pkar07 pg00-01 - nilairesources.com.my · director’s profile director’s profile 05 tan sri...

BBN Development Sdn. Bhd.

N.S. Township Development Sdn. Bhd.

PK Properties Sdn. Bhd.

Arus Ikhlas Sdn. Bhd.

Advance Point Management Sdn. Bhd.

Romila Jaya Sdn. Bhd.

Nilai Landscape Sdn. Bhd.

EDUCATION

HOSPITALITY

Nilai Springs Bhd.

(Nilai Springs Golf & Country Club)

PK Education Sdn. Bhd.

(Nilai International University College)

PROPERTY

RELATED ACTIVITIES

DEVELOPMENT AND

BOARD OF DIRECTORS

TAN SRI DATO’ DR GAN KONG SENG Executive Chairman

GAN ENG HONG Group Managing Director

CHOR ENG CHOON Group Executive Director

DATO’ GAN KONG HIOK Executive Director

YM PROF. EMERITUS TENGKU DATO’ SHAMSUL BAHRIN Executive Director

DATUK ALLADIN BIN MOHD HASHIM Independent Non-Executive Director

DATO’ PROF. ZAINUDDIN BIN MUHAMMAD Independent Non-Executive Director

OOI SOON KIAM Independent Non-Executive Director

SECRETARYPaul Yong Pow Choy

REGISTERED OFFICEWisma BBN, PT 7454, Jalan BBN 1/1A, Putra Nilai, 71800 Nilai, Negeri Sembilan Darul KhususTel : 06-850-1888 • Fax : 06-850-2492E-mail : [email protected]

REGISTRARSymphony Share Registrars Sdn BhdLevel 26, Menara Multi Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala LumpurTel : 03-2721-2222 • Fax : 03-2721-2530/2721-2531

BANKERSAmBank Berhad • AmInvestment Bank BerhadCIMB Bank Berhad • EON Bank BerhadHong Leong Bank Berhad • Malayan Banking BerhadRHB Bank Berhad

AUDITORSErnst & Young Level 23A, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur

SOLICITORSLee Hishammuddin Allen & GledhillLevel 16, Menara Asia Life, No. 189, Jalan Tun Razak, 50400 Kuala Lumpur

Raja Eleena Siew Ang & AssociatesNo. 8, Jalan Delima, Off Jalan Inai55100 Kuala Lumpur

LISTINGBursa Malaysia Securities BerhadMain Board

Corporate Information

PK Resources Berhad(17654-P)

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P K R e s o u r c e s B e r h a d A n n u a l R e p o r t 2 0 0 7

BBN Development Sdn. Bhd.

N.S. Township Development Sdn. Bhd.

PK Properties Sdn. Bhd.

Arus Ikhlas Sdn. Bhd.

Advance Point Management Sdn. Bhd.

Romila Jaya Sdn. Bhd.

Nilai Landscape Sdn. Bhd.

EDUCATION

HOSPITALITY

Nilai Springs Bhd.

(Nilai Springs Golf & Country Club)

PK Education Sdn. Bhd.

(Nilai University College)

PROPERTY

RELATED ACTIVITIES

DEVELOPMENT AND

BOARD OF DIRECTORS

TAN SRI DATO’ DR GAN KONG SENG Executive Chairman

GAN ENG HONG Group Managing Director

CHOR ENG CHOON Group Executive Director

DATO’ GAN KONG HIOK Executive Director

YM PROF. EMERITUS TENGKU DATO’ SHAMSUL BAHRIN Executive Director

DATUK ALLADIN BIN MOHD HASHIM Independent Non-Executive Director


OOI SOON KIAM Independent Non-Executive Director

SECRETARYPaul Yong Pow Choy

REGISTERED OFFICEWisma BBN, PT 7454, Jalan BBN 1/1A, Putra Nilai, 71800 Nilai, Negeri Sembilan Darul KhususTel : 06-850-1888 • Fax : 06-850-2492E-mail : [email protected]

REGISTRARSymphony Share Registrars Sdn BhdLevel 26, Menara Multi Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala LumpurTel : 03-2721-2222 • Fax : 03-2721-2530/2721-2531

BANKERSAmBank Berhad • AmInvestment Bank BerhadCIMB Bank Berhad • EON Bank BerhadHong Leong Bank Berhad • Malayan Banking BerhadRHB Bank Berhad

AUDITORSErnst & Young Level 23A, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur

SOLICITORSLee Hishammuddin Allen & GledhillLevel 16, Menara Asia Life, No. 189, Jalan Tun Razak, 50400 Kuala Lumpur

Raja Eleena Siew Ang & AssociatesNo. 8, Jalan Delima, Off Jalan Inai55100 Kuala Lumpur

LISTINGBursa Malaysia Securities BerhadMain Board

Corporate Information

PK Resources Berhad(17654-P)

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Director’s Profile

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TAN SRI DATO’ DR GAN KONG SENGExecutive ChairmanNon-Independent Director

Malaysian, aged 65

Tan Sri Dato’ Dr Gan Kong Seng, has been a Non-Independent Executive Director of PK Resources Berhad since 3 June 1991 and has been the Executive Chairman since 26 February 1992. He is also the Chairman of the Executive Committee and the Option Committee. He attended all five (5) Board Meetings of the Company held during the financial year ended 31 December 2007.

Tan Sri holds a Bachelor‘s Degree in Medicine and Surgery from the University of Malaya. He was conferred an Honorary Doctorate Degree in Philosophy (Education) by Oxford Brookes University, United Kingdom in 1998.

Tan Sri served as a medical doctor with the Ministry of Defence from 1970 to 1973 before entering private medical practice from 1973 to 1982. From 1981 to 1982, Tan Sri was a Senator of the Malaysia Senate and from 1982 to 1985, he was a State Executive Councilor of the Negeri Sembilan State Government. After 1985, he ventured into the world of business of his own until 1991 when he was appointed as a Director of PK Resources Berhad.

Tan Sri Dato’ Dr Gan Kong Seng is the father of Mr Gan Eng Hong, the Managing Director of the Company and the brother of Dato’ Gan Kong Hiok, an Executive Director of the Company. He is deemed a major shareholder of PK Resources Berhad and its subsidiaries by virtue of his interest in the Company as disclosed on page 37 and 38 of the Directors’ Report.

GAN ENG HONGGroup Managing DirectorNon-Independent Director

Malaysian, aged 37

Mr Gan Eng Hong, has been a Non-Independent Executive Director of PK Resources Berhad since 26 August 2003 and has been the Group Managing Director since 1 September 2006. He is currently a member of the Executive Committee. He attended four (4) out of five (5) Board Meetings of the Company held during the financial year ended 31 December 2007.

Mr Gan holds a Graduate Diploma in Legal Practice, Bachelor of Laws and Bachelor of Arts (Asian Studies) from the Australian National University. He is a Barrister of the High Court and Federal Courts of Australia and a Barrister and Solicitor of the Supreme Court of the Australian Capital Territory. He is also an Advocate & Solicitor of the Malaysian High Court.

Mr Gan practised law with Messrs Allen & Gledhill on his return to Malaysia in 1995. From 1997 to 1999, he worked with KPMG Management Consulting and subsequently KPMG Corporate Services before he joined Nilai International University College as Vice-President (Administration) in September 1999.

Mr Gan Eng Hong is the son of Tan Sri Dato’ Dr Gan Kong Seng, the Chairman of PK Resources Berhad.

DATO’ GAN KONG HIOK

Non-Independent Executive Director

Malaysian, aged 57

Dato’ Gan Kong Hiok, has been a Non-Independent Executive Director of PK Resources Berhad since 3 June 1991. He was appointed Managing Director of the Company on 27 April 2001 but due to his desire to focus on other commitments, he stepped down as Managing Director on 1 September 2006. He was also a member of the Audit Committee since 1995 but following the revised “Best Practices in Corporate Governance” on 1 October 2007 that requires all audit committee members to be non-executive directors, he resigned as a Audit Committee member on 16 November 2007. Currently, he is a member of the Executive Committee, Remuneration Committee and Option Committee. He attended three (3) out of four (4) Audit Committee Meetings and

four (4) out of five (5) Board Meetings of the Company held during the financial year ended 31 December 2007.

Dato’ Gan holds a Bachelor’s Degree (Hons) in Chemical Engineering from the University of Aston and a Master of Philosophy from the University of Oxford.

Dato’ Gan worked as an Investment Manager in the city of London for five years before joining Bumiputra Merchant Bankers Bhd. In 1982, he joined Multi-Purpose Holdings Bhd as their Corporate Planning Manager and in 1984, he was appointed the Group General Manager and Director of Magnum Corporation Bhd.

Dato’ Gan Kong Hiok is the brother of Tan Sri Dato’ Dr Gan Kong Seng, the Chairman of PK Resources Berhad. He is deemed a major shareholder of PK Resources Berhad and its subsidiaries by virtue of his interest in the Company as disclosed on page 37 and 38 of the Directors’ Report.


Director’s Profile (Contd.) Director’s Profile (Contd.)


OOI SOON KIAMIndependent Non-Executive Director

Malaysian, aged 64

Mr Ooi Soon Kiam, has been an Independent Non-Executive Director of PK Resources Berhad since 22 January 2002. He is currently the Chairman of the Remuneration Committee and a member of the Audit Committee, Option Committee and Nomination Committee. He attended all four (4) Audit Committee Meetings and five (5) Board Meetings of the Company held during the financial year ended 31 December 2007.

Mr Ooi sits on the Board of Industronics Berhad.

Mr Ooi holds a B.A. (Hons) in Economics from the University of Malaya and a Degree in Accounting from the University of British Columbia. He is a member of the Malaysian Institute of Accountants (MIA) and Canadian Institute of Chartered

Dato’ Prof. Zainuddin held many posts in various states of Malaysia before being promoted to the post of Director General of the Malaysian Federal Department of Town and Country Planning, which he held from 1993 to 2001. In recognition of his outstanding achievement and contribution to planning, he was conferred the title of Adjunct Professor of Planning by University Technology Malaysia in 1996. He was named Planner of the Year in 1995 by the Malaysian Institute of Planners and was named the Paul Harris Fellow in 1995 by the Rotary Club International. He was conferred Alumni Fellow in 1997 by Kansas State University, USA and Fellow of the Institute for Environment and Development (LESTARI), University Kebangsaan Malaysia and Fellow of the Malaysian Institute of Planners. He was the former Chairman of Putrajaya Holdings Sdn Bhd.

Dato’ Prof. Zainuddin Bin Muhammad has no family relationship with any of the other directors or major shareholders of PK Resources Berhad and has no shareholdings in Company.

Accountants (CICA). He is the former Technical Director of the Malaysian Accounting Standards Board.

Mr Ooi has many years of working experience as an educator in both public universities and private education institutions and has been an economic and financial consultant to local governments, public enterprises and international agencies. He had also been appointed General Manager and Finance Director in various companies.

Mr Ooi Soon Kiam has no family relationship with any of the other directors or major shareholders of PK Resources Berhad and has no shareholdings in the Company.

CHOR ENG CHOON Group Executive DirectorNon-Independent Director

Malaysian, aged 49

Mr Chor Eng Choon, has been a Non-Independent Group Executive Director of PK Resources Berhad since 24 February 2005. He is currently a member of the Executive Committee and Option Committee. He attended all five (5) Board Meetings of Company held during the financial year ended 31 December 2007.

Mr Chor holds a Bachelor in Accounting (Honor 1st Class) from the University of Malaya and is a member of the Malaysian Institute of Accountants (MIA) and Malaysian Association of Certified Public Accountants (MACPA).

Mr Chor joined KPMG Peat Marwick, Kuala Lumpur in 1984 and was seconded to its London office in 1988. He left the international accounting firm in 1991 to join Marshall Cavendish Ltd, a global publishing company as its Financial Controller based in its London office for 4½ years. He was the General Manager of BBN Development Sdn Bhd, the property development arm of PK Resources Berhad after he returned to Malaysia in 1996. In 2000, he joined Hua Yang Berhad as its Executive Director and was appointed the Chief Executive Officer of the Group in May 2002. He successfully brought about the listing of Hua Yang Berhad on the Main Board of Bursa Malaysia Securities Berhad on 29 November 2002. He rejoined PK Resources Berhad as its Group General Manager in July 2004.

Mr Chor Eng Choon has no family relationship with any of the other directors or major shareholders of PK Resources Berhad and has no shareholdings in the Company.

DATUK ALLADIN HASHIMSenior Independent Non-Executive Director

Malaysian, aged 69

Datuk Alladin Hashim, has been an Independent Non- Executive Director of PK Resources Berhad since 6 February 1980. He is currently the Chairman of the Audit Committee and Nomination Committee and a member of the Remuneration Committee. He attended all four (4) Audit Committee Meetings and four (4) out of five (5) Board Meetings of the Company held during the financial year ended 31 December 2007.

Datuk Alladin Hashim is a Director of UAC Berhad and Timberwell Bhd. He is also the Chairman of FPG Oleochemicals Sdn Bhd, a joint-venture company of the Federal Land Development Authority (FELDA).

Datuk Alladin Hashim obtained his Bachelor of Agricultural Science from the University of Malaya and a Master of Science in Agricultural Economics from the University of Massachusetts, USA. He attended the executive development programme of the Harvard Business School. He is also a Fellow of the Academy of Sciences Malaysia.

Datuk Alladin Hashim served FELDA from 1964 in various capacities, and was the Director General from 1979 to 1989. He was also the Chairman of the Malaysian Rubber Board (MRB) from 1997 to 2001.

Datuk Alladin Hashim has no family relationship with any of the other directors or major shareholders of PK Resources Berhad. His securities holdings are disclosed on page 37 and 38 of the Directors’ Report.

YM PROF. EMERITUS TENGKU DATO’ SHAMSUL BAHRINNon-Independent Executive Director

Malaysian, aged 69

Prof. Emeritus Tengku Dato’ Shamsul Bahrin, has been a Non-Independent Executive Director of PK Resources Berhad since 25 May 2001. He was also a member of the Audit Committee since 2001 but following the revised “Best Practices in Corporate Governance” on 1 October 2007 that requires all audit committee members to be non-executive directors, he resigned as a Audit Committee member on 16 November 2007. He is currently a member of the Executive Committee. He attended all four (4) Audit Committee Meetings and five (5) Board Meetings of the Company during the financial year ended 31 December 2007.

Tengku is the Non-Executive Chairman of Industronics Berhad. He is also a Director of PK Education Sdn Bhd, a subsidiary of the Company. He is the President of Nilai International University College and a member of the National Higher Education Council.

Tengku holds a Bachelor’s Degree in Geography from the University of Malaya and a Master’s Degree in Geography from the University of Sheffield. He was conferred the title of Professor Emeritus by the University of Malaya in 2005.

Tengku spent a period of thirty-four years in the University of Malaya where he retired as a Professor. His administrative experience includes being Head of the Department of Geography, Dean of the Faculty of Arts and Social Science and has served as a member of the Senate and Council of the University of Malaya for a number of years. He is a past President of the Malaysian Association of Private Colleges & Universities.

Prof. Emeritus Tengku Dato’ Shamsul Bahrin has no family relationship with any of the other directors or major shareholders of PK Resources Berhad and has no shareholdings in the Company.

Note : None of the Directors have any conflict of interests with PKRB and have been convicted of any offences within the past ten years. 07


Malaysian, aged 63

Dato’ Prof. Zainuddin Bin Muhammad, has been an Independent Non-Executive Director of PK Resources Berhad since 24 February 2005. He is currently a member of the Audit Committee. He attended all four (4) Audit Committee Meetings and four (4) out of five (5) Board Meetings of the Company held during the financial year ended 31 December 2007.

Dato’ Prof Zainuddin sits on the Boards of UDA Holdings Berhad, IOI Properties Berhad, Pembinaan Jayabumi Berhad and Pelangi Berhad. He is currently the Technical Adviser to the Johor State Government for the planning and development of the State new Administrative Centre at Nusajaya, Johor.

Dato’ Prof Zainuddin had his early education at the Royal Military College before furthering his studies at the University of Melbourne, Australia. He also holds a Master Degree in Regional and Community Planning from Kansas State University, USA, a Certificate in Urban Management from Harvard University, USA and a Postgraduate Diploma in Housing Planning and Building from Bouwcentrum International Education, Rotterdam, Holland.

Chairman’s Statement

On behalf of the Board of Directors of PK Resources Berhad, I am pleased to present

the Annual Report and Audited Financial Statements of the Group and the Company

for the financial year ended 31 December 2007.

OVERVIEW AND CORPORATE DEVELOPMENTS

During the financial year under review, the Group’s overall results continued to be based on the performance of its core activities; namely property development, education and hospitality. These activities are centred on the strategic location of Putra Nilai. Located within the extended Klang Valley, Putra Nilai is 15 minutes away from the Kuala Lumpur International Airport (KLIA), 20 minutes from Putrajaya and 40 minutes from Kuala Lumpur.

Overall, the Group achieved revenue of RM130.3 million. The Group’s property and education businesses were the main contributors to its performance. The property segment contributed RM71.5 million representing 54.8% of the Group’s revenue whilst education contributed RM35.2 million representing 27% of the Group’s revenue for the year.

360 acres of land has been reserved for bio-technology development in Putra Nilai. Inno Biologics Sdn Bhd, a company owned by the Ministry of Finance has commenced operations of its state-of-the-art bio-pharmaceutical plant. In addition, a Bio Innovation Center including research and incubation facilities as well as a marketing center for bio-tech manufacturing is also expected to be set up next year, on 6.48 hectares of land adjoining the bio-pharmaceutical plant.

Putra Nilai is now base to over 14,000 local and international students enrolled in leading tertiary institutions including the

Group’s own Nilai International University College, as well as Universiti Sains Islam Malaysia, Universiti Islam Antarabangsa Malaysia, INTI International University College, and Murni Nursing College. The student population is expected to increase over time as these institutions expand their offerings.

Nilai International University College was upgraded to University College status on 14th May 2007. The University College has since launched a number of new courses for the year under review, and is expected to start offering a range of home-grown degree programmes next year, in addition to its popular 3+0 degrees and diploma programmes. These programmes will focus on business and finance, hospitality and tourism, allied health sciences, information technology and engineering.

In August 2007, the shareholders at an Extraordinary General Meeting of its subsidiary, Nilai Springs Berhad approved the construction of a hotel to be located at the golf and country club. This hotel will utilize and complement the club’s existing facilities and activities and is expected to attract more outstation and overseas clientele. This follows from the streamlining of the core operations of the Group in Putra Nilai, with divestment of its interests in the Allson Klana Putra Nilai Hotel and Allson Klana Resort Seremban in April 2007 and June 2007 respectively.

FINANCIAL REVIEW

The Group’s revenue of RM130.3 million for the year under review was a decrease of 19.7% from the previous year of RM162.2 million. For 2007, it recorded a profit before tax of RM2.6 million compared to profit before tax of RM7.3 million in 2006.

The Group’s total assets as at 31 December 2007 stood at RM765.7 million, a decrease of 5.5 % from the previous year. This is following the divestment of its hotel assets as part of its streamlining operations to concentrate on the core businesses. Shareholders’ equity was at RM424.6 million. The Group’s net gearing, the ratio of net debt to shareholders’ equity decreased to 0.23 from 0.26 in the previous year.


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Chairman’s Statement

On behalf of the Board of Directors of PK Resources Berhad, I am pleased to present

the Annual Report and Audited Financial Statements of the Group and the Company

for the financial year ended 31 December 2007.

OVERVIEW AND CORPORATE DEVELOPMENTS

During the financial year under review, the Group’s overall results continued to be based on the performance of its core activities; namely property development, education and hospitality. These activities are centred on the strategic location of Putra Nilai. Located within the extended Klang Valley, Putra Nilai is 15 minutes away from the Kuala Lumpur International Airport (KLIA), 20 minutes from Putrajaya and 40 minutes from Kuala Lumpur.

Overall, the Group achieved revenue of RM130.3 million. The Group’s property and education businesses were the main contributors to its performance. The property segment contributed RM71.5 million representing 54.8% of the Group’s revenue whilst education contributed RM35.2 million representing 27% of the Group’s revenue for the year.

