Seal Incorporated Berhad (Company No: 4887 M) (Incorporated in Malaysia)

Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

Statutory financial statements for the year ended 30 June 2000 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

Corporate information

Directors Y.A.M.Tengku Sulaiman Shah Ibni Sultan Salahuddin Abdul Aziz Shah Chairman Tan Soo Hai Executive Director Dato’ Haji Abdul Hanif bin Abdullah Ooi Swee Aik Abd. Malek bin Hamzah

Audit Committee Y.A.M. Tengku Sulaiman Shah Ibni Sultan Salahuddin Abdul Aziz Shah Chairman (Independent Director) Ooi Swee Aik Member (Independent Director) Tan Soo Hai Member (Executive Director)

Secretaries Leong Oi Wah (MAICSA 7023802) Hooi Choy Khuan (LS 04870) Cheng Ghee Cheng (LS 04598)

Registered Office No. 21 & 23 Jalan Hussein (Ground Floor) 30250 Ipoh, Perak Darul Ridzuan, Malaysia Telephone No.: 05-2415633

Registrars Signet Share Registration Services Sdn. Bhd. No. 21 & 23 Jalan Hussein (Ground Floor) 30250 Ipoh, Perak Darul Ridzuan, Malaysia

Head office 3rd Floor, Selayang Mall Jalan SU 9, Taman Selayang Utama 68100 Batu Caves, Selangor Darul Ehsan, Malaysia

Factory office Site 28 & 30, Tasek Drive Tasek Industrial Estate 31400 Ipoh, Perak Darul Ridzuan, Malaysia

Auditors PricewaterhouseCoopers 1st Floor Standard Chartered Bank Chambers 21-27 Jalan Dato’ Maharaja Lela 30710 Ipoh, Perak Darul Ridzuan, Malaysia

Principal bankers Phileo Allied Bank (Malaysia) Berhad Bank Pembangunan & Infrastruktur Malaysia Berhad Southern Bank Berhad Arab Malaysian Bank Berhad Bank Kerajasama Rakyat Malaysia Berhad Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

Statutory financial statements for the year ended 30 June 2000

Index

Pages

Directors’ report 1 - 4

Statement by Directors 5

Statutory declaration 5

Report of the auditors 6 - 7

Financial statements

Income statements 8

Balance sheets 9

Statements of changes in equity 10

Cash flow statements 11

Notes to the financial statements 12 - 29 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

Directors’ report for the financial year ended 30 June 2000

The Directors submit their annual report to the members together with the audited financial statements of the Group and of the Company for the year ended 30 June 2000.

Principal activities

The principal activities of the Company are those of property investment and the manufacturing of plywood. The principal activities of the subsidiary companies during the financial year are set out in note 11 to the financial statements. There were no significant changes in the nature of these activities other than the temporary cessation of a subsidiary company’s plywood manufacturing operations.

Financial results

Group Company RM RM Loss for the financial year after taxation 37,347,650 17,178,602 Minority interest (8,698,195) - Net loss attributable to shareholders 28,649,455 17,178,602

Dividends

No dividends have been paid, declared or proposed since 30 June 1999.

Reserves and provisions

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

1 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

Directors

The Directors in office since the date of the last report are:

Y.A.M. Tengku Sulaiman Shah Ibni Sultan Salahuddin Abdul Aziz Shah Dato’ Haji Abdul Hanif bin Abdullah Ooi Swee Aik Tan Soo Hai Abd. Malek bin Hamzah appointed 3 May 2000 Ng Yeong Lee @ Wang Yong Lee resigned 3 January 2000 Lee Aik Chong resigned 2 May 2000 Nazam bin Mohd. Nazir resigned 25 July 2000

Directors’ interests in shares

According to the Register of Directors’ Shareholdings, particulars of interests of Directors who held office at the end of the financial year in the shares in the Company were as follows:

Number of ordinary shares of RM1 each Balance at 1.7.1999/ date of Balance at In the Company appointment Bought Sold 30.6.2000 Direct interest Tan Soo Hai 100,000 - - 100,000 Abd. Malek bin Hamzah 12,000 - - 12,000 Indirect interest Dato’ Haji Abdul Hanif bin Abdullah 30,079,057 - 27,156,000 2,923,057 Tan Soo Hai 108,000 - 108,000 - Nazam bin Mohd. Nazir 30,079,057 - 27,156,000 2,923,057

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

Directors’ benefits

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling Directors of the Company to 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 the fees and other emoluments shown in the notes to the accounts by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

2 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

Directors’ rotation

In accordance with the Company’s Articles of Association, Y.A.M. Tengku Sulaiman Shah Ibni Sultan Salahuddin Abdul Aziz Shah and Dato’ Haji Abdul Hanif bin Abdullah retire by rotation from the Board at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.

Directors’ retirement

In accordance with the Company’s Articles of Association, Abd. Malek bin Hamzah, who was appointed during the year retires from the Board at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election.

Statutory information on the financial statements

Before the income statements and balance sheets of the Group and the Company were made out, the Directors took reasonable steps:

(a) 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

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

At the date of this report, the Directors are not aware of any circumstances:

(a) which would render the amounts written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and the Company inadequate to any material extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and the Company misleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and the Company misleading or inappropriate.

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, in the opinion of the Directors, will or may substantially affect the ability of the Group and the Company to meet their obligations when they fall due.

3 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

At the date of this report, there does not exist:

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

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

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 which would render any amount stated in the financial statements misleading.

