TEO GUAN LEE CORPORATION BERHAD (283710-A)

T E O G U A N L E E C O R P O R A T I O N B E R H A D ( 2 8 3 7 1 0 - A )P l o t 2 8 , L o r o n g P e r u s a h a a n M a j u 4

P r a i I n d u s t r i a l E s t a t e , 1 3 6 0 0 P r a i , P e n a n g , M a l a y s i a

TGL Cover FA.indd 1 24/10/08 5:37:30 PM

JUSCO 1 UTAMA SHOPPING CENTRE

AEON SEBERANG PERAI CITY SHOPPING CENTRE

JUSCO MELAKA SHOPPING CENTRE

BOUTIQUE

UltramanUltraman

2 - 3 I Notice of Annual General Meeting

4 I Statement of Contents accompanying Notice of Annual General Meeting

5 I Corporate Information

6 - 8 I Board of Directors and Directors’ Profile

9 - 10 I Chairman’s Statement

11 - 14 I Statement on Corporate Governance

15 I Statement on Internal Control

16 - 18 I The Audit Committee

20 - 73 I Financial Statements

74 - 75 I List of Properties

76 - 78 I Analysis of Shareholdings

enclosed I Proxy Form

Content

2

ANNUAL REPORT 2008 • TEO GUAN LEE CORPORATION BERHAD (283710-A)

notICe IS HeReBY GIVen that the Fifteenth Annual General Meeting of the Company will be held at the Conference Room of teo Guan Lee Corporation Berhad, Plot 28 Lorong Perusahaan Maju 4, Prai Industrial estate, 13600 Prai, Pulau Pinang on tuesday, 25 november 2008 at 11.00 a.m. for the following purposes:

A G E N D AAs Ordinary Business

1. to receive the Audited Financial Statements for the year ended 30 June 2008 together with the reports of the Directors and Auditors thereon. Ordinary Resolution 1

2. to re-appoint Mr. toh Peng Hoe, a Director retiring under Section 129 of the Companies Act, 1965. Ordinary Resolution 2

3. to re-elect the following Directors retiring under the provision of Article 98 of the Articles of Association of the Company, and who, being eligible, have offered themselves for re-election:

a) Mr. toh Peng Hua Ordinary Resolution 3b) Mr. toh Su Meng Ordinary Resolution 4

4. to re-appoint Messrs. Peter Chong & Co. (formerly known as BKR Peter Chong) as Auditors of the Company and to authorise the Board of Directors to fix their remuneration. Ordinary Resolution 5

As Special Business

to consider and if thought fit, to pass with or without modifications the following ordinary resolutions:

5. to approve the payment of Directors’ Fees of RM20,000.00 for the year ended 30 June 2008. Ordinary Resolution 6

6. Authority to Issue Shares

“that pursuant to Section 132D of the Companies Act, 1965 and approvals from Bursa Malaysia Securities Berhad (“Bursa Securities”) and other relevant governmental/regulatory authorities where such authority shall be necessary, the Board of Directors be authorised to issue and allot shares in the Company from time to time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Board of Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued shall not exceed ten per centum (10%) of the issued share capital of the Company for the time being, and that the Board of Directors be also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Securities.” Ordinary Resolution 7

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

By order of the Board,

CHAN CHEE KHEONG (MAICSA 0810287)TAN CHOONG KHIANG (MAICSA 7018448)Secretaries

Penang

Date: 3 november 2008

notICe oF AnnUAL GeneRAL MeetInG

3notICe oF AnnUAL GeneRAL MeetInG (cont’d)

Notes:

A member entitled to attend and vote is entitled to appoint at least one (1) proxy to attend and vote instead of him.

A proxy may but need not be a member of the Company and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

To be valid this form duly completed must be deposited at the registered office of the Company at Plot 28 Lorong Perusahaan Maju 4, Prai Industrial Estate, 13600 Prai, Pulau Pinang not less than forty-eight (48) hours before the time for holding the meeting.

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

Explanatory Notes on Special Business

Directors’ Fees

this proposed ordinary Resolution 6, if passed, will authorise the payment of Directors’ fees for the financial year ended 30 June 2008 amounting to RM20,000.00.

Authority to Issue Shares

this proposed ordinary Resolution 7, if passed, will empower the Directors of the Company to issue and allot shares in the Company up to an amount not exceeding 10% of the total issued capital of the Company for the time being for such purposes as the Directors consider would be in the best interest of the Company. this Authority will, unless revoked or varied by the Company in general meeting, will expire at the next Annual General Meeting of the Company.

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1. Directors Standing for Re-election/Re-appointment

1. Mr. toh Peng Hoe, a Director who retires in compliance with Section 129(2) of the Companies Act, 1965 after having attained the age of seventy years.

2. Mr. toh Peng Hua, a Director retiring under the provision of Article 98 of the Articles of Association of the Company.

3. Mr. toh Su Meng, a Director retiring under the provision of Article 98 of the Articles of Association of the Company.

the details of the Directors standing for re-election/re-appointment are set out in the Board of Directors and Directors’ Profile on pages 6 to 8.

2. a. Details of Board Meetings and attendances of Directors

During the financial year ended 30 June 2008, the Board of Directors met five (5) times on the following dates:

1. 29 August 2007 2. 18 october 2007 3. 28 november 2007 4. 28 February 2008 5. 21 May 2008

All the above meetings were held at the Conference Room of teo Guan Lee Corporation Berhad at Plot 28 Lorong Perusahaan Maju 4, Prai Industrial estates, 13600 Penang.

the attendance record of the Directors is shown in the table below:

Name No of Meetings attended

1. toh Peng Hoe 5/52. toh Ping Hai 5/53. toh Peng Hua 5/54. Dato’ Mustapha Bin Abdul Hamid 5/55. Chan Wah Chong 5/56. toh Kian Beng 5/57. toh Su Meng 5/5

b. the Fifteenth Annual General Meeting of the Company will be held at the Conference Room of teo Guan Lee Corporation Berhad, Plot 28 Lorong Perusahaan Maju 4, Prai Industrial estate, 13600 Prai, Pulau Pinang on tuesday, 25 november 2008 at 11.00 a.m.

3. The details of the Directors respective interest in the securities of the Company are set out in the Analysis of Shareholdings which appear on pages 76 to 78.

StAteMent oF ContentS Accompanying the notice of the Annual General Meeting of the Company

5CHAIRMAN Dato’ Mustapha Bin Abdul Hamid

MANAGING DIRECTOR toh Peng Hoe

DIRECTORS toh Ping Hai toh Peng Hua Chan Wah Chong toh Kian Beng toh Su Meng

COMPANY SECRETARIES Chan Chee Kheong (MAICSA 0810287) tan Choong Khiang (MAICSA 7018448)

AUDIT COMMITTEE

Chairman Chan Wah Chong (Independent Non-Executive Director) Member Dato’ Mustapha Bin Abdul Hamid (Independent Non-Executive Director) toh Kian Beng (Executive Director)

NOMINATION COMMITTEE

Chairman Dato’ Mustapha Bin Abdul Hamid (Independent Non-Executive Director) Member Chan Wah Chong (Independent Non-Executive Director)

REMUNERATION COMMITTEE

Chairman Dato’ Mustapha Bin Abdul Hamid (Independent Non-Executive Director)Member Chan Wah Chong (Independent Non-Executive Director) toh Peng Hoe (Executive Director)

AUDITORS Peter Chong & Co (formerly known as BKR Peter Chong) Chartered Accountants

19th Floor, Gurney tower 18 Persiaran Gurney 10200 Penang

PRINCIPAL BANKERS Bank Islam Malaysia Berhad Malayan Banking Berhad oCBC Bank (Malaysia) Berhad Public Bank Berhad CIMB Bank Berhad

REGISTERED OFFICE Plot 28 Lorong Perusahaan Maju 4 Prai Industrial estate 13600 Prai, Penang tel: 04-5076 228 Fax: 04-5079 228

REGISTRAR PFA Registration Services Sdn. Bhd. Level 17, the Gardens north tower Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur, Malaysia tel: 03- 2264 3883 Fax: 03-2282 1886

STOCK EXCHANGE LISTING Bursa Malaysia Securities Berhad Second Board

CoRPoRAte InFoRMAtIon

6


DATO’ MUSTAPHA BIN ABDUL HAMID56 years of age, MalaysianIndependent and Non-Executive DirectorMember of Audit CommitteeChairman of Nomination and Remuneration Committee

Dato’ Mustapha Bin Abdul Hamid was appointed to the Board as an Independent and non-executive Director on 14 January 1994 and a member of the Audit Committee on 25 March 1998. He obtained a Bachelor of Social Science (Honours) Degree from University Science Malaysia and a Diploma in Public Management from national Institute of Public Administration (IntAn).

Prior to venturing into the private sector, Dato’ Mustapha was the Principal Assistant Director in the Prime Minister’s Department.

Dato’ Mustapha is also an Independent non-executive Director of Safeguard Corporation Berhad.

He has no family relationship with any Director and/or major shareholder of teo Guan Lee Corporation Berhad.

He has not been convicted of any offence in the past ten (10) years.

TOH PENG HOE72 years of age, MalaysianNon-Independent and Executive DirectorGroup Managing DirectorMember of Remuneration Committee

Toh Peng Hoe was appointed as Group Managing Director on 9 August 1994. He has 52 years of business experience and possesses in-depth knowledge and expertise of the garment trade. With his vision and stewardship, he has taken the Group from a small family business to an established importer and wholesaler and guided teo Guan Lee Corporation Berhad to the eventual listing into the Second Board of Bursa Malaysia Securities Berhad.

In his present capacity, he is responsible for the overall business development as well as formulation and implementation of the Group’s strategic plans and policies.

He has family relationship with other major shareholders of teo Guan Lee Corporation Berhad.


TOH PING HAI67 years of age, MalaysianNon-Independent and Executive Director

Toh Ping Hai was appointed to the Board on 9 August 1994. With more than 45 years of working experience within the Group, he is involved in the business development and expansion of the Group.

He is currently in charge of the operations of P.P.A.C (M) Sdn. Bhd.

He is a substantial shareholder of teo Guan Lee Corporation Berhad and has family relationship with other major shareholders of teo Guan Lee Corporation Berhad.


BoARD oF DIReCtoRS & DIReCtoRS’ PRoFILe

7TOH PENG HUA64 years of age, Malaysian Non-Independent and Executive Director

Toh Peng Hua was appointed to the Board on 9 August 1994. He is the Managing Director of teo Guan Lee (KL) Sdn. Bhd. He has been involved in the wholesaling and retailing business for over 42 years. Currently, he is responsible for managing and overseeing the day-to-day management, strategic business planning and operations of teo Guan Lee (KL) Sdn. Bhd. and its subsidiaries.

He is a substantial shareholder of teo Guan Lee Corporation Berhad and has family relationship with other major shareholders of teo Guan Lee Corporation Berhad.


CHAN WAH CHONG 44 years of age, MalaysianIndependent and Non-Executive DirectorChairman of Audit CommitteeMember of Nomination and Remuneration Committee

Chan Wah Chong was appointed to the Board and Chairman of Audit Committee on 10 August 1999. He started his career in accountancy with ernst & Young, an international accounting firm for 6 years before joining a local medium size audit firm as a senior staff for a year. He then joined a local pharmaceutical manufacturing concern as Corporate Finance Manager which he left after 1½ years to join a start up medical trading Company as its Finance Director.

He is a qualified member of the Malaysian Institute of Certified Public Accountants since 1994. He is presently running his own corporate advisory company.

He has no family relationship with any Director and/or major shareholders of teo Guan Lee Corporation Berhad.


TOH KIAN BENG46 years of age, MalaysianNon-Independent and Executive DirectorMember of Audit Committee

Toh Kian Beng was appointed to the Board on 1 December 1994 and was subsequently appointed as Member of Audit Committee on 26 September 1995. She graduated with a Bachelor of Commerce degree from University of new South Wales, Australia in 1983 and joined a local accounting firm for 1½ years. She is a member of Malaysian Institute of Accountants (MIA) and Certified Practising Accountant (CPA), Australia. She joined teo Guan Lee Group in 1985 and is responsible for the overall administrative, financial, planning and management of the Group. She is also involved in identifying new business ventures development and further expansion of the Group.

She has family relationship with other major shareholders of teo Guan Lee Corporation Berhad.

She has not been convicted of any offence in the past ten (10) years.

BoARD oF DIReCtoRS & DIReCtoRS’ PRoFILe (cont’d)

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TOH SU MENG59 years of age, MalaysianNon-Independent and Executive Director

Toh Su Meng was appointed to the Board on 7 January 2005. He joined teo Guan Lee Group after completing his secondary education as a Sales Representative. He is currently a Sales Manager of one of the subsidiary, teo Guan Lee (Penang) Sdn. Bhd. and is in charge of wholesale division.

He has family relationship with other major shareholders of teo Guan Lee Corporation Berhad.


BoARD oF DIReCtoRS & DIReCtoRS’ PRoFILe (cont’d)

9

FINANCIAL REvIEW

For the financial year under review, the Group achieved a revenue of RM100.44 million, an increase of RM15.31 million over last year’s revenue of RM85.13 million. the Group posted a profit before tax of RM12.43 million, an increase of RM1.89 million from the profit before tax of RM10.54 million achieved in the year before.

the improved turnover and profit before tax for the year under review is attributable to the continuous efforts undertaken in strengthening the brands’ positioning and concerted efforts to improve efficiencies in this difficult retail environment.

REvIEW OF OPERATIONS

the retailing of children’s apparel continues to be the main focus of the Group’s business. the various children brand names registered double digit growth due to an increase in number of outlets and sales per outlet.

the diversification into the baby segment by acquiring “Puppy Winks” continued into its second year of operation and contributed positively to the Group. the focus was on strengthening the brand’s position in the market and improving its product range. the Group has further embarked on expanding the baby segment by signing on “tom & Jerry“ baby wear licensing agreement and it is expected to be launched early next year.

the year under review also saw the opening of 4 new retail boutiques for its Cartoon labels under “Cartoon extra” and “Cartoon network” and 2 more in the pipeline to be opened in December 2008.

the Group will continue to open retail boutiques in suitable strategic locations.

CHAIRMAn’S StAteMent

On behalf of the Board of Directors, I am pleased to present to you the Annual Report and Audited Financial Statements of Teo Guan Lee Corporation Berhad for the financial year ended 30 June 2008.

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CHAIRMAn’S StAteMent (cont’d)

INDUSTRY OUTLOOK

the Malaysian economy is confronting the most challenging year of recent times. Global macroeconomics and credit market conditions are getting tougher due to the deepening global credit crisis.

Although the country’s economic fundamentals remain sound, consumer confidence would undoubtedly be affected. the domestic economy is plagued with the burdensome combination of mounting inflation risks, weak domestic demand and political uncertainties.

High commodities and crude oil prices, the silver lining of exports have come off and these add further uncertainty to export growth in the medium term.

nonetheless, as the Malaysian economy is relatively domestic driven, the effects are far more subdued.

Undoubtedly the country will experience a slowdown in growth but consumer spending will not be drastically reduced as long as there is job security, backed by high savings and growth in income.

MOvING FORWARD

the Group is well poised to confront the difficulties facing the retail environment. the Group is now in a firm financial position and with the strengths of its brands in the market place as well as continuous cost control measures to improve efficiencies, the Group is able to weather the difficult operating environment.

CORPORATE PROPOSAL

on 24 october 2008, the Company announced that after considering the capital reserves available as at 30 June 2008, the Board of Directors have decided to enlarge the Issued and Paid-up Capital of the Company via a higher Bonus Issue and the Proposed Private Placement.

the Company will not proceed with the Proposed Acquisition and the Proposed Bonus Issue is revised to an issuance of 15,535,800 new ordinary shares of RM1.00 each in tGL on the basis of three (3) bonus shares for every five (5) existing ordinary shares of RM1.00 each held in tGL on an entitlement date to be determined later.

DIvIDEND

no dividend has been recommended for the year ended 30 June 2008.

