TRC Synergy Berhad ( D) Annual Report 2002

Transcription

1 TRC Synergy Berhad ( D) Wisma TRC, 217 & 218, Jalan Negara 2, Taman Melawati, Ulu Klang, Selangor Darul Ehsan. Tel: (12 lines) Fax: , Website: TRC Synergy Berhad ( D) Annual Report 2002 TRC Synergy Berhad ( D) Annual Report 2002

2 ( D) TRC Synergy Berhad Annual Report 2002 The Building Blocks Of The Nation Bricks are used to signify TRC Synergy Berhad s core involvement in the building and construction industry. Each interlaying brick, being strong and sturdy depicts the company s endeavour to become the nation s largest and most successful corporation, achieved through synergistic effort and combined calibre of all its members. Meanwhile pictures placed strategically in each brick further elaborate on the company s ability to undertake specialized nation building projects like the construction of airport, stadium, hospital and road constructions which all contribute to the benefit of the people of Malaysia. Table of Contents Corporate Profile 1 Notice of Annual General Meeting 2 Statement Accompanying Notice of Annual General Meeting 3 Corporate Information 4 Financial Highlights 5 Financial Calendar 5 Corporate Diary 6 Board of Directors Profile 7 Chairman s Statement 9 Group Structure 12 Statement on Corporate Governance 13 Statement of Directors Responsibility 18 Statement of Internal Control 19 Audit Committee Report 21 Financial Statements 24 List of Properties 58 Analysis of Shareholdings 59 Proxy Form UPP Advertising Sdn. Bhd.

3 TRC SYNERGY BERHAD ( D)

4 1 CORPORATE PROFILE The company was 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 Kuala Lumpur Stock Exchange on 6 August 2002 where it offered Public Issue and Offer For Sale of 16,000,000 and 3,500,000 ordinary shares respectively. One of the development projects in Kuala Pilah, Negeri Sembilan. TRCS is principally an investment holding company while the principal activities of its subsidiary companies and associated company are relating to general contracting works. This includes building and infrastructure construction, turnkey design and build contracts, hiring and servicing of vehicles and construction equipment, manufacturing and dealing in concrete products, property development and project management services. Discussion at site office, Gua Musang, Kelantan East Malaysia Hospital, Keningau, Sabah. The TRCS group of companies employs over 800 personnels of which more than 15% are in the subprofessional and professional group. It not only has the ability to undertake common projects like roads and building construction but also specialized mega projects like airports, railway trackworks, stadium, hospitals and large property development ventures. Construction of road from Pos Blau to Kg. Kuala Betis, Gua Musang, Kelantan. The company s motto As one with the nation sums up the company s aspiration to progress in tandem with the nation s vision. Maktab Perguruan Tun Abdul Razak Sarawak

5 NOTICE OF SIXTH ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Sixth Annual General Meeting of the Company will be held at Damai Utama Function Hall, Kelab Century Paradise, Jalan Melawati 3, Taman Melawati, Ulu Klang, Selangor on Wednesday, 18 June 2003 at a.m. for the purpose of transacting the following businesses:- 2 AGENDA ORDINARY BUSINESS 1. To receive and adopt the Audited Financial Statements, Report of the Directors and Report of the Auditors thereon for the year ended 31 December Resolution 1 2. To approve the payment of a first and final tax-exempt dividend of 2.5 sen per share for the year ended 31 December Resolution 2 3. To approve the payment of Directors Remuneration in respect of the year ended 31 December Resolution 3 4. To re-elect Dato Hj Sufri bin Hj Mohd Zin who shall retire as Director of the Company pursuant to Articles 84 of the Company s Articles of Association. Resolution 4 5. To re-appoint Messrs Kumpulan Naga as the Auditors of the Company to hold office until the conclusion of the next Annual General Meeting and to authorize the Directors to fix their remuneration. Resolution 5 SPECIAL BUSINESS To consider and if thought fit, to pass the following resolution, with or without modification as Ordinary Resolution:- 6. 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 Kuala Lumpur Stock Exchange 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 Kuala Lumpur Stock Exchange and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting. Resolution 6 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 ALSO GIVEN, that a first and final tax-exempt dividend of 2.5 sen per share for the year ended 31 December 2002, if approved by the shareholders at the forthcoming Sixth Annual General Meeting will be paid on 30 July The entitlement date shall be fixed on 3 July 2003 and a Depositor shall qualify for entitlement only in respect of:- a) Shares transferred into the Depositor s Securities Account before 4.00 p.m. on 3 July 2003 in respect of ordinary transfers; and b) Shares bought on the Kuala Lumpur Stock Exchange on a cum entitlement basis according to the Rules of the Kuala Lumpur Stock Exchange. BY ORDER OF THE BOARD ABDUL AZIZ MOHAMED (LS ) TANG SWEE GUAN (MIA No. 5393) Company Secretaries Selangor Darul Ehsan 23 May 2003 Notes: 1. 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. 2. To be valid the proxy form duly completed must be deposited at the registered office of the Company not less than forty-eight (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 a 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, 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. 6 Authority for allotment of shares Ordinary Resolution proposed under item 6, 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 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.

