Annual Report 2008 IPMUDA BERHAD I Annual Report

IPMUDA BERHAD (22146-T) IPMUDA BERHAD I Annual Report 2008 IPMUDA BERHAD I Annual Report

Annual Report 2008

IPMUDA BERHAD (22146-T)

9th Floor, Maju Tower, No. 1001, Jalan Sultan Ismail, 50250 Kuala Lumpur. Malaysia Tel : +603 2719 2828 Fax : +603 2719 2818 THE BUILDING MATERIALS PEOPLE

Contents Contents

Notice of Annual General Meeting 6

Statement Accompanying Notice of Annual General Meeting 8

Corporate Data 9

Directors’ Profile 10

Operations Structure 15

Chairman’s Statement 16

Corporate Governance Statement 19

Audit Committee Report 23

Statement on Internal Control 27

Financial Statements 29

List of Properties Held 97

Statement of Shareholdings 101

Form of Proxy Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008

SUPPLIER OF CHOICE RECYCLABLE

CONSTRUCTION INDUSTRY CONNECTOR Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 STRENGTH & DURABILITY

RECYCLABLE

STEEL CONNECTIONS Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008

LATEST DESIGNS

STYLE Meets function

LIFESTYLE HOMES Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 SPECIALIST

THE BUILDING MATERIALS PEOPLE Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008

Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Thirty-Fourth Annual General Meeting of Ipmuda Berhad will be held at Crystal 2, Impiana Casuarina Hotel, Ipoh, 18 Jalan Raja Dr. Nazrin Shah, 30250 Ipoh, Perak Darul Ridzuan, Malaysia, on Tuesday 23 June 2009 at 9.00 a.m. for the following purposes : -

AS ORDINARY BUSINESS

1. To receive and adopt the Audited Financial Statements for the year ended 31 December 2008 and the Directors’ and Auditors’ Reports thereon. (Resolution 1 )

2. To declare a First and Final dividend of 3.0% less income tax at 25% for the year ended 31 December 2008. (Resolution 2 )

3. To approve the payment of Directors’ Fees for the year ended 31 December 2008. (Resolution 3 )

4. To re-elect the following Directors retiring under Article 101 of the Company’s Articles of Association:

(a) Dato’ Lim Heng Suan (Resolution 4 )

(b) Dato’ Lim Ah Lai (Resolution 5 )

5. To appoint Auditors and to authorise the Directors to fix their remuneration. (Resolution 7 )

AS SPECIAL BUSINESS

6. To consider and, if thought fit, to pass the following Ordinary Resolution:

Authority to the Directors to issue and allot shares pursuant to Section 132D of the Companies Act, 1965

“THAT subject always to the Companies Act, 1965, the Articles of Association of the Company and the approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby empowered, pursuant to Section 132D of the Companies Act, 1965, to issue and allot shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.” (Resolution 8 )

7. To transact any other business of which due notice shall have been received.

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008

Notice of Annual General Meeting

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT DATES

NOTICE IS ALSO HEREBY GIVEN that, subject to the approval of the shareholders at the 34th Annual General Meeting to be held on 23 June 2009, the First and Final Dividend of 3.0% less 25% income tax in respect of the financial year ended 31 December 2008, will be paid on 20 August 2009.

The entitlement date shall be fixed on 24 July 2009.

A depositor shall qualify for entitlement to the dividend only in respect of:-

a) Shares deposited into Depositor’s Securities Account before 12.30 pm on 22 July 2009. (In respect of shares which are exempted from mandatory deposit);

b) Shares transferred into the Depositor’s Securities Account before 4.00 pm on 24 July 2009 in respect of transfers; and

c) Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad.

BY ORDER OF THE BOARD

CHAN LAI CHOON Secretary

Ipoh, 29 May 2009

NOTES:

1) A member of the Company entitled to attend and vote at the abovementioned meeting is entitled to appoint one proxy but not more than two proxies, to attend and vote in his stead. Such proxy need not be a member of the Company, and where there are two proxies, the number of shares to be represented by each proxy must be stated.

2) The instrument appointing a proxy, in the case of an individual, shall be signed by the appointer or by his attorney duly authorised in writing, and in the case of a corporation, shall be either given under its common seal or under the hand of an officer or attorney of the corporation duly authorised.

3) The instrument appointing the proxy must be deposited at the Registered Office of the Company at Bangunan Ipmuda, 12 Jalan Datoh, 30000 Ipoh, Perak Darul Ridzuan, Malaysia, not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.

4) Explanatory Note on Special Business to be transacted:

The Ordinary Resolution 8 is proposed pursuant to Section 132D of the Companies Act, 1965, and if passed, will empower the Directors of the Company from the date of the above Annual General Meeting, authority to issue and allot shares from the unissued share capital of the Company for such purposes as the Directors deem fit and in the interest of the Company. This authority will, unless revoked or varied by the Company in general meeting, will expire at the conclusion of the next Annual General Meeting of the Company. Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008

Statement Accompanying Notice of Annual General Meeting

STATEMENT accompanying Notice of Thirty-Fourth Annual General Meeting of the Company pursuant to paragraph 8.28(2) of the Listing Requirements of Bursa Malaysia Securities Berhad:

Name of Directors who are standing for re-election:

a) Dato’ Lim Heng Suan

b) Dato’ Lim Ah Lai

c) Dato’ Mohamed Fuad bin Yon

Dato’ Lim Heng Suan and Dato’ Lim Ah Lai shareholdings are set out in page 103 of this Annual Report. Dato’ Mohamed Fuad bin Yon do not have any shareholdings in the Company. The profile of all these Directors are set out in pages 11, 13 and 14 of this Annual Report. Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008

CORPORATE DATA

BOARD OF DIRECTORS REGISTERED OFFICE Tan Sri Abu Sahid bin Mohamed Bangunan Ipmuda Executive Chairman 12 Jalan Datoh 30000 Ipoh Dato’ Abu Talib bin Mohamed Perak Darul Ridzuan Deputy Chairman Tel : 05-253 8030 Fax : 05-255 7727

Dato’ Lim Heng Suan Managing Director/Chief Executive Officer REGISTRAR Symphony Share Registrars Sdn. Bhd. Mr Tai Ah Chai Level 26, Menara Multi Purpose Executive Director Capital Square No. 8 Jalan Munshi Abdullah Dato’ Mohamed Fuad bin Yon 50100 Kuala Lumpur Non-Independent Non-Executive Director Tel : 03-2721 2222 Fax : 03-2721 2530 / 2721 2531

Dato’ Ahmad Bakri bin Shabdin Independent Non-Executive Director AUDITORS Horwath Dato’ Siew Mun Chuang Level 16 Tower C Independent Non-Executive Director Megan Avenue II

12 Jalan Yap Kwan Seng Dato’ Lim Ah Lai 50450 Kuala Lumpur Independent Non-Executive Director Malaysia

Dato’ Maarof bin H.A. Rahman Senior Independent Non-Executive Director PRINCIPAL BANKERS

Encik Mohd Fauzi bin Yon Bank Islam Malaysia Berhad (Alternate Director to Tan Sri Abu Sahid bin Mohamed) Bank Muamalat Malaysia Berhad CIMB Bank Berhad Malayan Banking Berhad SECRETARY HSBC Bank Malaysia Berhad RHB Investment Bank Berhad Chan Lai Choon MAICSA 0809269 Standard Chartered Bank Malaysia Berhad

STOCK EXCHANGE LISTING Bursa Malaysia Securities Berhad Main Board (Stock Code: 5673)

HOMEPAGE

www.ipmuda.com.my

Ipmuda Berhad Ipmuda Berhad 10 Annual Report 2008 Annual Report 2008

Directors’ Profile

TAN SRI ABU SAHID BIN MOHAMED Executive Chairman (Age 57, Malaysian)

Tan Sri Abu Sahid bin Mohamed was appointed to the Board on 22 April 1997. He is a Member of the Executive Committee and Investment Committee.

Tan Sri Abu Sahid is presently the Group Executive Chairman of the Maju Group of Companies

In 1977, he started his first company, Maju Alat Ganti Sdn Bhd (“MAG”) which was involved in the trading of motor spare parts. Subsequently, MAG became the biggest Malay spare parts company, dealing with both the private sector and the Government. He was Vice President of the Selangor and Federal Territory Engineering and Motor Parts Traders Association, a position he held from 1985 to 1987. He is now the Honorary President of the Association. Since then, Tan Sri Abu Sahid’s business interests have broadened. The Group’s portfolio is well diversified and at present, its activities include construction and property development, manufacturing of steel products and furniture, trading and distribution of building materials, infrastructure, shipping, resorts as well as engineering and security services.

Tan Sri Abu Sahid is the managing director of Maju Expressway Sdn Bhd, which has been given the Concession for the new highway directly linking Kuala Lumpur to Putrajaya and subsequently onwards to the Kuala Lumpur International Airport.

He is a major shareholder of Ipmuda.

Tan Sri Abu Sahid is the Executive Chairman of Perwaja Holdings Berhad and Bright Focus Berhad, Chairman of Kinsteel Bhd, a director of MTH Power Berhad and an alternate director in Pulai Springs Berhad. Tan Sri Abu Sahid is a major shareholder of Kinsteel Bhd, Perwaja Holdings Berhad and also Pulai Springs Berhad. Tan Sri Abu Sahid is also a director of various other private limited companies in Malaysia.

Tan Sri Abu Sahid is the younger brother of Dato’ Abu Talib bin Mohamed.

Save as disclosed above, he does not have any family relationship with any other Director and/or major shareholder of the Company and does not have any conflict of interest with the Company. He has not been convicted of any offence within the past 10 years.

DATO’ ABU TALIB BIN MOHAMED Deputy Chairman (Age 60, Malaysian)

Dato’ Abu Talib bin Mohamed was appointed to the Board on 22 April 1997. He is a Member of the Audit Committee, Executive Committee and Investment Committee.

He is a Fellow Member of the Chartered Institute of Management Accountants of United Kingdom and also a Member of the Malaysian Institute of Accountants. Dato’ Abu Talib has extensive knowledge of the steel industry as he was formerly the Director of Operations for Perwaja Steel Sdn Bhd in Kemaman, prior to joining Maju Holdings Sdn Bhd (“Maju Holdings”) as Group Executive Director in 1992. He has been the Group Managing Director of Maju Holdings since 1993.

Dato’ Abu Talib is also a director of Mycron Steel Berhad, Kinsteel Bhd, Perwaja Holdings Berhad and Bright Focus Berhad as well as a director of various other private limited companies in Malaysia.

Dato’ Abu Talib is the brother of Tan Sri Abu Sahid bin Mohamed, who is also a Director and major shareholder of the Company.

Directors’ Profile

DATO’ LIM HENG SUAN Managing Director/Chief Executive Officer (Age 44, Malaysian)

Dato’ Lim was appointed to the Board on 15 December 2005. He is a Member of the Executive Committee, Investment Committee and Remuneration Committee.

He had his tertiary education in the United Kingdom and majored in Accounting and Finance. While in the U.K. he was involved in various businesses. In 1997, he started Bonfield Limited, an international trading company involved in the trading of raw materials such as scrap metal, iron ore, electrode etc. for the steel industry.

Dato’ Lim is a deemed major shareholder of the Company.

Save as disclosed above, he does not have any family relationship with any Director and/or any other major shareholder of the Company and does not have any conflict of interest with the Company. He has not been convicted of any offence within the past 10 years.

MR TAI AH CHAI Executive Director (Age 51, Malaysian)

Mr Tai Ah Chai was appointed to the Board on 01 May 2008.

Mr Tai graduated from the University of Windsor, Ontario, Canada with a Bachelor of Commerce degree in Business Administration in 1980. Upon his graduation, Mr Tai served in accounting, marketing and sales positions in two companies, namely, Multi-Purpose Holdings Berhad from 1980 to 1988 and MBf Marketing Sdn Bhd (now known as Sri Hartamas Marketing Sdn Bhd) from 1988 to 1990. He joined Ipmuda Berhad in May 1990 as Assistant Sales Manager. By April 1991, he was promoted to the position of Sales Manager to be in charge of in-house and big corporate customers. Subsequently in 1994, he was appointed as the General Manager – Sales of Ipmuda Berhad. In September 2000, he was promoted to the position of Director – General Building Products of the Ipmuda Group. He presently holds directorships in various subsidiaries within the Ipmuda Group.

Mr Tai has also been playing an active role in the Building Materials Distributors Association of Malaysia (“BMDAM”). He was an Exco Member of the association from 1996 to 1999 before becoming the Vice President from 2000 to 2005. Currently, Mr Tai is the President of the BMDAM, a position he held since 2006.

He does not have any family relationship with any Director and/or major shareholder of the Company and does not have any conflict of interest with the Company. He has not been convicted of any offence within the past 10 years. Ipmuda Berhad Ipmuda Berhad 12 Annual Report 2008 Annual Report 2008

Directors’ Profile

DATO’ AHMAD BAKRI BIN SHABDIN Independent Non-Executive Director (Age 65, Malaysian)

Dato’ Ahmad Bakri bin Shabdin was appointed to the Board on 16 December 1999. He is the Chairman of the Audit Committee.

Dato’ Ahmad Bakri holds a Bachelor of Arts degree and a Post-Graduate Diploma in Public Administration from University of Malaya and a Master of Arts in Marketing Education degree from University of Lancaster. He was formerly the Vice-President, Corporate Affairs & Marketing Department of the Multimedia Development Corporation Sdn Bhd.

Upon graduation from University of Malaya in 1966, he joined the civil service as Assistant District Office in the District Office in Kelang, Selangor and retired from the civil service in February 1999. During his 33 years of service, he held a number of positions, which included Director-General of the Malaysian Tourism Board, Deputy Secretary- General in the Prime Minister’s Department and Secretary-General in the Ministry of Youth and Sports.

DATO’ SIEW MUN CHUANG Independent Non-Executive Director (Age 55, Malaysian)

Dato’ Siew Mun Chuang was appointed to the Board on 21 July 1997. He is Chairman of the Renumeration Committee and a Member of the Audit Committee and Nomination Committee..

From 1973 to 1979, he was with Price Waterhouse & Co and from 1980, he took over Tai Thong Restoran Sdn Bhd, and expanded it into a diversified food and beverage group and subsequently listed it on the Second Board of Bursa Malaysia Securities Berhad on 18 August 1997 under TT Resources Bhd (“TTRB”). He was the Managing Director of TTRB until 31 August 2000 afterwhich he assumed a Non-Executive Director’s post until his retirement on 13 March 2002. Thereafter, he started his own business in the food and beverage industry and he is currently the Managing Director of the Oriental Group of Restaurants. He is also a director of Perwaja Holdings Berhad.

Directors’ Profile

DATO’ MAAROF BIN H.A. RAHMAN Senior Independent Non-Executive Director (Age 53, Malaysian)

Dato’ Maarof bin H.A. Rahman was appointed to the Board on 2 July 2001. He is Chairman of the Nomination Committee and a Member of the Audit Committee and Remuneration Committee.

He holds a B.A. Management degree and Master of Business Administration degree from Webster University Geneva, Switzerland. Dato’ Maarof has a total span of 15 years of various management levels with both public and private sectors such as City Hall of Kuala Lumpur, Fisheries Development Authority, Bloomingdale Advertising and Maser Sdn Bhd.

Currently, he is Managing Director of Libroff Sdn Bhd and has held the position since 1989. The principal activities of Libroff Sdn Bhd are advertising, marketing, communication and trading. He is a Director of Libroff Printing Sdn Bhd, a large format digital printing company registered with the Treasury and Libroff Communication Sdn Bhd, an event management and communication company.

He is also an Executive Director of Tunai Setia Sdn Bhd, a property development company currently developing 20 acres of mix development project in Tampoi, Johor Bharu.

DATO’ LIM AH LAI Independent Non-Executive Director (Age 56, Malaysian)

Dato’ Lim Ah Lai was appointed to the Board on 29 October 2002 and has 32 years in the construction industry.

He does not have any family relationship with any Director and/or major shareholder of the Company and does not have any conflict of interest with the Company and has not been convicted of any offence within the past 10 years. Ipmuda Berhad Ipmuda Berhad 14 Annual Report 2008 Annual Report 2008

Directors’ Profile

DATO’ MOHAMED FUAD BIN YON Non-Independent non-Executive Director (Age 59, Malaysian)

Dato’ Mohamed Fuad bin Yon was appointed to the Board on 28 February 2004. He is a member of the Nomination Committee.

He is a demographer by profession having qualified from University College Cardiff, Wales, United Kingdom. Prior to joining Maju, he had managed companies involved in manufacturing, management and financial consultancies, property development and construction. He was the Managing Director of Asian Management, Research & Consultancy Sdn Bhd from 1982 to 1985, Chief Executive Officer and Managing Director of Malaysian Carbonless Industries Sdn Bhd from 1985 to 1988, Group Chief Executive Officer of Melewar Computer group of companies from 1989 to 1993, Group Chief Executive Officer of Maju Holdings Property Group of Companies from 1993 to 1997, Group Chief Executive Officer of Indera Development & Construction Sdn Bhd group of companies from 1997 to 2000 and the Chairman of FP & Strats Incorporated Sdn Bhd from 2000 to 2003. He is currently a director of Maju Holdings Sdn Bhd (“Maju Holdings”). He is a representative of Maju Holdings, a major shareholder of the Company.

He is a director of Kinsteel Bhd, Perwaja Holdings Berhad and Bright Focus Berhad as well as a director of various other private limited companies in Malaysia. He is also a board member of RISDA from 01 July 2005 and Benaris Property Sdn Bhd, a subsidiary of RISDA, effective 20 February 2006.

He is the brother to Encik Mohd Fauzi bin Yon.

ENCIK MOHD FAUZI BIN YON Alternate Director to Tan Sri Abu Sahid bin Mohamed (Age 58, Malaysian)

Encik Mohd Fauzi bin Yon was appointed as Alternate Director to Tan Sri Abu Sahid bin Mohamed on 28 February 2004.

He holds a Bachelor of Economics (Honours) degree from University of Malaya. After graduating from University of Malaya in 1975, he joined the Ministry of Foreign Affairs, Malaysia. He had served in various Malaysian Diplomatic Missions abroad between 1978 and 1993 before opting for retirement from the Government service in 1995. The last position he held before his optional retirement at the Ministry of Foreign Affairs, Malaysia was as Principal Assistant Secretary covering political and economic affairs of the South East Asian Region.

Encik Mohd Fauzi Yon joined Maju Holdings Sdn Bhd (“Maju Holdings”) as the Special Assistant to the Group Executive Chairman in August 1995 and is currently a director of Maju Holdings. He is a representative of Maju Holdings, a major shareholder of the Company. He also sits on the board of various other private limited companies in Malaysia.

