The Growth Compass · Kompleks Karamunsing Km 2.4, Jalan Tuaran 88300 Kota Kinabalu Sabah, Malaysia...

SURIA CAPITAL HOLDINGS BERHAD96895-W

Lot 8CF 01-02

8th Floor, Block C

Kompleks Karamunsing

Km 2.4, Jalan Tuaran

88300 Kota Kinabalu

Sabah, Malaysia

tel: +6 088 257 788 (4 lines)

fax: +6 088 256 410

website: www.suriagroup.com.my

2007 A N N U A L R E P O R T


(Incorporated in Malaysia)

20

07

AN

NU

AL R

EP

OR

T

The Growth Compass

Growth is an exercise of restraint and aggression.

It is not only about knowing what to do but when

to do it. Bunkering and logistics services are

strategic expansions of SuriaGroup’s port business.

SuriaGroup’s expansion into property development

“The Jesselton Waterfront” at a time when it is

what the market demands are further examples of

calculated aggression, while the port business is an

effort of restraint and organic growth. The Compass,

“the instrument for defining directions”, is clearly

established within SuriaGroup. This strategic

direction, knowledge of market conditions is what

brought the Sapangar Bay Container Port (SBCP),

a new and fully dedicated container operations

port to fruition. As depicted in the cover in

combination with a graphic of the compass, SBCP

will remain to be at the core of SuriaGroup’s

operations. Experience and expertise within the

Group will again combine to influence SuriaGroup’s

future progression.

5-YEAR FINANCIAL HIGHLIGHTS

OUR VISIONTo be one of the respected

leading Malaysian conglomerates

capable of delivering results

beyond expectations in every

business spectrum

OUR MISSIONTo provide top-notch services

and products in a professional

and ethical manner through

synergistic teamwork that creates

great value and returns for our

customers

CONTRACT & ENGINEERINGPORT OPERATIONS & BUNKERING SERVICES PROPERTY & DEVELOPMENT INFORMATION & TECHNOLOGY

2007 2006 2005 2004 2003

Results (RM'000) Revenue 310,243 211,445 161,400 71,952 10,366 Gross profit 107,139 85,250 77,396 33,661 6,124 Profit before taxation 71,472 69,462 62,399 23,457 23,133 Profit for the year 202,533 46,913 40,933 16,366 22,408

Selected Balance Sheet Items (RM'000) Cash and bank balances 83,640 101,706 169,834 113,219 238,776 Property, plant and equipment 579,552 420,304 279,062 154,542 1,254 Gross assets 1,068,507 778,173 686,211 484,474 345,852 Shareholders' funds 626,077 437,969 395,147 359,187 342,821

Financial RatiosCurrent ratio (x) 2.6 2.0 3.3 1.3 112.8 Long-term debt to equity (%) 55.7 54.2 53.8 - - Pre-tax return on average equity (%) 13.4 16.6 16.5 6.7 7.0 Return on average equity (%) 37.7 11.2 10.6 4.7 6.8

Share Information **Earnings per share (sen) 70.9 16.5 14.2 5.8 8.0Net dividend per share (sen) 10.4 3.7 2.9 - - Net assets per share (sen) 221.7 155.0 140.0 126.8 121.0Market price per share (sen) 340.0 93.0 100.0 109.0 127.0

OUR PORTS

SURIA CAPITAL HOLDINGS BERHAD (96895-W)

Kota Kinabalu (Registered Head Office) :Lot 8CF 01-02, 8th Floor, Block C, Kompleks Karamunsing, Km 2.4, Jalan Tuaran, 88300 Kota Kinabalu Sabah, MalaysiaTel : +(60)88-257 788 (4 lines) Fax : +(60)88-256 410 E-mail: [email protected]

Kuala Lumpur (Regional Office) :Suite 10.5, 10th Floor, Menara Great Eastern, No. 303, Jalan Ampang, 50450 Kuala Lumpur, MalaysiaTel : +(60)3-4256 8805 / 8806 Fax : +(60)3-4252 2805

SCHB ENGINEERING SERVICES SDN. BHD. (645642-W)

Lot 8CF 03-04, 8th Floor, Block CKompleks KaramunsingKm 2.4, Jalan Tuaran, 88300 Kota KinabaluSabah, MalaysiaTel : +(60)88-235 143, 236 143, 238 143, 243 143Fax : +(60)88-317 109Email : [email protected]

S.P. SATRIA SDN. BHD. (622494-V)

Lot 9CF 02, 9th Floor, Block CKompleks Karamunsing88300 Kota Kinabalu Sabah, MalaysiaTel : +(60)88-316 696Fax : +(60)88-231 086Email : [email protected]

TRICUBES SURIA SDN. BHD. (634170-T)

Lot 9CF 01, 9th Floor, Block CKompleks KaramunsingKm 2.4, Jalan Tuaran88300 Kota Kinabalu, Sabah, MalaysiaTel : +(60)88-232 988, 249 588, 244 488Fax : +(60)88-234 288Email : [email protected]

S.P. SATRIA LOGISTICS SDN. BHD. (722286-V)

Lot 9CF 02, 9th Floor, Block CKompleks KaramunsingKm 2.4, Jalan Tuaran88300 Kota Kinabalu, Sabah, MalaysiaTel : +(60)88-316 696Fax : +(60)88-223 288Email : [email protected]

SUBSIDIARY COMPANIES

SABAH PORTS SDN. BHD. (583073-H)

SPSB Headquarters & Operation BuildingSapangar Container PortJalan Sapangar, Sapangar BayP. O. Box 203, Pos Mini Indah Permai88450 Kota Kinabalu, Sabah, MalaysiaTel : +(60)88-483 390-399 (10 lines)Fax : +(60)88-489 912-914Email : [email protected]

SURIA BUMIRIA SDN. BHD. (633477-V)

Lot 9CF 03-04, 9th Floor, Block CKompleks KaramunsingKm 2.4, Jalan Tuaran88300 Kota Kinabalu, Sabah, MalaysiaTel : +(60)88-235 787Fax : +(60)88-231 050Email : [email protected]

Sapangar Bay Container PortJalan Sapangar, Sapangar BayPejabat Pos Mini, Indah PermaiP. O. Box 20388450 Kota Kinabalu Sabah, MalaysiaTel : +(60)88-489 904Fax : +(60)88-489 925

Kota Kinabalu PortWisma Pelabuhan, Jalan Tun Fuad Tanjung Lipat, Locked Bag 7588992 Kota KinabaluSabah, MalaysiaTel : +(60)88-538 500Fax : +(60)88-254 089

Sapangar Bay Oil TerminalPejabat Pos Mini Indah PermaiP. O. Box 5788450 Kota KinabaluSabah, MalaysiaTel : +(60)88-411 069Fax : +(60)88-411 130

Sandakan PortWisma Pelabuhan Jalan KaramuntingP. O. Box 136890715 SandakanSabah, MalaysiaTel : +(60)89-612 411Fax : +(60)89-612 975

Tawau PortWisma Pelabuhan Jalan DunlopP. O. Box 33591007 TawauSabah, MalaysiaTel : +(60)89-773 700Fax : +(60)89-761 808

Lahad Datu PortJalan Kastam BaruP. O. Box 6014391111 Lahad DatuSabah, MalaysiaTel : +(60)89-881 244Fax : +(60)89-882 749

Kudat PortP. O. Box 22889058 KudatSabah, MalaysiaTel : +(60)88-611 261Fax : +(60)88-621 320

Kunak PortJalan Kastam BaruP. O. Box 6014391111 Lahad DatuSabah, MalaysiaTel : +(60)89-881 244Fax : +(60)89-882 749

** Note: The comparative figures are restated for post capital restructuring exercise.

C O N T E N T S

Corporate InformationBoard Committees

Board of DirectorsBoard of Directors’ ProfileSenior Management Team

Chairman’s StatementGroup Managing Director’s Review of Operations

Corporate Social ResponsibilityHighlights of Events

Suria in the NewsCorporate Group Structure

ISO Achievement and RecognitionBusiness Policy

Share Price & Volume TradedStatement of Value Added & Distribution

Audit and Risk Management Committee ReportStatement on Internal Control

Statement on Corporate GovernanceResponsibility Statement by Directors

Additional Compliance Information

Financial StatementsShareholders’ Information

List of PropertiesNotice of Annual General Meeting

Statement Accompanying Notice of Annual General MeetingProxy Form

0405

060812

1622

30323435

36383940

4146475152

53120125127129

01-05

06-12

16-22

30-35

36-40

41-52

53-131

EARNINGS PER SHARESen

03 04 05 06 07

8070605040

2030

100

8.0

5.8 14

.2

16.5

70.9800

SHAREHOLDERS’ FUNDSRM Million

700600500400300

03 04 05 06 07

200100

0

342.

8

359.

2

395.

1

437.

9

626.

1

PROFIT FOR THE YEARRM Million

03 04 05 06 07

210180150120

6090

30

0

22.4

16.4

40.9

46.9

202.

5

REVENUERM Million

350300250200150

03 04 05 06 07

50100

0

10.4

71.9

161.

4 211.

4

310.

2

02

Sur ia Capita l Hold ings Berhad 96895-W 2007 Annua l Repor t

“”

The newly completed Sapangar Bay ContainerPort (SBCP) which commenced its portoperations in June 2007 had handled about39 per cent of the total TEUs.

Corporate Information

04

Suria Capita l Hold ings Berhad 96895-W 2007 Annua l Repor t

Board of Directors

Tan Sri Ibrahim Bin Menudin, P.S.M.Chairman, Non-Independent & Non-Executive

Datuk Hj. Abu Bakar Bin Hj. AbasGroup Managing DirectorNon-Independent & Executive

Datuk Ismail Bin Awang BesarNon-Independent & Non-Executive

Datuk Dr. Mohd. Yaakub Bin Hj. Johari, J.P.Non-Independent & Non-Executive

Hj. Abdul Kadir Bin Md. KassimIndependent & Non-Executive

Datuk Filik Bin Madan @ EsongNon-Independent & Non-Executive

Datuk Anthony Lai Vai Ming @ Lai Kheng Ming, J.P.

Independent & Non-Executive

Mohd Hasnol Bin AyubIndependent & Non-Executive

Datuk Dr. Hj. Patawari Bin Hj. PataweNon-Independent & Non-Executive

Group Company Secretary

Mohd Hanan Bin Ramli(LS. 0005860)

Senior Reference Director


Registered Office

Lot 8CF 01-02, 8th Floor, Block CKompleks Karamunsing, KM 2.4Jalan Tuaran, 88300 Kota KinabaluSabah, MalaysiaTel : +6 088-257 788 (4 lines)Fax : +6 088-256 410E-mail : [email protected]

Auditors

Ernst & YoungSuite 1-10-W1, 10th FloorCPS Tower, Centre Point SabahNo. 1, Jalan Centre Point88000 Kota KinabaluSabah, Malaysia

Principal Bankers

Alliance Bank Malaysia BerhadAmBank (M) BerhadBank Kerjasama Rakyat Malaysia BerhadBank Muamalat Malaysia BerhadHSBC Bank Malaysia Berhad Malayan Banking BerhadSabah Development Bank Berhad

Share Registrars

PFA Registration Services Sdn. Bhd.1301 Level 13, Uptown 1No.1, Jalan SS21/58Damansara Uptown47400 Petaling JayaSelangor Darul Ehsan, MalaysiaTel : +6 03-7725 4888, 7725 8046Fax : +6 03-7722 2311

Stock Exchange Listing

Bursa Malaysia Securities Berhad- Main Board

Quotation Data

Reuters Code SURI.KLBloomberg Code SURIA MKBernama Code SURIABMSB Code 6521

04

Board Committees

05

Nomination/AppointmentCommittee

Chairman


Members


Datuk Dr. Mohd. YaakubBin Hj. Johari, J.P.

Non-Independent & Non-Executive

Secretary

Mohd Hanan Bin Ramli(LS. 0005860)Group Company Secretary

RemunerationCommittee

Chairman


Members

Datuk Hj. Abu Bakar Bin Hj. AbasNon-Independent & Executive



Secretary

Mohd Hanan Bin Ramli(LS. 0005860)Group Company Secretary

Audit and Risk ManagementCommittee

Chairman

Datuk Anthony Lai Vai Ming @ Lai Kheng Ming, J.P.

Independent & Non-Executive

Members



Secretary

Dionysia Aloysius Kibat(MIA 13601)Group Internal Auditor

We seek to protect and enhance longterm shareholders’ value and the financialperformance of the Group, while takinginto account the interests of otherstakeholders.

Board of Directors

06


1. Tan Sri Ibrahim Bin Menudin, P.S.M.Chairman, Non-Independent & Non-Executive

2. Datuk Hj. Abu Bakar Bin Hj. AbasGroup Managing Director, Non-Independent & Executive

3. Datuk Ismail Bin Awang BesarNon-Independent & Non-Executive

4. Datuk Dr. Mohd. Yaakub Bin Hj. Johari, J.P.Non-Independent & Non-Executive

1 2 3 4

07

5. Hj. Abdul Kadir Bin Md. KassimIndependent & Non-Executive

6. Datuk Filik Bin Madan @ EsongNon-Independent & Non-Executive

7. Datuk Anthony Lai Vai Ming @ Lai Kheng Ming, J.P.Independent & Non-Executive

8. Mohd Hasnol Bin AyubIndependent & Non-Executive

9. Datuk Dr. Hj. Patawari Bin Hj. PataweNon-Independent & Non-Executive

5 6 7 8 9

Board of Directors’ Profile

08


Tan Sri Ibrahim Bin Menudin, 60, wasappointed as a Non-Independent andNon-Executive Chairman of the Companyon 20 May 2002. He also chairs theBoards of Sabah Ports Sdn. Bhd. since23 December 2003 and Suria BumiriaSdn. Bhd. since 7 September 2004.

He started his career in the Sabah State Civil Service and becameAccountant General of Sabah from1976 to 1979. In 1980, he resignedfrom the Service to become the ChiefExecutive Officer of BumiputraInvestment Fund of Sabah until 1985.He had also served as Chairman ofSabah Gas Industries Sdn. Bhd., DeputyChairman of Sabah Forest IndustriesSdn. Bhd. and board member of otherSabah Government corporations which

is involved in finance, forestry,manufacturing, plantations, hotel andproperty development.

Tan Sri Ibrahim was the Group ChiefExecutive of Malaysia Mining CorporationBerhad (MMC) in 1986 until 31 October2001 and also the Chairman of MalaysiaSmelting Corporation Berhad fromOctober 1985 to October 2001. Hewas the ex-Chairman of Gas MalaysiaSdn. Bhd. and Malakoff Berhad. He hadbeen a Board Member of Ashton MiningLimited (Australia) and PlutonicResources Ltd (Australia). FromFebruary 2002 until March 2004, he wasthe Special Advisor to the ChiefMinister of Sabah. On 22 November2007, he was appointed as Director ofSapuraCrest Petroleum Berhad.

Tan Sri Ibrahim, a Malaysian, holds aBachelor of Commerce from Universityof Western Australia. He is a memberof Institute of Chartered Accountantsin Australia, The Malaysian Institute ofCertified Public Accountants as well asthe Malaysian Institute of Accountants.

Currently, he is the Advisor of SabahForestry Development Authority(SAFODA).

He has no securities holding in SuriaCapital Holdings Berhad (SURIA) and its subsidiaries and no familyrelationship with any Director and/ormajor shareholder nor any conflict ofinterest with SURIA.

1. Tan Sri Ibrahim Bin Menudin, P.S.M.Chairman, Non-Independent & Non-Executive

Datuk Hj. Abu Bakar Bin Hj. Abas, 51,was appointed as Group ManagingDirector for SURIA on 1 February2004. Prior to this appointment, heheld the post of Executive Director ofSURIA. He also sits as member of theRemuneration Committee of the Board.

He is also a Board Member of SabahPorts Sdn. Bhd., Suria Bumiria Sdn. Bhd.and Hikmat Bumimaju Sdn. Bhd.. He isalso the Chairman of SURIA's othersubsidiary companies, namely S.P. SatriaSdn. Bhd., SCHB Engineering ServicesSdn. Bhd., Tricubes Suria Sdn. Bhd. andS.P. Satria Logistics Sdn. Bhd.. Datuk Hj.Abu Bakar, a Malaysian, holds a

Bachelor of Economics (Hons) fromUniversiti Kebangsaan Malaysia. He hadobtained his postgraduate Diploma inEconomic Development from theUniversity College of Swansea, UnitedKingdom.

He began his career in 1980 with theSabah State Civil Service serving theState's Economic Planning Unit, theState's Ministry of Communication andWorks and the State Ministry ofFinance in various positions. He wasthe Secretary General of the SabahBumiputra Chamber of Commerce(SBCC) from 1983 until 1988. A yearlater, he was attached to the Financial

Review Section of the State Ministry ofFinance until 1994. In 1995, he wasappointed as Senior ConfidentialSecretary to the Chief Minister ofSabah under the Chief Minister'sDepartment. While in the State CivilService and SBCC, he had chaired andsat on the Board of various publiccompanies as well as subsidiaries ofSBCC.

Datuk Hj. Abu Bakar holds 57,503shares in SURIA and has no familyrelationship with any Director and/ormajor shareholder nor any conflict ofinterest with SURIA.

2. Datuk Hj. Abu Bakar Bin Hj. AbasGroup Managing Director, Non-Independent & Executive

09

Datuk Ismail Bin Awang Besar, 64, wasappointed as Director of SURIA on 6June 1996 and as Chairman from 1 July2001 until 20 May 2002. He was madethe Managing Director of SURIA from14 September 2001 until 1 February2004. He chairs the Nomination/Appointment Committee and is amember of the RemunerationCommittee of the Board.

He also sits on the Boards of theCompany's subsidiaries, namely TricubesSuria Sdn. Bhd. and Suria Bumiria Sdn. Bhd.. Datuk Ismail, a Malaysiancitizen, is the Chairman of the SabahPublic Service Commission. He holds a

Bachelor of Arts (Hons) majoring inInternational Studies from theUniversity of Staffordshire, UnitedKingdom. He also has a postgraduateDiploma in Development Administrationfrom the University of Birmingham.

Once a senior staff in the Sabah State'sCivil Service under various appointments,he joined Sabah Development BankBerhad in 1985 as a Training Managerand moved his way up to ExecutiveDirector until he left in 1998. He wasthe Chairman of Saham Sabah Berhad,a state-sponsored unit trustmanagement company until 2001.

Datuk Ismail has no securities holdingin SURIA and its subsidiaries and nofamily relationship with any Directorand/or major shareholder nor anyconflict of interest with SURIA.

3. Datuk Ismail Bin Awang BesarNon-Independent & Non-Executive

Datuk Dr. Mohd. Yaakub Bin Hj. Johari,53, joined the Board of SURIA on 24 August 1996 as a Non-Independentand Non-Executive Director. He is amember of the Nomination/Appointment Committee of the Board.

He also sits on the Boards of WarisanHarta Sabah Sdn. Bhd., CreativeBusiness Services Sdn. Bhd., IDSInfotech Sdn. Bhd., Borneo NaturalProducts Sdn. Bhd., Konsortium PasifikSama Sdn. Bhd., Faradale Development(Sabah) Sdn. Bhd., Sabah Techno-ParkCorporation Sdn. Bhd., Borneo EssentialOils Sdn. Bhd. and Global KnowledgeSolutions Sdn. Bhd.. He is theChairman/Acting Managing Director ofthe Sabah Institute for Small andMedium Enterprise.

Datuk Dr. Mohd. Yaakub, a Malaysian, isthe Executive Director/Chief Executiveof Institute for Development Studies,Sabah (IDS). He holds a Bachelor ofScience (Hons) from the University ofSussex and a Master of Science (Liberal Studies) from the University ofManchester, England. In 1982, heobtained his PhD in Sociology from theUniversity of Salford, England.

He began his career as a part-timeLecturer in Political Science at theMARA Institute of Technology and in1983, he joined the Sabah State CivilService as an Assistant Director(Research and Consultant) in the SabahChief Minister's Department. He wasmade the Principal Assistant Director

(Management Development) in 1984.He joined IDS as an Associate Director(Social Affairs) in 1985 and later movedup to Deputy Chief Executive/SeniorResearch Fellow in 1991. In 1994, hewas promoted again to his currentposition as the Executive Director/ChiefExecutive of the Institute.

Datuk Dr. Mohd. Yaakub has nosecurities holding in SURIA and itssubsidiaries and no family relationshipwith any Director and/or majorshareholder nor any conflict of interestwith SURIA.

4. Datuk Dr. Mohd. Yaakub Bin Hj. Johari, J.P.Non-Independent & Non-Executive

Board of Directors’ Profile

10


Hj. Abdul Kadir Bin Md. Kassim, 67,was appointed to the Board of SURIAas an Independent and Non-ExecutiveDirector on 18 July 1997. He is theSenior Reference Director, who alsochairs the Remuneration Committee of the Board.

He is the Managing Partner of MessrsKadir, Andri & Partners. He is also aDirector of Petroliam Nasional Berhad(Petronas), UEM Group Berhad, UEMWorld Berhad, Proton Holdings Berhad,

TIME dotCom Berhad, Ho HupConstruction Company Berhad, SinoHua-An International Berhad and a fewprivate companies. He still serves asChairman of The Committee of LabuanInternational Financial Exchange and sitson the Listing Committee of BursaMalaysia. He served in the MalaysianAdministrative and Diplomatic Serviceand in the Judicial and Legal Servicebetween 1966 and 1973, holdingvarious positions.

Hj. Abdul Kadir, a Malaysian, holds aBachelor of Laws (Honours) degreefrom University of Singapore.

He has no securities holding in SURIAand/or its subsidiaries and also has nofamily relationship with any Directorand/or major shareholders nor anyconflict of interest with SURIA.

5. Hj. Abdul Kadir Bin Md. KassimIndependent & Non-Executive

Datuk Filik Bin Madan @ Esong, 55,joined the Board of SURIA on 1 July2001 as a Non-Independent and Non-Executive Director. He sits as memberof the Nomination/AppointmentCommittee, the RemunerationCommittee and the Audit and RiskManagement Committee of the Board.

He is the Deputy Permanent Secretaryof the State's Ministry of Finance, Sabah.

Datuk Filik, a Malaysian, began hiscareer with the Sabah Civil Service on9 June 1977 assuming various positionssuch as the Principal Assistant Secretaryto the State's Ministry of IndustrialDevelopment, Permanent Secretary ofthe Ministry of Agriculture andFisheries, Permanent Secretary of theMinistry of Resources and InformationTechnology Development and theGovernment Printer.

He graduated with a Bachelor ofEconomics (Applied Economics) fromUniversity of Malaya.

He has no securities holding in SURIAand its subsidiaries and no familyrelationship with any Director and/ormajor shareholder nor any conflict ofinterest with SURIA.

6. Datuk Filik Bin Madan @ EsongNon-Independent & Non-Executive

11

Datuk Anthony Lai Vai Ming @ LaiKheng Ming, 65, was appointed to theBoard of SURIA on 1 July 2001 as anIndependent and Non-Executive Director.He also chairs the Audit and RiskManagement Committee of the Board.

He is a member of Malaysian Instituteof Accountants, member of TheMalaysian Institute of Certified PublicAccountants, Fellow of CertifiedPractising Accountants, Australia, Fellow

of The Malaysian Institute of CharteredSecretaries & Administrators and Fellowof Malaysian Institute of Taxation.

He has been practising as a CharteredAccountant since 1974 with V.M. Lai & Co.

Datuk Lai is a Director of V.M. Lai TaxServices Sdn. Bhd., Sabapak Eco-HoldingsSdn. Bhd., S.P. Satria Sdn. Bhd., SabahPorts Sdn. Bhd. and the Chairman ofSabah Credit Corporation.

He served as a Senior Accountant from1968 until 1971 with TH Liew & Co, asa Chartered Accountant, ManagementConsultant cum Accountant in 1972 upto 1974 with Sri Kedua Sdn. Bhd.

He holds 20,000 securities holding inSURIA and has no family relationshipwith any Director and/or majorshareholder nor any conflict of interestwith SURIA.

7. Datuk Anthony Lai Vai Ming @ Lai Kheng Ming, J.P.Independent & Non-Executive

Encik Mohd Hasnol Bin Ayub, 44, joinedthe Board of SURIA on 1 July 2001 as an Independent and Non-ExecutiveDirector. He is also a member of theAudit and Risk Management Committeeof the Board.

He is the Managing Director of JahsiaConstruction Sdn. Bhd. and Jahsia Sdn.Bhd.; Director of Sabah Ports Sdn. Bhd.,S.P. Satria Sdn. Bhd., Hikmat Bumimaju

Sdn. Bhd., Rumah Anak Yatim Tambunanand as the Deputy President of SabahBumiputra Chamber of Commercesince 2004. He was the formerChairman of Abad Mesra Sdn. Bhd. andwas a Director of City Finance Bhd.from 1994 to 2000.

Encik Hasnol, a Malaysian, holds apostgraduate Diploma in BusinessAdministration and a Masters Degree

in Business Administration both fromthe University of Wales, UnitedKingdom.

He holds 2,500 shares in SURIA andhas no family relationship with anyDirector and/or major shareholder norany conflict of interest with SURIA.

8. Mohd Hasnol Bin AyubIndependent & Non-Executive

Datuk Dr. Hj. Patawari Bin Hj. Patawe,51, appointed to the Board of SURIA on12 October 2004 as a Non-Independentand Non-Executive Director.

He is a Fellow of Royal College ofSurgeons (FRCS), Edinburgh, Scotlandand has been a practising Doctor since1982. Currently, he is the Chairman of

Warisan Harta Sabah Sdn. Bhd.(WHSSB). He is also the Chairman ofWHSSB Property Development Sdn.Bhd. and holds directorship of DamaiSpecialist Centre.

He was the State’s Assistant Minister ofResource Development and InformationTechnology, Assistant Minister of

Industrial Development and AssistantMinister of Agriculture and FoodTechnology.

