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ANNUAL REPORT

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ANNUAL REPORT

AWC FACILITY SOLUTIONS BERHAD

2OO7

AWC FACILITY SOLUTIONS BERHAD (550098-A)

AWC FACILITY SOLUTIONS BERHAD

20-3, Subang Business Centre, Jalan USJ 9/5T, 47620 UEP Subang Jaya, Selangor Darul Ehsan Tel: 03-8023 2308 · Fax: 03-8025 9343

Contents

Group Structure Core Business Divisions Financial Highlights Corporate Information Directors' Profile Chairman's Statement Corporate Governance Statement Audit Committee Report Internal Control Statement Additional Compliance Information Financial Statements Notice of Nomination of Auditors Summary of Group Properties Analysis of Shareholdings Notice of Annual General Meeting Statement Accompanying Notice of Annual General Meeting Appendix I: Details of the Proposed Amendments to the Articles of Association Proxy Form

1 2 4 5 6 8 11 15 19 22 23 79 80 82 84 87

88

Group Structure

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 1

AWC Facility Solutions Berhad (550098-A)

Integrated Facility Management (IFM) Division M&E Engineering DIvision

Ambang Wira Sdn Bhd

holds the Concession from the Federal Government to provide comprehensive facility management services to the existing Federal Government common-user buildings within the Southern Zone and Sarawak

M&C Engineering & Trading Sdn Bhd 100% 100%

AWSB

M&C (M)

installation and maintenance of Building Automation Systems (BAS), Heating, Ventilation and Air-Conditioning (HVAC) Systems, industrial cooling systems and hydronic balancing systems

AW Facility Management Sdn Bhd

provides comprehensive facility management services for both the Government and the private sectors

100%

100%

M&C Engineering & Trading (S) Pte Ltd

installation and maintenance of Building and Home Automation Systems (BAS/HAS), network integration and HVAC engineering

AWFM

M&C (S)

Environmental and Landscape Services Sdn Bhd

(formerly known as Gold Green Landscape & Nursery Sdn Bhd) provides landscaping services for buildings including design, implementation & maintenance

Kejuruteraan Putrajaya Sdn Bhd 100% 100%

ELS

KPSB

engaged in M&E Engineering Services for highway street lighting and infrastructure works, telecommunications, factories, electrical installations, fire-fighting and lift systems

100%

Plant & Maintenance Engineering Sdn Bhd

specialists in industrial motors and transformers maintenance services spanning a wide range of industries and condition based monitoring for industrial facilities

PME

Nexaldes Sdn Bhd 51%

NSB

involved in the design, installation and maintenance of central vacuum and automated waste collection systems for residential, commercial and industrial properties under the "STREAM" brand name

51%

Infinite QL Sdn Bhd Group of Companies

involved in turnkey research & development for microelectronics, software products, consumer electronic products and security related products. Among the products under the IQL stable include the Vdosoft range of Digital Video Recorders (DVR) systems for Closed Circuit Television (CCTV) systems, Cardax card access security systems, smart card systems and car park autopay systems

IQL

Core Business Divisions

2 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

INTEGRATED FACILITY MANAGEMENT (IFM) DIVISION

D Ambang Wira Sdn Bhd (AWSB) D AW Facility Management Sdn Bhd (AWFM) D Environmental and Landscape Services Sdn Bhd (ELS) (Formerly known as Gold Green Landscape & Nursery Sdn Bhd (GGLN))

The Group provides comprehensive facility management services through its IFM Division. The services provided in this Division range from the comprehensive suite of services provided to our biggest client, the Federal Government, to clients where we only provide a single service, such as cleaning, civil & structural works, M&E maintenance, or any combination of those services. Presently the Group holds the Concession to provide comprehensive maintenance to Federal Government Common User buildings within the Southern Zone (states of Johor, Malacca, Negeri Sembilan) and Sarawak. AWSB, the concessionaire company, is responsible for the full suite of maintenance services for 31 buildings throughout these states. This Concession is due to expire in June 2008. Negotiations have commenced for the pricing revision which is due to take place in tandem with the 5-year extension of the Concession until the year 2013. This Division also has clients other than the Federal Government. The suite of services available to these other clients are the same as that offered under the Concession. The types of properties maintained includes all types of industrial, commercial (both office and retail) and residential buildings and facilities. Some prominent buildings maintained by AWFM in this Division include the Petronas Twin Towers, the Malaysian Tourism Information Centre (MATIC) and the KL Tower.

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 3

M&E ENGINEERING DIVISION

D M&C Engineering & Trading Sdn Bhd (M&C(M)) D M&C Engineering & Trading (S) Pte Ltd (M&C(S)) D Kejuruteraan Putrajaya Sdn Bhd (KPSB) D Plant & Maintenance Engineering Sdn Bhd (PME) D Nexaldes Sdn Bhd (NSB) D Infinite QL Sdn Bhd Group of Companies (IQL)

The Group's M&E Engineering Division has grown over the years to provide a comprehensive range of services and products. From pure trading activities to repair of industrial motors to the provision of state-of-the-art Closed Circuit Television (CCTV) Systems, we have expertise that both complements the IFM Division and caters to the needs of all building owners. The other point of note for this Division is that many of the component subsidiary companies have been in their respective fields of business for more than ten years. M&C(M) and M&C(S) are involved in the same business, dealing with the same products in Malaysia and Singapore respectively. They are actively involved in the sale, installation and maintenance of Building Automation Systems (BAS) and Building Management Systems (BMS), Heating, Ventilation & Air-Conditioning (HVAC) systems, hydronic balancing systems and industrial cooling systems. Their range of products include TAC products, Okumura Butterfly Valves, BAS and BMS Control Products, and various other products and components used in the HVAC industry. Both M&C(M) and M&C(S) are veterans in their industry, having been in the business for more than twenty years in Malaysia and ten years in Singapore respectively. KPSB does M&E contracts for all manner of buildings, installations and facilities, including civil works, infrastructure works, telecommunications towers, fire fighting systems, lift systems, and construction of factories. PME is a large scale industrial workshop for the repair and maintenance of all types of industrial motors and electrical equipment, including generators and transformers. These motors range in size from 5kW to 5500kW, generators from 400kW to 100000kW, and transformers from 500kVa to 3000kVa. These motors and equipment are used in a wide spectrum of industries, including steel mills, cement plants, power plants, paper mills and oil and gas companies. The services provided include diagnostics, cleaning, service, repair, refurbishment, overhaul and installation and commissioning. NSB designs, installs and distributes STREAM central vacuum systems and STREAM Automated Waste Collection Systems for use in residential, commercial or industrial establishments, including large scale township developments for the Automated Waste Collection Systems. Among the prominent sites where these systems are installed include the KL Convention Centre, Putrajaya Convention Centre, Maju Junction, Customs Complex in Kelana Jaya and the Prime Minister's Office and Residence in Putrajaya. IQL and its subsidiaries are specialists in turnkey research and development in microelectronics, software solutions, manufacture and distribution of consumer electronics and security related products. These products include the Vdosoft range of Casino Grade Digital Video Recorder Systems for use with CCTV, Cardax card access security systems for enterprise wide solutions. Among their prominent customers are the Genting Group, Maxis Group, Tanjong Group and the Poh Kong Group.

Financial Highlights

4 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

CONSOLIDATED/ GROUP 2005 2006 RM'000 RM'000 91,737 13,082 12,599 9,551 8,342 3.7 0.72 114,340 57,671 93,092 0.16 3.0 27.1 86,452 10,865 10,197 6,708 5,020 2.2 0.72 114,340 61,029 93,879 0.11 3.2 29.1

Year Ended 30 June Income Statement Highlights: Revenue Profit From Operations Profit Before Taxation Profit After Taxation Net Profit (attributable to equity holders of the Company) Earnings Per Share (sen) Dividend Per Share (sen) Balance Sheet Highlights: Share Capital Shareholders' Equity Total Assets Debt/Equity Ratio Current Ratio Net Assets Per Share (sen)

2004 RM'000 79,361 14,402 14,139 10,563 10,563 4.7 Nil 114,340 49,400 71,244 0.12 2.8 21.6

2007 RM'000 107,158 12,636 11,857 8,607 6,167 2.7 Nil 114,340 65,508 120,739 0.13 2.2 34.1

REVENUE (RM'000)

107,158 100,000 91,737 80,000 60,000 40,000 20,000 M&E 0 IFM 2004 2005 2006 2007 79,361

PROFIT BEFORE TAXATION (RM'000)

15,000 12,000 9,000 6,000 3,000 0 2004 2005 2006 2007 14,139

86,452

12,599

NET PROFIT (RM'000)

12,000 9,000 6,000 3,000 0 2004 2005 2006 2007 10,563

SHAREHOLDERS' EQUITY (RM'000)

80,000 60,000 40,000 49,400

10,197

8,342

5,020

6,167

20,000 0 2004 2005 2006 2007

57,671

60,539

65,508

11,857

Corporate Information

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 5

Dato' Mohd Annuar bin Zaini

Independent Non-Executive Chairman

Dato' Ahmad Kabeer bin Mohamed Nagoor

BOARD OF DIRECTORS

Non-Independent Non-Executive Deputy Chairman

Azmir Merican bin Dato' Azmi Merican

Group Chief Executive/Managing Director

Roslan bin Mohd Latif

Independent Non-Executive Director

AUDIT COMMITTEE

Dato' Mohd Annuar bin Zaini Chairman Roslan bin Mohd Latif

REGISTERED OFFICE

Third Floor, No. 79 (Room A) Jalan SS21/60 Damansara Utama 47400 Petaling Jaya Selangor Darul Ehsan Tel: 03-7728 4778 Fax: 03-7722 3668

AUDITORS

Ernst & Young Chartered Accountants (AF: 0039)

NOMINATION COMMITTEE

Dato' Mohd Annuar bin Zaini Chairman Dato' Ahmad Kabeer bin Mohamed Nagoor Roslan bin Mohd Latif

PRINCIPAL BANKER

CIMB Bank Berhad

PRINCIPAL OFFICE

20-7, Subang Business Centre Jalan USJ9/5T 47620 UEP Subang Jaya Selangor Darul Ehsan Tel: 03-8023 2308 Fax: 03-8025 9343

STOCK EXCHANGE LISTING

Second Board of the Bursa Malaysia Securities Berhad Stock Name: AWC Stock Code: 7579

COMPANY SECRETARIES

Tea Sor Hua (MACS 01324) Chan Bee Fang (MAICSA 7032385)

SHARE REGISTRAR

Securities Services (Holdings) Sdn Bhd Suite 18.05, MWE Plaza No. 8, Lebuh Farquhar 10200 Penang Tel: 04-263 1966/261 4680 Fax: 04-262 8544

Directors' Profile

6 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

DATO' MOHD ANNUAR BIN ZAINI

Independent Non-Executive Chairman/Audit Committee Chairman/Nomination Committee Chairman Malaysian, 56 years of age Dato' Mohd Annuar bin Zaini was appointed as the Independent Non-Executive Chairman of AWC on 16 February 2004. He holds a Master of Arts in Law & Diplomacy from The Fletcher School of Laws & Diplomacy, Tufts University, USA; and a Bachelor of Arts with honours in Economics from University Kebangsaan Malaysia. He began his career in the government service as an Administrative and Diplomatic Officer in 1977. He served the Malaysian Government at various ministries and departments and was the Senior Private Secretary to the Minister of Home Affairs from 1981 to 1986. From 1991 to 1993, he was the Principal Assistant Director of the Perak State Economic Planning Unit. In 1993, he was appointed General Manager of The Perak Foundation, a position he held until 1999 before he chose to take an optional retirement from the government service. Since February 2004, he has been appointed the Chairman of Malaysian National News Agency (BERNAMA). Also in February 2004, HRH The Sultan of Perak consented his appointment as Member of the Council of Elders to HRH Sultan of Perak. He is a Distinguished Fellow to Institute of Strategic and International Studies (ISIS) Malaysia and Fellow to Institut Sosial Malaysia. He is a member of the Board of Directors of University Malaya and Chairman of the Management Committee University Malaya Medical Centre. He is also a Member of the Advisory Board of the Public Complaints Bureau of the Prime Minister's department. On 28 August 2007, Dato' Annuar was appointed by the Prime Minister as his Special Adviser for the Northern Corridor Economic Region (NCER). On the corporate sector, he holds directorships in Berjaya Corporation Berhad, Dijaya Corporation Berhad, Malaysian Airline System Berhad, Linkedua (Malaysia) Berhad, MITV Corporation Sdn Bhd and Berjaya Corporation group of companies and a few private limited companies. He is also the Group Corporate Advisor of TSH Resources Berhad and Multi Media Synergy Corporation Sdn Bhd.

DATO' AHMAD KABEER BIN MOHAMED NAGOOR

Non-Independent Non-Executive Deputy Chairman/Nomination Committee Member Malaysian, 50 years of age Dato' Ahmad Kabeer bin Mohamed Nagoor was appointed to the Board of AWC as a Non-Independent Non-Executive Director on 2 February 2005. On 22 June 2007 he was re-designated as the Non-Independent Non-Executive Deputy Chairman of AWC. He graduated with a Masters Degree in Finance from the University of St. Louis, Missouri, USA in 1986. He started his career with the Bank of Nova Scotia in 1986 in the foreign exchange division before becoming a lecturer at the School of Management, Universiti Sains Malaysia from 1988 to 1994. He is a substantial shareholder of the Company. He is also the Executive Chairman of AKN Technology Berhad, and Chairman of MEMS Technology Berhad, AKN Messaging Technologies Berhad and Scicom (MSC) Berhad.

*

The vacancy in the Audit Committee resulting from the resignation of Mr Krishnan Menon will be filled within three (3) months, to comply with the paragraph 15.10(1) of the Listing Requirements.

Notes: 1. Family Relationship None of the Directors are related to each other. 2. Directors' Shareholdings Details of Directors' shareholdings in the Company can be found in the Analysis of Shareholdings section in the Annual Report. 3. Attendance at Board Meetings Details of Director's attendance at Board Meetings can be found in the Corporate Governance Statement section in the Annual Report. 4. Non-Conviction of Offences None of the Directors has any conviction of offences, other than traffic offences, within the past 10 years. 5. No Conflict of Interest None of the Directors has any conflict of interest with the Company.

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 7

AZMIR MERICAN BIN DATO' AZMI MERICAN

Group Chief Executive/Managing Director Malaysian, 36 years of age En Azmir Merican joined AWC on 13 August 2007 as its Group Chief Executive/Managing Director. He brings along with him a wealth of cross functional experience and expertise in various industries from his previous experience in private equity and financial advisory. Prior to AWC, Azmir was a key member of the Private Equity division of CIMB Investment Bank Berhad (formerly Commerce International Merchant Bankers Berhad) which was responsible for making the bank's successful entry into the private equity industry. En Azmir was involved in all aspects of the private equity business including fund structuring, fundraising, investment evaluation and deal structuring, monitoring and execution of divestment plans. He was heavily involved with several investee companies as part of the board or the management committees which was responsible for the development of post investment business plans and to carry out the implementation. Before joining CIMB, En Azmir was a manager in consulting arm of PricewaterhouseCoopers specializing in corporate advisory. His areas of expertise are strategic business planning, feasibility studies, investment evaluation & analysis as well as M&A advisory. En Azmir started his career with the Maybank group where he was part of the team which help established Maybank's venture capital and private equity arm. En Azmir holds a Bachelor's Degree in Business Administration majoring in finance from the Haworth School of Business, Western Michigan University, USA.

KRISHNAN MENON

Executive Director/Audit Committee Member Malaysian, 57 years of age Mr Krishnan Menon was appointed as an Executive Director of AWC on 7 July 2003 and subsequently as the Group Chief Executive Officer on 24 September 2003. As part of a Board rationalisation exercise, he was redesignated as Executive Director on 29 November 2005. He is a Fellow of the Institute of Chartered Accountants in England and Wales, as well as a member of the Malaysian Institute of Accountants and the Malaysian Institute of Certified Public Accountants. He spent 13 years in public practice at Hanafiah Raslan & Mohamed, seven years of which as a Partner. He joined Public Bank Berhad as General Manager and was subsequently promoted to Executive Vice-President. After working with two public listed companies, he joined Putrajaya Holdings Sdn Bhd as its Chief Operating Officer from 1997-2000. He is a Non-Executive Director of MISC Berhad, SPK-Sentosa Corporation Berhad, Scicom (MSC) Berhad and AKN Messaging Technologies Berhad, Chairman of Putrajaya Perdana Bhd as well as a Director of Putrajaya Holdings Sdn Bhd. Mr Krishnan Menon resigned as an Executive Director and Audit Committee member of the Company on 10 October 2007.

ROSLAN BIN MOHD LATIF

Independent Non-Executive Director/Audit Committee Member/Nomination Committee Member Malaysian, 51 years of age En Roslan was appointed as an Independent Non-Executive Director of AWC on 26 February 2007. He holds an MBA (Marketing) from Governors State University, Illinois USA and recently in 2007 completed his DBA (Doctor of Business Administration (Marketing)) from the University of South Australia. He started his career as an assistant business development officer with MARA in 1977. Since then his career has spanned numerous industries, including automotives, education and construction based activities. Currently he is involved in several businesses in these and other fields. En Roslan is also a part time speaker for Biro Tatanegara, Jabatan Perdana Menteri where he speaks on issues such as education, politics, the economy and other current issues.

Chairman's Statement

8 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

On behalf of the Board of Directors ("the Board") of AWC Facility Solutions Berhad ("AWC"), I am pleased to present the Annual Report of AWC together with the audited financial statements for the financial year ended 30 June 2007.

BOARD CHANGES

During the year, Datuk Nasir bin Safar resigned as an Independent Director and member of the Audit Committee. En Roslan bin Mohd Latif joined the Board as an Independent Director and also an Audit Committee member on 26 February 2007. Dato' Ahmad Kabeer bin Mohamed Nagoor, a Non-Independent Non-Executive Director and indirect substantial shareholder of the Company was re-designated as the Non-Independent Non-Executive Deputy Chairman on 22 June 2007. On 13 August 2007, En Azmir Merican bin Dato' Azmi Merican was appointed as Group Chief Executive/Managing Director, replacing Tn Hj Nordin Abu Bakar who retired as Managing Director on the same date. On 10 October 2007, Mr Krishnan Menon resigned as an Executive Director of the Company after having been with us since the Group was first formed in the year 2003. I take this opportunity to welcome both En Roslan and En Azmir to the Board, and at the same time to thank Datuk Nasir, Tn Hj Nordin and Mr Krishnan Menon for their contributions during their tenure with the Group.

CORPORATE DEVELOPMENTS

Acquisitions

During the year, the Group completed the acquisition of a 51% stake in the Infinite QL Sdn Bhd ("IQL") Group of Companies, on 29 September 2006. We are pleased to report that the IQL Group comfortably met the profit guarantee as provided by its vendors for the financial year ended 30 November 2006. As a consequence, AWC proceeded to pay the second tranche payment to the vendors in line with the terms of the acquisition. Other than this, the year under review proved to be a year of consolidation for the Group's activities, where efforts were directed towards undertaking changes that would improve the Group's performance over the long term.

Employee Share Option Scheme ("ESOS")

The ESOS, which was approved in 2005, has yet to be launched. The ESOS has not been launched to date due to the Company's share price continuing to trade below par. Further, the Board and Management continued to focus on improving the Group's financial performance. To this end, the granting of options will only be considered once the measures undertaken bear fruits, and the Group's financial performance shows an improvement, which is then reflected in the Company's share price.

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 9

Share buy-back exercise

At the last Annual General Meeting ("AGM") of the Company, the mandate for the Company to undertake the share buy-back exercise was renewed by shareholders. For the financial year ended 30 June 2007, the Company bought back 200,000 shares, at a total cost of RM49,867. These shares were purchased at an average price of 25 sen per share (excluding transaction costs). With these purchases, the number of shares held by the Company at the end of the financial year was 1,436,800, all of which are currently held as treasury shares. The Board will continue to monitor the performance of the Company's share price. Where appropriate, the Board will continue the share buy-back programme. The Board will also ascertain if it would be in the best interests of the Company to cancel any of the shares bought back, or to retain them as treasury shares. Based on the balance in the Share Premium account at 30 June 2007, and based on the Company's share price at the time of this statement, the Company has sufficient reserves to buy-back in full the amount permitted under the relevant legislation.