He is the brother to Dato’ Mohamed Fuad bin Yon.

OPERATIONS STRUCTURE Ipmuda Berhad Ipmuda Berhad 16 Annual Report 2008 Annual Report 2008

CHAIRMAN’S STATEMENT

“On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statements of Ipmuda Berhad and the Group for the financial year ended 31 December 2008”

INTRODUCTION

2008 saw the effects of the credit meltdown of the previous year spreading quickly throughout the banking system and onward into the real economy. This resulted in a global recessive crisis not seen since World War II. In the first half of the year the world wrestled with unprecedented price hikes while in the second half governments scrambled to stave off recession. Coordinated efforts among the advanced economies have seen various monetary and fiscal policies implemented to stimulate economic recovery. The fine balance of interest rates, spending, savings, consumption, production, employment and pump priming in all economies have now come under constant close global scrutiny to ensure recovery.

Malaysia has been more fortunate than many other developed nations as we have managed to sidestep most of the adverse impacts of the past two years. This can be attributed to our country’s robust local consumption base and the foresight of our policies, bearing in mind our past exercise of the 1997 Asian Financial Crisis.

Spiralling costs and shortage of construction materials in the first half of 2008 prompted the Government to liberalise certain protectionist policies which saw the removal of some ceiling prices, duties and bans on importation. To help ease the industry cash flow, the Government revamped its delivery system to expedite payments and the public project price variation clause was widened to include more building materials.

When the economy increasingly showed signs of slowing down and inflation began to ease in the final quarter of 2008, the Government unveiled a RM7 billion stimulus package and reduced the Overnight Policy Rate (OPR) by 25 basis points. This was quickly followed by a second stimulus package of RM60 billion in March 2009 and further cuts of up to 125 basis points in the OPR. The magnitude and swiftness of the Government’s reaction reflect the severity of the current global crisis.

Last year the Malaysian Economy managed a lower growth of 4.6% compared to 6.3% in 2007. This was mainly due to the fourth quarter slowdown in the manufacturing, mining and construction sectors. Growth in the construction sector fell from a commendable 4.6% in 2007 to 2.1% in 2008. This was on account of lower activities in the housing and commercial sectors. Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 17

CHAIRMAN’S STATEMENT

FINANCIAL HIGHLIGHTS

For the period under review, the Group delivered another year of improved performance. The Group’s revenue improved 20% from RM619 million in 2007 to RM743 million in 2008 while pre-tax profits surged from RM7.7 million a year ago to RM20.6 million in 2008, an improvement of 168%.

Contributing factors include undertaking the right stocking policy in the face of price volatilities, enhancing the product mix and intensifying sales and marketing efforts in the non-building material segments. An idle property was disposed off for a gain of RM1.78 million and the acquisition of a new subsidiary gave rise to a negative goodwill of RM4.9 million.

On the back of the financial results of 2008, the Group’s shareholders’ funds increased from RM132 million in 2007 to RM140 million.

OPERATIONS

The evolution of the industry favours the big players with customers demanding better and faster service that can only be provided by an established trading house. In creating value through connecting the Group’s many customers to our many suppliers, Ipmuda is able to continually streamline and reinvent large portions of our channel partner’s workflows. Ipmuda’s ability to “Value Innovate” together with our service commitment has resulted in long term customer and supplier loyalty.

Apart from seeking continuous improvements to our underlying business, the Group is constantly seeking out other areas and products where our competencies can be used to our advantage.

Both the trade in building materials and non-building materials grew by about 20% in 2008. The diversification into the trading of steel billets and materials for steel-making generated RM69.9 million in turnover while the subsidiaries involved in contracting works contributed another RM40.5 million.

The year also saw an increased amount of leveraging activities where many of the Group’s subsidiary product offerings were packaged together and this provided a synergistic added value, making our offerings highly competitive and differentiated.

DIVIDENDS

The Board is recommending a first and final dividend of 3 sen per share less income tax at 25% for the financial year ended 31 December 2008, totaling RM1,630,564 subject to the approval of the shareholders at the forthcoming Annual General Meeting.

CORPORATE DEVELOPMENT

On 31 July 2008, the Group completed the acquisition of 46.25% of the issued and paid-up share capital of Eager Vest Sdn Bhd for a cash consideration of RM897,500. The principal activity of Eager Vest is investment holding which currently holds 20% shareholding in five of Ipmuda’s subsidiaries. By virtue of board representation, Eager Vest is deemed a subsidiary of Ipmuda Berhad.

During the year, a wholly owned subsidiary, Perak Metal Industries Sdn Bhd disposed off its idle factory and land in Ipoh for a total consideration of RM2.2 million, generating a profit of RM1.78 million for the Group.

In the month of September, Ipmuda Berhad through its 100% owned subsidiary, Ipmuda Buildermart Sdn Bhd, increased its shareholdings in Perniagaan Maju Ramadhan Sdn Bhd (“PMR”) from 51% to 100% with the acquisition of 250,000 shares for a consideration of RM395,500. The principal activity of PMR is property development. Ipmuda Berhad Ipmuda Berhad 18 Annual Report 2008 Annual Report 2008

CHAIRMAN’S STATEMENT

CORPORATE SOCIAL RESPONSIBILTY

As an established player in the industry, the Group is fully aware of corporate social responsibility (“CSR”) being an integral part of good business management. This is exemplified in the way we deal with our employees, customers, suppliers and the communities in which we do business.

The development of the Group’s human capital remains a top priority with employees given training and development opportunities. There is an ongoing program to encourage and assist employees to undertake courses on a part time basis. At the corporate head office the usage of a Gym centre by staff are subsidised and the Group’s recreation club is encouraged to organise activities that foster greater comradeship and teambuilding. As in the past years the Group continues to provide financial assistance to various schools, charitable causes and social welfare.

Moving forward the Group will strive to better the framework for discharging its CSR with scope and coverage enlarged to be more encompassing.

OUTLOOK

With the external economies experiencing contraction, the Government is looking to counter this with strong domestic demand. The beneficial effects of the two stimulus plans to boost the local economy will most likely be felt in the second half of 2009. Should this prove insufficient, our country is said to have adequate liquidity and resources to fund another stimulus package. Demand for building materials will move up once the stimulus plans are implemented. The construction sector, being a prime beneficiary of the fiscal measures is expected to expand by 3%. With events still unfolding, no one can with credibility predict how extensive and severe this crisis will be. The world economy is projected to shrink by 1.3 % while the Malaysia’s economy to contract by 1% this year.

Ipmuda is cognisant of the challenges and the accompanying opportunities brought about by the fast changing economic landscape. With a management team of proven tenacity, acumen and agility and with support from our various stakeholders, Ipmuda is confident of navigating this turbulent period and emerging stronger than before. Ipmuda will not rest on the laurels of its 2008 performance but will continue to build on its areas of competencies and actively scout for businesses that bring about synergies and value innovation.

ACKNOWLEDGEMENT

On behalf of my fellow directors I would like to welcome Mr. Tai Ah Chai to the Board. Mr. Tai joined the company in May 1990 and has more than twenty seven years of experience in the building materials industry.

I wish to convey my heartfelt thanks and appreciation to the management and staff for their dedication, contribution and untiring commitment towards the success of the Group. My gratitude also goes to our shareholders, customers, suppliers, bankers, business associates and relevant authorities for their continued support and confidence.

Last but not least, I would like to express my deepest appreciation to my fellow Board members for their valuable wisdom and guidance.

Thank you.

Tan Sri Abu Sahid Mohamed Executive Chairman

18 May 2009 Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 19

CORPORATE GOVERNANCE STATEMENT

The Board of Directors (Board) of Ipmuda Berhad is fully committed to the principles of corporate governance in the Malaysian Code on Corporate Governance (Code). The Board is pleased to report on the manner the Group has applied the principles and the extent of compliance with the best practices of corporate governance as set out in Part 1 and Part 2 respectively of the Code.

DIRECTORS

The Board

The Board has the overall responsibility for corporate governance, direction, formulation of policies and overseeing the investment and business of the Group. A total of five (5) Board meetings were held during the financial year ended 31 December 2008. Details of attendance by Directors are as follows:

Directors No. of meetings No. of meetings held during appointment attended

Tan Sri Abu Sahid bin Mohamed 5 4 Dato’ Abu Talib bin Mohamed 5 4 Dato’ Lim Heng Suan 5 5 Tai Ah Chai 4 4 (Appointed on 01 May 2008) Dato’ Mohamed Fuad bin Yon 5 4 Dato’ Ahmad Bakri bin Shabdin 5 5 Dato’ Siew Mun Chuang 5 5 Dato’ Lim Ah Lai 5 5 Dato’ Maarof bin H.A. Rahman 5 5

Board Balance

The Board currently has nine (9) members, comprising three (3) Executive Directors (including the Executive Chairman) and six (6) Non-Executive Directors with four (4) of the Directors being Independent Directors. The Board’s composition complied with the Listing Requirements.

Together, the Board has a good mix of business, financial, banking, administration and technical expertise and experience to lead and control the Group. The profile of the Directors are presented on pages 10 to 14 of the Annual Report.

The roles of the Chairman and Managing Director/Chief Executive Officer are distinguished and separated. The Chairman is primarily responsible for orderly conduct and working of the Board whilst the Managing Director/Chief Executive Officer is responsible for the operations, business development and implementation of policies and decisions set by the Board.

The presence of the four Independent Non-Executive Directors fulfils a pivotal role in corporate accountability. Although all the Directors have an equal responsibility for the Group’s operations, the role of these Independent Non-Executive Directors is particularly important as they provide unbiased and independent views, advice and judgement.

There is a schedule of matters reserved for the Board’s decision, which includes the approval of annual budget, major investment and financial decisions and key policies.

To facilitate the smooth transaction of business within the Company, the Board has established three (3) Board committees, namely the Audit Committee, the Nomination Committee and the Remuneration Committee. The terms of reference of each Committee have been approved by the Board and where applicable, comply with the recommendations of the Code. Ipmuda Berhad Ipmuda Berhad 20 Annual Report 2008 Annual Report 2008

CORPORATE GOVERNANCE STATEMENT

Audit Committee

The Audit Committee reviews issues of accounting policies, presentation for external financial reporting and the deliberation of any audit findings of both the external and internal auditors arising from the Company’s financial statements and any issues raised by the auditors.

The report of the Audit Committee for the financial year ended 31 December 2008 is set out on pages 23 to 26.

Nomination Committee

The Nomination Committee comprises two Independent Non-Executive Directors and one Non-Independent Non- Executive Director. Members of the Nomination Committee are:

Dato’ Siew Mun Chuang (Independent Non-Executive Director ) Dato’ Maarof bin H.A. Rahman (Independent Non-Executive Director ) Dato’ Mohamed Fuad bin Yon (Non-Independent Non-Executive Director)

The Committee is responsible for proposing new nominees to the Board and to assess the contribution of each individual Director and the overall effectiveness of the Board on an on-going basis. The final decision for any appointments remains the responsibility of the Board after considering the Committee’s recommendations.

Remuneration Committee

The Remuneration Committee comprises two Independent Non-Executive Directors and the Managing Director/Chief Executive Officer. Members of the Remuneration Committee are:

Dato’ Siew Mun Chuang (Independent Non-Executive Director ) Dato’ Maarof bin H.A. Rahman (Independent Non-Executive Director ) Dato’ Lim Heng Suan (Managing Director/Chief Executive Officer)

The Committee is responsible for making recommendations on the remuneration of Executive Directors. The determination of remuneration packages of Non-Executive Directors is the responsibility of the Board as a whole.

The number of Directors whose remuneration falls within the respective bands during the financial year is as follows:

Executive Non-Executive Directors Directors (no.of director) (no.of director)

0 to RM50,000 – 5 RM350,001 to RM400,000 – 1 RM600,001 to RM650,000 1 – RM900,001 to RM950,000 1 – RM1,200,001 to RM1,250,000 1 –

Re-election of Directors

The Company’s Articles of Association stipulate that newly appointed Directors shall hold office until the next Annual General Meeting and shall then be eligible for re-election by shareholders and that at least one third or the number nearest to one third of the Directors are required to retire by rotation at every Annual General Meeting and be subject to re-election by shareholders. Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 21

CORPORATE GOVERNANCE STATEMENT

Supply of Information

The Board is supplied with all necessary information by way of Board papers prior to Board meetings.

The Directors have access to the advice and services of the Company Secretary to assist them in furtherance of their duties. The Directors may obtain independent professional advice on special issues at the Company’s expense to enable the Directors to discharge their duties with adequate knowledge on the matters being deliberated.

Directors’ Training

All the Directors have attended the in-house training programme mentioned below during the financial year. They will continue to attend further training programmes from time to time to keep abreast with the relevant changes and development in laws and regulations as well as business development. Mr. Tai Ah Chai who was appointed Executive Director on 01 May 2008 has completed his Mandatory Accreditation Programme as required by Bursa Malaysia Securities Berhad.

No: of Date Title Organiser days spent

Tan Sri Abu Sahid bin Mohamed 30.10.2008 Ongoing RAM Holdings Half day Business Berhad Improvement

Dato’ Abu Talib bin Mohamed 30.10.2008 Ongoing RAM Holdings Half day Business Berhad Improvement

Dato’ Lim Heng Suan 30.10.2008 Ongoing RAM Holdings Half day Business Berhad Improvement

Tai Ah Chai 30.10.2008 Ongoing RAM Holdings Half day (Appointed on 01 May 2008) Business Berhad Improvement

Dato’ Mohamed Fuad bin Yon 30.10.2008 Ongoing RAM Holdings Half day Business Berhad Improvement

Dato’ Ahmad Bakri bin Shabdin 30.10.2008 Ongoing RAM Holdings Half day Business Berhad Improvement

Dato’ Siew Mun Chuang 30.10.2008 Ongoing RAM Holdings Half day Business Berhad Improvement

Dato’ Lim Ah Lai 30.10.2008 Ongoing RAM Holdings Half day Business Berhad Improvement

Dato’ Maarof bin H.A. Rahman 30.10.2008 Ongoing RAM Holdings Half day Business Berhad Improvement Ipmuda Berhad Ipmuda Berhad 22 Annual Report 2008 Annual Report 2008

CORPORATE GOVERNANCE STATEMENT

SHAREHOLDERS

Relationship with Shareholders

The Board acknowledges the need for shareholders to be informed of all material business matters affecting the Group. Information of the Group’s business activities and performance are disseminated through announcements, quarterly announcements of its result, annual reports and the Annual General Meetings. In addition, the Group’s website at http://www.ipmuda.com.my provides a broad range of information regarding the Group to the shareholders.

Dato’ Maarof bin H.A. Rahman is the Senior Independent Non-Executive Director to whom minority shareholders’ concern may be conveyed.

The General Meeting

The Annual General Meetings and Extraordinary General Meetings provide means of communication with shareholders. The Board as well as the Auditors of the Company are present to answer questions raised at the meetings. The Board talks to the shareholders informally before and after the meetings.

ACCOUNTABILITY AND AUDIT

Financial Reporting

In presenting the annual financial statements and quarterly announcements of its results, the Board ensured that they present a balanced and understandable assessment of the Group’s position and prospects.

Directors Responsibility Statement

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

Internal Control

The Directors acknowledge the responsibility of maintaining a good and efficient system of internal control, including risk management and the need to review its effectiveness regularly. The system is designed to mitigate and manage risk in the pursuit of the business objectives as well as safeguard Group’s assets and shareholders’ investment in the Group. However, such system can only provide reasonable but not absolute assurance against misstatement, fraud or loss.

Relationship with Auditors

The internal auditors were present at all the Audit Committee meetings. The Company maintains a transparent relationship with the external auditors in seeking their professional advice and towards ensuring compliance with the accounting standards.

Related Party Transactions

Significant related party transactions of the Group for the financial year are disclosed in Note 42 – Related Party Disclosures to the Financial Statements. This note also sets out the recurrent transactions conducted during the period in accordance with the general mandate obtained from shareholders.

This Statement was approved by the Board of Directors on 18 May 2009. Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 23

AUDIT COMMITTEE REPORT

The Board of Directors is pleased to present the report of the Audit Committee for the financial year ended 31 December 2008.

COMPOSITION

The present Audit Committee comprises of four (4) members of whom three (3) are Independent Non-Executive Directors and one (1) is Non-Executive Director.

MEMBERSHIP AND MEETINGS

A total of five (5) meetings were held during the year. Details of attendance of each Audit Committee member is as follows:

Number of Meetings attended

Dato’ Ahmad Bakri bin Shabdin 5/5 (Chairman – Independent Non-Executive Director)

Dato’ Siew Mun Chuang 5/5 (Member – Independent Non-Executive Director)

Dato’ Maarof bin H.A. Rahman 5/5 (Member – Independent Non-Executive Director)

Dato’ Abu Talib bin Mohamed 4/5 (Member – Non-Independent Non-Executive Director

SUMMARY OF ACTIVITIES

During the financial year ended 31 December 2008, the activities of the Audit Committee include review of:

i) the quarterly and year-end financial statements and recommend the same to the Board for approval and announcements to the Bursa Malaysia Securities Berhad (“Bursa Malaysia”) and Securities Commission.

ii) the Company’s compliance in particular the quarterly and year end financial statements with the accounting standards issued by Malaysian Accounting Standards Board and the Listing Requirements of Bursa Malaysia.

iii) internal audit time-table for the year 2008.

iv) the internal audit reports presented by the Internal Audit Department (“IAD”) on findings and recommendations with respect to system and control weaknesses and ensure implementation of corrective actions.

v) matters relating to corporate governance in compliance with the Listing Requirements of Bursa Malaysia and the Malaysian Code on Corporate Governance.

vi) related party transactions for compliance with the Listing Requirements of Bursa Malaysia and the appropriateness of such transactions before recommending to the Board for approval.

vii) the Group’s Recurrent Related Party Transactions and the procedures in relation thereto. Ipmuda Berhad Ipmuda Berhad 24 Annual Report 2008 Annual Report 2008

AUDIT COMMITTEE REPORT

Internal Audit Function

The IAD was established since the 1980’s. The main role of the IAD is to provide the Audit Committee with independent and objective reports on the effectiveness of the system of internal controls within the Group.

The IAD carried out audits comprising head office functions and subsidiaries. The internal audit reports were deliberated by the Audit Committee and recommendations were duly acted upon by the management. The audits covered a comprehensive scope in the areas of operations, finance/accounts and investigation.

TERMS OF REFERENCE

The terms of reference of the Audit Committee are as follows:

A. COMPOSITION

The Board shall establish a committee of the Board of Directors (“Board”) to be known as the Audit Committee.

