2007 innovative ideas is created from ﬂ exibility sanichi technology berhad 2 sanichi technology...

SANICHI TECHNOLOGY BERHAD (661826-K)

PLO 135, Jalan Cyber 5,Kawasan Perindustrian Senai Fasa 3,81400 Senai, Johor.Tel: 607-598 8866Fax: 607-598 2886Email: [email protected]: www.sanichimold.com

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Innovative ideas is created from fl exibility

Annual Report 2007

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2 - 3 NOTICE OF ANNUAL GENERAL MEETING

4 CORPORATE STRUCTURE

5 CORPORATE INFORMATION

6 - 7 DIRECTORS’ PROFILE

8 - 9 CHAIRMAN’S STATEMENT

10 - 11 AUDIT COMMITTEE REPORT

12 - 16 CORPORATE GOVERNANCE STATEMENT

17 STATEMENT OF INTERNAL CONTROL

18 - 59 FINANCIAL STATEMENTS

60 - 61 ANALYSIS OF SHAREHOLDINGS

ENCLOSED PROXY FORM

Contents

SANICHI TECHNOLOGY BERHAD (661826-K) ANNUAL REPORT 20072

NOTICE OF THIRD ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Third Annual General Meeting of Sanichi Technology Berhad will be held at PLO 135, Jalan Cyber 5, Kawasan Perindustrian Senai Fasa 3, 81400 Senai Johor on Monday, 19th November 2007, at 11.00 a.m. to transact the following business:

AGENDA 1. To receive the Audited Financial Statements for the fi nancial year ended 30 June 2007

and the Reports of the Directors and Auditors thereon.

2. To re-elect Tan Sri Dato’ Sri Abdul Halil Bin Abd Mutalif who retire by rotation pursuant to Article 128 of the Company’s Articles of Association:

3. To re-elect Mr Er Soon Lock who retire by rotation pursuant to Article 132 of the Company’s Articles of Association:

4. To approve the payment of Directors’ fees of RM61,000-00 for the fi nancial year ended 30 June 2007

5. To re-appoint Messrs Horwath as Auditors of the Company and to authorize the Directors to fi x their remuneration.

6. To transact any other ordinary business of the Company for which due notice shall have been given.

By Order of the Board

Rokiah Binti Abdul Latiff (LS0000194)Choong Lee Hah (LS 007046)Company Secretaries

Johor Bahru 25th day of October 2007

NOTES:

1. A member entitled to attend and vote at this meeting is entitled to appoint more than one proxy to attend and vote in his stead. Where

a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifi es the proportion of his holdings to be

represented by each proxy.

2. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and

the provisions of Section 149(1) (b) of the Companies Act, 1965 shall not apply.

3. Where the Form of Proxy is executed by a corporation, it must be executed under its seal or under the hand of its attorney.

4. The instruments appointing a proxy must be deposited at the registered offi ce, 30-05, Level 30, Menara Landmark, Mail Box 172,

No. 12, Jalan Ngee Heng 80000 Johor Bahru, Johor not less than 48 hours before the time for holding the meeting or at any adjournment

thereof.

Ordinary Resolution 1





3SANICHI TECHNOLOGY BERHAD (661826-K) ANNUAL REPORT 2007

STATEMENT ACCOMPANYING THE NOTICE OF THE THIRD ANNUAL GENERAL MEETING

DIRECTORS WHO ARE SEEKING RE-ELECTION AT THE THIRD ANNUAL GENERAL MEETING OF THE COMPANY.

1. The Director retiring pursuant to Article 128 o f the Company’s Articles of Association and seeking re-election is as follows:-

• Tan Sri Dato’ Sri Abdul Halil Bin Abd Mutalif

The Director retiring pursuant to Article 132 of the Company’s Articles of Association and seeking re-election is as follows:-

• Er Soon Lock

2. BOARD MEETINGS HELD IN THE FINANCIAL YEAR ENDED 30 JUNE 2007

2.1 There were four (4) Board of Directors meetings held during the fi nancial period ended 30 June 2007, details of which are as follows:-

Date Time Venue

19 September 2006 10.00 am Meeting Room PLO 135, Jln Cyber 5, Kawasan Perindustrian Senai, Johor

28 November 2006 2.30 pm Meeting Room PLO 135, Jln Cyber 5, Kawasan Perindustrian Senai, Johor

15 February 2007 2.00 pm Meeting Room PLO 135, Jln Cyber 5, Kawasan Perindustrian Senai, Johor

28 May 2007 12.00 pm Meeting Room PLO 135, Jln Cyber 5, Kawasan Perindustrian Senai, Johor

2.2 Details of attendance of individual Directors at the Board Meetings are as follows:

Name of Director No. of meetings Percentage Attended of Attendance

Tan Sri Dato’ Sri Abdul Halil Abdul Mutalif 4/4 100%

Dato’ Dr Pang Chow Huat 4/4 100%

Datin Chen Choon Lee 4/4 100%

Mr Gwee Kok Ling 4/4 100%

Mr Er Soon Lock * 1/4 100%

Mr Lee Tuck Mun * 3/4 100%

* According to their services as director

3. Date, Time and Place of the Annual General Meeting

Date: 19 November 2007 Time: 11.00 am Place: PLO 135, Jalan Cyber 5, Kawasan Perindustrian Senai, Fasa 3, 81400 Senai, Johor

4. Further details of Directors who are standing for re-election Details of Directors who are standing for re-election are set out in the Directors’ profi le appearing on pages 6 & 7 of the

Annual Report


Design and fabrication of Advanced Plastic Injection Mould and

Conventional Plastic Injection Mould.

100%Sanichi Precision Mould

Sdn Bhd

Design and fabrication ofAdvanced Plastic Injection Mould.

100%Asia Pinnacle Sdn Bhd

Design and fabrication of Advanced Plastic Injection Mould and

Conventional Plastic Injection Mould.

100%Sanichi Mould

(Thailand) Co. Ltd

CORPORATE STRUCTURE

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CORPORATE INFORMATION

COMPANY SECRETARIESRokiah Binti Abdul Latiff(LS 0000194)

Choong Lee Hah(LS 007046)

REGISTERED OFFICE30-05, Level 30, Menara Landmark,Mail Box 172, 12 Jalan Ngee Heng80000 Johor BahruTel : 07-2781260Fax : 07-2781238

REGISTRARSymphony Share Registrars Sdn Bhd(Company No. 378993 - D)Level 26, Menara Multi-Purpose Capital Square, No.8, Jalan Munshi Abdullah, 50100 Kuala LumpurTel : 03- 2721 2222

AUDITORSHorwathChartered Accountants30-04, Level 30, Menara LandmarkMail Box 171, 12 Jalan Ngee Heng80000 Johor BahruTel : 07-2781268Fax : 07-2781238

BOARD OF DIRECTORS

Name Designation

Dato’ Dr Pang Chow Huat Chairman/Managing Director

Datin Chen Choon Lee Executive Director

Gwee Kok Ling Executive Director

Tan Sri Dato’ Sri Abdul Halil Bin Abd Mutalif Independent Non- Executive Director

Er Soon Lock Independent Non-Executive Director

PRINCIPAL BANKERSUnited Overseas Bank (Malaysia) Bhd 2, Jalan Wong Ah Fook 80000 Johor Bahru, JohorTel : 07-219 6300

SPONSORAlliance Investment Bank BerhadLevel 19, Menara Multi-PurposeCapital Square8, Jalan Munshi Abdullah50100 Kuala LumpurTel : 03-2692 7788Fax : 03-2691 9027/8

STOCK EXCHANGE LISTINGThe MESDAQ Market ofBursa Malaysia Securities Berhad


DATO’ DR PANG CHOW HUAT, aged 34, a Malaysian, is the founder and Chairman/Managing Director of Sanichi and was appointed to the Board on 20 June 2006. Equipped with more than fi fteen (15) years of experience in precision engineering in the plastic mould and tool industry, he is currently responsible for the overall strategy and direction of the Group as well as client relationship management. He was conferred a Doctor of Philosophy in Design Technology from the InterAmerican University, Washington D.C. in December 2005.

He began his career in 1991 as an apprentice with a local company specializing in the fabrication of plastic moulds and dies as well as plastic injection moulding, and later joined a Singapore-based mould manufacturer as Head of the Mould Fabrication Department. In 1996, with his in-depth knowledge in plastic moulding and fabrication, he founded Sanichi Precision Mould Industries, specializing in the servicing and repair of moulds and tools. He has extensive exposure to advanced design and technology of high-quality precision moulds and parts.

In February 2000, he established Sanichi Precision Mould Sdn Bhd (“SPMSB”) and ventured into the design, engineering and fabrication of plastic mould products through Research and Development (“R&D”). He is also the initiator for many of the in-house developed solutions in SPMSB, which is attributed to his hands-on technical know-how garnered in his years of working in the industry.

He is the Chairman of the Remuneration Committee and Nomination Committee of the Company.

DIRECTORS’ PROFILE

DATO’ DR PANG CHOW HUAT

DATIN CHEN CHOON LEE, aged 34, a Malaysian, is an Executive Director of Sanichi and was appointed to the Board on 20 June 2006. Equipped with more than fourteen (14) years of experience in account administration and management within a manufacturing environment, she is currently responsible for the overall supporting functions of the Group including fi nance, accounting, cash fl ow management, tax planning, human resource and administrative matters. She completed an Accounting Diploma from the London Chamber of Commerce and Industry from Maju Commercial Institute in 1993.

In 1998, she joined Sanichi Precision Mould Industries as Accounts Director, and was subsequently promoted to Finance Director in 2000.

DATIN CHEN CHOON LEE

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DATIN CHEN CHOON LEE

GWEE KOK LING, aged 33, a Malaysian, is an Executive Director of Sanichi and was appointed to the Board on 20 June 2006. He has accumulated more than thirteen (13) years of working experience in the mould and die industry, and is currently the Technical Director heading the R&D and business development departments of the Group. He graduated from Singapore Polytechnic College with a Diploma in Mechanical Engineering in 1994 and subsequently attained his Master in Business Administration from Heriot-Watt University, United Kingdom in 2002.

He began his career in 1994 in sales engineering. In 1995, he entered into a partnership arrangement to lead the design and development of die for the production and operations of the company. He joined Sanichi as its Business Development Manager in 2002.

He is a member of the Audit Committee of the Company.

GWEE KOK LING

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TAN SRI DATO’ SRI ABDUL HALIL BIN ABDUL MUTALIF, aged 61, a Malaysian, is an Independent Non-Executive Director of Sanichi and was appointed to the Board on 20 June 2006. He was formerly the Director-General of the Royal Malaysian Customs for fi ve (5) years before he retired in October 2005. After graduating from University Malaya with B.A (Hons.) in History in 1970, he began his career as an Administrative and Diplomatic Services Offi cer and served at various government departments and ministries, where he held key positions. From 1990 to 2000, he was seconded to Langkawi Development Authority (“LADA”) which was under the purview of the Ministry of Finance as General Manager. During the secondment to LADA, he was responsible for the overall development of the Langkawi islands. In 2000, he was subsequently seconded to the Royal Malaysian Customs to assume the position of Director-General of customs. During his tenure as Director-General of the Royal Malaysian Customs, yearly revenue collections increased from RM16 billion prior to his appointment to RM25 billion upon his retirement. He also sits on the board of directors of several private limited companies.

He is the Chairman of the Audit Committee, member of the Remuneration Committee and Nomination Committee of the Company.

DIRECTORS’ PROFILE(Cont’d)

TAN SRI DATO’ SRI ABDUL HALIL BIN ABDUL MUTALIF

ER SOON LOCK, aged 33, a Malaysian, is an Independent Non-Executive Director of Sanichi and was appointed to the Board on 17 April 2007. He graduated with a Bachelor of Commerce (Accounting) from New Zealand. He is a member of the Malaysian Institute of Accountants (MIA) and a fellow member of The Association of Chartered Certifi ed Accountants (ACCA).

He began his career with Deloitte KassimChan in 1997 as an Audit Assistant, and progressed to the position of Audit Manager. He left Deloitte KassimChan in 2003 to join Horwath, and was subsequently promoted to Audit Principal in 2005. His experience includes managing the audit and corporate fi nance divisions, providing reporting accountants or consultancy services on listing exercise, preparing business plan and conducting due-diligence review for companies in Malaysia, Singapore and China. In mid-2005, he left Horwath to set up AXP Solutions Sdn. Bhd., an MSC-company principally involved in the development and commercialisation of audit software, where he holds the positions of Chief Financial Offi cer cum Director and manages the fi nance and technical support units. He also actively reviews the exposure drafts issued by the Malaysian Accounting Standards Board and Corporate Law Reform Committee.

He is a member of the Audit Committee, member of the Remuneration Committee and Nomination Committee of the Company.

ER SOON LOCK

ER

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TAN SRI DATO’ SRI ABDUL HALIL BIN ABDUL MUTALIF

Notes: 1. There are no family relationships between the Directors and/or major shareholder of the Company save for Dato’ Dr Pang Chow Huat and Datin Chen Choon

Lee who are husband and wife.2. None of the Directors have any confl ict of interest with the Company.3. None of the Directors have any conviction for any offences, other than traffi c offences, within the past 10 years.4. Details of the Directors’ interest in securities of the Company is set out in page 21 Directors’ Report of this Annual Report.5. Details of the Directors’ attendance of Board Meetings is set out on page 13 Corporate Governance Statement of the Annual Report.


