Annual Report 2006 Cover - straits- · PDF fileHEAD OFFICE AND No.6, ... AmBank (M) Berhad RHB...

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CONTENTS

PAGE

Corporate Structure 02

5-Year Group Financial Highlights 03

Corporate Information 04 - 05

Directors’ Profile 08 - 09

Management Team 10 - 11

Corporate Statement 14 - 16

Corporate Governance Statement 18 - 24

Audit Committee Report 25 - 27

Statement of Internal Control 28 - 29

Additional Disclosures 30 - 31

Directors’ Report 35 - 38

Statement by Directors and Statutory Declaration 39

Auditors’ Report 40

Income Statements 41

Balance Sheets 42

Statements of Changes in Equity 43 - 44

Cash Flow Statements 45

Notes to the Financial Statements 46 - 82

Analysis of Shareholdings 84 - 86

List of Properties 87

Notice of Annual General Meeting 88 - 90

Form of Proxy

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CORPORATE STRUCTURE


5-YEAR GROUP FINANCIAL HIGHLIGHTS

FY2002 FY2003 FY2004 FY2005 FY2006 RM RM RM RM RM

‘000 ‘000 ‘000 ‘000 ‘000

SalesRevenue 8,187 8,773 14,730 26,847 27,499

Profit Before Taxation (163) 1,285 1,692 2,272 1,925

Net ProfitFor the Year (225) 1,030 1,421 1,716 1,432

(2,000)0

2,0004,000

6,0008,000

10,00012,00014,00016,000

18,00020,00022,00024,00026,00028,000

2002 2003 2004 2005 2006

Sales Revenue Profit Before Taxation Net Profit for the Year


CORPORATE INFORMATION

BOARd OF dIRECTORS

Directors

Tan Sri Dato’ Mohamed Noordin bin Hassan Chairman/ Non-Executive Director

Sim Keng Siong Managing Director

Lim Foo Seng Executive Director

Shinichi Yamamoto Independent Non-Executive Director

Looi Kem Loong Independent Non-Executive Director

Wong Peng Yew Non-Independent Non-Executive Director

Md Hilmi bin Datuk Hj Md Noor Independent Non-Executive Director (Resigned on 23 February 2007)

Koay Ben Ree Independent Non-Executive Director (Appointed with effect from 23 February 2007)

AUdIT COMMITTEE

Name Designation Directorship

Md Hilmi bin Datuk Hj Md Noor Chairman Independent Non-Executive Director (Resigned on 23 February 2007)

Koay Ben Ree Chairman Independent Non-Executive Director (Appointed with effect from 23 February 2007)

Looi Kem Loong Member Independent Non-Executive Director

Shinichi Yamamoto Member Independent Non-Executive Director

Lim Foo Seng Member Executive Director


COMPANYSECRETARIES Lim Foo Seng (MIA 12191)

Wong Wei Fong (MAICSA 7006751)

HEADOFFICEAND No.6, Jalan Salung 33/26, REGISTEREDOFFICE Shah Alam Technology Park, Section 33, 40400 Shah Alam, Selangor.

Telephone No. : 03-51234888 Facsimile No. : 03-51217818 E-mail address : [email protected] Website : www.quest.com.my

AUDITORS Yong & Leonard

PRINCIPALBANKERS Public Bank Berhad CIMB Bank Berhad AmBank (M) Berhad RHB Bank Berhad EON Bank Berhad

SHAREREGISTRAR Bina Management (M) Sdn Bhd Lot 10, The Highway Centre Jalan 51/205 46050 Petaling Jaya Selangor Darul Ehsan Telephone No : 03-77843922 Facsimile No : 03-77841988

SPONSOR Kenanga Investment Bank Berhad (formerly known as K & N Kenanga Berhad (Company No: 15678-H) 801, 8th Floor, Kenanga International Jalan Sultan Ismail 50250 Kuala Lumpur Telephone No : 03-2164 9080 Facsimile No : 03-2161 4990

STOCKEXCHANGE MESDAQ Market of Bursa Malaysia Securities Berhad (Bursa Securities)

CORPORATE INFORMATION (Cont’d)

board of directors

.... Yoursatisfaction

is our pride...


Lim Foo Seng, a Malaysian aged 37, was appointed to the Board on 28 January 2005 and is the Executive Director of Ruby Quest Berhad. He has 15 years experience in professional and commercial exposures. He is a member of the Malaysian Institute of Certified Public Accountants, a Chartered Accountant (Malaysia) and a member of the Malaysian Institute of Accountants. He has served in one of the international accounting firms, Deloitte Kassim Chan, based in Kuala Lumpur, from 1989 to 1995. It was then he acquired considerable knowledge, experience and exposure in management consultancy, taxation and accounting and auditing standards. He left the accounting firm in 1995 to join Arab-Malaysian Corporation Berhad Group (“Amcorp Group”) and was involved in business planning, venture capital activities, corporate restructuring and monitoring of portfolio companies in his capacity as Associate Director. He has also served as a board member of various portfolio companies of Amcorp Group. His last position with Amcorp Group was Chief Financial Officer of MCM Technologies Berhad, a subsidiary of Amcorp which is listed on

MESDAQ Market. At present, he is the Corporate Affair Director of the Group.

Tan Sri Dato’ Mohamed Noordin bin Hassan, a Malaysian aged 67, was appointed to the Board on 10 January 2005 and is the Chairman and Non-Executive Director of the Ruby Quest Berhad. He has more than 40 years of working experience with the Malaysian Government and corporate sectors. Whilst with the Government, he served in various Government Departments at District, States and Federal levels as Secretary General of the Ministry of Education, Ministry of Science, Technology and Environment and Deputy-Secretary General of the Ministry of International Trade & Industry and others. Upon his retirement, he joined Petroliam Nasional Berhad (“Petronas”) as Vice President Human Resource Management and subsequently, as Vice President Education. After he left Petronas, he continued to serve as a member of the Board of a few Petronas subsidiaries. Currently, he is also Chairman of DNP Holdings Berhad, a public listed company and sits on the board of a number of its subsidiaries. He also sits on the board of UMW Holdings Berhad as an Independent Non-Executive Director.

Sim Keng Siong, a Malaysian aged 35, was appointed to the Board on 28 January 2005 and is the Group Managing Director. He joined the Group in 1993. He has designed and successfully implemented various sizeable cleanroom projects throughout Malaysia. He has more than 10 years experience in the air filtration system and cleanroom industry. Mr. Sim graduated from Tunku Abdul Rahman College majoring in Mechanical Engineering. He has been the driving force in the growth, development and success of Envair Technology Sdn Bhd (“ETSB”) and Envair Mecs Engineering Sdn Bhd (“EMECS”), two of the wholly owned subsidiaries of Ruby Quest Berhad. Both ETSB and EMECS are involved in the cleanroom technological services which represent the main drivers for the Group’s business activities.

Wong Peng Yew, aged 56, was appointed to the Board on 1 February 1997. He was re-designated from Executive Vice Chairman to Non-Independent Non-Executive Director of Ruby Quest Berhad in 25 August 2006. He was based in the United Kingdom from 1978 until 1994 when he returned to Malaysia in 1995 to join Quest’s Group of Companies. During his working career in the United Kingdom, he was the Finance Director of ARM Holdings Plc from 1990 to 1994. From 1986 to 1990, he was the Finance Director of European Silicon Structures Ltd. He worked at Procter and Gamble International Division based in the United Kingdom and report directly to the European Head Office in Geneva. Prior to that, he was the European Finance Manager for CPG Group, a division of General Mills Inc. He has been a member of the Institute of Directors (UK) since 1992.

dIRECTORS’ PROFILE


Koay Ben ree, a Malaysian aged 35, was appointed to the Board on 23 February, 2007 and is an Independent Non-Executive Director of Ruby Quest Berhad. He also sits on the Board of I-Power Berhad as an Independent Non-Executive Director. He graduated from the University of Malaya with LLB (Honours) in 1995 and gained his admission as an Advocate & Solicitor to the High Court of Malaya in 1996. He later obtained his postgraduate qualification, LLM from the University of Warwick in 1997. Mr Koay worked in various legal firms before joining Messrs. Zul Rafique & Partners in 2000. He was made a Partner of Messrs. Zul Rafique & Partners in August 2004. Mr Koay’s experience includes advisory on numerous IPO’s, mergers and acquisitions, takeovers and debt restructurings, fund raisings and other corporate and commercial matters.

Shinichi Yamamoto, a Japanese aged 61, was appointed to the Board on 28 January 2005 and is an Independent Non-Executive Director of Ruby Quest Berhad. He holds a Bachelor of Economics from Osaka University, Japan. He has 20 years of experience in environmental related business. In 1983 to 1995, he ventured into the business of building maintenance, refurbishment of water tanks and construction of elevated pressed steel water tanks and secured contracts from various local authorities and universities. At present, he is working as coordinator for some Japanese companies, involving in environmental related activities such as high tech waste disposal system, wastewater treatment plant and incinerator plant. He is also acting as a consultant for Ebara Corp. Co. Ltd.

Looi Kem Loong, a Malaysian aged 31, was appointed to the Board on 12 January 2006 and is an Independent Non-Executive Director of Ruby Quest Berhad. Currently, he is the director of ALC Technology Group Sdn Bhd. Having completed his Bachelor in Accounting and Finance from University of Strathclyde (Scotland), Mr. Looi continued his articleship with an internationally affiliated audit firm. He is an Associate Member of the Institute of Chartered Accountants in England and Wales and also a member of the Malaysian Institute of Accountants. Having served as a manager in AmMerchant Bank Berhad and vice president in Newfields Advisors Sdn Bhd, Mr. Looi brings with him working experiences in audit, accountancy, corporate advisory and merchant banking.

Notes:

1. Family Relationship with Director and/or Major Shareholder None of the Directors has any family relationship with any director and/or major shareholder of the Company.

2. Conflict of Interest None of the Directors has any conflict of interest with the Company.

3. Conviction of Offences None of the Directors has been convicted of any offences in the past ten (10) years.

dIRECTORS’ PROFILE (Cont’d)

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LEFTTORIGHT(from top to bottom)

SimKengSiongGroup Managing Director

LimFooSengExecutive Director of Ruby Quest Berhad

TanJooWeeExecutive Director of Envair Mecs Engineering (Penang) Sdn Bhd

MANAGEMENT TEAM

AloysiousJoachimA/LJ.P.PereiraExecutive Director of Quest Liquid Separation Sdn Bhd

LowSiewPingExecutive Director of Vokes Air (M) Sdn Bhd

SimonLohChiYinExecutive Director of Envair Mecs Engineering Sdn Bhd

KooBeHowExecutive Director of Quest Liquid Separation Sdn Bhd

LimYinLengPersonal Assistant to Group Managing Director

ChanCheeSengGeneral Manager of Envair Mecs Engineering (Penang) Sdn Bhd

TayKokSengGeneral Manager of Envair Technology Sdn Bhd

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LEFTTORIGHT(from top to bottom)

PaulineChanMarketing Manager of Envair Mecs Engineering (Penang) Sdn Bhd

ChewKehChyangBusiness Development Manager ofQuest Technology Sdn Bhd

ChanSookYinFinance Manager of Ruby Quest Berhad

CheongCheeOnProject Manager of Envair Mecs Engineering (Penang) Sdn Bhd

OngSengJooSales Technical Manager of Envair Mecs Engineering (Penang) Sdn Bhd

LeeGuetSuanSales and Marketing Manager ofQuest Technology Sdn Bhd

MANAGEMENT TEAM (Cont’d)

LamTuckSeongAssistant Manager (Facility & Warehouse) ofRuby Quest Berhad

TanAiGuatAssistant Sales Manager ofQuest Technology Sdn Bhd

PrabaKiriAssistant Accounts Manager ofRuby Quest Berhad

corporate statement

.... Realisingour

dream....

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The new head office of Ruby Quest Berhad

Dear Shareholders,

On behalf of the Board of Directors, we are pleased to present the Corporate Statement of Ruby Quest Berhad (“Quest”) for the financial year ended 31 December 2006.

FINANCIALREVIEW

For the financial year ended 31 December 2006, the Group recorded revenue of RM27.50 million, an increase of 2.4% over the prior year’s revenue of RM26.85 million. The Group’s pre-tax profit for the year under review was RM1.93 million, a decline of 15.0% as compared to prior year’s pre-tax profit of RM2.27 million. After accounting for tax, the Group’s profit after tax was RM1.43 million for the financial year ended 31 December 2006 compared to RM1.72 million for the financial year ended 31 December 2005. The lower profit was mainly due to expansion costs incurred during the financial year under review. These costs were mainly in relation to additional human resource expenses for its new business activities and one time relocation expenses for its new Head Office.

The Group’s net assets stood at RM21.88 million, an increase of RM1.43 million over the previous financial year of RM20.45 million.

CORPORATEDEVELOPMENT

In line with the Group’s expansion plan, on 25 October 2005, Quest Filter Sdn Bhd (“QF”), a wholly owned subsidiary of Quest, has successfully bid in a public auction to acquire a corner three storey office block annexed to a one and a half warehouse building measuring approximately 66,232 square feet (“property”) located at Shah Alam Technology Park for purchase consideration of RM5.13 million. The acquisition was completed on 9 March 2006 and shareholders’ approval for the ratification for the acquisition was obtained in an Extraordinary General Meeting held on 21 June 2006.

CORPORATE STATEMENT


Prior to this acquisition, Quest had been renting its head office cum factory in Shah Alam via one of its wholly owned subsidiary, Quest Technology Sdn. Bhd. (“QT”) and some of its subsidiaries operate in different locations in the Klang Valley as the previous head office is unable to accommodate all its staff due to limited space.

The acquisition enabled Quest to house the entire Group’s operations in Klang Valley at a single location.The relocation is expected to increase the Group’s efficiency and reduce overheads in the long run.

NEWPRODUCTDEVELOPMENT

During the year under review, the Group via QF, has successfully developed its first water purifying unit for the household sector and submitted the Industrial Design for registration in nine Asian countries, including Malaysia. QF has also managed to obtain a conditional approval letter from the Malaysian Industrial Development Authority for its Pioneer Status application during the year under review. Additionally, QF is also manufacturing other water filtration products for external parties. The new production lines to manufacture a range of water filtration products for household sector were commissioned in the final quarter of the financial year ended 31 December 2006. This new business activity is synergistic with the Group’s existing liquid engineering division due to the availability of the expertise and technical know-how in the areas of water treatment systems for industrial sector.

