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ANNUAL REPORT

2O1O

(290455-W)

Dolomite Corporation Berhad (290455-W)

No. 3, Jalan SBC 2Taman Sri Batu Caves68100 Batu CavesSelangor Darul EhsanTel: 603-6186 0000Fax: 603-6187 2310Email: [email protected]: www.dolomite.com.my

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L REPORT 2010

CONTENTS Corporate Structure 2

Corporate Information 3

Profile of Directors 4

Chairman’s Statement 6

Statement on Corporate Governance 9

Statement of Internal Control 13

Audit Committee Report 15

Other Compliance Information 20

Financial Statements 21

List of Properties 79

Analysis of Shareholdings 80

Notice of Annual General Meeting 82

Proxy Form

VISION To be an internationally recognised premier integrated building materials producer, infrastructure & building contractor, property developer, innovative products provider and power producer.

MISSION To provide excellent quality products and services through innovative use of leading edge technology, dedicated employees and competitive sales and marketing strategies.

• Freehold

• Gated&guardedcommunity

• Twotieredperimeterfencing

• Multitieredintelligentsecurity

• Privateresortambienceclubhouse

stylefacilities

www.dolomitempler.com

Derbyshire22' x 75' Terrace House

Lancashire24’ x 95’ Superlink

DOLOMITE CORPORATION BERHAD (290455-W)

02 Corporate Structure

BUILDING MATERIALS

PROPERTY DEVELOPMENT

CONSTRUCTION

BIOTECHNOLOGY

POWER GENERATION

100%Dolomite Berhad

100%Dolomite Technology

Sdn Bhd

100%Dolomite Technology

(HK) Limited

100%Dolomite Industries Company Sdn Bhd

100%Dolomite Power-Shandong (HK) Limited

100%Dolomite Power-Wuhai (HK) Limited

100%Dolomite (Guangzhou) International Trading Co Limited

20%Beijing Glory Medical Equipment Co Limited

100%Dolomite Biotech Sdn Bhd

100%Dolomite Readymixed Concrete Sdn Bhd

100%Dolomite Engineering Sdn Bhd

100%Dolomite Hotmixes Sdn Bhd

100%Dolomite Industrial Park Sdn Bhd

100%Dolomite Concrete Products Sdn Bhd

50% + 1 shareD’Marina Sdn Bhd

100%Dolomite Transport Sdn Bhd

100%Dolomite-CM Quarries Sdn Bhd

100%Dolomite Properties Sdn Bhd

100%Shandong Dolomite Thermal Power Co Limited

100%Dolomite Coal Industry Co Limited

100%Orris Capital Sdn Bhd

ANNUAL REPORT 2010

03Corporate Information

Board of Directors

Tan Sri Dato’ Seri Mohd Jamil bin Johari

Lew Choong Keong

Lim Beng Keat

Huang Jen Soong

Jeffrey Gerard Gomez

Dominic Aw Kian-Wee

Chairman & Independent Non-Executive Director

Managing Director

Non-Independent Non-Executive Director


Independent Non-Executive Director


Joint Company SecretariesTai Yit Chan (MAICSA 7009143)

Chan Su San (MAICSA 6000622)

Lo Sze Min (MIA 3439)

Registered OfficeLot 6.05, Level 6, KPMG Tower8 First Avenue, Bandar Utama47800 Petaling JayaSelangor Darul EhsanTel: 03-7720 1188Fax: 03-7720 1111

Principal OfficeNo. 3, Jalan SBC 2Taman Sri Batu Caves68100 Batu CavesSelangor Darul EhsanTel: 03-6186 0000Fax: 03-6187 2310Website: www.dolomite.com.myEmail: [email protected]

Share RegistrarTricor Investor Services Sdn BhdLevel 17, The Gardens North TowerMid Valley CityLingkaran Syed Putra59200 Kuala LumpurTel: 03-2264 3883Fax: 03-2282 1886

AuditorsCrowe Horwath Chartered AccountantsLevel 16, Tower C, Megan Avenue II12, Jalan Yap Kwan Seng50450 Kuala LumpurTel: 03-2166 0000Fax: 03-2166 1000

SolicitorsMazlan & AssociatesShearn Delamore & Co

Principal BankersMalayan Banking Berhad

Public Bank Berhad

AmBank (M) Berhad

CIMB Bank Berhad

Hong Leong Investment Bank Berhad

RHB Bank Berhad

EON Bank Berhad

Stock Exchange ListingBursa Malaysia Securities BerhadStock Code: 5835Stock Short Name: DOLMITE


04 Profile of Directors

Tan Sri Dato’ Seri Mohd Jamil bin Johari

Chairman & Independent Non-Executive Director

Mr Lim Beng Keat


Tan Sri Dato’ Seri Mohd Jamil bin Johari, a Malaysian aged 64, was appointed to the Board of Directors on 25 July 2005 as the Chairman of Dolomite Corporation Berhad.

Tan Sri Dato’ Seri Mohd Jamil holds a Bachelor of Arts (Hons) degree and a Diploma in Education from the University of Malaya. He also obtained a Master of Arts in Political Science from the University of Washington, Seattle, Washington, United States of America.

Tan Sri Dato’ Seri Mohd Jamil joined the Royal Malaysia Police in January 1971 as Chief Inspector and retired with the rank of Deputy Inspector General of Police in May 2002. Thereafter, he was appointed as High Commissioner of Malaysia to Brunei until July 2004.

Tan Sri Dato’ Seri Mohd Jamil is also a member of the Audit Committee and the Nomination Committee.

Mr Lim Beng Keat, a Malaysian aged 65, is a Non-Independent & Non-Executive Director of Dolomite Corporation Berhad. He was appointed a Director of the Company on 17 July 2003.

Mr Lim holds a Bachelor of Science (Honours) degree from Queen Mary’s College, University of London and a Master’s degree in Civil Engineering from the Massachusetts Institute of Technology, United States of America. Mr Lim has over 42 years of experience in the construction and property development industries. He has been a Director of Dolomite Group since 1972 and Chairman of the subsidiary companies of Dolomite Corporation Berhad since 1982. Mr Lim served as Executive Vice Chairman of Dolomite Corporation Berhad from 17 July 2003 to 12 October 2005. Prior to joining Dolomite Group, Mr Lim worked as General Manager of People’s Park Development Pte. Ltd. in Singapore from 1969 to 1971. He is currently Chairman of Lim Housing Sdn Bhd, Lim Quee & Sons Sdn Bhd and Boulevard Realty Sdn Bhd.

Mr Lim is a member of the Remuneration Committee and Audit Committee.

Mr Lew Choong Keong

Managing Director

Mr Lew Choong Keong, a Malaysian aged 52, was appointed the Managing Director of Dolomite Corporation Berhad and Dolomite Group on 17 July 2003.

Mr Lew graduated from the University of Malaya with a Bachelor of Civil Engineering (Hons) degree. He is a Registered Professional Engineer with the Board of Engineers, Malaysia, a Fellow of the Institute of Engineers, Malaysia, a Fellow of the Institute of Quarry, Malaysia and a registered ASEAN Engineer.

Mr Lew has over 27 years of experience in the quarry and construction sectors. He began his career in Dolomite in 1983 as a Civil Engineer and was involved in several construction projects undertaken by the Group. He became Group General Manager in 1996 and was promoted to Executive Director in 2002 with expanded responsibilities for the Group’s overall operations.

As Managing Director, Mr Lew is responsible for the Group’s business direction, operational performance and strategic management of the Group’s resources.

Mr Lew also serves as a member of the Remuneration Committee.

ANNUAL REPORT 2010

05

Mr Huang Jen Soong


Mr Jeffrey Gerard Gomez

Independent Non-Executive Director

Mr Huang Jen Soong, a Malaysian aged 62, was appointed to the Board of Directors on 17 July 2003 as a Non-Independent Non-Executive Director of Dolomite Corporation Berhad.

Mr Huang graduated from the University of Malaya in 1973 with a Bachelor of Science (Hons) degree and subsequently obtained his Master in Business Administration degree from the University of North Carolina, United States of America in 1976. He is also a fellow member of the Institute of Quarry, Malaysia.

Mr Huang has been a Director of Dolomite Group since 1977 and was the Managing Director of the Group from 1980 to 2003. During his tenure as Managing Director, Mr Huang brought to the Group his entrepreneurship and was key driver of the Group’s transformation from a mere quarry operator in its early days to an integrated group specializing in building materials, construction and property development. At present, he sits on the Board of Directors of several subsidiary companies of Dolomite Corporation Berhad and a few other private companies. He is also the Managing Director of Bong Sin Rubber Estates Co Sdn Bhd.

Mr Huang is the Chairman of the Remuneration Committee and the Nomination Committee.

Mr Jeffrey Gerard Gomez, a Malaysian aged 51, was appointed to the Board of Directors on 17 July 2003 as an Independent Non-Executive Director of Dolomite Corporation Berhad.

Mr Jeffrey Gerard Gomez is a Fellow of the Institute of Chartered Accountants in England and Wales, United Kingdom. He is also a member of the Malaysian Institute of Accountants and the Malaysian Institute of Certified Public Accountants. Upon qualifying as a Chartered Accountant in London, England, he returned to Malaysia and currently heads Gomez and Co, a firm of Chartered Accountants.

Mr Jeffrey Gerard Gomez is the Chairman of the Audit Committee and a member of the Nomination Committee.

Other Information on Directors:

1. Save for the disclosures mentioned below, none of the Directors of the Company has any family relationship with any director and/or major shareholder of the Company.

Madam Yap Koon Wah, a substantial shareholder of Dolomite Corporation Berhad is the spouse of Mr Huang Jen Soong.

2. None of the Directors of the Company has any conflict of interest and/or personal interest in any business arrangement involving the Company or its subsidiaries.

3. None of the Directors of the Company has any conviction of offences other than traffic offences, if any, within the past ten (10) years.

4. The details of attendance at Board meetings are set out on page 9 of the Annual Report.

Mr Dominic Aw Kian-Wee


Mr Dominic Aw Kian-Wee, a Malaysian aged 39, was appointed as a Non-Independent Non-Executive Director of Dolomite Corporation Berhad on 1 September 2009.

Mr Dominic Aw holds a Bachelor of Law (Hons) degree from the University of Hull, North Humberside, England and a Barrister-at-Law (Middle Temple) from the University of Westminster, London, England. He is a partner of Mazlan & Associates since 1999 and has over 17 years of working experience as an advocate and solicitor.

Profile of Directors


06 Chairman’s Statement

On behalf of the Board of Directors, I am pleased to present the Annual Report and the Audited Financial Statements of the Company and the Group for the financial year ended 31 December 2010.

OPERATING ENVIRONMENTGlobally, the year 2010 saw a broad and uneven recovery in the advanced economies. The pace of recovery was subdued and uneven amidst persistently weak labour market in the United States, uncertainties over weak fiscal positions and constrained lending conditions in the European Union. The emerging economies in Asia fared better, supported by strong macroeconomic fundamentals and sound financial systems. This trend is expected to continue in the immediate future.

On the local front, the economy registered a 7.2% growth supported by strong domestic demands and recovery in exports. The construction sector expanded by 5.2% compared with 5.8% for 2009. The construction industry is expected to remain active and strong due to the Government’s initiative to turn Malaysia into a high income economy by 2020.

FINANCIAL PERFORMANCEThe year 2010 proved very challenging to the Group due to strong competition and relative strengths and weaknesses of the players in the respective industry. Despite the Group’s effort to leverage in areas where traditionally it has advantages, revenue for 2010 fell by 29.84% to RM44.884 million from RM63.798 million registered in the previous year. The decline in turnover was mainly due to the property development projects which were reaching tail-end and new launches were expected only after 2010. The manufacturing sector also declined as less building materials were used in line with the decline in property development activities in the Group.

Despite the drop in revenue, the Group recorded a lower loss after taxation of RM16.861 million for financial year ended 31 December 2010 compared to loss after taxation of RM27.911 million for the financial year 2009.

ANNUAL REPORT 2010

07

OPERATIONS REVIEWBuilding Materials

The Group’s building materials segment is likely to record an improvement in sales in the current financial year in view of the expected huge demand spurred by the high impact strategic projects such as Kuala Lumpur International Financial District, Mass Rapid Transit Project, Redevelopment of Rubber Research Institute land in Sungai Buloh and Wawasan Merdeka Project which are scheduled for implementation in 2011 under the Greater KL and the Economic Transformation Programme (“ETP”). The Group will focus in increasing its market share by securing contracts for supply of building materials to these projects.

Construction

The Group’s construction segment is expected to see a better year ahead. More internal construction contracts are expected to be awarded within the Group in the second half of this year with the launching of Dolomite Templer, an exclusive mixed residential development project in Templer’s Park, Selangor Darul Ehsan.

Going forward, the Group will endeavour to secure more contracts by participating in the tendering exercises called by the Government and the private sector.

Property Development

D’Marina

D’Marina, a prime comprehensive lifestyle project of the Group in Kuantan covering an area of 763 acres, will enter phase two during the current financial year. The take up rate for the 184 units of single storey semi-detached houses in phase two is expected to be good. The 92 units of single storey terrace houses in phase one have been completed and fully sold.

Dolomite Templer

Dolomite Templer, the modern high-end mixed residential development project of gated and guarded three storey superlink residences, semi-detached houses, bungalows and orchards, spread over 77 acres of freehold land adjacent to the Templer’s Park, with a gross development value in excess of RM500 million, was launched recently. The response has been good and currently earthwork is in progress.

The Group continues to

seek opportunities for

viable and profitable

investment overseas in

order to expand source

of revenue and profit.

Chairman’s Statement


08 Chairman’s Statement

CORPORATE SOCIAL RESPONSIBILITYThe Group continues to maintain a balance between the Group’s business goals and its economic, social and environmental responsibilities.

The Group always place priority on its customers’ satisfaction by offering products of high quality and complying with specifications. The Group also focuses on continuous optimization of its business processes, effective management and good corporate governance towards enhancing shareholders’ interest.

In the workplace, the Group’s employees are trained on the necessary health and safety measures and are provided with the required safety and protective devices. To keep the Group’s employees abreast with current changes in laws and regulations as well as for the objective of personal development, the Group assigned its employees to attend external trainings and development courses to further enhance their skills and knowledge.

The Group also makes regular contributions in kind to the needy in the community and charitable organizations.

PROSPECTThe roll-out of construction and infrastructure projects under the Tenth Malaysia Plan, 2011 Budget and the unveiling of the Greater KL and ETP by the Government will bring cheer to the construction industry in the country and are likely to provide significant support to the growth momentum in domestic private investment this year and over the next decade. The Malaysian economy is expected to grow in the region of 5% to 6% in 2011. Barring unforeseen circumstances, all the segments of the Group comprising construction, property development and manufacturing of building materials are anticipated to see an increase in their activities. The Group continues to seek opportunities for viable and profitable investment overseas in order to expand source of revenue and profit.

APPRECIATIONOn behalf of the Board of Directors, I would like to thank all our shareholders, valued customers, suppliers, contractors, bankers, consultants, business associates and government authorities for the continued support given to the Group.

I would also like to express my gratitude to my fellow Board members, management team and all employees of the Group for their sound advice, guidance, dedication and commitment to the Dolomite Group.

Thank you.

Tan Sri Dato’ Seri Mohd Jamil bin JohariChairman

May 2011

ANNUAL REPORT 2010

09Statement on Corporate Governance

The Board of Directors of Dolomite Corporation Berhad (“the Board”) is pleased to disclose to the shareholders on the manner which it has applied the Principles and extent of compliance with the Best Practices in Corporate Governance as set out in the Malaysian Code on Corporate Governance (“the Code”) pursuant to Paragraph 15.26 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“the Listing Requirements”). The Best Practice in the Code has been complied with unless otherwise stated.

BOARD OF DIRECTORS

The Board has always recognised the need for good corporate governance to protect and enhance long term shareholders’ value and the financial performance of the Company. An indication of the Board’s commitment is reflected in the conduct of regular Board meetings and their incorporation of various processes and systems as well as the establishment of relevant committees which also meet regularly. The Board always takes into account the interests of all stakeholders in their decision making.

COMPOSITION OF THE BOARD

The Company is managed and led by an effective Board, which comprises six (6) directors, one (1) is executive and five (5) are non-executive of whom two (2) are independent. The composition complies with the Listing Requirements, which requires one third (1/3) or at least two (2), whichever is the higher, of the Board shall comprise independent directors. The current Board brings with them years of experience in various fields of expertise, ranging from business, accountancy and legal to engineering and manufacturing of building materials in order to reach effective decisions in governing the Group.

The presence of the Independent Directors is essential as they provide unbiased and independent view, advice and judgment as well as safeguard the interests of other parties like minority shareholders. All Independent Directors fulfil the definition of ‘Independent Directors’ as stipulated under the Listing Requirements. They are independent of both the management and shareholders of the Company, and are free from any business or other conflict of interests which may interfere with the discharge of their duties and in making independent judgment.

A brief description of the background of each Director is presented in the profile of the Board of Directors set out on pages 4 to 5 of this Annual Report.

BOARD MEETINGS

Regular Meetings by the Board

The Board meets quarterly to review the financial, operational and business performance. In addition, the Board will meet as and when required to discuss any matters of importance.

The Board met eight (8) times during the financial year ended 31 December 2010 and the attendance of the respective Directors was as follows:

Directors Total Number of Meetings Attended

Percentage of Attendance

(%)

Tan Sri Dato’ Seri Mohd. Jamil Bin Johari 8/8 100

Lew Choong Keong 8/8 100

Lim Beng Keat 7/8 87.5

Huang Jen Soong 8/8 100

Jeffrey Gerard Gomez 8/8 100

Dominic Aw Kian-Wee 8/8 100

The Board had made themselves available during the financial year ended 31 December 2010 to serve the Group effectively.

The Directors are committed to the collective decision making process of the Board and deliberated and discussed on issues openly and constructively. The Directors may seek clarification or raise comments on the deliberation of the issues.

The proceedings of and resolutions passed at each Board and Board Committee meetings are minuted by the Company Secretary and kept in the statutory register at the registered office of the Company.


10 Statement on Corporate Governance

SUPPLY OF INFORMATION

Notices, together with the agenda of meetings were given to the Board at least seven (7) days before the meetings whilst the relevant Board papers, whenever possible, were given three (3) days prior to the meetings to accord sufficient time to the Directors to study and evaluate the matters to be discussed and to seek any clarification.

