PASDEC-Annualreport2011

PASDEC HOLDINGS BERHAD (367122-D) 2011 ANNUAL REPORT Resilience

14th Floor, Menara Teruntum Jalan Mahkota, 25000 Kuantan, annual Pahang Darul Makmur. report Telephone/Telefon : 09-5133888 Facsimile/Faksimili : 09-5145988 2011 Website : www.pasdec.com.my CORPORATE DIRECTORY

PASDEC HOLDINGS BERHAD (367122-D) VISION Tingkat 14, Menara Teruntum, Jalan Mahkota, 25000 Kuantan, Pahang Darul Makmur. Telephone: 09-5133888 Facsimile: 09-5145988 To be a progressive and excellent organization MISSION Website : www.pasdec.com.my

To be an esteemed organisation in property development and PASDEC CORPORATION KUANTAN TEMBELING RESORT MUTIARA PASDEC to invest in other business which could contribute the best SDN. BHD. (55031-P) SDN. BHD. (226274-V) SDN. BHD. (411529-T) return to the investors, customers and employees through an Tingkat 14, Menara Teruntum, Lot 2-06, Tingkat 2, Tingkat 14, Menara Teruntum, effecient and responsible management. Jalan Mahkota, 25000 Kuantan, Mahkota Square, Jalan Mahkota, Jalan Mahkota, 25000 Kuantan, Pahang Darul Makmur. 25000 Kuantan, Pahang Darul Makmur. Telephone: 09-5133888 Pahang Darul Makmur. Telephone: 09-5133888 Facsimile: 09-5145988 Telephone: 09-5156887/5132500 Facsimile: 09-5145988 Facsimile: 09-5132502 KIMDEC CORPORATION PAHANG OFF-SHORE SDN. BHD. (342895-U) BENTONG AQUARIUM & SANCTUARY SDN. BHD. (102524-D) Introduction Tingkat 14, Menara Teruntum, PARK SDN. BHD. (709060-M) Tingkat 14, Menara Teruntum, Jalan Mahkota, 25000 Kuantan, Tingkat 14, Menara Teruntum, Jalan Mahkota, 25000 Kuantan, Pahang Darul Makmur. Jalan Mahkota, 25000 Kuantan, Pahang Darul Makmur. Pasdec Holdings Berhad (“PASDEC”) is a leading government linked company Telephone: 09-5133888 Pahang Darul Makmur. Telephone: 09-5133888 based in Pahang listed on the Main Board of Bursa Malaysia Securities Berhad Facsimile: 09-5145988 Telephone: 09-5133888 Facsimile: 09-5145988 (Stock Code : 6912) under the property counter since 27 October 1997. Facsimile: 09-5145988 PASDEC PINTAS PAHANG AIRCRAFT INDUSTRIES PASDEC is responsible for coordinating and marketing Pahang’s vast resources to SDN. BHD. (358830-P) PASDEC ENGINEERING SDN. BHD. (551633-W) create new opportunities for growth and prosperity. Its present authorised and paid Tingkat 14, Menara Teruntum, SDN. BHD. (879347-V) Tingkat 14, Menara Teruntum, up capital is RM500 million and RM205.9 million respectively. Jalan Mahkota, 25000 Kuantan, Tingkat 14, Menara Teruntum, Jalan Mahkota, 25000 Kuantan, Pahang Darul Makmur. Jalan Mahkota, 25000 Kuantan, Pahang Darul Makmur. As an investment holding company, PASDEC through its subsidiaries and associ- Telephone: 09-5133888 Pahang Darul Makmur. Telephone: 09-5133888 ates companies is principally involved in property development, project manage- Facsimile: 09-5145988 Telephone: 09-5133888 Facsimile: 09-5145988 ment, civil and building construction, manufacturing of electrical wiring harness, Facsimile: 09-5145988 seat components and catalytic converters for the automotive industry in South SUMBANGAN SAKTI PASDEC BINA SDN. BHD. (9248-H) Africa and provision of data centre services. SDN. BHD. (426838-T) PASDEC MEGA SDN. BHD. (368024-K) Tingkat 3, Menara Teruntum, Tingkat 14, Menara Teruntum, Tingkat 14, Menara Teruntum, Jalan Mahkota, 25000 Kuantan, PASDEC is actively seeking for new business ventures and acquisition to expand Jalan Mahkota, 25000 Kuantan, Jalan Mahkota, 25000 Kuantan, Pahang Darul Makmur. its investment portfolio. Pahang Darul Makmur. Pahang Darul Makmur. Telephone: 09-5121036 Telephone: 09-5133888 Telephone: 09-5133888 Facsimile: 09-5121037 Facsimile: 09-5145988 Facsimile: 09-5145988 PASDEC PUTRA PASDEC LAND PASDEC TRADING SDN. BHD. (777804-K) SDN. BHD. (13735-M) SDN. BHD. (210031-A) Tingkat 3, Menara Teruntum, Tingkat 14, Menara Teruntum, Tingkat 14, Menara Teruntum, Jalan Mahkota, 25000 Kuantan, Jalan Mahkota, 25000 Kuantan, Jalan Mahkota, 25000 Kuantan, Pahang Darul Makmur. Pahang Darul Makmur. Pahang Darul Makmur. Telephone: 09-5133888 Telephone: 09-5133888 Telephone: 09-5133888 Facsimile: 09-5121037 Facsimile: 09-5145988 Facsimile: 09-5145988 PASDEC CEMPAKA PRIMA PRAI SDN. BHD. PASDEC TECHNOLOGY SDN. BHD. (672766-A) (277791-V) CENTRE & SERVICES Lot 13-01A, Level 13 (East Wing) Suite 12-3, 12th Floor, SDN. BHD. (968271-V) Berjaya Times Square, No. 1, Wisma UOA-2, 21 Jalan Pinang, Tingkat 14, Menara Teruntum, Jalan Imbi, 55100 Kuala Lumpur 50450 Kuala Lumpur. Jalan Mahkota, 25000 Kuantan, Telephone: 03-21491999 Telephone: 03-21644800 Pahang Darul Makmur. Facsimile : 03-21431685 Facsimile: 03-21649723 Telephone: 09-5133888 Facsimile: 09-5145988 GENTING VIEW RESORT DEVELOPMENT SDN. BHD. (76079-K) KM10, 69000 Genting Highlands, Pahang Darul Makmur. Telephone: 03-61002255 Facsimile: 03-61001236 PASDEC | Annual Report 2011 1 Contents

002 Notice of Annual General Meeting 016 Profile of Chief Executive Officer/President

003 Statement Accompanying Notice of 017 Top Management Team Annual General Meeting 018 Corporate Governance Statement 004 Chairman’s Statement 022 Statement of Directors’ Responsibilities 009 Group Financial Summary 023 Audit Committee Report 010 Corporate Information 026 Statement on Internal Control 011 Corporate Structure 028 Corporate | Human Resource Events 2011 012 Profile of Directors 033 Analysis of Shareholdings

035 List of Properties

038 Financial Statements

Proxy Form 2 PASDEC | Annual Report 2011 Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Sixteenth (16th) Annual General Meeting of PASDEC HOLDINGS BERHAD will be held at Meranti 1, Hyatt Regency Kuantan Resort, Telok Chempedak, 25050 Kuantan, Pahang Darul Makmur on Wednesday, 27 June 2012 at 3.00 p.m. for the following purposes:-

AGENDA

1. To receive the audited financial statements for the year ended 31 December 2011 together with the reports of the Directors and Auditors thereon. (Resolution 1)

2. To re-elect the following Directors who retire in accordance with Article 83 of the Company’s Articles of Association:-

a) Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob (Resolution 2) b) Dato’ Abdul Ghani bin L. Sulaiman (Resolution 3) c) Dato’ Dr. Hamdan bin Jaafar (Resolution 4)

3. To consider and if thought fit, to pass the following Ordinary Resolution in accordance with Section 129 of the Companies Act, 1965:-

“That pursuant to Section 129(6) of the Companies Act, 1965 Dato’ Mohamed Amin bin Haji Daud, who is over the age of seventy (70) years, be re-appointed as Director of the Company to hold office until the next Annual General Meeting”. (Resolution 5)

4. To approve Directors’ fees for the year ended 31 December 2011. (Resolution 6)

5. To re-appoint Messrs. Hanafiah Raslan & Mohamad as Auditors and to authorise the Directors to fix their remuneration. (Resolution 7)

6. To consider any other business of which due notice shall have been given.

By Order Of The Board,

SHAKERAH ENAYETALI Company Secretary

Kuantan 5 June 2012 PASDEC | Annual Report 2011 3

Notice of Annual General Meeting (Cont’d)

NOTES :

1. A member entitled to attend and vote at the meeting may appoint not more than two proxies to attend and vote in his stead, but such appointment shall be invalid unless he specifies the proportions of his holdings for each proxy. A proxy may, but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

2. A member of the Company who is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 may appoint at least one proxy but not more than two proxies in respect of each securities account.

3. The instrument appointing a proxy must be signed by the appointer or his attorney duly authorised in writing or if the appointer is a corporation either under common seal or under the hand of an attorney or an officer duly authorised.

4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 14th Floor, Menara Teruntum, Jalan Mahkota, 25000 Kuantan, Pahang Darul Makmur, not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING (Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad)

DETAILS OF INDIVIDUALS WHO ARE STANDING FOR ELECTION AS DIRECTORS (EXCLUDING DIRECTORS STANDING FOR RE-ELECTION)

No individual is seeking election as a Director at the Sixteenth Annual General Meeting of the Company. 4 PASDEC | Annual Report 2011

Chairman’s Statement

DATO’ SRI DIRAJA HAJI ADNAN BIN YAAKOB Chairman

Dear Valued Stakeholders,

On behalf of the Board of Directors of Pasdec Holdings Berhad (PASDEC), I have the pleasure of presenting to you the Annual Report and Audited Financial Statements of PASDEC Group for the financial year ended 31 December 2011.

OPERATING environment The steady growth in the economy reinvigorated the overall property market with the residential sub-sector being the main The Malaysian Gross Domestic Product (GDP) expanded mover in 2011. The combination of robust demand, lower by 5.1% in the year 2011 under the stewardship of our able overhang, low interest rates and higher land value contributed Government in spite of global uncertainties. The commendable to the growth in transactions and stronger prices of residential growth, albeit at a slower pace compared to last year’s GDP properties in 2011. of 7.2%, was supported by stronger domestic demand.

The world economy in 2011 was led by major Asian economies FINANCIAL PERFORMANCE as advanced nations in United States and Europe lagged behind. Asia’s resilience in the face of uncertainties is clearly The Group’s turnover for the financial year ended 31 December an indication of the continent’s emergence as an engine of 2011 stood at RM97.3 million, an increase of 14% from the global growth. The global manufacturing supply chain was turnover of RM85.1 million recorded in the previous year. affected by the natural disasters that took place in Japan and However, despite the higher turnover, the Group’s bottom Thailand in 2011. line was affected by several provisions and losses incurred by subsidiaries resulting in a marginal profit of RM0.47 million in In wake of the challenging external environment, the Malaysian the year under review as compared with the profit of RM4.48 Government’s on-going implementation of projects under million for the previous year. the Economic Transformation Plan (ETP) and Government Transformation Plan (GTP) play a significant role in ensuring In view of the Group’s performance, the Board of Directors that our domestic economy remains robust and attractive. does not recommend any dividend to be declared for the financial year ended 31 December 2011.

PROPERTY DEVELOPMENT OPERATIONS

The Group continued to focus on its main business of property development whilst maintaining its involvement in the construction and property management activities.

During the year, PASDEC Group generated a turnover of RM52.2 million from sales of 154 units of development properties within its on-going projects. Purchasers of 250 completed units at Baluk Perdana and Bandar Putra in Kuantan were handed over keys to their respective homes. PASDEC | Annual Report 2011 5

Chairman’s Statement (Cont’d)

The Group’s flagship projects at Bandar Putra, Baluk Perdana and Pasdec Damansara, all in Kuantan, continued to progress well in terms of construction and sales.

A well thought-out and planned township on 417 acres of freehold land in Tanjung Lumpur, Bandar Putra, tagged as “The Benchmark Of Exclusive Living” has a total estimated gross development value of RM1.3 billion. The first phase, developed progressively since 2008, is now nearing completion and is already home to more than 300 residents.

Strategically located by the roadside of Kuantan-Pekan Pantai Sepat dual carriageway, Putra Business Centre, comprising of 106 units of shop office, is steadily progressing in construction and has generated very encouraging demand.

During the year under review too, the Group paid the relevant premiums to the State Government to add to our land bank 600 acres of land at Chendor, Kuantan. This land was principally approved to PASDEC by the State Government in 1996. Plans are underway to develop the land into an integrated tourism development via joint venture.

Pasdec Bina Sdn. Bhd., our construction arm, successfully completed and handed over the Customs Complex in Mentakab worth RM14.9 million to the Royal Malaysian Customs Department during the year under review.

SIGNIFICANT CORPORATE DEVELOPMENT I am happy to note that PRSA Group contributed RM37.5 million to the revenue of the Group in 2011. However, due to In order to position the Group for future growth opportunities, finance cost and several provisions in the books, POSB Group the Group commenced several corporate initiatives through incurred losses during the year. Nevertheless, we expect strategic acquisitions and joint ventures in the year under positive contribution from PRSA Group in the coming years review. given the new supply contracts secured and in the pipeline. Acquisition of Pahang Off-Shore Sdn. Bhd. (POSB) by Taking heed of the efforts of Performance Management and a wholly owned subsidiary, Mutiara Pasdec Sdn. Bhd. Delivery Unit (PEMANDU) to promote Malaysia as a Regional marked the entry of the Group into automotive parts and Data Centre Hub, Pasdec Technology Centre & Services Sdn. components manufacturing business through Pasdec Bhd. (PTCSSB) was established last year as a joint venture Resources SA Limited (PRSA). PRSA has majority interest in between PASDEC and Leadcom (M) Sdn. Bhd. PTCSSB Pasdec Automotive Technologies (Pty) Ltd (PAT), a leading is currently finalising the design, specifications, costing, manufacturer and supplier of electrical wiring harness to OEM projections and funding for the project before embarking into vehicle manufacturers in South Africa. the construction and operation of a high-end data centre in Kuantan, Pahang. In its bid to diversify within the automotive sector to spread its risk and earning concentration, in the fourth quarter of 2011, During the year under review, RM20 million nominal amount PAT invested in CRH Africa Automotive (Pty) Ltd. (CRH), a of Rainbow Exchangeable Bonds (REBs) issued under Series company engaged in the manufacturing of seat components 2 were redeemed. As at the end of the year 2011, the entire and catalytic converters for the automotive industry. An RM15 million nominal amount issued under Series 1 and associate company of PAT, CRH which operates principally RM118 million out of RM135 million issued under Series 2 in South Africa, complements the existing business of PAT. were redeemed. 6 PASDEC | Annual Report 2011

Chairman’s Statement (Cont’d)

CORPORATE SOCIAL RESPONSIBILITY management functions within the Property Division to identify shortcomings and thereafter made improvements and To effectively deliver our responsibility as a corporate citizen, changes to synergize and streamline the various functions we focus our corporate social responsibility (CSR) initiatives within the division to enhance operation. on promoting sustainability within our organization, the communities we are engaged in and the society at large. The Group provides a healthy and safe working environment for the employees and provide sufficient insurance coverage to Our People employees in terms of hospitalization and surgical allowances, group term life and personal accident coverage for medical or PASDEC recognizes that human capital is the key element of accidental contingencies. successful organizations in an intensely competitive global business environment. The Group appreciates that a strong spirit of comradeship among employees is vital for the continued success of Therefore, we constantly inspire all employees, irrespective of PASDEC. In our efforts to foster closer interactions and job levels and positions, to excel in their work performance in stronger bonds among the employees, we organised a bi- order to meet the needs of our different divisions, which call for annual ‘Family Day’ as well as recreational and sports events. varying skills, capabilities and expertise among the employees. Personal development and skills training are provided to Community and Environment employees to enhance their knowledge, competencies and professionalism to meet their responsibilities and As a government linked company (GLC), we are responsible perform at their best. Employees are also encouraged to for the development and wellbeing of our people, particularly be more innovative and customer oriented. Job placements the quality of life in homes within the community in the and promotions within the organization give employees townships that we built. Towards this end, PASDEC Staff opportunities to undertake new challenges and ensure career Volunteer was set up with the aim to create a platform for advancement. the employees to go down to the ground to extend a helping hand to the community and to the needy. In addition, we also In the year 2011, a Group-wide training needs analysis was worked hand in hand with the ‘Rukun Tetangga’ of the local administered to the employees to assist in determining their communities to organise the community programs. training requirements. The Group also reviewed the project PASDEC | Annual Report 2011 7

Chairman’s Statement (Cont’d)

We remain positive of the Group’s capability and capacity to grow the value of our core business of property development, supported by Kuantan being the hub for trade and commerce under the East Coast Economic Region (ECER) master plan. Property development is expected to be the main revenue contributor in 2012 contributing approximately 60% to the Group’s turnover.

In addition to our on-going development projects to cater to various market segments, we plan to launch some 1,339 units of residential and commercial properties worth approximately RM397 million in the coming year. These include the development of Pasdec Persona and Vista Verde in Kuantan, the launch of new phases at Bandar Putra as well as Pasdec Idaman in Temerloh.

In 2011, the Group organised and participated in various In order to expedite the development of our land bank, our programs for the benefit of the community within our management team is also exploring smart partnership with developments. Some of our CSR initiatives were the yearly financially strong developers. Ramadhan Feast and contributions to mosques and surau, Tree Planting campaign as well as contribution of national The Group is progressing well with its plans to embark into newspapers to selected schools to encourage school children renewable energy and halal gelatine and expects to announce to read and keep abreast with latest news and development. some positive and exciting development in the areas soon.

Apart from undertaking CSR for the communities that we developed, the Group also carried out philanthropic efforts APPRECIATION to benefit the society. During our annual sales carnival in November, we organised programs to encourage kids to On behalf of the Board of Directors, I wish to express my excel in school, awareness program on healthy living and deepest appreciation to all our stakeholders; our management lifestyle for family and we gave away contributions to selected and employees for their dedication, hard work and loyalty; orphanages in Kuantan. As a caring corporate citizen of the our valued shareholders for their confidence; our customers disabled, the Group contributed Braille Al-Quran to blind for their trust in our products; and our business associates, students of selected special schools in Kuantan and Temerloh. financiers and consultants for their continued support.

The Group supports the development of sports in the State I must also thank the government and regulatory authorities, by jointly organising Pasdec Football Tournament and especially the State Government of Pahang, for their guidance contributing to sports tournaments organised by the State and support. bodies and associations. My heartfelt gratitude goes to my fellow Board members for As a responsible property developer, the Group is ever their invaluable commitment, guidance and wisdom. mindful of incorporating environmental friendly aspects in our township master plan and product designs without compromising on the quality.

LOOKING AHEAD

Despite a more challenging business environment forecast for the year 2012, we are confident that the Group will remain DATO’ SRI DIRAJA HAJI ADNAN BIN HAJI YAAKOB resilient to weather the economic challenges that may come Chairman with the slowdown in the global economy. Date: 29 May 2012 8 PASDEC | Annual Report 2011 Making An Impact By Delivering Distinctive Value PASDEC | Annual Report 2011 9 Group Financial Summary

TURNOVER NET ASSETS (RM’million) (RM’million)

358 359 384 120 400 367 107 350 103 350 100 97 97 85 300 80 250 60 200 150 40 100 20 50 0 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011

PROFIT/(LOSS) AFTER TAXATION (RM’million) 30 26 25 20 15 10

5 4 4 1 (9) 0.5 0 -5 -10 NET ASSETS PER SHARE 2007 2008 2009 2010 2011 EARNINGS/(LOSS) PER SHARE (RM) (SEN) 20 2.0 1.87 1.78 1.74 1.74 1.70 15.34 15 1.5

10 1.0 5 2.17 0.51 0.5 0 (0.25) (2.15) 0.0 -5 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011

Year Ended 31 December

2007 2008 2009 2010 2011 RM’000 RM’000 RM’000 RM’000 RM’000 Turnover 107,229 97,175 103,181 85,143 97,264 Profit/(Loss) After Taxation 26,404 3,579 (8,706) 4,476 466 Net Assets 358,358 358,974 350,268 384,198 367,000 Net Assets Per Share (RM) 1.74 1.74 1.70 1.87 1.78 Earnings/(Loss) Per Share (Sen) 15.34 2.17 (2.15) 0.51 (0.25) 10 PASDEC | Annual Report 2011 Corporate Information

BOARD OF DIRECTORS

YAB DATO’ SRI DIRAJA HAJI ADNAN BIN HAJI YAAKOB Non-Independent Non-Executive Chairman

YH DATO’ ABDUL GHANI BIN L. SULAIMAN Non-Independent Non-Executive Deputy Chairman

YH DATO’ HAJI LIAS BIN MOHD NOOR Non-Independent Non-Executive Director

YH DATO’ DR. HAMDAN BIN JAAFAR Non-Independent Non-Executive Director

YH DATO’ HAJI MOHAMAD NOR BIN ALI Non-Independent Non-Executive Director

YH DATO’ MOHAMED AMIN BIN HAJI DAUD Senior Independent Non-Executive Director

YH DATO’ SRI KHALID BIN MOHAMAD JIWA Independent Non-Executive Director

YH DATO’ ABDULLAH BIN A. RASOL Independent Non-Executive Director

CHIEF EXECUTIVE OFFICER/PRESIDENT REGISTRAR

YH DATO’ MOHD KHAIRUDDIN HJ. ABDUL MANAN Securities Services (Holdings) Sdn. Bhd. Level 7, Menara Milenium Jalan Damanlela, Pusat Bandar Damansara COMPANY SECRETARY Damansara Heights, 50490 Kuala Lumpur Telephone : 03-2084 9000 MISS SHAKERAH ENAYETALI : 03-2094 9940 Facsimile : 03-2095 0292 e-mail : [email protected] REGISTERED OFFICE

Tingkat 14, Menara Teruntum PRINCIPAL BANKERS Jalan Mahkota, 25000 Kuantan Telephone : 09-5133888 CIMB Bank Berhad Facsimile : 09-5145988 RHB Bank Berhad HSBC Bank Berhad AMBank Berhad WEBSITE

www.pasdec.com.my STOCK EXCHANGE LISTING

Main Board of Bursa Malaysia Securities Berhad AUDITORS

Messrs. Hanafiah Raslan & Mohamad Public Accountants PASDEC | Annual Report 2011 11 Corporate Structure

100% Pasdec Corporation Sdn. Bhd.

100% Kuantan Tembeling Resort Sdn. Bhd. 100%

Pasdec Putra Sdn. Bhd.

100% Pasdec Land Sdn. Bhd. 40% Pasdec Cempaka Sdn. Bhd.

40% 100% Pasdec Mega Sdn. Bhd. Genting View Resort Development Sdn. Bhd. 20%

Prima Prai Sdn. Bhd. 100% Sumbangan Sakti Sdn. Bhd.

100% Mutiara Pasdec Sdn. Bhd.

