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 Bursa Malaysia Securities Berhad (“BMSB”)’s Listing Requirements and should be read in conjunction with the Company’s annual financial statements for the year ended 31st December 2003.

The accounting policies and presentation adopted for the interim financial statements are consistent with those adopted in the annual financial statements for the year ended 31st December 2003.

The acquisition of the subsidiary companies pursuant to the corporate restructuring exercise in conjunction with the listing of Scomi Group Bhd on the Second Board of the BMSB was completed on 31st March 2003.   Therefore, the group existed with effect from 1st April 2003 and there is no preceding year comparative quarter.
	
A2.	Qualification of financial statements

The preceding year annual financial statements were not subject to any qualification.

A3.	Seasonal and cyclical factors 

The group’s results were not materially affected by any major 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 under review.

A5.	Material changes in estimates

There were no material changes in estimates of amount reported in the current quarter under review.

A6.	Issuance and repayment of debt and equity securities	

Save as disclosed below, there were no issuances, cancellations, share buy-backs, resale of shares bought back and repayment of debt and equity securities for the current quarter under review:

During the quarter ended 31st March 2004, the issued and paid-up share capital of the Company was increased from 100,000,000 ordinary shares of RM0.50 each to 110,702,000 ordinary shares of RM0.50 each by the issuance of:

(i)	10,000,000 new ordinary shares of RM0.50 each of the Company pursuant to the Private Placement on 19th January 2004; and

(ii)	702,000 new ordinary shares of RM0.50 each pursuant to the exercise of options granted under the Employees’ Share Option Scheme at the option price of RM1.38 per share.
	
A7.	Dividends Paid	

No dividends were paid during the quarter under review.

A8.	Segmental information 

	3 months ended 31 Mar 2004
	
	Revenue		Profit / (Loss) 
before tax	
	RM`000		RM`000	
	Oil & Gas	66,278 		11,703	
	Transportation Engineering	7,264		(786)	
	Investment Holding	1,496		(156)	
		75,038		10,761	
	Inter-segment elimination	(1,598)		(238)	
	Total	73,440		10,523	

A9.	Valuation of property, plant and equipment

There is no revaluation of property, plant and equipment as the group does not adopt a revaluation policy on property, plant and equipment.

A10.	Material events subsequent to the balance sheet date    

There was no material event subsequent to the balance sheet date that has not been reflected in this condensed financial statement.  

A11.  	Changes in composition of the group

(a)	Wira Kukuh Sdn Bhd

On 2nd January 2004, the Company acquired a total of 60,000 ordinary shares of RM1.00 each representing 60% of the issued and paid-up share capital of Wira Kukuh Sdn Bhd (“Wira Kukuh”) as follows:-

(i)	acquisition by way of transfer of 2 ordinary shares of RM1.00 each at the price of RM1.00 per share; and

(ii)	subscription for 59,998 ordinary shares of RM1.00 each at an issue price of RM1.00 per share.

With the acquisition, Wira Kukuh became a subsidiary of the Company.  The remaining 40,000 ordinary shares representing 40% of the issued and paid-up share capital of Wira Kukuh was subscribed for by Crest Petroleum Berhad on 2nd January 2004.

Wira Kukuh was incorporated on 3rd December 2003.  Its intended principal activity is to provide marine vessels transportation services to the oil and gas industry.   Since its incorporation, Wira Kukuh has not commenced business.
(b)	
OilServe (L) Berhad

The Company’s 60%-owned subsidiary, Wira Kukuh, had, on 13th January 2004, incorporated OilServe (L) Berhad (“OilServe”), an offshore company in Labuan.   Therefore the group’s effective interest in OilServe is 60%.  

OilServe’s intended principal activities are leasing of marine vessels.   Since its incorporation, OilServe has not commenced business.

Except for the above, there were no changes in the composition of the group during the quarter under review.

