CONTENTS - Malaysiastock.biz ** Incorporated in Brunei Darussalam 100% Quality Concrete Sdn. Bhd. (091959-D) Manufacture and sale of ready-mixed concrete, sale of concrete products

Corporate Information 02Group’s Financial Highlights 03Corporate Structure 04Executive Chairman’s Statement 05Directors’ Profile 07Statement on Directors’ Responsibility 10Audit Committee Report 11Statement on Corporate Governance 15 Statement on Internal Control 22Corporate Social Responsibility Statement 24

Directors’ Report and Audited Financial Statements 25

Analysis of Shareholdings 116List of Properties 118Notice of Annual General Meeting 119Statement Accompanying Notice of AGM 122

Proxy Form

CONTENTS

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Quality Concrete Holdings Berhad Annual Report 2012

COrpOraTE INfOrmaTION

CORPORATE & REGISTERED OFFICE

Room 209, 2nd Floor, Wisma Bukit Mata Kuching, Jalan Tunku Abdul Rahman, 93100 Kuching, Sarawak.Tel: 6082-206600Fax: 6082-206607Email: [email protected]

BOARD OF DIRECTORS

Dato Tiang Ming Sing (Executive Chairman)

Tiang Ching Kok (Managing Director)

Edmund Goh Chze Jin (Executive Director)

Robin Lo Bing (Independent Non-Executive Director)

Henry Law Kah Kwong (Independent Non-Executive Director)

David Wong Siew Chow (Independent Non-Executive Director)

COMPANY SECRETARY

Yeo Puay Huang (LS000577)Paul Chiam Tau Keen (MIA14900)

SHARE REGISTRAR

Securities Services (Holdings) Sdn. Bhd.Level 7, Menara MileniumJalan DamanlelaPusat Bandar DamansaraDamansara Heights50490 Kuala LumpurTel: 603-20849000Fax: 603-20949940

AUDITORS

Ernst & YoungChartered Accountants3rd Floor, Wisma Bukit Mata KuchingJalan Tunku Abdul Rahman93100 KuchingTel: 6082-243233Fax: 6082-421287

PRINCIPAL BANKERS

Alliance Bank Malaysia BerhadAmBank (M) BerhadBank Muamalat Malaysia BerhadCIMB Bank BerhadHong Leong Bank BerhadHSBC Bank Malaysia BerhadMalayan Banking BerhadPublic Bank BerhadRHB Islamic Bank BerhadUnited Oversea Bank (Malaysia) Berhad

STOCK EXCHANGE LISTING

Main MarketBursa Malaysia Securities BerhadStock Code: 7544Stock Name: QUALITY


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GrOUp’S fINaNCIaL HIGHLIGHTSfOr THE fINaNCIaL YEar 2008-2012

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100%

Nexpeak Sdn. Bhd. (938314-K)Dormant

** Incorporated in Brunei Darussalam

100%

Quality Concrete Sdn. Bhd. (091959-D)Manufacture and sale of ready-mixed concrete, sale of concrete products and trading of goods

100%

Kutex Sdn. Bhd. (12880-T)Manufacture and sale of woven polypropylene bags and polyethylene liners

100%

Polyflow Pipes Sdn. Bhd. (197401-H)Manufacture and sale of polyethylene pipes and fittings

100%

Lee Ling Timber Products Sdn. Bhd. (187652-K)Sawmilling and manufacture of downstream timber products

70%

Quality Concrete (Mukah) Sdn. Bhd. (570322-P)Dormant

100%

Hong Wei Holdings Sdn. Bhd. (90015-K)Property development and construction

100%

Agrowell Sdn. Bhd. (134100-V)Quarry operations and sale of aggregates and related products

100%

Seri BumiJaya Sdn. Bhd. (730546-K)Trading in Cement

100%

Enrich Fortress Sdn. Bhd. (906892-M)Dormant

100%

Casa Usaha Sdn. Bhd. (938195-X)Dormant

55%

Polyflow (B) Sdn. Bhd. ** (AGO/RC/6372/05)Manufacture of polyethylene pipes for purposes of supply, sale and trade of the same

COrpOraTE STrUCTUrE

QUaLITY CONCrETE HOLDINGS BErHaDIncorporated in malaysia (Company No. 378282-D)


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EXECUTIVE CHaIrmaN’S STaTEmENT

DATO TIANG MING SINGExecutive Chairman

REVIEW OF OPERATIONS AND FINANCIAL RESULTS

The global economy generally experiencing a bad patch during the financial year under review, with uncertainty clouding over the Eurozone sovereign debts crisis, slow recovery in America and other developed countries, softening of China economy and the recent natural disasters that hit Japan and Thailand have put more pressure on the already fragile economy. Crude oil and other commodities prices have also risen sharply due to the political unrest and tension in Arab region and casting further doubts on the recovery of world economy. Against this backdrop, QC managed to record Group revenue of RM211.4 million for the financial year under review, an increase of 33.5% year-on-year compared to RM158.3 million recorded in the previous financial year mainly contributed by the property and construction division.

Property and Construction division

The property and construction division is currently carrying out sub-contract works for the installation of water pipes and construction of water treatment plants in the rural areas of Sarawak State. The revenue from this division has risen to RM80.0 million from RM17.9 million a year ago. Currently, it has approximately RM200 million worth of works in hand and will soon launch its own commercial and residential property developments in both Kuching and Miri and it augurs well for the Group’s revenue and profit in the coming year. QC through its property arm has in the past year acquiring lands in various strategic areas in Sarawak and in Peninsular Malaysia for future developments and will continues to identify good opportunities to add to its existing land bank.

Manufacturing and Premix division

The manufacturing and premix division has not performed well compared to last financial year with revenue down from RM137 million to RM129.1 million. Revenue from the timber products has affected by the slow demands from China, Japan and Middle East countries, which are traditionally the major export market for sawn timber products. The weak selling price for sawn timber and the softening of US Dollar against Ringgit Malaysia has also resulted in revenue contributed by this segment shrunk by RM7.5 million from RM25.4 million registered in the last financial year.

The ready-mixed concrete segment has contributed RM72.8 million in revenue for the year a modest improvement of RM0.3 million compared to last year. The industry as a whole is very competitive and largely dependent on the performance of the construction sector. However, we have position ourselves to take advantage of any commencement of major infrastructure projects especially those related to SCORE (Sarawak Corridor of Renewable Energy) with our extensive networks. We hope that the commencement of these large infrastructure projects will help to spur the growth of the construction sector, which in turn will drive up the demand for ready-mixed concrete and its related products.

“On behalf of theBoard of Directors of

Quality Concrete Holdings Berhad,I am pleased to presentthe Annual Report and

Audited Financial Statementsof the Company

and the Group “QC” for thefinancial year ended

31 January 2012.”

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EXECUTIVE CHaIrmaN’S STaTEmENT

Our HDPE pipes manufacturing division has seems its revenue down slightly from RM35.8 million previously to RM35.0 million in the current financial year. However, we hope that with the rolling out of clean water projects for the rural areas in the coming year as announced in the Government’s 2012 budget will help to improve its performance.

For the current financial year under review, the Group’s pre-tax profit was significantly lower at RM1.9 million compared to RM11.2 million recorded in the previous financial year. The pre-tax profit for the last financial year was higher is mainly due to an inclusion of a one-off gain of RM9.3 million from the disposal of a subsidiary company.

The Group’s overall profitability has been dampened by the fuel costs and raw material costs that have been risen sharply during the year, furthermore interest costs and administrative costs have also increased by RM1.0 million and RM2.0 million respectively. The management has also provided RM4.0 million during the year for both impairment loss on receivables and inventories written down.

Correspondingly, the Group’s basic earning per share has also dropped from 17.261 sen recorded in the previous financial year to 0.35 sen.

DIVIDEND The Board declared its first and final dividend of 6.66 sen per share less 25% tax in respect of financial year 2011 on 29 September 2011 together with its announcement of the Group’s financial results for the second quarter, the dividend was paid to the shareholders of ordinary shares on 28 December 2011.

PROSPECT

The coming year will be equally challenging if not more than what we have experienced in the past twelve months with high volatility in commodities prices and the economic uncertainty that is currently affecting the European and US financial market. Our Group will continue to be vigilant in its efforts to enhance the share value and return of our valued shareholders and is committed to be more cost effective and efficient to deliver our products and services to the customers. We will continue to identify new investment opportunities and expand our business activities to improve our profitability and financial position. We are confident that despite this challenging environment our Group will be able to achieve this target in the coming year.

ACKNOWLEDGEMENT

On behalf of the Board of Directors, I wish to express our appreciation to our shareholders, the management and staff of the Group for their support, dedication, hard work and commitment to the Group. I also wish to convey our appreciation to our customers, suppliers, business associates, bankers, consultants and relevant government authorities for their continue support and confident in the Group.

Lastly, I also wish to extend my sincere appreciation to my fellow Board members for the guidance and contributions to the Group.

Dato Tiang Ming SingExecutive Chairman


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DIrECTOrS’ prOfILE

DATO TIANG MING SINGExecutive Chairman

Aged 61, MalaysianMember of Remuneration & Nomination Committee

Dato Tiang Ming Sing was appointed to the Board as Executive Chairman on 17 January 2000. Dato Tiang is also a director of two of the Group’s subsidiaries. He is a successful businessman who has extensive experience and knowledge in the timber and property development business. He started his career in the timber upstream business after completing his secondary education and has since expanded to the timber downstream business. He is also involved in property investment, property development and the construction industry. In recognition of his achievement and contribution he was conferred Panglima Setia Bintang Sarawak (“PSBS”) which carries the title “Dato” by the Tuan Yang Terutama Yang Dipertua Negeri Sarawak Tun Datuk Patinggi Abang Haji Muhammad Salahuddin in conjuction with His Excellency’s 87th Birthday on 25 October 2008. He presently holds directorships in other various private companies that make up the Lee Ling Group. He has no other personal interest in any business arrangement involving the Group, except for those disclosed on pages 100 to 102 of this Annual Report.

Dato Tiang holds 8,483,000 shares in the Company. He attended all the two (2) Board Meetings held in the financial year ended 31 January 2012. He has no convictions for any offences within the past 10 years.

Dato Tiang is the father to Mr. Tiang Ching Kok.

TIANG CHING KOKManaging Director

Aged 38, Malaysian

Mr. Tiang Ching Kok was appointed to the Board of on 2 January 2002. He graduated with a Bachelor of Commerce degree from Deakin University, Australia in 1996 and joined Earthmover Group of Companies in 1996 as Executive Director and was responsible for the overall management of the group. His valuable management experience in sawmilling and logging activities is an asset to QC Group as one of QCHB’s subsidiaries, Lee Ling Timber Products Sdn. Bhd., is also involved in the timber business. Mr. Tiang is also a director to all of the QCHB’s subsidiaries. He has no other personal interest in any business arrangement involving the Company, except for those disclosed on pages 100 to 102 of this Annual Report. He attended all the two (2) Board Meetings held in the financial year ended 31 January 2012. He has no convictions for any offences within the past 10 years.

He is the son to Dato Tiang Ming Sing.

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ROBIN LO BINGIndependent Non-Executive Director

Aged 65, MalaysianMember of Audit, Remuneration & Nomination Committee

Mr. Robin Lo was appointed to the Board on 2 May 2002. He graduated with a Bachelor of Science (Hons) in Applied Science from University of Nottingham, UK in 1976. Mr. Lo is the Chairman of Kutex Sdn. Bhd.. He had previously served as Chief Executive Officer of Encorp Group Sdn. Bhd., Group Managing Director of Sarawak Economic Development Corporation and Chief Executive Officer of Gold Coin Sarawak Sdn. Bhd.. He is a director of Sarawak Flour Mill Sdn. Bhd., Prestasi Flour Mill (M) Sdn. Bhd. & Bintawa Fishmeal Factory Sdn. Bhd.. He does not have any family relationship with any director and/or major shareholder of QCHB, nor any personal interest in any business arrangement involving the Company. Mr. Lo holds 272,405 shares in the Company. He attended all the two (2) Board Meetings held in the financial year ended 31 January 2012. He has no convictions for any offences within the past 10 years.

EDMUND GOH CHZE JINExecutive Director

Aged 41, Malaysian

Mr. Edmund Goh was appointed to the Board on 11 November 2003. He graduated with a Bachelor of Business degree majoring in Accountancy from RMIT University, Australia in 1994. He is also a member of the CPA Australia. He worked in ESSO Malaysia Berhad in 1993 and later joined PriceWaterhouseCoopers in 1995. In 1997, he joined AmInvesment Bank Berhad specialising in Corporate Finance. He left AmInvestment Bank to join QCHB in November 2003. Mr. Goh is also a director to all of the QCHB’s subsidiaries except Lee Ling Timber Products Sdn. Bhd.. He does not have any family relationship with any director and/or major shareholder of QCHB, nor any personal interest in any business arrangement involving the Company. He attended all the two (2) Board Meetings held in the financial year ended 31 January 2012. He has no convictions for any offences within the past 10 years.



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HENRY LAW KAH KWONGIndependent Non-Executive Director

Aged 66, MalaysianMember of Audit Committee

Mr. Henry Law was appointed to the Board on 30 January 2009. After obtaining his Senior Cambridge Certificate, Mr. Henry Law joined Standard Chartered Bank and he has extensive banking experience after spending for more than 23 years in the banking industry. Subsequently, he joined a trading company in Singapore for 5 years prior to coming back to Sarawak to work as a Marketing Manager for a timber company. He does not have any family relationship with any director and/or major shareholder of QCHB, nor any personal interest in any business arrangement involving the Company. He attended all the two (2) Board Meetings held in the financial year ended 31 January 2012. He has no convictions for any offences within the past 10 years.

DAVID WONG SIEW CHOWIndependent Non-Executive Director

Aged 62, MalaysianMember of Audit CommitteeMember of Remuneration & Nomination Committee

Mr. David Wong was appointed to the Board on 18 May 2011. Mr David Wong graduated with a Bachelor’s Degree in Commerce from Nanyang University, Singapore and is a Chartered Accountant and Fellow member of Chartered Association of Certified Accountants, England. He is currently the Senior Partner of Messrs Moore Rowland International, Chartered Accountants. He has over 30 years of experience involving audit, tax and advisory matters. He does not have any family relationship with any director and/or major shareholder of QCHB, nor any personal interest in any business arrangement involving the Company. He attended all the two (2) Board Meetings held in the financial year ended 31 January 2012. He has no convictions for any offences within the past 10 years.


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Quality Concrete Holdings Berhad Annual Report 2012 Quality Concrete Holdings Berhad Annual Report 2012

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STaTEmENT ON DIrECTOrS’ rESpONSIBILITY

The Directors are required by the Companies Act, 1965 (“the Act”) to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and the Company at the end of the financial year and the profit or loss of the Group and the Company for the financial year. As required by the Act and the Listing Requirements of Bursa Malaysia Securities, the financial statements have been prepared in accordance with the applicable MASB Approved Accounting Standards in Malaysia and the provision of the Act.

The Directors consider that in preparing the financial statements for the year ended 31 January 2012 set out on pages 34 to 115, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates. The Directors have responsibility for ensuring that the Group and the Company keep accounting records which disclose with reasonable accuracy the financial position of the Group and the Company which enable them to ensure that the financial statements comply with the Act. The Directors have general responsibility for taking such steps as are reasonably available to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

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aUDIT COmmITTEE rEpOrT

The Board of Directors of Quality Concrete Holdings Berhad is pleased to present the report of the Audit Committee of the Board for the year ended 31 January 2012.

The Audit Committee was established by a resolution of the Board on 7 October 1996.

MEMBERS AND MEETINGS

The members of the Audit Committee during the year comprised the directors listed below. During the year ended 31 January 2012, the Audit Committee held a total of four (4) meetings.

Name Status of directorship Independent Attendance of meetings

Robin Lo Bing Independent Non-Executive Director Yes Attended 3 out of 4 meetings held

Henry Law Kah Kwong Independent Non-Executive Director Yes Attended 4 out of 4 meetings held

David Wong Siew Chow Independent Non-Executive Director Yes Attended 4 out of 4 meetings held

TERMS OF REFERENCE

The terms of reference of the Audit Committee are as follows:

Membership

The Audit Committee shall be appointed by the Board from amongst their number and shall consist of not less than three (3) members, all of whom shall be non-executive directors. The majority of the Committee members shall be independent directors with at least one of whom shall be a member of the Malaysian Institute of Accountants or a member who fulfils the requirements stated in Paragraph 15.09 (1) (c) (ii) and Practice Note No. 13/2002, (Paragraph 7) of the listing requirements of the Bursa Malaysia Securities. The Chairman of the Audit Committee shall be an independent non-executive director appointed by the Board.

Meetings and minutes

Meetings shall be held not less than four (4) times a year and the Group Executive Director, Group Internal Auditor and a representative of the external auditors shall normally be invited to attend the meetings. Other members of the Board may attend the meetings upon the invitation of the Audit Committee. At least once a year, the Audit Committee shall meet the external auditors without any executive directors present. A quorum shall be two (2) members present and a majority of whom must be independent directors. Minutes of each meeting shall be kept and distributed to each number of the Audit Committee and of the Board. The Chairman of the Audit Committee shall report on each meeting to the Board. The Secretary to the Audit Committee shall be the Company Secretary.

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Authority

The Audit Committee is authorised by the Board:

i. to investigate any activity within its terms of reference and shall have unrestricted access to both the internal and external auditors and to all employees of the Group;

ii. to have the resources in order to perform its duties as set out in its terms of reference;

iii. to have full and unrestricted access to information pertaining to the Company and the Group;

iv. to have direct communication channels with the internal and external auditors; and

v. to obtain external legal or other independent professional advice as necessary.

