statutory financial statements -...

KUMPULAN NAGA Chartered Accountants ( AF 0024 )

TRC SYNERGY BERHAD

(Incorporated in Malaysia, Company No. 413192 - D)

Statutory Financial Statements 31 December, 2003

AND ITS SUBSIDIARY COMPANIES

TRC SYNERGY BERHAD

(Incorporated in Malaysia, Company No. 413192 - D)

Statutory Financial Statements

31 December

2003

Index Pages No.

Corporate Information 1

Directors' Report 2 - 6

Statement by Directors 7

Statutory Declaration 7

Auditors' Report 8

Balance Sheets 9 & 10

Income Statements 11

Statement of Changes in Equity - Group 12

Statement of Changes in Equity - Company 13

Cash Flow Statement - Group 14 & 15

Cash Flow Statement - Company 16

Notes to the Financial Statements 17 - 41

TRC Synergy Berhad (Incorporated in Malaysia, Company No. 413192 - D)

Corporate Information for the year ended 31 December 2003

Board of Directors : Dato' Haji Sufri Bin Haji Mohd Zin

: Abdul Aziz Bin Mohamad

: Rahman Bin Ali

: Noor Zilan Bin Mohamed Noor

Secretaries : 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

Bumiputra-Commerce Bank Berhad

AmBank Berhad

Registered Office/ : Wisma TRC Principal Place of Business 217 & 218, Jalan Negara 2,

Taman Melawati,53100 Ulu Klang, Selangor Darul Ehsan.

1

Directors Report for the year ended 31 December 2003

PRINCIPAL ACTIVITIES

RESULTS

Group Company

RM RM

Profit after taxation 8,684,109 9,119,118

Minority interest 4 -Net profit for the year 8,684,113 9,119,118

SIGNIFICANT EVENTS

(i)

(ii)

(iii)

(iv)

The directors have pleasure in presenting their report together with the audited financial statements of the Group and ofthe Company for the financial year ended 31 December 2003.

The principal activities of the Company are that of providing corporate, administrative and financial support services tothe subsidiaries and investment holding.

The principal activities of the subsidiaries are construction, manufacturing and trading of construction materials, hiringand servicing of machineries and vehicles, general contractors supplying labour and property development.

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

On 26 September 2003, an announcement was made to Malaysia Securities Exchange Berhad ("MSEB") that theCompany intends to undertake the following proposals :-

proposed private placement of up to 7,000,000 new TRCS shares representing up to 10% of the existing issued andpaid-up share capital of the Company;

proposed bonus issue of 15,400,000 new TRCS shares on the basis of one (1) new ordinary share for every five (5)existing TRCS shares held immediately after the Private Placement;

proposed establishment of Employees' Share Option Scheme for employees and directors ("ESOS").

proposed increase in the authorised share capital of TRCS from RM100,000,000 comprising 100,000,000 ordinaryshares of RM1.00 each to RM200,000,000 comprising 200,000,000 ordinary shares of RM1.00 each by thecreation of an additional 100,000,000 ordinary shares of RM1.00 each in TRCS.

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 yearwere not substantially affected by any item, transaction or event of a material and unusual nature.

2TRC SYNERGY BERHAD

(413192-D)

SIGNIFICANT EVENTS (Cont'd)

DIVIDENDS

DIRECTORS

Dato' Haji Sufri Bin Haji Mohd Zin

Abdul Aziz Bin Mohamad

Rahman Bin Ali

Noor Zilan Bin Mohamed Noor

DIRECTORS' BENEFITS

The Directors proposed the payment of a first and final tax exempt dividend of 2.5 sen per share amounting toRM2,310,000 for the current financial year. The dividend is based on the enlarged share capital of the Company uponcompletion of the private placement exercise and the bonus issue as mentioned in this directors' report. The dividend issubject to the approval of members at the forthcoming Annual General Meeting of the Company. The financialstatements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by theshareholders, will be accounted for in the shareholders' equity as an appropriation of retained profit in the next financialyear ending 31 December 2004.

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

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which theCompany was a party whereby the directors might acquire benefits by means of acquisition of shares in or debentures ofthe 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 thanbenefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixedsalary of a full time employee of the Company) by reason of a contract made by the Company or a related corporationwith any director or with a firm of which he is a member, or with a company in which he has a substantial financialinterest, except as disclosed in Note 34 to the financial statements.

The above said proposals have been approved by the Securities Commission vide its letter dated 13 January 2004 andthe Private Placement was completed on 26 February 2004, being the date of listing of the placement shares.

An Extraordinary General Meeting of the Company is scheduled to be held on 30 April 2004 to seek shareholders'approval on the proposed Bonus Issue, proposed ESOS and the proposed increase in the authorised share capital of theCompany.

The Company paid a final tax exempt dividend of 2.5 sen per share amounting to RM1,750,000 (2002: Nil) on 30 July2003 in respect of the financial year ended 31 December 2002.

3TRC SYNERGY BERHAD

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DIRECTORS' INTEREST

******** Number of Ordinary shares of RM1 each ******

At At

Shares in the Company 1.1.2003 Bought Sold 31.12.2003

Direct interest :

Dato' Haji Sufri Bin Haji Mohd Zin 10,575,000 - - 10,575,000

Abdul Aziz Bin Mohamad 100,000 - - 100,000Noor Zilan Bin Mohamed Noor 200,000 - (150,000) 50,000

Indirect interest :

Dato' Haji Sufri Bin Haji Mohd Zin # 32,400,000 - - 32,400,000

#

OTHER STATUTORY INFORMATION

(a)

(i)

(ii)

(b)

(i)

(ii)

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 corporationsduring the financial year were as follows :-

Deemed interested by virtue of his substantial shareholdings in TRC Capital Sdn. Bhd. and Kolektif Aman Sdn.Bhd.

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

to ensure that any current assets which were unlikely to realise their value as shown in the accounting records inthe ordinary course of business have been written down to an amount which they might be expected so torealise.

the amount written off for bad debts or the amount of the provision for doubtful debts inadequate to anysubstantial extent; and

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

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

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

By virtue of Dato' Haji Sufri Bin Haji Mohd Zin and Abdul Aziz Bin Mohamad having interests in the Company, theyare deemed to be interested in shares of the subsidiaries to the extent the Company has an interest.

4TRC SYNERGY BERHAD

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OTHER STATUTORY INFORMATION (Cont'd)

(c)

(d)`

(e) At the date of this report, there does not exist :-

(i)

(ii)

(f) In the opinion of the directors :-

(i)

(ii)

At the date of this report, the directors are not aware of any circumstances which have arisen which would renderadherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading orinappropriate.