CHAIRMAN’S STATEMENT

Review of Financial Results

For the fi nancial year under review, the Group recorded an increase of RM3.57 million or 16.7% compared to the previous fi nancial year. Profi t after tax increased to RM6.38 millions compared to the previous fi nancial year, representing an annual growth rate of 64.7%.

The previous fi nancial year included the pre-acquisition numbers for the period from 1 July 2005 to 19 June 2006, as the Group was only formed in 20 June 2006, when the Company acquired the entire issued share capital of Sanichi Precision Mould Sdn Bhd and Asia Pinnacle Sdn Bhd.

Based on the weighted average number of shares, the Group recorded a basic earnings per s hare of 5.87 sen for the year ended 30 June 2007.

The commendable fi nancial performance for the year under review was mainly attributed to the increase in overseas sales, as well as the continued growth of the Group’s Advanced Precision Injection Mould (“APIM”) business, which offers higher profi t margin as compared to the conventional precision injection mould.

The fi nancial year under review also saw a commendable accomplishment, with the Group’s overseas revenue contribution surpassing that of the local market for the fi rst time. Our overseas sales were derived mainly from Europe and Asia, contributing RM14.48 million or 58.1% to the Group’s revenue. This achievement says as much the success of our marketing efforts overseas as it does our competency and technology in producing APIM.

Dear shareholders,

The successful listing of Sanichi Technology Berhad on the MESDAQ Market of Bursa Malaysia Securities Berhad on 7 September 2006 marked a signifi cant milestone of the Sanichi Group since the establishment in 2000.

On behalf of the Board of Directors of Sanichi Technology Berhad (“Sanichi”), it is my pleasure to present to you the fi rst Annual Report and fi nancial statements of the Sanichi Group for the fi nancial year ended 30 June 2007 (“FY2007”).

Corporate Development

On 1 February 2007, we incorporated a wholly-owned subsidiary in Thailand, Sanichi Mould (Thailand) Co., Ltd, to tap into the potentially huge demand for APIM in the country. Subsequently in August 2007, we successfully set up a factory in Bangkok. This facility allows us not only to have greater access to multi-national companies based in Thailand, but also to offer our products and services with prompt delivery. We believe the direct presence there will give our existing and potential customers the confi dence.

Going forward, we are also planning to venture into strategic alliances with local operators in countries where the Group has no operations, to further expand our overseas market.

Research & DevelopmentWe recognize that continuous Research and Development (“R&D”) is the key driver to ensure growth of the Group. During the year under review, we invested approximately RM0.24 million, partly fi nanced by the proceeds from the Initial Public Offer (“IPO”), to facilitate our R&D activities to improve existing products and explore other innovative ideas. Amongst other innovations during the year, we have successfully developed and commercialized the Gas Injection Mould (“GIM”) in January 2007. Another pipeline product that is close to commercialization is the Multi-Stacking Mould (“MSM”), which we expect to roll out by the end of 2007.

In honing our competitive edge as a leading player in mould design and fabrication in the region, we will continue to undertake focused R&D in APIMs. Going forward, we plan to allocate additional RM2 million to develop new APIMs and magnesium injection mould for magnesium parts and components, as well as to further enhance the Gas Injection Mould for the Liquid Crystal Display (“LCD”) television manufacturing industry.


CHAIRMAN’S STATEMENT(Cont’d)

Utilization of IPO Proceeds

The Group’s Initial Public Offer (“IPO”) exercise, completed in September 2006, raised approximately RM15.86 million in proceeds, which are expected to be utilized within two years from the listing date. The status of the proceeds is shown below:

As at (RM’000)30 June 2007 IPO Amount Proceeds Utilised Balance

Capital Expenditure 4,000 2,763 1,237

Research & Development 2,000 503 1,497

Repayment of

Bank Borrowings 4,000 4,000 0

Working capital 4,160 4,130 30

Listing expenses 1,700 1,700 0

TOTAL 15,860 13,096 2,764

Future ProspectsThe prospects of the mould fabrication market in the region are bright, spurred on not only by the growth of foreign direct investment (“FDI”) in the manufacturing sector in Asia, but also indirectly by the continued long term demand for consumer goods containing plastic components.

However, there are challenges in the industry as well, what with rising material costs and the increasingly shorter product life cycles. Indeed, these factors are exerting pressure on production to be more effi cient and responsive to market demand. Without a doubt, manufacturers’ main challenge is to get their new products out to the market at the shortest time possible.

In the light of this, the Group has identifi ed two main thrusts for growth: further development of the overseas market, and relentless product innovation. Now that the factory in Thailand is set up, we now cast our sights on other countries, such as Vietnam which has in recent years been attracting signifi cant level of FDI.

Even as we have achieved encouraging success as one of the leading players in APIM in the region, we aim to become even more competitive amongst other APIM fabricators by the greater improvement and enhancement of our APIM products. Additionally, we plan to broaden our industry further by venturing into fabrication of larger moulds to cater for large components for the electrical and electronics, and automotive industries.

Corporate Governance The Board has instituted corporate governance practices within the Group that aim to protect and maximize shareholders’ value, as well as to enhance the business prosperity of the Group. The measures implemented to this effect are highlighted in the Corporate Governance Report.

AppreciationOn behalf of the Board of Directors, I would like to thank the management and employees of the Group for their commitment, support and endurance in making our listing successful and in ensuring the continued success of our Group. I would also like to extend our appreciation to our valued customers, shareholders and suppliers for their support and confi dence.

DATO’ DR PANG CHOW HUATChairman/Managing Director


AUDIT COMMITTEE REPORT

The Board of Sanichi Technology Berhad is pleased to present the report on the Audit Committee (“AC”) for the fi nancial year ended 30 June 2007.

COMPOSITION OF MEMBERS AND MEETINGS

The members of the AC at the date of this report are as follows:

ChairmanTan Sri Dato’ Sri Abdul Halil bin Abd Mutalif - Independent Non-Executive Director

MembersGwee Kok Ling - Non-Independent Executive DirectorEr Soon Lock - Independent Non-Executive Director

Member of the AC namely Er Soon Lock is a member of the Malaysian Institute of Accountants (“MIA”).

During the fi nancial year, 3 AC meetings were held and details of the attendance of the AC members are as follows:

Attendance at AC meetings

Tan Sri Dato’ Sri Abdul Halil

bin Abd Mutalif 3/3

Gwee Kok Ling 3/3

Er Soon Lock

(Appointed w.e.f 17 April 2007) 1/3

Lee Tuck Mun

(Resigned w.e.f. 17 April 2007) 2/3

TERMS OF REFERENCE OF THE AUDIT COMMITTEE

ObjectiveThe objective of the AC is to assist the Board to discharge its responsibilities by reviewing the adequacy and integrity of the Company and the Group’s fi nancial statements as well as the internal control systems including compliance with applicable laws, regulations, directives and guidelines. The presence of the AC is also to reinforce the independence of both the internal and external auditors and thereby helps assure that they will have rein in the audit process and to provide, by way of regular meetings and a line of communication between the Board and both the external and internal auditors. MembershipThe committee shall be appointed by the Board of Directors and fulfi ls the following requirements:

a. The AC must be composed of no fewer than 3 members;

b. Majority of the AC shall be independent; andc. At least one member of the AC must be a member of the

MIA or any other equivalent qualifi cations recognized by the MIA.

d. All members should be non-executive directors.

In the event of any vacancy resulting in the number of members being reduced to below three, the vacancy must be fi lled within 3 months.

The Chairman, who shall be elected by the AC, must be an Independent Director.

Notice of Meeting1. The Company Secretaries of Sanichi Technology

Berhad shall be the secretaries of the AC and will be responsible for co-ordination of administrative details including calling the meeting and keeping minutes.

2. The agenda for AC meetings shall be circulated before each meeting to members of the committee. The committee may require the internal and external auditors and any offi cer of the Company to attend any of its meetings as it deems fi t.

3. The external auditors shall have the right to appear and be heard at any of the AC meeting and shall appear before the committee when required to do so by the committee. The external auditors normally attend meetings at the invitation of the AC.

4. In addition, the Chairman may call a meeting of the AC if a request is made by any committee member, the Company’s Managing Director or the internal or external auditors.

Duties and Responsibilities of Audit CommitteeThe following are the main duties and responsibilities of the AC:

1. To recommend to the Board on the appointment and annual reappointment of the external auditors and their audit fee, after taking into consideration the independence and objectivity of the external auditors and cost effectiveness.

2. Discuss with the external auditor before the audit commences, the nature and scope of the audit.

3. To review the quarterly interim results and annual fi nancial statements of the Company and the Group prior to approval by the Board whilst ensuring that they are prepared in a timely and accurate manner complying with all accounting and regulatory requirements and are promptly published.

4. Discuss issues arising from the interim and fi nal audits and any matter the external auditor may wish to discuss in the absence of the Management where necessary.

5. Review the external auditor’s management letter and management’s response.


AUDIT COMMITTEE REPORT(Cont’d)

6. Evaluate the standards of internal controls and fi nancial reporting of the Sanichi Group of Companies.

7. Consider the major fi ndings of internal audits and /or investigations and Management’s response.

8. Review any related party transactions and confl ict of interest situation that may arise within Sanichi Group, including any transaction, procedure or source of conduct that raises questions of management integrity.

9. Consider other issues as defi ned by the Board.

Power of Audit Committee1. Have explicit authority to investigate any matter within

its terms of reference;

2. Have the resources required to perform its duties;

3. Have full and unrestricted access to any information, records and personnel of Sanichi and any of other companies within the Group;

4. Have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity;

5. Be able to obtain independent professional or other advice and to invite outsiders with relevant experience and expertise to attend the AC’s meeting (if required) and to brief the AC

6. Be able to convene meetings with external auditors without the presence of the executive board members, whenever deemed necessary.

Frequency of MeetingsThe AC shall hold a minimum of at least 4 meetings in a fi nancial year. The number of Committee meetings held during a fi nancial year and the details of attendance of each individual member in respect of meetings held shall be disclosed annually.

The meeting shall be chaired by the Chairman of AC or in the absence of the chairman, another committee member whom is an Independent Director nominated by the committee members. The quorum of the meeting shall consist of at least 2 members, the majority of whom shall be Independent Directors. The Chairman also has the discretion to call for additional meetings at any time.

SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE

During the fi nancial year, the AC carried out the following activities to discharge their duties and responsibilities:

1. Reviewed the unaudited quarterly fi nancial results and the annually audited fi nancial statements for the Board’s approval prior to their release to Bursa Malaysia Securities Berhad.

2. Reviewed the audit strategy and plan of the external auditors.

3. Reviewed the results of the External Auditor’s audit report.

4. Appointed a professional service provider fi rm to facilitate the setting up of the Group risk management framework. The internal audit function is expected to be established in the forth coming fi nancial year upon setting up of the risk management framework.

5. Reviewed and recommended the appointment and audit fee of the external auditors for the Board’s consideration.

6. Reviewed the AC Report and Statement on Internal Control before recommending for Board approval for the purpose of inclusion in the Annual Report.


CORPORATE GOVERNANCE STATEMENT

INTRODUCTION

The Board of Directors (“the Board”) of Sanichi Technology Berhad (“Sanichi” or “the Company”) is committed towards ensuring a high standard of corporate governance is maintained throughout the Company and its subsidiaries (“the Group”).

The Board believes that observance with statutory requirements and market regulations are pivotal to sound corporate governance. Hence, the Board is dedicated to adopt good corporate governance practices and procedures to ensure the principles and best practices in corporate governance as promulgated by the Malaysian Code on Corporate Governance (“the Code”) is applied and adhered to where possible in the best interests of the stakeholders.

This disclosure statement sets out the manner in which the Group has applied and complied with the Principles of the Code and the extent of compliance with Best Practices advocated therein pursuant to the Bursa Malaysia Securities Berhad Listing Requirements (“the Listing Requirements”).

BOARD OF DIRECTORS

1. The Board Sanichi is led by an experienced Board comprising members with a varied range of expertise in manufacturing, business

management and fi nance. Together they bring a broad range of skills, experience and knowledge relevant to directing and managing the Group’s businesses.

The Board is responsible for the overall performance of the Group and focuses mainly on strategic management, performance, standards of conduct and critical business issues.

2. Board Balance The Board currently comprises fi ve (5) members of whom three (3) are Executive Directors and two (2) are Independent

Non-Executive Directors. The presence of Independent Non-Executive Directors on the Board provides objectivity and expertise necessary to advise the Board on its decisions. The current composition of the Board is in compliance with the Code and the Listing Requirements. The profi le of each Board member is set out on page 6 to 7 of this Annual Report.

The Board is satisfi ed with its current membership as it fairly refl ects the investment of minority shareholders in the Company and represents the required mix of skills and experience required to discharge the Board’s duties and responsibilities. In addition, no individual Director or group of Directors dominates the Board’s decision making.

Dato’ Dr Pang Chow Huat functions both as the Chairman of the Board and the Managing Director of Sanichi. The Board is mindful that convergence of the two roles is not in compliance with best practices promulgated by the Code, but is comfortable that there is no undue risk involved in this practice.

3. Board Meetings To ensure the Group is managed effectively, the Board will have at least four (4) regularly scheduled meetings annually

with additional meetings being convened when necessary. Agenda and Board papers are circulated to the Board prior to the Board meetings so as to give the Directors time to consider and deliberate on the issues to be raised at Board meetings.


