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ANNUAL REPORT 2007

Notice of Annual General Meeting Notice of Nomination Corporate Information Directors Statement on Corporate Governance Additional Compliance Information Audit Committee Report Statement on Internal Control Group Financial Highlights Chairman's Statement Financial Statements List of Properties Analysis of Shareholdings Form of Proxy

2 5 6 7 9 14 16 20 21 22 26 80 81 Enclosed

NOTICE OF ANNUAL GENERAL MEETING

ANNUAL REPORT 2007

NOTICE IS HEREBY GIVEN that the Fourteenth Annual General Meeting of Advance Synergy Capital Berhad will be held at the Synergy Com Centre, Mezzanine Floor, No. 72, Pesiaran Jubli Perak, Seksyen 22, 40000 Shah Alam, Selangor Darul Ehsan on Monday, 30 June 2008 at 9.30 a.m. for the following purposes: AGENDA 1. 2. 3. To receive the Audited Financial Statements for the financial year ended 31 December 2007 together with the Reports of the Directors and Auditors thereon. To approve the payment of Directors' fees amounting to RM172,000 in respect of the financial year ended 31 December 2007 (2006: RM172,000). To re-elect the following Directors who retire pursuant to Article 120 of the Company's Articles of Association: a) Mr Wong Joon Hian b) Ir. Haji Mansor Bin Salleh @ Md Salleh 4. To appoint Messrs Baker Tilly Monteiro Heng as Auditors of the Company in place of the retiring auditors, Messrs BDO Binder, and to authorise the Directors to fix their remuneration. Notice of Nomination pursuant to Section 172(11) of the Companies Act, 1965 (a copy of which is annexed on page 5) has been received by the Company of the intention to propose the following ordinary resolution: "THAT Messrs Baker Tilly Monteiro Heng be and are hereby appointed as Auditors of the Company in place of the retiring auditors, Messrs BDO Binder, to hold office until the conclusion of the next Annual General Meeting at a remuneration to be fixed by the Directors." 5. Special Business To consider and if thought fit, pass the following resolutions as Ordinary Resolutions: 5.1 ORDINARY RESOLUTION 1 PROPOSED SHAREHOLDERS' MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS "THAT approval be and is hereby given for the Company and its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature as set out in Section 2.3 of the Company's Circular to Shareholders dated 5 June 2008 (the "Circular") with those related parties as specified in Section 2.2 of the Circular subject to the following: (i) the transactions are in the ordinary course of business and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company; and disclosure is made in the annual report of the breakdown of the aggregate value of the transactions conducted pursuant to the shareholders' mandate during the financial year, Resolution 6 Resolution 3 Resolution 4 Resolution 5 Resolution 1 Resolution 2

(ii)

AND THAT the authority conferred by this Ordinary Resolution shall continue to be in force until: (i) (ii) the conclusion of the next Annual General Meeting of the Company at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed; the expiration of the period within which the next Annual General Meeting after that date is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Companies Act, 1965); or

NOTICE OF ANNUAL GENERAL MEETING

ANNUAL REPORT 2007

(iii) revoked or varied by resolution passed by the shareholders in general meeting,

whichever is the earlier. AND THAT the Directors be authorised to complete and do all such acts and things to give effect to the transactions contemplated and/or authorised by this Ordinary Resolution." 5.2 ORDINARY RESOLUTION 2 PROPOSED RENEWAL OF AUTHORITY FOR SHARE BUY-BACK "THAT subject always to the Companies Act, 1965, the provisions of the Articles of Association of the Company, the requirements of Bursa Malaysia Securities Berhad and the approvals of all relevant governmental and/or regulatory authorities, the Company be and is hereby authorised to purchase such number of ordinary shares of RM1.00 each in the Company as may be determined by the Directors of the Company from time to time through Bursa Malaysia Securities Berhad upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company subject to the following: (i) (ii) (iii) the aggregate number of shares purchased does not exceed 10% of the total issued and paid-up share capital of the Company at any point in time; the maximum amount of funds to be allocated for the share buy-back shall not exceed the retained profits and/or the share premium account of the Company; and the shares so purchased may be cancelled and/or retained as treasury shares and shares retained as treasury shares may be distributed to shareholders as dividends and/or resold on the Bursa Malaysia Securities Berhad. Resolution 7

AND THAT the authority conferred by this Ordinary Resolution shall commence upon the passing of this Ordinary Resolution until: (i) the conclusion of the next Annual General Meeting of the Company following the general meeting at which such resolution was passed at which time it shall lapse unless by ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; the expiration of the period within which the next Annual General Meeting after that date is required by law to be held; or revoked or varied by ordinary resolution passed by the shareholders in general meeting,

(ii) (iii)

whichever occurs first." 6. To transact any other business for which due notice shall have been given.

By Order of the Board

Tan Seiw Ling Secretary Selangor Darul Ehsan 5 June 2008

NOTICE OF ANNUAL GENERAL MEETING

ANNUAL REPORT 2007

Notes: Proxy 1. 2. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy to attend and vote in his/her stead. A proxy need not be a member of the Company. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting. Where a member appoints two (2) proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholdings to be represented by each proxy. The instrument appointing a proxy must be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, under its common seal or under the hand of an officer or attorney duly authorised. The instrument appointing a proxy shall be deposited at the Registered Office of the Company at Level 3, Wisma Triton, No. 72, Pesiaran Jubli Perak, Seksyen 22, 40000 Shah Alam, Selangor Darul Ehsan not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting.

3. 4.

Explanatory Notes on Special Business 1. Resolution 6 - Proposed Shareholders' Mandate for Recurrent Related Party Transactions The proposed resolution 6, if passed, will allow the Company and its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature made in the ordinary course of business and on normal commercial terms which are not detrimental to the minority shareholders. The details on the proposal are set out in the Circular to Shareholders dated 5 June 2008 enclosed together with the 2007 Annual Report. 2. Resolution 7 - Proposed Renewal of Authority for Share Buy-Back The proposed resolution 7, if passed, will empower the Company to purchase its own shares up to 10% of the issued and paid-up share capital of the Company. This authority will, unless revoked or varied by the Company at a General Meeting, expire at the next Annual General Meeting. The details on the proposal are set out in the Circular to Shareholders dated 5 June 2008 enclosed together with the 2007 Annual Report. Statement Accompanying Notice of Annual General Meeting Details of the Directors standing for re-election as Directors at the Fourteenth Annual General Meeting of the Company under Resolutions 3 and 4 are set out on pages 7 and 8 of the 2007 Annual Report. Their securities holdings in the Company are set out on page 82 of the 2007 Annual Report.

NOTICE OF NOMINATION

ANNUAL REPORT 2007

CORPORATE INFORMATION

ANNUAL REPORT 2007

BOARD OF DIRECTORS Dato' Ahmad Sebi Bakar

(Chairman)

COMPANY SECRETARY Ms Tan Seiw Ling

Mr Wong Joon Hian

(Managing Director)

REGISTERED OFFICE AND CORPORATE OFFICE Level 3, Wisma Triton No. 72, Pesiaran Jubli Perak Seksyen 22, 40000 Shah Alam Selangor Darul Ehsan Tel : 03-51921886 Fax : 03-51922886

Ir. Haji Mansor Bin Salleh @ Md Salleh

(Independent Non-Executive Director)

Mr Chim Wai Khuan

(Independent Non-Executive Director)

Dr. Haji Ahmad Ghiti Bin Haji Mohd Daud

(Independent Non-Executive Director)

SHARE REGISTRAR AUDIT COMMITTEE

Chairman:

Ir. Haji Mansor Bin Salleh @ Md Salleh

Members:

Mr Chim Wai Khuan Dr. Haji Ahmad Ghiti Bin Haji Mohd Daud

Sectrars Services Sdn Bhd 28-1, Jalan Tun Sambanthan 3 Brickfields 50470 Kuala Lumpur Tel : 03-22746133 Fax : 03-22741016

AUDITORS NOMINATION COMMITTEE

Chairman:

Dr. Haji Ahmad Ghiti Bin Haji Mohd Daud

Members:

Dato' Ahmad Sebi Bakar Ir. Haji Mansor Bin Salleh @ Md Salleh

BDO Binder 12th Floor, Menara Uni.Asia 1008, Jalan Sultan Ismail 50250 Kuala Lumpur Tel : 03-26162888 Fax : 03-26163190

PRINCIPAL BANKERS REMUNERATION COMMITTEE

Chairman:

Mr Chim Wai Khuan

Members:

CIMB Bank Berhad Hong Leong Bank Berhad Hong Leong Islamic Bank Berhad Malayan Banking Berhad

Dato' Ahmad Sebi Bakar Ir. Haji Mansor Bin Salleh @ Md Salleh

STOCK EXCHANGE Main Board of Bursa Malaysia Securities Berhad

DIRECTORS

ANNUAL REPORT 2007

DATO' AHMAD SEBI BAKAR Chairman, Non-Independent Non-Executive Director Dato' Ahmad Sebi Bakar, 60, a Malaysian, was appointed to the Board on 3 August 1995. Dato' Ahmad Sebi Bakar holds a Bachelor of Arts (Hons) degree from the University of Malaya, Kuala Lumpur, a Diploma in Journalism from the Thomson Foundation, United Kingdom and a Master of Arts from Michigan State University, United States of America. He was the Editor of the Malay Mail, a member of the New Straits Times Press Group, from 1976 to 1982 and subsequently the Group Editor of Berita Harian from 1983 to 1986. From 1986 to 1989, he was the Managing Director of Sistem Televisyen Malaysia Bhd and a director of the New Straits Times Press Group from 1988 to 1989. He was also the Non-Executive Chairman of Unified Communications Holdings Limited, an indirect subsidiary of Advance Synergy Berhad which is listed on the Singapore Exchange Securities Trading Limited, from December 2003 to June 2006. He was conferred the Ahli Mangku Negara (A.M.N.) by the Yang Di-Pertuan Agong, DYMM Tuanku Haji Ahmad Shah Al-Mustain Billah Ibni Almarhum Sultan Abu Bakar in 1983, the Justice of Peace (J.P.) by DYMM Sultan Azlan Muhibbuddin Shah Ibni Almarhum Sultan Yusoff Izzuddin Shah Ghafarullah, Sultan of Perak, in 1986 and the Dato' Setia Diraja Kedah (D.S.D.K.) by DYMM Tuanku Alhaj Abdul Halim Mu'adzam Shah Ibni Almarhum Sultan Badlishah, Sultan of Kedah, in 1988. Currently, he sits on the Board of public listed companies namely, Advance Synergy Berhad in which he holds the position as Executive Chairman and Kumpulan Powernet Berhad, in which he holds both the positions as Executive Chairman and Managing Director. He is also a director of Alangka-Suka Hotels & Resorts Berhad, a non-listed public company which is a subsidiary of Advance Synergy Berhad. He is actively involved in social and charitable work and is the Chairman of several non-profit organisations, namely, the privately funded Orphanage Foundation of Malaysia (YATIM), and in the past, Bosnia Action Front, Malaysia. He is also the President of the Malaysian National Writers Association (PENA) since 1992. Dato' Ahmad Sebi Bakar is a member of the Nomination Committee and Remuneration Committee of Advance Synergy Capital Berhad. His securities holdings in the Company are disclosed in page 82 of this Annual Report. He does not have any family relationship with any director and/or major shareholder of Advance Synergy Capital Berhad nor has he any conflict of interest with Advance Synergy Capital Berhad. He has had no conviction for any offences within the past 10 years. WONG JOON HIAN Managing Director, Non-Independent Executive Director Mr Wong Joon Hian, 58, a Malaysian, was appointed to the Board on 3 August 1995 and appointed as the Managing Director on 22 September 1995. Mr Wong Joon Hian is a member of the Malaysian Institute of Certified Public Accountants, the Malaysian Institute of Accountants and a fellow member of the Institute of Chartered Accountants in England & Wales. He has accumulated over 30 years of working experience in the areas of audit, accountancy, financial services and corporate management. He commenced his career when he joined Price Waterhouse & Co. in England after qualifying as a Chartered Accountant in 1973. He returned to Malaysia in 1975 to work for Price Waterhouse (now known as PricewaterhouseCoopers), Malaysia until 1985. He then served as the Technical Manager of The Malaysian Association of Certified Public Accountants from 1986 until he was appointed as the General Manager-Operations of Supreme Finance (Malaysia) Berhad in December 1987. After Mayban Finance Berhad had completed the acquisition of Supreme Finance (Malaysia) Berhad in 1991, he joined BDO Binder where he stayed until 1994 when he left to work for Advance Synergy Berhad. Currently, he is a director in several non-listed public companies namely, Southern Investment Bank Berhad, BHL Venture Berhad, SFB Auto Berhad, Perdana Mutual Fund Berhad, CIMB Wealth Advisors Berhad and CIMB-Principal Asset Management Berhad. His securities holdings in the Company are disclosed in page 82 of this Annual Report. He does not have any family relationship with any director and/or major shareholder of Advance Synergy Capital Berhad nor has he any conflict of interest with Advance Synergy Capital Berhad. He has had no conviction for any offences within the past 10 years.

DIRECTORS

ANNUAL REPORT 2007

IR. HAJI MANSOR BIN SALLEH @ MD SALLEH Independent Non-Executive Director Ir. Haji Mansor Bin Salleh @ Md Salleh, 62, a Malaysian, was appointed to the Board on 28 May 2001. Ir. Haji Mansor Bin Salleh @ Md Salleh obtained his Bachelor of Science in Engineering from Queen's University, United Kingdom. He is a member of the Professional Engineers (Malaysia), Institution of Engineers Malaysia and Association of Consulting Engineers Malaysia. Ir. Haji Mansor Bin Salleh @ Md Salleh has over thirty-one years in the Engineering Consultancy Business involving design, construction, supervision, operation and maintenance of various Electrical, Mechanical and other Building Services Installation. He is currently the Executive Chairman and Managing Director of Antara Jurutera Perunding Sdn Bhd since its inception in 1974. Ir. Haji Mansor Bin Salleh @ Md Salleh is the Chairman of the Audit Committee and a member of the Nomination Committee and Remuneration Committee of Advance Synergy Capital Berhad. He has no securities holdings in the Company or its subsidiaries. He does not have any family relationship with any director and/or major shareholder of Advance Synergy Capital Berhad nor has he any conflict of interest with Advance Synergy Capital Berhad. He has had no conviction for any offences within the past 10 years. CHIM WAI KHUAN Independent Non-Executive Director Mr Chim Wai Khuan, 57, a Malaysian, was appointed to the Board on 10 July 2001. Mr Chim Wai Khuan is a member of the Malaysian Institute of Accountants. He has vast experience in auditing, taxation and management consultancy services while he was attached to several accounting firms in Malaysia and the United Kingdom from 1974 to 1985. Currently, he manages his own practice under the name of WKC & Co., an audit firm. He is currently an independent non-executive director of Advance Synergy Berhad and United U-Li Corporation Berhad and also a director of Ganad Corporation Berhad, a non-listed public company. Mr Chim Wai Khuan is the Chairman of the Remuneration Committee and a member of the Audit Committee of Advance Synergy Capital Berhad. He has no securities holdings in the Company or its subsidiaries. He does not have any family relationship with any director and/or major shareholder of Advance Synergy Capital Berhad nor has he any conflict of interest with Advance Synergy Capital Berhad. He has had no conviction for any offences within the past 10 years. DR. HAJI AHMAD GHITI BIN HAJI MOHD DAUD Independent Non-Executive Director Dr. Haji Ahmad Ghiti Bin Haji Mohd Daud, 58, a Malaysian, was appointed to the Board on 19 October 2001. Dr. Haji Ahmad Ghiti Bin Haji Mohd Daud holds a Bachelor of Arts, Honours from University of Malaya, a Diploma in Casualty Insurance from Insurance School of Japan and was awarded the degree of Doctor of Philosophy in Management (PhD) in 2001. He started his insurance career with an insurance company in 1974 and in 1979, he moved to an insurance broking company and became the General Manager and Director from 1982 to 1986. From 1987 to 1992, he was the Chief Executive Officer/Principal Officer of UMBC Insurans, and thereafter, served as Chairman of Talasco Insurance for a year. Through the years, he contributed immensely towards the insurance industry and was responsible for developing and spearheading the Oil and Gas business and Owner-Controlled Insurance Programme (OCIP) for major construction risks in Malaysia. Presently, he is the Regional Director of AAO Pana Insurance Brokers Sdn Bhd and was the Chairman of the Insurance Brokers Association of Malaysia (IBAM) for two (2) terms. He represented IBAM on the Board of Directors of the Malaysian Insurance Institute from 2001 to 2005 and a member of the Institute's Audit Committee. In 2004, he was elected as Chairman of The Council of International Insurance Brokers Association (CIIBA) for the 2004/2005 term. Dr. Haji Ahmad Ghiti Bin Haji Mohd Daud is the Chairman of the Nomination Committee and a member of the Audit Committee of Advance Synergy Capital Berhad. He has no securities holdings in the Company or its subsidiaries. He does not have any family relationship with any director and/or major shareholder of Advance Synergy Capital Berhad nor has he any conflict of interest with Advance Synergy Capital Berhad. He has had no conviction for any offences within the past 10 years.