QF had managed to register a profit before tax of RM0.040 million in its first year of operation and the business is expected to grow in the coming year.

A range of water filtration products manufactured by Quest Filter Sdn. Bhd.

PROSPECT

In view of the continuous uncertainties in the global economic environment, the Board and the management are constantly reviewing the entire Group’s operation, resources and commitments in order to improve the Group’s performance.

The Group will continue to embark on its products diversification strategies and overseas market penetration plan. During the year under review, the Group has successfully secured an overseas cleanroom project worth approximately RM0.72 million from Panasonic Communication Philippines Corporation in Manila, Philippines. This project was completed in October 2006. The successful implementation of this maiden overseas cleanroom project may pave the way for the Group to expand its core competency in the provision of design and integration of cleanroom system in the Philippines market in the near future.

CORPORATE STATEMENT (Cont’d)


The Group also benefited from its effort to diversify its products and services as its new high end flooring products under the brand name Gerflor, has registered revenue of RM2.135 million for financial year ended 31 December 2006. The exclusive rights to distribute Gerflor flooring products was successfully secured by the Group via QT from GERFLOR SAS, a public company incorporated in France, in the final quarter of last financial year ended 31 December 2005. This range of products complements the Group’s business activities for the cleanroom flooring system.

Going forward, the Group expects the new production lines for the water filtration products for household sector which are mainly targeting end users in the overseas markets, to contribute positively to the Group in the near future.

Barring unforeseen circumstances, the Group is expected to register a better performance for the financial year ending 31 December 2007.

ACKNOWLEDGEMENT

On behalf of the Board of Directors, we would like to thank all our employees for their untiring commitment, continuous effort, loyalty, dedication and contribution towards the growth of the Company. In addition, we would like to extend our heartfelt appreciation to our shareholders, customers, suppliers, business associates, bankers and regulatory authorities for their continuous support, co-operation and confidence in us. Lastly, we would also like to thank our fellow Board members for their assistance, advice and guidance.

TanSriDato’MohamedNoordinBinHassanChairman / Non-Executive Director

SimKengSiongGroup Managing Director

RUBYQUESTBERHAD

Participation by the Group to promote Gerflor’s flooring products in the 23rd Malaysian International Building Exposition held on 13-16 September 2006 at Kuala Lumpur Convention Centre.

CORPORATE STATEMENT (Cont’d)

corporate governance statement

audit committee report

statement of internal control

additional disclosures


CORPORATE GOVERNANCE STATEMENT

The Board recognises the importance of corporate governance in discharging the Board’s stewardship responsi-bilities and to protect and enhance the shareholders’ value. Premised on this, the Board is committed to ensure high standards of corporate governance are practiced throughout the Company and to apply the principles and best practices as governed by the Listing Requirements of the MESDAQ Market of Bursa Malaysia Securities Berhad and Guidance Note 2 on Corporate Governance. The Company continuously endeavours to comply with the Malaysian Code on Corporate Governance.

The following statement sets out the Company’s compliance with the principles of the Code.

A) DIRECTORS

i) TheBoard

The Board is primarily responsible for the strategic directions of the Company. In addition, the Board also oversees the conduct of the Company’s business, whereby it devises and puts in place adequate systems of control, focused primarily on mitigation of any foreseeable or potential risk besetting the Company.

ii) BoardBalance

The Board comprises seven directors, of whom two are executive directors and five are non-executive directors.

More than one-third (1/3) of the current Board is represented by Independent Non-Executive Directors who are independent of management and free from any business or other relationship which could interfere with the exercise of independent judgment on the Board’s deliberations and decision making, each of whom, brings with him vast and varied experiences, exposure and expertise.

The profile of each member of the current Board is set out on pages 8 to 9 of this Annual Report.

iii) BoardMeetings

To ensure that the Quest Group is managed effectively and efficiently, the current Board is scheduled to meet at least four (4) times a year, with additional meetings being convened when necessary. Besides that, the Board also approves matters through the circulation of Directors’ Circular Resolution in accordance with the Articles of Association of the Company.


CORPORATE GOVERNANCE STATEMENT (Cont’d)

The details of the Director’s attendances for the Board Meetings are set out below:-

NameofDirector No.ofmeetingsattended % duringthefinancialyear

Tan Sri Dato’ Mohamed Noordin Bin Hassan 5/5 100

Wong Peng Yew 5/5 100

Sim Keng Siong 5/5 100

Lim Foo Seng 5/5 100

Md Hilmi Bin Datuk Hj Md Noor 5/5 100(resigned on 23 February 2007)

Shinichi Yamamoto 5/5 100

Looi Kem Loong 5/5 100

Koay Ben Ree Not Applicable N/A(Appointed with effect from 23 February 2007)

iv) SupplyofInformationandAccesstoAdvice

The Board shall be provided with comprehensive board papers on a timely manner prior to board meetings. This is to ensure and enable the members of the Board to discharge their duties and responsibilities competently in a well-informed manner. All members of the Board have unhindered access to the advice and services of the Company Secretaries, and where necessary, may seek independent professional advisers for advice for the purpose of discharging their statutory and fiduciary duties. Every Director also has unrestricted access to all information with regard to the activities of Quest Group.

v) Directors’Training

All the Directors are provided with appropriate training and guidance as to their duties and responsibilities as Directors of a public listed company. The Directors had attended the Mandatory Accreditation Programme pursuant to Bursa Malaysia Securities Berhad guidelines on Training for Directors. The Directors will continue to undergo other relevant programmes to further enhance their skills and knowledge to assist them in discharging their duties as Directors.

vi) Re-electionofDirectors

In accordance with the Company’s Articles of Association, one-third (1/3) of the directors (except the Managing Director) shall retire from office and be eligible for re-election at each Annual General Meeting and all directors shall retire from office at least once in each three (3) years but shall be eligible for re-election. Directors appointed during the year will be subject to retirement and re-election by shareholders in the Annual General Meeting.



Directors over seventy (70) years of age are required to retire and submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965. Presently, none of the directors is subject to such retirement and re-appointment.

In accordance with the Company’s Articles of Association, the Managing Director of the Company

will not be subject to retirement by rotation and he shall, subject to the provisions of any contract between him and the Company be subject to the same provisions as to resignation and removal as the other Directors of the Company and if he ceases to hold the office of Director for any cause he shall immediately cease to be a Managing Director.

vii) BoardCommittee

The Board has set up several of the following Committees to assist the Board in discharging their duties and decision making:-

(a) AuditCommittee The Audit Committee comprises three (3) Independent Non-Executive Directors and one (1)

Executive Director, as follows:-

Chairman : Md Hilmi Bin Datuk Hj Md Noor (Independent Non-Executive Director) (Resigned on 23 February 2007)

Koay Ben Ree (Independent Non-Executive Director) (Appointed with effect from 23 February 2007)

Members : Shinichi Yamamoto (Independent Non-Executive Director)

Looi Kem Loong (Independent Non-Executive Director)

Lim Foo Seng (Executive Director)

The Audit Committee Report is set out on pages 25 to 27 of this Annual Report.

(b) NominationCommittee

The Nomination Committee comprises the following members:-

Chairman : Shinichi Yamamoto (Independent Non-Executive Director)

Members : Tan Sri Dato’ Mohamed Noordin bin Hassan (Non-Executive Director)

Md Hilmi Bin Datuk Hj Md Noor (Independent Non-Executive Director) (Resigned on 23 February 2007)


(b) NominationCommittee(Cont’d)

Koay Ben Ree (Independent Non-Executive Director) (Appointed with effect from 23 February 2007)

The terms of reference of the Nomination Committee are as follows:-

• To regularly review the Board structure, size and composition.

• To recommend candidates for the approval of the Board to fill Board vacancies.

• To annually review the required mix of skills and experience and other qualities and competence which non-executive directors should bring to the Board.

• To annually assess the effectiveness of the Board as a whole, the committee of the Board and contributions of each individual director of the Board.

(c) RemunerationCommittee

The Company has an established framework of principles to evaluate performance and reward for executive directors. Remuneration packages for the executive directors are formulated to be competitive and realistic, emphasis being placed on performance, with aims to attract, motivate and retain executive directors of caliber to the Group. For non-executive directors, the level of remuneration commensurates with the level of responsibilities undertaken by them for the Company.

The Remuneration Committee comprises the following members:-

Chairman : Tan Sri Dato’ Mohamed Noordin bin Hassan (Non-Executive Director)


Md Hilmi Bin Datuk Hj Md Noor (Independent Non-Executive Director) (Resigned on 23 February 2007)

Koay Ben Ree (Independent Non-Executive Director)

(Appointed with effect from 23 February 2007

The terms of reference of the Remuneration Committee are as follows:-

• To review and determine, at least once annually, adjustments to the remuneration package, including benefits in kind, of each executive director, taking into account the performance of the individual, the inflation price index, and where necessary, information from independent sources on remuneration packages for equivalent jobs in the industry.

• To review and determine the quantum of performance related bonuses, benefits-in-kind and Employee Share Options, if available, to be given to the executive directors.

• To consider and execute the renewal of the service contracts of executive directors as and when due, as well as the service contracts and remuneration package for newly appointed executive director(s) prior to their appointment.




B) DIRECTORS’REMUNERATION

The Directors are satisfied that the current level of remuneration is in line with the responsibilities expected.

The aggregate Directors’ remuneration paid or payable to all Directors of the Company categorised into appropriate components for the financial year ended 31 December 2006 are as follows:-

Remuneration–RM’000 Non-ExecutiveDirectors ExecutiveDirectors Total

• Salaries - 396 396

• Fees 48 - 48

• Bonuses - 45 45

• Payroll based expenses-

EPF - 40 40

• Meeting allowances 13 - 13

• Housing Allowance - 8 8

• Benefit-in-kind - 19 19

TOTAL 6� �0� �6�

Note: Mr Wong Peng Yew has been re-designated from the Executive Vice Chairman to the Non-Executive Director of Ruby Quest Berhad on 25 August 2006. The salaries for the Executive Directors included that of Mr Wong Peng Yew during his tenor as the Executive Director.

NumberofDirectors

RangeofRemuneration Non-Executive Executive Total Directors Directors

Below RM50,000 5 - 5

RM50,000 - RM100,000 - - -

RM100,000 - RM150,000 - - -

RM150,000 - RM200,000 - 1 1

RM200,000 - RM250,000 - 1 1



C) RELATIONSWITHSHAREHOLDERS

The Company recognises the importance of timely and regular dissemination of information to shareholders of the Company via the Annual Report to shareholders, quarterly financial reports and the various announcements made during the year. These will enable the shareholders and members of the public to have an overview of the Group’s performance and operations.

The Annual General Meeting also provides an opportunity for the shareholders to seek and clarify any issues relevant to the Company. Shareholders are encouraged to meet and communicate with the Board at Annual General Meeting and to vote on all resolutions.

D) ACCOUNTABILITYANDAUDIT

i) FinancialReporting

The Directors aim to provide a balanced and meaningful assessment of the Company’s financial performance and prospects, primarily through the Annual Report and quarterly financial statements.

The Directors are also responsible for ensuring that the annual financial statements are prepared in accordance with the provision of the Companies Act, 1965 and the applicable Approved Accounting Standards in Malaysia.

A statement by the Directors of their responsibilities in the preparation of financial statements is set out in the ensuring section.

ii) StatementofDirectors’ResponsibilitiesinrespectoftheFinancialStatements

The Malaysian Company Law requires the Directors to prepare financial statements for each financial year, which give true and fair view of the state of affairs of the Company and of the results and cash flow of the Company for that period. In preparing those financial statements, the Directors are required to:-

a) select suitable accounting policies and then apply them consistently;

b) state whether applicable accounting standards have been followed;

c) make judgments and estimates that are reasonable and prudent; and

d) prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy, at any time, the financial position of the Company. The Directors are also responsible for safeguarding the assets of the Company and for taking reasonable steps for the prevention and detection of fraud and irregularities.

The Directors have prepared the annual financial statements in compliance with the Companies Act, 1965.



iii) InternalControl

The Board acknowledges its responsibility for maintaining a sound system of internal control, which provides reasonable assessment of effective operations, internal controls and compliance with the laws and regulations as well as with internal procedures and guidelines. A statement on internal control of the Company is set out on pages 28 to 29 of this Annual Report.

iv) RelationshipwiththeAuditors

Through the Audit Committee, the Company shall establish a transparent and appropriate relationship with the Company’s auditors, which enable the auditors to highlight to the Audit Committee and the Board, matters that require the Board’s attention.


�. COMPOSITIONANDDESIGNATIONOFAUDITCOMMITTEE

The Audit Committee currently comprises the following members:-

Chairman : Md Hilmi Bin Datuk Hj Md Noor (Independent Non-Executive Director) (Resigned on 23 February 2007) Koay Ben Ree (Independent Non-Executive Director) (Appointed with effect from 23 February 2007)


Looi Kem Loong (Independent Non-Executive Director)

Lim Foo Seng (Executive Director)

�. TERMSOFREFERENCE

a) CompositionofAuditCommittee

The Committee shall be appointed from amongst the Board of Directors and shall comprise at least three (3) members whereby at least one member of the Committee:-

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

ii) if he/she is not a member of the Malaysian Institute of Accountants, he/she must have at least three years’ working experience and:-

a) he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or

b) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967.

iii) fulfills such other requirements as may be prescribed by the Bursa Securities.

The majority of the Committee members must be Independent Directors and in the event of any vacancy with the result that the number of members is reduced to below three (3), the vacancy must be filled within three (3) months.

b) Chairman

The Chairman, who shall be elected by the Audit Committee, must be an independent director.

AUdIT COMMITTEE REPORT


c) Secretary

The Company Secretary shall be the Secretary of the Committee and shall be responsible, in conjunction with the Chairman, for drawing up the agenda and circulating it prior to each meeting.