The Audit Committee shall be appointed by the Directors from among their number (pursuant to a resolution of the Board) which fulfills the following requirements:

1) the Audit Committee must be composed of no fewer than three (3) members;

2) all the Audit Committee members must be non-executive directors with a majority of them being independent directors; and

3) at least one member of the Audit Committee must be a member of the Malaysian Institute of Accountants or fulfils such other requirements as prescribed in Paragraph 15.10 of the Listing Requirements of Bursa Malaysia Securities Berhad.

No alternate director is to be appointed a member of the Audit Committee.

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

The members of the Audit Committee shall elect a Chairman from among their number who shall be an independent director.

The Board must review the term of office and performance of the Audit Committee and each of its members at least once every three (3) years to determine whether the Audit Committee members have carried out their duties in accordance with the terms of reference.

B. OBJECTIVES

The primary objectives of the Audit Committee are to:

a) Ensure transparency, integrity and accountability in the Ipmuda Group’s activities so as to safeguard the rights and interests of shareholders.

b) Provide assistance to the Board in fulfilling its fiduciary responsibilities relating to the corporate accounting policies and internal controls and financial reporting practices of the Ipmuda Group.

c) Maintain through regularly scheduled meetings, a direct line of communication between the Board, senior management, internal and external auditors. Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 25

AUDIT COMMITTEE REPORT

C. AUTHORITY

The Audit Committee is authorised by the Board to:

a) Investigate any activity within its terms of reference and investigate and report any activity, issues or concerns in regard to the Management of the Ipmuda Group.

b) Review the existing practices and make recommendations to Management. In this regard, the Audit Committee is authorized to seek any information it requires from any employee and to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers necessary.

The Audit Committee shall have direct access to the internal and external auditors, who in turn, have access at all times to the Chairman of the Audit Committee. Whenever deemed necessary, the Audit Committee will convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Company and Group except for the Company Secretary.

D. FUNCTIONS OF THE AUDIT COMMITTEE

1. To review and discuss the following with the external auditors:

i) their audit plan;

ii) their evaluation of the internal control system;

iii) their audit report, management letter and management’s response; and

iv) the assistance given by the employees of the Company to them.

2. To review the quarterly results and year end financial statements, prior to the approval by the Board, focusing particularly on:

i) going concern assumption;

ii) changes in or implementation of major accounting policies and practices;

iii) major judgemental areas, significant and unusual events; and

iv) compliance with accounting standards and other legal requirements;

3. To do the following in relation to the internal audit function:

i) To review the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work;

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

iii) To consider the significant findings of internal audit investigations and management’s response;

iv) To evaluate the system of internal controls, with the external auditors;

v) To assess the quality and depth of staffing in the internal audit function;

vi) To review any assessment or appraisal of the performance of the staff of the internal audit function; and

vii) To inquire into the effectiveness of the Group’s internal audit policies and procedures; Ipmuda Berhad Ipmuda Berhad 26 Annual Report 2008 Annual Report 2008

AUDIT COMMITTEE REPORT

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

5. To review and recommend the appointment of external auditors, the audit fee and to deal with matters relating to their resignation or dismissal including the nomination of person or persons as external auditors.

6. To review the risk management policies and practices of the Company and Group to ensure effectiveness.

7. To discuss problems and reservations arising from the interim and/or final external audits, and any matters the external auditors may wish to discuss (in the absence of Management, where necessary).

8. To carry out such other functions as may be agreed to by the Audit Committee and the Board of Directors.

E. MEETINGS

The Audit Committee shall meet at least four (4) times a year and such additional meetings as the Chairman shall decide in order to fulfill its duties. In addition, the Chairman may call a meeting of the audit committee if a request is made by any committee member, the Company’s Chief Executive Officer or external auditors.

The Chief Executive Officer, Finance Director and Head of Internal Audit will normally be invited to attend all meetings of the Audit Committee. Other board members and/or other employees may also be invited to attend any particular meeting of the Audit Committee as determined by the Chairman.

F. NOTICE

Three (3) days notice specifying the place, date and hour of the meeting and the business to be discussed thereat shall be given to all the Audit Committee members and any other person that may be required to attend.

G. QUORUM

The quorum for each meeting of the Audit Committee shall be a majority of members present who must be independent directors and any decision shall be a simple majority.

H. SECRETARY AND MINUTES

The Company Secretary shall act as Secretary of the Audit Committee.

The Secretary shall also be responsible for keeping the minutes of meetings of the Audit Committee and circulating them to the Audit Committee members and to the other members of the Board of Directors. The Chairman of the Audit Committee shall report on each meeting of the Audit Committee to the Board. Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 27

Statement On Internal Control

In accordance with the Statement on Internal Control - Guidance for Directors of Public Listed Companies, the Board is pleased to provide the following statement on the state of internal control of the Group which has been in place for the financial year under review up to the date of issuance of the annual report and financial statements.

Board Responsibility

The Board acknowledges that it is ultimately responsible for the Group’s system of internal control which includes the establishment of an appropriate control environment and review of its adequacy and integrity on a regular basis to ensure its effectiveness. The system is designed to manage rather than to eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

The system includes controls of a financial, operational, organisational and compliance nature as well as risk management. The Board has established an ongoing process to identify, evaluate, document, monitor, review and manage significant risks faced by the Group in safeguarding the shareholders’ investment, Group’s assets and other stakeholders’ interests.

Risk Management

Whilst the Board maintains ultimate control over risk and control issues, it has delegated to the Risk Management Committee (“RMC”) within an established framework on the implementation of risk management with the aim of strengthening the risk management functions across the Group. The RMC reports to the Audit Committee.

The RMC reviews the effectiveness and adequacy of the risk management processes in place and ensure that risk assessment exercise was carried out by the respective operating units and departments in monitoring and mitigating the risks faced by the respective units and departments. New areas are introduced for assessment as the business risk profile changes.

Internal Audit

The internal audit function adopts a risk-based approach to provide the Audit Committee with independent and objective reports on the state of internal control and the extent of compliance with the established policies and procedures as well as relevant statutory requirements.

The internal audit reports directly to the Audit Committee. Internal audit plans its audit based on the audit plan approved by the Audit Committee at the beginning of the year. The Audit Committee reviews the reports from internal audit, before reporting and making recommendations to the Board in strengthening the internal control. The Audit Committee presents its findings to the Board regularly, and at least on a quarterly basis, as appropriate. Ipmuda Berhad Ipmuda Berhad 28 Annual Report 2008 Annual Report 2008

Statement On Internal Control

Control Environment

The key elements of the Group’s system of internal control are as follows:

• There is in place an organisation structure which formally defines lines of responsibility and delegation of authority.

• Established strategic planning and budgeting process requiring all operating units to prepare annual operating budget including capital and manpower budgets. The Board reviews and approves the budgets.

• Effective reporting systems are in place for monthly performance and variance reports for review by management.

• Actual performance compared with budget and previous year is reviewed quarterly with detailed explanation of any material variances.

• Policies and procedures of most operating units are documented and updated regularly to meet changing business environment.

• Clearly defined approving authority of the managers and executives within the Group.

The Group’s system of internal control does not apply to associated companies because the Group does not have full management and control over them.

The external auditors contribute an independent perspective on certain aspects of the internal operating and financial control system arising from their work to the Audit Committee by way of Management Letter.

This Statement was approved by the Board of Directors on 18 May 2009. Ipmuda Berhad Annual Report 2008 Financial

Statements Statements

Directors’ Report 30 Financial Statement by Directors 34

Statutory Declaration 34

Independent Auditors’ Report 35

Balance Sheets 37

Income Statements 39

Statements of Changes in Equity 40

Cash Flow Statements 42

Notes to the Financial Statements 45 Ipmuda Berhad Ipmuda Berhad 30 Annual Report 2008 Annual Report 2008

DIRECTORS’ REPORT

The Directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2008.

Principal Activities

The Company is principally engaged in the businesses of trading and distribution of building materials, whilst the principal activities of the subsidiaries are set out in Note 8 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

RESULTS

THE GROUP THE COMPANY RM’000 RM’000

Profit for the financial year 15,305 2,187

Attributable to:- Equity holders of the Company 13,899 2,187 Minority interests 1,406 –

15,305 2,187

Dividends

Since the end of the previous financial year, the Company paid a first and final dividend of 2.5 sen per share less income tax of 26% on the ordinary shares amounting to RM1,340,686.

The Directors now recommend the payment of a first and final dividend in respect of the current financial year of 3.0 sen per share less income tax of 25% on the ordinary shares amounting to RM1,630,564 subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Company.

Reserves And Provisions

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

ISSUES OF SHARES AND DEBENTURES

During the financial year,

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

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

Options Granted Over Unissued Shares

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

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 31

DIRECTORS’ REPORT

Bad And Doubtful Debts

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts.

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

Current Assets

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

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

Valuation Methods

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

Contingent And Other Liabilities

The contingent liabilities of the Group and of the Company are disclosed in Note 44 to the financial statements. At the date of this report, there does not exist:-

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

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

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

Change Of Circumstances

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

Items Of An Unusual Nature

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

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

Ipmuda Berhad Ipmuda Berhad 32 Annual Report 2008 Annual Report 2008

DIRECTORS’ REPORT

DIRECTORS

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

Tan Sri Abu Sahid bin Mohamed Executive Chairman Dato’ Abu Talib bin Mohamed Deputy Chairman Dato’ Lim Heng Suan Managing Director / Chief Executive Officer Tai Ah Chai Executive Director (Appointed on 1 May 2008) Dato’ Mohamed Fuad bin Yon Dato’ Ahmad Bakri bin Shabdin Dato’ Siew Mun Chuang Dato’ Lim Ah Lai Dato’ Maarof bin H.A. Rahman Mohd. Fauzi bin Yon (Alternate to Tan Sri Abu Sahid bin Mohamed)

Directors’ Interests

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

NUMBER OF ORDINARY SHARES OF RM1 EACH AT AT 1.1.2008 ACQUIRED SOLD 31.12.2008

THE COMPANY DIRECT INTERESTS

Tan Sri Abu Sahid bin Mohamed 5,388,900 – – 5,388,900 Dato’ Lim Heng Suan 127,000 – – 127,000 Dato’ Lim Ah Lai 255,000 – – 255,000 Mohd. Fauzi bin Yon 100,000 – – 100,000 Tai Ah Chai 1 – 1,278 – 1,278

DEEMED INTERESTS

Tan Sri Abu Sahid bin Mohamed 2 16,162,000 – – 16,162,000 Dato’ Lim Heng Suan 3 4,594,000 – – 4,594,000

1 Shareholding as at date of appointment as Director of the Company.

2 Deemed interested by virtue of his shareholding in Maju Holdings Sdn. Bhd. and his child’s shareholding in Ipmuda Berhad. 3 Deemed interested by virtue of his shareholding in Purnama Gigih Sdn. Bhd.

Tan Sri Abu Sahid bin Mohamed by virtue of his interest in shares in the Company is also deemed interested in shares in all the Company’s subsidiaries to the extent of the Company’s interest.

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

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 33

DIRECTORS’ REPORT

Directors’ Benefits

Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in Note 35 to the financial statements, or the fixed salary of a full-time employee) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest, except as disclosed in Note 42 to the financial statements.

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

Significant Events During The Financial Year

The significant events during the financial year are disclosed in Note 46 to the financial statements.

Auditors

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

Signed on behalf of the Board in accordance with a resolution of the Directors dated 28 April 2009.

Tan Sri Abu Sahid bin Mohamed Executive Chairman

Dato’ Lim Heng Suan Managing Director / Chief Executive Officer

Ipmuda Berhad Ipmuda Berhad 34 Annual Report 2008 Annual Report 2008

Statement By Directors

We, Tan Sri Abu Sahid bin Mohamed and Dato’ Lim Heng Suan, being two of the Directors of Ipmuda Berhad, state that, in the opinion of the Directors, the financial statements set out in pages 37 to 96 are drawn up in accordance with applicable approved Financial Reporting Standards in Malaysia issued by the Malaysian Accounting Standards Board (“MASB”) and the provision of the Companies Act 1965 so as to give a true and fair view of the state of affairs of the Group and of the Company at 31 December 2008 and of their results and cash flows for the financial year ended on that date.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 28 April 2009.

Tan Sri Abu Sahid bin Mohamed Dato’ Lim Heng Suan Executive Chairman Managing Director / Chief Executive Officer

Statutory Declaration

I, Ong Wann Yi, being the Officer primarily responsible for the financial management of Ipmuda Berhad, do solemnly and sincerely declare that the financial statements set out on pages 37 to 96 are, to the best of my knowledge and belief, correct, and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act 1960.

Subscribed and solemnly declared by Ong Wann Yi, at Petaling Jaya, Selangor Darul Ehsan on 28 April 2009.

Ong Wann Yi

Before me

A. Rathnasamy AMN Pesuruhjaya Sumpah Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 35

Independent Auditors’ Report To The MemberS Of IPMUDA BERHAD

We have audited the financial statements of Ipmuda Berhad, which comprise the balance sheets as at 31 December 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 financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 37 to 96.

Directors’ Responsibility for 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’ Responsibilities

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 risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation 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 Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

Without qualifying our opinion, we draw your attention to Note 15 of the financial statements which provides disclosures in respect of the amounts due from companies in which certain Directors have substantial interests and the amounts due from companies with certain common Directors. The Directors are of the opinion that the debts will be recoverable and thus no allowance for doubtful debts is required as at 31 December 2008. As the debts are long overdue, we consider that we should draw your attention to the disclosure made in Note 15 to the financial statements.

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 Company as of 31 December 2008 and of its financial performance and cash flows for the financial year ended. Ipmuda Berhad Ipmuda Berhad 36 Annual Report 2008 Annual Report 2008

Independent Auditors’ Report To The MemberS Of IPMUDA BERHAD

Report on Other Legal and Regulatory Requirements

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

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

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 8 to the financial statements.

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

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

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.

Horwath James Chan Kuan Chee Firm No: AF 1018 Approval No: 2271/10/09 (J) Chartered Accountants Partner

Kuala Lumpur 28 April 2009 Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 37

BALANCE SHEETS AS AT 31 DECEMBER 2008

THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM’000 RM’000 RM’000 RM’000

ASSETS

NON-CURRENT ASSETS Property, plant and equipment 5 40,863 40,334 4,868 4,832 Investment properties 6 15,249 17,295 9,600 9,990 Prepaid land lease payments 7 11,990 12,335 1,870 1,909 Investments in subsidiaries 8 – – 22,086 21,182 Investments in associates 9 1,882 1,882 11 11 Other investments 10 1,236 962 748 432 Goodwill on consolidation 11 819 819 – – Deferred tax assets 12 977 1,285 316 373

73,016 74,912 39,499 38,729

CURRENT ASSETS Land and property development expenditure 13 7,317 7,293 – – Inventories 14 25,402 32,268 700 4,571 Trade receivables 15 196,195 225,098 63,147 77,766 Other receivables 16 10,581 11,823 7,595 6,599 Tax recoverable 511 480 – – Amount due from subsidiaries 8 – – 115,558 112,193 Short-term investment 17 5,223 5,223 5,223 5,223 Deposits 18 6,800 800 – – Cash and bank balances 19 5,139 5,311 1,163 507

257,168 288,296 193,386 206,859

TOTAL ASSETS 330,184 363,208 232,885 245,588

EQUITY AND LIABILITIES

EQUITY Share capital 20 72,469 72,469 72,469 72,469 Share premium 21 3,457 3,457 3,457 3,457 Exchange fluctuation reserves 22 305 416 – – Retained profits 23 50,131 37,573 19,721 18,875

126,362 113,915 95,647 94,801

MINORITY INTERESTS 13,870 18,602 – –

TOTAL EQUITY 140,232 132,517 95,647 94,801

The annexed notes form an integral part of these financial statements Ipmuda Berhad Ipmuda Berhad 38 Annual Report 2008 Annual Report 2008

BALANCE SHEETS AS AT 31 DECEMBER 2008

THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM’000 RM’000 RM’000 RM’000

NON-CURRENT LIABILITIES

Hire purchase payables 24 1,492 2,103 352 338 Term loan 25 334 524 – – Deferred tax liabilities 12 247 59 – – Secured bank guaranteed commercial papers 26 20,000 25,000 20,000 25,000

22,073 27,686 20,352 25,338

CURRENT LIABIILITIES Trade payables 27 91,976 103,212 22,304 25,826 Other payables 28 23,527 20,930 12,495 11,683 Amount due to subsidiaries 8 – – 44,744 37,989 Amount due to associates 9 22 24 22 24 Hire purchase payables 24 904 847 188 112 Term loan 25 190 174 – – Short-term borrowings 29 38,608 65,317 28,832 43,503 Bank overdrafts 30 5,370 4,557 3,143 1,111 Secured bank guaranteed commercial papers 26 5,000 5,000 5,000 5,000 Taxation 2,282 2,944 158 201

167,879 203,005 116,886 125,449

TOTAL LIABILITIES 189,952 230,691 137,238 150,787

TOTAL EQUITY AND LIABILITIES 330,184 363,208 232,885 245,588

The annexed notes form an integral part of these financial statements Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 39

INCOME STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM’000 RM’000 RM’000 RM’000

REVENUE 31 743,509 619,016 259,916 175,369

COST OF SALES 32 (686,493) (571,213) (242,777) (163,639)

GROSS PROFIT 57,016 47,803 17,139 11,730

OTHER INCOME 33 13,177 5,728 7,183 10,030

70,193 53,531 24,322 21,760

ADMINISTRATIVE EXPENSES (23,206) (21,486) (11,406) (10,487)

SELLING AND MARKETING EXPENSES (15,035) (12,559) (2,342) (2,491)

OTHER EXPENSES (7,404) (7,361) (3,265) (1,939)

FINANCE COSTS 34 (3,931) (4,472) (2,874) (3,146)

(49,576) (45,878) (19,887) (18,063)

20,617 7,653 4,435 3,697

SHARE OF PROFIT IN ASSOCIATES – 26 – –

PROFIT BEFORE TAXATION 35 20,617 7,679 4,435 3,697

INCOME TAX EXPENSE 36 (5,312) (3,958) (2,248) (1,485)

PROFIT AFTER TAXATION 15,305 3,721 2,187 2,212

ATTRIBUTABLE TO: Equity holders of the Company 13,899 2,843 2,187 2,212 Minority interests 1,406 878 – –

15,305 3,721 2,187 2,212

EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY - Basic, sen 37 19.18 3.92 - Diluted, sen 37 Not applicable Not applicable

The annexed notes form an integral part of these financial statements Ipmuda Berhad Ipmuda Berhad 40 Annual Report 2008 Annual Report 2008

STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

<---- ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY ----> <--- NON-DISTRIBUTABLE ---> DISTRIBUTABLE EXCHANGE SHARE SHARE FLUCTUATION RETAINED MINORITY TOTAL CAPITAL PREMIUM RESERVES PROFITS TOTAL INTERESTS EQUITY THE GROUP NOTE RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1.1.2007 72,469 3,457 425 34,730 111,081 13,087 124,168

