Plugin Ar2005

1
Value Statement
Notice of Annual General Meeting
Statement Accompanying Notice of Annual
General Meeting
Corporate Information
Corporate Structure
Financial Highlights
Directors Prole
Statement of Internal Control
Corporate Governance Statement
Statement of Directors Responsibilities
Report of the Audit Committee
Other Information
Environmental Management Activities at
Project Sites
Quality, Safety and Health Policy
Chairmans Statement / Penyata Pengerusi
Review of Operations
Calendar of Events
Directors Report
Directors Statement
Statutory Declaration
Report of the Auditors
Balance Sheets
Income Statements
Statements of Changes in Equity
Cash Flow Statements
Notes to the Financial Statements
Analysis of Shareholdings
List of Properties
Proxy Form
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2
7
11
12
13
14
18
24
31
32
36
38
40
44
52
62
66
73
73
74
75
77
78
80
83
137
139
contents
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2
NOTICE IS HEREBY GIVEN that the Ninth Annual General Meeting of the Company
will be held at Casuarina Room, Ground Floor, SIME Darby Convention Centre, 1A,
Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Monday, 12 June 2006 at 10.00
a.m. for the following purposes:-
Agenda
As Ordinary Business:

1. To receive the Audited Financial Statements of the Company for the year ended 31 December 2005 together with the
Reports of the Directors and Auditors thereon.

2. To approve the payment of a rst and nal dividend of 15% less 28% tax for the year ended 31 December 2005.

3. To approve the payment of Directors Fees for the year ended 31 December 2005.

4. To re-elect the following Directors retiring under the provisions of the Articles of Association of the Company:-
(i) Datuk (Prof.) A Rahman @ Omar bin Abdullah
(ii) Dato Wan Zakariah bin Haji Wan Muda

5. To re-appoint Messrs. Moore Stephens as Auditors of the Company and to authorise the Directors to x their remuneration.
notice of
annual
general
meeting
Resolution 1
Resolution 2
Resolution 3
Resolution 4
Resolution 5
Resolution 6
3
As Special Business:
To consider and if thought t, passing the following Resolutions as Ordinary Resolutions with or without modications:-
6. AUTHORITY TO DIRECTORS TO ALLOT AND ISSUE SHARES
THAT subject to the provisions of Section 132D of the Companies Act, 1965 and approvals from Bursa Malaysia
and other relevant governmental/regulatory authorities where such approvals shall be necessary, authority be
and is hereby given to the Directors of the Company to allot and issue shares in the Company from time to time
and upon such terms and conditions and for such purposes as the Directors may deem t provided that the
aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital
of the Company for the time being and such authority shall remain in force until the next Annual General Meeting
of the Company.
7. PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS
OF A REVENUE OR TRADING IN NATURE WITH ZAKI HOLDINGS (M) SDN BHD AND RESIDENCE INN &
MOTELS SDN BHD
THAT, subject to the Companies Act, 1965 (Act), the Memorandum and Articles of Association of the Company
and the Listing Requirements of Bursa Malaysia (Listing Requirements), approval be and is hereby given to
the Company and its subsidiaries (AZRB Group) to continue to enter into all arrangements and/or transactions
with Zaki Holdings (M) Sdn Bhd and Residence Inn & Motels Sdn Bhd, involving the interests of Directors, major
shareholders or persons connected with Directors and/or major shareholders of the AZRB Group (Related Parties)
as disclosed in section 2.2 of the circular to shareholders dated 19 May 2006 (Circular) provided that such
arrangements and/or transactions are:
(i) recurrent transactions of a revenue or trading in nature;
(ii) necessary for the day to day operations;
(iii) carried out in the ordinary course of business on normal commercial terms which are not more favourable
to the Related Parties than those generally available to the public; and
(iv) are not to the detriment of the minority shareholders.
(hereinafter known as the Shareholders Mandate 1);
Resolution 7
notice of annual general meeting
4
OF A REVENUE OR TRADING IN NATURE WITH ZAKI HOLDINGS (M) SDN BHD AND RESIDENCE INN &
MOTELS SDN BHD (contd)
AND THAT such approval shall continue to be in force until:
(i) the conclusion of the next Annual General Meeting (AGM) of the Company (being the 10th AGM of the Company),
at which time the said authority will lapse, unless by a resolution passed at a general meeting whereby the authority
of the Shareholders Mandate 1 is renewed;
(ii) the expiration of the period within which the next AGM of the Company (being the 10th AGM of the Company) is
required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed
pursuant to Section 143(2) of the Act); or
(iii) revoked or varied by resolution passed by the shareholders in a general meeting,
whichever is earlier;
AND THAT the aggregate value of the transactions of the Shareholders Mandate 1 conducted during a nancial year will
be disclosed in accordance with the Listing Requirements in the annual report for the said nancial year and the disclosure
will include amongst others, the following information:
(i) the types of recurrent related party transactions (RRPT); and
(ii) the names of the Related Parties who have interests in each type of the RRPT entered into and their relationship with
the AZRB Group;
AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing
all such documents as may be required) as they may consider expedient or necessary to give effect to the Shareholders
Mandate 1.
OF A REVENUE OR TRADING IN NATURE WITH QMC SDN BHD, CHUAN HUAT INDUSTRIAL MARKETING SDN
BHD AND CHUAN HUAT HARDWARE SDN BHD
THAT, subject to the Act, the Memorandum and Articles of Association of the Company and the Listing Requirements,
approval be and is hereby given to the AZRB Group to continue to enter into all arrangements and/or transactions with
QMC Sdn Bhd, Chuan Huat Industrial Marketing Sdn Bhd and Chuan Huat Hardware Sdn Bhd, involving the interests of
the Related Parties as disclosed in section 2.2 of the Circular provided that such arrangements and/or transactions are:
Resolution 8
5
(i) recurrent transactions of a revenue or trading in nature;
(ii) necessary for the day to day operations;
(iii) carried out in the ordinary course of business on normal commercial terms which are not more favourable to the
Related Parties than those generally available to the public; and
(iv) are not to the detriment of the minority shareholders.
(hereinafter known as the Shareholders Mandate 2);
AND THAT such approval shall continue to be in force until:
(i) the conclusion of the next AGM of the Company (being the 10th AGM of the Company), at which time the said authority
will lapse, unless by a resolution passed at a general meeting whereby the authority of Shareholders Mandate 2 is
renewed;
(ii) the expiration of the period within which the next AGM of the Company (being the 10th AGM of the Company) is
required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed
pursuant to Section 143(2) of the Act); or
(iii) revoked or varied by resolution passed by the shareholders in a general meeting,
whichever is earlier;
AND THAT the aggregate value of the transactions of the Shareholders Mandate 2 conducted during a nancial year will
be disclosed in accordance with the Listing Requirements in the annual report for the said nancial year and the disclosure
will include amongst others, the following information:
(i) the types of RRPT; and
(ii) the names of the Related Parties who have interests in each type of the RRPT entered into and their relationship with
the AZRB Group.
AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing
all such documents as may be required) as they may consider expedient or necessary to give effect to the Shareholders
Mandate 2.
9. To transact any other business for which due notice shall have been given in accordance with the Companies Act,
1965.
Resolution 9
6
Notice of Dividend Entitlement and Payment
NOTICE IS ALSO HEREBY GIVEN that the rst and nal dividend of 15% less 28% tax for the nancial year ended 31 December 2005, if approved,
will be paid on 19 July 2006 to depositors registered in the Record of Depositors at the close of business on 12 July 2006.
A Depositor shall qualify for entitlement to the dividend only in respect of:
a. Shares transferred into the Depositors Securities Account before 4.00 p.m. on 12 July 2006 in respect of ordinary transfer; and
b. Shares bought on the Bursa Malaysia on a cum entitlement basis according to the Rules of Bursa Malaysia.
By Order of the Board
BAHARI BIN JOHARI
LIM MING TOONG
LIEW WAI KEAN
Secretaries
Kuala Lumpur
19 May 2006
NOTES
1. A member of the Company who is entitled to attend and vote at the meeting is entitled
to appoint a proxy or proxies, (but not exceeding two (2) proxies), to attend and vote
in his stead.
2. Where a member appoints more than one (1) proxy, the appointment shall be invalid
unless he species the proportion of his holdings to be represented by each proxy.
3. A proxy may but need not be a member of the Company and the provision of Section
149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
4. Where a member is an authorised nominee as dened under the Securities Industry
(Central Depositories) Act 1991, it may appoint at least one proxy in respect of each
securities account it holds with ordinary shares of the Company standing to the credit
of the securities account.
5. Where the Form of Proxy is executed by a corporation, it must be executed under its
seal or under the hand of its attorney.
6. The instrument appointing a proxy and the power of attorney or other authority (if any)
under which it is signed, or a notarially certied copy of that power or authority, must,
to be valid, be deposited at the ofce of the Companys Registrars, Mega Corporate
Services Sdn Bhd, Share Registration Department, Level 11-2, Faber Imperial Court,
Jalan Sultan Ismail, 50250 Kuala Lumpur, not less than forty-eight (48) hours before
the time set for the meeting or at any adjournment thereof.
EXPLANATORY NOTES ON SPECIAL BUSINESS
7. The proposed ordinary resolution No. 7, if passed, will give the Directors of the Company
the power to issue shares in the Company up to an amount not exceeding in total
10% of the issued share capital of the Company for such purposes as the Directors
consider would be in the interests of the Company. This would avoid any delay and
cost involved in convening a general meeting to specically approve such an issue of
shares. This authority, unless revoked or varied at a General Meeting will expire at the
next Annual General Meeting of the Company.
8. The proposed ordinary resolutions No. 8 & 9, if passed, will allow the AZRB Group to
enter into recurrent related party transactions provided that such transactions are in the
ordinary course of business and undertaken at arms length, on normal commercial
terms of the AZRB Group which are not more favourable to the related parties than
those generally available to the public and are not to the detriment of the minority
shareholders (Proposed Shareholders Mandates).
The Proposed Shareholders Mandates would eliminate the need to convene separate
general meetings from time to time to seek shareholders approval as and when
potential recurrent related party transactions arise, thereby reducing substantially
administrative time and expenses in convening such meetings, without compromising
the corporate objectives and adversely affecting the business opportunities available
to the AZRB Group.
Further information on the Proposed Shareholders Mandates is set out in the circular
to shareholders of the Company which is despatched together with the Annual Report
of the Company for the nancial year ended 31 December 2005.
7
1. Details of Board meetings held during nancial year ended 31 December 2005:
There were 5 Board meetings held during the financial year ended 31 December 2005. Details of attendance of the Directors
are as follows:-
Name of Director Total Meetings Attended % of Attendance
Executive Directors
Dato Haji Wan Zaki bin Haji Wan Muda
Dato Wan Zakariah bin Haji Wan Muda
Dato Haji Mustaffa bin Mohamad
Dato W Zulkii bin Haji W Muda
Non-Executive Directors
Raja Dato Seri Aman bin Raja Haji Ahmad
Datuk (Prof.) A Rahman @ Omar bin Abdullah
Dato Ismail @ Mansor bin Said
5/5
4/5
5/5
4/5
5/5
5/5
5/5
100%
80%
100%
80%
100%
100%
100%
2. Place, date and time of Meeting
The Ninth Annual General Meeting of the Company will be held at Casuarina Room, Ground Floor, SIME Darby Convention Centre, 1A,
Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Monday, 12 June 2006 at 10.00 a.m.
3. Proles of Directors who are standing for re-election
The Directors who are offering themselves for re-election at the Annual General Meeting of the Company are as follows:-
(i) Datuk (Prof.) A Rahman @ Omar bin Abdullah (Independent Non-Executive Director)
(ii) Dato Wan Zakariah bin Haji Wan Muda (Managing Director)
Details of Directors are set out on pages 14 to 17 of this Annual Report and
Statement of Directors shareholdings on page 138 of this Annual Report.
statement
accompanying
notice of annual
general meeting
pursuant to paragraph 8.28(2) of the Bursa Malaysia Listing Requirements
8
smart partnership with
stakeholders
9
employees
customers
10
Back row, left to right: Dato Ismail @ Mansor bin Said, Dato Haji Mustaffa bin Mohamad, Dato W Zulkii bin Haji W Muda, Datuk (Prof.) A Rahman @ Omar bin Abdullah
Front row, left to right: Dato Haji Wan Zaki bin Haji Wan Muda, Raja Dato Seri Aman bin Raja Hj Ahmad, Dato Wan Zakariah bin Haji Wan Muda
11
Board of Directors
(Independent Non-Executive Chairman)
(Executive Vice Chairman)
(Managing Director)
(Executive Director)
(Executive Director)
(Independent Non-Executive Director)
(Independent Non-Executive Director)
Audit Committee
(Chairman, Independent Non-Executive Chairman)
(Member, Executive Vice Chairman)
(Member, Independent Non-Executive Director)
Company Secretary
Bahari bin Johari (LS 0008773)
Lim Ming Toong (MAICSA 7000281)
Liew Wai Kean (MAICSA 7020245)
Registered Ofce
Mezzanine Floor
8A, Jalan Seri Semantan Satu, Damansara Heights
50490 Kuala Lumpur, Wilayah Persekutuan
Tel: +603 2094 1888
Fax: +603 2094 7673
Registrar
Mega Corporate Services Sdn Bhd
Level 11-2, Faber Imperial Court, Jalan Sultan Ismail
Tel: +603 2692 4271
Fax: +603 2732 5388
Principal Bankers
Afn Bank Berhad
AmBank Berhad
AmMerchant Bank Berhad
Bumupitera-Commerce Bank (M) Berhad
HSBC Bank Malaysia Berhad
Malayan Banking Berhad
United Overseas Bank (Malaysia) Berhad
Auditors
Moore Stephens Chartered Accountants
8A, Jalan Sri Semantan Satu, Damansara Heights
Stock Exchange Listing
Main Board of Bursa Malaysia
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178
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176
14
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A Malaysian, aged 60, was appointed Chairman and Independent Non-Executive Director and member of Audit
Committee on 26th February 2004 and subsequently assumed the Chairman of Audit Committee on 8th April
2004. He is also the Chairman of Risk Management Committee and sits on the Remuneration and Nomination
Committee as an ordinary member.
He is a Certied Public Accountant (CPA), a member of Malaysian Institute of Accountants (MIA) and a Fellow of
the Institute of Chartered Accountant of England and Wales (ICAEW). He held various positions in Maybank Group
from 1974 to 1985 prior to joining Afn Bank Berhad in 1985 as Executive Director. He left Afn Bank in 1992
to join Perbadanan Usahawan Nasional Berhad as Chief Executive Ofcer for 2 years before his appointment as
Chief Executive Ofcer of Afn Bank Berhad.
He is also a Director of Afn Holdings Berhad (a company listed on the Main Board of Bursa Malaysia) and sits
on the board of Afn-ACF Finance Berhad and Afn Merchant Bank Berhad.
During the nancial year ended 31 December 2005, he attended 5 out of 5 Board meetings held.
SPMP, DPMP
RAJA DATO SERI AMAN BIN RAJA HJ AHMAD
Notes
Family Relationship
Except for Dato Haji Wan Zaki bin Haji Wan Muda, Dato Wan Zakariah
bin Haji Wan Muda and Dato W Zulkii bin Haji W Muda who are
brothers, none of the other Directors are related to one another, nor
with any substantial shareholders.
Conict of Interest
Save as disclosed in the related party transactions on pages 94 to 95
(note 41) of this Annual Report, none of the other Directors have any
conict of interest with the Company during the nancial year.
Convictions for Offences
None of the Directors have been convicted of any offence (excluding
trafc offences) within the last 10 years.
15
SIMP, DPMT, PPN, PJK DSSA
DATO HAJI WAN ZAKI BIN HAJI WAN MUDA DATO WAN ZAKARIAH BIN HAJI WAN MUDA
directors prole
A Malaysian, aged 57, was appointed the Executive Vice Chairman of
AZRB on 24 March 1999. He subsequently held the post of Executive
Chairman from 1 March 2000 and was redesignated as Executive
Vice Chairman of AZRB on 26 February 2004. He is presently the
Chairman of Remuneration Committee and an ordinary member of
the Audit Committee and Risk Management Committee.
He is the founder member of AZSB. Dato Haji Wan Zaki began
his working career in 1971 as a Financial Assistant with Syarikat
Permodalan Pahang Bhd, a Pahang state-owned company. In 1973,
he joined Perkayuan Pahang Sdn Bhd as a Financial Assistant and
Marketing Ofcer and subsequently rose to the position of Marketing
Manager. He left Perkayuan Pahang Sdn Bhd in 1977 to join Pesaka
Terengganu Bhd as its Operation Manager where he served until
1979 prior to joining Pesama Timber Corporation Sdn Bhd as
Managing Director. He left Pesama Timber Corporation Sdn Bhd in
1984 to start AZSB.
Dato Haji Wan Zaki is also a Director of Chuan Huat Resources Bhd
(a company listed on the Second Board of Bursa Malaysia) and also
sits on the boards of directors of several private limited companies.
During the nancial year ended 31 December 2005, he attended 5
out of 5 Board meetings held.
A Malaysian, aged 46, was appointed an Executive Director
of AZRB on 24 March 1999 and subsequently assumed the
Managing Director of AZRB with effect from 1 January 2003. He
is presently the Chairman of the Establishment Committee and sits
on the Remuneration Committee as an ordinary member.
He holds a Bachelor of Science (Quantity Surveying) degree
which he obtained in 1986 from the Thames Polytechnic, United
Kingdom. He joined AZSB in 1986 as a Quantity Surveyor and
was appointed a Director of AZSB in 1994. In 1996, he was
promoted to the position of Managing Director of AZSB which he
held until 6 February 2003.
He does not hold directorship in any other public companies but sits
on the boards of directors of several private limited companies.
During the nancial year ended 31 December 2005, he attended
4 out of 5 Board meetings held.
16
A Malaysian, aged 55, was appointed an Executive Director of
AZRB on 24 March 1999 and is an ordinary member of the
Establishment Committee.
He obtained his Bachelor of Law (Honours) degree from the
University of London, England in 1976, and was called to the
English Bar at Lincolns Inn in 1981. In 1985 he obtained a Post
Graduate Diploma in Port and Shipping Administration from the
University of Wales, Institute of Science and Technology, Cardiff.
He is also a member of the Chartered Institute of Transport (United
Kingdom) since 1986. In 1993 he was awarded a Diploma in
Syariah Law and Practice by the International Islamic University,
Malaysia. He was with Terengganu State Economic Development
Corporation, serving in various capacities from 1977-1985 prior
to joining ICSB as Managing Director in 1993. From 1985-1993
he served as the General Manager of Pangkalan Bekalan Kemaman
Sdn Bhd and concurrently as the Executive Director of Jasa Merin
(M) Sdn Bhd. These companies are directly and solely involved in
the provision of infrastructure and support services to the oil and
gas industry off the shores of Peninsular Malaysia. He is also a
Director of AZSB and AFE.
During the nancial year ended 31 December 2005, he
attended 5 out of 5 Board meetings held.
DATO HAJI MUSTAFFA BIN MOHAMAD
A Malaysian, aged 44, was appointed a Non-Executive Director
on 2 January 1999 and subsequently redesignated as the
Executive Director with effect from 1 March 2003. He sits on the
Establishment Committee as an ordinary member.
He holds a Bachelor of Science (Civil Engineering) degree which
he obtained in 1985 from the University of Southern Illinois, United
States of America. He began his career with AZSB as a Project
Manager in 1985. He was promoted to the position of Executive
Director (Operations) of AZSB in 1996 and subsequently became
the Managing Director of AZSB effective from 7 February 2003.
DATO W ZULKIFLI BIN HAJI W MUDA
directors prole
DPMT, PJK DIMP
17
A Malaysian, aged 60, was appointed an Independent Non-
Executive Director on 1 January 2003. He presently sits on the
Remuneration Committee as an ordinary member.
He holds a Diploma in Quantity Surveying from Thames Polytechnic,
London, United Kingdom, and an MSc in Construction Management
from the Heriot-Watt University, Scotland. He also holds fellowships
with The Royal Institute of Chartered Surveyors (UK) and the Institute
of Surveyors Malaysia, as well as Professional Membership with
The Chartered Institute of Building of Malaysia.
Datuk A Rahman is currently the Chairman of the Construction
Industry Development Board, prior to which he was the Deputy
Director General II of the Public Works Department. In 1992, he
was accorded an Honorary Professor by the University Teknologi
Malaysia. Among other appointments, he has also been President
of the Institute of Surveyors, Malaysia, Chairman of the Technical
Committee on the Development of the Professional Institute for
Baitulmal Wilayah Persekutuan and the President of the Board of
Quantity Surveyors, Malaysia.
A Malaysian, aged 57, was appointed a Non-Executive Director
on 26 May 1997 and subsequently assumed the responsibility
as an Independent Director. He presently sits on the Audit
Committee, Risk Management Committee and Remuneration
Committee as an ordinary member and is the Chairman of the
Nomination Committee.
He holds a Bachelor of Economics degree from the University
of Malaya. He was a Member of Parliament from 1978-1995,
Parliamentary Secretary of the Ministry of Youth and Sports
(1990-1995) and the Chairman of MARA from 1987 to 1990.
He was also appointed by Parliament as the Chairman of the Public
Accounts Committee where he served from 1985 to 1990. He
was also a Director of Sistem Televisyen Malaysia Berhad from
1995 to 2000 and the President of Institut Usahawan Bumiputera
from 1988 to 2002.
Dato Ismail is also a director of Lion Diversied Holdings Berhad (a
company listed on the Main Board of the Bursa Malaysia) and also
sits on the board of directors of a private limited company.
directors prole
PJN, DPMT, JSM, SMT, AMN DPMT, AMN
DATUK (PROF.) A RAHMAN @ OMAR BIN ABDULLAH DATO ISMAIL @ MANSOR BIN SAID
18
The Board of Directors is responsible for the Groups system of internal control and
for reviewing its integrity and adequacy. The system includes nancial, operational,
compliance and controls including risk management. The system is designed to
monitor, identify and manage risks in the pursuit of the Groups business objectives,
safeguard shareholders investments and the Groups assets.
Therefore, it follows that the system of internal control can only provide reasonable but not absolute assurance against the risk of material
loss and fraudulent activities. The concept of reasonable assurance recognizes that the cost of control procedures is not to exceed the
expected benets.
Risk Management
In view of the Groups effort to become more accountable, transparent and responsive to stakeholders interests, the Board has decided
to do away from the traditional risk management approach to a more systematic and advance risk management system. Enterprise Risk
Management (ERM) is a structured and disciplined approach aligning strategy, processes, people, technology and knowledge with the
purpose of evaluating and managing the uncertainties the Group faces as it creates value. This project involves a series of workshops with
the staff and management and interviews with the top management. Progressive meetings were done by the various Risk Management
Committees to address the current risk management issues. This risk management exercise is on-going and evolved as the Group expand
into new projects and new business ventures.
statement of
internal control
19
Neighbourhood Complex, Precinct 6, Putrajaya
20
statement of internal control
The following are the key principles of the ERM framework:
To facilitate a systematic and consistent identication of key business risks for AZRB and AZSB;
To facilitate an objective assessment of key controls in managing the relevant business identied;
To enhance the documentation and communication of risks and promote awareness of risk management;
To develop a framework to monitor and report risks and controls, with the assignment of responsibilities within the pilot companies (AZRB and
AZSB) for managing risks; and
Assist in establishing an appropriate risk management committee/function.
The Board acknowledges that considerable effort and commitment is required to implement the risk management framework within the Group.
To monitor and approve the Group Risk Management Strategy, Policy and Guidelines, a Risk Management Committee of the Board (Board Risk
Committee) had been established. This Board Committee, in ensuring an effective risk management framework is adhered to had established another
risk committee at the management level. In relation to that, a risk management committee (RMC) was formed at the management level. The RMC is
responsible for continuously coordinating the implementation of the risk management framework and reporting to the Board Risk Committee on an
aggregated view of principal risks inherent in all operating units and companies within the Group, and their respective risk response plans to manage
these risks. In short, the RMC is primarily responsible for review of the risk management processes.
To ensure an ongoing implementation of risks management and updates of risks registers, the RMC had appointed the risk management unit (RMU)
at business unit level. RMU members are nominated employees from Operations, Finance, Human Resources, Information Technology (IT) and a
designated Risk Ofcer. The RMU is currently headed by the Operations Director.
Amongst others, the roles and responsibilities of the RMU include:
Identify and communicate to the RMC the critical risks (present or potential) the business unit faces, their changes and the management action
plans to manage the risks;
Communicate risk management requirements in the business units;
Review risk proles and performance for the business unit; and
Review and update the business units risk management methodologies applied, specically those related to risk identication, measuring,
controlling, monitoring and reporting.
Control Activities and Procedures
Being part of the control tools, the Board reviews and approves annual budget prepared by the management. The budget is then compared to the actual
performance of the Group and any material variances will be addressed in detail by the Board and delivered to management for immediate actions.
Performance appraisals are being carried out annually to gauge the employees performance for any conrmation, promotion, transfer and annual increment
exercise and policies and procedures with regards to employees code of conducts and benets are properly set out in the employee handbook for
employees to adhere. A Committee has also been established by the Board to look after staffs welfare, grievances and any disciplinary matters.
21
In line with the newly adopted risk based internal auditing, the Audit Committee had approved a new audit plan for the year 2006 after having
carried out the risk assessment exercise. The new audit plan is derived after evaluating the effectiveness of the Groups system of internal control and
mitigation of risks including nancial, operational and compliance risks. The audit plan is directed to focus in areas of signicant risks to the Group.
The plan is formulated in order of priority, areas of high and signicant risk critical to the Groups performance and conducts independent risk based
audits to ensure that the system of internal controls developed to mitigate those risks identied is effective and working satisfactorily. This yearly audit
plan will give the opportunity to structure the audit plan in accordance with the changes in risks the Group may be exposed to given the fact of the
objectives, the industry and the organization itself that are continuously evolving.
Information And Communication
The Board has received and approved periodic nancial and operational progress reports detailing the overview performance of divisions within the
Group including the material related parties transactions. The Board also received progressive reports from the investment committee which studies
and makes proposals on any viable business opportunities the Group intends to undertake. Major corporate proposals are tabled and deliberated
before such proposals are being endorsed by the Board for implementation.
Monitoring
The Board places importance on maintaining a sound system of internal control and is responsible for reviewing the effectiveness of the system.
This is achieved through the reports by the Audit Committee at periodic Board meetings. The Audit Committee which is chaired by an independent
non-executive director reviews the internal control system ndings of the internal auditors and external auditors and accordingly endorses appropriate
remedial action. The Audit Committee which has engaged external party on a co-sourcing basis with the in-house internal auditors to perform the
internal audit function based on the approved audit plan has reviewed and made appropriate recommendations to the Audit Committee in areas like
procurement, tendering, project management, contract management, human resource audit, business development audit and nance audit.
Reviews were conducted on these areas and the results of these reviews including comments from the management were reported to the Audit
Committee, who in turn reports to the Board. Follow up reviews are carried out by the Groups Internal Auditor to ensure implementation on corrective
actions agreed by the management. At present, those internal control weaknesses identied during the nancial year under review are being addressed
by the management and has not in any way resulted in any material loss to the Group for the nancial year ended 31 December 2005 which require
disclosure in the Groups nancial statement.
The Board remains committed to ensure that appropriate remedial measures are taken to address any control weaknesses that become evident,
and that every effort is put into place to further strengthen the internal control system to protect the interests of its shareholders.
This statement of internal control is made in accordance with the resolution of the Board of Directors dated 24 April 2006.
statement of internal control
22
honesty
institutionalise the virtues of
23
trust
24
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The Board of Directors of Ahmad Zaki Resources Berhad is committed towards
the adoption of principles and best practices as enshrined in the Malaysian Code
of Corporate Governance throughout the Group. It is recognized that the adoption
of the highest standards of governance is imperative for the enhancement of
stakeholders value. The Group has complied with the Best Practices set out in Part
2 of the Code throughout the nancial year unless otherwise noted.
The Board is pleased to present the following report on the application of principles and compliance with best practices as set out in the
Malaysian Code of Corporate Governance.
SECTION 1: Directors
(a) Composition of the Board
The Board is currently led by an Independent Non-Executive Chairman and has seven (7) members comprising four (4) Executive
Directors and three (3) Independent Non-Executive Directors. The Board comprises a balance of members with experience in business
and nance required for an effective and independent decision making at the Board level. The Board considers its current size adequate
given the present scope and nature of the Groups business operations. A brief description on the background of each Director is
presented on pages 14 to 17 of the Annual Report.
25
The presence of three (3) Independent Directors shall provide unbiased and independent views and judgment in the decision making process
at the Board level and ensure that no signicant decisions and policies are made by any individual and that the interest of minority shareholders
are safeguarded.
The positions of the Chairman and the Managing Director are held by two individuals. There is a clear division of responsibilities between the
Chairman and the Managing Director which will ensure a balance of power and authority. Generally, the Chairman is responsible for the orderly
conduct and working of the Board while the Managing Director is responsible for the day to day management of the Group as well as to
implement policies and strategies adopted by the Board. The Board exercises its responsibilities collectively.
All the Directors have given their undertaking to comply with the Bursa Malaysia Exchange Berhad (BMEB) Listing Requirements and the
Independent Directors have conrmed their independence in writing.
(b) Board Responsibilities and Supply of Information
The Board recognizes its responsibilities amongst other include six principal responsibilities set out in Best Practice AAI of the Code in discharging
its stewardship role for its shareholders.
The Board has laid down formal schedule of matters specically reserved to it for decision to ensure that the direction and control of the Group is rmly
in its hands. The Managing Director is responsible to ensure that the management adhered to these guidelines and policies set by the Board.
The Directors have full access to information pertaining to all matters requiring the Boards decision. Prior to any Board meeting, all Directors
shall be furnished with proper board papers which contained necessary information for each of the meeting agenda in advance to enable
the Director to obtain further explanations, where necessary, in order to be briefed properly before the meeting. Matters to be discussed are
not limited to nancial performance of the Group but also to address major investment decisions as well as operational issues and problems
encountered by the Group.
The Board has also set out agreed procedures for the Directors to take independent professional advice at the Companys expense, if necessary.
All Directors have access to the advice and services of the Company Secretary who ensures compliance with statutory obligations, Listing Rules
of the BMEB or other regulatory requirements. The removal of the Company Secretary shall be a matter for the Board as a whole.
Besides the Audit Committee which was set up on 24 March 1999, several Board committees were established subsequently to assist the
Board in discharging its duties and responsibilities. All committees have written terms of reference and procedures duly endorsed by the Board
to examine a particular issue and report back to the Board with a recommendation. Chairman of the committee concerned will report to the
Board on matters dealt by the said committee which will be incorporated as part of the Board minutes.
The additional committees set up are Nomination Committee, Remuneration Committee, Establishment Committee and the Risk Management
Committee having the following primary functions and members:
corporate governance statement
26
NOMINATION COMMITTEE
Primary function
The Nomination Committee was established on 16 January 2002. The Nomination Committee is primarily responsible for constantly assessing
the overall effectiveness of the Board and Board committees and make recommendation to the Board for any new candidate as Board member
or Board committee member. In addition, the Nomination Committee also performs introduction brieng for the new Board members with
regards to the overall operations and corporate objectives of the Group and continues to ensure that the Board members undergo the necessary
Mandatory Accreditation Programme (MAP) & Continuous Education Programme (CEP) prescribed by the BMEB.
The actual decision as to who shall be nominated should be the responsibility of the full Board after considering the recommendations of the
Nomination Committee.
Member
The present members of the Nomination Committee of the Company are:
(i) Dato Ismail @ Mansor bin Said (Independent Non-Executive Director, Chairman)
(ii) Raja Dato Seri Aman bin Raja Haji Ahmad (Independent Non-Executive Chairman, Member)
(iii) Datuk (Prof.) A Rahman @ Omar bin Abdullah (Independent Non-Executive Director, Member)
The Company Secretary is the secretary of the Nomination Committee.
REMUNERATION COMMITTEE
Primary function
The Remuneration Committee was established on 20th August 2001. Its primary function is to set the policy framework and recommend to
the Board on remuneration packages and benets extended to the Directors, drawing from outside advice as necessary to ensure that the
remuneration is sufcient to attract and retain the Directors needed to run the Company successfully.
The determination of the remuneration package for Non-Executive Directors shall be a matter for the Board as a whole. The Director concerned
shall abstain from deliberations and voting on decisions in respect of his individual remuneration package.
Member
The present members of the Remuneration Committee of the Company are:
(i) Dato Haji Wan Zaki bin Haji Wan Muda (Executive Vice Chairman, Chairman)
(ii) Raja Dato Seri Aman bin Raja Haji Ahmad (Independent Non-Executive Chairman, Member)
(iii) Dato Wan Zakariah bin Haji Wan Muda (Managing Director, Member)
(iv) Datuk (Prof.) A Rahman @ Omar bin Abdullah (Independent Non-Executive Director, Member)
(v) Dato Ismail @ Mansor bin Said (Independent Non-Executive Director, Member)
The Company Secretary is the secretary of the Remuneration Committee.
27
ESTABLISHMENT COMMITTEE
Primary function
The Establishment Committee was established on 16 January 2002. The main purpose for setting up this committee is to formulate policies
and execution of the whole spectrum of Human Resource Management for the Group on behalf of the Board as well as to formulate and
implement Employee Share Option Scheme (ESOS) under the direction of the Board, in accordance with the rules and regulations determined
by the authorities.
Member
The present members of the Establishment Committee of the Company are:
(i) Dato Wan Zakariah bin Haji Wan Muda (Managing Director, Chairman)
(ii) Dato Haji Mustaffa bin Mohamad (Executive Director, Member)
(iii) Dato W Zulkii bin Haji W Muda (Executive Director, Member)
The Assistant General Manager, Human Resource is the secretary of the Establishment Committee.
The Establishment Committee hold four meetings during the nancial year ended 31 December 2005.
RISK MANAGEMENT COMMITTEE (BOARD)
Primary Function
The Board Risk Committee (BRC) was established on 18 August 2004 with the primary responsibility of ensuring an effective functioning of the
integrated risk management function within the organization. The BRC oversees and monitor the overall risks impacting the Group. It is being
chaired by the Group Chairman who is also an Independent Director to ensure independence from management as it is the BRC that reviews
and approves risk management policies and risk tolerance limits.
The BRC specically is to dene, sponsor and support all risk management activities within AZRB Group inclusive of its associated companies,
signicant joint ventures and where management responsibility is vested to AZRB. Apart from setting and approving the Groups Risk Management
Strategy, Policy and Guidelines, the BRC also receives and review reports such as Statement on Internal Control on risk management issues to
ensure that critical and signicant risks are being addressed and mitigated by proper action plans.
Member
The members of the Committee are as follows:
(i) Raja Dato Seri Aman bin Raja Haji Ahmad (Independent Non-Executive Chairman, Chairman)
(ii) Dato Ismail bin Said (Independent Non-Executive Director, Member)
(iii) Dato Haji Wan Zaki bin Haji Wan Muda (Non-Independent Executive Vice Chairman, Member)
28
(c) Board Meetings
During the nancial year ended 31 December 2005, ve (5) meetings were held. The date and details of attendance of each Board meeting
held are as follows:-
Date of meeting Venue
Total Board
Members
Attendance by Directors
(Percentage Attendance)
Independent Non-Independent
25 February 2005 4th Floor, Lot 88, Jalan Gombak 53100 Kuala Lumpur 7 3 (100%) 2 (50%)
24 March 2005 4th Floor, Lot 88, Jalan Gombak 53100 Kuala Lumpur 7 3 (100%) 4 (100%)
22 April 2005 4th Floor, Lot 88, Jalan Gombak 53100 Kuala Lumpur 7 3 (100%) 4 (100%)
24 May 2005 4th Floor, Lot 88, Jalan Gombak 53100 Kuala Lumpur 7 3 (100%) 4 (100%)
20 September 2005 4th Floor, Lot 88, Jalan Gombak 53100 Kuala Lumpur 7 3 (100%) 4 (100%)
The details of attendance of each Board member in the Board meetings held during the nancial year ended 31 December 2005 is set out in
the Statement Accompanying Notice of AGM on page 7 of this Annual Report.
(d) Appointment to the Board
In previous years, the process of assessing existing Directors and identifying, recruiting, nominating, appointing and orientating new directors are
performed by the Board. In compliance with the best practices recommended by the Code, these functions have been delegated to Nomination
Committee with effect from 16 January 2002.
(e) Directors Remuneration
Prior to the establishment of Remuneration Committee on 20 August 2001, the remuneration of each Director, are determined by the Board,
as a whole. The Directors do not participate in discussion and decision of their own remuneration.
Fees payable to Directors by the Company are approved by the shareholders at the AGM, based on the recommendation of the Board.
The details of the remuneration of the Directors of the Company received from the Group are as follows:-
Salaries*
RM
Allowances
RM
Fees
RM
Bonuses
RM
Benets-in-kind
RM
Total
RM
Executive Directors 1,435,404 22,000 265,000 102,519 635,800 2,460,723
Non-Executive Directors - 20,700 390,000 - 25,900 436,600
* Salaries inclusive of statutory employer contributions to the Employees Provident Fund.
29
The number of Directors whose remuneration falls into the following bands:-
Range Of Remuneration Executive Directors Non-Executive Directors
Below RM50,000 - 1
RM50,001 RM150,000 - -
RM150,001 RM200,000 - 1
RM200,000 RM250,000 - 1
RM250,001 RM450,000 - -
RM450,001 RM500,000 1 -
RM500,001 RM550,000 - -
RM550,001 RM600,000 2 -
RM600,001 RM850,000 - -
RM850,001 RM900,000 1 -
(f) Directors Training
Every Director of the Company undergoes continuous training to equip himself to effectively discharge his duties as a Director and for that
purpose he ensures that he attends such training program as prescribed by the BMEB from time to time. The Company also provides briengs
for new recruits to the Board, to ensure they have a comprehensive understanding on the operations of the Group and the Company.
All Directors have attended the MAP prescribed by the BMEB and have been attaining CEP prescribed by the BMEB from time to time.
(g) Re-election of Directors
In accordance with the Companys Articles of Association, one-third of the Directors, including Managing Director, shall retire from ofce by rotation
each year and all Directors are subject to retire at least once in every three years. Retiring Directors may offer themselves for re-election at the
AGM. Director who is appointed by the Board during the year is required to retire and seek re-election by shareholders at the following AGM
held following his appointment. Director over seventy (70) years of age is required to submit himself for re-appointment annually in accordance
with Section 129(6) of the Companies Act, 1965.
SECTION 2: Relationship with Shareholders
The Board maintained an effective communications policy that enables both the Board and the management to communicate effectively with its
shareholders, stakeholders and the public. The policy effectively interprets the operations of the Group to the shareholders and accommodates
feedback from shareholders, which are factored into the Groups business decision.
The Senior Independent Non-Executive Director, to whom concerns may be conveyed was held by Dato Mohamed bin Awang until 31 December
2003. Subsequently, the role was assumed by Dato Ismail bin Said with effect from 26 February 2004.
30
The Board communicates information on the operations, activities and performance of the Group to the shareholders, stakeholders and the public
through the following:-
(i) the Annual Report, which contains the nancial and operational review of the Groups business, corporate information, nancial statements, and
information on audit committee and Board of Directors;
(ii) various announcements made to the BMEB, which includes announcement on quarterly results; and
(iii) The Company website at http: //www. azrb.com.
The AGM serves as an important means for shareholders communication. Notice of the AGM and Annual Reports are sent to shareholders twenty
one (21) days prior to the meeting. At each AGM, the Board presents the performance and progress of the Group and provides shareholders with
the opportunity to raise questions pertaining to the Group. The Chairman and the Board will respond to the questions raised by the shareholders
during the AGM.
The Board has ensured each item of special business included in the notice of meeting will be accompanied by an explanatory statement on the
effects of the proposed resolution.
SECTION 3: Accountability and Audit
(a) Financial Reporting
The Board which is assisted by Audit Committee aims to present a balanced and understandable assessment of the Groups position and
prospect through the annual nancial statements and quarterly announcements of results to the BMEB.
The Directors are responsible to ensure the annual nancial statements are prepared in accordance with the provisions of the Companies Act,
1965 and applicable approved accounting standards in Malaysia.
A statement by the Directors of their responsibilities in preparing the nancial statements is set out separately on page 31 of this Annual Report.
(b) Internal Control and Risk Management
The Statement of Internal Control is set out on pages 18 to 21 of this Annual Report.
(c) Relationship with the External Auditors
Through the Audit Committee of the Board, the Board has established formal and transparent arrangements for maintaining an appropriate
relationship with the Groups external auditors. The role of the Audit Committee in relation to the external auditors is stated in the Audit Committee
Report.
This Statement of Corporate Governance is made in accordance with the resolution of the Board of Directors dated 24 April 2006.
31
The Directors acknowledged their responsibilities as required by the Companies
Act, 1965 to prepare the nancial statements for each nancial year so as to give
a true and fair view of the state of affairs of the Group and the Company as at end
of the nancial year and of the results and cash ow of the Group and the Company
for the nancial year then ended.
In the preparation of the nancial statements, the Directors have:
adopted suitable accounting policies and apply them consistently;
made judgments and estimates that are reasonable and prudent;
ensured that applicable approved accounting standards have been complied with; and
prepared the nancial statement on the going concern basis unless it is no longer appropriate to presume that the Company will
continue in business due to unavailable resources.
The Directors are responsible for ensuring that proper accounting and other records are kept which disclose with reasonable accuracy at
any time the nancial position of the Group and the Company and to enable them to ensure that the nancial statements comply with the
Companies Act, 1965. The Directors are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps
for prevention and detection of fraud and other irregularities.
This Statement of Directors responsibilities is made in accordance with the resolution of the Board of Directors dated 24 April 2006.
statement
of directors
responsibilities
in preparing the nancial statements
32
Composition of the Audit Committee / Membership
The present members of the Audit Committee of the Company are:
(i) Raja Dato Seri Aman bin Raja Haji Ahmad (Independent Non Executive Chairman, Chairman)
(ii) Dato Ismail @ Mansor bin Said (Independent Non-Executive Director, Member)
(iii) Dato Haji Wan Zaki bin Haji Wan Muda (Non-Independent Executive Vice Chairman, Member)
Terms Of Reference of Audit Committee
Terms of Membership
(i) The Committee shall be appointed by the Board of Directors amongst its members and consist of at least three members, of whom
majority are Independent Directors.
(ii) The Committee shall include one member who is a member of the Malaysian Institute of Accountants (MIA); or if he is not a or if he
is not a member of the MIA, he must have at least 3 years working experience and he must have passed the examinations specied
in Part I of the 1st Schedule of the Accountants Act 1967; or he must be a member of one of the associations of accountants specied
in Part II of the 1st Schedule of the Accountants Act 1967.
(iii) In the event of any vacancy in the Committee resulting in the non-compliance with Paragraph 15.10 of the Listing Requirements of
Bursa Malaysia, the Board shall appoint a new member within three months.
(iv) The Board of Directors shall review the term of ofce and the performance of the Committee and each of its members at least once
in every three years.
(v) No alternate Director shall be appointed as a member of the Committee.
report of the
audit committee
33
report of the audit committee
Meetings and Quorum of the Audit Committee
(i) The Committee shall meet at least 4 times a year and the quorum shall be at least two persons with majority being Independent Directors. The details
of the attendance of the meetings are disclosed under the heading Attendance of Audit Committee Meetings on page 35 of this Annual Report.
(ii) The Company Secretary shall act as secretary of the Committee.
(iii) The Audit Committee may require the attendance of any management staff from the Finance/Accounts Department or other departments
deemed necessary together with a representative or representatives from the external auditors.

