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MTD ACPI ENGINEERING BERHAD ( 258836-V )

1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan, Malaysia.Tel : 03-6195 1111 Fax : 03-6188 0101

B E Y O N D B O U N D A R I E S

LAPORAN TAHUNAN 2008 ANNUAL REPORT

MTD

ACPI EN

GIN

EERIN

G BER

HAD

258836-V ANN

UAL R

EPORT 2008

MTD ACPI Engineering Berhad (MTD ACPI) emerged following an internal integration within the MTD Group involving ACP Industries Berhad and MTD Construction Sdn Bhd.

The enlarged entity is an investment holding company with over 20 years of track record in the construction of mountain roads, highways, bridges, building geotechnical works, erosion control and highway maintenance. MTD ACPI also manufactures precast concrete products for infrastructure and buildings as well as involved in property development. It was listed on the Main Board of Bursa Malaysia Securities Berhad on 3 January 1995. After the completion of the consolidation in November 2006, it changed its name to MTD ACPI effective 8 May 2007.

MTD ACPI’s construction projects include the East Coast Expressway 1 and 2 (ECE 1 and ECE 2), road upgrading and improvements of Kuala Lumpur’s Jalan Cheras and Jalan Loke Yew.

Its precast concrete division was involved in the Muar By-Pass in Johor, Kuala Kurau Twin Deck Viaduct in Perak, Kuala Lumpur’s Stormwater Management and Road Tunnel (SMART), KTM Rawang-Ipoh Electrified Double Tracking, Singapore’s MRT and Deep Tunnel Sewerage systems. The main property project is Taman Sutera in Kajang, Selangor Darul Ehsan.

The Group’s construction expertise is in precast construction methods with the installation of Segmental Box Girders (SBG) as its niche. The division’s project portfolio covers a spectrum of works in the infrastructure and building arenas such as bridges, riverbank protection, drainage, residential quarters, hospitals and stadiums. Its Licenced System section markets precast systems like Acontank, Rockwood, Armorflex, Matiere and Reinforced Geowall. Besides Malaysia, the Group is also active in India, Thailand, Saudi Arabia and United Arab Emirates.

MTD ACPI is a member of the MTD Group, one of Malaysia’s key infrastructure companies involved in privatised infrastructure development, construction and engineering, property development and other construction related activities.



1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan, Malaysia.

Tel : 03-6195 1111 Fax : 03-6188 0101



MTD ACPI ENG

INEERING BERHAD 258836-V ANNUAL REPO

RT 2008Corporate Profile

contents

2 Corporate Information

3 Corporate Structure

4 Profile of the Board of Directors

12 Report of the Audit Committee

17 Statement on Corporate Governance

26 Additional Compliance Statement

30 Statement on Internal Control

33 Group 5-Year Financial Highlights

34 Chairman’s Statement / Penyata Pengerusi

42 Analysis of Shareholdings

45 Financial Statements

151 List of Properties

154 Notice of Annual General Meeting

160 Statement Accompanying Notice of Annual General Meeting

• Form of Proxy

MTD ACPI Engineering

2

corporate information

BOARD OF DIRECTORSNON-INDEPENDENT NON-EXECUTIVE CHAIRMAN

Dato’ Dr. Nik Hussain bin Abdul Rahman

GROUP MANAGING DIRECTORDato’ Azmil Khalili bin Dato’ Khalid

EXECUTIVE DIRECTORMr. Lee Leong Yow

Mr. Keith George Cowling Encik Md. Shukor bin Mohamed

SENIOR INDEPENDENT NON-EXECUTIVE DIRECTORDato’ Ir. A. Rashid bin Omar

INDEPENDENT NON-EXECUTIVE DIRECTORDato’ Haji Noordin bin Omar

Dato’ Ir. Kalid bin Alias

NON-INDEPENDENT NON-EXECUTIVE DIRECTORDato’ Rusma binti Ibrahim

AUDIT COMMITTEEDato’ Ir. A. Rashid bin Omar, Chairman

Dato’ Haji Noordin bin Omar Dato’ Ir. Kalid bin Alias

NOMINATION COMMITTEEDato’ Ir. A. Rashid bin Omar, Chairman

Dato’ Haji Noordin bin OmarDato’ Ir. Kalid bin Omar

REMUNERATION COMMITTEEDato’ Ir. A. Rashid bin Omar, Chairman

Dato’ Haji Noordin bin OmarDato’ Dr. Nik Hussain bin Abdul Rahman

MANAGEMENT COMMITTEEDato’ Nik Hussain bin Abdul Rahman, Chairman

Dato’ Azmil Khalili bin Dato’ KhalidMr. Lee Leong Yow

Mr. Keith George Cowling Encik Md. Shukor bin Mohamed

Encik Abd Halim bin SuratmanMr. Harry Low Chong Boon Encik Ahmad bin Abd Karim

Mr. Chan Chi LeeEncik Ahmad Tarmizi bin Ismail

COMPANIES SECRETARIESMs. Chan Bee KuanMs. Lee Poh Yean REGISTERED AND BUSINESS OFFICE1, Jalan Batu Caves68100 Batu CavesSelangor Darul EhsanMalaysiaTel : 03-6195 1111Fax : 03-6188 0101Website : www.mtdgrp.com

SHARE REGISTRARMega Corporate Services Sdn BhdLevel 15-2, Faber Imperial CourtJalan Sultan Ismail50250 Kuala LumpurMalaysiaTel : 03-2692 4271Fax : 03-2732 5388

AUDITORSErnst & Young, Chartered AccountantsLevel 23A, Menara MileniumJalan DamanlelaPusat Bandar Damansara50490 Kuala LumpurMalaysiaTel : 03-2087 7000Fax : 03-2095 5332

SOLICITORSLee Hishammuddin Allen & Gledhill

PRINCIPAL BANkERSCIMB Bank BerhadMalayan Banking BerhadEON Bank BerhadHong Leong Bank Berhad

STOCk EXCHANGE LISTINGMain Board of Bursa Malaysia Securities Berhad

2008 annual report

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100% ACP-DMT Sdn Bhd

51% ACP (Tracks) Sdn Bhd

100% Associated Concrete Products (Malaysia) Sdn Bhd

100% ACP Marketing Sdn Bhd

100% Precast Solutions Sdn Bhd

49% Associated Concrete Products (Sabah) Sdn Bhd

100% Associated Structural Concrete Sdn Bhd

100% ASC Tiles Sdn Bhd

100% Persys Sdn Bhd

100% Acentis Engineering Sdn Bhd

100% C&G Fabricators Sdn Bhd

100% Universal Building Products Sdn Bhd

corporate structure

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100% MTD Construction Sdn Bhd

60% MTD Construction (Philippines), Inc

40% Intraxis Engineering Sdn Bhd

100% Persys Engineering Sdn Bhd

100% ACP Technologies Sdn Bhd

100% ASC Engineering Sdn Bhd

100% ACPI Holding Limited

100% ASCE ContructionLimited

100% ASC EngineeringSdn Bhd Ltd

100% ACPI Engineering Sdn Bhd

100% Makin Permata Sdn Bhd

100% Gandaan Unik Sdn Bhd

60% Modal Ehsan Sdn Bhd

* Listed on Main Board, Bursa Malaysia Securities BerhadF Operating companies onlyF Shareholding percentage is based on ordinary share

capital only

Construction ManufacturingProperty

Development

*

as at 31 July 2008


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profile of theboard of directors

DATO’ AZMIL KHALILI BIN DATO’ KHALID Group Managing Director

DATO’ DR. NIK HUSSAIN BIN ABDUL RAHMANChairman

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profile of the board of directors(contd.)


A Malaysian, aged 72, Dato’ Dr. Nik Hussain was appointed to the Board of MTD ACPI Engineering Berhad (MTDACPI) on 31 October 2003 as Director and was redesignated as Executive Chairman in January 2004. Subsequently, he was redesignated as Chairman on 26 February 2007. He is also the Chairman of the Management Committee and a member of the Remuneration Committee.

Dato’ Dr. Nik Hussain holds a Bachelor in Dental Surgery from the University of Singapore. He served the Malaysian civil service as Deputy Minister of Works and Deputy Minister of Telecommunications and Posts from 1976 to 1984 before venturing into the corporate sector. Dato’ Dr. Nik Hussain is also the Group Executive Chairman of MTD Capital Bhd, Non-Independent Non-Executive Chairman of Metacorp Berhad and MTD InfraPerdana Bhd. He also sits on the board of several private limited companies.

DATO’ AZMIL KHALILI BIN DATO’ KHALIDGroup Managing Director

A Malaysian, aged 48, Dato’ Azmil was appointed to the Board of MTDACPI on 31 October 2003 as Director and was redesignated as Executive Vice Chairman in January 2004. On 15 August 2006 he was redesignated to Group Managing Director. He is also a member of the Management Committee.

Dato’ Azmil graduated with a Bachelor’s Degree in Civil Engineering and subsequently with a Masters in Business Administration. He began his career with a United Kingdom company, Tarmac National Construction and upon his return to Malaysia worked for Trust International Insurance and Citibank NA.

He joined the MTD Group in 1993 as its General Manager, Corporate Planning. In 1996, he was appointed Group Managing Director of MTD Capital Bhd. In his capacity as MTD Group Managing Director, he concurrently holds the position of Group Managing Director of MTD Capital Bhd, Metacorp Berhad, MTD InfraPerdana Bhd and MTDACPI and also the Chairman of the foreign subsidiaries of MTD Capital Bhd namely, MTD Walkers PLC, a company listed on the Colombo Stock Exchange, Republic of Sri Lanka and South Luzon Tollway Corporation, Philippines. Apart from MTD Group, Dato’ Azmil is the Chairman and Independent Non-Executive Director of Daya Materials Berhad. He is also a director of Touch ’n Go Sdn Bhd (formerly known as Rangkaian Segar Sdn Bhd), the Electronic Toll Collection operator, and Environment Idaman Sdn Bhd, a solid waste concession company. Dato’ Azmil is a Trustee of the Perdana Leadership Foundation. He also sits on the board of several private limited companies.


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LEE LEONG YOW Executive Director

MD. SHUKOR BIN MOHAMEDExecutive Director

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LEE LEONG YOW Executive Director

A Malaysian, aged 52, Mr. Lee was appointed the Executive Director of MTDACPI on 10 January 2005. He is also a member of the Management Committee.

Mr. Lee holds a Master in Business Administration (Finance) from University of Leicester, United Kingdom, and is a member of the Association of International Accountants, United Kingdom. He joined MTD Group as Finance Manager of MTD Prime Sdn Bhd in August 1994. Mr Lee was promoted to Group Financial Controller of MTD Capital Bhd in August 1997. In October 2001, he was appointed as General Manager, Head of Operations of MTD Group. Prior to joining the MTD Group, he was with Citibank N.A., as Financial Controller, Bank Cards business and with the Exxon Group of companies in Malaysia heading various accounting sections in Controllers Department. Mr. Lee also sits on the board of several private limited companies.

MD. SHUKOR BIN MOHAMEDExecutive Director

A Malaysian, aged 47, Encik Md. Shukor joined MTD Construction Sdn Bhd as General Manager in February 2006 and was appointed the Executive Director of MTDACPI on 15 August 2006. He is also a member of the Management Committee.

He holds a Bachelor of Science in Civil Engineering from University of Strathclyde, Scotland and a Master of Science in Transport Planning and Engineering from Leeds University, United Kingdom. He is a corporate member of the Institute of Engineers, Malaysia, a registered and professional engineer with the Board of Engineers, Malaysia and corporate member of the Institution of Highways and Transportation, United Kingdom.

Encik Md. Shukor spent 22 years with the Malaysian Highway Authority (MHA) serving in various capacities; from Engineer to Assistant Regional Director, Senior Project and Maintenance Engineer, Assistant Director of Operations, Director of Special Projects and Director of Professional Services and Technical Co-orperation, which was his last position prior to joining MTD Construction Sdn Bhd. He also sits on the board of several private limited companies.



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DATO’ HAJI NOORDIN BIN OMARIndependent Non-Executive Director

KEITH GEORGE COWLINGExecutive Director

DATO’ IR. A. RASHID BIN OMARSenior Independent Non-Executive Director


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KEITH GEORGE COWLINGExecutive Director

Mr. Cowling is a British citizen with Malaysian Permanent Resident status, aged 58, Mr. Cowling joined the MTD Group in 1984 and was appointed the Executive Director of MTDACPI on 15 August 2006. He is also a member of the Management Committee.

A Chartered Engineer, Mr. Cowling holds a Bachelor in Civil Engineering from Dundee University, Scotland and is a member of the Institution of Civil Engineers, United Kingdom, and a fellow of the Institute of Engineers, Malaysia, where he served on committees including Chairman of the Tunnelling and Underground Space Technical Division. His 36 years experience include service with the City of Dundee District Council, Dundee, Scotland (1972-1976), Mason Pittendrigh & Partners, Edinburgh, Scotland (1976-1977), Auscon Consultants, Sultanate of Oman (1979), Petroleum Development Oman, Sultanate of Omar (1980-1981) and Maunsell Consultants Asia, Hong Kong (1980-1984). Mr. Cowling also sits on the board of several private limited companies.

DATO’ IR. A. RASHID BIN OMARSenior Independent Non-Executive Director

A Malaysian, aged 59, Dato’ Rashid was appointed an Independent Non-Executive Director of MTDACPI on 15 August 2006. Subsequently, he was redesignated as Senior Independent Non-Executive Director on 3 June 2008. He is also the Chairman of the Audit Committee, the Nomination Committee and the Remuneration Committee.

Dato’ Rashid holds a Bachelor in Civil Engineering from the University of Glasgow, Scotland, and has a Diploma from University Technology Malaysia (then known as the National Institute Technology). Starting his career as a civil engineer on the East-West Highway Project in Grik, Perak, Dato’ Rashid then served with the Public Works Department (PWD) Malaysia in several positions including District Engineer Kerian, PWD Perak (1975-1977), Senior Executive Engineer, Highway Planning Unit, Ministry of Works Malaysia (1977-1978), Deputy Director of Infrastructure and Public Utilities Section, Implementation Coordination Unit, Prime Minister Department (1983-1989), Director PWD Malacca (1989-1995), Construction General Manager KLIA (1995-1999), Director PWD Johor (1999-2000) and Director Management Corporate Branch PWD Malaysia (2000-2005). Dato’ Rashid is also an Independent Non-Executive Director of Metacorp Berhad.

DATO’ HAJI NOORDIN BIN OMARIndependent Non-Executive Director

A Malaysian, aged 71, Dato’ Haji Noordin was appointed an Independent Non-Executive Director of MTDACPI on 19 April 1993. He is also a member of the Audit Committee, the Remuneration Committee and the Nomination Committee.

Dato’ Haji Noordin has a Senior Cambridge School Certificate. He served 34 years with the Royal Malaysian Police where he held the posts of Chief Police Officer for Pahang from 1990 to 1991 and for Perak, from 1991 to 1992, when he retired. He also sits on the board of several private limited companies.



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DATO’ IR. KALID BIN ALIASIndependent Non-Executive Director

DATO’ RUSMA BINTI IBRAHIMNon-Independent and Non-Executive Director


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DATO’ IR. KALID BIN ALIASIndependent Non-Executive Director

A Malaysian, aged 60, Dato’ Kalid was appointed an Independent Non-Executive Director of MTDACPI on 15 August 2006. He is also a member of the Audit Committee and Nomination Committee.

He holds a Bachelor in Civil Engineering from the University of Glasgow, Scotland, United Kingdom and a Master in Public Health Engineering from the University of Strathclyde, Glasgow, Scotland, United Kingdom. A Registered Professional Engineer with the Board of Engineers Malaysia, he is a Fellow of The Institution of Engineers, Malaysia and a Life Member of the Road Engineering Association of Malaysia.

Dato’ Kalid joined the Public Works Department (PWD) in 1975 where he served in various capacities including District Engineer, Assistant Director (Roads) PWD Selangor, Deputy Director of PWD Terengganu and Jabatan Pembangunan Persekutuan Kelantan, Director of PWD Negeri Sembilan and PWD Pahang, which was his last posting before retiring in November 2004.

DATO’ RUSMA BINTI IBRAHIMNon-Independent and Non-Executive Director

A Malaysian, aged 57, Dato’ Rusma was appointed a Non-Independent Non-Executive Director of MTDACPI on 8 August 2007.

Dato’ Rusma holds a Bachelor of Science and a Diploma in Public Administration from University of Malaya. She is currently the Technical Advisor to the Employees Provident Fund Malaysia (EPF). She provides consultancy services to the EPF in the area of benefit planning as well as those related to retirement issues.

She joined EPF in 1976 and has been actively involved in the review of the EPF scheme, which included the various benefit and withdrawal schemes for EPF members. She served 30 years with the EPF where she held the post of the Deputy Chief Executive Officer of Organisational Development Division, when she retired in August 2006. Dato’ Rusma is also an active speaker, having presented many papers on social security and topics relating to retirement at seminars and conferences both locally and internationally.

Notes:-

Family relationship with Director and/or major shareholdersDato’ Dr. Nik Hussain bin Abdul Rahman is the father-in-law of Dato’ Azmil Khalili bin Dato’ Khalid. Dato’ Dr. Nik Hussain bin Abdul Rahman and Dato’ Azmil Khalili bin Dato’ Khalid are deemed major shareholders of the Company and their interests in the securities of the Company are set out in the Analysis of Shareholdings of this Annual Report.

Saved as disclosed herein, none of the Directors have any family relationship with any Directors and/or substantial shareholders of the Company.

Conflict of interestNone of the Directors have any conflict of interest with the Company.

Convicted of offencesNone of the Directors have been convicted of any offence within the past 10 years other than traffic offences.



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report of theaudit committee

1. MEMBERSHIP AND MEETINGS

The Audit Committee comprises the following members and details of attendance of each member at meetings held during the financial year ended 31 March 2008 are as follows:

Members Number of MeetingsHeld Attendance

Dato’ Ir. A. Rashid bin OmarChairman, Senior Independent Non-Executive Director

9 8

Dato’ Haji Noordin bin OmarIndependent Non-Executive Director

9 8

Dato’ Ir. Kalid bin AliasIndependent Non-Executive Director

9 9

Mr. Lee Leong YowNon-Independent Executive Director(Resigned on 4 February 2008)

8* 7

* Reflects the number of meetings held during the time the director held office

2. COMPOSITION AND TERMS OF REFERENCE

2.1 Composition

The Audit Committee shall be appointed by the Board from among their number and shall comprise not fewer than three (3) members, all of whom shall be non-executive directors. The majority of the Audit Committee shall be independent directors.

At least one member of the Audit Committee shall be: -

a. a member of the Malaysian Institute of Accountants (“MIA”); or

b. if he is not a member of the MIA, he must have at least 3 years of working experience and:i. he must have passed the examinations specified in Part I of the First Schedule of the Accountants

Act 1967; or ii. he must be a member of one of the associations of accountants specified in Part II of the First

Schedule of the Accountants Act 1967; or

c. fulfils such other requirements* as prescribed or approved by Bursa Malaysia Securities Berhad (“Bursa Securities”).

* (a) a degree/masters/doctorate in accounting or finance and at least 3 years’ post qualification experience in accounting or finance; or

(b) at least 7 years’ experience being a chief financial officer of a corporation or having the function of being primarily responsible for the management of the financial affairs of a corporation.

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report of the audit committee(contd.)

2. COMPOSITION AND TERMS OF REFERENCE (CONTD.)

2.1 Composition (Contd.)

The members of the Audit Committee shall elect a Chairman from amongst themselves who is an Independent Director. No alternate Director of the Board shall be appointed as a member of the Audit Committee.

In the event of any vacancy in the Audit Committee resulting in the non-compliance of the Listing Requirements of Bursa Securities (“Listing Requirements”), the Board shall ensure that the vacancy is filled within three months.

The Board shall review the term of office and performance of Audit Committee and each of its members at least once in every three years.

2.2 Meetings

The Audit Committee shall meet at least four (4) times a year. In addition, the Chairman may call for additional meetings at any time at the Chairman’s discretion. The Audit Committee may also invite any officer or employee of the Group to be in attendance to assist in its deliberations. At least once a year the Audit Committee shall meet with the external auditors without any executive board member present.

2.3 Quorum

The meetings shall have a quorum of two (2) members who are independent directors.

2.4 Secretary

The Secretary of the Audit Committee shall be the Company Secretary.

The Secretary shall be responsible for drawing up the agenda with concurrence of the Chairman and circulating it, supported by explanatory documentation to members of the Audit Committee prior to each meeting.

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

2.5 Authority

The Audit Committee shall, in accordance with a procedure to be determined by the Board and at the expense of the Company,

a. be authorised to investigate any activity within its terms of reference. All employees shall be directed to co-operate with any request made by the Audit Committee;

b. have full and unrestricted access to any information pertaining to the Company or the Group;


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2.5 Authority (Contd.)

c. obtain outside legal or other independent professional advice and secure the attendance of outsiders with relevant experience and expertise if it deems necessary;

d. be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees, whenever necessary; and

e. be able to make relevant reports when necessary to the relevant authorities if a breach of the Listing Requirements occurs.

2.6 Duties and Responsibilities

The duties and responsibilities of the Audit Committee are: -

a. to review the quarterly, and annual financial statements prior to the approval by the Board, focusing particularly on:-• anychangesinorimplementationofnewaccountingpoliciesandpractices;• significantadjustmentsarisingfromtheaudits;• compliance with the applicable approved accounting standards, other statutory and legal

requirements; and• thegoingconcernassumption;

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

c. to review and monitor the effectiveness of internal control system;

d. to review the extent of compliance with established internal policies, standards, plans, procedures, laws and regulations;

e. to obtain assurance that proper plans for control have been developed prior to the commencement of major areas of change within the Group;

f. to review with the internal and external auditors the nature and scope of the audit plan and audit report;

g. to review any matters concerning the appointment and re-appointment, audit fee and any questions of resignation or dismissal of external auditors;


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2.6 Duties and Responsibilities (Contd.)

h. to review and evaluate factors related to the independence of internal and external auditors and assist them in preserving their independence;

i. to review internal and external auditors’ findings arising from audits, particularly any comments and responses in management letters as well as the assistance given by the employees of the Group in order to be satisfied that appropriate action is being taken;

j. to recommend to the Board steps to improve the system of internal control derived from the findings of the internal and external auditors and from the consultations of the Audit Committee itself;

k. to review with the external auditors the Statement on Internal Control of the Group for inclusion in the annual report;

l. to prepare the annual Audit Committee Report to the Board which includes the composition of the Audit Committee, its terms of reference, number of meetings held, a summary of its activities and the existence of an internal audit function and a summary of the activities of that function for inclusion in the annual report;

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

n. to review the performance of the internal audit function and report to the Board when necessary; and

o. to carry out any other function that may be mutually agreed upon by the Audit Committee and the Board when deemed necessary and appropriate.

3. SUMMARY OF ACTIVITIES

During the financial year under review, the Audit Committee carried out its duties as set out in the terms of reference and the activities are summarised as follows: -

• Reviewedtheexternalauditors’scopeofworkandtheirauditplanfortheyear.Priortotheaudit,representativesfrom the external auditors presented their audit strategy and plan;

• Reviewedwith theexternal auditorson the resultsof their audit, theauditedfinancial statementsand themanagement letter;



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3. SUMMARY OF ACTIVITIES (CONTD.)

• RecommendedfortheBoard’sconsiderationthere-appointmentofexternalauditorsandtheauditfees;

• Reviewed the quarterly financial statements and annual audited financial statements of the Group beforerecommending them for approval of the Board;

• Reviewedandapprovedtheinternalauditplan;

• Reviewedthe internalaudit reportspresentedby internalauditorsanddiscussedonmanagement’sactionstaken to improve the system of internal control and any outstanding matters;

• ReviewedtheauditreportonInformationSystemSecurityoftheGroupInformationTechnologyEnvironment;

• Reviewed theAuditCommitteeReportandStatementon InternalControland its recommendations to theBoard for inclusion in the Annual Report; and

• ReviewedrelatedpartytransactionsoftheCompanyandoftheGroup.

4. INTERNAL AUDIT FUNCTION

The Internal Audit Function is carried out by the Group Internal Audit Department (“Group IAD”) of MTD Capital Bhd, the holding company. Group IAD assists the Audit Committee (“AC”) in discharging its duties and responsibilities, and is independent of the activities they audit. The primary role of the department is to undertake independent, regular and systematic review of the system of internal control within the Group, so as to provide reasonable assurance that such system is sound, and that established policies and procedures are adhered to and continue to be effective and satisfactory.

In developing the Audit Plan, internal audit assignments are prioritised based on the results of the risk assessment exercise, audit cycle and discussions with Senior Management. The Annual Audit Plan is presented to the Audit Committee for approval.

The results of audit exercise are reported to the AC. The AC reviews the key concerns/issues raised by the Group IAD. The responses from the management and action plans are regularly reviewed and followed up by the Group IAD and the AC through Audit Tracking Register.


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statement oncorporate governance

The Board of Directors (“Board”) recognises that conformance to the Malaysian Code on Corporate Governance (Revised 2007) (“Code”) is crucial for a company to be successful in order to ensure the satisfaction of the investors and stakeholders and to safeguard their interests.

The Board is committed to support the Code and has embedded in the MTDACPI Group (“Group”) a framework of structures, processes and values to promote corporate credibility and to provide investors and stakeholders the assurance that the Board maintains good corporate governance and ethics to enhance the performance of the Group with the objective of increasing the value of the Group’s assets and shareholders’ investment. The framework is also intended to complement the Management in the attainment of sound business practices and strengthening its resources to manage the emerging market challenges faced by the Group.

The Board is pleased to report to the shareholders of the Company on the corporate governance practices within the Group as prescribed by the Code, for the financial year ended 31 March 2008.

A. DIRECTORS

Al. The Board

The Board, with its collective overall responsibility in providing leadership to the Group, plays a key role in the entrenchment of the culture of good corporate governance in the Group by charting the vision and mission of the Group to guide in the establishment of corporate strategies and goals aimed at directing management performance to enhance the success of the Group, including optimising long-term returns to increase shareholders values and meet the expectation of stakeholders.

The Board leads, controls and oversees the conduct of the Group’s business to ensure it is being properly managed to safeguard the Group’s assets and shareholders’ investment which inter-alia, includes:-

a) Reviewing and approving strategies, business goals and plans, policies and procedures to serve as a guide to the management to operate and manage the business of the Group;

b) Where it is appropriate, key performance indicators are being established to monitor the achievement of business goals and to ensure the implementation of business plans as well as the effectiveness of the processes are in place;

c) Continuously ensuring the effectiveness and adequacy of a sound system of internal control within the Group for management reporting and oversight, independent assurance against any material misstatement, loss or fraud, and identifying and managing the exposure to potential or principal risks that would impact on the Group;

d) Decision making on a formal schedule of matters reserved to itself which includes the overall group strategy and direction, acquisition and investment policy, approval of major capital expenditure for projects, and significant financial matters; and

e) Evaluating the viability of business propositions or corporate proposals, changes to the management and control procedures within the Group.


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A. DIRECTORS (CONTD.)

Al. The Board (Contd.)

The Board established inter alia the following committees: Audit Committee, Nomination Committee, Remuneration Committee (collectively referred to as “Board Committees”) and Management Committee and delegated certain functions to the Board Committees within clearly defined operating structure, lines of responsibilities and authority. The Board Committees in assisting the Board are either empowered to act independently or on behalf of the Board but the ultimate responsibilities for the final decision on matters of paramount importance, however, lies with the entire Board. The effectiveness and performance of each Board Committee, its structure, composition and responsibilities are evaluated annually with reference to its respective terms of reference.

The Board delegated to the Management Committee the responsibilities for all aspects of the day-to-day management of the Group. The Management Committee is supported by a management team with the requisite experience and skill and headed by the Group Managing Director. The Board receives comprehensive management reports including but not limited to operation and financial reporting based on annual budgets and quarterly financial results, to enable the Board to monitor the achievement of major operations within the Group.