Acquisition of subsidiaries – – – – – 4,724 4,724

Exchange fluctuation reserves – – (9) – (9) – (9)

Profit for the financial year -– – – 2,843 2,843 878 3,721

Dividends paid to minority interest of a subsidiary – – – – – (87) (87)

At 31.12.2007/ 1.1.2008 72,469 3,457 416 37,573 113,915 18,602 132,517

Acquisition of a subsidiary – – – – – (5,593) (5,593)

Additional investment in a subsidiary – – – – – (456) (456)

Exchange fluctuation reserves – – (111) – (111) – (111)

Profit for the financial year – – – 13,899 13,899 1,406 15,305

Dividend 38 – – – (1,341) (1,341) – (1,341)

Dividends paid to minority interest of a subsidiary – – – – – (89) (89)

At 31.12.2008 72,469 3,457 305 50,131 126,362 13,870 140,232

The annexed notes form an integral part of these financial statements Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 41

STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

NON- DISTRIBUTABLE DISTRIBUTABLE SHARE SHARE RETAINED TOTAL CAPITAL PREMIUM PROFITS EQUITY THE COMPANY NOTE RM’000 RM’000 RM’000 RM’000

At 1.1.2007 72,469 3,457 16,663 92,589

Profit for the financial year – – 2,212 2,212

At 31.12.2007/1.1.2008 72,469 3,457 18,875 94,801

Profit for the financial year – – 2,187 2,187

Dividend 38 – – (1,341) (1,341)

At 31.12.2008 72,469 3,457 19,721 95,647

The annexed notes form an integral part of these financial statements Ipmuda Berhad Ipmuda Berhad 42 Annual Report 2008 Annual Report 2008

CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES Profit before taxation 20,617 7,679 4,435 3,697

Adjustments for:- Depreciation of property, plant and equipment 2,788 2,209 559 468 Amortisation of prepaid land lease payments 247 247 39 39 Allowance for doubtful debts 1,089 1,842 279 914 Impairment loss on quoted investments 966 38 766 – (Excess of the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over cost of acquisition)/ Impairment of goodwill (4,956) 2,363 – – Interest expense 3,931 4,472 2,874 3,146 Share of results in associates – (26) – – Gain on disposal of property, plant and equipment (747) (450) (31) (99) (Gain)/Loss on disposal of investment properties (65) – 1 – Gain on disposal of prepaid land lease assets (1,268) – – – Changes in fair value of investment properties 628 (453) 170 (160) Property, plant and equipment written off 17 421 – * Interest income (3,177) (2,467) (1,334) (1,256) Dividend income (3) (5) (281) (280) Rental income (227) (222) (909) (575)

Operating profit before working capital changes 19,840 15,648 6,568 5,894 Land and property development (24) (25) – – Inventories 6,866 (7,255) 3,871 (1,949) Receivables 29,055 (30,315) 13,344 (20,360) Subsidiaries – – 3,390 (5,131) Associates (2) (1) (2) (1) Payables (8,639) 23,883 (2,710) 8,198

CASH FROM/(USED IN) OPERATIONS 47,096 1,935 24,461 (13,349) Interest paid (2,904) (3,372) (1,847) (2,046) Income tax (paid)/refunded (5,500) (1,685) (2,234) 201

NET CASH FROM/(USED IN) OPERATING ACTIVITIES CARRIED FORWARD 38,692 (3,122) 20,380 (15,194)

The annexed notes form an integral part of these financial statements Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 43

CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM’000 RM’000 RM’000 RM’000

NET CASH FROM/(USED IN) OPERATING ACTIVITIES BROUGHT FORWARD 38,692 (3,122) 20,380 (15,194)

CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES

Acquisition of subsidiaries, net of cash acquired 39 (776) (4,320) (904) (5,016) Additional investment in subsidiaries (396) – – – Proceeds from disposal of property, plant and equipment 1,094 694 31 119 Proceeds from disposal of investment properties 435 – 219 – Proceeds from disposal of prepaid land lease assets 1,366 – – – Proceeds from disposal of short-term investments – 3,074 – 3,074 Purchase of property, plant and equipment 40 (2,156) (2,107) (337) (392) Purchase of other investment (1,169) – (1,082) – Rental income 227 222 909 575 Interest income 3,177 2,467 1,334 1,256 Dividend received from subsidiaries – – 280 280 Dividend received from shares quoted in Malaysia 3 5 1 *

NET CASH FROM/(USED IN) INVESTING ACTIVITIES 1,805 35 451 (104)

CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES

Dividend paid to shareholders (1,341) – (1,341) – Dividends paid to minority shareholders in subsidiaries (89) (87) – – Interest on commercial papers (1,027) (873) (1,027) (873) Interest on bridging loan – (227) – (227) (Repayment)/Proceeds from issuance of commercial papers (5,000) 30,000 (5,000) 30,000 Repayment of hire purchase payables (870) (427) (168) (103) Repayment of short-term bank borrowings (26,512) (15,994) (14,671) (10,442) Debt service reserve account (12) (408) (12) (408) Repayment of bills payable (197) (289) – – Repayment of term loans (174) (161) – –

NET CASH (USED IN)/FROM FINANCING ACTIVITIES (35,222) 11,534 (22,219) 17,947

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 5,275 8,447 (1,388) 2,649 Carried Forward

The annexed notes form an integral part of these financial statements Ipmuda Berhad Ipmuda Berhad 44 Annual Report 2008 Annual Report 2008

CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM’000 RM’000 RM’000 RM’000

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 5,275 8,447 (1,388) 2,649 Brought Forward

EXCHANGE DIFFERENCES (272) (40) – –

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 1,146 (7,261) (1,012) (3,661)

CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 41 6,149 1,146 (2,400) (1,012)

Note:- * Amount less than RM500.

The annexed notes form an integral part of these financial statements Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 45

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

1 GENERAL INFORMATION

The Company is a public company limited by shares, incorporated under the Companies Act 1965 in Malaysia and is listed on the Main Board of Bursa Malaysia Securities Berhad. The domicile of the Company is Malaysia. The registered office and principal place of business are as follows:-

Registered office : Bangunan Ipmuda, 12 Jalan Datoh, 30000 Ipoh, Perak Darul Ridzuan.

Principal place of business : 9th Floor, Maju Tower, No. 1001, Jalan Sultan Ismail, 50250 Kuala Lumpur.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors dated 28 April 2009.

2. PRINCIPAL ACTIVITIES

3. BASIS OF PREPARATION

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

(a) During the current financial year, the Group and the Company have adopted the following:

(i) FRSs issued and effective for financial periods beginning on or after 1 July 2007:

FRS 107 Cash Flow Statements FRS 111 Construction Contracts FRS 112 Income Taxes FRS 118 Revenue FRS 120 Accounting for Government Grants and Disclosure of Government Assistance FRS 134 Interim Financial Reporting FRS 137 Provisions, Contingent Liabilities and Contingent Assets

FRS 120 is not relevant to the Group’s operations. The adoption of the other standards did not have any material impact on the form and content of disclosures presented in the financial statements.

(ii) Amendment to FRS 121 The Effects of Changes in Foreign Exchange Rates - Net Investment in a Foreign Operation issued and effective for financial periods beginning on or after 1 July 2007.

The adoption of this amendment did not have any material impact on the financial statements of the Group.

Ipmuda Berhad Ipmuda Berhad 46 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

3. BASIS OF PREPARATION (CONT’D)

(iii) IC Interpretations issued and effective for financial periods beginning on or after 1 July 2007:

IC Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities IC Interpretation 2 Member’s Shares in Co-operative Entities and Similar Instrument IC Interpretation 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds IC Interpretation 6 Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment

IC Interpretation 7 Applying the Restatement Approach under FRS 1292004 Financial Reporting in Hyperinflationary Economies IC Interpretation 8 Scope of FRS 2

The above IC Interpretations are not relevant to the Group’s operations.

(b) The Group has not adopted the following FRSs and IC Interpretations that have been issued as at the date of authorisation of these financial statements but are not yet effective for the Group:

(i) FRS issued and effective for financial periods beginning on or after 1 July 2009:

FRS 8 Operating Segments

FRS 8 replaces FRS 1142004 Segment Reporting and requires a “management approach”, under which segment information is presented on the same basis as that used for internal reporting purposes. The adoption of this standard only impacts the form and content of disclosures presented in the financial statements of the Group. This FRS is expected to have no material impact on the financial statements of the Group upon its initial application.

(ii) FRSs issued and effective for financial periods beginning on or after 1 January 2010:

FRS 4 Insurance Contracts FRS 7 Financial Instruments: Disclosures FRS 139 Financial Instruments: Recognition and Measurement

The Group considers financial guarantee contracts entered to be insurance arrangements and accounts for them under FRS 4. In this respect, the Group treats the guarantee contract as a contingent liability until such a time as it becomes probable that the Group will be required to make a payment under the guarantee. The adoption of FRS 4 is expected to have no material impact on the financial statements of the Group.

The possible impacts of FRS 7 and FRS 139 on the financial statements upon their initial applications are not disclosed by virtue of the exemptions given in these standards.

(iii) IC Interpretations issued and effective for financial periods beginning on or after 1 January 2010:

IC Interpretation 9 Reassessment of Embedded Derivatives IC Interpretation 10 Interim Financial Reporting and Impairment

IC Interpretation 9 is not relevant to the Group’s operations. IC Interpretation 10 prohibits the impairment losses recognised in an interim period on goodwill and investments in equity instruments and in financial assets carried at cost to be reversed at a subsequent balance sheet date. This interpretation is expected to have no material impact on the financial statements of the Group upon its initial application.

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 47

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

4. SIGNIFICANT ACCOUNTING POLICIES

(a) Critical Accounting Estimates and Judgements

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

(i) Depreciation of Property, Plant and Equipment

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

The Group anticipates that the residual values of its property, plant and equipment will be insignificant, except for motor vehicles. As a result, residual values are not being takeninto consideration for the computation of the depreciable amount of these assets. The cost of motor vehicles less residual value are depreciated on a straight-line basis over the assets’ economic useful lives which management has estimated to be 5 or 7 years.

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

(ii) Income Taxes

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

(iii) Impairment of Assets

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

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

The Group determines whether a property qualifies as an investment property, and has developed certain criteria based on FRS 140 in making that judgement. Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, the Group considers whether a property generates cash flows largely independent of the other assets held by the Group.

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

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

Ipmuda Berhad Ipmuda Berhad 48 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

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

(v) Property Development and Construction Contracts

The Group recognises property development and contract 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 and contract costs incurred for work performed to date bear to the estimated total property development and contract costs.

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

(vi) Allowance for Bad and Doubtful Debts

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

(vii) Operating Lease Commitments - the Group as Lessor

The Group has entered into commercial property leases on its investment property portfolio. The Group has determined that it retains all the significant risks and rewards of ownership of these properties which are leased out on operating leases.

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

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

(b) 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 arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity.

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

Financial instruments recognised in the balance sheet are disclosed in the individual policy statement associated with each item. Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 49

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(i) Functional and Presentation Currency

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

The consolidated financial statements are presented in Ringgit Malaysia (“RM”) which is also the Company’s functional and presentation currency.

(ii) Transactions and Balances

Transactions in foreign currencies are converted into the respective functional currencies on initial recognition, using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities at the balance sheet date are translated at the rates prevailing as of that date. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. All exchange differences are taken to the income statement.

The principal exchange rates for every unit of foreign currency ruling at the balance sheet date used were as follows:-

2008 2007 RM RM

Singapore Dollar 2.4111 2.3010 United States Dollar 3.4650 3.3378

(iii) Foreign Operations

The results and the financial position of all entities in the Group that have a functional currency different from the presentation currency are translated into the presentation currency are as follows:-

• assets and liabilities for each balance sheet presented are translated at the closing rate prevailing at the date of the balance sheet;

• income and expenses for each income statement are translated at the average exchange rates for the year; and

• all resulting exchange differences are recognised as a separate component of equity, as foreign currency translation reserve. On disposal, accumulated translation differences are recognised in the consolidated income statements as part of the gain or loss on sale.

(d) Basis of Consolidation

The consolidated financial statements comprise the financial statements of the Company and all its subsidiaries made up to 31 December 2008.

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

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

Ipmuda Berhad Ipmuda Berhad 50 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(d) Basis of Consolidation (Cont’d)

Intragroup transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances.

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

Minority interests are presented in the consolidated balance sheet of the Group within equity, separately from the Company’s equity holders, and are separately disclosed in the consolidated income statement of the Group.

(e) Goodwill on Consolidation

Goodwill on consolidation represents the excess of the cost of the acquisition over the Group’s share of the fair values of the identifiable net assets of the subsidiaries at the date of acquisition.

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

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

(f) Investments in Subsidiaries

Investments in subsidiaries are stated at cost in the balance sheet of the Company, and are reviewed for impairment at the end of the financial year if events or changes in circumstances indicate that their carrying values may not be recoverable. On the disposal of such investments, the difference between the net disposal proceeds and their carrying amount is taken to the income statement.

(g) Associates

An associate is an entity in which the Group has a long-term equity interest and where it exercises significant influence over the financial and operating policies.

Investments in associates in the consolidated financial statements are accounted for using the equity method, based on the financial statements of the associates made up to 31 December 2008. The Group’s share of the post-acquisition profits of the associates is included in the consolidated income statement and the Group’s interest in associates is stated at cost plus the Group’s share of the post- acquisition retained profits and reserves.

Unrealised gains on transactions between the Group and the associates are eliminated to the extent of the Group’s interest in the associate. Unrealised losses are eliminated unless cost cannot be recovered.

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.

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 51

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(g) Associate (Cont’d)

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 policies are adopted for like transactions and events in similar circumstances.

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

On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in the income statement.

(h) Property, Plant and Equipment

Property, plant and equipment, other than freehold land are stated at cost or revalued amount less accumulated depreciation and any impairment losses.

Freehold land is stated at cost less any impairment losses and is not depreciated. Buildings-in-progress are also not depreciated as these assets are not available for use. Depreciation of other property, plant and equipment is calculated under the straight-line method to write off the depreciable amount of the assets over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated.

The principal annual rates used for this purpose are:-

Buildings 2% Plant and equipment 10% - 35% Motor vehicles 20% Office furniture, renovation, equipment and air-conditioners 10% - 20%

The depreciation method, useful life and residual values are reviewed, and adjusted if appropriate, at each balance sheet date to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of the property, plant and equipment.

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

Surpluses arising from the revaluation of properties are credited to a revaluation reserve. Deficits arising from the revaluation, to the extent that they are not supported by any previous revaluation surpluses, are charged to the income statement.

The Directors have applied to certain buildings on leasehold land of the Group, the transitional provisions of International Accounting Standard No. 16 (Revised) Property, Plant and Equipment as adopted by the Malaysian Accounting Standards Board which allow for these assets to be stated at their last revalued amounts less depreciation. Accordingly, these revaluations have not been updated.

Ipmuda Berhad Ipmuda Berhad 52 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(i) 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. Subsequently to initial recognition, investment properties are stated at fair value. Fair value is arrived at by reference to market evidence of transaction prices for similar properties and is performed by registered independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued.

Gains or losses arising from changes in the fair values of investment properties are recognised in the income statement in the year in which they arise.

A property interest under an operating lease is classified and accounted for as an investment property on a property-by-property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at fair value.

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 the income statement in the year in which they arise.

(j) Prepaid Land Lease Payments

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

(k) Other Investments

Other investments are held on a long-term basis and are stated at cost less impairment losses.

On the disposal of these investments, the difference between the net disposal proceeds and the carrying amount of the investments is taken to the income statement.

(l) Impairment of Assets

The carrying values of assets, other than those to which FRS 136 - Impairment of Assets does not apply, are reviewed at each balance sheet date to determine whether there is an indication of impairment. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets’ net selling price and their value-in-use, which is measured by reference to discounted future cash flow.

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

In respect of assets other than goodwill, and when there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income statement immediately, unless the asset is carried at its revalued amount. A reversal of an impairment loss on a revalued asset is credited directly to the revaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the income statement, a reversal of that impairment loss is recognised as income in the income statement. Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 53

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(m) Land Held for Property Development and Property Development Costs

(i) Land Held for Property Development

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

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

(ii) 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 it 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.

(n) 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 bear 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 of costs incurred on construction contracts plus, recognised profits (less recognised losses), exceeds 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.

Ipmuda Berhad Ipmuda Berhad 54 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(o) Inventories

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

Cost is determined on a weighted average basis. The cost of raw materials comprises costs of purchase. The costs of finished goods and work-in-progress comprise costs of raw materials, direct labour, other direct costs and appropriate proportions of manufacturing overheads based on normal operating capacity. The cost of unsold properties comprises cost associated with the acquisition of land, direct costs and appropriate proportions of common costs.

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

(p) Receivables

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

(q) Payables

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

(r) Interest-bearing Borrowings

Interest-bearing borrowings are recorded at the amount of proceeds received, net of transaction costs.

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

(s) 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 purpose of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating leases, with the following exceptions:

• Property held under operating leases that would otherwise meet the definition of an investment property is classified as an investment property on a property-by-property basis and, if classified as investment property, is accounted for as if held under a finance lease (Note 4(i)); and

• 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.

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 55

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(s) Leases (Cont’d)

(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 income statement over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

The depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment as described in Note 4(h).

(iii) Operating Leases - the Group as Lessee

Operating lease payments are recognised as expenses on a straight-line basis over the term of the relevant leases. 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.

(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 (ab)(iv)). 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.

(t) Income Taxes

Income taxes for the year comprise current and deferred tax.

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

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

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

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

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the balance sheet date. Ipmuda Berhad Ipmuda Berhad 56 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(t) Income Taxes (Cont’d)

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

(u) Provision for Liabilities

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 costs.

(v) Employee 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, and short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Defined Contribution Plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in the income statement 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.

(w) Equity Instruments

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

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

(x) Cash and Cash Equivalents

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

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 57

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(y) Segmental Information

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

Most segment assets and liabilities can be directly attributed to the segments on a reasonable basis.

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

(z) Related Parties

A party is related to an entity if:-

(a) directly, or indirectly through one or more intermediaries, the party:- (i) controls, is controlled by, or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiaries); (ii) has an interest in the entity that gives it significant influence over the entity; or (iii) has joint control over the entity; (b) the party is an associate of the entity; (c) the party is a joint venture in which the entity is a venturer; (d) the party is a member of the key management personnel of the entity or its parent; (e) the party is a close member of the family of any individual referred to in (a) or (d); (f) the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or (g) the party is a post-employment benefit plan for the benefit of employees of the entity, or of any entity that is a related party of the entity.