360 acres of land has been reserved for bio-technology development in Putra Nilai. Inno Biologics Sdn Bhd, a company owned by the Ministry of Finance has commenced operations of its state-of-the-art bio-pharmaceutical plant. In addition, a Bio Innovation Center including research and incubation facilities as well as a marketing center for bio-tech manufacturing is also expected to be set up next year, on 6.48 hectares of land adjoining the bio-pharmaceutical plant.

Putra Nilai is now base to over 14,000 local and international students enrolled in leading tertiary institutions including the

Group’s own Nilai University College, as well as Universiti Sains Islam Malaysia, Universiti Islam Antarabangsa Malaysia, INTI International University College, and Murni Nursing College. The student population is expected to increase over time as these institutions expand their offerings.

Nilai University College was upgraded to University College status on 14th May 2007. The University College has since launched a number of new courses for the year under review, and is expected to start offering a range of home-grown degree programmes next year, in addition to its popular 3+0 degrees and diploma programmes. These programmes will focus on business and finance, hospitality and tourism, allied health sciences, information technology and engineering.

In August 2007, the shareholders at an Extraordinary General Meeting of its subsidiary, Nilai Springs Berhad approved the construction of a hotel to be located at the golf and country club. This hotel will utilize and complement the club’s existing facilities and activities and is expected to attract more outstation and overseas clientele. This follows from the streamlining of the core operations of the Group in Putra Nilai, with divestment of its interests in the Allson Klana Putra Nilai Hotel and Allson Klana Resort Seremban in April 2007 and June 2007 respectively.

FINANCIAL REVIEW

The Group’s revenue of RM130.3 million for the year under review was a decrease of 19.7% from the previous year of RM162.2 million. For 2007, it recorded a profit before tax of RM2.6 million compared to profit before tax of RM7.3 million in 2006.

The Group’s total assets as at 31 December 2007 stood at RM765.7 million, a decrease of 5.5 % from the previous year. This is following the divestment of its hotel assets as part of its streamlining operations to concentrate on the core businesses. Shareholders’ equity was at RM424.6 million. The Group’s net gearing, the ratio of net debt to shareholders’ equity decreased to 0.23 from 0.26 in the previous year.

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Chairman’s Statement (Contd.)

The Government’s recent pro-active measures to provide the impetus for economic activities include the exemption of Real Property Gains Tax, effective April 2007, the relaxation of Foreign Investment Committee rules for property purchases over RM250,000, and the decision to allow monthly EPF withdrawals to fund mortgages which will free up to RM9.6 billion annually for home purchases. These measures are expected to positively impact the property market.

Private tertiary education remains an increasingly competitive industry. With its university college status, new offerings and

continuous upgrading of its facilities, Nilai University College is expected to maintain its position as a premier private tertiary education provider in the region. Thus, contribution from the Group’s education segment is expected to remain robust.

The Group’s hospitality activity is also expected to improve with the expected completion of the Springs Resort Hotel at the golf and country club, in early 2009. This takes advantage of its proximity to the Kuala Lumpur International Airport, the Low Cost Carrier Terminal and Formula 1 racing circuit.

ACKNOWLEDGEMENT

On behalf of the Board, I would like to express my appreciation to the management and staff for their commitment and dedication. I would also like to thank our shareholders, valued customers, business associates and government authorities for their continued confidence, support and patronage to the Group. Lastly, I would like to thank my fellow directors on the Board for their guidance and invaluable contributions during the course of the year under review.

TAN SRI DATO’ DR. GAN KONG SENG

Executive Chairman

April, 2008


its Nilai University College - Olympic Council Malaysia Scholarship Scheme launched in 2002 continues to sponsor current and former national athletes for their tertiary education, in recognition of their contribution to the country.

The organ donation awareness campaign, “Humans for Humans” was first launched by the students of the university college in September 2006 and is now an annual event to promote the awareness and pledges for organ donations. In addition, we continue to provide financial and other forms of assistance such as the provision of computers and basic necessities to orphanages and orang asli communities.

Apart from these activities which will be carried out annually, we continuously identify other CSR activities whilst being mindful of the impact of our operations on the environment and the society as a whole.

CHALLENGES AND PROSPECTS

Public sentiment is expected to be cautious in 2008 due to lower disposable incomes arising from higher inflationary pressure. However we are cautiously optimistic to maintain and improve our performance for the coming year.

DIVIDEND

Your Board of Directors has recommended a first and final dividend of 3% less 26% tax in respect of the financial year ended 31 December 2007, maintaining the dividend rate as in the previous year.

CORPORATE SOCIAL RESPONSIBILITY (“CSR”)

Our CSR initiatives for the financial year are mainly philanthropic in nature, focusing on education, staff welfare and the community at large.

The Group contributed a 2.4 hectare land worth RM6 million to assist in the relocation of a national-type Chinese school to Putra Nilai. It will contribute an additional RM2 million towards the funding for the construction of a triple-block double storey school for 400 students.

Through Nilai University College, RM1.7 million worth of scholarships were offered to students annually based on both academic excellence as well as financial need. The majority were given directly from the university college, while a number were given through national dailies and organizations including Nanyang Siang Pau, News Straits Times, Sin Chew Jit Poh and various foundations. Meanwhile, the Group, through

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Review of Operations


1) PROPERTY DEVELOPMENT & RELATED ACTIVITIES

a) Property Development

The Group’s property development business in Putra Nilai saw a decline over its financial year 2007 results due to the continued sluggish domestic property market arising from concerns of interest rate hikes and disposable income pressures for the medium and low end market. Despite the reduction, property development remained the major contributor to the Group’s operating revenue and profit.

For the financial year under review, property sales registered at RM 44.3 million, a dip of 15.9% against the previous year of RM50.9 million whilst land sales made up 38% of the total property revenue of RM 71.5 million. Only 2 new property launches were done in 2007 with gross development value of RM 46.1 million consisting of the commercial shoplots of Acacia Avenue, and the gated cluster homes of Impiana Residence. The development under Impiana Residence, a first of its kind in Putra Nilai offers a new concept with innovative designs at an affordable price. The take-up rates were good for both the projects.

The future launches will continue to provide quality and innovative properties and will include higher end projects such as the Nilai Springs Heights which is a mixed development of bungalows, superlinks and semi-detached homes.

b) Quarrying

Turnover achieved from the Group’s quarry operations was RM 0.9 million as compared to RM 4.7 million in the previous year as the quarry operations was leased out for a 3 year term effective July, 2006. The leasing arrangement did not affect profitability significantly as profit for the year remained quite unchanged as compared to the previous year.

c) Landscaping

The Group’s landscaping business performed poorly, registering a turnover of RM7.1 million, a decrease of 32.9% over the previous year as anticipated landscaping jobs both external and in-house have been affected by the sluggish property market. Apart from the dip in revenue, the business unit’s profitability was further reduced by lower operating margins resulting from higher operating cost and the specific provision for debts giving rise to an overall loss of RM 1.6 million for the year.

2) EDUCATION

Nilai International University College’s performance improved with respect to revenue, registering RM 35.2 million in 2007 as compared to RM 33.7 million in 2006. However, the profit before tax was not in tandem with the revenue increase as a substantial amount of one-off startup expenses were incurred in relation to the setting up of several new courses.

For the financial year, the highly ranked 3+0 business programme with its partner, the Oxford Brookes University, United Kingdom continued to remain the more popular course. In terms of programme offerings, apart from the new degree in Business and Hospitality Management, the College offered 2 new diploma programmes in Aesthetic Management and Aircraft Maintenance Engineering and a certificate programme in Business.

c) Landscaping

The Group’s landscaping business performed poorly, registering a turnover of RM7.1 million, a decrease of 32.9% over the previous year as anticipated landscaping jobs both external and in-house have been affected by the sluggish property market. Apart from the dip in revenue, the business unit’s profitability was further reduced by lower operating margins resulting from higher operating cost and the specific provision for debts giving rise to an overall loss of RM 1.6 million for the year.

2) EDUCATION

Nilai International University College’s performance improved with respect to revenue, registering RM 35.2 million in 2007 as compared to RM 33.7 million in 2006. However, the profit before tax was not in tandem with the revenue increase as a substantial amount of one-off startup expenses were incurred in relation to the setting up of several new courses.

For the financial year, the highly ranked 3+0 business programme with its partner, the Oxford Brookes University, United Kingdom continued to remain the more popular course. In terms of programme offerings, apart from the new degree in Business and Hospitality Management, the College offered 2 new diploma programmes in Aesthetic Management and Aircraft Maintenance Engineering and a certificate programme in Business.

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Review of Operations


1) PROPERTY DEVELOPMENT & RELATED ACTIVITIES

a) Property Development

For the financial year under review, the Group’s property business unit registered a revenue of RM71.5 million, a reduction of 15.8% as compared to the revenue of RM84.9 million achieved in 2006. Property sales contributed RM44.3 million as compared to RM50.9 million in 2006, while land sales contributed RM27.2 million as compared to RM34.0 million in 2006. The decline in the property sales revenue was partly due to concerns of shrinking disposable incomes as a result of rising oil prices. Thus, property sales trends in 2007 show a stabilised market for first home purchasers whilst the market for home upgrade purchasers remain relatively soft.

Two new property launches were done in 2007 with a gross development value of RM46.1 million. Both properties achieved good take-up rates. These consist of:

i) Acacia Avenue, a commercial sub-centre located conveniently close to University Sains Islam Malaysia’s (USIM) campus; and

ii) Impiana Residence, a gated cluster home residential project, featuring attractive and innovative designs.

Future launches featuring quality and innovatively designed properties are currently being planned in Putra Nilai. In addition to affordable and comfortable properties, customers can also look forward to premium offerings such as gated mixed development of bungalows, superlink houses and semi-detached homes.

b) Quarrying

The Group’s quarry operations was leased out for a three year period effective July 2006. As such, the turnover achieved was RM0.9 million as compared to RM4.7 million in the previous year. However, profitability remained relatively unchanged at RM 0.4 million compared to RM 0.3 million in 2006.

c) Landscaping

The Group’s landscaping business performed badly, registered a turnover of RM7.1 million, a decrease of 32.9% over the previous year. The business unit incurred a loss of RM1.6 million as compared to the previous year profit of RM 0.2 million. This was largely due to the sluggish property market which has adversely affected both in-house and external landscaping jobs. In addition, higher operating costs and specific provisions for bad debts also impacted profit margins.

2) EDUCATION

Nilai University College’s revenue improved to RM35.2 million in 2007 as compared to RM33.7 million in 2006. Profit before tax was RM3.6 million, a decrease of 26.5% as compared to RM4.9 million in 2006. This was largely due to one-off startup expenses incurred in relation to the setting up of several new courses during the year.

The highly ranked 3+0 business programmes with its partner, the Oxford Brookes University, United Kingdom continued to remain popular. A number of new courses were introduced which incorporate industry linkages and industrial placements as part of their delivery. These include: B.A. (Hons) Business and Hospitality Management, Diploma in Aesthetic Management and Diploma in Aircraft Maintenance Engineering.

c) Landscaping

The Group’s landscaping business performed badly, registered a turnover of RM7.1 million, a decrease of 32.9% over the previous year. The business unit incurred a loss of RM1.6 million as compared to the previous year profit of RM 0.2 million. This was largely due to the sluggish property market which has adversely affected both in-house and external landscaping jobs. In addition, higher operating costs and specific provisions for bad debts also impacted profit margins.

2) EDUCATION

Nilai University College’s revenue improved to RM35.2 million in 2007 as compared to RM33.7 million in 2006. Profit before tax was RM3.6 million, a decrease of 26.5% as compared to RM4.9 million in 2006. This was largely due to one-off startup expenses incurred in relation to the setting up of several new courses during the year.

The highly ranked 3+0 business programmes with its partner, the Oxford Brookes University, United Kingdom continued to remain popular. A number of new courses were introduced which incorporate industry linkages and industrial placements as part of their delivery. These include: B.A. (Hons) Business and Hospitality Management, Diploma in Aesthetic Management and Diploma in Aircraft Maintenance Engineering.

13

20

07

Fin

anci

al H

ighl

ight

sReview of Operations (Contd.)

To cater for the growing number of students on campus,

a new Science and Technology building is being

constructed on its campus grounds. The 95,000sq²

building which is expected to be completed in 2009 will

house modern laboratories for engineering, nursing,

medical laboratory technology and sciences, as well as

state of the art classrooms and auditoriums for general

teaching.

3) Hospitality

Nilai Springs Golf & Country Club achieved a turnover of

RM8.1 million, an increase of 15.4% over the previous

year. As a result of the improved turnover, the business

unit reduced its loss to RM0.2 million from a loss of

RM1.2 million in the previous year. Golfing contributed

significantly to the improved performance as a result of

management measures undertaken within the year.

These measures include better golf course

maintenance, a new buggy fleet and the introduction

of caddies.

Following the increased golfing activities, the

performance of the food and beverage outlets also

showed an increase in revenue. The new look Golfers’

Terrace with its open kitchen concept was well received

by customers, as demonstrated by the increase in sales.

The construction of a 183 rooms resort hotel located at

the golf and country club is currently ongoing and is

scheduled for completion by the first half of 2009. The

hotel will both utilize and complement the facilities

and activities of the club. Besides catering to overseas

and outstation golfers, it is envisaged that the hotel

will also benefit from transit, business and tourist

market, due to its proximity to the Kuala Lumpur

International Airport, the Low Cost Carrier Terminal and

the Formula 1 Racing Circuit.

15

20

07

Fin

anci

al H

ighl

ight

sReview of Operations (Contd.)

In line with these programmes, industry linkages were built via memorandums of understanding for collaboration and industrial placement of the students.

In line with its upgrade to a university status, the College also upgraded its facilities with the construction of a new science and technology building due to be completed in 2008 and a beauty saloon to cater for the newly launched Aesthetic Management programme. Further the IT infrastructure of the College had been enhanced with the installation of wireless services throughout its campus.

3) HOSPITALITY

The Nilai Springs Golf & Country Club achieved a turnover of RM 8.1 million, an increase of 15.4% over the previous year. For the first time, the club managed to breakthrough the turnover level which had been quite stagnant for several years. In line with the improvement, the club recorded a loss of RM 0.2 million as compared to RM 1.1 million in the previous year. This improvement was significantly attributed to

the better performance of the golfing department which was achieved through a number of enhancements to the course and the replacement of the buggy fleet.

To remain competitive, and in line with other clubs, the club also started to appoint caddies in 2007 to assist the golfers at the course. This has generally been well accepted by the golfers and has contributed positively to golfing revenue.

Following the improved golfing activities, the performance of the food and beverage outlets was also positively impacted. The outlets especially the Golfers Terrace was given a new outlook and was converted to an open kitchen concept which improved food service and was better received by the patrons of the club. The meeting facilities at the clubhouse had also been improved to cater to the expectations of the customers. Plans are currently in the way for the construction of a hotel at the recreational club to complement the golfing operations. The banqueting facilities of the hotel should be operational by the second half of 2008.

15

2007 Financial Highlights31 December 2007

2003

424,

586

2004

429,

589

2005

429,

002

2006

426,

645

2007

424,

562

RM’000

SHAREHOLDERS’ FUNDS

2003 2004 2005 2006 2007

330,

430

452,

704

311,

375

162,

207

130,

303

RM’000

REVENUE

2003 2004 2005 2006 2007

975,

777

1,01

7,80

7

837,

602

809,

949

765,

701

RM’000

TOTAL ASSETS

(8,9

70)

2003

9,79

2

2004

4,42

8

2005

7,26

9

2006 20072,

682

RM’000

PRE-TAX PROFIT/(LOSS)

17


18

AUDIT COMMITTEE REPORT

The Board of Directors of PK Resources Berhad is pleased to present the report of the Audit Committee for the financial year ended 31 December 2007.

MEMBERS

The Audit Committee comprises five (5) Directors, three (3) of whom are Independent Non-Executive Directors:

• Datuk Alladin bin Mohd Hashim (Chairman/Independent Non-Executive Director)

• Ooi Soon Kiam (Independent Non-Executive Director)

• Dato’ Prof Zainuddin Bin Muhammad (Independent Non-Executive Director)

• Prof. Emeritus Tengku Dato’ Shamsul Bahrin (Executive Director) *

• Dato’ Gan Kong Hiok (Executive Director) *

*Note:

Following the revised “Best Practices In Corporate Governance” of 1 October 2007 that requites all audit committee members to be non-executive directors, both Prof. Emeritus Tengku Dato’ Shamsul Bahrin and Dato’ Gan Kong Hiok resigned as members of the Audit Committee on 16 November 2007.

TERMS OF REFERENCE

Objectives

The primary objectives of the Audit Committee are to:

1. Provide assistance to the Board in fulfilling its fiduciary responsibilities relating to the corporate accounting and practices of PK Resources Berhad and all its wholly and majority owned subsidiaries (“Group”).

2. Improve the Group’s management of principal risks, the quality of the accounting function, the system of internal controls and audit function.

3. Maintain through regularly scheduled meetings, a direct line of communication between the Board, senior management, external auditors internal auditors.

4. Enhance the independence of both the external and internal auditors’ function through active participation in the audit process.

5. Act upon the Board’s request to investigate and report on any issue or concern in regard to the management of the Group.

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Composition

The Committee shall be appointed by the Board from amongst its Directors and shall be no fewer than three (3) members, with a majority of them being Independent Directors. Subsequent to 16 November 2007 following the revised “Best Practices in Corporate Governance”, the composition of members comprise Non-Executive Directors only.

All members of the Committee shall be financially literate and at least one shall be a member of the Malaysian Institute of Accountants, or have the relevant qualifications and experience as prescribed by Bursa Malaysia Securities Berhad (“Bursa Securities”).

The members of the Committee shall select a Chairman from amongst their members who shall be an Independent Director.

In the event the number of Committee members becomes less than three (3), the Board shall within three months, appoint such number of new members as may be required to make up the minimum of three (3) members.

The term of office and performance of the Committee members shall be reviewed by the Board at least once every three years.

Meetings And Quorum

The Committee shall meet at least three (3) times a year, with each meeting planned to coincide with key dates in the Company’s financial reporting cycle, or more frequently as circumstances dictate.

The quorum for any meeting shall be two (2) members. In the absence of the Chairman, the members present shall elect a Chairman for the meeting from amongst the members present.

The Company Secretary shall be the Secretary of the Committee and shall be responsible, in conjunction with the Chairman, for drawing up the agenda and circulating it, together with explanatory supporting documents, to the Committee members prior to each meeting.

The Secretary shall also be responsible for keeping the minutes of meetings of the Committee and circulating them to the Committee members and to other members of the Board.

The Head of Finance and the Head of Internal Audit shall attend all meetings of the Committee. The Chief Executive Officer (CEO) and other officers of the company shall attend by invitation. The presence of external auditors will be requested if required and the external auditors may also request for a meeting if they consider it necessary. Nevertheless, the Committee shall meet with the External Auditors, the Internal Auditors or both without the presence of the executive board members and employees, whenever deemed necessary.

During the financial ended 31 December 2007, the Committee held four (4) meetings. The details of the attendance of each Committee member are as follows:

i) Datuk Alladin bin Mohd Hashim 4 of 4 meetings

ii) Ooi Soon Kiam 4 of 4 meetings

iii) Dato’ Prof Zainuddin Muhammad 4 of 4 meetings

iv) Prof. Emeritus Tengku Dato’ Shamsul Bahrin (Resigned on 16 November 2007) 4 of 4 meetings

v) Dato’ Gan Kong Hiok (Resigned on 16 November 2007) 3 of 4 meetings

AUDIT COMMITTEE REPORT (Contd. )

20

Authority

The Committee is authorised by the Board to investigate any activities within its terms of reference and shall have unrestricted access to both the internal and external auditors and to all employees of the Group.

The Committee will seek approval from the Board to obtain independent professional or other advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.

RESPONSIBILITIES & DUTIES

In fulfilling its primary objectives, the Audit Committee shall undertake the following responsibilities and duties:

Risk management and internal control

• Review the adequacy and effectiveness of risk management, internal control and governance systems.

• Review and recommend to the Board of Directors the Statement on Internal Control in relation to internal control and the management of risk included in the annual report.