6 3 STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING 1. Director who is standing for re-election at the 6th Annual General Meeting of TRC Synergy Berhad:- i) Dato Hj Sufri bin Hj Mohd Zin 2. Details of Board of Directors Meeting: Four (4) Board Meetings were held during the financial year ended 31 December 2002, details of which are set out in the Statement on Corporate Governance. 3. Particulars of Director standing for re-election at the 6th Annual General Meeting of TRC Synergy Berhad:- Name Dato Hj Sufri bin Hj Mohd Zin Age 46 Nationality Malaysian Position in the Company Working experience/ Qualification/Occupation Other directorship of public companies Securities holdings in the Company and its subsidiaries as at 28 April 2003 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 Executive Chairman/Managing Director Dato Hj Sufri is a graduate of Insititute Teknologi MARA with a Diploma in Business Studies. He started his career as a banker with Bank Bumiputera Malaysia Berhad in 1982 before participating in the building and construction industry in 1984 by incorporating Trans Resources Corporation Sdn Bhd, presently a wholly-owned subsidiary of TRC Synergy Berhad. For details, please refer to his profile on page 7 of the Annual Report. Nil 10,575,000 (15.11%) Direct and 32,400,000 (46.29%) Indirect shares in the Company. Nil None except that he is a substantial shareholder of Andaman Budi Sdn. Bhd. which is an associated company of Trans Resources Corporation Sdn. Bhd., a wholly owned subsidiary of the Company. Nil

7 CORPORATE INFORMATION 4 Board of Directors Dato Hj Sufri bin Hj Mohd Zin (Executive Chairman/Managing Director) Abdul Aziz bin Mohamad (Executive Director) Rahman bin Ali (Independent Non-Executive Director) Noor Zilan bin Mohamed Noor (Independent Non-Executive Director) Noor Asiah bte Dato Mahmood (Independent Non-Executive Director) (Resigned on 24 February 2003) Company Secretaries Abdul Aziz bin Mohamed (LS ) 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. Tel No. : / Fax No : trc@tm.net.my Branch Office Lot 3626, Block 16, KCLD, Taman Timberland, Lorong Rock 2, Kuching, Sarawak Tel No. : Fax No. : Website Auditors Messrs Kumpulan Naga 25 Jalan Thamby Abdullah Satu, Off Jalan Tun Sambanthan, Kuala Lumpur Share Registrar Malaysian Share Registration Services Sdn. Bhd. 7th Floor, Exchange Square, Bukit Kewangan Kuala Lumpur Tel No. : Fax No : Principal Bankers EON Bank Berhad Malayan Banking Berhad Arab-Malaysian Merchant Bank Berhad Affin Bank Berhad Solicitors Messrs Noorzilan & Partners Messrs C.C. Choo & Co. Stock Exchange Listing Kuala Lumpur Stock Exchange (Main Board) (Stock No. : 5054)

8 5 FINANCIAL HIGHLIGHTS AS AT 31 DECEMBER 2002 Balance Sheet (Group) In RM 000 Property, plant and equipment 56,421 Other non-current assets 399 Currents assets 231,716 Total tangible assets 288,536 Issued and paid up capital Share capital 70,000 Reserve 42,658 Shareholders fund 112,658 Net tangible assets per share (RM) 1.61 Ratios and statistic Turnover 303,225 Net profit for the year 17,786 In sen Earnings per share In % of turnover Operating profit 11 In RM 000 No. of ordinary shares 70,000 In times Gearing ratio (net) 0.71 Current ratio 1.40 FINANCIAL CALENDAR Financial year end 31 December 2002 Admission to the Main Board of the KLSE 6 August 2002 Announcement of results 2nd quarter results ended 30 June August rd quarter results ended 30 September November th quarter results ended 31 December February 2003 Audited Financial Statements for the financial year ended 31 December April 2003 Published Annual Report 23 May 2003 Annual General Meeting 18 June 2003