100% 100% Pasdec Bina Sdn. Bhd. Pahang Aircraft Industries 100% Sdn. Bhd. Pasdec Trading Sdn. Bhd. 100% 70% Pasdec Pintas Sdn. Bhd. Pahang Off-Shore Sdn. Bhd.

70% Bentong Aquarium & Sanctuary Park Sdn. Bhd. 97% Pasdec Resources SA Ltd

100% Kimdec Corporation Sdn. Bhd. 70% Pasdec AutomotiveTechnologies (Pty) Ltd

100% Pasdec Engineering Sdn. Bhd. 100% Femcotec Finance (Pty) Ltd

50% Pasdec Technology Centre & Services Sdn. Bhd. 100% Femco Mining Motors (Pty) Ltd

30.87%

CRH Africa Automotive (Pty) Ltd 12 PASDEC | Annual Report 2011 Profile of Directors

Dato’ Sri DiRaja Haji Adnan Bin Haji Yaakob Chairman Non-Independent Non-Executive Director

Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob, a Malaysian, aged 62, was appointed as Chairman and Director of Pasdec Holdings Berhad on 21 January 2003. He also serves as Chairman of the Tender Committee.

He holds a B.A (Hons) and Diploma in Education from University of Malaya. In October 2010, he was conferred a degree of Honorary Doctorate in Education Administration. Dato’ Sri DiRaja Haji Adnan is the first ever Malaysian to receive such honour from the most prestigious and oldest university in Jordan as a recognition towards his contribution to education especially in providing opportunity to the financially less fortunate students of Pahang to pursue higher education locally and internationally. In the same month, he was also conferred the Honorary Doctorate in Technology Management by Malaysia Pahang University (UMP).

Dato’ Sri DiRaja Haji Adnan is the first recipient of the newly-introduced award of Darjah Sri DiRaja Sultan Ahmad Shah Pahang (SDSA) which was bestowed upon him by His Royal Highness The Sultan of Pahang on His Royal Highness’ 80th birthday and carries the title Dato’ Sri DiRaja.

A well-known politician, he is a member of the Pahang State Legislative Assembly representing the Pelangai Constituency since 1986. Dato’ Sri DiRaja Haji Adnan has been the Chief Minister of Pahang since May 1999. He is also the Chairman of the State Executive Council of Pahang and holds portfolios in various committees.

Dato’ Sri DiRaja Haji Adnan is the Chairman of Mentiga Corporation Berhad and state owned agencies such as Perbadanan Kemajuan Negeri Pahang (PKNP), Pahang State Foundation, Amanah Saham Pahang (ASPA), Kumpulan Permodalan Bumiputera Pahang (KUMIPA), Lembaga Kemajuan Perusahaan Pertanian (LKPP) and Perbadanan Perpustakaan Awam Pahang (PPAP).

He does not have any family relationship with any other director and/or major shareholder, nor any conflict of interest with Pasdec Holdings Berhad. He has not been convicted for any offences (other than traffic offences) within the past 10 years. PASDEC | Annual Report 2011 13

Profile of Directors (Cont’d)

Dato’ Abdul Ghani Bin L. Sulaiman Deputy Chairman Non-Independent Non-Executive Director

Dato’ Haji Lias Bin Mohd Noor Non-Independent Non-Executive Director

Dato’ Abdul Ghani bin L. Sulaiman, a Malaysian, aged 69, was appointed as Deputy Chairman and Director of Pasdec Holdings Berhad on 22 April 2003. He graduated with a degree in Bachelor of Arts (Honours) from the University of Malaya in 1968 and served as an Officer of the Malaysian Administrative and Diplomatic Service in various government agencies.

Subsequently, he obtained his Diploma in Development Administration from Manchester University, United Kingdom in 1976, after which he continued to hold various posts in government agencies including the post of Malacca State Financial Officer, Sarawak State Development Officer, General Manager of Penang Regional Development Authority (PERDA) and Director of Pay and Allowance Division, Public Services Department, Malaysia.

Dato’ Abdul Ghani went on to serve as the State Secretary of Pahang in 1996 before retiring in 1998. Presently, he is the Deputy Chairman of Pahang State Planning Appeal Board under the Town And Country Planning Act, 1976 and Chairman of Segi Perkasa (M) Sdn. Bhd. He is Chairman of the Remuneration Committee of Pasdec Holdings Berhad.

Dato’ Haji Lias bin Mohd Noor, a Malaysian, aged 61, was appointed to the Board on 19 August 2002. He is a B.A (Econs) (Hons) graduate of Universiti Kebangsaan Malaysia. In 1993, he attended the Stanford Executive Program at Stanford University, USA and later in 2000 earned an MBA from Universiti Kebangsaan Malaysia.

He is the Chief Executive Officer of Perbadanan Kemajuan Negeri Pahang (PKNP). Prior to being promoted to his present post on 1 January 2003, he was the Acting Chief Executive Officer and Deputy General Manager of PKNP. He also sits on the Board of Pascorp Paper Industries Berhad.

Dato’ Haji Lias is Chairman of the Executive Committee and a member of the Nomination Committee and Tender Committee of Pasdec Holdings Berhad.

Profile of Directors (Cont’d)

Dato’ Dr. Hamdan Bin Jaafar Non-Independent Non-Executive Director

Dato’ Haji Mohamad Nor Bin Ali Non-Independent Non-Executive Director

Dato’ Dr. Hamdan bin Jaafar, a Malaysian aged 61, was appointed to the Board on 14 November 1995. He is an Economics Graduate from University Malaya and joined Perbadanan Kemajuan Negeri Pahang (PKNP) as an Administrative Officer upon his graduation in 1974.

He served in various departments within the PKNP Group and went on to become the Deputy General Manager before being promoted to Chief Executive of PKNP, a post which he held from 1994 to 2001. He was appointed as an Executive Director of Pasdec Holdings Berhad in December 1996 and subsequently in November 2001, he was seconded to Pasdec Holdings Berhad as the Group Managing Director where he served until early January 2005 before being called back to serve PKNP until his retirement in 2007.

During his tenure with PKNP, he attended the Stanford Top Management Program at Stanford University, USA in 1986. Dato’ Dr. Hamdan’s quest for knowledge earned him a doctorate in Business Administration from the European-American University at Oxford Centre and a Fellowship with The Oxford Centre for Leadership, United Kingdom in 2011. He has also been awarded a Doctorate in Business Administration by The Oxford Association of Management in 2006 and has been a Fellow of the Oxford Centre for Leadership in Business Administration since 2007.

Presently, he is running his own business. His experience ranges from township and real estate development to major socio-economic development in Pahang. Dato’ Dr. Hamdan is also a member of the Audit Committee and Remuneration Committee of Pasdec Holdings Berhad.

Dato’ Haji Mohamad Nor bin Ali, a Malaysian, aged 66, was appointed to the Board on 22 August 2002. Having graduated from University of Malaya with a B.A (Hons) Sociology in 1969, Dato’ Haji Mohamad Nor went on to take his Diploma in Management Science, and subsequently earned an MBA (Investments) and MBO from Northrop University, USA. He is a Fellow of Canadian Comprehensive Auditing Foundation (CCAF) since 1986.

He has vast experience in the audit field having served in the Public Sector as Director of Audit in various states including Pahang, Terengganu, Johor and Selangor. He was the Assistant Auditor General in 1996 before being promoted to Deputy Auditor General, a post he held until his retirement in 2001.

He is a member of the Executive Committee, Remuneration Committee and Tender Committee of Pasdec Holdings Berhad.

Profile of Directors (Cont’d)

Dato’ Mohamed Amin Bin Haji Daud Senior Independent Non-Executive Director

Dato’ Sri Khalid Bin Mohamad Jiwa Independent Non-Executive Director

Dato’ Mohamed Amin bin Haji Daud, a Malaysian, aged 74, was appointed to the Board on 30 April 1997. He is a Barrister-at-law of the Honorable Society of Middle Temple and was called to the English Bar in November 1971. Upon returning to Malaysia, he joined Messrs. Ibam Sdn. Bhd. in 1972 as Company Secretary and was later promoted to Deputy General Manager of the same company. Subsequently, he went on to set-up his own law practice with two other lawyers in Kuantan.

He was a Member of Parliament of Pekan, Pahang from 1982 to 1986 and Rompin, Pahang from 1986 to 1990. He served as the Deputy Speaker of Dewan Rakyat Malaysia from 1986 until 1990. He was the Chairman of Lembaga Kemajuan Pahang Tenggara from 1986 until 1995 and Chairman of Kuantan Port Authority from 1985 until 1987.

He is a member of the Audit Committee and Nomination Committee of Pasdec Holdings Berhad.

Dato’ Sri Khalid bin Mohamad Jiwa, a Malaysian aged 53, was appointed to the Board of Pasdec Holdings Berhad on 30 April 1997. He serves as Chairman of the Nomination Committee and a member of the Audit Committee of Pasdec Holdings Berhad.

He also currently sits on the Board of DFZ Capital Berhad and previously on the Board of Naluri Corporation Berhad, Atlan Holdings Berhad, Asian Composite Manufacturing Sdn. Bhd. and United Industries Sdn. Bhd. Dato’ Sri Khalid is the Group Executive Chairman of K-Corporation Sdn. Bhd. and its group of companies dealing with construction, property management, cosmetic products, specialised trading, IT and media services and agriculture activities.

Dato’ Sri Khalid is a business graduate and had previously worked in the financial sector after completing his studies in 1981. He then left the bank to start his own business with vast experience and knowledge in financial business. He is the Chairman and Founder of Yayasan Nurjiwa, a foundation that is actively involved in charity and social activities.

Profile of Directors (Cont’d)

Dato’ Abdullah bin A. Rasol, a Malaysian, aged 62, was appointed to the Board on 23 May 2002. Dato’ Abdullah is a Fellow of the Chartered Association of Certified Accountants, United Kingdom and a Chartered Accountant with the Malaysian Institute of Accountants. He is presently the Director, Corporate Affairs of Eden Inc. Berhad.

Prior to joining Eden Inc. Berhad, he was the Executive Director and Chief Executive Officer of Amanah General Insurance Berhad. He served the Amanah Capital Group since 1984, initially serving as the Finance Manager of Amanah Merchant Bank Berhad (AMBB) and moving on towards corporate banking and subsequently as the General Manager of AMBB. His tasks whilst at AMBB include marketing and evaluation of credit facilities, management of assets, financial advisory, equity restructuring and project financing. He gained audit and accounting experience in Coopers & Lybrand, Guthrie Malaysia Holdings Bhd and Pernas Construction Sdn. Bhd. prior to joining AMBB.

Dato’ Abdullah Bin A. Rasol Dato’ Abdullah serves as Chairman of the Audit Committee and a member of the Independent Non-Executive Director Remuneration Committee of Pasdec Holdings Berhad.

Dato’ Mohd Khairuddin Hj Abdul Manan, a Malaysian, aged 55, was appointed as Chief Executive Officer/President of Pasdec Holdings Berhad on 11 March 2009. He holds a B.A (Hons) in Strategic Environmental Planning Studies from Liverpool John Moores University, England.

Dato’ Mohd Khairuddin started his career as a Forecaster/Demographer at Binafon Sdn. Bhd. after graduating in 1982 and went on to gain experience and in depth knowledge in the property development and construction industry while serving Rimman International Sdn. Bhd., Housecoff Sdn. Bhd. and Panji Timor Sdn. Bhd. as Project Manager and General Manager.

He ventured into his own property development and construction business in 1992 and has undertaken projects in Seremban, Klang Valley, Pahang and Kedah prior to joining Pasdec Holdings Berhad. Among the notable projects undertaken by Dato’ Mohd Khairuddin are the Terminal One and Light Industrial Park in Seremban, Dato’ Mohd Khairuddin Water Treatment Plant in Habu, Cameron Highland and Langkawi Hospital in Kuah, Hj Abdul Manan Langkawi. Chief Executive Officer/President Dato’ Mohd Khairuddin is also a member of the Malay College Old Boys’ Association of the Malay College Kuala Kangsar and a committee member of its Negeri Sembilan branch.

1 2

3 4

1. Dato’ Mohd Khairuddin Hj Abdul Manan Chief Executive Officer/President

2. Goh Song Han Senior Vice President Corporate Resources

3. Mohd Azman Sa’ad Senior Vice President Property

4. Shakerah Enayetali Group Company Secretary 18 PASDEC | Annual Report 2011 Corporate Governance Statement

The Board of Directors is committed to the Principles and Best Practices

“ of the Revised 2007 Malaysian Code on Corporate Governance (the Code) and takes cognizance of the Corporate Governance Blueprint launched by the Securities Commission in 2011. The Board consistently strives to “ adopt the substance behind the corporate governance prescriptions and not merely the form.

Set out below is the manner which the Group has applied the chapters of good governance and the extent to which it has complied with the best practices set out in the Code throughout the year ended 31 December 2011.

BOARD RESPONSIBILITY

The Board is responsible for the overall performance of the Company and the Group and performs the following key duties and responsibilities:

i. ensure the formulation of strategic plan and direction of the Group; ii. approve the Group’s annual business plan and annual budget; iii. continuously review the Group’s annual business plan operations and monitoring of Group’s performance against the business plan and budget; iv. approve major business transactions; v. implement and review appropriate processes and internal controls to manage business risks.

Generally the Board is responsible to ensure that the Group is managed according to high standards of accountability and transparency.

COMPOSITION OF THE BOARD

The Board currently has eight (8) members comprising of a Non-Executive Chairman, a Non-Executive Deputy Chairman, three (3) Independent Non-Executive Directors and three (3) Non-Independent Non-Executive Directors.

The Board’s composition represents a mix of knowledge, skills and expertise relevant to the Company’s operations to provide strong and effective leadership and control of the Group

A brief profile of each Director is presented on pages 12 to 16 of this annual report.

The Non-Executive Directors, all of whom are respected business leaders in their own right, play an important role in the Board’s decisions, and provide unbiased and independent views, advice and judgement in the decision making process.

The roles of the Chairman and the Chief Executive Officer/President (CEO) are separate and clearly defined to ensure a balance of power and authority. The Chairman is primarily responsible for the orderly conduct and effectiveness of the Board whilst the CEO has the overall responsibility for the day-to-day running of the business and implementation of Board policies and decisions.

The terms and conditions of the appointment of Directors are set out in a letter of appointment that sets out amongst others the procedures for dealing with conflicts of interest and availability of independent professional advice. PASDEC | Annual Report 2011 19

Corporate Governance Statement (Cont’d)

BOARD MEETINGS

Board meetings are held at quarterly intervals with additional meetings convened, as and when necessary. The Board records its deliberations, in terms of issues discussed, and the conclusions in discharging its duties and responsibilities. All Directors are fully briefed in advance of Board meetings on the matters to be discussed and have access to any further information they may require. The Board may, whenever required, set up committees delegated with specific powers and responsibilities.

In the financial year ended 31 December 2011, eight (8) Board meetings were held and the attendance of each Director and the CEO at the Board meetings is as follows:-

Director No. of Meetings Attended %

Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob 8 out of 8 100 Dato’ Abdul Ghani bin L. Sulaiman 8 out of 8 100 Dato’ Haji Lias bin Mohd Noor 7 out of 8 87.5 Dato’ Dr. Hamdan bin Jaafar 8 out of 8 100 Dato’ Haji Mohamad Nor bin Ali 8 out of 8 100 Dato’ Mohamed Amin bin Haji Daud 4 out of 8 50 Dato’ Sri Khalid bin Mohamad Jiwa 7 out of 8 87.5 Dato’ Abdullah bin A. Rasol 7 out of 8 87.5 Dato’ Mohd Khairuddin Hj. Abdul Manan (CEO) 8 out of 8 100

INFORMATION FOR THE BOARD

The Directors are provided with adequate Board papers on a timely manner prior to Board meeting to enable the Directors to fully consider the matters presented for discussion and obtain further explanation, where necessary. These reports provide information on Group performance and major operational, financial and corporate issues. The CEO attends the Board meetings and senior management staff may be called to participate at the Board meetings to provide detailed explanation and clarifications on issues that are being deliberated.

All the Directors have access to the advice and services of the Company Secretary whose terms of appointment permits removal and appointment by the Board as a whole. The Board of Directors, whether as a full Board or in their individual capacity, in the furtherance of their duties, may seek independent professional advice at the Company’s seek.

BOARD COMMITTEES

The Board has established the following Committees to assist the Board in the execution of its duties:- • Audit Committee • Nomination Committee • Remuneration Committee • Tender Committee • Executive Committee

Audit Committee

The Audit Committee reviews issues of accounting policy and presentation for external financial reporting, monitors the works of the internal audit function and ensures an objective and professional relationship is maintained with external auditors.

The role of the Audit Committee and its activities during the year are set out in the Audit Committee Report in this annual report. 20 PASDEC | Annual Report 2011

Corporate Governance Statement (Cont’d)

Nomination Committee

The Board has established a Nomination Committee comprising of two (2) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director. The composition of the Nomination Committee is as follows:

Dato’ Sri Khalid bin Mohamad Jiwa (Chairman-Independent Non-Executive Director) Dato’ Mohamed Amin bin Haji Daud (Senior Independent Non-Executive Director) Dato’ Haji Lias bin Mohd Noor (Non-Independent Non-Executive Director)

The Committee is primarily responsible for the followings:- i. to review and recommend new candidates for appointment to the Board; ii. to review and recommend appointments to committees of the Board; and iii. to assist the Board in reviewing on annual basis the required mix of skills and experience of the Directors of the Company.

Remuneration Committee

The Board has established a Remuneration Committee comprising of four (4) Non-Executive Directors, one of whom is Independent, as follows;-

Dato’ Abdul Ghani bin L. Sulaiman (Chairman- Non-Independent Non-Executive Director) Dato’ Dr. Hamdan bin Jaafar (Non-Independent Non-Executive Director) Dato’ Haji Mohamad Nor bin Ali (Non-Independent Non-Executive Director) Dato’ Abdullah bin A. Rasol (Independent Non-Executive Director)

The Remuneration Committee reviews the remuneration package, terms of employment, reward structure and benefits of the CEO and makes the necessary recommendations for the decision of the Board, drawing from outside advice if necessary.

Other Committee

In addition to the aforementioned committees, the Board has also established a Tender Committee to ensure control over award of contracts to contractors and an Executive Committee to control functions of investment and certain levels of operational of the Group.

RE-ELECTION OF DIRECTORS

In accordance with the Company’s Articles of Association, all newly appointed Directors shall retire from office but shall be eligible for re-election in the next Annual General Meeting subsequent to their appointment.

The Articles further provides that at least one-third (1/3) of the remaining Directors be subjected to re-election by rotation at each Annual General Meeting and all Directors shall retire from office at least once in three (3) years. Directors over seventy (70) years of age are required to submit themselves for reappointment annually in accordance with Section 129(6) of the Companies Act, 1965.

DIRECTOR’S TRAINING

All the Directors have attended the Mandatory Accreditation Programme conducted by Bursa Malaysia Securities Berhad. The Directors are encouraged to attend seminars, forums, training programmes and conferences in order to enhance their skills and knowledge and to keep abreast with the relevant changes in law, regulations and the business environment to enable them to discharge their roles and responsibilities effectively. PASDEC | Annual Report 2011 21

Corporate Governance Statement (Cont’d)

During the financial year, the Directors attended various seminars, conferences and training programmes organised by various agencies that included corporate governance, regulatory updates and business developments, including among others, the following:-

1. Discharging Audit Committee & Internal Audit Function in Compliance with Risk Management Best Practices 2. Scrutinising Financial Statement Fraud and Detection of Red Flag for Directors and Officers of PLC’s and Government Regulatory Agencies 3. Conference organized by the Companies Commission of Malaysia

DIRECTORS’ REMUNERATION

The Board decides on the remuneration of Non-Executive Directors, with the individual Director concerned abstaining from discussion of his own remuneration. Directors’ fees are paid to the Directors with approval by the shareholders at the Annual General Meeting.

The aggregate remuneration of Directors of the Company for the financial year ended 31 December 2011 categorised by components and range of remuneration can be found in Note 9 (Page 80) of Notes to the Financial Statements in this Annual Report.

RELATIONSHIP WITH INVESTORS AND SHAREHOLDERS

The Board recognises the importance of transparency and accountability to its shareholders and communicates with its shareholders and stockholders regularly through timely release of financial results on quarterly basis, press releases and announcements, which provide shareholders with an overview of the Group’s performance, operations and major developments.

The Annual General Meeting serves as the primary channel for communicating with shareholders. Shareholders who are unable to attend are allowed to appoint proxies to attend and vote on their behalf. The Chairman, the Board and the CEO will respond to the questions raised by the shareholders during the Annual General Meeting.

Shareholders and the general public may obtain up-to-date information relating to the various activities of the Group by accessing its website at www.pasdec.com.my. The Group’s releases and latest financial and non-financial announcements can also be found at the website.

ACCOUNTABILITY AND AUDIT

Financial Reporting

In presenting the annual financial statements and quarterly announcement of results to the shareholders, the Board aims to present a balanced and understandable assessment to the Group’s position and prospects. Before the financial statements were drawn up, the Directors have taken the necessary steps to ensure that the Group used all the applicable accounting, prudent judgements and approximation. All accounting standards, which the Board considers to be applicable, have been followed. The role of the Audit Committee in the review and reporting of the financial information of the Group is outlined in the Audit Committee Report in the annual report.

Internal Control

The information on the Group’s internal control is presented in the Statement on Internal Control in this annual report.

Relationship with External Auditors

The Board has established transparent and appropriate relationship with external auditors through the Audit Committee. The role of the Audit Committee in relation to the Auditors is described in the Audit Committee Report in this annual report. 22 PASDEC | Annual Report 2011 Statement of Directors’ Responsibilities

The Directors are responsible for the preparation of financial statements for each financial year to give a true and fair view of the state of affairs of the Group and of the Company and of the results and cash flows of the Group and of the Company for the financial year then ended.

In ensuring the preparation of these financial statements the Directors have:-

- ensured compliance with applicable approved accounting standards;

- adopted suitable accounting policies and apply them consistently; and

- made judgments and estimates that are reasonable and prudent.

The Directors are responsible for ensuring that the Company and the Group maintain accounting records that disclose with reasonable accuracy the financial position in order to ensure that the financial statements comply with the Companies Act, 1965. The statement of Directors pursuant to Section 168(15) of the Companies Act, 1965 is set out on page 47 of this Annual Report.

The Directors have general responsibilities for taking such steps that are reasonably available to them to safeguard the assets of the Group, and to prevent and detect fraud and other irregularities. PASDEC | Annual Report 2011 23 Audit Committee Report

The Audit Committee (the Committee) was established on 12 June 1997 to act as a Committee of the Board of Directors.

MEMBERS AND MEETINGS

A total of six (6) meetings were held during the year. Details of the composition of the Committee and attendance by each member at the Committee meetings are set out below:

Name of Director Status of Directorship Independent Attendance to Meetings

Dato’ Abdullah bin A. Rasol Independent Non-Executive Yes 6 out of 6 Chairman of the Committee Director 100%

Dato’ Mohamed Amin bin Haji Daud Senior Independent Yes 3 out of 6 Member of the Committee Non-Executive Director 50%

Dato’ Sri Khalid bin Mohamad Jiwa Independent Non-Executive Yes 5 out of 6 Member of the Committee Director 83.3%

Dato’ Dr. Hamdan bin Jaafar Non-Independent Non-Executive No 6 out of 6 Member of the Committee Director 100%

The Chief Executive Officer, the Head of Group Internal Audit and other members of senior management attend meetings of the Committee as and when required by the Committee Members. The Company Secretary is the Secretary of the Committee.