CORPORATE GOVERNANCE STATEMENT(Cont’d)

During the fi nancial year, the Board met Four (4) times and details of each Director’s attendance are tabled below:

*Attendance at Board meetings

Dato’ Dr Pang Chow Huat 4/4

Datin Chen Choon Lee 4/4

Gwee Kok Ling 4/4

Tan Sri Dato’ Sri Abdul Halil Bin Abd Mutalif 4/4

Er Soon Lock (Appointed w.e.f 17 April 2007) 1/4

Lee Tuck Mun (Resigned w.e.f. 17 April 2007) 3/4

* Note: Number of meetings attended by each Director may vary according to their dates of resignation and appointment.

4. Supply of Information The Board has unrestricted and timely access to all information necessary for the discharge of its responsibilities. The

Board is supplied with all relevant information and reports on fi nancial, operational, corporate, regulatory, business development, and audit matters by way of Board papers or upon specifi c request for informed decision making and effective discharge of their duties. Notice of Board Meetings and board papers are provided to directors in advance so that meaningful deliberation and sound decisions can be made at Board meetings.

All Directors, whether as a full Board or in their individual capacity, have access to the advice and services of Company Secretaries, management representatives and, if deemed necessary, other independent professionals at the expense of the Company in the discharge of their duties.

5. Directors’ Training As off the date of this report all Directors have attended the Mandatory Accreditation Programme (MAP) prescribed by

Bursa Malaysia Securities Berhad.

6. Appointment to the Board The Group adopts a formal and transparent procedure for the appointment of directors to the Board through the

Nomination Committee (“NC”) which comprises exclusively of non-executive and independent directors.

The NC is responsible for assessing the size of the Board, relevant mix of skills and experience and the effectiveness of the Board.

7. Re-elections In accordance with the Company’s Articles of Association, at least one-third (1/3) of the Directors shall retire from offi ce

at each Annual General Meeting, subject to the retirement of all Directors, at least once in every three (3) years. Retiring directors can offer themselves for re-election. Directors who are appointed by the Board during the fi nancial year are subject to re-election by the shareholders at the Annual General Meeting following their appointment.

8. Board Committee The current Board Committees established to assist the Board in the execution of its responsibilities are as follows:

• Audit Committee • Nomination Committee • Remuneration Committee



DIRECTORS’ REMUNERATION

1. Remuneration Policies and Procedures

The Remuneration Committee (“RC”) was formed to assist the Board in determining and developing remuneration policy and to recommend the appropriate remuneration packages for all Directors. It is the ultimate responsibility of the entire Board to approve the remuneration for all Directors. The RC consists mainly of Non-Executive Directors.

The Company’s remuneration policy for Directors is tailored to support the Company’s overall objective of attracting and retaining Directors needed to run the Group effectively. In discharging their duties, the RC reviews and recommends to the Board an appropriate and competitive framework of remuneration for the Board. The remuneration packages of Non-Executives Directors are based on a fi xed annual director fee recommended by Board.

The determination of remuneration packages of Non-Executives Directors is a matter for the Board as a whole with individual Directors abstaining from discussion of their own remuneration packages.

The RC met once during the fi nancial year and all the members of the Committee attended the meeting.

2. Directors’ Remuneration The aggregate remuneration of the Directors of the Company during the fi nancial year are as follows:

Salary and Fees other emoluments Total RM’000 RM’000 RM’000

Executive Directors - 1,039 1,039

Non-Executive Directors 61 14 75

The number of Directors whose remuneration fell into each successive band are set out below:

Remuneration Band Number of Directors Executive Non-Executive

Less than RM50,000 - 3*

RM250,001 to RM300,000 2 -

RM350,001 to RM400,000 1 -

* Including the resign Director.

The Board is of the view that the transparency and accountability aspects of corporate governance as applicable to Directors’ Remuneration are appropriately served by the “band disclosure” in accordance with the Listing Requirements. Hence the remuneration of individual Directors are not disclosed in this statement in accordance with the Best Practice of the Code.

SHAREHOLDERS

1. Dialogue between Company and Investors The Board acknowledges the need for shareholders to be informed of all material business matters affecting the Company.

In addition to various announcements made during the year, the timely release of fi nancial results on a quarterly basis, research report released on a half yearly basis, press releases, annual reports and circulars provide shareholders with an overview of the Group’s performance and operations.

2. Annual General Meeting (“AGM”) The AGM is the principal forum for dialogue with individual shareholders and investors. Shareholders have direct access

to the Directors and are provided with suffi cient opportunity and time to participate through questions on the prospect, performance of the Group and other matters of concern. Members of the Board as well as the external auditors will be present to answer questions raised at the meeting. Constructive suggestions and comments raised by shareholders will also be noted for consideration. Shareholders who are unable to attend are allowed to appoint proxies to attend and vote on their behalf.



ACCOUNTABILITY AND AUDIT

1. Financial Reporting The Board aims to provide and present a balanced and meaningful assessment of the Group’s fi nancial performance

and prospects at the end of the fi nancial year, primarily through the quarterly announcement of results to Bursa Malaysia Securities Berhad, annual audited fi nancial statements as well as the Chairman’s statement and review of operations in the Annual Report.

The Board is assisted by the Audit Committee in overseeing the Group’s fi nancial reporting processes and the accuracy, adequacy and completeness of its fi nancial reporting.

2. Internal Control The Group’s Statement on Internal Control is set out on page 17.

3. Relationship with Auditors The external auditors has access to meet with the Audit Committee to review the audit plan, the results of the audit and

any other matters that the external auditors would like to bring to their attention.

4. Statement of Directors’ Responsibility for Preparing the Financial Statements The Directors are required by the Companies, Act, 1995 to prepare fi nancial statements for each fi nancial year which

have been made in accordance with the applicable approved accounting standards and the provisions of the Companies Act, 1965, which give a true and fair view of the state of affairs of the Group at the end of the fi nancial year and of the results and cash fl ows of the group for the fi nancial year.

In preparing the fi nancial statements, the Directors have: • selected suitable accounting policies and applied them consistently; • made judgments and estimates that are reasonable and prudent; • ensured that all applicable approved accounting standards and provisions of the Companies Act, 1965 have been

followed; and • based such statements on a going concern basis as the Directors have a reasonable expectation, having made

enquiries, that the group have adequate resources to continue in operational existence for the foreseeable future.

The Directors have responsibility for ensuring that the Group maintains accounting records which disclose with reasonable accuracy the fi nancial position of the Group and which enable them to ensure that the fi nancial statements comply with the Companies Act, 1965, applicable approved accounting standards ad other regulatory provisions.

The Directors have overall responsibilities for taking such steps that are reasonably open to them to safeguard the assets of the group to prevent and detect fraud and other irregularities.

ADDITIONAL COMPLIANCE INFORMATION

Recurrent Related Party TransactionThere were no recurrent related party transactions involved in the fi nancial year ended 30 June 2007.

Share BuybacksThere were no share buybacks transactions involved in the fi nancial year ended 30 June 2007

Options, Warrants or Convertible Securities ExercisedThe Company has not issued any options, warrants or convertible securities in respect of the fi nancial year ended 30 June 2007.

American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”)The Company has not sponsored any ADR or GDR programme for the fi nancial year ended 30 June 2007.

Sanctions and/or PenaltiesThe Company and its subsidiaries, Directors and management have not been imposed with any sanctions and/or penalties by regulatory bodies.

Related Party TransactionsThere were no material contracts by the Company and its subsidiaries involving Directors’ and major shareholders’ interest.

Revaluation of Landed PropertiesThe Company does not have a revaluation policy on landed properties.

Non-Audit FeesDuring the fi nancial period under review, the non-audit fees being paid to the external auditors of the Group amount to RM12,000.

Corporate Social ResponsibilitiesThe Company and its subsidiaries did not undertake any corporate social responsibility activities during the year.



Compliance Statement

As at the end of the fi nancial year, the Board is of the opinion that the following Principles and Best Practices of the Code (“Code”) have not been complied with:

Reference to the Code

Part 1 BIII

Part 2 AA1Part 2 CCI

Part 2 AAII

Part 2 AAXIII

Part 2 AAXVII

Part 2 BBI

Part 2 BBVII

Board Comments

Details of the remuneration of each Director are not disclosed in the Annual Report as the Board is of the opinion this infringes on the privacy of the individual Directors. As an alternative, the Annual Report discloses the annual remuneration of Directors in bands of RM50,000 and the number of Executive / Non-Executive Directors receiving annual remuneration in that particular band.

The Board does not have a formal investor relations programme and shareholder communications policy at present. Any important announcement is made through the Bursa Malaysia which in the opinion of the Board is adequate.

Dato’ Dr Pang Chow Huat functions both as the Chairman of the Board and the Managing Director of Sanichi. The Board is mindful that convergence of the two roles is not in compliance with best practices promulgated by the Code, but is comfortable that there is no undue risk involved in this practice.

The Group does not have a formal process for the orientation of newly appointed Board members as orientation is conducted on an informal basis by the Executive Directors. The Board is of the opinion that the activities of the Group are not complex as to require a formal training.

At present, the Group’s information system generates information which are predominantly fi nancial based.

The Code has been revised on 1 October 2007. The Company has yet to identify a suitable candidate to be appointed as a member of the audit committee to replace the existing executive director. The Company will take necessary steps to ensure compliance with the revised Code.

The Company was listed on 7 September 2006. During the fi nancial year the Board appointed a professional service provider fi rm to assist with the establishment of the risk management framework. The internal audit function is expected to be established in the forth coming fi nancial year upon the setting up of the risk management framework.

Summary of the Principle / Best Practice

Disclosure of each Director’s remuneration

Board to develop, implement and maintain an investor relations programme and communications policy to communicate effectively with shareholders, stakeholders and the public

Separation of powers of the Chairman of the Board and the Chief Executive.

Company to provide orientation and education programme for new Board members

Provision for non-quantitative information

All members of the audit committee should be non-executive directors

Establishment of the internal audit function

The collective approval by the Board on this Statement was on 1 October 2007.

Dato’ Dr Pang Chow HuatChairman


STATEMENT ON INTERNAL CONTROL

INTRODUCTIONThe Malaysian Code on Corporate Governance requires that the Board of a listed company should maintain a sound system of internal control to safeguard shareholders’ investment and the Company’s assets. The Bursa Malaysia Listing Requirements requires directors of public listed companies to include a statement in the annual report on its state on internal control as a group. The Board is pleased to include in the following such a statement in complying to the requirements.

BOARD RESPONSIBILITYThe Board recognizes the importance of a sound system of internal control and risk management practices, and affi rms its overall responsibility for the Group’s system of internal control. The Board’s responsibility includes the establishment of appropriate control environment and framework as well as the conduct of regular reviews on the adequacy and integrity of the Group’s internal control system. However, due to the inherent limitations of internal control systems, it should be noted that the controls established are designed to manage rather than eliminate the risk of failure to achieve business objectives. Accordingly, such system of internal control established can only provide reasonable and not absolute assurance against material misstatement or loss.

RISK MANAGEMENT FRAMEWORKThe Board is dedicated to strengthening the Group’s risk management processes of identifying, evaluating and managing signifi cant risks faced by the Group. Signifi cant risks that may affect the Group’s business objectives are continually monitored and any new signifi cant risk identifi ed are subsequently evaluated and managed.

During the fi nancial year, the company appointed a professional service providing fi rm to facilitate the Group’s management in connection with identifying and rating the Group’s signifi cant risks in a formal and structured manner. The risk facilitation exercise is expected to be completed before end of 2007 following which the internal audit activities will commence.

Whilst the Board is ultimately responsible for identifying the Group’s risks, the implementation of risk management systems and the establishment of the Group’s internal control framework will be delegated to the executive management.

KEY ELEMENTS OF INTERNAL CONTROLThe following are the key elements of the Group’s system of internal controls adopted:

I Control Environment The Board continues to strive to maintain an effective system of internal control to safeguard shareholders’ investment

and the Group’s assets whilst facilitating the proper conduct of the Group’s businesses. Executive Directors (“EDs”) adopt a hand-on approach and are assisted by Senior Management in managing the Group’s operations. EDs together with Senior Management are accountable for the conduct and performance of their operations within their respective businesses. The management monitors the day-to-day affairs of the Group through review of performance and operations reports, as well as by attending management meetings. Any signifi cant issue is immediately brought to the attention of the Managing Director.

II Management Structure and Reporting The Group maintains a set of clearly defi ned and structured lines of reporting to ensure clarity in the division of

responsibilities and the preparation and review of operational and fi nancial reports. Ad-hoc and scheduled meetings held at management and operational levels provide the platform for EDs and Senior Management to discuss and resolve business and operational issues.

III Internal Audit and Audit Committee During the fi nancial year, the Group has not formally established an internal audit function. The Board expects the

internal audit function to be established during the forthcoming fi nancial year upon completion of the risk facilitation exercise.

Upon commencement of the internal audit function, the Audit Committee will seek assurance from the internal auditor to examine the adequacy and effectiveness of the Group’s internal controls and will be entrusted with the following responsibilities in connection with the Group’s internal audit function:

• Review the adequacy of the scope and resources of the internal audit function ; • Reviews the internal audit programme and the fi ndings of the internal audit process ; and • Ensures that the recommendations of the internal audit function are carried out.

CONCLUSION

Upon commencement of the internal audit function, the Board is of the view that the Group’s risk management framework will be complete and in compliance with the Principles and Best Practice promulgated by the Malaysian Code on Corporate Governance.