(iv) The Committee shall meet with the external auditors at least once a year without Executive Board members present. Upon the request of the
external auditor, the Chairman of the Audit Committee shall convene a meeting of the committee to consider any matter the external auditors
believe should be brought to the attention of the Directors or shareholders.
Functions of the Audit Committee
The duties and responsibilities of the Audit Committee shall include the following:-
(i) To consider the appointment of the external auditor, the audit fee and any questions of resignation or dismissal;
(ii) To discuss with the external auditor before the audit commences, the nature and scope of the audit;
(iii) To discuss with the external auditor on the evolution of the system of internal controls and the assistance given by the employees to the
external auditors;
(iv) To review and report to the Board if there is reason (supported by grounds) to believe that the external auditor is not suitable for reappointment;
(v) To review the quarterly and year-end nancial statements of the Board, focusing particularly on:
Any changes in the accounting policies and practices;
Signicant adjustments arising from the audit;
The going concern assumption; and
Compliance with accounting standards and other legal requirements.
(vi) To discuss problems and reservations arising from the interim and nal audits, and any matter the auditors may wish to discuss (in the absence
of the management where necessary);
(vii) To review the external auditors management letter and the managements response;
34
(viii) To do the following where there is an internal audit function:
Review the adequacy of the scope, functions and resources of the internal audit function, and that it has the necessary authority to carry
out its work;
Review the internal audit program and results of the internal audit process and where necessary ensure that appropriate action is taken
on the recommendations of the internal audit function;
Review any appraisal or assessment of the performance of members of the internal audit function;
Approve any appointment or termination of senior staff members of the internal audit function; and
Inform itself of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons
for resigning.
(ix) To consider any related party transactions that may arise within the Company or the Group;
(x) To consider the major ndings of internal investigations and the managements response;
(xi) To consider other topics as dened by the Board.
Rights of the Audit Committee
The Audit Committee has ensured that, wherever necessary and reasonable for the performance of its duties, in accordance with a procedure
determined by the Board:-
(i) have authority to investigate any matter within its terms of reference;
(ii) have the resources which are required to perform its duties;
(iii) have full and unrestricted access to any information pertaining to the Company;
(iv) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity (if any);
(v) be able to obtain independent professional or other advice; and
(vi) be able to convene meetings with the external auditors, excluding the attendance of the executive members of the committee, whenever
deemed necessary.
Procedures of Audit Committee
The Audit Committee regulates its own procedures:-
(i) the calling of meetings;
(ii) the notice to be given of such meetings;
(iii) the voting and proceedings of such meetings;
(iv) the keeping of minutes; and
(v) the custody, protection and inspection of such minutes
35
Review of the Audit Committee
The Board of Directors has ensured that the term of ofce and performance of the Audit Committee and each of its members are being reviewed
at least once in every three years to determine whether the Audit Committee and members have carried out their duties in accordance with their
terms of reference.
Attendance of Audit Committee Meetings
The details of attendance of each Audit Committee meeting held during the nancial year ended 31 December 2005 are as follows:-
Date of meeting Total committee members Attendance by committee members (Percentage attendance)
Independent Non-Independent
25 February 2005 3 2 (100%) 1 (100%)
18 April 2005 3 2 (100%) 1 (100%)
24 May 2005 3 2 (100%) 1 (100%)
24 August 2005 3 2 (100%) 1 (100%)
30 August 2005 3 2 (100%) 1 (100%)
28 November 2005 3 2 (100%) 1 (100%)
The details of attendance of each Audit Committee member in the Audit Committee meetings held during the nancial year ended 31 December
2005 are as follows:-
Name of Audit Committee member
Total meetings attended by
Audit Committee member % of Attendance
Raja Dato Seri Aman bin Raja Haji Ahmad 6/6 100%
Dato Haji Wan Zaki bin Haji Wan Muda 6/6 100%
Dato Ismail @ Mansor bin Said 6/6 100%
Activities Undertaken By Audit Committee
The activities of the Audit Committee during the nancial year ended 31 December 2005 include the following:-
(i) review the Groups year end audited nancial statements presented by the external auditors and recommend the same to the Board for approval;
(ii) review the quarterly nancial result announcements;
(iii) review audit plan of external auditors;
(iv) review related party transactions within the Group;
(v) review of internal audit reports on ndings and recommendations in relation to weaknesses in the internal control system presented by the
internal auditors and discussed with management on corrective actions to be taken.
SHARE BUY BACK
During the nancial year, the Company did not engage in any share buyback arrangement.
OPTION, WARRANTS OR CONVERTIBLE SECURITIES
Save for the exercise of options pursuant to the Employees Share Option Scheme, the amount of which is disclosed in Note
43 of the Notes to the Financial Statements, there were no other exercises of options during the nancial year ended 31
December 2005.
During the nancial year, the Company did not implement any Warrants or Convertible Securities.
AMERICAN DEPOSITORY RECEIPT (ADR)/GLOBAL DEPOSITORY RECEIPTS (GDR)
During the nancial year, the Company did not sponsor any ADR/GDR programme.
SANCTIONS AND/PENALTIES
Since the end of the previous nancial year, there was no material sanction or penalty imposed on the Company and its
subsidiaries, directors or management by the relevant regulatory bodies.
PROFIT GUARANTEE
The Company did not issue any prot forecast or prot guarantee for the nancial year ended 31 December 2005.
UTILISATION OF PROCEEDS FROM CORPORATE PROPOSALS
The Company did not implement any corporate proposals to raise funds for the nancial year ended 31 December 2005.
STATEMENT OF VALUATION POLICY ON LANDED PROPERTIES
Landed properties held for long term investment purpose will be appraised at least once in every ve years.
36
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NON AUDIT FEES
There were no non-audit fees paid to the external auditors by the Company and its subsidiaries for the nancial year ended 31 December 2005.
VARIATION IN RESULTS
There is no signicant difference between the Audited and Unaudited Results released to the Bursa Malaysia in respect of the nancial year ended
31 December 2005.
MATERIAL CONTRACTS OR LOANS WITH RELATED PARTIES
Save as those disclosed in the following recurrent related parties transactions of a revenue in nature, there were no material contracts or loans entered
by the Company and its subsidiaries involved Directors and major shareholders interests either subsisting at the end of the nancial year ended 31
December 2005 or entered into since the end of previous nancial year.
RECURRENT RELATED PARTY TRANSACTIONS
The value of related party transactions entered by the Company and its subsidiaries during the nancial year which have acquired the shareholders
mandate in the previous AGM are quantied as follows :
Nature of the transactions with related party Entered by
Period covered
from 1 January
to 30 June of
Year 2005
RM000
Period covered
from 1 July to 31
December of Year
2005
RM000
a) Purchases of building materials from following subsidiaries of CHRB
(i) Chuan Huat Industrial Marketing Sdn. Bhd.
(ii) Chuan Huat Hardware Sdn. Bhd.
AZSB
AZSB
1,934
8
3,830
b) Insurance premium paid/payable to ZHSB AZSB, ICSB and AZRB 157 171
c) Administrative charges paid/payable to ZHSB AZSB and ICSB 61 61
d) Rental of premises paid to Dato Haji Wan Zaki bin Haji Wan Muda AZSB 18 18
e) Rental of premises paid to ZHSB AZSB and AZRB 210 210
f) Accommodation charges paid/payable to RIM AZSB 3 1
g) Rental received/receivable from RIM AZSB 18 18

Relationship of the related parties:
(i) Chuan Huat Resources Berhad (CHRB) Chuan Huat Resources Berhad, a company in which Dato Haji Wan Zaki bin Haji Wan
Muda has substantial nancial interest and is also a director.
(ii) Residence Inn & Motels Sdn. Bhd. (RIM) A subsidiary to Zaki Holdings (M) Sdn. Bhd.
(iii) Zaki Holdings (M) Sdn. Bhd. (ZHSB) Holding company of Ahmad Zaki Resources Berhad.

