Jalan Kelab Cinta Sayang, Taman Ria Jaya 08000 Sungai Petani, Kedah Darulaman Tel : 04 - 442 9081 Fax : 04 - 442 9084 Corporate Office Lot 87, Persiaran 11 Kawasan Perusahaan Bakar

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Contents

Corporate InformationExecutive Chairman’s Statement

Corporate StructureBoard Of Directors’ Profile

Corporate Governance StatementOther Information

Statement On Internal ControlAudit Committee Report

Reports And Financial Statements

Directors’ Report Directors' StatementStatutory Declaration

Independent Auditors’ Report to the Members Consolidated Balance Sheet

Consolidated Income Statement Consolidated Statement of Changes In Equity

Consolidated Cash Flow Statement Balance Sheet

Income Statement Statement of Changes In Equity

Cash Flow Statement Notes To The Financial Statements

List Of Properties Of The Group Analysis Of Shareholdings

Notice Of Annual General MeetingProxy Form

0203050608131415

18222223252627283031323334656668

Audit Committee

Chairman : Wee Cheong PohMember : Saffie Bin Bakar

Yeoh Cheng Han

Company Secretaries

Chee Wai Hong (MIA 17181)Wong Yee Lin (MIA 15898)Foo Li Ling (MAICSA 7019557)

Registered Office

51-8-B Menara BHL BankJalan Sultan Ahmad Shah10050 PenangTel : 04 - 228 9700Fax : 04 - 227 9800

Principal Bankers

Malayan Banking BerhadCIMB Bank BerhadBangkok Bank Public Company Limited

Share Registrar

Symphony Share Registrars Sdn BhdLevel 26, Menara Multi-Purpose, Capital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala LumpurTel : 03 - 2721 2222Fax : 03 - 2721 2530/2721 2531

Auditors

Grant Thornton (formerly known as JB Lau & Associates)Chartered Accountants51-8-A Menara BHL BankJalan Sultan Ahmad Shah10050 PenangTel : 04 - 228 7828Fax : 04 - 227 9828

Advocates & Solicitors

Wong Beh & TohSuite 4, 1st Floor, Nos. 173 & 174Jalan Kelab Cinta Sayang, Taman Ria Jaya08000 Sungai Petani, Kedah DarulamanTel : 04 - 442 9081Fax : 04 - 442 9084

Corporate Office

Lot 87, Persiaran 11Kawasan Perusahaan Bakar Arang08000 Sungai PetaniKedah Darulaman

Stock Exchange Listing

Second Board of Bursa Malaysia Securities BerhadStock Name : AEMStock Code : 7146

Board of Directors

Executive Chairman : Yang Wu-HsiungManaging Director : Yang Chao-TungNon-Independent Non-Executive Director : Tan Ah Lee

Yeoh Cheng Han Independent Non-Executive Director : Saffie Bin Bakar

Wee Cheong Poh

AE MULTI HOLDINGS BERHAD (539777-D)

Corporate Information02

FINANCIAL REVIEW

For the financial year ended 31 December 2008, the Group registered a consolidated revenue of RM69.13 million which is 12% lower than the preceding year’s consolidated revenue of RM78.86 million. The decrease in revenue was mainly due to lower contribution from the Printed Circuit Boards (“PCB”) division as a result of weak demand in the electrical and electronic products globally.

In tandem with the lower revenue, the Group posted a higher loss before taxation of RM6.35 million as compared to the previous financial year’s loss before taxation of RM0.63 million.

OPERATIONS REVIEW

Year 2008 was a challenging year for the PCB business, particularly in the last quarter. The operating environment started on a firm footing but ended on a weaker note as issues with US sub-prime mortgages worsen . It was a year where we streamlined our workforce for cost control reason and strived to reduce to an optimum level of staff without losing sight on the need to maintain its key strengths.

PCB division remained the primary contributor to the Group’s revenue, making up approximately 89% of the Group’s revenue during the financial year 2008. This division recorded revenue of RM61.39 million representing a 17% decrease as compared to RM73.71 million achieved in the previous financial year.

Due to the lower revenue and rising raw material costs, the PCB division reported a loss before taxation of RM6.42 million as compared to loss before taxation of RM0.36 million recorded in preceding financial year end.

By geographical segments the operations in Malaysia recorded a loss before taxation of RM6.71 million on the back of the revenue of RM18.20 million for the financial year ended 31 December 2008. For the same period, revenue and profit before taxation recorded from the Thailand operations were at RM43.19 million and RM0.29 millionrespectively.

On behalf of the Board of Directors of AE Multi Holdings Berhad, I am pleased to present herewith the Annual Report and Audited Financial Statements of the Company and the Group for the financial year ended 31 December 2008.

In effort to meet challenges, we will be maintaining a tight cost discipline and streamlining our operation to achieve cost efficiencies. To meet the requirements of customers, the Group is also embarking on TS16949 systems certification and is expected to achieve the certification in year 2009.

CORPORATE SOCIAL RESPONSIBILITY

The Board of Directors of the Company acknowledges the utmost importance of Corporate Social Responsibility. During the financial year, the Group offered practical industrial training to University Utara Malaysia’s undergraduates. Our employees are also continuously provided with training and development opportunities to ensure that they reach their fullest potential. Skills and technical training programmes are also given equal emphasis to ensure that our people remain technically skilled, proficient and ready to meet the challenges ahead.

We are also mindful on the environmental impact of our operations and activities, making sure that we meet the international RoHS (Regulatory on Hazardous Substances) and the standards laid down by regulators.

As a responsible employer, we have taken steps to provide a conducive working environment for our employees. This includes ensuring that our health and safety policies are in place and continuously practiced.

ANNUAL REPORT 2008

Executive Chairman’s Statement 03

STEERING AHEAD

The year 2009 is expected to be another challenging year after taking into consideration of the global economic uncertainty. The prospect for the electrical and electronic sector is cloudy given the concern over US economic slow down and the risk of it spreading to the rest of the world.

We realize that the Group will not be spared from the current global economic epidemic. The challenges ahead will not be easy and will require the hard work and initiative of everyone in the organization. However, we believe with our committed management team and dedicated workforce, we will pull through and deliver their best in these tough operating conditions. In an effort to meet these challenges, the Group has implemented various management strategies to control cost and fine tune its activities in line with the reduced demand in order to stay competitive in the PCB market and also to deliver products and services that meet the precise requirements of our multinational customers that will sustain our growth momentum.

DIVIDEND

The Board of Directors does not recommend the payment of any dividend for the financial year ended 31 December 2008.


Executive Chairman’s Statement(Cont’d)

04

ACKNOWLEDGEMENT

In closing, on behalf of the board members, I would like to thank the management team and staff of the Group for their contribution amidst these difficult conditions.

We would also like to express our sincere deepest gratitude to our valued customers, suppliers, bankers, financiers, business partners and associates, various government bodies and regulatory authorities for their unrelenting support of the Group for the past year.

Also my thanks to my fellow board members for their guidance and support throughout the year. Last but not least, we would like to extend our heartfelt gratitude and appreciation to our shareholders who have showed unwavering confidence in us. It is with your support that we could find the strength to continue the journey.

Yang Wu-HsiungExecutive Chairman

Corporate Structure 05

ANNUAL REPORT 2008

AE MULTIHOLDINGS BERHAD(Incorporated in Malaysia)

Investment holding and the provisionof management services

Manufacture and assembly of electronic and telecommunication

products

AAV IndustriesSdn. Bhd.

(Incorporated in Malaysia)

Investment holding company

FensollTechnology Sdn. Bhd.


Manufacture and sale of PCB and related products

AE Corporation (M) Sdn. Bhd.


Sourcing and reselling of PCB and related products, electronic and telecommunication components

AE Multi IndustriesSdn. Bhd.


100%

100%

100%

49.90%

51%

Manufacture of cartridge ink and related products

Trend VisionTechnology (Zhuhai)Co. Ltd.

(Incorporated in People's Republic of China)

100%

Manufacture and sale of PCB and related products

AmallionEnterprise (Thailand)

Corporation Ltd.(Incorporated in Thailand)

Board of Directors' Profile06

Yang Wu-HsiungExecutive Chairman

Mr. Yang Wu-Hsiung, a Taiwanese, aged 66, is the founder of the Company and was appointed as a Managing Director on 9 May 2002 and redesignated as an Executive Chairman with effect from 24 May 2005.

He graduated with a college degree majoring in Electronics Engineering from Taipei Technical College, Taiwan in 1960. Mr. Yang Wu-Hsiung has immense amount of experience in the electronics and electrical industry. Prior to the setting up of AE Corporation (M) Sdn Bhd, he was the General Manager of Kua Tiang (Taiwan) Industry Co. Ltd. and Amallion Enterprise Corporation, which were principally involved in the manufacturing of printed circuit board.

Presently, his responsibilities include strategic business development, providing direction and coordinating of the overall marketing and production operations of the Group. He also sits on the Board of several private limited companies.

His nephew, Mr. Yang Chao-Tung is also the Managing Director of AEM. Mr. Yang Wu-Hsiung is a director and major shareholder of Stanza Corporation Sdn. Bhd., which is a major shareholder of the Company.

Yang Chao-TungManaging Director

Mr. Yang Chao-Tung, a Taiwanese, age 43, joined the Board of the Company as an Executive Director on 9 May 2002 and was subsequently appointed as Managing Director on 24 May 2005. He serves as Chairman of the Remuneration Committee and ESOS Committee of the Company.

He graduated in 1987 with a college degree, majoring in Mechanical Engineering from Hwa Shia Tech College, Taiwan. He started his career in 1989 as an Engineer with Unitech Corporation Ltd., a public company involved in manufacturing of PCB. In 1991, he joined AE Corporation (M) Sdn Bhd as a General Manager before assuming directorship in 1992.

His responsibilities include management and coordination of the administration, marketing, production and engineering divisions as well as quality functions of the Group. He is also responsible for the business development of overseas’ markets and oversees the operation of the foreign subsidiary companies.

He is a nephew of the Executive Chairman, Mr. Yang Wu-Hsiung.

Tan Ah LeeNon-Independent Non-Executive Director

Mr. Tan Ah Lee, a Malaysian, aged 60, was appointed as an Executive Director of the Company on 9 May 2002 and redesignated as a Non-Independent Non-Executive Director on 11 January 2006. He also serves as a member of the ESOS Committee and Nomination Committee of the Company.

He completed his secondary school education at Chung Ling High School, Penang in 1967. He started his career in the shipping industry since 1971. He is a Director of Grand Peninsular Construction Sdn Bhd and also a Director of Malvest Construction Sdn Bhd. Over the years, he has gained comprehensive knowledge and vast experience in the field of shipping, international trade, manufacturing, property development and building construction, and has a strong understanding of different business culture. He also sits on the Board of several other private limited companies.

Yeoh Cheng HanNon-Independent Non-Executive Director

Mr. Yeoh Cheng Han, a Malaysian, aged 63 was appointed as a Non-Independent Non-Executive Director of the Company on 23 September 2005. He also serves as a member of the Audit Committee of the Company.

He completed his secondary school education in 1966 from Han Chiang High School. He has more than 28 years of invaluable experience through his involvement in various businesses. He star ted his career in 1978 when he established Zue Huat Trading Co. Sdn Bhd. Presently, he serves on the Board of KZH Resources Sdn Bhd and its subsidiaries. He gained exposure and experience in the property development and construction business with his equity participation in Malvest Group Sdn Bhd since 1995. Presently, he is the Director of several companies under the Malvest Group, a Group principally involved in property development and construction.

Mr. Yeoh Cheng Han is the spouse of Madam Loh Ah Heoh, who is a major shareholder of the Company.


Save as disclosed above, none of the Directors have:-

1) any family relationship with any Director and/or major shareholders of the Company;2) conflict of interest with the Company; and3) conviction for offences within the past ten (10) years other than traffic offences, if any.

Board of Directors' Profile(Cont’d)

07

Saffie Bin Bakar, SMP, AMP, PJKIndependent Non-Executive Director

Encik Saffie Bin Bakar, a Malaysian, aged 55, was appointed as an Independent Non-Executive Director of the Company on 16 May 2005. He is the Chairman of the Nomination Committee and a member of the Audit Committee and Remuneration Committee of the Company.

He graduated from University of Malaya with a B.A (Honours) majoring in Geography in 1977 and subsequently received a Postgraduate Diploma in Public Admin. (DPA) from the Faculty of Economics and Administration, University of Malaya in 1978. In 1988, he obtained a MBA degree from United States International University, San Diego, California, U.S.A. He is also an Associate Member of Cer tified System Investigator (CSI) World Headquaters, Singapore and a Chartered Audit Committee Director (CACD) of The Institute of Internal Auditors Malaysia (IIAM).

He had undergone various training programmes with the World Bank, UNDP, UNCTC, University of California, Berkeley and Catholic University of Leuven, Belgium. Between 1978 and 1981, he received in house training in the "State And Rural Development Project" (SRDP), which was funded by the Economic Planning Unit (EPU) and organized by UNDP and the World Bank. In addition, he becomes Local Counterpart to the Regional Planning Adviser, the Industrial Project Adviser and the Infrastructure Project Adviser, who are World Bank experts.

He has more than 30 years of management expertise especially in the areas of project planning, business development, property development, human resources management, project management, mining exploration, corporate advisory transactions including Initial Public Offerings (IPO) and Reverse Takeover (RTO). He was attached to the Perlis State Government from May 1978 to August 1983, during which he served as an Assistant State Secretary in Economic Planning. He joined Perlis State Economic Development Corporation (SEDC) in September 1983 as a Business Development Manager until his optional retirement from government service in August 1994.