STATEMENT ON CORPORATE GOVERNANCE

ANNUAL REPORT 2007

The Board of Directors ("Board") recognises the importance of good corporate governance and fully supports the recommendations of the Malaysian Code on Corporate Governance ("Code"). Accordingly, the Board is committed to ensure that the highest standards of Corporate Governance is practised by Advance Synergy Capital Berhad ("the Company") and its subsidiaries ("the Group") as a fundamental part of discharging its responsibilities to protect and enhance long-term shareholder value and the financial performance of the Group. The manner in which the Group has applied the Principles and the Best Practices stated in the Code throughout the financial year ended 31 December 2007 is set out in this Statement. THE BOARD OF DIRECTORS The Group is led and controlled by a Board that has the overall responsibility for corporate governance, strategic direction and overseeing the investments and operations of the Group. The Board meets at least four (4) times a year, with additional meetings convened as necessary. All Board members bring an independent judgement to bear on the issues of strategy, performance and resources including key appointments and standards of conduct. During the financial year ended 31 December 2007, five (5) meetings were held. The details of attendance of each Director at the Board Meetings are as follows: Name of Directors Dato' Ahmad Sebi Bakar Wong Joon Hian Ir. Haji Mansor Bin Salleh @ Md Salleh Chim Wai Khuan Dr. Haji Ahmad Ghiti Bin Haji Mohd Daud Board Balance The Board currently has five (5) members, comprising one (1) Executive Director and four (4) Non-Executive Directors, of which three (3) are Independent Non-Executive Directors. Together, the Directors bring a wide range of business and financial experience, skills and expertise. A brief description of the background of each Director is presented on pages 7 and 8 of this Annual Report. There is a clear division of responsibility between the Chairman and the Managing Director to ensure that there is a balance of power and authority. There is also balance in the Board with the presence of Independent Non-Executive Directors of the necessary calibre to carry sufficient weight in Board decisions. Although all the Directors have an equal responsibility for the Group's operations, the role of these Independent Non-Executive Directors is particularly important in ensuring that the strategies proposed by the executive management are fully deliberated upon, and take into account the long term interests of the shareholders, employees, customers, suppliers and the many communities in which the Group conduct its business. More than half of the Board is independent and the investment of minority shareholders is fairly reflected through Board representation. Board Committees The Board has delegated specific responsibilities to three (3) Board Committees, namely Audit Committee, Nomination Committee and Remuneration Committee to assist it in discharging its responsibilities, the details of which are set out in this Statement and Annual Report. These Committees have the authority to examine particular issues and report back to the Board with their recommendations. The ultimate responsibility for the final decision on all matters, however, lies with the entire Board. No. of Meetings Attended 4/5 5/5 4/5 5/5 5/5

STATEMENT ON CORPORATE GOVERNANCE

ANNUAL REPORT 2007

Supply of Information The Board has unrestricted access to information relating to the Group to allow it to effectively discharge its responsibilities. The members of the Board are provided with the Agenda and the Board Papers (including information on financial, operational and corporate matters as well as activities and performance of the Group and minutes of the Board Committees and Board Meetings) prior to each meeting of the Board to enable them to obtain further clarification or explanation, where necessary, on issues to be considered at the Board Meetings. The Directors have direct access to the advice and services of the Company Secretary. The Directors are entitled, whether as a full Board or in their individual capacity, to take independent advice, where necessary, in the furtherance of their duties and at the Company's expense. Appointments to the Board A formal procedure is in place for the appointment of Directors to the Board and this lies with the Nomination Committee. The Nomination Committee identifies and recommends candidates to the Board for directorship as required. Nomination Committee The Nomination Committee consists of three (3) Non-Executive Directors. Members of the Nomination Committee are as follows: (i) (ii) (iii) Dr. Haji Ahmad Ghiti Bin Haji Mohd Daud (Chairman, Independent Non-Executive Director) Dato' Ahmad Sebi Bakar (Member, Non-Independent Non-Executive Director) Ir. Haji Mansor Bin Salleh @ Md Salleh (Member, Independent Non-Executive Director)

The Nomination Committee is responsible for making recommendations on any nomination to the Board and to Committees of the Board. In making these recommendations, due consideration is given to the required mix of skills and experience that the proposed Directors should bring to the Board and the respective Board Committees. The actual decision as to who shall be nominated is the responsibility of the full Board after considering the Nomination Committee's recommendations. The Nomination Committee will also assess annually, the effectiveness of the Board as a whole, the Committees of the Board and the contribution of each individual Director. The Board, through the Nomination Committee, reviews annually its required mix of skills and experience and other qualities, including core competencies, which Non-Executive Directors should bring to the Board. The Nomination Committee shall meet at least once a year. Additional meetings can be scheduled if considered necessary by the Chairman of the Nomination Committee. The Nomination Committee held one (1) meeting during the financial year. Directors' Training The Directors are encouraged to attend training programmes in order to keep abreast with the current regulatory and industry developments as well as a continuing effort to train and equip themselves to effectively discharge their duties as Directors. During the financial year under review, the Directors have collectively and individually attended training programmes on areas relating to fraud issues and Insider Trading. The Board will evaluate and determine the training needs of its Directors on continuous basis.

STATEMENT ON CORPORATE GOVERNANCE

ANNUAL REPORT 2007

Re-election of Directors In accordance with the Company's Articles of Association, one-third (1/3) of the Directors retire from office at each Annual General Meeting but shall be eligible for re-election. Directors who are appointed by the Board during each financial year are subject to election by shareholders at first Annual General Meeting following their appointments. The Articles of Association of the Company provide that all Directors (including Managing Director) shall submit themselves for re-election at least once every three (3) years. DIRECTORS' REMUNERATION The objective of the Company's policy on Directors' remuneration is to attract and retain Directors of the calibre required to run the Group successfully. The component parts of remuneration are structured so as to link rewards to corporate and individual performance. In the case of Executive Directors, performance is measured against profits and targets set in the Group's annual plan. For Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken by the particular Non-Executive Director concerned. Remuneration Committee The Remuneration Committee consists of three (3) Non-Executive Directors. Members of the Remuneration Committee are as follows: (i) (ii) (iii) Mr Chim Wai Khuan (Chairman, Independent Non-Executive Director) Dato' Ahmad Sebi Bakar (Member, Non-Independent Non-Executive Director) Ir. Haji Mansor Bin Salleh @ Md Salleh (Member, Independent Non-Executive Director)

The Remuneration Committee recommends to the Board the remuneration of the Executive Directors, drawing advice from external consultants as necessary. It is, nevertheless, the ultimate responsibility of the entire Board to approve the remuneration of these Directors. The determination of the remuneration of the Non-Executive Directors is a matter for the Board as a whole. No Director shall take part in decisions pertaining to his own remuneration. The Remuneration Committee shall meet at least once a year. Additional meetings can be scheduled if considered necessary by the Chairman of the Remuneration Committee. The Remuneration Committee held one (1) meeting during the financial year. The details of the aggregate remuneration of the Directors for the financial year ended 31 December 2007 are as follows: Salaries, Bonuses & Other Emoluments RM 473,620 285,600 759,220

Category Executive Director Non-Executive Directors Total

Fees Payable RM 24,000 148,000 172,000

Benefits-in-kind RM 49,550 38,856 88,406

Total RM 547,170 472,456 1,019,626

The fees payable are approved by shareholders at each Annual General Meeting.

STATEMENT ON CORPORATE GOVERNANCE

ANNUAL REPORT 2007

The number of Directors of the Company whose remuneration fall into the following bands are as follows: Number Of Directors Range of Remuneration (RM) 50,000 & below 350,001 - 400,000 500,001 - 550,000 Executive 1 Non-Executive 3 1 -

RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS The Board acknowledges the importance of establishing a direct line of communication with shareholders and investors through timely dissemination of information on the Group's performance and operations via distribution of annual reports and relevant circulars, release of quarterly financial results, press releases and announcements. The Annual General Meeting is the main forum for dialogue with shareholders. The Board presents the progress and performance of the business and encourages shareholders to participate in the question and answer session, which provides an opportunity for shareholders to clarify any issues and to have a better understanding of the business. There is an open question and answer session in which shareholders may pose questions regarding the resolutions being proposed at the meeting and also on matters relating to the Group's businesses and affairs. The Board members are in attendance to provide explanations to all shareholders' queries and shareholders are encouraged to participate in discussions and to give their views to the Directors. To enhance the quality and value of the Annual General Meeting, the Board ensures that, for re-election of Directors, the Notice of Annual General Meeting identifies the Directors standing for re-election or election with a brief description to include matters such as age, relevant experience, list of directorships, date of appointment to the Board, details of participation in Board Committees and whether the particular Director is independent. In addition, each item of special business included in the Notice of Annual General Meeting will be accompanied by full explanation of the effects of a proposed resolution. It is also the practice of the Board to hold a media conference with members of the press upon request after an Annual General Meeting. ACCOUNTABILITY AND AUDIT Financial Reporting In presenting the annual financial statements and quarterly announcement to shareholders, the Directors aim to present a balanced and understandable assessment of the Group's position and prospects. This also covers other price-sensitive public reports and reports to regulators. Statement on Directors' Responsibility for preparing Financial Statements The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year which have been made out in accordance with applicable approved accounting standards and give a true and fair view of the state of affairs of the Company and the Group at the end of the financial year and of the results and cash flows of the Company and the Group for the financial year. The Directors have the responsibility for ensuring that the Company keeps accounting records which disclose with reasonable accuracy the financial position of the Company and the Group and which enables them to ensure the financial statements comply with the Companies Act, 1965. The Directors have overall responsibilities for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

STATEMENT ON CORPORATE GOVERNANCE

ANNUAL REPORT 2007

Internal Control The Board acknowledges its overall responsibility for maintaining a sound system of internal control to safeguard shareholders' investments, the Company's assets, and the need to review the adequacy and integrity of those systems regularly. In establishing and reviewing the system of internal control, the Directors recognise that the system of internal control can only provide reasonable but not absolute assurance against the risk of material misstatement or loss. The Statement on Internal Control as set out on page 20 of this Annual Report provides an overview of the state of internal control within the Group. Relationship with the Auditors The Board, through the Audit Committee, has established an open and transparent relationship with the Company's External and Internal Auditors. In this respect, the Audit Committee shall meet with both External and Internal Auditors to discuss issues arising from the audit or audit related issues. The Audit Committee will make regular reports to the Board concerning its actions and activities.

ADDITIONAL COMPLIANCE INFORMATION

ANNUAL REPORT 2007

UTILISATION OF PROCEEDS There was no corporate proposal involving the raising of funds during the financial year ended 31 December 2007. SHARE BUY-BACK There was no share buy-back during the financial year ended 31 December 2007. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES There were no options, warrants or convertible securities exercised during the financial year ended 31 December 2007. AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY RECEIPT (GDR) PROGRAMME The Company did not sponsor any ADR or GDR Programme during the financial year ended 31 December 2007. IMPOSITION OF SANCTIONS AND/OR PENALTIES There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year ended 31 December 2007. NON-AUDIT FEE The amount of non-audit fee payable to external auditors by the Company for the financial year ended 31 December 2007 was RM4,000. VARIATION IN RESULTS There was no material variance between the results for the financial year ended 31 December 2007 and the unaudited results previously announced. PROFIT GUARANTEE There was no profit guarantee given by the Company during the financial year ended 31 December 2007. REVALUATION POLICY ON LANDED PROPERTIES The Company does not have a policy to revalue its landed properties. MATERIAL CONTRACTS INVOLVING DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS There were no material contracts entered into by the Company and its subsidiaries involving Directors' and major shareholders' interests, either still subsisting at the end of the financial year ended 31 December 2007 or entered into since the end of the previous financial year.

ADDITIONAL COMPLIANCE INFORMATION

ANNUAL REPORT 2007

RECURRENT RELATED PARTY TRANSACTIONS The aggregate value of recurrent related party transactions ("Recurrent Transactions") conducted pursuant to the shareholders' mandate during the financial year ended 31 December 2007 were as follows: Aggregate Value of Recurrent Transactions RM'000 96

Nature of Recurrent Transactions Receipt of travel related services

Related Parties Orient Escape Travel Sdn Bhd ("Oriental Escape")

Nature of Relationship Note 1

Purchase of fabrics related products such as car cushion, sun shades and mattress stick-on fabrics

Notes: 1.

Powernet Industries Sdn Bhd ("PISB")

2

Note 2

Orient Escape is a subsidiary of Advance Synergy Berhad ("ASB"). ASB is a major shareholder of Advance Synergy Capital Berhad ("ASC") by virtue of its 52.76% equity interest in ASC. Dato' Ahmad Sebi Bakar, a Director of ASC, is also a Director and major shareholder of ASC and ASB. PISB is a wholly-owned subsidiary of Kumpulan Powernet Berhad ("KPB"). KPB is a 20% owned associated company of ASC, in which Dato' Ahmad Sebi Bakar, is a Director of PISB and KPB. He is also a major shareholder of KPB.

2.

AUDIT COMMITTEE REPORT

ANNUAL REPORT 2007

COMPOSITION The Audit Committee, whose composition is listed below comprises three (3) Independent Non-Executive Directors of the Board: · · · Ir. Haji Mansor Bin Salleh @ Md Salleh (Chairman, Independent Non-Executive Director) Mr Chim Wai Khuan (Member, Independent Non-Executive Director) Dr. Haji Ahmad Ghiti Bin Haji Mohd Daud (Member, Independent Non-Executive Director)

The composition of the Audit Committee is in compliance with the requirements of Bursa Malaysia Securities Berhad ("Bursa Securities"). MEETINGS AND ATTENDANCE During the financial year ended 31 December 2007, the Audit Committee held five (5) meetings. The details of attendance of each Audit Committee member at the Audit Committee Meetings are as follows: Name Ir. Haji Mansor Bin Salleh @ Md Salleh Chim Wai Khuan Dr. Haji Ahmad Ghiti Bin Haji Mohd Daud TERMS OF REFERENCE OF THE AUDIT COMMITTEE Objective The Audit Committee assists the Board of Directors ("Board") in discharging its responsibilities for overseeing and ensuring the quality and integrity of the accounting, auditing, internal control, risk management and financial reporting practices of the Group and the Company. Membership The Audit Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist of not less than three (3) members, all of whom shall be Non-Executive Directors and a majority shall be Independent Directors. No alternate director shall be appointed as a member of the Audit Committee. All members of the Audit Committee shall be financially literate and at least one (1) member of the Audit Committee: (i) (ii) must be a member of the Malaysian Institute of Accountants; or If he/she is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years' working experience and: · He/she must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act, 1967; · He/she must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act, 1967; or (iii) fulfils such other requirements as prescribed or approved by Bursa Securities. No. of Meetings Attended 4/5 5/5 5/5

The Chairman of the Audit Committee shall be an Independent Non-Executive Director and shall be appointed by the Board.

AUDIT COMMITTEE REPORT

ANNUAL REPORT 2007

The composition of the Audit Committee shall fulfil the requirements as prescribed in the Listing Requirements of Bursa Securities. Each member of the Audit Committee shall continue to be a member unless the member resigns, is removed or ceases to be a Director. Meetings A quorum shall be two (2) members present, both of whom must be Independent Directors. The Audit Committee shall meet at least four (4) times a year, or more frequently as the Audit Committee considers necessary. The Head of Finance and the Head of Internal Audit shall normally be invited to attend the meetings and when deemed necessary, representatives of the external auditors are also invited to attend. Other Board members and senior management staff may attend meetings upon the invitation of the Audit Committee. However, at least twice a year, the Audit Committee shall meet with the external auditors without any Executive Directors present. The Company Secretary shall be the Secretary of the Audit Committee. Minutes The Secretary will prepare the minutes, which shall be signed by the Chairman of the meeting and distributed to each member of the Audit Committee and of the Board. The Chairman of the Audit Committee shall report on each meeting to the Board. Authority The Audit Committee is authorised by the Board: (i) (ii) (ii) (iii) (iv) (v) (vi) To investigate any activity within its terms of reference; To have the Internal Audit Function report directly to the Audit Committee; To have the resources required to perform its duties; To have full and unrestricted access to any information pertaining to the Company and the Group; To have direct communication channels with the internal and external auditors; To obtain external legal or other independent advice as necessary; and To convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Company and the Group, whenever deemed necessary.

Functions and Duties The functions and duties of the Audit Committee shall be: (i) To review the following and report the same to the Board: (a) with the external auditor, the audit plan and the nature and scope of the audit; (b) with the external auditor, his evaluation of the system of internal controls; (c) with the external auditor, his audit report; (d) the assistance given by the employees of the Company and the Group to the external auditor; (e) the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work; (f) the internal audit programme, processes, the results of the internal audit programme, processes or investigations undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function; (g) the quarterly results and year end financial statements prior to the approval by the Board, focusing particularly on: · changes in or implementation of major accounting policy and practices changes; · significant and unusual events; · significant adjustments arising from the audit; · compliance with accounting standards and other legal requirements; · major judgmental areas; · the going concern assumption; and · compliance with the requirements of Bursa Securities;

AUDIT COMMITTEE REPORT

ANNUAL REPORT 2007

(h) (i) (j) (k) (l) any related party transaction and conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity; any letter of resignation from the external auditors of the Company; whether there is reason (supported by grounds) to believe that the external auditor is not suitable for reappointment; external auditors management letter and management's response; whether they are satisfied that the Corporate Risk Management procedure used within the Company and the Group provides reasonable assurance that all known risks are identified, evaluated and effectively manage. In particular, the Committee shall: · create a high-level risk strategy and policy aligned with the Group's strategic business objectives; · communicate the Board's vision, strategy, policy, responsibilities and reporting lines to all employees across the Group; · identify and communicate to the Board the critical risks (present or potential) the Group faces, their changes and the management action plans to manage the risks; · perform risk oversight and review risk profiles and organizational performance; · set performance measures for the Company and the Group (e.g. subsidiaries or business units); · provide guidance to the business units on their risk appetite and tolerance and other criteria, which when exceeded, trigger an obligation to report upwards to the Board; and · ensure that infrastructure, resource and system are in place for Enterprise Risk Management activities;

(ii) (iii)

To prepare the Audit Committee Report for the annual report as established by paragraph 15.16 of the Listing Requirements of Bursa Securities. Where the Audit Committee is of the view that any matter reported by it to the Board of the Company has not been satisfactorily resolved resulting in a breach of the Listing Requirements of Bursa Securities, the Audit Committee shall promptly report such matters to Bursa Securities; To consider and make recommendations to the Board on the appointment of external auditors and their fee and to consider any question of resignation or dismissal; To review any appraisal or assessment of the performance of the members of the internal audit function; To approve any appointment or termination of senior staff members of the internal audit function;

(iv) (v) (vi)

(vii) To take cognisance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning; (viii) To discuss problems and reservations arising from the interim and final audits, their evaluation of the system of internal controls, and any matters the external auditor may wish to discuss (in the absence of management where necessary); (ix) (x) To consider the major findings of internal investigations authorised by the Board and management's response; and To carry out any other function that may be mutually agreed upon by the Audit Committee and the Board.

The Chairman of the Audit Committee should engage on a continuous basis with senior management, such as the Chairman, the Chief Executive Officer, the Finance Director, the Head of Internal Audit and the external auditors in order to be kept informed of matters affecting the Company.

AUDIT COMMITTEE REPORT

ANNUAL REPORT 2007

SUMMARY OF ACTIVITIES The Audit Committee had undertaken the following activities during the financial year: · · · · · · · · Reviewed the quarterly unaudited results for announcement to Bursa Securities prior to submission to the Board for consideration and approval; Reviewed the annual audited financial statements with the external auditors prior to submission to the Board for consideration and approval; Reviewed with external auditors the scope of the audit planning memorandum and upon completion of the audit, reviewed significant audit and accounting issues; Reviewed with internal auditors the scope of the internal audit plan, internal audit reports and staffing resources of the Internal Audit Department; Considered and recommended to the Board the re-appointment of external auditors and their fee; Reviewed the Audit Committee Report and Statement on Internal Control and recommended to the Board for inclusion in the 2006 Annual Report; Reviewed recurrent related party transactions contemplated under the Proposed Shareholders' Mandate; and Reviewed risk registers for all risks identified, including consequences, likelihood and risk rating.