37
other information
Environmental management activities during the year are well demonstrated during
the implementation of our project sites at:
1) Subang Kelana Roadwork Project
2) Putrajaya Mosque at Precinct 3
3) 2C2 Hotel Basement at Precinct 2, Putrajaya
The Subang Kelana road project is located at the densely populated area in Subang Jaya. The sensitivity of environmental issues during construction
are the utmost importance not only being monitored by the local authority, Majlis Perbandaran Subang Jaya but also by the Residents Association.
We are committed to ensure that the environmental aspects are being monitored regularly and meet the standard requirement at all times.
The construction of Putrajaya Mosque and 2C2 Hotel Basement in Putrajaya are directly adjacent to the Putrajaya Lake. The main concern at these
projects is the monitoring of water quality that is related to silt trap discharge and surface run-off to the lake. With proper and systematic control and
maintenance of silt traps and perimeter drainage, the discharge of water and surface run-off to the lake is within the acceptable limit and the client
and the local authority are satised with our standards. We welcome any comments included in the non-compliance report and observation reports
issued by client and our internal auditors during audit exercises as we believe these comments would improve the system to avoid any spillage of
sediments and other aqueous materials to the lake.
The basic items that were monitored in the projects were:
(1) Silt Traps Discharge Monitoring
Silt Traps were constructed at site together with the perimeter earth drains and sand bags as bunds to intercept and channel the surface water
run-off within the construction site that contains sediments to the silt traps. The silt traps and earth drains are maintained regularly to ensure
the effectiveness of the system.
(2) Water Quality Monitoring
The most important indicator during the site clearing and earthwork activities is the total suspended solid. Monthly monitoring were done during
the construction stage to monitor the rate of change compared to the reading taken prior to the commencement of work and the ambient
values at the site and downstream or nearby water ways.
environmental
management
activities at
project sites
38
(3) Air Quality Monitoring
The ambient air monitoring was carried out to determine the characteristics at the sensitive receptor namely in the areas of Subang Jaya
residential areas and Putrajaya Administrative centre. Monthly monitoring was done to ensure that the total suspended particles concentration
is well below the hazard value.
(4) Noise Quality Monitoring
Noise level readings were taken using a pre calibrated precision integrating noise meter where the equipment was set up at the open space
within the project sites. The monitoring were done during the day and night time to record the noise level due to the construction activities.
The basic complaints at sites from our previous records are usually in relation to the following items as listed below. However, we always conduct
remedial measures so as to minimize or eradicate the issues. The action plans too were tabled to the Local Authorities (Majlis Perbandaran Subang
Jaya and Putrajaya Corporation) and also during the progress monitoring meeting.
a) Erosion and Sedimentation Control
Sand bags, concrete blocks / rocks and proper maintenance of perimeter drains are constantly used to lter and intercept the surface run-off
and also to act as barrier towards landslides. Temporary turng is also done to minimize the problems.
b) Solid Waste
Waste bins are provided at designated locations and all the wastes should be disposed at an approved dump site. An area for construction
debris too was designated within the site.
c) Temporary Toilets
To provide a clean sanitary condition, portable toilets were used at construction sites beside the standard temporary toilets. For portable toilets,
maintenance was carried every alternate days and desludging were done regularly.

d) Housekeeping
Housekeeping of sites was carried out by gotong royong exercise between site staff, workers and other subcontractors. The gotong royong
is normally done on a weekly basis.
e) Mosquito and Pest Control
The rodent and pest control services were engaged to carry out the mosquito and pest control activities at sites. The services include the
application of abate spraying and fogging which were carried out fortnightly.
Conclusion
We in AZRB believe that for the successful implementation of an effective environmental programme, a sense of responsibility is to be embraced
by all personnel involved in the projects. Because of this, we are constantly raising the level of our awareness, knowledge and commitment so as to
ensure an environmentally safe working condition not only for our operations but to the general public and the environment as well.
environmental management activities at project sites
39
40
quality,
safety and
health policy
Quality
We believe that quality enhances the value and reputation towards our
continued growth. We strive to provide quality and valued added services to
our customers satisfaction.
The objective of Quality Policy are :-
Meeting the expectations of the Client and to comply with statutory and regulatory requirements
Instill values of doing things right the rst time, every time
Promote Quality within AZSB, Suppliers and Sub-Contractors
Continuously improve our processes to meet and exceed MS ISO 9001:2000 Quality Management System
Work in a responsible manner in harmony with the natural and cultural environment.
The achievement of ISO 9000 certication since year 2000 for its construction arm Ahmad Zaki Sdn Bhd (AZSB), testies the Group commitment
towards its mission of being a trusted leader in delivering commitment with excellence and value. The successful upgrading of the ISO certication
from ISO 9002:1994 to ISO 9001:2000 shows the commitment and sensitivity towards the latest requirements and our willingness to change for
continuous improvement to pursue quality excellence.
In October 2005, AZSB obtained the SIRIM QAS recertication of ISO 9001:2000. Ahmad Zaki Resources Bhd also has been certied under the
provision of construction services for civil and building engineering works. All domestic and overseas projects undertaken by the company have
implemented the Quality Management System.
Customer Satisfaction Survey are conducted annually to measure the level of our customer satisfaction towards our work. It is then analysed and
used as a tool to improve the quality of our services to enhance customer satisfaction.
Project management, administration skills, technical knowledge and product quality are among the key performance index used and evaluated by
all clients on our project teams.
The system is a self access system where all approvals such as shop drawings, method statements and materials are vetted through by the QAQC
prior to submission to the Consultant or Client for approval. Staff will inspect the work rst and if found satisfactory, the work will then be run through
the Consultant or Client for inspection. Thus, we apply our work culture for doing things right, the rst time and every time.
The quality system, trainings and promotions is intended to cultivate a culture based on quality awareness not only within our staff, but extended to
all those involved with the Groups activities and the company ensures that the programme is always conducted on a continuous basis.
Currently, the continued improvements of the system are being planned and implemented in-conjunction with the growth of the company and its
increased turnover. In line with the companys policy to venture into overseas market, the project management system and the products delivered
must now meet the international standards.
41
quality, safety and health policy
Internal Quality Audit is being carried out twice a year on all projects and departments to ensure effective implementation and compliance of the
system along with the external audit by SIRIM QAS Sdn Bhd which is done once a year. Performance of the system is constantly being measured,
monitored and where applicable, improvements are made through corrective and preventive actions.
We believe in aiming to deliver excellence in every undertaking in all aspects our work and even going beyond the customers expectation.
Safety And Health
Being a responsible corporate citizen, the Group is committed to ensure all employees work in a safe and healthy environment, therefore safety and
health considerations will not be compromised in all company activities. Building a strong safety minded culture among all staff, workers, subcontractors
and suppliers is integral to the company construction activities.
The Group believes that human resources are an asset to the company, thus the development of their safety and health aspects and awareness are
the top priority. Staffs are continuously sent for trainings and awareness programmes in safety and health including inductions, occupational safety
and health practices, re ghting, rst aid and emergency response training and drills. These are in line with the Groups commitment to achieve
accident free environment.
Periodical safety audits are being carried out by internal auditors and also by external auditors (NIOSH Certication Sdn Bhd) to ensure compliance
to the system.
With our diligent efforts towards safety and health in compliance with the legislative requirements, the Groups construction arm Ahmad Zaki Sdn
Bhd was certied as an OHSAS 18001 company in September 2004. Being OHSAS 18001 certied, the commitment from the top management,
dedicated safety ofcers and organizing of safety awareness campaign programs annually to all our project sites and headquarters as well, lies
testimony of the Groups concerted endeavor towards the safety and health of its employees.
The companys approach by introducing the partnering concept to all staff, workers, subcontractors and suppliers not only in project management
but also in safety and health aspect has ensured the successful implementation of the safety and health policy.
Among the continual activities implemented are :-
Enhancement of Safety and Health subcontract agreement
Site Safety Committee involving subcontractors/workers
In-House Training Safety and Health awareness training
Induction courses for new staff/workers and subcontractors
Weekly tool box meeting
Monthly Safety and Health meeting and walk-about audit
Internal audits and external audits
Training needs on Safety and Health for Staff
Safety Campaign
HIRAC (Hazard Identication and Risk Assessment Control) for each activity at project sites are being implemented. The involvements of subcontractors
to present and highlight the hazards and methods to mitigate the risks have been the practice for all project sites. Once the mitigation measures
have been accepted, the risks are briefed to the workers during the tool box meeting.
The concerted effort put by the staff, workers and subcontractors in implementation the safety and health procedures have been recognized by the
authorities. The Companys achievement in safety and quality was recognized when it was short listed as one of the three nalists in construction
industry category in the National Safety Awards 2005.
We are committed to pursue our objective of achieving zero accidents rate at our workplace and ensuring continuous improvement in Safety and
Health awareness and performance.
42
high standards
setting and maintaining
43
in all undertakings
superior performance
striving for
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Dear shareholders,
12 months have passed since our Annual Report last year. During that
period, we have looked upon the future with optimism and self-belief based
on our efforts and achievements. On behalf of the Board of directors, it
gives me great pleasure to again present our Annual Report and Audited
nancial statements for AZRB and its Group of companies for the nancial
year ended 31 December 2005.
12 bulan telah berlalu sejak Laporan Tahunan kita pada tahun sebelumnya.
Sepanjang tempoh tersebut, kita telah merenung ke depan dengan penuh
optimisme dan kepercayaan kepada diri sendiri berdasarkan usaha-usaha
dan pencapaian kami sebelumnya. Bagi pihak Lembaga Pengarah, saya
dengan berbesar hatinya untuk sekali lagi membentangkan Laporan
Tahunan dan penyata-penyata kewangan yang diaudit untuk Syarikat
Kumpulan AZRB untuk tahun kewangan berakhir 31 Disember 2005.
It has been a stellar 12 months for the Group. As you
may recall last year, the Company had been committed
in remaining steadfast in its resolve to continue to create
shareholder value at every opportunity. We have been
ready to redene our focus, review our positioning and
rethink our strategy. We have proven that in these past 12
months that while the construction industry is experiencing
laggard growth; we have shown and demonstrated the
strength of our commitment to create more value for our
shareholders. Our nancial results for 2005 reect the value
of our practices and of the Groups investment policy and
business strategy.
Syarikat telah merekodkan prestasi yang amat cemerlang
dalam tempoh 12 bulan sebelumnya. Seperti mesej saya
pada tahun lepas, Syarikat berpegang teguh dalam azamnya
untuk mewujudkan nilai pemegang saham di setiap peluang
yang ada. Kami telah bersedia untuk mentakrifkan semula
tumpuan perniagaan, mengkaji semula kedudukan dan
memikir semula strategi kita. Manakala industri pembinaan
telah mengalami pertumbuhan yang lembab; kita telah
membuktikan dalam masa 12 bulan yang lalu ini kekuatan
komitmen kita untuk mewujudkan lebih nilai untuk
pemegang saham kita. Prestasi kewangan kita untuk tahun
2005 mencerminkan nilai tatacara yang telah kita amalkan
dan juga polisi pelaburan dan strategi perniagaan kita.
46
IT Expressway, Chennai, India
chairmans statement penyata pengerusi
Financial Performance
In retrospect for 2005, our hard work and prudent measures
have beneted the entire Group in its bottom line. For the nancial
year ended 31 December 2005, the Group recorded its highest
prot performance ever. The Group achieved a Prot Before Tax
(PBT) of RM28.1 million compared to a loss of RM4.1 million
in 2004. Prot After Tax increased to RM18.9 million from a
loss of R11.7 million from last year. Whilst revenue was slightly
down to RM249.1 million from RM257.9 million in 2004, the
PBT contribution was very much higher in 2005 due to stronger
operational performance.
Sustainable Development
Construction remains at the forefront of our core business activity.
However, the Groups oil and gas trading subsidiary has again
contributed signicantly to the Groups bottom line. Operating
prot before nancing income, charges and taxation contribution
from the oil and gas division was RM9.6 million for 2005. With
the prices of world oil which is expected to further increase,
this has allowed the Group to take a strategic position in the oil
and gas bunkering business with strong growth potential and
income contribution.
Prestasi Kewangan
Meninjau kembali prestasi 2005, usaha keras kami dan langkah-
langkah cermat kita telah memberi faedah kepada keuntungan
Kumpulan secara keseluruhan. Untuk tahun kewangan berakhir
31 Disember 2005, Kumpulan telah merekodkan prestasi
keuntugan tertinggi. Kumpulan mencapai Keuntungan Sebelum
Cukai sebanyak RM28.1 juta berbanding dengan kerugian
RM4.1 juta dalam tahun 2004. Keuntungan Selepas Cukai
meningkat dengan ketara kepada RM18.9 juta daripada
kerugian RM11.7 juta pada tahun sebelumya. Walaupun
Pendapatan menganjak kurang sedikit kepada RM249.1 juta
berbanding RM257.9 juta dalam tahun 2004, sumbangan
Keuntungan Sebelum Cukai jauh lebih tinggi dalam tahun 2005
disebabkan oleh prestasi operasi yang lebih kukuh.
Pembangunan Mampan
Aktiviti pembinaan masih menerajui kegiatan perniagaan
teras kita. Bagaimanapun, anak syarikat Kumpulan yang
terlibat didalam dagangan industri minyak dan gas telah sekali
lagi menyumbang dengan ketaranya kepada keuntungan
keseluruhan Kumpulan. Sumbangan keuntungan operasi
sebelum pendapatan pinjaman, caj-caj dan percukaian daripada
47
Al-Faisal University, Riyadh
48
Hospital Ampang
excellence in corporate responsibility
delivers competitive advantage
49
growth in business in FY2006. With our good track record,
disciplined management, expertise, reputation and work
quality, we are in a strong position to meet our customers
needs. We will remain focused on the areas where we do
best construction of building and infrastructure projects
and we will continuously seek ways to strengthen our niche
positioning in these sectors.
While we continue to explore suitable opportunities beyond
our shores, such as the current construction of the Al-
Faisal University in Riyadh as well as the construction of
IT Expressway in Chennai, India, we will remain steadfastly
prudent and will only consider projects that are commercially
viable. Any projects that we tender for will be subject to
careful planning and will have to meet our objectives of
protability and viability.
Further, we will continue to focus on our strengths in home
soil and actively pursue and bid for Public works projects such
as those outlined by our Prime Minister during the unveiling
of the 9th Malaysia Plan in April 2006. While we continue
Tanggungjawab Korporat
Syarikat memberi keutamaan yang khusus kepada alam
sekitar melalui pengamalan kerja secara beretika untuk
mengurangkan impak persekitaran ke tahap yang minima
dalam operasi perniagaan kita.
Kita juga mengambil dengan serius kewajipan kita kepada
semua pemegang saham ki ta memandangkan ki ta
memahami bahawa kecemerlangan dalam tanggungjawab
korporat akan mampu membawa kita ke arah kelebihan
daya mampu untuk bersaing dan kejayaan untuk jangka
masa panjang.
Our plantation subsidiary, PT Icthiar Gusti Pudi, which we
acquired in 2004, has commenced its nursery for oil palm
plantation and we expect to start the eld planting in Yr 2006.
Its revenue stream is expected to come online in only Yr
2009. This new division will help create a new source of
income for the Group in the longer term period.
Corporate Responsibility
The Group attaches a particular priority to the environment
by adopting practices in our work ethics which minimise the
environmental impact of our business operations.
We also take seriously our obligations to all our stakeholders
as we believe that excellence in corporate responsibility
delivers competitive advantage and long-term success.
Moving Forward
Barring unforeseen circumstances, with our current list of
projects in hand, our Group is on track towards a sustainable
perniagaan minyak dan gas adalah RM9.6 juta untuk 2005.
Memandangkan harga minyak sedunia yang dijangka akan
terus meningkat tinggi, syarikat kini berada dikedudukan yang
strategik untuk mengambil kesempatan harga minyak yang
tinggi untuk memantapkan lagi perniagaan bunkering gas
dan minyak dengan potensi pertumbuhan dan sumbangan
pendapatan yang kukuh untuk Kumpulan.
Anak syarikat perladangan kita, PT Icthiar Gusti Pudi yang
diperolehi dalam 2004, kini dalam proses penyemaian dan
penanaman pokok kelapa sawit dijangka bermula dalam tahun
2006. Justeru itu, pendapatan dari perniagaan minyak kelapa
sawit dijangka menjana keuntugan mulai tahun 2009. Ini sudah
tentu akan membantu mewujudkan satu sumber pendapatan
baru untuk Kumpulan untuk tempoh jangka panjang.
50
to build our project list on hand, we will be selective in our
tenders. Our priority will be to achieve consistent long-term
protability by tendering for projects that yield reasonable
returns. Although the competition will remain very strong, we
believe that companies with good management and that are
nancially strong will do well in the long term.
Our diversication efforts have also taken shape with our
investment in oil palm plantation and oil and gas businesses.
We will strive to venture and explore other areas of business
which offers substantial returns to the Company and help
sustain our growth in years to come.
Dividend Payout
In view of the excellent performance of the company
in FY2005, the Board recommended a first and final
dividend of 15%.
Maju Ke Hadapan
Sekiranya tiada ara yang melintang, dan dengan jumlah
projek-projek semasa yang dibangunkan sekarang, Kumpulan
kita kini di atas landasan menuju ke arah pertumbuhan
mampan dalam prestasi perniagaan untuk tahun 2006.
Dengan rekod prestasi cemerlang kita, pengurusan yang
berdisiplin, kepakaran, reputasi dan mutu kerja, kita
kini berada di kedudukan yang kukuh untuk memenuhi
keperluan-keperluan para pelanggan kita. Kita akan tetap
tertumpu pada kawasan-kawasan di mana kami mempunyai
kepakaran terbaik pembinaan projek-projek infrastruktur
dan kita akan terus mencari cara-cara bagi memperkukuhkan
bidang kita tataatur dalam sektor-sektor ini.
Kita akan terus meneroka peluang-peluang yang sesuai
menjangkau negara kita, seperti projek syarikat dalam
pembinaan Al-Faisal University di Riyadh serta pembinaan
Lebuh Raya IT di Chennai, India, kita akan kekal teguh
dan akan cermat mempertimbangkan projek-projek yang
mempunyai potensi daya maju secara komersial. Mana-mana
projek tender akan tertakluk kepada perancangan teliti dan
akan memenuhi objektif kita untuk memperolehi keuntungan
dan kebolehhidupan.
Seterusnya, kita akan menumpukan kekuatan kita di tanahair
sendiri terutamanya tender untuk kerajaan atau berkaitan
dengan projek-projek kerajaan seperti yang dibentangkan
oleh Perdana Menteri semasa memperkenalkan Rancangan
Malaysia Kesembilan dalam April 2006. Syarikat akan
terus membina dan menambah senarai projek. Di masa
yang sama, kita juga akan meneliti dan memilih tender-
tender yang ditawarkan. Keutamaan kita adalah untuk
mencapai keuntungan jangka panjang secara konsisten
melalui penglibatan tender untuk projek-projek yang akan
memberikan hasil pulangan yang munasabah. Walaupun
persaingan kompetitif akan sentiasa wujud, hanya kontraktor-
kontraktor yang berwibawa dan mempunyai pengurusan yang
baik dan serta segi kewangan kukuh akan bertahan dan dapat
mampu bersaing baik dalam jangka masa yang panjang.
Subang Link
Jalan Duta
51
RAJA DATO SERI AMAN B RAJA HAJI AHMAD
Chairman/Pengerusi
Acknowledgements
I wish to acknowledge that our performance this year could not have been achieved without the combined support, dedication and hard work of
our management and employees as a whole. Therefore, I wish to express my sincerest appreciation to the management and staff for their strong
commitment and dedication towards achieving the Companys objectives. Your undivided loyalty and focus towards the Companys shared Vision
has again brought us the desired results.
On behalf of the directors, I would also like to thank our valued customers, Government agencies, consultants, contractors, business associates,
suppliers and shareholders for their unwavering support, continued contribution and condence in AZRB. A word of gratitude is also due to my Board of
Directors for their invaluable advice. Together, we will continue to grow from strength to strength, achieving excellence and a rewarding tomorrow.
Usaha kita untuk mempelbagaian perniagaan juga telah mengambil bentuk dengan pelaburan dalam perladangan minyak sawit dan penglibatan dalam
industri minyak dan gas. Kita akan berusaha untuk menerajui dan meneroka bidang-bidang perniagaan lain yang mampu menawarkan pulangan
yang bermanfaat ke Syarikat dan akan membantu menampung pertumbuhan kita untuk tempoh akan datang..
Bayaran Dividen
Memandangkan prestasi yang cemerlang syarikat dalam FY2005, Lembaga mengesyorkan cadangan dividen akhir kasar sebanyak 15% sesaham
biasa bagi tahun kewangan berakhir 31 Disember 2005.
Penghargaan
Saya ingin menegaskan bahawa prestasi kami tahun ini tidak mungkin dicapai tanpa sokongan yang tidak berbelah bahagi, dedikasi dan daya usaha
pihak pengurusan dan kakitangan secara keseluruhannya. Oleh itu, saya ingin merakamkan penghargaan yang paling ikhlas kepada pihak pengurusan
dan kakitangan untuk komitmen dan daya ketahanan mereka kepada Syarikat. Kita telah menunjukkan ketaatan, azam dan daya upaya kita dan kita
juga telah membuktikan yang kita boleh mencapai hasrat dan aspirasi syarikat.
Bagi pihak pengarah-pengarah, saya juga ingin merakamkan setinggi-tinggi terima kasih kepada para pelanggan yang dihargai, agensi-agensi
kerajaan, konsultan, kontraktor-kontraktor, rakan-rakan perniagaan, pembekal-pembekal dan pemegang saham untuk sokongan sepadu, sumbangan
dan keyakinan mereka yang berterusan ke atas AZRB. Sepatah perkataan terima kasih juga kepada Lembaga Pengarah syarikat untuk nasihat yang
tidak ternilai yang telah diberikan. Bersama-sama, kita akan terus meningkatkan keutuhan Syarikat, mencapai kecemerlangan dan manfaat untuk
keesokan hari.
Construction Division
2005 was a challenging year for our construction division. The industry
contracted 1.1% compared to a similar contraction of 1.5% in 2004. The
trend has remained in the past two years which saw the construction industry
experiencing a negative growth. This was primarily due to the lower spending
on infrastructure projects and also the sharp decline in civil engineering
activity due to the completion of several major projects in the country.
As such, our construction division has registered a lower growth of revenue for 2005 of RM212 million against RM223 million
in 2004. However, operational prot before share of joint venture and associated companies, nancing income, charges
and taxation, has improved compared to the preceding year with Prot After Tax improving from RM13.2 million in 2004 to
RM22.4 million in 2005.
52
we have created a solid reputation
as the constructor of architecturally
aesthetic buildings with excellent
craftmanship
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53
Hospital Ampang
54
review of operations
In 2005, two (2) project were completed and was successfully handed over :-
Ampang Hospital, Ampang, Selangor
The 562-bed Ampang Hospital was built by AZRB on a turnkey basis on a 10-acre piece of land in Taman Pandan Mewah, Ampang, Selangor.
The 8-oor Ampang Hospital accommodates 562 hospitals beds and has a hostel for nurses along with a separate car park area. It will provide
second degree treatment for residents in the Ampang and its surrounding areas as well as those living in Klang Valley, and third degree treatment
for Endocrinology and Respiratory.
Ampang Hospital is a Tertiary standard hospital and is equipped with Total Hospital Information System (THIS) which is integrated with clinical systems
such as Laboratory Information System (LIS), Clinical Information System (CIS), OIS, Picture Archiving and Communication System (PACS), Hospital
Administration and Financial Information Systems (HIS).
AZRB is currently maintaining the Ampang Hospital for a two-year period as contractually required under the Defect Liability Period.
Putrajaya Auditorium Complex
The Putrajaya Auditorium Complex is located in the Federal Administrative capital of Putrajaya. Construction started in 2002 and the project was
successfully handed over to the Putrajaya Corporation in mid 2005.
The buildings design concept is based on creating a main public events area within Putrajaya, housing specialized facilities integrating all other
developments within the complex. The entire design of the complex is a retrospect look of oating pebble housed within a box frame. This promotes
the air of transparency and the free ow of pedestrian movement. The auditorium complex comprises the auditorium itself and an annex block and
both the auditorium and annex block are linked together via a link bridge.
Overall, the auditorium complex infuses an aura of environmental ambience created by the use of combining aluminium framed glazed curtain wall as
well as the screen wall. The main feature of the complex is the main auditorium hall. The hall houses 650 plush carpeted seatings throughout and is
complemented by the Galaxy ceiling concept. The perimeter walls symbolizes the traditional Anyaman design which is an infusion of Semangkuk
timber enhanced by the shade of gold when lighted up.
With this prestigious landmark in our nations Federal Administrative capital, the complex will play host to a multitude of stage performances and events
such as theatre, musicals, orchestras, operas and will undoubtedly elevate Putrajayas status for the future of arts and literature in the country.
55
Kompleks Auditorium, Precinct 3, Putrajaya
56
Al-Faisal University, Riyadh
57
Kiblat Walk,
Putrajaya Mosque,
Putrajaya
On-going and New Projects
The construction division has secured several new projects. The on-going projects include infrastructure, commercial and
development projects under the Government, private sector and international clients. The new and on-going projects are
listed as below :-
No. Project Name
Contract
Value
(RM million)
Project
Completion
Date
1.
Construction of Park and Ride Terminal, Precinct 7, Putrajaya 44.9 Apr 2006
2.
Construction of Bored Piling and Associated Foundation Works
for the Proposed Development of a 4 star Business Class Hotel,
Precinct 2, Putrajaya
11.9 Apr 2006
3.
Design and Build for Duta Road, Kuching Road and Other
Connecting Roads in Kuala Lumpur
167.0 Sept 2006
4.
Improvement and Maintenance of IT Expressway in Chennai, India 105.5 Oct 2006
5.
Construction of Kiblat Walk, Putrajaya Mosque, Putrajaya 208.9 May 2007
6.
Construction of Al-Faisal University, Riyadh, Saudi Arabia
(Phase 1 and 2)
397.4 Jun 2007
7.
Proposed Construction and Completion of an indoor
Sports Complex, Gong Badak, Terengganu
115.9 Jan 2008
8.
Design and Build for Jitra Road through Kodiang,
from Kedah to Arau, Perlis
87.2 Jan 2008
9.
Design and Build for Subang-Kelana Link (Phase 1 and 2) 315.5 Dec 2008
10.
Upgrading of Federal Road 3 from Kuantan to Pekan 383.9 May 2009
Our experience and expertise has been acknowledged by our peers and competitors in the industry and we have created
a solid reputation as the constructor of architecturally aesthetic buildings which calls for excellent craftsmanship. This has
been evident in our other past completed construction projects such as the Formula 1 Racing Circuit in Sepang, Lim Kok
Wing University College of Creativity, the many ne buildings of the International Islamic University, the KLIA Mosque, the
Petronas Technology University and the Federal Territory Mosque in Jalan Duta, Kuala Lumpur.
Despite the challenging conditions facing the construction industry, our construction division has increased its current
unbilled order book to RM1.5 billion. The division is also condent of securing more projects listed under the 9th Malaysia
Plan that was recently outlined by the Government.
58
Oil and Gas Division
Our oil and gas subsidiaries, Inter Century Sdn Bhd (ICSB) and Astral Far East Sdn Bhd (AFESB) are now well positioned to take advantage in the
increase of demand and consumption of oil and oil related products such as fuel, diesel, lubricants etc etc. ICSB in hand has a 5 years contract
with PETRONAS Dagangan Berhad, which is expiring on 31st May 2008 with 5 years renewal option, to supply fuel to marine and offshore vessels.
The division believes that with the increase in the concentration of oil-related activities such as oil exploration and oil production activities which in
turn would lead to increased demand in fuel, diesel, lubricants, etc for the offshore vessels. As such, this division has the potential to deliver better
performance in 2006.
In the future, the division could increase its bunkering capacity should the price situation persist or an opportunity to increase its activity beyond its
current operation into downstream activities.
F1 Circuit, Sepang Federal Territory Mosque, Kuala Lumpur
Plantation
In December 2004, the Group acquired an Indonesian company, PT Ichtiar Gusti Pudi (IGP). With the acquisition, the Group has established a presence
in the oil palm industry and PT IGP had been granted the permission to cultivate (Izin Lokasi) oil palm with a total area of 20,500 hectares which is
inclusive of the rights for cultivation (Hak Guna Usaha) of 8,2709.07 hectares of palm oil in Kalimantan Barat, Indonesia.
Currently, there are over 700,000 seedlings in the nursery area (pre-nursery and main nursery) totaling 50 hectares which is Stage 1 of the planting.
Some of these have been transported in stages into the main nursery or Stage 2 after 3 months being in the pre-nursery. We anticipate commencing
actual eld planting of the oil palm seedlings in October 2006.
Property Development
In light of the soft market conditions, no major development was undertaken throughout the year under review for the Groups only the development
project, namely the Taman Industri Paka at Paka, Dungun, Terengganu. Our subsidiary, Kemaman Technology and Industrial Park Sdn Bhd is planning
to restructure its focus from industrial lots to residential development on the balance undeveloped area. The proposal is still at the study stage and
any further development is dependent on the outcome of the market analysis. Owing to the above scenario, no signicant contribution from this
division is expected in the immediate future.
59
Nursery at PT Ichtiar Gusti Pudi, Kalimantan, Indonesia Oil and Gas Activities
60
being pro-active through continuous
research
61
development
in meeting challenges
62
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64
nancial statements
65
Directors Report
Directors Statement
Statutory Declaration
Report of the Auditors
Balance Sheets
Income Statements
Statements of Changes in Equity
Cash Flow Statements
Notes to the Financial Statements
Analysis of Shareholdings
List of Properties
Proxy Form
nancial statements 66
73
73
74
75
77
78
80
83
137
139
66
The Directors have pleasure in submitting their report and the audited
financial statements of the Group and of the Company for the year ended
31st December, 2005.

