Vastalux Energy B

erhad (789373-V)

2008 Annual R

eport MOVING AHEAD • STAYING AHEAD

Vision &Mission

Vision• Tobethepreferredconstructionengineeringcompanyforoil,gasand

petrochemicalsolutionintheregion.

Mission• To be competitive, competent and a leader in the core business of

Hook-Up&Commissioning,TopsideMajorMaintainance,FabricationandOffshoreInstallation.

• Tocommittotheclientsourworkculture,whichisdrivenbyquality,timelyjobcompletionandunfailingprotectiontohealth,safetyandtheenvironment.

• To continuously develop and retain highly skilled, motivated andprofessionalworkforcewhichwillgeneratethedynamicsforextendingtheboundariesofourcorecompetencies.

contents

Vision&Mission

02 NoticeofAnnualGeneralMeeting

04 StatementAccompanyingNotice

ofSecondAnnual GeneralMeeting

05 CorporateInformation

06 FinancialHighlights

07 MediaHighlights

08 CorporateMilestone

09 BoardofDirectors

10 ProfileofDirectors

15 SeniorManagementTeam

16 Chairman’sStatement

19 ChiefExecutive’sReview

22 Statementof Corporate Governance

26 AuditCommittee Report

29 Statementon InternalControl

30 CorporateSocial Responsibilities Report

31 Additional Compliance Information

32 Statementof Directors’ Responsibility

33 Directors’Report

37 Statementby Directors

37 StatutoryDeclaration

38 ReportoftheAuditors

40 BalanceSheets

42 StatementsofChangesinEquity

43 IncomeStatements

44 CashFlowStatements

47 Notestothe FinancialStatements

73 AnalysisofShareholdings

FormofProxy

1-21 corporate

22-32report

33-72f inancial

73-77others

MoVing ahead, staying ahead

It is the essence of our people that enables us to deliverexcellenceandinnovation.Challengesraiseouraspirationsandstimulateourambitiontomovingaheadandstayingahead.

TheGroup ispoised tobeour clients’ first choice for safety,innovation and performance, which, will result in goodprofitability,steadygrowthandfinancialstability.

coVer rationale

notice ofannual general Meeting

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02 AnnualReport2008

NOTICE IS HEREBY GIVEN thattheSecondAnnualGeneralMeetingoftheCompanywillbeheldattheBallroom,Mahkota3,HotelIstanaKualaLumpur,No.73,JalanRajaChulan,50200KualaLumpuronMonday,15June2009at9:30a.m.totransactthefollowingbusinesses:

agenda

1. ToreceivetheAuditedFinancialStatementsforthefinancialyearended31December2008andtheReportsoftheDirectorsandAuditors’thereon.

2. ToapprovethepaymentofDirectors’feesamountingtoRM70,000forthefinancialyearended31December2008.

3. Todeclareafinaldividendof1senlessMalaysianIncomeTaxof26%(i.e.net0.74%)forthefinancialyearended31December2008.

4. Tore-electthefollowingDirectorsretiringinaccordancewiththeArticle84oftheCompany’sArticlesofAssociation:

4.1 EncikAzmanBinAbdGhafar

4.2 EncikMunawirBinMohammad

5. Tore-appointMessrsWanNadzir&Co(AF1234)asAuditorsoftheCompanyandtoauthorisetheDirectorstofixtheirremuneration.

Special Business:To consider and if thought fit, to pass the following resolutions, with or withoutmodification, asOrdinaryResolutionsoftheCompany:

6. Authority for the Directors to Allot Shares Toconsiderandifthoughtfit,topassthefollowingresolution,withorwithoutmodification,as

OrdinaryResolutionoftheCompany:

“THATpursuanttoSection132DoftheCompaniesAct,1965,theDirectorsbeandareherebyempoweredtoallotandissueshares intheCompanyatanytimeuntil theconclusionof thenextAnnualGeneralMeetinganduponsuchtermsandconditionsandforsuchpurposesastheDirectorsmay,intheirabsolutediscretion,deemfitprovidedthattheaggregatenumberofsharestobeissueddoesnotexceed10%ofthetotalissuedandpaid-upsharecapitaloftheCompanyforthetimebeingandthattheDirectorsbeandarealsoempoweredtoobtaintheapprovalforthelistingofandquotationfortheadditionalsharessoissuedonBursaMalaysiaSecuritiesBerhad.”

7. Totransactanyotherordinarybusinessofwhichduenoticeshallhavebeengiven.

Resolution 1

Resolution 2

Resolution 3

Resolution 4

Resolution 5

Resolution 6

Resolution 7

notice of annual general Meeting (cont’d)

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03AnnualReport2008

notice of diVidend entitleMent

NOTICE IS HEREBY GIVENthatsubjecttotheapprovaloftheshareholdersattheSecondAnnualGeneralMeetingtobeheldon15June2009,aFinalDividendof1senlessMalaysianIncomeTaxof26%(i.e.net0.74%)inrespectofthefinancialyearended31December2008willbepaidon14September2009toshareholderswhosenamesappearintheCompany’sRecordofDepositorson15August2009.

ADepositorshallqualifyforentitlementonlyinrespectof:

(a) SecuritiestransferredintotheDepositor’sSecuritiesAccountbefore4:00p.m.on15August2009inrespectoftransfers;and

(b) SecuritiesboughtonBursaMalaysiaSecuritiesBerhadonacumentitlementbasisaccordingtotheRulesofBursaMalaysiaSecuritiesBerhad.

By Order of the Board

Lee Sze Liang(MAICSA 7043617)Rasyidi Bin Md Deris(MIA 17368)

Company Secretaries

KualaLumpur22May2009

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04 AnnualReport2008

Notes:1. AproxymaybutneednotbeamemberoftheCompanyandtheprovisionsofSection149(1)(b)oftheCompanies

ActshallnotapplytotheCompany.

2. Amembershallbeentitledtoappointmorethanone(1)proxytoattendandvoteatthesamemeeting.

3. Whereamemberappointsmorethanone(1)proxy,theappointmentshallbeinvalidunlesshespecifiestheproportionsofhisholdingstoberepresentedbyeachproxy.

4. WhereamemberisanauthorizednomineeasdefinedundertheCentralDepositoriesAct,itmayappointatleastone(1)proxyinrespectofeachSecuritiesAccountitholdswithordinarysharesoftheCompanystandingtothecreditofthesaidSecuritiesAccount.

5. Iftheappointerisacorporation,theproxyformmustbeexecutedunderitsCommonSealorunderthehandofitsattorney.

6. TheinstrumentappointingaproxymustbedepositedattheCompany’sRegisteredOfficeat7thFloor,TowerBlock,PlazaDwiTasik,No.21,JalanSriPermaisuri,BandarSriPermaisuri,56000,KualaLumpurnotlessthan48hoursbeforethetimeappointedforholdingtheMeetingoranyadjournmentthereof.

Explanatory Notes on Special Business:Authority for the Directors to Allot SharesThisproposedresolution, ifpassed,willempowertheDirectorsoftheCompany,fromthedateoftheforthcomingAnnualGeneralMeeting, to issueordinaryshares fromtheunissuedcapitalof theCompanyup toanaggregateamountnotexceeding10%of the issuedsharecapitalof theCompany for the timebeing, forsuchpurposesastheDirectorsconsiderwouldbeintheinterestoftheCompany.Thisauthoritywill,unlessrevokedorvariedbytheCompanyinageneralmeeting,expireattheconclusionofthenextAnnualGeneralMeetingoftheCompany.

notice of annual general Meeting (cont’d)

stateMent accoMpanying notice of second annual general Meeting

1. Theprofileof theDirectorswhoarestanding for re-electionaresetoutonpages13and14of theAnnualReport.

2. Thedetails of theDirectors’Shareholdings in thecompanyare setoutonpages36and73of theAnnualReport.

auditors

WanNadzir&Co.(AF1234)CharteredAccountantsNo.1C,3rdFloor,Block1WorldwideBusinessParkJalanTinju13/50,Section1340675ShahAlamSelangorDarulEhsan

Tel :03-55117512Fax :03-55127513

principal Bankers

AmbankBankBerhadBankIslam(M)BerhadCIMBBankBerhadMalayanBankingBerhadRHBBankBerhadBankMuamalatMalaysiaSdnBhd

stock eXchange

SecondBoardofBursaMalaysiaSecuritiesBerhadStockName:VASTALXStockCode:7251

corporateinforMation

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audit coMMittee

ChairmanDato’MohamedSallehBinBajuri

MemberTanSriDato’ZainolAbidinBinAbdRashidMunawirBinMohammad

reMuneration coMMittee

ChairmanTanSriDato’ZainolAbidinBinAbdRashid

MemberDato’MohamedSallehBinBajuriNorSabriBinHamzah

noMination coMMittee

ChairmanTanSriDato’ZainolAbidinBinAbdRashid

MemberDato’MohamedSallehBinBajuriMunawirBinMohammad

coMpany secretaries

LeeSzeLiang(MAICSA 7043617)

RasyidiBinMdDeris(MIA 17368)

registered office

7thFloor,TowerBlock,PlazaDwiTasikNo.21,JalanSriPermaisuriBandarSriPermaisuri56000KualaLumpur

Tel :03-91726666Fax :03-91724588

share registrar

MIDFConsultancyandCorporateServicesSdnBhdLevel8,MenaraMIDFNo.82,JalanRajaChulan50200KualaLumpur

Tel :03-21738888Fax :03-21738677

Board of directors

TanSriDato’ZainolAbidinBinAbdRashidIndependent Non-Executive Chairman

MohamadNorBinAbdulRashidExecutive Vice Chairman

NorSabriBinHamzahManaging Director/Chief Executive Officer

AzmanBinAbdGhafarExecutive Director

Dato’MohamedSallehBinBajuriIndependent Non-Executive Director

MunawirBinMohammadNon-Independent Non-Executive Director

nominationcommittee

remunerationcommittee

auditcommittee

Board ofdirectors

Managingdirector/

chiefexecutiveOfficer

finance operationcontract

andplanning

corporateservices /

assets

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06 AnnualReport2008

financialhighlights

Thesummaryoffinancialresultsfortheyearsended31December2004to31December2007assetoutbelowhavebeenpreparedsolelyfor illustrativepurposes,toshowtheproformaresultsof theVastaluxEnergyBerhadGrouphadtheVastaluxEnergyBerhadbeeninexistencefromthebeginningoftheearliestperiodpresented:

31 DECEMBER

2004 2005 2006 2007 2008* RM’mil RM’mil RM’mil RM’mil RM’mil

Revenue 44.0 77.3 143.2 143.2 186.8

Grossprofit 8.5 13.2 24.8 30.9 36.9

Profitbeforetax 4.3 5.3 12.5 15.6 21.4

Profitaftertax 3.5 3.5 8.7 10.7 17.6

Profitaftertaxandminorityinterest 3.5 3.5 8.7 10.7 17.6

Nettangibleassets 5.6 9.2 17.9 27.7 96.1

*Resultsincludingthepre-acquisitionresultsfrom1January2008to30April2008(acquisitiondate).

186.8

143.2143.2

77.3

44.0

0807060504Year

RevenueRM’mil

Profit after tax and minority interestRM’mil 17.6

10.7

8.7

3.53.5

0807060504Year

Net tangible assets RM’mil

96.1

27.7

17.9

9.25.6

0807060504Year

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07AnnualReport2008

Mediahighlights

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08 AnnualReport2008

corporateMilestone

1995• IncorporationofVastalux SdnBhd(VSB)

1998• Commencementofbusiness

2002• ObtainedPetronaslicense

forMechanical&ElectricalEngineering

2003• AwardedHook-Upand

CommissioningforAngsiPhaseIIIProject

• Health,Safety&EnvironmentAward2003BronzeAward

2004• Awarded3yearHook-Upand

CommissioningumbrellacontractforPetronasCarigaliSdnBhd(PCSB)facilities

2005• Awarded5yearTopsideMajor

MaintenancecontractforPCSBPeninsularMalaysiaOperation(PMO)

• Awarded2yearMinorFabricationcontractforCarigali-HESSCakerawalaPlatform

• VastaluxCapitalSdnBhd(VCSB)incorporatedandsuccessfullyraisedRM100millionSukukMusyarakahIslamicBond

• Health,Safety&EnvironmentAward2005ContractorCategory

2006• Acquiredfirstmarinevessel

(VastaJati)tosupportVSBoperationalactivities

• DFCEHSEAward2006ExcellentHSEPerformanceZeroLTIinPCSBProject

2007• Acquired75%MerakUtamaSdn

Bhdtoenteroil&gasUnderwaterStructuralInspectionMarket

• VastaJaticommencedoperationinmarinecharteroffshoresupportservice

• VSBwasaccreditedwithISO9001:2000QualityManagementSystem

• AwardedPCCforLabuanGasTerminal(GRT1&2)project

• IncorporationofVastaluxEnergyBerhad(VEB)

• AwardedprovisionofMinorEngineeringandMaintenanceServicesforMurphyShallowWaterProductionOperation

• Incorporatedasubsidiary, PTVastaluxEnergy(PTVE) inIndonesia

• Awarded3yearHook-Up&CommissioningforPCSBfacilitiescontract

2008• SetupsubsidiaryinVietnam

• PTVEsecuredfirstprojectforinstallationofgaspipelineofEPCgreaterJakartaDistributiononMainLineownedbyPerusahaanGasNegara

• SecuredcontractforCivilWorksPackage3fortheMelakaRefineryPSR-2revampprojectfromMalaysiaRefiningCompanySdnBhd

• ListingontheSecondBoardofBursaMalaysia

• Securedcontractforprocurement,constructionandcommissioningforthere-activationofthePasirGudangLPGplantfromPetronasDaganganBerhad

Board ofdirectors

from left to right

1. Dato’MohamedSallehBinBajuri Independent Non-Executive Director

2. MohamadNorBinAbdulRashid Executive Vice Chairman

3. TanSriDato’ZainolAbidinBinAbdRashid Independent Non-Executive Chairman

4. NorSabriBinHamzah Managing Director/Chief Executive Officer

5. MunawirBinMohammad Non-Independent Non-Executive Director

6. AzmanBinAbdGhafar Executive Director

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yBhg. tan sri dato’ Zainol aBidin Bin aBd rashid

Independent Non-Executive Chairman • Aged 63 • Malaysian

HewasappointedtotheBoardofthecompanyastheIndependentNon-ExecutiveChairmanon2June2008.HeisamemberoftheAuditCommitteeandChairmanforNominationCommitteeandRemunerationCommittee.