INTERNAL AUDIT FUNCTION The Audit Committee endorses the importance of the Internal Audit Function to assist in maintaining a sound system of internal control to protect the shareholders' investment. The Internal Audit Department ("IAD") was established in 2002. However, during the year, the Internal Audit Function had been outsourced to the IAD of the holding company, Advance Synergy Berhad. The Head of IAD reports directly and independently to the Audit Committee which regularly reviews the business processes and operations, risks management and the adequacy and effectiveness of the internal controls throughout the Group to ensure compliance with the policies, procedures, laws and regulations which could have a significant impact on operations. The Internal Audit adopts a top-down, risk-based audit approach in the implementation and monitoring of internal controls within the Group. This was achieved via the critical and in depth review and deliberation of the internal audit reports presented during the regular Audit Committee Meetings held. This top-down, risk-based approach will enable the Audit Committee to identify risks and internal controls within the Group and to take the necessary steps to address these issues. The IAD also undertakes to ensure that audit recommendations and corrective action plans to address all findings areimplemented by the Management.

ANNUAL REPORT 2007

INTRODUCTION The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of internal control to safeguard shareholders' investments and the Group's assets. The Listing Requirements of Bursa Malaysia Securities Berhad require directors of a listed company to include a statement in annual reports on the state of their internal controls. The Board of Directors' Internal Control Statement which is set out below has been prepared in accordance with the guidance for directors on internal control, the Statement on Internal Control: Guidance for Directors of Public Listed Companies ("Guidance"). However, associated companies have not been dealt with as part of the Advance Synergy Capital Berhad Group ("Group") for purposes of applying the Guidance. RESPONSIBILITY The Board of Directors ("Board") recognises the importance of sound internal controls and risk management practices to good corporate governance. The Board affirms its overall responsibility of reviewing the adequacy and integrity of the Group's system of internal controls and risk management, management information system, including systems for compliance with applicable laws, regulation, rules, directives and guidelines. It should be noted, however, that such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives. In addition, it should be noted that any system can provide only reasonable, and not absolute, assurance against material misstatement, loss or fraud. The Group regularly identifies, evaluates, monitors and manages the significant risks affecting the achievement of its business objectives throughout the period. RISK MANAGEMENT Following the implementation of a structured risk management framework, the Group has an ongoing process of identifying, documenting, evaluating, monitoring and managing significant risks affecting the achievement of its business objectives. By this process, all significant risks are communicated to the holding company and a group level risk profiling is also conducted. In addition, the Risk Management Committee regularly reviews the risk management process within the Group and the adequacy and integrity of the systems to manage risks. The effectiveness of the Group's system of internal controls will continue to be reviewed in the light of changes in the operating environment. The Board also seeks assurance on the continuity and effectiveness of the internal control system through independent appraisals by both the Internal and External Auditors. OTHER ELEMENTS OF THE INTERNAL CONTROL The other key elements of the Group's internal control systems are described below: · · · · Clearly defined delegation of responsibilities to Committee of the Board and to management of Head Office and operating units, including authorisation levels for all aspects of the business which are set out in an authority matrix; Regular and comprehensive information provided to management, covering financial performance and key business indicators; Regular monitoring of results against budget with major variances being followed up and management action taken, where necessary; and Regular visits to operating units by members of the Board and senior management.

ANNUAL REPORT 2007

YEAR ENDED 31 DECEMBER INCOME (RM Million) Gross Revenue Profit/(Loss) before taxation Profit/(Loss) after taxation BALANCE SHEET (RM Million) Total Assets Gross loans and advances Paid-up capital Shareholders' funds RATIO Dividend rate (gross) (%) Net assets per share (RM) Earnings/(Loss) per share (sen) Return on average shareholders' funds (%) 0 2.1 (0.4) (0.8) 0 2.1 (32.3) (15.2) 1 2.4 (0.7) 2.3 1 2.4 (7.1) (1.2) 1 2.5 1.7 1.9 333 66 157 324 355 63 157 325 392 64 157 375 385 17 157 379 397 15 157 392 20.5 (2.7) (0.6) 27.3 (49.3) (48.8) 28.2 8.5 (1.1) 22.1 (4.4) (11.0) 14.7 7.6 2.6 2007 2006 2005 2004 2003

RM' m illions RM Million 410 400 390 380 370 360 350 340 330 320 310 300 2007 2006 2005 2004 2003

RM' m illions 450 400 350 300 250 200 150 100 50 0

RM Million

RM' m illions 20.0 10.0 0.0 (10.0) (20.0) (30.0) (40.0) (50.0)

RM Million

2007

2006

2005

2004

2003

(60.0) 2007 2006 2005 2004 2003

Total Assets

Shareholders' Funds

Profit/(loss) Before Taxation

CHAIRMAN'S STATEMENT

ADVANCE SYNERGY CAPITAL BERHAD

Annual Report 2007

CHAIRMAN'S STATEMENT

ANNUAL REPORT 2007

Dear Shareholders, On behalf of the Board of Directors, I am pleased to present the Annual Report of Advance Synergy Capital Berhad and its Group of Companies (ASCAP Group) for the financial year ended 31 December 2007.

GROUP FINANCIAL PERFORMANCE During the financial year under review, the ASCAP Group registered a total revenue of RM20.52 million compared to RM27.26 million in 2006, a decrease of 25%. This is mainly due to less non-productive routes being operated as a result of route rationalisation. However, the ASCAP Group managed to reduce the loss after taxation and minority interest to RM0.62 million in 2007 compared to a loss of RM48.80 million in 2006. The substantial reduction in the level of losses in the current year compared to preceding year was mainly due to: a) Decrease in bus operating costs from RM49.27 million in preceding year 2006 to RM25.60 million in current year 2007. b) Decrease in impairment loss for buses. In year 2006, impairment loss was RM15.33 million and year 2007 impairment loss for buses was RM7.34 million. c) Decrease in impairment loss on investments by RM22.19 million. In preceding year 2006, the amount for impairment loss was RM17.85 million and for 2007, instead of a provision for impairment loss, there was a write back of impairment loss amounting to RM4.34 million. d) In 2007, there was a write back of tax expenses provided in prior years amounting to RM2.39 million. The ASCAP Group will continue to review its operations for 2008 and will take action to reduce costs and eliminate loss making operations. OPERATION REVIEW During 2007, the ASCAP Group carried out a rationalisation exercise of its bus operations and implemented measures to reduce loss making routes. As a result, its express bus division withdrew from all its routes except for the KLIA-Ipoh route; and the commuter bus division focused its operations in the city of Johore Bahru. This resulted in substantial savings in operating costs. Other factors such as the improvement in the quoted share prices of ASCAP's investments contributed to the reduction in losses for 2007. It is anticipated that the bus building division will contribute positively to the ASCAP Group in 2008 when the necessary approvals are received to enable it to design, build and sell its buses. ACE Synergy Insurance Berhad continued its trend of positive growth in 2007 with major contributions from its three main product segments of Property & Casualty; Accident & Health and Personal Lines. Net premiums grew 8.2% from RM97.4 million in 2006 to RM105.4 million in 2007. However, investment income substantially decreased by 24.3% from RM11.1 million in 2006 to RM8.4 million in 2007 due to lower returns from fixed income instruments. The ASCAP Group will continue to develop strategies to operate more efficiently to generate satisfactory returns on its investments.

CHAIRMAN'S STATEMENT

ANNUAL REPORT 2007

CORPORATE DEVELOPMENT During the year, the Company announced that its intention to dispose of its 20% investment in Southern Investment Bank Berhad ("SIBB") has been aborted. Instead, SIBB will directly negotiate with any interested party to acquire its assets and liabilities. The final outcome of any negotiations will be subject to the approval of the Honourable Minister of Finance. During the year, associate companies of the ASCAP Group, namely iSynergy Sdn Bhd ("iSynergy") and Synergy Cards Sdn Bhd ("Synergy Cards") which have been focusing their resources in implementing the restructuring of their businesses which comprise the issuance of loyalty cards by iSynergy and the issuance of credit cards under the Mastercard brand by Synergy Cards had plans to launch their international credit card businesses by the 3rd quarter of 2007. However, due to unforeseen circumstances this launch has been delayed by one year to the 3rd quarter of 2008. PROSPECTS Notwithstanding the global sub-prime crisis, the business environment in Malaysia appears to be resilient due to the healthy economy. The ASCAP Group will continue to implement its strategies to improve productivity and profitability. CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility ("CSR") is integral to our overall business strategy. It is about how a business engages in an open and transparent business practices that are based on ethical values and respect for the community, employees, the environment, shareholders and other stakeholders. It is designed to deliver sustainable value to society at large. As a public transport operator, we are aware that we are in constant interaction with the community and environment in which we operate. We believe that through CSR practices, we will inevitably investing our own future and contribute to the enhancement of our shareholders' and stakeholders' value and the enrichment of our society at large. The ASCAP Group is aware of its corporate responsibility which is reflected in its business practices. Based on the Bursa Malaysia's CSR framework for public listed companies, we have developed our own framework to assist us to report on CSR which covers four (4) focal areas ­ the environment, the community, the market place and the workplace. Environment We are aware of the environmental impact arising from our daily operations and are committed to exploring ways of reducing pollution, wastage and harmful emissions to reduce our carbon footprint. We do this through monitoring fuel consumption and we employ effective environmental management processes for our existing bus fleet and depots. Community We aim to be a good corporate citizen and we work to support and contribute to the enhancement and development of the local community. Due to the nature of our operations, we play an important role by providing essential bus services to the local communities served by us. We work closely with the local authorities which have jurisdiction over our bus routes to improve the safety and quality of our public transportation services. Additionally, our buses are equipped with the capability of in-bus TV infortainment programmes which are designed to educate and disseminate information to passengers such as anti-drug messages and environmental issues. Marketplace We are committed to good corporate governance, transparency and fair disclosure of material information to the marketplace. We communicate with our investors and shareholders through general meetings, corporate announcements, quarterly results and annual report. We also rely on the support and close relationship with our customers and key suppliers for the delivery of our services. We make sure that we communicate with our current customers and suppliers on a timely manner to meet our expectations and needs.

CHAIRMAN'S STATEMENT

ANNUAL REPORT 2007

Workplace We committed to providing our employees with a conducive and safe workplace environment. We provide free bus transportation for our employees to our head office from the nearest train station to reduce dependency on car travel. Ongoing training and development programmes are offered to employees to improve and develop their knowledge and skills. We also maintain regular dialogue with them through meetings. We are committed to CSR and will work towards integrating CSR values into our operations that benefit business and society. ACKNOWLEDGEMENT On behalf of the Board of Directors, we take this opportunity to express our sincere appreciation to the management and staff of the Group for their dedicated and diligent services to the Company. We also wish to express our utmost appreciation to the Regulatory Authorities, all business associates and shareholders for their invaluable support and cooperation.

DATO' AHMAD SEBI BAKAR Chairman

FINANCIAL STATEMENTS

ADVANCE SYNERGY CAPITAL BERHAD

Annual Report 2007

FINANCIAL STATEMENTS

ANNUAL REPORT 2007

Directors' Report Statement By Directors Statutory Declaration Report of the Auditors Balance Sheets Income Statements Statements of Changes In Equity Cash Flow Statements Notes to the Financial Statements 28 33 33 34 35 36 37 39 41

ANNUAL REPORT 2007

Advance Synergy Capital Berhad | 27 | Annual Report 2007

DIRECTORS' REPORT

ANNUAL REPORT 2007

The Directors hereby submit their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2007. PRINCIPAL ACTIVITIES The principal activities of the Company are investment holding and provision of management services. The principal activities of the subsidiaries are described in Note 10 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. RESULTS Group RM'000 (620) Company RM'000 7,728

(Loss)/Profit for the financial year DIVIDEND

No dividend has been paid or declared by the Company since the end of the previous financial year. The Directors do not recommend any dividend in respect of the financial year ended 31 December 2007. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year ended 31 December 2007. ISSUE OF SHARES AND DEBENTURES The Company has not issued any shares or debentures during the financial year ended 31 December 2007. DIRECTORS The Directors who held office since the date of the last report are: Dato' Ahmad Sebi Bakar Wong Joon Hian Ir. Haji Mansor Bin Salleh @ Md Salleh Chim Wai Khuan Dr. Haji Ahmad Ghiti Bin Haji Mohd Daud

| 28 | Advance Synergy Capital Berhad Annual Report 2007

DIRECTORS' REPORT

ANNUAL REPORT 2007

DIRECTORS' INTERESTS The Directors holding office at the end of the financial year and their beneficial interests in the ordinary shares of the Company and its related corporations during the financial year ended 31 December 2007 as recorded in the Register of Directors' Shareholdings kept by the Company under Section 134 of the Companies Act, 1965 are as follows: ----------- Number of Ordinary Shares of RM1.00 each ---------Balance Balance as at as at 1.1.2007 Bought Sold 31.12.2007 Shares in the Company Indirect interest: Wong Joon Hian Shares in the holding company Advance Synergy Berhad Direct interest: Dato' Ahmad Sebi Bakar Indirect interests: Dato' Ahmad Sebi Bakar Wong Joon Hian Ir. Haji Mansor Bin Salleh @ Md Salleh Shares in related corporation Syarikat Fit and Weld Engineering (M) Sdn Bhd (In liquidation) Direct interest: Ir. Haji Mansor Bin Salleh @ Md Salleh 110,250 110,250 15,203,509 33,451,109 ** 45,000 # 21,000 # 15,203,509 33,451,109 45,000 21,000 37,500 # 37,500

Advance Synergy Capital Berhad | 29 | Annual Report 2007

DIRECTORS' REPORT

ANNUAL REPORT 2007

DIRECTORS' INTERESTS (continued) ------------- Number of Warrants 2000/2010* ------------Balance Balance as at as at 1.1.2007 Bought Sold 31.12.2007

Warrants in the holding company Advance Synergy Berhad Direct interest: Dato' Ahmad Sebi Bakar Indirect interests: Dato' Ahmad Sebi Bakar Wong Joon Hian Ir. Haji Mansor Bin Salleh @ Md Salleh

#

7,510,005 21,465,000 *** 8,000 # 15,000 #

-

(500,000) -

7,010,005 21,465,000 8,000 15,000

Deemed interested by virtue of shares/warrants held via spouse pursuant to Section 134 (12)(c) of the Companies Act, 1965 which came into effect on 15 August 2007. The duration and exercise period of the warrants has been extended by five (5) years from 28 August 2003 up to and including 28 August 2008 and thereafter extended for a further period of two (2) years expiring on 28 August 2010. This includes his son's interest in 6,000,000 ordinary shares of Advance Synergy Berhad ("ASB") which shall be treated as his interest in the ordinary shares of ASB pursuant to Section 134(12)(c) of the Companies Act, 1965 which came into effect on 15 August 2007.

*

**

*** This includes his son's interest in 7,738,000 warrants of ASB which shall be treated as his interest in the warrants of ASB pursuant to Section 134(12)(c) of the Companies Act,1965 which came into effect on 15 August 2007.

None of the other Directors holding office at the end of financial year held any interest in the ordinary shares of the Company and of its related corporations during the financial year. DIRECTORS' BENEFITS Since the end of the previous financial year, none of the Directors has received or become entitled to receive a benefit (other than the benefits included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the 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 the remuneration received by certain Directors as Directors/Executives of the ultimate holding company and subsidiaries. There were no arrangements during and at the end of the financial year, to which the Company is a party, which had the object 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.

| 30 | Advance Synergy Capital Berhad Annual Report 2007

DIRECTORS' REPORT

ANNUAL REPORT 2007

OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY (I) AS AT THE END OF THE FINANCIAL YEAR (a) Before the income statements and balance sheets of the Group and of the Company were made out, the Directors took reasonable steps: (i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and have satisfied themselves that there are no known bad debts and that adequate provision had been made for doubtful debts; and to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values.

(ii) (b)

In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature other than revision to depreciation charges as explained in Note 7.1 to the financial statements.

(II)

FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT (c) The Directors are not aware of any circumstances: (i) (ii) (iii) (d) which would necessitate the writing off of bad debts or render the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any material extent; or which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; and which have arisen which would render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

In the opinion of the Directors: (i) there has not arisen any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made; and no contingent or other liability has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations as and when they fall due.

(ii)

(III) AS AT THE DATE OF THIS REPORT (e) (f) (g) There are no charges on the assets of the Group and of the Company which have arisen since the end of the financial year to secure the liabilities of any other person. There are no contingent liabilities of the Group and of the Company which have arisen since the end of the financial year. The Directors are not aware of any circumstances not otherwise dealt with in the report or financial statements which would render any amount stated in the financial statements of the Group or of the Company misleading.

Advance Synergy Capital Berhad | 31 | Annual Report 2007

DIRECTORS' REPORT

ANNUAL REPORT 2007

SIGNIFICANT EVENT DURING THE FINANCIAL YEAR Significant event during the financial year is disclosed in Note 37 to the financial statements. ULTIMATE HOLDING COMPANY The Directors regard Advance Synergy Berhad, a company incorporated in Malaysia and listed on the Main Board of Bursa Malaysia Securities Berhad, as the ultimate holding company. AUDITORS The auditors, BDO Binder, have expressed their willingness to continue in office. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors.

DATO' AHMAD SEBI BAKAR Director Selangor Darul Ehsan 22 April 2008

IR. HAJI MANSOR BIN SALLEH @ MD SALLEH Director

| 32 | Advance Synergy Capital Berhad Annual Report 2007

STATEMENT BY DIRECTORS

ANNUAL REPORT 2007

In the opinion of the Directors, the financial statements set out on pages 35 to 79 have been drawn up in accordance with applicable approved Financial Reporting Standards in Malaysia and provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2007 and of the results of the operations of the Group and of the Company and of the cash flows of the Group and of the Company for the financial year then ended.