In the opinion of the Directors:

(a) the results of the Group’s and the Company’s operations during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature except for the write down of plant and machinery and the provision for doubtful debts as disclosed in the income statements; and

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

Auditors

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

In accordance with a resolution of the Board of Directors dated 24 October 2000

Y.A.M. Tengku Sulaiman Shah Ibni Sultan Salahuddin Abdul Aziz Shah Tan Soo Hai Director Director

4 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

Statement by Directors Pursuant to Section 169 (15) of the Companies Act, 1965

We, Y.A.M. Tengku Sulaiman Shah Ibni Sultan Salahuddin Abdul Aziz Shah and Tan Soo Hai of Seal Incorporated Berhad, state that, in the opinion of the Directors, the financial statements set out on pages 8 to 29 are drawn up so as to give a true and fair view of the state of affairs of the Group and the Company as at 30 June 2000 and of the results and cash flows of the Group and the Company for the financial year ended on that date in accordance with the applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965.

In accordance with a resolution of the Board of Directors dated 24 October 2000

Y.A.M. Tengku Sulaiman Shah Ibni Sultan Salahuddin Abdul Aziz Shah Tan Soo Hai Director Director

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

I, Tan Soo Hai, being the Director primarily responsible for the financial management of Seal Incorporated Berhad, do solemnly and sincerely declare that the financial statements set out on pages 8 to 29 are, to the best of my knowledge and belief, correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed Tan Soo Hai at Kuala Lumpur on 24 October 2000, before me

Haron Hashim [No. W 128] Commissioner for Oaths Kuala Lumpur

5 Report of the auditors to the members of Seal Incorporated Berhad (Company No: 4887 M)

We have audited the financial statements set out on pages 8 to 29. These financial statements are the responsibility of the Company’s Directors. Our responsibility is to express an opinion on these financial statements based on our audit.

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

In our opinion:

(a) the financial statements have been prepared in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of:

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

(ii) the state of affairs of the Group and the Company as at 30 June 2000 and of the results and cash flows of the Group and the Company for the year ended on that date; and

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

6 Report of the auditors to the members of Seal Incorporated Berhad (continued) (Company No: 4887 M)

Without qualifying our opinion, we draw attention to note 2 of the notes to the financial statements. The Group and the Company incurred a net loss of RM28,649,455 and RM17,178,602 respectively for the financial year ended 30 June 2000 and as at that date, the current liabilities of the Group and the Company exceeded their current assets by RM93,887,639 and RM101,583,138 respectively. The expected cash flows from the existing activities of the Group and the Company are not sufficient to meet their financial obligations as and when they fall due. Accordingly, the appropriateness of preparing the financial statements of the Group and the Company on a going concern basis is dependent on the successful completion of the corporate exercise as disclosed in note 2 to the financial statements.

We have considered the financial statements and auditors’ report of the subsidiary companies of which we have not acted as auditors, as indicated in note 11 to the financial statements.

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

The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualification other than the qualification as disclosed in note 11 to the financial statements and did not include any comment made under subsection (3) of Section 174 of the Act.

PricewaterhouseCoopers [No. AF:1146] Public Accountants

Tan Hock Hin [No. 441/3/01(J/PH)] Partner of the firm

Ipoh, 24 October 2000

7 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

Income statements for the financial year ended 30 June 2000

Group Company 2000 1999 2000 1999 Note RM RM RM RM Revenue 4 15,055,001 20,417,065 12,535,848 10,029,409 Other operating income 219,904 329,107 103,651 133,038 Changes in inventories of finished goods and work in progress (2,577,694) (2,276,669) (486,357) 449,897 Raw materials and consumables and spares used (3,014,784) (5,853,114) (1,954,690) (809,459) Staff costs (4,050,906) (6,167,959) (2,212,339) (1,343,316) Depreciation and amortisation (4,903,223) (4,951,569) (3,483,542) (3,454,337) Other operating expenses (8,792,918) (11,111,750) (5,826,081) (5,788,123) Provision for diminution in value of investment in subsidiary companies - - (1,685,000) - Write down of plant and machinery (10,605,905) - (5,897,592) - Retrenchment costs (2,497,193) (1,127,000) - - Provision for doubtful debts (7,620,690) - - - Loss from operations 5 (28,788,408) (10,741,889) (8,906,102) (782,891) Finance costs 6 (8,558,642) (7,343,654) (8,272,500) (7,205,541) Loss before taxation (37,347,050) (18,085,543) (17,178,602) (7,988,432) Taxation 7 (600) 2,080,730 - - Loss from ordinary activities (37,347,650) (16,004,813) (17,178,602) (7,988,432) Minority interest 8,698,195 3,178,890 - - Net loss attributable to shareholders (28,649,455) (12,825,923) (17,178,602) (7,988,432)

Loss per share 8 (25.5) sen (11.4) sen

The notes on pages 12 to 29 form part of these financial statements.

8 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

Balance sheets as at 30 June 2000

Group Company 2000 1999 2000 1999 Note RM RM RM RM Non-current assets Property, plant and equipment 9 23,961,818 62,965,338 13,032,848 45,908,374 Investment properties 10 200,031,663 200,031,663 200,031,663 200,031,663 Investment in subsidiary companies 11 - - 14,223,259 15,908,259 Development properties and expenditure 12 57,420,707 - 57,420,707 - Deferred expenditure 13 - 106,534 - - Other investments 14 4,000 4,000 - - 281,418,188 263,107,535 284,708,477 261,848,296 Current assets Inventories 15 2,754,226 7,090,762 1,161,254 2,045,388 Trade debtors 16 1,125,818 9,332,989 993,055 1,238,877 Other debtors and prepayments 17 1,755,543 1,543,733 984,741 305,689 Amount owing by subsidiary companies 18 - - 51,395 42,669 Deposits, bank and cash balances 19 117,279 500,880 31,377 179,839 5,752,866 18,468,364 3,221,822 3,812,462 Current liabilities Trade creditors 4,955,137 7,015,364 1,076,136 1,745,387 Other creditors and accrued liabilities 24,654,650 14,062,625 16,022,487 6,784,749 Provisions for liabilities and charges 4,014,532 3,947,834 59,167 - Amount owing to subsidiary companies 20 - - 32,286,661 35,993,900 Taxation 1,690,119 1,523,904 - - Borrowings 21 54,312,479 54,506,421 52,477,233 52,208,621 Bank overdrafts 22 10,013,588 9,789,285 2,883,276 2,761,581 99,640,505 90,845,433 104,804,960 99,494,238 Net current liabilities (93,887,639) (72,377,069) (101,583,138) (95,681,776)