9 CORPORATE DIARY 6 21 February March 13 May 24 June REVENUE Appointment ( R M M i l l i o n ) of YBhg. Dato Hj Sufri Bin Hj Mohd Zin and En. Abdul Aziz Bin Mohamad SHAREHOLDERS as Managing Director and Executive FUNDS Director respectively. ( R M M i l l i o n ) EARNINGS PER SHARE Appointment ( S e n ) of Puan Noor Asiah Binti Mahmood, En. Noor Zilan Bin Mohamed Noor DIVIDEND and En. Rahman Bin Ali as Directors of PER the Company. SHARE ( S e n ) NET TANGIBLE 24 February 28 February Submission of Semi-Annual Returns as at 31 December ,000 to the KLSE. 12,000 i) Resignation of Pn. Noor Asiah Binti Mahmood as Director of the Company and also as Chairman of the Audit Committee. 12,000 ii) Appointment of En. Noor Zilan Bin Mohamed Noor as Chairman of Audit Committee. 12,000 Announcement of the 4th 12,000 quarterly unaudited financial result for the year ended 31 December The ( R M ) ceremony on ISO 9001:2000 certificate presentation to Trans Resources Corporation Sdn Bhd, a wholly-owned subsidiary of the Company was held at Nikko Hotel, Kuala Lumpur. 6 June The signing of the Underwriting Agreement in conjunction with the listing of the Company on the Main Board of the KLSE was held at Renaissance Hotel, Kuala Lumpur. Executive Chairman delivering his speech during ISO 9001:2000 certificate presentation. 18 July The Public Balloting Ceremony in relation to the listing of the Company on the Main Board of the KLSE was held at MIDF Consultancy and Corporate Services Sdn. Bhd. office premises. 1 August Announcement of the 2nd quarterly unaudited financial result for the period ended 30 June Gong hitting during Listing Ceremony 6 August Listing of the Company on the Main Board of the KLSE. 22 November Announcement of the 3rd quarterly unaudited financial result for the period ended 30 September The signing of the Underwriting Agreement, 6 June 2002

10 7 BOARD OF DIRECTORS PROFILE Dato Hj Sufri Bin Hj Mohd Zin (Executive Chairman/ Managing Director) Dato Hj Sufri Bin Hj Mohd Zin, Malaysian, aged 46, was appointed as the Managing Director of TRC Synergy Berhad ( TRC or the Company ) on 29 March 2002 and subsequently redesignated as Executive Chairman / Managing Director on 13 May He is also currently the Managing Director of the TRC Group of 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 2002, he attended all of the four (4) 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 associated company of Trans Resources Corporation Sdn. Bhd., a wholly owned subsidiary of the Company. Encik Abdul Aziz Bin Mohamad (Executive Director) Encik Abdul Aziz Bin Mohamad, Malaysian, aged 44, 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 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. En. Aziz attended all of the four (4) 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.

11 8 En. Rahman Bin Ali (Independent, Non Executive Director) En. Rahman Bin Ali, Malaysian, aged 46, 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 En. Rahman is a member of the Audit Committee, Nomination Committee and Remuneration Committee. He attended all the four (4) Board Meeting held during the financial year ended 31 December Encik Noor Zilan Bin Mohamed Noor (Independent, Non Executive Director) Encik Noor Zilan Bin Mohamed Noor, Malaysian, aged 43, 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 for further studies in the United Kingdom in 1984 and 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 1988 and upon returning to Malaysia he was then 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. En. Noor Zilan is the Chairman to the Audit Committee, Nomination Committee and Remuneration Committee. He attended all of the four (4) Board Meeting held during the financial year ended 31 December Note:- Save as disclosed above, 1) none of the Directors have:- i) any family relationship with any director and/or substantial shareholders of the Company; ii) any conflict of interest with the Company; and iii) 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 9 CHAIRMAN S STATEMENT To Our SHAREHOLDERS, On behalf of the Board of Directors of TRC Synergy Berhad, I am pleased to present the Annual Report and Audited Financial Statements of the Company and the Group for the financial year ended 31 December 2002 for the very first time upon its listing on the Kuala Lumpur Stock Exchange (KLSE). The successful listing of TRC Synergy Berhad on the Main Board of the KLSE on 6 th August 2002 was indeed a historic milestone for the Company and the Group. The Group has since not only witnessed commendable growth, but also has proven its ability to operate profitably during this uncertain global economic conditions.