The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee. The Committee is authorised by the Board to obtain such outside legal or other independent professional advice and to secure the attendance of such outsiders with relevant experience and expertise as it may consider necessary. The Committee is able to convene meetings with external auditors, the internal auditors or both, excluding the attendance of other Directors and management, whenever deemed necessary.

RESPONSIBILITIES AND DUTIES

The Committee shall undertake the following responsibilities and duties:

1. To review with the external auditors, the audit plan, the scope of audit and their audit report.

2. To review the evaluation of the system of internal control with the internal and external auditors.

3. 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.

4. To review the internal audit plan and review the results of the internal audit plan or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function. 24 PASDEC | Annual Report 2011

Audit Committee Report (Cont’d)

5. To review the quarterly results and the year end financial statements of the Group prior to the approval by Boardof Directors, focusing particularly on:

• Changes in or implementation of major accounting policies;

• Significant and unusual events; and

• Compliance with accounting standards and other regulatory requirements.

6. To review the procedures of recurrent related party transactions undertaken by the Company and the Group.

7. To review related party transactions entered into by the Company and the Group to ensure that they are in the best interest of the Group; fair, reasonable and on normal commercial terms; and not detrimental to minority interest.

8. To review with the external auditors with regards to problems and reservations arising from their interim and final audits.

9. To recommend the nomination of a person or persons as external auditors.

10. To assess the performance of the external auditors and make recommendations to the Board of Directors on their appointment and removal.

11. To review any letter of resignation from the external auditors and any questions of resignation or dismissal.

12. To monitor the Group’s compliance to the Bursa Malaysia Listing Requirements (LR) and the Malaysian Code of Corporate Governance from assurances by the Company Secretary and the results of review by the external and internal audits.

13. To report to Bursa Malaysia, any breaches of the LR which have not been satisfactory resolved.

14. To undertake such other functions as may be agreed by the Committee and the Board of Directors.

ACTIVITIES DURING THE FINANCIAL YEAR

During the year, the Committee carried out its duties as set out in its terms of reference. The main activities undertaken by the Committee were as follows:

• Reviewed the internal and external auditors’ scope of work and annual audit plans for the Group.

• Reviewed management letters and the audit report of the external auditors.

• Reviewed the quarterly and annual reports of the Group to ensure compliance with the LR, applicable approved accounting standards and other statutory and regulatory requirements prior to recommending for approval by the Board of Directors.

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

• Reviewed the resource requirements of the Group Internal Audit function.

• Met the external auditors during the year in the absence of management. PASDEC | Annual Report 2011 25

Audit Committee Report (Cont’d)

INTERNAL AUDIT FUNCTION

The Group has in-house Group Internal Audit function whose responsibility is to evaluate and improve the effectiveness of risk management, control and governance processes. The Group Internal Audit function adopts a risk-based methodology in planning and conducting audits by focusing on key risks areas.

The terms of reference of the Group Internal Audit function are clearly spelt out in the approved Group Internal Audit Charter. The Group Internal Audit operates and functions in accordance with the principles of the Charter. The Group Internal Audit reports directly to the Committee, and is independent of the audited activities.

During the financial year, the Group Internal Audit function had undertaken the following activities:

• Prepared the annual audit plan for approval by the Committee.

• Performed risk based audit based on the annual audit plan, including follow-up of matters from previous audit reports.

• Issued internal audit reports to the management on risk management, control and governance issues identified from the risk based audits together with recommendations for improvements in these processes.

The total cost incurred for the Group Internal Audit function in respect of the financial year ended 31 December 2011 amounted to RM187,000 (2010: RM178,000). 26 PASDEC | Annual Report 2011 Statement on Internal Control

Internal controls are embedded in the Group’s operations as follows:

1. Clear organization structure with defined reporting lines.

2. Defined level of authorities and lines of responsibilities from operating units up to the Board level to ensure accountabilities for risk management and control activities.

3. Review and award of contracts by Tender Committee. A minimum of three quotations is called for and tenders are awarded based on criteria such as pricing, quality, track record and speed of delivery.

4. Clearly documented standard operating procedures manuals which set out policies and procedures for day to day operations to be carried out. Regular reviews are performed to ensure that documentation remains current and relevant.

5. Periodic reporting of actual results and review against the budget.

6. A detailed budgeting process for each business which is approved by both operating level and the Board.

7. Regular information provided by Management to the Board and its committees, covering financial performance and key performance indicators including staff utilization and cashflow.

8. Periodic examination of business processes and the state of internal control by the internal audit function. Reports on the reviews carried out by the internal audit function are submitted on a regular basis to the Audit Committee.

The Board acknowledges its responsibility of ensuring the effectiveness and adequacy of the internal control system to cover risk management, financial, operational and compliance controls within the Group. The Board shall also periodically review all internal control mechanism as to ensure its strengths are being maintained and weaknesses are being remedied. The Board, however, does not regularly review the internal control system of its associated companies, as the Board does not have any direct control over their operations. PASDEC | Annual Report 2011 27 South Africa 28 PASDEC | Annual Report 2011 Corporate | Human Resource Events 2011

1 Staff and Management Gathering at 3rd Floor, EDC Seminar Hall, Kompleks Teruntum, Kuantan.

3-4 Official handover ceremony of “Utusan Malaysia” Newspaper Sponsorship at SK Paya Pulai, Temerloh and 7 In-house Human Capital SMK Kerdau, Temerloh. Development Programme 18 Participation in an official visit by Ustaz Zuridan Daud to Kampuchea organised by of University of Malaysia REHDA Pahang. Pahang. 19 PASDEC’s Veteran Team 10 “Breakfast with CEO 2011” won the championship in programme kick-off. PASDEC’s Cup Football Tournament co-organised 16 Handover of keys to with Kuantan District Football 32 buyers of PASDEC Association. Perdana Housing Project in Raub.

JANUARY FEBRUARY MARCH

31 Surveillance Audit MS ISO 9001:2008 by SIRIM QAS 11 In-house Human Capital 26-27 Emotional Spiritual Quotient International. Development Programme (ESQ) “Mission Statement & by Ustaz Rujhan Ghazali, a Character Building” Training freelance facilitator. for selected staff at Sempurna Resort, Kuantan. 16 Official handover ceremony of “Utusan Malaysia” 29-30 In-house “Selling Skills that Newspaper Sponsorship at Sells” seminar conducted SKC Semambu, Kuantan. by a consultant from GEM Asia Sdn Bhd at 3rd Floor, 16 Luncheon with the Chinese EDC Seminar Hall, Kompleks Media in conjunction Teruntum, Kuantan. with Chinese New Year Celebration at The Zenith Hotel, Kuantan.

26 PASDEC’s friendly badminton match with Maktab Sains Mara Muadzam Shah, Pekan. PASDEC | Annual Report 2011 29 Corporate | Human Resource Events 2011 (Cont’d)

17 In-house Human Capital Development Programme by Ustaz Abdullah Mahmud, a freelance facilitator.

21 15th Annual General Meeting of PASDEC Holdings Berhad at Meranti 1, Hyatt Regency 1-2 Closed Bowling Tournament Kuantan Resort, Kuantan. organised by the Kelab 9-10 Handover of keys to 104 buyers Keluarga of PKNP/Pasdec of Single Storey Terrace, 26 Community Programme Group at Mega Lanes, Kuantan. Double Storey Terrace, 1 ½ with Balok Perdana Housing Storey Terrace of Bandar Community at Taman 11-12 In-house “Improving Self- Putra Package 7A3 and 7A4 at Perumahan Balok Perdana, Effectiveness 2” course Bandar Putra Housing Project, Kuantan. conducted by a consultant Tg. Lumpur. 28-30 In-House Training for Internal from Final Spot Sdn Bhd at Audit MS ISO 9001:2008 at 3rd Floor, EDC Seminar Hall, 10 A visit from Chinese investors Sempurna Resort, Kuantan. Kompleks Teruntum, Kuantan. to PASDEC’s Headquarters.

11-12 In-house “Improving Self- 30 The Groundbreaking Ceremony 15-17 Participation in MAPEX I Effectiveness 2” course of Pahang Specialist Hospital, Exhibition 2011 at East Coast conducted by a consultant a joint venture with KPJ at Mall, Kuantan. from Final Spot Sdn Bhd. Tanjung Lumpur Project Site, Kuantan. APRIL MAY JUNE

13-16 Participation in the Teacher’s Day Festival Sales Exhibition 2011 at Waterfront Kuching, Sarawak.

15 PASDEC’s Friendly Golf Tournament between PASDEC with various Pahang Government Departments/ Agencies at Maran Hill Golf Resort, Maran.

23-27 Participation in “Pulon Sakan” EXPO (PERNAMA) Sales Exhibition at Kem Batu 10, Kuantan.

25-26 In-house “Improving Self- Effectiveness 3” course conducted by a consultant from Final Spot Sdn Bhd. 30 PASDEC | Annual Report 2011 Corporate | Human Resource Events 2011 (Cont’d)

4-5 5 Years Business Plan Brainstorming Session for the Senior Managers 2011 at Swiss Garden Spa & Resort, Kuantan.

16 Participation in the BN Youth Fair Programme Exhibition at Sultan Ahmad Shah Convention Hall, Kuantan.

18 2nd Staff and Management 16 Participation in Merdeka Day Gathering at 3rd Floor, EDC and Malaysia Day Parade at Seminar Hall, Kompleks Padang MPK 1, Kuantan. Teruntum, Kuantan. 24 “Hari Raya Aidilitri” Open House 20 Handover of Braille Al-Quran 2011 at Bandar Putra, Tanjung to Sekolah Kebangsaan Indera Lumpur, Kuantan. Mahkota, Sekolah Menengah 30 Memorandum of Understanding Kebangsaan Tengku Panglima 19 “Gagasan 1Malaysia” talk for (MOU) Signing Ceremony Perang Tengku Muhammad, the staff in conjunction with the between PASDEC and UDA Indera Mahkota and Taman Merdeka month at 3rd Floor, Holdings Berhad at The Ritz- Harapan Training Centre for EDC Seminar Hall, Kompleks Carlton Hotel, Kuala Lumpur. the Blind, Temerloh. Teruntum, Kuantan.

JULY AUGUST SEPTEMBER

29 Handover ceremony of 22 Handover of keys to 36 buyers PASDEC’s contribution to the of Bandar Putra Package 7A4 selected Surau and Mosques Housing Project at Bandar for the month of Ramadhan Putra, Kuantan. at Berjaya Mega Mall Kuantan for Aidilfitri Sales Carnival 22 Handover of keys to 47 buyers Programme 2011. of Balok Perdana Zon 3A1 Housing Project at Balok Perdana Project Site, Kuantan.

25 Breaking of fast at the month of Ramadhan for the staff with the YAB Pahang Chief Minister at his official residence. PASDEC | Annual Report 2011 31 Corporate | Human Resource Events 2011 (Cont’d)

3 Handover Ceremony of Royal Malaysian Customs (KDRM) Building Complex at Temerloh. 1-2 Re-certification Audit MS ISO 15 PASDEC’s Family Day 2011 at 9001:2008 by SIRIM QAS Swiss Garden Spa & Resort, International. Kuantan. 26 Closed Futsal Tournament 28-30 Participation in MAPEX III 2011 organised by Kelab Exhibition at Kuantan Parade, Keluarga of PKNP/PASDEC Kuantan. Group at Plaza Futsal, Kg. Tiram, Kuantan.

OCTOBER NOVEMBER DECEMBER

2-10 Internal Quality Audit (IQA) 2011- MS ISO 9001:2008

11-13 PASDEC’s Annual Sales Carnival 2011 “Ceria Bersama PASDEC” at East Coast Mall, Kuantan.

12 Closed Badminton Tournament 2011 organised by Kelab Keluarga of PKNP/PASDEC Group at Pahang Badminton Hall, Bandar Indera Mahkota, Kuantan.

19 Community Programme with Pasdec Damansara community at Taman Perumahan PASDEC Damansara, Kuantan. 32 PASDEC | Annual Report 2011 PASDEC | Annual Report 2011 33 Analysis of Shareholdings As At 8 May 2012

Authorised Share Capital : RM500,000,000 Issued and Paid-up Capital : RM205,978,000 Class of Shares : Ordinary Shares of RM1.00 each Voting Rights : One vote per shareholder on a show of hands or one vote per ordinary share on a poll

Analysis Of Shareholdings

Size Of Shareholdings No. Of Shareholders % No. Of Shares %

1 - 99 6 0.13 170 0.00 100 - 1000 1,750 37.10 1,726,437 0.84 1001 - 10000 2,281 48.36 9,879,110 4.80 10001 - 100000 584 12.38 17,868,933 8.68 100001 – 10,298,899 (*) 93 1.97 41,214,300 20.00 10,298,900 and above (**) 3 0.06 135,289,050 65.68

Total 4,717 100.00 205,978,000 100.00

Remarks:

* Less than 5% of issued holdings ** 5% and above of issued holdings

Directors’ Shareholdings

No Name Direct Indirect No. Of Shares Held % No. Of Shares Held %

1. Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob - - - -

2. Dato’ Abdul Ghani bin L. Sulaiman - - - -

3. Dato’ Haji Lias bin Mohd Noor - - - -

4. Dato’ Dr. Hamdan bin Jaafar - - - -

5. Dato’ Haji Mohamad Nor bin Ali - - - -

6. Dato’ Mohamed Amin bin Haji Daud - - - -

7. Dato’ Sri Khalid bin Mohamad Jiwa - - - -

8. Dato’ Abdullah bin A. Rasol - - - - 34 PASDEC | Annual Report 2011

Analysis of Shareholdings (Cont’d) As At 8 May 2012

Substantial Shareholders

Name Direct Indirect No. Of Shares Held % No. Of Shares Held %

Perbadanan Kemajuan Negeri Pahang 106,395,650 51.65 - - Ciri Ehsan Sdn. Bhd. 18,563,800 9.01 - - Pembinaan Sri Jati Sdn. Berhad 15,806,600 7.67 - -

Thirty Largest Shareholders (Without Aggregating Securities From Different Securities Accounts Belonging To The Same Person)

No. Name No. Of Shares %

1. Bank Kerjasama Rakyat Malaysia Berhad 100,918,650 48.99 - Perbadanan Kemajuan Negeri Pahang 2. Ciri Ehsan Sdn. Bhd. 18,563,800 9.01 3. HLG Nominee (Tempatan) Sdn. Bhd. 15,806,600 7.67 - Pembinaan Sri Jati Sdn. Berhad 4. Perbadanan Kemajuan Negeri Pahang 4,300,000 2.09 5. Chin Kian Fong 2,553,600 1.24 6. Yeoh Kean Hua 2,140,000 1.04 7. Poo Choo @ Ong Poo Choi 1,709,800 0.83 8. Alliancegroup Nominees (Tempatan) Sdn. Bhd. 1,420,000 0.69 - Tan Kian Chuan 9. Perbadanan Kemajuan Negeri Pahang 1,177,000 0.57 10. Ciptaan Meriang Sdn. Bhd. 1,060,000 0.51 11. Chin Kee Meng 1,039,600 0.50 12. Choong Yean Yaw 1,035,800 0.50 13. Lee Chee Heang 1,030,000 0.50 14. Chuah Chew Hing 1,015,100 0.49 15. FEAB Properties Sdn. Bhd. 1,000,000 0.49 16. Wong Moi@Wong Yoon Lan 906,000 0.44 17. Zenith Aim Sdn. Bhd. 867,900 0.42 18. Chin Sin Lin 795,300 0.39 19. Ooi Chai Tiew 672,200 0.33 20. Kenanga Nominees (Tempatan) Sdn. Bhd. 671,800 0.33 - Chin Kiam Hsung 21. Affin Nominees (Tempatan) Sdn. Bhd. 664,400 0.32 - Tee Kim Tee @ Tee Ching Tee 22. OSK Nominees (Tempatan) Sdn. Berhad 655,000 0.32 - Chin Kiam Hsung 23. Tan Swee Heng 539,000 0.26 24. Tew Kim Thin 520,000 0.25 25. Tee Sin Yee 501,300 0.24 26. OSK Nominees (Tempatan) Sdn. Berhad 480,300 0.23 - Kua Jing Kea @ Kua Nee Nee 27. Chuang Show Chuan 450,400 0.22 28. Tee Kian Heng 428,000 0.21 29. Tee Wee Seng 418,000 0.20 30. TA Nominees (Tempatan) Sdn. Bhd. 413,800 0.20 - Chuang Nee Wang Kim Lien

Total 163,753,350 79.50 PASDEC | Annual Report 2011 35 List of Properties As At 31 December 2011

Decription of Property/ NB Value (RM) Year of No Property Titles No Lot/PT No Tenure Existing Use Area (Ac) @ 31.12.2011 Acquisition KUANTAN 1 Kuantan Waterfront, PN 5601 Lot 38 Sek 12 L/hold 99 yrs Commercial 2.168 2,034,466.00 1996 Bandar Kuantan (23.04.2072) 2 Pasdec Pesona, PN 7736 Lot 108560 L/hold 99 yrs Vacant Land/ 19.480 3,761,539.00 1996 Paya Tiga, Mukim (18.04.2105) Residential Kuala Kuantan 3 Kuantan Piazza, HSM65652 PT 83065 L/hold 99 yrs Vacant Land/ 5.930 1,816,016.00 Tg Lumpur, Mukim (17.04.2106) Commercial Kuala Kuantan 4 Harbour Park, 3/3/24313 L/hold 99 yrs Vacant Land/ 164.000 10,778,230.00 1997 Tg Gelang Industrial Area Industry 5 Bukit Tenggek, HSD15538 PT 992 L/hold 99 yrs Vacant Land/ 49.420 425,849.00 1996 Mukim Ulu Kuantan (03.06.2095) Residential 6 Astana Villa, HSM PT L/hold 99 yrs Vacant Land/ 16.000 7,641,868.00 1998 Bandar Indera Mahkota (22.05.2092) Residential 7 Astana Hotel, HSM28692 PT 30731 L/hold 99 yrs Vacant Land 4.930 1998 Bandar Indera Mahkota (22.05.2092) 8 Astana Maintenance Center, HSM28693 PT 30733 L/hold 99 yrs Vacant Land 2.510 1998 Bandar Indera Mahkota (22.05.2092) 9 Pasdec Avenue, Sektor 3, HSD34943 PT 102786 L/hold 99 yrs Vacant Land/ 28.961 11,171,238.00 2007 Bandar Indera Mahkota (30.05.2096) Residential 10 Bukit Perdana, PN7220 Lot 105661 L/hold 99 yrs Vacant Land/ 34.036 5,172,806.00 1998 Bandar Indera Mahkota (02.01.2104) Residential 11 Mahkota Idaman (7 Lots), HSM44389 - PT 55557 L/hold 99 yrs Commercial 0.300 1,352,000.00 1996 Sector 3, BIM (24.05.2097) Building 12 Mahkota Perdana III, HSD24695 PT 78434 L/hold 99 yrs Vacant Land/ 2.610 1996 Sector 3, BIM (29.04.2102) Residential 13 Apartment Medan L/hold 99 yrs Apartment 1,436,578.00 1996 Warisan (12 units) (12.04.2086) 14 Kuantan Tembeling Resort PN4075 Lot 9 L/hold 99 yrs Apartment 13.210 7,576,090.00 1992 (12.12.2092) Bandar Putra, Mukim Kuala Kuantan 15 Bandar Putra -Condo HSD28947 PT 90709 Freehold Vacant Land/ 4.330 22,319,973.00 2003 Residential 16 Bandar Putra (1226) HSD29913 PT 91675 Freehold Vacant Land/ 24.590 Commercial 17 Bandar Putra (1221) HSD29908 PT 91670 Freehold Vacant Land/ 110.720 Agriculture 18 Bandar Putra (1228) HSD29915 PT 91677 Freehold Vacant Land/ 49.780 Agriculture 19 Bandar Putra (SD) Freehold Vacant Land/ 32.277 Residential Bandar Damansara, Mukim Sungai Karang 20 Damansara Zon 2A2 Fasa 3 Freehold Vacant Land/ 4.110 30,963,663.00 2005 Residential 21 Damansara Zon 2A2 Fasa 4 Freehold Vacant Land/ 13.410 Residential 22 Block 14 Freehold Vacant Land/ 32.789 Agriculture 23 Block 15 Freehold Vacant Land/ 20.252 Industrial 24 Block 38 Freehold Vacant Land/ 10.000 Agriculture 25 Block 40 Freehold Vacant Land/ 13.304 Agriculture 26 Block 46 Freehold Vacant Land/ 17.215 Agriculture 36 PASDEC | Annual Report 2011

List of Properties (Cont’d) As At 31 December 2011

Decription of Property/ NB Value (RM) Year of No Property Titles No Lot/PT No Tenure Existing Use Area (Ac) @ 31.12.2011 Acquisition Balok Perdana, Mukim Sungai Karang 27 Balok Perdana Zon 2AF2 L/hold 99 yrs Vacant Land/ 2.940 8,789,168.00 1996 (33 Lots) (16.01.99) Commercial 28 Balok Perdana Zon 2AF3 L/hold 99 yrs Vacant Land/ 4.667 1996 (56 Lots) (16.01.99) Commercial 29 Balok Perdana Zon 2AF4 L/hold 99 yrs Vacant Land/ 6.380 1996 (73 Lots) (16.01.99) Commercial 30 Balok Perdana Zon 2B L/hold 99 yrs Vacant Land/ 33.186 1996 (16.01.99) Commercial 31 Balok Perdana Zon 2C L/hold 99 yrs Vacant Land/ 2.594 1996 (16.01.99) Commercial 32 Balok Perdana Zon 3AF2 L/hold 99 yrs Land/ Residential 5.590 1996 (42 Lots) (16.01.99) 33 Balok Perdana Zon 3AF3 L/hold 99 yrs Land/ Residential 2.250 1996 (26 Lots) (16.01.99) 34 Balok Perdana Zon 3AF4 L/hold 99 yrs Land/ Residential 3.550 1996 (34 Lots) (16.01.99) 35 Balok Perdana Zon 3AF5 L/hold 99 yrs Land/ Residential 2.470 1996 (37 Lots) (16.01.99) 36 Balok Perdana Zon 3AF6 L/hold 99 yrs Land/ Residential 7.854 1996 (56 Lots) (16.01.99) 37 Balok Perdana Zon 3AF7 L/hold 99 yrs Vacant Land/ 6.724 1996 (16.01.99) Residential 38 Balok Perdana Zon 3C2 L/hold 99 yrs Vacant Land/ 1.630 1996 (16.01.99) Residential 39 Balok Perdana Zon 4 L/hold 99 yrs Vacant Land/ 14.600 1996 (16.01.99) Residential 40 Balok Perdana Zon 5 L/hold 99 yrs Vacant Land/ 14.522 1996 (16.01.99) Residential 41 Balok Perdana Zon 6 L/hold 99 yrs Vacant Land/ 33.200 1996 (16.01.99) Residential Bandar Baru Chendor, Mkm Sungai Karang 42 Chendor Utama 1 PN 11523 Lot 27002 L/hold 99 yrs Vacant Land/ 5.956 3,693,658.00 1997 (30.09.2100) Commercial 43 Chendor Utama 2 PN 17358 Lot 30406 L/hold 99 yrs Vacant Land/ 16.375 1997 (30.09.2100) Commercial 44 Chendor Utama 3 PN17359 Lot 30407 L/hold 99 yrs Vacant Land/ 77.416 1997 (30.09.2100) Residential 45 Chendor Utama 4 PN17360 Lot 30408 L/hold 99 yrs Vacant Land/ 60.737 1997 (30.09.2100) Commercial Kompleks Teruntum, Bandar Kuantan 46 Lot 2.15, 2.16, 3.13-3.15, PN 398 Lot 146 Sek 18 L/hold 99 yrs Building/ 1,403,717.00 1991 G 20 (08.06.2075) Commercial 47 Lot 2.20-2.23 1991 PEKAN 48 Commercial Peramu Pekan PN10540 Lot 10938 3.302 665,499.00 49 Commercial Peramu Pekan HSD4389 - PT12189 - 3.108 ROMPIN 50 Kampung Sembayan 1, HSD3329 PT2545 L/hold 99 yrs Vacant Land/ 391.360 187,556.00 1996 Mukim Rompin (15.01.2094) Agricultural 51 Kampung Sembayan 2, HSD3330 PT2546 L/hold 99 yrs Vacant Land/ 468.930 1996 Mukim Rompin (15.01.2094) Agricultural 52 Rompin Permai (20 Lots) Freehold Vacant Land/ 0.570 2,298,160.00 1996 Residential MARAN 53 Kuari Kampung Kuala Sentul, HSD605 PT8139 L/hold 21 yrs Quarry 17.170 91,673.00 1996 Mukim Chenor 14.08.2015) 54 PSK Land, Mukim Chenor, HSD838 PT21297 Vacant Land/ 28.071 1,000,000.00 2011 Maran Residential PASDEC | Annual Report 2011 37