HegraduatedfromUniversityofMalayainEconomicsandholdsaMastersinDevelopmentEconomicsfromBostonUniversity,USA.HestartedhiscareerasanAssistantSecretarytotheMinistryofNationalandRuralDevelopmentin1970.From1973to1980,hewasintheNationalInstituteofPublicAdministration(INTAN)astheProgrammeCoordinator.From1981toSeptember1983,hewastheDirectorofSabahInstituteofAdministrationandResearch.From1983toApril1989,hewastheDeputySecretaryfortheEconomicandInternationalDivision,TreasuryMinistryofFinance.

From1989to1994,hewastheDirectorforHumanResourceDevelopmentSection,EconomicPlanningUnitunderthePrimeMinister’sDepartment.From1994to1997,hewastheDirectorGeneralfortheManpowerDepartment,MinistryofHumanResource.HewaspromotedasSecretaryGeneralfortheMinistryofHumanResourcein1997.From2000to2006,hewastheChiefExecutiveOfficer/DirectorGeneralofInlandRevenueBoardofMalaysia.HeretiredfrompublicserviceinOctober2006.

Amonghisinternationalexperience,heactedastheDelegationLeaderinmeetingswiththeWorldBankInternationalMonetaryFund(IMF),AsiaPacificEconomicCooperation(APEC)andInternationalLabourOrganization(ILO).HewasalsoanAseanRegionalExpertinInformalSector,theChairmanforCommonwealthAssociationofTaxAuthorities(CATA)ManagementCommittee,theChairmanforSouthAsiaStudyGrouponTaxAdministration(SGATAR)andtheChairmanforAssociationofTaxAuthoritiesofIslamicCountries(ATAIC).

Savefortheabovementioned,hedoesnothave:

(i) anydirectorshipinotherpubliccompanies;(ii) anyfamilyrelationshipwithanyDirectorand/ormajorshareholderoftheCompany;(iii) anyconflictofinterestwiththeCompany;and(iv) anyconvictionofoffenceswithinthepasttenyearsotherthantrafficoffences,ifany.

profile ofdirectors

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profile of directors(cont’d)

MohaMad nor Bin aBdul rashid

Executive Vice Chairman • Aged 47 • Malaysian

HewasappointedtotheBoardasanExecutiveDirectoron2June2008 and was appointed as the Executive Vice Chairman on thesamedate.

HeholdsaDiplomainMechanicalEngineeringandhasmorethan20yearsofexperienceintheoilandgasindustryin all aspects of operational management of multiple sites, development of both the domestic and internationalmarketsandleadingthedevelopmentofstrategicbusinessplans.

HealsositsontheBoardofVastaluxSdn.Bhd.whichisthesubsidiaryofthecompany.Hedoesnothaveanyotherdirectorshipinotherpubliccompanies.

He started his career as an Assistant Project Engineer with Equator Engineering Sdn Bhd for hook-up &commissioning atESSOTerengganu CrudeOilTerminal and later became theConstructionSuperintendent forelectrical&instrumentationworksatKBBCPergauHydroPowerStationfrom1982to1992.

In1993,hejoinedMaserEngineeringSdnBhd(amemberofRenongGroupofCompanies)astheConstructionSuperintendentforSime-JGC-KellogConsortiumUndergroundandAbovegroundCablingWorksatMLNG-2.Aftersuccessful completion of the project, he was entrusted as the Construction Superintendent for Kertih RefineryDebottlenecking/JetfuelprojectatPetronasPenapisanSdnBhd.

In1996,hewastheExecutiveDirectorofTotalEqualSdnBhdwithfullresponsibilityformanagementandbusinessactivities,whichincludedenergy&engineering(oil&gasservices),maintenanceofplant&equipmentandsteelstructureminorfabricationworks.AmongthekeyprojectsheundertookwasMalaysianAirlineSystemBhd’sgroundsupportfacilitiesatKLIAandthesteelstructurefabricationofKaparPowerStation.

As the Executive Vice Chairman and also the founder of Vastalux Energy Berhad, he has successfully led thetransitionoftheCompanyfromasub-contractorstatustobecomeamain-contractorforPSCOperatorsinMalaysia,whichincludesPETRONASCarigaliSdnBhd,CarigaliHessOperatingCompanySdnBhdandMurphySarawakOilCompanyLtd.

Save for the contract disclosed on page 32 of theAnnual Report, there is no business arrangement with thecompany inwhichhehaspersonal interest.Alsoheneitherhasany family relationshipwithanyDirectorand/ormajorShareholderofthecompanynoranyconvictionofoffenceswithinthepasttenyearsotherthentrafficoffences,ifany.

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profile of directors(cont’d)

nor saBri Bin haMZah

Managing Director/Chief Executive Officer • Aged 38 • Malaysian

He was appointed to the Board as an Executive Director on 22September 2007 and was subsequently appointed as the ChiefExecutiveOfficerandManagingDirectoron2June2008.HeisalsoamemberofRemunerationCommittee.

HeholdsaDiplomainAccountancyfromUniversityTechnologyMARA(“UiTM”)andhas13yearsofexperienceintheoilandgasindustryinareasoffinancialandbudgetmanagement,humanresources,andstrategicbusinessplanning.Heistheco-founderofVastaluxEnergyBerhad(“VEB”).

HealsositsontheBoardofVastaluxSdn.Bhd.whichisthesubsidiaryofthecompany.

HestartedhiscareerasaProjectAccounts&AdministrationOfficerin1993withMaserKenzEngineeringSdnBhd(ajointventurebetweenMaserEngineeringSdnBhdandKentzInternationalCoLtd)forTNBSerdangGasTurbinePowerStationProject. In1994,hebecametheProjectAccountsExecutivewithMaserEngineeringSdnBhd(amemberofRenongGroupofCompanies)forvariousprojects,suchasMP1PQ-AJacketFabricationforSarawakShellBerhad,Lawit-ABridge&ModuleSupportFrameandSeligi-F&Raya-ASteelFabricationWorksforEMEPMI,withcontractvaluesofaboutRM25millionwherehewas responsible forprojectcashflow,projectclaims,costcontrolandmaintainingfullsetofaccounts.

In1996,hejoinedTotalEqualSdnBhdastheFinanceManager.Hewasresponsibleforensuringefficientcashflowmanagementofprojectsduringthe1997economiccrisisbyimplementingtightmanagementcontrolsinoperationsleading to theoptimizationofall related resources.Amongkeyprojectshewas involvedwereMalaysianAirlineSystemBhd’sgroundsupportfacilitiesatKLIAandsteelstructurefabricationofKaparPowerStationfrom1996to1998.

AstheManagingDirector/ChiefExecutiveOfficerofVEB,heisresponsiblefortheoveralloperationsoftheCompanywithemphasisonfinanceandbusinessdevelopment.

Savefortheabovementioned,hedoesnothave:

(i) anyDirectorshipiotherpubliccompanies;(ii) anyfamilyrelationshipwithanyDirectorand/ormajorshareholderoftheCompany;(iii) anyconflictofinterestwiththeCompany;and(iv) anyconvictionofoffenceswithinthepasttenyearsotherthantrafficoffences,ifany.

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profile of directors(cont’d)

aZMan Bin aBd ghafar

Executive Director • Aged 42 • Malaysian

HisappointmentasoneoftheBoardwasmadeon22September2007.

HeholdsaBachelorofScience (Economics) (Honours) inAccounting fromUniversityCollegeofWales,UnitedKingdomandanMBAinFinancefromtheUniversityPutraMalaysia.Hehas15yearsofexperienceintheoilandgasindustry.

HealsositsontheBoardofVastaluxSdn.Bhd.whichisthesubsidiaryofthecompany.

UponreturningfromtheUnitedKingdomin1990,hestartedhiscareerwithPETRONASasanAuditorandwasaSeniorAuditorwhenheleftin1995.

In1996,hejoinedRenongOverseasCorporationSdnBhdandwasresponsibleforthefinancialmanagementanddevelopmentofbothdomesticandinternationalmarkets.

In1999,hebecametheSeniorManagerofTreasuryatCrestPetroleumBhdandwasresponsibleforthegroupfinancedivisionandindealingatseniorlevelsinbothprivateandpublicsectors.

HejoinedVSBinJune2003astheSeniorManager,CorporateFinance&Planning.Currently,astheExecutiveDirectorofVastaluxEnergyBerhad,heisresponsiblefortheoverallmanagementofthefinancedepartment,HumanResourceDepartment,Administrative&PayrolldepartmentandInformationTechnologydepartment.

Savefortheabovementioned,hedoesnothave:

(i) anyDirectorshipinotherpubliccompanies;(ii) anyfamilyrelationshipwithanyDirectorand/ormajorshareholderoftheCompany;(iii) anyconflictofinterestwiththeCompany;and(iv) anyconvictionofoffenceswithinthepasttenyearsotherthantrafficoffences,ifany.

yBhg. dato’ MohaMed salleh Bin Bajuri

Independent Non-Executive Director • Aged 58 • Malaysian

Hewasappointed to theBoardof theCompanyon2June2008.He is the Chairman for theAudit Committee and member of theNominationCommitteeandRemunerationCommittee.

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profile of directors(cont’d)

HeisaqualifiedCharteredAccountantfromIrelandandisamemberoftheMalaysianInstituteofAccountants(MIA)since1986.HecamebacktoMalaysiain1979andjoinedPeatMarwick&CoasaSeniorAuditor.HethenjoinedMaybankFinanceBhdasaManagerandin1982,waspromotedtoGeneralManager.HewasthensecondedtoMalayanBankingBhdandwaspromotedtoGeneralManagerin1988,apositionhehelduntil1992.

From1982to1987,hewastheAlternateChairmanoftheAssociationofFinanceCompaniesinMalaysia(“AFCM”)andwas theChairmanofAFCMCommittee forEducationandPublicRelations.From1997 to1999,hewasaDirectorofSahamSabahBerhadandwasoneoftheTrusteesforYayasanKebajikanSDARA.HewasalsooneoftheTrusteesforTabungMelayuPontianSdnBhdfrom1997to2006.In1992,hetookoverJBSecutitiesSdnBhd,aStockbrokingfirminJohor,whereheheldthepositionofManagingDirectoruntil1995.

HeisnowinvolvedinthepropertybusinessandistheGroupExecutiveDirectorofCRSCHoldingsBhd.Heisalsoadirectorofanumberofpubliccompanies,amongstothers,AsianPacHoldingsBhd,EdenEnterprise(M)Bhd,Harbour-LinkGroupBhd,LKTIndustrialBhd,MiluxCorporationBhd,AgroBankBerhadandAirocomTechnologyBerhad.

Savefortheabovementioned,hedoesnothave:

(i) anyDirectorshipinotherpubliccompanies;(ii) anyfamilyrelationshipwithanyDirectorand/ormajorshareholderoftheCompany;(iii) anyconflictofinterestwiththeCompany;and(iv) anyconvictionofoffenceswithinthepasttenyearsotherthantrafficoffences,ifany.

Munawir Bin MohaMMad

Non-Independent Non-Executive Director • Aged 42 • Malaysian

HewasappointedtotheBoardoftheCompanyon2June2008.HeisamemberoftheAuditCommitteeandNominationCommittee.

HeisalsotheExecutiveDirectorofEfficientFrontierCapitalAdvisorsSdnBhd(EFCASB),theCo-AdvisertotheCompanyfortheInitialPublic Offering of the Company’s Share. He graduated from theUniversity of Southampton, UK. He is a Professional NationalAccountant(PNA)oftheAustralianNationalInstituteofAccountants(NIA),aCertifiedFinancialPlanner(CFP)andRegisteredFinancialPlanner(RFP)charterholder.

Hehasextensiveexperienceinthesecuritiesandinvestmentmanagementindustries.HewaspreviouslyattachedtoHillierHopkinsCharteredAccountantsUnitedKingdom,PermodalanNasionalBerhad,PETRONAS,theSecuritiesCommision(SC)andPBSecuritiesSdnBhdandMIDFSismaSecuritiesSdnBhd.Priortoassuminghiscurrentpositionas theExecutiveDirectorofEFCASB,hewas theChiefExecutiveOfficerofPhillipMutualBerhad,aninternationallyaffiliatedunit trustmanagementcompany.HeisalsoanInvestmentCommitteeMemberofPheimUnitTrustsBerhad.

HeholdsaCapitalMarketsServicesRepresentativelicense(CMSRL/A3285/2007)issuedbytheSC.

Savefortheabovementioned,hedoesnothave:

(i) anyDirectorshipinotherpubliccompanies;(ii) anyfamilyrelationshipwithanyDirectorand/ormajorshareholderoftheCompany;(iii) anyconflictofinterestwiththeCompany;and(iv) anyconvictionofoffenceswithinthepasttenyearsotherthantrafficoffences,ifany.

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15AnnualReport2008

senior ManageMent teaM

from left to right

1. SyedMohdAlwiSyedMustaffa Company Advisor

2. IsaharuddinAlwi Senior Manager, Contract & Planning Division

3. SaifulFaizMohdAziz GM Corporate Services & Asset Division

4. MohamedMahidinBinAbuKassim Company Advisor

5. A.BakarA.Wahab Business Development Director

6. AnnuarTumar GM Operation Division

chairMan’sstateMent

dear Valued shareholders,

First and foremost, please allow me to expressthat I amdeeplyhonoured tobepenning thefirstChairman’sStatementforVastaluxEnergyBerhad(“Vastalux” or “Group”) since its landmark listingontheSecondBoardofBursaMalaysaSecuritiesBerhadonthe12September2008.

On behalf of the Board of Directors (“Board”) ofVastalux, it is with great pleasure that I presentthe Annual Report for the financial year ended31December2008.

CHAIRMANTAN SRI DATO’ ZAINOL ABIDIN BIN ABD RASHID

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chairMan’s stateMent (cont’d)

financial results

The Group recorded a turnover of RM186.8 millionand profit after tax of RM17.6 million, exceeding theestimated results by 10% and 8% respectively. Thisexcellent performance was attributable to the strongperformanceoftheGroup’shook-upandcommissioningsegmentandthegrowthofitsnewbusinesssegmentofonshoreconstructionworks.