ACKNOWLEDGEMENTS

on behalf of the Board, I would like to express my sincere appreciation to my fellow Directors for their guidance and counsel.

I also wish to thank all our customers, business associates, bankers and shareholders for their confidence and continued support throughout the year.

Last but not least, my heartfelt gratitude goes to the management and staff for their contributions and dedication to the Group without which the Group would not progress to where it is today.

thank you.

DATO MUSTAPHA BIN ABDUL HAMIDCHAIRMAN

28 october 2008

11the Malaysian Code of Corporate Governance (“the Code”) introduced in March 2000, sets out the principles and best practices that companies may apply in the direction and management of their business and affairs towards achieving optimal governance framework and maximizing shareholder value.

the principles and best practices of the Code were incorporated into the Listing Requirements of the Bursa Malaysia Securities Berhad to promote transparency and accountability of the Public Listed Companies in Malaysia.

Set out below is a statement on how the Group has applied the principles and the extent of its compliance with the best practices during the financial year ended 30 June 2008.

A. THE BOARD OF DIRECTORS

the Board(i) the Board has overall responsibility for the strategic direction and control of the Group.

the Board meets regularly on a quarterly basis and additionally as required. the Board met five (5) times for year ended 30 June 2008 on the following dates:

Date 1. 29 August 2007 2. 18 october 2007 3. 28 november 2007 4. 28 February 2008 5. 21 May 2008

(ii) Board Balancethe composition of the Board reflects a balance of 5 executive Directors and 2 Independent non-executive Directors with a good mix of experience in business, finance & accounting, sales & marketing and public services which are relevant to the business operations of the Group.

the Directors’ profiles are presented on Pages 6 to 8 of the Annual Report. the executive Directors are generally responsible for making and implementing strategic plans and policies for the Group and overseeing overall conduct of the Group whilst non-executive Directors are persons of calibre playing a significant role in exercising independent and unbiased judgement through their knowledge and experience from other business sectors.

(iii) Supply of InformationAll the Directors have full and timely access to information concerning the Company and the Group. the Directors were given agenda and board papers containing information relevant to the business of the meeting for informed decision making and proper judgement.

the Board papers include financial, operational and corporate development. the Directors have access to the advice and services of the Company Secretary and the senior management staff of the Company.

(iv) Appointment to the Boardthe Committee will evaluate and recommend new member(s) to the Board of Directors. the Board of Directors would review the Company’s requirements and assess the quality of the present Board members periodically. Any new appointment, after due deliberation require general consensus of the Board.

the nomination Committee comprises the following:

Dato Mustapha Bin Abdul Hamid - Independent & non-executive DirectorChan Wah Chong - Independent & non-executive Director

During the financial year, the Committee met once on 18 october 2007.

(v) Directors’ trainingAll the Directors will continue to undergo the Continuing education Programme (“CeP”) to keep abreast of various issues facing the changing business environment and market.the Board of Directors are making arrangements for the Directors to attend any relevant training programme to further enhance their knowledge to enable them to discharge their responsibilities more effectively.

StAteMent on CoRPoRAte GoVeRnAnCe

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StAteMent on CoRPoRAte GoVeRnAnCe (cont’d)

A. THE BOARD OF DIRECTORS (cont’d)

(vi) Re-election of DirectorsAny director appointed during the year is required under Article 105 of the Company’s Articles of Association to retire and seek re-election by shareholders at the following AGM (“AGM”) immediately after their appointment.

the articles also require that one third of the Directors including the Managing Director, to retire by rotation and seek re-election at each AGM and that each director shall submit himself for re-election every 3 years.

Directors over the age of seventy (70) are required to submit themselves for re-appointment annually in accordance to Section 129(6) of the Companies Act, 1965.

B. DIRECTORS REMUNERATION

the Remuneration Committee is responsible for the making of recommendations to the Board on the remuneration packages of executive Director and recommends to the Board for approval. the current policy and procedure on remuneration is transparent and is based on corporate and individual performance. the determination of the remuneration packages of each director is a matter of the Board and each Director concerned plays no part in the decisions on their own remuneration. Directors’ fees are tabled at the Annual General Meeting for the approval of the shareholders of the Company.

the Remuneration Committee comprises of the following:Dato’ Mustapha Bin Abdul Hamid - Independent & non-executive DirectorChan Wah Chong - Independent & non-executive Directortoh Peng Hoe - executive Director

During the financial year, the Committee met on 21 May 2008.

the aggregate remuneration of the Directors of the Company for the financial year ended 30 June 2008 is as follows:-

Salary Fees BonusStatutory

Contribution Total

executive 546,000 – 37,250 29,218 612,468non-executive – 20,000 – – 20,000

632,468

the number of Directors of the Company who served during the financial year and whose total remuneration from the Group following within the respective bands are as follows:

Executive Non-Executive

RM1 - RM50,000 – 2RM50,001 - RM100,000 3 –RM100,001 - RM150,000 1 –RM150,001 - RM200,000 – –

RM200,001 - RM250,000 1 –

5 2

13C. RELATIONS WITH SHAREHOLDERS AND INvESTORS

the Company recognizes the importance of keeping shareholders and investors informed of the Group’s business corporate developments. Such information is disseminated via the Company’s Annual Report, circulars to shareholders, quarterly financial results and various announcements made from time to time.

the Annual General Meeting (“AGM”) remains the principal forum for dialogue with shareholders.

D. ACCOUNTABILITY AND AUDIT

(i) Financial Reportingthe Directors aim to provide a balanced and meaningful assessment of the Group’s financial performance and prospects primarily through the Annual Report and quarterly financial statements.

(ii) Internal Control the Board acknowledges that it is responsible for maintaining a sound system of internal controls which provides reasonable assessment of effective and efficient operations, internal financial controls and compliance with laws and regulations as well as with internal procedures and guidelines.

(iii) Relationship with Auditorsthe Company has always maintained a formal and transparent relationship with the Auditors in seeking professional advice and ensuring compliance with accounting standards.

(iv) Responsibility Statement by the Board of Directorsthe Board of Directors under paragraph 15.27(a) of the Listing Requirements of the Bursa Malaysia Securities Berhad are required to issue a statement explaining their responsibility in preparing the annual audited financial statements.

Under the Companies Act 1965, the Directors are required to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the Company at the financial year end and of the results and cash flows of the Group and of the Company for the financial year then ended.

In preparing the financial statements of teo Guan Lee Corporation Berhad for the financial year ended 30 June 2008, the directors have considered and followed the applicable approved Malaysian Accounting Standards, made judgments and estimates that are prudent and reasonable and adopted appropriate accounting policies.

the directors are also responsible in ensuring that the Company and Group keep accounting records which disclose with reasonable accuracy at any time the financial position of the Company, and which enables them to ensure the financial statements comply with the Companies Act, 1965. they are also responsible for taking such steps as are reasonably open to them to ensure the safeguarding of the assets of the Group and of the Company and to prevent and detect fraud and other such irregularities.

E. OTHER INFORMATION

a) options, Warrants or Convertible Securitiesthe amount of share options granted over unissued shares to Directors and employees were disclosed in the Directors Report.

b) Imposition of Sanctions/Penaltiesthere were no sanctions and/or penalties imposed on the Company or its subsidiaries, Directors or management by the relevant regulatory bodies.

c) non Audit Feesthe amount of non audit fees paid to external auditors was disclosed in the financial statements.

d) Variation in Resultsthere was no material variance between the unaudited profit after tax announced and the audited profit after tax for the financial year ended 30 June 2008.

e) Material ContractsDuring the financial year, there were no material contracts with the Company and its subsidiaries involving Directors and major shareholders other than as disclosed in the Director’s Report and notes to the Financial Statements.


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F) CORPORATE SOCIAL RESPONSIBILITY

As a corporate citizen, it is important for us to include corporate social responsibility (“CSR”) as an integral part of our business mainstream operations and practices. the Group had undertaken a number of activities in its efforts to give back to society and the less fortunate.

In the year under review, the Group made a donation towards the building fund of a primary school SJK(C) Pai teik in nibong tebal, Seberang Perai.

the Group had also made a donation towards relief work carried out in earthquake struck Wenchuan country in Sichuan, China. Sichuan was struck by a magnitude 7.9 earthquake on 12 May 2008. the earthquake caused significant damage as well as casualties in the region.

15INTRODUCTION

Pursuant to paragraph 15.27(b) of the Bursa Malaysia Securities Berhad (“Bursa Securities”) Listing Requirements, the Board of Directors of teo Guan Lee Corporation Berhad is pleased to provide the following statement on the state of internal control of the Group, which has been prepared in accordance with the “Statement of Internal Control - Guidance for Directors of Public Listed Companies” issued by the Institute of Internal Auditors Malaysia and adopted by the Bursa Securities.

INTERNAL CONTROL

the Board acknowledges that it is responsible for maintaining a sound system of internal controls, which provides reasonable assessment of effective and efficient operations, internal financial controls and compliance with laws and regulations as well as with internal procedures and guidelines.

Key elements of the Group’s systems of internal control are:

• ThereismonthlymonitoringandreviewoffinancialresultsforallmajordepartmentswithintheGroup,includingmonitoring and reporting thereon, of performance against the operating plans and annual budgets. the Group’s management teams communicate regularly to monitor performance;

• TheGrouphasadefinedorganizationalstructurewithclearlinesofaccountabilityandwhichhasadocumenteddelegation of authority that sets out the decisions that need to be taken and the appropriate authority levels of Management including matters that require Board approval;

• Thereareoperatingmanualsthatsetoutthepolicies,proceduresandpracticestobeadoptedbyallthecompaniesin the Group, to ensure clear accountabilities and control procedures are in place for all business units. the Group is continuously improving its existing control procedures to address the changing environment of its business operations and practices; and

the Group’s systems of internal controls are designed to provide reasonable but not absolute assurance against the risks of material errors, fraud or losses from occurring. It is possible that internal control may be circumvented or overridden. Furthermore, because of changing circumstances and conditions, the effectiveness of an internal control system may vary over time. the rationale of the systems of internal controls is to enable the Group to achieve its corporate objectives within an acceptable risk profile and cannot be expected to eliminate all risks.

the Board is of the view that there is no significant breakdown or weaknesses in the system on internal controls of the Group that have resulted in material losses incurred by the Group for the financial year ended 30 June 2008. the Group continues to take any necessary measures to strengthen its internal control structure and manage its risks.

INTERNAL AUDIT

During the financial year ended 30 June 2008, the Company outsourced its internal audit function.

A review on the Company’s compliance in applying the Principles and Best Practices based on the Malaysian Code of Corporate Governance and Chapter 15 of the Listing Requirements of Bursa Malaysia Securities was done.

Recommendations were made to the Board for areas that need improvement.

StAteMent on InteRnAL ContRoL

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A. the Members of the Audit Committee are:

a) Chan Wah Chong - Chairman (Independent Non-Executive Director)b) Dato’ Mustapha Bin Abdul Hamid - Member (Independent non-executive Director)c) toh Kian Beng - Member (Executive Director)

B. the terms of Reference of the Audit Committee are as follows:

CONSTITUTION the Board has established a Committee of the Board to be known as the Audit Committee.

MEMBERSHIP 1. the Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist of

not less than 3 members. A quorum shall be 2 members.

2. the Committee Members shall not be:

a) executive Directors of the Company or any related corporation;b) A spouse, parent, brother, sister, son or adopted son, daughter or adopted daughter of an executive Director

of the Company or of any related corporation; orc) Any person having a relationship which, in the opinion of the Board of Directors, would interfere with the

exercise of independent judgement in carrying out the functions of the Audit Committee.

3. the members of the Committee shall select a Chairman from among their members who is not an executive Director or employee of the Company or any related corporation.

4. If a member of the Committee resigns, dies or for any other reason ceases to be a member with the result that the number of members reduced below 3, the Board of Directors shall, within 3 months of that event, appoint such number of new members as may be required to make up the minimum number of 3 members.

AUTHORITY

5. the Committee is authorised by the Board to investigate any activity within its terms of Reference. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee.

6. the Committee is authorised by the Board to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.

tHe AUDIt CoMMIttee

17FUNCTIONS

7. the functions of the Committee shall be:

a) to consider and recommend the nomination of a person or persons as auditors together with such other functions as may be agreed to by the Audit Committee and the Board of Directors.

b) to discuss with the external Auditors on their audit plan including the assistance given by the employees of the Company to the external Auditors;

c) to review the quarterly and year-end financial statements of the Company, focusing particularly on:

i) any changes in accounting policies and practices;ii) significant adjustments arising from the audit;iii) the going concern assumption;iv) compliance with accounting standards and other legal requirements; andv) any significant and unusual events.

d) to consider any related party transaction and conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity;

e) to review the major risk area of the Group;

f) to discuss problems and reservations arising from the interim and final audits, and any matter the auditors may wish to discuss (in the absence of management where necessary);

g) to review evaluation by the external Auditors on the System of Internal Controls, the external Auditors’ management letter and management’s response;

h) to do the following where an internal audit function exists:

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

ii) review the internal audit programme, processes, results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function;

iii) review any appraisal or assessment of the performance of members of the internal audit function;iv) approve any appointment or termination of senior staff members of the internal audit function;v) review the resignation of internal audit staff members and provide the staff member the opportunity to

submit his reasons for resigning;

i) to review the allocation of options during the year under the company’s employees’ Share option Scheme (“eSoS”) to ensure that this is in compliance with the allocation criteria determined by the eSoS committee and in accordance with the By-Laws of the eSoS;

j) to consider the major findings of internal investigations and management’s response;

k) to consider other topics as defined by the Board.

ATTENDANCE AT MEETINGS

8. the Audit Committee may require the attendance of any management staff from the Finance/Accounts Department or other Departments deemed necessary together with a representative or representatives from the external Auditors. other Board members shall also have the right of attendance. However, at least twice a year the Committee shall meet with the external Auditors without executive Board members present.

9. the Company Secretary shall be the Secretary of the Committee.

tHe AUDIt CoMMIttee (cont’d)

18


FREqUENCY OF MEETINGS

10. Meetings shall be held not less than four times a year. the external Auditors may request a meeting if they consider that one is necessary.

REPORTING PROCEDURES

11. the Secretary shall circulate the minutes of meetings of the Audit Committee to all members of the Board.

ACTIvITIES FOR THE YEAR

During the financial year ended 30 June 2008, the Audit Committee met five (5) times on the following dates:

1. 29 August 20072. 18 october 20073. 28 november 20074. 28 February 20085. 21 May 2008

the attendance record of the Directors is shown in the table:

Attended

Chan Wah Chong 5/5Dato’ Mustapha Bin Abdul Hamid 5/5toh Kian Beng 5/5

All the meetings were held at the Conference Room of teo Guan Lee Corporation Berhad office at Plot 28 Lorong Perusahaan Maju 4, Prai Industrial estate, 13600 Prai.

During the year, the activities of the Audit Committee included:

1. Reviewing the annual and quarterly financial result announcements.2. Reviewing external auditors’ report in addition to credit and accounting issues arising from audit and updates of

new developments on accounting standards under the new FRS (Financial Reporting Standards).3. Reviewing audit strategy and plan with external auditors.4.. Reviewing the Internal Audit Report.

tHe AUDIt CoMMIttee (cont’d)

20 - 24 I Directors’ Report

25 I Statement by Directors

25 I Statutory Declaration

26 I Independent Auditors’ Report

27 I Consolidated Balance Sheet

28 I Consolidated Income Statement

29 I Consolidated Statement of Changes in Equity

30 - 31 I Consolidated Cash Flow Statement

32 I Balance Sheet

33 I Income Statement

34 I Statement of Changes in Equity

35 I Cash Flow Statement

36 - 73 I Notes to the Financial Statements

FInAnCIAL ContentS

20


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 2008.

PRINCIPAL ACTIvITIESthe principal activities of the Company are investment holding and provision of management services. the principal activities of its subsidiary companies are as disclosed in note 10 to the financial statements.

