Borneo Aqua Harvest Berhad · Borneo Aqua Harvest Berhad (“Borneo Aqua”) was incorporated on 16 April 2004 in Malaysia as a private limited company and was converted into a public

Borneo Aqua Harvest Berhad (649504-D)

649504-D


Lot 4, Block E, Bandar Nam Tung

Mile 2, Jalan Leila

90000 Sandakan, Sabah

T 6089 611 133 F 6089 618 633

www.borneoaqua.com.my

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annual report

Financial Statements 19

List of Properties 57

Analysis of Shareholdings 58

Notice of Annual General Meeting 60

Statement Accompanying Notice of Annual General Meeting 62

Form of proxy 63

Corporate Information 1

Corporate Profile 2

Corporate Structure 3

Our Vision & Mission 3

Chairman’s Statement 4

Directors’ Profiles 6

Statement of Corporate Governance 11

Audit Committee Report 15

Statement of Internal Control 17

Additional Compliance Information 18

CONTENTS

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Annual Report 2007

BOARD OF DIRECTORS

DATUK MD KAMAL BIN BILALIndependent Non-Executive Chairman

DATUK LO FUI MINGManaging Director/Chief Executive Officer

LO KEN HINExecutive Director

LO TECK YONGExecutive Director

AKINORI HOTANIExecutive Director

MD AFENDI BIN HAMDANIndependent Non-Executive Director

CHANG MEI-LIN @ TINA CHANGNon-Executive Director

CHONG KHING CHUNGIndependent Non-Executive Director

DORA CHIU KUI TZUIndependent Non-Executive Director

COMPANY SECRETARIES

KANG SHEW MENG

SEOW FEI SAN

CHONG TZU KHEN

AUDIT COMMITTEE

CHONG KHING CHUNGChairman

DATUK MD KAMAL BIN BILALMember

MD AFENDI BIN HAMDANMember

LO TECK YONGMember

REGISTERED OFFICE/HEAD OFFICE

Lot 4, Block E, Bandar Nam Tung,Jalan Leila,P.O.Box No. 2112,90724, Sandakan, Sabah.Tel 089-611133Fax 089-618633

R&D CENTRE

Pulau Palak,P.O.Box No. 2112,90724, Sandakan, Sabah.Tel 089-611133Fax 089-618633

SHARE REGISTRAR

Epsilon Registration Services Sdn Bhd

312, 3rd Floor,Block C, Kelana Square,17, Jalan SS7/26,47301, Petaling Jaya,Selangor Darul EhsanTel 03-78032116Fax 03-78061261

PRINCIPAL BANKER

Hong Leong Bank BerhadLot 1 - 3,Block 18, Mile 4,North Road, Bandar Indah,90722, Sandakan, Sabah.

AUDITORS

Ernst & Young (AF: 0039) Chartered Accountants16th Floor, Wisma Khoo Siak Chiew,Jalan Buli Sim Sim,90000 Sandakan, Sabah.

SPONSOR

CIMB Investment Bank Berhad (formerly known as Commerce International Merchant

Bankers Berhad)

5th Floor, Bangunan CIMB,Jalan Semantan,Damansara Heights,50490 Kuala LumpurTel 03-2084 8888

STOCK EXCHANGE LISTING

MESDAQ Market of Bursa MalaysiaSecurities BerhadStock Name: BAHVESTStock Code : 0098

CORPORATE INFORMATION

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CORPORATE PROFILE

THE PIONEER OF MALAYSIA’S AQUACULTURE NEW FRONTIERBorneo Aqua Harvest Berhad (“Borneo Aqua”) was incorporated on 16 April 2004 in Malaysia as a private limited companyand was converted into a public company on 20 May 2004. Borneo Aqua was listed on the MESDAQ Market of Bursa MalaysiaSecurities Berhad on 5 September 2005. Borneo Aqua has 3 wholly-owned subsidiaries, namely Plentiful Harvest Sdn Bhd(“Plentiful”), Marine Terrace Sdn Bhd (“Marine”) and Salient Horizon Sdn Bhd (“Salient”)

Plentiful was established with the focus on marine fish breeding, hatchery and rearing to support the local marine aquacultureindustry to reduce dependence on foreign imported fish fry and fish. Marine is principally involved in the rearing of marinefish whilst Salient owns a live fish carrier for the transport of the Group’s live adult fish to its customers in Hong Kong,Southern China and other parts of Asia Pacific, if required.

While other aquaculture companies deal only with certain aspects of aquaculture processes, Borneo Aqua Group is anintegrated aquaculture Group which involves in the entire process of sustainable aquaculture i.e. broodstock management,research and development (“R&D”), breeding, hatching, rearing, productions of live feed, marketing, transportation of livefishes and provision of training and consultancy services related to the industry.

The Group’s integrated approach in producing high value marine fishes with the application of biotechnology has led it tocommit to a comprehensive R&D programme and to employ skilled professionals to carry out its objectives. The Group’sunmatched investments in this area had made it well placed to lead the industry in Malaysia and to play a vital role in theaquaculture industry of the Asia Pacific region in the near future. The Group’s R&D team currently comprises expertise fromJapan, South Korea and Malaysia.

With the dedication of its experienced management together with the comprehensive R&D programme, the Group is veryconfident that it will be able to contribute positively to the country’s aquaculture industry and to enable it to join the fewelite countries as a forefront of marine fish breeding in the Asia Pacific region, in particular for Grouper species, in line withthe Government’s inspiration of self sustainability in this sector. In addition, a successful aquaculture industry will contributeto Malaysian economic growth by creating employment and reducing import of marine fish fry and fish. Currently, most of the

marine fish fry, in particular the Grouper species, for rearing purposes in Malaysia are mainly imported fromTaiwan and Indonesia.

To-date, the Group had succeeded in producing numerous high value species such as Coral TroutGrouper, Marble Grouper, Humpback Grouper, Coral Rockcod, Barred-Cheek Coral Trout, Tomato

Rockcod Grouper, Camouflage Grouper, Giant Grouper and Malabar Red Snapper forcommercial purpose. The Group is currently focusing its R&D activities in the breeding ofother high value marine fish, amongst others, Humphead Maori Wrasse, Speckle YellowGrouper, Speckle Blue Grouper and Speckle White Grouper.

Most of the Borneo Aqua Group’s income is tax-exempted as its main subsidiaries, namelyPlentiful and Marine have been granted tax incentive under Section 127 of the Income

Tax Act, 1967 whereby the two companies are exempted from tax on statutory income fromfish breeding, fish fry hatchery and fish rearing activities for a period of 10 years

commencing 1 April 2004.

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Annual Report 2007

100%MARINE TERRACE SDN BHD

100% PLENTIFUL HARVEST SDN BHD

100% SALIENT HORIZON SDN BHD

In view of the widening gap between the demand andsupply of marine fish in the country as well in theinternational market, Borneo Aqua intends to be thecatalyst to develop the marine fish farming industry inMalaysia and Asia Pacific region, consistent with theeconomic strategy of both the Sabah State and the FederalGovernment to promote aquaculture as one of theeconomic activities for the country.

Borneo Aqua is committed to further improve and developthe marine aquaculture industry in Malaysia by:

• enhancing the country’s research and developmentcapabilities in the breeding and hatchery of marinefish through sharing of knowledge with local

universities, research centres and relevantorganisations/bodies;

• educating local fish farmers on hatchery of marinefish through training and consultancy services to beprovided by the Company;

• creating sub-sector within the aquaculture industry orpromoting new down stream industry such as marinefish feed industry and production of value-added fishproducts such as fish fillet for export market; and

• improving the living standard of fish farmers throughrearing of a diversified and high commercial valuemarine fishes produced by Borneo Aqua.

Borneo Aqua is also committed to be one of the marketleaders in breeding and hatchery of high commercial valuemarine fish in the Asia Pacific region. In achieving thisbusiness objective, the Company will:

• broaden its product base or species of fish throughresearch by a highly trained and motivated R&D team

• enhance its R&D capabilities through tie-ups withlocal or international universities, research centresand related organisations/bodies;

• provide high quality fishes that are reared inconducive natural environment and toxic free;

• increase its production capacity and distributioncapability; and

• establish new and improve on its network ofcustomers for its products, and to develop strategicmarketing alliances with international wholesalers.

CORPORATE STRUCTURE

VISION & MISSION

(649504-D)

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DEAR FELLOW SHAREHOLDERS,

ON BEHALF OF THE BOARD OFDIRECTORS, I AM PLEASED TOPRESENT THE ANNUAL REPORTOF BORNEO AQUA HARVESTBERHAD (“BORNEO AQUA”) FORTHE FINANCIAL YEAR ENDED 31 MARCH 2007.

CHAIRMAN’S STATEMENT

BUSINESS AND FINANCIAL REVIEW

I am pleased to report that for the financial year ended 31 March 2007(“FYE 2007”), the Group recorded higher revenue of RM9.06 million ascompared to the revenue of RM6.41 million for the financial year ended31 March 2006 (“FYE 2006”). The increase in revenue of 41.34% wasmainly due to the improving results of the Group’s hatchery operations.For the said improvement, credit must be given to the Group’s dedicatedmanagement, and R&D team in perfecting the technique and formulaeused in the hatchery operations.

In the FYE 2007, the Group has successfully relocated and expanded itsrearing operations to Silam, Lahad Datu bringing the total rearingcapacity to approximately 1.0 million tails of fishes. The conduciveenvironment and water condition at the Group’s rearing sites at Silam,Lahad Datu is very suitable for fish rearing. In addition, the Group hadalso acquired a live fish carrier during the year and the Group is now in aposition to control its fish distribution process and gain direct access tothe Hong Kong and China market. As such, the Group has now attainedfull integration of its operations right from hatchery to productdistribution.

For the FYE 2007, the Group recorded a PBT and PAT of RM3.098 millionand RM2.762 million respectively. The PBT for the FYE 2007 increasedmarginally by 8.85% to RM3.098 million from PBT of RM2.846 million(excluding the one-off item amounting to RM2.226 million, representingthe recognition of negative goodwill on consolidation which arose fromthe acquisition of subsidiary companies (“One-Off Item”)) for the FYE2006 while the PAT for the FYE 2007 slightly decreased by 0.72% toRM2.762 million from RM2.782 million (excluding the One-Off Item) forthe FYE 2006. The increase in PBT is mainly due to the higher revenue asmentioned above.

RESEARCH AND DEVELOPMENT

The Borneo Aqua Group believes that R&D is the key strategy to ensuresound sustainable fisheries development and management, as this willprovide new knowledge and the technologies to improve productivity andcompetitiveness. The Group’s R&D team currently comprises expertise fromJapan, South Korea and Malaysia. The R&D team will continues toemphasis on new high value fish species which have commercialpotential, in addition to R&D activities to bring about greater operationsefficiency and quality of its products. Among the high value species thatthe Group will be focusing in the next 2 years will be Humphead MaoriWrasse, Speckle Yellow Grouper, Speckle Blue Grouper, Speckle WhiteGrouper.

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Annual Report 2007

CHAIRMAN’S STATEMENT (CONT’D)

CURRENT CAPACITY AND EXPANSION PLANS

The Group currently has about 2,300 broodstock of variousspecies and is progressively increasing the number andspecies of broodstock as the Group always believes thatability to produce fish fry is the key to a successfulaquaculture company. As mentioned earlier, the results fromthe Group’s hatchery operations has improved significantlyin the last quarter of this financial year and hence, thenumber of fish fry to be produced is expected to increasesignificantly in FY 2008. In view of the expected increase,the Group plans to build additional sea cages over the next12 months to increase its rearing capacity to 2.0 milliontails of fishes from existing 1.5 million tails of fishes.

The Group will also increase the capacity of its NurseryCentre in FY 2008 to enable the Group to handleapproximately 2.0 million fish fry at any point in time from1.0 million fish fry at present.

GENERAL OUTLOOK AND FUTURE PROSPECTS

The importance of aquaculture grows each year because ofincreased demand for seafood, overall population growthand diminishing natural seafood supplies. Today, more than1 billion people worldwide rely on fish as a source of animalprotein. Studies carried out by United Nation’s Food andAgriculture Organisation on the sustainable contribution offisheries to food security in the Asia Pacific region indicatedthat, by the year 2010, substantially more fish would berequired to sustain the demand from the expandingpopulation.

The fisheries sector is an important economic sector to thegrowing population in Malaysia as it continues to provide avital source of animal protein and promotes ruraldevelopment by providing employment. The consumption offish in Malaysia is expected to increase by 14 per cent by2010. To expedite marine finfish production and realise thetarget production, there is a need for a quantum leap to acultured system with higher production capacity.

Given the improving results of the Group’s hatchery andrearing operations, the Group expects both the fish fry

production rate and rearing capacity to continue to increaseover time. The Group would also continue to focus its effortsto enhance the operational efficiencies of its workprocesses, to expand its fish fry production and rearingcapacity, and to increase its products base. With the abovedevelopment and favourable demand, in particular fromHong Kong and China, the Board of Directors is optimisticof the Group’s prospects and expects the operating resultsfor the financial year ending 31 March 2008 and futurefinancial years to be significantly better.

DIVIDEND

In line with the dividend policy of the Company, I amdelighted to state that the Board of Directors has proposeda final tax-exempt dividend of 3.5% in respect of thefinancial year ended 31 March 2007, subject toshareholders’ approval at the forthcoming Annual GeneralMeeting. The amount of tax-exempt dividend declared asmentioned above represents approximately 38% of theGroup’s consolidated net profit of RM2.762 million, in linewith the Company’s dividend policy to declare and payannual dividends of at least 30% of the Group’s yearly netoperating profit.

A NOTE OF APPRECIATION

On behalf of the Board, I would like to take this opportunityto thank our staff and management for their continued hardwork, dedication and loyalty to the Group.

I would also like to thank our shareholders, our Sponsor, theGovernment of Sabah, Fisheries Department of Sabah andother relevant authorities, valuable customers and businesspartners for their unwavering support to the Group.

DATUK MD KAMAL BIN BILALChairman of the Board of Borneo Aqua Harvest Berhad

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DIRECTORS’ PROFILES

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Annual Report 2007

1 DATUK MD KAMAL BIN BILAL

Malaysian aged 44, is the Independent Non-Executive Chairman and memberof the Audit Committee of Borneo Aqua and was appointed to the Board ofDirectors of Borneo Aqua on 9 May 2005.

He entered the job market at the age of 20, serving as a CommunityDevelopment Officer in the Ministry of National and Rural Development. Aftergaining 13 years of experience in the Government sector, he ventured intothe automobile industry as a Proton Edar dealer in 1995. He was appointedas the Non-Executive Director of The Store Corporation Berhad in 2000 andwas re-designated as Independent Non-Executive Chairman in 2001. He wasalso appointed as Independent Non-Executive Chairman of KBB ResourcesBerhad and Prime Utilities Berhad in 2003 and 2005 respectively. Since2000, he has been the Division Treasurer of the United Malay NationalOrganization’s Kepala Batas division.

