Building on our success · ASIAN PAC HOLDINGS BERHAD (COMPANY NO. 129-T) ANNUAL REPORT 2007 02...

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2007 Annual Report Building on our success

Transcript of Building on our success · ASIAN PAC HOLDINGS BERHAD (COMPANY NO. 129-T) ANNUAL REPORT 2007 02...

  • 2007Annual Report

    Building on our success

  • Asian Pac Holdings Bhd is a company listed

    on the Main Board of Bursa Malaysia

    with operations in investment holding,

    property development and investment. Asian

    Pac is committed to the development of

    quality properties and aimed to be one

    of the mainstream property developer.

    Who we are

  • Contents

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    Creating better futures

    Chairman Statemant

    Corporate Information

    Board of Directors

    Corporate Governance Statement

    Audit Committee Report

    Statement on Internal Control

    Financial Statements

    List of Properties Held

    Analysis of Equity Shareholdings

    Analysis of Redeemable Convertible Secured Loan Stocks 2000/2007 (“RCSLS”) Holdings

    Notice of Annual General Meeting

    Statement Accompanying Notice of Annual General Meeting

    Proxy Form

  • Creating better futuresKK Times Square

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    PHASE I - SIGNATURE OFFICES

    Phase 1 - Signature Offices

    occupies 8 acres of prime real estate.

    It is a development of unprecedented

    vision and magnitude, designed

    specifically to meet the expectations of

    the business community. Completing

    by the end of 2007, the Signature

    Offices is set to become the new

    business axis of Kota Kinabalu city.

    KK TIMES SQUARE is a sprawling 23-acre project that will be

    developed in two phases. The largest urban commercial project Kota

    Kinabalu have ever seen is set to transform the face of this bustling

    city. It is strategically located along the Coastal Highway in the heart

    of Kota Kinabalu. Situated in a prestigious neighbourhood, it is within

    view of familiar landmarks such as the Sutera Harbour Marine Golf &

    Country Club, the Sutera Harbour Marine & Yacht Club, the Pacific

    Sutera Hotel, and the Magellan Sutera Hotel.

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    PHASE II - THE MALL

    Phase II - The Mall

    promises greater

    excitement and attraction

    for Kota Kinabalu’s residents

    and tourists with its shopping,

    leisure and entertainment

    of over 1,000,000 sf

    gross floor area.

    The Mall sits on a massive 15-acre commercial site. Planned as a city

    within a city, this development will be Sabah’s first, placing it among the

    most highly anticipated business and tourist destination in the region.

    On the drawing board are a proposed shopping mall, two hotels and two

    serviced apartment blocks. The Mall will have cineplexes and heaps of

    entertainment amenities undertaking many popular F & B outlets. Together

    with the Signature Offices, the Mall is envisaged to provide a synergy of

    commercial and leisure activities to the city of Kota Kinabalu.

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    Karamunsing Capital

    Dynamic and VibrantA Solid Investment with

    Rewarding Returns!

    Karamunsing Capital offers

    superb value-for-money

    property prices and an

    outstanding appreciation

    potential—making it an

    excellent investment

    opportunity for investors and

    business owners!

    Karamunsing Capital is a commercial development sets to revolutionize

    the business and retail environment of Kota Kinabalu. This 6.5-acre project

    is situated within the limits of the city centre. The design has traditional

    concepts but infused with modern architectural facade. Car parks located

    not only at ground level but also elevated ones above the shops.

    With its modern vibe, impressive contemporary façade and high growth

    potential, Karamunsing Capital stands to be a major draw for businesses,

    office workers and tourists.

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  • LeVenue I and II @ Desa ParkCity

    Reinterpreting Modern Tropical ArchitectureA Neighbourhood That Makes A

    Strong Impressions.

    The neighbourhood concept

    tells a tale of innovations and

    thoughtfulness dedicated to

    create a truly wonderful place.

    It is a place distinguished

    by perimeter feature walls.

    Protected by a commanding main

    entrance guard house, devoid of

    unwelcome traffic and humanized

    by a landscaped park of its own.

    Located in the vicinity of Damansara’s Golden Triangle, Levenue I and II

    are sited on 23.6 acres of prime freehold land.

    Contemporary expressions of tropical architecture are introduced into the

    design of Phase I with brilliance and style. Every opportunity for creating

    fluid, versatile and practical spaces is pursued with conviction and its

    concepts that create incredible living spaces are embraced to foster a

    unique atmosphere unimaginable in terrace and semi-detached homes.

    Phase II’s terraced bungalows are truly a break from the ordinary as they

    feature a “Zero Setback Concept”. It also feature a contemporary façade

    and a private outdoor enclave.

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    Up coming Development...

    The development plan for Fortune Eight in the previous financial year had undergone some changes

    as a result of feedbacks received from the local authority and consultants. The revised development

    plan consists of a 15 storey tower block with a sub-basement, retail outlets, elevated car parks and

    540 units of condominium suites with facilities.

  • The group recently acquired a piece of prime commercial land located at Sri Gombak, along

    Middle Ring Road II (“MRR II’). The development plan for this 12-acre of freehold land consists

    of 123 units of 3 storey shops with individual titles. The shops will have a modern façade

    with typical land size of 22’ x 75’ and built-up ranging from 4900 sq. ft. to 7000 sq. ft. The

    expected GDV for this development is approximately RM125 million.

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  • Performance Review

    Overall the financial year ended 31 March 2007 had been another commendable year for the Group. The Group chalked up a turnover of RM332.6 million, an increase of 31% from RM254.2 million in the previous financial year. The profit before tax also increased by a significant margin of 45%, from RM25.6 million to RM37.2 million.

    The profit after tax of RM25.3 million is slightly lower as compared to the previous year of RM26.6 million. This is mainly due to lower tax expense in the previous year as a result of recognition of deferred tax asset of RM8.5 million from a subsidiary company.

    Operations Review

    The Group continues to carry out and strengthen its core business of property development with new developments and acquisitions of land banks. Various innovative ideas and proposed development plans were submitted to the local authorities for its approval and are implemented during the current financial year.

    At the same time, the Group also completed and handed over several development projects in various locations in Klang Valley. Fortune Court, Fortune Square II and Fortune Central in Kepong Entrepreneurs’ Park were completed and handed over in May 2006, July 2006 and October 2006 respectively. Sutera Bukit Tunku was completed and handed over in November 2006, while Levenue 1 at Desa ParkCity was completed and handed over in December 2006. In total, the Group in the current financial year had handed over a record of more than 850 units of properties to the buyers, ahead of its scheduled completion.

    Chairman’s Statement

    On behalf of the Board of Directors,

    it is my pleasure to present the

    Annual Report and Audited Financial

    Statements of the Group and the

    Company for the financial year

    ended 31 March 2007.

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  • Meanwhile, the status of the new and on-going residential and commercial development projects being executed by the Group is as follows:

    Fortune AvenueThe progress of Fortune Avenue, a mixed development project which consists of 4 blocks of 11-storey shops cum condominiums in Kepong Entrepreneurs’ Park is in the final phase of construction works. The total Gross Development Value (“GDV”) is approximately RM177 million and total sales todate is around 97%. The construction works is targeted to be completed and handed over to the buyers in August 2007.

    LeVenue II @ Desa ParkCityThe Group commenced the construction works on Levenue II, its’s innovative project which feature a “zero setback concept” in early 2006 and the project is expected to be completed by the end of July 2007. The development of Levenue II consists of 67 units of 2-storey terrace bungalows, 28 units of 2-storey terrace houses and 2 units of bungalows with GDV of approximately RM117 million. As at todate, 95% sales were achieved.

    Karamunsing CapitalThe acquisition of the 6.542 acres of Karamunsing land from TCB Realty Sdn Bhd was completed on 8 November 2006 and the Group proceeded with its development plan of 8 blocks of commercial building comprising 16 lots of 3 storey shops /offices and 39 lots of 2 storey shops. These properties were launched on 18 November 2006 and the Group achieved 100% sales on the day of its launch. Karamunsing Capital is expected to be completed by the first half of 2009.

    KK Times Square Phase I and IIKK Times Square – Phase 1 is the Group’s first maiden project in Kota Kinabalu, Sabah. Phase 1 which is known as the Signature Offices comprises of 12 blocks of five, six and eight storey of business suites, shop-offices and retail outlets with a GDV of RM168 million. It is located on a prime site in Kota Kinabalu and as at todate, it has recorded sales of RM160 million. The construction works has reached 85% and is expected to complete by the fourth quarter of 2007.

