To be a leader in the technology-based business with ...dnex.listedcompany.com/misc/ar2005.pdf ·...

To be a leader in the technology-based business with

concentration in information, communication and

technology.

o u r m i s s i o n>> To build value for shareholders

>> To be an attractive technology stock

>> To be the technology flagship of the UEM Group

>> To be an employer of choice

>> To contribute towards the development of a knowledge-based society

o u r v i s i o n

C o v e r R a t i o n a l e

The cover design highlights on the relevance of TIME EngineeringBerhad (“TIME”) to today’s consumers, on how TIME is involveddirectly and indirectly in our lives.

It relays the importance of TIME’s services and the impact theyhave in our lives. As the presence of technology-based services like

those provided by TIME can be felt in all aspects of life, theybecome part of our lifestyle.

The design also shows the various applications of TIME’s servicesfrom home to the office including for work, education & training,communications and entertainment.

Innovation for all

Annual Report 2005 | TIME Engineering Berhad | 1

C2 Chairman’s Statement/Penyata Pengerusi

7 Operations Review

16 Corporate Social Responsibility

20 Corporate Diary

26 Profile of the Board of Directors

29 Group Corporate Directory

30 Corporate Structure

32 Corporate Information

34 Audit Committee Report

37 Statement on Internal Control

39 Statement on Corporate Governance

47 2005 Financial Highlights

48 Five-Year Financial Summary of the Group

51 Five-Year Performance of TIME Share

52 Changes in Authorised and Issued Share

Capital

57 Financial Diary 2005

58 List of Properties held by TIME Group

59 Financial Statements

102 Analysis of Shareholdings

104 Analysis of Warrantholdings 1996/2006

106 Notice of Thirty Sixth Annual General Meeting

107 Statement Accompanying Notice of

Thirty Sixth Annual General Meeting

• Form of Proxy

36th Annual General Meeting

VenueNirwana Ballroom 1

Ground FloorCrowne Plaza Mutiara

Kuala Lumpur Jalan Sultan Ismail

50718 Kuala Lumpur

Date9 June 2006

Time 9.30 a.m.

ontents

Year 2005 was the first year for the Group to implement itsbusiness strategies with a full focus on the information,communications and technology (“ICT”) business after thedisposal of the Power Division from the Group in 2004.

In the year under review, the Group’s business operations showedsound performance in particular that of its subsidiary - TIMESystems Integrators Sdn Bhd (“TSI”) - which fully completed PhaseIII of the Teaching and Learning of Science and Mathematics inEnglish (“PPSMI”) Project in the first quarter of 2005. Theproject, involving the supply and distribution of multimediaequipment, was awarded by the Ministry of Education (“MOE”) sinceNovember 2004.

In recognition of TSI’s proven capability to perform the contract for the second and third phases of thePPSMI Project, the MOE granted the Phase IV contract, which is expected to be completed in April 2006.

Dagang Net Technologies Sdn Bhd (“Dagang Net”) maintained its position as the country’s leading e-commerce service provider throughout 2005. Working alongside the Royal Malaysian Customs, itcontinued its nationwide roll-out of the SMK-Dagang•Net to smaller ports, airports and border crossingsincluding those in Sabah and Sarawak.

On 14 July 2005, the company launched its Web-based import-export permit application system -ePermit - for the Ministry of Agriculture and Agro-Based Industry.

ePermit enables importers, exporters and forwarding agents to apply for permits from Other GovernmentAgencies (“OGA”) and obtain the approval via the Internet. The OGA permits are transmitted to SMK-Dagang•Net electronically for validation and cross-reference purposes against Customs declaration.

Another subsidiary, TIME Quantum Technology Sdn Bhd (“TQT”), which operates an Internet Data Centre,continued to strengthen its Application Service Provisioning (“ASP”) platform – Rezonate. This include apartnership with a globally-established company to provide a more robust, stable, secure and scalableprovisioning platform including Single Sign-On (“SSO”) capabilities.

FINANCIAL PERFORMANCE

For the year under review, the Group recorded RM173.9 million in revenue compared to RM444.1million in the preceding year.

The lower revenue for 2005 was partly due to the lower value of PPSMI Phase III project and nonrecognition of PPSMI Phase IV project of around RM250.0 million which however will be recognised inthe first half of 2006. Also contributing to revenue for 2005 is business from SMK-Dagang•Net services,which increased by 18% to RM55.0 million from RM46.6 million in year 2004.

2 | TIME Engineering Berhad | Annual Report 2005

CDear ShareholdersOn behalf of the Board of Directors, it is my pleasure to present

this Annual Report and Audited Financial Statements of TIME

Engineering Berhad (“TIME”) and its Group of Companies for the

financial year ended 31 December 2005.

hairman’s Statement


Chairman’s Statement (continued)

The Group’s loss before tax for the current year was RM253.9 million compared toRM359.0 million in 2004. The lower loss was mainly due to the improvement in theresults of the ICT business and an associate.

The Group’s performance for the year was affected by:• the impairment loss in value of other investments which have not been performing

(RM123.4 million), and• interest on USD Bonds and loan from a financial institution (RM56.8 million).

As a result of these losses, there was a reduction in net assets and shareholders’ fundsof the Group and the Company.

With regard to its debt, TIME met its obligations and also made a prepayment of USD1.2million during the year. Subsequent to the year end, the Company has on 31 March2006 prepaid Tranche I of Extended Tranche 3 of USD Bonds amounting to USD28.8million due on 30 June 2006. The total principal repayment subsequent to the year endwas equivalent to RM108.9 million. The prepayment of the USD Bonds will result ininterest savings of almost RM8.0 million per annum.

DIVIDENDS

The Board does not recommend the payment of any dividend for the financial year ended31 December 2005.

I n n o v a t i o nfor the fu ture

Chairman’s Statement (continued)


BORROWINGS

The Group’s borrowings as at 31 December 2005 consist mainly of USD Bonds ofUSD57.8 million (equivalent to RM218.5 million) and Term Loan of RM556.0 million(including interest payable) from a financial institution. A sum of USD28.8 million (equivalentto RM108.9 million) of USD Bonds due on 30 June 2006 was paid on 31 March 2006.

On 23 March 2006, the Securities Commission approved the waiver on the moratoriumimposed on the Company with respect to the disposal of its investment in TIME dotComBerhad (“TdC”) shares, which had been placed since 28 June 2000. With the waiver, theCompany is poised to consider several measures to resolve the outstanding debt issues.

PROSPECTS FOR 2006

As the Group’s borrowings are being addressed, the Group can now focus on its businessgrowth and operations in 2006. This year, PPSMI and SMK-Dagang•Net services willremain the key contributors to the Group ICT business. With the expansion of servicesbeing offered, 2006 is expected to be an encouraging year for the Group with projectedrevenue growth from the operating subsidiaries.

The Group will continue its endeavours to expand its current business as well as ventureinto new growth areas of ICT business.

While pursuing these business endeavours, we will also continue to fulfill our role as anation-building partner. TIME, as a Government-linked company (“GLC”), views this roleseriously and will undertake efforts focused on skills and knowledge enhancementsparticularly ICT skills, and entrepreneurial and business acumen in the ICT sector.

We will do so by involving the participation of as many local businesses particularlyBumiputera-owned companies and entrepreneurs in our projects, a formula which we havefollowed diligently when implementing previous projects including the PPSMI project withMOE.

Returns on such an arrangement not only come from financial returns; they also come fromknowing that we have contributed to the Government’s efforts in developing ICT skills andbusiness knowledge among local companies especially Bumiputera-owned companies.

ACKNOWLEDGEMENTS

On behalf of the Group, I would like to thank our shareholders, customers, businessassociates, financiers, the Securities Commission, the Government and in particular theMinistry of Finance, Ministry of International Trade & Industries, Ministry of Education, theRoyal Malaysian Customs and other regulatory bodies for their continued support.

My appreciation also goes to my fellow Directors, the Management and staff of the Groupfor their guidance, commitment and dedication throughout the year.

Thank you.

DATUK HAJI MOHD KHALIL DATO’ HAJI MOHD NOORChairman

P


enyata PengerusiPemegang-pemegang Saham yang Budiman Bagi pihak Lembaga Pengarah, saya dengan sukacitanya membentangkan Laporan Tahunan dan Penyata

Kewangan yang diAudit bagi TIME Engineering Berhad (“TIME”) dan syarikat-syarikat Kumpulannya bagi

tahun kewangan berakhir 31 Disember 2005.

Tahun 2005 merupakan tahun pertama bagi Kumpulan TIME melaksanakan strategi perniagaannyadengan tumpuan sepenuhnya kepada perniagaan maklumat, komunikasi dan teknologi (“ICT”) selepaspelupusan Bahagian Tenaga daripada Kumpulan TIME pada tahun 2004.

Bagi tahun 2005 operasi perniagaan Kumpulan TIME telah menunjukkan prestasi yangmemberangsangkan terutamanya anak syarikatnya TIME Systems Integrators Sdn Bhd (“TSI”) – yang telahberjaya melaksanakan dan menyenggarakan projek Pengajaran dan Pembelajaran Sains dan Matematikdalam Bahasa Inggeris (“PPSMI”) Fasa III pada suku pertama tahun 2005. Projek tersebut membabitkanpembekalan dan pengagihan peralatan multimedia dan telah diberikan oleh Kementerian Pelajaran (“MOE”)sejak November 2004.

Berikutan kejayaan TSI dalam menyempurnakan projek PPSMI Fasa II dan III, MOE telah melanjutkankontrak PPSMI tersebut untuk projek PPSMI Fasa IV yang dijangka akan selesai April 2006.

Dagang Net Technologies Sdn Bhd (“Dagang Net’) mengekalkan posisinya sebagai penyedia perkhidmatane-dagang terulung di negara sepanjang 2005. Dengan kerjasama Kastam DiRaja Malaysia, Dagang Nettelah melancarkan SMK-Dagang•Net ke pelabuhan-pelabuhan kecil, lapangan-lapangan terbang dansempadan termasuk di Sabah dan Sarawak.

Pada 14 Julai 2005, Dagang Net telah melancarkan sistem permohonan permit import-eksportberasaskan web untuk Kementerian Pertanian dan Industri Asas Tani.

ePermit membenarkan pengimport, pengeksport dan agen penghantaran memohon permit dari AgensiKerajaan yang Lain “Other Government Agencies” (“OGA”) dan memperolehi kelulusan melalui Internet.Permit-permit yang diluluskan akan dihantar kepada SMK-Dagang•Net untuk disahkan dan semak silangsecara elektronik dengan deklarasi Kastam.

Sebuah anak syarikat lain, TIME Quantum Technology Sdn Bhd (“TQT”),yang mengendalikan Pusat Data Internet telah mengukuhkan lagi platformPenyediaan Perkhidmatan Aplikasi (“ASP”) – Rezonate. Ini termasuklahperkongsian dengan sebuah syarikat bertaraf global bagi membekalkanplatform penyediaan yang lebih mantap dan stabil seperti keupayaan SingleSign-On (“SSO”).

PRESTASI KEWANGAN

Bagi tahun 2005, Kumpulan telah mecatatkan pendapatan sebanyakRM173.9 juta berbanding RM444.1 juta pada tahun sebelumnya.

Pendapatan tahun 2005 yang lebih rendah adalah sebahagiannyadisebabkan oleh pengurangan nilai projek PPSMI Fasa III dan nilai projekPPSMI Fasa IV sebanyak RM250.0 juta yang hanya akan diambil kira padaseparuh pertama tahun 2006. Pendapatan tahun 2005 turut disumbangoleh perniagaan daripada perkhidmatan SMK-Dagang•Net yang meningkatsebanyak 18% kepada RM55.0 juta dari RM46.6 juta pada tahun 2004.

Kerugian sebelum cukai bagi tahun kewangan ialah RM253.9 jutaberbanding RM359.0 juta pada tahun 2004. Pengurangan kerugianadalah berikutan peningkatan dalam keputusan perniagaan ICT dansyarikat bersekutu.


Penyata Pengerusi (sambungan)

Prestasi Kumpulan bagi tahun kewangan telah terjejas berikutan :

• kerugian nilai dalam pelaburan yang tidak menguntungkan sebanyak RM123.4 juta, dan• faedah ke atas Bon Dollar Amerika dan hutang daripada sebuah institusi kewangan sebanyak RM56.8 juta

Kerugian tersebut telah mengakibatkan pengurangan aset bersih dan dana pemegang saham Kumpulan TIME dan Syarikat.

Mengenai hutangnya, TIME telah memenuhi obligasi hutangnya dan telah membuat pembayaran awal sebanyak USD1.2 juta.Selepas hujung tahun, Syarikat telah membuat pembayaran awal pada 31 Mac 2006 Tranche I of Extended Tranche 3 Bon DolarAmerika sebanyak USD28.8 juta yang matang pada 30 Jun 2006. Jumlah pembayaran balik prinsipal selepas hujung tahunberjumlah RM108.9 juta. Pembayaran awal Bon Dolar Amerika akan menjimatkan faedah sebanyak hampir RM8.0 juta setahun.

DIVIDEN

Lembaga Pengarah tidak mencadangkan sebarang pembayaran dividen bagi tahun kewangan berakhir 31 Disember 2005.

PINJAMAN

Pinjaman Kumpulan TIME pada 31 Disember 2005 merangkumi Bon Dolar Amerika sebanyak USD57.8 juta (bersamaanRM218.5 juta) dan Pinjaman Berpenggal sebanyak RM556.0 juta (termasuk faedah kena bayar) daripada sebuah institusikewangan. Sebanyak USD28.8 juta (bersamaan RM108.9 juta) Bon Dolar Amerika yang matang pada 30 Jun 2006 telah dibayarpada 31 Mac 2006.

Pada 23 Mac 2006, Suruhanjaya Sekuriti telah melepaskan Syarikat daripada moratorium yang dikenakan ke atasnya terhadappelupusan pelaburan di dalam saham TIME dotCom Berhad yang telah dikenakan sejak 28 Jun 2000. Dengan penepian tersebut,Syarikat akan dapat mempertimbang beberapa langkah untuk menyelesaikan isu hutang yang belum dijelaskan.

PROSPEK TAHUN 2006

Sementara pinjamannya ditangani, Kumpulan TIME kini boleh menyasarkan untuk membangunkan perniagaan dan operasi pada2006. Tahun ini, projek PPSMI dan perkhidmatan SMK-Dagang•Net akan terus menjadi penyumbang utama kepada perniagaanICT Kumpulan TIME. Dengan pengembangan perkhidmatan yang ditawarkan, 2006 dijangka menjadi tahun yangmemberangsangkan dengan unjuran peningkatan pendapatan daripada operasi anak-anak syarikat.

Kumpulan TIME akan terus berusaha mengembangkan perniagaan yang sedia ada serta menerokai bidang baru dalam perniagaanICT.

Disamping itu, Syarikat juga akan terus memainkan peranannya dalam memenuhi tanggungjawabnya sebagai rakan pembangunannegara. TIME, sebagai sebuah Syarikat Berkaitan Kerajaan (“GLC”), memandang serius peranan ini dan berusaha penuh bagimeningkatkan kemahiran dan pengetahuan terutamanya dalam kemahiran ICT, keusahawanan dan akumen perniagaan dalamsektor ICT.

TIME akan melaksanakan usaha ini dengan menggalakkan penyertaan lebih banyak syarikat dan usahawan Bumiputera dalamprojek-projeknya seperti bagi projek-projeknya yang lampau termasuk projek PPSMI dengan MOE.

Pulangan dari usaha tersebut didapati bukan dalam bentuk kewangan sahaja tetapi juga dari kepuasan menyumbang kepada usahaKerajaan dalam membangunkan kemahiran dan pengetahuan perniagaan ICT syarikat tempatan terutamanya syarikat Bumiputera.

PENGHARGAAN

Bagi pihak Kumpulan TIME, saya ingin merakamkan ucapan terima kasih kepada para pemegang saham, pelanggan-pelanggan,rakan-rakan niaga, pembiaya-pembiaya kewangan, Suruhanjaya Sekuriti, pihak Kerajaan terutamanya Kementerian Kewangan,Kementerian Perdagangan Antarabangsa dan Industri, Kementerian Pelajaran, Kastam DiRaja Malaysia dan lain-lain badankawalselia atas sokongan yang diberikan.

Saya juga ingin merakamkan penghargaan kepada rakan-rakan dalam Lembaga Pengarah, pihak Pengurusan dan kakitanganKumpulan TIME atas bimbingan, komitmen dan dedikasi yang diberikan sepanjang tahun.

Terima kasih.

DATUK HAJI MOHD KHALIL DATO’ HAJI MOHD NOORPengerusi


O

I n n o v a t i o nfor convenience

At TIME Engineering Berhad we’re constantly innovating ourselves.

In playing our part as the LEADER in technology-based businesses we

constantly evolve to provide ICT solutions and services

that exceed the demands of our customers.

perations Review


TIME Systems Integrators Sdn Bhd

TIME Systems Integrators Sdn Bhd (“TSI”), a wholly-owned subsidiary of TIME, continued

to play a prominent role in providing business expertise in ICT project management and

consultancy, supply of hardware equipment, maintenance and application development

services throughout 2005.

Subsequent to the successful implementation and maintenance performance in the

previous supply of multimedia equipment for the Teaching and Learning of Science and

Mathematics in English Programme (“PPSMI”) Phase III, TSI was again appointed as the

Master Vendor for the PPSMI Phase IV rollout by the Ministry of Education (“MOE”) in late

December 2005. The contract, worth about RM250.0 million, was for the delivery,

installation, testing, commissioning, training and maintaining the equipment for a three-

year warranty period.

The supply of the PPSMI Phase IV equipment is essentially for the teaching and learning

of Science and Mathematics in English for students in Standard 4 and Form 4.

Under PPSMI Phase IV, TSI is responsible to deploy a total of 33,481 notebooks; 9,471

projectors; 42,201 screens; 9,388 steel cabinets; 42,210 speakers and 2,781 laser

printers to more than 9,600 schools and other sites nationwide. The provision of the ICT

equipment to these schools is to facilitate and assist teachers in teaching of Science and

Mathematics in English via the use of courseware specially developed by the MOE.

TSI has trained more than 50,000 teachers under the PPSMI project on how to handle

and use the equipment; and by June 2006, TSI would have trained a total of around

80,000 teachers.


Playing its developmental role to assist the Government in the national Bumiputera

agenda, TSI maintained a total of 42 local Bumiputera ICT companies as Authorised

Service Providers (“ASPs”) and trained more than 180 qualified technicians to support

and maintain the equipment supplied for PPSMI Phase II, III and IV. To ensure excellent

service delivery from its ASPs, TSI facilitated the training to these technicians by

organising and engaging principals ie. IBM, Dell, NEC, Acer, Samsung, HP, Geha, Sanyo,

Mitsubishi and Panasonic to provide the training. Beside the ASPs, TSI also identified 127

systems installers, 69 logistics providers and 33 training contractors.

In 2005, TSI also assisted the ASPs in bidding for other government contracts. Among

the projects won through this collaboration were the PC Lab projects for Perak, Selangor,

Kuala Lumpur and Kelantan worth more than RM22.0 million. TSI also provided advisory

assistance to the ASPs in bidding for the Computer Maintenance contract, and five of its

ASPs successfully won a total contract worth approximately RM15.0 million.

Integral to the TSI’s support structure is the establishment of its Call Centre to provide

an online first level technical support prior to the escalation of reports to the network of

ASPs. The Call Centre system is linked to a centralised English for Teaching Mathematics

and Science Support (“ETEMS”) system on a real time basis and is being used to track

and monitor asset performance and support services. The application is also made

accessible to the authorised key officers from MOE and all State Education Departments

(“SEDs”) for their online asset maintenance performance monitoring. ETEMS is a Web-

based asset management database application developed as a value-added service to the

Government.

TSI will continue to play its role as a Government-linked company (“GLC”) and make

significant contributions to enhance the ICT infrastructure especially in the education

sector.

I n n o v a t i o nfor educat ion


In the year under review, TIME Quantum Technology Sdn Bhd (“TQT”) pursued various

initiatives to strengthen its business in IT solutions support, content and application

services, business continuity, managed services and business process outsourcing. In

2005, the company expanded vertical applications onto its portal – Rezonate - in offering

the Application Service Provisioning (“ASP”) services to enterprise users. The efforts

included identifying Independent Software Vendors (“ISVs”) to bundle their applications

such as human resource and finance with Rezonate. TQT also partnered with a globally-

established company in providing a more robust, stable, secure and scalable platform for

Rezonate.

On 12 July 2005, the UEM Group’s Central Business Intelligence System (“CBIS”),

developed on the Rezonate platform, was launched to the UEM Group’s business

development community. In line with Rezonate’s core capabilities of enabling and

promoting idea sharing and collaboration among its users, CBIS was set up to serve this

purpose in aiding the UEM Group to co-ordinate its business development efforts, which

do not only traverse various industries both horizontally and vertically but also

geographically as the UEM Group ventures into overseas markets.

With the stage now set for further expansion and growth into the ASP arena, the

Rezonate platform is ready to serve more complex yet specific user needs and

requirements in the future.

TIME Quantum Technology Sdn Bhd


As for TQT’s Managed Data Centre service, which was launched and made fully

operational the year before with Dagang Net Technologies Sdn Bhd (“Dagang Net”) as its

anchor tenant, the data centre enjoyed full network uptime and availability throughout the

year under review. With Dagang Net’s core network infrastructure already fully available

and robust, TQT is confident that the managed services it provides to Dagang Net would

allow the company to expand its SMK-Dagang•Net suite of services.

In August 2005, TQT kick-started its BS7799 initiative for its Managed Data Centre

service with the ultimate aim of strengthening its Information Security (“IS”) standards in

providing more reliable and secure managed data centre services to its increasing client

base. This initiative, targeted to complete in 2006, is in line with the intention of making

TQT a trusted partner in managed services.

TQT will continue to introduce new services as well as enhanced features and

functionalities to its existing products to cater to a more varied range of customers. With

such a direction, the company is also directly contributing to the development of more

homegrown ICT products and services, which the Government expects to soon become

an important earner to Malaysia’s economy.

I n n o v a t i o nfor serv ices


In 2005, Dagang Net Technologies Sdn Bhd (“Dagang Net”) continued efforts to maintain

its position as the country’s leading e-commerce service provider especially by working

alongside the Royal Malaysian Customs on a nationwide roll-out of the SMK-Dagang•Net

to smaller ports, airports and border crossings including those in Sabah and Sarawak.

This is in line with the company’s commitment following an agreement signed on 1 March

2005 with the Government of Malaysia represented by the Ministry of International Trade

and Industry (“MITI”) that allows Dagang Net to operate the electronic customs

declaration value-added network and electronic permits for other government agencies

(“OGAs”) for five years from 25 September 2004.

The company also launched its Web-based import-export permit application system -

ePermit - on 14 July 2005 for two permit-issuing agencies under the Ministry of

Agriculture and Agro-Based Industry.

The first-of-its-kind in Malaysia, ePermit enables importers, exporters and forwarding

agents to apply for permits from OGAs and obtain the approval via the Internet. Approved

permits from OGAs will then be transmitted to SMK-Dagang•Net electronically for

validation and cross-reference purposes against Customs declarations.

It is envisioned that all 23 permit-issuing agencies in Malaysia will be linked to this trade

documentation chain by September 2006. When fully implemented at all agencies,

ePermit will be able to electronically transfer an annual average of 250,000 applications

for import-export permits.

Another new product introduced was DutyNet, Malaysia’s first Web-based Customs duty

payment service. DutyNet marks the transformation of Dagang Net’s Electronic Funds

Transfer (“EFT”), the conventional value-added network, onto the Internet platform. Jointly

developed by Dagang Net and a commercial bank, DutyNet will facilitate preparation and

submission of Customs duty payment electronically.

Dagang Net Technologies Sdn Bhd


With DutyNet, the business community will be able to access and pay their customs duty

at almost 24 hours a day, 7 days a week, from anywhere and at anytime. In addition,

DutyNet incorporates the latest digital certification and encryption technology to ensure

that all online transactions are encrypted and authenticated, and all data is kept

confidential at all stages and transactions.

Apart from these achievements, the year under review was also a memorable one for

Dagang Net when the company’s ePermit bagged the MSC-Asia Pacific ICT (“MSC-

APICTA”) Awards 2005 for Best of “e-Government and Services” category for being the

most innovative ICT solution that supports electronic government initiatives and service

delivery to the community.

Dagang Net will continue to play a leading role in facilitating Malaysian companies’

capabilities to conduct cross-border trade by providing paperless trade facilitation

services. Apart from business gains for Dagang Net, these services can also help local

companies better prepare for increasing reliance on paperless or electronic means in

global trade, and thus enhance the country’s economic competitiveness.