Datuk Md Kamal Bin Bilal does not have any family relationship with anyother directors or major shareholders of the Company. He has no conflict ofinterest with the Company and has not been convicted of any offenceswithin the past ten (10) years, other than traffic offences, if any.

Datuk Md Kamal Bin Bilal attended all four (4) Board Meetings of theCompany held during the financial year.

2 DATUK LO FUI MING

Malaysian aged 51, is the Managing Director and Chief Executive Officer ofBorneo Aqua and was appointed to the Board of Directors of Borneo Aqua on9 May 2005.

Upon completion of his secondary education, he started working in a timbercamp in the operations division and was subsequently appointed as Manager.In 1980, he started his own logging company and was involved in variousaspect of the timber industry including timber concession holding, loggingcontracting, timber trading and timber processing. In 1995, he ventured intothe plantation industry. He was the Managing Director of CepatwawasanGroup Berhad (“Cepatwawasan”), a company listed on the Second Board ofBursa Securities, from 1 October, 2001 to 16 January 2004, 6 August 2004to 1 April 2005 and was appointed as the Non-Executive Deputy Chairmanuntil 21 July 2005. He also sits on the Board of several other privatecompanies. He incorporated Plentiful and Marine for breeding of fish and fishfry to supply to the local and international markets in 2001 and 2002respectively.

As the Managing Director and Chief Executive Officer of Borneo Aqua, he isprimary responsible for overseeing the overall business operations anddevelopment as well as formulation and implementation of the Borneo AquaGroup’s corporate strategies. With over 29 years of experience in thebusiness sector, he is the driving force of the Group.

Datuk Lo Fui Ming is the brother of Mr. Lo Ken Hin, brother-in-law of Ms.Dora Chiu Kui Tzu and the father of Mr. Lo Teck Yong.

He is a substantial shareholder of the Company. He has no conflict of interestwith the Company and has not been convicted of any offences within thepast ten (10) years, other than traffic offences, if any.

He attended all four (4) Board Meetings of the Company held during thefinancial year.

DIRECTORS’ PROFILES (CONT’D)

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3 LO KEN HIN

Malaysian aged 49, is the Executive Director of Borneo Aqua and was appointed to the Board of Directors of Borneo Aquaon 9 May 2005.

He is the director in charge of operations for Hatchery Centre and Rearing Centre of the Borneo Aqua Group. He isresponsible for overseeing the breeding and hatching operations, purchasing and production planning. In 1977, hejoined Syarikat Lo & Sons and was involved in the timber camp operations. From 1984 to 2001, he was the ExecutiveDirector for several timber companies. He has been a director of HHC Venture Sdn Bhd (“HHC”) since 2003. HHC isprincipally involved in general contract works for plantation sector. In 2001, he joined his brother Datuk Lo Fui Ming toform Plentiful to breed fish and fish fry.

Mr. Lo Ken Hin is the brother of Datuk Lo Fui Ming and uncle of Mr. Lo Teck Yong. He has no conflict of interest withthe Company and has not been convicted of any offences within the past ten (10) years, other than traffic offences, ifany.

He attended all four (4) Board Meetings of the Company held during the financial year.

4 LO TECK YONG

Malaysian aged 26, is the Executive Director of Borneo Aqua and was appointed to the Board of Directors of Borneo Aquaon 9 May 2005. He is the member of the Audit Committee of the Company. He is the director in charge of the marketingdivision of the Borneo Aqua Group. He oversees the Group’s overall product marketing and services, and marketdevelopment.

He obtained a Bachelor of Science Degree majoring in Marketing from University of Surrey, United Kingdom in 2003.Upon his graduation in 2003, he embarked on a study tour to a few fish breeding centres in Taiwan, Republic of Chinaand South Korea to expand his knowledge on fish breeding and marketing of fish and fish fry.

Mr. Lo Teck Yong is the son of Datuk Lo Fui Ming and nephew of Mr. Lo Ken Hin and Ms Dora Chiu Kui Tzu. He has noconflict of interest with the Company and has not been convicted of any offences, other than traffic offences, if any.


5 AKINORI HOTANI

Japanese aged 33, is an Executive Director of Borneo Aqua and was appointed to the Board of Directors of Borneo Aquaon 24 March 2006.

He obtained a Bachelor of Science Degree majoring in Marine Science and Aquaculture (First Class Honours) fromUniversity of Kinki, Japan in 1996. Upon graduation, he joined Nitto Seimo Corporation Co Ltd (“Nitto”), Japan as theHead of Ocean Research and Development Department. During his employment with Nitto, he has conducted numerousresearch and has gained extensive experience in marine fish breeding hatchery and rearing of marine fish. He also hasvast knowledge in formulation of aquaculture medicine and chemical, water environment control, micro-organismproduction, and fish eggs management and control and as well as designing and constructing fish cages (net cage,submersible cage and aquaculture system) He is responsible for the overall implementation of Borneo Aqua Group’s R&Dstrategies and activities. He is also responsible for product development and breeding activities of the Group.

Mr. Akinori Hotani does not have any family relationship with any other directors or major shareholders of the Company.He has no conflict of interest with the Company and has not been convicted of any offences within the past ten (10)years, other than traffic offences, if any.



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Annual Report 2007

6 MD AFENDI BIN HAMDAN

Malaysian aged 46, is the Independent Non-Executive Director of Borneo Aqua and was appointed to the Board ofDirectors of Borneo Aqua on 20 March 2007. He is the member of the Audit Committee of the Company.

He graduated from the University of Wisconsin - Stevens Point, USA, in 1989 with a Bachelor of Science in BusinessAdministration and minoring in Management Information System. He was a banker and subsequently ventured into thebusiness world as an entrepreneur in 1992. He started of as a petrol station operator in Klang Valley and later venturedinto properties, fast food restaurant, road maintenance works and in information technology area. He was appointed in1995 as a Deputy Chairman of Sabah Tourism by Yang di-Pertua Negeri Sabah until 1998. In 1996, he set up the DewanPerniagaan Melayu Negeri Sabah and was appointed as the Yang DiPertua for the first term to ensure the smooth runningof the organisation. He established and owns Rafflesia Chicken Hut fast food restaurants in 1999 and has successfullysetup 4 outlets in Sabah and one at the Mall, Kuala Lumpur.

Encik Md Afendi Bin Hamdan does not have any family relationship with any other directors or major shareholders of theCompany. He has no conflict of interest with the Company and has not been convicted of any offences within the pastten (10) years, other than traffic offences, if any.

He attended one (1) Board Meeting of the Company held after his appointment during the financial year.

7 CHANG MEI-LIN @ TINA CHANG

Taiwanese aged 53, is the Non-Executive Director of Borneo Aqua and was appointed to the Board of Directors of BorneoAqua on 9 May 2005.

She obtained a Bachelor Degree in International Trade Business from Ming Chuan University, Taiwan, Republic of Chinain 1974. Upon graduation, she joined Fuchi Electronic Co., Ltd in Japan as an Import and Export Executive. In 1977,she was promoted to Quality Control Manager, then to Manager of Management Department in 1981. In 1988, she waspromoted to Personal Assistant to the President of the company, a post she held until 1991. In July 1991, sheincorporated Tina International Holding Co., Ltd., which is the sole agent in Taiwan, Republic of China for Nitto SeimoCo. Ltd., a listed company in Japan, which is involved in, amongst others, trading in marine nets and other marinegoods.

Ms Chang Mei-Lin @ Tina Chang does not have any family relationship with any other directors or major shareholdersof the Company. She has no conflict of interest with the Company and has not been convicted of any offences withinthe past ten (10) years, other than traffic offences, if any.

She attended all four (4) Board Meetings of the Company held during the financial year.

8 CHONG KHING CHUNG

Malaysian aged 40, is the Independent Non-Executive Director and Audit Committee Chairman of Borneo Aqua since 9May 2005.

He is a Chartered Member of the Malaysian Institute of Accountants and a Certified Practising Accountants (“CPA”) ofAustralia. He obtained a Bachelor Degree in Accountancy from University of Western Australia in 1990. He spent theearly part of his career in the accountancy profession before eventually branching out into the capital market, holdingvarious positions, including as the Executive Director (Operations) of Innosabah Securities Bhd. In 2004, he wasappointed as the Executive Director cum Group Chief Financial Officer of Cepatwawasan Group Bhd. He subsequently hasa short stint with a Singapore public listed company in 2006 and is currently the Group Chief Financial Officer of aLondon AIM public listed company headquartered in Hong Kong.

Mr. Chong Khing Chung does not have any family relationship with any other directors or major shareholders of theCompany. He has no conflict of interest with the Company and has not been convicted of any offences within the pastten (10) years, other than traffic offences, if any.



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9 DORA CHIU KUI TZU

Malaysian aged 53, is the Independent Non-Executive Director of Borneo Aqua and was appointed to the Board ofDirectors of Borneo Aqua on 9 May 2005.

Upon completing her secondary education, she joined Guthrie Engineering Sdn Bhd as a Kardex Clerk cum PartsSupervisor in 1973. In 1982, she joined Hong Kong and Shanghai Banking Corporation (currently known as HSBC BankMalaysia Berhad (“HSBC”)). She left HSBC in 2002. She is a committee member of the Sandakan Hospice Association andthe Sabah Cheshire Home Sandakan, and an active member of the Sandakan Toastmaster Club.

Ms Dora Chiu Kui Tzu is the sister-in-law of Datuk Lo Fui Ming and aunty of Mr. Lo Teck Yong. She has no conflict ofinterest with the Company and has not been convicted of any offences, other than traffic offences, if any.

She attended all four (4) Board Meetings of the Company held during the financial year.


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Annual Report 2007

The Board of Directors (“the Boards”) of Borneo Aqua Harvest Berhad (“Borneo Aqua”) recognises and subscribes to theimportance of the principles and best practices set out in the Malaysia Code on Corporate Governance (“the Code”) as a keyfactor towards achieving an optimal governance framework and processes in managing the business and operational activitiesof the Company.

The Board subscribes to and supports the belief that good corporate governance practices are pivotal to enhancingshareholders’value. Hence, the Board is fully dedicated to continuously evaluate the Group’s corporate governance practicesand procedures to ensure that the principles and best practices in corporate governance are applied and adhered to in thebest interests of its stakeholders.

The Statement below sets out the manner in which the Group has applied the Principles of the Code and the extent ofcompliance with Best Practices advocated therein.

A. BOARD OF DIRECTORS

Responsibility of the Board of Directors

The Board takes full responsibility for the performance of the Group. The Board guides the Company on its short andlong-term goals, provides advice and directions on management and business development issues while providingbalance to the management of the Company.

The Board is responsible for the followings:

• Reviewing and adopting a strategic plan for the Group;

• Overseeing the conduct of the Group’s business to evaluate whether the business is being properly managed;

• Identify principal risks and ensure the implementation of appropriate systems to manage these risks;

• Succession planning, including appointing, training, determining the compensation of and where appropriate,replacing senior management;

• Developing and implementing an investor relations programme or shareholders communication policy for the Group;and

• Reviewing the adequacy and the integrity of the Group’s internal control systems and management informationsystems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines.

Composition and Balance

The Company is led by an experienced Board with nine (9) members; comprising one (1) Independent Non-ExecutiveChairman, one (1) Managing Director/Chief Executive Officer, three (3) Executive Directors, one (1) Non-ExecutiveDirector and three (3) Independent Non-Executive Directors. The Board composition represents a mix of knowledge, skillsand expertise to effectively discharge its stewardship responsibilities in spearheading the Group’s growth and futuredirection.

The Independent Non-Executive Chairman is responsible for the Board’s effectiveness and standard of conduct whilst theManaging Director/Chief Executive Officer has the overall responsibilities to oversee the business and operations. Theclear division of responsibilities between these two roles will ensure a balance of power and authority.

All independent and Non-Executive Directors do not participate in the day-to-day management of the Group. TheIndependent Non-Executive Directors have a responsibility to bring independent objective judgements to bear on theBoard’s decisions.

The Company is in compliance with Part 2 of the Malaysian Code of Corporate Governance which states that at least one-third (1/3) of the Board must be made up of Independent Non-Executive Directors. The Company has also complied withParagraph 15.02 of the Listing Requirements of Bursa Malaysia Securities Berhad for the MESDAQ Market, which requiresthe Board to have at least two (2) directors or one-third (1/3) of the Board are Independent Directors.

STATEMENT OF CORPORATE GOVERNANCE

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A. BOARD OF DIRECTORS (CONT’D)

Appointments and Re-election of Directors

All appointments of new directors to the Board are properly made with an established and transparent procedure and incompliance with the relevant rules of the relevant authorities. Any appointment of additional director will be made asand when it is deemed necessary by the existing Board with due consideration given to the mix and range of expertiseand experience required for an effective Board.

In accordance with the Company’s Articles of Association, at each Annual General Meeting, one-third (1/3) of theDirectors for the time being, or if their number is not a multiple of three (3), the number nearest to one-third (1/3)with a minimum of one (1), shall retire from office and an election of Directors shall take place provided always thateach Director (except the Managing Director) shall retire at least once in every three (3) years but shall be eligible forre-election. A Director retiring at a meeting shall retain office until the close of the meeting whether adjourned or not.An election of Directors shall take place each year.

Board Meeting and Supply of Information

The Board meets regularly on a quarterly basis to control and monitor the development of the Group. Additional meetingswill be convened as and when required. The agenda for each Board meeting is circulated to all the Directors for theirperusal well in advance of the Board meeting date. The Directors are given sufficient time to obtain further informationand explanation, where necessary, in order to be briefed properly before the meeting.

The proceedings and resolutions reached at each Board meeting are recorded in the minutes of the meetings, which arekept in the Minutes Book at the Registered Office.

Besides Board meetings, the Board exercises control on matters that require its approval through circulation of Directors’Resolutions.

The summary of attendance at the Board meetings held for the financial year ended 31 March, 2007 is as follows:

Directors Number of Board MeetingsHeld Attended

Datuk Md Kamal Bin Bilal 4 4Datuk Lo Fui Ming 4 4Lo Ken Hin 4 4Lo Teck Yong 4 4Chang Mei-Lin @ Tina Chang 4 3Dora Chiu Kui Tzu 4 4Chong Khing Chung 4 4Akinori Hotani 4 4Md Afendi Bin Hamdan (Appointed on 20 March 2007) 1 1

The Board members have access to the advice and services of the Company Secretaries and all information in relation tothe Group whether as a full Board or in their individual capacity to assist them in carrying out their duties. Wherenecessary, the Directors may engage independent professionals at the Group’s expense on specialized issues to enablethe Board to discharge their duties with adequate knowledge on the matters being deliberated.

Number of Directorship in Other Companies

None of the Directors of the Company hold any directorship in other public listed companies except for Datuk Md KamalBin Bilal.