Principal Activities
The Company is principally engaged in investment holding, providing management services and as contractors of civil and structural construction
works. The principal activities of the subsidiary companies are disclosed in note 6 to the nancial statements. There have been no signicant changes
in the nature of these activities.
Results
Group
RM
Company
RM
Prot attributable to shareholders 18,898,874 10,559,956

Dividend
Since the end of the previous nancial year, the Company paid a rst and nal dividend of 7% less tax at 28% amounting to RM3,362,204/- in
respect of the nancial year ended 31st December, 2005.
The Directors recommend a rst and nal dividend of 15% less tax at 28% amounting to RM7,204,723/- in respect of the nancial year ended
31st December, 2005.
Reserves and Provisions
There were no material transfers to or from reserves or provisions during the year other than those disclosed in the nancial statements.
Bad and Doubtful Debts
Before the income statements and balance sheets of the Group and of the Company were made out, the Directors took reasonable steps to
ascertain that action had been taken in relation to the writing off of bad debts and the making of provisions for doubtful debts, and have satised
themselves that all known bad debts had been written off and that no provision for doubtful debts is required. At the date of this report, the Directors
are not aware of any circumstances which would require provision to be made for doubtful debts or the amount written off for bad debts in the
nancial statements of the Group and of the Company inadequate to any substantial extent.
Current Assets
Before the income statements and balance sheets of the Group and of the Company were made out, the Directors took reasonable steps to ensure
directors report
67
that any current assets which were unlikely to realise in the ordinary course of business their values as shown in the accounting records of the Group
and of the Company have 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 which would render the values attributed to the current assets in the
nancial statements of the Group and of the Company misleading.
Valuation Methods
At the date of this report, the Directors are not aware of any circumstances which have arisen which render adherence to the existing method of
valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
Contingent and Other Liabilities
At the date of this report there does not exist:-
(i) any charge on the assets of the Group or of the Company which has arisen since the end of the nancial year which secures the liabilities of
any other person, or
(ii) any contingent liability in respect of the Group or of the Company which has arisen since the end of the nancial year.
No contingent liability or other liability of the Group or of the Company has become enforceable, or is likely to become enforceable within the period
of twelve months after the end of the nancial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group or of
the Company to meet their obligations as and when they fall due.
Change of Circumstances
At the date of this report, the Directors are not aware of any circumstances, not otherwise dealt with in this report or the nancial statements of the
Group and of the Company which would render any amount stated in the nancial statements misleading.
Items of an Unusual Nature
In the opinion of the Directors:-
(i) the results of the operations of the Group and of the Company for the nancial year were not substantially affected by any item, transaction or
event of a material and unusual nature.
(ii) there has not arisen in the interval between the end of the nancial 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 of the Company for the nancial year in which this
report is made.
directors report contd
68
Issue of Shares
During the year, no new issue of shares was made by the Company.

Employees Share Option Scheme (ESOS)
The Groups ESOS was approved by shareholders of the Company at the Annual General Meeting held on 20th June, 2002. The ESOS shall continue
to be in force for a duration of ten (10) years commencing from 26th July, 2002 and expiring on 25th July, 2012.
The salient features of the ESOS are:-
(a) eligible persons are full time employees with conrmed employment within the Group (including executive directors) other than a company
which is dormant. The Date of Offer being the date when an offer in writing is made to eligible employees to participate in ESOS. The eligibility
for participation in the ESOS shall be at the discretion of the Option Committee appointed by the Board of Directors;
(b the number of ordinary shares of RM1/- each in the Company (AZRB Shares) allocated, in the aggregate, to the directors and senior
management of the Group shall not exceed fty percent (50%) of the total AZRB Shares available under the ESOS;
(c) the aggregate number of shares to be allotted and issued under ESOS shall not exceed ten percent (10%) of the total enlarged issued and paid-
up ordinary share capital of the Company at the time of the offer or at any per centum in accordance with any guidelines, rules and regulations
of the relevant authorities governing the ESOS during the existence of the ESOS;
(d) the exercise price for each share shall be set at a discount of not more than ten percent (10%) from the weighted average market price of the
AZRB shares as shown in the Daily Ofcial List of Bursa Malaysia for the ve (5) Market Days immediately preceeding the Date of Offer;
(e) the number of AZRB Shares allocated to any individual director or employee who, either singly or collectively through persons connected holds
twenty percent (20%) or more in the issued and paid-up share capital of the Company shall not exceed ten percent (10%) of the total AZRB
Shares available under the ESOS; and
(f) new shares issued under the ESOS shall rank pari passu in all respects with the existing ordinary shares save and except that the new shares
shall not be entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which precedes the date of allotment
of the new shares.
During the nancial year, the number of ESOS options exercised and lapsed are as follows:-
Number of Share Options
2005 2004
At 1st January 2,798,800 3,224,600
Exercised - (404,200)
Lapsed (91,200) (21,600)
At 31st December 2,707,600 2,798,800
69
ESOS options lapsed due to resignations of employees.
There were no share options exercised during the nancial year.
Details of share options exercised during the nancial year:-
Exercise Period Exercise Price Number of Share Options Consideration Received
RM 2004 2004
RM
1.1.2004 - 31.12.2004 2.05 404,200 828,610
Less : Par value of ordinary (404,200)
Share Premium 424,410

The terms of share options outstanding as at the end of the nancial year are as follows:-

Number of Share Options Outstanding
Expiry Date Exercise Period
RM
2005 2004
25.7.2012 2.05 2,707,600 2,798,800
Directors of the Company
The Directors in ofce since the date of the last report are:-
Raja Dato Seri Aman Bin Raja Haji Ahmad
Dato Haji Wan Zaki Bin Haji Wan Muda
Dato Wan Zakariah Bin Haji Wan Muda
Dato Haji Mustaffa Bin Mohamad
Dato W Zulkii Bin Haji W Muda
Datuk (Prof.) A Rahman @ Omar Bin Abdullah
Dato Ismail @ Mansor Bin Said
In accordance with Article 80 of the Articles of Association, Datuk (Prof.) A Rahman @ Omar bin Abdullah and Dato Wan Zakariah bin Haji Wan Muda
retire, and being eligible offer themselves for re-election.
Directors Interests In Shares And Esos Options
The interest of those who were directors as at nancial year end in the shares and the ESOS options of the Company and related companies are
as follows:-
a) Shareholdings in the Company and Ultimate Holding Company
Number of Ordinary Shares of RM1/- Each
At
1.1.05 Bought Sold
At
31.12.05
The Company
Direct Interest
Dato Haji Wan Zaki bin Haji Wan Muda 498,690 498,690
Dato Wan Zakariah bin Haji Wan Muda 149,674 149,674
Dato Haji Mustaffa bin Mohamad 1,350,912 1,350,912
Dato W Zulkii bin Haji W Muda 112,874 113,000 225,874
Dato (Prof.) A Rahman @ Omar bin Abdullah 240,000 60,000 300,000
Dato Ismail @ Mansor bin Said 1 1
Indirect Interest
Being shares held through Zaki Holdings (M) Sdn. Bhd.
Dato Haji Wan Zaki bin Haji Wan Muda 39,212,410 1,050,000 40,262,410
Ultimate Holding Company
- Zaki Holdings (M) Sdn. Bhd.
Direct Interest
Dato W Zulkii bin Haji W Muda 10,000 10,000

(b) Share Options Pursuant to ESOS
Number of Options over Ordinary Shares of RM1/- Each
At
1.1.05 Exercised Lapsed
At
31.12.05
Dato Haji Mustaffa bin Mohamad 324,000 324,000
Dato W Zulkii bin Haji W Muda 406,000 406,000

By virtue of Dato Haji Wan Zaki bin Haji Wan Muda having an interest of more than fteen percent (15%) of the shares in the Company, he is deemed
interested in the shares of its subsidiary companies to the extent the Company has an interest.
Other than as disclosed above, none of the other directors held any shares or have any interest in the Company and its related companies during
the nancial year.
70
Directors Benets
Since the end of the previous nancial year no director of the Company has received or become entitled to receive any benet (other than those
disclosed as directors fees, other emoluments and benets-in-kind disclosed in note 25(c) to the nancial statements) by reason of a contract made
by the Company or a related corporation with the Director or with a rm of which the Director is a member, or with a company in which the Director
has a substantial nancial interest except for any benets that may have arisen out of ordinary course of business as disclosed in notes 44(a) and
44(b) to the nancial statements.
Neither during nor at the end of the nancial year, was the Company a party to any arrangements whose object is to enable the Directors to acquire
benets by means of the acquisition of shares in or debentures of the Company or any other body corporate other than the ESOS disclosed in the
nancial statements.
Signicant Events
(i) On 14th April, 2005, the Company signed the Contract Agreement with IT Expressway Ltd. for the improvement and maintenance of IT Corridor
in Chennai, India for India Rupee (Rs) 1,238,200,436/- or approximately RM105.260 million.
(ii) On 28th June, 2005, the Company signed an agreement with Alfaisal University for the Alfaisal University Campus Development Project Phases
1 and 2 in Riyadh, the Kingdom of Saudi Arabia for Saudi Riyals (SR) 385,812,376/- or approximately RM397.387 million.
(iii) On 31st May, 2005, the Company completed the acquisition of a foreign subsidiary company, P.T. Ichtiar Gusti Pudi, a company incorporated
in the Republic of Indonesia, for Indonesia Rupiah (Rp)17,000,000,000/- or approximately RM7.097 million.
Subsequent Event
(i) On 2nd March, 2006, the Company signed a Supplemental Agreement with the Government of Malaysia for additional works to be undertaken
for the Subang-Kelana Link Project in Selangor Darul Ehsan, Malaysia, for RM133.113 million.
(ii) On 26th March, 2006, the Company completed the incorporation of a foreign subsidiary company known as Ahmad Zaki Saudi Arabia Company
Ltd. (AZSA) in Riyadh, the Kingdom of Saudi Arabia. AZSA was incorporated with an initial paid-up share capital of SR500,000/- divided into
1,000 cash shares of equal value of SR500/-.
(iii) On 31st March, 2006, the wholly owned subsidiary company, Technipolitan Sdn. Bhd. changed its name to AZRB Machineries Sdn. Bhd..
The Directors regard Zaki Holdings (M) Sdn. Bhd., a company incorporated in Malaysia, as the ultimate holding company of the Company.
71
Auditors
The auditors, Messrs. Moore Stephens, have expressed their willingness to continue in ofce.
On Behalf of the Board
RAJA DATO SERI AMAN BIN RAJA HAJI AHMAD DATO WAN ZAKARIAH BIN HAJI WAN MUDA
KUALA LUMPUR
24th April, 2006
72
73
directors statement
statutory declaration
We, the undersigned, being two of the Directors of the Company, state that in the opinion of the Directors, the accompanying nancial statements
as set out on pages 75 to 136, are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting
standards in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31st December, 2005 and of
the results of the operations, changes in equity and cash ows of the Group and of the Company for the year ended on that date.
On Behalf of the Board
RAJA DATO SERI AMAN BIN RAJA HAJI AHMAD DATO WAN ZAKARIAH BIN HAJI WAN MUDA
KUALA LUMPUR
24th April, 2006
I, Ahmad Tarmizi bin Mohamed Hariri, NRIC No.: 630804-09-5065, being the ofcer primarily responsible for the nancial management of the
Company, do solemnly and sincerely declare that the nancial statements as set out on pages 75 to 136 are to the best of my knowledge and
belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory
Declarations Act, 1960.
Subscribed and solemnly declared at
Kuala Lumpur in the Federal Territory
this 24th day of April, 2006
Before me
AHMAD TARMIZI BIN MOHAMED HARIRI
S.MASOHOOD OMAR
DJN, PKT, PJK, PJM
NO. W. 354
Commission of Oaths
74
report of the auditors
to the members of Ahmad Zaki Resources Berhad (Incorporated in Malaysia)
We have audited the nancial statements set out on pages 75 to 136.
The preparation of the nancial statements are the responsibility of the Companys directors.
It is our responsibility to form an independent opinion, based on our audit, on those nancial statements and to report our opinion to you, as a body,
in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility towards any other person
for the content of this report.
We conducted our audit in accordance with the approved standards on auditing in Malaysia. These standards require that we plan and perform
the audit to obtain all the information and explanations, which we considered necessary to provide us with sufcient evidence to give reasonable
assurance that the nancial statements are free of material misstatement. Our audit includes examining, on a test basis, evidence relevant to the
amounts and disclosures in the nancial statements. Our audit includes an assessment of the accounting principles used and signicant estimates
made by the Directors as well as evaluating the overall adequacy of the presentation of information in the nancial statements. We believe our audit
provides a reasonable basis for our opinion.
In our opinion:-
(a) the nancial statements have been prepared in accordance with the provisions of the Companies Act, 1965 and applicable approved
accounting standards in Malaysia so as to give a true and fair view of:-
(i) the matters required by Section 169 of the Companies Act, 1965, to be dealt with in the nancial statements of the Group and of the
Company; and
(ii) the state of affairs of the Group and of the Company as at 31st December, 2005 and of the results of the operations, changes in equity
and cash ows of the Group and of the Company for the year on that date;
and
(b) the accounting and other records and the registers required by the Companies Act, 1965, to be kept by the Company and its subsidiary
companies of which we have acted as auditors have been properly kept in accordance with the provisions of the said Act.
The names of the subsidiary companies of which we have not acted as auditors are disclosed in note 6 to the nancial statements. We have
considered the nancial statements of these subsidiary companies and the auditors reports thereon.
We are satised that the nancial statements of the subsidiary companies that have been consolidated with the Companys nancial statements
are in form and content appropriate and proper for the purposes of the preparation of the consolidated nancial statements and we have received
satisfactory information and explanations required by us for these purposes.
The auditors reports on the nancial statements of the subsidiary companies were not subject to any qualication and in respect of subsidiary
companies incorporated in Malaysia, did not include any comment made under Section 174(3) of the Companies Act, 1965.
MOORE STEPHENS CHONG KWONG CHIN
Chartered Accountants 707/04/06 (J/PH)
(AF.0282) Partner
KUALA LUMPUR
24th April, 2006
75
report of the auditors balance sheets
as at 31st December, 2005
NON-CURRENT ASSETS
Property, plant and equipment
Investment properties
Investments in subsidiary companies
Interest in associated companies
Interest in joint ventures
New planting expenditure
Other investments
Deferred tax assets
Goodwill on consolidation
CURRENT ASSETS
Inventories
Property development costs
Trade and other receivables
Tax assets
Cash and cash deposits
CURRENT LIABILITIES
Trade and other payables
Borrowings
Bank overdrafts - secured
Tax liabilities
NET CURRENT ASSETS
NOTE
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
2005
RM
35,418,056
24,200,000
-
63,120
(28,407,817)
2,293,598
4,615,500
30,827
3,744,605
41,957,889
15,513,481
1,642,492
156,200,474
2,850,925
154,096,042
330,303,414
185,382,323
2,916,026
5,361,355
552,322
194,212,026
136,091,388
178,049,277
2004
RM
25,180,169
24,200,000
-
71,048
(27,830,772)
-
115,500
4,608
3,629,847
25,370,400
9,134,765
2,722,381
117,279,248
3,156,724
109,493,602
241,786,720
141,014,355
3,739,154
7,643,209
339,293
152,736,011
89,050,709
114,421,109
2005
RM
2,784,254
-
43,220,553
-
-
-
4,568,000
-
-
50,572,807
-
-
95,163,861
409,722
52,910,271
148,483,854
63,836,959
347,703
-
14,688
64,199,350
84,284,504
134,857,311
2004
RM
1,000,328
-
24,177,840
-
-
-
68,000
-
-
25,246,168
-
-
53,067,183
427,344
20,339,112
73,833,639
18,135,160
195,572
-
-
18,330,732
55,502,907
80,749,075
GROUP COMPANY
76
balance sheets contd
CAPITAL AND RESERVES
Share capital
Reserves
SHAREHOLDERS EQUITY
MINORITY INTEREST
NON-CURRENT LIABILITIES
Borrowings
Deferred tax liabilities
NOTE
21
22
19
11
GROUP COMPANY
2005
RM
66,710,400
54,249,887
120,960,287
2,524,354
50,582,645
3,981,991
54,564,636
178,049,277
2004
RM
66,710,400
38,723,557
105,433,957
1,585,330
6,760,082
641,740
7,401,822
114,421,109
2005
RM
66,710,400
20,684,859
87,395,259
-
45,880,663
1,581,389
47,462,052
134,857,311
2004
RM
66,710,400
13,493,582
80,203,982
-
527,093
18,000
545,093
80,749,075
The annexed notes form an integral part of, and should be read in conjunction with, these nancial statements.
77
income statements
for the year ended 31st December, 2005
Operating Revenue
Direct Operating Costs
Gross Prot
Other Operating Revenue
Administrative Costs
Other Operating Costs
Prot From Operations
Finance Costs
Share Of Results In Joint
Ventures
Share Of Results Of
Associated Companies
Prot/(Loss) Before Taxation
Taxation
Prot/(Loss) After Taxation
Minority Interest
Prot/(Loss) Attributable
To Shareholders
Basic Earnings/(Loss) Per
Ordinary Share (Sen)
Fully Diluted Earnings
Per Ordinary Share (Sen)
Proposed Net Dividend Per
Ordinary Share (Sen)
NOTE
23
24
25
26
27
27
GROUP COMPANY
2005
RM
249,124,615
(199,522,413)
49,602,202
4,012,515
(19,391,174)
(2,471,975)
(21,863,149)
31,751,568
(3,067,938)
(561,846)
(3,899)
28,117,885
(9,249,362)
18,868,523
30,351
18,898,874
28.33
-
10.80
2004
RM
257,915,020
(218,012,892)
39,902,128
3,948,801
(17,444,270)
(1,735,991)
(19,180,261)
24,670,668
(1,258,365)
(27,511,301)
(17,722)
(4,116,720)
(7,549,849)
(11,666,569)
(80,937)
(11,747,506)
(17.64)
-
5.04
2005
RM
164,386,352
(143,107,511)
21,278,841
751,826
(4,219,412)
(121,881)
(4,341,293)
17,689,374
(1,774,063)
-
-
15,915,311
(5,355,355)
10,559,956
-
10,559,956
2004
RM
50,224,321
(38,452,252)
11,772,069
538,799
(3,119,224)
(52,971)
(3,172,195)
9,138,673
(36,729)
-
-
9,101,944
(2,096,962)
7,004,982
-
7,004,982
78
statements of changes
in equityfor the year ended 31st December, 2005
Share
Premium
RM
1,755,840
424,410
-
-
-
2,180,250
-
-
-
2,180,250
Foreign
Exchange
Translation
Reserve
RM
-
-
-
(121)
-
(121)
-
(10,340)
-
(10,461)
Revaluation
Reserve
RM
7,002,890
-
-
-
-
7,002,890
-
-
-
7,002,890
Retained
Prot
RM
47,051,736
-
(11,747,506)
-
(5,763,692)
29,540,538
18,898,874
-
(3,362,204)
45,077,208
GROUP
At 1.1.04
Issuance of shares
pursuant to:-
Employees share
option scheme
Net loss for the year
Foreign translation
difference from
foreign subsidiary
company *
First and nal
dividend paid for
year 2003 (12%
per share less 28%
income tax)
At 31.12.04
Net prot for the
year
Foreign translation
difference from
foreign branches
and subsidiary
companies *
First and nal
dividend paid for
year 2004 (7% per
share less 28%
income tax)
At 31.12.05
Share
Capital
RM
66,306,200
404,200
-
-
-
66,710,400
-
-
-
66,710,400
Total
Shareholders
Equity
RM
122,116,666
828,610
(11,747,506)
(121)
(5,763,692)
105,433,957
18,898,874
(10,340)
(3,362,204)
120,960,287
79
statements of changes
in equity
Share
Premium
RM
1,755,840
424,410
-
-
2,180,250
-
-
-
2,180,250
Foreign
Exchange
Translation
Reserve
RM
-
-
-
-
-
(6,475)
-
-
(6,475)
Revaluation
Reserve
RM
-
-
-
-
-
-
-
-
Retained
Prot
RM
10,072,042
-
7,004,982
(5,763,692)
11,313,332
-
10,559,956
(3,362,204)
18,511,084
COMPANY
At 1.1.04
Issuance of shares
pursuant to:-
Employees share
option scheme
Net prot for the
year
First and nal
dividend paid for
year 2003 (12%
per share less 28%
income tax)
At 31.12.04
Foreign translation
difference from
foreign branches *
Net prot for the
year
First and nal
dividend paid for
year 2004 (7% per
share less 28%
income tax
At 31.12.05
Share
Capital
RM
66,306,200
404,200
-
-
66,710,400
-
-
-
66,710,400
Total
Shareholders
Equity
RM
78,134,082
828,610
7,004,982
(5,763,692)
80,203,982
(6,475)
10,559,956
(3,362,204)
87,395,259
* Expenses not recognised in income statements.
statements of changes in equity contd
80
cash ow statements
for the year ended 31st December, 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Prot/(Loss) Before Taxation
Adjustments for:-