In terms of individual Divisions, both Divisions have shown an improvement from last year, in terms of both revenue and profits, with the lion's share of the improvement contributed by the M&E Division. In the year under review, the M&E Division contributed approximately 65% of both the Group's revenue and net profit for the year. Going forward, we expect the contribution between the two Divisions to remain approximately within that range.

IFM Division

The Federal Government continues to be the Group's biggest client via the Concession held by the IFM Division for comprehensive facility maintenance services for the Southern Zone and Sarawak State. With the fees from the Concession as its single largest component, the IFM Division continues to be a strong contributor to the Group's revenues and profits. For the year under review, revenue from the IFM Division amounted to approximately RM44.4 million. This represents an increase of approximately RM4 million or 10% from last year. Part of this increase was attributable to certain ad hoc special projects commissioned by certain clients, including the Federal Government, which were undertaken and completed during the financial year under review. The profitability of the IFM Division at RM4.4 million profit before tax however has remained fairly consistent with that for last year despite the increased revenue. This is due to the fact that maintenance costs, including materials, fuel, and spare parts have continued to escalate.

FINANCIAL REVIEW

The Group's financial performance improved from the previous year, with revenues and profits showing significant gains. Group Revenue for the financial year under review was RM107.1 million, and net profit for the year amounted to RM6.2 million. These are increases of RM20.7 million (or 24%) and RM1.1 million (or 22%) respectively over the previous year.

Chairman's Statement

10 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

efficiency and increase productivity. Key to this is having the correct supporting infrastructure such as processes and procedures and IT systems in place. More importantly, this review will also emphasise on our most valuable assets, our employees, to ensure that this important resource has the necessary skills and training to deliver what is required. In line with this we will develop performance indicators for employees and inculcate a culture of high performance. In order to support this move, the human resources functions Group wide will have to be reorganised and realigned. Along with this, we also expect to revamp our finance and treasury operations. We will be allocating significant resources financial and otherwise to ensure the above exercise is well executed and the objectives achieved. As the Company grows, it is important to have a balanced portfolio of high performing businesses with strong market positions. It is our objective that the reorganisation will result in the Group having a right and balanced structure which will allow all stakeholders to benefit. Our overriding commitment is to deliver value and we will continue to emphasise this in all that we do.

M&E Division

The acquisition of a 51% equity interest in the IQL Group of Companies was completed on 29 September 2006. Total revenue from the Division totalled RM62.7 million, up from RM46.0 million last year, an improvement of RM16.7 million or 36%. A large part of this increase was contributed by the IQL Group of Companies. The performance of the IQL Group ensured that the profit guarantee provided by its vendors for the financial year ended 30 November 2006 was comfortably met. We are confident that they will also comfortably achieve the profit guarantees for the ensuing financial years ending 30 November 2007 and 2008. Nexaldes Sdn Bhd continued to perform well, completing their third year as a subsidiary of the Group, and achieving the profit guarantees provided for that time frame. Nexaldes continues to bid for several large-scale projects in the Middle East and in Singapore, and are confident that they will secure several such contracts in the current year.

DIVIDENDS

In the past financial year, a final dividend of 2% less 28% tax in respect of the financial year ended 30 June 2006 was paid. The Board has not recommended the payment of any dividend in respect of the financial year ended 30 June 2007. The Board has arrived at this decision having considered the working capital needs of the Group going forward and has decided to reinvest profits towards improving financial performance. This will also enable the Group to shore up its resources to take advantage of any opportunities that might present themselves and to also reduce dependence on external funding.

BUSINESS OUTLOOK

Shareholders would have noted the appointment of En Azmir Merican as the new Group Chief Executive/Managing Director. With his appointment, En Azmir is tasked with bringing the AWC Group to greater heights. From the financial point of view, this is translated into improving the Group's overall financial performance and ultimately, maximising returns to all stakeholders, shareholders included. In the ensuing financial year, the Group intends to actively source for additional IFM contracts of a significant size. This will provide added stability to the Group, and enable the Group to leverage on this stability to then delve further into the opportunities available to the M&E Division. The Company will be embarking on a business transformation exercise in order to position itself as the clear market leader for the IFM business with strong supporting M&E businesses under its stable. The main focus moving forward is to integrate and optimise resources. The exercise will examine the current operating conditions internally with the objective of putting in place steps to boost

APPRECIATION

Once again I take this opportunity to express my gratitude for the many parties, and individuals that have contributed to the fortunes and growth of the Group. These include our shareholders, customers, associates, business partners who have all shown loyalty and commitment to us. The Group's staff force have also pulled their weight and played their part, in terms of their commitment to their work and their loyalty to the Group. In conclusion, I wish to once again thank all fellow Board members, for their continued contributions to the Company and the Group.

Dato' Mohd Annuar bin Zaini 15 October 2007

Corporate Governance Statement

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 11

AWC Facility Solutions Berhad's ("AWC") Board of Directors believes in the need for good corporate governance practices to be applied throughout the Group. The Board is cognizant of, and subscribes fully to, the Malaysian Code on Corporate Governance ("the Code"), and the Principles and Best Practices as set out therein. In adhering to the requirements of the Code, the Board strives to ensure that the substance of the Code is upheld, and not complied with merely in form. The principles and best practices as set out in the Code (Parts 1 & 2) have been considered by the Board in preparing this report. The Board is pleased to set out below its Corporate Governance Statement as follows:

I

THE BOARD

The Board has been entrusted with, and is fully responsible for, the Group's overall strategy, growth and direction, including the Group's financial performance. The Board maintains full control of the Group's activities, through its matrix of authority filtering down to the various components. The Board draws on the diversified experience and expertise of its members to lead and control the Group effectively. The Board reserves certain material matters for its own decision. These include, but are not limited to, overall Group strategies, acquisitions and divestment policies, human capital matters, approvals for major capital expenditure and significant financial matters, including business plans and budgets.

a.

Composition and Balance

i. The Board currently has five members, comprising two (2) Executive Directors (including the Group Chief Executive/Managing Director), two (2) Independent Non-Executive Directors and the Non-Independent Non-Executive Deputy Chairman. This composition, which has remained the same from the previous year, complies with the Bursa Malaysia Listing Requirements that at least one third of the Board must comprise independent directors. A profile of each Director is presented under the Directors' Profile section in this Annual Report. ii. There is a clear distinction between the roles and responsibilities of the Chairman and the Group Chief Executive/Managing Director towards achieving a balance of power and authority. The Chairman is responsible for the orderly conduct of the Board, whilst the Group Chief Executive/Managing Director is responsible for the day to day running of the Group's activities and operations, in line with the strategies and policies as approved and adopted by the Board. In carrying out his duties, the Group Chief Executive/Managing Director is assisted by the Management Committee and members of the senior management team. iii. The Independent Non-Executive Directors are independent of management, free from business or other relationships that would interfere with their independence, and do not participate in the day to day running of the Group. They bring a wealth of experience in diverse fields and are able to contribute effectively in an independent and objective manner in reviewing, deliberating upon, and examining the strategies and direction as proposed by the management, at all times remaining cognizant of the interests of all stakeholders. The Board acknowledges that the current scenario where Dato' Mohd Annuar bin Zaini serves as the Chairman of the Board as well as of the Audit Committee is not ideal. The Board intends to address this issue in the ensuing financial year, as well as reviewing the composition of the Audit Committee.

iv.

Corporate Governance Statement

12 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

b.

Board Meetings

The Board meets at quarterly intervals, with additional meetings called when necessary. During the year under review, four (4) meetings were held. All Directors attended more than 50% of the meetings held, as set out below: Directors Dato' Mohd Annuar bin Zaini Dato' Ahmad Kabeer bin Mohamed Nagoor Datuk Nasir bin Safar (resigned from the Board on 30 December 2006) Tn Hj Nordin bin Abu Bakar (resigned from the Board on 13 August 2007) Krishnan Menon Roslan bin Mohd Latif (appointed to the Board on 26 February 2007) Azmir Merican bin Dato' Azmi Merican (appointed to the Board on 13 August 2007, subsequent to the end of the financial year) Attendance 4/4 4/4 1/2 4/4 4/4 2/2 N/A

The Directors receive notices to meetings, setting out the agenda with a full set of Board Papers before each meeting. The Board Papers provide sufficient detail of matters to be deliberated during the meeting. Information provided to the Board is not limited to quantitative performance information, instead it includes qualitative information such as major operational and financial issues. Where a potential conflict of interest situation arises, the Director concerned is to declare his interest and abstain from the decision making. Minutes of Board meetings together with decisions taken by way of resolutions passed are duly minuted and properly maintained by the Company Secretary. Directors have unhindered access to the services and advice of the Company Secretaries. The Company Secretaries are responsible for ensuring that Board meeting procedures are followed, and that all statutory and compliance obligations are complied with. In addition, Directors either individually or collectively, have unhindered access to information within the Company in furtherance of their duties, including direct access to senior management personnel. They may further obtain independent professional advice in fulfilling their fiduciary duties at the Company's expense, when necessary.

c.

Appointments, Re-elections, and the Nomination Committee

All Directors shall retire from office once every three (3) years, in accordance with the Company's Articles of Association. They shall however be eligible for re-election at the immediate subsequent Annual General Meeting (AGM) of the Company. Matters relating to the appointment and the evaluation of the performance of the Directors are dealt with by the Nomination Committee comprising the following members: Directors Dato' Mohd Annuar bin Zaini, Chairman Datuk Nasir bin Safar, Member (resigned on 30 December 2006) Roslan bin Mohd Latif, Member (appointed on 26 February 2007) Dato' Ahmad Kabeer bin Mohamed Nagoor, Member Designation Independent Non-Executive Chairman Independent Non-Executive Director Independent Non-Executive Director

Non-Independent Non-Executive Deputy Chairman

The Nomination Committee is entrusted to bring recommendations to the Board for the appointment of new Executive and Non-Executive Directors as well as the re-election of Directors who retire by rotation. In doing so, the Nomination Committee considers the mix of skills and expertise, experience and potential contributions of potential incoming Director(s) when considering new appointments to the Board. The performance and contributions of existing Directors as well as the performance of the Board as a whole are also assessed. The Nomination Committee also considers the balance of expertise and abilities of the Board in considering the appointment of new directors.

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 13

d.

Directors Training

All the Directors have completed the Mandatory Accreditation Programme (MAP) as stipulated by Bursa Malaysia. Directors are encouraged to, and have attended various seminars and conferences which were conducted in house as well as those conducted by third parties. This has enabled the Directors to keep abreast of industry, regulatory and other developments which in turn enables them to discharge their duties and responsibilities more effectively.

e.

Directors Remuneration

No Remuneration Committee has been established by the Board, as presently only two (2) of the Directors are executive in nature and earn a salary from the Group. The Board undertakes the evaluation of each of the individual Director's remuneration collectively. This includes deciding on the remuneration policy, terms and conditions of service for the Group as well as the remuneration for members of the Board. Where applicable, the Director concerned will abstain from deliberations and voting in respect of their own remuneration. The Directors remuneration for the financial year under review were as follows: Salaries and Benefits in Kind RM 428,760 ­ 428,760

Fees RM Executive Directors Non-Executive Directors Total Range of Remuneration ­ 195,000 195,000

Bonuses RM 25,000 30,000 55,000

Total RM 453,760 225,000 678,760 NonExecutive 2 1 ­ ­

Executive Below RM100,000 RM100,001 to RM200,000 RM200,001 to RM250,000 RM250,001 to RM300,000 ­ ­ 1 1

II

SHAREHOLDERS

a. Dialogue between the Company and Investors

The Board is well aware of the importance of effective communications between the Board, the shareholders, and the general public. To this end, annual reports, announcements of quarterly results, circulars to shareholders (where applicable) and announcements pertaining to corporate and other developments in the Group serve as the primary means of dissemination of information. This is done in a timely manner, so as to ensure that the Group's stakeholders are constantly kept up to date on the progress of the Group and also its development.

b.

Annual General Meetings ("AGM")

The principal forum for shareholders to interact and have dialogue with the Board is via the AGM of the Company. During the AGM, shareholders are given the opportunity to seek clarification pertaining to the Group or to request information regarding the operations, business activities, developments and direction of the Group. The Board, members of the senior management team and the Group's external auditors who will be in attendance during the AGM will address the queries raised.

Corporate Governance Statement

14 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

III ACCOUNTABILITY AND AUDIT

a. Financial Reporting

The Board is responsible for the preparation of the financial statements of the Company and of the Group. In doing so the Board ensures that they are prepared in compliance with the requirements of the Companies Act 1965 and in accordance with applicable financial reporting standards. The Directors aim to present a fair and accurate assessment of the Group's financial position, performance and prospects to its shareholders in presenting the quarterly announcements and annual financial statements. Towards this end, the Audit Committee assists the Board in overseeing the financial reporting process.

b.

Internal Control

The Audit Committee has been entrusted by the Board to ensure the effectiveness and efficacy of the Group's internal control systems. The Internal Control Statement is set out on pages 19 to 21 of this Annual Report, providing information on and an overview of the state of the Group's internal controls.

c.

Relationship with Auditors

Both internal and external auditors maintain a close and transparent relationship with the Group, via the Audit Committee. They have direct reporting access to the Board and to the Audit Committee therefore ensuring that issues highlighted are treated with independence and objectivity, free from any management influence. Additional aspects of the relationship between the Audit Committee and both the internal and external auditors are enumerated in the Audit Committee Report on pages 15 to 18 of this Annual Report.

DIRECTORS RESPONSIBILITY STATEMENT IN RELATION TO THE FINANCIAL STATEMENTS

It is a requirement for the Directors to prepare financial statements which give a true and fair view of the state of affairs of the Company and of the Group at the end of each financial year and of their results and their cash flows for the year then ended. In preparing the financial statements, the Directors have taken steps to ensure that: x x x the Company and the Group have used appropriate accounting policies which have been consistently applied; the judgments and estimates made have been made with reasonableness and prudence; and all approved accounting standards which are applicable in Malaysia have been complied with.

The Directors are responsible for ensuring that the Company maintains proper accounting records in compliance with the Companies Act, 1965, which disclose with a reasonable degree of accuracy the financial position of the Company and the Group. The Directors also have general responsibilities for taking reasonable steps towards safeguarding the assets of the Group, and to prevent and detect fraud and other irregularities. This statement is made in accordance with a resolution of the Board dated 9 October 2007.

Audit Committee Report

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 15

The Audit Committee ("the Committee") was established to act as a Committee of the Board of Directors, with the primary objective of assisting the Board in the areas of corporate governance, implementation and review of systems of internal controls, risk management, and management and financial reporting practices of the Group.

COMPOSITION OF THE AUDIT COMMITTEE

The Committee currently comprises the following members: Chairman Dato' Mohd Annuar bin Zaini Independent Non-Executive Chairman Members Krishnan Menon Executive Director Roslan bin Mohd Latif Independent Non-Executive Director

TERMS OF REFERENCE

The terms of reference of the Committee are as follows:

Membership

1. The Committee shall be appointed by the Board of Directors from among its members and shall comprise a minimum of three (3) members, with a majority of the Committee being Independent Directors, and at least one member of the Committee: a. b. must be a member of the Malaysian Institute of Accountants; or if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years working experience; and i. ii. 2. 3. 4. he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act 1967; or he must be a member of one of the associations of accountants specified in Part 2 of the 1st Schedule of the Accountants Act 1967.

No alternate directors shall be members of the Committee. The Committee shall elect a Chairman from amongst its members who shall be an Independent Director. In the event that a vacancy arises in the Committee for any reason, and the vacancy causes a non-compliance of item 1 above, the Board of Directors shall, within three (3) months from the date the vacancy arises, fill such vacancy in compliance with item 1 above. The Board of Directors shall review the term of office and performance of the Committee collectively and each of its members at least once every three (3) years.

5.

Audit Committee Report

16 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

Authority

The Committee is empowered by the Board to investigate any activity within its term of reference. It shall have: i. ii. iii. iv. full and unrestricted access to any information pertaining to the Company and its subsidiaries; direct communication channels with both the external auditors and the internal auditors or any person(s) carrying out the internal audit function or activity; free access to any employee or member of the management; and free access to seek and accept independent professional advice and to secure the attendance of outsiders with relevant experience and expertise as it considers necessary and the requisite resources to do so.

Duties and Responsibilities

The Committee's duties and responsibilities are as follows: 1. 2. To consider the appointment of external auditors, the terms of reference of their appointment, the audit fee and any questions of resignation or dismissal; To review with the external auditors: a. b. c. d. 3. 4. 5. 6. 7. their audit plan, scope and nature of the audit for the Group; their audit report; the external auditors' management letter and the management's response with regard to problems and reservations arising from their audits; and any matters the auditors may wish to discuss (in the absence of management where necessary).

Assess the quality, adequacy and effectiveness of the Group's internal control environment and systems, and take necessary actions to improve the same where necessary; To review the adequacy of the scope, functions and resources of the internal audit functions; To review the internal audit programme, processes and results of the internal audit and whether or not appropriate action is taken on the recommendations of the internal audit functions; Evaluate the quality of the audits conducted by both the internal and external auditors; Provide greater emphasis on the audit function by serving as the focal point for an open line of communication between the Board of Directors, internal auditors, external auditors and the management and providing a forum for discussion that is independent of the management. The Committee is to be the Board's principal agent in assuring the independence of the Company's external auditors, the integrity of the management and the adequacy of disclosure to the shareholders; To review with management on a periodic basis, the Company's general policies, procedures and controls especially in relation to management accounting, financial reporting, risk management and business ethics; To review the Group's quarterly results and year end financial statements before submission to the Board, particularly on: a. b. c. d. e. any changes in accounting policies and practices; major potential risk issues, if any; significant adjustments and issues arising from the audit; compliance with the applicable approved accounting standards; and compliance with the Listing Requirements of Bursa Malaysia Securities Berhad ("Bursa Malaysia") and other legal requirements.

8. 9.

10. 11. 12.

To review related party transactions to ensure that they have been conducted at arms length and on normal commercial terms; To verify the allocation of options pursuant to the Employees' Share Option Scheme ("ESOS") in compliance with the criteria as stipulated in the by-laws of the ESOS of the company, if any; and The Committee is to report to the Board regarding the above matters within its purview.

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 17

Frequency of Meetings

The Committee shall meet at least four (4) times annually, or more frequently as circumstances dictate. The external auditors may request for a meeting if they consider it necessary.

Secretary

The Company Secretary or any other person appointed by the Committee for this purpose shall act as Secretary for the Committee.

Reporting Procedures

The secretary shall circulate the notice and minutes of meetings of the Committee to all the members of the Board.

Quorum

In order to form a quorum for a Committee meeting, the majority of the members present must be independent directors. A duly convened meeting of the Committee at which quorum is present shall be competent to exercise all or any of the authorities, powers and discretion vested in or exercisable by the Committee.

MEETINGS

During the year, the Committee held a total of four (4) meetings. Details of attendance of the Committee members are as follows: Attendance at Meetings 4 of 4 4 of 4 2 of 2 2 of 2

Committee Members Dato' Mohd Annuar bin Zaini Krishnan Menon Roslan bin Mohd Latif (appointed on 26 February 2007) Datuk Nasir bin Safar (resigned on 30 December 2006)

The presence of the external and internal auditors (if any) respectively at any Audit Committee meeting, can be requested if required by the Audit Committee. Other members of the Board and officers of the Company and the Group may attend the meeting (specific to the relevant meeting) upon the invitation of the Audit Committee.