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

(aa) Contingent Liabilities

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

A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision. Ipmuda Berhad Ipmuda Berhad 58 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(ab) 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) sale of Goods

Revenue is recognised net of sales taxes and discounts upon transfer of significant risks and rewards of ownership to the buyer.

(ii) Construction Contracts

Revenue from construction contracts are accounted for by the stage of completion method as described in Note 4(n).

(iii) Sale of Properties

Revenue from the sale of properties is accounted for by the stage of completion method as described in Note 4(m)(ii).

(iv) Rental Income

Rental income from investment property is recognised on a straight-line basis over the term of the lease. The aggregate cost of incentives provided to lessees is recognised as a reduction of rental income over the lease term on a straight-line basis.

(v) Interest Income

Interest income is recognised on an accrual basis using the effective interest method except for interest on overdue sales invoices which is recognised on cash basis.

(vi) Dividend Income

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

(vii) Management Fees

Management fees are recognised when services are rendered.

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 59

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

5. PROPERTY, PLANT AND EQUIPMENT

OFFICE RENOVATION OFFICE PLANT, AND EQUIPMENT FREEHOLD BUILDING IN MACHINERY MOTOR FURNITURE AND LAND BUILDINGS PROGRESS AND TOOLS VEHICLES AND FITTINGS COMPUTERS TOTAL THE GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

AT 31 DECEMBER 2008

Cost or Valuation

At 1 January 2008 At cost 2,758 22,179 11,480 12,204 11,742 10,360 7,557 78,280 At valuation – 230 – – – – – 230

2,758 22,409 11,480 12,204 11,742 10,360 7,557 78,510 Additions – 19 109 388 569 1,063 324 2,472 Transfer from investment properties – 1,092 – – – – – 1,092 Disposals – (578) – (18) (648) (16) (35) (1,295) Write-offs – – – – – (35) (103) (138) Exchange differences – – – 276 110 40 44 470

At 31 December 2008 2,758 22,942 11,589 12,850 11,773 11,412 7,787 81,111

Representing: At cost 2,758 22,942 11,589 12,850 11,773 11,412 7,787 81,111 At valuation – – – – – – – –

At 31 December 2008 2,758 22,942 11,589 12,850 11,773 11,412 7,787 81,111

Accumulated Depreciation and Impairment

At 1 January 2008 – 6,180 – 10,002 7,830 7,352 6,812 38,176 Depreciation charge for the year – 424 – 571 836 603 354 2,788 Transfer from investment properties – 44 – – – – – 44 Disposals – (263) – (4) (630) (16) (35) (948) Write-offs – – – – – (19) (102) (121) Exchange differences – – – 181 51 39 38 309

At 31 December 2008 – 6,385 – 10,750 8,087 7,959 7,067 40,248

Net Carrying Amount

At cost 2,758 16,557 11,589 2,100 3,686 3,453 720 40,863 At valuation – – – – – – – –

At 31 December 2008 2,758 16,557 11,589 2,100 3,686 3,453 720 40,863

Ipmuda Berhad Ipmuda Berhad 60 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

5. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

AT 31 DECEMBER 2007

Cost or Valuation

At 1 January 2007 At cost 2,758 21,412 11,418 8,395 7,803 8,478 6,205 66,469 At valuation – 230 – – – – – 230

2,758 21,642 11,418 8,395 7,803 8,478 6,205 66,699 Acquisition of subsidiaries – 959 – 6,614 3,238 1,111 1,483 13,405 Additions – – 62 832 1,318 1,488 367 4,067 Disposals – (192) – (3,561) (638) – (61) (4,452) Write-offs – – – (140) – (725) (445) (1,310) Exchange differences – – – 64 21 8 8 101

At 31 December 2007 2,758 22,409 11,480 12,204 11,742 10,360 7,557 78,510

Representing: At cost 2,758 22,179 11,480 12,204 11,742 10,360 7,557 78,280 At valuation – 230 – – – – – 230

At 31 December 2007 2,758 22,409 11,480 12,204 11,742 10,360 7,557 78,510

Accumulated Depreciation and Impairment

At 1 January 2007 – 5,734 – 8,313 5,924 6,071 5,799 31,841 Acquisition of subsidiaries – 44 – 5,089 1,821 1,029 1,170 9,153 Depreciation charge for the year – 406 – 199 712 545 347 2,209 Disposals – (4) – (3,508) (635) – (61) (4,208) Write-offs – – – (140) – (301) (448) (889) Exchange differences – – – 49 8 8 5 70

At 31 December 2007 – 6,180 – 10,002 7,830 7,352 6,812 38,176

Net Carrying Amount

At cost 2,758 15,999 11,480 2,202 3,912 3,008 745 40,104 At valuation – 230 – – – – – 230

At 31 December 2007 2,758 16,229 11,480 2,202 3,912 3,008 745 40,334

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 61

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

5. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

OFFICE RENOVATION OFFICE PLANT, AND EQUIPMENT BUILDING IN MACHINERY MOTOR FURNITURE AND BUILDINGS PROGRESS AND TOOLS VEHICLES AND FITTINGS COMPUTERS TOTAL THE COMPANY RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

AT 31 DECEMBER 2008

Cost

At 1 January 2008 1,581 755 – 2,902 3,796 3,421 12,455 Additions – 109 – 269 116 101 595 Disposals – – – (114) – – (114)

At 31 December 2008 1,581 864 – 3,057 3,912 3,522 12,936

Accumulated Depreciation

At 1 January 2008 374 – – 1,686 2,417 3,146 7,623 Depreciation charge for the year 23 – – 203 223 110 559 Disposals – – – (114) – – (114)

At 31 December 2008 397 – – 1,775 2,640 3,256 8,068

Net Carrying Amount

At 31 December 2008 1,184 864 – 1,282 1,272 266 4,868

AT 31 DECEMBER 2007

Cost

At 1 January 2007 1,581 694 12 2,918 3,630 3,579 12,414 Additions – 61 – 401 166 122 750 Transfer to subsidiaries – – – (51) – (1) (52) Disposals – – – (366) – – (366) Write-offs – – (12) – – (279) (291)

At 31 December 2007 1,581 755 – 2,902 3,796 3,421 12,455

Accumulated Depreciation

At 1 January 2007 350 – 9 1,943 2,205 3,337 7,844 Depreciation charge for the year 24 – – 140 212 92 468 Transfer to subsidiaries – – – (31) – (1) (32) Disposals – – – (366) – – (366) Write-offs – – (9) – – (282) (291)

At 31 December 2007 374 – – 1,686 2,417 3,146 7,623

Net Carrying Amount

At 31 December 2007 1,207 755 – 1,216 1,379 275 4,832

Ipmuda Berhad Ipmuda Berhad 62 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

5. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

(a) Certain buildings on leasehold land of a subsidiary in the previous financial year were valued by the Directors based on the valuation performed by independent professional valuers. Fair value is determined by reference to open market values on an existing use basis.

Valuation Year of Amount valuation Description of property RM’000 Basis of valuation

1974 Buildings on long-term leasehold land, in Ipoh 230 Open market value

In the previous financial year, had the buildings on leasehold land been carried at cost less depreciation, the carrying amount of the buildings on the leasehold land would have been as follows:

THE GROUP 2008 2007 RM’000 RM’000

Buildings on long-term leasehold land in Ipoh – 210

As permitted by the MASB, where such valuation was a one-off isolated event prior to the adoption of the applicable Approved Accounting Standard by the MASB (FRS 116, “Property, Plant and Equipment”), and provided no further revaluations have been adopted in the preparation of the financial statements, these assets have continued to be stated on the basis of their previous revalued amounts (subject to continuity in the depreciation policy and the requirement to write down an asset to its recoverable value).

(b) During the financial year, the Group and the Company acquired property, plant and equipment at aggregate costs of RM2,472,000 (2007 - RM4,067,000) and RM595,000 (2007 - RM750,000), respectively, of which RM316,000 (2007 - RM1,960,000) and RM258,000 (2007 - RM358,000), respectively, were acquired by means of hire purchase and finance lease arrangements.

Net carrying amounts of property, plant and equipment held under hire purchase and finance lease arrangements are as follows:

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Motor vehicles 1,821 1,933 735 566

(c) The net carrying amounts of property, plant and equipment pledged as securities for borrowings (Notes 26 and 29) are as follows:-

THE GROUP 2008 2007 RM’000 RM’000

Freehold land 1,842 1,842 Building on freehold land 2,446 2,511 Buildings on long-term leasehold land 7,861 8,136

12,149 12,489 Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 63

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

6. INVESTMENT PROPERTIES

THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM’000 RM’000 RM’000 RM’000

Carrying Amount:-

At 1 January 17,295 13,950 9,990 9,830 Arising from acquisition of subsidiaries – 2,892 – – Transfer to property, plant and equipment (1,048) – – – Disposal (370) – (220) – Fair value adjustments (628) 453 (170) 160

At 31 December 15,249 17,295 9,600 9,990

Investment properties with an aggregate carrying value of RM9,430,000 (2007 – RM9,430,000) are pledged as security for borrowings as disclosed in Notes 25 and 26 to the financial statements.

7. PREPAID LAND LEASE PAYMENTS

THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM’000 RM’000 RM’000 RM’000

At 1 January 12,335 12,079 1,909 1,948 Acquisition of a subsidiary – 503 – – Disposal (98) – – – Amortisation for the financial year 35 (247) (247) (39) (39)

At 31 December 11,990 12,335 1,870 1,909

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Analysed as:

Long-term leasehold land 10,721 11,036 1,870 1,909 Short-term leasehold land 1,269 1,299 – –

11,990 12,335 1,870 1,909

Leasehold land with an aggregate carrying value of RM9,104,000 (2007 – RM9,325,000) are pledged as security for borrowings as disclosed in Notes 26 and 29 to the financial statements. Ipmuda Berhad Ipmuda Berhad 64 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

8. INVESTMENTS IN SUBSIDIARIES

THE COMPANY 2008 2007 RM’000 RM’000

Unquoted shares, at cost 26,140 25,236 Accumulated impairment losses (4,054) (4,054)

22,086 21,182

Amounts due from subsidiaries - trade accounts (394) 206 - current accounts 123,156 119,191

122,762 119,397 Allowance for doubtful debts (7,204) (7,204)

115,558 112,193

Amounts due to subsidiaries - trade accounts 279 939 - current accounts 44,465 37,050

44,744 37,989

The amounts due from and to subsidiaries are unsecured, non-interest bearing, repayable on demand and are to be settled in cash.

Details of the subsidiaries are as follows:-

Proportion of Ownership Interest (%) Country of Principal By Company By Subsidiaries Name of Subsidiaries Incorporation Activities 2008 2007 2008 2007

Armor Master Sdn. Bhd. Malaysia Investment holding 100.0 100.0 – –

Artilin Sdn. Bhd. Malaysia Dormant 77.8 77.8 – –

Better Living Grand Malaysia Trading in home 100.0 100.0 – – Sdn. Bhd. improvement materials

Control Instruments (M) Malaysia Constructing and 51.0 51.0 – – Sdn. Bhd. assembling industrial control instruments and engineering equipment

Eager Vest Sdn. Bhd. * Malaysia Investment holding 46.3 – – –

Edaran Maju-Muda Malaysia Trading in steel 100.0 100.0 – – Sdn. Bhd. products

Global Allied Sdn. Bhd. Malaysia Trading in heavy 70.0 70.0 – – steel products

Glorious Future Malaysia Investment holding 100.0 100.0 – – Sdn. Bhd.

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 65

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

8. INVESTMENTS IN SUBSIDIARIES (CONT’D)

Proportion of Ownership Interest (%) Country of Principal By Company By Subsidiaries Name of Subsidiaries Incorporation Activities 2008 2007 2008 2007

Homemart Distribution Malaysia Provision of 100.0 100.0 – – Centre Sdn. Bhd. warehousing services

Homemart Warehousing Malaysia Dormant 100.0 100.0 – – Sdn. Bhd.

Ipmuda Architectural Malaysia Trading agency 80.0 80.0 20.0 – Products Sdn. Bhd.

Ipmuda Buildermart Malaysia Trading in building 100.0 100.0 – – Sdn. Bhd. materials

Ipmuda Building Malaysia Dormant 100.0 100.0 – – Materials Sdn. Bhd.

Ipmuda Dagangan Malaysia Dormant 100.0 100.0 – – Sdn. Bhd.

Ipmuda Edar Sdn. Bhd. Malaysia Trading in fuel oil and 100.0 100.0 – – lubricant products

Ipmuda Construction Malaysia Contractor and trading 100.0 100.0 – – and Engineering in construction materials Sdn. Bhd. (formerly known as Ipmuda Engineering Sdn. Bhd.)

Ipmuda Lanco Malaysia Wholesale and retail of 51.0 51.0 – – Sdn. Bhd. building materials (ceased operations)

Ipmuda Selatan Malaysia Trading in building 80.0 80.0 20.0 – Sdn. Bhd. materials

Ipmuda Tiles & Malaysia Trading in tiles, marble 80.0 80.0 20.0 – Sanitarywares and sanitaryware Sdn. Bhd. products

Ipmuda Timuran Malaysia Trading in building 80.0 80.0 20.0 – Sdn. Bhd. materials

Ipmuda Tradelinks Malaysia Trading agency and 80.0 80.0 – – Sdn. Bhd. exporters (ceased operations)

Ipmuda Trading Singapore Trading in building 90.0 90.0 – – Pte. Ltd. * materials

Ipmuda Utara Malaysia Trading in building 80.0 80.0 20.0 – Sdn. Bhd. materials

Inliner Technologies Singapore Dormant – – 100.0 100.0 Pte. Ltd. *

Ipmuda Berhad Ipmuda Berhad 66 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

8. INVESTMENTS IN SUBSIDIARIES (CONT’D)

Proportion of Ownership Interest (%) Country of Principal By Company By Subsidiaries Name of Subsidiaries Incorporation Activities 2008 2007 2008 2007

Johnson Fluid Malaysia Specialist contractor in – – 100.0 100.0 Engineering Sdn. Bhd. fluid engineering systems

Johnson Pacific Singapore Specialist contractor in – – 100.0 100.0 Pte. Ltd. * fluid engineering systems

Liner Engineering Singapore Dormant – – 100.0 100.0 Pte. Ltd. *

Modular Equity Malaysia Investment holding 100.0 100.0 – – Sdn. Bhd.

Perak Metal Industries Malaysia Manufacture and sale 100.0 100.0 – – Sendirian Bhd. of locks and hinges (ceased operations)

Perfect Furniture Malaysia Trading in furniture – – 100.0 100.0 Fittings Systems hardware Sdn. Bhd. (ceased operations)

Perniagaan Maju Malaysia Property development – – 100.0 51.0 Ramadhan Sdn. Bhd.

Roset-BLG Sdn. Bhd. Malaysia Letting of properties – – 100.0 100.0 and manufacture and sale of furniture

Roset Interiors Malaysia Supply and installation – – 100.0 100.0 Sdn. Bhd. of home fittings

Roset Properties Malaysia Dormant – – 100.0 100.0 Sdn. Bhd.

Sitolly Co. Sdn. Bhd. * Malaysia Money Lending – – 80.0 80.0

Summit Management Malaysia Dormant – – 100.0 100.0 & Contracts Sdn. Bhd.

Toriki Metal Malaysia Property holding – – 100.0 100.0 Engineering Sdn. Bhd.

Uniherbal Sdn. Bhd. Malaysia Trading/distribution of 100.0 100.0 – – healthcare products

Victory Rally Sdn. Bhd. Malaysia Property holding 100.0 100.0 – –

* Not audited by Horwath

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 67

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

9. INVESTMENTS IN ASSOCIATES

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Unquoted shares, at cost 3,820 3,820 49 49 Share of post-acquisition losses less profits and retained reserves (1,916) (1,916) – – Accumulated impairment loss (22) (22) (38) (38)

1,882 1,882 11 11

Amounts due to associates - current accounts 22 24 22 24

The amounts due to the associates under current accounts are unsecured, non-interest bearing, repayable on demand and are to be settled in cash.

Details of the associates are as follows:-

Proportion of Ownership Interest (%) Country of By Company By Subsidiaries Principal Name of Associates Incorporation 2008 2007 2008 2007 Activities

Better Living Interiors (HK) Limited Hong Kong – – 30.0 30.0 Dormant

BMG Home Center Sdn. Bhd. Malaysia – – 20.0 20.0 Dormant

Budimex Sdn. Bhd. Malaysia 49.0 49.0 – – Trading agency of building materials

Vintage Consolidated Sdn. Bhd. Malaysia – – 25.0 25.0 Trading in building materials and provision of management services

The financial statements of the above associates are coterminous with those of the Group.

The Group’s share of aggregate assets and liabilities of the associates is as follows:-

2008 2007 RM’000 RM’000

Assets and liabilities

Current assets 1,884 1,884 Non-current assets 75 75

Total assets 1,959 1,959

Current liabilities 75 75

Total liabilities 75 75

Results

Revenue – – (Loss)/Profit for the year (2) 26

Ipmuda Berhad Ipmuda Berhad 68 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

10. OTHER INVESTMENTS

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Quoted shares in Malaysia, at cost 7,335 6,140 1,057 23 Accumulated impairment losses (6,675) (5,706) (777) (11)

660 434 280 12

Unquoted shares, at cost 260 260 60 60 Accumulated impairment losses (260) (260) (60) (60)

– – – –

Club membership 639 591 502 454 Accumulated impairment losses (63) (63) (34) (34)

576 528 468 420

Total 1,236 962 748 432

Market value of quoted shares 774 726 279 19

11. GOODWILL ON CONSOLIDATION

THE GROUP 2008 2007 RM’000 RM’000

At 1 January 819 – Goodwill arising from acquisition of subsidiaries (Note 39) – 3,182 Impairment losses – (2,363)

At 31 December 819 819

(a) Key assumptions for value-in-use calculations

The recoverable amount of a cash-generating unit (“CGU”) is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management covering a four-year period. The key assumptions used for each of the CGU’s value-in-use calculations are:

Growth rate 4% to 13% Gross margin 12% to 17% Discount rate 5% to 9%

(i) Growth rate

The average growth rate used is based on the planned capacity and forecasted demands.

(ii) Gross margin

The budgeted gross margin used is based on the average selling prices and the fixed and variable costs achieved in the year immediately before the budgeted year, adjusted for market conditions and economic conditions and internal resource efficiency. Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 69

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

11. GOODWILL ON CONSOLIDATION (CONT’D)

(a) Key assumptions for value-in-use calculations (Cont’d)

(iii) Discount rate

The discount rate used approximated the CGUs’ average cost of funds and the risk factor.