All directors have direct access to the advice and services of the joint company secretaries. Directors may also obtain independent professional advice whenever deemed necessary at the Company’s expense.

DIRECTORS’ TRAINING

In compliance with the Listing Requirements, all members of the Board have attended the required mandatory accreditation training programme.

The directors continue to identify and attend appropriate training that may be required from time to time to keep them abreast with current developments in the industry as well as the current changes in laws and regulations.

The description of the types of training attended by the Directors for the financial year ended 31 December 2010 is as follows:

Directors Programme

Tan Sri Dato’ Seri Mohd Jamil bin Johari What Every Director Should Know About Fraud: A New Approach Towards the Prevention and Detection of Fraud.

Lew Choong Keong (i) KPMG FRS 7 Financial Instruments: Disclosures and FRS 8 Operating Segments The “Disclosure” Workshop

(ii) What Every Director Should Know About Fraud: A New Approach Towards the Prevention and Detection of Fraud.

Lim Beng Keat None

Huang Jen Soong What Every Director Should Know About Fraud: A New Approach Towards the Prevention and Detection of Fraud.

Jeffrey Gerard Gomez What Every Director Should Know About Fraud: A New Approach Towards the Prevention and Detection of Fraud.

Dominic Aw Kian-Wee What Every Director Should Know About Fraud: A New Approach Towards the Prevention and Detection of Fraud.

Mr Lim Beng Keat has kept himself abreast on financial and business matters as well as changes in requirements and regulations to enable him to contribute to the Board effectively.

RETIREMENT BY ROTATION AND RE-ELECTION

In accordance with the Articles of Association of the Company, all Directors are subject to retirement by rotation at regular intervals of at least three (3) years at the Annual General Meeting and they shall be eligible for re-election.

BOARD COMMITTEES

The Board of Directors delegates certain responsibilities to Board Committees below and will periodically review their terms of reference. The Committees are required to report to the Board on their deliberations and recommendations.

1. Audit Committee

The Company has in place an Audit Committee which comprises all Non-Executive Directors. The Audit Committee holds quarterly meetings to review matters including the Group’s financial reporting, the nature and scope of audit reviews and the effectiveness of systems of internal control and compliance, as well as to deliberate the findings of the internal and external auditors. In addition, the Audit Committee will meet as and when required to discuss any other matters of importance.

ANNUAL REPORT 2010

11

2. Nomination Committee

The Nomination Committee’s responsibility, among others, is to recommend the right candidate with the necessary skills, experience and competencies to be filled in the Board. The Board as a whole makes the decisions on the new appointments and is also responsible for assessing the performance of each existing Director.

The Board’s Nomination Committee comprises three (3) Non-Executive Directors, the majority of whom are independent. The members are as follows:

Huang Jen Soong (Chairman and Non-Independent Non-Executive Director)

Tan Sri Dato’ Seri Mohd. Jamil Bin Johari (Independent Non Executive Director)

Jeffrey Gerard Gomez (Independent Non-Executive Director)

The Nomination Committee meets at least once a year. For the financial year ended 31 December 2010, the Nomination Committee held one (1) meeting. During the financial year ended 31 December 2010, the Nomination Committee had carried out assessment and review on the mix of skills, knowledge and competencies of the Board and was satisfied with the contribution and performance of the Board. The assessment by all Directors were summarised and reported at the Board meeting by the Chairman of the Nomination Committee.

The Nomination Committee also discussed the succession plan of the Group.

3. Remuneration Committee

The Remuneration Committee comprises mainly Non-Executive Directors, all of whom are non-independent. The members are as follows:

Huang Jen Soong (Chairman and Non-Independent Non-Executive Director)

Lim Beng Keat (Non-Independent Non-Executive Director)

Lew Choong Keong (Non-Independent Executive Director)

The Remuneration Committee recommends to the Board the remuneration for Directors with the aim of ensuring that the Company attracts and retains the Directors needed to run the Group successfully.

The remuneration of the Executive Director is structured on basis of linking rewards to corporate and individual performance. For Non-Executive Directors, the level of remuneration reflects the experience and degree of responsibilities. The Directors do not participate in decisions on their own remuneration packages.

During the financial year ended 31 December 2010, one (1) meeting was held, which was attended by all members of the Remuneration Committee. The Remuneration Committee reviewed and recommended to the Board the remuneration of the Directors.

The aggregate remuneration of Directors received/receivable from the Company and its subsidiaries categorised in the following components are:

Executive Directors RM’000

Non-Executive Directors RM’000

Total RM’000

Fees 0 84 84

Salaries & other emoluments 300 92 392

Short term benefits 51 0 51

Total 351 176 527

The number of Directors whose remuneration falls within each of the following successive band of RM50,000 are:

Range of RemunerationExecutive Directors

Non-Executive Directors Total

Below RM50,000 0 5 5

RM250,001 to RM300,000 1 0 1

Total 1 5 6

Details of Directors’ Remuneration for each Director are not disclosed as the Company is of the view that the disclosure in the above band width shall be sufficient.

Statement on Corporate Governance


12 Statement on Corporate Governance

DIALOGUE BETWEEN THE COMPANY AND INVESTORS

The Group values dialogue with investors as a means of effective communication that enables the Board to convey information about the Group’s performance, corporate strategy and other matters affecting shareholders’ interests.

Investors and shareholders can also obtain information on the Group through the Company’s published Annual Reports, Quarterly Results and Announcements which are made to Bursa Malaysia Securities Berhad.

The Annual General Meeting also provides an opportunity for shareholders to seek clarifications and to raise questions concerning the Group.

The Company recognises the importance of accountability to shareholders and effective communication between the Company and investors. In compliance with Para 9.21 of the Listing Requirements, the Company has established its own website at www.dolomite.com.my which contains vital information concerning the Group and is updated on a regular basis. Shareholders and investors are able to direct their queries to the Company through the Company’s website.

FINANCIAL REPORTING

In presenting the annual financial statements and quarterly announcement of results to shareholders, the Directors aim to present a balanced and understandable assessment of the Group’s position and prospects.

The Directors consider that in preparing the financial statements, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and estimates. All accounting standards which the Board considers to be applicable have been followed, subject to any explanations and material departures disclosed in the notes to the financial statements.

INTERNAL CONTROL

The Statement of Internal Control set out on pages 13 to 14 of this Annual Report provides an overview of the state of internal control within the Group.

RELATIONSHIP WITH THE AUDITORS

The role of the Audit Committee in relation to the external auditors, is disclosed in the Audit Committee Report set out on pages 15 to 19 of this Annual Report. The Group has always maintained a close and transparent relationship with its auditors in seeking professional advice and ensuring compliance with the accounting standards in Malaysia. The Audit Committee is committed to meet with the external auditors twice a year to discuss their audit plan, audit findings and the financial statements.

COMPLIANCE WITH THE CODE

The Company has complied throughout the financial year with all the best practice of corporate governance set out in part 2 of the Code, except for Best Practices AAVII and BBI (Nomination of a Senior Independent Non-executive Director). Given the current composition of the Board which reflects a strong independent element and the separation of the roles of the Chairman and Managing Director, the Board does not consider it necessary at this juncture to nominate a Senior Independent Non-Executive Director.

DIRECTORS’ RESPONSIBILITY STATEMENT ON ANNUAL AUDITED FINANCIAL STATEMENTS

The Board is responsible for ensuring that the financial statements of the Group give a true and fair view of the state of affairs of the Group and of the Company as at the end of the accounting period and of their profit or loss and cashflows for the period then ended. In preparing the financial statements, the Directors have ensured that applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 have been applied.

In preparing the financial statements, the Directors have selected and applied consistently suitable accounting policies and made reasonable and prudent judgments and estimates.

The Directors also have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

ANNUAL REPORT 2010

13Statement of Internal Control

INTRODUCTION

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’ investment and Group assets. Set out below is the Board’s Internal Control Statement of the Group made in compliance with Paragraph 15.26(b) of Bursa Malaysia Securities Berhad Main Market Listing Requirements and the Statement on Internal Control: Guidance for Directors of Public Listed Companies.

RESPONSIBILITY

The Board acknowledges its responsibility for maintaining a sound system of internal control, reviewing its adequacy and integrity, and its effectiveness to safeguard shareholders’ investment and the Group’s assets. The Group’s system of internal control can only provide reasonable but not absolute assurance against material misstatement or loss.

The Board believes that the Group’s system of internal control, financial or otherwise, should provide reasonable assurance regarding the achievement of the Group’s objectives in ensuring effectiveness and efficiency of operations, reliability and transparency of financial information and compliance with laws and regulations.

THE GROUP’S SYSTEM OF INTERNAL CONTROL

The following are the key processes in which the Board has adopted in reviewing the adequacy and integrity of the system of internal control for the Group:

Monitoring Mechanisms and Management Style

Scheduled periodic meetings of the Board, Board Committees and management represent the main platform by which the Group’s performance and conduct is monitored. The daily running of business is entrusted to the Managing Director and the management team. Under the purview of the Managing Director, the respective heads of each operating subsidiary and department of the Group are empowered with the responsibility to manage their respective operations.

The Board is responsible for setting the business direction and for overseeing the conduct of the Group’s operations through various Board Committees.

Enterprise Risk Management Framework

The Board recognises that an effective risk management framework will allow the Group to identify, evaluate and manage risk that affect the achievement of the Group’s business objectives within defined risk parameters in a timely and effective manner.

Against this backdrop, the following initiatives were undertaken:

• AformalEnterpriseRiskManagementFrameworkbasedontheAustraliaandNewZealand4360RiskManagementFrameworkwas adopted.

• ThisframeworkidentifiestherisksaffectingtheGroup,thecorrespondingoutcomesandevaluatestheeffectivenessoftheexisting controls to determine whether mitigation action plans need to be formulated accordingly.

• AlltherisksidentifiedaremaintainedinacomputerisedRiskRegisterDatabasetofacilitatemonitoringfromtimetotime.

• ThereisarequirementtosubmitperiodicriskmanagementreportsbyrespectiveheadsofoperatingsubsidiariestotheManagingDirector, who will then highlight the risk issues to the Board of Directors as well as the Audit Committee.


14 Statement of Internal Control

Key Elements of the System of Internal Control

The key elements of the system of internal control are:

1. The Board of Directors has put in place an organisation structure, which formally defines lines of responsibility and delegation of authority.

2. Major decisions that require the approval of the Board are only made after detailed appraisal and review.

3. Proposals for major capital expenditure and new investment by the Group are reviewed and approved by the Board of Directors.

4. Periodic reviews of adequacy and integrity of selected areas of internal control system are carried out by the internal audit function and results of such reviews are reported to the Audit Committee. The internal audit function thereby provides independent assurance on the areas reviewed by the internal audit function to the Board on the effectiveness of the Group’s internal control system.

5. The Audit Committee holds meetings to deliberate on the findings and recommendations for improvement by the internal auditor on the state of the internal control system and reports to the Board.

6. The Audit Committee also reviews and deliberates on any matters relating to internal control highlighted by the External Auditors in the course of their statutory audit of the financial statements of the Group.

7. Informal Board and management meetings at operational level are held during the financial year in order to assess performance and controls.

8. Quarterly performance reports provide Management and the Board of Directors with information on financial performance and key business indicators.

9. The head office coordinates the process for the Group for the coming year wherein the budgets are approved at operating unit level and ultimately by the Board of Directors.

The improvement of the system of internal controls is an on-going process and the Board maintains on-going commitment to strengthen the Group’s control environment and processes.

WEAKNESSES IN INTERNAL CONTROLS THAT RESULT IN MATERIAL LOSSES

There were no material losses incurred during the current financial year as a result of weaknesses in internal control which required additional disclosure in the financial statements. The management will continue to take adequate measures to strengthen the control environment in which the Group operates.

This statement is made in accordance with the resolution of the Board of Directors dated 28 April 2011.

INTERNAL AUDIT FUNCTION

Pursuant to Paragraph 9.25(1), Part A of Appendix 9C(30) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Board is pleased to set out below its internal audit function.

The Group’s internal audit function is outsourced to a professional internal audit service provider and this ensures that the outsourced internal auditors is independent as it has no involvement in the operations of the Group. The outsourced internal auditors, responsible for the review and appraisal on the effectiveness of risk management, internal control, and governance processes in the Group, reports directly to the Audit Committee.

The Audit Committee has full and direct access to internal auditors, reviews the reports on all audits performed and monitors its performance. The Audit Committee also in its framework reviews the adequacy of the scope, functions, competency and resources of the outsourced internal audit functions.

The outsourced internal auditors carried out internal audits on various operating units within the Group based on a risk-based audit plan approved by the Audit Committee. Based on these audits, the outsourced internal auditors provided the Audit Committee with periodic reports highlighting observations, recommendations and management action plans to improve the system of internal control.

During the year, the outsourced internal auditors has undertaken a total of four (4) audits on various segments within the Group and the Audit Committee has met four (4) times during the year to carry out its responsibility in reviewing the function and results of the internal audit assignments and to assure itself of the soundness of the internal control system. The Committee also met the outsourced internal auditors without the presence of management to obtain independent view and assurance on any issues that can impede the performance of the outsourced internal auditors. The fees incurred for the outsourced internal audit function in respect of the financial year amounted to RM46,000.

ANNUAL REPORT 2010

15Audit Committee Report

FORMATION

The Audit Committee was formed by the Board of Directors on 27 August 1994.

COMPOSITION

The current members of the Audit Committee are as follows:

Jeffrey Gerard Gomez (Chairman and Independent Non-Executive Director)

Tan Sri Dato’ Seri Mohd. Jamil Bin Johari (Independent Non Executive Director)

Lim Beng Keat (Non-Independent Non-Executive Director)

MEETINGS

The Audit Committee held six (6) meetings during the financial year. The attendance of the committee members was as follows:

Name of Committee Member Total Number of Meetings Attended

Jeffrey Gerard Gomez 6/6

Tan Sri Dato’ Seri Mohd. Jamil Bin Johari 6/6

Lim Beng Keat 6/6

The representatives of the external auditors, internal auditors and other officers of the Group were also invited to attend and brief the members on specific issues during the Audit Committee Meeting.

TERMS OF REFERENCE

1. Membership

1.1 The Audit Committee shall be appointed by the Board of Directors from amongst the Directors of the Company and shall consist of not less than (3) members, all of whom shall be Non-Executive Directors, and the majority shall be Independent Directors.

1.2 The majority of the members including the Chairman of the Audit Committee shall be Independent Directors as defined in Chapter 1 of the Listing Requirements.

1.3 All members of the Audit Committee should be financially literate and at least one member of the Audit Committee:

1.3.1 must be a member of the Malaysian Institute of Accountants; or

1.3.2 if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years’ working experience and:

1.3.2.1 he must have passed examinations specified in Part I of the 1st Schedule of the Accountants Act, 1967;

1.3.2.2 he must be a member of one of the Associations specified in Part II of the 1st Schedule of the Accountants Act, 1967; or

1.3.2.3 fulfills such other requirements as prescribed or approved by Bursa Securities.

1.4 No Alternate Director shall be appointed as a member of the Audit Committee.

1.5 The members of the Audit Committee shall elect a Chairman from amongst their number.

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

1.7 The terms of office and performance of the Audit Committee and each of its members shall be reviewed by the Board no less than once every three (3) years. However, the appointment terminates when a member ceases to be a Director.


16 Audit Committee Report

2. Meeting

2.1 The quorum of an Audit Committee Meeting shall be at least two (2) members, the majority present must be Independent Directors.

2.2 Meeting of the Audit Committee shall be held at least four (4) times a year. The Chairman may request for additional meetings if he considers that is necessary.

2.3 Notwithstanding paragraph 2.2 above, upon the request of any member of the Audit Committee, non-member directors, the internal or external auditors, the Chairman shall convene a meeting of the Audit Committee to consider the matters brought to his attention.

2.4 The external auditors have the right to appear and be heard at any meeting of the Audit Committee and shall appear before the Committee when required to do so.

2.5 The non-member directors and employees of the Company and of the Group shall normally attend the meetings to assist in deliberations and resolutions of matters raised. However, at least twice a year, the Audit Committee shall meet with the external auditors, internal auditors or both without the presence of the other Directors and employees of the Company.

2.6 The internal auditors shall be in attendance when required at the meetings to present and discuss the audit reports and other related matters as well as the recommendations relating thereto and to follow-up on all relevant decisions made.

2.7 The Company Secretary shall act as Secretary of the Audit Committee and shall be responsible, with the concurrence of the Chairman, for drawing up and circulating the agenda and the notice of meetings together with the supporting explanatory documentation to members prior to each meeting.

2.8 The Secretary of the Audit Committee shall be entrusted to record all proceedings and minutes of all meetings of the Audit Committee.

2.9 In addition to the availability of detailed minutes of the Audit Committee Meetings to all Board members, the Audit Committee at each Board meeting will report a summary of significant matters and resolutions.

3. Rights and Authority

The Audit Committee is authorised to:

3.1 investigate any matter within its terms of reference;

3.2 have adequate resources required to perform its duties;

3.3 have full and unrestricted access to information, records and documents relevant to its activities;

3.4 have direct communication channels with the external and internal auditors; and

3.5 engage, consult and obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise it considers necessary.

The Chairman of the Audit Committee shall engage on a continuous basis with senior management, such as the chairman, the managing director, the head of finance, the head of internal audit and the external auditors in order to be kept informed of matters affecting the Company.

4. Functions and Duties

The Audit Committee shall, amongst others, discharge the following functions:

4.1 To review and recommend for the Board’s approval, the Internal Audit Charter which defines the independent purpose, authority, scope and responsibility of the internal audit function in the Company and the Group.

ANNUAL REPORT 2010

17

4.2 To review the following and report to the Board:

4.2.1 With the external auditors:

4.2.1.1 the audit plan, audit report and the extent of assistance rendered by the Group’s employees during the audit;

4.2.1.2 the evaluation of the system of internal controls;

4.2.1.3 the audit fee and on matters concerning their suitability for nomination, appointment and re-appointment and the underlying reasons for resignation or dismissal as auditors;

4.2.1.4 the management letter and management’s response; and

4.2.1.5 issues and reservations arising from audit.

4.2.2 With the internal auditors:

4.2.2.1 ensure the internal audit function is independent of the activities it audits and the head of internal audit reports directly to the Audit Committee. The head of internal audit will be responsible for the regular review and/or appraisal of the effectiveness of the risk management, internal control and governance processes within the Company.