I n n o v a t i o nfor bus iness


2005 was a year when TIME dotCom Berhad (“TdC”) continued to pursue its strategy of

focusing on customers and intensifying efforts to improve customer service. The

company also undertook a number of strategic initiatives to increase its competitiveness

in terms of technology and pricing in its main business areas.

In the year under review, the fixed line business (including voice and data, indirect access

and broadband products and services) was TdC’s major revenue earner with RM273.5

million or 59.5% of the total revenue. The payphone business under TIME Reach Sdn.

Bhd. (“TIME Reach”) contributed RM168.0 million or 36.5% of total revenue while

RM18.4 million or 4% came from the Internet business.

To improve customer service, the company established the TIME Priority Plus (“TPP”) club

- specially designed customer relationship management (“CRM”) programmes aimed at

retaining customers and forging long term relationships with them. At the same time, to

inculcate a customer service culture among TdC employees, the “TIME Ambassador

Programme” was launched. In the year under review, all departments under Customer

Service Division attained ISO 9001:2000 certification, signifying the company’s

commitment to customer service quality and excellence.

Ensuring high service quality, TdC undertook two major network enhancement projects

namely the Metro Ethernet Backbone Network (“Metro-E”) and the Metro Transmission

Enhancement (“Tip Top”).

TIME dotCom Berhad


The Metro-E project is meant to transform the company’s network into an Internet

protocol (“IP”)-based network, capable of providing higher capacity and facilitating new

services. Under the Tip Top project, TdC’s last mile network equipment was replaced with

the Next Generation Synchronous Digital Hierarchy (“SDH”) equipment, while a dual

connection concept was introduced to reduce dependency on one single hub.

Looking ahead, despite challenges foreseen in 2006 – resulting from high oil prices and

competition in the telecommunications sector – TdC is optimistic of its potential

particularly in the broadband arena.

Through its wholly-owned subsidiary TT dotCom Sdn Bhd, TdC submitted its applications

to the Malaysian Communications and Multimedia Commission (“MCMC”) in the second

round of 3G spectrum licence bidding in 2005.

On 6 March 2006, TdC received an official letter from MCMC on its successful bid for

the 3G licence, and is working on detailed plans to be submitted to MCMC before 3

September 2006.

This is a significant milestone for TdC as 3G will serve as the catalyst for the company

to drive its business further particularly in broadband service delivery, which is still largely

an untapped market. Hence, with the right proposition, TdC can create a niche by

offering 3G broadband to the market.

I n n o v a t i o nfor te lecommunicat ions


Corporate Social Responsibility

CONTINUING ROLE AS A NATION-BUILDING PARTNER

TIME Engineering Berhad (“TIME”) business activities is persistently driven by the mandate toserve as a partner in nation-building and as a responsible corporate citizen, it acknowledges itsCorporate Social Responsibility (“CSR”) role to the nation and society.

TIME places significant emphasis on education and this has become its CSR main thrust, in linewith its mission to contribute towards the development of a knowledge-based society. TIME’s CSRinitiatives are aimed at contributing to society development that will enhance efforts in capacitybuilding and human capital development.

TIME has undertaken and sponsored a wide range of educational, social and communityprogrammes. TIME also supports internship programmes under various higher learninginstituitions in several related fields such as IT, computer science, business administration,accounting and management. TIME has also successfully initiated and supported significanteducation projects especially those that help the community gain from ICT opportunities andeducation enhancement through the use of technology in teaching and learning.

TRAINING UNDER THE “PROJEK PEMBEKALAN PERALATAN BAGI PROGRAM PENGAJARANDAN PEMBELAJARAN SAINS DAN MATEMATIK DALAM BAHASA INGGERIS” (“PPSMI”)PROJECT

Through its subsidiary TIME Systems Intergrators Sdn Bhd (“TSI”), TIME provides trainingprogrammes for teachers in the area of ICT skills. To date, more than 50,000 teachersnationwide have gone through the programme, and by June 2006, TSI would have trained a totalof around 80,000 teachers.

TSI developed 33 training contractors, 127 systems installers, and 69 logistics providers, andmaintained a total of 42 local Bumiputera ICT companies as Authorised Service Providers(“ASPs”) as well as trained more than 180 qualified technicians to support and maintain theequipment supplied for PPSMI Phase II, III and IV.


Corporate Social Responsibility (continued)

TSI also established entrepreneurial programmes for these local companies in line with theGovernment’s aim to increase participation from, and upgrade skills of Bumiputera ICT Smalland Medium Enterprises (“SMEs”).

PRIMARY LITERATURE PROGRAMME

TIME is the main sponsor for this programme which aims to train teachers of English languageto use alternative methods in their teaching materials to create an exciting, enjoyable andrewarding English lesson for teachers and students.

The programme is supported by the Curriculum Development Centre of the Ministry of Education(“MOE”) and British Council as the language partner. Activities of the programme include trainingworkshops, portfolio competitions, English Clubs, and the supply of English newspapers.

This five-year programme is targeted to train 1,200 teachers through conducting a total of 40workshops nationwide; setting up of English Clubs; organising four National PortfolioCompetitions; and supplying the New Straits Times and its education supplement to 1,200schools nationwide.

SMART EDUCATION PARTNERSHIP (“SEP”)

TIME, in a partnership with Prestariang Technology Sdn Bhd, Intel Technology Sdn Bhd, andMicrosoft (Malaysia) Sdn Bhd, affirms its commitment to partner with the MOE to empowerteachers in Malaysia to achieve their fullest potential.

It will collaborate to deliver a framework or roadmap for ICT-based teacher professionaldevelopment and training; develop and provide a communication, collaboration and knowledge-sharing platform through an Internet-based portal to promote teacher-centric content andinitiatives of Malaysian teachers; develop recognition programmes for Malaysian teachers, whichmay include annual grants and prizes for demonstration of effective ICT integration into theclassroom.



The SEP partners have already initiated the Innovative Teachers Network Programme through anInternet-based portal specifically for teachers to integrate ICT into curriculum and learning. Theprogramme consists of the provision of Web-based resources such as classroom andprofessional learning resources, online teacher communities, e-news and Internet/e-mailaccounts. TIME, through its associate company TIME dotCom Berhad (“TdC”), provides freeInternet and a 10 Mb e-mail account to teachers nationwide.

MAIN SPONSOR OF MALAYSIAN STUDENTS’ TEAM TO F1 IN SCHOOLS WORLDCHAMPIONSHIP AT BIRMINGHAM, UK

F1 Team In School is a co-curriculum activity introduced under a pilot project by the MOE in2005. Students are challenged to design and produce model F1 cars using Computer-AidedDesign Software (“CAD”) and Computer-Aided Manufacturing (“CAM”) Software and race them.Through this programme students will be exposed to various soft skills – creativity, design,problem-solving, teamwork, presentation including using computer-aided design andmanufacturing software.

TIME became the main sponsor of local students’ team to the F1 in Schools World Championshipat Birmingham, UK in January, 2006. The team, called “Aero Breaker” and comprising fourstudents from Sekolah Menengah Kebangsaan Taman Melawati, broke the world record with thecar they designed – named X-Dynamic - when it successfully clocked 1.083 seconds on a 20metre-track.

For TIME, the sponsorship is especially a meaningful one for the company as 2006 is Malaysia’sfirst ever entry in the international competition which saw 17 other teams from 11 countriesincluding United States, Australia, Great Britain, South Africa, Singapore and South Korea.



ONE-STOP MULTIMEDIA CENTRE

In January 2006, TIME launched a One-Stop Multimedia Centre at SMK Sultan Muzafar Shah 1,Lambor Kanan, Perak in support of the “Projek Rintis Sekolah Bestari” by the MOE. The centreis equipped with desktop computers, digital cameras, video cameras, printers, scanners and CDwriters as well as relevant multimedia software applications, the centre offers multimediafacilities and services to the school and local community members.

Ultimately, the One-Stop Multimedia Centre programme is aimed at bridging the digital divide inrural communities by bringing ICT infrastructure and education, especially multimedia facilitiesand services to schools.

5TH INTER-SCHOOL DEBATING CHAMPIONSHIP 2006

TIME’s contribution to education also continues this year with its first involvement with aninstitute of higher learning. TIME served as the main partner to the International IslamicUniversity Malaysia in organising the university’s 5th Inter-school Debating Championship 2006from 14 to 18 April, 2006. More than 130 teams and 200 adjudicators for both BahasaMelayu and English categories from schools nationwide were involved.

The event is aimed at exposing secondary school debaters and school teachers to world classdebating styles and format to further develop their debating skills. It is also meant to train futureleaders of the country with competencies of analytical thinking and communicating confidentlyand precisely, as well as serve as a forum for nation-building where young intellectuals can gatherideas and express them logically and rationally.

TIME views this as one of many means for the company to contribute towards the developmentof human capital and a knowledge-based society.


Corporate Diary

28 - 31 JANUARY 2005MY MALAYSIA, MYMSC EXHIBITION

TIME led the UEM Group ICT Division at My Malaysia, MyMSC @ Penang Exhibition from 28 - 31 January 2005 and showcasedits range of ICT products and services.

25 FEBRUARY 2005PRIMARY LITERATURE PROGRAMME IN SOUTHERN REGION

Mini launch of Primary Literature Programme in Southern Region was held in Johor. The programme activities included trainingworkshops for teachers in primary schools; English Clubs; portfolio competitions; and supply of newspapers with educationsupplements to the participating schools.

MARCH 2005COMPLETION OF PPSMI PHASE III

TSI successfully completed the delivery of PPSMI Phase III. Under the PPSMI Phase III, TSI has deployed another 14,448notebooks, 1,470 projectors, 1,537 screens, 1,537 trolleys including Uninterruptable Power Supply (UPS) and speakers and 166laser printers.

3 APRIL 2005ANUGERAH BINTANG POPULAR 2004

TdC sponsored the Anugerah Bintang Popular 2004 organised by TV3 and Berita Harian that gave recognition to Malaysia’s mostpopular entertainers.

9 MAY 2005SMART EDUCATION PARTNERSHIP

TIME, Prestariang Technology Sdn Bhd, Intel Technology Sdn Bhd and Microsoft (Malaysia) Sdn Bhd signed a Memorandum ofUnderstanding (“MoU”) of Smart Education Partnership. The MoU serves to document the parties’ continuing commitment topartner with the Ministry of Education (“MOE”) to empower teachers in Malaysia to achieve their fullest potential.

28 - 31 JANUARY 2005 9 MAY 2005 7 JUNE 2005


Corporate Diary (continued)

12 JULY 2005 14 JULY 2005

31 MAY 2005TDC’S 8TH ANNUAL GENERAL MEETING

TdC held its 8th Annual General Meeting at the Kuala Lumpur Golf & Country Club.

7 JUNE 200535TH ANNUAL GENERAL MEETING

TIME held its 35th Annual General Meeting at Hotel Nikko Kuala Lumpur.

12 JULY 2005CENTRAL BUSINESS INTELLIGENCE SYSTEM PORTAL (“CBIS”)

TQT launched CBIS, a customised web-based collaborative portal that allows users to synergise and collaborate businessinformation, market intelligence, business development initiatives and contacts.

14 JULY 2005EPERMIT FOR THE MINISTRY OF AGRICULTURE AND AGRO-BASED INDUSTRY

Dagang Net launched its ePermit for the Ministry of Agriculture and Agro-Based Industry. ePermit is a web-based permitapplication system that enables importers, exporters and forwarding agents to apply for import/export permit from OtherGovernment Agencies (“OGA”) and obtain the approval via the Internet. Approved permits from OGAs will be transmitted toCustoms’ Sistem Maklumat Kastam (“SMK-Dagang•Net”) electronically for validation and cross-reference purposes againstCustoms declaration.

2 AUGUST 2005SIGNING CEREMONY BETWEEN DAGANG NET AND TS TRANSASIA

Dagang Net and TS TransAsia announced a strategic alliance of landbridge trade between Malaysia and Thailand. This marked theprovision of landbridge schedules by TransAsia to Dagang Net to be published monthly on its web-based portal, MyPorts.

2 AUGUST 2005



10 AUGUST 2005LAUNCH OF DUTYNET

Dagang Net partnered with Bumiputra-Commerce Bank Berhad (“BCB”) to jointly launched DutyNet, the first Internet-basedCustoms Duty Payment service. DutyNet is linked to Dagang Net’s eDeclare portal, and facilitates preparation and submission ofCustoms duty payment electronically via BCB’s Internet business banking portal, Bizchannel.

23 – 25 AUGUST 2005SMIDEX 2005

TIME Group of Companies participated in SMIDEX 2005, themed “Moving SMEs up the Value Chain” to showcase its innovativeproducts and services including Dagang Net’s Order Fulfillment Services (“OFS”), a web-based service for RosettaNet ProcurementModule for small and medium industries to market their products to multinational corporations.

6 – 9 SEPTEMBER 2005ACM 2005

To aggressively showcase and promote their array of ICT products and services, TQT, TSI and Dagang Net participated in the 8thAsean Communications and Multimedia Expo and Forum (“ACM”).

7 SEPTEMBER 2005STRATEGIC EDUCATION ALLIANCE BETWEEN TQT AND COMAT ACADEMY SDN BHD

TQT signed a Strategic Education Alliance with Comat Academy Sdn Bhd (“Comat”) to market corporate education programmesoffered by Universitas 21 Global (“U21G”), which are internationally accredited by 16 of the world’s top-ranked universities.

10 AUGUST 2005 23 – 25 AUGUST 2005 7 SEPTEMBER 2005



9 SEPTEMBER 2005DAGANG NET WINS MSC-APICTA 2005 AWARD

Dagang Net's ePermit won the Best of E-Government and Services Award in the Multimedia Super Corridor - Asia Pacific ICTAwards (“MSC-APICTA”) 2005 Award.

17 SEPTEMBER 2005TIME-MOE FRIENDLY BOWLING 2005

With the objective to further strengthen the existing ties between MOE, TIME/TSI held the TIME-MOE Friendly Bowling 2005.

23 NOVEMBER 2005MESRA AIDILFITRI 2005

TIME organised the Mesra Aidilfitri 2005 in conjunction with Hari Raya Aidilfitri celebration to forge closer linkages and enhancebusiness relationship between TIME/TSI and key corporate customer namely MOE.

25 - 27 NOVEMBER 2005TIME WARISAN

More than 700 TIME Group staff and families attended the TIME Warisan gathering in Port Dickson. Lots of fun activities wereorganised such as Rendang Cooking Competition, telematches, games, sand art, kite making, and singing and danceperformances.

17 SEPTEMBER 2005 23 NOVEMBER 2005 25 - 27 NOVEMBER 2005



1 – 4 DECEMBER 2005MINGGU SAINS, TEKNOLOGI DAN ICT, JOHOR

TdC took part in this exhibition, organised by the Johor State Government with the aim of creating awareness on science andtechnology among the public.

10 - 14 DECEMBER 2005EAST ASIA BUSINESS EXHIBITION 2005 (EABEX ’05)

TIME participated in the East Asia Business Exhibition 2005 (“EABEX ’05”) under the banner of UEM Group to highlight andshowcase its latest products and services to foreign business visitors from East Asian countries. The EABEX ’05 also providedmatch-making meeting opportunities with potential business partners.

7 JANUARY 2006ONE-STOP MULTIMEDIA CENTRE

TIME launched the One-Stop Multimedia Centre at SMK Sultan Muzafar Shah 1, Lambor Kanan, Perak under its corporate socialresponsibility programme in support of MOE’s “Projek Rintis Sekolah Bestari” initiative.

12 - 16 JANUARY 2006F1 IN SCHOOLS WORLD CHAMPIONSHIP IN BIRMINGHAM, UK

TIME sponsored team “Aero Breaker” from Sekolah Menengah Kebangsaan Taman Melawati to the F1 in Schools WorldChampionship in Birmingham, UK. They won the fastest car award and broke the world record.

10 - 14 DECEMBER 2005 7 JANUARY 2006 12 - 16 JANUARY 2006



20 - 24 FEBRUARY 2006DAGANG NET HOSTED UNITED NATIONS WORKSHOP

Dagang Net hosted a 5-day international workshop on International Standards to Stimulate Paperless Trade and TechnicalWorkshop on UNeDocs Data Modelling, organised by UN/CEFACT (United Nations/Centre for Trade Facilitation and ElectronicBusiness), a UN body that develops the global standards for digital trade documents and data exchange. Participants includedpolicymakers and experts from various Governments agencies, international organisations, business communities and NGOs from18 different economies around the region.

10 MARCH 2006MEDIA VISIT TO TIME AND TSI CALL CENTRE

TIME organised a Media Briefing and visit to TSI Call Centre. Media representatives were briefed on TIME’s commitment andinvolvement in education and TSI’s successful fulfillment of its commitments for PPSMI Projects under Phase II, III and IV.

24 MARCH 2006LAUNCH OF EPERMIT AT MALAYSIAN COCOA BOARD IN TAWAU SABAH

Datu Dr. Michael Dosim Lunjew, Secretary-General of the Ministry of Plantation Industries and Commodities, launched DagangNet’s ePermit for the Malaysian Cocoa Board (“MCB”). MCB became the first agency under the Ministry to implement ePermit toexpedite the issuance of export permits that will enable local cocoa produce to reach the international markets faster.

14 - 18 APRIL 2006TIME SPONSORED IIUM 5TH INTER-SCHOOL DEBATING CHAMPIONSHIP 2006

TIME partnered with the International Islamic University Malaysia (“IIUM”) in organising the university’s 5th Inter-School DebatingChampionship 2006, aimed at exposing secondary school debaters and school teachers to world class debating styles and formatto further develop their debating skills. 130 teams and 200 adjudicators were involved for both Bahasa Melayu and Englishcategories from schools nationwide.

10 MARCH 2006 24 MARCH 2006 14 - 18 APRIL 2006


Profile of the Board of Directors

AMIRUDDIN ABDUL AZIZ, aged 47, a Malaysian, was appointed as the Managing Directorof the Company on 1 April 2003. He holds a Bachelor of Business Administration degreefrom Ohio University, USA. He has been with the UEM Group since 1988 serving in varioussenior positions. He began his career with the UEM Group in Projek Lebuhraya Utara SelatanBerhad (“PLUS”) as its Head of Treasury Department. Prior to his appointment as the ChiefFinancial Officer of Projek Usahasama Transit Ringan Automatik Sdn Bhd (“PUTRA”) fromJanuary 1997 to January 1999, he was the General Manager of Group Corporate Affairsin HBN Management Sdn Bhd (now known as UEM Group Management Sdn Bhd). FromFebruary 1999 to August 2000, he was the Chief Operating Officer of EPE PowerCorporation Berhad (now known as Ranhill Power Berhad). In August 2000, he wastransferred to Renong Berhad (now known as UEM Land Sdn Bhd) as its Chief OperatingOfficer, a position he held before he was appointed as the Chief Operating Officer of TIMEEngineering Berhad on 18 November 2001.

He also sits on the Board of TIME dotCom Berhad and several other private limitedcompanies. He is also a member of the Nomination Committee of the Company.

He has no securities holdings in the Company or its subsidiaries and none of his familymembers have direct or indirect relationships with any director or major shareholder of theCompany. He has not entered into any transactions, whether directly or indirectly, whichhave a conflict of interest with the Company. He also has not been convicted of any offenceswithin the past 10 years.

During the financial year ended 31 December 2005, he attended all of the 12 BoardMeetings convened.

DATUK HAJI MOHD KHALIL DATO’ HAJI MOHD NOOR

AMIRUDDIN ABDUL AZIZ

DATUK HAJI MOHD KHALIL DATO’ HAJI MOHD NOOR, aged 65, a Malaysian, wasappointed as the Chairman of the Company on 31 October 2001 following his appointmentas an Independent Non-Executive Director on 22 October 2001. He holds a B.A. (Honours)Degree in Economics and Islamic Studies from University of Malaya and Diploma inCommercial Policy from Geneva. He is a former public servant and his last position in thepublic service was Auditor General of Malaysia from 1994 to 2000. Some of the otherpositions he held during his 36 years of distinguished service in the public sector wereSecretary Foreign Investment Committee in the Prime Minister’s Department, SecretaryFinance Division in the Ministry of Finance, Deputy Secretary General in the Ministry of Tradeand Industry and Secretary General at the Ministry of Works.

He also sits on the Board of IOI Corporation Berhad, MNRB Holdings Berhad, MalaysianReinsurance Berhad, Bank Kerjasama Rakyat Malaysia Berhad, Aman Properties Sdn Bhdand Angkasa Raya Development Sdn Bhd; and is a Trustee of Yayasan Tan Sri Dato’ Lee ShinCheng. He is also the Chairman of the Audit, Remuneration and Nomination Committees ofthe Company.

Save as disclosed in the Financial Statements of the Annual Report, he has no securitiesholdings in the subsidiaries and none of his family members have direct or indirectrelationship with any director or major shareholder of the Company. He has not entered intoany transactions, whether directly or indirectly, which have a conflict of interest with theCompany. He also has not been convicted of any offences within the past 10 years.



Profile of the Board of Directors (continued)

HAJI ABDULLAH YUSOF, aged 69, a Malaysian, was appointed as the Independent Non-Executive Director on 22 October 2001. He is a mining engineer who graduated from theCamborne School of Metalliferous Mining, United Kingdom in 1961. He has over 35 yearsexperience in the mining tin industry and related activities, having held various positions inthe Osborne & Chappel Group of Companies, which were involved in mine management andconsultancy both locally and at the international level. He is a Fellow of the Institute ofMaterials, Minerals and Mining, United Kingdom and Fellow of the Institution of MineralEngineers Malaysia. He is also a registered Professional Engineer (Mining) with the Board ofEngineers Malaysia, a council member of the Malaysian Chamber of Mines and the TinIndustry (Research and Development) Board.

He is currently the Non-Executive Chairman of Osborne & Chappel International Sdn Bhd andthe Non-Executive Chairman of Ireka Corporation Berhad. He also sits on the Board ofGopeng Berhad and Cement Industries of Malaysia Berhad. He is also the member of theAudit, Remuneration and Nomination Committees of the Company.

He has no securities holdings in the Company or its subsidiaries and none of his familymembers have direct or indirect relationship with any director or major shareholder of theCompany. He has not entered into any transactions, whether directly or indirectly, whichhave a conflict of interest with the Company. He also has not been convicted of any offenceswithin the past 10 years.


DATO’ DR GAN KHUAN POH, aged 60, a Malaysian was appointed as the Independent Non-Executive Director of the Company on 12 November 2001. He holds a Ph.D (Economics)and M.A. (Economics) from Duke University, NC, USA; M.B.A. (Finance) from CornellUniversity, NY, USA and B.A. (Hons.) (Business Economics) from University of Malaya. Hestarted as a Government Service Officer in 1967 and served for 31 years at variouspositions ranging from the District level, the National Institute of Public Administration(“INTAN”) to the Prime Minister’s Department as Senior Director responsible forMacroeconomics in the Economic Planning Unit. He later joined the Pilecon Group ofCompanies in 1997 as Executive Director responsible for Group Finance and CorporatePlanning and later as its Managing Director until the end of year 2000.

He is currently the President of the Malaysian Economic Association (“MEA”) and sits on theBoard of Permodalan Bank Simpanan Nasional Berhad and Bank Simpanan Nasional Berhadand several other companies. He is also the member of the Audit and RemunerationCommittees of the Company.

He has no securities holdings in the Company or its subsidiaries and none of his familymembers have direct or indirect relationship with any director or major shareholder of theCompany. He has not entered into any transactions, whether directly or indirectly, whichhave a conflict of interest with the Company. He also has not been convicted of any offenceswithin the past 10 years.


HAJI ABDULLAH YUSOF

DATO’ DR GAN KHUAN POH


Profile of the Board of Directors (continued)

ELAKUMARI KANTILAL, aged 49, a Malaysian, was appointed as a Non-Independent Non-Executive Director of the Company on 22 October 2001. She holds a Master of Science inFinance & Accounting from the University of East Anglia, United Kingdom and a Bachelor ofAccounting from the Universiti Kebangsaan Malaysia. She is a member of the MalaysianInstitute of Accountants. Her previous work experience was as an Officer in the Ministry ofAgriculture and Accountant General’s Office from 1981 to 1986. She became a SeniorOfficer in the Division on Monitoring of Government Owned Enterprises in the Ministry ofFinance from 1986 to 1994. In September 1994, she joined Khazanah Nasional Berhad asthe Senior Manager and in November 2004, she was appointed as the Director ofInvestment.

She also sits on the Board of TIME dotCom Berhad and Faber Group Berhad and severalother private limited companies. She is also a member of the Audit Committee of theCompany.