He has no securities holding in SURIAand its subsidiaries and no familyrelationship with any Director and/ormajor shareholder nor any conflict ofinterest with SURIA.

9. Datuk Dr. Hj. Patawari Bin Hj. PataweNon-Independent & Non-Executive

Senior Management Team

12


1

2

5 7

10

8

13

4

6 11

12

9 3

1. Datuk Hj. Abu Bakar Bin Hj. AbasGroup Managing Director

2. Mohamad Yasin Bin AbdullahChief Financial Officer

3. Mohd. Sahid Bin Hj. Nawab KhanChief Operating Officer (Sabah Ports Sdn. Bhd.)

4. Hj. Zainie Bin Abdul AucasaExecutive Director (Suria Bumiria Sdn. Bhd.)

5. Loh Boon HonExecutive Director (S.P. Satria Sdn. Bhd.)

6. Steven Hooi Kok HoeChief Executive Officer(SCHB Engineering Services Sdn. Bhd.)

7. Shaiful Bin Hj. BatongExecutive Director(S.P. Satria Logistics Sdn. Bhd.)

8. Ng Kiat MinGeneral Manager, Corporate Services/Finance(Sabah Ports Sdn. Bhd.)

9. Mohd Hanan Bin Hj. Awang RamliGroup Company Secretary/Legal Advisor

10. Dionysia Aloysius KibatGroup Internal Auditor

11. Junita Binti Tajul AriffinHead, Group Human Resource & Administration

12. Azman Bin AmarashikinSenior Manager(Suria Bumiria Sdn. Bhd.)

14


15

“”

Jesselton Point, the ‘window’ to thelarger development project namelyJesselton Waterfront, will be the transitfor regional and international visitors.

Chairman’s Statement

16


The year 2007 marked yetanother year of progress in the Group’s efforts toexpand the scope of itsbusiness. All the subsidiariesof the Group continued toprogress well in theirrespective areas of theirbusiness activities with themainstay of the businesscontinued to remainfocused on port operationsand services provided bySabah Ports Sdn. Bhd..This complimented furtherto the expansion andstrength of the productbase of the Group.

03 04 05 06 07

10,366

71,952

161,400

211,445

310,243

Revenue(RM’000)

17

Dear Shareholders,

On behalf of the Board of Directorsof Suria Capital Holdings Berhad andits Group of Companies (SuriaGroup),I am pleased to present the AnnualReport of the Group for thefinancial year 2007.

Stable Malaysian Economy

Despite uncertainties in the globaleconomy, the Malaysian economycontinued to excel, remain strong andstable. Malaysia’s total trade in 2007continued on an upward trend,growing by 3.7% to record RM1.11trillion from RM1.07 trillion in 2006.This is the second year that Malaysia’stotal trade had surpassed the RM1trillion mark. Exports were valued atRM605.10 billion, an increase of 2.7%from 2006 while imports grew by4.9% to RM504.57 billion (Ministry ofInternational Trade & Industry, Malaysia).

The economy of Sabah, in particular, ispoised to expand with new vigour andsustained momentum fueled by thefresh state development initiativesunder the nationally inspired SabahDevelopment Corridor (SDC). Thecoordinated and comprehensiveperspective development of the Statespawns strong and most sustainablegrowth prospects for the developmentand expansion of ports in Sabah. Insubsequent to the recent launch ofthe SDC, Sabah stands poised tocatapult itself to the level of the

leading states in the country whichpromises equal growth opportunitiesfor all and a transformation thatrenders it as one of the most liveableplaces in Asia.

An initial financial allocation of RM5.0billion has been allocated to the Stateby the Federal Government for theremaining period of Ninth Malaysia Planuntil 2010. This will coincide with thefirst phase of SDC implementationwhich will be carried out in three (3)phases over a period of 18 years. Thesectors being promoted under the SDCinitiatives include agriculture, tourism,manufacturing, ports and logisticsservices in line with the State’s Halatuju.

The strategic thrusts of the SDC areaimed at achieving a four-foldexpansion of the State’s economy withthe opening of a new dimension in thegrowth and development of the portsin Sabah. The eight (8) principal portsmanaged and operated by Sabah PortsSdn. Bhd. are expected to play aleading catalytic role in thedevelopment of the State.

Overall, the healthy performance ofthe economy provided our SuriaGroupa positive environment for growth. Thesustained expansion of the economyspawned positive benefits andopportunities for the growth andexpansion of our SuriaGroup.

Business Growth

During the year under review,improvement recorded by Sabah PortsSdn. Bhd. in the operations of seven(7) ports under its jurisdiction in the

Chairman’s Statement

18


Investment Allowance Tax Incentive. Thetax incentive was granted on 17 May 2007 by the Minister of Financeon Sabah Ports Sdn. Bhd.’s investmentallowance to be regarded as anApproved Service Project (ASP) underSchedule 7B of the Income Tax Act,1967. This means Sabah Ports Sdn. Bhd.is eligible for an allowance of 100 percent on the qualifying capital expenditureincurred within five (5) years from thedate when the first capital expenditurewas incurred on retrospective basis.

RAM’s Rating on Issuance ofBond

The issuance of RM150 million IslamicDebt securities has been concluded on2 April 2007. The accreditation ofAA3/P1 rating on the said bond by theRating Agency of Malaysia (RAM) hasindeed reflected on the overall ports’sound business, financial andmanagement standing.

This recognition by the agency is ofsignificance to Sabah Ports Sdn. Bhd.and SuriaGroup as a whole inenhancing its corporate image andinstilling public confidence particularlyin the business investment strata. Theissuance of the bond allows the portoperation business to expand furtheras the company forges ahead.

Investor Relations

The SuriaGroup had undertaken amore systematic and structuredInvestor Relations Programme in 2007.SuriaGroup had received several visitsby fund managers and researchanalysts from various institutions. Thesevisits gave us the opportunity toprovide better perspectives on ourbusiness and thus enabled them to bemore familiar with our actual natureof business and business potentials

03 04 05 06 07

22,408 16,36640,933 46,913

202,533

Profit For The Year(RM’000)

03 04 05 06 07

23,133 23,457

62,39969,462 71,472

Profit Before Tax(RM’000)

State was notably significant. A verysignificant project for Sabah Ports Sdn.Bhd. is the completion of the RM400million Sapangar Bay Container Port inJune 2007.

The commissioning of the SapangarBay Container Port (SBCP) is a newlandmark for Sabah Ports Sdn. Bhd..The new hub port supported withconsolidated port operational servicesfrom her other seven (7) sister portswill be playing a major regional role interms of efficient container handlingand is all set into forging and makingof a new strategic gateway forcontainerized commodity in theregion. The grand scale opening of thenew port had coincided with thelaunching of the SDC held at SBCPon 29 January 2008.

Another Record Year

I am glad to announce that theGroup’s pre-tax and post-tax profitincreased by 3.0% and 331.7% to closeat RM71.5 million [2006: RM69.5million] and RM202.5 million [2006:RM46.9 million] respectively. Therecord performance was made possibleon the back of the 46.7% higherrevenue generated by the Grouptotaling RM310.2 million during 2007compared to RM211.4 million in 2006as well as one-off tax refund and net

deferred tax asset recognitionamounting to RM38.5 million andRM98.4 million respectively.

Improved Dividend Quantum

In view of the Group’s continuedimproved performance during thefinancial year, I am pleased toannounce that the Board hasproposed the payment of a finaldividend of 6% per ordinary share,less income taxation of 26% and aspecial dividend of 6% per ordinaryshare, tax exempt amounting toRM12.6 million and RM17.0 millionrespectively, making a total netdividend of 10.4% per ordinary sharein respect of the financial year ended31 December 2007 which, subject tothe approval of members at theforthcoming Annual General Meetingof the Company. The net dividend paidfor the financial year ended 31December 2006 was RM10.3 million,equivalent to 3.7% per ordinary share,after capital restructuring.

Investment Allowance TaxIncentive

During the year under review, theGroup recognized a deferred tax assetand one-off tax refund amounting toRM113.8 million and RM38.5 millionrespectively arising from an Approved

19

particularly with respect to our corebusiness in port operation servicesmanaged by Sabah Ports Sdn. Bhd..SuriaGroup has also announced adividend policy of payout ratio of upto 25% of net profit. On positive note,Suria’s shareholding profiles have beenincreasingly institutionalized.

Capital Restructuring

Suria undertook capital restructuringexercise in 2007 mainly as a housekeeping exercise to absorb theinherited accumulated losses during itsfinancial era and rather to reflect thecurrent business standing of Suria. Theexercise was done through capitalvalue reduction, share premiumreduction and share consolidationwhich was finally completed on 11 October 2007.

Prospects

The overall performance andachievements of SuriaGroup in 2007have been very encouraging. TheGroup is very optimistic that theoverall business opportunities andachievement will improve further inthe years ahead. The positive trend inthe national economy specifically intrading services coupled with thestrong economic fundamentals inMalaysia augurs well with our brighterfuture ahead. With respect to this, thenational economy is expected to begrowing between 6% and 6.5% in2008 due to contributions from allsectors of the economy. Whilst inSabah, the State’s economy isexpected to be growing at 6% in2008 similar to the rate for 2007.Domestic demand will be the maindriver of the economy while externaldemand is expected to pick up intandem with improved prospects inworld trade.

The ever increasing external highdemands for Sabah’s palm oil andcrude petroleum in the globalmarket will also help to sustain andboost up the growth of economy inSabah. These commodities along withtimber products are projected tocontribute about 60% of the totalexports value in 2008. On the partof our ports, we have to increaseour port efficiency to cater forthese needs.

Hence, the catalytic role of the eight(8) ports serving as the principal seaoutlets in the development of Sabahwill be greatly enhanced andstrengthened with the vast businessopportunities generated under theSDC which offers tremendousgrowth and expansion of Sabah PortsSdn. Bhd..

Corporate Governance

The Group continues to subscribeand remain committed to bestpractices as contained in theMalaysian Code on CorporateGovernance. This is so as the Group always adopts and practicesthe value of good corporategovernance. Our statement ofcorporate governance and relatedreports are on pages 47 to 50 ofthis Annual Report.

Related Party Transactions

Significant related party transactions ofthe Group for the year under revieware disclosed in Note 36 to theFinancial Statements.

Risk Management

The overall risk management objectiveof SuriaGroup is to ensure that it

creates value for its shareholders. Inthis context, we ensure that adequateresources are available for thedevelopment of the Group’s businesseswhile managing the interest rate,foreign currency exchange, liquidity andcredit risks. The risk managementreport is as disclosed on pages 41 to45 of this Annual Report.

Appreciation

On behalf of SuriaGroup, I wish toexpress my heartfelt thanks andsincere appreciation to the supportand assistance of the StateGovernment and other relevantagencies, especially Sabah PortsAuthority, the State’s Ministry ofInfrastructure Development, Ministry of Industrial Development and Ministryof Finance.

I would also wish to record mygratitude to the shareholders,stakeholders, our customers, financiersand business associates for theircontinued support and confidence inSuriaGroup.

Many special thanks to my fellowmembers of the Board, themanagement and staff of SuriaGroupfor their dedication and commitment in our efforts to take SuriaGroup togreater heights of success andaccomplishments.

Thank you.

Sincerely,

Tan Sri Ibrahim Bin MenudinChairman

20


“”

We will continue to search for morebusiness opportunities in the State whilegiving emphasis on infrastructuredevelopment.

Group Managing Director’sReview of Operations

22


We continued to

promote our

businesses in 2007

and SuriaGroup

performed better

during the year as

evidenced in our

revenue and profit

records, driven by

stronger performance

in all business

segments.

23

OVERVIEW

Overall, the performance of SuriaGroup has been very satisfactoryand its prospects remain bright and promising. We continued topromote our businesses in 2007 and SuriaGroup performed betterduring the year as evidenced in our revenue and profit records, drivenby stronger performance in all business segments. Undeniably, the PortOperations & Bunkering Services maintained at being the majorcontributor to our sound financial performance and profits.

RM202.5 million in 2007 respectivelyas compared to RM69.5 million andRM46.9 million in 2006.

Port Operations & Bunkering Servicesregistered revenue of RM228.1 million,an increase of 40.9% over theprevious year. The second highestcontributor was Contract &Engineering, amounting to RM77.3million, up by 70% mainly attributableto the Sabah Railway Rehabilitationproject. The remaining RM4.8 millionwas derived from other businesssegments.

Liquidity

The Group ended the year withRM84.1 million cash and bankbalances. We have sufficient cash flowto undertake projects in hand as wellas future business expansion.

The Group forged ahead bycontinuously playing a significant rolein the development of infrastructure in Sabah.

CONSOLIDATED OPERATIONS

Results

During the year 2007, the Groupregistered revenue of RM310.2 million,an increase of RM98.8 million or46.7% higher than that of previousyear ended 31 December 2006. Themain contributor for the aboveachievement was directly attributableto the increase in cargoes andcontainers handled by Sabah Ports Sdn.Bhd. at an average of 4.0% and 19.0%respectively above that of the previousyear. The Group’s pre-tax and post-taxprofits recorded RM71.5 million and

Borrowings

As of 31 December 2007, the Group’sborrowings stood at RM305.9 millionas compared to the previous year’sRM183.9 million, the increase beingmainly due to the issuance of RM80million Bai’ Bithaman Ajil Islamic DebtSecurities during the year.

SEGMENT OPERATIONS

Port Operations

In 2007, Sabah Ports Sdn. Bhd.operationally handled a total cargothroughput of 29.2 million tonnes ascompared to 28.1 million tonnes in 2006.This marked an increase of 4.0% rise.

In this respect, Sandakan Port hadhandled the highest cargo throughputby registering 35.4% or 10.3 million

The Group recordedcontinued progress in the respective

areas of business activities

Group Managing Director’s Review of Operations

24


25

machinery like mobile harbour cranes,reach stackers, rubber-tyred gantries,straddle carriers and empty containerhandlers.

The financial performance of thissegment has been encouraging whichrecorded revenue of RM187.5 millionin 2007 as compared to RM157.9million in 2006, an increase of 19%.

Property and Development

Eversince Suria Bumiria Sdn. Bhd.developed and managed Jesselton Point,it has undergone a tremendoustransformation process. Since then, ithas been fully operational with all itsservices and facilities operating on ahigh scale basis. For 2007, a totalaccumulated revenue of RM2.54 millionwas collected from the Jesselton Point,is more than double the amount ofRM1.1 million in the previous year.Jesselton Point in fact acts as a‘window’ to the larger developmentproject namely the Jesselton Waterfront (JW).

tonnes of the overall cargothroughput. Kunak Port showed asharp rise in its registered tonnage by347% being the highest growth interm of cargo handling, mainly onliquid cargo such as palm oil and PKE(Palm Kernel Expeller). This was dueto the completion of upgrading workon its oil jetty which was fullyoperational in October 2007.

In term of total container throughput(TEUs), Sabah Ports Sdn. Bhd. posted asubstantial increase of 19% rise with271,020 TEUs recorded in 2007 ascompared to 226,721 TEUs handled in 2006.

The newly completed Sapangar BayContainer Port (SBCP) whichcommenced its port operations in June2007 had handled about 39% of thetotal TEUs. We shall be expectingSBCP to achieve the targetedefficiency rate of 20 container boxesper hour by early 2008 especially soas the new container port is wellequipped with state-of-the-art handling

On the whole, the prospects for the Groupare very promising and all our subsidiariesexpected to perform with positive growthin the year ahead.

The JW is a major property anddevelopment project currently beingundertaken by our 100%-ownedsubsidiary company, Suria Bumiria Sdn.Bhd.. The implementation of this megaproject will spread over a period of five(5) years. Soon, Suria Bumiria Sdn. Bhd.will form joint-venture partnerships withpotential partners who are majorproperty players in Malaysia. Thisproject which combines social,economic and cultural elements will besprawled over 50.21 acres of the KotaKinabalu Port and when the operationsof the whole port move to theintegrated port (SBCP) at Sapangar Bay.

JW will be developed into two (2) phases- Phase 1, with 23.25 acres of land andPhase 2, encompassing 26.96 acres. Itwill also be the transit point forregional and international visitors, sincethe State Capital is the main entrypoint to the State. Among the facilitiesearmarked for the mega developmentproject includes a five-star marina hotel,five star boutique hotels, office towers,a commercial complex, internationalrestaurants, a maritime museum and aninternational cruise ship terminal.

Group Managing Director’s Review of Operations

26


products to domestic and internationalmarket, environmental managementservices, warehouse and fleetmanagement. Environmental managementservices include waste oil and oil spillmanagement.

The subsidiary commenced itsoperations since July 2006. In 2007,a total revenue of RM41.0 million wascollected from bunkering and logisticsservices as compared to RM3.8 millionin 2006. Its ultimate aim is to make itselfa regional bunkering hub in the regionwhile at the same time contemplating ofventuring into logistics business in oiland gas industry in the State.

Another major on-going project thissubsidiary is currently undertaking isthe rehabilitation of the Tanjung Aru –Tenom Railway Track worth RM133.8million which is scheduled to becompleted in September 2008. TheKunak Oil Jetty (Phase 1) was alsocompleted and fully operational inOctober 2007. It will be operating fullyas a dedicated terminal for palm oilexports catering around Lahad Datuand Tawau regions. Financially, thecompany recorded RM77.4 millionrevenue (external) against RM45.8million in 2006, an increase of 70%.

Contract and Engineering

The completion of the new SBCP inJune 2007 is one (1) of the majorengineering projects successfullyundertaken by SCHB EngineeringServices Sdn. Bhd.. The completion hadenabled all container handling activitiesat Kota Kinabalu Port to be relocatedto its new vicinity at Sapangar Bay.Besides, this subsidiary was alsoengaged in providing design andproject management on thedevelopment of the Jesselton Point forSuria Bumiria Sdn. Bhd..

Bunkering and Logistics Services

S.P. Satria Logistics Sdn. Bhd., a newwholly owned subsidiary of SuriaGroupcurrently functions to provide bunkeringand logistics services to the port usersof Sabah Ports Sdn. Bhd. in the form offresh water, fuel and lubricants suppliesas well as other support services.Indirectly, the subsidiary iscomplementing the existing portoperation services under Sabah PortsSdn. Bhd.. In terms of logistics services,the subsidiary’s main activities continueto include the trading of petroleum

Equipment Supply andMaintenance

Another subsidiary namely S.P. SatriaSdn. Bhd. continues to be responsiblein supplying port and cargo handlingequipment to all the ports. Besides,this subsidiary also provides equipmentmaintenance services which amongothers include spare parts supply,maintenance program (preventive andcorrective) and periodic inspections ofequipment. Other services includeservice contracts as well as trainingservices to mechanical equipmentoperators.

Basically, their service centres arestrategically located at all the majorports in Sabah. A substantial amount ofRM52.0 million was capitalized for theacquisition of additional cargo handlingequipment to further complement theport operation services at all the portsin the State. In 2007, the subsidiaryrecorded revenue of RM17.6 million,an increase of 32% against 2006.

Information and Technology

In terms of information andtechnology, Tricubes Suria Sdn. Bhd. isthe IT provider and enabler for theGroup. Among the distinctive one isthe completion of the PortManagement System specifically usedfor the networking on the handling ofcontainers and general cargo/palm oilat Sabah Ports Sdn. Bhd.. During theyear, the subsidiary registered revenueof RM6.0 million as compared toRM1.9 million in 2006.

27

of SuriaGroup with its sterling financialperformance significantly won with thehighest acclaim, admiration andacceptance of the port users. SabahPorts Sdn. Bhd. would play the keyrole in the success of the SDC.

Hence, we are more determined toplay a key role in meeting theexpanded needs for port facilities and services under the SabahDevelopment Corridor. Thedevelopment initiatives of Sabah PortsSdn. Bhd. will be complemented andfurther enhanced by our five (5)other subsidiaries, namely S.P. SatriaSdn. Bhd., S.P. Satria Logistics Sdn.Bhd., Tricubes Suria Sdn. Bhd., SCHBEngineering Services Sdn. Bhd. andSuria Bumiria Sdn. Bhd..

Potentially, the SuriaGroup willventure also into the oil and gasindustry which is a vibrant segmentfor the Group to move forward inthe future. With this latestdevelopment at hand, SuriaGroup willopen to new frontiers in thispotentially good business segmentparticularly by venturing deeper intothe industry and targeting newmarkets beyond Sabah shores to asfar as Indo-China.

On the whole, the prospects for theGroup are very promising and all oursubsidiaries expected to perform withpositive growth in the year ahead.

Appreciation

As an appreciation, I wish to take thisopportunity to congratulate theGroup’s management team and stafffor their exemplary contributionswhich enabled us to achieve excellencein all areas of our operations as wellas financial results.

I also wish to convey my sinceregratitude to all members of the Boardof the holding company as well as thatof the subsidiaries for their continuousguidance and endless support. Last butnot least, our shareholders, customers,port users and our business associatesfor making 2007 a successful year forSuriaGroup in particular.

Thank you.

Datuk Hj. Abu Bakar Bin Hj. AbasGroup Managing Director

The Way Forward

As a broad based Company, we willcontinue to search for more businessopportunities in the State while givingemphasis on infrastructuredevelopment. The sustained growth ofthe State’s economy is anticipated tospur more development projects inthe State. With the support fromFederal Government, moreinfrastructure development is expectedto be implemented in the Stateparticularly with various developmentprograms as outlined in the latestSabah Development Corridor (SDC).There will be more imports onconstruction materials, machines andequipment through the ports and thisadds directly to our revenue andprofits based on increase in portoperational services.

The SDC has in fact identified aspecific role for Sabah Ports Sdn. Bhd.leading to the creation of SapangarFree Zone (SFZ) linking the SBCP aswell as the expansion of the role ofSandakan Integrated Trade Exchange toleverage on the liberalization of theAsean Free Trade Area (AFTA).

Our aspirations and desire to play abigger and expanded role under SDCcomes fully tested and with proventrack record. This made Sabah PortsSdn. Bhd. as the “jewel in the crown”

28


“The completion of the Port Management Systemis specifically used for the networking on thehandling of containers and general cargo/palm oilat Sabah Ports Sdn. Bhd..

The completion of the Port Management Systemis specifically used for the networking on thehandling of containers and general cargo/palm oilat Sabah Ports Sdn. Bhd..”

Corporate Social Responsibility

30

Suria Capita l Holdings Berhad 96895-W 2007 Annua l Repor t

Beside being actively involved in its

business functions in the pursuit of

business excellence, SuriaGroup is

also well aware of its social

obligations, by giving back to the

society. Emphasis has been mainly

aimed at helping the needy and

less fortunate segment of the

society especially in Sabah.

1. Blood Donation Drive

A half-day blood donation campaign in aidof Likas Hospital’s Blood Bank was heldon Labour Day (1 May 2007) at theJesselton Point, Ferry Terminal, KotaKinabalu. It received very encouragingresponse from the staff and the publicalike. A total of 60 pints of blood wascollected during the drive.

2. Donation to Fire Victims

SuriaGroup made its donations in aid offire victims involving 62 families at TanjungAru. It was held at Tanjung Aru Lama on 6 October 2007, partly to ease theirfinancial burden in preparation for theHari Raya Celebration.

3. Raising Fund for Yayasan Tun Ahmadshah

Through the Corporate Golf Invitationevent, SuriaGroup has helped raise fundfor the Tun Ahmadshah Foundation inconjunction with its 3rd AnniversaryCelebrations held on 8 September 2007.

1

3

2

31

4. Ramadhan Programme for the Poor

Donation for the Ramadhan AidProgramme 2007 to the poor andorphanages from nearby villages in thesurrounding vicinity of the Sapangar BayContainer Port was handed throughKarambunai Assemblywoman, YangBerhormat Hjh. Jainab Binti Datuk SeriPanglima Hj. Ahmad who is also theAssistant Minister of IndustrialDevelopment. The handing-over was madeduring a ‘Majlis Berbuka Puasa’ function on20 September 2007.

5 & 6. Maintenance Work forMosques

SuriaGroup through its subsidiary, SCHBEngineering Services Sdn. Bhd. has carriedout various kind of maintenance works onMasjid Negeri Sabah and Masjid BandarayaLikas.

In addition, we have also

participated in several external

fund raisings in aid of the needy

including Sabah Welfare Association

of Poor and Needy (Perkemas),

the orphanages of Yayasan

Kebajikan Suria, Badan Muafakat

MRSM and Sabah Society For The

Blind.

4

5

6

Highlights of Events

32

Suria Capita l Holdings Berhad 96895-W 2007 Annua l Repor t

1) 15 May 2007

SURIA held its 24th Annual GeneralMeeting and Extraordinary GeneralMeeting.

2) 21 May 2007

The Federal Minister of Transport,YB Dato’ Seri Chan Kong Choy visitedSapangar Bay Container Port.

3) 1 June 2007

The commissioning of the new SapangarBay Container Port.

4) 12 July 2007

Visit by Kenanga Investment & FundManagers to Sapangar and Sandakan Ports.

5) 5 September 2007

Jazz Festival at Jesselton Point,Ferry Terminal, Kota Kinabalu.

6) 8 September 2007

SuriaGroup celebrated its 3rd AnniversaryCelebration at the Dewan Bangkuasi, SabahState Assembly Building, Kota Kinabalu.

1

2

3

4

5

6

33

7) 20 September 2007

Majlis Berbuka Puasa 2007 for SuriaGroupwith State Secretary of Sabah, DatukSukarti Wakiman as Guest of Honour.

8) 11 October 2007

Group Managing Director’s corporatebriefing at the State Secretary office, ChiefMinister Department, Kota Kinabalu.

9) 27 December 2007

SuriaGroup’s Budget 2008 DiscussionSession held at Sapangar Bay ContainerPort.

10) 18 January 2008

The State’s Cabinet Meeting was held atSapangar Bay Container Port prior to theofficial launching of Sabah DevelopmentCorridor held at the port.

11) 29 January 2008

Official launching of Sapangar Bay ContainerPort by the Right Honourable PrimeMinister of Malaysia, YAB Datuk SeriPanglima Abdullah Ahmad Badawi.