He is currently the Adviser to Shorubber (Malaysia) Sdn. Bhd (a manufacturer and exporter of industrial gloves) and Corporate Adviser of PECCA Leather Sdn. Bhd.(a manufacturer and exporter of leather car seat cover). He is also a director of KBB Resources Berhad, MESB Berhad, Sequoia Holdings Berhad and Ewein Berhad.

Wee Cheong PohIndependent Non-Executive Director

Mr. Wee Cheong Poh, a Malaysian, aged 68, joined the Board as an Independent Non-Executive Director of the Company on 9 May 2002. He is the Chairman of the Audit Committee and a member of the Nomination Committee and Remuneration Committee of the Company.

He graduated in 1966 from Perth Technical College, Australia, with Diploma in Accountancy. He was admitted as a member of the Australia Society of Certified Practising Accountants in 1970 and is also a member of Malaysian Institute of Accountants. He has been practising as a public accountant since 1971.

Currently, he ser ves as a Director of Gaban Spice Manufacturing (M) Sdn. Bhd., a wholly-owned subsidiary of Gaban Co. Ltd.

ANNUAL REPORT 2008

A. THE MALAYSIAN CODE ON CORPORATE GOVERNANCE

The Board of Directors (“Board”) is fully committed to ensure that the highest standards of corporate governance are practiced throughout the Company and its subsidiaries as a fundamental part of discharging its responsibilities to protect and enhance shareholders’ value and the financial performance of the Group. The Board is pleased to provide investors with an insight into the Principles of Corporate Governance of the Company and to the extent of compliance with the best practices of the Malaysian Code on Corporate Governance (Revised 2007) (“the Code”).

B. BOARD OF DIRECTORS

1. Composition and Balance

The Board comprises six (6) directors, two (2) are Executive Directors, two (2) are Non-Independent Non-Executive Directors and two (2) are Independent Non-Executive Directors. The Board’s composition represents a mix of knowledge, skills and strength in qualities, which are relevant to effectively discharge its stewardship responsibilities in spearheading the Group’s growth and future direction. Representation on the Board is reflective of the extent of shareholdings of various parties in the Company.

In the organization, the Executive Chairman led the Board to ensure its effectiveness. He also acts as facilitator at meetings of the Board to ensure appropriate discussion takes place and no Directors, whether Executive or Non-Executive, dominate any discussion. The Executive Chairman and Managing Director are responsible for implementing policies and decision of the Board, overseeing the operations as well as coordinating the development and implementation of business and corporate strategies.

Non-Executive Directors are all independent of management and free from any business or other relationship which could materially interfere with the exercise of their independent judgement. They play their roles by giving objective and independent view, advice and judgement to take into account of the interest of all stakeholders and ensuring a practice of a balanced Board’s decision making process. Where a potential conflict of interest may arise, it is mandatory practice for the Director concerned to declare his interest and abstain from the decision-making process.

All decisions of the Board are based on the decision of the majority and no single Board member can make any decision on behalf of the Board.

In accordance with the requirement of the Code, Encik Saffie Bin Bakar has been designated as the Senior Independent Non-Executive Director of the Board to whom concerns may be conveyed.

2. Board Responsibilities

The Group acknowledges the pivotal role played by the Board in the stewardship of its direction and operations, and ultimately the enhancement of long-term shareholder value. To fulfill this role, the Board is responsible for the overall corporate governance of the Group, including setting the strategic direction, establishing goals for Management, monitoring the achievement of these goals, identifying principal risks and ensuring that the Group’s internal control system and reporting procedures are adequate.


Corporate Governance Statement08

Corporate Governance Statement(Cont’d)

09

ANNUAL REPORT 2008

4. Supply of Information

Scheduled Board meetings are structured with a pre-set agenda. Prior to the Board meetings, all Directors are provided with sufficient and timely reports and supporting documents which are circulated in advance of each meeting to ensure sufficient time is given to understand the key issues and contents.

All Directors, whether as a Board or in their individual capacity have full access to information within the Group and may obtain independent professional advise at the Group’s expense on specific issue to enable the Board to discharge its duties in relation to the matters being deliberated. In addition, all Directors have unrestricted access to the advice and services of the Company Secretaries and senior management staff in the Group.

5. Directors’ Training

The Directors have participated in conference, seminars and training programmes to continue enhance their skills and knowledge relevant to the Group’s business and keep abreast with developments in the market place.

Training programmes attended by Directors in 2008 are as follows:-

Description of the type of training- Balanced Scorecard- Commercial Contracts Masterclass 2008- Due Diligence Management- Implementing an Effective System of Internal Control for SMEs and Public Companies- Forensic Accounting : Detecting, Controlling & Preventing Fraud- Seminar on Investment in Agriculture Sector for Private Company and Entrepreneurs- Analyzing and Interpreting Financial Statements- Internal Controls Masterclass- Transactions by Directors and Implications of S131 to S135 of the Companies Act 1965

6. Re-election of Directors

In accordance with the Company’s Articles of Association, an election of Directors shall take place each year. One-third of the Board shall retire from office at each Annual General Meeting and they may offer themselves for re-election. All directors, including the Managing Director, shall retire from office at least once in every three (3) years, but shall be eligible for re-election.

7. Board Committees

To assist the Board in the discharge of its duties effectively, the Board has delegated specific functions to the following four (4) Board Committees. Each Committee will operate within its clearly defined terms of reference. The Chairman of the various Committees will report to the Board on the outcome of the Committee meetings.

DirectorsYang Wu-HsiungYang Chao-TungTan Ah LeeYeoh Cheng HanWee Cheong PohSaffie Bin Bakar

Attendance4/43/44/44/44/44/4

B. BOARD OF DIRECTORS (Cont’d)

3. Board Meeting

The Board met regularly on a quarterly basis, with additional meetings convened as required between the scheduled meeting. The Directors’ attendance for the Board Meetings held in year 2008 was as follows:



10


7. Board Committees (Cont’d)

a) Audit Committee

The composition of the Audit Committee, the terms of reference and a summary of its activities are set out in the Audit Committee Report on pages 15 to 17 of this Annual Report.

b) Nomination Committee

The Nomination Committee has established on 26 June 2002. At the date of this statement, the Nomination Committee comprises the following Directors:

Chairman : Saffie Bin BakarIndependent Non-Executive Director

Members : Wee Cheong PohIndependent Non-Executive Director Tan Ah Lee Non-Independent Non-Executive Director

The Nomination Committee is responsible for making recommendations on the appointments of new Directors and re-appointment of Directors to the Board, assessing the effectiveness of the Board, its Committee and the contribution of each individual Director on an annual basis.

The Nomination Committee recommended to the Board that Mr. Yeoh Cheng Han and Mr. Tan Ah Lee be nominated for reappointment at the forthcoming Annual General Meeting.

c) Remuneration Committee

The Remuneration Committee was formed in 26 June 2002. The members are as follows:-

Chairman : Yang Chao-TungManaging Director

Members : Saffie Bin BakarIndependent Non-Executive Director Wee Cheong PohIndependent Non-Executive Director

The Remuneration Committee’s primary role is to draw up the policy framework and for making recommendations to the Board on remuneration packages and benefits annually as extended to the Directors. The Board as a whole determines the remuneration package of the Directors with the Director concerned abstaining from participating in the discussion with respect to his remuneration package at the Board of Directors’ Meeting.

All directors’ fees are approved by shareholders at the Annual General Meeting of the Company before they are paid.

Details of the nature and amount of each major element of the remuneration of the Directors of the Company, during the financial year, are as follows:

DirectorsExecutiveNon-ExecutiveTotal

Fees(RM)

30,00070,000

100,000

Salaries & Bonuses(RM)

171,000-

171,000

Meeting Allowance (RM)

2,1009,300

11,400

Total(RM)

203,10079,300

282,400


11


7. Board Committees (Cont’d)

c) Remuneration Committee (Cont’d)

The number of Director whose remuneration falls into following bands for the financial year ended 31 December 2008 are as follows:

Range of remuneration (RM)

50,000 and below50,001 – 100,000100,001 – 150,000150,001 – 200,000200,001 – 250,000250,001 – 300,000

Executive1--1--

Non-Executive4-----

Number of Directors

d) Employee Share Option Scheme (“ESOS”) Committee

The ESOS Committee was established by the Board on 25 August 2004 to administer the ESOS of the Company in accordance with the Bye-Laws of the scheme.

At the date of this Statement, the ESOS Committee comprises the following members:

Chairman : Yang Chao-TungManaging Director

Members : Tan Ah LeeNon-Independent Non-Executive DirectorEng Swee LuanPersonal Assistant To Chairman

C. SHAREHOLDERS

The Company acknowledges the importance of timely dissemination of information to shareholders and investors. In addition to various announcements made during the year, the timely release of annual reports, circulars to shareholders and financial results on a quarterly basis provides shareholders and the investing public with an overview of the Group’s performance and operations.

Annual General Meeting is an important forum for communication and dialogue with shareholders where all shareholders are given the opportunity to voice their views and direct question regarding the Group to Directors, including the chairperson of each of the Board Committees. The external auditors are also normally present to assist the Directors in advisory any relevant queries by shareholders.

ANNUAL REPORT 2008

D. ACCOUNTABILITY AND AUDIT

1. Financial Reporting

The Board aims to present a balanced, clear and understandable assessment of the Group’s financial performance and prospects to shareholders and the public via its Annual Report and quarterly financial results announcements. The Audit Committee assists the Board to ensure the accuracy and timely dissemination of financial and corporate announcement made to the Bursa Malaysia Securities Berhad (“Bursa Malaysia”).

2. Statement of Directors’ Responsibility For Preparing The Financial Statements

The Board is responsible for the preparation of the annual audited financial statements of the Group and of the Company which give a true and fair view of the state of affairs of the Group and of the Company and will ensure that they are presented in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standard in Malaysia.

In the preparation of the financial statements for the year ended 31 December 2008, the Directors have selected and applied consistently suitable accounting policies and made reasonable and prudent judgements and estimates.

The Directors are also responsible for the assets of the Group and of the Company and, hence, for taking reasonable steps for the prevention and detection of fraud and the irregularities.

3. Internal Control

The Directors acknowledge the responsibility of maintaining a good system of internal control to safeguard shareholders’ investment and the Group’s assets which cover not only the financial aspect but also operational and compliance controls as well as risk management.

The Group’s Statement On Internal Control for the year ended 31 December 2008 is set out on page 14 of this Annual Report.

4. Relationship with External Auditors

The Company has always maintained a transparent relationship with the external auditors in seeking their advice and towards ensuring compliance with the accounting standards and other related regulatory requirements. The external auditors report their findings which are included as part of the Company’s financial report with respect to each year’s audit on the statutory financial statements.


12


MATERIAL CONTRACTSThere were no material contracts entered into by the Company and its subsidiary companies involving Directors’ and major shareholders’ interests either still subsisting as at 31 December 2008 or entered into since the end of the previous financial year.

NON-AUDIT FEESThere was no non-audit fees paid to the external auditors for the financial year ended 31 December 2008, other than the taxation fee totalling RM8,250 payable to a company in which certain partners of the audit firm are shareholders and directors.

SHARE BUY-BACKSThere were no share buyback of the Company’s shares during the financial year ended 31 December 2008.

VARIATION IN RESULTSThere were no material variations between the audited results for the financial year ended 31 December 2008 and the unaudited results released for the financial quarter ended 31 December 2008.

PROFIT GUARANTEENo profit guarantee given by the Company or its subsidiary companies during the financial year ended 31 December 2008.

UTILISATION OF PROCEEDS No proceeds were raised for any corporate exercise during the financial year ended 31 December 2008.

REVALUATION OF LANDED PROPERTIESThe Group adopts a policy on revaluation at an interval of at least once in every five (5) years and for the purpose of complying with the Financial Reporting Standards (FRS116) on Property, Plant and Equipment, the Group’s landed properties have been reassessed through an independent valuer during the financial year ended 31 December 2006.

SANCTION AND/OR PENALTIESThere were no public sanctions and/or penalties imposed on the Company and its subsidiary companies, Directors or management by any relevant regulatory bodies during the financial year ended 31 December 2008.

OPTIONS, WARRANTS OR CONVERTIBLE SECURITIESNo options, warrants or convertible securities were exercised during the financial year ended 31 December 2008.

AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT (“GDR”) PROGRAMThe Company did not sponsor any ADR or GDR program during the financial year ended 31 December 2008.

RELATED PARTY TRANSACTIONS Details of the recurrent related party transactions of a revenue or trading nature have been duly disclosed in Note 33 ofthe Notes to Financial Statements.

Other Information 13

ANNUAL REPORT 2008

The Malaysian Code on Corporate Governance stipulates that the Board of Directors of listed companies should maintain a sound system of internal control to safe guard shareholders’ investment and the Group’s assets. The Board is committed to the Listing Requirements of Bursa Malaysia Securities Berhad and Statement of Internal Control: Guidance for Directors of Public Listed Companies and is pleased to set out below its statement on internal control which outlines the nature and scope of internal control of the Group during the year.

RESPONSIBILITY FOR RISK AND INTERNAL CONTROL

The Board recognises its responsibilities for the Group’s system of internal control and for reviewing its adequacy and integrity. The system of internal control is designed to identify and manage the principal risks facing by the businesses in pursuit of its objectives. The internal control system covers inter alia, risk management and financial, organizational, operational and compliance controls.

Nevertheless, in view of the limitations inherent in any system of internal control, the system is designed to manage rather than eliminate the risk of failure to achieve corporate objectives. Thus, the system of internal control can only provide reasonable but not absolute assurance against material misstatement, fraud or loss.