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

any charge on the assets of the Group and of the Company which has arisen since the end of the financial yearwhich 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.

no item, transaction or event of a material and unusual nature has arisen in the interval between the end of thefinancial 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.

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

5TRC SYNERGY BERHAD

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Auditors

On behalf of the Board,

…………………………………………………………

DATO' HAJI SUFRI BIN HAJI MOHD ZIN

Director

…………………………………………………………

ABDUL AZIZ BIN MOHAMAD

Director

Kuala Lumpur, Malaysia

Date:

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

6TRC SYNERGY BERHAD

(413192-D)

pursuant to Section 169(15) of the Companies Act, 1965

On behalf of the Board,

…………………………………………………….…..DATO' HAJI SUFRI BIN HAJI MOHD ZIN

…………………………………………………….…..ABDUL AZIZ BIN MOHAMAD


Date:

pursuant to Section 169(16) of the Companies Act, 1965

Subscribed and solemnly declared by the abovenamed, }DATO' HAJI SUFRI BIN HAJI MOHD ZIN at Petaling Jaya }in the State of Selangor Darul Ehsan on } ………………………………………………………..

} DATO' HAJI SUFRI BIN HAJI MOHD ZIN

Before me,

……………………………………………

Commissioner for Oaths

Statement by Directors

Statutory Declaration

I, DATO' HAJI SUFRI BIN HAJI MOHD ZIN, being the director primarily responsible for the financial managementof TRC Synergy Bhd., do solemnly and sincerely declare that the financial statements set out on pages 9 to 41 are, in myopinion correct, and I make this solemn declaration conscientiously believing the same to be true by virtue of theprovisions of the Statutory Declarations Act, 1960.

We, DATO' HAJI SUFRI BIN HAJI MOHD ZIN and ABDUL AZIZ BIN MOHAMAD, being two of the directorsof TRC Synergy Bhd., do hereby state that, in the opinion of the directors, the accompanying financial statements set outon pages 9 to 41 are drawn up in accordance with applicable Approved Accounting Standards in Malaysia and theprovisions of the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of theCompany as at 31 December 2003 and of the results and the cash flows of the Group and of the Company for the yearthen ended.

7TRC SYNERGY BERHAD

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Report of the Auditorsto the members of TRC Synergy Berhad.

In our opinion :-

(a)

(i)

(ii)

(b)

…………………………………………… ……………………………………………………Kumpulan Naga T. Nagarajan C.A.(M), FCCA, AICAA.F. No. 0024 No: 824/04/04 (J)Chartered Accountants (M)


Date:

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 aboutwhether the financial statements are free of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by the directors aswell as evaluating the overall presentation of the financial statements. We believe that our auditprovides a reasonable basis for our opinion.

We have audited the accompanying financial statements set out on pages 9 to 41.

the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 andapplicable Approved Accounting Standards in Malaysia so as to give a true and fair view of :-

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

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

the financial position of the Group and of the Company as at 31 December 2003 and of the results and thecash flows of the Group and of the Company for the year then ended; and

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

These financial statements are the responsibility of the Company's directors. Our responsibility is toexpress an opinion on the financial statements based on our audit.

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

We have considered the financial statements and the auditors' report of a subsidiary company of which we have notacted as auditors, as indicated in note 11 to the financial statements, being financial statements that have been includedin the consolidated financial statements.

8TRC SYNERGY BERHAD

(413192-D)

Balance Sheetsas at 31 December 2003

2003 2002 2003 2002Notes RM RM RM RM

FINANCED BY :

Share Capital 3 70,000,000 70,000,000 70,000,000 70,000,000 Share Premium 4 12,885,471 12,885,471 12,885,471 12,885,471 Reserve on Consolidation 16,540,657 16,540,657 - - Retained Profits/(Accumulated Losses) 5 20,166,024 13,231,911 7,151,543 (217,575) Shareholders' Equity 119,592,152 112,658,039 90,037,014 82,667,896

Deferred Taxation 6 3,921,338 3,101,830 - - Hire Purchase and Lease Creditors 7 2,473,095 6,911,166 - - Term Loans 8 371,193 702,375 - -

126,357,778 123,373,410 90,037,014 82,667,896

NON-CURRENT ASSETS

Property, Plant and Equipment 9 51,745,427 56,421,220 - -Investments 10 255,394 255,394 - -Investment in Subsidiaries 11 - - 89,999,828 82,678,401Investment in Associate 12 921,586 - - -Expenditure Carried Forward 13 61,520 - 61,520 -

CURRENT ASSETS

Property development project costs 14 6,364,064 11,072,951 - - Inventories 15 264,541 533,942 - - Trade receivables 16 100,522,405 81,802,824 - - Other receivables 5,933,227 4,351,000 2,000 2,000 Gross amount due from customers 17 103,025,178 91,891,767 - - Deposits with licensed banks 18 50,288,723 34,720,963 - - Cash and bank balances 19 4,568,099 7,486,321 22,580 20,081

270,966,237 231,859,768 24,580 22,081

Group Company

9TRC SYNERGY BERHAD

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Balance Sheetsas at 31 December 2003 (cont'd.)

2003 2002 2003 2002Notes RM RM RM RM

CURRENT LIABILITIES Trade payables 20 68,104,864 46,346,358 - -Other payables 7,881,898 5,728,878 38,189 23,386Hire purchase and lease creditors 7 6,183,999 8,781,586 - -Short term borrowings 21 109,431,017 98,369,403 - -Taxation 5,794,436 5,922,100 9,200 9,200Due to a director 22 194,647 14,647 - -Proposed dividend 1,525 - 1,525 -

197,592,386 165,162,972 48,914 32,586

NET CURRENT ASSETS/(LIABILITIES) 73,373,851 66,696,796 (24,334) (10,505)126,357,778 123,373,410 90,037,014 82,667,896

Group Company

The annexed notes form an integral part of these financial statements.