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

FINANCIAL RESULTS

Group CompanyRM RM

Profit for the financial year attributable to:

equity holders of the Company 9,322,643 9,685,686 Minority interest 89,174 –

9,411,817 9,685,686

DIvIDENDSno dividend has been paid or declared by the Company since the end of the previous financial year.

the Directors do not recommend the payment of any dividend in respect of the current financial year.

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

ISSUE OF SHARES AND DEBENTURESthe Company has not issued any new shares or debentures during the financial year.

EMPLOYEES’ SHARE OPTION SCHEMEthe Company’s employees’ Share option Scheme (“eSoS”) was approved by the shareholders at the extraordinary General Meeting (“eGM”) held on 5 January 2001 and became effective on 29 March 2001 for a period of 5 years. At the eGM held on 8 April 2005, the shareholders had approved amendments to the eSoS bye-laws and the extension of the duration of eSoS from 28 March 2006 to 28 March 2011.

the main features of the eSoS are:

(a) eligible employees are those who have been confirmed in writing as an employee of the Group for at least one (1) year of continuous service at the date of the offer or an eligible Director who is a full-time executive Director of the Group. Where a foreign employee is serving the Group under an employment contract, the contract shall be for a duration of at least three (3) years.

(b) the total number of shares to be offered under the eSoS shall not exceed 15% of the issued and paid-up share capital of the Company at any point in time during the existence of the eSoS.

(c) the option price shall be set at a discount of not more than 10% from the weighted average market price of the Company for the five (5) market days immediately preceding the date of offer or the par value of the shares of the Company of RM1.00 each, whichever is higher.

DIReCtoRS’ RePoRt

21EMPLOYEES’ SHARE OPTION SCHEME (cont’d)

(d) An option granted under eSoS shall be capable of being exercised by the grantee by notice in writing to the Company during the period from the date of the offer to 28 March 2011. the options granted shall be exercisable by the grantee in multiples of 1,000 shares in the following manner:

Percentage of Total Options ExercisableNumber of options granted Year 1 Year 2 Year 3 Year 4 Year 5

Below 20,000 100% – – – –20,000 to less than 100,000 40%* 30% 30%# – –100,000 and above 20% 20% 20% 20% 20%

* 40% or 20,000 eSoS shares, whichever is the higher# 30% or the remaining number of eSoS shares unexercised

options granted to full-time foreign employees shall be subject to a restriction on the exercise of the options whereby no more than 20% of the total options allotted to grantee can be exercised on an annual basis. However, where the employee is serving under an employment contract which should be for a duration of at least three (3) years, any remaining unexercised options can be exercised on the expiry of the employment contract if the remaining duration of the contract is less than five (5) years from the date on which the options are granted.

(e) options exercisable in a particular year but not exercised can be carried forward to the subsequent years subject to the time limit of the eSoS.

(f) All the new ordinary shares issued arising from eSoS rank pari passu in all respects with the existing ordinary shares of the Company.

(g) the grantees have no right to participate, by virtue of these options, in any share issue of any other company within the Group.

(h) the movements in the Company’s shares under options as at the beginning of the financial year until 30 June 2008 were as follows:

Number of Options over Ordinary Shares of RM1 eachBalance as Balance as

at 1.7.2007 Granted Exercised Lapsed at 30.6.2008

number of unissued shares under options at the following exercise price per share:

- RM1.00 681,000 – – (51,000)* 630,000- RM1.07 14,000 – – (4,000)* 10,000

* Due to staff resignations or offers not taken up.

DIRECTORS IN OFFICEthe Directors who have held office since the date of the last report are:

Dato’ Mustapha Bin Abdul Hamidtoh Peng Hoetoh Ping Haitoh Peng Huatoh Kian BengChan Wah Chongtoh Su Meng

In accordance with Section 129(2) of the Companies Act 1965, toh Peng Hoe, who is above seventy years of age, retires from the Board and offers himself for re-appointment under Section 129(6) of the Act, to hold office until the conclusion of the next Annual General Meeting.

In accordance with the Company’s Articles of Association, toh Peng Hua and toh Su Meng retire at the forthcoming Annual General Meeting and being eligible, are available for re-election.

DIReCtoRS’ RePoRt (cont’d)

22


DIRECTORS’ BENEFITSSince the end of the previous financial year, no Director has received or become entitled to receive any benefit (other than Directors’ remuneration as disclosed in the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest other than any deemed benefits arising from transactions as disclosed in note 26 to the financial statements.

During and at the end of the financial year, no arrangements subsisted to which the Company or a related corporation was a party, whereby Directors of the Company might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate other than options granted to full-time executive Directors of the Company pursuant to the eSoS.

DIRECTORS’ INTERESTAccording to the register of Directors’ shareholdings, the interest of Directors in office at the end of the financial year in shares and share options of the Company and its related corporations were as follows:

Number of Ordinary Shares of RM1.00 eachBalance as Balance as

at 1.7.2007 Bought Sold at 30.6.2008Shareholdings in the Company

Direct interesttoh Peng Hoe 68,000 – – 68,000toh Ping Hai 47,000 – – 47,000toh Peng Hua 32,000 – – 32,000toh Kian Beng 30,000 – – 30,000

Indirect interest toh Peng Hoe 9,439,202 644,000 – 10,083,202toh Ping Hai 9,444,202 155,000 – 9,599,202toh Peng Hua 9,439,202 8,000 – 9,447,202toh Kian Beng 9,439,202 – – 9,439,202toh Su Meng – 1,000 – 1,000

Number of Options over Ordinary Shares of RM1.00 eachOption price

RMBalance as

at 1.7.2007 ExercisedBalance as

at 30.6.2008

toh Su Meng 1.00 22,000 – 22,000

By virtue of their interest in shares of the Company, Messrs. toh Peng Hoe, toh Ping Hai, toh Peng Hua and toh Kian Beng are deemed to be interested in shares of all subsidiary companies to the extent the Company has an interest.

none of the other Directors in office at the end of the financial year held or dealt in shares and share options in the Company or its related corporations during the financial year.


23OTHER STATUTORY INFORMATIONBefore the balance sheets and income statements of the Group and of the Company were made out, the Directors took reasonable steps:

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

b) to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business have been written down to their estimated realisable values.

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

a) which would render the amount written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or

b) which would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading; or

c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or

d) not otherwise dealt with in this report or financial statements which would render any amount stated in the financial statements of the Group and of the Company misleading.

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

a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year to secure the liability of any other person; or

b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.

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, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet its obligations as and when they fall due.

In the opinion of the Directors,

a) the results of the Group’s and the Company’s operations during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature; and

b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of operations of the Group and of the Company for the financial year in which this report is made.


24


SIGNIFICANT EvENTS

Newly Proposed Corporate Exerciseon 12 April 2007 and subsequently revised on 17 May 2007, the Company announced to undertake the following:

(a) Proposed acquisition of TGL Industries Sdn. Bhd. (“TGLI”)Proposed acquisition of the entire issued and paid-up share capital in tGLI of 300,000 ordinary shares of RM1.00 each from teo Guan Lee Holdings Sendirian Berhad (“tGLH”) for a purchase consideration of RM12,330,415 to be wholly satisfied by the issuance of 12,330,415 new ordinary shares of RM1.00 each in the Company at an issue price of RM1.00 per share in accordance with conditional Share Sale Agreement dated 12 April 2007 (“SSA”).

(b) Proposed private placementProposed private placement of up to 5,000,000 new ordinary shares of RM1.00 each of the Company.

(c) Proposed bonus issueProposed bonus issue of up to 5,543,202 new ordinary shares of RM1.00 each in the Company on the basis of one (1) bonus share for every seven (7) existing shares held by the shareholders of the Company on the entitlement date to be determined later after the proposed acquisition and the proposed private placement in (a) and (b) above.

on 26 July 2007 and 20 August 2008, the Company obtained conditional approvals from Ministry of International trade and Industry (“MItI”) and Securities Commission (“SC”) respectively for the proposal (a) and (b) above.

AUDITORSthe auditors, Messrs. Peter Chong & Co. (formerly known as BKR Peter Chong), Chartered Accountants, have indicated their willingness to accept re-appointment.

Signed on behalf of the Board in accordance with a resolution of the Directors

.........................................toh Ping HaiDirector

..........................................toh Kian BengDirector

Georgetown, PenangDated: 15 october 2008


25StAteMent BY DIReCtoRS pursuant to Section 169(15) of the Companies Act, 1965

We, toh Ping Hai and toh Kian Beng, two of the Directors of teo GUAn Lee CoRPoRAtIon BeRHAD state that, in the opinion of the Directors, the financial statements set out on pages 27 to 73 are drawn up in accordance with the Financial Reporting Standards and the provisions of the Companies Act, 1965, so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2008 and of the results and cash flows of the Group and of the Company for the financial year ended on that date.

Signed on behalf of the Board in accordance with a resolution of the Directors

........................................toh Ping HaiDirector

.........................................toh Kian BengDirector


I, toh Kian Beng (nRIC no.:620309-07-5260), being the Director primarily responsible for the financial management of teo GUAn Lee CoRPoRAtIon BeRHAD do solemnly and sincerely declare that, to the best of my knowledge and belief, the financial statements set out on pages 27 to 73 are 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 toh Kian Beng ) ……………………………….at Georgetown in the State of Penang ) toh Kian Bengon 15 october 2008 ) )

Before me

……………………………….Mahni omar (P. 069) Commissioner for oaths

StAtUtoRY DeCLARAtIon pursuant to Section 169(16) of the Companies Act, 1965

26


Report on the financial statements

We have audited the financial statements of TEO GUAN LEE CORPORATION BERHAD, which comprise the balance sheet as at 30 June 2008 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 27 to 73.

Directors’ responsibilities for the financial statements

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

Auditors’ responsibility

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

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

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

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial positions of the Group and of the Company as of 30 June 2008 and of their financial performances and cash flows for the year then ended.

Report on other legal and regulatory requirements

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

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

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

(c) our audit reports on the financial statements of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

Other matters

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

Peter Chong & Co. Peter Chong Ton Nen(formerly known as BKR Peter Chong) no. 394/03/10 (J/PH)no. AF 0165 Partner of the FirmChartered Accountants


InDePenDent AUDItoRS’ RePoRt to tHe MeMBeRS oF teo GUAn Lee CoRPoRAtIon BeRHAD (283710-A) Incorporated in Malaysia

27

the attached notes form an integral part of these financial statements.

ConSoLIDAteD BALAnCe SHeet as at 30 June 2008

Restated2008 2007

Note RM RMASSETS

Non-current assetsProperty, plant and equipment 6 4,723,954 4,950,102 Prepaid land lease payments 7 545,904 553,372 Investment properties 8 16,405,846 16,252,575 Investments 9 113,697 113,697 Deferred tax assets 11 437,478 55,761 Goodwill on consolidation 12 13,546 13,546

22,240,425 21,939,053

Current assetsInventories 13 40,064,555 31,939,673 Receivables 14 21,570,011 21,772,015 tax assets 15 47,830 294,424 Deposit, cash and bank balances 16 1,232,699 1,859,923

62,915,095 55,866,035

TOTAL ASSETS 85,155,520 77,805,088

EqUITY AND LIABILITIES

Equity attributable to equity holders of the CompanyShare capital 17 20,753,000 20,753,000 Reserves 18 15,431,094 6,247,184

36,184,094 27,000,184 Minority interest 989,071 899,897

TOTAL EqUITY 37,173,165 27,900,081

Non-current liabilitiesBorrowings 19 8,284,577 1,745,351 Deferred tax liabilities 11 366,112 138,060

8,650,689 1,883,411

Current liabilitiesPayables 20 13,641,579 11,075,388 Borrowings 19 24,357,025 36,052,263 tax liabilities 15 1,333,062 893,945

39,331,666 48,021,596

TOTAL LIABILITIES 47,982,355 49,905,007

TOTAL EqUITY AND LIABILITIES 85,155,520 77,805,088

28



2008 2007Note RM RM

REvENUE 21 100,439,502 85,131,563

COST OF SALES (61,345,435) (50,059,924)

GROSS PROFIT 39,094,067 35,071,639

OTHER OPERATING INCOME 849,037 707,558

SELLING AND DISTRIBUTION COSTS (15,645,259) (12,571,221)

ADMINISTRATION EXPENSES (9,838,281) (10,216,170)

OPERATING PROFIT 22 14,459,564 12,991,806

FINANCE COSTS 24 (2,026,747) (2,453,133)

PROFIT BEFORE TAXATION 12,432,817 10,538,673

TAXATION 15 (3,021,000) (2,286,616)

PROFIT FOR THE FINANCIAL YEAR 9,411,817 8,252,057

ATTRIBUTABLE TO:EqUITY HOLDERS OF THE COMPANY 9,322,643 8,342,749

MINORITY INTEREST 89,174 (90,692)

9,411,817 8,252,057

EARNINGS PER SHARE (SEN) - Basic 25 44.92 40.20 - Diluted N/A n/A

ConSoLIDAteD InCoMe StAteMent for the financial year ended 30 June 2008

29ConSoLIDAteD StAteMent oF CHAnGeS In eQUItY for the financial year ended 30 June 2008


Attributable to equity holders of the Company

Currency (Accumulated

losses)/Share

capitalShare

premiumtranslation

reserveRetained

profits TotalMinority interest Total equity

RM RM RM RM RM RM RM

As at 1 July 2006 20,753,000 1,222,182 (54,255) (3,327,551) 18,593,376 990,589 19,583,965

net profit recognised directly in equity

- Currency translation differences – – 64,059 – 64,059 – 64,059

Profit for the financial year – – – 8,342,749 8,342,749 (90,692) 8,252,057

total recognised gains/(losses) – – 64,059 8,342,749 8,406,808 (90,692) 8,316,116

As at 30 June/ 1 July 2007 20,753,000 1,222,182 9,804 5,015,198 27,000,184 899,897 27,900,081

net loss recognised directly in equity

- Currency translation differences – – (138,733) – (138,733) – (138,733)

Profit for the financial year – – – 9,322,643 9,322,643 89,174 9,411,817

total recognised (losses)/gains – – (138,733) 9,322,643 9,183,910 89,174 9,273,084

As at 30 June 2008 20,753,000 1,222,182 (128,929) 14,337,841 36,184,094 989,071 37,173,165

30


2008 2007Note RM RM

CASH FLOWS FROM OPERATING ACTIvITIESProfit before taxation 12,432,817 10,538,673 Adjustments for:

Amortisation of prepaid land leased payments 7,468 7,468 Allowance for doubtful debts 588,633 729,640 Allowance for doubtful debts no longer required (370,788) (119,265)Bad debts written off 34,530 627,930 Depreciation of property, plant and equipment 842,626 771,829 Depreciation of investment properties 270,348 255,279 Dividend income (29) (183)Interest expenses 1,939,554 2,347,688 Interest income (8,999) (19,918)Inventory written down to net realisable value 680,239 – Inventory written off 2,369,615 – Profit on disposal of property, plant and equipment (65,003) (60,408)Profit on disposal of quoted investment (6,045) – Property, plant and equipment written off 1,521 9,003

operating profit before working capital changes 18,716,487 15,087,736 Inventories (11,174,736) (2,402,868)Receivables 51,681 (2,860,855)Payables 2,566,191 (617,088)

Cash generated from operations 10,159,623 9,206,925 Interest received 8,999 19,918 Interest paid (1,939,554) (2,349,882)tax paid 15 (2,659,998) (1,899,510)tax refunded 15 171,044 52,670

Net cash generated from operating activities 5,740,114 5,030,121

CASH FLOWS FROM INvESTING ACTIvITIES

Dividend received 29 183 Purchase of property, plant and equipment 27 (795,465) (1,423,973)Proceeds from disposal of property, plant and equipment 87,850 61,200 Proceeds from disposal of quoted investment 6,045 –

Net cash used in investing activities (701,541) (1,362,590)

ConSoLIDAteD CASH FLoW StAteMent for the financial year ended 30 June 2008

the above consolidated cash flow statement is to be read in conjunction with the notes to the financial statements.

31

the above consolidated cash flow statement is to be read in conjunction with the notes to the financial statements.