Training and succession plans are on-going attuned to organisational objectives to ensure orderly management transition in the Group towards continuity in creating and developing an internal pool of talents as successors to grow with the Group and to support the Group’s operation and future developments.

A2. Board Composition and Balance

The Board has nine (9) members comprising four (4) Non-Independent Executive Directors, three (3) Independent Non-Executive Directors and two (2) Non-Independent Non-Executive Directors. The profile of each Director is set out in the Profile of the Board of Directors.

The Independent Directors which make up 33% of the Board membership is in compliance with Paragraph 15.02 of the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) [“Listing Requirements”].

The Board comprises a mix of Executive Directors and Non-Executive Directors. The Non-Executive Directors possess an appropriate range of skill and experience including industry knowledge, accounting, financial, legal, technical, management and business acumen to deal with the diverse business needs of the Group.

The Chairman, the four (4) Executive Directors including the Group Managing Director are the representatives of management on the Board. The roles of the Chairman and the Group Managing Director are distinct and separated with clear division of responsibilities to ensure a balance of power and authority. The Chairman is responsible for leading the Board to ensure its effectiveness and integrity, the entrenchment of good corporate governance practices within the Group as well as maintaining effective communication between shareholders/investors and the Board. The Group Managing Director has the overall responsibilities of managing the day-to-day operation and business of the Group including implementation of policies and procedures and decision of the Board and vice-versa reports, communicates and clarifies to the Board on matters pertaining to business results and operation of the Group.

statement on corporate governance(contd.)

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A. DIRECTORS (CONTD.) A2. Board Composition and Balance (Contd.)

The Non-Executive Directors are independent of the management and do not participate in the day-to-day dealings/business or have other relationship with the Group which could materially interfere with the exercise of their independent judgement in the Board. Their independence attribute to effective independent supervisory function involving overseeing and monitoring the effectiveness of the management and their ability to challenge the decision of management is considered a means of protecting the interests of minority shareholders and stakeholders. Dato’ Ir. A. Rashid bin Omar is the Senior Independent Non-Executive Director to whom concerns relating to the Company may be conveyed.

The Board periodically and on an annual basis, reviews the experience, mix of skill and other qualities of the Board to ensure effective discharge of its duties and responsibilities in enhancing the success of the Group. Taking into account of the current Board and the specific business of the Group, the Board believes that the current composition and size of the Board are appropriate to ensure no individual Director or group of Directors dominate the decision making of the Board and is effective representation for the minority shareholders of the Company.

A3. Board Meetings

Board Meetings for each calendar year are scheduled at the beginning of the year. The Board meets regularly to consider the business of the Group. During the financial year ended 31 March 2008, the Board met five (5) times. The record of attendance of each Director during the financial year ended 31 March 2008 is as follows:-

Name of Director Attendance

Dato’ Dr. Nik Hussain bin Abdul Rahman(Non-Independent Non-Executive Director)

4/5

Dato’ Azmil Khalili bin Dato’ Khalid(Non-Independent Executive Director)

5/5

Lee Leong Yow(Non-Independent Executive Director)

5/5

Keith George Cowling(Non-Independent Executive Director)

5/5

Md. Shukor bin Mohamed(Non-Independent Executive Director)

3/5

Dato’ Ir. A. Rashid bin Omar(Senior Independent Non-Executive Director)(Redesignated w.e.f. 3 June 2008)

4/5



20


Name of Director Attendance

Dato’ Haji Noordin bin Omar(Independent Non-Executive Director)

3/5

Dato’ Ir. Kalid bin Alias(Independent Non-Executive Director)

5/5

Dato’ Rusma binti Ibrahim(Non-Independent Non-Executive Director)

2/2

The Chairman sets the agenda for each Board meeting which is distributed together with the notice of meeting in advance to each Director. The matters for discussion and decision-making by the Board are formalised and the proceedings and resolutions passed at each Board meeting are recorded in the minutes which are confirmed by the Board in the next succeeding meeting and signed by the Chairman of the meeting as a correct record of the proceedings thereat. The Directors may request for clarification or comment on the minutes prior to confirmation of the minutes. The Chairman of the respective Board Committee would inform the Board of any salient matters and/or reports which would be appended to the minutes of the Board meeting for Directors’ notation. The Board also exercises control on matters that require Board’s approval by way of circulation of Directors’ Resolutions in writing.

Besides Board meetings, consultation and sharing of expertise and experience between Directors are freely and frequently held. In the event of any potential conflict of interest situation, the Directors concerned will declare his interest to the Board immediately and will abstain from deliberations and decision in the matters in which they are interested. The management staff or professional advisers are invited to Board meetings to brief or provide details pertaining to any matters tabled at the Board meeting or to explain or clarify on issues that may be raised by the Board.

A4. Supply of Information

Prior to Board meetings, all information relevant for the understanding of the Board on matters to be tabled for deliberation at the Board meeting are distributed by the Company Secretaries in advance for review by the Directors, and this helps facilitate the efficient use of meeting time.

In the circulation of Directors’ Resolutions in writing to the Board members, proposal papers and supporting documents are attached to provide detailed information and explanation on the purpose of the resolution to be passed. The management endeavours to provide the Board with materials that are as concise as possible, yet give Directors sufficient information to make informed decisions. On an on-going basis, the Board is provided with information pertaining to the progress of business operations or significant projects, details on business propositions and corporate proposals undertaken or to be undertaken by the Group, to enable the Directors to understand the business operations, proposals and/or challenges faced by the Group.


A3. Board Meetings (Contd.)

2008 annual report

21



A4. Supply of Information (Contd.)

The Board collectively or individually is authorised to take such independent professional advice as it considers necessary in furtherance of their duties at the expense of the Company. All Directors have unrestricted access to the management staff to seek further information, up-dates or explanation on any aspect of the Group’s operation or business to fulfil their duties.

The Directors also have access to the advice and services of qualified Company Secretaries in the course of discharging their duties and fulfilling their obligations to statutory requirements, the Listing Requirements or other regulations, whether as a full board or in their individual capacity. Any appointment of Company Secretaries or removal is a matter for the Board as a whole.

The Directors are regularly updated on new statutory and regulatory requirements relating to their fiduciary duties and responsibilities, to enable them to keep abreast of new developments.

A5. Appointment of Directors

The Nomination Committee was established on 27 September 2001. Its members comprise exclusively of Non-Executive Directors with the majority being Independent Directors and are as follows:-

Member Designation

Dato’ Ir. A. Rashid bin Omar ChairmanSenior Independent Non-Executive Director

Dato’ Haji Noordin bin Omar Independent Non-Executive Director

Dato’ Ir. Kalid bin Alias Independent Non-Executive Director

The term of office of the Nomination Committee shall be for a period of two (2) years and may be re-nominated

and appointed by the Board from time-to-time.

The duties and responsibilities of the Nomination Committee are defined in its terms of reference approved by the Board which inter-alia includes review and assessment of the effectiveness, size and composition of the Board, and Board Committees; skill, and experience of its individual members. The Nomination Committee annually reviews and assesses the effectiveness of the Board and Board Committees as a whole, and the contribution of each individual Director.

The Nomination Committee is responsible for making recommendation for any appointment to the Board. In evaluating the suitability of new nominees, the Nomination Committee takes into account the requisite qualification and experience of the potential candidate to meet the relevant requirements of the Listing Requirements, including general understanding of business and other disciplines relevant to the success of a public listed company in today’s business environment.


22


A6. Re-Election or Re-Appointment of Directors

The Board recommends directors for re-election and/or re-appointment by shareholders at every annual general meeting (“AGM”) pursuant to the Company’s Articles of Association and the Companies Act, 1965.

i) All Directors are subject to retirement by rotation and in ascertaining the number of directors to retire, the Company shall ensure all directors shall retire from office at least once in every three (3) years but shall be eligible for re-election.

ii) One-third (1/3) of the Directors or the number nearest to one-third (1/3) shall retire from office at every AGM and if eligible, may offer themselves for re-election.

iii) Directors who are appointed by the Board to fill a casual vacancy shall hold office only until the next following AGM and shall then be eligible for re-election but shall not be taken into account in determining the Directors who are to retire by rotation at the meeting.

iv) The Group Managing Director shall retire from office at least once in every three (3) years, but such re-election shall be subject always to the provision stated in item (ii) above.

v) Directors over seventy (70) years of age are required to submit themselves for re-appointment as Directors annually by way of a resolution in accordance with Section 129(6) of the Companies Act, 1965.

The details of Directors standing for re-election and/or re-appointment at the forthcoming AGM are set out in the Notice of AGM.

A7. Directors’ Training

All the Directors have completed the Mandatory Accreditation Program. In the spirit of continuous education for Directors, the Company had organised a half day in-house training on “Directors’ Challenges in Corporate Governance and Risk Management” conducted by Columbus Circle Governance Sdn Bhd in the financial year ended 31 March 2008. All Directors attended the aforementioned training.

B. DIRECTORS’ REMUNERATION

The Remuneration Committee was established on 27 September 2001. Its members comprise mainly Independent Non-Executive Directors and are as follows:-

Member Designation

Dato’ Ir. A. Rashid bin Omar ChairmanSenior Independent Non-Executive Director

Dato’ Haji Noordin bin Omar Independent Non-Executive Director Dato’ Dr. Nik Hussain bin Abdul Rahman Non-Independent Non-Executive Director


2008 annual report

23

B. DIRECTORS’ REMUNERATION (CONTD.)

The term of office of the Remuneration Committee shall be for a period of two (2) years and may be re-nominated and appointed by the Board from time-to-time.

The duties and responsibilities of the Remuneration Committee are defined in its terms of reference approved by the Board, which inter-alia includes annual review of the remuneration packages of the Directors. The Remuneration Committee are mindful that the remuneration packages for the Executive Directors should be attractive to retain the Directors in the Board to run and lead the Group successfully. The level of remuneration rewarded to the Directors is reflective of the corporate performance of the Group and individual’s performance and achievements during the financial year under review. The remuneration packages are also linked to the Group’s policies and benchmarked against practices of comparable public listed corporations to be competitive. The Board makes changes to directors’ remuneration packages upon the recommendation of the Remuneration Committee and following discussion and approval by a majority of the Board.

The determination of the remuneration packages for Non-Executive Directors is a matter to be decided by the Board as a whole. None of the Directors participate in any way in determining their individual remuneration package. The Company reimburses expenses incurred by Directors in the course of their duties as Directors.

The fees payable to the Directors are determined by the Board and are subject to the approval of the shareholders of the Company at the AGM.

1. The aggregate remuneration of the Directors categorised into appropriate components during the financial year ended 31 March 2008 is as follows:-

Description Executive DirectorsRM (‘000)

Non-Executive Directors

RM (‘000)

TotalRM (‘000)

Percentage(%)

Salaries 475 297 772 49

Fees 132 162 294 19

Bonuses 107 66 173 11

Allowances 149 56 205 13

Benefits-in-kind 26 15 41 3

Others 79 - 79 5

Total 968 596 1,564 100



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B. DIRECTORS’ REMUNERATION (CONTD.)

2. The number of Directors whose total remuneration from the Group falls within the following bands are as follows:-

Remuneration Band Number of DirectorsTotal

Executive Non-Executive

Below RM50,000 1 4 5

RM150,001 to RM200,000 1 - 1

RM250,001 to RM300,000 1 - 1

RM450,001 to RM500,000 1 1 2

C. RELATIONSHIP WITH SHAREHOLDERS/INVESTORS

The AGM and extraordinary general meetings remain the principal forum for dialogue with shareholders. At each AGM, the Board presents the progress and performance of the Group and shareholders are encouraged to raise questions on the proposed resolutions and the business and operation of the Group. The Board will address all questions and clarifications required by the shareholders.

The Company encourages dialogues with institutional investors, fund managers and analyst to foster understanding of the Company’s activities and from time to time do participate in meetings or conferences to ensure that an up-dated progress and development of the business of the Group is well communicated and the corporate objectives are understood clearly by existing and prospective investors.

The Company maintains a dedicated website at www.mtdgrp.com that provides easy access to information on the Company’s latest events, news, announcements to Bursa Securities, financial results and other corporate information.

Shareholders may raise any queries or contact the Company or the Company’s Registrar during office hours and the officer in-charge will attend accordingly to the queries.

D. ACCOUNTABILITY AND AUDIT

(i) Financial Reporting

In presenting the annual financial statements and quarterly financial results, the Board had ensured that the Group adopts appropriate accounting policies and standards and consistently applied prudent judgements supported by reasonable estimates so that the financial statements represent a true and fair assessment of the Company and Group’s financial position.The Board vested responsibilities on the Audit Committee to ensure


2008 annual report

25


that the Company maintains proper accounting records, review and assess the accuracy and adequacy of all the information to be disclosed and ensure that the financial statements are in compliance with the Companies Act, 1965, the Listing Requirements and the applicable approved accounting standards in Malaysia.

A statement by the Directors of their responsibilities for the financial statements is incorporated within the Directors’ Report and Statement by Directors.

(ii) Internal Control

The Board had conducted a review of the effectiveness and adequacy of the Group’s System of Internal Control. The state of internal control within the Group and reports of the results are set out in the Statement on Internal Control.

(iii) Relationship with Auditors

The Board, through the Audit Committee, maintains a formal and transparent relationship with its external auditors, Messrs Ernst & Young, in seeking professional advice and ensuring compliance with the accounting standards of Malaysia. Matters that require the Board’s attention are highlighted by the external auditors to the Audit Committee and the Board through the issuance of management papers and reports.

(iv) Audit Committee

The Audit Committee consists of three (3) members in compliance with Paragraph 15.10(1) and 15.10(1)(b) of the Listing Requirements. Bursa Securities had granted the Company an extension of time until 3 November 2008 to comply with the composition of the Audit Committee pursuant to Paragraph 15.10(1)(c) of the Listing Requirements.

The Audit Committee meets with the external auditors, without the presence of the Executive Directors at least once a year, to encourage the external auditors to raise discussion on potentially adverse audit issues at a relatively early stage and to allow the external auditors to broach sensitive problems in an uninhibited manner pertaining to audit plan or audit findings and other relevant audit or accounting issues. The Audit Committee also meets with the external auditors, whenever it deems necessary.

The role of the Audit Committee in relation to the external auditors, the composition, terms of reference and a summary of activities of the Audit Committee are set out in the Report of the Audit Committee.

D. ACCOUNTABILITY AND AUDIT (CONTD.)

(i) Financial Reporting (Contd.)


26

additional compliancestatement

Utilisation of Proceeds

During the financial year, the Company had increased its issued and paid-up ordinary share capital from RM221,484,398 to RM231,632,798 by way of issuance of 10,148,400 ordinary shares of RM1.00 each for cash pursuant to the Company’s Private Placement at an average placement price of RM2.05. The share premium of RM10,655,820 arising from the issuance of ordinary shares has been included in the share premium account and the proceeds from the Private Placement has been utilized as working capital.

Share Buy-Back

During the financial year, the Company did not enter into any share buy-back transactions.

Options, Warrants or Convertible Securities

During the financial year, there were no options exercised pursuant to the Employee Share Option Scheme. The Company has not issued any warrants or convertible securities during the financial year.

American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) Programme

During the financial year, the Company did not sponsor and/or participate in any ADR or GDR programme.

Imposition of Sanctions and/or Penalties

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

Non-Audit Fees

The amount of non-audit fees paid and payable to the external auditors by the Group for the financial year is RM5,000.

2008 annual report

27

additional compliance statement(contd.)

Variation in Results

On 30 July 2008, the Company had announced the following deviations in the audited results released on 30 July 2008 as compared to the unaudited results released on 29 May 2008:-

UnauditedRM’000

AuditedRM’000

VarianceRM’000

Profit before taxation 14,706 12,736 (1,970)

Taxation (10,939) (9,784) 1,155

Profit after taxation 3,767 2,952 (815)

Minority interest (213) 2,076 2,289

Profit after taxation and minority interest 3,554 5,028 1,474

The deviations are mainly attributable to:

(i) Booking of unrealized foreign exchange loss amounting to RM1.4 million in compliance with FRS 121;(ii) Accruals of additional project expenses of RM0.6 million(iii) Adjustment of taxation in compliance with FRS 112; and(iv) Adjustment on minority interests amounting to RM2.0 million.

Profit Guarantee

Save as disclosed below, the Company had not provided any profit guarantee nor is there any profit guarantee given to the Company during the financial year.

(i) Pursuant to the Shares Sale Agreement dated 16 February 2006 between its wholly-owned subsidiary, ACP Industries Berhad (now known as MTD ACPI Engineering Berhad) (“ACPI”) and MTD Equity Sdn Bhd (“MTDE”), the wholly-owned subsidiary of MTD Capital Bhd (collectively the “Parties”), in relation to the proposed acquisition of the entire issued and paid-up share capital of MTD Construction Sdn Bhd (“MTD Construction”), comprising of 11,000,000 ordinary shares of RM1.00 each in MTD Construction by ACPI from MTDE for a total consideration of RM88.0 million to be satisfied by the issuance of 88,000,000 new share of RM1.00 each in ACPI (“Conditional SSA” or “Proposed Acquisition”), MTDE had guaranteed on the Audited Profit After Tax of MTD Construction of an aggregate of RM33.0 million for three (3) financial years, upon completion of the Conditional SSA (“Guaranteed Financial Years”).


28

MTDE, had vide a letter dated 29 April 2006 agreed with ACPI, to include/vary and add the following clauses to the Conditional SSA:-

(a) All loans, facilities, credits, advances and any other money owing:

(aa) by MTD Construction to; or

(ab) to MTD Construction by MTD Capital Bhd or its subsidiaries will be fully paid on or prior to completion of the Proposed Acquisition.

(b) In addition:-

(ba) “Guaranteed Financial Years” in the Conditional SSA shall mean the three (3) financial years ending 31 March 2007, 31 March 2008 and 31 March 2009;

(bb) the definition of “Audited Profit After Tax” in the Conditional SSA shall be amended to read as follows :-

“Audited Profit After Tax means the audited profit after tax for MTD Construction in respect of any of the Guaranteed Financial Years, taken from the audited accounts of MTD Construction for that year which figure shall be final and binding on the parties for the purposes of the Conditional SSA”; and

(bc) in consequence to the amendment stated in paragraph (b)(bb) above, clauses 5.2(a) and clause 5.2(b) of the Conditional SSA are accordingly revoked.

In the event the amount by which the Audited Profit After Tax is less than the guaranteed amount (“Shortfall”), is certified and verified by MTD Construction’s auditors to MTDE within ten (10) days (other than Saturday, Sunday or public holiday), MTDE must pay the shortfall to ACPI within five (5) business days from the date of the issue of the notice on the Shortfall.

Material Contracts

There were no other material contracts (not being contracts entered into in the ordinary course of business), which have been entered into by the Company and/or its subsidiaries involving Directors’ and major shareholders’ interests during the financial year ended 31 March 2008.


2008 annual report

29

Revaluation Policy

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

Recurrent Related Party Transactions (“RRPT”)

The information on RRPT for the financial year is set out in the financial statements.

DIRECTORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS

The Board is responsible for ensuring that the annual audited financial statements of the Company and the Group have been properly drawn up in accordance with the provisions of the Companies Act, 1965, applicable approved accounting standards in Malaysia and the Listing Requirements of Bursa Securities so as to give a true and fair view of the state of affairs and of results and cash flows of the Company and the Group, for the financial year ended 31 March 2008.

In preparing the financial statements, the Directors have:• adoptedappropriateaccountingpolicies,consistentlyappliedandsupportedbyreasonableprudentjudgementsand

estimates and prepared on going concern basis; and• ensuredthattheCompanyandtheGrouphavecompliedwithapplicableFinancialReportingStandards(“FRSs”).

The Board has overall 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.



30

INTRODUCTION

The Malaysian Code on Corporate Governance requires the board of listed companies to maintain a sound system of internal control to safeguard shareholders’ investments and the Company’s assets. Paragraph 15.27(b) of the Listing Requirements of Bursa Malaysia Securities Berhad requires the Board of Directors (“Board”) of listed companies to include a statement in their annual report about the state of their internal control. Paragraph 15.24 of the Listing Requirements states that the external auditors must review the statement made by the Board with regard to the state of internal control and reports the results thereof to the Board.

BOARD RESPONSIBILITY

The Board acknowledges that it is responsible for the Company and its subsidiaries’ (“Group”) system of internal control (“Group Internal Control System”) and the review of its adequacy and integrity.

The Group Internal Control System manages but does not eliminate the risk of failure to achieve business objectives. The Group Internal Control System provides only reasonable but not absolute assurance against material misstatement, loss or fraud.

The Board has in place an ongoing process, for identifying, evaluating, monitoring and managing the significant risks affecting the achievement of its business objectives throughout the period. The process is regularly reviewed by the Board and accords with the Statement on Internal Control: Guidance for Directors of Public Listed Companies.

kEY INTERNAL CONTROL PROCESSES

Enterprise Risk Management

A Group-wide risk management framework was established applicable to all functions in the Group, in operational, financial and support areas. In this structured risk management framework, the principal risks facing an operating unit of the Group are regularly reviewed and assessed, together with steps to manage those risks. The results of these reviews are placed on risk registers and, where necessary, specific action plans are developed to treat those risks with appropriate key performance indicators so as to monitor the implementation of these plans as well as the effectiveness of the processes. In addition, periodic exercises are to be carried out at Group level, on a bi-annual basis, to identify key issues affecting the Group as a whole, the changing risk profile and the emerging issues that may have an impact on the Group’s business objectives. The output of these assessment and reviews will be reported to the senior management, the Audit Committee and the Board which will have the ultimate responsibility to continuously assess the effectiveness of the risk management processes so that the Group’s systems and internal controls are such designed to ensure that the Group’s exposure to principal risks is properly managed. In this way, the systematic approach in the Group-wide risk management will help to optimise the effects of uncertainties or risks on the Group’s business objectives.

statement oninternal control

2008 annual report

31

kEY INTERNAL CONTROL PROCESSES (CONTD.)

Audit Committee

The Audit Committee (“AC”), which is chaired by an independent non-executive director deliberates on findings and recommendations for improvement proposed by the internal and external auditors. The AC also evaluates the adequacy and effectiveness of the Group’s risk management and system of internal control. Apart from reviewing the annual audit plan, the AC assesses the scope and quality of audit performed.

Further details on the AC are set out in the Audit Committee Report.

Internal Audit Function

The Internal Audit Function is carried out by the Group Internal Audit Department (“Group IAD”) of MTD Capital Bhd, the holding company. The Group IAD independently carries out its function and provides the AC and the Board with the assurance on the adequacy and integrity of the system of internal control.

The Group IAD reviews the internal control in the activities of the Group’s businesses based on the annual audit plan. The annual audit plan is reviewed and approved by the AC and the findings of the audits are submitted to the AC for review at their periodic meetings. The Group IAD adopts a risk-based approach when establishing its audit plan and strategy. The responses from Management and action plans are regularly reviewed and followed up by the Group IAD and the AC.

Other Key Elements of Internal Control

Apart from the above, the other key elements of the Group Internal Control System include: -

• Limitsofauthorityareestablishedtogovernthemanagementoffinancialandnonfinancialapprovallimits.

• Formaloperatingstructureinplacewithclearlydefinedlinesofresponsibilityandaccountability.

• VariousCommitteeshavebeenestablishedtoassisttheBoardindischargingitsduties.Amongthecommitteeare:-- Audit Committee- Nomination Committee- Remuneration Committee- Management Committee

• ManagementCommitteeMeetingsareheldonaregularbasistoidentify,discussandresolvestrategic,operational,

financial and key management issues.

• PoliciesandProceduresforkeyprocessesaredocumentedtoprovideguidancetoalllevelsofstaff.Thesepoliciesand procedures are reviewed and regularly updated when necessary.

• Whereappropriate,certaincompanieshavetheISOaccreditationfortheiroperationalprocesses.

statement on internal control(contd.)


32

kEY INTERNAL CONTROL PROCESSES (CONTD.)

• Comprehensivesystemsofoperationsandfinancial reporting to theBoardbasedonquarterly resultsandannualbudgets. In the event of variances, measures are followed up and subsequent actions proposed are taken.

• Provisionsofregularandcomprehensiveinformationtomanagementandemployees.

• Properguidelinesforhiringandterminationofstaff,andannualperformanceappraisalsystemareinplace.

• Traininganddevelopmentprogrammesareidentifiedandscheduledforemployeestoacquirethenecessaryknowledgeand competency to meet their performance and job expectations.

• AdequateinsurancesofthemajorassetsandresourcesoftheGroupareinplacetoensurethatthesearesufficientlycovered against any mishap that may result in material losses to the Group.

• Regularvisitstooperatingunitsbyseniormanagementandinternalauditors.

The Board is of the view that the system of internal control instituted throughout the Group is sound and effective. Notwithstanding this, reviews of all control procedures will be continuously carried out to ensure the ongoing effectiveness and adequacy of the system of internal control, so as to safeguard shareholders’ investment and the Group’s assets.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

The external auditors have reviewed this Statement on Internal Control for inclusion in the annual report for financial year ended 31 March 2008 and reported to the Board that no material issue has come to their attention that causes them to believe that the statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of internal control.

statement on internal control(contd.)

2008 annual report

33

33

2008 annual report

group 5-yearfinancial highlights


34penyata pengerusi

Dear valued shareholders,

On behalf of the Board of Directors, it is my pleasure to present to you the Annual Report of

the Group for the financial year ended 31 March 2008.

Para pemegang saham yang dihargai sekalian,

Bagi pihak Lembaga Pengarah, saya dengan sukacita membentangkan kepada anda Laporan

Tahunan Kumpulan bagi tahun kewangan berakhir 31 Mac 2008.

chairman’s statement

FINANCIAL HIGHLIGHTS For the period under review, the Company has turned around profitably by reporting a pre-tax profit of RM12.7 million compared to a pre-tax loss of RM78.6 million in the previous year. Turnover improved to RM877.5 million from RM446.5 million a year ago. The higher revenue was attributable to full year consolidation of earnings from MTD Construction Sdn Bhd, which was acquired in October 2006, as well as improved utilisation from the manufacturing division. The Group also recorded a higher tax charge in the year under review.

The Board of Directors (Board) has proposed a first and final dividend of 1 sen per share less 25% income tax for the year under review.

CONSTRUCTION AND ENGINEERING The construction and engineering division remains the biggest contributor to the Company’s revenue with RM658.7 million, followed by manufacturing and property segments. The manufacturing business also increased its turnover during the period under review, generating sales of RM314.4 million as compared to RM241.3 million in the previous year. This was due to the commencement in recognition of revenue from the Dubai Project in the current financial year.

The construction of the East Coast Expressway 2 Package 10, which is from Bukit Besi to Bukit Payung and Bukit Payung Spur Road, valued at RM1.2 billion, is progressing well with completion rate of 38% as at June 2008 and expected to finish by financial year 2011.

Meanwhile, the upgrading work at Jalan Cheras interchange/Taman Len Seng, which is valued at RM77.0 million, is still ongoing. The project is 88% completed and would be ready by the current financial year.

East Coast Expressway 2

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DATO’ DR NIK HUSSAIN BIN ABDUL RAHMANChairman / Pengerusi

chairman’s statement (contd.)penyata pengerusi (samb.)

MAKLUMAT PENTING KEWANGANBagi tahun yang ditinjau, Syarikat telah memulihkan keuntungan dengan mencatat keuntungan sebelum cukai sebanyak RM12.7 juta berbanding kerugian sebelum cukai sebanyak RM78.6 juta pada tahun sebelumnya. Perolehan meningkat kepada RM877.5 juta daripada RM446.5 juta setahun lalu. Hasil yang lebih tinggi tersebut disebabkan oleh penyatuan pendapatan setahun penuh daripada MTD Construction Sdn Bhd yang diambilalih pada bulan Oktober 2006 serta peningkatan dalam penggunaan daripada bahagian perkilangan. Kumpulan turut mencatat caj cukai yang lebih tinggi pada tahun yang ditinjau.