10TRC SYNERGY BERHAD

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Company 2003 2002 2003 2002

Notes RM RM RM RM

Revenue 23 324,683,952 303,225,466 9,600,000 -

Cost of Sales 23 (295,768,077) (264,862,365) - -

Gross Profit 28,915,875 38,363,101 9,600,000 -

Other Operating Income 1,656,188 6,873,156 - 34,525Administration Expenses (12,410,972) (12,067,251) - -Selling Expenses (201,425) (109,693) - -Other Operating Expenses - - (480,882) (230,202)Operating Profit/(Loss) 17,959,666 33,059,313 9,119,118 (195,677)

Finance Cost (7,584,387) (7,996,619) - -

Share of results of an associated company 1,209,222 195,615 - -Profit on disposal of Property, Plant and Equipment 1,481,106 474,841 - -

Profit/(Loss) Before Taxation 24 13,065,607 25,733,150 9,119,118 (195,677)Taxation 25 (4,381,498) (5,552,080) - (9,200)

Profit/(Loss) After Taxation 8,684,109 20,181,070 9,119,118 (204,877)

Minority interest 4 - - -

Pre-acquisition profit of subsidiary acquired - (2,395,461) - -

Net profit/(loss) for the year 8,684,113 17,785,609 9,119,118 (204,877)

- Earnings per share ( sen )- Basic/diluted 26 12.41 37.88 - -

Income Statementsfor the year ended 31 December 2003

Group



(413192-D)

Distributable

Share Share Capital Retained

Note Capital Premium Reserves Profits Total

RM RM RM RM RM

At 1 January 2002 2 - - (12,698) (12,696)

Net profit for the year - - - 17,785,609 17,785,609

Prior year adjustment - - - (4,541,000) (4,541,000)

Issue of shares 69,999,998 12,885,471 16,540,657 - 99,426,126

At 31 December 2002 70,000,000 12,885,471 16,540,657 13,231,911 112,658,039

At 1 January 2003 70,000,000 12,885,471 16,540,657 13,231,911 112,658,039

Net profit for the year - - - 8,684,113 8,684,113

Dividend 27 - - - (1,750,000) (1,750,000)

At 31 December 2003 70,000,000 12,885,471 16,540,657 20,166,024 119,592,152

Statement of Changes in Equity - Group for the year ended 31 December 2003

Non-Distributable


12TRC SYNERGY BERHAD.

(413192-D)

(Accumulated

Share Share Losses)/

Note Capital Premium Retained Profit Total

RM RM RM RM

At 1 January 2002 2 - (12,698) (12,696)

Net loss for the year - - (204,877) (204,877)

Issue of shares 69,999,998 12,885,471 - 82,885,469

At 31 December 2002 70,000,000 12,885,471 (217,575) 82,667,896

At 1 January 2003 70,000,000 12,885,471 (217,575) 82,667,896

Net profit for the year - - 9,119,118 9,119,118

Dividend 27 - - (1,750,000) (1,750,000)

At 31 December 2003 70,000,000 12,885,471 7,151,543 90,037,014

for the year ended 31 December 2003

Statement of Changes in Equity - Company



(413192-D)

Note 2003 2002RM RM

CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation 13,065,607 25,733,150

Adjustments for :-Deferred expenditure written off - 13,563 Depreciation 9,401,735 7,232,285 Gain on disposal of property, plant and equipment (1,481,106) (474,841) Share of results of an associated company (1,209,222) (155,952) Interest expense 6,639,664 7,083,726 Interest income (1,269,965) (1,215,652) Provision for bad debts written back - (5,500,000) Pre-acquisition profit before tax - (3,335,573) Property, plant and equipment written off 176,458 -Realisation of unrealised profit on development activities (5,924,751) -OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 19,398,420 29,380,706

Gross amount due from customers (11,133,411) (34,681,872)Associated company - 5,399,402 Inventories 269,401 (108,464) Receivables (20,301,808) (19,262,967)Payables 23,911,526 13,791,173 Directors' account 180,000 14,647 Property development project costs 10,633,638 (16,816,145)

Cash generated from/(used in) operations 22,957,766 (22,283,520)

Taxation paid (3,402,018) (8,121,261)Interest paid (6,639,664) (7,083,726)Interest received 1,269,965 1,215,652

Net cash generated from/(used in) operating activities 14,186,049 (36,272,855)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (6,811,293) (12,353,763)Proceeds from disposal of property, plant and equipment 3,389,999 23,044,267Acquisition of subsidiary net of cash acquired 28 4 (58,829,668)Net cash used in investing activities (3,421,290) (48,139,164)

Cash Flow Statement - Groupfor the year ended 31 December 2003

14 TRC SYNERGY BERHAD

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Note 2003 2002RM RM

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares - 30,547,746Repayment of term loans (331,182) (241,037) Expenditure carried forward (61,520) (1,428,144)Repayment of hire purchase creditors (7,035,658) (276,263) Dividend paid (1,748,475) - Net cash (used in)/generated from financing activities (9,176,835) 28,602,302

Net increase/(decrease) in cash and cash equivalents 1,587,924 (55,809,717)Cash and cash equivalents at the beginning of the year (55,809,715) 2Cash and cash equivalents at the end of the year (54,221,791) (55,809,715)

Cash and cash equivalents at end of year comprise the following :-

Cash and bank balances 4,568,099 7,486,321 Deposits with licensed banks 50,288,723 34,720,963Bank overdrafts (26,934,066) (27,150,080)Bankers acceptance (45,904,000) (41,215,000)

Revolving credit (5,000,000) (5,000,000)Bridging loan (556,898) (1,440,450)Medium term credit - (4,370,692)Overdraft - non chequeing (27,710,114) (18,840,777)

Revolving term loan (2,369,180) - Domestic factoring (604,355) -

(54,221,791) (55,809,715)

Cash Flow Statement - Groupfor the year ended 31 December 2003 ( Cont'd )



(413192-D)

Note 2003 2002RM RM

CASH FLOWS FROM OPERATING ACTIVITIES Net profit/(loss) before taxation 9,119,118 (195,677)

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES Receivables - (2,000) Payables 14,803 (685,789)Subsidiary companies (7,321,427) (28,229,620)Deferred expenditure - 696,477Net cash generated from/(used in) operating activities 1,812,494 (28,416,609)

CASH FLOWS FROM FINANCING ACTIVITIES Dividend paid (1,748,475) -Proceeds from share issue - 30,547,746Expenditure carried forward (61,520) (2,111,058)Net cash (used in)/generated from financing activities (1,809,995) 28,436,688

Net increase in cash and cash equivalents 2,499 20,079

Cash and cash equivalents at the beginning of the year 20,081 2 Cash and cash equivalents at the end of the year 22,580 20,081

For the year ended 31 December 2003Cash Flow Statement - Company



(413192-D)

1. CORPORATE INFORMATION

2. PRINCIPAL ACCOUNTING POLICIES

(a) Basis of Preparation of Financial Statements

(b) Basis of Consolidation

Notes to the Financial Statements

31 December 2003

The principal activities of the Company are that of investment holding and the provision of full 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 907 (2002 : 874).

The number of employees of the Company as at year end was 6 (2002: 8).

The Company is a public limited liability company incorporated and domiciled in Malaysia and listed on theMain Board of Malaysia Securities Exchange Berhad ("MSEB").

The registered office and the principal place of business of the Company is located at :-

Wisma TRC217 & 218, Jalan Negara 2,Taman Melawati,53100 Ulu Klang,Selangor Darul Ehsan.