On behalf of the Board

DATO' AHMAD SEBI BAKAR Director Selangor Darul Ehsan 22 April 2008

IR. HAJI MANSOR BIN SALLEH @ MD SALLEH Director

STATUTORY DECLARATION

I, WONG JOON HIAN, being the Director primarily responsible for the financial management of ADVANCE SYNERGY CAPITAL BERHAD, do solemnly and sincerely declare that the financial statements set out on pages 35 to 79 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 Selangor Darul Ehsan, this 22 April 2008 Before me:

WONG JOON HIAN

No. B226 KARAM SINGH Commissioner for Oaths

Advance Synergy Capital Berhad | 33 | Annual Report 2007

REPORT OF THE AUDITORS

TO THE MEMBERS OF ADVANCE SYNERGY CAPITAL BERHAD

ANNUAL REPORT 2007

We have audited the financial statements set out on pages 35 to 79. These financial statements are the responsibility of the Company's Directors. It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility towards any other person for the content of this report. We conducted our audit in accordance with approved standards on auditing in Malaysia. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion: (a) the financial statements have been properly drawn up in accordance with applicable approved Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of: (i) (ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of the Group and of the Company; and the state of affairs of the Group and of the Company as at 31 December 2007 and of the results of the operations of the Group and of the Company and of the cash flows of the Group and of the Company for the financial year then ended;

and (b) 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 said Act.

We have considered the financial statements and the auditors' report of the subsidiary of which we have not acted as auditors, as indicated in Note 10 to the financial statements, being financial statements that have been included in the consolidated financial statements. We are satisfied that the financial statements of the subsidiaries that are consolidated with the Company's financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The auditors' reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment made under Section 174(3) of the Act.

BDO BINDER AF : 0206 Chartered Accountants Kuala Lumpur 22 April 2008

TAN LYE CHONG 1972/08/09 (J) Partner

| 34 | Advance Synergy Capital Berhad Annual Report 2007

BALANCE SHEETS

AS AT 31 DECEMBER 2007

ANNUAL REPORT 2007

Group Note ASSETS Non-current assets Property, plant and equipment Prepaid lease payments for land Investment in subsidiaries Investment in associates Investment securities Sale and leaseback, factoring and bridging loan receivables 8 9 10 11 12 13 58,613 984 107,628 35,026 65,925 268,176 Current assets Inventories Sale and leaseback, factoring and bridging loan receivables Receivables Tax recoverable Marketable securities Short term deposits Cash and bank balances Non-current assets classified held for sale TOTAL ASSETS EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital Reserves TOTAL EQUITY Non-current liability Borrowings Current liabilities Payables Borrowings 24 20 2,759 1,647 4,406 TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES 8,787 333,133 7,085 17,537 24,622 29,718 354,684 6,338 6,338 6,338 247,562 789 789 789 234,285 20 4,381 5,096 18 19 156,861 167,485 324,346 156,861 168,105 324,966 156,861 84,363 241,224 156,861 76,635 233,496 14 13 15 16 3,135 409 54,615 1,074 1,449 3,005 773 64,460 17 497 333,133 4,830 60,041 45,425 1,522 2,753 849 3,388 118,808 354,684 137,526 1,073 1,449 3,005 151 143,204 247,562 129,720 363 2,753 849 450 134,135 234,285 72,179 1,001 112,732 46,686 3,278 235,876 322 5,200 78,619 20,217 104,358 453 5,200 78,620 15,877 100,150 2007 RM'000 2006 RM'000 (restated) Company 2007 RM'000 2006 RM'000

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

Advance Synergy Capital Berhad | 35 | Annual Report 2007

INCOME STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007

ANNUAL REPORT 2007

Group Note 2007 RM'000 2006 RM'000 Company 2007 RM'000 2006 RM'000

Revenue Cost of sales Gross profit/(loss) Other income Administrative expenses Other expenses Finance costs Share of profit of associates (Loss)/Profit before tax Tax income/(expenses) - Company and subsidiaries (Loss)/Profit for the financial year Attributable to: Equity holders of the Company (Loss)/Profit for the financial year Loss per ordinary share attributable to equity holders of the Company (sen) - Basic

25

20,516 (15,960 ) 4,556 850 (9,632 ) (3,823 ) (289 ) 5,627

27,257 (36,585 ) (9,328 ) 226 (12,281 ) (33,656 ) (228 ) 5,928 (49,339 ) 537 (48,802 )

15,611 15,611 653 (1,047 ) (5,611 ) 9,606 (1,878 ) 7,728

16,167 16,167 569 (1,017 ) (156,729 ) (141,010 ) (3,579 ) (144,589 )

26 27

(2,711 ) 2,091 (620 )

(620 ) (620 )

(48,802 ) (48,802 )

7,728 7,728

(144,589 ) (144,589 )

29

(0.41 )

(32.33 )

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

| 36 | Advance Synergy Capital Berhad Annual Report 2007

STATEMENTS OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007

ANNUAL REPORT 2007

Share capital RM'000 156,861 Share premium RM'000 221,962 Treasury shares RM'000 (3,089) (15) Accumulated losses RM'000 (864 ) Total RM'000 374,870 (15)

Group Balance as at 31 December 2005 Purchase of treasury shares Loss for the financial year, representing total recognised income and expense for the financial year Dividend Balance as at 31 December 2006 Balance as at 31 December 2006 Loss for the financial year, representing total recognised income and expense for the financial year Balance as at 31 December 2007

156,861 156,861

221,962 221,962

(3,104) (3,104)

(48,802 ) (1,087 ) (50,753 ) (50,753 )

(48,802) (1,087) 324,966 324,966

156,861

221,962

(3,104)

(620 ) (51,373 )

(620) 324,346

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

Advance Synergy Capital Berhad | 37 | Annual Report 2007

STATEMENTS OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007

ANNUAL REPORT 2007

Share capital RM'000 156,861 Share premium RM'000 221,962 Treasury shares RM'000 (3,089) (15) Accumulated losses RM'000 3,453 -

Company Balance as at 31 December 2005 Purchase of treasury share Loss for the financial year, representing total recognised income and expense for the financial year Dividend Balance as at 31 December 2006 Balance as at 31 December 2006 Profit for the financial year, representing total recognised income and expense for the financial year Balance as at 31 December 2007

Total RM'000 379,187 (15 )

156,861 156,861

221,962 221,962

(3,104) (3,104)

(144,589) (1,087) (142,223) (142,223)

(144,589 ) (1,087 ) 233,496 233,496

156,861

221,962

(3,104)

7,728 (134,495)

7,728 241,224

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

| 38 | Advance Synergy Capital Berhad Annual Report 2007

CASH FLOW STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007

ANNUAL REPORT 2007

Group Note 2007 RM'000 2006 RM'000 Company 2007 RM'000 2006 RM'000

CASH FLOWS FROM OPERATING ACTIVITIES (Loss)/Profit before tax Adjustments for: Allowance for doubtful debts Allowance for doubtful debts no longer required Amortisation of prepaid lease payments for land Depreciation of property, plant and equipment Dividend income Gain on disposal of: - property, plant and equipment - unquoted securities in Malaysia - marketable securities Impairment loss on: - investment in quoted securities - property, plant and equipment - investment in associates - investment in subsidiaries Write back of impairment loss on: - investment in quoted securities - marketable securities Interest income Interest expenses Inventories written off Property, plant and equipment written off Share of profit of associates Operating loss before working capital changes Decrease in inventories (Increase)/Decrease in marketable securities Decrease in sale and leaseback, factoring and bridging loan receivables (Increase)/Decrease in receivables (Decrease)/Increase in payables Cash used in operations Tax paid Tax refunded Net cash used in operating activities

(2,711 )

(49,339 )

9,606

(141,010 )

608 (13 ) 9 8 17 6,396 (5,713 ) (106 ) (545 ) 8 7,540 (4,340 ) (345 ) (3,422 ) 289 1,299 8 229 (5,627 ) (6,444 ) 396 (798 ) (9,499 ) (4,323 ) (20,668 ) (253 ) 2,801 (18,120 )

461 18 7,842 (2,975 ) (32 ) (131 ) (298 ) 12,393 15,334 5,458 (390 ) (3,225 ) 228 9 (5,928 ) (20,575 ) 6,563 1,427 2,896 878 (1,385 ) (10,196 ) (880 ) 57 (11,019 )

9,950 133 (14,747) (545) (4,340) (345) (864) (1,152) (798) (17,016) (57) (19,023) (253) 1,643 (17,633)

129,664 132 (14,854) (131) (298) 12,393 5,458 9,214 (390) (1,313) 4 (1,131) 1,427 (10,564) 116 (10,152) (880) 57 (10,975)

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

Advance Synergy Capital Berhad | 39 | Annual Report 2007

CASH FLOW STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007

ANNUAL REPORT 2007

Group Note 2007 RM'000 2006 RM'000 2007 RM'000 Company 2006 RM'000

CASH FLOWS FROM INVESTING ACTIVITIES Withdrawal of fixed deposit Acquisition of an associate Interest received Dividend received Dividend from an associate Proceeds from disposal of: - property, plant and equipment - marketable securities - unquoted securities Purchase of: - property, plant and equipment - unquoted securities - preference shares of an associate Net cash from / (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Dividend paid Treasury shares purchased Interest paid Repayments of hire purchase creditor Increase in amounts owing to subsidiaries Drawdown of short term borrowing Repayment of term loan Net cash (used in)/from financing activities Net (decrease)/ increase in cash and cash equivalents Cash and cash equivalents at the beginning of financial year Cash and cash equivalents at the end of financial year

115 5,707 10,731 714 2,992 30 (1,639 ) 18,620

28 (580 ) 561 2,938 10,584 50 5,131 (11,371 ) (15,908 ) (8,000 ) (16,567 )

125 38 10,731 2,992 (2) 13,884

(580) 561 117 10,584 5,131 (13) (8,000) 7,800

(354 ) (8 ) (597 ) (959 ) (459 ) 4,237 31 3,778

(1,079 ) (15 ) (233 ) (37 ) 16,000 (1,181 ) 13,455 (14,131 ) 18,368 4,237

5,606 5,606 1,857 1,299 3,156

(1,079) (15) (1,094) (4,269) 5,568 1,299

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

| 40 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

1. CORPORATE INFORMATION The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Board of Bursa Malaysia Securities Berhad. The registered office and principal place of business of the Company is located at Level 3, Wisma Triton, No. 72, Pesiaran Jubli Perak, Seksyen 22, 40000 Shah Alam, Selangor Darul Ehsan. The ultimate holding company of the Company is Advance Synergy Berhad, a company incorporated in Malaysia and listed on the Main Board of Bursa Malaysia Securities Berhad. The financial statements are presented in Ringgit Malaysia (RM), which is also the Company's functional currency. All financial information presented in RM has been rounded to the nearest thousand, unless otherwise stated. The financial statements were authorised for issue in accordance with a resolution by the Board of Directors on 22 April 2008. 2. PRINCIPAL ACTIVITIES The principal activities of the Company are investment holding and provision of management services. The principal activities of the subsidiaries are described in Note 10 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. 3. BASIS OF PREPARATION The financial statements of the Group and of the Company have been prepared in accordance with applicable approved Financial Reporting Standards ("FRS") in Malaysia and the provisions of the Companies Act, 1965. 4. SIGNIFICANT ACCOUNTING POLICIES 4.1 Basis of accounting The financial statements of the Group and of the Company have been prepared under the historical cost convention except as otherwise stated in the financial statements. The preparation of financial statements requires the Directors to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and contingent liabilities. In addition, the Directors are also required to exercise their judgement in the process of applying the accounting policies. The areas involving such judgements, estimates and assumptions are disclosed in Note 7. Although these estimates and assumptions are based on the Directors' best knowledge of events and actions, actual results could differ from those estimates. 4.2 Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries made up to the end of the financial year using the purchase method of accounting. Under the purchase method of accounting, the cost of business combination is measured at the aggregate of fair value at the date of exchange of assets given, liabilities incurred or assumed, and equity instruments issued plus any costs directly attributable to the business combination. At the acquisition date, the cost of business combination is allocated to identifiable assets, liabilities and contingent liabilities in the business combination which are measured initially at their fair values at the acquisition date. The excess of the cost of business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised as goodwill.

Advance Synergy Capital Berhad | 41 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

4. SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Basis of consolidation (continued) If the cost of business combination is less than the interest in the net fair value of the identifiable assets, liabilities and contingent liabilities, the Group will: (a) reassess the identification and measurement of the acquiree's identifiable assets, liabilities and contingent liabilities and the measurement of the cost of the combination; and (b) recognise immediately in profit or loss any excess remaining after that reassessment. When a business combination includes more than one exchange transaction, any adjustment to the fair values of the subsidiary's identifiable assets, liabilities and contingent liabilities relating to previously held interests of the Group is accounted for as a revaluation. Subsidiaries are consolidated from the acquisition date, which is the date on which the Group effectively obtains control, until the date on which the Group ceases to control the subsidiaries. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are exercisable are taken into account. Intragroup balances, transactions and unrealised gains and losses on intragroup transactions are eliminated in full. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. If a subsidiary uses accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to its financial statements in preparing the consolidated financial statements. The gain or loss on disposal of a subsidiary, which is the difference between the net disposal proceeds and the Group's share of its net assets as of the date of disposal including the carrying amount of goodwill and the cumulative amount of any exchange differences that relate to the subsidiary, is recognised in the consolidated income statement. Minority interest is that portion of the profit or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the Group. It is measured at the minority's share of the fair value of the subsidiaries' identifiable assets and liabilities at the acquisition date and the minority's share of changes in the subsidiaries' equity since that date. Where losses applicable to the minority in a subsidiary exceed the minority interest in the equity of that subsidiary, the excess and any further losses applicable to the minority are allocated against the Group's interest except to the extent that the minority has a binding obligation and is able to make additional investment to cover the losses. If the subsidiary subsequently reports profits, such profits are allocated to the Group's interest until the minority's share of losses previously absorbed by the Group has been recovered. Minority interest is presented in the consolidated balance sheet within equity and is presented in the consolidated statement of changes in equity separately from equity attributable to equity holders of the Company. Minority interest in the results of the Group is presented in the consolidated income statement as an allocation of the total profit or loss for the year between minority interest and equity holders of the Company. 4.3 Property, plant and equipment and depreciation All items of property, plant and equipment are initially measured at cost. Cost includes expenditures that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

| 42 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

4. SIGNIFICANT ACCOUNTING POLICIES (continued) 4.3 Property, plant and equipment and depreciation (continued) The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Group is obligated to incur when the asset is acquired, if applicable. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the asset and which has different useful life, is depreciated separately. After initial recognition, property, plant and equipment except for freehold land and construction work-inprogress are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Freehold land and construction work-in-progress are not depreciated. Depreciation on buses under refurbishment commences when the buses are ready for their intended use. Depreciation on other property, plant and equipment is calculated to write off the cost or valuation of the assets to their residual values on straight line basis over their estimated useful lives. The principal depreciation period and rates are as follows: Buildings Plant and machinery Furniture, fittings and equipment Renovations Motor vehicles Buses in operation 2% 20% 6% - 20% 10% - 20% 15% - 20% Over 7 years

At each balance sheet date, the carrying amount of property, plant and equipment is assessed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. The residual values, useful life and depreciation method are reviewed at each financial year end 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. The carrying amount of an item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the carrying amount is recognised in the income statement. 4.4 4.4.1 Leases and hire purchase Hire purchase Assets acquired under hire purchase arrangement which transfer substantially all the risks and rewards of ownership to the Group are capitalised as property, plant and equipment and the corresponding obligation are treated as liabilities. The property, plant and equipment capitalised are depreciated on the same basis as owned assets. Finance charges are allocated to the income statement over the period of the agreements to give a constant periodic rate of charge on the remaining hire purchase liabilities. 4.4.2 Operating lease Lease payments under operating leases are recognised as an expense on a straight line basis over the lease term.

Advance Synergy Capital Berhad | 43 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

4. SIGNIFICANT ACCOUNTING POLICIES (continued) 4.4 4.4.3 Leases and hire purchase (continued) Leases of land and amortisation Leasehold land that normally has an indefinite economic life and where the lease does not transfer substantially all the risks and rewards incidental to ownership is treated as an operating lease.The lump-sum upfront lease payment made on entering into or acquiring leasehold land is accounted for as prepaid lease payments and is amortised over the lease term of 59 years on a straight line basis. Prior to 1 January 2007, the Group had classified a lease of land as finance lease and had recognised the amount of prepaid lease payments as property within its property, plant and equipment. On adoption of FRS 117 Leases, the Group treats such lease as an operating lease, with the unamortised carrying amount classified as prepaid lease payments in accordance with the transitional provisions in FRS 117. The effect of the change in accounting policy is disclosed in Note 6.2. 4.5 4.5.1 Investments Subsidiaries A subsidiary is an entity in which the Group and the Company has power to control the financial and operating policies so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity. An investment in subsidiary, which is eliminated on consolidation, is stated in the Company's separate financial statements at cost less impairment losses, if any. On disposal of such an investment, the difference between the net disposal proceeds and its carrying amount is included in profit or loss. 4.5.2 Associates An associate is an entity over which the Group and the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not in control or joint control over those policies. In the Company's separate financial statements, investment in associate is stated at cost less impairment losses, if any. An investment in associate is accounted for in the consolidated financial statements using the equity method of accounting. The investment in associate in the consolidated balance sheet is initially recognised at cost and adjusted thereafter for the post acquisition change in the Group's share of net assets of the investment. The interest in associate is the carrying amount of the investment in the associate under the equity method together with any long-term interest that, in substance, form part of the Group's net interest in the associate. The Group's share of the profit or loss of the associate during the financial year is recognised in the consolidated financial statements. Distributions received from the associate reduce the carrying amount of the investment. Adjustments to the carrying amount may also be necessary for changes in the Group's proportionate interest in the associate arising from changes in the associate's equity that have not been recognised in the associate's profit or loss. Such changes include those arising from the revaluation of property, plant and equipment and from foreign exchange translation differences. The Group's share of those changes is recognised directly in equity of the Group. When the Group's share of losses in the associate equals or exceeds its interest in the associate, the carrying amount of that interest is reduced to nil and the Group does not recognise further losses unless it has incurred legal or constructive obligations or made payments on its behalf.

| 44 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

4. SIGNIFICANT ACCOUNTING POLICIES (continued) 4.5 4.5.2 Investments (continued) Associates (continued) The most recent available financial statements of the associate are used by the Group in applying the equity method. Where the reporting dates of the financial statements are not coterminous, the share of results is arrived at using the latest audited financial statements for which the difference in reporting dates is no more than three months. Adjustments are made for the effects of any significant transactions or events that occur between the intervening periods. Upon disposal of an investment in associate, the difference between the net disposal proceeds and its carrying amount is included in profit or loss. 4.5.3 Investment securities Non-current investment securities are stated at cost and an allowance for diminution in value is made where in the opinion of the Directors, there is a decline other than temporary in the value of such investments. Upon disposal of such investment, the difference between the net disposal proceeds and its carrying amount is recognised in profit or loss. 4.5.4 Marketable securities Marketable securities are acquired and held with the intention of resale in the short term, and are stated at the lower of cost and market value determined on an aggregate portfolio basis by category of investment. Cost is derived at on the weighted average basis while market value is determined based on quoted market value. Increase or decrease in the carrying amount of marketable securities is recognised in profit or loss. On disposal of marketable securities, the difference between the net disposal proceeds and its carrying amount is recognised in profit or loss. 4.6 Impairment of non-financial assets The carrying amount of assets, except for financial assets (excluding investment in subsidiaries and associates), inventories, deferred tax assets and non-current assets held for sale, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amount is estimated. The recoverable amount of an asset is estimated for an individual asset. Where it is not probable to estimate the recoverable amount of the individual asset, the impairment test is carried out on the cash generating unit (CGU) to which the asset belongs. Goodwill acquired in a business combination is from the acquisition date, allocated to each of the Group's CGU or groups of CGU that are expected to benefit from the synergies of the combination giving rise to the goodwill irrespective of whether other assets or liabilities of the acquiree are assigned to those units or groups of units. The recoverable amount of an asset or CGU is the higher of its fair value less cost to sell and its value in use. In estimating the value in use, the estimated future cash inflows and outflows to be derived from continuing use of the asset and from its ultimate disposal are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. An impairment loss is recognised in the income statement when the carrying amount of the asset or the CGU, including the goodwill or intangible asset, exceeds the recoverable amount of the asset or the CGU. The total impairment loss is allocated, first, to reduce the carrying amount of any goodwill allocated to the CGU and then to the other assets of the CGU on a pro-rate basis of the carrying amount of each asset in the CGU.