4.2.2.2 the adequacy and relevance of the scope, functions, competency and resources of internal audit and the necessary authority to carry out its work;

4.2.2.3 the audit plan of work programme and results of internal audit processes including recommendations and actions taken;

4.2.2.4 the extent of cooperation and assistance rendered by the Group’s employees during the audit; and

4.2.2.5 the appraisal of the performance of the internal audit including that of the senior staff and any matter concerning their appointment and termination; take cognizance of resignations of internal audit staff members (for in-house internal audit function) or the internal audit service provider (for out-sourced internal audit function) and provide the resigning staff member or the internal audit service provider an opportunity to submit his/her reasons for resigning, if necessary.

4.2.3 the quarterly results and year end financial statements prior to the approval by the Board, focusing particularly on:

4.2.3.1 changes and implementation of major accounting policies and practices;

4.2.3.2 significant and unusual issues;

4.2.3.3 going concern assumption; and

4.2.3.4 compliance with accounting standards, regulatory and other legal requirements.

4.2.4 the major findings of investigations and management response.

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

4.3 To report breaches of the Listing Requirements which have not been satisfactorily resolved, to Bursa Malaysia Securities Berhad.

4.4 To prepare the Audit Committee Report for inclusion in the Company’s Annual Report covering:

4.4.1 the composition of the Audit Committee including name, designation and directorship of the members;

4.4.2 the terms of reference of the Audit Committee;

4.4.3 the number of meetings held and details of attendance of each member;

4.4.4 a summary of the activities of the Audit Committee in the discharge of its functions and duties; and

4.4.5 a summary of the activities of the internal audit function.

Audit Committee Report


18 Audit Committee Report

4.5 To review the following for publication in the Company’s Annual Report:

4.5.1 the disclosure statement of the Board on:

4.5.1.1 the Company’s applications of the principles set out in Part I of the Malaysian Code on Corporate Governance; and

4.5.1.2 the extent of compliance with the best practices set out in Part II of the Malaysian Code on Corporate Governance, specifying reasons for any area of non-compliance and the alternative measures adopted in such areas.

4.5.2 the statement on the Board’s responsibility for the preparation of the annual audited financial statements.

4.5.3 the disclosure statement on the state of the internal controls system of the Company and of the Group.

4.5.4 other disclosures forming the contents of the Company’s Annual Report spelt out in Part A of Appendix 9C of the Listing Requirements.

The above functions and duties are in addition to such other functions as may be agreed from time to time by the Committee and the Board.

5. Internal Audit Function

The Head of the Outsourced Internal Audit Function shall have unrestricted access to the Audit Committee Members and report functionally directly to the Audit Committee whose scope of responsibility includes overseeing the internal audit functions.

The Company has outsourced its internal audit functions to RSM Corporate Consulting Sdn Bhd (“RSM”) at a fee of RM46,000 for the financial year ended 31 December 2010. The main role of RSM is to review the effectiveness of risk management, internal controls and governance procedures within the Group.

The representative(s) of RSM shall have unrestricted access to the Audit Committee Members and report to the Committee.

TRAINING OF AUDIT COMMITTEE MEMBERS

During the financial year, the Audit Committee members have attended training as follows:

Directors Programme

Tan Sri Dato’ Seri Mohd Jamil bin Johari What Every Director Should Know About Fraud: A New Approach Towards the Prevention and Detection of Fraud.

Lim Beng Keat None

Jeffrey Gerard Gomez What Every Director Should Know About Fraud: A New Approach Towards the Prevention and Detection of Fraud.

Mr Lim Beng Keat has kept himself abreast on financial and business matters as well as changes in requirements and regulations to enable him to contribute to the Audit Committee effectively.

All the Audit Committee members shall receive further training that may be required from time to time which will be useful for them in carrying out their work as Audit Committee members.

ACTIVITIES OF THE AUDIT COMMITTEE FOR YEAR 2010

The summary of the activities of the Audit Committee in the discharge of its duties and responsibilities were as follows:

1. reviewed the adequacy and relevance of the scope, functions, resources, risk based internal audit plan and results of the internal audit processes with the internal auditors;

2. reviewed the audit activities carried out by the internal auditors and the audit reports to ensure corrective actions are taken in addressing the risk issues reported;

3. reviewed with the assistance of the management, the adequacy, appropriateness and compliance of the procedures established to monitor recurrent related party transactions;

4. reviewed all related party transactions (if any) entered into by the Company and the Group at the Audit Committee’s quarterly meetings to ensure that the transactions entered into were at arm’s length basis and on normal commercial terms;

5. reviewed with external auditors, the Group’s audit plan for the year (inclusive of risk and audit approach, system evaluation, audit fees, issues raised and management responses) prior to the commencement of the annual audit;

ANNUAL REPORT 2010

19

6. reviewed the financial statements, the audit report, issues and reservations arising from audit and the management letter with the external auditors;

7. met with the external auditors and internal auditors without the presence of management staff and the Executive Director twice and thrice respectively during the financial year ended 31 December 2010;

8. reviewed the quarterly and year end financial statements with management for recommendation to the Board of Directors for approval and release to Bursa Securities;

9. updated and advised the Board on any latest changes and circulars issued by the accountancy, statutory and regulatory bodies;

10. reported to the Board on significant issues and concerns discussed during the Audit Committee’s meetings together with applicable recommendations. Minutes of meetings were made available to all Board members;

11. reviewed and approved the Audit Committee Report for the financial year ended 31 December 2010 for inclusion in the Company’s Year 2010 Annual Report;

12. reviewed the disclosure statements on compliance of the Malaysian Code on Corporate Governance and Directors’ Responsibility Statement on the annual audited financial statements for inclusion in the Company’s Year 2010 Annual Report; and

13. recommended to the Board the appointment of Messrs Crowe Horwath, a firm of chartered accountants, as external auditors of the Group for the financial year ended 31 December 2010.

INTERNAL AUDIT ACTIVITIES FOR YEAR 2010

During the financial year ended 31 December 2010, the internal audit function of the Group was performed by RSM.

The summary of the activities of the internal audit function were as follows:

1. preparation of the annual audit plan for the approval of the Audit Committee;

2. appraising the adequacy and integrity of internal controls and management information systems;

3. issuance of internal audit reports to the Audit Committee and management identifying weaknesses and issues and highlighting recommendations for improvements;

4. acting on suggestions made by the Audit Committee and/or senior management on concerns over operations or controls;

5. followed up on management corrective actions on audit issues raised by the external auditors;

6. reporting to the Audit Committee on review of the adequacy, appropriateness and compliance with the procedures established to monitor recurrent related party transactions;

7. reviewing the appropriateness of the disclosure statement in regard to compliance with the Malaysian Code on Corporate Governance and the statement on internal controls;

8. attending Audit Committee meetings to table and discuss internal audit reports;

9. reviewing the outcome of the risk management programme, including the key risks identified, the potential impact and the likelihood of the risks occurring, existing controls and action plans; and

10. reporting quarterly to the Board on all major issues relating to risks and risk management together with a Corporate Risk Register which summarises all risks with high gross and residual risk rating.

OPTIONS GRANTED OVER UNISSUED SHARES

The establishment of an Employees’ Share Option Scheme (“ESOS”) was approved at the Extraordinary General Meeting held on 28 September 2004. The initial period of the ESOS of five (5) years had lapsed on 23 November 2009. The duration of the ESOS had been extended for another five (5) years. As at to-date, no options have been granted pursuant to the ESOS to eligible directors and employees of the Group.

Audit Committee Report


20 Other Compliance Information

1. Status of Utilisation of Proceeds

During the financial year, there were no proceeds raised by the Company from any corporate exercise.

2. Non-Audit Fees Paid to External Auditors

Non-audit fees amounting to RM5,000.00 was paid to the external auditors for the financial year ended 31 December 2010.

3. Share Buy-Back

During the financial year, there were no share buy-back of the Company’s own shares.

4. Options, Warrants or Convertible Securities Exercised

There was no Option, Warrants or Convertible Securities exercised in respect of the financial year ended 31 December 2010.

5. Depository Receipt Programme (“DRP”)

During the financial year, the Company did not sponsor any DRP.

6. Imposition of Sanctions and/or Penalties

There were no sanctions and/or penalties imposed on the Company and the Group, Directors or management by the relevant regulatory authorities.

7. Profit Estimate, Forecast, Projection or Unaudited Results

There was no profit estimate, forecast or projection released by the Company. There was no significant variance between the released unaudited results of the Company and the audited results of the Company which require explanation and/or reconciliation.

8. Revaluation Policy on Landed Properties

The Group has not adopted a policy of regular revaluation of its landed properties at the end of the financial year ended 31 December 2010.

9. Profit Guarantee

No profit guarantee was given by the Company during the financial year.

10. Material Contracts

There were no material contracts entered into by the Company and the Group involving Directors’ or major shareholders’ interest.

11. Contracts Relating to Loans

There are no contracts relating to loans by the Company involving Directors’ and major shareholders’ interests.

12. Recurrent Related Party Transactions of Revenue Nature

There were no recurrent related party transactions of revenue nature during the financial year ended 31 December 2010.

FINANCIAL

STATEMENTS

Directors’ Report 22

Statement by Directors 26

Statutory Declaration 26

Independent Auditors’ Report 27

Statements of Financial Position 29

Statements of Comprehensive Income 31

Statements of Changes in Equity 32

Statements of Cash Flows 33

Notes to the Financial Statements 35


22 Directors’ Report

The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2010.

PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding. The principal activities of the subsidiaries are set out in Note 5 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

RESULTS

The The Group Company RM’000 RM’000

(Loss)/Profit after taxation for the financial year (16,861) 178

Attributable to:Owners of the Company (16,196) 178Minority interests (665) –

(16,861) 178

DIVIDENDS

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

RESERVES AND PROVISIONS

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

ISSUES OF SHARES AND DEBENTURES

During the financial year,

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

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

OPTIONS GRANTED OVER UNISSUED SHARES

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

EMPLOYEE SHARE OPTION SCHEME

At an Extraordinary General Meeting held on 28 September 2004, the Company’s shareholders approved the establishment of an Employee Share Option Scheme (“ESOS”) of not more than 15% of the issued and paid-up share capital of the Company at any time during the option period, to eligible directors and employees of the Group.

As at the date of this report, the Company has yet to grant any option under this ESOS to take up unissued shares of the Company to its eligible Directors and employees.

The salient features of the ESOS are as follows:

(i) Eligibility for participation in the ESOS shall be subject to the By-Laws of the ESOS where the eligible employees must be confirmed in the employment of the Group as at the date of offer.

(ii) The option is personal to the grantee and is non-assignable.

(iii) The Options Committee may at its discretion at any time within the duration of the scheme to make offers to any eligible employees, subject to the eligible employees’ maximum entitlement under the By-Law.

ANNUAL REPORT 2010

23

EMPLOYEE SHARE OPTION SCHEME (CONT’D)

(iv) The option price for each share shall be the weighted average market price of the existing ordinary shares of the Company as shown in the Daily Official List issued by the Bursa Malaysia Securities Berhad for the five (5) market days immediately preceding the date of offer set at a discount of not more than ten percent (10%) or at the par value of the ordinary shares of the Company, whichever is the higher amount.

(v) The options granted may be exercised at any time within a period five (5) years from the date of offer of the option and may at the discretion of the Options Committee be extended provided always that the initial scheme period stipulated in Clause 19.1 of the By-Law and such extension of the scheme made pursuant to this ESOS By-Law shall not in aggregate exceed a duration of ten (10) years.

(vi) The ESOS share shall remain unissued until the option is exercised and shall, upon allotment and issue, rank pari passu in all respects with the existing issued and fully paid-ordinary shares of the Company save that they will not entitle the holders thereof to receive any dividends, rights, bonus issues and any other distribution declared to the shareholders of the Company which entitlement thereof preceded the relevant exercise date of option.

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for impairment losses on receivables, and satisfied themselves that there are no known bad debts and that adequate allowance had been made for impairment losses on receivables.

At the date of this report, the directors are not aware of any circumstances that would require the writing off of bad debts, or the additional allowance for impairment losses on receivables in the financial statements of the Group and of the Company.

CURRENT ASSETS

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

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

VALUATION METHODS

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

CONTINGENT AND OTHER LIABILITIES

The contingent liability is disclosed in Note 41 to the financial statements. At the date of this report, there does not exist:

(i) any charge on the assets of the Group and of the Company that 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 and of the Company which has arisen since the end of the financial year.

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

CHANGE OF CIRCUMSTANCES

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

Directors’ Report


24 Director’s Report

ITEMS OF AN UNUSUAL NATURE

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

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

DIRECTORS

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

Tan Sri Dato’ Seri Mohd Jamil Bin Johari

Huang Jen Soong

Lim Beng Keat

Lew Choong Keong

Jeffrey Gerard Gomez

Dominic Aw Kian-Wee

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings, the interests of directors holding office at the end of the financial year in shares in the Company and its related corporations during the financial year are as follows:

Number of Ordinary Shares of RM0.50 Each At At 1.1.2010 Bought Sold 31.12.2010

Direct interestsLim Beng Keat 56,738,626 – (5,000,000) 51,738,626Huang Jen Soong 14,978,919 – – 14,978,919Lew Choong Keong 510,000 – – 510,000

Indirect interestHuang Jen Soong # 67,672,558 3,778,600 – 71,451,158

# Deemed interested by virtue of his wife, Madam Yap Koon Wah’s substantial shareholding in Bong Sin Rubber Estates Company Sdn. Bhd. and Bong Sin Construction Company Sdn. Bhd..

By virtue of their substantial shareholdings in the Company, Lim Beng Keat and Huang Jen Soong are deemed to have interests in shares in its related corporations during the financial year to the extent of the Company’s interest, in accordance with Section 6A of the Companies Act 1965.

The other directors holding office at the end of the financial year had no interest in shares in the Company or its related corporations during the financial year.

ANNUAL REPORT 2010

25

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by directors as shown in the financial statements, or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefits which may be deemed to arise from transactions entered into in the ordinary course of business with companies in which certain directors have substantial financial interests as disclosed in Note 38 to the financial statements.

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

AUDITORS

The auditors, Messrs. Crowe Horwath, have expressed their willingness to continue in office.

Signed in accordance with a resolution of the DirectorsDated 28 April 2011


Lew Choong Keong

Directors’ Report


26 Statement by Directors

We, Tan Sri Dato’ Seri Mohd Jamil Bin Johari and Lew Choong Keong, being two of the directors of Dolomite Corporation Berhad, state that, in the opinion of the directors, the financial statements are drawn up in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company at 31 December 2010 and of their results and cash flows for the financial year ended on that date.

The supplementary information set out in Note 44, which is not part of the financial statements, is prepared in all material respects, in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad.

Signed in accordance with a resolution of the DirectorsDated 28 April 2011


Lew Choong Keong

Statutory Declaration

I, Lo Sze Min, I/C No. 551013-13-5029 being the officer primarily responsible for the financial management of Dolomite Corporation Berhad, do solemnly and sincerely declare that the financial statements are, to the best of my knowledge and belief, correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act 1960.

Subscribed and solemnly declared by Lo Sze Min, I/C No. 551013-13-5029 at Kuala Lumpur in the Federal Territory on this 28 April 2011

Lo Sze Min

Before me,

Aishah Bt Shahul Hameed, PJK (W565) Commissioner for Oaths

ANNUAL REPORT 2010

27Independent Auditors’ Reportto the Members of Dolomite Corporation Berhad

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Dolomite Corporation Berhad, which comprise the statements of financial position as at 31 December 2010 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 29 to 78.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2010 and of their financial performance and cash flows for the financial year then ended.

Other Matters

The financial statements of the Group and the Company for the preceding financial year were audited by another firm of auditors whose report dated 26 April 2010, expressed an unqualified opinion on those statements.

REPORT ON OTHER LEGAL AND REGULATORY REqUIREMENTS

In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:

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

(b) We have considered the financial statements and the auditors’ reports of the subsidiaries of which we have not acted as auditors, which are indicated in Note 5 to the financial statements.

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

(d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.


28 Independent Auditors’ Report to the Members of Dolomite Corporation Berhad

REPORT ON OTHER LEgAL AND REguLATORy REquIREMENTs (CONT’D)

The supplementary information set out in Note 44 on page 78 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERs

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Crowe Horwath James Chan Kuan Chee Firm No: AF 1018 Approval No: 2271/10/11 (J) Chartered Accountants Chartered Accountant

28 April 2011 Kuala Lumpur

ANNUAL REPORT 2010

29Statements of Financial Positionat 31 December 2010

The Group The Company Restated Restated 31.12.2010 31.12.2009 1.1.2009 31.12.2010 31.12.2009 Note RM’000 RM’000 RM’000 RM’000 RM’000

Assets

Non-current assetsInvestments in subsidiaries 5 – – – 195,743 195,743Investment in an associate 6 – – 296 – –Other investment 7 – – – – –Property, plant and equipment 8 14,982 13,464 14,766 – –Prepaid lease payments 9 18,990 21,022 23,330 – –Investment properties 10 1,699 1,701 2,546 – –Intangible assets 11 15,510 17,627 20,600 – –Property development costs 12 93,368 48,563 51,106 – –Deferred tax assets 13 85 375 510 – – Trade receivables 14 7,769 10,297 11,134 7,769 –Other receivables, deposits

and prepayments 15 11,200 11,200 6,284 – –

163,603 124,249 130,572 203,512 195,743

Current assetsInventories 16 41,500 44,153 61,426 – –Trade receivables 14 12,614 37,213 46,012 967 3,063Other receivables, deposits

and prepayments 15 24,098 6,304 8,323 6 6Property development costs 17 29,057 68,674 66,387 – – Amount owing by subsidiaries 18 – – – 9,555 7,832Tax recoverable 3,748 3,560 1,790 1,264 137Deposits with licensed banks 19 643 2,382 3,099 – – Cash and bank balances 20 3,531 3,658 6,467 280 147

115,191 165,944 193,504 12,072 11,185

Total assets 278,794 290,193 324,076 215,584 206,928

The annexed notes form an integral part of these financial statements.


