Organization Chart

MISC Berhad annual report 2007 annual report 2007
Going Beyond
Greater global prominence
MISC Berhad 8178-H Level 25, Menara Dayabumi, Jalan Sultan Hishamuddin, 50050 Kuala Lumpur, Malaysia T 603 2273 8088 F 603 2273 6602
www.misc.com.my
MISC Berhad: Expanding our reach to all corners of the globe

Every move we make is vision and force personified.
At MISC Berhad, we keep forging ahead; charting the waters of success. From our humble beginnings with a micro fleet of only five, we are now the world's largest single owner-operator of LNG carriers. Through our partnerships and with a core business in energy and logistics, we continue to sustain and build our name from our first deepwater facility, FPSO Kikeh, to our latest delivery of LNG cargoes to a Scandinavian country, Norway. We are going places. Each step is a positive step towards success and global prominence.
A Strategy
that's paying off
MISC is a Believer of innovation, strategic development, strong manpower and global vision.
Petronas Twin Towers, Malaysia
Our goal is to achieve global championship in energy transportation and logistics services. With this focus, MISC has grown significantly. Our streamlined business has now paid off with MISC moving forward with an enhanced competitive edge. Over the last three years, we have continuously built our assets. We are also increasing our focus in the construction of deepwater facilities, drydocking of large tankers and marine conversion of FPSOs and FSOs. As we transcend and aspire to create global prominence, we are supported by one unified synergy to be a: Visionary, Strategist, Partner,
People Enhancer, Innovator, Educator and HSE Practitioner.
RM11.2b
Revenue
RM2.9b
Profit Before Taxation
RM18.6b RM27.9b
Shareholders Fund Total Assets
Contents
Chairmans Statement page 034 Investors Report 004
Current Year Financial Highlights
015
Over 340 Ports in 69 Countries
028
Senior Management
018
Group Structure
Corporate Accountability 034

Chairmans Statement
006
5-Year Financial Highlights
020
Statistics on Shareholdings
038 010
Vision Statement
021
Share Performance
012
MISC at a Glance
022
Financial Calendar
082
Statement on Corporate Governance
042
Internal Control Statement
013
In the News
Board & Management 023

Corporate Information
014
Fleet Strength
People Development
046
Terms of Reference of the Board Audit Committee
024
Directors Profile
President/CEOs Report
page 048
"With the business expansion and improvement initiatives in place supported by the appropriate human resource strategies, MISC is confident of sustaining business growth and moving closer in achieving its vision"
Sustaining Operational Growth 048
President/CEO's Report
084
People Highlights
190
Properties Owned by MISC Berhad & its Subsidiaries
086
Health, Safety & Environment
194
List of Vessels
070
Future Outlook
Corporate Social Responsiblity 092

MISC & Corporate Social Responsibility
204
MISC Offices Around the World
072
Corporate Highlights
206
Notice of Annual General Meeting
050
Segment Operations
078
Investor Relations
094
Youth Development
210 Financials 097

Financial Statements Statement Accompanying Notice of Annual General Meeting
066
Fleet Management
Human Capital 082

People Development
068
Human Resource Management
Form of Proxy
current year financial highlights
004
Current Year Financial Highlights

Profitability (RM' million)
Excluding the gain on disposal of ships of RM436.6 million for the current year, the financial year's profit before taxation was RM2,493.7 million which was 7.6% lower than the preceding years profit before taxation of RM2,698.5 million (excluding gain on disposal of RM202.3 million). The decrease in profit before taxation was mainly due to softening of rates and increase in cost of operations.
Dividend Paid per Share (sen)

Dividend paid per share as reflected in the financial statement was at 30 sen per share for the current year, comprising 20 sen final dividend for FY 2005/2006, and 10 sen interim dividend for FY 2006/2007.
Shareholders' Funds (RM' million)

Shareholders' funds increased by 2.7% to RM18,639.2 million from RM18,156.2 million resulting from the additional earnings retained for the financial year.
Debt/Equity Ratio (ratio)

Debt/equity ratio increased marginally to 0.37 from 0.36 due to the increase in Groups borrowings.
Balance Sheet (RM' million)

Total assets increased by 1.2% to RM27,954.8 million from RM27,623.1 million. The increase was mainly due to the increase in ships, property, plant and equipment of RM1,086.9 and investments in jointly controlled entities of RM363.9 million. However, the said increase has been offsetted by the decrease in current assets amounting to RM1,111.3 million.
Earnings Per Share (sen)

Earning per share increased by 0.80 sen or 1.1%.
current year financial highlights
005
Profitability
(RM' million)
Earnings
(sen per share)
07
11,198.9 2,930.3
06
10,747.1 2,900.8
05
10,650.8 4,738.9
04
7,606.3 2,326.4
03
5,433.0 1,310.3
07
76.7 30.0
06
75.9 30.0
05
128.1* 22.5*
04
61.6* 15.0*
03
35.2* 15.0*
* Adjusted for bonus Issue
Revenue Profit before Taxation
Earnings per Share Dividends per Share
Balance Sheet
(RM' million)
Debt/Equity Ratio
(ratio)
07
27,954.8 18,639.2
06
27,623.1 18,156.2
05
25,431.4 15,279.8
04
22,355.5 11,351.8
03
14,726.3 9,618.3
07
0.37 0.25
06
0.36 0.18
05
0.54 0.25
04
0.82 0.66
03
0.44 0.33
Total Assets Shareholders' Funds
Total Debt/Equity Net Debt/Equity
5-year financial highlights
006
on Sh are ho lde rs Fu nd s (% )
Pr Ho ofit lde for rs th of e Y th ea eC rA or ttr po ib ra uta tio b n ( le RM to 'm Equ illio it n) y
2007
2006
2006
To tal Bo rro wi ng s (R M' mi llio n)
2,852
2,823
2007
15
16
2007
6,804
6,608
2006
2005
2005
4,764
31
2005
8,215
Re tur n
2004
2004
2,290
20
2004
9,356
2003
2003
1,311
14
2003
4,245
2007 RMmillion** Revenue Profit before taxation Profit for the year attributable to equity holders of the Corporation Taxation Dividends Earnings per share (sen)* Return on assets (%) Return on shareholders funds (%) Profit before taxation as % of revenue Profit for the year attributable to equity holders of the Corporation as % of revenue Paid-up capital 11,198.9 2,930.3 2,852.0 33.4 1,097.0 76.7 12.3 15.3 26.2 25.5 3,719.8 18,639.2 27,954.8 9,074.2 6,804.4 4,399.0 473.1 0.37 13.4
2006 RMmillion
**
2005 RMmillion 10,650.8 4,738.9 4,763.5 18.9 837.0 128.1 22.5 31.2 44.5 44.7 1,859.9 15,279.8 25,431.4 9,876.1 8,214.5 2,665.4 382.2 0.54 15.6
2004 RMmillion 7,606.3 2,326.4 2,289.6 7.1 558.0 61.6 14.2 20.2 30.6 30.1 1,859.9 11,351.8 22,355.5 10,752.5 9,356.3 6,875.6 278.9 0.82 17.6
2003 RMmillion 5,433.0 1,310.3 1,310.7 (3.5) 558.0 35.2 10.5 13.6 24.1 24.1 1,859.9 9,618.3 14,726.3 5,032.9 4,244.7 1,912.0 248.3 0.44 14.3
10,747.1 2,900.8 2,822.6 30.2 1,114.1 75.9 12.8 15.5 27.0 26.3 3,719.8 18,156.2 27,623.1 9,182.2 6,607.7 3,326.6 460.2 0.36 13.6
5-Year Financial Highlights

Shareholders funds Total assets Total liabilities Total borrowings Capital expenditure Net tangible assets per share (sen)* Debt/equity ratio Interest cover ratio
* Adjusted for bonus issue ** The 2007 & 2006 audited summary data reflects the adoption of new and revised FRSs.
5-year financial highlights
007
Ex pe nd itu re (RM 'm illio n)
4,399
3,327
473
460
Co ve rR ati o( no .o f ti me s)
2007
Pe rS ha re (se n)
2007
2007
13
14
2006
2006
2006
2005
Ne tT an gib le As set s
2,665
2005
382
2005
16
2004
6,876
2004
Int ere st
Ca pit al
279
2004
18
2003
1,912
2003
248
2003
14
2007 RMmillion Revenue Profit before taxation Profit for the year attributable to equity holders of the Corporation Taxation Dividends Earnings per share (sen)* Return on assets (%) Return on shareholders funds (%) Profit before taxation as % of revenue Profit for the year attributable to equity holders of the Corporation as % of revenue Paid-up capital Shareholders funds Total assets Total liabilities Total borrowings Capital expenditure Net tangible assets per share (sen)* Debt/equity ratio Interest cover ratio 11,198.9 2,930.3 2,852.0 33.4 1,097.0 76.7 12.3 15.3 26.2 25.5 3,719.8 18,639.2 27,954.8 9,074.2 6,804.4 4,399.0 473.1 0.37 13.4
2006 RMmillion 10,747.1 2,900.8 2,822.6 30.2 1,114.1 75.9 12.8 15.5 27.0 26.3 3,719.8 18,156.2 27,623.1 9,182.2 6,607.7 3,326.6 460.2 0.36 13.6
2005 RMmillion
***
2004 RMmillion
***
2003 RMmillion*** 5,433.0 1,241.4 1,241.7 (3.5) 558.0 33.4 8.8 10.3 22.8 22.9 1,859.9 12,113.4 17,231.2 5,042.8 4,244.7 1,912.0 315.4 0.35 22.8
10,650.8 4,242.6 4,272.3 18.9 837.0 114.9 18.7 25.2 39.8 40.1 1,859.9 16,986.3 27,142.4 9,885.5 8,214.5 2,665.4 428.1 0.48 15.0
7,606.3 1,894.1 1,857.2 7.1 558.0 49.9 10.4 13.7 24.9 24.4 1,859.9 13,569.3 24,584.5 10,764.0 9,356.3 6,875.6 338.1 0.69 16.8
*** The selected consolidated financial data for the years 2005, 2004 and 2003 have been restated for the adoption of FRS121: The Effects of Changes in Foreign Exchange Rates. The restated selected consolidated financial data for the financial years 2005, 2004 and 2003 have not been audited and is presented solely for comparison purposes.
We never stop believing and we never stop going forward, crossing all boundaries and traversing the worlds unchartered waters.
We believe that in order to see what the world has to offer, one must travel. And travelled we have. Across oceans and seas, the Believer in us continue to explore the wonderful world of opportunities.
Vision Statement
To be the preferred provider of world-class Maritime Transportation and Logistics Services
Mission Statement
We are a logistics service provider, maritime transportation is our core business and we support the nations aspiration to become a leading maritime nation.
Shared Values
LOYALTY INTEGRITY
Loyal to nation and corporation
Honest and upright
PROFESSIONALISM
COHESIVENESS
Committed, innovative, proactive and always striving for excellence
United in purpose
Partner:
Growing operational strength through partnership building
Through the close collaborations achieved in the successful completion of various projects and ventures, MISC has further solidified its belief in growing through partnerships.
MISC at a glance
012
MISC at a Glance
MISC Berhad (MISC), a subsidiary of PETRONAS, is the leading international shipping line of Malaysia. The principal business of the Corporation consists of ship-owning, ship management and other related logistics and maritime transportation services.
Since its establishment in 1968, MISC has developed into a sound, successful Corporation that continues to grow on the solid foundation upon which it was built. The public listing of its shares in 1987 and its current standing as one of the top five companies in terms of market capitalisation as at June 2007 on the Main Board of Bursa Malaysia Securities Berhad further demonstrates its sound standing and viability. As a member of the PETRONAS Group, MISC is expected to benefit and further strengthen business synergies and economies of scale from related operations of its business. Through the provision of reliable, efficient and competitive services, MISC has indeed become a truly international player. Its modern, well-diversified and relatively young fleet of more than 100 vessels with a combined tonnage of more than 8 million deadweight tonnes and land-based facilities managed by experienced personnel enable MISC to meet the various demands of its customers. Through its wide network of shipping operations, all linked by the latest information and logistics systems support, MISC offers wide geographical coverage. This network also extends to many inland destinations and landlocked markets. Endowed with such diverse operations, MISC offers total logistics solution to its customers.
awards picture from left to right: Finance Asia - Asias 5th Best Managed Company 2006, CILT Company of the Year 2006, The BrandLaureate - Best Brand for Transportation-Shipping 2006, Lloyds List Maritime Asia Award - LNG Operator of the Year 2006, Premier ICT Award 2006 - Private Sector Category
in the news
013
In the News
AET bullish on cracking VLCC top five
Lloyds List, 24 Aug 2006 AET is setting its sights on joining the top five very large crude carrier owners, with plans to at least double its fleet. Already the world's second largest owner and operator of Aframax tankers, the former American Eagle Tankers and now wholly owned unit of MISC wants to become a top player in the VLCC business.
MISC commences first HALAL express services

Halal Journal, 21 Sept 2006
MMHE equips itself to become full-fledged deepwater centre

New Straits Times, 4 Dec 2006
Auto logistics tie-up between MILS and BLG

New Straits Times, 25 Dec 2006
Offshore business to make up 6-7pc of revenue: MISC
MISC increases its VLCC fleet

The Star, 6 Nov 2006
New Straits Time, 30 Mar 2007 MISC Bhd expects its offshore business to make up between 6 and 7 percent of total revenue over the next five years. Through its subsidiary Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE), MISC Bhd has landed themselves with contracts to build FPSO vessels and a future overseas job.
MISC determined to retain LNG leadership

Lloyds List, 19 Nov 2006 MISC Bhd, the shipping firm and the worlds largest owner of liquefied natural gas carriers is looking to broaden its base of business beyond its parent to third party contracts. To date, they have successfully secured a total of three third party LNG shipping contracts. These include medium term charters with Gas de France and BG plus a long term charter for two newbuildings with Yemen LNG.
MISC: Full Sail Ahead

Asia Oil & Gas Monitor, 29 Nov 2006 MISC Bhd is investing 20 billion ringgit (USD5.5 billion) over the next five years on a host of ships in a bid to become a global transportation company. The company's order list includes seven liquefied natural gas (LNG) tankers, eight chemical tankers, nine Aframax oil tankers and very large crude carriers (VLCC) as well as one big container vessel.
Growing deepwater sector a boon to MISC

The Star, 21 May 2007 MISCs expansion into the floating production systems (FPS) and floating storage and offloading vessels (FSO) business is gaining momentum.
fleet strength
014
Fleet * Strength
LNG Carriers
Aman Class Tenaga Class Puteri Class Puteri Satu Class Seri A Class Seri B Class 3 5 5 6 4 1
(as at 30 June 2007)
Petroleum Tankers
VLCC Aframax Product Long Range 2 (LR2) 9 31 5 1
Chemical Tankers
Melati Class Anggerik Class Semarak Class 7 4 2
24
46
13
Containerships
Above 5000 TEUs 3000-5000 TEUs 1000-3000 TEUs Below 1000 TEUs 2 3 8 8
Offshore Floating Facilities

FPSO** FSO 3 3
Others
LPG Dry Bulk (Panamax) 3 1
21
* excluding in-chartered vessels and newbuildings ** including jointly owned FPSO
over 340 ports in 69 countries
015

Algeria
Arzew Bethioua Rio Grande Santos Vila Do Conde
Argentina
Bahia Blanca Rosario San Lorenzo Zona Comun
Brunei
Lumut Seria
Bulgaria
Varna
Australia
Adelaide Bellbay Brisbane Freemantle Gove Melbourne Newcastle Port Kembla Sydney Torres Strait Varanus Island Whitnell Bay
Canada
Duke Point Mackay Montreal Stag Terminal Vancouver BC
Shekou Ulsan Yantian Yantai Yizheng Yingkou Xiamen Xijiang Terminal Xiaohudao Xinsha Taicang Taizhou Tianjin Tianjinxingang Zhangjiagang Zhuhai Zhoushan
France
Bordeaux Dunkirk Fos-sur-mer Lavera Le Harve Montoir de Bretagne Rouen
Germany
Brake Hamburg
Gibraltar
Gibraltar
Greece
Patras
China
Bohai BZ Terminal Chiwan Dailan Dongguan Fangcheng Guangzhou Huangpu Huizhou Jiangyin Jinzhou Lanshan Lianyungang Mai Liao Macau Nantong Ningbo Panyu Terminal Qingdao Rizhao Shanghai Shantou
Costa Rica
Punta Morales
Hong Kong
Hong Kong
Denmark
Fredericia
India
Chennai Cochin Dahej Hazira Haldia Kandla Marmagao Mumbai Mundra New Mangalore Nhava Sheva Ratnagiri Sikka Visakhapatnam
Bahamas
Freeport
Dominican Republic
San Pedro De Macoris
Bangladesh
Chittagong
Egypt
Adabiya Alexandria Damietta Idku Port Said Suez Canal
Belgium
Antwerp Ghent Zeebrugge
Brazil
Barcarena Munguba Paranagua Recife
El Salvador
Acajutla
Estonia
Tallinn
016
Indonesia
Arun Batam Badak Balikpapan Balongan Terminal Batam Island Belawan Bitung Blang Lancang Bontang Cilacap Dumai Exspan Terminal Jabung Terminal Jakarta Karimun Kuala Tanjung Manggis Bay North Pulau Laut Padang Sungai Pakning Sungai Udang Surubaya Taboneo Tanjung Bara Tanjung Uban Tuban
Gioia Tauro La Spezia Livorno Porto Marghera Ravenna Sarroch Oil Port
Jordan
Aqaba
Kenya
Mombasa
Sungai Udang Tanjung Pelepas Tanjung Bin Tanjong Sulong Tawau
Kuwait Jamaica
Kingston Mina Al Ahmadi Shuaiba
Mexico
Coatzacoalcos
Namibia Japan
Chita Chiba Futtsu Hakata Hatsukaichi Higashi Ogishima Himeji Hiroshima Ishigaki Kanakowa Kawasaki Kobe Mizushima Kisarazu Nagasaki Nagoya Nakagusuku Negishi Niigata Ogisjima Osaka Sakai Senboku I & II Sendai Shimizu Shimotsu Sodegaura Tokyo Yokkaichi Yokohama
Latvia
Ventspils
Walvis Bay
Netherlands Lithuania
Klaipeda Amsterdam Rotterdam Scheveningen St Eustatius Vlissingen
Lebanon
Jubail
Malaysia
Bintulu Kerteh Terminal Kemaman Kidurong Kota Kinabalu Kuantan Kuching Kunak Labuan Lahad Datu Lumut Melaka Miri Muara Pasir Gudang Penara Terminal Port Dickson Port Klang Prai Sandakan Sibu
New Zealand
Auckland Lyttelton Napier Tauranga Wellington/Nelson
Nigeria
Bonny Island
Iran
Asaluyeh Bandar Abbas Bandar Khomeini Bandar Mashahr
Norway
Hemmerfest Rafnes Slagentangen
Oman
Qalhat
Iraq
Umm Qasr
Pakistan
Karachi Port Qasim
Italy
Brindisi Cagliari Genoa
017
Panama
Panama Canal
Singapore
Singapore
Taichung Yung An
Papua New Guinea

Alotau Kimbe Oro Bay
South Africa
Cape Town Durban
Thailand
Benchamas Terminal Laem Chabang Map Ta Phut Platong Terminal Rayong Sriracha
South Korea Philippines

Bataan Batangas Belanak Terminal Calbayog Danao Davao Gingoog Iligan Iloilo Manila Roxas Daesan Incheon Gwangyang Kwangyang Onsan Pyongtaek Pusan Tongyeong Ulsan Yeosu
Trinidad & Tobago

Point Fortin
Tunisia
La Skhirra
Turkey
Aliaga Bosporus Strait Dardanelles Izmir Istanbul Marmara Ereglisi
Bayonne NJ Charleston Cove Point Dartmouth NS Delaware City Elba Charles Honolulu Houston Isabel Lake Charles New Orleans New York Norfolk Pasadena Point Comfort Porland ME Savannah Searsport Texas City
Spain
Algeciras Aviles Bilbao Barcelona Catagena Convent Huelva Las Palmas Sagunto Santa Cruz Tenerife Tarragona
Venezuela
Borburata
Poland
Gdansk Gdynia
Vietnam
Cai Lan Ho Chi Minh City Rang Dong Terminal Su Tu Den Vung Tau
Puerto Rico
Ponce
United Arab Emirates

Bandar Abbas Fujairah Jebel Ali Sharjah
Qatar
Ras Laffan
Romania
Constanta
United Kingdom Sri Lanka

Colombo Felix Towe Isle of Grain Liverpool Southampton Thamesport
Russia
Astrakhan Novorossiysk
Sudan
Marsa Bashayer Port Sudan
Saudi Arabia
Jeddah Ras Tanura Yanbo
Taiwan
Kaohsiung Suao
United States of America

Baltimore Baton Rouge
Group Structure
LNG Petroleum Offshore Marine & Heavy Engineering
100% 100%
PETRONAS Tankers Sdn Bhd (Ship Management) Puteri Delima Sdn Bhd
(Shipowning)
100%
MISC Tanker Holdings Sdn Bhd

(Investment Holdings)
100%
MISC Offshore Holdings (Brazil) Sdn Bhd (Investment

Holdings)
49%
MSE Holdings Sdn Bhd

100%
100%
MISC Tanker Holdings (Bermuda) Ltd (Investment Holdings) AET Tanker Holdings Sdn Bhd
SBM Systems Inc

(FPSO Owner)
100%
Malaysia Marine & Heavy Engineering Sdn Bhd (Ship Repair &
Heavy Engineering)
100%
Puteri Firus Sdn Bhd

(Shipowning)
100%
49%
FPSO Brasil Venture S.A (formerly known as SBM Espirito Santo Inc)
(Operations & Maintenance)
100%
100%
MSE Corporation Sdn Bhd

(Processing of Copper Grit)
100%
Puteri Intan Sdn Bhd

(Shipowning)
100%
AET Petroleum Tanker (M) Sdn Bhd (Shipowning) AET Shipmanagement (Malaysia) Sdn Bhd (formerly
known as ESPL Fleet Management Sdn Bhd) (Ship Management)
SBM Operacoes LTDA

(Operations & Maintenance)
100%
Techno Indah Sdn Bhd

(Sludge Treatment)
100%
Puteri Nilam Sdn Bhd

(Shipowning)
100%
49%
Brazilian Deepwater Floating Terminals Limited

(Construction of FPSO)
100%
Malaysia Tank Cleaning Company Sdn Bhd (Dormant) MMHE-ATB Sdn Bhd (Process
Equipment for Petrochemical, Oil & Gas and Power Generation Plants)
100%
Puteri Zamrud Sdn Bhd

(Shipowning)
100%
Red Harbour Sdn Bhd

(Shipowning )
49%
Brazilian Deepwater Production Limited

(Chartering of FPSO)
89%
100%
Puteri Delima Satu (L) Pte Ltd (Shipowning) Puteri Firus Satu (L) Pte Ltd (Shipowning)
100%
AET Shipmanagement (Singapore) Pte Ltd (formerly

known as Eagle Shipmanagement Pte Ltd) (Ship Management)
49%
Brazilian Deepwater Production Contractors Limited (Operations and

maintenance of FPSO)
70%
MMHE-SHI LNG Sdn Bhd

(Maintenance, Repair & Refurbishment of LNG Carriers)
100%
100%
AET Tankers Pte Ltd

(Commercial Operations & Chartering)
100%
100%
Puteri Nilam Satu (L) Pte Ltd (Shipowning) Puteri Intan Satu (L) Pte Ltd (Shipowning) Puteri Mutiara Satu (L) Pte Ltd (Shipowning)
MISC Offshore Floating Terminals (L) Pte Ltd (FPSO

Owner)
100%
AET UK Limited (Commercial Operations & Chartering)

51%
100%
Malaysia Deepwater Floating Terminal (Kikeh) Ltd (FPSO Owner) Malaysia Deepwater Production Contractors Sdn Bhd (Operations
& Maintenance of FPSO)
100%
AET Holdings (L) Pte Ltd (Invesment Holdings)

51%
100%
100%
AET Inc Limited

(Shipowing & Operations)
100%
Puteri Zamrud Satu (L) Pte Ltd (Shipowning)

100%
FPSO Ventures Sdn Bhd

51%
(Operations and Maintenance of Offshore Floating Terminals)
50%
American Marine & Offshore Services Ltd

(Shipping Agent & Lightering)
100%
Bunga Kasturi (L) Pte Ltd (Shipowning)

100%
Offshore Marine Ventures Sdn Bhd (Chartering of Vessels)
AET Agencies Inc

(Property Owning)
51%
Asia LNG Transport Sdn Bhd

(Shipowning/ Ship Management)
100%
AET Offshore Services Inc

(formerly known as Pelican Offshore Services Co Inc) (Lightering Operations)
51%
Asia LNG Transport Dua Sdn Bhd (Shipowning/

Ship Management)
100%
MTL Petrolink Corp

100%
OMIP Inc (Ship Rental & Lightering Operations) Offshore Marine Services Inc
(Lightering Operations)
100%
100%
Harlink Inc
100%
Nuelink Inc
100%
Paramount Tankers Corp

(Shipowning)
60%
MISC Nigeria Ltd

(Ship Operating & Other Activities Related To Shipping)
group structure
019
Liner & Integrated Logistics

100%
Maritime Education
Others
MISC Integrated Logistics Sdn Bhd (Integrated Logistics Services)

60%
100%
Malaysian Maritime Academy Sdn Bhd (Education

& Training for Seaman & Maritime Personnel)
100% 100%
MISC Capital (L) Ltd

MILS Seafrigo Sdn Bhd

(Own, manage and operate a Cold Storage Logistics Hub)
100%
MISC International (L) Ltd

60%
MILS-SterilGamma Sdn Bhd

(Sterilsation and fumigation facilities)
49%
SL-MISC International Line Co Ltd (Shipowning) MISC Enterprises Holdings Sdn Bhd (Voluntary Liquidation)
60%
BLG - MILS Logistics Sdn Bhd (Automotive Solutions) KEER - MISC Logistics Co Ltd (Transport) RAIS - MILS Logistics FZCO
(Integrated Logistics Services)
100%
50%
50%
Transware Distribution Services Pte Ltd (Warehousing) Trans-ware Logistics (Pvt) Ltd (Inland Container Depot) MISC Properties Sdn Bhd (Dormant)
25%
50%
100%
100%
MISC Haulage Services Sdn Bhd (Dormant)

100% 100%
100%
MISC Trucking and Warehousing Services Sdn Bhd (Dormant) MISC Agencies Sdn Bhd
(Shipping Agent)
MISC Ferry Services Sdn Bhd (Dormant) MISC Ship Management Sdn Bhd (Dormant)
100% 100%
100%
100%
MISC Agencies (Australia) Pty Ltd (Shipping Agent) MISC Agencies (U.K.) Ltd (Shipping Agent) MISC Agencies (Japan) Ltd (Shipping Agent) MISC Agencies (Netherlands) B.V.
(Shipping Agent)
100%
100%
100%
100%
MISC Agencies (Singapore) Pte Ltd (Shipping Agent) Leo Launches Pte Ltd
(Launch Operator)
51%
65%
MISC Agencies (Sarawak) Sdn Bhd (Shipping Agent) MISC Agencies (Thailand) Co Ltd (Shipping Agent) MISC Agencies (Lanka) Pvt Ltd (Shipping Agent)
49%
40%
Note: Chemical Business is under MISC Berhad
statistics on shareholdings
020
Analysis of Shareholdings Size of Shareholdings

Less than 100 100 - 1,000 1,000 - 10,000 10,001 - 100,000 100,001 to less than 5% of issued shares 5% and above of issued shares Total
No. of Shareholders
240 1,571 3,296 1,136 501 2 6,746
% of Shareholders
3.56 23.29 48.86 16.84 7.43 0.03 100.00
No. of Shares
6,067 1,091,386 13,156,523 37,580,670 1,039,783,338 2,628,209,602 3,719,827,586
% of Issued Share Capital

0.00 0.03 0.35 1.01 27.96 70.65 100.00
Substantial Shareholders Name of Shareholders

Petroliam Nasional Berhad Employees Provident Fund Board *
30 Largest Shareholders No. Name of Shareholders No. of Shares

2,322,512,920 305,696,682 108,296,200 85,207,500 61,333,334 49,000,000 39,071,200 30,831,514 26,276,000 24,762,400 24,552,153 20,392,500 18,198,922 18,166,512 17,404,200 17,163,600 16,836,600 15,165,200 14,204,560 13,831,700 13,349,600 10,909,434 10,800,000 10,767,500 10,045,000 9,299,400 8,929,000 7,352,300 7,306,100 6,613,800
%
62.44 8.22 2.91 2.29 1.65 1.32 1.05 0.83 0.71 0.67 0.66 0.55 0.49 0.49 0.47 0.46 0.45 0.41 0.38 0.37 0.36 0.29 0.29 0.29 0.27 0.25 0.24 0.20 0.20 0.18
No. of Shares
2,322,512,920 654,865,064
%
62.44 17.60
1. 2. 3. 4. 5 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.
* inclusive of shares held through nominees.
Statistics on Shareholdings
as at 29 June 2007
26. 27. 28. 29. 30.
Cartaban Nominees (Tempatan) Sdn Bhd Petroliam Nasional Berhad (Strategic INV) Employees Provident Fund Board Amanah Raya Nominees (Tempatan) Sdn Bhd Skim Amanah Saham Bumiputera Lembaga Kemajuan Tanah Persekutuan (FELDA) State Financial Secretary Sarawak Perbadanan Pembangunan Pulau Pinang Valuecap Sdn Bhd Lembaga Tabung Haji Amanah Raya Nominees (Tempatan) Sdn Bhd Amanah Saham Malaysia Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (PAR 1) Citigroup Nominees (Asing) Sdn. Bhd. Exempt AN for Mellon Bank (Mellon) Amanah Raya Nominees (Tempatan) Sdn Bhd Amanah Saham Wawasan 2020 Citigroup Nominees (Asing) Sdn Bhd Exempt AN for Merrill Lynch Pierce Fenner & Smith Incorporated (Foreign) HSBC Nominees (Asing) Sdn Bhd Exempt AN for JPMorgan Chase Bank, National Association (U.S.A.) " Cartaban Nominees (Asing) Sdn Bhd Exempt AN for RBC Dexia Investor Services Trust (Clients Account) Kerajaan Negeri Pahang Permodalan Nasional Berhad Cartaban Nominees (Asing) Sdn Bhd Investors Bank And Trust Company for Ishares, Inc. Cimsec Nominees (Tempatan) Sdn Bhd Security Trustee (KCW Issue 1) HSBC Nominees (Tempatan) Sdn Bhd Nomura Asset Mgmt Malaysia for Employees Provident Fund Amanah Raya Nominees (Tempatan) Sdn Bhd Amanah Saham Didik Citigroup Nominees (Tempatan) Sdn Bhd Exempt AN for Prudential Assurance Malaysia Berhad SBB Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board HSBC Nominees (Asing) Sdn Bhd TNTC for Mondrian Emerging Markets Equity Fund L. P. Alliancegroup Nominees (Tempatan) Sdn Bhd PHEIM Asset Management Sdn Bhd for Employees Provident Fund Mayban Nominees (Tempatan) Sdn Bhd Mayban Trustees Berhad for Public Ittikal Fund (N14011970240) Cartaban Nominees (Tempatan) Sdn Bhd Petronas for Petronas Retirement Benefit Scheme HSBC Nominees (Asing) Sdn Bhd BBH And Co. Boston for Vanguard Emerging Markets Stock Indexfund HSBC Nominees (Asing) Sdn Bhd BBH (LUX) SCA for Fidelity Funds Malaysia Citigroup Nominees (Tempatan) Sdn Bhd ING Insurance Berhad (INV-IL PAR)
Total
3,324,275,831
89.37
share performance
021
Date
18.05.06
Announcement
Joint Venture Agreement between MILS and Rais Hassan Saadi L.L.C Joint Venture Agreement between AET and Golden Energy Tanker Holdings Corporation Proposed acquisition of 49% interest in SBM Systems Inc and SBM Espirito Santo Inc Two new charters and two charter extensions for the existing LNG carriers Memorandum of Understanding between MISC and Universiti Teknologi Malaysia 1st quarter results for FY2006/07 Order confirmation of four Aframax tanker newbuildings and delivery of one very large crude carrier Joint Venture Agreement between MILS and BLG International Logistics GMBH & CO. KG Sale and lease-back of 5 Aframax tankers
MISC Local Shares

Volume (shares in million) 40 (RM) 12
07.06.06
30
20
09.06.06
10
21.07.06
0 31.03.06 28.04.06 31.05.06 30.06.06 31.07.06 31.08.06 29.09.06 31.10.06 30.11.06 29.12.06 31.01.07 28.02.07 30.03.07 30.04.07 31.05.07 29.06.07
02.08.06
14.08.06
31.10.06
15.11.06
Share Performance
as at 29 June 2007
MISC Foreign Shares
Volume (shares in million) 80 (RM) 12 60 9
20.11.06
23.11.06
2nd quarter results for FY2006/07 Order confirmation of two Aframax tanker newbuildings 3rd quarter results for FY2006/07 Joint Venture Agreement between MISC and SBM Holding Inc SA BC10 Project, Brazil FSO Abu Contract awarded to MISC 4th quarter results for FY2006/07
05.12.06
28.02.07
29.03.07
40
20
25.04.07
0 31.03.06 28.04.06 31.05.06 30.06.06 31.07.06 31.08.06 29.09.06 31.10.06 30.11.06 29.12.06 31.01.07 28.02.07 30.03.07 30.04.07 31.05.07 29.06.07
10.05.07
Source : Bursa Malaysia Berhad
Monthly Volume
PX Low
PX High
Source : Bloomberg
financial calendar
022
Financial Calendar
2006
Aug Nov
Feb
2007
May
Quarterly Results
Quarter 1 Results
14
23
Quarter 2 Results
23
22
Quarter 3 Results
28
10
Quarter 4 Results
10
30
Nov
Dec
May
Aug
Dividends
Interim Announced
Interim Paid
Final Announced
Final Payable
Jul
Annual Report
Annual Report Issued
25
Aug
Annual General Meeting
AGM
16
corporate information
023
Board of Directors
Chairman Tan Sri Dato Sri Mohd Hassan bin Marican President/ Chief Executive Officer Dato' Shamsul Azhar bin Abbas Directors Dato Sri Liang Kim Bang Harry K Menon Dato' Halipah binti Esa Datuk Nasarudin bin Md Idris Dato' Kalsom binti Abd Rahman Dato' Dr. Wan Abdul Aziz bin Wan Abdullah * Dato' Ibrahim Mahaludin bin Puteh
(alternate Director to Dato Dr. Wan Abdul Aziz bin Wan Abdullah)
Company Secretary Fina Norhizah binti Hj Baharu Zaman Audit Committee Members Dato' Halipah binti Esa *(Chairman) Dato Sri Liang Kim Bang * Harry K Menon * Dato' Kalsom binti Abd Rahman*
* Independent Non-Executive Director
Corporate Information
Registered Office Level 25, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : +603 2273 8088 Fax : +603 2273 6602 Telex : Naline MA 30325 MA 32449 Cable : MALAYASHIP KUALA LUMPUR Web : www.misc.com.my Auditors Ernst & Young Level 23A, Menara Milenium Jalan Damanlela Pusat Bandar Damansara 50490 Kuala Lumpur Principal Bankers CIMB Bank Berhad Malayan Banking Berhad Hongkong Bank Malaysia Berhad Share Registrars Symphony Share Registrars Sdn Bhd Level 26, Menara Multi Purpose Capital Square No 8, Jalan Munshi Abdullah 50100 Kuala Lumpur Tel : +603 2721 2222 Fax : +603 2721 2531 Stock Exchange Listing The Main Board of Bursa Malaysia Securities Berhad
directors' profile
024
Chairman
Tan Sri Dato Sri Mohd Hassan bin Marican
aged 54, is the President and Chief Executive Officer of Petroliam Nasional Berhad (PETRONAS). A Fellow of the Institute of Chartered Accountants in England and Wales, as well as a member of the Malaysian Institute of Accountants and the Malaysian Institute of Certified Public Accountants. He joined PETRONAS in 1989 as Senior Vice President of Finance and was appointed as President and Chief Executive Officer in February 1995. Tan Sri Dato Sri Mohd Hassan is a member of the PETRONAS Board of Directors, and apart from MISC Berhad, he is also the Chairman of PETRONAS Gas Berhad, another public listed subsidiary of PETRONAS, and Chairman of Engen Limited, South Africa's leading oil refining and marketing company, a subsidiary of PETRONAS. Beyond PETRONAS, Tan Sri Dato Sri Mohd Hassan is a Board member of Bank Negara Malaysia and a member of the Board of Malaysia-Thailand Joint Authority, which oversees petroleum development in the overlapping area between Malaysia and Thailand. He is also a member of the International Investment Council for the Republic of South Africa.
Directors Profile
directors' profile
025
Dato' Shamsul Azhar bin Abbas

aged 55, is the President / Chief Executive Officer of MISC Berhad. He sits on the Board of MISC and is the Chairman on the Boards of MISC's major subsidiaries. He is also the Chairman of PETRONAS Maritime Services Sdn Bhd, AET Tanker Holdings Sdn Bhd, Malaysia Marine and Heavy Engineering Sdn Bhd, MISC Integrated Logistics Sdn Bhd and a Director on the Boards of Bintulu Port Holdings Berhad, NCB Holdings Bhd and The London Steamship Owners' Mutual Insurance Association Limited (London P & I Club) and Council Member of American Bureau of Shipping (ABS) and Bureau Veritas. Dato' Shamsul Azhar bin Abbas holds a degree in Political Science from Science University of Malaysia, a Masters of Science Degree (MSc.) in Energy Management from University of Pennsylvania, USA and a Technical Diploma in Petroleum Economics from Institute Francaise du Petrole (IFP), France. He joined PETRONAS in 1975 and has held various senior management positions including Senior General Manager Corporate Planning and Development Division, Vice President Petrochemical Business, Vice President Oil Business, Vice President Exploration and Production Business and Vice President Logistics & Maritime Business. He was appointed as the Managing Director/Chief Executive Officer of MISC Berhad on 1 July 2004 and is currently a member of the PETRONAS Management Committee.
President / Chief Executive Officer
Dato Sri Liang Kim Bang

aged 70, is an Independent NonExecutive Director of MISC Berhad since 1972. He studied at University of Malaya, Singapore, 1957-1961 graduating with B.A. and B.A. (Hons) degrees and at University of Cambridge (Trinity College), England, 1962-1963 in Public Administration. He was also the former Sarawak State Financial Secretary. He is the Non-Executive Chairman of CMS Cement Sdn Bhd, CMS Wires Sdn Bhd and CMS Infra Trading Sdn Bhd. He is also a Non-Executive Director of Cahya Mata Sarawak Berhad, PPB Group Berhad, PPB Oil Palms Berhad, Rashid Hussain Berhad, CMS Trust Management Berhad and Utama Banking Group Berhad. He is also a member of the MISC Board Audit Committee.
directors' profile
026
Harry K Menon
aged 57, is an Independent NonExecutive Director of MISC Berhad since 2001. He is a Fellow of the Institute of Chartered Accountants in England and Wales, as well as a member of the Malaysian Institute of Accountants and the Malaysian Institute of Certified Public Accountants. He spent 13 years in public practice at Hanafiah Raslan & Mohamed, 7 years of which as a Partner. He joined Public Bank Berhad as General Manager and was subsequently promoted to Executive Vice-President. After working with two public listed companies, he joined Putrajaya Holdings Sdn Bhd as its Chief Operating Officer from 1997 2000. He is presently an Executive Director of AWC Facility Solutions Berhad, Chairman of Putrajaya Perdana Berhad and is a Non-Executive Director of SPK-Sentosa Corporation Berhad, AKN Messaging Technologies Berhad and SCICOM (MSC) Berhad as well as a Director of Putrajaya Holdings Sdn Bhd. He is also a member of the MISC Board Audit Committee.
Dato' Halipah binti Esa

aged 57, is an Independent NonExecutive Director of MISC Berhad since 2004. She graduated from University of Malaya with an honours degree majoring in Economics and later was conferred the Masters of Economics degree from the same University. She started her career with the Administrative and Diplomatic Services in 1973 as an Assistant Secretary in the Economic Planning Unit (EPU) in the Prime Minister's Department and subsequently held various other positions in the EPU and became the Deputy Director General Macro (1999-2004). She was Deputy Secretary General (Policy) in the Ministry of Finance from 2004-2005 and subsequently became Director General, Economic Planning Unit, Prime Ministers Department in 2005 before retiring in 2006. Currently she is the Chairman of Pengurusan Aset Air Bhd and sits on the Boards of UDA Holdings Berhad, Cagamas SME Berhad and KLCC Property Holdings Berhad. She was recently appointed as Chairman of the MISC Board Audit Committee.
Datuk Nasarudin bin Md Idris

aged 52, is a Non-Executive Director of MISC Berhad since 2004. He graduated from University of Malaya with a Bachelor of Arts (Honours) in 1978, and joined PETRONAS in the same year. He also holds a Master of Business Administration degree from Henley-The Management College, United Kingdom and a postgraduate diploma in Petroleum Economics from College of Petroleum Studies, United Kingdom. Since joining PETRONAS, he has held various senior management positions within the PETRONAS Group, including as the Senior General Manager, Corporate Planning and Development, Executive Assistant to the President, General Manager, Marketing, PETRONAS Dagangan Berhad, General Manager, Corporate Development Unit and General Manager, Group Strategic Planning. He is currently the Vice President of Corporate Planning and Development Division, and is a member of the Management Committee of PETRONAS. He serves on the Board of Directors of PETRONAS and various other subsidiaries within the PETRONAS Group. As of April 2007, Datuk Nasarudin was appointed Group Chief Executive Officer of KLCC (Holdings) Sdn Bhd, a wholly owned subsidiary of PETRONAS involved in property development & investment holding.
directors' profile
027
Dato Kalsom binti Abd Rahman

aged 58, is an Independent NonExecutive Director of MISC Berhad since 2004. She holds a Bachelor of Economics (Honours) degree from University of Malaya and a Master in Business Administration (Finance) from University of Oregon, USA. She had served in various capacities in the Ministry of International Trade and Industry (MITI) both at Headquarters and Overseas offices, the last post being the Deputy Secretary General (Industry). She sits on the Boards of Malaysian Industrial Development Finance Berhad (MIDF Berhad), MIDF Amanah Asset Management Berhad (formerly known as Amanah SSCM Asset Management Berhad), Chemical Company of Malaysia (CCM Berhad), Lion Forest Industries Berhad (LFIB Berhad), ASEAN Bintulu Fertilizer Sdn Bhd, Amanah International Finance Sdn Bhd, Inokom Corporation Sdn Bhd, Hyumal Motor Sdn Bhd, and Young Entrepreneurs Sdn. Bhd. Currently, she is the Chairman of the Executive Committee of Invest-In-Penang Berhad, and a member of the Consultative Committee of the Group Motor Division of the Sime Darby Berhad.
Dato' Dr. Wan Abdul Aziz Wan Abdullah

aged 55, is an Independent NonExecutive Director of MISC Berhad since 2006. He holds a Ph.D in Economics from University of Leeds, United Kingdom, a Masters in Philosophy in Development Studies from Institute of Development Studies, University of Sussex, United Kingdom and Bachelor in Economics (Honours) in Applied Economics from University of Malaya. He began his career in 1975 with the Malaysian Administrative and Diplomatic Service in the Economic Planning Unit (EPU), Prime Minister's Department as an Assistant Director and subsequently held various other positions in EPU. He was the Deputy Secretary of Economics and International Division, Ministry of Finance (2001) and later became the Deputy Director General (Macro), EPU and subsequently the Deputy Secretary General of Treasury (Policy), Ministry of Finance in 2005. He is currently the Secretary General of Treasury in the Ministry of Finance. He also sits on several other Boards, including the Board of Federal Land Development Authority (FELDA), Malaysia Airlines System Berhad (MAS), Kumpulan Wang Amanah Persaraan (KWAP), Inland Revenue Board, PETRONAS, Kuala Lumpur International Airport Berhad, Cyberview Sdn Bhd, Bank Negara Malaysia, Multimedia Development Corporation, Syarikat Bekalan Air Selangor Sdn Bhd and Pembinaan PFI Sdn Bhd.
Dato Ibrahim Mahaludin bin Puteh

aged 55, was appointed as the Alternate Director to Dato' Dr. Wan Abdul Aziz bin Wan Abdullah on 10 May 2007. He holds a Bachelor of Arts (Honours) from University of Malaya and Master of Business Administration Degree from University of Manchester, United Kingdom. He has served in various divisions at the Ministry of Finance since 1974 and has extensive experience in banking and finance. He had also served as Senior Adviser to the Executive Director for Southeast Asia at the World Bank Group in Washington D.C. He is presently the Deputy Secretary General (Policy) in the Ministry of Finance. He sits on the Boards of Syarikat Prasarana Negara Berhad, SME Bank, Bank Simpanan Nasional, TH Technologies Sdn Bhd and TH Indopalms Sdn Bhd.
senior management
028
Senior Management
is the President / Chief Executive Officer of MISC Berhad. He sits on the Board of MISC and is the Chairman on the Boards of MISC's major subsidiaries. He is also the Chairman of PETRONAS Maritime Services Sdn Bhd, AET Tanker Holdings Sdn Bhd, Malaysia Marine and Heavy Engineering Sdn Bhd, MISC Integrated Logistics Sdn Bhd and a Director on the Boards of Bintulu Port Holdings Berhad, NCB Holdings Bhd and The London Steamship Owners' Mutual Insurance Association Limited (London P & I Club) and Council Member of American Bureau of Shipping (ABS) and Bureau Veritas. Dato' Shamsul Azhar bin Abbas holds a degree in Political Science from Science University of Malaysia, a Masters of Science Degree (MSc.) in Energy Management from University of Pennsylvania, USA and a Technical Diploma in Petroleum Economics from Institute Francaise du Petrole (IFP), France. He joined PETRONAS in 1975 and has held various senior management positions including Senior General Manager Corporate Planning and Development Division, Vice President Petrochemical Business, Vice President Oil Business, Vice President Exploration and Production Business and Vice President Logistics & Maritime Business. He was appointed as the Managing Director/Chief Executive Officer of MISC Berhad on 1 July 2004 and currently a member of the PETRONAS Management Committee.
Zahar Mohd Hashim bin Zainuddin is the Vice President,