Directors’ Training

All the Directors except for Encik Md Afendi Bin Hamdan who will be attending the Mandatory Accreditation Programmeon 14 and 15 August 2007, have attended and successfully completed the Mandatory Accreditation Programme asrequired by Bursa Malaysia Securities Berhad. Every Director will undergo continuous training to equip himself/herselfto effectively discharge his/her duties as a director from time to time. The Company will provide briefing for newmembers of the Board, when necessary, to ensure they have a comprehensive understanding on the Group’s operations.

STATEMENT OF CORPORATE GOVERNANCE (CONT’D)

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Annual Report 2007

B. REMUNERATION OF DIRECTORS

The Board recognises that the remuneration of an Executive Director shall always be linked to corporate and individualperformance. The remuneration of Non-Executive Director and Independent Non-Executive Director are related to theirexperience and level of contribution. The Board however, decided that there is no necessity at this moment to set up aRemuneration Committee. Currently, the remuneration of both Executive and Non-Executive Directors are decided by theBoard.

For the financial year ended 31 March 2007, a total sum of RM525,608 was paid to the Directors of the Company. Thedetails of the Directors’ remuneration for the financial year ended 31 March 2007 are as follows:

Salaries and other emoluments Fees Total

RM RM RM

Executive Directors 335,888 - 335,888Non-Executive Directors - 189,720 189,720

Executive Non-ExecutiveRange of remuneration Directors Directors

Below RM50,000 2 3RM50,001 - RM100,000 2 -RM100,000 - RM150,000 1 1

C. SHAREHOLDERS AND INVESTORS RELATION

Recognising the importance of timely dissemination of information to shareholders and other stakeholders, the Board iscommitted to ensure that the shareholders and other stakeholders are well informed of major development of theCompany and the information is communicated timely to them through the following:

• The Annual Report; and

• The various disclosures and announcements made to Bursa Malaysia Securities Berhad including the ResearchReports, Quarterly Results and Annual Results, which are available publicly on the internet via Bursa MalaysiaSecurities Berhad’s website at http://www.bursamalaysia.com.

The Group’s Annual General Meeting (“AGM”) is an important forum where communications with shareholders areeffectively conducted. Shareholders will be notified of the meeting together with a copy of the Company’s Annual Reportat least twenty-one (21) days before the meeting. The Board will ensure that each item of special business included inthe notices of the AGM or Extraordinary General Meeting is accompanied by a full explanation of the effects of anyproposed resolution.

The Independent Non-Executive Chairman and the Board Members are prepared to respond to all queries and undertaketo provide sufficient clarification on issues and concerns raised by the shareholders. The external auditors are alsopresent to provide their professional and independent clarification, if required, on issues highlighted by the shareholders.

The Company strives to promote and encourage bilateral communication with its shareholders through participation atits general meetings and also ensure timely dissemination of any information to the investors, analysts and public atlarge. The Company always maintains and promotes transparency in our business activities and to continually keep theshareholders and the public well informed on the Company’s activities.

The Company also maintains a website (http://www.borneoaqua.com.my) which provides another communicationchannel for investors and shareholders to access corporate information and news related to the Group.


14



D. ACCOUNTABILITY AND AUDIT

(i) Financial Reporting

The Board has taken reasonable steps to provide a balanced and comprehensive assessment of the Group’s financialperformance and prospects, primarily through the annual report, quarterly financial results and research reports. Inthe preparation of the financial statements, the directors have adopted suitable accounting policies and appliedthem consistently and made judgements and estimates that are prudent and reasonable.

(ii) Internal Control

The Board has the responsibility for maintaining a sound system of internal controls, which provides reasonableassessments of effective and efficient operations, internal controls and compliance with laws and regulations.Currently, the Group does not maintain an Internal Audit Department due to the size of the Group. The Board is ofthe opinion that the current control mechanism, procedures and policies are adequate for the current level ofoperations.

(iii) Relationship with the Auditors

The Group’s independent external auditors hold an essential role for the shareholders by enhancing the reliabilityof the Group’s financial statements and providing assurance of that reliability to users of these financial statements.The Company has always maintained a formal and transparent relationship with its external auditors in seekingprofessional advice and ensuring compliance with the accounting standards in Malaysia.

E. DIRECTOR’S RESPONSIBILITY IN RESPECT OF THE ANNUAL FINANCIAL STATEMENTS

The Directors are required to prepare the financial statements for each financial year, which give a true and fair view ofthe state of affairs of the Group and of the Company at the end of the financial year, and of the results and cash flowof the Group and of the Company for the financial year ended.

In preparing the financial statements, the Directors have ensured that applicable approved accounting standards inMalaysia, the provisions of the Companies Act, 1965 and the Listing Requirements of Bursa Malaysia Securities Berhadfor the MESDAQ Market have been applied. The Directors also have a general responsibility for taking such steps as arereasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

15

Annual Report 2007

The Audit Committee was established to act as a Committee of the Board of Directors (“Board”) with the objective of assistingthe Board in the areas of corporate governance, systems of internal controls, risk management and financial reporting of theGroup.

Composition

The composition of the Audit Committee must fulfil the following requirements:

• The Audit Committee must be comprised of no fewer than 3 members;• The Chief Executive Officer, Managing Director and alternate directors shall not be appointed as members of the Audit

Committee;• The majority of the Audit Committee members shall be independent directors;• The Chairman of the Audit committee shall be an independent director from among their members;• At least one member of the Audit Committee:

- must be a member of the Malaysian Institute of Accountants; or- if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years’ working experience

and:-- he must have passed the examinations specified 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 specified in Part II of the 1st Schedule of the

Accountant’s Act 1967; or- fulfils such other requirements as prescribed by the Bursa Malaysia Securities Berhad.

The Audit Committee comprises:

Name Status of Directorship MeetingHeld Attended

ChairmanChong Khing Chung Independent Non-Executive Director 4 4

MemberDatuk Md Kamal Bin Bilal Independent Non-Executive Chairman 4 4

Lo Teck Yong Executive Director 4 4Md Afendi Bin Hamdan Independent Non-Executive Director 1 1 (appointed on 20 March 2007)

Terms of Reference

Authority

For the performance of its duties, the Audit Committee shall in accordance with the procedures determined by the Board andat the cost of the Company:

• have explicit authority to investigate any matter within its terms of reference;• have the resources required to perform its duties;• have full and unrestricted access to any information which it requires in the course of performing its duties;• have unrestricted access to the Chief Executive Officer and its Financial Department; • have direct communication channels with the external auditors;• be able to obtain independent/external professional or other advice and to secure the attendance of outsiders with

relevant experience and expertise if it considers this necessary; and• be able to convene meetings with the external auditors excluding the attendance of the executive members of the

Company, whenever deemed necessary.

AUDIT COMMITTEE REPORT

16


Functions of the Audit Committee

The Audit Committee shall, amongst others, discharge the following functions:

1. To review the following and report the same to the board of directors:

a) with the external auditors:

i) the external audit plan,ii) the evaluation of the system of internal controls; andiii) the external report.

b) the assistance given by the Company’s employees to the external auditors;

c) determine the quality, adequacy and effectiveness of the Group’s internal control policies;

d) to review with the management on a periodic basis, the Group’s general policies, procedures and controls, especiallyin relation to management accounting, financial reporting, risk management and business ethics;

e) the quarterly results and year end financial statements, prior to the approval by the board of directors, focusingparticularly on:

i) changes in or implementation of major accounting policy changes;ii) significant and unusual events, andii) compliance with accounting standards and other legal requirements;

f) and related party transactions and conflict of interest situation that may arise within the Group including anytransaction, procedure or course of conduct that raises questions of management integrity;

g) any letter of resignation from the external auditors of the Company; and

h) whether there is any grounds to believe that the external auditors is not suitable for reappointment; and

2. Recommend the nomination of a person or persons as external auditors.

Procedures of the Audit Committee

The Audit Committee shall regulate its procedures as follows:

(a) the calling of meetings;(b) the notice to be given of such meetings;(c) the voting and proceedings of such meetings;(d) the keeping of minutes; and(e) the custody, production and inspection of such minutes.

Summary of Activities

The following activities were carried out by the Audit Committee during the financial year under review:

• Reviewed the auditing plan with the external auditors for the statutory audit of the Group’s financial statement for thefinancial year ended 31 March 2007;

• Reviewed any changes in major accounting policies;• Reviewed any significant or unusual events;• Reviewed the compliance with accounting standards and other legal requirements; • Reviewed the research report, unaudited quarterly financial statements including the audited year end financial

statements to ensure adequacy of the disclosure of information essential for a fair and true presentation of the financialaffairs of the Group before recommending to the Board for approval;

• Discussed and reviewed the Group’s audited year end financial statements together with the report of the AuditCommittee with the external auditors in relation to the significant matters noted in the course of the audit of the Group’sfinancial statements as well as new development on accounting standards and regulatory requirements; and

• Considered the appointment of external auditors and their remunerations.

AUDIT COMMITTEE REPORT (CONT’D)

17

Annual Report 2007

STATEMENT OF INTERNAL CONTROL

Introduction

The Board is committed to maintain a sound system of internal control of the Group and is pleased to provide the followingStatement of Internal Control, which outline the Group’s nature and scope of internal control during the year.

Board Responsibility

The Board is responsible for establishing an appropriate control environment and framework on risk management,organisational, financial and operational controls including reviewing its adequacy and integrity.

The Board recognises the importance of sound internal controls and risk management as the platform for the practice of goodcorporate governance. Due to the inherent limitations in any system of internal controls, the system is designed to manage,rather than eliminate the risk of failure to achieve business objectives. Thus the framework is expected to provide reasonablebut not absolute assurance against material misstatements or losses.

Internal Control Framework

Presently the Group does not maintain an internal audit department. The Board believes that the same objective can beachieved as it has established an organization with clearly defined lines of accountability and delegated authorities and thecurrent control mechanisms are sufficient for the size of the group.

The Managing Director and senior management team monitor the day-to-day affairs of the Group by attending meetings bothat management and operational levels. These include technical and operations meetings and management review meetings forthe subsidiary companies.

The key elements of the Group’s internal control system are described below:

- A well defined organisational structure with clear lines of accountability that sets out the authority delegated to theBoard and management committees.

- There is a clearly defined delegation of responsibilities to the Audit Committee of the Board and the management of theholding company and operating units who ensure that appropriate control procedures are in place.

- Performance reports such as quarterly financial review and other corporate matters are regularly provided to the directorsand discussed at Board Meetings.

- Management meeting are regularly held to discuss and report on the operational performance, key information, legal andregulatory matters of each business unit.

- The Audit Committee is tasked by the Board with the duty of reviewing the effectiveness of the Group’s system of internalcontrols.

- The Audit Committee, on behalf of the Board, reviews and holds discussions with Management to deliberate on actionplans addressing the internal controls issues identified.

Presently the Group does not maintain an internal audit department as the Group has established an organization with clearlines of accountability and delegated authorities and the current control mechanisms are sufficient for the size of the Groupand it provides an adequate form of check and balance.

The Board is of the view that there were no significant breakdowns or weaknesses in the system of internal control of theGroup that may have a material impact the operations of the Group for the financial year ended 31 March 2007. However, theBoard remains committed towards maintaining a sound system of internal controls and therefore, on-going reviews will becarried out to measure the effectiveness of the internal control systems in order to establish shareholders’ confidence. Thisis to ensure that the Group’s system of internal controls is able to support the growth and dynamics of the Group in line withthe changes in the operating environment. The Board, intends to outsource the expertise of professional firm to ensure thatthe Company maintains a sound system of internal control to safeguard the shareholders’ investment and the Company’sassets.

ADDITIONAL COMPLIANCE INFORMATION

1. Utilistion of Proceeds

As at 31 March 2007, the utilisation of proceeds raised from the IPO are as follows:

Utilisation Approved Utilised as AmountUtilisation of 31 March 2006 Untilised

RM000 RM000 RM000

Capital expenditure 15,442.6 12,474.6 2,968.0Expenditure for research and development 1,560.0 *1,511.8 -Amount approved for acquisition of a second hand live fish carrier 2,500.0 *1,941.3 -Working capital 3,597.9 3,597.9 -Listing expenses 2,200.0 *1,904.6 -

Total 25,300.5 22,332.5 2,968.0

* The balance of the expenditure for research and development, listing expenses and part of the amount approvedfor acquisition of a second hand live fish carrier vessel have been utilised as working capital.

2. Share Buy-back

The Company did not carry out any share buy-back for the financial year under review.

3. Options, Warrants or Convertible Securities

There were no options, warrants or convertible securities issued during the financial year.

4. American Depository Receipt (ADR) or Global Depository Receipt (GDR)

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

5. Imposition of Sanctions and/or Penalties

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

6. Non-audit Fees

The amount of non-audit fees paid to the external auditors by the Group for the financial year ended 31 March 2007 wasRM18,000. The fee was related to the professional services rendered in respect to the review of quarterly announcements.

7. Profit Forecast

No profit forecast was announced or published by the Group and hence, no comparison is made between actual andforecast results.

8. Profit Guarantee

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

9. Recurrent Related Party Transactions of a Revenue or Trading Nature

There was no recurrent related party transactions of revenue or trading nature which had entered by the Group duringthe financial year ended 31 March 2007.

10. Contract Relating To Loan by the Company

There is no contract relating to loan by the Company.

11. Revaluation Policy

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

12. Material Contract

There was no other material contract entered into by company and/or its subsidiary company which involves Directors’interests during the financial year ended 31 March 2007.


18

Directors’ Report 20

Statement by Directors 23

Statutory Declaration 23

Report of the Auditors 24

Income Statements 25

Balance Sheets 26

Statements of Changes in Equity 27

Cash Flow Statements 28

Notes to the Financial Statements 30

FINANCIAL STATEMENTS

20


The Directors have pleasure in presenting their report together with the audited financial statements of the Group and of theCompany for the financial year ended 31 March 2007.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are fish breeding,operation of a fish hatchery, fish rearing and live fish transportation services.

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

RESULTS

Group CompanyRM RM

Profit for the year 2,761,504 1,151,405

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in thefinancial statements.

In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year werenot substantially affected by any item, transaction or event of a material and unusual nature.

SIGNIFICANT EVENTS

(a) On 8 August 2006, the Company had through a wholly-owned subsidiary, Plentiful Harvest Sdn. Bhd. incorporated acompany, Salient Horizon Sdn. Bhd. with an issued and paid up ordinary share capital of RM2.

(b) On 13 September 2006, a subsidiary, Salient Horizon Sdn. Bhd., acquired one unit of live fish carrier vessel at aconsideration of HKD 4 million (RM1,932,800).

DIVIDEND

The amount of dividend paid by the Company since 31 March 2006 was as follows:

RM

In respect of the financial year ended 31 March 2006 as reported in the directors’ report of that year:

Final tax exempt dividend of 3.5% on 300,000,000 ordinary shares of RM0.10 each declared on 12 March 2006 and paid on 25 August 2006 1,050,000

At the forthcoming Annual General Meeting, a final tax exempt dividend of 3.5% totalling RM1,050,000 in respect of thefinancial year ended 31 March 2007 will be proposed for shareholders’ approval. The financial statements for the currentfinancial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted forin shareholders’ equity as an appropriation of retained earnings in the financial year ending 31 March 2008.