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  • Chairman’s Statement (cont’d)

    Phase II which is known as “The Mall” consists of a shopping mall, 2 blocks of hotels and two blocks of serviced apartments which provide shopping, leisure and entertainment activities. The Group intends to develop and keep the shopping mall, the hotels and the carparks as its investment properties while the service apartments are meant for sale. The construction works for the Mall has commenced and the Group is committed in ensuring that the Mall will be one of the top retail destinations in East Malaysia.

    A signing ceremony was held on 18 July 2007 between Syarikat Kapasi Sdn Bhd, a wholly-owned subsidiary of the Company and Parkson Corporation Sdn Bhd to take-up an anchor position at the Mall for a total rental space of 140,000 sq.ft. over three floors. This marked the beginning of a new era in the Group’s business.

    Fortune EightThe next proposed development in Kepong Entrepreneurs’ Park known as “Fortune Eight” was delayed due to feedbacks received from the local authority and consultants. A revised development plan which consists of a 15 storey tower block with a sub-basement, retail outlets, elevated car parks and 540 units of condominium suites was re-submitted for the authority’s approval.

    Corporate Development

    The significant uncompleted corporate activities undertaken were as follows:

    • On 14 March 2007, the Company announced the Proposed Acquisition by BH Builders Sdn Bhd., a wholly-owned subsidiary of the Company of two pieces of freehold land measuring approximately 11.5885 acres and 1.0836 acres held under Geran 44285, Lot 10228 and HS (D) 58175 PT No. 3479 respectively, both in Mukim Batu, District of Gombak, Negeri Selangor Darul Ehsan from Data Kinetics Sdn Bhd for a total consideration of RM37 million. Upon the completion of the SPA, the Group intends to develop the land into 123 units of 3-storey shops with individual titles.

    • On 10 July 2007, the Company announced the redemption of up to RM52,100,000 nominal value of RCSLS on a proportionate basis representing RM25 for every RM100 nominal value of RCSLS held.

    • The Company announced on 23 July 2007 a Proposed Acquisition of the entire issued and paid-up share capital of Safe Valley Sdn Bhd (“Safe Valley”) from Mr. Lee Chea Yun and Mr. Kwan Moo Kan (“Vendors”) for a total cash consideration as follows:-

    1. RM1,901,394 being consideration for the acquisition of the 100% equity interest in Safe Valley to be paid to the Vendors;

    2. Assumption of RM20,915,334 being cash consideration for the acquisition of 35,281 sq. mtr. of freehold land approved for Building known as Parcel WM8, Wangsa Melawati comprising Lots Nos: 20268, 20269, 20276 and 20278, Mukim of Setapak, District of Kuala Lumpur.

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  • Corporate Governance

    The Group is pleased to inform that in a joint study conducted by Minority Shareholder Watchdog Group and The University of Nottingham-Malaysia Campus in 2006 for Corporate Governance, the Group emerged as the winner for Small Cap Public Listed Companies for compliance with the recommended principles and best practices. The Group will continue to strengthen our commitment towards good corporate governance in ensuring that the highest standards of corporate governance are observed and practiced throughout the Group.

    Corporate Social Responsibility

    As a responsible developer, the Group continues to strive to develop homes that are comfortable and conducive for living for the general public. In addition, conscious efforts are being made to ensure that the developments are surrounded with good landscaping and provide security features for the safety of the home owners. Environmental impact studies were also carried out at ecological sensitive areas to ensure our developments do not have a negative impact to the surrounding environment.

    Further, in the current financial year, the Group embarked on a charity fundraising project together with our business partners to raise fund to construct a four-storey home on a 15,000 sq. ft. land at Kampung Baru Salak South. This home is expected to provide a reliable, stable and nurturing sanctuary for 100 underprivileged children.

    The fundraising exercise was a major success, thanks to the generosity of the institutional and individual sponsors of the “Light a heart, Bring a Smile” Charity Dinner held on 10 November 2006. We would also like to take this opportunity to express our gratitude to the contractors, consultants and local authorities who together with the Group have contributed their time, efforts and resources to make this project a success.

    Currently, the construction works for the four-storey home is progressing well and is expected to complete by the end of 2007.

    At the home front, the welfare of the staff is also of paramount importance to the Group. Social outings and sports activities, such as badminton and bowling sessions are organized for the staff. During the current financial year, the Group arranged for a trip to South Korea for the staff to get together and relax from the hectic schedules at the work place.

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    Chairman’s Statement (cont’d)

    Prospects

    The Group’s main income stream comes from property development and for future sustainability; we need to constantly replenish our depleted land banks in location such as, the Klang Valley and Kota Kinabalu. Currently, to source for land banks in good locations with good values has become an increasingly difficult task amidst a highly competitive environment.

    As such, the Group plans to diversity into another core business in order to enhance our operational capabilities and to strengthen the Group’s revenue and profitability in the future. We have put in place the development plan for a shopping mall, hotels and carparks which the Group will retain and lease out to prospective tenants. The expected rental income will provide a stable income stream for the Group from Year 2010 onwards.

    Meanwhile, we will continue to sharpen our competitive edge in the property development activities. More emphasis will be placed on the design and concepts, quality of the products and landscaping surrounding the developments to enhance the image and reputation of the Group as a responsible property player in the market.

    Appreciation

    I would like to record my heartfelt gratitude to the directors, management and staff of the Group for their hard work, strong commitment and dedication that brings towards a commendable result in the current financial year.

    I would also like to express our deepest appreciation to the relevant authorities for their invaluable advice, guidance and assistance and to our business partners, suppliers and purchasers for their valuable support and confidence in Group.

    Finally, on behalf of the Board of Directors, I would like to take this opportunity to thank our loyal shareholders who have continued to support us and I look forward to continue to share with you our future success.

    Dato’ Seri Hj Megat Najmuddin Bin Dato’ Seri Dr Hj Megat KhasChairman 25 July 2007

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    Corporate Information

    DIRECTORS

    Dato’ Seri Hj Megat Najmuddin Bin Dato’ Seri Dr Hj Megat KhasChairman/ Independent Non-Executive Director

    Dato’ Hamzah Bin ZainudinDeputy Chairman/ Independent Non-Executive Director

    Dato’ Mustapha Bin BuangManaging Director

    Dato’ Mohamed Salleh Bin BajuriIndependent Non-Executive Director

    Mr Chuah Swee Guan (Appointed on 23 July 2007)Executive Director

    SECRETARY

    Chan Yoon Mun, ACIS(MAICSA 0927219)

    REGISTERED OFFICE

    12th Floor, Menara SMINo. 6, Lorong P. Ramlee 50250 Kuala LumpurTel No : 03-2078 1207Fax No : 03-2070 4818 Website: www.asianpac.com.my

    SHARE REGISTRAR

    Tenaga Koperat Sdn Bhd20th Floor, Plaza PermataJalan Kampar, Off Jalan Tun Razak 50400 Kuala Lumpur Tel No : 03-4041 6522Fax No : 03-4042 6352

    AUDITORS

    Ernst & YoungLevel 23A, Menara MileniumJalan Damanlela, Pusat Bandar Damansara50490 Kuala Lumpur

    SOLICITORS

    Megat Najmuddin Leong & Co.102 Jalan Bangsar59200 Kuala Lumpur

    Ho Loke & KohA-1-1 Megan Phileo Promenade189 Jalan Tun Razak50400 Kuala Lumpur

    PRINCIPAL BANKERS

    Alliance Bank Malaysia BerhadUnited Overseas Bank (Malaysia) Berhad

    STOCK EXCHANGE LISTING

    Main Board of Bursa Malaysia Securities Berhad

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    Directors’ Profile

    Dato’ Seri Hj Megat Najmuddin Bin Dato’ Seri Dr Hj Megat KhasMalaysian, aged 63

    Dato’ Seri Hj Megat Najmuddin Bin Dato’ Seri Dr Hj Megat Khas was appointed as a Non-Executive Director and Chairman of the Company on 19 October 1994. He is an Independent Director and serves as the Chairman of the Audit, Nomination and Remuneration Committees of the Company.

    He is a lawyer by profession and practiced for 14 years until 1986 when he went into full time politics. He was formerly the State Assemblyman of Kelana Jaya, Selangor for two terms. (1986 – 1990 and 1990 – 1995)

    He was appointed Executive Committee Member of the Federation of Public Listed Companies Berhad (FPLC) in August 1994 and elected President in October 1997. He represents this organization to the High Finance Committee of the Ministry of Finance. Further, he was also one of the first members of the Management Committee of the Malaysian Institute of Corporate Governance (MICG), and was elected President in April 1998. In addition, he was appointed as a member of the National Economic Advisory Council 2 (NEAC 2) by the then Prime Minister, where he was involved in the Human Resource Development Works Committee. In September 1999, he was appointed to the Capital Market Strategic Committee by the then Finance Minister and in August 2001, he was appointed as a member of the Corporate Debt Restructuring Committee (CDRC) of Bank Negara. He is a member of UMNO Malaysia’s Disciplinary Appeal Board. He is also Adjunct Professor of Law at the University Utara Malaysia.