Allowance for foreseeable losses for contract works
Amortisation of leasehold land
Amortisation of goodwill on consolidation
Bad debts written off
Depreciation of property, plant and equipment
Dividend revenue
Gain on disposal of property, plant and equipment
Impairment loss on investment in associate company
Interest expenses
Interest revenue
Loss on foreign exchange -unrealised
Preliminary expenses written off
Property, plant and equipment written off
Share of results of associated companies
Share of results in joint ventures
Operating Prot Before Working
Capital Changes
Increase in inventories
Increase in amount due from customers for contract
works
(Increase)/Decrease in property development costs
(Decrease)/Increase in amount due to customers for
contract works
(Increase)/Decrease in trade and other receivables
Increase in trade and other payables
Cash Generated From/(Used In) Operations
Interest Paid
Tax Paid
Net Cash Generated From/
(Used In) Operating Activities
Carried Down
NOTE
GROUP COMPANY
2005
RM
28,117,885
-
22,376
513,825
13,163
3,743,632
(7,800)
(201,505)
400
1,936,363
(2,709,463)
18,426
-
-
3,899
561,846
32,013,047
(5,225,443)
(12,061,952)
(73,384)
(11,542,971)
(27,776,625)
56,084,343
31,417,015
(2,155,954)
(8,027,002)
21,234,059
2004
RM
(4,116,720)
431,754
22,376
477,393
-
3,316,008
(543)
(765,841)
-
988,797
(2,297,631)
-
6,995
2,033
13,693
27,511,301
25,589,615
(2,321,166)
(7,114,952)
4,316
(13,341,227)
4,910,879
8,703,265
16,430,730
(988,797)
(7,415,614)
8,026,319
2005
RM
15,915,311
-
-
-
-
434,834
(10,000,040)
-
-
922,454
(751,826)
18,426
-
-
-
-
6,539,159
-
(10,234,610)
-
347,510
(43,619,273)
44,484,039
(2,483,175)
(52,203)
(959,369)
(3,494,747)
2004
RM
9,101,944
-
-
-
-
255,587
(8,000,032)
-
-
35,773
(538,799)
-
-
-
-
-
854,473
-
(143,644)
-
-
(70,945)
7,939,183
8,579,067
(35,773)
(632,144)
7,911,150
81
cash ow statements
cash ow statements contd
(Used In) Operating Activities
Brought Down
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of investment in
subsidiary companies
Acquisition of investment in
associated companies
Advances to related companies
Advances to associated company
Distribution received from joint ventures
Dividend received
Effect of acquisition of subsidiary companies,
net of cash acquired
Interest received
New planting expenditure incurred
Preliminary expenses incurred
Acquisition of other investment
Proceeds from disposal of property, plant
and equipment
Purchase of property, plant and equipment
Repayments from joint ventures
Repayments from related companies
Repayments from associated companies
Net Cash (Used In)/Generated
From Investing Activities
Balance Carried Down
NOTE
28
29
GROUP COMPANY
2005
RM
21,234,059
-
-
-
-
15,199
7,800
(7,096,899)
2,648,636
(2,099,344)
-
(4,500,000)
521,484
(3,120,900)
1,656,686
4,765
9,300
(11,953,273)
9,280,786
2004
RM
8,026,319
-
(400)
(34,553)
-
505,339
390
-
2,269,802
-
(6,995)
-
887,883
(3,636,938)
225,710
-
794,475
1,004,713
9,031,032
2005
RM
(3,494,747)
(19,042,713)
-
-
-
-
7,200,030
-
749,822
-
-
(4,500,000)
-
(1,472,701)
-
11,734,012
7,002
(5,324,548)
(8,819,295)
2004
RM
7,911,150
(4)
-
(12,819,525)
(7,002)
-
8,280,038
-
541,001
-
-
-
-
(72.008)
-
-
-
(4,077,500)
3,833,650
82
notes to the nancial
statements
Balance Brought Down
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from related companies
Advances from associated companies
Dividend paid
Payments to hire purchase payables
Proceeds from issuance of shares
Proceeds from trust receipts
Repayments of term loans
Repayments of trust receipts
Drawdown of term loan
(Used In) Financing Activities
Exchange differences
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE YEAR
CASH AND CASH EQUIVALENTS AT END
OF THE YEAR
NOTE
30
GROUP COMPANY
2005
RM
9,280,786
46,186
-
(3,362,204)
(2,204,250)
-
2,425,517)
(781,102)
(3,509,630)
45,000,000
37,614,517
46,895,303
(11,009)
46,884,294
101,850,393
148,734,687
2004
RM
9,031,032
166,119
53,089
(5,763,692)
(1,791,183)
828,610
(6,622,716)
(738,652)
(5,538,603)
-
(6,161,596)
2,869,436
(121)
2,869,315
98,981,078
101,850,393
2005
RM
(8,819,295)
-
-
(3,362,204)
(240,199)
-
-
-
-
45,000,000
41,397,597
32,578,302
(7,143)
32,571,159
20,339,112
52,910,271
2004
RM
3,833,650
-
-
(5,763,692)
(133,066)
828,610
-
-
-
-
(5,068,148)
(1,234,498)
-
(1,234,498)
21,573,610
20,339,112
cash ow statements contd
83
31st December, 2005
notes to the nancial
statements
1. General Information
(a) Principal Activities
The Company is principally engaged in investment holding, providing management services and as contractors of civil and structural
construction works.
The principal activities of the subsidiary companies are disclosed in note 6 to the nancial statements.
During the year, the Company commenced operations as contractors of civil and structural construction works in India and the Kingdom
of Saudi Arabia as disclosed in note 48 to the nancial statements.
The Group acquired a subsidiary company in the Republic of Indonesia which is principally engaged in oil palm cultivation.
There have been no other signicant changes in the nature of these activities during the year.
(b) Registered Ofce
The Company is a public limited liability company, incorporated and domiciled in Malaysia, with its share listed on the Main Board of the
Bursa Malaysia. The registered ofce of the Company is at Mezzanine Floor, 8A, Jalan Sri Semantan Satu, Damansara Heights, 50490
Kuala Lumpur.
(c) Principal Place of Business
No. 88, Jalan Gombak, Setapak, 53000 Kuala Lumpur.
(d) Holding Company
The holding company of the Company is Zaki Holdings (M) Sdn. Bhd., a company incorporated in Malaysia.
(e) Date of Authorisation for Issue
The nancial statements were authorised for issue in accordance with a Board of Directors resolution dated 24th April, 2006.
2. Basis Of Preparation Of The Financial Statements
The nancial statements of the Group and of the Company have been prepared in accordance with the provisions of the Companies Act, 1965
and applicable approved accounting standards issued by the Malaysian Accounting Standards Board (MASB).
84
notes to the nancial statements contd
2. Basis Of Preparation Of The Financial Statements (contd)
The nancial statements of the Group and of the Company are prepared under the historical cost convention modied to include the revaluation
of leasehold land and building unless otherwise indicated in the summary of signicant accounting policies. Certain leasehold land of the
subsidiary company are stated in the Groups nancial statements at values reecting the effective acquisition costs to the Group (group cost)
of those assets.
3. Signicant Accounting Policies
The signicant accounting policies adopted by the Group and the Company are consistent with those adopted in previous nancial years.
(a) Basis of Consolidation
The consolidated nancial statements incorporate the audited nancial statements of the Company and its subsidiary companies, which
are listed in note 6 to the nancial statements, made up to 31st December, 2005. All signicant intragroup balances, transactions and
resulting unrealised prots are eliminated on consolidation. Unrealised losses are eliminated on consolidation unless cost cannot be
recovered. The consolidated nancial statements reect external transactions only.
The nancial statements of the subsidiary companies acquired or disposed of during the year are included in consolidated nancial
statem .
The gain or loss on disposal of a subsidiary company is the difference between net disposal proceeds and the Groups share of its net
assets together with any unamortised balance of goodwill or reserve on consolidation.
(b) Goodwill or Reserve on Consolidation
Goodwill or reserve on consolidation represents the difference between the consideration paid for shares in subsidiary companies or
associated companies and the fair values attributable to the Groups share of net assets acquired.
Goodwill on consolidation is amortised over a period of ten years or the expected useful life, whichever is shorter, commencing in the
year of acquisition of subsidiary company or associated company. Reserve on consolidation is amortised over a period of three years
or the expected useful life, whichever is shorter, commencing one year after the year of acquisition of subsidiary company or associated
company. Goodwill on consolidation is written down when there is an impairment in their carrying value.
(c) Subsidiary Company
A subsidiary company is dened as a company in which the Group has a long term equity interest, directly or indirectly, and has control
over its nancial and operating policies so as to obtain benets therefrom.
Investment in subsidiary company, which are eliminated on consolidation, are stated at cost less accumulated impairment losses, if any,
85
in the Companys nancial statements. Impairment loss is determined on individual basis.
(d) Associated Company
An associated company is dened as a company, not being a subsidiary company, in which the Group has a long term equity interest and
has signicant inuence over its nancial and operating policies.
Investments in associated companies are stated at cost less accumulated impairment losses, if any, in the Companys nancial
statements.
Investments in associated companies are accounted for in the consolidated nancial statements by the equity method of accounting based
on audited nancial statements of the associated companies. The Groups share of post-acquisition results of associated companies is
included in the consolidated income statement. The Groups interest in associated companies is stated at cost plus the Groups share of
post-acquisition changes in the net assets of the associated companies.
The Groups share of post-acquisition losses is restricted to the carrying value of in that associated company. Should the associated
company subsequently reports prots, the Group will only resume to recognise its share of prots after its share of prots equal to its
share of losses previously not recognised.
(e) Joint Venture
Joint venture is dened as a contractual arrangement entered into by two or more parties to undertake a jointly controlled economic
activity in which no single venturer has unilateral control in the nancial and operating decisions of the joint venture.
Interest in joint venture which does not involve any establishment of a separate entity is accounted for in the nancial statements based
on the agreed share of the results, assets and liabilities of the joint venture.
Investment in joint venture which involves an establishment of a separate entity is stated at cost less accumulated impairment losses, if
any, in the nancial statements. Where consolidated nancial statements are prepared, the interest in the joint venture entity is accounted
for using the equity method based on the audited nancial statements of the entity. The consolidated income statement includes the
Groups share of the entitys results of the operation. In the consolidated balance sheet, the Groups interest is stated at cost and adjusted
for the Groups share of changes in the net assets of the entity.
(f) Property, Plant and Equipment and Depreciation
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any, except for
freehold land which is not amortised.
Depreciation of property, plant and equipment is calculated to write off their costs on a straight line basis over their estimated useful
lives.
86
3. Signicant Accounting Policies (contd)
The principal annual rates used for this purpose are:-
Leasehold land Over the remaining lease period of 23 and 77 years
Buildings 2%
Ofce equipment 10% - 20%
Furniture and ttings 10% - 20%
Plant and machinery 10% - 20%
Motor vehicles 20%
Renovation 20%
Fully depreciated property, plant and equipment are retained in the nancial statements until they are no longer in use and no further
charge for depreciation is made in respect of these property, plant and equipment.
Gain or loss arising from the disposal of property, plant and equipment is determined as the difference between the net disposal proceeds
and the carrying amount of the property, plant and equipment and is recognised in the income statement.
(g Impairment of Assets
The carrying amounts of assets other than inventories, assets arising from construction contracts, deferred tax assets and nancial assets
are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such an indication exists, the
assets recoverable amount is estimated. The recoverable amount is the higher of net selling price and the value in use, which is measured
by reference to discounted future cash ows. An impairment loss is recognised whenever the carrying amount of an item of asset exceeds
its recoverable amount.
An impairment loss is recognised as an expense in the income statement. However, an impairment loss on a revalued asset will be treated
as a revaluation decit to the extent that the loss does not exceed the amount held in revaluation reserve in respect of the same asset.
Reversal of impairment loss due to a subsequent increase in recoverable amount is restricted to the carrying amount that would have
been determined (net of accumulated depreciation, where applicable) had no impairment loss been recognised in prior years. The
reversal of impairment loss is recognised as revenue in the income statement. However, the reversal of impairment loss on a revalued
asset will be treated as revaluation surplus to the extent that the reversal does not exceed the amount previously held in revaluation
reserve in respect of the same asset.
(h) Investment Properties
Investment properties comprise land, buildings and expenditure incurred for development of properties which are held for investment
potential. In the subsidiarys nancial statements, these investment properties are stated at valuation less accumulated impairment
losses, if any, and additions subsequent to the date of last valuation are stated at cost less accumulated impairment losses, if any. In
the consolidated nancial statements, these properties are initially stated at the Groups cost and would be revalued subsequently in
87
accordance with the Groups revaluation policy. It is the Groups policy to maintain the buildings in a high standard and condition. As such,
these properties maintain their residual value of not less than their respective book value such that depreciation would be negligible. In view
of this, no depreciation is provided for these properties. The related maintenance expenditure is dealt with in the income statement.
The open market value of these properties will be appraised at least once in every ve (5) years by independent professional valuers. A
surplus arising therefrom is credited to revaluation reserve. However, a surplus will be recognised as revenue to the extent that it reverses
a revaluation decit of the same property previously recognised as an expenses. A decit arising therefrom is recognised as an expense.
However, a decit will be set-off against any related revaluation surplus to the extent that the decit does not exceed the amount held in
revaluation reserve in respect of the same property.
On disposal of these properties, any surplus in revaluation reserve relating to these properties will be transferred to retained prots.
(i) New Planting Expenditure
New planting expenditure incurred on land clearing and upkeep of trees to maturity is capitalised as costs and is amortised upon maturity
over the remaining lease period of the leasehold land.
(j) Inventories
Inventories are stated at the lower of cost and net realisable value and are costed on the rst-in-rst-out basis. Cost includes the actual
cost of purchases and incidentals in bringing the inventories into store. Cost of completed development properties is determined on
specic identication basis and includes land, construction and appropriate development overheads.
In arriving at the net realisable value, due allowance would be made for obsolete and slow moving items.
(k) Construction Contracts
Contract work-in-progress consists of cost incurred to date plus a proportion of estimated prot attributable to contract work performed
to date less progress billings received and receivable. Contract costs include direct materials, labour, sub-contract costs and attributable
construction overheads. Where foreseeable losses on contract are anticipated, full provision of these losses is made in the nancial
statements.
The aggregate of the costs incurred plus the prot/loss recognised on each contract is compared against the respective progress billings
up to the end of the nancial year. The excess of costs incurred plus recognised prot (less recognised losses) over progress billings,
is shown as Amount due from customers for contract work under current assets. Conversely, the excess of progress billings over
costs incurred and recognised prot (less recognised losses), is shown as Amount due to customers for contract work under current
liabilities.
88
(l) Property Development Costs
Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a
reasonable basis to such activities. Costs consists of land and construction costs and other development costs including related overheads
and capitalised borrowing costs.
When the nancial outcome of a development activity can be reliably estimated, development revenue and costs are recognised in the
income statement by reference to the stage of completion of development activities at the balance sheet date.
When the nancial outcome of a development activity cannot be reliably estimated, development revenue is recognised only to the extent
of development costs incurred that is probable will be recoverable, and development costs on properties sold are recognised as an
expense in the period in which they are incurred.
Any expected loss on a development project is recognised as an expense immediately.
Property development costs not recognised as an expense is recognised as an asset, which is measured at the lower of cost and net
realisable value.
Accrued billings as current assets represents the excess of revenue recognised in the income statement over billings to purchasers.
Progress
(m) Capitalisation of Borrowing Costs
Borrowing costs incurred on borrowings related to property, plant and equipment, development properties and investment properties are
capitalised during the period when activities to plan, develop and construct these assets are undertaken. Capitalisation of borrowing costs
ceases when these assets are ready for their intended use or sale.
(n) Hire Purchase
Hire purchase instalment plans are agreements whereby the lender conveys to the hirer, in return for a series of instalment payments, the
r .
Cost of property, plant and equipment acquired under the hire purchase instalment plans are capitalised as property, plant and equipment
and depreciated in accordance with the Groups policy on depreciation of property, plant and equipment . The related nance charges are
allocated to the income statement over the period of the instalment plans based on the sum-of-digit method so as to produce a constant
periodic rate of interest charges on the remaining balance of the liability. The total outstanding instalment payments after deducting the
future nance charges, representing the present value of hire purchase liabilities, are included in liabilities.
89
(o) Lease
Lease is an agreement whereby the lessor conveys to the lessee, in return for a series of minimum lease payments, the rights to use an
asset for an agreed lease term.
Property, plant and equipment on leases that transfer substantially all risks and rewards incident to ownership are accounted for under
nance lease method in which the fair market value of the leased property, plant and equipment or, if lower at the present value of the
minimum lease payments, are capitalised as property, plant and equipment and depreciated in accordance with the Groups policy on
depreciation of property, plant and equipment. The present value of the minimum lease payments is calculated based on discount factor
equivalent to the interest rate implicit in the lease. The related nance charges are allocated to the income statement based on the sum-
of-digit method so as to produce a constant periodic rate of interest charges on the remaining balance of the liability. The total outstanding
minimum lease payments after deducting the future nance charges representing the present value of minimum lease payments, are
included in liabilities.
All other leases are accounted for under the operating lease method in which the minimum lease payments are recognised as expenses
in the income statement as and when they are incurred.
(p) Foreign Currencies
(i) Transactions in foreign currencies
Transactions in foreign currencies are converted into Ringgit Malaysia at the rate of exchange ruling at the time of the transaction
and where settlement had not taken place at year end, at the approximate rates ruling as at that date. All gains and losses on
exchange are included in the income statement.
(ii) Translation of foreign currency nancial statements
Assets, liabilities and reserves of foreign subsidiary company are translated into Ringgit Malaysia at the rates of exchange
approximating those ruling as at the nancial year end. Income and expense items are translated at the average rate of exchange
for the nancial year. The translation differences arising therefrom are recorded as movements in translation reserve.
The exchange rate (denominated in units of Ringgit Malaysia per foreign currency) used in translation at the nancial year end are
as follows:-
2005
RM
3.7775
0.0833
0.0004
1.0096
United States Dollar (US$)
India Rupee (Rs)
Indonesian Rupiah (Rp)
Saudi Riyal (SR)
2004
RM
-
0.0878
0.0004
-
90
(q) Taxation
Taxation in the income statement represents the aggregate amount of current and deferred tax. Current tax is the expected amount
payable in respect of taxable income for the year and any adjustments recognised for prior years tax.
Deferred tax is recognised, using the liability method, on all temporary differences between the tax base of assets and liabilities and their
carrying amounts in the nancial statements. Deferred tax is not recognised if the temporary differences arises from goodwill or negative
goodwill or from the initial recognition of an asset or liability in a transaction, which is not a business combination and at the time of the
transaction, affects neither accounting prot nor taxable prot. Deferred tax is measured at the tax rates that are expected to apply in the
period in which the assets are realised or the liabilities are settled.
Deferred tax is recognised in equity when it relates to items recognised directly in equity. When deferred tax arises from business
combination that is an acquisition, the deferred tax is included in the resulting goodwill or negative goodwill.
Deferred tax assets are recognised only to the extent that there are sufcient taxable temporary differences relating to the same taxation
a
(r) Revenue Recognition
Dividend revenue from investment in subsidiaries, associated companies and other investments is recognised when the right to receive
the dividend is established.
Rental and management fees revenue are recognised on due and receivable basis.
Interest revenue is recognised on a time proportion basis that reects the effective yield of the assets.
Sales of goods are recognised when goods are delivered.
Revenue from construction contracts is recognised on the percentage of completion method in the proportion of which the contract costs
incurred to date bear to the total estimated contract costs, when the outcome of the contracts can be reliably estimated.
Revenue from development properties sold is recognised on the percentage of completion method in the proportion of which the
development costs incurred to date bear to the total estimated development costs, when the outcome of development can be reliably
estimated.
(s) Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand, bank balances and deposits, bank overdrafts and short term, highly liquid investments
91
that are readily convertible to known amount of cash and are subject to insignicant risk of changes in value.
(t) Employee Benets
(i) Short Term Employee Benets
Wages, salaries, social security contributions, bonuses are recognised as an expense in the year in which the associated services
are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave ar
recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short
term non-accumulating compensated absences such as sick leave are recognised when the absences occur.
(ii) Dened Contribution Plans
As required by law, companies in Malaysia make contributions to the Employees Provident Fund. Such contributions are recognised
as an expense in the income statement as incurred.
(iii) Equity Compensation Benets
The Employees Share Option Scheme (ESOS) allows the Groups employees to acquire shares in the Company. No compensation
cost or obligation is recognised. When the options are exercised, equity is increased by the amount of the proceeds received.
(u) Financial Instruments
Financial instruments are classied as assets, liabilities or equity in accordance with the substance of the contractual arrangement.
Interest, dividends, losses and gains relating to nancial instruments classied as assets or liabilities are reported as expense or revenue.
Distributions to holders of nancial instruments classied as equity are charged directly to equity. Financial instruments are offset when the
Company has a legally enforceable right to offset and intends either to settle on a net basis or to realise the asset and settle the liability
simultaneously.
The recognised nancial instruments comprise cash and cash equivalents, trade and other receivables, trade and other payables, other
non-current investments, bank borrowings and ordinary shares. These instruments are recognised in the nancial statements when a
contract or contractual arrangement has been entered into with the counter-parties.
The unrecognised nancial instruments comprise nancial guarantees given to nancial institutions for banking and credit facilities granted
to an associated company and subsidiary companies and legal claims by suppliers. The nancial guarantees and legal claims would be
recognised as liabilities when obligations to pay the counter-parties are assessed as being probable.
(i) Receivables
Receivables are stated at cost less allowance for doubtful debts, if any, which are the anticipated realisable values. Known bad debts
are written off and specic allowance is made for those debts considered to be doubtful of collection.
92
(ii) Payables
Payables are stated at cost which are the fair values of considerations to be paid in the future for goods and services received.
(iii) Other Non-Current Investments
Non-current investments other than investments in subsidiary companies, associated companies, jointly controlled entities and
investment properties are stated at cost less allowance for diminution in value, if any.
On disposal of investment, the difference between net disposal proceeds and its carrying amount is charged or credited to the
income statement.
(iv) Interest Bearing Bank Borrowings
The interest bearing bank borrowings include bank overdrafts and loans and are stated at the amount of proceeds received, net
of transaction costs.
(v) Equity Instruments
Ordinary shares are classied as equity. Dividends on ordinary shares are recognised in equity in the period in which they are
declared.
The transaction costs of an equity transaction, other than in the context of a business combination, are accounted for as a
deduction from equity, net of tax. Equity transaction costs comprise only those external costs directly attributable to the equity
transaction which would otherwise have been avoided. Cost of issuing equity securities in connection with a business combination
are included in the cost of acquisition.
93
Buildings &
Renovation
RM
7,471,715
-
648,000
-
8,119,715
718,590
148,385
-
-
866,975
7,252,740
6,753,125
147,813
Plant &
Machinery
RM
13,652,355
-
603,194
(156,500)
14,099,049
8,745,567
1,031,944
(156,494)
(47)
9,620,970
4,478,079
4,906,788
794,276
Motor
Vehicles
RM
14,348,910
-
3,088,520
(1,018,224)
16,419,206
8,192,501
2,249,496
(698,739)
(30)
9,743,228
6,675,978
6,156,409
2,086,161
Furniture,
Fittings &
Ofce
Equipment
RM
2,613,238
3,965
688,086
(68,903)
3,236,386
1,884,597
313,807
(68,415)
(82)
2,129,907
1,106,479
728,641
287,758
GROUP
COST
At 1.1.05
In respect of
subsidiary
company
acquired
Additions
Disposals
At 31.12.05
ACCUMULATED
DEPRECIATION
At 1.1.05
Charge for the
year
Disposals
Translation
difference
At 31.12.05
NET BOOK VALUE
At 31.12.05
At 31.12.04
Depreciation
charge for the
year ended
31.12.04
Freehold
Land
RM
5,369,840
-
162,000
-
5,531,840
-
-
-
-
-
5,531,840
5,369,840
-
Total
RM
44,803,983
9,328,169
5,189,800
(1,243,627)
58,078,325
19,623,814
3,960,262
(923,648)
(159)
22,660,269
35,418,056
25,180,169
3,338,384
Leasehold
Land
RM
1,347,925
9,324,204
-
-
10,672,129
82,559
216,630
-
-
299,189
10,372,940
1,265,366
22,376
4. Property, Plant and Equipment
94
Plant &
Machinery
RM
-
594,994
594,994
-
24,876
(47)
24,829
570,165
-
-
Motor
Vehicles
RM
1,562,008
1,247,136
2,809,144
561,680
392,267
(30)
953,917
1,855,227
1,000,328
255,194
Furniture,
Fittings &
Ofce
Equipment
RM
4,728
376,471
381,199
4,728
17,691
(82)
22,337
358,862
-
393
COMPANY
COST
At 1.1.05
Additions
At 31.12.05
ACCUMULATED
DEPRECIATION
At 1.1.05
Charge for the year
Translation difference
At 31.12.05
NET BOOK VALUE
At 31.12.05
At 31.12.04
Depreciation charge for the
year ended 31.12.04
Total
RM
1,566,736
2,218,601
3,785,337
566,408
434,834
(159)
1,001,083
2,784,254
1,000,328
255,587
4. Property, Plant and Equipment (contd)
95
Included in property, plant and equipment of the Group are:-
(i) analysis of leasehold land as follows:-
Long term lease refers to lease periods with unexpired periods of fty years or more.
Short term refers to lease periods with unexpired periods of less than fty years.
(ii) property, plant and equipment under hire purchase instalments plans as follows:-
Short Term
Leasehold Land
RM
9,483,949
9,261,913
159,745
138,909
Long Term
Leasehold Land
RM
1,188,180
1,111,027
1,188,180
1,126,457
2005
Cost
Net Book Value
2004
Cost
Net Book Value
Total
RM
10,672,129
10,372,940
1,347,925
1,265,366
Plant &
Machinery
RM
1,604,937
1,155,960
1,604,937
1,414,948
-
-
-
-
Motor
Vehicles
RM
11,121,398
5,969,316
10,294,911
5,942,985
2,237,088
1,409,571
1,362,008
870,329
GROUP
2005
Cost
Net Book Value
2004
Cost
Net Book Value
COMPANY
2005
Cost
Net Book Value
2004
Cost
Net Book Value
Total
RM
12,726,335
7,125,276
11,899,848
7,357,933
2,237,088
1,409,571
1,362,008
870,329
96
4. Property, Plant And Equipment (contd)
(iii) freehold and leasehold land and buildings with a total net book value of RM11,815,253/- (2004: RM11,940,840/-) charged to
nancial institutions as securities for banking facilities of a subsidiary company, Ahmad Zaki Sdn. Bhd. (AZSB) as disclosed in notes 20
and 42 to the nancial statements.
5. Investment Properties
The hotel properties are charged to nancial institutions as security for facilities of a subsidiary company, AZSB, as disclosed in note 20 to the
nancial statements.
The properties were revalued in 2002 by the Directors of AZSB based on independent professional valuers on the open market value basis.
6. Investments In Subsidiary Companies
2005
RM
4,950,000
543,912
18,706,088
19,250,000
24,200,0000
2004
RM
4,950,000
543,912
18,706,088
19,250,000
24,200,0000
At valuation
Freehold land
Hotel properties
- freehold land
- hotel buildings
GROUP
2005
RM
24,177,840
19,042,713
43,220,553
2004
RM
24,177,836
4
24,177,840
COMPANY
Unquoted shares, at cost
At beginning of the year
Additions
At the end of the year
97
Contractors of civil and structural
contract works
Dealer of marine fuels and
lubricants
Dormant
Dormant
Dormant
Dormant
Oil palm cultivation
Property development
Dealer of lubricants and
petroleum-based products
Dormant
2004
%
100
100
100
100
100
100
-