7

8

9

10

11

Suria in the News

34


Corporate Group Structure

35

SURIA CAPITALHOLDINGS BERHAD96895-W

Sabah Ports Sdn. Bhd.(583073- H)

S.P. Satria Logistics Sdn. Bhd.(722286 - V)

HikmatBumimaju Sdn. Bhd.(651557 -V)

S.P. Satria Sdn. Bhd.(622494 -V)

SCHB EngineeringServices Sdn. Bhd.(645642 W)

Suria Bumiria Sdn. Bhd.(633477- V)

Tricubes Suria Sdn. Bhd.(634170 - T)

Port Operations& Bunkering Services

Contract& Engineering

Property& Development

Information& Technology

100%

100% 40%

70%

70%

100%

60%

ISO Achievement and Recognition

On 28 November 2007, SCHB Engineering Services Sdn.

Bhd. was awarded the MS ISO 9001:2000 certification in

the scope of “Construction of Buildings, Civil &

Structural Works and Provision of Mechanical and

Electrical Works”. This recognition is an achievement for

this subsidiary which indicated that we have matured

progressively and at all time ready to take on bigger

challenges in the construction industry in particular. The

Company hopes to secure more projects during the

Ninth Malaysia Plan implementation period.

36


37

Based on the outcome of the Compliance Audit

which was carried out on 21 February 2008, the

Llyod’s Register Quality Assurance Limited

(LRQA) has eventually accredited Sabah Ports

Sdn. Bhd. with the certified Quality Assurance

Management System Standards of ISO 9001:2000.

The ISO 9001 Quality Management System

(QMS) of Sabah Ports Sdn. Bhd. has been

established and maintained to achieve customer

satisfaction, improve efficiency and effectiveness of

port operation processes at the ports.

We are committed to adapt and implement the

ISO 9001 QMS for improving and upgrading port

management and operations processes in order

to streamline the work processes through the

Quality Manual as a guide. In compliance with

this, we are able to meet the port users’ needs

and statutory requirements.

Business Policy

The Group’s business policy is mainlyto facilitate its mission of providingsuperior products and reliable servicesin an ethical way through our highly-motivated team to create value forour customers. These can be achievedthrough:

• adopting an efficient managementsystem;

• investing in reliable machineriesand port management system;

• increasing staff efficiency andproductivity;

• implementing an organised workingsystem especially at the variousport levels;

• implementation of “5S” system ofwork; and

• implementation of the electronicbased Sabah Ports ManagementSystem (SPMS).

Fully operational since June 2007,Sapangar Bay Container Port (SBCP) is the latest addition to the seven (7)ports acquired by SURIA. Officiallylaunched on the 29 January 2008,SBCP will generate increased cargoactivities, in line with the SabahDevelopment Corridor plan, in regardsto its planned function as a domestichub for containerized cargo. It isexpected that the newly built port willalso heighten transhipment activitiesowing to the port’s strategic locationand state of the art handling equipment.

Safety and HealthThe Group is committed to introduceand implement Safety and Healthmeasures at its Ports by setting-up aHealth, Safety and EnvironmentDepartment when it took over theoperation of the Ports on 1 September2004.

The Group will strive to prevent allaccidents, injuries and occupationalillness through the active participationof every employee. The Group iscommitted to continuous efforts toidentify and eliminate or manage safetyrisk associated with its activitiesespecially its core business. To realizethe policy, the Group shall observe thefollowing:

• Install and maintain facilities,establish Port Health, Safety andEnvironment Management System,provide training and conductoperations in a manner thatsafeguards people, property andenvironment.

• Respond quickly, effectively andwith care to emergencies oraccidents resulting from itsoperations, in co-operation withauthorised government agenciesand continuously review itsemergency plan.

• Comply with all applicable laws andregulations, apply responsiblestandards, code of practices andbest practices where laws andregulations do not exist.

• Emphasize to all employees,contractors and others working onits behalf of their responsibility andaccountability for safe performanceand encourage safe behavior whilstat work.

• Continually evaluate and reviewour operations.

QualityThe Group is fully committed toprovide superior and reliable servicesto its customers. In 2007, the Group’ssubsidiary; SCHB Engineering ServicesSdn. Bhd. had been awarded the MS ISO 9001:2000 certification. By thefollowing year, Sabah Ports Sdn. Bhd.also received its MS ISO 9001:2000accreditation.

38


Share Price & Volume Traded – 2007

39

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

High 1.76 1.66 1.54 1.86 1.88 2.18 3.44 3.02 3.28 3.88 3.70 3.42

Low 0.93 1.44 1.34 1.26 1.69 1.80 2.04 2.36 2.92 3.22 2.94 2.90

DailyAverageVolume 4,914,710 2,247,126 733,807 3,301,773 796,024 1,027,979 3,243,384 1,139,370 895,783 1,053,114 535,438 453,937Traded

Total 103,208,900 38,201,150 16,143,750 66,035,450 16,716,500 21,587,550 71,354,450 25,066,150 17,915,650 23,168,500 11,244,200 8,624,800Volume

Shar

e Pr

ice

(RM

)

Volu

me

Trad

ed (

Shar

es)

5,000,000

10,000,000

Volume Traded High

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

15,000,000

20,000,000

25,000,000

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Last Low

Year 2007 – Monthly Volume Traded and Highest-lowest Share Prices

Statement ofValue Added & Distribution

40


2007 2006(in RM Million)

Value Added:

Revenue 310 211Purchase of goods & services (160) (91)

Value added by the Group 150 120 Other income 6 9

Total value added available for distribution 156 129

Distribution:

To employees- salaries and other staff costs 46 41

To government- income tax (131) 23

To providers of capital- dividends to shareholders of the Company 13 4 - dividends to minority shareholders in subsidiaries 1 - - finance costs 14 2

Retained for future reinvestment & growth- depreciation & amortisation 25 16 - retained profits 188 43 - minority interests - -

Total distributed 156 129

Reconciliation

Profit for the year 202 47 Add: Depreciation & amortisation 25 16

Finance costs 14 2 Staff costs 46 41 Income tax (131) 23

Total value added 156 129

Value added is a wealth creation measure. The statement of Value Added & Distribution shows the total wealth created andhow it was distributed to stakeholders, including the Government and employees, with the balance retained in the Group forreinvestment and future growth.

41

Audit and Risk ManagementCommittee Report

1. COMPOSITION

Based on the requirement of Part C of Chapter 15 ofBursa Malaysia Securities Berhad (BMSB) ListingRequirements on Corporate Governance, the AuditCommittee was appointed from amongst the Directorsand no alternate Director is a member of theCommittee. The Committee was established in 1996and on 28 February 2007 the Board had approved thechange of its name to Audit and Risk ManagementCommittee (A&RMC) .

The Committee comprises three (3) members, two (2)of whom are Independent Directors and one (1) Non-Independent Director. One (1) member of theCommittee is a member of the Malaysian Institute ofAccountants (MIA) and the Chairman of the Committee.

Members of the Committee may relinquish theirmembership with prior written notice to the Chairmanand may continue to serve as Director of theCompany. In the event of any vacancy in theCommittee, the vacancy shall be filled within three (3)months and that the Nomination/AppointmentCommittee shall review and recommend for theBoard’s approval for another appropriate Director to fillthe vacancy.

2. MEMBERSHIP

The current members of the Committee and theirrespective designations are as follows:

• Datuk Anthony Lai Vai Ming @ Lai Kheng Ming,J.P., C.A.(M)Chairman(Independent & Non-Executive Director)(Member of the Malaysian Institute of Accountants)

• Mohd Hasnol Bin AyubMember(Independent & Non-Executive Director)

• Datuk Filik Bin Madan @ EsongMember(Non-Independent & Non-Executive Director)

• Dionysia Aloysius Kibat, C.A.(M)Secretary(Member of Malaysian Institute of Accountants)

The Company complies with the requirements onindependent memberships.

3. OBJECTIVES

In compliance with BMSB Listing Requirements and BestPractices of the Code on Corporate Governance, it isthe objective of the Committee to assure theshareholders of the Company that the Directors havecomplied with specified financial standards and requireddisclosure policies developed and administered by BMSBand other approved accounting standard bodies.

Further, the Committee shall ensure consistency withBMSB commitments to encourage high standards ofcorporate disclosure and transparency. The Committeealso endeavours to adopt practices aimed at maintainingappropriate standards of corporate responsibility, integrityand accountability to the Company’s shareholders.

4. DUTIES AND RESPONSIBILITIES

The principal duties and responsibilities of theCommittee shall include:

Financial Reporting4.1 To review the quarterly interim results, and

annual financial statements of the Board,focusing particularly on:

• Any changes in accounting policies andpractices;

• Significant adjustments arising from theexternal audits;

• The going concern assumption; andCompliance with accounting standards andother legal requirements.

4.2 To review any related party transactions andconflict of interest situation that may arise withinthe Company or the business units.

Audit and Risk Management Committee Report

External Audit4.3 To consider the appointment of a suitable

accounting firm to act as the external auditor.Amongst the factors considered for theappointment are the adequacy of experience andresources of the firm, the individuals assigned to theaudits, and the recommended audit fees payable.

4.4 To discuss the nature and scope of the audit with the external auditor (before the auditcommences) and ensure coordination (wheremore than one audit firm is involved).

4.5 To discuss issues and concerns arising from theinterim and final audits, and any other mattersthe external auditor wishes to discuss, in theabsence of management if necessary.

4.6 To review the external auditor’s managementletter and management’s response.

4.7 To review the assistance and co-operation givenby the Company, its business units and its officersto auditors.

Internal Audit4.8 Upon establishment of the internal audit

functions, to do the following;

• To review the adequacy of the scope,functions, competency and resources of theinternal audit function, and that it has thenecessary authority to carry out its work;

• Review the internal audit programme andresults of the internal audit process andwhere necessary ensure that appropriateaction is taken on the recommendations ofthe internal audit function;

• Review any appraisal or assessment of theperformance of members of the internal auditfunction;

• Approve any appointment or termination ofsenior staff members of the internal auditfunction; and

• Inform itself of resignations of internal auditstaff members and provide the resigning staffmember an opportunity to submit his reasonsfor resigning.

4.9 To consider the major findings of internal auditsand investigations, management’s response,remedial actions taken and follow-ups.

Risk Management4.10 Reviewing the effectiveness of the Group’s risk

management activities.

4.11 To evaluate the process the Group has in placefor assessing and continuously improving internalcontrols and systems, particularly those related toareas of significant business risk.

4.12 To review risk management reports particularlythe significant risk observations and risk responseand ensure that appropriate action plan is inplace to mitigate the risk.

4.13 To report to the Board any significant riskobservations that warrants the Board’s attention.

General4.14 To consider other functions as may be agreed to

by the Committee and the Board.

5. MEETINGS

5.1 The Committee will meet as frequently asrequired but not less than four (4) times a year.

5.2 The Committee may call such additional meetingsas the Chairman of the Committee decidesnecessary for the Committee to fulfill its duties.

6. AUTHORITY

In conducting its duties and responsibilities, theCommittee shall have the following rights:

6.1 Explicit authority to investigate any matter withinthis charter;

6.2 Have adequate resources required to conduct itsduties;

42


43

6.3 Have full, free and unrestricted access to anyinformation, records properties and personnel ofthe Company and of any other companies withinthe Group;

6.4 Have direct communication channels with theexternal and internal auditors and risk manager;

6.5 Able to obtain external independent professionaladvice and to invite external parties with relevantexperience to attend the Committee meetings foradvice;

6.6 Have discretion to invite other Directors and/oremployees of the Company to attend anyparticular Committee meeting to discuss specificissues; and

6.7 Able to convene meetings with external andinternal auditors and risk manager, excluding theattendance of the other directors and employeesof the Company if deemed necessary.

Details of the Committee meetings held during the financial year ended 31 December 2007 are as follows:

Date Time Place

16 February 2007 2.30 p.m. Company’s Registered Office

22 March 2007 1.30 p.m. Company’s Registered Office

14 May 2007 9.00 a.m. Company’s Registered Office

17 August 2007 9.00 a.m. Company’s Registered Office

27 September 2007 9.00 a.m. Company’s Registered Office

25 October 2007 9.00 a.m. Company’s Registered Office

18 December 2007 9.00 a.m. Company’s Registered Office

The attendance of each Member is as follows:

Name of the Committee members No. of meetings attended % of attendance

Datuk Anthony Lai Vai Ming @ Lai Kheng Ming, J.P., C.A.(M) 7/7 100

Mohd Hasnol Bin Ayub 7/7 100

Datuk Filik Bin Madan @ Esong 6/7 86

Members of Senior Management including the GroupManaging Director and Chief Financial Officer were alsopresent by invitation. At least, once a year, the ExternalAuditors were also invited to attend and participated in thedeliberations on relevant items at the Committee meetingsconducted during the period under review.

During the financial year 2007, the Committee carried outits duties as set out in the duties and responsibilities. TheBoard of Directors had decided that the Risk ManagementDepartment will report directly to the Committee. In linewith this, the Manager (Risk Management) was invited inevery quarterly meeting to present to the A&RMC the riskmanagement observation of SuriaGroup.

Audit and Risk Management Committee Report

44


7. INTERNAL CONTROLS

Internal controls are an integral self-regulatedmechanism in enhancing corporate governance. TheGroup’s internal audit function was set up as anindependent unit and reports directly to the A&RMC.Please refer to of the Statement on InternalControl for an explanation of the mechanisms thatexist to enable the A&RMC to discharge its functionseffectively.

8. RISK MANAGEMENT REPORT

The Group defines Risk Management as the culture,processes and structures that are directed towards theeffective management of potential opportunities andadverse effects within the Group’s businessenvironment.

Risk management is a key responsibility of management.We recognise that to achieve our business objectives, asound risk management processes should be in placeand functioning and embedded into the Group’sphilosophy, practices and business processes.

Structures and Roles

BOARD OF DIRECTORS

AUDIT AND RISKMANAGEMENT COMMITTEE

(A&RMC)

GROUP RISKMANAGEMENT COMMITTEE

(GRMC)

RISK MANAGEMENTWORKING COMMITTEES

(RMWC)

BUSINESS UNITHEADS

An oversight responsibilities over all key risks.

Reviewing the effectiveness of the Group’s riskmanagement activities for assessing andcontinuously improving internal controls andsystems, particularly those related to keybusiness risks.

Review management’s periodic risk managementreport and oversight responsibilities overstrategic risks in SuriaGroup and key risks in allbusiness units.

Responsible for the management of key risks inall business units and ensuring that necessarycontrol mechanisms and improvement initiativesare delivered effectively.

Responsible for the management of selectedstrategic risks and oversight responsibilities overoperational risks.

45

H

Risk Management PolicyThe Risk Management Policy is adopted for Suria CapitalHoldings Berhad and all its subsidiaries to have a commonstrategic and formal approach to risk management so as toimprove decision making, enhance outcomes andaccountability.

Risk Identification Process and AnalysisThe Group classified risks into strategic, operational,financial and compliance risk categories. The RiskManagement Working Committees are responsible foridentifying all risks within their internal and externalbusiness environment namely ports undertakings and relatedservices, project management and consultancy, propertydevelopment, information and communication technology,procurement, repair and maintenance of cargo handlingequipment, and bunkering and logistics services. Risk ismeasured in terms of likelihood and consequence (impact).

Risk Map/Profile

Monitoring and ReportingWe recognise that risk information change as processes andprocedures change. We, therefore, carry out periodicmonitoring and reviews of the changes that may alter theconsequence and likelihood of the risks.

On our risk management reporting process, the variousRMWCs will perform a monthly risk management process.The GRMC will present the risk management report to theA&RMC quarterly.

The A&RMC will present significant risks to the Board on aquarterly basis.

M

L

L

H

HM

ML

LIKELIHOOD

Low (L) Medium (M)IMPACTHigh (H)

Hig

hM

ediu

mLo

w

Statement on Internal Control

INTRODUCTION

The Malaysian Code on Corporate Governance requireslisted companies to maintain a sound system of internalcontrols to safeguard shareholders’ investments and theGroup’s assets. Bursa Malaysia Securities Berhad (BMSB)Listing Requirements require Directors of listed companiesto include in its annual report a statement on the state oftheir internal controls. The BMSB’s Statement on InternalControl : Guidance for Directors of Public ListedCompanies (Guidance) provides guidance for compliancewith these requirements. Set out below is the Board’sInternal Control Statement, which has been prepared inaccordance with the Guidance.

RESPONSIBILITY

The Board acknowledges its responsibility for the Group’ssystem of internal control and for reviewing its adequacyand integrity. Due to the limitations that are inherent in anysystem of internal controls, this system in designed tomanage, rather than eliminate, the risk of failure to achievecorporate objectives. Accordingly, it can only providereasonable and not absolute assurance against materialmisstatement or loss. The system of internal controls covers,inter alia, risk management, financial, operational andcompliance controls.

KEY PROCESSES

The Group has in place an on-going process for identifying,evaluating, monitoring and managing the significant risksaffecting the achievement of the Group’s business objectivesthroughout the period up to the date of this report. Thisprocess is regularly reviewed by the Board.

The Board recognizes the need for continuous improvementin its system of internal controls, existing processes andprocedures. In this regard, the Group has established itsRisk Management Department with a plan to undertake areview of its Risk Management Framework in the secondhalf of 2005 which reports directly to the Audit and RiskManagement Committee (A&RMC).

The Group Managing Director and his senior managementteam, through their day-to-day involvement in the operationsof the Group, ensure that on-going maintenance, monitoring,reviewing and reporting arrangements have been put inplace to provide reasonable assurance that the structure ofcontrols and operations is appropriate to the Group.

INTERNAL AUDIT FUNCTION

In accordance with Best Practices Provision BB VII in Part 2 ofthe Code the Group’s internal audit function was set up as anindependent unit during the last quarter of 2004, and reportsdirectly to the A&RMC.

The purpose of internal audit function is to assist theCommittee, in obtaining sufficient assurance of regularreview and appraisal of the effectiveness of the systems ofinternal controls within the Group. The objectives of theGroup’s internal audit function are set out to provideassurance to the Committee so that internal audit activitiesare performed with impartiality, proficiency and dueprofessional care.

A high level assessment of the Group’s business risks wascarried out by the Internal Audit Department based on thereport prepared by Risk Management Department tofacilitate the preparation of internal audit plan. The auditplan was approved by the A&RMC. With the adoption ofrisk-based approach, the internal audit function is able tofocus its work on principal risk areas and processes of thebusiness operation units.

The internal audit function undertakes systematic and timelyreview of the systems of internal controls in order toprovide reasonable assurance that operation of such controls,including systems for compliance with applicable laws,regulations and guidelines are adequate, efficient and effective.

In its focus on continuous improvement for the Group, theinternal audit function reviews critical key areas forimprovement and thereafter assesses the extent of which itsrecommendations have been implemented.

Since the establishment of the internal audit function, theInternal Audit Department has been facilitating the processof formalizing policies and procedures for the key andsupport functions of the port operation. Various auditassignments have been carried out to assess theeffectiveness of the systems of internal controls. Auditreports had been tabled during the year, highlightingweaknesses and recommendations to the A&RMC and themanagement. Such weaknesses, however, have not resulted inany material misstatement or loss.

REVIEW OF THE STATEMENT BY EXTERNALAUDITORS

The external auditors have reviewed this Statement onInternal Control for the inclusion in the annual report ofthe Group for the year ended 31 December 2007 andreported to the Board that nothing has come to theirattention causes them to believe that the statement isinconsistent with their understanding of the processadopted by the Board in reviewing the adequacy andintegrity of the system of internal controls.

46


INTRODUCTION

The Board of Directors of SURIA adopts and practices highstandard of corporate governance in conducting the affairsand business of the Group. The Board views this as afundamental part of its responsibilities to protect andenhance long term shareholders' value and the financialperformance of the Group, while taking into account theinterests of other stakeholders.

In tandem with this, the Board is fully committed to themaintenance of a high standard of corporate governance bysupporting and implementing the best practices andprinciples as laid out in the Malaysian Code on CorporateGovernance and Chapter 15 of Bursa Malaysia SecuritiesBerhad (BMSB).

THE DIRECTORS

Composition and Balance of The BoardThe Board comprises experienced Directors with a wideand varied range of expertise. The Board currently has nine(9) Directors consisting of one (1) Non-Independent & Non-Executive Chairman, one (1) Non-Independent & ExecutiveGroup Managing Director, four (4) Non-Independent & Non-Executive Directors and three (3) Independent & Non-Executive Directors. This complies with BMSB's requirementsin terms of the number of independent & non-executivedirectors in the composition of the Board. The individualDirectors bring a diverse range of skills and backgrounds. Inview of the composition of the Board, and having regard tothe caliber of the Directors and their range of experience,the Board believes that the interests of investors includingthe Group's minority shareholders and the public areadequately protected and advanced.

There is also a clear division of responsibilities between theChairman and Group Managing Director to ensure thatthere is a balance of power and authority in managing theGroup. The Group Managing Director reports to the Boardand seeks approval from the Board on major matters asand when necessary. The Chairman, having the necessaryskills and experience to manage the Board, encourageshealthy debate and ensures that resolutions are put to avote. Hence, Board decisions reflect the collective will ofthe Board and not the views of an individual or group.

Principal Responsibility of the BoardThe Board maintains effective control of the Group. Thisincludes responsibility for reviewing and adopting theManagement's proposals on Group's operational policies,

strategic business and action plans, including setting theannual budget for the Group. The Board's other primaryfunctions include regular overseeing of the Group's businessoperations and performance; and ensuring the existence ofappropriate processes and internal controls to measure andmanage business risks in general and specifically, operational,credit, market and liquidity risk.

At each regularly scheduled meeting, the Board will reviewthe financial and operational performance of the Groupagainst the annual budget previously approved by the Boardfor that year. Specific responsibilities have been delegated tothe Board's Committees, all of which have their clearlydefined terms of reference. These Committees have theauthority to examine the issues tabled before them andthereafter report back to the Board with recommendationsand comments.

The Committees established are as follows:

• Nomination/Appointment Committee• Remuneration Committee• Audit and Risk Management Committee

For further information on the roles of the Committees,kindly refer to Board Committees on Pages 49 and 50 ofthe Annual Report.

Supply of InformationAll scheduled Meetings held during the year were precededby a formal notice issued by the Group Company Secretaryin consultation with the Chairman. The Chairman ensuresthat all Directors have full and timely access to information,with Board Papers distributed in advance of Meetings. Thenotice of each Meeting is accompanied by the minutes ofpreceding Board Meetings, together with relevant informationand documents for matters on the agenda. SeniorManagement of the Group may be invited to attend BoardMeetings to provide detail explanations and clarifications onissues that are considered during the Meetings.

The Directors have access to all information within theGroup in furtherance of their duty. They also have access tothe advice and services of the Senior Management of theGroup and the Group Company Secretary, and independentprofessionals as and when required. From time to time, theDirectors are also provided with the latest update on theindustry developments in which the Group is engaged onand on the rules and regulations relating to the day to dayrunning of the Group that are imposed by the relevantregulatory authorities.

47

Statement on Corporate Governance


48


Directors' TrainingAs required under the Listing Requirements of the BMSB,all the Directors had successfully attended the MandatoryAccredition Programme and the Continuous EducationProgramme (CEP) organised by BMSB and other relevantregulatory authorities and professional bodies. The status ofeach Director's continuous compliance with the CEPrequirements is monitored and updated. The Group ensuresthat the newly appointed Directors undergo the requiredtrainings under the Listing Requirements.

With the repeal of Practice Note No. 15 on CEP by BMSB,the continuous training need of the Directors is now vestedon the Board of the Company.

During the year, the Board of Directors continued to attendvarious programmes as well as retreat organised by theCompany to keep themselves abreast of developments inthe market. In addition, the Directors are also briefed fromtime to time during Board Meetings by Group staff on anychanges in laws and regulations that are relevant to theGroup's operations.

Appointments To The BoardThe Nomination/Appointment Committee is responsible formaking recommendations for any appointment to the Boardincluding those of its subsidiaries. In making theserecommendations, the Nomination/Appointment Committeeconsiders the required mix of skills and experience that theDirectors should bring to the Board.

Re-Election of DirectorsIn accordance with the Group's Articles of Association, atleast one-third (1/3) of the Directors (except for theManaging Director) are subject to re-election by rotation ateach Annual General Meeting. All Directors shall retire fromoffice once at least in each three (3) years.

In accordance with Articles 86 of the Company’s Articles ofAssociation, Datuk Hj. Abu Bakar Bin Hj. Abas, the full timeGroup Managing Director who was appointed with effectfrom 1 February 2004, shall not be subject to retirement byrotation while he continues to hold office of the GroupManaging Director.

The Nomination/Appointment Committee is responsible torecommend to the Board candidates for all directorships tobe approved by the shareholders or the Board.

At the forthcoming Annual General Meeting, the Directors listedin the Notice of Annual General Meeting on Page 127 are dueto retire and being eligible, had offered themselves for re-election.

Directors' RemunerationThe Remuneration Committee proposes the Directors'remuneration before tabling to the Board prior to endorsementby the Members during the Group's Annual General Meeting. TheRemuneration Committee and the Board also makes necessaryreference to industry practice involving comparable organisationsin making the recommendation. The Remuneration Committeeensures that the executive directors do not participate in makingdecisions on their own remuneration packages.

The details of remuneration receivable by directors of the Company during the year are as follows:

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Executive:Salaries and other emoluments 348 320 348 320Bonus - current year’s provisions 55 55 55 55

- under provision in prior year 28 - 28 -Defined contribution plan 56 48 56 48Estimated money value of benefits-in-kind 44 81 44 81

531 504 531 504Non-Executive:

Fees 318 318 318 318Other emoluments 89 102 71 71Estimated money value of benefits-in-kind 45 71 45 71

983 995 965 964

49

THE BOARD COMMITTEES

In line with the recommendations made under the MalaysianCode on Corporate Governance and the requirement forpublic listed companies to comply with corporategovernance under the BMSB Listing Requirements, SURIAhad formed the following committees to assist theManagement in its operation towards achieving the optimalgovernance framework:

• Nomination/Appointment Committee• Remuneration Committee• Audit and Risk Management Committee

The Board had also appointed Hj. Abdul Kadir Bin Md.Kassim, a Senior Independent & Non-Executive Director ofthe Group as a Reference Director to whom concernsregarding the running of the Group may be conveyed.