She has no securities holdings in the Company or its subsidiaries and none of her familymembers have direct or indirect relationship with any director or major shareholder of theCompany. She has not entered into any transactions, whether directly or indirectly, whichhave a conflict of interest with the Company. She also has not been convicted of any offenceswithin the past 10 years.

During the financial year ended 31 December 2005, she attended 11 Board Meetings outof 12 Board Meetings convened.

SALMAH SHARIF, aged 44, a Malaysian, was appointed as a Non-Independent Non-Executive Director on 22 October 2001. She holds a Bachelor of Law from the UniversitiTeknologi MARA and was admitted as an Advocate and Solicitor at the High Court ofMalaysia in 1990. She began her career as a Legal Officer with Malaysian Industrial EstatesSdn Bhd (a subsidiary of the Malaysian Industrial Development Finance Berhad) from 1987to 1988 and was promoted to Company Secretary in 1989. She became the CompanySecretary and Legal Adviser of Khazanah Nasional Berhad in November 1994 and inSeptember 2004 she was redesignated as the Director of Legal and Support.

She also sits on the Board of several other private limited companies. She is also a memberof the Remuneration Committee of the Company.

She has no securities holdings in the Company or its subsidiaries and none of her familymembers have direct or indirect relationship with any director or major shareholder of theCompany. She has not entered into any transactions, whether directly or indirectly, whichhave a conflict of interest with the Company. She also has not been convicted of any offenceswithin the past 10 years.

During the financial year ended 31 December 2005, she attended 8 Board Meetings out of12 Board Meetings convened.

ELAKUMARI KANTILAL

SALMAH SHARIF

Group Corporate Directory


TIME Engineering Berhad (10039-P)

Investment holding in information, communication andtechnology, and telecommunications.

Head officeLevel 11, Wisma TIME 249 Jalan Tun Razak 50400 Kuala Lumpur, MalaysiaTel : (03)-2720 8100 Fax : (03)-2720 8101 Website : www.timengineering.com

SUBSIDIARIES

Dagang Net Technologies Sdn Bhd (177974-T)

Developing, managing and marketing inter-organisationbusiness solutions based on the applications of electronicdata interchange and electronic commerce concepts.

Head office17th & 20th Floor, HP TowersJalan Gelenggang, Bukit Damansara 50490 Kuala Lumpur, MalaysiaTel : (03)-2723 2723 Fax : (03)-2723 2727 Careline : 1300-133-133 Website : www.dagangnet.com

TIME Systems Integrators Sdn Bhd (78454-P)

Project management and consultancy in ICT, supply ofhardware equipment, maintenance and applicationdevelopment services with industry specification ingovernment contracts.

Head officeLevel 10, Wisma TIME249 Jalan Tun Razak 50400 Kuala Lumpur, MalaysiaTel : (03)-2731 6803Fax : (03)-2731 6788

TIME Quantum Technology Sdn Bhd (304964-H)

Supply of business continuity facility services and provisionof services such as consultancy for ICT projects, hardwareand software maintenance, outsourcing of informationtechnology requirements, information technology projectmanagement, system integration for informationtechnology systems and turnkey project implementor.

Head officeLevel 10, Wisma TIME249 Jalan Tun Razak 50400 Kuala Lumpur, MalaysiaTel : (03)-2731 6868Fax : (03)-2731 6860Website : www.tqt.com.my

ASSOCIATE COMPANY

TIME dotCom Berhad (413292-P)

Investment holding, provision of management andmarketing/promotional services and retailing oftelecommunications products.

Head officeLevel 1, Wisma TIME249 Jalan Tun Razak 50400 Kuala Lumpur, MalaysiaTel : (03)-2720 8000 Fax : (03)-2720 0199Website : www.time.com.my


43.83%

TIME Reach Sdn Bhd

43.83%

TIME dotNet Berhad

43.83%

TIMESat Sdn Bhd

43.83%

TT dotCom Sdn Bhd

43.83%

#TIME dotCom Berhad

NOTES:

1. Shareholdings percentage as at 14 April 2006 represent TIME Engineering Berhad's effective interest.2. # Listed on the Main Board of Bursa Malaysia Securities Berhad.3. * Under Members’ Voluntary Winding Up since 30 May 2005.4. ** Under Members’ Voluntary Winding Up since 21 December 2005.

INFORMATION, COMMUNICATION & TECHNOLOGY

Dagang NetTechnologies Sdn Bhd

60.16%

UNITED ENGINEERS (MALAYSIA) BERHAD

Dagang NetCommerce Sdn Bhd

45.03%

KHAZANAH NASIONAL BERHAD

100%

Corporate Structure

TELECOMMUNICATIONS

TIME Systems IntegratorsSdn Bhd

100%

60.16%

Dagang Net SolutionsSdn Bhd

60.16%

Opbase Trading Sdn Bhd30.68%

Macnet CCN (M) Sdn Bhd16.06%


Corporate Structure (continued)

TIME QuantumTechnology Sdn Bhd

100%

X-Calibre Online Sdn Bhd

100%

CORPORATE

Krisbiz Sdn Bhd100%

TIME Automation andManagement Services Sdn Bhd

100%TIME SpectrumCommunication Sdn Bhd

100%

*UNITIME Submarine Ventures Sdn Bhd

50%

** World Trade Facilitation Sdn Bhd

78.78%

Toplink Advisory andManagement Services Sdn Bhd

100%

Smartcard Systems (M)Sdn Bhd

51%

Eternaland Sdn Bhd100%

Cyberplus Sdn Bhd100%


Corporate Information

BOARD OF DIRECTORS

DATUK HAJI MOHD KHALIL

DATO’ HAJI MOHD NOOR

Chairman/Independent Non-Executive Director

*AMIRUDDIN ABDUL AZIZ

Managing Director

HAJI ABDULLAH YUSOF

Independent Non-Executive Director

DATO’ DR GAN KHUAN POH

Independent Non-Executive Director

*ELAKUMARI KANTILAL

Non-Independent Non-Executive Director

*SALMAH SHARIF

Non-Independent Non-Executive Director

* Nominees of United Engineers (Malaysia) Berhad

BOARD COMMITTEES

Audit Committee

Datuk Haji Mohd Khalil Dato’ Haji Mohd Noor, Chairman

Haji Abdullah Yusof

Dato’ Dr Gan Khuan Poh

Elakumari Kantilal

Nomination Committee


Haji Abdullah Yusof

Amiruddin Abdul Aziz

Remuneration Committee


Haji Abdullah Yusof

Dato’ Dr Gan Khuan Poh

Salmah Sharif

Selection Committee


Haji Abdullah Yusof

Amiruddin Abdul Aziz


Corporate Information (continued)

COMPANY SECRETARY

Sapiah Jamaludin

MAICSA 0807355

REGISTERED OFFICE

Level 11, Wisma TIME

249 Jalan Tun Razak

50400 Kuala Lumpur

Tel : (03) 2720 8100

Fax : (03) 2720 8101

Website: www.timengineering.com

SHARE REGISTRAR

Mega Corporate Services Sdn Bhd

Level 15-2, Faber Imperial Court

Jalan Sultan Ismail

50250 Kuala Lumpur

Tel : (03) 2692 4271

Fax : (03) 2732 5399/(03) 2732 5388

AUDITORS

Messr KPMG (AF0758)

(Chartered Accountants)

Wisma KPMG, Jalan Dungun

Damansara Heights

50490 Kuala Lumpur

Tel : (03) 2095 3388

Fax : (03) 2095 0971

STOCK EXCHANGE LISTING

Main Board of the Bursa Malaysia Securities Berhad

(Listed since 12 September 1983)

PRINCIPAL BANKERS

Bumiputra-Commerce Bank Bhd

Public Bank Bhd

PRINCIPAL SOLICITORS

Messr Albar & Partners

Messr Abu Talib Shahrom

Messr Shahrizat Rashid & Lee

Messr Wong & Partners

OUTSTANDING EQUITY SECURITIES

as at 14 April 2006

136,936,877 warrants 1996/2006 which are

exercisable from 5 August 1996 to 4 August 2006

at an exercise price of RM6.30

(TIME Warrants 1996/2006)


Audit Committee Report

The Audit Committee of TIME Engineering Berhad (“the Company”) for the year comprises four (4) members, namely three (3)Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director of the Board. They are as follows:-

Datuk Hj Mohd Khalil Dato’ Hj Mohd Noor - Independent Non-Executive Director(Chairman)

Haji Abdullah Yusof - Independent Non-Executive Director

Elakumari Kantilal - Non-Independent Non-Executive Director

Dato’ Dr. Gan Khuan Poh - Independent Non-Executive Director

TERMS OF REFERENCE OF THE AUDIT COMMITTEE

1. Membership

a) The Audit Committee shall comprise a minimum of three (3) non-executive directors, a majority of which should beindependent directors.

b) At least one (1) member of the Audit Committee must be a member of the Malaysian Institute of Accountants (“MIA”)or have any other equivalent qualifications recognised by the MIA.

c) The Chairman of the Audit Committee must be an independent director.

d) All members of the Audit Committee shall hold office only so long as they serve as directors of the Company.

2. Functions of the Audit Committee

a) To review the quarterly, half yearly and year-end financial statements of the Company and its subsidiaries (“the Group”)for recommendation to the Board for approval, focusing on compliance with accounting standards and legalrequirements, changes in accounting policies and practices and major potential risk issues.

b) To consider the appointment of the external auditors, the audit fee and any questions of their resignation or dismissal.

c) To review the external auditors' nature and scope of the audit before commencement of the audit, review the externalauditors’ audit report, management letter and responses thereto.

d) To review with the external auditors their evaluation of the systems and control and any comments they may have withrespect to improving control.

e) To review the adequacy of the scope, functions and resources of the internal audit department, and that it has thenecessary authority to carry out its duties.

f) To review the internal audit plan and results of the internal audit process and ensure that appropriate action is takenon the recommendations of the internal audit department.

g) To consider any related party transactions that may arise within the Group.

h) To consider the major findings of internal investigations and Management’s responses, and direct Management to takeappropriate actions.


3. Authority of the Audit Committee

The Audit Committee shall have the following authority:

a) To investigate any matter within its Terms of Reference.

b) To have the necessary resources to perform its duties.

c) To have rights to full, free and unrestricted access to information, records, personnel and properties of theCompany and other companies in the Group.

d) To communicate directly with the external auditors and Head of Internal Audit.

e) To obtain external professional advice and secure the attendance of outside parties with relevant experience andexpertise if it considers this necessary.

f) To convene meetings with the external auditors, without the presence of Management, if deemed necessary.

4. Frequency and attendance at Audit Committee Meetings

The Audit Committee should meet regularly, at least once in every quarter. The quorum shall consist of a majority ofindependent directors. The Chairman of the Committee should report on each meeting to the Board of Directors (“theBoard”). The Head of Internal Audit, Finance and a representative of the external auditors shall be entitled to attendmeetings and make known their views on matters under consideration by the Committee.

SUMMARY OF ACTIVITIES DURING THE YEAR

The following activities were carried out by the Audit Committee during the year:

(a) reviewed the external auditors’ audit plan for the Company and Group for the financial year prior to commencement ofthe audit, namely at the 4th Audit Committee meeting. The salient points of the plan among others, comprise thefollowing:

• proposed methodology

• significant audit matters

• timetable for the audit

• proposed audit fees

• engagement team

(b) reviewed and discussed with the external auditors the quarterly, half-yearly and year-end results of the Group (includingalso the auditors’ report, where applicable) to ensure that financial reporting and disclosure requirements of the relevantauthorities have been complied with, before recommending for Board approval.

(c) reviewed the external auditors’ management letter (including the Management responses) on internal control matters.

(d) reviewed the proposed fees of the external auditors for the 2005 statutory audit, taking into consideration, the scopeand nature of work to be performed.

(e) met with the external auditors in the absence of Management to discuss issues relating to audit findings from the interimand year end audits, control processes, record keeping and any other matter that the Audit Committee may wish todiscuss.

(f) reviewed and approved the annual internal audit plan of the Internal Audit Department, with consideration on the areasto be reviewed and the adequacy of resources to carry out the plan.

(g) reviewed the findings and recommendations of internal audit reports, where Management was present to clarify mattersto the Audit Committee.

Audit Committee Report (continued)


Audit Committee Report (continued)

(h) reviewed the risk management reports from companies in the Group, namely on the type of risks, controls to manage therisks, risk ratings and the action plans to manage the risks.

(i) reviewed related party transactions (including recurrent related party transactions) entered into by the Group; quarterlyreports detailing such transactions were tabled for the Audit Committee’s consideration.

(j) reviewed the Audit Committee Report, Statement on Internal Control and Statement on Corporate Governance prior tosubmission to the Board for their consideration and approval for inclusion in the Company’s Annual Report.

(k) attended trainings to keep abreast with developments on rules and regulations on corporate governance to facilitate thecontinuous effective discharge of their fiduciary duties and responsibilities. During the year, all the members of the AuditCommittee have attended at least two trainings, the details of which are set out in the Statement on Corporate Governance.

With the undertaking of the various activities mentioned above, the Audit Committee is of the view that it had properly dischargedits duties in accordance with its terms of reference in supporting the Board in the discharge of its fiduciary duties andresponsibilities.

MEETINGS

During the year, there were six (6) Audit Committee meetings. Due notices of the meetings, with the agenda clearly set out wereissued by the Company Secretary, who acts as the secretary of the Audit Committee. With the exception of the 6th meeting, therewas full attendance by all the members of the Audit Committee.

The meetings were held as follows:

1st Meeting 17 February 2005

2nd Meeting 8 April 2005

3rd Meeting 18 May 2005

4th Meeting 7 July 2005

5th Meeting 24 August 2005

6th Meeting 17 November 2005

The internal auditors of the Company, heads of subsidiary companies and their management teams, and the external auditorshave attended Audit Committee meetings.

INTERNAL AUDIT FUNCTION

In discharging its functions or duties, the Audit Committee is supported by an in-house internal audit function. The Head of InternalAudit reports directly to the Chairman of the Committee.

During the year, audit reviews were performed on the major operational subsidiary companies and the reports were tabled at AuditCommittee meetings. Representatives from the relevant companies were present to clarify on the issues raised in the reports.

The Internal Audit Department was also involved in the Company’s risk management activities, namely in convening riskmanagement review sessions, drafting and tabling the results thereof to the Audit Committee.


Statement on Internal Control

The following statement has been prepared, reviewed and approved for the purposes of complying with the Listing Requirementsof Bursa Malaysia Securities Berhad.

BOARD RESPONSIBILITY

The Board acknowledges its responsibility to establish a sound system of internal control that is maintained for its adequacy andintegrity. The Board recognises that these controls are intended to manage rather than eliminate risks of failure to achievebusiness objectives. The system can therefore, only provide reasonable but not absolute assurance against material misstatementor loss to the Group.

RISK MANAGEMENT

The Board’s continued commitment towards risk management was demonstrated through the continuation of the riskmanagement activities that had taken place in the previous year.

All active companies, which have held their risk management discussions, have now tabled their risk management reports to theAudit Committee. These reports, supplemented by risk registers describe the nature of the risks, the risk ratings, treatment andaction plans to manage the risks. The more significant risks identified were financial and funding, external risk, business andstrategic risk, customer and product/service risk, people and internal process risk.

One of the key risks of the parent company is financial and funding risks, arising from its debt obligations, which has to be fullysatisfied in 2007. In continuously managing this risk exposure, action plans to repay the debt have always been included in theannual Group business plans. During the year, part of the debt (namely, the USD bonds) which is only due in 2006 had beenpartially redeemed. (Note: As at the date of this Statement, all of the USD bonds due in 2006, have been fully redeemed).

During the year also, a company within the Group had reported improvements in its risk profile, namely the reduction in the ratingsof a significant number of risks since it commenced its risk management initiatives.

Recognizing the importance of being able to resume business in the event of a disruption, a company within the Group had put inplace a business continuity plan. This plan will be reviewed by the internal auditors to assess the progress of its implementationand to identify any opportunities for improvement in the following year. Meanwhile, other active companies within the Group areexpected to commence business continuity plan initiatives in the following year.


Statement on Internal Control (continued)

INTERNAL CONTROL STRUCTURES AND PROCESSES

During the year, the following internal control structures and processes were in place:-

• An organization structure with clearly defined lines of responsibilities – the Group has in place an organization structurewith clearly defined lines of responsibilities and delegation of authority to provide an auditable trail of accountability

• Clearly prescribed authority limits – prescribed authority limits for the approval of various transactions are set in a scheduleof authority limits known as the Discretionary Authority Limits

• Periodic Board meetings – periodic Board Meetings with due notices given and agendas clearly set out, where importantmatters are deliberated and decided, thereby availing the Board supervision over key issues

• Documented policies and procedures – documented policies and procedures are in place to facilitate consistent practicesin the support of the company’s business activities

• Independent internal audit function – there is an internal audit function which performs independent reviews on the systemsof internal controls and reports directly to the Audit Committee, and by extension to the Board.

• Process for review and approval of budgets and business plans – there are documented processes requiring businessunits to prepare annual budgets and business plans that are discussed and approved by the Board.

The external auditors have reviewed this Statement on Internal Control for the inclusion in the annual report of the Company forthe year ended 31 December 2005 and reported to the Board that nothing has come to their attention that causes them tobelieve that the statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacyand integrity of the system of internal controls.

This statement has been approved by the Board of Directors at its meeting on 13 April 2006.


Statement on Corporate Governance

The Board of Directors of TIME Engineering Berhad (“the Board”) continuously pursue its efforts to ensure that the Best Practicesare appropriately adopted throughout the Group as this would enhance shareholders value and financial performance of theCompany and safeguard the interest of employees and other stakeholders.

The Board is pleased to report the following Statement which sets out the main corporate governance practices that were in placethroughout the financial year ended 31 December 2005 and up to the date of this Statement.

1. BOARD OF DIRECTORS

Composition of the Board

There is no change to the composition of the Members of the Board and the Board Committees since the last financial yearended 31 December 2004 except the resignation of one member in the Selection Committee. This is set out in theCorporate Information on pages 32 to 33 of this Annual Report and the profiles of each Director of the Company arepresented on pages 26 to 28 of this Annual Report.

The current composition of the Board is in compliance with the Listing Requirements of Bursa Malaysia Securities Berhad(“Bursa Securities”) as reflected in the table below.

Category No of Directors Percentage of Directors

Independent Non-Executive Directors (including the Chairman) 3 50.00Managing Director 1 16.67Non-Independent Non-Executive Directors 2 33.33

Haji Abdullah Yusof continues to act as the Senior Independent Non-Executive Director, a role he held since the date of hisappointment to the Board, to whom any concerns concerning the Group may be conveyed.

Appointment of Board Members

The Board practices a formal procedure for appointments to the Board. The Nomination Committee recommends to theBoard the following:-

• Suitable candidates for all directorships; and• Directors to fill the seats on Board Committees

There was no new appointment made during the financial year except the re-appointment of Amiruddin Abdul Aziz asManaging Director of the Company for another term of not exceeding three (3) years pursuant to Article 91 of theCompany’s Articles of Association and the Listing Requirements of Bursa Securities.

Re-Appointment and Re-Election of Directors

Haji Abdullah Yusof will reach the age limit of 70 years on his next birthday on 15 November 2006 and would cease hisdirectorship pursuant to Section 129(1) of the Companies Act 1965 (“the Act”). At the forthcoming Annual General Meeting(“AGM”), the Company will seek the approval of its shareholders on the re-appointment of Haji Abdullah Yusof as a Directorof the Company pursuant to Section 129(6) of the Act and the resolution shall be passed by a majority of not less than threefourths (3/4) of shareholders.

After attaining the age of 70 years, Haji Abdullah Yusof would be subject to re-appointment at the AGM in every subsequentyear.

Article 96 of the Company’s Articles of Association provides that all Directors shall retire from office once at least in everythree (3) years but shall be eligible for re-election and the Directors to retire shall be those who have been longest in officesince their last election or appointment. At the forthcoming AGM, Amiruddin Abdul Aziz and Salmah Sharif shall retire byrotation and have offered themselves for re-election.


Statement on Corporate Governance (continued)

Duties and Responsibilities of the Board

The main focus of the Board is on the Group’s entire strategic direction, development and effective control with a view topreserve the long term viability of the Group. The Board approves the Group’s annual business plan and budget and carriesout periodic review of the progress made by the operating subsidiary companies against their respective budgets. The Boardalso reviews the action plans that are implemented by the operating subsidiary companies and their performance againsttargets allocated to them.

Board Meetings and Supply of Information to the Board

During the year, the Board met twelve (12) times including three (3) Special Board meetings. The agenda of the Boardmeetings is primarily focused on debt settlement programme, the Company’s equity investments, the Group’s financialperformance as well as review on the Group’s businesses and projects relating to the ICT industry.

The agenda for each Board meeting and papers relating to the agenda items are forwarded to all Directors for their perusalprior to the date of the Board meeting. The Directors can thus peruse the matters and issues to be deliberated at the Boardmeeting before the date of the meeting.

Minutes of every Board meeting are circulated to all Directors for their perusal prior to confirmation of the minutes at thefollowing Board meeting. The Directors may seek clarification or raise comments on the minutes prior to the confirmationof the minutes.

The Directors are also kept informed as to any corporate announcement released to Bursa Securities.

The Board has completed and unimpeded access to information relating to the Group in the discharge of their duties. SeniorManagement officers of the Group are invited to attend the Board meetings to update the Directors on the operatingsubsidiary companies business and to brief the Directors on proposals submitted for the Board’s consideration. TheDirectors have the liberty to seek external professional advice at the Company’s expense, if they so require.

Board Committees

The Board has delegated specific responsibilities to the Board Committees namely the Audit, the Nomination, theRemuneration and the Selection Committees. These Board Committees have clear defined functions and terms of reference.

These Committees are empowered to deliberate and examine issues related to their expertise and report back to the Boardwith their recommendations and comments. The recommendations made by these Committees are tabled to the Board fornoting and for action by the Board, where appropriate. This is to ensure that the ultimate responsibility for the final decisionon all matters lies with the entire Board.

During the year, the Board Committees deliberated on the following business matters at their respective meetings:-

i) Audit Committee

The Audit Committee reviewed the internal audit plan, the findings of internal audit and recommended actions to betaken by the management. The Audit Committee also reviewed quarterly financial results and year-end financialstatements prior to making recommendation to the Board. In addition, the Audit Committee also reviewed the riskmanagement reports periodically and the action plans to mitigate the risks.

ii) Nomination Committee

The Nomination Committee discussed and recommended to the Board on the proposed framework of training forDirectors. The training framework is aimed at meeting the following objectives:-

• To continuously enhance the Directors’ professionalism in discharging their duties and in keeping abreast withlatest development relating to rules and regulations; and

• To fulfill the requirements of the amended provisions to Practice Note No. 15/2003 of the ListingRequirements.



iii) Remuneration Committee

The Remuneration Committee reviewed the Government’s guiding principle on the implementation of performance-linked compensation to the Senior Management of TIME Group; the proposed revisions to the relevant human resourcepolicy for the Group and the payment of Bonus, Annual Increment, Promotional Increment and Structural Adjustmentpayments for employees of the Group.

iv) Selection Committee

The Selection Committee reviewed the appointment of maintenance service provider, the progress of the Teaching andLearning of Science and Mathematics in English (“PPSMI”) Phase III Project by the Ministry of Education (“MOE”) andthe update on the PPSMI Phase IV Project and approval of its budget and appointment of panel of suppliers.

The Board meetings and the Board Committee meetings convened during the year and the attendance of the Members ofthe Board and the Board Committees were as follows:-

Audit Nomination Remuneration SelectionBoard Committee Committee Committee Committee

Datuk Haji Mohd Khalil Dato’ Haji Mohd NoorChairman/ Independent Non-Executive Director 12/12 6/6 1/1 4/4 3/3

Haji Abdullah YusofIndependent Non-Executive Director 12/12 6/6 1/1 4/4 3/3

Amiruddin Abdul AzizManaging Director 12/12 – 1/1 – 3/3

Dato’ Dr Gan Khuan PohIndependent Non-Executive Director 12/12 6/6 – 4/4 –

Elakumari KantilalNon-Independent Non-Executive Director 11/12 5/6 – – –

Salmah SharifNon-Independent Non-Executive Director 8/12 – – 3/4 –

Note: The Managing Director also attended all the meetings of the Audit Committee and the Remuneration Committee on an invitationbasis.

Continuing Board Development

The Board acknowledges the importance of continuous education and training to enable effective discharge of their fiduciaryduties, responsibilities and to keep abreast with latest development relating to rules and regulations.

All Directors of the Company have accumulated more than 72 CEP Points under the Continuing Education Programmes(“CEP”) for Directors pursuant to Practice Note No. 15/2003 of the Listing Requirements (the CEP requirements have beenrepealed with effect from 1 January 2005).