List of Properties (Cont’d) As At 31 December 2011

Decription of Property/ NB Value (RM) Year of No Property Titles No Lot/PT No Tenure Existing Use Area (Ac) @ 31.12.2011 Acquisition TEMERLUH 55 Kimdec 1, Mukim Mentakab Freehold Vacant Land/ 7.910 25,230,504.00 2011 (29 Lots) Commercial 56 Kimdec 2, Mukim Mentakab GRN5979 Lot1207 Freehold Vacant Land/ 25.532 2011 Residential 57 Kimdec 3, Mukim Mentakab GRN7229 Lot1131 Freehold Vacant Land/ 30.375 2011 Residential 58 Kimdec 4, Mukim Mentakab GRN 7325 Lot1208 Freehold Vacant Land/ 25.250 2011 Residential 59 Kimdec 5, Mukim Mentakab HSD PT Freehold Vacant Land/ 4.459 2011 (99 Lots) Residential JERANTUT 60 Kuala Tembeling 1, HSD391 PT667 L/hold 99 yrs Vacant Land/ 12.500 316,372.00 1996 Mukim Kuala Tembeling (11.03.2076) Residential 61 Kuala Tembeling 2, HSD392 PT668 L/hold 99 yrs Vacant Land/ 79.880 1996 Mukim Kuala Tembeling (11.03.2076) Residential 62 Kuala Tembeling 3, HSD393 PT669 L/hold 99 yrs Vacant Land/ 4.000 1996 Mukim Kuala Tembeling (11.03.2076) Residential 63 Kuala Tembeling 4, HSD394 PT670 L/hold 99 yrs Vacant Land/ 19.000 1996 Mukim Kuala Tembeling (11.03.2076) Residential BENTONG 64 Bukit Tinggi HSD14686 PT18197 L/hold 99 yrs Vacant Land/ 90.490 35,636,261.00 (01.09.2101) Residential RAUB 65 Cheroh Perdana 3 (22 Lots) HSD 3143 PT 9367 L/hold 99 yrs Vacant Land/ 3.750 1996 (19.04.2086) Residential 66 Quarry Land Kg. Besu HSD10608 Lot 1595 L/hold 21 yrs Industrial/ 19.970 191,493.00 1996 (11.07.2023) Quarry CAMERON HIGHLAND 67 Lembah Ruil F2 113.390 183,903.00 2011 SELANGOR 68 Kota Warisan, Sepang Freehold Bungalow Lots 4.660 4,698,263.00 2006 (13 lots) TOTAL 2,332.650 190,836,543.00 Financial Statements

Directors’ Report 39 Statements Of Financial Position 46

Statement By Directors 42 Statements Of Changes In Equity 48

Statutory Declaration 42 Statements Of Cash Flows 51

Independent Auditors’ Report 43 Notes To The Financial Statements 53

Statements Of Comprehensive Income 45 PASDEC | Annual Report 2011 39 Directors’ Report

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2011.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding and provision of management services to the subsidiaries.

The principal activities of the subsidiaries are described in Note 16 to the financial statements.

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

RESULTS

Group Company RM RM

Profit net of tax 466,065 9,148,738

Profit attributable to: Owners of the parent (519,310) 9,148,738 Non-controlling interests 985,375 -

466,065 9,148,738

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

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

DIVIDENDS

The amounts of dividends paid by the Company since 31 December 2010 were as follows:

In respect of the financial year ended 31 December 2010 as reported in thedirectors’ report of that year:

Final tax exempt (single-tier) dividend of 2%, on 205,978,000 ordinary shares declared on 27 April 2011 4,119,560

The directors do not recommend the payment of any dividend for the financial year ended 31 December 2011.

40 PASDEC | Annual Report 2011

Directors’ Report (Cont’d)

DIRECTORS

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

Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob Dato’ Abdul Ghani bin L. Sulaiman Dato’ Haji Lias bin Mohd. Noor Dato’ Dr. Hamdan bin Jaafar Dato’ Abdullah @ Mohamad Nor bin Ali Dato’ Mohamed Amin bin Haji Daud Dato’ Sri Khalid bin Mohamad Jiwa Dato’ Abdullah bin A. Rasol

DIRECTORS’ BENEFITS

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

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

DIRECTORS’ INTEREST

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

EXCHANGEABLE BONDS

On 15 November 2006, the Company issued RM150 million Rainbow Exchangeable Bonds (“REBs”) at 100% of its nominal value comprising two (2) series as follows:-

(a) RM15 million REBs (“Series I”) exchangeable into 4,792,333 ordinary shares of Road Builder (M) Holdings Berhad issued for a maturity of 5 years from the issue date; and

(b) RM135 million REBs (“Series II”) exchangeable into 40,785,500 ordinary shares of YTL Cement Berhad issued for a maturity of 7 years from the issue date.

Series I REBs have been fully exchanged in prior years. During the year, RM20 million of Series II REBs have been exchanged. Details of the REBs are disclosed in Note 27 to the financial statements.

OTHER STATUTORY INFORMATION

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

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

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise. PASDEC | Annual Report 2011 41

Directors’ Report (Cont’d)

OTHER STATUTORY INFORMATION (CONT’D.)

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

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

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

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

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

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

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

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year other than disclosed in Note 26(c) to the financial statements.

(f) In the opinion of the directors:

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

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

SIGNIFICANT EVENTS

The significant events during the year are as disclosed in Note 38 to the financial statements.

AUDITORS

The auditors, Hanafiah Raslan & Mohamad, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors dated 29 May 2012.

Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob Dato’ Abdul Ghani bin L. Sulaiman 42 PASDEC | Annual Report 2011 Statement by Directors Pursuant To Section 169 (15) Of The Companies Act 1965

We, Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob and Dato’ Abdul Ghani bin L. Sulaiman, being two of the directors of Pasdec Holdings Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 45 to 120 are drawn up in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2011 and of its financial performance and cash flows for the year then ended.

The information set out in Note 39 to the financial statements have been prepared in accordance with the Guidance of Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the directors dated 29 May 2012.

Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob Dato’ Abdul Ghani bin L. Sulaiman

Statutory Declaration Pursuant to Section 169 (16) of the Companies Act 1965

I, Goh Song Han, being the officer primarily responsible for the financial management of Pasdec Holdings Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 45 to 120 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared the abovenamed Goh Song Han at Kuantan in the state of Pahang Darul Makmur on 29 May 2012. Goh Song Han

Before me, PASDEC | Annual Report 2011 43 Independent Auditors’ Report To The Members Of Pasdec Holdings Berhad (Incorporated In Malaysia)

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Pasdec Holdings Berhad, which comprise the statements of financial position as at 31 December 2011, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 45 to 120.

Directors’ responsibility for the financial statements

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

Auditors’ responsibility

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

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

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

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2011 and of their financial performance and cash flows for the year then ended.

44 PASDEC | Annual Report 2011

Independent Auditors’ Report (Cont’d) To The Members Of Pasdec Holdings Berhad (Incorporated In Malaysia)

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 16 to the financial statements, being financial statements that have been included in the consolidated financial statements.

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

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

OTHER MATTERS

The supplementary information set out in Note 39 on page 121 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad

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.

Hanafiah Raslan & Mohamad Sandra Segaran a/l Muniandy@Krishnan AF: 0002 No. 2882/01/13(J) Chartered Accountants Chartered Accountant

Kuantan, Pahang, Malaysia 29 May 2012 PASDEC | Annual Report 2011 45 Statements of Comprehensive Income For The Financial Year Ended 31 December 2011

Group Company Note 2011 2010 2011 2010 RM RM RM RM

Revenue 4 97,263,760 85,143,352 12,025,920 12,028,056 Cost of sales 5 (65,980,225) (60,425,412) - -

Gross profit 31,283,535 24,717,940 12,025,920 12,028,056

Other items of income: Interest income 741,983 319,070 19,224,107 19,593,163 Other income 20,833,434 7,498,842 7,863,924 132,251

Other items of expense: Administrative expenses (22,353,949) (9,670,619) (6,483,941) (5,790,979) Other expenses (23,350,517) (9,856,632) (19,695,419) (4,008,481) Finance costs 6 (6,442,240) (6,114,003) (4,807,681) (5,455,789)

Share of profit/(loss) of associates 92,252 (67,849) - -

Profit before tax 7 804,498 6,826,749 8,126,910 16,498,221

Income tax (expense)/benefit 10 (338,433) (2,350,653) 1,021,828 (2,561,199)

Profit net of tax 466,065 4,476,096 9,148,738 13,937,022

Other comprehensive (loss)/income: Net loss on available-for-sale financial assets - Loss on fair value changes (2,759,328) (8,039,922) - - - Transfer to profit or loss upon disposal 7(i) (9,106,441) (3,190,544) - - Foreign currency translation (3,131,125) - - -

Other comprehensive (loss)/income for the year, net of tax (14,996,894) (11,230,466) - -

Total comprehensive (loss)/income for the year (14,530,829) (6,754,370) 9,148,738 13,937,022

(Loss)/profit attributable to: Owners of the parent (519,310) 1,043,766 9,148,738 13,937,022 Non-controlling interests 985,375 3,432,330 - -

466,065 4,476,096 9,148,738 13,937,022

Total comprehensive (loss)/income attributable to: Owners of the parent (14,973,215) (10,186,700) 9,148,738 13,937,022 Non-controlling interests 442,386 3,432,330 - -

(14,530,829) (6,754,370) 9,148,738 13,937,022

Earnings per share attributable to equity holders of the Company (sen): Basic (loss)/earnings per share 11 (0.25) 0.51

The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 46 PASDEC | Annual Report 2011 Statements of Financial Position As At 31 December 2011

Group Company Note 2011 2010 2011 2010 RM RM RM RM

Assets Non-current assets Property, plant and equipment 12 15,744,920 13,123,227 810,023 377,657 Land held for property development 13(a) 141,194,472 142,164,607 - - Investment properties 14 10,049,188 7,172,754 - - Investments in subsidiaries 16 - - 66,531,233 67,563,097 Investments in associates 17 20,081,507 3,200,077 - - Marketable securities 22 63,376,719 86,136,047 - - Deferred tax assets 31 11,007,820 2,005,827 409,979 276,527 Intangible asset 15 35,732,463 808,242 - -

297,187,089 254,610,781 67,751,235 68,217,281

Current assets Property development costs 13(b) 89,510,841 132,546,926 - - Inventories 18 77,370,736 22,789,831 - - Trade and other receivables 19 64,070,256 84,405,964 221,014,078 220,214,692 Other current assets 20 932,498 552,317 247,809 185,008 Cash and bank balances 23 33,002,510 22,538,481 11,208,305 5,953,496

264,886,841 262,833,519 232,470,192 226,353,196

Total assets 562,073,930 517,444,300 300,221,427 294,570,477

Equity and liabilities

Current liabilities Retirement benefit obligations 24 315,507 671,153 66,547 371,535 Loans and borrowings 25 43,238,316 33,178,852 80,295 64,275 Trade and other payables 28 74,366,553 36,375,585 4,143,510 3,097,123 Tax payable 136,704 3,773,388 - 3,598,376

118,057,080 73,998,978 4,290,352 7,131,309

Net current assets 146,829,761 188,834,541 228,179,840 219,221,887

PASDEC | Annual Report 2011 47

Statements of Financial Position (Cont’d) As At 31 December 2011

Group Company 2011 2010 2011 2010 RM RM RM RM

Non-current liabilities Retirement benefit obligations 24 3,584,605 3,001,159 713,272 - Loans and borrowings 25 73,432,242 56,246,043 49,298,937 46,549,480

77,016,847 59,247,202 50,012,209 46,549,480

Total liabilities 195,073,927 133,246,180 54,302,561 53,680,789

Equity attributable to owners of the parent Share capital 29 205,978,000 205,978,000 205,978,000 205,978,000 Share premium 43,007,997 43,007,997 45,515,750 45,515,750 Other reserves 30 22,720,978 37,174,883 - - Retained earnings/ (Accumulated losses) 93,398,370 98,037,240 (5,574,884) (10,604,062)

365,105,345 384,198,120 245,918,866 240,889,688 Non-controlling interests 1,894,658 - - -

Total equity 367,000,003 384,198,120 245,918,866 240,889,688

Total equity and liabilities 562,073,930 517,444,300 300,221,427 294,570,477

The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 48 PASDEC | Annual Report 2011 Statements of Changes in Equity For The Financial Year Ended 31 December 2011

Attributable to owners of the parent Non-distributable Distributable Non-distributable Total equity Premium attributable Foreign paid on to owners Total Fair value currency acquisition Non- Total of the Share Share Retained other adjustment translation of minority controlling Note equity parent capital premium earnings reserves reserve reserve interests interests 2011 RM RM RM RM RM RM RM RM RM RM

Group

Opening balance at 1 January 2011 384,198,120 384,198,120 205,978,000 43,007,997 98,037,240 37,174,883 47,073,154 - (9,898,271) -

Total comprehensive income (14,530,829) (14,973,215) - - (519,310) (14,453,905) (11,865,769) (2,588,136) - 442,386

Transactions with owners Net effect on acquisition of subsidiaries 16 1,452,272 ------1,452,272 Dividends on ordinary shares 36 (4,119,560) (4,119,560) - - (4,119,560) - - - - -

Total transactions with owners (2,667,288) (4,119,560) - - (4,119,560) - - - - 1,452,272

Closing balance at 31 December 2011 367,000,003 365,105,345 205,978,000 43,007,997 93,398,370 22,720,978 35,207,385 ( 2,588,136) (9,898,271) 1,894,658 PASDEC | Annual Report 2011 49

Statements of Changes in Equity (Cont’d) For The Financial Year Ended 31 December 2011

Attributable to owners of the parent Non-distributable Distributable Non-distributable Total equity Premium attributable paid on to owners Total Fair value acquisition Non- Total of the Share Share Retained other adjustment of minority controlling Note equity parent capital premium earnings reserves reserve interests interests 2010 RM RM RM RM RM RM RM RM RM

Group

Opening balance at 1 January 2010 350,267,684 345,979,471 205,978,000 43,007,997 96,993,474 - - - 4,288,213 Effects of adopting FRS 139 58,303,620 58,303,620 - - - 58,303,620 58,303,620 - -

408,571,304 404,283,091 205,978,000 43,007,997 96,993,474 58,303,620 58,303,620 - 4,288,213

Total comprehensive income (6,754,370) (10,186,700) - - 1,043,766 (11,230,466) (11,230,466) - 3,432,330

Transactions with owners Acquisition of non-controlling interests 16 (7,720,543) ------(7,720,543) Premium paid on acquisition of minority interests 16 (9,898,271) (9,898,271) - - - (9,898,271) - (9,898,271) -

Total transactions with owners (17,618,814) (9,898,271) - - - (9,898,271) - (9,898,271) (7,720,543)

Closing balance at 31 December 2010 384,198,120 384,198,120 205,978,000 43,007,997 98,037,240 37,174,883 47,073,154 (9,898,271) -

The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 50 PASDEC | Annual Report 2011

Statements of Changes in Equity (Cont’d) For The Financial Year Ended 31 December 2011

Non-Distributable Distributable Profit/ Share Share (Accumulated capital premium losses) Total RM RM RM RM

Company

Opening balance at 1 January 2011 205,978,000 45,515,750 (10,604,062) 240,889,688

Total comprehensive income - - 9,148,738 9,148,738 Dividends on ordinary shares (Note 36) - - (4,119,560) (4,119,560)

Closing balance at 31 December 2011 205,978,000 45,515,750 (5,574,884) 245,918,866

Opening balance at 1 January 2010 205,978,000 45,515,750 (24,541,084) 226,952,666

Total comprehensive income - - 13,937,022 13,937,022

Closing balance at 31 December 2010 205,978,000 45,515,750 (10,604,062) 240,889,688

The accompanying accounting policies and explanatory notes form an integral part of the financial statements. PASDEC | Annual Report 2011 51 Statements of Cash Flows For The Financial Year Ended 31 December 2011

Group Company Note 2011 2010 2011 2010 RM RM RM RM

Operating activities

Profit before taxation 804,498 6,826,749 8,126,910 16,498,221 Adjustments for:

Reversal of allowance for impairment of trade and other receivables 7 (408,353) (432,202) - - Loss on disposal of subsidiary 7 464,477 - - - Depreciation of property, plant and equipment 7 1,501,296 1,249,622 109,174 45,911 Depreciation of investment properties 7 233,992 171,783 - - Gain on disposal of investments 7 (9,106,441) (3,190,544) - - Provision for liquidated ascertained damages 7 3,357,025 461,586 - - Reversal of provision for REB redemption premium and coupon 7 (7,280,628) - (7,280,628) - Gain on disposal of property, plant and equipment 7 (56,311) (2,873,662) - - Impairment loss on inventories 7 595,678 191,912 - - Reversal of impairment loss on inventories - (143,033) - - Impairment loss on investments in subsidiaries - - 1,031,864 - Impairment loss of intangible assets 7 808,242 - - - Impairment loss of property development costs 7 23,063 241,244 - - Share of (profit)/loss of associates (92,252) 67,849 - - Provision for retirement benefits 542,081 636,918 408,284 371,535 Impairment loss on receivables 7 93,283 1,848,692 13,574,864 107,379 Interest expense 6 6,442,240 6,114,003 4,807,681 5,455,789 Interest income 7 (741,983) (319,070) (19,224,107) (19,593,163) Dividend income (2,377,642) (3,233,376) - -

Total adjustments (6,002,233) 791,722 (6,572,868) (13,612,549) Operating cash flows before changes in working capital (5,197,735) 7,618,471 1,554,042 2,885,672

Changes in working capital Decrease/(increase) in receivables 19,736,180 7,797,937 (13,460,613) 8,171,646 (Increase)/decrease in inventories (47,402,453) 1,915,777 - - Decrease/(increase) in land held for development 970,135 (9,130,383) - - Increase in property development costs 43,013,022 24,911,767 - - Increase/(decrease) in payables (3,423,265) (27,558,869) (1,081,526) (14,934,014)

Total changes in working capital 12,893,619 (2,063,771) (14,542,139) (6,762,368) Interest paid - - - (1,658,026) Taxes paid (4,399,107) (116,915) (3,686,438) (126,910) Retirement benefits paid (314,281) (172,855) - -

Net cash flows from/(used in) operating activities 2,982,496 5,264,930 (16,674,535) (5,661,632) 52 PASDEC | Annual Report 2011

Statements Of Cash Flows (Cont’d) For The Financial Year Ended 31 December 2011

Group Company 2011 2010 2011 2010 RM RM RM RM

Investing activities Acquisition of an associate (18,264,000) - - - Proceeds from disposal of investment - 7,008,399 - - Purchase of property, plant and equipment (2,103,058) (178,473) (434,540) - Proceeds from disposal of property, plant and equipment 112,997 6,830,042 - - Net cash flows from disposal of subsidiary 2,195,388 - - - Net cash outflow from acquisition of subsidiary (11,657,626) - - - Interest received 741,983 319,070 19,224,107 19,593,163 Dividends received 2,377,642 3,218,782 - - Dividends paid (1,991,647) - (1,991,647) -

Net cash flows (used in)/from investing activities (28,588,321) 17,197,820 16,797,920 19,593,163

Financing activities

Proceeds from term loans 48,395,557 7,351,072 30,000,000 - Repayment of term loans (20,795,561) (17,277,175) (20,000,000) (7,000,000) Repayment of obligations under finance leases (337,287) (393,050) (60,895) (85,378) Interest paid (6,442,240) (6,114,003) (4,807,681) (5,455,789)

Net cash flows from/(used in) financing activities 20,820,469 (16,433,156) 5,131,424 (12,541,167)

Net (decrease)/increase in cash and cash equivalents (4,785,356) 6,029,594 5,254,809 1,390,364 Cash and cash equivalents at 1 January 3,678,685 (2,350,909) 5,953,496 4,563,132

Cash and cash equivalents at 31 December (Note 23) (1,106,671) 3,678,685 11,208,305 5,953,496

The accompanying accounting policies and explanatory notes form an integral part of the financial statements. PASDEC | Annual Report 2011 53 Notes to the Financial Statements For The Financial Year Ended 31 December 2011

1. Corporate information

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Bursa Malaysia Securities Berhad. The registered office of the Company is located at 14th Floor, Kompleks Teruntum, Jalan Mahkota, 25000 Kuantan, Pahang Darul Makmur.

The holding corporation of the Company is Perbadanan Kemajuan Negeri Pahang, a statutory body incorporated in Malaysia under the Pahang State Enactment No. 12, 1965.

The principal activities of the Company are investment holding and provision of management services to the subsidiaries. The principal activities of the subsidiaries are described in Note 16. There have been no significant changes in the nature of the principal activities during the financial year.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 29 May 2012.

2. Summary of significant accounting policies

2.1 Basis of preparation

The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards (“FRS”) and the Companies Act 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted new and revised FRS which are mandatory for financial periods as described fully in Note 2.2.

The financial statements have been prepared on a historical cost basis except as disclosed in the accounting policies below.