The Group Managing Director also has the service of theExecutive Management Committee (EXCOM) to refer to inperforming his day-to-day works.

With the establishment of these committees, the Board iswell informed of the running of the Group's business andthe various areas of risk management.

Nomination/Appointment Committee

The Nomination/Appointment Committee is responsible torecommend to the Board candidates for all directorships tobe filled for their approval and for submission to the AnnualGeneral Meeting for re-appointments or re-elections. The

Committee also recommends the appointment of the ChiefExecutive Officer. The duties and responsibilities of theCommittee include:

• Recommend to the Board, candidates for alldirectorships to be filled by the Board;

• Consider, in making its recommendations, candidates fordirectorships proposed by the Group Managing Directorand, within the bounds of practicability, by any otherSenior Officer or any Director or Shareholder;

• Recommend to the Board, Directors to fill the seats onBoard Committees;

• Examine the size of the Board with a view todetermine the number of directors on the Board inrelation to its effectiveness;

• Ensure that at every Annual General Meeting, one-third(1/3) of the Directors for the time being shall retirefrom the office;

• Review annually its required mix of skills and experienceand other qualities, including core competencies whichNon-Executive Directors should bring to the Board anddisclose the same in the annual report; and

• Assess annually the effectiveness of the Board as awhole, the committees of the Board and thecontribution of each individual Director based on theprocess implemented by the Board.

The number of directors of the Company whose total remuneration during the financial year fell within the following bandsis analysed below:

Number of Directors2007 2006

Executive Directors:RM500,001 – RM550,000 1 1

Non-Executive Directors:Below RM50,000 7 7RM50,001 – RM100,000 - -RM100,001 – RM150,000 - -RM150,001 – RM200,000 1 1


50


Remuneration Committee

The Remuneration Committee is responsible to review andrecommend to the Board the Group's remuneration policyincluding that of the Group's Executive Directors to ensurethat their remuneration reflects the industry practice andtheir contributions to the Group's growth and profitability.The remuneration policy also supports the Group'sobjectives and Shareholders' interests.

The determination of the remuneration of the Non-Executive Directors which are paid in the form of monthlyfees and attendance allowance is decided by the GeneralMeeting of members based on the recommendation of theBoard after making prior reference to industry practiceinvolving comparable organisation.

Audit and Risk Management Committee

The Audit and Risk Management Committee, was initiallyestablished as the Audit Committee in 1996. However, theBoard had approved the change of its name to Audit andRisk Management Committee to undertake the functions ofthe former Audit Committee adding to its portfolio thefunctions of Risk Management. The existing members of theformer Audit Committee automatically become themembers of the Audit and Risk Management Committee.

The Committee meets with the External and the InternalAuditors at least four (4) times annually to discuss thefinancial statements and their audit findings. It also meetswith the External Auditors whenever it deems necessary.

The minutes of the Committee meetings are formally tabledto the Board for noting and for action when necessary.

In addition to the duties and responsibilities set out underits terms of reference, the Committee acts as a forum fordiscussion of internal control issues and contributes to theBoard's review of the effectiveness of the Group's internalcontrol and risk management systems. The Audit Committeealso conducts a review of the internal audit function toensure the adequacy of the scope, functions and resourcesof Finance Division and that it has the necessary authorityto carry out its work impartially.

The activities of the former Audit Committee during theyear ended 31 December 2007 are set out under the Auditand Risk Management Committee Report on Pages 41 to 45.

SHAREHOLDERS

Dialogue With Shareholders and InvestorsThe Group acknowledges the importance of communicatingto its shareholders, investors and analysts. The Board alsorecognises the importance of transparency andaccountability to its shareholders and investors. This is donethrough the Annual General Meeting or the ExtraordinaryGeneral Meeting that serves as the main communicationchannel and principal forum for dialogue with Shareholders,also through the distribution of Annual Report to theshareholders and investors.

51

Responsibility Statement by Directors

ACCOUNTABILITY AND AUDIT

Financial ReportingThe Board is responsible for ensuring that the financialstatements of the Group as reported in the quarterlyannouncements to BMSB and the Annual Report toShareholders, are drawn up in accordance with CompaniesAct, 1965 and applicable Approved Accounting Standards inMalaysia, and so as to give a true and fair view of the stateof affairs of the Group as at the end of the reporting period.

The Audit and Risk Management Committee assists the Boardin ensuring accuracy and adequacy of information by reviewingand recommending for adoption of information for disclosure.

The Statement of Directors’ Responsibility for preparing theAnnual Audited Financial Statements pursuant to Section169 of the Companies Act, 1965 is set out on Page 59 ofthis Annual Report.

Internal ControlThe Board is fully aware and acknowledged theirresponsibilities to maintain a sound system of internalcontrol that covers not only the financial aspect but alsothe operation, risk management and compliance control tosafeguard shareholders’ investment and the Group’s assets.The key management personnel are tasked withresponsibility to monitor, manage and provide reports tothe Board on compliance of procedures, the financialstrength and the business activities of the Group.

An internal audit function has been established which isindependent of the activities it audits to regularly reviewand appraise the effectiveness of the Group’s system ofinternal controls. The internal audit function reports directlyto the Audit & Risk Management Committee. Audits areconducted based on operational, financial and administrativecontrols and compliance to the Group’s authority limits,policies and procedures, Securities Commission and BMSB’sListing Requirements, and other applicable laws and regulations.

The Group’s Statement on Internal Control is set out onPage 46 of this Annual Report.

Relationship With AuditorsThe Board has appropriately established a formal andtransparent relationship with the Group’s Auditors. TheExternal Auditors has continued to report to members ofthe Group of their findings that included as part of theGroup’s financial reports with respect to this year’s audit onstatutory financial statements.

The Group has established a good working relationship withits auditors through the Audit and Risk ManagementCommittee and the Internal Audit Department. The Auditand Risk Management Committee has always maintained aprofessional relationship with the External Auditors byensuring the Group taking the necessary action to addressthe key issues highlighted to the Group. Where necessary,meetings with the External Auditors are held. Under itsterms of reference, the Audit and Risk ManagementCommittee has expressed authority to communicate directlywith External and Internal Auditors. Meetings with Externaland Internal Auditors are held as appropriate to discuss theaudit plan, audit findings and the financial statements.External Auditors and Internal Auditors may, conversely, callfor a meeting with the Audit and Risk ManagementCommittee to discuss issues relating to the financialstatements and other related matters. Other Directors andSenior Management of the Group attend the Audit and RiskManagement Committee Meetings upon invitation.

The Audit and Risk Management Committee also reviewsthe appointment of the Group’s External Auditors and thefees payable to them on an annual basis. Whilst the ExternalAuditors may be appointed by the Company or Group toprovide services in relation to non-audit matters, therelationship with the External Auditors is monitored toensure that their impartiality and independence remainsunquestionable.

The detailed Audit and Risk Management Committee Reportis set out on Pages 41 to 45 of this Annual Report.

MATERIAL CONTRACT

There was no material contract entered into by the Groupinvolving the Directors’ and major shareholders’ interest,subsisting at the end of the year.

IMPOSITION OF SANCTION/PENALTY ON THEGROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007

There was no sanction or penalty imposed on the Group,Board Members and Management for the financial yearended 31 December 2007.

AMERICAN DEPOSITORY RECEIPT (ADR) ORGLOBAL DEPOSITORY RECEIPT (GDR)PROGRAMME

During the financial year, the Company did not sponsor anyADR or GDR programme.

CONFLICT OF INTEREST

None of the Directors has any family relationship withother Directors or major shareholders of the Company.However, Datuk Hj. Abu Bakar Bin Hj. Abas, Datuk AnthonyLai Vai Ming @ Lai Kheng Ming and Mohd Hasnol Bin Ayubeach holds 57,503; 20,000 and 2,500 shares respectivelydirectly in the share capital of the Company.

CONTRACTS RELATING TO LOAN

There were no contracts relating to loans by the Companyinvolving Directors and major shareholders.

CONVICTIONS FOR OFFENCES

None of the Directors have been convicted for offences withinthe past ten (10) years other than traffic offences, if any.

MATERIAL CONTRACTS

There were no material contracts between the Companyand its subsidiaries involving Directors’ and majorshareholders’ interests.

NON-AUDIT FEES

There were no non-audit fees paid to the external auditorsby the Company for the financial year.

OPTIONS, WARRANTS OF CONVERTIBLESECURITIES

No options, warrants or convertible securities were issuedby the Company during the financial year.

PROFIT GUARANTEE

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

RECURRENT RELATED PARTY TRANSACTIONS(RRPT)

There was no RRPT entered into during the financial year.

REVALUATIONS OF LANDED PROPERTIES

The Company does not have a revaluation policy on landedproperties.

SHARE BUYBACKS

During the financial year, there was no share buybacks bythe Company.

UTILISATION OF PROCEEDS

No proceeds were raised by the Company from anycorporate proposal.

52


Additional Compliance Information

5352

54 Directors’ Report

59 Statement by Directors

59 Statutory Declaration

60 Report of the Auditors

61 Income Statements

62 Balance Sheets

64 Consolidated Statement of Changes in Equity

65 Company Statement of Changes in Equity

66 Cash Flow Statements

68 Notes to the Financial Statements

Financial Statements 2007

Directors’ Report

54


The directors have pleasure in presenting their report together with the audited financial statements of the Group and of theCompany for the financial year ended 31 December 2007.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding, property development and those of engineering contractors.

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 CompanyRM’000 RM’000

Profit for the year 202,533 24,442

Attributable to:Equity holders of the Company 200,931 24,442Minority interests 1,602 -

202,533 24,442

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

In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year werenot substantially affected by any item, transaction or event of a material and unusual nature other than the effects arising fromthe approval obtained during the year by the subsidiary of the Company, Sabah Ports Sdn. Bhd., from the Minister of Financefor this subsidiary’s port operations to be regarded as an approved service project under Schedule 7B of the Income Tax Act,1967, whereby the subsidiary is entitled to claim investment allowance tax incentive at the rate of 100% on capital expenditureincurred for the period of five years from 1 September 2004 to 31 August 2009, which has resulted in an increase in theGroup’s profit for the year by:

a) RM38,499,000 due to utilisation of the abovementioned investment allowance tax incentive to offset against taxable incomeof prior years;

b) RM2,192,000 due to utilisation of the abovementioned investment allowance tax incentive to offset against taxable incomeof current year; and

c) RM113,815,000 relating to the recognition of deferred tax asset on unabsorbed investment allowance from theabovementioned tax incentive due to the early adoption of FRS 112: Income Taxes as disclosed in Note 2.3 to the financialstatements.

DIVIDENDS

The amount of dividends paid by the Company since 31 December 2006 were as follows:

RM’000

In respect of the financial year ended 31 December 2006 as reported in the directors’ report of that year:

Final dividend of 2.5% less 27% taxation on 566,655,984 ordinary shares, declared on 15 May 2007and paid on 31 May 2007 10,341

At the forthcoming Annual General Meeting, a final dividend of 6% less 26% taxation on 283,327,992 ordinary shares amountingto a dividend payable of RM12,579,763 (4.44 sen net per ordinary share) and a special tax exempt dividend of 6% on283,327,992 ordinary shares amounting to a dividend payable of RM16,999,680 (6.00 sen per ordinary share) in respect of thefinancial year ended 31 December 2007 will be proposed for shareholders’ approval. The financial statements for the currentfinancial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for inequity as an appropriation of retained earnings in the financial year ending 31 December 2008.

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:

Tan Sri Ibrahim Bin MenudinDatuk Hj. Abu Bakar Bin Hj. AbasDatuk Ismail Bin Awang BesarDatuk Dr. Mohd Yaakub Bin Hj. Johari, J.P.Datuk Anthony Lai Vai Ming @ Lai Kheng Ming, J.P.Datuk Filik Bin Madan @ EsongDatuk Dr. Hj. Patawari Bin Hj. PataweHj. Abdul Kadir Bin Md. KassimMohd Hasnol Bin Ayub

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which theCompany was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures ofthe Company or any other body corporate.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other thanbenefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salaryof a full-time employee of the Company as shown in Note 9 to the financial statements) by reason of a contract made by theCompany or a related corporation with any director or with a firm of which he is a member, or with a company in which hehas a substantial financial interest, except as disclosed in Note 36 to the financial statements.

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Directors’ Report

56


DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year inshares in the Company and its related corporations during the financial year were as follows:

Number of Ordinary Shares of RM1 EachPar ValueReductionand Share

1.1.2007 Acquired Consolidation Sold 31.12.2007

The Company

Direct Interest:Datuk Hj. Abu Bakar Bin Hj. Abas 115,000 - (57,497) - 57,503Datuk Anthony Lai Vai Ming

@ Lai Kheng Ming, J.P. - 20,000 - - 20,000Mohd Hasnol Bin Ayub 5,000 - (2,500) - 2,500

None of the other directors in office at the end of the financial year had any interest in shares in the Company or its relatedcorporations during the financial year.

CAPITAL RESTRUCTURING

During the financial year, the Company completed the implementation of capital restructuring exercise involving the following:

a) the reduction of the entire issued and paid up share capital of the Company from RM566,655,984 divided into 566,655,984ordinary shares of RM1.00 each to RM283,327,992 divided into 566,655,984 ordinary shares of RM0.50 each, by way ofcancellation of RM0.50 of the par value of each of the 566,655,984 issued and paid up ordinary shares of the Company(“Par Value Reduction”);

b) the reduction of the share premium account of the Company by RM68,713,923 and to utilise the credit arising from theshare premium reduction together with the credit from the Par Value Reduction of RM283,327,992 to eliminate theaccumulated losses of the Company; and

c) the consolidation of the resultant 566,655,984 ordinary shares of RM0.50 each in the Company, on the basis of everytwo (2) ordinary shares of RM0.50 each after the Par Value Reduction into one (1) ordinary share of RM1.00 each.(“Share Consolidation”).

The ordinary shares of RM1.00 each in the Company after the Share Consolidation shall rank equally in all respects with theexisting issued and paid-up share capital of the Company.

OTHER STATUTORY INFORMATION

a) Before the income statements and balance sheets of the Group and of the Company were made out, the directors tookreasonable steps:

i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provisionfor doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provisionhad been made for doubtful debts; and

ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records inthe 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 statementsof 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 renderadherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading orinappropriate.

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

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 whichsecures 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.

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 oftwelve months after the end of the financial year which will or may affect the ability of the Group or of theCompany 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 thefinancial year and the date of this report which is likely to affect substantially the results of the operations of theGroup or of the Company for the financial year in which this report is made.

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Directors’ Report

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SIGNIFICANT EVENT

In addition to the significant events disclosed elsewhere in this report, other significant event on acquisition of equity interestin subsidiary is disclosed in Note 18 to the financial statements.

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 26 February 2008.

TAN SRI IBRAHIM BIN MENUDIN DATUK HJ. ABU BAKAR BIN HJ. ABAS

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

We, TAN SRI IBRAHIM BIN MENUDIN and DATUK HJ. ABU BAKAR BIN HJ. ABAS, being two of the directors of SURIACAPITAL HOLDINGS BERHAD, do hereby state that, in the opinion of the directors, the accompanying financial statementsset out on pages 61 to 119 are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable FinancialReporting Standards in Malaysia so as to give a true and fair view of the financial position of the Group and of the Companyas at 31 December 2007 and of the results and the cash flows of the Group and of the Company for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the directors dated 26 February 2008.

TAN SRI IBRAHIM BIN MENUDIN DATUK HJ. ABU BAKAR BIN HJ. ABAS

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

I, MOHAMAD YASIN BIN ABDULLAH, being the officer primarily responsible for the financial management of SURIA CAPITALHOLDINGS BERHAD, do solemnly and sincerely declare that the accompanying financial statements set out on pages 61 to 119are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue ofthe provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by theabovenamed MOHAMAD YASIN BIN ABDULLAH at Kota Kinabalu in the Stateof Sabah on 26 February 2008 MOHAMAD YASIN BIN ABDULLAH

Before me,

59

Report of the Auditorsto the Members of Suria Capital Holdings Berhad

60


We have audited the financial statements set out on pages 61 to 119. These financial statements are the responsibility of theCompany’s directors.

It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report ouropinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do notassume responsibility to any other person for the content of this report.

We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, aswell as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis forour opinion.

In our opinion:

a) the financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 andapplicable Financial Reporting Standards in Malaysia so as to give a true and fair view of:

i) the financial position of the Group and of the Company as at 31 December 2007 and of the results and the cashflows of the Group and of the Company for the year then ended; and

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

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

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

Our auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not includeany comment required to be made under Section 174(3) of the Act.

ERNST & YOUNG CHIN MUI KHIONG PETERAF: 0039 1881/03/08(J)Chartered Accountants Partner

Kota Kinabalu, Malaysia26 February 2008

Income StatementsFor the Year Ended 31 December 2007

Group Company2007 2006 2007 2006

Note RM’000 RM’000 RM’000 RM’000

Revenue 3 310,243 211,445 103,821 59,046Cost of sales 4 (203,104) (126,195) (67,094) (44,844)

Gross profit 107,139 85,250 36,727 14,202Other income 5 6,449 9,062 356 498Administrative expenses (21,338) (18,219) (7,752) (6,003)Other expenses (6,300) (4,899) - -

Operating profit 85,950 71,194 29,331 8,697Finance costs 6 (14,471) (1,705) - -Share of loss of associate (7) (27) - -

Profit before tax 7 71,472 69,462 29,331 8,697Income tax expense 10 131,061 (22,549) (4,889) (2,049)

Profit for the year 202,533 46,913 24,442 6,648

Attributable to:Equity holders of the Company 200,931 46,902 24,442 6,648Minority interests 1,602 11 - -

202,533 46,913 24,442 6,648

2007 2006(Restated)

Earnings per ordinary share attributableto equity holders of the Company (sen):

Basic 11 70.92 16.55

Diluted 11 70.92 16.55

The accompanying notes form an integral part of the financial statements.

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62


Balance SheetsAs at 31 December 2007

Group Company2007 2006 2007 2006

Note RM’000 RM’000 RM’000 RM’000

ASSETSNon-current assetsProperty, plant and equipment 13 579,552 420,304 2,590 2,765Land held for property development 14 33,815 32,945 31,113 31,113Investment properties 15 2,668 2,725 6,336 6,571Prepaid land lease payments 16 24,891 25,155 23,296 23,539Intangible assets 17 105,200 108,889 - -Investments in subsidiaries 18 - - 201,050 199,650Investment in associate 19 357 364 - -Deferred tax assets 20 90,400 - - -

836,883 590,382 264,385 263,638

Current assetsInventories 21 1,638 1,743 - -Trade and other receivables 22 83,847 66,493 30,495 29,644Short term investments 23 62,049 17,849 18,903 14,867Cash and bank balances 24 84,090 101,706 62,852 66,507

231,624 187,791 112,250 111,018

TOTAL ASSETS 1,068,507 778,173 376,635 374,656

EQUITY AND LIABILITIESEquity attributable to equity holders

of the CompanyShare capital 25 283,328 566,656 283,328 566,656Share premium 25 62,785 131,884 62,785 131,884Retained earnings/(accumulated losses) 26 279,964 (260,571) 14,486 (352,042)

626,077 437,969 360,599 346,498Minority interests 2,075 1,262 - -

Total equity 628,152 439,231 360,599 346,498

Group Company2007 2006 2007 2006

Note RM’000 RM’000 RM’000 RM’000

Non-current liabilitiesBorrowings 27 121,559 17,209 - -Loan from Sabah Ports Authority 30 169,156 161,436 - -Amount due to Sabah Ports Authority 31 59,267 59,267 - -Deferred tax liabilities 20 90 8,051 - -

350,072 245,963 - -

Current liabilitiesBorrowings 27 15,169 5,223 - -Trade and other payables 32 73,243 81,757 15,840 28,158Amount due to Sabah Ports Authority 31 490 2,070 - -Current tax payable 1,381 3,929 196 -

90,283 92,979 16,036 28,158

Total liabilities 440,355 338,942 16,036 28,158

TOTAL EQUITY AND LIABILITIES 1,068,507 778,173 376,635 374,656


63

Consolidated Statement of Changes in EquityFor the Year Ended 31 December 2007

64


<------- Attributable to Equity Holders of the Company ------->Non-

Distributable DistributableRetained

Note Earnings/Share Share (Accumulated Minority Total

Capital Premium Losses) Total Interests EquityRM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2006 566,656 131,884 (303,393) 395,147 1,251 396,398Profit for the year - - 46,902 46,902 11 46,913Dividends 12 - - (4,080) (4,080) - (4,080)

At 31 December 2006 566,656 131,884 (260,571) 437,969 1,262 439,231

Capital restructuring (283,328) (68,714) 352,042 - - -Acquisition of equity

interest in subsidiary - - - - (144) (144)Subscription of shares

in subsidiary - - - - 450 450Transaction costs transfer

to share premium account - (385) 385 - - -Profit for the year - - 200,931 200,931 1,602 202,533Dividends paid by subsidiary 12 - - - - (1,095) (1,095)Dividends 12 - - (10,341) (10,341) - (10,341)Section 108 shortfall for

dividend paid by subsidiaryin respect of year 2005 - - (2,482) (2,482) - (2,482)

At 31 December 2007 283,328 62,785 279,964 626,077 2,075 628,152

Company Statement of Changes in EquityFor the Year Ended 31 December 2007

65

Non-Distributable Distributable

RetainedEarnings/

Share Share (Accumulated TotalCapital Premium Losses) Equity

Note RM’000 RM’000 RM’000 RM’000

At 1 January 2006 566,656 131,884 (354,610) 343,930Profit for the year - - 6,648 6,648Dividends 12 - - (4,080) (4,080)

At 31 December 2006 566,656 131,884 (352,042) 346,498Capital restructuring (283,328) (68,714) 352,042 -Profit for the year - - 24,442 24,442Transaction costs transfer

to share premium account - (385) 385 -Dividends 12 - - (10,341) (10,341)

At 31 December 2007 283,328 62,785 14,486 360,599


Cash Flow StatementsFor the Year Ended 31 December 2007

66


Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000(Restated)

CASH FLOWS FROM OPERATING ACTIVITIESProfit before tax 71,472 69,462 29,331 8,697Adjustments for:

Amortisation of port concession rights 3,689 3,686 - -Amortisation of prepaid land lease payments 264 263 243 243Bad debts written off 135 12 17 -Capital work-in-progress written off 318 - - -Depreciation of investment properties 57 56 235 235Depreciation of property, plant and equipment 20,710 12,019 289 525Dividend and investment income (785) (1,501) (27,119) (6,599)Finance costs 14,471 1,705 - -Gain on disposal of equipment (4) (477) - (1)Gain on disposal of short term investments (164) - (164) -Interest income (2,663) (3,678) (1,602) (1,909)Loss on disposal of equipment 40 - - -Negative goodwill on acquisition of subsidiary (144) - - -Short term accumulated compensated absences 801 87 31 -Short term accumulated compensated absences

written back (7) - - -Provision for diminution in value of

short term investments written back - (309) - (309)Provision for doubtful debts 161 49 - -Provision for doubtful debts written back (112) - - -Plant and equipment written off 578 - - -Share of loss of associate 7 27 - -

Operating profit before working capital changes 108,824 81,401 1,261 882Decrease/(increase) in inventories 105 (241) - -Decrease/(increase) in receivables 3,181 (18,311) (2,132) (14,153)Decrease in amount due to Sabah Ports Authority (1,580) (8,515) - -Increase in short term investments (45,164) (1,874) (5,000) (399)(Increase)/decrease in payables (9,308) 31,810 (12,349) 17,175

Cash generated from operations 56,058 84,270 (18,220) 3,505Tax paid (8,661) (16,735) (604) (2,477)Tax refunded 15,406 770 831 770

Net cash generated from/(used in) operating activities 62,803 68,305 (17,993) 1,798

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000(Restated)

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment (133,848) (126,644) (114) (210)Proceeds from disposal of equipment 2,546 743 - 9Purchase of land held for development (870) (139) - -Proceeds from disposal of short-term investment 1,550 - 1,550 -Net change in intangible assets - (2,390) - -Investment in subsidiary - - (1,400) -Investment income received 566 - - -Interest received 2,664 3,542 1,602 1,773Dividends received 2 1,501 23,041 6,599

Net cash (used in)/generated from investing activities (127,390) (123,387) 24,679 8,171

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issuance of ordinary shares

to minority shareholder 450 - - -Proceeds from issuance of Islamic Debt Securities 80,000 - - -Drawdown of loan from Sabah Ports Authority - 3,000 - -Repayments of hire purchase liabilities (12,179) (2,677) - (7)Interest paid (9,864) (9,289) - -Dividends paid (11,436) (4,080) (10,341) (4,080)

Net cash generated from/(used in) financing activities 46,971 (13,046) (10,341) (4,087)

Net (decrease)/increase in cashand cash equivalents (17,616) (68,128) (3,655) 5,882

Cash and cash equivalentsat beginning of year 101,706 169,834 66,507 60,625

Cash and cash equivalentsat end of year (Note 24) 84,090 101,706 62,852 66,507


67

Notes to the Financial Statements31 December 2007

68


1. CORPORATE INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Boardof Bursa Malaysia Securities Berhad. The registered office and principal place of business of the Company are located atLot 8CF 01-02, 8th Floor, Block C, Kompleks Karamunsing, Km 2.4, Jalan Tuaran, 88300 Kota Kinabalu, Sabah.