The financial statements of the Group and of the Company are prepared under the historical cost conventionexcept for revaluation of certain properties included under property, plant and equipment.

The financial statements of the Group and of the Company have been prepared in accordance with applicableApproved Accounting Standards issued by the Malaysian Accounting Standards Board (MASB) and complywith the provisions of the Companies Act, 1965. The principal accounting policies of the Group are as follows :-

The consolidated financial statements include the financial statements of the Company and all its subsidiariesmade up to 31 December. Subsidiaries are those companies in which the Group has the power to exercisecontrol over the financial and operating policies so as to obtain benefits from their activities. Subsidiaries areconsolidated using the acquisition method of accounting under which the results of subsidiaries acquired ordisposed of are included in the consolidated financial statements from the date of acquisition or up to thedate of disposal. Goodwill or reserve on consolidation represents the difference between the considerationpaid for the shares in the subsidiaries and the fair value of attributable net assets acquired, as applicable.


(413192-D)

(b) Basis of Consolidation (Cont'd)

(c) Subsidiary Companies

(d) Associated Company

(e) Long Term Investments


31 December 2003

Goodwill arising on consolidation is reflected in the consolidated balance sheet. The carrying amount of suchgoodwill is assessed in the year it arises, and periodically, including when economic conditions indicate thatthe carrying amount may be impaired. To the extent deemed impaired, such goodwill is written off by acharge to the income statement. All intercompany transactions, balances and unrealised gains or transactionsbetween the companies within the Group are eliminated. The reserve on consolidation represents the excessof the share of assets of subsidiary companies on acquisition date over the consideration paid for theiracquisition.

Subsidiaries are those companies in which the Group has a long term equity interest and where it has powerto exercise control over the financial and operating policies so as to obtain benefits therefrom.

Investments in subsidiary companies are stated in the financial statements of the Group at cost unless, in theopinion of the directors, there has been a permanent diminution in value, in which case an appropriateprovision is made.

Associate is a company in which the Group has a long term equity interest and where it exercises significantinfluence over the financial and operating policies.

Investments in associate are accounted for in the consolidated financial statements by the equity method ofaccounting based on the audited or management financial statements of the associate. Under the equitymethod of accounting, the Group's share of profits less losses of associates during the year is included in theconsolidated income statement. The Group's interest in associates is carried in the consolidated balance sheetat cost plus the Group's share of post-acquisition retained profits or accumulated losses and other reserves aswell as goodwill on acquisition.

Long term investments are stated at cost unless in the opinion of the directors there has been a permanentdiminution in value, in which case provision is made for the diminution in value.

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


(413192-D)

(f) Property, Plant and Equipment

Buildings 2%

Motor vehicles 20%

Plant and machinery 10%

Office equipment 20%

Furniture and fittings 10%

Renovation 10%

Telecommunication equipment 20%

Computers 20%

(g) Leased and Hired Assets


31 December 2003

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 55 - 99years.

Depreciation on other property, plant and equipment is calculated on the original cost or subsequentvaluation of property, plant and equipment is charged on a straight line basis at varying rates to write offassets over their estimated economic lives. The principal annual depreciation rates applied are as follows :-

Assets acquired under finance leases and hire purchase arrangements which in substance transfersubstantially 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 atthe lower of the net present value of minimum lease payments or the fair value of the lease assets at thebeginning of the respective lease terms. Leases and hire assets which do not meet such criteria are classifiedas operating lease.

Finance charge of finance leases and hire purchase are charged to the income statement over the period ofhire purchase or lease.

Rental payable under operating leases are accounted for in the income statement on a straight line basis overthe periods of the respective leases.


(413192-D)

(h) Inventories

(i) Development Properties

(j) Receivables

(k) Land Held For Development

(l) Payables

(m) Provisions


31 December 2003

Payables are carried at cost which is the fair value of the consideration to be paid in the future for goods andservices received, whether or not billed to the Group.

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

Development properties include all expenditure directly related to development together with an appropriateportion of other indirect expenses and are stated at the lower of cost and net realisable value.

Land held for development include all expenditure directly related to development together with anappropriate portion of other indirect expenses and are stated at cost.

Inventories are valued at the lower of cost and net realisable value. Cost comprises the cost of purchase plusthe 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 ofcompletion and selling expenses.

Receivables are carried at their anticipated realisable values.

Bad debts are written off in the year in which they are considered irrecoverable and provision is made forspecific doubtful debts, if any.


(413192-D)

(n) Foreign Currency Translation

(o) Income Tax

(p) Cash and Cash Equivalents


31 December 2003

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expectedamount of income taxes payable in respect of the taxable profit for the year and is measured using the taxrates 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 datebetween the tax bases of assets and liabilities and their carrying amounts in the financial statements. Inprinciple, deffered tax liabilities are recognised for all taxable temporary differences and deffered tax assetsare recognised for all deductable temporary differences, unused tax losses and unused tax credits to theextent that it is probable that taxable profit will be available against which the deductible temporarydifferences, unused tax losses and unused tax credits can be utilised. Deffered tax is not recognised if thetemporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset orliabilty in a transaction which is not a business combination and at the time of the transaction, affects neitheraccounting 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 orthe liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheetdate. Deferred tax is recognised in the income statement, except when it arises from a transaction which isrecognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, orwhen 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.

Foreign currency assets and liabilities are translated to Ringgit Malaysia at the rates of exchange ruling atthe balance sheet date and profit and loss items, where applicable, are converted at rates ruling on thetransaction dates. Differences on exchange are taken to the income statement.

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.


(413192-D)

(q) Revenue Recognition

(i) Dividend Income

(ii) Construction Contract

(iii) Sale of Goods

(iv) Interest Income / Rental Income / Management Fee


31 December 2003

Dividend income from long-term investments and, in respect of the Company, from subsidiaries andassociated companies, is recognised in the income statement upon the right to receipt of such dividendsbeing established.

Revenue is recognised when it is probable that the economic benefits associated with the transaction willflow to the Group and the amount of the revenue can be measured reliably.

Interest income and rental income are recognised on an accrual basis.

Revenue on sales of goods is recognised upon the transfer of risks and rewards.

Interest income, rental income and management fee are recognised on an accrual basis.

Contract revenue is recognised by reference to the stage of physical completion of the contract. Contractrevenue and costs are recognised as revenue and expense in the income statement in the accountingperiod in which the work is performed. The contract revenue is matched with the contract costs incurredin reaching the stage of completion, resulting in the reporting of revenue, expenses and profit which canbe attributed to the proportion of work completed. Profits expected to be realised on constructioncontracts are based on estimates of total revenue and costs at completion. These estimates are reviewedand revised periodically throughout the lives of the construction contracts and adjustment to the profitsresulting from such revisions are recorded in the accounting period in which the revisions are made. Ifestimates of costs to complete the construction contract indicate losses, provision is made for the fulllosses anticipated in the period in which they are identified.