    Dato’ Seri Hj Megat Najmuddin also holds directorships in SEG International Bhd, Formis Resources Berhad (Chairman), Dialog Group Berhad, Salcon Berhad and Tradewinds Corporation Berhad (Chairman).

    He has direct shareholdings of 1,857,000 ordinary shares of RM0.20 each in Asian Pac Holdings Berhad.

    He does not have any family relationship with any Director and/or major shareholder of the Company and there is no business arrangement with the Company in which he has a personal interest. He does not have any convictions for offences within the past 10 years.

    Dato’ Hamzah Bin ZainudinMalaysian, aged 50

    Dato’ Hamzah Bin Zainudin was appointed as a Non-Executive Director of the Company on 14 October 1993 and later on 27 February 2006, he was appointed as Deputy Chairman of the Company. He is an Independent Director and is a member of the Audit, Nomination and Remuneration Committees of the Company.

    He holds a diploma in Quantity Surveying from University Technology Malaysia and is an experienced Quantity Surveyor in the construction industry. He was the General Manager of Maju Bangun Sdn Bhd, a subsidiary of the State Economic Development Corporation of Perak from 1979 to 1984. He then joined Justera Sdn Bhd, a subsidiary of CASH Bhd and resigned as a Director in 1991. He was a member of the Ipoh City Council from 1989 to 1994 and a Senator in Malaysia’s Dewan Negara (Senate) from 2000 to 2006. He was a Chairman of Felcra Berhad (the Federal Land Consolidation and Rehabilitation Authority) that overseas land management and development of agricultural land owned by the State and individuals from 2000 to 2006. He is the Chairman of public companies listed on the Bursa Malaysia Securities Berhad, namely Evermaster Group Berhad and LFE Corporation Berhad.

    He has direct shareholdings of 5,412,243 ordinary shares of RM0.20 each in Asian Pac Holdings Berhad.

    Dato’ Hamzah does not have any family relationship with any Director and/or major shareholder of the Company and there is no business arrangement with the Company in which he has a personal interest. He does not have any convictions for offences within the past 10 years.

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    Directors’ Profile (cont’d)

    Dato’ Mustapha Bin BuangMalaysian, aged 59

    Dato’ Mustapha Bin Buang is the Managing Director of the Company. He first joined the Board as a Non-Executive Director on 14 October 1994. He is a member of the Audit and Remuneration Committees, and a chairman of the Employee Share Option Scheme Committee.

    He holds a degree in Economics from University Malaya. After graduation in 1972, he joined the Johore State Government as an Economic Planner. He then joined the finance industry from the year 1974 holding senior management position and gathered 16 years experience in the finance sector. He also holds directorships in Gula Perak Berhad and several private limited companies.

    He has direct and indirect shareholding of 32,850,985 and 800,000 ordinary shares of RM0.20 each in Asian Pac Holdings Berhad respectively.

    Dato’ Mustapha does not have any family relationship with any Director and/or major shareholder of the Company and there is no business arrangement with the Company in which he has a personal interest. He does not have any convictions for offences within the past 10 years.

    Dato’ Mohamed Salleh Bin BajuriMalaysian, aged 56

    Dato’ Mohamed Salleh Bin Bajuri was appointed as an Independent Non-Executive Director of the Company on 27 March 2001. He is also a member of the Audit, Nomination and Remuneration Committees of the Company.

    He obtained his Chartered Accountant qualification from the Institute of Chartered Accountants, Ireland.

    He started his career in Malaysia in 1978 with Peat Marwick & Co. as Senior Audit. In 1979, he joined Mayban Finance Berhad as Manager and was subsequently promoted to General Manager in 1982. He was then promoted to General Manager of Malayan Banking Berhad in 1988 and served in this position until 1992. In 1992, he was appointed as Managing Director of JB Securities Sdn Bhd, a stockbroking firm of which he was a founder member. After selling his equity stake in the said stockbroking firm in 1995, he joined CRSC Holdings Berhad as a Group Executive Director. CRSC is principally engaged in hotel operations and property management. He has also served as a director in Saham Sabah Berhad from 1997 to 1999. He was a trustee for Tabung Anak-Anak Melayu Pontian from 1995 to 2006 and Yayasan Kebajikan SDARA from 1997 to 2002.

    He is a director of Seacera Tiles Berhad, Eden Enterprise (M) Berhad, Harbour Link Group Berhad, LKT Industrial Berhad, Seal Polymer Industries Berhad and Milux Corporation Bhd, public companies listed on Bursa Malaysia Securities Berhad.

    He does not hold any shares in Asian Pac Holdings Berhad.

    Dato’ Salleh does not have any family relationship with any Director and/or major shareholder of the Company and there is no business arrangement with the Company in which he has a personal interest. He does not have any convictions for offences within the past 10 years.

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    Chuah Swee GuanMalaysian, aged 53

    Mr. Chuah Swee Guan was appointed as an Executive Director of the Company on 23 July 2007 after he held a position as Chief Executive Officer (Property Division) of the Company since April 2003. He is an Engineer by profession. He graduated with a Bachelor of Science in Engineering with 1st Class Honors from University of Glasgow, Scotland in 1977. He is also a professional Engineer on the Board of Engineers Malaysia and a Corporate Member of the Institution of Engineers Malaysia.

    He started his career as a Resident and Design Engineer with Jabatan Kerja Raya in 1977 and since then, had held positions of Project Manager, Senior Project Manager and General Manager in three different property development companies. He was the Managing Director of Lot One Development Sdn. Bhd. for 2 years from 1990. Subsequent to that, he held the post of Managing Director of Phileo Promenade Sdn. Bhd. and sat on the Board of Directors of several companies, including subsidiaries of Phileo Promenade Sdn. Bhd., Pentagon Property Management Sdn. Bhd., Impian Emas Holdings Sdn. Bhd. and Kiambang Sdn. Bhd. He was appointed to the Board of Directors of Phileo Land Berhad in 1996 as Executive Director. He resigned from Phileo Land Berhad in 2000 and became a Director of Systematic Corporate Parking Sdn. Bhd.

    He does not hold any shares in Asian Pac Holdings Berhad.

    Mr Chuah does not have any family relationship with any Director and/or major shareholder of the Company and there is no business arrangement with the Company in which he has a personal interest. He does not have any convictions for offences within the past 10 years.

    Directors’ Profile (cont’d)

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    Corporate Governance Statement

    The Board of Directors is committed to maintaining high standards of corporate governance and ensuring that the principles and best practices on corporate governance are observed and practiced throughout the Group. It strives to continually improve and comply with the processes and structure as articulated in the Principles and Best Practices set out in the Malaysian Code on Corporate Governance (“the Code”).

    The principles of the Code are divided into four Sections:-

    Section 1: DirectorsSection 2: Directors’ RemunerationSection 3: ShareholdersSection 4: Accountability and Audit

    In preparing this report, the Board has considered the manner in which it has applied the Principles of the Code and the extent to which it has complied with the Best Practices of the Code.

    SECTION 1: DIRECTORS

    The Board of Directors and Board BalanceThe Board presently has five (5) members, which comprises the Managing Director, Executive Director and three (3) Independent Non-Executive Directors. Together, the Directors have the necessary mix of skills and experience ranging from business, finance and corporate to general disciplines in managing the Group’s business. A profile of each Director is presented on pages 14 to 16 of this Report.

    No individual or group of individuals dominates the Board’s decision making and the number of directors reflects fairly the investment of the shareholders. The presence of a majority of independent non-executive Directors in the Board ensures the balance of power in the exercise of objective and independent judgment on corporate issues dealt with at the Board level, to safeguard the interest of major stakeholders and the minority shareholders respectively.

    Board Structures and ProceduresThe Board has overall responsibility for the proper conduct of the Group’s business. The Board meets on a quarterly basis and additionally as required. The Board has a formal schedule of matters specifically reserved for its decision, including overall strategic decisions on the restructuring exercise direction of the Group, annual operating plan and the monitoring of the Group’s operating and financial performance.