The Company has established a training framework for its Directors. In accordance with the objectives of this trainingframework, during the year the relevant training programmes conducted for the Directors were as follows:-

Director Date of Training Name of Training

Datuk Haji Mohd Khalil Dato’ Haji Mohd Noor 29 June 2005 Key Performance Indicator (KPIs) Framework (Manage and not just Measure Corporate Performance)

27 October 2005 GLC Transformation : UEM Leading the Way

2-4 December 2005 Value Creation : Role of the Board, CFO and Senior Management

Haji Abdullah Yusof 29 June 2005 Key Performance Indicator (KPIs) Framework (Manage and not just Measure Corporate Performance)



Amiruddin Abdul Aziz 24 June 2005 Update on Latest Financial Statement, Investment Strategies and International Financial Scandals

13 October 2005 Risk Management an Integrative and Common Sense Approach



Dato’ Dr. Gan Khuan Poh 2-4 December 2005 Value Creation : Role of the Board, CFO and Senior Management

13 December 2005 Briefing of Financial Reporting Standards for Directors

Elakumari Kantilal 2-4 December 2005 Value Creation : Role of the Board, CFO and Senior Management

13 December 2005 Briefing of Financial Reporting Standards for Directors

Salmah Sharif 27 October 2005 GLC Transformation : UEM Leading the Way




Directors’ Remuneration

There is no further revision to the remuneration scheme for Non-Executive Directors of the Company since the approval bythe Board on 7 September 2001.

The aggregate remuneration of the Directors for the financial year ended 31 December 2005 are categorised into theappropriate components as follows:-

Remuneration Director Fees Other Emoluments Benefits in kind Total Remuneration(RM) (RM) (RM) (RM)

Executive Director - 501,170 - 501,170

Non-Executive Directors 228,000 74,750 - 302,750

The number of Directors of the Company whose total remuneration fell within the respective bands during the financial yearended 31 December 2005 are as follows:-

No of Directors RM10,000 to RM50,000 RM50,001 to RM100,000 RM100,001 above

Executive Director - - 1

Non-Executive Directors 4 1 -

Total 4 1 1

At the forthcoming AGM, the shareholders would be considering for approval the aggregate annual Directors’ Fees for Non-Executive Directors as stated above.

2. COMMUNICATION WITH SHAREHOLDERS AND EXTERNAL PARTIES

Investor relations and shareholder communication

The Board acknowledges the importance of communication with shareholders and investors. Major development and eventsare duly and promptly announced via appropriate communications channels that provides shareholders with an overview ofthe Group’s performance and operations. During the year, in addition to the annual report, the Company has issued thefollowing notices:-

a) Notice to the Warrantholders in relation to the expiry and last date to exercise TIME Warrants 2000/2005 dated 31March 2005.

b) Notice to the ICULS Holders in relation to the maturity and the fifth and last interest payment on the outstandingamount of RM8,468,775 nominal amount of 2% Irredeemable Convertible Unsecured Loan Stock 2000/2005 (“TIMEICULS 2000/2005”) dated 18 November 2005.

Annual General Meeting (“AGM”)

The Company’s AGM provides a means of communication platform for dialogue with shareholders to have direct access tothe Board where they are informed on the progress and performance of the business and are given the opportunity to raisequestions or seek clarification on the business. Members of the Board, Senior Management as well as the External Auditorsof the Company are present to respond accordingly.

To ensure easy and convenient access to the Group’s financial information, press releases, annual reports, other corporateinformation by shareholders and investors, a corporate website is maintained at http://www.timengineering.com. TheCompany also makes timely announcements to Bursa Securities on all corporate events including its quarterly financialresults.




Participation in Corporate Events

In providing the shareholders and the public at large with the opportunity to gain information on the Group’s operations andin promoting its services, the Group participated in several exhibitions and conferences. The participation was either underthe umbrella of UEM Group or as the ICT Flagship of UEM. The Group’s participation in some of the major events were asfollows:-

Date of Event Event Description of Event

28 January to My Malaysia, MyMSC Exhibition TIME led the UEM Group ICT Division at My Malaysia, 31 January 2005 MyMSC @ Penang Exhibition held at the Penang

International Sports Arena which was launched by Dato’ Seri Abdullah Haji Ahmad Badawi, Prime Minister of Malaysia. The event was organised by the Multimedia Development Corporation (“MDC”) and supported by the Penang State Government and the Ministry of Science, Technology and Innovation (“MOSTI”).

TIME, TIME Systems Integrators Sdn Bhd (“TSI”), TIME Quantum Technology Sdn Bhd (“TQT”) and Dagang Net Technologies Sdn Bhd (“Dagang Net”) showcased their range of ICT products and services.

25 February 2005 Primary Literature Programme in This is a continuous Corporate Social Responsibility Southern Region (“CSR”) programme conducted by United Engineers

(Malaysia) Berhad (“UEM”) and TIME which was officially launched on 28 June 2004.

The objective is to introduce teachers with an alternative method of teaching English that provides children with opportunities to develop language skills and knowledge in an exciting, enjoyable and rewarding way at an early age.

In achieving the above objective, TQT has created an interactive CD-ROM module to supplement the learning materials, to enhance methods of learning and to further encourage the use of Information Technology in classrooms as well as further enhancing the teaching and learning experience for the teachers and students.

14 July 2005 ePermit for the Ministry of Dagang Net successfully launched its ePermit for the Agriculture and Agro-based Industry Ministry of Agriculture and Agro-based Industry, to

increase operational efficiencies to allow the agriculture sector easier and speedier access to the international markets. ePermit is a web-based permit application system enables importers, exporters and forwarding agents to apply for import/export permit from Other Government Agencies (“OGA”) and obtain the approval via the Internet. Approved permits from OGAs will be transmitted to the Sistem Maklumat Kastam (“SMK-Dagang•Net”) electronically for validation and cross-reference purposes against Customs declaration.



Date of Event Event Description of Event

10 August 2005 Launch of DutyNet Dagang Net in partnership with Bumiputra-Commerce Bank Berhad (“BCB”) jointly launched DutyNet, the first Internet-based Customs Duty Payment service. It was officiated by Tan Sri Dato’ Sri Abdul Halil Abdul Mutalib, Director General of Royal Malaysian Customs. DutyNet is linked to Dagang Net’s eDeclare portal, facilitates preparation and submission of Customs duty payment electronically via BCB’s Internet business banking portal, Bizchannel.

23 August to SMIDEX 2005 TIME Group of Companies participated in SMIDEX 2005, 25 August 2005 organized by SMIDEC and supported by the Malaysia

External Trade Development Corporation (“MATRADE”), the Malaysian Industrial Development Authority (“MIDA”) and the Malaysian International Chamber of Commerce and Industry (“MICCI”). The event was officiated by Dato’ Seri Abdullah Hj Ahmad Badawi, Prime Minister of Malaysia. To be inline with the theme “Moving SMEs up the Value Chain”, TIME has taken this platform to showcase its innovative products and services including Dagang Net’s Order Fulfillment Services (“OFS”), a web-based service for RosettaNet Procurement Module that facilitates the SMIs to market their products to multinational corporations.

7 September 2005 8th Asean Communications TQT, TSI and Dagang Net participated in the ACM 2005 and Multimedia Expo and to aggressively showcase and promote its array of ICT Forum (“ACM 2005”) products and services that embrace the latest

convergence of technology, solutions and application.

10 December to East Asia Business TIME participated in the EABEX ’05 under the banner of 14 December 2005 Exhibition 2005 UEM Group to highlight and showcase its latest products

(EABEX ‘05) and services to foreign business visitors from East Asian countries. The EABEX ’05 also provided match-making meeting opportunities with potential business partners.

3. ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board is committed to continuously provide and present a clear, balanced and comprehensive assessment of the Group’sfinancial performance and prospects. In order to fulfill the commitments to stakeholders, the Company ensures full, fair andaccurate recording and reporting of financial and business information.

The Audited Financial Statements for the year ended 31 December 2005 are prepared in accordance with the requirementsof the Act, and as well as the approved accounting standards.

Statement of Directors’ Responsibility for preparing the Financial Statements

The Directors are responsible in ensuring that the Company and its subsidiaries maintain and properly keep their accountingrecords, the register books and other statutory documents to enable the preparation of the Audited Financial Statementswith reasonable accuracy in compliance with the provisions of the Act.



The Group’s Audited Financial Statements have been prepared with the approved accounting standard in Malaysiaconsistently applied; supported by reasonable and prudent judgements and estimates; and ensuring that all accountingstandards have been followed.

The Statement of Directors pursuant to Section 169 of the Act is set out on page 63 of this Annual Report.

Statement on Internal Control

The Board acknowledges its responsibility to establish a sound system of internal control that is maintained and reviewedfor its adequacy and integrity.

The Group’s Statement on Internal Control is presented on pages 37 to 38 of this Annual Report.

Relationship with Auditors

The Directors have established an appropriate, formal, transparent and appropriate relationship with the Auditors, bothexternal and internal. The Group’s External Auditors, Messrs KPMG, provide an independent opinion, based on auditperformed on the financial statements of the Group and report the same to the shareholders of the Company in accordancewith Section 174 of the Act. From time to time, the Auditors highlight matters that require attention of the Audit Committeeand the Board of Directors.

The Audit Committee met with the External Auditors in the absence of the management representation on 11 May 2005and 10 April 2006. These meetings are intended to discuss issues relating to the audit findings from the year end audits,control processes, record keepings and any matter that the Audit Committee may wish to discuss with the External Auditors.

4. OTHER INFORMATION

Related Party Transaction

During the financial year under review, the Group had not entered into any recurrent related party transaction which is ofrevenue or trading nature other than those disclosed in the Audited Financial Statements for the year ended 31 December2005.

Material Contracts awarded to Directors and Substantial Shareholders

During the financial year under review, save as disclosed in the Audited Financial Statements for the year ended 31December 2005, none of the Directors and major shareholders has any material contract with the Company and or itssubsidiaries.

Sanctions and/or Penalties Imposed

During the financial year under review, the Group, Directors or Management have not been imposed with any sanctionsand/or penalties by any regulatory authorities.

5. STATEMENT OF COMPLIANCE WITH THE BEST PRACTICES OF THE CODE

The Board is committed to achieving a high standard of Corporate Governance throughout the organization. The Boardconsiders that it has complied throughout the financial year with the Best Practices as set out in the Corporate Code onCorporate Governance.

The Statement is issued in accordance with a Board Resolution passed at the Board meeting held and convened on 13 April 2006.


2005 Financial Highlights

2004

REVENUE

2005

99%

1%

96%

2% 2%

20042005

-35.8%

7.5%

0.1%

-71.8% 5.2%

-20.9%

-103.5%

PROFIT/(LOSS) BEFORE TAXATION

TOTAL ASSETS EMPLOYED

Information, Communication and Technology

Telecommunications

Power

Corporate

Others


Telecommunications

Power

Corporate

Others


Power

Corporate

Others

17.0%

2.2%

20042005

77%

10%

11%

34%

15%

50%

1%2%


Five-Year Financial Summary of the Group

2005 2004 2003 2002 2001RM’000 RM’000 RM’000 RM’000 RM’000

Consolidated Balance Sheet

Power Station - - - 277,468 277,224

Property, Plant and Equipment 14,653 12,096 49,181 142,703 165,268

Associate Companies &

Other Investments 813,942 1,036,719 1,328,237 1,668,965 2,340,325

Other Assets 1,807 5,966 2,317 2,479 2,093

Net Current Assets/(Liabilities) 2,040 (626,922) 241,692 119,081 (657,572)

Total Net Assets 832,442 427,859 1,621,427 2,210,696 2,127,338

Share Capital 775,245 768,155 765,029 746,413 746,413

Share Premium Account 1,717,012 1,702,903 1,696,684 1,659,636 1,659,636

Loan Stocks - 21,199 14,228 69,892 69,892

Reserves (2,338,436) (2,072,232) (1,691,531) (1,811,404) (1,818,524)

Shareholders' Funds 153,821 420,025 784,410 664,537 657,417

Minority Interest 12,405 7,645 4,346 49,818 46,794

USD Bonds 109,600 - 277,079 446,405 -

Exchangeable Secured Bonds - - - - 661,031

Long Term Liabilities 556,023 189 555,587 1,025,213 760,939

Deferred Taxation 593 - 5 24,723 1,157

Total Funds Employed 832,442 427,859 1,621,427 2,210,696 2,127,338


Five-Year Financial Summary of the Group (continued)

2005 2004 2003 2002 2001

RM’000 RM’000 RM’000 RM’000 RM’000

Consolidated Income Statement

Revenue 173,933 444,077 403,829 268,114 429,336

Operating (Loss)/Profit (163,132) 12,511 (32,428) 148,281 1,366,419

Share in Results of Associate Companies (90,823) (371,549) 167,437 (122,525) (271,360)

(Loss)/Profit Before Taxation (253,955) (359,038) 135,009 25,756 1,095,059

Taxation (7,612) 8,744 (1,654) 5,977 (28,120)

(Loss)/Profit After Taxation (261,567) (350,294) 133,355 31,733 1,066,939

Minority Interests (4,473) (16,837) (9,974) (11,857) 5,876

(Loss)/Profit Attributable

to Shareholders (266,040) (367,131) 123,381 19,876 1,072,815

Dividend Less Income Tax - - - - -

Retained (Loss)/Profit for the Year (266,040) (367,131) 123,381 19,876 1,072,815

Financial Ratios/Performance Ratios

(Loss)/Earnings Per Share (sen)

- Basic (34.5) (49.8) 16.4 2.7 143.7

- Diluted - - - - 102.5

(Loss)/Profit Before Taxation as a

Percentage of Shareholders' Funds (%) (165.10) (85.48) 17.21 3.88 166.57

(Loss)/Profit Before Taxation as a

Percentage of Total Assets (%) (16.83) (20.71) 5.61 0.94 31.93

Net Assets Per Share (sen) 21 56 103 96 94

Dividend Per Share (sen) - - - - -


Five-Year Financial Summary of the Group (continued)

2001 429,336

268,114

403,829

444,077

173,993

2002

2003

20042005

REVENUE(RM ‘000)

0 100 200 300 400 500

2001 657,417

664,537

784,410

420,025

153,821

2002

2003

20042005

SHAREHOLDERS’ FUNDS(RM ‘000)

0 200 400 600 800

2001 94

96

103

56

21

2002

2003

20042005

NET ASSETS PER SHARE(Sen)

0 20 40 60 80 100

2001 143.7

2.7

16.4

(49.8)

(34.5)

2002

2003

20042005

(LOSS)/EARNINGS PER SHARE(Sen)

(50) 0 50 100 150

2001 1,095,059

25,756

135,009

(359,038)

(253,955)

2002

2003

20042005

(LOSS)/PROFIT BEFORE TAXATION(RM ‘000)

(400) 0 400 800 1200


Five-Year Performance of TIME Share

Volume(‘000)

Price(RM)

3.5

3

2.5

2

1.5

1

0.5

0

Year20052004200320022001

80000

70000

60000

50000

40000

30000

20000

10000

0

Px Volume Px Low Px High Px Last


Changes in Authorised and Issued Share Capitalas at 14 April 2006

AUTHORISED SHARE CAPITAL

The present authorised share capital of TIME Engineering Berhad (“TIME”) is RM2,000,000,000.00 comprising of 2,000,000,000ordinary shares of RM1.00 each. Details of changes in the authorised share capital of TIME since incorporation are as follows:-

Increase in Authorised Total AuthorisedDate Share Capital Share Capital

RM RM

12.10.1970 100,000 100,00010.03.1971 100,000 200,00017.11.1972 800,000 1,000,00020.12.1973 2,000,000 3,000,00010.12.1980 2,000,000 5,000,00017.09.1982 20,000,000 25,000,00008.02.1983 25,000,000 50,000,00013.12.1989 300,000,000 350,000,00013.05.1996 650,000,000 1,000,000,00013.09.2000 1,000,000,000 2,000,000,000

ISSUED AND PAID-UP SHARE CAPITAL

The changes in the issued and paid-up share ordinary capital of TIME since incorporation and up to 14 April 2006 are as follows:-

No. of ordinary Cumulative issued and Date of allotment shares allotted Consideration paid-up capital

RM

12.10.70 100,000 Cash 100,00029.07.71 14,000 Cash 114,00008.10.71 16,000 Cash 130,00003.07.73 4,000 Cash 134,00010.08.73 67,000 Bonus issue of 1 for 2(a) 201,00024.09.73 18,000 Cash 219,00026.09.74 12,000 Cash 231,00023.11.74 13,000 Cash 244,00031.07.76 1,220,000 Bonus issue of 5 for 1(b) 1,464,00002.02.77 3,000 Cash 1,467,00030.10.79 586,800 Bonus issue of 2 for 5(c) 2,053,80011.11.80 150,000 Cash 2,203,80015.12.80 1,101,900 Bonus issue of 1 for 2(d) 3,305,70011.12.81 50,000 Cash 3,355,70014.06.82 40,500 Cash 3,396,20026.06.82 3,396,200 Bonus issue of 1 for 1(e) 6,792,40010.03.83 5,094,300 Bonus issue of 3 for 4(f) 11,886,70019.03.83 252,000 Cash 12,138,70016.08.83 6,600,000 Public issue(g) 18,738,700


Changes in Authorised and Issued Share Capital as at 14 April 2006 (continued)


RM

16.01.84 94,500 Issued at an issue price of RM1.50 per share under 18,833,200the Employees Share Option Scheme(h)

14.07.89 8,000,000 Special issue at par(i) 26,833,20028.09.89 to 622,000 Issued at an issue price of RM2.64 per share under 27,455,20016.11.89 the Employees Share Option Scheme(j)

07.03.90 13,000,000 Issued at an issue price of RM1.20 per share as part 40,455,200consideration for acquisition of RM37,500,000 nominal amount 10% convertible unsecured loan stocks in United Engineers (M) Berhad(k)

08.03.91 to 51,080,800 Issued at an issue price of RM1.20 per share pursuant 91,536,00007.12.91 to the conversion of TIME's 5% non-redeemable

convertible unsecured loan stocks 1990/1995 ("TIME Loan Stocks")(l)

09.01.92 to 29,857,166 Issued at an issue price of RM1.20 per share pursuant 121,393,16631.12.92 to the conversion of TIME Loan Stocks(m)

13.01.93 to 48,802,033 Issued at an issue price of RM1.20 per share pursuant 170,195,19927.12.93 to the conversion of TIME Loan Stocks(n)

03.01.94 to 30,242,600 Issued at an issue price of RM1.20 per share pursuant 200,437,79931.12.94 to the conversion of TIME Loan Stocks(o)

03.01.95 to 122,254,654 Issued at an issue price of RM1.20 per share pursuant 322,692,45330.04.95 to the conversion of TIME Loan Stocks(p)

26.05.95 10,606,060 Issued as consideration for acquisition of property from 333,298,513Mastari Corporation Sdn. Bhd. at an issue price of RM6.60 per share(q)

21.08.96 166,649,257 Rights issue of 1 for 2 at an issue price of RM4.40 499,947,770per share(r)

03.04.97 246,464,647 Issued as a consideration for the acquisition of 75% 746,412,417equity interest each in TIMECel Sdn Bhd and TIME Reach Sdn Bhd at an issue price of RM4.95 per share(s)

10.01.03 20,067 Issued at the conversion price of RM2.99 per share by 746,432,484the surrender and cancellation of RM60,000 nominal amount of 2% Irredeemable Convertible Unsecured Loan Stock 2000/2005 (“TIME ICULS”)(t)

27.01.03 37,457 Issued at the conversion price of RM2.99 per share by 746,469,941the surrender and cancellation of RM112,000 nominal amount of TIME ICULS(t)







RM

24.07.03 200 Issued at the conversion price of RM2.99 per share by 746,501,561way of cash by the surrender and cancellation of RM200 nominal amount of TIME ICULS(t)


24.07.03 3,263,198 Issued at the conversion price of RM2.99 per share by 749,959,659the surrender and cancellation of RM9,756,964 nominal amount of TIME ICULS(t)


01.08.03 3,344 Issued at the conversion price of RM2.99 per share by 749,968,019the surrender and cancellation of RM10,000 nominalamount of TIME ICULS(t)















RM









28.12.05 2,832,341 Compulsory conversion of the outstanding 775,244,683RM8,468,775 nominal amount of 2% irredeemable convertible unsecured loan stock 2000/2005 (“TIME ICULS”) at the Conversion Price of RM2.99 per New Ordinary Share at the Maturity Date(u)

EXPLANATORY NOTES ON CONSIDERATION

(a) Bonus Issue of 1 for 2 arising from the capitalisation of RM67,000 from the Unappropriated Profit Account.(b) Bonus Issue of 5 for 1 arising from the capitalisation of RM11,750 from the Share Premium Reserve and RM612,121

from the Asset Revaluation Reserve and RM596,129 from the Unappropriated Profit Account.(c) Bonus Issue of 2 for 5 arising from the capitalisation of RM1,500 from the Share Premium Reserve and RM5,858,300

from the Unappropriated Profit Account.(d) Bonus Issue of 1 for 2 arising from the capitalisation of RM 1,101,900 from the Asset Revaluation Reserve, RM1,291,727

from the Capital Reserve and RM716,860 from the Unappropriated Profit Account.(e) Bonus Issue of 1 for 1 arising from the capitalisation of RM95,250 from the Share Premium Reserve, RM1,292,363 from

the Asset Revaluation Reserve, RM1,291,727 from the Capital Reserve and RM716,860 from the Unappropriated ProfitAccount.

(f) Bonus Issue of 3 for 4 arising from the Capitalisation of RM4,610,306 form the Capital Reserve, RM483,994 from theUnapporiated Profit Account.

(g) Public Issue at an issue price of RM1.00 per share to provide additional working capital for the TIME Group and to providean opportunity for Bumiputra, other Malaysian and Malaysian employees of the TIME Group to participate in the equity ofthe Company in further compliance with the new Economic Policy of Malaysia.

(h) Issued under the terms of the Employees Share Option Scheme at an issue price of RM1.50 per share for cash to therespective persons named in the prospectus dated 30 June 1983.




(i) Special Bumiputra Issue at an issue price of RM1.00 per share for cash to the Bumiputra investors nominated or approvedby the Ministry of International Trade and Industry.

(j) Issued under the terms of the Group Employees Share Option Scheme at an issue price of RM2.64 per share for cash tothe respective persons named in the prospectus dated 30 June 1983.

(k) Issued at an issue price of RM1.20 per share as part consideration for the acquisition of RM37,500,000 nominal value10% Convertible Unsecured Loan Stocks 1986/1991 of RM1.00 each in United Engineers (M) Berhad from HatibudiNominees (Tempatan) Sdn Bhd.

(l) 51,080,800 new ordinary shares issued pursuant to the conversion of TIME 5% non-redeemable convertible unsecuredloan stocks 1990/1995 (“TIME Loan Stocks”) for the period from 8 March 1991 to 7 December 1991 fully paid in thecapital of the Company at a conversion rate of RM1.00 nominal value of TIME Loan Stocks plus RM0.20 cash for one (1)new TIME ordinary share credited as fully paid.

(m) 29,857,166 new ordinary shares issued pursuant to the conversion of TIME Loan Stocks for the period from 9 January1992 to 31 December 1992 fully paid in the capital of the Company at the following conversion rates :-* 29,588,000 Loan Stocks converted at the conversion rate of RM1.00 nominal value of TIME Loan Stocks plus

RM0.20 cash for one (1) new TIME ordinary share credited as fully paid; and* 323,000 Loan Stocks converted at the conversion rate of RM6.00 nominal value of TIME Loan Stocks for five (5) new

ordinary shares, any faction of a share resulting therefrom being disregarded.(n) 48,802,033 new ordinary shares issued pursuant to the conversion of TIME Loan Stocks for the period from 13 January

1993 to 27 December 1993 fully paid in the capital of the Company at the following conversion rates :- * 48,718,200 Loan Stocks converted at the conversion rate of RM1.00 nominal value of TIME Loan Stocks plus

RM0.20 cash for one (1) new TIME ordinary share credited as fully paid; and* 100,600 Loan Stocks converted at the conversion rate of RM6.00 nominal value of TIME Loan Stocks for five (5) new

ordinary shares, any fraction of a share resulting therefrom being disregarded.(o) 30,242,600 new ordinary shares issued pursuant to the conversion of TIME Loan Stocks for the period from 3 January

1994 to 31 December 1994 fully paid in the capital of the Company at the conversion rate of RM1.00 nominal value ofTIME Loan Stocks plus RM0.20 cash for one (1) new TIME ordinary share credited as fully paid.