DIRECTORS’ REPORT

21

Annual Report 2007

DIRECTORS

The names of the Directors of the Company in office since the date of the last report and at the date of this report are:

Datuk Md Kamal Bin BilalDatuk Lo Fui MingLo Ken HinLo Teck YongAkinori HotaniChang Mei-Lin @ Tina ChangChiu Kui Tzu @ DoraChong Khing ChungMd Afendi Bin Hamdan (Appointed on 20 March 2007)

DIRECTORS’ BENEFITS

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which theCompany was a party, whereby the Directors might acquire benefits by means of the acquisition of shares in or debentures ofthe Company or any other body corporate.

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other thanbenefits included in the aggregate amount of emoluments received or due and receivable by the Directors as shown in Note9 to the financial statements or the fixed salary of a full-time employee of the Company) by reason of a contract made bythe Company with any director or with a firm of which he is a member, or with a company in which he has a substantialfinancial interest.

DIRECTORS’ INTERESTS

According to the register of Directors’ shareholdings, the interests of Directors in office at the end of the financial year inshares in the Company during the financial year were as follows:

Number of Ordinary Shares of RM0.10 Each1.4.2006 Acquired Sold 31.3.2007

The Company

Direct Interest

Datuk Md Kamal Bin Bilal 2,180,000 - - 2,180,000Datuk Lo Fui Ming 117,276,271 1,789,000 (3,000,000) 116,065,271Lo Ken Hin 15,643,196 - (2,400,000) 13,243,196Lo Teck Yong 3,651,330 3,000,000 - 6,651,330Akinori Hotani 135,000 247,000 - 382,000Chang Mei-Lin @ Tina Chang 10,068,988 - (3,556,366) 6,512,622Chiu Kui Tzu @ Dora 100,000 - - 100,000Chong Khing Chung 40,000 - - 40,000Md Afendi Bin Hamdan - 6,000,000 - 6,000,000

Datuk Lo Fui Ming by virtue of his interest in shares in the Company is also deemed interested in shares of all the Company’ssubsidiaries to the extent the Company has an interest.

DIRECTORS’ REPORT (CONT’D)

22


OTHER STATUTORY INFORMATION

(a) Before the income statements and balance sheets of the Group and of the Company were made out, the Directors tookreasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making ofprovision for doubtful debts and satisfied themselves that there were no known bad debts and that no provisionfor doubtful debts was necessary; and

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records inthe ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the Directors are not aware of any circumstances which would render:

(i) it necessary to write off any bad debts or to make any provision for doubtful debts in respect of the financialstatements of the Group and of the Company; and

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

(c) At the date of this report, the Directors are not aware of any circumstances which have arisen which would renderadherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading orinappropriate.

(d) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report orfinancial statements of the Group and of the Company which would render any amount stated in the financial statementsmisleading.

(e) As at the date of this report, there does not exist:

(i) any charge on the assets of the Group and of the Company which has arisen since the end of the financial yearwhich secures the liabilities of any other person; or

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

(f) In the opinion of the Directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period oftwelve months after the end of the financial year which will or may affect the ability of the Group and of theCompany to meet their obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of thefinancial year and the date of this report which is likely to affect substantially the results of the operations of theGroup and of the Company for the financial year in which this report is made.

AUDITORS

The auditors, Ernst & Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 18 July 2007.

DATUK LO FUI MING LO KEN HIN

Sandakan, Malaysia

DIRECTORS’ REPORT (CONT’D)

23

Annual Report 2007

We, DATUK LO FUI MING and LO KEN HIN, being two of the Directors of BORNEO AQUA HARVEST BERHAD, do hereby statethat, in the opinion of the Directors, the accompanying financial statements set out on pages 25 to 56 are drawn up inaccordance with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia so as togive a true and fair view of the financial position of the Group and of the Company as at 31 March 2007 and of the resultsand the cash flows of the Group and of the Company for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 18 July 2007.

DATUK LO FUI MING LO KEN HIN

Sandakan, Malaysia

I, CHONG TZU KHEN, being the Officer primarily responsible for the financial management of BORNEO AQUA HARVEST BERHAD,do solemnly and sincerely declare that the accompanying financial statements set out on pages 25 to 56 are in my opinioncorrect, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions ofthe Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed CHONG TZU KHENat Sandakan in the State of Sabah on CHONG TZU KHEN18th day of July 2007

Before me,

RAMASAH BINTI HJ. MOHD. TAHA (S-029)Commissioner for OathsNo. 3, Tingkat 2, Bangunan SRDC (Sandakan)Sandakan, Sabah

STATEMENT BY DIRECTORSPURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

STATUTORY DECLARATIONPURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965

24


We have audited the financial statements set out on pages 25 to 56. These financial statements are the responsibility of theCompany’s Directors.

It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report ouropinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do notassume responsibility to any other person for the content of this report.

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

In our opinion:

(a) the financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 andapplicable Financial Reporting Standards in Malaysia so as to give a true and fair view of:

(i) the financial position of the Group and of the Company as at 31 March 2007 and of the results and the cash flowsof the Group and of the Company for the year then ended; and

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

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

We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the financialstatements of the Company are in form and content appropriate and proper for the purposes of the preparation of theconsolidated financial statements and we have received satisfactory information and explanations required by us for thosepurposes.

The Auditors’ Reports on the financial statements of the subsidiary companies were not subject to any qualification materialto the consolidated financial statements and did not include any comment required to be made under Section 174(3) of theAct.

ERNST & YOUNG CHONG YEW HOONGAF: 0039 1502/04/09 (J)Chartered Accountants Partner

Sandakan, Malaysia

Dated: 18 July 2007

REPORT OF THE AUDITORS TO THE MEMBERS OFBORNEO AQUA HARVEST BERHAD

25

Annual Report 2007

Group Company2007 2006 2007 2006

Note (12 months) (11 months)RM RM RM RM

Revenue 3 9,059,808 6,405,677 1,400,000 1,050,000Cost of sales 4 (4,107,994) (2,431,238) - -

Gross profit 4,951,814 3,974,439 1,400,000 1,050,000

Other income 5 220,687 2,485,443 220,687 236,209Other expenses (175,125) (546,523) - -Selling and distribution costs (468,839) (22,383) - -Administrative expenses (1,415,165) (799,353) (467,378) (88,970)

Operating profit 3,113,372 5,091,623 1,153,309 1,197,239

Finance costs 6 (15,136) (19,563) - -

Profit before tax 7 3,098,236 5,072,060 1,153,309 1,197,239

Income tax expense 10 (336,732) (63,456) (1,904) (62,832)

Profit for the year/period 2,761,504 5,008,604 1,151,405 1,134,407

Earnings per share attributable to equity holders of the Company (sen):- Basic 12 0.92 2.01

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

INCOME STATEMENTSFOR THE YEAR ENDED 31 MARCH 2007

26


Group CompanyNote 2007 2006 2007 2006

RM RM RM RM

Assets

Non-current assets

Property, plant and equipment 13 21,845,654 10,948,101 3,733 -Intangible asset 14 671,851 748,245 - -Investments in subsidiary companies 15 - - 105,204 105,204Biological assets 16 2,906,982 1,614,378 - -Deferred tax assets 25 119,532 214,749 - -

25,544,019 13,525,473 108,937 105,204

Current assets

Biological assets 16 4,425,734 1,285,255 - -Inventories 18 381,844 184,354 - -Trade and other receivables 19 4,792,705 5,151,645 29,507,999 16,813,926Tax refundable 50,546 717 47,993 -Cash and bank balances 20 3,487,588 16,130,446 2,012,397 14,617,699

13,138,417 22,752,417 31,568,389 31,431,625

TOTAL ASSETS 38,682,436 36,277,890 31,677,326 31,536,829

EQUITY AND LIABILITIES

Equity attributable to equityholders of the Company

Share capital 21 30,000,000 30,000,000 30,000,000 30,000,000Share premium 21 359,354 359,354 359,354 359,354Retained earnings 22 6,706,630 4,995,126 1,222,334 1,120,929

Total equity 37,065,984 35,354,480 31,581,688 31,480,283

Non-current liabilities

Hire purchase payables 23 122,054 114,243 - -Deferred tax liabilities 25 239,611 - - -

361,665 114,243 - -

Current liabilities

Trade and other payables 24 1,118,951 674,981 95,638 27,314Hire purchase payables 23 135,836 104,954 - -Current tax payable - 29,232 - 29,232

1,254,787 809,167 95,638 56,546

Total liabilities 1,616,452 923,410 95,638 56,546

TOTAL EQUITY AND LIBIALITIES 38,682,436 36,277,890 31,677,326 31,536,829


BALANCE SHEETSAS AT 31 MARCH 2007

27

Annual Report 2007

Non-Distributable Distributable

RetainedShare Share Earnings/

Capital Premium (Loss) TotalNote (Note 21) (Note 21) (Note 22)

RM RM RM RMGroup

At 1 April 2005 2 - (13,478) (13,476)

Issuance of ordinary shares:- for acquisition of subsidiary companies 105,204 - - 105,204- for settlement of amounts

due to former shareholders of subsidiary companies acquired 6,844,252 - - 6,844,252

- right issues 550,542 - - 550,542- public issue 2,500,000 22,250,000 - 24,750,000- bonus issue 20,000,000 (20,000,000) - -

Listing expenses 21 - (1,890,646) - (1,890,646)

Profit for the period - - 5,008,604 5,008,604

At 31 March 2006 30,000,000 359,354 4,995,126 35,354,480

Profit for the year - - 2,761,504 2,761,504Dividend 11 - - (1,050,000) (1,050,000)

At 31 March 2007 30,000,000 359,354 6,706,630 37,065,984

Company

At 1 April 2005 2 - (13,478) (13,476)

Issuance of ordinary shares:- for acquisition of subsidiary companies 105,204 - - 105,204- for settlement of amounts

due to former shareholders ofsubsidiary companies acquired 6,844,252 - - 6,844,252

- right issues 550,542 - - 550,542- public issue 2,500,000 22,250,000 - 24,750,000- bonus issue 20,000,000 (20,000,000) - -

Listing expenses 21 - (1,890,646) - (1,890,646)

Profit for the year - - 1,134,407 1,134,407

At 31 March 2006 30,000,000 359,354 1,120,929 31,480,283

Profit for the year - - 1,151,405 1,151,405Dividend 11 - - (1,050,000) (1,050,000)

At 31 March 2007 30,000,000 359,354 1,222,334 31,581,688


STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 MARCH 2007

28


Group Company2007 2006 2007 2006


Cash Flows From Operating Activities

Profit before tax 3,098,236 5,072,060 1,153,309 1,197,239

Adjustments for:

Interest income 5 - (34,675) - (34,675)Fixed deposits interests 5 (220,687) (201,534) (220,687) (201,534)Negative goodwill on consolidation 5 - (2,226,473) - -Gain on disposal of motor vehicles and equipment 5 - (21,379) - -REPO interest 5 - (1,382) - -Finance costs 6 15,136 19,563 - -Development cost written off 7 175,125 - - -Amortisation of broodstocks 7 56,394 48,125 - -Amortisation of development cost 7 118,013 12,695 - -Depreciation of property, plant and equipment 7 1,262,591 476,883 197 -Plant and equipment scrapped 7 - 158,844 - -Amortisation of leasehold land 7 17,567 1,464 - -

Operating profit before working capital changes 4,522,375 3,304,191 932,819 961,030

Net changes in account with subsidiary companies - - (12,660,473) (9,845,820)Decrease/(increase) in trade and other receivables 358,940 (3,152,859) (33,600) (18,650)Increase in inventories (3,337,969) (60,234) - -Increase/(decrease) in trade and other payables 443,970 (1,844,908) 68,324 (603,983)

Cash generated from/(used in) operations 1,987,316 (1,753,810) (11,692,930) (9,507,423)Income tax paid (80,965) (38,174) (79,129) (33,600)

Net cash generated from/(used in) operating activities 1,906,351 (1,791,984) (11,772,059) (9,541,023)

Cash Flows From Investing Activities

Proceeds from disposals of plant and equipment - 105,500 - -Purchase of property, plant and equipment (12,153,058) (7,767,453) (3,930) -Additions of broodstocks (1,234,742) (725,920) - -Development expenditure incurred (195,653) (373,502) - -Acquisitions of subsidiary companies 15 - 2,588,216 - (105,204)

Net cash used in investing activities (13,583,453) (6,173,159) (3,930) (105,204)

CASH FLOW STATEMENTSFOR THE YEAR ENDED 31 MARCH 2007

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Annual Report 2007

Group Company2007 2006 2007 2006


Cash Flows From Financing Activities

Dividend paid (1,050,000) - (1,050,000) -Settlement of amount due a director

of a subsidiary company - (12,000) - -Interest income - 34,675 - 34,675Fixed deposit interest 220,687 201,534 220,687 201,534REPO interest - 1,382 - -Proceeds from issuance of share capital - 25,300,542 - 25,300,542Listing expenses - (1,272,827) - (1,272,827)Interest paid on hire purchase (15,136) (19,563) - -Payment of hire purchase payables (121,307) (138,156) - -

Net cash (used in)/generated from financing activities (965,756) 24,095,587 (829,313) 24,263,924

Net (decrease)/increase in cash and cash equivalents (12,642,858) 16,130,444 (12,605,302) 14,617,697

Cash and cash equivalents at beginning of year/period 16,130,446 2 14,617,699 2

Cash and cash equivalents at end of year/period 20 3,487,588 16,130,446 2,012,397 14,617,699


CASH FLOW STATEMENTS (CONT’D)FOR THE YEAR ENDED 31 MARCH 2007

30


1. CORPORATE INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the MESDAQmarket of Bursa Malaysia Securities. The registered office of the Company is located at Lot 4, Block E, Bandar Nam Tung,Jalan Leila, 90000 Sandakan, Sabah. The principal place of business of the Company is located at the sea front of PulauPalak, Pulau Silam and Pulau Saga, Sandakan, Sabah.

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are fish breeding,operation of a fish hatchery, fish rearing and live fish transportation services. There have been no significant changesin the nature of the principal activities during the financial year.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of theDirectors on 18 July 2007.

2. SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

The financial statements comply with the provisions of the Companies Act, 1965 and applicable Financial ReportingStandards in Malaysia. At the beginning of the current financial year, the Group and the Company had adopted newand revised Financial Reporting Standards (“FRSs”) which are mandatory for financial periods beginning on or after1 January 2006 as described fully in Note 2.2.

The financial statements of the Group and of the Company have been prepared on a historical basis.

The financial statements are presented in Ringgit Malaysia (RM).