    During the financial year ended 31 March 2007, a total of five (5) Board meetings were held. The attendances of the Directors at Board Meetings held during the financial year are as follows:-

    Name of Directors Number of Meetings Attended/Held

    Dato’ Seri Hj Megat Najmuddin Bin Dato’ Seri Dr Hj Megat Khas 5/5Dato’ Mustapha Bin Buang 5/5Dato’ Hamzah Bin Zainudin 3/5Dato’ Mohamed Salleh Bin Bajuri 4/5

    Supply of InformationThe Directors are provided with timely and relevant information to discharge their duties and responsibilities, which include, amongst other, quarterly and annual financial statements, board papers recommending business and operational decisions, corporate and business development plans, status reports, minutes of meetings and reports/opinions from independent advisors.

    All Directors have access to the information from the Group’s senior management and the Company Secretary’s advices and services. If required, the Directors, whether as a full Board or in their individual capacity may take independent professional advice in the furtherance of their duties at the Company’s expense.

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    Corporate Governance Statement (cont’d)

    Committees established by the BoardThe Board has delegated certain functions to the committees it established to assist in the execution of its responsibilities. The Committees operate under clearly defined terms of reference. The Chairman of the respective Committees reports to the Board on the outcome of the Committee Meetings.

    • Audit CommitteeThe Audit Committee was set up on 28 July 1994 and is chaired by Dato’ Seri Hj Megat Najmuddin Bin Dato’ Seri Dr Hj Megat Khas. Other members of the Audit Committee are Dato’ Hamzah Bin Zainudin, Dato’ Mustapha Bin Buang and Dato’ Mohamed Salleh Bin Bajrui. The terms of reference and summary of activities of the Audit Committee are set out on pages 22 to 24 of this Report.

    • Nomination CommitteeThe Nomination Committee was formalized on 29 May 2002, comprising exclusively of Non-Executive Directors in accordance with the Malaysian Code on Corporate Governance. The present members of the Nomination Committee are Dato’ Seri Hj Megat Najmuddin Bin Dato’ Seri Dr Hj Megat Khas, Dato’ Hamzah Bin Zainudin and Dato’ Mohamed Salleh Bin Bajuri.

    The Nomination Committee is empowered to bring to the Board recommendations as to the appointment of any new executive or non-executive director, provided that the Chairman of the Nomination Committee, in developing such recommendations, consults all directors and reflects that consultation in any recommendation of the Nomination Committee brought forward to the Board.

    • Remuneration CommitteeThe Remuneration Committee set up in May 2001, comprises three (3) Independent Non-Executive Directors, namely Dato’ Seri Hj Megat Najmuddin Bin Dato’ Seri Dr Hj Megat Khas, Dato’ Hamzah Bin Zainudin and Dato’ Mohamed Salleh Bin Bajuri together with the Managing Director, Dato’ Mustapha Bin Buang.

    • Employees’ Share Option Scheme CommitteeThe Employees’ Share Option Scheme Committee (“ESOS Committee”) was formed on 13 April 2006 primarily to administer the Employees’ Share Option Scheme in accordance with the scheme’s objectives, by-laws and guidelines affecting the scheme. The ESOS Committee comprises Dato’ Mustapha Bin Buang (Managing Director). Liew Yin Yee (Group Accountant), Susan Yap Chui Suan (Assistant Manager - Human Resource) and Chan Yoon Mun (Company Secretary). The ESOS Committee meets as and when required.

    Appointments to the BoardThe Nomination Committee is responsible for assessing and making recommendations on any new appointments to the Board. In making these recommendations, due consideration is given in the required mix of skills, expertise, knowledge and experience that the proposed directors shall bring to complement the Board.

    The Board, through the Nomination Committee, assesses the effectiveness of the Board as a whole, the committees of the Board and the contributions of each Director on an ongoing basis. The Board also annually reviews the required mix of skills, experiences and other qualities including core competencies, which Non-Independent Director should bring to the Board.

    Re-electionIn accordance with the Company’s Articles of Association, all Directors who are appointed by the Board are subject to re-election by shareholders at the first Annual General Meeting after their appointments. The Articles also provided that at least one-third of the Board including the Executive Directors shall be subject to re-election by rotation at each Annual General Meeting.

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    Corporate Governance Statement (cont’d)

    Directors’ TrainingAll members of the Board have attended Bursa Securities’ Mandatory Accreditation Program (MAP) as well as the required training courses and seminars under the Continuing Education Programs (CEP). However, the newly appointed Executive Director has yet to attend MAP. For the year ended 31 March 2007, the Board is pleased to inform that all directors have achieved the prescribed CEP points and the programs attended by the Directors cover the areas such as corporate governance, risk management and financial reporting standards. The Directors will continue to attend relevant training programs to further enhance their skills and knowledge as well as to keep abreast with new developments for the furtherance of their skills.

    SECTION 2: DIRECTORS’ REMUNERATION

    Remuneration Policy and ProcedureThe Remuneration Committee reviews the annual salaries, incentive programmes, service arrangements and other employment conditions for the Executive Directors. They shall ensure that the Company’s Directors are fairly rewarded for their individual contributions to the Company’s overall performance and the levels of remuneration shall be sufficient to attract and retain Directors to run the Company and Group successfully.

    The determination of the remuneration of the Non-Executive Directors is a matter of the Board as a whole. Decisions and recommendations of the Committee shall be reported back to the Board for approval and ratification and where required by the rules and regulations governing the Company, for approval of shareholders in general meeting. The remuneration of Executive Directors is compatible with their corporate and individual performances while the level of remuneration for Non-Executive Directors shall reflect the experience and level of responsibility undertaken by the particular Non-Executive Director concerned. No director shall be involved in deciding his own remuneration.

    The summary of the remuneration of the Directors of the Company during the financial year is disclosed under Note 34 on page 88 of this Report.

    SECTION 3: SHAREHOLDERS

    Dialogue between Company and InvestorsShareholders and investors are kept informed of all major developments within the Group by way of announcements via the Bursa Malaysia Link, the Company’s annual report and other circulars to shareholders. The principle forum for dialogue with shareholders is during the Annual General Meetings.

    At each Annual General Meeting, the Board presents the progress and performance of the business and encourages shareholders to participate in a question and answer session. Directors are available to respond to shareholders’ questions during the meeting. Extraordinary General Meetings are held as and when required.

    The Board has designated Dato’ Hamzah Bin Zainudin as the Senior Independent Non-Executive Director to receive and deal with all shareholders’/public enquiries. Such enquiries must be made in writing and be directed to the Senior Independent Non-Executive Director as follows:-

    Asian Pac Holdings BerhadSenior Independent Non-Executive DirectorDato’ Hamzah Bin Zainudin12th Floor, Menara SMINo. 6, Lorong P. Ramlee50250 Kuala LumpurTel No : 03-2078 1207Fax No : 03-2070 4818

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    Corporate Governance Statement (cont’d)

    SECTION 4: ACCOUNTABILITY AND AUDIT

    Financial ReportingFor financial reporting through quarterly reports to the Bursa Malaysia Securities Berhad (“Bursa Securities”) and the annual report to shareholders, the Directors have a responsibility to present a fair statement of the Group’s position and prospect. The Audit Committee assists the Board in reviewing information for disclosure to ensure accuracy, adequacy and completeness. The Statement by Directors pursuant to Section 169 of the Companies Act 1965 is set out on page 32 of this Report.

    STATEMENT ON DIRECTORS’ RESPONSIBILITY FOR PREPARING FINANCIAL STATEMENTS

    The Directors are required by the Companies Act 1965 to prepare financial statements for each financial year which have been made out in accordance with applicable approved accounting standards and give a true and fair view of the state of affairs of the Group and Company at the end of the financial year and of the results and cash flows of the Group and Company for the financial year.

    In preparing the financial statements, the Directors have:• Selected suitable accounting policies and applied them consistently;• Made judgements and estimates that are reasonable and prudent;• Ensured that all applicable accounting standards have been followed; and• Prepared financial statements on the going concern basis as the Directors have a reasonable expectation, having

    made enquiries, that the Group and Company have adequate resources to continue in operational existence for the foreseeable future.

    The Directors have the responsibility for ensuring that the Company keeps accounting records which disclose with reasonable accuracy the financial position of the Group and Company and which enables them to ensure the financial statements comply with the Companies Act 1965 and the Listing Requirements of the Bursa Securities.

    The Directors have overall responsibilities for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. Such systems, by their nature, can only provide reasonable and not absolute assurance against material misstatement, loss and fraud.

    Internal ControlInformation on the Group’s Internal Control is presented in the Statement on Internal Control laid out on page 25 to 26.