Offshore Business. He is a certified Marine Engineer graduated from South Shields Marine & Technical College in the United Kingdom. He is a member of the Malaysian Institute of Certified Engineer and has attended INSEAD Senior Management Development Program. He has over 25 years of experience in shipbuilding, ship operation and project management. He has served in various capacities in PETRONAS and MISC including Senior Manager LNG & Tanker Fleet Operations, FPSO Senior Project Manager and General Manager Offshore Business. He has also served more than 10 years on overseas assignment with PETRONAS including heading the LNG fleet operations and technical liaison office in Japan. He currently sits as a board member for a few of MISC subsidiaries and joint venture companies. He is also Chairman of the Technical Committee for the Malaysian Shipowners Association.
from left to right : Gunaseharan A/L Ganapathy, Dato Shamsul Azhar bin Abbas, Zahar Mohd Hashim bin Zainuddin
Gunaseharan A/L K Ganapathy

is the Vice President, LNG Business. He graduated with an MBA from the University of Bath, U.K. He has also completed the Qualifying Examination of the Institute of Chartered Shipbrokers, London. He serves on various Boards of MISC's subsidiaries. He joined MISC's shore services in 1992 and was attached to the Petroleum Services. Three years later, he took up the post of Project Manager of Petroleum Services and in 2000, he was appointed as General Manager, Petroleum Business. In 2002, he was assigned the additional responsibility of managing the Corporation's Chemical Business and was subsequently redesignated as General Manager, Tanker Business. He was appointed as Vice President of the LNG Business on 1 April 2005.
senior management
029
from left to right : Hilmi bin Mohd Nashir, Wan Yusoff bin Wan Hamat, Niels Kim Balling
Niels Kim Balling is the Vice

President, Liner Business. He is educated in Maritime Law in Denmark, and has attended executive training at University of Wisconsin, Massachusetts Institute of Technology and Stanford-NUS in Singapore. He also serves on various Boards of associated companies and committees within the Group. Prior to joining MISC in 2004 he was the Managing Director of Econships Ltd, a management consulting practice serving amongst others Fortune 50 companies and Government linked companies in Asia, within the energy, retail, transport and aerospace sectors. During his time with Econships Ltd, he was also project leader for the Government study on developing Hong Kong's maritime cluster. Prior to this Kim worked for a number of years with Orient Overseas Container Line and A.P. Moller, the parent company of Maersk. Kim was also active within the Council of Logistics Management USA, International Chamber of Commerce, Pacific Basin Economic Council and served on the advisory council for Hong Kong University, MBA faculty. He is also a member of the World Shipping Council and the International Council of Container Operators.
Hilmi bin Mohd Nashir is the Managing Director/Chief Executive Officer of MISC Integrated Logistics Sdn Bhd (MILS), a wholly-owned subsidiary of MISC Berhad.
He graduated with an honours degree in Economics majoring in Analytical Economics from the University of Malaya. Prior to joining MISC in April 2001 as General Manager of MISC Trucking & Warehousing Sdn Bhd, he was with the PETRONAS Group for more than 20 years, with multi roles and experience ranging from Project Evaluation, Internal Audit, Contract Management, Vendor Development, Treasury and Project Management. In April 2002, he became the Chief Operating Officer of MISC Haulage Services Sdn Bhd before being appointed to his current position in April 2005.
Wan Yusoff bin Wan Hamat is the Managing Director/Chief Executive Officer of Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE).
He graduated with an Honours Degree in Engineering Production from Birmingham University, United Kingdom. Prior to joining MISC in April 2005, he was seconded by PETRONAS to MMHE in May 2004 after serving PETRONAS Oil and Petrochemical businesses for 27 years. He has held various senior management positions in the development and operation of refining and petchem ventures including MTBE (M) Sdn Bhd, PETRONAS Penapisan (Terengganu) Sdn Bhd, PETRONAS Penapisan (Melaka) Sdn Bhd and Aromatics Malaysia Sdn Bhd. In 1999 and thereafter, he assumed the position of Managing Director and Chief Executive Officer of PETRONAS Penapisan (Terengganu) Sdn Bhd.
senior management
030
Senior Management
from left to right : Hor Weng Yew, Noraini binti Che Dan, Michael Ting Sii Ching
Michael Ting Sii Ching is the

Vice President, Corporate Planning and Development. He graduated with a Bachelor of Business Administration degree (majoring in Accounting and Management Information System) from Simon Fraser University, Canada. Prior to joining MISC, he served the Arthur Andersen / HRM Business Consulting Division for around 9 years as Senior Consulting Manager before leaving to join the Phileo Allied Group to head its Corporate Finance Business Unit as General Manager / Executive Director for over 8 years. Subsequent to that, he started and managed his own Corporate, Management and Financial Advisory Practice for two and half years before joining MISC. Prior to his appointment as the Vice President, Corporate Planning and Development on 1 April 2005, he was the General Manager of the same division. He serves on the Boards of various subsidiaries of MISC Berhad and also sits on the Boards of TH Group Berhad and CB Industrial Product Holding Berhad.
Hor Weng Yew is the Senior General

Manager, Chemical Business. He completed his Bachelor of Arts in Economics from the National University of Singapore and obtained his MSc in Shipping, Trade & Finance (Distinction) from the City University Business School, London. He began his career with Neptune Orient Lines Limited (NOL) in 1989 and was involved in the strategy and business planning initiatives for AET, a subsidiary of NOL, since its inception in 1994. He joined the MISC Group in July 2003, following the acquisition of AET by MISC. He was later seconded to London to set up the MISC Regional Office. Prior to his current position on 1 September 2006, he was The Director of the Regional Business Directorate since June 2005.
Noraini binti Che Dan is the Vice

President, Finance. She graduated from University of Manchester with an honours degree in Economics. She is a member of the Malaysian Institute of Accountants and Malaysian Institute of Certified Public Accountants. Prior to joining MISC, she served in Pernas International Holdings Berhad for 15 years in various capacities including Group General Manager Finance and Chief Financial Officer. Prior to the appointment as the Vice President, Finance on 1 April 2005, she was the General Manager of the same division. She sits on the boards of Labuan Reinsurance (L) Ltd and various MISC subsidiaries and investment companies.
senior management
031
from left to right : Nordin bin Mat Yusoff, Fina Norhizah binti Hj Baharu Zaman, Ahmad Hafifi bin Ibrahim
Nordin bin Mat Yusoff is the Vice

President, Fleet Management Services. He graduated from University of Glasgow, Scotland with a degree in Naval Architecture & Ocean Engineering and is a registered Professional Engineer with the Board of Engineers, Malaysia. He joined PETRONAS in 1989 and has served in various capacities in PETRONAS Carigali Sdn Bhd and PETRONAS Tankers Sdn Bhd before joining MISC in 2001. Prior to joining PETRONAS, he was with Malaysia Marine and Heavy Engineering Sdn Bhd and was involved in project management of various new shipbuilding and offshore structures fabrication works. He currently sits as committee member of various classification societies and international shipping organisations. He is a Director of The Britannia Steamship Insurance Association Limited and various subsidiaries of MISC Berhad. He is also the Chairman of the Malaysian Shipowners' Association. Prior to his appointment as Vice President, Fleet Management Services on 1 April 2005, he was the Senior General Manager of the same division.
Fina Norhizah binti Hj Baharu Zaman is the Senior General Manager

of Legal & Corporate Secretarial Affairs Division and the Company Secretary of MISC Berhad.
Ahmad Hafifi bin Ibrahim

She obtained her Bachelor of Law degree from the University of Malaya in 1980 and had started her legal career with the Malaysian Attorney General Chambers where she had served as a Senior Federal Counsel and as the Legal Advisor to the Ministry of Transport. She did her Masters in Law (specialising in maritime and shipping) at the London School of Economics, University of London and had subsequently joined the International Islamic University, Malaysia in 1984 as a law lecturer. She was admitted as an Advocate and Solicitor of the High Court of Malaya in 1986. She joined PETRONAS in 1990 and had served the PETRONAS Legal Department in several capacities. In 2000, she was appointed as the General Manager (Legal) of the Logistics and Maritime Business PETRONAS and as General Manager of the Legal and Corporate Secretarial Affairs Division of MISC. is the Vice President, Human Resources Management. He holds a Degree in Law from the University of London, United Kingdom and a Certificate of Legal Practice from the University of Malaya. He joined PETRONAS in January 1980 and has held various positions in company secretarial and legal services area relating to exploration and production, manufacturing, sales and marketing, property and project management. He was the Company Secretary and General Manager, Commercial Division for PETRONAS Gas Berhad from 1995 to 1999. He was made Chief Executive Officer of Gas District Cooling (Holdings) Sdn Bhd from January 2000 to May 2005 before assuming his current position on 1 June 2005.
Nothing is too hard a pursuit; too impossible a quest.
We have made promises over the years. Promises that we continue to keep. As Strategists who want to increase our scope and venture into greater profitable channels, we aim to reach that complete goal. We want to be a global champion in energy transportation and logistics services and our strategic plans will lead us to greater heights of excellence.
034
Chairmans Statement
chairmans statement
035
Earnings per share improved from 75.9 sen to 76.7 sen while Net Tangible Assets per share increased from RM4.60 to RM4.73. Debt to Equity ratio increased marginally from 0.36 times to 0.37 times.
Dividend
The Board of Directors is recommending a final dividend of 20 sen per share, tax exempt. Together with the interim dividend of 10 sen per share, tax exempt, declared and paid in December 2006, the total dividend for the financial year will be 30 sen per share, tax exempt.
On Behalf of the Board of Directors, I

am pleased to present the Annual Report of MISC Berhad (MISC) for the financial year ended 31 March 2007.
The year under review saw MISC operating in a challenging market environment characterised by softer freight rates across most sectors due to overcapacity of tonnage and higher operating cost as a result of persistently high bunker prices. MISC nevertheless was able to rise to the challenge to deliver a satisfactory financial and operational performance through strong business partnerships, asset growth and focused capability building initiatives. The long term LNG shipping contracts continue to provide an effective cover for the MISC Group against the volatility of the freight market which was prevalent during the year. The year also saw enhanced returns from the heavy engineering business with the completion of major deepwater projects and increased demand for high value marine repair services.
The long term LNG shipping contracts continue to provide an effective cover for the MISC group against volatility of the freight market which was prevalent during the year.
Corporate Development
MISC continue to anchor its vision of becoming "the preferred provider of world-class maritime transportation and logistics services" on its three core pillars of global energy shipping, capability driven heavy engineering services and ASEAN centric logistics services. These core pillars are supported by continuous human resource development emphasising on building leadership and capabilities.
Financial Performance
Against this backdrop, MISC Group generated a higher revenue of RM11,198.9 million during the review period, an increase of 4.2% from RM10,747.1 million recorded in the previous period. Group profit before tax including exceptional gain was RM2,930.3 million, marginally higher than RM2,900.8 million before.
chairmans statement
036
During the year, MISC took delivery of two new LNG tankers, bringing its LNG fleet size to 23 tankers. The year also saw MISC securing a new medium term LNG shipping contract with BG Group and extended a contract with Gaz de France (GdF). AET continue to grow its fleet size by chartering-in four Aframax class tankers and took delivery of two Very Large Crude Carrier (VLCC), increasing its VLCC fleet to nine tankers. Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE) successfully completed and delivered FPSO Kikeh, the first deepwater Floating Production, Storage and Offloading (FPSO) facility to be built in Malaysia. The completion of the facility stands as a testimony to the success of MMHE in building capability in the engineering and construction of deepwater facilities, a capability previously not available in Malaysia. In addition to FPSO Kikeh, MMHE also completed and delivered two Floating Storage and Offloading (FSO) facilities
namely FSO Cendor and FSO Abu. MMHE also embarked on its yard optimization project aimed at increasing capacity and efficiency to undertake more deepwater works. The Offshore Business Unit completed the acquisition of 49% interest in FPSO Brasil, a deepwater FPSO currently in operation in Brazil and acquired a 49% interest in FPSO Espirito Santo, another deepwater FPSO, to be delivered in 2008. The downcycle of the global liner shipping business persisted during the financial year. Even with improved global trade volume, the liner business continues to be impacted by softer freight rates due to substantial capacity growth of larger TEU vessels and higher operating costs. The downturn also affected MISC Integrated Logistics Sdn Bhd (MILS) amidst its ongoing effort to restructure its haulage business and to enhance its capabilities to strengthen its service offerings.
The Groups chemical shipping business will take delivery of eight new 38,000 DWT chemical tankers by 2010.
Future Outlook
After a strong growth of over 5 per cent in 2006, the global economy is expected to grow at a slower rate of about 4.5 per cent in 2007 and 2008 amidst concerns over persistently high commodity prices and rising inflationary pressures. Against this background, the present global excess of vessel capacity is expected to persist, exerting downward pressure on freight rates. MISC will continue to enhance its capabilities and improve its cost structures to meet the challenges ahead, while leveraging on strategic partnerships for business growth opportunities. The Group will maintain its capacity-led growth strategy in its targeted energy logistics and transportation markets and the delivery of another six LNG tankers between 2007 and 2009 will further
chairmans statement
037
international as well as domestic maritime and academic institutions. With the business expansion and improvement initiatives in place supported by appropriate human resource strategies, MISC is confident of sustaining business growth and moving closer towards achieving its vision.
Appreciation
I would like to thank our shareholders, clients, affiliates and partners for their continued support and confidence in MISC. My appreciation also goes to the Government of Malaysia and various regulatory bodies for their support and assistance. strengthen the Groups global LNG shipping position. AET will continue to expand its capacity with the contracted delivery of eight Aframaxes and two VLCCs. It will also strengthen its presence in the product tanker business segment to capitalise on the increasing demand for transportation of Clean Petroleum Products (CPP). Moving forward, AET will continue to grow its fleet through strategic partnerships, joint ventures and in-charter arrangements in response to the high asset price environment. The chemical shipping market is expected to remain promising driven by higher demand for sophisticated chemical tankers and the growing position of the Middle East as a petrochemical producer and exporter. The Groups chemical shipping business will take delivery of eight new 38,000 DWT chemical tankers by 2010 and will continue building economies of scale through newbuilds or in-charter programs to achieve global reach trading capabilities in Asia, Europe and the Americas. The Group expects to see further growth of its energy business with anticipated higher contribution from the offshore and heavy engineering sectors on the back of positive market prospects for offshore exploration and production activities, especially in the deepwater sector. The liner business is expected to continue facing a difficult year against excess tonnage, softer freight rates and escalating operating costs. Liner business will continue to focus on improving its cost efficiencies and strengthening its yield management activities. In meeting the challenges ahead, MISC will continue to focus on human capital development to drive and sustain competitive edge in achieving its business objectives. There will be greater emphasis on building the required capabilities and competencies as well as to develop technical, business and leadership skills. This effort will be complemented by the Groups education and training academy, Akademi Laut Malaysia (ALAM), that will continue to enhance its role to develop highly qualified and competent maritime and shipping personnel for the Group, the nation and the industry through strategic alliances with world class I would like to take this opportunity to thank Tan Sri Dato Seri Dr Hj Zainul Ariff Hj Hussain, for his invaluable service as an Independent Director for the past seven years. I would also like to welcome Dato Dr. Wan Abdul Aziz Wan Abdullah, who was appointed as a new Board member in September 2006. To my other fellow Board members, I would like to express my gratitude for their wise counsel in charting the Groups direction to ensure our continued growth and success. Finally, my sincere gratitude goes to the employees of the MISC Group for their loyalty, dedication and contributions.
Tan Sri Dato Sri Mohd Hassan bin Marican Chairman
statement on corporate governance
038
Statement on Corporate Governance

The Board of Directors
(the Board) of MISC Berhad is committed to ensuring that the highest standards of corporate governance are applied throughout the Group. The Board fully supports the principles of Corporate Governance in the Malaysian Code of Corporate Governance (the Code) and strives to adopt the substance behind corporate governance prescriptions. The Board is pleased to disclose the Groups application of the Principles as set out in Part 1 of the Code.
THE BOARD
An experienced and dedicated Board consisting of members with a wide range of financial, business and public service backgrounds leads and controls the Group effectively. The Group recognises the vital role played by the Board in the stewardship of its direction and operations, and ultimately the enhancement of long term shareholders' value. The Directors bring depth and diversity in their expertise to the leadership of the challenging and highly competitive maritime and integrated logistics business. The Board reserves material matters to itself for decision, which includes the overall Group strategies and directions, acquisitions and divestment policies, approval of major capital expenditure projects, plans and budgets and significant financial matters, as well as human capital policies including succession planning for top management.
039
a. Board Composition
i The Board has a balanced composition of executive and non-executive Directors. More than one third of the Board are independent Directors, which is in compliance with the Listing Requirements of Bursa Malaysia Securities Berhad. The Board comprises eight Directors. The Chairman is a Non-Executive Director, whilst the President/Chief Executive Officer is an Executive Director. Five of the remaining six Directors are Independent Non-Executive Directors. A brief profile of each Director is presented on pages 24 to 27 of this Annual Report. ii There is a clear division of responsibilities between the roles of the Chairman and the President/Chief Executive Officer to ensure a balance of power and authority. The Chairman is primarily responsible for the orderly conduct and working of the Board whilst the President/ Chief Executive Officer is responsible for the overall operations of the business organisational effectiveness and the implementation of the Board's strategies and policies. The President/Chief Executive Officer is assisted by the Management Committee in managing the business on a day to day basis. iii The five Non-Executive Directors are independent of management and free from any business or other relationships that could materially interfere with the exercise of their independent judgement. They have the calibre to ensure that the strategies proposed by the Management are fully deliberated and examined in the long term interest of the Group, as well as the shareholders, employees and customers.
During the 12 months ended 31 March 2007, seven meetings of the Board were held. Details of the attendance are as follows:
Board of Directors
Tan Sri Dato Sri Mohd Hassan bin Marican Dato Shamsul Azhar bin Abbas Dato Sri Liang Kim Bang Harry K Menon Dato Halipah binti Esa Datuk Nasarudin bin Md Idris Dato Kalsom binti Abd Rahman Dato Dr. Wan Abdul Aziz bin Wan Abdullah (appointed on the Board on 14 September 2006)
Board Meetings Maximum Meetings Possible to Attended Attend

7 7 7 7 5 6 5 7 7 7 7 7 7 7
The agenda and a full set of Board papers for consideration are distributed well before meetings of the Board to ensure that Directors have sufficient time to read and be properly prepared for discussion at the meetings. Comprehensive and balanced financial and non financial information are encapsulated in the papers covering amongst others, strategic, operational, regulatory, marketing and human resource issues. Minutes of the Board meetings which include a record of the decisions and resolutions of the Board meetings are properly maintained by the Company Secretary. The Directors have unhindered access to the advice and services of the Company Secretary who is responsible for ensuring that Board meeting procedures are followed and that applicable rules and regulations are complied with.
b. Board Meetings
Board meetings are scheduled in advance at the beginning of the new financial year to enable Directors to plan ahead and fit the years meetings into their own schedules. The Board meets at least six times a year. Additional meetings are held as and when required.
040
c. Appointment and Re-election of Directors

In accordance with the provision of the Corporation's Articles of Association require that at least one third of the Directors shall retire from office at least once every three years but shall be eligible for re-election. Directors who are appointed by the Board shall hold office until the next Annual General Meeting of the Corporation and shall then retire and be eligible for reelection by the shareholders.
other training programmes to enhance their skill and knowledge and to ensure Directors are kept abreast with new developments in the business environment. During the financial year, all the Directors have attended the relevant training programs to further enhance their knowledge to enable them to discharge their duties and responsibilities more effectively.
d. Nomination Committee
Since the composition of the Board of Directors comprised mainly of Non-Executive Directors, the Board had for the past years assumed and functioned as a Nomination Committee. This Committee is empowered to bring to the Board its recommendations on the appointment of new Executive and Non-Executive Directors and the re-election of Directors who retire by rotation in accordance with the Corporations Articles of Association. All members of the Board participate in assessing, identifying, recruiting, nominating, appointing and orienting suitable candidates who can contribute effectively to the growth of the Corporation. Any Board member who has interest in any matter raised by the Committee abstains himself from the deliberations and voting. The Committee also ensures that the Board has an appropriate balance of expertise and abilities. The effectiveness of the Board as a whole and the contribution of each Director are also assessed.
f. Remuneration Committee
Since the composition of the Board of Directors comprised mainly of Non-Executive Directors, the full Board had for the past years assumed and functioned as a Remuneration Committee. The committee decides on the remuneration policy and terms of conditions of service for the Group as well as the remuneration of members of the Management Committee and members of the Board. The Directors do not participate in the deliberations and voting on decisions in respect of their own remuneration packages. Matters concerning the remuneration of senior management staff of the company are considered by the Management Development Committee. In effect MISC has a Remuneration Committee at two levels.
ACCOUNTABILITY AND AUDIT a. Audit Committee

The Audit Committee consists of four Independent NonExecutive Directors with Dato Halipah binti Esa as Chairman. The composition and Terms of Reference of the Audit Committee are also provided on pages 46 to 47 of this Report. The Audit Committee met four times during the financial year. The External Auditor, the Vice President Finance, the General Manager of Internal Audit, the General Manager of Ship Management Audit were in attendance at all the meetings.
e. Directors' Training
All Directors have attended the Mandatory Accreditation Programme (MAP) in compliance with the Listing Requirements of Bursa Malaysia Securities Berhad. Directors are encouraged to attend continuous education programme, talks, seminars, workshops, conferences and
041
Details of attendance are provided below: Audit Committee Attendance Record (1 April 2006 31 March 2007)
Members
Dato' Halipah binti Isa Dato Sri Liang Kim Bang Harry K Menon Dato' Kalsom binti Abd Rahman (appointed on the BAC on 28 February 2007)
Meetings Attended
3 4 4 1
Maximum Possible to Attend

4 4 4 1
Harry K Menon, who possessed the stipulated accountancy qualification, was appointed as a member of the Audit Committee on 13 November 2001. In addition to the duties and responsibilities set out in the Terms of Reference, the Audit Committee also acts as a forum for discussion on internal control issues and contributes to the Board's review of the effectiveness of the Company's internal control and risk management system. The Audit Committee also conducts a review of the internal audit functions and ensures that no restrictions are placed on the scope of statutory audits and on the independence of the internal audit functions. The Audit Committee meets the external auditors to discuss the annual financial statements and their audit findings. To manage confidentiality issues, the Board Audit Committee meetings are held on the same day as the Board of Directors meetings. The minutes of the Board Audit Committee are formally tabled to the Board for noting and action, where necessary.
b. Internal Control
Information on the Group's internal control is presented in the Statement on Internal Control set out on pages 42 to 45 of this Report.
c. Relationship with External Auditors

The Board ensures that there are formal and transparent arrangements for the maintenance of an objective and professional relationship with the external auditors.
d. Directors Remuneration
Currently, the annual fees of RM60,000.00 and RM36,000.00 are being paid to the Chairman and all Non-Executive Directors respectively. In addition, for every meeting attended, a meeting allowance of RM400 is paid to each Director.
internal control statement
042
Internal Control Statement

The Malaysian Code on
Corporate Governance requires the Board of Directors (Board) of public listed companies to maintain a sound system of internal control to safeguard shareholders' investment and the Group's assets.
Bursa Malaysia Listing Requirements, Paragraph 15.27(b) requires the Board to make a statement about the state of internal control of the listed entity as a Group. The Board of MISC Berhad (MISC) is committed to continuously improve the Groups system of internal control and is pleased to provide the following statement. strategic policies relating to the risks and the relevant controls thereof, of which details are set-out in the following pages. This is then delegated to the Management to implement the Boards direction and policies on risk and control. It should be noted that the system of internal control is designed to manage and control risks appropriately rather than eliminating the risk of failure, to achieve business objectives. Accordingly, these internal controls systems can only provide reasonable and not absolute assurance against material misstatement or loss or the occurrence of unforeseeable circumstances. The Board confirms that there is a continuous process for identifying, evaluating and managing the significant risks faced by the Group, which has been in place for the financial year under review. The process is regularly reviewed by the Board and is in accordance with the guidance as contained in the publication Statement on Internal Control : Guidance for Directors of Public Listed Companies.
Accountability of the Board Risk Management Framework

The Board of MISC acknowledges its overall responsibility for the Group's system of internal control and its effectiveness to safeguard the shareholders' investment and the Group's assets. This includes reviewing the strategic direction, financial, operational and compliance controls and the risk management policies and procedures. The Board defines risk parameters and standards guided by the corporate objective to maximise long term shareholders' value whilst meeting the needs of the customers, employees and all related stakeholders. In discharging its stewardship responsibilities, the Board has defined the risk management framework to identify the key risk areas, evaluate the impact and set broad The Board has endorsed the establishment of a Risk Advisory Group (RAG) and identified that MISC is exposed to four (4) major risk categories, namely Maritime Risk, Credit Risk, Country Risk and Finance Risk. Simultaneously, risk committee/councils were formed to manage each risk category and be accountable to the RAG on any issues and developments pertaining to the respective risk areas. A proper risk management structure and reporting framework has been established to ensure risks are being monitored, assessed and reviewed regularly as reflected below:
043
Board of Directors (Board) recovery measures are adequate in the challenging maritime environment. The Council has developed the Maritime Risk Management Framework and Guidelines in order to ensure that maritime risks are managed in a structured manner. Further improvement actions have been identified for implementation to ensure that the impact of maritime risk exposure can be mitigated or further reduced. The MISC Credit Committee (MCC) regularly reviews the credit risk and advises on appropriate measures to improve existing credit control procedures and practices and the quality of Trade Accounts Receivables. The MCC formulates its credit & trading risk based on the credit & trading operational guideline issued by the PETRONAS Groups Credit & Trading Risk Council (CTRC). The credit & trading risk framework and guidelines have been developed to ensure all matters relating to credit & trading risk are being addressed accordingly. MISC has a representative to PETRONAS Country Risk Council which allows the company to leverage on resources of Petronas Group in managing country risks. At the same time, MISC has also developed the Country Risk Management Framework and Guidelines as a guide in managing country risk. The framework and guidelines would facilitate a structured and consistent approach in managing country risks. The Group has financial risk guidelines for managing the Group's foreign exchange, interest rate, liquidity, price and counter-party risks. The Group also leverages on PETRONAS Group resources via the Finance Risk Council (FRC) when addressing/assessing financial risks. The FRC is a forum which proactively discusses, reviews and monitors finance risk exposure at Group level and makes appropriate recommendations to companies within the Group. It also fosters coordination of the Group Finance risk management practices and approaches in accordance with established policies and guidelines. MISC benefited from being part of the PETRONAS Group, which has an established Risk Management Committee, which defines, develops and recommends risk management strategies and policies for the PETRONAS Group. In addition, the Risk Management Committee also coordinates group-wide risk management in terms of building risk management awareness and capabilities, monitoring the risk exposures and planning responses to potential major risk events.
President /CEO
Management Committee (MC)
Maritime Risk Council (MRC)
Risk Advisory Group (RAG)
MISC Credit Committee (MCC)
Country Risk Council (CRC)*
Finance Risk Council (FRC)*
Note *: represented at PETRONAS respective councils
The RAG comprises certain members of the MC and is responsible to oversee the overall risk management function in MISC and to advise the President / CEO and MC on issues relating to : policies, procedures and guidelines related to risk management in line with market changes over time positions and exposures to ensure compliance with Group policy and recommend corrective actions issues arising from business lines and recommend solutions to management risk limits
The RAG is required to meet and update any risk management issues on a regular basis to the President / CEO, MC and the Board. The Maritime Risk Council (MRC) is responsible to ensure various maritime-related risks are identified and all necessary measures are in place for MISC to comply with the stringent international safety and environmental standards. Continual assessment and profiling is carried out to ensure preventive and
044
Key Processes
The process of governing the effectiveness and integrity of the system of internal control is carried throughout the various areas as follows:1. The Board Audit Committee (BAC) operating within its terms of reference and Management Audit Committee (MAC) performs an important role in ensuring that there are effective risk monitoring and compliance procedures to provide the level of assurance required by the Board. 2. Senior Management sets the tone for an effective control culture in the organisation through the companys shared values, developed to focus on the importance of these four key values: Loyalty Integrity Professionalism Cohesiveness
The conducts of internal audit work is governed by the Internal Audit Charter and the Internal Audit Charter Memorandum. 4. The Ship Management Audit Division, which reports regularly to the MAC and BAC, performs independent scheduled audits on the MISC Group vessels. The audits are designed to verify, evaluate and review the relevant management system activities, relating results comply with the planned arrangements and effective implementation. The audits are also designed to ensure vessels integrity is maintained with on-going maintenance to enhance the safety and reliability at all times. MISC Group vessels are subject to stringent audits, vettings/inspections to meet various regulatory and commercial requirements. These include vettings by oil majors and audits by the Malaysian Maritime Authority and ship classification societies to maintain international safety and security management certification under the relevant Codes. In addition, the Group is also subject to periodic management reviews by our customers risk management entities such as EXXON MOBIL, British Petroleum Plc (BP), Chevron Texaco, SHELL and Broken-Hill Properties (BHP). The Ship Management Audit Division would submit its findings and recommendations on corrective actions of each ship audited to the respective Fleet Management. The monitoring of follow-ups and the status of the corrective actions is maintained on 2 monthly basis. On a quarterly as well as annual basis, these findings are analysed and consolidated reports are submitted to the MAC for review, comments and further actions. The BAC is also updated on the status of the corrective action as appropriate. 5. There is a Corporate Health, Safety and Environment (CHSE) Division which drives various HSE sustainability policies & initiatives and defines the framework that exemplifies the corporates effort to continuously meet legal compliance as a minimum. CHSE also drives strategies and monitors performance to ensure HSE risks are managed to as low as reasonably practicable.
The importance of the shared values is manifested in the Corporations Code of Conduct for Officers and Staff which is issued to all staff upon joining. Employees are required to strictly adhere to the Code in performing their duties. 3. MISC Group Internal Audit (GIA), reporting to the BAC, performs an independent scheduled audits within the Group to evaluate and assess the effectiveness of risk management, internal controls and governance process. GIA also conducts additional assurance assignments upon request by the Management, MAC or BAC. The BAC reviews audit reports and also conducts annual assessment on the adequacy of GIAs scope of work, functions and resources including its annual audit plan and strategy. Prior to submission to the BAC, GIA submits the findings and recommendations on audit issues to the MAC for executive reviews. The deliberations and decisions are shared during BAC meetings. The key in solving lapses in internal controls is the execution of the Agreed Corrective Actions which are encompassed in the audit reports. GIA monitors the status of their implementation through the Quarterly Audit Status Report which is presented before the MAC and BAC half yearly.
045
6. In addition to the CHSE, there is also a Corporate Security Division (CSD) which maintains a clear policy, procedures and framework with the aim to continuously monitor adherence to established industry security standards as well as international security standards applicable under the relevant codes.
initiatives is monitored and reported at the ICTSC meetings to ensure smooth implementation. System reviews are initiated and conducted to confirm adequate controls are being established in order to adhere to the Companys business objectives, policies and procedures. Quarterly reports presented to the Management and Board Audit Committees and agreed corrective actions are taken to address any non-compliances. 6. The professionalism and competency of staff are enhanced through a structured training and development program and potential entrants/candidates are subject to a stringent recruitment process. A performance management system is in place, with established key performance indicators (KPIs) to measure staff performance and the performance review is conducted on an annual basis. Action plans to address staff developmental requirements are prepared and implemented timely. This is to ensure that staff are able to deliver their KPIs so that the company can meet its future management requirements. The Board does not regularly review the internal control system of its associated companies joint ventures and jointly controlled entities, as the Board does not have any direct control over their operations. Notwithstanding, the groups interests are served through representation on the board of the respective associated companies and receipt and review of management accounts and inquiries thereon. These representations also provide the Board with information for timely decision making on the continuity of the Group's investments based on the performance of the associated companies, joint ventures and jointly controlled entities. There were no material losses incurred during the current financial year as a result of weaknesses of internal control. Management would continue to take measures to strengthen the Groups control environment. This statement is made in accordance with the resolution of the Board of Directors dated 10th May 2007.
Other Significant Elements of Internal Control Systems

1. The Board reviews quarterly reports from Management on key operating performance, legal, environmental and regulatory matters. Financial performance is deliberated by the MC and also tabled to the Board on a quarterly basis. 2. Limits of Authority (LOA) manual provides a sound framework of authority and accountability within the organisation and facilitates quality and timely corporate decision making at the appropriate level in the organisations hierarchy. 3. The Group performs a comprehensive annual budgeting and planning exercise including the development of business strategies for the next five years, and establishment of performance indicators against which business units and subsidiary companies can be evaluated. Variances against the budget are analysed and reported internally on a monthly and quarterly basis and reported quarterly to the Board. The Groups strategic directions are also reviewed semi-annually taking into account changes in market conditions and significant business risks. 4. There is a clear procedure for investment appraisal including equity investment or divestment and capital expenditure. Tender Committees are established to ensure tender evaluation exercises are conducted in an effective, transparent and fair manner. 5. Information and Communications Technology (ICT) is extensively employed in MISC to automate work processes and to collect key business information. MISCs information and communication systems, which acts as an enabler to improve business processes, work productivity and decision making, are being implemented throughout the Group. An Information and Communications Technology Steering Committee (ICTSC) is established to provide strategic directions and guidance to ICT initiatives. Progress of ICT
terms of reference of the board audit committee
046
Terms of Reference of the Board Audit Committee

Board Audit Committee Members
Dato' Halipah binti Esa (Chairman) Dato Sri Liang Kim Bang Harry K Menon Dato' Kalsom binti Abd Rahman
1. Constitution
The Board Audit Committee ("Committee") was established on 28 June 1993. The General Manager Internal Audit shall be the Secretary of the Committee. A quorum shall be two members.
3. Chairman of Board Audit Committee

The members of the Committee shall elect a Chairman from among their number who shall be an Independent Director.
4. Attendance at Meetings
The President/CEO, the Vice President Finance, the General Manager Internal Audit and representative of the external auditors shall normally attend meetings. However, at least once a year the Committee shall meet with the external auditors without any Executive Board member present.
2. Membership
The Committee shall be appointed by the Board from amongst its directors and shall consist of not less than three members with the majority being Independent Directors. At least one member of the Committee must be a member of the Malaysian Institute of Accountants (MIA) or have at least 3 years working experience and have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act 1967 or be a member of one of the associations of accountants specified by Part II of the 1st Schedule of the Accountants Act 1967. No Alternate Director can be appointed a member of the Committee.
5. Frequency of Meetings
Meetings shall be held not less than three times a year. The external auditors may request a meeting if they consider that one is necessary.
6. Authority
The Committee is authorised by the Board to investigate any activity within its Terms of Reference. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee. The Committee is authorised by the Board to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.
terms of reference of the board audit committee
047
7. Duties
The duties of the Committee shall include the following: review the following and report to the Board of Directors:a. with the external auditors, the audit plan; b. with the external auditors, their evaluation of the system of internal controls; c. with the external auditors, their audit report; i. d. the assistance and co-operation given by the employees of the Corporation to the external auditors; e. the adequacy of the scope, functions and resources of the internal audit functions and that it has the necessary authority to carry out its work; f. the internal audit programme, processes, the results of the internal audits, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit functions; g. the quarterly results and year end financial statements, prior to the approval by the Board of Directors, focusing particularly on:-
i.
changes in or implementation of major accounting policy changes; ii. significant and unusual events; and iii. compliance with accounting standards and other legal requirements;
h. any related party transaction and conflict of interest situation that may arise within the Corporation or Group including any transaction, procedure or course of conduct that raise questions of management integrity; any letter of resignation from the external auditors; and whether there is any reason (supported by grounds) to believe that the Corporations external auditors are not suitable for re-appointment; and
j.
k. recommend the nomination of a person or persons as external auditors.
8. Reporting Procedures
The Secretary shall circulate the minutes of meetings of the Committee to all Members of the Board.
048
President / CEOs Report
president/CEOs report
049
For the financial year ended 31st March 2007,

the shipping industry continued to be challenging with increasing operating costs and softening freight rates particularly in the liner business. World Gross Domestic Product (GDP) growth improved slightly in 2006 despite high oil prices and rising interest rates. The continued global economic growth sustained the demand for energy especially oil and gas.
The growth in global LNG trade demand continued to support the growing LNG shipping tonnage. As expected, the slower global oil demand growth due to high oil prices and excess capacity of petroleum tankers exerted downward pressure on the overall petroleum freight rates. The chemical shipping market remained robust throughout the year due to increased global chemical seaborne trade driven mainly by new petrochemical plants in the Middle East and the introduction of new regulation requiring tankers with higher specification.
arm, MMHE produced a record profit for the year as a result of its refocused strategic direction and successful implementation of its capability building initiatives. The liner shipping market continued to experience cyclical downturn on the back of softening freight rates, overcapacity and increased operating cost. However, the redesigning of our network enabled Liner business to enhance its cost efficiency and improve its yield management activities to remain competitive. In response to the highly challenging domestic logistics environment, MILS rationalised its haulage business and developed new facilities to improve its service offerings.
Leveraging on strategic partnerships, offshore business enhanced its position by offering more effective solutions for domestic and international small field and deepwater offshore projects.
MISCs offshore and heavy engineering businesses benefited from the rapid growth in the oil & gas upstream Exploration and Production (E&P) activities through its progressive capability development. Leveraging on strategic partnerships, offshore business enhanced its position by offering more effective solutions for domestic and international small field and deepwater offshore projects. Our heavy engineering
050
LNG Shipping Business