(p) 122,254,654 new ordinary shares issued pursuant to the conversion of TIME Loan Stocks for the period from 3 January1995 to 30 April 1995 fully paid in the capital of the Company at the following conversion rates :-* 119,844,400 Loan Stocks converted at the conversion rate of RM1.00 nominal value of TIME Loan Stocks plus

RM0.20 cash for one (1) new TIME ordinary share credited as fully paid; and* 2,892,400 Loan Stocks converted at the conversion rate of RM6.00 nominal value of Loan Stocks for five (5) new

ordinary shares, any fraction of a share resulting therefrom being disregarded.(q) Issued at an issue price of RM6.60 per share as consideration for the acquisition of freehold property known as HS(D)

78380, PT No 38, Section 67 in the District of Wilayah Persekutuan, Town of Kuala Lumpur for a purchase considerationof RM70,000,000 from Mastari Corporation Sdn Bhd to provide TIME Group a permanent office space.

(r) Rights issue of 1 for 2 at an issue price of RM4.40 per share. The proceeds raised therefrom were utilised to finance thetelecommunications projects undertaken by TT dotCom Sdn Bhd (formerly known as TIME Telecommunications Sdn Bhd) andto partially pay for the conversion of the RM465,806,875 nominal value Renong CULS into new ordinary shares in RenongBerhad credited as fully paid-up.

(s) Issued at an issue price of RM4.95 per share as consideration for the acquisition of 75% equity interest each in therespective Companies below:-* acquisition of 179,250,000 ordinary shares of RM1.00 each of Sapura Digital Sdn Bhd (now known as TIMECel Sdn

Bhd) from Sapura Telecommunications Berhad (51%) and Sapura Holdings Sdn Bhd (24%) for a purchaseconsideration of RM750,000,000; and

* acquisition of 3,750,000 ordinary shares of RM1.00 each of Uniphone Sdn Bhd (now known as TIME Reach SdnBhd) from Sapura Telecommunications Berhad (49%) and Uniphone Telecommunications Berhad (26%) for a purchaseconsideration of RM470,000,000.

(t) 25,999,925 new ordinary shares of RM1.00 each issued pursuant to the Conversion Price of RM2.99 per new ordinaryShare by the surrender and cancellation of the RM77,739,410 nominal amount of 2% irredeemable convertible unsecuredloan stock 2000/2005 (“TIME ICULS”) with an aggregate nominal value equivalent to the Conversion Price.

(u) 2,832,341 new ordinary shares of RM1.00 each issued pursuant to compulsory conversion of the outstandingRM8,468,775 nominal amount of 2% irredeemable convertible unsecured loan stock 2000/2005 (“TIME ICULS”) at theConversion Price of RM2.99 per New Ordinary Share as at the Maturity Date at 5.00 p.m. on Friday, 23 December 2005.


Financial Diary 2005

28 February 2005

Announcement of unaudited financial results for fourth

quarter and year ended 31 December 2004.

31 March 2005

Issuance of Notice of Expiry and Last Date to exercise

of 97,855,674 Warrants 2000/2005 (“TIME

Warrants 2000/2005”).

16 May 2005

Issuance of Notice of 35th Annual General Meeting.

20 May 2005

Announcement of unaudited financial results for first

quarter ended 31 March 2005.

7 June 2005

35th Annual General Meeting.

24 June 2005

Date of Expiry of TIME Warrants 2000/2005.

25 August 2005

Announcement of unaudited financial results for second

quarter and half year ended 30 June 2005.

16 November 2005

Announcement of unaudited financial results for third

quarter ended 30 September 2005.

18 November 2005

Issuance of Notice to the Holders of RM8,468,775

nominal value 5-year 2% Irredeemable Convertible

Unsecured Loan Stock 2000/2005 (“TIME ICULS

2000/2005”) in relation to the Maturity and the Fifth

and Last Interest Payment of TIME ICULS 2000/2005.

16 December 2005

Date of entitlement to the Fifth and Last Interest

Payment on the outstanding RM8,468,775 nominal

amount of TIME ICULS 2000/2005.

23 December 2005

Date of payment to the Fifth and Last Interest on the

outstanding RM8,468,775 nominal amount of TIME

ICULS 2000/2005 to the ICULS Holders.

27 December 2005

Removal of the outstanding RM8,468,775 nominal

amount of TIME ICULS 2000/2005 from the Official

List of Bursa Malaysia Securities Berhad.

28 December 2005

Date of allotment of 2,832,341 new TIME Shares of

RM1.00 each arising from the compulsory conversion

of the outstanding RM8,468,775 nominal amount of

TIME ICULS 2000/2005 at the Conversion Price of

RM2.99 per New Ordinary Share.


List of Properties held by TIME Groupas at 31 December 2005

Date of Last

Audited Revaluation

Approximate Net Book (“R”)/Date of

Existing Age of Value as at Acquisition

Location Description Tenure Area Use Building 31.12.2005 (“A”)

(RM'000)

TIME Automation and Management Services Sdn Bhd

Lot 60005 Land and a Freehold 108 Vacant 5 years 234,565 18.11.1998

GF–Ground Floor G9 4 storey sq metres (A)

Jalan Trompet Shop Office

Seksyen BB7

Bandar Bukit

Beruntung

48300 Rawang

Selangor Darul Ehsan

Unit No.1-131 Bungalow Lot Freehold 1,234 Vacant - 347 1.3.2002

Bandar Bukit sq metres (A)

Mahkota Bangi

Selangor Darul Ehsan

60 Directors’ Report

63 Statement by Directors

63 Statutory Declaration

64 Report of the Auditors

65 Balance Sheets

66 Income Statements

67 Statement of Changes in Equity

69 Cash Flow Statements

72 Notes to the Financial Statements

Financial Statements


Directors’ Report for the year ended 31 December 2005

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company forthe year ended 31 December 2005.

PRINCIPAL ACTIVITIES

The principal activity of the Company is that of investment holding in telecommunications, engineering services and informationtechnology, whilst the principal activities of the subsidiaries are as stated in Note 3 to the financial statements. There has beenno significant change in the nature of these activities during the financial year.

RESULTSGroup Company

RM’000 RM’000

Net loss for the year (266,040) (274,516)

RESERVES AND PROVISIONS

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

DIVIDENDS

No dividend was paid during the year and the Directors do not recommend any dividend to be paid for the year under review.

DIRECTORS OF THE COMPANY

Directors who served since the date of the last report are:

Datuk Hj Mohd Khalil Dato’ Hj Mohd Noor (Chairman)Amiruddin Abdul Aziz (Managing Director)Dato’ Dr Gan Khuan PohHj Abdullah YusofElakumari KantilalSalmah Binti Sharif

The holdings and deemed holdings in the ordinary shares of the Company and of its related corporations (other than wholly-ownedsubsidiaries) of those who were Directors at year end as recorded in the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares of RM1.00 eachAt At

1.1.2005 Bought Sold 31.12.2005

Shareholdings in which a Director has direct interest

Interest of Datuk Hj Mohd Khalil Dato’ Hj Mohd Noor in:

TIME Engineering Berhad 5,000 - - 5,000

By virtue of his interests in the shares of the Company, Datuk Hj Mohd Khalil Dato’ Hj Mohd Noor is also deemed interested inthe shares of the subsidiaries during the financial year to the extent that TIME Engineering Berhad has an interest.

None of the other Directors holding office at 31 December 2005 had any interest in the ordinary shares of the Company and ofits related corporations during the financial year.

In accordance with the Company’s Articles of Association, Amiruddin Abdul Aziz and Salmah Binti Shariff retire by rotation fromthe Board at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.

Directors’ Report for the year ended 31 December 2005 (continued)


DIRECTORS’ BENEFITS

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit(other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown inthe financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firmof which the Director is a member, or with a company in which the Director has a substantial financial interest.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Companyto acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

ISSUE OF SHARES AND DEBENTURES

During the financial year, the issued and paid-up share capital of the Company was increased from 768,154,883 ordinary sharesof RM1.00 each to 775,244,683 of RM1.00 each by issuance of 7,089,800 ordinary shares of RM1.00 each arising from theconversion of RM21,198,502 nominal value of irredeemable convertible unsecured loan stocks (“ICULS”) at the conversion priceof RM2.99 per share by tendering RM2.99 nominal value of ICULS for every new ordinary shares of RM1.00 each.

OPTIONS GRANTED OVER UNISSUED SHARES

No options were granted to any person to take up unissued shares of the Company during the year.

WARRANTS

As at the end of the financial year, the Company has outstanding 136,936,877 warrants 1996/2006 which entitles the holdersto subscribe for one new ordinary share of RM1.00 each in the Company at any time not exceeding 4 August 2006 at thesubscription price of RM6.30.

IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)

Pursuant to the debt restructuring scheme which was completed in 2001, the Company issued RM86,208,185 nominal value 5-year 2% irredeemable convertible unsecured loan stocks 2000/2005 (“ICULS”) in full satisfaction of the same amount owing tothe Company’s unsecured scheme creditors.

The ICULS bear interest at 2% per annum. The ICULS are convertible into new ordinary shares of RM1.00 each in the Companyduring the conversion period, being the last three (3) years of the tenure of the ICULS, at the conversion price of RM2.99 forevery new ordinary share in the Company; by tendering RM2.99 nominal value of ICULS for every new ordinary share of RM1.00each in the Company; or by way of a surrender and cancellation of the nominal value of the ICULS in multiples of RM1.00 and thebalance of the conversion price, if any, by way of cash. The ICULS were fully converted to ordinary shares as at 31 December2005.

OTHER STATUTORY INFORMATION

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertainthat:

i) all known bad debts have been written off and adequate provision made for doubtful debts, and

ii) all current assets have been stated at the lower of cost and net realisable value.

OTHER STATUTORY INFORMATION (CONTINUED)

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

i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group andin the Company inadequate to any substantial extent, or

ii) that would render the value attributed to the current assets in the Group and in the Company financial statementsmisleading, or

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

iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financialstatements of the Group and of the Company misleading.

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

i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and whichsecures the liabilities of any other person, or

ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.

No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceablewithin the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantiallyaffect the ability of the Group and of the Company to meet their obligations as and when they fall due.

Except as disclosed in the financial statements, in the opinion of the Directors, the results of the operations of the Group and ofthe Company for the financial year ended 31 December 2005 have not been substantially affected by any item, transaction orevent of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end ofthat financial year and the date of this report.

SIGNIFICANT EVENTS

Significant events subsequent to balance sheet date are disclosed in Note 38 to the financial statements.

AUDITORS

The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.

Signed in accordance with a resolution of the Directors:

…………………………………………………………Datuk Hj Mohd Khalil Dato’ Hj Mohd Noor

…………………………………………………………Amiruddin Abdul Aziz

Kuala Lumpur,Date: 17 April 2006

Directors’ Report for the year ended 31 December 2005 (continued)


In the opinion of the Directors, the financial statements set out on pages 65 to 101 are drawn up in accordance with theprovisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fairview of the state of affairs of the Group and of the Company at 31 December 2005 and of the results of their operations andcash flows for the year ended on that date.

Signed in accordance with a resolution of the Directors:

…………………………………………………………Datuk Hj Mohd Khalil Dato’ Hj Mohd Noor

…………………………………………………………Amiruddin Abdul Aziz



Statement by Directors pursuant to Section 169(15) of the Companies Act, 1965

Statutory Declaration pursuant to Section 169(16) of the Companies Act, 1965

I, Zulina Mohammed Salleh, the officer primarily responsible for the financial management of TIME Engineering Berhad, dosolemnly and sincerely declare that the financial statements set out on pages 65 to 101 are, to the best of my knowledge andbelief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions ofthe Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed in Kuala Lumpur on 17 April 2006.

.................................................Zulina Mohammed Salleh

Before me:

We have audited the financial statements set out on pages 65 to 101. The preparation of the financial statements is theresponsibility of the Company’s Directors.

It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinionto you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assumeresponsibility to any other person for the content of this report.

We conducted our audit in accordance with approved Standards on Auditing in Malaysia. These standards require that we planand perform the audit to obtain all the information and explanations which we consider necessary to provide us with evidence togive reasonable assurance that the financial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence relevant to the amount and disclosures in the financial statements. An audit also includes an assessment of theaccounting principles used and significant estimates made by the Directors as well as evaluating the overall adequacy of thepresentation of information in the financial statements. We believe our audit provides a reasonable basis for our opinion.

In our opinion:(a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable

approved accounting standards in Malaysia so as to give a true and fair view of:

i) the state of affairs of the Group and of the Company at 31 December 2005 and the results of their operations andcash flows for the year ended on that date; and

ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of theGroup and of the Company; and

(b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company andthe subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the saidAct.

We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financialstatements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financialstatements and we have received satisfactory information and explanations required by us for those purposes.

The audit reports on the financial statements of the subsidiaries were not subject to any qualification and did not include anycomment made under subsection (3) of Section 174 of the Act.

KPMG Siew Chin Kiang @ Seow Chin KiangFirm Number: AF 0758 PartnerChartered Accountants Approval Number: 2012/11/06(J)



Report of the Auditors to the members of TIME Engineering Berhad


Balance Sheets at 31 December 2005

Group CompanyNote 2005 2004 2005 2004

RM’000 RM’000 RM’000 RM’000

Property, plant and equipment 2 14,653 12,096 456 417Investments in subsidiaries 3 - - 53,265 53,894Investments in associates 4 773,643 866,101 773,510 864,768Other investments 5 40,299 170,618 39,957 170,614Intangible assets 6 1,076 1,235 - - Deferred tax assets 21 731 4,731 - -

830,402 1,054,781 867,188 1,089,693

Current assetsInventories 7 10,728 1,637 - - Trade and other receivables 8 53,684 607,153 3,007 2,823Amount due from subsidiaries 9 - - 21,545 43,857Amount due from associates 10 89 92 89 92Tax recoverable 17,206 12,952 12,866 12,751Cash and cash equivalents 11 88,441 57,123 41,478 37,291

170,148 678,957 78,985 96,814Current liabilities

Trade and other payables 12 56,919 120,079 4,375 4,355Amount due to subsidiaries 9 - - 2,648 2,237Bank borrowings 13 1,820 958,975 - 516,471 Portion of bonds due within one year 20 108,940 224,177 108,940 224,177Taxation 429 2,648 - -

168,108 1,305,879 115,963 747,240

Net current assets/ (liabilities) 2,040 (626,922) (36,978) (650,426)

832,442 427,859 830,210 439,267Financed by:-

Capital and reserves

Share capital 14 775,245 768,155 775,245 768,155Reserves (621,424) (369,329) (610,658) (350,087)ICULS 15 - 21,199 - 21,199

Shareholders’ funds 153,821 420,025 164,587 439,267Minority shareholders’ interests 18 12,405 7,645 - -

Long term and deferred liabilities

Long term loans 19 556,023 189 556,023 - Bonds 20 109,600 - 109,600 - Deferred tax liabilities 21 593 - - -

666,216 189 665,623 -

832,442 427,859 830,210 439,267

The financial statements were approved and authorised for issue by the Board of Directors on 17 April 2006.

The notes set out on pages 72 to 101 form an integral part of, and should be read in conjunction with, these financial statements.


Income Statements for the year ended 31 December 2005

Group CompanyNote 2005 2004 2005 2004

RM’000 RM’000 RM’000 RM’000

Revenue 22 173,933 444,077 1,568 32,149 Cost of sales (95,628) (325,443) - -

Gross profit 78,305 118,634 1,568 32,149 Sales and marketing expenses (15,275) (51,217) - - Administrative expenses (9,063) (8,029) (1,330) (1,361)Other operating expenses (37,132) (47,496) (7,614) (5,608) Other operating income 23 7,145 81,753 4,313 4,091Waiver of amount due from subsidiary company - - - (16,428)Writeback of diminution

in value of other investments - 4,481 - 4,481Impairment loss - investment in:

- an associate company 4 - - (91,258) (1,401,513)- other investments 5 (123,429) - (122,878) -

Operating (loss)/profit 24 (99,449) 98,126 (217,199) (1,384,189)Finance costs 26 (63,515) (71,258) (56,824) (58,694)Gain on disposal of investments 136 - 136 - Loss on disposal/dilution of interests in a

subsidiary company 27 (906) (14,983) (629) - Share of loss of associates 28 (90,823) (371,549) - - Interest income 602 626 - -

Loss before tax (253,955) (359,038) (274,516) (1,442,883)Tax (expense)/credit - Company and

subsidiaries 29 (7,177) 9,341 - 4,014- Associates 29 (435) (597) - -

Net loss after tax (261,567) (350,294) (274,516) (1,438,869)Minority interests 18 (4,473) (16,837) - -

Net loss for the year (266,040) (367,131) (274,516) (1,438,869)

Basic loss per ordinary share (sen) 30 (34.5) (49.8)



Statement of Changes in Equityfor the year ended 31 December 2005

Non-distributable Share Capital Share Accumulatedcapital ICULS reserve premium losses Total

Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2004 765,029 14,228 18,419 1,696,684 (1,709,950) 784,410Loss on ICULS held by

subsidiary companiesdisposed to third parties - 16,316 - - (12,974) 3,342

Interest expense on ICULS - - - - (596) (596)

Net gains and losses not recognised in theincome statements - 16,316 - - (13,570) 2,746

Issue of shares:Conversion of ICULS 3,126 (9,345) - 6,219 - -

Net loss for the year - - - - (367,131) (367,131)

At 31 December 2004/1 January 2005 768,155 21,199 18,419 1,702,903 (2,090,651) 420,025

Interest expense on ICULS - - - - (164) (164)

Net losses not recognisedin the income statements - - - - (164) (164)

Issue of shares:Conversion of ICULS 7,090 (21,199) - 14,109 - -

Net loss for the year - - - - (266,040) (266,040)

At 31 December 2005 775,245 - 18,419 1,717,012 (2,356,855) 153,821

Note 14 Note 15 Note 16 Note 17


Statement of Changes in Equity for the year ended 31 December 2005 (continued)


Non-distributable Share Capital Share Accumulatedcapital ICULS reserve premium losses Total

Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2004 765,029 30,544 18,419 1,696,684 (631,944) 1,878,732

Interest expense on ICULS - - - - (596) (596)Net losses not recognised

in the income statements - - - - (596) (596)Issue of shares:

Conversion of ICULS 3,126 (9,345) - 6,219 - - Net loss for the year - - - - (1,438,869) (1,438,869)

At 31 December 2004/1 January 2005 768,155 21,199 18,419 1,702,903 (2,071,409) 439,267

Interest expense on ICULS - - - - (164) (164)Net losses not recognised

in the income statements - - - (164) (164)Issue of shares:

Conversion of ICULS 7,090 (21,199) - 14,109 - - Net loss for the year - - - - (274,516) (274,516)

At 31 December 2005 775,245 - 18,419 1,717,012 (2,346,089) 164,587

Note 14 Note 15 Note 16 Note 17



Cash Flow Statements for the year ended 31 December 2005

Group Company2005 2004 2005 2004

RM’000 RM’000 RM’000 RM’000

Cash receipts from customers 653,103 79,264 - - Cash payments to suppliers (94,765) (439,826) (1,690) (1,770)Cash payments to employees and for expenses (49,075) (38,191) (6,357) (1,660)

Cash flows from/(used in) operating activities 509,263 (398,753) (8,047) (3,430)

Taxation (paid)/refunded (9,074) 5,126 - 8,495Interest received 891 897 891 897

Net cash generated from/(used in) operating activities 501,080 (392,730) (7,156) 5,962

Investing ActivitiesAdvances to subsidiaries - - (77,173) (53,948)Capital repayment by associate companies 1,200 169,798 - 169,798Dividend received 1,001 - 1,296 1,702Interest received 602 160 - - Net cash outflow from dilution of interest

in a subsidiary company (i) - (5,222) - - Net cash outflow from acquisition of

subsidiary companies (ii) - (649) - - Proceeds from disposal of investments 7,914 3,342 7,914 - Proceeds from disposal of property,

plant and equipment 19 2,122 13 37Purchase of property, plant and equipment (6,519) (4,743) (333) (269)Purchase of Cyberplus shares - - - (38)Purchase of EPE Power Corporation

Berhad rights issue - (3,298) - (3,298)

Net cash generated from/(used in)investing activities 4,217 161,510 (68,283) 113,984

Financing ActivitiesDividend paid by subsidiary to minority shareholders (447) - - - Drawdown of bank borrowings 73,476 414,741 - - Interest paid (26,596) (99,616) (17,932) (82,123)Redemption of USD Bond (4,460) (159,508) (4,460) (159,508)Repayment from subsidiary companies - - 102,018 35,878Repayment of revolving credit (511,873) - - - Repayment of term loans - (38,374) - (38,374)


Cash Flow Statements for the year ended 31 December 2005 (continued)


Group Company2005 2004 2005 2004

RM’000 RM’000 RM’000 RM’000Financing Activities (continued)

Repayment of borrowings (3,473) (6,743) - - Repayment of lease payables - (1,500) - -

Net cash (used in)/ generated fromfinancing activities (473,373) 109,000 79,626 (244,127)

Net change in cash and cash equivalent 31,924 (122,220) 4,187 (124,181)Cash and cash equivalents at beginning

of year 56,466 178,686 37,291 161,472

Cash and cash equivalents at endof financial year (iii) 88,390 56,466 41,478 37,291

Notes to the cash flow statements

i) Dilution of interests in subsidiary companies

In the previous year, TIME Engineering Berhad’s equity interests in Ranhill Power Berhad (“RPB”) (formerly known as EPEPower Corporation Berhad) was diluted from 54.96% to 5.46%. Consequently, the Group no longer consolidates the resultsof RPB Group and TIME Engineering Berhad’s interests in RPB was diluted to a simple investment.

Effect of dilution

The dilution had the following cash flow effects as at 31 December 2004.Group2004

RM’000

Non-current assets 70,974Current assets 111,225Current liabilities (153,662)Long-term liabilities (13,554)

Net assets disposed 14,983Less: Loss on dilution of interests in investment in subsidiary companies (14,983)

Total cash consideration - Less: Cash and cash equivalents disposed off (5,222)

Net cash outflow from dilution of interests in subsidiary companies (5,222)


Cash Flow Statements for the year ended 31 December 2005 (continued)


Notes to the cash flow statements (continued)

ii) Acquisition of subsidiary companies

In the previous year, the fair value of assets and liabilities which arose in the acquisition of X-Calibre Online Sdn. Bhd. andKrisbiz Sdn. Bhd. and the cash flow effects are as follows:

Group2004

RM’000

Property, plant and equipment 168Current assets 696Current liabilities (3,943)

Net liabilities acquired (3,079)Goodwill on acquisition 3,879

Total cash consideration paid 800 Cash and cash equivalents acquired (151)

Net cash outflow from acquisition of subsidiary companies 649

iii) Cash and cash equivalents

Cash and cash equivalents included in the cash flow statements comprise the following balance sheet amounts:Group Company

2005 2004 2005 2004RM’000 RM’000 RM’000 RM’000

Deposits with licensed banks- Unrestricted 58,197 52,009 40,944 34,576- Restricted 27,086 - - -

85,283 52,009 40,944 34,576

Cash and bank balances- Unrestricted 3,095 5,114 534 2,715- Restricted 63 - - -

3,158 5,114 534 2,715

88,441 57,123 41,478 37,291

Bank overdrafts (51) (657) - -

88,390 56,466 41,478 37,291



Notes to the Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following accounting policies are adopted by the Group and by the Company and are consistent with those adopted inthe previous years.

(a) Basis of accounting

The financial statements of the Group and of the Company are prepared on the historical cost basis except as disclosedin the notes to the financial statements and in compliance with the provisions of the Companies Act, 1965 andapplicable approved accounting standards in Malaysia.

(b) Basis of consolidation

Subsidiaries are those enterprises controlled by the Company. Control exists when the Company has the power, directlyor indirectly to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities.

The financial statements of subsidiaries are included in the consolidated financial statements from the date that controleffectively commences until the date that control effectively ceases. Subsidiaries are consolidated using the acquisitionmethod of accounting.

Under the acquisition method of accounting, the results of subsidiaries acquired or disposed of during the year areincluded from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of thesubsidiaries' net assets are determined and these values are reflected in the Group financial statements. Thedifference between the acquisition cost and the fair values of the subsidiaries’ net assets is reflected as goodwill ornegative goodwill as appropriate.

Intra group transactions and balances are eliminated on consolidation. Unrealised profit and losses resulting fromintragroup transactions are also eliminated except for unrealised losses which cannot be recovered.

(c) Associates

An associate is a non-subsidiary company in which the Company has long-term equity interests of between 20% to50% and where the Company has representation on the Board and is in a position to exercise significant influence inits management.

The consolidated financial statements include the total recognised gains and losses of associates on an equityaccounted basis from the date that significant influence effectively commences until the date that significant influenceeffectively ceases.