19 - 22 Directors’ Report

23 Statement by Directors

23 Statutory Declaration

24 Auditors’ Report

25 - 26 Balance Sheets

27 Income Statements

28 - 29 Statements of Changes in Equity

30 - 31 Cash Flow Statements

32 - 59 Notes to the Financial Statements

FINANCIAL STATEMENTS


DIRECTORS’ REPORT

The directors hereby submit their report and the audited fi nancial statements of the Group and of the Company for the fi nancial year ended 30 June 2007.

PRINCIPAL ACTIVITIES

The Company is principally an investment holding company and a provider of management services. The principal activities of the subsidiaries are set out in Note 6 to the fi nancial statements. There have been no signifi cant changes in the nature of these activities during the fi nancial year.

RESULTS

THE GROUP THE COMPANY RM RM Profi t/(Loss) after taxation for the fi nancial year 6,375,718 (5,997)

DIVIDENDS

No dividend was paid since the end of the previous fi nancial year and the directors do not recommend the payment of any dividend for the current fi nancial year.

RESERVES AND PROVISIONS

All material transfers to or from reserves or provisions during the fi nancial year are disclosed in the fi nancial statements.

ISSUES OF SHARES AND DEBENTURES

During the fi nancial year,

(a) there were no changes in the authorised share capital of the Company; and

(b) the Company increased its issued and paid-up share capital from RM8,300,002 to RM11,350,000 by the issuance of 30,499,980 new ordinary share of RM0.10 each at issue price of RM0.52 per share pursuant to a public issue in conjunction with the fl otation exercise of the Company on the MESDAQ Market of Bursa Malaysia Securities Berhad. The newly issued shares rank pari passu in all respects with the existing shares of the Company; and

(c) there were no issues of debentures by the Company.

OPTIONS GRANTED OVER UNISSUED SHARES

During the fi nancial year, no options were granted by the Company to any person to take up any unissued shares in the Company.


DIRECTORS’ REPORT (Cont’d)

BAD AND DOUBTFUL DEBTS

Before the fi nancial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that 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.

At the date of this report, the directors are not aware of any circumstances that would require the writing off of bad debts, or the additional allowance for doubtful debts in the fi nancial statements of the Group and of the Company.

CURRENT ASSETS

Before the fi nancial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised in the ordinary course of business, including their values as shown in the accounting records of the Group and of the Company, have been written down to an amount which they might be expected so to realise.

At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the fi nancial statements of the Group and of the Company misleading.

VALUATION METHODS

At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

CONTINGENT AND OTHER LIABILITIES

The contingent liabilities are disclosed in Note 39 to the fi nancial statements. At the date of this report, there does not exist:-

(a) any charge on the assets of the Group and of the Company that has arisen since the end of the fi nancial year which secures the liabilities of any other person; or

(b) any contingent liability of the Group and of the Company which has arisen since the end of the fi nancial year.

No contingent or other liability of the Group and of the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the fi nancial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations when they fall due.

CHANGE OF CIRCUMSTANCES

At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the fi nancial statements of the Group and of the Company which would render any amount stated in the fi nancial statements misleading.



ITEMS OF AN UNUSUAL NATURE

The results of the operations of the Group and of the Company during the fi nancial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the fi nancial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group and of the Company for the fi nancial year.

DIRECTORS

The directors who served since the date of the last report are as follows:-

DATO’ DR. PANG CHOW HUAT TAN SRI DATO’ SRI ABDUL HALIL BIN ABD MUTALIF DATIN CHEN CHOON LEE GWEE KOK LING ER SOON LOCK (Appointed on 17.4.2007)LEE TUCK MUN (Resigned on 17.4.2007)

Pursuant to Article 128 of the Articles of Association of the Company, Tan Sri Dato’ Sri Abdul Halil Bin Abd Mutalif retires by rotation at the forthcoming annual general meeting and, being eligible, offers himself for re-election.

Pursuant to Article 132 of the Articles of Association of the Company, Er Soon Lock retires at the forthcoming annual general meeting and, being eligible, offers himself for re-election.

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings, the interests of directors holding offi ce at the end of the fi nancial year in shares in the Company and its related corporations during the fi nancial year are as follows:-

NUMBER OF ORDINARY SHARES OF RM0.10 EACH AT AT 1.7.2006 BOUGHT SOLD 30.06.2007 Direct Interest DATO’ DR. PANG CHOW HUAT 57,270,020 - (8,300,000) 48,970,020DATIN CHEN CHOON LEE 4,980,000 - (200,000) 4,780,000GWEE KOK LING 4,150,000 - (525,000) 3,625,000

Indirect Interest DATO’ DR. PANG CHOW HUAT 4,980,000 - (200,000) 4,780,000DATIN CHEN CHOON LEE 57,270,020 - (8,300,000) 48,970,020

By virtue of their interests in the Company, the abovenamed are deemed to have interests in shares in the Company’s subsidiaries to the extent of the Company’s interest in accordance with Section 6A of the Companies Act, 1965.

None of the other directors holding 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.



DIRECTORS’ BENEFITS

Since the end of the previous fi nancial year, no director has received or become entitled to receive any benefi t (other than a benefi t included in the aggregate amount of emoluments received or due and receivable by directors as shown in the fi nancial statements, or the fi xed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with the 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.

Neither during nor at the end of the fi nancial year was the Company a party to any arrangements whose object is to enable the directors to acquire benefi ts by means of the acquisition of shares in or debentures of the Company or any other body corporate.

AUDITORS

The auditors, Messrs. Horwath, have expressed their willingness to continue in offi ce.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORSDATED 1 OCTOBER 2007

Dato’ Dr. Pang Chow Huat

Datin Chen Choon Lee


STATEMENT BY DIRECTORS/ STATUTORY DECLARATION

STATEMENT BY DIRECTORS

We, Dato’ Dr. Pang Chow Huat and Datin Chen Choon Lee, being two of the directors of Sanichi Technology Berhad, state that, in the opinion of the directors, the fi nancial statements set out on pages 25 to 59 are drawn up in accordance with applicable MASB approved accounting standards in Malaysia for Entities Other Than Private Entities and the provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group and of the Company at 30 June 2007 and of their results and cash fl ows for the fi nancial year ended on that date.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORSDATED 1 OCTOBER 2007

Dato’ Dr. Pang Chow Huat Datin Chen Choon Lee

STATUTORY DECLARATION

I, Dato’ Dr. Pang Chow Huat, I/C No.: 731218-01-5205, being the director primarily responsible for the fi nancial management of Sanichi Technology Berhad, do solemnly and sincerely declare that the fi nancial statements set out on pages 25 to 59 are, to the best of my knowledge and belief, 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 Dato’ Dr. Pang Chow Huat, I/C No.: 731218-01-5205,at Johor Bahru in the state of Johor on this 1 October 2007

Before me Dato’ Dr. Pang Chow HuatRusly B. Mohd. Yunus P.I.S. (No. J112)Commissioner For Oaths


REPORT OF THE AUDITORS TO THE MEMBERS OF SANICHI TECHNOLOGY BERHAD

We have audited the fi nancial statements set out on pages 25 to 59. The preparation of the fi nancial statements is 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 approved standards on auditing in Malaysia. These standards require that we plan and perform the audit to obtain reasonable assurance that the fi nancial statements are free of material misstatement. Our audit included examining, on a test basis, evidence relevant to the amounts and disclosures in the fi nancial statements. Our audit also included an assessment of the accounting principles used and signifi cant estimates made by the directors as well as evaluating the overall adequacy of the presentation of information in the fi nancial statements. We believe our audit provides a reasonable basis for our opinion.

In our opinion,

(a) the fi nancial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable MASB approved accounting standards in Malaysia for Entities Other Than Private Entities so as to give a true and fair view of:-

(i) the state of affairs of the Group and of the Company at 30 June 2007 and their results and cash fl ows for the fi nancial year ended on that date; and

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

(b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company and the subsidiaries have been properly kept in accordance with the provisions of the said Act.

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

Our audit reports on the fi nancial statements of the subsidiaries were not subject to any qualifi cation and did not include any comments made under Subsection (3) of Section 174 of the Companies Act, 1965.

Horwath Wong Tak MunFirm No.: AF 1018 Approval No: 1793/09/08 (J)Chartered Accountants Partner

Johor Bahru1 October 2007


BALANCE SHEETS AT 30 JUNE 2007

THE GROUP THE COMPANY 2007 2006 2007 2006 NOTE RM RM RM RM (Restated)

ASSETS NON-CURRENT ASSETS Investment in subsidiaries 6 - - 9,257,600 8,300,002Property, plant and equipment 7 19,480,876 11,563,459 293 -Prepaid land lease payments 8 1,750,007 855,000 - -Development expenditure 9 242,601 - - -Goodwill on consolidation 10 6,711 6,711 - - 21,480,195 12,425,170 9,257,893 8,300,002

CURRENT ASSETS Inventories 11 951,767 181,958 - -Trade receivables 12 22,033,965 12,633,294 - -Other receivables, deposits and prepayments 13 1,257,449 737,398 15,800 585,165Amount owing by subsidiaries 14 - - 11,221,832 -Fixed deposits with licensed banks 15 2,091,812 1,145,000 1,003,726 -Cash and bank balances 1,475,279 5,774 437,257 - 27,810,272 14,703,424 12,678,615 585,165 TOTAL ASSETS 49,290,467 27,128,594 21,936,508 8,885,167

The annexed notes form an integral part of these fi nancial statements.


BALANCE SHEETS AT 30 JUNE 2007 (Cont’d)

THE GROUP THE COMPANY 2007 2006 2007 2006 NOTE RM RM RM RM (Restated) EQUITY AND LIABILITIES EQUITY Share capital 16 11,350,000 8,300,002 11,350,000 8,300,002Share premium 17 10,586,318 - 10,586,318 -Exchange translation reserve (59,080) - - -Reserve on consolidation 18 - 1,692,553 - -Retained profi ts/(Accumulated losses) 8,033,093 (35,178) (41,175) (35,178) TOTAL EQUITY 29,910,331 9,957,377 21,895,143 8,264,824 NON-CURRENT LIABILITIES Long term borrowings 19 9,367,919 4,421,358 - -Deferred taxation 20 727,000 572,000 - - 10,094,919 4,993,358 - - CURRENT LIABILITIES Trade payables 21 1,542,368 2,064,400 - -Progress billings 272,137 67,200 - -Other payables and accruals 22 1,052,219 1,127,198 21,365 209,382Amount owing to a subsidiary 14 - - - 410,961Provision for taxation 222,885 201,000 20,000 -Short-term borrowings 23 5,918,746 7,756,702 - -Bank overdrafts 26 276,862 961,359 - - 9,285,217 12,177,859 41,365 620,343 TOTAL LIABILITIES 19,380,136 17,171,217 41,365 620,343 TOTAL EQUITY AND LIABILITIES 49,290,467 27,128,594 21,936,508 8,885,167 Net assets per share 27 26.35 sen 12.00 sen



INCOME STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

THE GROUP THE COMPANY 2007 2006* 2007 2006 NOTE RM RM RM RM REVENUE 28 24,903,870 - 230,000 - COST OF SALES (13,354,521) - - - GROSS PROFIT 11,549,349 - 230,000 - OTHER INCOME 338,338 - 20,276 - SELLING AND DISTRIBUTION EXPENSES (506,719) - - - ADMINISTRATIVE EXPENSES (3,548,781) (19,511) (231,273) (19,511) FINANCE COSTS (621,851) - - - PROFIT/(LOSS) BEFORE TAXATION 29 7,210,336 (19,511) 19,003 (19,511) INCOME TAX EXPENSE 30 (834,618) - (25,000) - PROFIT/(LOSS) AFTER TAXATION 6,375,718 (19,511) (5,997) (19,511)

Earnings/(Loss) per share - basic (sen) 31 5.87 (0.86)

Earnings/(Loss) per share - diluted (sen) Not Not applicable applicable

* The results of the Group in 2006 incorporate the results of the Company only as the Group was formed on 20 June 2006.



STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

THE GROUP Foreign (Accumulated Exchange Losses)/ Share Share Reserve on Translation Retained Capital Premium Consolidation Reserve Profi ts Total NOTE RM RM RM RM RM RM

Balance at 1.7.2005 2 - - - (15,667) (15,665) Issued during the fi nancial year 16 8,300,000 - - - - 8,300,000 Loss after taxation for the fi nancial year - - - - (19,511) (19,511) Reserve arising from consolidation 18 - - 1,692,553 - - 1,692,553 Balance at 30.6.2006/ 1.7.2006, as previously stated 8,300,002 - 1,692,553 - (35,178) 9,957,377 Effects of adopting FRS 3 - - (1,692,553) - 1,692,553 - Balance at 1.7.2006, as restated 8,300,002 - - - 1,657,375 9,957,377 Issued during the fi nancial year 16 3,049,998 12,809,992 - - - 15,859,990 Listing expenses - (2,223,674) - - - (2,223,674) Currency exchange translation reserve - - - (59,080) - (59,080) Profi t after taxation for the fi nancial year - - - - 6,375,718 6,375,718 Balance at 30.6.2007 11,350,000 10,586,318 - (59,080) 8,033,093 29,910,331



STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 JUNE 2007 (Cont’d)

THE COMPANY Share Share Accumulated Capital Premium Losses Total NOTE RM RM RM RM

Balance at 1.7.2005 2 - (15,667) (15,665) Issued during the fi nancial year 16 8,300,000 - - 8,300,000 Loss after taxation for the fi nancial year - - (19,511) (19,511) Balance at 30.6.2006/1.7.2006 8,300,002 - (35,178) 8,264,824 Issued during the fi nancial year 16 3,049,998 12,809,992 - 15,859,990 Listing expenses - (2,223,674) - (2,223,674) Loss after taxation for the fi nancial year - - (5,997) (5,997) Balance at 30.6.2007 11,350,000 10,586,318 (41,175) 21,895,143



THE GROUP THE COMPANY 2007 2006 2007 2006 NOTE RM RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIES Profi t/(Loss) before taxation 7,210,336 (19,511) 19,003 (19,511) Adjustments for:- Amortisation of prepaid land lease payments 16,266 - - -Depreciation of property, plant and equipment 2,383,610 - 32 -Gain on disposal of property, plant and equipment (19,996) - - -Interest expense 585,987 - - -Interest income (48,361) - (20,276) -Reversal of allowance for doubtful debts (138,000) - - - Operating profi t/(loss) before working capital changes 9,989,842 (19,511) (1,241) (19,511)Increase in inventories (769,809) - - -(Increase)/Decrease in trade and other receivables (9,782,722) 19,511 569,365 (243,605)Increase in amount owing by subsidiaries - - (11,221,832) -Decrease in trade and other payables (392,074) - (188,017) (147,845)(Decrease)/Increase in amount owing to a subsidiary - - (410,961) 410,961 CASH FOR OPERATIONS (954,763) - (11,252,686) -Interest paid (585,987) - - -Income tax paid (657,733) - (5,000) - NET CASH FOR OPERATING ACTIVITIES (2,198,483) - (11,257,686) - BALANCE CARRIED FORWARD (2,198,483) - (11,257,686) -


CASH FLOW STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2007


CASH FLOW STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2007 (Cont’d)

THE GROUP THE COMPANY 2007 2006 2007 2006 NOTE RM RM RM RM BALANCE BROUGHT FORWARD (2,198,483) - (11,257,686) - CASH FLOWS (FOR)/FROM INVESTING ACTIVITIES Acquisition of subsidiaries, net of cash acquired 32 - 189,413 - (2)Additional investment in subsidiaries - - (957,598) -Increase in development expenditure (242,601) - - -Increase of prepaid land lease payments (911,273) - - -Interest received 48,361 - 20,276 -Proceeds from disposal of property, plant and equipment 529,000 - - -Purchase of property, plant and equipment 33 (8,533,226) - (325) - NET CASH (FOR)/FROM INVESTING ACTIVITIES (9,109,739) 189,413 (937,647) (2) CASH FLOWS FROM FINANCING ACTIVITIES Drawdown of term loans 6,647,773 - - -Proceeds from issuance of shares 15,859,990 - 15,859,990 -Listing expenses paid (2,223,674) - (2,223,674) -Repayment of bankers’ acceptances (3,652,000) - - -Repayment of hire purchase obligations (1,022,532) - - -Repayment of term loans (1,141,441) - - - NET CASH FROM FINANCING ACTIVITIES 14,468,116 - 13,636,316 - NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 3,159,894 189,413 1,440,983 (2) Effect of changes in exchange rates (59,080) - - - CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 189,415 2 - 2 CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 34 3,290,229 189,415 1,440,983 -



1. GENERAL INFORMATION

The Company is a public company limited by shares and is incorporated under the Malaysian Companies Act, 1965. The domicile of the Company is Malaysia. The registered offi ce and principal place of business are as follows:-

Registered offi ce : 30-05, Level 30, Menara Landmark Mail Box 172, No. 12, Jalan Ngee Heng 80000 Johor Bahru Johor.

Principal place of business : PLO 135, Jalan Cyber 5 Kawasan Perindustrian Senai Fasa 3 81400 Senai Johor.

The fi nancial statements were authorised for issue by the board of directors in accordance with a resolution of the directors dated 1 October 2007.

2. PRINCIPAL ACTIVITIES

The Company is principally an investment holding company and a provider of management services. The principal activities of the subsidiaries are set out in Note 6 to the fi nancial statements. There have been no signifi cant changes in the nature of these activities during the fi nancial year.

3. FINANCIAL RISK MANAGEMENT POLICIES

The Group’s fi nancial risk management policies seek to ensure that adequate fi nancial resources are available for the development of the Group’s business whilst managing its market, credit, liquidity and cash fl ow risks. The policies in respect of the major areas of treasury activity are as follows:-

(a) Market Risk

(i) Foreign Currency Risk

The Group is exposed to foreign exchange risk on sales and purchases that are denominated in a currency other than Ringgit Malaysia. The foreign currencies giving rise to the risk are disclosed in Note 36 to the fi nancial statements.

In respect of other monetary assets and liabilities held in foreign currencies, the Group carries out reviews periodically to ensure that the net exposure is kept at an acceptable level.

(ii) Interest Rate Risk

The Group obtains fi nancing through bank borrowings and hire purchase facilities. Its policy is to obtain the most favourable interest rates available.

Surplus funds are placed with licensed fi nancial institutions at the most favourable interest rates.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2007


NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2007 (Cont’d)

3. FINANCIAL RISK MANAGEMENT POLICIES (Cont’d)

(b) Credit Risk

The Group’s exposure to credit risks, or the risk of counterparties defaulting, arises mainly from receivables. The maximum exposure to credit risks is represented by the total carrying amount of these fi nancial assets in the balance sheet reduced by the effects of any netting arrangements with counterparties.

The Group’s concentration of credit risks relates to the amount owing by eight major customers which make up 58% of its total receivables.

(c) Liquidity and Cash Flow Risks

The Group manages its liquidity risk by maintaining suffi cient cash and the availability of funding through an adequate amount of committed credit facilities to meet estimated commitments arising from operational expenditure and fi nancial liabilities. The Group also has an effective control of cash management to ensure that the Group can pay its operating expenses at appropriate times.

4. BASIS OF PREPARATION

The fi nancial statements of the Group and of the Company have been prepared under the historical cost convention and modifi ed to include other bases of valuation as disclosed in other sections under signifi cant accounting policies, and in compliance with the applicable MASB approved accounting standards in Malaysia for Entities Other Than Private Entities and the provisions of the Companies Act, 1965.

In the current fi nancial year, the Group has adopted all the new and revised Financial Reporting Standards (“FRS”) issued by the Malaysian Accounting Standards Board which are relevant to its operations and effective for fi nancial periods beginning on or after 1 January 2006.

The adoption of these new and revised FRS does not have any material fi nancial effects on the fi nancial statements of the Group and the Company except for FRS 3 - Business Combinations. The effects of adopting this FRS on the accounting policies are disclosed in Note 5(e).

FRS 117 - Lease has been issued and is effective for fi nancial periods beginning on or after 1 October 2006 and the Group has elected to adopt this accounting standard in advance of its effective date. The effects of adopting this FRS on the accounting policies are disclosed in Note 5(j) and the effects on the comparative fi gures are disclosed in Note 41 to the fi nancial statements.

FRS 124 - Related Party Disclosures has issued and are effective for fi nancial periods beginning on or after 1 October 2006 and will be effective for the Group’s fi nancial statements for the fi nancial year ending 30 June 2008.

FRS 6 - Exploration for and Evaluation of Mineral Resources has been issued and is effective for the fi nancial period beginning on or after 1 January 2007. This standard is not relevant to the Group’s operations.

The following revised FRS have been issued and are effective for fi nancial periods beginning on or after 1 July 2007 and will be effective for the Group’s and the Company’s fi nancial statements for the fi nancial year ending 30 June 2008:-

FRS 107 Cash Flow Statements FRS 112 Income Taxes FRS 118 Revenue FRS 121 The Effects of Changes in Foreign Exchange Rates FRS 134 Interim Financial Reporting FRS 137 Provisions, Contingent Liabilities and Contingent Assets


4. BASIS OF PREPARATION (Cont’d)

FRS 139 - Financial Instruments: Recognition and Measurement has been issued and the effective date has yet to be determined by MASB. This new standard establishes principles for recognising and measuring fi nancial assets, the fi nancial liabilities and some contracts to buy and sell non-fi nancial items. The Group and the Company will apply this standard when it becomes effective.

5. SIGNIFICANT ACCOUNTING POLICIES

(a) Critical Accounting Estimates and Judgements Estimates and judgements are continually evaluated by the directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Group’s accounting policies and disclosures, and have a signifi cant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below:-

(i) Depreciation of Property, Plant and Equipment

The estimates for the residual values, useful lives and related depreciation charges for the property, plant and equipment are based on commercial and production factors which could change signifi cantly as a result of technical innovations and competitors’ actions in response to the market conditions.

The Group anticipates that the residual values of its property, plant and equipment will be insignifi cant. As a result, residual values are not being taken into consideration for the computation of the depreciation amount.

Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

(ii) Income Taxes There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the fi nal outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made.

(iii) Impairment of Assets

When the recoverable amount of an asset is determined based on the estimate of the value-in-use of the cash- generating unit to which the asset is allocated, the Group is required to make an estimate of the expected future cash fl ows from cash-generating unit and also to apply as suitable discount rate in order to determine the present value of those cash fl ows.

(iv) Amortisation of Development Costs

Changes in the expected level of usage and technological development could impact the economic useful lives therefore future amortisation charges could be revised.




5. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

(a) Critical Accounting Estimates and Judgements (Cont’d)

(v) Allowance for Doubtful Debts of Receivables

The Group makes allowance for doubtful debts based on an assessment of the recoverability of receivables. Allowances are applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management analyses historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of the allowance for doubtful debts of receivables. Where the expectation is different from the original estimate, such difference will impact the carrying value of receivables.

(vi) Allowance for Inventories

Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories.

(vii) Fair Value Estimates for Certain Financial Assets and Liabilities

The Group carries certain fi nancial assets and liabilities at fair value, which require extensive use of accounting estimates and judgement. While signifi cant components of fair value measurement were determined using verifi able objective evidence, the amount of changes in fair value would differ if the Group uses different valuation methodologies. Any changes in fair value of these assets and liabilities would affect profi t and equity.

(b) Financial Instruments

Financial instruments are recognised in the balance sheets when the Group and the Company have become a party to the contractual provision of the instruments.

Financial instruments are classifi ed as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a fi nancial instrument classifi ed as a liability, are reported as expense or income. Distributions to holder of fi nancial instruments classifi ed as equity are charged directly to equity.

Financial instruments are offset when the Group and the Company have a legally enforceable right to offset and intend to settle either on a net basis or to realise the asset and settle the liability simultaneously.

Financial instruments recognised in the balance sheets are disclosed in the individual policy statement associated with each item.

(c) Functional and Foreign Currency

(i) Functional and Presentation Currency

The functional currency of the Group is measured using the currency of the primary economic environment in which the Group operates.

The consolidated fi nancial statements are presented in Ringgit Malaysia (“RM”) which is the parent’s functional and presentation currency.



(c) Functional and Foreign Currency (Cont’d)

(ii) Transactions and Balances

Transactions in foreign currency are converted into respective functional currencies on initial recognition using the

exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities at the balance

sheet date are translated at the rates ruling as of that date. Non-monetary assets and liabilities are translated

using exchange rates that existed when the values were determined. All exchange differences are taken to the

income statement.

(iii) Foreign Operations

The result and fi nancial position of all the Group entities that have a functional currency different from the

presentation currency are translated into the presentation currency as follows:-

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of

balance sheet;

(ii) income and expense for the income statement are translated at the average exchange rate for the year; and

(iii) all resulting exchange differences are recognised as a separate component of equity, as a foreign currency

translation reserve. On disposal, accumulated translation differences are recognised in the consolidated

income statement as part of the gain or loss on sale.

(d) Basis of Consolidation

The consolidated fi nancial statements include the fi nancial statements of the Company and its subsidiaries made up to

30 June 2007.

A subsidiary is defi ned as an enterprise in which the parent company has the power, directly or indirectly to exercise

control over the fi nancial and operating policies so as to obtain benefi ts from its activities.

All subsidiaries are consolidated using the purchase method. Under the purchase method of accounting, the results

of the subsidiaries acquired or disposed of are included from the date of acquisition up to the date of disposal. At the

date of acquisition, the fair value of the subsidiaries’ net assets is determined and these values are refl ected in

the consolidated fi nancial statements. The cost of acquisition is measured at the aggregate of the fair values, at the

date of exchange, of assets given liabilities incurred or assumed, and equity instruments issued by the Group in

exchange for control of the acquiree, plus any costs directly attributable to the business combination.

Intragroup transactions, balances and unrealised gains on transactions are eliminated, unrealised losses are also

eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the fi nancial statements of the

subsidiaries to ensure consistency of accounting policies with those of the Group.





(e) Goodwill on Consolidation

Goodwill on consolidation represents the excess of the fair value of the purchase consideration over the Group’s share of the fair values of the identifi able net assets of the subsidiaries at the date of acquisition.

Goodwill is measured at cost less accumulated impairment losses, if any. The carrying value of goodwill is reviewed for impairment annually. The impairment value of goodwill is recognised immediately in the consolidated income statement. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Prior to 1 January 2006, negative goodwill was retained in the consolidated balance sheet. With the adoption of FRS 3 - Business Combinations, if after reassessment, the Group’s interest in the fair values of the identifi able net assets of the subsidiaries exceeds the cost of the business combinations, the excess is recognised immediately in the consolidated income statement.