The global LNG shipping industry continued to be robust during the year under review with the strong Global LNG trade demand growth of 10.6% as compared to 8.8% growth in the previous year. The World LNG fleet grew by 14.4% despite high newbuilding prices, boosting the global fleet size to 222 vessels in 2006. The LNG shipping market is evolving towards leveraging on technology as a competitive advantage, hence many LNG shipping players are exploring new technological innovations such as the development of Shuttle Regassification Vessel (SRV), Floating Storage and Regasification Unit (FSRU), and Compressed Natural Gas Carriers (CNGC). MISC continued to support PETRONAS Global LNG business expansion strategy with the delivery of its 23rd LNG carrier, Seri Angkasa in January 2007. Seri Angkasa was delivered to MLNG to commence its twenty-year time charter contract. MLNG also renewed its charter contracts for Tenaga Tiga and Tenaga Lima for fifteen years commencing May
The year under review also witnessed MISCs first third party contract involving a new LNG carrier, Seri Anggun which commenced medium term employment with BG Group in November 2006.
LNG Shipping Business
051
Hemiji Castle, Japan
and July 2006 respectively. Similarly, charter contracts for Aman Bintulu and Aman Hakata were also extended to 2028. The year under review also witnessed MISC's first third party contract involving a new LNG carrier, Seri Anggun which commenced medium term employment with BG Group in November 2006. Subsequently, BG Group awarded a similar contract for another new LNG carrier of the same class which will be delivered in December 2007. In addition, MISC enhanced further its relationship with Gaz de France (GdF) with an extension of its charter party contract for Tenaga Satu for another year starting April 2007 with option for two more years. During the year, 21.5% of MISC's revenue and 44.9% of MISC's operating profit was derived from LNG Shipping Business.
LNG trade is forecast to double in 2015 supported by the increasing supply from new LNG liquefaction plants in Oman, Australia, Nigeria, Trinidad & Tobago, Qatar, Norway and Russia.
The demand outlook for LNG shipping is expected to remain strong in the coming years, as LNG trade is forecast to double in 2015 supported by the increasing supply from new LNG liquefaction plants in Oman, Australia, Nigeria, Trinidad & Tobago, Qatar, Norway and Russia; coupled with increasing demand for cleaner fuels mainly from Europe, Japan, Korea, China and India. In realising its aspiration to be a global leader in LNG transportation, MISC will apply a three pronged strategy to continually provide PETRONAS its LNG transportation and logistics needs, secure third party long term contracts and leverage on synergies between different business units.
EUROPE USA ALGERIA MEXICO EGYPT TRINIDAD & TOBAGO NIGERIA YEMEN MALAYSIA TURKEY SOUTH KOREA JAPAN TAIWAN
To keep pace with the evolution of technology in the LNG shipping industry, MISC is partnering with a leading provider of floating production facilities for a joint development of a FSRU and with a technology developer in exploring CNGC potentials.
Existing Routes Future Routes
AUSTRALIA
052
Petroleum Shipping Business

The overall freight rates in the petroleum shipping industry were under pressure due to slower global oil demand growth especially from North America and China. However, the weakening of oil prices from previous highs assisted the demand for oil to remain buoyant. The delivery growth of newbuildings was higher than the scrapping rate of old tonnages. As a result, petroleum tanker freight rates were softer especially in the Aframax segment.
A joint venture with Restis Group was established to co-own ten new Aframax tankers contracted at Sungdong Yard with deliveries between 2009 and 2011. This venture will further enhance AET's position in the Aframax Europe market.
President & CEO of AET, En. Amir Azizan at the Launching of AETs new corporate identity.
petroleum shipping business
053
Big Ben, United Kingdom
Earlier in the year, a joint venture with Restis Group was established to co-own ten new Aframax tankers contracted at Sungdong Yard with deliveries between 2009 and 2011. This venture will further enhance AETs position in the Aframax Europe market. AET also contracted six Aframax tankers at Tsuneishi shipyard with deliveries between 2009 and 2010. This will be part financed through sale and lease-back arrangements for five of its older Aframax tankers. This arrangement will enable AET to continue operating these tankers whilst re-investing the capital released in newer tonnage. AET also grew its Aframax fleet by in-chartering four additional tankers thus enhancing its Aframax critical mass to forty eight (thirty one owned). During the year, AET took delivery of two VLCCs, Bunga Kasturi Tiga and Bunga Kasturi Empat bringing its VLCC fleet to ten tankers (nine owned). Leveraging on its existing strength of service offerings, AET also expanded its presence in product tanker services. Two MISC chemical tankers which were subject to trading restriction due to new regulations were converted into product tankers in December 2006. With these
two tankers, AET has a product tanker fleet of ten. In the year under review, 33% of MISC's revenue and 42.7% of its operating profit were derived from the petroleum shipping business. The short term outlook for petroleum shipping business will however remain challenging. The high influx of newbuilds and extended phase-out of ageing tankers will generate excess capacity, exerting further downward pressure on VLCC and Aframax freight rates. However, the anticipated high demand for transportation of Clean Petroleum Products (CPP) in the medium term will provide positive prospect in the product tanker segment. In facing the challenges and opportunities ahead, MISC will strengthen its global leadership position in the Aframax tanker market; develop itself as a significant global owner operator of VLCCs and further capitalise on opportunities in product tanker business segment. These strategies will further enhance MISC's presence as a leading petroleum tanker operator in the Atlantic basin market and in the Middle East markets.
The anticipated high demand for transportation of Clean Petroleum Products (CPP) in the medium term will provide positive prospect in the product tanker segment.
054
The year 2006 witnessed firm freight rates for the chemical shipping market. Demand for chemical tankers increased on the back of considerable growth of new petrochemical plant capacity in the Middle East and heightened petrochemical trading activities. On the supply side, growth in chemical tanker tonnage was balanced by new deliveries and the restriction of lower specification tankers due to the revised MARPOL Annex II Regulation.
During the year, MISC also successfully renewed nine Contracts of Afreightment (COA) with ExxonMobil, PETRONAS Trading Corporation, Kuok Oils & Grains Pte Ltd and Iffcochart Limited.
Chemical Shipping Business
chemical shipping business
055
Taj Mahal, India
As highlighted last financial year, six of MISCs single hull chemical tankers were restricted from transporting vegetable oil from January 2007 as stipulated by MARPOL Annex II Regulation. In maintaining the trading opportunities of these tankers, MISC chartered out four of the single hull Anggerik class tankers to Bryggen Shipping AS for five years commencing August 2006 and converted the two Semarak class tankers to product tankers trading under AET. During the year, MISC also successfully renewed nine Contracts of Afreightment (COA) with ExxonMobil, PETRONAS Trading Corporation, Kuok Oils & Grains Pte Ltd and Iffcochart Limited; extended one COA with Tenaga Nasional Berhad (TNB) and secured seven new contracts with Golden Hope Berhad, FR8 Navigation, Wilmar Trading Pte Ltd and IOI Loders Crocklaan. MISC's chemical shipping business is a relatively small contributor to MISC's operating results, accounting for 4.8% of MISC's revenue in 2007 and 3.8% of its operating profit.
The outlook for chemical shipping industry is encouraging with higher demand for more sophisticated chemical tankers and the development of petrochemical plants in the Middle East. In response to this positive outlook, MISC will continue developing its presence in the niche market segments of chemical and vegetable oil transportation by building economies of scale either through newbuilds or in charter programs. With the implementation of the growth strategy for the chemical shipping business, MISC will have global reach capabilities trading in Asia, Europe and the Americas and establish itself to be a leader in the global chemical tanker market.
056
Offshore Business
With demand for hydrocarbons rising steadily and reserves declining, oil and gas companies are increasing their upstream E&P activities. The high oil price has spurred the demand for offshore deepwater and small field development especially for projects involving FPSO/FSOs for the next 5 years. Asia is expected to outpace other regions in deepwater offshore development especially in Malaysia and China while other countries in the region will be focusing on shallow water prospects. This demand presents an attractive opportunity for MISC to enhance its offshore business by offering comprehensive solutions for offshore development. During financial year 2006/2007, MISC completed and delivered its second FSO facility, which was converted at MMHE, for deployment in Cendor field, offshore Kerteh, Terengganu. FSO Cendor is on a
High oil price has spurred the demand for offshore deepwater and small field development especially for projects involving FPSO/FSOs for the next 5 years.
offshore business
057
National Congress Building, Brazil
two year lease contract with Petrofac, Malaysia to support the early production system with future extension option. In March 2007, MISC delivered another FSO facility, FSO Abu to Abu Cluster field, Terengganu to begin a ten-year lease contract with PETRONAS Carigali Sdn Bhd (PCSB). These deliveries marked the commitment MISC has in growing its offshore business and supporting the development of marginal fields in Malaysia. In line with the growth of deepwater E&P activity in Malaysia, MISC was involved in the construction of FPSO Kikeh for Murphy Sabah Oil Ltd. FPSO Kikeh, a joint venture project with Single Buoy Moorings Inc (SBM), which had been converted successfully at MMHE, was delivered to its designated location, offshore Sabah and is expected to produce first oil in July 2007. The joint venture is a significant breakthrough for MISC into deepwater FPSO design, engineering and construction as well as operation and maintenance. Strengthening further on the strategic partnership with SBM, in November 2006, MISC acquired a 49% equity stake in another SBMs deepwater FPSO project, FPSO Espirito Santo which will be delivered to the BC10 field, offshore
Brazil in November 2008 on a fifteenyear contract with SHELL. In supporting the strategy to grow regionally and internationally, MISC, partnering with other regional players had also participated in bidding for other FPSO/FSO projects in Asia. In 2007, Offshore Business contributed 2% of MISC's revenue and 1.1% of its operating profit. The demand outlook for FPSO/FSO is robust as market drivers for offshore E&P activities will remain strong especially in Asia. MISC will place priority in supporting Malaysian small field development through cost effective solutions and asset optimisation. MISC will also strive to form strategic alliances and deepwater technology acquisition as well as carrying out feasibility studies on other potential floating facilities. In positioning itself as the preferred offshore floating solutions provider in the region, MISC is committed to ensure the required capabilities are institutionalised within the organisation.
FPSO Kikeh, a joint venture project with the Single Buoy Moorings Inc (SBM) is a significant breakthrough for MISC into deepwater FPSO design, engineering and construction as well as operation and maintenance.
058
Marine & Heavy Engineering Business

The growth in global energy demand led to increased E&P spending which had a positive impact on demand for offshore floaters and structures. The rise in offshore E&P activities led to high rig utilization, earning higher day rates, part of which went towards repairs of rigs. However, our ship repair business was affected by the phasing-out of the single hull tankers and the emergences of lowcost ship repair centres in China, Vietnam and Indonesia. The weakened freight markets also resulted in postponement of ship repair work.
The delivery of the deepwater FPSO Kikeh marked MMHEs success in undertaking larger deepwater Marine Conversion projects.
marine & heavy engineering business
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Sydney Opera House, Australia
During the year under review, MMHE accounted for 12% of MISC's revenue and 6% operating profits. MMHE successfully completed three topside fabrication projects namely the E11PB, Kikeh DTU and Ledang Anoa topsides. Two turret fabrication projects were completed and delivered to Australia and Brazil field development. MMHE also completed two FSO projects, FSO Cendor and FSO Abu, and one deepwater FPSO project, FPSO Kikeh, for MISC within the period. The delivery of the deepwater FPSO Kikeh marked MMHE's success in undertaking larger deepwater Marine Conversion projects. These projects signify the capability of MMHE in participating in offshore heavy engineering deepwater projects. To strengthen its Marine Repair business, MMHE formed a strategic partnership with Samsung Heavy Industries Co Ltd (SHI) in April 2006. The resultant joint venture company, MMHE-SHI LNG Sdn Bhd (MSLNG), provides maintenance and refurbishment services to LNG
shipowners. In its initial year, MSLNG successfully completed the repair of six LNG carriers. In addition, MMHE also completed high value marine repairs for nine LNG carriers, seventeen petroleum tankers, four chemical tankers and six drilling rigs. The capability building initiative which continued throughout financial year 2006/2007 focused on strengthening business processes and improving productivity. The implementation of procurement and subcontracting capability exercise resulted in a total savings of RM19 million. In its effort to build capabilities and facilities for deepwater projects, MMHE embarked on its yard optimisation initiative. The yard optimisation initiative commenced in December 2006 with the development of the Cutting and Assembly workshop aimed at meeting the requirement of large deepwater projects. This optimisation initiative will not only increase its productivity but will also position MMHE as a leading regional shipyard.
The capability building initiative, an implementation of procurement and subcontracting capability exercise resulted in a total savings of RM19 million.
Global demand for deepwater oil & gas facilities will remain strong due to increasing spending in E&P. Capitalising on the positive market prospects in this sector, MMHE expects to focus its business on high value marine repairs and on enhancing its engineering design and project management capabilities for construction and conversion of oil and gas support vessels as well as focusing on oil and gas deepwater engineering solution. Coupled with the yard optimisation initiative, MMHE is set to achieve its vision of becoming the regional hub for engineering and construction of deepwater facilities and high value marine repairs.
060
Liner Shipping Business

As expected, the global liner shipping industry experienced a market downturn during the financial year. Though global trade volumes increased by 7.1% compared to 6.8% growth in the previous year, the liner shipping industry remained challenging throughout the year. The liner trade was plagued by overcapacity due to delivery of larger TEU vessels, higher bunker prices and operating costs. Freight rates for the Asia/Europe service saw substantial decrease in the first half but improved considerably towards end of second half of the year after a low base due to ongoing strong cargo volumes. As member of the Grand
A new service, Halal Express was successfully launched and accepted favourably by the market with the aim to tap the growing demand for halal products in the Middle East and Indian Subcontinent.
liner shipping business
061
Windmill, Netherlands
Alliance, MISC injected three 5,334 TEU ships to improve overall scale efficiency under a vessel swap arrangement for its two 7,943 TEU newbuildings, the Bunga Seroja Series which were delivered during the year. The Australia trade remained weak due to low freight rates and temporary loss of Australian coastal cargoes due to a new entrant trying to re-establish as a domestic Australian operator which later failed. The New Zealand service was poor due to overcapacity but the new enlarged consortium enhanced MISC services through competitive product and cost. The Intra Asia services continued to be a difficult market. MISC restructured its services and entered into an alliance with Orient Overseas Container Line (OOCL) and TSK Line Agencies (TSK) for greater efficiency. A new service, MISC Liner Halal Express was successfully launched and accepted favorably by the market with the aim to
tap the growing demand for halal products in Middle East and Indian Subcontinent. Whilst the South Africa service generated reasonable gains, the domestic Perdana service managed to break-even despite operational challenges within the consortium. During this challenging year, the liner business nevertheless progressed further with its cost efficiency initiatives. MISC continued to reduce unit cost through in chartering of tonnage. The disposal of the ageing Bunga Pelangi was subsequently replaced with a similar size vessel in chartered at attractive terms. To strengthen the front line operations, MISC integrated its liner business with MISC Agencies. During this process, MISC formed a strategic partnership with CargoSmart to further improve its CRM efforts and provide e-business solutions to liner customers. The business outlook for liner shipping will continue to be challenging in the coming year due to overcapacity with
the delivery of newbuildings further pressuring freight rates. MISC's strategy is to focus on long haul routes by strengthening its position in the East-West trade with a focus on the European markets. MISC will also strive to maintain a position in alliances where it is a core partner, and establish itself as a leading player in the Halal supply chain solution.
062
Integrated Logistics Business

The Malaysian general logistics industry remained highly competitive and challenging mainly due to overcrowding of players providing similar services. The haulage industry continued to struggle with low rates and rising operating cost resulting in many players restructuring their haulage business. During the year, MILS restructured its haulage business whilst continuing to provide transport services as part of its total logistics and supply chain solutions. The globalisation of markets significantly increased the demand for the movement of merchandise, goods and services in the supply chain and logistics sector. Capitalizing on this trend, MILS will boost its position as a niche logistics player especially on the provision of valueadded logistics services with the completion of MILS Logistics Hub (MLH) in Pulau Indah. The 3-phase development of the MLH, upon completion, will result in the formation of a 90,000 square
MILS will boost its position as a niche logistics player epecially on the provision of valueadded logistics services with the completion of MILS Logisitcs Hub (MLH) in Pulau Indah.
integrated logistics business
063
Burj Al Arab, Dubai, United Arab Emirates
metres multi modular storage and processing facility. Awarded Free Commercial Zone status, MLH will also provide services including regional storage and distribution, Vendor Managed Inventory (VMI), light assembly and other core logistics solution services. Leveraging on its strategic partnership with SterilGamma Sdn Bhd, MILS will be able to operate sterilisation and fumigation facilities at MLH. Through its joint venture with ETB Seafrigo, one of Europes largest cold storage specialists, MILS will offer total cold chain logistics solutions with the development of cold and chilled facilities at MLH. The facility will be MILS first halal hub supported by the MISC Liner Halal Express Services, thus creating a hub and spoke network for halal products. In line with MILS strategy to strengthen its automotive supply chain and logistics capabilities, a joint venture was formed with BLG International Logistics GmbH to offer custom-made solutions to the automotive industry by providing a full range of automotive logistics services.
MILS is establishing a logistics hub to service its customers in Middle East and Africa through its joint venture company MISC-Rais LLC. The outlook for the regional logistics market is positive due to the rapid growth in consumer markets and liberalisation of trade. Moving forward, MILS will focus its efforts in the Oil & Gas, Fast Moving Consumer Goods (FMCG), Automotive and Public Sector business segments. MILS will also replicate MLH business model and capabilities to other distribution centres in the region. In view of the strategic partnerships and development of MLH capabilities, MILS is set to achieve its aspirations as the preferred partner in supply chain solutions and logistics services.
Moving forward, MILS will focus its efforts in the Oil & Gas, Fast Moving Consumer Goods (FMCG), Automotive Public Sector business segments.
064
Maritime Education
With global fleet growing in significant numbers, regulations becoming more stringent and the evolvement of marine technology, the development of skilled and competent maritime and shipping personnel continued to be critical. In its rally to meet the demand, Akademi Laut Malaysia (ALAM) continued to engage its key role as a centre in providing excellent maritime education and training programs through the continuous development of its curriculum and course offerings, acquisition of state of the art facilities and collaboration with highly regarded maritime institutions.
A Memorandum of Understanding (MOU) was signed with the United States Merchant Marine Academy (USMMA) which provides a benchmarking capability for the enhanced curricula developed in ALAM.
maritime education
065
During the year under review, ALAM developed strategic alliances with reputable academic and maritime training institutions in an effort to continuously upgrade its capabilities and quality of its maritime education and training. A Memorandum of Understanding (MOU) was signed with the United States Merchant Marine Academy (USMMA) which provides a benchmarking capability for the enhanced curricula developed in ALAM. ALAM also has an affiliation with Southshields Maritime College, which is a United Kingdom maritime training institute that specialises in providing seafarers with marine steam engineering expertise that is required for the operation of most LNG carriers. In supporting MISC's growth in the energy sector in general and offshore business in particular, an academic collaboration with STC Group, The Netherlands was developed to improve the maritime logistics and offshore basic training program. Locally, ALAM also signed MOUs with several higher technical learning institutions including University of Technology Malaysia (UTM), Institute Petroleum Technology of PETRONAS (INSTEP), University Technology of
PETRONAS (UTP) and SIRIM, with the aim of enhancing the training curricula for the development of management trainees for Fleet Management Services and junior engineers for Offshore Business Unit. ALAM, in the pursuit to position itself as the regional training hub for LNG, Petroleum and Chemical shipping personnel, continued to enhance its facilities with the acquisition of a series of simulators and the latest Distributed Control System. ALAM signed an agreement with Teledata Marine Systems Pte Ltd to develop the worlds first e-Learning package on LNG Shipping Cargo Operations which is expected to be launched in mid 2007. To add to the eventful year, ALAM's LNG simulator training syllabus was adopted by IMO as its model course. ALAM also created history when the first eighteen Malaysian female cadets enrolled in its cadetship program in July 2006. ALAM is now being recognized not only as a maritime training centre but also as a business partner to the regional shipping and oil & gas players.
Going forward, ALAM's focus will be to produce highly qualified and competent graduates. The strategy to further develop and upgrade its curriculum and infrastructure and to continue leverage on strategic alliances with leading maritime academies will better position ALAM to become a world class maritime education and training institution with capabilities in Energy shipping, shorebased maritime management and offshore safety administration.
066
Fleet Management
Significant growth in the global fleet where large numbers of LNG, petroleum and chemical tankers will be delivered up to 2011 and the enhancement of marine technology have shaped the shipping industry to be constantly challenged with shortage of competent and qualified personnel. The shortage led to rampant movement of personnel within the industry and called for a strategic retention programme. In MISC, the substantial fleet expansion plan demanded a larger pool of competent seafarers with the requisite leadership skills, mindset and behaviours to meet the dynamic industry challenges.
In strengthening FMS' capabilites in emerging shipping and marine engineering technologies, MISC initiated steps to cooperate with UTM and ALAM on research and advance technology transfer programmes.
fleet management
067
FMS Initiatives of the Year

FMS Capability Building Programmes Senior Officers Management Forums UTM & ALAM Post Graduate Professional Certificate Programmes Marine Technology Research & Database Setup
Fleet Management Services (FMS) capability building programme has progressed into the solution design stage. In this phase, focus was put on five capability areas: maintenance, procurement, fuel efficiency, dry docking and crew management. In strengthening FMS capabilities in emerging shipping and marine engineering technologies, MISC initiated steps to cooperate with UTM and ALAM on research and advance technology transfer programmes. The cooperation had produced several initiatives during the year including the "Post Graduate Professional Certificate Programme" and establishment of the Marine Technology Research and Database which will be further continued to provide enhanced capability for FMS in ensuring a pool of highly competent seafarers and fleet managers. Focusing on enhancement of integration and effective relationship between sea and shore staff, FMS continued with its
Senior Officers Management Forums for shipboard management. Four sessions were conducted during the financial year involving more than half of senior MISC's ship officers. With the continuous implementation of capability building initiatives, focused on the development of qualified and technologically savvy ship personnel, and the committment to producing leaders with the right mindset who will steer the organisation, FMS is poised to support MISC's business requirements. The capability driven FMS will not only provide cost effective but also competitive edge services to bring MISC to greater heights in facing the evolving shipping and maritime industry.
068
Human Resource Management

Recognising the importance of and need for competent and committed human capital to drive and sustain competitive edge in achieving business targets, MISC implemented several strategies and initiatives with greater emphasis primarily on areas of intensifying sourcing and broadening talent sources; attracting the right talents; developing technical, business and leadership skills; and retaining talent. During the year, MISC intensified its intake of management trainees to eighty seven in various engineering, finance and business disciplines and exposed them to on-the-job training and guidance, in order to groom them to be future leaders in the organisation. In addition, forty five tertiary education sponsorships were granted to selected students to pursue undergraduate courses in technical disciplines such
MISC also executed structured executive and management development programmes and created cross-posting opportunities within the Group to provide job enrichment for employees.
human resource management
069
as Naval Architecture, Marine Engineering and Mechanical Engineering, and in Finance, Accountancy and Business Administration. To provide the executives with the right skills and competencies at the developmental stage of their career, MISC Skill Group Development framework was instituted. In addition, the second mentoring programme for session financial year 2006 till 2008 which involved thirty six junior executives was conducted to ensure right development of leadership skills in their early years with the organisation. MISC also executed structured executive and management development programmes and created cross-posting opportunities within the Group to provide job enrichment for employees. An assessment centre was established to identify potential leaders where through Development Workshops, their leadership development and career path will be charted. Relevant conditioning programmes e.g. Leadership Excellence at PETRONAS (LEAP) were conducted to
equip and prepare existing/new leaders in all aspects when assuming leadership positions. To support continuous employee education, Staff Education Enhancement Programme (SEEP) was implemented commencing with one executive sponsored to pursue Master of Business Administration (MBA) in Finance at Harvard Business School. Leadership Opportunity Matching (LOM), an exercise to identify potential leaders and match them with opportunities within the organisation, is ongoing to support MISC's succession plan. MISC Employee Tracking Mindset Survey was conducted early in the year with the aim of understanding employees and their motivation level. Several mindset intervention programmes based on the influence model were implemented to improve the mindset level and sustain the change momentum. As part of the talent retention strategy, MISC is reviewing its reward strategy by conducting industry-specific total remuneration survey. The performance based culture was further strengthened through
implementation of Individual Performance Contracts (IPC) for all executives. In meeting the challenges ahead, MISC will continue to focus on human capital development through continuous implementation of suitable programmes. With the appropriate human resource strategies and initiatives in place, MISC is set to achieve its vision to be a global champion within the maritime transportation and logistics business.
070
The shipping downcycle which started in late financial year 2005/2006 continued during the year under review. It is anticipated that this trend will remain throughout most of the coming year due to significant vessel supply/demand imbalance and volatility of energy prices. With the ever changing and challenging shipping market, MISC will focus on strengthening its strategic partnerships for business opportunities, growing its asset size at the right price and improving its cost effectiveness. MISC will also look at inorganic growth opportunities as an alternative to build critical mass and expand global coverage.
Future Outlook
MISC will continue its growth strategies to be a global champion in energy transportation and logistics services by expanding its LNG, petroleum and chemical shipping businesses. In view of the challenging shipping industry, MISC will continue to be responsive to market developments and proactively strategise to react to the dynamic market situation. Leveraging on present business partnerships, MISC will grow its third party LNG business by sourcing and securing new long term contracts through tender and direct negotiations. The petroleum shipping business will defend its global leadership position in the Aframax tanker market and further capitalise on the opportunities within product tanker market. The chemical shipping business will continue to develop its presence in the niche market segments of chemical and vegetable oil transportation by seizing the opportunities
With the ever changing and challenging shipping market, MISC will focus on strengthening its strategic partnerships for business opportunities, growing its assets size at the right price and improving its cost effectiveness.
future outlook
071
In the short to medium term, Liner business will continue to be challenging due to oversupply of capacity which is expected to put downward pressure on the freight rates. Liner business will focus on rebalancing its asset portfolio mix, improving cost efficiencies and strengthening its yield management initiatives. The new MLH in Pulau Indah will position MISC as one of the premier logistics companies with state of the art facilities. MISC will continue to integrate its Liner business with MILS in developing an ASEAN centric liner and logistics business. Despite the challenging market environment, with the support of qualified leaders, institutionalised capabilities and entrepreneurial mindset and behaviors, MISC will deliver world class performance, build better resilience and grow in size. With its strategies in place, MISC will move forward to achieve its vision of becoming "the preferred provider of world-class maritime transportation and logistics services". On behalf of the Management, I would like to thank all our staff for their dedication and commitment towards realising our vision; our valued and supportive clients and partners; the Government and its Agencies; and last but not least our stakeholders and shareholders for their trust and support. I would also wish to express my gratitude to the Chairman, Board of Directors and Board Audit Committee for their guidance and assistance throughout the year.
presented by the substantial growth of new petrochemical plants in the Middle East and the ever growing palm oil shipping business from Asia. The outlook for offshore and heavy engineering businesses is encouraging as the increased global demand for energy will spur oil and gas fields development globally. Continuous development of small and deepwater offshore fields will increase as relatively high fuel prices render the development of such fields to be economically viable. MISC will focus its efforts in capturing a significant portion of the requirements for domestic and regional offshore floating facilities. Capitalising on the positive market prospects of this sector, MMHE will continue to develop its competencies in completing the oil & gas facilities at world class standards. With its yard optimisation initiative, MMHE will transform itself into a regional hub for engineering and construction of deepwater facilities and high value marine repairs.
Dato Shamsul Azhar bin Abbas

President/Chief Executive Officer Kuala Lumpur
corporate highlights
072
i. 15 June 06 - MISC orders four chemical tankers ii. 20 June 06 - MISC and DNV to develop fleet capability programme iii. 14 Aug 06 - 37th Annual General Meeting iv. 03 Aug 06 - MISC signs MOU with UTM for maritime industry capability building v. 15 Sept 06 - MMHE completes the construction of Kikeh DTU Truss Spar
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Corporate Highlights 06-07

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2006 : June
JOINT VENTURE BETWEEN AET AND GOLDEN ENERGY TANKER HOLDINGS CORPORATION AET entered into a 50:50 joint venture agreement with Golden Energy Tanker Holdings Corporation (a subsidiary of the Restis Group, one of the largest shipping companies in Greece) with the purpose of owning and operating Aframax crude oil tankers. The JV company intends to own and operate up to ten Aframax tankers. MISC ACQUIRES STAKE IN FPSO BRASIL MISC acquired a 49% stake in the owning and operating companies of FPSO Brasil, a Very Large Crude Carrier sized FPSO facility, presently located on the Roncador offshore field in the State of Rio De Janeiro, Brazil. The remaining stake in FPSO Brasil is owned by SBM Holdings Inc. 15 MISC ORDERS FOUR CHEMICAL TANKERS In addition to the current four chemical tanker newbuildings, MISC exercised its full option of ordering another four 38,000 DWT chemical tankers from STX Shipbuilding Co. 20 MISC AND DNV TO DEVELOP FLEET CAPABILITY PROGRAMME MISC signed a Consultancy Service Agreement with Det Norske Veritas (DNV) in which DNV will work together with MISC's Fleet Management Services (FMS) to determine the industrys best practice and develop the most effective fleet capability solutions for MISC.
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24 MISC SIGNS TWO NEW CHARTERS AND TWO CHARTER EXTENSIONS FOR ITS EXISTING LNG CARRIERS MISC Berhad signed two new charterparty agreements with Malaysia LNG Sdn Bhd (MLNG) in respect of two existing Liquefied Natural Gas (LNG) carriers, Tenaga Tiga and Tenaga Lima. MISC also signed with MLNG extensions for two current charterparty agreements in respect of two existing LNG carriers, Aman Hakata and Aman Bintulu.
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17 1st QUARTER ANALYSTS' BRIEFING 54 analysts and investors attended MISC's 1st Quarter Analysts' Briefing for the new financial year. The briefing is part of the Group's Corporate Governance practice, enabling investors to be updated on the latest information on the Group's business performance and developments.
2006 : September
15 MMHE COMPLETES THE CONSTRUCTION OF KIKEH DTU TRUSS SPAR Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE) completed the construction of the first deepwater structure Kikeh DTU Truss Spar, for Malaysia's maiden deepwater oil/gas exploration field. The project is the first application of Spar Technology in this region, and the first outside the Gulf of Mexico. With the successful completion of this deepwater structure, MMHE is moving aggressively to be one of the leading players in deepwater structures and FPSO and FSO conversion. 20 MISC COMMENCES FIRST HALAL SERVICE TO NORTHPORT MISC launched its latest liner service, the "MISC Halal Express", with the call of MISC's Bunga Delima to Northport. The first service of its kind, MISCs HALAL Express has set the stage for Malaysia to take the lead and play a more prominent role in its efforts to become a global HALAL hub. 23 FSO CENDOR RECEIVES FIRST OIL MISCs FSO Cendor received its first oil from a mobile offshore production unit (MOPU) via a flexible submarine pipeline. The Cendor field is located in Block PM304, offshore Terengganu, Malaysia and operated by Petrofac Malaysia Ltd, together with Petronas Carigali, Kuwait Foreign Petroleum Exploration Company (Kufpec) and PetroVietnam Investment Development Company (PIDC) as its development partners.
2006 : August
3 MISC SIGNS MoU WITH UTM FOR MARITIME INDUSTRY CAPABILITY BUILDING MISC Berhad and Universiti Teknologi Malaysia (UTM) signed a Memorandum of Understanding (MoU) to cooperate in the development of capabilities and expertise and in the promotion of research activities in the maritime, shipping and offshore industry in Malaysia. The joint undertaking is expected to generate substantial benefits not only for the two organisations, but also Malaysias maritime, shipping and offshore industry. SENIOR OFFICERS MANAGEMENT FORUM The Senior Officers Management forum, an event that brings together MISC officers, expatriate senior officers and MISC shore staff as well as manning agents and ALAM representatives was held for the third time. The aim of the forum is to share business and performance expectations as well as enhance integration and foster better relationships.
2006 : July
4 17 MISC/JLT CO-HOST LNG INSURANCE SEMINAR MISC Berhad and Jardine Lloyd Thompson Sdn Bhd (JLT) co-hosted a two day LNG Seminar entitled "A World Leader in the field of LNG Transportation". The seminar was aimed at creating a discussion platform for all parties involved in the LNG transportation insurance industry to share their concerns, knowledge and to better appreciate the risks involved in LNG transportation. 19 BUNGA KEKARAS RESCUES TSUNAMI VICTIMS The crew of MISC's 30,000 MT Product tanker, Bunga Kekaras orchestrated the rescue of 4 fishermen whose boat had capsized in the tsunami hit in Indonesia. The vessel, which was anchored at Cilacap, Indonesia, had steamed out to sea after tsunami alerts were being broadcasted by regional tsunami alert centres.
14 MISCs 37th ANNUAL GENERAL MEETING Close to 300 shareholders attended MISC's 37th Annual General Meeting at the Crowne Plaza Mutiara Hotel in Kuala Lumpur, where members approved a final dividend of 20 sen per share tax exempt. Together with the interim dividend of 10 sen per share, the total dividend for FY 2005/2006 is 30 sen per share.
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i. 06 Nov 06 ii. 22 Dec 06 iii. 15 Jan 07 iv. 26 Jan 07
- MISC named LNG Operator of the Year - MILS and BLG to provide automotive logistics - Naming ceremony of Seri Angkasa - Naming ceremony of Bunga Seroja Dua
2006 : October
3 MISC HOLDS BUKA PUASA GATHERING WITH ORPHANS FROM SEKENDI ORPHANAGE MISC staff gathered together for a Buka Puasa gathering with the orphans from Asrama Kebajikan Anak-Anak Yatim Sekendi, Selangor. About 80 children from the orphanage received Hari Raya goodie bags while the orphanage received a cash donation from MISC to upgrade its facilities.
2006 : November
6 MISC IS NAMED LNG OPERATOR OF THE YEAR FOR SECOND CONSECUTIVE YEAR MISC Berhad was once again voted LNG Operator of the Year at the 8th Lloyd's List Maritime Asia Awards, held in Kuala Lumpur. This is the second consecutive year MISC bagged the award that honours the best in the Asian Maritime Industry.
31 DELIVERY OF MISCS 8TH VLCC TANKER MISC Berhad took delivery of its eighth Very Large Crude Carrier (VLCC), Bunga Kasturi Tiga. The coming into service of the VLCC enabled MISC to expand beyond its existing capabilities by capitalising on the rapidly growing global oil and gas market. The continuous expansion of MISCs Petroleum fleet under AET provides MISC with the critical mass it requires to better serve its customers globally.
13 AET COMPLETES SALE AND LEASEBACK AGREEMENTS AET successfully completed the sale and lease-back of four of its Aframax tankers and signed a further deal to sell an additional vessel, also to be leased-back. This is to realise high capital value through sale and lease-back arrangements which allows AET to continue operating these tankers whilst re-investing the capital released in newer tonnage.
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2006 : December
5 MISC SEALINER SYSTEMS WINS PREMIER ICT AWARD MISC Berhad's Container Shipping System (also known as SEALINER System) clinched the Premier Information Technology Award 2006 (APTM 2006) for the private sector this year. The system provides MISC customers with end-to-end functionalities ranging from order processing, order fulfillment, operations and finance to transport their shipments through a reliable and extensive network of fixed routes to their destinations. MISC EXPANDS FLEET WITH ORDER OF TWO NEW AFRAMAXES MISC, through its subsidiary AET, ordered two new 107,500 DWT Aframax tankers from Tsuneishi Corporation of Japan. The increase in Aframax fleet size is aimed at replacing disposed tonnage and expanding the company's fleet capacity with modern tankers. MISC IS NAMED CILT COMPANY OF THE YEAR MISC was announced as Company of the Year by Chartered Institute of Logistics & Transport (CILT), a global professional body, established with the aim to spread logistics and transport knowledge, and to be a source of authoritative views for communication to governments, industry and the community. CILT has offices around the world, including in Malaysia.
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2007 : January
8 MISC WINS THE BRANDLAUREATE AWARD MISC was awarded the BrandLaureate Award and named as Malaysias best shipping brand. The BrandLaureate Awards is organised by Asia Pacific Brands Foundation (APBF), which was set up in 2004 to promote good branding practices and branding excellence in local industries. The BrandLaureate Awards recognises the best brands from Malaysia and Asia Pacific.
27 MISC HOLDS FIRST NAMING CEREMONY OF LNG VESSEL IN MALAYSIAN WATERS Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE) successfully completed a post gas trial inspection and final docking works on a Liquefied Natural Gas (LNG) carrier at its shipyard in Pasir Gudang, Johor. The vessel was named Seri Anggun at a naming ceremony held at the shipyard. Seri Anggun is the first LNG vessel to be named in Malaysia and its entry into MISC's LNG fleet further strengthened MISC's position as the world's largest single owner and operator of LNG carriers.
15 SERI ANGKASA IS MISCS 23RD LNG CARRIER MISC held the naming ceremony of its 23rd LNG carrier, at Malaysia Marine and Heavy Engineering (MMHE) Yard in Pasir Gudang, Johor, where Seri Angkasa successfully completed her post gas trial inspection and final docking works. The 145,000 cubic metre Seri Angkasa is the fourth of five new "Seri A Class" LNG carriers that has been ordered by MISC from Samsung Heavy Industries (SHI). 26 NAMING CEREMONY OF BUNGA SEROJA DUA MISC received its second Ultra Large Containership (ULCS) of 7943 TEUs from Daewoo Shipbuilding and Marine Engineering (DSME). Bunga Seroja Dua joined its sister vessel, Bunga Seroja Satu as the largest Malaysian registered container vessel to date. The vessel is 318m in length, 43m in breadth and 24.5m in depth. She joins MISC's fleet as its 21st container vessel.
22 MISC INTEGRATED LOGISTICS TO PROVIDE AUTOMOTIVE LOGISTICS IN MALAYSIA MISC Integrated Logistics (MILS) formed a joint venture with Germanys BLG International Logistics GmbH, a whollyowned subsidiary of BLG AG, to collaborate in the provision of Automotive Logistics in Malaysia. The tie-up will leverage on the strengths of MILS as a leading supply chain and logistics provider in the Malaysian market and BLG as the leading European automotive and automobile logistics provider. BLGs collaboration with MILS will be their first venture in South East Asia.
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- MILS wins gold award in safety - Naming ceremony of FPSO Kikeh - Naming ceremony of Bunga Kasturi Empat
2007 : February
2 MILS WINS GOLD AWARD IN SAFETY MILS was awarded the Gold Award for Safety in the Logistics category at the Anugerah Cemerlang Keselamatan dan Kesihatan Pekerjaan Kebangsaan 2006 awards ceremony, organised by the Occupational Health and Safety Council of the Human Resource Ministry. 23 MISC CO-ORGANISES FIRST MARINE SCIENCE TECHNOLOGY SEMINAR (MARSTEC 2007) MISC Berhad and Universiti Teknologi Malaysia jointly organised the first Marine Science and Technology Seminar (MARSTEC 2007). With the theme of "Enhancing Malaysia's Competitiveness in the Maritime Industry" the two-day seminar, a first of its kind in Malaysia, was aimed at enlightening participants on some of the latest development in marine technology as well as provide insights into the business challenges currently faced by the maritime industry.
16 MISC DONATES TO HELP REBUILD TWO FLOOD AFFECTED SCHOOLS IN JOHOR MISC Berhad, assisted with the re-building of two flood-affected schools in Johor by contributing school supplies furniture and electronic goods to Sekolah Kebangsaan Kangka Tebrau and Sekolah Agama Kangka Tebrau. MISC also provided school uniforms to students whose houses were affected by the flood.
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23 MISC AND UTM SIGNS MEMORANDUM OF AGREEMENT FOR PROFESSORSHIP CHAIR MISC and UTM signed a Memorandum of Agreement (MoA) for the establishment of a Professorship Chair in Marine Technology at UTM, to bridge the gap between what the academic institution is offering and the maritime industrys needs for qualified personnel and technological advancement to meet the present and future challenges. The signing is part of MISC's Memorandum of Understanding with UTM, signed in August 2006, which was aimed to develop capabilities, expertise and research activities in the maritime, shipping and offshore industry in Malaysia
PETROLEO BRASILEIRO S.A. PETROBRAS and BC-10 Holding Ltda) for a contractual period of 15 years.
2007 : April
11 MISCS FIRST SERI B CLASS LNG VESSEL IS NAMED MISCs first Seri B vessel of its 5th class LNG carriers, the 152,300 cubic metres Seri B Class. The vessel was named Seri Bakti by YBhg. Puan Sri Datin Sri Noraini Mohd. Yusoff, wife of the Chairman of MISC, YBhg. Tan Sri Dato Sri Mohd. Hassan Marican, at a ceremony in Nagasaki, Japan. 12 MISC'S 9th VLCC BUNGA KASTURI EMPAT IS NAMED MISC's 9th VLCC, Bunga Kasturi Empat was named by YBhg. Puan Sri Datin Sri Noraini Mohd. Yusoff at a naming ceremony in the USC Ariake Shipyard in Japan. In addition to this, MISC also has two more VLCC newbuildings with USC, one to be delivered later this year and the sixth and final one, sometime in mid 2008. 10 MILS SIGNS MOU WITH HALAL INDUSTRY DEVELOPMENT CORP MILS signed an MOU with Halal Industry Development Corporation (HDC) to collaborate on activities related to MILS Halal Chain and the halal logistics industry. Through this collaboration, MILS aims to develop and exhibit Malaysia as a pioneering Halal shipping and logistics hub for goods, services and technologies related to the global halal industry.
2007 : March
20 MISC WINS HSBC AWARD MISC was awarded the "Best Global Deal Initiated from Malaysia" by HSBC Bank Malaysia Berhad in recognition for the successful implementation of HSBC Cash Management solution (HSBCnet) to cater for MISC's global banking transactions. 29 MMHE CONSTRUCTS MALAYSIAS FIRST DEEPWATER FPSO MMHE completed the construction of the first Malaysian deepwater FPSO facility, marking a significant progress in the development of the countrys deepwater engineering and construction capability. Named, FPSO Kikeh, the facility is owned by Malaysian Deepwater Floating Terminal Ltd (MDFT), a joint venture between MISC and Single Buoy Mooring (SBM). FPSO Kikeh will be moored on the Kikeh field (1320m) located 120 km northwest of Labuan, Offshore Sabah. 29 JOINT VENTURE (JV) AGREEMENT BETWEEN MISC BERHAD AND SBM HOLDINGS INC SA MISC entered into an 'own, operate and manage' JV agreement with SBM for the management of an FPSO tanker facility for Shell Brasil Ltda (the operator of a production sharing contract with
2007 : June
3 FSO ABU RECEIVES FIRST OIL FSO Abu received its first oil from a fixed platform production facility. The Abu field is located in Block PM318, offshore Terengganu, Malaysia and operated by Petronas Carigali and Newfield Exploration on a 50:50 joint venture. TENAGA SATU UNLOADS MAIDEN CARGO IN NORWAY MISC's LNG Carrier, Tenaga Satu made its maiden call to the Snohvit LNG export facility in Norway, its first call to a Norwegian plant. The vessel, carrying LNG from Egypt, unloaded the cargo at the liquefaction plant in Melkoya. The LNG cargo is acquired from Gaz de France, a partner in the Snohvit consortium. The Tenaga Satu, is currently under medium-term charter with Gaz de France.
2007 : May
7 MILS WINS BEST HALAL-RELATED SERVICE PROVIDER MISC Integrated Logistics (MILS) was awarded the "Best Halal-Related Service Provider" by the Halal Journal, in conjunction with the 2nd World Halal Forum (WHF). The award is a positive reflection of MILS excellence in providing Halal Logistics Services to its customers.
Investor Relations
MISC is committed in ensuring timely dissemination of material information that is complete, transparent and credible to the market about its operations, financial conditions, business strategies and future prospects. Its objective is to ensure fair and accurate representation of the Group, so that existing and potential investors can make properly informed investment decisions, and other stakeholders can have a balanced understanding of the Group and its objectives.
The investor relations programme continues to be an integral part of MISC's commitment towards effective communication with shareholders, investors and the investment community at large and to maintain high standards of corporate governance. The Group will continue to take a proactive approach in communicating with the investing community by having a dedicated investor relations team to attend to enquiries in an informative, timely and professional manner and to drive an extensive investors outreach programme.
During the financial year, MISC's active investor relations efforts include: Timely announcements of its quarterly results as per Bursa Malaysia's Listing Requirements. Quarterly analysts' briefings where in-depth explanation on the Group's results, market conditions, long-term prospects and strategies were elaborated on. Feature presentations at half and full year analysts' briefings on its petroleum shipping, heavy engineering, chemical shipping and offshore business units as part of its effort in educating the investing public on the Group's business and operations. Moving forward presentations from other businesses will be featured to match their developments and accretive initiatives.
Comprehensive annual reviews with rating agencies, namely, Moody's Investor's Service, Standard & Poor's and Malaysian Rating Corporation Bhd (MARC), together with quarterly dialogue sessions via in-house meetings/telephone conferences to review announced results. Participation in International Investment Conferences and NonDeal Roadshows (NDRs) for both Equity and Fixed Income markets. The Group participated in four NDRs during the financial year, meeting fund managers and buy-side analysts. Regular dialogues with institutional investors and investment analysts via one-on-one meetings and conference calls.
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In line with the efforts for greater transparency, extensive information about the Groups performance and activities can be obtained from its Annual Reports and website
Dato' Shamsul Azhar bin Abbas President/Chief Executive Officer Mr. Michael Ting Sii Ching Vice President, Corporate Planning and Development Pn. Noraini Che Dan Vice President, Finance Ms. Adelene Alvisse Senior Manager, Investor Relations
www.misc.com.my
The Annual Reports are sent to shareholders, stakeholders and bond holders. The Group's "Corporate Disclosure Policies and Procedures" identify the following Management Personnel responsible for Investor Relations Activities.
MISC aims to build and maintain improved transparency with the investing community by keeping the communication channels open and being more accessible. Such efforts will be continuously enhanced to maintain the Group's corporate credibility and to strengthen investor confidence with greater corporate transparency.
Enquiries about the Group can be directed to:
investor.relations@miscbhd.com
The greatest success is to discover pathways that others do not seek.
As a global energy transportation leader, we assess prospects like mental surveyors, thinking beyond to move ahead. To pursue different yet untapped pathways, we act as Value Practitioners, equipping ourselves with capability building, technology transfers and many more hands-on training modules that help build our strength of will.
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People Development
Sustaining the Growth of Quality Human Capital
Our people are the primary asset of the Group. They act as the engine of growth that propels MISC in its journey towards Global Championship.
To ensure that MISC continues to have an abundant pool of leaders, sustaining the development of human capital is a vital aspect of the Groups strategy to achieve our vision of being a preferred provider of world-class maritime transportation and logistics services. People Development in MISC continues to focus on the Triple Plus element as outlined in our Corporate Agenda to be a Global Champion: involving 25 Managers and above who have volunteered to be Mentors, and 36 Mentees. The second round of the programme will run through till 2009. The long-term objective of Mentoring is to support the triple plus elements especially in leadership development and changing the mindset of MISC staff. The Mentoring Programme has contributed to the increase of the quality of our human capital through knowledge sharing. Through the 2 year programme, we have fostered a learning culture in MISC, where there is a passion for the sharing of knowledge and the establishment of developmental relationships. MISC staffs are in a lifelong process of self-development, and the sharing of experience and insights between the current and future leaders of the company contributes to the overall development of the staff on a personal as well as professional level.
Corporate Development Programmes