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

The Malaysian Accounting Standards Board (“MASB”) has issued a number of new and revised FRSs andInterpretations that are effective for financial periods beginning on or after 1 January 2006.

Except for the changes in accounting policies and their effects as discussed below, the new and revised FRSs andInterpretations above do not have any other significant impact on the financial statements of the Group and of theCompany:

(a) FRS 101: Presentation of Financial Statements

Biological assets

Prior to 1 April 2006, broodstocks and fishery livestocks were classified under broodstock and inventories.

The broodstocks and fishery livestocks are now disclosed as a separate item on the consolidated balance sheetas biological assets.

These changes in presentation have been applied retrospectively and as disclosed in Note 2.2(c), certaincomparatives have been restated. The effects on the consolidated balance sheet as at 31 March 2007 are setout in Note 2.2(b).

(b) Summary of effects of adopting new and revised FRSs on the current year’s financial statements

The following tables provides estimates of the extent to which each of the line items in the balance sheet asat 31 March 2007 is higher or lower than it would have been had the previous policies been applied in thecurrent year.

(Decrease)/IncreaseFRS 101

Description of change Note 2.2(a)RM

Group

Biological assets 7,332,716Inventories (4,425,734)Broodstock (2,906,982)

NOTES TO THE FINANCIAL STATEMENTS31 MARCH 2007

31

Annual Report 2007

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

2.2 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs (Cont’d)

(c) Restatement of comparatives

The following comparative amounts have been restated as a result of adopting the new and revised FRSs:

Increase(Decrease)/

Previously FRS 101Description of change Stated Note 2.2(a) Restated

RM RM RMAt 31 March 2006

Group

Biological assets - 2,899,633 2,899,633Inventories 1,469,609 (1,285,255) 184,354Broodstock 1,614,378 (1,614,378) -

2.3 Standards and Interpretations Issued but Not Yet Effective

At the date of authorisation of these financial statements, the following FRSs, amendments to FRSs andInterpretations were issued but not yet effective and have not been applied by the Group and the Company:

FRSs, Amendments to FRSs and Effective for financial periodsInterpretations beginning on or after

FRS 117: Leases 1 October 2006

FRS 124: Related Party Disclosures 1 October 2006

FRS 139: Financial Instruments: Recognition and Measurement Deferred

FRS 6: Exploration for and Evaluation of Mineral Resources 1 January 2007

Amendment to FRS 1192004: Employee Benefits 1 January 2007- Actuarial Gains and Losses, Group Plans and Disclosures

Amendment to FRS 121: The Effects of Changes 1 July 2007in Foreign Exchange Rates - Net Investment in a Foreign Operation

IC Interpretation 1: Changes in Existing 1 July 2007Decommissioning, Restoration and Similar Liabilities

IC Interpretation 2: Members’ Shares in 1 July 2007Co-operative Entities and Similar Instruments

IC Interpretation 5: Rights to Interests arising from 1 July 2007Decommissioning, Restoration and Environmental Rehabilitation Funds

IC Interpretation 6: Liabilities arising from 1 July 2007Participating in a Specific Market - Waste Electrical and Electronic Equipment

IC Interpretation 7: Applying the Restatement 1 July 2007Approach under FRS 1292004 - Financial Reporting in Hyperinflationary Economies

IC Interpretation 8: Scope of FRS 2 1 July 2007

The above FRSs, amendments to FRS and IC Interpretations are expected to have no impact on the financialstatements of the Group and the Company upon their initial application except for the following:

(i) FRS 117: Leases

This standard requires the classification of leasehold land as prepaid lease payments.

(ii) FRS 124: Related Party Disclosures

This standard will affect the identification of related parties and some other related party disclosures.

NOTES TO THE FINANCIAL STATEMENTS (CONT’D)

31 MARCH 2007

32



2.4 Summary of Significant Accounting Policies

(a) Subsidiaries and Basis of Consolidation

(i) Subsidiaries

Subsidiaries are entities over which the Group has the ability to control the financial and operatingpolicies so as to obtain benefits from their activities. The existence and effect of potential voting rightsthat are currently exercisable or convertible are considered when assessing whether the Group has suchpower over another entity.

In the Company’s separate financial statements, investments in subsidiaries are stated at cost lessimpairment losses. On disposal of such investments, the difference between net disposal proceeds andtheir carrying amounts is included in income statement.

(ii) Basis of Consolidation

The consolidated financial statements comprise the financial statements of the Company and itssubsidiaries as at the balance sheet date. The financial statements of the subsidiaries are prepared forthe same reporting date as the Company

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtainscontrol, and continue to be consolidated until the date that such control ceases. In preparing theconsolidated financial statements, intragroup balances, transactions and unrealised gains or losses areeliminated in full. Uniform accounting policies are adopted in the consolidated financial statements forlike transactions and events in similar circumstances.

Acquisitions of subsidiaries are accounted for using the purchase method. The purchase method ofaccounting involves allocating the cost of the acquisition to the fair value of the assets acquired andliabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition ismeasured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilitiesincurred or assumed, and equity instruments issued, plus any costs directly attributable to theacquisition.

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiableassets, liabilities and contingent liabilities represents goodwill. Any excess of the Group’s interest in thenet fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisitionis recognised immediately in income statement.

(b) Intangible Asset

Research and development costs

All research costs are recognised in the income statement as incurred.

Expenditure on development activities is also recognised as an expense in the period incurred except whenthe expenditure meet the following criteria where it will be capitalised as intangible assets:

- the product or process is clearly defined and costs are separately identified and measured reliably;- the technical feasibility of the product is demonstrated;- the product or process will be sold or used in-house;- the assets will generate future economic benefits; and - adequate technical, financial and other resources for completion of the project are available.

Development costs initially recognised as an expense are not recognised as an asset in subsequent periods.

Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses.Amortisation is recognised as an expense in the income statement based on a straight-line basis over 5 years.The policy for the recognition and measurement of impairment losses is in accordance with Note 2.4(e).

NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 MARCH 2007

33

Annual Report 2007


2.4 Summary of Significant Accounting Policies (Cont’d)

(c) Property, Plant and Equipment, and Depreciation

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

Subsequent to recognition, property, plant and equipment are stated at cost less accumulated depreciationand any accumulated impairment losses.

Long leasehold land with an unexpired lease term of more than 50 years is not amortised. The Directors areof the opinion that the non-amortisation of the long leasehold land has no material effect on the financialstatements. The effect of the non-amortisation of the long leasehold land is disclosed in Note 13 to thefinancial statements.

Depreciation of other property, plant and equipment is provided for on a straight line basis to write off thecost of each asset to its residual value over the estimated useful lives as follows:

Buildings 10 - 15 yearsFloating plateform, net and cages 10 yearsHatchery ponds 10 yearsHeavy equipments 5 yearsMotor vehicles 5 yearsFish pond equipment, furniture, fittings and equipment 10 years

Capital construction-in-progress is not depreciated until it is completed and ready for use.

The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure thatthe amount, method and period of depreciation are consistent with previous estimates and the expectedpattern of consumption of the future economic benefits embodied in the items of property, plant andequipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefitsare expected from its use or disposal. The difference between the net disposal proceeds, if any and the netcarrying amount is recognised in income statement.

(d) Biological Assets

Biological assets are stated at cost less accumulated amortisation and impairment losses. The policy for therecognition and measurement of impairment losses is in accordance with Note 2.4(e).

All costs incurred on immature broodstocks which are accumulated on a project basis, are capitalised untilsuch time when the broodstocks commence breeding. Costs incurred on immature broodstocks consist of theacquisition cost of the mother fish, cost of feeds and medication, direct labour cost and an appropriateproportion of farm operating overheads.

Maintenance costs of broodstocks after commencement of breeding are recognised in the income statement.

The costs of broodstocks are amortised over the economic egg production lives of the respective fish, whichvaries between 8 to 10 years depending on the species.

Upon the disposal of broodstocks, the difference between the net disposal proceeds and the net carryingamount is recognised in the income statement.


31 MARCH 2007HEADING (CONT’D)

34




(e) Impairment of Non-Financial Assets

The carrying amounts of assets other than inventories and deferred tax assets are reviewed at each balancesheet date to determine whether there is any indication of impairment. If any such indication exists, theasset’s recoverable amount is estimated to determine the amount of impairment loss.

For the purpose of impairment testing of these assets, recoverable amount is determined on an individual assetbasis unless the asset does not generate cash flows that are largely independent of those from other assets.If this is the case, recoverable amount is determined for the cash-generating unit (CGU) to which the assetbelongs to.

An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value inuse. In assessing value in use, the estimated future cash flows are discounted to their present value using apre-tax discount rate that reflects current market assessments of the time value of money and the risks specificto the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is consideredimpaired and is written down to its recoverable amount.

An impairment loss is recognised in income statement in the period in which it arises.

An impairment loss for an asset is reversed if, and only if, there has been a change in the estimates used todetermine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amountof an asset is increased to its revised recoverable amount, provided that this amount does not exceed thecarrying amount that would have been determined (net of amortisation or depreciation) had no impairmentloss been recognised for the asset in prior years. A reversal of impairment loss for an asset is recognised inincome statement.

(f) Inventories

(i) Fishery Livestocks

Fishery livestocks are stated at the lower of cost (determined on a monthly weighted average basis) andnet realisable value. Cost of fishery livestocks and fish fry-in-progress include the cost of feeds andmedication, direct labour cost and an appropriate proportion of farm operating overheads accumulatedon a project basis. Net realisable value represents the estimated selling price less all estimated costs tobe incurred in marketing, selling and distribution.

(ii) Consumable Stores

Consumable stores are stated at cost. Cost includes expenses incurred in bringing the items into storesand is computed using the weighted average method. Provision is made for all damaged, obsolete andslow-moving items.

(g) Financial Instruments

Financial instruments are recognised in the balance sheet when the Group has become a party to thecontractual provisions of the instrument.

Financial instruments are classified as assets, liabilities or equity in accordance with the substance of thecontractual arrangement. Interest, dividends and gains and losses relating to a financial instrument arereported as expense or income. Distributions to holders of financial instruments classified as equity arerecognised directly in equity. Financial assets and liabilities are offset against each other when the Group hasa legally enforceable right to offset and intends to settle either on a net basis or to realise the asset andsettle the liability simultaneously.


35

Annual Report 2007



(g) Financial Instruments (Cont’d)

(i) Cash and Cash Equivalents

For the purposes of the cash flow statements, cash and cash equivalents include cash on hand and atbank, deposit at call and short term highly liquid investments which have an insignificant risk of changesin value.

(ii) Receivables

Receivables are carried at anticipated realisable values. Bad debts are written off when identified. Anestimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheetdate.

(iii) Payables

Sundry payables are stated at cost which is the fair value of the consideration to be paid in the futurefor goods and services received.

(iv) Equity Instruments

Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in theperiod in which they are declared.

(h) Leases

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewardsincident to ownership. All other leases are classified as operating leases.

(i) Finance Leases

Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower oftheir fair values and the present value of the minimum lease payments at the inception of the leases,less accumulated depreciation and impairment losses. The corresponding liability is included in thebalance sheet as borrowings. In calculating the present value of the minimum lease payments, thediscount factor used is the interest rate implicit in the lease, when it is practicable to determine;otherwise, the Group’s incremental borrowing rate is used.

Lease payments are apportioned between the finance costs and the reduction of the outstanding liability.Finance costs, which represent the difference between the total leasing commitments and the fair valueof the assets acquired, are recognised as an expense in the income statement over the term of therelevant lease so as to produce a constant periodic rate of charge on the remaining balance of theobligations for each accounting period.

The depreciation policy for leased assets is consistent with that for depreciable property, plant andequipment as described in Note 2.4(c).

(ii) Operating Leases

Operating lease payments are recognised as an expense in the income statement on a straight-line basisover the term of the relevant lease.


31 MARCH 2007

36




(i) Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and it is probablethat an outflow of resources embodying economic benefits will be required to settle the obligation, and areliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjustedto reflect the current best estimate. Where the effect of the time value of money is material, provisions arediscounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability.Where discounting is used, the increase in the provision due to the passage of time is recognised as financecost.

(j) Income Tax

Income tax on the profit or loss for the year/period comprises current and deferred tax. Current tax is theexpected amount of income tax payable in respect of the taxable profit for the year/period and is measuredusing the tax rates that have been enacted at the balance sheet date.

Deferred tax is provided for using the liability method on temporary differences at the balance sheet datebetween the tax bases of assets and liabilities and their carrying amounts in the financial statements. Inprinciple, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assetsare recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extentthat it is probable that taxable profit will be available against which the deductible temporary differences,unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporarydifference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability ina transaction which is not a business combination and at the time of the transaction, affects neitheraccounting profit nor taxable profit.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realisedor the liability is settled, based on tax rates that have been enacted or substantively enacted at the balancesheet date. Deferred tax is recognised in the income statement, except when it arises from a transactionwhich is recognised directly in equity, in which case the deferred tax is also recognised directly in equity, orwhen it arises from a business combination that is an acquisition, in which case the deferred tax is includedin the resulting goodwill or negative goodwill.

(k) Employee Benefits

(i) Short Term Benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year inwhich the associated services are rendered by employees. Short term accumulating compensatedabsences such as paid annual leave are recognised when services are rendered by employees that increasetheir entitlement to future compensated absences. Short term non-accumulating compensated absencessuch as sick leave are recognised when the absences occur.

(ii) Defined Contribution Plans

As required by law, employers in Malaysia make contributions to the Employees Provident Fund. Suchcontributions are recognised as an expense in the income statement as incurred.


37

Annual Report 2007



(l) Foreign Currencies

(i) Functional and Presentation Currency

The individual financial statements of each entity in the Group are measured using the currency of theprimary economic environment in which the entity operates (“the functional currency”). The consolidatedfinancial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functionalcurrency.

(ii) Foreign Currency Transactions

In preparing the financial statements of the individual entities, transactions in currencies other than theentity’s functional currency (foreign currencies) are recorded in the functional currencies using theexchange rates prevailing at the dates of the transactions. At each balance sheet date, monetary itemsdenominated in foreign currencies are translated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the ratesprevailing on the date when the fair value was determined. Non-monetary items that are measured interms of historical cost in a foreign currency are not translated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetaryitems, are included in income statement for the period.

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

(m) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group andthe revenue can be reliably measured. The following specific recognition criteria must also be met beforerevenue is recognised:

(i) Sale of fish, fish fry and fish eggs

Revenue is recognised upon transfer of significant risks and rewards of ownership to the buyer. Revenueis not recognised to the extent where there are significant uncertainties regarding recovery of theconsideration due, associated costs or the possible return of goods.

(ii) Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

2.5 Changes in Estimates

The revised FRS 116: Property, Plant and Equipment requires the review of the residual value and remaining usefullife of an item of property, plant and equipment at least at each financial year end. The Group reviewed the residualvalues and the estimated useful lives of all property, plant and equipment. The effects of the revisions areimmaterial and no adjustment is made. The effects on future periods are dependent on the review of the residualvalue and remaining useful life of an item of property, plant and equipment in future periods.