    Relationship with AuditorsThe role of the Audit Committee in relation to external auditors may be found in the Audit Committee Report. The Company has always maintained a close and transparent relationship with its auditors in seeking professional advice and ensuring compliance with the accounting standards in Malaysia.

    OTHER INFORMATION

    Conflict of InterestNone of the Directors has any family relationship with other Directors or major shareholders of the Company and they do not have any conflict of interest with the Company.

    Utilisation of ProceedsNo proceeds were raised by the Company from any corporate proposal during the financial year.

    Share BuybacksDuring the financial year, there were no share buybacks by the Company.

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    Corporate Governance Statement (cont’d)

    Options, Warrants or Convertible Securities ExercisedDuring the financial year:

    1) Redeemable Convertible Secured Loan Stocks 2000/2007

    a) The Group has redeemed RM23,192,238 nominal value of Redeemable Convertible Secured Loan Stocks 2000/2007 (“RCSLS ”).

    b) The holders of RCSLS have converted RM1,627,702 nominal value of RCSLS at the conversion rate of RM0.25 for every ordinary share of RM0.20 each.

    2) Employees Share Option Scheme Subject to the following disclosure of the list of Employees who have been granted 700,000 or more Options during the financial year, the Company has obtained the relevant exemption from the Companies Commission of Malaysia on 20 April 2007 from having to comply with Section 169(11) for the financial year ended 31 March 2007. The Eligible Employees have exercised 7,085,000 Options during the financial year.

    No. Name Number Granted Number Exercised Balance

    1 Abd Molok Bin Abu Bakar 1,900,000 - 1,900,0002 Chuah Swee Guan 3,500,000 1,225,000 2,275,0003 Dato’ Hamzah Bin Zainudin 3,150,000 - 3,150,0004 Dato’ Mohamed Salleh Bin Bajuri 2,100,000 - 2,100,0005 Dato’ Mustapha Bin Buang 4.150,000 1,452,500 2,697,5006 Gan Meei Shyuan 750,000 250,000 500,0007 Liew Yin Yee 1,470,000 500,000 970,0008 Lokman Bin Zakaria 1,050,000 367,500 682,5009 Low Kiang Hoon 1,650,000 577,500 1,072,50010 Ng Choon Heng 900,000 315,000 585,00011 Suleiman Bin Ibrahim 900,000 - 900,00012 Wong Kong Wai 880,000 308,000 572,000

    American Depository Receipt (ADR) and Global Depository Receipt (GDR)During the financial year, the Company did not sponsor any ADR or GDR programme.

    Sanctions and/or Penalties ImposedThere were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management by the relevant regulatory bodies during the financial year.

    Non-Audit FeeDuring the financial year, non statutory audit fees paid to the External Auditors amounted to RM38,000 for the Interim Audit and review of Statement on Internal Control.

    Variation in ResultsThere were no variances of 10% or more between the audited results and the unaudited results announced.

    Profit GuaranteeDuring the financial year, there was no profit guarantees given by the Company.

    Material Contracts Involving Directors’ and Substantial Shareholders’ InterestThe Company and its subsidiaries did not enter into any material contracts which involved the interests of the Directors or substantial shareholders during the financial year.

    Statement made in accordance with the resolution of Board of Directors’ Meeting held on 23 July 2007.

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    Audit Committee Report

    COMPOSITION OF THE AUDIT COMMITTEE

    The members of the Audit Committee during the financial year under review were:-

    ChairmanDato’ Seri Hj Megat Najmuddin Bin Dato’ Seri Dr Hj Megat Khas Independent Non-Executive Director

    MembersDato’ Hamzah Bin Zainudin Independent Non-Executive DirectorDato’ Mohamed Salleh Bin Bajuri Independent Non-Executive DirectorDato’ Mustapha Bin Buang Managing Director

    TERMS OF REFERENCE

    1) Composition of Audit CommitteeThe Committee shall be appointed by the Directors from among its members which fulfils the following requirements:-

    a) the Audit Committee must be composed of no fewer than 3 members;b) a majority of the Audit Committee must be independent directors; c) no alternate director of the Board shall be appointed as member of the Committee; andd) at least one member of the Audit Committee:-

    (i) must be a member of the Malaysian Institute of Accountants; or(ii) if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years’ working

    experience and:-(aa) he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act

    1967; or(bb) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule

    of the Accountants Act 1967; or(cc) the signatory fulfils such other requirements as prescribed by the Exchange.

    The Committee shall elect a chairman from among its members who shall be an independent Director.

    In the event that a member of an Audit Committee resigns, dies or for any other reason ceases to be a member with the result that the number of members is reduced below three (3), the Board of Directors shall, within three (3) months of that event, appoint such number of new members as may be required to make up the minimum of three (3) members.

    2) MeetingsThe Committee shall meet at least four times a year.

    The Chairman shall convene a meeting of the Committee if requested to do so by any member, the management or the internal or external auditors to consider any matter within the scope and responsibilities of the Committee.

    3) Secretary to Audit CommitteeThe Company Secretary shall be the secretary of the Committee.

    4) QuorumA quorum shall consist of a majority of members who are independent directors.

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    Audit Committee Report (cont’d)

    5) AuthorityThe Committee is authorised by the Board to investigate any activity within its terms of reference and shall have unrestricted access to both the internal and external auditors and to all employees of the Group. The Committee is also authorised by the Board to obtain external legal or other independent professional advice as necessary.

    6) Duties and ResponsibilitiesThe duties and responsibilities of the Committee shall be:-

    i) To review the quarterly financial statements announcements to Bursa Malaysia Securities Berhad and annual financial statements prior to approval by the Board, focusing on:-

    • going concern assumption;• compliance with accounting standards and regulatory requirements;• any changes in accounting policies and practices;• significant issues arising from the audit; and• major judgmental areas.

    ii) To review with the external auditors the following:-

    • their audit plan;• their evaluation of the system of internal controls;• their audit report;• problems and reservations arising from their interim and final audits; • the assistance given by the employees of the Company and the Group to the external auditors; and• the audit fees and on matters concerning their suitability for nomination, appointment and re-appointment

    and the underlying reasons for resignation or dismissal as auditors.

    iii) To review the internal audit functions on the following:-

    • adequacy and relevance of the scope, functions and resources of the internal audit department and that it has the necessary authority to carry out its work;

    • the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function; and

    • internal audit plan, consider the major findings of internal audit, fraud investigations and actions and steps taken by management in response to audit findings.

    iv) To monitor related party transactions and conflict of interest situation that may arise within the Company and the Group including any transaction, procedure or course of conduct that raises questions of management integrity.

    v) To assess the adequacy and effectiveness of the systems of internal control and accounting control procedures of the Company and the Group by reviewing the external auditors’ management letters and management response.

    vi) To undertake such other responsibilities as may be agreed to by the Committee and the Board.

    vii) To report to the Board its activities, significant results and findings.

    ATTENDANCE OF MEETINGS

    The Audit Committee held five (5) meetings during the financial year. The following is the number of meetings attended by each member:-

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    Audit Committee Report (cont’d)

    Name of Committee members Number of meetings attended

    Dato’ Seri Hj Megat Najmuddin Bin Dato’ Seri Dr Hj Megat Khas 5/5Dato’ Hamzah Bin Zainudin 3/5Dato’ Mohamed Salleh Bin Bajuri 4/5Dato’ Mustapha Bin Buang 5/5

    The Company Secretary and certain senior management of the Company were present at all the Audit Committee meetings. The representatives of External Auditors had attended two (2) Audit Committee Meetings during the financial year.

    SUMMARY OF ACTIVITIES

    Pursuant to the terms of reference of the Audit Committee, the following activities were carried out by the Audit Committee during the financial year ended 31 March 2007 in discharge of its duties and responsibilities:-

    i) Reviewed the internal audit charter and the adequacy and relevance of the scope, functions, resources, internal audit plan and results of the internal audit processes with the Internal Audit Department; and that it has the necessary authority to carry out its work.

    ii) Reviewed with the external auditors, their audit plan (including system evaluations, audit fees, issues raised and management’s responses) prior to the commencement of the annual audit;

    iii) Reviewed the unaudited quarterly results and annual audited financial statements with the management and made recommendations thereon to the Board for approval;

    iv) Reviewed the financial statements, the audit report, issues arising from audits and the management letter with the external auditors; and

    v) Reviewed the statement on internal control for publication in the Company’s annual report.

    vi) Reviewed the Internal Audit reports on finding and recommendations and management’s response thereto to ensure adequate remedial actions have been taken.

    vii) Reviewed and verified the auditors’ remuneration to ensure its adequateness and fairness.

    viii) To verify the allocation of Employees Share Option Scheme (“ESOS”) and ensure that the Options is in compliance with the allocation criteria determined by the ESOS Committee and in accordance with the Bye-Laws of the ESOS.