13 10 Review of Operations During the period under review, the Group s main focus was to manage its projects effectively and efficiently within the parameters of quality, cost and time. The year 2002 was indeed a very challenging year for the Group. It was also a year where the country experienced acute labour shortage and this had to a certain extent affected the performance of the Group. Upgrading of existing Kuching Polytechnic, Sarawak. Construction Division For the period under review, this division was the major revenue contributor for the Group. Despite the competitive environment, this division managed to secure approximately RM236 million worth of contracts both from the government and private sectors. Amongst the bigger packages were the Construction and Completion of Jalan Pantai Baru from Tanjung Kidurong Suai Bakam, Sarawak, Section A1, the East Malaysia Hospital : Kuala Penyu Package KP4 and Upgrading of Existing Kuching Polytechnic, Kuching, Sarawak. The Group s business was started in West Malaysia and later expanded to East Malaysia with the setting up of its branch office in Kuching, Sarawak. Now, with its own local workforce exceeding 200, the East Malaysia operation contributed significantly to the Group s revenue. Apartments at Bayu Senibong, Johor Bahru. With its construction arm having been accredited with the ISO 9001 : 2000 Quality System the Group has attained the necessary credentials and is set to explore international ventures in the near future. Property Division The Group, through its property division, has successfully launched 122 units of semi-detached and terrace houses in Ulu Klang known as Andaman Ukay in the second half of The gross development value of the project is RM56 million and to date it has achieved commendable sales of more than 90%. The project is expected to be completed in One of the semi-detached units at Andaman Ukay, Ulu Klang, Selangor. The associated company of the Group is currently developing two parcels of land with a total area of 163 acres in Permas Jaya, Johor Bahru. To date, Phase A and B comprising medium cost apartments have been launched. The sales for the 2 phases have not been very encouraging due to the current soft property market in Johor and economic uncertainties. Manufacturing Division The Group s concrete manufacturing arm was set up to compliment the Group s activities. The Group plans to expand this division to cater for supplies of ready mixed concrete and precast concrete products to third parties in the near future.

14 11 Financial Performance The Group recorded a turnover of RM million and a pre-tax profit of RM25.73 million, for the financial year ended 31 December The earnings per share is sen whilst the shareholders fund stands at RM112.7 million. The acute labour shortage in the construction industry had a negative impact on several projects undertaken by the Group which in turn had an effect in the Group s efforts of achieving a higher revenue. In addition, the results of the associated company have also been impacted by the prevailing soft property market in Johor. East Malaysia Hospital, Keningau, Sabah. New Control Tower at Kota Bahru Airport, Kelantan. Future Outlook The Malaysian government has projected to achieve the status of a developed nation by the year The ongoing infrastructure projects and those in the pipeline will ensure that our nation moves to the next level of development. The Government has projected an economic growth of 4.5% for This projection together with the soon-tobe-announced Government economic stimulus package is expected to have a positive impact on the performance of the Group and the construction industry as a whole. Although there are opportunities for the Group, there are also unforeseen circumstances beyond its control. Malaysia, being relatively open, is inextricably linked to the world economy. Barring any major economical and financial upheavals in the world, the future of the Malaysia construction is set for sustainable growth. Dividend In view of the current global economic and financial uncertainties, the Board of Directors is recommending first and final tax exempt dividend of 2.5 sen per share to be paid in respect of the financial year ended 31 December 2002 amounting to RM1.75 million. The final dividend is subject to shareholders approval at the forthcoming Annual General Meeting. Upon approval, the final dividend would be paid on 30 July Acknowledgement and Appreciation On behalf of the Board, I would like to express my heartfelt gratitude to my fellow colleagues on the Board for their invaluable guidance and council. I would also like to extend my appreciation to the entire management and staff for their deep sense of dedication, hard work, patience, commitment and enthusiasm for the continued advancement of the Group. Finally, we would like to thank our shareholders, financiers and business associates for their continued support and the Government authorities for their guidance and advice. Kind regards, DATO HAJI SUFRI BIN HAJI MOHD. ZIN Executive Chairman 23 May 2003