RISK MANAGEMENT FRAMEWORK

The Board and Management practice proactive significant risks identification on a quarterly basis or earlier as appropriate, particularly any major proposed transactions, changes in nature of activities and/or operating environment, or venturing into new operating environment which may entail different risks, and put in place the appropriate risk response strategies and controls until those risks are managed to, and maintained at, a level acceptable to the Board.

INTERNAL CONTROL FUNCTION

The Board acknowledges the importance of an internal audit function and adopts a risk-based approach in developing its audit plan, which addresses the core auditable area of the Group based on their risk profile. The audit focuses on areas with high and weak controls to ensure that an adequate action plan has in place to improve the controls.

During the financial year under review, scheduled internal audits are carried out by the internal audit department. Observations noted from the internal audit findings were deliberated with Management and recommended action plans discussed for deployment to improve the system of internal control within the Group. The Audit Committee, on behalf of the Board, reviews internal control issues identified and recommendations from reports prepared by the internal audit department on a regular basis.

CONTROL WEAKNESSES THAT RESULTS IN MATERIAL LOSSES

Based on the findings in the internal auditors’ report for the financial year ended 31 December 2008, internal control weaknesses were identified during the year, all of which have been, or are being addressed. However, none of the weaknesses in the internal control system have resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s annual report.

The Board and the Management continue to take measures to strengthen the internal control environment of the Group.

Statement on Internal Control14


The Audit Committee (“the Committee”) of the Company was established on 9 May 2002 comprising a majority of Independent Non-Executive Directors.

MEMBERSHIP

The present membership of the Committee consists of:

Chairman : Wee Cheong PohIndependent Non-Executive Director

Members : Saffie Bin BakarIndependent Non-Executive DirectorYeoh Cheng Han Non-Independent Non-Executive Director

TERMS OF REFERENCE

1. Membership

The Committee shall be appointed by the Board from amongst the Directors and shall consist of not less than three members, majority of whom must be Independent Non-Executive Director of the Company and all of whom shall be Non-Executive Directors. None of the Alternate Directors shall be appointed as a member of the Committee. The members of the Committee shall elect a Chairman from amongst themselves who shall be an Independent Non-Executive Director.

All members of the Committee shall be financially literate and at least one of the members must:

a) be a member of the Malaysian Institute of Accountants; or

b) have at least three (3) years’ working experience and:-

• must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act, 1967, or• must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the

Accountants Act, 1967.

If a Member of the Committee for any reason ceases to be a Member of the Committee with the result that the number of Member is reduced below three (3), the Board shall within three (3) months of that event, appoint such number of new Member as may be required to make up the minimum number of three (3) Members.

2. Meetings

The Committee shall regulate its own proceedings. The Committee shall meet not less than four (4) times a year. Additional meetings may be held at the discretion of the Committee or at the request of external auditors.

The quorum of the meeting is two (2) and majority of Members present must be Independent Directors.

The Company Secretary shall be the Secretary of the Committee.

The financial controller, the head of internal audit and a representative of the external auditors should normally attend meetings.

Other board members may attend meetings upon the invitation of the Audit Committee.

Committee should meet with the external auditors without Executive Board Members present at least twice a year.

The Chairman of the Committee should engage on a continuous basis with senior management, such as the chairman, the managing director, the senior manager, the financial controller, the head of the internal audit and the external auditors in order to be kept informed of matters affecting the Company.

Audit Committee Report 15

ANNUAL REPORT 2008

3. Authority

The Committee shall, in accordance with a procedure to be determined by the Board:-

a) to investigate any activity within its terms of reference, the resources to do so and full access to information;b) to obtain independent professional advice and to invite outsiders with relevant experience to attend, if necessary;

andc) to have direct communication channels with the external auditors and person carrying out the internal audit function

or activity, if any.

4. Functions and Duties of the Committee

The functions and duties of the Committee shall include:-

• to consider the appointment and annual re-appointment of external auditors, their audit fees and any question of their resignation or dismissal and to recommend to the Board.

• to discuss with the external auditors before the audit commences, the nature and scope of their audit, their evaluation of the system of internal accounting controls and to ensure co-ordination where more than one audit firm is involved.

• to discuss problems and reservations arising from the interim and final audits, and any matters the external auditors may wish to discuss (in the absence of management where necessary).

• to review with the external auditor’s management letter and management’s response.

• to do the following, in relation to the internal audit function

- review the adequacy of the scope, functions and resources of the internal audit function, and that it has the necessary authority to carry out its work;

- review the internal audit programme and results of the internal audit process and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function;

- review any appraisal or assessment of the performance of members of the internal audit function;- approve any appointment or termination of senior members of the internal audit function; and - take cognizance of resignations of internal audit staff members and provide the resigning staff member an

opportunity to submit his reasons for resigning.

• to review the quarterly results and year end financial statements of the Group and the Company, prior to the approval by the Board, whilst ensuring that they are prepared in a timely and accurate manner, focusing particularly on:-

- changes in accounting policies and practices;- implementation of major accounting policies and practices; - going concern assumption;- significant and unusual events; and- compliance with accounting standards and other legal requirements.

• to consider/review any related party transactions and conflict of interest situation that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity.

• to consider the major findings of internal investigations and management’s response.

• to review and verify the allocation of share options granted to employees pursuant to the Employee Share Option Scheme.

• to review with the external auditor, his audit report.

Audit Committee Report(Cont’d)

16


4. Functions and Duties of the Committee (Cont’d)

• to review with the external auditor the assistance given by the employees of the Company.

• to review with the Board of Directors of the Company whether there is reason (supported by grounds) to believe that the Company’ external auditor is not suitable for re-appointment.

• to consider/perform any other topics/functions as authorized by the Board.

5. Attendance of Meetings

A total of five (5) meetings were held during the financial year ended 31 December 2008. The details of attendance of the Committee were as follows:-

6. Summary of activities

The main activities undertaken by the Committee for the financial year ended 31 December 2008 were as follows:-

• reviewed the quarterly unaudited financial results and recommended to the board for approval and for announcement to Bursa Malaysia and Securities Commission;

• reviewed the annual audited financial statements with external auditors to ensure compliance with the provisions of the Companies Act, 1965, Listing Requirements of Bursa Malaysia, applicable accounting standards in Malaysia and other legal and regulatory requirements prior to the submission to the Board for approval;

• reviewed the internal audit plan and its scope of work;

• reviewed the internal audit reports, which highlighted the audit findings, recommendations and management response. Discussed with Management the corrective action taken to improve the system of internal control based on improvement opportunities identified in the internal audit reports;

• established and formalized risk management framework and action plan to manage the risk identified on an on-going process.

• reviewed the recurrent related party transactions entered into by the Group;

• reviewed and discussed with the external auditors on their audit plan and scope of work for the year as well as the audit procedures to be utilized; and

• considered the re-appointment and remuneration of external auditors.

INTERNAL AUDIT FUNCTION

The internal audit functions are to assist the Board in monitoring and managing risks and internal controls. The internal audit functions also assist the Committee in discharging its duties and responsibilities.

The principal responsibility of the internal audit functions is to undertake independent, regular and systematic reviews of the system of internal controls so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively. It is also the responsibility of the internal audit functions to provide the Committee with independent and objective reports on the state of internal control of the various operating units within the Group and the extent of compliance with the Group’s established policies and procedures as well as the relevant statutory requirements.

DirectorsWee Cheong PohSaffie Bin Bakar Yeoh Cheng Han

Attendance5/55/55/5

Audit Committee Report(Cont’d)

17

ANNUAL REPORT 2008


18 Directors' ReportFor The Year Ended 31 December 2008

The directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the year ended 31 December 2008.

PRINCIPAL ACTIVITIES

The principal activities of the Company consist of investment holding and the provision of management services to its group of companies.

The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements.

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

RESULTS

Loss after taxation for the year

Attributable to :Equity holders of the CompanyMinority interests

COMPANYRM

(77,072)

(77,072)-

(77,072)

GROUPRM

(6,487,026)

(6,616,430)129,404

(6,487,026)

In the opinion of the directors, the results of the operations of the Group and of the Company for the financial year ended 31 December 2008 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

DIVIDENDS

No dividends have been declared or paid by the Company since the end of the previous financial year.

The Company is not in a position to pay any dividend in view of the current year loss and the accumulated losses as at balance sheet date.

RESERVES AND PROVISIONS

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

SHARE CAPITAL AND DEBENTURE

During the financial year, the Company did not issue any shares or debentures and did not grant any option to anyone to take up unissued shares of the Company.

ANNUAL REPORT 2008

Directors' ReportFor The Year Ended 31 December 2008

(Cont’d)19

EMPLOYEE SHARE OPTION SCHEME

The Company’s Employee Share Option Scheme (“ESOS”) is governed by the by-laws which were approved by the shareholders at an Extraordinary General Meeting held on 28 June 2004. The ESOS shall be in force for a duration of five years expiring on 24 November 2009.

The salient features of the ESOS are disclosed in Note 15 to the financial statements.

The movement of the options over unissued shares of the Company granted under the ESOS during the financial year are as follows :

Options over ordinary shares of RM0.50 each

Grantdate

24.11.04

Exerciseprice

RM0.65

Balanceat

1.1.08

3,883,000

Exercisedduring

the year

-

Lapseddue to

resignation

(548,000)

Balanceat

31.12.08

3,335,000

Details of options granted to directors are disclosed in the section on Directors’ Interests in this report.

DIRECTORS

The directors who served since the date of the last report are as follows :

Yang Wu-Hsiung Yang Chao-Tung Tan Ah Lee Yeoh Cheng Han Wee Cheong Poh Saffie Bin Bakar

In accordance with the Company’s Articles of Association, Mr. Yeoh Cheng Han and Mr. Tan Ah Lee retire from the Board at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.

DIRECTORS’ INTERESTS IN SHARES

According to the Register of Directors’ Shareholdings, the interests of directors in office at the end of the financial year in shares and options of the Company and its related corporations during the financial year are as follows :

The CompanyDirect Interest :Yang Wu-Hsiung Yang Chao-TungTan Ah LeeYeoh Cheng HanWee Cheong PohSaffie Bin Bakar

Balanceat

1.1.08

1,165,092855,114510,720200,00020,000

105,580

Bought

84,000-----

Sold

------

Balanceat

31.12.08

1,249,092855,114510,720200,00020,000

105,580

Number of ordinary shares of RM0.50 each

Directors' ReportFor The Year Ended 31 December 2008(Cont’d)

20


DIRECTORS’ INTERESTS IN SHARES (Cont’d)

Deemed Interest :Yang Wu-Hsiung

Yang Wu-HsiungYang Chao-TungTan Ah LeeYeoh Cheng Han

Balanceat

1.1.08

7,381,398

Balance at

1.1.08

214,000214,000100,000100,000

Bought

-

Granted

----

Sold

-

Exercised

----

Balanceat

31.12.08

7,381,398

Balance at

31.12.08

214,000214,000100,000100,000

Number of ordinary shares of RM0.50 each

Number of options for ordinary shares of RM0.50 each

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors shown in the financial statements) by reason of a contract made by the Company or a related corporation with a director or with a firm of which the director is a member or with a company in which the director has a substantial financial interest, other than those related party transactions disclosed in the notes to the financial statements.

During and at the end of the year, no arrangements subsisted to which the Company is a party, with the objects of enabling directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate other than the share options granted under the Company’s ESOS.

OTHER STATUTORY INFORMATION

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that :

(i) all known bad debts have been written off and adequate allowance has been made for doubtful debts, and

(ii) all current assets have been stated at the lower of cost and net realisable value.

At the date of this report, the directors are not aware of any circumstances :

(i) that would render the amount written off for bad debts or the amount of the allowance for doubtful debts in the Group and in the Company inadequate to any substantial extent, or

(ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or

(iii) that would render any amount stated in the financial statements of the Group and of the Company misleading, or

(iv) which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

ANNUAL REPORT 2008

Directors' ReportFor The Year Ended 31 December 2008

(Cont’d)21

OTHER STATUTORY INFORMATION (Cont’d)

At the date of this report, there does not exist :

(i) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which secures the liabilities of any other person, or

(ii) any contingent liability in respect of the Group and of the Company that has arisen since the end of the financial year.

No contingent liability or other liability of the Group and of the Company has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

AUDITORS

The auditors, Grant Thornton (formerly known as JB Lau & Associates), have expressed their willingness to continue in office.

Signed in accordance with a resolution of the directors :

Yang Wu-Hsiung

Yang Chao-Tung

Penang,

Date : 10 March 2009


Directors' Statement22

Statutory Declaration

I, Lim Tuan Guan, the officer primarily responsible for the financial management of AE Multi Holdings Berhad do solemnly and sincerely declare that the financial statements set out on pages 25 to 64 are to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )the abovenamed at Penang, this 10th )day of March 2009. )

Lim Tuan Guan

KARUPAYEE KAMALAM A/P R. MOTTAINO.: P015Commissioner for OathMalaysia

We, Yang Wu-Hsiung and Yang Chao-Tung, being two of the directors of AE Multi Holdings Berhad state that in the opinion of the directors, the financial statements set out on pages 25 to 64 are properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2008 and of their financial performance and cash flows for the financial year then ended.