Lembaga Pengarah (Lembaga) mencadangkan dividen pertama dan akhir sebanyak 1 sen sesaham tolak cukai pendapatan sebanyak 25% bagi tahun yang ditinjau.

PEMBINAAN DAN KEJURUTERAANBahagian pembinaan dan kejuruteraan kekal sebagai penyumbang terbesar kepada hasil Syarikat dengan RM658.7 juta, diikuti oleh segmen perkilangan dan hartanah. Perniagaan perkilangan turut mencatat perolehan yang lebih tinggi pada tempoh yang ditinjau dengan menjana jualan RM314.4 juta berbanding RM241.3 juta pada tahun sebelumnya. Ini adalah disebabkan oleh hasil yang mula diiktiraf daripada Projek Dubai pada tahun kewangan semasa.

Pembinaan Lebuhraya Pantai Timur 2 Pakej 10 yang mengunjur dari Bukit Besi hingga Bukit Payung dan Jalan Cabang Bukit Payung yang dinilai sebanyak RM1.2 bilion, sedang dijalankan dengan kadar penyiapan sebanyak 38% pada bulan Jun 2008 dan dijangka akan disiapkan pada tahun kewangan 2011.

Pada masa yang sama, kerja menaik taraf persimpangan Jalan Cheras/Taman Len Seng yang dinilai sebanyak RM77.0 juta juga sedang berjalan lancar. Projek tersebut sudah 88% selesai dan akan siap sepenuhnya pada tahun kewangan semasa.


36


OVERSEAS The Group’s overseas projects are progressing as scheduled. MTD Construction’s maiden project in the Philippines, the South Luzon Expressway (SLEX) has reached 55% completion as at June 2008. We intend to hand over the first two sections, TR1 & TR2 to the client South Luzon Tollway Corporation (SLTC) in financial year 2010. The last section TR3 is expected to complete by financial year 2011.

Our subsidiary, Associated Concrete Products (Malaysia) Sdn Bhd is active in the Middle East, supplying precast concrete tunnel lining to Obayashi Corporation of Japan for the construction of the Dubai Metro Project. The contract is worth RM118.0 million. As at June 2008, we have completed 76% of the casting works and are expected to complete the project in the current financial year.

Another business unit, Persys Sdn Bhd holds a RM120.7 million contract from Delhi Metro Rail Corporation Ltd for the design and construction of an elevated viaduct with a length of 4.8 kilometres including structural works of four elevated stations on the Inderlok-Mundka Corridor of Phase II of Delhi MRTs. The project is already 78% completed with completion in the current financial year.

Our work with contract value of RM214.0 million for the Saudi Binladin Group is also progressing smoothly. The casting and erection of precast segments in bridge and post-tensioning works for the improvement of the Jamarat Bridge and surrounding areas in Mina, Saudi Arabia achieved 92% completion as at June 2008 and are expected to be completed in the current financial year.

In Thailand, we had completed the first project of 1,360 units low-cost apartments in Nonthaburi in December 2006. Subsequently, the certificate of practical completion was issued in February 2007. On the on-going projects, we have completed about 88% of 2,220 units of low-cost apartments at Bangchalung, 90% of Mobang (1,488 units) and 60% of Pracha Utid (563 units). We expect to complete these projects to be completed in the current financial year.

SLEX rehabilitation & upgrading Project, Philippines

2008 annual report

37


LUAR NEGARAProjek-projek luar negara Kumpulan sedang berjalan seperti dijadualkan. Pada bulan Jun 2008, projek sulung MTD Construction di Filipina iaitu South Luzon Expressway (SLEX) telah 55% siap. Kita bercadang untuk menyerahkan dua seksyen pertama iaitu TR1 & TR2 kepada pelanggan, SLTC pada tahun kewangan 2010. Seksyen terakhir TR3 dijangka akan siap pada tahun kewangan 2011.

Syarikat subsidiari kita, Associated Concrete Products (M) Sdn Bhd, sedang beroperasi dengan aktif di Timur Tengah dengan membekalkan lapik terowong konkrit pasang siap kepada Obayashi Corporation, Jepun bagi pembinaan Projek Metro Dubai dengan kontrak bernilai RM118.0 juta. Pada bulan Jun 2008, kita telah menyelesaikan 76% kerja tuangan dan projek tersebut dijangka akan siap pada tahun kewangan semasa.

Satu lagi unit perniagaan, Persys Sdn Bhd, memegang kontrak bernilai RM120.7 juta daripada Delhi Metro Rail Corporation Ltd untuk merekabentuk dan membina sebuah jejambat sepanjang 4.8 kilometer termasuk kerja-kerja struktur bagi empat stesen ternaik di Fasa II Inderlok-Mundka Corridor bagi Delhi MRT. Projek tersebut kini 78% siap dan akan disiapkan pada tahun kewangan semasa.

Kerja dengan kontrak bernilai RM214.0 juta bagi Saudi Binladin Group juga sedang berjalan lancar. Kerja-kerja tuangan dan mendirikan segmen pasang siap di jambatan dan kerja pasca regangan untuk menaik taraf Jambatan Jamarat dan kawasan sekeliling di Mina, Arab Saudi telah 92% disiapkan pada Jun 2008 dan dijangka akan siap sepenuhnya pada tahun kewangan semasa.

Di Thailand, kita telah menyiapkan projek pertama berupa pembinaan 1,360 unit pangsapuri kos rendah di Nonthaburi pada bulan Disember 2006. Sijil penyiapan praktikal juga telah dikeluarkan pada bulan Februari 2007. Berhubung projek yang sedang berlangsung ini, kita telah menyiapkan 88% daripada 2,220 unit pangsapuri kos rendah di Bangchalung, 90% di Mobang (1,488 unit) dan 60% di Pracha Utid (563 unit). Kita menjangka akan dapat menyiapkan sepenuhnya projek-projek tersebut pada tahun kewangan semasa.

Improvement of the Jamarat Bridge, Mina, Saudi Arabia


38

38

MTD Capital Bhd


PROPERTYModal Ehsan Sdn Bhd has progressively launched more phases in its mixed development project, Taman Sutera in Kajang, which has generated much interest from buyers due to their affordable values. During the period under review, Modal Ehsan has launched 300 units of low medium/medium cost apartment with a GDV of RM24.3 million and 207 units of double storey terrace with a GDV of RM59.5 million, which yielded a take-up rate of 67% and 84% respectively with sales secured of RM67 million as at June 2008.

PROSPECTSThe successful consolidation of MTD Construction has put the Group on a firmer footing with a healthy order book of over RM2.5 billion. The unbilled portion would sustain earnings going forward. Furthermore, the manufacturing division has achieved higher efficiency and cost control. The projects under the Ninth Malaysia Plan are expected to support the construction and infrastructure sectors, which would bode well for MTD ACPI. However, the substantial increase in prices of raw materials such as concrete, steel and cement in this year had posed a challenge to us. The Company would nevertheless keep its vigorous efforts to ensure operating efficiencies are achieved to ensure that it was well positioned to participate in projects, which it could leverage on its construction and manufacturing capabilities. The Company is cautiously optimistic that performance will continue to improve in the financial year 2009.

CORPORATE SOCIAL RESPONSIBILITYThe company is mindful of our corporate social responsibility and will continue to seek to play an active role in the community, upholding the interests of the society and contributing in the best way that we can.

Precast reinforced concrete tunnel lining for the Dubai Metro Project Taman Sutera Kajang

2008 annual report

39

39

2008 annual report


HARTANAHModal Ehsan Sdn Bhd telah melancarkan secara berperingkat lebih banyak fasa dalam projek pembangunan campurannya di Taman Sutera Kajang yang telah menarik minat ramai pembeli disebabkan oleh harganya yang mampu dimiliki. Pada tempoh yang ditinjau, Modal Ehsan telah melancarkan 300 unit pangsapuri kos sederhana rendah/sederhana dengan GDV sebanyak RM24.3 juta dan 207 unit rumah teres dua tingkat dengan GDV sebanyak RM59.5 juta. Projek tersebut mencatat kadar pengambilan, masing-masing sebanyak 56% dan 91% dengan jumlah jualan yang diperoleh sebanyak RM67.0 juta pada bulan Jun 2008.

PROSPEKKejayaan penyatuan MTD Construction telah meletakkan Kumpulan di kedudukan yang lebih kukuh dengan jumlah di dalam buku pesanan yang baik iaitu sebanyak RM2.5 bilion. Bahagian yang masih belum dibil pula akan dapat mengukuhkan pendapatan Kumpulan pada masa depan. Selain itu, bahagian perkilangan juga telah mencapai kecekapan dan kawalan kos yang lebih tinggi. Projek-projek di bawah Rancangan Malaysia Kesembilan dijangka menyokong sektor pembinaan dan infrastruktur, dan ini akan mendatangkan kebaikan yang besar kepada MTD ACPI. Walau bagaimanapun, kenaikan besar harga bahan mentah seperti konkrit, besi dan simen pada tahun ini akan memberi cabaran kepada kita. Namun begitu, Syarikat akan meneruskan usaha gigihnya bagi memastikan kecekapan operasi dicapai agar ia berada di kedudukan yang baik untuk mengambil bahagian dalam projek-projek di mana Syarikat boleh memanfaatkan kemampuannya dalam bidang pembinaan dan perkilangan. Syarikat yakin bahawa prestasi akan terus mencatat peningkatan pada tahun kewangan 2009.

TANGGUNGJAWAB SOSIAL KORPORAT Syarikat memberi perhatian terhadap tanggungjawab sosial korporatnya dan akan terus berusaha memainkan peranan yang aktif dalam komuniti, menjaga kepentingan masyarakat dan menyumbang sebaik yang kita mampu.

Taman Sutera Kajang


40


CORPORATE DEVELOPMENTIn July 2007, the Company undertook and had obtained approval for a private placement exercise of up to 22,148,400 new ordinary shares of RM1.00 each, representing not more than 10% of the issued and paid-up share capital of the Company. The Company managed to place out 10,148,400 new shares. However, in view of the weak current market conditions, the Board decided not to seek for an extension of time from the authorities and thereby abort the placement for the remaining portion of 12,000,000 shares.

In June 2007, the Company undertook an internal re-organisation in the Manufacturing Division where the shareholding in seven subsidiary companies were disposed off to ACP (Tracks) Sdn Bhd, a special purpose vehicle (SPV), which is a wholly owned subsidiary of the Company. Subsequently, in December 2007, the shareholding of the Company in ACP (Tracks) Sdn Bhd was reduced to 51% following the issue of 9,800,000 new shares in ACP (Tracks) Sdn Bhd to a strategic partner, Trek Layar Sdn Bhd.

APPRECIATIONOn behalf of the Board, I would like to extend our deepest gratitude to our shareholders for their trust and confidence in the Group. We would also like to thank our customers, suppliers, bankers and business partners for their continuous support and cooperation with the Group.

To our management and staff, who have shown much hard work, dedication and loyalty in achieving our aspirations and objectives, we want to say Thank You.

Last but not least, I would like to thank my fellow Board members for their unwavering guidance and wisdom in serving the Group.


Delhi Metro Project, India

2008 annual report

41


PERKEMBANGAN KORPORATPada bulan Julai 2007, Syarikat telah menjalankan dan mendapat kelulusan untuk melaksanakan penempatan swasta 22,148,400 saham biasa baru bernilai RM1.00 sesaham, mewakili tidak lebih daripada 10% modal saham diterbit dan berbayar Syarikat. Syarikat berjaya menempatkan 10,148,400 saham baru. Walau bagaimanapun, berikutan keadaan pasaran yang lemah pada masa ini, Lembaga telah mengambil keputusan untuk tidak mendapatkan lanjutan masa daripada pihak berkuasa dan seterusnya membatalkan penempatan baki 12,000,000 saham lagi.

Pada bulan Jun 2007, Syarikat melaksanakan satu penyusunan semula dalaman bagi Bahagian Perkilangan di mana pegangan saham tujuh buah syarikat subsidiari telah dijual kepada ACP (Tracks) Sdn Bhd, sebuah syarikat tujuan khas (SPV) yang merupakan anak syarikat subsidiari milik penuh Syarikat. Kemudian, pada bulan Disember 2007, pegangan saham Syarikat dalam ACP (Tracks) Sdn Bhd telah dikurangkan kepada 51% berikutan penerbitan 9,800,000 saham baru dalam ACP (Tracks) Sdn Bhd kepada sebuah rakan kongsi strategik, Trek Layar Sdn Bhd.

PENGHARGAANBagi pihak Lembaga, saya ingin menyampaikan setinggi penghargaan kepada para pemegang saham atas kepercayaan dan keyakinan anda semua terhadap Kumpulan. Kami juga ingin mengucapkan ribuan terima kasih kepada para pembekal, bank-bank dan rakan kongsi perniagaan atas sokongan dan kerjasama berterusan mereka dengan Kumpulan.

Kepada pengurusan dan kakitangan kita yang telah menampilkan usaha gigih, dedikasi dan kesetiaan demi mencapai aspirasi dan objektif kita, saya ingin mengucapkan berbanyak terima kasih.

Yang terakhir dan terutama, saya ingin menyampaikan ucapan penghargaan tulus ikhlas kepada ahli-ahli Lembaga atas panduan dan kebijaksanaan mereka dalam menyumbangkan khidmat yang tidak berbelah bahagi kepada Kumpulan.

DATO’ DR. NIK HUSSAIN BIN ABDUL RAHMANPengerusi

Delhi Metro Project, India


42

analysis of shareholdings

As at 31 July 2008

Authorised Share Capital : RM500,000,000Issued and Paid-Up Share Capital : RM231,632,798Class of Shares : Ordinary Shares of RM1.00 eachVoting Rights : 1 vote per Ordinary ShareNo. of Shareholders : 3,245

ANALYSIS BY SIZE OF SHAREHOLDINGS

No. of Holders No. of Shares Percentage (%)Category Malaysian Foreign Malaysian Foreign Malaysian Foreign

Less than 100 shares

100 to 1,000 shares

1,001 to 10,000 shares

10,001 to 100,000 shares

100,001 to less than 5%

of issued shares

5% and above of issued shares

55

533

2,066

460

51

4

-

4

39

20

13

-

1,698

491,271

8,078,028

13,525,550

36,482,461

162,939,490

-

3,000

193,700

850,800

8,429,800

-

0.001

0.213

3.497

5.855

15.793

70.538

-

0.001

0.084

0.368

3.649

-

Total 3,169 76 221,518,498 9,477,300 95.897 4.102

LIST OF DIRECTOR’S SHAREHOLDINGS

No. of Shares Percentage (%)Category Malaysian Foreign Malaysian Foreign


Dato’ Azmil Khalili bin Dato’ Khalid

Dato’ Haji Noordin bin Omar

-

-

226,000

-

-

0.10

121,863,890(1)

121,863,890(2)

11,000(3)

52.76

52.76

#

Notes:-(1) Deemed interested by virtue of his direct and indirect interests in MTD Capital Bhd (“MTD”) via his spouse and child’s shareholdings in MTD

and his and his children’s shareholdings in Nikvest Sdn Bhd, a major shareholder of MTD, and his dauther’s interest in Alloy Consolidated Sdn Bhd (“ACSB”), a major shareholder of MTD.

(2) Deemed interested by virtue of his spouse’s major shareholding in MTD via ACSB.(3) Deemed interested by virtue of his daughter’s direct shareholding in MTDACPI.# Negligible

2008 annual report

43

analysis of shareholdings(contd.)

LIST OF SUBSTANTIAL SHAREHOLDERS (EXCLUDING BARE TRUSTEES)

Direct Interest Indirect InterestShareholders No. of Shares % No. of Shares %

MTD Equity Sdn Bhd (MTD Equity)

Metacorp Berhad (Metacorp)

Employees Provident Fund Board

Lembaga Tabung Haji

Lambang Simfoni Sdn Bhd (Lambang Simfoni)

MTD Capital Bhd (MTD)

Alloy Consolidated Sdn Bhd (ACSB)

Nikvest Sdn Bhd (Nikvest)


Datin Nik Fuziah binti Dato’ Nik Hussein

Dato’ Azmil Khalili bin Dato’ Khalid

Mohd Dom Ahmad

Ruslan Sulaiman

Haji Nik Fauzi bin Dato’ Nik Hussein

Nik Faizul bin Dato’ Nik Hussain

88,000,000

33,734,790

25,972,100(1)

23,163,100

-

129,100

-

-

-

-

-

-

-

-

-

39.10

14.60

11.24

10.03

-

0.06

-

-

-

-

-

-

-

-

-

-

-

-

-

33,734,790(2)

121,734,790(3)

121,863,890(4)

121,863,890(5)

121,863,890(6)

121,863,890(7)

121,863,890(8)

121,863,890(9)

121,863,890(9)

121,863,890(10)

121,870,890(11)

- -

- -

14.60

52.70

52.76

52.76

52.76

52.76

52.76

52.76

52.76

52.76

52.79

Notes: (1) Inclusive of 7,930,500 held through a portfolio manager.(2) Deemed interested through its major shareholding in Metacorp.(3) Deemed interested through its wholly-owned subsidiaries namely Lambang Simfoni and MTD Equity.(4) Deemed interested through its direct major shareholding in MTD and its wholly owned subsidiary, Alloy Concrete Engineering Sdn Bhd’s

shareholding in MTD.(5) Deemed interested through its direct major shareholding in MTD.(6) Deemed interested by virtue of his direct and indirect interests in MTD via his spouse and child’s shareholdings in MTD and his and his

children’s shareholdings in Nikvest, a major shareholder of MTD, and his daughter’s interest in ACSB, a major shareholder of MTD. (7) Deemed interested by virtue of her major shareholding in ACSB.(8) Deemed interested by virtue of his spouse’s major shareholding in MTD via ACSB and Alloy Concrete Engineering Sdn Bhd.(9) Deemed interested by virtue of their substantial shareholdings in ACSB, Alloy Concrete Engineering Sdn Bhd and other private companies

namely, Kembara Bakat Sdn Bhd and Perpetual Rich Sdn Bhd, which in turn are shareholders of MTD.(10) Deemed interested by virtue of his major shareholding in Nikvest. (11) Deemed interested through his spouse’s shareholding in MTDACPI, his shareholding in MTD and his major shareholding in Nikvest.


44

analysis of shareholdings(contd.)

No. Shareholders No. of Shares %

1. MTD Equity Sdn Bhd 88,000,000 38.102. Metacorp Berhad 33,734,790 14.603. Lembaga Tabung Haji 23,163,100 10.034. Employees Provident Fund Board 18,041,600 7.815. HSBC Nominees (Tempatan) Sdn Bhd

Nomura Asset Mgmt Malaysia for Employees Provident Fund 7,930,500 3.43

6. Amanah Raya Nominees (Tempatan) Sdn BhdSkim Amanah Saham Bumiputera - Permodalan Nasional Berhad

6,499,800 2.81

7. Cimsec Nominees (Asing) Sdn BhdCIMB for Dominguez Hills Corporation Ltd (PB)

2,860,200 1.24

8. Citigroup Nominees (Asing) Sdn BhdCBNY for DFA Emerging Markets Fund

2,193,100 0.95

9. Lau Kwai 2,000,000 0.8710. Lim Gnian Liang 2,000,000 0.8711. RHB Nominees (Tempatan) Sdn Bhd

Pledged Securities Account for Lim Gnian Liang2,000,000 0.87

12. Chua Hock Chin 1,513,911 0.6613. BI Nominees (Tempatan) Sdn Bhd

Langkah Taat (M) Sdn Bhd1,275,750 0.55

14. HSBC Nominees (Tempatan) Sdn BhdHPBS Sg for Chua Suya Hong Alias Chua Lee Hoon

862,500 0.37

15. Pertubuhan Keselamatan SosialCawagan Pelaburan Dan Harta

857,800 0.37

16. Mayban Nominees (Tempatan) Sdn BhdMayban Trustees Berhad for ASBI Dana Al-Mubin (940160)

848,000 0.37

17. Zuraida Binti Md Adib 750,000 0.3218. Lembaga Tabung Angkatan Tentera 658,000 0.2819. Citigroup Nominees (Asing) Sdn Bhd

CBNY for DFA Emerging Markets Small Cap Series601,000 0.26

20. Tan Kian Chuan 600,000 0.2621. PM Nominees (Tempatan) Sdn Bhd

PCB Asset Management Sdn Bhd for Mui Continental Insurance Berhad562,500 0.24

22. Soon Khiat Voon 510,000 0.2223. HDM Nominees (Tempatan) Sdn Bhd

Pledged Securities Account for Lau Kwai (M03)500,000 0.22

24. Public Nominees (Tempatan) Sdn BhdPledged Securities Account for Lau Kwai (E-TAI)

500,000 0.22

25. Citigroup Nominees (Asing) Sdn BhdUBS AG for Delta Gems LP

484,200 0.21

26. Mayban Nominees (Tempatan) Sdn BhdMayban Trustees Bhd for Amanah Saham Wanita (N14011980040)

450,000 0.19

27. Cartaban Nominees (Tempatan) Sdn BhdPetronas for Petroliam Research Fund

412,200 0.18

28. HSBC Nominees (Tempatan) Sdn BhdExempt An for HSBC Private Bank (Suisse) S.A. (NASSAU AC CL)

363,900 0.16

29. Citigroup Nominees (Asing) Sdn BhdUBS AG for Delta Gems Offshore Fund Ltd

355,800 0.15

30. Citigroup Nominees (Asing) Sdn BhdCBNY for Dimensional Funds II Plc

353,500 0.15

Total 200,882,151 86.96

Note:-The analysis of shareholdings is based on the issued and paid-up capital of the Company and the Record of Depositors as at 31 July 2008, net of 673,000 treasury shares.

THIRTY LARGEST SHAREHOLDERS (CONTD.)

46 Directors’ Report 55 Statement by Directors55 Statutory Declaration56 Independent Auditors’ Report 58 Income Statements59 Balance Sheets61 Consolidated Statement of Changes in Equity62 Company Statement of Changes in Equity 63 Consolidated Cash Flow Statement65 Company Cash Flow Statement 67 Notes to the Financial Statements

statementsfinancial

MTD ACPI Engineering Berhad

46

Directors’Report

DIRECTORS’ REPORT

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 March 2008.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding and project management.

The principal activities of the subsidiaries are described in Note 17 to the financial statements.

There have been no significant changes in the nature of the principal activities during the financial year.

RESULTS

Group Company RM’000 RM’000

Profit for the year 2,952 54,158

Attributable to:

Equity holders of the Company 5,028 54,158

Minority interests (2,076) -

2,952 54,158

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.

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

DIVIDENDS

The amount of dividends paid by the Company since 31 March 2007 were as follows:

RM’000

In respect of the financial year ended 31 March 2007 as reported in the directors’ report of that year:

A first and final dividend of 1% less 26% taxation on 221,484,398 ordinary shares less 637,000

treasury shares, approved on 24 July 2007 and paid on 25 October 2007 1,634

47

2008 annual report

DIVIDENDS (CONTD.)

At the forthcoming Annual General Meeting, a first and final dividend in respect of the financial year ended 31 March 2008, of 1% less 25% taxation on 231,632,798 ordinary shares less 637,000 treasury shares, amounting to a dividend payable of RM1,732,468 (0.75 sen net per ordinary share) will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 March 2009.

DIRECTORS

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

Dato’ Dr. Nik Hussain bin Abdul Rahman Dato’ Azmil Khalili bin Dato’ Khalid Lee Leong Yow Keith George Cowling Md. Shukor bin Mohamed Dato’ Haji Noordin bin Omar Dato’ Ir. A. Rashid bin Omar Dato’ Ir. Kalid bin Alias Dato’ Rusma binti Ibrahim (Appointed on 8 August 2007)

DIRECTORS’ BENEFITS

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate, other than as may arise from the share options granted pursuant to the Employees Share Options Scheme of the Company, the holding company and its fellow subsidiary.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors as shown in Note 8 and 9 to the financial statements or the fixed salary of full time employees of the Company and related corporations) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 39 to the financial statements.

directors’ report(contd.)


48


DIRECTORS’ INTERESTS

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

Number of Ordinary Shares of RM1.00 Each

1 April 31 March

2007 Acquired Sold 2008

The Company

Direct Interest

Dato’ Haji Noordin bin Omar 226,000 - - 226,000

Indirect Interest

Dato’ Dr. Nik Hussain

bin Abdul Rahman (1) 126,734,790 129,100 (5,000,000) 121,863,890

Dato’ Azmil Khalili bin Dato’ Khalid (2) 126,734,790 # 129,100 (5,000,000) 121,863,890

Dato’ Haji Noordin bin Omar (3) 11,000 # - - 11,000


1 April 31 March


Holding Company - MTD Capital Bhd

Direct Interest


bin Abdul Rahman 406,004 260,000 * (150,000) 516,004

Dato’ Azmil Khalili bin Dato’ Khalid 3,940 726,000 * - 729,940

Lee Leong Yow - 312,000 * - 312,000

Keith George Cowling 231,000 168,000 * (72,000) 327,000


1 April 31 March


Holding Company - MTD Capital Bhd

Indirect Interest


bin Abdul Rahman (4) 124,360,524 # 227,000 (258,000) 124,329,524

Dato’ Azmil Khalili bin Dato’ Khalid (2) 62,914,030 # - - 62,914,030

49

2008 annual report


DIRECTORS’ INTERESTS (CONTD.)


1 April 31 March


Fellow Subsidiary - Metacorp Berhad

Direct Interest


bin Abdul Rahman 480,000 - - 480,000

Dato’ Azmil Khalilibin Dato’ Khalid - 270,000 - 270,000

Indirect Interest


bin Abdul Rahman (5) 509,377,778 29,049,600 - 538,427,378

Dato’ Azmil Khalili bin Dato’ Khalid (5) 509,377,778 # 29,049,600 - 538,427,378

Number of Ordinary Shares of RM0.60/0.25^ Each

1 April 31 March


Fellow Subsidiary

- MTD InfraPerdana Bhd

Direct Interest


bin Abdul Rahman 52 400,000 - 400,052

Dato’ Azmil Khalili bin Dato’ Khalid 12,970 - - 12,970

Keith George Cowling 50,000 - - 50,000

Indirect Interest


bin Abdul Rahman (6) 821,167,008 # 57,805,300 (646,600) 878,325,708

Dato’ Azmil Khalili bin Dato’ Khalid (7) 818,708,231 # 57,805,300 (646,600) 875,866,931

^ Par value reduced from RM0.60 to RM0.25 per share with effect from 1 August 2007.


50


Number of Options 2002/2007 over Ordinary Shares

of RM1.00 Each

No of

Grant Expiry options Exercise 1 April 31 March

date date granted price 2007 Granted Exercised Lapsed 2008

RM

Holding Company

- MTD Capital Bhd


bin Abdul Rahman 07.06.2002 06.06.2007 160,000 1.97 480,000 - (260,000) (220,000) -

07.06.2003 06.06.2007 160,000 1.52

07.06.2004 06.06.2007 160,000 2.47

07.06.2005 06.06.2007 160,000 1.74

07.06.2006 06.06.2007 246,000 1.65

Dato’ Azmil Khalili bin

Dato’ Khalid 07.06.2002 06.06.2007 160,000 1.97 886,000 - (726,000) (160,000) -

07.06.2003 06.06.2007 160,000 1.52

07.06.2004 06.06.2007 160,000 2.47

07.06.2005 06.06.2007 160,000 1.74

07.06.2006 06.06.2007 246,000 1.65

Lee Leong Yow 07.06.2002 06.06.2007 112,000 1.97 564,000 - (312,000) (252,000) -

07.06.2003 06.06.2007 84,000 1.52

07.06.2004 06.06.2007 112,000 2.47

07.06.2005 06.06.2007 140,000 1.74

07.06.2006 06.06.2007 172,000 1.65

Keith George Cowling 07.06.2002 06.06.2007 112,000 1.97 392,000 - (168,000) (224,000) -

07.06.2003 06.06.2007 56,000 1.52

07.06.2004 06.06.2007 112,000 2.47

07.06.2005 06.06.2007 168,000 1.74

The Options lapsed on 7 June 2007.