Advance Synergy Capital Berhad | 45 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

4. SIGNIFICANT ACCOUNTING POLICIES (continued) 4.6 Impairment of non-financial assets (continued) The impairment loss is recognised in the income statement immediately. An impairment loss on goodwill is not reversed in subsequent periods. An impairment loss for other assets is reversed if and only if there has been a change in the estimates used to determine the assets' recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Such reversals are recognised as income immediately in the income statement. 4.7 Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determine using the weighted average formula. The cost of raw materials comprises all costs of purchase plus the cost of bringing the inventories to their present location and condition. The cost of work-in-progress includes the cost of raw materials, direct labour, other direct cost and a proportion of production overheads based on normal operating capacity of the production facilities. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. 4.8 4.8.1 Financial instruments Financial instruments recognised on the balance sheets Financial instruments are recognised on 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 and losses and gains relating to a financial instrument or a component that is a financial liability shall be recognised as income or expense in profit or loss. Distributions to holders of an equity instrument are debited directly to equity, net of any related tax effect. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle on a net basis or to realise the asset and settle the liability simultaneously. (a) Finance lease, factoring and bridging loan receivables When assets are leased out under a finance lease, the present value of the lease payments is recognised as receivables. The difference between the gross receivables and the present value of the receivables are recognised as unearned finance income. Lease income is recognised over the terms of the lease using the net investment method so as to reflect a constant periodic rate of return on the balance outstanding. Factoring and bridging loan receivables are carried at the factored amount including the interest receivable. Factoring and bridging loan income is recognised on the effective yield basis. (b) Receivables Receivables are carried at anticipated realisable value. Known bad debts are written off and specific allowance is made for debts considered to be doubtful of collection. Receivables are not held for trading purposes.

| 46 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

4. SIGNIFICANT ACCOUNTING POLICIES (continued) 4.8 4.8.1 Financial instruments (continued) Financial instruments recognised on the balance sheets (continued) (c) Payables Payables including amounts owing to related corporations are recognised when there is a contractual obligation to deliver cash or another financial asset to another entity. Payables are initially and subsequently measured at cost. (d) Cash and cash equivalents Cash and cash equivalents include cash and bank balances, bank overdrafts, deposits and other short term, highly liquid investments which are readily convertible into cash and which are subject to insignificant risk of changes in value. (e) Equity instruments Ordinary shares are recorded at the nominal value and proceeds in excess of the nominal value of share issued, if any, are accounted for as share premium. Both ordinary shares and share premium are classified as equity. Cost incurred directly attributable to the issuance of shares are accounted for as deduction from share premium. Otherwise, they are charged to the income statement. Dividends to shareholders are recognised in equity in the period in which they are declared. If the Company reacquires its own equity instruments, the consideration paid, including any attributable transaction costs is deducted from equity as treasury shares until they are cancelled. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments. Where such shares are issued by resale, the difference between the sales consideration and the carrying amount is shown as a movement in equity. (f) Interest bearing borrowings Interest bearing borrowings are recorded at the amount of proceeds received, net of transaction cost. 4.8.2 Financial instruments not recognised on the balance sheets There were no financial instruments not recognised on the balance sheets. 4.9 Borrowing costs Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset is capitalised as part of the cost of the asset until when substantially all the activities necessary to prepare the asset for its intended use or sale are complete, after which such expense is charged to the income statement. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. Capitalisation of borrowing cost is suspended during extended periods in which active development is interrupted. The amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on the borrowing during the period less any investment income on the temporary investment of the borrowing. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. 4.10 Provisions Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Advance Synergy Capital Berhad | 47 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

4. SIGNIFICANT ACCOUNTING POLICIES (continued) 4.10 Provisions (continued) Where the effect of the time value of money is material, the amount of the provision will be discounted to its present value at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. 4.11 Employee benefits

4.11.1 Short term employee benefits Wages, salaries, social security contributions, paid annual leave, paid sick leave, bonuses and non-monetary benefits are recognised as an expense in the financial year when employees have rendered their services to the Group. Short term accumulating compensated absences such as paid annual leave are recognised as expense when services are rendered by employees that increase their entitlement to future compensated absences Short term non-accumulating compensated absences such as sick leave are recognised when absences occur. Bonuses are recognised as an expense when there is a present, legal or constructive obligation to make such payments, as a result of past events and when reliable estimate can be made of the amount of the obligation. 4.11.2 Defined contribution plans The Company and subsidiaries incorporated in Malaysia make contributions to a statutory provident fund. The contributions are recognised as a liability after deducting any contribution already paid and as an expense in the period in which the employees render their services. 4.12 Income taxes Income taxes include all domestic and foreign taxes on taxable profit. Income taxes also include other taxes, such as withholding taxes, which are payable by a foreign subsidiary, associate or jointly controlled entity on distributions to the Group and Company, and real property gains taxes payable on disposal of properties, prior to 1 April 2007, if any. Taxes in the income statement comprise current tax and deferred tax. 4.12.1 Current tax Current tax is the amount of income taxes payable or receivable in respect of the taxable profit or loss for a period. Current tax for the current and prior periods is measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that have been enacted or substantially enacted by the balance sheet date. 4.12.2 Deferred tax Deferred tax is recognised in full using the liability method on temporary differences arising between the carrying amount of an asset or liability in the balance sheet and its tax base. Deferred tax is recognised for all temporary differences, unless the deferred tax arises from goodwill or the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither accounting profit nor taxable profit.

| 48 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

4. SIGNIFICANT ACCOUNTING POLICIES (continued) 4.12 Income taxes (continued)

4.12.2 Deferred tax (continued) A deferred tax asset is recognised only 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. The carrying amount of a deferred tax asset is reviewed at each balance sheet date. If it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that sufficient taxable profit will be available, such reductions will be reversed to the extent of the taxable profit. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same taxation authority. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. 4.13 Foreign currency

4.13.1 Functional currency The separate 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. 4.13.2 Foreign currency transactions and translations A foreign currency transaction is recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. At each balance sheet date, foreign currency monetary items are translated using the exchange rate at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency is translated using the exchange rate at the date of the transaction. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are recognised in profit or loss in the period in which they arise. Exchange differences arising on a monetary item that forms part of the Company's net investment in a foreign operation shall be recognised in profit or loss in the financial statements of the Company or the individual financial statements of the foreign operation, as appropriate. In the consolidated financial statements, such exchange differences are recognised initially in the exchange translation reserve except for a monetary item that is denominated in a currency other than the functional currency of either the Company or the foreign operation, which exchange differences is recognised in profit or loss in the consolidated financial statements. On the disposal of the foreign operation, the cumulative amount of the exchange differences relating to the foreign operation is recognised in profit or loss when the gain or loss on disposal is recognised. The results and financial position of an entity whose functional currency is not the currency of a hyperinflationary economy shall be translated into a different presentation currency using the following procedures: (a) assets and liabilities for each balance sheet presented (i.e. including comparatives) shall be translated at the closing rate at the date of that balance sheet;

Advance Synergy Capital Berhad | 49 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

4. SIGNIFICANT ACCOUNTING POLICIES (continued) 4.13 Foreign currency (continued)

4.13.2 Foreign currency transactions and translations (continued) (b) income and expenses for each income statement (i.e. including comparatives) shall be translated at exchange rates at the dates of the transactions; and (c) all resulting exchange differences shall be recognised as a separate component of equity. Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation is treated as assets and liabilities of the foreign operation and is translated at the exchange rate at the balance sheet date. 4.14 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable net of discounts and rebates. Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of revenue and the cost incurred or to be incurred in respect of the transaction can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised. 4.14.1 Rendering of services and sale of goods Revenue from the provision of public bus transportation services is recognised based on bus fare collections. Revenue from sale of goods is recognised when significant risks and rewards of ownership of the goods has been transferred to the customer and where the Group retains neither continuing managerial involvement over the goods, which coincides with delivering of goods and services and acceptance by customers. 4.14.2 Interest income Interest income is recognised on a time proportion basis, taking into account the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the Group. The Group ceases recognising interest income when an account is classified as nonperforming. 4.14.3 Dividend income Dividend from investments in subsidiaries, associates and other investments are recognised when the shareholders' right to receive payment is established. 4.14.4 Rental income Rental income is accounted for on a straight line basis over the lease terms on ongoing leases. The aggregate cost of incentives provided to lessees is recognised as a reduction of rental income over the lease term on a straight line basis. 4.15 Segment information Segment information is presented in respect of the Group's business and geographical segments. The primary reporting segment information is in respect of business segments as the Group's risk and return are affected predominantly by differences in the services it renders, while the secondary information is reported geographically.

| 50 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

4. SIGNIFICANT ACCOUNTING POLICIES (continued) 4.15 Segment information (continued) A segment with a majority of operating income earned from providing services to external clients and whose operating income, results or assets are 10 percent or more of all the segments is reported separately. Segment results, assets and liabilities include items that are directly attributable to a segment as well as those that can be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period. 4.16 Non-current assets (or disposal groups) held for sale Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. For this to be the case the asset (or disposal group) must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) and its sale must be highly probable. Immediately before the initial classification as held for sale, the carrying amounts of the non-current assets (or all the assets and liabilities in a disposal group) are measured in accordance with applicable FRSs. On initial classification as held for sale, non-current assets or disposal groups (other than investment properties, deferred tax assets, employee benefits assets and financial assets carried at fair value) are measured at the lower of carrying amount immediately before the initial classification as held for sale and fair value less costs to sell. Any differences are recognised in profit or loss as impairment loss. Non-current assets (or disposal groups) held for sale are classified as current assets (and current liabilities, in the case of non-current liabilities included within disposal groups) on the face of the balance sheet and are stated at the lower of carrying amount immediately before initial classification and fair value less costs to sell and are not depreciated. Any cumulative income or expense recognised directly in equity relating to the non-current asset (or disposal group) classified as held for sale is presented separately. If the Group has classified an asset (or disposal group) as held for sale but subsequently the criteria for classification is no longer met, the Group ceases to classify the asset (or disposal group) as held for sale. The Group measures a non-current asset that ceases to be classified as held for sale (or ceases to be included in a disposal group classified as held for sale) at the lower of: (a) its carrying amount before the asset (or disposal group) was classified as held for sale, adjusted for any depreciation, amortisation or revaluations that would have been recognised had the asset (or disposal group) not been classified as held for sale; and (b) its recoverable amount at the date of the subsequent decision not to sell. 5. ADOPTION OF NEW AND REVISED FINANCIAL REPORTING STANDARDS 5.1 New and revised FRSs adopted On 1 January 2007, the Group and the Company adopted the following new and revised FRSs which are mandatory for annual periods beginning on or after 1 January 2007: * FRS 117 * FRS 124 # Amendment to FRS 1192004 Leases Related Party Disclosures Employee Benefits ­ Actuarial Gains and Losses, Group Plans and Disclosures

#

* Effective for annual periods beginning on or after 1 October 2006 Effective for annual periods beginning on or after 1 January 2007 The adoption of FRS 124 has not resulted in significant changes in accounting policies of the Group.

Amendment to FRS 1192004 is not relevant to the Group. The effect of adopting FRS 117 is set out in Note 6.2.

Advance Synergy Capital Berhad | 51 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

5. ADOPTION OF NEW AND REVISED FINANCIAL REPORTING STANDARDS (continued) 5.2 New FRSs and amendments to FRS not adopted The Group has not adopted FRS 139 Financial Instruments: Recognition and Measurement and the consequential amendments resulting from FRS 139 which effective date is deferred to a date to be announced by the Malaysian Accounting Standards Board ("MASB"). FRS 139 establishes the principles for the recognition and measurement of financial assets and financial liabilities including circumstances under which hedge accounting is permitted. By virtue of the exemption provided under paragraph 103AB of FRS 139, the impact of applying FRS 139 on the Group's and the Company's financial statements upon first adoption of the standard as required by paragraph 30(b) of FRS 108 is not disclosed. The Group has also not adopted the following FRSs and amendments that have been issued as at the date of authorisation of these financial statements but are not yet effective for the Group. The Directors do not anticipate that the application of these standards when they are effective will have a material impact on the results and the financial position of the Group: (a) FRSs which are effective for annual periods beginning on or after 1 July 2007 FRS 107 FRS 112 FRS 118 FRS 134 FRS 137 Cash Flow Statements Income Taxes Revenue Interim Financial Reporting Provisions, Contingent Liabilities and Contingent Assets

These amendments align the MASB's FRS with the equivalent International Accounting Standards ("IAS"), both in terms of form and content. The adoption of these standards will only impact the form and content of disclosures presented in the financial statements. The Group will apply this amendment for its annual periods beginning 1 January 2008. (b) Framework for the Preparation and Presentation of Financial Statements ("Framework") which is effective for annual periods beginning on or after 1 July 2007 The Framework sets out the concepts that underlie the preparation and presentation of financial statements for external users. It is not an MASB approved accounting standard and hence does not define standards for any particular measurement or disclosure issue. The Group will apply this Framework for its annual periods beginning 1 January 2008. (c) The following FRSs are not relevant to the Group's operations: FRS 6 FRS 111 FRS 120 Exploration for and Evaluation of Mineral Resources Construction Contracts Accounting for Government Grants and Disclosure of Government Assistance

(d) Amendments and Interpretation Committee ("IC") Interpretations which are effective for annual periods beginning on or after 1 July 2007 Amendment to FRS 121 The Effects of Changes in Foreign Exchange Rates ­ Net Investment in a Foreign Operation This amendment results in exchange differences arising from a monetary item that forms part of the Group's net investment in a foreign operation to be recognised in equity irrespective of the currency in which the monetary item is denominated and if whether the monetary item results from a transaction with the Company or any of its subsidiaries. Previously, exchange differences arising from such transactions between the Company and its subsidiaries would be accounted for in the income statement or in equity depending on the currency of the monetary item. The Group will apply this amendment from its annual periods beginning 1 January 2008.

| 52 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

5. ADOPTION OF NEW AND REVISED FINANCIAL REPORTING STANDARDS (continued) 5.2 New FRSs and amendments to FRS not adopted (continued) IC Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities This interpretation addresses the effects of events that changes the measurement of an existing decommissioning, restoration or similar liability, namely a change in the estimated outflow of resources embodying economic benefits required to settle the obligation, a change in the current market-based discount rate as defined in paragraph 48 of FRS 1372004 and an increase that reflects the passage of time. The Group will apply this interpretation from its annual periods beginning 1 January 2008. This interpretation applies to transactions in which goods or services are received, including transactions in which the entity cannot identify specifically some or all of the goods or services received. Where the fair value of the share-based payment is in excess of the identifiable goods or services received, it is presumed that additional goods or services have been or will be received. The whole fair value of the share-based payment will be charged to income statement. The Group will apply this interpretation from its annual periods beginning 1 January 2008.

IC Interpretation 8 Scope of FRS 2

(e) The following IC Interpretations are not relevant to the Group's operations: IC Interpretation 2 IC Interpretation 5 IC Interpretation 6 IC Interpretation 7 6. Members' Shares in Co-operative Entities and Similar Instruments Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds Liabilities arising from Participating in a Specific Market ­ Waste Electrical and Electronic Equipment Applying the Restatement Approach under FRS 1292004 Financial Reporting in Hyperinflationary Economies

EFFECTS OF ADOPTION OF NEW AND REVISED STANDARDS 6.1 FRS 117 Leases (a) Leasehold land held for own use Under FRS 117, leasehold land held for own use is now classified as operating lease. The up-front payment made for the leasehold land represents prepaid lease payments that are amortised on a straight line basis over the lease term. Prior to 1 January 2007, leasehold land held for own use was classified as property, plant and equipment and was stated at cost less accumulated depreciation and accumulated impairment losses. In accordance with the transitional provisions of FRS 117, the unamortised amount of leasehold land as at 1 January 2007 which was stated at cost less accumulated amortisation is retained as the surrogate carrying amount of prepaid lease payments. The reclassification of leasehold land as prepaid lease payments has been accounted for retrospectively. The effects on the consolidated balance sheet as at 31 December 2007 are set out in Note 6.2. There were no effects on the consolidated income statement for the year ended 31 December 2007 and the Company's financial statements. (b) Initial direct costs FRS 117 requires initial direct costs incurred by a lessor in an operating lease arrangement in negotiating and arranging leases to be added to the carrying amount of the leased asset and be recognised as an expense over the lease term on the same basis as the lease income. Prior to 1 January 2007 such costs were recognised in the income statement immediately. This change in accounting policy is to be applied retrospectively. In general, the Group does not incur significant initial direct costs on negotiating and arranging lease and, as a result, this change in accounting policy does not materially affect the financial statements of the Group and of the Company.