Through the course of the financial year, the Groupwas awarded several contracts by various companiesoutofwhichthereweretwo(2)thatexceededRM10.0million.InMarch2008,MalaysiaRefiningCompanySdnBhd awarded a contract worth RM10.5 million to theGroupforCivilWorksPackage3AreaCfortheMelakaRefineryPSR-2Revampproject inMelaka. InOctober2008,PetronasDaganganBerhadawardedtheGroupacontractamountingtoRM32.5million.Thiswasfortheprocurement, construction and commissioning for thereactivationofthePasirGudangLPGPlant.

diVidend

The Board, having reflected on the good financialperformance, is pleased to propose a first and finaldividendof1senpershareless26%incometaxforthefinancialyearended31December2008.Thisamountedto a total payout of RM2.06 million which after 26%incometaxtranslatedtoanetamountofRM1.53millionbeingpaymenttoequityholders.

outlook

Thesupportsectorof theOil&Gas industry,ofwhichVastalux is a part of, is not directly affected by themovement of the oil price. The contracts secured bythesupportsectorareonmid-term to long-termbasis,usually for more than 1 year. As the world is facingdepleting oil reserves, it is expected that the majorOil & Gas companies will increase their Exploration &Production activities to ensure the adequate supply ofthis vital source of energy. Therefore, the outlook forthe support sector of the Oil & Gas sector remains tobegoodastheprocessofExploration&Productionisalengthyone,usuallylastingmorethan10years.

IntheNinthMalaysiaPlan,theMalaysianGovernmenthas allocated RM43.8 billion for the development ofupstreamanddownstreamsegmentsoftheoilandgassector. Of this, RM13.1 billion has been allocated forupstreamactivitiesandRM30.7billion fordownstreamactivities.

As such, based on this, the outlook for the offshorehook-upandcommissioning,andtop-sidemaintenanceservicesindustryinMalaysiaisfavorable.For2009,weareconfidentthattheGroup’sperformancewill remain positive.This is because the Group’s corebusinessofprovidinghook-upandcommissioningandtopside major maintenance services is mainly focusedontheexistingonshoreandoffshoreoilandgasfacilities.Theseservicesareregardedascriticaltotheoilandgasindustrytoensuretheintegrityofthefacilities,andarethereforelessaffectedbythefluctuationsinthepriceofcrudeoil.

corporate actiVities

Thepastoneyearhasdefinitelybeenamemorableonefor the Group. A significant milestone was the listingof Vastalux on the Second Board of Bursa MalaysiaSecuritiesBerhadon12September2008.

In addition to allowing our diligent employees and theinvesting community the opportunity to participate inVastalux’s equity and continuing growth, the status ofbeing a public listed company enhances the Group’sstatusespeciallyintheinternationalarena.ThiscertainlyaugurswellfortheGroupaswelookforwardtoincreasingourpresenceoverseasandboostourcompetitivenessinthisglobalisedmarket.

Movingahead,theGrouprecognisestheneedtoremainvigilantinsuchchallengingtimes.TheBoardishappytonotethatthemanagementandemployeesoftheGrouptirelesslymakeeffortstoimprovecostmanagementandoperationalefficiency.

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chairMan’s stateMent (cont’d)

coMMunity contriBution

The Group also holds the principle of being a sociallyresponsiblecorporateveryhighlyanddearly.Wehaveset aside a budget for environment protection withinitiatives such as waste management, tree-plantingandimprovingourrecyclingprogram.Wealsomaintainclose collaborations with the Malaysian Departmentof Environment and local councils for more effectiveimplementationofsuchinitiatives.

Wehaveinplaceoperationalpoliciesandprocedurestominimiseanynegativeimpacttosafety,environmentandsecurity.These policies and procedures are subjectedtoa riskmanagementprocess toensureweapply thehighest care and standards. One such policy requireseveryemployee,includingthoseemployedbyoursub-contractors,toundergoasafetyinductioncourse.

We believe that a successful business entity shouldnot only be responsible but also caring, especially fortheunderprivileged.Theseniormanagementandstaffmadeanupliftingvisit toanorphanage inJandaBaik,asmalltownlocated30kmfromKualaLumpur.Besidesengaging in activities with the orphans, we providedfinancialcontributiontotheorphanageaswellasgivingoutnecessityitemssuchasclothestothechildren.

Currently, we are carefully exploring various otherCorporate Social Responsibility initiatives forimplementation in the coming year.Weanxiously lookforwardtoplayingamuchmoreactiveandeffectiveroleinsociety.

our appreciation

On behalf of the Board, I would like to express ourappreciation to the management and staff for theiruntiringdedication,commitmentandcontributionwhichplayed a significant role in the Group’s commendableperformance.

Lastbutnotleast,Iwouldalsolikeextendourthanksandgratitudetoourclients,businessassociates,regulatorybodies and shareholders for their continuous supportandconfidenceinus.

CHAIRMANTAN SRI DATO’ ZAINOL ABIDIN BIN ABD RASHID

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chief eXecutiVe’sreView

CHIEFEXECUTIVEOFFICERNOR SABRI BIN HAMZAH

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chief eXecutiVe’s reView(cont’d)

eXcellent financial perforMance

ItismypleasuretoreportthatVastaluxrecordedprofitafter tax and minority interests of RM17.6 million forthefinancialyearended31December2008,exceedingtheestimatedresultby8%.Thebetter thanexpectedfinancial performancewas attributable to theGroup’scorebusinesssegmenti.e.hook-upandcommissioning,andfurtherboostedbythegrowthofournewbusinesssegmentofonshoreconstructionworks.

TheGroup’srevenueofRM186.8millionalsoexceededthe estimated result, i.e. by 10%. This was largelycontributed by the Group’s four (4) main operatingsegments whereby hook-up and commissioningservices recorded RM84.7 million revenue, topsidemajor maintenance services recorded RM57.1 millionrevenue,onshoreconstructionworksrecordedRM26.5million revenueandminor fabricationworks recordedRM15.8millionrevenue.

OurrecentlistingonBursaMalaysiaSecuritiesBerhadnotonlyenhancesourstatuslocally,butalsofacilitatedour overseas expansion plans. During the year, wehaveincorporatedcompaniesinIndonesiaandVietnamto extend the boundaries of our core competencies.Coupled with our order book of close to RM1 billion,we are confident our good financial performance willcontinueintheyearstocome.

enhancing huMan capital

Werecognised thatourmanagementandemployees’continual dedication, diligence and teamwork alsoplayed a significant role in the Group’s outstandingperformance. Nonetheless, we believed that for acompany to prosper, the employees must also grow.Oneofourmainprioritiesistoensureouremployeesreceived the best and necessary training for themto perform even better. We strongly encourage ouremployees to undergo development training for themto progress further in the careers. The enhancementofhumancapital isan impetus for theGroup togrowfurtherandbetter.

TheGroup’srevenueofRM186.8millionalsoexceededtheestimatedresult,i.e.by10%.

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Mid to long terM outlook reMains encouraging

ThedrasticfallofoilpricespaintedagrimoutlookfortheOil&Gasindustry,albeitunwarranted.Studiesbyinternationalbodiesrevealedthattheworldisfacingdepletingoilreserves,resultingindemandexceedingsupplyinthelongterm.Someresearchhousesevenexpect that the major Oil & Gas companies willincrease their Exploration & Production activitiesin the coming years. With increasing efficiency andbetter technology, the cost of production can onlybe lower thus ensuring economic viability even bytoday’soilprices.

conclusion

2008wasayearofsignificanceforVastalux.Wehavewitnessed thesuccessful listingof theGroup inBursaMalaysia Securities Berhad and recorded financialperformance better than estimated. Nonetheless, wecontinuetoputineffortstoimproveourcapabilitiesandperformanceasweendeavourtoprovidebettervaluetoourshareholders,employees,clientsandtothenation.Moving forward as a public-listed entity, the companywillworkhardtoincreasethevalueofitssharesandtobeabletogiveoutgooddividendsforourshareholders.SuchistheculturethatwehaveatVastalux.

Onthatnote,IwouldliketothanktheboardofdirectorsandemployeesofVastaluxfortheirdedicationandhardworkinthelastfinancialyear.Onthisnote,Iwouldalsoliketothankallourvaluedcustomers,businesspartners,localauthoritiesandeveryonewhohascontributedtothecompany’ssuccess.Ilookforwardtoanotherrewardingandmemorableyearofworkingtogetherandstrivingtoimproveourperformancefortheyearahead.

CHIEFEXECUTIVEOFFICERNOR SABRI BIN HAMZAH

chief eXecutiVe’s reView(cont’d)

ThebetterthanexpectedfinancialperformancewasattributabletotheGroup’scorebusinesssegmenti.e.hook-upandcommissioning,andfurtherboostedbythegrowthofournewbusinesssegmentofonshoreconstructionworks.

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stateMent ofcorporate goVernance

directors

VastaluxEnergyBerhad’sBoardofDirectorsputtheirfullcommitmenttoensurethatthecompanypracticesgoodcorporategovernance.TheBoardofDirectorsispleasedtoreportonthemannerinwhichthePrinciplesset-outinPart1oftheMalaysianCodeonCorporateGovernanceareapplied.

TheBoardofDirectorsrealisesthatitisimportanttoadoptahighstandardsofcorporategovernanceinthecompanyasafundamentalpartofdischargingitsresponsibilitiestoprotectandenhanceshareholders’valueandfinancialperformanceoftheGroup.

i. Board of Directors Composition TherearecurrentlySix(6)membersincompany’sBoardofDirectors,ofwhich,three(3)ofthemareExecutive

Directors. Two (2) out of Three (3) Non-Executive Directors are independent, which is in compliance withParagraph15.02of theListingRequirementsof theBursaMalaysiaSecuritiesBerhad (“BursaSecurities”),thatatleasttwo(2)Directorsorone-third(1/3)oftheBoard,whicheverishigher,areIndependentDirectors.AllIndependentNon-ExecutiveDirectorsareindependentofmanagementandfreeofanyrelationshipthatcouldinterferewiththeirexerciseofindependentjudgement.

ThereisacleardivisionofresponsibilitybetweentheChairmanandtheExecutiveDirectorstoensureabalanceofpowerandauthority.Intotality,theDirectorsshareawideexposureinthebusiness,financialandtechnicalfields.Thisblendofknowledgeandexperienceisvitaltodetermineanobjectiveoutlookofthecompany.

TheExecutiveDirectorsareresponsibleforthedaytodaymanagementofthebusinessaswellasimplementingthepoliciesanddecisionsoftheBoard.TheIndependentNon-ExecutiveDirectorsareconsideredbytheBoardofDirectorstobeindependentofmanagementandfreeofanyrelationshipwhichcouldmateriallyinterferewiththeexerciseoftheirindependentjudgment.

TheBoardhasalsodelegatedspecificresponsibilitiestothree(3)sub-committeesnamely,Audit,NominationandRemunerationCommittees.TheCommitteeshavetheauthoritytoexaminespecificissuesandreporttotheBoardwiththeirrecommendations.Thefinaldecisiononallmatters,however,lieswiththeentireBoard.

ii. Board Meeting and Attendance Duringthefinancialyear,aftertheCompany’sadmissiontotheofficiallistandthelistingandquotationofits

shareson theSecondBoardofBursaSecuritieson12September2008, theBoardhasconvenedone (1)meeting,whichisasfollows:

Meeting No. Date Time

1/2008 Thursday,20November2008 3.00p.m.

TheattendanceofeachdirectorattheBoardMeetingheldduringthefinancialyearended31stDecember2008isasfollows:

Name of Director Number of Board Meeting Attended

TanSriDato’ZainolAbidinBinAbdRashid 1/1 MohamadNorBinAbdulRashid 1/1 NorSabriBinHamzah 1/1 AzmanBinAbdGhafar 1/1 Dato’MohamedSallehBinBajuri 1/1 MunawirBinMohammad 1/1

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stateMent of corporate goVernance (cont’d)

iii. Supply of Information IneveryBoardofDirectorsmeeting,everymemberoftheBoardwereprovidedwithacompletesetofBoard

PaperscontainingreportsandotherrelevantinformationdetailingvariousaspectsoftheGroup’soperationsandperformancetoenablethemtodischargetheirduties.AllDirectorshaveaccesstotheadviceandservicesoftheCompanySecretariesandwherenecessary,infurtheranceoftheirdutiestakeindependentprofessionaladviceattheGroup’sexpense,ifnecessary.

iv. Appointments to the Board ItistheresponsibilityoftheNominationCommitteetorecommendnewappointeestotheBoard.

TheNominationCommitteewhichwasformedon2June2008comprisesmainlyofIndependentNon-ExecutiveDirectorsasfollows:

TanSriDato’ZainolAbidinBinAbdRashid Independent Non-Executive Director

Dato’MohamedSallehBinBajuri Independent Non-Executive Director

MunawirBinMohammad Non-Independent Non-Executive Director

TheNominationCommitteeconsiderstherecommendstotheBoardoftheCompanyandtheGroup,technicallycompetentpersonswithintegrityandastrongsenseofprofessionalismtobeappointedtotherelevantBoards.Further,theCommitteeassessestheeffectivenessoftheBoard,thecommitteesoftheBoardandthecontributionofeachindividualDirectorincludingindependentNon-ExecutiveDirectorandtheChiefExecutiveOfficer.

TheCommitteewillannuallyreviewtherequiredmixofskillsandexperiencewhichtheNon-ExecutiveDirectorsbringtotheBoard.

v. Re-election of Directors Alldirectorsshallretireonceatleastinevery3yearstocomplywithParagraph7.28(2)oftheListingRequirements

ofBursaSecurities.

InaccordancewithArticle89oftheArticlesofAssociationoftheCompany,one-third(1/3)oftheDirectorsforthetimebeingshallretirefromtheirofficeandbeeligibleforre-electionprovidedalwaysthatallthedirectorsshallretirefromtheirofficeonceatleastineachthree(3)years.AnypersonappointedbytheBoardeithertofillacasualvacancyorasanadditiontotheexistingDirectors,shallholdofficeonlyuntilthenextannualgeneralmeetingandshallthenbeeligibleforre-election.

vi. Directors’ Training AlltheDirectorshavecompletedtheMandatoryAccreditationProgramme.TheBoardmemberswillcontinueto

attendseminars,varioustrainingprogrammes,conferencesandetc.tokeepabreastwiththedevelopmentsintheregulationsandstatutesrelevanttotheindustryandtofurtherenhancetheirskillsandknowledge.

directors reMuneration

i. The Level and Make-up of Remuneration The Board has adopted the Principle as recommended by the Code.The Board ensures that the level of

remunerationissufficienttoattractandretainDirectorsneededtoruntheCompanysuccessfully.ThecomponentpartofremunerationhavebeenstructuredtolinkrewardstocorporateandindividualperformanceforExecutiveDirectors whilst Non-Executive Directors’ remuneration reflect the experience and level of responsibilitiesundertakenbyindividualNon-ExecutiveDirectors.