51

2008 annual report


Number of Options 2004/2008 over Ordinary Shares of RM0.50 Each

No of Grant Expiry options Exercise 1 April 31 March

date date granted price 2007 Granted Exercised Lapsed 2008 RM

Fellow Subsidiary

- Metacorp Berhad


bin Abdul Rahman 28.03.2004 27.03.2008 480,000 0.61 1,920,000 - - (1,920,000) -

28.03.2005 27.03.2008 480,000 0.50

28.03.2006 27.03.2008 480,000 0.50

28.03.2007 27.03.2008 480,000 0.50

Dato’ Azmil Khalili

bin Dato’ Khalid 28.03.2004 27.03.2008 480,000 0.61 1,920,000 - - (1,920,000) -

28.03.2005 27.03.2008 480,000 0.50

28.03.2006 27.03.2008 480,000 0.50

28.03.2007 27.03.2008 480,000 0.50

The Options lapsed on 28 March 2008.

* Exercise of ESOS

# Restated to include disclosure of interest held directly/indirectly by spouse/children pursuant to Section 134(12)(c) of the Companies Act, 1965 as amended by the Companies (Amendment) Act, 2007, which took effect on 15 August 2007.

(1) Deemed interested by virtue of his interests in Nikvest Sdn Bhd, a major shareholder of the Company and shares held by his spouse.

(2) Deemed interested by virtue of his spouse’s interests in the Company through Alloy Consolidated Sdn Bhd. (3) Deemed interested by virtue of shares held by his daughter. (4) Deemed interested by virtue of his and his children’s interests in Nikvest Sdn Bhd, a major shareholder of the Company;

his daughter’s interests in Alloy Consolidated Sdn Bhd, a major shareholder of the Company; and shares held by his spouse and child.

(5) Deemed interested by virtue of his interests in the Company. (6) Deemed interested by virtue of his interests in the Company; shares held by his spouse and his daughter’s interests in

MTD InfraPerdana Bhd through Alloy Consolidated Sdn Bhd. (7) Deemed interested by virtue of his interests in the Company and his spouse’s interests in MTD InfraPerdana Bhd

through Alloy Consolidated Sdn Bhd.

By virtue of Dato’ Dr. Nik Hussain bin Abdul Rahman and Dato’ Azmil Khalili bin Dato’ Khalid deemed interested in shares in the Company, they are deemed to have interests in the shares of all subsidiaries of the Company to the extent the Company has an interest.



52


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

ISSUE OF SHARES

During the financial year, the Company increased its issued and paid-up ordinary share capital from RM221,484,398 to RM231,632,798 by way of issuance of 10,148,400 ordinary shares of RM1.00 each for cash pursuant to the Company’s Private Placement at an average placement price of RM2.05. The share premium of RM10,655,820 arising from the issuance of ordinary shares has been included in the share premium account.

The new ordinary shares rank pari passu in all respects with the existing ordinary shares of the Company.

TREASURY SHARES

The details of the treasury shares are disclosed in Note 29(b) to the financial statements.

EMPLOYEES SHARE OPTIONS SCHEME (“ESOS”)

MTD ACPI Employees Share Options Scheme (“ESOS”) is governed by the by-laws approved by the shareholders at an Extraordinary General Meeting held on 27 September 2001. The ESOS which was implemented on 29 July 2002 and was to be in force for a period of 5 years from the date of implementation, expired on 28 July 2007.

The salient features and other terms of the ESOS are disclosed in Note 29(c) to the financial statements.

There were 8,962,300 options lapsed when the ESOS expired on 28 July 2007.

Number of Shares Options 2002/2007

of RM1.00 Each

Grant Expiry Exercise 1 April 31 March

date date price 2007 Granted Exercised Lapsed 2008

RM

Tan Chai Tiam 29 July 2002 28 July 2007 2.46 1,300,000 - - (1,300,000) -

Ahmad bin Abdul Karim 29 July 2002 28 July 2007 2.46 80,000 - - (80,000) -

Abd Halim bin Suratman 29 July 2002 28 July 2007 2.46 80,000 - - (80,000) -

Low Chong Boon 29 July 2002 28 July 2007 2.46 80,000 - - (80,000) -


53

2008 annual report

OTHER STATUTORY INFORMATION

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

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

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

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

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

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

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

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

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

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

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

(f) In the opinion of the directors:

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

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



54

SIGNIFICANT AND SUBSEQUENT EVENTS

The significant and subsequent events during the financial year are as disclosed in Notes 41 and 42 respectively to the financial statements.

AUDITORS

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

Signed on behalf of the Board in accordance with a resolution of the directors dated 25 July 2008.

DATO’ DR. NIK HuSSAIN BIN ABDuL RAHMAN LEE LEONG YOw


55

2008 annual report

we, Dato’ Dr. Nik Hussain bin Abdul Rahman and Lee Leong Yow, being two of the directors of MTD ACPI Engineering Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 58 to 150 are drawn up in accordance with applicable Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as at 31 March 2008 and of the results and the cash flows of the Group and of the Company for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the directors dated 25 July 2008.

DATO’ DR. NIK HuSSAIN BIN ABDuL RAHMAN LEE LEONG YOw

I, Chan Chi Lee, being the officer primarily responsible for the financial management of MTD ACPI Engineering Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 58 to 150 are in my opinion, correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed Chan Chi Lee at Kuala Lumpur in wilayah Persekutuan on 25 July 2008

Before me, CHAN CHI LEE

statement by directors

statutory declaration

Pursuant to Section 169(15) of the companies act, 1965

Pursuant to Section 169(16) of the companies act, 1965


56

we have audited the financial statements of MTD ACPI Engineering Berhad, which comprise the balance sheets as at 31 March 2008 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 58 to 150.

Directors’ responsibility to the financial statements

The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

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 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 judgment, 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 entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of the 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 at 31 March 2008 and of their financial performance and cash flows of the Group and of the Company for the year then ended.

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 accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 17 to the financial statements.

independent auditors’ report

to the members of MTD ACPI ENGINEERING BERHAD (Incorporated in Malaysia)

2008 annual report

57

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

(d) The auditors’ reports on the accounts of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.

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.

ERNST & YOuNG GEORGE KOSHYAF: 0039 No. 1846/07/09(J) Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia 25 July 2008

independent auditors’ report (contd.)

to the members of MTD ACPI ENGINEERING BERHAD (Incorporated in Malaysia)


58

Group CompanyNote 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000 (restated)

Revenue 3 877,466 446,547 - 2,488

Cost of sales 4 (815,583) (427,739) - (2,402)

Gross profit 61,883 18,808 - 86

Other income 5 12,635 5,240 67,512 8,422

Selling and marketing expenses (15,296) (8,291) - -

Administrative and other expenses (41,629) (78,886) (6,746) (8,539)

Operating profit/(loss) 17,593 (63,129) 60,766 (31)

Finance costs 6 (14,703) (12,894) (6,428) (6,737)

Share of profit/(loss) of associates 9,846 (2,549) - -

Profit/(loss) before tax 7 12,736 (78,572) 54,338 (6,768)

Income tax (expense)/credit 10 (9,784) (198) (180) 91

Profit/(loss) for the year 2,952 (78,770) 54,158 (6,677)

Attributable to:

Equity holders of the Company 5,028 (79,686) 54,158 (6,677)

Minority interests (2,076) 916 - -

2,952 (78,770) 54,158 (6,677)

Earnings/(loss) per share attributable to equity

holders of the Company (sen):

Basic, for earnings/(loss) for the year 11 2 (45)

Diluted, for earnings/(loss) for the year 11 2 (45)

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

income statements

For the Year Ended 31 March 2008

59

2008 annual report



ASSETS

Non-current assets

Property, plant and equipment 13 177,426 187,309 10,463 10,934

Investment properties 14 443 1,166 - -

Prepaid lease payments 15 6,199 6,346 - -

Intangible assets 16 65,763 70,543 - -

Investments in subsidiaries 17 - - 138,136 157,754

Investments in associates 18 12,904 4,477 - -

Other investments 19 385 787 261 261

Non-current receivables 20 10,676 16,125 10,676 16,125

Deferred tax assets 21 2,407 1,865 95 356

276,203 288,618 159,631 185,430

Current assets

Property development costs 22 98,333 96,845 - -

Inventories 23 63,131 55,746 - -

Trade receivables 20 193,312 204,998 5,091 5,091

Other receivables 24 95,914 71,254 1,511 1,522

Tax recoverable 3,910 13,110 - 124

Amount due from holding company 26 52,048 - - -

Amounts due from subsidiaries 26 - - 405,919 259,586

Amounts due from associates 27 27,979 43,721 - 4

Cash and bank balances 28 78,652 45,186 5,324 2,343

613,279 530,860 417,845 268,670

Non-current asset held for sale 35 1,419 - - -

614,698 530,860 417,845 268,670

TOTAL ASSETS 890,901 819,478 577,476 454,100

balancesheets

As At 31 March 2008


60



EQUITY AND LIABILITIES

Equity attributable to equity

holders of the Company

Share capital 29 231,632 221,484 231,632 221,484

Treasury shares 29 (1,904) (1,904) (1,904) (1,904)

Reserves 36,139 24,529 170,235 107,055

Shareholders’ equity 265,867 244,109 399,963 326,635

Minority interests 22,029 14,305 - -

Total equity 287,896 258,414 399,963 326,635

Non-current liabilities

Retirement benefit obligations 30 9,562 9,430 243 232

Borrowings 31 49,634 102,303 40,099 91,132

Long term payables 33 - 5,781 - -

Deferred taxation 21 1,104 391 102 486

60,300 117,905 40,444 91,850

Current liabilities

Retirement benefit obligations 30 223 90 - -

Trade payables 32 334,433 253,600 11 13

Other payables 33 53,646 73,802 1,472 1,666

Short term borrowings 31 153,109 113,848 56,518 2,033

Amounts due to holding company 26 154 1,412 154 -

Amounts due to subsidiaries 26 - - 78,735 31,903

Income tax payable 1,140 407 179 -

542,705 443,159 137,069 35,615

Total liabilities 603,005 561,064 177,513 127,465

TOTAL EQUITY AND LIABILITIES 890,901 819,478 577,476 454,100


balance sheets(contd.)

As At 31 March 2008

61

2008 annual report

Attributable to Equity Holders of the Company Non-Distributable Reserves

Capital Reserve Foreign Share Treasury Share Redemption on Revaluation Exchange Accumulated Minority Total

Note Capital Shares Premium Reserve Consolidation Reserve Reserve Losses Total Interests Equity RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

(restated)

At 1 April 2006 133,484 (1,904) 81,642 90 10,248 1,191 2,084 (256) 226,579 10,771 237,350

Effects of adopting:

FRS 3 - - - - (10,248) - - 10,248 - - -

Acquisition of a subsidiary 17(b) - - - - - - - - - 2,618 2,618

Realisation of revaluation

reserves upon disposal

of leasehold land - - - - - (1,191) - 1,191 - - -

Currency exchange - - - - - - (5,034) - (5,034) - (5,034)

Shares issued during the year 29(a) 88,000 - 15,840 - - - - - 103,840 - 103,840

Loss for the year - - - - - - - (79,686) (79,686) 916 (78,770)

Dividends 12 - - - - - - - (1,590) (1,590) - (1,590)

At 31 March 2007 (restated) 221,484 (1,904) 97,482 90 - - (2,950) (70,093) 244,109 14,305 258,414

At 1 April 2007

As previously reported 221,484 (1,904) 97,482 90 - - (2,950) (69,345) 244,857 14,305 259,162

Prior year adjustment 44 - - - - - - - (748) (748) - (748)

At 1 April 2007 (restated) 221,484 (1,904) 97,482 90 - - (2,950) (70,093) 244,109 14,305 258,414

Currency exchange - - - - - - (2,440) - (2,440) - (2,440)

Shares issued during the year 29(a) 10,148 - 10,656 - - - - - 20,804 9,800 30,604

Profit for the year - - - - - - - 5,028 5,028 (2,076) 2,952

Dividends 12 - - - - - - - (1,634) (1,634) - (1,634)

At 31 March 2008 231,632 (1,904) 108,138 90 - - (5,390) (66,699) 265,867 22,029 287,896


consolidated statementof changes in equity



62

Distributable Non-Distributable Reserve

Reserves Capital

Share Treasury Share Redemption Retained Total Note Capital Shares Premium Reserve Earnings Equity

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2006 133,484 (1,904) 81,642 90 17,750 231,062

Shares issued during the year 29(a) 88,000 - 15,840 - - 103,840

Loss for the year - - - - (6,677) (6,677)

Dividends 12 - - - - (1,590) (1,590)

At 31 March 2007 221,484 (1,904) 97,482 90 9,483 326,635

At 1 April 2007 221,484 (1,904) 97,482 90 9,483 326,635

Shares issued during the year 29(a) 10,148 - 10,656 - - 20,804

Profit for the year - - - - 54,158 54,158

Dividends 12 - - - - (1,634) (1,634)

At 31 March 2008 231,632 (1,904) 108,138 90 62,007 399,963


company statement of changes in equity


63

2008 annual report

2008 2007

RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit/(loss) before tax 12,736 (78,572)

Adjustments for:

Bad debts written off 183 -

Liquidated ascertained damages 192 10

Provision for doubtful debts 4,538 15,046

Provision for doubtful debts written back (9,581) (4,941)

Provision for diminution in value in investments /(written back) 256 (154)

Inventories written off 727 2,270

Impairment losses on property, plant and equipment 53 -

Impairment of goodwill on consolidation 4,780 -

Amortisation of prepaid lease payments 147 152

Depreciation of property, plant and equipment 23,015 21,207

Depreciation of investment properties 7 43

Interest expense 14,703 12,894

Interest income (2,701) (1,894)

Gain on disposal of property, plant and equipment (1,166) (1,575)

Gain on disposal of investment property (84) -

Gain on disposal on quoted shares (1,853) -

Provision for retirement benefits 355 1,534

Property, plant and equipment written off 2,393 2

Share of results of associates (9,846) 2,549

Operating profit/(loss) before changes in working capital 38,854 (31,429)

Property development costs (1,488) 20,542

Inventories (8,112) 19,526

Receivables 31,425 99,170

Amounts due by associates 15,742 (33,325)

Amounts due to holding company (53,306) 1,412

Amounts due to contract customers (39,762) 9,710

Payables 60,376 3,667

Cash generated from operations 43,729 89,273

Retirement benefits paid (90) (256)

Interest paid (14,703) (14,802)

Tax refunded/(paid) 320 (9,453)

Net cash generated from operating activities 29,256 64,762

consolidated cash flow statement



64

2008 2007 RM’000 RM’000

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received 2,701 1,894

Purchase of property, plant and equipment (Note 13(a)) (13,519) (21,001)

Proceeds from disposal of property, plant and equipment 2,025 6,005

Proceeds from disposal of investment properties 800 -

Purchase of other investments (302) -

Proceeds from disposal of other investments 2,301 -

Acquisition of subsidiary, net of cash acquired (Note 17(b)) - 29,565

Additional investment in associates - (120)

Net cash (used in)/generated from investing activities (5,994) 16,343

CASH FLOWS FROM FINANCING ACTIVITIES

Dividend paid (1,634) (1,590)

Repayment of other short term borrowings (22,229) (33,838)

Proceeds from issuance of ordinary shares 30,604 -

Repayment of long term loan (1,634) (7,391)

Repayment of hire purchase (2,204) (1,381)

Net cash generated from/(used in) financing activities 2,903 (44,200)

Net increase in cash and cash equivalents 26,165 36,905

Effects of foreign exchange rate changes (2,274) (5,280)

Cash and cash equivalents at beginning of financial year 39,423 7,798

Cash and cash equivalents at end of financial year (Note 28) 63,314 39,423


consolidated cash flow statement(contd.)


65

2008 annual report

2008 2007 RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIES


Adjustments for:

Depreciation of property, plant and equipment 411 524

Gain on disposal of property, plant and equipment (83) (242)

waiver of debts by subsidiaries - (4,010)

(Gain)/loss on disposal of investment in subsidiaries (57,182) 2,233

Provision for doubtful debts 48 -

Provision for doubtful debts written back - (1,113)

Provision for impairment loss in subsidiaries - 4,962

Provision for retirement benefits 24 29

Interest expense 6,428 6,737

Interest income (3,886) (2,331)

Operating profit before changes in working capital 98 21

Receivables 5,412 9,380

Payables (196) (182)

Amounts due from associates 4 -

Amounts due to holding company 154 -

Amounts due to subsidiaries (20,802) 8,460

Cash (used in)/generated from operations (15,330) 17,679

Retirement benefits paid (13) -

Net cash (used in)/generated from operating activities (15,343) 17,679

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from disposal of property, plant and equipment 222 244

Purchase of property, plant and equipment (Note 13(a)) (79) (164)

Interest received 1,987 2,331

Net cash generated from investing activities 2,130 2,411

companycash flow statement



66

2008 2007

RM’000 RM’000

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of shares 20,804 -

Drawdown/(repayment) of other short term borrowings 3,500 (12,503)

Interest paid (6,428) (6,737)

Dividend paid (1,634) (1,590)

Repayment of hire purchase (33) (50)

Net cash generated from/(used in) financing activities 16,209 (20,880)

Net increase/(decrease) in cash and cash equivalents 2,996 (790)

Cash and cash equivalents at beginning of financial year 1,843 2,633

Cash and cash equivalents at end of financial year (Note 28) 4,839 1,843


company cash flow statement(contd.)


67

2008 annual report

1. CORPORATE INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Board of Bursa Malaysia Securities Berhad. The registered office of the Company is located at 1, Jalan Batu Caves, 68100 Batu Caves Selangor Darul Ehsan.

The holding and ultimate holding company of the Company is MTD Capital Bhd, which is incorporated in Malaysia and produces financial statements available for public use.

The principal activities of the Company are investment holding and project management. The principal activities of the subsidiaries are described in Note 17. There have been no significant changes in the nature of the principal activities during the financial year.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 25 July 2008.

2. SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

The financial statements comply with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia.

The financial statements of the Group and of the Company have also been prepared on a historical basis, unless otherwise indicated in the summary of significant accounting policies.

The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated.

2.2 Summary of Significant Accounting Policies

(a) Subsidiaries and Basis of Consolidation

(i) Subsidiaries

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

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

notes to thefinancial statements

31 March 2008


68

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.2 Summary of Significant Accounting Policies (Contd.)

(a) Subsidiaries and Basis of Consolidation (Contd.)

(ii) Basis of Consolidation

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

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

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

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

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

(b) Associates

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

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting. under the equity method, the investment in associate is carried in the consolidated balance sheet at cost adjusted for post-acquisition changes in the Group’s share of net assets of the associate. The Group’s share of the net profit or loss of the associate is recognised in the consolidated profit or loss. where there has been a change recognised directly in the equity of the associate, the Group recognises its share of such changes.

notes to the financial statements(contd.)

31 March 2008

69

2008 annual report



(b) Associates (Contd.)

In applying the equity method, unrealised gains and losses on transactions between the Group and the associate are eliminated to the extent of the Group’s interest in the associate. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associate. The associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.

Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profit or loss in the period in which the investment is acquired.

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

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

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

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

(c) Intangible Assets

Goodwill

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


31 March 2008


70



(d) Property, Plant and Equipment and Depreciation

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

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

Freehold land has an unlimited useful life and therefore is not depreciated. Capital work in progress consists of building under construction/installation for intended use as production and administration facilities. No depreciation is charged in respect of this capital expenditure until the buildings are fully developed. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:

Buildings 1.6% - 2%

Plant and machinery 10% - 20%

Equipment, furniture and fittings 15% - 40%

Motor vehicles 20%

The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

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

(e) Investment Properties

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

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

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(f) Property Development Costs

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

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

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

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

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

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

(g) Construction Contracts

where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs are recognised as revenue and expenses respectively by using the stage of completion method. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs.

where the outcome of a construction contract cannot be reliably estimated, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

when it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

when the total costs incurred on construction contracts plus recognised profits (less recognised losses), exceed progress billings, the balance is classified as amount due from customers on contracts. when progress billings exceed costs incurred plus recognised profits (less recognised losses), the balance is classified as amount due to customers on contracts.

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(h) Inventories

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

Cost is determined using the weighted average method. The cost of raw materials comprises costs of purchase plus incidental expenses incurred in bringing the inventories to their present location and condition. The costs of finished goods and work-in-progress comprise raw materials, direct labour and appropriate proportions of factory overheads. The cost of unsold properties comprises costs associated with the acquisition of land, direct costs and appropriate proportions of common costs.

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

(i) Impairment of Non-Financial Assets

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

For goodwill, the recoverable amount is estimated at each balance sheet date or more frequently when indicators of impairment are identified.

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

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

An impairment loss is recognised in profit or loss in the period in which it arises.

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(i) Impairment of Non-Financial Assets (Contd.)

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

(j) Non-current Assets (or Disposal Groups) Held for Sale

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

Immediately before classification as held for sale, the measurement of the non-current assets (or all the assets and liabilities in a disposal group) is brought up-to-date in accordance with applicable FRSs. Then, on initial classification as held for sale, non- current assets or disposal groups (other than investment properties, deferred tax assets, employee benefits assets and financial assets) are measured in accordance with FRS 5 that is at the lower of carrying amount and fair value less costs to sell. Any differences are included in profit or loss.

(k) Foreign Currencies

(i) Functional and Presentation Currency

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

(ii) Foreign Currency Transactions

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

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(k) Foreign Currencies (Contd.)

(ii) Foreign Currency Transactions (Contd.)

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation, where that monetary item is denominated in either the functional currency of the reporting entity or the foreign operation, are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation, where that monetary item is denominated in a currency other than the functional currency of either the reporting entity or the foreign operation, are recognised in profit or loss for the period. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation, regardless of the currency of the monetary item, are recognised in profit or loss in the Company’s financial statements or the individual financial statements of the foreign operation, as appropriate.

Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

(iii) Foreign Operations

The result and financial position of the foreign operations that have a functional currency different from the presentation currency (RM) of the consolidated financial financial statements are translated into RM as follows:

- Asset and liabilities for each balance sheet presented are translated at the closing rate prevailing at the balance sheet date;

- Income and expense for each income statement are translated at average exchange rates for the year, which approximates the exchange rates at the dates of the transactions; and

- All resulting exchange differences are taken to the foreign currency translation reserve within equity.

Goodwill and fair value adjustments arising on 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 balance sheet date.

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(k) Foreign Currencies (Contd.)

(iii) Foreign Operations (Contd.)

The principal exchange rates used for each respective unit of foreign currency ruling were as follows:

2008 2007

RM RM

united States Dollar 3.43 3.68

Singapore Dollar 2.31 2.28

Indian Rupee 0.08 0.08

Philippines Pesos 0.07 0.07

Saudi Arabia Riyals 1.17 1.08

united Arab Emirates Dirhams 0.87 1.06

Thai Baht 0.10 0.11

(l) Income Tax

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

Deferred tax is provided for, using the liability method. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

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

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(m) Provisions

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

(n) Employee Retirement Benefits

(i) Short Term Benefits

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

(ii) Defined Contribution Plan

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

(iii) Defined Benefit Plan

The Group operates an unfunded, defined benefit Retirement Benefit Scheme (“the Scheme”) for its eligible employees. The Group’s obligation under the Scheme, calculated using the Projected unit Credit Method, is determined based on a triennial actuarial valuation by an independent actuary, through which the amount of benefit that employees have earned in return for their service in the current and prior years is estimated. That benefit is discounted in order to determine its present value.

Actuarial gains and losses are recognised as income or expense over the expected average remaining working lives of the participating employees when the cumulative unrecognised actuarial gains or losses for the Scheme exceed 10% of the higher of the present value of the defined benefit obligation and the fair value of plan assets. Past service costs are recognised immediately to the extent that the benefits are already vested, and otherwise are amortised on a straight-line basis over the average period until the amended benefits become vested.

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(n) Employee Retirement Benefits (Contd.)

(iii) Defined Benefit Plan (Contd.)

The amount recognised in the balance sheet represents the present value of the defined benefit obligations adjusted for unrecognised actuarial gains and losses and unrecognised past service costs, and reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to the net total of any unrecognised actuarial losses and past service costs, and the present value of any economic benefits in the form of refunds or reductions in future contributions to the plan.

(iv) Share Based Compensation

The MTD ACPI Engineering Berhad Employee Share Options Scheme (“ESOS”), an equity-settled, share-based compensation plan, allows the Group’s employees to acquire ordinary shares of the Company. The total fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in the share option reserve within equity over the vesting period and taking into account the probability that the options will vest. The fair value of share options is measured at grant date, taking into account, if any, the market vesting conditions upon which the options were granted but excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable on vesting date.

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

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

(o) Financial Instruments

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

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(o) Financial Instruments (Contd.)

(i) Cash and Cash Equivalents

For the purposes of the cash flow statements, cash and cash equivalents include cash on hand and at bank and deposits at call which have an insignificant risk of changes in value, net of outstanding bank overdrafts.

(ii) Other Non-current Investments

Non-current investments other than investments in subsidiaries, associates and investment properties are stated at cost less impairment losses. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in profit or loss.

(iii) Receivables

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

(iv) Payables

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

(v) Interest-bearing Borrowings

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

(vi) Marketable Securities

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

(vii) Equity Instruments

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

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(o) Financial Instruments (Contd.)

(vii) Equity Instruments (Contd.)

The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided.

The consideration paid, including attributable transaction costs on repurchased ordinary shares of the Company that have not been cancelled, are classified as treasury shares and presented as a deduction from equity. No gain or loss is recognised in profit or loss on the sale, re-issuance or cancellation of treasury shares. when treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity.

(p) Leases

(i) Classification

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets and the land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating leases, except land held for own use under an operating lease, the fair value of which cannot be measured separately from the fair value of a building situated thereon at the inception of the lease, is accounted for as being held under a finance lease, unless the building is also clearly held under an operating lease.

(ii) Finance Leases - the Group as Lessee

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

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

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(p) Leases (Contd.)

(ii) Finance Leases - the Group as Lessee (Contd.)

The depreciation policy for lease assets is in accordance with that for depreciable property, plant and equipment as described in Note 2.2(d).

(iii) Operating Leases - the Group as Lessee

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

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

(iv) Operating Leases - the Group as Lessor

Assets leased out under operating leases are presented on the balance sheets according to the nature of the assets. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease (Note 2.2(s)(vii)). Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

(q) Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

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

(r) Share Buy-back

Shares repurchased are held as treasury shares and are accounted for using the treasury stock method. under the treasury stock method, the shares repurchased are not cancelled but are held as treasury shares. The treasury shares are carried at cost.

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(r) Share Buy-back (Contd.)

The consideration paid, including any attributable transaction cost on repurchased shares of the Company that have not been cancelled, are classified as treasury shares and presented as a deduction from equity. No gain or loss is recognised in the income statement on the sale, re-issuance or cancellation of treasury shares. when treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity.

where treasury shares are distributed as share dividends, the cost of the treasury shares will be applied in the reduction of the share premium account or the distributable reserves, or both, where appropriate.

(s) Revenue Recognition

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

(i) Construction Contracts

Revenue from construction contracts is accounted for by the stage of completion method as described in Note 2.2(g).

(ii) Sale of Goods

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

(iii) Revenue from Services

Revenue from services rendered is recognised net of service taxes and discounts as and when the services are performed.

(iv) Interest Income

Interest income is recognised on an accrual basis using the effective interest method.

(v) Management Fees

Management fees are recognised when services are rendered.

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(s) Revenue Recognition (Contd.)

(vi) Dividend Income

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

(vii) Rental Income

Rental income is recognised on an accrual basis.

(viii) Revenue from Property Development Activities

Revenue from the property development activities are accounted for by the stage of completion method as described in Note 2.2(f).

(ix) Sale of Completed Properties

Revenue from sale of completed properties is recognised when significant risks and rewards have been passed to the purchasers.