(b) Sensitivity to changes in assumptions

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

12. DEFERRED TAX ASSETS/LIABILITIES

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

At 1 January 1,226 1,348 373 687 Arising from acquisition of subsidiaries (Note 39) – (14) – – Recognised in the income statement (Note 36) (496) (108) (57) (314)

At 31 December 730 1,226 316 373

Presented after appropriate offsetting as follows: Deferred tax assets 977 1,285 316 373 Deferred tax liabilities (247) (59) – –

730 1,226 316 373

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

Deferred Tax Liabilities of the Group:

Revaluation of Property, Plant Freehold Land and Equipment and Buildings Total RM’000 RM’000 RM’000

At 1 January 2007 1,939 141 2,080 Arising from acquisition of subsidiaries 14 – 14 Recognised in the income statement (1,568) (219) (1,787)

At 31 December 2007/1 January 2008 385 (78) 307 Recognised in the income statement 131 177 308

At 31 December 2008 516 99 615 Ipmuda Berhad Ipmuda Berhad 70 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

12. DEFERRED TAX ASSETS/LIABILITIES (CONT’D)

Deferred Tax Assets of the Group:

Unused Tax Losses and Unabsorbed Interest on Capital Overdue Allowances Debts Total RM’000 RM’000 RM’000

At 1 January 2007 2,236 1,192 3,428 Recognised in the income statement (1,898) 3 (1,895)

At 31 December 2007/1 January 2008 338 1,195 1,533 Recognised in the income statement (169) (19) (188)

At 31 December 2008 169 1,176 1,345

Deferred Tax Liabilities of the Company:

Revaluation of Property, Plant Freehold Land and Equipment and Buildings Total RM’000 RM’000 RM’000

At 1 January 2007 106 178 284 Recognised in the income statement (61) (86) (147)

At 31 December 2007/1 January 2008 45 92 137 Recognised in the income statement 15 – 15

At 31 December 2008 60 92 152

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 71

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

12. DEFERRED TAX ASSETS/LIABILITIES (CONT’D)

Deferred Tax Assets of the Company:

Unused Tax Losses and Unabsorbed Interest on Capital Overdue Allowances Debts Total RM’000 RM’000 RM’000

At 1 January 2007 514 457 971 Recognised in the income statement (514) 53 (461)

At 31 December 2007/1 January 2008 – 510 510 Recognised in the income statement – (42) (42)

At 31 December 2008 – 468 468

Deferred tax assets have not been recognised in respect of the following items:

THE GROUP 2008 2007 RM’000 RM’000

Unutilised tax losses 26,844 19,258 Unabsorbed capital allowances 7,045 1,633

33,889 20,891

Potential deferred tax benefit at 25% (2007 - 26%) 8,472 5,432

Ipmuda Berhad Ipmuda Berhad 72 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

13. LAND AND PROPERTY DEVELOPMENT EXPENDITURE

LEASEHOLD DEVELOPMENT LAND EXPENDITURE TOTAL RM’000 RM’000 RM’000

THE GROUP

At 1 January 2008 1,290 6,003 7,293 Addition – 24 24

At 31 December 2008 1,290 6,027 7,317

At 1 January 2007 1,290 5,979 7,269 Addition – 24 24

At 31 December 2007 1,290 6,003 7,293

THE GROUP 2008 2007 RM’000 RM’000

Represented by: Cumulative cost incurred to date 7,317 7,293 Less: Cumulative cost recognised as an expense – –

7,317 7,293

14. INVENTORIES

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

At Cost:- Trading and finished goods 21,663 28,057 700 4,519 Properties held for sale 436 1,253 – – Raw materials 180 107 – – Work-in-progress 155 204 – – Consumable store 1,541 1,272 – –

23,975 30,893 700 4,519

At Net Realisable Value:- Trading and finished goods 1,427 1,375 * 52

Total 25,402 32,268 700 4,571

Note:-

* - Amount less than RM500. Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 73

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

15. TRADE RECEIVABLES

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Trade receivables 204,130 245,173 70,833 85,358 Due from contract customers 14,330 4,319 – – Retention sums 2,766 2,083 – –

221,226 251,575 70,833 85,358 Allowance for doubtful debts (25,031) (26,477) (7,686) (7,592)

196,195 225,098 63,147 77,766

Included in trade receivables are:

Amounts due from companies in which certain Directors have substantial financial interests 24,873 37,017 21,165 32,007

Amounts due from companies with certain common Directors 18,703 29,139 6,626 8,221

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 normal trade credit terms range from 14 to 120 days. Other credit terms are assessed and approved on a case-by-case basis. 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 which are interest bearing 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 except in the form of outstanding balances due from companies in which certain Directors have substantial financial interests and from companies with certain common Directors representing 20% and 40% (2007 - 26% and 47%) of total trade receivables of the Group and the Company, respectively.

Concentration of credit risk exists when the changes in economic conditions affect the counterparties whose aggregate credit exposures are significant in relation to the Group’s total credit exposure.

In assessing the recoverability of these debts, the Directors have given due consideration to all pertinent information relating to the ability of the debtors to settle the debts and expect these amounts to be fully recoverable. Accordingly, no allowance has been made in respect of these amounts. Ipmuda Berhad Ipmuda Berhad 74 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

15. TRADE RECEIVABLES (CONT’D)

The following tabulation of construction contracts shows the elements included in the amounts due from and due to contract customers:

THE GROUP 2008 2007 RM’000 RM’000

Aggregate costs incurred to date 34,100 25,297 Add: Attributable profit 2,594 4,145

36,694 29,442 Less: Progress billings (24,113) (26,312)

12,581 3,130

Represented by: Due from contract customers 14,330 4,319 Due to contract customers (Note 27) (1,749) (1,189)

12,581 3,130

Amount of contract revenue recognised as revenue during the financial year (Note 31) 40,488 41,048

Amount of contract cost recognised as expenses during the financial year (Note 32) 34,474 35,203

16. OTHER RECEIVABLES

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Sundry receivables 5,166 4,501 4,954 4,243 Deposits and prepayments 4,795 6,569 2,641 2,345 Others 835 964 – 11

10,796 12,034 7,595 6,599 Allowance for doubtful debts (215) (211) – –

10,581 11,823 7,595 6,599

As at the balance sheet date, the Group and the Company have a significant concentration of credit risk in the form of outstanding balances from a debtor and from companies in which certain Directors have substantial financial interests amounting to RM4,824,000 (2007 – RM3,761,000) representing approximately 45% and 64% (2007: 31% and 57%) of other receivables respectively.

Concentration of credit risk exists when changes in economic conditions affecting the counterparties whose aggregate credit exposure is significant in relation to the Group’s total credit exposure.

In assessing the recoverability of these debts, the Directors have given due consideration to all pertinent information relating to the ability of the debtor to settle this debt and expect this amount to be fully recoverable. Accordingly, no allowance has been made in respect of this amount. Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 75

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

16. OTHER RECEIVABLES (cont’d) THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Included in other receivables are:

Amounts due from companies in which certain Directors have substantial financial interests 45 – 45 –

17. SHORT-TERM INVESTMENT

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Unquoted shares, at cost 10,134 10,134 9,410 9,410 Accumulated impairment losses (4,911) (4,911) (4,187) (4,187)

5,223 5,223 5,223 5,223

Pursuant to the agreement dated 20 December 1995 entered into by the Company for the acquisition of the 40% shareholding in Johnson Advanced Technology Sdn. Bhd. (“JAT”), the vendor of these shares has granted the Company an option to require the vendor to purchase back all these shares in the company. The put option may be exercised by the Company if the performance of the associate does not meet the stipulated performance criteria. This option is valid for a period of two years commencing one year after the completion of the purchase.

The put option was exercised by the Directors of the Company requiring the vendor to purchase back JAT shares at cost together with interests in February 1998. On 31 March 2001, the Arbitral Tribunal gave a judgement in favour of the Company. However, the transaction has not been finalised and completed to date as the vendor was placed under liquidation on 14 September 2001. The Company subsequently submitted proof of debt on 18 February 2002.

The latest Statement of the Position in the Winding Up from the liquidators as at 13 September 2008 showed that the vendor’s assets are able to satisfy a certain portion of the vendor’s debts in which proof had been admitted by the liquidators.

The Directors have given due consideration to all available information in assessing the recovery of the above amount and are of the opinion that no further provision for the irrecoverable amount is deemed necessary.

18. DEPOSITS

THE GROUP 2008 2007 RM’000 RM’000

With licensed banks 6,800 800

The weighted average effective interest rate of the deposits was 2.43% (2007 – 2.55%) per annum. The deposits have maturity periods ranging from 6 to 14 days (2007 - 6 to 8 days) at the balance sheet. Ipmuda Berhad Ipmuda Berhad 76 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

19. CASH & BANK BALANCES

Included in cash and bank balances of the Group is an amount of RM583 (2007 - RM583) which is maintained in the designated Housing Development Accounts pursuant to the Housing Developers (Control and Licensing) Act, 1966 and Housing Regulations, 1991 in connection with a subsidiary’s property development project.

Also included in cash and bank balances of the Group and the Company is an amount of RM420,000 (2007 - RM408,000) which is maintained in a designated debt service reserve account in connection with the issue of Secured Bank Guaranteed Commercial Papers.

20. SHARE CAPITAL

NUMBER OF SHARES THE COMPANY 2008 2007 2008 2007 ‘000 ‘000 RM’000 RM’000

Ordinary Shares of RM1 Each:-

Authorised At 1 January/31 December 500,000 500,000 500,000 500,000

Issued and Fully Paid-up At 1 January/31 December 72,469 72,469 72,469 72,469

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.

21. SHARE PREMIUM

THE GROUP/THE COMPANY 2008 2007 RM’000 RM’000

At 1 January/31 December 3,457 3,457

22. EXCHANGE FLUCTUATION RESERVES

The exchange fluctuation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.

23. RETAINED PROFITS

As at 31 December 2008, the Company has tax-exempt profits available for distribution of approximately RM7,887,000 (2007 - RM7,887,000), subject to the agreement of the Inland Revenue Board.

Subject to the agreement of the Inland Revenue Board, the Company has sufficient tax credit under Section 108 of the Income Tax Act, 1967 and the balance in the tax-exempt income account to frank the payment of dividends out of its entire distributable reserve without having to incur additional tax liability.

At the balance sheet date, the Company has not elected for the single tier tax system. When the tax credit balance is fully utilised, or by 31 December 2013 at the latest, the Company will automatically move to the single tier tax system. Under the single tier system, tax on the Company’s profits is the final tax and dividends distributed to the shareholders will be exempted from tax. Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 77

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

24. HIRE PURCHASE PAYABLES

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Future minimum hire purchase payments:-

- not later than 1 year 1,031 969 214 132 - later than 1 year and not later than 2 years 832 918 186 132 - later than 2 years and not later than 5 years 882 1,271 212 218 - more than 5 years 25 277 7 47

Total minimum future 2,770 3,435 619 529 hire purchase payments Future finance charges (374) (485) (79) (79)

Present value of hire purchase payables 2,396 2,950 540 450

Analysis of present value of hire purchase payables:

Current: - not later than 1 year 904 847 188 112

Non-current: - later than 1 year and not later than 2 years 755 802 163 112 - later than 2 years and not later than 5 years 717 1,078 183 186 - more than 5 years 20 223 6 40

Total non-current: 1,492 2,103 352 338

2,396 2,950 540 450

The hire purchase payables of the Group and the Company bore weighted average effective interest rates of 6.28% and 5.16% (2007 - 6.35% and 5.28%) per annum, respectively, at the balance sheet date. Ipmuda Berhad Ipmuda Berhad 78 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

25. TERM LOAN

THE GROUP 2008 2007 RM’000 RM’000

Current portion: - repayable within one year 190 174

Non-current portion: - repayable between one and two years 334 189 - repayable between two and five years – 335

334 524

524 698

Details of the repayment terms are as follows:-

Monthly Commencement Term Number of Monthly Instalment Date of Amount Outstanding Loan Instalments Amount Repayment 2008 2007 RM RM’000 RM’000

1 180 18,626 July 2005 524 698

The term loan of the Group bore an effective interest rate of 8.00% (2007 - 8.25%) per annum at the balance sheet date and is secured by:-

(a) a subsidiary’s leasehold land and buildings;

(b) a joint and several guarantee of certain Directors of a subsidiary and two former directors who are directors of the subsidiary’s former holding company; and

26. SECURED BANK GUARANTEED COMMERCIAL PAPERS

The Company issued RM30.0 million secured bank guaranteed commercial papers in year 2007. During the financial year, the Company redeemed RM5.0 million of the commercial papers. The outstanding balance as at 31 December 2008 was RM25.0 million.

THE GROUP/THE COMPANY 2008 2007 RM’000 RM’000

Amount due not later than 1 year 5,000 5,000 Amount due later than 1 year 20,000 25,000

25,000 30,000

The Company had set up a debt service reserve account wherein an equivalent of 3 months’ interest shall be maintained at all times. As at 31 December 2008, the balance in this account amounted to RM420,000 (2007 - RM408,000) as disclosed in Note 19 to the financial statements and was placed as fixed deposits with a licensed bank.

The bank guaranteed commercial papers are secured against the subsidiaries’ properties with a carrying value of RM28,232,000 (2007 - RM28,733,000) and bear interest rates ranging from 3.73% to 4.18% (2007 - 3.60% to 3.80%) per annum. Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 79

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

27. TRADE PAYABLES

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Trade payables 89,642 100,343 22,304 25,826 Retention sums 585 1,680 – – Due to contract customers (Note 15) 1,749 1,189 – –

91,976 103,212 22,304 25,826

Included in trade payables are:

Amounts due to companies in which certain Directors have substantial financial interests 14,334 27,485 * 17

Amounts due to companies with certain common Directors * 55 – 75

Note:- * - Amount less than RM500.

Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 14 to 120 days.

28. OTHER PAYABLES

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Sundry payables 13,448 13,132 9,426 9,388 Deposits 1,863 824 – – Accruals 7,125 5,816 2,823 2,092 Others 1,091 1,158 246 203

23,527 20,930 12,495 11,683

Included in other payables are:

Amounts due to companies in which certain Directors have substantial financial interests 223 11 223 11

Ipmuda Berhad Ipmuda Berhad 80 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

29. SHORT-TERM BORROWINGS

The short-term bank borrowings of the Group and of the Company consist of the following:-

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Secured: - trust receipts 343 – – – - bills payable – 197 – –

Unsecured loan: - bankers’ acceptances 37,415 64,670 28,832 43,503 - revolving credit 850 450 – –

38,608 65,317 28,832 43,503

The trust receipts of the Group bore an effective interest rate of 8.50% per annum at the balance sheet date and are secured in the same manner as the term loan as disclosed in Note 25 to the financial statements.

The bills payable of the Group in the previous financial year bore an effective interest rate of 8.75% per annum at the balance sheet date and are secured in the same manner as the term loan as disclosed in Note 25 to the financial statements.

The unsecured borrowings of the Group and of the Company bore the following weighted average effective interest rates as at the balance sheet date:-

THE GROUP THE COMPANY 2008 2007 2008 2007 % p.a. % p.a. % p.a. % p.a.

Bankers’ acceptances 4.54 4.50 4.61 4.55 Revolving credit 9.00 9.25 – –

30. BANK OVERDRAFTS

The bank overdrafts of the Group and of the Company are unsecured and bore weighted average effective interest rates of 7.35% (2007 - 7.73%) and 7.01% (2007 - 7.37%) per annum respectively at the balance sheet date.

31. REVENUE

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Sale of goods 700,521 576,659 259,916 175,369 Rental income from investment properties 1,470 1,309 – – Property development 1,030 – – – Construction contracts (Note 15) 40,488 41,048 – –

743,509 619,016 259,916 175,369

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 81

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

32. COST OF SALES

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Cost of inventories sold 651,202 536,010 242,777 163,639 Cost of property held for sale 817 – – – Construction contract costs (Note 15) 34,474 35,203 – –

686,493 571,213 242,777 163,639

33. OTHER INCOME

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Rental income 227 222 909 575 Interest on deposits 124 38 49 18 Interest on overdue trade receivables 3,053 2,429 1,285 1,238 Commission received – 2 – 3,182 Cash discount received 1,920 1,856 714 746 Changes in fair value of investment properties – 453 – 160 Management fees – – 3,914 3,698 Gain on disposal of property, plant and equipment 747 450 31 99 Gain on disposal of investment properties 65 – – – Gain on disposal of prepaid land lease assets 1,268 – – – Liabilities written back 459 – – – Dividend income 3 5 281 280 Negative goodwill 4,956 – – – Sundry income 355 273 * 34

13,177 5,728 7,183 10,030

Note:- * - Amount less than RM500.

34. FINANCE COSTS

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Interest on trade financing 2,541 3,035 1,793 1,954 Interest on commercial papers 1,027 873 1,027 873 Interest on bridging loan – 227 – 227 Interest on bank overdrafts 84 155 30 74 Leasing and hire purchase interest 161 82 24 18 Revolving credit interest 70 39 – – Term loan interest 48 61 – –

3,931 4,472 2,874 3,146 Ipmuda Berhad Ipmuda Berhad 82 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

35. PROFIT BEFORE TAXATION

Profit before taxation is arrived at after charging/(crediting) the following:-

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Audit fees - for the current financial year 301 303 64 71 - (over)/underprovision in prior year (7) 18 1 8 - other services 53 49 53 49 Allowance for doubtful debts 1,089 1,842 279 914 Amortisation of prepaid land lease payments 247 247 39 39 Changes in fair value of investment properties 628 – 170 – Commission on bank guarantee 530 455 530 455 Depreciation of property, plant and equipment 2,788 2,209 559 468 Impairment of goodwill – 2,363 – – Impairment loss on quoted investments 966 38 766 – Lease rental 1,143 1,230 577 670 Property, plant and equipment written off 17 421 – * Net foreign exchange (gain)/loss (36) 9 11 (6)

Note:- * - Amount less than RM500.