    INTERNAL AUDIT FUNCTION/ACTIVITIES

    The Internal Audit Department of the Group was established to assist the Board of Directors and the Audit Committee in discharging their duties and responsibilities. The Department undertakes its functions based on the annual audit plan that is reviewed and approved by the Audit Committee, and it is committed to provide independent assurance on effectiveness and adequacy of the system of internal control.

    A risk-based approach is adopted to prioritize the Department’s efforts to the critical business risk areas. These are designed to evaluate and enhance risk management, internal control and governance processes to assist management in achieving its goals.

    During the financial year, audit assignments were carried out in accordance with the annual audit plan approved by the Audit Committee. The resulting reports of the audits undertaken were presented to the Audit Committee and forwarded to the management for attention and necessary actions. The Internal Audit Department set up a monitoring process to determine the extent to which its recommendation has been implemented and report to the Audit Committee accordingly.

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    Statement on Internal Control Financial Year Ended 31 March 2007

    Introduction

    The Malaysian Code on Corporate Governance sets out as a principle that the Board of Directors (“Board”) of a listed company should maintain a sound system of internal control (“System”) to safeguard shareholders’ investment and the assets of the Group. Paragraph 15.27(b) of the Bursa Malaysia Listing Requirements requires the Board to include a statement in its annual report on the state of internal control of the listed issuer as a Group. The Board of Asian Pac Holdings Berhad (“the Company”) is pleased to provide the statement on the state of internal control of the Company and its subsidiaries (“the Group”).

    Board of Directors’ Responsibility

    The Board is responsible for the Group’s System and for reviewing its adequacy and integrity as an effort to safeguard shareholders’ investment and assets of the Group. The Board, through its various committees, has continuously reviewed the adequacy and effectiveness of the System in particular the financial, operational as well as compliance aspects of the Group throughout the financial year.

    However, due to the limitations that are inherent in any system of internal control, the Group’s System can only provide reasonable assurance against material misstatement and financial loss, rather than to eliminate entirely the risk of business failure.

    Risk Management

    The Board has made risk assessment an on-going exercise to effectively manage and mitigate significant risks faced or likely to be faced by the Group. The senior management and staff from various levels are also involved in identifying, evaluating and managing risks in the course of carrying out their day to day work. The major Group’s risks are communicated, highlighted and brought to the Board’s attention and discussion. These processes are embedded within the Group’s overall business operations and guided by the documented policies and procedures.

    Internal Control Environment

    The following are the key processes that the Board has established in ensuring adequacy and integrity of the System:

    • An organization structure exists with clearly defined lines of authority, responsibility and appropriate levels of accountability;

    • Documented policies and procedures are available for all major operations of the Group. These policies and procedures are formulated by various head of departments within the Group, and have been reviewed and endorsed by the Board prior to implementation by the Management. Updated policies and procedures will be presented and endorsed by the Board, before they are implemented;

    • A computerized Human Resource Management System provides a comprehensive employee database and an efficient system for managing human resource functions. Provided with conducive and safe environment, all employees are expected to be vigilant and efficient in their job functions. A standardized Performance Management System is adopted throughout the Group to effectively review and reward the employees based on their performance, hence effectively providing a platform for evaluating employees’ performances;

    • Based on agreed objectives and strategies, Business Plans and Budgets are prepared annually to set targets and action plans for the year and these are presented to the Board for approval. Major deviations from budgets are monitored, analyzed and reported to the Board to ensure that objectives are met and irregularities investigated, where necessary;

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    Statement on Internal Control Financial Year Ended 31 March 2007 (cont’d)

    • Meetings are held at management and operational levels to identify, discuss and resolve business and operational issues. These include regular monthly management meetings and heads of department meetings which are minuted and held on a needs basis. The Board is represented by the Managing Director who chairs the management meetings while the Project General Manager chairs the heads of department meetings. Significant issues would be drawn to attention, discussion and decision by the Board;

    • The Audit Committee with the assistance of the Internal Audit Department provides further assurance to the Board through the various risk-based audit reviews conducted. Audit findings are communicated to the Audit Committee to enable timely evaluation of the adequacy and integrity of the Group’s internal control system; and

    • The senior management is actively involved in the day to day business operations of the group and conducted regular visits to the Group’s operating offices or sites.

    Conclusion

    Based on the various internal control features currently available and/or to be incorporated into the Group’s key processes, the Board is confident that the Group’s operations are under control and significant risks faced by the Group are sufficiently addressed and managed.

    The Board is aware that significant risks facing the Group changes with time and hence it strives to continuously review and improve the Group’s System so as to maintain an adequate level of internal control at all times.

    This statement is reviewed and approved by the Board of Directors in the meeting dated 23 July 2007 and had been reviewed by the external auditors.

  • Financial Statements

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    32

    32

    33

    34

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    37

    39

    40

    42

    Directors’ Report

    Statement by Directors

    Statutory Declaration

    Report of the Auditors

    Balance Sheets

    Income Statements

    Consolidated Statement of Changes in Equity

    Company Statement of Changes in Equity

    Cash Flow Statements

    Notes to the Financial Statements

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    Directors’ Report

    The directors have pleasure in presenting their report together with the audited fi nancial statements of the Group and of the Company for the fi nancial year ended 31 March 2007.

    PRINCIPAL ACTIVITIES

    The Company is principally involved in the holding of securities for investment purposes, provision of management services and trading of building materials.

    The principal activities of the subsidiaries are disclosed in Note 8 to the fi nancial statements.

    There have been no signifi cant changes in the nature of the principal activities during the fi nancial year. RESULTS

    Group Company RM’000 RM’000 Profi t for the year 25,298 2,922 Attributable to: Equity holders of the Company 25,269 2,922 Minority interests 29 - 25,298 2,922 There were no material transfers to or from reserves or provisions during the fi nancial year other than as disclosed in the statements of changes in equity.

    In the opinion of the directors, the results of the operations of the Group and of the Company during the fi nancial 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 a decrease in the Group’s and the Company’s profi t for the year by RM3,093,000 and RM658,000 respectively as disclosed in Note 2.3(f)(ii) to the fi nancial statements; and

    (b) the effects arising from the changes in estimates where the residual values of certain motor vehicles were revised resulting in an increase in the Group’s profi t for the year by RM581,000 as disclosed in Note 2.4 to the fi nancial statements.

    DIVIDENDS No dividend has been paid or declared by the Company since the end of the previous fi nancial year.

    The directors do not recommend the payment of any dividends in respect of the current fi nancial year.

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    Directors’ Report (cont’d)

    DIRECTORS

    The names of the directors of the Company in offi ce since the date of the last report and at the date of this report are:

    Dato’ Seri Hj. Megat Najmuddin bin Dato’ Seri Dr Hj. Megat Khas Dato’ Mustapha bin Buang Dato’ Hamzah bin Zainudin Dato’ Mohamed Salleh bin Bajuri DIRECTORS’ BENEFITS Neither at the end of the fi nancial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefi ts by means of the acquisition of shares in or debentures of the Company or any other body corporate, other than as disclosed in Note 41(c) and (d) to the fi nancial statements. Since the end of the previous fi nancial year, no director has received or become entitled to receive a benefi t (other than benefi ts included in the aggregate amount of emoluments received or due and receivable by the directors or the fi xed salary of full time employees of the Company and related corporations as shown in Notes 32, 33 and 34 to the fi nancial statements) by reason of a contract made by the Company or a related corporation with any director or with a fi rm of which the director is a member, or with a company in which the director has a substantial fi nancial interest. DIRECTORS’ INTERESTS According to the register of directors’ shareholdings, the interests of directors in offi ce at the end of the fi nancial year in shares, warrants and options over shares in the Company during the fi nancial year were as follows: Number of Ordinary Shares of RM0.20 Each 1 April 31 March 2006 Acquired Sold 2007 Dato’ Seri Hj. Megat Najmuddin bin Dato’ Seri Dr Hj. Megat Khas - direct 6,857,000 - (5,000,000) 1,857,000 Dato’ Hamzah bin Zainudin - direct 5,412,243 - - 5,412,243 Dato’ Mustapha bin Buang - direct 29,271,985 4,752,500 (1,173,500) 32,850,985 - indirect 800,000 - - 800,000

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    Directors’ Report (cont’d)

    DIRECTORS’ INTERESTS (CONT’D) Number of Warrants 2001/2006 1 April 31 March 2006 Allotted Expired 2007

    Dato’ Seri Hj. Megat Najmuddin bin Dato’ Seri Dr Hj. Megat Khas - direct 619,000 - (619,000) - Dato’ Hamzah bin Zainudin - direct 1,400,747 - (1,400,747) - Dato’ Mustapha bin Buang - indirect 266,666 - (266,666) - Number of Options Over Ordinary Shares of RM0.20 Each 1 April 31 March 2006 Granted Exercised 2007 Dato’ Hamzah bin Zainudin - direct - 3,150,000 - 3,150,000 Dato’ Mustapha bin Buang - direct - 4,150,000 (1,452,500) 2,697,500 Dato’ Mohamed Salleh bin Bajuri - direct - 2,100,000 - 2,100,000 None of the other directors in offi ce at the end of the fi nancial year had any interest in shares in the Company or its related corporations during the fi nancial year.

