TRC SYNERGY BERHAD D ANNUAL REPORT 2004

Transcription

1 TRC SYNERGY BERHAD D ANNUAL REPORT

2 A WALL BEGINS WITH ONE BRICK. A BUILDING BEGINS WITH MANY. BEHIND LAYERS OF PAINT, CEMENT, GLASS AND METAL FACADES, A STRUCTURE OF BRICKS IS CAREFULLY CONSTRUCTED TO STAND THE TESTS OF TIME. THESE SIMPLE RECTANGULAR UNASSUMING BLOCKS ARE THE ESSENCE OF EVERY BUILDING, EVERY BRIDGE, EVERY HOSPITAL, EVERY HOME. BRICKS ARE THE SIMPLEST AND MOST NECESSARY ELEMENT IN THE BUILDING AND CONSTRUCTION INDUSTRY. EACH INTERLAYING BRICK IS STRONG AND STURDY AND SIGNIFIES TRC SYNERGY BERHAD S CORE AND DEDICATED INVOLVEMENT IN THE INDUSTRY. AS BRICKS FO BUILDINGS, TRC S SUCCESS IS ACHIEVED THROUGH THE SYNERGISTIC EFFORTS AND COMBINED CALIBERS OF ALL ITS MEMBERS. IT IS THIS FOULA THAT GUIDES THE COMPANY S REALIZATION OF BECOMING ONE OF MALAYSIA S LARG EST AND MOST SUCCESSFUL CORPORATIONS. WE ARE THE BUILDING BLOCKS OF OUR NATION. introduction 01

3 TABLE OF CONTENTS Chairman s Statement Corporate Profile Board Of Directors Profile Corporate Information Corporate Structure Statement on Corporate Governance Statement on Internal Control Audit Committee Report Financial Statements List of Properties Analysis of Shareholdings Notice of 8th Annual General Meeting Statement Accompanying Notice of Annual General Meeting Proxy Form

4 02 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T TO ALL OUR SHAREHOLDERS ON BEHALF OF THE BOARD OF TRC SYNERGY BERHAD, I HAVE PLEASURE IN PRESENTING TO YOU THE ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER. REVIEW OF OPERATIONS The year has been another challenging year for the Group. In the past 12 months, there has been a sharp decline in the number of government and private sector jobs and infrastructure projects. Overall, the construction sector contracted by 1.9% in the year under review. The scarcity of jobs coupled by the sharp rise in construction related material costs like steel bars and diesel have greatly impacted the Group s performance. CONSTRUCTION DIVISION For the period under review, construction activity was the main revenue contributor for the Group. Due to the slowdown in the construction sector, the Group s construction arm was not able to secure any sizeable projects. The New Prison Complex in Bentong, which was initially expected to commence in the third quarter of, has now been deferred to the first half of In order to cushion the impact of the contracting domestic construction activity, the Group has intensified its efforts to venture abroad, particularly, in countries like India, Middle East and Africa. We are confident that some of these ventures would materialise in the coming years and this would help to sustain the Group s construction division.

5 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 03 CHAIAN S STATEMENT Dato Hj Sufri Bin Hj Mohd Zin (Executive Chairman) PROPERTY DIVISION The Group, through its property arm, has successfully completed 122 units of semidetached and terrace houses in Ulu Klang known as Andaman Ukay and a Certificate of Fitness was issued in June. The associated company of the Group is currently developing part of a piece of land measuring 163 acres in the Plentong region, next to Permas Jaya, in Johor Bahru. It has, to date, completed Phase A comprising of 352 units of Medium Cost Apartments. Two blocks out of the five blocks of Medium Cost Apartments in Phase B comprising 356 units are currently being developed. So far, the sales for Phase B have been slow due to the soft property market in Johor. We are currently restrategising the development of the remaining land bank to be more in line with the prevailing market trends and demands of properties in Johor and to tap into its potential.

6 04 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T Seri Setia Bridge at Putrajaya MANUFACTURING DIVISION Due to the slowdown in construction activity, this division was relatively dormant for the period under review. FINANCIAL PERFOANCE The Group recorded a turnover of ,368 million and a pretax profit of 378,811 for the financial year ended 31 December. The low pretax margin is largely due to the rise in diesel prices and other construction material costs, which have invariably eroded the Group s margin.

7 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 05 CHANGES IN THE COMPOSITION OF THE GROUP On 2 July, the Company acquired 9 shares of 1.00 each in TRC Infra Sdn. Bhd., at par representing 90% equity interest, thus becoming a new subsidiary of the Group. The Group had also incorporated a new subsidiary in India known as TRC Construction India Private Limited on 12 August. It is a whollyowned subsidiary of the Company and it is expected to carry out construction activities in India. In addition to the above,, the Company had on 1 November incorporated a whollyowned subsidiary, TRC International Pte. Ltd an offshore company in Labuan to serve as an investment holding company for the international activities of the Group. The rationale for the acquisition and incorporation of the above companies is to set a platform for the Group to expand its operations both locally and internationally. ECONOMIC OUTLOOK In accordance with the Economic Report /2005, the construction sector is forecasted to grow by 1.8% in the year 2005, contributed partly by the civilengineering subsector. The housing subsector is also envisaged to remain robust, underpinned by higher incomes, low interest rates, and easy access to loans. Greater public spending is seen on road and utility, especially water, projects in the coming years. Emphasis on improving road network is mainly focused on East Malaysia and the upgrading of federal roads in the state of Pahang, Terengganu and Kelantan. We envisage that the Government will revive spending on projects under the Ninth Malaysia Plan (9MP) and this is expected to have a positive impact on the performance of the Group going forward. DIVIDEND With due recognition to the Company s shareholders support, the Board of Directors is recommending a First and Final gross dividend of 1.5 sen per share less 28% income tax amounting to 997, for the financial year ended 31 December. The dividend is subject to the shareholders approval at the forthcoming annual general meeting. ACKNOWLEDGEMENT AND APPRECIATION On behalf of the Board of Directors, I would like to extend our sincere appreciation to all our valued clients, bankers and business associates for their undivided support. I would also like to put on record my gratitude to the management and staff of the Group for their effort and hard work in spite of the challenging business environment in the preceding year. Finally, we acknowledge and appreciate the continuing support of our shareholders and we hope that the prospect for the coming years would be better for the Group.

8 06 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T Pedestrian Bridge at Taman Seri Empangan at Putrajaya

9 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 07 CORPORATE PROFILE TRC Synergy Berhad was initially incorporated as a private limited company in Malaysia under the Companies Act, 1965 on 11 December 1996 under the name TRC Synergy Sdn Bhd. On 8 January 1997, the company changed its status from a private limited company to a public company and assumed the name TRC Synergy Berhad (TRCS). TRCS was listed on the Main Board of the Bursa Malaysia Securities Berhad on 6 August 2002, where it offered Public Issue and Offer For Sale of 16,000,000 and 3,500,000 ordinary shares respectively. TRCS is principally an investment holding company while the principal activities of its subsidiary companies and associate company are related to general contracting works. This includes building and infrastructure construction, turnkey design and building contracts, hiring and servicing of vehicles and construction equipment, manufacturing and dealing in concrete products, property development and project management services. The TRCS group of companies employs over 800 personnel of which more than 15% are in the subprofessional and professional group. TRCS not only has the ability to undertake common projects like roads and buiing construction, but also specializes in mega projects like airports, railway trackworks, stadium, hospitals and large property development ventures. The company s motto As one with the nation sums up the company s aspiration to progress in tandem with the nation s vision.

10 08 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T BOARD OF DIRECTORS PROFILE Dato Haji Sufri Bin Haji Mohd Zin, Malaysian, aged 48, was appointed as the Managing Director of TRC Synergy Berhad ( TRC or the Company ) on 29 March 2002 and is presently the Executive Chairman of the Company and the Managing Director of its subsidiary Companies. He graduated from Institute of Teknologi MARA ( ITM ) in 1982 with a Diploma in Business Studies. He started his career as a banker with Bank Bumiputera Malaysia Bhd in His inherent perseverance and unique business acumen led him into the building and construction industry in YBhg Dato Hj Sufri is a member of the Audit Committee. During the Financial year ended 31 December, he attended all of the six (6) Board Meetings. He does not have any personal interest in any business arrangement involving the Company, except that he is a substantial shareholder of Andaman Budi Sdn. Bhd. which is an associate company of Trans Resources Corporation Sdn. Bhd., a wholly owned subsidiary of the Company. Dato Hj Sufri Bin Hj Mohd Zin (Executive Chairman) Abdul Aziz Bin Mohamad, Malaysian, aged 46, was appointed as an Executive Director of the Company on 29 March He joined TRC Group as a Senior Contract Executive in 1994 and was later promoted to Deputy General Manager (Contracts) in He received his early education in the Malay College Kuala Kangsar (MCKK) and later graduated from Trent Polytechnic in Nottingham, England in He is a Quantity Surveyor by profession and a member of the Institution of Surveyors, Malaysia. He started his career as an Assistant Quantity Surveyor in England with Rider Hunt and Partners in He later joined Jabatan Kerja Raya (JKR) Kuala Lumpur in 1983 as a Quantity Surveyor where he administered the contractual aspects of projects. Aziz attended all of the six (6) Board Meetings held during the financial year ended 31 December. He does not have any personal interest in any business arrangement involving the Company, except that he is a shareholder of Andaman Budi Sdn. Bhd. which is an associated company of Trans Resources Corporation Sdn. Bhd., a wholly owned subsidiary of the Company. Abdul Aziz Bin Mohamad (Executive Director)

11 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 09 Noor Zilan Bin Mohamed Noor, Malaysian, aged 45, was appointed as a Director of the Company on 13 May He graduated from ITM in 1983 with a Diploma in Law. He then joined United Malayan Banking Corporation as a Trainee Executive Officer before pursuing his further studies in the United Kingdom in 1984 where he graduated from City of London Polytechnics with LLB (Hons) majoring in Business Law in Subsequently, he went on to read Law at Lincoln s Inn and was called to the English Bar in Upon returning to Malaysia he was called and admitted to the Malaysian Bar in 1989 as an Advocate & Solicitor. He then worked as a Legal Assistant before starting his own law firm in 1991 and is now a Senior Partner with an established law firm in Kuala Lumpur specializing in the area of Corporate Law, Banking, Building and Construction Law apart from civil & criminal litigation. Noor Zilan is the Chairman to the Audit Committee, Nomination Committee and Remuneration Committee. He attended all of the six (6) Board Meetings held during the financial year ended 31 December. Noor Zilan Bin Mohamed Noor (Independent, Non Executive Director) Rahman Bin Ali, Malaysian, aged 48, was appointed as a Director of the Company on 13 May He graduated from University of Malaya in 1982 with a Degree in Accounting. He is currently a Chartered Accountant of the Malaysian Institute of Accountants. He started his career as a credit officer with Bank Bumiputera Malaysia Berhad in He left the bank in 1986 to set up his own management consultancy company under the name of Advance Management Services in 1986 before becoming a Branch Manager with a public accounting firm, Sahir and Co. in In 1994, he set up his own accounting firm by the name A. Rahman & Associates and later became a partner of Omar Arif, A. Rahman & Associates in Rahman is a member of the Audit Committee, Nomination Committee and Remuneration Committee. He attended five (5) out of six (6) Board Meetings held during the financial year ended 31 December. Rahman Bin Ali (Independent, Non Executive Director) General (R) Dato Seri Mohd Shahrom Bin Dato Hj Nordin (NonIndependent, NonExecutive Director) General (R) Dato Seri Mohd Shahrom Bin Dato Hj Nordin, aged 58, was appointed as a Director of the Company on 25 March. After his secondary education, he was selected for Officer Cadet training at the Royal Military College, Sungai Besi in 1966 before being commissioned as a Second Lieutenant to the Royal Malay Regiment in 1968 and assigned as a Platoon Commander with the 2nd Battalion, Royal Malay Regiment. General (R) Dato Seri Mohd Shahrom has served in various appointments at command, staff, training and at diplomatic service levels and he was the Chief of the Malaysian Army from 1 January to 15 September. Prior to that appointment, he was the Chief of staff at the Armed Forces Headquarters. Currently, he is the Senior Vice President Defence of the National Aerospace & Defence Industries Sdn. Bhd. (NADI). He is also the Chairman of SME Aerospace Sdn. Bhd. (SMEA) and Director of SME Ordnance Sdn. Bhd. (SMEO). Both SMEA and SMEO are subsidiary companies of the NADI Group of Companies. General (R) Dato Seri Mohd Shahrom attended five (5) out of six (6) Board Meetings held during the financial year ended 31 December. NOTE Save as disclosed, 1) none of the Directors have: i) ii) iii) any family relationship with any director and/or substantial shareholders of the Company; any conflict of interest with the Company; and any conviction for offences (other than traffic offences) within the past ten (10) years. 2) none of the Directors holds directorship in other public companies.