Unrealised profits arising on transactions between the Group and its associates which are included in the carryingamount of the related assets and liabilities are eliminated partially to the extent of the Group’s interests in theassociates. Unrealised losses on such transactions are also eliminated partially unless cost cannot be recovered.

Goodwill on acquisition is calculated based on the difference between the cost of investment and the Group’s share ofnet assets of the associates at the date of acquisition.

(d) Property, plant and equipment

Freehold land is stated at cost. All other property, plant and equipment are stated at cost/valuation less accumulateddepreciation and accumulated impairment losses.

Property, plant and equipment retired from active use and held for disposal are stated at the carrying amount at thedate when the asset is retired from active use, less impairment losses, if any.

Notes to the Financial Statements (continued)


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(d) Property, plant and equipment (continued)

Depreciation

Freehold land is not amortised. Leasehold land and buildings are amortised over the unexpired lives of the leases.The straight line method is used to write off the cost of the other assets over the term of their estimated useful livesat the following principal annual rates:

Buildings 2%Improvements 20%Plant and machinery 5% - 20%Motor vehicles 20% Office equipment, furniture and fittings 5% - 50%Loose tools 10% - 100%Computer equipment and software 33 1/3%

(e) Intangible asset

(i) Goodwill

Goodwill represents the excess of the cost of acquisition over the fair value of the net identifiable assets acquiredand is stated at cost less accumulated amortisation and accumulated impairment losses.

Goodwill is amortised from the date of initial recognition over its estimated useful life of not more than 20 years.

(ii) License fees

License fees incurred for rights to manufacture and assemble certain licensed products are amortised over aperiod of five years.

(iii) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledgeand understanding, is recognised in the income statement as an expense as incurred.

Expenditure on development activities, whereby research findings are applied to a plan or design for theproduction of new or substantially improved products and processes, is capitalised if the product or process istechnically and commercially feasible and the Group has sufficient resources to complete development. Theexpenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads.Other development expenditure is recognised in the income statement as an expense as incurred.

Capitalised development expenditure is amortised and recognised as an expense on a systematic basis so as toreflect the pattern in which the related economic benefits are recognised over three years commencing in theyear where the related sales are first made.

(f) Finance leases

Leases in which the Group and the Company assume substantially all the risks and rewards of ownership are classifiedas finance leases. Assets acquired by way of finance leases are stated at an amount equal to the lower of their fairvalues and the present value of the minimum lease payments at the inception of the leases, less accumulateddepreciation and impairment losses.

In calculating the present value of the minimum lease payments, the discount rate is the interest rate implicit in thelease, if this is practicable to determine, if not, the Group’s incremental borrowing rate is used.




(g) Investments

Long term investments, other than in subsidiaries and associates, are stated at cost. An allowance is made when theDirectors are of the view that there is a diminution in their value which is other than temporary.

Long term investments in subsidiaries and associates are stated at cost in the Company, less impairment loss whereapplicable.

Short term quoted investments are stated at the lower of cost and market value on an investment portfolio basis.

(h) Trade and other receivables

Trade and other receivables are stated at cost less allowance for doubtful debts.

(i) Employee benefits

(i) Short term employee benefits

Wages, salaries and bonuses are recognised as expenses in the year in which the associated services arerendered by employees of the Group. Short term accumulating compensated absences such as paid annual leaveare recognised when services are rendered by employees that increase their entitlement to future compensatedabsences, and short term non-accumulating compensated absences such as sick leave are recognised whenabsences occur.

(ii) Defined contribution plans

Obligations for contributions to defined contribution plans are recognised as an expense in the income statementas incurred.

(j) Provisions

A provision is recognised when it is probable that an outflow of resources embodying economic benefits will be requiredto settle a present obligation (legal or constructive) as a result of a past event and a reliable estimate can be made ofthe amount.

(k) Liabilities

Borrowings and trade and other payables are stated at cost.

(l) Amount due from contract customers

Amount due from contract customers on contracts is stated at cost plus attributable profits less foreseeable lossesand less progress billings. Cost includes all direct costs and other related costs. Where progress billings exceed theaggregate amount due from contract customers plus attributable profits less foreseeable losses, the net creditbalance on all such contracts is shown in trade and other payables as amount due to contract customers.

(m) Inventories

Finished goods are stated at the lower of cost and net realisable value with weighted average cost being the main basisfor cost. Cost consists of purchase costs.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessaryto make the sale.

(n) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investmentswhich have an insignificant risk of changes in value. For the purpose of the cash flow statement, cash and cashequivalents are presented net of bank overdrafts.

In the previous financial year, the Cash Flow Statements was prepared under the Indirect Method. For the currentfinancial year, as allowed for under FRS 107 (Cash Flow Statements), the Group adopted the Direct Method in thepreparation of the Cash Flow Statements. The comparative figures have been re-presented to conform with the currentmethod.




(o) Impairment

The carrying amount of assets, other than inventories, assets arising from contracts, deferred tax assets and financialassets (other than investments in subsidiaries and associates), are reviewed at each balance sheet date to determinewhether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount isestimated. An impairment loss is recognised whenever the carrying amount of an asset or the cash-generating unit towhich it belongs exceeds its recoverable amount. Impairment losses are recognised in the income statement.

The recoverable amount is the greater of the asset’s net selling price and its value in use. In assessing value in use,estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects currentmarket assessments of the time value of money and the risks specific to the asset. For an asset that does not generatelargely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the assetbelongs.

An impairment loss in respect of goodwill is not reversed unless the loss was caused by a specific external event of anexceptional nature that is not expected to recur and subsequent external events have occurred that reverse the effectof that event.

In respect of other assets, an impairment loss is reversed if there has been a change in the estimates used todetermine the recoverable amount.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amountthat would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Thereversal is recognised in the income statement.

(p) Income tax

Tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the incomestatement except to the extent that it relates to items recognised directly in equity, in which case it is recognised inequity.

Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted orsubstantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided, using the liability method, on temporary differences arising between the tax bases of assetsand liabilities and their carrying amounts in the financial statements. Temporary differences are not recognised forgoodwill not deductible for tax purposes and the initial recognition of assets or liabilities that at the time of thetransaction affects neither accounting nor taxable profit. The amount of deferred tax provided is based on the expectedmanner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted orsubstantially enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available againstwhich the asset can be utilised.

(q) Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated to Ringgit Malaysia at rates of exchange ruling at the date of thetransactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translatedto Ringgit Malaysia at the foreign exchange rates ruling at that date. Foreign exchange differences arising ontranslation are recognised in the income statement.

The closing rates used in the translation of foreign currency monetary assets and liabilities are as follows:

2005 2004RM RM

1 USD 3.78 3.80




(r) Discontinuing operations

A discontinuing operation is a clearly distinguishable component of the Group’s business that is disposed or terminatedpursuant to a single plan, which represents a separate major line of business or geographical area of operations and can bedistinguished operationally and for financial reporting purposes.

(s) Revenue

(i) Goods sold and services rendered

Revenue from sale of goods is measured at the fair value of the consideration receivable and is recognised in the incomestatement when the significant risks and rewards of ownership have been transferred to the buyer.

Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of thetransaction at the balance sheet date. The stage of completion is assessed by reference to services performed to dateas a percentage of total services to be performed. Where the outcome of the transaction cannot be estimated reliably,revenue is recognised only to the extent of the expenses recognised that are recoverable.

(ii) Contracts

Revenue from fixed price contracts is recognised on the percentage of completion method, measured by reference tosurveys of work performed.

When the outcome of a contract cannot be estimated reliably, revenue is recognised only to the extent of contractcosts that is probable to be recoverable and contract costs are recognised as an expense in the year in which theyare incurred.

An expected loss on a contract is recognised immediately in the income statement.

(iii) Dividend income

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

(iv) Interest income

Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset.

(t) Expenses

(i) Operating lease payments

Payments made under operating leases are recognised in the income statement on a straight-line basis over the termof the lease. Lease incentives received are recognised in the income statement as an integral part of the total leasepayments made.

(ii) Finance costs

All interest and other costs incurred in connection with borrowings are expensed as incurred. The interest componentof finance lease payments is recognised in the income statement so as to give a constant periodic rate of interest onthe outstanding liability at the end of each accounting year.

(u) Government grants

Grants from the government are recognised where there is reasonable assurance that the grant will be received and theCompany will comply with all attached conditions.

Government grant income relating to costs is recognised in the income statement during the year necessary to match themwith the costs they are intended to compensate.

Government grant income relating to purchase of assets is deferred and credited to the income statement on the straightline basis over the expected lives of the related assets.

2. PROPERTY, PLANT AND EQUIPMENT

OfficeGroup equipment, Capital-

Land and Plant and Motor furniture Loose Computer work-in-Cost/Valuation buildings machinery vehicles and fittings tools systems progress Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2005 2,019 3,992 253 1,918 - 28,734 1,910 38,826

Additions 156 50 154 175 - 1,895 5,311 7,741Disposals (6) - (42) (52) - (2,261) - (2,361)Written off (383) - - (99) - (1,462) - (1,944)Reclassifications 300 106 - 116 - 2,170 (2,692) -

At 31 December 2005 2,086 4,148 365 2,058 - 29,076 4,529 42,262

Accumulated depreciation

At 1 January 2005 935 798 108 1,127 - 23,762 - 26,730

Depreciation charge 263 830 73 207 - 3,739 - 5,112

Disposals (4) - (43) (21) - (2,253) - (2,321)Written off (380) - - (96) - (1,436) - (1,912)

At 31 December 2005 814 1,628 138 1,217 - 23,812 - 27,609

Net book valueAt 31 December

2005 1,272 2,520 227 841 - 5,264 4,529 14,653

At 31 December 2004 1,084 3,194 145 791 - 4,972 1,910 12,096

For the year ended 31 December 2004Depreciation charge 237 1,227 50 320 6 10,915 - 12,755





2. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Officeequipment, Computer

furniture equipmentLand and Motor and andbuildings vehicles fittings software Total

Company RM’000 RM’000 RM’000 RM’000 RM’000

Cost/Valuation At 1 January 2005 83 249 172 640 1,144Additions 46 154 13 111 324Disposals - (42) (1) - (43)

At 31 December 2005 129 361 184 751 1,425

Accumulated depreciation At 1 January 2005 55 107 120 445 727Depreciation charge 17 72 22 174 285Disposals - (43) - - (43)

At 31 December 2005 72 136 142 619 969

Net book value At 31 December 2005 57 225 42 132 456

At 31 December 2004 28 142 52 195 417

For the year ended31 December 2004Depreciation charge 16 41 98 - 155

The net book value of land and buildings at the end of the year comprise of the following:

Group Company2005 2004 2005 2004

RM’000 RM’000 RM’000 RM’000

Freehold land 347 347 - -Buildings and improvement 925 737 58 28

1,272 1,084 58 28

Security

Certain property, plant and equipment of the Group amounting to Nil (2004 - RM3,049,000) are charged to banks assecurity for borrowings.



3. INVESTMENTS IN SUBSIDIARIES

Company2005 2004

RM’000 RM’000Unquoted shares

At cost 107,517 108,874Less: Impairment loss (54,252) (54,980)

53,265 53,894

The principal activities of the companies in the Group, all incorporated in Malaysia and the interests of TIME EngineeringBerhad are shown below:-

Effective ownershipinterests

Name of company Principal Activities 2005 2004

Information Communicatiom Technology

Dagang Net Technologies Development, management and provision of business to 60.2% 63.3%Sdn. Bhd. * business (B2B) e-commerce and computerised transaction

facilitation services.

Dagang Net Commerce Dormant. 60.2% 63.3%Sdn. Bhd.*(Indirect subsidiary company)

Dagang Net Solutions Dormant. 60.2% 63.3%Sdn. Bhd.*(Indirect subsidiary company)

Opbase Trading Sdn. Bhd.* Dormant. 30.7% 32.3%(Indirect subsidiary company)

TIME Systems Integrators Sdn. Bhd. Supply, delivery, installation, testing, commissioning, and 100% 100%maintenance of teaching aids equipment.

TIME Quantum Technology Sdn. Bhd. Providing managed and internet-related services and supply 100% 100%of computer hardware, software and peripherals.

X-Calibre Online Sdn. Bhd. Dormant. 100% 100% (Indirect subsidiary company)

Krisbiz Sdn. Bhd. Dormant 100% 100%

Engineering servicesTIME Automation & Supply, installation and maintenance of engineering and 100% 100%

Management Services Sdn. Bhd. other equipment for expressways and other general engineering works.

TIME Spectrum Dormant. 100% 100%Communication Sdn. Bhd.(Indirect subsidiary company)



3. INVESTMENTS IN SUBSIDIARIES (CONTINUED)



CorporateToplink Advisory and Investment holding. 100% 100%

Management Services Sdn. Bhd.

World Trade Facilitation Investment holding. 78.8% 78.8%Sdn. Bhd. ** (under members voluntary liquidation)

Smartcard Systems (M) Dormant. 51% 51%Sdn. Bhd.

Eternaland Sdn. Bhd. Dormant. 100% 100%

Cyberplus Sdn. Bhd. Dormant. 100% 100%

* On 17 October 2005, the Group’s equity interest in Dagang Net Technologies Sdn Bhd (“DNT”) was diluted from 63.3%to 60.2% following the transfer of shares in DNT to the original promoter of DNT as a fulfillment of its obligationpursuant to the Shareholders Agreement dated 10 April 1992.

As of 31 October 2005, DNT has net assets of approximately RM28,693,000 and the loss on disposal to the Groupis approximately RM906,000 (Note 27).

** As part of the Group’s effort to streamline the shareholding in DNT, on 8 February 2006, the shares in DNT held byWorld Trade Facilitation Sdn Bhd were distributed to its members resulting in the Company’s direct shareholding inDNT to increase to 60.2%.

Effect of acquisition

In the previous year, the acquisition of X-Calibre Online Sdn. Bhd. and Krisbiz Sdn. Bhd. had the following effect on the Group’sfinancial statements as at 31 December 2004:

Group2004

RM’000Income StatementRevenue 7Cost of sales (80)

Gross loss (73)Other operating income 92Administrative expenses (72)Other operating expenses (293)

Operating loss (346) Interest expense -

Loss before tax (346)Income tax expense -

Net loss (346)



3. INVESTMENTS IN SUBSIDIARIES (CONTINUED)

Effect of acquisition (continued)

Group2004

RM’000Balance SheetCurrent assets 508Current liabilities (3,933)

Net liabilities acquired (3,425)Goodwill on acquisition 3,879Less: Amortisation of goodwill (194)Goodwill written off (2,660)

Decrease in Group’s net assets (2,400)

4. INVESTMENTS IN ASSOCIATES

Group Company2005 2004 2005 2004

RM’000 RM’000 RM’000 RM’000

Quoted shares 1,184,065 1,184,065 2,365,783 2,365,783 Unquoted shares and loan stocks 1,383 2,583 - -

1,185,448 1,186,648 2,365,783 2,365,783Share of post-acquisition reserves (411,805) (320,547) - -

Less: Impairment loss - - (1,592,273) (1,501,015)

773,643 866,101 773,510 864,768

Market value of quoted associates 520,714 696,172 520,714 696,172

The Group’s investments in associates of RM773,643,000 (2004 - RM866,101,000) is represented by its share of netassets other than goodwill in the associates.

The Group and the Company’s investment in TIME dotCom Berhad as at 31 December 2005 exceeded its quoted marketvalue by approximately RM253 million (2004 – RM169 million). During the year, the Company made an impairment loss ofRM91,258,000 (2004 - RM1,401,513,000) in relation to the write down of investment in TIME dotCom Berhad toapproximate its carrying value at Group level. The Board of Directors is of the opinion that the net carrying value ofinvestment in associates as at 31 December 2005 is recoverable.



4. INVESTMENTS IN ASSOCIATES (CONTINUED)

The significant associates of the Group, all incorporated in Malaysia are as follows:



TIME dotCom Berhad Investment holding in telecommunication companies 44.7% 44.7%providing communication and internet services (including wireless transmission) through its established domestic and international network.

UNITIME Submarine Dormant. 50% 50%Ventures Sdn. Bhd.*(Indirect associate company)

Macnet CCN Sdn. Bhd. Dormant. 16.1% 16.9%(Indirect associate company)

* under voluntary liquidation

A portion of the Company’s quoted shares in the associate is pledged with the trustee of the USD Bonds (Note 20) and alicensed bank (Note 19) as security for banking facilities granted to the Company. The carrying values of the quoted sharesare as follows:

Group Company2005 2004 2005 2004

RM’000 RM’000 RM’000 RM’000Pledged with:

Trustees of USD Bonds 265,867 297,234 265,867 297,234Licensed bank 356,693 398,776 356,693 398,776

622,560 696,010 622,560 696,010

5. OTHER INVESTMENTS

Group Company2005 2004 2005 2004

RM’000 RM’000 RM’000 RM’000

Quoted shares, at cost 163,704 172,912 785,391 795,489 Less: Accumulated impairment loss (123,435) (2,324) (745,464) (624,905)

40,269 170,588 39,927 170,584

Unquoted shares, at cost 70 70 70 70Less: Accumulated impairment loss (40) (40) (40) (40)

30 30 30 30

40,299 170,618 39,957 170,614

Market value of quoted shares 40,269 124,299 39,927 124,299

Certain of the Company’s investment in quoted shares with carrying value of RM31,470,000 (2004 – RM136,098,000)are deposited with the trustee of the USD Bonds as security for the USD Bonds (Note 20).



6. INTANGIBLE ASSETS - GROUPDevelopment

Goodwill expenditure TotalCost RM’000 RM’000 RM’000

At 1 January / 31 December 1,079 315 1,394

Accumulated amortisation At 1 January 54 105 159Amortisation charge 54 105 159

At 31 December 108 210 318

Net book value

At 31 December 2005 971 105 1,076

At 31 December 2004 1,025 210 1,235

For the year ended 31 December 2004Amortisation charge 194 105 299

The balance of the development expenditure incurred by the Group is in respect of a blueprint design for the components of MyPort.

7. INVENTORIESGroup

2005 2004 RM’000 RM’000

At cost:Finished goods

- Goods on hand 3,645 1,565- Goods in transit 7,020 -

Smart cards and smartcard readers 63 72

10,728 1,637

8. TRADE AND OTHER RECEIVABLESGroup Company

2005 2004 2005 2004RM’000 RM’000 RM’000 RM’000

Trade receivables 38,753 523,801 - - Less: Allowance for doubtful debts (6,664) (10,461) - -

32,089 513,340 - -

Retention sum 2,522 2,899 - - Less: Allowance for doubtful debts (169) (546) - -

2,353 2,353 - -

34,442 515,693 - -

Other receivables and prepaid expenses 8,139 20,590 3,292 3,108Less: Allowance for doubtful debts (285) (285) (285) (285)

7,854 20,305 3,007 2,823

Amount due from contract customers 11,388 71,155 - -

53,684 607,153 3,007 2,823



8. TRADE AND OTHER RECEIVABLES (CONTINUED)

Amount due from contract customers, consists of the following:Group

2005 2004RM’000 RM’000

Aggregate costs incurred to date 11,388 71,155Add: Attributable profit - -

11,388 71,155Less: Progress billings accrued - -

Amount due from contract customers 11,388 71,155

During the year, trade and other receivables amounting to RM5,911,000 were written off against allowances for doubtfuldebts.

As at 31 December 2004 an amount of RM500.5 million (RM486.3 million in trade receivables and RM14.2 million inother receivables, deposits and prepayments) was receivable for work performed pursuant to the Ministry of Education’steaching and learning of Science and Mathematics in English Program Phase II Contract (“MOE Contract Phase II”).

The entire receivables for the work performed pursuant to the MOE Contract Phase II was disposed of for a net purchaseconsideration of RM501.6 million under a Debt Purchase Agreement and Deed of Assignment dated 25 March 2005(“Disposal”). The Disposal was pursuant to a Master Programme Agreement dated 23 March 2005 as approved by theSecurities Commission under the guidelines on the offering of asset-backed securities.

On 5 April 2005, the proceeds from the Disposal was utilised to fully settle the outstanding credit facility of RM438 million(Note 13) in relation to the MOE Contract Phase II.

9. AMOUNT DUE FROM/(TO) SUBSIDIARIES

The amount due from/(to) subsidiaries consist of the following:Company

2005 2004RM’000 RM’000

Amount due from subsidiaries 22,156 44,468Less: Allowance for doubtful debts (611) (611)

21,545 43,857

Amount due to subsidiaries 2,648 2,237

Certain inter-company advances bear interest at 4% (2004 - 4%) per annum with no fixed repayment terms.

10. AMOUNT DUE FROM ASSOCIATES

Amount owing by associates, arose mainly from non-trade transactions which are unsecured, interest free and have no fixedrepayment terms and trade transactions, which have credit terms ranging from 30 to 90 days, respectively.



11. CASH AND CASH EQUIVALENTS

Group Company2005 2004 2005 2004

RM’000 RM’000 RM’000 RM’000

Deposits with licensed banks 85,283 52,009 40,944 34,576Cash and bank balances 3,158 5,114 534 2,715

88,441 57,123 41,478 37,291

Included in cash and bank balances and deposits with licensed banks of the Group is a sum of RM27,148,904 (2004 - NIL)pledged to banks for credit facilities granted to a subsidiary.

12. TRADE AND OTHER PAYABLESGroup Company

2005 2004 2005 2004RM’000 RM’000 RM’000 RM’000

Trade payables 27,638 78,841 - - Other payables and accrued expenses 26,514 35,571 1,608 1,092Deferred grant income - 139 - - Interest payable 2,767 5,528 2,767 3,263

56,919 120,079 4,375 4,355

Trade payables of the Group includes retention payables amounting to RM524,000 (2004 - RM524,000).

13. BANK BORROWINGS Group Company

2005 2004 2005 2004RM’000 RM’000 RM’000 RM’000

Muamalat cash line - overdraft (unsecured) 51 657 - -

Al-Murabahah revolving credit facility (secured) - 3,000 - - Revolving credit (secured) - 438,397 - - Trust receipts (secured) 1,602 - - - Term loan (secured) (Note 19) - 516,471 - 516,471 Al-Ijarah loan (secured) (Note 19) 167 450 - -

1,820 958,975 - 516,471

Muamalat Cash LineThe Muamalat overdraft cash line bears a profit margin at 7.8% (2004 - 7.90%) per annum.

Al-Murabahah revolving credit In the previous year, the Al-Murabahah revolving credit facility which can be renewed annually is secured by way of a firstcharge over the fixed and floating assets of a subsidiary company. The Al-Murabahah revolving credit bears a profit marginof 6.5% to 7.4% (2004 – 6.5% to 7.4%) per annum.



13. BANK BORROWINGS (CONTINUED)

Revolving CreditThe revolving credit facility bears interest charges at rates ranging from 4.50% to 5.71% (2004 - 4.50% to 5.71%) perannum. In the previous year, the facility was secured by the following:

(i) Debenture to charge, by way of creating a first fixed and floating charge over the assets and properties of a subsidiarycompany;

(ii) Assignment of Revenue Account of the MOE Contract Phase II, by way of assigning all its rights, interest, titles andbenefits in and under the Revenue Account and all monies standing to the credit of the said Revenue Account;

(iii) Assignment of Sinking Fund Account of the MOE Contract Phase II, by way of assigning all its rights, interest, titlesand benefits in and under the said Sinking Fund Account;

(iv) Assignment of Supplier Performance Bonds in respect of the MOE Contract Phase II, by way of assigning all its rights,interest, titles and benefits in and under the said Supplier Performance Bonds; and

(v) Assignment of Insurances in respect of the MOE Contract Phase II, by way of assigning all its rights, interest, titlesand benefits in and under all policies and contract of insurance which are required to be entered into or procured bythe Company and/or the supplier in connection with the MOE Contract Phase II.

Trust receiptsThe trust receipts facility is secured by a Memorandum of Deposit and irrevocable letter of set-off over fixed deposits of asubsidiary. The facility bears an interest at 6.5% per annum.

Al-Ijarah loanThe Al-Ijarah loan is repayable in 36 monthly instalments from May 2003. The Al-Ijarah loan is secured by a first chargeover the fixed and floating assets of a subsidiary company. The Al-Ijarah loan bears a profit margin at 7.8% (2004 - 7.90%)per annum.

All the above bank borrowings utilised are denominated in Ringgit Malaysia.

