PART A: EXPLANATORY NOTES AS PER MASB 26

A1.	Basis of preparation of interim financial reports

		These interim financial statements are prepared in accordance with the Malaysian Accounting Standards Board (MASB) Standard No.26 “Interim Financial Reporting” and paragraph 9.22 of the Kuala Lumpur Stock Exchange Listing Requirements and should be read in conjunction with the company’s and its subsidiaries’ annual financial statements for the year ended 31st December 2002. 

		The acquisition of the subsidiary companies pursuant to the corporate restructuring exercise in conjunction with the listing of Scomi Group Berhad on the Second Board of the Kuala Lumpur Stock Exchange was completed on 31st March 2003. Therefore the interim financial reports reflect the post-acquisition results of the company effective 1st April 2003.

		The accounting policies and presentation adopted for the interim financial statements are consistent with those adopted for the last annual audited financial statements.
	
A2.	Audit report

	There were no audit qualifications on the annual financial statements for the year ended 31st December 2002.

A3.	Seasonal and cyclical factors 

	The group’s results were not materially affected by any seasonal or cyclical factors.
	
A4.	Unusual and extraordinary items 

	There were no exceptional and/or extraordinary items affecting assets, liabilities, equity, net income or cash during the current quarter and financial year-to-date under review.

A5.	Material changes in estimates

	There were no material changes in estimates of amount reported during the quarter and financial year-to-date under review.

A6.	Issuance and repayment of debt and equity securities	

	Save as disclosed in Note B8, there is no issuance or repayment of debt and equity securities during the quarter and financial year-to-date under review.
	
A7.	Dividends Paid	

	No dividends were paid during the quarter and financial year-to-date under review. 

A8.	Segment information 

	9 months ended   
30th Sept 2003
	
	Revenue		Profit before tax	
	RM ‘000
		RM ‘000	
Oil & Gas	78,914 		10,955	
Transportation & Engineering
Investment Holding	25,625
1,148		1,271
881	
	                         		            	
Total	105,687
		13,107	
Inter-segment elimination	(1,320)
		(1,300)	

Total	
104,367		
11,807	

A9.	Valuation of property, plant and equipment

The carrying value of property, plant and equipment has been brought forward without amendments from the annual audited financial statements for the year ended 31st December 2002.

A10.	Material events subsequent to the balance sheet date    
 
Proposed Acquisition

On 5th November 2003, the Company has entered into the Sale and Purchase Agreements for the proposed acquisition of Oiltools International Limited (“Oil”) representing 7,453,267 ordinary shares of USD 1.00 each in Oil (“Oil ordinary shares”) and 8,848,514 cumulative redeemable preference shares of USD 1.00 each in Oil (“Oil preference shares”) from 3I Group PLC, 3I Parallel Venture LP, 3I UKIP II LP, Parallel Ventures Managers Limited, PALL Corporation, PALL Netherlands B.V., together with all rights, benefits, entitlements and dividends declared but not paid in Oil.

On 4th November 2003, the Company has also issued letters of intent to Derrick Corporation and Christopher Pianca, stating the Company’s intention to enter into put and call option agreements to acquire Derrick’s and Christopher Pianca’s shareholdings in Oil of 2,801,545 Oil ordinary shares and 2,141,136 Oil preference shares, together with all rights, benefits, entitlements and dividends declared but not paid in Oil.

Proposed Capital Restructuring

The Company is proposing a Private Placement of up to 10% of the issued and paid-up share capital of the Company.

Following the Private Placement, the Company proposes a Bonus Issue of up to 73,860,000 ordinary shares of RM 0.50 each in Scomi Group Bhd (“Scomi”), credited as fully paid-up on the basis of three (3) new ordinary shares for every five (5) ordinary shares held in Scomi after the Proposed Private Placement.

The Company is also proposing a Share Split into five (5) new ordinary shares in Scomi of RM 0.10 each for every one (1) ordinary share of RM 0.50 each held in Scomi after the Proposed Private Placement and Proposed Bonus Issue.

A10.	Material events subsequent to the balance sheet date    

Pursuant to the Proposed Share Split, the Company is proposing amendments to its Memorandum and Articles of Association.

Details of the above proposals are disclosed in an announcement dated 6th November 2003.

There were no other material events subsequent to the end of the quarter and financial year-to-date under review that have not been reflected in the financial statements other than as disclosed in Note B8.

A11.  Changes in composition of the group

There were no changes in the composition of the Group during the quarter and financial year-to-date under review.

A12.  Contingent liabilities

There were no material contingent liabilities for the group as at the date of this announcement.