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stateMent of corporate goVernance (cont’d)

ii. Procedure The Remuneration Committee recommends to the Board the remuneration framework and remuneration

packageoftheExecutiveDirectors.ThelevelofremunerationreflectstheexperienceandlevelofresponsibilitiesundertakenbytheExecutiveDirectors.ThedeterminationofthefeesoftheNon-ExecutiveDirectorsisdecidedbytheBoardasawhole.

The Remuneration Committee which was formed on 2 June 2008 comprises mainly of Independent Non-ExecutiveDirectorsasfollows:

TanSriDato’ZainolAbidinBinAbdRashid Independent Non-Executive Director

Dato’MohamedSallehBinBajuri Independent Non-Executive Director

NorSabriBinHamzah Chief Executive Officer

TheRemunerationCommitteeisauthorisedbytheBoardtoaccessandreviewatleastonceineveryfinancialyeartheremunerationpackagesoftheDirectorsandseniormanagementpersonnel.

iii. Disclosure ThedetailsofDirectors’remunerationforthefinancialyearended31December2008areasfollows:

Directors’ Remunerations Salary Fee Other Emoluments Total RM’000 RM’000 RM’000 RM’000

Executive 365 - - 365 Non-Executive - 70 3 73

Range of Remuneration Executive Non-Executive

BelowRM50,000 - 3 RM50,001-RM100,000 1 - RM100,001-RM150,000 1 - RM150,001-RM200,000 1 - RM200,001-RM250,000 - - RM250,001-RM300,000 - -

3 3

shareholders

i. Dialogue Between Companies and Investors TheCompanyrecognizestheimportanceofaccountabilitytoitsshareholdersthroughpropercommunication

withitsshareholders.ThisisdonethroughtimelydisseminationofinformationontheGroup’sperformanceandmajordevelopmentswhicharecommunicatedtothemvariousdisclosuresandannouncementstotheBursaSecurities,includingthequarterlyfinancialresults,annualreportsandwhereappropriate,pressreleases.

TheCompanyalsomaintainawebsiteatwww.vastalux.com.mythatallowsalltheshareholdersandinvestorstogainaccesstoinformationabouttheGroup.

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stateMent of corporate goVernance (cont’d)

Inaddition,theCompanyalsojointheMalaysianInvestorsRelationAssociationtofacilitatecommunicationandcloserrelationshipbetweentheCompanyandtheinvestorcommunity.

ii. The Annual General Meeting TheAnnual General Meeting (AGM), is the principal forum for dialogue with shareholders and an avenue

fordirect interactionbetween theshareholdersand investorswhere theyaregiven theopportunity to raisequestionsontheoperational,financialperformanceandmajordevelopmentsoftheGroupaswellasontheresolutionsbeingproposed.ShareholdersareencouragedtoattendandparticipateintheAGM.

accountaBility and audit

i. Financial Reporting Inpresenting theannualfinancialstatementsandquarterlyfinancial reports, theDirectorsaim topresenta

balancedandunderstandableassessmentoftheCompany’spositionandprospects.

TheBoard is assisted by theAuditCommittee to oversee theGroup’s financial reporting process and thequalityofthefinancialreporting.TheCompanyalsopresentsitsfinancialresultsonaquarterlybasisviapublicannouncements.Thequarterly financial results are reviewedby theAuditCommitteeandapprovedby theBoardofDirectorspriortoitsreleasetoBursaSecurities.

ii. Internal Control TheCompanymaintainsareasonablysoundsystemofinternalcontroltosafeguardshareholders’investments

andthecompany’sassets.TheBoardacknowledgestheirresponsibilitytomaintainareasonablesoundsystemof internal controls coveringfinancial, operationalandcomplianceand riskmanagement.TheBoardseeksregularassuranceonthecontinuityandeffectivenessoftheinternalcontrolsystemthroughindependentreviewbytheinternalandexternalauditors.

iii. Relationship with Auditors TheAuditCommitteehadmaintainedanappropriateandtransparentrelationshipwiththeCompany’sAuditors.

TheAuditCommitteehasbeenauthorisedtocommunicatedirectlywithboththeExternalAuditorsandInternalAuditors.BoththeExternalAuditorsandInternalAuditorsareinvitedtoattendtheAuditCommitteeMeetingstofacilitatetheexchangeofviewsonissuesrequiringattention.

stateMent of coMpliance with the Best practices of the code

TheCompanyiscommittedtoachievehighstandardsofcorporategovernance,highlevelofintegrityandethicsinitsbusinessdealings.TheBoardisoftheviewthat,inallmaterialaspects,thecompanyhaveadoptedandcompliedwiththebestpracticesoftheCodeasprescribedintheMalaysianCodeofCorporateGovernance.

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audit coMMittee report

TheAuditCommitteewasestablishedon2June2008.

MeMBers and Meetings

TheAuditCommitteeiscomprisedofthefollowingmembers:

Chairman

Dato’MohamedSallehbinBajuri Independent Non-Executive Director (Member of Malaysian Institute of Accountants)

Members

TanSriDato’ZainolAbidinbinAbdRashid Independent Non-Executive DirectorEncikMunawirbinMohammad Non-Independent Non-Executive Director

ThefirstAuditCommitteeMeetingwasheldon20November2008fromthelistingdateoftheCompanyontheSecondBoardofBursaMalaysiaSecuritiesBerhadon12September2008tilltheFinancialYearEnded31December2008andallthethree(3)AuditCommitteememberswerepresentatthemeeting.

terMs of reference

CompositionTheAuditCommittee(‘theCommittee”)shallbeappointedby theBoardamongst theDirectorsof theCompanyandshallconsistofnolessthanthree(3)memberscomprisingamajorityofIndependentDirectors.Aquorumforameetingshallbeatleasttwo(2)members,bothbeingIndependentDirectors.

TheCommitteeshallincludeatleastone(1)DirectorwhoisamemberoftheMalaysianInstituteofAccountants(“MIA”)oralternativelyaDirectorwhomusthaveatleastthree(3)yearsworkingexperienceandhavepassedtheexaminationsspecified inPart Iof theFirstScheduleof theAccountantsAct1967or isamemberofone(1)oftheassociationsofaccountantsspecifiedinPartIIorfulfillssuchotherrequirementsasmaybeprescribedbyorapprovedbyBursaMalaysiaSecuritiesBerhadandorsuchotherrelevantauthoritiesfromtimetotime.

IfamemberoftheCommitteeresigns,diesorforanyreasonceasestobeamemberwiththeresultthatthenumberofmembersisreducedbelow3,theBoardshallwithin3monthsoftheeventappointsuchnumberofnewmembersasmayberequiredtofillthevacancy.

TheChairmanoftheCommitteeshallbeanindependentNon-ExecutiveDirector.NoAlternateDirectoroftheBoardshallbeappointedasamemberoftheCommittee.

TheBoardshallreviewthetermofofficeandperformanceoftheCommitteeandeachofitsmembersatleastonceinevery3yearsanddetermineiftheirdutieshavebeencarriedoutinaccordancewiththeirtermsofreferenceandwillrecommendthenecessaryactionsthereon.

Duties and ResponsibilitiesThedutiesandresponsibilitiesoftheCommitteeareasfollows:

1. Carryoutthefollowingwithregardtotheinternalauditfunction:

• Reviewtheadequacyofthescope,functionsandresourcesoftheinternalauditfunctionandthatishasthenecessaryauthoritytocarryoutitsresponsibilities;

• Review the internal audit programmes, major findings of internal audits, process and investigationundertaken,management’sresponseandcoordinationbetweentheinternalandexternalauditors;

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audit coMMittee report(cont’d)

• Reviewanyappraisalorassessmentoftheperformanceofmembersoftheinternalauditfunction;

• Approveanyappointmentorterminationofseniorstaffmembersoftheinternalauditfunction;and

• Takecognizanceofresignationofinternalauditstaffmembersandprovidetheresigningstaffmemberanopportunitytosubmithisreasonsforresigning.

2. Carryoutthefollowingwithregardstotheexternalauditfunction:

• Consider the appointment of the external auditors, the audit fee and any questions of resignation ordismissal andonwhether there is reason (supportedbygrounds) tobelieve that theGroup’sexternalauditorsisnotsuitableforre-appointment;

• Review audit plans before the audit commences, audit reports, evaluations of the system of internalaccountingcontrolsandmanagementlettersandresponsewiththeexternalauditors;

• Reviewthequarterlyresultsandyearendfinancialstatements,priortotheapprovalbytheBoard,focusingparticularlyon:

a. Anychangesinorimplementationofmajoraccountingpolicyandpractices;

b. Significantadjustmentsarisingfromtheaudit;

c. Thegoingconcernassumption;and

d. Compliancewithaccountingstandardsandotherlegalrequirements.

• ReviewanymanagementlettersentbytheexternalauditorstotheGroupandthemanagement’sresponsetosuchletter;

• Discussproblemsandreservationsarisingfromtheinterimandfinalaudits,andanymattertheauditorsmaywishtodiscuss(intheabsenceofmanagementwherenecessary);

• Reviewtheexternalauditors’auditreport;

• ReviewtheassistancegivenbytheemployeesoftheGrouptotheexternalauditors;and

• Review all areas of significant financial risks and the arrangements in place to contain those risks toacceptablelevels.

3. ReviewanyrelatedpartytransactionsandconflictofinterestsituationthatmayariseintheCompanyandGroupincludinganytransactions,procedureorcourseofconductthatraisesquestionsofManagementintegrity.

4. Reviewandverifytheallocationofshareoptionstoeligiblepersonsasbeingincompliancewiththeby-lawsapprovedbytheBoardandshareholders.

5. Report toBursaMalaysiaSecuritiesBerhadonanymatter reportedby it to theBoardwhichhasnotbeensatisfactorilyresolvedresultinginabreachoftheListingRequirementsofBursaMalaysiaSecuritiesBerhad.

6. TheCommitteeshallupdatetheBoardonissuesandconcernsdiscussedduringtheirmeetingsincludingthoseraisedbyexternalauditorsandwhereappropriate,makethenecessaryrecommendationstotheBoard.

MeetingsTheCommitteeshallmeetatleastfour(4)timesannuallyormorefrequentlyascircumstancesrequiredwithduenoticeofissuestobediscussedandshallrecorditsconclusionsindischargingitsdutiesandresponsibilities.OtherDirectors and employees shall attend any particular Committee meeting only at the Committee’s invitation andspecifictotherelevantmeeting.

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audit coMMittee report(cont’d)

The external auditors and internal auditors have the right to appear and be heard at any meeting of theAuditCommittee and shall appear before theAudit Committee when required to do so by theAudit Committee.TheCompanySecretaryshallbetheSecretaryoftheCommittee.

TheCommitteeshallcauseminutestobeenteredinthebooksprovidedforpurposeofrecordingallresolutionsandproceedingsofminutes.SuchminutesshallbesignedbytheChairmanofthemeetingatwhichtheproceedingswereheldorbytheChairmanofthenextsucceedingmeetingandifsosigned,shallbeconclusiveevidencewithoutanyfurtherproofofthefacts.

TheCommittee,throughitsChairman,shallreporttotheBoardatthenextBoard’smeetingaftereachCommitteemeeting.Whenpresentingany recommendation to theBoard, theCommitteewillprovidesuchbackgroundandsupportinginformationasmaybenecessaryfortheBoardtomakeaninformeddecision.

suMMary of actiVities undertaken By the audit coMMittee

TheAuditCommitteewasestablishedon2June2008.Duringthefinancialyearunderreview,theAuditCommitteeconvenedone(1)meetingtocarryoutthefollowingactivities:

• ReviewedandadoptedthedraftTermofReferenceoftheCommittee;

• Approvedandacceptedtheproposaltoset-upGroupInternalAuditDepartment(“GIA”);

• ReviewedthequarterlyandannualfinancialresultsoftheCompanyandGrouppriortosubmissiontotheBoardforconsiderationandapproval;and

• Reviewed related party transactions and conflict of interest situations thatmay arise in theCompany andGroup.

suMMary of actiVities undertaken By the internal audit function

TheGIAevaluatedthefollowing:

• Adequacy,integrityandeffectivenessoftheCompanyandGroup’sinternalcontrolsinsafeguardingshareholders’investment and the Company and Group’s assets. The internal controls cover financial, operational andcompliancecontrolsandenterpriseriskmanagement;

• Extentofcompliancewithestablishedpolicies,proceduresandstatutoryrequirements;and

• Adequacy of policies, procedures and guidelines on the Company and Group’s accounting, financial andoperationalactivities.

TheinternalauditfunctionfocusesonhighpriorityactivitiesdeterminedbyriskassessmentandinaccordancewiththeauditplanningmemorandumapprovedbytheAuditCommittee.

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stateMent oninternal control

introduction

The Board acknowledges that the practice of good corporate governance is an on-going process and not justanannualmattertobecoveredascomplianceintheAnnualReport.Asoundsystemofinternalcontrolincludestheestablishmentofanappropriatecontrolenvironmentandframework,encompassingfinancial,operationalandcompliancecontrolsandmanagementofrisksthroughoutitsoperationsinordertoprotectitsshareholders’valueandGroup’sassetsaswellasotherstakeholders’interest,atthesametime.

responsiBility

TheBoard,throughoutthefinancialyearunderreviewhasindentified,evaluatedandmanagedthesignificantriskfacedbytheGroupthroughthemonitoringoftheGroup’sperformanceandprofitabilityatitsBoardmeetings.TheBoardhasassignedtheAuditCommitteewiththedutyofreviewingandmonitoringtheeffectivenessoftheGroup’sinternalcontrol.

key control process

ThekeycontrolsoftheGroup’ssystemofinternalcontrolareasfollows:

• DefinemanagementstructureoftheGroupandcleardelegationofauthoritytoCommitteesoftheBoardandManagementwhereauthoritylevelshavebeenclearlyestablished;

• EstablishoperatingpoliciesandprocedureswithrespecttokeyoperationalareasthatarecontinuouslyreviewedandupdatedbytheManagementtoreflectchangingriskprofile;

• Regular meetings are held between the Executive Director and the Management to deliberate on Groupstrategiesandpolicies,operationalandfinancialperformanceandotherkeyissues;

• Thecompliancefunction,whichcomprisesoftheCommitteeandinternalauditfunction,shallassisttheBoardtooverseethemanagementofriskandreviewtheeffectivenessofinternalcontrols.TheCommitteereviewstheinternalauditreportsandalsoconductsannualassessmentontheadequacyoftheinternalaudit’sscopeofwork;and

• The competency of staff is enhanced through rigorous recruitment process and development programs.Aperformanceappraisalsystemofstaffisinplace,withestablishedtargetsandaccountabilityandisreviewedonannualbasis.

internal audit function

TheGrouphasanInternalAuditDepartmentwhichindependentlyreviewstheadequacyandintegrityoftheGroup’ssystemsofcontrolinmanagingthekeyrisksandreportaccordinglytotheAuditCommitteeonaquarterlybasis.Whereanysignificantweaknesseshavebeenidentified,improvementmeasuresarerecommendedtostrengthencontrols,withfollow-upauditsbyinternalaudittoassessthestatusofimplementationthereofbytheManagement.AriskbasedapproachtowardsplanningandconductsofauditsareusedbytheInternalAuditorsinprioritizingtheirreviewofthevariousriskareasoftheGroup.

conclusion

The internal control system is designed tomanage rather thaneliminate the riskof failure toachievebusinessobjectives,andcanonlyprovidereasonableandnotabsoluteassuranceagainstmaterialmisstatementorloss.