12 10 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T CORPORATE INFOATION Warden Quarters at Politeknik Kuching, Sarawak BOARD OF DIRECTORS Dato Hj Sufri Bin Hj Mohd Zin (Executive Chairman) Abdul Aziz Bin Mohamad (Executive Director) Rahman Bin Ali (Independent NonExecutive Director) Noor Zilan Bin Mohamed Noor (Independent NonExecutive Director) General (R) Dato Seri Mohd Shahrom Bin Dato Hj Nordin (NonIndependent, NonExecutive Director) (Appointed on 25 March ) COMPANY SECRETARIES Abdul Aziz Bin Mohamed (LS ) Dato Tang Swee Guan (MIA No. 5393) REGISTERED OFFICE / PRINCIPAL PLACE OF BUSINESS Wisma TRC No. 217 & 218 Jalan Negara 2 Taman Melawati Ulu Klang Selangor Darul Ehsan Tel No. : / Fax No. : trc@tm.net.my BRANCH OFFICE Lot 3626, Block 16, KCLD Taman Timberland Lorong Rock Kuching Sarawak Tel No. : Fax No. : WEBSITE AUDITORS Kumpulan Naga (AF0024) Suit 1, 1st Floor, Wisma Leopad No. 5, Jalan Tun Sambanthan Kuala Lumpur SHARE REGISTRAR Symphony Share Registrars Sdn Bhd (formerly known as Malaysian Share Registration Services Sdn Bhd) Level 26, Menara Multi Purpose Capital Square 8, Jalan Munshi Abdullah Kuala Lumpur Tel : Fax : / PRINCIPAL BANKERS EON Bank Berhad Malayan Banking Berhad ArabMalaysian Merchant Bank Berhad Affin Bank Berhad SOLICITORS Messrs Noorzilan & Partners Messrs C.C. Choo & Co. STOCK EXCHANGE LISTING Bursa Malaysia Securities Berhad (Main Board) (Stock No. : 5054)

13 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 11 CORPORATE STRUCTURE TRC SYNERGY BERHAD D TRANS RESOURCES CORPORATION SDN BHD (100%) P TRC INFRA SDN BHD (90%) P TRC CONSTRUCTION INDIA PTE LTD (100%) U45203KLPTC TRC INTERNATIONAL PTE LTD (100%) LL04510 GOMEX SDN BHD (45%) D TRC DEVELOPMENT SDN BHD (100%) U TRC CONCRETE INDUSTRIES SDN BHD (100%) V TRC CONSTRUCTION (SARAWAK) SDN BHD (100%) W ANDAMAN BUDI SDN BHD (40%) W TRCPDI JV SDN BHD (60%) K

14 12 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T Road P4/026 Precinct 4, Putrajaya STATEMENT ON CORPORATE GOVERNANCE The Board of Directors of TRC Synergy Berhad ( the Board ) upholds good corporate governance and has always ensured that the highest standards of corporate governance as set out in the Malaysian Code on Corporate Governance ( The Code ) are practiced within the group. These have been recognized by the Board as the Group s key responsibilities in order to protect and enhance long term shareholder value and to safeguard the Group s assets. The Board will continuously evaluate the Group s corporate governance practices and procedures, and where appropriate will adopt and implement the best practices as enshrined in the Code. In accordance with paragraph of the Bursa Malaysia s Listing Requirements ( Listing Requirements ), the Board is pleased to provide the following statement detailing the manner the Group has applied the Principles and the extent of compliance with the Best Practices.

15 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T DIRECTORS a) The Board of Directors The Group is led and controlled by an effective Board of Directors headed by the Executive Chairman who has detailed knowledge and vast experience in the construction industry. The rest of the Board members possess a wide range of skill and experiences ranging from construction, finance, legal and general management disciplines suitable for managing the Group s businesses. The Board of Directors has overall responsibility for the performance of the Group inclusive of corporate governance, strategic planning and maintaining effective control over financial and operational matters. b) Board Balance The Board consists of five members comprising two Executive Directors, two Independent NonExecutive Directors and one Non Independent Non Executive Director. The Company complies with the criteria of having at least onethird of the Board Members as Independent NonExecutive Directors. The profiles of the Directors are presented in this Annual Report on pages 8 and 9. Two of the Board members are Independent NonExecutive Directors who provide broad, unbiased and balanced assessments on proposals initiated by the Executive Directors and the senior management of the Group. The NonExecutive Directors also include a representative of Lembaga Tabung Angkatan Tentera, one of the substantial shareholders of the Company, who brings independent judgments that safeguards the interest of overall shareholders of the Company. c) Board Meeting During the financial year ended 31 December, six board meetings were held. In the meetings, the Board deliberated and considered matters relating to the Group s financial performance, key business and operational issues and business plans. Details of attendance at the meeting are as follows: NAME NO. OF MEETINGS ATTENDED Dato Hj Sufri Bin Hj Mohd Zin Abdul Aziz Bin Mohamad Noor Zilan Bin Mohamed Noor Rahman Bin Ali Gen (B) Dato Seri Mohd Shahrom Bin Dato Hj Nordin (Appointed on 25/3/04) 6/6 6/6 6/6 5/6 5/5 The Board has agreed to meet at least four times a year with additional matters addressed by way of circular resolutions and additional meetings to be held as and when the need arises. d) Supply of Information to the Board All Directors have unfettered access to all information within the Group as a full Board or in their individual capacity in carrying out their duties and responsibilities. They also have direct access to the advice and services of the Company Secretaries, internal and external auditors and other independent professionals at all times. As for the Board meeting, the Board members are provided with adequate information in the form of a complete set of Board files two weeks prior to the meeting. e) Appointment and Reelection of Directors The Company has a formal and transparent procedure for the appointment of new directors and reelection of directors. These aspects are spelt out clearly in the Company s Articles of Association.

16 14 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T All newly appointed Directors are subject to election by shareholders at the Annual General Meeting subsequent to their appointment. As for the reelection of Directors, the Articles of Association of the Company provides at least onethird of the Directors are required to retire by rotation at each financial year and are eligible to offer themselves for reelection at the Annual General Meting. All Directors shall retire from office at least once in each three years. f) Directors Training Gen (B) Dato Seri Mohd Shahrom bin Dato Hj Nordin, who was appointed as Director on 25 March, has attended and completed the Mandatory Accreditation Program ( MAP ). He will continue to undergo Continuous Education Programme ( CEP ) as prescribed by the Listing Requirements commencing from the year As for the other Directors, all of them have completed MAP as well as 72 CEP points that need to be completed during the year and. For year 2005, the Board as a whole will determine the training needs for directors and they have principally agreed to attend at least one training every year. g) Board Committees As recommended by the Code, the Board has established the following committees to assist the Board in discharging its duties: i) ii) iii) iv) Audit Committee Nomination Committee Remuneration Committee Employees and Directors Share Option Scheme (ESOS) Committee Each of these committees has its own functions and responsibilities and they report to the Board. 2. DIRECTORS REMUNERATION The Group has adopted the principle recommended by the Code whereby the level or remuneration of the Directors and senior management should reflect the level of responsibility and contributions toward the successful and efficient running of the Group s activities. Procedure To assist the Board in the discharge of its duties, the Board had established a Remuneration Committee on 22 May As at the date of the Annual Report, the composition of the Remuneration Committee is as follows: i) ii) Noor Zilan Bin Mohamed Noor Rahman Bin Ali The Committee will review and recommend to the Board the remuneration package of the executive directors and senior management of the Group with the main aim of providing a level of remuneration sufficient to attract and retain competent executives who can manage the Group effectively. During the financial year ended 31 December, the Committee met once with all members present. Disclosure The aggregate remuneration of the Directors received and receivable from the Company and its subsidiaries during the financial year are as follows: CATEGORY FEES () SALARIES () EPF & SOCSO () Executive Directors 120, , , NonExecutive Director 75, Total 195, , ,877.80

17 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 15 The remuneration paid to the Directors, analysed into the following bands, is as follows: RANGE OF REMUNERATION NUMBER OF EXECUTIVE DIRECTORS NUMBER OF NONEXECUTIVE DIRECTORS Less than 50, , , , , RELATIONSHIP WITH INVESTORS AND SHAREHOLDER COMMUNICATION The Board acknowledges the need for shareholders to be informed of all important issues and major developments concerning the Company. In addition to the various announcements made during the year, the timely release of financial results on a quarterly basis provides shareholders with an overview of the Group s performance and operations. During the financial year ended 31 December, there were a number of dialogues and analyst briefings organised by the Company. These sessions were held either at the request of the analysts or initiated by the Company. During the discussions which were attended by the Executive Directors and Senior Management staff, relevant information pertaining to the Group was disseminated to the public. The Company also has a cordial relationship with reporters who have been playing a very effective role in conveying the Group s information to the public, shareholders and investors. Besides, shareholders, investors and members of the public may also obtain updated information on the Group by accessing to the Company s website at The company uses the Annual General Meeting as the primary channel of communication with its shareholders. Shareholders who are unable to attend to the meeting can appoint their proxies who can vote on their behalf. The Board of directors, senior management as well as the Company s Auditors are present to answer any relevant questions raised at the meeting. 4. ACCOUNTABILITY AND AUDIT i. Financial Reporting In presenting the Company s financial statements and quarterly results to shareholders and other interested parties, the Board aims to present a balanced and understandable assessment of the Group s financial position and prospects. The financial statements of the Company and of the Group are prepared in accordance with the requirements of the applicable Approved Accounting Standards in Malaysia and the provisions of the Companies Act, The Group s annual financial statements and quarterly results are reviewed by the Audit Committee and approved by the Board before announcement to Bursa Malaysia for public release. The statement explaining the Directors responsibilities for preparing the annual audited financial statements pursuant to paragraph 15.27(a) of the Listing Requirements is set out on page 17 of the Annual Report. ii. Internal Control The Board acknowledges and places strong emphasis in maintaining a sound system of internal control which is necessary to safeguard the Group s assets and shareholders interest. Details of the Group s internal control system is presented in the Statement on Internal Control and Audit Committee Report set out on pages 18 to 20 and pages 21 to 24 respectively.

18 16 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T iii. Relationship with Auditors Through the Audit Committee, the Group has established a transparent and appropriate relationship with the Group s external auditors in seeking their advice and towards ensuring compliance with the applicable Approved Accounting Standards. STATEMENT OF COMPLIANCE WITH THE BEST PRACTICE OF THE MALAYSIAN CODE ON CORPORATE GOVERNANCE (THE CODE) Save as disclosed below, the group has substantially complied with the Best Practices in Corporate Governance set out in Part 2 of the Code: PROVISION OF THE CODE DETAILS EXPLANATION Part 2, AA II Chairman and Chief Executive The Company is headed by an Executive Chairman and therefore, the roles of the Chairman and the Chief Executive Officer are not separate. The Board is of the opinion that the check and balance of power is undertaken by the strong presence of Independent NonExecutive Directors in the Board. Furthermore, the Chairman encourages all Directors to participate actively in all deliberation of issues that concern the Group. Hence, the Board maintains the view that this combined arrangement will not hamper the Board from making fair decisions for the best interest of the Group. Part 2, AA VII Senior Independent NonExecutive Director to whom concerns may be conveyed Presently, all Board Members are accessible by the shareholders and public investors where they can relay their concerns over company matters. Therefore, the appointment of Senior Independent NonExecutive Director to assume such responsibilities is not timely necessary. ADDITIONAL CORPORATE INFOATION In compliance with the Listing Requirements, the following information is provided: i. Utilization of proceeds During the financial year ended 31 Dicember, the company has fully utilized the prceeds from Private Placement exercise amounting to 16.1 million for the company s working capital and defray expenses in relation to the corporate exercise. ii. Share buybacks The Company has not undertaken any share buyback exercises during the financial year ended 31 December. iii. Option, Warrants or Convertible Securities During the financial year ended 31 December the Company established a Share Option Scheme for Employees and Directors ( The Scheme ). The Scheme shall remain in force for a duration of five years commencing from 22 June. Details of the Scheme are reported in the Directors Report on page 28. iv. American Depository Receipt (ADR) / Global Depository Receipt (GDR) The Company has not sponsored any ADR or GDR Programmes. v. Sanctions and / or penalties There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year ended 31 December. vi. NonAudit Fees The nonaudit fees paid to external auditors amounting to 46, for the financial year ended 31 December.

19 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 17 vii. Variation of Results There is a deviation of more that 10% between the loss after tax and minority interest stated in the announced unaudited consolidated results and the audited results of the Group for the financial year ended 31 December. We append below a reconciliation between the net loss after tax and minority interest stated in the announced unaudited accounts which was released to Bursa Malaysia on 28 February 2005 and the net profit as reported in the Group s audited accounts for the financial year ended 31 December : Net loss after taxation and minority interest as announced on 28 February 2005 Adjustment Overprovision of taxation Additional share loss of associated company Share of taxation of associated company Additional loss of subsidiary company Reversal of deferred taxation Other adjustments Net profit after taxation and minority interests as per the audited accounts (137,786) 185,680 (4,000) (2,552) (1,496) 1, ,004 viii. Profit Guarantee There was no profit guarantee given by the Company during the financial year ended 31 December. ix. Material Contracts There was no material contracts between the Company and its subsidiaries involving Directors and major shareholders interests during the financial year ended 31 December. x. Revaluation of landed properties The Company does not adopt a policy of regular revaluation of its properties. xi. Recurrent Related Party Transaction The Company did not enter into any recurrent related party transaction which requires the shareholders mandate during the financial year ended 31 December. STATEMENT OF DIRECTORS RESPONSIBILITY IN RELATION TO THE FINANCIAL STATEMENTS The Board is responsible to ensure that the financial statements are prepared in accordance with the provision of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to ensure a true and fair view of the state of affairs of the Group and the Company as at the end of each financial year and of their results and their cash flows for that financial year then ended. The Board is also responsible to maintain accounting records that disclose with reasonable accuracy the financial position of the Group and the Company, and which enable them to ensure that the financial statements comply with the Companies Act, 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. The Directors are satisfied that in preparing the financial statements of the Group for the financial year ended 31 December, the Group has adopted appropriate accounting policies and applied them prudently and consistently. They are also satisfied that reasonable and prudent judgments and estimates were made and all applicable Approved Accounting Standards in Malaysia have been followed accordingly.