Non-current liabilities Borrowings 21 (37,819,899) (3,685,315) (37,289,404) (3,151,983) 149,710,650 187,045,151 145,835,935 163,014,537 Financed by: Capital and reserves Share capital 23 112,145,732 112,145,732 112,145,732 112,145,732 Share premium 249,797,108 249,797,108 249,797,108 249,797,108 Reserves 277,675 264,526 352,940 352,940 Accumulated losses (217,886,857) (189,237,402) (216,459,845) (199,281,243) 144,333,658 172,969,964 145,835,935 163,014,537 Minority interest 5,376,992 14,075,187 - - 149,710,650 187,045,151 145,835,935 163,014,537

The notes on pages 12 to 29 form part of these financial statements.

9 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

Statements of changes in equity for the financial year ended 30 June 2000

Non-distributable Asset Currency Share Share revaluation translation Accumulated capital premium reserve reserve losses Total Group RMRMRMRMRMRM Balance at 1 July 1998 112,145,732 249,797,108 352,940 (132,717 ) (176,411,479) 185,751,584 Currency translation difference - - - 44,303 - 44,303 Net loss for the year - - - - (12,825,923) (12,825,923) Balance at 30 June 1999 112,145,732 249,797,108 352,940 (88,414 ) (189,237,402) 172,969,964

Balance at 1 July 1999 112,145,732 249,797,108 352,940 (88,414 ) (189,237,402) 172,969,964 Currency translation difference - - - 13,149 - 13,149 Net loss for the year - - - - (28,649,455) (28,649,455) Balance at 30 June 2000 112,145,732 249,797,108 352,940 (75,265 ) (217,886,857) 144,333,658

Company Balance at 1 July 1998 112,145,732 249,797,108 352,940 - (191,292,811) 171,002,969 Net loss for the year - - - - (7,988,432) (7,988,432) Balance at 30 June 1999 112,145,732 249,797,108 352,940 - (199,281,243) 163,014,537

Balance at 1 July 1999 112,145,732 249,797,108 352,940 - (199,281,243) 163,014,537 Net loss for the year - - - - (17,178,602) (17,178,602) Balance at 30 June 2000 112,145,732 249,797,108 352,940 - (216,459,845) 145,835,935

The notes on pages 12 to 29 form part of these financial statements.

10 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

Cash flow statements for the financial year ended 30 June 2000

Group Company 2000 1999 2000 1999 Note RM RM RM RM Operating activities Cash receipts from customers 16,010,217 23,008,163 12,722,859 11,812,036 Cash paid to suppliers and employees (7,201,074) (18,736,363) (592,434) (6,094,860) Cash from operations 8,809,143 4,271,800 12,130,425 5,717,176 Interest paid (8,735,031) (5,327,817) (7,776,882) (4,303,874) Tax paid (187,680) (2,378) - - Net cash flow (used in)/from operating activities (113,568) (1,058,395) 4,353,543 1,413,302

Investing activities Purchase of plant and equipment - (1,039,091) - (1,039,091) Proceeds from disposal of plant and equipment - 80,150 - 80,150 Purchase of freehold land included in development properties (33,926,315) - (33,926,315) - Net cash used in investing activities (33,926,315) (958,941) (33,926,315) (958,941)

Financing activities Repayment to subsidiary companies - - (4,802,102) (805,870) Repayment of borrowings (1,188,799) (168,002) (723,408) - Term loan received - 353,252 - 353,252 Short term borrowings obtained - 1,245,000 - - Revolving loan obtained 34,828,125 - 34,828,125 - Net cash flow from/(used in) financing activities 33,639,326 1,430,250 29,302,615 (452,618) Net (decrease)/increase in cash and cash equivalents during the year (400,557) (587,086) (270,157) 1,743 Cash and cash equivalents at beginning of year (9,521,925) (8,934,839) (2,581,742) (2,583,485) Cash and cash equivalents at end of year 24 (9,922,482) (9,521,925) (2,851,899) (2,581,742)

The notes on pages 12 to 29 form part of these financial statements.

11 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

Notes to the financial statements for the year ended 30 June 2000

1 General information

The principal activities of the Company are those of property investment and the manufacture of plywood. The principal activities of the subsidiary companies during the financial year are set out in note 11 to the financial statements. During the year, a subsidiary company has temporarily ceased its plywood manufacturing operations.

The number of employees at the end of the financial year 30 June 2000 amounted to 100 (30.6.1999: 978) employees in the Group and 81 (30.6.1999: 108) employees in the Company.

2 Basis of accounting

The financial statements of the Group and the Company have been prepared under the historical cost convention, modified by the revaluation of the investments in subsidiary companies and certain long term leasehold land and buildings.

The financial statements comply with the applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965.