2.3 Changes in Accounting Policies, Effects and Changes in Comparatives Arising from Adoption of New and Revised FRSs

On 1 April 2007, the Company adopted the following new and revised FRSs and Amendment to FRS mandatory for financial periods beginning on or after 1 October 2006:

FRS 6 Exploration for and Evaluation of Mineral Resources FRS 117 Leases FRS 124 Related Party Disclosures Amendment to Employee Benefits - Actuarial Gains and Losses, Group Plans and Disclosures FRS 1192004

FRS 6 is not relevant to the Group’s operations. The adoption of the revised FRS 124 and FRS 1192004 did not result in significant changes in accounting policies of the Company. The adoption of revised FRS 124 gave rise to additional disclosure. The principal changes in accounting policies and their effects resulting from the adoption of the revised FRS 117 are discussed below:

(a) FRS 117: Leases

Prior to 1 April 2007, leasehold land held for own use was classified as property, plant and equipment and was stated at cost less accumulated depreciation and impairment loss. The adoption of the revised FRS 117 has resulted in a change in the accounting policy relating to the classification of leases of land and buildings. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets and the land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classification.

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2.3 Changes in Accounting Policies, Effects and Changes in Comparatives Arising from Adoption of New and Revised FRSs (Contd.)

(a) FRS 117: Leases (Contd.)

Leasehold land held for own use is now classified as operating lease and where necessary, the minimum lease payments or the up-front payments made are allocated between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land element and buildings element of the lease at the inception of the lease. The up-front payment represents prepaid lease payments and are amortised on a straight line basis over the lease term.

The Group has applied the change in accounting policy in respect of leasehold properties in accordance with FRS 117. At 1 April 2007, the unamortised amount of leasehold properties is retained as the surrogate carrying amount of prepaid lease payments as allowed by the revised FRS. The reclassification of leasehold properties as prepaid lease payments has been accounted for retrospectively and as disclosed in Note 2.3 (c), certain comparatives have been restated. The effects on the balance sheet as at 31 March 2008 are set out in Note 2.3 (b). There were no effects on the income statement for the financial year ended 31 March 2008.

(b) Summary of effects of adopting revised FRS on the current year’s financial statements

The following summary provide estimates of the extent to which each of the line items in the balance sheet as at 31 March 2008 is higher or lower than it would have been had the previous policies been applied in the current year.

Effects on balance sheets as at 31 March 2008

(Decrease)/ Increase FRS 117

Note 2.3(a) Description of Change RM

Property, plant and equipment (6,199)

Prepaid lease payments 6,199

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2.3 Changes in Accounting Policies, Effects and Changes in Comparatives Arising from Adoption of New and Revised FRSs (Contd.)

(c) Restatement of comparatives

The following comparative amounts have been restated as a result of adopting the revised FRS 117:

Increase/ (Decrease)

Previously FRS 117 Stated Note 2.3(a) Restated

Description of Change RM RM RM

At 31 March 2007

Property, plant and equipment 193,655 (6,346) 187,309

Prepaid lease payments - 6,346 6,346

2.4 Standards and Interpretations Issued but Not Yet Effective

At the date of authorisation of these financial statements, the following FRSs, amendments to FRS and Interpretations were issued but not yet effective and have not been applied by the Group:

Effective for financial periods

beginning on FRSs, Amendments to FRS and Interpretations or after

FRS 139 Financial Instruments: Recognition and Measurement Deferred

IC Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities 1 July 2007

IC Interpretation 2 Members’ Shares in Co-operative Entities and Similar Instruments 1 July 2007

IC Interpretation 5 Rights to Interests Arising from Decommission, Restoration and 1 July 2007

Environmental Rehabilitation Funds

IC Interpretation 6 Liabilities Arising from Participation in a Specific Market - waste 1 July 2007

Electrical and Electronical Equipment

IC Interpretation 7 Applying the Restatement Approach under FRS 1292004 - Financial 1 July 2007

Reporting in Hyperinflationary Economies

IC Interpretation 8 Scope of FRS 2 1 July 2007

Amendment to Cash Flow Statements 1 July 2007

FRS 107

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2.4 Standards and Interpretations Issued but Not Yet Effective (Contd.)

Effective for financial periods

beginning on FRSs, Amendments to FRS and Interpretations or after

Amendment to Construction Contracts 1 July 2007

FRS 111

Amendment to Income taxes 1 July 2007

FRS 112

Amendment to Revenue 1 July 2007

FRS 118

Amendment to Accounting for Government Grants and 1 July 2007

FRS 120 Disclosure of Government Assistance

Amendment to The Effects of Changes in Foreign Exchange 1 July 2007

FRS 121 Rates - Net Investment in a Foreign Operation

Amendment to Interim Financial Reporting 1 July 2007

FRS 134

Amendment to Provisions, Contingent Liabilities and 1 July 2007

FRS 137 Contingent Assets

The above FRS, amendments to FRS and Interpretations are expected to have no significant impact on the financial statements of the Group and the Company upon their initial application except for:

(i) Amendment to FRS 121: The Effects of Changes in Foreign Exchange Rates - Net Investment in a Foreign Operation

This amendment requires that where an entity has a monetary item that forms part of its net investment in a foreign operation, the exchange differences arising from such monetary items should always be recognised in equity in the consolidated financial statements and should not be dependent on the currency of the monetary item. Prior to this amendment, exchange differences arising on monetary item that forms part of

the Company’s net investment in a foreign operation is recognised in equity in the consolidated financial statements only when that monetary item is denominated either in the functional currency of the reporting entity or the foreign operation. The Company will apply this amendment from financial periods beginning 1 April 2008. As it is not possible to reasonably estimate the exchange rates applicable to such monetary items for future periods, the directors are therefore unable to determine if the initial adoption of this amendment will have a material impact on the consolidated financial statements for the financial year ending 31 March 2008.

The Group and the Company are exempted from disclosing the possible impact, if any, to the financial statements upon the initial application of FRS 139.

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2.5 Significant Accounting Estimates and Judgements

(a) Critical Judgements Made in Applying Accounting Policies

There are no significant critical judgements made by management in the process of applying the Company’s accounting policies that has significant effect on the amounts recognised in the financial statements.

(b) Key Sources of Estimation Uncertainty

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

(i) Construction Contracts

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

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

(ii) Property Development

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

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

(iii) Deferred Tax Assets Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable

profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. Further details are provided for in Note 21.

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2.5 Significant Accounting Estimates and Judgements (Contd.)

(b) Key Sources of Estimation Uncertainty (Contd.)

(iv) Impairment of Goodwill

The Group determines whether goodwill is impaired at least on annual basis. This requires an estimation of the value-in-use of the cash-generating units (“CGu”) to which goodwill is allocated. Estimating a value-in-use amount requires management to make an estimate of the expected future cash flows from the CGu and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of goodwill in respect of acquisition of a subsidiary as at 31 March 2008 was RM65,763,000. Further details are disclosed in Note 16.

(v) Impairment of investments

At balance sheet date, management determines whether the carrying amounts of its investments are impaired. This involves measuring the recoverable amounts which includes fair value less costs to sell and valuation techniques. Valuation techniques include the use of discounted cash flow analysis, considering the current market value indicators and recent arms-length market transactions. These estimates provide reasonable approximations to the computation of recoverable amounts.

In performing discounted cash flow analysis, discount rate and growth rates used reflect, amongst others, the maturity of the business development cycle as well as the industry growth potential. The discount rate applied is 10% whereas the growth rates used to project cash flows for the following year approximate the performances of the investment based on the latest approved budgets. The growth rates used to extrapolate the cash flows beyond the following year reflect a progressive decline to a rate lower than industry average.

Based on management’s review, the investments of the Group are not impaired as at balance sheet date.

(v) Useful lives of Property, Plant and Equipment

The Group estimates the useful lives of property, plant and equipment based on the period over which the assets are expected to be available for use. The estimated useful lives of property, plant and equipment are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the relevant assets. In addition, the estimation of the useful lives of property, plant and equipment are based on the internal technical evaluation and experience with similar assets. It is possible, however, that future results of operations could be materially affected by changes in the estimates brought about by changes in factors mentioned above. The amounts and timings of recorded expenses for any period would be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of the property, plant and equipment would increase the recorded expenses and decrease the non-current assets.

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3. REVENUE

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Construction contracts 638,563 268,029 - -

Sale of goods 211,805 153,336 - 2,488

Sale of development properties 27,098 25,182 - -

877,466 446,547 - 2,488

4. COST OF SALES

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Construction contract costs 611,018 289,833 - -

Cost of inventories sold 178,836 116,626 - 2,402

Property development costs (Note 22) 25,729 21,280 - -

815,583 427,739 - 2,402

5. OTHER INCOME

Included in other income are:

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Interest income on deposits placed

in licensed banks 811 593 97 45

Interest income on trade receivables 1,890 1,301 1,890 1,301

Interest income on advances

granted to a subsidiary - - 1,899 985

Net gain on disposal of

property, plant and equipment 1,166 1,575 83 242

Gain on disposal of subsidiaries (Note 17) - - 57,182 -

Gain on disposal of investment properties 84 - - -

Gain on disposal of quoted shares 1,853 - - -

Realised gains on foreign exchange 13 81 - -

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2008 annual report

5. OTHER INCOME (CONTD.)

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Management fees - - 4,647 4,260

Rental income 45 45 - -

Commission received from a subsidiary - - 1,506 1,477

6. FINANCE COSTS

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Interest expense on:

Medium Term Notes (MTNs) 6,067 6,067 6,067 6,067

Other borrowings 9,884 8,735 361 670

15,951 14,802 6,428 6,737

Less: Interest expense capitalised

in qualifying assets:

Property development cost (Note 22) (1,248) (1,908) - -

14,703 12,894 6,428 6,737

7. PROFIT/(LOSS) BEFORE TAX

The following amounts have been included in arriving at profit/(loss) before tax:

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Employee benefits expense (Note 8) 37,327 27,418 2,232 2,551

Non-executive directors’ remuneration (Note 9) 186 140 170 103

Auditors’ remuneration 354 250 35 35

Bad debts written off 183 - - -

Liquidated ascertained damages (Note 33 (b)) 192 10 - -

Depreciation of property, plant and equipment 23,015 21,207 411 524

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90

7. PROFIT/(LOSS) BEFORE TAX (CONTD.)

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Amortisation of prepaid land lease payments 147 152 - -

Impairment of goodwill on consolidation

(Note 16) 4,780 - - -

Depreciation of investment properties 7 43 - -

Loss on disposals of investment in subsidiaries - - - 2,233

Inventories written off 727 2,270 - -

waiver of debts by subsidiaries - - - (4,010)

Provision for diminution in

investment/(written back) 256 (154) - -

Property, plant and equipment written off 2,393 2 - -

Provision for doubtful debts

- trade (Note 20) 4,538 12,654 - -

- non-trade (Note 24) - 2,392 48 -

Provision for doubtful debts written back

- trade (Note 20) (8,355) (4,941) - (1,113)

- non-trade (Note 24) (1,226) - - -

Provision for impairment loss in subsidiaries - - - 4,962

Hire for plant and machinery 3,335 1,267 - -

Impairment losses on property,

plant and equipment 53 - - -

Rental of equipment 300 - - -

Rental expense for land and buildings 270 492 - -

8. EMPLOYEE BENEFITS EXPENSE

Group Company 2008 2007 2008 2007


wages and salaries 31,411 21,347 1,814 2,175

Employees retirement benefits (Note 30) 355 1,534 24 29

Pension costs - defined

contribution plans and social security costs 3,062 2,325 244 254

Other staff related expenses 2,499 2,212 150 93

37,327 27,418 2,232 2,551

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8. EMPLOYEE BENEFITS EXPENSE (CONTD.)

Included in staff costs of the Group and of the Company are executive directors’ remuneration excluding benefits-in-kind, amounting to RM 2,325,000 (2007: RM2,127,000) and RM312,000 (2007: RM584,000) respectively as disclosed in Note 9.

9. DIRECTORS’ REMUNERATION

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000 Directors of the Company

Executive:

Salaries and other emoluments 475 403 40 336

Fees 132 93 96 93

Allowance 149 111 113 110

Bonus 107 - 48 -

Pension costs - defined contribution plans 79 45 15 45

Benefits-in-kind 26 21 1 19

968 673 313 603

Non-Executive:

Fees 114 100 114 78

Allowance 56 25 56 25

170 125 170 103

Total 1,138 798 483 706

Directors of Subsidiaries

Executive:

Salaries and other emoluments 1,109 1,281 - -

Fee 48 34 - -

Allowance - 16 - -

Bonus 133 - - -

Pension costs - defined contribution plans 91 144 - -

Social security costs 2 - - -

Benefits-in-kind 97 53 - -

1,480 1,528 - -

Non-Executive:

Fees 16 15 - -

1,496 1,543 - -

Total 2,634 2,341 483 706

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9. DIRECTORS’ REMUNERATION (CONTD.)

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Analysis excluding benefits in kind:

Total executive directors’

remuneration excluding benefits-

in-kind (Note 8) 2,325 2,127 312 584

Total non-executive directors’

remuneration (Note 7) 186 140 170 103

Total directors’ remuneration

excluding benefits-in kind 2,511 2,267 482 687

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

Number of Directors 2008 2007

Executive directors:

RM1 - RM50,000 1 1

RM50,001 - RM100,000 - 1

RM100,001 - RM150,000 - 1

RM150,001 - RM200,000 1 3

RM250,001 - RM300,000 1 1

RM450,001 - RM500,000 2 -

Non-Executive directors:

RM1 - RM50,000 3 5

RM50,001 - RM100,000 1 -

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10. INCOME TAX EXPENSE/(CREDIT)

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Income tax:

Malaysian income tax 3,098 1,548 303 265

Foreign tax 4,411 124 - -

under/(over)provision in prior years 2,144 (919) - -

9,653 753 303 265

Deferred tax (Note 21):

Relating to origination and reversal

of temporary differences 310 177 (47) 130

Relating to changes in tax rates (111) (8) (6) -

Overprovision in prior years (68) (724) (70) (486)

131 (555) (123) (356)

Tax expense/(credit) for the year 9,784 198 180 (91)

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

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

Group 2008 2007

RM’000 RM’000


Taxation at Malaysian statutory tax rate of 26% (2007: 27%) 3,311 (21,214)

Tax incentive obtained from differential tax rate at 20% (2007: 20%) (69) (35)

Effect of different tax rates in other countries (981) 3,516

Effect of changes in tax rates on opening balance of deferred tax (111) (8)

Effect of income not subject to tax (3,908) (851)

Effect of expenses not deductible for tax purposes 8,116 12,257

Effect of share of results of associates (2,499) 688

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94

10. INCOME TAX EXPENSE/(CREDIT) (CONTD.)

Group 2008 2007

RM’000 RM’000

Effect of utilisation of previously unrecognised tax losses

and unabsorbed capital allowances (697) (144)

Deferred tax assets not recognised during the year 4,546 7,632

Overprovision of deferred tax in prior years (68) (724)

under/(over)provision of tax expense in prior years 2,144 (919)

Income tax expense for the year 9,784 198

Company

2008 2007

RM’000 RM’000


Taxation at Malaysian statutory tax rate of 26% (2007: 27%) 14,128 (1,827)

Deferred tax assets recognised at different tax rates (6) -

Effect of income not subject to tax (14,867) (1,080)

Effect of expenses not deductible for tax purposes 995 3,497

Deferred tax assets recognised in respect of unutilised tax losses - (195)

Overprovision of deferred tax in prior years (70) (486)

Income tax expense/(credit) for the year 180 (91)

Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the Section 108 balance of the Malaysia Income Tax Act 1967 (“S.108 balance”) and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the S.108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.

The Company did not elect for the irrevocable option to disregard the S.108 balance. Accordingly, during the transitional period, the Company may utilise the credit in the S.108 balance as at 31 March 2008 to distribute cash dividend payments to ordinary shareholdings as defined under the Finance Act 2007. As at 31 March 2008, the Company has sufficient credit in the S.108 balance to frank the payment of dividends amounting to RM42,755,000 (2007:RM42,579,000) out of its retained earnings. If the balance of the retained earnings of RM19,252,000 were to be distributed as dividends, the Company may distribute such dividends under the single tier system.

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11. EARNINGS/(LOSS) PER SHARE

(a) Basic

Basic earnings/(loss) per share is calculated by dividing the net profit/(loss) for the year by the weighted average number of ordinary shares in issue during the financial year, excluding treasury shares held.

Group 2008 2007

Profit/(loss) for the year (RM’000) 5,028 (79,686)

weighted average number of ordinary shares in issue,

excluding treasury shares (‘000) 223,067 176,847

Basic earnings/(loss) per share (sen) 2 (45)

(b) Diluted

There is no potential dilution of ordinary shares in current year. The effects on the basic loss per share for the previous financial year arising from the assumed conversion of options of the Company’s ESOS is anti-dilutive since the average market price of the Company’s share is lower than the exercise price of the ESOS. Accordingly, diluted loss per share for the previous financial year have not been presented.

12. DIVIDENDS

Dividends Dividends in respect of Year Recognised in Year

2008 2007 2006 2008 2007 RM’000 RM’000 RM’000 RM’000 RM’000

First and final

dividend for 2006:

1% less 28% taxation, on

221,484,398 ordinary

shares less 637,000

treasury shares (0.72 sen

per ordinary shares) - - 1,590 - 1,590

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96

12. DIVIDENDS (CONTD.)

Dividends Dividends in respect of Year Recognised in Year

2008 2007 2006 2008 2007 RM’000 RM’000 RM’000 RM’000 RM’000

First and final

dividend for 2007:

1% less 26% taxation, on

221,484,398 ordinary

shares less 637,000

treasury shares (0.74 sen

per ordinary shares) - 1,634 - 1,634 -

Proposed for approval

at AGM (not recognised as

at 31 March):

First and final dividend

for 2008:

1% less 25% taxation

on 231,632,798

ordinary shares less

637,000 treasury

shares (0.75 per

ordinary shares) 1,732 - - - -

1,732 1,634 1,590 1,634 1,590

At the forthcoming Annual General Meeting, a first and final dividend in respect of the financial year ended 31 March 2008, of 1% less 25% taxation on 231,632,798 ordinary shares less 637,000 treasury shares, amounting to a dividend payable of RM1,732,468 (0.75 sen net per ordinary share) will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 March 2009.

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2008 annual report

13. PROPERTY, PLANT AND EQUIPMENT

Equipment, Furniture

Land and Plant and and Motor Buildings* Machinery Fittings Vehicles Total

RM’000 RM’000 RM’000 RM’000 RM’000

Group

As at 31 March 2008

Cost

At 1 April 2007 146,114 227,283 15,587 25,415 414,399

Additions 3,050 8,905 665 3,983 16,603

Disposals (252) (1,735) (565) (3,668) (6,220)

write off - (2,906) (10) - (2,916)

Transfer (3,923) 3,923 - - -

Exchange differences (629) (1,513) (21) (50) (2,213)

At 31 March 2008 144,360 233,957 15,656 25,680 419,653

Accumulated

Depreciation

and Impairment

Losses

At 1 April 2007 33,081 163,788 11,383 18,838 227,090

Depreciation charge for

the year 4,154 15,104 1,199 2,558 23,015

Disposals (28) (1,530) (428) (3,375) (5,361)

write off - (515) (8) - (523)

Impairment loss 53 - - - 53

Transfer (510) 510 - - -

Exchange differences (634) (1,282) (39) (92) (2,047)

At 31 March 2008 36,116 176,075 12,107 17,929 242,227

Net Carrying Amount 108,244 57,882 3,549 7,751 177,426

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98

13. PROPERTY, PLANT AND EQUIPMENT (CONTD.)



RM’000 RM’000 RM’000 RM’000 RM’000

Group (Contd.)

As at 31 March 2007

Cost

At 1 April 2006 141,790 216,507 9,392 10,119 377,808

Acquisition of a subsidiary

company (Note 17) 17,019 4,139 5,520 15,244 41,922

Additions 10,956 8,564 1,337 2,796 23,653

Disposals (1,854) (2,263) (258) (3,164) (7,539)

write off (197) (15) (566) - (778)

Transfer to investment

properties (Note 14) (347) - - - (347)

Transfer to property

development costs

(Note 22) (20,895) - - - (20,895)

Exchange differences (358) 351 162 420 575

At 31 March 2007 146,114 227,283 15,587 25,415 414,399

Accumulated Depreciation

and Impairment

Losses

At 1 April 2006 31,068 144,861 6,698 8,275 190,902

Acquisition of a subsidiary

company (Note 17) 53 4,135 4,653 11,488 20,329

Depreciation charge for

the year 2,363 16,114 828 1,902 21,207

Disposals (129) (1,493) (260) (2,972) (4,854)

write off (197) (13) (566) - (776)

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2008 annual report




RM’000 RM’000 RM’000 RM’000 RM’000

Group (Contd.)

Transfer to investment

properties (Note 14) (47) - - - (47)

Exchange differences (30) 184 30 145 329

At 31 March 2007 33,081 163,788 11,383 18,838 227,090

Net Carrying Amount 113,033 63,495 4,204 6,577 187,309

* Land and Buildings of the Group:

Capital Freehold Work-in-

Land Buildings progress Total RM’000 RM’000 RM’000 RM’000

Group

As at 31 March 2008

Cost

At 1 April 2007 54,035 90,970 1,109 146,114

Additions - 2,954 96 3,050

Disposals - (252) - (252)

Transfer to plant and machinery - (2,718) (1,205) (3,923)

Exchange differences - (629) - (629)

At 31 March 2008 54,035 90,325 - 144,360

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100


* Land and Buildings of the Group (Contd.):



Group (Contd.)


and Impairment Losses

At 1 April 2007 6,338 26,743 - 33,081

Depreciation charge for the year - 4,154 - 4,154

Disposals - (28) - (28)

Transfer - (510) - (510)

Impairment losses - 53 - 53


At 31 March 2008 6,338 29,778 - 36,116

Net Carrying Amount 47,697 60,547 - 108,244

As at 31 March 2007

Cost

At 1 April 2006 54,232 86,523 1,035 141,790

Acquisition of a subsidiary (Note 17) 10,000 1,382 5,637 17,019

Additions - 5,266 5,690 10,956

Disposals - (1,854) - (1,854)

write off (197) - - (197)

Transfer to investment properties (Note 14) - (347) - (347)

Transfer to property -

development costs (Note 22) (10,000) - (10,895) (20,895)

Exchange differences - - (358) (358)

At 31 March 2007 54,035 90,970 1,109 146,114

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2008 annual report


* Land and Buildings of the Group (Contd.):



Group (Contd.)


At 1 April 2007 6,535 24,533 - 31,068

Acquisition of a subsidiary company (Note 17) - 53 - 53

Depreciation charge for the year - 2,363 - 2,363

Disposals - (129) - (129)

write off (197) - - (197)

Transfer to investment properties (Note 14) - (47) - (47)


At 31 March 2007 6,338 26,743 - 33,081

Net Carrying Amount 47,697 64,227 1,109 113,033

Equipment,

Freehold Furniture Motor

Land Buildings and Fittings Vehicles Total

RM’000 RM’000 RM’000 RM’000 RM’000

Company

As at 31 March 2008

Cost

At 1 April 2007 1,414 10,817 2,533 1,986 16,750

Additions - - 79 - 79

Disposals - - (677) (677)

At 31 March 2008 1,414 10,817 2,612 1,309 16,152

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102


Equipment,

Freehold Furniture Motor

Land Buildings and Fittings Vehicles Total

RM’000 RM’000 RM’000 RM’000 RM’000

Company (Contd.)

Accumulated depreciation

At 1 April 2007 - 2,178 2,087 1,551 5,816

Depreciation charge

for the year - 223 44 144 411

Disposals - - - (538) (538)

At 31 March 2008 - 2,401 2,131 1,157 5,689

Net carrying amount

At 31 March 2008 1,414 8,416 481 152 10,463

Company

As at 31 March 2007

Cost

At 1 April 2006 1,414 10,817 2,374 2,920 17,525

Additions - - 159 220 379

Disposals - - - (1,154) (1,154)

At 31 March 2007 1,414 10,817 2,533 1,986 16,750

Accumulated depreciation

At 1 April 2006 - 1,954 2,047 2,443 6,444

Depreciation charge

for the year - 224 40 260 524

Disposals - - - (1,152) (1,152)

At 31 March 2007 - 2,178 2,087 1,551 5,816

Net carrying amount

At 31 March 2007 1,414 8,639 446 435 10,934

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2008 annual report


(a) Property, plant and equipment were acquired by way of the following means:

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Cash 13,519 21,001 79 164

Hire purchase arrangements 3,084 2,652 - 215

16,603 23,653 79 379

Net carrying amounts of property, plant and equipment held under hire purchase arrangements are as follows:

Motor vehicles 6,338 4,654 135 178

Details of the terms and conditions of the hire purchase are disclosed in Note 34.

(b) Certain present and future assets of certain subsidiaries are being pledged as a fixed and floating charge as a registered debenture as disclosed in Note 31. The net book values of property, plant and equipment pledged for borrowings as disclosed in Note 31 are as follows:

Group

2008 2007

RM’000 RM’000

Freehold land 6,892 6,892

14. INVESTMENT PROPERTIES

Group 2008 2007

RM’000 RM’000

Freehold Properties

At beginning of year 1,304 1,646

Disposal (800) -

Transfer from property, plant and equipment (Note 13) - 347

Transfer to prepaid land lease payments (Note 15) - (689)

At end of year 504 1,304

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104

14. INVESTMENT PROPERTIES (CONTD.)

Group 2008 2007

RM’000 RM’000


At beginning of year 138 73

Depreciation charge for the year (Note 7) 7 43

Disposal (84) -

Transfer from property, plant and equipment (Note 13) - 47

Transfer to prepaid land lease payments (Note 15) - (25)

At end of year 61 138

Net Carrying Amount 443 1,166

Estimated fair value of investment properties 470 1,259

15. PREPAID LEASE PAYMENTS

Group 2008 2007

RM’000 RM’000 (restated)


Transfer from investment properties (Note 14) - 664

Amortisation for the year (Note 7) (147) (152)

Disposal - (1,745)

At end of year 6,199 6,346

Analysed as:

Long term leasehold land 6,199 6,346

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2008 annual report

16. INTANGIBLE ASSETS

Group 2008 2007

RM’000 RM’000 (restated)

Goodwill

Cost


Accumulated Impairment

At beginning of year - -

Impairment loss for the year (Note7) (4,780) -

At end of year (4,780) -

Net Carrying Amount 65,763 70,543

(a) Impairment Tests for Goodwill

Goodwill has been allocated to the Group’s CGu, construction segment. A review of the recoverable amount of the goodwill based on the utilisation of assigned projects book order value in the goodwill led to the recognition of an impairment loss of RM4,780,000 as disclosed in Note 7. The key assumption used in determining the value-in-use calculation is further disclosed below:

(b) Key Assumptions Used in Value-in-use Calculations

The recoverable amount of a CGu is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management covering a three-year period. The key assumptions used for value-in-use calculations are:

Gross Margin Discount Rate

2008 2007 2008 2007

Construction contracts 4% 4% 10% 10%

The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:

(i) Budgeted Gross Margin

The basis used to determine the value assigned to the budgeted gross margins is the average gross margins achieved in the year immediately before the budgeted year increased for expected efficiency improvements and anticipated cost increase.

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106

16. INTANGIBLE ASSETS (CONTD.)

(b) Key Assumptions Used in Value-in-use Calculations (Contd.)

(ii) Discount Rate

The discount rates used are pre-tax and reflect specific risks relating to the relevant segments.

(iii) Sensitivity to Changes in Assumptions

with regard to the assessment of fair value less costs to sell of the CGus, management believes that no reasonably possible change in any of the above key assumptions would cause the carrying values of the CGus to materially exceed their recoverable amounts.