15 GROUP STRUCTURE as at 28 April TRC SYNERGY BERHAD ( D) Investment Holding & Provision of Management Services TRANS RESOURCES CORPORATION SDN BHD ( P) (100%) Construction TRC DEVELOPMENT SDN BHD ( U) (100%) Property Development & Project Management Services TRC CONCRETE INDUSTRIES SDN BHD ( V) (100%) Manufacturing & Trading in Concrete Piles & Ready-Mixed Concrete ANDAMAN BUDI SDN BHD ( W) (40%) Property Development

16 13 STATEMENT ON CORPORATE GOVERNANCE The Malaysian Code on Corporate Governance essentially set out principles and best practices on structures and processes that corporations may use in their operations in achieving the optimal governance framework. The Board of Directors ( the Board ) are fully committed to maintaining high standards of corporate governance within TRC group. Good corporate governance is a fundamental part of the Group s responsibility to protect and enhance long term shareholder value and financial performance, whilst taking into account the interests of other stakeholders. 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 Malaysian Code of Corporate Governance ( code ). In accordance with paragraph of the KLSE 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. A) DIRECTORS a) The Board of Directors The Group is led by an effective Board of Directors headed by the Executive Chairman which leads and control the activities of the Group. 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 four members comprising two Executive Directors and two Independent Non-Executive Directors. The profiles of the Directors are presented in this Annual Report on pages 7 and 8. In the Board s opinion, the Directors possess the skills, experience and industry specific knowledge necessary to effectively discharge their duties and responsibilities as members of the Board. The Board has two Executive Directors who have detailed knowledge and broad business and commercial experience as regards to the Group s core business. Half of the Board members are Independent Non-Executive Directors who provide broad, unbiased and balanced assessment on proposals initiated by the Executive Directors and the senior management of the Group. c) Board Meeting The Board met four times for the financial year ended to 31 December In the meetings, the Board deliberated and considered matters relating to the Group s financial performance, key business and operational issues and business plans. Attendance at the Board Meetings are as follows:- No Meeting Date/Time Attendance Place 1 1 st BOD Meeting 22/05/02 (10.30 a.m.) 2 Special BOD Meeting 18/07/02 (9.30 a.m.) 3 2 nd BOD Meeting 1/08/02 (11.15 a.m.) 4 3 rd BOD Meeting 19/11/02 (11.15 a.m.) All Directors All Directors All Directors All Directors Meeting Room, Wisma TRC, 217 & 218, Jalan Negara 2, Taman Melawati, Ulu Klang, Selangor Meeting Room, MIDF Consultancy & Corporate Services Sdn. Bhd., Ting 12, Bangunan MIDF, 195A Jln Tun Razak, Kuala Lumpur Meeting Room, Wisma TRC, 217 & 218, Jalan Negara 2, Taman Melawati, Ulu Klang, Selangor Meeting Room, Wisma TRC, 217 & 218, Jalan Negara 2, Taman Melawati, Ulu Klang, Selangor Note : BOD means Board of Directors Going forward, the Board plans to meet quarterly with a view to have additional meeting as and when the need arises. d) Supply of Information to the Board. All Directors have access to all information within the Group and to the advice and services of the Company Secretaries in carrying out their duties and responsibilities. The Board members are provided with adequate information in the form of complete set of Board file two weeks prior to each Board meeting.