A13.	Capital commitments 

Authorised capital commitments not provided for in the financial statements as at 30th September 2003.

	Approved and contracted for
RM’000		Approved but not contracted for
RM’000	

Building	
-		
615	

Plant and Machinery 	
1,036		
981	

Office Equipment, Furniture and Fittings	
591		
582	

Motor Vehicles	
1,104		
396	
Total	2,731		2,574	

A14.	Significant related party transactions

There were no significant related party transactions entered into in the quarter and financial year-to-date under review. 

A15.  Comparison with preceding quarter’s results 

Comparative figures for the preceding year are not available as this is Scomi Group Berhad’s third quarterly report to the Kuala Lumpur Stock Exchange since its listing on 13th May 2003.

PART B: ADDITIONAL INFORMATION REQUIRED BY THE KUALA  LUMPUR STOCK EXCHANGE LISTING REQUIREMENTS

B1.	Review of performance 
	
The group recorded revenue of RM104.4 million out of which the Oil & Gas and Transportation Engineering Division contributed to 75% and 25%, respectively, for the period under review. The profit after tax for the period ended 30th September 2003 was RM8.4 million which represent 62.5% of the 2003 consolidated profit after tax forecast net of pre-acquisition profits of RM13.5 million.
	
On proforma basis the group proforma revenue for the nine months period ended 30th September 2003 was RM143.1 million. The group proforma profit after tax was RM12.3 million which represents 68.3% of the 2003 annual forecast.  

(The proforma figures include the pre-acquisition results of the first quarter ended 31st March 2003).

 B2.   Variation of results against preceding quarter 

Compared with the preceding quarter’s results, the current quarter’s revenue increased by 7.4% from RM50.3 million to RM54 million. The increase in revenue was mainly contributed by the Oil & Gas Division which recorded an increase of 9.5% from RM34.8 million to RM44.1 million whereas the Transportation Engineering Division recorded a decrease of 36.5% from RM15.6 million to RM9.9 million. 

B3.   Current year prospects 

Barring any unforeseen circumstances and based on historical trend, the Board expects the group to be on track to meet its profit forecast as set out in its Prospectus dated 15th April 2003. 

	B4.	Variance of actual and forecast profit 

The group has not provided any quarterly profit forecast and therefore no variance information is available for presentation. 

B5.	Taxation 
						3 months ended	6 months ended

	30.9.2003
RM’000	30.9.2002
RM’000	30.09.2003
RM’000	30.09.2002
RM’000	
In respect of the current period:	

		
Income Tax	1,635	-	3,375	-	

The effective tax rate for the nine months under review was 28%, same as statutory income tax rate of 28%.

B6.	 Unquoted investments and/or properties 

	The group has not made any investments in any unquoted investments and/or properties during the current quarter and financial year-to-date under review.

B7.	 Quoted and marketable investments 

	There were no investments in quoted and marketable securities made during the current quarter and financial year-to-date under review.

B8. 	Status of corporate proposal

a)	 On 11th July 2003, Kota Minerals & Chemicals Sdn Bhd, a wholly-owned subsidiary of the Company, entered into a conditional Share Sale Agreement (“SSA”) for the acquisition of 100,000 ordinary shares of RM1.00 each representing the entire issued and paid-up capital of OBM Terminal Sdn Bhd for a total cash consideration of RM6,300,000. 

Approval from the Foreign Investment Committee was obtained on 30th August 2003.

The acquisition was completed on 3rd October 2003 and the balance of the cash consideration of RM5,760,000 was paid.

B8. 	Status of corporate proposal 

b) 	On 5th August 2003, Kota Minerals and Chemicals Sdn Bhd (“KMC”) entered into a Shareholders Agreement with Siam Synergy Co., Ltd (“SSC”) in relation to their investment into a joint venture company (“JVCO”) in Thailand. 

It is intended that the JVCO will be known as Siam-KMC Co., Ltd with an issued and paid-up share capital of 1,250,000 Baht (approximately RM 113,000) divided into 500,000 ordinary shares of which KMC and SSC have partially paid-up 2.50 Baht (RM0.226) per share in the following proportions:-

KMC	245,000 shares (49%)

SSC	255,000 shares (51%)

As KMC and SSC have only made partial payment for the issued shares in the JVCO, KMC and SSC will be liable to make additional payments of up to 7.50 Baht for each of their shares in JVCO.