Audit Committee Report

18 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

SUMMARY OF ACTIVITIES

During the financial year under review, the Committee carried out the following activities in discharging their duties and responsibilities: 1. 2. 3. 4. Reviewed the quarterly financial results of the Company including the announcements pertaining thereto, before the release of the quarterly announcements to Bursa Malaysia; Reviewed the audit plan and scope of the statutory audit of the Company's financial statements for the financial year ended 30 June 2007 with the external auditors; Reviewed the annual audited financial statements of the Company and issues arising from the audit of the financial statements, together with the external auditors' management letter and the management's responses thereon; Reviewed the risk management framework, reports and progress of the risk management functions of the Group and ensuring that principal risk areas are adequately covered and corrective actions taken by management are adequately addressed on a timely basis; Reviewed the internal audit plan, work done and reports, for the internal audit function and considered the findings of internal audit investigations and management responses thereon, and ensure that appropriate actions are taken on the recommendations raised by the internal auditors; and Reviewed related party transactions, if any, for compliance with the Listing Requirements of Bursa Malaysia.

5.

6.

INTERNAL AUDIT FUNCTION

The Group's internal audit function is carried out by a third party professional company, which is independent of the activities and operations of the Group. The internal auditors are empowered by the Audit Committee to audit the Group's business operations and internal control processes and procedures, to ensure a sound system of internal controls. The internal auditors' report will then be presented to the Audit Committee on a quarterly basis.

STATEMENT PERTAINING TO THE ALLOCATION OF SHARE OPTIONS TO EMPLOYEES

To date the Company has not granted any share options to eligible employees pursuant to the Company's ESOS. In the event such options are granted to eligible employees, the Audit Committee will review such allocation to ensure compliance with the criteria as set out in the by-laws of the Company's ESOS.

Internal Control Statement

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 19

INTRODUCTION

The Board of Directors ("the Board") of AWC Facility Solutions Berhad ("AWC" or "the Company") is pleased to present the Internal Control Statement ("ICS") for the financial year ended 30 June 2007. This Statement sets out the system of internal control in force within the Group during the financial year under review and is issued in accordance with para 15.27 (b) of the Listing Requirements of Bursa Malaysia Securities Berhad. The Board is guided by the "Statement on Internal Control ­ Guidance for Directors of Public Listed Companies ("ICG")" in issuing this Statement.

RESPONSIBILITY

The Board is committed to maintaining a sound system of internal control within the AWC Group of Companies, to safeguard shareholders' investment and the Group's assets. The Board is fully aware of, and acknowledges, its responsibility for identifying and managing significant risks within the business environment in which the Group operates. The Board is also cognizant of its responsibility for ensuring the effectiveness and adequacy of the internal control system to cover the risk management, financial, operational and compliance controls within the Group. The Group's internal control framework is designed to manage and mitigate risks that may hinder the Group from achieving its business objectives, rather than to eliminate those risks completely. The Board recognizes the fact that any system of internal controls can only provide reasonable and not absolute assurance against material misstatement, fraud or loss. Management plays its part in this whole process by ensuring the internal control processes are properly implemented and adhered to, and further to feedback to the Board in the event internal controls are breached, whether willfully or otherwise. The Board has outsourced the internal audit function to a professional third party, namely Audex Governance Sdn Bhd ("Audex"). They are independent of the Board, Management, and of the Group's operations, and report directly to the Audit Committee. In carrying out their reviews, they undertake an objective, independent and systematic review of the systems of internal control so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively. Where there are shortcomings or areas for potential error, they recommend improvements which are then considered and adopted by the Board and Management, where appropriate. The Board confirms that there is an ongoing process for identifying, evaluating and managing significant risks faced by the Group. This process was set up during the year under review and is ongoing up to date of the approval of the annual report and the financial statements, and is regularly reviewed by the Board.

RISK MANAGEMENT FRAMEWORK

The Board recognizes that the management of significant risks represents an integral part of the Group's operations. The ability to identify and then manage well, such risks, is critical to the achievement or otherwise, of the Group's corporate and financial objectives. This ongoing process, is undertaken in all key areas of the Group's operations, including at all operating subsidiaries. This is subject to regular review by the Board.

Internal Control Statement

20 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

CONTROL STRUCTURE AND ENVIRONMENT

The Board ensures that the proper control environment exists within which the Group and its employees conduct themselves. The following are the key elements of control adopted in achieving this:

x

Independence of the Audit Committee

The Audit Committee comprises a majority of independent, and non-executive directors, who bring a wealth of experience and diverse qualifications. The Audit Committee has full access to both the External and Internal Auditors. The Audit Committee considers the adequacy and effectiveness of internal control procedures put in place during the financial year. The Audit Committee regularly reviews internal control issues identified by the Internal Auditors, by the External Auditors as well as in some instances by the management team in their quarterly reports. A detailed review of the activities of the Audit Committee over the course of the financial year is set out in the Audit Committee Report.

x

Organisational Structure

In addition to the Audit Committee, the Board in discharging its duties is supported by the Nomination Committee and a management committee comprising senior management personnel of the subsidiaries of the Group. The Group operates within well-defined structures, with terms of reference and job functions in place for the Group Chief Executive/Managing Director, Executive Director and other senior management staff of the Group. Reporting lines within the Group are clearly set out with regular feedback between individual subsidiaries and senior management staff at the holding company.

x

Policies and Procedures and Authority Limits

The Group's major subsidiaries operate in line with properly documented policies and procedures with clearly defined authority limits. These authority limits have been approved by the Board taking into consideration accountability and responsibility, and are clearly outlined in the Group Authority Manual ("GAM") which the Board had adopted previously. The GAM provides a clear operational framework for the Group, the management and employees. For situations not covered under the GAM, the Board will consider the matter at hand and arrive at its decision, or to delegate the same to key management personnel for their further action.

x

Financial and Operational Information

The Board receives and reviews regular reports regarding the operations of the various subsidiaries within the Group. Budgets, business plans, and performance data for individual subsidiaries are reviewed by the senior management team, and are thereafter tabled to the Board for their approval and adoption.

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 21

MONITORING AND REVIEW

The Board, with assistance from the Internal Auditors, has developed a monitoring and reporting process whereby the significant risks to the individual subsidiaries and also to the Group are evaluated and monitored. Appropriate controls are developed where deemed necessary and the effectiveness of these controls are thereafter reviewed and reported on by the Internal Auditors.

x

Performance Monitoring and Review

Directors are provided with, and discuss and review performance reports for the Group regularly at the Board meetings. These reports cover financial information, operational issues, business development matters as well as corporate and compliance matters.

x

Monitoring Controls

The Group has an internal audit function, whose primary responsibility is to provide an independent evaluation of the system of internal control as well as the risk management framework. This independent evaluation is intended to assure the Board, through the Audit Committee, that the systems of internal control have functioned substantially as intended. The Internal Auditors submit reports on a quarterly basis to the Audit Committee which are tabled at the corresponding quarterly meetings. These are reviewed and acknowledged by the Audit Committee and remedial action taken where necessary to mitigate and manage risks identified. Where required, further controls as may be deemed necessary are designed and implemented. The audit plan for the subsequent periods are also tabled setting out the entities to be audited and the areas of emphasis and will take cognizance of previous findings, and follow up visits conducted. In addition, the annual statutory audit of the Group by the external auditors includes a broad review of the internal control systems in the Group. Control weakness issues are identified via Management Letters and recommendations for appropriate remedial action presented for the Board's consideration.

CONCLUSION

The Board considers the existing systems of internal controls as broadly set out in this Statement currently in place for the Group to be adequate taking into account the business environment within which the Group operates. However, the internal control framework is being continuously reviewed and enhanced to ensure its effectiveness and adequacy. This Statement is made in accordance with the resolution of the Board of Directors dated 9 October 2007.

Additional Compliance Information

22 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

1.

UTILISATION OF PROCEEDS FROM CORPORATE EXERCISES

No corporate exercise involving fund raising was carried out during the year under review.

2.

SHARE BUY-BACK

The Company commenced its share buy-back programme in March 2005. All the shares purchased by the Company were retained as treasury shares. As at 30 September 2007, a total of 1,486,800 ordinary shares have been bought back and held as treasury shares in accordance with Section 67A of the Companies Act, 1965. None of the treasury shares were resold or cancelled during the financial year. The details of the share buy-back carried out by the Company during the financial year and up to 30 September 2007 are as follows: No. of Shares Purchased & Retained as Treasury Shares 100,000 100,000 50,000 250,000

Monthly Breakdown# August 2006 March 2007 August 2007 Total * #

Purchase Price per Share (sen) Lowest Highest Average 24.0 25.5 28.0 24.0 24.0 25.5 28.0 28.0 24.0 25.5 28.0 25.4

Total Consideration Paid (RM)* 24,000 25,500 14,000 63,500

Excluding transaction costs. Other than indicated, there were no shares bought back in other months.

3.

OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES

There were no Options or Warrants in issue during the financial year.

4.

AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY RECEIPT (GDR)

The Company did not sponsor any ADR or GDR programme during the financial year.

5.

IMPOSITION OF SANCTIONS AND/OR PENALTIES

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

6.

NON-AUDIT FEES

No non-audit fees were paid or payable to the external auditors by the Group for the financial year ended 30 June 2007.

7.

PROFIT ESTIMATES, FORECAST OR PROJECTIONS

The Company did not issue any profit estimates, forecasts or projections for the financial year under review.

8.

PROFIT GUARANTEE

The Company did not issue any profit guarantee during the financial year.

9.

MATERIAL CONTRACTS

There was no material contracts entered into by the Company or its subsidiaries, involving directors and major shareholders' interest during the financial year.

Financial Statements

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 23

Directors' Report Statement by Directors Statutory Declaration Report of the Auditors Consolidated Income Statement Consolidated Balance Sheet Consolidated Statement of Changes in Equity Consolidated Cash Flow Statement Income Statement Balance Sheet Statement of Changes in Equity Cash Flow Statement Notes to the Financial Statements

24 27 27 28 29 30 31 32 34 35 36 37 38

Directors' Report

24 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 30 June 2007.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are described in Note 13 to the financial statements. There have been no significant changes in the nature of the principal activities during the financial year.

RESULTS

Group RM Net profit/(loss) for the year Attributable to: Equity holders of the Company Minority interests 8,606,695 Company RM (19,017,688)

6,166,228 2,440,467 8,606,695

(19,017,688) ­ (19,017,688)

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the statements of changes in equity. In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature.

DIVIDENDS

The amount of dividends paid by the Company since 30 June 2006 were as follows: RM In respect of the financial year ended 30 June 2006 as reported in the directors' report of that year: Final dividend of 2% less 28% taxation, on 227,442,427 ordinary shares, declared on 15 December 2006 And paid up to 30 June 2007 1,637,586 1,631,907

Other than those mentioned above, no dividend has been declared or paid by the Company since the end of the previous financial year. The directors do not propose the payment of any final dividend in respect of the current financial year.

DIRECTORS

The names of the directors of the Company in office since the date of the last report and at the date of this report are: Dato' Mohd Annuar bin Zaini Dato' Ahmad Kabeer bin Mohamed Nagoor Azmir Merican bin Dato' Azmi Merican (appointed on 13 August 2007) Krishnan Menon Roslan Bin Mohd Latif (appointed on 26 February 2007) Hj Nordin bin Abu Bakar (resigned on 13 August 2007) Datuk Nasir bin Safar (resigned on 30 December 2006)

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 25

DIRECTORS' BENEFITS

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate. Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors as shown in Note 6 to the financial statements of the Company) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 33 to the financial statements.

DIRECTORS' INTERESTS

According to the register of directors' shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows: Number of Ordinary Shares of RM0.50 Each 1.7.2006 Acquired Sold 30.6.2007 The Company Direct Interest: Dato' Mohd Annuar bin Zaini Nordin bin Abu Bakar Krishnan Menon Indirect Interest: Dato' Ahmad Kabeer bin Mohamed Nagoor 57,000 514,000 300,000 82,641,043 ­ ­ ­ ­ ­ (160,000) ­ ­ 57,000 354,000 300,000 82,641,043

Dato' Ahmad Kabeer bin Mohamed Nagoor by virtue of his interest in shares in the Company is also deemed interested in shares of all the Company's subsidiaries to the extent the Company has an interest.

TREASURY SHARES

During the financial year, the Company repurchased 200,000 (2006: 90,000) of its issued ordinary shares from the open market at an average price of RM0.25 per share. The total consideration paid for the repurchase including transaction costs was RM49,867 (2006: RM24,431). The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965. As at 30 June 2007, the Company held as treasury shares a total of 1,436,800 (2006: 1,236,800) of its 228,679,227 (2006: 228,679,227) issued ordinary shares. Such treasury shares are held at a carrying amount of RM404,529 (2006: RM354,662) and further relevant details are disclosed in Note 22(b) to the financial statements.

Directors' Report

26 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

OTHER STATUTORY INFORMATION

(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 satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(ii) (b)

At the date of this report, the directors are not aware of any circumstances which would render: (i) (ii) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; and the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

(c) (d) (e)

At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. As at the date of this report, there does not exist: (i) (ii) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability of the Group or of the Company which has arisen since the end of the financial year.

(f)

In the opinion of the directors: (i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

(ii)

SIGNIFICANT EVENT

Details of a significant event are disclosed in Note 36 to the financial statements.

AUDITORS

The auditors, Ernst & Young, retire and do not seek reappointment. Signed on behalf of the Board in accordance with a resolution of the directors

Dato' Mohd Annuar bin Zaini Kuala Lumpur, Malaysia 9 October 2007

Dato' Ahmad Kabeer bin Mohamed Nagoor

Statement by Directors

pursuant to section 169(15) of the companies act, 1965

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 27

We, Dato' Mohd Annuar bin Zaini and Dato' Ahmad Kabeer bin Mohamed Nagoor, being two of the directors of AWC Facility Solutions Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 29 to 78 are drawn up in accordance with applicable Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as at 30 June 2007 and of the results and the cash flows of the Group and of the Company for the year then ended. Signed on behalf of the Board in accordance with a resolution of the directors

Dato' Mohd Annuar bin Zaini Kuala Lumpur, Malaysia 9 October 2007

Dato' Ahmad Kabeer bin Mohamed Nagoor

Statutory Declaration

pursuant to section 169(16) of the companies act, 1965

I, Krishnan Menon, being the director primarily responsible for the financial management of AWC Facility Solutions Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 29 to 78 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the abovenamed Krishnan Menon at Kuala Lumpur in the Federal Territory on 9 October 2007

Krishnan Menon

Before me, Soh Ah Kau, AMN No. W 315 Commissioner for Oaths

Report of the Auditors

to the members of AWC Facility Solutions Berhad

28 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

We have audited the financial statements set out on pages 29 to 78. 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 to any other person for the content of this report. We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standards 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 presentation of the financial statements. 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 the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia so as to give a true and fair view of: (i) (ii) (b) the financial position of the Group and of the Company as at 30 June 2007 and of the results and the cash flows of the Group and of the Company for the year then ended; and the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and

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

We have considered the financial statements and the auditors' reports thereon of the subsidiaries of which we have not acted as auditors, as indicated in Note 13 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 have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The auditors' reports on the financial statements of the subsidiaries were not subject to any qualification material to the consolidated financial statements and did not include any comment required to be made under Section 174 (3) of the Act.

Ernst & Young AF: 0039 Chartered Accountants Kuala Lumpur, Malaysia 9 October 2007

Ahmad Zahirudin bin Abdul Rahim No. 2607/12/08(J) Partner

Consolidated Income Statement

for the year ended 30 June 2007

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 29

Note Revenue Cost of sales Gross profit Other operating income Other operating expenses Profit from operations Finance costs Profit before taxation Taxation Net profit for the year Attributable to: Equity holders of the Company Minority interests 4 7 8 3

2007 RM 107,158,294 (75,539,994) 31,618,300 1,348,186 (20,330,243) 12,636,243 (779,001) 11,857,242 (3,250,547) 8,606,695

2006 RM 86,451,747 (58,108,460) 28,343,287 916,556 (18,395,223) 10,864,620 (667,935) 10,196,685 (3,489,146) 6,707,539

6,166,228 2,440,467 8,606,695

5,019,749 1,687,790 6,707,539 2.2

Basic earnings per share (sen)

9

2.7

The accompanying notes form an integral part of the financial statements

Consolidated Balance Sheet

as at 30 June 2007

30 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

Note

2007 RM

2006 RM (Restated)

ASSETS Non-current assets Property, plant and equipment Investment properties Other investments Other intangible assets Goodwill on consolidation Deferred tax assets

11 12 14 15 15 27

11,998,102 3,611,560 34,500 3,991,929 19,445,591 138,819 39,220,501

10,968,432 3,685,446 115,000 3,355,200 7,762,287 168,247 26,054,612

Current assets Inventories Tax recoverable Other receivables Trade receivables Cash and bank balances

16 17 18 21

9,069,939 1,316,694 4,973,914 46,696,234 19,461,286 81,518,067

7,600,001 1,311,288 3,010,209 44,404,461 11,498,568 67,824,527 93,879,139

TOTAL ASSETS EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital Share premium Treasury shares Foreign exchange reserve Accumulated losses Minority interests Total equity Non-current liabilities Long term payables Long term borrowings Deferred tax liabilities

120,738,568

22 22(b) 24

114,339,614 7,649,452 (404,529) 346,885 (56,423,910) 65,507,512 12,496,298 78,003,810

114,339,614 7,649,452 (354,662) 346,885 (60,952,552) 61,028,737 5,147,652 66,176,389

25 26 27

1,500,000 3,651,003 1,170,385 6,321,388

1,500,000 3,557,857 1,424,400 6,482,257

Current liabilities Other payables Trade payables Provision for taxation Short term borrowings

28 29 26

13,885,151 15,858,917 1,596,194 5,073,108 36,413,370

6,732,343 10,816,017 860,939 2,811,194 21,220,493 27,702,750 93,879,139

Total liabilities TOTAL EQUITY AND LIABILITIES

42,734,758 120,738,568

The accompanying notes form an integral part of the financial statements

Share Capital RM Total RM 57,671,378 (24,431) (1,637,959) ­ 5,019,749 61,028,737 5,147,652 (490,000) 1,687,790 ­ ­ (24,431) (1,637,959) (490,000) 6,707,539 66,176,389 3,949,862 61,621,240 7,649,452 ­ ­ ­ ­ 7,649,452 (354,662) 346,885 (60,952,552) ­ ­ ­ ­ ­ 5,019,749 (24,431) ­ ­ ­ ­ (1,637,959) (330,231) 346,885 (64,334,342)

­­­­­­­­­ Non-distributable ­­­­­­­ Foreign Share Treasury Exchange Accumulated Premium Shares Reserve Losses RM RM RM RM Minority Interests RM Total Equity RM

114,339,614 ­ ­ ­ ­

At 1 July 2005 Treasury shares: Repurchase (Note 22(b)) Dividend (Note 10) Dividend paid to minority interests (Note 30) Net profit for the year

At 30 June 2006

114,339,614

At 1 July 2006 As previously stated Prior year adjustment (Note 30) 7,649,452 ­ 7,649,452 ­ ­ ­ ­ 7,649,452 (404,529) 346,885 (56,423,910) (49,867) ­ ­ ­ ­ ­ ­ ­ ­ (1,637,586) 6,166,228 ­ (354,662) 346,885 (60,952,552) 61,028,737 (49,867) (1,637,586) 6,166,228 ­ 65,507,512 (354,662) ­ 346,885 ­ (61,442,552) 490,000 60,538,737 490,000

114,339,614 ­

5,637,652 (490,000) 5,147,652 ­ ­ 2,440,467 4,908,179 12,496,298

66,176,389 ­ 66,176,389 (49,867) (1,637,586) 8,606,695 4,908,179 78,003,810

As restated Treasury shares: Repurchase (Note 22(b)) Dividend (Note 10) Net profit for the year Acquisition of subsidiaries (Note 13) ­ ­ ­ ­