17 14 e) Appointment and Re-election of Directors The Company has a formal and transparent procedures for the appointment of new directors and re-election of directors. These aspects are spelt out clearly in the Company s Articles of Association. All the newly appointed Directors are subject to election by shareholders at the Annual General Meeting subsequent to their appointment. As for the re-election of Directors, the Articles of Association of the Company provides at least one-third 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 once at least in each three years. f) Directors Training All Directors have attended and completed the KLSE s Mandatory Accreditation Programme ( MAP ) conducted by the Research Institute of Investment Analysis Malaysia, an affiliate of the KLSE in accordance with the KLSE Listing Requirements. As part of the education and orientation programme for the new Directors, management will brief the new Directors on the business aspects of the Group while the Company Secretary will provide relevant guidelines on the statutory and regulatory matters to the new Directors. From time to time the Board members are encouraged to attend external training to further enhance their knowledge and skill. g) Board Committees i. Audit Committee The matters relating to the Audit Committee are set out in the Audit Committee Report. ii. Nomination Committee The Committee which was established on 22 May 2002 comprises exclusively of Independent Non-Executive Directors. As at 21 May 2003, the committee members are: - i) En. Noor Zilan Bin Mohamed Noor (Independent Non-Executive Director) Chairman ii) En. Rahman Ali (Independent Non-Executive Director) The Committee will carry out its duties in accordance with the approved terms of reference. The primary responsibility, among others, is to consider suitable person for appointment as Directors of the Company and its subsidiaries and to assess directors on an on-going basis. iii. Remuneration Committee The Board established a Remuneration Committee on 22 May Presently the Committee comprises of two (2) Independent Non-Executive Directors. As at 21 May 2003 the Committee are:- i) En. Noor Zilan Bin Mohamed Noor (Independent Non-Executive Director) Chairman ii) En. Rahman Ali (Independent Non-Executive Director) The Committee that has been set up by the Board will carry out its duties in accordance with the approved terms of reference. Their primary responsibility among others is to recommend to the Board on the remuneration of the Executive Directors in all its forms, drawing from outside advice where necessary. Nevertheless, the determination of remuneration packages of Directors is a matter for the Board as a whole and individuals are required to abstain from discussion of their own remuneration. B) DIRECTORS REMUNERATION Teachers Training College at Kota Samarahan, Sarawak. The remuneration of each Director is determined by the Board as a whole. Their remuneration reflects the experience and level of responsibility which goes with the Board membership. For the Financial year ended 31 December 2002, the Company started paying Directors remuneration to Non-Executive Directors from June 2002 as they were appointed as Directors in the middle of May 2002.

18 15 The aggregate remuneration of the Directors received and receivable from the Company and its subsidiaries during the financial year are as follows:- Category Fees (RM) Salaries (RM) Benefit-in-kind (RM) Executive Directors 252,960 42,000 Non-Executive Director 42,000 Total 294,960 42,000 The remuneration paid to the Directors, analyzed into the following bands, is as follows:- Range of remuneration Number of Director Executive Non-Executive Less than RM 50,000 3 RM 100,000 RM 200,000 2 C) RELATIONSHIP WITH INVESTORS AND SHAREHOLDER COMMUNICATION Before the listing of the Company on the Main Board of the KLSE in August 2002, there were a number of dialogues and analysts briefings organized 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. Press conference during the signing of the Underwriting Agreement. 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 D) ACCOUNTABILITY AND AUDIT i. Financial Reporting In presenting the Company s financial statements and quarterly results to shareholders and other interested parties, the Board is mindful of the necessity to present a balanced 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 provision 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 the KLSE for public release. The Statement explaining the Directors responsibilities for preparing the annual audited financial statements pursuant to paragraph 15.27(a) of the KLSE Listing Requirements is set out on page 18 of the Annual report. ii. Internal Control. The Board acknowledges and placed strong emphasis in maintaining a sound system of internal control which is necessary to safeguard the Group s assets and shareholders investment. Details of the Group s internal control system is presented in the Statement on Internal Control set out on pages 19 to 20 of the Annual Report. 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.

19 16 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 Part 2, AA II Part 2, AA III & VI Part 2, AA VII Details Chairman and Chief Executive Independent Non- Executive Director Senior Independent Non-Executive Director to whom concerns may be conveyed Explanation The Company is headed by an Executive Chairman who is also the Managing Director of the Company 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 Non-Executive Director which is currently representing 50% in number of the Directors. Furthermore, the Chairman encourages all Directors to participate actively in all deliberation of issues that concern the Group. The Board is also considering to appoint a new Independent Non-Executive Director to assume the role of Chairman. The appointment is expected to be done when a suitable candidate is identified. The Company complies with the criteria of having at least one-third of the Board Members as Independent Non-Executive Directors. Presently all Board Members are accessible by the shareholders and public investors where they can relay their concerns over company s matter. Therefore, the appointment of Senior Independent Non-Executive Director to assume such responsibilities is not timely necessary. This statement on Corporate Governance is made in accordance with the resolution of Board of Director dated 17 April Construction of East Malaysia Hospital, Kuala Penyu, Sabah. Construction of road from Pos Blau to Kg. Kuala Betis, Gua Musang, Kelantan.