The principal activities of the Company are investment holding, property development and those of engineeringcontractors. The principal activities of the subsidiaries are set out in Note 18 to the financial statements. There have beenno significant changes in the nature of the principal activities during the financial year.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of thedirectors on 26 February 2008.

2. SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

The financial statements comply with the provisions of the Companies Act, 1965 and applicable Financial ReportingStandards in Malaysia. During the current financial year, the Company had adopted new and revised FinancialReporting Standards (FRSs) as described fully in Note 2.3.

The financial statements of the Group and of the Company have been prepared on a historical basis. The financialstatements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000)except when otherwise indicated.

2.2 Summary of Significant Accounting Policies

a) Subsidiaries and Basis of Consolidation

i) SubsidiariesSubsidiaries are entities over which the Group has the ability to control the financial and operating policiesso as to obtain benefits from their activities. The existence and effect of potential voting rights that arecurrently exercisable or convertible are considered when assessing whether the Group has such powerover another entity.

In the Company’s separate financial statements, investments in subsidiaries are stated at cost lessimpairment losses. On disposal of such investments, the difference between net disposal proceeds and theircarrying amounts is included in the income statement.

ii) Basis of ConsolidationThe consolidated financial statements comprise the financial statements of the Company and its subsidiariesas at the balance sheet date. The financial statements of the subsidiaries are prepared for the samereporting date as the Company.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtainscontrol, and continue to be consolidated until the date that such control ceases. In preparing theconsolidated financial statements, intragroup balances, transactions and unrealised gains or losses areeliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for liketransactions and events in similar circumstances.

2. SIGNIFICAT ACCOUNTING POLICIES (CONT’D.)

2.2 Summary of Significant Accounting Policies (Cont’d.)

a) Subsidiaries and Basis of Consolidation (Cont’d.)

ii) Basis of Consolidation (Cont’d.)Acquisitions of subsidiaries are accounted for using the purchase method. The purchase method ofaccounting involves allocating the cost of the acquisition to the fair value of the assets acquired andliabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measuredas the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred orassumed, and equity instruments issued, plus any costs directly attributable to the acquisition.

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiableassets, liabilities and contingent liabilities represents goodwill. Any excess of the Group’s interest in the netfair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition isrecognised immediately in the income statement.

Minority interests represent the portion of income statement and net assets in subsidiaries not held by theGroup. It is measured at the minorities’ share of the fair value of the subsidiaries’ identifiable assets andliabilities at the acquisition date and the minorities’ share of changes in the subsidiaries’ equity since then.

b) AssociatesAssociates are entities in which the Group has significant influence and that is neither a subsidiary nor aninterest in a joint venture. Significant influence is the power to participate in the financial and operating policydecisions of the investee but not in control or joint control over those policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method ofaccounting. Under the equity method, the investment in associate is carried in the consolidated balance sheetat cost adjusted for post-acquisition changes in the Group’s share of net assets of the associate. The Group’sshare of the net profit or loss of the associate is recognised in the consolidated income statement. Where therehas been a change recognised directly in the equity of the associate, the Group recognises its share of suchchanges. In applying the equity method, unrealised gains and losses on transactions between the Group and theassociate are eliminated to the extent of the Group’s interest in the associate. After application of the equitymethod, the Group determines whether it is necessary to recognise any additional impairment loss with respectto the Group’s net investment in the associate. The associate is equity accounted for from the date the Groupobtains significant influence until the date the Group ceases to have significant influence over the associate.

Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised.Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities andcontingent liabilities over the cost of the investment is excluded from the carrying amount of the investmentand is instead included as income in the determination of the Group’s share of the associate’s profit or loss inthe period in which the investment is acquired.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including anylong-term interests that, in substance, form part of the Group’s net investment in the associate, the Group doesnot recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

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70


2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)


b) Associates (Cont’d.)The most recent available audited financial statements of the associates are used by the Group in applying theequity method. Where the dates of the audited financial statements used are not coterminous with those ofthe Group, the share of results is arrived at from the last audited financial statements available and managementfinancial statements to the end of the accounting period. Uniform accounting policies are adopted for liketransactions and events in similar circumstances.

In the Company’s separate financial statements, investments in associates are stated at cost less impairment losses.

On disposal of such investments, the difference between the net disposal proceeds and their carrying amountsis included in the income statement.

c) Intangible Assets

i) Goodwill on Business AcquisitionGoodwill acquired in a business combination is initially measured at cost being the excess of the cost ofbusiness combination over the Group’s interest in the net fair value of the identifiable assets, liabilities andcontingent liabilities. Following the initial recognition, goodwill is measured at cost less any accumulatedimpairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or morefrequently if events or changes in circumstances indicate that the carrying value may be impaired. Gainsand losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

ii) Other Intangible AssetsIntangible assets acquired separately are measured on initial recognition at cost. The cost of intangibleassets acquired in a business combination is their fair values as at the date of acquisition. Following initialrecognition, intangible assets are carried at cost less any accumulated amortisation and any accumulatedimpairment losses. The useful lives of intangible assets are assessed to be either finite or indefinite.Intangible assets with finite lives are amortised on a straight-line basis over the estimated economic usefullives and assessed for impairment whenever there is an indication that the intangible asset may beimpaired. The amortisation period and the amortisation method for an intangible asset with a finite usefullife are reviewed at least at each balance sheet date.

Intangible assets with indefinite useful lives are not amortised but tested for impairment annually or morefrequently if the events or changes in circumstances indicate that the carrying value may be impaired eitherindividually or at the cash-generating unit level. The useful life of an intangible asset with an indefinite lifeis also reviewed annually to determine whether the useful life assessment continues to be supportable.

Port Concession RightsPort concession rights represent the excess of the ascribed value of port operations paid by the Groupover the fair values of the Group’s share of the identified movable assets and liabilities acquired from theSabah Ports Authority pursuant to the Privatisation Agreement entered between the Group, the SabahState Government and Sabah Ports Authority in September 2003 (Privatisation Agreement). The ascribedvalue of port operations inclusive of the port undertakings and existing movable assets is determined basedon an independent valuation carried out by an appointed consultant. The valuation was based on “as iswhere is” basis using the Discounted Cash Flow method of valuation and at a discount factor of 11.5%.



c) Intangible Assets (Cont’d.)

ii) Other Intangible Assets (Cont’d.)

Port Concession Rights (Cont’d.)Port concession rights are stated at cost less accumulated amortisation and impairment losses.

Port concession rights is amortised and charged to the income statement on a straight-line basis over theport concessions period of 30 years.

Software Licence and Port Management System Development CostsSoftware licence and port management system development costs are stated at cost less any impairmentlosses. Impairment is assessed whenever there is an indication of impairment and the amortisation periodand method are also reviewed at least at each balance sheet date. Amortisation of the assets commenceswhen the asset is ready in use.

d) Property, Plant and Equipment, and DepreciationAll items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in theasset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that futureeconomic benefits associated with the item will flow to the Group and the cost of the item can be measuredreliably. All other repairs and maintenance are charged to the income statement during the financial period inwhich they are incurred.

Subsequent to recognition, property, plant and equipment are stated at cost less accumulated depreciation andany accumulated impairment losses.

Port development and ancillary facilities construction-in-progress are not depreciated as these assets are notavailable for use. Depreciation of other property, plant and equipment is provided for on a straight-line basis towrite off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:

Buildings 2% - 3.33%Wharves and jetties 3.33% or the remaining concession periodFerry terminal Over remaining lease periodCargo handling equipment 5% - 10%Motor vehicles, furniture, fittings and equipment 10% - 40%Renovation 20%

The residual values, useful life and depreciation method are reviewed at each financial year end to ensure thatthe amount, method and period of depreciation are consistent with previous estimates and the expected patternof consumption of the future economic benefits embodied in the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefitsare expected from its use or disposal. The difference between the net disposal proceeds, if any and the netcarrying amount is recognised in the income statement.

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72




e) Investment PropertiesInvestment properties are properties which are held either to earn rental income or for capital appreciation or forboth. Properties that are occupied by the companies in the Group are accounted for as owner-occupied rather thanas investment properties. Investment properties are stated at cost less accumulated depreciation and impairment losses,consistent with the accounting policy for property, plant and equipment as stated in accounting policy Note 2.2(d).

A property interest under an operating lease is classified and accounted for as an investment property on aproperty-by-property basis when the Group holds it to earn rentals or for capital appreciation or both.

Investment properties are derecognised when either they have been disposed of or when the investmentproperty is permanently withdrawn from use and no future economic benefit is expected from its disposal. Anygains or losses on the retirement or disposal of an investment property are recognised in the income statementin the year in which they arise.

f) Land Held for Property Development and Property Development Costs

i) Land Held for Property DevelopmentLand held for property development consists of land where no development activities have been carried outor where development activities are not expected to be completed within the normal operating cycle. Suchland 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 whendevelopment activities have commenced and where it can be demonstrated that the development activitiescan be completed within the normal operating cycle.

ii) Property Development CostsProperty development costs comprise all costs that are directly attributable to development activities orthat can be allocated on a reasonable basis to such activities.

When the financial outcome of a development activity can be reliably estimated, property developmentrevenue and expenses are recognised in the income statement by using the stage of completion method.The stage of completion is determined by the proportion that property development costs incurred forwork performed to date bear to the estimated total property development costs.

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

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

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

The excess of revenue recognised in the income statement over billings to purchasers is classified asaccrued billings within trade receivables and the excess of billings to purchasers over revenue recognisedin the income statement is classified as progress billings within trade payables.



g) ContractsWhere the outcome of a contract can be reliably estimated, contract revenue and contract costs are recognisedas revenue and expenses respectively by using the stage of completion method. The stage of completion ismeasured by reference to the proportion of contract costs incurred for work performed to date to theestimated total contract costs.

Where the outcome of a contract cannot be reliably estimated, contract revenue is recognised to the extentof contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses inthe period in which they are incurred.

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

When the total of costs incurred on contracts plus, recognised profits (less recognised losses), exceeds progressbillings, the balance is classified as amount due from customers on contracts. When progress billings exceedcosts incurred plus, recognised profits (less recognised losses), the balance is classified as amount due tocustomers on contracts.

h) Impairment of Non-financial AssetsThe carrying amounts of assets, other than investment property, contract assets, property development costs,inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether there is anyindication of impairment. If any such indication exists, the asset’s recoverable amount is estimated to determinethe amount of impairment loss.

For goodwill, intangible assets that have an indefinite useful life and intangible assets that are not yet availablefor use, the recoverable amount is estimated at each balance sheet date or more frequently when indicatorsof impairment are identified.

For the purpose of impairment testing of these assets, recoverable amount is determined on an individual assetbasis unless the asset does not generate cash flows that are largely independent of those from other assets. Ifthis is the case, recoverable amount is determined for the cash-generating unit (CGU) to which the assetbelongs to. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of theGroup’s CGUs, or groups of CGUs, that are expected to benefit from the synergies of the combination,irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value inuse. In assessing value in use, the estimated future cash flows 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 tothe asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is consideredimpaired and is written down to its recoverable amount. Impairment losses recognised in respect of a CGU orgroups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units orgroups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units ona pro-rata basis.

An impairment loss is recognised in income statement in the period in which it arises.

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h) Impairment of Non-financial Assets (Cont’d.)Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other thangoodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’srecoverable amount since the last impairment loss was recognised. The carrying amount of an asset other thangoodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carryingamount that would have been determined (net of amortisation or depreciation) had no impairment loss beenrecognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill isrecognised in the income statement.

i) InventoriesInventories are stated at lower of cost and net realisable value.

Costs of spare parts are determined using the first in, first out method. Costs of consumable stores aredetermined using weighted average basis. The costs of inventories comprises costs of purchase.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costsnecessary to make the sale.

j) Financial InstrumentsFinancial instruments are recognised in the balance sheet when the Group has become a party to thecontractual provisions of the instrument.

Financial instruments are classified as assets, liabilities or equity in accordance with the substance of thecontractual arrangement. Interest, dividends and gains and losses relating to a financial instrument are reportedas expense or income. Distributions to holders of financial instruments classified as equity are recogniseddirectly in equity. Financial instruments are offset when the Group has a legally enforceable right to offset andintends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

i) Cash and Cash EquivalentsFor the purposes of the cash flow statements, cash and cash equivalents include cash on hand and at bank,deposit at call and short term highly liquid investments which have an insignificant risk of changes in value,net of outstanding bank overdrafts, if any.

ii) Short Term InvestmentsShort term investments are stated at cost less impairment losses. On disposal of an investment, thedifference between net disposal proceeds and its carrying amount is recognised in income statement.

iii) Trade ReceivablesTrade receivables are carried at anticipated realisable values. Bad debts are written off when identified. Anestimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheetdate.

iv) Trade PayablesTrade payables are stated at the fair value of the consideration to be paid in the future for goods andservices received.



j) Financial Instruments (Cont’d.)

v) Interest Bearing Loans and Borrowings All loans and borrowings are initially recognised at the fair value of the consideration received less directlyattributable transaction costs. After initial recognition, interest bearing loans and borrowings aresubsequently measured at amortised cost using the effective interest method.

vi) Equity InstrumentsOrdinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in theperiod in which they are declared.

The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax.Equity transaction costs comprise only those incremental external costs directly attributable to the equitytransaction which would otherwise have been avoided.

The consideration paid, including attributable transaction costs on repurchased ordinary shares of theCompany that have not been cancelled, are classified as treasury shares and presented as a deduction fromequity. No gain or loss is recognised in income statement on the sale, re-issuance or cancellation oftreasury shares. When treasury shares are reissued by resale, the difference between the salesconsideration and the carrying amount is recognised in equity.

vii) Derivative Financial InstrumentDerivative financial instruments are not recognised in the financial statements.

k) Leases

i) ClassificationA lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewardsincidental to ownership. Leases of land and buildings are classified as operating or finance leases in thesame way as leases of other assets and the land and buildings elements of a lease of land and buildingsare considered separately for the purposes of lease classification. All leases that do not transfersubstantially all the risks and rewards are classified as operating leases, with the following exceptions:

- Property held under operating leases that would otherwise meet the definition of an investmentproperty is classified as an investment property on a property-by-property basis and, if classified asinvestment property, is accounted for as if held under a finance lease (Note 2.2(e)); and

- Land held for own use under an operating lease, the fair value of which cannot be measured separatelyfrom the fair value of a building situated thereon at the inception of the lease, is accounted for asbeing held under a finance lease, unless the building is also clearly held under an operating lease.

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k) Leases (Cont’d.)

ii) Finance Leases - the Group as LesseeAssets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower oftheir fair values and the present value of the minimum lease payments at the inception of the leases, lessaccumulated depreciation and impairment losses. The corresponding liability is included in the balance sheetas borrowings. In calculating the present value of the minimum lease payments, the discount factor used isthe interest rate implicit in the lease, when it is practicable to determine; otherwise, the Group’s incrementalborrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets.

Lease payments are apportioned between the finance costs and the reduction of the outstanding liability.Finance costs, which represent the difference between the total leasing commitments and the fair value ofthe assets acquired, are recognised in the income statement over the term of the relevant lease so as toproduce a constant periodic rate of charge on the remaining balance of the obligations for each accountingperiod.

The depreciation policy for leased assets is in accordance with that for depreciable property, plant andequipment as described in Note 2.2(d).

iii) Operating Leases - the Group as LesseeOperating lease payments are recognised as an expense on a straight-line basis over the term of therelevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction ofrental expense over the lease term on a straight-line basis.

In the case of a lease of land and buildings, the minimum lease payments or the up-front payments madeare allocated, whenever necessary, between the land and the buildings elements in proportion to therelative fair values for leasehold interests in the land element and buildings element of the lease at theinception of the lease. The up-front payment represents prepaid lease payments and are amortised on astraight-line basis over the lease term.

iv) Operating Leases - the Group as LessorAssets leased out under operating leases are presented on the balance sheets according to the nature ofthe assets. Rental income from operating leases is recognised on a straight-line basis over the term of therelevant lease (Note 2.2(q)(vi)). Initial direct costs incurred in negotiating and arranging an operating leaseare added to the carrying amount of the leased asset and recognised on a straight-line basis over the leaseterm.

l) Borrowing CostsBorrowing costs directly attributable to the acquisition, construction or production of qualifying assets, whichare assets that necessarily take a substantial period of time to get ready for their intended use or sale, areadded to the cost of those assets, until such time as the assets are substantially ready for their intended useor sale. Investment income earned on the temporary investment of specific borrowings pending theirexpenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in income statement in the period in which they are incurred.



m) Income TaxIncome tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expectedamount of income taxes payable in respect of the taxable profit for the year and is measured using the taxrates that have been enacted at the balance sheet date.

Deferred tax is provided for, using the liability method. In principle, deferred tax liabilities are recognised for alltaxable temporary differences and deferred tax assets are recognised for all deductible temporary differences,unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be availableagainst which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or fromthe initial recognition of an asset or liability in a transaction which is not a business combination and at thetime of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realisedor the liability is settled, based on tax rates that have been enacted or substantively enacted at the balancesheet date. Deferred tax is recognised as income or an expense and included in the income statement for theperiod, except when it arises from a transaction which is recognised directly in equity, in which case thedeferred tax is also recognised directly in equity, or when it arises from a business combination that is anacquisition, in which case the deferred tax is included in the resulting goodwill or the amount of any excess ofthe acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilitiesover the cost of the combination.

n) ProvisionsProvisions for liabilities are recognised when the Group has a present obligation as a result of a past event andit is probable that an outflow of resources embodying economic benefits will be required to settle the obligation,and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date andadjusted to reflect the current best estimate. Where the effect of the time value of money is material, provisionsare discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability.Wherediscounting is used, the increase in the provision due to the passage of time is recognised as finance cost.

Provision for restructuring costs is recognised when a detailed and formal restructuring plan has been approved,and the restructuring has either commenced or has been announced publicly. Costs relating to ongoing activitiesare not provided for.

o) Employee Benefits

i) Short Term BenefitsWages, salaries, bonuses and social security contributions are recognised as an expense in the year inwhich the associated services are rendered by employees of the Group. Short term accumulatingcompensated absences such as paid annual leave are recognised when services are rendered by employeesthat increase their entitlement to future compensated absences. Short term non-accumulating compensatedabsences such as sick leave are recognised when the absences occur.

ii) Defined Contribution PlansDefined contribution plans are post-employment benefit plans under which the Group pays fixedcontributions into separate entitles or funds and will have no legal or constructive obligation to pay furthercontributions if any of the funds do not hold sufficient assets to pay all employee benefits relating toemployee services in the current and preceding financial years. Such contributions are recognised as anexpense in the income statement as incurred. As required by law, companies in Malaysia make suchcontributions to the Employees’ Provident Fund (“EPF”).

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p) Foreign Currencies

i) Functional and Presentation CurrencyThe individual financial statements of each entity in the Group are measured using the currency of theprimary economic environment in which the entity operates (“the functional currency”). The consolidatedfinancial statements are presented in Ringgit Malaysia (RM), which is also the Group’s functional currency.

ii) Foreign Currency TransactionsIn preparing the financial statements of the individual entities, transactions in currencies other than theentity’s functional currency (foreign currencies) are recorded in the functional currencies using theexchange rates prevailing at the dates of the transactions. At each balance sheet date, monetary itemsdenominated in foreign currencies are translated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the ratesprevailing on the date when the fair value was determined. Non-monetary items that are measured interms of historical cost in a foreign currency are not translated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetaryitems, are included in the income statement for the period.

Exchange differences arising on the translation of non-monetary items carried at fair value are included inincome statement for the period except for the differences arising on the translation of non-monetaryitems in respect of which gains and losses are recognised directly in equity. Exchange differences arisingfrom such non-monetary items are also recognised directly in equity.

q) Revenue RecognitionRevenue is recognised when it is probable that the economic benefits will flow to the Group and the amountof the revenue can be reliably measured. The following specific recognition criteria must also be met beforerevenue is recognised:

i) Sale of GoodsRevenue is recognised net of sales taxes upon transfer of significant risks and rewards of ownership tothe buyer. Revenue is not recognised to the extent where there are significant uncertainties regardingrecovery of the consideration due, associated costs or the possible return of goods.

ii) Revenue from ContractsRevenue from contracts is accounted for by the stage of completion method as described in Note 2.2(g).

iii) Revenue from Port OperationsRevenue from port operations are recognised on an accrual basis.

iv) Revenue from ServicesRevenue from services rendered is recognised net of discounts as and when the services are rendered.

v) Revenue from Sale of TicketsRevenue from sale of tickets is recognised on cash basis.



q) Revenue Recognition (Cont’d.)

vi) Rental IncomeRental income is recognised on a straight-line basis over the term of the lease.The aggregate cost of incentivesprovided to lessees is recognised as a reduction of rental income over the lease term on a straight-line basis.

vii) Interest IncomeInterest income is recognised on an accrual basis using the effective interest method.

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

ix) Management FeesManagement fees are recognised when services are rendered.

2.3 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs

On 1 January 2007, the Company adopted the new and revised FRSs which are mandatory for the current financial year.The adoption of the relevant new and revised FRSs did not result in significant changes in accounting policies of the Group.

At the date of authorisation of these financial statements, the following FRSs, amendments to FRSs and IssuesCommittee (“IC”) Interpretations were in issue but not yet effective and have not been applied by the Group andthe Company:

Effective for financial periodFRSs, Amendments to FRSs and IC Interpretations beginning on or after

FRS 107: Cash Flow Statements 1 July 2007FRS 111: Construction Contracts 1 July 2007FRS 118: Revenue 1 July 2007FRS 120: Accounting for Government Grants and Disclosure of Government Assistance 1 July 2007FRS 134: Interim Financial Reporting 1 July 2007FRS 137: Provisions, Contingent Liabilities and Contingent Assets 1 July 2007FRS 139: Financial Instruments: Recognition and Measurement DeferredAmendment to FRS 121: The Effects of Changes in

Foreign Exchange Rates - Net Investment in a Foreign Operation 1 July 2007IC Interpretation 1: Changes in Existing Decommissioning, Restoration and Similar Liabilities 1 July 2007IC Interpretation 2: Members’ Shares in Co-operative Entities and Similar Instruments 1 July 2007IC Interpretation 5: Rights to Interest arising from

Decommissioning, Restoration and Environmental Rehabilitation Funds 1 July 2007IC Interpretation 6: Liabilities arising from participating

in a Specific Market - Waste Electrical and Electronic Equipment 1 July 2007IC Interpretation 7: Applying the Restatement Approach under FRS 1292004

- Financial Reporting in Hyperinflationary Economics 1 July 2007IC Interpretation 8: Scope of FRS 2 1 July 2007

The above new and revised FRSs, amendments to FRSs and Interpretations are expected to have no significant impact onthe financial statements of the Group and the Company upon their initial application. The Group and the Company areexempted from disclosing the possible impact, if any, to the financial statements upon the initial application of FRS 139.

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2.3 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs (Cont’d.)

The principal change in accounting policy and the effects arising from the adoption of FRS 112 are discussed below.

(a) FRS 112: Income TaxesDuring the year, the Group changed its accounting policy following the issuance of FRS 112: Income Taxes by MASBon 15 June 2007 and accordingly deferred tax asset on unabsorbed investment allowances is to be recognised tothe extent that it is probable that future taxable profit will be available against which it can be utilised.

(b) Effects of Change in Accounting Policy on the Current Year’s Financial StatementsThe following tables provide estimates of the extent to which each of the line items in the balance sheet andincome statement for the year ended 31 December 2007 is higher or lower than it would have been had theprevious policy been applied in the current year.

(i) Effect on consolidated balance sheet as at 31 December 2007IncreaseRM’000

Deferred tax assets 113,815Retained earnings 113,815

(ii) Effect on consolidated income statement for the year ended 31 December 2007

Increase/(Decrease)

RM’000

Income tax expense (113,815)Profit for the year 113,815

2.4 Significant Accounting Estimates and Judgements

Key Sources of Estimation UncertaintyThe key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheetdate, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilitieswithin the next financial year are discussed below.

i) Impairment of goodwillThe Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of thevalue-in-use of the cash-generating units (“CGU”) to which goodwill is allocated. Estimating a value-in-use amountrequires management to make an estimate of the expected future cash flows from the CGU and also to choosea suitable discount rate in order to calculate the present value of those cash flows.The carrying amounts of goodwillas at 31 December 2007 were RM4,486,000 (2006: RM4,486,000). Further details are disclosed in Note 17.

ii) Depreciation of plant and machineryThe cost of plant and machinery is depreciated on a straight-line basis over the assets’ useful lives. Managementestimates the useful lives of these plant and machinery to be within 10 to 20 years. These are the commonlife expectancies applied in the port industry. Changes in the expected level of usage could impact the economicuseful lives and the residual values of these assets, therefore future depreciation charges could be revised.