A12.   	Contingent liabilities

Details of contingent liabilities of the group as at 31st March 2004 are as follows: -

	RM`000	
	Guarantees and contingencies relating to borrowings of subsidiaries	84,450	
	Guarantee given to third party in respect of credit arrangement 	provided to a subsidiary	50	
	Total	84,500	

A13.	Capital commitments 

Authorised capital commitments not provided for in the financial statements as at 31st March 2004.

	Approved and contracted for
RM`000		Approved but not contracted for
RM`000	
	Property	-    		4,488	
	Plant and Machinery 	-    		6,958	
	Office Equipment, Furniture and Fittings	7		1,281	
	Motor Vehicles	589		4,349	
	Total	596		17,076	

A14.	Significant related party transactions

There were no significant related party transactions entered into during the quarter under review. 

PART B:	ADDITIONAL INFORMATION REQUIRED BY THE MALAYSIA SECURITIES EXCHANGE BERHAD’S LISTING REQUIREMENTS

B1.	Review of performance 
	
The group recorded a revenue of RM73.4 million with approximately 90% of the revenue contributed by Oil & Gas Division.

The group’s profit from operations for the period ended 31st March 2004 amounted to RM10.9 million.   The operating profit was contributed solely by the Oil & Gas Division with Transportation Engineering and Investment Holding Divisions incurring losses of RM1.0 million resulting from the increase in raw material prices and Eurodollar value and the sales of sample ambulance / hearse / minibus / econovan at a very minimal margin of 1% - 6%.

B2.	Variation of results against preceding quarter 

The group registered RM10.5 million pre-tax profits during the first quarter ended 31 March 2004 as compared to the preceding quarter of RM9.1 million.   The increased profit was contributed mainly by the activities of Oil and Gas Division. 

B3.	Current year prospects 

With the proposed acquisition of Oiltools International Limited, the Company will focus on the integration and enhancement of business potentials of the two entities.   Concurrently, the group will continue its plans and strategies to strengthen its core activities locally and abroad.   With the formation of a joint venture with Crest Petroleum Berhad, the Company also looks forward to embark on its new marine vessel transportation business in the current year.   Apart from that, with the proposed divestment of non-core activities, the group expects to focus in its oil and gas business activities going forward.

B4.	Variance of actual and profit forecast / profit guarantee 

The group has not provided any quarterly profit forecast and there is no profit guarantee issued by the group or the Company. 

B5.	Taxation 
		
< ----- Individual Quarter ---- >		
< --- Cumulative Quarter ---- >	
	
Current Year Quarter	
Preceding Year Quarter	
	
Current Year To Date	Preceding Year Corresponding Period	
	31 Mar 2004
RM`000	31 Mar 2003
RM`000		31 Mar 2004
RM`000	31 Mar 2003
RM`000	
	Income Tax	2,999	-    	     	2,999	-    	

The group’s effective tax rate for the 1st quarter approximates the statutory tax rate. 

B6.	Unquoted investments and/or properties 

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

B7.	Quoted and marketable investments 

There were no investments in quoted and marketable securities made during the current quarter under review.

B8. 	Status of corporate proposal
  
a)	Private Placement

The Private Placement of 10,000,000 new ordinary shares of RM0.50 each of the Company was issued on 19th January 2004 and granted listing and quotation on the Second Board of the BMSB with effect from 27th January 2004.

The status of utilisation of the proceeds raised from the Private Placement exercise is as follows:

	RM ‘000
Gross proceeds	125,000
Expenses incurred for Private Placement exercise		(1,798)
Working capital		(14,140)
			_______
		109,062
			=====

b)	Proposed Bonus Issue and Shares Split

Following the Private Placement, the Company proposed a Bonus Issue of up to 73,860,000 ordinary shares of RM0.50 each in the Company, credited as fully paid-up on the basis of three (3) new ordinary shares for every five (5) ordinary shares held in the Company after the Private Placement.