30

The Group The Company Restated Restated 31.12.2010 31.12.2009 1.1.2009 31.12.2010 31.12.2009 Note RM’000 RM’000 RM’000 RM’000 RM’000

Equity and liabilities

Equity Share capital 21 131,364 131,364 262,727 131,364 131,364Reserves 22 (4,521) 20,945 (82,582) 59,932 68,694

Total equity attributable to owners of the Company 126,843 152,309 180,145 191,296 200,058

Minority interests 86 751 1,096 – –

Total equity 126,929 153,060 181,241 191,296 200,058

Non-current liabilities

Long-term borrowings 23 15,555 19,189 5,217 – –Deferred tax liabilities 26 842 822 923 – –Other payables and accruals 28 935 – – – –

17,332 20,011 6,140 – –

Current liabilitiesTrade payables 27 10,060 16,237 14,281 – –Other payables and accruals 28 28,019 5,323 5,257 193 260 Amount owing to subsidiaries 18 – – – 24,095 6,610 Short-term borrowings 29 96,170 95,444 116,852 – –Provision for taxation 284 118 305 – –

134,533 117,122 136,695 24,288 6,870

Total liabilities 151,865 137,133 142,835 24,288 6,870

Total equity and liabilities 278,794 290,193 324,076 215,584 206,928

Statements of Financial Positionat 31 December 2010


ANNUAL REPORT 2010

31Statements of Comprehensive Incomefor the Financial Year Ended 31 December 2010

The Group The Company 2010 2009 2010 2009 Note RM’000 RM’000 RM’000 RM’000

Revenue 30 44,884 63,978 1,800 – Cost of sales 31 (44,985) (67,343) – –

Gross (loss)/profit (101) (3,365) 1,800 –Other income 1,921 3,137 767 2,375

1,820 (228) 2,567 2,375Marketing and distribution expenses (4,664) (7,116) – –Administrative expenses (9,527) (8,855) (721) (850)Other expenses (1,804) (6,628) – (58,767)Share of results in an associate – (306) – –Finance costs (4,837) (5,841) (2,065) (8)

Loss before taxation 32 (19,012) (28,974) (219) (57,250)Income tax expense 33 2,151 1,063 397 (533)

(Loss)/Profit after taxation (16,861) (27,911) 178 (57,783)

Other comprehensive expense, net of tax Foreign currency translation (330) (270) – –

Total comprehensive (expenses)/ income for the financial year (17,191) (28,181) 178 (57,783)

(Loss)/profit after taxation attributable to:Owners of the company (16,196) (27,566) 178 (57,783)Minority interests (665) (345) – –

(16,861) (27,911) 178 (57,783)

Total comprehensive (expenses)/ income attributable to:Owners of the company (16,526) (27,836) 178 (57,783)Minority interests (665) (345) – –

(17,191) (28,181) 178 (57,783)

Loss per share (sen) 34– basic (6.16) (10.49)– diluted N/A N/A



32 Statements of Changes in Equityfor the Financial Year Ended 31 December 2010

Non-Distributable Distributable Foreign Attributable Exchange to Owners Share Capital Translation Accumulated of the Minority Total Capital Reserve Reserve Losses Company Interests Equity The Group Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Balance at 1.1.2009 262,727 – 963 (83,545) 180,145 1,096 181,241Par value reduction (131,363) 68,694 – 62,669 – – – Total comprehensive

expenses for the financial year – – (270) (27,566) (27,836) (345) (28,181)

Balance at 31.12.2009 131,364 68,694 693 (48,442) 152,309 751 153,060

Balance at 31.12.2009/1.1.2010– as previously reported 131,364 68,694 693 (48,442) 152,309 751 153,060– effect of adopting FRS 139 3(a)(iii) – – – (8,940) (8,940) – (8,940)

– as restated 131,364 68,694 693 (57,382) 143,369 751 144,120

Total comprehensive expenses for the financial year – – (330) (16,196) (16,526) (665) (17,191)

Balance at 31.12.2010 131,364 68,694 363 (73,578) 126,843 86 126,929

Non-Distributable Distributable Share Capital Accumulated Total Capital Reserve Losses Equity The Company Note RM’000 RM’000 RM’000 RM’000

Balance at 1.1.2009 262,727 – (4,886) 257,841

Par value reduction (131,363) 68,694 62,669 –Total comprehensive expenses for the financial year – – (57,783) (57,783)

Balance at 31.12.2009/1.1.2010– as previously reported 131,364 68,694 – 200,058– effect of adopting FRS 139 3(a)(iii) – – (8,940) (8,940)

– as restated 131,364 68,694 (8,940) 191,118Total comprehensive income

for the financial year – – 178 178

Balance at 31.12.2010 131,364 68,694 (8,762) 191,296


ANNUAL REPORT 2010

33Statements of Cash Flowsfor the Financial Year Ended 31 December 2010

The Group The Company 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Cash flows from/(for) operating activitiesLoss before taxation (19,012) (28,974) (219) (57,250)Adjustments for:

Amortisation of:– intangible assets 838 838 – – – prepaid lease payments 1,860 1,860 – – Depreciation of:– property, plant and equipment 2,517 2,768 – – – investment properties 2 2 – – Interest expense 4,837 5,841 2,065 8Impairment loss on:– intangible assets 1,279 2,164 – – – investments in subsidiaries – – – 1,000– property, plant and equipment – 512 – – – trade receivables 1,051 3,255 – 3,062Property, plant and equipment written off – 3 – – Waiver of debts to subsidiaries – – – 54,704Interest income (510) (671) (767) (2,375)Amortisation of long-term payables (250) – – – Gain on disposal of property, plant

and equipment (22) (24) – – Writeback of impairment losses

on receivables (61) (668) – – Share of results in an associate – 306 – –

Operating (loss)/profit before working capital changes (7,471) (12,788) 1,079 (851)Decrease in property development costs 3,663 743 – –Decrease in inventories 2,653 17,408 – – (Increase)/Decrease in trade and other receivables (597) 4,152 (14,611) (6,126)Increase/(Decrease) in trade and other payables 16,523 1,789 (68) 75

Cash from/(for) operations 14,771 11,304 (13,600) (6,902)Income tax paid (780) (861) (280) (964)Income tax refunded 3,218 – – – Interest paid (4,837) (5,841) – –

Net cash from/(for) operating activities 12,372 4,602 (13,880) (7,866)

Balance carried forward 12,372 4,602 (13,880) (7,866)



34

The Group The Company 2010 2009 2010 2009 Note RM’000 RM’000 RM’000 RM’000

Balance brought forward 12,372 4,602 (13,880) (7,866)

Cash flows (for)/from investing activities

(Advances to)/Repayment from subsidiaries – – (1,406) 1,289Deposit pledged with licensed bank (1) (33) – – Expenditure incurred on

property development costs (9,109) – – – Interest received 510 671 – – Proceeds from disposal of property,

plant and equipment 22 24 – – Purchase of property, plant and equipment 35 (1,565) (193) – –

Net cash from/(for) investing activities (10,143) 469 (1,406) 1,289

Cash flows (for)/from financing activitiesAdvances from subsidiaries – – 15,419 6,553Proceeds from loan and borrowings – 22,428 – – Repayment of hire purchase obligations (1,999) (1,653) – – Repayment of loan and borrowings (16,498) (20,417) – –

Net cash (for)/from financing activities (18,497) 358 15,419 6,553

Net (decrease)/increase in cash and cash equivalents (16,268) 5,429 133 (24)

Currency translation differences (120) (46) – –

Cash and cash equivalents at beginning of the financial year (7,340) (12,723) 147 171

Cash and cash equivalents at end of the financial year 36 (23,728) (7,340) 280 147

Statements of Cash Flowsfor the Financial Year Ended 31 December 2010


ANNUAL REPORT 2010

35Notes to the Financial Statementsfor the Financial Year Ended 31 December 2010

1. GENERAL INFORMATION

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

Registered office : Lot 6.05, Level 6, KPMG Tower, 8 First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor Darul Ehsan.

Principal place of business : 3 Jalan SBC 2, Taman Sri Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 28 April 2011.

2. PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding. The principal activities of the subsidiaries are set out in Note 5 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

3. BASIS OF PREPARATION

The financial statements of the Group are prepared under the historical cost convention and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with Financial Reporting Standards (“FRS”) and the Companies Act 1965 in Malaysia.

(a) During the current financial year, the Group has adopted the following new accounting standards and interpretations (including the consequential amendments):

FRSs and IC Interpretations (including the Consequential Amendments)

FRS 4 Insurance Contracts

FRS 7 Financial Instruments: Disclosures

FRS 8 Operating Segments

FRS 101 (Revised) Presentation of Financial Statements

FRS 123 (Revised) Borrowing Costs

FRS 139 Financial Instruments: Recognition and Measurement

Amendments to FRS 1 and FRS 127: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

Amendments to FRS 2: Vesting Conditions and Cancellations

Amendments to FRS 7, FRS 139 and IC Interpretation 9

Amendments to FRS 101 and FRS 132: Puttable Financial Instruments and Obligations Arising on Liquidation

Amendments to FRS 132: Classification of Rights Issues and the Transitional Provision in Relation to Compound Instruments

IC Interpretation 9 Reassessment of Embedded Derivatives

IC Interpretation 10 Interim Financial Reporting and Impairment


36 Notes to the Financial Statementsfor the Financial Year Ended 31 December 2010

3. BASIS OF PREPARATION (CONT’D)

(a) FRSs and IC Interpretations (including the Consequential Amendments)

IC Interpretation 11: FRS 2 – Group and Treasury Share Transactions

IC Interpretation 13 Customer Loyalty Programmes

IC Interpretation 14: FRS 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

Annual Improvements to FRSs (2009)

The adoption of the above accounting standards and interpretations (including the consequential amendments) did not have any material impact on the Group’s financial statements, other than the following:

(i) FRS 7 requires additional disclosures about the financial instruments of the Group. Prior to 1 January 2010, information about financial statements was disclosed in accordance with the requirements of FRS 132 – Financial Instruments: Disclosures and Presentation. FRS 7 requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk.

The Group has applied FRS 7 prospectively in accordance with the transitional provisions. Accordingly, the new disclosures have not been applied to the comparatives and are included throughout the financial statements for the current financial year.

(ii) FRS 101 (Revised) introduces the statement of comprehensive income, with all items of income and expense recognised in profit or loss, together with all other items of recognised income and expense recognised directly in equity, either in one single statement, or in two linked statements. The Group has elected to present this statement as one single statement.

The revised standard also separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with all non-owner changes in equity presented in the statement of comprehensive income as other comprehensive income.

In addition, a statement of financial position is required at the beginning of the earliest comparative period following a change in accounting policy, the correction of an error or the classification of items in the statement.

FRS 101 (Revised) also requires the Group to make new disclosures to enable users of the financial statements to evaluate the Group’s objectives, policies and processes for managing capital. This new disclosure is made in Note 42(b) to the financial statements.

Comparative information has been re-presented so that it is in conformity with the requirements of this revised standard.

(iii) The adoption of FRS 139 (including the consequential amendments) has resulted in several changes to accounting policies relating to recognition and measurements of financial instruments.

The financial impact to the financial statements is summarised as follows:

The Group At 1.1.2010 RM

Accumulated lossesRemeasurement of long-term trade receivables (8,940)

Prior to 1 January 2010, long-term trade receivables were recorded at cost. With the adoption of FRS 139, long-term trade receivables are now recognised initially at their fair value, which are estimated by discounting the expected cash flows using the current market interest rate. Interest income is recognised in profit or loss using the effective interest method.

All these financial impacts are recognised as an adjustment to the opening balance of retained profits or another appropriate reserve upon the adoption of FRS 139. Comparatives are not adjusted/represented by virtue of the exemption given in this standard.

ANNUAL REPORT 2010

37Notes to the Financial Statementsfor the Financial Year Ended 31 December 2010

3. BASIS OF PREPARATION (CONT’D)

(b) The Group has not applied in advance the following accounting standards and interpretations (including the consequential amendments) that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the current financial year:

FRSs and IC Interpretations (including the Consequential Amendments) Effective date

FRS 1 (Revised) First-time Adoption of Financial Reporting Standards 1 July 2010

FRS 3 (Revised) Business Combinations 1 July 2010

FRS 124 (Revised) Related Party Disclosure 1 January 2012

FRS 127 (Revised) Consolidated and Separate Financial Statements 1 July 2010

Amendments to FRS 1 (Revised): Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters 1 January 2011

Amendments to FRS 1: Additional Exemptions for First-time Adopters 1 January 2011

Amendments to FRS 2: Scope of FRS 2 and FRS 3 (Revised) 1 July 2010

Amendments to FRS 2: Group Cash-settled Share-based Payment Transactions 1 January 2011

Amendments to FRS 5: Plan to Sell the Controlling Interest in a Subsidiary 1 July 2010

Amendments to FRS 7: Improving Disclosures about Financial Instruments 1 January 2011

Amendments to FRS 138: Consequential Amendments Arising from FRS 3 (Revised) 1 July 2010

Amendments to IC Interpretation 14: Prepayments of a Minimum Funding Requirement 1 July 2011

Amendments to IC Interpretation 9: Scope of IC Interpretation 9 and FRS 3 (Revised) 1 July 2010

IC Interpretation 4 Determining Whether an Arrangement Contains a Lease 1 January 2011

IC Interpretation 12 Service Concession Arrangements 1 July 2010

IC Interpretation 15 Agreements for the Construction of Real Estate 1 January 2012

IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation 1 July 2010

IC Interpretation 17 Distributions of Non-cash Assets to Owners 1 July 2010

IC Interpretation 18 Transfers of Assets from Customers 1 January 2011

IC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments 1 July 2011

Annual Improvements to FRSs (2010) 1 January 2011

The above accounting standards and interpretations (including the consequential amendments) are not relevant to the Group’s operations except as follows:

(i) FRS 3 (Revised) introduces significant changes to the accounting for business combinations, both at the acquisition date and post acquisition, and requires greater use of fair values. In addition, all transaction costs, other than share and debt issue costs, will be expensed as incurred. This revised standard will be applied prospectively and therefore there will not have any financial impact on the financial statements of the Group for the current financial year but may impact the accounting for future transactions or arrangements.

(ii) FRS 127 (Revised) requires accounting for changes in ownership interests by the group in a subsidiary, while maintaining control, to be recognised as an equity transaction. When the group loses control of a subsidiary, any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognised in profit or loss. The revised standard also requires all losses attributable to the minority interest to be absorbed by the minority interest instead of by the parent. The Group will apply the major changes of FRS 127 (Revised) prospectively and therefore there will be no financial impact on the financial statements of the Group for the current financial year but may impact the accounting for its future transactions or arrangements.



4. SIGNIFICANT ACCOUNTING POLICIES

(a) Critical Accounting Estimates and Judgements

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

(i) Depreciation of Property, Plant and Equipment

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

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

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

(ii) Income Taxes

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

(iii) Property Development

The Group recognises property development revenue and expenses in the profit or loss by using the stage of completion method. The stage of completion is determined by the proportion that the 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.

(iv) Construction Contracts

Construction contracts accounting requires reliable estimation of the costs to complete the contract and reliable estimation of the stage of completion.

• ContractRevenue

Construction contracts accounting requires that variation claims and incentive payments only be recognised as contract revenue to the extent that it is probable that they will be accepted by the customers. As the approval process often takes some time, a judgement is required to be made of its probability and revenue

recognised accordingly.

• ContractCosts

Using experience gained on each particular contract and taking into account the expectations of the time and materials required to complete the contract, management estimates the profitability of the contract on an individual basis at any particular time.

(v) Impairment of Non-financial Assets

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

ANNUAL REPORT 2010

39

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

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

(vi) Allowance for Inventories

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

(vii) Classification between Investment Properties and Owner-Occupied Properties

The Group determines whether a property qualifies as an investment property, and has developed a criteria in making that judgement. Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, the Group considers whether a property generates cash flows largely independent of the other assets held by the Group.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a finance lease), the Group accounts for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes.

Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as investment property.

(viii) Impairment of Trade and Other Receivables

An impairment loss is recognised when there is objective evidence that a financial asset is impaired. Management specifically reviews its loan and receivables financial assets and analyses historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in the customer payment terms when making a judgment to evaluate the adequacy of the allowance for impairment losses. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. If the expectation is different from the estimation, such difference will impact the carrying value of receivables.

(ix) Impairment of Available-for-sale Financial Assets

The Group reviews its available-for-sale financial assets at the end of each reporting period to assess whether they are impaired. The Group also records impairment loss on available-for-sale equity investments when there has been a significant or prolonged decline in the fair value below their cost. The determination of what is “significant’ or “prolonged” requires judgement. In making this judgement, the Group evaluates, among other factors, historical share price movements and the duration and extent to which the fair value of an investment is less than its cost.

(x) Impairment of Goodwill

Goodwill is tested for impairment annually and at other times when such indicators exist. This requires management to estimate the expected future cash flows of the cash-generating unit to which goodwill is allocated and to apply a suitable discount rate in order to determine the present value of those cash flows. The future cash flows are most sensitive to budgeted gross margins, growth rates estimated and discount rate used. If the expectation is different from the estimation, such difference will impact the carrying value of goodwill.

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

The Group carries certain financial assets and liabilities at fair value, which requires extensive use of accounting estimates and judgement. While significant components of fair value measurement were determined using verifiable objective evidence, the amount of changes in fair value would differ if the Group uses different valuation methodologies. Any changes in fair value of these assets and liabilities would affect profit and/or equity.

Notes to the Financial Statementsfor the Financial Year Ended 31 December 2010


40


(b) Basis of Consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to 31 December 2010.

A subsidiary is defined as a company in which the parent company has the power, directly or indirectly, to exercise control over its financial and operating policies so as to obtain benefits from its activities.

All subsidiaries are consolidated using the purchase method. Under the purchase method, the results of the subsidiaries acquired or disposed of are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements. The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination.

Intragroup transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

Minority interests in the consolidated statement of financial position consist of the minorities’ share of fair values of the identifiable assets and liabilities of the acquiree as at the date of acquisition and the minorities’ share of movements in the acquiree’s equity.

Minority interests are presented within equity in the consolidated statement of financial position, separately from the Company’s shareholders’ equity, and are separately disclosed in the consolidated statement of comprehensive income. Transactions with minority interests are accounted for as transactions with owners. Gain or loss on disposal to minority interests is recognised directly in equity.

(c) Functional and Foreign Currencies

(i) Functional and Presentation Currency

The individual financial statements of each entity in the Group are presented in the currency of the primary economic environment in which the entity operates, which is the functional currency.

The consolidated financial statements are presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.