20 18 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T Kuala Penyu Hospital, Sabah STATEMENT ON INTERNAL CONTROL The Board of Directors of TRC Synergy Berhad ( the Board ) is committed to maintaining a sound System of Internal Control in the Group and is pleased to provide the following statement that outlines the nature and scope of internal control of the Group during the financial year ended 31 December pursuant to paragraph 15.27(b) of the Bursa Malaysia s Listing Requirements.

21 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T RESPONSIBILITY The Board acknowledges the importance of sound internal controls and risk management practices within the Group to meet its business objectives. The Board affirms its overall responsibility for the effectiveness of the Group s systems of internal control and risk management, and for reviewing the adequacy and integrity of these systems. The internal control system involves the core business and its key management, including the Board, and is designed to meet the Group s particular needs and to manage the risks to which it is exposed. The system of Internal Control aims to: i) ii) iii) safeguard shareholders interest and the assets of the Group; ensure that proper accounting records are maintained; and that the financial information used within the business and the publication to the public is reliable. The Board is fully aware that this system, by its nature, can only provide reasonable, and not absolute, assurance against material misstatement, loss and fraud. These systems are designed to manage, rather than eliminate, the risk of failure to achieve the business objectives of the Group. 2. INTERNAL CONTROL The key elements of the Group s internal control system are described below: a) Internal Audit Department The Internal Audit Department which was established on 20 August reviews key business processes and controls and assists the Audit Committee in the discharge of its duties and responsibilities. Its role is to provide independent and objective reports on the organization, management, records, accounting policies and internal controls to the Audit Committee and the Board. b) Quality Policy There is a clear and well documented Quality Policy in accordance with ISO 9001 : 2000 by a whollyowned subsidiary of the Company which is undertaking the core business of the Group. This policy and the related procedures are communicated to the respective staff members. Amongst the salient features of the Quality Policy are as follows: i) ii) iii) iv) v) Internal Quality Audits are conducted at planned intervals to determine whether the Quality Management System is effectively implemented and maintained and conforms to the established system requirements of Internal Standard, ISO 9001:2000. On an annual basis, an overall Internal Quality Audit Plan is devised encompassing every department and project, taking into consideration the status and importance of relevant processes, areas to be audited as well as results of previous audits. Qualified Internal Quality Auditors will be assigned with audit works in accordance with the Internal Quality Audit Plan where the reports shall be examined and analyzed and reported to the management during Management Review Board Meeting. As part of the Quality Management System, the management shall meet on a monthly basis to discuss and deliberate all issues relating to the business of the Group. The Audit Committee is accessible to the relevant reports produced in relation to the Quality Management and if the need arises, the matter shall be further discussed in the Board Meeting. c) Line of Reporting Clearly defined delegation of responsibilities to committees of the Board and to operating units, including authorisation levels for all aspects of the business. This also includes detailed job descriptions and specifications provided to each employee of the Group which is further reiterated through a well defined organizational structure. d) Dissemination of Information within the Group Regular and comprehensive information is provided to Management covering financial performance and key business indicators, key operating statistics/ indicators, key business risks, legal, environmental and regulatory matters. Key matters affecting the Group are brought to the attention of the Audit Committee and are reported to the Board on a regular basis.

22 20 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T e) Detail Budgeting Process A detailed budgeting process where operating units prepare budgets for every project for discussion in the Management Meeting. A monthly monitoring of results against the budget, with major variances being followed up and management action taken, where necessary. f) Risk Management Framework The Group has in place an ongoing process for identifying, evaluating, monitoring and managing the significant risks affecting the achievement of its business objectives. This is an ongoing process, subject to regular review by the Board, and accords with the Statement on Internal Control: Guidance for Directors of Public Listed Companies. The Group adopts a decentralised approach to risk management by encouraging participation of all employees in such a manner that the employees take ownership and responsibility for risks at their respective levels. The process of risk management and treatment is overseen by the senior management and reported to the Board through the Audit Committee. The risk management framework is also embodied in the Quality Policy in accordance with ISO 9001 : 2000 practised by a whollyowned subsidiary of the Company. g) Audit Committee The Audit Committee, on behalf of the Board, regularly reviews and holds discussions with the management on the matters relating to internal control, the external auditors and the management. The Report on the Audit Committee set out on pages 21 to 24 of this Annual Report contains further details on the activities undertaken by the Audit Committee in. h) Board The Board holds regular discussions with the Audit Committee, Management and external auditors and reads their reports on matters relating to internal controls and deliberates their recommendations for implementation. The Directors have taken the necessary steps, as are reasonably open to them, to ensure that appropriate systems are in place for the assets of the Group to be adequately safeguarded through the prevention and detection of fraud and other irregularities and material misstatements. The Directors believe that the system of internal control is considered appropriate to business operations, and that the risks taken are at an acceptable level within the context of the business environment of the Group. During the year, a number of improvements to internal controls were identified and addressed. There has been no significant weakness noted which would result in any material loss. This statement is made in accordance with a resolution of the Board of Directors dated 25 April 2005.

23 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 21 Girls Hostel at Politeknik Kuching, Sarawak AUDIT COMMITTEE REPORT 1. COMPOSITION OF THE AUDIT COMMITTEE The Audit Committee comprises of the following two Independent NonExecutive Directors and one executive director: Chairman: Noor Zilan bin Mohamed Noor (Independent NonExecutive Director) Members: i) YBhg. Dato Hj Sufri Bin Hj Mohd Zin (Eecutive Chairman) ii) Rahman Bin Ali (Independent NonExecutive Director) (Member of the Malaysian Institute of Accountants) Secretary : Abdul Aziz Bin Mohamed (Company Secretary)

24 22 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 2. TES OF REFERENCE a) Composition The Board of Directors shall elect an Audit Committee from amongst themselves (pursuant to a resolution of the Board of Directors) comprising not less than three members where the majority of them shall be independent nonexecutive members of the Board. The members of the Audit Committee shall elect a Chairman from amongst themselves. All members of the Audit Committee, including the Chairman, will hold office only so long as they serve as Directors of the Company. Should any members of the Audit Committee cease to be a Director of the Company, his membership in the Audit Committee would cease forthwith. If the members of the Audit Committee for any reason be reduced to below three, the Board of Directors shall within three months of that event, appoint such number of new members as may be required to make up the minimum number of three members. b) Objectives The primary objectives of the Audit Committee are: i) ii) iii) To provide assistance to the Board in fulfilling its fiduciary responsibilities particularly relating to business ethics, policies and practices and financial management and control. To provide greater emphasis on the audit functions by increasing the objectivity and independence of external and internal auditors and providing a forum for discussion that is independent of the management. To maintain through regularly scheduled meetings a direct line of communication between the Board and the external auditors, internal auditors and management. c) Duties and responsibilities The duties and responsibilities of the Audit Committee shall be: i) ii) iii) To consider the appointment of the external auditors, determination of audit fees and any questions of resignation or dismissal. To discuss with the external auditor before the audit commences the nature and scope of the audit, and ensure coordination where more than one audit firm is involved. To review the quarterly results and year end financial statements before submission to the board, focusing particularly on: iv) v) vi) vii) viii) Any changes in accounting policies and practices Major judgmental areas Significant adjustments resulting from the audit The going concern assumption Compliance with accounting standards Compliance with the stock exchange and legal requirements. To discuss problems and reservations arising from the interim and final audits, and any matters the auditors may wish to discuss (in the absence of management where necessary). To review the internal audit programme, consider the major findings of internal audit investigations and management s response, and ensure coordination between the internal and external auditors. To keep under review the effectiveness of the internal control system, and in particular review the external auditor s management letter and management s response. To review any related party transactions and conflict of interest situations that may arise within the Group including any transactions, procedure or course of conduct that raises questions of management integrity. To carry out such other functions as may be agreed to by the Audit Committee and the Board of Directors. d) Authority The Committee is authorized by the Board to investigate any activity within the terms of reference. It is authorized to seek any information it requires from any employees and all employees are directed to cooperate with any request made by the Committee.

25 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 23 The Committee is empowered by the Board to retain persons having special competence as necessary to assist the Committee in fulfilling its responsibilities. e) Meeting and Minutes The primary objectives of the Audit Committee are: The Audit Committee shall not hold less than three meetings a year and the quorum for each meeting shall be two members. Minutes of each meeting shall be kept and distributed to each member of the Committee and also to the other members of the Board. The Committee Chairman shall report on each meeting to the Board. The Company Secretary shall act as the Secretary to the Audit Committee. 3. SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE During the financial year ended 31 December, the Audit Committee met five times. The details of the attendance of the members of the Audit Committee are as follows: NO AUDIT COMMITTEE ATTENDANCE Noor Zilan Bin Mohamed Noor Dato Hj Sufri Bin Hj Mohd Zin Rahman Bin Ali 5/5 5/5 5/5 During the financial year, the Audit Committee carried out reviews of the following: i) ii) iii) iv) v) The quarterly management and annual audited financial statements to ensure compliance with statutory reporting requirements and appropriate resolution of all accounting and audit matters requiring significant judgment and where appropriate, made recommendations to the Board. The external auditor s audit plan and scope for the Company and the Group, the audit report, significant issues raised and management responses in relation thereto. The external auditor s fees and to recommend their reappointment to the Board. Measures implemented by management with regard to risk management and internal control. The statement of Corporate Governance and Statement on Internal Controls which are prepared in accordance with the provisions set out under the Malaysian Code on Corporate Governance, the extent of compliance with the said Code and recommend to the Board action plans to address further compliance matters. 4. INTERNAL AUDIT FUNCTION During the year, the Company has taken another proactive step to establish an Internal Audit Department as recommended by the Malaysian Code on Corporate Governance. The department, which was established on 20 August, will provide assistance to the Audit Committee in the discharge of its duties and responsibilities. The principal objective of the Internal Audit Department is to ascertain that adequate internal control is maintained in order to safeguard the assets of the Group and the shareholders interest.

26 24 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T After its establishment, the Internal Audit Department conducted a comprehensive audit on subcontractors works order and related documents which were reviewed by the Audit Committee and the necessary actions have been taken by the management to rectify the identified weaknesses. The Department also established followup audit reviews to monitor and ensure that the recommendations agreed by the Audit Committee have been effectively implemented. Going forward, the Internal Audit Department will strengthen its capacity and efficiency for better contribution to the Group pursuant to the Audit Charter and Internal Audit Plan which have been approved by the Audit Committee. 5. STATEMENT IN RELATION TO THE ALLOCATION OF SHARE OPTION SCHEME The Audit Committee noted that the Company has established a Share Option Scheme for Employees and Directors ( The Scheme ) pursuant to the ByLaws which was approved by the shareholders at the Extraordinary General Meeting held on 30 April. The Scheme shall remain in force for a duration of five years commencing from 22 June. The salient terms of the Scheme are as follows: i) ii) iii) iv) the maximum number of the Company s new shares to be made available under the Scheme shall not exceed fifteen percent (15%) of the issued and paid up capital of the Company; not more than fifty percent (50%) of the Company s shares available under the Scheme shall be allocated to Directors and senior management; not more than ten percent (10%) of the Company s shares available under the Scheme shall be allocated to an individual Director or eligible employees who either singly or collectively through persons connected to them hold twenty percent (20%) or more of the issued and paid up capital of the Company; The eligible participants shall include eligible employees and Directors who as at the offer date have satisfied the following criteria : is a confirmed employee or appointed director within the Group; has attained at least age of eighteen; is employed full time and is on the payroll of the Group; is under such category and of such criteria that the option committee may from time to time decide. v) vi) The Scheme shall remain in force for a duration of five years from the effective date of the launch. The option price for each share shall be based on the weighted average market price (WAMP) of the Company s share traded on the Exchange for the five trading days preceding the date of offer with a discount if any that does not exceed ten percent (10%) from the five days of the Company s shares. The option under the Scheme was offered to eligible employees and Directors on 22 June and 1 September at an offer price of 1.70 per option share. The Audit Committee progressively reviews the offer made by the Company as to ensure they are made in accordance to the allocation pursuant to the ByLaws. During the financial year ended 31 December the Company has not offered any options to NonExecutive Directors.