Financial reporting

• To review the quarterly results and year-end financial statements of the Group before submission to the Board for approval, focusing particularly on:

i. Changes in existing or implementation of new accounting policies and practices;

ii. Major judgmental areas, significant and unusual events;

iii. Accuracy and adequacy of the disclosure of information essential to a fair and full presentation of the financial affairs of the Group;

iv. Going concern assumption; and

v. Compliance with applicable accounting standards, regulatory and other legal requirements.

External Audits

• To recommend to the Board the appointment of the external auditors, the audit fee, and any question of resignation or dismissal.

• To discuss with the external auditors before the audit commences, the nature and scope of audit.

• To discuss problems and reservations arising from the interim and final audits and any matters the external auditors may wish to discuss (in the absence of management, if necessary).

• To review the external auditors’ management letter, management’s response and action taken.


21


Internal Audits

• To review the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work.

• To ensure co-ordination between external and internal auditors.

• To review the internal audit programme, the results of internal audit processes, special assignment or investigation undertaken and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function.

• To review the internal audit findings and management’s response.

• To review any appraisal or assessment of the performance of the members of the internal audit function.

• To approve any appointment or termination of senior staff member of the internal audit function.

• To take cognisance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.

Other responsibilities and duties

• To review any related party transaction and conflict of interest situation that may arise within the Group, including any transaction, procedure or course of conduct that raises questions of management integrity.

• To consider and examine other topics, as defined by the Board.

SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

During the financial year ended 31 December 2007, the main activities undertaken by the Committee were as follows:

Risks and Controls

• Reviewed the effectiveness of the risk management system, the risk assessment reports and the risk profile of the Group.

• Evaluated the effectiveness of the system of internal controls through the review of work performed by internal and external auditors and discussion with key senior management.

Financial Results

• Reviewed the quarterly and year-to-date unaudited financial results and the annual audited financial statements before recommending them to the Board for approval.

• In respect of the quarterly and year end financial statements, reviewed the Company’s compliance with the Listing Requirements of the Bursa Securities, MASB and other relevant legal and regulatory requirements in the presence of the external auditors.


22

External Audit

• Reviewed the external auditors’ scope of work and their audit plan.

• Reviewed significant issues and concerns arising from the audit.

• Evaluated external auditors’ performance and recommended their appointment and fees to the Board for approval.

Internal Audit

• Reviewed the internal audit department’s resource requirements, programmes and plans.

• Reviewed the internal audit reports and monitored/followed up on major findings and management’s response to ensure that adequate remedial action are taken by management.

Related Party Transactions

• Reviewed related party transactions entered into by the Group to ensure that such transactions are undertaken on the Group’s normal commercial terms and that the internal control procedures with regards to such transactions are sufficient and in compliance with the Shareholders’ Mandate for recurrent related party transactions.

INTERNAL AUDIT FUNCTION

In the discharge of its duties, the Audit Committee is supported by an in-house Internal Audit Department that adopts a risk-based audit methodology, which is aligned with the risks of the Group to ensure that relevant controls addressing those risks are reviewed on a rotational basis. The internal audit function is independent of the activities it audits and reports directly to the Audit Committee. For the financial year 2007, the internal audit function costs RM155,000.

During the financial year, activities carried out by internal audit include, inter alia, the following:

• Reviewed the adequacy of risk management and the effectiveness and efficiency of internal controls, compliance with established Group policies, procedures and statutory requirements, reliability and integrity of financial and operational information and means of safeguarding assets.

• Followed up on the implementation of corrective actions for findings highlighted in the audit reports.

• Reviewed related party transactions.

• Carried out special assignments requested by management.

REPORTS/MINUTES

Minutes of the meeting of the Audit Committee are circulated to all members of the Board, and significant issues are discussed at Board Meetings.


23


The Board of Directors (“Board”) of PK Resources Berhad is committed to ensure that the highest standards of corporate governance are practised throughout the Group as a fundamental part of discharging its duties and responsibilities to protect and enhance shareholders’ value and support the Group’s continued growth and success.

The Board believes that observance with statutory requirements and market regulations are pivotal to sound corporate governance. Good corporate governance is fundamental to the long term prosperity of the Group. Hence, the Board is continuously dedicated to evaluate the Group’s 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 in the best interests of its 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 as advocated therein pursuant to the Bursa Malaysia Securities Berhad (“Bursa Securities”) Listing Requirements.

THE BOARD OF DIRECTORS

The Board of PK Resources Berhad is led by a group of members from diverse backgrounds, which comprises professionals with skills and experience in various fields including medicine, engineering, agriculture, education, business, accounting, law and regional and community planning. A brief description on the background or profile of each Director is presented on page 5 to 7 of the Annual Report.

The Board has the overall responsibility for effective performance and control of the Company and the Group, whereby collective decision and close monitoring is conducted over strategic, financial, operational, compliance and governance issues. Its responsibilities include but shall not be limited to the following :-

• Strategic planning of the Group

• Overseeing the conduct and management of the Company’s business

• Identification of risks and ensuring appropriate systems of risk management

• Internal control system

BOARD BALANCE

The Board currently has eight (8) members. There are five (5) Executive Directors and three (3) Independent Non-Executive Directors. The Board composition is in compliance with the Listing Requirements of the Bursa Securities as well as the Code, which requires a minimum of 1/3 of the Board to be Independent Directors.

The roles of the Chairman and Group Chief Executive Officer are combined. He has overall responsibility over the operating units, organisational effectiveness and implementation of Board policies and decisions. The Executive Directors, with their intimate knowledge of the Group’s business, take on the primary responsibility for the conduct of the Group’s business operations.

The Independent Non-Executive Directors, who are individuals of calibre, credibility and having the necessary skills and experiences, play a key role in providing unbiased and independent views, advice and contribute their knowledge and experience towards the formulation of policies and in the decision making process.

Datuk Alladin Bin Mohd Hashim is the Senior Independent Non-Executive Director, as prescribed in the Code, to whom concerns pertaining to the Group may be conveyed by shareholders and the public.

STATEMENT ON CORPORATE GOVERNANCE

24

BOARD MEETINGS AND SUPPLY OF INFORMATION

Board meetings are scheduled in advance at the beginning of the new financial year to enable Directors to plan ahead and fit the year’s meetings into their own schedules. The Board meets at least five (5) times a year, with additional meetings convened as and when necessary.

There were five Board Meetings held during the financial year ended 31 December 2007 and the attendance record of each Director is as follows:

Number of Meetings

Attended %

Executive Directors

Tan Sri Dato’ Dr Gan Kong Seng 5/5 100

Dato’ Gan Kong Hiok 4/5 80

YM Prof. Emeritus Tengku Dato’ Shamsul Bahrin 5/5 100

Mr Gan Eng Hong 4/5 80

Mr Chor Eng Choon 5/5 100

Non-Executive Directors

Datuk Alladin Bin Mohd Hashim 4/5 80

Mr Ooi Soon Kiam 5/5 100

Dato’ Prof. Zainuddin Bin Muhammad 4/5 80

Dato’ Haji Mohamad Haslah Bin Mohamad Amin 4/5 80 (resigned w.e.f. 16/11/2007)

The agenda for the Board Meetings, together with appropriate reports and information on the Company’s business operations, and proposal papers for the Board’s consideration are circulated to all the Directors prior to the meetings in sufficient time so that all Directors are given time to prepare, obtain additional information or clarification prior to the meeting to ensure a smooth proceeding of each meeting. The Board papers includes, amongst others, the following details :-

• Quarterly financial results

• Performance report of the Group

• Business plans and budgets

• Major operational and financial matters

• Risk assessment of the Group

• Updates on statutory regulations and requirements affecting the Company

STATEMENT ON CORPORATE GOVERNANCE (Contd. )

25


BOARD MEETINGS AND SUPPLY OF INFORMATION (Contd.)

In addition, there is a schedule of matters reserved specifically for the Board’s decision, including the approval of business plans and budgets, material acquisitions and disposals of assets, financial results, dividend recommendations and board appointments.

The Board Policy Manual has been drawn up with the aim to assist Board Members in discharging their duties and responsibilities.

The Board has unrestricted and timely access to all information necessary for the discharge of its responsibilities. All directors, whether as a full Board or in their individual capacity, have access to the advice and services of the Company Secretaries, management representatives and, if deemed necessary, other independent professionals at the expense of the Group in the discharge of their duties.

APPOINTMENTS TO THE BOARD

The Company has in place formal and transparent procedures for appointment of new Directors. These procedures ensure that all nominees to the Board are first considered by the Nomination Committee, taking into account the required mix of skills and experience and other qualities before making a recommendation to the Board. The Nomination Committee is responsible for proposing potential Board appointments and assessing the Board on an on-going basis.

The Board has the services of the Company Secretaries who ensure that all appointments are properly made, and that all necessary information is obtained from the directors, both for the Company’s records and for the purposes of meeting statutory requirements as well as obligations arising from the Listing Requirements or other regulatory requirements.

RE-ELECTION OF DIRECTORS

In accordance with the Company’s Articles of Association, one-third of the directors, including the Managing Director, shall retire by rotation at each Annual General Meeting provided always that all directors shall retire from office at least once every three years. The directors retiring from office shall be eligible for re-election by the shareholders at the Annual General Meeting. Any directors appointed during the year are subject to re-election by shareholders at the next Annual General Meeting after their appointment.

DIRECTORS’ TRAINING

All the Directors have attended and completed the Mandatory Accreditation Programme (“MAP”) as prescribed by the Listing Requirements.

The Board acknowledges the amendments to the Listing requirements to assume the onus of determining or overseeing the training needs of their Directors from year 2005 onwards. Hence, the Directors are empowered to determine their own training requirements as they consider necessary and are encouraged to attend training programmes on a continual basis to enhance their skills and knowledge and to keep abreast with latest developments in the marketplace which are important for carrying out an effective role as directors, particularly on corporate governance and best practices set out in the Code.


26

BOARD COMMITTEES

The Board has established the following committees to assist the Board in the discharge of its duties and responsibilities. The committees are provided with written terms of reference. The Chairman of the various committees reports the decision and outcome of the committee meetings to the Board.

(a) Executive Committee

The Executive Committee is responsible for implementing the decisions and policies of the Board as well as the coordination of activities necessary to ensure the successful implementation of the Group’s business plan.

The members of the Executive Committee are as follows :-

Tan Sri Dato’ Dr Gan Kong Seng (Executive Chairman)

Mr Gan Eng Hong (Managing Director)

Dato’ Gan Kong Hiok (Executive Director)

YM Prof. Emeritus Tengku Dato’ Shamsul Bahrin (Executive Director)

Mr Chor Eng Choon (Executive Director)

(b) Audit Committee

The principal objective of the Audit Committee is to assist the Board of Directors in discharging its statutory duties and responsibilities relating to accounting and reporting practices in the Holding Company and each of its subsidiaries. Further details on the terms and reference of the Audit Committee are set out on page 18 to 22 of the Annual Report.

The composition of the Audit Committee meets the Listing Requirements of the Bursa Securities in respect of all its members being independent non-executive directors and one of its members being a member of the Malaysian Institute of Accountants.

The members of the Audit Committee are as follows :-

Datuk Alladin Bin Mohd Hashim (Chairman)

Mr Ooi Soon Kiam

Dato’ Prof. Zainuddin Bin Muhammad

(c) Nomination Committee

The Company adopts a formal and transparent procedure for the appointment of directors to the Board through the Nomination Committee. The Nomination Committee comprises exclusively of independent non-executive directors.

The Board through the Nomination Committee reviews its required mix of skills and experience and other qualities, including core competencies which non-executive directors should bring to the Board. The Nomination Committee is also responsible for reviewing and making recommendation on appointment of new members to the Board. In making their recommendation, the Committee members shall consider the required size of the Board, mix of skills, experience and other qualities which the Director shall bring to the Company. Nomination made is put to the Main Board for assessment and endorsement.


27


BOARD COMMITTEES (Contd.)

(c) Nomination Committee

The members of the Nomination Committee are as follows :-

Datuk Alladin Bin Mohd Hashim (Chairman)

Mr Ooi Soon Kiam

(d) Remuneration Committee

The Remuneration Committee, which comprises two (2) Non-Executive Directors and one (1) Executive Director, was formed to assist the Board in reviewing, determining and developing remuneration policies for the Executive Directors and to recommend the appropriate remuneration packages. Executive Directors play no part in the decisions on their own remuneration packages.

The members of the Remuneration Committee are as follows :-

Mr Ooi Soon Kiam (Chairman/Independent Non-Executive Director)

Datuk Alladin Bin Mohd Hashim (Independent Non-Executive Director)

Dato’ Gan Kong Hiok (Executive Director)

(e) Option Committee

The Option Committee has been appointed by the Board to administer the Company’s Employee Share Option Scheme (“ESOS”) in accordance with the objectives and regulations as stipulated in the By-Laws.

The members of the Option Committee are as follows :-

Tan Sri Dato’ Dr Gan Kong Seng

Dato’ Gan Kong Hiok

Mr Ooi Soon Kiam

Mr Chor Eng Choon

DIRECTORS’ REMUNERATION

The Remuneration Committee shall review the remuneration packages of the Executive Directors annually or as and when required for Board’s approval. The component parts of remuneration for the Executive Directors are structured so as to link rewards to corporate and individual performance and take into account the individual responsibilities and contributions. The level of remuneration for the Non-Executive Directors is linked to their experience and level of responsibilities undertaken by the particular Non-Executive Director concerned.

The Directors concerned do not participate in decisions regarding their own remuneration packages. The fees of Directors, including Non-Executive Directors, are endorsed by the Board for approval by the shareholders of the Company at the Annual General Meeting.

The details of the remuneration of the Directors of the Company comprising remuneration received from the


28

Directors’ remuneration (contd.)

Company and subsidiary companies during the financial year ended 31 December 2007 are as follows :-

(a) AggregateremunerationofDirectorscategorisedintoappropriatecomponents:-

ExecutiveDirectors Non-ExecutiveDirectors

Fees 88,000 103,917

Salaries 2,380,220 -

Bonus 608,968 -

Benefit-in-kind 99,744 -

Others 56,500 58,500

TOTAL 3,233,432 162,417

(b) NumberofDirectorswhoseremunerationfallintothefollowingbands:-

NumberofDirectors

RangeofRemuneration(RM) Executive Non-Executive

50,000 and below - 3

50,001 - 100,000 - 1

100,001 - 500,000 1 -

500,001 - 1,000,000 4 -

relationship with shareholDers 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 from time to time during the year, the timely release of financial results on a quarterly basis provides shareholders with an overview of the Group’s performance and operations.

At each Annual General Meeting, the Board presents the progress and performance of the business of the Group. The Annual General Meeting is the principal forum for dialogue with the shareholders and the Board encourages shareholders participation. Shareholders are notified of the meeting together with a copy of the Company’s Annual Report at least 21 days before the meeting in accordance with the provision of the Company’s Articles of Association.


29


ACCOUNTABILITY AND AUDIT

(a) Financial Reporting

The Board aims to present a balanced and understandable assessment of the Group’s financial performance and prospects through the annual financial statements and quarterly announcements of results to Bursa Securities. In this respect, the Audit Committee assists the Board in ensuring accuracy and adequacy of the financial reporting.

(b) Internal Control

The Statement on Internal Control set out on page 32 to 33 of the Annual Report provides an overview of the state of internal control within the Group.

(c) Relationship with the Auditors

The Audit Committee acting on behalf of the Board meets the Group’s external auditors annually to review the scope and adequacy of the audit process, the annual financial statements and their audit findings. In addition to that, the Audit Committee also meets with the external auditors whenever it deems necessary and ensures the external auditors receive full co-operation from the management to discharge their duties.

The Audit Committee Report and the terms of reference are set out on page 18 to 22 of the Annual Report.

ADDITIONAL COMPLIANCE INFORMATION

To comply with the Listing Requirements of the Bursa Malaysia Securities Berhad, the following additional information is provided :-

(a) Share Buybacks

There was no share buy-back exercise carried out by the Company for the financial year ended 31 December 2007.

(b) Options, Warrants or Convertible Securities

The Company has obtained approval from the Securities Commission to implement an Employees Shares Option Scheme which was first implemented on 20 December 2002. No options have been exercised during the year.

The Company did not issue any warrants or convertible securities.

(c) American Depository Receipt (ADR) or Global Depository Receipt (GDR) Programme

During the financial year ended 31 December 2007, the Company did not sponsor any ADR or GDR programme.

(d) Imposition of Sanctions/Penalties

There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management by the relevant regulatory bodies.

(e) Non-Audit Fees

There were no non-audit fees paid to the external auditors for the financial year.


30

ADDITIONAL COMPLIANCE INFORMATION (Contd.)

(f) Profit Estimate, Forecast, Projection or Unaudited Results Announced

The Company did not make or release any profit estimate, forecast or projections for the financial year.

(g) Profit Guarantee

There was no profit guarantee received by the Company during the financial year ended 31 December 2007.

(h) Material Contracts

Save as disclosed below, there were no other material contracts entered into by the Company and its subsidiary companies which involved Directors’ and major shareholders’ interest either still subsisting at the end of the financial year ended 31 December 2007 or entered into since the end of the previous financial year.

(i) On 13 August 1998, PK Resources Berhad (“PKR”) entered into a Sales and Purchase Agreement with Akarmas Sdn Bhd (“Akarmas”) to purchase 350,000 ordinary shares in Arus Ikhlas Sdn Bhd (“Arus Ikhlas”) at a total cash consideration of RM144,291,276.00. The balance sum of RM4,789,907.12 outstanding as at 31 December 2007 has been fully settled during February 2008.

Akarmas is a major shareholder of PKR which holds 5.58% of the issued share capital of PKR. As of March 2008, the shareholdings increased to 10.84%.

(ii) On 21 February 1995, Arus Ikhlas, a subsidiary of the Company, entered into a Sales and Purchase Agreement with Pristine Acres Sdn Bhd (“Pristine”) to dispose several pieces and parcels of vacant land at a total cash consideration of RM7,442,191.87. A balance sum of RM5,489,289.47 is still outstanding.

As at todate, Pristine is a major shareholder of PKR which holds 7.24% of the issued share capital of PKR.

(i) Revaluation Policy

The Company does not have a revaluation policy on landed properties.

(j) Recurrent Related Party Transactions of a Revenue Nature

Recurrent related party transactions of a revenue nature of the Group for the financial year ended 31 December 2007 are disclosed in Note 35 of the audited financial statement.


31


The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year, which give a true and fair view of the Company and the Group’s state of affairs. Following discussions with the external auditors, the Directors consider that the Company uses appropriate accounting policies that are consistently applied and supported by reasonable as well as prudent judgments and estimates, and that all accounting standards which they consider applicable have been followed during the preparation of the financial statements.

The Directors are responsible for ensuring that the Company keeps the accounting records and that they are disclosed with reasonable accuracy which enables them to ensure that the financial statements comply with the Companies Act, 1965.

The Directors have the general responsibility for taking such steps to safeguard the assets of the Group, and to detect and prevent fraud as well as other irregularities.

STATEMENT OF DIRECTORS’ RESPONSIBILITYIn Relation To The Preparation Of The Financial Statements

32

The Malaysian Code on Corporate Governance stipulates that the Board of Directors of listed companies should maintain a sound system of internal control to safeguard shareholders’ investments and Group assets. The Board of Directors recognises the importance of sound internal control to good corporate governance and is taking appropriate initiatives to further strengthen the transparency, accountability and efficiency of operations.

BOARD RESPONSIBILITY

The Board of Directors affirms its responsibility for the Group’s approach to assessing risks and the system of internal controls, and for reviewing its effectiveness, adequacy and integrity. It should be noted, however, that such systems are designed to manage, rather than eliminate, the risk of failure to achieve corporate objectives. Accordingly, it can only provide reasonable but not absolute assurance against material misstatement of management and financial information or against financial losses and fraud.

Nonetheless, the Board remains committed towards operating a sound system of internal control and has recognised that the system must continuously evolve to support the type of business and size of operations of the Group. The Board, in striving for continuous improvement, will put in place appropriate action plans, when necessary, to further enhance the Group’s system of internal control.

The system of internal control covers, inter alia, financial, operational and compliance controls and risk management procedures.