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3. REVENUE

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Income from port operations:- Anchorage 18,710 18,197 - -- At wharves 168,808 139,747 - -- Ferry terminal 1,882 883 - -Contract income 77,294 45,613 69,890 45,613Distributors fees 2,087 - - -Dividend income from subsidiaries - - 26,900 6,050Dividend income from quoted shares 2 7 2 7Equipment assembling fees 1,225 - - -Fixed deposit interest income 1,602 1,773 1,602 1,773Gain on disposal of short term investments 164 - 164 -Investment income from unit trust funds 217 542 217 542Management fees - - 4,680 4,680Miscellaneous income 256 353 - -Rental income 763 500 366 381Sale of fuel and lubricants 36,663 3,830 - -Sale of fenders 570 - - -

310,243 211,445 103,821 59,046

4. COST OF SALES

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Contract costs 70,015 42,342 67,094 44,810Cost of completed properties - 34 - 34Cost of fuel and lubricants 34,437 3,732 - -Port operating expenses 98,652 80,087 - -

203,104 126,195 67,094 44,844


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5. OTHER INCOME

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Depot leasing income 2,253 1,973 - -Investment income from unit trust fund 566 952 - -Fixed deposit interest income 1,061 1,905 - -Gain on disposal of equipment 4 477 - 1Hiring income 23 210 - -Interest income on overdue accounts 218 - 352 136Provision for diminution in value of

short term investments written back - 309 - 309Rental income 905 1,449 - -Sundry income 1,126 1,567 4 52Tender fees received 149 220 - -Negative goodwill recognised on acquisition

of subsidiary 144 - - -

6,449 9,062 356 498

6. FINANCE COSTS

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Interest expense on:Hire purchase and finance lease liabilities 3,969 924 - -Borrowings from Sabah Ports Authority 10,090 8,441 - -Islamic debt securities 4,616 60 - -

18,675 9,425 - -Less: Interest expense capitalised in port development

and ancillary facilities construction-in-progress(Note 13(b)) (4,204) (7,720) - -

14,471 1,705 - -

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7. PROFIT BEFORE TAX

The following amounts have been included in arriving at profit before tax:

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Employee benefits expense (Note 8) 45,995 40,107 2,737 2,069Non-executive directors’ remuneration (Note 9) 485 499 389 389Amortisation of port concession rights 3,689 3,686 - -Amortisation of investment properties 57 56 235 235Amortisation of prepaid land lease payments 264 263 243 243Auditors’ remuneration:

- current year 98 92 28 28- overprovision in prior year (2) (8) - -- other services 100 - - -

Bad debts written off 135 12 17 -Capital work-in-progress written off 318 - - -Depreciation of property, plant and equipment 20,710 12,019 289 525Hire of vehicles - 104 118 100Loss on disposal of equipment 40 - - -Leasing of equipment 17 271 - -Leasing of port land 1,000 1,000 - -Plant and equipment written off 578 - - -Provision for doubtful debts 161 49 - -Provision for doubtful debts written back (112) - - -Short-term accumulating compensated absences 801 87 31 -Short-term accumulating compensated absences

written back (7) - - -Realised (gain)/loss on foreign exchange (8) 18 - -Rental of office equipment - 20 - 3Rental of office premises 58 130 - 127

8. EMPLOYEE BENEFITS EXPENSE

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Salaries, wages and allowances 34,433 31,433 2,119 1,655Social security contributions 392 351 13 12Employees’ Provident Fund contributions 4,191 4,463 291 250Bonuses 5,366 3,820 283 152Other payroll related expenses 1,613 40 31 -

45,995 40,107 2,737 2,069

Included in employee benefits expense of the Group and of the Company are executive directors’ remuneration amountingto RM1,259,000 (2006: RM1,194,000) and RM487,000 (2006: RM423,000) respectively as further disclosed in Note 9.


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9. DIRECTORS’ REMUNERATION

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Executive directors’ remuneration (Note 8):Fees - - - -Other emoluments 1,259 1,194 487 423

1,259 1,194 487 423

Non-executive directors’ remuneration (Note 7):Fees 381 381 318 318Other emoluments 104 118 71 71

485 499 389 389

Total directors’ remuneration (Note 36(b)) 1,744 1,693 876 812Estimated money value of benefits-in-kind 174 230 89 152

Total directors’ remuneration including benefits-in-kind 1,918 1,923 965 964

The details of remuneration receivable by directors of the Company during the year are as follows:

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Executive:Salaries and other emoluments 348 320 348 320Bonus - current year’s provisions 55 55 55 55

- under provision in prior year 28 - 28 -Defined contribution plan 56 48 56 48Estimated money value of benefits-in-kind 44 81 44 81

531 504 531 504Non-Executive:

Fees 318 318 318 318Other emoluments 89 102 71 71Estimated money value of benefits-in-kind 45 71 45 71

983 995 965 964

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9. DIRECTORS’ REMUNERATION (CONT’D.)

The number of directors of the Company whose total remuneration during the financial year fell within the followingbands is analysed below:

Number of Directors2007 2006

Executive directors:RM500,001 - RM550,000 1 1

Non-executive directors:Below RM50,000 7 7RM50,001 - RM100,000 - -RM100,001 - RM150,000 - -RM150,001 - RM200,000 1 1

10. INCOME TAX EXPENSE

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Current income tax 4,750 19,873 4,825 2,224(Over)/underprovision in prior years (37,450) (1,317) 64 (175)

(32,700) 18,556 4,889 2,049

Deferred tax (Note 20)Relating to origination and reversal of

temporary differences (97,056) 2,574 - -Relating to changes in tax rates (895) (83) - -(Over)/underprovision in prior year (410) 1,502 - -

(98,361) 3,993 - -

Income tax expense for the year (131,061) 22,549 4,889 2,049


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10. INCOME TAX EXPENSE (CONT’D.)

During the year, a subsidiary, Sabah Ports Sdn. Bhd. obtained approval from the Minister of Finance for this subsidiary’sport operations to be regarded as an approved service project under Schedule 7B of the Income Tax Act, 1967, wherebythis subsidiary is entitled to claim investment allowance tax incentive at the rate of 100% on capital expenditure incurredfor the period of five (5) years from 1 September 2004 to 31 August 2009. As at 31 December 2007, the total investmentallowance claimed by this subsidiary arising from this approval was approximately RM599,874,000 and utilised as follows:

RM’000

Total investment allowance claimed for years of assessment 2004 to 2007 599,874Utilised for:- prior years (137,496)- current year (8,118)

(145,614)

Unabsorbed investment allowance carried forward for future years 454,260

Overprovision of income tax expense in prior years of the Group is mainly due to utilisation of the abovementionedinvestment allowance tax incentive of RM137,496,000 resulting in tax saving of approximately RM38,499,000.

Deferred tax expense for the year included a credit of RM113,815,000 relating to the recognition of deferred tax asseton unabsorbed investment allowance from the abovementioned tax incentive granted by the Minister of Finance duringthe year and the early adoption of FRS 112: Income Taxes.

Domestic income tax is calculated at the statutory tax rate of 27% (2006: 28%) of the estimated assessable profit for theyear. The domestic statutory tax rate will be reduced to 26% from the current year’s rate of 27%, effective year ofassessment 2008 and to 25% for subsequent years. The computation of deferred tax as at 31 December 2007 has reflectedthese changes.

A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income taxexpense at the effective income tax rate of the Group and of the Company is as follows:

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Profit before tax 71,472 69,462 29,331 8,697

Taxation at Malaysian statutory tax rate of 27%(2006: 28%) 19,298 19,449 7,919 2,435

Income subject to lower tax rate (105) - - -Income not subject to tax (243) (550) (3,468) (283)Effects of changes in tax rates (895) (163) - -Expenses not deductible for tax purposes 4,760 3,286 502 369Effect of share of losses of associates 2 - - -Utilisation of investment allowance (2,192) - - -Utilisation of previously unrecognised tax losses

and unabsorbed capital allowance (172) (414) (145) (414)

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10. INCOME TAX EXPENSE (CONT’D.)

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Deferred tax assets not recognised ondeductible temporary differences 17 756 17 117

Deferred tax assets not recognised in respectof current year tax losses and unabsorbedcapital allowance 144 - - -

Deferred tax assets recognised onunabsorbed investment allowances (113,815) - - -

(Over)/underprovision of deferred tax in prior year (410) 1,502 - -(Over)/underprovision of tax expense in prior years (37,450) (1,317) 64 (175)

Income tax expense for the year (131,061) 22,549 4,889 2,049

Other than the tax savings from the investment allowance granted during the year by the Minister of Finance during theyear as mentioned above, other tax savings during the financial year are from:

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Utilisation of current year tax losses 228 55 228 55Utilisation of previously unrecognised tax losses 172 414 145 414

11. EARNINGS PER ORDINARY SHARE

a) BasicBasic earnings per ordinary share is calculated by dividing the profit for the year attributable to ordinary equityholders of the Company by the number of ordinary shares in issue during the financial year.

2007 2006(Restated)

Profit for the year (RM’000) 200,931 46,902Number of ordinary shares in issue (’000) 283,328 283,328Basic earnings per ordinary share (sen) 70.92 16.55

The comparative number of ordinary shares in issue has been restated to take into account the effect arising fromthe capital restructuring during the financial year.

b) DilutedThe Company has no dilutive potential ordinary shares.


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12. DIVIDENDS

Dividends in respect Dividendsof Year Recognised in Year

2007 2006 2005 2007 2006RM’000 RM’000 RM’000 RM’000 RM’000

Recognised during the year:Final dividend for 2005:

1% less 28% taxation on566,655,984 ordinary shares(0.72 sen net per ordinary share) - - 4,080 - 4,080

Final dividend for 2006:2.5% less 27% taxation on

566,655,984 ordinary shares(1.83 sen net per ordinary share) - 10,341 - 10,341 -

- 10,341 4,080 10,341 4,080

Proposed for approval at AGM(not recognised as at31 December):

Final dividend for 2007:6% less 26% taxation

on 283,327,992 ordinary shares(4.44 sen net per ordinary share) 12,580 - - - -

Special tax exempt dividend for 2007:6% on 283,327,992 ordinary shares(6.00 sen per ordinary share) 17,000 - - - -

29,580 - - - -

29,580 10,341 4,080 10,341 4,080

At the forthcoming Annual General Meeting, a final dividend of 6% less 26% taxation on 283,327,992 ordinary sharesamounting to a dividend payable of RM12,579,763 (4.44 sen net per ordinary share) and a special tax exempt dividendof 6% on 283,327,992 ordinary shares amounting to a dividend payable of RM16,999,680 (6.00 sen per ordinary share) inrespect of the financial year ended 31 December 2007 will be proposed for shareholders’ approval. The financialstatements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by theshareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2008.

13. PROPERTY, PLANT AND EQUIPMENT

Motor PortVehicles, Development

Wharves, Cargo Furniture, and AncillaryJetties Handling Equipment Facilities

and Ferry Equipment and Construction-Buildings Terminal RM’000 Renovation in-progress Total

RM’000 RM’000 RM’000 RM’000 RM’000

GroupAt 31 December 2007CostAt 1.1.2007 6,462 69,946 85,693 21,429 261,106 444,636Additions - 4,567 52,397 3,446 123,028 183,438Disposals (584) (2,857) - (215) - (3,656)Write offs - (358) - (849) (318) (1,525)Reclassifications 36,043 319,642 18,615 5,828 (380,128) -

At 31.12.2007 41,921 390,940 156,705 29,639 3,688 622,893

Accumulated depreciationAt 1.1.2007 241 3,171 9,357 11,563 - 24,332Depreciation charge for the year 737 8,452 7,423 4,098 - 20,710Disposals (77) (873) - (122) - (1,072)Write offs - (123) - (506) - (629)

At 31.12.2007 901 10,627 16,780 15,033 - 43,341

Net carrying amount 41,020 380,313 139,925 14,606 3,688 579,552

At 31 December 2006CostAt 1.1.2006 6,462 30,193 64,701 18,128 172,152 291,636Additions - 7,266 21,233 3,587 121,441 153,527Disposals - - (241) (286) - (527)Reclassifications - 32,487 - - (32,487) -

At 31.12.2006 6,462 69,946 85,693 21,429 261,106 444,636

Accumulated depreciationAt 1.1.2006 95 1,698 4,008 6,773 - 12,574Depreciation charge for the year 146 1,473 5,487 4,913 - 12,019Disposals - - (138) (123) - (261)

At 31.12.2006 241 3,171 9,357 11,563 - 24,332

Net carrying amount 6,221 66,775 76,336 9,866 261,106 420,304

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90


13. PROPERTY, PLANT AND EQUIPMENT (CONT’D.)

FurnitureOffice and Office Motor

Buildings Equipment Renovation Vehicles TotalRM’000 RM’000 RM’000 RM’000 RM’000

CompanyAt 31 December 2007CostAt 1.1.2007 1,870 1,355 1,383 180 4,788Additions - 101 13 - 114

At 31.12.2007 1,870 1,456 1,396 180 4,902

Accumulated depreciationAt 1.1.2007 60 882 982 99 2,023Depreciation charge for the year 37 139 78 35 289

At 31.12.2007 97 1,021 1,060 134 2,312

Net carrying amount 1,773 435 336 46 2,590

At 31 December 2006CostAt 1.1.2006 1,880 1,319 1,234 180 4,613Additions - 60 150 - 210Disposals - (24) (1) - (25)Transfer from investment properties 465 - - - 465Transfer to investment properties (475) - - - (475)

At 31.12.2006 1,870 1,355 1,383 180 4,788

Accumulated depreciationAt 1.1.2006 18 612 817 64 1,511Depreciation charge for the year 38 286 166 35 525Disposals - (16) (1) - (17)Transfer from investment properties 12 - - - 12Transfer to investment properties (8) - - - (8)

At 31.12.2006 60 882 982 99 2,023

Net carrying amount 1,810 473 401 81 2,765

91

13. PROPERTY, PLANT AND EQUIPMENT (CONT’D.)

a) During the financial year, the Group and the Company acquired property, plant and equipment at aggregate costs ofRM183,438,000 (2006: RM153,527,160) and RM114,000 (2006: RM210,000) respectively of which RM45,302,000 (2006:RM19,163,000) were acquired by means of hire purchase arrangements. Net carrying amounts of property, plant andequipment held under hire purchase and finance lease arrangements are as follows:

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Cargo handling equipment 78,199 31,152 - -Motor vehicles 1,265 1,678 - -

79,464 32,830 - -

b) Interest expense capitalised during the financial year under port development and ancillary facilities construction-in-progress of the Group amounted to RM4,204,000 (2006: RM7,720,000), as disclosed in Note 6.

14. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS

a) Land held for property developmentLeasehold Development

Land Costs TotalRM’000 RM’000 RM’000

GroupAt 31 December 2007CostAt 1.1.2007 31,113 1,832 32,945Additions - 870 870

At 31.12.2007 31,113 2,702 33,815

At 31 December 2006CostAt 1.1.2006 31,113 1,693 32,806Additions - 139 139

At 31.12.2006 31,113 1,832 32,945


92


14. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS (CONT’D.)

a) Land held for property development (Cont’d.)Leasehold Development

Land Costs TotalRM’000 RM’000 RM’000

CompanyAt 31 December 2007CostAt 1.1.2007 31,113 - 31,113Additions - - -

At 31.12.2007 31,113 - 31,113

At 31 December 2006CostAt 1.1.2006 31,113 - 31,113Additions - - -

At 31.12.2006 31,113 - 31,113

The land is currently zoned under industrial and the title to it is in the process of being issued by the relevant authorities.

The Company entered into a joint venture agreement on 1 September 2004 with a subsidiary to develop the landinto commercial and residential properties. Detailed terms of the joint venture are finalised.

b) Property development costsGroup Company

2007 2006 2007 2006RM’000 RM’000 RM’000 RM’000

Cumulative property development costsAt 1 January - 1,068 - 1,068Costs incurred during the year - - - -Recognised during the year - (1,068) - (1,068)

At 31 December - - - -

15. INVESTMENT PROPERTIES

LeaseholdBuildings Renovation Total

RM’000 RM’000 RM’000

GroupAt 31 December 2007CostAt 1.1.2007 and 31.12.2007 2,814 - 2,814

Accumulated depreciationAt 1.1.2007 89 - 89Depreciation charge for the year 57 - 57

At 31.12.2007 146 - 146

Net carrying amount 2,668 - 2,668

At 31 December 2006CostAt 1.1.2006 2,814 - 2,814Additions - - -

At 31.12.2006 2,814 - 2,814

Accumulated depreciationAt 1.1.2006 33 - 33Depreciation charge for the year 56 - 56

At 31.12.2006 89 - 89

Net carrying amount 2,725 - 2,725

CompanyAt 31 December 2007CostAt 1.1.2007 6,580 413 6,993Addition - - -

At 31.12.2007 6,580 413 6,993

Accumulated depreciationAt 1.1.2007 205 217 422Depreciation charge for the year 132 103 235

At 31.12.2007 337 320 657

Net carrying amount 6,243 93 6,336

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94


15. INVESTMENT PROPERTIES (CONT’D.)

LeaseholdBuildings Renovation Total

RM’000 RM’000 RM’000

Company (Cont’d.)At 31 December 2006CostAt 1.1.2006 6,570 413 6,983Transfer from property, plant and equipment 475 - 475Transfer to property, plant and equipment (465) - (465)

At 31.12.2006 6,580 413 6,993

Accumulated depreciationAt 1.1.2006 77 114 191Charge for the year 132 103 235Transfer from property, plant and equipment 8 - 8Transfer to property, plant and equipment (12) - (12)

At 31.12.2006 205 217 422

Net carrying amount 6,375 196 6,571

16. PREPAID LAND LEASE PAYMENTS

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Long term leasehold land:At 1 January 25,155 25,418 23,539 23,782Amortisation for the year (264) (263) (243) (243)

At 31 December 24,891 25,155 23,296 23,539

17. INTANGIBLE ASSETS

*SoftwarePort Goodwill on Licences and

Concession Business SystemRights Acquisition Development Total

RM’000 RM’000 RM’000 RM’000

GroupCostAt 1 January 2006 110,615 4,486 - 115,101Additions - - 2,390 2,390

At 31 December 2006and 1 January 2007 110,615 4,486 2,390 117,491

Additions - - - -

At 31 December 2007 110,615 4,486 2,390 117,491

Accumulated amortisationand impairment

At 1 January 2006 4,916 - - 4,916Amortisation (Note 7) 3,686 - - 3,686

At 31 December 2006 and1 January 2007 8,602 - - 8,602

Amortisation (Note 7) 3,689 - - 3,689

At 31 December 2007 12,291 - - 12,291

Net carrying amountAt 31 December 2007 98,324 4,486 2,390 105,200

At 31 December 2006 102,013 4,486 2,390 108,889

* No amortisation has been charged as the asset is still in the stage of design and development.

Impairment tests for goodwillPort concession rights and goodwill on business acquisition are related to the acquisition of port operations pursuant tothe Privatisation Agreement.

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17. INTANGIBLE ASSETS (CONT’D.)

Key assumptions used in value-in-use calculationsThe recoverable amount of the port operations under the Privatisation Agreement is determined based on value-in-usecalculations using the cash flow projections approved by the Board. The key assumptions used for cash flow projections are:

Average Rate of Port Dues and Charges2008 - 2010 2011 - 2034

At wharves- Liquid cargo (RM/MT) 8.8 - 9.3 9.3 - 9.6- Dry cargo (RM/MT) 11.9 - 12.0 11.9 -12.1- Container (RM/TEU) 280.8 280.8

At anchorage (RM/MT) 1.7 1.7

Average Growth Rate2008 - 2010 2011 - 2034

% %

At wharves- Liquid cargo 18.3 - 23.9 2.3 - 8.5- Dry cargo 4.5 - 6.7 1.2 - 2.6- Container 6.7 - 14.5 4.9 - 6.0

At anchorage 4.1 3.6 - 4.1

The following describes the key assumptions upon which the Board has based its cash flow projections to undertakeimpairment testing of port concession rights and goodwill:

i) Rate of port dues and charges of major types of cargoThe port dues and charges are in accordance to the current tariff rates pursuant to the “Sabah Ports Authority(Scales of Dues & Charges) Regulations 1977” and subsequent amendments thereto and the revision in 2008 in thetariff rates pursuant to the Privatisation Agreement as follows:

2009 - 2034

Port dues (RM per Gross Registered Tonnage) 0.15- Wharfage (RM/MT) 3.00- Operations at anchor (RM/MT) 1.50- Cargo handling (RM/MT) 4.00 - 10.00

ii) Growth rate by cargo and container volumeThe average growth rates used are consistent with the projected long-term average growth rate for the port industryand the projected growth rate of the palm oil industry in Sabah.

17. INTANGIBLE ASSETS (CONT’D.)

Key assumptions used in value-in-use calculations (Cont’d.)iii) Discount rate

The discount rates used are post-tax and reflect specific risk relating to the port industry.

iv) The Privatisation Agreement dated 23 September 2003 between the Group, Sabah Ports Authority and the StateGovernment shall continue to be applicable throughout the projection years.

v) Staff cost, repairs and maintenance and other overheads are generally projected to increase by 4% - 5%.

vi) The capital expenditure is based on existing contracts and projected capital expenditure programme.

Sensitivity to changes in assumptionsWith regard to the assessment of value-in-use of the port operations, the Board believes that no reasonably possiblechange in any of the above key assumptions would cause the carrying value of the port operations to materially exceedtheir recoverable amounts, save as discussed below:

i) Growth rate assumptionThe Board recognises that the growth of the industries in Sabah, in particular the palm oil industry, can have asignificant impact on growth rate assumptions.

ii) Capital expenditure programmeThe Board recognises that any delay in the implementation of the projected capital expenditure programme mayaffect the value-in-use of the port operations.

18. INVESTMENTS IN SUBSIDIARIES

Company2007 2006

RM’000 RM’000

CostUnquoted ordinary shares 111,050 109,650Irredeemable preference shares 90,000 90,000

201,050 199,650

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98


18. INVESTMENT IN SUBSIDIARIES (CONT’D.)

Details of the subsidiaries, which are all incorporated in Malaysia, are as follows:

Proportion ofName of Subsidiaries Principal Activities Ownership Interest

2007 2006% %

Held by the Company:

Sabah Ports Sdn. Bhd. Provision of port and related services in Sabah 100 100

Suria Bumiria Sdn. Bhd. Property developer and ferry terminal operator 100 100

SCHB Engineering Construction contractor, provision of project managementServices Sdn. Bhd. and technical support services 100 100

S.P. Satria Sdn. Bhd. Distributor of port cargo handling equipment andrelated spare parts, and provision of equipmentmaintenance services 70 70

S.P. Satria Logistics Sdn. Bhd. Provision of bunkering and related services 70 49

Tricubes Suria Sdn. Bhd. Supply of customised IT systems and provision ofrelated technical services 60 60

During the financial year, the Company acquired 350,000 ordinary shares in S.P. Satria Logistics Sdn. Bhd. (70% equity interest)from its subsidiary, S.P. Satria Sdn. Bhd.. Subsequent to the acquisition, the Company subscribed for 1,050,000 new ordinaryshares in S. P. Satria Sdn. Bhd., representing 70% of the new ordinary shares allotted by S. P. Satria Logistics Sdn. Bhd..

19. INVESTMENT IN ASSOCIATE

Group2007 2006

RM’000 RM’000

In Malaysia:Unquoted shares at cost 400 400Share of post-acquisition reserves (43) (36)

357 364

19. INVESTMENT IN ASSOCIATE (CONT’D.)

Details of the associate, which is incorporated in Malaysia, are as follows:Proportion of

Name of Associate Principal Activity Ownership Interest2007 2006

% %

Hikmat Bumimaju Sdn. Bhd. Dormant 40 40

The summarised financial information of the associate is as follows:

Group2007 2006

RM’000 RM’000

Assets and liabilitiesCurrent assets 873 1,407Non-current assets - 331

Total assets 873 1,738

Current liabilities 2 826

ResultsRevenue - -Loss for the year (17) (68)

20. DEFERRED TAX

Group2007 2006

RM’000 RM’000

At 1 January (8,051) (4,058)Recognised in income statement (Note 10) 98,361 (3,993)

At 31 December 90,310 (8,051)

Presented after appropriate offsetting as follows:Deferred tax assets 90,400 -Deferred tax liabilities (90) (8,051)

90,310 (8,051)

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100


20. DEFERRED TAX (CONT’D.)

The movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follow:

Property, Plant andEquipment

RM’000

Deferred tax liabilities of the Group:At 1 January 2007 (8,126)Recognised in income statement (15,409)

At 31 December 2007 (23,535)

At 1 January 2006 (4,089)Recognised in income statement (4,037)

At 31 December 2006 (8,126)

Property, UnabsorbedPlant and Investment

Equipment Allowances TotalRM’000 RM’000 RM’000

Deferred tax assets of the Group:At 1 January 2007 75 - 75Recognised in income statement (45) 113,815 113,770

At 31 December 2007 30 113,815 113,845

At 1 January 2006 31 - 31Recognised in income statement 44 - 44

At 31 December 2006 75 - 75

Deferred tax assets have not been recognised in respect of the following items:

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Unused tax losses 2,126 844 - 268Unabsorbed capital allowances 3,400 888 1,697 497Taxable temporary differences (749) (310) (192) (74)

4,777 1,422 1,505 691

20. DEFERRED TAX (CONT’D.)

The unused tax losses and unabsorbed capital allowances of the Group and the Company are available indefinitely foroffsetting against future taxable profits of the respective entities within the Group and the Company, subject to nosubstantial change in shareholdings of those entities and the Company under the Income Tax Act, 1967 and guidelinesissued by the tax authority.

21. INVENTORIESGroup

2007 2006RM’000 RM’000

CostConsumable stores 79 139Spare parts 1,559 1,604

1,638 1,743

22. TRADE AND OTHER RECEIVABLES

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Trade receivablesThird parties 31,077 32,004 10,591 12,087Minority corporate shareholder 360 178 - -Subsidiaries - - 1,083 7,683

31,437 32,182 11,674 19,770Less: Provision for doubtful debts Third parties (1,526) (371) - -

Trade receivable, net 29,911 31,811 11,674 19,770

Other receivablesSubsidiaries - - 17,541 3,886Contractor advances 460 - - -Deposits 17,999 21,215 123 3,202Prepayments 9,187 8,792 68 73Sundry receivables 4,322 3,538 1,089 1,449Tax refundable 22,023 1,303 - 1,264

53,991 34,848 18,821 9,874Less: Provision for doubtful debts Third parties (55) (166) - -

Other receivables, net 53,936 34,682 18,821 9,874

83,847 66,493 30,495 29,644

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22. TRADE AND OTHER RECEIVABLES (CONT’D.)

a) Credit riskThe Group’s primary exposure to credit risk arises through its trade receivables. The Group’s trading terms with itscustomers are mainly on credit, except for new customers, where payment in advance is normally required.The creditperiod is generally for a period of one (1) month, extending up to three (3) months for major customers. Eachcustomer has a maximum credit limit. The Group seeks to maintain strict control over its outstanding receivablesand has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by seniormanagement. In view of the aforementioned and the fact that the Group’s trade receivables relate to a large numberof diversified customers, there is no significant concentration of credit risk. Trade receivables are non-interest bearing.

