Protasco Bhd ("Protasco" or "the Company") - Articles Entitled : Costlier materials to eat into Protasco profit

## fields Type :: Reply to query Subject :: Protasco Bhd ("Protasco" or "the Company") : - Articles Entitled : Costlier materials to eat into Protasco profit ## fields Reply to Bursa Malaysia's Query Letter - Reference ID :: IJ-061002-45241 ## para Contents : ## para We refer to Bursa Malaysia’s query letter dated 2 October 2006 on the news article in respect of Protasco Berhad in The New Straits Times, Biznews Section, page 40 on Monday 2 October 2006 and in particular the following: ## para “…….Protasco Bhd expects its net profit to drop by some 47 percent in its current financial year ending December 31, 2006…” ## para “…….Protasco expects to register a net profit of at least RM24 million on the back of a RM400 million revenue this year.” ## para “ We are forecasting a 100 per cent jump in net profit and a doubling of our revenue next year…” ## para In this regard, we wish to inform Bursa Malaysia that with reference to our announcement of 29 August 2006, the consolidated profit after tax and minority interests (“PATAMI”) for the first six (6) months ended 30 June 2006 was RM9.962 million. Based on this and the expectation that the second half of the year ending 31 December 2006 should be better than the first half of the year ending 31 December 2006, the Board of Directors of Protasco at its meeting on 29 August 2006 approved the revision of the forecast Group PATAMI for the 12 months ending 31 December 2006 from RM24.6 million to RM25.7 million. This forecast has not been reviewed by the external auditors. ## para As also announced to Bursa Malaysia on 25 May 2006 and 29 August 2006 on the First and Second Quarterly Report on Protasco as per Note 2, Part A of the Explanatory Notes, Changes In Accounting Policies under FRS 3 : Business Combinations, the adoption of FRS 3 with effect from 1 January 2006 has resulted in the Group ceasing the amortization of reserve on consolidation. The amount amortized for the previous year ended 31 December 2005 was RM12.524 million. Thus, for the purpose of comparison, after adjusting for the cessation of the amortization of reserve on consolidation for the previous year ended 31 December 2005 had FRS 3 been adopted then, the revised forecast Group PATAMI for the current year ending 31 December 2006 of RM25.7 million would represent a drop of about RM2.9 million or 10%, and not 47% as reported in the above article. ## para Protasco has bid for infrastructure related projects locally and overseas amounting to about RM1.2 billion. It is hoped that based on these, Protasco will be able to secure not less than RM400 million worth of project works in the next 12 months. Depending on the timing and size of the projects, when and if secured, these new projects should be able to contribute positively to the PATAMI of the Group from 2007. Accordingly, we wish to clarify that contrary to what was reported in the above article, Protasco did not forecast a “100 per cent jump in net profit and a doubling of our revenue next year”. ## para With regard to Papua New Guinea, Protasco wishes to clarify that HCM Engineering (PNG) Ltd (“HCM-PNG”), a company incorporated in Papua New Guinea, has been informed that effective from 19 September 2006, under a logging licence granted to HCM-PNG, it may commence logging activities in an area known as Inland Promio TRP. HCM-PNG is required to build roads of about 35 km in this logging area. HCM-PNG is a subsidiary of Protasco. This venture will have no material effect on Protasco Group earning and net tangible assets for the current financial year ending 31 December 2006. ## para Query Letter Contents : ## para We refer to the above article appearing in The New Straits Times, Biznews ## para section, page 40 on Monday, 2 October 2006, a copy of which is enclosed for ## para your reference. ## para In particular, we would like to draw your attention to the underlined ## para sentences, which are reproduced as follows:- ## para "... Protasco Bhd expects its net profit to drop by some 47 per cent in its ## para current financial year ending December 31, 2006 ..." ## para "... Protasco expects to register a net profit of at least RM24 million on the ## para back of a RM400 million revenue this year." ## para " We are forecasting a 100 per cent jump in net profit and a doubling of our ## para revenue next year ..." ## para In accordance with Bursa Securities' Corporate Disclosure Policy, you are ## para requested to furnish Bursa Securities with an announcement for public release ## para confirming or denying the above reported article and in particular the ## para underlined sentences after due and diligent enquiry with all the directors, ## para major shareholders and all such other persons reasonably familiar with the ## para matters about which the disclosure is to be made in this respect. In the event ## para you deny the above sentence or any other part of the above reported article, ## para you are required to set forth facts sufficient to clarify any misleading ## para aspects of the same. In the event you confirm the above sentences or any other ## para part of the above reported article, you are required to set forth facts ## para sufficient to support the same, including the relevant bases and assumptions in ## para arriving at the above forecast. In this respect, you are also required to ## para confirm whether the accounting bases, calculations and assumptions have been ## para reviewed by the external auditors. ## para Please furnish Bursa Securities with your reply within one (1) market day from ## para the date hereof. ## para Yours faithfully ## para CHONG FUI TZY ## para Head, Issuers ## para Listing Division ## para Group Regulations ## para CFT/IJ ## para c.c. En. Chung Tin Fah ## para Securities Commission (via fax)