(413192-D)

(r) Impairment

(s) Financial Instruments


31 December 2003

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 tothe relevant accounting policies) to determine whether there are any indications that those assets havesuffered an impairment loss. If any such indication exists, impairment is measured by comparing the carryingvalues of the assets with their recoverable amounts. Recoverable amount is the higher of net selling price andvalue in use, which is measured by reference to discounted future cash flows. Recoverable amounts areestimated for individual assets or, if it is possible, for the cash-generating unit to which the asset belongs.

Reversal of impairment losses recognised in prior years is recorded when there is an indication that theimpairment losses recognised for the asset no longer exist or have decreased. The reversal is recognised to theextent of the carrying amount of the asset that would have been determined (net of amortisation anddepreciation) had no impairment loss been recognised. The reversal is recognised in the income statementimmediately, 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 anexpense in the income statement, a reversal of that impairment loss is recognised in the income statement.

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 inthe individual policy statements for the relevant item. The financial instruments are recognised in the balancesheet 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 arecharged directly to equity. Financial instruments are offset when the Group has a legally enforceable right tooffset and intends to settle either on a net basis or to realise the assets and settle the liability simultaneously.

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


(413192-D)

(t) Construction Contracts

3. SHARE CAPITAL

2003 2002

RM RM

Authorised:-

Ordinary shares of RM1.00 each

At 1 January 100,000,000 100,000

Created during the year - 99,900,000 At 31 December 100,000,000 100,000,000

Issued and fully paid :-

Ordinary shares of RM1.00 each

At 1 January 70,000,000 2

Issued during the year - 69,999,998 At 31 December 70,000,000 70,000,000

4. SHARE PREMIUM

2003 2002

RM RM

Balance as at 1 January 12,885,471 -

Arising during the year - 12,885,471 Balance as at 31 December 12,885,471 12,885,471

5. RETAINED PROFITS


Group and Company

Group and Company

31 December 2003

As at 31 December 2003, the Company has tax exempt profits available for distribution of approximatelyRM7,551,525 (2002:RM Nil), subject to the agreement of the Inland Revenue Board.

Construction work in progress which is stated at cost plus attributable profits less anticipated losses andprogress billings is shown as amount due from customers.

The excess of progress billings over cost plus attributable profits less anticipated loses is shown as amountdue to customers.

Costs consist of direct materials, direct labour, direct overhead, sub-contract charge and attributableexpenses.


(413192-D)

6. DEFERRED TAXATION

2003 2002

RM RM

At 1 January 3,101,830 -

Prior year adjustment - 4,541,000

Transfer from/(to) income statement 819,508 (1,439,170) At 31 December 3,921,338 3,101,830

7. HIRE PURCHASE AND LEASE CREDITORS

2003 2002

RM RM

Portion repayable not later than 1 year 6,183,999 8,781,586

Portion repayable later than 1 year and not later than 5 years 2,473,095 6,911,166 8,657,094 15,692,752

8. TERM LOANS

2003 2002

RM RM

Term loans - secured 723,597 1,054,779

Less : Due within 12 months included

in short term borrowings ( Note 21 ) (352,404) (352,404) 371,193 702,375

The term loans bear :-

i)

ii)


31 December 2003

Group

Group

Group

interest at a rate of approximately 1.5% (2002: 1.5%) above the bank's base lending rate and is secured byfreehold land and building belonging to the subsidiary company and is jointly and severally guaranteed bythe directors of the subsidiary company. The term loan is repayable by way of 60 equal monthly instalmentsof RM29,855 inclusive of interest, with the repayments commenced from November 2000.

interest at the rate of 6.5% (2002:6.5%) per annum on a monthly rest basis as prescribed under the "TabungIndustri Kecil dan Serderhana" and is repayable by way of equal monthly instalments, commenced fromDecember 2000. 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 anda legal charge over leasehold land belonging to a subsidiary company.


(413192-D)

9. PROPERTY, PLANT AND EQUIPMENT

Leasehold Capital

Freehold land and work in Plant and Motor Office Furniture Telecommunication

Cost land buildings Buildings progress machinery vehicles equipment and fittings Renovation Computers equipment Total

RM RM RM RM RM RM RM RM RM RM RM RM

At 1 January 2003 4,835,200 3,850,000 3,127,300 - 71,735,825 17,955,810 3,812,798 765,184 1,331,607 68,534 1,250 107,483,508

Additions - - - 3,035,160 3,072,147 360,400 223,869 7,504 110,803 1,410 - 6,811,293

Disposals - - - - (6,365,616) (1,657,396) (219,274) (74,510) (57,949) - - (8,374,745)

At 31 December 2003 4,835,200 3,850,000 3,127,300 3,035,160 68,442,356 16,658,814 3,817,393 698,178 1,384,461 69,944 1,250 105,920,056

Accumulated

Depreciation

At 1 January 2003 - 211,480 214,513 - 34,827,097 11,723,988 2,850,847 480,446 695,304 58,425 188 51,062,288

Depreciation charge

for the year - 60,477 62,546 - 7,021,786 1,732,599 316,744 66,592 137,263 3,478 250 9,401,735

Disposals - - - - (4,488,775) (1,534,415) (184,832) (46,648) (34,724) - - (6,289,394)

At 31 December 2003 - 271,957 277,059 - 37,360,108 11,922,172 2,982,759 500,390 797,843 61,903 438 54,174,629

Net Book Value

At 31 December 2003 4,835,200 3,578,043 2,850,241 3,035,160 31,082,248 4,736,642 834,634 197,788 586,618 8,041 812 51,745,427

At 31 December 2002 4,835,200 3,638,520 2,912,787 - 36,908,729 6,231,822 961,951 284,738 636,302 10,109 1,062 56,421,220

Notes to the Financial Statements 31 December 2003

26TRC SYNERGY BERHAD (No.Tempatan: 413192-D)

9. PROPERTY, PLANT AND EQUIPMENT (Cont'd)

(a) Revaluation

2003 2002

RM RM

Freehold land 1,730,490 1,730,490

Freehold buildings 1,404,000 1,435,200

Leasehold land and buildings 4,372,563 4,431,943

7,507,053 7,597,633

(b) Security

(c) Assets acquired under hire purchase and lease arrangements

2003 2002RM RM

Plant and machinery 18,305,707 10,922,459

Motor vehicle 4,526,631 5,707,521 22,832,338 16,629,980

31 December 2003


Certain freehold and leasehold land and buildings of a subsidiary company were revalued by an independentprofessional valuer using the open market valuation basis. However in 2001, a proportion of this revaluationwas deemed to be in excess of market values and was consequently subject to a downward revaluationduring that year. The properties acquired subsequent to the said revaluation are however stated at cost, as thedirectors are of the opinion that the purchase consideration for the properties approximate their marketvalues. Had the land and building affected been carried at their historical costs less accumulateddepreciation, the carrying amounts of the revalued assets that would have been included in the financialstatements at the end of the year are as follows :-

Certain land and buildings with a net carrying value of RM8,178,675 (2002:RM9,797,072) have beencharged to financial institutions as security for various credit facilities granted to a subsidiary company.