Notwithstanding anything to the contrary hereinbefore stated, the Audit Committee does not have executive powers and shall report to the Board of Directors on matters considered and its recommendations thereon, pertaining to the Company and the Group.

Responsibility

Where the Audit Committee is of the view that a matter reported by it to the Board of Directors has not been satisfactorily resolved resulting in a breach of the Listing Requirements of Bursa Malaysia Securities, the Audit Committee has the responsibility to promptly report such matter to the Bursa Malaysia Securities Berhad.

REVIEW OF THE COMPOSITION OF THE AUDIT COMMITTEE

The term of office and performance of the Audit Committee and each of the members shall be reviewed by the Board of Directors at least once every three (3) years to determine whether the Audit Committee and its members have carried out their duties in accordance with their terms of reference.

Duties

The duties of the Audit Committee are:

i. to consider the appointment, resignation and dismissal of external auditors and the audit fee;

ii. to review the nature and scope of the audit with the internal and external auditors before the audit commences;

iii. to review the quarterly and annual financial statements of the Company and the Group focusing on the matters set out below, and thereafter to submit them to the Board:

• anychangesinaccountingpoliciesandpractices;• significantadjustmentsarisingfromtheaudit;• thegoingconcernassumption;and• compliancewithaccountingstandardsandregulatoryrequirements.

iv. to discuss problems and reservations arising from the interim and final audits, and any matter the external auditors may wish to discuss;


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v. to review the audit reports prepared by the internal and external auditors, the major findings and management’s responses thereto;

vi. to review the adequacy of the scope, functions and resources of the internal and management audit department and whether it has the necessary authority to carry out its work;

vii. to consider the report, major findings and management’s response thereto on any internal investigations carried out by the internal auditors;

viii. to review any appraisal or assessment of the performance of executive(s) in the internal and management audit department;

ix. to approve any appointment or termination of senior executive(s) in the internal and management audit department;

x. to be informed of any resignation of executives in the internal and management audit department and to provide the resigning executive an opportunity to submit his/her reason for resignation;

xi. to review the evaluation of the systems of internal control with the auditors;

xii. to review the assistance given by the Company’s and the Group’s employees to the auditors;

xiii. to review related party transactions entered into by the Company and the Group to ensure that such transactions are undertaken on the Group’s normal commercial terms and that the internal control procedures with regards to such transactions are sufficient; and

xiv. any such other functions as may be agreed to by the Audit Committee and the Board.

ACTIVITIES OF THE AUDIT COMMITTEE DURING THE YEAR

In line with the terms of reference of the Audit Committee, the following activities were carried out by the Audit Committee during the year ended 31 January 2012 in the discharge of its functions and duties:

i. review of the audit plans for the year for the Company and the Group prepared by the internal and external auditors;

ii. review of the audit reports for the Company and the Group prepared by the internal and external auditors and consideration of the major findings by the auditors and management’s responses thereto;

iii. review of the quarterly and annual reports of the Company and the Group prior to submission to the Board of Directors for consideration and approval;

iv. review of the disclosure on related party transactions entered into by the Company and the Group in the annual report of the Company;

v. review of the Circular to shareholders in relation to the General Mandate for recurring related party transactions before recommending it for the Board of Directors’ approval;

vi. commissioning of special reviews on specific areas of financial operations of the Group; and

vii. meet with the external auditors in the absence of management except the Company Secretary.


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INTERNAL AUDIT FUNCTIONS

The Company has an Internal and Management Audit Department whose principal responsibility is to undertake regular and systematic reviews of the systems of controls so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively in the Company and the Group. The Department is also responsible for the conduct of regular and systematic reviews of environmental, safety and health issues in the Company and the Group. The attainment of such objective involves the following activities being carried out by the Department:

i. reviewing and appraising the soundness, adequacy and application of accounting, financial and other controls and promoting effective control in the Company and the Group at reasonable cost;

ii. ascertaining the extent of compliance with established policies, procedures and statutory requirements;

iii. ascertaining the extent to which the Company’s and the Group’s assets are accounted for and safeguarded from losses of all kinds;

iv. appraising the reliability and usefulness of information developed within the Company and the Group for management;

v. recommending improvements to the existing systems of controls;

vi. carrying out audit work in liaison with the external auditors to maximise the use of resources and for effective coverage of audit risks;

vii. carrying out investigations and special reviews requested by management and/or the Audit Committee of the Company; and

viii. identifying opportunities and recommend to improve the operations of and processes in the Company and the Group.


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STaTEmENT ON COrpOraTE GOVErNaNCE

THE CODE

The Board of Quality Concrete Holdings Berhad (“Board”) is committed in ensuring that the principles and best practices on structures and processes as sets out in the Malaysian Code on Corporate Governance (“Code”) are practiced throughout the Group as a fundamental part of discharging its responsibilities to protect and enhance shareholder value and financial performance of the Group and the Company.

Details on how the Company has applied the principles and complied with the best practices set out in part I and II of the Code, pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities are reported as below.

1. The Board of Directors

1.1 Board composition and balance

The Board has the overall responsibility for corporate governance, strategic direction and overseeing the investments of the Company. The Group is led and managed by an experienced Board. Collectively, the Directors have a wide range of legal, business, financial and technical experience. The mix of skills and experience is vital for the successful direction of the Group. A brief profile of each Director is presented on pages 7 to 9.

The Board currently has six (6) members, comprising three (3) Non-Executive Directors and three (3) Executive Directors. Three of the six Directors are Independent Directors, which complies with the statutory requirement of a minimum of one-third.

1.2 Roles and responsibilities

There is a clear division of responsibility between the Executive Chairman and the Group Managing Director to ensure that there is a balance of power and authority. The roles of the Chairman and the Group Managing Director are separated and clearly defined. The Chairman is responsible for the Group’s corporate affairs and development and he is also tasked with ensuring the effectiveness and conduct of the Board in carried out its duties and responsibilities whilst the Group Managing Director has overall responsibilities over the operating units, organisational effectiveness and implementation of Board policies and decisions.

The presence of Independent Non-Executive Directors fulfills a pivotal role in corporate accountability. Although all the Directors have an equal responsibility for the Group’s operations, the role of these Independent Non-Executive Directors is particularly important as they provide unbiased and independent views, advice and judgement to take account of the interests, not only of the Group, but also of shareholders, employees, customers, suppliers and the many communities in which the Group conducts business.

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1.3 Board meetings

During the financial year ended 31 January 2012, two (2) Board meetings were held. Details of the attendance of the Directors at the Board Meetings are disclosed in their respective personal profiles set out as follows:-

Directors No. of meetings attended

Dato’ Tiang Ming Sing 2 out of 2 Tiang Ching Kok 2 out of 2 Edmund Goh Chze Jin 2 out of 2 Robin Lo Bing 2 out of 2 Henry Law Kah Kwong 2 out of 2 David Wong Siew Chow 2 out of 2

1.4 Supply of information

All Directors are provided with an agenda and a set of Board papers prior to Board meetings. This is issued in sufficient time to enable the Directors to obtain further explanations, where necessary, in order to be properly briefed before the meeting. The Board papers include, among others, the following:-

i. financial performance of the Group and of the Company;

ii. corporate and investment strategies and plans;

iii. other major operational and financial issues;

iv. minutes of the Management Committee meetings;

v. minutes of all other Sub-Committees meetings; and

vi. annual budgets.

In addition, there is a schedule of matters reserved specifically for the Board’s decision, including the approval of corporate plans and annual budgets, acquisitions and disposals of undertakings and properties of a substantial value, major investments and financial decisions, and changes to the management and control structure within the Group, including key policies and procedures and delegated authority limits.

Directors may obtain independent professional advice in the furtherance of their duties, at the Company’s expense.

All Directors have access to the advice and services of the Company Secretary in carrying out their duties.


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2. The Board of Directors

The following Board Committees have been established to assist the Board in the execution of its responsibilities.

a. Audit Committee

The Audit Committee reviews issues of accounting policy and presentation for external financial reporting, monitors the work of the internal audit function and ensures an objective and professional relationship is maintained with the external auditors. The Committee has full access to the auditors both internally and externally who, in turn, have access at all times to the Chairman of the Committee. The Committee meets with the external auditors in the absence of management at the start of each meeting except for the Company Secretary.

The report on the Audit Committee may be found on pages 11 to 14.

b. Nomination Committee

The Nomination Committee, which was set up on 2 May 2003, is responsible for recommending board appointments and assessment of directors on an on-going basis. The current members of the Nomination Committee are Dato Tiang Ming Sing, Mr. Robin Lo Bing and Mr. David Wong Siew Chow.

During the financial year ended 31 January 2012, no meeting was held.

c. Remuneration Committee

The Remuneration Committee, which was set up on 2 May 2003, is responsible for determining the level and make up of Executive Directors’ remuneration for Quality Concrete Holdings Berhad and its subsidiaries so as to ensure that the Group attracts and retains the Directors of the necessary caliber, experience and quality needed to run the Group successfully. The Current members of the Remuneration Committee are Dato Tiang Ming Sing, Mr. Robin Lo Bing and Mr. David Wong Siew Chow.

During the financial year ended 31 January 2012, no meeting was held.

3. Appointment and Re-election of the Directors

Any proposed new appointments to the Board require deliberation by the full Board guided by and taking into consideration the recomendation of the nomination committee.

In accordance with the Company’s Articles of Association, all Directors who are appointed by the Board are subject to election by shareholders at the first Annual General Meeting after their appointment.

In accordance with the Articles of Associations, at each Annual General Meeting one third of the Directors for the time being or if their number is not three or a multiple of three, then the number nearest one-third, shall retire from office. The Directors to retire in every year shall be those who have been longest in office since their last election, but as between persons who become Directors on the same day those to retire (unless they otherwise agree among themselves) shall be determined by lot. All Directors shall retire from office once at least in each three (3) years, but shall be eligible for re-election.


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4. Directors’ Remuneration

The details of remuneration of the Directors of the Company for the financial year ended 31 January 2012 are as follows:-

Category Fees Emoluments Benefit In Kind Total Remuneration RM’000 RM’000 RM’000 RM’000

Executive Directors 36 928 43 1,007 Non-Executive Directors 26 32 - 58

Total 62 960 43 1,065

The number of Directors whose total remuneration falls within the following bands is as follows:-

Executive Directors Non-Executive Directors

Below RM50,000 - 3 RM250,001-RM300,000 1 - RM300,001-RM350,000 2 -

5. Directors’ Training

All the Directors had completed the Mandatory Accreditation Programme (“MAP”) conducted by the Research Institute of Investment Analysis Malaysia, an affiliate company of the Bursa Malaysia Securities Berhad (“BMSB”). In addition, they have also attended seminars and Mandatory Continuing Programmes (“CEP”) as prescribed by BMSB which include corporate practices and governance for Company Directors, updates on regulatory issues, risk management, directors remunerations and investors information, Audit Committees’ unique competency requirements and understanding and minimising the risk of accounting manipulations. A register has been maintained to record the number of CEP hours accumulated by each Director. The Company will see to it that the Directors continue to attend other relevant training programmes to enhance their knowledge from time to time.

During the financial year ended 31 January 2012, the training programmes attended by the Directors are as follows:

• 2012 Budget Seminar• Transactions by Directors & Practical Issues And Solutions• Mandatory Accreditation Programme for Directors of Public Listed Companies• National Tax Seminar 2011• Workshop on New Public Rulings in 2010 & 2011


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6. Investor Relations and Shareholder Communication

The Board acknowledges the need for shareholders to be informed of all material business matters affecting the Company. In addition to various announcements made during the year, the timely release of financial results on a quarterly basis provides shareholders with an overview of the Group’s performance and operations.

The Company has been using the Annual General Meeting, usually held in July each year, as a means of communicating with shareholders. Shareholders who are unable to attend are allowed to appoint proxies to attend and vote on their behalf. Members of the Board as well as the Auditors of the Company are present to answer questions raised at the meeting.

Any queries or concerns regarding the Quality Concrete Group may be conveyed to the following persons:-

i Mr. Robin Lo Bing, Independent Non-Executive Director Telephone number : 6082-230777 Facsimile number : 6082-234777

ii. Mr. Tiang Ching Kok, Managing Director Telephone number : 6082-206608 Facsimile number : 6082-206607

iii. Mr. Edmund Goh Chze Jin, Executive Director Telephone number : 6082-206603 Facsimile number : 6082-206607

7. Financial Reporting

In presenting the annual financial statements and quarterly announcement of results to shareholders, the Directors aim to present a balanced and understandable assessment of the Group’s position and prospects.

The Directors consider that in preparing the financial statements, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and estimates. All accounting standards which the Board considers to be applicable have been followed, subject to any explanations and material departures disclosed in the notes to the financial statements.

8. Internal Control

The Directors acknowledge their responsibility for the Group’s system of internal controls, which is designed to identify and manage the risks facing the businesses in pursuit of its objectives. The system of internal control covers management and financial risks, organisational, operational and compliance controls to safeguard shareholders’ investments and the Group’s assets. This system, by its nature, can only provide reasonable and not absolute assurance against misstatement or loss.

The key elements of the Group’s internal control system are described below:-

• Clearly defined delegation of responsibilities to Committees of the Board and the management of Group Head Office and operating units, including authorisation levels for all aspects of the businesses. Each operating unit has clear accountabilities for ensuring that appropriate risk management and control procedures are in place. These delegations are subject to periodic review throughout the year as to their implementation and for their continuing suitability.


20


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21

• Clearly documented internal procedures set out in the Operating Manuals and the Group Procedures and Authorities.

• Regular internal audit visits to monitor compliance with procedures and assess the integrity of financial information provided.

• Regular and comprehensive information provided to management, covering financial performance and key business indicators, such as staff utilisation and cash flow performance.

• A detailed budgeting process where operating units prepare budgets for the coming year which are approved both at the operating level and by the Board.

• Monitoring of results against budget, with major variances being followed up and management action taken, where necessary.

• Visits to operating units by members of the Board and senior management.

The Board undertakes ongoing reviews of the key operational and financial risks facing the Group’s businesses together with those areas relating to compliance with laws and regulations. The monitoring arrangements in place give reasonable assurance that the structure of controls and operation is appropriate to the Company’s and the Group’s situation and that there is an acceptable level of risk throughout the Group’s businesses.

9. Relationship with the Auditors

The Audit Committee and the Board have established formal and transparent arrangements with the Company’s external auditors to maintain appropriate relationship. The role of Audit Committee in relation to the external auditors is stated on pages 11 to 14. The external auditors will from time to time highlight to the Audit Committee and Board of Directors on matters that require the Board’s attention.

10. Additional Compliance Information

The following information is presented in compliance with the BMSB Listing requirements:

10.1 Share buybacks

During the financial year, the Company did not enter into any share buybacks transactions.

10.2 Options, warrants or convertible securities

The Company has not issued any options, warrants or convertible securities during the financial year, other than the granting/exercise of options under the Employees’ Share Option Scheme as disclosed in the Directors’ Report.

10.3 American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) programme

During the year, the Company did not sponsor any ADR or GDR programme.


20


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21

21Quality Concrete Holdings Berhad Annual Report 2010

10.4 Imposition of sanctions and penalties

There were no sanctions or penalties imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies during the financial year.

10.5 Non-audit fee

The amount of non-audit fees paid to the external auditors by the Group and by the Company for the year amounted to RM63,072.

10.6 Profit guarantee

During the financial year, there was no profit guarantee given by the Company.

10.7 Material contracts

None of the Directors and/or Major Shareholders had any material contract with the Company and/or its subsidiaries during the financial year ended 31 January 2012.


22


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23

STaTEmENT ON INTErNaL CONTrOL

Pursuant to paragraph 15.26(b) of the Bursa Malaysia Securities’ Main Market Listing Requirements

The Board of Directors of Quality Concrete Holdings Berhad (“Board”) is pleased to provide the following statement on the extent of compliance with the Principles and Best Practices of good corporate governance as set out in the Malaysian Code of Corporate Governance by the Group.

Board Responsibility

The Board acknowledges the importance of having an effective internal control system and a well structured risk management framework to safeguard the interest of shareholders, customers, employees and as well as the Group’s assets. The Board understands its overall responsibility for establishing an efficient and effective system of internal control covering not only financial controls but also relating to operational, compliance and risk management and for reviewing the adequacy and integrity of the system. However, due to the limitations that are inherent in any system of internal control, those systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

The Board has established an ongoing process for identifying, evaluating and managing the principal risks faced, or potentially exposed to, by the Group in pursuing its business objectives. The process is being continually monitored and reviewed for its adequacy and effectiveness to ensure it is in accordance with the Internal Control Guidance.

Risk Management Framework

The Board and management are proactive in identifying significant risks associated with its business processes. The Risk Management Committee was established in April 2004 to coordinate the implementation of an enterprise-wide risk management programme for the Group. The Committee is made up of two (2) representatives from the Board, the management representatives from the respective subsidiaries and also the Internal Auditor.

During the year, the Committee has conducted meetings to review and re-evaluate the risk profiles identified by the respective business units within the Group as well as assessing the effectiveness of the controls in place to address those risks.

Internal Audit Function

The Board acknowledges the importance of internal audit function and has in place an internal audit unit which reports directly the Audit Committee on a quarterly basis. The internal audit function adopts a risk-based approach in developing its audit strategy and plan which focuses on identifying principal risks affecting the achievement of the Group’s business objectives, assessing the likelihood and impact of these risks, evaluating the effectiveness of the existing controls in place and formulating action plans to improve the internal control system. During the year, scheduled internal audit visits were carried out by the internal audit unit based on the audit plan presented to and approved by the Audit Committee. On a quarterly basis, internal auditor reports to the Audit Committee on reported weaknesses are remedied within the required time frame by the Management of the respective subsidiaries.