31 MARCH 2007

38



2.6 Significant Accounting Estimates

Key Sources of Estimation Uncertainty

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

(i) Depreciation of property, plant and equipment

The cost of plant and machinery is depreciated on a straight-line basis over the assets’ useful lives.Management estimates the useful lives of these plant and machinery to be between 5 to 15 years. These arecommon life expectancies applied in the aquaculture industry. Changes in the expected level of usage andtechnological developments could impact the economic useful lives and the residual values of these assets,therefore future depreciation charges could be revised.

(ii) Deferred tax assets

Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extentthat it is probable that taxable profit will be available against which the losses and capital allowances can beutilised. Significant management judgement is required to determine the amount of deferred tax assets thatcan be recognised, based upon the likely timing and level of future taxable profits together with future taxplanning strategies. The total carrying value of recognised tax losses and capital allowances of the Group wasRM1,863,928 (2005: RM766,961) and the unrecognised unabsorbed capital allowances of the Group wasRM764,816 (2005: RM752,000).

(iii) Amortisation of Broodstocks

The cost of broodstocks is depreciated on a straight-line basis over the expected economic egg productionlives of the respective species of fish. Management estimates the expected economic egg production lives tobe within 8 to 10 years. Changes to these estimated economic egg production lives could impact the futureamortisation charges.

3. REVENUEGroup Company

2007 2006 2007 2006(12 months) (11 months)

RM RM RM RMSale of:

Adult fish 1,847,459 5,279,264 - -Fish fry 7,205,649 1,124,113 - -Fish eggs 6,700 2,300 - -Tax exempt dividends from subsidiary companies - - 1,400,000 1,050,000

9,059,808 6,405,677 1,400,000 1,050,000


39

Annual Report 2007

4. COST OF SALES

This represents cost of adult fish and fish fries sold.

5. OTHER INCOME

Group Company2007 2006 2007 2006

(12 months) (11 months)RM RM RM RM

Interest income 220,687 237,591 220,687 236,209Gain on disposal of motor vehicles and equipment - 21,379 - -Goodwill on consolidation* - 2,226,473 - -

220,687 2,485,443 220,687 236,209

* This represented the recognition of negative goodwill on consolidation which arose from acquisition of subsidiarycompanies during last financial year as referred to in Note 15(c) to the financial statements.

6. FINANCE COSTS

Group Company2007 2006 2007 2006


Interest on hire purchase 15,136 19,563 - -

7. PROFIT BEFORE TAX

The following amounts have been included in arriving at profit before tax:

Group Company2007 2006 2007 2006


Amortisation of broodstocks (Note 16) 56,394 48,125 - -Amortisation of development cost (Note 14) 118,013 12,695 - -Amortisation of leasehold land (Note 13) 17,567 1,464 - -Auditors’ remuneration- current year 64,000 31,000 35,000 15,000- other services 18,000 10,000 18,000 10,000- underprovision in prior period - 4,000 - 2,000Depreciation of property, plant and equipment (Note 13) 1,262,591 476,883 197 -Fish pond rental - 24,000 - -Development cost written off (Note 14) 175,125 - - -Land rental - 3,750 - -Non-Executive Directors’ remuneration (Note 9) 189,720 105,200 189,720 -Office rental 12,000 12,000 - -Plant and equipment scrapped - 158,844 - -Professional fees charged by

an associate of the Company’s auditors 7,670 4,200 2,360 -Loss on foreign currency exchange 45 9,753 - -Rental of fish stall 3,780 630 - -Research and development expenditure - 546,523 - -Employee benefits expenses (Note 8) 1,356,943 915,862 - -


31 MARCH 2007

40


8. EMPLOYEE BENEFITS EXPENSES

Group Company2007 2006 2007 2006


Salaries and wages 1,620,495 1,065,457 - -Contributions to defined contribution plan 107,575 126,200 - -Social security contributions 13,066 12,025 - -

1,741,136 1,203,682 - -Capitalised under:- broodstock (171,230) (80,383) - -- development expenditure (65,178) (34,034) - -- construction work-in-progress (147,785) (173,403) - -

Recognised in income statement 1,356,943 915,862 - -

Included in the employee benefits expenses of the Group are Executive Directors’ remuneration of RM159,644 (2006:RM152,116) as further disclosed in Note 9.

9. DIRECTORS’ REMUNERATION

Group Company2007 2006 2007 2006


Directors of the Company

Executive Directors’ remuneration (Note 8):Salaries 282,000 147,000 - -Other emoluments 53,888 42,402 - -

335,888 189,402 - -Capitalised under- development expenditure (32,500) - - -- biological assets (32,500) - - -- construction work-in-progress (147,688) (90,842) - -

Recognised income statement 123,200 98,560 - -

Non-executive Directors’ remuneration (Note 7):Fees 160,000 91,000 160,000 -Other emoluments 29,720 14,200 29,720 -

Recognised income statement 189,720 105,200 189,720 -

Total Directors’ remuneration 312,920 203,760 189,720 -

Directors of subsidiaryExecutive Directors’ remuneration:

Salaries 30,000 45,000 - -Other emoluments 6,444 8,556 - -

36,444 53,556 - -


41

Annual Report 2007

10. INCOME TAX EXPENSE

Group Company2007 2006 2007 2006


Current income tax:On interest income for the year/period - 63,466 - 62,832Under/(over)provision in prior year/period 1,904 (10) 1,904 -

1,904 63,456 1,904 62,832

Deferred tax (Note 25):Relating to origination and reversal of temporary differences 200,075 - - -Relating to changes in tax rate 19,603 - - -Underprovision in prior year 115,150 - - -

334,828 - - -

Income tax expense for the year/period 336,732 63,456 1,904 62,832

The subsidiary companies have been granted tax incentive under Section 127 of the Income Tax Act, 1967 whereby theyare exempted from tax on statutory income from fish breeding, fish fry hatchery and fish rearing activities for a periodof 10 years commencing 1 April 2004.

Current income tax is calculated at the statutory tax rate of 27% (2006: 28%) on the estimated assessable profit for theyear. The statutory tax rate will be reduced from the current year’s rate of 27% to 26%, effective year of assessment2008. The computation of deferred tax as at 31 March 2007 has reflected these changes.

A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income taxexpense at the effective income tax rate of the Group and of the Company is as follows:

Group Company2007 2006 2007 2006


Profit before tax 3,098,236 5,072,060 1,153,309 1,197,239

Taxation at statutory tax rate of 27% (2006: 28%) 836,524 1,420,177 311,393 335,227Effect on opening deferred tax reduction in tax rate 8,795 - - -Reduction in deferred tax arising from reduction in tax rate 10,808 - - -Effect of tax exemption on profit (463,287) (907,068) (378,000) (294,000)Effect of income subject to tax rate of 20%* - (254) - -Effect of expenses not deductible for tax purposes 153,717 54,659 49,164 21,605Deferred tax assets not recognised

in respect of current year’s tax losses 17,443 - 17,443 -Timing difference reversable during

pioneer period not recognised (344,322) (504,048) - -Under/(over)provision of income tax expense in prior year 1,904 (10) 1,904 -Underprovision of deferred tax in prior year 115,150 - - -

Income tax expense for the year/period 336,732 63,456 1,904 62,832

* Pursuant to Paragraph 2A, Schedule 1, Part 1 of the Income Tax Act, 1967, the income tax rate applicable to thefirst RM500,000 of the chargeable income of all the subsidiary companies is 20% as they are considered small andmedium scale companies.


31 MARCH 2007

42


10. INCOME TAX EXPENSE (CONT’D)

Group2007 2006

RM RM

Unutilised tax losses carried forward 1,047,994 815,138Unabsorbed capital allowances 1,580,750 752,000

2,628,744 1,567,138

11. DIVIDEND

Dividend in Dividend Respect of Year Recognised in year

2007 2006 2007 2006RM RM RM RM

Recognised during the year:

Final tax-exempt dividend for 2006:

3.5% on 300,000,000 ordinary shares at RM0.10 each (0.35 sen per ordinary share) - 1,050,000 1,050,000 -

Proposed for approval at AGM:(not recognised in 2007:)

Final tax-exempt dividend for 2007:

3.5% on 300,000,000 ordinary shares at RM0.10 each (0.35 sen per ordinary share) 1,050,000 - - -

1,050,000 1,050,000 1,050,000 -

At the forthcoming Annual General Meeting, a final tax exempt dividend of 3.5% totalling RM1,050,000 in respect ofthe financial year ended 31 March 2007 will be proposed for shareholders’ approval. The financial statements for thecurrent financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will beaccounted for in shareholders’ equity as an appropriation of retained earnings in the financial year ending 31 March2008.

12. EARNINGS PER SHARE

(a) Basic

Basic earnings per share amounts are calculated by dividing profit for the year/period attributable to ordinaryequity holders of the Company by the weighted average number of ordinary shares in issue during the financialyear/period.

Group2007 2006

(12 months) (11 months)

Profit for the year/period (RM) 2,761,504 5,008,604

Weighted average number of ordinary shares in issue 300,000,000 248,630,143

Basic earnings per share (Sen) 0.92 2.01


43

Annual Report 2007

12. EARNINGS PER SHARE (CONT’D)

(b) Diluted

The Group has no potential ordinary shares in issue as at balance sheet date and therefore, diluted earnings pershare has not been presented.

13. PROPERTY, PLANT AND EQUIPMENT

Fish pondFloating equipment,

Leasehold plateform, furniture, Constructionland and net and Hatchery Heavy Motor fitting and work-in-buildings cages ponds equipment vehicles equipment progress Total

RM RM RM RM RM RM RM RM

Group

At 31 March 2007

Cost

At 1 April 2006 2,786,636 2,182,876 3,444,123 113,000 185,360 2,288,359 1,182,332 12,182,686Additions 1,003,362 2,446,868 - 2,028,416 218,595 1,063,845 5,568,772 12,329,858Reclassifications 582,365 1,517,149 - - - 16,101 (2,115,615) -

At 31 March 2007 4,372,363 6,146,893 3,444,123 2,141,416 403,955 3,368,305 4,635,489 24,512,544

Accumulateddepreciation

At 1 April 2006 65,829 441,287 217,470 18,833 92,205 398,961 - 1,234,585Depreciation charge

for the year 198,887 505,256 344,412 54,956 48,448 280,346 - 1,432,305

At 31 March 2007 264,716 946,543 561,882 73,789 140,653 679,307 - 2,666,890

Net carrying amount

At 31 March 2007 4,107,647 5,200,350 2,882,241 2,067,627 263,302 2,688,998 4,635,489 21,845,654

At 31 March 2006

Cost

At date of acquisitionof subsidiarycompanies 558,153 1,376,002 782,010 141,000 185,360 1,437,982 174,638 4,655,145

Additions 1,148,259 73,309 493,562 113,000 - 855,877 5,265,595 7,949,602Disposals - - - (141,000) - (5,500) - (146,500)Scrapped (151,922) (70,215) (53,424) - - - - (275,561)Reclassifications 1,232,146 803,780 2,221,975 - - - (4,257,901) -

At 31 March 2006 2,786,636 2,182,876 3,444,123 113,000 185,360 2,288,359 1,182,332 12,182,686


31 MARCH 2007

44


13. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Fish pondFloating equipment,

Leasehold plateform, furniture, Constructionland and net and Hatchery Heavy Motor fitting and work-in-buildings cages ponds equipment vehicles equipment progress Total

RM RM RM RM RM RM RM RM

Accumulateddepreciation

At date of acquisitionof subsidiarycompanies 80,564 297,128 108,330 45,700 58,223 220,955 - 810,900

Depreciation charge for the period 63,873 164,460 126,948 35,283 33,982 178,235 - 602,781

Disposals - - - (62,150) - (229) - (62,379)Scrapped (78,608) (20,301) (17,808) - - - - (116,717)

At 31 March 2006 65,829 441,287 217,470 18,833 92,205 398,961 - 1,234,585

Net carrying amount

At 31 March 2006 2,720,807 1,741,589 3,226,653 94,167 93,155 1,889,398 1,182,332 10,948,101

Long leasehold land and buildings of the Group:

Long Shortleasehold leasehold

land land Buildings TotalRM RM RM RM

Group

At 31 March 2007

Cost

At 1 April 2006 629,396 527,014 1,630,226 2,786,636Additions 745,765 - 257,597 1,003,362Reclassifications - - 582,365 582,365

At 31 March 2007 1,375,161 527,014 2,470,188 4,372,363

Accumulated depreciation

At 1 April 2006 - 1,464 64,365 65,829Depreciation charge for the year - 17,567 181,320 198,887

At 31 March 2007 - 19,031 245,685 264,716

Net carrying amount

At 31 March 2007 1,375,161 507,983 2,224,503 4,107,647


45

Annual Report 2007


Long Shortleasehold leasehold

land land Buildings TotalRM RM RM RM

At 31 March 2006

Cost

At date of acquisition of subsidiary companies 77,143 - 481,010 558,153Additions 552,253 527,014 68,992 1,148,259Written off - - (151,922) (151,922)Reclassifications - - 1,232,146 1,232,146

At 31 March 2006 629,396 527,014 1,630,226 2,786,636


At date of acquisition of subsidiary companies - - 80,564 80,564Depreciation charge for the period - 1,464 62,409 63,873Written off - - (78,608) (78,608)

At 31 March 2006 - 1,464 64,365 65,829

Net carrying amount

At 31 March 2006 629,396 525,550 1,565,861 2,720,807

Equipment,furniture

and fittingRM

Company

At 31 March 2007

Cost

Additions 3,930


Depreciation charge for the year 197

Net carrying amount

At 31 March 2007 3,733

(i) During the financial year/period, the Group acquired property, plant and equipment with a total cost ofRM12,329,858 (2006: RM7,949,602) as follows:

Group2007 2006

RM RM

Assets acquired under hire purchase arrangement 160,000 143,000Cash payments made for acquisition of property, plant and equipment 12,153,058 7,767,453Depreciation capitalised under capital construction-in-progress 16,800 39,149

12,329,858 7,949,602


31 MARCH 2007

46



(ii) Capital construction-in-progress capitalised during the year/period included:Group

2007 2006RM RM

Depreciation charge for the year/period 16,800 39,149Executive Directors’ remuneration 147,688 90,842

(iii) Net book value of plant and equipment held under hire purchase arrangement are as follows:Group

2007 2006RM RM

Heavy equipment 71,567 94,167Motor vehicles 94,183 93,155Fish pond equipment 263,302 153,449

429,052 340,771

(iv) Depreciation of property, plant and equipment during the financial year/period was taken up in the financialstatements as follows:

Group2007 2006

RM RM

Recognised in income statement 1,280,158 478,347

Capitalised under:- broodstocks 114,256 55,718- development expenditure 21,091 29,567- capital construction-in-progress 16,800 39,149

1,432,305 602,781

(v) The floating plateform, staff quarters and fish rearing cages are constructed on the sea front of Pulau Bai and PulauPalak in Sandakan, and Pulau Silam and Pulau Saga in Lahad Datu. The Group has obtained permission from therelevant authorities to undertake fish rearing activities on the sea front of Pulau Bai and Pulau Palak. However,written approval from the relevant authorities for undertaking of fish breeding, fish fry hatchery and fish rearingactivities on the sea front of Pulau Silam and Pulau Saga are in the final stages of being obtained. The Directorsare confident that the said approval will be obtained in due course.