60

100
100

Country of
Incorporation
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Republic of
Indonesia
Malaysia
Malaysia
India

Name of the Company
Held by the Company
# Ahmad Zaki Sdn. Bhd.
# Inter-Century Sdn. Bhd.
# Tadok Granite Manufacturing Sdn. Bhd.
# AZRB International Ventures Sdn. Bhd.
# AZRB Machineries Sdn. Bhd. (formerly
known as Technipolitan Sdn. Bhd.)
# Trend Vista Development Sdn. Bhd.
* P.T. Ichtiar Gusti Pudi
Held through Ahmad Zaki Sdn. Bhd.
* Kemaman Technology & Industrial Park
Sdn. Bhd. (KTIP)
Held through Inter-Century Sdn.
Bhd.
# Astral Far East Sdn. Bhd.
Held through AZRB International
Ventures Sdn. Bhd.
* AZRB Construction (India) Pvt. Ltd.
2005
%
100
100
100
100
100
100
95
60
100
100
The subsidiary companies are as follows:-
# Audited by an associated rm of the auditors of the Company.
* Audited by rms not associated with auditors of the Company.
Effective Equity
Interest
98
7. Interest In Associated Companies
Post acquisition losses of an associated company not recognised in the nancial statements are as follows:-
2005
RM
110,400
-
(400)
110,000
(46,880)
63,120
2004
RM
110,000
400
-
110,400
(39,352)
71,048
GROUP
Unquoted shares, at cost
Additions
Impairment Loss
At the end of the year
Share of losses of associated companies
2005
RM
55,064
40,288
(32,232)
8,056
63,120
2004
RM
58,963
40,288
(28,203)
12,085
71,048
GROUP
Represented by:-
Groups share of net tangible assets
Goodwill on acquisition
Less: Accumulated amortisation
2005
RM
8
3,381
2004
RM
3,373
3,373
GROUP
Loss for the year
Accumulated losses
99
Project management
General contractor
Dormant
2004
%
50
20
40
Name of the Company
Held through Ahmad Zaki Sdn. Bhd.
# Fasatimur Sdn. Bhd.
# Maxi Heritage Sdn. Bhd.
# Hidro Fokus Sdn. Bhd.
2005
%
50
20
40
The associated companies, all incorporated in Malaysia, are as follows:-
# Audited by rms not associated with auditors of the Company.
8. Interest In Joint Ventures
Th .
(i) BumiHiway-Ahmad Zaki Joint Venture which undertakes the contract for realignment of the route from Putrajaya to Cyberjaya, Selangor.
(ii) Johawaki-Ahmad Zaki Joint Venture which undertakes the contract to design, construct and complete the Masjid Wilayah Persekutuan,
Jalan Duta, Kuala Lumpur, and for renewal of junction and increasing the quality of road at Kompleks Matrade, Kuala Lumpur.
(iii) Malaysia-China Hidro Joint Venture which undertakes the contract for design and execution of works for Bakun Hydroelectric Project
Package CW2 - Main Civil Works at Sarawak.
2005
RM
(27,830,772)
(561,846)
(15,199)
(28,407,817)
2004
RM
185,868
(27,511,301)
(505,339)
(27,830,772)
GROUP
Shares of post acquisition results in joint ventures
Add: Share of results for the year
Less: Distribution from joint ventures
At end of the year
Effective Equity
Interest
100
8. Interest In Joint Ventures (contd)
(a) The Groups share of assets, liabilities, revenue and expenses of the joint ventures are as follows:-
(i) Share of the assets and liabilities

(ii) Share of the revenue and expenses

In prior year, attributable contract costs included an allowance for foreseeable losses on the Malaysia-China Hydro Joint
Venture of RM19,891,113/-.
2005
RM
415
8,889,060
341,714
4,804,808
14,035,582
6,739,588
16,840,452
18,863,774
(42,443,814)
(28,407,817)
2004
RM
377
3,915,737
144,194
2,545,971
6,605,902
11,253,053
16,493,953
6,690,045
(34,437,051)
(27,830,772)
GROUP
CURRENT ASSETS
Trade receivables
Other receivables, deposits and prepayments
Cash and cash deposits
LESS: CURRENT LIABILITIES
Amount due to customers for contract works
Trade payables
Other payables and accruals
Share of net assets of the joint ventures
2005
RM
15,561,320
(15,595,896)
(34,576)
56,798
22,222
-
(584,068)
(584,068)
(561,846)
2004
RM
24,462,170
(52,468,647)
(28,006,477)
497,420
(27,509,057)
(2,228)
(16)
(2,244)
(27,511,301)
GROUP
Attributable contract revenue
Attributable contract costs
Gross loss
Other operating revenue
Administrative costs
Finance costs
Share of loss for the year
101
9. New Planting Expenditure
This is in respect of expenditure incurred on new planting of oil palm in a plantation in Indonesia.
Included in new planting expenditure is amortisation of leasehold land amounting to RM194,254/- (2004 : Nil)
10. Other Investment
The club membership is in respect of transferable golf club membership.
2005
RM
2,293,598
2004
RM
-
GROUP
At cost :
Additions
At cost :
Unquoted shares in Malaysia
Additions
At end of the year
Club membership
GROUP COMPANY
2005
RM
47,500
4,500,000
4,547,500
68,000
4,615,500
2004
RM
47,500
-
47,500
68,000
115,500
2005
RM
-
4,500,000
4,500,000
68,000
4,568,000
2004
RM
-
-
-
68,000
68,000
102
11. Deffered Tax Assets/ (Liabilities)
This is in respect of estimated deferred tax assets/(liabilities) arising from temporary differences as follows:-
Deferred tax assets
Transfer to income statements
(note 26)
In respect of subsidiary
company acquired (note 28)
Translation difference
At end of the year
Presented after appropriate
offsetting as follows:-
Deferred tax assets
GROUP COMPANY
2005
RM
(637,132)
(703,283)
(2,610,777)
28
(3,951,164)
30,827
(3,981,991)
(3,951,164)
2004
RM
(445,027)
(192,105)
-
-
(637,132)
4,608
(641,740)
(637,132)
2005
RM
(18,000)
(1,563,417)
-
28
(1,581,389)
-
(1,581,389)
(1,581,189)
2004
RM
(3,500)
(14,500)
-
-
(18,000)
-
(18,000)
(18,000)
2005
RM
1,305
29,522
30,827
2004
RM
4,608
-
4,608
GROUP
Differences between the carrying amount of
property, plant and equipment and its tax base
Unabsorbed business losses
Deferred tax assets recognised
103
The .
The estimated deferred tax assets arising from temporary differences not recognised in the nancial statements are as follows:-
Deductible temporary differences include an amount of RM1,775,500/- (2004 : RM5,570,000/- ) in respect of share of a joint ventures
allowance for foreseeable losses.
Differences between the carrying amount of property,
plant and equipment and its tax base
Taxable temporary differences in respect of foreign
branchs revenue
Surplus arising from revaluation of investment
property
Deductible temporary differences in respect of
expenses
Fair value adjustment in respect of acquisition of
subsidiary company
Deferred tax liabilities provided for
GROUP COMPANY
2005
RM
(169,374)
(672,700)
(529,140)
-
(2,610,777)
(3,981,991)
2004
RM
(112,600)
-
(529,140)
-
-
(641,740)
2005
RM
(61,674)
(672,700)
-
(847,015)
-
(1,581,389)
2004
RM
(18,000)
-
-
-
-
(18,000)
Deductible temporary differences in respect of
expenses
GROUP COMPANY
2005
RM
3,195,500