The Secretary shall also be responsible for keeping the minutes of meetings of the Committee and circulating them to the Committee Members.

d) Meetings

The quorum for a meeting shall be two (2) members, provided that the majority of the members present at the meeting shall be independent directors.

The external auditors have the right to appear at any meeting of the Audit Committee and shall appear before the Committee when required to do so by the Committee. The external auditors may also request a meeting if they consider it necessary.

e) Rights

The Audit Committee shall:

i) have explicit authority to investigate any matter within its terms of reference;

ii) have the resources which it needs to perform its duties;

iii) have full and unrestricted access to any information which it requires in the course of performing its duties;

iv) have unrestricted access to the chief executive officer and chief financial officer;

v) have direct communication channels with the external and internal auditors (if any); and

vi) be able to obtain independent professional or other advice in the performance of its duties at the cost of the Company.

f) Duties

The duties of the Audit Committee shall include a review of:

i) the nomination of external auditors;

ii) the adequacy of existing external audit arrangements, with particular emphasis on the scope and quality of the audit;

iii) the effectiveness of the internal control and management information systems;

iv) the internal audit findings and implementation status of recommendations made by internal auditors;

v) the quarterly reports and year-end financial statements of the Company with both the external auditors and senior management;

vi) the external auditor’s audit report;

vii) any management letter sent by the external auditors to the Company and the management’s response to such letter;

viii) any letter of resignation from the Company’s external auditors;

ix) the assistance given by the Company’s officers to the external auditors;

x) all areas of significant financial risk and the arrangements in place to contain these risks to acceptable levels; and

xi) all related party transactions and potential conflict of interest situations.

AUdIT COMMITTEE REPORT (Cont’d)

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AUdIT COMMITTEE REPORT (Cont’d)

�. SUMMARYOFACTIVITIES

The Audit Committee is scheduled to meet at least four (4) times a year, with additional meetings being convened when necessary.

Details of the attendance during the year under review are as follows:-

Name No.ofmeetingsattended % duringthefinancialyear

Lim Foo Seng 5/5 100

Md Hilmi Bin Datuk Hj Md Noor 5/5 100 (Resigned on 23 February 2007)

Shinichi Yamamoto 5/5 100

Looi Kem Loong 5/5 100

Koay Ben Ree Not Applicable N/A (Appointed with effect from 23 February 2007)

During the year under review, the following were the activities of the Audit Committee:

1. Reviewed the quarterly financial results and ensured that the financial reporting and disclosure requirements of relevant authorities had been complied with, focusing particularly on:

1.1 changes in or implementation of major accounting policies and practices;

1.2 the on-going concern assumption;

1.3 significant and unusual events; and

1.4 compliance with accounting standards and other legal requirements.

2. Reviewed the related party transactions and conflict of interest situation, if any, within the Company or group including any transactions, procedures or course of conduct that raised questions of management integrity in the ordinary course of business.

3. Reviewed the audit strategy and plan of the External Auditors.

�. INTERNALAUDITFUNCTION

During the financial year, the Company does not have an internal audit department and the Audit Committee relied on discussions with the senior management and executive directors, review of quarterly financial statements and input from the external auditors to discharge its duties. The Executive Directors through their daily involvement in the business operations and attendance at operational and management level meetings, monitors the Company’s policies and procedures. Any significant unresolved matters, requiring the Board of Directors’ intervention will be reported by the Executive Directors accordingly.


INTRODUCTION

The Malaysian Code on Corporate Governance stipulates that the Board of Directors of listed companies should maintain a sound system of internal control to safeguard shareholders’ investments and the Group’s assets. Below is the Board of Directors’ Statement on Internal Control which has been prepared with reference to the Bursa Securities “Statement on Internal Control: Guidance for Directors of Public Listed Companies”.

RESPONSIBILITIES

The Board of Directors recognises the importance of a sound system of internal control and effective risk management practices to good corporate governance. The Board affirms its overall responsibility for maintaining sound systems of internal control within the Group covering financial, operational, compliance and risk management issues, and for reviewing regularly the adequacy and effectiveness of such systems within the Group. Sound systems of internal control will help to safeguard the Group’s assets and shareholders’ investment.

The Board, in the discharge of its stewardship responsibilities, is committed to identify key risks to which companies within the Group are exposed and will introduce appropriate systems progressively to manage such risks.

Notwithstanding that, there are, however, limitations inherent in any system of internal control, and such system is designed to manage rather than eliminate the risk that may impede the achievement of business objectives. It should be appreciated that it could therefore only provide reasonable and not absolute assurance against material misstatement of management or financial information or financial losses or frauds. It should be further noted that the cost of control procedures should not exceed the benefits to be derived from such procedures.

KEYELEMENTSOFINTERNALCONTROL

Some of the key control procedures have been embedded in the operations of the business with sufficient assurance mechanism to safeguard the assets of the Group and to preserve shareholders’ investment. The following key elements ensure that the proper control regime is maintained:

AuditCommittee

The Audit Committee reviews the Group’s accounting and reporting policies and practices, and the adequacy and effectiveness of the systems of internal control. The Audit Committee also ensures that there is continuous effort by management to address and resolve areas where control weaknesses exist.

The Audit Committee reviews the quarterly results of the Group and recommends adoption of such results to the Board before announcement to Bursa Securities is made.

RiskManagement

Currently there is no structured risk management process to assess significant risks faced by the Group. However, the findings of the external auditors and informal identification and review of risks are carried out during management meetings as an on going process for identifying, evaluating and managing significant risks faced by the Group. The topics that were discussed include corporate image, environment, health and safety, human resource, product quality, project activities, general performance and competitors’ activities.

STATEMENT ON INTERNAL CONTROL


ReportingandReview

The Group has in place a management reporting mechanism whereby financial information is generated for senior management review on a timely manner. The Group Managing Director meets regularly with the Executive Director and senior management to review, discuss and resolve operational, financial, corporate and business issues.

OtherRisksandControlProcesses

In addition to the above, the Group also has in place the following key elements:

• An organisation structure, with clearly defined authority limits and reporting mechanism to higher levels of management and to the Board, which supports the maintenance of a strong control environment.

• Specific responsibilities have delegated to the relevant Board committees, all of which have formalised terms of reference. These committees have the authority to examine all matters within their scope and report to the Board with their recommendations.

Conclusion

The system of internal control is satisfactory and has not resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s annual report. The Group continues to take measures to strengthen the internal control environment.

STATEMENT ON INTERNAL CONTROL(Cont’d)


AddITIONAL dISCLOSURES

STATUSOFTHEUTILISATIONOFTHEINITIALPUBLICOFFERPROCEEDS

As at 31 December 2006, the status of utilisation of the proceeds for Quest Group is summarised below:-

Purpose Approved Utilisationforthe Cumulative Unutilised Utilisation currentfinancial utilisationasat balance yearended ��December�006 ��December�006

Unutilised: RM’000 RM’000 RM’000 RM’000 Capital Expenditure 2000 1000 2000 - Working Capital 5948 3280 4864 1084

R&D expenses 500 69 69 431

Listing expenses 1500 1 1365 135*

�,�� 0 �� 6�0

* The unutilised balance of the budgeted listing expenses as at 31 December 2006 will be utilised for working capital purposes.

MATERIALCONTRACTSINVOLVINGDIRECTORS’ANDSUBSTANTIALSHAREHOLDERS’INTEREST

There were no material contracts entered by the Company or its subsidiaries involving directors’ and substantial shareholders’ interest in the financial year ended 31 December 2006.

VARIATIONOFRESULTS

There were no significant variations between the audited results for the financial year and the unaudited results previously announced.

SANCTIONSAND/ORPENALTIES

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


NON-AUDITFEES

Other fees paid by the Company to external auditors for the financial year ended 31 December 2006 other than the statutory audit fees were RM1,800.00 as disclosed in Note 10 of the financial statements.

PROFITFORECAST/PROFITGUARANTEE

The Company did not issue any profit forecast in any public documents during the current financial year.

REVALUATIONPOLICYONLANDEDPROPERTIES

The Company does not have any revaluation policy on landed properties.

AddITIONAL dISCLOSURES (Cont’d)

financial statements

.... Stimulatinggrowth ...

ensuringourcontinualsuccess


RUBYQUESTBERHAD(Company No. 412406-T)(Incorporated in Malayasia)

Contents

Directors’ Report 35 - 38

Statement by the Directors 39

Statutory Declaration 39

Report of the Auditors 40

Income Statements 41

Balance Sheets 42

Statements of Changes in Equity 43 - 44

Cash Flow Statements 45

Notes of the Financial Statements 46 - 82

FINANCIAL REPORT

RUBY QUEST BERHAD (Company No. 412406-T)(Incorporated in Malayasia)


Directors’Report The directors have pleasure in submitting their report and the audited financial statements of the Group and the Company for the financial year ended 31 December 2006.

PrincipalActivities The principal activities of the Company are investments holding and the provision of management services. The principal activities of the Group consist of manufacturing and distribution of air and water filters, installation of cleanroom and water treatment system and providing technical and management services.

There have been no significant changes in the nature of these activities during the financial year. The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the MES-DAQ Market of the Bursa Malaysia Securities Berhad. Its registered office is situated at No.6, Jalan Salung 33/26, Seksyen 33, Shah Alam Technology Park, 40400 Shah Alam, Selangor Darul Ehsan. FinancialResults Group CompanyProfit after taxation RM 1,432,496 RM 4,239,422 ReservesandProvisions All material transfers to or from reserves and provisions during the year are shown in the financial statements. ShareCapital During the financial year, no allotment and issue of shares was made by the Company.

Directors The directors who have held office during the period since the date of the last report are as follows: Wong Peng Yew Tan Sri Dato’ Mohamed Noordin Bin Hassan Md Hilmi Bin Datuk Hj Md Noor (Resigned on 23 February 2007) Lim Foo Seng Sim Keng Siong Shinichi Yamamoto Looi Kem Loong Koay Ben Ree (Appointed on 23 February 2007)

FINANCIAL REPORT


FINANCIAL REPORT (Cont’d)

Directors’Interests The following directors who held office at the end of the financial year had, according to the register required to be kept under Section 134 of the Companies Act, 1965, an interest in shares of the Company as stated below:

NumberofordinarysharesatRM0.�0each

At At �.�.�006 Acquired Sold ��.��.�006

Interest in shares of the Company

Direct interest:

Wong Peng Yew 33,745,199 - 11,000,000 22,745,199

Tan Sri Dato’ Mohamed Noordin Bin Hassan 3,821,930 - 1,670,000 2,151,930

Md Hilmi Bin Datuk Hj Md Noor 50,000 - - 50,000

Lim Foo Seng 2,320,280 - - 2,320,280

Sim Keng Siong 9,888,840 24,080,300 22,614,300 11,354,840

Shinichi Yamamoto 20,000 - - 20,000

Looi Kem Loong - 20,000 - 20,000

Indirect interest by virtue of the interest held by the spouse of Sim Keng Siong 32,010 - - 32,010

By virtue of the above directors’ shareholdings in Ruby Quest Berhad, they are deemed to have an interest in the ordinary shares of companies under the Ruby Quest Berhad’s group of companies, to the extent of the Company has an interest. Directors’Benefits Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than those 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 direc-tor has a substantial financial interest.

Neither during nor at the end of the financial year was the Company a party to any arrangements whose object is to enable the directors to acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate.


OtherStatutoryInformation

Before the income statements and balance sheets of the Group and 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 provision for doubtful debts and had satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as shown in the accounting records of the Group and the Company had been written down to an amount which they might be expected so to realise.

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

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

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

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 the Company to meet their obligations as and when they fall due. At the date of this report, there does not exist: (a) any charge on the assets of the Group and the Company which has arisen since the end of the financial year

which secures the liability of any other person; or

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

At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading. In the opinion of the directors: (a) the results of the Group’s and the Company’s operations during the financial year were not 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 the operations

of the Group and the Company for the financial year in which this report is made.



Auditors The auditors, Yong & Leonard, have expressed their willingness to continue in office. Signed in accordance with a resolution of the Board of Directors:

SIMKENGSIONG LIMFOOSENG Director Director 12 April 2007



StatementbyDirectors

PursuanttoSection�6�(��)oftheCompaniesAct,��6� We, Sim Keng Siong and Lim Foo Seng, being two of the directors of Ruby Quest Berhad, do hereby state that, in the opinion of the directors, the financial statements set out on pages 7 to 40 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2006 and of the results and cash flows of the Group and of the Company for the year ended on that date in accordance with Malaysian Accounting Standards Board approved accounting standards for entities other than private entities and the provi-sions of the Companies Act, 1965.

Signed in accordance with a resolution of the Board of Directors :

SIMKENGSIONG LIMFOOSENG Director Director 12 April 2007

StatutoryDeclaration

PursuanttoSection�6�(�6)oftheCompaniesAct,��6� I, Lim Foo Seng, being the director primarily responsible for the financial management of Ruby Quest Berhad, do solemnly and sincerely declare that the financial statements set out on pages 7 to 40 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by ) Lim Foo Seng ) at Petaling Jaya in the state of Selangor Darul Ehsan ) on 12 April 2007 ) LIMFOOSENG Before me,

Commissioner For Oaths



ReportoftheAuditors

tothemembersofRUBYQUESTBERHAD(��06-T)

We have audited the financial statements set out on pages 41 to 82. These financial statements are the respon-sibility of the Company’s directors.

It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act 1965 and for no other purpose. We do not assume responsibility to any other person for the content of this report.

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

In our opinion:

(a) the financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 and Malaysian Accounting Standards Board approved accounting standards for entities other than private entities in Malaysia so as to give a true and fair view of :

(i) the financial position of the Group and the Company as at 31 December 2006 and of the result and the cash flow of the Group and the Company for the year then ended; and

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

(b) the accounting and other records and the registers required by the Act to be kept by the Group and the Com-

pany have been properly kept in accordance with the provisions of the Act.

The names of the subsidiaries of which we have not acted as auditors are disclosed in Note 15 to the financial statements. We have considered the financial statements of these subsidiaries and the auditors reports ther-eon.

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

The auditors’ report on the financial statements of the subsidiaries were not subject to any qualification and did not include any adverse comment made under subsection (3) of Section 174 of the Act.