TheBoardisoftheviewthatthesystemofinternalcontrol,whichisreviewonanongoingbasis,isadequatefortheGrouptomanageitsriskandtoachieveitsbusinessobjectives.

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corporate socialresponsiBility (csr) report

policy

CSRpracticesandprogramsareallfundamentallyaboutsafeguarding and promoting our business. Accordingly,wehavebeenalwaysmindfulofourcorporateandsocialobligations, in particular to the development of socialintegrationandtheenvironment.Inoureffortstoachieveourobjectiveswehavedevelopedprogramsforenhancingsocialintegration,particularlyinyouthdevelopmentaswefeeltheneedtocontributetoorat leastfacilitateintheirgrowthanddevelopmentoftheyoungergenerationforthefutureofthecountryandtheenvironment.

enVironMent

Every effort is made to ensure a clean and healthyenvironment. We have an annual budget for furtherimprovementstothefabricationyardenvironment,forbettercontrolofwastegenerationandfortheplantingoftrees.Thisisanon-goingprocess.Wearealsoalwayslookingat ways of improving the recycling program to minimizeimpact to theenvironment. In thiseffortwemaintainaninteractionwiththeDepartmentofEnvironmentandlocalcouncils.

social coMMunity

We have always encouraged and sought to ensureparticipation by local companies and inhabitants inthe District in our procurement processes and in theemployment needsof our organization. In theoperationof the fabrication yards, industries in the Districts ofKemaman,BintuluandLabuanaregivenemploymentandeconomic opportunities. Vastalux has also participatedandcontributedtowardseventsandprogramsorganizedbytheDistricts.

work enVironMent

Wearecommittedtocomplyingwithworkplacehealthandsafety lawsand regulationsof thegovernmentagenciesof the Occupational Safety and Health including that oftheFireDepartmentandtheDepartmentofEnvironment.Everyemployee, includingthoseemployedbyourmanycontractors,iscompelledtogothroughaSafetyInductionCourse. On-the-job instructions as well as refreshercoursesareheldregularlytoinculcatesafetyawarenessamongallpersonnelincarryingouttheirduties.

Vastalux has developed working procedures in dealingwith issues and contingencies such as oil spills, fires,marine disasters and strikes.All our safety officers andsomeofouroperationandsupportservicespersonnelaretrained in initial FirstAid procedures.All cargo handlingand fabrication equipments are inspected regularly incompliancewiththeDepartmentofHealthandSafety.

Our Operations procedures are also subject to a RiskManagementprocesstominimizeanynegativeimpacttosafety,environmentandsecurity.VastaluxisandremainsInternational Marine Contractor Association Members(“IMCA”)Codecompliant.

Business Marketplace

Vastalux endeavours to nurture and cultivate a cultureof compliance with all requirements of all laws, rules,regulations and ethics towards realizing and enhancinglong term shareholders’ interests. We regularly engageinmeetingswithall regulatoryauthorities toensureandmaintainaharmoniousworkingrelationship.

Weseektoadheretoethical,fair,effectiveandtransparentprocurementpracticesincompliancewiththecompany’soperationalprocedures.

recent csr actiVity

The Management Team of Vastalux recently visited theBadanAmal Nur Zaharah (“BANZ”) orphanage, locatedinJandaBaikwhichhousesmorethan43orphansagingfrom5till20yearsold.

ThetripwaspartourVastalux’sCSRprogramasanefforttoreachouttotheneedyandtoillustratethatVastalux’sresponsibilityextendsbeyondjuststakeholders.

Attendedbyourseniormanagementandstaff,theeventwastoprovidefinancialcontributionforBANZinassistingthemintheoperationalcostandcontributingclothinganduseditemstotheorphanage.

IntheshortspeechbyourChiefExecutiveOfficer,EncikNor Sabri Hamzah, he said that Vastalux’s activitiesreachesbeyondoperatingasaprofitcorporationbutalsoinreachingtowardshelpingthoseinneedandbyprovidingthemwithabetterfuture,withavisionthattheymightevensomedaycontributebacktosociety.

OurvisittoBANZisthefirstofmanyCSRprogramwhichhave in planned for coming years, which goes to showthe commitment level of the Vastalux management inachievingitspolicy.

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additional coMpliance inforMation

status of utilisation of proceeds raised froM corporate proposal

On12September2008,theCompanywaslistedontheSecondBoardofBursaMalaysia.ThestatusofutilisationofthelistingproceedsfromtheInitialPublicOfferingexerciseisasfollows:

Time frame for Proposed Actual utilisation Purpose utilisation utilisation upon listing Remarks RM’000 RM’000 RM’000

1. Capitalexpenditure: i. Developmentandconstruction 3,000 3,000 Within - offabricationyardand 24months yardfacilities ii. Financeorpartfinancethe 10,000 - Within 10,000 Available acquisitionofmarinevessel(s) 12months foruse2. Retirementofbankborrowings 21,501 21,501 Immediate -3. Workingcapital i. Expansionofbusinessand 10,000 10,000 Within - markets 24months ii. Existingoperations 5,316 5,316 Within - 12months4. Estimatedlistingexpenses 2,559 2,559 Immediate -

52,376 42,376 10,000

share Buy Backs

TheCompanydidnotcarryoutanysharebuy-backsduringthefinancialyear.

options, warrants or conVertiBle securities

Duringthefinancialyear,therewerenooptions,warrantsorconvertiblesecuritiesissuedbytheCompany.

aMerican depository receipt (“adr”) / gloBal depository receipt (“gdr”)

TheCompanydidnotsponsoredanyADRorGDRprogrammeduringthefinancialyear.

non-audit fees

The amount of non-audit fees paid to external auditors for the financial year ended 31 December 2008 wasRM100,000.00as theReportingAccountants for theCompany’sadmission to theofficial listand the listingandquotationofitssharesontheSecondBoardofBursaMalaysiaSecuritiesBerhad.

results Variation

Therewasnomaterialvariationbetweentheauditedresultsforthefinancialyearended31December2008andtheunauditedresultspreviouslyannounced.

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additional coMpliance inforMation(cont’d)

profit guarantee

Duringthefinancialyear,therewasnoprofitguaranteegivenbytheCompany.

Material contract

On 11 February 2008, the Company entered into Sale and Purchase agreement through Vastalux Sdn Bhd, awhollyownedsubsidiaryoftheCompanywithMohamadNorBinAbdulRashidinrespectofthedisposalofpieceofpropertywithabungalowhouseunderIndividualTitleNo.HS(D)4666,PT.1735,MukimKualaLumpur,DaerahKualaLumpur,NegeriWilayahKualaLumpurandbearingpostaladdressatNo.41,JalanDesaMaju,TamanDesa,58100KualaLumpurmeasuringanareaofapproximately790.393squaremeter.Thetransactionwascompletedon4December2008.

reValuation policy on landed properties

TheCompanydoesnotownanylandedproperties.Accordingly,ithasnotadoptedapolicyonrevaluationoflandedpropertiesduringthefinancialyearended31December2008.

iMposition of sanction/penalties

Therewasnosanctionand/orpenaltiesimposedontheCompanyand/oritssubsidiaries,directorsormanagementbyanyregulatorybodiesduringthefinancialyear.

Thedirectorsare requiredby law topreparefinancialstatements foreachfinancialyear inaccordancewith theapplicableapprovedaccountingstandards inMalaysiaandgiveatrueandfairviewof thestateofaffairsof theGroupandoftheCompanyattheendofthefinancialyearandoftheresultsandthecashflowsoftheGroupandoftheCompanyforthefinancialyear.

Inpreparing thefinancialstatementsof theGroupandof theCompany, theDirectorshaveadoptedappropriateaccounting policies and applied them consistently and prudently. The Directors have also ensured that thoseapplicableaccountingstandardshavebeenfollowedandconfirmedthatthefinancialstatementshavebeenpreparedonagoingconcernbasis.

The Directors are responsible for ensuring that the Company keeps accounting records which disclose withreasonableaccuracythefinancialpositionoftheGroupandoftheCompanyandwhichenablethemtoensurethatthefinancialstatementsareincompliancewiththeprovisionsoftheCompaniesAct,1965.

TheDirectorsarealsoresponsiblefortakingsuchstepsthatarereasonablyopentothemtosafeguardtheassetsoftheGroupandtopreventanddetectfraudandotherirregularities.

stateMent of directors’ responsiBilityin respect of the audited financial statementspursuant to Paragraph 15.27 (a) of the Listing Requirement of Bursa Malaysia

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33Annual Report 2008

DIRECTORS’REPORT

The Directors hereby submit their report and the audited financial statements of the Group and Company for the financial year ended 31 December 2008.

PRINCIPAL ACTIVITIES

The principal activity of the Company is that of investment holding. The principal activities of its subsidiaries are disclosed in Note 8 to the Financial Statements.

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

FINANCIAL RESULTS

Group Company RM RM

Net profit for the year 17,613,981 2,393,196Minority interest (52,566) -

Net profit attributable to shareholders 17,561,415 2,393,196

DIVIDENDS

No dividends were paid since the end of the previous financial year.

At the forthcoming Annual General Meeting, a first and final dividend in respect of the financial year ended 31 December 2008 of 1.0 sen per ordinary share less 26% taxation, will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December 2009.

RESERVES AND PROVISIONS

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

ISSUE OF SHARES OR DEBENTURES

During the financial year, the following ordinary shares of RM0.25 each were issued by the Company:

Dateofissue Purposeofissue No.ofshares Termofissue

30.4.2008 Acquisition of subsidiaries 111,199,996 Other than cash30.5.2008 Non-Renounceable Rights Issue 37,808,000 Cash8.9.2008 Listing on the Second Board of 57,232,000 Cash Bursa Malaysia Securities Berhad

No debentures were issued during the financial year.

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34 Annual Report 2008

INFORMATION ON THE FINANCIAL STATEMENTS

Before the financial statements of the Group and the Company were made out, the Directors took reasonable steps:

a. to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that there were no bad debts to be written off and no provision for doubtful debts is required; and

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

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

a. which would render it necessary to write off any bad debts or to make any provision for doubtful debts in the financial statements of the Group and the Company inadequate to any substantial extent; or

b. which would render the values attributed to current assets misleading or inappropriate; or

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

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements that would render any amount stated in the financial statements misleading.

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and the Company to meet its obligations when they fall due.

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

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

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

In the opinion of the Directors:

a. the result of the Group’s and the Company’s operation during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature except as disclosed in the income statements and notes to the financial statements; and

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

DIRECTORS’ REPORT(cont’d)

DIRECTORS’ REPORT(cont’d)

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35Annual Report 2008

SIGNIFICANT EVENTS

a. On 30 April 2008, the Company acquired the entire issued and paid up capital of Vastalux Sdn. Bhd. comprising 5,000,000 ordinary shares of RM1.00 each for a total purchase consideration of RM27,799,999 satisfied via issuance of the Company’s 111,199,996 new ordinary shares of RM0.25 each at par value. Consequently, the Company increased its issued and paid up capital from RM1 to RM27,800,000.

b. On 30 May 2008, the Company increased its paid-up capital from RM27,800,000 to RM37,252,000 by the issuance of Non-Renounceable rights issue of 37,808,000 new ordinary shares of RM0.25 each, on the basis of approximately 34 new ordinary shares for every 100 existing ordinary shares held.

c. On 8 September 2008, in conjunction with the Listing on the Second Board of Bursa Securities, the Company carried out the initial public offering of 90,232,000 ordinary shares of RM0.25 each comprising:

i. Public issue of 57,232,000 new ordinary shares of RM0.25 each consists as follows:

a. 12,000,000 new ordinary shares for application by the Malaysian Public;

b. 4,240,000 new ordinary shares for application by the eligible senior management, business associates, Directors and Promoters of the Vastalux Energy Berhad Group; and

c. 40,992,000 new ordinary shares for placement to selected investors.

ii. Offer for sale of 26,000,000 ordinary shares of RM0.25 each available for placement to selected investors at RM0.75 per ordinary share.

iii. Restricted offer for sale of 7,000,000 ordinary shares of RM0.25 each available for application by the eligible employees of the Vastalux Energy Berhad group and its subsidiaries at RM0.75 per ordinary shares.

d. On 12 September 2008, the Company was officially listed on the Second Board of the Bursa Malaysia.

DIRECTORS

The Directors in office since the date of last report are as follows:

Nor Sabri bin Hamzah

Azman bin Abd Ghafar

Mohamad Nor bin Abdul Rashid (Appointed on 2.6.2008)

Tan Sri Dato’ Zainol Abidin bin Abd Rashid (Appointed on 2.6.2008)

Dato’ Mohamed Salleh bin Bajuri (Appointed on 2.6.2008)

Munawir bin Mohammad (Appointed on 2.6.2008)

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36 Annual Report 2008

DIRECTORS’ INTERESTS

According to the register of Directors shareholdings, the interests of Directors in office at the end of the financial year in the shares of the Company and its related corporations during the financial year were as follows: NumberofOrdinarySharesofRM0.25each Asat AsatCompany 1.1.2008 Bought Sold 31.12.2008

DirectinterestMohamad Nor bin Abd. Rashid - 67,720,835 - 67,720,835 Nor Sabri bin Hamzah 2 46,663,908 - 46,663,910Azman bin Abd Ghafar 2 3,923,253 - 3,923,255Tan Sri Dato’ Zainol Abidin bin Abd. Rashid - 90,000 - 90,000 Dato’ Mohamed Salleh bin Bajuri - 80,000 - 80,000Munawir bin Mohammad - 70,000 - 70,000

By virtue of their interest in shares of the Company, Nor Sabri bin Hamzah and Mohamad Nor bin Abdul Rashid are deemed to have interest in all subsidiaries to the extent the Company has an interest.