(ii) Transactions and Balances

Transactions in foreign currencies are converted into the respective functional currencies on initial recognition, using the exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities at the end of the reporting period are translated at the rates ruling as of that date. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. All exchange differences are recognised in profit or loss.

(iii) Foreign Operations

Assets and liabilities of foreign operations are translated to RM at the rates of exchange ruling at the end of the reporting period. Revenues and expenses of foreign operations are translated at exchange rates ruling at the dates of the transactions. All exchange differences arising from translation are taken directly to other comprehensive income and accumulated in equity under translation reserve. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income relating to that particular foreign operation is reclassified from equity to profit or loss.

Goodwill and fair value adjustments arising from the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the end of the reporting period.


ANNUAL REPORT 2010

41


(d) Financial Instruments

Financial instruments are recognised in the statements of financial position when the Group has become a party to the contractual provisions of the instruments.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to 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.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

Financial instruments recognised in the statements of financial position are disclosed in the individual policy statement associated with each item.

(i) Financial Assets

On initial recognition, financial assets are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets, as appropriate.

• FinancialAssetsatFairValueThroughProfitorLoss

As at the end of the reporting period, there were no financial assets classified under this category.

• Held-to-maturityInvestments

As at the end of the reporting period, there were no financial assets classified under this category.

• LoansandReceivablesFinancialAssets

Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables financial assets. Loans and receivables financial assets are measured at amortised cost using the effective interest method, less any impairment loss. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

• Available-for-saleFinancialAssets

Available-for-sale financial assets are non-derivative financial assets that are designated in this category or are not classified in any of the other categories.

For available-for-sale investments, gain and losses arising from changes in fair value are recognised directly in equity, until the security is disposed off or is determined to be impaired, at which time the cumulative gains or losses previously recognised in equity is included in the profit or loss for the year. Impairment losses recognised in profit or loss for equity investments classified as available-for-sale are not subsequently reversed through profit or loss.

After initial recognition, available-for-sale financial assets are remeasured to their fair values at the end of each reporting period. Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in the fair value reserve, with the exception of impairment losses. On derecognition, the cumulative gain or loss previously accumulated in the fair value reserve is reclassified from equity into profit or loss.

Dividends on available-for-sale equity instruments are recognised in profit or loss when the Group’s right to receive payments is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less accumulated impairment losses, if any.





(d) Financial Instruments (cont’d)

(ii) Financial Liabilities

All financial liabilities are initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method other than those categorised as fair value through profit or loss.

Fair value through profit or loss category comprises financial liabilities that are either held for trading or are designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges

(iii) Equity Instruments

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

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

(e) Investments in Subsidiaries

Investments in subsidiaries are stated at cost in the statement of financial position of the Company, and are reviewed for impairment at the end of the reporting period if events or changes in circumstances indicate that the carrying values may not be recoverable.

On the disposal of the investments in subsidiaries, the difference between the net disposal proceeds and the carrying amount of the investments is recognised in profit or loss.

(f) Investments in Associates

An associate is an entity in which the Group has a long-term equity interest and where it exercises significant influence over the financial and operating policies. Associates are accounted for in the consolidated financial statements using the equity method. The consolidated financial statements include the Group’s share of the profit or loss of the equity accounted associates, after adjustments, if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

When the Group’s share of losses exceeds its interest in an equity accounted associate, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee. Investments in associates are stated in the statement of financial position of the Group at cost less any impairment losses.

(g) Investment in Joint Venture

(i) Jointly-controlled Entities

Jointly-controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Jointly-controlled entities are accounted for in the consolidated financial statements using the equity method unless it is classified as held for sale (or included in a disposal group that is classified as held for sale). The consolidated financial statements include the Group’s share of the income and expenses of the equity accounted joint ventures, after adjustments to align the accounting policies with those of the Group, from the date that joint control commences until the date that joint control ceases.

When the Group’s share of losses exceeds its interest in an equity accounted joint venture, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the joint venture. Investments in joint ventures are stated in the statement of financial position of the Group at cost less impairment losses.

The Group has 50% (2009 – 50%) effective ownership interest in an Indian incorporated jointly controlled entity, Dolomite Berhad-ALS Limited JV, whose principal activity is providing construction services for the National Highway Authority in India. The carrying amount of this interest has been reduced to Nil as the Group’s share of losses has exceeded its interest.

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(g) Investment in Joint Venture (cont’d)

(ii) Jointly-controlled Operations and Assets

The interests of the Group in unincorporated joint ventures and jointly-controlled assets are brought to account by recognising in its financial statements the assets it controls and the liabilities that it incurs, and the expenses it incurs and its share of income that it earns from the sale of goods or services by the joint venture.

(h) Property, Plant and Equipment

Property, plant and equipment, are stated at cost less accumulated depreciation and impairment losses, if any.

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

Buildings 2% Motor vehicles 10% – 20% Plant, machinery and equipment 9.5% – 12.5%

The depreciation method, useful life and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period 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 the property, plant and equipment.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Group is obligated to incur when the asset is acquired, if applicable.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset is recognised in profit or loss.

(i) Prepaid Lease Payments

Leases of land under which the lessor has not transferred all the risks and benefits of ownership are classified as operating leases. Lease prepayment for land use right is stated at cost less accumulated amortisation and impairment losses, if any. Amortisation is recognised in profit or loss on a straight-line basis over the unexpired term of the leases.

(j) Investment Properties

(i) Investment Properties Carried at Cost

Investment properties are properties which are owned to earn rental income or for capital appreciation or for both. These include land (other than leasehold land) held for a currently undetermined future use. Properties that are occupied by the companies in the Group are accounted for as owner-occupied rather than as investment properties.

Investment properties are stated at cost less any accumulated depreciation and any accumulated impairment losses, consistent with the policy set out in Note 4(h) above.

Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of 50 years for buildings. Freehold land is not depreciated.

(ii) Determination of Fair Value for Disclosure

The directors estimate the fair values of the Group’s investment properties without involvement of independent valuers.

The estimated fair values are based on comparable market values of similar properties in the vicinity, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.



44


(k) Intangible Assets

(i) Goodwill

Goodwill represents the excess of the fair value of the purchase consideration over the Group’s share of the fair values of the identifiable assets, liabilities and contingent liabilities of the subsidiaries at the date of acquisition.

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

If, after reassessment, the Group’s interest in the fair values of the identifiable net assets of the subsidiaries exceeds the cost of the business combinations, the excess is recognised as income immediately in profit or loss.

(ii) Quarry and Mining Development Costs and Computer Software

Quarry and mining development costs are stated at cost and represent expenditure that is directly attributable to the quarry/mining development activities or that can be allocated on a reasonable basis to such activities. Computer software that is not integral to the functionality of the related equipment is recognised as an intangible asset.

(iii) Subsequent Expenditure

Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

(iv) Amortisation

Amortisation is charged to profit or loss on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite and are amortised from the date that they are available for use. Goodwill and other intangible assets with indefinite useful lives are tested for impairment annually and whenever there is an indication that they may be impaired.

The quarry and mining development costs are to be amortised on a straight line basis over the lease periods ranging from 10 to 50 years. The estimated useful life of the computer software is 8 years.

(l) Property Development Costs

(i) Non-current Property Development

Non-current property development costs consist of land and development costs where no development activities are carried out or where development activities are not expected to be completed within the normal operating cycle. Such land and development costs are carried at cost less any accumulated impairment losses.

Costs associated with the acquisition of land include the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other relevant levies. Pre-acquisition costs are charged to profit or loss as incurred unless such costs are directly identifiable to the consequent property development activity.

Non-current property development costs are transferred to current asset when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle.

(ii) Current Property Development

Current property development costs comprise costs associated with the acquisition of land and all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities.

Property development costs that are not recognised as an expense are recognised as an asset and carried at the lower of cost and net realisable value.

When the financial outcome of a development activity can be reliably estimated, the amount of property revenues and expenses recognised in profit or loss are determined by reference to the stage of completion of development activity at the end of the reporting period.


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(l) Property Development Costs (cont’d)

(ii) Current Property Development (cont’d)

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

Where it is probable that property development costs will exceed property development revenue, any expected loss is recognised as an expense in profit or loss immediately, including costs to be incurred over the defects liability period.

(m) Impairment

(i) Impairment of Financial Assets

All financial assets (other than those categorised at fair value through profit or loss), are assessed at the end of each reporting period whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. For an equity instrument, a significant or prolonged decline in the fair value below its cost is considered to be objective evidence of impairment.

An impairment loss in respect of held-to-maturity investments and loans and receivables financial assets is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the fair value reserve. In addition, the cumulative loss recognised in other comprehensive income and accumulated in equity under fair value reserve, is reclassified from equity to profit or loss.

With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of available-for-sale equity instruments, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss made is recognised in other comprehensive income.

(ii) Impairment of Non-Financial Assets

The carrying values of assets, other than those to which FRS 136 – Impairment of Assets does not apply, are reviewed at the end of each reporting period for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets’ fair value less costs to sell and their value-in-use, which is measured by reference to discounted future cash flow.

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

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



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(n) Assets under Hire Purchase

Assets acquired under hire purchase are capitalised in the financial statements and are depreciated in accordance with the policy set out in Note 4(h) above. Each hire purchase payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. Finance charges are recognised in profit or loss over the period of the respective hire purchase agreements.

(o) Inventories

Completed properties held for resale are measured at the lower of cost and net realisable value. Cost is determined on a specific identification basis and includes land, all direct building costs and other related development costs.

Raw materials and finished goods are measured at the lower of cost and net realisable value with weighted average cost being the main basis of costing method. Consumables are valued at cost using the first in first out method. Costs of raw materials include the actual cost of materials and incidental costs in bringing these to their present condition and location. In the case of finished goods, cost includes an appropriate share of production overheads based on normal operating capacity.

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.

(p) Progress Billings/Accrued Billings

In respect of progress billings:

(i) where revenue recognised in profit or loss exceeds the billings to purchasers, the balance is shown as accrued billings under current assets; and

(ii) where billings to purchasers exceed the revenue recognised to profit or loss, the balance is shown as progress billings under current liabilities.

(q) Borrowing Costs

Borrowing costs directly attributable to the acquisition and construction of development properties, plant and equipment are capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use or sale. Capitalisation of borrowing costs is suspended during extended periods in which active development is interrupted.

All other borrowing costs are charged to profit or loss as expenses in the period in which they are incurred.

(r) Income Taxes

Income tax 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 or substantively enacted at the end of the reporting period.

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

Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs 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 assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised.


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(r) Income Taxes (cont’d)

Deferred tax assets and liabilities are 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 the tax rates that have been enacted or substantively enacted at the end of the reporting period.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same taxation authority.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transactions either in other comprehensive income or directly in equity and deferred tax arising from a business combination is included in the resulting goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs.

(s) Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, deposits pledged with financial institutions, bank overdrafts and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purposes of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(t) Provisions

Provisions are recognised when the Group has a present obligation as a result of past events, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount can be made. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the provision is the present value of the estimated expenditure required to settle the obligation.

(u) Employee Benefits

(i) Short-term Benefits

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

(ii) Defined Contribution Plans

The Group’s contributions to defined contribution plans are recognised in profit or loss in the period to which they relate. Once the contributions have been paid, the Group has no further liability in respect of the defined contribution plans.

(v) Related Parties

A party is related to an entity if:

(i) directly, or indirectly through one or more intermediaries, the party:

• controls,iscontrolledby,orisundercommoncontrolwith,theentity(thisincludesparents,subsidiariesand fellow subsidiaries);

• hasaninterestintheentitythatgivesitsignificantinfluenceovertheentity;or

• hasjointcontrolovertheentity;

(ii) the party is an associate of the entity;

(iii) the party is a joint venture in which the entity is a venturer;

(iv) the party is a member of the key management personnel of the entity or its parent;

(v) the party is a close member of the family of any individual referred to in (i) or (iv);



48


(v) Related Parties (cont’d)

(vi) the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (iv) or (v); or

(vii) the party is a post-employment benefit plan for the benefit of employees of the entity, or of any entity that is a related party of the entity.

Close members of the family of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity.

(w) Contingent Liabilities

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

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

(x) Revenue Recognition

(i) Property Development

Revenue from property development is recognised from the sale of completed and uncompleted development properties.

Revenue from the sale of completed properties is recognised when the sale is contracted.

Revenue on uncompleted properties contracted for sale is recognised based on the stage of completion method unless the outcome of the development cannot be reliably determined in which case the revenue on the development is only recognised to the extent of development costs incurred that are recoverable.

The stage of completion is determined based on the proportion that the development costs incurred for work performed to date bear to the estimated total development costs.

(ii) Sale of Goods

Revenue is recognised upon delivery of goods and customers’ acceptance and where applicable, net of returns and trade discounts.

(iii) Construction Contracts

Revenue on contracts is recognised on the percentage of completion method unless the outcome of the contract cannot be reliably determined, in which case revenue on contracts is only recognised to the extent of contract costs incurred that are recoverable. Foreseeable losses, if any, are provided for in full as and when it can be reasonably ascertained that the contract will result in a loss.

The stage of completion is determined based on surveys of work performed.

(iv) Interest Income

Interest income is recognised on an accrual basis.

(v) Dividend Income

Dividend income from investment is recognised when the right to receive dividend payment is established.

(vi) Rental Income

Rental income is recognised on an accrual basis.

(y) Operating Segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.


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5. INVESTMENTS IN SUBSIDIARIES

The Company 2010 2009 RM’000 RM’000

Unquoted shares, at cost 197,117 197,117Less: Accumulated impairment losses (1,374) (1,374)

195,743 195,743

The details of the subsidiaries are as follows:

Country of Effective Name of Company Incorporation Equity Interest Principal Activities 2010 2009 % %

Dolomite Berhad Malaysia 100 100 Investment holding.

Dolomite Technology Sdn. Bhd. Malaysia 100 100 Dormant.

Dolomite Technology (HK) Limited ^ Hong Kong 100 100 Investment holding.

Subsidiaries of Dolomite Berhad Dolomite Industries Company Malaysia 100 100 Quarry operation,

Sdn. Bhd. construction and property investment.

Dolomite Industrial Park Sdn. Bhd. Malaysia 100 100 Property development.

Dolomite Hotmixes Sdn. Bhd. Malaysia 100 100 Manufacture and sale of hotmixes.

Dolomite Concrete Products Sdn. Bhd. Malaysia 100 100 Dormant.

Dolomite Readymixed Concrete Malaysia 100 100 Production and sale of Sdn. Bhd. readymixed concrete.

Dolomite Transport Sdn. Bhd. Malaysia 100 100 Transportation services.

Dolomite Engineering Sdn. Bhd. Malaysia 100 100 Builders and contractors.

Dolomite-CM Quarries Sdn. Bhd. Malaysia 100 51 Quarry operation.

D’Marina Sdn. Bhd. Malaysia 50* 50* Property development.

Subsidiary of Dolomite Industries Company Sdn. Bhd.

Dolomite Properties Sdn. Bhd. Malaysia 100 100 Property development.

Subsidiary of Dolomite Technology Sdn. Bhd.

Dolomite Biotech Sdn. Bhd. Malaysia 100 100 Dormant.

Subsidiary of Dolomite-CM Quarries Sdn. Bhd.

Orris Capital Sdn. Bhd. Malaysia 100 100 Leasing and subleasing of quarry land.




5. INVESTMENTS IN SUBSIDIARIES (CONT’D)


Subsidiaries of Dolomite Technology(HK)Limited

Dolomite Power-Shandong (HK) Limited ^ Hong Kong 100 100 Investment holding.

Dolomite Power-Wuhai (HK) Limited ^ Hong Kong 100 100 Investment holding.

Dolomite (Guangzhou) International Trading Co. Ltd. ^ China 100 100 General trading.

Subsidiary of Dolomite Power-Shandong(HK)Limited

Shandong Dolomite Thermal Power Co. Ltd. ^ China 100 100 Construction of a thermal power plant.

Subsidiary of Dolomite Power-Wuhai(HK)Limited

Dolomite Coal Industry Co. Ltd., Wuhai, Inner Mongolia ^ China 100 100 Dormant.

^ Not audited by Messrs. Crowe Horwath.

* Denotes 50%+1 share.

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6. INVESTMENT IN AN ASSOCIATE

The Group 2010 2009 RM’000 RM’000

Unquoted shares, at cost 675 675Share of post acquisition losses (675) (675)

– –Transfer to other investment (Note 7) – –

– –

The investment in an associate was reclassified by the management as other investment (or available-for-sale investment) as the Group decided during the financial year not to assume any role in the business management nor exercise any influence on its financial and operating policy decisions in the foreseeable future.

The details of the associate are as follows:


Beijing Glory Medical Equipment Co. Ltd China 20 20 Producer of syringes and other medical devices.

The summarised financial information of the associate is as follows:

The Group 2010 2009 RM’000 RM’000

Assets and liabilitiesTotal assets – 5,737Total liabilities – 5,393

ResultsRevenue – 1,424Loss for the year – (1,344)

7. OTHER INVESTMENT

The Group 2010 2009 RM’000 RM’000

Unquoted shares:At 1.1.2010/2009 – – Transfer from interest in an associate (Note 6) – –

At 31.12.2010/2009 – –

Represented by:At cost 675 – Impairment loss (675) –

– –



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8. PROPERTY, PLANT AND EqUIPMENT

Effects of At Exchange Depreciation At 1.1.2010 Additions Rates Charge 31.12.2010 The Group RM’000 RM’000 RM’000 RM’000 RM’000

Net book value

Buildings 2,857 – – (90) 2,767Motor vehicles 1,439 – – (542) 897Plant, machinery and equipment 8,657 2,528 (2) (1,885) 9,298Capital work-in-progress 511 1,545 (36) – 2,020

13,464 4,073 (38) (2,517) 14,982

At Reclassifi- Written Impairment Depreciation At 1.1.2009 cation Additions Off Loss Charge 31.12.2009 The Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Net book value

Buildings 2,723 222 – (3) – (85) 2,857Motor vehicles 2,367 – 88 – – (1,016) 1,439Plant, machinery and equipment 9,676 – 1,160 – (512) (1,667) 8,657 Capital work-in-progress – 418 93 – – – 511

14,766 640 1,341 (3) (512) (2,768) 13,464

Accumulated At Accumulated Impairment Net Book Cost Depreciation Losses Value The Group RM’000 RM’000 RM’000 RM’000

At 31.12.2010

Buildings 4,260 (1,493) – 2,767Motor vehicles 25,429 (24,532) – 897Plant, machinery and equipment 64,866 (55,056) (512) 9,298Capital work-in-progress 2,020 – – 2,020

96,575 (81,081) (512) 14,982

At 31.12.2009

Buildings 4,260 (1,403) – 2,857Motor vehicles 25,570 (24,131) – 1,439Plant, machinery and equipment 62,338 (53,169) (512) 8,657Capital work-in-progress 511 – – 511

92,679 (78,703) (512) 13,464

The net book value of property, plant and equipment acquired under hire purchase terms is as follows:

The Group 2010 2009 RM’000 RM’000

Motor vehicles 387 677Plant, machinery and equipment 6,253 6,696

6,640 7,373


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9. PREPAID LEASE PAYMENTS

The Group 2010 2009 RM’000 RM’000

Leasehold land, at cost:At 1 January 33,289 33,737Reclassification – (418)Exchange differences (172) (30)

At 31 December 33,117 33,289

Accumulated amortisation: At 1 January (12,267) (10,407)Amortisation charge during the financial year (1,860) (1,860)

At 31 December (14,127) (12,267)

Carrying value at 31 December 18,990 21,022

The prepaid lease payments comprise:

(a) a piece of leasehold land held for own use in Malaysia. The leasehold land has a remaining tenure of 9 years (2009 – 10 years); and

(b) a piece of leasehold land acquired for the construction of a thermal plant in Shandong Province of China. The land use right is non-transferable and has a remaining tenure of 47 years (2009 – 48 years).