ConSoLIDAteD CASH FLoW StAteMent (cont’d) for the financial year ended 30 June 2008

2008 2007Note RM RM

CASH FLOWS FROM FINANCING ACTIvITIES

Movement in short-term borrowings (12,895,183) (616,477)Payment of corporate exercise expenses (102,052) (72,907)Repayment of revolving credits – (2,530,000)Drawdown of term loans 10,300,000 – Repayment of term loans (3,035,989) (649,346)Repayment of hire purchase obligations (274,589) (279,383)

Net cash used in financing activities (6,007,813) (4,148,113)

NET DECREASE IN CASH AND CASH EqUIvALENTS (969,240) (480,582)

EFFECTS OF EXCHANGE RATE CHANGES (140,023) 71,727

(1,109,263) (408,855)

CASH AND CASH EqUIvALENTS BROUGHT FORWARD (1,231,103) (814,580)

EFFECTS OF EXCHANGE RATE CHANGES 1,290 (7,668)

(1,229,813) (822,248)

CASH AND CASH EqUIvALENTS CARRIED FORWARD 28 (2,339,076) (1,231,103)

32



2008 2007Note RM RM

ASSETS

Non-current assetsInvestment in subsidiary companies 10 22,222,865 20,875,013

Current assetsReceivables 14 15,842,554 9,083,441 tax assets 15 – 181,492 Deposit, cash and bank balances 16 732 2,147

15,843,286 9,267,080

TOTAL ASSETS 38,066,151 30,142,093

EqUITY AND LIABILITIES

Equity attributable to equity holders of the CompanyShare capital 17 20,753,000 20,753,000 Reserves 18 17,172,611 7,486,925

TOTAL EqUITY 37,925,611 28,239,925

Current liabilitiesPayables 20 119,957 1,902,168 tax liabilities 15 20,583 –

140,540 1,902,168

TOTAL LIABILITIES 140,540 1,902,168

TOTAL EqUITY AND LIABILITIES 38,066,151 30,142,093

BALAnCe SHeet as at 30 June 2008

33InCoMe StAteMent for the financial year ended 30 June 2008


2008 2007Note RM RM

REvENUE 21 10,813,514 8,986,118

OTHER OPERATING INCOME 1,438,909 858,890

ADMINISTRATION EXPENSES (98,947) (775,631)

OPERATING PROFIT 22 12,153,476 9,069,377

FINANCE COSTS 24 (152) (135,294)

PROFIT BEFORE TAXATION 12,153,324 8,934,083

TAXATION 15 (2,467,638) (2,417,716)

PROFIT FOR THE FINANCIAL YEAR 9,685,686 6,516,367

34



Share capital Share premium

(Accumulated losses)/

Retained profits Total

RM RM RM RM

As at 1 July 2006 20,753,000 1,222,182 (251,624) 21,723,558

Profit for the financial year – – 6,516,367 6,516,367

As at 30 June/1 July 2007 20,753,000 1,222,182 6,264,743 28,239,925

Profit for the financial year – – 9,685,686 9,685,686

As at 30 June 2008 20,753,000 1,222,182 15,950,429 37,925,611

StAteMent oF CHAnGeS In eQUItY for the financial year ended 30 June 2008

352008 2007

Note RM RMCASH FLOWS FROM OPERATING ACTIvITIESProfit before taxation 12,153,324 8,934,083

Adjustments for:Dividend income (10,813,514) (8,986,118)Interest expenses – 133,077 Interest income (91,057) (142,341)Impairment loss in respect of investment in subsidiary companies- additional – 195,102 - reversal (1,347,852) (716,548)

operating loss before working capital changes (99,099) (582,745)Receivables 150 518,300 Payables (95,308) 69,017

Cash (used in)/generated from operations (194,257) 4,572 Interest paid – (135,271)tax refunded 15 171,044 –

Net cash used in operating activities (23,213) (130,699)

CASH FLOWS FROM INvESTING ACTIvITIES

Dividend received 8,376,907 6,559,866 Acquisition of subsidiary companies – (4)Additional investment in a subsidiary company – (99,998)

Net cash generated from investing activities 8,376,907 6,459,864

CASH FLOWS FROM FINANCING ACTIvITIES

Payment of corporate exercise expenses (102,052) (115,156)Refund of corporate exercise expenses – 42,249 Advance from subsidiary companies 123,850 3,436,547 Advance to subsidiary companies (8,376,907) (6,652,698)Repayment of revolving credits – (2,530,000)Repayment of term loans – (14,077)

Net cash used in financing activities (8,355,109) (5,833,135)

NET (DECREASE)/INCREASE IN CASH AND CASH EqUIvALENTS (1,415) 496,030

CASH AND CASH EqUIvALENTS BROUGHT FORWARD 2,147 (493,883)

CASH AND CASH EqUIvALENTS CARRIED FORWARD 28 732 2,147

CASH FLoW StAteMent for the financial year ended 30 June 2008

the above cash flow statement is to be read in conjunction with the notes to the financial statements.

36


1. GENERAL INFORMATION

the principal activities of the Company are investment holding and provision of management services.

the principal activities of its subsidiary companies are as disclosed in note 10.

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

the Company is a public limited liability company, incorporated and domiciled in Malaysia, listed on the Second Board of Bursa Malaysia Securities Berhad. the address of the registered office and the principal place of business of the Company are at Plot 28 Lorong Perusahaan Maju 4, Prai Industrial estate, 13600 Prai, Pulau Pinang.

the Board has authorised the issuance of the financial statements on 15 october 2008.

2. FINANCIAL RISK MANAGEMENT OBJECTIvES AND POLICIES

the Group is exposed to a variety of financial risks, including interest rate risk, credit risk, foreign currency risk, market risk, liquidity and cash flow risks. the Group’s overall risk management objective is to ensure that adequate resources are available to meet the operating requirements and to develop the Group’s business whilst managing the associated risks. the Group does not trade in financial instruments or engage in speculative transactions.

Interest rate riskthe Group is exposed to interest rate risk mainly from its fixed deposits and borrowings. the Group mitigates the exposure on interest rate fluctuation by borrowing at both fixed and floating rate of interest. Credit riskthe Group has a standard credit policy to monitor the exposure to credit risk. Credit granted to customers over a certain amount is subject to credit evaluations and approved by authorised personnel. All outstanding accounts are subject to continuous monitoring and review by management. At balance sheet date, the maximum exposure for the Group was represented by the carrying amount of the financial assets.

Foreign currency riskthe Group is exposed to various foreign currency risks, mainly US Dollar. Foreign currency denominated assets and liabilities together with cash flows from highly probable purchases and sales give rise to foreign exchange exposures.

Foreign exchange exposures in transactional currencies are kept to an acceptable level by entering into forward currency contracts, where necessary.

Market riskthe Group is exposed to market risk through its investment in equity market. Investment is evaluated and reviewed on a case to case basis and is subject to regular review. Liquidity and cash flow riskLiquidity risk is the risk that the Group is unable to service its cash obligation in the future.

Cash flow risk is the risk that future cash flows associated with a financial instrument will fluctuate. In the case of a floating rate debt instrument, such fluctuations result in a change in the effective interest rate of the financial instrument, usually without a corresponding change in its fair value.

the liquidity of the Group is depending on future cash flow from operations and availability of funding to ensure that all refinancing, repayment and funding needs are met.

the Group maintains sufficient credit facilities for its funding requirements. Any excess funds are invested in short term deposits with licensed financial institutions at competitive interest rates obtainable.

noteS to tHe FInAnCIAL StAteMentS for the financial year ended 30 June 2008

37noteS to tHe FInAnCIAL StAteMentS (cont’d) for the financial year ended 30 June 2008

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparationthe financial statements of the Group and of the Company comply with the Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia.

At the beginning of the current financial year, the Group and the Company had adopted the new and revised Financial Reporting Standards (“FRSs”), Amendments to FRSs and Issue Committee (“IC”) Interpretations as fully described in note 4.

(b) Subsidiary companies and basis of consolidationSubsidiary companies 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.

Basis of consolidationthe consolidated financial statements comprise the financial statements of the Company and its subsidiary companies as at balance sheet date. the financial statements of the subsidiary companies are prepared for the same reporting date as the Company.

Subsidiary companies are consolidated from the date of acquisition, being the date on which the Group obtain control, and continue to be consolidated until the date that such control ceases. In preparing the consolidated financial statements, intragroup balance, 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.

Acquisition of subsidiary companies is accounted for using the purchase method, except for the financial statements of certain subsidiary companies which are consolidated using merger method of accounting. Financial statements of subsidiary companies consolidated using the merger method of accounting are consolidated in accordance with Malaysian Accounting Standard no. 2 “Accounting for Acquisitions and Mergers” prevailing at the time of acquisition. Details of these subsidiary companies are disclosed in note 10.

the Group has adopted the transition provisions as allowed by the Malaysian Accounting Standards Board and chosen to apply this standard prospectively. Accordingly, Business Combination entered into prior to 1 July 2001 has not been restated to comply with this standard.

Under the merger method of accounting, the results of the subsidiary companies are presented as if the merger had been effected throughout the current and previous financial years. on consolidation, the difference between the carrying values of the investment over the nominal value of the shares acquired is taken to merger reserve.

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 income statement.

Minority interests represent the portion of profit or loss and net assets in subsidiary companies not held by the Group. It is measured at the minorities’ share of the fair value of the subsidiary companies’ identifiable assets and liabilities at the acquisition date and the minorities’ share of changes in subsidiary companies’ equity since then.

38


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

(c) Goodwill Goodwill arising from a business combination represents the excess of the cost of investments over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities and is initially measured at cost. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Goodwill is not amortised but instead, it is review for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on disposal of an entity include the carrying amount of goodwill relating to the entity sold.

(d) Property, plant and equipment and depreciationAll items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. the carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Subsequent to recognition, property, plant and equipment except for freehold land are stated at cost less accumulated depreciation and any accumulated impairment losses.

Freehold land has an unlimited useful life and therefore is not depreciated.

other property, plant and equipment are depreciated on a straight line basis to write off the cost of assets to their residual values over the following estimated useful lives:

Number of years

Leasehold buildings 54 - 99Freehold buildings 50Furniture and fittings 3 - 20office equipment 3 - 10Plant and machinery 10Motor vehicles 3 - 5

the residual value and useful life of an asset is reviewed at least at each financial year-end and, if expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate, and the depreciation charge for the current and future periods are adjusted. the gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item and recognised in the income statements.

Where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its recoverable amount.

(e) LeasesClassification A lease is recognised as a finance lease if it transfers substantially to the Group all risks and rewards incidental to ownership. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets and the land and buildings elements of a lease of land and buildings are considered separately for the purpose of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating leases.

noteS to tHe FInAnCIAL StAteMentS (cont’d) for the financial year ended 30 June 2008

39noteS to tHe FInAnCIAL StAteMentS (cont’d) for the financial year ended 30 June 2008


(e) Leases (cont’d)Finance leaseAssets acquired by way of hire purchase or finance lease 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. Any initial direct costs are also added to the carrying amount of such assets.

Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised 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 in accordance with that for depreciable property, plant and equipment as described in note 3(d).

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

Lease of landPrepaid land lease payments on leasehold land are stated at surrogate cost less accumulated amortisation and any impairment loss. the policy for the recognition and measurement of impairment losses are in accordance with note 3(n).

Land held on long lease is being a lease with an unexpired period of 50 years or more and less than 50 years is described as short lease.

the lease payments are amortised on a straight-line basis over the lease terms of 54 - 99 years.

(f) Investment properties Investment properties are properties which are held either to earn rental income or for capital appreciation or both. Properties that are occupied by the companies in the Group are accounted for as owner-occupied rather than investment properties.

Investment properties are measured initially at cost, including transaction cost. After initial recognition, the Group chooses the cost model as allowed under FRS 140 Investment Property and dealt with in accordance with FRS 116 Property, Plant and equipment.

Investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.

Freehold land has an unlimited useful life and therefore is not depreciated.

other investment properties are depreciated on a straight line basis to write off the cost of assets to their residual values over the following estimated useful lives:

Number of years

Leasehold land 76 - 90Buildings 50

40



(f) Investment properties (cont’d)Investment property is derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in income statement in the year in which they arise.

(g) InvestmentsInvestment in subsidiary companies and other non-current investments are shown at cost and adjusted for impairment where the diminution in value is not temporary. Impairment loss is recognised as an expense in the period in which the diminution is identified.

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

(h) InventoriesInventories are stated at the lower of cost and net realisable value.

Cost is determined using the first-in, first-out method. the cost of raw material comprises the original cost of purchase plus the cost of bringing the inventories to their intended location and condition. the cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and an appropriate proportion of production overheads.

net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses.

(i) ReceivablesReceivables are carried at anticipated realisable value. All known bad debts are written off in the period in which they are identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the period end.

(j) Taxation and deferred taxationIncome tax on the results for the financial year comprises current and deferred tax. Current tax is the expected amount of income tax payable in respect of the taxable profits for the financial year and is measured using the tax rates that have been enacted at the balance sheet date.

Deferred taxation liabilities and assets are accounted for using the liability method at the current tax rate in respect of all temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base including unused tax losses and capital allowances.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. the carrying amount of a deferred tax asset is reviewed at each balance sheet date. If it is no longer probable that sufficient future taxable profit will be available to allow the benefit of part or that entire deferred tax asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that sufficient future taxable profit will be available, such reductions will be reversed.



(k) Functional and foreign currencies

Functional and presentation currencythe 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.

Foreign currency transactionsIn preparing the financial statements of the individual entities, transactions in currencies other than entity’s functional currency are recorded in the 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 translated at the rates prevailing on the balance sheet date. non-monetary items carried at fair value that are denominated in foreign currencies are translated at the 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 translated.

exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in income statement for the period except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation, where that monetary item is denominated in either the functional currency of the reporting entity or the foreign operation, are initially taken directly to foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in income statement. exchange differences arising on monetary items that form part of Group’s net investment in foreign operation, where that monetary item is denominated in a currency other than the functional currency of either the reporting entity or the foreign operation, are recognised in income statement for the period. exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation, regardless of the currency of the monetary item, are recognised in income statement in the Company’s financial statements or the individual financial statements of the foreign operation, as appropriate.

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

Foreign operationsthe results and financial position of foreign operations that have a functional currency different from the presentation currency (RM) of the consolidated financial statements are translated into RM as follows:

- Assets and liabilities for each balance sheet presented are translated at the closing rate prevailing at

the balance sheet date;

- Income and expenses for each income statement are translated at average exchange rates for the year, which approximately the exchange rates at the dates of the transactions; and

- All resulting exchange differences are taken to the foreign currency translation reserve with equity.


42



(l) Revenue recognitionRevenue from sale of goods is measured at the fair value of the consideration received and receivable, net of discounts allowed and returns and is recognised in the income statement when the risk and rewards of ownership have been transferred to the buyer and it is probable that the economic benefits associated with the transactions will flow to the companies in the Group.

Rental income is recognised on an accrual basis in accordance with the substance of the relevant agreement unless collectability is in doubt.

Dividend income is recognised when the shareholder’s right to receive payment is established. Interest income is recognised on an accrual basis (taking into account the effective yield on the assets) unless collectability is in doubt.

(m) Financial instruments

Financial instrument is any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial instruments carried on the balance sheet include investment, cash and bank balances, receivables, payables and borrowings. the particular recognition methods adopted are disclosed in the individual accounting policy statements associated with each item.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses related to a financial instrument classified as 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 set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

(n) Impairment of assets the carrying amounts of the Group’s 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, intangible assets that have indefinite useful lives and intangible assets that are not yet available for use, the recoverable amount is estimated at annual basis or more frequently when indicators of impairment are identified.

An asset’s recoverable amount is the higher of an asset’s or Cash-Generating Unit’s (“CGU”) fair value less costs to sell and its value in use. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

An impairment loss is recognised in income statement in the period in which it arises, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for as a revaluation decrease to the extent that the impairment loss does not exceed the amount held in the asset revaluation reserve for the same asset.