None of the other Directors in office at the end of the financial year held any interest in shares of the Company or its related corporations during the financial year.

DIRECTORS’ BENEFITS

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the objects or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in the Company or any other body corporate.

Since the end of the previous financial year, no Director has received or become entitled to receive any benefit (other than as disclosed in the Note 30 to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a Company in which he has a substantial financial interest.

AUDITORS

The auditors, Wan Nadzir & Co., have expressed their willingness to continue in office.

On behalf of the Board.

……………………...….Nor Sabri bin HamzahDirector

……………………...….Azman bin Abd Ghafar Director

Shah AlamDated: 22 April 2009

DIRECTORS’ REPORT(cont’d)

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37Annual Report 2008

STATEMENT BY DIRECTORSpursuanttoSection169(15)oftheCompaniesAct,1965

We, Nor Sabri bin Hamzah and Azman bin Abd Ghafar, being two of the Directors of Vastalux Energy Berhad, do hereby state that in the opinion of the Directors, the financial statements set out on pages 40 to 72 are drawn up in accordance with the applicable Approved Accounting Standards for entities other than private entities issued by the Malaysian Accounting Standards Board and the provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2008 and of its results and cash flows for the financial year ended on that date.

Signed in accordance with a resolution of the Directors.

……………………...….Nor Sabri bin HamzahDirector

……………………...….Azman bin Abd Ghafar Director

Shah AlamDated: 22 April 2009

I, Azman bin Abd Ghafar, being the Director primarily responsible for the financial management of Vastalux Energy Berhad, do solemnly and sincerely declare that the financial statements set out on pages 40 to 72 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declaration Act, 1960.

Subscribed and solemnly declared by the abovenamed at Shah Alam in the state of Selangor Darul Ehsan this day of 22 April 2009 ……………………...…. Azman bin Abd Ghafar

Before me

STATUTORY DECLARATION pursuanttoSection169(16)oftheCompaniesAct,1965

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38 Annual Report 2008

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Vastalux Energy Berhad, which comprise the balance sheet as at 31 December 2008 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 40 to 72.

Directors’ResponsibilityfortheFinancialStatementsThe Directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with applicable Approved Accounting Standards for entities other than private entities issued by the Malaysian Accounting Standards Board and the Companies Act, 1965 in Malaysia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

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

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

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

OpinionIn our opinion the financial statements have been properly drawn up in accordance with applicable Approved Accounting Standards for entities other than private entities issued by the Malaysian Accounting Standards Board and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2008 and of their financial performance and cash flows for the year then ended.

INDEPENDENTAUDITORS’ REPORTS totheMembersofVastaluxEnergyBerhad

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REPORT ON OTHER LEGAL AND REGULATORY REqUIREMENTS

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

a. In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have been properly kept in accordance with the provisions of the Act.

b. We have considered the accounts and the auditors’ reports of all subsidiaries of which we have not acted as auditors, which are indicated in Note 8 to the financial statements.

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

d. Our audit reports on the account of the subsidiaries did not contain any qualification of any adverse comment made under Section 174(3) of the Act.

OTHER MATTERS

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

WAN NADZIR & CO. No. AF: 1234 Chartered Accountants

Wan Nadzir bin Wan MohamadApproval No. 2018/02/10 (J)Chartered Accountant

Shah AlamDated: 22 April 2009

INDEPENDENT AUDITORS’ REPORTS totheMembersofVastaluxEnergyBerhad(cont’d)

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40 Annual Report 2008

BALANCE SHEETSasat31December2008

Group Company Note 2008 2008 2007 RM RM RM

NON-CURRENTASSETSProperty, plant and equipment 6 17,775,006 - - Prepaid land lease 7 14,910,517 - - Goodwill on consolidation 54,952 - - Investment in subsidiaries 8 - 19,873,280 - Deferred expenditure 9 725,255 - - Deferred tax assets 10 1,767,713 - -

35,233,443 19,873,280 -

CURRENTASSETSAmount due from customers 11 164,549,671 - - Trade receivables 12 18,790,986 - - Other receivables, deposits and prepayments 13 6,608,990 1,000 - Amount due from subsidiaries 14 - 48,672,834 - Tax recoverable 1,168,000 2,060,947 - Dividend receivable - 8,300,000 -Deposits at licensed banks 15 36,191,276 - - Cash and bank balances 16 14,566,555 1,208,901 1

241,875,478 60,243,682 1

TOTALASSETS 277,108,921 80,116,962 1

EQUITYANDLIABILITIES

EQUITYShare capital 17 51,560,000 51,560,000 1Capital reserves 18 31,922,308 26,056,536 - Foreign exchange reserve 19 (54,719) - -Retained earnings/(Accumulated losses) 11,688,623 2,386,176 (7,020)

Equity attributable to shareholders of the Company 95,116,212 80,002,712 (7,019)Minority interest 3,625,402 - -

TOTALEQUITY 98,741,614 80,002,712 (7,019)

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

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41Annual Report 2008

Group Company Note 2008 2008 2007 RM RM RM

NON-CURRENTLIABILITIESTerm loan 20 5,523,131 - -Bonds 21 25,000,000 - - Deferred tax liabilities 10 2,863,526 - -

33,386,657 - -

CURRENTLIABILITIESBank overdrafts 22 7,660,133 - - Bills payable 22 9,432,511 - - Trade payables 23 95,248,306 - - Other payables and accruals 24 4,667,930 101,428 7,020 Term loan 20 281,117 - - Bonds 21 25,000,000 - - Provision for taxation 2,690,653 12,822 -

144,980,650 114,250 7,020

TOTALLIABILITIES 178,367,307 114,250 7,020

TOTALEQUITYANDLIABILITIES 277,108,921 80,116,962 1

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

BALANCE SHEETSasat31December2008(cont’d)

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42 Annual Report 2008

STATEMENTS OF CHANGES IN EqUITYfor the financial year ended 31 December 2008

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43Annual Report 2008

INCOME STATEMENTSfor the financial year ended 31 December 2008

Group Company 1.1.2008 1.1.2008 22.9.2007 to to to Note 31.12.2008 31.12.2008 31.12.2007 RM RM RM

Revenue 25 128,023,472 3,289,497 - Cost of sales and services 26 (102,508,140) - -

Gross profit 25,515,332 3,289,497 - Other operating income 6,700,930 75,092 - Administrative expenses (6,193,470) (103,302) (7,020)Other operating expenses (431,685) - -

Profit/(Loss) from operations 25,591,107 3,261,287 (7,020)Finance costs (4,204,013) - -

Profit/(Loss) before taxation 27 21,387,094 3,261,287 (7,020)Taxation 28 (3,773,113) (868,091) -

Net profit/(loss) for the year/period 17,613,981 2,393,196 (7,020)

Attributable to:Equity holders of the Company 17,561,415 2,393,196 (7,020)Minority interest 52,566 - -

Net profit/(loss) for the year/period 17,613,981 2,393,196 (7,020)

Earnings per ordinary share (sen) 29 15.34

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

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Group Company 1.1.2008 1.1.2008 22.9.2007 to to to 31.12.2008 31.12.2008 31.12.2007 RM RM RM

CASHFLOWSFROMOPERATINGACTIVITIESProfit/(Loss) before taxation 21,387,094 3,261,287 (7,020)Adjustments for:Amortisation of deferred expenditure 291,921 - - Amortisation of prepaid lease payments 174,112 - - Depreciation of property, plant and equipment 4,337,102 - - Foreign exchange gain - Realised (130,236) - - Gain on disposal of property, plant and equipment (12,000) - - Interest expenses 4,204,013 - - Interest income (861,826) - - Realisation of negative goodwill (5,241,341) - -

Operating profit/(loss) before working capital changes 24,148,839 3,261,287 (7,020)Changes in working capital:Amount due from customers (37,614,587) - - Receivables, deposits and prepayments (6,969,697) (3,290,497) - Payables and accruals 9,737,964 94,408 7,020 Amount due to subsidiaries - (48,672,834) -

Cash used in operations (10,697,481) (48,607,636) - Interest paid (4,204,013) - - Interest received 861,826 - - Tax paid (4,580,425) - -

Net cash used in operating activities (18,620,093) (48,607,636) -

CASHFLOWSFROMINVESTINGACTIVITIESPurchase of property, plant and equipment (1,579,980) - - Proceeds from disposal of property, plant and equipment 2,206,600 - - Payment for land lease (4,249,443) - - Acquisition of subsidiaries - (net cash received) (Note A) 41,740,679 - -

Net cash generated from investing activities 38,117,856 - -

CASHFLOWSFROMFINANCINGACTIVITIESProceeds from issue of shares 52,376,000 52,376,000 1 Payment of listing expenses (2,559,464) (2,559,464) - Pledged deposits of a subsidiary placed with licensed banks (25,000,000) - -Proceeds from shares subscription of minorities of subsidiary 2,880,701 - -Repayment of term loan (2,885,914) - - Payment of hire purchase instalments (1,337,549) - -Repayment of bonds (25,000,000) - -

Net cash (used in)/generated from financing activities (1,526,226) 49,816,536 1

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

CASH FLOW STATEMENTSfor the financial year ended 31 December 2008

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45Annual Report 2008

Group Company 1.1.2008 1.1.2008 22.9.2007 to to to 31.12.2008 31.12.2008 31.12.2007 RM RM RM

Net increase in cash and cash equivalents 17,971,537 1,208,900 1Effects of exchange rate changes 126,160 - - Cash and cash equivalents: At beginning of year/period 1 1 -

At end of year/period (Note B) 18,097,698 1,208,901 1

NotestotheCashFlowStatements:A. Summaryofnetassetsacquired Group 1.1.2008 to 31.12.2008 RM

Property, plant and equipment 22,973,475 Prepaid land lease 10,835,186 Goodwill on consolidation 54,952 Deferred expenditure 1,017,176 Receivables 18,202,895 Amount due from customers 126,935,084 Tax recoverable 320,124 Deposits at licensed banks 44,372,841 Cash and bank balances 11,408,006 Payables (90,005,612) Bank overdrafts (14,040,168) Borrowings (19,818,568) Provision for taxation (2,665,829) Bonds (75,000,000) Amount due to Directors (7,756) Deferred taxation (887,888) Minority interests (652,578)

Net assets acquired 33,041,340 Negative goodwill credited to income statement (5,241,341)

Total cost of acquisition 27,799,999 Purchase consideration satisfied by issue of shares (27,799,999) Less: Cash and cash equivalents of subsidiaries acquired (41,740,679)

Net cash generated from acquisition of subsidiaries (41,740,679)

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

CASH FLOW STATEMENTSfor the financial year ended 31 December 2008 (cont’d)

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46 Annual Report 2008

NotestotheCashFlowStatements(cont’d):B. Cashandcashequivalents Group Company 1.1.2008 1.1.2008 22.9.2007 to to to 31.12.2008 31.12.2008 31.12.2007 RM RM RM

Deposits with licensed banks (Note 15) 36,191,276 - - Cash and bank balances (Note 16) 14,566,555 1,208,901 1

50,757,831 1,208,901 1 Less: Bank overdrafts (7,660,133) - - Portion of deposits for repayment of bonds within 12 months (25,000,000) - -

18,097,698 1,208,901 1

C. Analysisofissuanceofsharecapital Group Company 1.1.2008 1.1.2008 22.9.2007 to to to 31.12.2008 31.12.2008 31.12.2007 RM RM RM

Cash 52,376,000 52,376,000 1 Acquisition of subsidiaries 27,799,999 27,799,999 -

80,175,999 80,175,999 1

CASH FLOW STATEMENTSfor the financial year ended 31 December 2008 (cont’d)

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47Annual Report 2008

NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2008

1. GENERAL INFORMATION

The principal activity of the Company is that of investment holding. The principal activities of the subsidiaries are disclosed in Note 8 to the financial statements.

The Company is a public listed company, incorporated and domiciled in Malaysia and is listed on the Second Board of Bursa Malaysia Securities.

The registered office and principal place of business of the Company is located at 7th Floor, Tower Block, Plaza Dwi Tasik, No. 21, Jalan Sri Permaisuri, Bandar Sri Permaisuri, 56000 Cheras, Kuala Lumpur.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 22 April 2009.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements of the Group and the Company have been prepared in accordance with the applicable Approved Accounting Standards for entities other than private entities issued by the Malaysian Accounting Standards Board and provision of the Companies Act, 1965 in Malaysia.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 5 to the financial statements.

The adoption of the relevant new or revised Financial Reporting Standards (“FRS”), that are effective for the financial year beginning on or after 1 January 2008 and have been applied in preparing these financial statements are as follows:

FRSs Effectivedate

FRS 107 Cash Flow Statements 1 July 2007 FRS 111 Construction Contracts 1 July 2007 FRS 112 Income Taxes 1 July 2007 FRS 118 Revenue 1 July 2007 Amendment The Effects of Changes in Foreign Exchange Rates to FRS 121 - Net Investment in a Foreign Operation 1 July 2007 FRS 137 Provisions, Contingent Liabilities and Contingent Assets 1 July 2007

Standards effective for the financial year beginning on or after 1 January 2008 but not relevant for the Groups’ operations are as follows:

FRSs/ICInterpretations Effectivedate

IC Interpretation 1 Changes in Existing Decommissioning, Restoration 1 July 2007 and Similar Liabilities IC Interpretation 2 Member’s Shares in Co-operative Entities and Similar Instruments 1 July 2007 IC Interpretation 5 Rights to Interests arising from Decommissioning, 1 July 2007 Restoration and Environmental Rehabilitation Funds IC Interpretation 6 Liabilities arising from Participating in a Specific Market 1 July 2007 - waste Electrical and Electronic Equipment

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2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (cont’d)

FRSs/ICInterpretations(cont’d) Effectivedate

IC Interpretation 7 Applying the Restatement Approach under l FRS129 2004 1 July 2007 Financial Reporting in Hyperinflationary Economies IC Interpretation 8 Scope of FRS 2 1 July 2007 FRS 120 Accounting for Government Grants and Disclosure of 1 July 2007 Government Assistance FRS 134 Interim Financial Reporting 1 July 2007

The adoption of the above FRSs/IC Interpretation does not have significant financial impact on the Groups’ except as disclosed in the Notes to the financial statements.