(vi) The financial effect on non-amortisation of the long leasehold land on the financial results is a decrease inamortisation charge of RM8,681 (2006: RM8,580).

14. INTANGIBLE ASSETDevelopment

CostsRM

Group

Cost

At date of acquisition of subsidiary companies 384,788Additions 403,069

At 31 March 2006 and 1 April 2006 787,857Additions 216,744Written off (175,125)

At 31 March 2007 829,476


47

Annual Report 2007

14. INTANGIBLE ASSET (CONT’D)Development

CostsRM

Accumulated amortisation

At date of acquisition of subsidiary companies 26,917Amortisation charge for the period 12,695

At 31 March 2006 and 1 April 2006 39,612Amortisation charge for the year 118,013

At 31 March 2007 157,625

Net carrying amount

At 31 March 2007 671,851

At 31 March 2006 748,245

This represents expenditure incurred on development of techniques for improvement of operational efficiencies of fishfry hatchery and fish rearing activities.

Development expenditure capitalised during the financial year/period included depreciation of property, plant andequipment of RM21,091 (2006: RM29,567).

15. INVESTMENTS IN SUBSIDIARY COMPANIES

Company2007 2006

RM RM

Unquoted shares at cost

Investments in subsidiary companies 105,204 105,204

The particulars of subsidiary companies, which are incorporated in Malaysia, at 31 March 2007 are:

Effective InterestHeld

Subsidiary Companies Principal Activities 2007 2006% %

Held by the Company

Plentiful Harvest Sdn. Bhd. Fish breeding, operation of 100 100a fish hatchery and fish rearing

Marine Terrace Sdn. Bhd. Fish rearing 100 100

Held through a subsidiary

Salient Horizon Sdn. Bhd. Live fish transportation services 100 -


31 MARCH 2007

48


15. INVESTMENTS IN SUBSIDIARY COMPANIES (CONT’D)

(i) On 8 August 2006, the Company had through its wholly-owned subsidiary company, Plentiful Harvest Sdn. Bhd.,incorporated a company, Salient Horizon Sdn. Bhd. with issued and paid up ordinary share capital of RM2.

(ii) Effects of the acquisition in 2006:

(a) The acquisition had the following effects on the Group’s financial results for the previous financial period:

2006(11 months)

RM

Revenue 6,405,677Operating profit 4,944,384Profit after tax 4,924,197

(b) The acquisition had the following effects on the financial position of the Group as at the end of previousfinancial year:

2006RM

Property, plant and equipment 10,800,289Broodstocks 1,565,414Deferred tax assets 214,749Development expenditure 1,359,357Inventories 1,399,132Trade and other receivables 5,132,995Tax refundable 717Cash and bank balances 1,512,747Trade and other payables (647,667)Hire purchase payables (104,954)

21,232,779

(c) The fair values of assets and liabilities assumed from the acquisition of the subsidiary companies were asfollows:

2006RM

Property, plant and equipment 3,844,245Broodstocks 880,865Deferred tax assets 214,749Development expenditure 357,871Inventories 1,409,375Trade and other receivables 1,998,786Cash and bank balances 2,588,216Amounts due to directors (6,856,252)Dividends payable (800,000)Trade and other payables (1,088,592)Hire purchase payables (214,353)Provision for taxation (3,233)

Group’s share of net assets 2,331,677Negative goodwill on consolidation (2,226,473)

Cost of acquisition 105,204

Purchase consideration satisfied by ordinary shares issued 105,204

Net cash and cash equivalents of subsidiary companies acquired 2,588,216


49

Annual Report 2007

16. BIOLOGICAL ASSETS

FisheryLivestocks

Broodstocks and Fish Fry TotalRM RM RM

Group

At 31 March 2007

At cost

At 1 April 2006 1,614,378 1,285,255 2,899,633Additions 1,348,998 7,248,473 8,597,471Amortisation charge for the year (56,394) - (56,394)Sold - (4,107,994) (4,107,994)

At 31 March 2007 2,906,982 4,425,734 7,332,716

Non-current 2,906,982 - 2,906,982Current - 4,425,734 4,425,734

2,906,982 4,425,734 7,332,716

At 31 March 2006

At cost

At date of acquisition 880,865 1,145,690 2,026,555Additions 781,638 2,570,803 3,352,441Amortisation charge for the period (48,125) - (48,125)Sold - (2,431,238) (2,431,238)

At 31 March 2006 1,614,378 1,285,255 2,899,633

Non-current 1,614,378 - 1,614,378Current - 1,285,255 1,285,255

At 31 March 2006 1,614,378 1,285,255 2,899,633

Maintenance expenditure of immature broodstocks capitalised during the financial year/period included depreciationcharge of RM114,256 (2006: RM55,718).

17. GOODWILL ON CONSOLIDATION

Group2007 2006

RM RM

Negative goodwill arising from acquisition of subsidiary companies - (2,226,473)Recognised in income statement during the period - 2,226,473

- -


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50


18. INVENTORIES

Group2007 2006

RM RM

At cost

Fuel and oil 64,614 457Feeds 160,632 111,046Chemicals 67,318 52,796General stores 89,280 20,055

381,844 184,354

19. TRADE AND OTHER RECEIVABLES

Group Company2007 2006 2007 2006

RM RM RM RM

Trade receivables

Third party 4,035,391 2,313,895 - -

Other receivables

Amounts due from subsidiary companies - - 29,455,749 16,795,276Deposits 73,843 18,890 500 500Deposits paid for acquisition of land - 940,290 - -Prepayments 331,057 249,232 51,750 18,150Sundry receivables 202,754 153,531 - -Advances to contractor for purchase

of hatchery input materials - 888,008 - -Advances to construction

contractors of hatchery center 149,660 587,799 - -

757,314 2,837,750 29,507,999 16,813,926

4,792,705 5,151,645 29,507,999 16,813,926

(a) Credit risk

The Company’s primary exposure to credit risk arises through its trade receivables. The Company’s trading termswith its customer are mainly on credit. The credit period is generally less than 30 days. Other credit terms areassessed and approved on a case-by-case basis.

There is no significant concentration of credit risk. Trade receivables are non interest bearing.

(b) Amounts due from subsidiary companies

The amounts are unsecured, interest-free and have no fixed terms of repayment.

(c) Advances to contractor for purchase of hatchery input material

These advances were recoverable through deduction of breeding commission payable upon production of fish fry.

Further details on related party transactions are disclosed in Note 27.

Other information on financial risks of other receivables are disclosed in Note 28.


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Annual Report 2007

20. CASH AND CASH EQUIVALENTS

Cash and cash equivalents included in the cash flow statements comprise the following balance sheet amounts:

Group Company2007 2006 2007 2006

RM RM RM RM

Fixed deposits with a licensed bank 2,008,414 14,173,443 2,008,414 14,173,443Cash and bank balances 1,479,174 1,957,003 3,983 444,256

Total cash and cash equivalents 3,487,588 16,130,446 2,012,397 14,617,699

Other information on financial risks of cash and cash equivalents are disclosed in Note 28.

21. SHARE CAPITAL AND SHARE PREMIUM

Number ofOrdinary

Shares ofRM0.10 Each Amount

TotalShare Capital Share Capital Share Capital(Issued and (Issued and Share and Share

Fully Paid) (Fully Paid) Premium PremiumRM RM RM

At 1 April 2005 20 2 - 2Ordinary shares issued during the year pursuant

to listing exercise:- for acquisition of subsidiary companies 1,052,040 105,204 - 105,204- for settlement of amounts due to

former shareholders of subsidiary companies 68,442,520 6,844,252 - 6,844,252- right issues 5,505,420 550,542 - 550,542- public issue 25,000,000 2,500,000 22,250,000 24,750,000- bonus issue 200,000,000 20,000,000 (20,000,000) -Listing expenses - - (1,890,646) (1,890,646)

At 31 March 2006 and 31 March 2007 300,000,000 30,000,000 359,354 30,359,354

Included in listing expenses in the previous financial year was an amount of RM310,000 being non-audit fee paid to theauditors of the Company for acting as Reporting Accountant.

Number of OrdinaryShares of RM0.10 Each Amount

2007 2006 2007 2006RM RM

Authorised

At beginning of year 500,000,000 1,000,000 50,000,000 100,000Created during the year - 499,000,000 - 49,900,000

At end of year 500,000,000 500,000,000 50,000,000 50,000,000


31 MARCH 2007

52


22. RETAINED EARNINGS

The Company has sufficient balance of tax exempt income account and tax credit under Section 108 of the Income TaxAct, 1967 to frank payment of dividends out of its entire retained earnings as at 31 March 2007.

23. HIRE PURCHASE PAYABLES

Group2007 2006

RM RM

Future minimum hire purchase payments:

Not later than 1 year 147,705 117,004Later than 1 year and not later than 2 years 88,566 89,277Later than 2 years and not later than 5 years 38,973 30,138

275,244 236,419Less: Future finance charges (17,354) (17,222)

Present value of hire purchase payables 257,890 219,197

Analysis of present value of hire purchase payables:

Not later than 1 year 135,836 104,954Later than 1 year and not later than 2 years 83,935 84,723Later than 2 years and not later than 5 years 38,119 29,520

257,890 219,197Less: Amount due within twelve months (135,836) (104,954)

Amount due after twelve months 122,054 114,243

Other information on financial risks of hire purchase are disclosed in Note 28.

24. TRADE AND OTHER PAYABLES

Group Company2007 2006 2007 2006

RM RM RM RM

Trade payables

Third parties 637,825 389,319 - -

Other payables

Accruals 251,990 156,105 44,813 15,000Deposit from a fish buyer 108,769 - - -Sundry payables 120,367 129,557 50,825 12,314

481,126 285,662 95,638 27,314

1,118,951 674,981 95,638 27,314

Trade payables are non-interest bearing and the normal trade credit terms granted to the Company range from 30 daysto 60 days.


53

Annual Report 2007

25. DEFERRED TAX

Group2007 2006

RM RM

At beginning of year/period (214,749) (214,749)Recognised in income statement (Note 10) 334,828 -

At end of year/period 120,079 (214,749)

Presented after appropriate offsetting as follows:

Deferred tax assets (119,532) (214,749)Deferred tax liabilities 239,611 -

120,079 (214,749)

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

Deferred tax liability in respect of property, plant and equipment:

Group2007 2006

RM RM

Recognised in income statement 604,701 -

Deferred tax assets:

UnabsorbedUnutilised CapitalTax losses Allowance Total

RM RM RM

At 1 April 2006 (214,749) - (214,749)Recognised in income statement (57,730) (212,143) (269,873)

At 31 March 2007 (272,479) (212,143) (484,622)

At date of acquisition of subsidiaries (214,749) - (214,749)Recognised in income statement - - -

At 31 March 2007 (214,749) - (214,749)

Deferred tax assets of the Group have not been recognised in respect of unabsorbed capital allowances of RM764,816(2005: RM752,000) as they are expected to be utilised by the subsidiary companies during the 10 years tax exemptionperiod as referred to in Note 10.

The availability of the unused tax losses and unabsorbed capital allowances for offsetting against future taxable profitsof the Group are subject to no substantial changes in shareholdings of the Group under Section 44(5A), 44(5B) andSchedule 3, Paragraphs 75A and 75B of Income Tax Act, 1967.


31 MARCH 2007

54


26. CAPITAL COMMITMENTSGroup Company

2007 2006 2007 2006(12 months) (11 months)

RM RM RM RM

Approved but not contracted for:- Construction of fish net 272,062 - - -- Construction of labour quarters 240,280 - - -- Construction of ponds and cages 93,055 8,968,067 - -- Construction of office building with

training centre, fish fry, packing and distribution centre and a jetty 501,100 2,436,306 - -

- Renovation of new office building - 163,719 - -- Purchase of broodstocks 180,000 240,448 - -

1,286,497 11,808,540 - -

27. RELATED PARTY DISCLOSURES

In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had thefollowing transactions with related parties:

Group2007 2006

RM RMTransaction with a Director:Sub-lease rental paid to a Director- Datuk Lo Fui Ming - 520,000

Transactions entered into pursuant to the restructuring and listing exercise:

Issuance of Company’s ordinary shares as settlement of amounts due to directors:

- Datuk Lo Fui Ming - 3,680,075- Ho Khin Fong @ Henry Ho - 577,199- Lo Ken Hin - 520,625- Tai, Chu-Chun - 429,000- Chang Mei-Lin @ Tina Chang - 350,004

In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had thefollowing transactions with related parties during the financial year:

Company2007 2006

RM RMTransactions entered into pursuant

to the restructuring and listing exercise:

Issuance of Company’s ordinary shares as settlement of purchase consideration of subsidiary companies acquired from:

- Datuk Lo Fui Ming - 26,651- Tai, Chu-Chun - 19,833- Lo Teck Yong - 15,781- Ho Khin Fong @ Henry Ho - 13,730- Lo Ken Hin - 13,730- Chang Mei-Lin @ Tina Chang - 10,171


55

Annual Report 2007

27. RELATED PARTY DISCLOSURES (CONT’D)

Company2007 2006

RM RMIssuance of shares of the Company for settlement

of amounts due to Directors/ shareholders of subsidiary companies, on behalf of:

- Plentiful Harvest Sdn. Bhd. - 5,299,918- Marine Terrace Sdn. Bhd. - 1,544,334

Subsidiary companies:

Advances given 11,960,473 16,368,109Tax exempt dividends received 1,400,000 1,050,000

The Directors are of the opinion that all the above transactions entered into in the normal course of business have beenestablished on terms mutually agreed between the relevant parties.

28. FINANCIAL INSTRUMENTS

(a) Financial risk management objectives and policies

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

(b) Interest rate risk

The following tables set out the carrying amounts, the effective interest rates (EIR) as at the Balance Sheet dateand the remaining maturities of the Group’s and the Company’s financial instruments that are exposed to interestrate risks:

Within 1 - 2 2 - 3Note EIR 1 year years years Total

% RM RM RM RMGroup

At 31 March 2007

Fixed rate

Fixed deposits 20 2.60 2,008,414 - - 2,008,414Hire purchase payables 23 5.50 - 10.43 135,836 83,935 38,119 257,890

At 31 March 2006

Fixed rate

Fixed deposits 20 2.71 14,173,443 - - 14,173,443Hire purchase payables 23 6.13 - 16.25 104,954 84,723 29,520 219,197


31 MARCH 2007

56


28. FINANCIAL INSTRUMENTS (CONT’D)

Within 1 - 2 2 - 3Note EIR 1 year years years Total

% RM RM RM RM

Company

At 31 March 2007

Fixed rate

Fixed deposits 20 2.60 2,008,414 - - 2,008,414

At 31 March 2006

Fixed rate

Fixed deposits 20 2.71 14,173,443 - - 14,173,443

(c) Foreign currency risk

The Group is exposed to transactional currency risk primarily through purchases and sales that are denominated ina currency other than the functional currency of the operations to which they relate. The currency giving rise tothis risk is primarily United States Dollars (USD).