14. SHARE CAPITALGroup and Company2005 2004

RM’000 RM’000Authorised:

Ordinary shares of RM1.00 each 2,000,000 2,000,000

Issued and fully paid:Balance at 1 January 768,155 765,029Arising from conversion of loan stocks 7,090 3,126

Balance at 31 December 775,245 768,155

Warrants

As at the end of the financial year, the Company has the following outstanding warrants:

Number of warrants

outstanding asWarrants Exercise price Expiry date of 31.12.2005

Warrants 1996/2006 RM6.30 4 August 2006 136,936,877

Warrants 1996/2006 was issued pertaining to the redeemable secured zero-coupon bonds 1996/2001 (Note 20). In1999, upon obtaining approvals from the Securities Commission, the shareholders and the warrant holders of the Company,the exercise year for the outstanding warrants 1996/2001 was extended for an additional five and a half years from theexisting four and a half years expiring on 4 February 2001 to ten years expiring on 4 August 2006.



15. ICULS Group and Company2005 2004

RM’000 RM’000

At beginning of year 21,199 30,544Converted to ordinary shares (21,199) (9,345)

- 21,199

Pursuant to the debt restructuring scheme which was completed in 2001, the Company issued RM86,208,185 nominalvalue 5-year 2% irredeemable convertible unsecured loan stocks 2000/2005 (“ICULS”) in full satisfaction of the sameamount owing to the Company’s unsecured scheme creditors.

The salient features of the ICULS are as follows:

(a) bear interest at 2% per annum;(b) convertible into new ordinary shares of RM1.00 each in the Company during the conversion period, being the last

three years of the tenure of the ICULS, at the conversion price of RM2.99 for every new ordinary share in theCompany:(i) by tendering RM2.99 nominal value of ICULS for every new ordinary share of RM1.00 each in the Company; or(ii) by way of a surrender and cancellation of the nominal value of the ICULS in multiples of RM1.00 and the balance

of the conversion price, if any, by way of cash;(c) the ICULS are for a period of five calendar years maturing on 25 December 2005; and(d) all outstanding ICULS will be mandatorily converted into new ordinary shares of RM1.00 each at the conversion price

on maturity.

All ICULS were converted into fully paid ordinary shares at the maturity date, by tendering RM2.99 nominal value of ICULSfor every new ordinary shares of RM1.00 each.

16. CAPITAL RESERVE Group and Company2005 2004

RM’000 RM’000

At beginning and end of the year 18,419 18,419

The capital reserve arose from the issue of the TIME warrants 2001/2002 and TIME warrants 2000/2005.

Pursuant to the debt restructuring scheme which was completed in 2001, the Company issued:

(a) 133,615,972 TIME warrants 2001/2002 (“replacements warrants”) on the basis of one replacement warrant insubstitution and upon the surrender and cancellation of one TIME warrant 1996/2006 held at an issue price ofRM0.01 per replacement warrant; and

(b) 67,855,674 TIME warrants 2000/2005 at an issue price of RM0.26 per TIME warrant 2000/2005 to theCompany’s shareholders.

17. SHARE PREMIUMGroup and Company2005 2004

RM’000 RM’000

At 1 January 1,702,903 1,696,684Arising from conversion of loan stocks 14,109 6,219

At 31 December 1,717,012 1,702,903



18. MINORITY SHAREHOLDERS’ INTERESTS

This consists of the minority shareholders’ proportion of share capital and reserves of subsidiaries, net of their share ofsubsidiary's goodwill on consolidation and amortisation of goodwill charged to the minority shareholders.

19. LONG TERM LOANSGroup Company

2005 2004 2005 2004RM’000 RM’000 RM’000 RM’000

Term loans - secured 516,342 516,471 516,342 516,471

Interest payable – term loans 39,681 - 39,681 - Less: Current portion of term loan (Note 13) - (516,471) - (516,471)

Due between one and two years 556,023 - 556,023 -

Al-Ijarah loan - secured 167 639 - - Less: Current portion of Al-Ijarah loan (Note 13) (167) (450) - -

Due between one and two years - 189 - -

556,023 189 556,023 -

The term loan is obtained from a development bank, bears interest at 8.5% (2004-8.5%) per annum and is secured byquoted shares in an associate company as mentioned in Note 4.

On 5 April 2005, the development bank approved the Company’s request to extend the maturity date for the bulletrepayment of the outstanding principal and interest of the term loan facility from 30 June 2005 to 30 June 2007 withoutany further requirements or conditions.

All the above bank borrowings are denominated in Ringgit Malaysia.

20. BONDS Group and Company2005 2004

RM’000 RM’000

At 1 January 224,177 383,685Redemption during the year (4,460) (159,508)Less: Unrealised foreign exchange gain (1,177) -

At 31 December 218,540 224,177Less: Due within one year shown under current liabilities (108,940) (224,177)

Due after one year 109,600 -

The Bonds represents the Ringgit Malaysia equivalent of USD 58 million (2004 - USD 59 million), translated at the exchangerate of RM3.78 : USD1 (2004 - RM3.80 : USD1) nominal value redeemable secured zero-coupon bonds 1996/2001(“USD Bonds”) issued with detachable warrants (Note 14).

Certain of the Company’s quoted shares in an associated company (Note 4) and quoted shares in other investment (Note5) are pledged with the trustee of the USD Bonds as security for the USD Bonds.



20. BONDS (CONTINUED)

Pursuant to the Updated Restructuring Offer agreed by the USD Bondholders on 18 June 2002, the entire principaloutstanding as of 31 December 2002 was to be repaid in three tranches as follows:

% of Amount Equivalent toTranche USD Bonds Date (USD million) RM million

1 27.5 30 June 2003 44.559 169.3252 27.5 30 June 2004 44.559 169.3253 45.0 30 June 2005 72.916 277.080

162.034 615.730

The USD Bonds will carry the following prescribed rate of interest based on London Inter-Bank Offer Rate (“LIBOR”) up tothe dates of redemption as set out below:

For the period Interest rate

1 July 2002 to 30 June 2003 LIBOR + 2.00%1 July 2003 to 30 June 2004 LIBOR + 2.25%1 July 2004 to 30 June 2005 LIBOR + 2.50%

In previous years, the Company has fully redeemed Tranche 1, Tranche 2 and part of Tranche 3 of the USD Bonds amountingto USD 103,040,000 (equivalent to RM 391,553,000) in total.

On 31 March 2005, the US Bondholders formalised the extension of the maturity date of the remaining amount of Tranche3 (“Extended Tranche 3”) without any further requirements and conditions as follows:

Amount Equivalent toTranche Date (USD million) RM million

1 30 June 2006 30.0 114.02 30 June 2007 29.0 110.2

59.0 224.2

The outstanding USD Bonds will carry an interest rate at the prevailing LIBOR + 2.5% up to the respective redemption dates.

During the year, the Company has partially redeemed Tranche 1 of the Extended Tranche 3 of the USD Bonds amounting toUSD1,179,000 (equivalent to RM4,460,000).

On 31 March 2006, the Company has made an early redemption of the entire principal of USD28,821,000 (equivalent toRM106,490,200 translated at the prevailing exchange rate of RM3.695:USD1) due on 30 June 2006.

21. DEFERRED TAX

The amounts, determined after appropriate offsetting, are as follows:Group

2005 2004RM’000 RM’000

Deferred tax liabilities (593) - Deferred tax assets 731 4,731

138 4,731

Deferred tax liabilities and assets are offset above where there is a legally enforceable right to set off current tax assetsagainst current tax liabilities and where the deferred taxes relate to the same taxation authority.



21. DEFERRED TAX (CONTINUED)

The recognised deferred tax assets and liabilities (before offsetting) are as follows:

Group Company2005 2004 2005 2004

RM’000 RM’000 RM’000 RM’000Property, plant and equipment

- capital allowances (941) (952) - - Provisions 181 1,249 - - Unabsorbed capital allowances 430 430 - - Unutilised tax losses 489 4,055 - - Others (21) (51) - -

138 4,731 - -

No deferred tax has been recognised for the following items:

Group Company2005 2004 2005 2004

RM’000 RM’000 RM’000 RM’000

Property, plant and equipment- capital allowances 162 (101) (153) (83)

Provisions 155 4,146 155 - Unabsorbed capital allowances 2,633 1,700 1,855 1,580Unutilised tax losses 120,022 116,019 101,441 95,054

122,972 121,764 103,298 96,551

Unrecognised deferred tax assets at 28% 34,432 34,094 28,923 27,034

The unabsorbed capital allowances and unutilised tax losses do not expire under current tax legislation. Deferred tax assetshave not been recognised in respect of these items because it is not probable that future taxable profits will be availableagainst which the Group can utilise the benefits. The unabsorbed capital allowances and unutilised tax losses are subject tothe agreement of the tax authorities.

22. REVENUE

Group Company2005 2004 2005 2004

RM’000 RM’000 RM’000 RM’000

Proportionate value of contract works performed 112,124 368,680 - - Sale of goods 7,914 9,600 - - Rendering of services 52,737 65,797 - - Gross dividend income from:- Subsidiary company - - 410 32,149- Other investment 1,158 - 1,158 -

173,933 444,077 1,568 32,149



23. OTHER OPERATING INCOME

Included in other operating income are the following:

Group Company2005 2004 2005 2004

RM’000 RM’000 RM’000 RM’000

Debt waiver - 53,334 - - Bad debts recovered 17 189 - 79Gain on disposal of property, plant and equipment 19 458 13 37 Government grant 139 167 - - Interest income 891 1,078 1,698 1,718Realised gain on foreign exchange 3 8 3 8Reimbursement of project financing costs 1,340 14,240 - - Rental income 32 13 32 4Unrealised foreign exchange gain on bonds 1,177 - 1,177 - Waiver by trade creditors - 7,295 - - Management fee - - 1,200 2,059Service tax refund 1,916 - - - Over-accrual of prior year rental expenses 224 - - - Write back of allowance for doubtful debts:

Trade receivables 889 4 - - Amount due from subsidiary companies - - - 140

24. OPERATING (LOSS)/PROFIT

Group Company2005 2004 2005 2004

RM’000 RM’000 RM’000 RM’000Operating (loss)/profit is arrived at

after charging:-Allowance for doubtful trade receivables 2,626 3,170 - - Amortisation of:

Development expenditure 105 105 - - Goodwill 54 194 - -

Auditors’ remuneration- statutory audit 85 74 28 25- other professional fees 45 75 - 45

Bad debts written off - 2,561 - - Depreciation 5,112 12,755 285 315Directors’ remuneration 949 758 804 605Goodwill written off - 2,660 - - Impairment loss - investment in

subsidiary company - - - 611Loss on disposal of property, plant

and equipment to a related party - 3 - 3Net realised loss on foreign exchange 6 7 - - Property, plant and equipment

written off 32 132 - - Rental of premises payable to:

Related party 454 401 454 401Others 1,259 1,012 - 14

Rental of site and equipment 3,797 1,809 62 59



25. EMPLOYEE INFORMATION Group Company

2005 2004 2005 2004RM’000 RM’000 RM’000 RM’000

Salaries and other benefits 16,281 13,418 3,903 2,030EPF contribution 1,796 1,497 483 359

Staff costs 18,077 14,915 4,386 2,389

The number of employees of the Group and of the Company (including Executive Directors) at the end of the year was 326(2004 - 296) and 53 (2004 - 46), respectively.

26. FINANCE COSTSGroup Company

2005 2004 2005 2004RM’000 RM’000 RM’000 RM’000

Finance charges/interest expense on:Short-term loans 35 405 - - Term loans 43,880 46,987 43,880 46,987Bonds 12,944 11,707 12,944 11,707Finance lease - 333 - - Revolving credit 6,326 19,542 - - Bank overdrafts 8 55 - - Interest waiver - (8,394) - - Others 322 623 - -

63,515 71,258 56,824 58,694

27. LOSS ON DISPOSAL/DILUTION OF INTERESTS IN A SUBSIDIARY COMPANY

Group Company2005 2004 2005 2004

RM’000 RM’000 RM’000 RM’000Loss on disposal/dilution of interests in a

subsidiary company(Note 3 and Note 31) (906) (14,983) (629) -

On 25 February 2004, the Company’s equity interests in Ranhill Power Berhad (“RPB”) (formerly known as EPE PowerCorporation Berhad) was diluted from 54.96% to 5.46%. At 29 February 2004, the RPB Group had net assets ofRM27,261,000, and the loss on dilution to the Group was approximately RM14,983,000. The remaining interest wasdisposed off in 2005.

28. SHARE IN RESULTS OF ASSOCIATE COMPANIESGroup

2005 2004RM’000 RM’000

Share of loss before tax of associate companies: (90,823) (371,549)

Share of tax expense of associate companies (435) (597)

The Group’s share in loss before tax and tax expense of associate companies above have been arrived at based on theassociate companies’ audited financial statements.



29. TAX (EXPENSE)/CREDITGroup Company

2005 2004 2005 2004RM’000 RM’000 RM’000 RM’000

Income tax expenseCurrent year (3,829) (7,136) - - Overprovision in prior years 814 3,756 - 4,014

(3,015) (3,380) - 4,014Deferred tax benefit

Current year - 4,731 - - Origination and reversal of temporary

differences (4,423) - - - Under-recognition of prior year

deferred tax assets (170) - - - Recovery of tax deducted at source -

on dividend received from subsidiaries 431 7,990 - -

Tax (expense)/credit (7,177) 9,341 - 4,014Share of tax expense of associate

companies (Note 28) (435) (597) - -

Total tax (expense)/credit (7,612) 8,744 - 4,014

Reconciliation of effective tax expense

Loss before tax (253,955) (359,038) (274,516) (1,442,883)

Income tax using Malaysian tax rate (28%) 71,107 100,531 76,864 404,007

Income not subject to tax - 16,777 - - Expenses not deductible for tax purposes (50,785) (22,864) (75,217) (403,398)Utilisation of deferred tax assets

previously not recognised 67 3,276 - - Deferred tax asset not recognised

in the current financial year (3,157) (1,132) (1,647) (609)Benefit of previously unrecognised

tax losses and capital allowances - 4,000 - - Recovery of tax deducted at source on

dividend received from subsidiary companies 431 7,990 - - Share of associate’s tax reconciliation items (25,865) (103,590) - - Tax payable on interim dividends paid (224) - - -

(8,426) 4,988 - - Over provision in prior years 814 3,756 - 4,014

Tax (expense)/credit for the year (7,612) 8,744 - 4,014



30. LOSS PER ORDINARY SHARE

a) Basic loss per ordinary share

The basic loss per ordinary share is calculated by dividing the Group’s net loss attributable to shareholders by theweighted average number of ordinary shares outstanding during the financial year.

2005 2004

Net loss attributable to shareholders (RM’000) (266,204) (380,701)

Weighted average number of ordinary shares (‘000)Issued ordinary shares at beginning of the year 768,155 765,029

Effect of shares issued 4,039 192

Weighted average number of ordinary shares 772,194 765,221

Basic loss per ordinary share (sen) (34.5) (49.8)

b) Diluted loss per ordinary share

The diluted loss per ordinary share for 2004 and 2005 is not presented as the average market value of the sharesof the Company is lower than the subscription price for the outstanding warrants.

31. DISCONTINUING OPERATIONS

In the previous year, the Company’s equity interests in Ranhill Power Berhad (“RPB”) was diluted from 54.96% to 5.46%.Consequently, the Group no longer consolidates the results of RPB Group and the Company’s interests in RPB was dilutedto a simple investment.

At 29 February 2004, the RPB Group had net assets of RM27,261,000.

The revenue, results and cash flows of the RPB Group for the financial year ended 31 December 2004 included in thesefinancial statements are:

Group 2004

RM’000

Revenue 9,641Cost of sales (8,553)

Gross profit 1,088Sales and marketing expenses (29)Administrative expenses (1,302)Other operating expenses (392)Debt waiver 53,334Other operating income 344

Profit from operations 53,043Interest income 422Finance costs (net of interest waiver of RM8.394 million) 7,539Share in profit of associate companies 823



31. DISCONTINUING OPERATIONS

Group 2004

RM’000

Profit before tax 61,827Income tax expense (542)

Profit before minority interests 61,285Minority interests (57)

Net profit for the year 61,228

Cash flows from operating activities 4,701Cash flows from investing activities 1,144Cash flows from financing activities (1,299)

Net cash flows 4,546

32. SEGMENTAL INFORMATION

Corporate

The Company is an investment holding company. During the year, the Group’s operating businesses are classified into threemajor segments as follows:

Information communication technology

Supply, delivery, installation, testing, commissioning and maintenance of teaching aids equipment, development,management and provision of business to business (B2B) e-commerce and computerised transaction facilitation services,provision of media and electronic communications services, provisioning of managed and internet-related services and totalsystems integrators and information technology consultancy.

Telecommunication

The provision of telecommunications, internet and multimedia facilities and services of an associate.

Others

Supply, installation and maintenance of engineering and other equipment for expressways, telecommunications network andother general engineering works.

In previous years, the Group’s operating businesses include the following business that was discontinued in 2005 (Note 31):

Power

Operate an open cycle gas-fired power station and supply of electricity and manufacture, supply and maintenance of electricalswitchgears, switchboards, transformers, designs, engineering and construction of power transmission infrastructure andpower distribution system.

The Group’s operations are located predominantly in Malaysia and accordingly, information on geographical segment is notpresented.

32. SEGMENTAL INFORMATION (CONTINUED)

Informationcommunication Telecom-

technology Corporate munication Others Eliminations Consolidated31 December 2005 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000Business segments

Revenue from external customers 172,775 1,158 - - - 173,933

Inter-segment revenue 2,312 1,539 - - (3,851) -

Total revenue 175,087 2,697 - - (3,851) 173,933

Segment resultProfit/(loss) from operations 26,737 (124,839) - 146 (1,493) (99,449)

Interest income 602 - - - - 602Finance costs (7,498) (56,824) - - 807 (63,515)Loss on disposal of interests in

a subsidiary company - (906) - - - (906)Gain on disposal of investments - 136 - - - 136Share of loss of associates - - (90,823) - - (90,823)

Loss before tax (253,955)Tax expense (7,612)

Net loss after tax (261,567)Minority interests (4,473)

Net loss for the year (266,040)

Segment assets 107,145 172,810 - 21,234 (74,282) 226,907Investments in associates - - 773,510 133 - 773,643

Total assets 107,145 172,810 773,510 21,367 (74,282) 1,000,550

Segment liabilities 71,737 780,110 - 5,816 (23,339) 834,324

Capital expenditure 7,417 324 - - - 7,741

Depreciation and amortisation 4,927 285 - 5 54 5,271





32. SEGMENTAL INFORMATION (CONTINUED)

Informationcommunication Telecom-

Power technology Corporate munication Others Eliminations Consolidated31 December 2004 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000Business segments

Revenue from external customers 9,641 427,352 - - 7,084 - 444,077

Inter-segment revenue - 511 32,149 - - (32,660) -

Total revenue 9,641 427,863 32,149 - 7,084 (32,660) 444,077

Segment resultProfit/(Loss) before

debt waiver (291) 38,468 28,664 - 9,264 (31,313) 44,792Debt waiver 53,334 - - - - - 53,334

Profit from operations 53,043 38,468 28,664 - 9,264 (31,313) 98,126

Interest income 422 204 - - - - 626Finance costs 7,539 (20,924) (58,694) - - 821 (71,258)Loss on dilution of

interests in a subsidiary company - - - - - (14,983) (14,983)

Share of loss of associates - - - (371,549) - - (371,549)

Loss before tax (359,038)Tax credit 8,744

Net loss after tax (350,294)Minority interests (16,837)

Net loss for the year (367,131)

Segment assets - 622,075 322,783 - 22,857 (100,078) 867,637Investments in

associates - - - 864,768 1,333 - 866,101

Total assets - 622,075 322,783 864,768 24,190 (100,078) 1,733,738

Segment liabilities - 597,806 747,340 - 8,744 (47,822) 1,306,068

Capital expenditure 4 8,554 300 - - - 8,858

Depreciation and amortisation 493 12,046 315 - 6 194 13,054

Net non-cash expenses other than depreciation and amortisation 396,479



33. OPERATING LEASESGroup

2005 2004RM’000 RM’000

Non cancellable commitments for rental of officepremises, data transmission expenses, lease ofcomputer equipment and computer network setting up:

Payable within 1 year 5,071 3,763Payable between 2 to 3 years 3,559 5,465

8,630 9,228

34. COMMITMENTSGroup Company

2005 2004 2005 2004RM’000 RM’000 RM’000 RM’000

Capital commitments:Property, plant and equipment

Approved and contracted for 846 199 100 - Approved but not contracted for 143 430 - -

989 629 100 -

35. RELATED PARTIES

The related parties and their relationship with the Company and its subsidiary companies are as follows:

Name of related parties Relationship

STLR Sdn. Bhd. (“STLR”) A wholly-owned subsidiary company of Khazanah Nasional Berhad (“Khazanah”)

Telekom Malaysia Berhad An associate company of Khazanah

United Engineers (Malaysia) Berhad A corporate shareholder of the Company(“UEM”)

Teras Teknologi Sdn. Bhd. A subsidiary company of UEM

UEM Group Management Sdn. Bhd. A subsidiary company of UEM

Significant transactions with the related corporations are as follows:Group

2005 2004RM’000 RM’000

Related parties Transaction

Telekom Malaysia Berhad Payment for multimedia and ISDN 1,019 1,170

STLR Rental expense 401 401

Teras Teknologi Sdn. Bhd. Payment for secondment of staff - 216Payment for development software system 106 247Sale of IT products & services 127 -

UEM Group Management Management fee 326 282Sdn. Bhd. Sale of IT products & services 102 246



35. RELATED PARTIES (CONTINUED)Group

2005 2004RM’000 RM’000

Related parties Transaction

With associate companies

TT dotCom Sdn. Bhd. Lease line and phone charges 584 727

TIME dotNet Berhad Lease line expense 184 284

With subsidiary company

TIME Systems Integrators Management fee income 1,200 2,059Sdn. Bhd. Interest income 807 821

These transactions have been entered into in the normal course of business and have been established under negotiatedterms.

36. FINANCIAL INSTRUMENTS

Financial risk management objectives and policies

The operations of the Group are subject to a variety of financial risks, including foreign currency risk, interest rate risk, creditrisk and liquidity risk. The Group has formulated a financial risk management framework whose principal objective is tominimise the group’s exposure to risks and/or costs associated with the financing, investing and operating activities of theGroup.

Various risk management policies are made and approved by the Board of Directors for observation in the day-to-dayoperations for the controlling and management of the risks associated with financial instruments.

Foreign currency risk

The Group has exposure to foreign currency risk as a result of its USD Bonds and transactions denominated in foreigncurrency arising from its normal business activities. The exposure to foreign exchange is monitored on an ongoing basis tomaintain acceptable level of risk and exposure.

Interest rate risk

The Group’s significant interest-bearing financial assets and financial liabilities are mainly its deposit placements and also itslong term obligations comprising USD Bonds and long term loans.

The deposit placements as of balance sheet date are short term and therefore exposure to the effects of future changes inprevailing level of interest rates is limited.

The Group manages its interest rate risk exposure by maintaining a mix of fixed and floating rate borrowings.

Credit risk

The Group is exposed to credit risk mainly from trade receivables. The Group extends credit to its customers based uponcareful evaluation of the customers’ financial condition and credit history. The Group also generally ensures a large numberof customers so as to limit high credit concentration in a customer or customers from a particular market.



36. FINANCIAL INSTRUMENTS (CONTINUED)

Liquidity risk

The Group’s exposure to liquidity risk stems from its short term and long term debt obligations. The Group actively managesits debts maturity profile, operating cash flow and availability of funding so as to ensure all refinancing, repayment and fundingneeds are met.

The Group practices prudent liquidity risk management to minimise the mismatch of financial assets and liabilities to meetits debt obligations as and when they fall due. The Group also maintains sufficient levels of cash or cash convertibleinvestments and credit facilities for contingent funding requirement of working capital.

Fair values

The fair values of short term financial assets and financial liabilities reported in the balance sheet approximate their carryingamounts because of the immediate or short term maturity of these financial instruments.

The fair values of quoted securities are their quoted prices at the balance sheet date. The fair values of quoted securitiesare disclosed in Notes 4 and 5.

The fair values of long term financial liabilities are determined by discounting the relevant cash flow using the current interestrates for similar instruments at balance sheet date. There was no material difference between the fair values and carryingvalues of these liabilities at balance sheet date.

Effective interest rates and repricing analysis

In respect of interest-earning financial assets and interest-bearing financial liabilities, the following table indicates theireffective interest rates at the balance sheet date and the periods in which they reprice or mature, whichever is earlier.