27 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 25 DIRECTORS REPORTS AND AUDITED FINANCIAL STATEMENTS Corporate Information Director s Report Statement by Directors Statutory Declaration Report of the Auditors Balance Sheets Income Statements Statement of Changes in Equity Group Statement of Changes in Equity Company Cash Flow Statement Group Cash Flow Statement Company Notes to the Financial Statements

28 26 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T CORPORATE INFOATION BOARD OF DIRECTORS : Dato Hj Sufri Bin Hj Mohd Zin : Abdul Aziz Bin Mohamad : Rahman Bin Ali : Noor Zilan Bin Mohamed Noor : Gen (R) Dato Seri Mohd Shahrom Bin Dato Hj Nordin SECRETARIES : Dato Tang Swee Guan : Abdul Aziz Bin Mohamed AUDITORS : Kumpulan Naga Chartered Accountants (M) BANKERS : EON Bank Berhad Affin Bank Berhad AmFinance Berhad Malayan Banking Berhad Malaysian International Merchant Bankers Berhad United Overseas Bank Berhad RHB Bank Berhad Southern Bank Berhad BumiputraCommerce Bank Berhad AmBank Berhad REGISTERED OFFICE / : Wisma TRC PRINCIPAL PLACE OF BUSINESS 217 & 218, Jalan Negara 2 Taman Melawati Ulu Klang Selangor Darul Ehsan

29 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 27 DIRECTORS REPORT for the year ended 31 December The directors hereby present their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December. PRINCIPAL ACTIVITIES The principal activities of the Company are that of providing corporate, administrative and financial support services to the subsidiaries, investment holding and general contractors supplying labour. The principal activities of the subsidiaries are construction, manufacturing and trading of construction materials, hiring and servicing of machineries and vehicles and property development. There have been no significant changes in the nature of these activities during the year. RESULTS Profit/(loss) after taxation Minority Interest Net profit/(loss) for the year GROUP 40, ,004 COMPANY (2,246,190) (2,246,190) There were no material transfers to or from reserves or provisions during the financial year. 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. SHARE CAPITAL During the financial year the Company increased its : (a) (b) authorised share capital from 100,000,000 to 200,000,000 through the creation of 100,000,000 ordinary shares of 1 each, and issued an paid up share capital from 70,000,000 to 92,400,000 by way of issuance of 22,400,000 ordinary shares as follows : (i) (ii) private placement of 7,000,000 new shares representing up to 10% of the existing issued and paidup share capital of the Company at an issue price of 2.30 per share for cash for additional working capital purposes. The share premium arising, after deducting the share issue costs of 372,270, amounted to 8,727,730 and this has been credited to the share premium account. bonus issue of 15,400,000 new shares on the basis of one new ordinary share for every five existing shares held immediately after the Private Placement. The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company. DIVIDENDS The amount of dividends paid by the Company since 31 December were as follows : In respect of the financial year ended 31 December as reported in the directors' report of that year : First and final tax exempt dividend of 2.5 sen per share on 92,400,000 ordinary shares, paid on 16 July. 2,310,000

30 28 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T DIRECTORS REPORT for the year ended 31 December At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 December, of 1.5% less 28% taxation on 92,400,000 ordinary shares, amounting to a dividend payable of 997,920 (1.08 sen net per ordinary share) will be proposed for shareholders' approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December DIRECTORS The names of the directors of the Company since the date of the last report and at the date of this report are : Dato' Haji Sufri Bin Haji Mohd Zin Abdul Aziz Bin Mohamad Rahman Bin Ali Noor Zilan Bin Mohamed Noor Gen. (R) Dato' Seri Mohd Shahrom Bin Dato' Hj Nordin 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 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) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 35 to the financial statements. DIRECTORS' INTEREST According to the register of directors' shareholding required to be kept under Section 134 of the Companies Act, 1965, the interest of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows : NUMBER OF ORDINARY SHARES OF 1 EACH AT 1.1. AT SHARES IN THE COMPANY BOUGHT SOLD Direct interest : Dato' Haji Sufri Bin Haji Mohd Zin Abdul Aziz Bin Mohamad Noor Zilan Bin Mohamed Noor 10,575, ,000 50,000 2,115,000 20,000 (50,000) 12,690, ,000 Indirect interest : Dato' Haji Sufri Bin Haji Mohd Zin # 32,400,000 4,080,000 36,480,000 # Deemed interested by virtue of his substantial shareholdings in TRC Capital Sdn. Bhd. and Kolektif Aman Sdn. Bhd. By virtue of Dato' Haji Sufri Bin Haji Mohd Zin and Abdul Aziz Bin Mohamad having interests in the Company, they are deemed to be interested in shares of the subsidiaries to the extent the Company has an interest. EMPLOYEE SHARE OPTION SCHEME The Company has established a Share Option Scheme for Employees and Directors ("The Scheme") pursuant to the ByLaws which was approved by the shareholders at the Extraordinary General Meeting held on 30 April. The Scheme shall remain in force for a duration of five years commencing from 22 June.

31 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 29 DIRECTORS REPORT for the year ended 31 December The salient terms of the Scheme are as follows : (a) (b) (c) (d) the maximum number of the Company's new shares to be made available under the Scheme shall not exceed fifteen percent (15%) of the issued and paid up capital of the Company; not more than fifty percent (50%) of the Company's shares available under the Scheme shall be allocated to Directors and senior management; not more than ten percent (10%) of the Company's shares available under the Scheme shall be allocated to individual Director or eligible employees, who either singly or collectively through person connected to them holds twenty percent (20%) or more of the issued and paidup capital of the Company. The eligible participants shall include eligible employees and Directors who as at the offer date have satisfied the following criteria : (i) (ii) (iii) (iv) is a confirmed employee or appointed director within the Group; has attained at least age of eighteen; is employed full time and on the payroll of the Group; is under such category and of such criteria that the option committee may from time to time decide. (e) The option price for each share shall be based on the weighted average market price (WAMP) of the Company's share traded on the Exchange for the five trading days preceding the date of offer with a discount if any, that does not exceed ten percent (10%) from the five day of the Company's shares. The option under the Scheme was offered to the eligible employees and Directors on 22 June and 1 September at an offer price of 1.70 per option share. During the financial year ended 31 December the Company has not offered any option to the NonExecutive Directors. OTHER STATUTORY INFOATION (a) Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonable steps : (i) (ii) 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 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 have been written down to an amount which they might be expected so to realise. (b) At the date of this report, the directors are not aware of any circumstances which would render: (i) (ii) the amount written off for bad debts or the amount of the provision for doubtful debts inadequate to any substantial extent; and the values attributed to current assets in the financial statements of the Group and of the Company misleading. (c) (d) (e) 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. At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. At the date of this report, there does not exist : (i) (ii) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability of the Group and of the Company which has arisen since the end of the financial year.

32 30 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T DIRECTORS REPORT for the year ended 31 December (f) In the opinion of the directors : (i) (ii) no contingent liability 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 and of the Company to meet their obligations as and when they fall due; and 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 and of the Company for the financial year in which this report is made. Auditors The auditors, Kumpulan Naga, have expressed their willingness to continue in office. On behalf of the Board, DATO' HAJI SUFRI BIN HAJI MOHD ZIN Director ABDUL AZIZ BIN MOHAMAD Director Kuala Lumpur, Malaysia Date: 27 APRIL 2005

33 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 31 STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965 We, DATO' HAJI SUFRI BIN HAJI MOHD ZIN and ABDUL AZIZ BIN MOHAMAD, being two of the directors of TRC SYNERGY BHD., do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 34 to 58 are drawn up in accordance with applicable MASB Approved Accounting Standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December and of the results and the cash flows of the Group and of the Company for the year then ended. On behalf of the Board, DATO' HAJI SUFRI BIN HAJI MOHD ZIN Director ABDUL AZIZ BIN MOHAMAD Director Kuala Lumpur, Malaysia Date: 27 APRIL 2005

34 32 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965 I, DATO' HAJI SUFRI BIN HAJI MOHD ZIN, being the director primarily responsible for the financial management of TRC SYNERGY BHD., do solemnly and sincerely declare that the accompanying financial statements set out on pages 34 to 58 are, in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true by virtue of the provisions of the Statutory Declarations Act, Subscribed and solemnly declared by the above named, DATO' HAJI SUFRI BIN HAJI MOHD ZIN at Petaling Jaya in the State of Selangor Darul Ehsan on 27 April 2005 DATO' HAJI SUFRI BIN HAJI MOHD ZIN Before me, Commissioner for Oaths

35 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 33 REPORT OF THE AUDITORS TO THE MEMBERS OF TRC SYNERGY BERHAD (Incorporated in Malaysia) We have audited the financial statements set out on pages 34 to 58. These financial statements are the responsibility of the Company's directors. It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility to any other person for the content of this report. We conducted our audit in accordance with applicable Approved Standards on Auditing 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 the directors, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion : (a) the financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable MASB Approved Accounting Standards in Malaysia so as to give a true and fair view of : (i) (ii) the financial position of the Group and of the Company as at 31 December and of the results and the cash flows of the Group and of the Company for the year then ended; and the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and (b) the accounting and other records and the registers required by the Act to be kept by the Company and by its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. We have considered the financial statements and the auditors' report of a subsidiary company of which we have not acted as auditors, as indicated in Note 11 to the financial statements, being financial statements that have been included in the consolidated financial statements. 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. 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. Kumpulan Naga A.F. No Chartered Accountants (M) T. Nagarajan C.A.(M),FCCA,FTII,AICMA No: 824/04/06 (J) Kuala Lumpur, Malaysia Date: 27 APRIL 2005

36 34 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T BALANCE SHEETS as at 31 December GROUP COMPANY AS RESTATED FINANCED BY : NOTES Share Capital 3 92,400,000 70,000,000 92,400,000 70,000,000 Share Premium 4 6,213,201 12,885,471 6,213,201 12,885,471 Reserve on Consolidation 16,540,657 16,540,657 Exchange Fluctuation Reserve (3,828) Retained Profits 5 11,497,497 13,766,493 2,595,353 7,151,543 Shareholders' Equity 126,647, ,192, ,208,554 90,037,014 Minority Interest (500) 126,647, ,192, ,208,554 90,037,014 Deferred Taxation 6 2,767,633 3,469,273 Hire Purchase and Lease Creditors 7 941,198 2,473,095 Term Loans 8 40,003, ,193 40,000, ,359, ,506, ,208,554 90,037,014 NONCURRENT ASSETS Property, Plant and Equipment 9 41,709,264 51,745,427 Investments 10 4,255, ,394 4,000,000 Investment in Subsidiaries ,596,297 89,999,828 Investment in Associate , ,586 Expenditure Carried Forward ,333 61, ,333 61,520 CURRENT ASSETS Property development project costs ,246 6,364,064 Inventories , ,541 Trade receivables ,447, ,899,307 Other receivables 5,784,989 5,556,325 66,628 2,000 Gross amount due from customers 17 97,961, ,025,178 Deposits with licensed banks 18 45,851,022 50,288,723 Cash and bank balances 19 3,295,280 4,568,099 36,389 22, ,520, ,966, ,017 24,580 CURRENT LIABILITIES Trade payables 20 46,470,980 68,104,864 Other payables 4,780,295 7,881, ,988 38,189 Hire purchase and lease creditors 7 2,484,154 6,183,999 Short term borrowings 21 75,345, ,431,017 Taxation 8,332,960 12,646,032 9,200 9,200 Due to a director , ,647 8,239 Dividends payable 2,666 1,525 2,666 1, ,564, ,443, ,093 48,914 NET CURRENT ASSETS/(LIABILITIES) 122,955,544 66,522,255 (313,076) (24,334) 170,359, ,506, ,208,554 90,037,014 The annexed notes form an integral part of these financial statements.

37 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 35 INCOME STATEMENTS for the year ended 31 December GROUP COMPANY NOTES Revenue ,438, ,683,952 5,268,190 9,600,000 Cost of Sales 23 (291,112,923) (295,768,077) (4,098,153) Gross Profit 13,325,445 28,915,875 1,170,037 9,600,000 Other Operating Income 1,679,585 1,656,188 6,038 Administration Expenses (11,834,316) (12,410,972) Selling Expenses (63,271) (201,425) Other Operating Expenses (1,510,923) (480,882) Operating Profit/(Loss) 3,107,443 17,959,666 (334,848) 9,119,118 Finance Cost (7,247,253) (7,584,387) (1,911,342) Share of results of an associated company (405,182) 1,209,222 Profit on disposal of Property, Plant and Equipment 4,923,803 1,481,106 Profit/(Loss) Before Taxation ,811 13,065,607 (2,246,190) 9,119,118 Taxation 25 (338,308) (4,381,498) (Loss)/Profit After Taxation 40,503 8,684,109 (2,246,190) 9,119,118 Minority interest Net (loss)/profit for the year 41,004 8,684,113 (2,246,190) 9,119,118 Earnings per share ( sen ) Basic Diluted The annexed notes form an integral part of these financial statements.

38 36 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T STATEMENT OF CHANGES IN EQUITY GROUP for the year ended 31 December NONDISTRIBUTABLE DISTRIBUTABLE EXCHANGE NOTES SHARE CAPITAL SHARE PREMIUM CAPITAL RESERVES FLUCTUATION RESERVES RETAINED PROFITS TOTAL At 1 January As previously reported 70,000,000 12,885,471 16,540,657 13,231, ,658,039 Prior year adjustments 27 (6,399,531) (6,399,531) As restated 70,000,000 12,885,471 16,540,657 6,832, ,258,508 Net profit for the year 8,684,113 8,684,113 Dividend 28 (1,750,000) (1,750,000) At 31 December 70,000,000 12,885,471 16,540,657 13,766, ,192,621 At 1 January As previously reported 70,000,000 12,885,471 16,540,657 20,166, ,592,152 Prior year adjustments 27 (6,399,531) (6,399,531) As restated 70,000,000 12,885,471 16,540,657 13,766, ,192,621 Net profit for the year 41,004 41,004 Issue of shares Private Placement 7,000,000 9,100,000 16,100,000 Bonus issue 15,400,000 (15,400,000) Share issue costs (372,270) (372,270) Exchange fluctuation reserves (3,828) (3,828) Dividend 28 (2,310,000) (2,310,000) At 31 December 92,400,000 6,213,201 16,540,657 (3,828) 11,497, ,647,527 The annexed notes form an integral part of these financial statements.

39 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 37 STATEMENTS OF CHANGES IN EQUITY COMPANY for the year ended 31 December NOTES SHARE CAPITAL SHARE PREMIUM RETAINED PROFIT TOTAL At 1 January 70,000,000 12,885,471 (217,575) 82,667,896 Net profit for the year 9,119,118 9,119,118 Dividend 28 (1,750,000) (1,750,000) At 31 December 70,000,000 12,885,471 7,151,543 90,037,014 At 1 January 70,000,000 12,885,471 7,151,543 90,037,014 Net loss for the year (2,246,190) (2,246,190) Issue of shares 22,400,000 (6,672,270) 15,727,730 Dividend 28 (2,310,000) (2,310,000) At 31 December 92,400,000 6,213,201 2,595, ,208,554 The annexed notes form an integral part of these financial statements.