10. INVESTMENT PROPERTIES

Freehold Land Others Total The Group RM’000 RM’000 RM’000

At costAt 1.1.2009 2,460 87 2,547Reclassification (843) – (843)

At 31.12.2009/31.12.2010 1,617 87 1,704

Accumulated depreciationAt 1.1.2009 – (1) (1)Depreciation charge – (2) (2)

At 31.12.2009/1.1.2010 – (3) (3)Depreciation charge – (2) (2)

At 31.12.2010 – (5) (5)

Carrying amountsAt 31.12.2009 1,617 84 1,701

At 31.12.2010 1,617 82 1,699

Market valuesAt 31.12.2009 2,656 86 2,742

At 31.12.2010 2,645 60 2,705

The carrying amounts of the freehold land arose from the fair value adjustment arising from the Group’s business combination in prior years.



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11. INTANGIBLE ASSETS

Quarry and Mining Computer Development Goodwill Software Costs Total The Group RM’000 RM’000 RM’000 RM’000

At cost:At 1.1.2009 14,764 129 15,801 30,694Effects of exchange rates – – 29 29

At 31.12.2009/31.12.2010 14,764 129 15,830 30,723

Accumulated amortisation:At 1.1.2009 – (49) (4,990) (5,039)Amortisation charge – (16) (822) (838)

At 31.12.2009/1.1.2010 – (65) (5,812) (5,877)Amortisation charge – (16) (822) (838)

At 31.12.2010 – (81) (6,634) (6,715)

Accumulated impairment losses:At 1.1.2009 (5,055) – – (5,055)Impairment loss (335) – (1,829) (2,164)

At 31.12.2009/1.1.2010 (5,390) – (1,829) (7,219)Impairment loss (711) – (568) (1,279)

At 31.12.2010 (6,101) – (2,397) (8,498)

Carrying amount:At 31.12.2009 9,374 64 8,189 17,627

At 31.12.2010 8,663 48 6,799 15,510

Goodwill

Goodwill is stated at cost and reviewed for impairment annually.

For the purpose of impairment testing, goodwill is allocated to the Group’s operating divisions which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. The aggregate carrying amount of goodwill is allocated to the Group’s property development segment.

The recoverable amount was determined based on fair value less costs to sell and value in use.

The fair value less costs to sell has been determined after taking into account the intrinsic value of the land held for property development. The land held for development is determined using a valuation carried out by an independent valuer.

The recoverable amount of a cash-generating unit is determined based on value-in-use calculations using cash flow projections on financial budget approved by management covering a period of one year.

The cash flow projections are using estimated growth rates based on past years achievement, the expected projects to be launched in the next financial year and the management’s expectations of market developments and are discounted using a discount rate of 8% per annum. The discount rate used is pre-tax and reflects specific risks relating to the relevant segments.

The management believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of the goodwill to be materially higher than its recoverable amount.

An impairment loss of RM711,000 (2009 – RM335,000) was recognised. The impairment loss was allocated fully to goodwill, and is included in other expenses.


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11. INTANGIBLE ASSETS (CONT’D)

quarry and Mining Development Costs

An impairment loss of RM568,000 is recognised during the financial year in respect of the development costs for the quarry located at Bentong, Pahang.

The impairment loss of RM1,829,000 recognised in the previous year was in respect of the development costs for a coal mine located in Wuhai City of Inner Mongolia attributable to Dolomite Coal Industry Co. Ltd, a subsidiary of the Group. The application for the approval of coal extraction was lodged at the end of year 2007. Currently, the approval is still pending from the local government authority. In view that the outcome of the application remains uncertain at this stage, an impairment loss was recognised, notwithstanding that a preliminary evaluation report on the coal deposit on the above coal mine indicated the viability of the commercial production of the coal mine that was issued by a consultant in year 2007. The carrying amount after the impairment loss was Nil.

12. PROPERTY DEVELOPMENT COSTS (NON-CURRENT)

Freehold Development Land Expenditure Total The Group RM’000 RM’000 RM’000

At 1.1.2009 31,852 19,254 51,106Reclassification (4,424) (68) (4,492)Addition during the financial year – 1,949 1,949

At 31.12.2009/1.1.2010 27,428 21,135 48,563Reclassification 2,063 33,891 35,954Addition during the financial year 7,871 1,238 9,109Reversal during the financial year – (258) (258)

At 31.12.2010 37,362 56,006 93,368

The freehold land of the Group has been pledged to licensed banks as security for certain banking facilities granted to the Group.

13. DEFERRED TAX ASSETS

The Group 2010 2009 RM’000 RM’000

At 1 January 375 510Recognised in profit or loss (Note 33) (290) (135)

At 31 December 85 375

The deferred tax assets and liability are attributable to the following:

The Group 2010 2009 RM’000 RM’000

Deferred tax assets:Unabsorbed capital allowances 1,042 762Unutilised tax losses 118 328

Deferred tax liability:Accelerated capital allowances over depreciation (1,075) (715)

85 375



56

13. DEFERRED TAX ASSETS (CONT’D)

No deferred tax assets are recognised on the following items:

The Group 2010 2009 RM’000 RM’000

Unabsorbed capital allowances 3,104 1,574Unutilised tax losses 13,021 6,338

16,125 7,912

Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profits will be available against which the Group can utilise these benefits.

14. TRADE RECEIVABLES


Non-current:Trade receivables 19,771 10,297 19,771 – Allowance for impairment losses (12,002) – (12,002) –

7,769 10,297 7,769 –

Current:Trade receivables 15,088 24,194 967 6,125Allowance for impairment losses (6,312) (8,384) – (3,062)

8,776 15,810 967 3,063

Progress billings receivable 3,133 19,603 – – Retention sum 705 1,800 – –

12,614 37,213 967 3,063

Allowance for impairment losses:At 1 January (8,384) (10,205) (3,062) – Effect of adopting FRS 139 (8,940) – (8,940) – Addition during the financial year (1,051) (3,255) – (3,062)Written off during the financial year – 4,408 – – Writeback during the financial year 61 668 – –

At 31 December (18,314) (8,384) (12,002) (3,062)

The credit terms of the Group and of the Company range from 14 to 30 days. Other credit terms are assessed and approved on a case-by-case basis.

Included in trade receivables are amounts owing by a major customer arising mainly from sales of completed properties and construction contracts in prior years totalling RM8,631,000 (2009 – RM10,297,000).

The Board of Directors is of the view that these amounts are fully recoverable. The Directors have also obtained indicative market values in respect of the said properties and the estimated market values of these properties are above the carrying amounts. In addition, the Board has obtained the necessary documents from the major customer to pledge the said properties to the Group.


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15. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS


Non-current: Deposits 11,200 11,200 – –

Current:Accrued billings in respect of property development 1,654 4,219 – – Other receivables 1,732 1,517 – – Deposits for purchase of property,

plant and equipment 19,624 – – – Sundry deposits 984 414 6 6Prepayment 104 154 – –

24,098 6,304 6 6

Deposits of RM11.2 million represent the commitment deposit being part payment towards land cost, for the purpose of developing a parcel of converted leasehold land in Mukim Kuala Kuantan.

16. INVENTORIES

The Group 2010 2009 RM’000 RM’000

At cost:Developed properties 5,338 7,909Raw materials and consumables 2,670 2,686Finished goods 33,492 33,558

41,500 44,153

None of the inventories is carried at net realisable value.

17. PROPERTY DEVELOPMENT COSTS (CURRENT)


2010

Accumulated costs:At 1.1.2010 52,292 335,747 388,039Reclassification (2,063) (33,891) (35,954)Reversal of costs for completed projects (9,255) (282,037) (291,292)Costs incurred during the financial year – 8,570 8,570

At 31.12.2010 40,974 28,389 69,363

Accumulated costs recognised in profit or loss:At 1.1.2010 (23,004) (296,361) (319,365)Costs recognised in profit or loss during the financial year (2,111) (10,122) (12,233)Reversal of costs for completed projects 9,255 282,037 291,292

At 31.12.2010 (15,860) (24,446) (40,306)

Net property development costs 25,114 3,943 29,057



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17. PROPERTY DEVELOPMENT COSTS (CURRENT) (CONT'D)


2009

Accumulated costs:At 1.1.2009 47,381 327,748 375,129Reclassification 4,911 68 4,979Costs incurred during the financial year – 7,931 7,931

At 31.12.2009 52,292 335,747 388,039

Accumulated costs recognised in profit or loss:At 1.1.2009 (21,376) (287,366) (308,742)Costs recognised in profit or loss during the financial year (1,628) (8,995) (10,623)

At 31.12.2009 (23,004) (296,361) (319,365)

Net property development costs 29,288 39,386 68,674

Additions to development expenditure during the year include:

The Group 2010 2009 RM’000 RM’000

Interest expense capiltalised 2,410 1,185

Interest is capitalised in development costs at rates ranging from 7.55% to 8.55% (2009 – 6.80% to 8.75%) per annum.

The freehold land of the Group has been pledged to licensed banks as security for certain banking facilities granted to the Group.

18. AMOUNTS OWING BY/TO SUBSIDIARIES

The amounts owing by/to subsidiaries are non-trade in nature, unsecured, repayable on demand and are subjected to interest at 8.00% (2009 – 8.00%) per annum.

19. DEPOSITS WITH LICENSED BANKS

Included in deposits placed with licensed banks of the Group is RM34,000 (2009 – RM33,000) pledged for a bank guarantee granted to a third party.

The deposits with licensed banks at the end of the reporting period bore an average interest of 0.48% (2009 – 1.71%) per annum. The maturity period of the deposits with licensed banks is three (3) months (2009 – three (3) months).

20. CASH AND BANK BALANCES

Included in the cash and bank balances of the Group is an amount of RM835,000 (2009 – RM243,000) maintained under the Housing Development Accounts pursuant to Section 7A of the Housing Development (Control and Licensing) Act 1966 which is restricted from use in other operations.


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21. SHARE CAPITAL The Company 2010 2009 2010 2009 Number Of Shares RM’000 RM’000

Ordinary shares of of RM0.50 Each

Authorised 1,000,000 1,000,000 1,000,000 1,000,000

Issued and fully paid-upAt 1 January 262,727 262,727 131,364 262,727Par value reduction of RM0.50 – – – (131,363)

At 31 December 262,727 262,727 131,364 131,364

In the previous financial year, the Company undertook a par value reduction exercise whereby the share capital of the Group and Company was reduced from RM262,727,204 comprising 262,727,204 ordinary shares of RM1.00 each, to RM131,363,602 comprising 262,727,204 ordinary shares of RM0.50 each.

22. RESERVES The Group The Company 2010 2009 2010 2009 NOTE RM’000 RM’000 RM’000 RM’000

Accumulated losses (73,578) (48,442) (8,762) – Capital reserve (a) 68,694 68,694 68,694 68,694Foreign exchange translation reserve (b) 363 693 – –

(4,521) 20,945 59,932 68,694

(a) Capital Reserve

The capital reserve arose from the par value reduction exercise in the previous financial year.

(b) Foreign Exchange Translation Reserve

The foreign exchange translation reserve arose from the translation of the financial statements of foreign subsidiaries and is not distributable by way of dividends.

23. LONG-TERM BORROWINGS The Group 2010 2009 RM’000 RM’000

Term loans – secured (Note 24) 13,843 17,325Hire purchase payables (Note 25) 1,712 1,864

15,555 19,189

24. TERM LOANS – SECURED The Group 2010 2009 RM’000 RM’000

Current portion:– not later than one year (Note 29) 7,492 3,951

Non-current portion:– later than one year and not later than two years 3,568 7,273– later than two years and not later than five years 10,275 10,052

Total non-current portion (Note 23) 13,843 17,325

21,335 21,276

Information on financial risks of the term loans is disclosed in Note 42(a)(iii) to the financial statements.



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25. HIRE PURCHASE PAYABLES

The Group 2010 2009 RM’000 RM’000

Minimum hire purchase payments:– not later than one year 1,267 2,071– later than one year and not later than five years 1,905 2,036

3,172 4,107Less: Future finance charges (393) (397)

Present value of hire purchase payables 2,779 3,710

Current portion (Note 29):– not later than one year 1,067 1,846

Non-current portion (Note 23):– later than one year and not later than five years 1,712 905– later than five years – 959

1,712 1,864

2,779 3,710

Information on financial risks of the hire purchase payables is disclosed in Note 42(a)(iii) to the financial statements.

26. DEFERRED TAX LIABILITIES 2010 2009 RM’000 RM’000

At 1 January 822 923Recognised in profit or loss (Note 33) 20 (101)

At 31 December 842 822

The deferred tax liabilities are in respect of temporary differences arising from accelerated capital allowances on qualifying assets.

27. TRADE PAYABLES

The normal trade credit terms granted to the Group range from 14 to 60 days.

28. OTHER PAYABLES AND ACCRUALS


Non-current:Other payables, at amortised cost 935 – – –

Current:Accrued billings in respect of property development 933 – – – Other payables and accruals, at cost 7,860 5,160 193 260Advances from a trading partner, at cost 19,063 – – – Amount owing to jointly controlled

operation, at cost 163 163 – –

28,019 5,323 193 260

The advances from a trading partner are unsecured, interest-free and repayable on demand. The amount owing is to be settled in cash.


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29. SHORT-TERM BORROWINGS

2010 Secured Unsecured Total RM’000 RM’000 RM’000

Term loans (Note 24) 7,492 – 7,492Hire purchase payables (Note 25) 1,067 – 1,067Bank overdrafts 25,100 2,768 27,868Bankers’ acceptances – 704 704Revolving credits 8,889 50,150 59,039

42,548 53,622 96,170

2009 Secured Unsecured Total RM’000 RM’000 RM’000

Term loans (Note 24) 3,951 – 3,951Hire purchase payables (Note 25) 1,846 – 1,846Bank overdrafts 12,482 865 13,347Bankers’ acceptances – 1,152 1,152Revolving credits 21,748 53,400 75,148

40,027 55,417 95,444

The term loans, overdrafts and revolving credits are secured by a legal charge over certain parcels of properties of the Group.

Information on financial risks of the bank overdrafts, bankers’ acceptances and revolving credits are disclosed in Note 42(a)(iii) to the financial statements.

30. REVENUE


Property development 23,692 36,124 – – Sale of goods 18,848 27,460 – – Contract revenue 2,243 276 – – Rental income 101 118 – – Dividend income – – 1,800 –

44,884 63,978 1,800 –

31. COST OF SALES


Property development 21,478 36,717 – – Cost of goods sold 20,728 30,374 – – Contract cost 2,779 252 –

44,985 67,343 – –




32. LOSS BEFORE TAXATION


Loss before taxation is arrived at after charging/ (crediting):

Amortisation of:– intangible assets 838 838 – – – prepaid lease payments 1,860 1,860 – – Auditor remuneration:(i) Statutory audit – for the financial year 205 227 40 52 – overprovision in the previous financial year (13) – (7) – (ii) Other services 5 11 5 10Depreciation of:– property, plant and equipment 2,517 2,768 – – – investment properties 2 2 – – Impairment loss on:– intangible assets 1,279 2,164 – – – investments in subsidiaries – – – 1,000– property, plant and equipment – 512 – – – trade receivables 1,051 3,255 – 3,062Interest expense:– bankers’ acceptances 46 45 – – – bank overdrafts 583 589 – – – hire purchase 259 263 – – – revolving credits 3,713 4,564 – – – subsidiaries – – 2,065 8– term loans 236 380 – – Loss on foreign exchange– realised 2 – – – Property, plant and equipment written off – 3 – – Rental of machinery and trucks 180 9 – – Rental of properties 24 42 – – Directors’ benefit-in-kind 15 17 – – Directors’ fee 84 76 – – Directors’ non-fee emoluments 128 122 – – Directors’ remuneration 300 300 – – Employee benefits plan– salaries 4,506 5,234 – – – defined contribution plans 392 439 – – Waiver of debts to subsidiaries – – – 54,704Amortisation of long-term payables (250) – – – Dividend income – – 1,800 – Gain on disposal of property, plant and equipment (22) (24) – – Interest income:– deposits with licensed banks (24) (71) – – – receivables (486) (600) – – – amount owing by subsidiaries – – (767) (2,375)Rental of machinery and trucks (253) (118) – – Rental of properties (123) (116) – – Writeback of impairment losses on receivables (61) (668) – –

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33. INCOME TAX EXPENSE


Current tax:– for the financial year 330 261 158 555– overprovision in previous financial years (2,791) (1,358) (555) (22)

(2,461) (1,097) (397) 533

Deferred tax assets (Note 13):– relating to origination and recognition

of temporary differences 290 135 – –

Deferred tax liabilities (Note 26):– relating to originating and recognition

of temporary differences 20 (174) – – – underprovision in the previous

financial year – 73 – –

20 (101) – –

(2,151) (1,063) (397) 533

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


Loss before taxation (19,012) (28,974) (219) (57,250)

Tax at the statutory tax rate of 25% (4,753) (7,243) (55) (14,312)

Tax effects of:Non-taxable income (91) – – – Non-deductible expenses 3,399 6,093 213 14,867Deferred tax assets not recognised

during the financial year 2,052 1,376 – – Differential in tax rates 33 – – – Over/(Under)provision in the

previous financial year:– current tax (2,791) (1,358) (555) (22)– deferred tax liabilities – 73 – – Others – (4) – –

Income tax expense for the financial year (2,151) (1,063) (397) 533

34. LOSS PER SHARE

The Group 2010 2009

Loss attributable to owners of the Company (RM’000) (16,196) (27,566)

Weighted average number of ordinary shares at 31 December (’000) 262,727 262,727

Basic loss per share (sen) (6.16) (10.49)

The diluted loss per share was not applicable as there were no dilutive potential ordinary shares outstanding at the end of the reporting period.