2004
RM
7,011,000
2005
RM
-
2004
RM
-
104
12. Goodwill On Consolidation
13. Inventories
There were no inventories carried at net realisable value.
2005
RM
4,733,643
624,554
5,358,197
(1,613,592)
3,744,605
2004
RM
4,733,643
-
4,733,643
(1,103,796)
3,629,847
GROUP
At cost :
In respect of subsidiary company acquired
(note 28)
Less : Accumulated amortisation
At end of the year
2005
RM
2,896,627
12,540,115
76,739
15,513,481
2004
RM
1,743,354
7,314,672
76,739
9,134,765
GROUP
At cost :
Completed development properties
Marine fuels and lubricants
Granite blocks and slabs
105
14. Property Development Costs
15. Trade and Other Receivables
The Groups and the Companys normal trade credit term ranges from 60 to 90 days.
Amount due from customers for contract works
(note 31)
Trade receivables
Other receivables, deposits and prepayment (note 32)
Amount owing by related companies (note 33)
Amount owing by associated companies (note 34)
Amount owing by joint ventures (note 35)
GROUP COMPANY
2005
RM
75,836,210
61,022,723
19,160,098
111,670
20,000
49,773
156,200,474
2004
RM
63,774,258
49,434,006
2,218,790
116,435
29,300
1,706,459
117,279,248
2005
RM
10,485,102
30,007,683
13,771,343
40,899,733
-
-
95,163,861
2004
RM
250,492
-
175,944
52,633,745
7,002
-
53,067,183
2005
RM
2,757,920
73,384
2,831,304
(35,539)
-
(35,539)
(1,153,273)
1,642,492
2004
RM
2,726,697
31,223
2,757,920
-
(35,539)
(35,539)
-
2,722,381
GROUP
Development costs
Costs incurred during the year
At end of the year
Costs recognised in income statement:
Recognised during the year
At end of the year
Transfer to inventories
106
15. Trade and Other Receivables (contd)
The foreign currency exposure prole of trade receivables is as follows:-
16. Tax Assets
This is in respect of tax paid in advance to the Inland Revenue Board.
17. Cash and Cash Deposits
Included in cash deposits with licensed banks of the Group are deposits of RM57,146,267/- (2004: RM52,429,916/-) which have been
pledged to nancial institutions as security for bank guarantee and credit facilities of the Group.
Included in cash deposits with licensed banks of the Company are deposits of RM2,352,599/- (2004 : RM2,289,947/-) which have been
pledged to nancial institutions as security for bank guarantee and credit facilities of its subsidiary company, AZSB.
The cash deposits with licensed banks of the Group and of the Company bear effective interest at rates ranging from 2.50% to 3.70% (2004
: 2.50% to 4.00%) and 2.50% to 3.65% (2004 : 2.50% to 3.85%) respectively per annum.
2005
RM
20,029,868
2004
RM
-
GROUP/COMPANY
Saudi Riyal
Cash and bank balances
Cash deposits with licensed banks
GROUP COMPANY
2005
RM
31,185,173
122,910,869
154,096,042
2004
RM
22,560,492
86,933,110
109,493,602
2005
RM
23,744,149
29,166,122
52,910,271
2004
RM
195,736
20,143,376
20,339,112
107
The foreign currency exposure prole is as follows:-
18. Trade and Other Payables
19. Borrowings
Indonesia Rupiah
India Rupee
United States Dollar
Saudi Riyal
GROUP COMPANY
2005
RM
163,268
778,365
29,635,526
1,914,474
32,491,633
2004
RM
-
7,836
-
-
7,836
2005
RM
-
776,706
16,549,064
1,914,474
19,240,244
2004
RM
-
-
-
-
-
Amount due to customers for contract works
(note 31)
Trade payables (note 36)
Other payables and accruals (note 37)
Amount owing to holding company (note 38)
Amount to an associated company (note 39)
Advance payments received (note 40)
GROUP COMPANY
2005
RM
8,692,166
117,248,352
3,163,791
247,304
53,089
55,977,621
185,382,323
2004
RM
20,235,138
95,163,464
1,879,571
201,118
53,089
23,481,975
141,014,355
2005
RM
347,510
10,747,267
1,764,561
-
-
50,977,621
63,836,959
2004
RM
-
-
43,876
-
-
18,091,284
18,135,160
Current Liabilities
Hire purchase payables (note 41)
Trust receipts - secured
Term loans (note 42)
GROUP COMPANY
2005
RM
2,096,146
-
819,880
2,916,026
2004
RM
1,872,552
1,084,113
782,489
3,739,154
2005
RM
347,703
-
-
347,703
2004
RM
195,572
-
-
195,572
108
19. Borrowings (contd)
The trust receipt facilities are payable on demand and bear interest at a rate of 7.00% (2004 : 7.00%) per annum. These facilities are secured
and supported by:-
(i) cash deposits of a subsidiary company, AZSB; and
(ii) corporate guarantee from the Company.
20. Bank Overdrafts - Secured
The bank overdraft facilities are payable on demand and bear interest at rates ranging from 7.00% to 7.50% (2004 : 7.00% to 7.50%) per
annum. These facilities are secured and supported by:-
(i) cash deposits and freehold and leasehold land and buildings of a subsidiary company, AZSB, as disclosed in notes 4 and 5 to the nancial
statements;
(ii) cash deposits of the Company; and
(iii) corporate guarantee from the Company.
Non-Current Liabilities
Total Borrowings
Trust receipts - secured
GROUP COMPANY
2005
RM
4,105,295
46,477,350
50,582,645
6,201,441
-
47,297,230
53,498,671
2004
RM
4,464,239
2,295,843
6,760,082
6,336,791
1,084,113
3,078,332
10,499,236
2005
RM
880,663
45,000,000
45,880,663
1,228,366
-
45,000,000
46,228,366
2004
RM
527,093
-
527,093
722,665
-
-
722,665
109
21. Share Capital
22. Reserves
Revaluation reserve is in respect of the excess of market value of freehold land and hotel buildings classied under investment properties over
their carrying value. The revaluation was made in 2002 in accordance with the Groups policy for investment properties.
The Directors proposed a rst and nal dividend of 15% (2004 : 7%) per ordinary share in respect of the current nancial year. The retained
prots appropriated for this proposed dividend less tax at 28% amounted to RM7,204,723/- (2004 : RM3,362,204/-).
Non-Distributable
Share premium
Revaluation reserve
Foreign exchange translation reserve
Distributable
Retained Prots
GROUP COMPANY
2005
RM
100,000,000
66,710,400
-
66,710,400
2004
RM
100,000,000
66,306,200
404,200
66,710,400
GROUP/COMPANY
Ordinary shares of RM1/- each
Authorised:
100,000,000 ordinary shares
Issued and fully paid:
Issued pursuant to:-
- Employees share options scheme
At end of the year
2005
RM
2,180,250
7,002,890
(10,461)
9,172,679
45,077,208
54,249,887
2004
RM
2,180,250
7,002,890
(121)
9,183,019
29,540,538
38,723,557
2005
RM
2,180,250
-
(6,475)
2,173,775
18,511,084
20,684,859
2004
RM
2,180,250
-
-
2,180,250
11,313,332
13,493,582
110
23. Operating Revenue
24. Direct Operating Costs
25. Prot/(Loss) Before Taxation
(a) Prot/(Loss) before taxation is arrived at after charging/(crediting):-
Management fees
Dividend revenue
Sales of goods
Attributable contract revenue
Attributable development revenue
GROUP COMPANY
2005
RM
-
-
36,663,528
212,461,087
-
249,124,615
2004
RM
-
-
33,945,362
223,306,003
663,655
257,915,020
2005
RM
1,570,000
10,000,040
-
152,816,312
-
164,386,352
2004
RM
1,570,000
8,000,032
-
40,654,289
-
50,224,321
Costs of goods sold
Attributable contract costs
Attributable development costs
GROUP COMPANY
2005
RM
23,148,131
176,374,282
-
199,522,413
2004
RM
19,444,098
198,315,884
252,910
218,012,892
2005
RM
-
143,107,511
-
143,107,511
2004
RM
-
38,452,252
-
38,452,252
Allowance for foreseeable losses for
contract works
Amortisation of goodwill on consolidation
Amortisation of leasehold land
Auditors remuneration
- statutory audit
- under provision in prior year
GROUP COMPANY
2005
RM
-
513,825
22,376
98,152
2,100
2004
RM
431,754
477,393
22,376
45,123
-
2005
RM
-
-
-
37,016
-
2004
RM
-
-
-
8,000
-
111
(b) Employees Information
The number of employees including full-time directors of the Group and of the Company as at the nancial year end were 329 (2004 :
309) and 60 (2004 : 12) respectively.
The staff costs of the Group and of the Company consist of aggregate remuneration of salaried directors, other staffs salaries, allowances,
bonus, EPF, SOCSO, medical expenses, staff welfare and other expenses directly related to employment of staff.
Bad debts written off
Depreciation of property, plant and equipment
Directors remuneration
- fees
- other emoluments
Impairment loss on investment in associated company
Interest expense
Loss on foreign exchange
- realised
- unrealised
Preliminary expenses written off
Property, plant and equipment written off
Rental and running cost of machinery and equipment
Rental of motor vehicles
Rental of premises
Dividend revenue - unquoted shares
Gain on disposal of property, plant and equipment
Interest revenue
Rental revenue
- premises
GROUP COMPANY
2005
RM
13,163
3,743,632
655,000
1,580,623
400
1,936,363
40,578
18,426
-
-
1,428,319
85,197
1,848,125
(7,800)
(201,505)
(2,709,463)
(147,950)
2004
RM
-
3,316,008
665,000
1,590,125
-
988,797
-
-
6,995
2,033
2,203,403
7,135
1,889,876
(543)
(765,841)
(2,297,631)
(173,350)
2005
RM
-
434,834
372,000
911,846
-
922,454
39,913
18,426
-
-
-
83,182
187,866
-
-
(751,826)
-
2004
RM
-
255,587
365,000
828,600
-
35,773
-
-
-
-
-
2,764
180,000
-
-
(538,799)
-
Staff costs
GROUP COMPANY
2005
RM
16,657,431
2004
RM
15,360,089
2005
RM
3,436,056
2004
RM
1,646,430
112
25. Prot/(Loss) Before Taxation (contd)
(c) The remuneration paid or payable to the Directors and the estimated monetary value of benets provided to the Directors during
the nancial year by the Group and by the Company are as follows:-
Executive Directors
Fees
Other emoluments
Benets-in-kind
Non-Executive Directors
Fees
Other emoluments
Benets-in-kind
GROUP COMPANY
2005
RM
265,000
1,559,923
635,800
2,460,723
390,000
20,700
25,900
436,600
2004
RM
282,000
1,573,625
577,970
2,433,595
383,000
16,500
17,167
416,667
2005
RM
-
892,946
251,100
1,144,046
372,000
18,900
14,200
405,100
2004
RM
-
814,500
249,830
1,064,330
365,000
14,100
1,200
380,300
The Executive directors are as follows:-
2005
2004
The Non-Executive directors are as follows:-
2005
2004
113
26. Taxation
The provision for taxation differs from the amount of taxation determined by applying the applicable statutory tax rate to the prot/(loss) before
taxation as a result of the following differences:-
Malaysian income tax
- based on results for the year
Deferred tax relating to the origination and reversal of
temporary differences (note 11)
(Over)/Under provision in prior years
Tax expense
GROUP COMPANY
2005
RM
8,585,128
703,283
9,288,411
(39,049)
9,249,362
2004
RM
7,326,197
192,105
7,518,302
31,547
7,549,849
2005
RM
3,791,938
1,563,417
5,355,355
-
5,355,355
2004
RM
2,042,665
14,500
2,057,165
39,797
2,096,962
Accounting prot/(loss) before taxation
Tax at the statutory income tax rate of 28%
Tax effects arising from:-
Effect of lower tax rate for Malaysian subsidiary
companies with issued and paid-up share capital of
RM2.5 million and below
Effect of lower tax rate for foreign branches
Non-deductible expenses
Deductible losses from joint ventures
Deferred tax assets not recognised in the nancial
statements
Underprovision of deferred taxation in prior years
Reversal of deferred tax assets previously not recognised
(Over)/Under provision of taxation in prior years
Tax expense
GROUP COMPANY
2005
RM
28,117,885
7,873,008
(5,900)
(269,000)
1,702,503
-
-
-
(12,200)
(39,049)
9,249,362
2004
RM
(4,116,720)
(1,152,682)
(1,164)
-
1,661,148
-
7,011,000
-
-
31,547
7,549,849
2005
RM
15,915,311
4,456,287
-
(269,000)
499,053
-
-
669,015
-
-
5,355,355
2004
RM
9,101,944
2,548,544
-
-
177,636
(669,015)
-
-
-
39,797
2,096,962
114
26. Taxation (contd)
Subject to agreement by the Inland Revenue Board:-
(i) the Company has sufcient tax credit under Section 108 of the Income Tax Act, 1967, to frank payment of dividends out of its entire
retained prots as at 31st December, 2005, without incurring additional tax liability; and
(ii) the Company has tax exempt income account available for distribution by way of tax exempt dividends amounted to RM297,002/-
(2004: RM297,002/-). This is in respect of chargeable income of which the income tax has been waived.
27. Basic Earnings/(Loss) Per Ordinary Share
The basic earnings per ordinary share of the Group is calculated based on the prot attributable to shareholders of RM18,898,874/- (2004
: Loss of RM11,747,506/-) divided by the number of ordinary shares of RM1/- each in issue of 66,710,400 (2004 : weighted average
number of ordinary shares of 66,606,233).
The fully diluted earnings (2004 : loss ) per ordinary share is not presented in the nancial statements as the effect of the assumed subscriptions
for new ordinary shares by ESOS option holders is anti-dilutive.
28. Acquisition Of Subsidiary Companies
On 31st May, 2005, the Group completed the acquisition of 95% equity shareholdings in P.T. Ichtiar Gusti Pudi (IGP) for a cash consideration
of Rp17,000,000,000/- or RM7,097,500/-.
In prior year, the Company incorporated 2 subsidiary companies namely Trend Vista Development Sdn. Bhd. (TVD) and Technipolitan Sdn.
Bhd. (TSB) for a paid-up capital of RM2/- each and a sub-subsidiary company, AZRB Construction (India) Pvt. Ltd. (ACI) with a paid-up
capital of Rs100,000/- or RM8,430/-.
(i) Effect of acquisition of subsidiary companies, net of cash acquired.
The fair value of the assets acquired and the liabilities assumed at the effective date of acquisition are as follows:-
IGP
2005
RM
9,328,169
601
95,634
(2,610,777)
624,554
(340,681)
7,097,500
(601)
7,096,899
ACI TSB,TVD
2004
RM
-
8,434
-
-
-
-
8,434
(8,434)
-
GROUP
Cash at bank
Other receivables
Deferred taxation
Minority interest
Total purchase consideration
Cash at bank
Effect of acquisition of subsidiary companies, net of cash acquired
115
ii) Effect of Consolidated Income Statement
The effect on the consolidated results of the Group from their effective date of acquisition are as follows:-
(iii) Effect of Consolidated Financial Position
The effect on the consolidated balance sheet as at nancial year end are as follows:-
IGP
2005
RM
-
-
-
-
-
-
-
-
-
-
ACI TSB,TVD
2004
RM
-
-
-
36
(31,621)
(6,995)
(38,616)
(38,580)
(17)
(38,597)
GROUP
Operating revenue
Direct operating costs
Gross prot
Other operating revenue
Administrative costs
Other operating costs
Finance costs
Net loss for the year
IGP
2005
RM
9,484,251
2,293,598
13,249,730
119,399
(7,540)
(24,143)
(2,976,945)
(969,166)
(2,610,777)
(6,713,427)
(4,216)
11,840,764
ACI TSB,TVD
2004
RM
-
-
7,836
527
-
(15,051)
-
-
-
-
-
(6,688)
GROUP
Planting development expenditure
Cash at bank
Other receivables and deposits
Trade payables
Other payables and accruals
Amount owing to related companies
Minority interest
Deferred taxation
Revaluation reserve
Translation reserve
116
29. Purchase Of Property, Plant And Equipment
During the nancial year, the Group acquired property, plant and equipment with aggregate cost of RM5,189,800/- (2004 : RM6,943,238/-)
of which RM2,068,900/- (2004 : RM3,306,300/-) was nanced by means of hire purchase. Cash payments of RM3,120,900/- (2004 :
RM3,636,938/-) were made to purchase property, plant and equipment.
During the nancial year, the Company acquired property, plant and equipment with aggregate cost of RM2,218,601/- (2004 : RM572,008/-) of
which RM745,900/- (2004 : RM500,000/-) was nanced by means of hire purchase. Cash payments of RM1,472,701/- (2004 : RM72,008/-)
were made to purchase property, plant and equipment.
30. Cash And Cash Equivalents
Cash and cash equivalents included in the cash ow statements comprise the following amounts:-
Included in cash deposits with licensed banks of the Group are deposits of RM57,146,267/- (2004: RM52,429,916/-) which have been
pledged to nancial institutions as security for bank guarantee and credit facilities of the Group and are only available to be utilised for
repayment of the said facilities.
Included in cash deposits with licensed banks of the Company are deposits of RM2,352,599/- (2004 : RM2,289,947/-) which have been
pledged to nancial institutions as security for bank guarantee and credit facilities of its subsidiary company, AZSB, and are only available to
be utilised for repayment of the said facilities.
Cash and bank balances
Cash deposits with licensed bank
Bank overdrafts
GROUP COMPANY
2005
RM
31,185,173
122,910,869
(5,361,355)
148,734,687
2004
RM
22,560,492
86,933,110
(7,643,209)
101,850,393
2005
RM
23,744,149
29,166,122
-
52,910,271
2004
RM
195,736
20,143,376
-
20,339,112
117
31. Amount Due From/(To) Customers For Contract Works
Included in the above progress billings of the Group are retention sums of RM17,304,945/- (2004: RM18,304,044/-).
32. Other Receivables, Deposits And Prepayments
Included in other receivables of the Group and of the Company are advances to sub-contractors of RM12,905,661/- (2004 : Nil) and
RM9,905,661/- (2004 : Nil) respectively.
Aggregate costs incurred to date
Attributable prots
Allowance for foreseeable losses
Progress billings
Represented By:-
Amount due from customers for contract
works (note 15)
Amount due to customers for contract
works (note 18)
GROUP COMPANY
2005
RM
1,183,708,034
117,559,687
-
1,301,267,721
(1,234,123,677)
67,144,044
75,836,210
(8,692,166)
2004
RM
965,450,684
86,533,900
(431,754)
1,051,552,830
(1,008,013,710)
43,539,120
63,774,258
(20,235,138)
2005
RM
200,064,649
12,813,191
-
212,877,840
(202,740,248)
10,137,592
10,485,102
(347,510)
2004
RM
57,069,613
3,111,525
-
60,181,138
(59,930,646)
250,492
250,492
-
Other receivables
Sundry deposits
Prepayments
GROUP COMPANY
2005
RM
17,161,436
999,618
999,044
19,160,098
2004
RM
1,211,403
933,612
73,775
2,218,790
2005
RM
12,902,668
71,756
796,919
13,771,343
2004
RM
133,094
42,850
-
175,944
118
32. Other Receivables, Deposits And Prepayments (contd)
33. Amount Owing By Related Companies
These amounts are non-trade in nature, unsecured, interest free and with no xed term of repayment.
Indonesia Rupiah
India Rupee
Saudi Riyal
GROUP COMPANY
2005
RM
119,399
9,126,924
1,720,018
10,966,341
2004
RM
-
527
-
527
2005
RM
-
9,125,663
1,720,018
10,845,681
2004
RM
-
-
-
-
Holding Company
Subsidiary Companies
- AZRB Construction (India) Pvt. Ltd.
- Ahmad Zaki Sdn. Bhd.
- Inter-Century Sdn. Bhd.
- Tadok Granite Manufacturing Sdn. Bhd.
- AZRB International Ventures Sdn. Bhd.
- Kemaman Technology & Industrial Park Sdn. Bhd.
- AZRB Machineries Sdn. Bhd. (formerly known as
Technipolitan Sdn. Bhd.)
- Trend Vista Development Sdn. Bhd.
- P.T. Ichtiar Gusti Pudi
Related Company
- Residence Inn & Motels Sdn. Bhd.
GROUP COMPANY
2005
RM
-
-
-
-
-
-
-
-
-
-
111,670
111,670
2004
RM
-
-
-
-
-
-
-
-
-
-
116,435
116,435
2005
RM
96,650
9,490
33,236,027
4,424,485
289,360
41,734
1,460
17,673
17,673
2,765,181
-
40,899,733
2004
RM
78,843
-
48,829,989
3,404,344
264,093
31,734
1,146
11,798
11,798
-
-
52,633,745
119
34. Amount Owing By Associated Companies
These amounts are non-trade in nature, unsecured, interest free and with no xed term of repayment.
35. Amount Owing By Joint Ventures
These amounts are unsecured, interest free and with no xed term of repayment.
India Rupee
Indonesia Rupiah
GROUP COMPANY
2005
RM
-
-
-
2004
RM
-
-
-
2005
RM
9,490
2,765,181
2,774,671
2004
RM
-
-
-
Amount owing by:-
Maxi Heritage Sdn. Bhd.
Hidro Fokus Sdn. Bhd.
GROUP COMPANY
2005
RM
20,000
-
20,000
2004
RM
20,000
9,300
29,300
2005
RM
-
-
-
2004
RM
-
7,002
7,002
Trade
Bumi Hiway - Ahmad Zaki Joint Venture
Johawaki - Ahmad Zaki Joint Venture
Non-Trade
Bumi Hiway - Ahmad Zaki Joint Venture
Johawaki - Ahmad Zaki Joint Venture
GROUP
2005
RM
2,856
-
46,917
-
49,773
2004
RM
1,656,041
(180,743)
46,917
184,244
1,706,459
120
36. Trade Payables
Included in trade payables of the Group are amounts owing to:-
The Groups and the Companys normal trade credit term ranges from 60 to 90 days.
37. Other Payables and Accruals
Included in accruals of the Group and of the Company is the balance of consideration owing for acquisition of PT Ichtiar Gusti Pudi amounting
to RM695,300/- (2004 : Nil).
2005
RM
573,193
-
2004
RM
80,012
4,865
GROUP
Chuan Huat Industrial Marketing Sdn. Bhd., a subsidiary company of
Chuan Huat Resources Berhad, a company in which Dato Haji Wan
Zaki bin Haji Wan Muda has substantial nancial interest and is also
a director
QMC Sdn. Bhd., a company in which Dato Haji Wan Zaki bin Haji
Wan Muda has substantial nancial interest and is also a director
Indonesia Rupiah
Saudi Riyal
GROUP COMPANY
2005
RM
7,540
10,747,267
10,754,807
2004
RM
-
-
-
2005
RM
-
10,747,267
10,747,267
2004
RM
-
-
-
Other payables
Deposits received
Accruals
GROUP COMPANY
2005
RM
1,196,645
680
1,966,466
3,163,791
2004
RM
930,868
680
948,023
1,879,571
2005
RM
90,377
-
1,674,184
1,764,561
2004
RM
27,976
-
15,900
43,876
121
38. Amount Owing To Holding Company
This amount owing to Zaki Holdings (M) Sdn. Bhd. is non-trade in nature, unsecured, interest free and with no xed term repayment.
39. Amount Owing To An Associated Company
This amount owing to Fasatimur Sdn. Bhd. is non-trade in nature, unsecured, interest free and with no xed term repayment.
40. Advance Payments Received
This amount is in respect of interest free advances received for performance of the Groups and of the Companys construction contracts. These
advances are to be set off against the Groups and the Companys progress billings on the related contracts.
Indonesia Rupiah
India Rupee
Saudi Riyal
GROUP COMPANY
2005
RM
24,143
75,647
91,843
191,633
2004
RM
-
14,001
-
14,001
2005
RM
-
71,972
91,843
163,815
2004
RM
-
-
-
-
India Rupee
Saudi Riyal
GROUP/COMPANY
2005
RM
9,966,252
31,011,368
40,977,620
2004
RM
-
-
-
122
41. Hire Purchase Payables
The hire purchase payables of the Group and of the Company bear effective interest at rates ranging from 4.46% 7.60% (2004 : 7.6%) per
annum.
Total instalment payments
Less: Future nance charges
Present value of hire purchase payables
Payable within one year
Present value of hire purchase payables (note 19)
Payable after one year but not later than ve years
Present value of hire purchase payables (note 19)
GROUP COMPANY
2005
RM
6,841,724
(640,283)
6,201,441
2,397,391
(301,245)
2,096,146
4,444,333
(339,038)
4,105,295
6,201,441
2004
RM
7,183,751
(846,960)
6,336,791
2,268,107
(395,555)
1,872,552
4,915,644
(451,405)
4,464,239
6,336,791
2005
RM
1,352,347
(123,981)
1,228,366
402,852
(55,149)
347,703
949,495
(68,832)
880,663
1,228,366
2004
RM
811,676
(89,011)
722,665
236,256
(40,684)
195,572
575,420
(48,327)
527,093
722,665
123
42. Term Loans
SECURED
The term loans bear effective interest at rates ranging from 6.60% to 8.00% (2004 : 2.25% to 8.00%) per annum.
The term loans are repayable in monthly instalments over 5 and 10 years commencing in April, 2003 and April, 2001 respectively.
The term loans are secured and supported as follows:-
(i) legal charges over freehold and leasehold land and buildings of a subsidiary company, AZSB, as disclosed in note 4 to the nancial
statements; and
(ii) a corporate guarantee from the Company.
UNSECURED
The unsecured term loan bears interest at a xed rate of 7.13% (2004 : Nil) per annum and is repayable in one lump sum on the last day of
the tenor of the facility which should not exceed ve years.
CURRENT LIABILITIES
- Secured
Repayable within one year (note 19)
NON-CURRENT LIABILITIES
- Secured
Repayable after one year but not later than ve years
Repayable after ve years
- Unsecured
Repayable after one year but not later than 5 years
GROUP COMPANY
2005
RM
819,880
1,305,387
171,963
1,477,350
45,000,000
46,477,350
47,297,230
2004
RM
782,489
2,125,660
170,183
2,295,843
-
2,295,843
3,078,332
2005
RM
-
-
-
-
45,000,000
45,000,000
45,000,000
2004
RM
-
-
-
-
-
-
-
124
43. Equity Compensation Benets
(i) The Groups ESOS was approved by shareholders of the Company at the Annual General Meeting held on 20th June, 2002. The ESOS
shall continue to be in force for a duration of ten (10) years commencing from 26th July, 2002 and expiring on 25th July, 2012.
The salient features of the ESOS are:-
(a) eligible persons are full time employees with conrmed employment within the Group (including executive directors) other than a
company which is dormant. The Date of Offer being the date when an offer in writing is made to eligible employees to participate
in ESOS. The eligibility for participation in the ESOS shall be at the discretion of the Option Committee appointed by the Board of
Directors;
(b) the number of ordinary shares of RM1/- each in the Company (AZRB Shares) allocated, in the aggregate, to the directors and
senior management of the Group shall not exceed fty percent (50%) of the total AZRB Shares available under the ESOS;
(c) the aggregate number of shares to be allotted and issued under ESOS shall not exceed ten percent (10%) of the total enlarged
issued and paid-up ordinary share capital of the Company at the time of the offer or at any per centum in accordance with any
guidelines, rules and regulations of the relevant authorities governing the ESOS during the existence of the ESOS;
(d) the exercise price for each share shall be set at a discount of not more than ten percent (10%) from the weighted average market
price of the AZRB shares as shown in the Daily Ofcial List of Bursa Malaysia for the ve (5) Market Days immediately preceeding
the Date of Offer;
(e) the number of AZRB Shares allocated to any individual director or employee who, either singly or collectively through persons
connected holds twenty percent (20%) or more in the issued and paid-up share capital of the Company shall not exceed ten
percent (10%) of the total AZRB Shares available under the ESOS; and
(f) new shares issued under the ESOS shall rank pari passu in all respects with the existing ordinary shares save and except that
the new shares shall not be entitled to any dividend, rights, allotments and/or other distributions, the entitlement date of which
precedes the date of allotment of the new shares.
(ii) During the nancial year, the number of ESOS options exercised and lapsed are as follows:-
ESOS options lapsed due to resignations of employees.
At 1st January
Exercised
Lapsed
At 31st December
2005
2,798,800
-
(91,200)
2,707,600
2004
3,224,600
(404,200)
(21,600)
2,798,800
Number Of Share Options
125
There were no share options exercised during the nancial year.
Details of share options exercised in prior year:-
The terms of share options outstanding as at the end of the nancial year are as follows:-
(iii) The Directors interest in ESOS options are as follows:-
Exercise Period
1.1.2004 - 31.12.2004
Less : Par value of ordinary shares
Share premium
Number Of
Share Options
2004
404,200
Consideration
Received
2004
RM
828,610
(404,200)
424,410
Exercise Price
RM
2.05
Expiry Date
25.7.2012
Exercise Price
RM
2.05
2005
2,707,600
2004
RM
2,798,800
Number of Share Options Outstanding
Interest in share options pursuant to the ESOS
At
1.1.05
588,000
425,600
324,000
406,000
Exercised
-
-
-
-
At
31.12.05
588,000
425,600
324,000
406,000
Number of Share Options Over Ordinary Shares of RM1/- Each
Lapsed
-
-
-
-
126
44. Signicant Related Party Transactions
(a) The signicant transactions with related companies are as follows:-
Accommodation charged by:-
Management fees charged to:-
- Tadok Granite Manufacturing Sdn. Bhd.
- AZRB International Ventures Sdn. Bhd.
- Trend Vista Development Sdn. Bhd.
- Technipolitan Sdn. Bhd.
- PT Ichtiar Gusti Pudi
Dividend revenue from:-
Rental received and receivable from:-
Administrative service charged by:-
Rental paid and payable to:-
Insurance premium paid and payable to:-
GROUP COMPANY
2005
RM
4,103
-
-
-
-
-
-
-
-
-
-
122,400
420,000
327,792
2004
RM
1,664
-
-
-
-
-
-
-
-
-
(36,000)
122,400
420,000
246,372
2005
RM
-
(1,200,000)
(300,000)
(5,000)
(5,000)
(5,000)
(5,000)
(50,000)
(5,000,030)
(5,000,010)
-
-
180,000
59,090
2004
RM
-
(1,200,000)
(300,000)
(50,000)
(10,000)
(5,000)
(5,000)
-
(4,000,024)
(4,000,008)
-
-
180,000
-
127
(b) The signicant transactions with the Directors, parties connected to the Directors and companies in which the Directors have substantial
nancial interest are as follows:-
The Directors are of the opinion that the above transactions are entered into in the normal course of business and have been established under
terms mutually agreed upon between the parties involved.
Purchases from subsidiary companies of Chuan Huat
Resources Berhad, a company in which Dato Haji
Wan Zaki bin Haji Wan Muda has substantial nancial
interest and is also a director:-
- Chuan Huat Industrial Marketing Sdn. Bhd.
- Chuan Huat Hardware Sdn. Bhd.
Rental of premises paid to Dato Haji Wan Zaki bin
Haji Wan Muda
GROUP COMPANY
2005
RM
5,764,393
8,300
36,000
2004
RM
13,146,603
171,567
36,000
2005
RM
-
-
-
2004
RM
-
-
-
128
45. Contingent Liabilities