17. INVESTMENTS IN SUBSIDIARIES

Company 2008 2007

RM’000 RM’000

unquoted shares, at cost 143,031 162,649

Less: Provision for impairment losses (4,895) (4,895)

138,136 157,754

(a) Details of the subsidiaries are as follows:

Effective InterestCountry of Held (%)

Name Incorporation 2008 2007 Principal Activities

Held by the Company

ACP - DMT Sdn. Bhd. Malaysia 100 100 Manufacturing and marketing of

speciality, highway and safety

products and providing

related services

ACP Technologies Sdn. Bhd. Malaysia 100 100 Investment holding

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2008 annual report

17. INVESTMENTS IN SUBSIDIARIES (CONTD.)

(a) Details of the subsidiaries are as follows: (Contd.)



Held by the Company (Contd.)

ACPI Engineering Sdn. Bhd. Malaysia 100 100 Steel fabrication and

manufacturing, construction

management and

contracting in the

fields of environmental

systems and engineering

Gandaan unik Sdn. Bhd. Malaysia 100 100 Investment holding

Makin Permata Sdn. Bhd. Malaysia 100 100 Investment holding

Persys Engineering Sdn. Bhd. Malaysia 100 100 Construction, manufacturing and

marketing of precast

concrete system products

MTD Construction Sdn. Bhd. Malaysia 100 100 Civil engineering and

construction works

ACP (Tracks) Sdn. Bhd. Malaysia 51 100 Investment holding

Persys Resources Sdn. Bhd.^ Malaysia 100 100 Dormant

(under members’

voluntary winding up)

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108





Subsidiaries of ACP (Tracks)

Sdn. Bhd.

Persys Sdn. Bhd. Malaysia 51 100 Construction, manufacturing and

marketing of heavy

element precast products for

viaducts, elevated highways,

light rail transit guideways and

bridges and construction

related businesses

Acentis Engineering Sdn. Bhd. Malaysia 51 100 Construction and provision of

infrastructure and services for

water and waste water

treatment

ASC Tiles Sdn. Bhd. Malaysia 51 100 Manufacturing of

concrete roof tiles

Associated Structural Malaysia 51 100 Manufacturing of building

Concrete Sdn. Bhd. system products

C & G Fabricators Sdn. Bhd. Malaysia 51 100 Manufacturing and marketing

of metal based products for

building and construction

industry

31 March 2008


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Subsidiaries of ACP (Tracks)

Sdn. Bhd. (Contd.)

universal Building Malaysia 45 88 Manufacturing and marketing

Products Sdn. Bhd. of metal and timber based

products for building and

construction industry

Associated Concrete Malaysia 51 100 Manufacturing and

Products (Malaysia) Sdn. Bhd. marketing of precast

concrete products

Subsidiaries of Associated

Concrete Products (Malaysia)

Sdn. Bhd.

ACP Marketing Sdn. Bhd. Malaysia 51 100 Marketing of precast

concrete products

Associated Concrete Singapore 51 100 Temporarily ceased

Products operations (in the process of

(Singapore) Pte. Ltd.* # striking off)

Precast Solutions Sdn. Bhd. Malaysia 51 100 Project management,

construction works,

licensing and franchising of

precast concrete products

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110





Subsidiary of ACPI Engineering

Sdn. Bhd.

wing Span Sdn. Bhd.^ Malaysia 60 60 Temporarily ceased

(under members’ operations

voluntary winding up)

Subsidiaries of ACP

Technologies Sdn. Bhd.

ASC Engineering Malaysia 100 100 Manufacturing of engineered

Sdn. Bhd. products and providing

specialist contracting

services

Subsidiaries of ASC

Engineering Sdn. Bhd.

ACPI Holding Ltd. * @ Thailand 100 100 Investment holding

Subsidiaries of ACPI Holding

Ltd.

ASCE Construction Ltd. * @ Thailand 100 100 Manufacturing of engineered

products and providing


ASC Engineering Thailand 100 100 Manufacturing of engineered

Sdn. Bhd. Ltd. * products and providing


services

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2008 annual report





Subsidiaries of ACPI Holding

Ltd. (Contd.)

ASC Engineering Sdn. Thailand 100 100 Construction and engineering

Bhd. - ASCE

Construction Ltd.

Joint Venture * @

ASC Engineering Sdn. Thailand 100 100 Construction and engineering

Bhd Ltd. - ASCE

Construction Ltd.

Joint Venture * @

Subsidiary of Gandaan

Unik Sdn. Bhd.

Modal Ehsan Sdn. Bhd. Malaysia 60 60 Property development

Subsidiaries of MTD

Construction Sdn. Bhd.

MTD Tunneltech Sdn. Malaysia 60 60 Dormant

Bhd.

MTD Construction Philippines 60 60 Civil engineering and

(Philippines), Inc. construction works

Disposal of subsidiaries

During the year, the Company had undertaken an internal reorganisation by the disposal of seven (7) subsidiary companies to ACP (Tracks) Sdn. Bhd., a wholly owned subsidiary of the Company.

* Audited by firms of auditors other than Ernst & Young

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112


# The Company on 20 June 2008, announced that approval was granted to its subsidiary, Associated Concrete Products (Malaysia) Sdn Bhd to proceed with the application to the relevant authority for the striking off of this dormant subsidiary with an issued and paid-up capital of SGD2 only. The outcome of the application is still pending at the date of the report.

^ The final meetings for the Members’ Voluntary winding-up had been duly conducted on 30 April 2008 and these subsidiaries, with an issued and paid-up capital of RM5,000,000 and RM300,000 respectively would be dissolved on 6 August 2008, the expiration of three (3) months after the lodging of the Form 69 with the Suruhanjaya Syarikat Malaysia.

@ The Auditor’s Report included an “Emphasis of Matter” in relation to its going concern as a result of recurring losses from operations and net capital deficiencies as at 31 March 2008.

(b) Acquisition in the previous financial year

On 17 October 2006, the Company had acquired 100% equity interest in MTD Construction Sdn. Bhd. comprising 11,000,000 shares of RM1.00 each from MTD Equity Sdn. Bhd., a wholly owned subsidiary of MTD Capital Bhd, for a consideration of RM88,000,000 which was satisfied by the issuance of 88,000,000 new ordinary shares of the Company of RM1.00 each. upon the completion of the acquisition, MTD Construction Sdn. Bhd. became a wholly owned subsidiary of the Company.

The cost of acquisition of RM103,840,000 consists of issuance of 88,000,000 new ordinary shares of RM1.00 each with a fair value of RM1.18 each, being the published price of the shares of the Company at the date of acquisition.

The acquired subsidiary, in the previous financial year, contributed the following results to the Group:

2007 RM’000

Revenue 165,885

Loss for the year (368)

If the acquisition had occurred on 1 April 2006, the Group’s revenue and loss for the year would have been RM565,310,000 and RM86,022,000 respectively.

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(b) Acquisition in the previous financial year (Contd.)

The assets and liabilities arising from the acquisition are as follows :

Fair Value Acquiree’s Recognised on Carrying

Acquisition Amount RM’000 RM’000

(restated) (restated)

Property, plant and equipment (Note 13) 21,593 13,959

Inventories 72 72

Trade and other receivables 215,076 215,076

Cash and bank balances 29,565 29,565

Deferred tax assets (Note 21) 1,163 1,163

267,469 259,835

Trade and other payables (157,418) (157,418)

Retirement benefit obligations (4,291) (4,291)

Hire purchase (2,400) (2,400)

Bank borrowings (67,445) (67,445)

Minority interests (2,618) (2,618)

(234,172) (234,172)

Fair value of net assets 33,297

Goodwill on acquisition 70,543

Cost of acquisition 103,840

The cash inflow on acquisition is as follows :

RM’000

Purchase consideration satisfied by cash -

Cash and cash equivalents of subsidiary acquired 29,565

Net cash inflow to the Group 29,565

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114

18. INVESTMENTS IN ASSOCIATES

Group 2008 2007

RM’000 RM’000

unquoted shares, at cost 8,041 8,040

Share of post-acquisition reserves 6,282 (3,563)

14,323 4,477

Classified as non-current asset held for sale (Note 35) (1,419) -

12,904 4,477

Details of associates are as follows:

Equity InterestYear Country of Held(%)

Name Ended Incorporation 2008 2007 Principal Activities

Held by MTD Construction

Sdn. Bhd.

Intraxis Engineering 31 December Malaysia 40 40 Civil works for Bakun

Sdn. Bhd. # 2007 Hidroelectric project

Held by Associated

Concrete Products

(Malaysia) Sdn. Bhd.

Associated Concrete 31 December Cambodia 49 49 Manufacturing and

Products (Cambodia) 2007 marketing of precast

Pte. Ltd. * # @ concrete products

ACPC Properties 31 December Cambodia 49 49 Investment holding

Pte. Ltd. * # @ 2007

Associated Concrete 31 December Malaysia 49 49 Manufacturing and

Products (Sabah) 2007 marketing of precast

Sdn. Bhd. # concrete products

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2008 annual report

18. INVESTMENTS IN ASSOCIATES (CONTD.)

Equity InterestYear Country of Held(%)

Name Ended Incorporation 2008 2007 Principal Activities

Held by ACP Technologies

Sdn. Bhd.

ASC Engineering Sdn. 31 March Thailand 49 49 Construction and

Bhd. and u and O 2008 engineering

Corporation Ltd. *

* Audited by firms of auditors other than Ernst & Young

# The financial statements of the above associates are not coterminous with those of the Group, which have financial year end of 31 December 2007. For the purpose of applying the equity method of accounting, the financial statements of these associates for the year ended 31 March 2008 have been used and appropriate adjustments have been made for the effects of significant transactions between that date and 31 March 2008.

@ The associates have been disposed off subsequent to year end.The details on the disposal is further disclosed in Note 42(a).

The summarised financial statements of the associates are as follows:

2008 2007 RM’000 RM’000

Assets and liabilities

Current assets 141,406 119,106

Non-current assets 24,646 77,554

Total assets 166,052 196,660

Current liabilities 121,587 175,383

Non-current liabilities 2,668 11,030

Total liabilities 124,255 186,413

Results

Revenue 55,212 22,584

Profit/(loss) for the year 25,201 (479)

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116

19. OTHER INVESTMENTS

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Quoted shares, at cost

- in Malaysia 519 217 - -

- outside Malaysia - 448 - -

519 665 - -

Less: Accumulated impairment loss (423) (167) - -

96 498 - -

Transferable club memberships 289 289 261 261

385 787 261 261

Quoted shares, at market value

- in Malaysia 109 111 - -

- outside Malaysia - 1,927 - -

109 2,038 - -

20. TRADE RECEIVABLES

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000 Current

Trade receivables 142,120 179,647 5,091 5,091

Progress billings 21,118 30,953 - -

Amounts due from customers on

contracts (Note 25) 56,929 22,839 - -

Retention sums on contracts (Note 25) 19,191 21,422 - -

239,358 254,861 5,091 5,091

Less: Provision for doubtful debts (46,046) (49,863) - -

193,312 204,998 5,091 5,091

Non-current

Trade receivables 10,676 16,125 10,676 16,125

203,988 221,123 15,767 21,216

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2008 annual report

20. TRADE RECEIVABLES (CONTD.)

Included in the trade receivables and retention sums on contracts of the Group are amounts of RM Nil (2007: RM76,000) and RM1,844,000 (2007:RM960,000) respectively receivable from a company in which certain directors of the Company are deemed to have an interest. The amounts are unsecured, non-interest bearing and are to be repaid by cash settlement.

The entire non-current amounts consist of outstanding balance from one debtor whereby there is an arrangement of deferred payments until 2010 on a quarterly basis. The amount due bears interest of 10% (2007: 10%) per annum, unsecured and are to be repaid by cash settlement.

(a) Movement of provision for doubtful debts:

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

At beginning of the year (49,863) (42,150) - (1,113)

Provision for doubtful debts (Note 7) (4,538) (12,654) - -


written back (Note 7) 8,355 4,941 - 1,113

At end of the year (46,046) (49,863) - -

(b) Credit risk

The Group’s primary exposure to credit risk arises through its trade receivables. The Group’s trading terms with its customers are mainly on credit. The credit period is generally for a period of one month (2007: one month), extending up to four months (2007: four months) for major customers. Each customer has a maximum credit limit. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. In view of the aforementioned and the fact that the Group’s trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. Trade receivables are non-interest bearing except for the RM15,767,000 (2007: RM21,216,000) owed by a debtor of the Group and the Company.

21. DEFERRED TAXATION

Group Company 2008 2007 2008 2007


At beginning of year (1,474) 244 130 486

Acquisition of subsidiary (Note 17(b)) - (1,163) - -

Recognised in income statement (Note 10) 131 (555) (123) (356)

Exchange difference 40 - - -

At end of year (1,303) (1,474) 7 130

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118

21. DEFERRED TAXATION (CONTD.)

Group Company 2008 2007 2008 2007


Presented after appropriate

offsetting as follows:

Deferred tax assets (2,407) (1,865) (95) (356)

Deferred tax liabilities 1,104 391 102 486

(1,303) (1,474) 7 130

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

Deferred Tax Assets of the Group: Provisions

RM’000

At 1 April 2007 (restated) (1,865)

Recognised in the income statement (582)

Exchange difference 40

At 31 March 2008 (2,407)

At 1 April 2006 (5,397)

Recognised in the income statement 3,532

At 31 March 2007 (1,865)

Deferred Tax Liabilities of the Group: Accelerated

Capital Allowances

RM’000

At 1 April 2007 391

Recognised in the income statement 713

At 31 March 2008 1,104

At 1 April 2006 4,181

Recognised in the income statement (3,790)

At 31 March 2007 391

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2008 annual report

21. DEFERRED TAXATION (CONTD.)

Deferred Tax Liabilities/(Assets) of the Company: Accelerated

Capital Allowances Others Total

RM’000 RM’000 RM’000

At 1 April 2007 93 37 130

Recognised in the income statement 9 (132) (123)

At 31 March 2008 102 (95) 7

At 1 April 2006 100 386 486

Recognised in the income statement (7) (349) (356)

At 31 March 2007 93 37 130

Deferred tax assets have not been recognised in respect of the following items:

Group 2008 2007

RM’000 RM’000

unused tax losses 74,291 54,235

unabsorbed capital allowances 21,201 23,924

unutilised reinvestment allowances 18,903 18,034

Others 16,666 20,065

131,061 116,258

The unutilised tax losses, unabsorbed capital allowances and unutilised reinvestment allowances are available indefinitely for offsetting against future taxable profits of the respective entities within the Group, subject to no substantial change in shareholdings of those entities under the Income Tax Act, 1967 and guidelines issued by the tax authority.

22. PROPERTY DEVELOPMENT COSTS

Freehold Development Land Costs Total

RM’000 RM’000 RM’000 Group

At 31 March 2008

Cumulative Property Development Cost

At 1 April 2007 64,750 156,773 221,523

Cost incurred during the year - 37,312 37,312

Reversal due to disposal (10,000) - (10,000)

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120

22. PROPERTY DEVELOPMENT COSTS (CONTD.)

Freehold Development Land Costs Total

RM’000 RM’000 RM’000 Group (Contd.)

At 31 March 2008 (Contd.)

Cumulative Property Development Cost (Contd.)

Transfer to construction contract - (35,132) (35,132)

Reversal of completed projects (2,932) (69,852) (72,784)

At 31 March 2008 51,818 89,101 140,919

Cumulative Cost Recognised in Income Statement

At 1 April 2007 (12,532) (112,146) (124,678)

Recognised during the year (Note 4) (7,047) (18,682) (25,729)

Reversal due to disposal 9,078 - 9,078

Transfer to construction contract - 25,959 25,959

Reversal of completed projects 2,932 69,852 72,784

At 31 March 2008 (7,569) (35,017) (42,586)

Property development cost at 31 March 2008 44,249 54,084 98,333

At 31 March 2007

Cumulative Property Development Cost

At 1 April 2006 54,750 143,232 197,982

Cost incurred during the year - 2,646 2,646

Transfer from property, plant and equipment (Note 13) 10,000 10,895 20,895

At 31 March 2007 64,750 156,773 221,523

Cumulative Cost Recognised in Income Statement

At 1 April 2006 (8,898) (94,500) (103,398)

Recognised during the year (Note 4) (3,634) (17,646) (21,280)

At 31 March 2007 (12,532) (112,146) (124,678)

Property development cost at 31 March 2007 52,218 44,627 96,845

Included in property development costs of the Group is interest expense during the financial year amounting to RM1,248,000 (2007: RM1,908,000).

The freehold land has been pledged to a licensed bank to secure the borrowings of the Group as disclosed in Note 31.

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2008 annual report

23. INVENTORIES

Group 2008 2007

RM’000 RM’000

Cost:Properties held for sale 59 375

Raw materials 20,847 17,494

work-in-progress 733 527

Finished goods 37,935 29,581

Consumables 630 704

60,204 48,681

Net realisable value:

Finished goods 450 3,940

Properties held for sale 2,477 3,125

2,927 7,065

63,131 55,746

24. OTHER RECEIVABLES

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Deposits 3,605 6,561 1,324 1,324

Advances to subcontractors (a) 37,966 28,500 - -

Prepayments 1,611 6,910 99 60

Amount due from related corporations 26,678 14,694 - -

Sundry receivables (a) 28,090 17,851 136 138

97,950 74,516 1,559 1,522

Less: Provision for doubtful debts (b) (2,036) (3,262) (48) -

95,914 71,254 1,511 1,522

(a) Included in the advances to subcontractors and sundry receivables of the Group are amounts of RM33,191,000 (2007: RM70,000) and RM4,043,000 (2007: RM4,041,000) respectively receivable from companies in which certain directors of the Company are deemed to have an interest. The amounts are unsecured, non-interest bearing and has no fixed term of repayment.

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122

24. OTHER RECEIVABLES (CONTD.)

(b) Movement of provision for doubtful debts:

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

At beginning of the year (3,262) (870) - -


written back (Note 7) 1,226 - - -

Provision for doubtful debts (Note 7) - (2,392) (48) -

At end of the year (2,036) (3,262) (48) -

The Group has no significant concentration of credit risk that may arise from exposure to a single debtor or to groups of debtors.

Related corporations refers to companies within the MTD Capital Bhd group of companies. The amounts due from related corporations are unsecured, non interest-bearing and are repayable on demand.

25. AMOUNTS DUE FROM/(TO) CUSTOMERS ON CONTRACTS

Group 2008 2007

RM’000 RM’000

Construction contracts costs incurred to date 2,957,096 2,481,788

Attributable profits 199,719 170,820

Less: Provision for foreseeable losses (99) (25,338)

3,156,716 2,627,270

Less: Progress billings (3,137,085) (2,647,401)

19,631 (20,131)

Amounts due from customers on contracts (Note 20) 56,929 22,839

Amounts due to customers on contracts (Note 32) (37,298) (42,970)

19,631 (20,131)

Retention sums on contracts, included within trade receivables (Note 20) 19,191 21,422

Advances received on contracts, included within trade payables (Note 32) (74,092) (44,957)

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26. AMOUNTS DUE FROM/(TO) SUBSIDIARIES AND HOLDING COMPANY

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Amount due from subsidiaries:

Trade - - - 32,673

Non-trade - - 405,919 226,913

- - 405,919 259,586

Amount due from holding company:

Non-trade 52,048 - - -

Amount due to subsidiaries:

Non-trade - - (78,735) (31,903)

Amount due to holding company:

Non-trade (154) (1,412) (154) -

Included in amounts due from subsidiaries is a balance amounting to RM68,000,000 (2007: RM13,878,000) which attracted interest at the rate of 7% (2007: 2.0% to 7.2%) per annum. The amount of RM68,000,000 arose from the internal restructuring exercise, which is further disclosed in Note 41(c), is not secured and has to be repaid within five years from 13 November 2007.

Included in amounts due to subsidiaries, in the previous financial year, were balances amounting to RM4,200,000 which attracted interest varying between 4.0% to 7.5% per annum. The amounts due to subsidiaries were unsecured and repayable on demand.

The amounts due from/(to) holding company is unsecured, non interest-bearing and repayable on demand.

27. AMOUNTS DUE FROM ASSOCIATES

Group Company

2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Trade 121 5,075 - -

Non-trade 27,858 38,646 - 4

27,979 43,721 - 4

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

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28. CASH AND BANK BALANCES

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Deposits with licensed banks 26,214 4,707 4,873 1,873

Cash in hand and at bank 52,438 40,479 451 470

78,652 45,186 5,324 2,343

Less: Bank overdrafts (Note 31) (15,338) (5,763) (485) (500)

Cash and cash equivalents 63,314 39,423 4,839 1,843

Included in cash at bank of the Group are amounts of RM2,766,500 (2007: RM679,000) held pursuant to Section 7A of the Housing Development (Control and Licensing) Act 1966 and therefore restricted from use in other operations.

Deposits with licensed banks of the Group and Company amounting to RM3,657,000 (2007: RM4,662,000) and RM1,873,000 (2007: RM1,873,000) respectively are pledged as securities for credit facilities granted to certain subsidiaries (Note 31).

The weighted average effective interest rates of deposits at the balance sheet date are as follows:

Group Company 2008 2007 2008 2007

% % % %

Licensed banks 3.54 3.00 2.84 3.00

The average maturities of deposit as at the end of the financial year are as follows:

Group Company 2008 2007 2008 2007 Days Days Days Days

Licensed banks 184 235 15 15

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2008 annual report

29. SHARE CAPITAL

Group and Company Number of Shares Amount

2008 2007 2008 2007 ‘000 ‘000 RM’000 RM’000

Authorised:

At beginning of the year/end of the year 500,000 500,000 500,000 500,000

Issued and Fully Paid:

At beginning of the year 221,484 133,484 221,484 133,484

Share issued during the year 10,148 88,000 10,148 88,000

At end of the year 231,632 221,484 231,632 221,484

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

(a) Ordinary Shares Issued for Cash

During the financial year, the Company increased its issued and paid-up ordinary share capital from RM221,484,398 to RM231,632,798 by way of issuance of 10,148,400 ordinary shares of RM1.00 each for cash pursuant to the Company’s Private Placement at an average placement price of RM2.05. The share premium of RM10,655,820 arising from the issuance of ordinary shares has been included in the share premium account.

The new ordinary shares rank pari passu in all respects with the existing ordinary shares of the Company.

In the previous financial year, the Company issued 88,000,000 new ordinary shares of RM1 each at an issue price of RM1 per ordinary share amounting to RM88,000,000 as partial discharge of purchase consideration for the acquisition of MTD Construction Sdn. Bhd. The new ordinary shares rank pari passu in all respects with the existing ordinary shares of the Company.

(b) Treasury Shares

The shareholders of the Company, via an ordinary resolution passed at the Annual General Meeting held on 19 September 2006, renewed their approval for the Company’s plan to repurchase its own shares up to 10% of the existing total paid-up capital (“Share Buy- back”).

The shares repurchased were held as treasury shares in accordance with Section 67A of the Companies Act, 1965.

During the financial year, the Company has not repurchased its shares and there were no sales, cancellation or distribution of treasury shares.

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126

29. SHARE CAPITAL (CONTD.)

(b) Treasury Shares (Contd.)

The number of treasury shares held on hand are as follows:

Number of ordinary

shares Amount ‘000 RM’000

At 1 April 2006/31 March 2007 and 1 April 2007/31 March 2008 637 1,904

(c) Employees Share Options Scheme (“ESOS”)

MTD ACPI Employees Share Options Scheme (“ESOS”) is governed by the by-laws Number of approved by the shareholders at an Extraordinary General Meeting ordinaryheld on 27 September 2001. The ESOS was implemented on 29 July 2002 for a period of 5 years from the date of Amount implementation and expired on 28 July 2007.

The salient features of the ESOS were as follows:

(i) The Options Committee appointed by the Board of Directors to administer the ESOS, may at its discretion at any time offer options in writing to eligible employees of the Group (save for any subsidiaries which are dormant) to subscribe for new ordinary shares of RM1.00 each in the Company.

(ii) To qualify for participation in the Scheme, any employee whose employment has been confirmed and is at least 18 years of age and any executive directors holding office in a full-time executive capacity of the Group (save for any subsidiaries which are dormant) shall be eligible to participate in the ESOS.

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

(iv) No options will be granted to any executive director of the Company unless the shareholders of the Company in a general meeting shall have previously approved the maximum allowable allotment of shares to that executive director.

(v) The option price for each share shall be the weighted average of the market price as quoted in the Daily Official List issued by Bursa Malaysia Securities Berhad for the 5 market days immediately preceding the date on which the option is granted less, if the Options Committee shall so determine at their discretion from time to time, a discount of not more than 10% or the par value of the shares of the Company of RM1.00.

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2008 annual report

29. SHARE CAPITAL (CONTD.)

(c) Employees Share Options Scheme (“ESOS”) (Contd.)

The salient features of the ESOS were as follows (Contd.):

(vi) An option is exercisable only by that grantee during his lifetime and whilst he is in the employment of the Group and within the option period. All unexercised or partially exercised options shall become null and void after the date of expiry.

(vii) The new ordinary shares to be allotted and issued upon any exercise of the options will upon such allotment and issuance, rank pari passu in all respects with the then issued and fully paid-up shares except that the shares so issued will not be entitled to any dividends, rights, allotments or other distributions, the entitlement date of which is prior to the date of allotment of the new shares and will be subject to all the provisions of the articles relating to transfer, transmission and otherwise of the shares.

(viii) The option shall not carry any right to vote at any general meeting of the Company. A grantee shall not be entitled to any dividends, rights or other entitlement on his unexercised options.

(ix) The shares to be allotted and issued to a grantee pursuant to the exercise of an Option under the ESOS will not be subject to any retention period or restriction on transfer.

The terms of options vested and lapsed during the financial year are as follows:

AtGrant Expiry Exercise beginning At end Date Date Price of year Granted Exercised Lapsed of year

RM ‘000 ‘000 ‘000 ‘000 ‘000

2008

29/7/2002 28/7/2007 2.46 4,828 - - (4,828) -

2007

29/7/2002 28/7/2007 2.46 6,814 - - (1,986) 4,828

30. RETIREMENT BENEFIT OBLIGATIONS

The Group and the Company operate an unfunded defined benefit retirement benefit scheme for its eligible employees. Provision for the unfunded retirement benefit obligations is made in accordance with the terms stipulated in the Collective Agreement for all eligible employees. This is calculated based on the employees’ current emoluments and the length of their service with the Company.

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128

30. RETIREMENT BENEFIT OBLIGATIONS (CONTD.)

The amounts recognised in the balance sheet are determined as follows:

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Present value of unfunded defined benefit

obligations, representing net liability 9,785 9,520 243 232

Analysed into:

Current 223 90 - -

Non-current:

Later than 1 year but not later than 2 years 311 223 - -

Later than 2 year but not later than 5 years 311 311 - -

Later than 5 years 8,940 8,896 243 232

9,562 9,430 243 232

9,785 9,520 243 232

The amounts recognised in the income statement are as follows:

Group Company 2008 2007 2008 2007


Current service cost 741 929 13 16

Adjustment of liability (873) - - -

Interest cost 487 605 11 13

Total, included in employee

benefits expense (Note 8) 355 1,534 24 29

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2008 annual report

30. RETIREMENT BENEFIT OBLIGATIONS (CONTD.)

Movements in the net liability in the current year were as follows:

Group Company 2008 2007 2008 2007


At beginning of the year 9,520 8,242 232 203

Payment (90) (256) (13) -

Recognised in income statement (Note 7) 355 1,534 24 29

At end of the year 9,785 9,520 243 232

Principal actuarial assumptions used: 2008 2007

% %

Discount rate 5.1 6.5

Expected rate of salary increases 4.0 - 5.6 6.0

31. BORROWINGS

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Short term borrowings

Secured:

Bank overdrafts (Note 28) 14,667 3,540 - -

Bankers’ acceptances 11,143 8,978 - -

Revolving credits 15,500 3,000 5,000 -

Hire purchase (Note 34) 2,457 1,542 33 33

Bridging loan - 3,667 - -

Term loan 14,050 23,280 - -

57,817 44,007 5,033 33

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130

31. BORROWINGS (CONTD.)

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

unsecured:

Bank overdrafts (Note 28) 671 2,223 485 500


Revolving credits 39,000 53,000 - 1,500

Medium term notes 51,000 - 51,000 -

95,292 69,841 51,485 2,000

153,109 113,848 56,518 2,033

Long term borrowings

Secured:


Term loan 7,540 9,174 - -

9,634 11,303 99 132

unsecured:

Medium term notes 40,000 91,000 40,000 91,000

49,634 102,303 40,099 91,132

Total borrowings 202,743 216,151 96,617 93,165

Total borrowings

Bank overdrafts (Note 28) 15,338 5,763 485 500


Revolving credits 54,500 56,000 5,000 1,500


Bridging loan - 3,667 - -

Term loan 21,590 32,454 - -

Medium term notes 91,000 91,000 91,000 91,000

202,743 216,151 96,617 93,165

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The weighted average effective interest rates during the financial year for borrowings are as follows:

Group Company 2008 2007 2008 2007

% % % %

Bank overdrafts 7.89 7.63 - -

Bankers’ acceptances 6.22 4.53 - -

Revolving credits 5.72 5.75 5.25 5.00

Hire purchase 3.48 3.42 3.68 3.68

Bridging loan - 8.25 - -

Term loan - fixed rates 8.38 8.38 - -

Medium term notes 6.75 6.75 6.75 6.75

(i) The secured bank overdrafts, bankers’ acceptances, revolving credits, bridging loan and term loan of the Group are secured by certain assets of the Group and of the Company as disclosed in Notes 13, 22, and 28.