Signed in accordance with a resolution of the directors :

Yang Wu-Hsiung

Yang Chao-Tung


ANNUAL REPORT 2008

Report on the Financial Statements

We have audited the financial statements of AE Multi Holdings Berhad, which comprise the balance sheets as at31 December 2008 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 25 to 64.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2008 and of their financial performance and cash flows for the year then ended.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following :

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act,

(b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 6 to the financial statements,

(c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes, and

(d) The auditors’ reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

23Independent Auditors’ Report To The Members

of AE Multi Holdings BerhadCompany No. 539777-D (Incorporated In Malaysia)


Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

John Lau Tiang Hua, DJNPartner No. 1107/03/10 (J)Chartered Accountant

Grant Thornton(formerly known as JB Lau & Associates)No. AF : 0042Chartered Accountants


Penang

24

Independent Auditors’ Report To The Membersof AE Multi Holdings BerhadCompany No. 539777-D (Incorporated In Malaysia)

(Cont’d)

ANNUAL REPORT 2008

Consolidated Balance SheetAs At 31 December 2008

25

ASSETSNon-current assetsProperty, plant and equipmentInvestment propertyPrepaid land lease paymentsInvestment in an associateOther investments

Current assetsInventoriesTrade receivablesOther receivables, deposits and prepaymentsFixed deposit with a licensed bankCash and bank balances

TOTAL ASSETS

EQUITY AND LIABILITIESEquity attributable to equity holders of the

CompanyShare capitalShare premiumReservesAccumulated losses

Minority interestsTotal equity

Non-current liabilitiesBorrowingsDeferred tax liabilities

Current liabilitiesTrade payablesOther payables and accrualsAmount due to directorsBorrowingsProvision for taxation

Total liabilities

TOTAL EQUITY AND LIABILITIES

NOTE

34578

910111314

151617

1920

21222319

2007RM

33,871,226 650,000

1,484,246 406,958 777,530

37,189,960

26,417,140 18,748,896 3,174,538

4,600 4,069,893

52,415,067

89,605,027

42,247,500 5,572,425

(361,204)(13,341,564)34,117,157 1,340,496

35,457,653

2,092,471 367,844

2,460,315

11,211,049 4,872,410

3,802 35,464,663

135,13551,687,05954,147,374

89,605,027

2008RM

31,241,458 650,000

1,455,746 285,552 777,530

34,410,286

21,574,032 12,738,483 2,922,602

- 3,544,856

40,779,973

75,190,259

42,247,500 5,572,425 (466,644)

(19,949,801)27,403,480 2,515,864

29,919,344

2,702,813 352,987

3,055,800

8,339,853 2,428,550

3,802 31,307,775

135,13542,215,11545,270,915

75,190,259

The notes set out on pages 34 to 64 form an integral part of these financial statements.


Consolidated Income StatementFor the Year Ended 31 December 2008

26

Revenue

Cost of sales

Gross profit

Other income

Administrative expenses

Selling and distribution expenses

(Loss)/Profit from operations

Finance costs

Share of results of an associate

Loss before taxation

Taxation

Loss for the year

Attributable to :

Equity holders of the CompanyMinority interests

Loss per share (sen)

NOTE

24

25

26

27

28

29

2007RM

78,861,168

(71,510,053)

7,351,115

1,611,906

(4,384,399)

(2,699,629)

1,878,993

(2,258,440)

(248,244)

(627,691)

(96,329)

(724,020)

(750,888)26,868

(724,020)

(0.89)

2008RM

69,129,330

(67,816,559)

1,312,771

542,888

(4,059,228)

(2,009,614)

(4,213,183)

(2,015,531)

(121,406)

(6,350,120)

(136,906)

(6,487,026)

(6,616,430)129,404

(6,487,026)

(7.83)


ANNUAL REPORT 2008

Consolidated Statement of Changes In EquityFor The Year Ended 31 December 2008

27


MinorityInterests

RM

1,340,496

-

-

-

129,404

129,404

1,045,964

2,515,864

1,049,825

-

-

-

26,868

26,868

263,803

1,340,496

TotalEquity

RM

35,457,653

-

(97,247)

(97,247)

(6,487,026)

(6,584,273)

1,045,964

29,919,344

35,777,993

-

139,877

139,877

(724,020)

(584,143)

263,803

35,457,653

2008

Balance at beginning

Net gain/(loss) not recognised in the income statement

Foreign currency translation differences

Net income recognised directly in equity

Loss for the year

Total recognised income and expense for the year

Issue of shares to minority interests

Balance at end

2007


Net gain/(loss) not recognised in the income statement

Foreign currency translation differences

Net income recognised directly in equity

Loss for the year

Total recognised income and expense for the year

Issue of shares to minorityinterests

Balance at end

NOTE

17

17

17

17

TotalRM

34,117,157

-

(97,247)

(97,247)

(6,616,430)

(6,713,677)

-

27,403,480

34,728,168

-

139,877

139,877

(750,888)

(611,011)

-

34,117,157

ShareCapital

RM

42,247,500

-

-

-

-

-

-

42,247,500

42,247,500

-

-

-

-

-

-

42,247,500

Share Premium

RM

5,572,425

-

-

-

-

-

-

5,572,425

5,572,425

-

-

-

-

-

-

5,572,425

ReservesRM

(361,204)

(8,193)

(97,247)

(105,440)

-

(105,440)

-

(466,644)

(492,888)

(8,193)

139,877

131,684

-

131,684

-

(361,204)

AccumulatedLosses

RM

(13,341,564)

8,193

-

8,193

(6,616,430)

(6,608,237)

-

(19,949,801)

(12,598,869)

8,193

-

8,193

(750,888)

(742,695)

-

(13,341,564)

Attributable to Equity Holders of the CompanyNon-distributable


Consolidated Cash Flow StatementFor The Year Ended 31 December 2008

28

CASH FLOWS FROM OPERATING ACTIVITIESLoss before taxationAdjustments for :

Allowance for doubtful debtsAmortisation on prepaid land lease paymentsBad debtsDepreciationGain on disposal of property, plant and equipmentImpairment loss on other investmentsInterest expenseInterest incomeShare of results of an associate

Operating profit before working capital changesInventoriesReceivablesPayables

Cash generated from operationsIncome tax paidIncome tax refundInterest paid

Net cash from operating activities

CASH FLOWS FROM INVESTING ACTIVITIESInterest receivedProceeds from disposal of property, plant and equipment

* Purchase of property, plant and equipmentNet cash used in investing activities

Balance carried forward

2007RM

(627,691)

416,014 28,500

206,488 6,307,405

(76,950)10,000

2,258,440 (44,025)

248,244

8,726,425 (1,580,454)(2,284,941)(2,147,098)

2,713,932 (117,026)

-(2,258,440)

338,466

44,025 87,477

(3,837,041)(3,705,539)

(3,367,073)

2008RM

(6,350,120)

-28,500

483,777 5,965,999

--

2,015,531 (33,246)121,406

2,231,847 4,843,108 5,767,497

(5,315,056)

7,527,396 (153,883)

13,195 (2,015,531)

5,371,177

33,246 -

(2,565,675)(2,532,429)

2,838,748


ANNUAL REPORT 2008

Consolidated Cash Flow StatementFor The Year Ended 31 December 2008

(Cont’d)29

Balance brought forward

CASH FLOWS FROM FINANCING ACTIVITIESBankers acceptancePayment of hire purchase payablesProceeds from issuance of shares to minority interestsProceeds from term loanPromissory notesRepayment of term loansTrust receiptsNet cash (used in)/from financing activities

Effects of changes in exchange rates

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING

CASH AND CASH EQUIVALENTS AT END

Represented by :Fixed deposit with a licensed bankCash and bank balancesBank overdrafts

* Purchase of property, plant and equipmentTotal acquisition costAcquisition under hire purchase loan

Total cash acquisition

2007RM

(3,367,073)

6,948,988 (148,850)263,803

-52,225

(3,526,781)1,765,376 5,354,761

(108,255)

1,879,433

1,946,756

3,826,189

4,600 4,069,893

(248,304)

3,826,189

3,837,041-

3,837,041

2008RM

2,838,748

(4,515,456)(293,361)

1,045,964 2,891,010

(95,825)(2,895,243)

29,754 (3,833,157)

276,941

(717,468)

3,826,189

3,108,721

-3,544,856 (436,135)

3,108,721

3,710,419(1,144,744)

2,565,675



Balance SheetAs At 31 December 2008

30

ASSETS

Non-current assetsInvestment in subsidiariesInvestment in an associateOther investments

Current assetsOther receivablesAmount due from subsidiariesBank balances

TOTAL ASSETS

EQUITY AND LIABILITIES

Share capitalShare premiumRetained profitsTotal equity

Current liabilitiesOther payables and accrualsAmount due to subsidiariesTotal liabilities

TOTAL EQUITY AND LIABILITIES

2007RM

35,971,926 720,000 777,530

37,469,456

696 11,019,377

903 11,020,976

48,490,432

42,247,500 5,572,425

359,061 48,178,986

163,446 148,000311,446

48,490,432

2008RM

35,971,926 720,000 777,530

37,469,456

956 11,079,631

22,640 11,103,227

48,572,683

42,247,500 5,572,425

281,989 48,101,914

217,753 253,016470,769

48,572,683


NOTE

678

111214

151618

2212

Income StatementFor the Year Ended 31 December 2008

31

ANNUAL REPORT 2008

Revenue

Other income

Administrative expenses


Taxation

Loss for the year

2007RM

100,000

-

(188,662)

(88,662)

-

(88,662)

2008RM

100,000

6,000

(183,072)

(77,072)

-

(77,072)


NOTE

24

25

27

28

Statement of Changes In EquityFor The Year Ended 31 December 2008

32


2008


Loss for the year

Balance at end

2007


Loss for the year

Balance at end

ShareCapital

RM

42,247,500

-

42,247,500

42,247,500

-

42,247,500

Non-distributable

SharePremium

RM

5,572,425

-

5,572,425

5,572,425

-

5,572,425

Distributable

RetainedProfits

RM

359,061

(77,072)

281,989

447,723

(88,662)

359,061

TotalEquity

RM

48,178,986

(77,072)

48,101,914

48,267,648

(88,662)

48,178,986


Cash Flow StatementFor the Year Ended 31 December 2008

33

ANNUAL REPORT 2008

CASH FLOWS FROM OPERATING ACTIVITIES

Loss before taxationWorking capital changes :ReceivablesPayables

Net cash used in operating activities

CASH FLOWS FROM FINANCING ACTIVITIES

Subsidiaries

NET INCREASE/(DECREASE) IN CASH

CASH AT BEGINNING

CASH AT END

2008RM

(77,072)

(260)54,307

(23,025)

44,762

21,737

903

22,640

2007RM

(88,662)

234 22,214

(66,214)

59,999

(6,215)

7,118

903



Notes to the Financial Statements31 December 2008

34

1. CORPORATE INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Second Board of Bursa Malaysia Securities Berhad.

The principal activities of the Company consist of investment holding and the provision of management services to its group of companies. The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 10 March 2009.

2. SIGNIFICANT ACCOUNTING POLICIES

The following accounting policies adopted by the Group and the Company are consistent with those adopted in the previous financial years unless otherwise indicated below.

2.1 Basis of Preparation

The financial statements of the Group and of the Company are prepared under the historical cost convention unless otherwise indicated in the accounting policies below and comply with Financial Reporting Standards and the Companies Act, 1965 in Malaysia.

The Group and the Company had adopted new/revised Financial Reporting Standards (“FRSs”) which are mandatory for financial periods beginning on or after 1 January 2008 as described fully in Note 2.23.

2.2 Significant Accounting Estimates and Judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed as follows :

(i) Depreciation of property, plant and equipmentThe depreciable costs of property, plant and equipment are allocated on the straight line basis over their estimated useful lives. Management estimates the useful lives of these assets to be within 5 to 50 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and residual value of these assets.

(ii) Net realisable values of inventoriesReviews are made by management on damage, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuations of inventories.

(iii) Recoverability of receivables The Group makes allowances for doubtful debts based on an assessment of the recoverability of receivables. Allowances for doubtful debt is provided where events or changes in circumstances indicate that the balances may not be collectable. The identification of doubtful debts requires use of judgement and estimates. Where

ANNUAL REPORT 2008


(Cont’d)35

2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

2.2 Significant Accounting Estimates and Judgements (Cont’d)

(iii) Recoverability of receivables (Cont’d)

the estimation is different from the original estimate, such difference will impact the carrying value of the receivables and doubtful debts expenses in the period in which such estimate has been changed.

2.3 Subsidiaries and Basis of Consolidation

Subsidiaries

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

Investment in subsidiaries which is eliminated on consolidation is stated at cost less any accumulated impairment losses in the Company’s separate financial statements.

The policy for the recognition and measurement of impairment losses is in accordance with the accounting policy as set out in Note 2.13.

Upon the disposal of investment in subsidiaries, the difference between net disposal proceeds and their carrying amount is charged or credited to the income statement.

Basis of Consolidation

The financial statements of the Group include the audited financial statements of the Company and all its subsidiaries made up to the end of the financial year. Subsidiaries are consolidated using the acquisition method of accounting.

Under the acquisition method of accounting, the results of the subsidiaries acquired or disposed of are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements.

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the acquirees’ identifiable assets, liabilities and contingent liabilities represents goodwill and is retained in the balance sheet. The policy for the recognition and measurement of impairment losses in goodwill is in accordance with the accounting policy as set out in Note 2.13.

Any excess of the Group’s interest in the net fair value of the acquirees’ identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in the income statement.

Inter-company balances, transactions and resulting unrealised gain are eliminated on consolidation and the consolidated financial statements reflect external transactions only. Unrealised losses are eliminated on consolidation unless costs cannot be recovered. Where necessary, adjustments are made to the financial statements of the subsidiaries to ensure consistency of accounting policies with those of the Group.

Minority interest is measured at the minorities’ share of the fair values of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the minorities’ share of changes in the subsidiaries’ equity since then.