Advance Synergy Capital Berhad | 53 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

6. EFFECTS OF ADOPTION OF NEW AND REVISED STANDARDS (continued) 6.2 Summary of effects of adopting FRS 117 Leases on the current year's financial statements Effects on consolidated balance sheet as at 31 December 2007: Increase/(Decrease) FRS 117 RM'000 (984) 984

Group Property, plant and equipment Prepaid lease payments for land 7. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates, assumptions concerning the future and judgments are made in the preparation of the financial statements. They affect the application of the Group's accounting policies, reported amount of assets, liabilities, income and expenses, and disclosures made. These estimates and assumptions are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. 7.1 Changes in estimates FRS 116 Property, Plant and Equipment requires the review of the residual value and remaining useful life of an item of property, plant and equipment at least at each year end. The Group revised the residual values of certain buses in operation with effect from 1 October 2007. The revisions were accounted for prospectively as a change in accounting estimate and as a result, the depreciation charges of the Group for the current year have been reduced by RM685,575. 7.2 Key sources of estimation uncertainty The following are key assumptions concerning the future and other key sources of estimation at the balance sheet date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. (a) Allowance for doubtful debts The policy for assessing allowance for doubtful debts of the receivables of the Group is based on the ongoing evaluation of the collectability and aging analysis of the receivables and on the management's judgement. A considerable amount of judgement is required in assessing the ultimate realisation of these receivables, including creditworthiness and the past collection history of each receivable. If the financial conditions of the receivables have deteriorated, resulting in impairment of their ability to make payments, additional allowance may be required. The Group has exposure to credit risks relating to recovery of trade and other receivables. Significant judgements are involved in estimating the impairment of such debts. In determining the amounts of impairment of certain specific debts, the Directors have considered certain factors relating to the financial position of the receivables, estimated value of collaterals and business recovery plan, as further disclosed in Note 13(v). The Group recognises the impairment on the receivables based on Directors estimates and the final outcome may be significantly different from the amounts that are initially recognised. (b) Impairment of property, plant and equipment Property, plant and equipment are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment loss is recognised for the amount by which the carrying amount of the assets exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less cost to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest level for which there is separately identifiable cash flows. The Directors believe that the estimates of the recoverable amounts are reasonable. However, changes in estimates of such recoverable amount would affect future operating results.

| 54 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

7. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued) 7.2 Key sources of estimation uncertainty (continued) (c) Depreciation of property, plant and equipment The cost of property, plant and equipment is depreciated on a straight line basis over the assets' useful lives. Management estimates the useful lives based on common life expectancies applied in the industry as disclosed in Note 4.3. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, and therefore future depreciation charges could be revised. (d) Impairment of investment in subsidiaries The Group evaluates the extent to which the fair value of an investment is less than its cost by considering the financial health of and near term business outlook for the investment such as industry and sector performance, changes in technology and operational and financing cash flows of the investment. The recoverable amount of this investment is arrived at based on the value in use of the subsidiaries. (e) Impairment of investment in associates and investment securities The investment in associates and investment securities are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with the accounting policies stated in Notes 4.5.2 and 4.5.3 respectively. The recoverable amounts of quoted investments have been determined based on their fair value less costs to sell, while the recoverable amounts of unquoted investments in associates have been determined based on the value in use of the associates. (f) Income taxes Significant judgement is required in determining the capital allowances and deductibility of certain expenses during the estimation of the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities based on estimates of whether additional taxes will be due. Where the final outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provision in the period in which such determination is made. 8. PROPERTY, PLANT AND EQUIPMENT Depreciation charge for the year RM'000 (59) (170) (1,331) (436) (268) (4,132) (6,396) Impairment Balance loss for as at the year 31.12.2007 RM'000 RM'000 (7,339) (201) (7,540) 43,468 2,736 323 3,680 3,049 367 1,976 3,014 58,613

Group

Carrying amount Freehold land Buildings Plant and machinery Furniture, fittings and equipment Renovations Motor vehicles Buses -in operation -under refurbishment Construction work-in-progress

Balance as at Written Reclassi1.1.2007 Additions Disposals off fication RM'000 RM'000 RM'000 RM'000 RM'000 43,403 2,795 485 4,282 3,421 635 13,532 632 2,994 72,179 65 11 958 178 472 20 1,704 (3) (114) (371) (120) (608) (112) (117) (229) (3) 3 (186) (311) (497)

Advance Synergy Capital Berhad | 55 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

8. PROPERTY, PLANT AND EQUIPMENT (continued) [------------------------- At 31.12.2007 ------------------------] Group Accumulated Cost depreciation RM'000 RM'000 43,468 2,973 859 7,427 4,137 1,771 36,186 210 3,014 100,045 (237) (536) (3,747) (1,088) (1,404) (15,900) (22,912) Accumulated impairment Carrying losses amount RM'000 RM'000 (18,310) (210) (18,520) 43,468 2,736 323 3,680 3,049 367 1,976 3,014 58,613

Freehold land Buildings Plant and machinery Furniture, fittings and equipment Renovations Motor vehicles Buses - in operation - under refurbishment Construction work-in-progress

Group

Balance as at Written Reclassi1.1.2006 Additions Disposals off fication RM'000 RM'000 RM'000 RM'000 RM'000 (restated)

Depreciation charge for the year RM'000 (restated)

Impairment Balance loss for as at the year 31.12.2006 RM'000 RM'000 (restated)

Carrying amount 43,170 Freehold land 2,854 Buildings 617 Plant and machinery Furniture, fittings 3,011 and equipment 3,434 Renovations 983 Motor vehicles Buses 18,496 -in operation -under refurbishment 10,608 Construction 605 work-in-progress 83,778 233 35 2,310 402 3,201 3,034 2,389 11,604 (18) (18) (9) (9) 12,224 (12,224) (59 ) (167 ) (1,030 ) (415 ) (330 ) (5,841 ) (7,842 ) (14,548 ) (786 ) (15,334 ) 43,403 2,795 485 4,282 3,421 635 13,532 632 2,994 72,179

| 56 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

8. PROPERTY, PLANT AND EQUIPMENT (continued) [------------------------- At 31.12.2006 ------------------------] Accumulated depreciation RM'000 (restated) (178 ) (367 ) (2,492 ) (721 ) (1,232 ) (13,409 ) (18,399 ) Accumulated impairment Carrying losses amount RM'000 RM'000 (restated) (14,548) (786) (15,334) 43,403 2,795 485 4,282 3,421 635 13,532 632 2,994 72,179

Group

Cost RM'000 (restated) 43,403 2,973 852 6,774 4,142 1,867 41,489 1,418 2,994 105,912 Balance as at 1.1.2007 RM'000 88 365 453

Freehold land Buildings Plant and machinery Furniture, fittings and equipment Renovations Motor vehicles Buses - in operation - under refurbishment Construction work-in-progress

Company Carrying amount Furniture, fittings and equipment Motor vehicles

Additions RM'000 2 2

Depreciation Balance charge for as at the year 31.12.2007 RM'000 RM'000 (13 ) (120 ) (133 ) 77 245 322

[------------- At 31.12.2007 --------------] Company Cost RM'000 191 802 993 Balance as at 1.1.2006 RM'000 Accumulated Carrying depreciation amount RM'000 RM'000 (114) (557) (671) 77 245 322

Furniture, fittings and equipment Motor vehicles

Company

Additions RM'000

Written off RM'000

Depreciation Balance charge for as at the year 31.12.2006 RM'000 RM'000

Carrying amount Furniture, fittings and equipment Motor vehicles 91 485 576 13 13 (4) (4) (12 ) (120 ) (132 ) 88 365 453

Advance Synergy Capital Berhad | 57 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

8. PROPERTY, PLANT AND EQUIPMENT (continued) [------------- At 31.12.2006 --------------] Company Cost RM'000 189 802 991 (a) Accumulated Carrying depreciation amount RM'000 RM'000 (101 ) (437 ) (538 ) 88 365 453

Furniture, fittings and equipment Motor vehicles

Construction work-in-progress are construction work being carried out to earn rental in the future. Upon completion of the construction work, they will be reclassified to respective category in property, plant and equipment and would be depreciated accordingly. Freehold land of the Group of RM16,707,464 (2006: RM16,642,106) has been charged to a bank for term loan granted to the Group. Included in property, plant and equipment of the Group are motor vehicles with net book value of RM29,000 (2006: RM40,000) held under hire purchase arrangement. The management of Triton Express Sdn Bhd and Triton Commuter Sdn Bhd, being the subsidiaries included within the bus transportation service segment, carried out a review of the recoverable amounts of their property, plant and equipment during the current financial year due to the deterioration in the market value for used buses. The review led to the recognition of an impairment loss for buses amounting to RM7,540,000 (2006: RM15,334,000) in the income statements (included in other expenses) as disclosed in Note 26 to the financial statements. The recoverable amounts of the buses are based on the management's estimated market value. Term loan interest capitalised during the financial year under freehold land of the Group amounted to RM65,000 (2006: RM233,000). The rate of interest capitalised is 6.5% (2006: 6.5%) per annum.

(b) (c) (d)

(e)

9.

PREPAID LEASE PAYMENTS FOR LAND Group Carrying amount Leasehold land Balance as at 1.1.2007 RM'000 1,001 Amortisation Balance charge for as at the year 31.12.2007 RM'000 RM'000 (17) 984

[----------------- At 31.12.2007 -----------------] Group Accumulated amortisation RM'000 (57) Carrying amount RM'000 984

Cost RM'000 1,001

Leasehold land

| 58 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

9. PREPAID LEASE PAYMENTS FOR LAND (continued) Group Carrying amount Balance Amortisation as at charge for 1.1.2006 the year RM'000 RM'000 (restated ) (restated ) 1,019 (18 ) Balance as at 31.12.2006 RM'000 (restated ) 1,001

Leasehold land

Group

[----------------- At 31.12.2006 -----------------] Accumulated Carrying Cost amortisation amount RM'000 RM'000 RM'000 (restated ) (restated ) (restated ) 1,041 (40 ) 1,001

Leasehold land 10. INVESTMENT IN SUBSIDIARIES

Company Company Unquoted shares ­ at cost Less: Impairment losses 2007 RM'000 16,414 (11,214 ) 5,200 2006 RM'000 16,414 (11,214) 5,200

(a) The details of the subsidiaries, which are incorporated in Malaysia unless otherwise mentioned, are as follows: Group Effective Interest Name of Company ASC Equities Sdn Bhd ASC Credit Sdn Bhd Triton-K Sdn Bhd Triton Khidmat Sdn Bhd Triton Engineering Sdn Bhd Triton Commuter Sdn Bhd Triton Express Sdn Bhd AESBI Power Systems Sdn Bhd * Triton Express (S) Pte Ltd (Incorporated in Singapore) Triton Feeder Services Sdn Bhd Triton Terminal Management Sdn Bhd Triton Excursions Sdn Bhd Triton Synergy Holdings Sdn Bhd Triton Express Holdings Sdn Bhd Quality Bus & Coach (M) Sdn Bhd Transit Vision Holdings Sdn Bhd * Subsidiary not audited by BDO Binder. 2007 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 61% 70% 2006 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 61% 70% Principal Activities Investment holding and venture capital Credit and leasing Management services Provision of manpower management services Provision of bus repair and services Provision of stage bus services Provision of express bus service Property investment and management services Provision of express bus service Dormant Dormant Dormant Investment holding Dormant Design, building and fabrication of coaches Production and marketing of electronic and visual media

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NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

10. INVESTMENT IN SUBSIDIARIES (continued) (b) The management of the Company carried out a review of the recoverable amount of its investment in subsidiaries due to the capital deficiency position of the subsidiaries. In the previous financial year, the review led to the recognition of an impairment loss of RM9,214,000 in the income statements (included in other expenses) as disclosed in Note 26 to the financial statements. However, during the current financial year, there was no additional impairment loss required to be made. 11. INVESTMENT IN ASSOCIATES 2007 RM'000 At cost: Quoted shares Less: Impairment losses Unquoted shares Group's share of post acquisition reserves 12,758 (7,458) 5,300 73,319 78,619 29,009 107,628 Market value of quoted shares The Group's investments in associates are represented by: 5,300 Group 2006 RM'000 12,758 (7,458) 5,300 73,320 78,620 34,112 112,732 5,300 2007 RM'000 Company 2006 RM'000 12,758 (7,458) 5,300 73,320 78,620 78,620 5,300

12,758 (7,458 ) 5,300 73,319 78,619 78,619 5,300

2007 RM'000 65,192 42,436 107,628

2006 RM'000 70,296 42,436 112,732

Group's share of net assets Premium on acquisition

(a)

The details of the associates which are incorporated in Malaysia, unless otherwise mentioned, are as follows: Group Effective Interest 2006 2007 20% 20% 29% 29% 49% 50% 20% 20% 29% 29% 49% 50%

Name of Company * Southern Investment Bank Berhad * Kumpulan Powernet Berhad iSynergy Sdn Bhd Synergy Cards Sdn Bhd * ACE Synergy Insurance Berhad * Hicom Australia Pty Ltd (Incorporated in Australia) * Associates not audited by BDO Binder. (b)

Principal Activities Merchant banking business Investment holding Provision of payment related products and services Provision of designated payment instruments and products Underwriting of general insurance business Design, building and fabrication of coaches

The management recognised an impairment loss of RM464 (2006: RM5,458,000) in the income statement (included in other expenses) on its quoted investment in an associate as the carrying value of the quoted investment in the associate exceeded its recoverable amount as at the balance sheet date. The recoverable amount of the quoted investment in associate is determined based on their market value.

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NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

11. INVESTMENT IN ASSOCIATES (continued) (c) The summarised financial information of the associates is as follows: Results Revenue Profit for the financial year Assets and liabilities Total assets Total liabilities 497,515 300,618 711,951 504,300 203,966 7,970 217,776 5,509 2007 RM'000 2006 RM'000

The financial statements of the associates are coterminous with those of the Group, except for Kumpulan Powernet Berhad ("KPB") which has a financial year end of 30 April. For the purpose of applying the equity method of accounting, the unaudited financial statements of KPB for the financial year ended 31 January 2008 have been used and appropriate adjustments have been made for the effects of significant transactions between 31 December 2007 and 31 January 2008. 12. INVESTMENT SECURITIES Group 2007 RM'000 Quoted Securities In Malaysia: Shares stated at cost Less : Allowance for diminution in value Unquoted Securities Preference shares in an associate Unquoted Islamic Securities Outside Malaysia: Shares stated at cost 14,809 22,809 35,026 12,217 30,809 38,809 46,686 7,877 8,000 20,217 12,217 8,000 15,877 7,877 20,270 (8,053 ) 12,217 8,000 20,270 (12,393 ) 7,877 8,000 20,270 (8,053) 12,217 8,000 20,270 (12,393) 7,877 8,000 2006 RM'000 Company 2007 RM'000 2006 RM'000

Market value: Quoted shares in Malaysia

The management recognised a reversal of allowance for diminution in value of RM4,340,000 in the income statement on its quoted securities as the recoverable amount of certain quoted securities exceeded its carrying value at the balance sheet date. The recoverable amounts of the quoted investments are determined based on their market values.

Advance Synergy Capital Berhad | 61 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

13. SALE AND LEASEBACK, FACTORING AND BRIDGING LOAN RECEIVABLES Group 2007 RM'000 Minimum lease payments: - Sale and leaseback receivables Unearned finance income Net investment in finance leases Allowance for uncollectible finance income Allowance for uncollectible minimum lease payments Bridging loan receivables Factoring receivables Less: Allowance for doubtful debts 72,703 409 (6,778) 66,334 Total receivables Current Non-current 66,334 409 65,925 66,334 (i) The minimum lease payments at the balance sheet date: Not later than one year Later than one year and not later than five years (ii) The net investment in finance leases at the balance sheet date: Not later than one year Later than one year and not later than five years 2006 RM'000 13,116 (921) 12,195 (1,853) (883) 9,459 48,497 8,484 (3,121) 53,860 63,319 60,041 3,278 63,319 9,408 3,708 13,116 8,487 3,708 12,195

(iii) During the financial year, the sale and leaseback receivable and a significant portion of the factoring receivables have been restructured into bridging loan receivables which will mature in the year 2009 and repayable in one lump sum. (iv) The factoring and bridging loan receivables are owed by the ultimate holding and related companies of the Group, as well as one of the associates. (v) The Directors are of the opinion that the above amounts are recoverable based on the following factors: (a) The amounts are secured against unquoted shares in a subsidiary of the ultimate holding company which in total represents approximately RM40 million in the net assets of that subsidiary; (b) The ultimate holding company, Advance Synergy Berhad ("ASB"), has recently completed a corporate exercise which, among others, involved a rights issue of irredeemable convertible unsecured loan stocks with proceeds of approximately RM83 million. This has significantly improved the financial position of ASB and its ability to provide financial support to those related companies included in the above receivables to enable them to continue their businesses as going concern and to repay their loans to the Group; and

| 62 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

13. SALE AND LEASEBACK, FACTORING AND BRIDGING LOAN RECEIVABLES (continued) (c) 14. The associate is in the process of commencing a new business plan which is expected to generate positive cash flows in five (5) years' time. Group 2007 RM'000 940 2,195 3,135 15. RECEIVABLES 2007 RM'000 Amount owing by ultimate holding company (Note 15.1) Amounts owing by subsidiaries (Note 15.2) Less: Allowance for doubtful debts Amounts owing by related companies (Note 15.3) Less : Allowance for doubtful debts 28,987 1,954 (25) 1,929 Amounts owing by associates Less: Allowance for doubtful debts 14,585 (3,107) 11,478 Trade receivables (Note 15.4) less: Allowance for doubtful debts 2,251 (659) 1,592 Other receivables, deposits and prepayments (Note 15.5) Less: Allowance for doubtful debts 10,686 (57) 10,629 54,615 Group 2006 RM'000 28,792 1,996 1,996 6,427 (3,095) 3,332 1,366 (102) 1,264 10,098 (57) 10,041 45,425 2006 RM'000 3,778 1,052 4,830

INVENTORIES

At cost Spare parts and consumables Work-in-progress

Company 2007 RM'000 28,451 226,644 (139,210 ) 87,434 1,174 (25 ) 1,149 13,839 (3,107 ) 10,732 9,817 (57 ) 9,760 137,526 2006 RM'000 28,459 216,725 (129,297) 87,428 1,238 1,238 6,117 (3,095) 3,022 9,630 (57) 9,573 129,720

15.1 15.2

Amount owing by the ultimate holding company, Advance Synergy Berhad ("ASB"), represents advances which are unsecured, bears interest at 3% (2006: 3%) per annum and payable upon demand. The amounts owing by subsidiaries represent advances which are unsecured and payable upon demand. Interest is charged on certain amounts owing by subsidiaries amounted to RM12,960,925 (2006 : RM13,310,890) at rates ranging from 3% to 7% (2006: 3% to 7%) per annum.