40 38 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T CASH FLOW STATEMENTS GROUP for the year ended 31 December CASH FLOWS FROM OPERATING ACTIVITIES NOTES Profit before taxation 378,811 13,065,607 Adjustments for : Amortisation of expenditure carried forward 116,667 Exchange reserve arising due to retranslation of financial statements in foreign currency (3,828) Depreciation 8,369,189 9,401,735 Gain on disposal of property, plant and equipment (4,923,803) (1,481,106) Share of results of an associated company 405,182 (1,209,222) Interest expense 4,753,030 6,639,664 Interest income (1,384,237) (1,269,965) Property, plant and equipment written off 14, ,458 Realisation of unrealised profit on development activities (49,788) (5,924,751) OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 7,675,750 19,398,420 Gross amount due from customers 5,063,637 (11,133,411) Inventories 18, ,401 Receivables (5,777,050) (20,301,808) Payables (24,735,487) 23,911,526 Directors' account (46,761) 180,000 Property development project costs 5,480,606 10,633,638 Cash (used in)/generated from operations (12,321,019) 22,957,766 Taxation paid (5,350,468) (3,402,018) Interest paid (4,753,030) (6,639,664) Interest received 1,384,237 1,269,965 Net cash (used in)/generated from operating activities (21,040,280) 14,186,049 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment (4,000,000) Purchase of property, plant and equipment (1,856,238) (6,811,293) Proceeds from disposal of property, plant and equipment 8,432,488 3,389,999 Acquisition of subsidiary net of cash acquired Net cash generated from/(used in) investing activities 2,576,251 (3,421,290) CASH FLOWS FROM FINANCING ACTIVITIES Fixed deposits 4,437,701 (15,567,760) (Repayment of)/proceeds from short term borrowings (28,991,380) 2,408,291 Proceeds from issue of shares 15,727,730 Repayment of term loans 39,577,150 (331,182) Expenditure carried forward (980,480) (61,520) Repayment of hire purchase creditors (5,231,742) (7,035,658) Dividend paid (2,308,859) (1,748,475) Net cash generated from/(used in) financing activities 22,230,120 (22,336,304) Net increase/(decrease) in cash and cash equivalents 3,766,091 (11,571,545) Cash and cash equivalents at the beginning of the year (50,076,081) (38,504,536) Cash and cash equivalents at the end of the year (46,309,990) (50,076,081) Cash and cash equivalents at end of year comprise the following : Cash and bank balances 3,295,280 4,568,099 Bank overdrafts (49,605,270) (54,644,180) (46,309,990) (50,076,081) The annexed notes form an integral part of these financial statements.

41 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 39 CASH FLOW STATEMENTS COMPANY for the year ended 31 December CASH FLOWS FROM OPERATING ACTIVITIES Net (loss)/profit before taxation (2,246,190) 9,119,118 Adjustments for : Amortisation of expenditure carried forward Operating (loss)/profit before working capital changes 116,667 (2,129,523) 9,119,118 Working Capital Changes : Receivables Payables Directors' account Net cash (used in)/generated from operating activities (64,628) 357,799 8,239 (1,828,113) 14,803 9,133,921 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment Acquisition of subsidiary companies Advances to subsidiary companies Net cash used in investing activities (4,000,000) (8,239) (46,588,230) (50,596,469) (7,321,427) (7,321,427) CASH FLOWS FROM FINANCING ACTIVITIES Dividend paid Proceeds from share issue Expenditure carried forward Term loans Net cash generated from/(used in) financing activities (2,308,859) 15,727,730 (980,480) 40,000,000 52,438,391 (1,748,475) (61,520) (1,809,995) Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 13,809 22,580 36,389 2,499 20,081 22,580 The annexed notes form an integral part of these financial statements.

42 40 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T NOTES TO THE FINANCIAL STATEMENTS 31 December 1. CORPORATE INFOATION The principal activities of the Company are that of investment holding, general contractors supplying labour and providing corporate, administrative and financial support services to the subsidiaries. The principal activities of the subsidiaries are disclosed in Note 11 to the financial statements. The number of employees of the Group as at year end were 604 ( : 907). The number of employees of the Company as at year end was 90 (: 6). The Company is a public limited liability company incorporated and domiciled in Malaysia and listed on the Main Board of Bursa Malaysia Securities Berhad. The registered office and the principal place of business of the Company are located at : Wisma TRC 217 & 218, Jalan Negara 2, Taman Melawati, Ulu Klang, Selangor Darul Ehsan. 2. PRINCIPAL ACCOUNTING POLICIES The financial statements of the Group and of the Company have been prepared in accordance with applicable Approved Accounting Standards issued by the Malaysian Accounting Standards Board (MASB) and comply with the provisions of the Companies Act, The principal accounting policies of the Group are as follows: (a) Basis of Preparation of Financial Statements The financial statements of the Group and of the Company are prepared under the historical cost convention except for revaluation of certain properties included under property, plant and equipment. (b) Basis of Consolidation The consolidated financial statements include the financial statements of the Company and all its subsidiaries made up to 31 December. Subsidiaries are those companies in which the Group has the power to exercise control over the financial and operating policies so as to obtain benefits from their activities. Subsidiaries are consolidated using the acquisition method of accounting under which the results of subsidiaries acquired or disposed of are included in the consolidated financial statements from the date of acquisition or up to the date of disposal. Goodwill or reserve on consolidation represents the difference between the consideration paid for the shares in the subsidiaries and the fair value of attributable net assets acquired, as applicable. Goodwill arising on consolidation is reflected in the consolidated balance sheet. The carrying amount of such goodwill is assessed in the year it arises, and periodically, including when economic conditions indicate that the carrying amount may be impaired. To the extent deemed impaired, such goodwill is written off by a charge to the income statement. All intercompany transactions, balances and unrealised gains or transactions between the companies within the Group are eliminated. The reserve on consolidation represents the excess of the share of assets of subsidiary companies on acquisition date over the consideration paid for their acquisition. (c) Subsidiary Companies Subsidiaries are those companies in which the Group has a long term equity interest and where it has power to exercise control over the financial and operating policies so as to obtain benefits therefrom. (d) Investments in subsidiary companies are stated in the financial statements of the Group at cost unless, in the opinion of the directors, there has been a permanent diminution in value, in which case an appropriate provision is made. Associated Company Associate is a company in which the Group has a long term equity interest and where it exercises significant influence over the financial and operating policies.

43 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 41 NOTES TO THE FINANCIAL STATEMENTS 31 December Investments in associate are accounted for in the consolidated financial statements by the equity method of accounting based on the audited or management financial statements of the associate. Under the equity method of accounting, the Group's share of profits less losses of associates during the year is included in the consolidated income statement. The Group's interest in associates is carried in the consolidated balance sheet at cost plus the Group's share of postacquisition retained profits or accumulated losses and other reserves as well as goodwill on acquisition. Unrealised gains on transactions between the Group and the associate are eliminated to the extent of the Group's interest in the associate. Unrealised losses are eliminated unless cost cannot be recovered. (e) (f) Long Term Investments Long term investments are stated at cost unless in the opinion of the directors there has been a permanent diminution in value, in which case provision is made for the diminution in value. Property, Plant and Equipment Property, plant and equipment are stated at cost modified by the revaluation of certain land and buildings, less accumulated depreciation and amortisation. Freehold land is not depreciated. Leasehold land is amortised over the period of leases ranging from years. Depreciation on other property, plant and equipment is calculated on the original cost or subsequent valuation of the property, plant and equipment and is charged on a straight line basis at varying rates to write off the cost of each asset to its residual value over the estimated useful life. The principal annual depreciation rates applied are as follows: Buildings Motor vehicles Plant and machinery Office equipment Furniture and fittings Renovation Telecommunication equipment Computers 2% 20% 10% 20% 10% 10% 20% 20% (g) (h) Leased and Hired Assets Assets acquired under finance leases and hire purchase arrangements which in substance transfer substantially all the risks and benefits of ownership of the assets to the Company are capitalised as property, plant and equipment. The property, plant and equipment and corresponding lease obligations are recorded at the lower of the net present value of minimum lease payments or the fair value of the lease assets at the beginning of the respective lease terms. Leases and hire assets which do not meet such criteria are classified as operating lease. Finance charge of finance leases and hire purchase are charged to the income statement over the period of hire purchase or lease. Rental payable under operating leases are accounted for in the income statement on a straight line basis over the periods of the respective leases. Inventories Inventories are valued at the lower of cost and net realisable value. Cost comprises the cost of purchase plus the cost of bringing the inventories to its present condition. Net realisable value is the estimate of the selling price in the ordinary course of business less the cost of completion and selling expenses. (i) (j) Development Properties Development properties include all expenditure directly related to development together with an appropriate portion of other indirect expenses and are stated at the lower of cost and net realisable value. Receivables Receivables are carried at their anticipated realisable values.

44 42 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T NOTES TO THE FINANCIAL STATEMENTS 31 December (k) Bad debts are written off in the year in which they are considered irrecoverable and provision is made for specific doubtful debts, if any. Land Held For Development Land held for development include all expenditure directly related to development together with an appropriate portion of other indirect expenses and are stated at cost. (l) Payables Payables are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group. (m) Foreign Currency Translation (i) (ii) Foreign Currency Transaction Foreign currency assets and liabilities are translated to Ringgit Malaysia at the rates of exchange ruling at the balance sheet date and profit and loss items, where applicable, are converted at rates ruling on the transaction dates. Differences on exchange are taken to the income statement. Foreign Entities Financial statements of foreign consolidated subsidiaries are translated at yearend exchange rates with respect to the assets and liabilities, and at exchange rates at the dates of the transactions with respects to the income statement. All resulting translation differences are recognised in equity. (n) Income Tax Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date. Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductable temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liabilty in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition in which case the deferred tax is included in the resulting goodwill or negative goodwill. (o) Cash and Cash Equivalents For the purposes of the cash flow statement, cash and cash equivalents include cash on hand and at bank, deposits at call and short term highly liquid investments which have an insignificant risk of changes in value, net of outstanding bank overdrafts. (p) Revenue Recognition Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of the revenue can be measured reliably. (i) (ii) Dividend Income Dividend income from longterm investments and, in respect of the Company, from subsidiaries and associated companies, is recognised in the income statement upon the right to receipt of such dividends being established. Construction Contract Contract revenue is recognised by reference to the stage of physical completion of the contract. Contract revenue and costs are recognised as revenue and expense in the income statement in the accounting period in which the work is performed. The contract revenue is matched with the contract costs incurred in reaching the stage of completion, resulting in the reporting of revenue, expenses and profit which can be attributed to the proportion of work completed. Profits expected to be realised on construction contracts are based on estimates of total revenue and costs at completion. These estimates are reviewed and revised periodically throughout the lives of the construction contracts

45 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 43 NOTES TO THE FINANCIAL STATEMENTS 31 December and adjustment to the profits resulting from such revisions are recorded in the accounting period in which the revisions are made. If estimates of costs to complete the construction contract indicate losses, provision is made for the full losses anticipated in the period in which they are identified. (iii) (iv) Sale of Goods Revenue on sales of goods is recognised upon the transfer of risks and rewards. Interest Income / Rental Income / Management Fee Interest income, rental income and management fee are recognised on an accrual basis. (q) Impairment At each balance sheet date, the Group reviews the carrying amounts of its assets (other than inventories, deferred tax assets, assets arising from employee benefits and financial assets which are reviewed pursuant to the relevant accounting policies) to determine whether there are any indications that those assets have suffered an impairment loss. If any such indication exists, impairment is measured by comparing the carrying values of the assets with their recoverable amounts. Recoverable amount is the higher of net selling price and value in use, which is measured by reference to discounted future cash flows. Recoverable amounts are estimated for individual assets or, if it is possible, for the cashgenerating unit to which the asset belongs. An impairment loss is charged to the income statement immediately, unless the asset is carried at revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of any available previously recognised revaluation surplus for the same asset. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. The reversal is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income statement immediately, unless the asset is stated at revaluation, in which case it is taken to revaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the income statement, a reversal of that impairment loss is recognised in the income statement. (r) Financial Instruments Financial instruments carried in the balance sheet include cash and bank balances, investments, inventories, receivables, payables, leases and borrowings. The particular recognition methods adopted are disclosed in the individual policy statements for the relevant item. The financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the assets and settle the liability simultaneously. (s) Construction Contracts Construction work in progress which is stated at cost plus attributable profits less anticipated losses and progress billings is shown as amount due from customers. The excess of progress billings over cost plus attributable profits less anticipated loses is shown as amount due to customers. Costs consist of direct materials, direct labour, direct overhead, subcontract charge and attributable expenses.

46 44 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T NOTES TO THE FINANCIAL STATEMENTS 31 December 3. SHARE CAPITAL GROUP AND COMPANY Authorised: Ordinary shares of 1.00 each At 1 January Created during the year At 31 December 100,000, ,000, ,000, ,000, ,000,000 Issued and fully paid : Ordinary shares of 1.00 each At 1 January Issued during the year At 31 December 70,000,000 22,400,000 92,400,000 70,000,000 70,000,000 During the financial year, the issued and paid up share capital of the Company was increased from 70,000,000 to 92,400,000 by way of : (i) (ii) issue of 7,000,000 new ordinary shares of 1.00 each through a Private Placement at an issue price of 2.30 per share for cash for additional working capital purposes. The share premium arising, after deducting the share issue costs of 372,270, amounted to 8,727,730 and this has been credited to the share premium account. Capitalisation of 15,400,000 from the share premium account for 15,400,000 bonus shares on the basis of one bonus share for every five existing ordinary shares of 1.00 each after the Private Placement. The new ordinary shares shall rank pari passu in all respects with the existing ordinary shares of the Company. 4. SHARE PREMIUM GROUP AND COMPANY Balance as at 1 January Arising from shares issued : On private placement at a premium of 1.30 Share issue costs Capitalisation of bonus issue Balance as at 31 December 9,100,000 (372,270) 12,885,471 8,727,730 (15,400,000) 6,213,201 12,885,471 12,885, RETAINED PROFITS The Company has tax exempt profits available for distribution of approximately 5,242,666 (:7,551,525), subject to the agreement of the Inland Revenue Board. The Company has sufficient tax credit under Section 108 of the Income Tax Act, 1967 to frank the payment of dividends of approximately 1,080,000 (:Nil) out of its retained profits without incurring additional tax liability.