YONG&LEONARD LEONGPOOIWAH Firm Number : AF 0075 Approval Number : 2228/03/08(J) Chartered Accountants Partner of the firm

12 April 2007




Group Company

IncomeStatementsfortheyearended��December�006

�006 �00� �006 �00�Note RM RM RM RM

Revenue 4 27,499,057 26,847,059 6,598,396 -

Other operating income 5 397,237 338,948 98,290 137,288

Impairment of investment in subsidiary - (5,219) (130,000) (40,000)

Operating expenses 6 (25,566,486) (24,769,043) (715,128) (79,244)

Profit from operations 2,329,808 2,411,745 5,851,558 18,044

Share of results of associates - (612) - -

Finance costs 7 (404,636) (139,001) - -

Profit before taxation 8 1,925,172 2,272,132 5,851,558 18,044

Taxation 11 (492,676) (556,261) (1,612,136) (40,053)

Profit / (loss) for the year 1,432,496 1,715,871 4,239,422 (22,009)

Earnings per share Basic (Sen) 12 1.46 1.98

The annexed notes form an integral part of these financial statements



Group Company

BalanceSheets asat��December�006

�006 �00� �006 �00�Note RM RM RM RM

(Restated)Non-CurrentAssets Property, Plant and equipment 13 9,194,860 1,417,387 9,066 - Intangible assets 14 69,360 - - - Investments in subsidiaries 15 - - 3,379,006 3,009,008 Investments in associates 16 - - - - Deferred tax assets 17 104,920 38,069 - - Goodwill on consolidation 18 79,815 175,703 - -

9,448,955 1,631,159 3,388,072 3,009,008

CurrentAssets Inventories 19 5,304,703 2,568,056 - - Trade debtors 20 15,471,884 17,413,407 - - Other debtors, deposits and prepayments 2,210,646 2,228,170 32,079 11,617 Amount due from subsidiaries 15 - - 12,352,366 4,171,177 Tax refundable 33,340 98,660 9,881 - Placement with licensed banks 21 4,191,569 7,839,808 1,650,000 6,000,000 Cash and bank balances 1,337,932 1,187,304 11,734 6,202

28,550,074 31,335,405 14,056,060 10,188,996

Less:CurrentLiabilitiesAmount due to customer on contract 22 - - - - Trade creditors 5,280,338 6,905,652 - - Other creditors and accruals 524,031 410,573 85,147 59,652 Amount due to subsidiaries 15 - - 98,516 99,899 Provision for royalty expenses 23 183,110 141,335 - - Provision for taxation 660,297 1,260,849 - 17,406 Borrowings (secured) - bank overdrafts 24 2,378,529 2,044,127 - - - others 24 1,533,976 1,223,910 - -

10,560,281 11,986,446 183,663 176,957

NetCurrentAssets 17,989,793 19,348,959 13,872,397 10,012,039

Less:Non-CurrentLiabilities Borrowings (secured) 24 5,496,802 517,299 - - Deferred tax liabilities 25 62,042 15,411 - -

5,558,844 532,710 - -

21,879,904 20,447,408 17,260,469 13,021,047

CapitalandReserves Share capital 26 9,798,000 9,798,000 9,798,000 9,798,000 Share premium reserve 27 7,397,536 7,397,536 7,397,536 7,397,536 Retained profits / (Accumulated losses) 4,684,368 3,251,872 64,933 (4,174,489)

Shareholders’Equity 21,879,904 20,447,408 17,260,469 13,021,047



StatementsofChangesinEquity fortheyearended��December�006

Non-distributable DistributableShare Share Reserveson Retainedcapital premium consolidation profits Total

(Note�6) (Note�7)RM RM RM RM RM

Group

At 1 January 2005 414,678 1,933,314 1,782,385 2,602,263 6,732,640

Reserve on consolidation arising from acquisitions of subsidiaries - - 1,399,304 - 1,399,304

Issue of ordinary shares - acquisition of subsidiaries 76,567 1,939,439 - - 2,016,006 - bonus issue 6,688,755 (2,440,804) (3,181,689) (1,066,262) - - public issue 2,618,000 7,330,400 - - 9,948,400

Listing expenses written off - (1,364,813) - - (1,364,813)

Net profit for the year - - - 1,715,871 1,715,871

At 31 December 2005 9,798,000 7,397,536 - 3,251,872 20,447,408


At 31 December 2006 9,798,000 7,397,536 - 4,684,368 21,879,904




StatementsofChangesinEquityfortheyearended��December�006

Non-distributable Distributable Share Share Revaluation Retained capital premium reserve profits Total

Note (Note�6) (Note�7) RM RM RM RM RM

Company

At 1 January 2005 414,678 1,933,314 - 95,471 2,443,463

Surplus on revaluation of investments 33 (d) - - 4,247,951 (4,247,951) -

Issue of ordinary shares - acquisitions of subsidiaries 76,567 1,939,439 - - 2,016,006 - bonus issue 6,688,755 (2,440,804) (4,247,951) - - - public issue 2,618,000 7,330,400 - - 9,948,400

Listing expenses written off - (1,364,813) - - (1,364,813)

Net loss for the year - - - (22,009) (22,009)

At 31 December 2005 - as restated 9,798,000 7,397,536 - (4,174,489) 13,021,047

At 31 December 2005 - as previously reported 9,798,000 7,397,536 - 73,462 17,268,998 - changes in accounting policy 33 (d) - - - (4,247,951) (4,247,951)

- as restated 9,798,000 7,397,536 - (4,174,489) 13,021,047


At 31 December 2006 9,798,000 7,397,536 - 64,933 17,260,469



Group Company


CashFlowStatements fortheyearended��December�006

�006 �00� �006 �00� Note RM RM RM RM OperatingActivities Profit before taxation 1,925,172 2,272,132 5,851,558 18,044 Adjustments for:

Share of results of associates - 612 - - Depreciation 385,514 283,931 474 - Amortisation of goodwill - 22,265 - - Impairment loss on goodwill 95,888 - - - Provision for royalty expenses 41,775 40,414 - - Provision for diminution in value in associate - 5,219 130,000 40,000 Plant and equipment written off 496 2,501 - - Gain on disposals of plant and equipment (17,639) (163,200) - - Loss on disposal of property, plant and equipment 753 - - - Bad debts recovered (14,110) (17,386) - - Interest income (217,064) (157,762) (98,290) (137,288)Interest expense 404,636 139,001 - -

Operating profit / (loss) before working capital changes 2,605,421 2,427,727 5,883,742 (79,244) Amount due from customers - 72,500 - - Inventories (2,736,647) (140,517) - - Debtors 864,869 (7,967,173) (20,462) 79,712 Creditors (1,500,967) 1,141,813 25,495 14,344 Amount due from subsidiaries - - (8,181,189) (4,171,177)Amount due from associates - 186,805 - - Amount due to subsidiaries - - (1,383) (722,406)Amount due to associates - (100,998) - (100,998) Cash used in operations (767,324) (4,379,843) (2,293,797) (4,979,769) Interest received 162,752 135,820 98,290 130,438 Interest paid (225,218) (93,976) - - Royalty paid - - - - Tax refunded - 27,762 - 411 Tax paid (1,048,128) (489,678) (1,639,423) (16,758) Net cash used in operating activities (1,877,918) (4,799,915) (3,834,930) (4,865,678) InvestingActivities 28 (2,305,118) (1,538,181) (509,538) (110,000) FinancingActivities 29 (550,738) 8,891,658 - 8,973,915 Net (decrease) / increase in cashand cash equivalents (4,733,774) 2,553,562 (4,344,468) 3,998,237 Cash and cash equivalentsat beginning of year 5,343,177 2,789,615 6,006,202 2,007,965 Cashandcashequivalentsatendofyear 30 609,403 5,343,177 1,661,734 6,006,202



NotestotheFinancialStatements fortheyearended��December�006 �. AccountingPolicies

(a) BasisOfPreparation

The financial statements of the Group and the Company have been prepared under the historical cost convention and comply with Malaysian Accounting Standards Board approved accounting standards for entities other than private entities and the provisions of the Companies Act, 1965.

The preparation of financial statements in conformity with the Malaysian Accounting Standards Board approved accounting standards for entities other than private entities requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires directors to exercise their judgment in the process of applying the Company’s accounting policies. Although these estimates and judgment are based on the directors’ best knowledge of current events and actions, actual results may differ.

The areas involving a higher degree of judgment or complexity, or areas where assumptions and

estimates are significant to the financial statements, are disclosed in Note 2.

(i) Standards, amendments to published standards and interpretations that are effective

The new accounting standards, amendments to published standards and IC Interpretations, if applicable, to existing standards effective for the Company’s financial period beginning on or after 1 January 2006 are as follows:

FRS 1 First-time Adoption of Financial Reporting Standards FRS 3 Business Combinations

FRS 5 Non-current Assets held for Sale and Presentation of Discontinued Operations FRS 101 Presentation of Financial Statements

FRS 102 Inventories

FRS 108 Accounting Policies, Changes in Accounting Estimates and Errors FRS 110 Events After the Balance Sheet Date

FRS 116 Property, Plant and Equipment

FRS 121 The Effect of Changes in Foreign Exchange Rate FRS 127 Consolidated and Separate Financial Statements FRS 128 Investments in Associates

FRS 132 Financial Instruments : Disclosure and Presentation FRS 133 Earnings Per Share

FRS 136 Impairment of Assets

FRS 138 Intangibles Assets



�. AccountingPolicies(Cont’d)

(a) BasisOfPreparation(Cont’d)

All changes in accounting policies have been made in accordance with the transition provisions in the respective standards, amendments to published standards and interpretations. All standards, amendments and interpretations adopted by the Group require retrospective application other than:

FRS 3 - prospectively for business combinations for which the agreement date is or on after 1

January 2006.

FRS 116 - the exchange of property, plant and equipment is accounted at fair value prospectively.

(ii) Standards, amendments to published standards and interpretations to existing standards that are not yet effective and have not been early adopted

The new standards, amendments to published standards and interpretations that are mandatory for the Group’s financial periods beginning on or after 1 January 2007 or later periods, but which the Group has not early adopted, are as follows:

FRS 117 Leases (effective for accounting periods beginning on or after 1 October 2006). This standard requires the classification of leasehold land as prepaid lease payments. The Group will apply this standard from financial periods beginning on 1 January 2007.

FRS 124 Related Party Disclosures (effective for accounting periods beginning on or after 1 October 2006). This standard will affect the identification of related parties and some other related party disclosures. The Group will apply this standard from financial periods beginning 1 January 2007.

FRS 139 Financial Instruments : Recognition and Measurement (effective date yet to be

determined by Malaysian Accounting Standards Board). This new standard establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. Hedge accounting is permitted only under strict circumstances. The Group will apply this standard when effective.

(b) Property,PlantAndEquipment

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment

losses. Cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate assets, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company 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 year in which they are incurred.




(b) Property,PlantAndEquipment(Cont’d) Freehold land is not depreciated as it has an infinite life. Other property, plant and equipment are

depreciated on a straight line basis to write off the cost of plant and equipment over their estimated useful lives to their residual value at the following annual rates:

Factory shop 2% Building 2% Renovation 10% Motor vehicles 10% - 20% Plant and machineries 20% - 33% Other assets 10% - 15% Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each balance

sheet date. (c) Subsidiaries Subsidiaries are those companies in which the Group has power to exercise control over the financial and

operating policies so as to obtain benefits from their activities, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.

Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results of subsidiaries acquired or disposed of are included from the date of acquisition up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements. The difference between the cost of acquisition over the Group’s share of the fair value of the identifiable net assets of the subsidiary acquired at the date of acquisition is reflected as goodwill or reserve on consolidation.

Intra-group transactions, balances and unrealised gains on transactions are eliminated. Unrealised

losses are also eliminated unless cost cannot be recovered. (d) Associates Associates are enterprises in which the Group exercises significant influence, but which it does not

control. Significant influence is the power to participate in the financial and operating policy decisions of the associates but not the power to exercise control over those policies. Investments in associates are accounted for in the consolidated financial statements by the equity method of accounting.

Equity accounting involves recognising the Group’s share of the post acquisition results of associates in the income statement and its share of post acquisition movements in reserves is recognised in reserve. The cumulative post acquisition movements are adjusted against the cost of the investment and includes goodwill on acquisition (net of accumulated amortisation). Equity accounting is discontinued when the carrying amount of the investment in an associate reaches zero, unless the Group has incurred obligations or made payments on behalf oftheassociate.



�. AccountingPolicies(Cont’d) (d) Associates(Cont’d)

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence on impairment of the asset transferred. Where necessary, in applying the equity method, adjustments are made to the financial statements of associates to ensure consistency of accounting policies with those of the Group.

(e) IntangibleAssets

(i) Research and development

Research expenditure is recognised as an expense when incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when the following criteria are fulfilled:

• it is technically feasible to complete the intangible asset so that it will be available for use or sale;

• management intends to complete the intangible asset and use or sell it;

• there is an ability to use or sell the intangible asset;

• it can be demonstrated how the intangible asset will generate probable future economic

benefits; • adequate technical, financial and other resources to complete the development and to use

or sell the intangible asset are available; and

• the expenditure attributable to the intangible asset during its development can be reliably measured.

Other development expenditures that do not meet these criteria are recognised as an expense

when incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use on a straight line basis over its useful life, not exceeding five years.

Development assets are tested for impairment annually, in accordance with FRS 136.

(ii) Goodwill Goodwill represents the excess of the cost of acquisition of subsidiaries over the fair value of the

Group’s share of the identifiable net assets at the date of acquisition.

Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.




(f) Impairmentofassets

The carrying amounts of the Group’s and of the Company’s assets are reviewed at each balance sheet date to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, impairment is measured by comparing the carrying values of the assets with their recoverable amounts. Recoverable amount is the higher of net selling price and value in use, which is measured by reference to discounted future cash flows. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating units to which the assets belong.

The impairment loss is charged to the income statement and any subsequent increase in recoverable amount is recognised in the income statement.

(g) FinanceLease

Leases of plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases.

Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance charge is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Property, plant and equipment acquired under finance leases is depreciated over the estimated useful life of the asset. Where there is no reasonable certainty that the ownership will be transferred to the Company, the asset is depreciated over the shorter of the lease term and its estimated useful life.

(h) Inventories Inventories are valued at the lower of cost and net realisable value determined on the first-in-first-out

basis. Net realisable value is the estimated selling price in the ordinary course of business, less the cost of completion and selling expenses.

(i) Debtors Trade and other debtors are carried at anticipated realisable value. Specific provisions are made for

debts which have been identified as bad or doubtful.

(j) Constructioncontracts

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that is probable will be recoverable and contract costs are recognised as expenses.




(j) Construction contracts (Cont’d)(j) Constructioncontracts(Cont’d)

When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised over the period of the contract as revenue and expenses respectively. The Company uses the percentage of completion method to determine the appropriate amount of revenue and cost to recognise in a given period; the stage of completion is measured by reference to contract costs incurred for work performed to date bear to the estimated total costs for the contract. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

The aggregate of the costs incurred and the profit or loss recognised in each contract is compared against the progress billings up to the year end. Where costs incurred and recognised profit (less recognised losses) exceed progress billings, the balance is shown as amounts due from customers on construction contracts under current assets. When progress billings exceed costs incurred plus recognised profit (less recognised losses), the balance is shown as amounts due to customers on construction contracts under current liabilities.

(k) CashAndCashEquivalents

For the purposes of the cash flow statements, cash and cash equivalents comprise cash in hand, deposits held at call with banks, other short term, highly liquid investments with original maturities of three months or less and bank overdrafts. Bank overdrafts are included within borrowings in current liabilities on the balance sheet.

(l) ShareCapital Ordinary shares and non-redeemable preference shares with discretionary dividends are classified

as equity. Other shares are classified as equity or liability according to the economic substance of the particular instrument.

Distribution to holders of a financial instrument classified as an equity instrument is charged directly to

equity. (m) IncomeTaxes

Current tax expense is determined according to the tax laws of Malaysia and include all taxes based upon the taxable profits including real property gain taxes payable on disposal of properties, if any.

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

Deferred tax assets are recognised to the extent that it is probable the taxable profits will be available

against which the deductible temporary differences or unused tax losses can be utilised.

Tax rates enacted or substantively enacted by the balance sheet date are used to determine deferred tax.




(n) Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of

past events, when it is probable that an outflow of resources will be required to settle the obligation, and when a reliable estimate of the amount can be made.

(o) RevenueRecognition

Revenue is recognised upon delivery of goods, net of discounts and returns / upon rendering of services.

Revenues from construction contracts are recognised in accordance with Note 1 (j).

Other revenues earned are recognised as follows: • Gross dividend income from investment is recognised when the right to receive payment is

established. • Sales commission, management fee and administrative charges and interest income are recognised

as they accrue. Rental income is recognised on accrual basis in accordance with the substance of the rental agreement.

(p) CurrencyTranslation (i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using

the currency of the primary economic environment in which the entity operates (the “functional currency”). The financial statements are presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

(q) FinancialInstruments

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

A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise, a contractual right to exchange financial instruments with another enterprise under conditions that are potentially favourable, or an equity instrument of another enterprise.




(q) FinancialInstruments(Cont’d)

A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable.

The particular recognition methods adopted for financial instruments recognised on the balance sheet is disclosed in the individual accounting policy statements associated with each item.

(r) SegmentReporting

Segment reporting is presented for enhanced assessment of the Group’s risk and returns. Business segments provide products or services that are subject to risk and returns that are different from those of other business segments. Geographical segments provide products or services within a particular economic environment that is subject to risk and returns that are different from those components operating in other economic environments.

Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. Segment revenue, expense, assets and segment liabilities are determined before intragroup balances and intragroup transactions are eliminated as part of the consolidation process, except to the extent that such intragroup balances and transactions are between group enterprises within a single segment.

�. CriticalAccountingEstimatesAndJudgments

Estimates and judgment are continually evaluated by the directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have material impact to the Group’s results and financial position are tested for sensitivity to changes in the underlying parameters. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.

(a) Estimated Impairment Of Goodwill(a) EstimatedImpairmentOfGoodwill

The Group tests goodwill for impairment annually in accordance with its accounting policy. More regular

reviews are performed if events indicate that this is necessary. (b) DeferredTaxAssets

Deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. This involves judgment regarding the future financial performance of the particular entity in which the deferred tax asset has been recognised.



�. CriticalAccountingEstimatesAndJudgments(Cont’d)

(b) DeferredTaxAssets(Cont’d) If the projected growth rate applied in the profit projections had been lower by 10% from management’s

estimates as at 31 December 2006, there would be no deferred tax assets needed to be written down as an expense to the income statement.

(c) ConstructionContracts

The Group recognises contract revenue based on the percentage of completion method. The stage of completion is measured by reference to the contract costs incurred to date to the estimated total costs for the contract. Significant judgment is required in determining the stage of completion, the extent of the contract costs incurred, the estimated total contract revenue (for contracts other than fixed price contracts) and contracts costs, as well as the recoverability of the contracts. Total contract revenue also includes an estimation of the recoverable variation works that are recoverable from the customers. In making the judgment, the Group relied on the past experience and work of specialist.

If the estimated total contract revenue increase / decrease by 10% from management estimates, the Group revenue will increase / decrease by RM90,000 and RM90,000 respectively.

If the estimated total contract costs increase / decrease by 10% from management’s estimates, the Group revenue will decrease / increase by RM82,000 and RM100,000 respectively.

�. FinancialRiskManagement

(a) ObjectivesAndPolicies

The Group’s financial risk management framework whose principal objective is to minimise the Group exposure to risks and / or costs associated with the financing, investing and operating activities of the Group. The overall financial risk management objective is to ensure that the Company creates value for its shareholders.

The task of identifying and evaluating the key business risks is undertaken by the executive board members and executive management who will be responsible for the establishment and implementation of appropriate systems to manage these risks. Various risk management actions are taken depending on the assessment of the impact and likelihood of the risk.

(b) ForeignCurrencyRisk

The Group does not have significant foreign currency exposure to any effects of foreign currency

exchange rate fluctuations as at 31 December 2006.

The Group policy is to manage all its foreign financial assets and liabilities using the best available foreign currency exchange rates where applicable. Transactional exposures in currencies other than the entity’s functional currency, if any, are kept at a minimal level.



Group Company


�. FinancialRiskManagement(Cont’d)

(c) InterestRateRisk

The Group’s income and operating cash flows are substantially independent of changes in market interest rates. Interest rate exposure arises from the Group’s borrowings, and is managed through the use of fixed and floating rate debts.

(d) MarketRisk

For key product purchases, the Company establishes floating and fixed price levels that the Company considers acceptable and enters physical supply or derivative agreements, where necessary, to achieve these levels.

(e) FairValues

The carrying amounts of financial assets and liabilities of the Group and Company at the balance sheet date approximated their fair values except as set out below:

Carrying Fair Carrying Fairamount value amount value

RM RM RM RM

Financialassets Investments in subsidiaries - - 3,379,006 ^

Investments in associates - β - β

Amount due from subsidiaries - - 12,352,366 *

Financialliabilities

Amount due to subsidiaries - - 98,516 *

Finance lease liabilities 1,131,741 422,565 - -

Term loan 1 4,219,307 β - -

Term loan 2 471,515 # - -

Term loan 3 162,333 # - -



�. FinancialRiskManagement(Cont’d)

(e) FairValues(Cont’d)

^ It was not practicable within the constraints of timeliness and cost to estimate reliably the fair value of the shares in subsidiaries. At the balance sheet date, the net tangible assets reported by the subsidiaries was higher than the carrying amount above.

β It was not practicable within the constraints of cost to estimate these fair values reliably.

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

# The carrying amount of the Group’s term loans approximate the fair value due principally to a floating interest rate implicit in the loans. The Company believes that the carrying amount at balance sheet date closely resembles fair value of similar type of borrowings, quoted at a floating rate.

The methods and assumptions used to estimate the fair values of the following classes of financial

instruments are provided below :-

(i) Cash and cash equivalents, trade and other receivables, and trade and other payables

The carrying amounts approximate fair values due to the relatively short term maturity of these financial instruments.

(ii) Finance lease liabilities The fair value of finance lease liabilities is estimated using the discounted cash flow analysis based

on current incremental lending rates for similar types of lending and borrowing arrangements.

(f) CreditRisk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause

the other party to incur a financial loss. It is controlled by the application of credit monitoring procedures. Credit risks are minimised and monitored via strictly limiting the Group’s trading parties to business partners with high creditworthiness. The Group has no significant concentrations of credit risk.

(g) LiquidityAndCashFlowRisks

The Group actively manages its debts maturity profile, operating cash flows and the availability of

funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash equivalents to meet its working capital requirements.



�. Revenue

�006 �00� �006 �00�RM RM RM RM

Invoiced value of goods sold and construction contracts 27,499,057 26,847,059 - -

Rendering of management services to subsidiaries - - 600,000 -

Dividends - subsidiaries - - 5,998,396 -

27,499,057 26,847,059 6,598,396 -

�. OtherOperatingIncome

�006 �00� �006 �00�RM RM RM RM

Bad debts recovered 14,110 17,386 - -

Labour and installation charges 19,700 - - -

Interest income 217,064 157,762 98,290 137,288

Net gain in foreign exchange 103,568 - - -

Rental income 14,000 - - -

Gain on disposals of plant and equipment 17,639 163,200 - -

Sundry income 11,156 600 - -

397,237 338,948 98,290 137,288

6. OperatingExpenses

�006 �00� �006 �00�RM RM RM RM

Changes in inventories of finished goods (1,509,165) (166,799) - -

Purchase of raw materials, trading goods, consumables used and construction cost 20,071,873 19,024,762 - -

Direct cost 1,411,426 895,936 - -

Employee benefit expenses 3,004,478 2,946,225 514,406 -

Depreciation 385,514 283,931 474 -

Other operating expenses 2,202,560 1,784,988 200,248 79,244

25,566,686 24,769,043 715,128 79,244

Group Company

Group Company

Group Company



7. FinanceCost

�006 �00� �006 �00�RM RM RM RM

Trust receipts and bankers’ acceptance charges 62,997 8,656 - -

Bank interest 162,221 85,320 - -

Finance lease interest 25,077 31,720 - -

Term loan interest 154,341 13,305 - -

404,636 139,001 - -

8. ProfitForTheYear

The following amounts have been charged/ (credited) in arriving at profit for the year:

�006 �00� �006 �00�RM RM RM RM

Auditors’ remuneration - Current year 57,700 41,300 7,000 4,000 - Under provision in prior years - 1,958 - -

Amortisation of goodwill - 22,265 - -

Bad debts recovered (14,110) (17,386) - -

Gain on disposals of plant and equipment (17,639) (163,200) - -

Loss on disposals of plant and equipment 753 - - -

Depreciation of property, plant and equipment 385,514 283,931 474 -

Impairment losses - Investment in subsidiaries - - 130,000 40,000 - Goodwill 95,888 - - -

Net (gain) / loss in foreign exchange (103,568) 4,401 - -

Warehouse, office and staff accommodation rental payable 370,500 466,000 25,000 -

Provision for royalty expenses 41,775 44,570 - -

Plant and equipment written off 496 2,501 - -

Group Company

Group Company



Group Company

�. Directors’Remuneration

The directors of the Company in office during the year were as follows:

NonExecutiveDirectors Tan Sri Dato’ Mohamad Noordin Bin Hassan Md Hilmi Bin Datuk Hj Md Noor Shinichi Yamamoto Looi Kem Loong Wong Peng Yew (Redesignated from executive director from 25 August 2006) Executivedirectors Lim Foo Seng Sim Keng Siong

The aggregate amount of emoluments receivable by directors of the Company during the year were as

follows:

�006 �00� �006 �00�RM RM RM RM

Non-executivedirectors: - Fees 60,833 44,178 60,833 44,178

Executivedirectors: - Salaries and other emoluments 448,962 461,535 132,000 - - Defined contribution plan 39,900 33,654 15,840 - - Other employee benefits 18,992 - - -

568,687 539,367 208,673 44,178

The number of directors of the Company whose total remuneration for the financial year ended 31 December 2006 fell within the following bands is analysed below:

ExecutiveDirectors: NumberofDirectors Below RM50,000 - RM50,001 - RM 100,000 - RM100,001 - RM200,000 1 RM 200,000 - RM300,000 1

Non-executivedirectors:Below RM50,000 5

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Group Company


Group Company

�0. Auditors’Remuneration

�006 �00� �006 �00�RM RM RM RM

Yong&Leonardandtheiraffiliates Statutory audit (Note 8) 35,200 20,000 7,000 4,000

Fees for other services: - review of statement of internal control 1,800 - 1,800 - - tax advisory and compliance work 9,200 - 1,000 -

46,200 20,000 9,800 4,000

��. Taxation

�006 �00� �006 �00�RM RM RM RM

Malaysian Income Tax - Current year’s provision 489,824 628,418 1,614,406 38,789 - Under / (over) provision in prior years 23,072 (51,163) (2,270) 1,264 - Deferred tax (Notes 17 and 25) Origination and reversal of temporary differences (20,220) (20,994) - -

492,676 556,261 1,612,136 40,053

Tax saving as a result of utilisation of current yearcapital allowances for which credit is recognised during the year 56,089 902 - -

6�r U B Y Q U E S T B E r H A D A N N U A L R E P O R T - 2 0 0 6


Group Company

��. Taxation(Cont’d)

The explanation of the relationship between tax expense and profit from ordinary activities before tax is as follows:

�006 �00� �006 �00�RM RM RM RM

Numerical reconciliation between tax expenseand the product of accounting profit multipliedby the Malaysian tax rate

Profit from ordinary activities before tax 1,925,172 2,272,132 5,851,558 18,044

Tax calculated at the Malaysian tax rate of 28% (2005: 28%) 539,048 636,197 1,638,437 5,052

Tax effect of : - expenses not deductible for tax purposes 251,521 81,959 56,992 33,737 - income not subject to tax (90,955) (21,271) (81,155) - - utilisation of previously unrecognised deferred tax assets (53,464) (649) - -

- deferred tax assets not recognised during the year - 38,391 132 - - deferred tax liabilities not recognised during the year (8,246) - - - - overprovision of deferred tax assets in prior years (2,269) (2) - - - reduction of tax as a result of 8% tax saving on the first RM500,000 of chargeable income for companies with a paid up capital of RM2,500,000 and below (166,031) (127,201) - - - under / (over) provision in prior years 23,072 (51,163) (2,270) 1,264

492,676 556,261 1,612,136 40,053

Certain subsidiary companies being Malaysian resident companies with paid-up share capital of less than RM2.5 million have applied income tax rates of 20% on the first RM500,000 and 28% on the excess of RM500,000. Income tax expense for the Company is calculated based on the Malaysian statutory income tax rate of 28% of the estimated taxable profit for the financial year. Subject to the agreement with the tax authorities, the Company has sufficient credit under Section 108 of the Income Tax Act, 1967 to frank its entire retained profits if paid out as dividends. On 21 July 2004, one of the subsidiaries obtained pioneer status on its principal activity and 70% of its pioneer income is exempted from taxation for the period from 1 March 2003 to 29 February 2008.