114,339,614

At 30 June 2007

114,339,614

Consolidated Statement of Changes in Equity

for the year ended 30 June 2007

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 31

The accompanying notes form an integral part of the financial statements

Consolidated Cash Flow Statement

for the year ended 30 June 2007

32 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

2007 RM CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Adjustment for: Depreciation of property, plant and equipment Depreciation of investment property Plant and equipment written off Net gain from disposal of plant and equipment Loss on disposal of other investment Provision for warranty Provision for doubtful debts, net Bad debts written off Deposit written off Provision for slow moving stocks Amortisation of deferred expenditure (Writeback)/provision for short-term accumulating compensated absences Net unrealised foreign exchange gain Interest expense Interest income Operating profit before working capital changes Increase in inventories Decrease/(increase) in receivables Increase in payables Cash generated from operations Interest paid Deferred expenditure paid Taxes paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of other investments Net cash outflow for acquisitions (Note 13) Purchase of plant and equipment Proceeds from disposal of plant and equipment Proceeds from disposal of other investment Interest received Net cash used in investing activities 11,857,242 2,306,932 73,886 12,569 (59,077) 37,950 76,060 330,355 10,634 17,614 51,789 2,069,183 (18,129) (20,256) 779,001 (413,737) 17,112,016 (844,286) 7,975,220 3,520,423 27,763,373 (779,001) (456,456) (3,615,817) 22,912,099

2006 RM 10,196,685 2,009,087 73,886 19,797 (114,602) ­ 98,027 1,406,904 11,608 ­ 64,420 1,429,075 31,109 (4,975) 667,935 (247,791) 15,641,165 (591,795) (9,468,556) 855,992 6,436,806 (662,253) ­ (3,141,701) 2,632,852

­ (10,602,697) (1,313,328) 71,748 42,550 413,737 (11,387,990)

(80,500) ­ (1,040,686) 211,846 ­ 240,079 (669,261)

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 33

2007 RM CASH FLOWS FROM FINANCING ACTIVITIES Repayment of term loans Repayment of long term payables Repayment of hire purchase and lease financing Drawdown of trade bills payable Acquisition of treasury shares Dividend paid Net cash used in financing activities NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF FINANCIAL YEAR CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR CASH AND CASH EQUIVALENTS COMPRISE: Cash and bank balances Deposits with licensed banks Bank overdrafts (2,095,269) (1,500,000) (282,946) 1,307,116 (49,867) (1,631,907) (4,252,873) 7,271,236 10,228,887 17,500,123

2006 RM (2,988,453) (1,500,000) (337,657) 52,730 (24,431) (2,106,777) (6,904,588) (4,940,997) 15,169,884 10,228,887

8,162,124 11,299,162 (1,961,163) 17,500,123

4,144,621 7,353,947 (1,269,681) 10,228,887

The accompanying notes form an integral part of the financial statements

Income Statement

for the year ended 30 June 2007

34 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

Note Revenue Other operating expenses (Loss)/profit from operations Finance costs (Loss)/profit before taxation Taxation Net (loss)/profit for the year 3 4 7 8

2007 RM 1,273,292 (20,023,197) (18,749,905) (227,404) (18,977,309) (40,379) (19,017,688)

2006 RM 4,151,167 (1,166,256) 2,984,911 (255,963) 2,728,948 (915,943) 1,813,005

The accompanying notes form an integral part of the financial statements

Balance Sheet

as at 30 June 2007

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 35

Note ASSETS Non-current assets Plant and equipment Investments in subsidiaries

2007 RM

2006 RM

11 13

8,798 111,390,743 111,399,541

12,238 114,946,003 114,958,241

Current assets Tax recoverable Other receivables Due from subsidiaries Cash and bank balances

17 20 21

239,304 21,244 791,312 156,329 1,208,189

112,463 221,244 1,898,132 49,184 2,281,023 117,239,264

TOTAL ASSETS EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital Share premium Treasury shares Merger reserve Accumulated losses Total equity Non-current liabilities Long term payables Long term borrowings

112,607,730

22 22(b) 23

114,339,614 7,649,452 (404,529) 12,522,542 (45,634,366) 88,472,713

114,339,614 7,649,452 (354,662) 12,522,542 (24,979,092) 109,177,854

25 26

1,500,000 1,200,000 2,700,000

1,500,000 2,000,000 3,500,000

Current liabilities Due to subsidiaries Other payables Short term borrowings

20 28 26

15,045,638 5,589,379 800,000 21,435,017

1,522,929 2,238,481 800,000 4,561,410 8,061,410 117,239,264

Total liabilities TOTAL EQUITY AND LIABILITIES

24,135,017 112,607,730

The accompanying notes form an integral part of the financial statements

Statement of Changes in Equity

for the year ended 30 June 2007

36 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

Share Capital RM At 1 July 2005 Treasury shares: Repurchase (Note 22(b)) Dividend (Note 10) Net profit for the year At 30 June 2006 At 1 July 2006 Treasury shares: Repurchase (Note 22(b)) Dividend (Note 10) Net loss for the year At 30 June 2007 114,339,614 ­ ­ ­ 114,339,614 114,339,614 ­ ­ ­ 114,339,614

­­­­­­­­ Non-distributable ­­­­­­­­ Share Treasury Merger Accumulated Premium Shares Reserve Losses RM RM RM RM 7,649,452 ­ ­ ­ 7,649,452 7,649,452 ­ ­ ­ 7,649,452 (330,231) (24,431) ­ ­ (354,662) (354,662) (49,867) ­ ­ (404,529) 12,522,542 ­ ­ ­ 12,522,542 12,522,542 ­ ­ ­ 12,522,542 (25,154,138) ­ (1,637,959) 1,813,005 (24,979,092) (24,979,092) ­ (1,637,586) (19,017,688) (45,634,366)

Total RM 109,027,239 (24,431) (1,637,959) 1,813,005 109,177,854 109,177,854 (49,867) (1,637,586) (19,017,688) 88,472,713

The accompanying notes form an integral part of the financial statements

Cash Flow Statement

for the year ended 30 June 2007

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 37

2007 RM CASH FLOWS FROM OPERATING ACTIVITIES (Loss)/profit before taxation Adjustment for: Depreciation Impairment losses on investment in subsidiaries Provision for short term accumulating compensated absences Interest expense Dividend income Net unrealised foreign exchange gain Operating loss before working capital changes Decrease/(increase) in receivables (Decrease)/increase in payables Net changes in related companies balances Cash generated from operations Interest paid Taxes paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of subsidiaries Purchase of plant and equipment Dividends received Net cash (used in)/generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayment of long term payables Repayment of term loan Acquisition of treasury shares Dividends paid to shareholders Net cash used in financing activities NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF FINANCIAL YEAR CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR (18,977,309) 4,480 18,855,260 ­ 227,404 (697,292) ­ (587,457) 200,000 (154,781) 14,629,529 14,087,291 (227,404) (167,220) 13,692,667

2006 RM 2,728,948 4,236 ­ 5,087 255,963 (3,479,167) (1,714) (486,647) (200,858) 220,124 2,826,858 2,359,477 (255,963) (726,326) 1,377,188

(10,300,000) (1,040) 697,292 (9,603,748)

­ (2,100) 2,479,167 2,477,067

(1,500,000) (800,000) (49,867) (1,631,907) (3,981,774) 107,145 49,184 156,329

(1,500,000) (800,000) (24,431) (1,616,777) (3,941,208) (86,953) 136,137 49,184

The accompanying notes form an integral part of the financial statements

Notes to the Financial Statements

­ 30 June 2007

38 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

1.

CORPORATE INFORMATION

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are described in Note 13. There have been no significant changes in the nature of the principal activities during the financial year . The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Second Board of Bursa Malaysia Securities Berhad. The registered office of the Company is located at 3rd floor, No 79 (Room A), Jalan SS21/60, Damansara Utama, 47400 Petaling Jaya, Selangor Darul Ehsan. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 9 October 2007.

2.

SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

The financial statements comply with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia. At the beginning of the current financial year, the Group and the Company had adopted new and revised FRSs, which are mandatory for financial periods beginning or after 1 January 2006 as described fully in Note 2.3. The financial statements of the Group and of the Company have been prepared under the historical cost convention. The financial statements are presented in Ringgit Malaysia (RM).

2.2 Summary of Significant Accounting Policies

(a) Subsidiaries and Basis of Consolidation (i) Subsidiaries Subsidiaries are entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their 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. In the Company's separate financial statements, investments in subsidiaries are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit and loss. (ii) Basis of Consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are prepared for the same reporting date as the Company. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. In preparing the consolidated financial statements, intragroup balances, transactions and unrealised gains or losses are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances.

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 39

2.

SIGNIFICANT ACCOUNTING POLICIES

(continued)

2.2 Summary of Significant Accounting Policies (continued)

(a) Subsidiaries and Basis of Consolidation (continued) (ii) Basis of Consolidation (continued) Acquisitions of subsidiaries are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition. Any excess of the cost of the acquisition over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. Any excess of the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in profit or loss. Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. It is measured at the minorities' share of the fair value of the subsidiaries' identifiable assets and liabilities at the acquisition date and the minorities' share of changes in the subsidiaries' equity since then. (b) Intangible Assets (i) Goodwill Goodwill acquired in a business combination is initially measured at cost being 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. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. (ii) Other Intangible Assets Deferred Expenditure Deferred expenditure relates to expenses incurred in advance for third parties for the contracted period and are charged to the income statement over the contractual period of 4 to 8 years on a straight-line basis when the services are performed. Research and Development Research expenditure is recognised as an expense when incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will be a success considering its commercial and technological feasibility, and only if the costs can be measured reliably. Other development expenditure is recognised as an expense when incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Marketing Rights Marketing rights are stated at cost and amortised using the straight-line method over the expected economic useful life of 5 years. The marketing rights are not revalued. Software Licenses Software licenses are stated at cost and amortised using the straight-line method over the expected economic useful life of 5 years. The software license is not revalued.

Notes to the Financial Statements

40 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

2.

SIGNIFICANT ACCOUNTING POLICIES

(continued)

2.2 Summary of Significant Accounting Policies (continued)

(c) Property, Plant and Equipment and Depreciation Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Freehold land and capital work-in-progress are not depreciated. Leasehold condominiums are depreciated over the remaining lease period. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates: Freehold buildings Freehold apartments Leasehold buildings Computer equipment and software Machinery, equipment and motor vehicles Furniture, fittings and office equipment Electrical installations and renovation 2% 2% Over lease period of 96 years 10 ­ 50% 10 ­ 20% 8 ­ 20% 10 ­ 33 1/3%

When an indication of impairment exists, the carrying amount of the asset is written down immediately to its recoverable value. Upon the disposal of an item of property, plant or equipment, the difference between the net disposal proceeds and the net carrying amount is recognised in the income statement. (d) Investment Properties Investment properties are land or buildings held by the Company or held under a finance lease, to earn rental income or for capital appreciation or both. Investment properties are stated at cost less accumulated depreciation and accumulated impairment losses. Upon the disposal of an item of investment property, the difference between the net disposal proceeds and the carrying amount is recognized in the income statement. When an indication of impairment exists, the carrying amount of the asset is written down immediately to its recoverable value. Depreciation of investment property is provided for on a straight line basis to write off the cost of the building to its residual value over the estimated useful life, at the annual rate of 2%. (e) Investments in Subsidiaries The Company's investments in subsidiaries are stated at cost less impairment losses. When an indication of impairment exists, the carrying value of the investment is reviewed and if found to be in excess of its recoverable value, is written down immediately to its recoverable amount. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is recognised in the income statement.

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 41

2.

SIGNIFICANT ACCOUNTING POLICIES

(continued)

2.2 Summary of Significant Accounting Policies (continued)

(f) Construction Contracts Where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs are recognised as revenue and expenses respectively by using the stage of completion method. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs. Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. When the total of costs incurred on construction contracts plus recognised profits (less recognised losses), exceeds progress billings, the balance is classified as amount due from customers on contracts. When progress billings exceed costs incurred plus recognised profits (less recognised losses), the balance is classified as amount due to customers on contracts. (g) Impairment of Non-financial Assets The carrying amounts of the Group's assets, other than construction contract assets, property development costs, inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated to determine the amount of impairment loss. For goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date or more frequently when indicators of impairment are identified. For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for 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 CGUs, or groups of CGUs, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. An asset's recoverable amount is the higher of an asset's or CGU's fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. An impairment loss is recognised in profit or loss in the period in which it arises. Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss.

Notes to the Financial Statements

42 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

2.

SIGNIFICANT ACCOUNTING POLICIES

(continued)

2.2 Summary of Significant Accounting Policies (continued)

(h) Inventories Inventories consist of consumables, trading and installation goods. Consumables are stated at lower of cost (determined using the first in, first out method) and net realisable value. Trading and installation goods are stated at the lower of cost (determined using the weighted average method) and net realisable value. Cost of inventories include all costs incurred in bringing the inventories to their present location and condition. 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. Provision is made where necessary for obsolete, slow moving and defective inventories. (i) Financial Instruments Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. (i) Cash and Cash Equivalents For the purposes of the cash flow statements, cash and cash equivalents include cash on hand and at bank and deposits at call which have an insignificant risk of changes in value, net of outstanding bank overdrafts. (ii) Other Non-Current Investments Non-current investments other than investments in subsidiaries, associates and jointly controlled entities are stated at cost less impairment losses. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in profit or loss. (iii) Trade Receivables Receivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date. (iv) Trade Payables Payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received. (v) Interest Bearing Loans and Borrowings All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 43

2.

SIGNIFICANT ACCOUNTING POLICIES

(continued)

2.2 Summary of Significant Accounting Policies (continued)

(i) Financial Instruments (continued) (vi) Equity Instruments Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared. The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided. Costs of issuing equity securities in connection with a business combination are included in the cost of acquisition. The consideration paid, including attributable transaction costs on repurchased ordinary shares of the Company that have not been cancelled, are classified as treasury shares and presented as a deduction from equity. No gain or loss is recognised in the income statement on the sale, re-issuance or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity. (j) Hire Purchase and Finance Leases A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incident to ownership. All other leases are classified as operating leases. Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the balance sheet as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Group's incremental borrowing rate is used. Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised as an expense in the income statement over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period. The depreciation policy for leased assets is consistent with that for depreciable property, plant and equipment as described in Note 2.2(c). (k) Provisions for Liabilities Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

Notes to the Financial Statements

44 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

2.

SIGNIFICANT ACCOUNTING POLICIES

(continued)

2.2 Summary of Significant Accounting Policies (continued)

(l) Income Tax Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date. Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unutilised tax losses and unutilised tax credits to the extent that it is probable that taxable profit will be available against which these can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill. (m) Employee Benefits (i) Short term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. (ii) Defined contribution plans As required by law, companies in Malaysia make contributions to the Employees Provident Fund ("EPF"). Two of the Group's foreign subsidiaries make contributions to their country's statutory pension scheme. Such contributions are recognised as an expense in the income statement as incurred. (n) Revenue Recognition Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably. (i) Construction contracts Revenue from construction contracts is accounted for by the stage of completion method as described in Note 2.2(f). (ii) Sale of goods Revenue relating to sale of goods is recognised net of discounts upon the transfer of risks and rewards. (iii) Revenue from services Revenue from services rendered is recognised net of service taxes and discounts as and when the services are performed. (iv) Rental income Rental income is accounted for on an accrual basis.

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 45

2.

SIGNIFICANT ACCOUNTING POLICIES

(continued)

2.2 Summary of Significant Accounting Policies (continued)

(n) Revenue Recognition (continued) (v) Dividend income Dividend income is recognised when the right to receive payment is established. (vi) Interest income Interest income is accounted for on an accrual basis. (o) Foreign Currencies (i) Functional and Presentation Currency The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company's functional currency. (ii) Foreign Currency Transactions In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded in the respective functional currencies using the exchange rates prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Nonmonetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period except for exchange differences arising on monetary items that form part of the Group's net investment in foreign operations. Exchange differences arising on monetary items that form part of the Group's net investment in foreign operations, where that monetary item is denominated in either the functional currency of the reporting entity or the foreign operations, are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange differences arising on monetary items that form part of the Group's net investment in foreign operations, where that monetary item is denominated in a currency other than the functional currency of either the reporting entity or the foreign operations, are recognised in profit or loss for the period. Exchange differences arising on monetary items that form part of the Company's net investment in foreign operations, regardless of the currency of the monetary item, are recognised in profit or loss in the Company's financial statements or the individual financial statements of the foreign operations, as appropriate. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity. (iii) Foreign Entities Financial statements of foreign consolidated subsidiaries are translated at year-end exchange rates with respect to the assets and liabilities, and at exchange rates at the dates of the transactions with respect to the income statement. All resulting translation differences are recognised in equity. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the Company and translated at the exchange rate ruling at the date of the transaction.

Notes to the Financial Statements

46 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

2.

SIGNIFICANT ACCOUNTING POLICIES

(continued)

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

On 1 July 2006, the Group and the Company adopted the following FRSs mandatory for financial periods beginning on or after 1 January 2006: FRS 2 FRS 3 FRS 5 FRS 101 FRS 102 FRS 108 FRS 110 FRS 116 FRS 121 FRS 127 FRS 128 FRS 131 FRS 132 FRS 133 FRS 136 FRS 138 FRS 140 Share-based Payment Business Combinations Non-current Assets Held for Sale and Discontinued Operations Presentation of Financial Statements Inventories Accounting Policies, Changes in Estimates and Errors Events after the Balance Sheet Date Property, Plant and Equipment The Effects of Changes in Foreign Exchange Rates Consolidated and Separate Financial Statements Investments in Associates Interests in Joint Ventures Financial Instruments: Disclosure and Presentation Earnings Per Share Impairment of Assets Intangible Assets Investment Property

The adoption of FRS 2, 3, 5, 102, 108, 110, 116, 121, 127, 128, 131, 132, 133, 136 and 138 did not result in significant changes in accounting policies of the Group and the Company. The principal changes in accounting policies and their financial impact on the Group and the Company, resulting from the adoption of the other new and revised FRSs are as discussed below: (a) FRS 101: Presentation of Financial Statements The adoption of the revised FRS 101 has affected the presentation of balance sheet, income statement as well as the statement of changes in equity. Among other things, FRS 101 requires disclosure on the face of the statement of changes in equity, total recognized income and expenses for the period. The current year's presentation of the Group's financial statements is based on the revised requirements of FRS 101, with the comparatives restated to conform to the current year's presentations. (b) FRS 140: Investment Property Investment property is land or buildings held by the Group or held under a finance lease, to earn rental income or for capital appreciation or both. Prior to 1 July 2006, investment property of RM3,685,446 was classified as land and buildings as part of property, plant and equipment. Investment property is stated at cost less accumulated depreciation and accumulated impairment losses.

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 47

2.

SIGNIFICANT ACCOUNTING POLICIES

(continued)

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

(c) Summary of Effects of adopting new and revised FRSs The following comparative amounts have been restated as a result of adopting the new and revised FRSs: Previously Stated Increase/ (Decrease) FRS 140 Note 2.3 (b) RM (3,685,446) 3,685,446 Restated

Description of change RM At 30 June 2006 Property, plant and equipment Investment properties 14,653,878 ­

RM 10,968,432 3,685,446

The Group and the Company has not adopted the following FRSs, amendments and interpretations prior to the proposed adoption dates: FRS, Amendments to FRS and Interpretations FRS 117: Leases FRS 124: Related Party Disclosures FRS 139: Financial Instruments: Recognition and Measurement FRS 6: Exploration for and Evaluation of Mineral Resources Amendment to FRS 121: The Effects of Changes in Foreign Exchange Rates ­ Net Investment in a Foreign Operation FRS 112: Income Taxes FRS 107: Cash Flows Statements FRS 111: Construction Contracts FRS 118: Revenue FRS 119: Employee Benefits FRS 120: Accounting for Government Grants and Disclosure of Government Assistance FRS 126: Accounting and Reporting by Retirement Benefits Plans FRS 129: Financial Reporting in Hyperinflationary Economies FRS 134: Interim Financial Reporting FRS 137: Provision, Contingent Liabilities and Contingent Assets IC Interpretation 1: Changes in Existing Decommissioning, Restoration and Similar Liabilities IC Interpretation 2: Members' Shares in Co-operative Entities and Similar Liabilities IC Interpretation 5: Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds IC Interpretation 6: Liabilities arising from Participating in a Specific Market ­ Waste Electrical and Electronic Equipment Effective for financial periods beginning on or after 1 October 2006 1 October 2006 Date deferred 1 January 2007 1 July 2007 1 July 2007 1 July 2007 1 July 2007 1 July 2007 1 July 2007 1 July 2007 1 July 2007 1 July 2007 1 July 2007 1 July 2007 1 July 2007 1 July 2007 1 July 2007 1 July 2007

Notes to the Financial Statements

48 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

2.