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 income statement, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase.



(o) Non-current assets (disposal groups) held for sale and discontinued operationsnon-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. this condition is regarded as met only when the sale is highly probable and the asset (disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. non-current assets classified as held for sale are measured at the lower of the assets’ previous carrying amount and fair value less cost to sell.

A component of the Group is classified as a discontinued operation when the criteria to be classified as held for sale have been met or it has been disposed of and such a component represents a separate major line of business or geographical area of operations, is part of a single co-ordinated major line of business or geographical area of operations.

(p) Interest bearing loans and borrowingsInterest bearing loans and borrowings are initially measured at fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest bearing borrowings are subsequently measured at amortised cost using the effective interest method.

(q) Employee benefits

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

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

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

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

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


44



(r) ProvisionsProvisions are reviewed at each balance sheet date and adjusted to reflect the current best estimates. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

Provisions, if any, is recognised when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation (legal or constructive) as a result of a past event and a reliable estimate can be made of the amount.

(s) PayablesPayables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services rendered.

(t) Borrowing costs

Borrowing costs incurred to finance the construction of property, plant and equipment are capitalised as part of the cost of the asset during the period of time that is required to complete and prepare the asset for its intended use. Borrowing costs incurred to finance property development activities and construction contracts are accounted for in a similar manner. All other borrowing costs are expensed.

(u) Equity instrumentsequity instruments issued by the Company are recorded at the proceeds received, net of direct issue cost. ordinary shares are classified as equity. Dividends on ordinary shares are recognised in which they are declared.

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

4. CHANGES IN ACCOUNTING POLICIES AND EFFECTS ARISING FROM ADOPTION OF NEW AND REvISED FINANCIAL REPORTING STANDARDS (“FRSs”)

At the beginning of the financial year, the Group and the Company had adopted the following new and revised FRSs and Amendments to FRSs and IC Interpretations:

Effective datesFRS 117 Leases 1 october 2006FRS 124 Related Party Disclosures 1 october 2006FRS 107 Cash Flows Statements 1 July 2007FRS 112 Income taxes 1 July 2007FRS 118 Revenue 1 July 2007FRS 134 Interim Financial Reporting 1 July 2007FRS 137 Provisions, Contingent Liabilities and Contingent Assets 1 July 2007Amendment to FRS 121 the effects of Changes in Foreign exchange Rates

- net Investment in a Foreign operation 1 July 2007


454. CHANGES IN ACCOUNTING POLICIES AND EFFECTS ARISING FROM ADOPTION OF NEW AND REvISED

FINANCIAL REPORTING STANDARDS (“FRSs”) (cont’d)

However, the following FRSs and IC Interpretations have not been adopted by the Group and the Company as they are not relevant to the Group’s and the Company’s operations:

Effective datesFRS 6 exploration for evaluation of Mineral Resources 1 January 2007Amendment to

FRS 1192004 employee Benefits - Actuarial Gains and Losses, Group Plans

and Disclosures1 January 2007

FRS 111 Construction Contracts 1 July 2007FRS 120 Accounting for Government Grants and Disclosure of

Government Assistance1 July 2007

FRS 126 Accounting and Reporting by Retirement Benefits Plans 1 July 2007FRS 129 Financial Reporting in Hyperinflationary economies 1 July 2007IC Interpretation 1 Changes in existing Decommissioning, Restoration and Similar

Liabilities1 July 2007

IC Interpretation 2 Members’ Shares in Co-operative entities and Similar Instruments

1 July 2007

IC Interpretation 5 Rights to Interests arising from Decommissioning, Restoration and environmental Rehabilitation Funds

1 July 2007

IC Interpretation 6 Liabilities arising from Participating in a Specific Market - Waste electrical and electronic equipment

1 July 2007

IC Interpretation 7 Applying the Restatement Approach under FRS 1292004 Financial Reporting in Hyperinflationary economies

1 July 2007

IC Interpretation 8 Scope of FRS 2 1 July 2007

the adoption of the above new or revised FRSs and IC Interpretations does not result in substantial changes to the Group’s and the Company’s policies other than as disclosed below: FRS 117: LeasesPrior to 1 July 2007, leasehold land held for own use was classified as property, plant and equipment and was stated at cost/valuation less accumulated depreciation and impairment losses. the adoption of the revised FRS 117 has resulted in a change in the accounting policy relating to the classification of leases of land and buildings. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets. the land elements and buildings elements of a lease are to be classified separately. Leasehold land held for own use is now classified as operating lease and where necessary, the minimum lease payments or the up-front payments made are allocated between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land element and buildings element of the lease at the inception of the lease. the up-front payments represent prepaid land lease payments and are amortised on a straight-line basis over the lease term.

the Group has applied the change in accounting policy in respect of leasehold land in accordance with the transitional provisions of FRS 117. At 1 July 2007, the unamortised amount of leasehold land is retained as the surrogate carrying amount of prepaid land lease payments as allowed by the transitional provisions. the effects on the balance sheets as at 30 June 2008 are set out below:

RMBalance sheetDecreased in property, plant and equipment (545,904)Increased in prepaid land lease payments 545,904

there were no effects on the income statements for the financial year ended 30 June 2008.


46


4. CHANGES IN ACCOUNTING POLICIES AND EFFECTS ARISING FROM ADOPTION OF NEW AND REvISED FINANCIAL REPORTING STANDARDS (“FRSs”) (cont’d)

the reclassification of leasehold lands as prepaid land lease payments has been accounted for retrospectively and as such, certain comparatives have been restated.

Previously Effects of stated FRS 117 Restated

RM RM RMProperty, plant and equipment 5,503,474 (553,372) 4,950,102 Prepaid land lease payments – 553,372 553,372

FRS 124: Related Party DisclosuresFRS 124 expands the definition of related party and adds new disclosure requirements. the adoption of FRS 124 will only impact the format and extent of disclosures presented in the financial statements. FRS 139: Financial Instruments: Recognition and Measurementthe Group and the Company has not early adopted the deferred FRS 139: Financial Instruments: Recognition and Measurement and by virtue of the exemption provided for in FRS 139, the possible impact of applying the standard, if any, need not be disclosed.

5. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

Preparation of the financial statements involved making certain estimates, judgements, and assumptions concerning the future. they affect the accounting policies applied, amount of assets, liabilities, income and expenses reported and disclosures made. they are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. Changes in these estimates and assumptions by management may have an effect on the balances as reported in financial statements. Significant accounting estimates and judgements, where used, have been disclosed in the relevant notes to the financial statements.

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

(i) Classification between investment properties and property, plant and equipmentthe Group has developed certain criteria based on FRS 140 in making judgement whether a property qualifies as an investment property. Investment property is a property held to earn rentals or for capital appreciation or both.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portion could be sold separately (or leased out separately under a finance lease), the Group would account for the portion separately. If portion could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes. Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as an investment property.

(ii) Depreciation of property, plant and equipment and investment propertiesProperty, plant and equipment and investment properties are depreciated on a straight-line basis over estimated useful lives. the Group estimates the useful lives of these assets to be within 3 to 99 years. Changes in the expected level of usage could impact the economic useful lives and the residual values of these assets, and therefore future depreciation charges could be revised.


475. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (cont’d)

(iii) Allowances for doubtful debtsAn allowance is made for doubtful accounts for estimated losses resulting from the subsequent inability of customers to make required payments. If the financial conditions of the customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required in future period. Management specifically analyses accounts receivables and analyses historical bad debt, customer concentrations, customer creditworthiness, current economic trends and changes in the customer payment terms when making a judgement to evaluate the adequacy of the allowance for doubtful debts.

(iv) Income taxes

Significant judgement is required in determining the capital allowances and deductibility of certain expenses during the estimation of the provision for income taxes. there are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. the Group recognises liabilities for anticipated tax based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the period in which such determination is made.

(v) Deferred tax assetsDeferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

(vi) Impairment of investment in subsidiary companiesthe Company determines whether there is any indication that an impairment loss on the investment in subsidiary companies recognised in prior periods may no longer exist or may have decreased at Balance Sheet date annually. During the current financial year, the Company recognised a reversal of impairment losses in respect of investment in subsidiary companies following the continuous improvement in the financial performance of these subsidiary companies. this requires an estimation of the value-in-use of the cash-generating units (“CGU”) of the subsidiary companies.

the recoverable amount of a CGU is determined based on the value-in-use calculations using cash flow projections based on financial budgets approved by management of the subsidiary companies. the carrying amount of investment in the subsidiary companies as at 30 June 2008 less accumulated impairment losses was RM22,222,865 (2007: RM20,875,013). Further details of the reversal of impairment losses are disclosed in note 10.


48


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50


6. PROPERTY, PLANT AND EqUIPMENT (cont’d)

(i) net carrying amount of land and buildings belonging to certain subsidiary companies for which titles have yet to be issued by relevant authority:

Group2008 2007

RM RM

Freehold land and buildings 1,130,008 1,149,993 Leasehold apartments 177,710 183,095

(ii) net carrying amount of assets held under hire purchase installment plans:

Group2008 2007

RM RM

Motor vehicles 613,080 634,345

7. PREPAID LAND LEASE PAYMENTS

GroupRestated

2008 2007RM RM

net carrying amounts as at 1 JulyAs previously reported – – effect of adopting FRS 117 553,372 560,840

net carrying amounts as at 1 July, restated 553,372 560,840 Current amortisation (7,468) (7,468)

net carrying amounts as at 30 June 545,904 553,372

At cost 646,252 646,252 Accumulated amortisation (100,348) (92,880)

net carrying amounts as at 30 June 545,904 553,372


518. INvESTMENT PROPERTIES

Freehold Long term land and leasehold land buildings and buildings Total

Group RM RM RM

net carrying amount as at 1 July 2006 5,308,046 9,261,673 14,569,719 transfer from property, plant and equipment (note 6) 1,938,135 – 1,938,135 Depreciation (80,827) (174,452) (255,279)

net carrying amount as at 30 June/1 July 2007 7,165,354 9,087,221 16,252,575 transfer from property, plant and equipment (note 6) – 423,619 423,619 Depreciation (85,135) (185,213) (270,348)

net carrying amount as at 30 June 2008 7,080,219 9,325,627 16,405,846

As at 30 June 2008Cost 7,597,286 10,884,723 18,482,009 Accumulated depreciation (517,067) (1,559,096) (2,076,163)

7,080,219 9,325,627 16,405,846

As at 30 June 2007Cost 7,597,286 10,376,078 17,973,364 Accumulated depreciation (431,932) (1,288,857) (1,720,789)

7,165,354 9,087,221 16,252,575

(i) net carrying amount of land and buildings belonging to certain subsidiary companies for which titles have yet to be issued by relevant authority:

Group2008 2007

RM RM

Freehold land and buildings 4,664,027 6,661,490 Long term leasehold land and buildings 5,952,916 6,066,183

(ii) net carrying amount of assets pledged to banks for banking facilities granted to certain subsidiary companies as disclosed in note 19(i) are as follows:

Group2008 2007

RM RM

Leasehold land and buildings 5,895,131 6,006,647

(iii) the estimated fair value of the investment properties held at the end of the financial year, based on Directors

valuation arrived at by reference to market evidence of transaction prices for nearby properties is approximately RM22,507,300.


52


9. INvESTMENTS

Group2008 2007

RM RM

Quoted shares in Malaysia, at cost 349,924 349,924

Less: Impairment loss (236,227) (236,227)

net carrying amount 113,697 113,697

Quoted shares in Malaysia, at market value 122,300 179,365

10. INvESTMENT IN SUBSIDIARY COMPANIES

Company2008 2007

RM RM

Unquoted shares, at cost 27,778,067 27,678,065 Additions – 100,002

27,778,067 27,778,067 Less: Impairment loss

As at 1 July (6,903,054) (7,424,500) Additions – (195,102) Reversal 1,347,852 716,548

As at 30 June (5,555,202) (6,903,054)

22,222,865 20,875,013

Key assumptions used in value-in-use calculations

the recoverable amount of a CGU is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management of subsidiary companies.

the following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of investment in the subsidiary companies.

the growth rates are based on industry growth forecasts. Changes in selling price and direct costs are based on past practices and expectation of future changes in market. the cash flow projections derived from the most recent financial budgets approved by the management of subsidiary companies for next 3 years based on an estimated growth rate of 5%. the discount rate used is the management expected pre-tax weighted average cost of capital which is 8%.

Sensitivity to changes in assumptions

With regard to the assessment of value-in-use of the CGUs units, the 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.


5310. INvESTMENT IN SUBSIDIARY COMPANIES (cont’d)

All the subsidiary companies were incorporated in Malaysia except for tGL Distributors (S) Pte. Ltd. which was incorporated in the Republic of Singapore. the subsidiary companies are as follows:

Gross equity interest

Principal activities

2008 2007Subsidiary companies of the Company % %

@teo Guan Lee (K.L.) Sdn. Bhd. 100 100 Investment holding, wholesaler and retailer of garments and related accessories

@teo Guan Lee (Penang) Sdn. Bhd. 100 100 Wholesaler and retailer of garments and related accessories, and investment holding

@P.P.A.C (M) Sdn. Bhd. 100 100 Wholesaler of garments and investment holding

*Galeri Megah Sdn. Bhd. 100 100 Property investment

*Affluent Lifestyle Sdn. Bhd. 100 100 Distributor of baby and children apparels

*Digitaland (M) Sdn. Bhd. 100 100 Distributor and dealer of apparels

*Syarikat Perniagaan Bingel (M) Sdn. Bhd. 53 53 Manufacturer of all kinds of clothes and garments

*electra Impressions Sdn. Bhd. 100 100 Distributor and dealer of apparels

*Contemporary Symphony Sdn. Bhd. 100 100 Distributor and dealer of apparels

Subsidiary companies of Teo Guan Lee (K.L.) Sdn. Bhd.

@JC Garments (M) Sdn. Bhd. 100 100 Manufacturer of garments

@teo Guan Lee Properties (K.L.) Sdn. Bhd.

100 100 Property investment

Mode Fashion Marketing Sdn. Bhd. 100 100 Distributor of infant, children and teenage apparels and footwear

Character network Sdn. Bhd. 100 100 Distributor of baby and children apparels

*tGL Distributors (S) Pte. Ltd. 100 100 Ceased operation

Puppy Winks Marketing Sdn. Bhd. 100 100 Distributor of baby wear, accessories and toiletries

* the financial statements of these companies were examined by other firms of auditors.

@ Subsidiary companies consolidated using merger method of accounting.


54


11. DEFERRED TAXATION

Group2008 2007

RM RMnet deferred tax liabilities as at 1 July (82,299) (264,210)Current (note 15) 215,365 (92,889)non-current (note 15) (61,700) 274,800

net deferred tax assets/(liabilities) as at 30 June 71,366 (82,299)

Disclosed as:Deferred tax assets 437,478 55,761 Deferred tax liabilities (366,112) (138,060)

71,366 (82,299)

(i) the movements of deferred taxation are in respect of tax effects on the following temporary differences:

As at Recognised As at1st July in income 30th June

Group 2007 statement 2008RM RM RM

Deferred tax assetstemporary differences on:- Property, plant and equipment (10,957) 34,501 23,544 - Inventories – 399,261 399,261 - Unused tax losses 11,344 (10,036) 1,308 - others 55,374 (42,009) 13,365

55,761 381,717 437,478

Deferred tax liabilitiestemporary differences on:

- Property, plant and equipment (287,800) (78,312) (366,112)- Inventories 139,740 (139,740) – - others 10,000 (10,000) –

(138,060) (228,052) (366,112)

(82,299) 153,665 71,366

(ii) As at 30 June 2008, deferred tax assets amounting RM437,478 (2007: RM55,761) is recognised in the financial

statements as it is probable that it will be realised in future years based on the recent results of the respective subsidiary companies.