THE SYSTEMS OF INTERNAL CONTROL

The Board maintains full control and direction over appropriate strategic, financial, organisational and compliance issues. It has delegated to executive management the implementation of the systems of internal control within an established framework.

The key features of this framework are:

i. an organizational structure with formally defined lines of responsibility.

ii. clearly defined authorisation limits at appropriate levels.

iii. yearly budgets approved at operating unit level and ultimately by the Board.

iv. regular and comprehensive management reports covering financial performance and key business indicators, which include monitoring of significant variances against budgets and plans.

v. monthly meeting by senior management with managers of business units to review their financial performance, business development, management and corporate issues.

vi. quarterly meetings for Audit Committee and Board of Directors held to discuss internal audit reports and periodic financial statements.

vii. setting up formalised standard operating manuals on internal policies and procedures.

viii. on-going training and regular performance evaluation to upgrade employees’ competencies, skills and professionalism.

ix. independent internal audit function.

STATEMENT ON INTERNAL CONTROL

33


RISK MANAGEMENT FRAMEwORK

The Group has in place an on-going process for identifying, evaluating and managing significant risks faced by the Group. As an integral part of planning and review, management from each business area identify their risks, the probability of those risks occurring, the impact if they do occur and the actions being taken to manage those risks to the desired level.

This process has been in place throughout the year and up to the date of approval of the annual report and financial statements. Internal audit independently reviews the risk identification procedures implemented by the Management and report to the Audit Committee.

ASSURANCE MECHANISM

The Board, through the Audit Committee examines the effectiveness of the Group’s system of internal control. The activities undertaken by the Audit Committee in this respect include:

i. assessment of risk by reviewing evidence of risk assessment activity;

ii. agreeing the scope of the internal audit programme;

iii. reviews of the quarterly and annual financial statements; and

iv. review of the scope of the external audit and the external auditors’ plans

ASSOCIATED COMPANIES

The scope of this statement does not extend to the associated companies, as their internal control is not within the Group’s framework.

CONCLUSION

During the financial year ended 31 December 2007, there were no material losses resulting from breakdowns or weaknesses in the Group’s system of internal controls and the Group had continued to take the necessary measures to ensure that the system of internal controls is in place and functions effectively.

STATEMENT ON INTERNAL CONTROL (Contd. )

FIN

AN

CIA

L ST

ATE

MEN

TS

36 Directors’Report

41 StatementbyDirectors

41 StatutoryDeclaration

42 ReportoftheAuditors

43 IncomeStatements

45 BalanceSheets

47 StatementofChangesinEquity

50 CashFlowStatements

54 NotestotheFinancialStatements

36

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

PRINCIPAL ACTIVITIES

The principal activities of the Company are in the provision of management services and investment holding. The principal activities of the subsidiaries and associates are set out in Notes 15 and 16 to the financial statements.

There have been no significant changes in the nature of the principal activities during the financial year except for the discontinuance of the hotel division as disclosed in Note 26 to the financial statements.

RESULTS

GROUP COMPANY

RM RM

Loss for the year from continuing operations (2,082,857) (2,863,219)

Profit for the year from discontinued operations 3,649,504 -

Profit/(loss) for the year 1,566,647 (2,863,219)

Attributable to:

Equity holders of the Company 168,795 (2,863,219)

Minority interests 1,397,852 -

1,566,647 (2,863,219)

There were no material transfers to or from reserves or provisions during the financial year.

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

DIVIDENDS

During the year, the Company paid a final dividend of 3% net of 27% tax, amounting to RM2,497,377 representing the dividend for the financial year ended 31 December 2006, as proposed in the Directors’ Report in respect of the previous year.

At the forthcoming Annual General Meeting, a final dividend of 3% net of 26% tax, amounting to RM2,531,588 in respect of the financial year ended 31 December 2007 will be proposed for shareholders’ approval. The financial statements for the financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in shareholders’ equity as an appropriation of retained earnings in the financial year ending 31 December 2008.

DIRECTORS’ REPORT

37


Directors

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

Tan Sri Dato’ Dr Gan Kong Seng (Chairman)

Datuk Alladin Bin Mohd Hashim

Dato’ Gan Kong Hiok

YM Prof. Emeritus Tengku Dato’ Shamsul Bahrin

Ooi Soon Kiam

Gan Eng Hong

Chor Eng Choon

Dato’ Prof. Zainuddin Bin Muhammad

Dato’ Haji Mohamad Haslah Bin Mohamad Amin (resigned on 16 November 2007)

Directors’ benefits

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate other than by virtue of share options granted under the Employee Share Options Scheme, as disclosed below.

Since the end of the previous financial year, other than as disclosed in Note 35 to the financial statements, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments and fees received or due and receivable by the directors or the fixed salary of a full-time employee of the Company as shown in the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, as required to be disclosed by Section 169(8) of the Companies Act, 1965.

Directors’ interests

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares and options over shares in the Company were as follows:

NumberofOrdinarysharesofRM1eachintheCompany

Asat Bought Sold Asat 1.1.2007 31.12.2007

TheCompany

Directinterest:

Tan Sri Dato’ Dr Gan Kong Seng 3,534,000 - - 3,534,000

Datuk Alladin bin Mohd Hashim 13,000 - 10,000 3,000

Dato’ Gan Kong Hiok 2,240,000 - - 2,240,000

DIRECTORS’ REPORT (Contd. )

38

DIRECTORS’ INTERESTS (Contd.)

Number of Ordinary shares of RM1 each in the Company

As at Bought Sold As at 1.1.2007 31.12.2007

The Company (Contd.)

Indirect interest:

Tan Sri Dato’ Dr Gan Kong Seng 34,635,934 - - 34,635,934

Datuk Alladin bin Mohd Hashim 93,000 - - 93,000

Dato’ Gan Kong Hiok 17,919,882 - - 17,919,882

Number of Options Over Ordinary Shares of RM1 each in the Company

As at Granted Excerised As at 1.1.2007 31.12.2007

The Company

Tan Sri Dato’ Dr Gan Kong Seng 400,000 - - 400,000

Dato’ Gan Kong Hiok 400,000 - - 400,000

YM Prof. Emeritus Tengku Dato’ Shamsul Bahrin 250,000 - - 250,000

Gan Eng Hong 200,000 200,000 - 400,000

Chor Eng Choon - 250,000 - 250,000

None of the other directors in office at the end of the financial year had any interest in shares in the Company during the financial year.

EMPLOYEE SHARE OPTIONS SCHEME

The Employee Share Options Scheme (“ESOS”) is governed by the by-laws approved by the shareholders at an Extraordinary General Meeting held on 30 July 2002. The ESOS came into effect on 20 December 2002 and is to be in force for a period of 10 years thereon. The salient features and other terms of the ESOS are disclosed in Note 31 to the financial statements.

OTHER STATUTORY INFORMATION

(a) Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonable steps:


39


OTHER STATUTORY INFORMATION (Contd.)

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the directors are not aware of any circumstances which would render:

(i) the amount written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; and

(ii) the values attributed to current assets in the financial statements of the Group and of the Company misleading.

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

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

(e) As at the date of this report, there does not exist:

(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.

(f) In the opinion of the directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

SIGNIFICANT EVENTS DURING THE YEAR

Details of significant events are disclosed in Note 39 to the financial statements.


40

SUBSEQUENT EVENTS

Details of subsequent events are disclosed in Note 42 to the financial statements.

AUDITORS

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

Signed on behalf of the Board in accordance with a resolution of the directors dated 24 April 2008.

TAN SRI DATO’ DR GAN KONG SENG

GAN ENG HONG


41


STATEMENT BY DIRECTORS Pursuant To Section 169(15) Of The Companies Act, 1965

We, TAN SRI DATO’ DR GAN KONG SENG and GAN ENG HONG, being two of the directors of PK RESOURCES BERHAD, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 43 to 107 are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2007 and of the results and the cash flows of the Group and of the Company for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the directors dated 24 April 2008.

TAN SRI DATO’ DR GAN KONG SENG

GAN ENG HONG

STATUTORY DECLARATION Pursuant To Section 169(16) Of The Companies Act, 1965

I, LOW OOI LENG, being the officer primarily responsible for the financial management of PK RESOURCES BERHAD, do solemnly and sincerely declare that the accompanying financial statements set out on pages 43 to 107 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed LOW OOI LENG at Nilai in Negeri Sembilan Darul Khusus on 24 April 2008. LOW OOI LENG

Before me,

R. Nandan@SithambaramAMN, PIS, PPN (N 034)

Commissioner for Oaths

42

We have audited the financial statements set out on pages 43 to 107. These financial statements are the responsibility of the Company’s directors.

It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility to any other person for the content of this report.

We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

In our opinion:

(a) the financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia so as to give a true and fair view of:

(i) the financial position of the Group and of the Company as at 31 December 2007 and of the results and the cash flows of the Group and of the Company for the year then ended; and

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

(b) the accounting and other records and the registers required by the Act to be kept by the Company and by its subsidiaries for which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

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

The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification material to the consolidated financial statements and did not include any comment required to be made under Section 174(3) of the Companies Act, 1965.

Ernst & Young Mohd. Sukarno bin Tun Sardon AF: 0039 No. 1697/03/09(J) Chartered Accountants Partner

Kuala Lumpur, Malaysia 24 April 2008

REPORT OF THE AUDITORS To The Members Of PK Resources Berhad (Incorporated In Malaysia)

43


INCOME STATEMENTS For The Year Ended 31 December 2007

GROUP COMPANY Note 2007 2006 2007 2006 RM RM RM RM

Continuing Operations

Revenue 3 122,933,260 141,146,797 5,578,028 5,555,111

Cost of sales 3 (53,942,722) (66,379,578) - -

Gross profit 68,990,538 74,767,219 5,578,028 5,555,111

Other operating income 3,649,664 3,083,800 21,193 42,050

Administration expenses (55,944,407) (55,708,376) (2,884,446) (4,307,867)

Selling and distribution expenses (4,594,913) (2,431,094) - -

Operating expenses (5,890,112) (4,869,496) - -

Operating profit 5 6,210,770 14,842,053 2,714,775 1,289,294

Finance costs 4 (7,166,927) (7,793,911) (5,543,164) (6,241,769)

Share of loss of associates (11,297) (90,633) - -

(Loss)/profit before tax (967,454) 6,957,509 (2,828,389) (4,952,475)

Income tax expense 8 (1,115,403) (6,335,696) (34,830) (45,833)

(Loss)/profit for the year from continuing operations (2,082,857) 621,813 (2,863,219) (4,998,308)

Discontinued Operations

Profit for the year from discontinued operations 26 3,649,504 311,763 - -

Profit/(loss) for the year 1,566,647 933,576 (2,863,219) (4,998,308)

Attributable to:

Equity holders of the Company 168,795 (3,666) (2,863,219) (4,998,308)

Minority interests 1,397,852 937,242 - -

1,566,647 933,576 (2,863,219) (4,998,308)

44

GROUP Note 2007 2006 sen sen

Earnings per share attributable to equity holders of the Company:

- Basic, for loss from continuing operations 9 (2.65) (0.32)

- Basic, for profit from discontinued operations 9 2.80 0.32

0.15 -

- Diluted, for loss from continuing operations 9 (2.65) (0.32)

- Diluted, for profit from discontinued operations 9 2.80 0.32

0.15 -

Net dividend per share 10 2.19 2.16

The accompanying notes form an integral part of the financial statements.

INCOME STATEMENTS (Contd. ) For The Year Ended 31 December 2007

45



ASSETS

Non-current assets

Property, plant and equipment 11 152,913,612 154,761,700 49,563 74,563

Land held for property development 12 116,325,204 118,372,487 - -

Investment properties 13 10,249,232 12,060,560 - -

Prepaid land lease payments 14 5,375,599 5,564,621 - -

Investments in subsidiaries 15 - - 277,733,481 277,733,481

Investments in associates 16 823,949 970,732 - -

Other investments 17 1 1 1 1

Deferred tax assets 33 1,612,957 3,036,101 - -

Goodwill arising on consolidation 18 842,506 842,506 - -

288,143,060 295,608,708 277,783,045 277,808,045

Current assets

Property development costs 19 257,409,060 261,591,907 - -

Inventories 20 72,652,058 78,663,971 - -

Trade receivables 21 63,140,942 85,845,673 - -

Other receivables 22 48,954,457 7,458,153 23,461,352 129,612

Amounts due from subsidiaries 23 - - 85,258,699 113,296,240

Amount due from an associate 16 533,853 533,822 - -

Tax recoverable 5,563,940 7,297,373 2,050,350 4,020,288

Deposits with licensed banks 24 8,780,673 9,836,120 - -

Cash and bank balances 25 18,721,460 5,689,236 116,203 35,218

475,756,443 456,916,255 110,886,604 117,481,358

Non-current assets classified as held for sale 26 1,801,277 57,424,428 - -

477,557,720 514,340,683 110,886,604 117,481,358

TOTAL ASSETS 765,700,780 809,949,391 388,669,649 395,289,403

BALANCE SHEETS As At 31 December 2007

46

BALANCE SHEETS (Contd. )As At 31 December 2007


EQUITY AND LIABILITIES

Equity attributable to equity holders of the Company

Share capital 31 114,035,500 114,035,500 114,035,500 114,035,500

Reserves 32 310,526,534 312,609,383 129,092,774 134,326,320

424,562,034 426,644,883 243,128,274 248,361,820

Minority interests 133,465,808 132,204,339 - -

Total equity 558,027,842 558,849,222 243,128,274 248,361,820

Non-current liabilities

Deferred tax liabilities 33 38,036,075 38,395,904 - -

Long term amount due to subsidiaries 23 - - 69,009,296 58,499,553

Other long term liabilities 34 49,583,594 66,128,704 10,500 22,119

87,619,669 104,524,608 69,019,796 58,521,672

Current liabilities

Trade payables 27 20,480,403 43,819,277 - -

Other payables 28 48,985,492 51,951,573 16,908,975 19,404,935

Provision 29 363,439 2,888,699 - -

Amount due to an associate 16 225,000 225,000 - -

Amounts due to subsidiaries 23 - - 59,596,854 68,971,470

Bank borrowings 30 49,706,577 47,192,580 15,750 29,506

Tax payables 292,358 294,129 - -

120,053,269 146,371,258 76,521,579 88,405,911

Liabilities directly associated with assets classified as held for sale 26 - 204,303 - -

120,053,269 146,575,561 76,521,579 88,405,911

Total liabilities 207,672,938 251,100,169 145,541,375 146,927,583

TOTAL EQUITY AND LIABILITIES 765,700,780 809,949,391 388,669,649 395,289,403


47


STATEMENTS OF CHANGES IN EQUITY For The Year Ended 31 December 2007

A

ttri

bu

tab

le t

o E

qu

ity

Ho

lder

s o

f th

e C

om

pan

y

M

ino

rity

To

tal

No

n-D

istr

ibu

tab

le

D

istr

ibu

tab

le

Inte

rest

s Eq

uit

y

Sh

are

C

apit

al

Shar

e

Shar

e O

pti

on

C

apit

al

Red

emp

tio

n

Exch

ang

e

Ret

ain

ed

Cap

ital

Pr

emiu

m

Res

erve

R

eser

ve

Res

erve

R

eser

ve

Earn

ing

s To

tal

R

M

RM

R

M

RM

R

M

RM

R

M

RM

R

M

RM

GR

OU

P

At 1

Janu

ary

2007

11

4,03

5,50

0 11

3,53

7,67

1 -

16,8

89,9

12

2,97

2,00

0 33

2,87

6 17

8,87

6,92

4 42

6,64

4,88

3 13

2,20

4,33

9 55

8,84

9,22

2

Prem

ium

on

shar

es is

sued

to

non

-par

ticip

atin

g

min

ority

inte

rest

s

- -

- 11

8,68

3

- -

- 11

8,68

3

38,7

57

157,

440

Issua

nce

of s

hare

s in

s

ubsid

iarie

s to

n

on-p

artic

ipat

ing

m

inor

ity in

tere

sts

-

- -

- -

- -

- 60

60

Profi

t for

the

year

, re

cogn

ised

inco

me

and

exp

ense

for t

he y

ear

- -

- -

- -

168,

795

16

8,79

5

1,39

7,85

2

1,56

6,64

7

Divi

dend

pai

d fo

r the

yea

r e

nded

31

Dece

mbe

r 200

6 (N

ote

10)

- -

- -

- -

(2,4

97,3

77)

(2,4

97,3

77)

- (2

,497

,377

)

Divi

dend

pai

d by

a

sub

sidia

ry to

n

on-p

artic

ipat

ing

m

inor

ity in

tere

sts

-

- -

- -

- -

- (1

75,2

00)

(175

,200

)

Effe

cts

of w

indi

ng u

p a

sub

sidia

ry (N

ote

32(e

)) -

- -

- -

(332

,876

) 33

2,87

6

- -

-

Shar

e op

tions

gra

nted

u

nder

ESO

S

- -

127,

050

-

- -

- 12

7,05

0

- 12

7,05

0

At 3

1 De

cem

ber 2

007

11

4,03

5,50

0

113,

537,

671

12

7,05

0

17,0

08,5

95

2,97

2,00

0 -

176,

881,

218

42

4,56

2,03

4

133,

465,

808

55

8,02

7,84

2

48

STATEMENTS OF CHANGES IN EQUITY (Contd. )For The Year Ended 31 December 2007

A

ttri

bu

tab

le t

o E

qu

ity

Ho

lder

s o

f th

e C

om

pan

y

Min

ori

ty

Tota

l

N

on

-Dis

trib

uta

ble

D

istr

ibu

tab

le

Inte

rest

s Eq

uit

y

Cap

ital

Sh

are

Sh

are

Cap

ital

R

edem

pti

on

Ex

chan

ge

R

etai

ned

C

apit

al

Prem

ium

R

eser

ve

Res

erve

R

eser

ve

Earn

ing

s To

tal

R

M

RM

R

M

RM

R

M

RM

R

M

RM

R

M

GR

OU

P

At 1

Janu

ary

2006

11

4,03

5,50

0

113

,537

,671

1

6,78

0,63

3

2,9

72,0

00

332

,876

1

81,3

43,7

57

429

,002

,437

1

30,7

86,8

96

559

,789

,333

Prem

ium

on

shar

es

issu

ed to

n

on-p

artic

ipat

ing

m

inor

ity in

tere

sts

-

-

109

,279

-

-

-

1

09,2

79

35,

692

1

44,9

71

Issua

nce

of s

hare

s in

s

ubsid

iarie

s to

n

on-p

artic

ipat

ing

m

inor

ity in

tere

sts

-

-

-

-

-

-

-

600

,029

6

00,0

29

(Los

s)/p

rofit

for t

he

yea

r, re

pres

entin

g

tota

l rec

ogni

sed

inco

me

a

nd e

xpen

se fo

r the

yea

r -

-

-

-

-

(3

,666

) (3

,666

) 9

37,2

42

933

,576

Divi

dend

pai

d fo

r the

y

ear e

nded

31

Dece

mbe

r 2

005

(Not

e 10

) -

-

-

-

-

(2

,463

,167

) (2

,463

,167

) -

(2

,463

,167

)

Divi

dend

pai

d by

a

sub

sidia

ry to

non

-par

ticip

atin

g

min

ority

inte

rest

s -

-

-

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4

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49


N

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1

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STATEMENTS OF CHANGES IN EQUITY (Contd. )For The Year Ended 31 December 2007

50

CASH FLOW STATEMENTS For The Year Ended 31 December 2007

GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

(Loss)/profit before taxation from: - Continuing operations (967,454) 6,957,509 (2,828,389) (4,952,475) - Discontinued operations 3,649,504 311,763 - -

Adjustments for: Depreciation of property, plant and equipment - Continuing operations 5,755,130 5,998,935 42,846 40,879 - Discontinued operations - 3,026,171 - -

Depreciation of investment properties - Discontinued operations 10,051 40,206 - -

Amortisation of prepaid land lease payments - Continuing operations 189,022 284,347 - - - Discontinued operations - 67,256 - -

Property, plant and equipment written off - Continuing operations 41,663 40,144 995 - - Discontinued operations - 284,681 - -

Dividend income - - (4,208,160) (4,303,500)

Interest income (833,420) (849,445) (16,596) (8,174)

Interest expense - Continuing operations 7,166,927 7,793,911 5,543,164 6,241,769 - Discontinued operations 251,125 451,612 - -

Impairment of goodwill - 45,120 - -

Gain on disposal of property, plant and equipment - Continuing operations (71,091) (163,949) - - - Discontinued operations (1,872,285) (17,935) - -

(Write back)/impairment of investments and properties (682,715) (140,622) - 134,378

51


GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

CASHFLOWSFROMOPERATINGACTIVITIES(Contd.)