20 17 ADDITIONAL CORPORATE INFORMATION In compliance with the KLSE Listing Requirements, the following information is provided:- i) Utilization of proceeds The status of utilization of proceeds from the public issue during the financial year were as follows:- Approved by Securities Commission Time frame for utilazation Financial year ending 31 December 2002 Financial year ending 31 December 2003 Amount Utilized Balance RM RM RM RM a. Repayment of Short Term Loans 18,847,746-16,067,936 2,779,810 b. Redemption of Property 8,000,000 2,176,465 5,823,535 c. Working Capital 1,500,000-1,500,000 - d. Listing Expenses 2,200,000-2,200,000-22,547,746 8,000,000 21,944,401 8,603,345 ii) iii) iv) Share buybacks There was no share buyback by the Company during the financial year ended 31 December Option, Warrants or Convertible Securities. The Company has neither offered any options nor issued any warrants or convertible securities. American Depository Receipt (ADR) / Global Depository Receipt (GDR). The Company has not sponsored any ADR or GDR Programme. v) Sanctions and / or penalties There were no sanction and/or penalty imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year ended 31 December vi) Variation of Results There was no material variation between the audited results for the financial year ended 31 December 2002 with the projected figure reported in our prospectus dated 28 June vii) Profit Guarantee There was no profit guarantee given by the Company during the financial year ended 31 December xi) ix) Material Contracts There was no material contract on the company and its subsidiaries involving Directors and major shareholders interests during the financial year. Revaluation of landed properties The Company does not adopt a policy of regular revaluation of its properties. vi) Non-Audit Fees The non-audit fees paid to external auditors amounting to RM42,780 for the financial year ended 31 December x) 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 PARTICULARS OF MATERIAL CONTRACTS INVOLVING DIRECTORS AND SHAREHOLDERS On 16 April 2001, Andaman Budi Sdn. Bhd. (ABSB) which is an associated company of Trans Resources Corporation Sdn. Bhd. (TRC) a wholly owned subsidiary of the Company executed a Letter of Acceptance in favour of TRC to undertake the project knows as construction and completion of 2 blocks of medium cost apartments 11 and 12 storey (352 units) phase A on Lot LTD , Mukim Plentong, Johor Bahru, Johor Darul Takzim for the contract sum of RM 24,932, On 10 September 2001, ABSB executed a Letter of Acceptance in favour of TRC to undetake the project known as construction and completion of 5 block of apartments (827 units) including piling works, common facilities and covered car park for phase B or Lot No. PTD , Mukim Plentong, Johor Darul Takzim for the contract sum of RM 72,637, Dato Hj Sufri Bin Hj Mohd Zin, the Executive Chairman / Managing Director of the Company is a substantial shareholder of ABSB, holding 51% equity interest whereas En. Abdul Aziz Bin Mohamad, the Executive Director of the Company is a shareholder of ABSB, holding 9% equity interest.

21 18 Resettlement project at Sg. Pau, Sik, Kedah. Labuan Airport, Labuan. 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 2002, 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.

22 19 STATEMENT ON INTERNAL CONTROL INTRODUCTION Pursuant to paragraph (b) of the Kuala Lumpur Stock Exchange Listing Requirements the Board of Directors of TRC Synergy Berhad ( the Group ) is pleased to provide this statement on the internal control which outlines the nature and scope of internal control of the Group during the financial year ended 31 December RESPONSIBILITY The Board is committed to the continuous improvement to 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 controls 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. 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 business objectives of the Group. For the purposes of this statement, the Group refers to the Company and its subsidiaries, excluding associated company. INTERNAL CONTROL The key elements of the Group s internal control system are described below:- ISO 9001:2000 Certificate Presentation There is 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 procedures are communicated to the respective staff members. RISK MANAGEMENT FRAMEWORK The Group has in place an on-going process for identifying, evaluating, monitoring and managing the significant risks affecting the achievement of 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 description and specification provided to each employee of the Group which is further reiterated through a well defined organizational structure. Documented internal procedures set out in a series of Operating Manuals. Regular and comprehensive information provided to management, covering financial performance and key business indicators. A detailed budgeting process where operating units prepare budgets for the coming year which are approved both at operating unit level and by the full Board. A monthly monitoring of results against budget, with major variances being followed up and management action taken, where necessary. its business objectives. This is an on-going process, subject to regular review by the Board, and accords with the Statement on Internal Control: Guidance for Directors of Public Listed Companies. The key elements of the Group s Risk Management Framework are described below :- 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. Review and holding of discussions by the Audit Committee on significant internal control matters relating to the Group.