3. FINANCIAL RISK MANAGEMENT POLICIES

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its risks. The Group operates within guidelines that are approved by the Board and the Group’s policy is not to engage in speculative transactions.

The main areas of financial risks faced by the Group and the policy in respect of the major areas of treasury activity are set out as follows:

a. Interestraterisk The Group minimises its interest rate risk exposure by relying mainly on fixed rate borrowing. Financing

needs are assessed regularly and their utilisations are constantly monitored. Approval from the Board of Directors is sought for any revision or addition on financing facilities. The investments in financial assets, is deposits placed with licensed bank, are short term in nature and not held for speculative purposes.

b. Creditrisk The credit risk is controlled by the application of credit approvals, limits and monitoring procedures to

ensure that only reasonable credit-worthy customers are accepted. The Group’s normal credit term ranges from 30 to 90 days except for related companies, which are not subject to credit terms.

c. Liquidity and cash flow risks The Group actively manages its debt maturity profile, operating cash flows and the availability of funding

so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash equivalent to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities of a reasonable level to its overall debt position.

d. Foreigncurrencytransactionsandtranslation The Group incurs currency exposure mainly on trade transactions with its major customers and suppliers.

The Group has, to significant extent, transferred the risk to the suppliers for payment in foreign currency by fixing the exchange rate at the point of invoicing by the suppliers.

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

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49Annual Report 2008

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements.

a. Accountingconvention The financial statements of the Group and the Company are prepared under the historical cost convention

unless otherwise indicated in the other significant accounting policies.

b. Basisofconsolidation Subsidiaries The consolidated financial statements include the financial statements of the Company and all its

subsidiaries. Subsidiaries are those companies in which the Group has a long term equity interest and where it has power to exercise control over the financial and operating policies so as to obtain benefits therefrom.

Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results of the subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. The assets and liabilities of a subsidiary are measured at their fair values at the date of acquisition and these values are reflected in the consolidated balance sheet. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired at the date of acquisition is reflected as goodwill – See Note 4(c) below. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

Intragroup transactions, balances and any unrealised income and expenses arising from intragroup transaction, are eliminated on consolidation and the consolidated financial statements reflect external transactions only.

The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s share of its net assets together with any unamortised balance of goodwill and exchange differences which were not previously recognised in the consolidated income statement.

Minority interest is measured at the minorities’ share of the post acquisition fair values of the identifiable assets and the liabilities of the acquiree. They are presented in the consolidated balance sheet within equity, separately from the parent shareholders’ equity, and are separately disclosed in the consolidated income statements.

c. Goodwill Goodwill/(negative goodwill) arises on the acquisition of subsidiaries, associates and joint ventures.

Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree.

Goodwill is measured at cost and is tested for the impairment at least annually or more frequently when there is objective evidence of impairment. When the excess is negative (negative goodwill), it is recognised immediately in the income statements.

Goodwill is allocated to cash-generating units and is tested annually for impairment or more frequently if events or changes in circumstances indicate that it might be impaired.

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

c. Goodwill(cont’d) In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount

of the investment. The entire carrying amount of the investment is tested for impairment when there is objective evidence of impairment.

d. Property,plantandequipment Property, plant and equipment except for mould, dies and jigs included under plant and machinery, held by

the Group and the Company are stated at cost less accumulated depreciation and impairment losses.

Depreciation is charged on a straight line basis to write off the cost of each asset over their estimated useful lives at the following annual rates:

Plant and machinery 20% Computers 20% Furniture and fittings and signboard 10% Office equipment 10% Motor vehicles 20% Renovation 20% Telecommunication equipment 20% Vessel and equipment on vessel 10% - 33.3%

e. Amountduefromcustomers Amount due from contract customers represents the gross unbilled amount expected to be collected from

customers for contract work performed to date. It is measured at cost plus profit recognised to date less progress billing and recognised losses. Cost includes all expenditure related directly to specific projects and an allocation of fixed and variable overheads incurred in the Group’s contract activities based on normal operating capacity.

Where the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the balance sheet date. The stage of completion is determined by survey of work done. Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that is probable will be recoverable. Contract costs are recognised as expenses in the year in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is

recognised as an expense immediately. When costs incurred on construction contracts plus recognised profits (less recognised losses) exceeds progress billings, the balance is shown as amount due from customers. When progress billings exceed costs incurred plus recognised profits (less recognised losses), the balance is shown as amount due to customers.

f. Cashandcashequivalents Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, bank overdrafts and

short term, highly liquid investment that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purpose of the cash flow statements, cash and cash equivalents are presented net of bank overdrafts and exclude portion of deposits for repayment of bonds within 12 months.

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

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

g. Tradeandotherreceivables Receivables are carried at anticipated realisable value. An estimate is made for doubtful debts based on

a review of all outstanding amounts at the financial year end. Bad debts are written off during the financial year in which they are identified.

h. Lease Leases of property, plant and equipment where the Company assumes substantially all the benefits and

risk of ownership are classified as finance leases.

Finance leases are capitalised at the estimated present value of the underlying lease payments at the date of inception. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance charge is charged to the income statement over the lease year.

Property, plant and equipment acquired under finance lease contracts is depreciated over the useful life of the asset in accordance with the policy set out in Note 4(d). If there is no reasonable certainty that the ownership will be transferred to the Company, the asset is depreciated over the shorter of the lease term and its useful life.

Operating leases are leases of assets under which all risks and benefits of ownership are effectively

retained by lessor. Payments made under operating leases are charged to the income statement on a straight line basis over the year of the lease.

Leasehold land that normally has an indefinite economic life and title is not expected to pass to the Group by the end of the lease term is treated as operating lease.The payment made on entering into or acquiring a leasehold land is accounted for as prepaid land lease payment and is amortised over the respective lease term ranging from 50 to 60 years.

i. Impairmentofassets The carrying values of assets are reviewed for impairment when there is an indication that the assets might

be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount is the higher of net realisable value and its value in use, which is measured by reference to discounted future cash flows. Recoverable amounts are estimated for individual assets, or if it is not possible, for the cash-generating unit.

An impairment loss is charged to the income statements immediately.

Subsequent increase in the recoverable amount of an asset is treated as reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income statement immediately.

j. Tradeandotherpayables Trade payables are stated at the fair value of the consideration to be paid in the future for good and

services received.

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

k. Incometax Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date

between the tax bases of assets and liabilities and their carrying amounts in the financial amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that the taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax is measured at the tax rates are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognises direct to equity, in which case the deferred tax is also charged or credited directly to equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill. Income tax on the profit or loss for the year comprises current and deferred tax.

Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date.

l. Deferredexpenditures Deferred expenditures are accounted for as follows:

i. Cost for issuance of Sukuk Musyarakah of a subsidiary is amortised evenly throughout the Sukuk Musyarakah’s tenure.

ii. All expenditure in connection to the dry-docking of the vessel is capitalised as dry-docking expenditure and is amortised over the dry-docking cycle of 3 years. The amortisation commences when the vessel is ready for its intended use.

m. Revenuerecognition i. Revenuefromconstructioncontract Revenue from construction contracts is accounted for by the stage of completion method as described

in Note 4(e).

ii. Charterhireofvessel Charter hire of vessel is recognised when the services are rendered and is computed at the contracted

daily rate. In the event invoices are yet to be issued at year end, the revenue is accrued to the extent of the services rendered at the balance sheet date.

n. Foreigncurrencies i. Foreigncurrencytranslation Transactions in foreign currencies during the financial year are converted into Ringgit Malaysia at

the rates of exchange ruling on the transaction dates unless hedged by forward foreign exchange contracts, in which case the rates specified in such forward contracts are used. Monetary assets and liabilities in foreign currency at the balance sheet date are translated into Ringgit Malaysia at rates of exchange approximately those ruling on that date. Non-monetary assets and liabilities in foreign currency at the balance sheet date are translated into Ringgit Malaysia at rates of exchange approximating those ruling on that date of the transactions. Exchange gains or losses are dealt with in the income statements.

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

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

n. Foreigncurrencies(cont’d) i. Foreigncurrencytranslation(cont’d) The principal closing rates used in translation of foreign currency amounts were as follows:

Year-endRates 2008 2007 RM RM

1 US Dollar 3.46 n/a 1,000 Rupiah 0.32 n/a

ii. Foreignoperations The results and financial position of foreign operations that have a functional currency different from

the presentation currency (RM) of the consolidated financial statements are translated into RM as follows:

• Assets and liabilities for each balance sheet presented are translated at closing rate prevailing at the balance sheet date;

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

• All resulting exchange differences are taken to the foreign currency translation reserve within equity.

o. Employee benefits i. Short term benefits Wages, salaries, allowances, bonuses and social security contributions are recognised as an expense

in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences.

ii. Defined contribution plan As required by law, companies in Malaysia make contributions to the state pension scheme, the

Employees Provident Fund. Such contributions are recognised as an expense in the income statement as incurred. Once the contributions have been paid, the Group has no further payment obligations.

p. Segmentreporting Segment reporting is presented for enhanced assessment of the Group’s risks and returns. A business

segment is a group of assets and operations engaged in providing products or services that subject to risk and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that is subject to risks and returns that are different from those operating in other economic environments.

Segment revenue, expense, assets and liabilities are those amounts resulting from operating activities of a segment that are directly attributable to the segment and a relevant portion that can be allocated on a reasonable basis to the segment.

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54 Annual Report 2008

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

p. Segmentreporting(cont’d) Segment revenue, expense, assets and liabilities are determined before intra-group balances and

intragroup transactions are eliminated as part of the consolidation process, except to the extent that such intra group balances and transactions are between group enterprises within a single segment.

q. Financialinstruments Financial instruments carried on the balance sheet include cash and bank balances, receivables and

payables. The particular recognition methods adopted are disclosed in the individual accounting policy statements associated with each item.

r. Contingentliabilities The Group does not recognise a contingent liability but discloses its existence in the financial statements.

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare case where there is a liability that cannot be recognised because it cannot be measured reliably.

5. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of financial statements requires management to exercise judgement in the process of applying the accounting policies. It also requires the use of accounting estimates and assumptions that affect reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the balance sheet date, and reported amounts of income and expenses during the financial year.

Although these estimates are based on management’s best knowledge of current events and actions, historical experiences and various other factors, including expectations for future events that are believed to be reasonable under the circumstances, actual results may ultimately differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised and in any future years affected.

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

i. Constructioncontracts The Group recognised revenue based on percentage of completion method. The stage of completion is

measured by reference to the contract construction costs incurred to date to the estimated total costs. Significant judgement is required in determining the stage of completion, the extent of the contract costs incurred, the estimated total revenue and contract costs, as well as the recoverability of the construction contracts activities. Total revenue also includes an estimation of the recoverable variation works that are recoverable from the customers. In making the judgement, the Company relied on past experience and work of in-house specialists.

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

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55Annual Report 2008

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

ii. Incometax There are certain transactions and computations for which the ultimate tax determination may be different

from the initial estimate. The Group recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made.

iii. Deferredtaxassets Deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available

against which the temporary differences can be utilised. This involves judgment regarding the future financial performance of the particular entity in which the deferred tax asset has been recognised.

iv. Depreciationofvesselsandequipmentonvessel The cost of vessel and equipment on vessel are depreciated on straight-line basis over the assets’ useful

life. Management estimates the useful lives of the Group’s vessel to 10 years and equipment on vessel to be between 3 to 5 years. These are common life expectancies applied in the shipping industry. Changes in the expected level of usage could impact the economic useful lives and residual values of these assets, therefore future depreciation charges could be revised.

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56 Annual Report 2008

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ed

d

epre

ciat

ion

A

cqui

sitio

n of

sub

sidi

arie

s 5

,834

,070

1

41,8

66

791

,221

8

60,2

51

977

,864

1

70,3

29

1,9

71,9

84

-

10,

747,

585

C

harg

e fo

r the

yea

r 1

,427

,617

3

4,26

8

219

,944

1

26,6

49

217

,816

4

1,28

8

2,2

69,5

20

- 4

,337

,102

Dis

posa

l -

-

-

(1

00,0

00)

-

-

-

-

(100

,000

)

Fore

ign

exch

ange

adj

ustm

ent

-

-

(16)

-

(3

02)

-

-

-

(318

)

A

t end

of y

ear

7,2

61,6

87

176

,134

1

,011

,149

8

86,9

00

1,1

95,3

78

211

,617

4

,241

,504

-

1

4,98

4,36

9

N

etb

ook

valu

e

At 3

1.12

.200

8 3

,366

,802

3

00,3

70

670

,776

1

12,9

70

388

,618

7

6,09

0

12,

859,

380

-

1

7,77

5,00

6

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

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7. PREPAID LAND LEASE Group 2008 RM

Acquisition of subsidiaries 10,835,186 Add: Additions 4,249,443 Less: Amortisation (174,112)

At end of year 14,910,517

The properties are charged as security for banking facilities as referred to Note 20 and Note 22 to the financial statements.

8. INVESTMENT IN SUBSIDIARIES Company 2008 RM

Unquoted shares, at cost 27,799,999 Less: Dividends out of pre-acquisition profits (7,926,719)

19,873,280

The subsidiary (including sub-subsidiaries) of the Company are as follows:

Countryof Percentageof Name incorporation equityheld(%) Principalactivities 2008

Vastalux Sdn. Bhd. Malaysia 100 Provision of offshore and onshore hook-up and commissioning, offshore topside and onshore facilities maintenance services, offshore and onshore minor fabrication works and charter of marine vessel.

SubsidiariesofVSB Vastalux Fabricators Sdn. Bhd. Malaysia 100 Workshop and fabrications job Vastalux Onshore Services Malaysia 100 Onshore construction of oil and gas plants Sdn. Bhd. Vastalux Capital Sdn. Bhd. Malaysia 100 As a special purpose entity for funding

activities Vastalux E&C Sdn. Bhd. Malaysia 100 Top side major maintenance works Vastalux Offshore Services Malaysia 100 Hook-up and commissioning works Sdn. Bhd. Vastalux Marine Sdn. Bhd. Malaysia 100 Dormant Merak Utama Sdn. Bhd. Malaysia 75 Under water inspection for structural integrity PT Vastalux Energy * Indonesia 80 Provision of offshore and onshore oil and

gas supporting services in Indonesia V-Factor Sdn. Bhd. Malaysia 100 Charter of marine vessel Vastalux-Anpha Company Vietnam 57 Dormant Limited *

* Audited by firms other than Wan Nadzir & Co.