Executive Development Programme (EDP) First Line Managers Business Management Excellence Managing Motivation Performance Improvement (MMPI) Management Development Programme (MDP) Insead Senior Management Development Programme (SMDP)
Leadership Performance Management Programmes

Managing Your Career Managing Career Development Leadership in Service Excellence Leadership Dimension in Action Personal Renewal Workshop Value of Integrity Strategic Innovative Leadership Leadership Coaching Skill for Impact Influencing Your Results Strategic Management & Business Intelligence These ongoing programmes are designed to ensure readiness of the leaders to assume higher positions and also to equip them with necessary skills to outperform. The Corporate Development Programmes have been incorporated as MISC Career Management Framework.
1. Leadership Development
Mentoring: Inspiring the development of future leaders
With the successful implementation of the pilot Mentoring programme in late 2006, the second round of the programme was launched in early 2007,
Ongoing Leadership Programmes

MISC continues to provide the following training and development programmes for staff in order to increase their leadership potential:
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Understanding the crucial need for capability building to increase maketability and competetiveness, MISC has added two additional capability initiatives to our corporate agenda:
resources and capabilities, relevant agencies and institutions in Malaysia.
3. Mindset and Behaviour Change

Mindset and behaviour change of employees is a prerequisite to drive the organisation's aspiration to become a Global Champion by 2010 aligning to the Corporate Agenda. In order to measure the level of mindset and behaviour of all levels of staff within MISC group, MISC Employee Tracking Survey (METS) 2006 survey was carried out from May till June, with the findings providing better understanding of the current mindset level at MISC. Task Forces and Focus Groups were formed comprising of Executives, Managers and Senior Management level to identify symptoms/root causes, issues and intervention plans. There will be another mindset survey which is planned sometime in March / April 2008 to assess the mindset at all levels and to ensure all staff share the same aspirations of the Group and ready to brave the challenges of becoming a Global Champion.
Technology Transfer through Smart Partnerships

MISC/SBM JV, MDFTs successful construction of Malaysia's first deepwater FPSO, FPSO Kikeh was made possible through the smart partnership between MISC, SBM and MMHE. Detailed engineering design by SBM in Holland and Monaco was done with a provision for technology transfer for trainees from MISC and MMHE. This sharing of technology mega structural effort by PETRONAS, MISC and MMHE, marked a new high for MISC. Made possible via a technology transfer between MMHE and SBM, the MISC team of experts rose to the challenge and have thus further developed their expertise in deepwater constructional engineering.
Enhancing Research and Development

MISC and UTM signed a Memorandum of Agreement (MoA) for the establishment of Professorship Chair in Marine Technology at UTM. The Professorship Chair will be tasked to bridge the gap between what the academic institution is offering and the maritime industry's needs for qualified personnel and technological advancement to meet the present and future challenges. It is hoped that the establishment of the Chair would further enhanced the research in Maritime Technology, which would benefit the maritime sector in Malaysia. To complement the Professorship Chair, MISC has sponsored the development of Marine Technology Research and Development Database at UTM. This database captures the information on ongoing projects, facilities, available
2. Capability Building
Developing local capability is crucial in keeping the Group on par with the competition as we explore new frontiers in the industry. During the year, we continued our efforts of last year, building human capital capabilities via the following critical institutional capabilites identification which include leadership performance, strategic planning, business building, fleet management and maritime management; pilot capability efforts in FMS and MMHE; and a collaborative effort with Des Norske Veritas (DNV).
Value Practitioner
Living the Brand Proactive, Committed, Reliable
Our brand implementation exercise is a synchronised internal and external enhancement effort. The exercise encourages everyone at MISC to share ideas, build partnerships and showcase MISC as the preferred employer of choice.
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Celebrating Partnerships : A tradition of recognition

In MISCs journey towards success, we recognise the crucial part played by our employees, the people who are the backbone of the entire organisation. This year, in continuing with our tradition of celebrating our partnership with loyal and dedicated employees, a total of 193 employees were awarded the 35, 30, 25, 20 and 15 years long service awards respectively. We also saw 21 employees receive the MISC Retirement Awards, all of whom have served MISC well throughout their years with the Company. This year also saw the Long Service Awards create another milestone as we included in our celebrations, the staff of ALAM and AET. Although the awards can never compare with the dedication and hard work that our people has put into the growth of the Group, the celebration is our small way of thanking our employees and recognising the positive contributions that they have made to the Group.
a total of
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Work-Life Balance : Body, Mind and Spirit
MISC cares about work-life balance and promotes physical and mental development in support of their professional development. We believe that strong partnerships within the Group is fostered not only through working relationships but through outside activities such as sports, games as well as community services. During the past year, MISC staff participated in various internal and external sporting events:
employees awarded
People Highlights
Mini Sports Day World Maritime Day Sports Carnival PETRONAS Family Carnival Kuala Lumpur Hockey League Selangor Premier Football League PETRONAS Sports and Recreational Club Mini Sports Day
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Education Excellence Award : Strengthening closer relationships between the Management, staff and their families.
As part of the Corporations continuous effort to strengthen and encourage strong partnerships between the Management and the staff, MISC annually holds the Education Excellence Award. The award celebrates the achievements of the children of MISC staff in their UPSR, PMR and SPM examinations. It is our way of saying
celebrating the achievements of the children of MISC staff
'thank you' to our staff for their continual commitment and dedication, as well as to their family members for their encouraging support. Now in its third year, the creation of the Education Excellence Awards helps in developing and strengthening
the bond between MISC and thepeople behind the Corporation, by recognising the dedication and contribution of our people and at the same time, appreciating the outstanding achievement of the staff children, the youth of the nation.
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Health, Safety and Environment
MISC achieved a marked improvement of 23% for Lost Time Injury Frequency (LTIF), and an impressive 37% improvement in Total Recordable Case Frequency (TRCF)
MISC is determined in sustaining its future growth through expanded capabilities and targeted innovations to rise above its competition for a greater global prominence. The Health, Safety & Environment (HSE) fraternity within MISC Group distinctively contributed towards this notion as reflected in the HSE Performance for Financial Year (FY) 2006/2007. In assessing the performance of the current year against FY2005/2006, collectively, MISC achieved a marked improvement of 23% for Lost Time Injury Frequency (LTIF), and an impressive 37% improvement in Total Recordable Case Frequency (TRCF) a laudable
achievement by each OPUs HSE entity and its management, along with the guidance and championing of initiatives complemented by Corporate HSE (CHSE). At the forefront of the operations in maritime transportation, MISC Fleet Management Services (FMS) and AET Shipmanagement have both shown significant progress in the reduction of injuries to those onboard the containerships, LNG, chemical, and petroleum tankers. For the FY2006/2007, FMSs LTIF rate recorded an improvement of 27% whilst TRCF improved by 14% as compared to last year's. Meanwhile, AET's LTIF for
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FY2006/2007 showed a significant 36% improvement against FY2005/2006, whereas its TRCF revealed a massive 53% improvement. The FMS Safety Campaign was launched on 3 April 2006 with the slogan 'Zero Incident Zero Accident (ZIZA) Make It Safe in MISC'. New initiatives were introduced throughout the campaign to mitigate risks at an 'As Low as Reasonably Practicable' (ALARP) level. Programmes under the campaign include safety incentives to ship staff, publication of safety handbooks and safety posters, and the quarterly issue of ZIZA Bulletin. One of the objectives of the campaign is to sustain the safety culture onboard all ships. Through the 'Ziza Campaign', 13 ships had maintained 3-year ZIZA Safety Performance, 7 ships maintained 2-year ZIZA Safety Performance and 13 ships achieved 1-year ZIZA Safety Performance. Analysis and findings from investigations are shared with all staff and crew to heighten their safety awareness with the lessons learnt. In addition to the Safety Alerts, Safety Advisories and Safety Reminders have been introduced as communication tools for quick information sharing amongst the MISC seafaring community. The MISC Fuel Efficiency Campaign was launched in August 2006 with the objectives of
fuel-saving measures and reducing environmental pollution. All ships will eventually be required to implement the recommended course of actions as promulgated by FMS. FMS also demonstrated proactive values in sustaining high quality levels and conformance to HSE legal requirements as adopted by International and National Regulators. This was achieved through the management system standards of ISO on Environment & Quality, and ISM Code on Safety & Environment, besides the Tanker Management and Self Assessment (TMSA) guidelines and other marine-related requirement. Internal analysis, evaluations and reviews of FMS HSE performance, including the utilisation of HSEMS Self Assessment Chart and external feedbacks, provide the avenues for FMS towards global leadership in ship management. The customers safety performance measurement instruments such as TMSA are guidelines for FMS continuous improvement and focus on customers HSE expectations. On the other hand, AET witnessed an exciting change with the rebranding exercise that reflects its milestones and successful achievement from a regional to a global player in FY2006/2007. The
rebranding has brought about four new core values, namely Excellence, Partnership, Responsibility and Innovation. The core values define the serious commitment for continual improvement on Health, Safety and Environment protection to meet the industry demand and expectation. During the year under review, AET ascertained its proactiveness by engaging in ISO 9001 and ISO 14001 in a move to further enhance high quality standards and compliance to international and national requirements on HSE.
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AET made the most of its HSE Management System (HSEMS) Self Assessment Chart gap analysis study as a tool and guiding principle to be a global leader in petroleum transportation. To further complement the gap analysis study, the TMSA approach was also utilised to allow the identification of comprehensive HSE requirements as well as the enhancement of existing policies and frameworks in tandem with the eight elements of the HSEMS. Similar to FMS, AET has established two electronic bulletins, namely the Health and Environmental Bulletins, for promulgation to its fleet of vessels in order to promote Health and Environmental awareness to all onboard.
The LTIF rating for projects and asset management under the Offshore Business Unit (OBU) performed well considering there was only one LTI case for FY2006/2007. TRCF marked an impressive 40% against the past years. The FPSO Project BC 10, another Joint Venture with SBM, has established hazard management process and action plans that incorporate high degree of safety design integrity to support the entire construction phase in Keppel Singapore and the expected operations conditions in offshore Brazil. OBU, together with MMHE as its contractor, performed tank cleaning and disposal of sludge at the Johor anchorage for the recently purchased three old crude oil tankers. The above tasks were completed in compliance with all DOE requirements.
Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE)s LTIF rating for FY2006/2007 showed an improvement of 13% against FY2005/2006, whilst its TRCF was at an all time high of 52% improvement. 5.5 million manhours worked with zero LTI was achieved for Kikeh DTU Spar project while the Kikeh FPSO project accomplished more than 7.2 million manhours worked with zero LTI. MMHE had 10 sessions of roadshow on their 'U-See U-Act' (UCUX) programme since April 2006 and the 'Safety Advisory Chit / Summonses' (SAC/SU) had also been successfully conducted in the month of February & March 2007. The participants were from foreman level and above. The objective is to get greater involvement from the Line Management in UCUX programme and enforcement of Safety Rules and Regulations at site through SAC/SU. MMHE had also embarked on the Respiratory Protection Awareness Month (RPAM), in February 2007. The programme included health talks by an Industrial Hygienist, an Occupational Health Doctor and respiratory protection equipment experts, together with safety talks at project sites delivered by the Quality, Health, Safety & Environment (QHSE) department. The RPAM programme was targeted on employees involved in activities such as welding, painting and blasting, which produce airborne contaminants that have potential adverse health effects. A total of 28 in-house courses were conducted involving 2,407 attendees and 2,085.5 man/days by internal and external instructors. Meanwhile, 7,284
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employees of subcontractors attended the MMHE HSE induction/ refresher courses in line with the mandatory requirement prior commencing work in MMHE. Evacuation, fire and rescue drills were conducted on a monthly basis with the expectation to maintain emergency response teams state of preparedness. A total of 22 drills were conducted to continuously test on the effectiveness of the emergency response, including an oil spill drill conducted at waterfront (sea) of Dry Dock 2.
A QHSE Week 2006 was held from 9th to 15th December 2006 with the objective to provide awareness on Quality, Health, Safety and Environment to the MMHE community. Several activities were held such as:
QHSE Week 2006 Best Awards. Presented to the best workshop, project, and division that managed to fulfill all the HSE criteria for HSE effort and management QHSE exhibition participated by the various government bodies and private agencies and suppliers Blood donation drive by MMHE, 'Work Given-Out' staff (those employed through Manning Agencies) and subcontractor workers QHSE talks by Occupational Health Doctor including various authorities QHSE quiz participated by 18 teams from all MMHEs business/service units HSE Explorace carried out for the first time in MMHE that tested not only the knowledge and skills on health, safety, and environmental issues, but also the physical and mental fitness of each participant
MMHE received a company-wide certification of ISO 9001:2000 from Lloyd's Register Quality Assurance Ltd (LRQA) on 29 October 2006. An award was also received from Sarawak Shell Berhad for the completion of E11PB project with Zero LTI for more than one million manhours worked. After attaining a significant improvement in FY2005/2006, MISC Integrated Logistics Sdn Bhd (MILS) repeated its remarkable track record in FY2006/2007 with a marked improvement of 54% for the LTIF whilst TRCF was improved by 42% as compared to last year. MILS had undertaken several new initiatives to mitigate HSE risks, which include the development of their Drug & Alcohol policy that entailed a Drug & Alcohol screening for all new recruitment and existing staff. In addition, a 'Zero Accident, Zero Fatality Campaign' was also carried out with the Road Transport Safety (RTS) training for sub-contractors at Penang, Johor and Kuantan respectively. The programme consisted of Vehicle Management Training, Journey
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MILS carried out an initiative educating the contractors and subcontractors alike on the Self Assessment programme via presentation and other means of communication. HSE contractors' audits were also conducted to monitor the implementation of the Contractor Management initiative. The hard work paid off when MILS won the Gold Awards for the 'Anugerah Cemerlang Keselamatan dan Kesihatan Pekerja 2006' from the Department of Occupational Safety & Health, (DOSH) Malaysia. Accreditations by SIRIM for OHSAS 180001 & EMS 140001, and from Lloyd's for ISO 9001:2000 were received accordingly for all MILS' regional and administrative offices nationwide. There was a considerable progress in the HSE Performance of Akademi Laut Malaysia (ALAM) for FY2006/2007 in comparison with FY2005/2006, whereby an improvement of 14% was recorded for LTIF. ALAM had undertaken several new initiatives such as ALAM-wide onsite HSE Inspection where a total of 12 inspections were completed; ALAM-wide "Basic Risk Factors" Survey in which findings were to be used for the next Financial Year HSE Plan; conducted the first ever Fire Drill involving BOMBA; conducted many firsts ever at ALAM with regard to HSE initiatives in order to further improve their HSEMS (e.g Drug Test, Health Talk, Road Safety Talk, etc); and last but not least, ALAM's first ever Hazards Register was successfully documented. At the PETRONAS Group HSE Forum 2006 held in Jakarta, ALAM received the Special Award for the first non-plant OPU to effectively implement the HSEMS. Subsequent to the above, ALAM was cited as a role model in recognition of its 'Drug/Alcohol Abuse Management' at
Management, Driver Management and Road Transport Safety modules. On top of that, MILS also had the Safety Passport programme rolled-out at Port Klang, Melaka and Kerteh. 132 drivers from Inland Distributors (ID), Petronas Dagangan Berhad (PDB), and MILS attended the Safety Passport programme, which consists of Defensive Driving Training, Basic First Aid, Basic HSE, Fire Fighting and MILS emergency procedure, including theft and robbery. In the area of Contractor Management,
Institusi Pengajian Tinggi Swasta (IPTS) by the Melaka state government via Jabatan Keselamatan dan Kesihatan Pekerja Negeri Melaka. ALAM's guidelines were also taken up to provide as samples for other IPTS. Championing efforts at the corporate level, CHSE has provided stewardship and support for several programmes at HQ and down at the operations level. In just two years upon its inception, CHSE unit has progressed remarkably well advancing from establishing the alignment towards PETRONAS HSE standards and requirements, to a more proactive role in ensuring that all initiatives and targets for all OPUs are met, and that all intervention plans are carried out as intended. With the end in mind to sustain the future growth of HSE through expanded capabilities and targeted innovations, several other initiatives were undertaken including the facilitation of a dialogue session between the HSE Managers and Y.Bhg. Dato' President. The move to effect the dialogue session is a showcase
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of HSE leadership and commitment from the Top Management, in which there are no holds barred where HSE is concerned. To advocate a healthy lifestyle by exercising regularly, the first ever MISC Walkathon was organised. The event which was held at the Lake Gardens on 17th March 2007 helped to promote togetherness at home and also in the workplace as the participation was opened to all staff as well as family members. Revisions of the MISC Policy Statement on Health, Safety and Environment together with the MISC Policy Statement on Drug and Alcohol were successfully carried out and disseminated within the MISC group of companies upon completion. A 'Drug Awareness Campaign' was held in conjunction with the launching of the revised policy, to educate employees on the hazards and effects of drug abuse and the hindrance it posed towards achieving safe and productive work operations. Now a permanent event in the annual HSE plan, a Blood Donation Drive was conducted under a 'Bring a New Donor Campaign' with the intention to reach out to new donors via the regulars, subsequently increasing the percentage of successful donations to 72% in comparison with 55% from the previous drive. Other programmes on the Loss Prevention section include Cancer Awareness, Paper Recycling, Chemical Health Risk Assessment, Behavioral Safety and a series of the HSE Excellence workshops, as a continuation to last financial years initiatives to educate MISC staff on HSE Awareness. MISC has also undertaken the implementation of a structured and integrated Skill Group Development Programme in HSE. Staff under this skill group will benefit from the enhancement
programmes designed for the expansion of HSE capabilities within MISC HSE fraternity. Several training programmes have also been conducted through Institut Teknologi Petroleum PETRONAS (INSTEP) and other external trainers, such as the Tripod Incident Investigation Methodology, Permit-to-Work, Hazards and Effects Management Process (HEMP), Indoor Air Quality Assessment and the HSE Tier-3 Assurance. In its entirety, HSE in MISC Group has gone beyond its conservative scope and chartered course in order to become prominent in the global arena. Recognising the effect that HSE Performance has in the bottomline of all businesses and also in securing new business deals, the leadership and commitment of the MISC management has provided assurance to all stakeholders that HSE risks are mitigated to an 'As Low as Reasonably Practicable' (ALARP) level.
MILS was awarded the Gold Awards for the Anugerah Cemerlang Keselamatan dan Kesihatan Pekerja 2006 from the Department of Occupational Safety & Health, (DOSH) Malaysia.
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Lending our hands to those in need
We have over the years implemented and extended our expertise to help build the nation. Our open and transparent business practices are a testament of our commitment to operate ethically whilst contributing to the nations economic development.
MISC & Corporate Social Responsibility

Doing Our Part in Community Building
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Developing todays youth for tomorrows leaders MISCs scholars
As we do so, our actions improve the quality of life for the people of MISC as well as the community and society at large. At MISC, we understand that CSR is beyond philanthropy and public relations. We see the bigger picture, where our CSR efforts will provide both qualitative and quantitative long-term growth for the Group, shareholders and stakeholders alike. By educating the nation through maritime education and sponsorships; imparting positive market skills and development to university scholars via our 'Navigate Your Career' programme; and by being in essence a caring corporate citizen, our CSR framework is dedicated towards two main vital MISC agendas Youth Development and Community Corporate Responsibility.
Youth development is our contribution to both industry sustenance and nation building, whilst our community efforts are an extension of our caring fortitude as a global player that is still very Malaysian at heart. It is an ongoing effort on our part, one in which we approach with pride and confidence that our actions will help map the future of Malaysia's development both from a professional viewpoint as well as via the provision of a global ready and able workforce.
have noticed a flux in the current local graduates scenario, where there are issues raised in regards to their general lacklustre performance or personality upon graduation. We wish to help prepare them to be more industry ready and adapt to the changes and progression of the job market.
For the year, our focus on CSR was divided into two main areas of development: Youth Development Community Corporate Responsibility
Our CSR infused business culture

During the year, MISC's CSR-related programmes continued to focus on youth development. As we envision ourselves to be a maritime nation, we are also committed towards the provision of efficient human capital to support this vision. This year also marked a paradigm shift in the way we extend our assistance. We are now looking at developing university scholars into prepared and able 'real world' ready individuals. We
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Youth Development
We believe that in order to help build a progressive nation, we have to play our role, both big and small in social development.
We play a different part in the scheme of things; ours is a CSR approach based more on development educational and personal career development. The latest additions of the simulation system modules and increase in training berths onboard most MISC ships have also assisted our graduates, making them industry ready and renowned as some of the most in demand seafarers in the region. Our proactive stance in maritime education continues to lead us to push the need for greater maritime education throughout Malaysia and South East Asia.
For the year under review, more than RM14 million was invested to our Cadet Sponsorship Programme which amounted to a sponsorship of 95% of ALAM's current scholars. The programme is structured to equip the cadets with technological, technical and practical training that will incite excellence in their future work environment. The programme, which has garnered increased recognition by students, parents and affiliates globally, has encouraged an upturn in prospective student applications annually. Its regimented training modules have helped build the Malaysian maritime industry, and to date, a large number of Malaysian captains in the industry are ALAM scholars. Subsequently, our scholastic approach churns a positive spin from qualitative to quantitative economic attributes. This continues to be our mission, and it is one in which we approach with a sense of pride and accomplishment.
2. Cadet Sponsorship Programme

Investment comes in various forms, both quantitative and qualitative. In our case, we embrace the qualitative aspect by empowering our youth with the capabilities and expertise to enjoy a healthy, robust international career as a seafarer.
1. ALAM the regions nerve centre for maritime excellence

From our initial Nautical Cadet Programme in 1979, MISC has spurred on as the current leader in maritime education in Malaysia. Our incessant drive to build a maritime nation continued with our focus on our very own maritime training academy, Akademi Laut Malaysia (ALAM). A wholly owned subsidiary, ALAM was injected with RM6.6 million to further maintain and equip the academy with the latest technological equipment and facilities. During the year, a record number of 378 cadets joined ALAMs fraternity, marking a 56% increase in enrolment. We believe this is the result of increased interest in the possibilities of a maritime career on the seven seas.
3. MISC Education Sponsorship Programme

This year, our educational funding programmes in human capital
Gearing students for the years ahead, ensuring a journey of integrity, vision & promise
095
development continued with sponsorships extended to 52 candidates, both for children of MISC staff as well as nationwide. Selected based on their exemplary performances in education, the provision allowed the students to further their education both locally and abroad in courses relevant to MISCs business such as Naval Architecture, Marine Engineering, Offshore Engineering, Transport & Logistics, Mechanical Engineering, Electrical Engineering, Civil Engineering, Accounting and Economics.
through the right attitude and persona in the workplace. The CSR programme is inclusive of road shows, online resource centre and practical attachment modules. We believe that our latest effort in social development will help create a more buoyant local graduate pool in the near future, establishing a global ready team of professionals in the process. Still in its preliminary stage of development, we look forward to further development in the ensuing years.
Our caring fortitude
4. Navigate Your Career our latest fundamental CSR infused programme

The general tame reputation and volatility in the skilled performance of local entry level graduates into the marketplace has led us to develop a new programme in youth development. One in which we are hopeful will help boost and encourage a more vibrant and industry ready local graduate workforce. Malaysian graduates have been citicised as of late for their lack of interpersonal and professional skills. This has led to a dire need for entry level job placements for them with most companies local and multinational giving top priority to more rounded and well development private tertiary scholars. On that basis, we have devised the 'MISC CSR Programme Navigate Your Career. Developed to encourage a mindset change for local undergraduates, the programme is set for initial launch in July 2007 in various universities across the nation. A 3-part programme Educate, Engage & Expose Navigate Your Career is geared to enhance employment awareness via guidance initiatives to impart soft skills and insights into career opportunities possible
Community Corporate Responsibility

2007 saw us continue on with our pledge to extend our hands to the needy.
Throughout the year, monies as well as educational gifts and provisions were extended to various members of the community and charitable causes. Institutions of higher learning and maritime-related organisations were also part and parcel of our continual charity programmes, either co-organised by MISC or through other worthy avenues. As a group that has seen Malaysia flourish and bloom, we believe that we play a pivotal role in the countrys development and sustenance. This is our part of nation building, and it is a role that we take seriously. We are proud of our efforts and view each effort as a venture to develop stronger relationships with all. People are the essence of a country and through our labours; we aim to continue to build a thriving nation of proud, intellectual, positive Malaysians.
We never lose sight of the bigger picture the Globe
Our mind mapping strategies and Innovator zeal continue to reveal a long universal link across the globe. With partnerships on almost every corner of the earth, our ideas have taken flight from paper into a real feasible global master plan.
heuwhoe
97
Financial Statements
098
Directors Report
104
Income Statements
110
Cash Flow Statements
102
Statement by Directors and Statutory Declaration
105
Balance Sheets
111
Notes to the Financial Statements
107
Statements of Changes in Equity
103
Report of the Auditors
directors' report
098
Directors' Report
The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Corporation for the financial year ended 31 March 2007.
Principal Activities
The principal activities of the Corporation consist of shipowning, ship operating, other activities related to shipping services and owning and operating offshore floating services. The principal activities of the subsidiaries are described in Note 37 to the financial statements. There have been no significant changes in the nature of the principal activities during the financial year.
Results
Group Corporation RM'000 RM'000 Profit for the year Attributable to: Equity holders of the Corporation Minority interests 2,896,930 3,700,744
2,852,025 44,905 2,896,930
3,700,744 3,700,744
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements. In the opinion of the directors, the results of the operations of the Group and of the Corporation during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature other than: a. the effects arising from the changes in accounting policies due to the adoption of the new and revised FRSs which has resulted in an increase in the Group's and the Corporation's profit for the year by RM178,800,000 and RM233,464,000 (including the effects arising from changes in estimates as disclosed in b. below) respectively as disclosed in Note 2.3(h)(ii) to the financial statements; and b. the effects arising from changes in estimates where the residual values of ships were revised resulting in an increase in the Group's and the Corporation's profit for the year by RM159,100,000 and RM101,393,000 respectively as disclosed in Note 2.4 to the financial statements.
directors' report
099
Dividends
The amount of dividends paid by the Corporation since 31 March 2006 were as follows: RM'000 In respect of the financial year ended 31 March 2006 as reported in the directors' report of that year: Final tax exempt dividend of 20 sen per share, paid on 30 August 2006 In respect of the financial year ended 31 March 2007: Interim tax exempt dividend of 10 sen per share, paid on 22 December 2006
727,975
368,991
At the forthcoming Annual General Meeting, the following tax exempt dividend will be proposed for shareholders' approval in respect of the financial year ended 31 March 2007: RM'000 Final tax exempt dividend of 20 sen per share 743,966
The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 March 2008.
Directors
The names of the directors of the Corporation in office since the date of the last report and at the date of this report are: Tan Sri Dato Sri Mohd Hassan bin Marican Dato' Shamsul Azhar bin Abbas Dato Sri Liang Kim Bang Harry K. Menon Dato' Halipah binti Esa Nasaruddin bin Md Idris Dato' Kalsom binti Abd Rahman Dato' Dr Wan Abdul Aziz bin Wan Abdullah Dato' Ibrahim Mahaludin bin Puteh Tan Sri Dato' Seri Dr Hj Zainul Ariff bin Hj Hussain
(appointed on 14 September 2006) (appointed on 10 May 2007, alternate to Dato' Dr Wan Abdul Aziz bin Wan Abdullah) (resigned on 1 January 2007)
Directors' Benefits
Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Corporation was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Corporation or any other body corporate. Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a fulltime employee of the Corporation as shown in Note 7 to the financial statements) by reason of a contract made by the Corporation or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.
directors' report
100
Directors' Report (cont'd)

Directors' Interests
According to the register of directors' shareholdings, the interests of directors in office at the end of the financial year in shares in the Corporation and its related corporations during the financial year were as follows: Number of Ordinary Shares of RM1 Each 31 March 1 April 2006 Bought Sold 2007 The Corporation Direct Dato Sri Liang Kim Bang Indirect Dato Sri Liang Kim Bang Fellow Subsidiary PETRONAS Dagangan Berhad Direct Tan Sri Dato Sri Mohd Hassan bin Marican Fellow Subsidiary PETRONAS Gas Berhad Direct Tan Sri Dato Sri Mohd Hassan bin Marican Dato' Kalsom binti Abd Rahman Nasaruddin bin Md Idris Fellow Subsidiary KLCC Property Holdings Berhad Direct Tan Sri Dato Sri Mohd Hassan bin Marican
304,000 136,000
304,000 136,000
2,000
2,000
5,000 3,000
1,000
5,000 1,000 3,000
50,000
50,000
None of the other directors in office at the end of the financial year had any interest in shares in the Corporation or its related corporations during the financial year.
Other Statutory Information

a. Before the income statements and balance sheets of the Group and of the Corporation were made out, the directors took reasonable steps: i. to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and
ii. to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise. b. At the date of this report, the directors are not aware of any circumstances which would render: i. the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Corporation inadequate to any substantial extent; and
ii. the values attributed to the current assets in the financial statements of the Group and of the Corporation misleading. c. At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Corporation misleading or inappropriate.
directors' report
101
Other Statutory Information (cont'd)

d. At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Corporation which would render any amount stated in the financial statements misleading. e. As at the date of this report, there does not exist: i. any charge on the assets of the Group or of the Corporation which has arisen since the end of the financial year which secures the liabilities of any other person; or
ii. any contingent liability of the Group or of the Corporation which has arisen since the end of the financial year. f. In the opinion of the directors: i. no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Corporation to meet their obligations when they fall due; and
ii. no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Corporation for the financial year in which this report is made.
Significant Events
Significant events during the financial year are disclosed in Note 40 to the financial statements.
Auditors
The auditors, Ernst & Young, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors dated 10 May 2007.
statement by directors and statutory declaration
102
Statement by Directors
Pursuant to Section 169(15) of the Companies Act, 1965

We, Tan Sri Dato Sri Mohd Hassan bin Marican and Dato' Shamsul Azhar bin Abbas, being two of the directors of MISC Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 104 to 189 are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia so as to give a true and fair view of the financial position of the Group and of the Corporation as at 31 March 2007 and of the results and the cash flows of the Group and of the Corporation for the year then ended. Signed on behalf of the Board in accordance with a resolution of the directors dated 10 May 2007.
Statutory Declaration
Pursuant to Section 169(16) of the Companies Act, 1965

I, Noraini binti Che Dan, being the officer primarily responsible for the financial management of MISC Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 104 to 189 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the abovenamed Noraini binti Che Dan at Kuala Lumpur in Wilayah Persekutuan on 10 May 2007
Noraini binti Che Dan
Before me, Haron Hashim (W 128) Commissioner of Oath
report of the auditors
103
Report of the Auditors to the Members of MISC Berhad

(Incorporated in Malaysia)
We have audited the financial statements set out on pages 104 to 189. These financial statements are the responsibility of the Corporation's directors. It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility to any other person for the content of this report. We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion: a. the financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia so as to give a true and fair view of: i. the financial position of the Group and of the Corporation as at 31 March 2007 and of the results and the cash flows of the Group and of the Corporation for the year then ended; and
ii. the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and b. the accounting and other records and the registers required by the Act to be kept by the Corporation and by its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. We have considered the financial statements and the auditors' reports thereon of the subsidiaries of which we have not acted as auditors, as indicated in Note 37 to the financial statements, being financial statements that have been included in the consolidated financial statements. We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Corporation are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The auditors' reports on the financial statements of the subsidiaries were not subject to any qualification material to the consolidated financial statements and did not include any comment required to be made under Section 174(3) of the Act.
Ernst & Young AF: 0039 Chartered Accountants Kuala Lumpur, Malaysia 10 May 2007
Habibah bte Abdul No. 1210/05/08(J) Partner
income statements
104
Income Statements
for the year ended 31 March 2007