Employee Information (Excluding Directors)

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Salaries and other emoluments 21,398 20,454 5,962 5,821 Social security contributions 199 187 51 51 Defined contribution plan 2,383 2,199 642 637

23,980 22,840 6,655 6,509

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 83

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

35. PROFIT BEFORE TAXATION (CONT’D)

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Directors’ Remuneration

Directors of the Company Executive:- Salaries and other emoluments 2,772 2,405 2,447 2,080 Defined contribution plan 333 289 294 250 Benefits-in-kind 62 47 34 20

3,167 2,741 2,775 2,350

Non-executive:- Fees 126 126 126 126

Other Directors Executive: Salaries and other emoluments 2,090 1,963 – – Defined contribution plan 259 209 – – Benefits-in-kind 56 51 – –

2,405 2,223 – –

Analysis excluding benefits-in-kind:- Total executive Directors’ remuneration 5,454 4,866 2,741 2,330 Total non-executive Directors’ remuneration 126 126 126 126

5,580 4,992 2,867 2,456

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

NUMBER OF DIRECTORS 2008 2007

Executive Directors:- RM350,001 - RM400,000 1 1 RM550,001 - RM600,000 – 1 RM600,001 - RM650,000 1 – RM700,001 - RM750,000 – 1 RM900,001 - RM950,000 1 – RM950,001 - RM1,000,000 – 1 RM1,200,001 - RM1,250,000 1 –

4 4

Non-executive Directors:- RM50,000 and below 5 5 Ipmuda Berhad Ipmuda Berhad 84 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

36. INCOME TAX EXPENSE

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Malaysian current tax:-

- for the financial year 4,792 3,642 2,160 1,115 - under/(over)provision in prior years 24 208 31 56

4,816 3,850 2,191 1,171

Deferred tax (Note 12):- - for the financial year 494 112 57 328 - overprovision in prior years 2 (4) – (14)

496 108 57 314

5,312 3,958 2,248 1,485

During the current financial year, the statutory tax rate in Malaysia was reduced from 27% to 26%.

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

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Profit before taxation 20,617 7,679 4,435 3,697

Tax at the Malaysian statutory tax rate of 26% (2007 - 27%) 5,360 2,073 1,153 998

Tax effects of:- Effect of lower tax rates for small and medium scale companies (167) (248) – – Different tax rates in other countries 33 205 – – Effect of changes in tax rate on deferred tax 4 89 (14) 42 Effect of share of results in associate - (7) – – Allowance for impairment in goodwill not deductible for tax purposes – 638 – – Changes in fair value of investment properties 749 (49) – (43) Income not subject to tax (2,433) (87) (2) – Expenses not deductible for tax purposes 1,595 1,109 1,032 578 Utilisation of previously unrecognised tax losses and unabsorbed capital allowances (539) (289) – (132) Deferred tax assets not recognised 682 333 47 – (Over)/Underprovision in prior years: - current tax 24 208 31 56 - deferred tax 2 (4) – (14) Others 2 (13) 1 –

5,312 3,958 2,248 1,485

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 85

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

36. INCOME TAX EXPENSE (CONT’D)

Subject to agreement with the tax authorities, at the balance sheet date, the unutilised tax losses and unabsorbed capital allowances available to be carried forward for offset against future taxable business income are as follows:-

THE GROUP 2008 2007 RM’000 RM’000

Unutilised tax losses 27,348 20,345 Unabsorbed capital allowances 7,045 6,427

The availability of the unused tax losses and unabsorbed capital allowances for offsetting against future taxable profits of the respective subsidiaries and of the Company are subject to no substantial changes in the shareholdings of those subsidiaries and the Company under Section 44(5A) and (5B) of Income Tax Act, 1967.

37. EARNINGS PER SHARE

The basic earnings per share is calculated by dividing the profit for the year attributable to the ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year held by the Company.

THE GROUP 2008 2007 RM’000 RM’000

Profit attributable to ordinary equity holders of the Company 13,899 2,843 Weighted average number of ordinary shares in issue 72,469 72,469 Basic earnings per share (sen) 19.18 3.92

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

38. DIVIDENDS

Dividends paid and proposed in respect of ordinary shares are as follows:-

THE GROUP 2008 2007 RM’000 RM’000

Paid:- First and final dividend in respect of the financial year ended 31 December 2007 of 2.5 sen per share less income tax of 26% on ordinary shares, paid on 20 August 2008 1,341 –

Proposed:- First and final dividend in respect of the current financial year of 3.0 sen per share less income tax of 25% on ordinary shares 1,631 –

Ipmuda Berhad Ipmuda Berhad 86 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

39. ACQUISITION OF SUBSIDIARIES

(a) During the current financial year,

(i) the Company acquired 555,000 ordinary shares of RM1.00 each in Eager Vest Sdn. Bhd. (“EVSB”) representing 46.25% of the issued and paid-up share capital of EVSB for a cash consideration of RM897,500. The principal activity of EVSB is investment holding. EVSB currently owns a 20% shareholding in five of Ipmuda Berhad’s subsidiaries. After acquisition of the shares, EVSB is deemed a subsidiary of Ipmuda Berhad by way of board representation.

(b) During the financial year ended 31 December 2007,

(i) a wholly-owned subsidiary, Modular Equity Sdn. Bhd. completed its acquisition of the entire issued and paid-up capital of Johnson Pacific Pte. Ltd., Inliner Technologies Pte. Ltd. and Johnson Fluid Engineering Sdn. Bhd. from Johnson Industries Pte. Ltd. (In Compulsory Liquidation) for a total consideration of SGD1,350,000 equivalent to approximately RM3,100,000.

The total purchase consideration was satisfied by way of a contra of the debts owed by Johnson Industries Pte. Ltd. to the Company.

(ii) the Company completed its acquisition of the 51% of the issued and paid-up capital of Control Instruments (M) Sdn. Bhd. from Maju Holdings Sdn. Bhd. for a total consideration of RM5,000,000.

The purchase consideration was satisfied by way of a contra of the debts owed by Maju Holdings Sdn. Bhd. to the Company.

Details of net assets acquired and cash flow arising from the acquisition of the subsidiaries are as follows:-

THE GROUP 2008 2007 FAIR CARRYING FAIR CARRYING VALUE AMOUNT VALUE AMOUNT RM’000 RM’000 RM’000 RM’000

Non-current assets 12,407 12,407 7,752 7,752 Current assets 137 137 20,750 20,750 Non-current liabilities – – (14) (14) Current liabilities (1) (1) (18,846) (18,846) Minority interests (6,743) (6,743) (4,724) (4,724)

Fair value of net assets acquired 5,800 5,800 4,918 4,918

(Excess of the Group’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over cost of acquisition)/ Excess of cost of acquisition over the Group’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities (Note 11) (4,896) 3,182

Total cost of acquisition, satisfied by cash 904 * 8,100 * Less: Cash and cash equivalents of subsidiaries acquired (128) (3,780)

Net cash outflow from acquisition of subsidiaries 776 4,320

Note:- * - Includes related cost of RM7,000 (2007: RM26,000)

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 87

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

39. ACQUISITION OF SUBSIDIARIES (CONT’D)

The effects of the acquisition of the subsidiaries on the financial results of the Group at the end of the financial year are as follows:-

2008 2007 RM’000 RM’000

Revenue – 39,708 Loss after taxation (14) (773)

40. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Cost of property, plant and equipment purchased 2,472 4,067 595 750 Amount financed through hire purchase (316) (1,960) (258) (358)

Cash disbursed for purchase of property, plant and equipment 2,156 2,107 337 392

41. CASH AND CASH EQUIVALENTS

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

THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM’000 RM’000 RM’000 RM’000

Cash and bank balances 19 5,139 5,311 1,163 507 Bank overdrafts 30 (5,370) (4,557) (3,143) (1,111)

(231) 754 (1,980) (604)

Less: Debt Service Reserve Account 19 (420) (408) (420) (408)

(651) 346 (2,400) (1,012) Deposits 18 6,800 800 – –

6,149 1,146 (2,400) (1,012)

Ipmuda Berhad Ipmuda Berhad 88 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

42. RELATED PARTY DISCLOSURES

(a) Identities of related parties

(i) the Company has a controlling related party relationship with its subsidiaries as disclosed in Note 8 to the financial statements;

(ii) companies in which certain Directors have substantial financial interests;

(iii) companies in which there are certain common Directors; and

(iv) key management personnel.

(b) In addition to the balances as disclosed in the relevant notes to the financial statements, the Group and the Company carried out the following transactions with the related parties during the financial year:

(i) Subsidiaries

THE COMPANY 2008 2007 RM’000 RM’000

Sales to:- - Better Living Grand Sdn. Bhd. 230 90 - Homemart Distribution Centre Sdn. Bhd. (4) 4 - Ipmuda Construction & Engineering Sdn. Bhd. 72 57 - Edaran Maju-Muda Sdn. Bhd. – 483 - Ipmuda Buildermart Sdn. Bhd. 1,824 2,756 - Ipmuda Timuran Sdn. Bhd. 5,987 3,837 - Ipmuda Tiles & Sanitarywares Sdn. Bhd. 27 195 - Ipmuda Architectural Products Sdn. Bhd. * – - Ipmuda Selatan Sdn. Bhd. 20 130 - Ipmuda Utara Sdn. Bhd. 467 142 - Roset-BLG Sdn. Bhd. – 2 - Johnson Pacific Pte. Ltd. (7) 305 - Johnson Fluid Engineering Sdn. Bhd. 493 –

Purchases from:- - Better Living Grand Sdn. Bhd. 159 187 - Roset Interiors Sdn. Bhd. – 1 - Ipmuda Edar Sdn. Bhd. 6 11 - Ipmuda Construction & Engineering Sdn. Bhd. 5 1 - Edaran Maju-Muda Sdn. Bhd. 4,555 2,644 - Ipmuda Buildermart Sdn. Bhd. 650 380 - Ipmuda Timuran Sdn. Bhd. 34 133 - Ipmuda Tiles & Sanitarywares Sdn. Bhd. 2,209 7,392 - Ipmuda Architectural Products Sdn. Bhd. 927 662 - Ipmuda Selatan Sdn. Bhd. 44 25 - Ipmuda Utara Sdn. Bhd. 50 13

Note:- * - Amount less than RM500.

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 89

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

42. RELATED PARTY DISCLOSURES (CONT’D)

(i) Subsidiaries (cont’d)

THE COMPANY 2008 2007 RM’000 RM’000

Commissions received from/(paid to):- - Edaran Maju-Muda Sdn. Bhd. – 3,181 - Ipmuda Buildermart Sdn. Bhd. (26) (2) - Ipmuda Timuran Sdn. Bhd. – 1

Management fees received from:- - Ipmuda Edar Sdn. Bhd. 120 120 - Johnson Pacific Pte. Ltd. – (73) - Edaran Maju-Muda Sdn. Bhd. 1,000 1,000 - Ipmuda Timuran Sdn. Bhd. 250 250 - Ipmuda Tiles & Sanitarywares Sdn. Bhd. 120 – - Ipmuda Architectural Products Sdn Bhd. 180 180 - Ipmuda Selatan Sdn. Bhd. 1,000 1,000 - Ipmuda Utara Sdn. Bhd. 1,000 1,000 - Global Allied Sdn. Bhd. 100 100 - Control Instruments (M) Sdn. Bhd. 144 120

Rental charged by/(to):- - Roset-BLG Sdn. Bhd. 59 170 - Better Living Grand Sdn. Bhd. (76) (59) - Roset Interiors Sdn. Bhd. (28) (11) - Homemart Distribution Centre Sdn. Bhd. (3) – - Ipmuda Buildermart Sdn. Bhd. (233) – - Ipmuda Edar Sdn. Bhd. (59) (58) - Ipmuda Construction & Engineering Sdn. Bhd. (20) (24) - Edaran Maju-Muda Sdn. Bhd. (11) (11) - Ipmuda Timuran Sdn. Bhd. (24) (24) - Ipmuda Tiles & Sanitarywares Sdn. Bhd. (62) – - Ipmuda Architectural Products Sdn Bhd. (53) (51) - Ipmuda Selatan Sdn. Bhd. (192) (192) - Ipmuda Utara Sdn. Bhd. – (9) - Roset-BLG Sdn. Bhd. (4) (4) - Uniherbal Sdn. Bhd. (2) –

Warehousing services charged by:- - Homemart Distribution Centre Sdn. Bhd. 119 194

Ipmuda Berhad Ipmuda Berhad 90 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

42. RELATED PARTY DISCLOSURES (CONT’D)

(ii) Companies in which certain Directors have substantial financial interests

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Sales to:- - Maju Holdings Sdn. Bhd. 4,460 15,021 4,453 15,021 - ASM Development Sdn. Bhd. 2,724 – 2,092 – - PFC Engineering Sdn. Bhd. 244 – – – - PFCE Dagangan Sdn. Bhd. 49 – – – - Perfect Channel Sdn. Bhd. 11,002 10,562 – – - Perfect Wiremakers Sdn. Bhd. 7 – – – - Perwaja Rolling Mill & Development Sdn. Bhd. 317 – – – - Perwaja Steel Sdn. Bhd. 27,319 47,817 27,308 19,475

Purchases from:- - Kin Kee Marketing Sdn. Bhd. 5,354 7,866 – – - PFC Engineering Sdn. Bhd. 3,006 – – – - PFCE Dagangan Sdn. Bhd. 601 – – – - Perfect Channel Sdn. Bhd. 116,376 116,037 – – - Perfect Wiremakers Sdn. Bhd. 364 – – – - Perwaja Steel Sdn. Bhd. 42,305 58 42,305 –

Rental and services charges paid to:- - ASM Properties Sdn. Bhd. 616 591 616 591

(iii) Companies in which there are certain common Directors

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Sales to:- - LAL Engineering Sdn. Bhd. 8,483 3,194 6,737 3,180 - ASM Properties Sdn. Bhd. – 350 – 350

Purchases from:- - Maju Steel Sdn. Bhd. 1,311 – – –

(vi) Key management personnel

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Short-term employee benefits 4,931 4,410 3,547 3,382

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 91

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

43. CAPITAL COMMITMENTS

THE GROUP THE COMPANY 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Capital expenditure

Approved and contracted for:- Property, plant and equipment 602 602 48 48

Approved but not contracted for:- Property, plant and equipment 5,382 2,499 2,805 1,254

44. CONTINGENT LIABILITIES

THE COMPANY 2008 2007 RM’000 RM’000

Unsecured:-

Corporate guarantees given to banks for credit facilities granted to subsidiaries 17,951 25,081

Corporate guarantees and letters of undertaking given in favour of third parties for supplying goods to subsidiaries 50,300 49,800

68,251 74,881

45. SEGMENT INFORMATION

(a) Reporting Format

The primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences in the products and services produced. Secondary information is reported geographically. The operating businesses are organised and managed separately accordingly to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

(b) Business Segments

The Group comprises the following main business segments:

(i) Trading - distributor and supplier of construction and finishing building materials, heavy steel products, architectural hardware, home improvement materials, cabinet systems, fuel and lubricants. This segment offers products and services for the construction, infrastructural and manufacturing sectors and end users.

(ii) Property and investment holding - properties are leased out for rental income or held for long-term capital appreciation. Investments in quoted and unquoted shares are held for dividend income and capital gains. Ipmuda Berhad Ipmuda Berhad 92 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

45. SEGMENT INFORMATION (CONT’D)

(b) Business Segments (Cont’d)

The Group comprises the following main business segments: (Cont’d)

(iii) Contracting - specialist contractor engaged in fluid engineering systems and maintenance works as well as contracting and assembling of industrial control instruments and engineering equipment. This segment also engaged in roofing works which products include metal roofing, prefabricated roof trusses and ceiling works.

(iv) Manufacturing - manufacture and supply of kitchen cabinet and wardrobe systems. This segment offers the complete cabinet systems and component parts such as doors, furniture components and wooden mouldings.

(v) Property development - the development of residential and commercial properties.

(vi) Financing - provision of finances to third parties for interest income.

Other operations of the Group comprise mainly provision of warehousing services which does not constitute a separately reportable segment.

The Group’s geographical segments are based on the location of the Group’s assets. Sales to external customers disclosed in geographical segments are based on the geographical location of its customers. The Group’s six main business segments operate in two geographical areas:

(i) Malaysia - the operations in this area are principally trading and distribution of building materials, property and investment holding, specialist contracting, manufacturing of kitchen cabinets and wardrobe systems, property development and financing.

(ii) Singapore - the operations in this area are principally trading and distribution of building materials and specialist contractor in fluid engineering systems and maintenance works.

(d) Allocation Basis and Transfer Pricing

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Transfer prices between business segments are set on an arm’s length basis in a manner similar to transactions with third parties. Segment revenue, expenses and results include transfers between business segments. Those transfers are eliminated on consolidation. Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 93

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

45. SEGMENT INFORMATION (CONT’D)

The following table provides an analysis of the Group’s revenue, results, assets, liabilities and other information by business segments:

Property and Investment Property Trading Holding Contracting Manufacturing Development Financing Others Elimination Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 31 December 2008

Revenue Sales to external customers 699,203 1,470 40,488 1,318 1,030 – – – 743,509 Inter-segment sales 37,345 973 362 – – – – (38,680) –

Total revenue 736,548 2,443 40,850 1,318 1,030 – – (38,680) 743,509

Results Profit/(loss) from operations 17,804 5,533 281 760 189 (1) (18) – 24,548 Finance costs (3,931) Share of results in associates – – – – – – – – –

Profit before taxation 20,617 Income tax expense (5,312)

Profit after taxation 15,305

Assets Segment assets 227,398 13,795 44,176 5,180 8,523 26,869 54 – 325,995 Investments in associates – 1,882 – – – – – – 1,882 Goodwill on consolidation – 819 – – – – – – 819

227,398 16,496 44,176 5,180 8,523 26,869 54 – 328,696 Unallocated assets 1,488

Total assets 330,184

Liabilities Segment liabilities 160,528 2,164 23,400 301 331 2 697 - 187,423 Unallocated liabilities 2,529

Total liabilities 189,952

Other segment information Capital expenditure 1,969 – 483 20 – – – – 2,472 Depreciation 1,518 – 1,176 94 – – – – 2,788 Amortisation of prepaid lease payments 232 – 15 – – – – – 247

Ipmuda Berhad Ipmuda Berhad 94 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

45. SEGMENT INFORMATION (CONT’D)

The following table provides an analysis of the Group’s revenue, results, assets, liabilities and other information by business segments: (Cont’d)

At 31 December 2007

Revenue Sales to external customers 576,294 1,309 41,048 365 – – – – 619,016 Inter-segment sales 43,375 928 718 – – – – (45,021) –

Total revenue 619,669 2,237 41,766 365 – – – (45,021) 619,016

Results Profit/(loss) from operations 15,129 (1,504) (293) (1,151) (46) – (10) – 12,125 Finance costs (4,472) Share of results in associates – 26 – – – – – – 26

Profit before taxation 7,679 Income tax expense (3,958)

Profit after taxation 3,721

Assets Segment assets 270,600 13,726 33,267 5,695 8,531 26,869 54 – 358,742 Investments in associates – 1,882 – – – – – – 1,882 Goodwill on consolidation – 819 – – – – – – 819

270,600 16,427 33,267 5,695 8,531 26,869 54 – 361,443 Unallocated assets 1,765

Total assets 363,208

Liabilities Segment liabilities 206,542 2,161 15,875 274 2,173 1 662 – 227,688 Unallocated liabilties 3,003

Total liabilities 230,691

Other segment information Capital expenditure 2,719 - 1,179 169 - - - - 4,067 Depreciation 1,246 - 847 116 - - - - 2,209 Amortisation of prepaid lease payments 232 - 15 - - - - - 247

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 95

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

46. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) On 31 July 2008, the Company acquired 555,000 ordinary shares of RM1.00 each in Eager Vest Sdn Bhd (“EVSB”) representing 46.25% of the issued and paid-up share capital of EVSB for a cash consideration of RM897,500. The principal activity of EVSB is investment holding. EVSB currently owns a 20% shareholding in five of Ipmuda Berhad’s subsidiaries. After the acquisition of the shares, EVSB is deemed a subsidiary of Ipmuda Berhad by way of board representation.