The financial statements are presented in Ringgit Malaysia (“RM”).

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 January 2011, the Group and the Company adopted the following new and amended FRS and IC Interpretations mandatory for annual financial periods as described below.

Effective for annual periods Description beginning on or after

FRS 1 First-time Adoption of Financial Reporting Standards 1 July 2010 Amendments to FRS 2 Share-based Payment 1 July 2010 FRS 3 Business Combinations 1 July 2010 Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued Operations 1 July 2010 Amendments to FRS 127 Consolidated and Separate Financial Statements 1 July 2010 Amendments to FRS 138 Intangible Assets 1 July 2010 Amendments to IC Interpretation 9 Reassessment of Embedded Derivatives 1 July 2010 IC Interpretation 12 Service Concession Arrangements 1 July 2010 IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation 1 July 2010 54 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.2 Changes in accounting policies (cont’d.)

Effective for annual periods Description beginning on or after

IC Interpretation 17 Distributions of Non-cash Assets to Owners 1 July 2010 Amendments to FRS 132: Classification of Rights Issues 1 March 2010 IC Interpretation 18 Transfers of Assets from Customers 1 January 2011 Amendments to FRS 7: Improving Disclosures about Financial Instruments 1 January 2011 Amendments to FRS 1: Limited Exemptions for First-time Adopters 1 January 2011 Amendments to FRS 1: Additional Exemptions for First-time Adopters 1 January 2011 IC Interpretation 4 Determining Whether an Arrangement Contains a Lease 1 January 2011 Improvements to FRS issued in 2010 1 January 2011

Adoption of the above standards and interpretations did not have any significant effect on the financial performance and position of the Group and the Company except as follows:

Revised FRS 3 Business Combinations and Amendments to FRS 127 Consolidated and and Separate Financial Statements

The revised standards are effective for annual periods beginning on or after 1 July 2010. The revised FRS 3 introduces a number of changes in accounting for business combinations occurring after 1 July 2010. These changes impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results.

The revised FRS 3 continues to apply the acquisition method to business combinations but with some significant changes. All payments to purchase a business are recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently remeasured through the statement of comprehensive income. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs are expensed.

The amendments to FRS 127 require that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as an equity transaction. Therefore, such transactions will no longer give rise to goodwill, nor will they give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary.

Amendments to FRS 7: Improving Disclosures about Financial Instruments

The amended standard requires enhanced disclosure about fair value measurement and liquidity risk. Fair value measurements related to items recorded at fair value are to be disclosed by source of inputs using a three level fair value hierarchy (Level 1, Level 2 and Level 3), by class, for all financial instruments recognised at fair value. A reconciliation between the beginning and ending balance for Level 3 fair value measurements is required. Any significant transfers between levels of the fair value hierarchy and the reasons for those transfers need to be disclosed. The amendments also clarify the requirements for liquidity risk disclosures with respect to derivative transactions and assets used for liquidity management. The fair value measurement disclosures are presented in Note 33. The liquidity risk disclosures are not significantly impacted by the amendments and are presented in Note 34.

PASDEC | Annual Report 2011 55

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.3 Standards issued but not yet effective

The Group has not adopted the following standards and interpretations that have been issued but not yet effective:

Effective for annual periods Description beginning on or after

IC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments 1 July 2011 Amendments to IC Interpretation 14: Prepayments of a Minimum Funding Requirement 1 July 2011 Amendments to FRS 1: Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters 1 January 2012 Amendments to FRS 7: Transfers of Financial Assets 1 January 2012 Amendments to FRS 112: Deferred Tax: Recovery of Underlying Assets 1 January 2012 FRS 124 Related Party Disclosures 1 January 2012 Amendments to FRS 101: Presentation of Items of Other Comprehensive Income 1 July 2012 FRS 10 Consolidated Financial Statements 1 January 2013 FRS 11 Joint Arrangements 1 January 2013 FRS 13 Fair Value Measurement 1 January 2013 FRS 12 Disclosure of Interests in Other Entities FRS 119 Employee Benefits 1 January 2013 FRS 127 Separate Financial Statements 1 January 2013 FRS 128 Investment in Associates and Joint Ventures 1 January 2013 IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine 1 January 2013 Amendments to FRS 7: Disclosures - Offsetting Financial Assets and Financial Liabilities 1 January 2013 Amendments to FRS 132: Offsetting Financial Assets and Financial Liabilities 1 January 2014 FRS 9 Financial Instruments 1 January 2015

The directors expect that the adoption of the standards and interpretations above will have no material impact on the financial statements in the period of initial application, except as disclosed below:

Amendments to FRS 7: Transfers of Financial Assets

The amendments require additional disclosure about financial assets that have been transferred but not derecognised to enable the user of the Group’s financial statements to understand the relationship with those assets that have not been derecognised and their associated liabilities. In addition, the amendments require disclosures about continuing involvement in derecognised assets to enable the user to evaluate the nature of, and risks associated with, the entity’s continuing involvement in those derecognised assets. The amendments affects disclosure only and have no impact on the Group’s financial position or performance.

Amendments to FRS 112: Deferred Tax: Recovery of Underlying Assets

The amendments clarified the determination of deferred tax on investment property measured at fair value. The amendment introduces a rebuttable presumption that deferred tax on investment property measured using the fair value model in FRS 140 should be determined on the basis that its carrying amount will be recovered through sale. Furthermore, it introduces the requirement that deferred tax on non-depreciable assets that are measured using the revaluation model in FRS 116 to be always measured on a sale basis of that asset. 56 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.3 Standards issued but not yet effective (cont’d.)

Amendments to FRS 101: Presentation of Items of Other Comprehensive Income

The amendments to FRS 101 change the grouping of items presented in Other Comprehensive Income. Items that could be reclassified (or “recycled”) to profit or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassified. The amendments affect presentation only and have no impact on the Company’s financial position or performance.

FRS 9 Financial Instruments

FRS 9 reflects the first phase of work on the replacement of FRS 139 and applies to classification and measurement of financial assets and financial liabilities as defined in FRS 139. The adoption of this first phase of FRS 9 will have an effect on the classification and measurement of the Group’s financial assets but will potentially have no impact on classification and measurements of financial liabilities. The Group is in the process of making an assessment of the impact of adoption of FRS 9.

FRS 10 Consolidated financial statements

FRS 10 replaces the portion of FRS 127 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. FRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by FRS 10 will require management to exercise significant judgement to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in FRS 127.

FRS 11 Joint Arrangements

FRS 11 replaces FRS 131 Interests in Joint Ventures and IC Interpretation 113 Jointly-controlled Entities – Non- monetary Contributions by Venturers.

FRS 11 removes the option to account for jointly controlled entities (“JCE”) using proportionate consolidation. Instead, JCE that meet the definition of a joint venture must be accounted for using the equity method.

FRS 12 Disclosure of Interests in Other Entities

FRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are required. This standard affects disclosures only and has no impact on the Group’s financial position or performance.

FRS 13 Fair Value Measurement

FRS 13 establishes a single source of guidance under FRS for all fair value measurements. FRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under FRS when fair value is required or permitted. The Group is currently assessing the impact of adoption of FRS 13.

FRS 127 Separate Financial Statements

As a consequence of the new FRS 10 and FRS 12, FRS 127 is limited to accounting for subsidiaries, jointly controlled entities and associates in separate financial statements.

PASDEC | Annual Report 2011 57

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.3 Standards issued but not yet effective (cont’d.)

FRS 128 Investments in Associates and Joint Ventures

As a consequence of the new FRS 11 and FRS 12, FRS 128 is renamed as FRS 128 Investments in Associates and Joint Ventures. This new standard describes the application of the equity method to investments in joint ventures in addition to associates.

Amendments to FRS 7: Disclosures – Offsetting Financial Assets and Financial Liabilities

The amendments require additional information to be disclosed to enable users of financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position. The amendments affects disclosure only and have no impact on the Group’s financial position or performance.

Amendments to FRS 132: Offsetting Financial Assets and Financial Liabilities

The amendments to FRS 132 clarified that a legally enforceable right to set off is a right of set off that must not be contingent on a future event; and must be legally enforceable in the normal course of business, the event of default and the event of insolvency or bankruptcy of the entity and all of the counterparties. The amendments further clarified that an entity will meet the net settlement criterion as provided in FRS 132 if the entity can settle amounts in a manner that the outcome is, in effect, equivalent to net settlement.

The directors expect that the adoption of the standards and interpretations above will have no material impact on the financial statements in the period of initial application.

Malaysian Financial Reporting Standards (MFRS Framework)

On 19 November 2011, the Malaysian Accounting Standards Board (MASB) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (MFRS Framework).

The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for Construction of Real Estate (IC 15), including its parent, significant investor and venturer (herein called ‘Transitioning Entities’).

Transitioning Entities will be allowed to defer adoption of the new MFRS Framework for an additional one year. Consequently, adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2013.

The Group falls within the scope definition of Transitioning Entities and accordingly, will be required to prepare financial statements using the MFRS Framework in its first MFRS financial statements for the year ending 31 December 2013. In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits. 58 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.3 Standards issued but not yet effective (cont’d.)

Malaysian Financial Reporting Standards (MFRS Framework) (cont’d.)

The Group has commenced transitioning its accounting policies and financial reporting from the current Financial Reporting Standards to the MFRS Framework by establishing a project team to plan and manage the adoption of the MFRS Framework. This project consists of the following phases:

(a) Assessment and planning phase

This phase involves the following:

(i) High level identification of the key differences between Financial Reporting Standards and accounting standards under the MFRS Framework and disclosures that are expected to arise from the adoption of MFRS Framework;

(ii) Evaluation of any training requirements; and

(iii) Preparation of a conversion plan

The Group has commenced its assessment and planning phase, with work progressing in each of the areas described above. This phase is expected to be completed during the upcoming financial year.

(b) Implementation review phase

This phase aims to:

(i) formulate new and/or revised accounting policies and procedures for compliance with the MFRS Framework;

(ii) identify potential financial effects as at the date of transition, arising from the adoption of theMFRS Framework;

(iii) develop disclosures required by the MFRS Framework; and

(iv) develop training programs for the staff.

At the date of these financial statements, the Group has not completed its quantification of the financial effects of the differences between Financial Reporting Standards and accounting standards under the MFRS Framework due to the ongoing assessment by the project team. Accordingly, the consolidated financial performance and financial position as disclosed in these financial statements for the year ended 31 December 2011 could be different if prepared under the MFRS Framework.

The Group considers that it is achieving its scheduled milestones and expects to be in a position to fully comply with the requirements of the MFRS Framework for the financial year ending 31 December 2013.

PASDEC | Annual Report 2011 59

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.4 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as of the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Acquisition of subsidiaries are accounted for by applying the purchase method. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in other comprehensive income. The cost of a business combination is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the business combination.

Any excess of the cost of business combination over the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities is recorded as goodwill on the statement of financial position. The accounting policy for goodwill is set out in Note 2.9. Any excess of the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in profit or loss on the date of acquisition. When the Group acquires a business, embedded derivatives separated from the host contract by the acquiree are reassessed on acquisition unless the business combination results in a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required under the contract.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

2.5 Transactions with non-controlling interests

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and is presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company.

Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.

2.6 Foreign currency

a) Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency. 60 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.6 Foreign currency (cont’d.)

b) Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.

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

c) Foreign operations

The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or loss.

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

2.7 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. PASDEC | Annual Report 2011 61

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.7 Property, plant and equipment (cont’d.)

Depreciation of property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life as follows:

Leasehold land Remaining lease period Leasehold improvement 10 years Buildings 20 years Plant and machinery 5 to 10 years Motor vehicles 5 to 10 years Office equipment 5 to 10 years Office renovation 10 to 12.5 years Furniture and fittings 5 to 10 years

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumtances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

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

2.8 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. Following initial recognition, investment properties are carried at cost less any accumulated depreciation and accumulated impairment losses. The buildings are depreciated at 2% per annum on a straight line method.

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

Transfers are made to or from investment property only when there is a change in use.

2.9 Intangible assets

Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination.

62 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.9 Intangible assets (cont’d.)

Goodwill (cont’d.)

The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash- generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.

Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.

2.10 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).

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

Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.

PASDEC | Annual Report 2011 63

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.11 Subsidiaries

A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.

2.12 Associates

An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. An associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.

The Group’s investments in associates are accounted for using the equity method. Under the equity method, the investment in associates is measured in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associates. Goodwill relating to associates is included in the carrying amount of the investment. 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 for the period in which the investment is acquired.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associates. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss.

The financial statements of the associates are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

2.13 Land held for property development and property development costs

a) 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 property development costs at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle.

64 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.13 Land held for property development and property development costs (cont’d.)

b) 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 profit anf loss 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 to date bear to the estimated total property development costs.

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

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

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

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

2.14 Construction contracts

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

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that are likely to be recoverable. Contract costs are recognised as expense 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.

Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable of being reliably measured.

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.

PASDEC | Annual Report 2011 65

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.15 Financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group andthe Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, andthe categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets.

The Group and the Company classified their financial assets as available-for-sale and loans and receivables.

a) Available-for-sale financial assets

Available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group’s right to receive payment is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.

b) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.

66 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.16 Impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

a) Trade and other receivables and other financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

b) Available-for-sale financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.

Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.

2.17 Cash and cash equivalents

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

PASDEC | Annual Report 2011 67

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.18 Inventories

Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their present location and condition are accounted for as follows:

- Raw materials: purchase costs on a first-in first-out basis. - Finished goods and work-in-progress: costs of raw materials, direct labour, other direct costs and appropriate proportions of production overheads.

The cost of unsold properties comprises cost associated with the purchase 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 estimated costs of completion and the estimated costs necessary to make the sale.

2.19 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If 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. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

2.20 Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of FRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

a) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

The Group and the Company have not designated any financial liabilities as at fair value through profit or loss. 68 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.20 Financial liabilities (cont’d.)

b) Other financial liabilities

The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Loans and borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

2.21 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group incurred in connection with the borrowing of funds.

2.22 Employee benefits

a) Short term benefits

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

b) Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. The Malaysian companies in the Group make contributions to the Employee Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

PASDEC | Annual Report 2011 69

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.23 Leases

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term.

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. 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.

2.24 Revenue

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. Revenue is measured at the fair value of consideration received or receivable.

a) Sale of properties

Revenue from sale of properties is accounted for by the stage of completion method as described in Note 2.13(b).

b) Construction contracts

Revenue from construction contracts is accounted for by the stage of completion method as described in Note 2.14.

c) Sale of goods

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

d) Revenue from services

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

e) Dividend income

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

f) Rental income

Rental income from investment property is recognised on a straight-line basis over the term of the lease. 70 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.24 Revenue (cont’d.)

g) Interest income

Interest income is recognised using the effective interest method.

h) Management fees

Management fees are recognised when services are rendered.

2.25 Income taxes

a) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

PASDEC | Annual Report 2011 71

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

2. Summary of significant accounting policies (cont’d.)

2.25 Income taxes (cont’d.)

b) Deferred tax (cont’d.)

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

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

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

2.26 Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 37, including the factors used to identify the reportable segments and the measurement basis of segment information.

2.27 Share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

2.28 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group.

72 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

3. Significant accounting judgements and estimates

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

3.1 Judgements made in applying accounting policies

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

(a) Impairment of available-for-sale investments

The Group reviews its debt securities classified as available-for-sale investments at each reporting date to assess whether they are impaired. The Group also records impairment charges on available-for-sale equity investments when there has been a significant or prolonged decline in the fair value below their cost.

The determination of what is “significant” or “prolonged” requires judgement. In making this judgement, the Group evaluates, among other factors, historical share price movements and the duration and extent to which the fair value of an investment is less than its cost.

3.2 Key sources of estimation uncertainty

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

(a) Useful lives of plant and machinery

The cost of plant and machinery is depreciated on a straight-line basis over assets’ estimated economic useful lives. Management estimates the useful lives of these plant and machinery to be 5 to 10 years. These are common life expectancies applied in the automotive industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore, future depreciation charges could be revised. The carrying amount of the Group’s plant and equipment at the reporting date is disclosed in Note 12.

(b) Impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivables at the reporting date is disclosed in Note 19. PASDEC | Annual Report 2011 73

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

3. Significant accounting judgements and estimates (cont’d.)

3.2 Key sources of estimation uncertainty (cont’d.)

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

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

The carrying amounts of assets and liabilities of the Group arising from property development activities are disclosed in Note 13(b).

(d) Impairment of goodwill

Goodwill is tested for impairment annually and at other times when such indicators exist. This requires an estimation of the value in use of the cash-generating units to which goodwill is allocated.

When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of the carrying value, the key assumptions applied in the impairment assessment of goodwill and sensitivity analysis to changes in the assumptions are given in Note 15.

(e) Deferred tax assets

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based on the likely timing and level of future taxable profits together with future tax planning strategies.

Assumptions about generation of future taxable profits depend on management’s estimates of future cash flows. These depends on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statements of financial position and the amount of unrecognised tax losses and unrecognised temporary differences.

74 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

4. Revenue

Group Company 2011 2010 2011 2010 RM RM RM RM

Sale of properties 47,995,946 66,386,039 - - Construction contracts 4,278,080 9,239,994 - - Sale of goods 40,089,497 2,921,711 - - Management fees 275,600 800,294 12,025,920 12,028,056 Rental income 2,246,995 2,566,153 - - Dividend income 2,377,642 3,229,161 - -

97,263,760 85,143,352 12,025,920 12,028,056

5. Cost of sales

Group 2011 2010 RM RM

Property development costs (Note 13(b)) 37,379,637 25,612,177 Additional costs for completed projects 650,313 4,482,264 Cost of land held for property development sold (Note 13(a)) 3,711,957 8,021,639 Cost of inventories sold 20,520,729 14,368,350 Cost of services rendered 1,039,086 1,360,700 Cost of construction contracts 2,678,503 6,580,282

65,980,225 60,425,412

6. Finance costs

Group Company 2011 2010 2011 2010 RM RM RM RM

Interest expense on: Hire purchase 41,756 37,208 13,386 14,592 Term loans 2,359,553 213,566 534,578 - Overdrafts 2,026,773 1,650,473 - - Revolving credits 168,589 158,883 - - Rainbow Exchangeable Bonds (“REBs”) 1,845,569 3,783,171 1,845,569 3,783,171 Other interests - 270,702 2,414,148 1,658,026

6,442,240 6,114,003 4,807,681 5,455,789

PASDEC | Annual Report 2011 75

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

7. Profit before tax

The following items have been included in arriving at profit before tax:

Group Company 2011 2010 2011 2010 RM RM RM RM

Employee benefits expense (Note 8) 26,493,826 10,253,565 5,818,375 7,017,173 Non-executive directors’ remuneration (Note 9) 669,300 727,150 639,400 652,450 Auditors’ remuneration 448,509 160,000 15,000 15,000 Impairment loss on financial assets: - Trade receivables 83,283 1,424,214 - - - Other receivables 10,000 424,478 13,574,864 107,379 Office rental 506,432 506,432 444,179 444,179 Rental - others 955,091 14,535 - - Provision for liquidated ascertained damages 3,357,025 461,586 - - Provision for impairment losses in inventories 595,678 191,912 - - Loss on disposal of subsidiary (Note 16) 464,477 - - - Property development costs written off 21,395 - - - Depreciation of property, plant and equipment (Note 12) 1,501,296 1,249,622 109,174 45,911 Depreciation of investment properties (Note 14) 233,992 171,783 - - Impairment of property development costs (Note 13(b)) 23,063 241,244 - - Impairment of intangible asset (Note 15) 808,242 - - - Provision for impairment losses in inventories 595,678 191,912 - - Provision for impairment losses in investments in subsidiaries - - 1,031,864 - Interest income (741,983) (319,070) (19,224,107) (19,593,163) Reversal of allowance for impairment of trade and other receivables (408,353) (432,202) - - Bad debts recovered (159,829) - - - Gain on disposal of property, plant and equipment (56,311) (2,873,662) - - Reversal of amortisation on premium and coupon upon redemption of REBs (7,280,628) - (7,280,628) - Gain on disposal of investments (Note i) (9,106,441) (3,190,544) - -

Note (i) - Gain on disposal of quoted shares is in relation to the redemption of REBs.

8. Employee benefits expense

Group Company 2011 2010 2011 2010 RM RM RM RM

Wages and salaries 16,716,372 7,592,447 3,899,242 4,429,750 Social security contributions 92,356 94,304 53,818 52,467 Short-term accumulating compensated absences 169,408 (63,412) 72,630 734,570 Contributions to defined contribution plan 863,398 927,004 503,534 571,740 Pension costs - defined benefit plan (Note 24) 542,081 636,918 408,284 371,535 Other staff related expenses 8,110,211 1,066,304 880,867 857,111

26,493,826 10,253,565 5,818,375 7,017,173

Included in employee benefits expense of the Group are executive directors’ remuneration amounting to RM989,217 (2010: RM430,260) as further disclosed in Note 9.

76 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

9. Directors’ remuneration

Group Company 2011 2010 2011 2010 RM RM RM RM

Executive directors’ remuneration (Note 8): Salaries and other emoluments 989,217 430,260 - -

Non-executive directors’ remuneration (Note 7): Fees 501,000 501,000 501,000 501,000 Other emoluments 168,300 226,150 138,400 151,450

669,300 727,150 639,400 652,450

Total directors’ remuneration 1,658,517 1,157,410 639,400 652,450

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

Number of Directors 2011 2010

Non-executive directors: Up to RM50,000 1 - RM50,001 – RM100,000 6 7 RM100,001 – RM150,000 1 1

10. Income tax expense/(benefit)

Major components of income tax expense/(benefit)

The major components of income tax expense/(benefit) for the years ended 31 December 2011 and 2010 are:

Group Company 2011 2010 2011 2010 RM RM RM RM

Statement of comprehensive income: Current income tax: Malaysian income tax - 2,892,384 - 2,710,816 Foreign income tax 55,373 - - - (Over)/under provision in prior year (870,260) 41,455 (888,376) 126,910

(814,887) 2,933,839 (888,376) 2,837,726

PASDEC | Annual Report 2011 77

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

10. Income tax expense/(benefit) (cont’d.)

Major components of income tax expense/(benefit) (cont’d.)