Trade receivables amounting to RM7,602,067 (2006: RM5,829,253) are secured by bank guarantees made in favour ofthe Group.

Included in deposits are amounts totalling RM14,048,132 (2006: RM13,850,537) paid for purchase of new cargohandling equipment.

b) Amounts due from related parties Amounts due from all related parties are non-interest bearing except for an amount due from a subsidiary whichbears interest of 5.5% (2006: 5.5%) per annum. All related party receivables are unsecured and repayable on demand.

Further details on related party transactions are disclosed in Note 36.

23. SHORT TERM INVESTMENTS

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

CostShares quoted in Malaysia - 386 - 386Unit trust funds quoted in Malaysia 62,049 17,463 18,903 14,481

62,049 17,849 18,903 14,867

Market ValueShares quoted in Malaysia - 280 - 280Unit trust funds quoted in Malaysia 62,059 17,597 18,905 14,615

62,059 17,877 18,905 14,895

24. CASH AND BANK BALANCES

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Cash on hand and at banks 19,817 16,402 12,528 10,732Deposits with licensed banks 64,273 85,304 50,324 55,775

Total cash and bank balances 84,090 101,706 62,852 66,507

Deposits with licensed banks of the Group amounting to RM2,264,568 (2006: RM2,183,500) are held under lien to securea bank guarantee made in favour of the Sabah Ports Authority (“SPA”) against lease rental of port land payable to SPA.

Included in cash on hand and at bank is a designated accounts amounting to RM2,236,995 which capture the proceedsfrom the Islamic Debt Securities for capital expenditure and working capital requirements as disclosed in Note 28.

25. SHARE CAPITAL AND SHARE PREMIUM

Number of Ordinary Shareof RM1 Each Amount

2007 2006 2007 2006’000 ’000 RM’000 RM’000

Share CapitalIssued and fully paidAt 1 January 566,656 566,656 566,656 566,656Par Value Reduction and Share Consolidation (283,328) - (283,328) -

At 31 December 283,328 566,656 283,328 566,656

AuthorisedAt 31 December 800,000 800,000 800,000 800,000

Share PremiumAt 1 January 131,884 131,884Share Premium Reduction (68,714) -Transaction costs (385) -

At 31 December 62,785 131,884

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to onevote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

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104


25. SHARE CAPITAL AND SHARE PREMIUM (CONT’D.)

Capital RestructuringDuring the financial year, the Company completed the implementation of capital restructuring exercise involving the following:

a) the reduction of the entire issued and paid up share capital of the Company from RM566,655,984 divided into566,655,984 ordinary shares of RM1.00 each to RM283,327,992 divided into 566,655,984 ordinary shares of RM0.50each, by way of cancellation of RM0.50 of the par value of each of the 566,655,984 issued and paid up ordinaryshares of the Company (“Par Value Reduction”);

b) the reduction of the share premium account of the Company by RM68,713,923 and to utilise the credit arising fromthe share premium reduction together with the credit from the Par Value Reduction of RM283,327,992 to eliminatethe accumulated losses of the Company (“Share Premium Reduction”); and

c) the consolidation of the resultant 566,655,984 ordinary shares of RM0.50 each in the Company, on the basis of everytwo (2) ordinary shares of RM0.50 each after the Par Value Reduction into one (1) ordinary share of RM1.00 each.(“Share Consolidation”).

The ordinary shares of RM1.00 each in the Company after the Share Consolidation shall rank equally in all respects withthe existing issued and paid-up share capital of the Company.

26. RETAINED EARNINGS

Presently, Malaysian companies adopt the full imputation system. In accordance with the Finance Act 2007 which wasgazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributedto 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 (6) years, expiring on 31 December 2013, to allow companies to pay frankeddividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the108 balance and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.

The Company has not elected for the irrevocable option to disregard the 108 balance. Accordingly, during the transitionalperiod, the Company may utilise the credit in the 108 balance as at 31 December 2007 to distribute cash dividendpayments to ordinary shareholdings as defined under the Finance Act 2007. As at 31 December 2007, the Company hassufficient credit in the 108 balance and the balance in the tax exempt income account to pay franked dividends out ofits entire retained earnings.

27. BORROWINGS

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Short term borrowingsSecured:Islamic Debt Securities (Note 28) 1,091 - - -Hire purchase liabilities (Note 29) 14,078 5,223 - -

15,169 5,223 - -

Long term borrowingsSecured:Islamic Debt Securities (Note 28) 80,000 - - -Hire purchase liabilities (Note 29) 41,559 17,209 - -

121,559 17,209 - -

Total borrowingsIslamic Debt Securities (Note 28) 81,091 - - -Hire purchase liabilities (Note 29) 55,637 22,432 - -

136,728 22,432 - -

28. ISLAMIC DEBT SECURITIES

a) RM80 Million Bai’ Bithaman Ajil Islamic Debt Securities (“BAIDS”)

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Nominal value of BAIDS facility 80,000 - - -Accrued finance costs 3,291 - - -Repayment during the year (2,200) - - -

81,091 - - -

Analysed as:Repayable within 1 year 1,091 - - -Repayable after 1 year 80,000 - - -

81,091 - - -

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106


28. ISLAMIC DEBT SECURITIES (CONT’D.)

On 2 April 2007, a subsidiary of the Company, Sabah Ports Sdn. Bhd. issued BAIDS of RM80,000,000.

The BAIDS comprise tranches as follows:

CouponRates Tenure RM

Tranche 1 5.15% 3 years 10,000,000Tranche 2 5.25% 4 years 10,000,000Tranche 3 5.35% 5 years 10,000,000Tranche 4 5.45% 6 years 10,000,000Tranche 5 5.55% 7 years 10,000,000Tranche 6 5.65% 8 years 10,000,000Tranche 7 5.75% 9 years 10,000,000Tranche 8 5.85% 10 years 10,000,000

80,000,000

b) RM70 Million Murabahah Underwritten Notes Issuance Facility/Islamic Medium Term Notes Facility(“MUNIF Notes/IMTN”)The subsidiary of the Company has also obtained RM70 million MUNIF Notes/IMTN facilities. The MUNIF/IMTNfacilities will expire seven (7) years from the date of first issuance of the first MUNIF Notes/IMTN Notes,2 April 2007. As at 31 December 2007, there was no MUNIF/IMTN in issue.

The BAIDS and MUNIF Notes/IMTN share security on a pari passu basis over:

i) assignment and charge of the Designated Accounts and monies standing to the credit of the accounts, includingpermitted investments; and

ii) an undertaking from the Company.

29. HIRE PURCHASE LIABILITIES

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Future minimum lease payments:Not later than 1 year 16,861 6,059 - -Later than 1 year and not later than 2 years 16,917 6,948 - -Later than 2 years and not later than 5 years 27,898 12,665 - -Later than 5 years 29 - - -

29. HIRE PURCHASE LIABILITIES (CONT’D.)

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Total future minimum lease payments 61,705 25,672 - -Less: Future finance charges (6,068) (3,240) - -

Present value of hire purchase liabilities 55,637 22,432 - -

Analysis of present value of hirepurchase liabilities:

Not later than 1 year 14,078 5,223 - -Later than 1 year and not later than 2 years 14,999 6,024 - -Later than 2 years and not later than 5 years 26,532 11,185 - -Later than 5 years 28 - - -

55,637 22,432 - -Less: Amount due within 1 year (14,078) (5,223) - -

Amount due after 1 year 41,559 17,209 - -

The Group has hire purchase contracts for various items of property, plant and equipment (see Note 13(a)). These leaseshave terms of renewal but no purchase options and escalation clauses. Renewals are at the option of the specific entitythat holds the lease. There are no restrictions placed upon the Group by entering into these leases and no arrangementshave been entered into for contingent rental payments.

30. LOAN FROM SABAH PORTS AUTHORITY

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Amounts drawndown 150,000 150,000 - -Interest capitalised 19,156 11,436 - -

169,156 161,436 - -

On 5 February 2005, a subsidiary of the Company, Sabah Ports Sdn. Bhd., entered into a loan agreement with the SPA, tosecure a loan facility of RM193 million from SPA. This loan to Sabah Ports Sdn. Bhd. is made in pursuant to the LoanAgreement made between the Government of Malaysia and SPA dated 31 December 2004, wherein, the Government ofMalaysia has agreed to make available a sum of RM193 million to SPA to be on-lend to Sabah Ports Sdn. Bhd. for the purposeof part financing the purchase of cargo handling equipment and construction of the Sapangar Bay Container Terminal.

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108


30. LOAN FROM SABAH PORTS AUTHORITY (CONT’D.)

The principal terms of the loan are as follows:

Repayment: Over a period of ten (10) years commencing from the sixth year after the date of the first drawdown; and

Interest: Shall bear interest at a rate of 4% per annum, and interest for the first five (5) years after the date ofthe first drawdown shall be capitalised.

31. AMOUNT DUE TO SABAH PORTS AUTHORITY

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Analysed as:Due within 12 months 490 2,070 - -Due after 12 months 59,267 59,267 - -

59,757 61,337 - -

This represents mainly of reimbursements payable to SPA in respect of payments of capital expenditure made by SPA priorto the takeover date pursuant to the terms of the Privatisation Agreement.

On 24 January 2006, the repayment of the amount due to SPA was restructured in the following manner:

i) Immediate repayment of RM20 million, which has been settled in 2006;ii) the balance of the RM59 million is repayable over ten (10) years commencing from the sixth year after the loan has

been restructured; andiii) interest bearing at 4% per annum and is payable annually.

32. TRADE AND OTHER PAYABLES

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Trade payablesThird parties 30,200 43,343 - 8,305Subsidiaries - - 15,194 17,731

30,200 43,343 15,194 26,036

32. TRADE AND OTHER PAYABLES (CONT’D.)

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Other payablesAmounts due to related parties:

Subsidiaries - - - 1,697Minority corporate shareholder 876 - - -

Accruals 9,247 5,833 464 306Deposits received 1,399 1,013 - -Amounts due to contractors 27,116 29,195 - -Retention monies of contractors 1,236 536 - -Sundry payables 3,169 1,837 182 119

43,043 38,414 646 2,122

73,243 81,757 15,840 28,158

a) Trade payablesTrade payables are non-interest bearing and the normal trade credit terms granted to the Group range from one(1) month to three (3) months.

b) Amounts due to related partiesAmounts due to all related parties are unsecured, non-interest bearing and are repayable on demand.

Further details on related party transactions are disclosed in Note 36.

33. OPERATING LEASE ARRANGEMENTS

a) The Group as lesseeThe Group has entered into non-cancellable operating lease agreements for the use of land and buildings. Theseleases have an average remaining life of between 3 and 27 years with renewal option included in the contracts. Thereare no restrictions placed upon the Group by entering into these leases.

The future aggregate minimum lease payments under non-cancellable operating leases contracted for as at the balancesheet date but not recognised as liabilities are as follows:

2007 2006RM’000 RM’000

(Restated)

Future minimum rental payments:Not later than 1 year 1,000 1,000Later than 1 year and not later than 5 years 15,000 13,000Later than 5 years 105,000 108,000

121,000 122,000

109


110


33. OPERATING LEASE ARRANGEMENTS (CONT’D.)

a) The Group as lessee (Cont’d.)

2007 2006RM’000 RM’000

(Restated)

Future variable rental payments:Later than 1 year and not later than 5 years 40,477 30,058Later than 5 years 376,737 387,156

417,214 417,214

538,214 539,214

The future variable rental payments are estimated based on growth rate assumption as discussed in Note 17. Basedon the Privatisation Agreement, the amount payable by the Group for the lease of land used for port operations iscalculated on the basis of:

a) RM1 million per annum for each of the first concession year to the fifth concession year;

b) for the sixth concession year to the tenth concession year:

i) RM3 million per annum; and

ii) RM0.75 per metric tonne of cargo handled in excess of the annual threshold throughput of 10 millionmetric tonnes; and

c) for the eleventh and subsequently concession year until the expiry date:

i) RM5 million per annum; and

ii) RM0.75 per metric tonne of cargo handled in excess of the annual threshold throughput of 10 millionmetric tonnes; and

The lease payments recognised in income statement during the financial year are disclosed in Note 7.

b) The Group as lessorThe Group has entered into non-cancellable operating lease agreements on its land, office building and outlets inferry terminal. These leases have remaining lease terms of between 2 and 27 years.

33. OPERATING LEASE ARRANGEMENTS (CONT’D.)

b) The Group as lessor (Cont’d.)The future minimum lease payments receivable under the operating leases contracted for as at the balance sheetdate but not recognised as receivables, are as follows:

Group2007 2006

RM’000 RM’000

Future minimum rental payments:Not later than 1 year 2,396 2,595Later than 1 year and not later than 5 years 10,038 8,570Later than 5 years 20,366 38,970

32,800 50,135

The rental income recognised in income statement during the financial year is disclosed in Note 5.

34. CAPITAL COMMITMENTS

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Approved and contracted for:Bunkering for Sandakan 199 - - -Installation of fire fighting system 50 - - -Purchase of property, plant and equipment 4,140 60,226 - -Installation and commission of electrical works - 7 - -Sapangar Bay Container Port Development - 78,548 - -Construction of Sandakan and Kunak Oil Jetties - 26,887 - -Renovation of office building 511 - - -Construction of jetty for Sandakan

Palm Oil Industrial Cluster 47,859 1,041 - -Installation of pipelines to Sandakan

Sg. Mowtas Jetty and Lahad Datu Oil Jetty 120 12,714 - -Installation of customised informationtechnology systems 288 1,856 - -

Ferry terminal jetty 579 - - -

53,746 181,279 - -

Approved but not contracted for:Purchase of equipment 459,090 443,196 1,780 -Improvement to port infrastructure facilities 331,174 337,603 - -

790,264 780,799 1,780 -

844,010 962,078 1,780 -

111


112


35. CONTINGENT LIABILITIES

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Unsecured:Corporate guarantees given to banks for

credit facilities granted to staff 8,714 9,885 - -

The repayment of staff housing loan facilities is by way of the deductions from staff salaries and the guarantee given shallcease upon the resignation of the staff concerned.

36. RELATED PARTY DISCLOSURES

a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had thefollowing transactions with related parties during the financial year:

2007 2006RM’000 RM’000

CompanySubsidiaries

Interest income (352) (136)Management fees charged (4,680) (4,680)Rental income (30) (45)Computer maintenance fees 89 60Purchase of equipment and fittings 49 175Sub-contract fee expense 67,094 43,788Vehicles leasing charges 118 101

The directors are of the opinion that all the above transactions have been entered into in the normal course ofbusiness and are contracted based on normal market rates.

b) The remuneration of directors and other members of key management during the financial year was as follows:

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Short-term employee benefits 3,505 3,781 1,055 1,266Post-employment benefits:

Defined contribution plan 372 425 88 124

3,877 4,206 1,143 1,390

36. RELATED PARTY DISCLOSURES (CONT’D.)

Included in the total remuneration of key management personnel are:

Group Company2007 2006 2007 2006

RM’000 RM’000 RM’000 RM’000

Directors’ remuneration (Note 9) 1,744 1,693 876 812

37. FINANCIAL INSTRUMENTS

a) Financial risk management objectives and policiesThe Group’s financial risk management policy seeks to ensure that adequate financial resources are available for thedevelopment of the Group’s businesses whilst managing its interest rate risks (both fair value and cash flow), foreigncurrency risk, liquidity risk and credit risk. The Board reviews and agrees policies for managing each of these risksand they are summarised below. It is, and has been throughout the year under review, the Group’s policy that notrading in derivative financial instruments shall be undertaken.

b) Interest rate riskCash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because ofchanges in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument willfluctuate due to changes in market interest rates. As the Group’s interest-bearing financial assets are mainly shortterm in nature and have been mostly placed in fixed deposits or occasionally, in short term commercial papers, theGroup’s income and operating cash flows are substantially independent of changes in market interest rates.

The Group’s interest rate risk arises primarily from fixed rated interest-bearing borrowings which expose the Groupto fair value interest rate risk.

113


114


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37. FINANCIAL INSTRUMENTS (CONT’D.)

b) Interest rate risk (Cont’d.)Interest on financial instruments subject to floating interest rates is contractually repriced at intervals ranging fromone month to twelve months. Interests on financial instruments at fixed rates are fixed until the maturity of theinstrument. The other financial instruments of the Group and the Company that are not included in the above tablesare not subject to interest rate risks.

c) Foreign currency riskThe Group is exposed to transactional currency risk primarily through purchase of cargo handling equipments thatare denominated in a currency other than the functional currency of the operations to which they relate. Thecurrencies giving rise to this risk are primarily United States Dollars and Euro. Foreign exchange exposures intransactional currencies other than functional currencies of the operating entities are kept to an acceptable level.

d) Liquidity riskThe Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure thatrefinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group maintainssufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, theGroup strives to maintain available banking facilities at a reasonable level to its overall debt position. As far aspossible, the Group raises committed funding from both capital markets and financial institutions and balances itsportfolio with some short term funding so as to achieve overall cost effectiveness.

e) Credit riskThe Group’s credit risk is primarily attributable to trade receivables. The Group trades only with recognised andcreditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subjectto credit verification procedures. In addition, receivable balances are monitored on an ongoing basis and the Group’sexposure to bad debts is not significant. For transactions that are not denominated in the functional currency of therelevant operating unit, the Group does not offer credit terms without the specific approval of the Head of CreditControl.

The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents, marketable securitiesand non-current investments, arises from default of the counterparty, with a maximum exposure equal to the carryingamount of these financial assets.

The Group does not have any significant exposure to any individual customer or counterparty nor does it have anymajor concentration of credit risk related to any financial assets.

115


116


37. FINANCIAL INSTRUMENTS (CONT’D.)

f) Fair ValuesThe carrying amounts of financial assets and liabilities of the Group at the balance sheet date approximated theirfair values except for the following:

CompanyCarrying FairAmount Value

Note RM’000 RM’000

At 31 December 2007Hire purchase liabilities 29 55,637 55,637Loan from Sabah Ports Authority 30 169,156 102,572Amount due to Sabah Ports Authority 31 59,267 31,568

At 31 December 2006Hire purchase liabilities 29 22,432 22,432Loan from Sabah Ports Authority 30 161,436 94,974Amount due to Sabah Ports Authority 31 59,267 29,230

The nominal/notional amount and the net fair value of financial instruments not recognised in the balance sheet ofthe Group at the end of the financial year is:

Nominal/Notional Net FairAmount Value

Note RM’000 RM’000

Contingent liabilitiesAt 31 December 2007 35 8,714 *

At 31 December 2006 35 9,885 *

* It is not practicable to estimate the fair value of contingent liabilities reliably due to the uncertainty of timing,costs and eventual outcome.

The methods and assumptions used by management to determine fair values of financial instruments other than thosewhose carrying amounts reasonably approximate their fair values are as follows:

Borrowings:Fair value has been determined using discounted estimated cash flows. The discount rates used are the currentmarket incremental lending rates for similar type of lending, borrowing and leasing arrangements.

38. SEGMENT INFORMATION

a) Reporting formatThe primary segment reporting format is determined to be business segments as the Group’s risks and rates ofreturn are affected predominantly by differences in the products and services produced. Secondary information isreported geographically. The operating businesses are organised and managed separately according to the nature ofthe products and services provided, with each segment representing a strategic business unit that offers differentproducts and serves different markets.

b) Business segmentsThe Group comprises the following main business segments:

i) Investment holding - earn interest and dividend income from fixed deposits and short term investments.

ii) Property development - the development of residential and commercial properties.

iii) Port operations and bunkering services - provision of port and related services, bunkering and related services, anddistributor of port cargo handling equipment and related spare parts, and provision of equipment maintenanceservices.

iv) Contract and engineering - construction contractor, provision of project management and technical supportservices.

c) Geographical segmentsThe Group’s activities are all within Malaysia.

d) Allocation basis and transfer pricingSegment results, assets and liabilities include items directly attributable to a segment as well as those that can beallocated on a reasonable basis. Unallocated items comprise mainly corporate assets, liabilities and expenses.

Transfer prices between business segments are set on an arm’s length basis in a manner similar to transactions withthird parties. Segment revenue, expenses and results include transfers between business segments. These transfers areeliminated on consolidation.

117


118


38. SEGMENT INFORMATION (CONT’D.)

The following table provides an analysis of the Group’s revenue, results, assets, liabilities and other information by businesssegment:

PortOperations and

Investment Property Bunkering Contract and TotalHolding Development Services Engineering Eliminations OperationsRM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2007RevenueSale to external customers 2,322 2,537 228,090 77,294 - 310,243Inter-segment sales 31,610 - 268 58,167 (90,045) -

Total revenue 33,932 2,537 228,358 135,461 (90,045) 310,243

ResultsSegment results 26,534 (445) 80,895 9,930 (30,964) 85,950

Finance costs (14,471)Share of results of associate - - - (7) - (7)

Profit before tax 71,472Income tax expense 131,061

Profit for the year 202,533

AssetsSegment assets 366,071 15,275 896,082 23,486 (232,764) 1,068,150Investment in associate - - - 357 - 357

Total assets 1,068,507

LiabilitiesSegment liabilities 842 11,297 424,249 24,700 (20,733) 440,355

Total liabilities 440,355

Other segment informationCapital expenditure 114 4,126 182,960 136 (3,898) 183,438Amortisation of investment

properties 57 - - - - 57Amortisation of prepaid land lease 244 - 20 - - 264Depreciation of investment

properties - - 3,689 - - 3,689Depreciation of property,

plant and equipment 468 673 19,521 48 - 20,710

38. SEGMENT INFORMATION (CONT’D.)

PortOperations and

Investment Property Bunkering Contract and TotalHolding Development Services Engineering Eliminations operationsRM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2006RevenueSale to external customers 2,658 1,126 161,848 45,813 - 211,445Inter-segment sales 10,775 - 177 67,745 (78,697) -

Total revenue 13,433 1,126 162,025 113,558 (78,697) 211,445

ResultsSegment results 7,927 (1,357) 68,937 5,493 (9,806) 71,194

Finance costs (1,705)Share of results of associate - - - (27) - (27)

Profit before tax 69,462Income tax expense (22,549)

Profit for the year 46,913

AssetsSegment assets 360,897 10,852 594,304 31,193 (219,437) 777,809Investment in associate - - - 364 - 364

Total assets 778,173

LiabilitiesSegment liabilities 435 6,078 305,615 39,135 (12,321) 338,942

Total liabilities 338,942

Other segment informationCapital expenditure 210 8,774 149,256 36 (4,749) 153,527Amortisation of port concession rights - - 3,686 - - 3,686Amortisation of prepaid land lease 243 - 20 - - 263Depreciation of investment properties 56 - - - - 56Depreciation of property,

plant and equipment 703 224 11,059 33 - 12,019Provision for diminution in

value of short term investmentswritten back (309) - - - - (309)

119

Shareholders’ Informationas at 10 March 2008

120


1. ANALYSIS OF SHAREHOLDINGS

AUTHORISED SHARE CAPITAL : RM800,000,000

ISSUED AND FULLY PAID-UP : RM283,327,992

CLASS OF SHARES : Ordinary shares of One Ringgit each

NO. OF SHAREHOLDERS : 22,652

VOTING RIGHTS : One vote per ordinary share

2. DIRECTORS’ SHAREHOLDINGS AS AT 10 MARCH 2008

ShareholdingsName of Directors (Direct Interest) %

1. Tan Sri Ibrahim Bin Menudin, P.S.M. - -

2. Datuk Hj. Abu Bakar Bin Hj. Abas 57,503 0.020

3. Datuk Ismail Bin Awang Besar - -

4. Datuk Dr. Mohd Yaakub Bin Hj. Johari, J.P. - -

5. Hj. Abdul Kadir Bin Md. Kassim - -

6. Datuk Anthony Lai Vai Ming @ Lai Kheng Ming, J.P. 20,000 0.008

7. Mohd Hasnol Bin Ayub 2,500 0.000

8. Datuk Filik Bin Madan @ Esong - -

9. Datuk Dr. Hj. Patawari Bin Hj. Patawe - -

Total 80,003 0.028

3. ANALYSIS OF HOLDINGS AS AT 10 MARCH 2008 (MALAYSIAN & FOREIGN – COMBINED)

No. of No. of ------------------ Size of Holdings ------------------ Holders % Shares %

1 - 99 46 0.20 2,008 0.00100 - 1,000 14,045 62.00 9,455,911 3.34

1,001 - 10,000 7,630 33.69 25,366,075 8.9510,001 - 100,000 832 3.67 22,865,291 8.07

100,001 - 14,166,398 (*) 95 0.42 94,901,200 33.5014,166,399 - AND ABOVE (**) 1 0.01 130,657,504 46.11

DIRECTORS’ HOLDINGS 3 0.01 80,003 0.03

TOTAL 22,652 100.00 283,327,992 100.00

REMARK * LESS THAN 5% OF ISSUED SHARES** 5% AND ABOVE OF ISSUED SHARES

4. ANALYSIS OF HOLDINGS AS AT 10 MARCH 2008 (MALAYSIAN & FOREIGN – SEPARATE)

------- No. of Holders ------ -------- No. of Shares -------- ---------------- % --------------

---------------- Size of Holdings ---------------- Malaysian Foreign Malaysian Foreign Malaysian Foreign

1 - 99 46 0 2,008 0 0.00 0.00

100 - 1,000 13,894 151 9,337,161 118,750 3.29 0.04

1,001 - 10,000 7,310 320 24,028,425 1,340,150 8.48 0.47

10,001 - 100,000 710 122 18,674,894 4,267,900 6.59 1.50

100,001 - 14,166,398 (*) 69 26 70,309,300 24,591,900 24.81 8.68

14,166,399 - AND ABOVE (**) 1 0 130,657,504 0 46.11 0.00

DIRECTORS’ HOLDINGS 3 0 80,003 0 0.03 0.00

TOTAL 22,033 619 253,009,292 30,318,700 89.31 10.69

------- No. of Holders ------ -------- No. of Shares -------- ---------------- % --------------