35. PURCHASE OF PROPERTY, PLANT AND EqUIPMENT The Group

2010 2009 RM’000 RM’000

Cost of property, plant and equipment purchased 4,073 1,341Amount financed through hire purchase (1,068) (1,148)Amount set off with trade receivables (1,440) –

Cash disbursed for purchase of property, plant and equipment 1,565 193

36. CASH AND CASH EqUIVALENTS

For the purpose of the statements of cash flows, cash and cash equivalents comprise the following:


Deposits with licensed banks 643 2,382 – – Cash and bank balances 3,531 3,658 280 147Bank overdrafts (Note 29) (27,868) (13,347) – –

(23,694) (7,307) 280 147

Deposits pledged with licensed banks (34) (33) – –

(23,728) (7,340) 280 147

37. DIRECTORS’ REMUNERATION

(a) The aggregate amounts of emoluments received and receivable by directors of the Group and the Company during the financial year are as follows:


Executive directors:– non-fee emoluments 300 300 – – – short-term benefits 36 36 – –

336 336 – –

Non-executive directors:– fee 84 76 84 76– other emoluments 92 86 88 72

176 162 172 148

Benefits-in-kind 15 17 – –

(b) Details of directors’ emoluments of the Group and the Company received/receivable for the financial year in bands of RM50,000 are as follows:


Executive directors:RM250,001–RM300,000 1 1 – –

Non-executive directors:Below RM50,000 4 4 4 4RM50,001–RM100,000 1 1 1 1

6 6 5 5

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38. SIGNIFICANT RELATED PARTY DISCLOSURES

(a) Identities of related parties

The Group has related party relationships with:

(i) its subsidiaries;

(ii) companies and entities in which certain directors of the Group have direct and indirect financial interests; and

(iii) the directors who are the key management personnel.

(b) In addition to the information detailed elsewhere in the financial statements, the Group and the Company carried out the following significant transactions with the related parties during the financial year:


SubsidiariesDividend income receivable – – 1,800 – Interest income receivable – – 767 2,375Interest expense payable – – (2,065) (8)

Company related to certain directors of a subsidiary

Construction cost payable 1,236 50 – –

Firm in respect of services provided by a director

Legal fees payable 11 40 – –

Key management personnelShort-term employee benefits 351 353 – –

39. OPERATING SEGMENTS

Segment information is presented in respect of the Group’s business and geographical segments. The primary format, business segments, is prepared based on the Group’s management reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise interest-earning assets and revenue, interest-bearing loan, tax assets and liabilities, borrowings and expenses and corporate assets and expenses. Segmental capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one period.

Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill.

Inter-segment pricing is determined based on negotiated terms.

(a) Business segments

The following are the Group’s main business segments:

(i) Manufacturing

The Group focus on manufacture and sale of hotmixes, concrete piles and readymixed concrete.

(ii) Construction and property development

The Group also undertakes, earthworks, buildings and expressways contracts. Further, the Group also undertakes the development of commercial and residential properties.

(b) Geographical segments

As the operations in China are not active, geographical segment is not presented in these financial statements as the Group’s activities are predominantly in Malaysia.




39. OPERATING SEGMENTS (CONT’D)

Business segments

Property Manufacturing Construction Development Group RM’000 RM’000 RM’000 RM’000

2010

RevenueExternal revenue 18,948 2,244 23,692 44,884Inter-segment revenue 4,750 9,506 – 14,256

23,698 11,750 23,692 59,140Adjustments and eliminations (14,256)

Consolidated revenue 44,884

ResultsSegment results (11,276) (1,901) (1,508) (14,685)Interest income 510

(14,175)Finance costs (4,837)Income tax expense 2,151

(16,861)Minority interests 665

Consolidated loss after taxation (16,196)

AssetsSegment assets 98,674 3,574 158,280 260,258Unallocated assets 18,266

Consolidated total assets 278,794

LiabilitiesSegment liabilities 28,171 2,616 31,338 62,125Unallocated liabilities 89,740

Consolidated total liabilities 151,865

Other segment itemsCapital expenditure:– property, plant and equipment 2,615 1,440 18 4,073– property development costs (non-current) – – 9,109 9,109Amortisation of:– intangible assets 838 – – 838– prepaid lease payments 1,860 – – 1,860Depreciation of:– property, plant and equipment 1,950 342 225 2,517– investment properties – 2 – 2Impairment loss on:– intangible assets 568 – 711 1,279– trade receivables – – – 1,051Amortisation of long-term payables – – (250) (250)Writeback of impairment losses on receivables (61) – – (61)

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39. OPERATING SEGMENTS (CONT’D)

Business segments (cont’d)

Property Manufacturing Construction Development Group RM’000 RM’000 RM’000 RM’000

2009

RevenueExternal revenue 27,578 276 36,124 63,978Inter-segment revenue 5,880 12,368 – 18,248

33,458 12,644 36,124 82,226Adjustments and eliminations (18,248)

Consolidated revenue 63,978

ResultsSegment results (11,481) (6,809) (5,208) (23,498)Interest income 671

(22,827)Finance costs (5,841)Share of loss of associate (306)Income tax expense 1,063

(27,911)Minority interest 345

Consolidated loss after taxation (27,566)

AssetsSegment assets 87,897 12,803 175,178 275,878Unallocated assets 14,315

Consolidated total assets 290,193

LiabilitiesSegment liabilities 10,247 2,583 32,071 44,901Unallocated liabilities 92,232

Consolidated total liabilities 137,133

Other segment itemsCapital expenditure:– property, plant and equipment 1,253 – 88 1,341– property development costs (non-current) – – 1,949 1,949Amortisation of:– intangible assets 838 – – 838– prepaid lease payments 1,860 – – 1,860Depreciation of:– property, plant and equipment 2,345 199 224 2,768 – investment properties – – 2 2Impairment loss on:– property, plant and equipment 512 – – 512– intangible assets 1,829 – 335 2,164– trade receivables 3,155Written of property, plant and equipment 3 – – 3Writeback of impairment losses on receivables (668) – – (668)



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40. CAPITAL COMMITMENT

The Group 2010 2009 RM’000 RM’000

Approved and contracted for:Purchase of property, plant and equipment 2,432 –

41. CONTINGENT LIABILITY

A writ was filed by a subsidiary, Dolomite Readymixed Concrete Sdn. Bhd. (“DRC”) in 1995 whereby DRC filed a claim of RM132,000 against Cosmopolitan Enterprise Sdn. Bhd. (“Cosmo”) and three (3) other defendants for concrete supplied to Cosmo. Cosmo subsequently made a counterclaim of RM3,354,000 for alleged defective concrete products.

In the opinion of the directors, after taking appropriate legal advice, the directors established that the counterclaim has no merit. Following the trial on 28 June 2010 to 30 June 2010, the Court had on 4 August 2010 allowed DRC’s claim and dismissed Cosmo’s counterclaim. As such, no provision has been made in the financial statements.

42. FINANCIAL INSTRUMENTS

The Group’s activities are exposed to a variety of market risks (including foreign currency risk, interest rate risk and equity price risk), credit risk and liquidity risk. The Group’s overall financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

(a) Financial Risk Management Policies

The Group’s policies in respect of the major areas of treasury activity are as follows:

(i) Market Risk

(i) Foreign Currency Risk

The Group is exposed to foreign currency risk on transactions and balances that are denominated in currencies other than Ringgit Malaysia. The currency giving rise to this risk is Hong Kong Dollar. Foreign currency risk is monitored closely on an ongoing basis to ensure that the net exposure is at an acceptable level.

The Group’s exposure to foreign currency is as follows:

United Hong Chinese States Kong Ringgit Renminbi Dollar Dollar Malaysia Total The Group RM’000 RM’000 RM’000 RM’000 RM’000

2010

Financial assetsTrade receivables – – – 20,383 20,383Other receivables

and deposits – – – 2,716 2,716Deposits with

licensed banks 609 – – 34 643Cash and

bank balances 681 23 1 2,826 3,531

1,290 23 1 25,959 27,273


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42. FINANCIAL INSTRUMENTS (CONT’D)

(a) Financial Risk Management Policies (cont’d)

(i) Market Risk (cont’d)

(i) Foreign Currency Risk (cont’d)


2010

Financial liabilitiesTerm loans – – – 21,335 21,335Hire purchase payables – – – 2,779 2,779Bank overdrafts – – – 27,868 27,868Bankers’ acceptances – – – 704 704Revolving credits – – – 59,039 59,039Trade payables – – – 10,060 10,060Other payables

and accruals 294 19,063 31 8,633 28,021

294 19,063 31 130,418 149,806

Net financial assets/ (liabilities) 996 (19,040) (30) (104,459) (122,533)

Less: Net financial assets/(liabilities) denominated in the respective entities’ functional currencies (996) – 30 104,459 103,493

Currency exposure – (19,040) – – (19,040)



70






2009

Financial assetsTrade receivables – – – 47,510 47,510Other receivables

and deposits 1 – – 1,930 1,931Deposits with

licensed banks 2,108 – – 274 2,382Cash and

bank balances 605 516 4 2,533 3,658

2,714 516 4 52,247 55,481

Financial liabilities

Term loans – – – 21,276 21,276Hire purchase payables – – – 3,710 3,710Bank overdrafts – – – 13,347 13,347Bankers’ acceptances – – – 1,152 1,152Revolving credits – – – 75,148 75,148Trade payables – – – 16,237 16,237Other payables

and accruals 63 – 55 5,205 5,323

63 – 55 136,075 136,193

Net financial assets/ (liabilities) 2,651 516 (51) (83,828) (80,712)

Less: Net financial assets/(liabilities) denominated in the respective entities’ functional currencies (2,651) – 51 83,828 81,228

Currency exposure – 516 – – 516


ANNUAL REPORT 2010

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Hong Chinese Kong Ringgit Renminbi Dollar Malaysia Total The Company RM’000 RM’000 RM’000 RM’000

2010

Financial assetsTrade receivables – – 8,736 8,736Amount owing by subsidiaries 52 954 8,549 9,555Other receivables and deposits – – 6 6Cash and bank balances – – 280 280

52 954 17,571 18,577

Financial liabilitiesAmount owing to subsidiaries – – 24,095 24,095Other payables and accruals – – 193 193

– – 24,288 24,288

Net financial assets/(liabilities) 52 954 (6,717) (5,711)

Less: Net financial liabilities denominated in the entity’s functional currency – – 6,717 6,717

Currency exposure 52 954 – 1,006

2009

Financial assetsTrade receivables – – 3,063 3,063Amount owing by subsidiaries 52 809 6,971 7,832Other receivables and deposits – – 6 6Cash and bank balances – – 147 147

52 809 10,187 11,048

Financial liabilitiesAmount owing to subsidiaries – – 6,610 6,610Other payables and accruals – – 260 260

– – 6,870 6,870

Net financial assets 52 809 3,317 4,178

Less: Net financial assets denominated in the entity’s functional currency – – (3,317) (3,317)

Currency exposure 52 809 – 861



72





Foreign currency risk sensitivity analysis

The following table details the sensitivity analysis to a reasonably possible change in the foreign currencies as at the end of the reporting period, with all other variables held constant:

The The Group Company 2010 2010 Increase/ Increase/ (Decrease) (Decrease) RM’000 RM’000

Effects on loss after taxation/ equity

United States Dollar:– strengthened by 5% 952 –– weakened by 5% (952) –

Chinese Renminbi:– strengthened by 5% – 3– weakened by 5% – (3)

Hong Kong Dollar:– strengthened by 5% – 48– weakened by 5% – (48)

(ii) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to interest rate risk arises mainly from interest-bearing financial assets and liabilities. The Group’s policy is to obtain the most favourable interest rates available. Any surplus funds of the Group will be placed with licensed financial institutions to generate interest income.

Information relating to the Group’s exposure to the interest rate risk of the financial liabilities is disclosed in Note 42(a)(iii) to the financial statements.

Exposure to interest rate risk

The The Group Company 2010 2010 RM’000 RM’000

Fixed rate instrumentsAmount owing by subsidiaries – 9,555Amount owing to subsidiaries – (24,095)Hire purchase payables (2,779) –

(2,779) (14,540)

Floating rate instrumentsDeposits with licensed banks 643 – Term loans (21,335) – Bank overdrafts (27,868) – Bankers’ acceptances (704) – Revolving credits (59,039) –

(108,303) –


ANNUAL REPORT 2010

73




(ii) Interest Rate Risk (cont’d)

Interest rate risk sensitivity analysis

The interest rate risk sensitivity analysis on the fixed rate instrument is not disclosed as this financial instrument is measured at amortised cost.

The following table details the sensitivity analysis on the floating rate instruments to a reasonably possible change in the interest rate as at the end of the reporting period, with all other variables held constant:

The The Group Company 2010 2010 Increase/ Increase/ (Decrease) (Decrease) RM’000 RM’000

Effects on loss after taxation/equity

Increase of 100 basis points (1,083) – Decrease of 100 basis points 1,083 –

(iii) Equity Price Risk

The Group does not have any quoted investments and hence is not exposed to equity price risk.

(ii) Credit Risk

The Group’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade and other receivables. The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. For other financial assets (including quoted investments, cash and bank balances and derivatives), the Group minimises credit risk by dealing exclusively with high credit rating counterparties.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of the trade and other receivables as appropriate. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. Impairment is estimated by management based on prior experience and the current economic environment.

Credit risk concentration profile

The Group’s major concentration of credit risk relates to the amount owing by a major customer which constituted approximately 38% of its trade receivables as at the end of the reporting period.

Exposure to credit risk

As the Group does not hold any collateral, the maximum exposure to credit risk is represented by the carrying amount of the financial assets as at the end of the reporting period.

The Group does not have exposure to international credit risk as the entire trade receivables are concentrated in Malaysia.






(ii) Credit Risk (cont’d)

Ageing analysis

The ageing analysis of the Group’s trade receivables as at 31 December 2010 is as follows:

Gross Individual Collective Carrying Amount Impairment Impairment Value The Group RM’000 RM’000 RM’000 RM’000

2010

Not past due 1,298 – – 1,298

Past due:– less than 3 months 5,012 – – 5,012– 3 to 6 months 774 – – 774– over 6 months 31,613 (18,314) – 13,299

38,697 (18,314) – 20,383

At the end of the reporting period, trade receivables that are individually impaired were those in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancement.

The collective impairment allowance is determined based on estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience.

Trade receivables that are past due but not impaired

The Group believes that no impairment allowance is necessary in respect of these trade receivables. They are substantially companies with good collection track record and no recent history of default.

Trade receivables that are neither past due nor impaired

A significant portion of trade receivables that are neither past due nor impaired are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the trade receivables. Any receivables having significant balances past due or more than 30 days, which are deemed to have higher credit risk, are monitored individually.

The security for the amount owing by a major customer is detailed in Note 14 to the financial statements.

ANNUAL REPORT 2010

75



(iii) Liquidity Risk

Liquidity risk arises mainly from general funding and business activities. The Group practises prudent risk management by maintaining sufficient cash balances and the availability of funding through certain committed credit facilities.

The following table sets out the maturity profile of the financial liabilities as at the end of the reporting period based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period):

Average Contractual Effective Un- Interest Carrying discounted Within 1 – 5 Over Rate Amount Cash Flows 1 Year Years 5 Years The Group % RM’000 RM’000 RM’000 RM’000 RM’000

2010

Fixed rate instrument:Hire purchase payables 9.85 (2,779) (3,172) (1,267) (1,905) –

Floating rate instruments:Term loans – secured 7.94 (21,335) (24,481) (8,835) (15,645) –Bank overdrafts – secured 7.73 (25,100) (25,100) (25,100) – –Bank overdrafts – unsecured 7.92 (2,768) (2,768) (2,768) – –Bankers’ acceptances – unsecured 4.76 (704) (704) (704) – –Revolving credits – secured 4.85 (8,889) (8,889) (8,889) – –Revolving credits – unsecured 6.13 (50,150) (50,150) (50,150) – –

(108,946) (112,092) (96,446) (15,645) –

2009

Financial liabilities:Fixed rate instrument:

Hire purchase payables 8.57 (3,710) (4,107) (2,071) (2,036) –

Floating rate instruments:Term loans – secured 7.23 (21,276) (25,596) (6,385) (19,211) –Bank overdrafts – secured 7.13 (12,482) (12,482) (12,482) – –Bank overdrafts – unsecured 7.18 (865) (865) (865) – –Bankers’ acceptances – unsecured 3.85 (1,152) (1,152) (1,152) – –Revolving credits – secured 4.20 (21,748) (21,748) (21,748) – –Revolving credits – unsecured 5.46 (53,400) (53,400) (53,400) – –

(110,923) (115,243) (96,032) (19,211) –



76



(iii) Liquidity Risk (cont’d)

Average Contractual Effective Un- Interest Carrying discounted Within 1 – 5 Over Rate Amount Cash Flows 1 Year Years 5 Years The Company % RM’000 RM’000 RM’000 RM’000 RM’000

2010

Financial liability:Fixed rate instrument:

Amount owing to subsidiaries 8.00 (24,095) (24,095) (24,095) – –

2009

Financial liability:Fixed rate instrument:

Amount owing to subsidiaries 8.00 (6,610) (6,610) (6,610) – –

(b) Capital Risk Management

The Group manages its capital to ensure that entities within the Group will be able to maintain an optimal capital structure so as to support their businesses and maximise shareholders value. To achieve this objective, the Group may make adjustments to the capital structure in view of changes in economic conditions, such as adjusting the amount of dividend payment, returning of capital to shareholders or issuing new shares.