22


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23

STaTEmENT ON INTErNaL CONTrOL

As part of the ongoing process, the Internal Auditor has conducted detailed risk audits on the following areas as identified in the approved audit plan:

(a) Review of Credit Assessment, Granting of Credit Limits and Terms.(b) Review on Collections of Receivables (c) Policies and Procedure Review on Purchase of Raw Materials (d) Policies and Procedure Review on Diesel or Lubricant Consumption.(e) Review of Repairs and Maintenance (f ) Review of Spare Parts Management(g) Review on Worker and Health Safety

Key Elements of Internal Control

The Group has also put in place the following key elements of internal control:

• Anorganisationalstructurewithwelldefinedscopeofresponsibilities,accountabilitiesandappropriatelevelofdelegated authorities;

• Aprocessofhierarchicalreportingwhichprovidesforadocumentedandauditabletrailofaccountability;

• Regularandcomprehensive informationprovided tomanagementcoveringbothfinancialandoperationalperformance and key business indicators, for effective monitoring and decision making;

• RegularvisitstooperatingunitsandcloseinvolvementindailyoperationoftheGroupbyExecutiveDirectorsand senior management;

• RegularBoardandAuditCommitteemeetingsareheldquarterlytoidentifyandresolveoperationalandfinancialissues;

• TheAuditCommitteereviewsandholdsmeetingswithmanagementontheproposedactiontobetakenonsignificant internal control issues identified by internal and external auditors.

Board Review

The Board is of the view that based on the internal auditor’s report there is a reasonable assurance that the Group’s internal control system is in place and operating as designed. A number of minor internal control weaknesses were identified during the year, all of which have been, or are being addressed. None of the weaknesses have resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s annual report.

The Board is continuously reviewing and implementing measures to strengthen the internal control system of the Group.

This statement is issued in accordance with a resolution of the Directors dated 24 May 2012.

24


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25

We are committed to be a successful and responsible corporate citizen not only just about delivering quality products and services and generating attractive economic returns to our customers and shareholders. We also recognize that it is our corporate social responsibility to ensure that we conduct our business activities ethically and professionally.

In order to achieve this aim, we will periodically review our policies, monitor and where necessary improved on our performance. We are committed to continuous improvement in our corporate social responsibility program.

Our commitment toward our social responsibility is reflected through the following policies:

Workforce

We aim to be employer of choice in the industries that we operate in. We believe that dedicated and competent workforce is paramount to the success of the business of our Group. Therefore, we will continue to invest in human resource developments to ensure proper trainings are given to the employees to further enhance their skills and knowledge.

Safety and Health

We are committed to provide a safer and healthier environment for our employees and customers and minimise any preventable accidents and health hazards that may occur in our business premises.

Environment

We are committed to seek in our operation continuous improvements to minimise any negative impact on the environment. We will ensure that our business activities are conducted in compliance with the applicable environment rules and regulations.

Community

We are committed to provide continuous support to various activities carried out by local charities and organizations.

COrpOraTE SOCIaL rESpONSIBILITY STaTEmENT

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Index Page

Directors’ Report 26

Statement by Directors’ and Statutory Declaration 30

Independent Auditors’ Report 31

Statements of Comprehensive Income 34

Statements of Financial Position 36

Consolidated Statement of Changes in Equity 38

Company Statement of Changes in Equity 39

Statements of Cash Flows 40

Notes to the Financial Statements 43

Supplementary Information 115

DIrECTOrS’ rEpOrT aND aUDITED fINaNCIaL STaTEmENTS

26


DIrECTOrS’ rEpOrT

- 3 -

Company No: 378282-D Quality Concrete Holdings Berhad (Incorporated in Malaysia) Directors’ Report The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 January 2012. Principal activities The principal activities of the Company are investment holding and the provision of management services. The principal activities of the subsidiaries are set out in Note 18 to the financial statements. There have been no significant changes in the nature of the principal activities during the financial year. Results Group Company RM’000 RM’000 Profit for the year 375 1,511 ===== ===== Attributable to: Equity holders of the Company 203 1,511 Non-controlling interest 172 - –––––– –––––– 375 1,511 ===== ===== There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements. In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. Dividends The amount of dividends paid by the Company since 31 January 2011 were as follows: RM In respect of the financial year ended 31 January 2011 as reported in the directors’ report of that year: First and final dividend of 6.66 sen per share, less 25% taxation

on 57,962,000 ordinary shares, declared on 29 September 2011 and paid on 28 December 2011 2,895,202 =======

2012


27

DIrECTOrS’ rEpOrT

- 4 -

Company No: 378282-D Quality Concrete Holdings Berhad (Incorporated in Malaysia) Directors’ Report Directors The names of the directors of the Company in office since the date of the last report and at the date of this report are: Dato’ Tiang Ming Sing Tiang Ching Kok Edmund Goh Chze Jin Robin Lo Bing Henry Law Kah Kwong David Wong Siew Chow Directors’ benefits Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time employee of the Company as shown in Note 9 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 33 to the financial statements. Directors’ interests According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares of the Company during the financial year were as follows: Number of ordinary shares of RM1 each 1 February 2011 and 31 January 2012 Direct Interest: Dato’ Tiang Ming Sing 8,483,000 Robin Lo Bing 272,405 None of the other directors in office at the end of the financial year had any interest in shares and options in the Company or its related corporations during the financial year.

28


DIrECTOrS’ rEpOrT

- 5 -

Company No: 378282-D Quality Concrete Holdings Berhad (Incorporated in Malaysia) Directors’ Report Other statutory information (a) Before the statements of comprehensive income and statements of financial position of

the Group and of the Company were made out, the directors took reasonable steps: (i) to ascertain that proper action had been taken in relation to the writing off of bad

debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise their value as

shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

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

render: (i) the amount written off for bad debts or the amount of the provision for doubtful

debts in the financial statements of the Group and of the Company inadequate to any substantial extent; and

(ii) the values attributed to the current assets in the financial statements of the Group

and of the Company misleading. (c) At the date of this report, the directors are not aware of any circumstances which have

arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

(d) At the date of this report, the directors are not aware of any circumstances not otherwise

dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

(e) As at the date of this report, there does not exist: (i) any charge on the assets of the Group or of the Company which has arisen since

the end of the financial year which secures the liabilities of any other person; or (ii) any contingent liability of the Group or of the Company which has arisen since

the end of the financial year.


29

DIrECTOrS’ rEpOrT

- 6 -

Company No: 378282-D Quality Concrete Holdings Berhad (Incorporated in Malaysia) Directors’ Report Other statutory information (contd.) (f) In the opinion of the directors: (i) no contingent or other liability has become enforceable or is likely to become

enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the

interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

Auditors The auditors, Ernst & Young, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors dated Dato’ Tiang Ming Sing Edmund Goh Chze Jin Tiang Ching Kok

24 May 2012.

30


STaTEmENT BY DIrECTOrSpursuant to Section 169(15) of the Companies Act, 1965

- 7 -

Company No: 378282-D Quality Concrete Holdings Berhad Statement by Directors pursuant to Section 169(15) of the Companies Act, 1965 We, Dato’ Tiang Ming Sing and Edmund Goh Chze Jin, being two of the directors of Quality Concrete Holdings Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 9 to 91 are drawn up in accordance with the provisions of the Companies Act, 1965 and Financial Reporting Standards in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 January 2012 and of their financial performance and cash flows for the year then ended. The information set out in Note 40 to the financial statements have been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants. Signed on behalf of the Board in accordance with a resolution of the directors dated Dato’ Tiang Ming Sing Edmund Goh Chze Jin Statutory Declaration pursuant to Section 169(16) of the Companies Act, 1965 I, Edmund Goh Chze Jin, being the director primarily responsible for the financial management of Quality Concrete Holdings Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 9 to 91 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the abovenamed Edmund Goh Chze Jin at Kuching in the State of Sarawak on 26 May 2012 Edmund Goh Chze Jin Before me, Yong Nam Hua (No. Q118) Commissioner for Oaths

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

Tiang Ching Kok and Edmund Goh Chze Jin ,

34 to 114

34 to 115

Tiang Ching Kok

24

24 May 2012.


31

INDEpENDENT aUDITOrS’ rEpOrTto the Members of Quality Concrete Holdings Berhad (Incorporated in Malaysia)

- 8 -

Company No: 378282-D Independent Auditors’ Report to the Members of Quality Concrete Holdings Berhad (Incorporated in Malaysia) Report on the financial statements We have audited the financial statements of Quality Concrete Holdings Berhad, which comprise the statements of financial position as at 31 January 2012 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 9 to 91. Directors’ responsibility for the financial statements The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia, and for such internal control as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

34 to 114.

32



- 9 -

Company No: 378282-D Independent Auditors’ Report to the Members of Quality Concrete Holdings Berhad (contd.) Opinion In our opinion, the financial statements have been properly drawn up in accordance with the Companies Act 1965 and Financial Reporting Standards in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 January 2012 and of their financial performance and cash flows for the year then ended. Report on other legal and regulatory requirements In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following: (a) In our opinion, the accounting and other records and the registers required by the

Act to be kept by the Company and its subsidiaries have been properly kept in accordance with the provisions of the Act.

(b) We have considered the accounts and the auditors’ reports of the subsidiaries of

which we have not acted as auditors, which are indicated in Note 18 to the financial statements.

(c) We are satisfied that the accounts of the subsidiaries that have been consolidated

with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors’ reports on the accounts of the subsidiaries were not subject to any

qualification and did not include any comment required to be made under Section 174(3) of the Act.


33


- 10 -

Company No: 378282-D Independent Auditors’ Report to the Members of Quality Concrete Holdings Berhad (contd.) Other matters The supplementary information set out in Note 40 on page 92 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Lossess in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. ERNST & YOUNG YONG CHUNG SING AF: 0039 1052/09/12 (J) Chartered Accountants Chartered Accountant Kuching, Malaysia Date: 26 May 2012

115

24

34


STaTEmENTS Of COmprEHENSIVE INCOmEfor the year ended 31 January 2012

- 11 -

Company No: 378282-D Quality Concrete Holdings Berhad Statements of Comprehensive Income for the year ended 31 January 2012 Group Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Revenue 4 211,437 158,337 4,965 2,803 Cost of sales 5 (186,123) (132,625) - - ––––––– ––––––– –––––– –––––– Gross profit 25,314 25,712 4,965 2,803 Other income 4,811 14,137 1,622 11,050 Selling and marketing expenses (10,301) (10,546) - - Administrative expenses (9,144) (7,121) (2,443) (2,159) Other expenses (5,541) (8,731) (1,436) (1,037) ––––––– ––––––– –––––– –––––– Operating profit 5,139 13,451 2,708 10,657 Finance costs 6 (3,234) (2,205) (213) (233) ––––––– ––––––– –––––– –––––– Profit before tax 7 1,905 11,246 2,495 10,424 Income tax expense 10 (1,530) (1,165) (984) (270) ––––––– ––––––– –––––– –––––– Profit for the year, net of tax 375 10,081 1,511 10,154 ––––––– ––––––– –––––– –––––– Other comprehensive income Foreign currency translation (19) (4) - - ––––––– ––––––– –––––– –––––– Total comprehensive income for the year 356 10,077 1,511 10,154 ====== ====== ===== ===== Profit attributable to: Owners of the parent 203 10,003 1,511 10,154 Non-controlling interests 172 78 - - ––––––– ––––––– –––––– –––––– 375 10,081 1,511 10,154 ====== ====== ===== =====


35

STaTEmENTS Of COmprEHENSIVE INCOmEfor the year ended 31 January 2012

- 12 -

Company No: 378282-D Quality Concrete Holdings Berhad Statements of Comprehensive Income for the year ended 31 January 2012 Group Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Total comprehensive income attributable to: Owners of the parent 184 9,999 1,511 10,154 Non-controlling interests 172 78 - - ––––––– ––––––– –––––– –––––– 356 10,077 1,511 10,154 ====== ====== ===== ===== Earnings per share attributable to equity holders of the Company (sen): Basic, for profit for the year 11(a) 0.35 17.26 Diluted, for profit for the year 11(b) N/A N/A ===== ===== The accompanying notes form an integral part of the financial statements.

36


STaTEmENTS Of fINaNCIaL pOSITIONas at 31 January 2012

- 13 -

Company No: 378282-D Quality Concrete Holdings Berhad Statement of Financial Position as at 31 January 2012 Group Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 ASSETS Non-current assets Property, plant and equipment 13 40,296 36,823 3,355 3,037 Prepaid land lease payments 14 17,780 17,628 5,641 5,768 Land held for property development 15(a) 36,388 36,371 - - Investment properties 16 1,735 - - - Goodwill on consolidation 17 970 970 - - Investment in subsidiaries 18 - - 76,027 75,612 Investment securities 19 4,989 5,474 4,954 5,440 Deposit on land acquisition 10,634 - - - Deferred tax asset 30 236 - - - –––––– –––––– –––––– –––––– 113,028 97,266 89,977 89,857 –––––– –––––– –––––– –––––– Current assets Property development costs 15(b) 5,351 4,980 - - Inventories 20 56,964 42,463 - - Trade and other receivables 21 89,523 72,770 37,244 39,795 Due from customers on contracts 22 12,423 4,887 - - Tax recoverable 955 2,387 1,081 1,085 Cash and bank balances 23 8,800 14,658 2,031 2,168 ––––––– ––––––– ––––––– ––––––– 174,016 142,145 40,356 43,048 ––––––– ––––––– ––––––– ––––––– TOTAL ASSETS 287,044 239,411 130,333 132,905 ====== ====== ====== ====== EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital 24 57,962 57,962 57,962 57,962 Share premium 24 24,994 24,994 24,994 24,994 Other reserves 25 4,599 4,618 - - Retained earnings 26 61,331 64,023 43,057 44,441 ––––––– ––––––– ––––––– ––––––– 148,886 151,597 126,013 127,397 Non-controlling interests 731 219 - - ––––––– ––––––– ––––––– ––––––– Total equity 149,617 151,816 126,013 127,397 ––––––– ––––––– ––––––– –––––––

- 14 -

Company No: 378282-D Quality Concrete Holdings Berhad Statement of Financial Position as at 31 January 2012 (contd.) Group Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Non-current liabilities Borrowings 27 16,396 15,117 402 369 Deferred tax liabilities 30 4,201 5,213 44 35 ––––––– ––––––– –––––– ––––––– 20,597 20,330 446 404 ––––––– ––––––– –––––– ––––––– Current liabilities Borrowings 27 74,326 39,278 2,413 2,750 Trade and other payables 29 40,720 26,593 1,461 2,084 Current tax payable 1,784 1,394 - 270 ––––––– ––––––– ––––––– ––––––– 116,830 67,265 3,874 5,104 ––––––– ––––––– ––––––– ––––––– Total liabilities 137,427 87,595 4,320 5,508 ––––––– ––––––– ––––––– –––––––

TOTAL EQUITY AND LIABILITIES 287,044 239,411 130,333 132,905 ====== ====== ====== ====== The accompanying notes form an integral part of the financial statements.


37

STaTEmENTS Of fINaNCIaL pOSITIONas at 31 January 2012

- 14 -

Company No: 378282-D Quality Concrete Holdings Berhad Statement of Financial Position as at 31 January 2012 (contd.) Group Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Non-current liabilities Borrowings 27 16,396 15,117 402 369 Deferred tax liabilities 30 4,201 5,213 44 35 ––––––– ––––––– –––––– ––––––– 20,597 20,330 446 404 ––––––– ––––––– –––––– ––––––– Current liabilities Borrowings 27 74,326 39,278 2,413 2,750 Trade and other payables 29 40,720 26,593 1,461 2,084 Current tax payable 1,784 1,394 - 270 ––––––– ––––––– ––––––– ––––––– 116,830 67,265 3,874 5,104 ––––––– ––––––– ––––––– ––––––– Total liabilities 137,427 87,595 4,320 5,508 ––––––– ––––––– ––––––– –––––––

TOTAL EQUITY AND LIABILITIES 287,044 239,411 130,333 132,905 ====== ====== ====== ====== The accompanying notes form an integral part of the financial statements.