47 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 45 NOTES TO THE FINANCIAL STATEMENTS 31 December 6. DEFERRED TAXATION GROUP AS RESTATED At beginning of financial year, as previously stated Prior year adjustments over provision in prior years At beginning of financial year, as restated 3,469,273 3,921,338 (452,065) 3,469,273 Transfer to income statement (Note 25) At end of financial year (701,640) 2,767,633 3,469, HIRE PURCHASE AND LEASE CREDITORS COMPANY Portion repayable not later than 1 year Portion repayable later than 1 year and not later than 5 years 2,484, ,198 3,425,352 6,183,999 2,473,095 8,657, TE LOANS GROUP COMPANY a) Term loans secured Less : Due within 12 months included in short term borrowings ( Note 21 ) 300,747 (297,218) 3, ,597 (352,404) 371,193 b) Term loan unsecured 40,000,000 40,000,000 Total 40,003, ,193 40,000,000 The term loans bear : i) interest at a rate of approximately 1.5% (: 1.5%) above the bank's base lending rate and is secured by freehold land and building belonging to the subsidiary company and is jointly and severally guaranteed by the directors of the subsidiary company. The term loan is repayable by way of 60 equal monthly instalments of 29,855 inclusive of interest, with the repayments commenced from November 2000.

48 46 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T NOTES TO THE FINANCIAL STATEMENTS 31 December ii) iii) interest at the rate of 6.5% (:6.5%) per annum on a monthly rest basis as prescribed under the "Tabung Industri Kecil dan Serderhana" and is repayable by way of equal monthly instalments, commenced from December The facility is secured by a fixed deposit placed with a licensed bank as disclosed in Note (18) to the financial statements, a joint and several guarantee by the directors of the subsidiary company and a legal charge over leasehold land belonging to a subsidiary company. interest at a rate of 8.15% per annum and is repayable in one lump sum on the last day of the Tenor of the Facility (ie : Not exceeding five years commencing from date of the Advance of the Facility which is 3 June. 9. PROPERTY, PLANT AND EQUIPMENT LEASEHOLD CAPITAL PLANT FURNITURE TELECOM FREEHOLD LAND AND WORKIN AND MOTOR OFFICE AND MUNICATION COST LAND BUILDINGS BUILDINGS PROGRESS MACHINERY VEHICLES EQUIPMENT FITTINGS RENOVATION COMPUTERS EQUIPMENT TOTAL At 1 January 4,835,200 3,850,000 3,127,300 3,035,160 68,442,356 16,658,814 3,817, ,178 1,384,461 69,944 1, ,920,056 Additions 120, ,120 1,039, ,379 3,200 79,189 1,856,238 Disposals (80,460) (1,900,000) (8,500,112) (1,377,382) (20,183) (11,878,137) At 31 December 4,754,740 1,950,000 3,127,300 3,155,600 60,341,364 16,321,342 4,011, ,378 1,463,650 69,944 1,250 95,898,157 Accumulated Depreciation At 1 January 271, ,059 37,360,108 11,922,172 2,982, , ,843 61, ,174,629 Depreciation charge for the year 46,984 62,546 6,015,620 1,709, ,490 53, ,952 3, ,369,189 Disposals (164,698) (6,947,737) (1,223,469) (19,021) (8,354,925) At 31 December 154, ,605 36,427,991 12,408,635 3,295, , ,795 65, ,188,893 Net Book Value At 31 December 4,754,740 1,795,757 2,787,695 3,155,600 23,913,373 3,912, , , ,855 4, ,709,264 At 31 December 4,835,200 3,578,043 2,850,241 3,035,160 31,082,248 4,736, , , ,618 8, ,745,427 (a) Revaluation Certain freehold and leasehold land and buildings of a subsidiary company were revalued by an independent professional valuer using the open market valuation basis. However in 2001, a proportion of this revaluation was deemed to be in excess of market values and was consequently subject to a downward revaluation during that year. The properties acquired subsequent to the said revaluation are however stated at cost, as the directors are of the opinion that the purchase consideration for the properties approximate their market values. Had the land and building affected been carried at their historical costs less accumulated depreciation, the carrying amounts of the revalued assets that would have been included in the financial statements at the end of the year are as follows : Freehold land Freehold buildings Leasehold land and buildings 1,730,490 1,372,800 1,637,021 4,740,311 1,730,490 1,404,000 4,372,563 7,507,053

49 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 47 NOTES TO THE FINANCIAL STATEMENTS 31 December (b) Security Certain land and buildings with a net carrying value of 6,851,465 (:8,178,675) have been charged to financial institutions as security for various credit facilities granted to a subsidiary company. A leasehold land with a net book value of 529,457 (: 537,597) has been pledged to a financial institution for borrowing facility granted to a subsidiary company. (c) Assets acquired under hire purchase and lease arrangements The net book value of property, plant and equipment of the subsidiary company acquired under hire purchase and lease arrangements are as follows : Plant and machinery Motor vehicle 11,568,341 3,636,960 15,205,301 18,305,707 4,526,631 22,832, INVESTMENTS GROUP COMPANY At Cost: Shares quoted in Malaysia 111, ,394 Corporate membership 144, ,000 Subordinated bonds 4,000,000 4,000,000 4,255, ,394 4,000,000 Market value Shares quoted in Malaysia 15,337 13, INVESTMENT IN SUBSIDIARIES COMPANY Unquoted shares, at cost Amount due from subsidiary companies 54,457,020 82,139, ,596,297 54,448,781 35,551,047 89,999,828 The details of the subsidiary companies are as follows :

50 48 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T NOTES TO THE FINANCIAL STATEMENTS 31 December COUNTRY OF INCORPORATION EFFECTIVE INTEREST (%) PRINCIPAL ACTIVITIES Trans Resources Corporation Sdn. Bhd. TRC Development Sdn. Bhd. TRC Concrete Industries Sdn. Bhd. TRCPDI JV Sdn. Bhd. TRC Infra Sdn. Bhd. * TRC Construction (Sarawak) Sdn. Bhd. TRC Construction India Pte Ltd ** TRC International Pte Ltd Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia India Malaysia Construction activities. Property development. Manufacture of ready mixed concrete. Construction. Dormant Construction. Dormant Construction. Construction. Investment Holding. * ** Audited by another firm of auditors. The financial statements of TRC International Pte Ltd have not been consolidated with the financial statements of the Group as the Directors are of the opinion that there will be of no real value in view of the insignificant effect on the financial statements of the Group. 12. INVESTMENT IN ASSOCIATE Details of the Associated Company are as follows : PERCENTAGE OF EQUITY NAME PRINCIPAL ACTIVITY COUNTRY OF INCORPORATION % % Andaman Budi Sdn. Bhd. Property development Malaysia GROUP Unquoted shares, at cost Share of post acquisition profit 200, , , , , ,586 The following amounts represent the Group's share of the assets, liabilities, revenue and expenses of the Associated Company : GROUP Property, plant and equipment Current assets Current liabilities Long term liabilities Net assets 11,122 12,972,198 (12,469,468) 513,852 28,498 9,372,967 (8,479,184) (695) 921,586 Revenue 3,064,390 7,984,706 (Loss)/Profit before taxation Taxation (Loss)/Profit after taxation (405,182) (2,552) (407,734) 1,209,222 (287,636) 921,586

51 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 49 NOTES TO THE FINANCIAL STATEMENTS 31 December 13. EXPENDITURE CARRIED FORWARD GROUP/COMPANY Expenditure carried forward 925,333 61,520 Expenditure carried forward represents professional fees incurred in connection with the corporate exercises undertaken by the Company. This will be set off against the share premium account upon completion of the corporate exercises. 14. PROPERTY DEVELOPMENT PROJECT COSTS GROUP Brought forward Land Development costs Incurred during the year Land Development costs Recognised in income statement 13,447,499 21,779,660 35,227,159 37,294 8,610,776 43,875,229 13,384,152 5,456,595 18,840,747 63,347 16,323,065 35,227,159 Brought forward Current year (28,863,095) (14,078,888) 933,246 (7,767,796) (21,095,299) 6,364, INVENTORIES GROUP At Cost : Construction materials Raw materials 196,801 49, , ,042 30, , TRADE RECEIVABLES Included in the trade receivables are related company balances and retention sums as follows :

52 50 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T NOTES TO THE FINANCIAL STATEMENTS 31 December GROUP Amount due from an associated company Amount due (to)/from a joint venture activity Retention sums 21,585,931 (5,225) 14,037,388 35,618,094 16,650,041 (2,971) 15,491,010 32,138,080 The retention sums are subject to satisfactory completion of the respective project defect liability periods. The Group's normal trade credit term ranges from 30 to 90 days. Other credit terms are assessed and approved on a casebycase basis. 17. GROSS AMOUNT DUE FROM CUSTOMERS GROUP Costs incurred to date Add: Attributable (losses)/profits Less: Progress billings received and receivable 1,059,944,284 (28,811) 1,059,915,473 (961,953,932) 97,961, ,252,800 16,116, ,369,395 (723,344,217) 103,025,178 Included in progress billings are retention monies totalling 696,434 (: Nil). 18. FIXED DEPOSITS The fixed deposits are placed with licenced financial institutions and have been charged to secure credit facilities granted to the subsidiary companies by the financial institutions. 19. CASH AND BANK BALANCES Included in the cash and bank balances of the Group are amounts of 131,485 (: 2,016,980) held pursuant to Section 7A of the Housing Development ( Control and Licensing ) Act 1966, and therefore restricted from use in other operations. 20. TRADE PAYABLES The normal trade credit terms granted to the Group range from 30 to 90 days. 21. SHORT TE BORROWINGS

53 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 51 NOTES TO THE FINANCIAL STATEMENTS 31 December GROUP Secured: Bankers acceptance Bank overdrafts Revolving credit facility Medium term credit Bridging loan Domestic factoring facilities Overdraft non chequing Revolving term loan 13,518,000 25,549,694 5,000,000 5,854, ,055,576 1,070,159 75,048,323 45,904,000 26,934,066 5,000, , ,355 27,710,114 2,369, ,078,613 Term loan repayable not later than one year 297,218 75,345, , ,431,017 (a) (b) (c) (d) (e) (f) Bank Overdrafts The bank overdrafts of the subsidiary companies are subject to interest at rates ranging from 1.25% to 2.5% (: 1.25% to 2.5%) per annum above the banks' base lending rates and are secured by fixed and floating charges over the subsidiary companies present and future assets, certain fixed deposits, freehold land and assignment of certain contract receipts of the subsidiary companies and a joint and several guarantee by the directors of the subsidiary companies and a corporate guarantee by a subsidiary company. Revolving Credit Facility The revolving credit facility is subject to interest at the rate of 1.25% (: 1.25%) above the Kuala Lumpur InterBank Offer Rates (KLIBOR) and is secured by assignment of contract by way of Letter of Undertaking from the Awarder to remit all proceeds and personal guarantee of a directors of a subsidiary company. Bankers Acceptance The bankers acceptances are subject to commission at rates of approximately 1.0% to 2.0% (: 1.0% to 2.0%) over the B.A. rate and are secured by fixed and floating charges over the subsidiary companies present and future assets, certain fixed deposits, freehold land and leasehold properties belonging to the subsidiary company, a joint and several guarantee by the directors' of the subsidiary companies and a corporate guarantee by a subsidiary company. Bridging Loan The bridging loan is subject to interest at the rate of 1.5 % (: 1.5%) per annum above the bank's base lending rate and is secured by a property belonging to a subsidiary company and a personal guarantee by a director of the subsidiary company. Other Short Term Trade Facilities The medium term credit is subject to a commission of 0.1% per month and the domestic factoring facility is subject to charges at a rate of 9.9% (: 9.9%) per annum above the bank's base lending rate. The non chequing overdraft facility bears interest at a rate of 1.5% (:1.5%) per annum above the bank's base lending rate. The facilities are jointly and severally guaranteed by the directors of the subsidiary company. Revolving Term Loan The revolving term loan is subject to charges at a rate of 1.75% per annum above the bank's base lending rate and are secured by a corporate guarantee from the holding company, the assignment of certain contract receipts and project account, the project sinking fund account, certain fixed deposits of a subsidiary company placed with licensed financial institution and personal guarantee by a director of the subsidiary company. 22. AMOUNT DUE TO A DIRECTOR The amount due to a director is unsecured, interest free and has no fixed terms of repayment.