The term loans are secured by the following:

(a) First legal charge over freehold land of certain subsidiaries as disclosed in Note 13 and Note 22;

(b) A registered debenture creating a fixed and floating charge on present and future assets of certain subsidiaries;

(c) Corporate guarantees by the Company; and

(d) Negative pledge from subsidiaries.

(ii) On 14 January 2003, the Company entered into a Facility Agreement with AmMerchant Bank (“Investor”) for an Islamic Notes Issuance Facility comprising the issuance of Commercial Papers (CPs) and/or Medium Term Notes (MTNs) based on the Syariah principle of Mudarabah.

The aggregate outstanding amount of the face value of the CPs and MTNs issued under the Facility shall at any one time not exceed RM130,000,000. The proceeds of the issue were utilised to finance existing projects, to repay existing bank borrowings, part finance capital expenditure and to provide additional working capital for the Group. Both the CPs and MTNs are unsecured.

Pursuant to the Facility Agreement, the Company disposed of certain assets to the Investor at an agreed purchase price. The same assets were then resold by the Investor to the Company at a selling price which comprise the original purchase price and a profit portion or margin agreed between the Company and the Investor.

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(ii) The settlement of the purchase consideration was by issuance of a negotiable and non- interest bearing promissory note, either in the form of CPs or MTNs, or a combination of both and may be traded in the secondary market under the Syariah principle of Bai’ Al- Dayn. The CPs were issued at a discount to face value and the MTNs were issued at par. Both the CPs and MTNs will be redeemed at their selling price on the respective maturity dates.

Details of the MTNs drawndown by the Company and outstanding as at balance sheet date are as follows:

Yield atType of Issuance date Issuance Maturity Amount facility % date date RM’000

Issue 1 7.16 6 February 2003 6 February 2009 11,000


Issue 3 6.03 7 July 2003 7 July 2009 40,000


91,000

32. TRADE PAYABLES

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Trade payables 217,638 165,673 11 13

Amounts due to customers on

contracts (Note 25) 37,298 42,970 - -

Retention sum (Note 25) 74,092 44,957 - -

Progress billing in respect of

property development cost 5,405 - - -

334,433 253,600 11 13

Included in the trade payables are amounts of RM12,558,000 (2007: RM39,941,000) in respect of construction works payable to companies in which certain directors of the Company are deemed to have an interest. The amounts are not secured, non-interest bearing and have no fixed terms of repayment.

The normal trade credit terms granted to the Group range from 30 to 120 days (2007: 30 to 120 days).

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33. OTHER PAYABLES

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Short term

Sundry payables (a) 23,503 34,408 67 278

Accruals (b) 9,540 19,226 1,364 1,388

Amount due to related

corporations 20,603 20,168 41 -

53,646 73,802 1,472 1,666

Long term

Sundry payables (a) - 5,781 - -

53,646 79,583 1,472 1,666

(a) Included in the sundry payables are current portion of RM7,281,010 (2007: RM1,500,000) which represents an amount owing to a shareholder of a subsidiary. The amount bears interest at the rate of 7.5% (2007: Nil) per annum and is repayable on demand.

Included in sundry payables are current and non-current liability portion of RM5,781,010 (2007: RM5,781,010) and RM Nil (2007: RM5,781,010) respectively which represents amount owing to former shareholders of a subsidiary. The amount is unsecured, non-interest bearing has fixed term of repayment.

(b) Included in accruals of the Group are liquidated ascertained damages payable amounting to RM1,818,000 (2007: RM1,662,000).

Movement for provisions for liquidated ascertained damages during the year is as follows:

Group

2008 2007

RM’000 RM’000

At the beginning of the year 1,662 1,652

Additional provision during the year (Note 7) 192 10

utilised during the year (36) -

At end of the year 1,818 1,662

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34. HIRE PURCHASE AND FINANCE LEASE LIABILITIES

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Future minimum lease payments:

Not later than 1 year 2,070 1,744 40 40

Later than 1 year and not later than 2 years 2,029 1,516 40 40

Later than 2 years and not later than 5 years 892 844 80 120

4,991 4,104 160 200

Less: Future finance charges (440) (433) (28) (35)

Present value of finance lease liabilities 4,551 3,671 132 165

Analysis of present value

of finance lease liabilities:

Not later than 1 year 2,457 1,542 33 33

Later than 1 year and not later than 2 years 1,480 1,334 33 33

Later than 2 years and not later than 5 years 614 795 66 99

4,551 3,671 132 165

Less: Amount due within 12 months (2,457) (1,542) (33) (33)

Amount due after 12 months 2,094 2,129 99 132

Analysed as :

Due within 12 months (Note 31) 2,457 1,542 33 33

Due after 12 months (Note 31) 2,094 2,129 99 132

4,551 3,671 132 165

The Group has finance leases and hire purchase contracts for motor vehicles (Note 13(a)). There are no restrictions placed upon the Group by entering into these leases and no arrangements have been entered into for contingent rental payments.

The weighted average effective interest rate at the balance sheet date of the Group and the Company is further disclosed in Note 31.

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35. NON-CURRENT ASSET HELD FOR SALE

On 9 May 2008, the Group announced the wholly owned subsidiary, Associated Concrete Products (Malaysia) Sdn. Bhd. (“ACPM”) had entered into two (2) sales and purchase agreements to fully dispose its 49% shares in Associated Concrete Products (Cambodia) Pte. Ltd. and ACPC Properties Pte. Ltd. respectively at a total disposal consideration of uSD2,300,000 (RM7,330,000).

Details of the disposal being disclosed in Note 42(a).

The investment in associate held for sale on the Group’s balance sheet as at 31 March 2008 is as follows:

RM’000

unquoted shares at cost 1,749

Share of post acquisition reserves (330)

Non-current asset held for sale (Note18) 1,419

The above non-current asset held for sale is stated at lower of its carrying amount and fair value less costs to sell. No remeasurement is made on the carrying amount as the disposal of associate companies are not expected to be lower than the carrying amount as at the balance sheet date.

36. CONTINGENT LIABILITIES

Company

2008 2007

RM’000 RM’000

Corporate guarantees given to

financial institutions for

facilities granted to

subsidiaries 139,167 62,648

Corporate guarantees given to

financial institutions for

performance bonds issued to

third parties 11,339 47,935

150,506 110,583

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136

37. COMMITMENTS

Group

2008 2007

RM’000 RM’000

Property, plant and equipment:

Approved but not contracted for 303 4,000

38. CONTINGENT ASSETS

(a) Pursuant to the purchase agreement entered on the acquisition of MTD Construction Sdn. Bhd. (“MTDC”) as disclosed in Note 17, MTD Equity Sdn. Bhd. provided a profit guarantee to the Company that the audited Profit After Tax (“PAT”) of MTD Construction Sdn. Bhd. during the 3 financial years ending 31 March 2007, 31 March 2008 and 31 March 2009 will not be less than RM33,000,000. In the event of any shortfall in the actual PAT from the guaranteed amount, MTD Equity Sdn. Bhd. must pay the shortfall to the Company at the end of the 3-year warranty period in cash.

(b) On 23 March 2005, MTD Construction Sdn. Bhd. (“Plaintiff”), a subsidiary of the Company through its solicitors had served a writ of Summons and Statement of Claim on AXA Affin Assurance Bhd (“ AXA or Defendant”). The suit involves a claim under a Contractor’s All Risk Policy (“CAR Policy”) underwritten by AXA and procured by the Plaintiff in respect of a project known as “Construction and Completion of Jalan Simpang Pulai-Lojing-Gua Musang- Kuala Berang, Package 2” (“MTD Construction Project”).

under the terms of the CAR Policy, AXA agreed that if at any time during the period of cover, the items or any part thereof covered by the CAR Policy shall suffer any unforeseen and sudden physical loss or damage from any cause, other than those specifically excluded, in any manner necessitating repair or replacement, AXA will indemnify the Plaintiff in respect of such loss or damage. Plaintiff contends that AXA is in breach of the CAR Policy when it failed to decide on acceptance of its liability or make payment in settlement of the claim and is claiming for inter-alia, RM38,586,234 as at August 2003 being costs for the remedial works in respect of slope failures/landslips at the Project site, alternatively damages to be assessed and costs.

On 12 May 2005, the Plaintiff through its solicitors received a Statement of Defence by AXA dated 9 May 2005, denying full liability of the Plaintiff’s claim in the suit, citing inter alia, that it was entitled to repudiate liability under the CAR Policy on the ground that the loss is entirely excluded under the terms of the CAR Policy as the slope failures were caused by faulty design and/or defective workmanship.

AXA had on 7 December 2005 filed an application in the High Court for, inter alia, an order under Order 14A and/or Order 33 Rule 2, Rules of the High Court 1980 that a preliminary question of fact and law be determined i.e. whether Plaintiff’s claim under the CAR Policy in respect of the slope failure, caused by the failure of Plaintiff’s design to cope with unforeseen ground conditions is excluded on a proper construction of CAR Policy; or alternatively, for an order under Section 24A(2)(b) of the Courts of Judicature Act 1964 that the determination of the issues of fact whether the slope failures was due to the faulty design and/or defective workmanship be referred to a sole arbitrator (“Application”).

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38. CONTINGENT ASSETS (CONTD.)

The Application was scheduled for hearing on 7 February 2007 whereon the Defendant withdrew the Application with no order as to costs.

The learned judge then proceeded to fix the trial dates on 17 August 2009 to 20 August 2009. In the meantime, the matter has been fixed for case management on 27 August 2008.

The solicitors for MTDC are of the view that MTDC has a sustainable claims and a good chance of success on the balance of probability.

39. SIGNIFICANT RELATED PARTY TRANSACTIONS

(a) In addition to the transactions detailed elsewhere in the financial statements, the Company had the following transactions with related parties during the financial year:

2008 2007 RM’000 RM’000

Group

Contract revenue from ultimate holding company (i) (52,047) (82,825)

Contract revenue from companies where directors have interest (ii) (8,079) (9,567)

Advances made to a company where directors have interest (ii) 33,136 -

Contract cost to companies where directors have interest (ii) 71,324 11,156

Contract revenue from related corporations (iii) (25,958) (14,890)

Insurance paid to a company related to a director of the Company (iv) 1,854 4,545

Advances granted by a shareholder of a subsidiary 5,781 -

Interest charge on advances granted by a shareholder of a subsidiary (v) 364 -

Project management fee payable to a related corporation (vi) 384 -

Company

Commission received from a subsidiary (1,506) (1,477)

Management fee received from subsidiaries (4,647) (4,259)

Sale of goods and services to subsidiaries (vii) - (2,488)

Loan interest income charged to subsidiaries (viii) (1,899) (985)

Loan interest expense charged by subsidiaries (viii) - 145

(i) The contract revenue from ultimate holding company were made according to the published prices and conditions offered to the major customers of the Group, except that a longer credit period of up to six months is normally granted.

(ii) Relates to non-related corporations in which certain directors are deemed to have an interest. Datin Nik Fuziah binti Nik Hussain, who is the spouse of Dato’ Azmil Khalili bin Dato’ Khalid, a director of the Company, and the daughter of Dato’ Dr. Nik Hussain bin Abdul Rahman, a director of the Company, has an interest in these companies.

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39. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTD.)

(a) In addition to the transactions detailed elsewhere in the financial statements, the Company had the following transactions with related parties during the financial year: (Contd.)

(iii) The directors consider that the contract revenue were made according to the published prices and conditions similar to those offered to the major customers of the Group, except that a longer credit period of up to six months is normally granted.

Related corporations refers to companies within the MTD Capital Bhd group of companies.

(iv) The directors consider that the insurance paid were made according to the published prices and conditions similar to those offered to the major customers of the insurance company, except that interest was not charged on overdue balances.

(v) The interest charges arose from the advance granted by a shareholder of the subsidiary company as further disclosed in Note 33(a).

(vi) The rendering of services by a related corporation was made at arm’s length pricing without a fixed term of repayment.

(vii) The sale of goods subsidiaries were made according to the published prices and conditions offered to the major customers of the Company, except that a longer credit period of up to six months is normally granted.

(viii) The loan interest income/expense arose from the amounts due from/(to) holding company and fellow subsidiaries. Further details are disclosed in 26.

Information regarding outstanding balances arising from related party transactions as at 31 March 2008 are disclosed in Notes 24, 26, and 33.

(b) Compensation of key management personnel

The remuneration of directors and other members of key management during the year was as follows:

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Short-term employee benefits 2,545 2,137 530 739

Defined contribution plan 237 226 57 82

Others 166 126 130 125

2,948 2,489 717 946

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39. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTD.)

(b) Compensation of key management personnel (Contd.)

Included in the total key management personnel are:

Group Company 2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Directors’ remuneration (Note 9) 2,325 2,127 312 584

Executive directors of the Company have been granted the following number of options over ordinary shares at RM1.00 each under the Company’s ESOS:

Group and Company 2008 2007 ‘000 ‘000

At beginning of year - 2,600

Less: Lapsed during the year - (1,300)

Resignation during the year - (1,300)

At end of year - -

The options were granted on the same terms and conditions as those offered to other employees of the Group as disclosed in Note 29(c).

40. SEGMENTAL INFORMATION

(a) Analysis by Business Segments

The Group’s operating business is organised and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

The main business segments of the Group comprise the following:

(i) Construction - Constructing and marketing of heavy element precast products for viaducts, elevated highways, light rail transit guideways, bridges, building system products, contracting in the fields of environmental systems and providing specialist contracting services.

(ii) Manufacturing and related services - manufacturing and marketing of industrial products, project management, manufacturing, marketing, licensing and franchising of precast and engineered products and investment holding.

(iii) Property development - Development and construction of residential, commercial and industrial property and sale of land held for development.

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40. SEGMENTAL INFORMATION (CONTD.)

(a) Analysis by Business Segments (Contd.)

2008 Construction Manufacturing Property Total Elimination Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Revenue

External sales 638,563 211,805 27,098 877,466 - 877,466

Inter-segment sales 20,144 102,652 - 122,796 (122,796) -

Total revenue 658,707 314,457 27,098 1,000,262 (122,796) 877,466

Result

Segment results 67,877 8,933 (2,559) 74,251 (59,359) 14,892

Interest income 4,371 112 75 4,558 (1,857) 2,701

Interest expenses (10,713) (5,252) (637) (16,602) 1,899 (14,703)

Share of results of associates 9,612 - - 9,612 234 9,846

Profit/(loss) before tax 71,147 3,793 (3,121) 71,819 (59,083) 12,736

Taxation (9,022) (933) 171 (9,784) - (9,784)

62,125 2,860 (2,950) 62,035 (59,083) 2,952

Minority Interests 2,076

5,028

Assets

Segmental assets 701,364 310,912 55,271 1,067,547 (197,286) 870,261

Investments in associates 9,677 3,098 - 12,775 129 12,904

Non-current asset held for sale - 1,419 - 1,419 - 1,419

unallocated assets 5,629 688 6,317

Total assets 1,087,370 (196,469) 890,901

Liabilities

Segmental liabilities 318,700 248,860 31,509 599,069 1,692 600,761

unallocated liabilities 2,244 - 2,244

Total liabilities 601,313 1,692 603,005

Other segment information

Capital expenditure 4,902 11,654 47 16,603 - 16,603

Depreciation 5,583 17,318 121 23,022 - 23,022

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(a) Analysis by Business Segments (Contd.)

2007 Construction Manufacturing Property Total Elimination Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Revenue

External sales 268,029 153,336 25,182 446,547 - 446,547

Inter-segment sales 36,236 87,949 - 124,185 (124,185) -

Total revenue 304,265 241,285 25,182 570,732 (124,185) 446,547

Result

Segment results (76,343) (8,424) (461) (85,228) 20,205 (65,023)

Interest income 5,017 200 452 5,669 (3,775) 1,894

Interest expenses (13,592) (939) (263) (14,794) 1,900 (12,894)

Share of results of

associates (120) (2,739) - (2,859) 310 (2,549)

Loss before tax (85,038) (11,902) (272) (97,212) 18,640 (78,572)

Taxation 216 (776) 362 (198) - (198)

(84,822) (12,678) 90 (97,410) 18,640 (78,770)

Minority Interests (916)

(79,686)

Assets

Segmental assets 599,573 222,902 104,771 927,246 (127,220) 800,026

Investments in associates - 4,517 - 4,517 (40) 4,477

unallocated assets 14,975 - 14,975

Consolidated total assets 946,738 (127,260) 819,478

Liabilities

Segmental liabilities 285,899 200,723 77,934 564,556 (4,290) 560,266

unallocated liabilities 798 - 798

Total liabilities 565,354 (4,290) 561,064

Other segment information

Capital expenditure 19,774 3,452 427 23,653 - 23,653

Depreciation 10,832 10,334 84 21,250 - 21,250

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(b) Analysis by Geographical Segments

The Group has operations in Malaysia, Thailand, India, Philippines, united Arab Emirates(uAE) and Saudi Arabia. In presenting information on the basis of geographical segments, segment revenue is based on geographical locations of customers. Segment assets are based on the geographical locations of assets.

Total Revenue Profit/(Loss) from External Capital Segment before

Customers Expenditure Assets Tax RM’000 RM’000 RM’000 RM’000

2008

Malaysia 600,310 8,850 699,186 (2,252)

Thailand 23,903 99 46,498 (6,495)

India 34,475 3,666 28,167 (7,073)

Philippines 108,558 1,742 56,326 14,397

united Arab Emirates(uAE) 54,350 2,232 21,048 13,600

Saudi Arabia 55,870 14 19,036 559

Consolidated 877,466 16,603 870,261 12,736

2007

Malaysia 344,362 16,230 660,614 (27,412)

Thailand 4,740 637 38,992 (47,533)

India 12,726 2,044 19,455 (3,499)

Philippines 26,220 2,538 57,346 1,934

united Arab Emirates(uAE) 1,693 1,766 8,444 (3,760)

Saudi Arabia 56,806 438 15,175 1,698

Consolidated 446,547 23,653 800,026 (78,572)

41. SIGNIFICANT EVENTS

(a) On 11 April 2007, the Company announced that at the Extraordinary General Meeting of wing Span Sdn. Bhd., a wholly-owned subsidiary of the Company (“wSSB”), held on 11 April 2007, it was resolved that wSSB shall be wound-up by way of Members’ Voluntary winding-up pursuant to Section 254(1)(b) of the Companies Act, 1965.

On 22 May 2008, the Company announced that pursuant to Section 272 (5) of the Companies Act, 1965, wSSB will be dissolved on the expiration of three (3) months after the lodging of the Form 69 with Suruhanjaya Syarikat Malaysia i.e. 6 August 2008.

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41. SIGNIFICANT EVENTS (CONTD.)

(b) On 19 March 2007, a wholly owned subsidiary of the Company, MTD Construction Sdn Bhd announced that it had entered into a conditional Sale and Purchase Agreement to dispose of a piece of freehold land held under Geran 41019, Lot 1381, Bandar Selayang, District of Gombak, Selangor Darul Ehsan including all existing buildings and structures erected to the holding company of the Company, MTD Capital Bhd, for a total cash consideration of RM20,364,000.

The proposal was approved in the Extraordinary General Meeting on 3 May 2007 and finally completed on 13 December 2007.

(c) The Company on 18 April 2007, announced that the Company proposes to undertake an internal reorganisation of the Group by the disposal of seven (7) subsidiary companies to a special purpose vehicle (“SPV”), a wholly-owned subsidiary by the Company, ACP (Tracks) Sdn. Bhd. (“ACP Tracks”).

Subsequently, on 15 June 2007, the Company had entered into a shares sale agreement with ACP Tracks in respect of the proposed internal reorganisation of the Group.

The Proposed Internal Reorganisation of the Group involves the proposed disposal of the entire shareholdings of the Company in the following subsidiary companies:

(i) Associated Concrete Products (Malaysia) Sdn. Bhd. (“ACPM”); (ii) Associated Structural Concrete Sdn. Bhd. (“ASC”); (iii) ASC Tiles Sdn. Bhd. (“ASCT”) (iv) Persys Sdn Bhd (“PSB”); (v) Acentis Engineering Sdn. Bhd. (“Acentis”); (vi) C&G Fabricators Sdn Bhd (“C&G”); and (vii) universal Building Products Sdn. Bhd. (“uBP”) (collectively referred to as the “Disposal Companies”)

to a SPV for a disposal consideration of RM88,000,000 (“Disposal Consideration”).

The Disposal Consideration shall be satisfied by the SPV in the following manner:

(i) issuance of 10,199,998 new ordinary shares of RM1.00 each in SPV (“SPV Shares”) to the Company at par; and

(ii) the balance of RM77,800,002 will be in the form of shareholder loan carrying an interest rate of 7% per annum (“Shareholder Loan”).

The Shareholder Loan should be repaid by the SPV within five (5) years from the completion date of the Proposed Internal Reorganisation of the Group. In the event the Shareholder Loan is not repaid within the said period, it will be converted into SPV Shares at par.

The Disposal Consideration of RM88,000,000 was arrived at on a “willing-buyer willing- seller” basis after taking into account but not limited to the net asset value as at 31 March 2006, latest profit/loss after taxation and deferred tax assets of the respective Disposal Companies on an aggregate basis.

The Proposed Internal Reorganisation of the Group was completed on 13 November 2007.

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41. SIGNIFICANT EVENTS (CONTD.)

(d) On 20 July 2007, the Company proposed to implement a private placement of up to 22,148,400 new ordinary shares of RM1.00 each in the Company, representing not more than 10% of the issued and paid-up share capital of the Company.

On 11 July 2008, the Company announced that it has completed the issuance of the first tranche of its shares consisting 648,400 shares on 25 October 2007 and the issuance of second tranche consisting of 9,500,000 shares on 20 November 2007 and the Company had decided to abort the Proposed Private Placement of the remaining 12,000,000 shares in view that the recent market prices of the shares do not reflect the fair value of the Company.

(e) On 7 September 2007, Aseambankers Malaysia Berhad (“Aseambankers”) announced, on behalf the Board of Directors of the Company that it had entered into a subscription agreement with Trek Layar Sdn. Bhd. (“Trek Layar”) and ACP (Tracks) Sdn. Bhd. (“ACP Tracks”) (Subscription Agreement) wherein Trek Layar will subscribe for 9,800,000 new ACP Tracks Shares (“Subscription Shares”) at par for a cash consideration of RM9,800,000 (“Subscription Consideration”). The proposed subscription by Trek Layar of the Subscription Shares shall represent 49% of the resultant entire enlarged issued and paid up capital of ACP Tracks upon the completion of the Subscription Agreement and a Share Sale Agreement dated 15 June 2007 entered into between the Company and ACP Tracks (“Share Sale Agreement”) pursuant to a proposed internal reorganisation of the Group as in item (b) above.

The proceeds of RM9,800,000 from the issuance of new ACP Tracks shares to Trek Layar shall be used to

partly repay the shareholder advance of the Company to ACP Tracks. The subscription was completed on 31 December 2007.

42. SUBSEQUENT EVENTS

(a) On 9 May 2008, the Company announced that its subsidiary, Associated Concrete Products (Malaysia) Sdn. Bhd. (“ACPM”) had on 8 May 2008, entered into two (2) conditional share sale and purchase agreements (“Share Sale and Purchase Agreements”) with Mr. Ta Ratha Phyrum, a Cambodian citizen (“Purchaser”), for the disposal of the 49% equity interests in Associated Concrete Products (Cambodia) Pte Ltd (“ACP Cambodia”) and ACPC Properties Pte Ltd (“ACPC Properties”) respectively at a total disposal consideration of united States Dollar (uSD) 2,300,000 (“Disposal Consideration”).

The Disposal Consideration shall be paid by the Purchaser as follows:

(i) the sum of uSD230,000 (“Deposit Sum”) to ACPM upon the execution of the Share Sale and Purchase Agreements; and

(ii) the sum of uSD2,070,000 (“Balance Sum”) to ACPM within thirty (30) days from the date the Tax Clearance is obtained.

Following the completion of the Share Sale and Purchase Agreements, ACP Cambodia and ACPC Properties will cease to be the Associate Companies of ACPM and MTD ACPI Group will exit all its operation in Cambodia.

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42. SUBSEQUENT EVENTS (CONTD.)

(b) On 18 June 2008, the Company announced that a subsidiary, ACP Tracks, acquired 525,000 ordinary shares of RM1.00 each in universal Building Products Sdn Bhd (“uBP”) representing 11.93% of its issued and paid up capital for a total cash consideration of RM52,500 only. with the completion of this acquisition, uBP would become a wholly-owned subsidiary of ACP Tracks.

43. MATERIAL LITIGATIONS

(a) On 24 March 2003 Modal Ehsan Sdn Bhd (“Second Respondent”), a subsidiary of the Company was served with an Application for Judicial Review by Sistem Lingkaran- Lebuhraya Kajang Sdn Bhd (“Applicant”). The application was to review the award of compensation granted by Pentadbir Tanah, Daerah Hulu Langat (“First Respondent”) to the Second Respondent. The Applicant is a company which has been given a concession by the Government of Malaysia to manage Lebuhraya Penyuraian Trafik Jalan Lingkaran Kajang (“Project”).

Lembaga Lebuhraya Malaysia (“LLM”) is a statutory body which was established for the purpose of, among others, land acquisition according to Land Acquisition Act 1960 whereby the acquisition is for the purpose of, among others, public interest as in the case of the Project.

The Second Respondent is the land owner held under Geran No. 6042 Lot No. 1967, Daerah Hulu Langat, Mukim Kajang, Selangor Darul Ehsan (“Said Land”).

Based on the said concession, the Applicant is responsible for the payment of compensation for the land acquired for purposes of the Project. Pursuant to the Government Gazzette No. 1965 dated 20 December 2001, it was declared that part of the Said Land was to be acquired for purposes of the Project (“Acquired Land”).

On 8 January 2003, First Respondent awarded a compensation to the Second Respondent for the Acquired Land amounting to RM3,890,450 (“First Award”).

The Applicant had filed its objection against the First Award as the award was not proposed by the Valuation and Property Services Department. The Applicant made an application for judicial review against the First Award.

On 1 June 2006, the court granted inter alia a writ of Certiorari to quash the award of the First Respondent awarding the compensation of RM3,890,450 to the Second Respondent and a writ of Mandamus to compel the First Respondent to hold a fresh enquiry to revalue the First Award. upon completion of investigations and fresh inquiry on 16 May 2007 and 7 September 2007, the First Respondent awarded the Second Respondent a compensation award amounting to RM10,591,746 (“Second Award”).