2.4 Property, Plant and Equipment

Property, plant and equipment are initially stated at cost.

Land and buildings are subsequently shown at valuation based on valuations by external independent valuers, less subsequent amortisation/depreciation. Subsequent additions are shown at cost while disposals are at valuation or cost as appropriate. Revaluations are performed at least once in every five years.


Notes to the Financial Statements31 December 2008(Cont’d)

36


2.4 Property, Plant and Equipment (Cont’d)

Surpluses arising on revaluation are credited to asset revaluation reserve. Any deficit arising from revaluation is charged against the revaluation reserve to the extent of a previous surplus held in the asset revaluation reserve for the same asset. In all other cases, a decrease in carrying amount is charged to the income statement.

All other property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.


Property, plant and equipment are depreciated on the straight line method to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates :

Buildings 2% - 5%Hostels 2%Building improvements 2% - 10%Machinery and factory equipment 10% - 20%Furniture, fixtures and office equipment 10% - 20%Motor vehicles 20%

Freehold land is not amortised as it has an infinite life.

The residual value, useful life and depreciation method are reviewed at each balance sheet date to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

Upon the disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the income statement and the attributable portion of the revaluation surplus is taken directly to retained profits.

2.5 Investment Property

Investment property is property which is held either to earn rental income or for capital appreciation or for both. Such property is measured initially at cost, including transaction costs. Subsequent to initial recognition, investment property is stated at fair value. Fair value is arrived at by reference to market evidence of transaction prices for similar properties and is performed by registered independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued.

Gains or losses arising from changes in the fair values of investment property is recognised in profit or loss in the year in which they arise.

A property interest under an operating lease is classified and accounted for as an investment property on a property-by-property basis when the Company holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at fair value.

Investment property is derecognised when either it has been disposed of or when it is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year in which they arise.

ANNUAL REPORT 2008


(Cont’d)37


2.6 Leases

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time.

Under an operating lease the lessor does not transfer substantially all the risks and rewards incidental to ownership to the lessee while under a finance lease substantially all the risks and rewards incidental to legal ownership are transferred by the lessor to the lessee.

Operating Leases - as LessorAsset leased out under operating leases are presented on the balance sheet according to the nature of the assets. Rental income from operating leases is recognised on a straight-line basis over the term of lease. Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

Operating Leases - as LesseeOperating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expenses 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 made are allocated, whenever necessary, between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land elements and buildings elements of the lease at the inception of the lease. The upfront payment represents prepaid lease payments and are amortised on a straight-line basis over the lease term.

Prepaid land lease payments on leasehold land are amortised on a straight line basis over the remaining lease term of the land of 60 years.

2.7 Hire Purchase

Property, plant and equipment financed under hire purchase are capitalised in the financial statements and are depreciated in accordance with the accounting policy as set out in Note 2.4. Outstanding obligations due under hire purchase after deducting finance costs are included as liabilities in the financial statements. The finance costs are charged to the income statement over the period of the respective agreements using the sum-of-digits method.

2.8 Investments

Associates

An associate is defined as one in which the Company has significant influence, but not control, over the financial and operating policies.

Investment in an associate is accounted for in the consolidated financial statements by the equity method of accounting based on audited or management financial statements of the associates. Under the equity method of accounting, the Group’s share of profits/losses of the associates during the year is included in the consolidated income statement. The Group’s interest in associates is carried in the consolidated balance sheet at cost plus the Group’s share of post-acquisition retained profits or accumulated losses and other reserves as well as goodwill on acquisition. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associates.



38


2.8 Investments (Cont’d)

Associates (Cont’d)

Unrealised profits arising on transactions between the Group and its associates which are included in the carrying amount of the related assets and liabilities are eliminated to the extent of the Group’s interests in the associates. Unrealised losses on such transactions are also eliminated unless cost cannot be recovered.

The equity method of accounting is discontinued when the Group’s share of losses of the associates exceeds the carrying amount of investment, unless the Group has incurred obligations or guaranteed obligations in respect of the associates.

In the Company’s separate financial statements, investment in associates is stated at cost less any accumulated impairment losses.


Upon the disposal of investment in an associate, the difference between the net disposal proceeds and the carrying amount is charged or credited to the income statement.

Other investments

Other investments are stated at cost less any accumulated impairment losses.


Upon disposal of other investments, the difference between the net disposal proceeds and its carrying amount is charged or credited to the income statement.

2.9 Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost of finished goods and work-in-progress includes materials, direct labour and attributable production overheads are determined on the weighted average basis.

Cost of raw materials and consumables is determined on the first-in, first-out basis.

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

2.10Receivables

Receivables are stated at their anticipated realisable values. Known bad debts are written off and specific allowances are made for any debts considered to be doubtful of collection.

2.11Payables

Payables are stated at cost which is the fair value of the consideration to be paid in future for goods and servicesreceived.

ANNUAL REPORT 2008


(Cont’d)39


2.12Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and it 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 and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

2.13 Impairment of Assets

At each balance sheet date, the Group reviews the carrying amounts of its assets other than inventories, prepaid land lease payments and financial assets to determine whether there is any indication of impairment. If any such indication exists, impairment is measured by comparing the carrying values of the assets with their recoverable amounts. Recoverable amount is the higher of net selling price and value in use, which is measured by reference to discounted future cash flows.

An impairment loss is recognised as an expense in the income statement immediately, unless the asset is carried at a revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of any unutilised previously recognised revaluation surplus for the same asset. Reversal of impairment losses recognised in prior years is recorded when the impairment losses recognised for the asset no longer exist or have decreased.

2.14Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction, production or preparation of assets until they are ready for their intended use or sale are capitalised as part of the cost of those assets. Other borrowing costs are recognised as expenses in the year in which they are incurred.

2.15 Income Recognition

Sale of goodsRevenue from sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer.

Provision of servicesRevenue arising from the provision of services is recognised on the dates the services are rendered and completed.

Management fee incomeManagement fee income is recognised in the income statement on the accrual basis.

2.16Research and Development Expenditure

All general research and development expenditure is charged to the income statement in the year in which the expenditure is incurred.

2.17Employee Benefits

Short term benefitsWages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leaveare recognised when the absences occur.



40


2.17Employee Benefits (Cont’d)

Defined contribution plansAs required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund (“EPF”). Such contributions are recognised as an expense in the income statement as incurred.

Share-based compensationThe Company Employee Share Option Scheme (“ESOS”), an equity-settled, share-based compensation plan, allows the Group’s employees to acquire ordinary shares of the Company. The total fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in the share option reserve within equity over the vesting period and taking into account the probability that the options will vest. The fair value of share options is measured at grant date, taking into account, if any, the market vesting conditions upon which the options were granted but excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable on vesting date.

At each balance sheet date, the Group revises its estimates of the number of options that are expected to become exercisable on vesting date. It recognises the impact of the revision of original estimates, if any, in the profit or loss, and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in the share option reserve until the option is exercised, upon which it will be transferred to share premium, or until the option expires, upon which it will be transferred directly to retained profits.

The proceeds received net of any directly attributable transaction costs are credited to equity when the options are exercised.

FRS 2 Share-based payment, is not applicable in accordance with its transitional provisions as the share options were granted before 31 December 2004.

2.18Foreign Currencies

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

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each balance sheet date, foreign currency monetary items are translated into functional currency at the exchange rates ruling at that date. All exchange gains or losses are included in the income statement.

The financial statements of the foreign subsidiaries are translated into Ringgit Malaysia at the approximate rate of exchange ruling on the balance sheet date for balance sheet items and at the approximate average rate of exchange ruling on transaction dates for income statement items. Exchange differences due to such currency translations are taken directly to exchange translation reserve.

2.19 Income Tax

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income tax payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted by the balance sheet date.

Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements.

Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

ANNUAL REPORT 2008


(Cont’d)41


2.19 Income Tax (Cont’d)

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled based on the tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date.

2.20Cash and Cash Equivalents

Cash comprises cash in hand, cash at bank and demand deposits. Cash equivalents are short term and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value against which bank overdraft balances, if any, are deducted.

2.21Equity Instruments

Ordinary shares are classified as equity which are recorded at the nominal value and proceeds in excess of the nominal value of shares issued, if any, are accounted for as share premium. Both ordinary shares and share premium are classified as equity. Dividends on ordinary shares are recognised as liabilities when declared.

The transaction costs of an equity transaction which comprise only those incremental external costs directly attributable to the equity transaction are accounted for as a deduction from equity, net of tax, from the proceeds.

2.22Financial Instruments

Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument.

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

The particular recognition methods adopted are disclosed in the individual accounting policy associated with eachitem.


42



2.23New and Revised Financial Reporting Standards (“FRSs”)

The Group and the Company adopted the following new and revised FRSs and IC Interpretations during the financial year :

FRS 107 Cash Flow Statements * FRS 111 Construction Contracts

FRS 112 Income Taxes FRS 118 Revenue

* FRS 120 Accounting for Government Grants and Disclosure of Government Assistance Amendment to The Effects of Changes in Foreign Exchange Rates - Net Investment

FRS 121 a Foreign OperationFRS 134 Interim Financial Reporting FRS 137 Provisions, Contingent Liabilities and Contingent Assets

* IC Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities* IC Interpretation 2 Members’ Shares in Co-operative Entities and Similar Instruments * IC Interpretation 5 Rights to Interests arising from Decommissioning, Restoration and

Environmental Rehabilitation Funds * IC Interpretation 6 Liabilities arising from Participating in a Specific Market - Waste Electrical

and Electronic Equipment* IC Interpretation 7 Applying the Restatement Approach under FRS 1292004 Financial

Reporting in Hyperinflationary Economies* IC Interpretation 8 Scope of FRS 2

Effective date

1 July 20071 July 20071 July 20071 July 20071 July 2007

1 July 20071 July 20071 July 20071 July 20071 July 2007

1 July 2007

1 July 2007

1 July 20071 July 2007

The adoption of the above FRSs did not give rise to any adjustment to the opening balances of accumulated losses/retained profits of the prior and current year or to changes in the comparative figures.

The Group and the Company have not early adopted the following FRSs and IC Interpretations which are effective for financial periods beginning on or after 1 July 2009 and 1 January 2010.

Mandatory for financial period beginning on or after 1 July 2009 : FRS 8 Operating Segments

Mandatory for financial period beginning on or after 1 January 2010 :* FRS 4 Insurance Contracts

FRS 7 Financial Instruments : DisclosuresFRS 139 Financial Instruments : Recognition and Measurement

* IC Interpretation 9 Reassessment of Embedded DerivativesIC Interpretation 10 Interim Financial Reporting and Impairment

* Not applicable to the Group and Company.

The effects of FRS 139, if any, upon its initial recognition are exempted from disclosure.


(Cont’d)43

ANNUAL REPORT 2008

3. PROPERTY, PLANT AND EQUIPMENT

GROUP

2008

Cost/ValuationBalance at beginning AdditionsForeign currency translationBalance at end

Accumulated depreciationand impairment losses

Balance at beginning Current chargeForeign currency translation

* Balance at endNet carrying amount

* Analysed as :Accumulated depreciationAccumulated impairment losses

2007

Cost/ValuationBalance at beginning AdditionsDisposalsForeign currency translationBalance at end

Accumulated depreciationand impairment losses

Balance at beginning Current chargeDisposalsForeign currency translation

* Balance at endNet carrying amount

* Analysed as :Accumulated depreciationAccumulated impairment losses

Land andbuildings

RM

11,840,822 -

(194,666)11,646,156

2,125,758 404,042 (57,204)

2,472,596 9,173,560

2,472,596 -

2,472,596

11,734,729 --

106,093 11,840,822

1,690,709 405,240

-29,809

2,125,7589,715,064

2,125,758-

2,125,758

Buildingsimprovements

RM

236,222 152,239

(2,079)386,382

1,931 8,501 (107)

10,325 376,057

10,325 -

10,325

-236,222

--

236,222

-1,902

-29

1,931234,291

1,931-

1,931

At valuation

Machineryand factoryequipment

RM

70,597,232 2,795,843 (771,813)

72,621,262

48,342,864 5,018,363 (520,546)

52,840,681 19,780,581

50,138,750 2,701,931

52,840,681

67,142,291 3,203,752

(209,621)460,810

70,597,232

42,885,373 5,363,711

(199,094)292,874

48,342,864 22,254,368

45,640,9332,701,931

48,342,864

Furniture,fixtures and

officeequipment

RM

3,972,146 710,408 28,545

4,711,099

3,067,945 323,272

6,366 3,397,583 1,313,516

3,044,007 353,576

3,397,583

3,703,555 267,655

-936

3,972,146

2,862,664 204,595

-686

3,067,945 904,201

2,714,369 353,576

3,067,945

Motorvehicles

RM

2,046,129 51,929

(31,137)2,066,921

1,282,827 211,821 (25,471)

1,469,177 597,744

1,469,177 -

1,469,177

1,898,141 129,412

-18,576

2,046,129

935,985 331,957

-14,885

1,282,827763,302

1,282,827-

1,282,827

TotalRM

88,692,551 3,710,419 (971,150)

91,431,820

54,821,325 5,965,999 (596,962)

60,190,362 31,241,458

57,134,855 3,055,507

60,190,362

84,478,716 3,837,041

(209,621)586,415

88,692,551

48,374,731 6,307,405

(199,094)338,283

54,821,325 33,871,226

51,765,8183,055,507

54,821,325

At cost



44

3. PROPERTY, PLANT AND EQUIPMENT (Cont’d)

i. The breakdown of land and buildings at valuation is as follows :

2008

At valuationBalance at beginningForeign currency translation

Balance at end

Accumulated depreciationBalance at beginning Current chargeForeign currency translation

Balance at end

Net carrying amount

2007

At valuationBalance at beginningForeign currency translation

Balance at end

Accumulated depreciationBalance at beginning Current chargeForeign currency translation

Balance at end

Net carrying amount

Freehold landRM

458,931 (13,787)

445,144

---

-

445,144

Freehold landRM

451,417 7,514

458,931

---

-

458,931

BuildingsRM

10,563,498 (180,879)

10,382,619

2,101,349 386,885 (57,204)

2,431,030

7,951,589

BuildingsRM

10,464,919 98,579

10,563,498

1,683,457 388,08329,809

2,101,349

8,462,149

HostelsRM

818,393 -

818,393

24,409 17,157

-

41,566

776,827

HostelsRM

818,393 -

818,393

7,25217,157

-

24,409

793,984

TotalRM

11,840,822 (194,666)

11,646,156

2,125,758 404,042 (57,204)

2,472,596

9,173,560

TotalRM

11,734,729 106,093

11,840,822

1,690,709 405,24029,809

2,125,758

9,715,064

ANNUAL REPORT 2008


(Cont’d)45

3. PROPERTY, PLANT AND EQUIPMENT (Cont’d)

ii. The freehold land, buildings and hostels were revalued on 15 December 2006 by Raine & Horne, International Zaki & Partners Sdn. Bhd., an independent professional valuer. Fair value is determined by reference to the open market values on an existing use basis.