The net book value of property, plant and equipment of the subsidiary company acquired under hirepurchase and lease arrangements are as follows :-

A leasehold land with a net book value of RM537,597 (2002: RM543,488) has been pledged to afinancial institution for borrowing facility granted to a subsidiary company.


(413192-D)

10. INVESTMENTS

2003 2002

RM RM

At Cost:

- Shares quoted in Malaysia 111,394 111,394

- Corporate membership 144,000 144,000 255,394 255,394

Market value- Shares quoted in Malaysia 13,477 7,000

11. INVESTMENT IN SUBSIDIARIES

2003 2002

RM RM

Unquoted shares, at cost 54,448,781 54,448,781

Amount due from subsidiary companies 35,551,047 28,229,620 89,999,828 82,678,401

Country of Principal

Incorporation Activities

2003 2002

Trans Resources Corporation

Sdn. Bhd. Malaysia 100 100 Construction

activities.TRC Development Sdn. Bhd. Malaysia 100 100 Property

development.TRC Concrete Industries Sdn. Bhd. Malaysia 100 100 Manufacture of

ready mixedconcrete.

TRC-PDI JV Sdn. Bhd. Malaysia 60 - Construction.

* TRC Construction (Sarawak) Malaysia 100 - Construction. Sdn. Bhd.

Company

Interest (%)

Notes to the Financial Statements31 December 2003

Effective

Group

The details of the subsidiary companies are as follows :-

* Audited by another firm of auditors.


(413192-D)

12. INVESTMENT IN ASSOCIATE

Principal Country of

Name Activity Incorporation 2003 2002

% %

Andaman Budi Property Malaysia 40 40 Sdn. Bhd. development

2003 2002

RM RM

Unquoted shares, at cost 200,000 200,000

Share of post - acquisition profit/(losses) 721,586 (200,000)921,586 -

2003 2002

RM RM

Property, plant and equipment 28,498 54,590

Current assets 9,372,967 8,483,790

Current liabilities (8,479,184) (8,408,842)

Long term liabilities (695) (205,963)

Net assets/(liabilities) 921,586 (76,425)

Share of net liabilities in excess of cost - 76,425921,586 -

Revenue 7,984,706 2,412,005

Profit before taxation 1,209,222 195,615

Taxation (287,636) -Profit after taxation 921,586 195,615

Percentage of equity


Group

Group

Details of the Associated Company are as follows :-

The following amounts represent the Group's share of the assets, liabilities, revenue and expenses of theAssociated Company :


(413192-D)

13. EXPENDITURE CARRIED FORWARD

2003 2002

RM RM

Expenditure carried forward 61,520 -

14. PROPERTY DEVELOPMENT PROJECT COSTS

2003 2002RM RM

Brought forward

- Land 13,384,152 -- Development costs 5,456,595 276,134

18,840,747 276,134

Incurred during the year

- Land 63,347 13,384,152- Development costs 16,323,065 5,180,461

35,227,159 18,840,747

Recognised in income statement

Brought forward (7,767,796) -Current year (21,095,299) (7,767,796)

6,364,064 11,072,951

15. INVENTORIES

2003 2002RM RM

At Cost :

Construction materials 234,042 352,569 Raw materials 30,499 181,373

264,541 533,942

31 December 2003

Company

Group


Group

Expenditure carried forward represents professional fees incurred in connection with the corporate exercisesundertaken by the Company. This will be set off against the share premium account upon completion of thecorporate exercises.


(413192-D)

16. TRADE RECEIVABLES

2003 2002

RM RM

Amount due from an associated company 17,107,545 14,167,312

Amount due (to)/from a joint venture activity (2,971) 534,319

Retention sums 15,491,010 11,356,36732,595,584 26,057,998

17. GROSS AMOUNT DUE FROM CUSTOMERS

2003 2002RM RM

Costs incurred to date 810,252,800 577,241,154Add: Attributable profits 16,116,595 24,399,235

826,369,395 601,640,389

Less: Progress billings received and receivable (723,344,217) (509,748,622)103,025,178 91,891,767

18. FIXED DEPOSITS

19. CASH AND BANK BALANCES

31 December 2003

Group


Group

The fixed deposits are placed with licenced financial institutions and have been charged to secure credit facilitiesgranted to the subsidiary companies by the financial institutions.

Included in the cash and bank balances of the Group are amounts of RM2,016,980 (2002: RM701,812) heldpursuant to Section 7A of the Housing Development ( Control and Licensing ) Act 1966, and therefore restrictedfrom use in other operations.

Included in the trade receivables are related company balances and retention sums as follows :-

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 60 days. Other credit terms are assessed and approvedon a case-by-case basis.


(413192-D)

20. TRADE PAYABLES

21. SHORT TERM BORROWINGS

2003 2002RM RM

Secured:

Bankers acceptance 45,904,000 41,215,000 Bank overdrafts 26,934,066 27,150,080 Revolving credit facility 5,000,000 5,000,000 Medium term credit - 4,370,692 Bridging loan 556,898 1,440,450 Domestic factoring facilities 604,355 -Overdraft non chequing 27,710,114 18,840,777 Revolving term loan 2,369,180 -

109,078,613 98,016,999

Term loan repayable not later than one year 352,404 352,404 109,431,017 98,369,403

(a) Bank Overdrafts

(b) Revolving Credit Facility


Group

The bank overdrafts of the subsidiary companies are subject to interest at rates ranging from 1.25% to 2.5%(2002: 1.25% to 2.5%) per annum above the banks' base lending rates and are secured by fixed and floatingcharges over the subsidiary companies present and future assets, certain fixed deposits, freehold land andassignment of certain contract receipts of the subsidiary companies and a joint and several guarantee by thedirectors of the subsidiary companies and a corporate guarantee by a subsidiary company.

The revolving credit facility is subject to interest at the rate of 1.25% (2002: 1.25%) above the KualaLumpur Inter-Bank Offer Rates (KLIBOR) and is secured by assignment of contract by way of Letter ofUndertaking from the Awarder to remit all proceeds and personal guarantee of a directors of a subsidiarycompany.