The Group and the Company incurred a loss of RM28,649,455 and RM17,178,602 respectively for the year ended 30 June 2000 and as at that date, the current liabilities of the Group and the Company exceeded their current assets by RM93,887,639 and RM101,583,138 respectively. The expected cash flows from the existing activities of the Group and the Company are not sufficient to meet their financial obligations as and when they fall due. During the financial year, the Directors have taken actions to temporarily close the loss making plywood manufacturing operations of a subsidiary and have rescheduled the repayment terms of certain borrowings of a subsidiary company. The Directors have proposed to undertake a private placement of up to 10% of the Company’s existing issued and paid-up share capital and also to embark on structuring a comprehensive corporate exercise to raise additional funds to significantly mitigate the Group’s and the Company’s cash flow constraints.

The Directors are of the opinion that the private placement and the corporate exercise will be successfully implemented. Accordingly, the Directors consider that it is appropriate to prepare the financial statements of the Group and the Company on a going concern basis. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that may be necessary if the Group and the Company are unable to continue as a going concern.

12 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

3 Summary of significant accounting policies

The following accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements.

(a) Consolidation

The consolidated financial statements include the financial statements of the Company and all its subsidiary companies made up to the end of the financial year.

Subsidiary companies are those companies in which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities.

The results of the subsidiary companies acquired or disposed during the financial year are included in the consolidated income statements from the dates of their acquisition or to the date of disposal. Inter-company transactions are eliminated on consolidation and the consolidated financial statements reflect external transactions only.

(b) Subsidiary companies

Investment in subsidiary companies are stated at cost and at Directors’ valuation to its par value unless in the opinion of the Directors there is a permanent diminution in value in which case a provision is made for the diminution in value.

Investments in quoted securities and other non-current investments are shown at cost and provision is made where, in the opinion of the Directors, there is a permanent diminution in value. Permanent diminution in the value of an investment is recognised as an expense in the financial year in which the diminution is identified.

On disposal of an investment, the difference between the net disposal proceeds and its carrying amount is charged or credited to the income statement.

13 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

(d) Investment properties

Investment properties are stated at cost or directors’ valuation based on independent professional valuers reports. Additions subsequent to the date of valuation are stated at cost. It is the Company’s policy to appraise the investment properties once in every five years unless in the opinion of the Directors there is a permanent diminution in value during the intervening period in which case a provision is made for the diminution in value. Any surplus or deficit arising from the revaluation will be dealt with in the Revaluation Reserve account. A deficit is set-off against the Revaluation Reserve account only to the extent of a surplus credited from the previous revaluation of the investment property and the excess of the deficit is charged to the income statements. No depreciation is provided on the investment properties. The related maintenance expenditure is dealt with in the income statements.

(e) Development properties and expenditure

The cost of land held for future development and related expenditure incurred to put the land in a condition ready for development are carried forward as development properties and expenditure.

(f) Property, plant and equipment

All property, plant and equipment are initially stated at cost. Certain land and buildings are subsequently shown at market value, based on external independent valuers, less subsequent depreciation for property. All other property, plant and equipment is stated at historical cost less depreciation.

The Directors have applied the transitional provision of International Accounting Standard No. 16 (Revised) Property, Plant and Equipment as adopted by Malaysian Accounting Standards Board where certain leasehold land and buildings are stated at their 1983 valuation less accumulated depreciation. Accordingly, this valuation has not been updated.

Freehold land is not amortised as it is deemed to have an indefinite life. The revalued amount of leasehold land is amortised in equal instalments over the periods of the respective leases that range from 55 to 88 years.

All other property, plant and equipment assets are depreciated on a straight line basis to write off the cost of each asset, to their residual values over their estimated useful lives at the following annual rates:

Buildings 2% Kongsi house, forest concession, roads and drains 10% - 20% Plant, machinery and motor vehicles 5% - 20% Furniture, fittings and equipment 5% - 20% Renovation 20%

14 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

(g) Inventories

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

Cost is determined using the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads, but excludes interest expenses.

Net realisable value is the estimate of the selling price in the ordinary course of business less cost of completion and selling expenses.

(h) Trade and other debtors

Trade debtors are carried at anticipated realisable value. Bad debts are written off in the year in which they are identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the end of the financial year.

(i) Provisions

Provisions are recognised when there is a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

(j) Deferred taxation

Provision is made using the liability method for taxation deferred by timing differences except where the tax effects of such timing differences are expected to be deferred indefinitely

Deferred tax benefits are recognised only if there is a reasonable expectation of their realisation.

(k) Revenue recognition

Sales are recognised upon delivery of products and customer acceptance, if any, net of sales taxes and discounts, and after eliminating sales within the Group.

Rental and interest income are recognised on the accruals basis and after eliminating rental and interest income charged within the Group.

15 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

(l) Foreign currencies

The Group’s foreign entities are those operations that are not an integral part of the operations of the Company. Income statements of foreign entities are translated into Ringgit Malaysia at average exchange rates for the financial year and the balance sheets are translated at exchange rates ruling at the balance sheet date. Exchange differences arising from the retranslation of the net investment in foreign entities are taken to ‘Currency translation difference’ in shareholders’ equity. On disposal of the foreign entity, such translation differences are recognised in the income statement as part of the gain or loss on disposal.

The principal closing rates used in translation of foreign currency amounts were as follows: 2000 1999 RM RM Foreign currency 1 SGD 2.183 2.256

(m) Cash and cash equivalents

Cash and cash equivalents comprise deposits with licensed banks which are free from encumbrances, bank and cash balances, and bank overdrafts.