No provision has been made for the contingent liabilities mentioned in 1(a) above as the outcome of the legal proceedings are still pending and
that AZSB has supplementary agreements with joint venture partners to indemnify AZSB against any liabilities which may arise therefrom.
46. Capital Commitment
In prior year, capital commitment was in respect of acquisition of a foreign subsidiary company.
(1) UNSECURED
(a) Legal claims by suppliers of joint ventures
of AZSB
(b) Corporate guarantees given to nancial
institutions and suppliers in respect of
credit facilities granted to AZSB
(2) PARTIALLY SECURED
Corporate guarantee given together with a pledge
of cash deposits of the Company amounting to
RM2,352,599/- (2004 : RM2,289,947/-) to a
nancial institutions in respect of credit facilities
granted to AZSB
GROUP COMPANY
2005
RM
18,453,756
-
-
18,453,756
2004
RM
3,677,234
-
-
3,677,234
2005
RM
-
96,962,740
34,830,149
131,792,889
2004
RM
-
74,104,089
12,524,839
86,628,928
Approved and contracted for
* Equivalent to Rp17,000,000,000/-.
COMPANY
2005
RM
-
2004
RM
*6,919,007
129
47. Segmental Analysis - By Activity
Segment information is presented in respect of the Groups business and geographical segments. Segment results, assets and liabilities include
items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprises
corporate assets, liabilities and expenses.
Segment assets and liabilities do not include income tax assets and tax liabilities respectively. Segment capital expenditure is the total costs
incurred during the year to acquire segment assets that are expected to be used for more than one accounting period.
Inter-segment transactions are entered in the ordinary course of business based on terms mutually agreed upon by the parties
concerned.
Business Segments
The Group comprises the following three major business segments:-
(i) Construction - civil and structural construction works.
(ii) Trading in oil and gas and other related services - dealing in marine fuels, lubricants and petroleum based products.
(iii) Cultivation - oil palm
(iv) Other operations - property development, investment holding, provision of management services
and dormant companies.
Geographical Segments
The Group operates in four principal geographical areas of the world:-
(i) Malaysia - civil and structural construction works, dealing in marine fuels, lubricants and petroleum based
products, property development, investment holding, provision of management services and dormant
companies
(ii) Republic of Indonesia - oil palm cultivation
(iii) India - civil and structural construction works and dormant company
(iv) Kingdom of Saudi Arabia - civil and structural construction works
130
47. Segmental Analysis - By Activity (contd)
Major Segment By Activity
Construction
RM
Trading In
Oil & Gas &
Other Related
Services
RM
Cultivation
RM
Other
Operations
RM
Eliminations
RM
Consolidated
RM
2005
REVENUE

External revenue
Inter-segment revenue
212,461,087
-
36,663,528
959,584
-
-
-
1,570,000
-
(2,529,584)
249,124,615
-
Total revenue 212,461,087 37,623,112 - 1,570,000 (2,529,584) 249,124,615
RESULTS
Segment result
Interest revenue
Interest expenses
Share of results in joint
ventures
Share of results of
Income taxes
Prot after taxation but
before minority interest
Minority interest
22,379,788
(561,846)
(3,899)
9,644,591

-
-
-
-
-
(4,113,849)
-
-
-
-
-
27,910,530
2,709,463
(1,936,363)
(561,846)
(3,899)
(9,249,362)
18,868,523
30,351
Net prot for the year 18,898,874
OTHER INFORMATION
Segment assets
Investments properties
Tax assets
Deferred tax assets
Cash deposits with licensed
banks
Other investments
Interest in associated
companies
179,343,547
(28,407,817)
63,120
20,197,137
-
-
11,866,261
-
-
30,846,329
-
-
-
-
-
242,253,274
24,200,000
(28,407,817)
3,744,605
2,850,925
30,827
122,910,869
4,615,500
63,120
Consolidated total assets 372,261,303
Segment liabilities
Interest bearing borrowings
Tax liabilities
179,123,409 3,939,856 31,683 2,287,375 - 185,382,323
58,860,026
552,322
3,981,991
Consolidated total liabilities 248,776,662
Capital expenditure
Depreciation
3,338,172
2,702,839
799,642
696,873
156,082
-
895,904
406,296
-
(40,000)
5,189,800
3,766,008
notes to the nancial statement contd
131
Construction
RM
Trading In
Oil & Gas &
Other Related
Services
RM
Cultivation
RM
Other
Operations
RM
Eliminations
RM
Consolidated
RM
2004
REVENUE

External revenue
Inter-segment revenue
223,306,003
-
33,945,362
956,517
-
-
663,655
1,570,000
-
(2,526,517)
257,915,020
-
Total revenue 223,306,003 34,901,879 - 2,233,655 (2,526,517) 257,915,020
RESULTS
Segment result
Interest revenue
Interest expenses
Share of results in joint
ventures
Share of results of
Income taxes
Prot after taxation but
before minority interest
Minority interest
13,159,390
(27,511,301)
(17,722)
10,938,537

-
-
-
-
-
(1,994,458)
-
-
-
-
-
22,103,469
2,297,631
(988,797)
(27,511,301)
(17,722)
(7,549,849)
(11,666,569)
(80,937)
Net loss for the year (11,747,506)
OTHER INFORMATION
Segment assets
Investments properties
Tax assets
Deferred tax assets
Cash deposits with licensed
banks
Other investments
Interest in associated
companies
150,659,375
(27,830,772)
71,048
19,490,820
-
-
-
-
-
6,726,860
-
-
-
-
-
176,877,055
24,200,000
(27,830,772)
3,629,847
3,156,724
4,608
86,933,110
115,500
71,048
Consolidated total assets 267,157,120
Segment liabilities
Interest bearing borrowings
Tax liabilities
120,096,675 2,108,162 - 18,809,518 141,014,355
18,142,445
339,293
641,740
Consolidated total liabilities 160,137,833
Capital expenditure
Depreciation
6,071,514
2,464,045
293,868
614,802
-
-
577,856
299,537
-
(40,000)
6,943,238
3,338,384
132
47. Segmental Analysis - By Activity (contd)
MAJOR SEGMENT BY GEOGRAPHICAL LOCATION
MALAYSIA
RM
REPUBLIC OF
INDONESIA
RM
INDIA
RM
KINGDOM OF
SAUDI ARABIA
RM
CONSOLIDATED
RM
2005
Total revenue from external customers 210,213,767 - 3,202,339 35,708,509 249,124,615
Segment assets
Investments associate companies
Tax assets
Deferred tax assets
Fixed deposits with licensed banks
Investment properties
Other investments
185,063,491
63,120
(28,407,817)
3,744,605
2,850,925
30,827
109,824,407
24,200,000
4,615,500
11,866,261
-
-
-
-
-
13,086,462
-
-
10,571,548
-
-
-
-
-
-
-
-
34,751,974
-
-
-
-
-
-
-
-
242,253,274
63,120
(28,407,817)
3,744,605
2,850,925
30,827
122,910,869
24,200,000
4,615,500
Consolidated total assets 301,985,058 24,952,723 10,571,548 34,751,974 372,261,303
Capital expenditure 3,708,533 156,082 33,891 1,291,294 5,189,800
No comparative gures are presented for 2004 as the Group operated principally within the same geographical region.
48. Signicant Events
(i) On 14th April, 2005, the Company signed the Contract Agreement with IT Expressway Ltd. for the improvement and maintenance of IT
Corridor in Chennai, India for India Rupee (Rs) 1,238,200,436/- or approximately RM105.260 million.
(ii) On 28th June, 2005, the Company signed an agreement with Alfaisal University for the Alfaisal University Campus Development Project
Phases 1 and 2 in Riyadh, the Kingdom of Saudi Arabia for Saudi Riyals (SR) 385,812,376/- or approximately RM397.387 million.
(iii) On 31st May, 2005, the Company completed the acquisition of a foreign subsidiary company, P.T. Ichtiar Gusti Pudi, a company incorporated
in the Republic of Indonesia, for Indonesia Rupiah (Rp)17,000,000,000/- or approximately RM7.097 million.
49. Subsequent Events
(i) On 2nd March, 2006, the Company signed a Supplemental Agreement with the Government of Malaysia for additional works to be
undertaken for the Subang-Kelana Link Project in Selangor Darul Ehsan, Malaysia for RM133.113 million.
(ii) On 26th March, 2006, the Company completed the incorporation of a foreign subsidiary company known as Ahmad Zaki Saudi Arabia
Company Ltd. (AZSA) in Riyadh, the Kingdom of Saudi Arabia. AZSA was incorporated with an initial paid-up share capital of SR500,000/-
divided into 1,000 cash shares of equal value of SR500/-.
(iii) On 31st March, 2006, the wholly owned subsidiary company, Technipolitan Sdn. Bhd. changed its name to AZRB Machineries Sdn. Bhd.
133
50. Financial Instruments
(a) Financial Risk Management Policies

The Group is exposed to a variety of risks in the formal course of business. The Companys risk management seeks to minimize the potential
adverse effects from these exposures. The management reviews and agrees policies for managing each of these risks as follows:-
(i) Foreign Exchange Risk
The Group is exposed to foreign currency risk as a result of its normal trade activities when the currency denomination differs from
its functional currency. Foreign exchange exposures in transactional currencies other than functional currencies of the operating
entities are kept to an acceptable level.
(ii) Interest Rate Risk
The Groups exposure to interest rate risk relates to interest bearing nancial assets and liabilities:-
- Interest bearing nancial assets
Cash deposits are short term in nature and are not held for speculative purposes but are placed to satisfy conditions for bank
guarantee and borrowing facilities granted to the Group and for better yield returns than cash at banks.
The Group manages its interest rate yield by prudently balancing the placement of deposits with varying maturity periods.
- Interest bearing nancial liabilities
The Group manages its interest rate exposure by maintaining a prudent mix of xed and oating rate borrowings. The Group
actively reviews its debt portfolio, taking into account the investment holding period and the nature of its assets. This strategy
allows it to capitalise on cheaper funding in a low interest rate environment and achieve a certain level of protection against
rate hikes.
(iii) Credit Risk
The Groups exposure to credit risk arises from its receivables and the maximum risk associated with recognised nancial assets is
the carrying amounts as presented in the balance sheet.
The Group has a credit policy in place and the exposure to credit risk is managed through the tendering assessment and evaluation
process, application of credit approvals, credit limits and monitoring procedures.
The Group does not have any signicant credit risk exposure to any individual customer.
134
50. Financial Instruments (contd)
(iv) Liquidity and Cash Flow Risks
The Group actively manages its operating cash ows and the availability of funding so as to ensure that all repayment and funding
needs are met. As part of its overall prudent liquidity management, the Group maintains sufcient levels of cash to meet its working
capital requirements.
(b) Fair Values
The methods and assumptions used to estimate the fair value of each class of nancial assets and liabilities are as follows:-
(i) Cash and Bank Balances, Cash Deposits, Trade and Other Receivables and Payables
The carrying amounts approximate fair values due to the relatively short term maturities of these nancial assets and liabilities.
(ii) Borrowings
The carrying amounts of bank overdrafts approximate fair values due to the relatively short term maturities of these nancial liabilities.
The carrying amounts of oating rate term loans approximate their fair values.
The fair values of hire purchase payables and xed rate term loans are estimated using discounted cash ow analysis, based on
current lending rates for similar types of borrowing arrangements.
The carrying amounts of nancial assets and liabilities recognised in the balance sheets approximate their fair values except for the
following:-
GROUP COMPANY
Note
Carrying
Amount
RM
Fair Value
RM
Carrying
Amount
RM
Fair Value
RM
2005
Financial Assets
Club memberships
Unquoted shares
10
10
68,000
4,547,500
100,000
*-
68,000
4,500,000
100,000
*-
Financial Liabilities
Hire purchase payables
Borrowings
41
42
6,201,441
45,000,000
6,066,281
44,766,839
1,228,366
45,000,000
1,170,664
44,766,839
135
GROUP COMPANY
Note
Carrying
Amount
RM
Fair Value
RM
Carrying
Amount
RM
Fair Value
RM
2004
Financial Assets
Club memberships
Unquoted shares
10
10
68,000
47,500
100,000
*-
68,000
-
100,000
-
Financial Liability
Hire purchase payables 41 6,336,791 6,295,599 722,665 706,026
* It
estimate fair value without incurring excessive costs.
The nominal/notional amounts and fair values of nancial liabilities not recognised in the balance sheets of the Group and of the
Company are as follows:-
GROUP COMPANY
Note
Nominal
Amount
RM
Fair Value
RM
Nominal
Amount
RM
Fair Value
RM
2005
Contigent liabilities in respect of:-
Legal claims by suppliers of joint ventures of AZSB
Corporate guarantees given to nancial institutions
and suppliers of AZSB
Corporate guarantees given to a nancial
institution of AZSB
45(1a)
45(1b)
45(2)
(partially
secured)
18,453,756
-
-
*-
-
-
-
96,962,740
34,830,149
-
96,962,740
35,423,648
18,453,756 - 131,792,889 132,386,388
2004
Contigent liabilities in respect of:-
Legal claims by suppliers of joint ventures of AZSB
Corporate guarantees given to nancial institutions
and suppliers of AZSB
Corporate guarantees given to a nancial
institution of AZSB
45(1a)
45(1b)
45(2)
(partially
secured)
3,677,234
-
-
*-
-
-
-
74,104,089
12,524,839
-
74,110,270
12,524,839
3,677,234 - 86,628,928 86,635,109
* It is not practical to estimate the fair value of the contingent liabilities reliably due to uncertainties of timing, costs and eventual outcome.
136
51. Currency
All amounts are in Ringgit Malaysia unless otherwise stated.
52. Comparative Figures
Certain comparative gures have been reclassied to conform with the current years presentation as follows:-
(a) Reclassication of interest in joint ventures.
GROUP
As Reclassied
RM
As Previously Report
RM
BALANCE SHEET
Non-current Assets
Non-current Liabilities
25,370,400
7,401,822
53,201,172
35,232,594
(b) Reclassication of repayments from joint ventures

GROUP
As Reclassied
RM
As Previously Report
RM
CASH FLOW STATEMENT
Net cash generated from operating activities
Net cash generated from investing activities
8,026,319
1,004,713
8,252,029
779,003
137
analysis of
shareholdings
Authorised Share Capital : RM100,000,000
Class of Shares : Ordinary Share of RM1.00 each
Issued and Fully Paid-up Share Capital : RM66,710,400
Voting Rights : One vote per RM1.00 per share
Statement of Directors Shareholdings
NUMBER OF ORDINARY SHARES OF RM1/- EACH
Direct
Interest %
Deemed
Interest %
The Company
Ahmad Zaki Resources Berhad
Raja Dato Seri Aman Bin Raja Haji Ahmad
Datuk (Prof.) A Rahman Bin Abdullah
Dato Ismail @ Mansor Bin Said
Zaki Holdings (M) Sdn. Bhd.
498,690
149,674
1,350,912
264,674
300,000
1
50,001
10,000
10,000
0.75
0.22
2.03
0.40
0.45
50.00
10.00
10.00
40,262,410
60.35*
* Shares held through Zaki Holdings (M) Sdn. Bhd.

By virtue of Dato Haji Wan Zaki Bin Haji Wan Muda having an interest of more than 15% of the shares in Ahmad Zaki Resources Berhad, he is
deemed interested in the shares of its subsidiaries to the extent the Company has an interest.
Other than as disclosed above, none of the Directors held any shares or have any interest in the Company and its related companies as at 28 April, 2006.
Distribution of Shareholders
Category
No. of Shareholders No. of Shares % of Shareholding
Malaysian Foreign Malaysian Foreign Malaysian Foreign
Less than 100
100 to 1,000
1,001 to 10,000
10,001 to 100,000
100,001 to less than 5% of Issued Shares
5% and above of Issued Shares
96
374
1377
222
33
1
0
3
18
5
2
0
4,785
314,800
4,977,160
5,968,794
14,694,311
40,262,410
0
2,600
78,180
107,860
299,500
0
0.01
0.47
7.46
8.95
22.03
60.35
0
0
0.12
0.16
0.45
0
Total 2,103 28 66,222,260 488,140 99.27 0.73

as at 28th April 2006
138
analysis of shareholdings contd
List of Substantial Shareholders (5% and Above Excluding Bare Trustees)
NUMBER OF ORDINARY SHARES OF RM1/- EACH
Direct
Interest % Deemed Interest %
1 Zaki Holdings (M) Sdn. Bhd.
2 Dato Haji Wan Zaki Bin Haji Wan Muda
40,262,410
498,690
60.35
0.75
40,262,410
60.35*
* Shares held through Zaki Holdings (M) Sdn. Bhd.
List of 30 Largest Shareholders
No Name Shares Held %
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Zaki Holdings (M) Sdn. Bhd.
Employees Provident Fund Board
HSBC Nominees (Tempatan) Sdn. Bhd.
- HSBC (M) Trustee Bhd for OSK-UOB Small Cap Opportunity Unit Trust (3548)
OSK Nominees (Tempatan) Sdn. Bhd.
- Idris Bin Mohammad
Nik Mahani Binti Nik Mohd Rashid
Al Wakalah Nominees (Tempatan) Sdn. Bhd.
- Pledged Securities Account for Dato Haji Mustaffa Bin Mohamad (CKT)
Qutronics Sdn. Bhd.
Betanaz Corporation Sdn. Bhd.
Maybank Nominees (Tempatan) Sdn. Bhd.
- Maybank Trustee Berhad for MAAKL Value Fund
BHLB Trustee Berhad
- Prunsmall - Cap Fund
AXA Afn General Insurance Berhad
M & A Securities Sdn. Bhd.
-IVT (B)
OSK Nominees (Tempatan) Sdn. Bhd.
- Nordin Bin Abu Bakar
Geosakti Sdn. Bhd.
Rosmini Azah Binti Abdul Rahman
Datuk (Prof) A Rahman @ Omar Bin Abdullah
Inter-Pacic Equity Nominees (Tempatan) Sdn.Bhd.
- Pledged Securities Account For Lew Mee Choon
Fong Ting Wong
Mayban Securities Nominees (Tempatan) Sdn. Bhd.
- Pledged Securities Account For Lee Keng Hong
Low Ewe Hum
Amanah Raya Berhad
- Kumpulan Modal Bumiputra Pahang
Ke-zan Nominees (Asing) Sdn Bhd
Tengku Ab Malek Bin Tengku Mohamed
- Kim Eng Securities PTE. Ltd. for Horizon Growth Fund N.V
Ruziah Azdi Binti Abdul Rahman
Dato Hamzah Bin Hasan
HSBC Nominees (Tempatan) Sdn. Bhd.
- HSBC (M) Trustee Bhd for MAAKL Progress Fund (4082)
40,262,410
1,979,740
1,340,700
1,279,445
796,127
784,000
783,500
734,000
566,912
498,690
464,500
444,100
439,200
425,800
423,429
363,400
312,800
300,000
264,674
230,000

221,000
216,860
215,600
200,000
199,300
178,360

155,000
151,000
150,000

149,674
60.35
2.97
2.01

1.92

1.19
1.18

1.17
1.10
0.85
0.75
0.70
0.67
0.66
0.64
0.63
0.54
0.47
0.45
0.40
0.34
0.33
0.33
0.32
0.30
0.30
0.27

0.23
0.23
0.22

0.22
Total 54,530,221 81.74
139
Title & location of property
Date of
acquisition
Description of property
(existing use)
Tenure
(age of building)
Total land area/
(built up area)
NBV
RM000
GM372, Lot 981 and
GM 4708, Lot 985
Mukim Setapak
Daerah Kuala Lumpur and
Negeri Wilayah Persekutuan
(Lot 981 and Lot 985)
20.01.1994
&
16.02.1994
Vacant land Freehold 54,967 sq. ft. 4,950
EMR 873, Lot 826
Mukim Sungai
Karang, Kuantan
Pahang (Lot 826)
30.10.1993 Land and 1-storey and 3-storey
buildings held for rental
Freehold (12 years) 202,815/(64,670)
sq. ft.
19,250
HS (M) 1038, Lot
PT4782 and HS (M)
1039, Lot PT4783
Mukim Setapak
(Lot PT4782 and Lot PT4783)
05.05.1997 Adjoining 5-storey
buildings for own use
Freehold (10 years) 3,498/
(20,728) sq. ft.
4,045
Daerah KualaHS (M) 994, Lot PT16360
Mukim Setapak
(Lot PT16360)
28.09.2000 5-storey building for
own use
(10,364) sq. ft.
1,320
HS (D) 15563, Lot 4910
PT1921
Mukim Hulu Klang
District Gombak
Negeri Selangor (Lot PT4970)
21.01.2000 Double storey bungalow
for rental
Leasehold expiring
17.06.2078/
(21 years)
10,332/
(2,457) sq. ft.
1,579
GM 1821, Lot No 5413
Mukim Kuala Lumpur
District of Negeri Wilayah Persekutuan
(Lot PT5419)
26.11.2002 Double storey bungalow
for own use
(9,640) sq. ft.
6,190
Lot PT2100, HSD 722
Mukim Kuala Telemong
District of Hulu TerTengganu
Kuala Terengganu, Terengganu
(Lot PT2100)
15.07.2003 Vacant Land Leasehold expiring
18.10.2025
20 hectares 132

HS(M) 929, Lot PT 16343
Mukim Setapak
(Lot PT 16343)
24.11.2005 4-storey building
for own use
(8,291)sq.ft
808
HGU No. 5 Desa Amboyo Selatan
Kecamatan Ngabang
Kabupaten Pontianak
Kalimantan Barat
Republic of Indonesia
31.05.2005 Land for Cultivation Leasehold expiring
27.09.2033
7,740 hectares 9,130
list of properties
as at 31st December 2005
This page is intentionally left blank
p
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f
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Company No. 432768-X Incorporated in Malaysia
*I/We, NRIC/Company No.
of
being a *member/members of AHMAD ZAKI RESOURCES BERHAD, hereby appoint
NRIC No.
of
*and/or failing him/her NRIC No.
of
or failing *him/her/both, the Chairman of the Meeting as *my/our proxy to vote for *me/us on *my/our behalf at the Ninth Annual General Meeting
of the Company, to be held at Casuarina Room, Ground Floor, SIME Darby Convention Centre, 1A, Jalan Bukit Kiara 1, 60000 Kuala Lumpur on
Monday, 12 June 2006 at 10.00 a.m. and, at every adjournment thereof *for/against the resolution(s) to be proposed thereat.
The proportion of *my/our holding to be represented by *my/our proxies are as follows:
(The next paragraph should be completed only when two proxies are appointed)
* First Proxy (1) % * Second Proxy (2) %
* My/our proxy is to vote as indicated below:-
No. Resolutions For Against No. Resolutions For Against
1. Resolution 1 6. Resolution 6
5. Resolution 5
(Please indicate with an X in the appropriate spaces provided above as to how you wish your votes to be cast. If you do not do so, the proxy will vote or abstain
from voting at *his/her discretion).
As Witness my hand this day of 2006.
Signature of member(s)/Seal
Notes:
1. A member of the Company who is entitled to attend and vote at the meeting is entitled to appoint a proxy or
proxies, (but not exceeding two (2) proxies), to attend and vote in his stead.
2. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he species the
proportion of his holdings to be represented by each proxy.
3. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies
Act, 1965 shall not apply to the Company.
4. Where a member is an authorised nominee as dened under the Securities Industry (Central Depositories) Act
1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the
Company standing to the credit of the securities account.
5. Where the Form of Proxy is executed by a corporation, it must be executed under its seal or under the hand of
its attorney.
6. The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed, or
a notarially certied copy of that power or authority, must, to be valid, be deposited at the ofce of the Companys
Registrars, Mega Corporate Services Sdn Bhd, Share Registration Department, Level 11-2, Faber Imperial Court,
Jalan Sultan Ismail, 50250 Kuala Lumpur, not less than forty-eight (48) hours before the time set for the meeting
or at any adjournment thereof.
Number of Shares Held:

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* Shares held through Zaki Holdings (M) Sdn. Bhd.

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