Allowance for doubtful debts - Continuing operations 899,548 904,671 413,019 1,928,033 - Discontinued operations 50,106 28,237 - -

Write back of provision for liquidated ascertained damages (2,525,260) - - -

Bad debts written off 299,393 39,196 7,892 -

Bad debts recovered - (12,000) - -

Write down of inventories 606,984 670,784 - -

Share options granted under ESOS 127,050 - 127,050 -

Loss retained in associates 11,297 90,633 - -

Operating profit/(loss) before working capital changes 12,105,575 25,851,225 (918,179) (919,090)

Working capital changes:

Property development expenditure 6,230,130 23,068,755 - -

Inventories 6,223,130 1,419,396 - -

Receivables 27,400,446 (10,029,534) (23,331,740) (13,563)

Payables (24,916,390) (10,400,355) (2,495,960) 530,580

Associates (31) (24) - -

Subsidiaries - - 23,211,308 (6,506,380)

Cash generated from/(used in) operations 27,042,860 29,909,463 (3,534,571) (6,908,453)

Dividend received - - 3,327,959 3,098,520

Interest paid (6,939,058) (7,766,531) (2,715) (3,174)

Tax refund 1,483,549 1,138,787 2,815,309 3,570,000

Net cash flows generated from/(used in) operating activities 21,587,351 23,281,719 2,605,982 (243,107)

CASH FLOW STATEMENTS (Contd. ) For The Year Ended 31 December 2007

52


GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

CASHFLOWSFROMINVESTINGACTIVITIES

Proceeds from disposal of property, plant and equipment 12,125,853 251,173 - -

Purchase of property, plant and equipment (2,715,799) (2,044,117) (18,841) (650)

Proceeds from disposal of other investments - 2,688,495 - 2,688,495

Additonal investment in a subsidiary, net of cash acquired (3) 2 - -

Interest received 833,420 849,445 16,596 8,174

Net cash flows generated from/ (used in) investing activities 10,243,471 1,744,998 (2,245) 2,696,019

CASHFLOWSFROMFINANCINGACTIVITIES

Proceeds from issue of shares to minority interests 157,500 745,000 - -

Dividend paid to shareholders of the Company (2,497,377) (2,463,167) (2,497,377) (2,463,167)

Dividend paid to minority shareholders in a subsidiary (175,200) (155,520) - -

Drawdown of term loans 7,119,850 1,880,150 - -

Repayment of term loans (17,543,552) (20,119,169) - -

Repayment of hire purchase creditors (584,935) (275,050) (25,375) (32,250)

Net cash flows used in financing activities (13,523,714) (20,387,756) (2,522,752) (2,495,417)

NETINCREASE/(DECREASE)INCASHANDCASHEQUIVALENTS 18,307,108 4,638,961 80,985 (42,505)

CASHANDCASHEQUIVALENTSATBEGINNINGOFYEAR 8,355,750 3,716,789 35,218 77,723

CASHANDCASHEQUIVALENTSATENDOFYEAR 26,662,858 8,355,750 116,203 35,218

53


Cash and cash equivalents comprise the following:

GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Deposits with licensed banks 8,780,673 9,836,120 - -

Cash and bank balances 18,721,460 5,689,236 116,203 35,218

Bank overdrafts (839,275) (7,169,606) - -

26,662,858 8,355,750 116,203 35,218



54

1. CORPORATE INFORMATION

TheCompanyisapubliclimitedliabilitycompany,incorporatedanddomiciledinMalaysia,andislistedontheMainBoardofBursaMalaysiaSecuritiesBerhad.

TheregisteredofficeandtheprincipalplaceofbusinessoftheCompanyislocatedatWismaBBN,PT7454,JalanBBN1/1A,PutraPointPhase1,PutraNilai,71800Nilai,NegeriSembilanDarulKhusus.

TheprincipalactivitiesoftheCompanyareintheprovisionofmanagementservicesandinvestmentholding.Theprincipalactivitiesofthesubsidiariesandassociatesaresetout inNotes15and16tothefinancialstatements. There have been no significant changes in the nature of the principal activities during thefinancialyearexceptforthediscontinuanceofthehoteldivisionasdisclosedinNote26tothefinancialstatements.

ThefinancialstatementswereauthorisedforissuebytheBoardofDirectorsinaccordancewitharesolutionofthedirectorsdated24April2008.

2. SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

ThefinancialstatementsoftheGroupandoftheCompany,presentedinRinggitMalaysia,complywith the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards inMalaysia.

ThefinancialstatementsoftheGroupandoftheCompanyhavebeenpreparedontherespectivemeasurementbasisasstatedinthesummaryofsignificantaccountingpolicies.

2.2 Adoption of new and revised Financial Reporting Standards (“FRSs”)

At thebeginningof thecurrentfinancial year, theCompanyhadadopted the followingnewandrevisedFRSswhicharemandatoryforitsfinancialyearbeginningon1January2007:

FRS6: ExplorationforandEvaluationofMineralResources

AmendmentstoFRS119: EmployeeBenefits-ActuarialGainsandLosses,GroupPlansandDisclosures

FRS6andamendmentstoFRS119areeffectiveforperiodsbeginningonorafter1January2007.

The adoptionof all the above standards does not result in significant changes to the accountingpoliciesanddoesnotresultinsignificantimpactonthefinancialstatementsoftheGroupandoftheCompany.

In theprevious year, theGroupand theCompanyhas taken theoptionof early adoptionof thefollowingnewFRSs,whichwereeffectiveforperiodsbeginningonorafter1October2006,inthelastfinancialstatementsfortheyearended31December2006:

FRS117 LeasesFRS124 RelatedPartyDisclosures

(i) New standards and interpretations that are not yet effective

ThenewFRS107,112,118,134and137thathavebeenissuedbutnotyeteffectivewillnothavesignificant impacton thefinancial statementsof theGroupandof theCompanyuponadoption.

NOTES TO THE FINANCIAL STATEMENTS 31December2007

54

55


NOTES TO THE FINANCIAL STATEMENTS (Contd. )31 December 2007

2. SIGNIFICANT ACCOUNTING POLICIES (Contd.)

2.2 AdoptionofnewandrevisedFinancialReportingStandards(“FRSs”)(Contd.)

(i) Newstandardsandinterpretationsthatarenotyeteffective(Contd.)

The new FRS 111 and 120, amendments to FRS 121, and Issues Committee Interpretations (“IC Interpretations”) 1, 2, 5, 6, 7 and 8 that have been issued but not yet effective are not applicable to the Group and the Company.

FRS 139, Financial Instruments : Recognition and Measurement application has been deferred to a date to be announced by the Malaysian Accounting Standards Board. The Group and the Company are exempted from disclosing the possible impact, if any, to the financial statements upon the initial application of FRS 139.

2.3 SignificantAccountingJudgementsandEstimates

Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Group’s accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances.

(a) Keysourcesofestimationuncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(i) Impairmentofgoodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash-generating units (“CGU”) to which goodwill is allocated. Estimating a recoverable amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of goodwill as at 31 December 2007 was RM842,506 (2006: RM842,506). Further details are disclosed in Note 18.

(ii) Depreciationofproperty,plantandequipment

The cost of property, plant and equipment is depreciated on a straight line basis over the assets’ useful life. Management estimates of the useful lives of property, plant and equipment and the residual value are as disclosed in Note 2.4(d). Any changes in the useful lives and residual value could impact the future depreciation charges. A 1% difference in the current year depreciation charge would result in 4% variance in the profit for the year of the Group.

(iii) Propertydevelopment

The Group recognises property development revenue and expenses in the income statement by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.

Significant judgement is required in determining the stage of completion, the extent of the property development costs incurred, the estimated total property development revenue and costs, as well as the recoverability of the development projects. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists.

56



2.3 SignificantAccountingJudgementsandEstimates(Contd.)

(a) Keysourcesofestimationuncertainty(Contd.)

(iii) Propertydevelopment(Contd.)

A 10% difference in the estimated total property development revenue or costs would result in approximately 6% variance in the Group’s revenue and 9% variance in the Group’s cost of sales.

(iv) Incometaxes

Judgement is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. As at 31 December 2007, the Group have tax payables, tax recoverable and deferred tax liabilities of approximately RM292,000 (2006: RM294,000), RM5,564,000 (2006: RM7,297,000) and RM38,036,000 (2006: RM38,396,000), respectively.

(v) Deferredtaxassets

Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The total carrying value of recognised tax losses and capital allowances of the Group was approximately RM1,613,000 (2006: RM3,036,000) and of the unrecognised tax losses and capital allowances of the Group and the Company were approximately RM58,373,000 (2006: RM66,198,000) and RM639,000 (2006: RM502,000) respectively.

2.4 SummaryofSignificantAccountingPolicies

(a) SubsidiariesandBasisofConsolidation

(i) Subsidiaries

Subsidiaries are entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.

(ii) BasisofConsolidation

In the Company’s separate financial statements, investments in subsidiaries are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are prepared for the same reporting date as the Company.

57




2.4 SummaryofSignificantAccountingPolicies(Contd.)

(a) SubsidiariesandBasisofConsolidation(Contd.)

(ii) BasisofConsolidation(Contd.)

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. In preparing the consolidated financial statements, intragroup balances, transactions and unrealised gains or losses are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances.

Acquisitions of subsidiaries are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition.

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in profit or loss.

Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. It is measured at the minorities’ share of the fair value of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the minorities’ share of changes in the subsidiaries’ equity since then.

(b) Associates

Associates are entities in which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not in control or joint control over those policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting. Under the equity method, the investment in associate is carried in the consolidated balance sheet at cost adjusted for post-acquisition changes in the Group’s share of net assets of the associate. The Group’s share of the net profit or loss of the associate is recognised in the consolidated profit or loss. Where there has been a change recognised directly in the equity of the associate, the Group recognises its share of such changes. In applying the equity method, unrealised gains and losses on transactions between the Group and the associate are eliminated to the extent of the Group’s interest in the associate. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associate. The associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any long-term interests that, in substance, form part of the Group’s net investment in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

58



2.4 SummaryofSignificantAccountingPolicies(contd.)

(b) Associates(Contd.)

The most recent available audited financial statements of the associates are used by the Group in applying the equity method. Where the dates of the audited financial statements used are not coterminous with those of the Group, the share of results is arrived at from the last audited financial statements available and management financial statements to the end of the accounting period. Uniform accounting policies are adopted for like transactions and events in similar circumstances.

In the Company’s separate financial statements, investments in associates are stated at cost less impairment losses.

On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

(c) Goodwill

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

(d) Property,PlantandEquipment,andDepreciation

All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Subsequent to recognition, property, plant and equipment except for freehold land are stated at cost less accumulated depreciation and any accumulated impairment losses.

Freehold land has an unlimited useful life and therefore is not depreciated. Buildings-in-progress are also not depreciated as these assets are not available for use. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:

Club house 2%

Golf course 2%

Buildings 1 ²⁄3 % to 20%

Plant and equipment, others 5% to 25%

Assets of a value below RM500 are written off in the year of purchase.

59




2.4 SummaryofSignificantAccountingPolicies(contd.)

(d) Property,PlantandEquipment,andDepreciation(Contd.)

The residual values, useful life and depreciation method are reviewed at each financial year-end 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 benefits embodied in the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in profit or loss.

(e) InvestmentProperties

Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Such properties are measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation.

Investment properties are derecognised when either they have been disposed of or when the investment properties is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of investment properties are recognised in profit or loss in the year in which they arise.

(f) LandHeldforPropertyDevelopmentandPropertyDevelopmentCosts

(i) LandHeldforPropertyDevelopment

Land held for property development consists of land where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle. Such land is classified within non-current assets and is stated at cost less any accumulated impairment losses.

Land held for property development is reclassified as property development costs at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle.

(ii) PropertyDevelopmentCosts

Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities.

When the financial outcome of a development activity can be reliably estimated, property development revenue and expenses are recognised in the income statement by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.

Where the financial outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable, and property development costs on properties sold are recognised as an expense in the period in which they are incurred.

Any expected loss on a development project, including costs to be incurred over the defects liability period, is recognised as an expense immediately.

60




(f) LandHeldforPropertyDevelopmentandPropertyDevelopmentCosts(Contd.)

(ii) PropertyDevelopmentCosts(Contd.)

Property development costs not recognised as an expense are recognised as an asset, which is measured at the lower of cost and net realisable value.

The excess of revenue recognised in the income statement over billings to purchasers is classified as accrued billings within trade receivables and the excess of billings to purchasers over revenue recognised in the income statement is classified as progress billings within trade payables.

(g) ImpairmentofNon-financialAssets

The carrying amounts of assets, other than investment properties, property development costs, inventories, deferred tax assets and non-current assets held for sale, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated to determine the amount of impairment loss.

For goodwill, assets that have an indefinite useful life, the recoverable amount is estimated at each balance sheet date or more frequently when indicators of impairment are identified.

For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the CGU to which the assets belong to. Goodwill acquired in a business combination is from the acquisition date, allocated to each of the Group’s CGUs, or groups of CGUs, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to these units or groups of units.

An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

An impairment loss is recognised in profit or loss in the period in which it arises, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for as a revaluation decrease to the extent that the impairment loss does not exceed the amount held in the asset revaluation reserve for the same asset.

Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase.

61





(h) Inventories

Inventories are stated at lower of cost and net realisable value.

Cost is determined on the weighted average basis and comprises all incidentals incurred in bringing the inventories to their existing condition and location. The cost of finished goods includes material, direct labour and production overhead costs. The cost of unsold properties comprises cost associated with the acquisition of land, direct costs and appropriate proportions of common costs.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

(i) FinancialInstruments

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends and gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are recognised directly in equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

(i) Cash and Cash Equivalents

For the purposes of the cash flow statements, cash and cash equivalents include cash and bank balances and deposits with licensed banks which have an insignificant risk of changes

in value, net of outstanding bank overdrafts.

(ii) Marketable Securities

Marketable securities are carried at the lower of cost and market value, determined on an aggregate basis. Cost is determined on the weighted average basis while market value is determined based on quoted market values. Increases or decreases in the carrying amount of marketable securities are recognised in profit or loss. On disposal of marketable securities, the difference between net disposal proceeds and the carrying amount is recognised in profit or loss.

(iii) Receivables

Receivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date.

(iv) Payables

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

(v) Interest Bearing Loans and Borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

(vi) Equity Instruments

Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

62




(j) Leases

(i) Classification

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets and the land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating leases.

(ii) Finance Leases - the Group as Lessee

Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the balance sheet as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Group’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets.

Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in the profit or loss over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

The depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment as described in Note 2.4(d).

(iii) Operating Leases - the Group as Lessee

Operating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

In the case of a lease of land and buildings, the minimum lease payments or the up-front payments made are allocated, whenever necessary, between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land element and buildings element of the lease at the inception of the lease. The up-front payment represents prepaid lease payments and are amortised on a straight-line basis over the lease term.

(k) BorrowingCosts

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

63





(l) IncomeTax

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date.

Deferred tax is provided for, using the liability method. In principle, deferred tax liabilities are recognised for all taxable temporary differences and 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 profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill 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 profit nor taxable profit.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised as income or an expense and included in the profit or loss for the period, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised 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 the amount of any excess of the acquirer’s interest is the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of the combination.

(m) Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as finance cost.

(n) EmployeeBenefits

(i) Short Term Benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Defined Contributions Plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in the profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”).

64




(n) EmployeeBenefits(Contd.)

(iii) Share-based Compensation

The Employee Share Options Scheme (“ESOS”), an equity-settled, share-based compensation plan, allows the Group’s employees to acquire ordinary shares of the Company.

The total fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in the Share Option reserve within equity over the vesting period and taking into account the probability that the options will vest. The fair value of share options is measured at grant date, taking into account, if any, the market vesting conditions upon which the options were granted but excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable on vesting date.

At each balance sheet date, the Group revises its estimates of the number of options that are expected to become exercisable on vesting date. It recognises the impact of the revision of original estimates, if any, in the profit or loss, and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in the Share Option reserve until the option is exercised, upon which it will be transferred to share premium, or until the option expires, upon which it will be transferred directly to retained earnings.

The proceeds received net of any directly attributable transaction costs are credited to equity when the options are exercised.

(o) FunctionalandPresentationCurrency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.

(p) RevenueRecognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

(i) Sale of Properties

Revenue from sale of properties is accounted for by the stage of completion method as described in Note 2.4(f)(ii).

(ii) Sale of Goods and Services

Revenue is recognised net of sales taxes and upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(iii) Interest Income

Interest income is recognised on an accrual basis using the effective interest method. Where recoverability is uncertain, interest income will be recognised on a receipt basis.

(iv) Dividend Income

Dividend income is recognised when the Group’s right to receive payment is established.

(v) Management Fees

Management fees are recognised when services are rendered.

65





(q) Non-currentAssetsHeldforSale

Non-current assets are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary.

Immediately before classification as held for sale, the measurement of the non-current assets is brought up-to-date in accordance with applicable FRSs. Then, on initial classification as held for sale, non-current assets are measured in accordance with FRS 5 that is at the lower of carrying amount and fair value less costs to sell. Any differences are included in profit or loss.

A component of the Group is classified as a discontinued operation when the criteria to be classified as held for sale have been met or it has been disposed and such a component represents a separate major line of business of operations.

3. REVENUE AND COST OF SALES GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Sales of land, houses and shoplots 71,470,656 84,862,086 - -

Sales of food, beverage and room rentals 7,957,092 6,797,158 - -

Education 35,197,643 33,723,497 - -

Dividend income from subsidiaries - - 4,208,160 4,303,500

Others 8,307,869 15,764,056 1,369,868 1,251,611

122,933,260 141,146,797 5,578,028 5,555,111

Sales of land, houses and shoplots represent land sold and a proportion of contract revenue determined by reference to the stage of completion of houses and shoplots sold, net of discounts.