38


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39


COmpaNY STaTEmENT Of CHaNGES IN EQUITY for the year ended 31 January 2012

- 16 -

Company No: 378282-D Quality Concrete Holdings Berhad Company Statement of Changes in Equity for the year ended 31 January 2012 Non- distributable Distributable Share Share Retained Total capital premium earnings equity (Note 24) (Note 24) (Note 26) RM’000 RM’000 RM’000 RM’000 At 1 February 2011 57,962 24,994 44,441 127,397 Total comprehensive income - - 1,511 1,511 Dividend paid - - (2,895) (2,895) –––––– –––––– –––––– ––––––– At 31 January 2012 57,962 24,994 43,057 126,013 ===== ===== ===== ====== At 1 February 2010 57,962 24,994 32,405 115,361 Effect of adoption of FRS139 - - 1,882 1,882 –––––– –––––– –––––– ––––––– At 1 February 2010 (restated) 57,962 24,994 34,287 117,243 Total comprehensive income - - 10,154 10,154 –––––– –––––– –––––– ––––––– At 31 January 2011 57,962 24,994 44,441 127,397 ===== ===== ===== ====== The accompanying notes form an integral part of the financial statements

40


STaTEmENTS Of CaSH fLOWSfor the year ended 31 January 2012

- 17 -

Company No: 378282-D Quality Concrete Holdings Berhad Statements of Cash Flows for the year ended 31 January 2012 Group Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Cash flows from operating activities Profit before tax 1,905 11,246 2,495 10,424 Adjustments for: Amortisation of prepaid land lease payments 7 391 393 127 128 Bad debts written off 7 14 84 - - Depreciation of property, plant and equipment 7 4,175 3,345 402 311 Gain on disposal of subsidiary 7 - (9,256) - (9,239) Gross dividend income 7 (11) (428) (4,965) (2,803) Gain on disposal of property, plant and equipment 7 (23) (85) - - Interest income 7 (631) (458) (1) (1) Interest expense 7 3,053 2,135 197 218 Inventory written off 1,996 - - - Gain on disposal of other investments 7 - (158) - (158) Property, plant and equipment written off 7 52 17 - - Impairment loss on receivables 7 2,036 6,570 370 529 Net fair value loss/(gains) on investment securities 485 (1,274) 486 (1,274) Unrealised foreign exchange loss - 3 - - –––––– –––––– –––––– –––––– Operating profit/(loss) before working capital changes 13,442 (889) (1,865) Increase in property development costs (371) (241) - - Increase in inventories (16,479) (1,389) - - (Increase)/decrease in receivables (18,771) (8,148) 2,181 (10,418) Decrease/(increase) in payables 14,127 9,299 (623) 363 Increase in due from customers on contracts (7,536) (4,887) - - –––––– –––––– –––––– –––––– Cash (used in)/generated from operations (15,588) 6,768 669 (11,920) Interest paid (3,050) (2,254) (197) (218) Tax paid, net of refund (956) (1,159) (1,241) (690) –––––– –––––– –––––– –––––– Net cash (used in)/generated from operating activities (19,594) 3,355 (769) (12,828) –––––– –––––– –––––– ––––––

(889) 12,134 (1,865)


41


- 18 -

Company No: 378282-D Quality Concrete Holdings Berhad Statements of Cash Flows for the year ended 31 January 2012 (contd.) Group Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Cash flows from investing activities Acquisition of land held for property development 15(a) - (27,692) - - Additional investment in subsidiaries - - (415) (4,300) Acquisition of investment properties (1,735) - - - Addition of prepaid land lease payment (543) - - - Issue of share in subsidiary level 340 - - - Purchase of investment securities - (6,144) - (6,144) Proceeds from disposal of other investments - 19,296 - 18,920 Prepayment of land lease 14 - (162) - - Deposits for purchase of investment properties (10,634) - - - Proceeds from disposal of land held for property development - 3,623 - - Purchase of property, plant and equipment 13 (4,918) (2,816) (720) (976) Proceeds from disposal of property, plant and equipment 134 150 - - Proceeds from disposal of subsidiary - 9,239 - 9,239 Purchase and subsequent development expenditure incurred on land held for development 15(a) (17) - - - Dividend received 11 428 4,965 2,803 Interest received 631 458 1 1 –––––– –––––– –––––– –––––– Net cash (used in)/generated from investing activities (16,731) (3,620) 3,831 19,543 –––––– –––––– –––––– –––––– Cash flows from financing activities Dividend paid 12 (2,895) - (2,895) - Net proceeds from hire purchase liabilities - 774 436 539 Hire purchase repayment (804) - (262) - Drawdown of term loans - 13,924 - - Net proceeds from bankers’ acceptances and revolving credit 29,271 2,141 - - Share margin facility repayment (478) (5,628) (478) (5,627) –––––– –––––– –––––– –––––– Net cash generated from/(used in) financing activities 25,094 11,211 (3,199) (5,088) –––––– –––––– –––––– ––––––

42



- 19 -

Company No: 378282-D Quality Concrete Holdings Berhad Statements of Cash Flows for the year ended 31 January 2012 (contd.) Group Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Net (decrease)/increase in cash and cash equivalents (11,231) 10,946 (137) 1,627 Effect of exchange rate changes (64) (4) - - Cash and cash equivalents at the beginning of the year 12,981 2,039 2,168 541 –––––– –––––– –––––– –––––– Cash and cash equivalents at the end of the year 23 1,686 12,981 2,031 2,168 ===== ===== ===== ===== The accompanying notes form an integral part of the financial statements


43

NOTES TO THE fINaNCIaL STaTEmENTS - 31 January 2012

- 20 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 1. Corporate information The Company is a public limited liability company, incorporated and domiciled in

Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at Room 209, 2nd Floor, Wisma Bukit Mata Kuching, Jalan Tunku Abdul Rahman, 93100 Kuching.

The principal activities of the Company are investment holding and the provision of

management services. The principal activities of the subsidiaries are set out in Note 18 to the financial statements. There have been no significant changes in the nature of the principal activities during the financial year.

2. Summary of significant accounting policies 2.1 Basis of preparation

The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted new and revised FRS which are mandatory for financial periods beginning on or after 1 January 2011 as described fully in Note 2.2.

The financial statements of the Group and of the Company have also been prepared on the historical cost basis except as disclosed in the accounting policies below. The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows: On 1 February 2011, the Group and the Company adopted the following new and amended FRS and IC Interpretations mandatory for annual financial periods beginning on or after 1 January 2011.

Amendments to FRS 132: Classification of Rights Issues FRS 1: First-time Adoption of Financial Reporting Standards FRS 3: Business Combinations (revised) Amendments to FRS 2: Share-based Payment Amendments to FRS 5: Non-current Assets Held for Sale and Discontinued

Operations.

44



- 21 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 2. Summary of significant accounting policies (contd.)

2.2 Changes in accounting policies (contd.)

Amendments to FRS 127: Consolidated and Separate Financial Statements Amendments to FRS 138: Intangible Assets Amendments to IC Interpretation 9: Reassessment of Embedded Derivatives IC Interpretation 12: Service Concession Arrangements IC Interpretation 16: Hedges of a Net Investment in a Foreign Operation IC Interpretation 17: Distributions of Non-cash Assets to Owners Amendments to FRS 1: Limited Exemption from Comparative FRS 7 Disclosures

for First-time Adopters. Amendments to FRS 1: Additional Exemptions for First-time Adopters. Amendments to FRS 2: Group Cash-settled Share-based Payment Transactions Amendments to FRS 7: Improving Disclosures about Financial Instruments Amendments to FRS ‘Improvements to FRS (2010)’ IC Interpretation 4: Determining Whether An Arrangement Contains a Lease IC Interpretation 18: Transfers of Assets from Customers TR 1-4: Shariah Compliant Sale Contracts . Adoption of the above standards and interpretations did not have any effect on the financial performance or position of the Group and of the Company, except for those disclosed below: Revised FRS 3 Business Combinations and Amendments to FRS 127 Consolidated and Separate Financial Statements The adoption of the two revised standards affects the way in which the Group accounts for business combinations and the preparation of its consolidated financial statements. Under the revised FRS 3, all acquisition-related costs are recognized as an expense in the statement of comprehensive income in the period in which they are incurred. All considerations transferred, including contingent considerations, are measured at fair value as at acquisition date. Any equity interests held prior to the date control is obtained is remeasured at fair value, with the resulting gains or losses recognized in the statement of comprehensive income. There is now an option on a case to case basis to measure non-controlling interests either at fair value or at the non-controlling interests’ proportionate share of the net identifiable assets of the assets acquired. Goodwill arising from the business combination is measured as the difference between the aggregate fair value of consideration transferred, any non-controlling interests in the acquire and the fair value at acquisition date of any previously-held equity interest in the acquiree, and the fair value if identifiable assets acquired and liabilities assumed (including contingent liabilities) at acquisition date.


45


- 22 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012

2. Summary of significant accounting policies (contd.)

2.2 Changes in accounting policies (contd.)

Revised FRS 3 Business Combinations and Amendments to FRS 127 Consolidated and Separate Financial Statements (contd.) The revised FRS 127 requires that changes in ownership interest which do not result in a loss of control be accounted for as equity transactions, instead of in the statement of comprehensive income. Where changes in ownership interest results in loss of control, any remaining interest in the entity is remeasured at fair value and any resulting gains or losses is recognised in the statement of comprehensive income. Total comprehensive income will be proportionately allocated to non-controlling interests, even if it results in the non-controlling interests being in a deficit position. The revised FRS 3 and FRS 127 apply prospectively to acquisitions occurring on or after 1 January 2011, and therefore had no financial impact on the financial statements of the Group as there were no new business combinations during the year. Amendments to FRS 7: Improving Disclosures about Financial Instruments The amended standard requires enhance disclosure about fair value measurement and liquidity risk. Fair value measurements related to items recorded at fair value are to be disclosed by source of inputs using a three level fair value hierarchy (Level 1, Level 2 and Level 3), by class, for all financial instruments recognized at fair value. A reconciliation between the beginning and ending balance for Level 3 fair value measurements is required. Any significant transfers between levels of fair value hierarchy and the reasons for those transfers need to be disclosed. The amendments also clarify the transactions and assets used for liquidity risk disclosures with respect to derivative transactions and assets used for liquidity managements. The fair value measurement disclosures are presented in Note 35. The liquidity risk disclosures are not significantly impacted by the amendments and are presented in Note 36 (b).

2.3 Malaysian Financial Reporting Standards

On 19 November 2011, the Malaysian Accounting Standards Board (MASB) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (MFRS Framework). The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for Construction of Real Estate (IC 15), including its parent, significant investor and venturer.

46



- 23 -


2.3 Malaysia Financial Reporting Standards (contd.) The Group will be required to prepare financial statements using the MFRS Framework

in its first MFRS financial statements for the year ending 31 January 2013. In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits. The Group has established a project tem to plan and manage the adoption of the MFRS Framework. The Group has not completed its assessment of the financial effects of the difference between Financial Reporting Standards and accounting standards under the MFRS Framework. Accordingly, the consolidated financial performance and financial position as disclosed in these financial statements for the year ended 31 January 2012 could be different if prepared under the MFRS Framework. The Group considers that it is achieving its scheduled milestones and expects to be in a position to fully comply with the requirements of the MFRS Framework for the financial year ending 31 January 2013.

2.4 Basis of consolidation

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

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

Acquisitions of subsidiaries are accounted for by applying the purchase method. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in other comprehensive income. The cost of a business combination is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the business combination. Any excess of the cost of business combination over the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities is recorded as goodwill on the statement of financial position.


47


- 24 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 2. Summary of significant accounting policies (contd.) 2.4 Basis of consolidation (contd.)

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

2.5 Transactions with non-controlling interests Non-controlling interest represents the equity in subsidiaries not attributable, directly or

indirectly, to owners of the Company, and is presented separately in the Group’s statement of comprehensive income and within equity in the Group’s statement of financial position, separately from equity attributable to owners of the Company.

Changes in the Company owners’ ownership interest in a subsidiary that do not result in

a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.

2.6 Foreign currency

(a) Functional and presentation currency The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.

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- 25 -


2.6 Foreign currency (contd.)

(b) Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation. Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

(c) Foreign operations

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


49


- 26 -



2.7 Property, plant and equipment

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

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

Certain leasehold land and buildings of the Group have not been revalued since they were revalued in 1999. The quarry reserve has not been revalued since it was revalued in 1991. The Directors have not adopted a policy of regular revaluations of such assets and no latest valuation has been recorded. As permitted under the transitional provisions of IAS 16 (Revised): Property, Plant and Equipment, these assets continue to be stated at their valuation less accumulated depreciation. The above transitional provisions are available only on the first application of the MASB Approved Accounting Standard IAS 16 (Revised): Property, Plant and Equipment which is effective for periods ending on or after 1 September 1998. By virtue of this transitional provision, an entity that had recorded its property, plant and equipment at revalued amounts but had not adopted a policy of revaluation has been allowed to continue carrying those assets on the basis of their previous revaluations subject to continuity in its depreciation policy and the requirement to write down the assets to their recoverable amounts for impairment adjustments. The transitional provisions will remain in force until and unless the entity chooses to adopt a revaluation policy in place of a cost policy. When that happens, FRS 116 (which supersedes IAS 16) would require revaluations to be carried out at regular intervals. Any revaluation surplus is recognised in other comprehensive income and accumulated in equity under the asset revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss. A revaluation deficit is recognised in profit or loss, except to the extent that it offsets an existing surplus on the same asset carried in the asset revaluation reserve. Upon disposal or retirement of an asset, any revaluation reserve relating to the particular asset is transferred directly to retained earnings.

50



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2.7 Property, plant and equipment (contd.)

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. The revaluation surplus included in the asset revaluation reserve in respect of an asset is transferred directly to retained earnings on retirement or disposal of the asset. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:

Buildings 2% - 25% Quarry reserve 5% Plant, machinery and operating equipment 6.67% - 25% Motor vehicles 10% - 25% Office furniture and equipment 10% - 33.3% Barges 10% Renovation 10%

Work-in-progress is not depreciated as these assets are not available for use.

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

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

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

2.8 Investment properties

Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Such properties are initial recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit or loss during the financial year in which they are incurred. Subsequent to recognition, investment properties are stated at cost less impairment losses.


51


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2. Summary of significant accounting policies (contd.) 2.8 Investment properties (contd.)

The residual values and useful life are reviewed at each financial year-end to ensure that the amount and method are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of investment properties. An item of investment properties is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in profit or loss.

2.9 Intangible assets

Goodwill

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

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

The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods. Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.

Goodwill and fair value adjustments arising on the acquisition of foreign operation on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.6.

Goodwill and fair value adjustments which arose on acquisitions of foreign operation before 1 January 2006 are deemed to be assets and liabilities of the Company and are recorded in RM at the rates prevailing at the date of acquisition.

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2. Summary of significant accounting policies (contd.) 2.10 Prepaid land lease payments

Prepaid land lease payments were initially measured at cost. Following initial recognition, prepaid land lease payments were measured at cost less accumulated amortisation and accumulated impairment losses. The prepaid land lease payments were amortised over their lease terms.

2.11 Impairment of non-financial assets

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

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

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

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

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


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2.12 Subsidiaries

A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.

2.13 Financial assets

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

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

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

(a) Financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income.

Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that are held primarily for trading purposes are presented as current whereas financial assets that are not held primarily for trading purposes are presented as current or non-current based on the settlement date.

54



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Company No: 378282-D

Quality Concrete Holdings Berhad

Notes to the Financial Statements - 31 January 2012


2.13 Financial assets (contd.)

(b) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

(c) Held-to-maturity investments Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process. Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current.

(d) Available-for-sale financial assets Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories. ` After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group and the Company’s right to receive payment is established.


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2.13 Financial assets (contd.)

(d) Available-for-sale financial assets (contd.)

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss. Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date. A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.

2.14 Impairment of financial assets

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

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

cost

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

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2.14 Impairment of financial assets (contd.)

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

cost (contd.)

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

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

(b) Unquoted equity securities carried at cost If there is objective evidence (such as significant adverse changes in the

business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

2.15 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.


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2.16 Construction contracts

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

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

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable of being reliably measured. When the total of costs incurred on construction contracts plus recognised profits (less recognised losses) exceeds progress billings, the balance is classified as amount due from customers for contract work. When progress billings exceed costs incurred plus, recognised profits (less recognised losses), the balance is classified as amount due to customers for contract work.

2.17 Land held for property development and property development costs

(a) Land held for property development

Land held for property development consists of land where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle. Such land is classified within non-current assets and is stated at cost less any accumulated impairment losses.

Land held for property development is reclassified as property development costs at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle.

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2.17 Land held for property development and property development costs (contd.)

(b) Property development costs

Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities.

When the financial outcome of a development activity can be reliably estimated, property development revenue and expenses are recognised in profit or loss by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.

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

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

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

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

2.18 Inventories

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

- Raw materials: purchase costs on a weighted average cost basis. - Finished goods and work-in-progress: costs of direct materials and labour and a

proportion of manufacturing overheads based on normal operating capacity. These costs are assigned on a weighted average cost basis.

Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale.


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2. Summary of significant accounting policies (contd.) 2.19 Provisions

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

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

2.20 Financial liabilities

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

(a) Financial liabilities at fair value through profit or loss

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

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.

The Group and the Company have not designated any financial liabilities as at fair value through profit or loss.

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(b) Other financial liabilities

The Group’s and the Company's other financial liabilities include trade payables, other payables, amount due to related companies and loans and borrowings.

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

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

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

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

2.21 Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs using the expected loss method. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.


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Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 2. Summary of significant accounting policies (contd.) 2.22 Borrowing costs

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

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

2.23 Employee benefits Defined contribution plans

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

2.24 Leases

(a) As lessee

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

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

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

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2.24 Leases (contd.)

(b) As lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.25(f).

2.25 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.

(a) Sale of goods

Revenue from sale of goods is recognised upon the transfer of significant risks and rewards of ownership of the goods to the customer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of consideration due, associated costs or the possible return of goods.

(b) Construction and service contracts Revenue from construction and service contracts is accounted for by the stage of completion method as described in Note 2.16.

(c) Sale of properties Revenue from sale of properties is accounted for by the stage of completion method as described in Note 2.17.

(d) Dividend income

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

(e) Interest income Interest income is recognised on an accrual basis using the effective interest method.

(f) Rental income Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.


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2. Summary of significant accounting policies (contd.) 2.26 Income taxes

(a) Current tax Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all temporary differences, except: - where the deferred tax liability arises from the initial recognition of

goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of taxable temporary differences associated with investments in

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

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

- where the deferred tax asset relating to the deductible temporary difference

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

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2. Summary of significant accounting policies (contd.) 2.26 Income taxes (contd.)

(b) Deferred tax (contd.)

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

The carrying amount of deferred tax assets is reviewed at each reporting date

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

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

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

2.27 Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 38, including the factors used to identify the reportable segments and the measurement basis of segment information.


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2. Summary of significant accounting policies (contd.) 2.28 Share capital and share issuance expenses

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

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

2.29 Contingencies

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

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

3. Significant accounting estimates and judgements

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

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

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3. Significant accounting estimates and judgements (contd.)

Key sources of estimation uncertainty (contd.)