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��. EarningsPerShare

Basic earnings per share of the Group is calculated by dividing the profit attributable to ordinary equity holders of the Company for the year by the weighted average number of ordinary shares in issue during the year.

Group�006 �00�

RM RM

Profit attributable to ordinary equity holders of the Company 1,432,492 1,715,871

Weighted average number of ordinary shares in issue 97,980,000 86,862,000

Basic earnings per share (sen) 1.46 1.98

There is no potential ordinary share in issue as at balance sheet date and therefore, no diluted earnings per share is presented.

��. Property,PlantandEquipment

Furniture, Freehold fittingsand

land& other Toolsand Motorfactoryshop equipment equipment vehicles Total

RM RM RM RM RMGroup

Cost

At 1 January 2006 295,663 848,772 432,823 1,153,272 2,730,530

Additions 6,370,247 1,794,744 22,108 - 8,187,099

Write off - (974) - - (974)

Disposals - (26,100) - (131,202) (157,302)

At 31 December 2006 6,665,910 2,616,442 454,931 1,022,070 10,759,353

Accumulateddepreciation

At 1 January 2006 25,127 522,853 275,932 489,231 1,313,143

Charge for the year 54,156 128,832 45,656 156,870 385,514

Write off - (478) - - (478)

Disposals - (15,659) - (118,027) (133,686)

At 31 December 2006 79,283 635,548 321,588 528,074 1,564,493

Netbookvalue

At 31 December 2006 6,586,627 1,980,894 133,343 493,996 9,194,860

At 31 December 2005 270,536 325,919 156,891 664,041 1,417,387

Depreciationchargefor�00� 4,435 73,206 54,927 151,363 283,931



��. PlantandEquipment

Office Computer Equipment Total RM RM RM

Company Cost At 1 January 2006 - - - Additions 6,490 3,050 9,540

At 31 December 2006 6,490 3,050 9,540

Accumulateddepreciation At 1 January 2006 - - -

Charge for the year 162 312 474

At 31 December 2006 162 312 474

Netbookvalue At 31 December 2006 6,328 2,738 9,066

Group�006 �00�

RM RMMotor vehicles under finance lease: - Additions during the year - 419,676 - Net book value at end of year 493,993 662,815

Machinery under finance lease: - Additions during the year 900,000 - - Net book value at end of year 888,750 -

The freehold land and factory shop of the Group with a net book value of RM6,586,627 (2005: RM270,536) have been pledged as security for banking facilities



��. IntangibleAssets

Group�006 �00�

RM RM

Developmentcosts

At beginning of year - -

Additions 69,360 -

At end of year 69,360 -

Development costs principally comprise internally generated expenditure on development costs on major projects where it is reasonably anticipated that the costs will be recovered through future commercial activity.

��. InvestmentsinSubsidiaries

Company �006 �00�

RM RM (Restated)

Investment in subsidiaries at cost - unquoted shares 3,509,006 3,009,008

Accumulated impairment lossesccumulated impairment losses (130,000) -

Total 3,379,006 3,009,008

Unquoted shares, at cost At beginning of year 3,009,008 863,002

Add: Additional investments in subsidiaries 499,998 2,126,006

Transfer from “Investments in Associates” (Note 16) - 20,000

Less: Impairment of investment in subsidiary (130,000) -

At end of year 3,379,006 3,009,008



��. InvestmentsinSubsidiaries(Cont’d)

The particulars of the subsidiaries, all of which are incorporated in Malaysia, are as follows:-

Equity interest

NameofCompany �006 �00� Principalactivities

Vokes Air (M) Sdn. Bhd.* 100% 100% Distribution and manufacturing of air filters.

Quest Equipment and 100% 100% Supply of filters and installation of cleanroom systems. Services Sdn. Bhd.*

Quest Technology 100% 100% Trading and installation of filters and cleanroom systems, Sdn. Bhd.* and providing technical and management services.

Quest Liquid 100% 100% Selling, installation, maintenance and servicing of water Separation Sdn. Bhd.* treatment equipment and provision of water treatment services.

Quest Filter Sdn. Bhd.* 100% 100% Manufacturing and trading of water and air filters.

Quest System and 100% 100% Selling, installation, maintenance and servicing of water Engineering Sdn. Bhd. * treatment equipment and sale of cleanroom filters and equipment.

Envair Technology 100% 100% Installation of cleanroom and sale of cleanroom filters and Sdn. Bhd.** equipment. Envair MECS Engineering 100% 100% Mechanical and electrical systems for air filtration. Sdn. Bhd.**

Envair MECS Engineering 100% 100% Mechanical, electrical contracting services and (Penang) Sdn. Bhd. ** engineering works.

* - audited by Yong & Leonard. ** - not audited by Yong & Leonard.

The amount due from / (to) subsidiaries is unsecured, interest free and has no fixed terms of repayment.



Group Company

�6. InvestmentsinAssociates

�006 �00� �006 �00�RM RM RM RM

Non-CurrentAssets Unquoted shares, at cost 40,000 60,000 40,000 60,000 Add: Transfer to “Investments in Subsidiaries” (Note 15) - (20,000) - (20,000)

40,000 40,000 40,000 40,000

Less: Share of post-acquisition losses (34,781) (34,781) - -

5,219 5,219 40,000 40,000

Less: Provision for diminution in value (5,219) (5,219) (40,000) (40,000) - - - -

The particulars of the associate, which is incorporated in Malaysia are as follows:-

Equityinterest Nameofcompany �006 �00� Principalactivities

Sebquest Technology Sdn. Bhd. ** 40% 40% Inactive

** - In Members’ Voluntary Winding up - not audited by Yong & Leonard

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�6. InvestmentsinAssociates(Cont’d)

Group

�006 �00�RM RM

Share of net assets are represented as follows:

Share of net assets other than goodwill of associates 5,219 5,219

Goodwill on acquisition, net of amortisation - -

5,219 5,219The Group’s share of the assets and liabilitiesof the associates is as follows:

Current assets 5,569 5,569

Current liabilities (350) (350)

5,219 5,219 The Group’s share of the revenue and expenses of the associates is as follows:

Revenue - -

Other operating income - -

Expenses - (612)

Loss from ordinary activities - (612)

Amortisation of goodwill arising from acquisition of associates - -

- (612)

The above equity method of accounting had been applied using the unaudited financial statements of Sebquest Technology Sdn. Bhd.

The associate went into members’ voluntary winding up during the year.

�7. DeferredTaxAssets

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority. The following amount, determined after appropriate offsetting, if any, is shown in the balance sheet:

Group�006 �00�RM RM

Deferred tax assets in respect of:- - Provision for royalty fee 51,271 39,573

- Property, plant and equipment (12,534) (12,167)

- Others 66,183 10,663

104,920 38,069 At beginning of year Credited to income statement (Note 11) 38,069 19,127

- Provisions for royalty expenses 11,697 11,315

- Property, plant and equipment (13) (3,036)

- Others 55,167 10,663

- At end of year 104,920 38,069



�7. DeferredTaxAssets(Cont’d)

The recognition of the deferred tax assets is dependent of future taxable profits in excess of profits arising from the reversal of existing taxable temporary differences. The evidence used to support this recognition is the management’s projected plan, which shows that it is probable the deferred tax assets would be realised in future years.

��. GoodwillonConsolidation

Group �006 �00�

RM RMNetbookvalue

- At beginning of year 175,703 91,370

- Additions - 106,598

- Amortisation - (22,265)

- Provision for impairment (95,888) -

- At end of year 79,815 175,703

Previously, goodwill arising on the acquisition of subsidiaries is systematically amortised on a straight-line basis over a period of 10 years. Upon adoption of FRS 3 and FRS 127, the Group has discontinued amortising such goodwill and has tested the entire carrying amount of investment in subsidiaries for impairment in accordance with the requirement of FRS 136. Because the change in this accounting policy has been applied prospectively, the change has had no impact on amounts reported in prior years.

��. Inventories

Group �006 �00�

RM RM

Raw materials 1,854,226 1,135,074

Finished goods 2,942,147 1,432,982

Goods in transit 508,330 -

5,304,703 2,568,056

�0. Tradereceivables

Group �006 �00�

RM RM

Trade receivables 15,540,794 17,432,872

Less: Provision for doubtful debts (68,910) (19,465)

15,471,884 17,413,407

Included in the trade receivables of the Group is an amount of RM644,425 (2005: Nil) owing from project customers for more than the allowed credit term. However, the directors are in the opinion that this amount is recoverable as they have received positive feedback from the ultimate owner of the project that the amount outstanding will be settled.


Group Company

Group Company


��. Placementwithlicensedbank

�006 �00� �006 �00�RM RM RM RM

Deposits with licensed banks 2,541,569 7,639,808 1,250,000 6,000,000

Capital guaranteed placement with financial institution 1,250,000 - - -

Negotiable of Deposits Repurchase Order Agreement 400,000 200,000 400,000 -

4,191,569 7,839,808 1,650,000 6,000,000

The weighted average interest rates during the financial year and the average maturities of fixed deposits as at 31 December 2006 were as follows:-

Weighted Average Weighted Average

average maturities average maturitiesinterestrate days interestrate days

Fixed deposits 4.82% 256 3.00% 46

Capital guaranteed placement with financial institution 8.00% 365 - -

Negotiable of Deposits Repurchase Order Agreement - - 1.80% 16

Group The placement with financial institution is capital guaranteed but the annual return for the first year is fixed at 8.00% .The annual returns for the subsequent years are fully variable and not guaranteed.

Included in placement with licensed banks is an amount of RM2,541,569 (2005: RM1,639,808) pledged to banks as securities for bank guarantee and other credit facilities.



��. Amountduetocustomeroncontract

Group

�006 �00�RM RM

Cost of construction contracts 868,055 -

Progressive profit 37,359 -

905,414 -

Less: Progressive billings (905,414) -

Amount due from customer on contracts - -

��. ProvisionforRoyaltyExpenses

Group�006 �00�

RM RM

At beginning of year 141,335 100,921

Add: Provision during the year 41,775 40,414

At end of year 183,110 141,335

A provision has been recognised for the expected royalty expenses to be paid based on revenue of one of the subsidiaries.



��. Borrowings(secured)

Group�006 �00�

RM RM

Current

- Bank overdrafts 2,378,529 2,044,127

- Bankers’ acceptances and bills payable 1,045,882 1,095,031

- Finance lease liabilities 299,226 117,485

- Term loans 188,868 11,394

1,533,976 1,223,910

3,912,505 3,268,037

Non-current

- Finance lease liabilities 832,515 355,804

- Term loans 4,664,287 161,495

5,496,802 517,.299

Bankers’acceptances,billspayable,bankoverdraftsandtermloans

These are secured as follows:

(a) Legal charge over the subsidiary’s land and building;

(b) Pledge of fixed deposit receipts; and

(c) Joint and several guarantee by certain directors of the relevant subsidiaries.

Group�006 �00�

RM RMFinanceleaseliabilities

- Current 299,226 117,485

- Non current 832,515 355,804

1,131,741 473,289 Minimum finance lease payments

- not later than 1 year 345,795 137,835

- later than 1 year and not later than 2 years 394,638 124,678

- later than 2 years and not later than 5 years 547,872 235,686

- later than 5 years 19,393 54,817

1,307,698 553,016

Future finance charges (175,957) (79,727)

Present value of finance lease liabilities 1,131,741 473,289

Present value of finance lease liabilities are repayable:



- later than 2 years and not later than 5 years 528,295 202,757

- later than 5 years 16,428 46,428

1,131,741 473,289



�� Borrowings(secured)(Cont’d)

Finance lease liabilities are effectively secured as the rights to the relevant assets revert to the creditors in the event of default.