The second application for Judicial Review was filed on 22 October 2007 by the Applicant for a Certiorari Order to quash the award granted on 7 September 2007 on the ground inter alia, that the amount of award is excessive and pray for a Mandamus Order to hold a fresh inquiry for the re-evaluation of the Second Award. The matter is now fixed for hearing on 29 October 2008.

31 March 2008



146

43. MATERIAL LITIGATIONS (CONTD.)

(b) On 9 June 1998, the Perwira Affin Bank Berhad (“Plaintiff”) filed a writ of summon and statement of claim in the Kuala Lumpur High Court against the Company (“Defendant”) seeking for inter alia, a declaration that all progress payments due and owing by the Defendant to a third party, LK Ooi Construction Sdn. Bhd. under a letter of award/contract with the Defendant in relation to construction and completion of a subcontract that was valued at RM8.85 million which had been assigned to the Plaintiff by way of a deed of assignment, to be paid to the Plaintiff.

whilst the aggregate amount of the progress payments is not specified in the statement of claim, the Plaintiff claims that the Defendant had, save for an amount of approximately RM2.82 million, failed to pay the Plaintiff any or all of the progress payments due under the sub contract. As such, the Plaintiff’s claim against the Defendant is estimated to be approximately RM6.03 million.

The Plaintiff’s application for summary judgment was heard and dismissed with costs on 30 March 2000. The Plaintiff’s appeal to the Court of Appeal against the summary judgement was also dismissed with costs on 23 June 2003.

Hearing of the matter began on 25 October 2005 and decision was fixed on 30 August 2007. The Plaintiff filed an application to further amend the statement of claim on 17 August 2007. The matter was then fixed for mention pending disposal of the Plaintiff’s application to amend the statement of claim. The next mention date for the decision and the Plaintiff’s application to amend the statement of claim was fixed on 16 September 2008.

(c) On 4 July 2008, Tenaga Nasional Berhad (“Plaintiff”) through their solicitor had served the writ of Summon and Statement of Claim against MTD Construction Sdn. Bhd., a subsidiary of the Company (“Defendant”) alleging that, the Defendant and/or agent and/or employees have negligently caused damage to the Plaintiff’s 33KV power cables during the road work and excavation near the Plaza Phoenix. The Plaintiff’s claim is for the Special damages, Aggravated damages and Examplary damages for the total sum of RM11,407,378. The Plaintiff claimed 8% interest on damages amount claimed from the date of filing of the writ summon and statement of claim until full realisation.

The Defendant categorically denies liability for any damages to the power cables and further stated that the

amounts claimed by the Plaintiff for the alleged loss and damage are grossly inflated and without basis.The Defendant’s solicitor has filed an appearance on 9 July 2008. The Court has approved an extension of time for the Company to file a defence till 8 August 2008, and the solicitor now is in the midst of preparing the defence. Pending satisfactory resolution of the matters, no provision has been made by the directors in the financial statements.

Based on the legal opinion from the solicitors, the directors are in the opinion that the likelihood of the crystallisation of the above matters are remote.

44. PRIOR YEAR ADJUSTMENTS

Retirement Benefit Obligations

Retirement benefits liability was previously not recognised in a subsidiary; MTD Constructions Sdn. Bhd. The quantum of this liability was determined by a qualified actuary on 25 July 2008. The effect arising from this non-recognition has been accounted for retrospectively and are as disclosed below:

31 March 2008


147

2008 annual report

44. PRIOR YEAR ADJUSTMENTS (CONTD.)

Effect of Prior Year Adjustments

Comparatives as at 31 March 2007 have been restated as follows:

As previously stated Adjustment Restated

RM’000 RM’000 RM’000

Effects on Balance Sheet:

Deferred tax assets 486 1,379 1,865

Goodwill 67,368 3,175 70,543

Retirement benefits obligation (4,218) (5,302) (9,520)

Accumulated losses (69,345) 748 (70,093)

Effects on Income Statement

Loss before tax (77,561) (1,011) (78,572)

Income tax expense (461) 263 (198)

Net loss for the year (78,022) (748) (78,770)

Loss attributable to the equity holders of the Company (78,938) (748) (79,686)

45. FINANCIAL INSTRUMENTS

(a) Financial Risk Management Objectives and Policies

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its market price, interest rate, foreign exchange, liquidity and credit risks. The Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative transactions.

(b) Market Price Risk

The Group has investments in quoted securities listed on Bursa Malaysia Berhad and the Singapore Stock Exchange.

(c) Interest Rate Risk

The Group’s primary interest rate risk relates to the interest-bearing debt, as the Group held no substantial long term interest-bearing assets as at 31 March 2008. The investment in financial assets are mainly short term in nature and they are not held for speculative purposes but are mostly placed in fixed deposits.

31 March 2008



148

45. FINANCIAL INSTRUMENTS (CONTD.)

(d) Foreign Exchange Risk

The Group operates internationally and is exposed to various currencies, mainly the united States Dollar, Saudi Arabia Riyals, Indian Rupee and united Arab Emirates Dirhams. Foreign currency denominated assets and liabilities together with expected cash flows from purchases and sales give rise to foreign exchange exposures.

Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level.

Net Financial Assets/(Liabilities) Held in Non-Functional Currency

United States Ringgit Dollars Malaysia

Functional currency of the Group (in RM’000)

At 31 March 2008

Ringgit Malaysia (137) -

Indian Rupee - (10,304)

Saudi Arabia Riyals - 79

united Arab Emirates Dirhams - (1,538)

At 31 March 2007

Ringgit Malaysia (215) -

Indian Rupee - (13,696)

Saudi Arabia Riyals - (2,657)

united Arab Emirates Dirhams - (9,110)

(e) Liquidity Risk

The Group ensures that there are adequate funds to meet all their obligations in a timely and cost effective manner.

31 March 2008


149

2008 annual report


(f) Credit Risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a loss to the Group. The Group has adopted the policy of only dealing with credit worthy counterparties and obtaining sufficient collaterals or other securities where appropriate, as a means of mitigating the risk of financial losses from defaults. Trade receivables are monitored on an ongoing basis via Group management reporting procedures.

The Group does not have any significant exposure to any individual customer or counterparty nor does it have any

major concentration of credit risk related to any financial instruments.

The carrying amount of financial assets recorded in the financial statements, net of any provision for losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collaterals or other securities obtained.

(g) Fair Values

The following methods and assumptions are used to estimate the fair values of the following classes of financial instruments:

(i) Cash and Cash Equivalents, Receivables, Payables and Short Term Borrowings

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

(ii) Quoted Shares

The fair value of quoted shares is determined by reference to stock exchange quoted market bid prices at the close of the business on the balance sheet date.

(iii) Long Term Borrowings and Non-current Receivables

The fair value of long term borrowings and non-current receivables is estimated by discounting the expected future cash flows using the current interest rates for liabilities/assets with similar profiles.

31 March 2008



150


(g) Fair Values (Contd.)

(iii) Long Term Borrowings and Non-current Receivables (Contd.)

As at the balance sheet date, the fair value of the long term borrowings and non- current receivables of the Group and the Company are as follows:

2008 2007 Carrying Fair Carrying Fair Amount Value Amount Value RM’000 RM’000 RM’000 RM’000

Group

Non-current receivables

Trade receivables (Note 20) 10,676 8,404 16,125 12,512


Hire purchase (Note 31) 2,094 1,919 2,129 1,784

Term loan and MTNs (Note 31) 47,540 40,525 100,174 87,063

Company

Non-current receivables

Trade receivables (Note 20) 10,676 8,404 16,125 12,512


Hire purchase (Note 31) 99 109 132 143

Term loan and MTNs (Note 31) 40,000 35,101 91,000 80,657

It is not practical to estimate the fair value of contingent liabilities (as disclosed in Note 36 to the financial statements) reliably due to uncertainties of timing, costs and eventual outcome.

31 March 2008


151

2008 annual report

Item Location Owner

DescriptionandExisting Use Tenure

LandArea

(sq. ft.)

Built-upArea

(sq. ft.)

ApproximateAge of

Building

Net Book Value

(RM’000)

1

2

3

4

5

6

7

8

9

Level 3 and 4wisma DomainLot No 318, Jalan 51A/22346100 Petaling JayaSelangor Darul Ehsan

PTD No. 34735 Lot 9041Mukim AmpanganDistrict of SerembanNegeri Sembilan Darul Khusus

PTD 30196 Lot No.47084,PTD 30197 Lot No.47085 andPTD 24102 Lot No.23528Mukim Hulu KintaDistrict of KintaPerak Darul Ridzuan

PTD 18416 Lot No.9020,PTD 18417 Lot No.9021 andPTD 18418 Lot No.9022Mukim Ampangan District of SerembanNegeri Sembilan Darul Khusus

Lot Nos. 160 and 161Mukim GurunDistrict of Kuala MudaKedah Darul Aman

Lot No 2661Mukim Senai-KulaiDistrict of Johor BahruJohor Darul Takzim

Lot No. 2876Mukim Hulu Sungai JohorKota TinggiJohor Darul Takzim

PTD 18415 Lot No.9019 andPTD 18419 Lot No.9023Mukim Ampangan District of SerembanNegeri Sembilan Darul Khusus

PT 4936 & PT 4937(Sub-divided from Lot 162)Mukim GurunDistrict of Kuala MudaKedah Darul Aman

MTD ACPIEngineering Berhad

MTD ACPIEngineering Berhad

Associated ConcreteProducts(Malaysia)Sdn Bhd







Office

Land

Office andfactorybuilding



Land

Land


Office and factorybuilding

99-yearleaseexpiring on08.09.2067

Freehold

Freehold

Freehold

Freehold

Freehold

Freehold

Freehold

Freehold

15,490

616,844

841,415

1,279,183

1,261,104

1,845,855

1,041,318

852,825

633,645

40,676

-

45,703

103,531

101,268

-

-

87,000

47,000

13 years

-

19 years6 months

13 years8 months

14 years8 months

-

-

13years6 months

10 years

8,417

1,414

10,441

13,566

6,185

4,600

2,806

11,537

8,910

list of properties

Held by the Group as at 31 March 2008


152

Item Location Owner


LandArea

(sq. ft.)

Built-upArea

(sq. ft.)

ApproximateAge of

Building

Net Book Value

(RM’000)

10

11

12

13

14

15

16

17

Lot No.676 & 677Mukim Jeram Batu District of PontianJohor Darul Takzim

H.S(M) 5569 No.P.T.8209K andH.S(D) 4418 No.P.T 14711KMukim Kuala NerusDistrict of TerengganuTerengganu Darul Iman

PTD No. 10140Lot No. 2394 and 2396Mukim Batang KaliDistrict of SelangorSelangor Darul Ehsan

H.S.(D)139005 PTD No.8783Mukim Senai-KulaiDistrict of JohorJohor Darul Takzim

H.S (M) 6209 No.PT4175 Mukim KaparDistrict of KlangSelangor Darul Ehsan

Parcel No. CT-08-118th Floor, Corporate Tower Subang SquareJalan SS 15/4G, Subang JayaSelangor under H.S.(D) P.T.No. 3845 (Lot 8026) and H.S. (D) 9208 P.T. No. 3846 (Lot 8027)Mukim DamansaraDistrict of PetalingSelangor Darul Ehsan

H.S.(D) 7050Lot P.T. No 12052Mukim DengkilDistrict of SepangSelangor Darul Ehsan

Parcel No. T3.01The Summit Subang uSJH.S(D) 121185Lot P.T. No.8Mukim DamansaraDistrict of PetalingSelangor Darul Ehsan




ACP MarketingSdn Bhd

ACP-DMTSdn Bhd

ACP-DMTSdn Bhd

MakinPermataSdn Bhd

universal BuildingProductsSdn Bhd






Office

Land

Shoplot

Freehold

60-year leasesexpiring on29.06.2045 and13.06.2052respectively

Freehold

60-year leasesexpiring12.01.2047

99-year leasesexpiring on09.06.2086

Freehold

Freehold

Freehold

926,098

464,570

2,134,483

261,348

78,135

-

150,160

-

250,842

17,606

419,381

14,609

20,380

946

-

457

4 years

27 years6 months

14 years

24 years6 months

18 years6 months

-

-

10 years

11,275

2,887

26,754***

2,841##

1,553

266

6,892

292

list of properties(contd.)

153

2008 annual report

Item Location Owner


LandArea

(sq. ft.)

Built-upArea

(sq. ft.)

ApproximateAge of

Building

Net Book Value

(RM’000)

18

19

20

21

22

23

24

Lot Nos 491,492,493,505507, 510, 1076, 1967, 2411Mukim KajangDistrict of Hulu LangatSelangor Darul Ehsan

Lot 8, H.S.(M) 10828PT22413Taman Mawar 2Kg Baru, Sg RuanMukim Gali, RaubPahang Darul Makmur

A1/4A-0019No17, Jalan Kenangasari 2ABandar Sg. Buaya48010 RawangSelangor Darul Ehsan

A1/12DS-0120No27, Jalan Melatisari 2EBandar Sg. Buaya48010 RawangSelangor Darul Ehsan

A1/16-0008No.15, Jalan Inaisari 3Bandar Sg. Buaya48010 RawangSelangor Darul Ehsan

unit B02-150 Meranti ParkBukit TinggiBentungPahang Darul Makmur

unit C03-10 Meranti ParkBukit TinggiBentungPahang Darul Makmur

Modal EhsanSdn Bhd

ASC EngineeringSdn Bhd

PersysEngineeringSdn Bhd



MTD ConstructionSdn Bhd

MTD ConstructionSdn Bhd

Land held for develop-ment

Terrace House

Double storeyShop office

Double storeyterrace house

One and half storeyterrace house

Apartment

Apartment

Freehold

Freehold




LeaseholdExpiring 2091

LeaseholdExpiring 2091

5,732,496

1,470

1,651

1,644

3,029

-

-

-

1,581

3,058

1,460

1,743

525

805

-

7 years

12 years6 months

12 years6 months

12 years6 months

9 years

9 years

45,032

150

303

151

196

107

157

*** Include office and factory building amounting to net book value of RM2,592,406 which are held by Persys Sdn Bhd.## Include office and factory building amounting to net book value of RM627,285 which are held by Associated Concrete Products (Malaysia)

Sdn Bhd.

list of properties(contd.)


154

NOTICE IS HEREBY GIVEN THAT the Fifteenth (15th) Annual General Meeting of the Company will be held on Tuesday, 23 September 2008 at 10.00 a.m. at 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan for the following purposes:

AGENDA

1. To receive the audited financial statements of the Company for the financial year ended 31 March 2008 together with the reports of the Directors and the Auditors thereon.

2. To approve the payment of a first and final dividend of 1% less 25% taxation for the financial year ended 31 March 2008.

3. To approve the payment of Directors’ fees for the financial year ended 31 March 2008.

4. To re-elect the following Directors who retire in accordance with Article 85 of the Company’s Articles of Association:

i) Mr. Keith George Cowling ii) Dato’ Ir. A. Rashid bin Omar

5. To re-appoint the following Directors who retire pursuant to Section 129(6) of the Companies Act, 1965:

i) Dato’ Dr. Nik Hussain bin Abdul Rahmanii) Dato’ Haji Noordin bin Omar

6. To re-appoint Messrs Ernst & Young as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration.

7. As Special Business

To consider and, if thought fit, with or without modification, to pass the following ordinary and special resolutions:

ORDINARY RESOLUTION 1

AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965

“THAT the Directors of the Company be and are hereby authorised, pursuant to Section 132D of the Companies Act, 1965, to allot and issue shares of the Company at any time to such persons, upon such terms and conditions and for such purposes the Directors in their absolute discretion shall deem fit provided always that the aggregate number of shares to be issued shall not exceed ten percent (10%) of the issued share capital of the Company and the relevant approvals of the regulatory bodies shall have been obtained.”

(Resolution 1)

(Resolution 2)

(Resolution 3)

(Resolution 4)(Resolution 5)

(Resolution 6)(Resolution 7)

(Resolution 8)

(Resolution 9)

notice ofannual general meeting

155

2008 annual report


PROPOSED RENEWAL OF THE AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN SHARES (“PROPOSED RENEWAL OF SHARE BUY-BACK MANDATE”)

“THAT, subject to compliance with all applicable laws, rules, regulations and guidelines for the

time being in force or as may be amended from time to time approval be and is hereby given to the Company to allocate an amount of funds not exceeding the Company’s audited retained profits and share premium account (based on the latest audited account as at 31 March 2008, retained profits and share premium account amounting to RM62,008,794 and RM108,137,888 respectively) to purchase on the market of the Bursa Malaysia Securities Berhad such ordinary shares of RM1.00 each forming up to ten percent (10%) of the total issued and paid-up share capital for the time being of the Company AND THAT the Directors of the Company be and are hereby empowered to determine the actual number of shares to be purchased, the timing of the purchase and the treatment of the purchased shares that is to say whether to cancel the shares so purchased or to retain them as treasury shares or to carry out part of both and in respect of those shares retained, whether to re-sell them on the markets and/or cancel and/or to distribute them as share dividends or to carry out part of both as and when the Directors deem fit and to take all steps as shall be necessary and to enter into any agreement, arrangement and guarantee with any party or parties to implement, finalise and give full effect to the aforesaid purchase in the best interest of the Company AND THAT the Proposed Renewal of Share Buy-back Mandate conferred by this resolution shall be effective immediately upon the passing of this resolution and shall determine upon the conclusion of the next annual general meeting of the Company following the date of the passing of this ordinary resolution or upon the revocation or variation by the shareholders of the Company in a general meeting or upon the expiration of the period during which the next annual general meeting is required by law to be held, whichever shall occur first.”


PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“PROPOSED RENEWAL OF RRPT MANDATE”)

“THAT, subject to the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company and its subsidiaries to enter into renewal of recurrent related party transactions of a revenue or trading nature for arrangements or transactions involving the interests of the Directors, major shareholders or persons connected to the Directors and/or major shareholders of the Company and/or its subsidiaries (“Related Parties”) as identified in the Circular to Shareholders dated 29 August 2008, subject further to the following:

(i) the transactions are in the ordinary course of business which are necessary for day-to-day operations of the Company and its subsidiaries and are on normal commercial terms not more favourable to related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company;

(Resolution 10)

notice of annual general meeting(contd.)


156


PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“PROPOSED RENEWAL OF RRPT MANDATE”) (Contd.)

(ii) disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the shareholders’ mandate during the financial year; and

(iii) such approval shall continue to be in force until:

(a) the conclusion of the next annual general meeting (“AGM”) of the Company following the general meeting at which this mandate is passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed;

(b) the expiration of the period within which the next AGM after this date is required to be held pursuant to Section 143(1) of the Companies Act 1965 (“Act”) but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act; or

(c) revoked or varied by resolution passed by shareholders of the Company in general meeting;

whichever is earlier;

AND THAT the Directors and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) to give effect to the transactions contemplated and/or authorised by this Ordinary Resolution.”


PROPOSED NEW SHAREHOLDERS’ MANDATE FOR ADDITIONAL RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“PROPOSED NEW RRPT MANDATE”)

“THAT, subject to the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company and its subsidiaries to enter into additional recurrent related party transactions of a revenue and trading nature for arrangements or transactions involving the interests of the Directors, major shareholders or persons connected to the Directors and/or major shareholders of the Company and/or its subsidiaries (“Related Parties”) as identified in the Circular to Shareholders dated 29 August 2008, subject further to the following:

(Resolution 11)


157

2008 annual report


PROPOSED NEW SHAREHOLDERS’ MANDATE FOR ADDITIONAL RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“PROPOSED NEW RRPT MANDATE”) (Contd.)

(i) the transactions are in the ordinary course of business which are necessary for day-to-day operations of the Company and its subsidiaries and are on normal commercial terms not more favourable to related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company;

(ii) disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the shareholders’ mandate during the financial year; and

(iii) such approval shall continue to be in force until:

(a) the conclusion of the next annual general meeting (“AGM”) of the Company following the general meeting at which this mandate is passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed;

(b) the expiration of the period within which the next AGM after this date is required to be held pursuant to Section 143(1) of the Companies Act 1965 (“Act”) but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act; or

(c) revoked or varied by resolution passed by shareholders of the Company in general meeting;

whichever is earlier;

AND THAT the Directors and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) to give effect to the transactions contemplated and/or authorised by this Ordinary Resolution.”

SPECIAL RESOLUTION 1

PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION OF THE COMPANY (“PROPOSED AMENDMENTS TO ARTICLES”)

“THAT the amendments to the Articles of Association of the Company as set out in Appendix I of the Circular to Shareholders dated 29 August 2008 be and is hereby approved AND THAT the Directors of the Company be and are hereby authorised to assent to any modifications, variations and/or amendments as may be required by the relevant authorities and do all acts and things and take all steps as may be consider necessary to give full effect of the Proposed Amendments to Articles.”

8. To transact any other ordinary business of which due notice has been given.

(Resolution 12)

(Resolution 13)



158

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS ALSO HEREBY GIVEN THAT a first and final dividend of 1% less 25% taxation for the financial year ended 31 March 2008, if approved, will be paid on 31 October 2008 to those shareholders whose names are registered in the Record of Depositors of the Company at the close of business on 10 October 2008.

A Depositor shall only be entitled to the said dividend in respect of:

(a) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 10 October 2008 in respect of ordinary transfer; and

(b) Shares bought on the Bursa Malaysia Securities Berhad on a cum dividend basis according to the Rules of the Bursa Malaysia Securities Berhad.

By Order of the Board,

Chan Bee Kuan (MAICSA 7003851)Lee Poh Yean (MAICSA 7015043)Company Secretaries

Selangor Darul Ehsan29 August 2008


159

2008 annual report

Explanatory Notes to Special Business:

Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965

The Ordinary Resolution 1, if passed, will give the Board of Directors of the Company the flexibility to issue and allot shares to such persons at any time and for such purposes as it considers justified in the interest of the Company without the need to convene a general meeting. The authority will, unless otherwise revoked by the Company’s shareholders, expire at the next annual general meeting of the Company.

Proposed Renewal of the Authority for the Company to Purchase Its Own Shares

The Ordinary Resolution 2, if passed, will allow the Board of Directors to exercise the power of the Company to purchase not more than 10% of the issued and paid-up share capital of the Company at any time within the guidelines and the time period stipulated in the Listing Requirements of Bursa Malaysia Securities Berhad. The shares to be bought back may be cancelled, retained or distributed to shareholders as share dividends depending on the situation. The details of this proposed Renewal are set out in the Share Buy-Back Statement dated 29 August 2008.

Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

The Ordinary Resolutions 3 and 4, if passed, will allow the Company and its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature with the Related Parties in the ordinary course of business which are necessary for its day-to-day operations and on normal commercial terms which are not more favourable than those generally available to the public and are not to the detriment of the minority shareholders of the Company. The details of this proposed mandate are set out in the Circular to Shareholders dated 29 August 2008.

Proposed Amendments to Articles of Association of the Company

The Special Resolution 1, if passed will enhance the administration of the internal affairs of the Company and is in the best interest of the Company. The details of the Proposed Amendment to the Articles are set out in the Circular to Shareholders dated 29 August 2008.

Notes:

1. A member of the Company entitled to attend and vote at this meeting is entitled to appoint up to two (2) proxies to attend and vote in his stead. A proxy need not be a member of the Company and the provisions of section 149 (1) (a) and (b) of the Companies Act, 1965 are not applicable.

2. If a member wishes to appoint two (2) proxies, the proportion of his shareholding represented by each proxy must be specified failing which the appointment is not valid.

3. The instrument appointing a proxy or proxies, in the case of an individual, shall be signed by the appointer or his/her attorney duly authorised, and in the case of a corporation, either under its common seal or under the hand of an officer or attorney duly authorised in writing.

4. The instrument appointing a proxy must be deposited at the Company’s Registered Office situated at 1, Jalan Batu Caves, 689100 Batu Caves, Selangor Darul Ehsan, not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

5. where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.



160

statement accompanying notice of annual general meeting

DETAILS OF INDIVIDUALS WHO ARE STANDING FOR ELECTION AS DIRECTORS

No individual is seeking election as a Director at the Fifteenth (15th) Annual General Meeting of the Company.

(Pursuant to Paragraph 8.28(2) of the Listing Requirements of Bursa Malaysia Securities Berhad)

FORM OF PROXY

*I/we,___________________________________________________________________________________________________________________(FuLL NAME IN BLOCK LETTERS)

of______________________________________________________________________________________________________________________(FuLL ADDRESS)

_______________________________________________________________________________________________________________________(FuLL ADDRESS)

being a member / members of MTD ACPI Engineering Berhad, hereby appoint the presiding Chairman or the following person (s) (*delete whichever is not applicable) as my / our proxy / proxies to vote for me / us and on my / our behalf, at the Fifteenth (15th) Annual General Meeting of the Company, to be held at on Tuesday, 23 September 2008 at 10.00 a.m. at 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan or at any adjournment thereof:

Names of Proxy, NRIC Nos. & Address: No. of shares represented by each proxy

1 ________________________________________________

________________________________________________ _______________________________________________

2 ________________________________________________

________________________________________________ _______________________________________________

In the case of a vote taken by way of show of hands, the first-named proxy shall vote on my / our behalf.In the case of a poll being demanded, my / our proxy / proxies shall vote as indicated below* :

First Proxy Second Proxy

RESOLUTION For Against For Against

1 To receive the audited financial statements of the Company for the financial year ended 31 March 2008 and the Directors’ and Auditors’ reports.

2 To approve the payment of a first and final dividend of 1% less 25% taxation for the financial year ended 31 March 2008.

3 To approve the payment of Directors’ fees for the financial year ended 31 March 2008.

4 To re-elect Mr. Keith George Cowling as Director.

5 To re-elect Dato’ Ir. A. Rashid bin Omar as Director.

6 To re-appoint Dato’ Dr. Nik Hussain bin Abdul Rahman as Director.

7 To re-appoint Dato’ Haji Noordin bin Omar as Director.

8 To re-appoint Messrs Ernst & Young as auditors and to authorise the Directors to determine their remuneration.

9 Authorisation for Directors to issue shares pursuant to Section 132D of the Companies Act, 1965.

10 Proposed Renewal of the Authority for the Company to Purchase its Own Shares.

11 Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature.

12 Proposed New Shareholders’ Mandate for Additional Recurrent Related Party Transactions of a Revenue or Trading Nature.

13 Proposed Amendments to Articles of Association of the Company.

Please indicate with an “X” how you wish your vote to be cast. If you do not indicate accordingly, the proxy / proxies will vote or abstain from voting at his discretion.

Date:______________________________________________ ______________________________________________ Signature of Member/Common SealNotes:1. A member of the Company entitled to attend and vote at this meeting is entitled to appoint up to two (2) proxies to attend and vote in his stead. A proxy need not be a member

of the Company and the provisions of section 149 (1) (a) and (b) of the Companies Act, 1965 are not applicable.

2. If a member wishes to appoint two (2) proxies, the proportion of his shareholding represented by each proxy must be specified failing which the appointment is not valid.

3. The instrument appointing a proxy or proxies, in the case of an individual, shall be signed by the appointer or his/her attorney duly authorised, and in the case of a corporation, either under its common seal or under the hand of an officer or attorney duly authorised in writing.

4. The instrument appointing a proxy must be deposited at the Company’s Registered Office situated at 1, Jalan Batu Caves, Selangor Darul Ehsan, not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

5. where a member of the Company is an authorized nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

No. of Ordinary Shares Held

THE COMPANY SECRETARIES MTD ACPI ENGINEERING BERHAD (258836-V)

1, Jalan Batu Caves68100 Batu Caves

Selangor Darul Ehsan

Fold this flap for sealing

Then fold here

1st fold here

AFFIXSTAMP



1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan, Malaysia.Tel : 03-6195 1111 Fax : 03-6188 0101



MTD

ACPI EN

GIN

EERIN

G BER

HAD

258836-V ANN

UAL R

EPORT 2008

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