(a) Depreciation of property, plant and equipment

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Management estimates the useful lives of the property, plant and equipment (excluding land and buildings) to be within 3 to 20 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. The carrying amount of the Group’s plant and equipment at the reporting date is disclosed in Note 13. A 5% difference in the expected useful lives of these assets from management’s estimates would result in approximately 11% (2011: 3%) variance in the Group’s profit for the year.

(b) Construction contracts

The Group recognises contract revenue based on percentage of completion method. The stage of completion is measured by reference to either the costs incurred to-date to the estimated total cost or the completion of a physical proportion of work to-date. Significant judgement is required in determining the stage of completion, the extent of the costs incurred and the estimated total revenue (for contracts other than fixed contracts) and costs. Total contract revenue also includes an estimation of the variation works that are recoverable from the customers. In making the judgement, the Group relies on past experience and work of specialists. The carrying amounts of assets and liabilities of the Group arising from construction activities are disclosed in Note 22. A 10% difference in the estimated total construction contracts revenue or costs would result in approximately 13% (2011: 1%) variance in the Group’s revenue.

(c) Impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivable at the reporting date is disclosed in Note 21.


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Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 4. Revenue Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Property development 80,005 17,911 - - Manufacturing and premixing 129,155 137,185 - - Trading 793 615 - - Quarry operations 1,469 2,223 - - Investment and management services 15 403 4,965 2,803 ––––––– ––––––– –––––– –––––– 211,437 158,337 4,965 2,803 ====== ====== ===== ===== 5. Cost of sales Cost of constructions 71,963 16,649 - - Cost of inventories sold 114,160 115,976 - - ––––––– ––––––– –––––– –––––– 186,123 132,625 - - ====== ====== ===== ===== 6. Finance costs Interest expense on: Bank borrowings 3,164 2,177 176 197 Hire purchase liabilities 121 56 - - Intercompany borrowings 21 21 21 21 ––––––– ––––––– –––––– –––––– 3,306 2,254 197 218 Less: Interest expense capitalised in qualifying assets Property development costs (Note 15(b)) (253) (119) - - ––––––– ––––––– –––––– –––––– Net interest expense 3,053 2,135 197 218 Less: Interest expense charged to cost of sales (49) (72) - - Add: Bank charges 230 142 16 15 ––––––– ––––––– –––––– –––––– 3,234 2,205 213 233 ====== ====== ===== =====

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Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 7. Profit before tax Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 The following amounts have been included in arriving at profit before tax: Rental factory 19 - - - Amortisation of prepaid land lease payments (Note 14) 391 393 127 128 Auditors’ remuneration: - current year 123 116 25 25 Bad debts written off 14 84 - - Depreciation of property, plant and equipment (Note 13) 4,175 3,345 402 311 Gain on disposal of property, plant and equipment (23) (85) - - Gain on disposal of subsidiary - (9,256) - (9,239) Gain on disposal of other investments - (158) - (158) Gross dividend income (15) (428) (4,965) (2,803) Interest expense (Note 6) 3,053 2,135 197 218 Interest income (631) (458) (1) (1) Inventories written down 1,996 - - - Non-executive directors’ remuneration (Note 9) 352 251 58 27 Impairment loss on receivables 2,036 6,570 370 529 Property, plant and equipment written off 52 17 - - Operating leases: - minimum lease payments for land and buildings 478 425 - - Net foreign currency exchange gain (303) (9) - - Net fair value (gain)/loss on investment securities 485 (1,274) 486 (1,274) Employee benefits expense (Note 8) 11,684 9,686 1,529 1,314 Rental income (646) (628) (276) (276) ===== ===== ===== =====

362


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Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 8. Employee benefits expense Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Salaries, allowances and bonus 10,178 8,563 1,388 1,196 Contributions to defined contribution plan 1,164 936 135 113 Social security contributions 144 115 6 5 Other benefits 198 72 - - –––––– –––––– ––––– –––––– 11,684 9,686 1,529 1,314 ===== ===== ==== ===== Included in employee benefits expense of the Group and of the Company are Executive

Directors’ remuneration amounting to RM1,725,334 (2011: RM1,495,390) and RM964,000 (2011: RM871,040) respectively, as further disclosed in Note 9.

9. Directors’ remuneration Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Executive directors’ remuneration (Note 8): Fees 342 204 36 15 Other emoluments 1,383 1,292 928 856 ––––– ––––– ––––– ––– 1,725 1,496 964 871 ––––– ––––– ––––– ––– Non-executive directors’ remuneration (Note 7): Fees 320 239 26 15 Other emoluments 32 12 32 12 ––––– ––––– ––––– ––– 352 251 58 27 ––––– ––––– ––––– ––– Total directors’ remuneration 2,077 1,747 1,022 898 Estimated money value of benefits-in-kind 53 42 43 24 ––––– ––––– ––––– –––– Total directors’ remuneration including benefits-in-kind 2,130 1,789 1,065 922 ==== ==== ==== ===

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Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 9. Directors’ remuneration (contd.) The details of remuneration received and receivable by directors of the Company during the

year are as follows: Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Executive:

Salaries and other emoluments 1,273 1,219 865 797 Fees 342 204 36 15 Contributions to defined contribution plan 110 73 63 59 Benefits-in-kind 43 42 43 24 ––––– ––––– ––––– ––––– 1,768 1,538 1,007 895 ––––– ––––– ––––– ––––– Non-executive:

Fees 320 239 26 15 Other emoluments 32 12 32 12 Benefits-in-kind 10 - - - ––––– ––––– ––––– ––––– 362 251 58 27 ––––– ––––– ––––– ––––– 2,130 1,789 1,065 922 ==== ==== ==== ==== The number of directors of the Company whose total remuneration during the financial

year fell within the following bands is analysed below: Number of Directors 2012 2011 Executive directors:

RM250,001 – RM300,000 - 2 RM300,001 – RM350,000 2 1 RM350,001 – RM400,000 1 - === === Non-executive directors:

Below RM50,000 3 3 === ===


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Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 10. Income tax expense Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Current income tax: Malaysian income tax 3,676 2,296 1,046 270 Over provision in prior years: Malaysian income tax (898) (256) (71) - –––––– –––––– ––––– ––––– 2,778 2,040 975 270 –––––– –––––– ––––– ––––– Deferred tax (Note 30): Relating to origination and reversal of temporary differences (472) 283 13 - Over provision in prior years (776) (1,158) (4) - –––––– –––––– ––––– ––––– (1,248) (875) 9 - –––––– –––––– ––––– ––––– Total income tax expense 1,530 1,165 984 270 ===== ===== ==== ====

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2011: 25%) of the estimated assessable profit for the year.

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

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Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 10. Income tax expense (contd.) A reconciliation of income tax expense applicable to profit before tax at the statutory

income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows:

2012 2011 RM’000 RM’000 Group Profit before tax 1,905 11,246 ===== ===== Taxation at Malaysian statutory tax rate of 25% (2011: 25%) 476 2,812 Income not subject to tax - (6) Expenses not deductible for tax purposes 2,548 (365) Deferred tax assets not recognised during the year 180 120 Utilisation of previously unrecognised tax losses and unabsorbed capital allowances - 16 Over provision of income tax in prior years (898) (256) Over provision of deferred tax in prior years (776) (1,158) Deferred tax arising from the transfer of qualifying assets to a related company - 2 –––––– –––––– Income tax expense for the year 1,530 1,165 ===== ===== Company Profit before tax 2,495 10,424 ===== ===== Taxation at Malaysian statutory tax rate of 25% (2011: 25%) 624 2,606 Expenses not deductible for tax purposes 435 (2,361) Utilisation of previously unrecognised tax losses - 21 Utilisation of previously unrecognised unabsorbed capital allowance - (5) Deferred tax assets not recognised during the year - 9 Over provision of deferred tax in prior years (4) - Over provision of income tax in prior years (71) - –––––– –––––– Income tax expense for the year 984 270 ===== =====


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Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 11. Earnings per share

(a) Basic

Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year.

2012 2011

Profit attributable to ordinary equity holders of the Company (RM’000) 203 10,003 Weighted average number of ordinary shares in issue (’000) 57,962 57,962 Basic earnings/(loss) per share (sen) 0.35 17.26 ===== =====

(b) Diluted

The Group has no potential ordinary shares in issue as at the reporting date and therefore, diluted earnings per share is presented as equal to basic earnings per share.

12. Dividends

Dividends Dividends in respect of year recognised in year 2012 2011 2012 2011

RM RM RM RM

Recognised during the year:

First and final dividend 2012: 6.66 sen per share, less 25% taxation on 57,962,000 ordinary shares 2,895,202 - 2,895,202 - ======= ======= ======= =======

per share (sen)

74


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= ==

===

====

==

==

====

==

Acc

umul

ated

dep

reci

atio

n A

t 1 F

ebru

ary

2011

6,

042

2,31

0 35

,424

12

,662

1,

278

- 57

,716

D

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ciat

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char

ge fo

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yea

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Rec

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or l

oss (

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63

1 90

2,

581

722

151

- 4,

175

D

ispos

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writ

ten

off

(4)

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88)

(128

) (1

32)

- (5

52)

Ex

chan

ge d

iffer

ence

s -

- -

4 1

- 5

––––

––

––––

––

––––

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––––

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––––

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––––

––

––––

A

t 31

Janu

ary

2012

6,

669

2,40

0 37

,717

13

,260

1,

298

- 61

,344

==

===

====

= ==

===

====

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==

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Net

car

ryin

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ount

A

t 31

Janu

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2012

2

1,51

3 -

12,4

85

5,05

3 90

1 34

4 40

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= ==

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75

- 52

-

Com

pany

No:

378

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the

Fina

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tem

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- 31

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201

2 13

. Pr

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and

equ

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cont

d.)

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fu

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Q

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00

RM

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At 1

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795

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A

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) (5

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-

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Exch

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ce

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(4)

(1)

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)

Recl

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(7)

- (4

3)

- 50

-

-

––––

––

––––

– ––

––––

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––––

– ––

––––

– A

t 31

Janu

ary

2011

28

,031

2,

400

46,7

48

15,2

99

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1 -

94,5

39

==

===

====

==

===

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==

====

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====

A

ccum

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At 1

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,580

1,

138

- 57

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61

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(43)

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50

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––––

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––––

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2011

6,

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278

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1 Ja

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11

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89

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36,8

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==

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nuar

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12

76



- 53 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 13. Property, plant and equipment (contd.) * Buildings of the Group:

At valuation At cost Buildings Buildings Renovation Total RM’000 RM’000 RM’000 RM’000 Group 2012 Cost At 1 February 2011 13,952 13,850 229 28,031 Additions - 159 34 193 Disposals/written off - (42) - (42) –––––– –––––– ––––– –––––– At 31 January 2012 13,952 13,967 263 28,182 ===== ===== ==== ===== Accumulated depreciation At 1 February 2011 3,135 2,792 115 6,042 Depreciation charge for the year 279 336 16 631 Disposals/written off - (4) - (4) –––––– –––––– ––––– –––––– At 31 January 2012 3,414 3,124 131 6,669 ===== ===== ==== ===== Net carrying amount At 31 January 2012 10,538 10,843 132 21,513 ===== ===== ==== =====


77


- 54 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 13. Property, plant and equipment (contd.) * Buildings of the Group: (contd.)

At valuation At cost Buildings Buildings Renovation Total RM’000 RM’000 RM’000 RM’000 Group (contd.) 2011 Cost At 1 February 2010 13,952 13,444 132 27,528 Additions - 413 98 511 Reclassification - (7) - (7) Exchange differences - - (1) (1) –––––– –––––– ––––– –––––– At 31 January 2011 13,952 13,850 229 28,031 ===== ===== ==== ===== Accumulated depreciation At 1 February 2010 2,856 2,473 109 5,438 Depreciation charge for the year 279 326 6 611 Adjustments - (7) - (7) –––––– –––––– ––––– –––––– At 31 January 2011 3,135 2,792 115 6,042 ===== ===== ==== ===== Net carrying amount At 31 January 2011 10,817 11,058 114 21,989 ===== ===== ==== =====

78



- 55 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 13. Property, plant and equipment (contd.) Office Furniture Plant Motor and Office and vehicles equipment renovation machineries Total RM’000 RM’000 RM’000 RM’000 RM’000 Company 2012 At 1 February 2011 1,185 278 186 2,250 3,899 Additions 666 48 6 - 720 ––––– ––––– ––––– ––––– –––––– At 31 January 2012 1,851 326 192 2,250 4,619 ==== ==== ==== ==== ===== Accumulated depreciation At 1 February 2011 329 151 87 295 862

Depreciation charge for the year (Note 7) 144 22 11 225 402 ––––– ––––– ––––– ––––– ––––– At 31 January 2012 473 173 98 520 1,264 ==== ==== ==== ==== ==== Net carrying amount At 31 January 2012 1,378 153 94 1,730 3,355 ==== ==== ==== ==== ====


79


- 56 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 13. Property, plant and equipment (contd.) Office Furniture Plant Motor and Office and vehicles equipment renovation machineries Total RM’000 RM’000 RM’000 RM’000 RM’000 Company 2011 At 1 February 2010 370 216 87 2,250 2,923 Additions 815 62 99 - 976 ––––– ––––– ––––– ––––– –––––– At 31 January 2011 1,185 278 186 2,250 3,899 ==== ==== ==== ==== ===== Accumulated depreciation At 1 February 2010 258 137 86 70 551 Depreciation charge for the year (Note 7) 71 14 1 225 311 ––––– ––––– ––––– ––––– ––––– At 31 January 2011 329 151 87 295 862 ==== ==== ==== ==== ==== Net carrying amount At 31 January 2011 856 127 99 1,955 3,037 ==== ==== ==== ==== ====

(a) During the financial year, the Group and the Company acquired property, plant and equipment with an aggregate cost of RM7,815,494 (2011: RM2,816,307) and RM720,428 (2011: RM976,106) of which RM2,898,080 and RM436,000 (2011: RM1,117,980 and RM640,480) were acquired by means of hire purchase. The carrying amount of property, plant and equipment held under hire purchase arrangements at the reporting date were RM5,276,241 (2011: RM1,181,011) and RM1,340,522 (2011: RM781,655) respectively.

Property, plant and equipment are pledged as security for the related hire purchase liabilities (Note 28).

(b) The net carrying amount of buildings pledged as security for borrowings is RM14,532,442 (2011: RM13,052,959).

80



- 57 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 14. Prepaid land lease payments Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 At 1 February 2011/2010 17,628 19,378 5,768 5,896 Additions 543 162 - - Disposal of a subsidiary - (1,519) - - Amortisation for the year (Note 7) (391) (393) (127) (128) –––––– –––––– ––––– ––––– At 31 January 2012/2011 17,780 17,628 5,641 5,768 ===== ===== ==== ==== Analysed as: Short term leasehold land 14,640 14,990 5,641 5,768 Long term leasehold land 3,140 2,638 - - –––––– –––––– ––––– ––––– 17,780 17,628 5,641 5,768 ===== ===== ==== ====

(i) The title to a parcel of leasehold land of the Group has yet to be issued by the relevant authority.

(ii) Certain parcels of leasehold land of the Group and of the Company have been

pledged as security for borrowings as disclosed in Note 27. 15. Land held for property development and property development costs

(a) Land held for property development Short-term Long-term leasehold leasehold land land Total RM’000 RM’000 RM’000

Group 2012 Cost At 1 February 2011 33,116 3,255 36,371 Additions 17 - 17 ——— —––— —–––– At 31 January 2012 33,133 3,255 36,388 ===== ===== =====


81


- 58 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 15. Land held for property development and property development costs (contd.)

(a) Land held for property development (contd.) Short-term Long-term leasehold leasehold land land Total RM’000 RM’000 RM’000

Group (contd.) 2011 Cost At 1 February 2010 5,424 3,255 8,679 Additions 27,692 - 27,692 ——— —––— —–––– At 31 January 2011 33,116 3,255 36,371 ===== ===== =====

(b) Property development costs

Group

2012 Cumulative property development costs At 1 February 2011 3,906 11,941 15,847 Costs incurred during the year - 371 371 ——— ——— —––— At 31 January 2012 3,906 12,312 16,218 ===== ===== ===== Cumulative costs recognised in profit or loss At 1 February 2011 2,305 8,562 10,867 –——– ——–– ——–– At 31 January 2012 2,305 8,562 10,867 ===== ===== ===== Property development costs at 31 January 2012 1,601 3,750 5,351 ===== ===== =====

82



- 59 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 15. Land held for property development and property development costs (contd.)

(a) Land held for property development (contd.) Short-term Long-term leasehold leasehold land land Total RM’000 RM’000 RM’000

Group (contd.)

2011 Cumulative property development costs At 1 February 2010 3,906 11,581 15,487 Costs incurred during the year - 360 360 ——— ——— —––— At 31 January 2011 3,906 11,941 15,847 ===== ===== ===== Cumulative costs recognised in profit or loss At 1 February 2010 2,305 8,562 10,867 –——– ——–– —–—– At 31 January 2011 2,305 8,562 10,867 ===== ===== ===== Property development costs at 31 January 2011 1,601 3,379 4,980 ===== ===== =====

Included in property development costs incurred during the year is: 2012 2011 RM’000 RM’000 Interest expense (Note 6) 253 119 ===== ===== Certain leasehold land have been charged as security for banking facilities

granted to the Group as disclosed in Note 27.