It is intended that the JVCO shall be involved in the provision of drilling fluids and engineering services and the supply of other related materials and chemicals such as completion equipment and production chemicals in Thailand and the Malaysia-Thailand Joint Development Area. 
     
c)	On 16th September 2003, the Company made a conditional offer to Swift Marine Pte Ltd (Swift Marine) for the acquisition of 3,300,000 ordinary shares of RM1.00 each representing 44% of the issued and paid-up share capital of Intra Oil Services Berhad (Company No: 061696-V) for a total aggregate cash consideration of USD 6,513,158.  Swift Marine has on 16th September 2003 accepted the conditional offer.

d)	On 17th September 2003, the company made a conditional offer to Sunlight Marine Services S.A. (Sunlight) for the acquisition of an additional 250,000 ordinary shares of RM1.00 each representing 3.33% of the entire issued and paid-up share capital of Intra Oil for a total cash consideration of USD 493,421. Sunlight has on 17th September 2003 accepted the conditional offer.

B8. 	Status of corporate proposal

e) On 15th October 2003, due to the inability of Swift Marine, Sunlight and the Company to agree to the terms and conditions of the definitive sale and purchase agreements to be entered into between Swift Marine, Sunlight and the Company, respectively, in respect of the Proposed Acquisitions, Swift Marine and Sunlight have mutually agreed with the Company to terminate the Company’s offers. As such, the Company’s offers shall be null and void and of no further effect, and each party shall have no claim for compensation against each other in respect of such mutual termination.
         
f)	On 9th October 2003, the Scomi Group Berhad (Scomi) entered into a Joint Venture Agreement (‘’JVA”) with Crest Petroleum Bhd (Company No: 45631d) (“Crest”) in relation to the incorporation of a joint venture company (“JVCO”) to provide complementary marine vessel transportation services to the oil and gas industry. The JVCO shall have paid up capital of RM100,000 comprising 100,000 ordinary shares of RM1.00, the shareholding structure of which will be Crest, 40% and Scomi, 60%. Scomi shall subscribe to its 60,000 shares in the JVCO though internally generated funds. 

g)	The status of utilisation of the proceeds raised from the Public Issue pursuant to the listing of the Company in the Second Board of the Kuala Lumpur Stock Exchange (“KLSE”) amounting to RM17,014,020 is as follows:

As approved by the Securities Commission & KLSE
RM’000
		
Utilised as at the date of report

RM’000	
Working Capital	15,014
		8,980	
Estimated listing expenses	2,000		2,238

	
17,014		
11,218	

B9.	Group borrowings 

The group’s borrowings as at the end of the reporting quarter are as follows:

	RM ‘000	

Short term borrowing:
	
19,398	
Long term borrowing:
	2,614	

Total	   
22,012	

The trade finance facilities are secured by way of a debenture on the fixed and floating assets and corporate guarantees of subsidiary companies. The term loan is secured by way of a first party loan agreement and deed of assignment over the property and a guarantee by a subsidiary company. 

B10.	Off balance sheet financial instrument 

There were no off balance sheet financial instruments as at the date of this report.

B11.	Changes in material litigation 

Neither Scomi Group Berhad nor any of its subsidiaries is engaged in any litigation or arbitration, either as plaintiff or defendant, which has a material effect on the financial position of company or any of its subsidiaries and the Board does not know of any proceedings pending or threatened, or of any fact likely to give rise to any proceedings, which might materially and adversely affect the position or business of the company or any of its subsidiaries. 

 B12.	Dividends 

The Board of Directors of the company approved an interim dividend of 3 percent, less 28 percent income tax for the financial year-to-date under review, which has been paid on 3rd October 2003.

B13.	Net earnings per share 

											3 months ended
30.9.2003                                 	Year-to-
date ended
30.9.2003                                 	
Basic earnings per share			
Net profit attribute to shareholders (RM’000)	4,457	8,432	
Weighted average number of shares (‘000)	94,310	47,417	
Basic earnings per share (sen)
	4.46	12.88	
Diluted earnings per share
			
Weighted average number of shares (‘000)	100,000	65,457	
Number of shares under option (‘000) *
	9,000	9,000	
No. of shares that would have been issued at fair value
	(9,000)	(9,000)	
No. of shares used to compute diluted 
earnings per share (‘000)	100,000	65,457	

Fully diluted earnings per share (sen)	4.46	
12.88	
		
* Scomi Group Berhad has established an employees share option scheme (ESOS) which shall not exceed an amount equivalent to ten percent (10%) of the issued and paid-up capital of the company at the time of offering the options. The initial grant of 9,000,000 ordinary shares of the ESOS was made on 9th May 2003.

*  The adjusted weighted average of ordinary shares issued and issueable has been arrived at average for fair value at RM1.38 assuming the option were fully exercised on 13th May 2003, the date the company was listed on the Second Board of the Kuala Lumpur Stock Exchange.