Cost of sales comprise: GROUP

2007 2006 RM RM

Sales of land, houses and shoplots 47,035,167 54,188,979

Sales of food and beverage 827,629 676,425

Others 6,079,926 11,514,174

53,942,722 66,379,578

66


4. FINANCE COSTS GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Interest expense:

- Overdraft 96,896 57,144 - -

- Term loan 4,805,264 5,540,286 - -

- Revolving credit 1,726,923 1,683,401 - -

- Hire purchase 56,093 29,450 2,715 3,174

- Subsidiaries - - 5,061,457 5,759,603

Interest on balance of consideration on acquisition of a subsidiary 478,992 478,992 478,992 478,992

Others 2,759 4,638 - -

7,166,927 7,793,911 5,543,164 6,241,769

5. OPERATING PROFIT

The following amounts have been included in arriving at operating profit:

GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Employee benefits expense (Note 6) 20,024,220 18,990,792 1,327,840 1,146,462

Directors’ remuneration (Note 7) 3,376,849 3,082,691 734,227 759,401

Auditors’ remuneration 118,000 113,000 30,000 25,000

Depreciation of property, plant and equipment 5,755,130 5,998,935 42,846 40,879

Amortisation of prepaid land lease payments 189,022 284,347 - -

Property, plant and equipment written off 41,663 40,144 995 -

Allowance for doubtful debts 899,548 904,671 413,019 1,928,033

Bad debts written off 299,393 39,196 7,892 -

Bad debts recovered - (12,000) - -

67



5. OPERATING PROFIT (Contd.)

GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

(Write back)/impairment of investments and properties (682,715) (140,622) - 134,378

Rental of premises 769,984 514,749 - -

Impairment of goodwill - 45,120 - -

Write down of inventories 606,984 670,784 - -

Royalty - 421,800 - -

Lease rental 91,645 107,751 - 2,780

Hire of plant and machinery 30,458 34,560 - -

Interest income (833,420) (849,445) (16,596) (8,174)

Gain on disposal of property, plant and equipment (71,091) (163,949) - -

Management fee income - - (1,369,868) (1,251,611)

Rental income (243,157) (619,890) - -

Write back of provision for liquidated ascertained damages (Note 29) (2,525,260) - - -

6. EMPLOYEE BENEFITS EXPENSE

GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Wages, salaries and allowances 17,817,329 16,839,376 1,056,654 1,005,530

Statutory contributions to Employee Provident Fund and social security 2,079,841 2,151,416 144,136 140,932

Share options granted under ESOS 127,050 - 127,050 -

20,024,220 18,990,792 1,327,840 1,146,462

68


7. DIRECTORS’ REMUNERATION GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Executive directors

Salaries and other emoluments 3,045,688 2,755,988 585,810 604,401

Fees 69,000 66,925 25,000 25,000

Benefits-in-kind 99,744 88,778 - -

3,214,432 2,911,691 610,810 629,401

Non-executive directors

Fees 103,917 106,000 97,917 100,000

Other emoluments 58,500 65,000 25,500 30,000

162,417 171,000 123,417 130,000

Total 3,376,849 3,082,691 734,227 759,401

The number of directors of the Company whose total remuneration during the financial year fell within the following bands is analysed below:

GROUP

2007 2006 RM RM

Executive directors

RM100,001 - RM500,000 1 2

RM500,001 - RM1,000,000 4 3

Non-executive directors

RM50,000 and below 3 3

RM50,001 - RM100,000 1 1

9 9

69



8. INCOME TAX EXPENSE GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Continuingoperations: Malaysian income tax (144,537) 767,015 11,664 -

Deferred taxation 1,525,732 3,280,014 - -

Under/(over) provision in prior years

- current 196,625 301,655 23,166 45,833

- deferred (462,417) 1,987,012 - -

Total income tax expense from continuing operations 1,115,403 6,335,696 34,830 45,833

Discontinuedoperations: Malaysian income tax - - - -

Total income tax expense 1,115,403 6,335,696 34,830 45,833

Domestic current income tax is calculated at the Malaysian statutory tax rate of 27% (2006: 28%) of the estimated assessable profit for the year. The domestic statutory tax rate will be reduced to 26% from the current year’s rate of 27%, effective year of assessment 2008 and to 25% effective year of assessment 2009. The computation of deferred tax as at 31 December 2007 has reflected these changes.

A reconciliation of income tax expense applicable to (loss)/profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows:

GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Profit/(loss) before taxation - Continuing operations (967,454) 6,957,509 (2,828,389) (4,952,475)

- Discontinued operations (Note 26) 3,649,504 311,763 - -

2,682,050 7,269,272 (2,828,389) (4,952,475)

Taxation at Malaysian statutory tax rate of 27% (2006: 28%) 724,154 2,035,396 (763,665) (1,386,693)

Effect of tax savings in small and medium scale companies (105) (57,693) - -

Effect of deferred tax at different tax rates (378,866) (316,145) - 387

Income not subject to tax (2,788,404) (2,878,977) (931,718) (972,672)

70


8. INCOME TAX EXPENSE (Contd.) GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Expenses not deductible for tax purposes 3,744,123 3,988,194 1,627,684 2,371,082

Utilisation of previously unrecognised tax losses (10,770) (206,668) - (133,964)

Utilisation of previously unrecognised unabsorbed capital allowances (92,520) (35,546) - -

Deferred tax assets not recognised during the year 183,583 1,518,468 79,363 121,860

Under/(over) provision in prior years - current taxation 196,625 301,655 23,166 45,833

- deferred taxation (462,417) 1,987,012 - -

Tax expense for the year 1,115,403 6,335,696 34,830 45,833

9. EARNINGS PER SHARE

(a) Basic

Basic earnings per share amounts are calculated by dividing the consolidated profit/(loss) for the year attributable to equity holders of the Company by the number of ordinary shares in issue during the

financial year.

2007 2006 RM RM

Loss from continuing operations attributable to equity holders of the Company (3,019,825) (361,580)

Profit from discontinued operations attributable to equity holders of the Company 3,188,620 357,914

Profit/(loss) attributable to equity holders of the Company 168,795 (3,666)

2007 2006

Number of ordinary shares in issue 114,035,500 114,035,500

71



9. EARNINGS PER SHARE (Contd.)

(a) Basic(Contd.)

2007 2006 sen sen

Basic earnings per share for:

Loss from continuing operations (2.65) (0.32)

Profit from discontinued operation 2.80 0.32

Profit for the year 0.15 -

(b) Diluted

For the current year, the outstanding ESOS have been excluded from the computation of fully diluted earnings per share as their conversion to ordinary shares would be antidilutive in nature. Accordingly, the basic and fully diluted earnings per share are the same.

10. DIVIDENDS NetDividendsper Amount OrdinaryShare

2007 2006 2007 2006 RM RM Sen Sen

3% (2006: 3%) less 27% (2006: 28%) taxation on 114,035,500 ordinary shares 2,497,377 2,463,167 2.19 2.16

At the forthcoming Annual General Meeting, a final dividend of 3% net of 26% tax, amounting to RM2,531,588 in respect of the financial year ended 31 December 2007 will be proposed for shareholders’ approval. The financial statements for the financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in shareholders’ equity as an appropriation of retained earnings in the financial year ending 31 December 2008.

72


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76


11. PROPERTY, PLANT AND EQUIPMENT (Contd.)

Motor Computer OfficeCOMPANY Vehicles Equipment Equipments Total RM RM RM RM

Cost

At 1 January 2007 108,937 29,251 8,109 146,297

Addition - 15,143 3,698 18,841

Write off - - (1,810) (1,810)

At 31 December 2007 108,937 44,394 9,997 163,328

AccumulatedDepreciation

At 1 January 2007 51,134 16,771 3,829 71,734

Charge for the year 33,515 7,497 1,834 42,846

Write off - - (815) (815)

At 31 December 2007 84,649 24,268 4,848 113,765

NetCarryingAmount

At 31 December 2007 24,288 20,126 5,149 49,563

Costs

At 1 January 2006 108,937 28,601 8,109 145,647

Addition - 650 - 650

At 31 December 2006 108,937 29,251 8,109 146,297


At 1 January 2006 17,619 11,029 2,207 30,855

Charge for the year 33,515 5,742 1,622 40,879

At 31 December 2006 51,134 16,771 3,829 71,734

NetCarryingAmount

At 31 December 2006 57,803 12,480 4,280 74,563

Included in property, plant and equipment of the Group is a freehold land of a subsidiary, with an aggregate net book value of RM46,305,595 (2006: RM46,305,595) which is charged to a financial institution for financial facilities extended to that subsidiary. This charge is pending discharge by the financial institution as the term loan of that subsidiary has been fully settled during the financial year.

During the financial year, the Group acquired property, plant and equipment at aggregate costs of RM3,951,799 (2006: RM2,314,317) of which RM1,236,000 (2006: RM270,200) were acquired by means of hire purchase. Net book value of property, plant and equipment held under hire purchase in the Group and the Company is RM1,297,658 (2006: RM416,597) and RM24,288 (2006: RM57,803) respectively.

77



12. LAND HELD FOR PROPERTY DEVELOPMENT

GROUP

2007 2006 RM RM

Freehold land, at cost

At 1 January 118,372,487 125,309,259

Reversal of sales in prior years - 152,217

Transfer to property development costs (2,047,283) (7,088,989)

At 31 December 116,325,204 118,372,487

Certain land held for property development are being charged for borrowings taken by the subsidiaries.

13. INVESTMENT PROPERTIES

Freehold GROUP Land Building Total RM RM RM

Cost

At 1 January 2007 10,396,096 2,010,366 12,406,462

Reclassified as held for sale (146,864) (2,010,366) (2,157,230)

At 31 December 2007 10,249,232 - 10,249,232


At 1 January 2007 - 345,902 345,902

Charge for the year - 10,051 10,051

Reclassified as held for sale - (355,953) (355,953)

At 31 December 2007 - - -

NetCarryingAmount

At 31 December 2007 10,249,232 - 10,249,232

Cost

At 1 January 2006/31 December 2006 10,396,096 2,010,366 12,406,462


At 1 January 2006 - 305,696 305,696

Charge for the year - 40,206 40,206

At 31 December 2006 - 345,902 345,902

NetCarryingAmount

At 31 December 2006 10,396,096 1,664,464 12,060,560

The fair value of the above investment properties is approximately RM10,829,989 (2006: RM12,999,936) based on the current prices in an active market for the respective properties within each vicinity during the financial year.

78


14. PREPAID LAND LEASE PAYMENTS

GROUP

2007 2006 RM RM

Cost

At 1 January 9,567,155 17,557,157

Reclassified as held for sale - (7,990,002)

At 31 December 9,567,155 9,567,155

AccumulatedAmortisation

At 1 January 4,002,534 4,690,404

Amortisation for the year 189,022 351,603

Reclassified as held for sale - (1,039,473)

At 31 December 4,191,556 4,002,534

NetCarryingAmount

At 31 December 5,375,599 5,564,621

15. INVESTMENTS IN SUBSIDIARIES

COMPANY

2007 2006 RM RM

Unquoted shares, at cost 277,733,481 278,008,481

Accumulated impairment losses - (275,000)

277,733,481 277,733,481

Details of the subsidiaries are as follows:

Company Principal Countryof EffectiveEquity

Activities Incorporation Interest

2007 2006 % %

BBN Development Sdn. Bhd. Property development Malaysia 75.38 75.38

PK Properties Sdn. Bhd. Property development Malaysia 100.00 100.00

NS Township Development Property development Malaysia 70.00 70.00 Sdn. Bhd.

Arus Ikhlas Sdn. Bhd. Property development Malaysia 70.00 70.00

79



15. INVESTMENTS IN SUBSIDIARIES (Contd.)

Company Principal Countryof EffectiveEquity

Activities Incorporation Interest

2007 2006 % %

PK Education Sdn. Bhd. Provision of educational services Malaysia 70.00 70.00

Advance Point (M) Sdn. Bhd. Property development Malaysia 70.00 70.00

PK Hotels & Leisure Sdn. Bhd. Dormant Malaysia 100.00 100.00

Nilai Springs Bhd. Operation and management Malaysia 75.38 75.38 of golf and country club

Romila Jaya Sdn. Bhd. Quarry operations and Malaysia 91.05 91.05 leasing of quarry

Nilai Landscape Sdn. Bhd. Nursery and landscaping Malaysia 100.00 100.00

Advance Point Management Provision of building Malaysia 70.00 70.00 Sdn. Bhd. management services

Healthcom Pharma Sdn. Bhd. Dormant Malaysia 35.70 35.70

PK Innovations Sdn. Bhd.* Building management Malaysia 100.00 70.00 and security system

PK Mall Management Sdn. Bhd. Management services Malaysia 100.00 100.00

Healthcom Sdn. Bhd. Dormant Malaysia 51.00 51.00

PK Trade & Services Sdn. Bhd. Dormant Malaysia 100.00 100.00

Nilai Hills Sdn. Bhd. Dormant Malaysia 100.00 100.00

PK Academy Sdn. Bhd. Dormant Malaysia 70.00 70.00

Awan Cermat Sdn. Bhd. Dormant Malaysia 91.05 91.05

PK Healthcare Services Sdn. Bhd. Dormant Malaysia 100.00 100.00

Emerald Spirit Sdn. Bhd.** Dormant Malaysia - 70.00

Peladang Chemicals (S) Pte. Ltd.*** Liquidated Singapore - 100.00

* Information relating to the acquisition of additional issued and paid-up capital of the subsidiary is set out in Note 39(f).

** Information relating to the disposal of the subsidiary is set out in Note 39(c).

*** Information relating to the winding up of the subsidiary is set out in Note 39(d).

80


16. INVESTMENTS IN ASSOCIATES

GROUP

2007 2006 RM RM

Unquoted shares, at cost 1,314,000 1,314,000

Share of post-acquisition losses (354,565) (343,268)

959,435 970,732

Accumulated impairment losses (135,486) -

823,949 970,732

Share of net assets 823,949 970,732

The amounts due from/(to) associates are unsecured, non-interest bearing, and repayable on demand.

Details of the associates are as follows:

Principal Countryof Effective Activities Incorporation EquityInterest

2007 2006 % %

Golden Plateau Sdn. Bhd. Dormant Malaysia 50.00 50.00

Chartz Development Sdn. Bhd. Dormant Malaysia 30.00 30.00

17. OTHER INVESTMENTS

GROUP/COMPANY

2007 2006 RM RM

Quoted shares, at cost 2 4,945,823

Quoted shares disposed - (4,945,821)

2 2

Less: Accumulated impairment losses (1) (1)

1 1

Market value as at 31 December 1 1

81



18. GOODWILL ARISING ON CONSOLIDATION

GROUP

2007 2006 RM RM

Cost

At 1 January 842,506 1,787,586

Effects of adopting FRS 3 - (899,960)

Impairment loss for the year - (45,120)

At 31 December 842,506 842,506

Accumulatedamortisationandimpairmentlosses

At 1 January - 899,960

Effects of adopting FRS 3 - (899,960)

At 31 December - -

Netcarryingamount

At 31 December 842,506 842,506

Goodwill represents excess of cost of the acquisition over the Group’s interest in the net fair value of identifiable assets, liabilities and contingent liabilities of each investment or cash generating unit. Goodwill has been allocated to the Group’s cash generating units (“CGU”) identified according to business segments as follows:

Property Development Others Total RM RM RM

31 December 2007 738,506 104,000 842,506

31 December 2006 738,506 104,000 842,506

Goodwill is tested for impairment on an annual basis by comparing the carrying amount with the recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit (“CGU”) fair value less costs to sell and its value in use. As the fair value less costs to sell is higher than the value in use of the respective CGU, the fair value less costs to sell would best reflect its recoverable amounts. Fair value less costs to sell is arrived at based on reference to market values on an existing use basis of recent transactions of similar properties.

82


19. PROPERTY DEVELOPMENT COSTS

GROUP

2007 2006 RM RM

At 1 January

Freehold land 136,765,680 133,199,552

Development costs 452,912,416 437,667,604

589,678,096 570,867,156

Cost incurred during the year:

Development costs 43,598,311 27,522,863

Cost recognised in income statement

At 1 January (328,086,189) (275,899,892)

Recognised during the year (49,050,543) (52,186,297)

At 31 December (377,136,732) (328,086,189)

Transfers:

From land held for property development 2,047,283 7,088,989

To inventories (777,898) (15,209,782)

To non-current assets classified as held for sale - (591,130)

1,269,385 (8,711,923)

Property development costs at 31 December 257,409,060 261,591,907

Certain pieces of land under property development costs are being charged for borrowings taken by the subsidiaries.

83



20. INVENTORIES

GROUP

2007 2006 RM RM

Atcost:

Trading inventories 506,448 715,608

Unsold completed building units 29,345,820 33,483,760

Commercial land 41,981,345 42,890,716

Work in progress - 634,503

Hotel supplies and consumables - 373,054

Consumables 288,445 296,330

72,122,058 78,393,971

Atnetrealisablevalue:

Unsold completed building units 530,000 270,000

72,652,058 78,663,971

21. TRADE RECEIVABLES

GROUP

2007 2006 RM RM

Trade receivables 68,763,762 90,534,999

Less: Allowance for doubtful debts (5,622,820) (4,689,326)

63,140,942 85,845,673

During the financial year, the Group has written off RM16,160 (2006: Nil) against allowance for doubtful debts and trade receivables.

Included in trade receivables of the Group are balances totalling RM31,618,472 (2006: RM31,604,778) from three entities, of which RM5,489,289 (2006: RM5,489,289) are amounts due from a company in which a director has financial interests. In determining the extent of allowance for doubtful debts, the Directors have given due consideration to the current economic conditions and other information available to assess the likelihood of bad debts arising. Although uncertainty generally exists with regard to the recovery of debts under the current economic conditions, the Directors are of the opinion that the allowance made for doubtful debts is adequate. It is not possible, however, to anticipate any possible future deterioration in credit conditions in respect of debtor parties.

The Group’s normal trade credit terms range from 21 to 90 days. Other credit terms are assessed on a case-by-case basis.

84


22. OTHER RECEIVABLES GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Deposits 2,006,647 2,352,378 111,696 110,000

Prepayments 2,485,588 2,479,011 11,233 19,612

Sundry receivables 44,462,222* 2,626,764 23,338,423* -

48,954,457 7,458,153 23,461,352 129,612

* Included in sundry receivables of the Group and of the Company are RM39,675,311 and RM23,338,423 respectively due from a single debtor of which an amount of RM39,309,859 relates to the sale of hotel business as disclosed in Note 39(c) to the financial statements.

23. AMOUNT DUE FROM/(TO) SUBSIDIARIES

COMPANY

2007 2006 RM RM

Current

Amounts due from subsidiaries 87,599,750 115,224,272

Less: Allowance for doubtful debts (2,341,051) (1,928,032)

Net amounts due from subsidiaries 85,258,699 113,296,240

The amounts due from subsidiaries are unsecured, non-interest bearing and repayable on demand.

COMPANY

2007 2006 RM RM

Current

Amounts due to subsidiaries

- interest bearing 6,599,999 14,364,053

- non-interest bearing 52,996,855 54,607,417

59,596,854 68,971,470

Non-current

Amounts due to subsidiaries

- interest bearing 69,009,296 58,499,553

Total amount due to subsidiaries 128,606,150 127,471,023

85



23. AMOUNT DUE FROM/(TO) SUBSIDIARIES (Contd.)

The amounts due to subsidiaries arose primarily from payments on the Company’s behalf which are unsecured and repayable on demand. The amounts subjected to interest bore interest rates of 5.0% to 9.0% (2006: 5.0% to 9.0%) per annum. Included in the current and the non-current interest bearing amount is an amount of RM13,426,188 which has a fixed term of repayment. The non-current amount of RM6,826,187 will be repayable by September 2009.

24. DEPOSITS WITH LICENSED BANKS

The interest rates and the average maturity of deposits with licensed banks as at the balance sheet date were as follows:

GROUP GROUP InterestRates AverageMaturityDays

2007 2006 2007 2006 % %

Fixed deposits 2.30 - 3.55 2.40 - 3.30 18 23

25. CASH AND BANK BALANCES

Included in cash and bank balances of the Group are :

(a) amounts totalling RM1,073,120 (2006: RM1,126,892) placed in trust for purchasers of residential houses and apartments in accordance with Housing Developers (Control and Licensing) Act 1966.

(b) amounts of RM199,750 (2006: RM78,125) in respect of share application monies received for shares in a subsidiary which are held in trust on behalf of the applicants and the related other payables are disclosed in Note 28. These application monies had been placed in trust as at 31 December 2007.

86


26. DISCONTINUED OPERATIONS AND NON-CURRENT ASSETS HELD FOR SALE

GROUP

Note 2007 2006 RM RM

Discontinuedoperations

Profit for the year from hotelling business (a) 3,649,504 311,763

Non-currentassetsclassifiedasheldforsale

Disposal of land and building (b) 1,801,277 3,247,680

Disposal of hotel properties - 54,176,748

1,801,277 57,424,428

Liabilitiesassociatedwithassetsclassifiedasheldforsale - 204,303

(a) DiscontinuedOperationsandDisposalGroupClassifiedasHeldforSale

On 9 November 2006, PK Hotels & Leisure Sdn. Bhd., a wholly-owned subsidiary of the Company, entered into a Sales & Purchase Agreement (“SPA”) with Al-Hasry Travel & Tours Sdn. Bhd. to dispose the hotel building known as the Allson Klana Putra Nilai together with the furniture, fittings and equipment as listed in the agreement, collectively known as the “Property”, for a total cash consideration of RM12,613,290 . Subsequently, PK Hotels & Leisure Sdn. Bhd. had agreed to give a discount of RM1,561,329 to net off against the selling price. This sale was completed on 6 April 2007.