In accordance with the transitional provisions of FRS 3, the negative goodwill as at 1 July 2006 of RM1,692,553 was derecognised with a corresponding adjustment to retained profi ts.

(f) Development Expenditure

Development expenditure is recognised as an expense except that expenditure incurred on development projects are capitalised as long-term assets to the extent that such expenditure is expected to generate future economic benefi ts.

Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses, if any. Development expenditure initially recognised as an expense are not recognised as assets in the subsequent period.

The development expenditure is amortised on a straight-line method over a period of 3 years when the products are ready for sale or use. In the event that the expected future economic benefi ts are no longer probable of being recovered, the development expenditure is written down to its recoverable amount.

(g) Investments in Subsidiaries

Investments in subsidiaries are stated at cost in the balance sheet of the Company, and are reviewed for impairment at the end of the fi nancial year if events or changes in circumstances indicate that their carrying values may not be recoverable.

On the disposal of the investments in subsidiaries, the difference between the net disposal proceeds and the carrying amount of the investments is taken to the income statements.

(h) Property, Plant and Equipment

Property, plant and equipment, other than freehold land are stated at cost less accumulated depreciation or amortisation and accumulated impairment losses, if any. Freehold land is stated at cost less impairment loss, if any, and is not depreciated.

Depreciation or amortisation is calculated under the straight-line method to write off the depreciable amount of the assets over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual rates used for this purpose are:-

Buildings 2% Plant and machinery 15% Furniture, fi ttings and offi ce equipment and motor vehicles 15% to 20%



(h) Property, Plant and Equipment (Cont’d)

The depreciation method, useful life and residual values are reviewed, and adjusted if appropriate, at each balance sheet date to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefi ts embodied in the items of the property, plant and equipment. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefi ts are expected from its use. Any gain or loss arising from derecognition of the asset is included in the income statement in the year the asset is derecognised.

(i) Impairment of Assets

The carrying amounts of assets, other than those to which FRS 136 - Impairment of Assets does not apply, are reviewed at each balance sheet date for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts.

An impairment loss is charged to the income statements immediately unless the asset is carried at its revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of a previously recognised revaluation surplus for the same asset.

In respect of assets other than goodwill, and when there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income statements immediately, unless the asset is carried at its revalued amount. A reversal of an impairment loss on a revalued asset is credited directly to the revaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the income statements, a reversal of that impairment loss is recognised as income in the income statements.

(j) Prepaid Land Lease Payments

The prepaid land lease payments comprise the up-front payments made for the leasehold interest in land. The lease payments are amortised on a straight line basis over the lease terms. Prior to 1 October 2006, leasehold land was classifi ed under property, plant and equipment and was stated at cost less accumulated amortisation and accumulated impairment losses, if any. Upon adoption of the revised FRS 117, the unamortised amount of leasehold interest in land is retained as the surrogate carrying amount of prepaid land lease payments as allowed by the revised FRS 117.

(k) Assets under Hire Purchase

Plant and equipment acquired under hire purchase are capitalised in the fi nancial statements and are depreciated in accordance with the policy set out in Note 5(h) above. Each hire purchase payment is allocated between the liability and fi nance charges so as to achieve a constant rate on the fi nance balance outstanding. Finance charges are allocated to the income statements over the periods of the respective hire purchase agreements.

(l) Progress Billings

Where billings to purchasers exceed the revenue recognised to the income statement, the balance is shown as progress billings under current liabilities.





(m) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the fi rst-in-fi rst-out basis, and comprises the cost of material and incidentals incurred in bringing the inventories to their present location and condition. Cost of work-in-progress includes the cost of materials, labour and an appropriate proportion of production overheads.

Net realisable value represents the estimated selling price less the estimated costs of completion and the estimated costs necessary to make the sale.

Where necessary, due allowance is made for all damaged, obsolete and slow moving items.

(n) Receivables

Receivables are carried at anticipated realisable value. Bad debts are written off in the period in which they are identifi ed. An estimate is made for doubtful debts based on a review of all outstanding amounts at the balance sheet date.

(o) Payables

Payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received.

(p) Income Taxes

Income taxes for the year comprises current and deferred tax.

Current tax is the expected amount of income taxes payable in respect of the taxable profi t for the period and is measured using the tax rates that have been enacted or substantially enacted at the balance sheet date.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the fi nancial statements.

Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifi able assets, liabilities and contingent liabilities over the business combination cost or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profi t nor taxable profi t.

Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profi t will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantially enacted at the balance sheet date.

Deferred tax is recognised in the income statements, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifi able assets, liabilities and contingent liabilities over the business combination cost. The carrying amounts of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that suffi cient taxable profi ts will be available to allow all or part of the deferred tax assets to be utilised.



(q) Interest-bearing Borrowings

The interest-bearing bank loans and overdrafts are recorded at the amount of proceeds received, net of transaction costs.

All borrowing costs are charged to the income statement as an expense in the period in which they are incurred.

(r) Equity Instruments

Ordinary shares are classifi ed as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds.

Dividends on ordinary shares are recognised as liabilities when approved for appropriation.

(s) Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, deposits pledged with licensed banks, bank overdrafts and short term, highly liquid investment that are readily convertible to known amounts of cash and which are subject to an insignifi cant risk of changes in value.

(t) Employee Benefi ts

(i) Short-term benefi ts

Wages, salaries, paid annual leave, bonuses, and non-monetary benefi ts are accrued in the period in which the associated services are rendered by employees of the Group.

(ii) Defi ned Contribution Plans

The Group’s contributions to defi ned contribution plans are charged to the income statement in the period to which they relate. Once the contributions have been paid, the Group has no further liabilities in respect of the defi ned contribution plans. A foreign subsidiary of the Group makes contributions to its respective country’s pension schemes. Such contributions are recognised as an expense in the income statement as incurred.

(u) Segmental Information

Segment revenue and expenses are those directly attributed to the segments and include any joint revenue and expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of property, plant and equipment (net of accumulated depreciation and impairment losses, where applicable) inventories, receivables and cash and bank balances.

Most segment assets can be directly attributed to the segments on a reasonable basis. Segment assets and liabilities do not include income tax assets and liabilities respectively.

Segment revenue, expenses and results include transfers between segments. The prices charged on intersegment transactions are based on normal commercial terms. These transfers are eliminated on consolidation.





(v) Contingent Liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will only be confi rmed by the occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that an outfl ow of economic resources will be required or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the fi nancial statements. When a change in the probability of an outfl ow occurs so that the outfl ow is probable, it will then be recognised as a provision.

(w) Revenue Recognition (i) Sale of Goods

Revenue on sales of mould and toolings is recognised upon delivery of injection moulded sample parts and customers’ acceptance and where applicable, net of sales tax, returns and trade discounts.

(ii) Interest Income

Interest income is recognised on an accrual basis.

(iii) Rendering of services

Revenue is recognised upon rendering of services and when the outcome of the transaction can be estimated reliably. In the event the outcome of the transaction could not be estimated reliably, revenue is recognised to the extent of the expenses incurred that are recoverable.

6. INVESTMENT IN SUBSIDIARIES

THE COMPANY 2007 2006 RM RM Unquoted shares, at cost 9,257,600 8,300,002

Details of subsidiaries are as follows:-

Proportion of Ownership Interest Country of Name of Company (%) Incorporation Principal Activities 2007 2006 Sanichi Precision 100 100 Malaysia Design and fabrication of precision moulds and Mould Sdn. Bhd. tooling Asia Pinnacle Sdn. Bhd. 100 100 Malaysia Design and fabrication of precision moulds and tooling Sanichi Mould (Thailand) 100 - Thailand Dormant Co., Ltd.


7. PROPERTY, PLANT AND EQUIPMENT

THE GROUP At Depreciation At 1.7.2006 Additions Disposal charges 30.6.2007 Net book value RM RM RM RM RM

Freehold land 150,000 - (150,000) - - Buildings 2,781,627 32,901 (316,528) (57,756) 2,440,244 Plant and machinery 8,159,028 9,567,319 (42,475) (2,079,848) 15,604,024 Furniture, fi ttings, offi ce equipment and motor vehicles 472,804 1,209,811 (1) (246,006) 1,436,608 11,563,459 10,810,031 (509,004) (2,383,610) 19,480,876

THE GROUP Additions through acquisition of At a subsidiary At Net book value 1.7.2005 (Note 32) 30.6.2006 RM RM RM Freehold land - 150,000 150,000 Buildings - 2,781,627 2,781,627 Plant and machinery - 8,159,028 8,159,028 Furniture, fi ttings, offi ce equipment and motor vehicles - 472,804 472,804 - 11,563,459 11,563,459

Accumulated Net book At cost depreciation value At 30.6.2007 RM RM RM Buildings 2,579,871 (139,627) 2,440,244 Plant and machinery 21,096,787 (5,492,763) 15,604,024 Furniture, fi ttings, offi ce equipment and motor vehicles 2,104,193 (667,585) 1,436,608 25,780,851 (6,299,975) 19,480,876

Accumulated Net book At cost depreciation value At 30.6.2006 RM RM RM Freehold land 150,000 - 150,000 Buildings 2,909,375 (127,748) 2,781,627 Plant and machinery 11,918,968 (3,759,940) 8,159,028 Furniture, fi ttings, offi ce equipment and motor vehicles 920,382 (447,578) 472,804 15,898,725 (4,335,266) 11,563,459




7. PROPERTY, PLANT AND EQUIPMENT (Cont’d)

THE COMPANY At Depreciation At 1.7.2006 Additions charges 30.6.2007 Net book value RM RM RM RM

Offi ce equipment - 325 (32) 293

Accumulated Net book At cost depreciation value At 30.6.2007 RM RM RM

Offi ce equipment 325 (32) 293

The net book value of the property, plant and equipment of the Group that were acquired under hire purchase terms are as

follows:-

THE GROUP 2007 2006 RM RM

Motor vehicles 672,210 2,200

Plant and machinery 3,152,114 2,497,156

3,824,324 2,499,356

The following assets at net book value of the Group have been pledged to fi nancial institutions as security for banking

facilities granted to the Group as disclosed in Note 23 to the fi nancial statements:-


Freehold land - 150,000

Buildings 2,440,244 2,781,627

Plant and machinery 8,816,865 2,798,621

11,257,109 5,730,248


8. PREPAID LAND LEASE PAYMENTS

THE GROUP 2007 2006 RM RM (Restated)

At 1.7.2006/2005 855,000 -

Addition during the year 911,273 855,000

Release to income statement for the year (16,266) -

At 30.6.2007/2006 1,750,007 855,000

THE GROUP 2007 2006 RM RM (Restated)

At cost 1,811,273 900,000

Accumulated amortisation (61,266) (45,000)

1,750,007 855,000

The comparative fi gures were restated after incorporating the effects of adopting FRS 117 - Leases, as disclosed in Note 41

to the fi nancial statements.

The leasehold land has been pledged to fi nancial institution as security for banking facilities granted to the Group.

9. DEVELOPMENT EXPENDITURE


At cost:-

At 1.7.2006/2005 - -

Addition during the year 242,601 -

At 30.6.2007/2006 242,601 -

The development expenditure relates to costs incurred for the development of the injection mould project.




10. GOODWILL ON CONSOLIDATION

THE GROUP 2007 2006 RM RM Carrying value at 1.7.2006/2005 6,711 - Arising from acquisition of a subsidiary (Note 32) - 6,711 Carrying value at 30.6.2007/2006 6,711 6,711

11. INVENTORIES

THE GROUP 2007 2006 RM RM At cost:- Raw materials 807,664 144,709 Work-in-progress 144,103 37,249 951,767 181,958

None of the inventories are carried at net realisable value, as at balance date.

12. TRADE RECEIVABLES

THE GROUP 2007 2006 RM RM Trade receivables 22,103,465 12,944,124 Less : Allowance for doubtful debts (69,500) (310,830) 22,033,965 12,633,294

Allowance for doubtful debts at 1.7.2006/2005 310,830 - Addition for the fi nancial year - 310,830 Bad debts written off (103,330) - Reversal of allowance for doubtful debts (138,000) - Allowance for doubtful debts at 30.6.2007/2006 69,500 310,830 The Group’s normal trade credit terms range from 30 to 60 days (2006: 30 to 60 days). Other credit terms are assessed and varied on a case-by-case basis.


12. TRADE RECEIVABLES (Cont’d)

The foreign currency exposure profi le of trade receivables is as follows:-

THE GROUP 2007 2006 RM RM Euro 2,968,592 1,172,700 Singapore Dollar 1,776,912 771,765 United States Dollar 9,927,921 6,160,941

Subsequent to the fi nancial year end and until 1 October 2007, the Group has collected approximately RM7.282 million from the above trade receivables.

13. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

THE GROUP THE COMPANY 2007 2006 2007 2006 RM RM RM RM Other receivables 948,037 66,692 5,000 - Deposits 62,400 18,850 - - Prepayments 247,012 651,856 10,800 585,165 1,257,449 737,398 15,800 585,165

14. AMOUNT OWING BY/(TO) SUBSIDIARIES

The amount owing by/(to) subsidiaries are unsecured, interest free and not subject to fi xed terms of repayments.

15. FIXED DEPOSITS WITH LICENSED BANKS

The fi xed deposits of the Group amounting to RM1,080,586 (2006: RM1,052,500) have been pledged as securities for bank borrowings granted to the Group as disclosed in Note 23 to the fi nancial statements.