(b) During the current financial year, Ipmuda Buildermart Sdn Bhd, a wholly owned subsidiary, increased its shareholding from 49% to 100% after the acquisition of 250,000 shares in another subsidiary, Perniagaan Maju Ramadhan Sdn Bhd (“PMR”) for a consideration of RM395,500. The principal activity of PMR is property development.

47. FINANCIAL RISK MANAGEMENT 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, credit, liquidity and cash flow risks. The policies in respect of the major areas of the treasury activity are as follows:-

(a) Market Risk

(i) Foreign Currency Risk

The Group has subsidiaries operating in Singapore whose revenue and expenses are denominated in its functional currency of Singapore Dollar. This gave rise to foreign exchange exposure which the Group constantly monitors diligently.

(ii) Interest Rate Risk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-bearing financial assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group’s interest-bearing financial assets are mainly short-term in nature and have been mostly placed in deposits.

The Group’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group to the fair value interest rate risk. The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings.

(iii) Price Risk

The Group’s exposure to price risk arises mainly from changes in quoted equity prices. The Group does not use derivative instruments to manage equity risk.

(b) Credit Risk

The Group’s credit risk is primarily attributable to trade receivables. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. Collaterals are also obtained from some customers to further mitigate the credit risk exposure. In addition, receivable balances are monitored on an ongoing basis via Group management reporting procedures and the Group’s exposure to bad debts is not significant.

The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents, marketable securities and non-current investments, arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these financial assets. Ipmuda Berhad Ipmuda Berhad 96 Annual Report 2008 Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200

47. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities at a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from both capital markets and financial institutions and balances its portfolio with some short-term funding so as to achieve overall cost effectiveness.

48. FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

(a) Marketable Securities

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.

(b) Borrowings

Fair value has been determined using discounted estimated cash flows. The discount rates used are the current market incremental lending rates for similar types of lending, borrowing and leasing arrangements.

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

(e) Contingent Liabilities

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

THE COMPANY Nominal Net Fair Amount Value Note RM’000 RM’000

At 31 December 2008 Corporate guarantees 44 68,251 *

At 31 December 2007 Corporate guarantees 44 74,881 *

* - The net fair value of the contingent liabilities is estimated to be minimal as the subsidiaries are expected to fulfill their obligations to repay their borrowings. Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 97

LIST OF PROPERTIES HELD as at 31 December 2008

Building Tenure Land Area/ Carrying value Age(approx.) Existing (Expiry date Built-up area @ 31/12/2008 Location (years) Use of lease) (Sq metre) RM

1 12 Jalan Datoh 19* Office and Freehold 2,297 587,622 30000 Ipoh showroom Perak Darul Ridzuan

2 Lot 1240 & 29462 – Light Freehold 4,663 600,000 Lahat Lane industrial 30200 Ipoh lot (vacant) Perak Darul Ridzuan

3 1, Jalan Hala Datoh 2 20 Shophouse Freehold 338 500,000 30000 Ipoh Perak Darul Ridzuan

4 Lots CG9 & 10 30 Office Freehold 274 900,000 Plaza Pekeliling 50400 Kuala Lumpur Wilayah Persekutuan

5 6, Jalan Penchala 18* Office and Leasehold 8,094 2,249,755 46050 Petaling Jaya warehouse 18.06.2056 Selangor Darul Ehsan

6 Lot 1618, Jalan Dewani 16 Office and Freehold 3,753/ 1,401,747 Off Jalan Tampoi warehouse 2,092 81100 Johor Bahru Johor Darul Takzim

7 Lot 1619, Jalan Dewani – Light Freehold 5,025 1,278,749 Off Jalan Tampoi industrial lot 81100 Johor Bahru Johor Darul Takzim

8 36K, Jalan Bukit Kecil 19 Office and Leasehold 821 389,196 21100 Kuala Terengganu warehouse 02.08.2069 Terengganu Darul Iman

9 Units 2-1-23, 24, 26, 27, 28 15 Office Leasehold 713 1,382,000 Harbour Trade Centre (vacant) 11.08.2090 Gat Lebuh MacCallum 10300 Pulau Pinang

10 Units 2-7-16, 17, 31 15 Office Leasehold 712 859,698 Harbour Trade Centre 11.08.2090 Gat Lebuh MacCallum 10300 Pulau Pinang

11 84, Jalan Bertam 14 13* Shophouse Freehold 195 350,000 Taman Daya 81100 Johor Bahru Johor Darul Takzim

Ipmuda Berhad Ipmuda Berhad 98 Annual Report 2008 Annual Report 2008

LIST OF PROPERTIES HELD as at 31 December 2008

Building Tenure Land Area/ Carrying value Age(approx.) Existing (Expiry date Built-up area @ 31/12/2008 Location (years) Use of lease) (Sq metre) RM

12 3, Jalan Sutra Jaya 12 Shophouse Leasehold 149 110,000 2/1 Taman Sutra Jaya (vacant) 01.12.2092 08000 Sg Petani Kedah Darul Aman

13 Plot 653, 654, 662 & 663 – Industrial Freehold 3,865 528,880 Mukim Pengkalan Kundor land District of Kota Setar (vacant) Kedah Darul Aman

14 Unit 4J, Admiral Cove 9 Condominium Freehold 90 216,561 Condominium Jalan Pantai Port Dickson Negeri Sembilan

15 B-G-1,2,3 & B-1-1,2,3 4 Apartment Freehold 1,111 860,000 & B-2-1,2 & B-3-1, 2 (partially Taman Pelangi Apartment vacant) Melaka

16 16 Jalan Pelangi 13 4 Single storey Freehold 121 110,000 Taman Pelangi terrace house Rawang Selangor Darul Ehsan

17 21, Jalan Kuala Kangsar 17 Office and Leasehold 12,141 1,731,976 Tasek Industrial Estate warehouse 30.09.2064 31400 Ipoh Perak Darul Ridzuan

18 No. 1105, Block A 9 Office Leasehold 47 138,913 Pusat Dagang Setia Jaya 17.07.2091 9 Jalan PJS 8/9 46150 Petaling Jaya Selangor Darul Ehsan

19 3, Jalan Kilang 3 14* Factory Leasehold 2,149/ 290,000 Jelapang Industrial Estate and office 15.07.2036 282 30100 Ipoh Perak Darul Ridzuan

20 Block 10-18 – Shop-offices Leasehold 7,775 10,528,552 Lot 11, 11A, 15, 17 & 19 (under 09.11.2093 Jalan Usahawan (1/53) construction) Perusahaan Setapak Kuala Lumpur

21 1, Jalan 13/1 16* Showroom, Leasehold 20,773 13,013,160 46200 Petaling Jaya office and 06.01.2060 Selangor Darul Ehsan warehouse

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 99

LIST OF PROPERTIES HELD as at 31 December 2008

Building Tenure Land Area/ Carrying value Age(approx.) Existing (Expiry date Built-up area @ 31/12/2008 Location (years) Use of lease) (Sq metre) RM

22 Lot 155, Lingkaran Taman 13 Factory Freehold 10,063/ 4,288,444 Industri Integrasi Rawang 3 5,070 Taman Industri Integrasi Rawang, 48000 Rawang Selangor Darul Ehsan

23 3645, Jalan Bagan Dalam – Commercial Freehold 12,292 6,000,000 12100 Butterworth land Pulau Pinang

24 Lots 3213 & 3214 12 Office and Leasehold 20,133 4,172,421 Lorong Jelawat Satu, warehouse 03.12.2050 Seberang Jaya Industrial Park Pulau Pinang

25 Lot 758 – Rubber Freehold 14,285 540,000 Jalan Ayer Merah estate Kulim Kedah Darul Aman

26 1 & 3, Jalan IMJ 3 10 Office and Leasehold 803 497,164 Taman Industri Malim Jaya warehouse 18.11.2095 75450 Melaka

27 No. 86, Jalan 1 11 Office and Freehold 143 194,844 Taman Sri Kluang warehouse 86000 Kluang Johor Darul Takzim

28 No. 44, Jalan TSJ 8/1B 11 Office and Freehold 164 212,073 Taman Seremban Jaya warehouse 70450 Seremban Negeri Sembilan

29 Parcel No. BC/G/13A 8 Apartment Leasehold 227 260,000 & BC/2/13A (vacant) 20.12.2094 Storey No. GF & 2, Block C A’ Farmosa Garden Villa Malacca

30 PTD 129839 – Bungalow lot Freehold 816 70,000 Mukim Plentong (vacant) Johor Bahru Johor Darul Takzim

31 Lot 7732, Kawasan 20* Office and Leasehold 5,059/ 1,152,009 Perindustrian factory 04.08.2041 3,437 Kampong Baru Balakong 43300 Balakong, Selangor Darul Ehsan

Ipmuda Berhad Ipmuda Berhad 100 Annual Report 2008 Annual Report 2008

LIST OF PROPERTIES HELD as at 31 December 2008

Building Tenure Land Area/ Carrying value Age(approx.) Existing (Expiry date Built-up area @ 31/12/2008 Location (years) Use of lease) (Sq metre) RM

32 No. 45, Jalan 8/146 14 Shop-offices Leasehold 178 1,200,000 Taman Tasik Selatan 29.06.2087 57000 Kuala Lumpur

33 1 Jalan KP 1/6 12 Shop-office Freehold 318 1,026,099 Taman Kajang Prima 43000 Kajang, Selangor Darul Ehsan

34 23 Jalan Desa 9/6 11* Shop-offices Freehold 153 380,000 Bandar Country Homes (vacant) 48000 Rawang Selangor Darul Ehsan

35 RG-23, R1-20, R3-19, 4* Studio suite Leasehold 272 124,000 Block Redang condominium La’ Cemara Desaru (vacant) Resort Condominium Desaru, Johor Darul Takzim

* The building age is from date of purchase as the actual age of the buildings cannot be ascertained.

Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 101

Statement of Shareholdings

Authorised Share Capital : RM500,000,000.00 Issued and Paid-Up Capital : RM72,469,500.00 Class of Shares : Ordinary Share of RM1.00 each Voting Rights : 1 Vote per share

DISTRIBUTION OF SHAREHOLDINGS AS AT 14 MAY 2009

Percentage of Percentage of Range of No. of Shareholders Issued Capital Shareholdings Shareholders (%) No. of Shares (%)

Less than 100 36 0.92 800 0.00 100-1,000 1,874 48.08 1,843,132 2.55 1,001-10,000 1,730 44.38 6,564,751 9.06 10,001-100,000 234 6.00 5,935,565 8.19 100,001 to less than 5% of issued shares 18 0.46 13,083,500 18.05 5% and above of issued shares 6 0.15 45,041,752 62.15

TOTAL 3,898 100.00 72,469,500 100.00

THIRTY LARGEST SHAREHOLDERS AS AT 14 MAY 2009 (as per Record of Depositors)

Percentage of No. of Issued Shares Capital (%)

1. Maju Holdings Sdn Bhd 15,962,000 22.03 2. IGB Corporation Berhad 7,641,752 10.54 3. M.I.T Nominees (Tempatan) Sdn Bhd Pledged 7,424,000 10.24 Securities Account For Sim Choo Thiam 4. Amanah Raya Nominees (Tempatan) Sdn Bhd 5,712,000 7.88 Skim Amanah Saham Bumiputera 5. Purnama Gigih Sdn Bhd 4,594,000 6.34 6. M.I.T Nominees (Tempatan) Sdn Bhd Pledged 3,708,000 5.12 Securities Account For Abu Sahid Bin Mohamed 7. M.I.T Nominees (Tempatan) Sdn Bhd Pledged 3,536,000 4.88 Securities Account For Num A/L Din Niam 8. Teh Cheong Suan 2,386,000 3.29 9. Abu Sahid Bin Mohamed 1,680,900 2.32 10. Tecsun Sdn Bhd 1,500,000 2.07 11. M & A Nominee (Tempatan) Sdn Bhd 1,111,000 1.53 FRLA Services Sdn Bhd For Lim Chong Seng 12. Harmoni Sdn Bhd 451,800 0.62 13. Teh Boey Wah 291,000 0.40 14. Smooth Operation Sdn Bhd 288,000 0.40 15. Lim Ah Lai 255,000 0.35 16. Public Nominees (Tempatan) Sdn Bhd Pledged Securities 247,000 0.34 Account for Surinder Singh A/L Wassan Singh 17. Chai Youn Nyok 215,100 0.30 18. Low Hing Noi 200,000 0.28 19. Ruthlene Binti Abu Sahid 200,000 0.28 20. Teh Paik Chuan 185,000 0.26 21. Chong Hai Heong 159,700 0.22 22. Kee Tak Lip 130,000 0.18 23. Lim Heng Suan 127,000 0.18 24. Goh Juai Hian 120,000 0.17 Ipmuda Berhad Ipmuda Berhad 102 Annual Report 2008 Annual Report 2008

Statement of Shareholdings

Percentage of No. of Issued Shares Capital (%)

25. Resourceful Means Sdn Bhd 100,000 0.14 26. CIMSEC Nominees (Tempatan) Sdn Bhd 100,000 0.14 CIMB Bank For Parmjit Singh A/L Meva Singh 27. Mohd Fauzi Bin Yon 100,000 0.14 28. Zurid Corporation Sdn Bhd 100,000 0.14 29. Loo Kiew Man 99,000 0.14 30. Ambank (M) Berhad Pledged Securities Account 82,200 0.11 For Ahmad Zahid Bin Hamidi

TOTAL 58,706,452 81.01

SUBSTANTIAL SHAREHOLDERS AS AT 14 MAY 2009 (as per Register of Substantial Shareholders)

Percentage of No. of Shares No. of Shares Issued Direct Interest Deemed Interest Capital (%)

1. Maju Holdings Sdn Bhd 15,962,000 – 22.03

2. Tan Sri Abu Sahid bin Mohamed 5,388,900 15,962,000 29.46

3. Purnama Gigih Sdn Bhd 4,594,000 – 6.34

4. Dato’ Lim Heng Suan 127,000 4,594,000 6.51

5. Amanah Raya Nominees (Tempatan) Sdn Bhd 5,712,000 – 7.88 Skim Amanah Saham Bumiputera

6. IGB Corporation Berhad 7,641,752 – 10.54

7. Gold IS Berhad – 7,641,752 10.54

8. Dato’ Tan Chin Nam – 7,929,752 10.94

9. Robert Tan Chung Meng – 7,929,752 10.94

10. Sim Choo Thiam 7,424,000 – 10.24

11. Teh Cheong Suan 2,386,000 1,500,000 5.36 Ipmuda Berhad Ipmuda Berhad Annual Report 2008 Annual Report 2008 103

Statement of Shareholdings

DIRECTORS’ SHAREHOLDINGS AS AT 14 MAY 2009 (as per Register of Directors’ Shareholdings)

Percentage No. of Shares No. of Shares of Issued Name of Directors Direct Interest Deemed Interest Capital (%)

Tan Sri Abu Sahid Bin Mohamed 5,388,900 16,162,000* 29.74

Dato’ Lim Heng Suan 127,000 4,594,000# 6.51

Dato’ Lim Ah Lai 255,000 – 0.35

Tai Ah Chai 1,278 – 0.00

Mohd Fauzi Bin Yon 100,000 – 0.14 (Alternate Director to Tan Sri Abu Sahid bin Mohamed)

None of the other Directors have any interests in shares (direct or indirect) in the Company.

Note:-

* Deemed interested by virtue of his substantial shareholding in Maju Holdings Sdn Bhd and his child’s shareholding in Ipmuda Berhad (“the Company”). By virtue of Tan Sri Abu Sahid Bin Mohamed’s interests of more than 15% in the Company, he is deemed to have an interest in the shares of all the subsidiaries to the extent that the Company has an interest.

# Deemed interested by virtue of his substantial shareholding in Purnama Gigih Sdn Bhd. (This page has been intentionally left blank) ✄ 3) 2) 1) NOTES: Signature: Dated this______dayof______2009 vote orabstainashethinksfit. will Proxy your directions, specific of absence the In cast. be to vote your wish you how “X” with indicate Please Malaysia onTuesday thereof, 23June2009at9.00a.m.andanyadjournment inthemannerindicatedbelow: be held at Crystal 2, Impiana Casuarina Hotel, Ipoh, 18 Jalan Raja Dr. Nazrinas my/our Shah, proxy 30250 to vote Ipoh, for Perak me/us on Darul my/our Ridzuan, behalf at the Thirty-Fourth Annual General Meeting of the Company to of or failinghim of shares hereby appoint being amember(s)ofIPMUDABERHADholding of I/We Berhad Ipmuda

NO ______6 5 4 3 2 1 8 7

_ 216T) (22146-T ______The instrument appointing the proxy must be deposited at the Registered Office of the Company at Bangunan Ipmuda, 12 duly attorney his by or appointer the by signed be shall individual, an of case the proxy,in a appointing instrument The byeachproxymustbestated. toberepresented twoproxies,thenumberofshares are there not more than two proxies to attend and vote in his stead. Such proxy need not be a member of the Company, and where A member of the Company entitled to attend and vote at the abovementioned meeting is entitled to appoint one proxy but the meeting or any adjournment thereof. the meetingorany adjournment Jalan Datoh, 30000 Ipoh, Perak Darul Ridzuan, Malaysia, not less than forty-eight (48) hours before the time set for holding ofthe corporationdulyauthorised. officer orattorney authorised in writing, and in the case of a corporation, shall be either given under its common seal or under the hand of an Dato’ MohamedFuadbinYon Dato’ LimAhLai the Dato’ LimHengSuan of 101 Article under retiring Company’s ArticlesofAssociation: Directors following the of Re-election Approval ofDirectors’ Fees Declaration ofaFirstandFinaldividend Adoption ofAuditedFinancialStatementsandReports of theCompaniesAct,1965 Authority to the Directors to issue and allot shares pursuant to Section 132D Appointment ofAuditorsandauthoriseDirectors tofixtheir remuneration ______

______

______RESOLUTION ______Form ofProxy FOR AGAINST

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AFFIX STAMP

The Company Secretary IPMUDA BERHAD Bangunan Ipmuda, 12, Jalan Datoh, 30000 Ipoh, Perak Darul Ridzuan, Malaysia.

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