83


- 60 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 16. Investment properties Group 2012 2011 RM’000 RM’000 At 1 February - - Additions 1,735 - ––––– ––––– At 31 January 1,735 - ==== ==== 17. Goodwill on consolidation Group 2012 2011 RM’000 RM’000 At 1 February 970 976 Arising from disposal of subsidiary - (6) ––––– ––––– At 31 January 970 970 ==== ====

The carrying amounts of goodwill allocated to the Group’s cash-generating units are as follows:

Group 2012 2011 RM’000 RM’000 Quarry operations 970 970 ==== ==== 18. Investment in subsidiaries Company 2012 2011 RM’000 RM’000 Unquoted shares at cost 76,027 75,612 ====== ======

84



- 61 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 18. Investment in subsidiaries (contd.) Details of the subsidiaries are as follows: Proportion of Country of ownership interest Name of subsidiaries incorporation Principal activities 2012 2011 Held by the Company: Quality Concrete Malaysia Manufacture and sale of 100 100 Sdn. Bhd.* ready-mixed concrete, sale of concrete products and trading of goods Polyflow Pipes Malaysia Manufacture and sale 100 100 Sdn. Bhd.* of polyethylene pipes Kutex Sdn. Bhd.* Malaysia Manufacture and sale of 100 100 woven polypropylene bags and polyethylene liners Hong Wei Holdings Malaysia Property development and 100 100 Sdn. Bhd.* construction

Lee Ling Timber Products Malaysia Sawmilling and 100 100 Sendirian Berhad* manufacture of downstream timber products Agrowell Sdn. Bhd.* Malaysia Quarry operations and 100 100 sale of aggregates and related products Polyflow (B) Sdn. Bhd.** Brunei Manufacture and sale of 55 55 Darussalam polyethylene pipes Seri Bumijaya Sdn. Bhd.* Malaysia Property development, 100 100 general construction and trading in building products Enrich Fortress Sdn. Bhd.* Malaysia Dormant 100 - Casa Usaha Sdn. Bhd.* Malaysia Dormant 100 - Nexpeak Sdn. Bhd.* Malaysia Dormant 100 - Quality Concrete Malaysia Dormant 70 70 (Mukah) Sdn. Bhd.* * Audited by Ernst & Young, Malaysia ** Audited by firms other than Ernst & Young


85


- 62 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 18. Investment in subsidiaries (contd.)

On 6 September 2011, the Company acquired 100% equity interest in Enrich Fortress Sdn. Bhd., a company incorporated in Malaysia, for a total cash consideration of RM2. Subsequent to the acquisition, Enrich Fortress Sdn. Bhd. became subsidiary of the Group.

On 9 May 2011, the Company acquired 100% equity interest in Casa Usaha Sdn. Bhd., company incorporated in Malaysia, for a total cash consideration of RM2. Subsequent to the acquisition, Casa Usaha Sdn. Bhd. became subsidiary of the Group.

On 10 November 2011, the Company acquired 100% equity interest in Nexpeak Sdn. Bhd., a company incorporated in Malaysia, for a total cash consideration of RM2. Subsequent to the acquisition, Nexpeak Sdn. Bhd. became subsidiary of the Group.

19. Investment securities Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Non-Current Held for trading investments Equity instruments (quoted in Malaysia), representing total investment securities 4,989 5,474 4,954 5,440 ===== ===== ===== ===== Market value: Equity instruments (quoted in Malaysia), representing total investment securities 4,989 5,474 4,954 5,440

===== ===== ===== ===== Investments pledged as security Certain of the quoted shares have been pledged as security for margin facilities granted

by the securities firms as disclosed in Note 27.

86



- 63 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 20. Inventories Group 2012 2011 RM’000 RM’000 Cost Raw materials 15,293 10,043 Sawn timber 2,662 4,484 Semi-finished and finished goods 17,824 15,998 Spare parts and consumables 941 855 Properties held for sale 7,053 5,118 Others 73 44 Stock-in-transit 13,118 5,921 –––––– –––––– 56,964 42,463 ===== =====

During the year, the amount of inventories recognised as an expense in cost of sales of the Group was RM1,995,672 (2011: RM Nil).

21. Trade and other receivables Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Current Trade receivables Third parties 70,569 65,012 720 720 Retention sum (Note 20) - 1,056 - - –––––– –––––– –––––– –––––– 70,569 66,068 720 720 Less: Allowance for impairment - Third parties (10,225) (8,368) (720) (720) –––––– –––––– –––––– –––––– Trade receivables, net 60,344 57,700 - - –––––– –––––– –––––– ––––––


87


- 64 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 21. Trade and other receivables (contd.) Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Other receivables Amount due from subsidiaries company - - 32,078 33,937 Sundry receivables 21,347 17,412 5,735 6,320 Less: Allowance for impairment (4,854) (4,785) (649) (529) 16,493 12,627 5,086 5,791 Advance to subcontractors 8,896 - - - Prepayments 1,015 1,657 15 12 Deposits 2,775 786 65 55 –––––– ––––––– –––––– –––––– 29,179 15,070 37,244 39,795 –––––– ––––––– –––––– ––––––

Total trade and other receivables 89,523 72,770 37,244 39,795 Add: Cash and bank balances 8,800 14,658 2,031 2,168 –––––– ––––––– –––––– –––––– Total loans and receivables 98,323 87,428 39,275 41,963 ===== ====== ===== =====

(a) Credit risk The Group’s primary exposure to credit risk arises through its trade receivables.

The Group’s trading terms with its customers are mainly on credit. The credit period is generally for a period of 14 to 120 days. Other credit terms are assessed and approved on a case-by-case basis. Each customer has a maximum credit limit. The Group seeks to maintain strict control over its outstanding receivables and has a credit limit. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. In view of the aforementioned and the fact that the Group’s trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. Trade receivables of certain subsidiaries bear interest ranging from 0.75% to 9% (2011: 0.75% to 9%) per annum.

(b) Trade receivables

Included in trade receivables of the Group is an amount of RM935,216 (2011: RM540,091) due from a company in which certain directors of the Group and the Company have substantial financial interest. The amount is unsecured, non-interest bearing and has no fixed term of repayment.

88



- 65 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 21. Trade and other receivables (contd.) (c) Other receivables Included in sundry receivables of the Group and the Company is an amount of RM33,889 (2011: RM33,889) representing shortfall in profit guarantee

receivable from certain shareholders of the Company. The amount is receivable in accordance with the provisions of the Profit Guarantee and Stakeholders’ Agreement entered into between the Company, the guarantors and HSBC (M) Trustee Berhad arising from the listing of the Company’s shares on the Bursa Malaysia Securities. This amount has been fully impaired during the financial year.

An amount of RM956,674 (2011: RM612,457) due from companies in which

certain directors of the Group and the Company have substantial financial interest is included in sundry receivables of the Group. The amount is unsecured, non-interest bearing and has no fixed term of repayment.

Further details on related party transactions are disclosed in Note 33.

Ageing analysis of trade receivables

The ageing analysis of the Company’s trade receivables is as follows: Group Company

2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Neither past due nor impaired 28,779 7,964 - - 1 to 30 days past due not impaired 11,458 8,046 - - 31 to 60 days past due not impaired 6,848 5,278 - - 61 to 90 days past due not impaired 1,208 8,210 - - More than 91 days past due not impaired 11,105 25,225 - -

30,619 46,759 - - ––––––– –––––– ––––– ––––– 59,398 54,723 - - Impaired 11,171 11,345 720 720 –––––– –––––– ––––– ––––– 70,569 66,068 720 720 ===== ===== ==== ====


89


- 66 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 21. Trade and other receivables (contd.)

Trade receivables that are neither past due nor impaired Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group and the Company. None of the Group’s and the Company’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year. Receivables that are past due but not impaired The Group and the Company have trade receivables amounting to RM30,619,717 (2011: RM46,758,549) and RM Nil (2011: RM Nil) respectively, that are past due at the reporting date but not impaired. At the reporting date, trade receivables arising from export sales amounting to RM1,702,608 (2011: RM1,738,787) have been arranged to be settled via letters of credit issued by reputable banks in countries where the customers are based. Trade receivables that are impaired The Group’s and Company’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

Group Company Individually impaired Individually impaired 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Trade receivables 11,171 11,345 720 720 Less : Allowance for impairment (10,225) (8,368) (720) (720) –––––– –––––– –––––– –––––– 946 2,977 - - ===== ===== ===== ===== Movement in allowance accounts: Group Company

2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

At 1 January 8,368 6,577 720 720 Charge for the year 2,066 2,450 - - Reversal of impairment (145) - - - Written off (64) (659) - - –––––– ––––– ––––– ––––– At 31 December 10,225 8,368 720 720 ===== ===== ===== ====

90



- 67 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 21. Trade and other receivables (contd.)

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements. Other receivables that are impaired At the reporting date, the Group and the Company have provided an allowance of RM4,853,946 (2011: RM4,785,189) and RM649,069 (2011: RM528,889) respectively, for impairment of the amount due from other receivables with a nominal amount of RM4,853,946 (2011: RM4,780,329) and RM370,180 (2011: RM528,889) respectively. There are movement in this allowance account in the Group and the Company for the financial year ended 31 January 2012, where RM370,180 (2011: RM4,161,509) and RM370,180 (2011: RM528,889) relates to charge for impairment loss, and RM46,563 (2011: RM2,604,860) and RM Nil (2011: RM Nil) relates to the write-off of impairment loss, respectively.

22. Due from customers on contracts Group 2012 2011 RM’000 RM’000

Construction contract costs incurred to date 86,545 14,581 Attributable profits 8,904 863 –––––– –––––– 95,449 15,444 Less: Progress billings (83,026) (10,557) –––––– –––––– Due from customers on contracts 12,423 4,887 ===== ===== Retention sums on construction contract included

in trade receivables (Note 21) - 1,056 ===== =====

23. Cash and cash equivalents Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Cash on hand and at bank 7,775 12,714 1,969 2,108 Deposit with a licenced bank 693 1,682 - - Investment in money market fund 332 262 62 60 ––––– –––––– ––––– ––––– Cash and bank balances 8,800 14,658 2,031 2,168 ==== ===== ==== ====


91


- 68 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 23. Cash and cash equivalents (contd.) Other information on financial risks of cash and cash equivalents are disclosed in Note

36. For the purpose of the cash flow statements, cash and cash equivalents comprise the following as at the reporting date:

Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Cash and bank balances 8,800 14,658 2,031 2,168 Bank overdrafts (Note 27) (7,114) (1,677) - - –––––– ––––– ––––– ––––– Total cash and cash equivalents 1,686 12,981 2,031 2,168 ===== ==== ==== ==== 24. Share capital and share premium

Number of ordinary shares of RM1 each Amount Share Total Share capital share capital (Issued capital (Issued and and fully Share and share fully paid) paid) premium premium ’000 RM’000 RM’000 RM’000 Group/Company At 1 February 2010/2011 and 31 January 2011/2012 57,962 57,962 24,994 82,956 ===== ===== ===== ===== Number of ordinary shares of RM1 Each Amount ’000 ’000 RM’000 RM’000 Authorised share capital At 1 February 2010/2011 and 31 January 2011/2012 100,000 100,000 100,000 100,000 ====== ====== ====== ====== The holders of ordinary shares are entitled to receive dividends as declared from time to

time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

92



- 69 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 25. Other reserves Foreign Revaluation exchange reserve reserve Total RM’000 RM’000 RM’000 Group At 1 February 2011 4,603 15 4,618 Foreign currency translation - (19) (19) ––––– ––––– ––––– At 31 January 2012 4,603 (4) 4,599 ==== ==== ==== At 1 February 2010 4,603 19 4,622 Foreign currency translation - (4) (4) ––––– ––––– ––––– At 31 January 2011 4,603 15 4,618 ==== ==== ==== The nature and purpose of each category of reserve are as follows: (a) Revaluation reserve The revaluation reserve is used to record increases in the fair value of leasehold

land, buildings and quarry reserve. (b) Foreign exchange reserve The foreign exchange reserve is used to record exchange differences arising from

the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group’s net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation.

26. Retained earnings Previously, Malaysian companies adopted the full imputation system. In accordance with

the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the Section 108 balance and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the Section 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.


93


- 70 -

Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 26. Retained earnings (contd.) The Company did not elect for the irrevocable option to disregard the Section 108 balance.

Accordingly, during the transitional period, the Company may utilise the credit in the Section 108 balance locked-in as at 31 December 2007 to distribute cash dividend payments to ordinary shareholdings as defined under the Finance Act 2007.

As at 31 January 2012, the Company has tax exempt profits available for distribution of approximately RM8 million (2011: RM8 million) subject to agreement of the Inland Revenue Board.

The Company has sufficient tax credit under Section 108 of the Income Tax Act, 1967 to

frank the payment of dividends amounting to RM30 million (2011: RM30 million) out of its retained earnings as at 31 January 2012.

27. Borrowings Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Short term borrowings Secured: Bank overdrafts 7,114 1,677 - - Bankers’ acceptance 51,711 7,122 - - Term loans 90 88 - - Hire purchase liabilities (Note 28) 1,210 395 312 170 Revolving credit 10,000 950 - - –––––– –––––– –––––– –––––– 70,125 10,232 312 170 –––––– –––––– –––––– –––––– Unsecured: Bankers’ acceptances 2,100 26,467 - - Share margin facility 2,101 2,579 2,101 2,580 –––––– –––––– –––––– –––––– 4,201 29,046 - - –––––– –––––– –––––– –––––– 74,326 39,278 2,413 2,750 ===== ===== ===== ===== Long term borrowings Secured: Term loans 14,000 14,000 - - Hire purchase liabilities (Note 28) 2,396 1,117 402 369 –––––– –––––– –––––– –––––– 16,396 15,117 402 369 ===== ===== ===== =====

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Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 27. Borrowings (contd.) Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Total borrowings Bank overdrafts (Note 22) 7,114 1,677 - - Term loans 14,090 14,088 - - Hire purchase liabilities (Note 28) 3,606 1,512 714 539 Bankers’ acceptances 53,811 33,589 - - Revolving credit 10,000 950 - - Share margin facility 2,101 2,579 2,101 2,580 –––––– –––––– –––––– –––––– 90,722 54,395 2,815 3,119 ===== ===== ===== ===== Bank overdrafts Bank overdrafts of certain subsidiaries are denominated in RM, bear interest ranging from BLR + 1% to BLR + 1.50% and are secured by a corporate guarantee of the holding company. The bank overdraft of another subsidiary is secured by a floating debenture of RM3 million over the said subsidiary’s assets incorporating a fixed charge on the landed properties of the subsidiary disclosed in Note 14. Hire purchase liabilities Hire purchase liabilities of certain subsidiary is denominated in RM, bear interest ranging from 3.30% to 6.60% per annum and are secured by a corporate guarantee of the Company.

Hire purchase liabilities of other subsidiaries are denominated in RM, bear interest ranging from 3.30% to 6.60% per annum. Bankers’ acceptances Bankers’ acceptances of a certain subsidiary is denominated in RM, bear interest ranging from 3.01% to 7.50% per annum and are secured by a corporate guarantee of the holding company. Bankers’ acceptances of a certain subsidiary is denominated in RM, bear interest ranging from 2.91% to 4.14% per annum and are secured by a fixed and floating charge over the leasehold property of the holding company. Bankers’ acceptance of a certain subsidiary is denominated in RM, with 4.58% interest per annum is unsecured in nature.


95


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Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 27. Borrowings (contd.)

Bankers’ acceptances (contd.) Bankers’ acceptance of a certain subsidiary is denominated in RM, bear interest ranging from 3.29% to 3.66% per annum and are secured by first party and first legal charge over certain landed properties and corporate guarantee. Revolving credit Revolving credit of a subsidiary bears interest of 6.45% per annum and is secured by a corporate guarantee of the holding company. Revolving credit of a subsidiary bears interest of 7.95% per annum and is secured by first party charge for RM10 million over a parcel of vacant land and corporate guarantees from holding company. Term loan at BLR + 1.0% p.a. This loan is secured by second legal charge over two parcels of leasehold lad as disclosed in Note 11 and two corporate guarantees from the holding company and YBhg. Dato’ Tiang Ming Sing. This loan is to be repaid over a period of ten years inclusive of first three years grace period of interest servicing. Other information on financial risks of borrowings are disclosed in Note 25. The overdraft and term loans amounting to RM2,289,414 (2011: RM2,935,654) of a subsidiary is secured by a deed of assignment over certain landed properties of the subsidiary and first and second legal charges to be created over the said properties upon issuance of strata title disclosed in Note 13, 14, and 15.

28. Hire purchase liabilities Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Future minimum lease payments: Not later than 1 year 1,398 477 341 197 Later than 1 year and not later than 2 years 1,374 516 319 236 Later than 2 years and not later than 5 years 1,193 700 98 158 –––––– –––––– –––––– –––––– Total future minimum lease payments 3,965 1,693 758 591 Less: Future finance charges (359) (181) (44) (52) –––––– –––––– –––––– –––––– Present value of hire purchase liabilities 3,606 1,512 714 539 ===== ===== ===== =====

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Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 28. Hire purchase liabilities (contd.) Analysis of present value of hire purchase liabilities: Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Not later than 1 year 1,230 395 312 170 Later than 1 year and not later than 2 years 1,265 458 306 218 Later than 2 years and not later than 5 years 1,131 659 96 151 –––––– –––––– –––––– –––––– 3,626 1,512 714 539 Less: Amount due within 12 months (Note 26) (1,230) (395) (312) (170) –––––– –––––– –––––– –––––– Amount due after 12 months (Note 26) 2,396 1,117 402 369 ===== ===== ===== =====

Other information on financial risks of hire purchase liabilities are disclosed in Note 36. 29. Trade and other payables Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Current Trade payables Third parties 28,760 18,740 - - Deposit - 12 - - Retention sum 2,756 643 - - –––––– –––––– –––––– –––––– 31,516 19,395 - - –––––– –––––– –––––– –––––– Other payables Sundry payables 6,843 4,965 - - Accruals 2,039 1,050 166 779 Deposit - 18 - - Amount due to directors 322 326 - - Amount due to subsidiary company - - 1,295 1,305 Amount due to related company - 839 - - –––––– –––––– –––––– –––––– 9,204 7,198 1,461 2,084 –––––– –––––– –––––– –––––– 40,720 26,593 1,461 2,084 ===== ===== ===== =====

7,0121,870


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Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 29. Trade and other payables (contd.) (a) Trade payables

Trade payables are non-interest bearing and the normal trade credit terms granted

to the Group range from 30 to 120 days.