The historical cost and net carrying amount of properties stated at valuation are as follows :

2008

Cost

Accumulated depreciation

Net carrying amount

2007

Cost

Accumulated depreciation

Net carrying amount

FreeholdlandRM

175,000

-

175,000

175,000

-

175,000

BuildingsRM

9,869,113

(3,850,683)

6,018,430

9,869,113

(2,970,162)

6,898,951

HostelsRM

655,202

(77,603)

577,599

655,202

(63,495)

591,707

iii. The net carrying amount of property, plant and equipment being acquired under hire purchase loans are as follows :

Machinery and factory equipmentMotor vehicles

2008RM

1,368,830265,777

1,634,607

2007RM

-370,555

370,555

iv. The net carrying amount of property, plant and equipment charged to financial institutions for banking facilities granted to the Group is as follows :

At valuation :Freehold landBuildings

2008RM

346,6328,222,031

8,568,663

2007RM

458,9318,462,149

8,921,080



46

The short leasehold land is pledged to a licensed bank as security for banking facilities granted to a subsidiary.

Short leasehold land refers to land with an unexpired lease period of less than fifty years.

5. PREPAID LAND LEASE PAYMENTS

Short leasehold land :Balance at beginningLess : Amortisation for the year

Balance at end

2008RM

1,484,246(28,500)

1,455,746

2007RM

1,512,746(28,500)

1,484,246

GROUP

The short leasehold land is pledged to a licensed bank as security for banking facilities granted to a subsidiary.

Short leasehold land refers to land with an unexpired leased period of less than fifty years.

6. INVESTMENT IN SUBSIDIARIES

Unquoted shares, at cost

2008RM

35,971,926

2007RM

35,971,926

COMPANY

Details of the subsidiaries are as follows :

Name of Company

DirectAE Corporation (M) Sdn. Bhd.

Fensoll Technology Sdn. Bhd.

AE Multi Industries Sdn. Bhd.

Place ofIncorporation

Malaysia

Malaysia

Malaysia

2008

100%

100%

100%

2007

100%

100%

100%

Principal Activities

Manufacture and sale of printed circuitboards and related products.

Investment holding company.

Sourcing and reselling of printed circuit boards and related products, electronicand telecommunication components.

EffectiveEquity Interest

4. INVESTMENT PROPERTY

Short leasehold land, at valuation

2008RM

650,000

2007RM

650,000

GROUP

ANNUAL REPORT 2008


(Cont’d)47

6. INVESTMENT IN SUBSIDIARIES (Cont’d)

Name of Company

Indirect - held through AE Corporation (M) Sdn. Bhd.* Amallion Enterprise (Thailand)

Corporation Ltd.

Indirect - held through Fensoll Technology Sdn. Bhd.* Trend Vision Technology

(Zhuhai) Co. Ltd.

* Not audited by Grant Thornton.


Thailand

People’s Republicof China

2008

100%

51%

2007

100%

51%


Manufacture and sale of printed circuitboards and related products.

Manufacture of cartridge ink and related products.

EffectiveEquity Interest

7. INVESTMENT IN AN ASSOCIATE

Unquoted shares, at cost Share of post-acquisition reserve

2008RM

720,000-

720,000

2007RM

720,000-

720,000

COMPANY2007

RM

720,000(313,042)

406,958

2008RM

720,000(434,448)

285,552

GROUP

Name of Company

* AAV Industries Sdn. Bhd.


Malaysia

Equity2008

49.90%

Interest2007

49.90%


Manufacturing and assembly of electronic and telecommunications products.

Effective

Details of the associate are as follows :

* Not audited by Grant Thornton.



48

7. INVESTMENT IN AN ASSOCIATE (Cont’d)

Assets and liabilitiesNon-current assetsCurrent assets

Total assets

Non-current liabilitiesCurrent liabilities

Total liabilities

ResultsRevenueLoss for the year

2008RM

1,835,892950,956

2,786,848

-1,342,644

1,342,644

4,153,166(243,298)

2007RM

1,901,3961,646,263

3,547,659

-2,809,583

2,809,583

2,023,456(497,482)

The summarised financial information of the associate are as follows :

8. OTHER INVESTMENTS

Club membership, at costLess : Accumulated impairment losses

Balance at beginningCurrent year

Balance at end

Unquoted shares, at cost

Total

2008RM

-

--

--

777,530

777,530

2007RM

-

--

--

777,530

777,530

COMPANY2007

RM

29,960

19,96010,000

(29,960)-

777,530

777,530

2008RM

29,960

29,960-

(29,960)-

777,530

777,530

GROUP

9. INVENTORIES

At cost :Raw materialsWork-in-progressFinished goodsConsumables

At net realisable value :Consumables

2008RM

13,469,6021,628,5775,036,563

588,17720,722,919

851,11321,574,032

2007RM

16,082,5243,160,5835,359,595

535,78125,138,483

1,278,65726,417,140

GROUP

ANNUAL REPORT 2008


(Cont’d)49

Included herein is an amount of RM1,326,023 (2007 : RM1,367,557) due from an associate of the Company.

The normal credit terms granted to trade receivables range from 30 to 90 days (2007 : 30 to 90 days). Other credit terms are assessed and approved on a case-by-case basis.

11. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

Other receivablesDepositsPrepaymentsTax recoverable

Analysis by currencies :Ringgit MalaysiaThai BahtChinese RenminbiUS Dollar

2008RM

956---

956

956---

956

2007RM

696---

696

696---

696

COMPANY2007

RM

2,013,29731,251

1,115,77514,215

3,174,538

944,5392,077,763

152,236-

3,174,538

2008RM

1,652,36754,558

1,212,5373,140

2,922,602

883,4661,130,843

651,645256,648

2,922,602

GROUP

10. TRADE RECEIVABLES

Total amount

Less : Allowance for doubtful debtsBalance at beginningCurrent yearWritten off

Balance at end

Analysis by currencies :Ringgit MalaysiaUS DollarChinese RenminbiThai BahtEuro

2008RM

12,741,579

418,111-

(415,015)

(3,096)

12,738,483

2,594,4508,779,9951,259,966

107,168-

12,741,579

2007RM

19,167,007

3,429,147416,014

(3,427,050)

(418,111)

18,748,896

3,993,752757,710776,160

13,635,5723,813

19,167,007

GROUP



50

12. AMOUNT DUE FROM/TO SUBSIDIARIES

Amount due from subsidiariesAnalysis by currencies :Ringgit MalaysiaThai Baht

Amount due to subsidiaries Analysis by currencies :Ringgit Malaysia

2008RM

7,225,5813,854,050

11,079,631

253,016

2007RM

7,422,9233,596,454

11,019,377

148,000

COMPANY

The amount due from/to subsidiaries is non-trade related, unsecured, interest free and has no fixed terms of repayment.

13. FIXED DEPOSIT WITH A LICENSED BANK

GROUP

The interest rate and maturity of fixed deposit at balance sheet date was 3.70% per annum and 1 year respectively.

14. CASH AND BANK BALANCES

Analysis by currencies :Ringgit MalaysiaThai BahtChinese RenminbiUS Dollar

2008RM

22,640---

22,640

2007RM

903---

903

COMPANY2007

RM

271,9363,676,246

118,1923,519

4,069,893

2008RM

277,3192,501,225

519,273247,039

3,544,856

GROUP

15. SHARE CAPITAL

Authorised :Balance at beginning/end

Issued and fully paid :Balance at beginning/end

2008RM

50,000,000

42,247,500

2007RM

50,000,000

42,247,500

Amount2007

100,000,000

84,495,000

2008

100,000,000

84,495,000

Number of ordinary sharesof RM0.50 each

EMPLOYEE SHARE OPTION SCHEME

The Company’s Employee Share Option Scheme (“ESOS”) is governed by the by-laws which were approved by the shareholders at an Extraordinary General Meeting held on 28 June 2004. The ESOS shall be in force for a duration of five years expiring on 24 November 2009.

ANNUAL REPORT 2008


(Cont’d)51

15. SHARE CAPITAL (Cont’d)

EMPLOYEE SHARE OPTION SCHEME (Cont’d)

The salient features of the ESOS are as follows:

(a) Eligible employees are those employees who are at least eighteen years of age on the date of offer. Eligible employees also include executive directors who have been confirmed and employed full-time by and on the payroll of any company in the Group. Whilst for non-executive directors, they must be a member of the Board of Directors of a company(ies) comprised in the Group.

(b) The total number of shares to be offered under the ESOS shall not exceed 10% of the issued and paid-up share capital of the Company at any point of time during the duration of ESOS.

(c) The option is personal to the grantee and is non-assignable, non-transferable, non-chargeable and non-disposable in any manner whatsoever.

(d) The exercise price shall be at a discount of not more than 10% from the weighted average market price of the shares as shown in the daily official list issued by the Bursa Malaysia Securities Berhad for the five market days preceding the date of offer or the par value of the ordinary shares, whichever is higher.

(e) The ESOS is for a period of five years from the date of the last approval of the relevant authorities subject however to any extension or renewal of the ESOS for another five years only as may be approved by all the relevant authorities.

16. SHARE PREMIUM

Balance at beginning/end

2008RM

5,572,425

2007RM

5,572,425

17. RESERVES

Non-distributable :Asset revaluation reserveBalance at beginningLess : Current year realisation

Balance at end

Exchange fluctuation reserveTranslation of net assets of foreign subsidiariesBalance at beginningCurrent year exchange fluctuation

Balance at end

2008RM

378,714(8,193)

370,521

(739,918)(97,247)

(837,165)

(466,644)

2007RM

386,907(8,193)

378,714

(879,795)139,877

(739,918)

(361,204)

GROUP

Asset revaluation reserve is in respect of the surplus on revaluation of short leasehold land and buildings net of deferred tax.


52


18. RETAINED PROFITS

COMPANY

Since the Company has no Section 108 tax credit balance as at 31 December 2008, accordingly the Company automatically moves to the singer tier system. As a result, there are no longer any restriction on the Company to frank the payment of dividend out of its entire retained profits as at balance sheet date.

The borrowings are secured by :

(i) legal charges over the freehold and leasehold properties of the subsidiaries,(ii) debenture by way of fixed and floating charges over the assets of the subsidiaries, both present and future, and(iii) corporate guarantee of the Company.

19. BORROWINGS

Non-current liabilities

Term loans :Total amount repayableLess : Repayable within next twelve months

included in current liabilities

Hire purchase payables :Total amount payableLess : Interest in suspense

Less : Payable within next twelve monthsincluded in current liabilities

Current liabilities

Bank overdraftsBankers acceptanceHire purchase payablesPromissory noteShort term revolving creditTerm loans Trust receipts

Analysis by currencies :Ringgit MalaysiaThai Baht

2008RM

3,222,807

(1,271,842)

1,950,965

1,214,707(160,077)

1,054,630

(302,782)

751,848

2,702,813

436,13517,539,532

302,7822,409,1751,000,0001,271,8428,348,309

31,307,775

20,647,50713,363,081

34,010,588

2007RM

3,227,040

(1,204,570)

2,022,470

211,819(8,572)

203,247

(133,246)

70,001

2,092,471

248,30422,054,988

133,2462,505,0001,000,0001,204,5708,318,555

35,464,663

21,081,62416,475,510

37,557,134

GROUP


(Cont’d)53

ANNUAL REPORT 2008

19. BORROWINGS (Cont’d)

The interest rates per annum of bank borrowings at balance sheet date are as follows :

Bank overdraftsBankers acceptanceHire purchase payablesPromissory noteShort term revolving creditTerm loans Trust receipts

2008%

7.00 - 8.003.55 - 5.892.61 - 3.97

6.754.90

7.50 - 8.504.45

2007%

7.13 - 8.253.73 - 5.952.61 - 2.63

6.884.90

7.10 - 8.257.40

GROUP

The maturities of the borrowings as at balance sheet date are as follows :

Bankers acceptancePromissory noteShort term revolving creditTrust receipts

2008days

29 - 1209092

150

2007days

38 - 1201209190

GROUP

The term loans are repayable over 52 to 120 equal monthly instalments.