4 Revenue

Group Company 2000 1999 2000 1999 RM RM RM RM Revenue comprises: Sales of logs and plywood at invoiced value net of discounts and allowances 5,272,042 11,286,941 2,752,889 899,285 Rental income from investment properties 9,782,959 9,130,124 9,782,959 9,130,124 15,055,001 20,417,065 12,535,848 10,029,409

16 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

5 Loss from operations Group Company 2000 1999 2000 1999 RM RM RM RM Loss from operations is stated after charging: Directors’ remuneration Fees - directors of the Company 65,000 85,000 59,167 70,000 - other directors 15,000 15,000 - - Other emoluments - directors of the Company 314,130 399,996 214,130 279,996 Depreciation and amortisation 4,903,223 4,951,569 3,483,542 3,454,338 Write down of plant and machinery 10,605,905 - 5,897,592 - Auditors’ remuneration 80,756 80,756 33,700 33,700 Cost of inventories recognised as an expense 9,013,521 - 3,926,620 1,309,597 Rent of land and buildings - 11,561 - 11,561 Provision for doubtful debts 7,620,690 1,923,873 - 1,536,315 Provision for diminution in value of investment in subsidiary companies - - 1,685,000 - Bad debt written off - 5,525 - - Preliminary and pre-operating expenses 106,534 - - - and crediting: Rental income 90,000 - 93,750 9,000 Doubtful debts recovered - 48,768 - 47,078 Gain on foreign exchange 2,372 121,196 - -

6 Finance cost

Group Company 2000 1999 2000 1999 RM RM RM RM This comprise interest expense on: - term loans 442,914 496,421 317,909 390,510 - bank overdrafts 878,208 1,134,480 247,829 298,824 - other borrowings 7,262,268 5,716,756 7,707,824 6,517,881 8,583,390 7,347,657 8,273,562 7,207,215 Interest income (24,748) (4,003) (1,062) (1,674) 8,558,642 7,343,654 8,272,500 7,205,541

17 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

7 Taxation

Group 2000 1999 RM RM Malaysian income tax 600 - Transfer from deferred taxation - (2,080,700) 600 (2,080,700) Taxation (over)/underprovided in previous year - (30) 600 (2,080,730)

Timing differences which are not recognised nor accounted for comprise the following:

Group Company 2000 1999 2000 1999 RM RM RM RM Unabsorbed tax losses 72,748,000 60,590,000 56,799,000 51,531,000 Unabsorbed capital allowances 59,051,000 57,173,000 54,459,000 53,363,000 Unabsorbed reinvestment allowances 103,000 103,000 - - Provisions 6,505,000 2,795,000 293,000 293,000 Depreciation and corresponding taxation allowances (10,082,000) (22,780,000) (5,862,000) (13,279,000) 128,325,000 97,881,000 105,689,000 91,908,000

Subject to the agreement with the Inland Revenue Board, the above unabsorbed tax losses and capital allowances of the Group and the Company can be carried forward and utilised to offset against future taxable profits of the Group and the Company respectively.

8 Loss per share

The loss per share for the year has been calculated based on the Group’s loss after taxation and minority interests of RM28,649,455 (1999: RM12,825,923) and the number of ordinary shares in issue of 112,145,732 (1999: 112,145,732).

18 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

9 Property, plant and equipment

Kongsi Plant, Long Long Short house, machinery, Renovation, term term term forest motor furniture, leasehold leasehold leasehold concession, vehicles fittings Freehold land and land and land and roads and and and land buildings buildings buildings drains loose tools equipment Group at cost at valuation at cost at cost at cost at cost at cost Total 2000 RM RM RM RM RM RM RM RM Cost/Valuation At 1 July 1999 23,821,872 14,748,020 3,485,672 1,923,233 3,339,238 103,830,118 4,358,582 155,506,735 Write off - - - - (793,352) - - (793,352) Reclassification [Note 9(c)] (23,494,392) ------(23,494,392) At 30 June 2000 327,480 14,748,020 3,485,672 1,923,233 2,545,886 103,830,118 4,358,582 131,218,991

Depreciation At 1 July 1999 - 6,877,384 2,686,490 1,319,238 3,339,223 76,445,156 1,873,906 92,541,397 Charge for the year - 167,234 13,110 13,202 7 4,017,879 691,791 4,903,223 Write off - - - - (793,352) - - (793,352) Write down [Note 9(b)] - - - - - 10,605,905 - 10,605,905 At 30 June 2000 - 7,044,618 2,699,600 1,332,440 2,545,878 91,068,940 2,565,697 107,257,173

Net book value At 30 June 2000 327,480 7,703,402 786,072 590,793 8 12,761,178 1,792,885 23,961,818

1999 Cost/Valuation At 1 July 1998 23,821,872 14,748,020 5,408,905 - 3,339,238 103,884,334 3,455,946 154,658,315 Reclassification - - (1,923,233) 1,923,233 - - - - Additions - - - - - 134,235 904,856 1,039,091 Disposals - - - - - (188,451) (2,220) (190,671)

At 30 June 1999 23,821,872 14,748,020 3,485,672 1,923,233 3,339,238 103,830,118 4,358,582 155,506,735

Depreciation At 1 July 1998 - 6,710,149 3,958,303 - 3,318,893 72,456,290 1,257,631 87,701,266 Reclassification - - (1,306,036) 1,306,036 - - - - Charge for the year - 167,235 34,223 13,202 20,330 4,100,304 616,275 4,951,569 Disposals - - - - - (111,438) - (111,438)

At 30 June 1999 - 6,877,384 2,686,490 1,319,238 3,339,223 76,445,156 1,873,906 92,541,397

Net book value At 30 June 1999 23,821,872 7,870,636 799,182 603,995 15 27,384,962 2,484,676 62,965,338