Included in trade payables of the Group in an amount of RM54,000 (2011: RM342,712) due to companies in which certain directors of the Group and the Company have substantial financial interest. The amount is unsecured, non-interest bearing and has no fixed term of repayment.

(b) Other payables

Included in sundry payables of the Group is an amount of RM439,124 (2011: RM4,405) due to companies in which certain directors of the Group and the Company have substantial financial interest. The amount is unsecured, non-interest bearing and has no fixed term of repayment.

Other information on financial risk of the other payables are disclosed in Note 36.

(a) Amount due to related companies These amounts are unsecured, non-interest bearing and are repayable on demand.

30. Deferred tax (asset)/liabilities Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 At 1 February 5,213 6,088 35 35 Recognised in profit or loss (Note 10) (1,248) (875) 9 - ––––– ––––– ––––– ––––– At 31 January 3,965 5,213 44 35 ==== ==== ==== ==== Presented after appropriate offsetting as follows: Deferred tax assets (236) - - - Deferred tax liabilities 4,201 5,213 44 35 ––––– ––––– ––––– ––––– At 31 January 3,965 5,213 44 35 ==== ==== ==== ====

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30. Deferred tax (asset)/liabilities (contd.) Property, plant and equipment Others Total RM’000 RM’000 RM’000

At 1 February 2011 6,049 35 6,084 Recognised in profit or loss (1,257) 9 (1,248) –––––– –––––– –––––– At 31 January 2012 4,792 44 4,836 ===== ===== =====

` At 1 February 2010 6,053 35 6,088 Recognised in profit or loss (4) - (4) –––––– –––––– –––––– At 31 January 2011 6,049 35 6,084 ===== ===== =====

Deferred tax liabilities of the Group Unutilised business losses and unabsorbed capital allowances RM’000

At 1 February 2011 (871) Recognised in profit or loss - –––– At 31 January 2012 (871) ===

At 1 February 2010 - Recognised in profit or loss (871) –––– At 31 January 2011 (871) ===

Deferred tax liabilities of the Company Property, plant and equipment RM’000

At 1 February 2011 35 Recognised in profit or loss 9 –––– At 31 January 2012 44 ===

At 1 February 2010 35 Recognised in profit or loss - –––– At 31 January 2011 35 ===


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Company No: 378282-D Quality Concrete Holdings Berhad Notes to the Financial Statements - 31 January 2012 30. Deferred tax (asset)/liabilities (contd.) Deferred tax assets have not been recognised in respect of the following items: Group 2012 2011 RM’000 RM’000 Unutilised tax losses 2,319 423 Unabsorbed capital allowances 872 22 ––––– ––––– 3,191 445 ==== ==== As at 31 January 2012, the deferred tax assets are not recognised as it is not probable that

future taxable profit will be available against which the unutilised tax losses and unabsorbed capital allowances can be utilised. The availability of the unutilised tax losses and unabsorbed capital allowances for offsetting against future profits of the Group is subject to the provisions of the Income Tax Act, 1967.

31. Operating lease arrangements The Group as lessee The Group has entered into non-cancellable operating lease arrangements for the use of

buildings. These leases have an average life of 3 years with no renewal or purchase option included in the contracts. The contracts include fixed rentals for an average of 3 years. There are no restrictions placed upon by the Group by entering into these leases.

The future aggregate minimum lease payments under non-cancellable operating leases

contracted for as at the reporting date but not recognised as liabilities and the total of future aggregate minimum sublease receipts expected to be received under non-cancellable subleases, are as follows:

Group and Company 2012 2011 RM’000 RM’000 Not later than 1 year 68 68 Later than 1 year and not later than 5 years 194 194 –––– –––– 262 262 === === Future minimum sublease receipts - - === === The lease payments recognised in profit and loss during the financial year are disclosed

in Note 7.

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32. Contingent liabilities Company 2012 2011 RM’000 RM’000 (a) Corporate guarantees in respect of banking and credit facilities granted to subsidiaries 108,087 54,108 ====== =====

` (b) A subsidiary of the Company was awarded a contract to construct a school which

it later sub-contracted to another party with progress claims payable on a ‘back-to-back’ basis. Following the delay in the completion of the project, there are potential liquidated ascertained damages (“LAD”) in the region of RM2 million which may be imposed by the client. In the event the LAD charges are imposed on the subsidiary, the subsidiary will be able to pass on the claims to its sub-contractor in view of the ‘back-to-back’ arrangements.

33. Related party disclosures

(i) In addition to the transactions detailed elsewhere in the financial statements, the

Group and the Company had the following transactions with related parties during the financial year, in the normal course of business and transacted on normal commercial terms:

Company 2012 2011 RM’000 RM’000 (a) Transactions with subsidiaries:

Income

Rental income 276 276 ==== ====

Information regarding outstanding balances with subsidiaries as at 31

January 2012 is disclosed in Note 21.


101


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Notes to the Financial Statements - 31 January 2012 33. Related party disclosures

(i) In addition to the transactions detailed elsewhere in the financial statements,

the Group and the Company had the following transactions with related parties during the financial year, in the normal course of business and transacted on normal commercial terms: (contd.)

(b) Transactions with companies in which certain Directors of the Company

and/or persons connected to them have a substantial financial interest and/or are directors:

Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Income

Sales of pipes/fittings 1 - - - Sales of concrete, cement, steel bars, stones and R.C. piles 436 119 - - Sales of sawn timber 59 17 - -

==== ==== ==== ==== ` Expenditure

Rental paid 76 70 70 70 Purchase of sawn timber 4,131 5,158 - - ==== ==== ==== ====

(c) Transaction with companies in which certain directors of subsidiaries and/or persons connected to them have a substantial financial interest and/or are directors:

Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Income Sales of pipes/fittings 170 1,900 - - Sales of sawn timber - 87 - - ==== ==== ==== ==== Expenditure Purchase of spare parts - 20 - - ==== ==== ==== ====

76

102



- 79 -



Notes to the Financial Statements - 31 January 2012 33. Related party disclosures

(ii) Compensation key management personnel The remuneration of directors during the year was as follows: Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Fees 662 443 62 30 Other emoluments 1,468 1,346 1,003 892 –––––– –––––– –––––– –––––– Total (Note 9) 2,130 1,789 1,065 922 ===== ===== ===== ===== 34. Capital commitment Capital expenditure as at the reporting date is as follows: Group 2012 2011 RM’000 RM’000

Capital expenditure Approved and contracted for: Investment properties 3,195,350 - ======= ====== 35. Fair value of financial instruments

(a) Determination of fair value

The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

(i) Cash and bank deposits, other receivables and other payables

The carrying amounts of these balances approximate their fair values due to the relatively short term nature of these financial instruments.

(ii) Trade receivables and trade payables

The carrying amounts of trade receivables and trade payables approximate their fair values because they are subject to normal trade credit terms.


103


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35. Fair value of financial instruments (contd.)

(a) Determination of fair value (contd.)

(iii) Amounts due from/to related companies

The carrying values of amounts due from/to related companies in current assets and current liabilities approximate their fair values due to the short term nature. No disclosure of fair value is made for non-current amounts due from/to related companies as it is not practicable to determine their fair values with sufficient reliability since these balances have no fixed terms of repayment.

(iv) Investment securities

The fair values of quoted investment securities are determined by reference to their stock exchange quoted closing bid price at the end of the reporting period.

(v) Bank borrowings and term loan

The carrying values of bank borrowings and term loan approximate their fair values as they bear interest rates which approximate the current incremental borrowing rates for similar types of lending and borrowing arrangements.

(b) Fair value hierarchy

The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: Level 1 - Quoted prices in active markets for identical assets or liabilities, Level 2 - Inputs other than quoted prices included in Level 1 that are

observable for the asset or liability, either directly or indirectly; and

Level 3 - Inputs for the asset or liability that are not based on observable

market data (unobservable inputs).

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35. Fair value of financial instruments (contd.)

(b) Fair value hierarchy (contd.)

The following table shows an analysis of financial instruments carried at fair values by level of fair value hierarchy: Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000 Group 2012 Financial assets Equity instruments 4,989 - - 4,989 ===== ===== ===== ===== Company 2012 Financial assets Equity instruments 4,954 - - 4,954 ===== ===== ===== ===== Comparative figures have not been presented for 31 January 2011 by virtue of paragraph 44G of FRS 7. There have been no transfers between levels during the financial year.

36. Financial risk management objectives and policies

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The Group’s and the Company’s principal financial instruments comprise bank overdrafts, borrowings, cash and short-term deposits. The main purpose of these financial instruments is to manage the Group’s funding and liquidity requirements. The Group and the Company has other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

The Board of Directors with the assistance of professionals and advisers as Internal Auditors, Management Executive Committee and Risk Management Committee has the overall responsibility for the establishment and oversight of the Group’s risk management framework. The Management Executive Committee, represented by the Group Managing Director, Group Executive Director, Executive Director and Chief Financial Officer are the Top Management responsible for the implementation of decisions and policies formulated by the Board. The Risk Management Committee comprising Executive Directors and senior management staffs who are responsible under their respective scope of work for the day-to-day operations carries out risks identification, evaluate, monitor and formulate mitigation strategies on risks identified and periodically review risk management processes and policies. The audit committee provides independent oversight to the effectiveness of the risk management process.


105


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36. Financial risk management objectives and policies (contd.)

The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk. The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objective, policies and processes for the management of these risks.

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. At the reporting date, the Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivables balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. It is the Group’s policy that contractual deposits are collected and scheduled progress payments are received from the buyers when due. Titles to properties are only transferred upon full settlement. Management does not expect any counterparties to fail to meet their obligations.

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position. There was no significant concentration of credit risk with any entity.

Information regarding financial assets that are either past due or impaired and aging analysis is disclosed on Note 21. Management believes that no additional credit risk beyond that provided for is inherent in the Group’s trade and other receivables.

(b) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group adopts a prudent approach to managing its liquidity risk. The Group always maintains sufficient cash and cash equivalents, and has available funding through a diverse source of committed and uncommitted credit facilities from various banks.

106



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36. Financial risk management objectives and policies (contd.) (b) Liquidity risk (contd.)

Analysis of financial instruments by remaining contractual maturities

The table below analyses the maturity profile of the Group’s and the Company’s financial liabilities based on contractual undiscounted repayment obligations.

On demand or within One to Over one year five years five years Total RM’000 RM’000 RM’000 RM’000 2012 Group Financial liabilities Trade and other payables 40,720 - - 40,720 Borrowings 75,917 11,235 10,159 97,311

––––––– –––––– –––––– ––––––– Total undiscounted financial liabilities 116,637 11,235 10,159 138,031 ====== ===== ===== ====== Company Financial liabilities Other payables 1,461 - - 1,461 Hire purchase payables 341 417 - 758 Borrowings 2,101 - - 2,101

–––––– –––––– ––––– –––––– Total undiscounted financial liabilities 3,903 417 - 4,320 ===== ===== ==== =====


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36. Financial risk management objectives and policies (contd.) (b) Liquidity risk (contd.)

Analysis of financial instruments by remaining contractual maturities (contd.)

On demand or within One to Over one year five years five years Total RM’000 RM’000 RM’000 RM’000 2011 Group Financial liabilities Trade and other payables 26,593 - - 26,593 Borrowings 39,360 15,235 - 54,595

–––––– –––––– ––––– –––––– Total undiscounted financial liabilities 65,953 15,235 - 81,188 ===== ===== ==== ===== Company Financial liabilities Other payables 2,084 - - 2,084 Hire purchase payables 197 394 - 591 Borrowings 2,580 - - 2,580

––––– –––– ––––– –––––– Total undiscounted financial liabilities 4,861 394 - 5,255 ==== ==== ==== =====

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Notes to the Financial Statements - 31 January 2012 36. Financial risk management objectives and policies (contd.)

(c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates. The Group’s and the Company’s exposure to market risk for changes in interest rates arise primarily from their fixed/treasury deposits and loans and bank borrowings. The Group and the Company’s fixed/treasury deposits and borrowings at floating rates are contractually re-priced at intervals of less than 6 months (2011: less than 6 months) from the reporting date. Sensitivity analysis for interest rate risk At the reporting date, it is estimated that a hundred basis points increase in interest rate, with all other variables held constant, would decrease the Group’s profit net of tax by approximately RM164,039 (2011: RM115,973), arising mainly as a result of higher interest expense on net floating borrowing position. A decrease in interest rate would have had the equal but opposite effect on the aforesaid amount, on the basis that all other variables remain constant.

(d) Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily RM. The foreign currencies in which these transactions are denominated are mainly US Dollars (“USD”). The Group’s trade receivable balances at the reporting date have similar exposures. The Group is using forward currency contracts to eliminate the currency exposures on any individual transactions for which payment is anticipated more than one month after the Company has entered into a firm commitment for a sale or purchase. The forward currency contracts must be in the same currency as the hedged item. It is the Group’s policy not to enter into forward contracts until a firm commitment is in place. It is the Group’s policy to negotiate the terms of the hedge derivatives to match the terms of the hedged item to maximise hedge effectiveness.


109


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Notes to the Financial Statements - 31 January 2012 36. Financial risk management objectives and policies (contd.)

(d) Foreign currency risk (contd.)

The Group is also exposed to currency translation risk arising from its net investments in foreign operations Brunei Darussalam (“Brunei”). The Group’s net investments in Brunei are not hedged as currency positions in Brunei Dollars is considered to be long-term in nature.

Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible 10% strengthening of the USD exchange rates against the functional currency of the Group, with all other variables held constant.

Group RM’000

United States Dollar 190 ====

A 10% weakening of the above foreign currencies against the underlying functional currencies at the reporting date would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

(e) Market price risk Market price risk is the risk that the fair value or future cash flows of the

Group’s financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates).

The Group is exposed to market price risk and the risk of impairment in the value of investments held. The Company manages the risk of impairment by evaluation of investment opportunities, continuously monitoring the performance of investments held and assessing market risk relevant to which the investments operate.

Sensitivity analysis for equity price risk

At the reporting date, if prices for equity securities increase by 10% with all other variables being held constant, the profit net of tax will be RM498,910 higher as a result of higher fair value gain on fair value through profit or loss investments in equity instruments. A 10% decrease in the underlying equity prices would have had the equal but opposite effect to the amounts shown above.

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Notes to the Financial Statements - 31 January 2012 37. Capital management The primary objective of the Group’s and the Company’s capital management is to ensure

that it maintains healthy capital ratios to support its business and maximise shareholder value. No changes were made in the objective, policies and processes during the years ended 31 January 2012 and 2011.

The Group reviews its capital structure and makes adjustments to reflect economic

conditions, business strategies and future commitments on a continuous basis. The Group monitors capital using a gearing ratio. The gearing ratio is calculated as loans

and borrowings divided by equity attributable to owners of the parent.

The Group and the Company are in compliance with all externally imposed capital requirements in respect of certain external borrowings for the financial years ended 31 January 2012 and 2011.

Group Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Loans and borrowings 27 90,722 54,395 2,815 3,119 Trade and other payables 29 40,720 26,593 1,461 2,084 Less: Cash and bank balances 23 (8,800) (14,658) (2,031) (2,168) ––––––– ––––––– ––––––– ––––––– Net debt 122,642 66,330 2,245 3,035 ––––––– ––––––– ––––––– ––––––– Equity attributable to owners of the parent 149,617 151,597 126,013 127,397 ––––––– ––––––– ––––––– ––––––– Total capital 149,617 151,597 126,013 127,397 ––––––– ––––––– ––––––– ––––––– Capital and net debt 272,259 217,927 128,258 130,432 ====== ====== ====== ====== Gearing ratio 45% 30% 2% 2% ====== ====== ====== =====


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Notes to the Financial Statements - 31 January 2012 38. Segment information For management purposes, the Group is organised into business based on their

strategic business units, and has five reportable operating segments as follows:

(i) Property development - sale of properties; (ii) Manufacturing and premixing - manufacture and sale of ready-mixed concrete,

concrete products, polyethylene pipes, woven polypropylene bags and polyethylene liners, sawmilling and manufacture of downstream timber products;

(iii) Trading - general trading; (iv) Quarry operations - extracting and sale of aggregates; and (v) Investment and management services - investment holding and advisory.

Other business segments include plantation, none of which are of a sufficient size to be reported separately. Except as indicated above, no operating segments has been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the

purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments.

Segment results, assets and liabilities include items directly attributable to a segment

as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, liabilities, income and expenses.

Transfer prices between business segments are on an arm’s length basis in a manner

similar to transactions with third parties. Segment revenue, expenses and results include transfer between business segments. These transfers are eliminated on consolidation.

112


- 89

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114



- 91 -



Notes to the Financial Statements - 31 January 2012 39. Authorisation of financial statements for issue

The financial statements for the year ended 31 January 2012 were authorised for issue in accordance with a resolution of the directors on .