54 52 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T NOTES TO THE FINANCIAL STATEMENTS 31 December 23. REVENUE AND COST OF SALES Revenue of the Group represents recognised contract revenue, sale of construction materials, hiring of machineries and motor vehicles, property development and supply of labour. Turnover of the Company comprises management fee and supply of labour. Cost of sales of the Group consists of direct materials, direct labour, direct overhead, subcontract charges and other directly attributable expenses. Cost of sales of the Company represents labour charges incurred in relation to the turnover generated. 24. PROFIT/(LOSS) BEFORE TAXATION GROUP COMPANY THESE ARE STATED AFTER CHARGING/(CREDITING) : After charging : Amortisation charges Directors' remuneration Auditors' remuneration current year prior year overprovision Bank overdraft interest Term loan interest Hire purchase and lease interest Bankers acceptance interest Loan interest others Depreciation of property, plant and equipment Property, plant and equipment written off Rental of premises Preliminary expenses written off Rental of vehicle and heavy machinery Interest income Gain on disposal of property, plant and equipment Rental of vehicle 116, ,758 75,000 1,514,759 29,909 1,092, ,087 1,388,823 8,369,189 14, ,612 84,208 (1,384,237) (4,923,803) 315,500 80,700 (700) 1,626, ,189 1,534,231 1,338,706 2,033,580 9,401, , ,300 2,300 92,761 (1,269,965) (1,481,106) (7,700) 116,667 75,000 12,000 52,000 12,000 (700) 25. TAXATION GROUP COMPANY Provision for the year Real property gain tax Overprovision in prior years Transfer to/(from) deferred taxation (Note 6) Share of associated company's taxation (1,352,603) (35,026) 350, ,640 (2,552) (338,308) (3,274,354) (819,508) (287,636) (4,381,498) The effective tax rate is significantly higher from the statutory rate due to certain expenses are disallowed for taxation purposes. A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Company is as follows :

55 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 53 NOTES TO THE FINANCIAL STATEMENTS 31 December GROUP Profit before taxation 378,811 13,065,607 Taxation at Malaysian statutory rate of 28% (: 28%) Overprovided in prior years Real property gain tax Effect of income not subject to tax Expenses not deductible for tax purposes Differential tax rate for small and medium scale companies Tax expense for the year (902,665) 350,233 (35,026) 428,956 (201,590) 21,784 (338,308) (2,151,044) (683,076) (1,547,378) (4,381,498) 26. EARNINGS PER SHARE (a) Basic earnings per share Basic earnings per share of the Group has been computed by dividing the profit attributable to shareholders by the weighted average number of shares in issue during the year. For the purpose of this computation, the number of shares repurchased, if any, has been excluded from the weighted average number of shares in issue. GROUP Profit after taxation and minority interests 41,004 8,684,113 Weighted average number of ordinary shares in issue 91,328,962 85,400,000 Basic earnings per share (sen) (b) Fully diluted earnings per share Fully diluted earnings per shares is calculated by dividing the profit attributable to shareholders by the weighted average number of ordinary shares outstanding during the year, adjusted for the effects of dilutive options, i.e. assuming the exercise of all options issued on the earliest date they became exercisable GROUP Profit after taxation and minority interests 41,004 8,684,113 Weighted average number of ordinary shares in issue Adjustment for share options Weighted average number of ordinary shares for diluted earning per share 91,328,962 (866,250) 90,462,712 85,400,000 Diluted earnings per shares (sen) 0.05 * * As the diluted earnings per share for the year ended 31 December exceeds the basic earnings per share, the antidilutive effect is ignored.

56 54 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T NOTES TO THE FINANCIAL STATEMENTS 31 December 27. PRIOR YEARS ADJUSTMENTS This represents tax liability resulted from the reassessment of a subsidiary company's tax in respect of prior years by the Inland Revenue Board. 28. DIVIDENDS AMOUNT NET DIVIDENDS PER SHARE Sen Sen First and final tax exempt dividend of 2.5 sen per share. 2,310,000 1,750, At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 December, of 1.5% less 28% taxation on 92,400,000 ordinary shares, amounting to a dividend payable of 997,920 (1.08 sen net per ordinary share) will be proposed for shareholders' approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December ACQUISITION OF SUBSIDIARY COMPANIES During the financial year, the Company acquired TRC Infra Sdn. Bhd., TRC Construction India Pte Ltd and TRC International Pte Ltd. The fair value of the assets acquired and liabilities assumed are as follows : Cash and bank balances Minority interest 8,240 (1) 12 (4) Net assets acquired Goodwill on consolidation 8,239 8 Total purchase consideration 8,239 8 Cash and cash equivalents of subsidiaries Net cash on acquisition of subsidiaries (8,240) (1) (12) (4) 29. CAPITAL COMMITMENT GROUP Approved and contracted for 1,881,400 2,004,840

57 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 55 NOTES TO THE FINANCIAL STATEMENTS 31 December 31. FINANCIAL INSTRUMENTS Financial Risk Management Objectives and Policies The Group's financial risk management policies seek to ensure that adequate financial resources are available for the development of the Group's business whilst managing its credit, interest rate, exchange rate and liquidity risks. The Group operates within clearly defined guidelines that are approved by the Board and the Group's policy is not to engage in speculative transactions. (a) Credit Risks Credit risk, or the risk of counter parties defaulting, are controlled by the application of credit approval, limits and monitoring procedures. Trade receivables are monitored on an ongoing basis via Group management reporting procedures. (b) The Group does not have any significant exposure to any individual customer or counter party nor does it have any major concentration of credit risk related to any financial instrument. Interest Rate Risks The Group is exposed to interest rate risk through the impact of rate changes on credit facilities. The Group manages its interest rate risk through the use of both fixed and floating rate debt and derivative financial instruments. (c) Liquidity Risks The Group practices prudent liquidity risk management to minimise the mismatch of financial assets and liabilities and to maintain sufficient credit facilities for contingent funding requirement of working capital. (d) Exchange Rate Risks The Group operates internationally and is exposed to Indian Rupee. Foreign currency denominated assets and liabilities together with expected cash flows from highly probable purchases and sales give rise to foreign exchange exposures. (e) Fair Values The aggregate value of financial assets and financial liabilities which are not carried at fair value on the balance sheets of the Group and of the Company are represented as follows : NOTE CARRYING AMOUNT GROUP FAIR VALUE Financial Assets Marketable securities ,000 15,337 The carrying amounts of financial assets and liabilities are approximate their fair values due to the relatively shortterm maturity of these financial instruments.

58 56 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T NOTES TO THE FINANCIAL STATEMENTS 31 December 32. SEGMENTAL INFOATION REVENUE PROFIT/(LOSS) BEFORE TAXATION TOTAL ASSETS EMPLOYED Investment holding Construction activity Property development Hiring of motor vehicle and machinery Manufacturing and retailing in ready mixed concrete Retailing of construction materials Supply of labour Others Group's share of profit of an associated company 1,020, ,144,922 16,982,769 4,096, ,447 59,020,977 4,248, , ,428,803 9,600, ,274,203 30,553,796 4,835,937 1,177,767 58,992,465 5,146, , ,073,026 (434,896) 558,025 2,714,766 (30,753) (231,732) 78,993 (1,811,294) (108,904) (405,182) 329,023 9,119,118 2,903,680 2,584,557 17,943 (526,355) 694, ,308 2,852 1,209,222 16,440, , ,102,440 6,543,696 4,457,038 1,105,191 58,678,344 4,054,786 8, ,923,868 86, ,805,213 18,128,742 4,712,833 1,426,488 57,240,968 3,053, , ,950,164 Consolidated adjustments (26,990,435) 304,438,368 (32,389,074) 324,683,952 49, ,811 (3,375,250) 13,065, ,923, ,950,164 No segmental reporting has been prepared in respect of geographical location as the Group's activities are predominantly carried out in Malaysia. 33. CONTINGENT LIABILITIES GROUP COMPANY Secured Bank guarantees Performance bond Advance bond Design bond Tender bond Supplier / Maintenance / Security 33,431,770 16,352,204 2,170,250 4,674,526 56,628,750 35,444,124 6,352, , ,000 5,823,250 48,104,578 10,744,944 16,352,204 2,170,250 3,879,776 33,147,174 6,577,423 6,352, ,000 3,625,000 16,934,627 The bank guarantees are secured by fixed deposits of a subsidiary company and a corporate guarantee by the Company.

59 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 57 NOTES TO THE FINANCIAL STATEMENTS 31 December GROUP COMPANY Unsecured Corporate guarantee Corporate guarantees given to banks for credit facilities granted to trade related subsidiaries 36,424,489 34,338,234 Corporate guarantees given to banks for credit facilities granted to associated company 36,424,489 34,338, STAFF COSTS GROUP COMPANY Staff costs 16,903,929 19,084,811 5,191, ,682 Staff costs of the Group and the Company include directors' remuneration, salaries, bonus, contributions to Employees' Provident Fund and all other staff related expenses. 35. SIGNIFICANT RELATED PARTY TRANSACTIONS Group Dividend payable to holding company Management fee charged by holding company Contract income on a housing development activity from a subsidiary company Purchase of construction materials from a subsidiary company Contract labour supplied by a subsidiary company Rental of motor vehicle from a subsidiary company Subcontractors cost charged by a subsidiary company Contract income on a housing development activity from an associated company Management fee receivable from a subsidiary company Contract labour supplied by holding company 1,020,000 10,233, ,101 10,786,585 4,531, ,645 4,248,190 9,300, ,000 16,182,145 1,259,499 5,146,387 7, ,380 9,723,081 Company Dividend income from a subsidiary company Management fee from a subsidiary company Supply of labour to a subsidiary company 1,020,000 4,248,190 9,300, ,000 The directors are of the opinion that all the transactions above have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.

60 58 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T NOTES TO THE FINANCIAL STATEMENTS 31 December 36. MATERIAL LITIGATION The Group is involved in the following pending litigation matter : A writ filed under Kuala Lumpur High Court Suite No: S22298 by Trans Resources Corporation Sdn. Bhd. (TRC), a subsidiary of the Group against Sanwell Corporation ('Sanwell') and United Malayan Land Berhad ('UM Land') for an outstanding contract sum due and owing pursuant to an Earthworks Contract dated 30 October 1996 whereby TRC was engaged by Sanwell as the earthworks contractor. The payment for the work done was guaranteed by UM Land up to the sum of 15,500, In light of the Federal Court decision on 25 May 2002 and also the subsequent direction given by the High Court Judge on 28 May 2002, the abovementioned Civil Suit cannot be proceeded with and the matters in dispute between TRC and Sanwell will now have to proceed by means of arbitration. However, UM Land has, since the Federal Court's decision, filed a motion to vary the Federal Court decision. Their argument, inter alia, is that UM Land should not be bound by the arbitration clause, as it was not a party to the Earthworks Contract. In December 2002, TRC had obtained from the High Court an order for the appointment of arbitrator ("the Order"). The Order was subsequently served on Sanwell but the latter did not respond to the Order. In May, TRC filed an application to discharge the Order. On 2 April, an order from the High Court to discharge the arbitration order was obtained. The case management was done in August and full trial has been fixed to be held in May/July The solicitors for TRC are of the view that TRC is likely to succeed in its claim against the defendants. 37. COMPARATIVES The following comparative amounts as at 31 December have been reclassified to conform with current year's presentation. GROUP CASH FLOW STATEMENT AS RESTATED AS PREVIOUSLY STATED Cash Flows From Financing Activities Fixed deposit Short term borrowings (15,567,760) 2,408,291 Cash and cash equivalent at end of the year comprise the following : Fixed deposit Short term borrowings 50,288,723 (54,434,433)

61 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 59 LIST OF PROPERTIES To following are the properties owned by the TRCS Group: NO LOCATION TENURE DESCRIPTION / APPROX AGE LAND AREA / NET BOOK VALUE DATE OF EXISTING USE OF BUILDINGS BUILD UP AREA 31 DECEMBER VALUATION 1 Developer s Shoplot Lot No. 27 Commerce Square Bintulu Park City Off Jalan Tun Ahmad Zaidi Bintulu Town District Sarawak 57year leasehold expiring 30/3/2055 3storey shop/office 7 years 1,319.8 sq ft / 3,959.6 sq ft 390, /9/ Lot No Section 16 Kuching Central Land District Sarawak 60year leasehold expiring 18/4/2059 4storey shop/office 6 years 2,412.2 sq ft / 8,856.8 sq ft 876, /9/ Lot No. PT to PT Mukim and District of Klang Selangor Freehold Industrial land 154,587.0 sq ft 4,640, /9/ Lot No. PT Mukim of Ampangan District of Seremban Negeri Sembilan 99year leasehold expiring 18/9/2095 Residential land acres 531, /9/ Lot No. PT 9259 Mukim of Setapak District of Gombak Selangor Freehold 4storey shop/office 14 years 1,760.0 sq ft / 7,040.0 sq ft 809, /9/ Developer s Parcel No. 47 (218) First and Second Floors of an Intermediate 4storey shop/office building Taman Melawati Metro 1 Phase 4 Town Centre Selangor Freehold First and Second Floors of 4storey shop/office 14 years 1,760.0 sq ft 400, /8/ Kondominium Kirana Jalan Pinang, Kuala Lumpur (Acquired on 5/6/2000) Freehold Apartment 4 years 3,681.3 sq ft 1,691, Units of Apartments Idaman Senibong Apartment Taman Bayu Senibong Johor Bahru, Johor (18 units were acquired on 1/7/ and another 24 units were acquired on 8/7/) Leasehold expiring 21/1/2097 Under Construction Varying from sq ft, sq ft & sq ft 3,155,600.00