19 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

9 Property, plant and equipment (continued)

Kongsi Plant, Long Short house, machinery, Renovation, Long term term term forest motor furniture, leasehold leasehold leasehold roads vehicles fittings Freehold land and land and land and and and and land buildings buildings buildings drains loose tools equipment Company at cost at valuation at cost at cost at cost at cost at cost Total 2000 RM RM RM RM RM RM RM RM Cost/Valuation At 1 July 1999 23,821,872 5,922,371 3,028,069 1,923,233 793,352 58,286,921 3,860,158 97,635,976 Write off - - - - (793,352) - - (793,352) Reclassification [Note 9(c)] (23,494,392) ------(23,494,392) At 30 June 2000 327,480 5,922,371 3,028,069 1,923,233 - 58,286,921 3,860,158 73,348,232

Depreciation At 1 July 1999 - 3,569,646 2,373,467 1,319,238 793,345 42,205,949 1,465,957 51,727,602 Charge for the year - 36,490 9,307 13,202 7 2,751,173 673,363 3,483,542 Write off - - - - (793,352) - - (793,352) Write down [Note 9(b)] - - - - - 5,897,592 - 5,897,592 At 30 June 2000 - 3,606,136 2,382,774 1,332,440 - 50,854,714 2,139,320 60,315,384 Net book value At 30 June 2000 327,480 2,316,235 645,295 590,793 - 7,432,207 1,720,838 13,032,848

1999 Cost/Valuation At 1 July 1998 23,821,872 5,922,371 4,951,302 - 793,352 58,341,137 2,957,522 96,787,556 Reclassification - - (1,923,233) 1,923,233 - - - - Additions - - - - - 134,235 904,856 1,039,091 Disposals - - - - - (188,451) (2,220) (190,671) At 30 June 1999 23,821,872 5,922,371 3,028,069 1,923,233 793,352 58,286,921 3,860,158 97,635,976

Depreciation At 1 July 1998 - 3,533,155 3,670,196 - 793,345 39,506,897 881,110 48,384,703 Reclassification - - (1,306,036) 1,306,036 - - - - Charge for the year - 36,491 9,307 13,202 - 2,810,490 584,847 3,454,337 Disposals - - - - - (111,438) - (111,438) At 30 June 1999 - 3,569,646 2,373,467 1,319,238 793,345 42,205,949 1,465,957 51,727,602

Net book value At 30 June 1999 23,821,872 2,352,725 654,602 603,995 7 16,080,972 2,394,201 45,908,374

20 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

9 Property, plant and equipment (continued)

(a) Included under valuation of property of the Group and the Company at 30 June 2000 are the following:

Year of Amount of valuation Description of property Valuation Basis of valuation Company RM 1983 Leasehold land and buildings at 5,922,371 Fair market value based Ipoh on independent professional valuation Subsidiary companies 1983 Leasehold land and buildings at 8,825,649 Fair market value based Kuala Krai (Note) on independent professional valuation Total 14,748,020

Note: An amount of RM874,351 has been written off from the valuation of the buildings on leasehold land of a subsidiary company in the year ended 30 June 1998 due to the cessation of operations in that subsidiary company.

As allowed by the transitional provisions of International Accounting Standard 16 (Revised), Property, Plant and Equipment issued by the Malaysian Accounting Standards Board, these property have been stated at their prior years’ valuations.

The net book value of revalued property of the Group and the Company that would have been included in the financial statements, had these assets been carried at cost less depreciation are as follows:

Group Company 2000 1999 2000 1999 RM RM RM RM Long term leasehold land 200,048 203,307 89,786 91,210 Buildings 1,570,453 1,639,741 444,524 469,803

(b) Included in the plant and equipment of the Group and the Company are plant and machinery at a total cost of RM83,725,468 and RM51,087,330 respectively which have been retired from active use during the year. The related net book value of these plant and machinery as at 30 June 2000 amounted to RM21,211,810 and RM11,795,184 for the Group and the Company respectively. These plant and machinery were written down by half of those values to RM10,605,905 and RM5,897,592 for the Group and the Company respectively to reflect the Directors’ estimate of their net realisable value.

(c) During the year, freehold land costing RM23,494,392 has been reclassified to development properties to reflect the Directors’ intention to develop the land into a mixed housing project.

21 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

10 Investment properties Group and Company 2000 1999 RM RM At cost, Leasehold land and buildings 276,875,730 276,875,730 Less: Shortfall in profit guarantee received in: - 1998 (6,844,067) (6,844,067) - 1999 - - - 2000 - - 270,031,663 270,031,663 Provision for permanent diminution in value (70,000,000) (70,000,000) 200,031,663 200,031,663

(a) Under the agreement for the acquisition of the investment properties, the vendor has given a profit guarantee to the Company for a three year period with effect from the financial year ended 30 June 1997. The Company has not met the profit of RM17.0 million per annum warranted for the financial years ended 30 June 1997, 1998 and 1999. An amount of RM6,844,067 was received in 1998 as compensation for the shortfall in the profit guarantee in respect of the financial year ended 30 June 1997. The Company has taken legal actions against the guarantors to recover the balance of the shortfall.

(b) The open market value of the investment properties based on independent professional valuation are as follows: Amount of Date of valuation Description of property valuation RM 3 August 1999 Commercial land and shopping complex 150,000,000 20 October 2000 Industrial land and complex 55,000,000 205,000,000

11 Subsidiary companies Company 2000 1999 RM RM Shares in unquoted corporations At cost, 10,011,009 10,011,009 Provision for diminution in value (4,326,000) (4,326,000) 5,685,009 5,685,009 At directors’ valuation, 13,473,250 13,473,250 Provision for diminution in value (4,935,000) (3,250,000) 8,538,250 10,223,250 14,223,259 15,908,259

Shares stated at Directors’ valuation were revalued by the Directors to their par value in the financial year ended 30 June 1981 and 1984.