24 May 2012.


115

- 92 -



Supplementary Information For the financial year ended 31 January 2012 40. Supplementary information - breakdown of retained profits into realised and

unrealised

The breakdown of the retained profits of the Group and of the Company as at 31 January 2012 into realised and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2011 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Group Company RM’000 RM’000 Total retained earnings/ (accumulated losses) of the Company and its subsidiaries - Unrealised 3,965 61 - Realised 58,746 42,996 ––––––– ––––––– 62,711 43,057 Less: Consolidation adjustment (1,380) - ––––––– ––––––– Retained earnings as per financial statements 61,331 43,057 ====== ======

SUppLEmENTarY INfOrmaTION For the financial year ended 31 January 2012

116


117116


117

Authorised Share Capital : RM100,000,000 Issued and Paid-up Share Capital : RM57,962,000 comprising 57,962,000 Ordinary Shares of RM1.00 eachClass of Shares : Ordinary Shares of RM1.00 each Voting Rights : One Vote Per Ordinary Share Distribution Schedule

Size of Shareholdings No. of Holders % No. of Shares %

less than 100 11 0.53 500 0.00100 to 1,000 1,107 53.50 1,091,304 1.881,001 to 10,000 807 39.00 2,816,881 4.8610,001 to 100,000 116 5.61 3,491,116 6.02100,001 to less than 5% of issued shares 24 1.16 20,035,299 34.575% and above of issued shares 4 0.19 30,526,900 52.67

2,069 100.00 57,962,000 100.00 Substantial Shareholders as at 10 May 2012 According to the Register of substantial shareholders, the substantial shareholders of the Company as at 10 May 2012 are as follows:

Name of Substantial Shareholders Direct % Deemed interest %

1. HSBC Nominees (Asing) Sdn. Bhd. HSBCIT (S) Ltd for Entrequest Holdings Limited 10,500,000 18.12 - -

2. Cahaya Besi (Sarawak) Sdn. Bhd. 9,329,900 16.10 - -

3. Datin Ha Ai Ing 7,001,000 12.08 11,008,000 18.99

4. Dato Tiang Ming Sing 8,483,000 14.64 9,526,000 16.43

5. Wee Song Ching 3,548,300 6.12 - -

List of Directors’ Interest

According to the Register of Directors’ Shareholdings, the interest of Directors in the ordinary shares of the Company as at 10 May 2012 are as follows:

Direct % Deemed interest %

1. Tiang Ming Sing 8,483,000 14.64 9,526,000 16.43 2. Tiang Ching Kok - - 18,009,000 31.073. Edmund Goh Chze Jin - - - - 4. Robin Lo Bing 272,405 0.47 - - 5. Henry Law Kah Kwong - - - - 6 David Wong Siew Chow - - - -

aNaLYSIS Of SHarEHOLDINGSas at 10 may 2012

116


117116


117

THIrTY LarGEST SHarEHOLErSas at 10 may 2012

No. of Shares % of shareholdings

1. HSBC Nominees (Asing) Sdn. Bhd. HSBCIT (S) Ltd for Entrequest Holdings Limited 10,500,000 18.12 2. Kenanga Nominees (Tempatan) Sdn. Bhd. Pledged securities account for Cahaya Besi (Sarawak) Sdn. Bhd. 7,325,900 12.64 3. Ha Ai Ing 7,001,000 12.08 4. RHB Capital Nominees (Tempatan) Sdn. Bhd. Pledged securities account for Tiang Ming Sing 5,700,000 9.83 5. HDM Nominees (Tempatan) Sdn. Bhd. Pledged securities account for Yesgains Sdn. Bhd. 2,652,000 4.58 6. Maybank Nominees (Tempatan) Sdn. Bhd. Pledged securities account for Wee Song Ching 2,514,700 4.34 7. Cahaya Besi (Sarawak) Sdn. Bhd. 2,004,000 3.46 8. HLB Nominees (Tempatan) Sdn. Bhd. Pledged securities account for Tiang Chiin Yew 2,000,000 3.45 9. CIMSEC Nominees (Tempatan) Sdn. Bhd. CIMB Bank for Tiang Ming Sing 1,918,000 3.31 10. HDM Nominees (Tempatan) Sdn. Bhd. Pledged securities account for Wangsa Bumimas Timber Sdn. Bhd. 1,305,000 2.25 11. Datuk Hajjah Raziah @ Rodiah Binti Mahmud 1,172,000 2.02 12. Amsec Nominees (Tempatan) Sdn. Bhd. Pledged securities account for Wee Song Ching 1,033,600 1.78 13. Affin Nominees (Tempatan) Sdn. Bhd. Pledged securities account for Tiang Ming Sing 865,000 1.49 14. HDM Nominees (Tempatan) Sdn. Bhd. Pledged securities account for Law Wee 636,100 1.10 15. Encorp Properties Sdn Bhd 567,594 0.98 16. Kenanga Nominees (Tempatan) Sdn. Bhd. Pledged securities account for Tiang Chiin Ling 525,000 0.91 17. HLB Nominees (Tempatan) Sdn. Bhd. Pledged securities account for Lo Ga Lung 521,100 0.90 18. Datuk Mazelan Bin Bugo 390,000 0.67 19. Public Nominees (Tempatan) Sdn. Bhd. Pledged securities account for Hii Sing Wo 315,000 0.54 20. Robin Lo Bing 272,405 0.47 21. Law Wee 254,000 0.44 22. HLB Nominees (Tempatan) Sdn. Bhd. Pledged securities account for Hwang Ai Mor 206,200 0.36 23. Wong You Kee 200,000 0.35 24. CIMSEC Nominees (Tempatan) Sdn. Bhd. Pledged securities account for Abdul Aziz Bin Husain 156,000 0.27 25. TA Nominees (Tempatan) Sdn. Bhd. Pledged securities account for Law Kiing Kiu 154,200 0.27 26. Chieng Ngee Ong 136,400 0.24 27. Yong Lin Lin 122,000 0.21 28. Ngu Kee Tiong 115,000 0.20 29. Abdul Hamed Bin Sepawi 100,000 0.17 30. Kenanga Nominees (Tempatan) Sdn. Bhd. Pledged securities account for Ting Kuok Ing 100,000 0.17

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119118


119

LIST Of prOpErTIESas at 31st January 2012

Address Brief Description Existing use Tenure & Age of Net Book Date of last Expiry Date Buildings Value (RM) revaluation/ acquisition Lot 27, Blk 4 Industrial land & Factory Leasehold 4 & 12 9,703,358 Land acquired on 24.4.1997.Muara Tebas factory buildings of 2069 Land lease renewedLand District. approx. 6.0620 on 05.11.2009. Building hectares completed on 26.7.2000 2nd building completed in 2008

Lot 706, Block 7, Industrial Land with Factory 2054 15 23,445,487 Land acquired on 2.4.1997MTLD, Sejingkat factory buildings of & staff Buildings completed onIndustrial Park, approx. 6.980 quarter December 1997 New93050 Kuching hectares extension completed in 2002 Land & buildings revalued on 28.10.1999 Lot 1355, Blk 3 Industrial Zone Site Leasehold 11 & 20 2,554,907 Land acquired onMiri Concession Land 1.4081 workshop & 2047 20.10.1997. BuildingLand District hectares laboratory completed in 1990 & 1999

Lot 511 & 512, Mukim Agricultural Land of Vacant Freehold - 1,734,571 Land acquired inPengkalan Raja, 3.66 hectares 2012Pontian District, Johor. Lot 602, Blk 20 Kemena Plant office, laboratory, Office, Leasehold 9 1,115,052 Land acquired onLand District Kidurong cement store & worker laboratory, 2067 23.07.2001.Industrial Area, Bintulu quarter store & worker Building completed in 2002. approx. 1.2142 hectares quarter Worker quarter extension completed in 2009.

Industrial Lot#103, Industrial land Vacant Leasehold - 633,496 Land acquired in 1997Tanjung Manis of approx. 1.6637 2051Timber processing zone hectares Lot 368, Blk 53, Mukah Industrial land Office, Leasehold 7 405,637 Land acquired onLand District, Mukah of approx. 1.32 acre laboratory, 2063 20.01.2003. Building store & workers’ completed in 2009 quarter Lot 8024-8029, Industrial land Vacant Leasehold - 1,116,255 Land acquired in 20088083-8084, Blk 5, of approx. 7,315 60 yearsKBLD D.Senadin, sq. meter from title Miri issue M3-324, Mixed Zone Land of Vacant land Leasehold - 86,060 Land acquiredSeniawan Sbrang, Bau approx. 2.934 hectares 2034 on 13.7.2000 Lot 60, Jalan Ting Lik Plant office, laboratory Plant office, - 10 4,747 Building completed in Kwong, Sibu & cement store store & 2000 & 2004 laboratory No. 8, Level 10 1 unit Condominium Staff usage Leasehold 12 1 Building acquiredChonglin Plaza, of approx. 1,226 sq. 2925 on 9.12.1999Kuching feet 40,799,571

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119118


119

NOTICE Of aNNUaL GENEraL mEETING

Resolution 1

Resolution 2Resolution 3

Resolution 4

Resolution 5

Resolution 6

ORDINARY BUSINESS

1. Adoption of Financial Statements

To receive the Audited Financial Statements and reports of Directors and Auditors for the financial year ended 31 January 2012.

2. Re-Election of Directors

In accordance with Article 75 of the Company’s Articles of Association, the following Directors retire from the Board and being eligible, offer themselves for re-election:

Dato Tiang Ming Sing Edmund Goh Chze Jin

3. Approval of Directors’ Fee

To approve Directors’ fees in respect of the financial year ended 31 January 2012.

4. Re-Appointment of Auditors

To re-appoint Messrs. Ernst & Young as Auditors and to authorise the Directors to fix their remuneration.

SPECIAL BUSINESS

To consider and, if thought fit, to pass the following as ordinary resolutions:

5. Authority to issue Shares Pursuant to Section 132D of the Companies Act, 1965

“That subject to Section 132D of the Companies Act, 1965 and approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, at any time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this Resolution does not exceed ten per centum (10%) of the issued and paid-up share capital of the Company for the time being and the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad; AND THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

NOTICE IS HEREBY GIVEN that the Sixteenth Annual General Meeting of QUALITY CONCRETE HOLDINGS BERHAD will be held at Room 209, 2nd Floor, Wisma Bukit Mata Kuching, Jalan Tunku Abdul Rahman, 93100 Kuching, Sarawak, on Friday, 6 July 2012 at 10.30 a.m. for the following purposes :-

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121120


121


Resolution 7

6. Proposed Renewal of Shareholders’ Mandate For Recurrent Related Party Transaction Of A Revenue Or Trading Nature

“That subject to the Companies Act, 1965, the Memorandum and Articles of Association of the Company and the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company and its subsidiaries to enter into any of the category of recurrent transactions of a revenue or trading nature as set out in Paragraph 2.2 of the Company’s Circular to Shareholders dated 14 June 2012 with the related parties mentioned therein which are necessary for Quality Concrete Holdings Berhad Group’s day-to-day operations subject to the following:-

a) the transactions are in the ordinary course of business and are on normal commercial terms which are not more favourable to the related parties than those available to the public and on terms not to the detriment of the minority shareholders; and

b) disclosure is made in the annual report of the breakdown of the aggregate value of transactions conducted pursuant to the Shareholders’ Mandate during the financial year based on the following information:

i) The types of recurrent related party transactions made; and ii) The names of the related parties involved in each type of the recurrent related party

transactions made and their relationship with the Company.

AND THAT such approval shall continue to be in force until:-

a) the conclusion of the next Annual General Meeting (“AGM”) of the Company following the forthcoming AGM at which such Proposed Renewal of Shareholders’ Mandate was passed, at which time it will lapse, unless by a resolution passed at an AGM whereby the authority is renewed;

b) the expiration of the period within which the next AGM of the Company subsequent to the date it is required to be held pursuant to the provisions of the Act; or

c) revoked or varied by resolution passed by the shareholders in an AGM or Extraordinary General Meeting,

whichever is earlier;

And the Directors and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) to give effect to the transactions contemplated and/or authorised by this resolution.”

7. To transact any other business for which due notice shall have been given in accordance with the Companies Act, 1965 and the Articles of the Company.

By Order of the Board,

Yeo Puay HuangPaul Chiam Tau KeenCompany Secretary

Dated : 14 June 2012

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Explanatory Notes to Special Business

a) Ordinary Resolution 6 - Authority to allot shares pursuant to Section 132D of the Companies Act, 1965.

The Ordinary Resolution proposed under Resolution 6 of the Agenda is a renewal of the General Mandate for the Directors to issue and allot shares pursuant to Section 132D of the Companies Act, 1965.

This resolution will give authority to the Directors of the Company, from the date of the above Annual General Meeting, to issue and allot shares in the Company up to and not exceeding in total ten per cent (10%) of the issued and paid-up share capital of the Company for the time being, for such purposes as they consider would be in the interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company. As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the Fifteenth Annual General Meeting held on 8 July 2011 and which will lapse at the conclusion of the Sixteenth Annual General meeting to be held on 6 July 2012.

The General Mandate sought will enable the Directors of the Company to issue and allot shares, including but not limited to further placing of shares for purposes of funding investments(s), working capital and/or acquisitions.

b) Proposed General Mandate for Recurrent Related Party Transactions

For further information on Ordinary Resolutions No. 7, please refer to the Circular to Shareholders dated 14 June 2012.

Notes :

1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 29 June 2012 (“General Meeting Record of Depositors”) shall be eligible to attend the Meeting.

2. A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his/her place. A proxy need not be a member of the Company. Where a holder appoints two or more proxies, he/she shall specify the proportion of his/her shareholdings to be represented by each proxy.

3. A corporation which is a member may by resolution of its directors authorise such person as it thinks fit to act as its representative at the meeting pursuant to Section 147 of the Companies Act, 1965.

4. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his/her attorney, and the person so appointed may attend and vote at the meeting at which the appointer is entitled to vote.

5. The instrument appointing a proxy or representative must be deposited at the registered office, Room 209, 2nd Floor, Wisma Bukit Mata Kuching, Jalan Tunku Abdul Rahman, 93100 Kuching, not less than forty-eight (48) hours before the time for holding the meeting.

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123

1. Directors standing for re-election

Pursuant to Paragraph 7.26 of the Main Market Listing Requirements, the Directors who are standing for re-election at the Fifteenth Annual General Meeting of the Company are as follows:

• Dato Tiang Ming Sing• Edmund Goh Chze Jin

2. Details of attendance of Directors at Board Meetings

Please refer to page 16 for details

3. Place, date and hour of Annual General Meeting

Room 209, 2nd Floor, Wisma Bukit Mata Kuching, Jalan Tunku Abdul Rahman, 93100 Kuching, Sarawak on Friday, 6 July 2012 at 10.30 a.m.

4. Further details of Directors seeking re-election at the Fifteenth Annual General Meeting can be found in pages 7 to 8 of the Annual Report.

STaTEmENT aCCOmpaNYING NOTICE Of aGm

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123

I/We IC No. / Company No.

of

being a member/members of QUALITY CONCRETE HOLDINGS BERHAD hereby appoint IC No.

of

or failing him/her, the Chairman of the meeting as my/our proxy/proxies to vote for me/us on my/our behalf, at the Annual General Meeting of the Company to be held at Room 209, 2nd Floor, Wisma Bukit Mata Kuching, Jalan Tunku Abdul Rahman, 93100 Kuching, Sarawak, on Friday, 6 July 2012 at 10.30 a.m. for the following purposes:-

(Please indicate with an “X” in the appropriate spaces above how you wish your votes to be cast. If you do not indicate how you wish your proxy to vote on any resolution, the proxy shall vote as he thinks fit, or at his discretion, abstain from voting.)

NO. RESOLUTION FOR AGAINST

1. To receive the Audited Financial Statements and reports of Directors and Auditors for the financial year ended 31 January 2012.

2. To re-elect Dato Tiang Ming Sing who is retiring in accordance with Article 75 of the Articles of Association of the Company and is offering himself for re-election.

3. To re-elect Edmund Goh Chze Jin who is retiring in accordance with Article 75 of the Articles of Association of the Company and is offering himself for re-election.

4. To approve Directors’ fees in respect of the financial year ended 31 January 2012.

5. To re-appoint Messrs. Ernst & Young as Auditors and to authorise the Directors to fix their remuneration.

6. To authorise Directors to allot and issue Shares Pursuant to Section 132D of the Companies Act, 1965.

7. Proposed renewal of shareholders’ mandate for recurrent related party transaction of a revenue or trading nature.

Signed this day of , 2012

Signature / Common Seal of Shareholder

NOTES:1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 29 June 2012 (“General Meeting Record

of Depositors”) shall be eligible to attend the Meeting.

2. A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his/her place. A proxy need not be a member of the Company. Where a holder appoints two or more proxies, he/she shall specify the proportion of his/her shareholdings to be represented by each proxy.

3. A corporation which is a member may by resolution of its directors authorise such person as it thinks fit to act as its representative at the meeting pursuant to Section 147 of the Companies Act, 1965.

4. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his/her attorney, and the person so appointed may attend and vote at the meeting at which the appointer is entitled to vote.

5. The instrument appointing a proxy or representative must be deposited at the registered office, Room 209, 2nd Floor, Wisma Bukit Mata Kuching, Jalan Tunku Abdul Rahman, 93100 Kuching, not less than forty-eight (48) hours before the time for holding the meeting.

(Full Name in Capital Letters)

(Full Name in Capital Letters)

(Full Address in Capital Letters)

(Full Address in Capital Letters)

QUALITY CONCRETE HOLDINGS BERHAD(Company No. 378282-D) Incorporated in Malaysia

No. of Shares Held:

fOrm Of prOXY

QUALITY CONCRETE HOLDINGS BERHAD (Company No. 378282-D)

Incorporated in Malaysia

Room 209, 2nd Floor, Wisma Bukit Mata Kuching,Jalan Tunku Abdul Rahman, 93100 Kuching, Sarawak.Tel: +6082-206600 Fax: +6082-206607

S T A M P

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CONTENTS - Malaysiastock.biz ** Incorporated in Brunei Darussalam 100% Quality Concrete Sdn. Bhd. (091959-D) Manufacture and sale of ready-mixed concrete, sale of concrete products