(d) Liquidity risk

The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensurethat refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Groupmaintains sufficient levels of cash or cash convertible investments to meet its working capital requirements.

(e) Credit risk

The Group’s credit risk is primarily attributable to trade receivables. Credit risk is managed by the application ofcredit approvals, credit limits and monitoring procedures. Credit risks are minimised and monitored by strictlylimiting the Group’s associations to business partners with high creditworthiness. Trade receivables are monitoredon an ongoing basis via the Group’s management reporting procedures and based on the Group’s historicalexperience and industry practices, the collection of accounts receivables falls within recorded allowances.Accordingly, management believes that there is no additional credit risk beyond amounts already allowed forcollection losses after taking into consideration inherent risk in the Group’s trade receivables.

The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents, arises from defaultof the counterparty, with a maximum exposure equal to the carrying amount of this financial assets.

(f) Fair values

The methods and assumptions used by management to determine fair values of financial instruments other thanwhose carrying amounts reasonably approximate their fair values are as follows:

Other receivables (non-current), borrowings and other payables (non-current)

Fair value has been determined using discounted estimated cash flows. The discount rates used are the currentmarket incremental lending rates for similar types of lending, borrowing and leasing arrangements.

29. SEGMENTAL INFORMATION

No segmental information is being presented as the Group is operating principally in one industry and within the country.


57

Annual Report 2007

The summary of the information on landed properties owned by our Group is as follows:

ApproximateAudited Net Approximate Land Area /

Description of Status / Book Value age of Building Tenure / ApproximateProperty / Registered as at 31 (Years) / Expiry Date Total Built-

Address Existing Use Owner March 2007 CF Status of Lease up AreaRM Sq. ft.

CL 075402256 A parcel of Owned/ 73,800 Not applicable Not applicable 3.69 acresAirport Road, aquaculture land PlentifulDistrict of Sandakan, which is currently HarvestSandakan, Sabah vacant Sdn Bhd

CL 075371087 A parcel of Owned/ 552,252 Not applicable 99 years 13.38Kampung Sungai Kayu, aquaculture land Plentiful leasehold landDistrict of Sandakan, which is currently Harvest expiring onSandakan Sabah used for Sdn Bhd 31.12.2079

hatchery operation

NT 073026472 A parcel of Subleased/ 509,448 Not applicable Perpetuity 13.00Kampung Sungai Kayu, aquaculture land Datuk LoDistrict of Sandakan, which is currently Fui MingSandakan Sabah used for

hatchery operation

CL 075487053 A parcel of Owned/ 216,647 Not applicable 99 years 10.14Kampung Sungai Kayu, aquaculture land Plentiful leasehold landDistrict of Sandakan, which is currently Harvest expiring onSandakan Sabah vacant Sdn Bhd 31.12.2095



TL 077537092 An intermediate Owned/ 321,595 29 Years 999 Years 4,800 sq ftLot 4, Block E, 4-storey shophouse Plentiful freeholdBandar Nam Tung, which is currently Harvest expiring onJalan Leila, 90000, used for Sdn Bhd 02.09.2911Sandakan, Sabah. Borneo Aqua’s office

LIST OF PROPERTIES

58


ANALYSIS OF SHAREHOLDINGSAS AT 10 JULY 2007

Authorised Capital : RM50,000,000Issued and Fully Paid-Up Capital : RM30,000,000Class of Shares : Ordinary Shares of 10 sen each fully paidVoting Rights : One vote per share

ANALYSIS BY SIZE OF SHAREHOLDINGS

No. of Holders % No. of Shares %

1 - 99 13 0.90 568 0.00100 - 1000 64 4.45 52,032 0.02 1,001 - 10,000 727 50.52 4,352,400 1.45 10,001 - 100,000 482 33.50 18,962,330 6.32 100,001 - 14,999,999 152 10.56 160,567,399 53.52 15,000,000 and above 1 0.07 116,065,271 38.69 (5% of issued securities)

Total 1,439 100.00 300,000,000 100.00

LIST OF SUBSTANTIAL SHAREHOLDERS’ SHAREHOLDINGS AS PER THE REGISTER OF SUBSTANTIALSHAREHOLDERS AS AT 10 JULY 2007

No. of Shares No. of Shares Name Direct % Indirect %

1. Datuk Md Kamal bin Bilal 2,180,000 0.73 - -2. Datuk Lo Fui Ming 116,065,271 38.69 - -3. Lo Ken Hin 11,978,196 3.99 - -4. Lo Teck Yong 6,651,330 2.22 - -5. Dora Chiu Kui Tzu 95,000 0.03 - -6. Chong Khing Chung 40,000 0.01 - -7. Chang Mei-Lin @ Tina Chang 6,512,622 2.17 - -8. Hotani Akinori 382,000 0.13 - -9. Md Afendi Bin Hamdan 3,000,000 1.00 - -

LIST OF DIRECTORS’ SHAREHOLDINGS AS PER THE REGISTER OF DIRECTORS’ SHAREHOLDINGS AS AT 10 JULY 2007

No. of Shares No. of Shares Name Direct % Indirect %

1. Datuk Lo Fui Ming 116,065,271 38.69 - -

59

Annual Report 2007

ANALYSIS OF SHAREHOLDINGS (CONT’D)AS AT 10 JULY 2007

THE 30 LARGEST SECURITIES ACCOUNT HOLDERS

Name Shares Held %

1. LO FUI MING 114,011,271 38.00

2. HO KHIN FONG @ HENRY HO 12,515,736 4.17

3. KENANGA NOMINEES (TEMPATAN) SDN BHD 12,073,600 4.02 QUALIFIER: KENANGA CAPITAL SDN BHD FOR LEONG KAM HENG

4. LO KEN HIN 11,228,196 3.74

5. TAI, CHU-CHUN 8,115,802 2.71

6. LO TECK YONG 6,651,330 2.22

7. TINA CHANG, MEI-LIN 6,512,622 2.17

8. HO FAH SEE 6,488,900 2.16

9. WONG YIN FA 5,910,000 1.97

10. CHAM HING KOK 5,636,900 1.88

11. MD AFENDI BIN HAMDAN 5,500,000 1.83

12. HO FAH SEE 4,949,200 1.65

13. FONG YOKE LIN 4,000,000 1.33

14. MARIA SHERRY SUKENDY 3,556,366 1.19

15. CIMSEC NOMINEES (ASING) SDN BHD 3,000,000 1.00 QUALIFIER: NITTO SEIMO CO. LTD.

16. AFFIN NOMINEES (TEMPATAN) SDN BHD 2,665,700 0.89 QUALIFIER: PLEDGED SECURITIES ACCOUNT FOR YONG CHAN VUI (YON0770C)

17. MD KAMAL BIN BILAL 2,180,000 0.73

18. HDM NOMINEES (TEMPATAN) SDN BHD 2,107,900 0.70 QUALIFIER: PLEDGED SECURITIES ACCOUNT FOR CHIN LIH LIH (M02)

19. LO FUI MING 2,054,000 0.68

20. SO KA LUNG 1,989,000 0.66

21. KOH KIN LIP 1,600,000 0.53

22. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 1,498,000 0.50 QUALIFIER: PLEDGED SECURITIES ACCOUNT FOR YONG LOONG CHEN (100306)

23. AMSEC NOMINEES (TEMPATAN) SDN BHD 1,446,000 0.48 QUALIFIER: PLEDGED SECURITIES ACCOUNT FOR YAP KEN VOON

24 LAI WAI KWAN 1,436,830 0.48

25. HAN CHAW KWANG 1,429,753 0.48

26. HDM NOMINEES (TEMPATAN) SDN BHD 1,308,000 0.44 QUALIFIER: PLEDGED SECURITIES ACCOUNT FOR FOO PAK SOOI (M01)

27. HIEW MEI KEN 1,293,700 0.43

28. AFFIN NOMINEES (ASING) SDN BHD 1,229,800 0.41 QUALIFIER: EXEMPT AN FOR PHILLIP SECURITIES (HONG KONG) LTD (CLIENTS’ ACCOUNT)

29. AFFIN NOMINEES (TEMPATAN) SDN BHD 1,185,500 0.40 QUALIFIER: EON FINANCE BERHAD FOR YONG LOONG CHEN

30. GOH KEAT HIN 1,155,000 0.39

234,729,106 78.24

60


NOTICE IS HEREBY GIVEN THAT the Third Annual General Meeting of the Company will be held at Ballroom of Sabah HotelSandakan, KM 1 Jalan Utara, Sandakan, Sabah on Friday, 24 August 2007 at 10.00 a.m. for the following business:

AGENDA

1. To lay the Audited Financial Statements of the Company for the financial year ended 31 March2007 together with the Directors’ and Auditors’ Reports thereon.

2. To approve the payment of a tax exempt dividend of 3.5% for the financial year ended 31 March2007.

3. To re-elect the following Directors retiring in accordance with the Company’s Articles ofAssociation:

i) Datuk Md Kamal Bin Bilal (Article 93)ii) Datuk Lo Fui Ming (Article 93)iii) Mr. Lo Ken Hin (Article 93)iv) Encik Md Affendi Bin Hamdan (Article 99)

4. To appoint Auditors and to authorise the Directors to fix their remuneration.

5. As Special Business to consider and if thought fit, to pass the following resolutions, with orwithout modifications:-

AS ORDINARY RESOLUTION - AUTHORITY TO ISSUE SHARES

“THAT subject always to the approvals of the relevant governmental and/or regulatoryauthorities, the Directors be and are hereby authorised pursuant to Section 132D of theCompanies Act, 1965 to issue shares in the Company at any time until the conclusion of thenext Annual General Meeting upon such terms and conditions and for such purposes as theDirectors may in their absolute discretion deem fit provided that the aggregate number ofshares to be issued pursuant to this Resolution does not exceed 10% of the issued sharecapital of the Company for the time being.”

6. To transact any other business for which due notice shall have been given in accordance withthe Companies Act, 1965.

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS ALSO HEREBY GIVEN THAT a tax exempt dividend of 3.5% for the financial year ended 31 March 2007, if approvedby shareholders, will be paid on 20 September 2007 to shareholders whose names appear in the Record of Depositors of theCompany at the close of business on 10 September 2007.

A Depositor shall qualify for entitlement only in respect of:-

a. shares transferred to the Depositor’s Securities Account before 4.00 p.m. on 10 September 2007 in respect of transfers;and

b. shares bought on Bursa Malaysia Securities Berhad on a cum-entitlement basis according to the Rules of Bursa MalaysiaSecurities Berhad.

BY ORDER OF THE BOARDKANG SHEW MENGSEOW FEI SANCHONG TZU KHENSecretaries

Selangor Darul Ehsan31 July 2007

NOTICE OF THE THIRD ANNUAL GENERAL MEETING

RESOLUTION NO.

1

2345

6

7

61

Annual Report 2007

Notes:-

(a) A member shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting. Where a memberappoints two (2) proxies, the appointment shall be invalid unless he specifies the proportions of his holdings to berepresented by each proxy. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Act shall not apply to the Company. The instrument appointing a proxy must be in writing under the handof the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under seal or atthe hand of an officer or attorney duly authorised.

(b) The instrument of proxy shall be deposited at 312, 3rd Floor Block C Kelana Square, 17 Jalan SS7/26, 47301 PetalingJaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time for holding the meeting.

(c) Only a depositor whose name appears on the Record of Depositors as at 20 August 2007 shall be entitled to attend thesaid meeting or appoint proxies to attend and/or vote on his/her behalf.

Explanatory Note on Special Business

• Resolution 7

The proposed Ordinary Resolution 7, if passed, is to give the Directors of the Company flexibility to issue and allot sharesfor such purposes as the Directors in their absolute discretion consider to be in the interest of the Company, withouthaving to convene a general meeting. This authority will expire at the next Annual General Meeting of the Company.

NOTICE OF THE THIRD ANNUAL GENERAL MEETING (CONT’D)

62


1. Names of directors who are standing for election

(a) Datuk Md Kamal Bin Bilal - Article 93

(b) Datuk Lo Fui Ming - Article 93

(c) Mr. Lo Ken Hin - Article 93

(d) Encik Md Affendi Bin Hamdan - Article 99

2. Further details of the abovementioned retiring directors are set out on pages 7, 8 and 9 of this Annual Report.

STATEMENT ACCOMPANYING NOTICE OF THIRD ANNUAL GENERAL MEETING

FORM OF PROXY

I/We(BLOCK LETTERS)

NRIC No./Company No.

of

being (a) Member(s) of BORNEO AQUA HARVEST BERHAD (649504-D) hereby appoint

of

or failing him, THE CHAIRMAN OF THE MEETING as my/our proxy to vote for me/us on my/our behalf at the Third AnnualGeneral Meeting of the Company to be held at Ballroom of Sabah Hotel Sandakan, KM 1 Jalan Utara, Sandakan, Sabah onFriday, 24 August 2007 at 10.00 a.m. and at any adjournment thereof and to vote as indicated below:-

FOR AGAINST

ORDINARY RESOLUTION NO. 1







Please indicate with an “X” in the space above on how you wish to cast your vote. In the absence of specific directions, yourproxy will vote or abstain as he/she thinks fit.

Signed this day of , 2007

Signature / Seal of Member

Notes:

(a) A member shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting. Where a memberappoints two (2) proxies, the appointment shall be invalid unless he specifies the proportions of his holdings to berepresented by each proxy. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Act shall not apply to the Company. The instrument appointing a proxy must be in writing under the handof the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under seal or atthe hand of an officer or attorney duly authorised.

(b) The instrument of proxy shall be deposited at 312, 3rd Floor Block C Kelana Square, 17 Jalan SS7/26, 47301 PetalingJaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time for holding the meeting.

(c) Only a depositor whose name appears on the Record of Depositors as at 20 August 2007 shall be entitled to attend thesaid meeting or appoint proxies to attend and/or vote on his/her behalf.

No of Shares Held

fold here

fold here

Affixstamphere

The Company Secretary

BORNEO AQUA HARVEST BERHAD (649504-D)

312, 3rd Floor Block C Kelana Square,17 Jalan SS7/26, 47301 Petaling Jaya,Selangor Darul Ehsan

Documents

Borneo Aqua Harvest Berhad · Borneo Aqua Harvest Berhad (“Borneo Aqua”) was incorporated on 16 April 2004 in Malaysia as a private limited company and was converted into a public