22 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

11 Subsidiary companies

The subsidiary companies are: Holding in equity By By company subsidiaries Place of 2000 1999 2000 1999 Name of company incorporation % % % % Principal activities Great Eastern Mills Berhad Malaysia 60 60 - - Manufacture of plywood. (Note) Ceased logging activity. Sam Koh Company Sdn. Berhad Malaysia 100 100 - - Ceased sawmilling Seal Board Sdn. Berhad Malaysia 100 100 - - Ceased manufacture of blockboard Seal Trading Corporation Malaysia 100 100 - - Ceased trading of timber Sdn. Bhd. products Maynah Sdn. Berhad Malaysia - - 100 100 Letting of properties Seal Services Corporation Malaysia 100 100 - - Insurance agency. Ceased hire Sdn. Bhd. purchase financing. Seal Panel-Tech Sdn. Bhd. Malaysia 100 100 - - Dormant * Seal Development Sdn. Bhd. Malaysia 100 100 - - Dormant + Seal Trading Pte. Ltd. Singapore 100 100 - - Dormant South East Asia Lumber Malaysia 100 100 - - Dormant (Plywood) Sdn. Bhd. Kelantan Lumber Products Malaysia - - 100 100 Ceased sawmilling and Sdn. Berhad provision of sawing services Gem Board Sendirian Berhad Malaysia - - 100 100 Dormant

* Not audited by PricewaterhouseCoopers + Audited by a member firm of PricewaterhouseCoopers

Note: The financial statements of this subsidiary company contain a qualification that an amount of RM7,500,000 owing by a log supplier included as trade debtors in the accounts of this subsidiary is doubtful of recovery and has not been provided for. However, the Directors of the Company have provided for this debt and reflected the provision of RM7,500,000 in the Group financial statements accordingly.

12 Development properties and expenditure

Group and Company 2000 RM At cost, Freehold land held for future development 57,360,707 Development expenditure 60,000 57,420,707

23 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

13 Deferred expenditure

Group 2000 1999 RM RM At cost, Preliminary expenses - 17,237 Pre-operating expenses - 89,297 - 106,534

The deferred expenditure has been charged out to the Income Statement during the financial year.

14 Investments

Group 2000 1999 Shares in a corporation quoted in Malaysia RM RM At cost 4,000 4,000

At market value 28,532 23,800

15 Inventories

Group Company 2000 1999 2000 1999 RM RM RM RM At cost, Raw materials - 643,947 - 236,532 Consumables and spares 2,372,451 2,747,048 703,639 864,884 2,372,451 3,390,995 703,639 1,101,416 Provision for slow moving and obsolete stocks (834,406) (94,108) -- 1,538,045 3,296,887 703,639 1,101,416 At net realisable value, Work in progress 332,183 1,147,699 145,949 208,420 Finished goods 883,998 2,646,176 311,666 735,552 1,216,181 3,793,875 457,615 943,972 2,754,226 7,090,762 1,161,254 2,045,388

24 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

16 Trade debtors

Group Company 2000 1999 2000 1999 RM RM RM RM Trade debtors 21,358,237 22,067,155 13,177,034 13,422,856 Provision for doubtful debts (20,232,419) (12,734,166 ) (12,183,979 ) (12,183,979 ) 1,125,818 9,332,989 993,055 1,238,877

17 Other debtors

Other debtors of the Group are stated after the provision for doubtful debts of RM115,271 (1999: RM44,441).

18 Amount owing by subsidiary companies

The amounts owing are non-trade in nature and are unsecured, interest free with no fixed terms of repayment. The amount is stated after provision for doubtful debts of RM171,605 (1999: RM171,605).

19 Deposits, bank and cash balances

Group Company 2000 1999 2000 1999 RM RM RM RM Bank and cash balances 68,068 246,128 8,339 158,607 Deposits with licensed banks 49,211 254,752 23,038 21,232 117,279 500,880 31,377 179,839

20 Amount owing to subsidiary companies

Company 2000 1999 RM RM Current account - interest bearing 6,836,481 11,337,125 - non-interest bearing 25,450,180 24,656,775 32,286,661 35,993,900

The amounts owing are unsecured and carry no fixed terms of repayment. The interest bearing portion carries an interest rate of 7.40% (1999: 7.40%) per annum.

25 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

21 Borrowings

Group Company 2000 1999 2000 1999 Note RM RM RM RM Secured Banker acceptances (a) - 1,948,000 - - Term loan 1 repayable by 20 quarterly instalments commencing July 1999 (b) 3,752,187 4,164,215 3,752,187 4,164,215 Term loan 2 repayable by 18 monthly instalments commencing March 2000 (c) 1,705,835 - - - Revolving loan (d) 35,482,941 - 35,482,941 - Revolving credits (e) 49,046,973 49,535,223 49,046,973 49,535,223 89,987,936 55,647,438 88,282,101 53,699,438 Unsecured Term loan 3 repayable by 16 monthly instalments commencing January 2000 (f) 659,906 883,132 - - Term loan 4 repayable by 8 half yearly instalments commencing July 1994 (g) 983,363 1,159,147 983,363 1,159,147 Revolving credit (h) 501,173 502,019 501,173 502,019 2,144,442 2,544,298 1,484,536 1,661,166 92,132,378 58,191,736 89,766,637 55,360,604 Repayable within 12 months (54,312,479) (54,506,421) (52,477,233) (52,208,621) Repayable after 12 months 37,819,899 3,685,315 37,289,404 3,151,983

(a) During the year, the bankers acceptances were rescheduled as Term Loan 2 and deferred to recommence monthly repayments in March 2000. In the previous year, the bankers acceptances carried interest rates ranging from 5.60% to 14.50% per annum and were secured by a fixed charge over a subsidiary company’s leasehold land and buildings and a floating charge over all the assets of that subsidiary company.