Group Company 2011 2010 2011 2010 RM RM RM RM

Deferred income tax (Note 31): Relating to originating and reversal of temporary differences 628,658 (741,613) (133,452) (276,527) Under provision in prior year 524,662 158,427 - -

1,153,320 (583,186) (133,452) (276,527)

Total income tax expense/(benefit) 338,433 2,350,653 (1,021,828) 2,561,199

Reconciliation between tax expense and accounting profit

The reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the years ended 31 December 2011 and 2010 are as follows:

2011 2010 RM RM

Group

Profit before taxation 804,498 6,826,749

Taxation at Malaysian statutory tax rate of 25% (2010: 25%) 201,125 1,706,687 Utilisation of Group relief (1,638,010) (2,070,165) Different tax rate in another country 23,197 - Effect of income not subject to tax (3,245,961) (3,566,573) Effect of expenses not deductible for tax purposes 3,781,193 5,197,551 Effect of utilisation of previously unrecognised tax losses and unabsorbed capital allowances (168,399) (1,881,780) Deferred tax assets not recognised in respect of current year’s tax losses and unabsorbed capital allowances 1,764,048 2,765,051 Under provision of deferred tax in prior year 524,662 158,427 (Over)/under provision of income tax in prior year (870,260) 41,455 Share of result of associate (33,162) -

Tax expense for the year 338,433 2,350,653

78 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

10. Income tax expense/(benefit) (cont’d.)

Reconciliation between tax expense and accounting profit (cont’d.) 2011 2010 RM RM

Company

Profit before taxation 8,126,910 16,498,221

Taxation at Malaysian statutory tax rate of 25% (2010: 25%) 2,031,728 4,124,555 Utilisation of Group relief (1,638,010) (2,070,165) Effect of income not subject to tax (1,241,723) - Effect of expenses not deductible for tax purposes 714,553 382,231 Effect of utilisation of previously unrecognised tax losses - (2,332) (Over)/under provision of income tax in prior year (888,376) 126,910

Tax (benefit)/expense for the year (1,021,828) 2,561,199

Income tax is calculated at the Malaysian statutory tax rate of 25% (2010: 25%) of the estimated assessable profit for the year.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.

Tax savings during the financial year arising from:

Group Company 2011 2010 2011 2010 RM RM RM RM

Utilisation of previously unrecognised tax losses and unabsorbed capital allowances 168,399 1,881,780 - 2,332

11. Earnings/(loss) per share

(a) Basic

Basic (loss)/earnings per share amounts are calculated by dividing (loss)/profit for the year, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year.

Group 2011 2010

(Loss)/profit attributable to ordinary equity holders of the Company (RM) (519,310) 1,043,766

Weighted average number of ordinary shares in issue (units) 205,978,000 205,978,000

Basic (loss)/earnings per share (sen) (0.25) 0.51

PASDEC | Annual Report 2011 79

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

11. Earnings/(losses) per share (cont’d.)

(b) Diluted

No diluted earnings per share were presented as there were no potential dilutive ordinary shares outstanding as at 31 December 2011.

12. Property, plant and equipment

Leasehold Leasehold Plant and Other land improvement Buildings machinery assets* Total RM RM RM RM RM RM

Group

Cost:

At 1 January 2010 112,784 - 13,938,715 5,281,471 7,438,364 26,771,334 Additions - - - - 361,473 361,473 Disposals - - (3,697,140) (228,000) (1,092,509) (5,017,649)

At 31 December 2010 and 1 January 2011 112,784 - 10,241,575 5,053,471 6,707,328 22,115,158 Additions - 286,899 - 1,241,099 889,410 2,417,408 Disposals - - - - (202,437) (202,437) Acquisition of a subsidiary (Note 16) - 128,168 - 5,449,572 441,750 6,019,490 Disposal of a subsidiary (Note 16) (112,784) - (1,347,761) (5,040,317) (151,842) (6,652,704) Exchange differences - (15,570) - (662,019) (53,662) (731,251)

At 31 December 2011 - 399,497 8,893,814 6,041,806 7,630,547 22,965,664

Accumulated depreciation:

At 1 January 2010 33,306 - 1,231,966 2,829,648 4,708,658 8,803,578 Charge for the year (Note 7) 2,210 - 228,943 338,414 680,055 1,249,622 Disposals - - (178,086) (205,761) (677,422) (1,061,269)

At 31 December 2010 and 1 January 2011 35,516 - 1,282,823 2,962,301 4,711,291 8,991,931 Disposals - - - - (145,751) (145,751) Charge for the year (Note 7) 2,210 46,107 203,998 617,295 631,686 1,501,296 Acquisition of a subsidiary (Note 16) - 6,232 - 718,223 38,279 762,734 Disposal of a subsidiary (Note 16) (37,726) - (349,519) (3,287,708) (100,337) (3,775,290) Exchange differences - (3,128) - (101,582) (9,466) (114,176)

At 31 December 2011 - 49,211 1,137,302 908,529 5,125,702 7,220,744

Net carrying amount:

At 31 December 2010 77,268 - 8,958,752 2,091,170 1,996,037 13,123,227

At 31 December 2011 - 350,286 7,756,512 5,133,277 2,504,845 15,744,920

*Other assets consist of office renovation, furniture and fittings, office equipment, and motor vehicles.

80 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

12. Property, plant and equipment (cont’d.)

Office Motor Furniture & Office equipment vehicles fittings renovation Total RM RM RM RM RM

Company

Cost:

At 1 January 2010 8,300 285,489 - - 293,789 Additions - 183,000 - - 183,000

At 31 December 2010 and 1 January 2011 8,300 468,489 - - 476,789 Additions 337,101 129,834 9,166 65,439 541,540

At 31 December 2011 345,401 598,323 9,166 65,439 1,018,329

Accumulated depreciation:

At 1 January 2010 6,782 46,439 - - 53,221 Charge for the year (Note 7) 1,517 44,394 - - 45,911

At 31 December 2010 and 1 January 2011 8,299 90,833 - - 99,132 Charge for the year (Note 7) 52,892 49,954 480 5,848 109,174

At 31 December 2011 61,191 140,787 480 5,848 208,306

Net carrying amount:

At 31 December 2010 1 377,656 - - 377,657

At 31 December 2011 284,210 457,536 8,686 59,591 810,023

During the financial year, the Group and the Company acquired property, plant and equipment at aggregate costsof RM2,417,408 (2010: RM361,473) and RM541,540 (2010: RM 183,000) of which RM314,350 (2010: RM183,000) and RM107,000 (2010: RM183,000) respectively were acquired by means of hire purchase. Net carrying amounts of property, plant and equipment held under hire purchase arrangements are as follows:

Group Company 2011 2010 2011 2010 RM RM RM RM

Motor vehicles 659,075 739,004 457,536 377,656 Plant and machinery - 337,317 - -

659,075 1,076,321 457,536 377,656 PASDEC | Annual Report 2011 81

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

13. Land held for property development and property development costs

(a) Land held for property development

Freehold Leasehold land land Total RM RM RM

Group

At 31 December 2011

Cost At 1 January 2011 54,110,385 108,552,589 162,662,974 Additions 140 2,741,682 2,741,822 Disposals (Note 5) (3,711,957) - (3,711,957)

At 31 December 2011 50,398,568 111,294,271 161,692,839

Accumulated impairment losses At 1 January/31 December (382,000) (20,116,367) (20,498,367)

Carrying amount at 31 December 2011 50,016,568 91,177,904 141,194,472

At 31 December 2010

Cost At 1 January 2010 44,538,641 108,993,950 153,532,591 Additions 5,314,534 6,393,562 11,708,096 Disposals (Note 5) (7,882,039) (139,600) (8,021,639) Reclassification 10,857,692 (10,857,692) - Transfer from property development costs (Note 13(b)) 1,631,557 4,573,176 6,204,733 Transfer to property development costs (Note 13(b)) (350,000) (410,807) (760,807)

At 31 December 2010 54,110,385 108,552,589 162,662,974

Accumulated impairment losses At 1 January/31 December (382,000) (20,116,367) (20,498,367)

Carrying amount at 31 December 2010 53,728,385 88,436,222 142,164,607

82 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

13. Land held for property development and property development costs (cont’d.)

(b) Property development costs

Freehold Leasehold Development land land costs Total RM RM RM RM

Group

At 31 December 2011

Cumulative property development costs At 1 January 2011 26,015,484 8,138,875 245,072,330 279,226,689 Costs incurred during the year - 387,000 37,594,210 37,981,210 Reclassification - 37,604,186 (37,604,186) - Unsold units transferred to inventories (6,286) (37,604,186) (5,982,728) (43,593,200) Reversal of completed projects (936,614) (1,555,920) (35,090,975) (37,583,509) Written off (Note 7) - - (21,395) (21,395)

At 31 December 2011 25,072,584 6,969,955 203,967,256 236,009,795

Accumulated impairment losses At 1 January 2011 - (92,342) (3,687,538) (3,779,880) Impairment loss for the year (Note 7) - - (23,063) (23,063)

At 31 December 2011 - (92,342) (3,710,601) (3,802,943)

Cumulative costs recognised in income statement At 1 January 2011 (2,657,478) (233,952) (140,008,453) (142,899,883) Recognised during the year (Note 5) (2,383,219) (1,624,427) (33,371,991) (37,379,637) Reversal of completed projects 936,614 1,555,920 35,090,975 37,583,509

At 31 December 2011 (4,104,083) (302,459) (138,289,469) (142,696,011)

Property development costs at 31 December 2011 20,968,501 6,575,154 61,967,186 89,510,841 PASDEC | Annual Report 2011 83

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

13. Land held for property development and property development costs (cont’d.)

(b) Property development costs (cont’d.)

Freehold Leasehold Development land land costs Total RM RM RM RM

Group (cont’d.)

At 31 December 2010

Cumulative property development costs At 1 January 2010 25,607,036 11,567,324 261,726,167 298,900,527 Costs incurred during the year 2,139,562 1,391,220 25,714,913 29,245,695 Transfer from land held for property development (Note 13(a)) 350,000 410,807 - 760,807 Disposal - - (20,284,212) (20,284,212) Transfer to land held for property development (Note 13(a)) (1,631,557) (4,573,176) - (6,204,733) Unsold units transferred to inventories (102,422) - (2,714,725) (2,817,147) Reversal of completed projects (347,135) (657,300) (19,369,813) (20,374,248)

At 31 December 2010 26,015,484 8,138,875 245,072,330 279,226,689

Accumulated impairment losses At 1 January 2010 - - (3,538,636) (3,538,636) Impairment loss for the year (Note 7) - (92,342) (148,902) (241,244)

At 31 December 2010 - (92,342) (3,687,538) (3,779,880)

Cumulative costs recognised in income statement At 1 January 2010 (2,906,674) (233,952) (134,521,328) (137,661,954) Recognised during the year (Note 5) (97,939) (657,300) (24,856,938) (25,612,177) Reversal of completed projects 347,135 657,300 19,369,813 20,374,248

At 31 December 2010 (2,657,478) (233,952) (140,008,453) (142,899,883)

Property development costs at 31 December 2010 23,358,006 7,812,581 101,376,339 132,546,926

84 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

13. Land held for property development and property development costs (cont’d.)

The freehold land and leasehold land of certain subsidiaries with a carrying value of RM29,265,384 (2010: RM27,033,882) have been charged as security for short term borrowings.

The title of leasehold land held for development of a subsidiary with a carrying value of RM35,236,205 (2010: RM33,747,037) is still pending transfer to the subsidiary’s name from the ultimate holding corporation, Perbadanan Kemajuan Negeri Pahang.

The title of freehold land held for development of a subsidiary with a carrying value of RM30,740,103 (2010: RM32,309,074) is still pending transfer to the subsidiary’s name from the vendor.

14. Investment properties

Group 2011 2010 RM RM

Buildings

Cost At 1 January 8,640,694 8,640,694 Addition 3,110,426 -

At 31 December 11,751,120 8,640,694

Accumulated depreciation At 1 January 1,467,940 1,296,157 Charge for the year (Note 7) 233,992 171,783

At 31 December 1,701,932 1,467,940

Net carrying amount At 31 December 10,049,188 7,172,754

Investment properties, at fair value At 31 December 12,842,658 8,640,694

Part of the building of a subsidiary with carrying value amounting to RM136,854 (2010: RM142,081) is pledged to financial institutions for credit facilities granted to the subsidiary as detailed in Note 25.

Investment properties comprise commercial properties which are leased out for rental income. Each of the leases contains an initial non-cancellable leases of the period between 1 to 5 years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions.

The rental income and depreciation recognised in income statements in respect of investment properties are RM2,246,995 (2010: RM2,566,153) and RM233,992 (2010: RM171,783) respectively.

PASDEC | Annual Report 2011 85

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

15. Intangible asset

Group 2011 2010 RM RM

Goodwill

Cost: At 1 January 4,577,645 4,577,645 Acquisition of a subsidiary (Note 16) 35,732,463 -

At 31 December 40,310,108 4,577,645

Impairment: At 1 January 3,769,403 3,769,403 Addition (Note 7) 808,242 -

At 31 December 4,577,645 3,769,403

Net carrying amount: At 31 December 35,732,463 808,242

Impairment testing of goodwill

The recoverable amount of the goodwill, for purpose of the impairment testing, is determined based on value-in-use calculations using cash flow projections covering five-year period. The key assumptions used for value-in-use calculations are as follows:

2011 2010 RM RM

Budgeted gross margin 34% 25% Growth rates 5% 0% Pre-tax discount rates 16% - 17% 7.80%

Budgeted gross margins – Gross margins are based on average values achieved in the three years preceding the start of the budget period. These are maintained over the budget period.

Growth rates – The forecasted growth rates are based on management’s estimate and do not exceed the long-term average growth rate for the industries.

Pre-tax discount rates – Discount rates has been estimated using capital asset pricing model.

The directors regard the goodwill of RM35,732,463 arising from acquisition of Pahang Off-Shore Sdn. Bhd. (“POSB”) is not impaired based on the latest performance and expected future performance and development of POSB’s subsidiary, Pasdec Automotive Technologies (Pty) Ltd. and also its associate, CRH Africa Holdings (Pty) Ltd.

Impairment loss recognised

During the financial year, an impairment loss of RM808,242 (2010: Nil) was recognised to writedown the goodwillfor subsidiaries that have been making losses.

86 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

16. Investments in subsidiaries

Company 2011 2010 RM RM

Unquoted shares at cost 99,443,569 99,443,569 Less: Accumulated impairment losses (32,912,336) (31,880,472)

66,531,233 67,563,097

Details of the subsidiaries are as follows:

Country of Proportion (%) of Name incorporation Principal activities ownership interest 2011 2010 % %

Held by the Company:

Pasdec Corporation Sdn. Bhd. Malaysia Property development and 100 100 project management

Kuantan Tembeling Resort Sdn. Bhd. Malaysia Property development and 100 100 project management

Pasdec Land Sdn. Bhd. Malaysia Property development 100 100

Pasdec Bina Sdn. Bhd.# Malaysia Building and civil construction 100 100

Kimdec Corporation Sdn. Bhd. Malaysia Property development 100 100

Sumbangan Sakti Sdn. Bhd.# Malaysia Property development 100 100

Pasdec Mega Sdn. Bhd. Malaysia Property development 100 100

Pasdec Pintas Sdn. Bhd.# Malaysia Dormant 70 70

Mutiara Pasdec Sdn. Bhd.# Malaysia Investment holding 100 100

Bentong Aquarium & Sanctuary Park Malaysia Dormant 70 70 Sdn. Bhd.#

Pasdec Engineering Sdn. Bhd. Malaysia Value engineering and 100 100 consultancy services Held through Pasdec Corporation Sdn. Bhd.:

Pasdec Putra Sdn. Bhd. Malaysia Property development 100 100

PASDEC | Annual Report 2011 87

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

16. Investments in subsidiaries (cont’d.)

Country of Proportion (%) of Name incorporation Principal activities ownership interest 2011 2010 % %

Held through Mutiara Pasdec Sdn. Bhd.:

Pahang Aircraft Industries Sdn. Bhd.# Malaysia Dormant 100 100

Pasdec Trading Sdn. Bhd. Malaysia Trading of building materials 100 100 and providing of insurance services

Pahang Off-Shore Sdn.Bhd. ** Malaysia Investment holding 100 -

Held through Pasdec Bina Sdn. Bhd.:

Kuantan Bricks Sdn. Bhd. Malaysia Manufacturing and supply - 100 of bricks

Held through Pahang Off-Shore Sdn. Bhd.:

Pasdec Resources S.A. Ltd.* South Africa Investment holding 97 -

Held through Pasdec Resources S.A. Limited:

Pasdec Automative Technologies South Africa Manufacturing and supply of 70 - (Pty) Ltd.* automotive wiring harnesses

Femcotec Finance (Proprietary) Ltd.* South Africa Dormant 100 -

Femco Mining Motors (Proprietary) Ltd.* South Africa Dormant 100 -

* Audited by a firm of chartered accountants other than Hanafiah Raslan & Mohamad.

** Audited by Ernst & Young, Malaysia of which Hanafiah Raslan & Mohamad is a member firm.

# The auditors’ report of this company refers to the going concern assumption and that the subsidiary is dependent upon the financial support from the holding company. The report is not qualified.

Acquisition of subsidiary

On 1 April 2011, the Group through its wholly owned subsidiary Mutiara Pasdec Sdn. Bhd. (“Mutiara Pasdec”) acquired 100% equity interest in Pahang Off-Shore Sdn. Bhd. (“POSB”) an investment holding company incorporated in Malaysia. Upon the acquisition, POSB became a subsidiary of the Group. POSB Group is made up by companies as disclosed above.

Mutiara Pasdec acquired POSB from a third party which held the shares in POSB from 17 August 2010 to the date of acquisition by Mutiara Pasdec. Prior to 17 August 2010, POSB was a wholy owned subsidiary of Perbadanan Kemajuan Negeri Pahang, the holding corporation of the Company.

88 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

16. Investments in subsidiaries (cont’d.)

Acquisition of subsidiary (contd.)

The fair values of the identifiable assets and liabilities of POSB as at the date of acquisition were:

Carrying Fair value amount RM RM

Property, plant and equipment 5,256,756 5,256,756 Deferred tax assets 11,488,008 11,488,008 Inventories 11,302,560 11,302,560 Trade and other receivables 5,211,285 5,211,285 Cash and cash equivalents (2,802,626) (2,802,626)

30,455,983 30,455,983

Borrowings (11,773,627) (11,773,627) Trade and other payables (44,107,547) (45,435,852)

(55,881,174) (57,209,479)

Net identifiable liabilities (25,425,191) (26,753,496)

Total cost of business combination

The total cost of the business combination is as follows:

Cash paid 8,855,000

The effect of the acquisition on cash flows is as follows:

Total cost of the business combination to be setlled in cash 8,855,000 Add: Cash and cash equivalents of subsidiary acquired 2,802,626

Net cash outflow on acquisition 11,657,626

Goodwill arising on acquisition

Fair value of net identifiable liabilities (25,425,191) Less: Non-controlling interests (1,452,272)

Group’s interest in fair value of net identifiable assets (26,877,463) Cost of business combination 8,855,000

Goodwill on business acquisition 35,732,463

PASDEC | Annual Report 2011 89

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

16. Investments in subsidiaries (cont’d.)

Acquisition of subsidiary (cont’d.)

Impact of acquisition in statement of comprehensive income

From the date of acquisition, POSB has contributed loss net of tax of RM2,660,529 to the Group’s loss net of tax. If the combination had taken place at the beginning of the financial year, the Group’s loss, net of tax would have been RM975,408 and revenue would have been RM106,737,480.

Provisional accounting of acquisition

The fair values of the identifiable assets and liabilities were datemined on a provisional basis.

Disposal of subsidiary

The Group disposed of its 100% equity interest in Kuantan Bricks Sdn. Bhd. on 31 December 2011 for a total consideration of RM2,200,000 comprising of cash and deferred cash settlement. The subsidiary was previously reported as part of the manufacturing segment.

The disposal had the following effects on the financial position of the Group as at the end of the year:

2011 2010 RM RM

Property, plant and equipment 2,877,414 3,258,946 Inventories 418,004 280,903 Trade and other receivables 7,323,012 1,007,960 Cash and bank balances 4,612 35,783 Trade and other payables (7,884,785) (8,168,871) Borrowings (73,780) (203,099)

Net asset/(liabilities) disposed 2,664,477 (3,788,378)

Total disposal proceeds (2,200,000)

Loss on disposal to the Group 464,477

Disposal proceeds settled by: Cash 320,000 Deferred payment 1,880,000

2,200,000

Cash inflow arising on disposals: Cash consideration 2,200,000 Cash and cash equivalents of subsidiary disposed (4,612)

Net cash inflow on disposal 2,195,388

90 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

17. Investments in associates

Group 2011 2010 RM RM

Unquoted shares, at cost 19,534,000 1,270,000 Share of post-acquisition reserves 2,092,329 2,000,077

21,626,329 3,270,077 Exchange differences (1,474,822) -

20,151,507 3,270,077 Less: Accumulated impairment losses (70,000) (70,000)

20,081,507 3,200,077

Details of the associates are as follows:

Country of Proportion (%) of Name incorporation Principal activities ownership interest 2011 2010 % %

Held by the Company:

Pasdec Technology Centre and Malaysia Operations maintenance of high 50 - Services Sdn. Bhd. # end data centre. The Company is yet to commence operations Held through subsidiaries:

Prima Prai Sdn. Bhd. Malaysia Property development 20 20

Genting View Resort Development Malaysia Ceased operations 40 40 Sdn. Bhd.

Pasdec Cempaka Sdn. Bhd. Malaysia Dormant 40 40

CRH Africa Automotive (Pty) Ltd.* South Africa Manufacturing of automobile 30.87 - seat components and catalytic converters

* Audited by a firm of chartered accountants other than Hanafiah Raslan & Mohamad.

# Newly incorporated on 15 November 2011 with RM2 paid up share capital and is yet to commence operation. No audited financial statements is prepared as at 31 December 2011.

The financial statements of the above associates are coterminous with those of the Group, except for Prima Prai Sdn. Bhd. and Genting View Resort Development Sdn. Bhd. which have financial years end on 31 March and 30 June respectively. For the purpose of applying the equity method of accounting, the management accounts of Prima Prai Sdn. Bhd. and Genting View Resort Development Sdn. Bhd. for the respective year and period ended 31 December 2011 have been used.

On 16 November 2011, the Group acquired 30.87% equity interest in CRH Africa Automotive (Pty) Ltd. (“CRH”) for total cash consideration of ZAR48,000,000 (RM18,264,000). PASDEC | Annual Report 2011 91

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

17. Investments in associates (cont’d.)

The summarised financial information of the associate, not adjusted for the proportion of ownership interest held by the Group, is as follows:

Group 2011 2010 RM RM

Assets and liabilities: Total assets 46,796,573 12,380,984

Total liabilities (19,144,150) (7,102,679)

Results: Revenue 8,972,130 2,152,878

Profit for the year 268,276 28,600

The Group had pledge the equity interest in CRH Africa Automotive (Proprietary) Limited with carrying value of RM16,907,614 as a security for borrowings granted to the Group amounting to RM11,749,050.

18. Inventories

Group 2011 2010 RM RM

Cost Properties held for sale 62,305,041 22,539,752 Finished goods 1,409,348 434,437 Raw material 8,802,338 - Work-in-progress 5,689,399 - Diesel and lubricant - 55,354

78,206,126 23,029,543

Less: Allowance for impairment Properties held for sale (667,613) (135,268) Finished goods (167,777) (104,444)

(835,390) (239,712)

77,370,736 22,789,831

The Group has pledged the properties held for sale amounting to RM38,875,560 (2010: Nil), as security for bank facilities (Note 25).