    ISSUE OF SHARES The issuance of ordinary shares during the fi nancial year is as disclosed in Note 18 to the fi nancial statements.

    SIGNIFICANT AND SUBSEQUENT EVENTS The signifi cant and subsequent events are as disclosed in Note 41 to the fi nancial statements.

    OTHER STATUTORY INFORMATION (a) Before the balance sheets and income statements of the Group and of the Company 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 allowance for doubtful debts and satisfi ed themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and

    (ii) to ensure that any current assets which were unlikely to realise their values 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.

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    Directors’ Report (cont’d)

    OTHER STATUTORY INFORMATION (CONT’D) (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 allowance for doubtful debts in the fi nancial statements of the Group and of the Company inadequate to any substantial extent; and

    (ii) the values attributed to the current assets in the fi nancial statements of the Group and of the Company

    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 Company misleading or inappropriate.

    (d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report

    or fi nancial statements of the Group and of the Company which would render any amount stated in the fi nancial 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 Company which has arisen since the end of the fi nancial year which secures the liabilities of any other person; or

    (ii) any contingent liability in respect of the Group or of the Company which has arisen since the end of the fi nancial

    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 fi nancial year which will or may affect the ability of the Group or of the Company 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 fi nancial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the fi nancial year in which this report is made.

    AUDITORS

    The auditors, Ernst & Young, have expressed their willingness to continue in offi ce.

    Signed on behalf of the Board in accordance with a resolution of the directors dated 23 July 2007. Dato’ Seri Hj. Megat Najmuddin bin Dato’ Mustapha bin Buang Dato’ Seri Dr Hj. Megat Khas

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    Statement by Directors Pursuant to Section 169(15) of the Companies Act, 1965

    We, Dato’ Seri Hj. Megat Najmuddin bin Dato’ Seri Dr Hj. Megat Khas and Dato’ Mustapha bin Buang, being two of the directors of Asian Pac Holdings Berhad, do hereby state that, in the opinion of the directors, the accompanying fi nancial statements set out on pages 34 to 99 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 fi nancial position of the Group and of the Company as at 31 March 2007 and of the results and the cash fl ows of the Group and of the Company for the year then ended.

    Signed on behalf of the Board in accordance with a resolution of the directors dated 23 July 2007. Dato’ Seri Hj. Megat Najmuddin bin Dato’ Mustapha bin Buang Dato’ Seri Dr Hj. Megat Khas

    Statutory Declaration Pursuant to Section 169(16) of the Companies Act, 1965

    I, Liew Yin Yee, being the offi cer primarily responsible for the fi nancial management of Asian Pac Holdings Berhad, do solemnly and sincerely declare that the accompanying fi nancial statements set out on pages 34 to 99 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 Liew Yin Yee at Kuala Lumpur in the Federal Territory on 23 July 2007. Liew Yin Yee

    Before me,

    W328Sariah Bt. YeobCommissioner for Oaths

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    Report of the Auditors to the Members of Asian Pac Holdings Berhad (Incorporated in Malaysia)

    We have audited the fi nancial statements set out on pages 34 to 99. These fi nancial statements are the responsibility of the Company’s directors.

    It is our responsibility to form an independent opinion, based on our audit, on the fi nancial 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 fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by the directors, as well as evaluating the overall presentation of the fi nancial statements. We believe that our audit provides a reasonable basis for our opinion.

    In our opinion: (a) the fi nancial 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 fi nancial position of the Group and of the Company as at 31 March 2007 and of the results and the cash fl ows of the Group and of the Company for the year then ended; and

    (ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the fi nancial statements;

    and (b) the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries

    of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

    We are satisfi ed that the fi nancial statements of the subsidiaries that have been consolidated with the fi nancial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated fi nancial statements and we have received satisfactory information and explanations required by us for those purposes.

    The auditors’ reports on the fi nancial statements of the subsidiaries were not subject to any qualifi cation material to the consolidated fi nancial statements and did not include any comment required to be made under Section 174(3) of the Act.

    Ernst & Young Lee Seng HuatAF: 0039 No. 2518/12/07(J)Chartered Accountants Partner Kuala Lumpur, Malaysia 23 July 2007

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    Balance Sheets as at 31 March 2007

    Group Company Note 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000 (restated) ASSETS Non-current assets Property, plant and equipment 3 116,429 111,671 300 303 Land held for property development 4(a) 131,117 140,452 - - Investment properties 5 31,150 41,400 - - Prepaid land lease payments 6 42,563 42,488 - - Intangible assets 7 23,942 25,055 - - Investments in subsidiaries 8 - - 370,328 361,272 Other investments 9 31,762 53,732 3,108 1,874 Deferred tax assets 10 1,678 8,529 - - 378,641 423,327 373,736 363,449

    Current assets Property development costs 4(b) 116,669 179,287 - - Inventories of completed properties 11 30,618 521 - - Trade receivables 12 40,523 31,639 - - Other receivables 13 46,139 24,361 19,940 2,508 Amounts due from subsidiaries 14 - - 165,504 179,233 Short term investments 15 13,378 - 3,967 - Short term deposits 16 23,948 28,758 5,420 275 Cash and bank balances 17 35,196 25,980 118 42 306,471 290,546 194,949 182,058 TOTAL ASSETS 685,112 713,873 568,685 545,507 EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital 18 161,183 158,462 161,183 158,462 0% Irredeemable Convertible Unsecured Loan Stocks 2006/2011 19 30,000 - 30,000 - Share premium 850 - 850 - Other reserves 20 2,429 5,846 80,429 83,846 Retained profi ts/(Accumulated losses) 47,340 16,131 (62,304) (71,072) 241,802 180,439 210,158 171,236 Minority interests 139 110 - -

    Total equity 241,941 180,549 210,158 171,236

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    Balance Sheets as at 31 March 2007 (cont’d)

    Group Company Note 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000 (restated) Non-current liabilities Deferred tax liabilities 10 103,094 108,905 - - Other deferred liabilities 21 - 18,660 - 18,660 Borrowings 22 - 28,667 - - Hire purchase payables 23 837 897 85 159 4% Redeemable Convertible Secured Loan Stocks 2000/2007 24 - 233,246 - 233,246 103,931 390,375 85 252,065 Current liabilities Other deferred liabilities 21 16,674 - 16,674 - Borrowings 22 - 14,000 - - 4% Redeemable Convertible Secured Loan Stocks 2000/2007 24 208,426 - 208,426 - Trade payables 25 100,012 86,225 - - Interest payable 26 2,147 2,976 2,147 2,530 Other payables 27 9,889 38,209 477 30,734 Amounts due to subsidiaries 28 - - 130,718 88,942 Tax payable 2,092 1,539 - - 339,240 142,949 358,442 122,206 Total liabilities 443,171 533,324 358,527 374,271 TOTAL EQUITY AND LIABILITIES 685,112 713,873 568,685 545,507

    The accompanying notes form an integral part of the fi nancial statements.

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    Income Statements for the year ended 31 March 2007

    The accompanying notes form an integral part of the fi nancial statements.