(iii) Deferred tax assets have not been recognised in respect of the following temporary differences:

Group2008 2007

RM RM

Unused tax losses 2,046,000 2,051,000

Potential deferred tax assets 368,000 369,000

the unused tax losses are available to offset against future taxable profits of the relevant subsidiary companies in which those items arose. Deferred tax assets have not been recognised as they may not be used to offset against taxable profits of other subsidiary companies. the utilisation of the above deferred tax assets by the relevant subsidiary companies is remote as it is not probable that sufficient future taxable profit will be available.


5512. GOODWILL ON CONSOLIDATION

Group2008 2007

RM RM

Goodwill on consolidation 13,546 13,546

Key assumptions used in value-in-use calculations

the recoverable amount of a CGU is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management. the following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill.

Management estimates discount rate using pre-tax rates that reflect current market assessment of the time value of money and the risks specific to the CGU. the growth rates are based on industry growth forecasts. Changes in selling price and direct costs are based on past practices and expectation of future changes in market. the Group prepared cash flow projections derived from the most recent financial budgets approved by the Board for next 3 years based on an estimated growth rate of 5%. the discount rate used is the management expected pre-tax weighted average cost of capital which is 8%.

13. INvENTORIES

Group2008 2007

RM RM

Raw materials 1,198,084 1,308,156 Work-in-progress 522,218 470,254 Finished goods 38,344,253 30,161,263

40,064,555 31,939,673

Inventories have been written down to its net realisable value by RM680,239 (2007: RMnil) and inventories written off amounted RM2,369,615 (2007: RMnil).


56


14. RECEIvABLES

Group Company2008 2007 2008 2007

RM RM RM RMtrade receivables 20,175,256 20,648,182 – – Less: Allowance for doubtful debts

As at 1 July (798,018) (1,854,790) – – Additions (588,633) (729,640) – – Written off 337,824 1,663,899 – – no longer required 370,788 119,265 – – exchange differences – 3,248 – –

As at 30 June (678,039) (798,018) – –

19,497,217 19,850,164 – –

Due from subsidiary companies, non-trade

- interest at 3.0% per annum – – 15,611,196 8,953,985 other receivables 273,462 257,364 – – Deposits and prepayments 1,799,332 1,664,487 231,358 129,456

21,570,011 21,772,015 15,842,554 9,083,441

(i) Included in receivables of the Group and of the Company are balances with the following related parties:

Group2008 2007

RM RMTrade and other receivablestGL Packaging Sdn. Bhd. 1,674 611 Loan to a Director of subsidiary companies 40,015 46,000 Loan to person connected to Directors 15,500 21,500

Rental depositstGL Packaging Sdn. Bhd. 650,000 650,000 tGL Industries Sdn. Bhd. 150,000 150,000

the related party relationships with the above parties are as disclosed in note 26.

(ii) Included in deposits and prepayments of the Group and of the Company is an amount of RM231,358 (2007: RM126,156) incurred in respect of newly proposed corporate exercise as mentioned in note 31.

(iii) the amounts due from subsidiary companies are unsecured and have no fixed terms of repayment.

(iv) other receivables are unsecured, interest free and have no fixed terms of repayment.

(v) the amounts due from a Director and person connected to Directors represent loans given to an executive Director and employee of a subsidiary company respectively in accordance with a scheme approved in the general meeting of the subsidiary company concerned. the loans are unsecured, interest free and repayable at agreed terms.


5715. TAXATION

Group Company2008 2007 2008 2007

RM RM RM RMnet tax (liabilities)/assets as at 1 July (599,521) 22,166 181,492 172,956 taxation charge for the financial year:Malaysian taxation- Based on results for the financial year (3,266,167) (2,462,531) (2,459,098) (2,417,000)- Adjustment in respect of prior years 91,502 (5,996) (8,540) (716)Payment made during the financial year 2,659,998 1,899,510 – – tax deducted at source – – 2,436,607 2,426,252 tax refunded (171,044) (52,670) (171,044) –

net tax (liabilities)/assets as at 30 June (1,285,232) (599,521) (20,583) 181,492

Disclosed as:tax assets 47,830 294,424 – 181,492 tax liabilities (1,333,062) (893,945) (20,583) –

(1,285,232) (599,521) (20,583) 181,492

Group Company2008 2007 2008 2007 RM RM RM RM

Taxation expenses comprise:Current- Malaysian taxation 3,266,167 2,462,531 2,459,098 2,417,000 - Deferred taxation (note 11) (215,365) 92,889 – –

Non-current- Malaysian taxation (91,502) 5,996 8,540 716 - Deferred taxation (note 11) 61,700 (274,800) – –

3,021,000 2,286,616 2,467,638 2,417,716

tax savings of the Group arising from utilisation of unused tax losses and capital allowances carried forward amounted to approximately RM4,000 (2007: RM310,000).

the Group has unused tax losses amounted to approximately RM2,047,000 (2007: RM2,053,000) which can be used to offset against future taxable profits retained by the relevant subsidiary companies.

Domestic income tax is calculated at the Malaysian statutory tax rate of 26% (2007: 27%) of the estimated assessable profit for the financial year where companies with a paid-up capital of less than RM2.5 million enjoy a lower tax rate of 20% for its first RM500,000 chargeable income. the domestic statutory tax rate will be reduced to 25% from the current year’s rate of 26% effective year of assessment 2009. the computation of deferred tax as at 30 June 2008 has reflected these changes. taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.


58


15. TAXATION (cont’d)

Reconciliation of tax expense with accounting profit:

Group Company2008 2007 2008 2007

RM’000 RM’000 RM’000 RM’000

Profit before taxation 12,433 10,539 12,153 8,934

tax at the current income tax rate at 26% (2007: 27%) 3,233 2,846 3,160 2,412

tax effects in respect of:- Depreciation on non-qualifying property,

plant and equipment, prepaid land leased payments and investment properties 26 28 25 –

- non-allowable expenses 194 309 – 198 - non-taxable income (11) (9) (725) (193)- Allowances for doubtful debts in respect of a subsidiary company – (412) – – tax savings arising from utilisation of

unused tax losses and capital allowance for which deferred tax assets have not been accounted for in previous years (1) – – –

Different tax rate of a foreign subsidiary company (8) 6 – –

Deferred tax (liabilities)/assets not recognised (11) 1 – –

Adjustment in respect of prior years- Income tax (92) 6 8 1 - Deferred tax 62 (275) – – tax effects of changes in tax rate (205) (126) – – tax savings arising from lower tax rate on

1st RM500,000 chargeable income of certain subsidiary companies (166) (88) – –

3,021 2,286 2,468 2,418


5916. DEPOSIT, CASH AND BANK BALANCES

Group Company2008 2007 2008 2007

RM RM RM RM

Cash and bank balances 1,232,699 1,301,343 732 2,147 Fixed deposit with a licensed bank – 558,580 – –

1,232,699 1,859,923 732 2,147

Fixed deposit is pledged to a bank for banking facilities as disclosed in note 19(i).

the currency profile of deposit, cash and bank balances is as follows:

Group Company2008 2007 2008 2007

RM RM RM RMRinggit Malaysia 1,209,174 1,830,447 732 2,147 Singapore Dollar 23,525 20,116 – – US Dollar – 9,360 – –

1,232,699 1,859,923 732 2,147

17. SHARE CAPITAL

2008 2007 2008 2007Group and Company No. of shares No. of shares RM RM

Authorised

ordinary shares of RM1 each 100,000,000 100,000,000 100,000,000 100,000,000

Issued and fully paid

ordinary shares of RM1 each 20,753,000 20,753,000 20,753,000 20,753,000

the Company’s employees’ Share option Scheme (“eSoS”) was approved by the shareholders at the extraordinary General Meeting (“eGM”) held on 5 January 2001 and became effective on 29 March 2001 for a period of 5 years. At the eGM held on 8 April 2005, the shareholders had approved amendments to the eSoS bye-laws and the extension of the duration of eSoS from 28 March 2006 to 28 March 2011.

the main features of the eSoS are:

(a) eligible employees are those who have been confirmed in writing as an employee of the Group for at least one (1) year of continuous service at the date of the offer or an eligible Director who is a full-time executive Director of the Group. Where a foreign employee is serving the Group under an employment contract, the contract shall be for a duration of at least three (3) years.

(b) the total number of shares to be offered under the eSoS shall not exceed 15% of the issued and paid-up share capital of the Company at any point in time during the existence of the eSoS.

(c) the option price shall be set at a discount of not more than 10% from the weighted average market price of the Company for the five (5) market days immediately preceding the date of offer or the par value of the shares of the Company of RM1.00 each, whichever is higher.


60


17. SHARE CAPITAL (cont’d)

(d) An option granted under eSoS shall be capable of being exercised by the grantee by notice in writing to the Company during the period from the date of the offer to 28 March 2011. the options granted shall be exercisable by the grantee in multiples of 1,000 shares in the following manner:-

Percentage of Total Options ExercisableNumber of options granted Year 1 Year 2 Year 3 Year 4 Year 5

Below 20,000 100% – – – –20,000 to less than 100,000 40%* 30% 30%# – –100,000 and above 20% 20% 20% 20% 20%

* 40% or 20,000 eSoS shares, whichever is the higher# 30% or the remaining number of eSoS shares unexercised

options granted to full-time foreign employees shall be subject to a restriction on the exercise of the options whereby no more than 20% of the total options allotted to grantee can be exercised on an annual basis. However, where the employee is serving under an employment contract which should be for a duration of at least three (3) years, any remaining unexercised options can be exercised on the expiry of the employment contract if the remaining duration of the contract is less than five (5) years from the date on which the options are granted.

(e) options exercisable in a particular year but not exercised can be carried forward to the subsequent years subject to the time limit of the eSoS.

(f) All the new ordinary shares issued arising from eSoS rank pari passu in all respects with the existing ordinary shares of the Company.

(g) the grantees have no right to participate, by virtue of these options, in any share issue of any other company within the Group.

(h) the movements in the Company’s shares under options as at the beginning of the financial year until 30 June 2008 were as follows:

Number of Options over Ordinary Shares of RM1 eachBalance as Balance as

at 1.7.2007 Granted Exercised Lapsed at 30.6.2008number of unissued shares under options at the following exercise price per share:- RM1.00 681,000 – – (51,000)* 630,000- RM1.07 14,000 – – (4,000)* 10,000

* Due to staff resignations or offers not taken up.


6118. RESERvES

Group Company2008 2007 2008 2007

RM RM RM RMNon-distributableShare premium 1,222,182 1,222,182 1,222,182 1,222,182 Currency translation reserve (128,929) 9,804 – –

1,093,253 1,231,986 1,222,182 1,222,182 DistributableRetained profits 14,337,841 5,015,198 15,950,429 6,264,743

15,431,094 6,247,184 17,172,611 7,486,925

Subject to agreement by the Inland Revenue Board, the Company has sufficient tax exempt income and tax credit under Section 108 of the Income tax Act, 1967 to frank the payment of dividends out of its entire retained profits as at 30 June 2008.

19. BORROWINGS

Group2008 2007

RM RMCurrentSecuredBank overdrafts 455,210 114,248 Bankers’ acceptance and trust receipts 1,184,000 1,034,000 Hire purchase obligations 207,602 222,016 term loans 1,384,778 651,168

3,231,590 2,021,432

UnsecuredBank overdrafts 3,116,565 2,976,778 Bankers’ acceptance and trust receipts 18,008,870 31,054,053

21,125,435 34,030,831

total 24,357,025 36,052,263

Non-currentSecuredHire purchase obligations 214,458 205,633 term loans 8,070,119 1,539,718

total 8,284,577 1,745,351

(i) the bank borrowings are secured as follows:- by way of legal charge over freehold and leasehold land and buildings of certain subsidiary companies as

disclosed in note 8(ii).- pledged of fixed deposit as disclosed in note 16.


62


19. BORROWINGS (cont’d)

(ii) Interests charged are as follows:- bank overdrafts - 1.50% to 2.50% (2007: 1.50% to 2.50%) per annum above the lending banks’ base lending

rate.- bankers’ acceptance - 3.60% to 8.50% (2007: 3.70% to 8.50%) per annum.- revolving credits - nil (2007: 6.12% to 6.34%) per annum.- term loans - 0.30% (2007: 0% to 0.60%) per annum above the lending banks’ base lending rate.

(iii) the implicit interest rates of the hire purchase obligations ranges from 4.23% to 7.28% (2007: 4.75% to 7.15%) per annum.

(iv) the outstanding term loans as at the end of the financial year are repayable as follows:

Group2008 2007

RM RM

not later than 1 year 1,384,778 651,168 Between 1 to 2 years 1,427,866 691,467 Between 2 to 5 years 6,642,253 848,251

9,454,897 2,190,886

(v) outstanding hire purchase obligations:

Group2008 2007

RM RMMinimum lease payment- not later than 1 year 223,145 239,297 - later than 1 year and not later than 5 years 225,185 215,516

448,330 454,813

Less: Unexpired finance charges (26,270) (27,164)

422,060 427,649

Present value of hire purchase obligationsPayable as follows:- not later than 1 year 207,602 222,016 - later than 1 year and not later than 5 years 214,458 205,633

422,060 427,649


6320. PAYABLES

Group Company2008 2007 2008 2007

RM RM RM RM

trade payables 10,937,580 8,406,972 – – other payables 1,539,178 1,369,946 61,955 157,263 Accruals 1,108,285 1,241,938 12,002 12,002 Due to Directors 56,536 56,532 46,000 46,000 Due to subsidiary companies – – – 1,686,903

13,641,579 11,075,388 119,957 1,902,168

(i) the currency exposure profile of payables is as follows:

Group Company

2008 2007 2008 2007RM RM RM RM

Ringgit Malaysia 13,606,861 11,057,741 119,957 1,902,168 Singapore Dollar 34,718 17,647 – –

13,641,579 11,075,388 119,957 1,902,168

(ii) Included in payables of the Group are balances with the following related parties:

Group2008 2007 RM RM

Trade payables

- tGL Packaging Sdn. Bhd. 10,816 79,980

Other payables

- tGL Packaging Sdn. Bhd. – 13,781 - tGL Industries Sdn. Bhd. 498,630 –

the related party relationships with the above parties are as disclosed in note 26.

(iii) other payables, balances due to Directors and subsidiary companies are unsecured, interest free and have no fixed terms of repayment.