The Proposed Bonus Issue had been revised to 72,600,000 ordinary shares of RM0.50 in the Company.   The revision resulted from the completion of the Private Placement on 27th January 2004, whereby a total of 10,000,000 new ordinary shares in the Company were listed on the Second Board of the BMSB.   The basis of the Proposed Bonus Issue remains unchanged.

The issuance of up to 72,600,000 new ordinary shares in the Company pursuant to the Proposed Bonus Issue will entail a capitalisation of up to RM36.3 million from the share premium reserves of the Company. 

Apart from that, the Company proposed a Share Split into five (5) new ordinary shares in the Company of RM 0.10 each for every one (1) ordinary share of RM 0.50 each held in the Company after the Private Placement and Proposed Bonus Issue.

The Share Split was approved by the Securities Commission on 10th February 2004.   Subsequently, BMSB had, via its letter dated 8th March 2004, given the following approval-in-principle for:

(i) 	the listing of and quotation for up to 72,600,000 ordinary shares of RM0.50 each in the Company pursuant to the Proposed Bonus Issue; 

B8. 	Status of corporate proposal (cont’d)
 
(ii) 	the subdivision of up to 193,600,000 ordinary shares of RM0.50 each (inclusive of the Bonus Shares and assuming full exercise of all options under the Employee Share Option Scheme (“ESOS”)) into up to 968,000,000 ordinary shares of RM0.10 each in the Company on the basis of five (5) new ordinary shares of RM0.10 each for every one (1) ordinary share of RM0.50 each held in the Company; and

(iii)	the listing of and quotation for up to 968,000,000 ordinary shares of RM0.10 each in the Company.

The implementation of the Proposed Bonus Issue, the Proposed Share Split and the Proposed Amendments to the Memorandum and Articles of Association (M&A) had been approved by the shareholders of the Company at an extraordinary general meeting convened on 8th April 2004.

The shares to be issued pursuant to the Proposed Bonus Issue were allotted on 30th April 2004 and the Proposed Share Split was implemented immediately thereafter.  

c)	Proposed Transfer of Listing Status

The Company proposes to transfer the listing of and quotation for its entire enlarged issued and paid-up share capital from the Second Board to the Main Board of the BMSB after the completion of the Proposed Bonus Issue and Proposed Share Split.

The Proposed Transfer is conditional upon the Proposed Bonus Issue.  However, the Proposed Transfer is not conditional upon the Proposed Share Split. 

The Proposed Transfer was approved by the Securities Commission on 5th May 2004. The re-quotation of the entire issued and paid up share capital of the Company on the Main Board of Bursa Malaysia will be on 13th May 2004.

d)	Proposed Acquisition of Oiltools International Limited 

On 5th November 2003, the Company entered into the Sale and Purchase Agreements for the proposed acquisition of Oiltools International Limited (“Oil”) from 3i Group PLC, 3i Parallel Venture LP, 3i UKIP II LP (“collectively known as 3i Vendors”), Parallel Ventures Managers Limited, Pall Corporation, Pall Netherlands B.V. (“collectively known as Pall Vendors”).  (“Proposed 3i and Pall Acquisitions”)

On 20th January 2004, the Bermuda Monetary Authority approved the transfer of shares in Oil to Kota Minerals & Chemicals Sdn Bhd ("KMC"), a wholly owned subsidiary of the Company, the granting to the Company of options over the shares in Oil and subsequent transfer to KMC, upon the exercise of the options of shares in Oil. 

On 30th January 2004, the Company entered into conditional put and call option agreements with Derrick Corporation and Mr Christopher Pianca, respectively, to acquire the entire shareholdings of Derrick (“Derrick PCA”) and Mr Christopher Pianca (“Pianca PCA”) in Oil.

Apart from that, the Company also entered into a conditional sale and purchase agreement with Lazerich International Holdings Limited on 30th January 2004 (“Lazerich SPA”) to acquire Lazerich’s entire shareholdings in Oil.

On 30th January 2004, the Company, KMC, Mr Christopher Pianca and Derrick Corporation also entered into a conditional Shareholders’ Agreement for the purpose of outlining the rights of the respective shareholders and the management of Oil.