(b) Term loan 1 was obtained from a bank and carries an interest rate of 7.75% (1999: 7.75%) per annum and is secured by a fixed charge over certain plant and machinery of the Company.

(c) Term loan 2 carries an interest rate of 9.05% per annum and is secured by a fixed charge over a subsidiary company’s leasehold land and buildings and a floating charge over all the assets of that subsidiary company.

(d) The revolving loan was obtained from a bank and carries an interest rate of 11.25% per annum and is secured by a fixed charge over an investment property of the Company costing RM197,574,000. The loan is repayable upon maturity in December 2002.

(e) The revolving credits were obtained from banks and carry interest rates ranging from 9.30% to 10.75% (1999: 9.45% to 16.80%) per annum. The revolving credits are secured by a fixed charge over an investment property costing RM54,128,334 (1999: RM54,128,334) and the freehold land of the Company costing RM23,494,392 (1998: RM23,494,392) included as development properties.

26 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

21 Borrowings (continued)

(f) Term loan 3 was obtained from a bank and carries interest rates ranging from 9.05% to 9.50% (1999: 9.50% to 14.35%) per annum.

(g) Term Loan 4 was obtained from a third party and carries interest rates ranging from 10.50% to 14.50% (1999: 7.94% to 10.50%) per annum.

(h) The revolving credit was obtained from a bank and carries interest rates ranging from 5.05% to 7.02% (1999: 7.02% to 16.00%) per annum.

22 Bank overdrafts Group Company 2000 1999 2000 1999 RM RM RM RM Secured 7,080,830 6,977,726 - - Unsecured 2,932,758 2,811,559 2,883,276 2,761,581 10,013,588 9,789,285 2,883,276 2,761,581

The bank overdrafts of the Group and the Company carry interest rates ranging from 8.30% to 10.05% (1999: 8.55% to 15.30%) per annum. The secured bank overdrafts of the Group are secured by fixed and floating charges over all the property, plant and equipment of a subsidiary company.

23 Share capital Group and Company 2000 1999 RM RM Ordinary shares of RM1 each Authorised 500,000,000 500,000,000

Issued and fully paid 112,145,732 112,145,732

24 Cash and cash equivalents

Cash and cash equivalents included in the consolidated cash flow statement comprise the following: Group Company 2000 1999 2000 1999 RM RM RM RM Deposits, bank and cash balances 117,279 500,880 31,377 179,839 Bank overdrafts (10,013,588) (9,789,285) (2,883,276) (2,761,581) (9,896,309) (9,288,405) (2,851,899) (2,581,742) Deposits pledged to a bank (26,173) (233,520) - - (9,922,482) (9,521,925) (2,851,899) (2,581,742)

The deposits of RM26,173 (1999: RM233,520) have been pledged to a bank for guarantees issued for utility facilities of a subsidiary company.

27 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

25 Significant related party transactions

Group Company 2000 1999 2000 1999 RM RM RM RM Purchases on behalf by a subsidiary company - - 531,914 897,232 Interest charged by a subsidiary company - - 652,773 883,501 Rental of premises charged to a company in which a Director has substantial financial interest 912,662 530,636 912,662 530,636 Rental of lorry paid to a company in which certain Directors have substantial financial interests - 501,440 - - Insurance purchased from a company controlled by a person connected with a Director - 600,143 - 351,163

The above transactions were established at prices negotiated between the related parties involved.

26 Segment reporting – Group

(Loss)/profit Revenue before taxation Assets Analysis by activity RM RM RM 2000 Investment properties 9,782,959 4,200,143 202,870,126 Plywood manufacturing 5,272,042 (41,547,193) 26,880,221 Property development - - 57,420,707 15,055,001 (37,347,050) 287,171,054 1999 Investment properties 9,130,124 3,750,015 203,628,181 Plywood manufacturing 11,286,941 (21,835,558) 54,453,326 Property development - - 23,494,392 20,417,065 (18,085,543) 281,575,899

An asset of the previous year has been reclassified from plywood manufacturing to property development in line with Directors’ current year’s intention to develop the land into a mixed housing project.

28 Seal Incorporated Berhad (Company no: 4887 M) (Incorporated in Malaysia)

27 Contingent liabilities (unsecured)

Company

(a) Guarantees

Company 2000 1999 RM RM Unsecured Guarantees to banks for credit facilities extended to subsidiary companies 10,963,000 7,860,858

Group and Company

(b) Refundable deposits

Arising from the changeover of the management of the property division from Selayang Mall Sdn. Bhd. to the Company, the Company has a contingent liability in respect of refundable deposits amounting to approximately RM1.06 million (1999: RM1.45 million) that was received from the tenants by Selayang Mall Sdn. Bhd. (SMSB) in respect of rental of premises, supply of electricity and water facilities which have not been returned by SMSB to the Company.

Certain creditors have filed claims against the Group and the Company to recover principal debts amounting to approximately RM4.894 million (1999: RM1.344 million) and RM0.931 million (1999: RM0.676 million) respectively plus interests and costs. The principal debts have been provided in the financial statements of the Group and the Company but no provision has been made for interests and costs pending the outcome and settlement of the legal proceedings. The Directors are of the opinion that such contingent liabilities, if any, are not significant to the financial statements of the Group and the Company.

28 Comparatives

The presentation of the financial statements for the current year has been changed to adopt the Malaysian Accounting Standards Board (MASB) Standards No. 1 (Presentation of Financial Statements). Certain comparative figures have been reclassified to conform with current year’s presentation.