Advance Point (M) Sdn. Bhd. (“APM”) had on 1 January 2007 transferred its hotel business, namely Allson Klana Resort, Seremban, to Emerald Spirit Sdn. Bhd. (“EMS”). On 26 April 2007, APM and EMS, both subsidiaries of the Company, entered into a Subscription Agreement with Gen Glamour Sdn. Bhd. (“GGR”) whereby GGR has agreed to subscribe to 1,000,000 ordinary shares of RM1 each in EMS for RM1,000,000 in cash (“Proposed Divestment”). Following the Proposed Divestment, EMS became a 99.9% owned subsidiary of GGR. In return, the Company and APM shall receive RM39,309,859 in cash for the Proposed Divestment. This was completed on 1 June 2007.

(b) DisposalofLandandBuilding

PK Hotels & Leisure Sdn. Bhd. and BBN Development Sdn. Bhd., subsidiaries of the Company, intended to dispose its land and building which has been classified under investment property in the previous year. The net carrying amount of the land and building of RM1,801,277 has been classified to non-current assets held for sale during the financial year. The disposal is due to be completed in the next financial year and as at 31 December 2007, negotiations for the sale were in progress.

87



26. DISCONTINUED OPERATIONS AND NON-CURRENT ASSETS HELD FOR SALE (Contd.)

An analysis of the results of discontinued operations is as follows:

GROUP

2007 2006 RM RM

Revenue 7,369,818 21,059,995

Cost of sales (1,469,659) (4,933,992)

5,900,159 16,126,003

Other income 2,954,310 538,305

Operating expenses (4,953,840) (15,900,933)

Finance costs (251,125) (451,612)

Profit before tax of discontinued operations 3,649,504 311,763

Taxation - -

Profit for the year from discontinued operations 3,649,504 311,763

The following amounts have been included in arriving at profit for the year from discontinued operations:

GROUP

2007 2006 RM RM

Auditors’ remuneration 21,000 21,000

Directors’ fees 19,000 21,075

Depreciation - Property, plant and equipment - 3,026,171

- Investment properties 10,051 40,206

Amortisation of prepaid land lease payments - 67,256

Staff costs - Wages and salaries 2,011,144 4,132,647

- EPF and social security costs 219,873 626,942

- Others (3,214) 1,312,516

Allowance for doubtful debts 50,106 28,237

Rental expenses - 84,940

Property, plant and equipment written off - 284,681

Interest expense 251,125 451,612

Rental income (56,550) (146,400)

Management fees income (525,185) (60,000)

Gain on disposal of property, plant and equipment (1,872,285) (17,935)

88


26. DISCONTINUED OPERATIONS AND NON-CURRENT ASSETS HELD FOR SALE (Contd.)

The cash flows attributed to the discontinued operations are as follows:

GROUP

2007 2006 RM RM

Operating cash flows (8,206,714) (373,274)

Investing cash flows 12,051,961 (154,747)

Financing cash flows (169,303) (75,262)

Total cash flows 3,675,944 (603,283)

The major classes of assets and liabilities classified as held for sale on the consolidated balance sheet as at 31 December 2007 are as follows:

Carryingamountasat

31.12.2007 31.12.2006 RM RM

Assets

Property, plant and equipment 1,654,413 49,882,769

Prepaid land lease payments - 6,950,529

Property development costs 146,864 591,130

Non-current assets classified as held for sale 1,801,277 57,424,428

Liabilities

Hire purchase payables, representing liabilities directly associated with assets classified as held for sale - 204,303

Included in the non-current assets held for sale of the Group are land and buildings of a subsidiary, with an aggregate net book value of RM39,681,037 in respect of the previous year, which are charged to financial institutions for financial facilities extended to that subsidiary.

27. TRADE PAYABLES

Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30 to 90 days (2006: 30 to 90 days).

89



28. OTHER PAYABLES

GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Balance of consideration on acquisition of a subsidiary (Note 34) 4,789,907 4,789,907 4,789,907 4,789,907

Sundry payables 26,601,342 34,276,155 11,698,025 14,161,649

Deposits 6,521,170 4,885,886 - -

Accruals 9,817,313 7,079,496 421,043 453,379

Deferred income 1,056,010 842,004 - -

Amounts held in trust 199,750 78,125 - -

48,985,492 51,951,573 16,908,975 19,404,935

Details of amounts held in trust are disclosed in Note 25(b).

29. PROVISION

GROUP

2007 2006 RM RM

At 1 January 2,888,699 2,888,699

Unused amount reversed (2,525,260) -

At 31 December 363,439 2,888,699

The above represents provision for liquidated ascertained damages in respect of projects undertaken by a subsidiary. The provision is recognised for expected liquidated damages claims based on the terms of applicable sale and purchase agreements.

90


30. BANK BORROWINGS

GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Unsecured: Bank overdrafts 839,275 904,965 - -

Secured: Bank overdrafts - 6,264,641 - -

Current portion of long term liabilities (Note 34) - Commercial papers 30,712,490 30,694,247 - -

- Hire purchase creditors 494,090 221,838 15,750 29,506

- Term loans 17,660,722 9,106,889 - -

49,706,577 47,192,580 15,750 29,506

Interest on the bank borrowings during the year ranged from 3.75% to 9.5% (2006: 2.85% to 9.7%) per annum.

The security over the long term loan and commercial papers is disclosed in Note 34.

31. SHARE CAPITAL

GROUP/COMPANY

2007 2006 RM RM

Authorised: 250,000,000 ordinary shares of RM1 each 250,000,000 250,000,000

Issued and fully paid up: 114,035,500 ordinary shares of RM1 each 114,035,500 114,035,500

ESOS is governed by the by-laws approved by the shareholders at an Extraordinary General Meeting held 30 July 2002. The ESOS is to be in force for a period of 10 years from the date it became effective, 20 December 2002.

91



31. SHARE CAPITAL (Contd.)

The salient features of the ESOS are as follows:

(i) The Options Committee appointed by the Board of Directors to administer the ESOS, may from time to time grant options to eligible employees of the Group to subscribe for new ordinary shares of RM1 each in the Company.

(ii) Subject to the discretion of the Options Committee, any employee whose employment is more than one (1) year and any executive directors holding office in a full-time executive capacity of the Group, shall be eligible to participate in the ESOS.

(iii) The total number of shares to be issued under the ESOS shall not exceed in aggregate 10% of the issued share capital of the Company at any point of time during the tenure of the ESOS and out of which not more than 50% of the shares shall be allocated, in aggregate, to directors and senior management. In addition, not more than 10% of the shares available under the ESOS shall be allocated to any individual director or employee who, either singly or collectively through his/her associates, holds 20% or more in the issued and paid-up capital of the Company.

(iv) The option price for each share shall be the weighted average of the market price as quoted in the daily official list issued by Bursa Malaysia Securities Berhad for the 5 market days immediately preceding the date on which the option is granted less, if the Options Committee shall so determine at their discretion from time to time, a discount of not more than 10% or the par value of the shares of the Company of RM1.

(v) The options shall become exercisable only during the employees lifetime provided the employee has been in continuous service with the Group throughout the period.

(vi) All new ordinary shares issued upon exercise of the options granted under the ESOS will rank pari passu in all respects with the existing ordinary shares of the Company other than as may be specified in a resolution approving the distribution of dividends prior to their exercise dates.

(vii) The persons to whom the options have been granted have no right to participate by virtue of the options, in any share issue of any other company.

Information with respect to the number of options granted under the ESOS is as follows:

Numberofshareoptions

2007 2006 RM RM

At 1 January 4,259,000 6,263,000

Granted 3,295,000 -

Lapsed - (2,004,000)

At 31 December 7,554,000 4,259,000

The fair value of share options granted to employees is estimated using the Binomial Model.

92


32. RESERVES

GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Distributable: Retained earnings 176,881,218 178,876,924 12,456,053 17,816,649

Non-distributable: 113,537,671 113,537,671 113,537,671 113,537,671 Share premium

Share option reserve 127,050 - 127,050 -

Capital reserve 17,008,595 16,889,912 - -

Capital redemption reserve 2,972,000 2,972,000 2,972,000 2,972,000

Exchange reserve - 332,876 - -

310,526,534 312,609,383 129,092,774 134,326,320

As at 31 December 2007, the Company has tax exempt profits available for distribution of approximately RM15,197,442 (2006: RM15,197,442), subject to the agreement of the Inland Revenue Board.

Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the 108 balance and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.

The Company did not elect for the irrevocable option to disregard the 108 balance. Accordingly, during the transitional period, the Company may utilise the credit in the 108 balance as at 31 December 2007 to distribute cash dividend payments to ordinary shareholdings as defined under the Finance Act 2007. As at 31 December 2007, the Company has sufficient credit in the 108 balance to pay franked dividends out of its entire retained earnings.

Movements in reserves are shown in the respective statements of changes in equity.

The nature and purpose of each category of reserve are as follows:

(a) SharePremium

This amount arose from premium on the issue of ordinary shares above par value.

(b) ShareOptionReserve

This amount arose from the equity-settled share options granted to the employees. This reserve is made up of the cumulative value of services received from employees recorded on grant of share options. Further details of the share options are disclosed in Note 31.

93



32. RESERVES (Contd.)

(c) CapitalReserve

Capital reserve of the Group amounting to RM17,135,645 (2006: RM16,889,912) arose from premium

on shares issued to non-participating minority interests in a subsidiary.

(d) Capitalredemptionreserve

This amount arose from the nominal value of shares repurchased and cancelled. The amount was transferred from retained earnings under Section 67A of the Companies Act, 1965.

(e) ForeignExchangeReserve

The foreign exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements of a foreign subsidiary. During the financial year, the foreign subsidiary has been wound-up and the related foreign exchange differences has been transferred to retained earnings. Further details are disclosed in Note 39(d) to the financial statements.

33. DEFERRED TAX LIABILITIES AND ASSETS

GROUP

2007 2006 RM RM

At 1 January 35,359,803 30,092,777

Recognised in the income statement 1,063,315 5,267,026

At 31 December 36,423,118 35,359,803

Presented after appropriate offsetting as follows:

GROUP

2007 2006 RM RM

Deferred tax assets: (1,612,957) (3,036,101)

Deferred tax liabilities: 38,036,075 38,395,904

36,423,118 35,359,803

94


33. DEFERRED TAX LIABILITIES AND ASSETS (Contd.)

The components and movements of deferred tax liabilities and assets of the Group during the financial year prior to offsetting are as follows:

DeferredtaxliabilitiesoftheGroup:

Accelerated Revaluation Property capital ofleasehold development allowance land expenditure Total RM RM RM RM

At 1 January 2007 17,662,443 1,283,069 27,158,095 46,103,607

Recognised in the income statement 866,821 - (658,816) 208,005

At 31 December 2007 18,529,264 1,283,069 26,499,279 46,311,612

At 1 January 2006 20,209,377 1,374,952 27,970,580 49,554,909

Recognised in the income statement (2,546,934) (91,883) (812,485) (3,451,302)

At 31 December 2006 17,662,443 1,283,069 27,158,095 46,103,607

DeferredtaxassetsoftheGroup:

Taxlossesand unabsorbed Provisions allowances Others Total RM RM RM RM

At 1 January 2007 (1,715,989) (8,926,064) (101,751) (10,743,804)

Recognised in the income statement 1,338,214 (445,839) (37,065) 855,310

At 31 December 2007 (377,775) (9,371,903) (138,816) (9,888,494)

At 1 January 2006 (1,910,889) (17,248,518) (302,725) (19,462,132)

Recognised in the income statement 194,900 8,322,454 200,974 8,718,328

At 31 December 2006 (1,715,989) (8,926,064) (101,751) (10,743,804)

Deferred tax assets not recognised are in respect of the following items:

GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Arising from: Unutilised tax losses 35,245,520 33,976,552 484,631 378,400

Unabsorbed capital allowances 23,127,663 32,221,409 154,554 123,837

95



33. DEFERRED TAX LIABILITIES AND ASSETS (Contd.)

The unutilised tax losses and unabsorbed capital allowances of the Group are available indefinitely for offsetting against future taxable profits of the respective entities within the Group, subject to no substantial change in shareholdings of those entities under the Income Tax Act, 1967 and guidelines issued by the tax authority.

The unutilised tax losses and unabsorbed capital allowances of the Company are available for offsetting against future taxable profits subject to no substantial change in shareholdings under the Income Tax Act, 1967 and guidelines issued by the tax authority.

Deferred tax assets have not been recognised in respect of unutilised tax losses and unabsorbed capital allowances as it is not probable that future taxable profit will be available against which they can be utilised based on the current plan of the respective companies.

34. OTHER LONG TERM LIABILITIES

GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Totalborrowings

Balance of consideration on acquisition of a subsidiary (a) 4,789,907 4,789,907 4,789,907 4,789,907

Term loans (b) 17,660,722 26,767,611 - -

Medium Term Notes (c) 48,630,828 48,098,332 - -

Commercial Papers (c) 30,712,490 30,694,247 - -

Hire purchase creditors (d) 1,446,856 591,488 26,250 51,625

103,240,803 110,941,585 4,816,157 4,841,532

Less:Shorttermborrowings

Balance of consideration on acquisition of a subsidiary (Note 28) (4,789,907) (4,789,907) (4,789,907) (4,789,907)

Commercial papers (30,712,490) (30,694,247) - -

Hire purchase creditors (494,090) (221,838) (15,750) (29,506)

Term loans (17,660,722) (9,106,889) - -

Longtermborrowings 49,583,594 66,128,704 10,500 22,119

96


34. OTHER LONG TERM LIABILITIES (Contd.)

(a) The balance of consideration on acquisition of a subsidiary represents the remaining 45% of the consideration for the acquisition of the 70% equity interest in Arus Ikhlas Sdn Bhd (“AISB”). The out-standing balance was payable to the vendor of AISB on or before the expiry of the 36 month period from the date of completion of the acquisition, i.e. by December 2001. Until that date, the amount owing was non-interest bearing. However, interest at 10% per annum is chargeable on the balance outstanding after the 36 month period until full settlement of the balance.

(b) Term loans

Term loans comprise four loans which are secured by fixed and floating charges on certain freehold and long leasehold land and buildings of certain subsidiaries. Interest was charged during the year at 6.8% to 9.5% (2006: 6.8% to 9.7%) per annum.

The term loans are repayable as follows:

GROUP

2007 2006 RM RM

Financial year ended/ending:

31 December 2007 - 9,106,889

31 December 2008 17,660,722 17,660,722

17,660,722 26,767,611

(c) Medium Term Notes and Commercial Papers

On 31 December 2004, BBN Development Sdn. Bhd. (“BBN”), a subsidiary of the Company issued RM31,000,000 of Commercial Papers (“CPs”) and RM50,000,000 of Medium Term Notes (“MTN”) under the Murabahah Notes Issuance Facility (“MUNIF”) to repay the outstanding bank borrowings of the Company and a fellow subsidiary.

The MUNIF is available up to seven (7) years from the date of first issuance with the issuance of CPs with maturities ranging from one (1) to twelve (12) months and Medium Term Notes (“MTN”) with maturities ranging from one (1) to seven (7) years.

The MUNIF Programme is subject to the Facility Limit Reduction Schedule set out as follows:

Fromthedateoffirstissuance ReductionAmount RevisedFacilityLimit (RM’million) (RM’million)

Fifth year 20 66

Sixth year 34 32

Seventh year 32 -

97



34. OTHER LONG TERM LIABILITIES (Contd.)

The limit for issuance of CPs is RM56 million or the Revised Facility Limit above, whichever is lower.

The MUNIF is secured by a bank guarantee issued under the Kafalah Facility of up to RM89 million. The Kafalah Facility is secured against certain land being developed and held for future development of BBN as detailed in Note 12 and 19 respectively and corporate guarantee by the Company.

During the year, the Company redeemed and renewed the RM31,000,000 Commercial Papers (“CPs”). The net proceeds received net of discount is as follows:

FaceValue Discount NetProceeds RM RM RM

CPs 31,000,000 (287,510) 30,712,490

CPs are subject to profits ranging from 3.92% to 4.88% (2006: 3.92% to 4.88%) per annum and repayable within the next twelve (12) months.

The Medium Term Notes have profits rates and maturity dates as stated below.

AggregateFaceValue ProfitRate MaturityDate

RM20 million 5.0% 31 December 2009

RM30 million 5.5% 31 December 2010

(d) Hire purchase creditors GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Minimum lease payments

Within one year 560,652 249,836 17,829 28,088

Between one to five years 1,077,021 422,464 11,882 2 9,708

1,637,673 672,300 29,711 57,796

Less: Future finance charges (190,817) (80,812) (3,461) (6,171)

Present value of finance lease liabilities 1,446,856 591,488 26,250 51,625

Analysed as:

Due within 12 months 494,090 221,838 15,750 29,506

Due after 12 months 952,766 369,650 10,500 22,119

1,446,856 591,488 26,250 51,625

The flat interest rate for the hire purchase creditors is ranging from 3.75% to 5.64% (2006: 2.85% to 4.5%) per annum.

98


35. SIGNIFICANT RELATED PARTY TRANSACTIONS

GROUP

Transactionvalue Outstandingbalance

2007 2006 2007 2006 RM RM RM RM

Rental paid to a company in which certain directors have financial interests - G.O. Construction Sdn. Bhd. 135,448 135,448 - -

COMPANY

2007 2006 RM RM

Management fees charged to subsidiaries 1,369,868 1,251,611

Dividend income from subsidiaries 4,208,160 4,303,500

Interest charged by subsidiaries:

- BBN Development Sdn Bhd 4,322,242 5,021,966

- PK Education Sdn Bhd 739,215 737,637

Information regarding outstanding balances arising from related party transactions as at 31 December 2007 is disclosed in Note 16 and 23.

The remuneration of directors of the Group and of the Company during the year is disclosed in Note 7. The remuneration of other members of key management during the year is as follows:

GROUP COMPANY

2007 2006 2007 2006 RM RM RM RM

Salaries and other related costs 964,486 1,163,232 410,038 410,213

Benefits-in-kind 18,400 11,800 8,600 8,600

Directors’ fees 24,000 30,500 - -

1,006,886 1,205,532 418,638 418,813

99



36. CONTINGENT LIABILITIES (UNSECURED)

COMPANY

2007 2006 RM RM

Corporate guarantee for facilities granted to subsidiaries 110,000,000 110,000,000

There is a pending claim of RM10.00 million against one of its subsidiaries, Nilai Springs Berhad (“NSB”) for an alleged breach of contract. NSB had denied the claim, and its application to the High Court to strike off the claim was allowed on 28 November 2001. The case has been fixed for trial on 1 and 2 July 2008 to be held at Seremban High Court.

The directors of NSB in consultation with legal counsel are of the opinion that no provision is required.

37. CAPITALCOMMITMENTS

GROUP

2007 2006 RM RM

Approved and contracted for 2,227,451 -

Approved but not contracted for 41,672,983 161,538

43,900,434 161,538

38. SEGMENT INFORMATION

(a) Reportingformat

The segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences in the products and services produced. The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

(b) Businesssegments

The Group is principally engaged in the following activities:

(i) Property development

(ii) Education

(iii) Hospitality

Other operations of the Group mainly comprise investment holding, landscaping, operations and leasing of a quarry which do not constitute a separately reportable segment.

100


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104


38. SEGMENT INFORMATION (Contd.)

(c) Geographicalsegments:

Information on the Group’s operations by geographical segments is not presented as the Group predominantly operates in Malaysia.

39. SIGNIFICANT EVENTS DURING THE YEAR

(a) On 28 August 2006, Nilai Landscape Sdn. Bhd., a wholly-owned subsidiary of the Company, entered into an agreement to dispose a building with carrying amount of RM2,656,550 for a cash consideration of RM2,150,000. In addition, an amount of RM506,550 would be compensated by one of its related companies, NS Township Development Sdn. Bhd. on completion of the disposal. The land where this building is situated is also disposed by BBN Development Sdn. Bhd. for a cash consideration of RM4,478,798. These transactions were completed in May 2007.

(b) On 9 November 2006, PK Hotels & Leisure Sdn. Bhd., a wholly-owned subsidiary of the Company, entered into a Sales & Purchase Agreement (“SPA”) with Al-Hasry Travel & Tours Sdn. Bhd. to dispose the hotel building known as the Allson Klana Putra Nilai together with the furniture, fittings and equipment as listed in the agreement, collectively known as the “Property”, for a total cash consideration of RM12,613,290 . Subsequently, PK Hotels & Leisure Sdn. Bhd. had agreed to give a discount of RM1,561,329 to net off against the selling price. This sale was completed on 6 April 2007.