Advance Synergy Capital Berhad | 63 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

15. RECEIVABLES (continued) 15.3 15.4 15.5 The amounts owing by related companies represent advances which are unsecured, interest free and payable upon demand. The credit term offered by the Group in respect of trade receivables range from 60 to 90 days from date of invoice. Included in other receivables is an amount of RM9,522,109 (2006: RM9,241,034) which is unsecured and bears interest at 3% (2006: 3%) per annum. This amount arose from loan to a former wholly-owned subsidiary to finance the purchase of land. The amount of receivable is expected to be fully settled in 2008. Group and Company 2007 RM'000 1,449 1,571 2006 RM'000 2,753 2,753

16.

MARKETABLE SECURITIES

Quoted securities: Shares in Malaysia Market value of shares quoted in Malaysia 17. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE

A portion of Triton Commuter Sdn Bhd is presented as non-current assets held for sale following the Group's commitment to a plan on 3 December 2007 to dispose of that portion due to excess capacity. Efforts to sell the non-current assets have commenced, and a sale is expected by 30 June 2008. As at 31 December 2007, the assets classified as held for sale are as follows: Group 2007 RM'000 497 Group and Company 2007 Number of ordinary shares '000 1,000,000 156,861 Number of ordinary shares '000 1,000,000 156,861 2006

Property, plant and equipment 18. SHARE CAPITAL

Ordinary shares of RM1.00 each: Authorised Issued and fully paid-up

RM'000 1,000,000 156,861

RM'000 1,000,000 156,861

(a) Out of the total 156,860,835 issued and fully paid-up ordinary shares, 5,949,735 are held as treasury shares. At the balance sheet date, the number of outstanding shares in issue and fully paid-up is 150,911,100 ordinary shares of RM1.00 each. (b) The holders of ordinary shares are entitled to receive dividends as and when declared by the Company and are entitled to one vote per share at meetings of the Company. All ordinary shares rank pari passu with regard to the Company's residual assets.

| 64 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

19. RESERVES 2007 RM'000 Non-distributable: Share premium Treasury shares, at cost 221,962 (3,104) 218,858 Accumulated losses (51,373) 167,485 20. BORROWINGS Note Non-current liabilities Term loan (secured) Hire purchase creditor Current liabilities Term loan (secured) Hire purchase creditor Short term borrowing Total borrowings Term loan (secured) Hire purchase creditor Short term borrowing 2007 RM'000 4,364 17 4,381 1,637 10 1,647 21 22 23 6,001 27 6,028 Information on financial risks is disclosed in Note 35. 21. TERM LOAN (SECURED) 2007 RM'000 Term loan, repayable by 60 equal monthly instalments of RM156,530 each commencing 20 September 2005 Analysis of term loan liability: Not later than one year Later than one year and not later than two years Later than two years and not later than five years Less: Amount due within twelve months (Note 20) Amount due after twelve months 6,001 1,637 1,746 2,618 6,001 (1,637) 4,364 Group 2006 RM'000 6,598 1,527 1,636 3,435 6,598 (1,527) 5,071 221,962 (3,104) 218,858 (50,753) 168,105 221,962 (3,104 ) 218,858 (134,495 ) 84,363 221,962 (3,104) 218,858 (142,223) 76,635 Group 2006 RM'000 Company 2007 RM'000 2006 RM'000

The movements in reserves are shown in the Statements of Changes in Equity. Group 2006 RM'000 5,071 25 5,096 1,527 10 16,000 17,537 6,598 35 16,000 22,633 Company 2007 RM'000 2006 RM'000 -

The term loan is borrowed by a subsidiary and is secured by way of a first fixed charge over the freehold land of the Group with carrying amount of RM16,707,464 (2006: RM16,642,106) (Note 8 (b)).

Advance Synergy Capital Berhad | 65 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

22. HIRE PURCHASE CREDITOR Group 2007 RM'000 Minimum hire purchase payments: - Not later than one year - Later than one year and not later than five years Total minimum hire purchase payments Less: Future finance charges Present value of hire purchase liabilities Repayable as follows: Current liabilities Not later than one year Non-current liabilities Later than one year and not later than five years Less: Amount due within twelve months (Note 20) Amount due after twelve months 23. SHORT TERM BORROWING The short term loan is borrowed by a subsidiary and is secured by certain unquoted Islamic Securities outside Malaysia amounted to RM16 million ("pledged securities"). The short term loan is secured and bears interest at 8.0% per annum. During the year, the pledged securities had been forfeited and the RM16 million short term borrowing had been fully settled by the Group. 24. PAYABLES 2007 RM'000 Trade payables (Note 24.1) Amounts owing to subsidiaries (Note 24.2) Amounts owing to related companies (Note 24.3) Other payables and accruals Amount owing to a Director 795 19 1,945 2,759 Group 2006 RM'000 3,790 12 3,282 1 7,085 Company 2007 RM'000 5,851 8 479 6,338 2006 RM'000 245 544 789 10 17 27 (10 ) 17 10 25 35 (10 ) 25 11 18 29 (2 ) 27 11 29 40 (5 ) 35 2006 RM'000

24.1 The credit terms available to the Group in respect of trade payables range from 30 to 90 days from date of invoice. 24.2 The amounts owing to subsidiaries represent advances which are unsecured, interest-free and payable upon demand. 24.3 The amounts owing to related companies represent advances which are unsecured, interest-free and payable upon demand.

| 66 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

25. REVENUE 2007 RM'000 Bus transportation services Interest and financing income Rental income Gross dividend income 10,510 3,422 871 5,713 20,516 26. (LOSS)/PROFIT BEFORE TAX Note 2007 RM'000 Group 2006 RM'000 Group 2006 RM'000 20,196 3,225 861 2,975 27,257 Company 2007 RM'000 864 14,747 15,611 2006 RM'000 1,313 14,854 16,167

(Loss)/Profit before tax is arrived at: After charging: Allowance for doubtful debts Amortisation of prepaid lease payments for land Auditors' remuneration: - Statutory - holding company - subsidiaries - under/(over)provision in prior years - Non-statutory - holding company Depreciation of property, plant and equipment Directors' remuneration: - fees - other emoluments Impairment loss on: - investment in associates - investment in quoted securities - property, plant and equipment - investment in subsidiaries Interest expenses: - hire purchase - term loan Inventories written off Property, plant and equipment write off Rental expenses: - equipment - premises - land And crediting: Allowance for doubtful debts no longer required Gross dividend income from: - unquoted securities outside Malaysia - quoted securities in Malaysia - associate

Company 2006 2007 RM'000 RM'000

608 9 17 76 95 12 4 8 6,396 172 759 7,540 3 286 1,299 8 229 28 187 24

461 18 68 91 (23) 4 7,842 172 1,127 5,458 12,393 15,334 2 226 9 48 620 37

9,950 76 8 4 133 172 474 1 77 -

129,664 68 (20) 4 132 172 474 5,458 12,393 9,214 4 1 -

8

13 5,666 47 -

2,821 154 -

47 14,700

154 14,700

Advance Synergy Capital Berhad | 67 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

26. (LOSS)/PROFIT BEFORE TAX (continued) 2007 RM'000 106 545 115 3,005 302 875 3 12 16 4,340 345 Group Note Gain on disposal of: - unquoted securities - property, plant and equipment - marketable securities Interest income: - short term deposits - sale and leaseback, factoring and bridging loan receivables - others Rental income Net foreign exchange gain Write back of impairment loss on: - investment in quoted securities - marketable securities 2006 RM'000 131 32 298 93 2,367 765 861 390 2007 RM'000 545 115 749 4,340 345 Company 2006 RM'000 131 298 93 1,220 390

The estimated monetary value of other benefits, not included in the above, received by the Directors of the Company and its subsidiaries were RM88,406 (2006: RM76,400) for the Company and for the Group. 27. TAX (INCOME)/EXPENSES Group 2007 RM'000 Current tax expense based on (loss)/profit for the financial year: - Malaysian income tax - Over provision in prior years 2006 RM'000 2007 RM'000 Company 2006 RM'000

171 (2,262 ) (2,091 )

(537 ) (537 )

4,140 (2,262 ) 1,878

3,759 (180) 3,579

The Malaysian income tax is calculated at the statutory tax rate of 27% (2006: 28%) of the estimated taxable profit for the fiscal year. The Malaysian statutory tax rate has been reduced to 27% from the previous year's rate of 28% for the fiscal year of assessment 2007, to 26% for fiscal year of assessment 2008, and to 25% for fiscal year of assessment 2009 onwards. The computation of deferred tax as at 31 December 2007 has reflected these changes.

| 68 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

27. TAX (INCOME)/EXPENSES (continued) The numerical reconciliation between the average effective tax rate and the applicable tax rate of the Group and of the Company are as follows: Group Company 2007 % Applicable tax rate Tax effect in respect of: Non-allowable expenses Non-taxable income Utilisation of previously unrecognised tax losses and capital allowances Unutilised tax losses and capital allowances not recognised Share of profit of associates Effect of changes in tax rates on opening balance of deferred tax Tax exempt income Over provision in prior years Average effective tax rate 28. DEFERRED TAX The amounts of temporary differences for which no deferred tax assets have been recognised in the balance sheet are as follows: Group Company 2007 RM'000 Unabsorbed tax losses Unutilised capital allowances 68,307 44,196 112,503 2006 RM'000 62,043 31,431 93,474 2007 RM'000 2006 RM'000 (27) 155 (47) (8) 197 (208) (56) 6 (83) (77) 2006 % (28 ) 28 (1 ) 15 (11 ) (1 ) (2 ) (1 ) (1 ) 2007 % 27 29 (13 ) 43 (24 ) 19 2006 % (28 ) 32 (1 ) 3 3

Deferred tax assets have not been recognised in respect of these items as it is not probable that taxable profits of certain subsidiaries will be available against which the deductible temporary differences can be utilised.

Advance Synergy Capital Berhad | 69 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

29. LOSS PER ORDINARY SHARE (i) Basic Basic loss per ordinary share for the financial year is calculated by dividing the loss for the financial year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year. Group 2007 2006 RM'000 RM'000 Loss attributable to equity holders of the Company Weighted average number of ordinary shares in issue Basic loss per ordinary share (sen) (ii) Diluted The diluted loss per ordinary share for the financial year has not been disclosed as their effects on the basic loss per ordinary share are anti-dilutive. 30. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT During the financial year, the Group and the Company made the following cash payments to purchase property, plant and equipment: Group 2007 RM'000 Purchase of property, plant and equipment (Note 8) Capitalisation of term loan interest Cash payments on purchase of property, plant and equipment 31. CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the cash flow statements as at the end of the financial year comprise the following balance sheet amounts: Group 2007 RM'000 Short term deposits Cash and bank balances 3,005 773 3,778 2006 RM'000 849 3,388 4,237 2007 RM'000 3,005 151 3,156 Company 2006 RM'000 849 450 1,299 1,704 (65 ) 1,639 2006 RM'000 11,604 (233) 11,371 2007 RM'000 2 2 Company 2006 RM'000 13 13 620 150,911 0.41 48,802 150,931 32.33

| 70 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

32. SEGMENT REPORTING The Group's operations comprise the following business segments: Investment holding Bus transportation services Credit and leasing (i) Business segment 2007 Investment holding RM'000 7,000 15,577 22,577 9,301 (286 ) 5,627 Bus transportation services RM'000 10,511 6,120 16,631 (20,339) (3) Credit and leasing RM'000 3,005 3,005 2,989 Eliminations RM'000 (21,697) (21,697) : Investment income and providing full corporate and financial support to the Group : Provision of stage bus, express bus and bus maintenance, fabrication and related services : Provision of credit and leasing facilities

Total RM'000 20,516 20,516 (8,049) (289) 5,627 (2,711) 2,091 (620)

Revenue Sales to external customers Inter-segment sales Total Results Segment results Finance costs Share of profit of associates Loss before tax Tax income Loss for the financial year Assets Segment assets Investment in associates Non-current assets classified as held for sale

146,940 107,628 -

11,734 497

66,334 -

-

225,008 107,628 497 333,133

Liabilities Segment liabilities Other segment information Capital expenditure Depreciation of property, plant and equipment Amortisation of prepaid lease payments for land Impairment loss on property, plant and equipment Write back of impairment loss on: - investment in quoted securities - marketable securities Non-cash income Non-cash expenses other than depreciation, amortisation and impairment

7,182 1,158 920 4,340 345 71

1,597 546 5,476 17 7,540 13 2,065

8 -

-

8,787 1,704 6,396 17 7,540 4,340 345 13 2,136

Advance Synergy Capital Berhad | 71 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

32. SEGMENT REPORTING (continued) (i) Business segments (continued) 2006 Investment holding RM'000 4,694 15,237 19,931 (14,770 ) (228 ) 5,928 Bus transportation services RM'000 20,196 17,199 37,395 (42,623) Credit and leasing RM'000 2,367 2,367 2,354 Eliminations RM'000 (32,436) (32,436) -

Revenue Sales to external customers Inter-segment sales Total Results Segment results Finance costs Share of profit of associates Loss before tax Tax income Loss for the financial year Assets Segment assets Investment in associates

Total RM'000 27,257 27,257 (55,039) (228) 5,928 (49,339) 537 (48,802)

148,509 112,732

26,516 -

66,927 -

-

241,952 112,732 354,684

Liabilities Segment liabilities Other segment information Capital expenditure Depreciation of property, plant and equipment Amortisation of prepaid lease payments for land Impairment loss on: - investment in associates - property, plant and equipment - investment in quoted securities Non-cash expenses other than depreciation, amortisation and impairment

24,254 3,747 723 5,458 12,393 370

5,449 7,857 7,119 18 15,334 100

15 -

-

29,718 11,604 7,842 18 5,458 15,334 12,393 470

(ii) Geographical segments The Group's activity are predominantly carried out in Malaysia, with operations outside Malaysia contributing less than 10% of the Group's revenue, total assets and capital expenditure. Accordingly, no information on the Group's operations by geographical segments has been provided.

| 72 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

33. COMMITMENTS Capital commitments in respect of: 2007 RM'000 87 Group 2006 RM'000 50 2007 RM'000 Company 2006 RM'000 -

Purchase of property, plant and equipment - authorised and contracted for Analysed as follows: - Implementation of accounting software 34. EMPLOYEE BENEFITS

87 Group 2007 RM'000

50

Company 2007 RM'000 426 80 83 589

-

2006 RM'000 10,973 817 149 199 12,138

2006 RM'000 435 70 74 579

Salaries and wages Defined contribution plan Social security contribution Other employee benefits

6,189 534 77 165 6,965

35.

FINANCIAL INSTRUMENTS (a) Financial risk management objectives and policies The Board of Directors recognises the importance of financial risk management in the overall management of the Group's businesses. A sound risk management system will not only mitigate financial risk but will be able to create opportunities if risk elements are properly managed. The Group's overall financial risk management objective is to ensure that the Group creates value for its shareholders whilst minimising the potential adverse effects on the performance of the Group. Financial risk management is carried out through risk reviews, internal control systems and adherence to the Group's financial risk management policies, as set out below: (i) Interest rate risk The Group's income and operating cash flows are substantially independent of changes in market interest rates. Interest rate exposure arising from the Group's deposits and borrowings is managed through the use of a mixture of placements with varying tenures. The Group does not use derivative financial instruments to hedge its interest rate risk.

Advance Synergy Capital Berhad | 73 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

35. FINANCIAL INSTRUMENTS (continued) (a) Financial risk management objectives and policies (continued) (i) Interest rate risk (continued) 2007 % 3.50 6.00 6.00 5.46 6.50 Group 2006 % 3.39 7.50 - 9.21 7.50 5.00 5.46 6.50 8.00 Company 2007 % 3.00 -7.00 3.50 2006 % 3.00 -7.00 3.39 -

Financial assets Subsidiaries Short term deposits Sale and leaseback receivables Factoring receivables Bridging loan receivables Financial liabilities Hire purchase creditor Term loan (secured) Short term borrowing

The following tables set out the carrying amounts as at the balance sheet date and the remaining maturities of the Group's financial instruments that are exposed to interest rate risk: More than 5 4-5 3-4 2-3 1-2 Within Total years years years years years 1 year Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 2007 Fixed rate Group Sale and leaseback, factoring and bridging loan receivables Hire purchase creditor Term loan (secured) Company Short term deposits 31 3,005 3,005 13 22 21 409 10 1,637 65,925 11 1,746 6 2,618 66,334 27 6,001

2006 Fixed rate Group Sale and leaseback, factoring and bridging loan receivables Hire purchase creditor Term loan (secured) Short term borrowing Company Short term deposits

Note

Within 1 year RM'000

1-2 years RM'000

3-4 2-3 years years RM'000 RM'000

4-5 years RM'000

More than 5 Total years RM'000 RM'000

13 22 21 23

60,041 10 1,527 16,000

3,278 10 1,636 -

10 1,746 -

5 1,689 -

-

-

63,319 35 6,598 16,000

31

849

-

-

-

-

-

849

| 74 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

35. FINANCIAL INSTRUMENTS (continued) (a) Financial risk management objectives and policies (continued) (ii) Credit risk Credit risk, which is the risk of counter-parties defaulting, is controlled by the application of credit approvals, limit and monitoring procedures. Credit evaluations are performed on all customers requiring credit over a certain amount and strictly limiting the Company's associations to parties with high credit worthiness. Receivables are monitored on an ongoing basis to ensure that the Group is exposed to minimal credit risk. As at 31 December 2007, the Group has sale and leaseback, factoring and bridging loan receivables of RM408,717 (2006: RM60,041,313) which have been outstanding for more than the credit term granted. As mentioned in Note 13 (iii), the reduction in the amount outstanding for more than the credit term granted is due to those portions of the factoring receivables that have been restructured into bridging loan receivables which will mature in the year 2009 and repayable in one lump sum. Other than as mentioned, credit period in respect of trade receivables ranges from payment in advance to an average of 90 days from date of invoice. The Group's historical experience in collection of accounts receivable falls within the recorded allowances. Due to these factors, the management believes that no additional credit risk for collection losses is inherent to the Group's trade receivables. The maximum exposure to credit risk for the Group is represented by the carrying amounts of the financial assets at the balance sheet. In respect of short term deposits and cash and bank balances placed with major financial institutions in Malaysia, the Directors believe that the possibility of non-performance by these financial institutions is remote on the basis of their financial strength. (iii) Foreign currency risk The Group is exposed to foreign currency exchange risk as a result of the Group's transaction with foreign trade receivables and payables. Foreign exchange risk arises when future commercial transactions, recognised assets and liabilities are denominated in a currency that is not the entity's functional currency. The Group monitors the movement in foreign currency exchange rates closely to ensure action can be taken to minimise exposure where appropriate. The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. The net unhedged financial assets of the Group that are not denominated in their functional currencies are as follows: Group 2006 2007 RM'000 RM'000 Functional currencies Investment securities US Dollar Trade receivables Australian Dollar Other payables Australian Dollar Bank balances Singapore Dollar US Dollar 14,809 1,349 271 3 3 30,809 41 2,438 2,479

Advance Synergy Capital Berhad | 75 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

35. FINANCIAL INSTRUMENTS (continued) (b) Fair values The carrying amounts of the financial instruments of the Group and of the Company as at balance sheet date approximate their fair values except as set out below: Group Company Carrying amount RM'000 Fair value RM'000 Carrying amount RM'000 Fair value RM'000

As 31 December 2007 Recognised Sale and leaseback, factoring and bridging loan receivables Investment securities - quoted securities in Malaysia - unquoted securities Hire purchase creditor Term loan (secured)

66,334 12,217 22,809 27 6,001 Group Carrying amount RM'000

51,578 12,217 # 25 5,365

12,217 8,000 -

12,217 # -

Company Fair value RM'000 Carrying amount RM'000 Fair value RM'000

As 31 December 2006 Recognised Sale and leaseback, factoring and bridging loan receivables Investment securities - quoted securities in Malaysia - unquoted securities Hire purchase creditor Term loan (secured)

#

63,319 7,877 38,809 35 6,598

53,540 7,877 # 32 5,580

7,877 8,000 -

7,877 # -

It is not practical to estimate the fair value of the unquoted investment securities due to lack of quoted market price and the inability to estimate fair value without incurring excessive costs. The Directors believe that the carrying amount represents the recoverable value.