Group 2007 RM'000 Note Revenue Cost of sales Gross profit Gain on disposal of ships Other operating income General and administrative expenses Operating profit Finance costs Share of (loss)/profit of associates Share of profit of jointly controlled entities Profit before taxation Taxation Profit for the year Attributable to: Equity holders of the Corporation Minority interests 2,852,025 44,905 2,896,930 Basic earnings per share attributable to equity holders of the Corporation (sen) 10 76.7 75.9 2,822,573 48,029 2,870,602 3,700,744 3,700,744 1,584,981 1,584,981 9 5 8 4 3 11,198,945 (7,779,198) 3,419,747 436,559 303,345 (909,224) 3,250,427 (347,757) (491) 28,131 2,930,310 (33,380) 2,896,930 2006 RM'000 (restated) 10,747,080 (7,326,051) 3,421,029 202,325 383,190 (784,588) 3,221,956 (348,398) 15,404 11,830 2,900,792 (30,190) 2,870,602 Corporation 2007 RM'000 2006 RM'000 (restated) 4,824,679 (4,028,558) 796,121 202,325 999,912 (376,279) 1,622,079 (18,901) 1,603,178 (18,197) 1,584,981
4,355,482 (3,822,813) 532,669 131,915 3,473,359 (391,064) 3,746,879 (46,135) 3,700,744 3,700,744
The accompanying notes form an integral part of the financial statements.
balance sheets
105
Balance Sheets
as at 31 March 2007
Group 2007 RM'000 Note 2006 RM'000 (restated) Corporation 2007 RM'000 2006 RM'000 (restated)
Non-Current Assets
Ships Property, plant and equipment Investment properties Intangible assets Investments in subsidiaries Investments in associates Investments in jointly controlled entities Other investments Deferred tax assets 12 12 13 14 15 16 17 18 29 21,034,467 843,227 49,500 1,041,424 2,685 503,358 236,077 2,941 23,713,679 19,963,021 827,770 53,800 1,037,585 12,290 139,476 235,577 1,151 22,270,670 8,592,410 90,131 49,500 6,716,259 51,141 15,499,441 7,122,515 321,943 53,800 3,647,632 8,314 50,568 11,204,772
Current Assets
Inventories Trade and other receivables Marketable securities Cash, deposits and bank balances Non-current assets classified as held for sale 19 20 22 23 24 262,974 1,721,703 851 2,217,564 4,203,092 38,015 4,241,107 243,500 1,679,379 3,587 3,425,969 5,352,435 5,352,435 103,090 1,012,199 851 735,116 1,851,256 172,618 2,023,874 85,491 3,290,868 3,587 487,600 3,867,546 3,867,546
Current Liabilities
Trade and other payables Borrowings 25 26 2,205,615 495,252 2,700,867 1,540,240 25,253,919 2,507,542 609,748 3,117,290 2,235,145 24,505,815 2,670,723 97,065 2,767,788 (743,914) 14,755,527 1,974,176 1,974,176 1,893,370 13,098,142
Net Current Assets/(Liabilities)
balance sheets
106
Balance Sheets
as at 31 March 2007 (cont'd)

Group 2007 RM'000 Note 2006 RM'000 (restated) Corporation 2007 RM'000 2006 RM'000 (restated)
Equity
Equity attributable to equity holders of the Corporation Share capital Other reserves Retained profits Minority Interests 27 28 3,719,828 1,121,422 13,797,911 18,639,161 241,435 18,880,596 26 29 6,309,140 64,183 25,253,919 3,719,828 2,348,423 12,087,955 18,156,206 284,686 18,440,892 5,997,910 67,013 24,505,815 3,719,828 127,049 10,905,284 14,752,161 14,752,161 3,366 14,755,527 3,719,828 1,073,206 8,301,506 13,094,540 13,094,540 3,602 13,098,142
Non-Current Liabilities
Borrowings Deferred tax liabilities
consolidated statement of changes in equity
107
Consolidated Statement of Changes in Equity

<------ Attributable to Equity Holders of the Corporation ------> Share Capital <-Non-distributable-> Distributable Ordinary Share Other Retained Shares Premium Reserves Profits Total RM'000 RM'000 RM'000 RM'000 RM'000 Minority Interests Total Equity
Note At 1 April 2005 As previously stated Effects of adopting FRS 121 At 1 April 2005 (restated) Currency translation differences: Group Associates Jointly controlled entities Transfer from reserves to retained profits Net expense recognised directly in equity Profit for the year Total recognised income and expense for the year Bonus issue Dividends Acquisition of a subsidiary At 31 March 2006 11 28 28 28 28 28
RM'000
RM'000
1,859,914 1,859,914 1,859,914 3,719,828
460,882 460,882 (460,882)
106,221 2,849,280 2,955,501 (586,161) 1,232 (194) (585,123) (21,955) (607,078) (607,078) 2,348,423
12,852,789 (1,096,235) 11,756,554 21,955 21,955 2,822,573 2,844,528 (1,399,032) (1,114,095) 12,087,955
15,279,806 1,753,045 17,032,851 (586,161) 1,232 (194) (585,123) (585,123) 2,822,573 2,237,450 (1,114,095) 18,156,206
275,484 (4,963) 270,521 (15,454) (15,454) (15,454) 48,029 32,575 (14,893) (3,517) 284,686
15,555,290 1,748,082 17,303,372 (601,615) 1,232 (194) (600,577) (600,577) 2,870,602 2,270,025 (1,128,988) (3,517) 18,440,892
consolidated statement of changes in equity
108
Consolidated Statement of Changes in Equity

for the year ended 31 March 2007 (cont'd)
<------ Attributable to Equity Holders of the Corporation ------> Share Capital <-Non-distributable-> Distributable Ordinary Share Other Retained Shares Premium Reserves Profits Total RM'000 RM'000 RM'000 RM'000 RM'000 Minority Interests Total Equity
Note At 1 April 2006 As previously stated Effects of adopting FRS 121 At 1 April 2006 (restated) Effects of adopting FRS 3 Currency translation differences: Group Associates Jointly controlled entities Transfer to reserves from retained profits Net expense recognised directly in equity Profit for the year Total recognised income and expense for the year Dividends Acquisition of subsidiaries At 31 March 2007 11 28 28 28 28 28
RM'000
RM'000
3,719,828 3,719,828 3,719,828
23,150 2,325,273 2,348,423 2,348,423
13,309,578 (1,221,623) 12,087,955 65 12,088,020
17,052,556 1,103,650 18,156,206 65 18,156,271
298,882 (14,196) 284,686 284,686
17,351,438 1,089,454 18,440,892 65 18,440,957
3,719,828
(1,273,372) 207 996
(45,168) (45,168) 2,852,025 2,806,857 (1,096,966) 13,797,911
(1,273,372) 207 996 (1,272,169) (1,272,169) 2,852,025 1,579,856 (1,096,966) 18,639,161
24,932 24,932 24,932 44,905 69,837 (17,764) (95,324) 241,435
(1,248,440) 207 996 (1,247,237) (1,247,237) 2,896,930 1,649,693 (1,114,730) (95,324) 18,880,596
(1,272,169) 45,168
(1,227,001)
(1,227,001) 1,121,422
statements of changes in equity
109
Statements of Changes in Equity

Share Capital Ordinary Shares RM'000 <-- Non-Distributable --> Distributable Share Other Retained Premium Reserves Profits RM'000 RM'000 RM'000
Note Note At 1 April 2005 As previously stated Effects of adopting FRS 121 At 1 April 2005 (restated) Currency translation differences Net expense recognised directly in equity Profit for the year Total recognised income and expense for the year Bonus issue Dividends At 31 March 2006 At 1 April 2006 As previously stated Effects of adopting FRS 121 At 1 April 2006 (restated) Currency translation differences Net expense recognised directly in equity Profit for the year Total recognised income and expense for the year Dividends At 31 March 2007 11 28 28 11 28 28
Total RM'000
1,859,914 1,859,914 1,859,914 3,719,828
460,882 460,882 (460,882)
35,217 1,536,018 1,571,235 (498,029) (498,029) (498,029) 1,073,206
9,963,036 (733,384) 9,229,652 1,584,981 1,584,981 (1,399,032) (1,114,095) 8,301,506
12,319,049 802,634 13,121,683 (498,029) (498,029) 1,584,981 1,086,952 (1,114,095) 13,094,540
3,719,828 3,719,828 3,719,828
35,217 1,037,989 1,073,206 (946,157) (946,157) (946,157) 127,049
9,119,310 (817,804) 8,301,506 3,700,744 3,700,744 (1,096,966) 10,905,284
12,874,355 220,185 13,094,540 (946,157) (946,157) 3,700,744 2,754,587 (1,096,966) 14,752,161
cash flow statements
110
Cash Flow Statements

Group Note 2007 RM'000 2006 RM'000 Corporation 2007 RM'000 2006 RM'000
Cash receipts from customers Cash paid to suppliers and employees Cash from operations Taxation paid Net cash generated from operating activities Net cash (used in)/generated from investing activities Net cash used in financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of financial year Currency translation differences Cash and cash equivalents at end of financial year Cash and cash equivalents comprise: Cash, deposits and bank balances 23 30 31
11,274,148 (7,607,139) 3,667,009 (33,379) 3,633,630 (3,609,544) (1,045,121) (1,021,035) 3,425,969 (187,370) 2,217,564
10,907,229 (6,238,566) 4,668,663 (9,644) 4,659,019 (2,640,635) (2,920,123) (901,739) 4,373,775 (46,067) 3,425,969
4,856,846 (3,917,840) 939,006 939,006 354,115 (1,047,014) 246,107 487,600 1,409 735,116
4,990,322 (3,930,352) 1,059,970 1,059,970 (1,873,911) (1,537,407) (2,351,348) 2,850,711 (11,763) 487,600
2,217,564
3,425,969
735,116
487,600
notes to the financial statements
111

31 March 2007
1. Corporate Information
The Corporation is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Board of Bursa Malaysia Securities. The registered office of the Corporation is located at Level 25, Menara Dayabumi, Jalan Sultan Hishamuddin, 50050 Kuala Lumpur. The holding and ultimate holding company of the Corporation is Petroliam Nasional Berhad, a company incorporated and domiciled in Malaysia. The principal activities of the Corporation consist of shipowning, ship operating, other activities related to shipping services and owning and operating offshore floating services. The principal activities of the subsidiaries are described in Note 37. There have been no significant changes in the nature of the principal activities during the financial year. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 10 May 2007.
2.
Significant Accounting Policies
2.1 Basis of Preparation The financial statements comply with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia ("FRS"). At the beginning of the current financial year, the Group and the Corporation had adopted new and revised FRSs which are mandatory for financial periods beginning on or after 1 January 2006 as described fully in Note 2.3. The financial statements of the Group and of the Corporation have also been prepared on a historical cost basis unless otherwise indicated in the accounting policies below. The functional currency of the Corporation and certain subsidiaries is United States Dollar ("USD"). The financial statements are presented in Ringgit Malaysia ("RM") in compliance with FRSs and all values are rounded to the nearest thousand (RM'000) except when otherwise indicated. 2.2 Summary of Significant Accounting Policies a. Subsidiaries and Basis of Consolidation i. Subsidiaries Subsidiaries are entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity. In the Corporation's separate financial statements, investments in subsidiaries are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.
112

31 March 2007 (cont'd)
2. Significant Accounting Policies (cont'd)
2.2 Summary of Significant Accounting Policies (cont'd) a. Subsidiaries and Basis of Consolidation (cont'd) ii. Basis of Consolidation The consolidated financial statements comprise the financial statements of the Corporation and its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are prepared for the same reporting date as the Corporation. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. In preparing the consolidated financial statements, intragroup balances, transactions and unrealised gains or losses are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances. Acquisitions of subsidiaries are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition. Any excess of the cost of the acquisition over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. Any excess of the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in profit or loss. When the merger method is used, the cost of investment in the Corporation's book is recorded at the nominal value of shares issued and the difference between the carrying value of the investment and the nominal value of shares acquired is treated as merger reserve or merger deficit. The results of the companies being merged are included as if the merger had been effected throughout the current and previous years. Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. It is measured at the minorities' share of the fair value of the subsidiaries' identifiable assets and liabilities at the acquisition date and the minorities' share of changes in subsidiaries' equity since then. b. Associates Associates are entities in which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not in control or joint control over those policies.
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Significant Accounting Policies (cont'd)
2.2 Summary of Significant Accounting Policies (cont'd) b. Associates (cont'd) Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting. Under the equity method, the investment in associate is carried in the consolidated balance sheet at cost adjusted for postacquisition changes in the Group's share of net assets of the associate. The Group's share of the net profit or loss of the associate is recognised in the consolidated profit or loss. Where there has been a change recognised directly in the equity of the associate, the Group recognises its share of such changes. In applying the equity method, unrealised gains and losses on transactions between the Group and the associate are eliminated to the extent of the Group's interest in the associate. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group's net investment in the associate. The associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. Any excess of the Group's share of the net fair value of the associate's identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group's share of the associate's profit or loss in the period in which the investment is acquired. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any long-term interests that, in substance, form part of the Group's net investment in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. The most recent available audited financial statements of the associates are used by the Group in applying the equity method. Where the dates of the audited financial statements used are not coterminous with those of the Group, the share of results is arrived at from the last audited financial statements available and management financial statements to the end of the accounting period. Uniform accounting policies are adopted for like transactions and events in similar circumstances. In the Corporation's separate financial statements, investments in associates are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss. c. Jointly Controlled Entities The Group has an interest in joint ventures which are jointly controlled entities. A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control, and a jointly controlled entity is a joint venture that involves the establishment of a separate entity in which each venturer has an interest. Investments in jointly controlled entities are accounted for in the consolidated financial statements using the equity method of accounting as described in Note 2.2(b). In the Corporation's separate financial statements, investments in jointly controlled entities are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.
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2.2 Summary of Significant Accounting Policies (cont'd) d. Intangible Assets i. Goodwill Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
ii. Other Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair values as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised on a straight-line basis over the estimated economic useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each balance sheet date. Intangible assets with indefinite useful lives are not amortised but tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying value may be impaired either individually or at the cash-generating-unit level. The useful life of an intangible asset with an indefinite life is also reviewed annually to determine whether the useful life assessment continues to be supportable. e. Ships, Property, Plant and Equipment, and Depreciation All ships, property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Subsequent to recognition, ships, property, plant and equipment except for freehold land, ships under construction, systems work in progress and construction in progress are stated at cost less accumulated depreciation and any accumulated impairment losses. Long term leasehold and foreshore land of a subsidiary have not been revalued since they were revalued in 1988. The directors have not adopted a policy of regular revaluations of such assets and no later valuation has been recorded. As permitted under the transitional provisions of IAS 16 (Revised): Property, Plant and Equipment, these assets continue to be stated at their original valuation less accumulated depreciation and impairment losses.
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2.2 Summary of Significant Accounting Policies (cont'd) e. Ships, Property, Plant and Equipment, and Depreciation (cont'd) Freehold land has an unlimited useful life and therefore is not depreciated. Leasehold land is depreciated on a straight-line basis over the period of the respective leases which range from 60 to 99 years. Ships under construction, systems work in progress and construction in progress are not depreciated as these assets are not available for use. Depreciation of ships under construction commences from the date of delivery of the ships. Depreciation of ships in operation, property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates: Ships constructed (including floating solutions assets) Ships purchased Buildings Containers Motor vehicles Furniture, fittings and equipment Computer software and hardware Plant and machinery Tugboats, engines and pushers Drydocks and waste plant 5 20 years Remaining useful life 2% 7% 8% 15% 10% 33.3% 10% 33.3% 15% 33.3% 10% 20% 6.7% 20% 2% 10%
The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the ships, property, plant and equipment. Ships, property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in profit or loss and the unutilised portion of the revaluation surplus is taken directly to retained profits. f. Investment Properties Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Such properties are measured at cost, including transaction costs. Freehold land and building of the Corporation have not been revalued since they were revalued in 1984. The directors have not adopted a policy of regular revaluations of such assets and no later valuation has been recorded. Depreciation of investment properties is provided for on a straight-line basis at 2% per annum. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year in which they arise.
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2.2 Summary of Significant Accounting Policies (cont'd) g. Construction Contracts Where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs are recognised as revenue and expenses respectively by using the stage of completion method. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs. Where the outcome of a construction contract cannot be reliably estimated, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. When the total of costs incurred on construction contracts plus, recognised profits (less recognised losses), exceeds progress billings, the balance is classified as amount due from customers on contracts. When progress billings exceed costs incurred plus, recognised profits (less recognised losses), the balance is classified as amount due to customers on contracts. h. Impairment of Non-financial Assets The carrying amounts of assets, other than construction contract assets, inventories, deferred tax assets and non-current assets held for sale, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated to determine the amount of impairment loss. For goodwill, the recoverable amount is estimated at each balance sheet date or more frequently when indicators of impairment are identified. For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the cash-generating-unit ("CGU") to which the asset belongs to. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's CGUs, or groups of CGUs, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. An asset's recoverable amount is the higher of an asset's or CGU's fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. An impairment loss is recognised in profit or loss in the period in which it arises, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for as a revaluation decrease to the extent that the impairment loss does not exceed the amount held in the asset revaluation reserve for the same asset.
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2.2 Summary of Significant Accounting Policies (cont'd) h. Impairment of Non-financial Assets (cont'd) Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase. i. Inventories Inventories which comprise bunkers, lubricants, spares, raw materials and consumable stores are held for own consumption and are stated at the lower of cost and net realisable value. Cost is arrived at on the weighted average basis and comprises the purchase price and other direct charges. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale. j. Financial Instruments Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends and gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are recognised directly in equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. i. Cash and Cash Equivalents For the purposes of the cash flow statements, cash and cash equivalents include cash on hand and at bank, deposit at call and short term highly liquid investments which have an insignificant risk of changes in value, net of outstanding bank overdrafts.
ii. Other Non-current Investments Non-current investments other than investments in subsidiaries, associates, jointly controlled entities and investment properties are stated at cost less impairment losses. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in profit or loss. iii. Marketable Securities Marketable securities are carried at the lower of cost and market value, determined on an aggregate basis. Cost is determined on the weighted average basis while market value is determined based on quoted market values. Increases or decreases in the carrying amount of marketable securities are recognised in profit or loss. On disposal of marketable securities, the difference between net disposal proceeds and the carrying amount is recognised in profit or loss.
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2.2 Summary of Significant Accounting Policies (cont'd) j. Financial Instruments (cont'd) iv. Trade and Other Receivables Trade and other receivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date. v. Trade and Other Payables Trade and other payables are stated at the fair value of the consideration to be paid in the future for goods and services received. vi. Interest Bearing Loans and Borrowings All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. vii. Non-convertible Cumulative Redeemable Preference Shares ("NCRPS") The NCRPS are recorded at the amount of proceeds received, net of transaction costs. The NCRPS are classified as non-current liabilities in the balance sheet and the preferential dividends are recognised as finance costs in profit or loss in the period in which they are incurred. viii. Equity Instruments Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared. The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided. ix. Derivative Financial Instruments Derivative financial instruments are not recognised in the financial statements. Interest rate swap contracts: Net differentials in interest receipt and payments arising from interest rate swap contracts are recognised as interest income or expense in the profit or loss over the period of contract. Forward bunkers contract: Upon settlement, the forward bunkers contract is recognised as expense in the profit or loss.
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2.2 Summary of Significant Accounting Policies (cont'd) k. Leases i. Classification A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. All leases that do not transfer substantially all the risks and rewards are classified as operating leases.
ii. Operating Leases the Group as Lessee Operating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis. An up-front payment represents prepaid lease payments and are amortised on a straight-line basis over the lease term. iii. Operating Lease the Group as Lessor Assets leased out under operating leases are presented on the balance sheet according to the nature of the assets. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease (Note 2.2 (q)(vi)). Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term. l. Borrowing Costs Borrowing costs comprise debts issuance costs and interest costs. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. m. Income Tax Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date. Deferred tax is provided for, using the liability method. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised as income or an expense and included in the profit or loss for the period, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or the amount of any excess of the acquirer's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities over the cost of the combination.
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2.2 Summary of Significant Accounting Policies (cont'd) n. Provisions Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as finance cost. Provision for warranty is made based on service histories to cover the estimated liability that may arise during the warranty period. Any surplus provision will be written back at the end of the warranty period while additional provision is made as and when necessary. o. Employee Benefits i. Short Term Benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.
ii. Defined Contribution Plans Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in the profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund ("EPF"). Some of the Group's foreign subsidiaries also make contributions to their respective countries' statutory pension schemes. iii. Termination Benefits Termination benefits are payable when employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits as a liability and an expense when it is demonstrably committed to either terminate the employment of current employees according to a detailed plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. In the case of an offer made to encourage voluntary redundancy, the measurement of termination benefits is based on the number of employees expected to accept the offer. Benefits falling due more than twelve months after balance sheet date are discounted to present value.
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2.2 Summary of Significant Accounting Policies (cont'd) p. Foreign Currencies i. Functional and Presentation Currency The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The functional currency of the Corporation and certain subsidiaries is United States Dollar ("USD"). The financial statements are presented in Ringgit Malaysia ("RM"), in compliance with FRSs.
ii. Foreign Currency Transactions In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency ("foreign currencies") are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are translated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated. Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in profit or loss for the period except for exchange differences arising on monetary items that form part of the Group's net investment in foreign operation. Exchange differences arising on monetary items that form part of the Group's net investment in foreign operation, where that monetary item is denominated in either the functional currency of the reporting entity or the foreign operation, are initially taken directly to the currency translation reserve within equity until the disposal of the foreign operation, at which time they are recognised in profit or loss. Exchange differences arising on monetary items that form part of the Group's net investment in foreign operation, where that monetary item is denominated in a currency other than the functional currency of either the reporting entity or the foreign operation, are recognised in profit or loss for the period. Exchange differences arising on monetary items that form part of the Corporation's net investment in foreign operation, regardless of the currency of the monetary item, are recognised in profit or loss in the Corporations financial statements or the individual financial statements of the foreign operation, as appropriate. Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity. iii. Foreign Operations The results and financial position of foreign operations that have a functional currency different from the presentation currency ("RM") of the consolidated financial statements are translated into RM as follows: Assets and liabilities for each balance sheet presented are translated at the closing rate prevailing at the balance sheet date; Income and expenses for each income statement are translated at average exchange rates for the year, which approximates the exchange rates at the dates of the transactions; and All resulting exchange differences are taken to the currency translation reserve within equity.
Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 April 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the balance sheet date. Goodwill and fair value adjustments which arose on the acquisition of foreign subsidiaries before 1 April 2006 are deemed to be assets and liabilities of the parent company and are recorded in RM at the rates prevailing at the date of acquisition.
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2.2 Summary of Significant Accounting Policies (cont'd) q. Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: i. Freight Income Freight receivable and the relevant discharge costs of cargoes loaded onto ships up to the balance sheet date are accrued for in the financial statements.
ii. Charter Income The results of ships employed and voyage charter and that of other services rendered are accounted for on a time accrual basis. iii. Lightering Income Income on lightering charges is recognised on percentage of completion of voyages calculated on a discharge-to-discharge basis. The voyage revenue is recognised evenly over the period from a vessel's departure from its previous discharge point to its projected departure from its next discharge point. iv. Other Shipping Related Income Revenue from services rendered is recognised net of service taxes and discounts as and when the services are performed. v. Construction Contracts Revenue from construction contracts is accounted for by the stage of completion method as described in Note 2.2(g). vi. Rental Income Rental income from investment property is recognised on a straight-line basis over the term of the lease. The aggregate cost of incentives provided to lessee is recognised as a reduction of rental income over the lease term on a straight-line basis. vii. Interest Income Interest income is recognised on an accrual basis using the effective interest method. viii.Dividend Income Dividend income is recognised when the Group's right to receive payment is established. r. Non-current Assets Held for Sale Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary. Immediately before classification as held for sale, the measurement of the non-current assets is brought up-to-date in accordance with applicable FRSs. Then, on initial classification as held for sale, non-current assets are measured in accordance with FRS 5 that is at the lower of carrying amount and fair value less costs to sell. Any differences are included in profit or loss.
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2.2 Summary of Significant Accounting Policies (cont'd) s. Repairs and Maintenance Repairs and maintenance costs are recognised in profit or loss as incurred. Drydocking expenditure is capitalised and depreciated over a period of 30 months or the period until the next drydocking date, whichever is shorter. 2.3 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs On 1 April 2006, the Group and the Corporation adopted the following FRSs mandatory for financial periods beginning on or after 1 January 2006: FRS 2 FRS 3 FRS 5 FRS 101 FRS 102 FRS 108 FRS 110 FRS 116 FRS 121 FRS 127 FRS 128 FRS 131 FRS 132 FRS 133 FRS 136 FRS 138 FRS 140 Share-based Payment Business Combinations Non-current Assets Held for Sale and Discontinued Operations Presentation of Financial Statements Inventories Accounting Policies, Changes in Accounting Estimates and Errors Events After the Balance Sheet Date Property, Plant and Equipment The Effects of Changes in Foreign Exchange Rates Consolidated and Separate Financial Statements Investments in Associates Interests in Joint Ventures Financial Instruments: Disclosure and Presentation Earnings Per Share Impairment of Assets Intangible Assets Investment Property
At the date of authorisation of these financial statements, the following FRSs, amendments to FRSs and Interpretations were issued but not yet effective and have not been applied by the Group and the Corporation: FRS 117 FRS 124 FRS 139 FRS 6 Amendment to FRS 1192004 Amendment to FRS 121 IC Interpretation 1 IC Interpretation 2 IC Interpretation 5 IC Interpretation 6 IC Interpretation 7 IC Interpretation 8 Leases Related Party Disclosures Financial Instruments: Recognition and Measurement Exploration for and Evaluation of Mineral Resources Employee Benefits Actuarial Gains and Losses, Group Plans and Disclosures The Effects of Changes in Foreign Exchange Rates Net Investment in a Foreign Operation Changes in Existing Decommissioning, Restoration and Similar Liabilities Members' Shares in Co-operative Entities and Similar Instruments Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds Liabilities arising from Participating in a Specific Market Waste Electrical and Electronic Equipment Applying the Restatement Approach under FRS 1292004 Financial Reporting in Hyperinflationary Economics Scope of FRS 2
The above FRSs, amendments to FRSs and Interpretations are expected to have no significant impact on the financial statements of the Group and the Corporation upon their initial application. The Group and the Corporation are exempted from disclosing the possible impact, if any to the financial statements upon the initial application of FRS 117, 124 and 139.
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2.3 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs (cont'd) The adoption of FRS 2, 102, 108, 110, 127, 128, 132 and 133 does not result in significant changes in accounting policies of the Group. The principal changes in accounting policies and their effects resulting from the adoption of the other new and revised FRSs are discussed below: a. FRS 3: Business Combinations, FRS 136: Impairment of Assets and FRS 138: Intangible Assets The new FRS 3 has resulted in consequential amendments to two other accounting standards, FRS 136 and FRS 138. In accordance with the transitional provisions, FRS 3 has been applied for business combinations for which the agreement date is on or after 1 April 2006. i. Goodwill Prior to 1 April 2006, goodwill was amortised on a straight-line basis over its estimated useful life which ranged from 5 to 20 years and at each balance sheet date, the Group assessed if there was any indication of impairment of the cash-generatingunit in which the goodwill is attached to. The adoption of FRS 3 and the revised FRS 136 has resulted in the Group ceasing annual goodwill amortisation. Goodwill is now carried at cost less accumulated impairment losses and is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired. In accordance with the transitional provisions of FRS 3, the Group has applied the revised accounting policy for goodwill prospectively from 1 April 2006. The transitional provisions of FRS 3 also required the Group to eliminate the carrying amount of the accumulated amortisation at 1 April 2006 amounting to RM164,165,000 against the carrying amount of goodwill. The net carrying amount of goodwill as at 1 April 2006 of RM741,167,000 ceased to be amortised thereafter. Because the revised accounting policy has been applied prospectively, the change has had no impact on amounts reported for financial year ended 31 March 2006 or prior periods. The effects on the consolidated balance sheet as at 31 March 2007 and consolidated income statement for the year ended 31 March 2007 are set out in Note 2.3(h)(i) and Note 2.3(h)(ii) respectively. This change has no impact on the Corporation's financial statements. ii. Excess of Group's interest in the net fair value of acquiree's identifiable assets, liabilities and contingent liabilities over cost (previously known as negative goodwill) Prior to 1 April 2006, negative goodwill was amortised over the weighted average useful life of the non-monetary assets acquired, except to the extent it relates to identified expected future losses as at the date of acquisition. In such cases, it was recognised in profit or loss as those expected losses were incurred. Under FRS 3, any excess of the Group's interest in the net fair value of acquiree's identifiable assets, liabilities and contingent liabilities over cost of acquisitions, after reassessment, is now recognised immediately in profit or loss. In accordance with transitional provisions of FRS 3, the negative goodwill as at 1 April 2006 of RM65,000 was derecognised with a corresponding increase in retained profits. Because the revised accounting policy has been applied prospectively, the change has had no impact on amounts reported for financial year ended 31 March 2006 or prior periods. The effects on the consolidated balance sheet as at 31 March 2007 and consolidated income statement for the year ended 31 March 2007 are set out in Note 2.3(h)(i) and Note 2.3(h)(ii) respectively. This change has no impact on the Corporation's financial statements.
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2.3 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs (cont'd) a. FRS 3: Business Combinations, FRS 136: Impairment of Assets and FRS 138: Intangible Assets (cont'd) iii. Accounting for acquisitions Prior to 1 April 2006, the Group did not recognise separately the acquiree's contingent liabilities at the acquisition date as part of allocating the cost of a business combination. Upon the adoption of FRS 3, contingent liabilities are now separately recognised, provided their fair value can be measured reliably. In addition, the Group was previously allowed to recognise restructuring provisions in connection with an acquisition regardless of whether the acquiree had recognised such provisions. Upon the adoption of FRS 3, the Group is now permitted to recognise such provisions only when the acquiree has, at the acquisition date, an existing liability for restructuring recognised in accordance with FRS 137. The change did not affect the financial statements of the Group and the Corporation. iv. Other intangible assets Prior to 1 April 2006, all intangible assets were considered to have a finite useful life and were stated at cost less accumulated amortisation and impairment losses. Upon the adoption of FRS 138, the useful lives of intangible assets are now assessed at the individual asset level as having either a finite or indefinite life. In accordance with the transitional provisions of FRS 138, the change in the useful life assessment from finite to indefinite is made on a prospective basis. Other intangible assets of the Group comprise of fair value of time charter hire contracts, based on valuations performed by an independent professional valuer, and is considered to have finite useful lives and therefore, continue to be stated at cost less accumulated amortisation and impairment losses. The change did not affect the financial statements of the Group and the Corporation. b. FRS 5: Non-current Assets Held for Sale and Discontinued Operations Prior to 1 April 2006, non-current assets held for sale were neither classified nor presented as current assets. There were no differences in the measurement of non-current assets held for sale and those for continuing use. Upon the adoption of FRS 5, non-current assets held for sale are classified as current assets and are stated at the lower of carrying amount and fair value less costs to sell. The Group has applied FRS 5 prospectively in accordance with the transitional provisions. The effects on the balance sheets as at 31 March 2007 and income statements for the year ended 31 March 2007 are set out in Note 2.3(h)(i) and Note 2.3(h)(ii) respectively. c. FRS 101: Presentation of Financial Statements Prior to 1 April 2006, minority interests at the balance sheet date were presented in the consolidated balance sheet separately from liabilities and equity. Upon the adoption of the revised FRS 101, minority interests are now presented within total equity. In the consolidated income statement, minority interests are presented as an allocation of the total profit or loss for the year. A similar requirement is also applicable to the statement of changes in equity. The revised FRS 101 also requires disclosure, on the face of the statement of changes in equity, total recognised income and expenses for the year, showing separately the amounts attributable to equity holders of the Corporation and to minority interests. Prior to 1 April 2006, the Group's share of taxation of associates and jointly controlled entities accounted for using the equity method was included as part of the Group's income tax expense in the consolidated income statement. Upon the adoption of the revised FRS 101, the share of taxation of associates and jointly controlled entities are now included in the respective shares of profit or loss reported in the consolidated income statement before arriving at the Group's profit or loss before tax.
126

2.3 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs (cont'd) c. FRS 101: Presentation of Financial Statements (cont'd) Because the revised accounting policy has been applied prospectively, the change has had no impact on amounts reported for financial year ended 31 March 2006 or prior periods. The effects on the consolidated balance sheet as at 31 March 2007 and consolidated income statement for the year ended 31 March 2007 are set out in Note 2.3(h)(i) and Note 2.3(h)(ii) respectively. These changes in presentation have no impact on the Corporation's financial statements. d. FRS 116: Property, Plant and Equipment Prior to 1 April 2006, drydocking expenditure was recognised in profit or loss as incurred. Upon the adoption of FRS 116, drydocking expenditure are capitalised and depreciated over a period of 30 months or the period until the next drydocking date, whichever is shorter. Because the revised accounting policy has been applied prospectively, the change has had no impact on amounts reported for financial year ended 31 March 2006 or prior periods. The effects on the balance sheets as at 31 March 2007 and income statements for the year ended 31 March 2007 are set out in Note 2.3(h)(i) and Note 2.3(h)(ii) respectively. e. FRS 121: The Effects of Changes in Foreign Exchange Rates i. Change in functional currency Prior to 1 April 2006, the financial records of the Corporation, and all its subsidiaries, other than overseas subsidiaries, were maintained in Ringgit Malaysia ("RM"), and reported in the financial statements using the same currency. Upon the adoption of FRS 121, it has been determined that the functional currency of the Corporation and several subsidiaries are United States Dollar ("USD") and as such, all transactions should be recorded in USD. This change in accounting policy has been accounted for retrospectively and as disclosed in Note 2.3(i), certain comparatives have been restated. The effects on the balance sheets as at 31 March 2007 and income statements for the year ended 31 March 2007 are set out in Note 2.3(h)(i) and Note 2.3(h)(ii) respectively.
ii. Goodwill and fair value adjustments Prior to 1 April 2006, goodwill arising on the acquisition of a foreign operation and fair value adjustments to the carrying amounts of assets and liabilities arising on such an acquisition were deemed to be assets and liabilities of the parent company and were translated using the exchange rate at the date of acquisition. Upon the adoption of the revised FRS 121, goodwill and fair value adjustments arising on the acquisition of a foreign operation are now treated as assets and liabilities of the foreign operation and are translated at the closing rate. In accordance with the transitional provisions, the Group has applied this change in accounting policy prospectively to all acquisitions occurring after 1 April 2006. The change did not affect the financial statements of the Group and the Corporation.
127
2.
2.3 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs (cont'd) f. FRS 131: Interests in Joint Ventures Prior to 1 April 2006, the Group's share of profit of jointly controlled entities accounted for using the equity method was included as part of the Group's share of profit of associates in the consolidated income statement. Upon the adoption of FRS 131, the share of profit of jointly controlled entities accounted for using the equity method are now included in the respective share of profit or loss of jointly controlled entities. In addition, prior to 1 April 2006, the Group's investments in jointly controlled entities accounted for using the equity method was included as part of the Group's share of investments in associates in the consolidated balance sheet. Upon the adoption of FRS 131, the Group's investments in jointly controlled entities accounted for using the equity method are now included in the respective investments in jointly controlled entities. These changes in presentation have been applied retrospectively and as disclosed in Note 2.3(i), certain comparatives have been restated. The effects on the consolidated balance sheet as at 31 March 2007 and consolidated income statement for the year ended 31 March 2007 are set out in Note 2.3(h)(i) and Note 2.3(h)(ii) respectively. There changes in presentation have no impact on the Corporation's financial statements. g. FRS 140: Investment Property Prior to 1 April 2006, investment properties were classified as property, plant and equipment and stated at the revalued amount in 1984. Upon the adoption of FRS 140, investment properties are now reclassified from property, plant and equipment and remains stated at the revalued amounts. These changes in presentation have been applied retrospectively and as disclosed in Note 2.3(i),certain comparatives have been restated. The effects on the balance sheets as at 31 March 2007 are set out in Note 2.3(h)(i). There were no effects on the income statements for the year ended 31 March 2007. h. Summary of effects of adopting new and revised FRSs on the current year's financial statements The following tables provide estimates of the extent to which each of the line items in the balance sheets and income statements for the year ended 31 March 2007 is higher or lower than it would have been had the previous policies been applied in the current year.
2.
2.3 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs (cont'd)
h. Summary of effects of adopting new and revised FRSs on the current year's financial statements (cont'd)
i.
Effects on balance sheets as at 31 March 2007
Description of change
FRS 3 Note 2.3(a)(i) RM'000
FRS 3 Note 2.3(a)(ii) RM'000
FRS 5 Note 2.3(b) RM'000
FRS 101 Note 2.3(c) RM'000
Increase/(Decrease) FRS 116 FRS 121 Note Note 2.3(d)/2.4 2.3(e)(i) RM'000 RM'000
FRS 131 Note 2.3(f) RM'000
FRS 140 Note 2.3(g) RM'000
Total RM'000
Group Ships Property, plant and equipment Investment properties Intangible assets Investments in associates Investments in jointly controlled entities Other investments Non-current assets held for sale Deferred tax liabilities Other reserves Retained profits Minority interests Total equity (57,868) (57,868) (57,868) 47 47 47 37,710 (37,710) (241,435)
(304,212) 13,634 (315,900) (1,946) (304,212)
(41,671) (16,525) (15,351) 48,328 107 4,573 894 (338) (1,382,630) 1,382,963 (20,316) (19,983)
503,358 (503,358)
49,500 (49,500)
(345,883) 70,685 (64,851) (9,493) 503,358 (503,251) 4,573 (36,816) (338) (1,368,996) 1,009,242 (22,262) (623,451)
128
2.
i.
Effects on balance sheets as at 31 March 2007 (cont'd)
FRS 101 Note 2.3(c) RM'000
FRS 131 Note 2.3(f) RM'000
FRS 140 Note 2.3(g) RM'000
Total RM'000
Corporation Ships Property, plant and equipment Investment properties Investments in subsidiaries Non-current assets held for sale Other investments Deferred tax liabilities Retained profits Other reserves 169,384 (169,384)
(144,000) (150,453) 6,453
484,958 3,787 (15,351) 386,063 (29,212) 4,561 (338) 740,448 94,020
49,500 (49,500)
340,958 222,671 (64,851) 386,063 (198,596) 4,561 (338) 589,995 100,473
129
2.
ii. Effects on income statements for the year ended 31 March 2007
FRS 101 Note 2.3(c) RM'000
FRS 131 Note 2.3(f) RM'000
FRS 140 Note 2.3(g) RM'000
Total RM'000
Group Revenue Cost of sales General and administrative expenses Other operating income Operating profit Finance costs Share of profit of associates Share of profit of jointly controlled entities Profit before taxation Taxation Profit for the year Minority interests Basic earnings per share (sen) 57,868 (57,868) (57,868) (57,868) (0.02) (47) 47 47 47 305 (305) (305) (305) 274 274 274
317,846 (317,846) (317,846) (317,846) (1,946) (0.09)
25,638 (87,075) (79,113) 5,352 197,178 317 (62) 196,799 (373) 197,172 (1,143) 0.05
28,131 (28,131)
25,638 230,771 (20,987) 5,352 (178,794) 317 28,405 (28,193) (178,899) (99) (178,800) (3,089) (0.06)
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2.
ii. Effects on income statements for the year ended 31 March 2007 (cont'd)
FRS 101 Note 2.3(c) RM'000
FRS 131 Note 2.3(f) RM'000
FRS 140 Note 2.3(g) RM'000
Total RM'000
Corporation Revenue Cost of sales General and administrative expenses Other operating income Operating profit Finance costs Profit before taxation Profit for the year 3,233 (3,233) (3,233) (3,233)
150,453 (150,453) (150,453) (150,453)
17,256 3,579 (154,546) (247,630) (79,407) 371 (79,778) (79,778)
17,256 154,032 (151,313) (247,630) (233,093) 371 (233,464) (233,464)
131
132

2.3 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs (cont'd) i. Restatement of comparatives The following comparative amounts have been restated as a result of adopting the new and revised FRSs:
Previously Stated FRS 121 Note 2.3(e)(i) RM'000
2.3(e)(i) Description of change At 1 April 2005 Group Other reserves Retained profits Corporation Other reserves Retained profits At 31 March 2006 Group Ships Property, plant and equipment Investment properties Investments in associates Investments in jointly controlled entities Other investments Other reserves Retained profits Minority interests Deferred tax liabilities Corporation Ships Property, plant and equipment Investment properties Investments in subsidiaries Investments in associates Other investments Other reserves Retained profits Deferred tax liabilities
RM'000
Increase/(Decrease) FRS 131 FRS 140 Note Note 2.3(f) 2.3(g) RM'000 RM'000
Restated
RM'000
106,221 12,852,789
2,849,280 (1,096,235)
2,955,501 11,756,554
35,217 9,963,036
1,536,018 (733,384)
1,571,235 9,229,652
18,912,009 842,351 151,766 236,462 23,150 13,309,578 298,882 67,115
1,051,012 39,219 (885) 2,325,273 (1,221,623) (14,196) (102)
(139,476) 139,476
(53,800) 53,800
19,963,021 827,770 53,800 12,290 139,476 235,577 2,348,423 12,087,955 284,686 67,013
7,026,237 336,517 3,561,981 8,505 51,499 35,217 9,119,310 3,704
96,278 39,226 85,651 (191) (881) 1,037,989 (817,804) (102)
(53,800) 53,800
7,122,515 321,943 53,800 3,647,632 8,314 50,568 1,073,206 8,301,506 3,602
133
2.
2.3 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs (cont'd) i. Restatement of comparatives (cont'd)
Previously Stated FRS 121 Note 2.3(e)(i) RM'000
2.3(e)(i) Description of change
RM'000
Increase/(Decrease) FRS 131 FRS 140 Note Note 2.3(f) 2.3(g) RM'000 RM'000
Restated
RM'000
Group For the year ended 31 March 2006 Revenue Cost of sales Gross profit Gain on disposal of ships Other operating income General and administrative expenses Operating profit Finance costs Share of profit from associates Share of profit from jointly controlled entities Profit before taxation Taxation Profit for the year Basic earnings per share (sen) Corporation For the year ended 31 March 2006 Revenue Cost of sales Gross profit Gain on disposal of ships Other operating income General and administrative expenses Operating profit Finance costs Profit before taxation Taxation Profit for the year
10,766,426 7,168,638 3,597,788 244,257 262,788 756,170 3,348,663 343,566 27,234 3,032,331 29,843 3,002,488 79.3
(19,346) 157,413 (176,759) (41,932) 120,402 28,418 (126,707) 4,832 (131,539) 347 (131,886) (3.4)
(11,830) 11,830
10,747,080 7,326,051 3,421,029 202,325 383,190 784,588 3,221,956 348,398 15,404 11,830 2,900,792 30,190 2,870,602 75.9
4,839,284 3,970,452 868,832 244,257 892,071 297,217 1,707,943 18,838 1,689,105 17,850 1,671,255
(14,605) 58,106 (72,711) (41,932) 107,841 79,062 (85,864) 63 (85,927) 347 (86,274)
4,824,679 4,028,558 796,121 202,325 999,912 376,279 1,622,079 18,901 1,603,178 18,197 1,584,981
134

