The Kuala Lumpur Stock Exchange
Exchange Square
Bukit Kewangan
50200 Kuala Lumpur
Attention: Cik Latifah Haji Mohd Yusof (Senior Vice-President, Listing)
Dear Madam,
AIC CORPORATION BERHAD ("AIC" OR "THE COMPANY")
Practice Note No. 1/98 With Respect To The Year 2000 Disclosure
We refer to the abovecaptioned matter, our annoucement dated 30
June 1998 and your letter dated 3 August 1998 regarding the above. On behalf of the Board
of AIC, we hereby make the following announcement:-
- Company’s Overall Potential Exposure To The Year 2000 Problem
Impact on the company’s business
AIC is aware of the significant impact and implication of the
millennium bug in the business operations and is committed to address its IT-based systems
and non-IT based systems in the operational activities. The Year 2000 problem will affect
some of the subsidiaries which is still using accounting based application software that
are not Year 2000 compliant, and generally the areas which will be affected are inventory,
sales, purchase order and other accounting applications. Certain machinery and equipment
might be non-Year 2000 compliant. The impact of the non-compliant is still being studied.
The Company does not foresee any legal implications to arise from not being Year 2000
compliant at this moment.
Exposure risk from third parties
There might be uncertainties arising from machines and equipment
that are needed in the operational activities and this matter is being studied at the
Group level currently. Appropriate actions will be taken and announced once this study is
complete. The Group has already budgeted about RM2 million to replace and upgrade its
IT-based hardware and software which are not Year 2000 compliant. This would ensure
minimum effect to the company’s future financial and operational activities relating
to Year 2000 issue.
- Company’s Year 2000 Action Plan
The Group is not fully Year 2000 compliant as of this date, the Company
has plans to implement the following activities to ensure Year 2000 compliant:
- The Year 2000 problem is currently handled by the Group MIS in collaboration with Group
Internal Auditors, as approved by the Audit Committee on 22 June 1998.
- To develop an inventory list of all systems, applications, hardware and equipment that
are affected by Year 2000 problem, assess the impact and categorise system or equipment
into mission critical, critical and non-critical based on the seriousness of the impact.
- To develop a plan and have individual systems and equipment identified verified and
tested to be compliant by mid 1999.
Our share registrar, Signet & Co. has confirmed that they will be
Year 2000 compliant by end August 1998. The Group has also received official confirmation
from its computer hardware and software vendors regarding its existing hardware and
software to determine whether they are Year 2000 compliant and possible solution for Year
2000 compliance. Nevertheless, the Group intends to have its accounting systems fully Year
2000 compliant by mid 1999.
To further reduce risk associated with Year 2000, we have also written
to our machinery and equipment supplier to obtain verification for Y2K compliant and also
the solutions needed if the hardware supplied are non-Year 2000 compliant. We have yet to
receive any confirmation from them as at to-date.
At present, the Company does not intend to employ new staff but working
towards using its existing resources, i.e. internal audit department to monitor the
Group’s compliance towards Year 2000 activities.
The Group does not intend to obtain independent verification from
external consultant at this time. The Group will seek collaboration from its vendors and
suppliers to minimise the potential risks associated to Year 2000 problem. However, the
Group may seek external Y2K consultant if the needs arise. In addition, the Audit
Committee will independently monitor the Group’s status on Year 2000 compliance.
The Group has initiated its computerisation plan since 1997 and has
allocated RM2 million from the Bonds, Rights and Warrants Issue (circular to shareholders
and prospectus dated 9 May 1997 and 28 May 1997 respectively) to upgrade the computer
systems. The impact of this expenditure on the Company’s results of operations and
liquidity is not material.
It is also the practice of the Group to purchase new hardware and
software from its proposed subsidiary company, Integral CAD Technology Sdn Bhd (a company
involved in the computer related business) and other appointed vendors, to ensure that
they are Year 2000 compliant.
A compliance schedule is being drafted and is pending the Board of
Director’s Approval for group wide implementation to ensure compliance by mid 1999
since the Group has just started some initial steps to determine the scope of work
required to be Year 2000 compliant
The Year 2000 project members will assist the
head of company of the respective subsidiaries to address the problem. The Audit Committee
will be involved in monitoring the progress and status of the Group’s Year 2000
activities and to ensure compliance by mid 1999.
The contingency plans for the Group is being studied for critical
systems to ensure continue of operations. The plan will be developed once the study on
critical systems is completed.
The Group shall undertake to make further announcement of any material
development in relation to the Y2K compliance.
Yours faithfully
On Behalf Of The Board
HAJI SARIP BIN HAMID
Executive Chairman
c.c : Securities Commission