Maturities of term loans and hire purchase payables are as follows :

Within one yearMore than one year and less than five yearsMore than five years

Less : Unexpired interest

2008RM

1,648,7942,781,381

7,339

4,437,514(160,077)

4,277,437

2007RM

1,344,8022,067,832

26,225

3,438,859(8,572)

3,430,287

GROUP

20. DEFERRED TAX LIABILITIES

Revaluation surplus :Balance at beginning Transfer to income statement

Balance at end

2008RM

367,844(14,857)

352,987

2007RM

382,701(14,857)

367,844

GROUP



54

20. DEFERRED TAX LIABILITIES (Cont’d)

Deferred tax liability on revaluation surplusThe transfer from deferred tax liability to income statement is in relation to the differences between the actual depreciation on the revalued properties and the corresponding depreciation based on the cost of the properties.

21. TRADE PAYABLES

Analysis by currencies :Ringgit MalaysiaThai BahtUS DollarChinese RenminbiSingapore Dollar

2008RM

1,838,4563,789,8881,223,2901,473,682

14,537

8,339,853

2007RM

3,066,7405,962,5601,252,418

874,48154,850

11,211,049

GROUP

The normal credit terms granted by trade payables range from 30 to 90 days (2007 : 30 to 90 days).

23. AMOUNT DUE TO DIRECTORS

GROUP

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

22. OTHER PAYABLES AND ACCRUALS

Other payablesAccruals

Analysis by currencies :Ringgit MalaysiaChinese RenminbiUS DollarThai BahtNew Taiwan DollarJapanese YenSingapore Dollar

2008RM

46,553171,200

217,753

217,753------

217,753

2007RM

45,946117,500

163,446

163,446------

163,446

COMPANY2007

RM

4,106,538765,872

4,872,410

2,623,576774,895

1,129,881295,803

-46,9491,306

4,872,410

2008RM

1,788,997639,553

2,428,550

1,037,658756,679276,145175,922126,60649,2606,280

2,428,550

GROUP

ANNUAL REPORT 2008


(Cont’d)55

26. FINANCE COSTS

Bankers acceptance and trust receiptsHire purchase payablesOverdraftsPromissory noteShort term revolving creditTerm loans

2008RM

1,021,02275,89521,670

173,71148,407

674,826

2,015,531

2007RM

1,035,68917,59253,863

174,66848,519

928,109

2,258,440

GROUP

25. OTHER INCOME

Realised gain on foreign exchangeGain on disposal of property, plant

and equipmentInterest incomeMiscellaneous

2008RM

-

--

6,000

6,000

2007RM

-

---

-

COMPANY2007

RM

1,297,755

76,95044,025

193,176

1,611,906

2008RM

399,279

-33,246

110,363

542,888

GROUP

24. REVENUE

Manufacturing salesTrading salesManagement fee income

2008RM

--

100,000

100,000

2007RM

--

100,000

100,000

COMPANY2007

RM

78,537,161324,007

-

78,861,168

2008RM

67,642,6761,486,654

-

69,129,330

GROUP



56

27. LOSS BEFORE TAXATION

After charging :

Allowance for doubtful debtsAmortisation of prepaid land lease

paymentsAudit fee- current year- over provision in prior yearBad debtsDepreciationDirectors’ fees - Executive directors- Non-executive directorsDirectors’ emoluments for

non-executive directorsImpairment loss on other investmentsInterest expenseRealised loss on foreign exchangeRental of plant and equipment Rental of premisesResearch and development expensesStaff costs *

And crediting :

Gain on disposal of property, plant and equipment

Interest incomeRealised gain on foreign exchangeRental income

Staff costs *- Salaries, wages, allowances and

bonus- EPF- SOCSO

2008RM

-

-

10,000---

30,00070,000

9,300--- - --

2,100

---

-

2,100--

2,100

2007RM

-

-

10,000---

30,00070,000

8,100---

- - -

3,600

---

-

3,600--

3,600

COMPANY2007

RM

416,014

28,500

36,250-

206,4886,307,405

30,00070,000

8,10010,000

2,258,44016,4557,760

24,01747,977

8,355,893

76,95044,025

1,297,755-

8,163,907162,29429,692

8,355,893

2008RM

-

28,500

40,757(3,000)

483,7775,965,999

30,00070,000

9,300-

2,015,531109,22113,535

323,30146,144

8,157,569

-33,246

399,2795,343

7,962,563166,40628,600

8,157,569

GROUP

ANNUAL REPORT 2008


(Cont’d)57

27. LOSS BEFORE TAXATION (Cont’d)

Included in the staff costs of the Group and of the Company are directors’ remunerations as shown below :

Directors’ emoluments

Directors of the CompanyExecutive Directors :- Salaries and bonus

Directors of a subsidiary Executive Directors :- Salaries and bonus

Benefits-in-kind

2008RM

2,100

-

2,100-

2,100

2007RM

3,600

-

3,600-

3,600

COMPANY2007

RM

196,255

192,715

388,97034,932

423,902

2008RM

173,100

610,339

783,43989,326

872,765

GROUP

28. TAXATION

Income tax :Based on results for the year- Foreign tax

Deferred tax : Relating to origination

and reversal of temporary differences- Malaysia- Foreign

2008RM

-

---

-

2007RM

-

---

-

COMPANY2007

RM

(111,186)

3,47711,38014,857

(96,329)

2008RM

(151,763)

-14,85714,857

(136,906)

GROUP



58

The reconciliation of tax expense of the Group and Company is as follows :

28. TAXATION (Cont’d)


Income tax at Malaysian statutory tax rate of 26% (2007 : 27%)

Effects of :- Different tax rates in other countries- Income not subject to tax- Expenses not deductible for tax purposes- Annual crystallisation of deferred tax

on revaluation surplus- Utilisation of current year’s reinvestment

allowance - Deferred tax assets not recognised

2008RM

(77,072)

20,039

--

(20,039)

-

--

-

2007RM

(88,662)

23,939

--

(23,939)

-

--

-

COMPANY2007

RM

(627,691)

169,477

(27,686)307,747(204,273)

14,857

41,377(397,828)

(96,329)

2008RM

(6,350,120)

1,651,031

9,545-

(150,867)

14,857

7,681(1,669,153)

(136,906)

GROUP

The amount and future availability of unabsorbed tax losses, capital allowances and reinvestment allowance for which the related tax effects have not been accounted for at balance sheet date are estimated as follows :

Unabsorbed tax lossesUnabsorbed capital allowancesReinvestment allowance

2008RM

178,000--

2007RM

206,461--

COMPANY2007

RM

6,720,00010,699,00017,728,000

2008RM

10,025,00011,465,00016,938,000

GROUP

These unabsorbed tax losses, capital allowances and reinvestment allowance are available to be carried forward for set off against future assessable income of the Company and its subsidiaries of a nature and amount sufficient for the tax losses, capital allowances and reinvestment allowance to be utilised.

The Malaysian corporate tax rate will be reduced further to 25% effective from the year of assessment 2009.

ANNUAL REPORT 2008


(Cont’d)59

Loss attributable to equity holders of the Company (RM) :

Weighted average number of ordinary shares of RM0.50 each

Basic loss per share (sen)

2008

(6,616,430)

84,495,000

(7.83)

2007

(750,888)

84,495,000

(0.89)

29. LOSS PER SHARE (SEN)

GROUP

Basic loss per shareThe basic loss per share of the Group is calculated by dividing the loss attributable to equity holders of the Company for the year by the weighted average number of ordinary shares in issue during the financial year as follow :

Diluted loss per share has not been computed as the effect of the share options under ESOS is anti-dilutive in nature.

30. CAPITAL COMMITMENT

GROUP

Authorised but not contracted for :- Property, plant and equipment

2008RM

-

2007RM

1,774,500

31. CONTINGENT LIABILITIES (UNSECURED)

COMPANY

Corporate guarantee extended to banks for credit facilities granted to subsidiaries

LimitRM

35,765,949

2008 2007Utilised

RM

19,478,168

LimitRM

35,897,123

UtilisedRM

21,759,473

32. SEGMENTAL INFORMATION

Business Segments

The Group comprises the following main business segments :

(1) Printed circuit boards Manufacture and sale of printed circuit boards and related products.(2) Electronic products Assembly and trading of electronic products and telecommunication components and

accessories.(3) Cartridge ink Manufacture of cartridge ink and related products.(4) Investment holding Investment and the provision of management services.



60

32. SEGMENTAL INFORMATION (Cont’d)

Geographical Segments

The Group’s printed circuit board business operates in two principal geographical areas, Malaysia and Thailand, while the cartridge ink business operates in China. The investment holding operates in Malaysia only.

2008By business segments

RevenueRevenue from external customersInter-segment revenue

Total revenue

ResultSegment resultsInterest expenseInterest incomeShare of result of an associate

Loss before taxationTaxation

Loss after taxationMinority interests

Loss for the year

AssetsSegment assetsTax recoverableCash and bank balances

Total assets

LiabilitiesSegment liabilitiesProvision for taxation and deferred

taxationBorrowings

Total liabilities

Other information

Capital expenditureDepreciationAmortisation of prepaid land lease

paymentsNon-cash expenses other than

depreciation and amortisation

Printedcircuitboards

RM

61,388,51810,984,619

72,373,137

(4,495,434)

82,011,049

24,401,171

3,367,8185,744,647

28,500

483,777

Electronicproducts

RM

1,486,6543,470,890

4,957,544

86,762

3,093,753

1,422,299

-5,089

-

-

CartridgeinkRM

6,254,158-

6,254,158

241,480

6,722,883

2,230,361

342,601216,263

-

-

Investmentholding

RM

- 100,000

100,000

(79,237)

50,876,934

2,820,116

- -

-

121,406

EliminationRM

- (14,555,509)

-

(71,062,356)

(20,101,742)

- -

-

-

TotalRM

69,129,330 -

69,129,330

(4,246,429)(2,015,531)

33,246(121,406)

(6,350,120)(136,906)

(6,487,026)(129,404)

(6,616,430)

71,642,2633,140

3,544,856

75,190,259

10,772,205

488,12234,010,588

45,270,915

3,710,4195,965,999

28,500

605,183


(Cont’d)61

ANNUAL REPORT 2008


Geographical Segments (Cont’d)

2007

RevenueRevenue from external customersInter-segment revenue

Total revenue

ResultSegment resultsInterest expenseInterest incomeShare of result of an associate

Loss before taxationTaxation

Loss after taxationMinority interests

Loss for the year

AssetsSegment assetsTax recoverableFixed deposit with a licensed bankCash and bank balances

Total assets

LiabilitiesSegment liabilitiesProvision for taxation and deferred

taxationBorrowings

Total liabilities

Other information

Capital expenditureDepreciationAmortisation of prepaid land lease

paymentsNon-cash expenses other than

depreciation and amortisation

Printedcircuit

boardsRM

73,713,83613,459,732

87,173,568

1,689,527

99,534,540

23,558,437

3,453,9466,156,479

28,500

554,553

Electronicproducts

RM

324,0073,935,477

4,259,484

206,035

3,823,061

1,711,348

-5,089

-

-

CartridgeinkRM

4,823,325-

4,823,325

33,136

4,277,677

1,649,376

383,095145,837

-

999

Investmentholding

RM

- 100,000

100,000

(93,730)

50,143,445

1,986,639

--

-

248,244

EliminationRM

- (17,495,209)

-

(72,262,404)

(12,818,539)

--

-

-

TotalRM

78,861,168 -

78,861,168

1,834,968 (2,258,440)

44,025 (248,244)

(627,691)(96,329)

(724,020)(26,868)

(750,888)

85,516,31914,2154,600

4,069,893

89,605,027

16,087,261

502,97937,557,134

54,147,374

3,837,0416,307,405

28,500

803,796


62Notes to the Financial Statements31 December 2008(Cont’d)


By geographical segments

MalaysiaChinaThailand

MalaysiaChinaThailand

Total assetsRM

30,224,4097,242,156

37,723,694

75,190,259

Totalassets

RM

38,673,4434,395,869

46,535,715

89,605,027

Capitalexpenditure

RM

1,564,524342,601

1,803,294

3,710,419

Capitalexpenditure

RM

1,632,793383,095

1,821,153

3,837,041

RevenueRM

23,227,4236,254,158

39,647,749

69,129,330

RevenueRM

27,558,5094,823,325

46,479,334

78,861,168

2008

2007

33. RELATED PARTY DISCLOSURES

(i) Related party transactions

Purchase of consumable goods from a company in which certain directors have controlling interest

- Amallion Enterprise Corporation

Management fee from a subsidiary

2008RM

-

100,000

2007RM

-

100,000

COMPANY2007

RM

46,048

-

2008RM

-

-

GROUP

(ii) Compensation of key management personnel

Salaries and other short-term employee benefits

Estimated money value of benefits-in-kind

2008RM

111,400

-

111,400

2007RM

111,700

-

111,700

COMPANY2007

RM

497,070

34,932

532,002

2008RM

968,339

89,326

1,057,665

GROUP

ANNUAL REPORT 2008


(Cont’d)63

33. RELATED PARTY DISCLOSURES (Cont’d)

(i) Related party transactions (Cont’d)

Key management personnel comprises the Board of Directors of the Company and of its subsidiaries.

Key management personnel are those persons including directors having authority and responsibility for planning, directing and controlling the activities of the Group and of the Company, directly or indirectly.

34. FINANCIAL INSTRUMENTS

Financial risk management objectives and policiesThe Group’s financial risk management policy seeks to ensure that adequate resources are available for the development of the Group’s business whilst managing its credit, interest rate, foreign currency and liquidity risks. The Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative transactions.

Credit riskCredit risk, or the risk of counterparties defaulting, is controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised and monitored via strictly limiting the Group’s associates to business partners with high creditworthiness. Trade receivables are monitored on an ongoing basis via the Company’s management reporting procedures. The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial instrument.