B8. 	Status of corporate proposal (cont’d)

The expiry date for the Proposed 3i and Pall Acquisitions was on 1st April 2004, whereas the completion date for the Derrick PCA, Pianca PCA and Lazerich SPA is on 1st September 2004.   The Company had obtained agreement from the 3i Vendors and Pall Vendors to extend the time to complete the Proposed 3i and Pall Acquisitions.

The Company had, on 6th April 2004, entered into the following agreements:

(i) 	3i Extension Agreement with the 3i Vendors;
(ii) 	Pall Extension Agreement with the Pall Vendors; and
(iii) 	Put and Call Option Agreement Amendment Agreement with Derrick.

The time required to fulfill all conditions precedent to Completion of the Proposed 3i and Pall Acquisitions had been extended from 1st April 2004 to 1st July 2004 and the time required by Derrick to fulfill the conditions precedent to Completion of the Derrick PCA had been extended from 1st September 2004 to 1st July 2007.

The Proposed 3i and Pall Acquisitions were approved by Securities Commission on 5th May 2004.

e)	Proposed Disposal of Subsidiaries

On 22nd March 2004, the Company entered into a conditional share sale agreement ("SSA") with Prestar Resources Berhad (“Prestar”) to dispose of its entire equity interest in Scomi Sdn Bhd (“SSB”) comprising 9,281,762 ordinary shares of RM1.00 each in SSB to Prestar and its entire equity interest in Scomi Transportation Solutions Sdn Bhd (“SCOTS”) comprising 500,000 ordinary shares of RM1.00 each in SCOTS (collectively referred to herein as "Sale Shares") to Prestar for a total consideration of RM42,500,000 to be satisfied by way of issuance of 28,333,333 new ordinary shares of RM1.00 each in Prestar (“Prestar Shares”) at an issue price of RM1.50 per share (“the Proposed Disposal”).

The Company is proposing to offer the abovementioned 28,333,333 Prestar Shares to the shareholders of the Company after the completion of the Proposed Disposal at a proposed offer price of RM1.35 per Offer Share. 

The Proposed Disposal is subject to Prestar securing the necessary approvals.  The submission by Prestar to the relevant authorities is currently pending.

B9.	Group borrowings 

The group borrowings as at the end of the reporting period are as follows:

	RM`000	
	Short term borrowings	26,956	
	Long term borrowings	3,187	
	Total	30,143	

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

B10.	Off balance sheet financial instrument 

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

B11.	Changes in material litigation 

Neither the Company 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 the 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 directors recommend the payment of a final dividend of 3%, less income tax of 28%, in respect of the financial year ended 31 December 2003 to the shareholders of the Company who are on the Record of Depositors at the entitlement date to be determined.  The proposed final dividend is subject to the approval of the shareholders at the forthcoming annual general meeting.

B13.	Earnings per share 

					< ---- Individual Quarter ----- >		< -- Cumulative Quarter -- > 	
	31 Mar 2004	31 Mar 2003		31 Mar 2004                                 	31 Mar 2003                                 	
	Basic earnings per share						
	Net profit attribute to shareholders 		(RM`000)		7,482	-    			7,482	-    	
	Weighted average number of  		shares (‘000)		108,015	-    			108,015	-    	
	Basic earnings per share (sen)		6.9	-    			6.9	-    	
	Diluted earnings per share						
	Net profit attribute to shareholders 		(RM`000)		7,482	-    			7,482	-    	
						
	Weighted average number of  		shares as per above (‘000)		108,015	-    			108,015	-    	
	Number of shares under ESOS		9,018				9,018		
	Number of ESOS that would have 		been issued at fair value (‘000) 		(1,827)	-    			(1,827)	-    	
	Weighted average number of  		shares - diluted (‘000)		115,206	-         			115,206	-         	
	Fully diluted earnings per share 		(sen)		6.5	-    			6.5	-