62 60 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T ANALYSIS OF SHAREHOLDINGS LIST OF THIRTY LARGEST SHAREHOLDERS as at 29 April 2005 NO NAME NO OF SHARES % 01 Kolektif Aman Sdn Bhd 18,240, TRC Capital Sdn Bhd 18,240, Lembaga Tabung Angkatan Tentera 8,400, Dato Haji Sufri Bin Haji Mohd Zin 3,630, HLB Nominees (Tempatan) Sdn Bhd (Account for Dato Haji Sufri Bin Haji Mohd Zin) Citicorp Nominees (Asing) Sdn Bhd (Mellon Bank N A for State Employees Retirement System) Employess Provident Fund Board 3,000,000 2,652,000 2,375, HSBC Nominees (Asing) Sdn Bhd (JPMCB for the Malaysia Fund Incorporated) Alliancegroup Nominees (Tempatan) Sdn Bhd (Account for Dato Haji Sufri Bin Haji Mohd Zin) HLB Nominees (Tempatan) Sdn Bhd (Account for Leong Kam Heng) AMSEC Nominees (Tempatan) Sdn Bhd (Account for Leong Kam Heng) AMSEC Nominees (Tempatan) Sdn Bhd (EON Finance for Dato Haji Sufri Bin Haji Mohd Zin) AMSEC Nominees (Tempatan) Sdn Bhd (Account for Khoo Tew Choon) Affin Nominees (Tempatan) Sdn Bhd (Account for Dato Haji Sufri Bin Haji Mohd Zin) Far Frontier (M) Sdn Bhd 2,252,400 2,040,000 1,897,980 1,586,760 1,560,000 1,553,600 1,440,000 1,381,

63 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 61 ANALYSIS OF SHAREHOLDINGS NO NAME NO OF SHARES % Alliancegroup Nominees (Tempatan) Sdn Bhd (Account for Khoo Tew Choon) Mohd Raffee Bin Jalil 1,174,320 1,172, HSBC Nominees (Tempatan) Sdn Bhd (HSBC (M) Trustree Bhd for OSKUOB Small Cap Opportunity Unit Trust) Citicorp Nominees (Tempatan) Sdn Bhd (Account for Dato Haji Sufri Bin Haji Mohd Zin) Alliancegroup Nominees (Tempatan) Sdn Bhd (Account for Ooi Cheng Ooi Peng Huat) Alliancegroup Nominees (Tempatan) Sdn Bhd (Account for Leong Kam Heng) HLB Nominees (Tempatan) Sdn Bhd (Account for Khoo Tew Choon) HLB Nominees (Tempatan) Sdn Bhd (Account for Khoo Tew Choon) HSBC Nominees (Asing) Sdn Bhd (HPBN for Golden Millennium Worldwide Ltd) Lim Chiang Kheng 1,021,480 1,020, , , , , , , Citicorp Nominees (Tempatan) Sdn Bhd (Account for Khoo Teng San) HLB Nominees (Tempatan) Sdn Bhd (Account for Yap Yon Tai) Citicorp Nominees (Asing) Sdn Bhd (CB Lux for CB Fund Asia Vision) PB Securities Nominees (Tempatan) Sdn Bhd (Account for Ahmad Fauzi Bin Ghazali) AMSEC Nominees (Tempatan) Sdn Bhd (Account for Yap Yon Tai) 540, , , , ,

64 62 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T ANALYSIS OF SHAREHOLDINGS LIST OF DIRECTORS SHAREHOLDING as at 29 April 2005 NO NAME NO OF SHARES % DATO HAJI SUFRI BIN HAJI MOHD ZIN (Acc Alliancegroup Nominees (Tempatan) Sdn Bhd) (Acc HLB Nominees (Tempatan) Sdn Bhd) (Acc Amsec Nominees (Tempatan) Sdn Bhd) (Acc Affin Nominees (Tempatan) Sdn Bhd) (Acc Citicorp Nominees (Tempatan) Sdn Bhd) ABDUL AZIZ BIN MOHAMAD 3,630,000 2,040,000 3,000,000 1,560,000 1,440,000 1,020,000 12,690, , RAHMAN BIN ALI NOOR ZILAN BIN MOHAMED NOOR GENERAL (R) DATO SERI MOHD SHAHROM BIN DATO HJ NORDIN LIST OF SUBSTANTIAL SHAREHOLDERS as at 29 April 2005 NO NAME NO OF SHARES % 01 Kolektif Aman Sdn Bhd 18,240, TRC Capital Sdn Bhd 18,240, Dato Haji Sufri Bin Haji Mohd Zin 12,690, Lembaga Tabung Angkatan Tentera 8,400, TOTAL 57,570,

65 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 63 ANALYSIS OF SHAREHOLDINGS ANALYSIS BY SIZE OF SHAREHOLDINGS as at 29 April 2005 CATEGORY NO OF HOLDERS % NO OF SHARES % Less than , , ,001 10, ,313, , , ,551, ,001 to less than 5% of issued shares ,926, % and above of issued shares ,570, TOTAL 1, ,400,

66 64 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T NOTICE OF 8TH ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Eighth Annual General Meeting of the Company will be held at Indah Ballroom, Flamingo Hotel, 5, Tasik Ampang, Hulu Kelang, Ampang, Selangor on Thursday, 23 June 2005 at a.m. for the purpose of transacting the following businesses: AGENDA ORDINARY BUSINESS To receive and adopt the Audited Financial Statements, Report of the Directors and Report of the Auditors thereon for the year ended 31 December. To approve the payment of a first and final dividend 0f 1.5 sen per share less 28% income tax in respect of the financial year ended 31 December. To approve the payment of Directors Fees in respect of the financial year ended 31 December. To reelect Noor Zilan bin Mohamed Noor who shall retire as Director of the Company pursuant to Articles 84 of the Company's Articles of Association. To reelect Rahman bin Ali who shall retire as Director of the Company pursuant to Articles 84 of the Company's Articles of Association. To reappoint Messrs Kumpulan Naga as the Auditors of the Company to hold office until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration. Resolution 1 Resolution 2 Resolution 3 Resolution 4 Resolution 5 Resolution 6 SPECIAL BUSINESS To consider and if thought fit, to pass the following resolution, with or without modification as Ordinary Resolution: 7 AUTHORITY FOR ALLOTMENT OF SHARES "THAT subject always to the Companies Act, 1965, the Articles of Association of the Company and the approvals of the Bursa Malaysia Securities Berhad and other relevant governmental/regulatory authorities, where such approvals are necessary, the Directors be and are hereby empowered, pursuant to section 132D of the Companies Act, 1965, to issue shares in the Company from time to time at such price, upon such terms and conditions, for such purposes and to such person whomsoever as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being and that the Director be also empowered to obtain the approval for the listing and the quotation of the additional shares so issued on the Bursa Malaysia Securities Berhad and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting." Resolution 7 To transact any other business of which due notice shall be given in accordance with the Articles of Association of the Company and the Companies Act, NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT NOTICE IS HEREBY GIVEN that a first and final dividend of 1.5 sen per share less 28% income tax in respect of the financial year ended 31 December will be paid on 22 July 2005 to shareholders whose names appear on the Company s Register of Depositors on 30 June A Depositor shall qualify for entitlement to the divident only in respect: a) Shares transferred into the Depositor s Securities Account before 4.00pm on 30 June 2005 in respect of ordinary transfers; and b) Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad. BY ORDER OF THE BOARD DATO TANG SWEE GUAN (MIA No. 5393) ABDUL AZIZ MOHAMED (LS ) Secretaries Selangor Darul Ehsan 1 June 2005

67 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T 65 NOTICE OF 8TH ANNUAL GENERAL MEETING NOTES: A proxy may but need not be a member of the Company and the previous of section 149 (1) (b) of the Act shall not apply to the Company. To be valid the proxy form duly completed must be deposited at the registered office of the Company not less than fortyeight hours before the time for holding the meeting or any adjournment thereof. A member shall be entitled to appoint more than one proxy to attend and vote at the same meetings. Where a member appoints more than one proxy the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. Where a member is an authorized nominee as defined under the Central Depositories Act, it may appoint at least one proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account. If the appointer is a corporation, the proxy form must be executed under its Common Seal or under the hand of its attorney. EXPLANATORY NOTES TO THE SPECIAL BUSINESS Ordinary Resolution No. 7 Authority for allotment of shares Ordinary Resolution No. 7, if passed, will give power to the Directors of the Company to issue shares up to a maximum 10% of the issued share capital of the Company for the time being for such purposes as the Directors consider would be in the interest of the Company. This would avoid any delay and cost involved in convening a general meeting to specifically approve such an issue of shares. This authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the Company.

68 66 T R C S Y N E R G Y B E R H A D A N N U A L R E P O R T STATEMENT ACCOMPANYING notice of annual general meeting 1. Directors who are standing for reelection at the 8th Annual General Meeting of TRC Synergy Berhad is Noor Zilan bin Mohamed Noor and Rahman bin Ali. 2. Details of Board of Directors Meeting: Six Board Meetings were held during the financial year ended 31 December, details of which are set out in the Statement on Corporate Governance. 3. Particulars of Directors standing for reelection at the 8th Annual General Meeting of TRC Synergy Berhad: NAME AGE NATIONALITY POSITION IN THE COMPANY WORKING EXPERIENCE / QUALIFICATION/OCCUPATION OTHER DIRECTORSHIP OF PUBLIC COMPANIES SECURITIES HOLDINGS IN THE COMPANY AND ITS SUBSIDIARIES AS AT 29 APRIL FAMILY RELATIONSHIP WITH ANY DIRECTOR AND/OR SUBSTANTIAL SHAREHOLDER OF THE COMPANY ANY CONFLICT OF INTEREST WITH THE COMPANY LIST OF CONVICTIONS FOR OFFENCES (OTHER THAN TRAFFIC OFFENCES) WITHIN THE PAST 10 YEARS Noor Zilan bin Mohamed Noor 45 Malaysian Independent, NonExecutive Director Noor Zilan bin Mohamed Noor is a graduate from ITM in 1983 with a Diploma in Law and City of London Polytechnics with LLB (Hons) majoring in Business Law in He is now a Senior Partner with an established law firm in Kuala Lumpur specializing in the area of Corporate Law, Banking, Building and Construction Law apart from civil & criminal litigation. For details, please refer to his profile on page 9 of the Annual Report. Nil Nil Nil Nil Nil NAME AGE NATIONALITY POSITION IN THE COMPANY WORKING EXPERIENCE / QUALIFICATION/OCCUPATION OTHER DIRECTORSHIP OF PUBLIC COMPANIES SECURITIES HOLDINGS IN THE COMPANY AND ITS SUBSIDIARIES AS AT 29 APRIL FAMILY RELATIONSHIP WITH ANY DIRECTOR AND/OR SUBSTANTIAL SHAREHOLDER OF THE COMPANY ANY CONFLICT OF INTEREST WITH THE COMPANY LIST OF CONVICTIONS FOR OFFENCES (OTHER THAN TRAFFIC OFFENCES) WITHIN THE PAST 10 YEARS Rahman bin Ali 48 Malaysian Independent, NonExecutive Director Rahman Ali is a graduate of University of Malaya in 1982 with a Degree in Accounting. He is currently a Chartered Accountant of the Malaysian Institute of Accountants. In 1994, he set up his own accounting firm by the name A. Rahman & Associates and later became a partner of Omar Arif, A.Rahman & Associates in For details, please refer to his profile on page 9 of the Annual Report. Nil Nil Nil Nil Nil

69 TRC Synergy Berhad ( D) PROXY FO I/We, of Being a member/members of TRC Synergy Berhad, hereby appoint of or failing whom, of as my/or proxy to vote for me/us and on my/our behalf at the eighth Annual General Meeting of the Company, to be held at Indah Ballroom, Flamingo Hotel, 5, Tasik Ampang, Hulu Kelang, Ampang, Selangor on Thursday, 23 June 2005 at 11.00am and, at every adjournment thereof. I/we direct my/our proxy to vote for or against the resolutions to be tabled at the eighth Annual General Meeting as hereunder indicated. RESOLUTIONS FOR AGAIN ST ORDINARY RESOLUTION 1 Receive and adoption of Audited Financial Statements and Reports of Directors and Auditors for the year ended 31 December ORDINARY RESOLUTION 2 Declaration of first and final tax exempt dividend ORDINARY RESOLUTION 3 Payment of Directors Fees ORDINARY RESOLUTION 4 Reelection of Noor Zilan Bin Mohamed Noor as Director of the Company ORDINARY RESOLUTION 5 Reelection of Rahman Bin Ali as Director of the Company ORDINARY RESOLUTION 6 Reappointment of Messrs Kumpulan Naga as Auditors of the Company and to authorize the Directors to fix their remuneration ORDINARY RESOLUTION 7 Authority to Directors to allot and issue shares pursuant to Section 132D of the Companies Act, 1965 (Please indicate with an X in the space provided how you wish your vote to be cast on the resolution specified in the Notice of the eighth Annual General Meeting. If this form of proxy is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain from voting at his/her discretion.) Dated this 1 June Signature(s)/Common Seal of Member(s) Notes: 1. A proxy may but not need be a member of the Company and the previous of section 149 (1) (b) of the Act shall not apply to the Co. 2. To be valid this form duly completed must be deposited at the registered office of the Company not less than fortyeight (48) hours before the time for holding the meeting or any adjournment thereof. 3. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meetings. 4. Where the member appoints more than one (1) proxy the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. 5. Where a member is an authorized nominee as defined under the Central Depositories Act, it may appoint at least one proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account. 6. If the appointer is a corporation, this form must be executed under its Common Seal or under the hand of its attorney.

70 fold here postage The Company Secretary TRC Synergy Berhad ( D) Wisma TRC 217 & 218, Jalan Negara 2 Taman Melawati Ulu Klang Selangor Darul Ehsan fold here

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75 TRC SYNERGY BERHAD ( D) WISMA TRC 217 & 218, JALAN NEGARA 2 TAMAN MELAWATI ULU KLANG SELANGOR DARUL EHSAN TEL TEL FAX