Interest rate riskThe Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowings. Interest rates of borrowings are mainly subject to fluctuations in the banks’ base lending rates. Borrowings are secured from banks which offer the most competitive rates.

The information on maturity dates and interest rates of financial assets and liabilities are disclosed in their respective notes.

Foreign currency riskThe objectives of the Group’s foreign exchange policies are to allow the Group to manage exposures that arise from trading activities effectively within a framework of controls that does not expose the Group to unnecessary foreign exchange risks. However the Group does not hedge its foreign currency risk exposure.

Liquidity riskThe Group actively manages its debt maturity profile, operating cash flows and availability of funding so as to ensure that all repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash and cash equivalents to meet its working capital requirements.



64

34. FINANCIAL INSTRUMENTS (Cont’d)

Fair valuesThe carrying amounts of the financial assets and financial liabilities of the Group and of the Company as at balance sheet date approximate their fair value except for the following :

Financial assetsAt 31 December 2008Amount due from subsidiaries

At 31 December 2007Amount due from subsidiaries

Financial liabilitiesAt 31 December 2008Amount due to subsidiariesLong term borrowings

At 31 December 2007Amount due to subsidiariesLong term borrowings

Carryingamount

11,079,631

11,019,377

253,016-

148,000-

Fairvalue

#

#

#-

#-

COMPANYFair

value

-

-

- 2,472,573

-1,821,319

Carryingamount

-

-

-2,702,813

-2,092,471

GROUP

# It is not practical to estimate the fair values of subsidiaries balances due principally to a lack of fixed repayment terms entered into by the parties involved and without incurring excessive costs. However, the Group does not anticipate the carrying amounts recorded at the balance sheet date to be significantly different from the values that would eventually be received or settled.

The fair value of hire purchase payables and term loans are estimated using discounted cash flows analysis, based on current incremental borrowing and lending rates for similar types of lending and borrowings arrangements.

List of Properties of the Group 65

ANNUAL REPORT 2008

Address/Location

1. Lot 87, 88 & 89, Persiaran 11, Kawasan Perusahaan Bakar Arang, 08000 Sungai Petani, Kedah.

2. No.608, Lorong 2/4A, Taman Sri Wang, 08000 Sungai Petani, Kedah.

3. No.64, Taman Sejahtera, 08000 Sungai Petani, Kedah.

4. No.9, Lorong 56, Taman Patani Jaya, 08000 Sungai Petani, Kedah.

5. No. 20, Lorong 64, Taman Patani Jaya, 08000 Sungai Petani, Kedah.



8. P.T. No. 8564, H.S.(M) 170/90, Mukim of Sungai Pasir, District of Kuala Muda, Kedah.

9. 707 Moo 4, Bangpoo Ind. Estate Phraksa Muang, Samutprakam,Thailand 10280.

Description

Industrial; factory

complex

Residential; single story

terrace house

Residential; single storey

terrace house

Residential; double storey

terrace house


terrace house


terrace house


terrace house

Industrial Land

Industrial;doublestorey

factory

Total Land Area/Built-

up Area (square metre)

14,213 / 6,731

156 / 89

152 / 152

143 / 141

143 / 152

143 / 141

143 / 141

5868

5,760 /3,432

Existing Use

Office & factory

Hostel

Hostel

Hostel

Hostel

Hostel

Hostel

EmptyLand

Office &factory

Tenure (Years)

99 (expiring on 24 March

2089)*

Freehold

Freehold

Freehold

Freehold

Freehold

Freehold

99 (expiringon 24 March

2089)**

Freehold

ApproximateAge of

Building(Years)

15

22

31

13

13

13

13

-

8

Date ofValuation

15 Dec 2006

15 Dec 2006

15 Dec 2006

15 Dec 2006

15 Dec 2006

15 Dec 2006

15 Dec 2006

15 Dec 2006

15 Dec 2006

Net Carrying Amount

(RM’000)

6,783

66

76

152

172

153

158

650

3,446

* Perbandaran Kemajuan Negeri Kedah subleased to AE Corporation (M) Sdn Bhd for 60 years commencing on 24 March 1990** Perbandaran Kemajuan Negeri Kedah subleased to AE Multi Industries Sdn Bhd for 60 years commencing on 21 March 1990

66


Notes:-j Deemed interested by virtue of his shareholdings of more than 15% equity interest in Stanza Corporation Sdn Bhd

pursuant to Section 6A(4) of the Companies Act, 1965.

k Deemed interested by virtue of her shareholdings of more than 15% equity interest in Peninsular Accord Sdn Bhd pursuant to Section 6A(4) of the Companies Act, 1965.

A. Authorised Share Capital : RM50,000,000.00Issued and fully paid-up Share Capital : RM42,247,500.00Class of Shares : Ordinary Shares of RM0.50 eachVoting Rights : On show of hands - One vote

On a poll - One vote for one ordinary share

B. ANALYSIS BY SIZE OF SHAREHOLDINGS

Size of shareholdings

Less than 100 shares100 to 1,000 shares1,001 to 10,000 shares10,001 to 100,000 shares100,001 to less than 5% of issued shares5% and above of issued sharesTotal

No. of shareholders

9629

2,016753892

3,498

% of totalshareholders

0.2617.9857.6321.532.540.06

100.00

No. of shares

524599,464

9,968,14822,709,48237,163,38614,053,99684,495,000

% of totalissued capital

0.000.71

11.8026.8843.9816.63

100.00

C. SUBSTANTIAL SHAREHOLDERS

Name

Stanza Corporation Sdn BhdPeninsular Accord Sdn BhdYang Wu-HsiungDatin Hajah Sumaiah Binti SarifLoh Ah Heoh

Direct

7,381,3986,672,5981,249,092

557,526441,920

%

8.74 7.901.480.660.52

Deemed

--

7,381,398 j6,672,598 k6,672,598 k

%

--

8.747.907.90

<------------------------------------Number of Shares Held------------------------------------>

D. DIRECTORS’ SHAREHOLDINGS

Name

Yang Wu-HsiungYang Chao-TungTan Ah LeeYeoh Cheng HanSaffie Bin BakarWee Cheong Poh

Direct

1,249,092855,114510,720200,000105,58020,000

%

1.481.010.600.240.120.02

Deemed

7,381,398 j-----

%

8.74-----

<------------------------------------Number of Shares Held------------------------------------>

Analysis of ShareholdingsAs At 7 April 2009

E. THIRTY LARGEST SHAREHOLDERS

% of totalName of Shareholders No. of Shares issued capital

1. Stanza Corporation Sdn. Bhd. 7,381,398 8.742. Peninsular Accord Sdn. Bhd. 6,672,598 7.903. Mayban Nominees (Tempatan) Sdn. Bhd. 3,538,740 4.19

[Pledged securities account for Goh Hock Leong]4. Mohamed Azman Bin Yahya 3,000,000 3.555. Alliancegroup Nominees (Tempatan) Sdn. Bhd. 3,000,000 3.55

[Pledged securities account for Koid Hun Kian (100723)]6. Yang, Wu-Hsiung 1,249,092 1.487. Liaw, Hsin-Chung 958,000 1.138. Wong Mei Hwa 899,500 1.069. Citigroup Nominees (Tempatan) Sdn. Bhd. 883,000 1.05

[Pledged securities account for Koid Hun Kian (474064)]10.Yang, Chao-Tung 855,038 1.0111.Hsu, Pao-Lu 843,000 1.0012.Tang Yew Khuan @ Tan Ewe Kuan 791,558 0.9413.Tan Ghim Theam 710,000 0.8414.Yang, Chueh-Kuang 677,918 0.8015.Hsu, Yu-Tang 675,998 0.8016.Lim Hun Beng 620,700 0.7317.Low Lee Kee 583,400 0.6918.M.I.T Nominees (Tempatan) Sdn. Bhd. 560,000 0.66

[Pledged securities account for Ng Weng Keong (MG0011-048)]19.Sumaiah Binti Sarif 557,432 0.6620.M.I.T Nominees (Tempatan) Sdn. Bhd. 538,000 0.64

[Pledged securities account for Siow Hock Lee (MG0125-048)]21.Ooi Chong Lan 531,000 0.6322.Tan Yeng Fatt 497,200 0.5923.Wu Michael Chien-Lung 471,200 0.5624.Loh Ah Heoh 441,920 0.5225.Tan Ah Lee 435,720 0.5226.Lim Hun Hooi 425,850 0.5027.Cher Tze Hang, Matthias 425,712 0.5028.Tan Sun Lai 415,000 0.4929.Cher Tze Hang, Matthias 390,210 0.4630.Citigroup Nominees (Asing) Sdn. Bhd. 352,100 0.42

Exempt an for Mellon Bank (Abnamro Mellon)

ANNUAL REPORT 2008

67Analysis of Shareholdings

As At 7 April 2009(Cont’d)


Notice of Annual General Meeting68

NOTICE IS HEREBY GIVEN that the Eighth Annual General Meeting of the Company will be held at Impiana Room, Penang Golf Resort, No. 1687 Jalan Bertam, 13200 Kepala Batas, Seberang Perai Utara, Penang on Friday, 29 May 2009 at 11.00 a.m. for the following purposes :-

AGENDA

1. To receive the Audited Financial Statements for the financial year ended 31 December 2008 together with the Reports of the Directors and Auditors thereon.

2. To approve the payment of Directors’ fees of RM80,000 for the financial year ended 31 December 2008.

3. To re-elect Mr Yeoh Cheng Han who retires in accordance with Article 29.1 of the Company’s Articles of Association.

4. To re-elect Mr Tan Ah Lee who retires in accordance with Article 29.1 of the Company’s Articles of Association.

5. To re-appoint Messrs Grant Thornton (formerly known as JB Lau & Associates) as auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration.

As special business :To consider and if thought fit, to pass with or without modifications the following as Ordinary Resolution :-

6. ORDINARY RESOLUTION :AUTHORITY TO ISSUE SHARES“That pursuant to Section 132D of the Companies Act, 1965, and subject to the approvals of the relevant Governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company, at such time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution in any one financial year does not exceed 10% of the issued share capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

7. To transact any other business of which due notices shall have been given in accordance with the Companies Act, 1965.

OrdinaryResolution 1






By Order of the Board,

Chee Wai Hong (MIA 17181) Wong Yee Lin (MIA 15898)Foo Li Ling (MAICSA 7019557)Company Secretaries

Penang

Date : 7 May 2009

Notes :

1. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

2. The proxy form must be duly completed and deposited at the Registered Office of the Company, 51-8-B Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang not less than forty-eight (48) hours before the time appointed for holding the meeting.

3. A member shall be entitled to appoint up to (2) proxies to attend and vote at the same meeting.

4. Where a member appoints two (2) proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

5. If the appointor is a corporation, this form must be executed under its Common Seal or under the hand of its attorney.

6. Biographical details of each of the Directors standing for re-election can be found in the Directors’ profile on pages 6 and 7 of the Annual Report.

Explanatory Notes on Special Business

The proposed Ordinary Resolution 6, if passed, will give authority to the Board of Directors to issue and allot ordinary shares from the unissued capital of the Company at any time in their absolute discretion and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company or the expiration of the period within which the next Annual General Meeting is required by law to be held or revoked/varied by resolution passed by the shareholders in general meeting whichever is the earlier.

Notice of Annual General Meeting(Cont’d)

69

ANNUAL REPORT 2008

70


This page is intentionally left blank

Notes : 1. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act,

1965 shall not apply to the Company.2. To be valid this form duly completed must be deposited at the registered office of the Company, 51-8-B Menara BHL

Bank, Jalan Sultan Ahmad Shah, 10050 Penang not less than forty-eight (48) hours before the time appointed for holding the meeting.

3. A member shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting.4. Where a member appoints two (2) proxies, the appointment shall be invalid unless he specifies the proportions of his

holdings to be represented by each proxy.5. If the appointor is a corporation, this form must be executed under its Common Seal or under the hand of its attorney.

Proxy Form AE MULTI HOLDINGS BERHAD(539777-D) (Incorporated in Malaysia)

* I / We

of

being a * member / members of the abovenamed Company, hereby appoint

of

or failing him,

of

No. of Resolution

1

2

3

4

5

6

To receive and adopt the Reports and Financial Statements

To approve the payment of Directors’ fees

To re-elect the following Directors retiring under Article 29.1 of the Company’s Articles of Association :-

(i) Mr Yeoh Cheng Han

(ii) Mr Tan Ah Lee

To re-appoint Messrs Grant Thornton (formerly known as JB Lau & Associates) as Auditors

As Special BusinessOrdinary Resolution -To authorise Directors to allot and issue shares pursuant to Section 132D of the Companies Act, 1965

For Against

as * my / our proxy to vote for * me / us on * my / our behalf at the Eighth Annual General Meeting of the Company to be held at Impiana Room, Penang Golf Resort, No. 1687 Jalan Bertam, 13200 Kepala Batas, Seberang Perai Utara, Penang on Friday, 29 May 2009 at 11.00 a.m. and any adjournment thereof.

Resolutions

Please indicate with an “x” in the appropriate spaces provided above on how you wish your vote to be cast. If no specific direction for voting is given, the proxy may vote as he thinks fit.

(Full Name in Block Letters)

(Address)


(Address)


(Address)

No. of shares held

Signature of Member (s)

Signed this , 2009.day of

Please fold across the lines and close

Please fold across the lines and close

The Company Secretaries

AE Multi Holdings Berhad (539777-D)

51-8-B Menara BHL BankJalan Sultan Ahmad Shah10050 Penang

Postage

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Documents

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