SIGNIFICANT ACCOUNTING POLICIES

(continued)

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

(c) Summary of Effects of adopting new and revised FRSs (continued) FRS, Amendments to FRS and Interpretations IC Interpretation 7: Applying the Restatement Approach under FRS 1292004 Financial Reporting in Hyperinflationary Economies IC Interpretation 8: Scope of FRS 2 Effective for financial periods beginning on or after 1 July 2007 1 July 2007

The Company is exempted from disclosing the possible impact of the initial application of FRS 117, FRS 124 and FRS 139. The other amendments, interpretations and FRSs are not expected to have any material impact on the financial statements of the Group and the Company upon their adoption.

2.4 Changes in Estimates

The revised 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 financial year end. The Group anticipates that the residual values of its assets will be insignificant. As a result, residual values are not taken into consideration for the computation of the depreciable amount. There were no other changes in estimates that have a material effect on the result of the current financial year.

2.5 Significant Judgement and Estimates

(i) Impairment of goodwill The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash-generating units ("CGU") to which goodwill is allocated. Estimating a value-in-use amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amounts of goodwill as at 30 June 2007 was RM19,445,591 (2006: RM7,762,287). Further details are disclosed in Note 15. (ii) Revenue recognition on construction contracts The Group recognises construction and other project implementation contract revenue and expenses by using the stage of completion method. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs. Significant judgement is required in determining the stage of completion of the contract, the extent of contract costs incurred, estimated total contract revenue and costs, as well as the recoverability of the contract amount. In making these judgements, the Group evaluates based on past experience and by relying on the work of specialists.

3.

REVENUE

Group 2007 RM Facilities management Mechanical and electrical engineering services Landscape and nursery Repair services Dividend income Management fees 43,169,797 59,072,095 1,270,866 3,645,536 ­ ­ 107,158,294 2006 RM 45,991,673 33,256,432 3,846,746 3,356,896 ­ ­ 86,451,747 Company 2007 2006 RM RM ­ ­ ­ ­ 697,292 576,000 1,273,292 ­ ­ ­ ­ 3,479,167 672,000 4,151,167

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 49

4.

PROFIT/(LOSS) FROM OPERATIONS

Profit/(loss) from operations is stated after charging/(crediting): Group 2007 RM Staff costs (Note 5) Non-executive directors' remuneration (Note 6) Auditors' remuneration: ­ Statutory audit Ernst & Young Other auditors Rental expense for: ­ Buildings ­ Machineries Rental income Amortisation of deferred expenditure Depreciation ­ Property, plant and equipment ­ Investment properties Deposit written off Foreign exchange gain ­ Realised ­ Unrealised Plant and equipment written off Impairment losses on investment in subsidiaries Net gain on disposal of plant and equipment Loss on disposal of other investment Interest income from: ­ Deposits ­ Others (Writeback)/Provision for short-term accumulating compensated absences Provision for slow moving stocks Provision for warranty Provision for doubtful debts, net Bad debts written off 18,744,374 225,000 2006 RM 16,119,247 202,103 Company 2007 2006 RM RM 520,983 75,000 504,864 52,103

72,000 90,100 1,583,221 33,623 (295,841) 2,069,183 2,306,932 73,886 17,614 (113,223) (20,256) 12,569 ­ (59,077) 37,950 (413,737) ­ (18,129) 51,789 76,060 330,355 10,634

90,000 45,935 764,080 215,959 (296,554) 1,429,075 2,009,087 73,886 ­ (57,041) (4,975) 19,797 ­ (114,602) ­ (247,594) (197) 31,109 64,420 98,027 1,406,904 11,608

29,000 ­ 42,000 ­ ­ ­ 4,480 ­ ­ ­ ­ ­ 18,855,260 ­ ­ ­ ­ ­ ­ ­ ­ ­

25,000 ­ 42,000 ­ ­ ­ 4,236 ­ ­ ­ (1,714) ­ ­ ­ ­ ­ ­ 5,087 ­ ­ ­ ­

5.

STAFF COSTS

Group 2007 RM Salaries and wages Employees provident fund Social security costs (Write back)/provision for short term accumulating compensated absences Gratuity expenses Other staff related expenses 14,626,259 1,570,806 156,142 (18,129) 240,446 2,168,850 18,744,374 2006 RM 12,417,070 1,378,036 159,752 31,109 82,208 2,051,072 16,119,247 Company 2007 2006 RM RM 426,058 54,553 1,765 ­ ­ 38,607 520,983 403,284 52,848 1,697 5,087 ­ 41,948 504,864

Included in staff costs of the Group and of the Company are executive directors' remuneration amounting to RM1,935,746 (2006: RM1,971,774) and RM201,600 (2006: RM201,600) respectively as further disclosed in Note 6.

Notes to the Financial Statements

50 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

6.

DIRECTORS' REMUNERATION

Group 2007 RM Directors of the Company Executive: Salaries and other emoluments Employees provident fund and social security costs Bonus Benefits in kind 2006 RM Company 2007 2006 RM RM

330,000 44,760 25,000 54,000 453,760

330,000 44,760 25,000 66,500 466,260

180,000 21,600 ­ ­ 201,600

180,000 21,600 ­ ­ 201,600

Non-Executive: Fees

225,000 678,760

202,103 668,363

75,000 276,600

52,103 253,703

Directors of Subsidiaries Executive: Salaries and other emoluments Fees Employees provident fund and social security costs Bonus Benefits-in-kind

1,192,323 120,750 143,118 79,795 57,831 1,593,817

1,171,455 209,456 111,404 79,699 58,278 1,630,292 2,298,655

­ ­ ­ ­ ­ ­ 276,600

­ ­ ­ ­ ­ ­ 253,703

Total Analysis excluding benefits-in-kind: Total executive directors' remuneration excluding benefits-in-kind (Note 5) Total non-executive directors' remuneration (Note 4) Total directors' remuneration excluding benefits-in-kind

2,272,577

1,935,746 225,000 2,160,746

1,971,774 202,103 2,173,877

201,600 75,000 276,600

201,600 52,103 253,703

The number of directors of the Company whose total remuneration during the financial year fell within the following bands is analysed below: Number of Directors 2007 2006 Executive directors: RM200,001 ­ RM250,000 RM250,001 ­ RM300,000 Non-executive directors: Below RM100,000 RM100,001 ­ RM200,000 1 1 2 1 1 1 3 1

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 51

7.

FINANCE COSTS

Group 2007 RM Interest expense on: Bank overdrafts Term loan Hire purchase and finance lease Others 187,765 462,619 40,469 88,148 779,001 2006 RM 118,344 496,739 46,592 6,260 667,935 Company 2007 2006 RM RM ­ 206,363 ­ 21,041 227,404 ­ 255,963 ­ ­ 255,963

8.

TAXATION

Group 2007 RM Tax expense for the year Under/(over)provision of tax expense in prior years 3,807,076 68,011 3,875,087 Deferred taxation (Note 27): Relating to origination and reversal of temporary differences (Over)/under provision in prior years 2006 RM 4,032,521 (10,444) 4,022,077 Company 2007 2006 RM RM 86,919 (46,540) 40,379 923,306 (7,363) 915,943

(602,184) (22,356) (624,540) 3,250,547

(617,241) 84,310 (532,931) 3,489,146

­ ­ ­ 40,379

­ ­ ­ 915,943

Domestic income tax is calculated at the Malaysian statutory tax rate of 27% (2006: 28%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. During the financial year, the income tax rate applicable to the subsidiaries in Singapore was 18% (2006: 20%).

Notes to the Financial Statements

52 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

8.

TAXATION

(continued)

A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows: Group 2007 RM Profit/(loss) before taxation Taxation at Malaysian statutory tax rate of 27% (2006: 28%) Effect of different tax rates in other countries Effect on opening deferred tax of reduction in income tax rate Tax incentive obtained from differential rate of 20% Effect of expenses not deductible for tax purposes Effect of income not subject to tax Effect of utilisation of previously unrecognised deferred tax assets Deferred tax assets not recognised during the year (Over)/underprovision of deferred tax in prior year Under/(over) provision of income tax in prior years 11,857,242 2006 RM 10,196,685 Company 2007 2006 RM RM (18,977,309) 2,728,948

3,201,455 113,271 (75,370) (160,547) 578,788 (632,252) (68,308) 247,855 (22,356) 68,011 3,250,547

2,855,072 (89,292) ­ (141,651) 403,595 (25,918) ­ 413,474 84,310 (10,444) 3,489,146

(5,123,874) ­ ­ ­ 5,206,529 ­ ­ 4,264 ­ (46,540) 40,379

764,105 ­ ­ ­ 157,981 ­ ­ 1,220 ­ (7,363) 915,943

The corporate tax rates for companies with paid up capital of RM2.5 million and below at the beginning of the basis period for the year of assessment are as follows: Chargeable Income First RM500,000 Amount exceeding RM500,000 Rate 20% 27%

9.

BASIC EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profit for the year by the weighted average number of ordinary shares in issue during the financial year, excluding treasury shares held by the Company. 2007 Net profit for the year (RM) Weighted average number of ordinary shares in issue Basic earnings per share (sen) 6,166,228 227,325,760 2.7 2006 5,019,749 227,492,427 2.2

There are no shares or other instruments in issue which have a dilutive effect on the earnings per share of the Group.

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 53

10. DIVIDENDS

Amount 2007 RM Final dividend of 2% less tax of 28%, declared on 15 December 2006 in respect of the financial year ended 30 June 2006 Final dividend of 2% less tax of 28%, declared on 21 November 2005 in respect of the financial year ended 30 June 2005 2006 RM Net dividend per share 2007 2006 sen sen

1,637,586

­

1.43

-

­ 1,637,586

1,637,959 1,637,959

­ 1.43

1.43 1.43

No dividend is proposed in respect of the current financial year.

11. PROPERTY, PLANT AND EQUIPMENT

Computer Equipment and Software RM Machinery, Equipment and Motor Vehicles RM Furniture, Fittings and Office Equipment RM Electrical Installations and Renovations RM

Land and Buildings* RM Group At 30 June 2007 Cost At 1 July 2006 Acquisition of subsidiaries Additions Disposals Write offs At 30 June 2007 Accumulated Depreciation At 1 July 2006 Acquisition of subsidiaries Charge for the year Disposals Write offs At 30 June 2007 Net Carrying Amount At 30 June 2007 4,281,065 ­ 46,535 ­ ­ 4,327,600

Total RM

4,971,969 689,706 527,175 (2,988) (55,406) 6,130,456

7,409,708 374,804 1,363,863 (255,163) ­ 8,893,212

4,104,537 831,980 291,821 (9,307) (56,115) 5,162,916

816,343 17,662 78,596 ­ (42,252) 870,349

21,583,622 1,914,152 2,307,990 (267,458) (153,773) 25,384,533

385,008 ­ 72,731 ­ ­ 457,739

3,027,924 491,136 857,287 (2,987) (53,142) 4,320,218

4,176,911 224,069 933,248 (245,119) ­ 5,089,109

2,218,935 142,269 399,526 (6,681) (51,069) 2,702,980

806,412 2,826 44,140 ­ (36,993) 816,385

10,615,190 860,300 2,306,932 (254,787) (141,204) 13,386,431

3,869,861

1,810,238

3,804,103

2,459,936

53,964

11,998,102

Notes to the Financial Statements

54 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

11. PROPERTY, PLANT AND EQUIPMENT

(continued) Machinery, Equipment and Motor Vehicles RM Furniture, Fittings and Office Equipment RM Electrical Installations and Renovations RM

Land and Buildings* RM Group At 30 June 2006 Cost At 1 July 2005 Additions Disposals Write offs At 30 June 2006 Accumulated Depreciation At 1 July 2005 Charge for the year Disposals Write offs At 30 June 2006 Net Carrying Amount At 30 June 2006 * Land and Buildings 4,281,065 ­ ­ ­ 4,281,065

Computer Equipment and Software RM

Total RM

4,729,549 301,628 (26,112) (33,096) 4,971,969

7,134,543 969,009 (681,648) (12,196) 7,409,708

4,042,214 106,751 (15,677) (28,751) 4,104,537

798,203 18,140 ­ ­ 816,343

20,985,574 1,395,528 (723,437) (74,043) 21,583,622

312,589 72,419 ­ ­ 385,008

2,457,078 623,891 (26,112) (26,933) 3,027,924

3,844,337 922,856 (584,988) (5,294) 4,176,911

2,054,472 201,575 (15,093) (22,019) 2,218,935

618,066 188,346 ­ ­ 806,412

9,286,542 2,009,087 (626,193) (54,246) 10,615,190

3,896,057

1,944,045

3,232,797

1,885,602

9,931

10,968,432

Freehold Land RM At 30 June 2007 Group Cost At 1 July 2006 Additions At 30 June 2007 Accumulated Depreciation At 1 July 2006 Charge for the year At 30 June 2007 Net Carrying Amount At 30 June 2007 660,000 ­ 660,000

Freehold Buildings RM

Total RM

3,621,065 46,535 3,667,600

4,281,065 46,535 4,327,600

­ ­ ­

385,008 72,731 457,739

385,008 72,731 457,739

660,000

3,209,861

3,869,861

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 55

11. PROPERTY, PLANT AND EQUIPMENT

* Land and Buildings

(continued)

Freehold Land RM At 30 June 2006 Cost At 1 July 2005/At 30 June 2006 Accumulated Depreciation At 1 July 2005 Charge for the year At 30 June 2006 Net Carrying Amount At 30 June 2006 660,000

Freehold Buildings RM

Total RM

3,621,065

4,281,065

­ ­ ­

238,703 146,305 385,008

238,703 146,305 385,008

660,000

3,236,057 Furniture, Fittings and Office Equipment RM

3,896,057

Computer Equipment and Software RM Company At 30 June 2007 Cost At 1 July 2006 Additions At 30 June 2007 Accumulated Depreciation At 1 July 2006 Charge during the year At 30 June 2007 Net Carrying Amount At 30 June 2007 16,928 1,040 17,968

Total RM

4,603 ­ 4,603

21,531 1,040 22,571

7,965 3,559 11,524

1,328 921 2,249

9,293 4,480 13,773

6,444

2,354

8,798

Notes to the Financial Statements

56 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

11. PROPERTY, PLANT AND EQUIPMENT

(continued) Computer Equipment and Software RM Furniture, Fittings and Office Equipment RM

Total RM

At 30 June 2006 Cost At 1 July 2005 Additions At 30 June 2006 Accumulated Depreciation At 1 July 2005 Charge during the year At 30 June 2006 Net Carrying Amount At 30 June 2006 (a) (b) 16,928 ­ 16,928 2,503 2,100 4,603 19,431 2,100 21,531

4,580 3,385 7,965

477 851 1,328

5,057 4,236 9,293

8,963

3,275

12,238

Included in property, plant and equipment of the Group are fully depreciated assets which are still in use costing RM3,338,313 (2006: RM3,486,278). Net book value of property, plant and equipment held under hire purchase and finance lease arrangements are as follows: Group 2007 RM Motor vehicles Machinery and equipment 1,451,352 32,243 1,483,595 2006 RM 614,119 2,300 616,419

(c) (d) (e)

During the year, the Group acquired property, plant and equipment with an aggregate cost of RM2,307,990 (2006: RM1,395,528) of which RM1,110,162 (2006: RM354,842) was acquired by means of finance lease arrangements. Freehold land and freehold buildings with net book value of RM3,869,861 (2006: RM3,896,057) have been pledged for borrowings as disclosed in Note 26(ii)(e). Property, plant and equipment with net book value of RM1,376,645 (2006: RM1,398,171) have been pledged for borrowings as disclosed in Note 26(ii)(f).

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 57

12. INVESTMENT PROPERTIES

Freehold Buildings RM Group At 30 June 2007 Cost At 1 July 2006/30 June 2007 Accumulated Depreciation At 1 July 2006 Charge during the year At 30 June 2007 Net Carrying Amount At 30 June 2007 At 30 June 2006 Cost At 1 July 2005/30 June 2006 Accumulated Depreciation At 1 July 2005 Charge during the year At 30 June 2006 Net Carrying Amount At 30 June 2006 3,297,350 761,999 4,059,349 3,297,350 761,999 4,059,349 Leasehold Buildings RM Total RM

330,250 65,947 396,197

43,653 7,939 51,592

373,903 73,886 447,789

2,901,153

710,407

3,611,560

264,303 65,947 330,250

35,714 7,939 43,653

300,017 73,886 373,903

2,967,100

718,346

3,685,446

Separate strata titles have yet to be issued by the relevant authority for the above investment properties. The leasehold condominiums with net book value of RM710,407 (2006: RM718,346) are under a long term lease while the freehold buildings have been pledged for borrowings as disclosed in Note 26(ii)(e). The fair value of investment properties as at the reporting date is estimated to be approximately RM4,500,000.

Notes to the Financial Statements

58 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

13. INVESTMENTS IN SUBSIDIARIES

Company 2007 2006 RM RM Unquoted shares at cost At 1 July 2006 Acquisition during the year Less: Accumulated impairment losses At 30 June 2007 (a) Details of the subsidiaries included in the Group financial statements are as follows: Effective Equity Interest Held (%) 2007 2006 100% 100% 100% 100% 100% 100% 100% 100% 114,946,003 15,300,000 130,246,003 (18,855,260) 111,390,743 114,946,003 ­ 114,946,003 ­ 114,946,003

Name of Company Ambang Wira Sdn. Bhd. ("AWSB") AW Facility Management Sdn. Bhd. ("AWFM") M & C Engineering and Trading Sdn. Bhd. ("M&C(M)") M & C Engineering and Trading (S) Pte. Ltd.* ("M&C(S)") Environmental and Landscape Services Sdn. Bhd.* ("ELS") (formerly known as Gold Green Landscape and Nursery Sdn. Bhd.) Kejuruteraan Putrajaya Sdn. Bhd.* ("KPSB") Plant & Maintenance Engineering Sdn. Bhd.* ("PME") Nexaldes Sdn. Bhd.* ("NSB") Nexaldes (S) Pte. Ltd.* ("NPL") Beam Central Vacuum Systems (M) Sdn. Bhd.* ("BCVS") Stream Industries Sdn. Bhd.* ("SISB")

Country of Incorporation Malaysia Malaysia Malaysia Singapore

Principal Activities Comprehensive facility management services Comprehensive facility management services Air-conditioning and building automation Air-conditioning and building automation Landscaping

Malaysia

100%

100%

Malaysia Malaysia

100% 100%

100% 100%

Mechanical and electrical engineering services Provision of repair and refurbishment services for rotating machines General trading and installation of cleaning equipment and vacuum systems Environmental engineering and general trading Dormant

Malaysia

51%

51%

Singapore Malaysia

51% 51%

51% 51%

Malaysia

51%

51%

Environmental engineering and general trading

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 59

13. INVESTMENTS IN SUBSIDIARIES

(a)

(continued)

Details of the subsidiaries included in the Group financial statements are as follows: Effective Equity Interest Held (%) 2007 2006 51% 0%

Name of Company Infinite QL Sdn. Bhd.* ("IQL")

Country of Incorporation Malaysia

Principal Activities Research and development in microelectronics and software products, manufacture and distribution of consumer electronics and security related products. Research and development in microelectronics and software products, manufacture and distribution of consumer electronics and security related products. Research and development, manufacture and distribution of consumer electronics and security related products. Research and development, manufacture and distribution of consumer electronics and security related products. Research and development, manufacture and distribution of consumer electronics and security related products. Consultancy services and training

Cardax Sales & Services Sdn. Bhd.* ("Cardax")

Malaysia

51%

0%

Vdosoft Sdn. Bhd.* ("VDO")

Malaysia

51%

0%

Device 4U Sdn. Bhd.* ("D4U")

Malaysia

51%

0%

Meps Devices Sdn. Bhd.* ("MEPS")

Malaysia

51%

0%

IQL Consulting Sdn. Bhd.* ("IQLC") *

Malaysia

26%

0%

Audited by firms of chartered accountants other than Ernst & Young

On 29 September 2006, the Group acquired a 51% equity interest in IQL and its subsidiaries, Cardax, VDO, D4U, MEPS, for a total cash consideration of RM15,300,000. IQL had on 15 November 2006, acquired a 51% equity interest in IQLC for a total cash consideration of RM510.