Included in the fi xed deposits of the Group is RM691,268 (2006: RM669,646) which was placed under the name of a director who held it in trust for a subsidiary.

The effective interest rate per annum of the fi xed deposits at the balance sheet date range from 3.38% to 3.70% (2006: 3.70%). The fi xed deposits have maturity periods range from 3 to 12 months (2006: 12 months).




16. SHARE CAPITAL

Par value THE GROUP AND THE COMPANY 2007 2006 2007 2006 2007 2006 RM RM Number of shares RM RM AUTHORISED At 1.7.2006/2005 0.10 1.00 250,000,000 100,000 25,000,000 100,000 Share split - 900,000 - - After share split 0.10 0.10 250,000,000 1,000,000 25,000,000 100,000 Created during the fi nancial year 0.10 0.10 - 249,000,000 - 24,900,000 At 30.6.2007/2006 0.10 0.10 250,000,000 250,000,000 25,000,000 25,000,000

ISSUED AND FULLY PAID-UP At 1.7.2006/2005 0.10 1.00 83,000,020 2 8,300,002 2 Share split - 18 - - After share split 0.10 0.10 83,000,020 20 8,300,002 2 Shares issued for acquisition of a subsidiary (Note 32) 0.10 0.10 - 83,000,000 - 8,300,000 Shares issued pursuant to the public issue 0.10 0.10 30,499,980 - 3,049,998 - At 30.6.2007/2006 0.10 0.10 113,500,000 83,000,020 11,350,000 8,300,002

17. SHARE PREMIUM

THE GROUP AND THE COMPANY 2007 2006 RM RM Share premium arose from the following:- Public issue of 30,499,980 new ordinary shares of RM0.10 each at a premium of RM0.42 per share 12,809,992 - Listing expenses (2,223,674) - 10,586,318 -

The share premium is not distributable by way of cash dividends and may be utilised in the manner set out in Section 60(3) of the Companies Act, 1965.


18. RESERVE ON CONSOLIDATION THE GROUP 2007 2006 RM RM Carrying value at 1.7.2006/2005 1,692,553 - Arising from acquisition of a subsidiary (Note 32) - 1,692,553 Effect of adopting FRS 3: - derecognition of reserve on consolidation (1,692,553) - Carrying value at 30.6.2007/2006 - 1,692,553

As a result of the adoption of FRS 3 - Business Combinations, under the transitional provisions of FRS 3, reserve on consolidation which arose from the acquisition of subsidiaries before FRS 3 became effective was derecognised with a corresponding adjustment to accumulated losses.

19. LONG TERM BORROWINGS THE GROUP 2007 2006 RM RM Hire purchase payables (Note 24) 1,520,417 491,585 Term loans (Note 25) 7,847,502 3,929,773 9,367,919 4,421,358

20. DEFERRED TAXATION THE GROUP 2007 2006 RM RM At 1.7.2006/2005 572,000 - Additions through acquisition of a subsidiary (Note 32) - 572,000 Transfer from income statement (Note 30) 155,000 - At 30.6.2007/2006 727,000 572,000

Deferred tax liability and asset are attributable to the following items:-

THE GROUP 2007 2006 RM RM Deferred tax liability:- - Accelerated capital allowances 736,000 659,000 Deferred tax asset:- - Allowance for doubtful debts (9,000) (87,000) 727,000 572,000




21. TRADE PAYABLES

The normal trade credit terms granted to the Group range from 60 to 90 days (2006: 60 to 90 days).

The foreign currency exposure profi le of trade payables is as follows:-

THE GROUP 2007 2006 RM RM Singapore Dollar 58,359 10,494

22. OTHER PAYABLES AND ACCRUALS

THE GROUP THE COMPANY 2007 2006 2007 2006 RM RM RM RM Other payables 538,663 715,818 5,710 202,782 Accrued expenses 132,129 191,040 12,000 6,600 Payroll liabilities 381,427 220,340 3,655 - 1,052,219 1,127,198 21,365 209,382

The foreign currency exposure profi le of other payables and accruals is as follows:-

THE GROUP 2007 2006 RM RM Japanese Yen - 270,673 Singapore Dollar - 29,768

23. SHORT TERM BORROWINGS

THE GROUP 2007 2006 RM RM Bankers’ acceptances 2,457,000 6,109,000 Hire purchase payables (Note 24) 1,059,726 834,285 Term loans (Note 25) 2,402,020 813,417 5,918,746 7,756,702

Bankers’ acceptances are drawn for a period of up to 120 days (2006: 120 days) which are renewable on maturity. Interest is charged at rates ranging from 4.05% to 5.69% (2006: 3.80% to 4.45%) per annum.


23. SHORT TERM BORROWINGS (Cont’d)

The bankers’ acceptances and term loans are secured as follows:-

(i) by way of legal charges over the landed properties of the Group;

(ii) by the joint and several guarantees of certain directors of the Group;

(iii) by a pledge of fi xed deposits of the Group; and

(iv) by way of fi xed charges over the machinery of the Group.

24. HIRE PURCHASE PAYABLES

THE GROUP 2007 2006 RM RM Minimum hire purchase payment:- - not later than one year 1,193,784 909,673 - later than one year and not later than fi ve years 1,626,729 500,713 2,820,513 1,410,386 Less : Future fi nance charges (240,370) (84,516) Present value of hire purchase liabilities 2,580,143 1,325,870


The net hire purchase liabilities is repayable as follows:- Current:- - not later than one year (Note 23) 1,059,726 834,285 Non-current:- - later than one year and not later than fi ve years (Note 19) 1,520,417 491,585 2,580,143 1,325,870

The hire purchase liabilities bore interest at the balance sheet date of between 5.32% to 8.72% (2006: 6.50% to 11.69%) per annum.




25. TERM LOANS

THE GROUP 2007 2006 RM RM Current portion:- - repayable within one year (Note 23) 2,402,020 813,417 Non-current portion:- - repayable between one and two years 2,562,010 872,171 - repayable between two and fi ve years 3,698,272 1,420,233 - repayable more than fi ve years 1,587,220 1,637,369 Total non-current portion (Note 19) 7,847,502 3,929,773 10,249,522 4,743,190

Term loans bear interest at rates ranging from 6.40% to 8.25% (2006: 6.85% to 8.30%) per annum and are secured in the same manner as the short term borrowings as disclosed in Note 23 to the fi nancial statements.

26. BANK OVERDRAFTS

The bank overdrafts to a limit of RM1,700,000 (2006: RM1,380,000) is payable on demand and interest is charged at rates ranging from 8.00% to 8.75% (2006: 8.25% to 8.75%) per annum.

The bank overdrafts are secured in the same manner as the short term borrowings as disclosed in Note 23 to the fi nancial statements.

27. NET ASSETS PER SHARE

The net assets per share of the Group is calculated based on the net assets of RM29,910,331 (2006: RM9,957,377) attributable to ordinary shares divided by the number of ordinary shares in issue at the balance sheet date of 113,500,000 (2006: 83,000,020) shares of RM0.10 each.

28. REVENUE

THE GROUP THE COMPANY 2007 2006 2007 2006 RM RM RM RM Sales of goods 24,903,870 - - - Rendering of services to subsidiaries - - 230,000 - 24,903,870 - 230,000 -


29. PROFIT/(LOSS) BEFORE TAXATION

THE GROUP THE COMPANY 2007 2006 2007 2006 RM RM RM RM Profi t/(Loss) before taxation is arrived at after charging:- Audit fees - statutory 32,500 6,000 10,000 6,000 - special - 500 - 500 Amortisation of prepaid land lease payments 16,266 - - - Depreciation of property, plant and equipment 2,383,610 - 32 - Directors’ remuneration - fees 61,000 - 61,000 - Directors’ remuneration - EPF contributions 102,229 - - - Directors’ remuneration - other emoluments 951,042 - 14,300 - Interest expenses 585,987 - - - Loss on foreign exchange - realised 41,667 - - - Rental charges 100,586 - 1,100 - Staff costs 4,039,751 - 25,868 - and crediting:- Bad debts recovered (50,109) - - - Gain on disposal of property, plant and equipment (19,996) - - - Gain on foreign exchanged - realised (49,404) - - - Interest income (48,361) - (20,276) - Reversal of allowance for doubtful debts (138,000) - - -

Included in staff costs of the Group and of the Company are EPF contributions of RM269,349 (2006: RM Nil) and RM1,308 (2006: RM Nil) respectively.

30. INCOME TAX EXPENSE

THE GROUP THE COMPANY 2007 2006 2007 2006 RM RM RM RM Malaysian income tax:- - Current year 833,000 - 25,000 - - Underprovision in prior year (153,382) - - - 679,618 - 25,000 - Deferred tax expenses (Note 20):- - Relating to origination of temporary difference 164,000 - - - - Overprovision in prior year (9,000) - - -

155,000 - - - Total tax expense 834,618 - 25,000 -




30. INCOME TAX EXPENSE (Cont’d)

A reconciliation of the income tax expenses applicable to the profi t/(loss) before tax at the statutory tax rate to income tax expenses at the effective tax rate of the Group and of the Company are as follows:-

THE GROUP THE COMPANY 2007 2006 2007 2006 RM RM RM RM Profi t/(Loss) before taxation 7,210,336 (19,511) 19,003 (19,511) Malaysian taxation at statutory rates 1,874,100 (5,463) 5,100 (5,463) Tax effects of:- Non-deductible expenses 208,000 5,463 19,900 5,463 Non-taxable income (15,000) - - - Tax savings from income tax incentives (1,070,100) - - - Overprovision of income tax in prior years (153,382) - - - Overprovision of deferred tax in prior years (9,000) - - - Tax for the fi nancial year 834,618 - 25,000 -

31. EARNINGS/(LOSS) PER SHARE

THE GROUP 2007 2006 RM RM Basic Net profi t/(loss) attribute to ordinary shareholders 6,375,718 (19,511) Number of shares in issue as at 1.7.2006/2005 83,000,020 2 Effects of the issuance of 30,499,980 (2006: 8,300,000) new ordinary shares 25,569,846 2,273,973 Weighted average number of shares 108,569,866 2,273,975 Basic earnings/(loss) per share (sen) 5.87 (0.86)

The fully diluted earnings per share for the Group is not presented as there were no dilutive potential ordinary shares during the fi nancial year.


32. SUMMARY OF EFFECTS ON ACQUISITIONS OF SUBSIDIARIES

On 20 June 2006, the Company acquired the entire issued and paid-up share capital of Sanichi Precision Mould Sdn. Bhd.

and Asia Pinnacle Sdn. Bhd.. The details of net assets acquired, goodwill, reserve on consolidation and cash fl ows arising

from the acquisitions were as follows:-

THE GROUP At date of acquisition 2006 RM

Property, plant and equipment (Note 7) 11,563,459

Prepaid land lease payments 855,000

Inventories 181,958

Trade and other receivables 13,200,879

Fixed deposits with licensed banks 1,145,000

Cash and bank balances 5,774

Trade and other payables (2,986,607)

Progress billings (67,200)

Taxation (201,000)

Borrowings (12,178,060)

Bank overdrafts (961,359)

Deferred taxation (Note 20) (572,000)

Net assets acquired 9,985,844

Goodwill (Note 10) 6,711

Reserve on consolidation (Note 18) (1,692,553)

Total purchase consideration 8,300,002

Less : Portion fi nanced by issuance of shares for acquisition

of a subsidiary (Note 16) (8,300,000)

Cash consideration of a subsidiary acquired 2

Cash and cash equivalents acquired (189,415)

Net cash infl ow from acquisition of subsidiaries (189,413)




32. SUMMARY OF EFFECTS ON ACQUISITIONS OF SUBSIDIARIES (Cont’d)

There were no effects by the acquisition of subsidiaries towards the fi nancial results of the Group during the year 30 June 2006. As the Group was only formed on 20 June 2006, no signifi cant post-acquisition results were consolidated into the Group’s income statements.