GRAND TOTAL 22,652 283,327,992 100.00

REMARK * LESS THAN 5% OF ISSUED SHARES** 5% AND ABOVE OF ISSUED SHARES

5. HOLDER WITH HOLDINGS OF 5% AND ABOVE AS AT 10 MARCH 2008

No. Name Holdings %

1 WARISAN HARTA SABAH SDN. BHD. 130,657,504 46.11

121


122


6. LIST OF TOP 30 HOLDERS AS AT 10 MARCH 2008

(WITHOUT AGGREGATING SECURITIES FROM DIFFERENT SECURITIES ACCOUNTS BELONGINGTO THE SAME PERSON)

NATIONALITY/COUNTRY OF

NO. NAME INCORPORATION HOLDINGS %

1. WARISAN HARTA SABAH SDN. BHD. MALAYSIAN 130,657,504 46.115MALAYSIA

2. LEMBAGA TABUNG HAJI MALAYSIAN 13,331,500 4.705MALAYSIA

3. YAYASAN SABAH MALAYSIAN 10,571,000 3.731MALAYSIA

4. CITIGROUP NOMINEES (ASING) SDN. BHD. MALAYSIAN 9,075,450 3.203GOLDMAN SACHS INTERNATIONAL MALAYSIA

5. HSBC NOMINEES (ASING) SDN. BHD. MALAYSIAN 7,205,400 2.543EXEMPT AN FOR JPMORGAN CHASE MALAYSIABANK, NATIONAL ASSOCIATION (BERMUDA)

6. MAYBANK NOMINEES (TEMPATAN) SDN. BHD. MALAYSIAN 6,283,750 2.217MAYBANK TRUSTEES BERHAD FOR MALAYSIAPUBLIC ITTIKAL FUND

7. CHIEF MINISTER, STATE OF SABAH MALAYSIAN 4,800,000 1.694MINISTRY OF FINANCE SABAH MALAYSIA

8. MAYBAN NOMINEES (TEMPATAN) SDN. BHD. MALAYSIAN 4,053,000 1.430MAYBAN TRUSTEES BERHAD FOR MALAYSIAPUBLIC REGULAR SAVINGS FUND

9. AMANAH RAYA NOMINEES (TEMPATAN) SDN. BHD. MALAYSIAN 3,297,700 1.163PUBLIC ISLAMIC OPPORTUNITIES FUND MALAYSIA

10. AMANAH RAYA NOMINEES (TEMPATAN) SDN. BHD. MALAYSIAN 3,273,500 1.155PUBLIC SMALLCAP FUND MALAYSIA

11. DB (MALAYSIA) NOMINEE (TEMPATAN) MALAYSIAN 3,000,600 1.059SENDIRIAN BERHAD MALAYSIAICAPITAL.BIZ BERHAD

12. AMSEC NOMINEES (TEMPATAN) SDN. BHD. MALAYSIAN 2,771,050 0.978AMTRUSTEE BERHAD FOR CIMB ISLAMIC MALAYSIADALI EQUITY GROWTH FUND(UT-CIMB-DALI)

123

6. LIST OF TOP 30 HOLDERS AS AT 10 MARCH 2008 (CONT’D.)




13. AMANAH RAYA NOMINEES (TEMPATAN) SDN. BHD. MALAYSIAN 1,913,300 0.675PUBLIC ISLAMIC SECTOR SELECT FUND MALAYSIA

14. AMANAH RAYA NOMINEES (TEMPATAN) SDN. BHD. MALAYSIAN 1,410,000 0.497PUBLIC SECTOR SELECT FUND MALAYSIA

15. HDM NOMINEES (ASING) SDN. BHD. MALAYSIAN 1,000,000 0.352DBS VICKERS SECS (S) PTE LTD MALAYSIAFOR RIVER ESTATES INCORPORATED

16. HSBC NOMINEES (ASING) SDN. BHD. MALAYSIAN 978,000 0.345EXEMPT AN FOR JPMORGAN CHASE MALAYSIABANK, NATIONAL ASSOCIATION (LIECHTENSTEIN)

17. BHLB TRUSTEE BERHAD MALAYSIAN 812,350 0.286PUBLIC REGIONAL SECTOR FUND MALAYSIA

18. UNIVERSAL TRUSTEE (MALAYSIA) BERHAD MALAYSIAN 768,850 0.271CIMB-PRINCIPAL EQUITY FUND MALAYSIA

19. CITIGROUP NOMINEES (ASING) SDN. BHD. MALAYSIAN 726,800 0.256CBNY FOR DFA EMERGING MARKETS MALAYSIASMALL CAP SERIES

20. CITIGROUP NOMINEES (ASING) SDN. BHD. MALAYSIAN 693,700 0.244EXEMPT AN FOR UBS AG SINGAPORE (FOREIGN) MALAYSIA

21. HSBC NOMINEES (ASING) SDN. BHD. MALAYSIAN 619,550 0.218EXEMPT AN FOR CREDIT SUISSE (SG BR-TST-ASING) MALAYSIA

22. CITIGROUP NOMINEES (ASING) SDN. BHD. MALAYSIAN 590,800 0.208CBNY FOR DFA EMERGING MARKETS FUND MALAYSIA

23. MAYBAN NOMINEES (TEMPATAN) SDN. BHD. MALAYSIAN 550,000 0.194MAYBAN TRUSTEES BERHAD FOR MALAYSIAMAAKL-CM SHARIAH FLEXI FUND (270785)

24. UNIVERSAL TRUSTEE (MALAYSIA) BERHAD MALAYSIAN 548,550 0.193CIMB ISLAMIC DALI EQUITY FUND MALAYSIA


124


6. LIST OF TOP 30 HOLDERS AS AT 10 MARCH 2008 (CONT’D.)




25. CIMSEC NOMINEES (TEMPATAN) SDN. BHD. MALAYSIAN 535,000 0.188CIMB BANK FOR SIMON TAN @ TAN MALAYSIABUCK LEE (MM1060)

26. HDM NOMINEES (ASING) SDN. BHD MALAYSIAN 523,600 0.184DBS VICKERS SECS (S) PTE LTD FOR MALAYSIALIM MENG SENG

27. MAYBAN NOMINEES (TEMPATAN) SDN. BHD. MALAYSIAN 504,000 0.177PLEDGED SECURITIES ACCOUNT MALAYSIAFOR SIAW TECK SIONG

28. UNIVERSAL TRUSTEE (MALAYSIA) BERHAD MALAYSIAN 500,000 0.176CIMB ISLAMIC BALANCED FUND MALAYSIA

29. MAYBAN NOMINEES (TEMPATAN) SDN. BHD. MALAYSIAN 497,500 0.175CAPITAL DYNAMICS ASSET MANAGEMENT MALAYSIASDN. BHD. FOR ACE SYNERGY INSURANCE BERHAD(CDAM23-990350)

30. AMANAH RAYA BERHAD MALAYSIAN 494,450 0.174CIMB ISLAMIC EQUITY FUND MALAYSIA

SUMMARY

TOTAL NO. OF HOLDERS : 30

TOTAL HOLDINGS : 211,986,904

TOTAL PERCENTAGE (%) : 74.820

List of Propertiesas at 31 December 2007

125

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Notice of Annual General Meeting

127

NOTICE IS HEREBY GIVEN THAT the Twenty Fifth Annual General Meeting of the Company will be held at Ballroom 1,Shangri-La’s Tanjung Aru Resort, 20 Jalan Aru, Tanjung Aru, 88995 Kota Kinabalu, Sabah, on Wednesday, 30th day of April 2008at 10.30 a.m. for the following purposes:

AGENDA

As Ordinary Business

1. To receive and adopt the Company’s Audited Accounts and the Reports of Directors and Auditorsthereon for the year ended 31 December 2007. (Resolution 1)

2. To re-elect the following Directors who retire by rotation pursuant to Article 89 of the Company’sArticles of Association.

Datuk Filik Bin Madan @ Esong (Resolution 2)

Mohd Hasnol Bin Ayub (Resolution 3)

Hj. Abdul Kadir Bin Md. Kassim (Resolution 4)

3. To approve the payment of Directors’ Fees amounting to RM420,000.00 for the financial year ending 31 December 2008. (Resolution 5)

4. To approve the payment of final dividend of 6.0 sen per share less income tax 26% and a special taxexempt dividend of 6.0 sen per share in respect of the financial year ended 31 December 2007. (Resolution 6)

5. To re-appoint Messrs. Ernst & Young as Auditors of the Company and authorise the Directors todetermine their remuneration. (Resolution 7)

As Special Business:

6. To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions.

ORDINARY RESOLUTION NO. 1 – AUTHORITY TO DIRECTORS TO ALLOT AND ISSUESHARES

“THAT, subject always to the Companies Act, 1965, the Articles of Association of the Company andthe approvals of the relevant governmental/regulatory authorities, the Directors be and they are herebyauthorised pursuant to Section 132D of the Companies Act, 1965 to allot and issue shares in theCompany at any time until the conclusion of the next Annual General Meeting and upon such termsand conditions and for such purposes as the Directors may in their absolute discretion deem fitprovided that the aggregate number of shares to be issued does not exceed ten per cent (10%) of theissued share capital of the Company for the time being.” (Resolution 8)

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

Notice of Annual General Meeting

128


NOTICE OF BOOK CLOSURE AND DIVIDEND ENTITLEMENT

NOTICE IS ALSO HEREBY GIVEN that the final dividend of 6.0 sen per share less income tax of 26% and a special taxexempt dividend of 6.0 sen per share in respect of the financial year ended 31 December 2007, if approved, will be paid on22 May 2008.

The entitlement date shall be fixed on 9 May 2008 and a Depositor shall qualify for entitlement only in respect of:

(a) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 9 May 2008 in respect of transfers.

(b) Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the BursaMalaysia Securities Berhad.

By Order Of The Board.

MOHD HANAN BIN RAMLI (LS. 0005860)Group Company Secretary

Dated on this 9th day of April 2008Kota Kinabalu, Sabah

NOTES:1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies (but not more than two) to attend and

vote in his stead. Where a member appoints two (2) proxies, the appointments shall be invalid unless he specifies the proportions of hisholdings to be represented by each proxy. A proxy may but need not be a member of the Company and the provisions of Section149(1)(b) of the Companies Act, 1965 need not be complied with.

2. If the appointer is a corporation, this proxy form should be executed under its common seal.

3 The instrument appointing a proxy shall be deposited at the Registered Office of the Company at Lot 8CF 01-02, 8th Floor, Block C,Kompleks Karamunsing, KM 2.4 Jalan Tuaran, 88300 Kota Kinabalu at least forty-eight (48) hours before the time set for holding theMeeting or any adjournment thereof.

EXPLANATORY NOTES ON SPECIAL BUSINESS

4. Resolution 8, if passed, will give the Directors of the Company, from the date of the above General Meeting, authority to issue and allotordinary shares from the unissued share capital of the Company up to an aggregate amount not exceeding 10% of the issued sharecapital of the Company for the time being. This authority unless revoked or varied at a General Meeting, will expire at the next AnnualGeneral meeting.

Statement AccompanyingNotice of Annual General Meeting

129

Pursuant to Paragraph 8.28(2) of the Listing Requirements of Bursa Malaysia Securities Berhad

1. Directors who are standing for re-election at the 25th Annual General Meeting of the Company to beheld at Ballroom 1, Shangri-La’s Tanjung Aru Resort, 20 Jalan Aru, Tanjung Aru, 88995 Kota Kinabalu,Sabah on 30 April 2008 at 10.30 a.m.

The Directors retiring by rotation pursuant to the Article 89 of the Company’s Articles of Association and seeking re-election are:

• Datuk Filik Bin Madan @ Esong• Mohd Hasnol Bin Ayub• Hj. Abdul Kadir Bin Md. Kassim

Further details of the Directors seeking re-election as required under Appendix 8A Item (4), Paragraph 8.28 (2) of theListing Requirements of the Bursa Malaysia Securities Berhad are set out as follow:


Datuk Filik Bin Madan @ Esong, 55, joined the Board of SURIA on 1 July 2001 as a Non-Independent and Non-Executive Director. He sits as member of the Nomination/Appointment Committee, the Remuneration Committee andthe Audit and Risk Management Committee of the Board.

He is the Deputy Permanent Secretary of the State's Ministry of Finance, Sabah.

Datuk Filik, a Malaysian, began his career with the Sabah Civil Service on 9 June 1977 assuming various positions suchas the Principal Assistant Secretary to the State's Ministry of Industrial Development, Permanent Secretary of theMinistry of Agriculture and Fisheries, Permanent Secretary of the Ministry of Resources and Information TechnologyDevelopment and the Government Printer.

He graduated with a Bachelor of Economics (Applied Economics) from University of Malaya.

He has no securities holding in SURIA and its subsidiaries and no family relationship with any Director and/or majorshareholder nor any conflict of interest with SURIA.

Statement Accompanying Notice of Annual General Meeting

130


Further details of the Directors seeking re-election as required under Appendix 8A Item (4), Paragraph 8.28 (2) of theListing Requirements of the Bursa Malaysia Securities Berhad are set out as follow: (Cont’d.)


Encik Mohd Hasnol Bin Ayub, 44, joined the Board of SURIA on 1 July 2001 as an Independent and Non-ExecutiveDirector. He is also a member of the Audit and Risk Management Committee of the Board.

He is the Managing Director of Jahsia Construction Sdn. Bhd. and Jahsia Sdn. Bhd.; Director of Sabah Ports Sdn. Bhd.,S.P. Satria Sdn. Bhd., Hikmat Bumimaju Sdn. Bhd., Rumah Anak Yatim Tambunan and as the Deputy President of SabahBumiputra Chamber of Commerce since 2004. He was the former Chairman of Abad Mesra Sdn. Bhd. and was aDirector of City Finance Bhd. from 1994 to 2000.

Encik Hasnol, a Malaysian, holds a postgraduate Diploma in Business Administration and a Masters Degree in BusinessAdministration both from the University of Wales, United Kingdom.

He holds 2,500 shares in SURIA and has no family relationship with any Director and/or major shareholder nor anyconflict of interest with SURIA.


Hj. Abdul Kadir Bin Md. Kassim, 67, was appointed to the Board of SURIA as an Independent and Non-ExecutiveDirector on 18 July 1997. He is the Senior Reference Director, who also chairs the Remuneration Committee of theBoard.

He is the Managing Partner of Messrs Kadir, Andri & Partners. He is also a Director of Petroliam Nasional Berhad(Petronas), UEM Group Berhad, UEM World Berhad, Proton Holdings Berhad, TIME dotCom Berhad, Ho HupConstruction Company Berhad, Sino Hua-An International Berhad and a few private companies. He still serves asChairman of The Committee of Labuan International Financial Exchange and sits on the Listing Committee of BursaMalaysia. He served in the Malaysian Administrative and Diplomatic Service and in the Judicial and Legal Servicebetween 1966 and 1973, holding various positions.

Hj. Abdul Kadir, a Malaysian, holds a Bachelor of Laws (Honours) degree from University of Singapore.

He has no securities holding in SURIA and/or its subsidiaries and also has no family relationship with any Directorand/or major shareholders nor any conflict of interest with SURIA.

131

2. Board Meetings held during the financial year ended 31 December 2007.

A total of 9 Board meetings held during the financial year ended 31 December 2007 were as follows:

Dates of Meeting Venue Time

5 January 2007 Company’s Registered Office 2.15 p.m.

28 February 2007 Company’s Registered Office 11.30 a.m.

30 March 2007 Company’s Regional Office, Kuala Lumpur 2.45 p.m.

14 May 2007 SPSB Headquarters and Operation Building, Sapangar, Sabah 4.30 p.m.

22 June 2007 Company’s Registered Office 4.30 p.m.

25 July 2007 SPSB Headquarters and Operation Building, Sapangar, Sabah 11.30 a.m.

17 August 2007 SPSB Headquarters and Operation Building, Sapangar, Sabah 9.00 a.m.

31 October 2007 Company’s Registered Office 11.30 a.m.

28 December 2007 Company’s Registered Office 9.00 a.m.

3. Details of attendance at Board Meetings held in the financial year ended 31 December 2007.

Name of Director No. of Meetings Attended % of Attendance 2007

Tan Sri Ibrahim Bin Menudin, P.S.M. 9/9 100

Datuk Hj. Abu Bakar Bin Hj. Abas 9/9 100

Datuk Ismail Bin Awang Besar 8/9 89

Datuk Dr. Mohd. Yaakub Bin Hj. Johari, J.P. 9/9 100

Hj. Abdul Kadir Bin Md. Kassim 7/9 78

Datuk Filik Bin Madan @ Esong 9/9 100

Datuk Anthony Lai Vai Ming @ Lai Kheng Ming, J.P. 9/9 100

Mohd Hasnol Bin Ayub 9/9 100

Datuk Dr. Hj. Patawari Bin Hj. Patawe 9/9 100

4. None of the Directors has:• Any family relationship with any Director of the Company, its subsidiaries and/or the major Shareholder of the

Company;• Any conflict of interest with the Company;• Any conviction within the past ten years.

5. All the Directors are Malaysian.

90°E 100°E 110°E 120°E 130°E 140°E 150°E 160°E 170°E 180°

30°S

20°S

10°S

10°N

20°N

0°

40°S

30°N

40°N

50°N

PACIFIC OCEAN

INDIAN OCEAN

SouthChina Sea

Sea of JapanSea of Japan

Bay of Bengal

MALAYSIA

BORNEO

Banda SeaBanda SeaJava SeaJava SeaJava Sea

Equator

W E

N

S

KUDAT PORT

SAPANGAR BAY OIL TERMINAL

SAPANGAR BAYCONTAINER PORT

KOTA KINABALU PORT

SANDAKAN PORT

LAHAD DATU PORT

KUNAK PORT

TAWAU PORT

STATEMENT ON INFORMATION CONTAINEDIN THE ANNUAL REPORT

All the information provided in this Annual Reporthad been made up to the date not earlier thansix (6) weeks from the date ofNotice of the Annual General Meeting.

Proxy Form

SURIA CAPITAL HOLDINGS BERHAD(96895-W)

(Incorporated in Malaysia)

I/We NRIC No./Co.No.:

of

being a Member of SURIA CAPITAL HOLDINGS BERHAD, hereby appoint

NRIC No.:

of

or failing him, NRIC No.:

of

As my/our proxy to vote for me/us on my/our behalf at the Twenty Fifth Annual General Meeting of the Company to beheld at Ballroom 1, Shangri-La's Tanjung Aru Resort, 20 Jalan Aru, Tanjung Aru, 88995 Kota Kinabalu, Sabah, on Wednesday,30th day of April 2008 at 10:30 a.m. and at any adjournment thereof in respect of my/our holding of shares in the manner as indicated below:

NO. OF SHARES HELD

(FULL NAME IN BLOCK LETTERS)

(FULL ADDRESS)



(ADDRESS)

(ADDRESS)

NO. RESOLUTION FOR AGAINST

AS ORDINARY BUSINESS1. To receive and adopt the Company’s Audited Accounts and the Reports of Directors

and Auditors thereon for the financial year ended 31 December 2007. (Resolution 1)

2. To re-elect the following Directors who retire by rotation pursuant to Article 89 of theCompany’s Articles of Association:

Datuk Filik Bin Madan @ Esong (Resolution 2)Mohd Hasnol Bin Ayub (Resolution 3) Hj. Abdul Kadir Bin Md. Kassim (Resolution 4)

3. To approve the payment of Directors’ Fees amounting to RM420,000.00 for the financialyear ending 31 December 2008. (Resolution 5)

4. To approve the payment of final dividend of 6.0 sen per share less income tax of 26%and a special tax exempt dividend of 6.0 sen per share in respect of the financial yearended 31 December 2007. (Resolution 6)

5. To re-appoint Messrs. Ernst & Young as Auditors of the Company and to authorise the Directors to fix their remuneration. (Resolution 7)

AS SPECIAL BUSINESS6. Authority to Allot and Issue Shares (Resolution 8)

(Please indicate with a cross [X] in the spaces provided whether you wish your votes to be cast for or against theResolutions. In the absence of specific directions, your proxy will vote or abstain as he thinks fit.)

Dated this day of , 2008

Signature/Common Seal of Member(s)

Notes:1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies (but not more than two) to attend and vote in

his stead. Where a member appoints two (2) proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to berepresented by each proxy. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the CompaniesAct, 1965 need not be complied with.

2. If the appointer is a corporation, this proxy form should be executed under its common seal.3. The instrument appointing a proxy shall be deposited at the Registered Office of the Company at Lot 8CF 01 - 02, 8th Floor, Block C,

Kompleks Karamunsing, Km 2.4 Jalan Tuaran, 88300 Kota Kinabalu at least forty-eight (48) hours before the time for holding the meeting or anyadjournment thereof.

Please fold here

Please fold here

Group Company SecretarySuria Capital Holdings Berhad (96895-W)Lot 8CF 01-028th Floor, Block C, Kompleks KaramunsingKM 2.4, Jalan Tuaran88300 Kota KinabaluSabah, Malaysia

Affix StampHere

OUR PORTS

SURIA CAPITAL HOLDINGS BERHAD (96895-W)

Kota Kinabalu (Registered Head Office) :Lot 8CF 01-02, 8th Floor, Block C, Kompleks Karamunsing, Km 2.4, Jalan Tuaran, 88300 Kota Kinabalu Sabah, MalaysiaTel : +(60)88-257 788 (4 lines) Fax : +(60)88-256 410 E-mail: [email protected]

Kuala Lumpur (Regional Office) :Suite 10.5, 10th Floor, Menara Great Eastern, No. 303, Jalan Ampang, 50450 Kuala Lumpur, MalaysiaTel : +(60)3-4256 8805 / 8806 Fax : +(60)3-4252 2805

SCHB ENGINEERING SERVICES SDN. BHD. (645642-W)

Lot 8CF 03-04, 8th Floor, Block CKompleks KaramunsingKm 2.4, Jalan Tuaran, 88300 Kota KinabaluSabah, MalaysiaTel : +(60)88-235 143, 236 143, 238 143, 243 143Fax : +(60)88-317 109Email : [email protected]

S.P. SATRIA SDN. BHD. (622494-V) Lot 9CF 02, 9th Floor, Block CKompleks Karamunsing88300 Kota Kinabalu Sabah, MalaysiaTel : +(60)88-316 696Fax : +(60)88-231 086Email : [email protected]

TRICUBES SURIA SDN. BHD. (634170-T)

Lot 9CF 01, 9th Floor, Block CKompleks KaramunsingKm 2.4, Jalan Tuaran88300 Kota Kinabalu, Sabah, MalaysiaTel : +(60)88-232 988, 249 588, 244 488Fax : +(60)88-234 288Email : [email protected]

S.P. SATRIA LOGISTICS SDN. BHD. (722286-V)

Lot 9CF 02, 9th Floor, Block CKompleks KaramunsingKm 2.4, Jalan Tuaran88300 Kota Kinabalu, Sabah, MalaysiaTel : +(60)88-316 696Fax : +(60)88-223 288Email : [email protected]

SUBSIDIARY COMPANIES

SABAH PORTS SDN. BHD. (583073-H)

SPSB Headquarters & Operation BuildingSapangar Container PortJalan Sapangar, Sapangar BayP. O. Box 203, Pos Mini Indah Permai88450 Kota Kinabalu, Sabah, MalaysiaTel : +(60)88-483 390-399 (10 lines)Fax : +(60)88-489 912-914Email : [email protected]

SURIA BUMIRIA SDN. BHD. (633477-V)

Lot 9CF 03-04, 9th Floor, Block CKompleks KaramunsingKm 2.4, Jalan Tuaran88300 Kota Kinabalu, Sabah, MalaysiaTel : +(60)88-235 787Fax : +(60)88-231 050Email : [email protected]

Sapangar Bay Container PortJalan Sapangar, Sapangar BayPejabat Pos Mini, Indah PermaiP. O. Box 20388450 Kota Kinabalu Sabah, MalaysiaTel : +(60)88-489 904Fax : +(60)88-489 925

Kota Kinabalu PortWisma Pelabuhan, Jalan Tun Fuad Tanjung Lipat, Locked Bag 7588992 Kota KinabaluSabah, MalaysiaTel : +(60)88-538 500Fax : +(60)88-254 089

Sapangar Bay Oil TerminalPejabat Pos Mini Indah PermaiP. O. Box 5788450 Kota KinabaluSabah, MalaysiaTel : +(60)88-411 069Fax : +(60)88-411 130

Sandakan PortWisma Pelabuhan Jalan KaramuntingP. O. Box 136890715 SandakanSabah, MalaysiaTel : +(60)89-612 411Fax : +(60)89-612 975

Tawau PortWisma Pelabuhan Jalan DunlopP. O. Box 33591007 TawauSabah, MalaysiaTel : +(60)89-773 700Fax : +(60)89-761 808

Lahad Datu PortJalan Kastam BaruP. O. Box 6014391111 Lahad DatuSabah, MalaysiaTel : +(60)89-881 244Fax : +(60)89-882 749

Kudat PortP. O. Box 22889058 KudatSabah, MalaysiaTel : +(60)88-611 261Fax : +(60)88-621 320

Kunak PortJalan Kastam BaruP. O. Box 6014391111 Lahad DatuSabah, MalaysiaTel : +(60)89-881 244Fax : +(60)89-882 749


Lot 8CF 01-02

8th Floor, Block C

Kompleks Karamunsing

Km 2.4, Jalan Tuaran

88300 Kota Kinabalu

Sabah, Malaysia

tel: +6 088 257 788 (4 lines)

fax: +6 088 256 410

website: www.suriagroup.com.my

The Growth Compass · Kompleks Karamunsing Km 2.4, Jalan Tuaran 88300 Kota Kinabalu Sabah, Malaysia...

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Transcript of The Growth Compass · Kompleks Karamunsing Km 2.4, Jalan Tuaran 88300 Kota Kinabalu Sabah, Malaysia...