Notes to the Financial Statements

60 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

13. INVESTMENTS IN SUBSIDIARIES

(b)

(continued)

The acquisitions undertaken in the current financial year had the following effect on the Group's financial results for that year: 2007 RM Revenue Profit before taxation Net profit for the year 13,850,567 2,916,110 2,678,493

The acquisitions had the following effect on the financial position of the Group as at the end of the current financial year: 2007 RM Property, plant and equipment Goodwill on consolidation Deferred expenditure Inventories Trade and other receivables Tax refundable Deposits with licensed banks Cash and bank balances Borrowings Trade and other payables Provision for taxation Deferred tax liabilities Minority interest Group's share of net assets 1,283,561 1,159,553 2,072,573 1,512,477 14,014,341 1,601 1,273,739 491,664 (2,930,907) (5,484,518) (664,243) (430,953) 12,298,888 (6,025,964) 6,272,924

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 61

13. INVESTMENTS IN SUBSIDIARIES

(continued)

The fair values of the assets acquired and liabilities assumed from the acquisition of the subsidiaries were as follows: 2007 RM Property, plant and equipment Intangible assets Goodwill Inventories Trade and other receivables Deposits with licensed banks Cash and bank balances Borrowings Trade and other payables Provision for taxation Deferred tax liabilities Fair value of total net assets Less: Minority interests Group's share of net assets Goodwill on acquisition Cost of acquisition Total goodwill arising from acquisition (Note 15) Purchase consideration satisfied by: Cash Balance of purchase consideration Total cost of acquisitions Cash outflow arising from acquisitions: Purchase consideration satisfied by cash Cash and cash equivalents of subsidiaries acquired Net cash outflow to the Group 1,053,852 2,249,456 1,159,553 677,441 12,589,301 1,047,159 57,910 (3,147,269) (5,131,932) (470,579) (399,953) 9,684,939 (4,908,180) 4,776,759 10,523,751 15,300,510 11,683,304

10,300,510 5,000,000 15,300,510

10,300,510 302,187 10,602,697

As disclosed in Note 28 to the financial statements, the balance of purchase consideration will be paid progressively upon the fulfilment of profit guarantees granted by the vendors.

14. OTHER INVESTMENTS

Group 2007 RM Investment in golf club membership, at cost 34,500 2006 RM 115,000

Notes to the Financial Statements

62 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

15. INTANGIBLE ASSETS

(i) Other Intangible Assets

Deferred Development Expenditure Expenditure RM RM Group At 30 June 2007 Cost At 1 July 2006 Incurred and capitalised during the year Acquisition of subsidiaries At 30 June 2007 Accumulated amortisation At 1 July 2006 Amortisation for the year Acquisition of subsidiaries At 30 June 2007 Net carrying amount At 30 June 2007 At 30 June 2006 Cost At 1 July 2005 Reversal during the year At 30 June 2006 Accumulated amortisation At 1 July 2005 Amortisation for the year At 30 June 2006 Net carrying amount At 30 June 2006 8,913,463 (332,239) 8,581,224 ­ ­ ­ ­ ­ ­ ­ ­ ­ 8,913,463 (332,239) 8,581,224 8,581,224 ­ ­ 8,581,224 ­ 286,768 2,998,102 3,284,870 ­ ­ 2,756,000 2,756,000 ­ 169,688 481,484 651,172 8,581,224 456,456 6,235,586 15,273,266 Marketing Rights RM Software Licences RM Total RM

5,226,024 1,435,843 ­ 6,661,867

­ 373,780 2,085,600 2,459,380

­ 233,333 1,506,000 1,739,333

­ 26,227 394,530 420,757

5,226,024 2,069,183 3,986,130 11,281,337

1,919,357

825,490

1,016,667

230,415

3,991,929

3,796,949 1,429,075 5,226,024

­ ­ ­

­ ­ ­

­ ­ ­

3,796,949 1,429,075 5,226,024

3,355,200

­

­

­

3,355,200

(ii) Goodwill On Consolidation

Group 2007 RM At 1 July 2006/2005 Arising from acquisition of subsidiaries (Note 13) At 30 June 7,762,287 11,683,304 19,445,591 2006 RM 7,762,287 ­ 7,762,287

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 63

15. INTANGIBLE ASSETS

(continued)

(ii) Goodwill On Consolidation (continued)

(a) Impairment tests for goodwill Allocation of goodwill to CGUs The Group's goodwill has been allocated to the respective Cash Generating Units all of which operate in the M&E Engineering segment as follows: 2007 RM CGU IQL and its subsidiaries NSB and its subsidiaries PME 11,683,304 6,327,215 1,435,072 19,445,591 Key assumptions used in value in use computations The recoverable amount for all CGUs are determined based on value-in-use calculations using cash flow projections based on financial budgets estimated by management covering a five-year period. Cash flows beyond the five-year period are not included in the computation of value-in-use on the grounds of prudence. The key assumptions used in the value-in-use computations are as follows: Average annual revenue growth % CGU IQL and its subsidiaries NSB and its subsidiaries PME 26 10 9 2006 RM ­ 6,327,215 1,435,072 7,762,287

Discount rate % 10 10 10

The following describes each key assumption on which management has based its cashflow projections to undertake impairment testing of goodwill: (i) Gross Margin The basis used to determine the value assigned to the budgeted gross margins is based on historical achieved margins and assumes no significant changes in cost structure or input prices. (ii) Revenue Growth Revenue growth over the five year period is projected based on management's estimation taking into consideration secured orders, anticipated identified future projects/contracts and historical growth rates. (iii) Discount Rate The discount rates used are pre-tax and take into consideration the industry risks associated with the M&E Engineering segment. Sensitivity to changes in assumptions With regard to the assessment of value in use of the respective CGUs, management believes that no reasonably possible change in any of the above key assumptions would cause the carrying values of the units to materially exceed their recoverable amounts.

Notes to the Financial Statements

64 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

16. INVENTORIES

Group 2007 RM At cost: Consumables Trading and installation goods 2,788,327 6,281,612 9,069,939 2006 RM 3,016,010 4,583,991 7,600,001

The cost of inventories recognised as an expense during the financial year for the Group amounted to RM15,632,652 (2006: RM14,915,709).

17. OTHER RECEIVABLES

Group 2007 RM Deposit for proposed acquisition of Infinite QL Sdn Bhd Deposits Prepayments Staff loans Sundry receivables Less: Provision for doubtful debts ­ 623,313 764,824 301,730 3,371,448 5,061,315 (87,401) 4,973,914 2006 RM 200,000 264,219 229,194 347,952 2,023,645 3,065,010 (54,801) 3,010,209 Company 2007 2006 RM RM ­ 5,440 ­ ­ 15,804 21,244 ­ 21,244 200,000 5,440 ­ ­ 15,804 221,244 ­ 221,244

Included in staff loans are housing, vehicles, computers and handphones' loans granted to the employees of certain subsidiaries. The loans are unsecured, interest is charged at 4% (2006: 4%) per annum for AWSB only and repayments are made through deduction from the employees' monthly salaries.

18. TRADE RECEIVABLES

Group 2007 RM Trade receivables Due from customers on contracts (Note 19) Retention sums on contracts (Note 19) Less: Provision for doubtful debts 45,904,526 2,208,636 2,221,786 50,334,948 (3,638,714) 46,696,234 2006 RM 42,104,540 3,418,573 2,222,307 47,745,420 (3,340,959) 44,404,461

The Group's normal trade credit term ranges from 30 to 90 days (2006: 30 to 90 days). Other credit terms are assessed and approved on a case-by-case basis.

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 65

19. DUE FROM/(TO) CUSTOMERS ON CONTRACTS

Group 2007 RM Construction costs incurred to date Attributable profit Less: Progress billings 52,389,696 5,946,109 58,335,805 (57,615,000) 720,805 Due from customers on contracts (Note 18) Due to customers on contracts (Note 29) 2,208,636 (1,487,831) 720,805 Advances received on contracts, included within trade payables (Note 29) Retention sums on contracts, included within trade receivables (Note 18) Contract costs recognised as an expense (1,029,204) 2,221,786 21,197,117 2006 RM 43,775,174 7,723,864 51,499,038 (48,358,073) 3,140,965 3,418,573 (277,608) 3,140,965 (753,913) 2,222,307 12,969,285

The costs incurred to date on construction contracts include the following charges made during the financial year: Group 2007 RM Rental of equipment and machinery ­ 2006 RM 18,410

20. DUE FROM/(TO) SUBSIDIARIES

The amounts due from/(to) subsidiaries are unsecured, interest free and have no fixed terms of repayment.

Notes to the Financial Statements

66 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

21. CASH AND BANK BALANCES

Group 2007 RM Cash and bank balances Deposits with licensed banks 8,162,124 11,299,162 19,461,286 2006 RM 4,144,621 7,353,947 11,498,568 Company 2007 2006 RM RM 156,329 ­ 156,329 49,184 ­ 49,184

Deposits with licensed banks amounting to RM3,324,266 (2006: RM1,985,904) have been pledged to banks for credit facilities granted to certain subsidiaries as referred to in Note 26. The weighted average effective interest rates of deposits at the balance sheet date were as follows: Group 2007 % p.a. Licensed banks The average maturities of deposits as at the end of the financial year were as follows: Group 2007 Days Licensed banks 65 2006 Days 41 3.1 2006 % p.a. 3.4

22. SHARE CAPITAL

Number of Shares 2007 2006 Authorised: Ordinary shares of RM0.50 each At 1 July 2006/2005 and 30 June Issued and fully paid: Ordinary shares of RM0.50 each At 1 July 2006/2005 and 30 June Amount 2007 RM 2006 RM

1,000,000,000 1,000,000,000

500,000,000

500,000,000

228,679,227

228,679,227

114,339,614

114,339,614

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 67

22. SHARE CAPITAL

(continued)

(a) Employee Share Options Scheme ("ESOS")

The Company's Employee Share Options Scheme ("ESOS') is governed by the by-laws approved by the shareholders at the Extraordinary General Meeting of the Company held on 28 December 2004. As at 30 June 2007, no options have been granted to any of the employees or directors. Once implemented, the ESOS will be in force for five years. The main features of the ESOS are as follows: (i) (ii) The ESOS shall be in force for a period of five years from the date of implementation. To date, the ESOS is yet to be implemented. Persons who are eligible under the ESOS (excluding Government employee(s) or representative(s)) include executive and non-executive directors and employees of the Group who are at least eighteen years of age whose employment with the Group has been confirmed in writing. For the case of non Malaysian citizens, the person's contribution must be deemed vital to the Group, and for executives, must have been in service with the Group for a minimum period of one year. The aggregate number of shares to be offered under the ESOS shall not exceed 15% of the issued and paid up ordinary share capital of the Company at any time during the duration of the ESOS. The subscription price for each share under the ESOS shall, subject always to the by- laws, be the weighted average market price of the shares for the five market days immediately preceding the date of offer, with a discount of not more than 10%, or any such rate as may be allowed by the authorities. The number of shares under option, the option price, and the method of exercise of the option may be adjusted as a result of any alteration in the capital structure of the Company by way of a rights issue, bonus issue or other capitalisation issue, consolidation or subdivision of shares or reduction of capital or otherwise howsoever, if any, made by the Company while an option remains unexercised. Options granted under the ESOS can be exercised by the grantee by notice in writing to the Company during the option period in the prescribed form in multiples of one hundred shares. No person who is participating in the ESOS will be entitled to participate in more than one employee share options scheme currently implemented by any company within the Group.

(iii) (iv)

(v)

(vi) (vi)

To date, no options have been granted under the ESOS, and as such no options have been exercised.

(b) Treasury Shares

This amount relates to the acquisition cost of treasury shares. The shareholders of the Company, by a special resolution passed in the Annual General Meeting of the Company held on 28 December 2004, approved the Company's plan to repurchase its own shares. This mandate from the shareholders was subsequently renewed at the Annual General Meetings of the Company on 21 November 2005 and 9 November 2006 respectively. The directors of the Company are committed to enhancing the value of the Company to its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders. During the financial year, the Company repurchased 200,000 of its issued ordinary shares from the open market at an average price of RM0.25 per share. The total consideration paid for the repurchase including transaction costs was RM49,867. The repurchase transactions were financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965. Of the total 228,679,227 (2006: 228,679,227) issued and fully paid ordinary shares as at 30 June 2007, 1,436,800 (2006: 1,236,800) are held as treasury shares by the Company. As at 30 June 2007, the number of ordinary shares in issue and fully paid is therefore 227,242,427 (2006: 227,442,427) ordinary shares of RM0.50 each.

Notes to the Financial Statements

68 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

22. SHARE CAPITAL

(continued)

(b) Treasury Shares (continued)

Number of Ordinary Shares 2007 2006 Ordinary shares of RM0.50 each At 1 July 2006/2005 Repurchased during the year At 30 June Amount 2007 RM 354,662 49,867 404,529 2006 RM 330,231 24,431 354,662

1,236,800 200,000 1,436,800

1,146,800 90,000 1,236,800

23. MERGER RESERVE

Company 2007 2006 RM RM At 1 July 2006/2005 and 30 June 12,522,542 12,522,542

Merger reserve relates to the excess of fair value of shares issued for acquisition of subsidiaries over the par value of these shares where such acquisition qualifies for merger relief as set out in Section 60(4)f of the Companies Act, 1965.

24. FOREIGN EXCHANGE RESERVE (NON-DISTRIBUTABLE)

Group 2007 RM At 1 July 2006/2005 and 30 June 346,885 2006 RM 346,885

The foreign exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements of its foreign subsidiaries.

25. LONG TERM PAYABLES

Group/Company 2007 2006 RM RM Balance of purchase consideration Less: Amount due within one year (Note 28) 6,500,000 (5,000,000) 1,500,000 3,000,000 (1,500,000) 1,500,000

Long term payables are in relation to the balance of purchase consideration to be paid to the vendors of IQL upon fulfillment of the profit guarantee for the financial year ending 30 November 2008. Long term payables of RM1,500,000 in respect of the previous financial year were in relation to the balance of purchase consideration to be paid to the vendors of NSB upon fulfillment of the profit guarantee for the financial year ended 30 June 2007.

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 69

26. BORROWINGS

Group 2007 RM Short term borrowings Secured: Bank overdrafts Term loans Hire purchase and finance lease payables (Note iii) Bankers' acceptances Revolving credits Unsecured: Multi trade facility 2006 RM Company 2007 2006 RM RM

1,961,163 1,318,379 357,539 427,000 949,980 5,014,061 59,047 5,073,108

1,269,681 1,189,853 222,749 ­ ­ 2,682,283 128,911 2,811,194

­ 800,000 ­ ­ ­ 800,000 ­ 800,000

­ 800,000 ­ ­ ­ 800,000 ­ 800,000

Long term borrowings Secured: Term loans Hire purchase and finance lease payables (Note iii)

2,715,140 935,863 3,651,003

3,198,922 358,935 3,557,857

1,200,000 ­ 1,200,000

2,000,000 ­ 2,000,000

Total borrowings Bank overdrafts Multi trade facility Bankers' acceptances Revolving credits Term loans Hire purchase and finance lease payables (Note iii)

1,961,163 59,047 427,000 949,980 4,033,519 1,293,402 8,724,111

1,269,681 128,911 ­ ­ 4,388,775 581,684 6,369,051

­ ­ ­ ­ 2,000,000 ­ 2,000,000

­ ­ ­ ­ 2,800,000 ­ 2,800,000

Maturity of borrowings (excluding hire purchase and finance lease payables) Within 1 year More than 1 year and less than 2 years More than 2 years and less than 5 years

4,715,569 1,200,221 1,514,919 7,430,709

2,588,445 1,174,783 2,024,139 5,787,367

800,000 800,000 400,000 2,000,000

800,000 800,000 1,200,000 2,800,000

Notes to the Financial Statements

70 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

26. BORROWINGS

(i)

(continued)

The weighted average effective interest rates at the balance sheet date for borrowings, excluding hire purchase and finance lease payables were as follows: Group 2007 % p.a. Bankers' acceptances Revolving credits Bank overdrafts Term loans 5.3 8.3 8.2 8.3 2006 % p.a. ­ ­ 8.3 7.8

(ii)

The bankers' acceptances, revolving credits, bank overdrafts and term loans are secured by the following: (a) (b) (c) (d) (e) (f) (g) (h) Lien on deposit with licensed banks and accumulation of interest thereon as disclosed in Note 21; Legal Deed of Assignment of contract proceeds from certain projects awarded to AWSB and AWFM, by the Federal Government (represented by the Ministry of Works); Facility agreement of PME; Personal Guarantee from a director and indirect substantial shareholder of the Company, Dato' Ahmad Kabeer bin Mohamed Nagoor for RM500,000; Buildings of the Group as disclosed in Note 11(d) and Note 12; Negative pledge of certain property, plant and equipment of the Group as disclosed in Note 11(e); Joint and several guarantee of a director of a subsidiary and a related party in their personal capacity; Third party charge of AKN Technology Berhad shares quoted on the Bursa Malaysia Securities Berhad owned by Krishnan Menon, a director of the Company, where the margin of advance shall not exceed 50% of the market value of the shares charged; Irrevocable letter of undertaking from the Company stating that the Company shall not dilute or dispose off its shareholding in a subsidiary, NSB, without prior written consent of the bank. In the event of any dilution or disposal the entire proceeds must be used to reduce/settle the term loan; Corporate guarantee by Credit Guarantee Corporation Malaysia Berhad ("CGC") under Flexi Guarantee Scheme ("FGS") and Fund for Small and Medium Industries Scheme ("SMIS") for RM560,000 and RM820,000 respectively; Sinking fund with limit of RM1,160,000 to be established by a subsidiary together with the interest thereon; and Existing first party General Investment Account ("GIA") and fresh upfront Fixed Deposit ("FDR") for RM203,983 and RM300,000 respectively.

(i)

(j)

(k) (l)

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 71

26. BORROWINGS

(iii)

(continued)

Hire purchase and finance lease payables Group 2007 RM Minimum lease payment Not later than 1 year Later than 1 year and not later than 2 years Later than 2 years and not later than 5 years Less: Future finance charges Present value of finance lease liabilities Present value of finance lease liabilities Not later than 1 year Later than 1 year and not later than 2 years Later than 2 years and not later than 5 years 428,983 410,398 617,609 1,456,990 (163,588) 1,293,402 2006 RM 247,956 210,776 188,590 647,322 (65,638) 581,684

357,539 349,386 586,477 1,293,402

222,749 189,876 169,059 581,684

Analysed as Due within 12 months Due after 12 months

357,539 935,863 1,293,402

222,749 358,935 581,684

The hire purchase and lease liabilities bore interest at the balance sheet date at rates between 4.6% to 10.7% (2006: 5.3% to 8.1%) per annum.