The normal trade credit terms granted to the Group range from 30 to 90 days.


(413192-D)

21. SHORT TERM BORROWINGS (Cont'd)

(c) Bankers Acceptance

(d) Bridging Loan

(e) Other Short Term Trade Facilities

(f) Revolving Term Loan

22. AMOUNT DUE TO A DIRECTOR

23. REVENUE AND COST OF SALES


The amount due to a director is unsecured, interest free and has no fixed terms of repayment.

The bankers acceptances are subject to commission at rates of approximately 1.0% to 2.0% (2002: 10% to2.0%) over the B.A. rate and are secured by fixed and floating charges over the subsidiary companies presentand future assets, certain fixed deposits, freehold land and leasehold properties belonging to the subsidiarycompany, a joint and several guarantee by the directors' of the subsidiary companies and a corporateguarantee by a subsidiary company.

The domestic factoring facility is subject to charges at a rate of 9.9% (2002: 9.9%) per annum above thebank's base lending rate. The non chequing overdraft facility bears interest at a rate of 1.5% (2002:1.5%) perannum above the bank's base lending rate. The facilities are jointly and severally guaranteed by the directorsof the subsidiary company.

Revenue of the Group represents recognised contract revenue, sale of construction materials, hiring ofmachineries and motor vehicles, property development and supply of labour.

Turnover of the Company comprises dividend income and management fee.

Cost of sales of the Group consists of direct materials, direct labour, direct overhead, sub-contract charges andother directly attributable expenses.

The bridging loan is subject to interest at the rate of 1.5 % (2002: 1.5%) per annum above the bank's baselending rate and is secured by a property belonging to a subsidiary company and a personal guarantee by adirector of the subsidiary company.

The revolving term loan is subject to charges at a rate of 1.75% per annum above the bank's base lendingrate and are secured by a corporate guarantee from the holding company, the assignment of certain contractreceipts and project account, the project sinking fund account, certain fixed deposits of a subsidiarycompany placed with licensed financial institution and personal guarantee by a director of the subsidiarycompany.


(413192-D)

24. PROFIT BEFORE TAXATION

2003 2002 2003 2002

RM RM RM RM

After charging :-

Directors' remuneration 315,500 294,960 52,000 42,000

Auditors' remuneration

- current year 80,700 76,000 12,000 12,000

- prior year overprovision (700) (2,500) (700) -Bank overdraft interest 1,626,958 3,148,441 - -

Term loan interest 106,189 95,134 - -

Hire purchase and lease interest 1,534,231 1,432,130 - -

Bankers acceptance interest 1,338,706 1,327,405 - -

Loan interest - others 2,033,580 1,080,616 - -Depreciation of property, plant

and equipment 9,401,735 9,252,226 - -

Property, plant and equipment

written off 176,458 - - -

Rental of premises 622,300 597,788 - -

Preliminary expenses written off 2,300 2,500 - 2,500

Pre-operating expenses written off - 9,700 - 9,700

Provision for doubtful debts

written back - (5,500,000) - -

Interest income (1,269,965) (1,215,652) - -

Gain on disposal of property, plant and equipment (1,481,106) (474,841) - -Rental of vehicle (7,700) - - -

Group Company


These are stated after charging/(crediting) :-


(413192-D)

25. TAXATION

2003 2002 2003 2002

RM RM RM RM

Provision for the year 3,274,354 7,386,600 - 9,200 Overprovision in prior years - (395,350) - -

Transfer to/(from) deferred taxation (Note 6) 819,508 (1,439,170) - -

Share of associated company's taxation 287,636 - - -4,381,498 5,552,080 - 9,200

26. EARNINGS PER SHARE

27. DIVIDENDS

2003 2002 2003 2002

RM RM Sen Sen

1,750,000 - 2.5 -

31 December 2003

Amount Net Dividends Per Share

Company


Group

Malaysian taxation based on results for theyear:-

The calculation of earnings per share is based on the Group's net profit for the year of RM8,684,113 (2002 :RM17,785,609) and weighted average number of ordinary shares in issue during the year amounting toRM70,000,000 (2002: RM46,949,891). There are no diluted shares in issue.

The Directors proposed the payment of a first and final tax exempt dividend of 2.5 sen per share amounting toRM2,310,000 for the current financial year. The dividend is based on the enlarged share capital of theCompany upon completion of the private placement exercise and the bonus issue as mentioned in the directors'report. The dividend is subject to the approval of members at the forthcoming Annual General Meeting of theCompany. The financial statements for the current financial year do not reflect this proposed dividend. Suchdividend, if approved by the shareholders, will be accounted for in the shareholders' equity as an appropriationof retained profit in the next financial year ending 31 December 2004.

First and final tax exempt dividend of2.5 sen per share.

The effective tax rate is significantly higher from the statutory rate due to certain expenses are disallowed fortaxation purposes.

The Inland Revenue Board (IRB) is currently re-assessing the Company's tax position in respect of previousyears of assessment. The Board of Directors are still in discussion with the tax authorities to resolve the matter amicably.


(413192-D)

28. ACQUISITION OF SUBSIDIARY COMPANIES

2003 2002RM RM

Property, plant and equipment - 67,494,167

Inventories - 425,478

Quoted and unquoted investments - 5,498,843

Project costs - 281,134 Trade receivables - 54,259,927

Other receivables, deposits and prepayments - 7,131,221

Amount due from customers - 57,209,895

Fixed deposit - 37,464,074

Cash and bank balances 12 5,537,280

Trade payables - (34,742,521)

Other payables - (2,832,367)

Factoring creditors - (11,754)

Hire purchase creditors - (15,969,015)

Bankers acceptance - (43,713,000)

Term loan - (1,061,221)

SMI loan - (234,595)

Bank borrowings - (58,106,268)Taxation - (7,641,840)Minority interest (4) -

Net assets acquired 8 70,989,438

Capital reserve on consolidation - (16,540,657)

Total purchase consideration 8 54,448,781

Discharge by issuance of company shares - (49,052,252)

Share premium - (5,396,529)

Cash and cash equivalents of subsidiaries (12) 58,829,668Net cash on acquisition of subsidiaries (4) 58,829,668

29. CAPITAL COMMITMENT

2003 2002

RM RM

Approved and contracted for 2,004,840 -

Group

31 December 2003Notes to the Financial Statements

During the financial year, the Company acquired TRC-PDI JV Sdn. Bhd. and TRC Construction (Sarawak) Sdn.Bhd. The fair value of the assets acquired and liabilities assumed are as follows :-


(413192-D)

30. FINANCIAL INSTRUMENTS

Financial Risk Management Objectives and Policies

(a) Credit Risks

(b) Interest Rate Risks

(c) Liquidity Risks

(d) Fair Values

Group Carrying Amount Fair Value

Note RM RM Financial Assets

Marketable securities 10 111,000 13,477


31 December 2003

The Group's financial risk management policies seek to ensure that adequate financial resources are available forthe development of the Group's business whilst managing its credit, interest rate and liquidity risks. The Groupoperates within clearly defined guidelines that are approved by the Board and the Group's policy is not to engagein speculative transactions.