Group�006 �00�

RM RM

Termloan

Term loan are repayable:



- later than 2 years but not later than 5 years 585,174 42,235

- later than 5 years 3,858,021 107,040

4,853,155 172,889

Current 188,868 11,394

Non Current 4,664,287 161,495

4,853,155 172,889

Interest % %

Average effective interest rates:

Term loan 1 Fixed at 3.48 -

Term loan 2 BLR - 3.75 -

Term loan 3 7.25 to 8.25 7.25

Bankers’ acceptances 5.25 4.17

Bank overdraft 1 Fixed at 5.00 Fixed at 5.00

Bank overdraft 2 Fixed at 5.00 Fixed at 5.00

Bank overdraft 3 BLR + 2.00 BLR + 2.00



Finance lease 2.38 to 9.97 5.27 to 10.46

��. DeferredTaxLiabilities

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority. The following amount, determined after appropriate offsetting, if any, is shown in the balance sheet:

Group�006 �00�

RM RMDeferred tax liabilities in respect of

- Property, plant and equipment 62,042 15,411

At beginning of year 15,411 9,807

Add: Acquisition of subsidiaries - 7,656

Transfer from “Taxation” (Note 11) 46,631 (2,052)

At end of year 62,042 15,411


�006 �00�


�6. ShareCapital-GroupandCompany

Number RM Number RM

Authorised OrdinarysharesofRM�.00each

At beginning of year\ - - 433,334 433,334

Created during the year - - 24,500,000 24,500,000

Conversion of convertible redeemable preference shares to ordinary shares - - 66,666 66,666

- - 25,000,000 25,000,000

Share split by subdividing every one ordinaryshares of RM1.00 each into ten new ordinaryshares of RM0.10 each - - 25,000,000 25,000,000

At end of year - - - -

OrdinarysharesofRM0.�0each

At beginning of year 250,000,000 25,000,000 - -

Share split by subdividing every one ordinary shares of RM1.00 each into ten new ordinary shares of RM0.10 each - - 250,000,000 25,000,000

At end of year 250,000,000 25,000,000 250,000,000 25,000,000

ConvertibleredeemablepreferencesharesofRM�.00each

At beginning of year - - 66,666 66,666

Converted to ordinary shares - - (66,666) (66,666)


Total at end of year 250,000,000 25,000,000 250,000,000 25,000,000

Issuedandfullypaid OrdinarysharesofRM�.00each


Issued during the year: - - - -

- acquisition of subsidiary - - 76,567 76,567

- converted from convertible redeemable preference sharespreference shares - - 66,666 66,666

- bonus issue - - 6,688,755 6,688,755

- - 7,180,000 7,180,000 Share split by subdividing every one ordinaryshares of RM1.00 each into ten new ordinaryshares of RM0.10 each - - 7,180,000 7,180,000

- - - -



�006 �00�

�6. ShareCapital-GroupandCompany(Cont’d)

Number RM Number RMIssuedandfullypaid(cont’d)

OrdinarysharesofRM0.�0each

At beginning of year 97,980,000 9,798,000 - -

Share split by subdividing every one ordinaryshares of RM1.00 each into ten new ordinaryshares of RM0.10 each - - 71,800,000 7,180,000

- public issue - - 26,180,000 2,618,000

At end of year 97,980,000 9,798,000 97,980,000 9,798,000

ConvertibleredeemablepreferencesharesofRM�.00each


Conversion to ordinary shares - - (66,666) (66,666)


Total at end of year 97,980,000 9,798,000 97,980,000 9,798,000

Convertibleredeemablepreferenceshares On 5 April 2004, the Company issued 66,666 convertible redeemable preference shares with nominal value of RM1.00 each at RM30.00 each by way of cash. This gives rise to a premium of RM29.00 each totaling RM1,933,314. The main features of the convertible redeemable preference shares are as follows:

(a) The convertible redeemable preference shares carry a fixed cumulative preferential nett dividend at the rate of 3% per annum payable on 5 April each year.

(b) The convertible redeemable preference shares will not be entitled to participate in profits other than the preferential dividend.

(c) The convertible redeemable preference shares rank in priority to all other shares of the Company with regard to dividend and return of capital and confer upon the holders the right to vote at the Company’s general meetings for the purpose of reducing the capital or winding up or where a proposal to be submitted to the meeting directly affects the rights attached to the preference shares.

(d) The convertible redeemable preference shares may be redeemed at any time after 12 months or before the expiry of 12 months provided that 1 month’s notice in writing has been given to the holders.

(e) The convertible redeemable preference shares are convertible into new ordinary shares of the Company upon the Company having obtained the approvals from the relevant authorities for listing of the Company on MESDAQ. The new ordinary shares allotted and issued upon conversion of the convertible redeemable preference shares will rank pari passu in all respects with the existing ordinary shares of the Company. The conversion was completed on 6 January 2005.


Group Company


�6. ShareCapital-GroupandCompany(Cont’d)

EmployeeShareOptionScheme(“ESOS”)

The Company received approval from the Securities Commission for an ESOS for the benefit of eligible employees and directors of the Group for the new ordinary shares of RM0.10 each in the Company for a period of 5 years.

The ESOS had been implemented on 8 June 2005. As at 31 December 2006, there is no offer made by the Company.

The main features of the ESOS are as follows:

(a) The total number of ordinary shares to be issued by the Company under the ESOS shall not exceed 20% of the total issued and paid-up ordinary shares of the Company; such that not more than fifty per cent (50%) of the new shares available under the ESOS should be allocated, in aggregate, to the Senior Management of the Company;

(b) Not more than ten per cent (10%) of the new shares available under the ESOS should be allocated to any one Eligible Person, who either singly or collectively through persons connected with such Eligible Person, holds twenty per cent (20%) or more of the issued and paid-up capital of the Company;

(c) The option price under the ESOS shall not be less than initial public offer price or based on the five (5) day weighted average market price of the shares immediately preceding the Offer Date of the Option, with a discount of not more than ten per centum (10%), or at the par value of the shares, whichever is higher;

(d) The options granted are exercisable on the first five (5) Market Days of every calendar month or such other date, which may be determined by Options Committee from time to time; and

(e) The new ordinary shares allotted and issued under the scheme ranked pari passu in all respect with the existing issued and fully paid-up ordinary shares of RM0.10 each in the Company.

�7. SharePremium

�006 �00� �006 �00�RM RM RM RM

At beginning of year 7,397,536 1,933,314 7,397,536 1,933,314

Acquisition of subsidiaries - 1,939,439 - 1,939,439

7,397,536 3,872,753 7,397,536 3,872,753

Bonus issue and share split - (2,440,804) - (2,440,804)

7,397,536 1,431,949 7,397,536 1,431,949

Public issue at premium - 7,330,400 - 7,330,400

7,397,536 8,762,349 7,397,536 8,762,349 Less : Listing expenses charged against share premium account - (1,364,813) - (1,364,813)

At end of year 7,397,536 7,397,536 7,397,536 7,397,536


Group Company


��. InvestingActivities

�006 �00� �006 �00�RM RM RM RM

Purchase of property, plant and equipment * (1,374,499) (234,717) (9,540) -

Proceeds from disposal of property, plant and equipment 40,502 223,000 - -

Intangible assets expenditures (69,360) - - -

Additions of fixed deposits pledged to financial institution (901,761) (821,908) - -

Additional investment in subsidiaries (Note below) - (704,556) (499,998) (110,000)

Net cash used in investing activities (2,305,118) (1,538,181) (509,538) (110,000)

Purchase of property, plant and equipment *

Total cost of property, plant and equipment 8,187,099 644,717 (9,540) -

Less: Financed by finance lease arrangements (800,000) (410,000) - - Financed by term loan creditor (4,850,000) - - - Capitalisation of prepayments (1,162,600) - - -

Cash used 1,374,499 234,717 (9,540) -

Additionalinvestmentinsubsidiaries

Total purchase consideration 499,998 2,126,006

Acquisition of subsidiaries by share issuance - (2,016,006)

Cash used 499,998 110,000

��. FinancingActivities

Group Company �006 �00� �006 �00� RM RM RM RM

(Repayment) / drawdown ofbankers’ acceptances (49,149) 152,031 - -

Repayment of finance lease liabilities (166,625) (210,359) - -

Repayment of term loan (295,589) (23,929) - -

Payment of listing expenses (39,375) (974,485) - (974,485)

Issue of ordinary shares - 9,948,400 - 9,948,400

Net cash (used in)/generated from financing activities (550,738) 8,891,658 - 8,973,915

77r U B Y Q U E S T B E r H A D A N N U A L R E P O R T - 2 0 0 6


�0. CashandCashEquivalents


Fixed deposits with licensed banks 3,791,569 7,639,808 1,250,000 6,000,000

Less: Fixed deposits pledged to financial institution (2,541,569) (1,639,808) - -

1,250,000 6,000,000 1,250,000 6,000,000

Short term unquoted investment, at cost 400,000 200,000 400,000 -

Cash and bank balances 1,337,932 1,187,304 11,734 6,202

Bank overdrafts (2,378,529) (2,044,127) - -

609,403 5,343,177 1,661,734 6,006,202

��. ContingentLiabilities At 31 December 2006, the Company had contingent liabilities in respect of a corporate guarantee issued to financial institutions amounting to RM15,950,000 (2005: 4,515,470) for banking facilities extended to certain subsidiaries companies. At 31 December 2006, the Company had contingent liabilities in respect of corporate guarantees issued to suppliers of certain subsidiaries in supplier agreements to supply product to the subsidiaries.

��. CapitalCommitment Capital expenditure not provided for the financial statements are as follows:


Authorised and contracted for - 4,617,000 - -

Analysed as follows: - Property, plant and equipment - 4,617,000 - -



��. ChangesinAccountingPolicies

The list of new accounting standards, amendments to published standards and interpretations on existing standards that are effective for the Company’s financial year beginning on or after 1 January 2006 is set out in Note 1(a)(i).

(a) Irrelevantorimmaterialeffectonfinancialstatements

The adoption of FRS 1, 5, 102, 108, 110, 116, 128, 131,132, 133 and ICs did not have a material impact

on the financial statements of the Company. In summary:

(i) FRS 1 is not relevant to the Company’s operations

(ii) FRS 5 requires the Company to continue to depreciate its property, plant and equipment where assets identified for disposal do not meet the criteria set out by that standard; previously, depreciation ceased when the Board has plans to sell the assets

(iii) FRS 102, 108, 110, 116, 121, 128, 131 and 132 had no material effect on the Company’s policies

(b) FRS�“BusinessCombinations”,FRS��6“ImpairmentofAssets”andFRS��“IntangibleAssets”

Goodwill The adoption of FRS 3, 136 and 138 resulted in a change in the accounting policy for goodwill

prospectively from 1 January 2006

Until 31 December 2005, goodwill was amortised on a straight line basis over a period of 10 years and assessed for an indication of impairment at each balance sheet date.

In accordance with the provision of FRS 3:

(i) the Group ceased amortisation of goodwill from 1 January 2006

(ii) accumulated amortisation as at 31 December 2005 has been eliminated with a corresponding decrease in the cost of goodwill;

(iii) from the period ended 31 December 2006 onwards, goodwill is stated at cost less accumulated impairment, and is tested annually for impairment, as well as when there are indications of impairment.

As this standard is applied prospectively, there is no impact of this change in accounting policy on prior

year consolidated financial statements.

(c) FRS��7“ConsolidatedandSeparateFinancialStatements”

Previously, investments in subsidiaries were recorded at revalued amounts. FRS 127 now requires the investments in subsidiaries to be accounted for either at cost or in accordance with FRS 139 “Financial Instruments: Recognition and Measurement”. The Company now adopt a new accounting policy in accordance with FRS 127 and account investment in subsidiaries at cost. This change in accounting policy is applied retrospectively.



��. ChangesinAccountingPolicies(Cont’d)

(c) FRS��7“ConsolidatedandSeparateFinancialStatements”(Cont’d)

The effects of this change in accounting policy on the Company’s balance sheet for the current and prior years are shown in Notes 33 (d) below. There were no effects on the Company’s income statement nor the consolidated financial statements.

(d) Restatementofbalancesheetat��December�006andreservesat��December�00�

The following table discloses the adjustments that have been made in accordance with the transitional and new provisions of the respective FRSs to each of the line items in the Company’s balance sheet and reserve as at 31 December 2005.

Changesin

accountingpolicies-

Aspreviously FRS��7reported Note��(c) Asrestated

RM RM RMCompany At��December�00� Investment in subsidiaries 7,256,959 (4,247,951) 3,009,008

Retained profit / accumulated losses 73,462 (4,247,951) (4,174,489)

��. SegmentReporting

The Group is principally involved in four main business segments: Investments - Incorporating investment holding operations. Air filtration system - Sales of filters and installation of cleanroom system. Liquid filtration system - Selling, installation, maintenance and servicing of water treatment equipment. Manufacturing - Manufacturing of air filters.

All intersegment transactions are conducted on an arm’s-length basis under terms, conditions and prices not materially different from transactions with unrelated parties.



��. SegmentReporting(Cont’d)

(a) Primaryreportingformat-businesssegments Air Liquid filtration filtration

Investment system system Manufacturing Eliminations Group RM RM RM RM RM RM

Yearended��December�006

Revenue:

External revenue - 25,364,594 1,104,628 1,029,835 - 27,499,057

Intersegment revenue 6,598,396 3,576,861 1,994,899 592,115 (12,762,271) -

Total revenue 6,598,396 28,941,455 3,099,527 1,621,950 (12,762,271) 27,499,057

Results

Segment results 5,851,558 2,315,152 180,077 (52,695) (5,868,396) 2,425,696

Unallocated costs (95,888)

Profit from operations 2,329,808

Finance costs - (237,581) (7,365) (159,690) - (404,636)

Share of results of associates - - - - - -

Taxation (1,612,136) (485,706) (22,941) 29,711 1,598,396 (492,676)

Net profit for the year 1,432,496

At��December�006

Net assets: Segment assets 13,955,245 27,130,678 1,607,931 11,599,878 (16,512,778) 37,780,954

Investments in associates - - - - - -

Unallocated assets 218,075

Total assets 37,999,029

Segment liabilities 183,663 20,022,943 1,402,155 10,300,803 (16,512,778) 15,396,786

Unallocated liabilities 722,339

Total liabilities 16,119,125

Yearended��December�006

Other information:

Capital expenditure 9,540 92,347 6,638 8,078,574 - 8,187,099

Depreciation and amortisation 474 220,407 24,994 139,639 - 385,514

Other non-cash expenses - - 383 41,888 - 42,271




(a)Primaryreportingformat-businesssegments(Cont’d) Air Liquid filtration filtration

Investment system system Manufacturing Eliminations Group

RM RM RM RM RM RM

Yearended ��December�00�

Revenue

External revenue - 25,823,090 919,873 104,096 - 26,847,059

Intersegment revenue - 2,133,790 964,572 779,590 (3,877,952) -

Total revenue - 27,956,880 1,884,445 883,686 (3,877,952) 26,847,05

Results

Segment results 18,044 2,517,711 (61,067) (75,459) - 2,399,229

Unallocated costs 12,156

Profit from operations 2,411,385

Finance costs - (122,241) (12,218) (4,542) - (139,001)

Share of results of associates (612) - - - - (612)

Taxation (40,053) (533,691) (5,263) 22,746 - (556,261)

Net profit for the year 1,715,511

At��December�00�Netassets

Segment assets 10,188,996 27,980,400 1,061,848 1,629,605 (8,206,717) 32,654,132

Investments in associates - - - - - -

Unallocated assets 312,432

Total assets 32,966,564

Segment liabilities 159,551 17,982,795 721,734 585,533 (8,206,717) 11,242,896

Unallocated liabilities 1,276,260

Total liabilities 12,519,156

Yearended��December�00� Otherinformation

Capital expenditure 2,126,006 638,521 6,196 - - 2,770,723

Depreciation and amortisation 22,265 187,476 48,094 48,361 - 306,196

Other non-cash expenses 550 1,625 44,570 - 46,745

Unallocated costs represent corporate expenses. Segment assets consist primarily of plant and equipment, inventories, operating receivables and cash, and mainly exclude investments, deferred tax assets and tax refundable. Segment liabilities comprise operating liabilities and exclude provision for taxation and deferred tax liabilities. Capital expenditure comprises additions to plant and equipment and investment in subsidiary company.