27. DEFERRED TAX

Group 2007 RM At 1 July 2006/2005 Recognised in income statement (Note 8) Acquisition of a subsidiary (Note 13) At 30 June Presented after appropriate offsetting as follows: Deferred tax assets Deferred tax liabilities 1,256,153 (624,540) 399,953 1,031,566 2006 RM 1,789,084 (532,931) ­ 1,256,153

(138,819) 1,170,385 1,031,566

(168,247) 1,424,400 1,256,153

Notes to the Financial Statements

72 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

27. DEFERRED TAX

(continued)

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

Deferred Tax Liabilities of the Group:

Accelerated Capital Allowances RM At 1 July 2005 Recognised in income statement At 30 June 2006 At 1 July 2006 Acquisition of subsidiaries Recognised in income statement At 30 June 2007 1,132,092 1,440 1,133,532 1,133,532 399,953 (184,017) 1,349,468 Other Intangible Assets RM 1,406,841 (467,385) 939,456 939,456 ­ (440,423) 499,033

Others RM 172,058 (30,805) 141,253 141,253 ­ (3,071) 138,182

Total RM 2,710,991 (496,750) 2,214,241 2,214,241 399,953 (627,511) 1,986,683

Deferred Tax Assets of the Group:

Tax Losses and Unabsorbed Capital Allowances RM At 1 July 2005 Recognised in income statement At 30 June 2006 At 1 July 2006 Recognised in income statement At 30 June 2007 (329,886) 67,511 (262,375) (262,375) ­ (262,375) Provision for Doubtful Payables Debts RM RM (66,086) (84,701) (150,787) (150,787) (29,709) (180,496) (525,935) (18,991) (544,926) (544,926) 32,680 (512,246)

Total RM (921,907) (36,181) (958,088) (958,088) 2,971 (955,117)

Deferred tax assets have not been recognised in respect of the following items: Group 2007 RM Unutilised tax losses Unabsorbed capital allowances Other deductible temporary differences 410,320 9,585 1,156,862 2006 RM 716,430 95,939 1,455,173

The unutilised tax losses are available indefinitely for offset against future taxable profits of the companies in which those items arose. Deferred tax assets have not been recognised in respect of these items as there is no probable expectation that future taxable income of the affected subsidiaries will be sufficient to allow the benefit to be realised.

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 73

28. OTHER PAYABLES

Group 2007 RM Sundry payables 4,706,943 Balance of purchase consideration (Note 25) 5,000,000 Provision for short term accumulating compensated absences 339,774 Accruals 3,838,434 13,885,151 2006 RM 1,942,093 1,500,000 387,233 2,903,017 6,732,343 Company 2007 2006 RM RM 529,542 5,000,000 5,087 54,750 5,589,379 698,974 1,500,000 5,087 34,420 2,238,481

Balance of purchase consideration consists of RM1,500,000 (2006: RM1,500,000) and RM3,500,000 to be paid to the vendors of NSB and IQL upon fulfillment of their profit guarantees for the financial years ended/ending 30 June 2007 and 30 November 2006 and 2007 respectively.

29. TRADE PAYABLES

Group 2007 RM Trade payables Due to customers on contracts (Note 19) Advances received on contracts (Note 19) 13,341,882 1,487,831 1,029,204 15,858,917 The normal trade credit term granted to the Group ranges from 30 to 120 days (2006: 30 to 120 days). 2006 RM 9,784,496 277,608 753,913 10,816,017

30. PRIOR YEAR ADJUSTMENT

In financial year 2006, dividend paid to minority interests of RM490,000 was erroneously treated as appropriation from the Group's revenues rather than as a reduction in minority interests. Accordingly, the prior year comparatives have been restated as follows: As previously stated RM Consolidated Balance Sheet Reserve ­ accumulated losses Minority interests (61,442,552) 5,637,652 Adjustment RM 490,000 (490,000) As restated RM (60,952,552) 5,147,652

Notes to the Financial Statements

74 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

31. COMMITMENTS

(a) Capital Commitments

Group 2007 RM Capital expenditure Acquisition of 51% equity interest in Infinite QL Sdn. Bhd. (IQL) 2006 RM Company 2007 2006 RM RM

­

15,100,000

­

15,100,000

(b) Non-Cancellable Operating Lease Commitments

Group 2007 RM Future minimum rentals payable Not later than 1 year Later than 1 year and not later than 2 years Later than 2 years and not later than 5 years 1,093,608 997,909 350,504 2,442,021 2006 RM 122,986 2,061 ­ 125,047

32. CONTINGENT LIABILITIES

Group 2007 RM Unsecured Performance guarantee extended to third parties ­ trade related Bank guarantees extended to third parties Corporate guarantee given to banks for credit facilities granted to subsidiaries 911,875 3,191,299 2,726,275 2006 RM 521,927 5,917,554 3,134,170

33. SIGNIFICANT RELATED PARTY TRANSACTIONS

2007 RM Group Rental expenses paid to directors of a subsidiary, Gan Geok Soon and Sri Skanda Rajah A/L S. Ratnam Company Management fee charged to subsidiaries Rental expense payable to a subsidiary, AWSB Dividend income from subsidiaries 2006 RM

115,200

115,200

(576,000) 42,000 (697,292)

(672,000) 42,000 (3,479,167)

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

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 75

34. FINANCIAL INSTRUMENTS

(a) Financial Risk Management Objectives and Policies

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

(b) Interest Rate Risk

The Group's primary interest rate risk relates to interest-bearing debts, as the Group has no substantial long-term interest-bearing assets as at 30 June 2007. The investment in financial assets are mainly short term in nature and they are not held for speculative purposes but have been mostly placed in fixed deposits which yield better returns than cash at bank.

(c) Foreign Exchange Risk

The Group is not exposed to significant foreign exchange risk as the majority of the Group's transactions, assets and liabilities are denominated in Ringgit Malaysia except for two of the subsidiaries of the Group which are exposed to the Singapore Dollar. The foreign exchange risk of Singapore Dollar is reduced through a policy of matching receipts and payments in Singapore Dollar. The financial assets and liabilities of subsidiaries as at 30 June 2007 and 30 June 2006 which are denominated in Singapore Dollar are as follows: 2007 RM Due from customers on contracts Other receivables Trade receivables Cash and bank balances Other payables Trade payables 644,924 110,754 3,016,067 3,829,455 326,335 1,613,173 2006 RM 1,809,463 112,169 3,858,434 2,718,391 466,548 1,004,589

Notes to the Financial Statements

76 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

34. FINANCIAL INSTRUMENTS

(d) Liquidity Risk

(continued)

The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities at a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from financial institutions so as to achieve overall cost effectiveness.

(e) Credit Risk

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

(f)

Fair Values

The carrying amounts of the financial assets and liabilities of the Group and of the Company at the balance sheet date approximated their fair values except the following: Group Carrying Amount RM Financial Liabilities At 30 June 2007: Long term payables Term loans Hire purchase and finance lease payables At 30 June 2006: Long term payables Term loans Hire purchase and finance lease payables 1,500,000 4,033,519 1,293,402 1,280,076 4,222,666 1,325,580 1,500,000 2,000,000 ­ 1,280,076 2,098,346 ­ Fair Value RM Company Carrying Fair Amount Value RM RM

1,500,000 4,388,775 581,684

1,280,076 4,538,573 573,064

1,500,000 2,800,000 ­

1,280,076 2,921,594 ­

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 77

35. SEGMENT INFORMATION

(a) Business Segments

The Group is organised into three major business segments: (i) (ii) Investment holding. Integrated facilities management ("IFM") ­ provision of an integrated range of services for office, commercial, industrial, residential and administrative buildings. These services include electrical, mechanical, civil, structural, energy and utilities management and maintenance, vertical transport management, security and safety management and central monitoring systems, landscaping and ground care. Mechanical and electrical ("M&E") engineering ­ provision of various mechanical and electrical engineering services for the building industry which complement the integrated facilities management division. These include computerised Building Automation Systems (BAS), Heating, Ventilation and Air-Conditioning Systems (HVAC), integrated installation of electrical systems, energy saving and lift systems, central vacuum and central waste collection systems, the repair and refurbishment of large scale motors and turnkey research and development in microelectronics, consumer electronics, software solutions and security related products.

(iii)

The directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties. Integrated Investment Facilities Holding Management RM RM 30 June 2007 Revenue External sales Inter-segment sales Total revenue Results Segment results Finance costs Profit before taxation Taxation Profit after taxation Minority interests Net profit for the year Assets and Liabilities Segment and consolidated assets Segment and consolidated liabilities Other information Capital expenditure Depreciation Non-cash expenses other than depreciation ­ 1,273,292 1,273,292 44,440,662 9,839,194 54,279,856 62,717,632 19,506,247 82,223,879 ­ (30,618,733) (30,618,733) 107,158,294 ­ 107,158,294 M&E Engineering RM

Elimination Consolidated RM RM

(18,749,906) (227,404) (40,379) ­

4,375,377 (149,069) (1,272,393) ­

13,043,360 (454,528) (2,104,886) (2,440,467)

13,967,412 52,000 167,111 ­

12,636,243 (779,001) 11,857,242 (3,250,547) 8,606,695 (2,440,467) 6,166,228

425,675 9,089,379

30,585,478 10,676,012

89,727,415 22,969,367

­ ­

120,738,568 42,734,758

1,040 4,480 18,855,260

632,622 1,337,316 1,476,492

1,674,328 1,039,023 1,217,648

­ ­ (18,855,260)

2,307,990 2,380,819 2,694,140

Notes to the Financial Statements

78 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

35. SEGMENT INFORMATION (continued)

(a) Business Segments (continued)

Integrated Investment Facilities Holding Management RM RM 30 June 2006 Revenue External sales Inter-segment sales Total revenue Results Segment results Finance costs Profit before taxation Taxation Profit after taxation Minority interests Net profit for the year Assets and Liabilities Segment and consolidated assets Segment and consolidated liabilities Other information Capital expenditure Depreciation Non-cash expenses other than depreciation ­ 4,151,167 4,151,167 40,403,675 ­ 40,403,675 46,048,072 231,120 46,279,192 ­ (4,382,287) (4,382,287) 86,451,747 ­ 86,451,747 M&E Engineering RM

Elimination Consolidated RM RM

2,984,911 (255,963) (915,943) ­

4,301,477 (318,192) (1,725,288) ­

7,421,899 (145,780) (1,909,582) (1,687,790)

(3,843,667) 52,000 1,061,667 ­

10,864,620 (667,935) 10,196,685 (3,489,146) 6,707,539 (1,687,790) 5,019,749

395,129 6,496,117

41,051,522 12,040,517

52,432,488 9,166,116

­ ­

93,879,139 27,702,750

2,100 4,236 5,087

478,123 1,301,622 2,675,414

915,305 777,115 162,835

­ ­ ­

1,395,528 2,082,973 2,843,336

(b) Geographical Segments

Analysis by geographical segments is not prepared as the Group operates predominantly in Malaysia.

36. SIGNIFICANT EVENT

On 29 September 2006, the Group acquired a 51% equity interest in IQL and its subsidiaries, Cardax, VDO, D4U, MEPS for a total cash consideration of RM15,300,000. IQL had on 15 November 2006, acquired a 51% equity interest in IQLC for a total cash consideration of RM510.

Notice of Nomination of Auditors

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 79

K-Capital Sdn. Bhd. Third Floor, No. 79 (Room A) Jalan SS21/60, Damansara Utama 47400 Petaling Jaya, Selangor Date: 28 September 2007 The Board of Directors AWC Facility Solutions Berhad Third Floor, No. 79 (Room A) Jalan SS21/60, Damansara Utama 47400 Petaling Jaya, Selangor

Dear Sirs, Notice of Nomination of Auditors Pursuant to Section 172(11) of the Companies Act, 1965, we, being the shareholder of the Company hereby give notice of our intention to nominate Messrs. Horwath for appointment as auditors of the Company and to propose the following as an ordinary resolution to be tabled at the forthcoming Annual General Meeting: "THAT Messrs. Horwath be and hereby appointed as Auditors of the Company in place of the retiring Auditors, Messrs. Ernst & Young to hold office until the conclusion of the next Annual General Meeting at a remuneration to be agreed between the Directors and the Auditors."

Yours faithfully, For and on behalf of K-Capital Sdn. Bhd.

Dato' Ahmad Kabeer bin Mohamed Nagoor Company Director

Summary of Group Properties

80 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

No 1

Owner AWSB

Location An intermediate shop lot and six intermediate office lots known as parcel Nos. S23A-1, Level 1, S23A-2, Level 2, S23A-3, Level 3, S23A-3A, Level 3A, S23A-5, Level 5, S23A-6, Level 6 and S23A-7, Level 7, respectively all in Block S23A in Subang Business Centre erected on part of the land held under Grant 54290, Lot No.50530, Pekan Subang Jaya, District of Petaling, Selangor Darul Ehsan An intermediate shop lot and six intermediate office lots known as parcel Nos. S25-1, Level 1, S25-2, Level 2, S25-3, Level 3, S25-3A, Level 3A, S25-5, Level 5, S25-6, Level 6 and S25-7, Level 7, respectively all in Block S25 in Subang Business Centre erected on part of the land held under Grant 54290, Lot No.50530, Pekan Subang Jaya, District of Petaling, Selangor Darul Ehsan One-unit of 4 storey shop lot known as No. 79, Jalan 25/2, Taman Bukit Emas, 47301,Petaling Jaya erected on HS (D) 31948, PT 6685 Mukim Sungai Buloh, District of Petaling, Selangor Darul Ehsan One unit of apartment known as Sub Lot No. 4-29, City Heights Apartments, Taman Sri Sungai Chua, Kajang, Selangor erected on part of land held under HSM 22288, PT 50453, Section 1, Tempat Batu 18 1/2, Mukim Kajang, District of Ulu Langat, Selangor Darul Ehsan One unit of office known as parcel Nos. S-23-A, Level 23, Northern Tower erected on part of the land held under Grant 62181, Lot 1242, Town of Georgetown, Section 13, North East District, Penang One unit of condominium known as parcel No. B-02-04, Lorong PJS 11/26, Sunway Lagoon View, Resort Condominium, Phase 5E, Mukim Damansara erected on part of land held under HS (D) 184215 PT 163, Mukim of Bandar Sunway, District of Petaling One unit of condominium known as parcel No. B-22-03, Lorong PJS 11/26, Sunway Lagoon View, Resort Condominium, Phase 5E, Mukim Damansara erected on part of land held under HS (D) 184215 PT 163, Mukim of Bandar Sunway, District of Petaling

2

AWSB

3 4

M&C(M) M&C(M)

5 6

M&C(M) M&C(M)

7

M&C(M)

Total

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 81

Description Shop lot and office lots

Existing Use Office

Land Area (sq. ft.) ­

Built-up Area (sq. ft.) 11,737

Tenure Freehold

Approximate Age of Building 11 years

Audited Net Book Value 30 June 2007 (RM) 3,047,910

Shop lot and office lots

Office

­

11,737

Freehold

11 years

2,099,889

Office building Apartment

Office Vacant

­ ­

6,401 860

Freehold Freehold

14 years 7 years

1,104,600 86,109

Office building Condominium

Tenanted Tenanted

­ ­

2,183 1,390

Freehold

8 years

432,508 334,607

Leasehold 7 years 99 years expiring on 1 April 2097 Leasehold 7 years 99 years expiring on 1 April 2097

Condominium

Tenanted

­

1,390

375,798

7,481,421

Analysis of Shareholdings

as at 30 September 2007

82 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

Class of Equity Securities Voting Rights

: Ordinary Shares of RM0.50 each : One vote per shareholder on a show of hands or one vote per ordinary share on a poll

DISTRIBUTION SCHEDULE OF SHAREHOLDERS

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 Total No. of Shareholders 1,805 1,931 3,947 1,644 201 1 9,529 No. of Shares 134,419 1,150,421 20,700,525 53,971,129 76,842,316 74,393,617 227,192,427 %* 0.06 0.51 9.11 23.76 33.82 32.74 100.00

SUBSTANTIAL SHAREHOLDERS' SHAREHOLDINGS

(excluding those who are bare trustees pursuant to Section 69 of the Companies Act, 1965) No. of Ordinary Shares of RM0.50 Each Beneficially Held by the Shareholders Direct Indirect Interest %* Interest 80,746,559 ­ 35.54 ­ ­ a 82,641,043

Name of Substantial Shareholders K-Capital Sdn Bhd ("K-Cap") Dato' Ahmad Kabeer bin Mohamed Nagoor Notes:

a

%* ­ 36.37

By virtue of his interest in K-Cap, AKN Capital Sdn Bhd ("AKNC") and Ilmu Mantap Sdn Bhd ("IMSB"), Dato' Ahmad Kabeer bin Mohamed Nagoor is deemed interested in the shares of the Company to the extent that K-Cap, AKNC and IMSB have an interest.

DIRECTORS' SHAREHOLDINGS

No. of Ordinary Shares of RM0.50 Each Beneficially Held by the Directors Direct Indirect Interest %* Interest 57,000 ­ ­ ­ 0.03 ­ ­ ­ ­ a 82,641,043 ­ ­

Name of Directors Dato' Mohd Annuar bin Zaini Dato' Ahmad Kabeer bin Mohamed Nagoor Azmir Merican bin Dato' Azmi Merican Roslan bin Mohd Latif Notes:

a

%* ­ 36.37 ­ ­

By virtue of his interest in K-Cap, AKNC and IMSB, Dato' Ahmad Kabeer bin Mohamed Nagoor is deemed interested in the shares of the Company to the extent that K-Cap, AKNC and IMSB have an interest.

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 83

30 LARGEST SECURITIES ACCOUNT HOLDERS

(without aggregating securities from different securities accounts belonging to the same person) No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. Name K-Capital Sdn Bhd Linear Corporation Berhad CIMB Group Nominees (Tempatan) Sdn Bhd Pledged Securities Account for K-Capital Sdn Bhd TA Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Yeo Jin Hui Teresa Goh Lean See OSK Nominees (Tempatan) Sdn Berhad Pledged Securities Account for Chong Lee Fong Md. Shah bin Abu Hasan Deutsche Bank (Malaysia) Berhad Omega Matrix (M) Sdn Bhd CIMSEC Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Choo Kwang Wah (Penang) Ng Boon Keng Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Tan Seng Yong Tony Setiadi CIMB Group Nominees (Tempatan) Sdn Bhd Pledged Securities Account for AKN Capital Sdn Bhd Lew Yuen Kee @ Lew Ah Kee Leow Hong Yen Ilmu Mantap Sdn Bhd Tay Bee Geok Koperasi Pembangunan Daerah Johor Bahru Berhad Chai Mee Yin Ke-Zan Nominees (Tempatan) Sdn Bhd Kim Eng Securities Pte. Ltd. for Law Ah Moy Eow Yin Kam Lim Kian Seng Ong Teck Wan Choo Kok Lan Mercsec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Siow Wong Yen @ Siow Kwang Hwa Choo Har Thong Lee Choon Lim Lim Chong Chang SJ SEC Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Goh Kay Chong No. of Shares Held 74,393,617 8,383,451 6,350,000 2,540,000 2,530,600 1,708,800 1,638,000 1,508,889 1,427,709 1,115,000 1,100,000 1,083,600 1,071,500 1,000,000 1,000,000 900,000 887,291 805,800 800,000 775,400 770,000 652,600 636,333 575,000 550,000 548,000 538,000 510,000 500,000 500,000 %* 32.74 3.69 2.79 1.12 1.11 0.75 0.72 0.66 0.63 0.49 0.48 0.48 0.47 0.44 0.44 0.40 0.39 0.35 0.35 0.34 0.34 0.29 0.28 0.25 0.24 0.24 0.24 0.22 0.22 0.22

* All percentage shareholding computations are based on the issued and paid-up capital of the Company of RM113,596,213.50

comprising 227,192,427 ordinary shares of RM0.50 each after deduction of 1,486,800 treasury shares retained by the Company as per Record of Depositors.

Notice of Annual General Meeting

84 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD NOTICE IS HEREBY GIVEN that the Sixth Annual General Meeting of AWC FACILITY SOLUTIONS BERHAD ("the Company") will be held at Conference Room, Level 3, The Eastin Hotel, 13, Jalan 16/11, Pusat Dagang Seksyen 16, 46350 Petaling Jaya, Selangor Darul Ehsan on Wednesday, 28 November 2007 at 10.30 a.m. to transact the following business:

Agenda

1. 2. 3. To receive the Audited Financial Statements for the financial year ended 30 June 2007 together with the Reports of the Directors and Auditors thereon. To approve the payment of Directors' fees for the financial year ended 30 June 2007. To re-elect the following Directors who retire in accordance with Article 103 and Article 109 of the Company's Articles of Association: i. ii. iii. 4. Dato' Ahmad Kabeer bin Mohamed Nagoor (Article 103) Roslan bin Mohd Latif (Article 109) Azmir Merican bin Dato' Azmi Merican (Article 109)

(Resolution 1) (Resolution 2)

(Resolution 3) (Resolution 4) (Resolution 5) (Resolution 6)

To appoint Auditors 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 79 of the Annual Report, has been received by the Company for the nomination of Messrs Horwath who have given their consent to act, for appointment as Auditors and of the intention to propose the following ordinary resolution: "THAT Messrs Horwath be and are hereby appointed as Auditors of the Company in place of the retiring Auditors, Messrs Ernst & Young to hold office until the conclusion of the next Annual General Meeting at a remuneration to be agreed between the Directors and the Auditors."