The methods and assumptions used by management to determine fair values of the financial instruments are as follow: (i) The carrying amounts of financial assets and liabilities maturing within 12 months approximate their fair values due to the relatively short term maturity of these financial instruments.

(ii) The fair values of quoted investments is determined by reference to the stock exchange quoted market bid prices at the close of the business on the balance sheet date. (iii) The fair values of the sale and leaseback, factoring and bridging loan receivables are estimated by discounting future contractual cash flows at the current market interest rate available to the Group for similar financial instruments. (iv) Fair values of term loan and hire purchase creditor have been determined using discounted cash flows technique. The discount rates used are based on the risk-free Malaysian Government Securities rate with a credit spread added to reflect the default risk of the Group.

| 76 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

36. SIGNIFICANT RELATED PARTY DISCLOSURES (a) Identities of related parties Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. The Company has controlling related party relationship with its direct and indirect subsidiaries and its holding company. Name of related parties Advance Synergy Berhad ("ASB") iSynergy Sdn Bhd ("iSynergy") Synergy Cards Sdn Bhd ("Synergy Cards") Orient Escape Travel Sdn Bhd ("OET") Worldwide Matrix Sdn Bhd ("Worldwide") Sadong Development Sdn Bhd ("Sadong") Bornion Sawmill Sdn Bhd ("Bornion") Synergy Petroleum Incorporated ("Synergy Petroleum") Unified Communications Sdn Bhd ("UC") ACE Synergy Insurance Berhad Kumpulan Powernet Berhad ("KPB") Southern Investment Bank Berhad ("SIBB") Hicom Australia Pty Ltd ("Hicom") Dato' Ahmad Sebi Bakar (b) Relationship Holding company Subsidiary of ASB and associate Subsidiary of ASB and associate Subsidiary of ASB Subsidiary of ASB Subsidiary of ASB Subsidiary of ASB Subsidiary of ASB Subsidiary of ASB Associate Associate Associate Associate Director of the Company

In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year: Group 2007 RM'000 (i) Income Interest receivable from: - Worldwide - Sadong - Bornion - Synergy Petroleum - SIBB - OET - ASB - Hicom Rental income receivable from: - ASB - KPB - UC - iSynergy - Synergy Cards 1,213 671 201 805 9 24 101 11 195 92 389 195 944 529 159 635 36 21 78 11 195 83 389 195 9 11 36 11 2006 RM'000 Company 2007 RM'000 2006 RM'000

Advance Synergy Capital Berhad | 77 | Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

36. SIGNIFICANT RELATED PARTY DISCLOSURES (continued) (b) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year: (continued) Group 2007 RM'000 (ii) Expenses Corporate advisory fees paid to: - SIBB Management fees payable to: - SIBB 2 13 12 31 13 12 31 2006 RM'000 Company 2007 RM'000 2006 RM'000

The related party transactions described above were carried out on terms and conditions not materially different from those obtainable from transactions with unrelated parties. (c) Compensation of key management personnel The remuneration of Directors, who are considered to be the key management personnel, during the year was as follows: Group 2007 RM'000 Short term employee benefits Contributions to defined contribution plans 892 135 1,027 37. SIGNIFICANT EVENT DURING THE FINANCIAL YEAR The Company had on 18 April 2007 announced that Bank Negara Malaysia ("BNM") has no objection in principle for the Company to commence negotiations with interested parties to dispose of its 20% equity interest comprising 15,580,000 ordinary shares of RM1.00 each in Southern Investment Bank Berhad ("SIBB"). The interested parties concerned would however, need to obtain the approval of BNM before commencing negotiations with the Company. The Company and the interested parties are required to obtain the prior approval of the Minister of Finance in accordance with the Banking and Financial Institutions Act, 1989 before entering into any agreement to effect the above proposal. On 22 May 2007, the Company announced that it shall be seeking the approvals of BNM /Minister of Finance to allow the Company to enter into a Share Sale Agreement with HLG Credit Sdn Bhd ("HLG Credit"), an indirect subsidiary of Hong Leong Financial Group Berhad, to dispose of its 20% equity interest in SIBB ("Proposed Disposal"). On 22 October 2007, the Company announced that SIBB has on 19 October 2007 submitted an application to BNM for the proposed disposal of certain of its assets and liabilities to HLG Credit, for a total cash consideration to be determined based on the aggregate sum of the net book value of the disposed SIBB assets and liabilities ("NBV") plus a premium to the NBV. This application will replace the Proposed Disposal originally announced by the Company on 22 May 2007. As a result, the Proposed Disposal by the Company will not need to be implemented and has been aborted. 2006 RM'000 1,245 189 1,434

| 78 | Advance Synergy Capital Berhad Annual Report 2007

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2007

ANNUAL REPORT 2007

38. COMPARATIVE FIGURES The following comparative figures have been reclassified to be consistent with current year's presentation: As previously reported RM'000 As restated RM'000

Group Balance Sheets Non-current assets Property, plant and equipment Prepaid lease payments for land Non-current liabilities Term loan (secured) Hire purchase creditor Borrowings Current liabilities Short term borrowing Borrowings Payables Income Statements Other income Administrative expenses Company Income Statements Other income Administrative expenses

Reclassification RM'000

73,180 5,071 25 17,527 7,095

(1,001 ) 1,001 (5,071 ) (25 ) 5,096 (17,527 ) 17,537 (10 )

72,179 1,001 5,096 17,537 7,085

616 (12,671 )

(390 ) 390

226 (12,281 )

959 (1,407 )

(390 ) 390

569 (1,017 )

Advance Synergy Capital Berhad | 79 | Annual Report 2007

LIST OF PROPERTIES

AS AT 31 DECEMBER 2007

ANNUAL REPORT 2007

Net Age of Book Date of Building Value (Years) (RM'000) Acquisition 14 32,510 3.6.2003

Location No. 72, Pesiaran Jubli Perak Seksyen 22 40000 Shah Alam Selangor Darul Ehsan HS (D) 80060 P.T. No. 14373 Mukim of Damansara Daerah Petaling Selangor Darul Ehsan Lot PT 4251 Kawasan Perusahaan Pengkalan Chepa II Kelantan Darul Naim Geran 25342 Lot No. 3786 Mukim Tebrau Daerah Johor Bahru Johor Darul Takzim Geran 25343 Lot No. 3787 Mukim Tebrau Daerah Johor Bahru Johor Darul Takzim

Land Area Description (sq metres) Industrial land and buildings 61,492

Existing Use Office, warehouse, workshop and depot

Tenure Freehold

Industrial land

19,350

Workshop

Leasehold for 60 years expiring on 21.11.2064 Freehold

2

1,374

1.9.2004

Industrial land

38,388

Land held for office, warehouse, workshop and depot Office, warehouse, workshop and depot

-

8,114

26.4.2005

Industrial land and bus depot

39,242

Freehold

2

9,638

26.4.2005

| 80 | Advance Synergy Capital Berhad Annual Report 2007

ANALYSIS OF SHAREHOLDINGS

AS AT 28 APRIL 2008

ANNUAL REPORT 2007

Share Capital Authorised Share Capital Issued and fully paid-up Class of shares Voting rights : : : : RM1,000,000,000 RM156,860,835 Ordinary shares of RM1.00 each One (1) vote per ordinary share

Distribution of Shareholdings Size of Shareholdings Less than 100 100 ­ 1,000 1,001 ­ 10,000 10,001 ­ 100,000 100,001 to less than 5% of issued shares 5% and above of issued shares No. of Shareholders 897 7,657 5,040 697 57 2 14,350

Note: * Excluding a total of 5,949,735 shares bought back by the Company and retained as treasury shares.

% of Shareholders 6.25 53.36 35.12 4.86 0.40 0.01 100.00

No. of Shares 39,102 5,091,273 18,100,175 19,552,805 28,512,545 79,615,200 150,911,100 *

% of Shares 0.03 3.37 11.99 12.96 18.89 52.76 100.00 *

Substantial Shareholders Direct Interest No. of Shares Advance Synergy Berhad Dato' Ahmad Sebi Bakar Suasana Dinamik Sdn Bhd 79,615,200 a % of Shares * 52.76 Indirect Interest No. of Shares 79,615,200 b 79,615,200 c % of Shares * 52.76 52.76

Notes: a b c * Of which 26,950,000 shares are held through a nominee company. Deemed interested by virtue of his interest in Advance Synergy Berhad ("ASB") pursuant to Section 6A of the Companies Act, 1965. Deemed interested by virtue of its interest in ASB pursuant to Section 6A of the Companies Act, 1965. Excluding a total of 5,949,735 shares bought back by the Company and retained as treasury shares.

Advance Synergy Capital Berhad | 81 | Annual Report 2007

ANALYSIS OF SHAREHOLDINGS

AS AT 28 APRIL 2008

ANNUAL REPORT 2007

Directors' Interests in Shares in the Company and its Related Corporations The Company Name Dato' Ahmad Sebi Bakar Wong Joon Hian Holding Company Advance Synergy Berhad ("ASB") Name Dato' Ahmad Sebi Bakar Wong Joon Hian Ir. Haji Mansor Bin Salleh @ Md Salleh No. of Ordinary Shares of RM0.30 Each % of % of Shares Direct Shares Indirect 15,203,509 3.29 95,057,609 (3) 45,000 (2) 21,000 (2) 20.60 0.01 ** No. of Ordinary Shares of RM1.00 Each % of % of Direct Shares * Indirect Shares * 79,615,200 (1) 37,500 (2) 52.76 0.02

Name Dato' Ahmad Sebi Bakar Wong Joon Hian Ir. Haji Mansor Bin Salleh @ Md Salleh

Direct 7,010,005 -

No. of Warrants 2000/2010 % of Shares Indirect 4.15 21,465,000 (3) 8,000 (2) 15,000 (2)

% of Shares 12.71 0.05 0.09

Name Dato' Ahmad Sebi Bakar Wong Joon Hian Ir. Haji Mansor Bin Salleh @ Md Salleh Related Corporation Syarikat Fit and Weld Engineering (M) Sdn Bhd (In liquidation) Name Ir. Haji Mansor Bin Salleh @ Md Salleh

Notes:

No. of 2% 10-Year Irredeemable Convertible Unsecured Loan Stocks of the Nominal Value of RM0.15 Each ("ICULS") % of % of Direct Shares Indirect Shares 123,212,999 13.18 149,602,489 (3) 157,500 (2) 73,500 (2) 16.00 0.02 0.01

No. of Ordinary Shares of RM1.00 Each % of % of Direct Shares Indirect Shares 110,250 15.00 -

(1) Deemed interested by virtue of his interest in ASB pursuant to Section 6A of the Companies Act, 1965. (2) This is his spouse's interest in the securities of the Company and ASB which shall be treated as his interest in the securities of the Company and ASB pursuant to Section 134(12)(c) of the Companies Act, 1965 which came into effect on 15 August 2007. (3) This includes his son's interest in the securities of ASB which shall be treated as his interest in the securities of ASB pursuant to Section 134 (12) (c) of the Companies Act, 1965 which came into effect on 15 August 2007. * Excluding a total of 5,949,735 shares bought back by the Company and retained as treasury shares. ** Negligible.

By virtue of his interest in the Company, Dato' Ahmad Sebi Bakar is also deemed to be interested in the shares in all companies (including subsidiaries) to the extent that the Company has an interest.

| 82 | Advance Synergy Capital Berhad Annual Report 2007

ANALYSIS OF SHAREHOLDINGS

AS AT 28 APRIL 2008

ANNUAL REPORT 2007

Thirty Largest Registered Shareholders Name of Shareholders 1. 2. Advance Synergy Berhad ABB Nominee (Tempatan) Sdn Bhd Pledged Securities Account for Advance Synergy Berhad (BSNC-Jln Bunus) SJ Sec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Chew Lee Hwa SJ Sec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Azran Bin Haji Abdul Rahman Lim Hong Liang Loo Pak Soon Azran Bin Haji Abdul Rahman Johan Enterprise Sdn Bhd Chew Lee Hwa Yeoh Kean Hua Mayban Nominees (Asing) Sdn Bhd Pledged Securities Account for San Sam Tuan Lim Kim Ong HLB Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Mah Siew Seong PM Nominees (Tempatan) Sdn Bhd PCB Asset Management Sdn Bhd for Ng Faai @ Ng Yoke Pei (Sban) RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Hiew Kat Kee (071123) Ngan Teng Han Ng Teng Song Liew Kon Mun Wilfred Koh Seng Han SJ Sec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Chan Sai Kim Chiong Ah Hui Hong Eng Kwee @ Hong Eng Hwe SJ Sec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Chan Sai Kim (SMT) No. of Shares 52,995,200 26,950,000 % of Shares * 34.90 17.86

3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

6,746,900 6,355,000 2,103,600 1,850,400 1,084,000 850,000 733,800 523,665 497,100 444,900 350,000 275,700

4.47 4.21 1.39 1.23 0.72 0.56 0.49 0.35 0.33 0.29 0.23 0.18

15. 16. 17. 18. 19. 20. 21. 22. 23.

267,100 225,000 224,000 206,300 200,000 197,300 194,500 194,000 186,100

0.18 0.15 0.15 0.14 0.13 0.13 0.13 0.13 0.12

Advance Synergy Capital Berhad | 83 | Annual Report 2007

ANALYSIS OF SHAREHOLDINGS

AS AT 28 APRIL 2008

ANNUAL REPORT 2007

Thirty Largest Registered Shareholders (continued) Name of Shareholders 24. Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Chong Nyok Chai (E-TMR/MTH) Lai Ming Chun @ Lai Poh Lin Lee Bee Seng Tan Oi Lai RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Soo Siew Seng (CEB) Chin Lee Hong (Sea Product) Sdn Bhd Yap Nyo Nyok @ Yap Yoon Jin No. of Shares 178,300 % of Shares * 0.12

25. 26. 27. 28. 29. 30.

Note:

170,000 170,000 169,400 168,200 160,000 160,000

0.11 0.11 0.11 0.11 0.11 0.11

* Excluding a total of 5,949,735 shares bought back by the Company and retained as treasury shares.

| 84 | Advance Synergy Capital Berhad Annual Report 2007

NOTICE OF NOMINATION

ANNUAL REPORT 2007

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ANNUAL REPORT 2007

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FORM OF PROXY

ANNUAL REPORT 2007

Number of Shares Held CDS Account No.

(Company No. 286452-T) (Incorporated in Malaysia)

I/We _____________________________________________________________________________________________ NRIC No. /Company No. _____________________________________________________________________________ of _______________________________________________________________________________________________ being a member/members of ADVANCE SYNERGY CAPITAL BERHAD, hereby appoint _________________________ __________________________________________________________ NRIC No. ______________________________ of _______________________________________________________________________________________________ or failing him/her, ___________________________________________________________________________________ __________________________________________________________ NRIC No. ______________________________ of _______________________________________________________________________________________________ or failing him/her, THE CHAIRMAN OF THE MEETING as *my/our proxy to vote for *me/us on *my/our behalf at the Fourteenth Annual General Meeting of the Company to be held at the Synergy Com Centre, Mezzanine Floor, No. 72, Pesiaran Jubli Perak, Seksyen 22, 40000 Shah Alam, Selangor Darul Ehsan on Monday, 30 June 2008 at 9.30 a.m. and at any adjournment thereof, as indicated below:

* Strikeout whichever not applicable.

NO. 1. 2. 3. 4. 5. 6. 7.

RESOLUTIONS To receive the Audited Financial Statements and Reports To approve Directors' fees To re-elect Mr Wong Joon Hian as Director To re-elect Ir. Haji Mansor Bin Salleh @ Md Salleh as Director To appoint Auditors Proposed Shareholders' Mandate for Recurrent Related Party Transactions Proposed Renewal of Authority for Share Buy-Back

FOR

AGAINST

Please indicate with an "X" how you wish your vote to be cast. If no specific instruction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.

Signed this __________ day of ___________________ 2008.

____________________________________

Signature of Shareholder/Common Seal

Notes:

1. 2. 3. 4. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy to attend and vote in his/her stead. A proxy need not be a member of the Company. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting. Where a member appoints two (2) proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholdings to be represented by each proxy. The instrument appointing a proxy must be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, under its common seal or under the hand of an officer or attorney duly authorised. The instrument appointing a proxy shall be deposited at the Registered Office of the Company at Level 3, Wisma Triton, No. 72, Pesiaran Jubli Perak, Seksyen 22, 40000 Shah Alam, Selangor Darul Ehsan not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting.

Please fold here

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Affix Stamp Here

THE COMPANY SECRETARY ADVANCE SYNERGY CAPITAL BERHAD Level 3, Wisma Triton No. 72, Pesiaran Jubli Perak Seksyen 22, 40000 Shah Alam Selangor Darul Ehsan

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