(b) Secondaryreportingformat-geographicalsegments

No secondary segmental analysis by geographical location is presented in the current financial year, as the Group’s operations are located mainly in Malaysia.

��. ApprovalofFinancialStatements

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 12 April 2007

.... Creating valueto ourshareholders....

analysis of shareholdings

list of properties

notice of tenth annual general meeting

statement accompanying notice of annual general meeting

form of proxy


ANALYSIS OF SHAREHOLdINGS

RUBYQUESTBERHAD(��06-T)

Authorised Share Capital : RM25,000,000Issued and Fully Paid-up Capital : RM9,798,000Class of Shares : Ordinary Shares of RM0.10 eachVoting Rights : 1 Vote per Ordinary Share

dIRECTORS’ SHAREHOLdINGS AS AT 4TH MAY 2007(per register of Directors’ Shareholdings)

Directors Direct Indirect No.ofshares % No.ofshares %

Tan Sri Dato’ Mohamed Noordin Bin 1,051,930 1.07 - - Hassan

Sim Keng Siong 11,354,840 11.59 32,010 (1) 0.03

Lim Foo Seng 2,320,280 2.37 - -

Wong Peng Yew 22,497,199 22.96 - -

Shinichi Yamamoto 5,000 0.005 - -

Looi Kem Loong 20,000 0.02 - -

Koay Ben Ree - - - -

Note:1. Interest held by spouse

SUBSTANTIAL SHAREHOLdERS AS AT 4TH MAY 2007(per register of Substantial Shareholders)

Directors Direct Indirect No.ofshares % No.ofshares %

Sim Keng Siong 11,354,840 11.59 32,010 (1) 0.03

Wong Peng Yew 22,497,199 22.96 - -

Note:1. Interest held by spouse

ANALYSIS OF SHAREHOLdERS AS AT 4TH MAY 2007

Category No.ofholders Percentage No.ofshares Percentage (%) (%)

1 - 99 5 0.76 241 0.00

100 - 1,000 46 6.97 28,060 0.03

1,001 - 10,000 310 46.97 1,966,800 2.01

10,001 - 100,000 218 33.03 8,038,190 8.20

100,001 to less than 5% of issued shares 80 12.12 65,449,510 66.80

5% and above of issued shares 1 0.15 22,497,199 22.96

660 100.00 97,980,000 100.00


ANALYSIS OF SHAREHOLdINGS (Cont’d)

TOP 30 SHAREHOLdERS AS AT 4TH MAY 2007

NO. NAMEOFSHAREHOLDERS NO.OFSHARESHELD PERCENTAGE(%)

1 WONG PENG YEW 22,497,199 22.96

2 SIM KENG SIONG 4,699,840 4.80

3 ER KA WEI 4,012,400 4.10

4 TAN CHENG HOY 3,698,400 3.77

5 TA NOMINEES (TEMPATAN) SDN BHD 3,685,000 3.76 BENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR SIM KENG SIONG

6 LIM MUI HENG 3,373,900 3.44

7 ECM LIBRA AVENUE NOMINEES 2,839,000 2.90 (TEMPATAN) SDN BHD BENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR SIM KENG SIONG

8 LIM FOO SENG 2,320,280 2.37

9 CHENG CHAI CHIN 2,181,000 2.23

10 YAP AH SENG 2,179,800 2.22

11 AFFIN NOMINEES (TEMPATAN) SDN BHD 1,795,000 1.83 BENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR TAN CHENG HOY (TAN6469C)

12 NETVAL VENTURES SDN BHD 1,600,020 1.63


14 AFFIN NOMINEES (TEMPATAN) SDN BHD 1,500,000 1.53 BENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR ER KA YAN (ERK0013C)


16 CHENG CHAI CHIN 1,492,000 1.52

17 MOHAMED NOORDIN BIN HASSAN 1,051,930 1.07


ANALYSIS OF SHAREHOLdINGS (Cont’d)

TOP 30 SHAREHOLdERS AS AT 4TH MAY 2007 (Cont’d)

NO. NAMEOFSHAREHOLDERS NO.OFSHARESHELD PERCENTAGE(%)

18 AFFIN NOMINEES (TEMPATAN) SDN BHD 1,050,000 1.07 BENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR LIM LAY HOON (LIM4448C)

19 LAU MEI CHIN 1,050,000 1.07

20 ER KA YAN 978,000 1.00

21 LIM TEH 945,000 0.96

22 PHAN SIN TIAN 914,800 0.93 23 LEE HAN KEONG 860,000 0.88

24 TEE YAN CHIN 805,000 0.82

25 AFFIN NOMINEES (TEMPATAN) SDN BHD 800,000 0.82 BENEFICIARY : EASSETMANAGEMENT SDN BHD FOR KU HONG HAI

26 TAN HOCK LEY 700,000 0.71

27 SIMON LOH CHI YIN 677,790 0.69

28 CHIEW HOCK SENG 670,000 0.68

29 CHAN KOK CHOY 624,100 0.64

30 LEE SIEW FOONG 595,000 0.61

TOTAL 7�,6��,�� 7�.��


LIST OF PROPERTIES

ThedetailsofthelandedpropertiesoftheGroupasatthedateofthisAnnualReportaresetoutbelow:

Location Approximate Description/ Tenure/ Netbook Ageof LandArea/ Use Dateof valueasat building Built-upArea Acquisition ��December (years) �006

1) Envair Land area: 1½-storey Tenure: RM266,100 6Technology Approximately terrace The land on whichSdn Bhd 2,000 square office lot. the property is feet. erected is a freehold land.

No.11, Jalan Built-up floor area: Date ofTaboh 33/ 22, Approximately acquisition:Seksyen 33, 3,000 square feet. 18 July 2000Shah Alam Technology Park, 40400 Shah Alam,Selangor Darul Ehsan

2) Quest Filter Sdn Bhd Land area: Corner three Tenure: RM6,320,527 6No.6, Jalan Salung Approximately (3) storey The land on which33/26, Shah Alam 58,578 office block the property isTechnology Park, square feet. annexed to erected is a Section 33, a one and a freehold land.40400 Shah Alam, Built-up floor area: half storeySelangor. Approximately warehouse Date of 66,232 square feet. building. acquisition: 9 March 2006

Note: There was no revaluation of the properties during the year under review .


NOTICE OF TENTH ANNUAL GENERAL MEETING

(Resolution 7)

(Resolution 5)

(Resolution 6)

NOTICEISHEREBYGIVENTHAT the Tenth Annual General Meeting of Ruby Quest Berhad will be held at Putra Room, Kelab Golf Sultan Abdul Aziz Shah, No.1, Rumah Kelab, Jalan Kelab Golf 13/6 (Sek 13), 41000 Shah Alam, Selangor on Thursday, 21 June 2007 at 10.00 a.m., to transact the following business:

ASORDINARYBUSINESS:-

1. To receive the audited financial statements of the Company and of the Group for the (Resolution 1) financial year ended 31 December 2006 together with the Directors’ and Auditors’

Reports thereon

2. To approve the payment of Directors’ fees for the financial year ended 31 December (Resolution 2) 2006

3. To re-elect the following Directors who retire in accordance with Article 92 of the Company’s Articles of Association:

i. Shinichi Yamamoto (Resolution 3) ii. Lim Foo Seng (Resolution 4)

4. To re-elect Koay Ben Ree retiring in accordance with Article 98 of the Company’s Articles of Association

5. To re-appoint Messrs Yong & Leonard as the Company’s Auditors and to authorise the Directors to fix their remuneration ASSPECIALBUSINESS:-

6. To consider and if thought fit, to pass the following resolution, with or without modifications: - ORDINARY RESOLUTION- AUTHORITY UNDER SECTION 132D OF THE

COMPANIES ACT, 1965 FOR THE DIRECTORS TO ISSUE SHARES

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

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

BYORDEROFTHEBOARD

LIMFOOSENG(MIA��)WONGWEIFONG(MAICSA70067��)

SecretariesShah Alam30 May 2007


NOTICE OF TENTH ANNUAL GENERAL MEETING (Cont’d)

Notes:

(i) A member of the Company who is entitled to attend and vote at this meeting is entitled to appoint a proxy/proxies, and in the case of a corporation, a duly authorised representative to attend and vote in its stead.

(ii) A proxy may but need not be a member of the Company. Where a member appoints more than one (1) proxy, he shall specify the proportions of his shareholdings to be represented by each proxy.

(iii) Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. Please indicate the securities account number where applicable.

(iv) The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if the appointor is a corporation, either under its common seal or under the hand of its attorney duly authorised in writing.

(v) The instrument appointing a proxy must be deposited at the Registered Office of the Company situated at No. 6 Jalan Salung 33/26, Shah Alam Technology Park, Section 33, 40400 Shah Alam, Selangor Darul Ehsan, not less than forty-eight (48) hours before the time set for holding this meeting or at any adjourn-ment thereof.

EXPLANATORYNOTEUNDERSPECIALBUSINESS

OrdinaryResolution7

The Ordinary Resolution 7 proposed, if passed, will give the Directors of the Company, from the date of the forthcoming Annual General Meeting, authority to issue and allot ordinary shares from the unissued capital of the Company being for such purposes as the Directors consider would be in the interest of the Company. This authority, unless revoked or varied by the Company in a General Meeting, will expire at the next Annual General Meeting of the Company.


NOTICE OF TENTH ANNUAL GENERAL MEETING (Cont’d)

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

Furtherdetailsofindividualstandingre-electionofDirectors:-

Name Lim Foo Seng Shinichi Yamamoto Koay Ben Ree

Age 37 61 35

Nationality Malaysian Japanese Malaysian

Position Executive Director Independent Non - Independent Non -

Executive Director Executive Director

Qualification Details are set out on Details are set out on Details are set out on

Page 8 of the Page 9 of the Page 9 of the

Annual Report Annual Report Annual Report

Working experience Details are set out on Details are set out on Details are set out on

and occupation Page 8 of the Page 9 of the Page 9 of the

Annual Report Annual Report Annual Report

Directorships I-Power Berhad

in other public Independent

companies - - Non-Executive Director

Security Details are set out on Details are set out on Details are set out on

holdings in the Page 84 of the Page 84 of the Page 84 of the

Company and Annual Report Annual Report Annual Report

its subsidiaries

Family relationship None None None

with any

director and/

or major

shareholder

Any conflict of None None None

interest with

the Company

List of None None None

convictions for

offences within the

past 10 years other

than traffic offences

No. of shares held

CDS Account No.

RUBYQUESTBERHAD(CompanyNo.��06-T)(IncorporatedinMalaysia)

FORMOFPROXY

I/We,________________________________of______________________________, being a member/members of

RubyQuestBerhad hereby appoint _________________________________________________ of __________

_________________________________ or failing him/her, the Chairman of the Meeting as my/our proxy, to attend

and vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at Putra Room, Kelab

Golf Sultan Abdul Aziz Shah, No.1, Rumah Kelab, Jalan Kelab Golf 13/6 (Sek 13), 41000 Shah Alam, Selangor on

Thursday, 21 June 2007 at 10.00 a.m.

My/our proxy is to vote on the following Resolutions as indicated by an “X” in the appropriate spaces below:

RESOLUTIONS *FOR *AGAINST

1. To receive the audited financial statements of the Company and of the Group for the financial year ended 31 December 2006 together with the Directors’ and Auditors’ Reports thereon

2. To approve the payment of Directors’ fees for the financial year ended 31 December 2006

3. To re-elect Shinichi Yamamoto retiring in accordance with Article 92 of the Company’s Articles of Association

4. To re-elect Lim Foo Seng retiring in accordance with Article 92 of the Company’s Articles of Association

5. To re-elect Koay Ben Ree retiring in accordance with Article 98 of the Company’s Articles of Association

6. To re-appoint Messrs Yong & Leonard as the Company’s Auditors and to authorise the Directors to fix their remuneration

SpecialBusiness

7. To authorise Directors to issue shares pursuant to Section 132D of the Companies Act, 1965

•Please indicate with an “X” in the spaces provided whether you wish your votes to be cast for or against the resolution. In the ab-

sence of specific directions, your proxy will vote or abstain as he/she thinks fits.

Dated this ______ day of ________________ 2007.

______________________________Signature or Common Seal of Shareholders

Notes:

(i) A member of the Company who is entitled to attend and vote at this meeting is entitled to appoint a proxy/proxies, and in the case of a corporation, a duly authorised representative to attend and vote in its stead.

(ii) A proxy may but need not be a member of the Company. Where a member appoints more than one (1) proxy, he shall specify the proportions of his shareholdings to be represented by each proxy.

(iii) Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Com-pany standing to the credit of the said securities account. Please indicate the securities account number where applicable.

(iv) The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if the appointor is a corporation, either under its common seal or under the hand of its attorney duly authorised in writing.

(v) The instrument appointing a proxy must be deposited at the Registered Office of the Company situated at No. 6 Jalan Salung 33/26, Shah Alam Technology Park, Section 33, 40400 Shah Alam, Selangor Darul Ehsan, not less than forty-eight (48) hours before the time set for holding this meeting or at any adjournment thereof.

The Company Secretary

RUBYQUESTBERHAD(Co.No:��06-T)

No.6, Jalan Salung 33/26, Seksyen 33, Shah Alam Technology Park,

40400 Shah Alam, Selangor Darul Ehsan

Stamp

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