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 85

As Special Business: To consider and if thought fit, to pass the following Resolutions, with or without modifications: 5. ORDINARY RESOLUTION RENEWAL OF THE AUTHORITY FOR THE SHARE BUY-BACK BY THE COMPANY "THAT, subject always to the Companies Act, 1965 ("Act"), the provisions of the Memorandum and Articles of Association of the Company and the Listing Requirements of Bursa Malaysia Securities Berhad ("Bursa Securities") and the approvals of all relevant governmental and/or regulatory authorities, the Company be and is hereby authorised, to the extent permitted by the law, to buy-back and/or hold such amount of ordinary shares of RM0.50 each in the Company as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions for such purposes as the Directors may deem fit and expedient in the interest of the Company provided that: i. The aggregate number of shares bought-back and/or held does not exceed 10% of the total issued and paid up share capital of the Company subject to a restriction that the issued and paid up capital of the Company does not fall below the applicable minimum share capital requirement of the Listing Requirements of Bursa Securities; The maximum amount to be allocated for the share buy-back shall not exceed the retained profits and the share premium account of the Company; The shares purchased are to be treated in any of the following manners: a. b. c. cancel the purchased ordinary shares; or retain the purchased ordinary shares as treasury shares held by the Company; or retain part of the purchased ordinary shares as treasury shares and cancel the remainder;

(Resolution 7)

ii. iii.

The treasury shares may be distributed as dividend to the shareholders and/or resold on the market of Bursa Securities and/or subsequently cancelled; AND THAT the authority conferred by this resolution shall commence upon the passing of this resolution until: i. The conclusion of the next Annual General Meeting ("AGM") of the Company, unless by an ordinary resolution passed at the meeting, the authority is renewed, either unconditionally or subject to conditions; or The expiration of the period within which the next AGM after the date it is required by law to be held; or Revoked or varied by ordinary resolution passed by the shareholders of the Company at a general meeting of the Company,

ii. iii.

whichever occurs first; AND THAT authority be and is hereby unconditionally and generally given to the Directors of the Company to take all such steps as are necessary or expedient (including without limitation, the opening and maintaining of a Central Depositor Account(s) under the Securities Industry (Central Depositories) Act, 1991, and the entering into of all other agreements, arrangements and guarantee with any party or parties) to implement, finalise and give full effect to the aforesaid buy-back with full power to assent to any conditions, modifications, revaluations, variations and/or amendments (if any) as may be imposed by the relevant authorities and with full power to do all such acts and things thereafter (including without limitation, the cancellation or retention as treasury shares of all or any part of the shares bought-back) in accordance with the Act, the provisions of the Memorandum of Articles of Association of the Company and the Listing Requirements of Bursa Securities and all other relevant governmental and/or regulatory authorities."

Notice of Annual General Meeting

86 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

6.

SPECIAL RESOLUTION PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION "THAT the proposed amendments to the existing Articles of Association of the Company as set out in Appendix I of the Annual Report 2007 be and is hereby approved and adopted."

(Resolution 8)

7.

To transact any other business of which due notice shall have been given in accordance with the Act.

By order of the Board

Tea Sor Hua (MACS 01324) Chan Bee Fang (MAICSA 7032385) Company Secretaries Petaling Jaya, Selangor 5 November 2007

Notes: a. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but need not be a member of the Company and the provision of Section 149 (1) (a) and (b) of the Act shall not apply to the Company. b. The instrument appointing a proxy shall be in writing under the hand of the appointor or in the case of Corporate member, the instrument appointing a proxy shall be either under the Seal or under the hand of an officer or attorney duly authorised. c. Where a member appoints more than one proxy, the appointment shall be invalid unless he/she specifies the proportion of his/her holding to be represented by each proxy. d. The instrument appointing a proxy must be deposited at the Registered office of the Company at Third Floor, No. 79 (Room A), Jalan SS21/60, Damansara Utama, 47400 Petaling Jaya, Selangor not less than 48 hours before the time for holding the Meeting or at any adjournment thereof. EXPLANATORY NOTES TO SPECIAL BUSINESS Ordinary Resolution The proposed Ordinary Resolution under Agenda 5 is to renew the shareholders' mandate for the share buy-back by the Company and will empower the Directors to buy-back and/or hold up to a maximum of 10% of the Company's issued and paid-up share capital at any point of time, by utilizing the amount allocated which shall not exceed the total retained profits and/or share premium account of the Company. This authority unless revoked or varied by the Company at a general meeting, will expire at the conclusion of the next AGM of the Company, or the expiration of period within which the next AGM is required by law to be held, whichever is earlier. Please refer to the Share Buy Back Statement to Shareholders dated 5 November 2007 for further details. Special Resolution The proposed Special Resolution under Agenda 6 is to amend the existing Articles of Association of the Company to ensure continued compliance with the Listing Requirements of the Bursa Malaysia Securities Berhad. Please refer to the documents marked Appendix I attached to the Annual Report for details of the proposed Amendments.

Statement Accompanying Notice of Annual General Meeting

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 87

1.

DIRECTORS STANDING FOR RE-ELECTION AT THE SIXTH ANNUAL GENERAL MEETING OF THE COMPANY

Article 103 ­ At least one-third of the Directors for the time being shall retire from Office provided that all Directors, shall retire from office once at least in every three years but shall be eligible for re-election. Article 109 ­ Any Director appointed to fill a casual vacancy or as an addition to the existing Directors shall hold office only until the next following AGM and shall then be eligible for re-election but shall not be taken into account in determining the Directors who are to retire by rotation at that meeting. The Directors standing for re-election at the Sixth Annual General Meeting of the Company are as follows: i. ii. iii. Dato' Ahmad Kabeer bin Mohamed Nagoor (Article 103) Roslan bin Mohd Latif (Article 109) Azmir Merican bin Dato' Azmi Merican (Article 109)

2.

DETAILS OF ATTENDANCE OF DIRECTORS AT BOARD MEETINGS

A total of four (4) Board Meetings were held during the financial year ended 30 June 2007. Details of attendance of Directors holding office at the end of the financial year are as follows: Directors Dato' Mohd Annuar bin Zaini Dato' Ahmad Kabeer bin Mohamed Nagoor Krishnan Menon* Roslan bin Mohd Latif (appointed on 26/02/2007) Azmir Merican bin Dato' Azmi Merican (appointed on 13/08/2007) Tn Hj Nordin bin Abu Bakar (resigned on 13/08/2007) Datuk Nasir bin Safar (resigned on 30/12/2006) * Mr Krishnan Menon resigned as a Director on 10/10/2007. Attendance 4 of 4 4 of 4 4 of 4 2 of 2 N/A 4 of 4 1 of 2

3.

THE PLACE, DATE AND TIME OF THE MEETING

The Sixth Annual General Meeting of AWC FACILITY SOLUTIONS BERHAD will be held at Conference Room, Level 3, The Eastin Hotel, 13, Jalan 16/11, Pusat Dagang Seksyen 16, 46350 Petaling Jaya, Selangor Darul Ehsan on Wednesday, 28 November 2007 at 10.30 a.m.

4.

FURTHER DETAILS OF DIRECTORS WHO ARE STANDING FOR RE-ELECTION

Further details of the Directors who are standing for re-election are set out in the Directors' Profile Section (pages 6 to 7 of the Annual Report); while their securities holdings (where applicable) are set out in the Analysis of Shareholdings ­ Directors' Interest in the Company and Related Corporations (page 82 of the Annual Report).

Appendix I: Details of the Proposed Amendments to the Articles of Association

88 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

Article No 2 Existing Provisions Amended Provisions

Words Approved Market Place

Meanings means a stock exchange which is specified to be an approved market place in the Securities Industry (Central Depositories) (Exemption) (No 2) Order 1988. means the Malaysian Central Depository Sdn Bhd.

Words

Meanings Deleted

Central Depository

Bursa Depository or Depository

means the Bursa Malaysia Depository Sdn Bhd or such other central depository as may be prescribed under the Listing Requirements. means the Securities Industry (Central Depositories) Act, 1991 as amended from time to time and any re-enactment thereof. means a holder of a securities account established by Bursa Depository. means the meaning given in Section 2 of the Securities Industry (Central Depositories) Act 1991.

Central Depositories Act

means the Securities Industry (Central Depositories) Act, 1991 as amended from time to time and any re-enactment thereof. means a holder of a securities account. means the securities in the Company standing to the credit of a securities account of a Depositor, subject to the provisions of the Central Depositories Act and the Rules. means Kuala Lumpur Stock Exchange.

Depositories Act

Depositor

Depositor

Deposited Security

Deposited Security

The Exchange

The Exchange or Bursa Securities

means Bursa Malaysia Securities Berhad or any stock exchange on which the shares or other securities of the Company are listed from time to time. means the Listing Requirements of Bursa Malaysia Securities Berhad including any amendments to the same that may be made from time to time. means any day on which the stock market of the Exchange is open for trading in securities.

Listing Requirements

means the Listing Requirements of Kuala Lumpur Stock Exchange including any amendments to the same that may be made from time to time. means any day between Mondays and Fridays which is not a market holiday of the Exchange upon which the Company is listed or a Public Holiday.

Listing Requirements

Market day

Market days

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 89

Article No 2

Existing Provisions

Amended Provisions

Words member or members

Meanings means any person or persons for the time being holding shares in the Company including Depositors whose names appear on the Record of Depositors in accordance with Section 35 of the Security Industry (Central Depositories) Act but shall exclude the Central Depository or its nominee company in whose name the Deposited Securities are registered unless required by virtue of the Central Depositories Act or the Rules or the context of these Articles. means the Rules of the Central Depository and any appendices thereto.

Words member or members

Meanings means any person who for time being holding shares in the Company includes Depositors whose names appear on the Record of Depositors in accordance with Section 35 of the Security Industry (Central Depositories) Act but excludes the Depository in its capacity as a bare trustee.

Rules

Rules

means the Rules of the Bursa Depository and shall have the meaning given in Section 2 of the Securities Industry (Central Depositories) Act 1991. Note: reference to the above interpretations throughout the whole Articles of Association be changed accordingly.

5 (5)

The total nominal value of issued preference shares shall not exceed the total nominal value of issued ordinary shares at any time; The Company shall have power to issue preference capital ranking equally with, or in priority to, preference shares already issued.

Deleted

5 (6)

Renumbered as Article 5(5)

Appendix I: Details of the Proposed Amendments to the Articles of Association

90 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

Article No 8

Existing Provisions

Amended Provisions

Preference shareholders shall have the same rights as ordinary shareholders as regards receiving notices, reports and audited accounts, and attending general meetings of the Company and shall be entitled to a return of capital in preference to ordinary shareholders when the Company is wound up. Preference shareholders shall also have the right to vote at any meeting in each of the following circumstances: (a) when the dividend or part of the dividend on the preference shares is in arrears for more than six (6) months; (b) on a proposal to reduce the Company's share capital; (c) on a proposal for the disposal of the whole of the Company's property, business and undertaking; (d) on a proposal that affects the rights attached to the preference shares; (e) on a proposal to wind up the Company; and (f) during the winding up of the Company.

Preference shareholders shall have the same rights as ordinary shareholders as regards receiving notices, reports and audited accounts, and attending general meetings of the Company and shall also have the right to vote at any meeting in each of the following circumstances:

(a) No change

(b) No change (c) No change (d) No change (e) No change (f) No change (1) Where: (a) the securities of the Company are listed on another stock exchange; and (b) the Company is exempted from compliance with section 14 of the Central Depositories Act or section 29 of the Securities Industry (Central Depositories) (Amendment) Act, 1998, as the case may be, under the Rules in respect of such securities; the Company shall, upon request of a securities holder, permit a transmission of securities held by such securities holder from the register of holders maintained by the registrar of the Company in the jurisdiction of the other stock exchange to the register of holders maintained by the registrar of the Company in Malaysia and vice-versa provided that there shall be no change in the ownership of such securities.

41

(1) Where: (a) the securities of the Company are listed on an Approved Market Place; and (b) the Company is exempted from compliance with section 14 of the Central Depositories Act or section 29 of the Securities Industry (Central Depositories) (Amendment) Act, 1998, as the case may be, under the Rules in respect of such securities; the Company shall, upon request of a securities holder, permit a transmission of securities held by such securities holder from the register of holders maintained by the registrar of the Company in the jurisdiction of the Approved Market Place (hereinafter referred to as "the Foreign Register"), to the register of holders maintained by the registrar of the Company in Malaysia (hereinafter referred to as "the Malaysian Register") provided that there shall be no change in the ownership of such securities. (2) For the avoidance of doubt, if the Company fulfils the requirements of paragraphs (a) and (b) of Article 41(1) above, the Company shall not allow any transmission of securities from the Malaysian Register into the Foreign Register.

(2) Deleted

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007 91

Article No 66(a)

Existing Provisions

Amended Provisions

The notices convening meetings shall specify the place, day and hour of the meeting, and shall be given to all shareholders, at least 14 days before the meeting or at least 21 days before the meeting where any special resolution is to be proposed or where it is an annual general meeting. Any notice of a meeting called to consider special business shall be accompanied by a statement regarding the effect of any proposed resolution in respect of such special businesses. At least 14 days' notice or 21 days' notice in the case where any special resolution is proposed or where it is the annual general meeting of every such meeting shall be given by advertisement in the daily press and in writing to each Stock Exchange upon which the company is listed.

The notices convening meetings shall specify the place, day and hour of the meeting, and shall be given to all shareholders, at least 14 days before the meeting or at least 21 days before the meeting where any special resolution is to be proposed or where it is an annual general meeting. Any notice of a meeting called to consider special business shall be accompanied by a statement regarding the effect of any proposed resolution in respect of such special businesses. At least 14 days' notice or 21 days' notice in the case where any special resolution is proposed or where it is the annual general meeting of every such meeting shall be given by advertisement in at least one nationally circulated Bahasa Malaysia or English daily newspaper and in writing to each Stock Exchange upon which the company is listed. The Company shall also request the Central Depository in accordance with the Rules, to issue a Record of Depositors as at the latest date which is reasonably practicable which shall in any event not less than three (3) market days before the general meeting (hereinafter referred to as "the General Meeting Record of Depositors"). A shareholder shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting. Where a shareholder appoints two (2) proxies, he shall specify the proportion of his shareholdings to be represented by each proxy. The first directors shall be Datuk Haji Mohamed Al Amin Bin Abdul Majid and Lee Kok Khee. Unless otherwise determined by the Company in general meeting the number of directors shall not be less than two (2) nor more than twenty (20).

66(c)

The Company shall also request the Central Depository in accordance with the Rules, to issue a Record of Depositors as at a date not less than three (3) market days before the general meeting (hereinafter referred to as "the General Meeting Record of Depositors").

88(a)

A shareholder may appoint more than two (2) proxies to attend the same meeting. Where a shareholder appoints two (2) or more proxies, he shall specify the proportion of his shareholdings to be represented by each proxy. The first directors shall be Datuk Haji Mohamed Al Amin Bin Abdul Majid and Lee Kok Khee. All the directors of the Company shall be natural persons. Unless otherwise determined by the Company in general meeting the number of directors shall not be less than two (2) nor more than twenty (20).

100

Appendix I: Details of the Proposed Amendments to the Articles of Association

92 ANNUAL REPORT 2007 AWC FACILITY SOLUTIONS BERHAD

Article No 114

Existing Provisions

Amended Provisions

The office of a Director shall, ipso facto, be vacated if the Director: (a) attains the age of seventy (70) years unless Section 129(6) of the Act is complied with; (b) ceases to be a Director by virtue of the Act; (c) becomes bankrupt or makes any arrangement or composition with his creditors generally; (d) becomes prohibited from being a Director by reason of any order made under the Act or contravenes Section 130 of the Act; (e) becomes of unsound mind or a person whose person or estate is liable to be dealt with in any way under the law relating to mental disorder; (f) resigns his Office by notice in writing to the Company; (g) is absent from more than 50% of the total board of Directors' meetings held during a financial year save and except in a case where the Exchange has granted a waiver to the Director from compliance with this requirement; or (h) is removed from his Office of Director by a resolution of the Company in general meeting of which special notice has been given.

The office of a Director shall become vacant if the Director: (a) No change (b) No change (c) becomes bankrupt or makes any arrangement or composition with his creditors generally during his term of office; (d) No change

(e) becomes of unsound mind or a person whose person or estate is liable to be dealt with in any way under the law relating to mental disorder during his term of office; (f) No change (g) No change

(h) is removed from his Office of Director by a resolution of the Company in general meeting of which special notice has been given; or (i) is convicted of any offence (whether in Malaysia or elsewhere) in relation to the offences under the Act or the securities laws as defined in the Listing Requirements.

Proxy Form

AWC FACILITY SOLUTIONS BERHAD ANNUAL REPORT 2007

I/We __________________________________________________ NRIC/Company No._____________________________

(full name in capital letters)

of _____________________________________________________________________________________________________

(full address)

being (a) member(s) of AWC FACILITY SOLUTIONS BERHAD hereby appoint _________________________________

(full name in capital letters)

_______________________________________________________

NRIC No. ____________________________________

of _____________________________________________________________________________________________________

(full address)

or failing him/her, _______________________________________

(full name in capital letters)

NRIC No. ____________________________________

of _____________________________________________________________________________________________________

(full address)

or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Sixth Annual General Meeting of the Company to be held at Conference Room, Level 3, The Eastin Hotel, 13, Jalan 16/11, Pusat Dagang Seksyen 16, 46350 Petaling Jaya, Selangor Darul Ehsan on Wednesday, 28 November 2007 at 10.30 a.m. and at any adjournment thereof. Please indicate with an "X" in the appropriate spaces how you wish your votes to be cast. If no specific direction as to vote is given, the Proxy will vote or abstain from voting at his/her discretion. No. Resolutions 1. To receive the Audited Financial Statements for the financial year ended 30 June 2007 together with the Reports of the Directors and Auditors thereon. To approve the payment of Directors' fees for the financial year ended 30 June 2007. To re-elect Dato' Ahmad Kabeer bin Mohamed Nagoor as Director who retires pursuant to Article No. 103 of the Company's Articles of Association. To re-elect En Roslan bin Mohd Latif as Director who retires pursuant to Article No. 109 of the Company's Articles of Association. To re-elect En Azmir Merican bin Dato' Azmi Merican as Director who retires pursuant to Article No. 109 of the Company's Articles of Association. To appoint Auditors and to authorise the Directors to fix their remuneration. To approve the renewal of the authority for the Share buy-back by the Company. To approve the amendments to the Company's Articles of Association. No. of Shares Held For Against

2. 3.

4.

5.

6. 7. 8.

Dated this _______________ day of ____________________ 2007

Signature of Member(s)/Common Seal

Notes: a. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but need not be a member of the Company and the provision of Section 149 (1) (a) and (b) of the Companies Act, 1965 shall not apply to the Company. b. The instrument appointing a proxy shall be in writing under the hand of the appointor or in the case of Corporate member, the instrument appointing a proxy shall be either under the Seal or under the hand of an officer or attorney duly authorised. c. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportion of his/her holding to be represented by each proxy. d. The instrument appointing a proxy must be deposited at the Registered office of the Company at Third Floor, No. 79 (Room A), Jalan SS21/60, Damansara Utama, 47400 Petaling Jaya, Selangor not less than 48 hours before the time for holding the Meeting or at any adjournment thereof.

Affix Stamp

The Company Secretary AWC Facility Solutions Berhad (550098-A) Third Floor, No. 79 (Room A), Jalan SS21/60, Damansara Utama, 47400 Petaling Jaya, Selangor, Malaysia

Information

AWC Facility Solutions Bhd AR2007

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