21. REvENUE

Group Company

2008 2007 2008 2007RM RM RM RM

Sale of goods 98,715,635 83,501,087 – – Rental income 1,723,867 1,630,476 – – Dividend income – – 10,813,514 8,986,118

100,439,502 85,131,563 10,813,514 8,986,118


64


22. OPERATING PROFIT

the following items have been charged/(credited) in arriving at operating profit:

Group Company2008 2007 2008 2007

RM RM RM RMAuditors’ remuneration- Statutory audit

- current year 105,329 89,339 12,000 12,000 - overprovision in prior year (7,827) (800) – –

- Special audit – 81,682 – 12,000 - other services 8,875 17,800 1,575 3,150 Allowance for doubtful debts 588,633 729,640 – – Allowance for doubtful debts no longer

required (370,788) (119,265) – – Amortisation of prepaid land lease

payments 7,468 7,468 – – Bad debts recovered (2,000) (36,631) – – Bad debts written off 34,530 627,930 – – Corporate exercise expenses- other professionals – 417,150 – 417,150 - Auditors’ remuneration – 35,000 – 35,000 Depreciation of:- property, plant and equipment 842,626 771,829 – – - investment properties 270,348 255,279 – – Direct operating expenses of investment

properties:- non revenue generating 2,701 1,846 – – - revenue generating 588,063 429,915 – –

Dividend income (29) (183) – – Directors’ remuneration (note 23) 1,202,617 922,883 20,000 20,000 Realised gain on foreign exchange (7,866) (22,526) – –Inventories written down to its net

realisable value 680,239 – – – Inventories written off 2,369,615 – – – Impairment loss on investments- additional – – – 195,102 - reversal – – (1,347,852) (716,548)Interest income from:- subsidiary companies – – (91,057) (142,341)- financial institutions (8,999) (19,918) – – Preliminary expenses written off – 2,200 – – Property, plant and equipment written off 1,521 9,003 – – Profit on disposal of property, plant and

equipment (65,003) (60,408) – – Profit on disposal of quoted investment (6,045) – – – Rental of premises 1,596,149 1,284,012 – – Rental income (32,280) (18,180) – – Staff costs- salaries, wages and allowances 14,663,279 13,305,026 – –- employees’ Provident Fund 1,076,204 982,923 – – - others 592,988 412,705 – –


6523. DIRECTORS’ REMUNERATION

Group Company2008 2007 2008 2007

RM RM RM RMDirectors of the Company- fees 20,000 20,000 20,000 20,000 - salary, bonus and allowance 583,250 567,150 – – - employees’ Provident Fund 29,218 17,208 – –

632,468 604,358 20,000 20,000

other Directors of subsidiary companies- salary, bonus and allowance 514,040 289,009 – – - employees’ Provident Fund 56,109 29,516 – –

570,149 318,525 – –

Total 1,202,617 922,883 20,000 20,000

Non- Non-Executive Executive Executive Executive

Group 2008 2008 2007 2007Directors of the Company RM RM RM RMDirectors’ fees – 20,000 – 20,000 Directors’ other emoluments- salaries 546,000 – 542,800 – - bonus 37,250 – 24,350 – - employees’ Provident Fund 29,218 – 17,208 –

612,468 20,000 544,619 20,000

Company Directors of the CompanyDirectors’ fees – 20,000 – 20,000

Directors’ remunerations were received or receivable by the following Directors: Directors of the Company- Dato’ Mustapha Bin Abdul Hamid- toh Peng Hoe- toh Ping Hai- toh Peng Hua- toh Kian Beng- Chan Wah Chong- toh Su Meng

other Directors of subsidiary companies- toh Choon Keat- Kee Lik Kang- Kee Leck Seok- toh Choon Guan- toh See Wooi


66


24. FINANCE COSTS

Group Company2008 2007 2008 2007

RM RM RM RMInterest on:- bank overdrafts 134,867 233,348 – 21,080 - bankers’ acceptance and trust receipts 1,459,135 1,822,934 – – - revolving credits – 111,997 – 111,997 - term loans 319,528 152,750 – – - hire purchase 26,024 26,659 – –

1,939,554 2,347,688 – 133,077

Bank charges 87,193 105,445 152 2,217

2,026,747 2,453,133 152 135,294

25. EARNINGS PER SHARE

Basic Earnings Per Sharethe basic earnings per share of the Group is calculated based on the profit attributable to shareholders divided by the weighted average number of ordinary shares in issue as follows:

2008 2007RM RM

Profit attributable to shareholders of parent entity 9,322,643 8,342,749

Number of shares

2008 2007

Weighted average number of ordinary shares in issue 20,753,000 20,753,000

earning per share (sen) 44.92 40.20

Diluted Earnings Per Sharethe diluted earnings per share of the Group is calculated based on the profit attributable to shareholders divided by the adjusted weighted average number of ordinary shares. the weighted average number of ordinary shares is adjusted to assume conversion of all dilutive potential shares, namely share options granted under the Company’s eSoS scheme. the diluted earnings per share is not presented for both current financial period and previous financial year as the effect of the assumed conversion of eSoS is anti-dilutive.


6726. SIGNIFICANT RELATED PARTY DISCLOSURES

In addition to related party disclosure mentioned elsewhere in the financial statements, set out below are the other significant related party disclosures:-

(a) Related party relationships

the Directors who are major shareholders and close members of their families including companies where they have a significant influence are also considered as related parties.

Related parties are in which one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. the Company has related party relationship with the following:

(i) Subsidiary companies as disclosed in note 10.

(ii) A substantial shareholder of the Company:

teo Guan Lee Holdings Sendirian Berhad, in which toh Peng Chooi, toh Peng Hoe, toh Ping Hai and toh Peng Hua are also Directors and have financial interest.

(iii) Shareholders of teo Guan Lee Holdings Sendirian Berhad:

toh Peng Chooi Holdings Sdn. Bhd., in which toh Peng Chooi and toh Su Meng have financial interest and are also Directors.

toh Peng Hoe Holdings Sdn. Bhd., in which toh Peng Hoe, toh Kian Beng, toh Choon Keat, toh Choon Guan and toh Choon neng have financial interest, and toh Peng Hoe and toh Kian Beng are also Directors.

toh Ping Hai Holdings Sdn. Bhd., in which toh Ping Hai and toh Sea Yong have financial interest, and toh Ping Hai is also a Director.

toh Peng Hua Holdings Sdn. Bhd., in which toh Peng Hua, toh See Wooi and toh See Choong have financial interest, and toh Peng Hua is also a Director.

(iv) Wholly owned subsidiary companies of teo Guan Lee Holdings Sendirian Berhad:

teo Guan Lee Realty Sdn. Bhd.teo Guan Lee Development Sdn. Bhd.tGL Packaging Sdn. Bhd.tGL Industries Sdn. Bhd.P.W. textiles Manufacturing Sdn. Bhd.

(v) Companies in which the Directors of a subsidiary company, Messrs. Kee Lik Kang and Kee Leck Seok, are Directors and have financial interest:

Perniagaan Sulam Kim Bin (M) Sdn. Bhd.Bin Marketing (M) Sdn. Bhd.

(vi) Persons acting as Directors of the Company and subsidiary companies as disclosed in note 23. (vii) Persons connected to Directors:

toh Peng Chooi, father of toh Su Meng and brother of toh Peng Hoe, toh Ping Hai and toh Peng Hua toh Choon Guan, toh Choon Keat and toh Choon neng, sons of toh Peng Hoe toh Sea Yong, son of toh Ping Hai

toh See Wooi and toh See Choong, sons of toh Peng Hua

Yeoh Wooi Keong, nephew of toh Peng Hoe, toh Ping Hai and toh Peng Hua


68


26. SIGNIFICANT RELATED PARTY DISCLOSURES (cont’d)

(b) Significant related party transactions

In the normal course of business, the Group and the Company undertake on agreed terms and prices, the following significant transactions with its related parties:

Group Company2008 2007 2008 2007

RM RM RM RM

Purchase of goods from

- Perniagaan Sulam Kim Bin (M) Sdn. Bhd. 133,999 84,633 – – - tGL Packaging Sdn. Bhd. 50,832 29,039 – –

Rental paid to

- tGL Packaging Sdn. Bhd. 604,800 604,800 – – - tGL Industries Sdn. Bhd. 600,000 600,000 – –

Sales to

- tGL Packaging Sdn. Bhd. – 318 – –

Repayments to

- tGL Packaging Sdn. Bhd. 13,170 – – – - P.P.A.C. (M) Sdn. Bhd. – – 748,520 951,248 - teo Guan Lee (K.L.) Sdn. Bhd. – – 4,440,000 3,766,800 - teo Guan Lee (Penang) Sdn. Bhd. – – 1,481,480 1,843,688 - Contemporary Symphony Sdn. Bhd. – – 400,000 87,222 - teo Guan Lee Realty Sdn. Bhd. – 1,691,064 – 500,010 - teo Guan Lee Holdings Sendirian Berhad – 81,300 – 81,300 - Affluent Lifestyle Sdn. Bhd. – – 536,718 1,122 - Character network Sdn. Bhd. – – – 2,618 - Digitaland (M) Sdn. Bhd. – – 391,854 – - electra Impressions Sdn. Bhd. – – 378,335 –

Interest receivable from

- Galeri Megah Sdn. Bhd. – – 91,057 142,341

Advances from

- teo Guan Lee (Penang) Sdn. Bhd. – 123,850 1,697,347- teo Guan Lee (K.L.) Sdn. Bhd. – – – 1,739,200- tGL Packaging Sdn. Bhd. – 6,329 – – - teo Guan Lee Realty Sdn. Bhd. – 1,691,064 – 500,010

Dividend received from

- teo Guan Lee (Penang) Sdn. Bhd. – – 1,481,480 1,843,688 - P.P.A.C. (M) Sdn. Bhd. – – 748,520 949,378 - teo Guan Lee (K.L.) Sdn. Bhd. – – 4,440,000 3,766,800 - Affluent Lifestyle Sdn. Bhd. – – 536,718 – - Contemporary Symphony Sdn. Bhd. – – 400,000 – - Digitaland (M) Sdn. Bhd. – – 391,854 – - electra Impressions Sdn. Bhd. – – 378,335 –

Information regarding outstanding balances arising from related party transactions as at 30 June 2008 and 30 June 2007 are disclosed in notes 14 and 20.

(c) Compensation of key management personnel

the key management’s remuneration includes fees, salary, bonus, allowances and other benefits computed based on the cost incurred by the Group and the Company. the Group and the Company define its Directors as key management and its compensation as stated in note 23.


6927. PURCHASE OF PROPERTY, PLANT AND EqUIPMENT

Group2008 2007

RM RM

total purchase during the financial year 1,064,465 1,703,153 Financed by hire purchase (269,000) (279,180)

795,465 1,423,973

28. CASH AND CASH EqUIvALENTS

Group Company2008 2007 2008 2007

RM RM RM RM

Represented by:Deposit, cash and bank balances 1,232,699 1,859,923 732 2,147 Bank overdrafts (3,571,775) (3,091,026) – –

(2,339,076) (1,231,103) 732 2,147

29. CONTINGENT LIABILITIES

Company2008 2007

RM RMUnsecuredCorporate guarantee to banks for banking facilities granted to certain subsidiary

companies- Facilities approved 50,662,000 56,510,000 - Amount utilised 29,773,810 37,369,965

30. CAPITAL COMMITMENTS

Group2008 2007

RM RMCapital expenditure which have been authorised by the Directors but not

provided for in the financial statementsContracted(i) Property, plant and equipment

- motor vehicle – 130,000

(ii) non-cancellable operating lease commitment- not later than 1 year 354,589 99,264 - Later than 1 year and not later than 5 years 477,051 831,640

831,640 930,904


70


31. SIGNIFICANT EvENTS

Newly proposed corporate exerciseon 12 April 2007 and subsequently revised on 17 May 2007, the Company announced to undertake the following:

(a) Proposed acquisition of TGL Industries Sdn. Bhd. (“TGLI”)Proposed acquisition of the entire issued and paid-up share capital in tGLI of 300,000 ordinary shares of RM1.00 each from teo Guan Lee Holdings Sendirian Berhad (“tGLH”) for a purchase consideration of RM12,330,415 to be wholly satisfied by the issuance of 12,330,415 new ordinary shares of RM1.00 each in the Company at an issue price of RM1.00 per share in accordance with conditional Share Sale Agreement dated 12 April 2007 (“SSA”).

(b) Proposed private placementProposed private placement of up to 5,000,000 new ordinary shares of RM1.00 each of the Company.

(c) Proposed bonus issueProposed bonus issue of up to 5,543,202 new ordinary shares of RM1.00 each in the Company on the basis of one (1) bonus share for every seven (7) existing shares held by the shareholders of the Company on the entitlement date to be determined later after the proposed acquisition and the proposed private placement in (a) and (b) above.

on 26 July 2007 and 20 August 2008, the Company obtained conditional approvals from Ministry of International trade and Industry (“MItI”) and Securities Commission (“SC”) respectively for the proposal (a) and (b) above.

32. FINANCIAL INSTRUMENTS

(i) Interest rate riskother than those disclosed elsewhere in the financial statements, the Group’s effective yield of deposit, cash and bank balances ranges from 1% to 3% (2007: 1% to 3%) per annum.

Fixed deposit with a licensed bank has a maturity of nil (2007: 5 months).

(ii) Credit risks

Receivablesthe Group’s normal trade receivables credit period ranges from 30 days to 180 days (2007: 30 days to 180 days). other credit terms are assessed and approved on a case-by-case basis. At the balance sheet date, there was no significant concentration of credit risk. the maximum exposures of credit risk for the Group are represented by the carrying amount of the financial asset.

Payablesthe normal trade credit period granted to the Group ranges from 30 days to 150 days (2007: 30 days to 150 days) or such other period as negotiated with the suppliers.

(iii) Fair valuesthe carrying amounts of the financial assets and liabilities of the Group and the Company classified as current assets and current liabilities as at 30 June 2008 approximate their fair values due to the relatively short-term maturity of these financial instruments. the method and assumptions to determine the fair value of other financial assets and liabilities are as follows:

(a) the fair value of non-current quoted investment of the Group is represented by the market value as disclosed in note 9.

(b) It is not practical to estimate the fair values of the non-current unquoted shares because of the lack of quoted market prices and inability to estimate fair value without incurring excessive costs. However, the Directors believe that the carrying amount represents the recoverable amount.

(c) It is not practical to estimate the fair value of the amounts due from/to subsidiary companies, principally due to a lack of fixed repayment terms entered by the parties involved and inability to estimate fair value without incurring excessive costs. However, the Directors do not anticipate the carrying amount recorded at balance sheet date to be significantly different from the values that would eventually be settled as disclosed in notes 14 and 20.


7132. FINANCIAL INSTRUMENTS (cont’d)

(iii) Fair values (cont’d)

(d) the fair value of long-term borrowings is estimated based on the current rates available for borrowings with the similar maturity profile. the carrying amounts of the long-term borrowings at balance sheet date approximate their fair value.

(e) the Company provides corporate guarantees to banks for credit facilities extended to certain subsidiary companies as disclosed in note 29. the fair value of such corporate guarantees is not expected to be material as the probability of the subsidiary companies defaulting on the credit lines is remote.

33. SEGMENTAL ANALYSIS

the Group’s operating business are classified according to the following business segments:

(i) Apparels - manufacturing, marketing and distribution of garments and its related accessories (ii) Investment properties

Group analysis by segment:

InvestmentApparels properties Elimination Consolidated

RM RM RM RM2008RevenueRevenue from external customer 98,715,635 1,723,867 – 100,439,502 Inter-segment revenue – 405,000 (405,000) –

98,715,635 2,128,867 (405,000) 100,439,502

ResultSegmental result 13,343,908 1,118,534 – 14,462,442 Unallocated corporate expenses (99,099)

14,363,343 Interest expense (1,939,554)Interest income 8,999 Dividend income 29

Profit before taxation 12,432,817 taxation (3,021,000)

Profit for the financial year 9,411,817


72


33. SEGMENTAL ANALYSIS (cont’d) Group analysis by segment:


RM RM RM RM2008Other informationSegment assets 66,769,311 17,900,901 – 84,670,212

Segment liabilities 30,422,035 15,741,189 – 46,163,224 Unallocated corporate liabilities 119,957 total liabilities 46,283,181Capital expenditure 1,038,015 26,450 – 1,064,465

Non-cash items

Allowance for doubtful debts 588,633 – – 588,633 Allowance for doubtful debts no longer

required (370,788) – – (370,788)Amortisation of prepaid land lease

payments 7,468 – – 7,468 Bad debts written off 34,530 – – 34,530 Depreciation of: - property, plant and equipment 813,756 28,870 – 842,626 - investment properties 13,129 257,219 – 270,348 Inventories written down to its net

realisable value 680,239 – – 680,239 Inventories written off 2,369,615 – – 2,369,615 Property, plant and equipment- profit on disposal (65,003) – – (65,003)- written off 1,521 – – 1,521 Profit on disposal of quoted investment (6,045) – – (6,045)

2007RevenueRevenue from external customer 83,501,087 1,630,476 – 85,131,563 Inter-segment revenue – 285,000 (285,000) –

83,501,087 1,915,476 (285,000) 85,131,563

ResultSegmental result 12,211,814 1,237,191 – 13,449,005 Unallocated corporate expenses (582,745)

12,866,260 Interest expense (2,347,688)Interest income 19,918 Dividend income 183

Profit before taxation 10,538,673 taxation (2,286,616)

Profit for the financial year 8,252,057


7333. SEGMENTAL ANALYSIS (cont’d) Group analysis by segment:


RM RM RM RM2007Other informationSegment assets 58,724,766 18,730,137 – 77,454,903

Segment liabilities 38,793,137 9,864,602 – 48,657,739 Unallocated corporate liabilities 215,263

total liabilities 48,873,002 Capital expenditure 997,790 705,363 – 1,703,153

Non-cash items

Allowance for doubtful debts 729,640 – – 729,640 Allowance for doubtful debts no longer

required (119,265) – – (119,265)Amortisation of prepaid land lease

payments 7,468 – – 7,468 Bad debts written off 627,930 – – 627,930 Depreciation of - property, plant and equipment 744,604 27,225 – 771,829 - investment properties 4,272 251,007 – 255,279 Property, plant and equipment- profit on disposal (60,408) – – (60,408)- written off 9,003 – – 9,003

Segment revenue and segment result include transfers between business segments. Such transfers are accounted for at agreed price among the related parties.

the Group’s business activities were predominantly carried out in Malaysia and therefore, information by geographical segment is not presented.