The effects of the acquisitions of subsidiaries on the fi nancial position of the Group at the end of the fi nancial year are as follows:-

THE GROUP 2006 RM Property, plant and equipment 11,563,459 Prepaid land lease payments 855,000 Inventories 181,958 Trade and other receivables 13,200,879 Fixed deposits with licensed banks 1,145,000 Cash and bank balances 5,774 Trade and other payables (2,986,607) Progress billings (67,200) Taxation (201,000) Borrowings (12,178,060) Bank overdrafts (961,359) Deferred taxation (572,000) Increase in Group’s net assets 9,985,844

The results of operations incorporating the full year’s revenue and expenses, and deducting the pre-acquisition results for the period of the fi nancial year before the date of the acquisition are as follows:-

THE GROUP 2006 RM Revenue 21,333,218 Other income 64,958 Operating costs (16,725,029) Profi t before taxation 4,673,147 Taxation (803,142) Profi t after taxation 3,870,005 Pre-acquisition profi t (3,889,516) Loss attributable to shareholders (19,511)


33. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

THE GROUP THE COMPANY 2007 2006 2007 2006 RM RM RM RM Cost of property, plant and equipment purchased 10,810,031 - 325 - Amount fi nanced through hire purchase (2,276,805) - - - Cash disbursed for purchase of property, plant and equipment 8,533,226 - 325 -

34. CASH AND CASH EQUIVALENTS

For the purpose of the cash fl ow statement, cash and cash equivalents comprise of the following items:-

THE GROUP THE COMPANY 2007 2006 2007 2006 RM RM RM RM Fixed deposits with licensed banks (Note 15) 2,091,812 1,145,000 1,003,726 - Cash and bank balances 1,475,279 5,774 437,257 - Bank overdrafts (Note 26) (276,862) (961,359) - - 3,290,229 189,415 1,440,983 -

35. DIRECTORS’ REMUNERATION

The aggregate amount of emoluments received and receivable by the directors of the Group and of the Company during the fi nancial year were as follows:-

THE GROUP THE COMPANY 2007 2006 2007 2006 RM RM RM RM Executive directors:- - basic salaries, bonus and EPF 1,038,971 - - - Non-Executive directors:- - fees 61,000 - 61,000 - - other emoluments 14,300 - 14,300 - 1,114,271 - 75,300 -




35. DIRECTORS’ REMUNERATION (Cont’d)

The remuneration received/receivable by the Directors from the Group during the fi nancial year in the bands of RM50,000 are as follows:-

THE GROUP Number of Directors 2007 2006 Executive directors:- RM250,001 - RM300,000 2 - RM350,001 - RM400,000 1 - 3 - Non-Executive directors:- Below RM50,000 3 - 6 -

36. FOREIGN EXCHANGE RATES

The applicable closing foreign exchange rates used (expressed on the basis of one unit of foreign currency to Ringgit Malaysia equivalent) for the translation of foreign currency balances at the balance sheet date are as follows:-

THE GROUP 2007 2006 RM RM Euro 4.64 4.65 Japanese Yen - 0.03 Singapore Dollar 2.25 2.31 Thailand Baht 0.10 - United States Dollar 3.45 3.67

37. SEGMENTAL REPORTING


SALES REVENUE BY GEOGRAPHICAL MARKET:- Malaysia 10,422,611 - Other Asia Pacifi c countries 9,239,826 - European countries 4,548,724 - Others 692,709 - 24,903,870 -


37. SEGMENTAL REPORTING (Cont’d)

No segmental information has been prepared for fi nancial year ended 30 June 2006 as no signifi cant post-acquisition results were consolidated into the Group’s income statements.

No other segmental information such as segment assets, liabilities and results are presented as the Group is principally engaged within one industry which involves the design and fabrication of precision moulds and tooling and operates from Malaysia only.

38. SIGNIFICANT RELATED COMPANY TRANSACTIONS

The signifi cant related company transactions are as follows:- THE COMPANY 2007 2006 Name of related company Nature of transaction RM RM Subsidiaries Asia Pinnacle Sdn. Bhd. Management fee income 80,000 -

Sanichi Precision Mould Sdn. Bhd. Management fee income 150,000 -

39. CONTINGENT LIABILITIES

THE COMPANY 2007 2006 RM RM Corporate guarantees (unsecured) given to licensed banks for banking facilities granted to subsidiaries 27,151,000 -

40. FAIR VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Fair value is defi ned as the amount at which the fi nancial instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm’s length transaction, other than in a forced sale or liquidation.

The following methods and assumptions are used to estimate the fair value of each class of fi nancial assets and liabilities:-

(a) Unquoted investment

It is not practicable to determine the fair values because of the lack of quoted market prices and the assumptions used in valuation models to value these investments cannot be reasonable determined.

(b) Bank balances and other liquid funds and short term receivables

The carrying amounts approximated their fair values due to the relatively short term maturity of these instruments.




40. FAIR VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Cont’d)

(c) Short term borrowings and other current liabilities

The carrying amounts approximated their fair values because of the short period to maturity of these instruments.

(d) Long term bank loans

The carrying amounts approximated their fair values as these instruments bear interest at variable rates.

(e) Amount owing by/(to) subsidiaries

It is not practicable to estimate the fair values of the amount owing by/(to) subsidiaries due principally to a lack of fi xed repayments terms. However, the Company does not anticipate the carrying amounts recorded at the balance sheet date to be signifi cantly different from the values that would eventually be received or settled.

(f) Hire purchase payables

The fair value of hire purchase payables is determined by discounting the relevant cash fl ows using current interest rates for similar instruments at the balance sheet date.

(g) Contingent liabilities

The nominal amount and net fair value of contingent liabilities not recognised in the balance sheets of the Company are as follows:

THE COMPANY Nominal Net Fair Amount Value Note RM RM At 30.6.2007 Corporate guarantees 39 27,151,000 *

* The net fair value of the contingent liabilities is estimated to be minimal as the subsidiaries are expected to fulfi ll their obligations to repay the banking facilities.

41. EFFECTS ARISING FROM THE ADOPTION OF NEW AND REVISED FRS

The following comparative fi gures have been restated as a result of adopting the new and revised FRS:-

As previously Effects of As stated FRS 117 restated THE GROUP RM RM RM Balance Sheet (extract):- Property, plant and equipment 12,418,459 (855,000) 11,563,459 Prepaid land lease payments - 855,000 855,000


SHARE CAPITAL

Authorised Share Capital : RM25,000,000.00Issued and Fully Paid-Up Capital : RM11,350,000.00Class of Equity Securities : Ordinary Shares of RM0.10 eachVoting Rights : One vote per share

DISTRIBUTION OF SHAREHOLDERS

No. of No. ofRange of shareholdings Shareholders % Shares %

Less than 100 5 0.44 276 0.00100 – 1,000 137 12.01 118,904 0.101,001 – 10,000 611 53.55 3,866,400 3.4110,001 – 100,000 307 26.91 11,249,007 9.91100,001 to less than 5% of Issued Shares 79 6.92 48,130,893 42.415% and above of Issued shares 2 0.17 50,134,520 44.17 1,141 100.00 113,500,000 100.00

THIRTY (30) LARGEST SECURITIES ACCOUNT HOLDERS(without aggregating securities from different securities accounts belonging to the same person)

No. ofNo. Name Shares Held %

1. Dato’ Dr Pang Chow Huat 43,970,020 38.74

2. PFM Capital Sdn Bhd 6,164,500 5.43

3. EB Nominees (Tempatan) Sdn Bhd 5,000,000 4.41

(A/C for Dato’ Dr Pang Chow Huat)

4. Datin Chen Choon Lee 3,925,347 3.46

5. AMMB Nominees (Tempatan) Sdn Bhd 3,700,000 3.26

(Amtrustee Berhad for HLG Dividend Fund HLGDF)

6. Gwee Kok Ling 3,345,000 2.95

7. Ng Kit Heng 3,000,000 2.64

8. OSK Nominees (Tempatan) Sdn Bhd 2,044,800 1.80

(OSK Capital Sdn Bhd for Mohd Abdullah Bin Mohd Mohaidin)

9. Ng Kee Leen 2,000,000 1.76

10. Soh Teck Toh 1,422,900 1.25

11. Syed Sobri Bin Syed Ismail 1,410,000 1.24

12. Lee Kuan Chen 1,375,000 1.21

13. Wong Fuei Boon 1,243,000 1.10

14. Multi-Purpose Insurans Bhd 1,000,000 0.88

15. Wong Yen Lin @ Wong Yoon Lin 1,000,000 0.88

16. AMMB Nominees (Tempatan) Sdn Bhd 1,000,000 0.88

(Amtrustee Berhad for HLG Dana Makmur)

ANALYSIS OF SHAREHOLDINGSAS AT 8 OCTOBER 2007


THIRTY (30) LARGEST SECURITIES ACCOUNT HOLDERS (Cont’d)(without aggregating securities from different securities accounts belonging to the same person)

No. ofNo. Name Shares Held %

17. Quek Wee Seng 900,000 0.7918. TLC Nominees (Tempatan) Sdn Bhd 854,653 0.75 (A/c for Datin Chen Choon Lee) 19. Koay Phaik Sim 830,000 0.7320. RHB Capital Nominees (Tempatan) Sdn Bhd 700,000 0.62 (A/c for Tang Teck Heng) 21. RHB Capital Nominees (Tempatan) Sdn Bhd 630,000 0.56 (A/c for Tang Kian Huat) 22. Yap Ban Foo 500,000 0.4423. TA Nominees (Tempatan) Sdn Bhd 500,000 0.44 (A/c for Pee Kee Chiaw) 24. Bun Sek Yen 458,000 0.4025. Khoo Koay Boon 441,000 0.3926. AIBB Nominees (Tempatan) Sdn Bhd 439,900 0.39 (A/c for Rajith A/L Gamgadharan Nair) 27. Lee Giam Choon 420,000 0.3728. Tee Hwee Ing 400,000 0.3529. Azlan Shah Bin Ahmad Shah 377,100 0.3330. Amsec Nominees (Tempatan) Sdn Bhd 357,100 0.31 (Ambank Malaysia Berhad for Ng Saw Thong)

SUBSTANTIAL SHAREHOLDERS

Direct No. Indirect No.No. Name of Shares % of Shares %

1. Dato’ Dr Pang Chow Huat 48,970,020 43.14 (i) 4,780,000 4.212. PFM Capital Sdn Bhd 6,164,500 5.43 - -

Note: (i) Deemed interest by virtue of the shareholdings of his wife, Datin Chen Choon Lee.

DIRECTORS’ SHAREHOLDINGS

Direct No. Indirect No.No. Name of Shares % of Shares %

1. Dato’ Dr Pang Chow Huat 48,970,020 43.14 (i) 4,780,000 4.212. Datin Chen Choon Lee 4,780,000 4.21 (ii) 48,970,020 43.143. Tan Sri Dato’ Sri Abdul Halil Bin Abd Mutalif - - - -4. Gwee Kok Ling 3,345,000 2.95 - -5. Er Soon Lock - - - -

Note: (i) Deemed interest by virtue of the shareholdings of his wife, Datin Chen Choon Lee.(ii) Deemed interest by virtue of the shareholdings of her husband, Dato’ Dr Pang Chow Huat.

ANALYSIS OF SHAREHOLDINGS AS AT 8 OCTOBER 2007 (Cont’d)

This page has been left blank intentionally.

SANICHI TECHNOLOGY BERHAD (661826-K)(Incorporated In Malaysia)

PROXY FORM

Number of Ordinary Shares Held

I/We,………………………………………………………………................… Nric No./Co. No: ……………......................................... (FULL NAME IN BLOCK LETTERS)

of …………………………………………………………………………………………….…………………..................…………………..

…………………………………………………………………………………………………………………..................…………………... (FULL ADDRESS)

being a member of SANICHI TECHNOLOGY BERHAD, hereby appoint ……….................…………...……………..…………….

…………………………………………………………………………………………………………………………..................…………... (FULL NAME AND NRIC/ PASSPORT NO. IN BLOCK LETTERS)

…………………………………………………………………………………………………….............................................................. (FULL ADDRESS)

or failing him/her, the Chairman of the meeting as *my/our proxy(ies) to vote for *me/us and on *my/ our behalf at the Third Annual General Meeting of the Company to be held at the PLO 135, Jalan Cyber 5, Kawasan Perindustrian Senai, Fasa 3, 81400 Senai Johor on Monday, 19th November 2007 at 11.00 a.m. or any adjournment thereof.

If you wish to appoint other person(s) to be your proxy/proxies, kindly delete the words “The Chairman of the Meeting or failing him” and insert the name(s) of the person(s) desired.

Mark either box if you wish to direct the proxy how to vote. If no mark is made the proxy may vote on the resolution or abstain from voting as the proxy thinks fi t. If you appoint two proxies and wish them to vote differently this should be specifi ed.

My/our proxy/proxies is/are to vote as indicated below

No.

1.

2.

3.

4.

5.

6.

ORDINARY RESOLUTIONS

To receive the Audited Financial Statements for the Financial year ended 30 June 2007 and the Reports of the Directors and Auditors thereon.

To re-elect Tan Sri Dato’ Sri Abdul Halil Bin Abd Mutalif who retire by rotation pursuant to Article 128 of the Company’s Articles of Association:

To re-elect Mr Er Soon Lock who retire by rotation pursuant to Article 132 of the Company’s Articles of Association:

To approve the payment of Directors’ fees of RM61,000-00 for the fi nancial year ended 30 June 2007

To re-appoint Messrs Horwath as Auditors of the Company and to authorize the Directors to fi x their remuneration.

To transact any other ordinary business of the Company for which due notice shall have been given.

FOR AGAINST

* Strike out whichever not applicable

Signed this …….....… day of …………........................……. 2007

…………………………………………………….Signature of Member/Common Seal

Notes:(i) A member entitled to attend and vote at the above meeting is entitled to appoint a proxy/proxies who may but need not be a member of the Company to vote in his/her stead. If the proxy is not a member, he need not be an advocate, an approved company auditor or a person approved by the Companies Commission of Malaysia.(ii) Where a member appoints two proxies, the appointment shall be invalid unless he/she specifi es the proportion of his/her holdings to be represented by each proxy.(iii) This instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorized in writing or, if the appointer is a corporation, either under its common seal or under the hand of an offi cer or attorney duly authorized.(iv) This instrument appointing a proxy must be deposited at the Registered Offi ce of the Company not less than forty-eight (48) hours before the time appointed for holding the meeting or at any adjournment thereof.

Then fold here

1st fold here

AFFIXSTAMP

REGISTERED OFFICE

30-05, Level 30, Menara Landmark,Mail Box 172, 12 Jalan Ngee Heng80000 Johor Bahru

2007 innovative ideas is created from ﬂ exibility sanichi technology berhad 2 sanichi technology...

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