    Group Company Note 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000 (restated) Revenue 29 332,650 254,173 1,999 4,659 Cost of sales 30 (265,456) (200,768) - (3,976)

    Gross profi t 67,194 53,405 1,999 683 Other operating income 31 9,193 2,463 20,570 25,067 Employee benefi ts expense 32 (8,919) (6,516) (1,693) (942)Depreciation (784) (1,242) (8) (119)Other operating expenses 33 (22,691) (12,829) (11,184) (2,390)

    Profi t from operations 43,993 35,281 9,684 22,299 Finance costs 35 (6,826) (9,634) (6,762) (9,568)

    Profi t before tax 37,167 25,647 2,922 12,731 Income tax expense 36 (11,869) 1,001 - -

    Profi t for the year 25,298 26,648 2,922 12,731 Attributable to: Equity holders of the Company 25,269 26,612 2,922 12,731 Minority interests 29 36 - - 25,298 26,648 2,922 12,731 Earnings per share attributable to equity holders of the Company: Basic, for profi t for the year (sen) 37(a) 3.2 6.8 Diluted, for profi t for the year (sen) 37(b) 2.3 3.0

  • Attributable to Equity Holders of the Company (Accumulated Non-Distributable Losses)/ Share ICULS ICULS Share Other Retained Minority Total Capital 2000/2005 2006/2011 Premium Reserves Profi ts Total Interests Equity RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 At 1 April 2005 As previously stated 367,816 125,989 - 105,159 5,846 (506,482) 98,328 74 98,402 Effects of adopting FRS 117 (Note 2.3(d)) - - - - - (1,127) (1,127) - (1,127)

    At 1 April 2005 (restated) 367,816 125,989 - 105,159 5,846 (507,609) 97,201 74 97,275 Interest on ICULS 2000/2005 not recognised in the income statement (Note 35), representing net expense recognised directly in equity - - - - - (3,374) (3,374) - (3,374)Profi t for the year - - - - - 26,612 26,612 36 26,648

    Total recognised income and expense for the year - - - - - 23,238 23,238 36 23,274

    Conversion of ICULS 2000/ 2005 to ordinary shares 124,495 (125,989) - 1,494 - - - - - Share Capital Reduction, Share Premium Cancellation and Set-Off (393,849) - - (106,653) - 500,502 - - - Issuance of ordinary shares for the acquisition of subsidiaries 60,000 - - - - - 60,000 - 60,000

    At 31 March 2006 (restated) 158,462 - - - 5,846 16,131 180,439 110 180,549

    Consolidated Statement of Changes in Equity for the year ended 31 March 2007

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  • The accompanying notes form an integral part of the fi nancial statements.

    Attributable to Equity Holders of the Company Non-Distributable Distributable Share ICULS ICULS Share Other Retained Minority Total Capital 2000/2005 2006/2011 Premium Reserves Profi ts Total Interests Equity RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

    At 1 April 2006 As previously stated 158,462 - - - 5,846 17,732 182,040 110 182,150 Effects of adopting FRS 117 (Note 2.3(d)) - - - - - (1,601) (1,601) - (1,601)

    At 1 April 2006 (restated) 158,462 - - - 5,846 16,131 180,439 110 180,549

    Effects of adopting FRS 3 (Note 2.3(b)(ii)) - - - - - 94 94 - 94 Profi t for the year, representing total recognised income and expense for the year - - - - - 25,269 25,269 29 25,298 Exercise of Warrants 2001/ 2006 (Note 18) 1 - - - - - 1 - 1 Issue of ordinary shares pursuant to ESOS (Note 18) 1,417 - - 525 - - 1,942 - 1,942 Share options granted under ESOS (Note 18) - - - - 2,429 - 2,429 - 2,429 Issuance of ICULS 2006/ 2011 (Note 19) - - 30,000 - - - 30,000 - 30,000 Transfer to retained profi ts (Note 20(a)) - - - - (5,846) 5,846 - - - Conversion of RCSLS to ordinary shares (Note 24) 1,303 - - 325 - - 1,628 - 1,628

    At 31 March 2007 161,183 - 30,000 850 2,429 47,340 241,802 139 241,941

    Consolidated Statement of Changes in Equity for the year ended 31 March 2007

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    Company Statement of Changes in Equity for the year ended 31 March 2007

    Non-Distributable Share ICULS ICULS Share Other Accumulated Capital 2000/2005 2006/2011 Premium Reserves Losses Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 At 1 April 2005 367,816 125,989 - 105,159 83,846 (580,931) 101,879 Interest on ICULS 2000/ 2005 not recognised in the income statement (Note 35), representing net expense recognised directly in equity - - - - - (3,374) (3,374)Profi t for the year - - - - - 12,731 12,731Total recognised income and expense for the year - - - - - 9,357 9,357

    Conversion of ICULS 2000/ 2005 to ordinary shares 124,495 (125,989) - 1,494 - - - Share Capital Reduction, Share Premium Cancellation and Set-Off (393,849) - - (106,653) - 500,502 - Issuance of ordinary shares for the acquisition of subsidiaries 60,000 - - - - - 60,000

    At 31 March 2006 158,462 - - - 83,846 (71,072) 171,236 At 1 April 2006 158,462 - - - 83,846 (71,072) 171,236 Profi t for the year, representing total recognised income and expense for the year - - - - - 2,922 2,922 Exercise of Warrants 2001/2006 (Note 18) 1 - - - - - 1 Issue of ordinary shares pursuant to ESOS (Note 18) 1,417 - - 525 - - 1,942 Share options granted under ESOS (Note 18) - - - - 2,429 - 2,429 Issuance of ICULS 2006/ 2011 (Note 19) - - 30,000 - - - 30,000 Transfer to retained profi ts (Note 20(a)) - - - - (5,846) 5,846 - Conversion of RCSLS to ordinary shares (Note 24) 1,303 - - 325 - - 1,628

    At 31 March 2007 161,183 - 30,000 850 80,429 (62,304) 210,158

    The accompanying notes form an integral part of the fi nancial statements.

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    Group Company 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000 (restated)

    CASH FLOWS FROM OPERATING ACTIVITIES Profi t before tax 37,167 25,647 2,922 12,731 Adjustment for: Allowance for doubtful debts - 221 - - Writeback of allowance for doubtful debts (2,186) - - - Bad debts written off - 327 - - Discount on repurchase of RCSLS - (78) - (78) Depreciation 784 1,242 8 119 Amortisation of prepaid land lease payments 477 474 - - Property, plant and equipment written off 9 - 2 - Gain on disposal of property, plant and equipment (net) - (36) (1) - Writeback of impairment losses on property, plant and equipment (40) - - - Impairment loss on intangible assets 1,207 - - - Amortisation of intangible assets - 1,528 - - Impairment losses on quoted investments 678 3,327 - 518 Writeback of impairment losses on quoted investments (3,763) - (1,234) - Quoted investments written off - 15 - - Loss on disposal of quoted investments (net) 3,889 6 - 5 Impairment losses on investment properties 10,250 - - - Impairment losses on subsidiaries - - 10,279 97 Writeback of impairment losses on subsidiaries - - (19,335) (24,987) RCSLS premium written back (Note 35) (1,986) (1,040) (1,986) (1,040) Share options granted under ESOS 2,954 - 658 - Interest expense 8,812 10,674 8,748 10,608 Interest income (1,570) (1,207) (404) (374) Dividend income (1,314) (557) (1,100) -

    Operating profi t/(loss) before working capital changes 55,368 40,543 (1,443) (2,401) Decrease in property development costs 67,651 28,744 - - (Increase)/Decrease in receivables (10,919) (27,410) 39 2,162 (Increase)/Decrease in inventories (30,097) 1,143 - - Increase/(Decrease) in payables 14,796 44,732 (260) 174 Changes in subsidiaries balances - - 57,800 70,037

    Cash generated from operations 96,799 87,752 56,136 69,972 Interest received 393 374 393 374 Dividend received - - 803 - Taxes paid (10,276) (8,959) - -

    Net cash generated from operating activities 86,916 79,167 57,332 70,346

    Cash Flow Statements for the year ended 31 March 2007

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    Cash Flow Statements for the year ended 31 March 2007 (cont’d)

    Group Company 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000 (restated)

    CASH FLOW FROM INVESTING ACTIVITIES Interest received 1,153 825 - - Dividend received 946 401 - - Proceeds from disposal of property, plant and equipment 2 39 1 - Proceeds from disposal of quoted investments 11,755 53 - 5 Purchase of property, plant and equipment (1,067) (325) (7) (6)Purchase of commercial papers (3,967) - (3,967) - Improvement on land held for development (Note 4(a)) (22) (249) - - Prepayment of land lease (Note 6) (24) - - - Acquisition of subsidiaries - (1,658) - (2,000)

    Net cash generated from/(used in) investing activities 8,776 (914) (3,973) (2,001) CASH FLOW FROM FINANCING ACTIVITIES Repayment of hire purchase fi nancing (486) (357) (70) (69)Issuance of shares - ESOS 1,417 - 1,417 - Drawdown of term loan - 28,667 - - Repayment of term loan (42,667) (25,986) - (6,000)Repurchase of RCSLS - (4