(c) Advance Point (M) Sdn. Bhd. (“APM”) had on 1 January 2007 transferred its hotel business, namely Allson Klana Resort, Seremban, to Emerald Spirit Sdn. Bhd. (“EMS”). On 26 April 2007, APM and EMS, both subsidiaries of the Company, entered into a Subscription Agreement with Gen Glamour Sdn. Bhd. (“GGR”) whereby GGR has agreed to subscribe to 1,000,000 ordinary shares of RM1 each in EMS for RM1,000,000 in cash (“Proposed Divestment”). Following the Proposed Divestment, EMS became a 99.9% owned subsidiary of GGR. In return, the Company and APM shall receive RM39,309,859 in cash for the Proposed Divestment. This was completed on 1 June 2007.

(d) On 16 March 2007, Peladang Chemicals (S) Pte Ltd, a wholly-owned subsidiary of the Company, had been wound-up. The final members’ meeting was held in Singapore on 16 March 2007.

(e) On 7 September 2007, Nilai Springs Berhad, a subsidiary of the Company has obtained approval from the shareholders to construct a 180 rooms Hotel Resort at Nilai Springs Golf & Country Club (“Hotel Resort”) with banqueting, meeting and sports facilities.

(f) On 12 October 2007, PK Properties Sdn. Bhd., a wholly-owned subsidiary of the Company acquired the remaining 30% of the issued and paid-up capital in PK Innovations Sdn. Bhd. (“PKI”), comprising 3 ordinary shares of RM1 each for a cash consideration of RM3. Following the acquisition, PKI became its wholly-owned subsidiary.

105



40. COMPARATIVES

The presentation and classification of items in the current year financial statements have been consistent with the previous financial year except that certain comparative amounts have been reclassified to conform with current year’s presentation:

As Re- As PreviouslyStated classification Restated

RM RM RM

Group

Fortheyearended31December2006

Other operating income 3,820,377 (736,577) 3,083,800

Administration expenses (45,916,307) (9,792,069) (55,708,376)

Selling and distribution expenses (3,514,734) 1,083,640 (2,431,094)

Operating expenses (14,314,502) 9,445,006 (4,869,496)

41. FINANCIAL INSTRUMENTS

(a) FinancialRiskManagementObjectivesandPolicies

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its interest rate risk, liquidity risk and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. It is, and has been throughout the year under review, the Group’s policy that no trading in derivative financial instruments shall be undertaken.

(b) InterestRateRisk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-bearing financial assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group’s interest-bearing financial assets are mainly short term in nature and have been mostly placed in fixed deposits.

The Group’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk. The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings.

The information on maturity days and effective interest rates of financial assets and liabilities are disclosed in their respective notes.

(c) LiquidityRisk

The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities at a reasonable level to its overall debt position.

106


41. FINANCIAL INSTRUMENTS (Contd.)

(d) CreditRisk

The Group’s credit risk is primarily attributable to trade receivables. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis and the Group’s exposure to bad debts is not significant.

The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents and non-current investments, arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these financial assets.

The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial assets except for those disclosed in Note 21 and 22.

(e) FairValues

COMPANY

CarryingAmount FairValue

RM RM

At31December2007

Amounts due from subsidiaries 85,258,699 #

Amounts due to subsidiaries 52,996,855 #

At31December2006

Amounts due from subsidiaries 113,296,240 #

Amounts due to subsidiaries 54,607,417 #

# It is not practicable to estimate the fair values due principally to a lack of fixed repayment terms.

The fair values of investment properties are disclosed in Note 13. The fair value is determined based on the current prices in an active market for the respective properties within each vicinity during the financial year.

107



42. SUBSEQUENT EVENTS

On 18 March 2008, Akarmas Sdn. Bhd. (“Akarmas”) acquired 6,000,000 ordinary shares, representing approximately 5.26% of the total issued and paid-up share capital of the Company via direct business transaction for a total cash consideration of approximately RM3,600,000 or RM0.60 per share (“Acquisition”). Arising from the Acquisition, Akarmas’ direct holding of the voting shares of the Company increased from 5.58% to 10.84%.

Subsequent to the Acquisition, Akarmas is obliged to extend a mandatory take-over to acquire all the shares in the Company not already owned by Akarmas and its persons acting in concert with it (“PAC”) as Akarmas and its PACs held more than 33% but less than 50% of the voting shares in the Company and the Acquisition involved Akarmas acquiring more than 2% of the shares in the Company.

The mandatory take-over was offered by Bank Islam Malaysia Berhad on behalf of Akarmas for a cash consideration of RM0.60 per share (“Offer”) for the following:

(i) all the remaining 61,606,566 ordinary shares of RM1 each in the Company, representing approximately 54.02% of the total issued and paid-up share capital of the Company not already owned by Akarmas and its PAC; and

(ii) all the new shares that may be alloted and issued up to the close of the Offer pursuant to the exercise of outstanding options granted to the employees of the Company under ESOS of the Company as disclosed in the Directors’ Report.

108

LIST OF PROPERTIES OWNED BY THE GROUP

Approx. Netbook Expiry Unit/ ageof valueasat Description/Location Tenure ofLease Acreage building 31.12.07

1. IndustrialLandDevelopment Leasehold Year 23 - 891,963 Mukim Labu and Setul 2092 acres District of Seremban. (For development and future sale) 2. Mixeddevelopmentof Freehold - 1,192.15 - 84,449,435 commercialandresidential acres Mukim Labu and Setul District of Seremban (For development and future sale) 3. Condominiums Leasehold Year 17 13 2,170,112 PT 4591, Jalan Penghulu Cantik 2092 units 70100 Seremban Negeri Sembilan (For future sale) 4. GolfCourselandandClubhouse Freehold - 252.87 11 45,035,069 PT 4770, Putra Nilai acres 71800 Nilai Negeri Sembilan 5. QuarryLand,MukimLabu Leasehold Year 30 - 1,841,977 10th Mile Seremban - KL Highway 2054 30 2,400,667 71907 Labu acres Negeri Sembilan 6. BungalowLand&Building Leasehold Year 1.1 26 1,573,443 H.S (D) 1695, PT 978, 2080 acres Mukim Tras, 49000 Raub Pahang 7. Building - - 1 10 *1,654,412 PT 10844, Desa Cempaka unit Putra Nilai, 71800 Nilai Negeri Sembilan 8. Building - - 1 10 *441,859 PT 6367, Jalan BBN 3/1 unit Putra Nilai, 71800 Nilai Negeri Sembilan 9. Land&Building(College) Freehold - 104.61 10 109,388,972 PT 13106, Putra Nilai acres 71800 Nilai Negeri Sembilan 10. Building - - - 10 *1,286,693 PT 7454, Jalan BBN 1/1A Putra Nilai, 71800 Nilai Negeri Sembilan

* The net book values of these properties do not include the value of the pieces of land where they occupy.

109


ANALYSIS OF SHAREHOLDINGS As At 24 April 2008

Type of shares : Ordinary shares of RM1.00 each

Voting rights : One vote per shareholder on a show of hands One vote per ordinary share on a poll

No. of shareholders : 2,103

DISTRIBUTION OF SHAREHOLDINGS

No.of Total %ofSizeofholdings holders holdings Shares

1 - 999 117 44,254 0.04

1,000 - 10,000 1,714 4,974,590 4.36

10,001 - 100,000 234 6,751,648 5.92

100,001 - 5,701,774 33 27,570,037 24.18

5,701,775 - above 5 74,694,971 65.50

Total 2,103 114,035,500 100.00

SUBSTANTIAL SHAREHOLDINGS

Names DirectHoldings IndirectHoldings

No.ofShares % No.ofShares %

1. Akarmas Sdn Bhd 33,367,600 29.26 - -

2 Ragan Jaya Sdn Bhd 26,034,934 22.83 - -

3 Pristine Acres Sdn Bhd 8,259,000 7.24 - -

4 FELDA 7,292,437 6.39 - -

5 Tan Sri Dato’ Dr Gan Kong Seng 3,534,000 3.10 59,402,534 52.09

6 Dato’ Gan Kong Hiok 2,240,000 1.96 8,259,000 7.24

7 Lim Mee Hwa 475,000 0.42 5,575,000 4.89

TOTAL 81,202,971 71.21

110

LISTOFTOP30SHAREHOLDERS

Name No.ofShares %

1 Akarmas Sdn. Bhd. 27,006,600 23.68

2 Ragan Jaya Sdn. Bhd. 26,034,934 22.83

3 AMMB Nominees (Tempatan) Sdn. Bhd. 8,000,000 7.02 AmBank (M) Berhad for Pristine Acres Sdn. Bhd.

4 Lembaga Kemajuan Tanah Persekutuan (FELDA) 7,292,437 6.39

5 Akarmas Sdn. Bhd. 6,361,000 5.58

6 Gen Glamour Sdn. Bhd. 4,572,000 4.01

7 DB (Malaysia) Nominee (Asing) Sdn. Bhd. 3,250,000 2.85 Exempt An for British and Malayan Trustees Limited (Yeoman 3-Rights)

8 Tan Sri Dato’ Dr Gan Kong Seng 3,234,000 2.84

9 HSBC Nominees (Asing) Sdn. Bhd. 2,000,000 1.75 BNY Brussels for Queensland Investment Corporation

10 Alliancegroup Nominees (Tempatan) Sdn. Bhd. 1,900,000 1.67 Pledged Securities Account for Dato’ Gan Kong Hiok

11 Low Mun Chong 1,720,000 1.51

12 Chan Kam Seng 1,455,000 1.28

13 Ten Ah Man 1,333,000 1.17

14 Dato’ Lee Pit Chern 1,278,000 1.12

15 Affin Nominees (Tempatan) Sdn. Bhd. 1,000,000 0.88 Pledged Securities Account for Low Mun Chong

16 Pertubuhan Peladang Kebangsaan 619,437 0.54

17 Bukit Maju Developments Bhd. 600,000 0.53

18 HDM Nominees (Asing) Sdn. Bhd. 475,000 0.42 DBS Vickers Secs (S) Pte. Ltd. for Lim Mee Hwa

19 CIMSEC Nominees (Asing) Sdn. Bhd. 441,400 0.39 Exempt An for CIMB-GK Securities Pte. Ltd. (Retail Clients)

20 Southern Investment Bank Berhad 340,000 0.30 Employees Provident Fund

21 Ng Kim Teng 300,000 0.26

22 Ng Kim Ling 300,000 0.26

23 Mayban Nominees (Tempatan) Sdn. Bhd. 300,000 0.26 Pledged Securities Account for Tan Sri Dato’ Dr Gan Kong Seng

24 Pristine Acres Sdn. Bhd. 259,000 0.23

25 Mayban Nominees (Tempatan) Sdn. Bhd. 220,500 0.19 Pledged Securities Account for Lim Kiam Hooi

26 Kenanga Nominees (Tempatan) Sdn. Bhd. 218,000 0.19 Pledged Securities Account for Tan Chin Eng

27 Chan Kam Seng 200,000 0.18

28 DB (Malaysia) Nominee (Asing) Sdn. Bhd. 200,000 0.18 Exempt An for British and Malayan Trustees Limited (Yeoman CL2)

29 Loo Ah Luan 196,000 0.17

30 Yong Kee Chong 166,300 0.15

101,272,608 88.81

ANALYSIS OF SHAREHOLDINGS As At 24 Apr i l 2008 (CONTD.)

111


DIRECTORSSHAREHOLDINGS(In accordance with the register maintained under Section 134 of the Companies Act, 1965)

NameofDirectors Direct % Indirect %

Tan Sri Dato’ Dr Gan Kong Seng 3,534,0001 3.099 59,402,5343 52.091

Dato’ Gan Kong Hiok 2,240,0002 1.964 8,259,0004 7.242

Datuk Alladin Bin Mohd Hashim 3,000 0.002 93,0005 0.082

Gan Eng Hong - - - -

Chor Eng Choon - - - -

YM Prof. Emeritus Tengku Dato’ Shamsul Bahrin - - - -

Dato’ Prof. Zainuddin Bin Muhammad - - - -

Ooi Soon Kiam - - - -

Notes to interest in shares:

1. Partly held through Mayban Nominees (Tempatan) Sdn. Bhd.

2. Shares held through AllianceGroup Nominees (Tempatan) Sdn. Bhd. and Southern Investment Bank Berhad.

3. Indirect shareholdings includes the shares held through Ragan Jaya Sdn. Bhd and Akarmas Sdn. Bhd.

4. Indirect shareholdings includes the shares held through Pristine Acres Sdn. Bhd.

5. Deemed interested through his spouse’s, Datin Hamidah Bte Ibrahim, shareholdings in PK Resources Berhad.

112

NOTICEISHEREBYGIVENTHAT the Thirty-Fourth Annual General Meeting of the Company will be held at Nilai

Springs Golf & Country Club, Putra Nilai, 71800 Nilai, Negeri Sembilan Darul Khusus, on Thursday, 26 June 2008

at 11.30 a.m. for the following purposes:-

AGENDA

Resolution1 To receive and adopt the Audited Accounts for the financial year ended 31 December 2007 and the Reports of the Directors and Auditors thereon.

Resolution2 To approve payment of a first and final dividend of 3% per RM1.00 ordinary share less 26% tax in respect of the financial year ended 31 December 2007.

Resolution3 To re-elect Mr Chor Eng Choon who shall retire pursuant to Article 77 of the Company’s Articles of Association.

Resolution4 To re-elect Dato’ Prof Zainuddin Bin Muhammad who shall retire pursuant to Article 77 of the Company’s Articles of Association.

Resolution5 To re-elect Datuk Alladin Bin Mohd Hashim who shall retire pursuant to Article 77 of the Company’s Articles of Association.

Resolution6 To approve payment of Directors’ fee.

Resolution7 To re-appoint Messrs. Ernst & Young as auditors and authorise the Directors to fix their remuneration.

SPECIALBUSINESS

To consider and if thought fit, to pass the following Ordinary/Special Resolutions:

ORDINARYRESOLUTION

Resolution8 Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965 (See note 2.1)

“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby empowered to issue and allot shares in the Company, at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad and that authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

SPECIALRESOLUTION

Resolution9 ProposedAmendmentstotheArticlesofAssociationoftheCompany

“THAT the proposed amendments to the Articles of Association of the Company, as contained in Appendix II which is attached to the Circular to Shareholders dated 4 June 2008 be and are hereby approved.

AND THAT the Directors be and are hereby authorised to assent to any modifications, variations and/or amendments as may be required by the relevant authorities and to do all acts and things and take steps as may be considered necessary to give full effect to the proposed amendments to the Articles of Association of the Company.”

To transact any other ordinary business for which due notice has been given.

NOTICE OF 34TH ANNUAL GENERAL MEETING

113


NOTICE ISALSOHEREBYGIVENTHAT the First and Final Dividend of 3% per RM1.00 ordinary share less

26% tax for the financial year ended 31 December 2007, if approved by the shareholders at the Annual General

Meeting, will be payable on 31 July 2008 to Depositors registered in the Records of Depositors at the close of

business on 12 July 2008.

A Depositor shall qualify for entitlement to the dividend only in respect of :-

(a) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 12 July 2008 in respect of transfers; and

(b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.

BY ORDER OF THE BOARD

PaulYongPowChoy(MIA9105)

Company Secretary

NilaiNegeri Sembilan Darul Khusus4 June 2008

Notes:-

1. Appointment of Proxy

(a) A member of the Company entitled to attend and vote is entitled to appoint one or more proxies to vote in his stead. A proxy need not be a member of the Company and the provisions of Section 149 (1) of the Companies Act, 1965 shall not apply to the Company.

(b) The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation, either under seal or under the hand of an officer or attorney duly authorised.

(c) The instrument appointing a proxy shall be deposited at the Registered Office at Wisma BBN, PT 7454, Jalan BBN 1/1A, Putra Nilai, 71800 Nilai, Negeri Sembilan Darul Khusus not less than 48 hours before the time appointed for holding the meeting and at any adjournment thereof.

2. Explanatory Note on Special Business :

2.1 Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965

The proposed Resolution 8, if passed, will give the Directors authority to allot and issue new ordinary shares up to an amount not exceeding 10% of the issued share capital of the Company for such purposes as the Directors consider would be in the interest of the Company. This authority will commence from the date of this Annual General Meeting and unless revoked or varied by the Company at a General Meeting, will expire at the next Annual General Meeting.

2.2 Proposed Amendments to the Articles of Association of the Company

The proposed Resolution 9, if passed, will bring the Articles of Association of the Company in line with the amendments to the Listing Requirements of Bursa Malaysia Securities Berhad.

NOTICE OF BOOk CLOSURE FOR PAYMENT OF DIvIDEND

114

1. NamesofDirectorswhoarestandingforre-election

a) Mr Chor Eng Choon

b) Dato’ Prof Zainuddin Bin Muhammad

c) Datuk Alladin Bin Mohd Hashim

2. DetailsofDirectorsseekingforre-election

Details of Directors seeking for re-election at the 34th Annual General Meeting are set out in the Directors’ Profile on pages 6 to 7 of the Annual Report.

STATEMENT ACCOMPANYING NOTICE OF 34TH ANNUAL GENERAL MEETING(pursuant to paragraph 8.28(2) of the Listing Requirements of the Bursa Malaysia Securities Berhad)

I/We ______________________________________________________ of ________________________________________________

being a member/members of PK RESOURCES BERHAD, hereby appoint ____________________________________________ of

_____________________________________________________________________________________________________________

to be my/our proxy/proxies to attend and to vote for me/us on my/our behalf at the THIRTY-FOURTH ANNUAL GENERAL MEETING of the Company to be held at Nilai Springs Golf & Country Club, Putra Nilai, 71800 Nilai, Negeri Sembilan Darul Khusus, on Thursday, 26 June 2008 at 11.30 a.m.

My/Our proxy/proxies is/are to vote as indicated below :-

Resolutions FOR AGAINST

RESOLuTIOn nO. 1

RESOLuTIOn nO. 2

RESOLuTIOn nO. 3

RESOLuTIOn nO. 4

RESOLuTIOn nO. 5

RESOLuTIOn nO. 6

RESOLuTIOn nO. 7

RESOLuTIOn nO. 8

RESOLuTIOn nO. 9

Please indicate with an “X” in the appropriate spaces where you wish your votes to be cast. In the absence of specific directions, your proxy will vote or abstain from voting at his discretion.

_____________________Date

_____________________ _______________________Signature No. of Shares Held

PROXY FORM

Notes:-

1. Appointment Of Proxy

(a) A member of the Company entitled to attend and vote is entitled to appoint one or more proxies to vote in his stead. A proxy need not be a member of the Company and the provisions of Section 149 (1) of the Companies Act, 1965 shall not apply to the Company.

(b) The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation, either under seal or under the hand of an officer or attorney duly authorised.

(c) The instrument appointing a proxy shall be deposited at the Registered Office at Wisma BBN, PT 7454, Jalan BBN 1/1A, Putra Nilai, 71800 Nilai, Negeri Sembilan Darul Khusus not less than 48 hours before the time appointed for holding the meeting and at any adjournment thereof.

2. Explanatory Note On Special Business :

2.1 Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965

The proposed Resolution 8, if passed, will give the Directors authority to allot and issue new ordinary shares up to an amount not exceeding 10% of the issued share capital of the Company for such purposes as the Directors consider would be in the interest of the Company. This authority will commence from the date of this Annual General Meeting and unless revoked or varied by the Company at a General Meeting, will expire at the next Annual General Meeting.

2.2 Proposed Amendments to the Articles of Association of the Company

The proposed Resolution 9, if passed, will bring the Articles of Association of the Company in line with the amendments to the Listing Requirements of Bursa Malaysia Securities Berhad.

PK RESOURCES BERHAD

(17654-P)

The Company SecretaryWisma BBN, PT 7454, Jalan BBN 1/1A, Putra Nilai, 71800 Nilai, Negeri Sembilan Darul Khusus.

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