The Group manages its capital based on debt-to-equity ratio. The Group’s strategies were unchanged from the previous financial year. The debt-to-equity ratio is calculated as net debt divided by total equity. Net debt is calculated as borrowings plus trade and other payables less cash and cash equivalents.

The debt-to-equity ratio of the Company as at the end of the reporting period was as follows:

The Group 2010 2009 RM’000 RM’000

Term loans 21,335 21,276Hire purchase payables 2,779 3,710Bank overdrafts 27,868 13,347Bankers’ acceptances 704 1,152Revolving credits 59,039 75,148Trade payables 10,060 16,237Other payables and accruals 28,021 5,323

149,806 136,193Less: Deposits with licensed banks (643) (2,382)

Cash and bank balances (3,531) (3,658)

Net debt 145,632 130,153

Total equity 126,929 153,060

Debt-to-equity ratio 1.15 0.85

Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated shareholders’ equity (total equity attributable to owners of the Company) equal to or not less than the 25% of the issued and paid-up share capital (excluding treasury shares) and such shareholders’ equity is not less than RM40 million. The Company has complied with this requirement.


ANNUAL REPORT 2010

77


(c) Classification of Financial Instruments


Financial assetsLoans and receivables financial assets Trade receivables 20,383 8,736Other receivables, deposits and prepayments 2,716 6Amount owing by subsidiaries – 9,555Deposits with licensed banks 643 – Cash and bank balances 3,531 280

27,273 18,577

Financial liabilitiesOther financial liabilitiesTerm loans 21,335 –Hire purchase payables 2,779 –Bank overdrafts 27,868 –Bankers’ acceptances 704 – Revolving credits 59,039 –Trade payables 10,060 –Other payables and accruals 28,021 193Amount owing to subsidiaries – 24,095

149,806 24,288

(d) Fair Values of Financial Instruments

The carrying amounts of the financial assets and financial liabilities reported in the financial statements approximated their fair values.

The following summarises the methods used in determining the fair values of the financial instruments:

(i) The financial assets and financial liabilities maturing within the next twelve months approximated their fair values due to the relatively short-term maturity of the financial instruments.

(ii) The fair values of the hire purchase payables are determined by discounting the relevant cash flows using current interest rates for similar instruments as at the end of the reporting period.

(iii) The carrying amount of the term loan approximated its fair value as it is a floating rate instrument that is repriced to the market interest rate on or near the end of the reporting period.



78

43. COMPARATIVE FIGURES

The following figures have been reclassified to conform with the current year’s presentation:

As As Previously Restated Reported RM’000 RM’000

Consolidated Statement of Financial Position (Extract):

Trade receivables (non-current) 10,297 9,142Other receivables, deposits and prepayments (non-current) 11,200 12,355Trade receivables (current) 37,213 41,432Other receivables, deposits and prepayments (current) 6,304 2,085

44. SUPPLEMENTARY INFORMATION – DISCLOSURE OF REALISED AND UNREALISED PROFITS/LOSSES

The breakdown of the accumulated losses of the Group and of the Company as at the end of the reporting period into realised and unrealised profits/(losses) are presented in accordance with the directive issued by Bursa Malaysia Securities Berhad and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants, as follows:


Total retained profits/(accumulated losses): – realised 59,726 (8,762)– unrealised (757) –

58,969 (8,762)

Total share of accumulated losses of associate: – realised (675) –

58,294 (8,762)Less: Consolidation adjustments (131,872) –

At 31 December (73,578) (8,762)


ANNUAL REPORT 2010

79List of Propertiesas at 31 December 2010

Location/AddressDescription/ Existing Use Tenure Land Area

Approximate Age of

Building

Net Book Value

(RM’000)Date of

Valuation

PN 6338 and PN 6339, Lot 5704 and 5705, Mukim of Hulu Langat, Selangor Postal address: 11 3/4 Miles, Sungai Serai, 43100 Hulu Langat, Selangor

Quarry land together with office, workshop, crusher plant, weighbridge and magazine

Leasehold/ expiring on

8/6/2019

36,499,088 sq.ft.

27 years 23,893 31 May 2002

Lot 6022, C.T.18267, Mukim Batu, District of Kuala Lumpur, Selangor

Commercial land under development

Freehold 139,401 sq.ft.

N/A 24,707 31 May 2002

PT No. 22211, 28822–28825, 28839–28841, Mukim Batu, District of Gombak, Selangor

8 plots of industrial land


N/A 18,145 31 May 2002

Geran 53437, Lots 6442–6448 Mukim Batu, District of Gombak, Selangor

7 plots of commercial land


N/A 35,954 N/A

Geran 44117, Lot 1476, Mukim Rawang, District of Gombak, Selangor

Agricultural land Freehold 31.5403 hectares

N/A 37,400 N/A

PT No. 22473–22474, Mukim Batu, District of Gombak, Selangor Postal address: No. 3 & 5, Jalan SBC 2, Taman Sri Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan

Office building Freehold 3,000 sq.ft.

6 years 1,856 N/A

Geran 19950, Lot No. 10340 Mukim & District Klang, Selangor Postal address: No. 6, Block B, Level 6, Idaman Sentosa, Jalan Bendahara, 47A, Taman Sentosa, 41200 Klang, Selangor

Apartment Freehold 754 sq.ft.

8 years 81 N/A

Lot No. 15-50-006, South of National Road 104, Linpan Town, Linyi County, Shandong Province, The People’s Republic of China

Industrial land Leasehold/ expiring on

21/8/2057

120,149 sq.m.

N/A 4,289 N/A


80 Analysis of Shareholdingsas at 3 May 2011

Authorised Share Capital – RM1,000,000,000

Issued & Fully Paid Capital – RM131,363,602

Class of Shares – Ordinary Share of RM0.50 each

Voting Rights – One vote per share

DISTRIBUTION OF SHAREHOLDINGS

Size of No. of % of No. of % of Shareholdings Shareholders Shareholders Shares Held Shareholdings

1 – 99 16 0.47 782 0.00100 – 1,000 1,153 33.86 945,800 0.361,001 – 10,000 1,669 49.02 7,363,797 2.8010,001 – 100,000 460 13.51 14,571,608 5.55 100,001 – 13,136,359 (*) 103 3.02 121,138,100 46.1113,136,360 and above (**) 4 0.12 118,707,117 45.18

Total 3,405 100.00 262,727,204 100.00

Remark: * Less than 5% of issued shares ** 5% and above of issued shares

SUBSTANTIAL SHAREHOLDERS

Name No. of Shares Held Direct % Indirect %

1 Bong Sin Rubber Estates Company Sdn Berhad 71,451,158 27.20 – –2. Huang Jen Soong 14,978,919 5.70 71,451,158 1 27.203. Lim Beng Keat 44,011,626 16.75 – –4. Lim Beng Teck 16,618,054 6.33 – –5. Tan Sri Abu Sahid Mohamed 15,059,000 5.73 – –6. Lau Huang Nam 7,841,682 2.98 10,604,669 2 4.04 7. Yap Koon Wah – – 71,451,158 3 27.208. Bong Sin Construction Company Sdn Bhd – – 71,451,158 4 27.20

Notes:1 Deemed interest by virtue of his wife, Madam Yap Koon Wah’s substantial shareholdings in Bong Sin Rubber Estates Company Sdn Berhad

and Bong Sin Construction Company Sdn Bhd.2 Deemed interest by virtue of his brother, Lau Huan Yeong’s direct interest in Dolomite Corporation Berhad and his and Lau Huan Yeong’s

deemed interest in Chong Lee Company (Malaya) Sdn Bhd and Zhong-Hsin (Singapore) Pte Ltd.3 Deemed interest by virtue of her substantial shareholdings in Bong Sin Rubber Estates Company Sdn Berhad and Bong Sin Construction

Company Sdn Bhd.4 Deemed interest by virtue of its substantial shareholdings in Bong Sin Rubber Estates Company Sdn Berhad.

DIRECTORS’ SHAREHOLDINGS

Name No. of Ordinary Shares of RM0.50 Each Held Direct % Indirect %

1. Tan Sri Dato’ Seri Mohd Jamil Bin Johari – – – –2. Lim Beng Keat 2 44,011,626 16.75 – –3. Huang Jen Soong 2 14,978,919 5.70 71,451,158 1 27.204. Lew Choong Keong 2 510,000 0.19 – –5. Jeffrey Gerard Gomez – – – –6. Dominic Aw Kian-Wee – – – –

Notes:1 Deemed interest by virtue of his wife, Madam Yap Koon Wah’s substantial shareholdings in Bong Sin Rubber Estates Company Sdn Berhad

and Bong Sin Construction Company Sdn Bhd.2 By virtue of their shareholdings in the Company, they are deemed to have interest in the shares of the subsidiaries of the Company.

ANNUAL REPORT 2010

81

LIST OF TOP 30 SHAREHOLDERS

No. Name of Shareholders Shareholdings %

1. Bong Sin Rubber Estates Company Sdn Berhad 71,451,158 27.20

2. RHB Capital Nominees (Tempatan) Sdn Bhd 17,980,400 6.84 Pledged Securities Account for Lim Beng Keat (CEB)

3. Huang Jen Soong 14,978,919 5.70

4. Lim Beng Keat 14,296,640 5.44

5. Abu Sahid Bin Mohamed 10,860,300 4.13

6. RHB Capital Nominees (Tempatan) Sdn Bhd 9,981,000 3.80 Pledged Securities Account for Lim Beng Teck (CEB)

7. Lau Huan Yeong 8,311,669 3.16

8. RHB Nominees (Tempatan) Sdn Bhd 8,202,586 3.12 Pledged Securities Account for Lim Beng Keat (CEB)

9. OSK Nominees (Asing) Sdn Berhad 7,841,682 2.98 Kim Eng Securities Pte. Ltd. for Lau Huang Nam

10. HSBC Nominees (Tempatan) Sdn Bhd 6,600,000 2.51 Pledged Securities Account for Lim Beng Teck (202-460994-089)

11. Khiam Huat Industrial Works Sdn Berhad 6,187,301 2.36

12. UOBM Nominees (Tempatan) Sdn Bhd 5,087,000 1.94 Exempt An for Areca Capital Sdn Bhd (Client A/C 1)

13. Ng Ping Ho 5,000,000 1.90

14. M.I.T Nominees (Tempatan) Sdn Bhd 4,198,700 1.60 Pledged Securities Account for Abu Sahid Bin Mohamed (MG0172-003)

15. Citigroup Nominees (Tempatan) Sdn Bhd 3,532,000 1.35 Pledged Securities Account for Lim Beng Keat (473908)

16. Lim Chui Kui @ Lim Chooi Kui 3,388,224 1.29

17. Tasec Nominees (Tempatan) Sdn Bhd 2,289,900 0.87 Pledged Securities Account for Woi Leng Bok

18. Oriental Dragon Enterprises Inc. 2,023,200 0.77

19. Ng Sim Bee 2,000,096 0.76

20. OSK Nominees (Asing) Sdn Berhad 1,893,000 0.72 Kim Eng Securities Pte. Ltd. for Zhong Hsin (Singapore) Pte Ltd

21. Teo Boon Huang Andy 1,861,800 0.71

22. Public Invest Nominees (Tempatan) Sdn Bhd 1,658,786 0.63 Pledged Securities Account for Mohamed Nizam Bin Abdul Razak

23. Ng Swee Seong 1,628,955 0.62

24. Ng Kiam Neiw 1,500,000 0.57

25. Khoo Ee Ping 1,388,000 0.53

26. Shanmughalingam A/L Murugasu 1,366,054 0.52

27. Lee Poh Hwa 1,136,800 0.43

28. How Yam Hooi 889,358 0.34

29. How Hoe Lian @ Law Hoe Lian 780,595 0.30

30. Mohamed Nizam bin Abdul Razak 779,394 0.30

Total 219,093,517 83.39

Analysis of Shareholdingsas at 3 May 2011


82 Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Seventeenth Annual General Meeting of the Company will be held at The Raya Room, Mezzanine Floor, Hotel Equatorial, Jalan Sultan Ismail, 50250 Kuala Lumpur on Wednesday, 22 June 2011 at 2.30 p.m. to transact the following businesses:

AGENDA

As Ordinary Business

1. To receive the Audited Financial Statements for the financial year ended 31 December 2010 together with the Directors’ and Auditors’ Reports thereon.

2. To approve the Directors’ Fees for the financial year ended 31 December 2010.

3. To re-elect Mr Lim Beng Keat who is retiring pursuant to Article 69 of the Articles of Association of the Company.

4. To re-elect Mr Jeffrey Gerard Gomez a/l Cyril Gomez who is retiring pursuant to Article 69 of the Articles of Association of the Company.

5. To re-appoint Messrs Crowe Horwath as Auditors of the Company and to authorise the Directors to fix their remuneration.

As Special Business

To consider and, if thought fit, to pass the following ordinary resolution:

6. Authority under Section 132D of the Companies Act, 1965 for the Directors to allot and issue shares

“That pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby authorised to allot and issue shares in the Company at any time until the conclusion of the next Annual General Meeting 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 to be issued does not exceed ten per centum (10%) of the issued share capital of the Company for the time being, subject always to the approval of all the relevant regulatory bodies being obtained for such allotment and issue.”

BY ORDER OF THE BOARD

Tai Yit Chan (MAICSA 7009143) Chan Su San (MAICSA 6000622) Lo Sze Min (MIA 3439)Company Secretaries

Selangor Darul EhsanDate: 31 May 2011

Ordinary Resolution 1






ANNUAL REPORT 2010

83Notice of Annual General Meeting

NOTES:

1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint more than two (2) proxies to attend at the same meeting but only one (1) proxy shall be entitled to vote on a show of hands. Where a member appoints two (2) or more proxies, the member shall specify in each proxy form the proportion of the member’s shareholdings to be represented by each proxy.

2. A proxy may but need not be a member of the Company and need not be any of the persons prescribed by Section 149(1)(b) of the Companies Act, 1965.

3. The instrument appointing a proxy shall be in writing (in the common or usual form) under the hand of the appointor or of his/her attorney duly authorised in writing or, if the appointor is a corporation, either under its Common Seal or under the hand of an officer or attorney duly authorised.

4. The instrument appointing a proxy and the power of attorney or authority, if any, under which it is signed or notarially certified copy of that power or authority shall be deposited at the registered office of the Company at Lot 6.05, Level 6, KPMG Tower, 8 First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting.

Explanatory Notes on Special Business

5. The Company had obtained its shareholders’ approval for the general mandate for issuance of shares pursuant to Section 132D of the Companies Act, 1965 (“the Act”) at the Sixteenth Annual General Meeting held on 23 June 2010. The Company did not issue any shares pursuant to this mandate obtained.

The Ordinary Resolution 6 is a renewal of the general mandate for the issuance of shares by the Company pursuant to Section 132D of the Act. The mandate, if passed, will provide flexibility for the Company and empower the Directors to allot and issue shares in the Company up to an amount not exceeding in total 10% of the issued share capital of the Company for purpose of funding the working capital or future investments of the Group. This authority, unless revoked or varied by the Company at a general meeting, will expire at the next Annual General Meeting.

At this juncture, there is no decision to issue new shares. If there should be a decision to issue new shares after the general mandate is obtained, the Company will make an announcement in respect thereof.

This page is intentionally left blank

I/We, _____________________________________________________________________________________________________________________(Please use Block Letters)

NRIC No./Passport No./Company No. _______________________________________________________________________________________

of ________________________________________________________________________________________________________________________

being (a) member(s) of DOLOMITE CORPORATION BERHAD and entitled to vote hereby appoint________________________________

________________________________________________________________________NRIC No. __________________________________________

of ________________________________________________________________________________________________________________________

or failing him/her, ________________________________________________________________________________________________________

NRIC No. _________________________________________________________________________________________________________________

of ________________________________________________________________________________________________________________________

or failing him/her, the Chairman of the meeting as my/our proxy to attend and vote for me/us on my/our behalf at the Seventeenth Annual General Meeting of the Company to be held at The Raya Room, Mezzanine Floor, Hotel Equatorial, Jalan Sultan Ismail, 50250 Kuala Lumpur on Wednesday, 22 June 2011 at 2.30 p.m. and at any adjournment thereof in respect of my/our shareholding in the manner indicated below:

No. Resolutions For Against

Ordinary Resolution 1Receipt of the Audited Financial Statements for the financial year ended 31 December 2010 and Directors’ and Auditors’ Reports

Ordinary Resolution 2 Approval of Directors’ Fees for the financial year ended 31 December 2010

Ordinary Resolution 3 Re-election of Mr Lim Beng Keat as Director

Ordinary Resolution 4 Re-election of Mr Jeffrey Gerard Gomez a/l Cyril Gomez as Director

Ordinary Resolution 5 Re-appointment of Messrs Crowe Horwath as Auditors

Ordinary Resolution 6Authority under Section 132D of the Companies Act, 1965 for the Directors to allot and issue shares

Please indicate with an “X” in the spaces provided how you wish your votes to be cast. If no specific direction is given on the voting, the proxy/proxies will vote or abstain from voting on the resolutions at his/her discretion.

Dated this ___________ day of ____________________________ 2011.

________________________________________________________Signature of Shareholder or Common Seal

NOTES:1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint more than two (2) proxies to attend at the same

meeting but only one (1) proxy shall be entitled to vote on a show of hands. Where a member appoints two (2) or more proxies, the member

shall specify in each proxy form the proportion of the member’s shareholdings to be represented by each proxy.

2. A proxy may but need not be a member of the Company and need not be any of the persons prescribed by Section 149(1)(b) of the Companies

Act, 1965.

3. The instrument appointing a proxy shall be in writing (in the common or usual form) under the hand of the appointor or of his/her attorney

duly authorised in writing or, if the appointor is a corporation, either under its Common Seal or under the hand of an officer or attorney duly

authorised.

4. The instrument appointing a proxy and the power of attorney or authority, if any, under which it is signed or notarially certified copy of that

power or authority shall be deposited at the registered office of the Company at Lot 6.05, Level 6, KPMG Tower, 8 First Avenue, Bandar Utama,

47800 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting.

Number of share(s) held

Proxy Form

Then fold here

1st fold here

Fold this flap for sealing

The Company Secretaries

Dolomite Corporation Berhad (290455-W)

Lot 6.05, Level 6, KPMG Tower 8 First Avenue, Bandar Utama 47800 Petaling Jaya Selangor Darul Ehsan Malaysia

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