23 20 Construction of Sekolah Men. Tengku Indera Petra (2), Gua Musang, Kelantan. 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. OTHER CONTROL PROCESSES 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. 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 17 April INTERNAL AUDIT The Group is currently undertaking the relevant measures to have an internal audit function so that regular and systematic reviews of the system of internal control can be undertaken so as to provide reasonable assurance that such systems operate satisfactorily and effectively in the Group. 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 23 of this Annual Report contains further details on the activities undertaken by the Audit Committee in Road construction undertaken by the Group.

24 21 AUDIT COMMITTEE REPORT The Board of TRC Synergy Berhad is pleased to present the Audit Committee Report for the financial year ended 31 December Composition of the Audit Committee Chairman: En Noor Zilan bin Mohamed Noor (Independent Non-Executive Director) (Appointed on 24 February 2003) Member: Puan Noor Asiah Binti Mahmood (Independent Non-Executive Director) (Resigned on 24 February 2003) i) YBhg. Dato Hj Sufri Bin Hj Mohd Zin (Executive Chairman / Managing Director) ii) En Rahman Bin Ali (Independent Non-Executive Director) (Member of the Malaysian Institute of Accountants) Secretary: En. Abdul Aziz Bin Mohamed (Company Secretary) 2. Terms of Reference i. 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 (3) members where the majority of them shall be independent non-executive 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. ii. Objectives The primary objectives of the Audit Committee are: a. To provide assistance to the Board in fulfilling its fiduciary responsibilities particularly relating to business ethics, policies and practices and financial management and control. b. 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. c. To maintain through regularly scheduled meetings a direct line of communication between the Board and the external auditors, internal auditors and management. iii. Duties and responsibilities The duties and responsibilities of the Audit Committee shall be: a. To consider the appointment of the external auditors, determination of audit fee and any questions of resignation or dismissal. b. To discuss with the external auditor before the audit commences the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved. c. To review the quarterly results and year end financial statements before submission to the board, focusing particularly on: i. Any changes in accounting policies and practices ii. Major judgmental areas iii. Significant adjustments resulting from the audit Hockey Stadium Bukit Jalil - one of the mega projects by the Group. If the members of the Audit Committee for any reason be reduced to below three (3), the Board of Directors shall within three (3) months of that event, appoint such number of the new members as may be required to make up the minimum number of three (3) members.

25 22 iv. The going concern assumption v. Compliance with accounting standards vi. Compliance with the stock exchange and legal requirements d. 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) e. 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. f. To keep under review the effectiveness of the internal control system, and in particular review the external auditors management letter and management s response. g. 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. h. To carry out such other functions as may be agreed to by the Audit Committee and the Board of Directors. iv) 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 co-operate with any request made by the Committee. The Committee is empowered by the Board to retain persons having special competence as necessary to assist the Committee in fulfilling its responsibilities. v) Meeting and Minutes The Audit Committee shall not hold less than three (3) meetings a year and the quorum for each meeting shall be two (2) 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. Construction of road from Simpang Pulai-Lojing-Gua Musang-Kuala Berang Casting precast concrete piles by TRC Concrete Industries Sdn. Bhd.

26 23 3. Summary of Activities of the Audit Committee. During the financial year ended 31 December 2002, the Audit Committee met two (2) times. The details of the attendance of the members of the Audit Committee are as follows:- No Audit Committee En Noor Zilan bin Mohamed Noor (Appointed on 24 February 2003) Pn. Noor Asiah Binti Mahmood (Resigned on 24 February 2003) Dato Hj Sufri Bin Hj Mohd Zin Attendance n/a Percentage n/a 2/2 100% 1/2 50% 4 En. Rahman Bin Ali 2/2 100% During the financial year, the Audit Committee carried out the following review :- - 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 auditors fees and to recommend their reappointments 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 plan to address further compliance matters. 4) Internal Audit Function The Board have taken necessary steps, as are reasonably open to them, to ensure that appropriate systems in place for the assets of the Group to be adequately safe guarded through the prevention and detection of fraud and other irregularity and material misstatements. In this context, the Board is currently, undertaking relevant measures to have an internal audit function so that regular and systematic reviews of the system of internal control can be undertaken. - 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. Construction of bridge in Gua Musang, Kelantan. Concrete batching plant operated by TRC Concrete Industries Sdn. Bhd.