2.4 Changes in Estimates The revised FRS 116: Property, Plant and Equipment requires the review of the residual value and remaining useful life of ships, property, plant and equipment at least at each financial year end. The Group revised the residual value of ships with effect from 1 April 2006. The revision was accounted for prospectively as a change in accounting estimates and as a result, the depreciation charges of the Group and of the Corporation for the current financial year have been reduced by RM159,100,000 and RM101,393,000 respectively. 2.5 Significant Accounting Estimates and Judgements a. Critical Judgements Made in Applying Accounting Policies The following are the judgements made by management in the process of applying the Group's accounting policies that have the most significant effect on the amount recognised in the financial statements. i. Classification between investment properties and property, plant and equipment The Group has developed certain criteria based on FRS 140 in making judgement whether a property qualifies as an investment property. Investment property is a property held to earn rentals or for capital appreciation or both. Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for administrative purposes. If these portions could be sold separately (or leased out separately under finance lease), the Group would account for the portion separately. If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for administrative purposes. Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as investment property. ii. Operating lease commitments the Group as lessor It is in the ordinary course of business that the Group enters into lease arrangements with related and third parties on its ships. Some of the lease arrangements may be extended to a longer period of time, covering substantially the useful life of the ships concerned. The Group has determined that it retains all the significant risks and rewards of ownership of these ships, and the ships are recognised and classified as part of non-current assets of the Group and the Corporation. b. Key Sources of Estimation Uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. i. Impairment of goodwill The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating-units ("CGU") to which goodwill is allocated. Estimating a value in use amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amounts of goodwill as at 31 March 2007 were RM773,109,000 (2006: RM741,167,000). Further details of the impairment loss recognised are disclosed in Note 14(a).
135
2.
2.5 Significant Accounting Estimates and Judgements (cont'd) b. Key Sources of Estimation Uncertainty (cont'd) ii. Impairment of ships, property, plant and equipment During the financial year, the Group has recognised impairment loss in respect of property, plant and equipment. The Group carried out the impairment test based on a variety of estimation including the value in use of the CGU to which ships, property, plant and equipment are allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of ships, property, plant and equipment of the Group as at 31 March 2007 were RM21,034,467,000 (2006: RM19,963,021,000) and RM843,227,000 (2006: RM827,770,000) respectively. Further details of the impairment loss recognised are disclosed in Note 12(e). iii. Depreciation of ships The cost of ships is depreciated on a straight-line basis over the assets' useful lives. Management estimates the useful lives of these ships to be 20 years. This is a prudent life expectancy applied in the shipping industry. Changes in the expected level of usage and regulations could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. A 10.00% increase in the average useful lives of these assets from management's estimates would result in approximately 6.07% increase in profit for the year. iv. Deferred tax assets Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The total carrying value of recognised tax losses and capital allowances of the Group was RM20,752,000 (2006: RM17,739,000) and the unrecognised tax losses and capital allowances of the Group was RM579,114,000 (2006: RM467,091,000).
3.
Revenue
Group 2007 RM'000 Freight income Charter and lightering income Other shipping related income Non-shipping income 3,707,287 5,787,986 544,091 1,159,581 11,198,945 2006 RM'000 3,927,803 5,385,994 460,711 972,572 10,747,080 Corporation 2007 2006 RM'000 RM'000 3,374,172 790,711 190,599 4,355,482 3,650,012 1,001,326 173,341 4,824,679
Non-shipping income mainly represents revenue generated from shipbuilding, repairing and heavy engineering work.
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4. Other Operating Income
Group 2007 RM'000 Interest income: Subsidiaries Deposits Dividend income on equity investments: Subsidiaries Quoted in Malaysia Unquoted in Malaysia Unquoted outside Malaysia Rental income: Subsidiaries Others Exchange gain: Realised Unrealised Management services: Subsidiaries Others Gain on disposal of: Property, plant and equipment Subsidiary Associates Other investments Gain on liquidation of a subsidiary Write back of provision for doubtful debts Reversal of writedown of inventories Miscellaneous: Subsidiaries Others 2006 RM'000
Corporation 2007 2006 RM'000 RM'000
110,886 22,867 2,706 143 2,671 80,871 32,494 85 24,816 177 1,181 6,038 18,410 303,345
121,733 15,293 1,197 3,217 45,303 64,076 284 71,926 24,626 1,088 1,137 392 32,918 383,190
90,066 17,423 1,681,579 12,039 2,706 277 375 54,398 25,235 57,429 85 11,360 1,338,205 177 174,725 6,038 245 997 3,473,359
72,820 50,421 363,131 2,140 1,130 6,994 1,997 46,375 34,490 63,234 284 30,666 324,163 2,067 999,912
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5.
Operating Profit
The following amounts have been included in arriving at operating profit: Group 2007 RM'000 Amortisation of intangible assets Auditors' remuneration: Auditors of the Corporation: Statutory audits Other services Other auditors: Statutory audits Other services Charter hire expense Drydocking expense Impairment loss in goodwill Inventories used Exchange loss: Realised Unrealised Operating lease rental Provision for doubtful debts Bad debts written off Rental of equipment Rental of land and buildings Ships, property, plant and equipment: Depreciation (Note 12) Written off Impairment loss (Note 12) Staff costs (Note 6) 28,168 2006 RM'000 70,425 Corporation 2007 2006 RM'000 RM'000
1,705 888 386 130 1,633,730 2,325 1,556,418 22,913 17,912 707 26,537 891 205,328 22,405 1,360,837 14,798 1,943 851,481
1,395 994 604 430 1,275,578 168,535 1,442,010 76,766 8,008 373 15,517 1,730 150,885 19,932 1,426,477 139 9,600 695,850
550 787 109 984,571 691,632 7,439 12,851 9,042 765 191,636 12,437 437,258 12,599 301,960
500 889 418 1,071,294 91,589 719,276 65,990 7,622 10,194 61 124,909 12,570 519,665 248,617
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6. Staff Costs
Group 2007 RM'000 Wages, salaries and bonuses Termination benefits Social security costs Contributions to defined contribution plan Other staff related expenses 731,925 2,440 1,522 26,061 89,533 851,481 2006 RM'000 583,548 4,408 1,759 28,031 78,104 695,850 Corporation 2007 2006 RM'000 RM'000 235,953 737 10,146 55,124 301,960 187,682 882 696 12,229 47,128 248,617
Included in staff costs of the Group and of the Corporation are executive directors' remuneration amounting to RM4,278,000 (2006: RM2,143,000) and RM1,208,000 (2006: RM874,000) respectively as further disclosed in Note 7.
7.
Directors' Remuneration
Group 2007 RM'000 Executive directors' remuneration: Fees Other emoluments Non-executive directors' remuneration: Fees Total directors' remuneration Estimated money value of benefits-in-kind Total directors' remuneration including benefits-in-kind 2006 RM'000 Corporation 2007 2006 RM'000 RM'000
315 3,963 4,278 1,445 5,723 1,078 6,801
245 1,898 2,143 1,583 3,726 686 4,412
1,208 1,208 347 1,555 47 1,602
874 874 330 1,204 29 1,233
The details of remuneration receivable by directors of the Corporation during the year are as follows: Group 2007 RM'000 Executive: Salaries and other emoluments Bonus Fees Defined contribution plan Estimated money value of benefits-in-kind Non-Executive: Fees 2006 RM'000 Corporation 2007 2006 RM'000 RM'000
797 135 171 276 47 1,426 347 1,773
646 102 228 29 1,005 330 1,335
797 135 276 47 1,255 347 1,602
646 228 29 903 330 1,233
139
7.
Directors' Remuneration (contd)

The number of directors of the Corporation whose total remuneration during the financial year fell within the following bands is analysed below: Number of Directors 2006 2007 Executive directors: RM900,001 RM1,500,000 Non-Executive directors: RM1 RM50,000 RM50,001 RM100,000
1 7 1
1 5 2
8.
Finance Costs
Group 2007 RM'000 Interest expense: Subsidiaries Third parties Islamic Private Debt Securities Non-convertible Cumulative Redeemable Preference Shares dividend Total interest expense Less: Interest expense capitalised in qualifying assets: Ships under construction Net interest expense 2006 RM'000 Corporation 2007 2006 RM'000 RM'000
374,985 1,002 1,084 377,071
379,481 301 2,434 382,216
56,734 1,002 57,736
52,221 301 52,522
(29,314) 347,757
(33,818) 348,398
(11,601) 46,135
(33,621) 18,901
9.
Taxation
Group 2007 RM'000 Current income tax: Malaysian income tax Foreign tax (Over)/underprovision in prior years: Malaysian income tax Foreign tax Deferred tax: Relating to origination and reversal of temporary differences Relating to changes in tax rates Transfer to deferred tax (Note 29) (Over)/underprovision in prior years 2006 RM'000 Corporation 2007 2006 RM'000 RM'000
32,426 5,695 (333) 31 (2,734) (1,783) 210 (132) 33,380
29,627 3,990 1,267 283 67 (8,350) 3,306 30,190
18,197 18,197
Domestic current income tax is calculated at the statutory tax rate of 27% (2006: 28%) of the estimated assessable profit for the financial year. The domestic statutory tax rate will be reduced to 26% from the current rate of 27%, effective year of assessment 2008. The computation of deferred tax as at 31 March 2007 has reflected these changes.
140

9. Taxation (cont'd)
A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Corporation is as follows:
Group 2007 RM'000 Profit before taxation Taxation at Malaysian statutory tax rate of 27% (2006: 28%) Effect of changes in tax rates on opening balance of deferred tax Effect of different tax rates in other countries Income not subject to tax: Tax exempt shipping income Other tax exempt income Expenses not deductible for tax purposes Utilisation of previously unrecognised tax losses, capital allowances and reinvestment allowances Utilisation of reinvestment allowances during the year Deferred tax (over)/under provided in prior years Deferred tax assets not recognised during the year Income tax (over)/under provided in prior years Taxation for the year (42,528) (4,895) (132) 70,759 (302) 33,380 (62,721) 3,306 9,332 1,550 30,190 (1,028,102) (124,092) 362,860 (774,115) (398,946) 396,657 2,930,310 791,184 (1,783) 10,411 2006 RM'000 2,900,792 812,222 42,905
Corporation 2007 2006 RM'000 RM'000 3,700,744 999,201 (132) (221,276) (945,359) 119,957 (13,746) 61,355 1,603,178 448,890 (258,597) (252,501) 122,150 (41,745) 18,197
Tax exempt shipping income is derived from the operations of the Group's sea-going Malaysian registered ships under Section 54A of the Malaysian Income Tax Act, 1967 and ships registered outside Malaysia under tax jurisdictions of other countries. The Corporation has sufficient tax exempt income to frank the payment of dividend out of its entire retained profits as at 31 March 2007, subject to an agreement with Inland Revenue Board.
141
10. Earnings per Share

Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the Corporation by the weighted average number of ordinary shares in issue during the financial year. Group 2007 Profit attributable to equity holders of the Corporation (RM'000) Weighted average number of ordinary shares in issue ('000) Basic earnings per share (sen) 2,852,025 3,719,828 76.7
2006
2,822,573 3,719,828 75.9
Diluted earnings per share are not presented as there were no potential dilutive ordinary shares outstanding as at 31 March 2007.
11. Dividends
Dividends Recognised in Year 2007 2006 RM'000 RM'000 In respect of financial year: 31 March 2005: Final tax exempt dividend of 20 sen per share Special tax exempt dividend of 20 sen per share 31 March 2006: Interim tax exempt dividend at 10 sen per share Final tax exempt dividend at 20 sen per share 31 March 2007: Interim tax exempt dividend at 10 sen per share
727,975 727,975 368,991 1,096,966
371,365 371,365 742,730 371,365 371,365 1,114,095
At the forthcoming Annual General Meeting, the following tax exempt dividend will be proposed for shareholders' approval in respect of the financial year ended 31 March 2007: RM'000 743,966
Final tax exempt dividend of 20 sen per share
The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 March 2008.
12. Ships, Property, Plant and Equipment
<------------------------------------------------------------Cost------------------------------------------------------------> Disposals Reclassified Currency At and as held translation At 1.4.2006 Additions write offs Transfers for sale differences 31.3.2007 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Group 31 March 2007 Ships At cost: Ships in operation Ships under construction 29,309,003 3,530,124 32,839,127 886,821 3,333,373 4,220,194 (1,315,480) (4,037) (1,319,517) 2,100,028 (2,100,028)
(1,899,500) (376,970) (2,276,470)
29,080,872 4,382,462 33,463,334
142
Property, plant and equipment At cost: Freehold land Long term leasehold land Short term leasehold land Freehold buildings Leasehold buildings Drydocks and waste plant Containers Motor vehicles Furniture, fittings and equipment Computer software and hardware Systems work in progress Construction in progress Plant and machinery Tugboats, engines and pushers 16,820 178,760 15,270 58,947 93,893 401,623 261,108 147,923 83,384 189,100 32,167 264,867 4,394 1,748,256 273 247 540 22,287 2,052 9,280 10,717 90,090 43,342 178,828 (2,481) (373) (5,353) (46,801) (48,361) (1,808) (20,762) (6,287) (2) (2,399) (134,627)
418 24,043 (24,043) (418)
(1,106) (40,968) (4,347) (743) (47,164)
(838) (5,453) (1,000) (1,929) (5,660) (15,093) (346) (1,652) (9,696) (1,837) (250) (549) (44,303)
14,876 130,131 14,270 52,545 83,095 423,910 199,214 101,268 89,204 193,402 89,420 305,261 4,394 1,700,990
12. Ships, Property, Plant and Equipment (cont'd)
<-----------------------------------------Accumulated Depreciation-------------------------------------------> Disposals, write offs Depreciation and Reclassified Currency At charge for impairment as held translation At 1.4.2006 the year losses Transfers for sale differences 31.3.2007 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Net book value at 31.3.2007 RM'000
Group 31 March 2007 Ships At cost: Ships in operation Ships under construction 12,876,106 12,876,106 1,272,513 1,272,513 (857,648) (857,648)
(862,104) (862,104)
12,428,867 12,428,867
16,652,005 4,382,462 21,034,467
143
Property, plant and equipment At cost: Freehold land Long term leasehold land Short term leasehold land Freehold buildings Leasehold buildings Drydocks and waste plant Containers Motor vehicles Furniture, fittings and equipment Computer software and hardware Systems work in progress Construction in progress Plant and machinery Tugboats, engines and pushers 35,329 6,282 20,714 27,394 139,591 246,127 103,852 55,054 99,067 184,168 2,908 920,486 2,064 392 1,904 2,126 7,735 5,395 8,439 7,976 38,064 13,919 310 88,324 (403) (373) (1,998) 1,943 (46,801) (48,040) (2,351) (18,499) (1,701) (118,223)
(5,302) (3,624) (223) (9,149)
(678) (428) (467) (1,372) (14,344) (223) (526) (5,668) 31 (23,675)
31,010 6,246 18,154 25,927 149,269 190,377 64,028 60,153 112,964 196,417 3,218 857,763
14,876 99,121 8,024 34,391 57,168 274,641 8,837 37,240 29,051 80,438 89,420 108,844 1,176 843,227
<-------------------------------------------------Cost/Valuation-----------------------------------------------------> Disposals Reclassified Currency At and as investment translation At 1.4.2005 Additions write offs Transfers properties differences 31.3.2006 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Group 31 March 2006 Ships At cost: Ships in operation Ships under construction 28,418,157 2,479,603 30,897,760 641,135 2,614,081 3,255,216 (406,787) 1,473,614 (1,473,614) (406,787)
(817,116) (89,946) (907,062)
29,309,003 3,530,124 32,839,127
Property, plant and equipment At 1984 valuation: Freehold land Freehold buildings 35,293 38,477
(34,318) (37,414)
(975) (1,063)
144
At cost: Freehold land Long term leasehold land Short term leasehold land Freehold buildings Leasehold buildings Drydocks and waste plant Containers Motor vehicles Furniture, fittings and equipment Computer software and hardware Systems work in progress Trailers and prime movers Plant and machinery Tugboats, engines and pushers 17,487 180,462 15,704 72,463 96,349 396,127 349,523 42,954 61,530 171,181 67,305 180,620 243,010 70,769 2,039,254 659 2,835 5,496 2,383 22,552 7,509 4,623 25,284 71,341
(80,289) (77,897) (71) (23,635) (3,146) (66,375) (251,413)
180,620 38,549 (38,549) (180,620)
(14,324) (86,056)
(667) (2,361) (434) (2,027) (2,456) (8,126) (137) (627) (4,504) (1,212) (281) (24,870)
16,820 178,760 15,270 58,947 93,893 401,623 261,108 147,923 83,384 189,100 32,167 264,867 4,394 1,748,256
<---------------------------------------------Accumulated Depreciation-------------------------------------------> Disposals, write offs Depreciation and Reclassified Currency At charge for impairment as investment translation At 1.4.2005 the year losses Transfers properties differences 31.3.2006 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Group 31 March 2006 Ships At cost: Ships in operation Ships under construction 12,100,489 12,100,489 1,336,012 1,336,012 (190,330) (190,330)
(370,065) (370,065)
12,876,106 16,432,897 3,530,124 12,876,106 19,963,021
Property, plant and equipment At 1984 valuation: Freehold land Freehold buildings 18,388 763
(18,629)
(522)
145
At cost: Freehold land Long term leasehold land Short term leasehold land Freehold buildings Leasehold buildings Drydocks and waste plant Containers Motor vehicles Furniture, fittings and equipment Computer software and hardware Systems work in progress Trailers and prime movers Plant and machinery Tugboats, engines and pushers 33,292 6,048 32,381 21,003 125,797 327,702 8 ,258 47,867 90,091 164,795 174,510 44,719 1,094,851 2,313 410 2,971 6,938 4,194 6,358 8,472 7,483 34,804 12,816 2,943 90,465 9,600 (80,289) (77,584) (59) (23,462) (3,013) (44,754) (219,561)
164,795 (164,795)
(13,627) (32,256)
(276) (176) (1,011) (547) (7,644) (89) (237) (2,366) (145) (13,013)
35,329 6,282 20,714 27,394 139,591 246,127 103,852 55,054 99,067 184,168 2,908 920,486
16,820 143,431 8,988 38,233 66,499 262,032 14,981 44,071 28,330 90,033 32,167 80,699 1,486 827,770
<----------------------------------------------------------Cost----------------------------------------------------------> Reclassified Currency At as held translation At 1.4.2006 Additions Disposals Transfers for sale differences 31.3.2007 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Corporation 31 March 2007 Ships At cost: Ships in operation Ships under construction 11,221,317 2,776,643 13,997,960 724,701 2,432,935 3,157,636 (409,061) 1,380,934 (4,037) (2,048,976) (413,098) (668,042)
(748,467) 12,169,424 (286,038) 2,870,527 (1,034,505) 15,039,951
Property and equipment At cost: Freehold land Long term leasehold land Short term leasehold land Freehold buildings Leasehold buildings Containers Motor vehicles Furniture, fittings and equipment Computer software and hardware Systems work in progress 12,665 83,106 15,270 29,827 86,421 261,108 3,984 17,554 143,593 32,167 685,695 273 1,042 1,748 8,820 11,883 (46,801) (261) (8,379) (6,287) (61,728)
(7,439) 24,043 (24,043) (7,439)
(11,836) (77,927) (14,270) (27,869) (80,764) (212,666)
(829) (5,452) (1,000) (1,958) (5,657) (15,093) (294) (1,228) (9,423) (1,837) (42,771)
199,214 4,471 10,635 158,654 372,974
146
<--------------------------------------------Accumulated Depreciation--------------------------------------------> Depreciation Reclassified Currency At charge for as held translation At 1.4.2006 the year Disposals Transfers for sale differences 31.3.2007 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Corporation 31 March 2007 Ships At cost: Ships in operation Ships under construction 6,875,445 6,875,445 398,853 398,853 (296,220) (296,220) (75,835) (75,835) (454,702) (454,702)
6,447,541 6,447,541
5,721,883 2,870,527 8,592,410
Property and equipment At cost: Freehold land Long term leasehold land Short term leasehold land Freehold buildings Leasehold buildings Containers Motor vehicles Furniture, fittings and equipment Computer software and hardware Systems work in progress 9,987 6,284 6,681 19,821 246,127 2,308 4,591 67,953 363,752 5,395 908 1,267 30,835 38,405 (46,801) (250) (8,363) (55,414) (837) (837)
(9,411) (5,871) (5,518) (19,248) (40,048)
(576) (413) (1,163) (573) (14,344) (178) (355) (5,413) (23,015)
190,377 2,788 4,666 85,012 282,843
8,837 1,683 5,969 73,642 90,131
147
<--------------------------------------------------Cost/Valuation---------------------------------------------------> Reclassified Currency At as investment translation At 1.4.2005 Additions Disposals Transfers properties differences 31.3.2006 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Corporation 31 March 2006 Ships At cost: Ships in operation Ships under construction 13,199,729 1,609,305 14,809,034 534,873 1,841,622 2,376,495 (406,557) (1,773,381) (606,249) (406,557) (2,379,630)
(333,347) 11,221,317 (68,035) 2,776,643 (401,382) 13,997,960
Property and equipment At 1984 valuation: Freehold land Freehold buildings 35,293 38,477
(34,318) (37,414)
(975) (1,063)
148
At cost: Freehold land Long term leasehold land Short term leasehold land Freehold buildings Leasehold buildings Containers Motor vehicles Furniture, fittings and equipment Computer software and hardware Systems work in progress 13,025 85,301 15,704 42,867 88,877 349,523 3,678 2,832 127,594 67,305 870,476 165 2,516 1,277 15,088 3,692 4,623 27,361
(80,289) (860) (22,335) (103,484)
38,549 (38,549)
(14,324) (86,056)
(360) (2,360) (434) (1,232) (2,456) (8,126) (111) (366) (3,907) (1,212) (22,602)
12,665 83,106 15,270 29,827 86,421 261,108 3,984 17,554 143,593 32,167 685,695
<----------------------------------------------Accumulated Depreciation------------------------------------------> Depreciation Reclassified Currency At charge for as investment translation At 1.4.2005 the year Disposals Transfers properties differences 31.3.2006 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Corporation 31 March 2006
Ships At cost: Ships in operation Ships under construction 7,380,626 7,380,626 479,005 479,005 (190,101) (190,101) (596,005) (596,005)
(198,080) (198,080)
6,875,445 6,875,445
4,345,872 2,776,643 7,122,515
Property and equipment At 1984 valuation: Freehold land Freehold buildings 18,388 763
(18,629)
(522)
At cost: Freehold land Long term leasehold land Short term leasehold land Freehold buildings Leasehold buildings Containers Motor vehicles Furniture, fittings and equipment Computer software and hardware Systems work in progress 9,406 6,048 20,230 18,577 327,702 2,138 2,799 64,909 470,197 856 410 649 1,791 6,358 821 1,905 27,107 40,660 (80,289) (588) (22,176) (103,053)
149
(13,627) (32,256)
(275) (174) (571) (547) (7,644) (63) (113) (1,887) (11,796)
9,987 6,284 6,681 19,821 246,127 2,308 4,591 67,953 363,752
12,665 73,119 8,986 23,146 66,600 14,981 1,676 12,963 75,640 32,167 321,943
150

a. Certain properties were revalued by the directors in 1988 based on valuations carried out by firms of professional valuers to reflect the market values then. Surpluses on revaluation were taken to the revaluation reserve on that date. The net book value of revalued properties, had the assets been carried at cost less depreciation, is as follows: Group 2007 2006 RM'000 RM'000 Long term leasehold and foreshore land 1988 7,474 7,726
b. Included in long term leasehold land of the Group is the carrying value of a long term leasehold and foreshore land of a subsidiary of RM54,217,000 (2006: RM55,592,000) which cannot be disposed off, charged or subleased without the prior consent of the Johor State Government. c. The net carrying amounts of ships, property, plant and equipment pledged as securities for borrowings (Note 26) are as follows: Group 2007 2006 RM'000 RM'000 Ships Property, plant and equipment 4,169,022 52,932 4,221,954 3,297,472 56,009 3,353,481
d. Borrowing costs capitalised during the financial year for ships under construction of the Group and of the Corporation amounted to RM29,314,000 (2006: RM33,818,000) and RM11,601,000 (2006: RM33,621,000) respectively, as disclosed in Note 8. e. The Group has carried out a review of the recoverable amount of its ships, property, plant and equipment during the financial year. The review led to the recognition of an impairment loss of RM1,943,000 (2006: RM9,600,000) as disclosed in Note 5. The recoverable amount was based on value in use and was determined at the cash-generating-unit ("CGU") of each asset. In determining value in use for the CGU, the cash flows were discounted at a rate determined by management on a pre-tax basis.
151
13. Investment Properties

Group and Corporation Freehold Freehold Land Building Total RM'000 RM'000 RM'000 Valuation At 1 April 2005 Transfer from property, plant and equipment Currency translation differences At 31 March 2006 Currency translation differences At 31 March 2007 Accumulated depreciation At 1 April 2005 Transfer from property, plant and equipment Depreciation charge for the year Currency translation differences At 31 March 2006 Depreciation charge for the year Currency translation differences At 31 March 2007 Net carrying amount At 31 March 2006 At 31 March 2007 Fair value 31 March 2007
35,293 (975) 34,318 (2,247) 32,071
53,207 (1,469) 51,738 (3,388) 48,350
88,500 (2,444) 86,056 (5,635) 80,421
32,311 853 (908) 32,256 811 (2,146) 30,921
32,311 853 (908) 32,256 811 (2,146) 30,921
34,318 32,071 33,043
19,482 17,429 17,957
53,800 49,500 51,000
Investment properties were revalued by the directors in 1984 based on valuations carried out by firms of professional valuers to reflect the market values then. Surpluses on revaluation were taken to the revaluation reserve on that date. The net book value of the revalued properties, had the assets been carried at cost less depreciation, is as follows: Group 2007 2006 RM'000 RM'000 Freehold land 1984 Freehold buildings 1984 818 2,901 3,719 818 3,047 3,865
152

14. Intangible Assets
Group Reserve arising on consolidation RM'000 Cost At 1 April 2005 and 31 March 2006 Effects of adopting FRS 3 Additional investment in a subsidiary Currency translation differences At 31 March 2007 Accumulated amortisation and impairment At 1 April 2005 Amortisation At 31 March 2006 and 1 April 2006 Effects of adopting FRS 3 Amortisation Impairment loss recognised in income statement At 31 March 2007 Net carrying amount At 31 March 2006 At 31 March 2007 (65) 741,167 773,109 296,483 268,315 1,037,585 1,041,424 Other intangible assets RM'000
Goodwill RM'000
Total RM'000
(234) 234
905,332 (164,165) 82,595 (48,328) 775,434
504,463 504,463
1,409,561 (163,931) 82,595 (48,328) 1,279,897
(122) (47) (169) 169
121,865 42,300 164,165 (164,165) 2,325 2,325
179,808 28,172 207,980 28,168 236,148
301,551 70,425 371,976 (163,996) 28,168 2,325 238,473
153
14. Intangible Assets (cont'd)

Other intangible assets relate to fair value of time charter hire contracts based on valuations performed by an independent professional valuer, and are amortised over the time charter period of the vessels. Impairment test for Goodwill and Investment in Subsidiaries a. Impairment loss recognised The Group has carried out a review of the recoverable amount of its investments in subsidiaries and goodwill during the financial year. The review led to the recognition of an impairment loss of RM2,325,000 (2006: RM Nil) as disclosed in Note 5. The recoverable amount was based on value in use and was determined at the cash-generating-unit ("CGU") of each individual subsidiaries. In determining value in use for the CGU, the cash flows were discounted at a rate determined by management on a pre-tax basis. b. Allocation of goodwill Goodwill has been allocated to the Group's CGU identified according to business segment as follows: 2007 RM'000 Energy related shipping Other energy businesses Integrated liner logistics Non-shipping 689,795 82,594 720 773,109 2006 RM'000 738,122 2,325 720 741,167
c. Key assumptions used in value in use calculations The recoverable amount of a CGU is determined based on value in use calculations using cash flow projections based on financial budgets approved by management covering a five-year period. The discount rate used is based on the pre-tax weighted average cost of capital determined by the management.
154

31 March 2007 (contd)
15. Investments in Subsidiaries
Corporation 2007 2006 RM'000 RM'000 Unquoted shares at cost Loans and advances to subsidiaries 5,351,746 1,364,513 6,716,259 2,679,299 968,333 3,647,632
Included in unquoted shares is preference shares of RM2,630,236,000 (2006: RM303,289,000) which bear interest at rates ranging from 5.00% to 7.50% (2006: 7.50%) per annum. The loans and advances to subsidiaries are unsecured, bear interest at rates ranging from 3.25% to 7.00% (2006: 3.09% to 7.00%) per annum and are not repayable within 12 months from the balance sheet date. Details of the subsidiaries are disclosed in Note 37.
16. Investments in Associates

Group 2007 RM'000 2006 RM'000 Corporation 2007 2006 RM'000 RM'000
Unquoted shares in Malaysia, at cost Unquoted shares outside Malaysia, at cost Share of post-acquisition(losses)/profits Share of other post-acquisition reserves Less: Accumulated impairment losses Represented by: Share of net assets Loans to an associate
681 4,407 5,088 (620) (1,152) 3,316 (1,214) 2,102 2,102 583 2,685
12,176 12,176 387 (945) 11,618 11,618 11,618 672 12,290
8,314 8,314 8,314 8,314 8,314 8,314
155
16. Investments in Associates (cont'd)

The loans to an associate is unsecured, interest-free, and have no fixed term of repayment. The summarised financial information of the associates are as follows: 2007 RM'000 Assets and liabilities Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Results Revenue (Loss)/profit for the year Details of the associates are disclosed in Note 38. 2006 RM'000
15,511 7,121 22,632 12,243 1,940 14,183
37,966 8,634 46,600 8,336 1,049 9,385
8,474 (327)
11,697 1,275
17. Investments in Jointly Controlled Entities

Group 2007 2006 RM'000 RM'000 Unquoted shares in Malaysia, at cost Unquoted shares outside Malaysia, at cost 6,246 159,814 166,060 47,913 (801) 47,112 213,172 213,172 290,186 503,358 19,604 19,604 20,149 195 20,344 39,948 39,948 99,528 139,476
Share of post-acquisition profits Share of other post-acquisition reserves
Represented by: Share of net assets Loans to jointly controlled entities
The loans to jointly controlled entities are unsecured, bear interest at rates ranging from 5.50% to 7.00% (2006: 7.00%), and have no fixed term of repayment except for loan to KEER-MISC Logistics Co Ltd. amounting to RM95,265,000 (2006: RM99,528,000) which is repayable by June 2010.
156

17. Investments in Jointly Controlled Entities (cont'd)
The Group's aggregate share of the current assets, non-current assets, current liabilities, non-current liabilities, income and expenses of the jointly controlled entities are as follows: 2007 RM'000 Assets and liabilities Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Results Revenue Expenses Details of the jointly controlled entities are disclosed in Note 39. 2006 RM'000
88,814 429,344 518,158 49,307 255,679 304,986
33,749 64,314 98,063 44,784 13,331 58,115
209,610 181,479
68,137 56,307
157
18. Other Investments

Group 2007 RM'000 Unquoted shares at cost Less: Provision for diminution in value Quoted shares at cost 41,330 (1,370) 39,960 196,117 236,077 278,448 2006 RM'000 43,280 (1,394) 41,886 193,691 235,577 235,313 Corporation 2007 2006 RM'000 RM'000 38,956 38,956 12,185 51,141 25,713 37,529 37,529 13,039 50,568 24,042
Market value of quoted shares
19. Inventories
Group 2007 RM'000 Cost: Bunkers, lubricants and consumable stores Spares Raw materials 2006 RM'000 Corporation 2007 2006 RM'000 RM'000
183,641 66,127 13,206 262,974
182,143 42,778 14,390 239,311
42,609 60,481 103,090
58,053 23,249 81,302
Net realisable value: Bunkers, lubricants and consumable stores Spares
262,974
1,148 3,041 243,500
103,090
1,148 3,041 85,491
158

20. Trade and Other Receivables
Group 2007 RM'000 Trade receivables Third parties Subsidiaries Holding company Fellow subsidiaries Associates Jointly controlled entities Due from customers on contracts (Note 21) 2006 RM'000 Corporation 2007 2006 RM'000 RM'000
1,109,115 9,762 53,846 7,614 3,945 302,853 1,487,135
1,089,904 1,099 145,023 3,116 3,857 287,428 1,530,427
428,710 159,608 17 20,784 7,614 3,945 620,678
398,701 205,612 116 112,582 3,434 28 720,473
Less: Provision for doubtful debts: Third parties Subsidiaries Fellow subsidiaries Associates Trade receivables, net Other receivables Amount due from related parties: Subsidiaries Holding company Fellow subsidiaries Associates Jointly controlled entities Deposits Prepayments Others
(72,676) (2,071) (87) (74,834) 1,412,301
(87,948) (761) (96) (88,805) 1,441,622
(39,688) (2,011) (87) (41,786) 578,892
(32,889) (2,214) (96) (35,199) 685,274
290 502 4,771 5,563 6,077 64,635 235,177 311,452
732 (15) 717 5,672 40,204 193,909 240,502
326,260 290 161 326,711 1,534 8,810 98,277 435,332
2,479,357 2,479,357 1,629 4,699 122,137 2,607,822
Less: Provision for doubtful debts: Others Other receivables, net
(2,050) 309,402 1,721,703
(2,745) 237,757 1,679,379
(2,025) 433,307 1,012,199
(2,228) 2,605,594 3,290,868
159
20. Trade and Other Receivables (cont'd)

a. Credit risk The Group's primary exposure to credit risk arises through its trade receivables. The Group's trading terms with its customers are mainly on credit, except for new customers, where payment in advance is normally required. The Group's normal trade credit terms ranges from 7 to 90 days (2006: 7 to 90 days). Other credit terms are assessed and approved on a case-by-case basis and each customer has a maximum credit limit. Credit risk is also monitored and assessed in the Management Credit Committee meetings held at least once in every 2 months which comprises senior management team members of the Group. In view of the aforementioned and the fact that the Group's trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. Trade receivables are non-interest bearing. b. Amount due from group companies The amounts due from holding company, fellow subsidiaries and subsidiaries are unsecured, interest-free and have no fixed terms of repayment except for the amount due from AET Holdings (L) Pte. Ltd. amounting to RM Nil (2006: RM168,951,000) which bears interest at rates ranging from 5.47% to 5.79% (2006: 3.09% to 5.47%) per annum and amount due from Puteri Intan Satu (L) Private Limited amounting to RM62,200,000 (2006: RM66,510,000) which bears interest rate of 4.50% (2006: 4.50%) per annum. c. Amount due from associates The amounts due from associates are unsecured, interest-free and have normal credit terms which ranges from 15 to 30 days (2006: 15 to 30 days). d. Amount due from jointly controlled entities The amounts due from jointly controlled entities are unsecured, interest-free and have normal credit terms which ranges from 15 to 30 days (2006: 15 to 30 days).
160

21. Due from/(to) Customers on Contracts
Group 2007 2006 RM'000 RM'000 Construction contract costs incurred and recognised profits to date Less: Progress billings 3,188,587 (2,975,176) 213,411 302,853 (89,442) 213,411 1,456 2,202,867 (1,975,192) 227,675 287,428 (59,753) 227,675 1,196
Due from customers on contracts (Note 20) Due to customers on contracts (Note 25)
Advances received on contracts (Note 25)
The costs incurred to date on construction contracts include the following charges made during the financial year: Group 2007 2006 RM'000 RM'000 Depreciation of plant and equipment 18,981 17,306
22. Marketable Securities

Group and Corporation 2007 2006 RM'000 RM'000 Shares quoted in Malaysia, at cost Market value of quoted shares 851 1,026 3,587 3,587
23. Cash, Deposits and Bank Balances

Group 2007 RM'000 Deposits with licensed banks Cash and bank balances 849,360 1,368,204 2,217,564 2006 RM'000 2,757,570 668,399 3,425,969 Corporation 2007 2006 RM'000 RM'000 272,558 462,558 735,116 339,197 148,403 487,600
161
24. Non-Current Assets Classified as Held for Sale

Group 2007 RM'000 Land and buildings 38,015 2006 RM'000 Corporation 2007 2006 RM'000 RM'000 172,618
These represent carrying values of properties owned by the Group with the intention of disposing off in the immediate future. Included in the assets for the Corporation are properties that are intended to be disposed off within the Group. The carrying amounts of the assets immediately before reclassification are not materially different from their fair value.
25. Trade and Other Payables

Group 2007 RM'000 Trade payables Third parties Subsidiaries Holding company Fellow subsidiaries Associates Jointly controlled entities Construction contracts: Due to customers (Note 21) Advances received (Note 21) Other payables Amount due to related parties: Subsidiaries Holding company Fellow subsidiaries Accruals and provisions Others 2006 RM'000 Corporation 2007 2006 RM'000 RM'000
931,006 21,186 6,099 2,530 3 89,442 1,456 1,051,722
845,980 263 88,476 2,458 236 59,753 1,196 998,362
529,650 149,659 21,186 2,150 2,530 3 705,178
568,418 102,762 263 17,312 2,458 31 691,244
48,897 2,213 51,110 315,190 787,593 1,153,893 2,205,615
51,360 17,070 68,430 312,763 1,127,987 1,509,180 2,507,542
1,831,557 1,831,557 14,073 119,915 1,965,545 2,670,723
1,049,599 1,049,599 102,628 130,705 1,282,932 1,974,176
162

25. Trade and Other Payables (cont'd)
a. Trade payables Trade payables are non-interest bearing and the normal trade credit terms granted to the Group ranges from 14 to 90 days (2006: 14 to 90 days). b. Amount due to group companies The amounts due to holding company, fellow subsidiaries and subsidiaries are unsecured, interest-free and have no fixed terms of repayment, except for an amount due to MISC Capital (L) Limited and AET Inc. Limited of RM917,800,000 (2006: RM1,012,551,000) and RM656,070,000 (2006: RM Nil) which bears interest at rates ranging from 5.00% to 6.13% (2006: 5.00% to 6.13%) and 5.00% to 6.13% (2006: Nil) per annum respectively. c. Amount due to associates The trade amounts due to associates have a normal credit term which ranges from 15 to 30 days (2006: 15 to 30 days). d. Amount due to jointly controlled entities The trade amounts due to jointly controlled entities have a normal credit term which ranges from 15 to 30 days (2006: 15 to 30 days). e. Other payables, accruals and provision Included in other payables is amount due to deconsolidated subsidiaries amounting to RM2,926,000 (2006: RM3,072,000). The amount due is unsecured, interest-free and repayable upon completion of the liquidation exercise. The Group gives approximately one year warranty on certain products and undertakes to repair or replace items that fail to perform satisfactorily. A provision has been recognised at the financial year end on expected warranty claims based on past experience of the level of repairs and returns.
163
26. Borrowings
Group 2007 RM'000 Short Term Borrowings Secured: Term loans Fixed rate Floating rate Unsecured: Term loans Fixed rate Floating rate Islamic Private Debt Securities Al Murabahah Medium Term Notes 2006 RM'000 Corporation 2007 2006 RM'000 RM'000
164,399 186,414 350,813
85,177 199,478 284,655
12,608 34,766 97,065 144,439 495,252
164,500 160,593 325,093 609,748
97,065 97,065 97,065
Long Term Borrowings Secured: Term loans Fixed rate Floating rate Unsecured: Term loans Floating rate US Dollar Guaranteed Notes 7.50% Non-convertible Cumulative Redeemable Preference Shares ("NCRPS") of USD1.00 each Total Borrowings Term loans Islamic Private Debt Securities Al Murabahah Medium Term Notes US Dollar Guaranteed Notes NCRPS
2,166,400 363,909 2,530,309 3,771,725 3,771,725 7,106 6,309,140 2,928,496 97,065 3,771,725 6,797,286 7,106 6,804,392
1,309,012 588,891 1,897,903 37,202 4,031,517 4,068,719 31,288 5,997,910 2,544,853 4,031,517 6,576,370 31,288 6,607,658
97,065 97,065 97,065
164