92 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

19. Trade and other receivables

Group Company 2011 2010 2011 2010 RM RM RM RM

Current

Trade receivables 22,594,222 36,338,791 - - Construction contracts: Retention sum receivable (Note 21) 2,060,733 652,200 - - Progress billings receivable 16,446,170 22,804,979 - - Accrued billings 3,233,860 - - -

44,334,985 59,795,970 - - Less: Allowance for impairment (2,741,401) (5,642,183) - -

41,593,584 54,153,787 - -

Other receivables Amount due from related parties: Subsidiaries - - 235,773,534 209,940,084 Holding corporation 20,654,096 25,400,818 17,435,353 24,987,568 Related companies 14,227,166 24,574,088 593,842 5,322,623

34,881,262 49,974,906 253,802,729 240,250,275 Deposits 1,700,118 1,352,312 - - Tax recoverable 4,217,699 2,640,389 976,438 - Sundry receivables 10,749,171 5,807,311 66,640 221,282

51,548,250 59,774,918 254,845,807 240,471,557

Less: Allowance for impairment Third parties (3,646,719) (2,067,345) (66,642) (66,640) Subsidiaries - - (17,395,081) (391,562) Holding corporation (15,776,164) (15,776,164) (15,776,164) (15,776,164) Related companies (9,648,695) (11,679,232) (593,842) (4,022,499)

(29,071,578) (29,522,741) (33,831,729) (20,256,865)

22,476,672 30,252,177 221,014,078 220,214,692

Total trade and other receivables 64,070,256 84,405,964 221,014,078 220,214,692 Add: Cash and bank balances (Note 23) 33,002,510 22,538,481 11,208,305 5,953,496

Total loans and receivables 97,072,766 106,944,445 232,222,383 226,168,188

PASDEC | Annual Report 2011 93

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

19. Trade and other receivables (cont’d.)

(a) Trade receivables

Trade receivables are non-interest bearing and are generally on 30 to 120 day (2010: 30 to 120 day) terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

Ageing analysis of trade receivables

The ageing analysis of the Group’s trade receivables is as follows:

Group 2011 2010 RM RM

Neither past due nor impaired 37,523,749 44,778,718

1 to 30 days past due not impaired 216,279 330,692 31 to 60 days past due not impaired 875,071 437,163 61 to 90 days past due not impaired 96,042 3,713,202 More than 91 days past due not impaired 2,882,443 4,894,012

4,069,835 9,375,069 Impaired 2,741,401 5,642,183

44,334,985 59,795,970

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group.

None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Receivables that are past due but not impaired

The Group has trade receivables amounting to RM4,069,835 (2010: RM9,375,069) that are past due at the reporting date but not impaired.

Trade receivables that were past due but not impaired relate to customers that have a good track record with the Group. Based on past experience and no adverse information to date, the directors of the Group are of the opinion that no provision for impairment is necessary in respect of these balances as there has not been a significant change in the credit quality and the balances are still considered fully recoverable.

94 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

19. Trade and other receivables (cont’d.)

(a) Trade receivables (cont’d.)

Trade receivables that are impaired

The Group’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

Individually impaired 2011 2010 RM RM

Group

Trade receivables - nominal amounts 2,741,401 5,642,183 Less: Allowance for impairment (2,741,401) (5,642,183)

- -

Movement in allowance accounts:

Group 2011 2010 RM RM

At 1 January 5,642,183 4,725,637 Charge for the year (Note 7) 83,283 1,424,214 Effect on disposal of subsidiary (22,085) - Reversal (Note 7) (406,336) (432,202) Reclassification (450) - Written off (2,555,194) (75,466)

At 31 December 2,741,401 5,642,183

(b) Other receivables

Amounts due from subsidiaries amounting to RM82,381,156 (2010: RM74,390,386) bear interest of 6% (2010: 6%) per annum and are repayable on demand. The remaining amounts due from subsidiaries bear interest at 8.6% (2010: 8.3%) per annum. The amounts are unsecured and are to be settled in cash.

The amounts due from holding corporation and related companies are non-interest bearing and repayable on demand. These amounts are unsecured and are to be settled in cash.

PASDEC | Annual Report 2011 95

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

19. Trade and other receivables (cont’d.)

(b) Other receivables (cont’d.)

Other receivables that are impaired

The Group’s and Company’s other receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

Individually impaired Group Company 2011 2010 2011 2010 RM RM RM RM

Other receivables - nominal amounts 32,430,466 50,328,877 77,314,359 33,523,730

Less: Allowance for impairment (29,071,578) (29,522,741) (33,831,729) (20,256,865)

3,358,888 20,806,136 43,482,630 13,266,865

Movement in allowance accounts:

Group Company 2011 2010 2011 2010 RM RM RM RM

At 1 January 29,522,741 30,746,318 20,256,865 20,149,486 Charge for the year (Note 7) 10,000 424,478 13,574,864 107,379 Reversal (Note 7) (2,017) - - - Written off (459,596) (1,648,055) - - Reclassification 450 - - -

At 31 December 29,071,578 29,522,741 33,831,729 20,256,865

20. Other current assets

Group Company 2011 2010 2011 2010 RM RM RM RM

Prepayments 341,824 390,063 247,809 185,008 Due from customers on contract (Note 21) 590,674 162,254 - -

932,498 552,317 247,809 185,008

96 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

21. Gross amount due from/(to) customers

Group 2011 2010 RM RM

Construction contract costs incurred todate 16,892,146 20,738,473 Attributable profits 1,099,449 1,993,651

17,991,595 22,732,124 Less : Progress billings (17,400,921) (22,569,870)

590,674 162,254

Presented as: Gross amount due from customers for contract work (Note 20) 590,674 162,254

Retention sum on contracts, included within trade receivables (Note 19) 2,060,733 652,200

22. Marketable securities

Group 2011 2010 RM RM Market value Market value Carrying of quoted Carrying of quoted amount investments amount investments

Non-current Available-for-sale financial assets Carrying amount: Shares quoted in Malaysia 62,892,427 62,892,427 85,658,305 85,658,305 Unit trusts quoted in Malaysia 484,292 484,292 477,742 477,742

63,376,719 63,376,719 86,136,047 86,136,047

Investments pledged as security

The Group’s investments in quoted shares with a carrying amount of RM17,000,047 (2010: RM44,697,322) are pledged to financial institutions for issuance of RM150 million Rainbow Exchangeable Bonds (“REBs”) (Note 27).

The Group’s investments in quoted shares with carrying amount of RM45,696,000 (2010: RM40,785,658) are pledged to banks for certain facilities granted to a related company.

PASDEC | Annual Report 2011 97

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

23. Cash and cash equivalents

Group Company 2011 2010 2011 2010 RM RM RM RM

Cash in hand and at banks 16,981,813 11,924,373 302,786 1,545,309 Deposits with licensed banks 16,020,697 10,614,108 10,905,519 4,408,187

Cash and bank balances 33,002,510 22,538,481 11,208,305 5,953,496

Included in cash at banks of the Group is an amount of RM5,329,663 (2010: RM9,185,855) held pursuant to Section 7A of the Housing Development (Control and Licensing) Act 1966 and therefore restricted from use in other operations.

Deposits with licensed banks of the Group amounting to RM11,432,929 (2010: RM6,710,030) are pledged to banks for credit facilities granted to certain subsidiaries.

Deposits with licensed banks earn interest at the respective deposit rates. The weighted average effective interest rate as at 31 December 2011 for the Group and the Company were 3.02% (2010: 3.10%) and 2.63% (2010: 3.00%) respectively.

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

Group Company 2011 2010 2011 2010 RM RM RM RM

Cash and bank balances 33,002,510 22,538,481 11,208,305 5,953,496 Bank overdrafts (Note 25) (34,109,181) (18,859,796) - -

Cash and cash equivalents (1,106,671) 3,678,685 11,208,305 5,953,496

98 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

24. Retirement benefit obligations

The Group operates an unfunded, defined benefit Retirement Benefit Scheme (“the Scheme”) for its eligible employees. Under the Scheme, eligible employees are entitled to retirement benefits with 7.5% of final salary multiplied by plan service with maximum of 300 months payable on attainment of the early retirement age of 40 upon completion of 10 or more years of plan service or retirement age of 56.

(i) Statement of Financial Position

The amounts recognised in the Statement of financial position are determined as follows:

Group Company 2011 2010 2011 2010 RM RM RM RM

Present value of funded defined benefit obligations 4,144,124 4,240,642 779,819 371,535 Unrecognised actuarial losses (244,012) (568,330) - -

Net liability 3,900,112 3,672,312 779,819 371,535

Analysed as: Current 315,507 671,153 66,547 371,535

Non-current: Later than 1 year but not later than 2 years 481,462 564,712 101,551 - Later than 2 years but not later than 5 years 3,103,143 2,436,447 611,721 -

3,584,605 3,001,159 713,272 -

3,900,112 3,672,312 779,819 371,535

The movement in the present value of the defined benefit obligations over the year is as follows:

Group Company 2011 2010 2011 2010 RM RM RM RM

At 1 January 3,672,312 3,208,249 371,535 - Current service cost 1,095,326 337,484 408,284 196,865 Interest cost 239,556 259,536 - 151,396 Amortisation of actuarial loss (792,801) 39,898 - 23,274 Benefits paid (314,281) (172,855) - -

At 31 December 3,900,112 3,672,312 779,819 371,535

PASDEC | Annual Report 2011 99

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

24. Retirement benefit obligations (cont’d.)

(ii) Statements of comprehensive income

The amounts recognised in the statements of comprehensive income are as follows:

Group Company 2011 2010 2011 2010 RM RM RM RM

Current service cost 1,095,326 337,484 408,284 196,865 Interest cost 239,556 259,536 - 151,396 Amortisation of actuarial loss (792,801) 39,898 - 23,274

Total, included in employee benefits expense (Note 8) 542,081 636,918 408,284 371,535

All of the Group’s contribution to defined benefit plan has been included in administrative expenses.

(iii) Actuarial assumptions

The principal assumptions used for the purposes of the actuarial valuations were as follows:

2011 2010 % %

Discount rate 6.5 7.0 Expected rate of salary increases 5.0 5.0

Actuarial valuation for the Scheme is conducted by an independent actuary at regular intervals. The last valuation performed for the Scheme was on 1 September 2010.

Assumptions regarding future mortality are based on published statistics and mortality tables.

(iv) Historical information

The history of experience adjustments is as follows:

Group Company 2011 2010 2011 2010 RM RM RM RM

Present value of defined benefit obligations 3,900,112 3,672,312 779,819 371,535

100 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

25. Loans and borrowings

Group Company 2011 2010 2011 2010 RM RM RM RM

Current

Secured: Bank overdrafts 33,266,854 18,123,864 - - Revolving credits 2,000,000 2,000,000 - - Term loans 4,610,143 12,077,362 - - Loan at prime + 2.0% per annum 2,349,810 - - - Obligations under finance leases (Note 26(b)) 131,298 177,421 80,295 -

42,358,105 32,378,647 80,295 -

Unsecured: Bank overdrafts 842,327 735,932 - - Obligations under finance leases (Note 26(b)) 37,884 64,273 - 64,275

880,211 800,205 - 64,275

43,238,316 33,178,852 80,295 64,275

Non-current

Secured: Term loans 44,599,203 9,581,191 30,000,000 - Loan at prime + 2.0% per annum 9,399,240 - - - Rainbow Exchangeable Bonds (Note 27) 19,065,817 46,346,445 19,065,817 46,346,445 Obligations under finance leases (Note 26(b)) 354,841 115,371 233,120 -

73,419,101 56,043,007 49,298,937 46,346,445

Unsecured: Obligations under finance leases (Note 26(b)) 13,141 203,036 - 203,035

73,432,242 56,246,043 49,298,937 46,549,480

Total loans and borrowings 116,670,558 89,424,895 49,379,232 46,613,755

PASDEC | Annual Report 2011 101

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

25. Loans and borrowings (cont’d.)

The remaining maturities of the loans and borrowings as at 31 December 2011 are as follows:

Group Company 2011 2010 2011 2010 RM RM RM RM

On demand or within one year 43,238,316 33,178,852 80,295 64,275 More than 1 year and less than 2 years 13,050,334 1,135,321 30,231,243 74,651 More than 2 years and less than 5 years 29,421,485 50,894,471 19,065,817 46,398,877 5 years or more 30,960,423 4,216,251 1,877 75,952

116,670,558 89,424,895 49,379,232 46,613,755

Bank overdrafts

The bank overdrafts of the Group are secured against the land registered under the name of the holding corporation, first legal charge over long term leasehold land and building of certain subsidiaries, fixed and floating charges over certain assets of subsidiaries, joint and several guarantee by the directors of a corporate shareholder of a subsidiary and corporate guarantee by a subsidiary and the Company. The weighted average effective interest as at 31 December 2011 for the Group was 8.45% (2010: 8.03%) per annum.

Revolving credits

The secured revolving credits of the Group are for a period of six months and are secured against fixed legal charge over certain freehold land of a subsidiary, proportionate corporate guarantee by the Company of up to 51% and joint and several guarantee by the directors of a corporate shareholder. The weighted average effective interest as at 31 December 2011 for the Group was 6.13% (2010: 6.13%) per annum.

Term loans

The term loans are secured by the following:

(a) First legal charge over the freehold land and leasehold land of certain subsidiaries; (b) Fixed and floating charges over certain assets of subsidiaries; (c) Joint and several guarantee by the directors of a corporate shareholder of the respective subsidiary; and (d) Corporate guarantee by a subsidiary and the Company.

Term loans bear interest at respective term loan rates. The weighted average effective interest as at 31 December 2011 for the Group was 8.0% (2010: 7.72%) per annum. The repayment of the Group’s term loans are ranging from 2 years to 8 years.

Loan at prime + 2.0% per annum

The loan is secured by the following:

(a) Corporate guarantee from the Company;and (b) 30.87% of ordinary shares held in CRH Africa Automotive (Pty) Ltd.

Rainbow Exchangeable Bonds

The Rainbow Exchangeable Bonds of the Group and of the Company are secured against part of the marketable securities as disclosed in Note 22. The bonds bear interest at 5.25% (2010: 5.25%) per annum. 102 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

25. Loans and borrowings (cont’d.)

Obligations under finance leases

The secured obligations under finance leases of the Group are secured against corporate guarantee by a subsidiary company. The weighted average effective interest as at 31 December 2011 for the Group and the Company were 8.91% (2010: 3.47%) and 2.60% (2010: 2.60%) per annum respectively.

26. Commitments

(a) Operating lease commitments – as lessee

The Group has entered into commercial lease on office properties. Leases are negotiated for an average term of seven years. Rentals are fixed for an average of three years.

Future minimum rentals payable under non-cancellable operating leases at the reporting date are as follows:

Group 2011 2010 RM RM

Not later than 1 year 905,986 857,585 Later than 1 year but not later than 5 years 1,811,972 1,138,519

2,717,958 1,996,104

(b) Finance lease commitments

The Group has finance leases for certain items of plant and equipment and furniture and fixtures (Note 12). These leases do not have terms of renewal, but have purchase options at nominal values at the end of the lease term.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

Group Company 2011 2010 2011 2010 RM RM RM RM

Minimum lease payments: Not later than 1 year 188,276 267,527 95,040 76,645 Later than 1 year and not later than 5 years 329,394 165,136 184,360 136,471 Later than 5 years 85,000 199,735 85,000 93,834

602,670 632,398 364,400 306,950 Less: Future finance charges (65,506) (72,297) (50,985) (42,640)

Present value of lease liabilities 537,164 560,101 313,415 264,310

PASDEC | Annual Report 2011 103

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

26. Commitments (cont’d.)

(b) Finance lease commitments (cont’d.)

Group Company 2011 2010 2011 2010 RM RM RM RM

Analysed as: Current (Note 25) Secured 131,298 177,421 80,295 - Unsecured 37,884 64,273 - 64,275

169,182 241,694 80,295 64,275

Non-current (Note 25) Secured 354,841 115,371 233,120 - Unsecured 13,141 203,036 - 203,035

367,982 318,407 233,120 203,035

537,164 560,101 313,415 267,310

The Group is defending a claim by a former director of a subsidiary company for various amounts, the most significant of which is an amount of ZAR25.5 million plus 20% of profits earned by Pasdec Automotive Technologies (Pty) Ltd. (“PAT”) earned between 1998 and 2003 plus interest, against Pasdec Resources S.A. Limited (“PRSA”) and PAT. The same former director is pursuing a claim against the Group for ZAR0.8 million plus costs and interest in the Labour Court of South Africa. The directors consider the claims to have no substance. However, the ultimate outcome of the matter cannot presently be determined and no provision for any liability that may result has been made in the financial statements.

An arbitration tribunal has ruled that the agreement is binding and therefore PAT is liable to pay the claimant. However, the value of the claim cannot be reasonably estimated, as the claimant cannot provide proof of the quantum of the claim, which would have to be defended in court. For this reason no provision were made for the liability that may occur due to these court cases. As the outcome of the matter is uncertain and cannot be presently determined, the best estimate made by management had to be used. Therefore, a provision of ZAR2,000,000 (RM783,270) has been provided in PRSA.

27. Rainbow Exchangeable Bonds

On 15 November 2006, the Company issued RM150 million Rainbow Exchangeable Bonds (“REBs”) at 100% of its nominal value comprising two series as follows:

(i) Series 1 - up to RM15 million REBs or such other amount exchangeable into 4,792,333 or such other appropriate number of ordinary shares in Road Builder (M) Holdings Berhad (“RBH”) (“Exchange Shares”); and

(ii) Series 2 - up to RM135 million REBs or such other amount exchangeable into 40,785,500 or such other appropriate number of ordinary shares in YTL Cement Berhad (“Exchange Shares”). 104 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

27. Rainbow Exchangeable Bonds (cont’d.)

The salient features of REBs issued by the Company are as follows:

(a) The tenures of the Series 1 and 2 are 5 and 7 years respectively.

(b) The REBs carry an interest or coupon rate of 5% per annum for both series and payable semi-annually in arrears from the date of issue of the REBs, with the last coupon payment to be made on the respective maturity dates.

(c) Each REB entitles the REBs holders to exchange for one Exchange Share at the Exchange Price which is indicatively set at a premium of 10% to 30% from five-day Weighted Average Market Price of the relevant Exchange Shares prior to the price fixing date or at par, whichever is higher at any time after the Securities Commission’s approval, for the relevant series at any time during the Exchange Period.

(d) The REBs are secured by the following:

(i) A Put-Option written by the Put-Option Writer to acquire the Exchange Shares at an agreed Option Price, upon the terms and conditions contained in the Put-Option agreements;

(ii) Deposit/ pledge of the Exchange Shares with the Security Trustee, for the benefit of the REBs holders;

(iii) Assignment/ charge of an Escrow Account, a Disbursement Account (“DA”), and Debt Service Reserve Account (“DSRA”), in favour of the Security Trustee for the REBs holders; and

(iv) Assignment of the proceeds under an irrevocable Standby Line from a financial institution (“Liquidity Reserve Provider”) equivalent to one (1) coupon payment payable during the tenor of the REBs, in favour of the Security Trustee for the REBs Holders; or

If no Standby Line is established, an assignment/ charge of a Liquidity Reserve Account (“LRA”), into which an amount equivalent to one (1) coupon payment payable during the tenor of the REBs shall be deposited.

(e) The Option Price with regards to Series 1 and 2 are as follows:

Series 1: the outstanding amounts, owing or payable by the Company to the REBs holders under the relevant Transaction Documents, as at the date of the put option notice as referred to in the Put-Option agreements;

Series 2: the outstanding amounts, owing or payable by the Company to the REBs holders under the relevant Transaction Documents, as at the date of the put option notice less the amount of:- - any standby facilities procured by the Company; and - any cash deposits by the Company into the DSRA.

(f) The REBs shall be redeemed by the Issuer on the respective maturity dates at approximately 122% to 140% of the Issue Price of the relevant Series save and except for the following circumstances:-

(i) The REBs are exchangeable at any time by the REBs holders into the Exchange Shares, during the tenors of the REBs;

(ii) The REBs may be redeemed by the Issuer after the expiry of three (3) years from the issue date of the REBs and subject to the market price of the relevant Exchange Shares as traded on Bursa Malaysia Securities Berhad being at least 130% of the Exchange Price of the relevant Exchange Shares;

(iii) The Issuer may, at any time, purchase the REBs at any price in the open market or by private treaty;

(iv) The REBs shall be cancelled and cannot be reissued if the REBs have been exchanged into the Exchange Shares by the REBs holders, redeemed by the Issuer after year 3 and/or purchased by the Issuer in the open market.

PASDEC | Annual Report 2011 105

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

27. Rainbow Exchangeable Bonds (cont’d.)

The REBs are accounted for in the statements of financial position of the Group and of the Company as follows:

Group and Company 2011 2010 RM RM

Nominal value - issued and fully paid At 1 January 37,000,000 44,000,000 Issued and fully paid Exchanged into Exchange Shares (20,000,000) (7,000,000)

At 31 December 17,000,000 37,000,000

Redemption premium At 31 December 2,065,817 9,346,445

Total included within long term borrowings (Note 25) 19,065,817 46,346,445

28. Trade and other payables

Group Company 2011 2010 2011 2010 RM RM RM RM

Current Trade payables Third parties 27,949,953 23,336,342 - -

Other payables Amounts due to related parties: Due to a corporate shareholder of subsidiary companies 1,077,250 1,071,250 - - Due to a director 6,326,389 - - - Due to other related companies - 12,840 - - Due to holding corporation 19,784,705 4,940,589 2,536,568 1,302,786

27,188,344 6,024,679 2,536,568 1,302,786 Other payables 14,578,004 3,051,886 - - Accruals 4,359,613 3,731,428 1,536,303 1,563,087 Coupon on bonds 70,639 231,250 70,639 231,250

46,416,600 13,039,243 4,143,510 3,097,123

Total trade and other payables 74,366,553 36,375,585 4,143,510 3,097,123 Add: Loans and borrowings (Note 25) 116,670,558 89,424,895 49,379,232 46,613,755

Total financial liabilitiescarried at amortised cost 191,037,111 125,800,480 53,522,742 49,710,878

106 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

28. Trade and other payables (cont’d.)

(a) Trade payables

Trade payables are non-interest bearing and the normal trade credit term granted to the Group ranges from 30 to 90 days.

(b) Amounts due to related companies

The amounts due to related parties are non-interest bearing and are repayable on demand. These amounts are unsecured and are to be settled in cash.

Part of other payables of a subsidiary is provision for litigation settlement amounting to RM783,270 (2010: Nil) as detailed in Note 26(c).

29. Share capital

Number of ordinary shares of RM1 each Amount 2011 2010 2011 2010 RM RM

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

Issued and fully paid 1 January/31 December 205,978,000 205,978,000 205,978,000 205,978,000

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 general meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

PASDEC | Annual Report 2011 107

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

30. Other reserves

Premium Foreign paid on Fair value currency acquisition of adjustment translation non-controlling reserve reserve interest Total RM RM RM RM

Group

At 1 January 2011 47,073,154 - (9,898,271) 37,174,883

Other comprehensive income: Available-for-sale financial assets: Loss on fair value changes (2,759,328) - - (2,759,328) Transfer to profit or loss upon disposal (9,106,441) - - (9,106,441) Foreign currency translation - (3,131,125) - (3,131,125) Less: Non-controlling interest - 542,989 - 542,989

(11,865,769) (2,588,136) - (14,453,905)

At 31 December 2011 35,207,385 (2,588,136) (9,898,271) 22,720,978

At 1 January 2010 - - - - Effect of adopting FRS 139 58,303,620 - - 58,303,620

58,303,620 - - 58,303,620 Other comprehensive income: Available-for-sale financial assets: Loss on fair value changes (8,039,922) - - (8,039,922) Transfer to profit or loss upon disposal (3,190,544) - - (3,190,544)

(11,230,466) - - (11,230,466) Transactions with owners Premium paid on acquisition of minority interest - - (9,898,271) (9,898,271)

At 31 December 2010 47,073,154 - (9,898,271) 37,174,883

Fair value adjustment reserve Fair value adjustment reserve represents the cumulative fair value changes of available-for-sale financial assets until they are disposed off or impaired.