34. CURRENCY

All amounts are stated in Ringgit Malaysia, unless otherwise indicated.


74


LOCATION Existing

Approx.Land/area

Built UpArea Date Of

Net Bookvalue

As At 30June 2008

DESCRIPTION Tenure Use (Sq. Ft.) Acquisition RM

Lot 252 & 253 SeC 211 Freehold/ Four Storey 3,649/13,971 19/10/91 808,330BAnDAR KAJAnG AnD 17 Years office and LoCAteD At 1 JALAn FactoryJeLItA SAtU, tAMAnJeLItA, 43000 KAJAnGSeLAnGoR DARUL eHSAn

Lot e7 & e8, MUKIM oF 99 Years two Storey 29,375/26,000 21/1/92 2,957,949KUALA LUMPUR AnD Leasehold office andAMPAnG AnD expiring WarehouseLoCAteD At PHASe 3 In 2082/tAMAn SHAMeLIn 13 YearsPeRKASA, 3-1/2 MILeSJALAn CHeRAS, 56100KUALA LUMPUR

UnItS 3-4-9, 3-4-10, 99 Years Apartments nA/4,092 29/4/91 235,4953-4-11 AnD 3-4-12 Leasehold and StaffJALAn 3/91 tAMAn expiring QuartersSHAMeLIn PeRKASA In 2082/56100 KUALA LUMPUR 14 Years

BeRJAYA StAR CItY Freehold/ Condominium nA/1,070 5/10/95 472,512Lot A-40-001 7866 & 5 Years Unit10798 Lot no. 339 & 145SeC 52, toWn oFKUALA LUMPUR

HS(D)2, Lot no. 555 Freehold/ 3 Storey Shop 958/3,600 30/9/89 499,592HS(D) 9 Lot no. 562 34 Years officeHS(D) 14 Lot no. 567no. 20, LeBUH CHULIA10200 PenAnG

HS(D)67820 P.t. no,21060 Freehold/ 3 Storey Shop 2800/8900 18/8/05 1,916,600MUKIM CHeRAS, DAeRAH HULU 2 Year officeLAnGAt, StAte oF SeLAnGoRLot no. K46 AnD K47 BAnDAR SUnGAI LonG

HS (M) no. 9985, Pt no. 99 Years three Storey nA/4,200 16/12/95 443,12515832 (7173) MUKIM Leasehold Factory AndAMPAnG, DIStRICt oF expiring HostelULU LAnGAt, 36, A, B In 2081/JALAn BUnGA tAnJUnG 8 13 YearstAMAn PUtRASeLAnGoR DARUL eHSAn

LISt oF PRoPeRtIeS HeLD BY tHe GRoUP

75

LOCATION Existing

Approx.Land/area

Built UpArea Date Of

Net Bookvalue

As At 30June 2008

DESCRIPTION Tenure Use (Sq. Ft.) Acquisition RM

HS (M) no. 9986, Pt no. 99 Years three Storey nA/4,200 12/1/94 375,73115833 (7174) MUKIM Leasehold Factory And AMPAnG, DIStRICt oF expiring officeULU LAnGAt, 38, A, B In 2081/JALAn BUnGA tAnJUnG 8 14 YearstAMAn PUtRASeLAnGoR DARUL eHSAn

HS (D) 1496, Pt no. 1247 60 Years Apartment nA/925 8/6/93 62,438MUKIM HULU teLUM Leasehold (Vacant)DIStRICt oF CAMeRon expiringHIGHLAnDS, PAHAnG In 2050/no. 5, FLooR no. 3 12 YearsBLoCK no. G, tAMAnteRInGKAP PUnCAKHULU teLUMCAMeRon HIGHLAnDS, PAHAnG DARUL MAKMUR

HS (M) no. 8732, Pt no. 60 Years 1-1/2 Storey nA/2,750 6/6/96 176,1619750 In tHe MUKIM oF Leasehold terraceDUABeLAS, DIStRICt expiring FactoryoF KUALA LAnGAt In 2056SeLAnGoR DARUL eHSAn 12 Years

HS (M) no. 8733, Pt no. 60 Years 1-1/2 Storey nA/2,750 6/6/96 176,1619751 In tHe MUKIM oF Leasehold terraceDUABeLAS DIStRICt expiring FactoryoF KUALA LAnGAt In 2056SeLAnGoR DARUL eHSAn 12 Years

KoMPLeKS BUKIt Freehold/ Retail nA/4,968 24/10/95 3,861,144JAMBUL Lot G-K05, G- 11 Years Shop-LotK06, G-K07, G-K08, 1-351-36, PenAnG

PRAnGIn MALL, KoMtAR 99 Years Retail nA/6,456 23/5/96 5,895,1312-01, 2-02, 2-07, 2-08, 2-09 expiring Shop-Lot2-80, 2-81, 2-82 PenAnG In 2096

8 Years

BAnDAR PenAS, Freehold Retail nA/3,377 22/5/96 1,460,380BUtteRWoRtH G-57 11 Years Shop-Lot

LISt oF PRoPeRtIeS HeLD BY tHe GRoUP (cont’d)

76


AnALYSIS oF SHAReHoLDInGS as at 10 october 2008

SHARE CAPITAL

Authorised : RM100,000,000.00Issued and Fully paid-up : RM20,753,000.00Class of Shares : ordinary Shares of RM1.00 eachVoting Right : one voting right for one ordinary share

DISTRIBUTION OF SHAREHOLDERS

Holdings No. of Holders Total Holdings %

1 - 99 8 240 0100 - 1,000 652 636,250 3.061,001 - 10,000 674 2,597,550 12.5210,001 - 100,000 81 2,138,860 10.31100,001 - 1,037,649 17 4,760,949 22.941,037,650 and above 3 10,619,151 51.17

total 1,435 20,753,000 100.00

THIRTY LARGEST SECURITIES ACCOUNT HOLDERS

Name Shareholdings %

1 teo Guan Lee Holdings Sendirian Berhad 7,295,260 35.152 omega nominees (tempatan) Sdn. Bhd.

[Pledged securities account for Teo Guan Lee Holdings Sdn. Bhd.]2,143,942 10.33

3 Ideal Structure Sdn. Bhd. 1,179,949 5.694 Lau Soo Hooi 815,000 3.935 Loh Kin Heng 541,000 2.616 Melodi Ragam Sdn. Bhd. 523,949 2.527 PRB nominees (tempatan) Sdn. Bhd.

[Rubber Industry Smallholders Development Authority]364,000 1.75

8 Lau Soo Hiang 345,000 1.669 Melodi Ragam Sdn. Bhd. 287,000 1.3810 PRB nominees (tempatan) Sdn. Bhd.


11 Khor Sim ngee 250,000 1.2012 Sin Len Moi 229,000 1.1013 PRB nominees (tempatan) Sdn. Bhd.


14 KAF-Seagroatt & Campbell Securities Sdn. Bhd. 191,000 0.9215 toh Choon Guan 141,000 0.6816 Lim Lee Chu @ Lim Keat ee 124,000 0.6017 Syarikat Rimba timur (Rt) Sdn. Bhd. 120,000 0.5818 tan Kar Pin 117,000 0.5619 PRB nominees (tempatan) Sdn. Bhd.


20 Wong Shak on 101,000 0.49

77AnALYSIS oF SHAReHoLDInGS as at 10 october 2008 (cont’d)

THIRTY LARGEST SECURITIES ACCOUNT HOLDERS (cont’d)

Name Shareholdings %

21 Ching Gek Lee 90,000 0.4322 Poo Choo @ ong Poo Choi 88,800 0.4323 Gek Lee enterprise Sdn. Bhd. 70,000 0.3424 toh Siam Cheng 70,000 0.3425 toh Peng Hoe 68,000 0.3326 Loh Kin Heng 64,600 0.3127 toh Choon Guan 58,000 0.2828 JF Apex nominees (tempatan) Sdn. Bhd.

[Pledged securities account for Oh Boo Teck (MARGIN)]52,000 0.25

29 Wang Ing Yok @ Wong Soon eack 50,000 0.2430 ng Wooi Ying 48,500 0.23

total 16,040,000 77.28

SUBSTANTIAL SHAREHOLDERS

NameShareholdings %

Direct Indirect Direct Indirect

1. toh Peng Chooi Holdings Sdn. Bhd. 5,000 9,439,202 (5) 0.02 45.482. toh Peng Hoe Holdings Sdn. Bhd. – 9,439,202 (5) – 45.483. toh Ping Hai Holdings Sdn. Bhd. 5,000 9,439,202 (5) 0.02 45.484. toh Peng Hua Holdings Sdn. Bhd. – 9,439,202 (5) – 45.485 Lau Soo Hiang 345,000 9,439,202 (4) 1.66 45.486. toh Choon Guan 199,000 9,439,202 (4) 0.96 45.487. toh Choon Keat 40,000 9,439,202 (4) 0.19 45.488. toh Choon neng 22,000 9,439,202 (4) 0.11 45.489. toh Peng Hoe 68,000 9,439,202 (4) 0.33 45.4810. toh Peng Chooi 52,000 9,444,202 (1) 0.25 45.5111. toh Ping Hai 47,000 9,444,202 (3) 0.23 45.5112. toh Peng Hua 32,000 9,439,202 (2) 0.15 45.4813. toh Kian Beng 30,000 9,439,202 (4) 0.14 45.4814. Lim Lee Chu @ Lim Keat ee 138,000 9,444,202 (3) 0.66 45.5115. tea Mooi Kooi @ teh Yan Kwee 8,000 9,439,202 (2) 0.04 45.4816. toh Choon Meng 8,000 9,439,202 (4) 0.04 45.4817. teo Guan Lee Holdings Sdn.Bhd. 9,439,202 – 45.48 –18. Ideal Structure Sdn. Bhd. 1,179,949 – 5.69 –19. Rubber Industry Smallholders Development

Authority (RISDA)1,062,000 – 5.12 –

notes:

(1) Deemed interested through toh Peng Chooi Holdings Sendirian Berhad by virtue of its substantial shareholding in tGLH

(2) Deemed interested through toh Peng Hua Holdings Sendirian Berhad by virtue of its substantial shareholding in tGLH

(3) Deemed interested through toh Ping Hai Holdings Sendirian Berhad by virtue of its substantial shareholding in tGLH

(4) Deemed interested through toh Peng Hoe Holdings Sendirian Berhad by virtue of its substantial shareholding in tGLH

(5) Deemed interested by virtue of Section 6A of the Companies Act, 1965 via tGLH

78


AnALYSIS oF SHAReHoLDInGS as at 10 october 2008 (cont’d)

DIRECTORS’ SHAREHOLDINGS

Name DirectNo. of shares held %

IndirectNo. of shares held %

1. toh Peng Hua 32,000 0.15 9,447,202 * 45.522. toh Ping Hai 47,000 0.23 9,599,202 ** 46.253. toh Peng Hoe 68,000 0.33 10,083,202 *** 48.594. toh Kian Beng 30,000 0.14 9,439,202 ^ 45.485. toh Su Meng – – 1,000 @ 0.0056. Dato’ Mustapha Bin Abdul Hamid – – – –7. Chan Wah Chong – – – –

notes:

* Deemed interested through toh Peng Hua Holdings Sendirian Berhad by virtue of its substantial shareholding in teo Guan Lee Holdings Sdn. Bhd. (“tGLH”) (9,439,202 ordinary shares of RM1.00 each); and tea Mooi Kooi @ teh Yan Kwee (8,000 ordinary shares) by virtue of Section 134(12)(c) of the Companies Act (the “Act”).

** Deemed interested through toh Ping Hai Holdings Sendirian Berhad by virtue of its substantial shareholding in tGLH (9,439,202 ordinary shares) and in toh Ping Hai Holdings Sendirian Berhad (5,000 ordinary shares); Lim Lee Chu @ Lim Keat ee (138,000 ordinary shares) and toh Sea Yong (17,000 ordinary shares) by virtue of Section 134(12)(c) of the Act.

*** Deemed interested through toh Peng Hoe Holdings Sendirian Berhad by virtue of its substantial shareholding in tGLH (9,439,202 ordinary shares); Lau Soo Hiang (345,000 ordinary shares), toh Kian Beng (30,000 ordinary shares), toh Choon Keat (40,000 ordinary shares), toh Choon neng (22,000 ordinary shares), toh Choon Guan (199,000 ordinary shares) and toh Choon Meng (8,000 ordinary shares) by virtue of Section 134(12)(c) of the Act.

@ Deemed interested through toh Jia Sheng (1,000 ordinary shares) by virtue of Section 134(12)(c) of the Act.

^ Deemed interested through toh Peng Hoe Holdings Sendirian Berhad by virtue of its substantial shareholding in tGLH

I/We................................................................................................................................................................................................(FULL nAMe In BLoCK LetteRS)

of ....................................................................................................................................................................................................(ADDReSS)

being a member/members of teo GUAn Lee CoRPoRAtIon BeRHAD hereby appoint ................................................

.........................................................................................................................................................................................................(FULL nAMe In BLoCK LetteRS)

of ....................................................................................................................................................................................................(ADDReSS)

as my/our proxy, to vote in my/our name(s) and on my/our behalf at the Fifteenth Annual General Meeting of the Company to be held at the Conference Room of teo Guan Lee Corporation Berhad, Plot 28 Lorong Perusahaan Maju 4, Prai Industrial estate, 13600 Prai, Pulau Pinang on tuesday, 25 november 2008 at 11.00 a.m. and at any adjournment thereof for/against the resolutions to be proposed thereat.

I/We hereby indicate with an “X” in the spaces provided how I/we wish my/our votes to be cast. (Unless otherwise instructed, the proxy may vote as he thinks fit)

NO. RESOLUTION FOR AGAINST

1. to receive the Audited Financial Statements of the Company for the year ended 30 June 2008 together with the reports of the Directors and Auditors thereon.

2. to re-appoint Mr. toh Peng Hoe, Director retiring under Section 129 of the Companies Act, 1965.

3. to re-elect Mr. toh Peng Hua, Director retiring under the provision of Article 98 of the Articles of Association of the Company.

4. to re-elect Mr. toh Su Meng, Director retiring under the provision of Article 98 of the Articles of Association of the Company.

5. to re-appoint Messrs. Peter Chong & Co. (formerly known as BKR Peter Chong) as Auditors of the Company and to authorise the Board of Directors to fix their remuneration.

6. to approve the payment of Directors’ Fees of RM20,000.00 for the year ended 30 June 2008.

7. Authority to issue shares under Section 132D of the Companies Act, 1965.

Signature of Shareholder(s) ...................

Signed this ................... day of................... 2008.

number of shares held: ...........................

Notes:

A member entitled to attend and vote is entitled to appoint at least one (1) proxy to attend and vote instead of him.

A proxy may but need not be a member of the Company and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

To be valid this form duly completed must be deposited at the registered office of the Company at Plot 28 Lorong Perusahaan Maju 4, Prai Industrial Estate, 13600 Prai, Pulau Pinang not less than forty-eight (48) hours before the time for holding the meeting.

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

PRoXY FoRM

Teo Guan Lee Corporation Berhad (283710-A)

Plot 28 Lorong Perusahaan Maju 4Prai Industrial estate, 13600 PraiPulau Pinang, Malaysia

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TEO GUAN LEE CORPORATION BERHAD (283710-A)

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