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 Groupmanagement reporting procedures.

The Group does not have any significant exposure to any individual customer or counter party nor does ithave any major concentration of credit risk related to any financial instrument.

The aggregate value of financial assets and financial liabilities which are not carried at fair value on thebalance sheets of the Group and of the Company are represented as follows :-

The carrying amounts of cash and cash equivalents, deposits, receivables, payables and borrowings,approximate their fair values due to the relatively short-term maturity of these financial instruments.

The Group is exposed to interest rate risk through the impact of rate changes on credit facilities. The Groupmanages its interest rate risk through the use of both fixed and floating rate debt and derivative financialinstruments.

The Group practices prudent liquidity risk management to minimise the mismatch of financial assets andliabilities and to maintain sufficient credit facilities for contingent funding requirement of working capital.


(413192-D)

31. SEGMENTAL INFORMATION

2003 2002 2003 2002 2003 2002RM RM RM RM RM RM

Investment holding 9,600,000 - 9,119,118 (195,677) 86,100 22,081Construction activity 246,274,203 252,619,020 2,903,680 26,747,654 238,805,213 231,861,958Property development 30,553,796 8,743,307 2,584,557 417,668 18,128,742 9,681,147Hiring of motor vehicle and machinery 4,835,937 4,473,048 17,943 308,589 4,712,833 2,862,397Manufacturing and retailing in ready mixed concrete 1,177,767 4,871,433 (526,355) (38,066) 1,426,488 2,605,801Retailing of construction materials 58,992,465 36,020,358 694,532 3,732,231 57,240,968 32,352,831Supply of labour 5,146,074 5,915,948 435,308 278,445 3,053,363 6,454,098Others 492,784 1,662,682 2,852 311,019 496,457 2,696,069Group's share of profit of an associated company - - 1,209,222 195,615 - -

357,073,026 314,305,796 16,440,857 31,757,478 323,950,164 288,536,382

Consolidated adjustments (32,389,074) (11,080,330) (3,375,250) (6,024,328) - -324,683,952 303,225,466 13,065,607 25,733,150 323,950,164 288,536,382

AssetsEmployedRevenue Taxation

Before


TotalProfit/(Loss)

No segmental reporting has been prepared in respect of geographical location as the Group's activities arepredominantly carried out in Malaysia.


(413192-D)

32. CONTINGENT LIABILITIES

2003 2002 2003 2002RM RM RM RM

Secured

Bank guarantees

Performance bond 35,444,124 29,230,261 6,577,423 - Advance bond 6,352,204 1,275,678 6,352,204 - Design bond 380,000 380,000 380,000 - Tender bond 105,000 151,250 - - Supplier / Maintenance / Security 5,823,250 5,354,294 3,625,000 -

48,104,578 36,391,483 16,934,627 -

2003 2002 2003 2002

RM RM RM RMUnsecured

Corporate guarantee

Corporate guarantees given to banks for credit facilities granted to third parties - trade related subsidiaries 1,524,415 1,825,213 34,338,234 -

Corporate guarantees given to banks for credit facilities granted to third parties - associated company - 6,046,880 - -

1,524,415 7,872,093 34,338,234 -

31 December 2003Notes to the Financial Statements

Group Company

Group Company

The bank guarantees are secured by fixed deposits of a subsidiary company and a corporate guarantee by theCompany.


(413192-D)

33. STAFF COSTS

2003 2002 2003 2002RM RM RM RM

Staff costs 19,084,811 18,809,682 219,682 126,839

34. SIGNIFICANT RELATED PARTY TRANSACTIONS

2003 2002Group RM RM

Dividend payable to holding company 9,300,000 -Management fee charged by the holding company 300,000 -Contract income on a housing development activity from a subsidiary company 16,182,145 1,452,924 Purchase of construction materials from a subsidiary company 1,259,499 5,174,127Contract labour supplied by a subsidiary company 5,146,387 5,906,203Rental of motor vehicle from a subsidiary company 7,700 13,200Gain on disposal of land to a subsidiary company - 6,024,327Sub-contractors cost charged to a subsidiary company 190,380 -Contract income on a housing development activity from an associated company 9,723,081 9,804,565

Company

Dividend income from a subsidiary company 9,300,000 -Management fee from a subsidiary company 300,000 -

Group Company


Staff costs of the Group and the Company include directors' remuneration, salaries, bonus, contributions toEmployees' Provident Fund and all other staff related expenses.

The directors are of the opinion that all the transactions above have been entered into in the normal course ofbusiness and have been established on terms and conditions that are not materially different from thoseobtainable in transactions with unrelated parties.


(413192-D)

35. MATERIAL LITIGATION

i)

ii)


The Group is involved in the following pending litigation matters :-

A writ filed under Kuala Lumpur High Court Suite No: S2-22-98 by Trans Resources Corporation Sdn.Bhd. (TRC), a subsidiary of the Group against Sanwell Corporation ('Sanwell') and United Malayan LandBerhad ('UM Land') for an outstanding contract sum due and owing pursuant to an Earthworks Contractdated 30 October 1996 whereby TRC was engaged by Sanwell as the earthworks contractor. The paymentfor the work done was guaranteed by UM Land up to the sum of RM15,500,000.00. In light of theFederal Court decision on 25 May 2002 and also the subsequent direction given by the High Court Judgeon 28 May 2002, the abovementioned Civil Suit cannot be proceeded with and the matters in disputebetween 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, interalia, is that UM Land should not be bound by the arbitration clause, as it was not a party to theEarthworks Contract. In December 2002, TRC had obtained from the High Court an order for theappointment of arbitrator ("the Order"). The Order was subsequently served on Sanwell but the latter didnot respond to the Order. In May 2003, TRC filed an application to discharge the Order. The Court hasfixed 4 March 2004 as the hearing date for the application.

A writ was filed at the Kuala Lumpur High Court Companies Winding-Up Petition No : D2-28-919-2001 by TRC for breach of contract against Benefit Depth Sdn. Bhd. The amount claimed by TRC isRM300,000.00 for consent fees, RM562,664.19 for damages and RM15,000,000.00 for loss of profit. Awinding-up order was granted to TRC on 28 March 2002. The "Proof of Debt and General Form" and allother relevant documents had been filed at the Official Receivers Office on 27 May 2003.


(413192-D)

statutory financial statements -...

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