Foreign exchange reserve The foreign exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign subsidiaries.

108 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

31. Deferred tax

Deferred income tax as at 31 December relates to the following:

Group

As at 1 Recognised As at 31 Recognised Acquisition Disposal As at 31 January in profit December in profit Exchange of of December 2010 or loss 2010 or loss differences subsidiary subsidiary 2011 RM RM RM RM RM RM RM RM

Deferred tax liabilities:

Property, plant and equipment 62,945 403,980 466,925 (1,932) (179,998) 1,180,987 (225,093) 1,240,889

Deferred tax assets:

Provision and others (283,631) (35,182) (318,813) 251,322 36,131 (237,061) - (268,421) Retirement benefit obligations (802,062) 6,724 (795,338) (18,157) - - - (813,495) Unutilised tax lossess and unabsorbed capital allowances (399,893) (958,708) (1,358,601) 922,087 1,476,562 (12,431,934) 225,093 (11,166,793)

(1,485,586) (987,166) (2,472,752) 1,155,252 1,512,693 (12,668,995) 225,093 (12,248,709)

(1,422,641) (583,186) (2,005,827) 1,153,320 1,332,695 (11,488,008) - (11,007,820)

Company

As at 1 Recognised As at 31 Recognised As at 31 January in profit December in profit December 2010 or loss 2010 or loss 2011 RM RM RM RM RM

Deferred tax assets:

Provision and others - (183,643) (183,643) (133,452) (317,095) Retirement benefit obligations - (92,884) (92,884) - (92,884)

- (276,527) (276,527) (133,452) (409,979)

PASDEC | Annual Report 2011 109

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

31. Deferred tax (cont’d.) Group Company 2011 2010 2011 2010 RM RM RM RM

Presented after appropriate offsetting as follows: Deferred tax assets (12,248,709) (2,472,752) (409,979) (276,527) Deferred tax liabilities 1,240,889 466,925 - -

(11,007,820) (2,005,827) (409,979) (276,527)

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

Group 2011 2010 RM RM

Unrecognised tax losses 24,759,412 20,707,571 Unabsorbed capital allowances 156,967 1,403,594 Provisions and others 518,051 627,076

25,434,430 22,738,241

Unrecognised tax losses and unabsorbed capital allowances

At the reporting date, the Group has tax losses and unabsorbed capital allowances of approximately RM24,759,000 and RM157,000 (2010: RM20,708,000 and RM1,404,000) respectively that are available for offset against future taxable profits of the companies in which the losses arose, for which no deferred tax asset is recognised due to uncertainty of its recoverability. The availability of unused tax losses and unabsorbed capital allowances for offsetting against future taxable profits of the respective subsidiaries in Malaysia are subject to no substantial changes in shareholdings of those subsidiaries under the Income Tax Act, 1967 and guidelines issued by the tax authority.

32. Related party transactions

(a) Sale and purchase of goods and services

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place at terms agreed between the parties during the financial year:

Group Company 2011 2010 2011 2010 RM RM RM RM

Holding corporation - office rental and service charge 506,432 506,432 - - Subsidiaries - interest income - - (19,506,533) (19,467,216) - management fee income - - (12,025,920) (12,025,920) Rental paid to a shareholder of subsidiary 679,226 - - - Rental paid to a related party 253,246 - - -

110 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

32. Related party transactions (cont’d.)

(b) Compensation of key management personnel

The remuneration of directors and other members of key management during the year was as follows:

Group Company 2011 2010 2011 2010 RM RM RM RM

Short term employee benefits 2,501,124 1,798,141 1,482,007 1,294,941 Post-employment benefits - Defined contribution plan 101,364 92,184 101,364 86,424 - Defined benefit plan 120,572 - 120,572 -

2,723,060 1,890,325 1,583,371 1,381,365

Included in the total key management personnel are:

Group Company 2011 2010 2011 2010 RM RM RM RM

Directors’ remuneration 1,658,517 1,157,410 639,400 652,450

33. Fair value of financial instruments

A. Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value

Group Company Carrying Fair Carrying Fair Note amount value amount value RM RM RM RM

2011 Financial liabilities: Loans and borrowings (non-current) - Term loans 25 44,599,203 34,983,666 30,000,000 22,913,049 - Loan at prime + 2% per annum 25 9,399,240 7,607,447 - - - Rainbow Exchangeable Bonds 27 19,065,817 16,872,867 19,065,817 16,872,867 - Obligations under finance leases 26 367,982 357,696 233,120 231,234

PASDEC | Annual Report 2011 111

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

33. Fair value of financial instruments (cont’d.)

A. Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value (cont’d.)

Group Company Carrying Fair Carrying Fair Note amount value amount value RM RM RM RM

2010 Financial liabilities: Loans and borrowings (non-current) - Term loans 25 9,581,191 7,968,890 - - - Rainbow Exchangeable Bonds 27 46,346,445 41,220,330 46,346,445 41,220,330 - Obligations under finance leases 26 318,407 292,744 203,035 185,595

B. Determination of fair value

Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:

Note

Trade and other receivables 19 Trade and other payables 28 Loans and borrowings (current) 25

The carrying amounts of these financial assets and liabilities are reasonable approximations of fair values due to their short term nature.

The carrying amounts of current loans and borrowings are reasonable approximations of fair values due to the insignificant impact of discounting.

The fair values of current loans and borrowings are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

Amounts due from/to subsidiaries

The fair values of these financial instruments are estimated by charging expected future cash flows at market incremental lending rate for similar types of lending or borrowing at the reporting date.

Quoted equity instruments

Fair value is determined directly by reference to their published market bid price at the reporting date.

112 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

33. Fair value of financial instruments (cont’d.)

B. Determination of fair value (cont’d.)

Quoted equity instruments (cont’d.)

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

(a) Level 1 Quoted prices (unadjusted) in active markets for identical assets and liabilities.

(b) Level 2 Input other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

31 December 2011 Level 1 Financial asset: Note RM

Equity instruments available-for-sale (quoted) 22 63,376,719

34. Financial risk management objectives and policies

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk, market price risk and foreign currency risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Chief Executive Officer, Senior Vice President Corporate Resources and Senior Vice President Property. The Audit Committee provides independent oversight to the effectiveness of the risk management process.

It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company do not apply hedge accounting.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities, cash and bank balances and derivatives), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. For transactions that do not occur in the country of the relevant operating unit, the Group does not offer credit terms without the approval of the Senior Vice President Corporate Resources. Since the Group trades only with recognised and creditworthy third parties, there is no requirement for collateral.

PASDEC | Annual Report 2011 113

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

34. Financial risk management objectives and policie (cont’d.)

(a) Credit risk (cont’d.)

Exposure to credit risk

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by amount due from holding corporation of RM20,654,096 (2010: RM25,400,818)

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring industry sector profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s at the reporting date is as follows:

Group 2011 2010 RM % of total RM % of total

By industry sectors:

Property development 36,456,776 87.6% 49,698,047 91.8% Manufacturing 1,435,689 3.5% 1,007,960 1.9% Construction 2,672,463 6.4% 499,558 0.9% Trading 525,607 1.3% 734,787 1.3% Others 503,049 1.2% 2,213,435 4.1%

41,593,584 100.0% 54,153,787 100.0%

By country:

Malaysia 40,157,896 96.6% 54,153,787 100.0% South Africa 1,389,989 3.3% - 0.0% Japan 45,699 0.1% - 0.0%

41,593,584 100.0% 54,153,787 100.0%

At the reporting date, approximately 14% (2010: 27%) of the Group’s trade and other receivables were due from related parties while almost all of the Company’s receivables were balances with related parties.

Financial assets that are neither past due nor impaired

Information regarding trade receivables that are neither past due nor impaired is disclosed in Note 19. Deposits with banks and other financial institutions and investment securities that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Note 19.

114 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

34. Financial risk management objectives and policies (cont’d.)

(b) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. 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.

At the reporting date, approximately 37% (2010: 37%) of the Group’s loans and borrowings (Note 25) will mature in less than one year based on the carrying amount reflected in the financial statements. 0.2% (2010: 0.1%) of the Company’s loans and borrowings will mature in less than one year at the reporting date.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

2011 On demand or within One to Over five one year five years years Total RM RM RM RM

Group

Financial liabilities:

Trade and other payables 74,366,553 - - 74,366,553 Loans and borrowings 43,238,316 42,471,819 30,960,423 116,670,558

Total undiscounted financial liabilities 117,604,869 42,471,819 30,960,423 191,037,111

Company

Financial liabilities:

Other payables 4,143,510 - - 4,143,510 Loans and borrowings 80,295 49,297,060 1,877 49,379,232

Total undiscounted financial liabilities 4,223,805 49,297,060 1,877 53,522,742

PASDEC | Annual Report 2011 115

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

34. Financial risk management objectives and policies (cont’d.)

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings, loans at floating rates given to related parties and investments in debt securities classified as available-for-sale. The Company’s loans at floating rate given to subsidiaries form a natural hedge for its non-current floating rate bank loan.

The Group manages its interest rate exposure by maintaining a mixed of fixed and floating rate borrowings to achieve the overall cost effectiveness.

(d) Market price risk

Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates).

The Group is exposed to equity price risk arising from its investment in quoted equity instruments. The quoted equity instruments in Malaysia are listed on the Bursa Malaysia. These instruments are classified as held for trading or available-for-sale financial assets. The Group does not have exposure to commodity price risk.

(e) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily RM and South Africa Rand (“ZAR”). The foreign currencies in which these transactions are denominated are mainly ZAR.

Approximately 39% (2010: Nil) of the Group’s sales are denominated in foreign currencies whilst all of costs are denominated in the respective functional currencies of the Group entities. The Group’s trade receivable and trade payable balances at the reporting date have similar exposures.

The Group also holds cash and cash equivalents denominated in foreign currencies for working capital purposes. At the reporting date, such foreign currency balances (mainly in ZAR) amount to RM6,385,794 (2010: Nil).

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change in the South Africa Rand (“ZAR”), Japanese Yen (“JPY”), Euro (“EUR”) and Botswana Pula (“BWP”) exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.

RM Profit net of tax

ZAR/RM - strengthened 3% (2010: 3%) 43,071 - weakened 3% (2010: 3%) (43,071) JPY/RM - strengthened 3% (2010: 3%) (311) - weakened 3% (2010: 3%) 311 EUR/RM - strengthened 3% (2010: 3%) (562,602) - weakened 3% (2010: 3%) 562,602 BWP/RM - strengthened 3% (2010: 3%) (1,479) - weakened 3% (2010: 3%) 1,479

116 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

35. Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2011 and 31 December 2010.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, loans and borrowings, trade and other payables, less cash and bank balances. Capital includes equity attributable to the owners of the parent less the fair value adjustment reserve.

Group Company Note 2011 2010 2011 2010 RM RM RM RM

Loans and borrowings 25 116,670,558 89,424,895 49,379,232 46,613,755 Trade and other payables 28 74,366,553 36,375,585 4,143,510 3,097,123 Less: - Cash and bank balances 23 (33,002,510) (22,538,481) (11,208,305) (5,953,496)

Net debt 158,034,601 103,261,999 42,314,437 43,757,382

Equity attributable to the owners of the parent 365,105,345 384,198,120 245,918,866 240,889,688 Less: Fair value adjustment reserve 30 (35,207,385) (47,073,154) - -

Total capital 329,897,960 337,124,966 245,918,866 240,889,688

Capital and net debt 487,932,561 440,386,965 288,233,303 284,647,070

Gearing ratio 32% 23% 15% 15%

36. Dividends

Group and Company 2011 2010 RM RM

Recognised during the financial year:

Dividends on ordinary shares: Final tax exempt (single-tier) dividend for 2010: 2.00 sen (2010: Nil) per share. 4,119,560 -

PASDEC | Annual Report 2011 117

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

37. Segment information

For management purposes, the Group is organised into business units based on their products and services, and has five reportable operating segments as follows:

I. Investment holding - provision of management services; II. Property development - the development of residential and commercial properties; III. Trading - in building materials; IV. Construction - construction of residential and commercial properties; V. Manufacturing - manufacture of automotive related products; VI. Others - value engineering and consultancy services.

Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a Group basis and are not allocated to operating segments.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

Investment Property Manufac- Holding Development Trading Construction turing Others Total Elimination Note Consolidated RM RM RM RM RM RM RM RM RM

31 December 2011

Revenue - Sales to external customers - 52,178,029 1,267,186 4,278,080 38,806,384 734,081 97,263,760 - 97,263,760 - Inter-segment sales 12,025,920 53,400 215,753 1,571,329 - 912,809 14,779,211 (14,779,211) A -

Total revenue 12,025,920 52,231,429 1,482,939 5,849,409 38,806,384 1,646,890 112,042,971 (14,779,211) 97,263,760

Results Depreciation 109,174 601,551 3,646 24,209 806,440 190,268 1,735,288 - 1,735,288 Share of results of associates - - - - 92,252 - 92,252 - 92,252 Other non-cash expenses 372,212 447,367 - 19,812 - 6,361 845,752 - B 845,752 Profit/(loss) before tax 8,126,909 (13,301,606) (285,783) (257,013) (1,143,553) (2,264,368) (9,125,414) 9,929,912 C 804,498

Assets Investment in associates - 1,200,000 - - 16,881,430 - 18,081,430 2,000,077 20,081,507 Addition to non- current asset 541,540 2,790,422 - 4,351 1,820,277 2,640 5,159,230 - D 5,159,230 Segment assets 300,221,426 490,086,115 6,991,849 7,795,450 66,072,908 23,939,882 895,107,630 (333,033,700) E 562,073,930

Segment liabilities 54,302,561 287,907,664 3,481,093 14,006,340 97,945,995 20,249,254 447,892,907 (282,818,980) F 195,073,927

118 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

37. Segment information (cont’d.)

Investment Property Manufac- Holding Development Trading Construction turing Others Total Elimination Note Consolidated RM RM RM RM RM RM RM RM RM

31 December 2010

Revenue - Sales to external customers - 70,862,264 1,598,394 8,864,132 1,493 3,817,069 85,143,352 - 85,143,352 - Inter-segment sales 12,028,056 26,296,735 558,718 7,176,567 243,568 411,954 46,715,598 (46,715,598) A -

Total revenue 12,028,056 97,158,999 2,157,112 16,040,699 4,229,023 131,858,950 (46,715,598) 85,143,352

Results Depreciation and amortisation 45,911 750,976 20,536 21,781 388,214 193,987 1,421,405 - 1,421,405 Share of results of associates - (67,849) - - - - (67,849) - (67,849) Other non-cash expenses 478,917 (3,942,263) 525,420 1,861,336 326,732 1,156 (748,702) 3,371,869 B 2,623,167 Profit/(loss) before tax 16,498,221 5,431,945 1,597,511 (1,618,165) (913,728) (294,552) 20,701,232 (13,874,483) C 6,826,749

Assets Investment in associates - 1,200,000 - - - - 1,200,000 2,000,077 3,200,077 Addition to non- current asset 183,000 11,847,884 - 11,050 1,189 26,446 12,069,569 - D 12,069,569 Segment assets 294,570,476 526,175,818 6,816,589 4,782,748 4,583,592 17,232,488 854,161,711 (336,717,411) E 517,444,300

Liabilities - Segment liabilities 53,680,789 298,521,047 3,020,050 10,736,625 8,371,972 11,043,656 385,374,139 (252,127,959) F 133,246,180

A Inter-segment revenues are eliminated on consolidation.

B Other material non-cash expenses consist of the following items as presented in the respective notes to the financial statements:

Note 2011 2010 RM RM

Impairment of financial assets 7 93,283 1,985,295 Reversal of impairment losses 7 (408,353) (432,202) Impairment of property development cost 7 23,063 241,244 Provisions for impairment of inventories 7 595,678 191,912 Increase in liability for defined benefit plan 8 542,081 636,918

845,752 2,623,167

PASDEC | Annual Report 2011 119

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

37. Segment information (cont’d.)

C The following items are added to/(deducted from) segment profit to arrive at “Profit before tax from continuing operations” presented in the consolidated statement of comprehensive income:

2011 2010 RM RM

Share of results of associates 92,252 (67,849) Profit from inter-segment sales (11,151,413) (23,577,897) Finance income (24,868,728) (23,862,790) Finance costs 24,868,728 23,862,790 Unallocated corporate expenses 20,989,073 9,771,263

9,929,912 (13,874,483)

D Additions to non-current assets consist of:

2011 2010 RM RM

Property, plant and equipment 2,417,408 361,473 Land held for property development 2,741,822 11,708,096

5,159,230 12,069,569

E The following items are added to/(deducted from) segment assets to arrive at total assets reported in the consolidated statement of financial position:

2011 2010 RM RM

Investment in associates 2,000,077 2,000,077 Investment in subsidiaries (99,465,519) (87,695,002) Inter-segment assets (235,568,258) (251,022,486)

(333,033,700) (336,717,411)

F The following item is deducted from segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position:

2011 2010 RM RM

Inter-segment liabilities (282,818,980) (252,127,959)

120 PASDEC | Annual Report 2011

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

37. Segment information (cont’d.)

Geographical information

Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows:

Revenues Non-current assets 2011 2010 2011 2010 RM RM RM RM

Malaysia 50,296,848 85,143,352 264,887,854 254,610,781 South Africa 46,966,912 - 32,299,235 -

97,263,760 85,143,352 297,187,089 254,610,781

Non-current assets information presented above consist of the following items as presented in the consolidated statement of financial position:

2011 2010 RM RM

Property, plant and equipment 15,744,920 13,123,227 Land held for property development 141,194,472 142,164,607 Investment properties 10,049,188 7,172,754 Investments in associates 20,081,507 3,200,077 Marketable securities 63,376,719 86,136,047 Deferred tax assets 11,007,820 2,005,827 Intangible asset 35,732,463 808,242

297,187,089 254,610,781

38. Significant events

(a) On 1 April 2011, a wholly owned subsidiary, Mutiara Pasdec Sdn. Bhd. acquired 100% equity interest representing 10,000,000 ordinary shares of RM1.00 each in POSB for a total consideration of RM8,855,000. As a result of this acquisition, POSB has become a wholly-owned subsidiary of the Company. Further details in relation to the acquisition are disclosed in Note 16.

Subsequently, on 16 November 2011, Pasdec Automotive Technologies (Pty) Ltd., a sub-subsidiary of POSB completed the acquisition of 30.87% equity interest in CRH Africa Automotive (Pty) Ltd. for a total consideration of ZAR48,000,000 (RM18,264,000).

(b) On 11 April 2011, a wholly owned subsidiary, Pasdec Bina Sdn. Bhd. disposed its entire equity interest in Kuantan Bricks Sdn. Bhd. (“KBSB”) for a total consideration of RM2,200,000. The disposal was completed on 31 December 2011 and KBSB is no longer a subsidiary of the Group. Further details in relation to the disposal are disclosed in Note 16.

(c) During the year, RM20 million nominal amount of Rainbow Exchangeable Bonds (“REBs”) under Series 2 were redeemed. Up to end of the financial year, the entire RM15 million nominal amount of REBs under Series 1 and RM118 million from RM135 million nominal amount REBs under Series 2 have been redeemed.

PASDEC | Annual Report 2011 121

Notes to the Financial Statements (Cont’d) For The Financial Year Ended 31 December 2011

39. Supplementary information – breakdown of retained profits into realised and unrealised

The breakdown of the retained profits of the Group and of the Company as at 31 December 2011 into realisedand unrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Group Company 2011 2011 RM RM

Total retained profits/(accumulated losses) of the Company and its subsidiaries - Realised 36,489,440 (5,984,863) - Unrealised 10,224,550 409,979

46,713,990 (5,574,884) Total share of retained profits from associates - Realised 2,092,329 - - Unrealised - -

48,806,319 (5,574,884) Less: Consolidation adjustments (44,592,051) -

Retained profits/(accumulated losses) as per financial statements 93,398,370 (5,574,884) This page has been intentionally left blank. PROXY FORM

CDS Account No. No. of shares held

I/We of (Full name in block, NRIC No./Company No. and telephone number) being a member/members of PASDEC HOLDINGS BERHAD hereby appoint

Full Name (in Block) NRIC/Passport No. Proportion of Shareholdings No. of Shares % Address

and/or (delete as appropriate)

Full Name (in Block) NRIC/Passport No. Proportion of Shareholdings No. of Shares % Address or failing him/her the Chairman of the meeting as my/our proxy to vote for me/us and on my/our behalf at the Sixteenth (16th) Annual General Meeting of the Company to be held at Meranti 1, Hyatt Regency Kuantan Resort, Teluk Chempedak, 25050 Kuantan, Pahang Darul Makmur on Wednesday, 27 June 2012 at 3.00 p.m. or any adjournment thereof, and to vote as indicated below:-

ORDINARY RESOLUTION FOR AGAINST 1. To receive the audited financial statements for the year ended 31 December 2011 2. Re-election of Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob (Article 83) 3. Re-election of Dato’ Abdul Ghani bin L. Sulaiman (Article 83) 4. Re-election of Dato’ Dr. Hamdan bin Jaafar (Article 83) 5. Re-appointment of Dato’ Mohamed Amin bin Haji Daud (Section 129) 6. Payment of Directors’ Fees 7. Re-appointment of Messrs. Hanafiah Raslan & Mohamad as Auditors

(Please indicate with an “X” in the appropriate spaces provided above as to how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his discretion.)

Signed this day of , 2012

Signature of Member/Common Seal

Notes:- 1. A member entitled to attend and vote at the meeting may appoint not more than two proxies to attend and vote in his stead, but such appointment shall be invalid unless he specifies the proportions of his holdings for each proxy. A proxy may, but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 2. A member of the Company who is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 may appoint at least one proxy but not more than two proxies in respect of each securities account. 3. The instrument appointing a proxy must be signed by the appointer or his attorney duly authorised in writing or if the appointer is a corporation either under common seal or under the hand of an attorney or an officer duly authorised. 4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 14th Floor, Menara Teruntum, Jalan Mahkota, 25000 Kuantan, Pahang Darul Makmur, not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof. Fold this flap for sealing

Then fold here

STAMP

The Company Secretary PASDEC HOLDINGS BERHAD 14th Floor, Menara Teruntum Jalan Mahkota, 25000 Kuantan Pahang Darul Makmur

1st fold here CORPORATE DIRECTORY

14th Floor, Menara Teruntum Jalan Mahkota, 25000 Kuantan, annual Pahang Darul Makmur. report Telephone/Telefon : 09-5133888 Facsimile/Faksimili : 09-5145988 2011 Website : www.pasdec.com.my