26. Borrowings (cont'd)
The secured term loans are secured by mortgages over certain ships, property, plant and equipment together with charter agreements, insurance of the relevant ships, property, plant and equipment. The carrying value of the ships, property, plant and equipment pledged is stated in Note 12(c). NCRPS The 7.50% NCRPS of USD1.00 each issued to minority shareholders of certain subsidiaries shall confer the holders the following rights and privileges: a. The right to receive out of profit for the year of the subsidiaries a cumulative preferential dividend on each preferential dividend share at a net of 7.50% (2006: 7.50%) per annum; b. The NCRPS shall rank pari passu with the ordinary shares in all respects except that the NCRPS shall rank in priority with regard to dividend payment of the subsidiaries; c. The NCRPS shall not entitle its holder thereof to participate in the profits or surplus assets of the subsidiaries; d. The NCRPS shall not be converted to ordinary shares of the subsidiaries; and e. The NCRPS shall be redeemed at any time at par together with a sum equal to arrears of the preferential dividend thereon after a period of ten years from the date of issue on 1 July 1997, extendable for a period of five years subject to the approval of the preference shareholders.
27. Share Capital

Number of Ordinary Shares of RM1 Each 2007 2006 '000 '000 Authorised*: At 1 April 2006/2005 At 31 March Issued and fully paid*: At 1 April 2006/2005 At 31 March *
Amount 2007 2006 RM'000 RM'000
5,000,000 5,000,000
5,000,000 5,000,000
5,000,000 5,000,000
5,000,000 5,000,000
3,719,828 3,719,828
3,719,828 3,719,828
3,719,828 3,719,828
3,719,828 3,719,828
Included in the authorised, issued and fully paid share capital is one preference share of RM1 (2006: RM1). The preference shareholder is not entitled to any dividend nor to participate in the capital distribution upon dissolution of the Corporation but shall rank for repayment in priority to all other shares. Other rights and restrictions attached to the preference share are set out in Article 3B of the Corporations Articles of Association.
165
28. Other Reserves

Other Capital Reserve RM'000 Capital Currency Statutory Redemption Translation Reserve Reserve Reserve RM'000 RM'000 RM'000
Revaluation Reserve RM'000 Group At 1 April 2005 As previously stated Effects of adopting FRS 121 At 1 April 2005 (restated) Currency translation differences: Group Associates Jointly controlled entities Transfer to retained profits At 31 March 2006 At 1 April 2006 As previously stated Effects of adopting FRS 121 At 1 April 2006 (restated) Currency translation differences: Group Associates Jointly controlled entities Transfer from retained profits At 31 March 2007 Corporation At 1 April 2005 As previously stated Effects of adopting FRS 121 At 1 April 2005 (restated) Currency translation differences At 31 March 2006 At 1 April 2006 As previously stated Effects of adopting FRS 121 At 1 April 2006 (restated) Currency translation differences At 31 March 2007
Capital Reserve RM'000
Total RM'000
35,272 35,272
1,185 1,185
41,479 41,479
23,060 23,060
5,225 2,849,280 2,854,505
106,221 2,849,280 2,955,501
35,272
1,185
( 137) 41,342
(21,818) 1,242
(586,161) 1,232 ( 194) 2,269,382
(586,161) 1,232 (194) (21,955) 2,348,423
35,272 35,272
1,185 1,185
41,342 41,342
1,242 1,242
(55,891) 2,325,273 2,269,382
23,150 2,325,273 2,348,423
35,272
1,185
41,342
1,242
45,168 45,168
(1,273,372) (1,273,372) 207 207 996 996 45,168 997,213 1,121,422
35,217 35,217 35,217
1,536,018 1,536,018 (498,029) 1,037,989
35,217 1,536,018 1,571,235 (498,029) 1,073,206
35,217 35,217 35,217
1,037,989 1,037,989 (946,157) 91,832
35,217 1,037,989 1,073,206 (946,157) 127,049
166

28. Other Reserves (cont'd)
The nature and purpose of each category of reserves are as follows: a. Revaluation Reserve Revaluation reserve represents surplus arising from the revaluation of certain freehold land and buildings of the Corporation in 1984. b. Capital Reserve Capital reserve represents reserve arising from bonus issue in subsidiaries. c. Other Capital Reserve Other capital reserve represents the Group's share of its subsidiary's reserve. d. Statutory Reserve Statutory reserve is maintained by an overseas associate in accordance with the laws of the country. e. Capital Redemption Reserve Capital redemption reserve represents reserve created upon the redemption of preference shares in a subsidiary. f. Currency Translation Reserve Currency translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of the Corporation and foreign operations whose functional currencies are different from that of the Group's presentation currency.
29. Deferred Tax

Group 2007 RM'000 At 1 April Recognised in income statement (Note 9) In Malaysia Outside Malaysia Currency translation differences At 31 March 65,862 (4,649) 210 (181) 61,242 2006 RM'000 70,941 3,373 (8,350) (102) 65,862 Corporation 2007 2006 RM'000 RM'000 3,602 (236) 3,366 3,704 (102) 3,602
167
29. Deferred Tax (cont'd)

Group 2007 RM'000 Presented after appropriate offsetting as follows: Deferred tax assets Deferred tax liabilities 2006 RM'000 Corporation 2007 2006 RM'000 RM'000
(2,941) 64,183 61,242
(1,151) 67,013 65,862
3,366 3,366
3,602 3,602
The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows: Deferred Tax Liabilities of the Group: Accelerated Capital Revaluation Allowances of Land RM'000 RM'000 At 1 April 2006 Recognised in income statement: In Malaysia Outside Malaysia Currency translation differences At 31 March 2007 At 1 April 2005 Recognised in income statement: In Malaysia Outside Malaysia Currency translation differences At 31 March 2006 68,961 (2,942) 32 66,051 80,772 (3,389) (8,422) 68,961 3,547 (181) 3,366 3,649 (102) 3,547
Others RM'000 19 242 261 903 (909) 6
Total RM'000 72,508 (2,923) 274 (181) 69,678 85,324 (4,298) (8,416) (102) 72,508
168

29. Deferred Tax (cont'd)
Deferred Tax Assets of the Group: Tax Losses and Unabsorbed Other Capital Payables Allowances RM'000 RM'000 At 1 April 2006 Recognised in income statement: In Malaysia Outside Malaysia At 31 March 2007 At 1 April 2005 Recognised in income statement: In Malaysia Outside Malaysia At 31 March 2006 Deferred tax liabilities of the Corporation arises from revaluation of properties: 2007 RM'000 At 1 April 2006/2005 Currency translation differences At 31 March 2007/2006 Deferred tax assets have not been recognised in respect of the following items: Group 2007 RM'000 Unused tax losses Unabsorbed capital allowances Others 542,715 36,399 12,106 591,220 2006 RM'000 408,885 58,206 19,675 486,766 Corporation 2007 2006 RM'000 RM'000 466,064 466,064 289,674 289,674 3,602 (236) 3,366 2006 RM'000 3,704 (102) 3,602 (1,359) (1,153) 66 (2,446) (9,236) 7,811 66 (1,359) (4,967) (538) (98) (5,603) (4,967) (4,967)
Others RM'000 (320) (35) (32) (387) (180) (140) (320)
Total RM'000 (6,646) (1,726) (64) (8,436) (14,383) 7,671 66 (6,646)
The unused tax losses of the Corporation relate to the loss making non-resident ships and can be utilised to offset against future taxable profits. Deferred tax assets have not been recognised for certain subsidiaries as these subsidiaries have a recent history of losses.
169
30. Cash Flows from Investing Activities

Group 2007 RM'000 Purchase of ships, property, plant and equipment Purchase of additional shares in subsidiaries Acquisitions of associates and jointly controlled entities Investments in subsidiaries Repayment of loans from subsidiaries, net of issuance Drawdown of loans from a subsidiary Dividends received from Quoted investments Unquoted investments Redemption of preference shares from a subsidiary Proceeds from disposal of ships, property, plant and equipment Proceeds from disposal of marketable securities Proceeds from liquidation of a subsidiary Proceeds from disposal of associates Interest received Net cash (used in)/generated from investing activities (4,399,022) (181,664) (119,969) (2,700) 22,867 2,849 954,390 2,011 111,694 (3,609,544) 2006 RM'000 (3,326,557) (49,318) (12,305) 16,555 476,377 173,385 81,228 (2,640,635) Corporation 2007 2006 RM'000 RM'000 (3,169,519) (181,664) 607,232 823,640 12,012 1,684,285 24,530 266,467 2,011 177,501 107,620 354,115 (2,403,856) (8,314) (403,077) 2,085 364,261 449,878 125,112 (1,873,911)
31. Cash Flows from Financing Activities

Group 2007 RM'000 Drawdown of term loans Drawdown of Islamic Private Debt Securities Repayment of term loans Loans to a jointly controlled entity Repayment of loans from associates and jointly controlled entities Repayment of Islamic Private Debt Securities Dividends paid to shareholders of Corporation Dividends paid to minority shareholders of subsidiaries Repayment of preference shares Interest paid Net cash used in financing activities 1,134,192 96,087 (599,013) (254,754) 64,184 (1,096,966) (17,764) (23,507) (347,580) (1,045,121) 2006 RM'000 88,176 (1,118,858) (400,000) (1,114,095) (14,893) (360,453) (2,920,123) Corporation 2007 2006 RM'000 RM'000 96,087 (1,096,966) (46,135) (1,047,014) (400,000) (1,114,095) (23,312) (1,537,407)
170

32. Significant Related Party Transactions
In addition to related party disclosures elsewhere in the financial statements, set out below are other significant related party transactions. The directors are of the opinion that the transactions below have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from that obtainable in transactions with unrelated parties, unless otherwise stated. Group 2007 RM'000 Related parties a. Provision of shipping and shipping related services Charter hire revenue Forwarding charges Warehouse service Haulage service Fabrication contract service b. Purchase of goods and services Purchase of bunkers, lubricants and spare parts Purchase of service for repairs, conversion of ships and drydocking Purchase of crew service Net transfer of ships Purchase of information technology services Management fee Manpower fee 2006 RM'000 Corporation 2007 2006 RM'000 RM'000
2,587,510 71,594 13,237 63,198 154,741
3,045,791 48,131 13,909 57,917 188,063
445,029
923,130
316,077 5,761 19,391 6,131 9,696
188,382 9,135 11,236 6,819 2,149
126,687 158,538 592,207 19,391 9,696
160,847 185,404 1,992,049 11,236 2,149
171
33. Commitments
a. Capital Commitments Group 2007 RM'000 Capital expenditure Approved and contracted for: Ships, property, plant and equipment Technology projects Investments Approved but not contracted for: Ships, property, plant and equipment Technology projects Investments 2006 RM'000 Corporation 2007 2006 RM'000 RM'000
4,942,942 26,680 4,969,622 6,973,584 9,524 20 6,983,128 11,952,750
5,846,145 27,754 117,033 5,990,932 2,438,802 12,190 380 2,451,372 8,442,304
3,241,445 26,680 3,268,125 6,435,068 9,524 20 6,444,612 9,712,737
5,463,746 27,754 117,033 5,608,533 2,297,597 12,190 2,309,787 7,918,320
b. Non-Cancellable Operating Lease Commitments Group as Lessee Group 2007 RM'000 Future minimum rentals payable: Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years 2006 RM'000 Corporation 2007 2006 RM'000 RM'000
822,072 1,601,471 347,537 2,771,080
506,463 781,884 144,268 1,432,615
319,783 566,611 112,069 998,463
289,097 461,388 144,268 894,753
172

34. Contingent Liabilities
Group Corporation 2007 2006 RM'000 RM'000
Unsecured
Letters of guarantee issued in respect of banking facilities extended to third party agents Indemnity provided in respect of banking facilities extended to subsidiaries Bank guarantees extended to customers for performance bond on contracts
2007 RM'000
2006 RM'000
25,181 225,831 251,012
26,744 150,560 177,304
7,955 5,472,574 5,480,529
12,505 6,055,591 6,068,096
35. Segment Information

a. Reporting Format The primary segment reporting format is determined to be business segments as the Group's risks and rates of return are affected predominantly by differences in services produced. Secondary information is reported geographically. The operating businesses are organised and managed separately according to the nature of the service provided, with each segment representing a strategic business unit that serves different markets. b. Business segments During the financial year, management has decided to change the composition of the segments to better reflect the nature of its businesses. The Group is organised on a worldwide basis into four major business segments: i. Energy related shipping the provision of liquefied natural gas ("LNG") services, petroleum tanker services, and chemical tanker services;
ii. Other energy businesses operation and maintenance of offshore floating facilities, and shipbuilding, repairing and heavy engineering works; iii. Integrated liner logistics comprises liner services, haulage, trucking and warehousing and agency businesses; iv. Non-shipping fleet management services, marine education and training, and other diversified businesses.
35. Segment Information (cont'd)
b. Business segments (cont'd)
31 March 2007
Energy Other Related Energy Integrated Shipping Businesses Liner Logistics RM'000 RM'000 RM'000 NonShipping RM'000 Total RM'000
Eliminations Consolidated RM'000 RM'000
Revenue
6,644,795
1,571,616
3,635,029
41,159 11,892,599
(693,654)
11,198,945
2,499,329 473,472 2,972,801 1,975 21,051 (491) 5,105
192,964 34,676 227,640
(194,568) 176,364 (18,204)
(224,194) 3,789,889 3,565,695
2,273,531 4,474,401 6,747,932 (491) 28,131
236,992 (3,734,497) (3,497,505)
Results Segment results Other operating income * Operating profit Finance costs (unallocated) Share of loss of associates Share of profit of jointly controlled entities Profit before taxation Taxation Profit for the year
2,510,523 739,904 3,250,427 (347,757) (491) 28,131 2,930,310 (33,380) 2,896,930
Assets and Liabilities Segment assets Investments in equity method of associates Investments in equity method of jointly controlled entities 14,341,915 34,819 2,315,036 323,493 2,092,930 2,979,107
2,138,425 2,685 145,046 623,404
7,989,296 27,448,743 2,685 4,042,820 503,358 9,074,190
27,448,743 2,685
Segment liabilities
503,358 27,954,786 9,074,190
173
Other Information Capital expenditure Depreciation Impairment losses Non-cash expenses other than depreciation and impairment loss
2,992,137 1,099,542 48,956
1,034,025 82,418 1,943 2,044
357,140 134,625 2,325 8,518
15,720 44,252 11,427
4,399,022 1,360,837 4,268 70,945
4,399,022 1,360,837 4,268 70,945
b. Business segments (cont'd)
31 March 2006
Energy Related Shipping RM'000 NonShipping RM'000
Other Energy Integrated Businesses Liner Logistics RM'000 RM'000
Total Eliminations Consolidated RM'000 RM'000 RM'000
Revenue
6,503,458
1,410,286
3,215,354
40,535 11,169,633
(422,553)
10,747,080
2,783,023 291,630 3,074,653 795 11,830 14,609
40,421 63,535 103,956
(62,930) (146,531) 47,482 1,637,500 (15,448) 1,490,969
2,613,983 2,040,147 4,654,130 15,404 11,830
22,458 (1,454,632) (1,432,174)
Results Segment results Other operating income * Operating profit Finance costs (unallocated) Share of profit of associates Share of profit of jointly controlled entities Profit before taxation Taxation Profit for the year
2,636,441 585,515 3,221,956 (348,398) 15,404 11,830 2,900,792 (30,190) 2,870,602
Assets and Liabilities Segment assets Investments in equity method of associates Investments in equity method of jointly controlled entities 15,384,204 3,209,416 2,773,496 1,272,703
2,003,522 11 139,476 630,650
7,310,117 27,471,339 12,279 12,290 4,069,444 139,476 9,182,213
27,471,339 12,290
Segment liabilities
139,476 27,623,105 9,182,213
174
Other Information Capital expenditure Depreciation Impairment losses Non-cash expenses other than depreciation and impairment loss
1,947,808 1,128,926 73,891
1,076,726 70,039 9,600 138
274,118 114,793 7,030
27,905 112,719 6,898
3,326,557 1,426,477 9,600 87,957
3,326,557 1,426,477 9,600 87,957
* Include gain on disposal of ships of RM436,559,000 (2006: RM202,325,000).
175

c. Geographical Segments Although the Group's four major business segments are managed on a worldwide basis, they operate in five principal geographical areas of the world. In Malaysia, its home country, the Group's areas of operations are principally energy related shipping, other energy businesses, integrated liner logistics and non-shipping. The Group also operates energy related shipping and integrated liner logistics in other regions in the world as follows: Asia and Africa Europe Australasia The United States of America
Asia and Africa RM'000 31 March 2007 Revenue Segment assets Capital expenditure 31 March 2006 Revenue Segment assets Capital expenditure
Malaysia RM'000
Europe RM'000
Australasia RM'000
The United States of America Consolidated RM'000 RM'000
730,302 1,344,973 543
4,983,753 17,788,882 3,964,493
1,908,965 1,290,066 190
826,292 405,112 650
2,749,633 7,125,753 433,146
11,198,945 27,954,786 4,399,022
2,045,744 1,740,722 77,500
4,437,793 19,655,748 3,154,343
1,363,612 1,120,707 288
692,683 385,893 173
2,207,248 4,720,035 94,253
10,747,080 27,623,105 3,326,557
d. Allocation Basis and Transfer Pricing Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, liabilities and expenses. Transfer prices between business segments are set on an arm's length basis in a manner similar to transactions with third parties. Segment revenue, expenses and results include transfers between business segments. These transfers are eliminated on consolidation.
176

36. Financial Instruments
a. Financial Risk Management Objectives and Policies The Group's financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group's businesses whilst managing its interest rate risks (both fair value and cash flow), foreign currency risk, liquidity risk, credit risk and bunkers price risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. It is, and has been throughout the year under review, the Group's policy that no trading of speculative nature in derivative financial instruments shall be undertaken. b. Interest Rate Risk Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-bearing financial assets, the Group's income and operating cash flows are substantially independent of changes in market interest rates. The Group's interest-bearing financial assets are mainly short term in nature and have been mostly placed in time deposit and overnight placement. The Group's interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk. The Group's interest rate risks arise from the volatility of the benchmark interest rates both in Ringgit and US Dollar (which are its main borrowing currencies). The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings. The Group manages this by keeping 90% or more of its borrowings at fixed rates of interest. To manage this mix in a costefficient manner, the Group enters into interest rate swaps, in which the Group agrees to exchange, at specified intervals, the difference between fixed and floating rate interest amounts calculated by reference to an agreed-upon notional principal amount. As at balance sheet date, the Group had entered into interest swaps with the following notional principal amount and maturities:
Notional Amount 2007 2006 RM'000 RM'000 More than 5 years The fixed interest rates relating to interest rate swaps at the balance sheet date is 5.09% (2006: Nil). 1,415,730
36. Financial Instruments (cont'd)
b. Interest Rate Risk (cont'd)
The following tables set out the carrying amounts, the range of interest rate as at the balance sheet date and the remaining maturities of the Group's and the Corporation's financial instruments that are exposed to interest rate risk.
Note
Interest rates %
Within 1 Year RM'000
12 Years RM'000
23 Years RM'000
34 Years RM'000
45 Years RM'000
More Than 5 Years RM'000
At 31 March 2007
Group Fixed Rate Term loan US Dollar Guaranteed Notes Islamic Private Debts Securities NCRPS 26 26 26 26 23 26 2.407.15 5.146.08 849,360 (221,180) (186,414) (128,216) 4.007.45 5.006.13 3.80 7.50 (177,007) (97,065) (178,077) (208,614) (1,376,397)
(287,538) (49,279)
(334,853)
(1,157,318) (2,395,328) (7,106)
Floating Rate Deposits with licensed banks Term loan
Corporation Fixed Rate Islamic Private Debts Securities 26 23 2.437.15 272,558 3.80 (97,065)
Floating Rate Deposits with licensed banks
At 31 March 2006
Group Fixed Rate Term loan US Dollar Guaranteed Notes NCRPS 26 26 26 23 26 4.007.45 5.006.13 7.50 2.004.89 2.835.14
(249,677) 2,757,570 (360,071)
(60,680) (236,680)
(27,964) (86,574) (1,470,748) (199,478) (137,202)
(140,070) (52,733)
(993,724) (2,560,769) (31,288)
177
Floating rate Deposits with licensed banks Term loan
Corporation Floating rate Deposits with licensed banks
23
2.694.63
339,197
178

c. Foreign Currency Risk The Group is exposed to transactional currency risk primarily through sales and purchases that are denominated in a currency other than the functional currency of the operations to which they relate. The currencies giving rise to this risk are primarily Ringgit Malaysia ("RM"), Sterling Pound ("GBP"), Australian Dollar ("AUD"), Euro ("EUR") and Singapore Dollar ("SGD"). Foreign exchange exposures in transactional currencies other than functional currencies of the operating entity are kept to an acceptable level. Approximately 29.61% of Group's sales are denominated in currencies other than the unit's functional currency of the operating unit making the sale, whilst almost 64.92% of costs are denominated in the unit's functional currency. The Group maintains a natural hedge, wherever possible, by borrowing in the currency of the country in which the property or investment is located or by borrowing in currencies that match the future revenue stream to be generated from its investments. The net unhedged financial receivables and payables of the Group companies and that of the Corporation that are not denominated in their functional currencies are as follows:
Functional Currency of Group Companies At 31 March 2007 Ringgit Malaysia United States Dollar
Net Financial Receivables/(Payables) Held in Non-Functional Currencies United Ringgit States Sterling Australian Singapore Malaysia Dollar Pound Dollar EURO Dollar Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
(378,856) (378,856)
99,273 99,273
948 36,162 37,110
(1) 5,066 5,065
19,110 31,804 50,914
(4,097) 5,614 1,517
115,233 (300,210) (184,977)
At 31 March 2006 Ringgit Malaysia United States Dollar
(404,108) (404,108)
10,427 10,427
2,661 27,190 29,851
26 8,837 8,863
2,600 15,780 18,380
(58) 7,733 7,675
15,656 (344,568) (328,912)
Functional Currency of Corporation At 31 March 2007 United States Dollar At 31 March 2006 United States Dollar
(347,071)
42,281
5,066
39,718
7,478
(252,528)
(411,400)
31,910
9,303
35,698
7,782
(326,707)
179

c. Foreign Currency Risk (cont'd) The cash and bank balances of the Group companies and that of the Corporation that are not denominated in their functional currencies are as follows: Cash and bank balances Held in Non-Functional Currencies United Ringgit States Sterling Australian Singapore Malaysia Dollar Pound Dollar EURO Dollar RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Functional Currency of Group Companies At 31 March 2007 Ringgit Malaysia United States Dollar
Total RM'000
307,260 307,260
7,993 7,993
9,407 9,407
3,928 3,928
11,466 11,466
8,492 8,492
7,993 340,553 348,546
At 31 March 2006 Ringgit Malaysia United States Dollar
1,197,080 1,197,080
32,514 32,514
699 1,081 1,780
9,392 9,392
48,410 48,410
27,608 270 27,878
60,821 1,256,233 1,317,054
Functional Currency of Corporation At 31 March 2007 United States Dollar At 31 March 2006 United States Dollar
150,426
5,061
3,733
9,334
5,180
173,734
437,076
30
9,392
44,996
491,494
d. Liquidity Risk As at 31 March 2007, the Group had at its disposal cash and short term deposits amounting to RM2,217,564,000 (2006: RM3,425,969,000). As at 31 March 2007, the Corporation has unutilised Murabahah Commercial Paper/Medium Term Notes Programme amounting to RM900,000,000 which could be used for working capital purposes. The Group's holdings of cash and short term deposits, together with committed funding facilities and net cash flow from operations, are expected to be sufficient to cover its cash flow needs (excluding merger and acquisition activities) in the next financial year. Any shortfall and additional cash requirements arising from the Group's merger and acquisition activities can be met by additional financing. The Group's strong balance sheet provides it with financial flexibility in determining the optimum financing source. The various options, among others, include bank borrowings, bonds issuance and structured financing.
180

e. Credit Risk The Group's credit risk is primarily attributable to trade receivables. The Group trades only with recognised and creditworthy third parties. It is the Group's policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis and the Group's exposure to bad debts is not significant. The credit risk of the Group's other financial assets, which comprise cash and cash equivalents, marketable securities and non-current investments, arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these financial assets. The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial assets. f. Bunkers Price Risk Bunkers price risk is the risk that the future bunkers price will flutuate because of the effects of demand, supply and political climates. The Group's profit are affected by changes in the price of bunkers. The Group manages this risk by entering into forward contracts for the price of bunkers for a 6 month period. g. Fair Values The carrying amounts of financial assets and liabilities of the Group and of the Corporation at the balance sheet date approximated their fair values except for the following: Group Carrying Amount Fair Value RM'000 RM'000 Corporation Carrying Amount Fair Value RM'000 RM'000
Note At 31 March 2007 Non-current quoted shares Non-current unquoted shares Forward bunkers contract Fixed rate: Term loans Islamic Private Debts Securities US Dollar Guaranteed Notes Interest rate swap At 31 March 2006 Non-current quoted shares Non-current unquoted shares Fixed rate: Term loans US Dollar Guaranteed Notes *
18 18 36(f) 26 26 26 36(b)
196,117 39,960 (2,343,407) (97,065 ) (3,771,725 )
278,448 * 1,657 (2,246,429) (97,633) (3,892,172) (10,630)
12,185 38,956 (97,065)
25,713 * 1,657 (97,633)
18 18 26 26
193,691 41,886 (1,558,689) (4,031,517)
235,313 * (1,254,038) (4,120,752)
13,039 37,529
24,042 *
The fair value of non-current unquoted shares is not disclosed as it is not practicable to determine the fair value with sufficient reliability.
181

g. Fair Values (cont'd) The methods and assumptions used by management to determine fair values of financial instruments other than those whose carrying amounts reasonably approximate their fair values are as follows: i. Noncurrent quoted shares Fair value of these non-current quoted shares is determined by reference to stock exchange quoted market bid prices on the balance sheet date.
ii. Forward bunkers contract Fair value is estimated as the difference between the hedged bunker price and average market price multiplied by the unutilised hedged bunker units. iii. Term loans and Islamic Private Debts Securities Fair value has been determined using discounted estimated cash flows. The discount rates used are the current market incremental lending rates for similar types of borrowing. iv. US Dollar Guaranteed Notes Fair value is determined by reference to stock exchange quoted market prices on the balance sheet date. v. Interest rate swap The fair value of the interest rate swap is the amount that would be payable or receivable upon termination of the position at the balance sheet date, and is calculated as the difference between the present value of the estimated future cash flows at the contracted rate compared to that calculated at the market rate at the balance sheet date.
37. Subsidiaries and Activities

Country of Incorporation Malaysia Principal Activities Investment holding and provision of management services Shipping Shipping Shipping Shipping Shipping Dormant Effective Interest (%) 2007 2006 100 100
Name of Company PETRONAS Tankers Sdn. Bhd.
Puteri Intan Sdn. Bhd. Puteri Delima Sdn. Bhd. Puteri Nilam Sdn. Bhd. Puteri Zamrud Sdn. Bhd. Puteri Firus Sdn. Bhd. MISC Ship Management Sdn. Bhd.
Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia
100 100 100 100 100 100
100 100 100 100 100 100
182

37. Subsidiaries and Activities (cont'd)
Country of Incorporation Principal Activities Effective Interest (%) 2007 2006 100 100 100 100 100 100 100 65
Name of Company MISC Enterprises Holdings Sdn. Bhd. MISC Properties Sdn. Bhd. MISC Information Technology Sdn. Bhd. MSE Holdings Sdn. Bhd.
Malaysia In-liquidation Malaysia Dormant
Malaysia In-liquidation Malaysia Investment holding
Malaysia Marine and Heavy Engineering Sdn. Bhd.
Malaysia Shipbuilding, ship repairing and engineering works Malaysia Ship repairing and engineering works Malaysia Processing of copper grit Sludge disposal management Process equipment for petrochemical, oil and gas and power generation plants Dormant Shipping agent and warehousing
100
65
MMHE-SHI LNG Sdn. Bhd.
70
MSE Corporation Sdn. Bhd.
100
65
Techno Indah Sdn. Bhd.
Malaysia
100
65
MMHE-ATB Sdn. Bhd.
Malaysia
60
58
Malaysia Tank Cleaning Company Sdn. Bhd. MISC Agencies Sdn. Bhd.
Malaysia Malaysia
100 100
65 100
183

Country of Incorporation Principal Activities Effective Interest (%) 2007 2006 100 100
Name of Company MISA (B) Sdn. Bhd.
Brunei In-liquidation Darussalam Malaysia In-liquidation Malaysia Shipping agent Shipping agent Shipping agent Shipping agent Port and general agent Shipping agent Launch operator Dormant Integrated logistics services Dormant Dormant Own, manage and operate a cold storage logistic hub
MISC Agencies (Trengganu) Sdn. Bhd. MISC Agencies (Sarawak) Sdn. Bhd.
100 65
100 65
MISC Agencies (Netherlands) B.V. *
Netherlands
100
100
MISC Agencies (Australia) Pty. Ltd. #
Australia
100
100
MISC Agencies (U.K.) Ltd. *
United Kingdom Japan
100
100
MISC Agencies (Japan) Ltd. *
100
100
MISC Agencies (Singapore) Private Limited *
Singapore
100
100
Leo Launches Private Limited *
Singapore
51
51
MISC Ferry Services Sdn. Bhd. MISC Integrated Logistics Sdn. Bhd.
Malaysia Malaysia
100 100
100 100
MISC Haulage Services Sdn. Bhd. MISC Trucking and Warehousing Services Sdn. Bhd. MILS Seafrigo Sdn. Bhd.
Malaysia Malaysia Malaysia
100 100 60
100 100
184

Country of Incorporation Malaysia Principal Activities Sterilisation and fumigation facilities Shipowning and ship management Shipowning and ship management Education and training for seamen and maritime personnel Shipping Shipping Shipping Shipping Shipping Shipping Investment holding Investment holding Investment holding Shipowning Ship management Effective Interest (%) 2007 2006 60
Name of Company MILS SterilGamma Sdn. Bhd.
Asia LNG Transport Sdn. Bhd.
Malaysia
51
51
Asia LNG Transport Dua Sdn. Bhd.
Malaysia
51
51
Malaysian Maritime Academy Sdn. Bhd.
Malaysia
100
100
Puteri Intan Satu (L) Private Limited Puteri Delima Satu (L) Private Limited Puteri Nilam Satu (L) Private Limited Puteri Zamrud Satu (L) Private Limited Puteri Firus Satu (L) Private Limited Puteri Mutiara Satu (L) Private Limited MISC Tanker Holdings Sdn. Bhd.
Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia
100 100 100 100 100 100 100
100 100 100 100 100 100 100
MISC Tanker Holdings (Bermuda) Limited
Bermuda
100
100
AET Tanker Holdings Sdn. Bhd.
Malaysia
100
100
AET Petroleum Tanker (M) Sdn. Bhd. AET Shipmanagement (M) Sdn. Bhd. (formerly known as ESPL Fleet Management Sdn. Bhd.)
Malaysia Malaysia
100 100
100 100
185

Country of Incorporation Singapore Principal Activities Ship management Effective Interest (%) 2007 2006 100 100
Name of Company AET Shipmanagement (Singapore) Pte. Ltd. (formerly known as Eagle Shipmanagement Pte. Ltd.)# AET Holdings (L) Pte. Ltd.
Malaysia
Investment holding Shipowning and operations Commercial operation and chartering Commercial operation and chartering Shipping agent and lightering Lightering
100
100
AET Inc. Limited
Bermuda
100
100
AET Tankers Pte. Ltd.
Singapore
100
100
AET UK Limited
United Kingdom
100
100
American Marine and Offshore Services Limited
Cayman Islands
100
100
AET Offshore Services Company Inc. (formerly known as Pelican Offshore Services Company, Inc.) AET Agencies Inc.
The United States of America
100
100
The United States of America The United States of America The United States of America
Property owning Investment holding Ship rental services and lightering Lightering
100
100
MTL Petrolink Group
100
100
OMIP Inc.
100
100
Offshore Marine Services, Inc.
The United States of America The United States of America
100
100
Harlink, Inc.
Lightering
100
100
186

Country of Incorporation Nuelink, Inc. The United States of America Malaysia Principal Activities Lightering Effective Interest (%) 2007 2006 100 100
Name of Company
MISC International (L) Limited
Investment holding Operating and maintaining floating production, storage and off-loading ("FPSO") facility Special purpose vehicle for issuance of US Dollar Guaranteed Notes Investment holding Dormant Operating and maintaining FPSO facility Owning and chartering of support vessels FPSO owner
100
100
MISC Offshore Floating Terminals (L) Limited
Malaysia
100
100
MISC Capital (L) Limited
Malaysia
100
100
MISC Offshore Holdings (Brazil) Sdn Bhd
Malaysia
100
M.I.S.C. Nigeria Limited FPSO Ventures Sdn. Bhd.
Nigeria Malaysia
60 51
60 51
Offshore Marine Ventures Sdn. Bhd.
Malaysia
51
51
Malaysia Deepwater Floating Terminal (Kikeh) Limited
Malaysia
51
51
187

Country of Incorporation Malaysia Principal Activities Operating and maintaining FPSO facility Effective Interest (%) 2007 2006 51 51
Name of Company Malaysia Deepwater Production Contractors Sdn. Bhd.
* #
Audited by firms of auditors other than Ernst & Young Audited by affiliates of Ernst & Young Malaysia
38. Associates and Activities

Country of Incorporation Malaysia Principal Activities Automative solutions and related integrated logistic services Integrated logistics services Shipping agent Shipping agent and freight forwarding services Inland container depot Effective Interest (%) 2007 2006 60
Name of Company BLG MILS Logistics Sdn. Bhd.
RAIS MILS Logistic FZCO
United Arab Emirates
50
MISC Agencies (Thailand) Company Limited
Thailand
49
49
MISC Agencies Lanka (Pvt) Limited
Sri Lanka
40
40
Transware Logistics (Pvt) Ltd.
Sri Lanka
25
25
The financial statements of the above associates are coterminous with those of the Group.
188

39. Jointly Controlled Entities and Activities
Country of Incorporation Malaysia Singapore Singapore Principal Activities Shipowning Warehousing Ship management Transportation Shipowning Effective Interest (%) 2007 2006 51 50 50 50 50
Name of Company Red Harbour Sdn. Bhd. Transware Distribution Services Pte. Ltd. Transasia Pool Pte. Ltd.
KEER MISC Logistics Co Ltd. Paramount Tankers Corp.
Sudan Republic of the Marshall Island Sudan Switzerland Switzerland
50 50
50
SL-MISC International Line Co. Limited SBM Systems Inc FPSO Brasil Venture S.A. (formerly known as SBM Espirito Santo Inc.)
Shipowning FPSO owner Operating and maintaining FPSO facility Operating and maintaining FPSO facility
49 49 49
49
SBM Operacoes Limitada
Brazil
49
The financial statements of the above jointly controlled entities are coterminous with those of the Group, except for Transware Distribution Services Pte. Ltd., Transasia Pool Pte. Ltd., Paramount Tankers Corp., SL-MISC International Line Co. Ltd, SBM Systems Inc., FPSO Brasil Venture S.A. (formerly known as SBM Espirito Santo Inc.), and SBM Operacoes Limitada which have financial years ended 31 December. For the purpose of applying the equity method of accounting, the audited financial statements up to the year ended 31 December 2006 have been used and management accounts up to 31 March 2007 have been used for the transactions between 1 January 2007 to 31 March 2007, except for Paramount Tankers Corp. which uses management accounts up to 31 March 2007.
189
40. Significant Events

a. On 2 June 2006, AET Inc. Limited ("AET"), a wholly-owned subsidiary of the Corporation had entered into a joint venture agreement with Golden Energy Tanker Holdings Corporation ("Golden Energy"), a subsidiary of the Restis Group, incorporated in Republic of the Marshall Island, for the establishment of a joint venture company for the purpose of acquisition, ownership, operation and charter of crude oil tankers for the business of marketing and transporting crude oil. The joint venture company with a paid up capital of USD250,000 (RM863,000) has been incorporated with AET and Golden Energy having 50% equity respectively in the joint venture company. b. On 9 June 2006, the Corporation had completed the proposed acquisition of the 49% interest in SBM Systems Inc. and SBM Espirito Santo Inc. collectively known as FPSO Brasil companies for the purpose of owning and operating of the FPSO Brasil at the final purchase price of USD103,776,417 (RM358,340,000). c. On 24 September 2006, a wholly-owned subsidiary of the Corporation, MISC Integrated Logistics Sdn. Bhd. (MILS) had entered into a joint venture agreement with Rais Hassan Saadi LLC for the establishment of a joint venture company, namely RAIS - MILS Logistic FZCO ("RAIS"). MILS subscribed for 50% equity interest in RAIS for a total cash consideration of RM480,960. d. On 14 November 2006, a wholly-owned subsidiary of the Corporation, MISC Integrated Logistics Sdn. Bhd. (MILS) had entered into a joint venture agreement with BLG International Logistics GMBH & CO. KG., a subsidiary of BLG AG, incorporated in Germany for the establishment of a joint venture company, namely BLG MILS Logistics Sdn. Bhd. for the purpose of offering integrated automotive logistics services in Malaysia. The joint venture company was incorporated with a paid up capital of RM500,000 with MILS holding 60% equity whilst the remaining 40% equity is owned by BLG International Logistics GMBH & CO. KG. e. On 17 November 2006, AET Petroleum Tanker (M) Sdn Bhd (AETP), a wholly-owned subsidiary of the Corporation, acquired 2 shares for RM1.00 each in Red Harbour Sdn. Bhd. (Red Harbour), a company incorporated in Malaysia, for a total consideration of RM2.00 representing 100% equity interest. On 16 January 2007, Red Harbour issued 6,331,228 shares for RM1.00 each to AETP. After the share issue, AETP retained 51% equity in Red Harbour whilst the remaining 49% equity is owned by Champ International Inc., a company incorporated in Republic of the Marshall Island. f. On 27 March 2007, the Corporation entered into a joint venture agreement with SBM Holding Inc S.A. ("SBM") for the purpose of owning, operating and managing a Floating Production Storage and Offloading ("FPSO") tanker facility for Shell Brasil Ltda, the operator of a production sharing contract with PETROLEO BRASILEIRO S.A. PETROBRAS and BC-10 block located in the Campos Basin, offshore Brazil, for a contractual period of 15 years. The following three Bermudan joint venture companies have been incorporated, with the proposal for MISC holding 49% and SBM holding 51% equity interest: i. Brazilian Deepwater Floating Terminals Limited, for the purpose of undertaking the engineering, procurement, construction and installation of the FPSO;
ii. Brazillian Deepwater Production Production Limited, for the purpose of chartering the FPSO; and iii. Brazilian Deepwater Production Contractors Limited, for the purpose of undertaking the operation and maintenance of the FPSO. The FPSO with a storage capacity of 1.9 million bbls is to be named "FPSO Espirito Santo".
properties owned by MISC Berhad and its subsidaries
190
Properties Owned by MISC Berhad and its Subsidiaries