31.12.2005Effectiveinterest Within 1 - 5

rate p.a. Total 1 year yearsGroup % RM’000 RM’000 RM’000Financial assetDeposits placed with financial institutions 2.30 – 2.75 85,283 85,283 -

Financial liabilitiesTerm loan 8.50 516,342 - 516,342Bonds 6.16 218,540 108,940 109,600


rate p.a. Total 1 year yearsCompany % RM’000 RM’000 RM’000Financial assetsDeposits placed with financial institutions 2.73 40,944 40,944 -Advances to a subsidiary company 4.00 10,448 10,448 -

Financial liabilitiesTerm loan 8.50 516,342 - 516,342Bonds 6.16 218,540 108,940 109,600



36. FINANCIAL INSTRUMENTS (CONTINUED)

Effective interest rates and repricing analysis (continued)


rate p.a. Total 1 year yearsGroup % RM’000 RM’000 RM’000Financial assetDeposits placed with financial institutions 2.40 – 3.00 52,009 52,009 -

Financial liabilitiesRevolving credit 4.50 – 5.71 438,397 438,397 - Term loan 8.50 516,471 516,471 - Bonds 4.44 224,177 224,177 -

CompanyFinancial assetsDeposits placed with financial institutions 2.89 34,576 34,576 - Advances to a subsidiary company 4.00 38,705 38,705 -

Financial liabilitiesTerm loan 8.50 516,471 516,471 - Bonds 4.44 224,177 224,177 -

Recognised financial instruments

The carrying amounts of debtors, amount due from subsidiaries, deposits with licensed banks, cash and bank balances,amount due to subsidiaries, creditors, short term borrowings and current portion of long term borrowings approximate fairvalues due to the relatively short term maturity of these financial instruments.

It is not practicable to estimate the fair value of long term unquoted investments due to the lack of quoted market pricesand their fair value is not anticipated to be significantly different from the carrying amount at the balance sheet date.

37. COMPARATIVE FIGURES

The following comparatives have been restated to conform with the current year presentation.

Group CompanyAs previously As previously

As restated stated As restated statedRM’000 RM’000 RM’000 RM’000

Balance sheetsTrade receivables 523,801 522,467 - - Less: Allowance for doubtful debts (10,461) (9,127) - -

38. EVENTS AFTER BALANCE SHEET DATE

USD Bonds

On 31 March 2006 the Company has made an early redemption of the entire principal of USD28,821,000 due on 30 June2006 (Note 20) together with the interest accrued up to the repayment date of USD1,756,400 (equivalent toRM106,490,200 and RM6,490,000 in principal and interest respectively, translated at the prevailing exchange rate ofRM3.695:USD1).

Investments in Associates

Between 10 February 2006 to 23 February 2006, the Company disposed of a portion of shares in an associate, TIMEdotCom Berhad (“TdC”) with a carrying value of RM15.5 million for total proceeds of RM12.3 million. The proceeds fromthe disposal was utilised for early redemption of part of the USD Bonds of USD28.821 million due on 30 June 2006.Following the disposal, the shareholding in TdC reduced from 44.73% to 43.83%.

Other Investments

Between 16 March 2006 to 17 April 2006 the Company disposed of a portion of its investments in quoted shares with acarrying value of RM39.9 million for total proceeds of RM96.7 million. The proceeds from the disposal was partly utilisedfor early redemption of part of the USD Bonds of USD28.821 million due on 30 June 2006.

Authorised Share Capital : RM2,000,000,000.00Issued and Fully Paid : RM775,244,683.00Class of Shares : Ordinary Shares of RM1.00 eachNo. of Shareholders : 26,373Voting Right : 1 vote per Ordinary Share

Category No. of Shareholders No. of Shares PercentageMalaysian Foreign Malaysian Foreign Malaysian Foreign

LESS THAN 100 SHARES 268 1 3,967 1 0.00 0.00100 TO 1,000 SHARES 7,228 111 7,090,708 109,157 0.91 0.011,001 TO 10,000 SHARES 14,675 397 63,184,165 2,111,298 8.15 0.2710,001 TO 100,000 SHARES 3,219 190 93,136,032 6,345,160 12.01 0.82100,001 TO LESS THAN 5%

OF ISSUED SHARES 239 43 121,413,824 24,515,815 15.66 3.165% AND ABOVE OF ISSUED SHARES 1 1 349,112,731 108,221,825 45.03 13.96

TOTAL 25,630 743 633,941,427 141,303,256 81.77 18.23

CLASSIFICATION OF SHAREHOLDERS

No. of Category No. of Shares Percentage Shareholders Percentage

INDIVIDUALS 172,166,798 22.20 22,619 85.76NOMINEE COMPANIES 215,804,167 27.84 3,489 13.23INDUSTRIAL &

COMMERCIAL COMPANIES 360,943,118 46.56 210 0.80GOVERNMENT AGENCIES 125,000 0.02 5 0.02BANKS/FINANCE COMPANIES 25,173,600 3.25 40 0.15FOUNDATION/INVESTMENT

TRUSTS/CHARITIES 1,032,000 0.13 10 0.04

TOTAL 775,244,683 100 26,373 100

DIRECTORS’ INTERESTS IN SHARES IN THE COMPANY

Name of Director No. of Shares Percentage

DATUK HAJI MOHD KHALIL DATO’ HAJI MOHD NOOR 5,000 Negligible

30 LARGEST SHAREHOLDERS AS AT 14 APRIL 2006

No. Name of Shareholder No. of Shares Percentage

1. UNITED ENGINEERS (MALAYSIA) BERHAD 349,112,731 45.032. MAYBAN NOMINEES (ASING) SDN BHD

- UEM LAND SDN BHD FOR TIME INVESTMENTS (CAYMAN) LIMITED 108,221,825 13.963. AM NOMINEES (TEMPATAN) SDN BHD

- EMPLOYEES PROVIDENT FUND BOARD (A/C1) 22,230,000 2.874. LEMBAGA TABUNG HAJI 20,301,000 2.625. CITIGROUP NOMINEES (ASING) SDN BHD

- MELLON BANK, N.A. FOR BANCO DI DESIO E DELLA BRIANZA S.P.A 6,102,500 0.796. EMPLOYEES PROVIDENT FUND BOARD 4,222,300 0.54


Analysis of Shareholdingsas at 14 April 2006


Analysis of Shareholdings as at 14 April 2006 (continued)

30 LARGEST SHAREHOLDERS AS AT 14 APRIL 2006 (CONTINUED)

No. Name of Shareholder No. of Shares Percentage

7. CITIGROUP NOMINEES (ASING) SDN BHD - EXEMPT AN FOR MERRILL LYNCH PIERCE FENNER & SMITH

INCORPORATED (FOREIGN) 3,892,000 0.508. CIMB NOMINEES (TEMPATAN) SDN BHD

- COMMERCE INTERNATIONAL MERCHANT BANKERS BERHAD 2,463,198 0.329. WONG AH CHAI 2,150,000 0.28

10. MAYBAN NOMINEES (TEMPATAN) SDN BHD - AVENUE INVEST BERHAD FOR PERUSAHAAN OTOMOBIL NASIONAL BERHAD 1,995,000 0.26

11. CITIGROUP NOMINEES (ASING) SDN BHD - CBNY FOR DFA EMERGING MARKETS SMALL CAP SERIES 1,980,100 0.26

12. PROBALANCE SDN BHD 1,900,000 0.2513. TEO KIN SWEE 1,755,700 0.2314. SYARIKAT HAWK SOON HIN SDN BHD 1,346,000 0.1715. YAP LIM SEN 1,213,000 0.1616. HSBC NOMINEES (TEMPATAN) SDN BHD

- PLEDGED SECURITIES ACCOUNT FOR HOO WAN FATT 1,126,900 0.1517. AMANAH RAYA NOMINEES (TEMPATAN) SDN BHD

- SEKIM AMANAH SAHAM NASIONAL 1,071,000 0.1418. SAP MALAYSIA SDN BHD 1,021,331 0.1319. KUALA LUMPUR CITY NOMINEES (ASING) SDN BHD

- PLEDGED SECURITIES ACCOUNT FOR MALAYSIA FOCUS INVESTMENT FUND LIMITED 1,000,000 0.13

20. MIDF SISMA NOMINEES (TEMPATAN) SDN BHD - INTRINSIC CAPITAL MANAGEMENT SDN BHD FOR NORHIBAH BINTI MOHD TAHIR 980,000 0.13

21. KE-ZAN NOMINEES (TEMPATAN) SDN. BHD. - KIM ENG SECURITIES PTE. LTD. FOR SIN KHUAN OI 925,000 0.12

22. NG TENG SONG 922,000 0.1223. YAYASAN KELANTAN DARULNAIM 870,000 0.1124. LIM SAY CHONG 850,000 0.1125. MIDF SISMA NOMINEES (TEMPATAN) SDN BHD

- INTRINSIC CAPITAL MANAGEMENT SDN BHD FOR ABD HAMID BIN IBRAHIM 845,000 0.1126. LUI NYOK MOY 766,000 0.1027. MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD

- PLEDGED SECURITIES ACCOUNT FOR TAN SENG LEONG 760,000 0.1028. HSBC NOMINEES (TEMPATAN) SDN BHD

- HSBC (MALAYSIA) TRUSTEE BERHAD FOR AMANAH SAHAM SARAWAK 754,000 0.1029. NICAN ASIA LIMITED 750,000 0.1030. MIDF SISMA NOMINEES (TEMPATAN) SDN BHD

- INTRINSIC CAPITAL MANAGEMENT SDN BHD FOR RAJA MOHD AZMI BIN RAJA RAZALI 750,000 0.10

TOTAL 542,276,585 69.95

SUBSTANTIAL SHAREHOLDERS AS PER THE REGISTER OF SUBSTANTIAL SHAREHOLDERS, EXCLUDING BARE TRUSTEES

No. of Shares Deemed No. Name Held Direct Percentage Interest Percentage

1. UNITED ENGINEERS (MALAYSIA) BERHAD 349,112,731 45.03 - -

2. TIME INVESTMENTS (CAYMAN) LIMITED 108,221,825 13.96 - -

3. KHAZANAH NASIONAL BERHAD - - *349,112,731 45.03

* Deemed interest through United Engineers (Malaysia) Berhad.


Analysis of Warrantholdings 1996/2006 as at 14 April 2006

No. of Warrants : 136,936,877

Date of Issue : 5 August 1996

Exercise Price : RM6.30

No. of Warrantholders : 19,746

Date of Expiry : Friday, 4 August 2006 at 5.00 p.m.

Category No. of Warrantholders No. of Warrants Percentage

Malaysian Foreign Malaysian Foreign Malaysian Foreign

LESS THAN 100 WARRANTS 3,431 49 210,881 1861 0.15 0.00

100 TO 1,000 WARRANTS 2,556 37 1,359,832 18,485 0.99 0.01

1,001 TO 10,000 WARRANTS 11,611 134 34,693,138 477,321 25.34 0.35

10,001 TO 100,000 WARRANTS 1,692 73 43,456,492 2,096,106 31.73 1.53

100,001 TO LESS THAN 5%

OF ISSUED WARRANTS 158 5 53,179,451 1,443,310 38.84 1.05

5% AND ABOVE OF ISSUED SHARES 0 0 0 0 0.00 0.00

TOTAL 19,448 298 132,899,794 4,037,083 97.05 2.94

CLASSIFICATION OF WARRANTHOLDERS

No. of

Category No. of Warrants Percentage Warrantholders Percentage

INDIVIDUALS 117,156,919 85.56 17,245 87.33

NOMINEE COMPANIES 18,040,296 13.17 2,384 12.07

INDUSTRIAL & COMMERCIAL

COMPANIES 1,180,156 0.86 90 0.46

GOVERNMENT AGENCIES 32,000 0.02 1 0.00

BANKS/FINANCE COMPANIES 144,104 0.11 23 0.12

FOUNDATION/INVESTMENT

TRUSTS/ CHARITIES 383,402 0.28 3 0.02

TOTAL 136,936,877 100 19,746 100

Analysis of Warrantholdings 1996/2006 as at 14 April 2006 (continued)


30 LARGEST WARRANTHOLDERS AS AT 14 APRIL 2006

No. Name of Warrantholder No. of Warrants Percentage

1. TEE AH PENG 4,100,000 2.99

2. KAMARIAH BINTI ABDULLAH 2,536,000 1.85

3. AZIZAH BINTI HAT 1,704,000 1.24

4. HEZLINDA BINTI NIK ISMAIL 1,525,200 1.11

5. ROSE LINA BT CHE MAT 1,302,300 0.95

6. LOKE KOK SAM 1,098,300 0.80

7. KOO BOON LUI 1,000,000 0.73

8. TAN BEE HUAT 986,065 0.72

9. NIK ISMAIL BIN CHE YAHYA 900,800 0.66

10. HEE WUI YANG 805,000 0.59

11. LIM SIN YONG 756,200 0.55

12. CHOW AYI LIAN 703,529 0.51

13. MUNIAMAH A/P PERIASAMY 700,747 0.51

14. MURSTIFAH BINTI HJ KHARUDDIN 700,000 0.51

15. TEOH CHOONG LEONG 700,000 0.5116. CITIGROUP NOMINEES (ASING) SDN BHD

- EXEMPT AN FOR MERRILL LYNCH PIERCE FENNER & SMITH INCORPORATED (FOREIGN) 656,000 0.4817. MOHD KAMAL BIN MASTUKI 649,700 0.47

18. KONG YOON SING 605,000 0.44

19. CHIN YEN BOON 600,000 0.44

20. SIM PECK LING 600,000 0.44

21. LOONG KENG WING 599,900 0.44

22. NG KENG JOO 579,043 0.42

23. KIM GEE MOI 565,000 0.41

24. YOW YUEN THIAM 558,000 0.41

25. HO CHIN HOY 529,447 0.39

26. LIM BUN GEEH 520,247 0.3827. MAYBAN NOMINEES (TEMPATAN) SDN BHD

- PLEDGED SECURITIES ACCOUNT FOR LU THIAN TACK 500,000 0.37

28. WAN ARMIZI BIN WAN MAHMUD 500,000 0.3729. RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD

- PLEDGED SECURITIES ACCOUNT FOR CHOW AYI LIAN 499,235 0.36

30. CHA REN A/L IM 478,000 0.35

TOTAL 27,957,713 20.42


Notice of Thirty Sixth Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Thirty Sixth Annual General Meeting of Members of TIME Engineering Berhad will be held at Nirwana Ballroom 1, Ground Floor, Crowne Plaza Mutiara KualaLumpur, Jalan Sultan Ismail, 50718 Kuala Lumpur on Friday, 9 June 2006 at 9.30 a.m. for the purposeof transacting the following businesses:-

AGENDA

As Ordinary Business :-

1. To receive and adopt the Audited Financial Statements for the financial year ended 31 December 2005 together with theReports of the Directors and Auditors thereon. Resolution 1

2. To re-elect Amiruddin Abdul Aziz who retires by rotation in accordance with Article 96 of the Company’s Articles ofAssociation and, being eligible, he has offered himself for re-election. Resolution 2

3. To re-elect Salmah Sharif who retires by rotation in accordance with Article 96 of the Company’s Articles of Association and,being eligible, she has offered herself for re-election. Resolution 3

4. To consider and, if thought fit, to pass the following resolution as a Special Resolution pursuant to Section 129(6) of theCompanies Act 1965:-

“That Haji Abdullah Yusof who will be attaining the age of 70 years be and is hereby re-appointed as a Director of theCompany in accordance with Section 129(6) of the Companies Act, 1965 and to hold office until the conclusion of the nextAnnual General Meeting”. Special Resolution

5. To sanction the payment of Directors’ Fees for the financial year ended 31 December 2005. Resolution 4

6. To re-appoint Messrs KPMG as Auditors of the Company to hold office until the conclusion of the next Annual General Meetingand to authorize the Directors to fix the Auditors’ remuneration. Resolution 5

7. To transact any other business of which due notice shall have been received.

By Order of the Board

SAPIAH JAMALUDINSecretary

18 May 2006Kuala Lumpur

Note 1 – Appointment of Proxy

(i) Any member of the Company entitled to attend and vote at this meeting is also entitled to appoint a proxy to attend and vote on a show of hands or on a pollin his stead. A proxy may but need not be a member of the Company. Where a member appoints one or more proxies (subject to a maximum of two [2] proxies),the member shall specify in each proxy form the proportion of the member’s shareholdings to be represented by each proxy.

(ii) This instrument appointing a proxy, in case of an individual, shall be signed by the appointer or by his attorney duly authorized in writing and in the case of acorporation shall be either given under its Common Seal or signed on its behalf by an attorney or officer of the corporation so authorised.

(iii) This instrument appointing a proxy must be deposited at the Company’s Registered Office at Level 11, Wisma TIME, 249 Jalan Tun Razak, 50400 Kuala Lumpurnot less than twenty four (24) hours before the time fixed for holding the Meeting or any adjournment thereof in the following manner:-• By hand and post;• By facsimile at 03-27208101 and to follow-up with the original form of proxy, which the original form must also be deposited at the said Company’s

Registered Office not less than the said 24 hours;• By registering in www.timengineering.com and submit the proxy form through TIMEinfo:XS

Note 2 - Registration of Members/Proxies

Registration of Members/Proxies attending the Meeting will be from 8.30 a.m. on the day of the Meeting. Members/Proxies are required to produce their identificationdocuments for registration.


Statement Accompanying Notice of Thirty Sixth Annual General Meeting pursuant to paragraph 8.28(2) of the ListingRequirements of the Bursa Malaysia Securities Berhad.

1. DIRECTORS WHO ARE STANDING FOR RE-ELECTION

Directors retiring by rotation pursuant to Article 96 of the Company’s Articles of Association and seeking for re-election areas follows:-• Amiruddin Abdul Aziz• Salmah Sharif

2. BOARD MEETINGS HELD IN THE FINANCIAL YEAR ENDED 31 DECEMBER 2005

A total of twelve Board Meetings including three Special Board Meetings were held during the financial year ended 31 December 2005.

Board Meetings

No of Date of Time of Meeting Meeting Meeting Venue of Meeting

First 11 January 2005 9.30 a.m. Boardroom, Level 11, Wisma TIME, 249 Jalan Tun Razak50400 Kuala Lumpur

Second 26 February 2005 10.30 a.m. Straits Boardroom, Level 2, The Westin Kuala Lumpur Hotel199 Jalan Bukit Bintang, Kuala Lumpur

Third 22 April 2005 9.30 a.m. Boardroom, Level 11, Wisma TIME, 249 Jalan Tun Razak 50400 Kuala Lumpur

Fourth 20 May 2005 9.30 a.m. Boardroom, Level 11, Wisma TIME, 249 Jalan Tun Razak 50400 Kuala Lumpur

Fifth 2 June 2005 9.30 a.m. Boardroom, Level 11, Wisma TIME, 249 Jalan Tun Razak 50400 Kuala Lumpur

Sixth 21 July 2005 10.00 a.m. Boardroom, Level 11, Wisma TIME, 249 Jalan Tun Razak 50400 Kuala Lumpur

Seventh 25 August 2005 9.30 a.m. Boardroom, Level 11, Wisma TIME, 249 Jalan Tun Razak50400 Kuala Lumpur

Eighth 31 October 2005 9.30 a.m. Boardroom, Level 11, Wisma TIME, 249 Jalan Tun Razak50400 Kuala Lumpur

Ninth 21 November 2005 2.30 p.m. Boardroom, Level 11, Wisma TIME, 249 Jalan Tun Razak50400 Kuala Lumpur

Statement Accompanying Notice of Thirty Sixth Annual General Meeting

Special Board Meetings

Date of Time ofMeeting Meeting Venue of Meeting

7 June 2005 12.45 p.m. Sakura Room, Level 2, Hotel Nikko Kuala Lumpur165 Jalan Ampang, 50450 Kuala Lumpur

3 October 2005 5.00 p.m. Boardroom, Level 11, Wisma TIME, 249 Jalan Tun Razak 50400 Kuala Lumpur

22 December 2005 11.30 a.m. Room TIME 1, Level 11, Wisma TIME, 249 Jalan Tun Razak 50400 Kuala Lumpur

3. DETAILS OF ATTENDANCE OF DIRECTORS AT BOARD MEETINGS DURING THE FINANCIAL YEAR ENDED 31 DECEMBER 2005

Name No. of Meetings Percentage of Attended Attendance

Datuk Haji Mohd Khalil Dato’ Haji Mohd Noor, Chairman 12/12 100

Amiruddin Abdul Aziz 12/12 100

Haji Abdullah Yusof 12/12 100

Dato’ Dr Gan Khuan Poh 12/12 100

Elakumari Kantilal 11/12 91.7

Salmah Sharif 8/12 66.7

4. LIST OF GENERAL MEETING FROM 1 JANUARY 2005 TO 31 DECEMBER 2005

Type of Meeting Date of Meeting Time of Meeting Venue of Meeting

Thirty Fifth Annual General Meeting 7 June 2005 10.00 a.m. Ballroom 1 & 2, Level 2 Hotel Nikko Kuala Lumpur165 Jalan Ampang50450 Kuala Lumpur

Statement Accompanying Notice of Thirty Sixth Annual General Meeting (continued)


Form of Proxy

(Before completing this form please refer to the notes below)

I / We ………………………………………………………………..…......................... (CDS Account No.: .……………..….……………..)

of ………………………………………………………………………………………………………………………………………………………………

being a member of TIME Engineering Berhad hereby appoint ……………………………………………………….……………………….....

of ……………………………………………………………………………………………………………………………………………………………...

or failing him/her, The Chairman of the Meeting as my/our proxy, to vote for me/us on my/our behalf at the Thirty Sixth AnnualGeneral Meeting of the Company to be held at Nirwana Ballroom 1, Ground Floor, Crowne Plaza Mutiara Kuala Lumpur, Jalan SultanIsmail, 50718 Kuala Lumpur on Friday, 9 June 2006 at 9.30 a.m. and at any adjournment thereof, in the manner indicated below:-

(Please indicate with a “x” or “√“ in the boxes provided below as to how you wish your vote to be cast. If you do not do so, the proxy will vote orabstain from voting at his discretion)

(FULL NAME IN BLOCK LETTERS)

(FULL ADDRESS)

(FULL ADDRESS)

(FULL NAME IN BLOCK LETTERS)

NOTES :-i) Any member of the Company entitled to attend and vote at this meeting is also entitled to appoint a proxy to attend and vote on a show of hands or on a poll in

his stead. A proxy need not be a member of the Company. Where a member appoints one or more proxies (subject to a maximum of two [2] proxies), themember shall specify in each proxy form the proportion of the member’s shareholdings to be represented by each proxy.

ii) This instrument appointing a proxy, in case of an individual, shall be signed by the appointer or by his attorney duly authorized in writing and in the case of acorporation shall be either given under its Common Seal or signed on its behalf by an attorney or officer of the corporation so authorized.

iii) This instrument appointing a proxy must be deposited at the Company’s Registered Office at Level 11, Wisma TIME, 249 Jalan Tun Razak, 50400 Kuala Lumpurnot less than twenty four (24) hours before the time fixed for holding the Meeting or any adjournment thereof in the following manner:-• By hand and post;• By facsimile at 03-2720 8101 and to follow-up with the original form, which the original form must also be deposited at the said Company’s Registered Office

not less than the said twenty four (24) hours;• By registering in www.timengineering.com and submit the proxy form through TIMEinfo:XS.

AS ORDINARY BUSINESS

Resolution 1 To receive and adopt the Audited Financial Statements for the financial year ended 31 December 2005 together with the Reports of Directors and Auditors thereon.

Resolution 2 To re-elect Amiruddin Abdul Aziz who retires by rotation in accordance with Article 96 of theCompany’s Articles of Association and, being eligible, he has offered himself for re-election.

Resolution 3 To re-elect Salmah Sharif who retires by rotation in accordance with Article 96 of theCompany’s Articles of Association and, being eligible, she has offered herself for re-election.

Special To consider and, if thought fit, to pass the following resolution as a Special Resolution pursuantto Section 129(6) of the Companies Act 1965:-

“That Haji Abdullah Yusof who will be attaining the age of 70 years be and is hereby re-appointed as a Director of the Company in accordance with Section 129(6) of the CompaniesAct, 1965 and to hold office until the conclusion of the next Annual General Meeting”.

Resolution 4 To sanction the payment of Directors’ Fees for the financial year ended 31 December 2005.

Resolution 5 To re-appoint Messrs. KPMG as Auditors of the Company to hold office until the conclusion ofthe next Annual General Meeting and to authorise the Directors to fix the Auditors’remuneration.

FOR AGAINST

Dated this ……….. day of …………………….. 2006 …………………………………………Signature of Shareholder/Seal

No. of ordinary shares held

TIME ENGINEERING BERHAD (Company No. 10039-P) (Incorporated in Malaysia under the Companies Act, 1965)

Resolution

The Company Secretary

TIME ENGINEERING BERHADLevel 11, Wisma TIME

249 Jalan Tun Razak

50400 Kuala Lumpur

STAMP

(10039-P)

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