31 March 2007
Tenure & Year Lease Expires Approx Age of Existing Bldg/Land Use (years) Net Book Value RM'000 Area in sq ft
No Location Malaysia 1. No.2 Jalan Conlay 50450, Kuala Lumpur Wisma MISC No.2 Jalan Conlay 50450, Kuala Lumpur Lot 23 Lebuh Sultan Mohamad 1, Bandar Sultan Sulaiman 42008 Port Klang Selangor Darul Ehsan No. 7 Lorong Merpati 1 Jalan Bukit Sekilau Taman Tas Mahkota 25200 Kuantan, Pahang Darul Makmur Blok-H, Tgkt. 7 Unit No.1 Mount Pleasure Apartment 12000 Batu Feringghi Pulau Pinang Lot 33835 (Title No. PN26618) Mukim Kapar, Daerah Klang Selangor Darul Ehsan Lot PLO 137 & 138 Tebrau II Industrial Estate Johor Darul Takzim
Description
Land
Freehold
63,600
Rented
33
32,071
2.
Office Building
Freehold
262,500
Rented
31
17,430
3.
Land, Office Building, Warehouse, Workshop, Repair Shed & Container Yard
Leasehold 2089
2,221,560
Cargo Cum, Office Complex & Container Yard
16
59,267
4.
Double Storey Semi-Detached House
Freehold
4,117
Vacant
24
103
5.
Apartment
Freehold
1,300
Vacant
27
153
6.
Land & Container Yard
Leasehold/ 2087
1,119,492
Vacant Land & Container Yard Cargo Cum, Office Complex & Container Yard Office Building & Container Yard
16
12,343
7.
Land, Office Building, Warehouse, Workshop, Repair Shed & Container Yard Land & Container Container Yard
Leasehold/ 2023
894,287
14
20,661
8.
Plot 2 P.T. 2113 Air Keroh Industrial Estate Melaka
Leasehold/ 2091
241,326
15
1,831
191
No Location Malaysia (cont'd) 9. Lot 568-615 Mukim 16 Daerah Seberang Perai Utara Pulau Pinang
Description
Tenure & Year Lease Expires
Area in sq ft
Approx Age of Existing Bldg/Land Use (years)
Net Book Value RM'000
Land, Office Building, Warehouse, Workshop, Repair Shed & Container Yard Land, Office Building, & Container Yard
Freehold
752,752
Cargo Cum, Office Complex & Container Yard
15
30,649
10. PLO 516, Jalan Keluli 3 Kaw. Perindustrian Pasir Gudang, Mukim Plentong Johor Darul Takzim 11. Precint 3.8, Seksyen 14 Shah Alam Selangor Darul Ehsan 12. Lot 36, Seksyen 7, Fasa 1A Pulau Indah Industrial Park (West Port), Pelabuhan Klang Selangor Darul Ehsan 13. Tingkat Bawah dan Tgkt 1 Wisma Takada Jalan Gaya, Lorong EWAN 88000 Kota Kinabalu 14. Lot 1411, Section 66, Tanah Daerah Pekan Kuching 15. Lot 2115, Section 66, Tanah Daerah Pekan Kuching 16. No. 18, Jln. Tengku Ampuan Zabedah G 9/G, Section 9, Shah Alam Selangor Darul Ehsan 17. Sebahagian dari Lot PT 4593 Kawasan Perindustrian Kerteh Mukim Kerteh, 24300 Kemaman Terengganu Darul Iman
Leasehold/ 2025
217,800 Office Building & Container Yard
12
3,543
Land
Leasehold/ 2099
107,413
Vacant Land
11
14,415
Land
Leasehold/ 2097
1,725,978
Vacant Land
11
18,662
Office Premises
Leasehold/ 2092
6,000
MISA KK Office
13
1,232
Land
Leasehold/ 2055 Leasehold/ 2046 Leasehold/ 2094
227,296
Vacant Land Vacant Land Rented
10
4,185
Land
85,987
10
4,021
3 Storey Shop Office
1,800
10
968
Land, Office Building & Warehouse
Leasehold/ 2060
47,522 Office Building & Warehouse
10,760
192
Properties Owned by MISC Berhad and its Subsidiaries

Approx Tenure & Year Lease Expires Area in sq ft Approx Age of Existing Bldg/Land Use (years) Net Book Value RM'000
No Location Malaysia (cont'd) 18. Lot 154, Plot 3, Kaw. Perindustrian Kidurong, Bintulu Sarawak 19. PTD 22805 Mukim Plentong, Johor Bahru, Johor Darul Takzim
Description
Land
Leasehold/ 2062
217,800
Vacant Land
1,325
Land, Shipyard Warehouse, Workshops & Office Buildings
Leasehold/ 2040
5,307,573
Shiprepair, Shipbuilding & Engineering Fabrication Yards Ancillary Facilities & Office Buildings Staff Quarters
33
323,058
20. PTD 65616 Mukim Plentong, Johor Bahru, Johor Darul Takzim 21. PTD 65615 Mukim Plentong, Johor Bahru, Johor Darul Takzim 22. PTD 65617 Mukim Plentong, Johor Bahru, Johor Darul Takzim 23. PTD 65618 Mukim Plentong, Johor Bahru, Johor Darul Takzim 24. PTD 65619 Mukim Plentong, Johor Bahru, Johor Darul Takzim 25. Open Yard 1203, Phase 1, Kemaman Supply Base, 24007 Kemaman, Terengganu Darul Iman
4 Storey Residential Flats
Leasehold/ 2044
698,354
28
3,174
Land
Leasehold/ 2044
169,928
Vacant
N/A
Land
Leasehold/ 2044
374,093
Vacant
N/A
4 Storey Residential Flats
Leasehold/ 2044
588,050
Staff Quarters
28
4 storey Residential Flats
Leasehold/ 2044
130,485
Staff Quarters
28
Warehouse
Leasehold/ 2009
4,048
Warehousing & Storage
385
193
No Location United Kingdom 26. 305, The Collonades Porchester Square, Bayswater London W2 6AS 27. Town Quay Wharf Barking Essex London Australia 28. 447, Kent Street Sydney Australia 29. Suite 40, Albert Square 37-39 Albert Road Melbourne 3004 Australia United States of America 30. Galveston, Texas, USA
Description
Tenure & Year Lease Expires
Area in sq ft
Approx Age of Existing Bldg/Land Use (years)
Net Book Value RM'000
Apartment
Leasehold/ 2073
1,200
Owner's use
15
2,927
Office Building
Leasehold/ 2990
10,000
MISC Europe Office & MISAL Office
13
4,305
Land & Building (including 15 basement carparks) Land & Building (including 2 basement carparks)
Freehold
1,012 sq meters 371 sq meters
Owner Occupied Owner Occupied
13
1,442
Freehold
28
2,251
Land & Office
Owned
290,415
Workboats, Dockage Ltrg Support Operation
38
2,749
Netherlands 31. Westplein 6-7, 3016 BM Rotterdam, Holland Total Office Building Freehold 8,083 MISAN Head Office 28 1,829
575,739
list of vessels
194
List of Vessels
30 June 2007
List of Owned and In-Chartered Vessels by Type/Category LNG Carriers Aman Class Tenaga Class Puteri Class Puteri Satu Class Seri "A" Class Seri "B" Class Petroleum Tankers Crude Oil Tankers VLCC Crude Oil Tankers Aframax Long Range 2 (LR2) Product No DWT GRT
3 5 5 6 4 1 24 9 31 1 5 46 19
32,877 359,885 367,595 456,409 333,682 90,065 1,640,513 2,736,256 3,203,353 104,385 68,050 6,112,044 1,928,837
49,071 402,550 431,031 566,644 382,916 105,335 1,937,547 1,432,591 1,755,420 53,483 46,316 3,287,810 1,049,964
In-Chartered - Petroleum Tankers Chemical Tankers Melati Class Anggerik Class Semarak Class
7 4 2 13 3
224,174 119,877 31,998 376,049 59,322
155,088 73,812 19,902 248,802 34,770
In-Chartered - Chemical Tankers Containerships Above 5000 TEUs 3000 5000 TEUs 1000 3000 TEUs Below 1000 TEUs
2 3 8 8 21 13
207,490 161,866 193,059 80,539 642,954 525,231
179,552 132,543 154,216 71,812 538,123 470,972
In-Chartered - Containerships Others LPG Dry Bulk (Panamax)
3 1 4
10,264 73,127 83,391
10,799 38,972 49,771
list of vessels
195
No Total MISC Vessel (Owned) Total In-Chartered Total MISC Vessel (Including In-Chartered) 108 35 143
DWT 8,854,951 2,513,390 11,368,341
GRT 6,062,053 1,555,706 7,617,759
Offshore Floating Facilites Floating Production Storage and Offloading (FPSO) Floating Storage and Offloading (FSO) Total Offfshore Floating Facilites
No 3 3 6
DWT 615,768 244,790 860,558
bbls 4,319,000 1,652,631 5,971,631
Newbuildings LNG Carriers Petroleum Tankers VLCC Petroleum Tankers Aframax Chemical Tankers Total Newbuildings
No 5 2 8 8 23
DWT 375,200 597,000 859,000 304,000 2,135,200
GRT
Under Conversion FPSO*
No 1
DWT 270,000
bbls
jointly owned
list of vessels
196
List of Vessels
30 June 2007 (cont'd)
LNG Carriers
Aman Class 1. Aman Bintulu 2. Aman Sendai 3. Aman Hakata Built DWT GRT
1993 1997 1998
10,975 10,951 10,951 32,877
16,399 16,336 16,336 49,071
Tenaga Class 4. Tenaga Satu 5. Tenaga Dua 6. Tenaga Tiga 7. Tenaga Empat 8. Tenaga Lima
1982 1981 1981 1981 1981
71,814 72,087 72,083 71,818 72,083 359,885
80,510 80,510 80,510 80,510 80,510 402,550
Puteri Class 9. Puteri Intan 10. Puteri Delima 11. Puteri Nilam 12. Puteri Zamrud 13. Puteri Firus
1994 1995 1995 1996 1997
73,519 73,519 73,519 73,519 73,519 367,595
86,205 86,205 86,211 86,205 86,205 431,031
Puteri Satu Class 14. Puteri Intan Satu 15. Puteri Delima Satu 16. Puteri Nilam Satu 17. Puteri Zamrud Satu 18. Puteri Firus Satu 19. Puteri Mutiara Satu Seri A Class 20. 21. 22. 23 Seri Alam Seri Amanah Seri Anggun Seri Angkasa
2002 2002 2003 2004 2004 2005
75,849 75,929 76,124 76,144 76,124 76,239 456,409
94,430 94,430 94,446 94,446 94,446 94,446 566,644
2005 2006 2006 2007
83,482 83,400 83,396 83,404 333,682
95,729 95,729 95,729 95,729 382,916
Seri B Class 24. Seri Bakti Total LNG Carriers 2007 90,065 90,065 1,640,513 105,335 105,335 1,937,547
list of vessels
197
Petroleum Tankers
VLCC 1. Bunga Kasturi 2. Bunga Kasturi Dua 3. Bunga Kasturi Tiga 4. Bunga Kasturi Empat 5. Eagle Valencia 6. Eagle Venice 7. Eagle Vienna 8. Eagle Virginia 9. Eagle Vermont
Built
DWT
GRT
2003 2005 2006 2007 2005 2005 2004 2002 2002
299,999 300,542 300,397 300,325 306,998 306,998 306,999 306,999 306,999 2,736,256
157,200 157,200 157,200 157,200 160,046 160,046 161,233 161,233 161,233 1,432,591
Aframax 10. Bunga Kelana Satu 11. Bunga Kelana Dua 12. Bunga Kelana 3 13. Bunga Kelana 4 14. Bunga Kelana 5 15. Bunga Kelana 6 16. Bunga Kelana 7 17. Bunga Kelana 8 18. Bunga Kelana 9 19. Bunga Kelana 10 20. Bunga Kenanga 21. Eagle Albany 22. Eagle Anaheim 23. Eagle Atlanta 24. Eagle Augusta 25. Eagle Austin 26. Eagle Baltimore 27. Eagle Beaumont 28. Eagle Birmingham 29. Eagle Boston 30. Eagle Charlotte 31. Eagle Columbus 32. Eagle Otome 33. Eagle Phoenix 34. Eagle Subaru 35. Eagle Tacoma 36. Eagle Toledo 37. Eagle Trenton 38. Eagle Tucson 39. Eagle Tampa 40. Quasar
1997 1997 1998 1999 1999 1999 2004 2004 2004 2004 2000 1998 1999 1999 1999 1998 1996 1996 1997 1996 1997 1997 1994 1998 1994 2002 2003 2003 2003 2003 1989
105,884 105,976 105,784 105,815 105,788 105,811 105,194 105,174 105,200 105,274 73,096 107,160 107,160 107,160 105,345 105,426 99,405 99,448 99,343 99,328 107,169 107,166 95,663 106,127 95,676 107,123 107,092 107,123 107,123 107,123 97,197 3,203,353
57,017 57,017 57,017 57,017 57,017 57,017 58,194 58,194 58,194 58,194 40,037 57,929 57,929 57,929 58,156 58,156 57,456 57,456 57,456 57,456 57,949 57,949 52,504 56,346 52,504 58,166 58,166 58,166 58,166 58,166 52,500 1,755,420
list of vessels
198
List of Vessels
Petroleum Tankers
LR2 40. Eagle Milwaukee Product 41. Bunga Kasai 42. Bunga Kerayong 43. Bunga Kekaras 44. Bunga Kemiri 45. Pernas Rantau Built DWT GRT
1987
104,385 104,385 4,999 18,130 29,990 9,932 4,999 68,050 6,014,847
53,483 53,483 3,581 12,994 20,378 5,782 3,581 46,316 3,235,310
1994 1994 1995 1995 1994
Total Petroleum Tankers (Owned) In-Chartered VLCC 1. Camden Aframax 2. Eagle Auriga 3. Eagle Carina 4. Eagle Centaurus 5. Eagle Corona 6. Glenross 7. Lochness 8. Genmar Ajax 9. Sanko Brave 10. Sanko Bright 11. Stavanger Bay 12. CV Stealth 13. Sanko Blossom 14. CS Stealth 15. MT Intrepid Reliance 16. Eagle Stealth 17. Feng Huang Zhou Shuttle 18. Kazan City 19. Samara City
1995 1993 1992 1992 1993 1993 1994 1996 2003 2003 2003 2005 2005 2006 2006 2001 2006 1996 1993
298,306 102,352 95,639 95,644 95,634 90,679 90,607 96,183 105,672 105,745 105,744 104,499 105,699 104,592 104,403 105,322 110,485 5,760 5,872 1,928,837 8,040,881
156,802 55,962 52,504 52,504 52,504 53,135 53,135 53,829 56,172 56,172 56,172 58,148 56,172 58,446 56,573 56,346 56,573 4,408 4,407 1,049,964 4,377,774
Total Petroleum Tankers (Including In-Chartered)
list of vessels
199
Chemical Tankers
Melati Class 1. Bunga Melati Satu 2. Bunga Melati Dua 3. Bunga Melati 3 4. Bunga Melati 4 5. Bunga Melati 5 6. Bunga Melati 6 7. Bunga Melati 7
Built
DWT
GRT
1997 1997 1999 1999 1999 2000 2000
32,127 32,169 31,983 31,967 31,975 31,981 31,972 224,174
22,254 22,254 22,116 22,116 22,116 22,116 22,116 155,088
Anggerik Class 8. MT Varden (ex-Bunga Anggerik) 9. MT Skarven ( ex-Bunga Cenderawasih) 10. MT Stolzen (ex-Bunga Mawar) 11. MT Karven (ex-Bunga Tanjung)
1989 1990 1990 1991
29,995 29,928 29,974 29,980 119,877
18,453 18,453 18,453 18,453 73,812
Semarak Class 12. Bunga Semarak 13. Bunga Siantan
1990 1991
15,999 15,999 31,998 376,049
9,951 9,951 19,902 248,802
Total Chemical Tankers (Owned) In-Chartered 1. Bunga Kantan Satu 2. Bunga Kantan Dua 3. Bunga Kantan Tiga
2005 2005 2005
19,774 19,774 19,774 59,322 435,371
11,590 11,590 11,590 34,770 283,572
Total Chemical Tankers (Including In-Chartered)
list of vessels
200
List of Vessels
Containership
Above 5000 TEUs 1. Bunga Seroja Satu 2. Bunga Seroja Dua Built DWT GRT
2006 2007
103,717 103,773 207,490
89,776 89,776 179,552
3000 - 5000 TEUs 3. Bunga Pelangi Dua 4. Bunga Raya Satu 5. Bunga Raya Dua
1995 1998 1998
65,318 48,304 48,244 161,866
53,379 39,582 39,582 132,543
1000 - 3000 TEUs 6. Bunga Bidara 7. Bunga Delima 8. Bunga Kenari 9. Bunga Terasek 10. Bunga Teratai 11. Bunga Teratai Dua 12. Bunga Teratai Tiga 13. Bunga Teratai Empat
1990 1990 1991 1991 1998 1998 1998 1998
23,518 23,584 23,576 24,073 24,613 24,554 24,580 24,561 193,059
17,215 17,215 17,215 17,215 21,339 21,339 21,339 21,339 154,216
Below 1000 TEUs 14. Bunga Mas Lima 15. Bunga Mas Enam 16. Bunga Mas Tujuh 17. Bunga Mas Lapan 18. Bunga Mas 9 19. Bunga Mas 10 20. Bunga Mas 11 21. Bunga Mas 12
1997 1997 1997 1998 1998 1998 1998 1999
8,991 8,668 9,039 8,665 12,250 12,288 10,325 10,313 80,539 642,954
8,957 8,957 8,957 8,957 9,380 9,380 8,612 8,612 71,812 538,123
Total Containership (Owned)
list of vessels
201
Containership
In-Chartered 1. OOCL China 2. OOCL California 3. OOCL Britain 4. Northern Divinity 5. Conti Singa 6. Sinotran Shanghai 7. Nordwelle 8. Theodore Storm 9. Marvel 10. Lucien GA 11. MISC Merlion 12. Sky Venus 13. Vin Pioneer
Built
DWT
GRT
1996 1995 1996 1997 1996 2005 2005 2004 1994 2002 1990 1983 1998
67,625 67,765 67,625 44,700 44,585 37,800 34,741 33,297 6,500 17,124 56,030 38,351 9,088 525,231 1,168,185
67,427 66,046 66,046 36,606 42,336 28,150 26,611 28,000 5,403 14,193 49,874 33,405 6,875 470,972 1,009,095
Total Containership (Including In-Chartered)
list of vessels
202
List of Vessels
Others
LPG 1. Pernas Butane 2. Konsep Maju 3. Bunga Kekwa Dry Bulk (Panamax) 4. Bunga Saga 9 Built DWT GRT
1991 1995 1995
2,213 4,999 3,052 10,264 73,127 73,127 83,391
2,352 4,951 3,496 10,799 38,972 38,972 49,771
1999
Total Others
Offshore Floating Facilities Floating Production Storage and Offloading (FPSO) 1. Bunga Kertas 2. Brasil* 3. Kikeh Floating Storage and Offloading (FSO) 4. Angsi 5. Cendor 6. Abu Cluster Total Offshore Floating Facilities
Year Converted
DWT
Capacity (bbls)
2003 2002 2007
87,768 255,000 273,000 615,768 64,950 89,920 89,920 244,790 860,558
619,000 1,700,000 2,000,000 4,319,000 472,631 590,000 590,000 1,652,631 5,971,631
2005 2006 2006
Storage
jointly owned
list of vessels
203
Committed Newbuildings LNG Carriers 1. Hull 1591 2. Hull 2221 3. Hull 2222 4. Hull 2223 5. Hull 2224 Petroleum Tankers - VLCC 1. VLCC H078 2. VLCC H079 Petroleum Tankers - Aframax 1. HN S2232 2. HN S2233 3. HN1423 4. HN1424 5. HN1425 6. HN1426 7. HN1457 8. HN1458 Chemical Tankers 1. HN2044 2. HN2045 3. HN2046 4. HN2047 5. HN2048 6. HN2049 7. HN2050 8. HN2051
Expected Delivery
DWT
GRT
2007 2007 2008 2008 2008
81,600 73,400 73,400 73,400 73,400 375,200 298,500 298,500 597,000 107,000 107,000 107,500 107,500 107,500 107,500 107,500 107,500 859,000 38,000 38,000 38,000 38,000 38,000 38,000 38,000 38,000 304,000 2,433,700
2007 2008
2007 2007 2009 2010 2010 2010 2011 2011
2007 2007 2007 2007 2009 2009 2009 2009
Total Newbuildings
Under Conversion Floating Production Storage and Offloading (FPSO) 1. Espirito Santo* Total New Conversion
Expected Completion
DWT
Capacity (bbls)
2008
270,000 270,000
2,020,200 2,020,200
jointly owned
MISC offices around the world
204
MISC Offices Around the World

MISC Head Office Level 25, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur or PO Box: 10371 50712 Kuala Lumpur Malaysia Tel : 603-2273-8088 Fax : 603-2273-6602 http://www.misc.com.my Asia LNG Transport Sdn Bhd Asia LNG Transport Dua Sdn Bhd Level 28, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Malaysia Tel : 603-2275-3255 Fax : 603-2275-3209 AET Shipmanagement (Singapore) Pte Ltd 1 HarbourFront Avenue #11-01, Keppel Bay Tower Singapore, 098632 Tel : 65-6100-2288 Fax : 65-6345-1133 BLG-MILS Logistics Sdn Bhd c/o MISC Integrated Logistics Sdn Bhd Lot 88077 Jalan Perigi Nenas 7/1 Taman Perindustrian Pulau Indah, 42907 Pelabuhan Klang Selangor Darul Ehsan Malaysia Tel : 603-3161-2400 (Hunting Line) Fax : 603-3161-2500 FPSO Ventures Sdn Bhd Suite 2.03, 2nd Floor Menara SPK, No. 22 Jalan Sultan Ismail 50250 Kuala Lumpur Malaysia Tel : 603-2145-2600 Fax : 603-2145-2700 KEER MISC Logistics Co Ltd No. 20, Street 17 Al Amarat, Khartoum, Sudan Tel : 249-183-574-550/51 Fax : 249-183-561-717 Malaysia Deepwater Floating Terminal (Kikeh) Ltd Level 28, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Malaysia Tel : 603-2275-3402 Fax : 603-2275-2953 Malaysia Deepwater Production Contractors Sdn Bhd Suite 2.03, 2nd Floor Menara SPK, No.22 Jalan Sultan Ismail 50520 Kuala Lumpur Malaysia Tel : 603-2142-1211 Fax : 603-2145-2700 Malaysia Marine and Heavy Engineering Sdn Bhd PLO 3, Jalan Pekeliling P.O. Box 77 81700 Pasir Gudang Johor, Malaysia Tel : 607-251-2111 Fax : 607-251-3997 Malaysia Maritime Academy Sdn Bhd P.O. Box 31 Kuala Sungai Baru 78207 Melaka Malaysia Tel : 606-387-6201 Fax : 606-387-6700 MILS-Seafrigo Sdn Bhd c/o MISC Integrated Logistics Sdn Bhd Lot 88077 Jalan Perigi Nenas 7/1 Taman Perindustrian Pulau Indah, 42907 Pelabuhan Klang Selangor Darul Ehsan Malaysia Tel : 603-3161-2400 (Hunting Line) Fax : 603-3161-2500 MILS-SterilGamma Sdn Bhd c/o MISC Integrated Logistics Sdn Bhd Lot 88077 Jalan Perigi Nenas 7/1 Taman Perindustrian Pulau Indah, 42907 Pelabuhan Klang Selangor Darul Ehsan Malaysia Tel : 603-3161-2400 (Hunting Line) Fax : 603-3161-2500 MISC Agencies Sdn Bhd (Port Klang) Lot 23, Leboh Sultan Mohamed 1, Kawasan Perusahaan PKNS Fasa 2 Bandar Sultan Suleiman Pelabuhan Utara P.O. Box 146, 42009 Pelabuhan Klang Selangor Darul Ehsan Malaysia Tel : 603-3176-5753 Fax : 603-3176-6289
AET Offshore Services Inc 1301 Pelican Island-2 Galveston, Texas 77554, USA Tel : 1-832-615-2000 Fax : 1-713-622-2256 AET Shipmanagement (Malaysia) Sdn Bhd Level 11, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Malaysia Tel : 603-2267-4800 Fax : 603-2273-0608 AET Tankers Pte Ltd 1 HarbourFront Avenue #11-01, Keppel Bay Tower Singapore 098632 Tel : 65-6100-2288 Fax : 65-6345-1133 AET UK Limited Suite 8.02, Exchange Tower 1 Harbour Exchange Square London E14, 9GE United Kingdom Tel : 44-20-7536-5880 Fax : 44-20-7538-5561
MISC offices around the world
205
MISC Agencies Sdn Bhd (Johor) 1st Floor, Complex MISC PLO 137 & 138 Jalan Angkasa Mas Utama Kawasan Perindustrian Tebrau II 81100 Johor Bahru Johor, Malaysia Tel : 607-3513-684 Fax : 607-3513-695/696 MISC Agencies Sdn Bhd (Penang) Suite No 5, Level 14 NB Tower 2, 5050, Jalan Bagan Luar, 12000 Butterworth Penang Malaysia Tel : 604-3236-969 Fax : 604-3329-608 MISC Agencies Sdn Bhd (Pahang) No B4, Upper Floor Jalan Gebeng 2/6 Gebeng Industrial Estate 26080 Kuantan Pahang Darul Makmur Malaysia Tel : 609-5833-557 Fax : 609-5833-550 MISC Agencies Sdn Bhd (Sabah) Ground Floor, Wisma Takada Jalan Gaya, 88000 Kota Kinabalu, Sabah Malaysia Tel : 088-212-070 Fax : 088-234-445/ 088-269-880 MISC Agencies (Australia) Pty Ltd Suite 40, Albert Square 37-39 Albert Road Melbourne, Victoria 3004 Australia Tel : 61-3-9862-6200 Fax : 61-3-9867-6167
MISC Agencies (Japan) Ltd Koizumi Building 5th Floor, 29-1 Nishigotanda I-Chrome, Shinigawa-ku Tokyo 141-00, 31, Japan Tel : 81-3-5496-2361 Fax : 81-3-5496-2320 MISC Agencies Lanka (Pvt) Ltd Level 7, Valiant Towers 46/7, Nawam Mawatha P.O. Box 795, Colombo 2 Sri Lanka Tel : 94-11-234-8933-8 (6 lines) Fax : 94-11-234-8931/2 MISC Agencies (Netherlands) BV Westplein 6-7, 3016 BM Rotterdam, Netherlands Tel : 31-10-209-2222 Fax : 31-10-209-2299 MISC Agencies (Sarawak) Sdn Bhd No. 1, 1st Floor, Bintulu Parkcity Commercial Centre Bintulu, 97012 Sarawak Malaysia Tel : 0686-318-311/312/313 Fax : 0686-311-326 MISC Agencies (Singapore) Pte Ltd 1 HarbourFront Avenue #11-05/09, Keppel Bay Tower Singapore 098632 Tel : 65-6220-1522 Fax : 65-6271-0817 MISC Agencies (Thailand) Co Ltd Green Tower, 4th Floor 3656/9-10, Rama 4 Road Klong Toey, Bangkok 10110 Thailand Tel : 66-2-367-3558/3581 Fax : 66-2-367-3586/3587
MISC Agencies (UK) Ltd Quayside House 13 Town Quay Wharf Abbey Road, Barking Essex IG11 7 AT, United Kingdom Tel : 44-20-8591-3232 Fax : 44-20-8507-1624 MISC Integrated Logistics Sdn Bhd Lot 88077 Jalan Perigi Nenas 7/1 Taman Perindustrian Pulau Indah, 42907 Pelabuhan Klang Selangor Darul Ehsan Malaysia Tel : 603-3161-2400 (Hunting Line) Fax : 603-3161-2500 MISC LNG Liason Office Japan Nisseki Yokohama Building 1-1-8 Sakuragi-cho Nakaku 231-0062, Japan Tel : 81-45-680-2280 Fax : 81-45-680-2284 MMHE-SHI LNG Sdn Bhd c/o Malaysia Marine and Heavy Engineering Sdn Bhd PLO 3, Jalan Pekeliling P.O Box 77 81700 Pasir Gudang Johor, Malaysia Tel : 607-251-2111 Fax : 607-251-3997 MMHE-ATB Sdn Bhd c/o Malaysia Marine and Heavy Engineering Sdn Bhd PLO 3, Jalan Pekeliling P.O Box 77 81700 Pasir Gudang Johor, Malaysia Tel : 607-251-2111 Fax : 607-251-3999
MMHE-Turkmenistan Ashgabat Office Level 6, 126 Garagum Bank Building, Turkmenbashy Shayoly, Ashgabat 744000 Turkmenistan Tel : 607-251-2111 Fax : 607-251-3999 PETRONAS Tankers Sdn Bhd Level 28, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Malaysia Tel : 603-2275-2465 Fax : 603-2275-3229 RAIS MILS Logistics FZCO Plot No. W40B, Dubai Airport Free Zone P.O.Box 7 Dubai, U.A.E. Tel : 9714-299-4476 Fax : 9714-299-4432 Transware Distribution Services Pte Ltd 9 Gul Circle Singapore 629565 Tel : 65-6861-1757 Fax : 65-6862-5639 Trans-ware Logistics (Pvt) Ltd 150, 150/1, Pamunugama Road Tudella, Ja-Ela Sri Lanka Tel : 94-1-232-577 Fax : 94-1-232-588
notice of annual general meeting
206

NOTICE IS HEREBY GIVEN that the Thirty-Eighth (38th) Annual General Meeting of Members of MISC Berhad will be held on 16 August 2007 at 11.00 am at Ballroom 1, Level 2, Nikko Hotel Kuala Lumpur, 165, Jalan Ampang 50450 Kuala Lumpur for the following purposes:
As Ordinary Business
1. To receive and adopt the audited financial statements for the financial year ended 31 March 2007 and the Reports of the Directors and Auditors thereon. 2. To declare a final dividend of 20 sen per share (Malaysian Income Tax exempted) in respect of the financial year ended 31 March 2007. 3. To re-elect Dato' Dr. Wan Abdul Aziz bin Wan Abdullah who retires in accordance with Article 95 of the Articles of Association of the Company and being eligible offer himself for re-election. 4. To re-elect the following Directors who retire by rotation in accordance with Article 97 of the Articles of Association of the Company and being eligible offer themselves for re-election: Dato' Shamsul Azhar bin Abbas Datuk Nasarudin bin Md Idris Dato' Kalsom binti Abd Rahman 5. To approve the payment of Directors' fees for the financial year ended 31 March 2007. 6. To re-appoint Messrs Ernst & Young as auditors of the Company and to authorise the Directors to fix their remuneration. 7. As Special Business To consider and if thought fit, to pass the following resolutions: a) Section 129(2) and (6) of the Companies Act, 1965 "That Dato Sri Liang Kim Bang, a Director who retires pursuant to Section 129(2) of the Companies Act, 1965 be and is hereby re-appointed as Director of the Company to hold office until the conclusion of the next Annual General Meeting of the Company."
207
b) Proposed Amendments to the Articles of Association of the Company "That the proposed amendments to the Articles of Association of the Company as contained in Appendix I of the Annual Report be and are hereby approved" 8. To transact any other ordinary business of which due notice has been given.
Notice of Dividend Entitlement and Payment

Notice is hereby given that subject to the approval of Members at the Annual General Meeting on 16 August 2007, a final dividend of 20 sen per share (Malaysian Income Tax exempted) in respect of the financial year ended 31 March 2007 will be paid on 30 August 2007 to Depositors whose names appear in the Record of Depositors on 17 August 2007. A depositor shall qualify for entitlement to the dividend only in respect of: i. shares transferred into the Depositor's securities account before 4.00 p.m. on 17 August 2007 in respect of ordinary transfers; and ii. shares bought on Bursa Malaysia on a cum entitlement basis according to the Rules of Bursa Malaysia. By Order of the Board
Fina Norhizah binti Baharu Zaman

Company Secretary (LS 01571) Kuala Lumpur Date: 25 July 2007
NOTES Proxy 1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and, on a poll, to vote in his stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 2. In the case of a Corporate Body, the proxy appointed must be in accordance with its Memorandum and Articles of Association and the instrument appointing a proxy shall be given under the Company's Common Seal or under the hand of an officer or attorney duly authorised. 3. The form of proxy must be deposited at the Registrar of the Company, Symphony Share Registrars Sdn Bhd (378993-D) at Level 26, Menara Multi Purpose, Capital Square, No. 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur, Malaysia not less than 48 hours before the time appointed for holding the Meeting. 4. Explanatory Notes on Special Business a) Section 129(6) of the Companies Act, 1965 The re-appointment of Dato Sri Liang Kim Bang, as Director of the Company persuant to Section 129(6) of the Companies Act, 1965 shall take effect if the proposed Resolution has been passed by a majority of not less than three-fourths (3/4) of such members as being entitled to vote in person or, where proxies are allowed, by proxy, at a general meeting of which not less than 21 days' notice specifying the intention to propose the resolution as special resolution has been duly given. b) Proposed Amendments to the Articles of Association of the Company The proposed resolution is to amend the Articles of Association of the Company to be in line with the recent amendments of the Listing Requirements of Bursa Malaysia Securities Berhad.
208
Notice of Annual General Meeting (cont'd)

Appendix I
Proposed Amendments to The Articles of Association
Article No. Existing Article Amended Article
Interpretation
"Approved Market Place" means a stock exchange which is specified to be an approved market place in the Securities Industry (Central Depositories) (Exemption) (No. 2) Order 1998.
Deleted
Article 3B (3) Shares
3. In a distribution of capital in a winding up of the Company, the Preference Shareholder shall be entitled to repayment of the capital paid up on the preference share in priority to any repayment of capital to any other member. The preference share shall confer no other right to participate in the capital or profits of the Company.
Deleted
Article 6A (a) Shares
Subject to the Act, the provision of these Articles and the Requirements of the Exchange, the Company shall have the power to issue preference shares on such terms and conditions and carrying such rights or restrictions provided that the total nominal of the issued preference shares shall not exceed the total nominal value of the issued ordinary shares at any time. The Company shall not, unless with the consent of existing preference shareholders at a class meeting, issue preference shares ranking in priority to the preference shares already issued but may issued preference shares ranking equally therewith.
Subject to the Act, the provision of these Articles and the Requirements of the Exchange, the Company shall have the power to issue preference shares on such terms and conditions and carrying such rights or restrictions. The Company shall not, unless with the consent of existing preference shareholders at a class meeting, issue preference shares ranking in priority to the preference shares already issued but may issued preference shares ranking equally therewith.
Transmission of Securities from Foreign Register Article 44A
1. Where: a) The securities of a company are listed on an Approved Market Place; and b) Such company is exempted from compliance with section 14 of the Central Depositories Act or section 29 of the Securities Industry (Central Depositories) (Amendment) Act 1998, as the case may be, under the Rules of the Central Depository in respect of
Where: a) The securities of a company are listed on another stock exchange; and b) Such company is exempted from compliance with section 14 of the Central Depositories Act or section 29 of the Securities Industry (Central Depositories) (Amendment) Act 1998, as the case may be, under the Rules of the Central Depository in respect of such
209
Article No.
Existing Article
Amended Article
such securities, such company shall, upon request of a securities holder, permit a transmission of securities held by such securities holder form the register of holders maintained by the registrar of the company in the jurisdiction of the Approved Market Place (hereinafter referred to as "the Foreign Register") to the register of holders maintained by the registrar of the company in Malaysia (hereinafter referred to as "the Malaysia Register") provided that there shall be no change in the ownership of such securities. 2. For the avoidance of doubt, no company which fulfils the requirements of subparagraphs (1)(a) and (b) above shall allow any transmission of securities from the Malaysian register into the Foreign Register.
securities, such company shall, upon request of a securities holder, permit a transmission of securities held by such securities holder form the register of holders maintained by the registrar of the company in the jurisdiction of the other stock exchange to the register of holders maintained by the registrar of the company in the jurisdiction of the other stock exchange to the register of holders maintained by the registrar of the company in Malaysia and vice versa provided that there shall be no change in the ownership of such securities.
Deleted
Article 58A(b) General Meeting
b) The Company shall also request the Central Depository in accordance with the Rules, to issue a Record of Depositors, as at a date not less than 3 Market Days before the general meeting (hereinafter referred to "the General Meeting Record of Depositors").
b) The Company shall also request the Central Depository in accordance with the Rules, to issue a Record of Depositors, as at the latest date which is reasonably practicable which shall in any event be not less than 3 Market Days before the general meeting (hereinafter referred to as "the General Meeting Record of Depositors").
New Provision Article 73B
On a resolution to be decided on a show of hands, a holder of ordinary shares or preference shares who is personally present and entitled to vote shall be entitled to 1 vote.
Article 80A Directors
All the Directors of the company shall be natural persons.
Deleted
statement accompanying notice of annual general meeting
210
Statement Accompanying

Pursuant To Paragraph 8.28(2) of the Listing Requirements of the Bursa Malaysia Securities Berhad
1. The profiles of the Directors who are standing for re-election as in Agenda 3 of the Notice of Annual General Meeting are set out on pages 024 to 027 of this Annual Report. 2. The details of the Directors' securities holdings in the Company are set out in page 100 of this Annual Report. None of the Company's Directors hold any interests in the Company's subsidiaries. 3. Details of Directors' Fees for the Financial Year ended 31 March 2007 are as follows:
Annual Fees
Tan Sri Dato Sri Mohd Hassan bin Marican Dato Sri Liang Kim Bang Harry K Menon Dato' Halipah binti Esa Datuk Nasarudin bin Md Idris Dato' Kalsom binti Abdul Rahman Dato' Dr. Wan Abdul Aziz bin Wan Abdullah (appointed w.e.f 14 September 2006) Tan Sri Dato' Seri Dr Hj Zainul Ariff bin Hj Hussain (resigned w.e.f 1 January 2007) 60,000 36,000 36,000 36,000 36,000 36,000
Board Attendance Fees

2,800 2,800 2,800 2,000 2,400 2,000
BAC Annual Fees

8,400 8,400 9,300 2,100
BAC Attendance Fees

1,600 1,600 1,200 400
Total
62,800 48,800 48,800 48,500 38,400 40,500
19,677
800
20,477
27,000
1,600
9,000
800
38,400
form of proxy
MISC Berhad
Form of Proxy
I/We of being a member/members of the abovenamed Company, hereby appoint and/or of and failing the abovenamed proxies, the Chairman of the meeting as my/our proxy to vote for me/us and on my/our behalf at the ThirtyEighth Annual General Meeting of the Company to be held at Ballroom 1, Level 2, Nikko Hotel Kuala Lumpur, 165, Jalan Ampang 50450 Kuala Lumpur on 16 August 2007 at 11.00 a.m. and at any adjournment thereof, on the following resolutions referred to in the notice of Annual General Meeting:
Ordinary Resolution
1 To receive and adopt the audited financial statements for the financial year ended 31 March 2007 and the Reports of the Directors and Auditors thereon. 2 To declare a final dividend of 20 sen per share (tax exempt) in respect of the financial year ended 31 March 2007. 3 To re-elect Dato Dr. Wan Abdul Aziz bin Wan Abdullah who retires in accordance with Article 95 of the Articles of Association of the Company and being eligible offer himself for re-election. 4 To re-elect the following directors who retire by rotation in accordance with Article 97 of the Articles of Association of the Company and being eligible offer themselves for re-election: Dato Shamsul Azhar bin Abbas Datuk Nasarudin bin Md Idris Dato Kalsom binti Abd Rahman 5 To approve the payment of Directors Fees for the financial year ended 31 March 2007. 6 To re-appoint Messrs Ernst & Young as auditors of the Company and to authorise the Directors to fix their remuneration.
For
Against
Special Resolution
7 To re-appoint Dato Sri Liang Kim Bang as Director of the Company, who retires pursuant to Section 129(2) of the Companies Act, 1965. 8 To approve the Proposed Amendments to the Articles of Association of the Company.
Unless voting instructions are indicated in the spaces above the proxy will vote as he thinks fit. No. of shares held
Signed this
day of
2007 Signature/Common Seal of Appointor
Note: 1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and, on a poll, to vote instead of him. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 2. In the case of a Corporate Body, the Proxy appointed must be in accordance with its Memorandum and Articles of Association, and the instrument appointing a proxy shall be given under the Company's Common Seal or under the hand of an officer or attorney duly authorised. 3. This form of proxy must be deposited at the Registrar of the Company, Symphony Share Registrars Sdn Bhd (378993-D) at Level 26, Menara Multi Purpose, Capital Square, No. 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur, Malaysia, not less than forty-eight hours before the time appointed for holding the Meeting.
Stamp
Symphony Share Registrars Sdn Bhd Level 26, Menara Multi Purpose Capital Square No 8, Jalan Munshi Abdullah 50100 Kuala Lumpur

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Pr Ho ofit lde for rs th of e Y th ea eC rA or ttr po ib ra uta tio b n ( le RM to 'm Equ illio it n) y

To tal Bo rro wi ng s (R M' mi llio n)

5-Year Financial Highlights

5-year financial highlights

Ex pe nd itu re (RM 'm illio n)

Loyal to nation and corporation

Honest and upright

Committed, innovative, proactive and always striving for excellence

MISC commences first HALAL express services

MMHE equips itself to become full-fledged deepwater centre

Auto logistics tie-up between MILS and BLG

Offshore business to make up 6-7pc of revenue: MISC

MISC increases its VLCC fleet

MISC determined to retain LNG leadership

MISC: Full Sail Ahead

Growing deepwater sector a boon to MISC

(as at 30 June 2007)

Offshore Floating Facilities

over 340 ports in 69 countries

Over 340 Ports in 69 Countries

over 340 ports in 69 countries

Over 340 Ports in 69 Countries

Sungai Udang Tanjung Pelepas Tanjung Bin Tanjong Sulong Tawau

over 340 ports in 69 countries

Papua New Guinea

South Korea Philippines

Trinidad & Tobago

United Arab Emirates

United Kingdom Sri Lanka

United States of America

MISC Tanker Holdings Sdn Bhd

MISC Offshore Holdings (Brazil) Sdn Bhd (Investment

MSE Holdings Sdn Bhd

SBM Systems Inc

Puteri Firus Sdn Bhd

MSE Corporation Sdn Bhd

Puteri Intan Sdn Bhd

SBM Operacoes LTDA

Techno Indah Sdn Bhd