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9. DEFERRED EXPENDITURE

Group Dry-docking Bondissue Total expenses expenses Others 2008 RM RM RM RM

Acquisition of subsidiaries 326,781 670,726 19,669 1,017,176 Less: Amortisation (104,570) (167,682) (19,669) (291,921)

At end of year 222,211 503,044 - 725,255

10. DEFERRED TAX (ASSETS)/LIABILITIES

Group 2008 RM

Acquisition of subsidiaries 887,888 Recognised in the income statement (Note 28) 206,579 Foreign exchange adjustment 1,346

At end of year 1,095,813

Presented after appropriate offsetting as follows: Deferred tax assets (1,767,713) Deferred tax liabilities 2,863,526

1,095,813

Deferred tax assets and liabilities are offset where there is a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred taxes relate to the same tax authority. The components and movements in deferred tax (assets)/liabilities during the financial year prior to offsetting are as follows:

DeferredTaxAssetsoftheGroup Accrued Capital Business revenue allowance losses Total RM RM RM RM

Acquisition of subsidiaries - - (32,112) (32,112) Recognised in the income statement (1,097,300) (665,708) 26,061 (1,736,947) Foreign exchange adjustment - - 1,346 1,346

At 31 December 2008 (1,097,300) (665,708) (4,705) (1,767,713)

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

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10. DEFERRED TAX (ASSETS)/LIABILITIES (cont’d)

DeferredTaxLiabilitiesoftheGroup Property, Accrued plantand Deferred revenue equipment expenditure Total RM RM RM RM

Acquisition of subsidiaries - 831,700 88,300 920,000 Recognised in the income statement 1,281,000 692,826 (30,300) 1,943,526

At 31 December 2008 1,281,000 1,524,526 58,000 2,863,526

11. AMOUNT DUE FROM CUSTOMERS

Group 2008 RM

Cost incurred to date 521,495,585 Add: Attributable profits 103,385,386

624,880,971 Less: Progress billings (460,331,300)

Amount due from customers 164,549,671

Group 2008 RM

Retention sums on contracts, included within trade receivables (Note 12) 512,923

Included in contract cost are the following charges made during the financial year:

Group 2008 RM

Amortisation of deferred expenditure 104,570 Depreciation of property, plant and equipment 2,269,520 Rental of machinery and equipment 10,697,147 Rental of motor vehicles 13,867 Rental of yard 4,033,321 Staff costs (Note 31) 21,529,224

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12. TRADE RECEIVABLES Group 2008 RM

Trade receivables 18,278,063 Retention sums on contracts (Note 11) 512,923

18,790,986

The currency exposure profile of the trade receivables is as follows:

Group 2008 RM

RM 17,163,067 USD 1,627,919

18,790,986

13. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

Group Company 2008 2008 2007 RM RM RM

Other receivables 5,084,704 - - Deposits 363,819 1,000 - Prepayments 1,160,467 - -

6,608,990 1,000 -

The currency exposure profile of the other receivables, deposits and prepayments are as follows:

Group Company 2008 2008 2007 RM RM RM

- RM 5,439,950 1,000 - - RUPIAH 1,086,777 - - - USD 82,263 - -

6,608,990 1,000 -

14. AMOUNT DUE FROM SUBSIDIARIES

Company The amount due from subsidiaries are unsecured, interest-free and have no fixed term of repayment.

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

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15. DEPOSITS AT LICENSED BANKS

Group i. Certain deposits with licensed financed institutions are maintained in designated accounts and can be utilised

in accordance to the terms of Sukuk Musyarakah referred to in Note 21 to the financial statements.

ii. The fixed deposits are pledged for banking facilities of the Group.

iii. The weighted average effective interest rate of deposits at the balance sheet date was 3.70% to 4.50% .

16. CASH AND BANK BALANCES

Group Cash and bank balances are maintained in designated accounts and can be utilised in accordance to the terms

of Sukuk Musyarakah as referred to Note 21 to the financial statements.

The currency exposure profile of the cash and bank balances is as follows:

Group Company 2008 2008 2007 RM RM RM

- RM 11,493,514 1,208,901 1 - RUPIAH 139,370 - - - USD 2,933,671 - -

14,566,555 1,208,901 1

17. SHARE CAPITAL

Group Company 2008 2008 2007 RM RM RM

Authorised: Ordinary shares of RM0.25 each At beginning of year 100,000,000 100,000,000 100,000 Created during year/period - - 99,900,000

At end of year/period 100,000,000 100,000,000 100,000,000

Issued and fully paid-up: Ordinary shares of RM0.25 each At beginning of year 1 1 * Issued during the year/period 51,559,999 51,559,999 *

At end of year/period 51,560,000 51,560,000 1

* Denotes RM0.50

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18. CAPITAL RESERVES

Group Company 2008 2008 2007 RM RM RM

Share Premium 26,056,536 26,056,536 - Other reserve - Note (i) 5,865,772 - -

31,922,308 26,056,536 -

Note(i) The reserve is in respect of net dividends out of pre-acquisition profits.

19. FOREIGN EXCHANGE RESERVE

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of a foreign operation whose functional currency is different from that of the Groups’ presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Groups’ net investment in foreign operation, where the monetary items is denominated in either the functional currency of the reporting entity or the foreign operation.

20. TERM LOAN

Group 2008 RM

Payable within 1 year 281,117 Payable between 1 year to 2 years 442,844 Payable after 2 years but not later than 5 years 1,733,297 Payable after 5 years 3,346,990

5,804,248

Presented as: Current liabilities 281,117 Non current liabilities 5,523,131

5,804,248

The term loan is secured by the following:

a. Legal charges over properties belonging to the Group; and

b. Joint and several guarantee by certain Directors of the Group.

The weighted average borrowing cost was 8.49% per annum.

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

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21. BONDS

On 23 December 2005, Sukuk Musyarakah of RM100 million nominal value were issued by a subsidiary, VCSB.

Issued in 4 series, the principal terms of the Sukuk Musyarakah are as follows:

a. Tenure – multiple maturities ranging from 2 years to 5 years.

b. Coupon/profit evaluation rate – from 4.75% to 5.75% per annum.

c. The bond is secured as follows:

i. Memorandum of charge over the Proceeds Account (under the name of the holding company) and Designated Accounts pertaining to the issuance of Sukuk Musyarakah.

ii. Mortgage in respect of a vessel owned by the Company or a related company.

The maturity of Sukuk Musyarakah is as follows:

Group 2008 RM

Payable within 1 year 25,000,000 Payable after 1 year but not later than 2 years 25,000,000

50,000,000

Presented as: Current liabilities 25,000,000 Non current liabilities 25,000,000

50,000,000

The weighted average effective interest rate at the balance sheet date for the Sukuk Musyarakah is 5.35% per annum.

22. BANK OVERDRAFTS AND BILLS PAYABLE

Group Bank overdrafts and bills payable facilities are secured as follows:

a. Fixed deposits of the Group;

b. Legal charges over properties belonging to the Group; and

c. Joint and several guarantee by certain Directors of the Group.

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22. BANK OVERDRAFTS AND BILLS PAYABLE (cont’d)

Group(cont’d) The facilities bear interest at the following rates per annum:

Group 2008 RM

Bank overdrafts 8.75%-9.00% Bills payable 8.00%

23. TRADE PAYABLES

Group Trade payables include accrued cost amounted to RM55,377,936.

The currency exposure profile of the trade payables are as follows:

Group 2008 RM

- RM 93,049,414 - USD 2,198,892

95,248,306

24. OTHER PAYABLES AND ACCRUALS Group Company 2008 2008 2007 RM RM RM

Other payables 921,706 18,428 7,020 Accruals 3,746,224 83,000 -

4,667,930 101,428 7,020

The currency exposure profile of the other payables and accruals are as follows:

Group Company 2008 2008 2007 RM RM RM

- RM 4,247,610 101,428 7,020 - RUPIAH 116,733 - - - USD 303,587 - -

4,667,930 101,428 7,020

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

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25. REVENUE

Group Company 2008 2008 2007 RM RM RM

Contract income from oil and gas activities 184,827,722 - - Charter hire of vessel 1,991,461 - - Dividend income - 3,289,497 -

186,819,183 3,289,497 - Less: Pre-acquisition (prior to 30 April 2008) (58,795,711) - -

Post-acquisition 128,023,472 3,289,497 -

26. COST OF SALES AND SERVICES

Group Company 2008 2008 2007 RM RM RM

Contract cost from oil and gas activities 148,934,230 - - Charter hire of vessel 957,895 - -

149,892,125 - - Less: Pre-acquisition (prior to 30 April 2008) (47,383,985) - -

Post-acquisition 102,508,140 - -

27. PROFIT/(LOSS) BEFORE TAXATION

Profit/(Loss) before taxation has been arrived at after charging/(crediting):

Group Company 2008 2008 2007 RM RM RM

Auditors’ remuneration: - Statutory audit 88,500 10,000 1,000 - Non-statutory audit 1,000 1,000 - Amortisation of deferred expenditure 187,351 - - Amortisation of prepaid lease payment 174,112 - - Directors’ remuneration (Note 30) 437,584 73,000 - Depreciation of property, plant and equipment 2,067,582 - - Interest on: - Bank overdrafts 477,029 - - - Bills payable 461,942 - - - Bonds 2,763,744 - - - Finance creditors 34,930 - - - Term loan 466,368 - -

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27. PROFIT/(LOSS) BEFORE TAXATION (cont’d)

Group Company 2008 2008 2007 RM RM RM

Interest income (861,826) - - Foreign exchange gain - Realised (130,236) - - Gain on disposal of property, plant and equipment (12,000) - - Rental of: - Motor vehicles 10,683 - - - Premises 656,254 - - Rental income (80,000) - - Staff costs (excluding Directors’ remuneration) (Note 31) 5,040,010 - - Realisation of negative goodwill (5,241,341) - -

28. TAXATION

Group Company 2008 2008 2007 RM RM RM

Currenttaxexpense Malaysian: - Current year 4,178,383 868,091 - - Prior year (611,849) - -

Total current tax 3,566,534 868,091 -

Deferredtaxexpense(Notes10) Relating to (reversal)/origination of temporary differences 102,449 - - Underprovision in prior year/period 104,130 - -

Total deferred tax 206,579 - -

Tax expense for the year/period 3,773,113 868,091 -

Provision for taxation is determined by applying the Malaysian tax rate of 26% on chargeable income. However, this amount has yet to be agreed by the Inland Revenue Board of Malaysia.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

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28. TAXATION (cont’d)

Group Company 2008 2008 2007 RM RM RM

Profit/(Loss) before taxation 21,387,094 3,261,287 (7,020)

Income tax at 26%/27% 5,560,644 847,935 (1,895) Tax effects in respect of: Non deductible expenses 539,728 20,156 - Realisation of deferred tax benefit previously not recognised (565,500) - - Deferred tax benefit not recognised 141,373 - 1,895 Change in tax rate (35,112) - - Different tax rates in other countries 2,448 - - Non taxable income (1,362,749) - -

4,280,832 868,091 - (Over)/Underprovision in respect of previous year Income tax (611,849) - - Deferred taxation 104,130 - -

Tax expense for the year 3,773,113 868,091 -

29. EARNINGS PER ORDINARY SHARE (SEN)

a. The earnings per share is calculated by dividing the net profit for the financial year attributable to ordinary equity holders by the weighted average number of ordinary shares in issue during the financial year as follow:

Group 2008 RM

Profit attributable to ordinary equity holders of the Company 17,561,415

Weighted average number of ordinary shares in issue 114,473,138

Earnings per share (sen) 15.34

b. The diluted earnings per share for the Group were not presented as there were no dilutive potential ordinary shares during the financial year.

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30. DIRECTORS’ REMUNERATION

Group Company 2008 2008 2007 RM RM RM

DirectorsoftheCompany Executive Director Salaries 364,584 - - Non-Executive Director Fees 70,000 70,000 - Others 3,000 3,000 -

Total remuneration of Directors of the Company (Note 27) 437,584 73,000 -

The following is the remuneration of (other) directors of a subsidiary:

Group Company 2008 2008 2007 RM RM RM

Fees 12,000 - -

31. STAFF COSTS

Group 2008 RM

Staff costs - total 26,569,234 Amount directly charged to contract cost (Note 11) (21,529,224)

Amount charged to administrative cost 5,040,010

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

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32. SEGMENTAL INFORMATION

The Group operates mainly in Asia. In determining the geographical segments of the Group, revenue is based on the geographical location of customers. Total assets and capital expenditure are based on the geographical locations of the assets.

Capital Total Revenue expenditure assets RM RM RM

2008 Malaysia 127,504,203 1,553,343 268,025,401 Indonesia 519,269 21,184 1,859,934 Vietnam - 5,453 7,223,586

128,023,472 1,579,980 277,108,921

The financial information by industrial segment is not presented as the Group consider to operate in one business segment.

33. CONTINGENT LIABILITIES

Group 2008 RM

Being a claim from a third party in dispute # 2,624,243

# The abovementioned claim is being handled by the Group’s solicitors and based on the facts and merits of the abovementioned suits, it is the Directors’ opinion that the Group has sufficient grounds to resist the Plantiff’s claim.

34. COMMITMENT

Group 2008 RM

Approved and contracted for: Commitment to purchase a piece of land 8,304,000

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35. SIGNIFICANT RELATED PARTY DISCLOSURE

During the financial year, significant related party transactions other than those disclosed elsewhere in the financial statements are as follows:

Group 2008 RM

Transactions Rental income received from a Director 80,000

36. FINANCIAL INSTRUMENTS

Financialriskmanagementobjectivesandpolicies The Group’s financial risk management policy seeks to ensure that adequate financial resources are available

for the development of the Group’s businesses whilst managing its risks. The Group operates within guidelines that are approved by the Board and the Group’s policy is not to engage in speculative transactions.

Exposure to credit, liquidity, interest rate and foreign currency risks arises in the normal course of the Group and the Company’s business. The Board reviews and agrees policies for managing each of these risks and they are summarised below:

Creditrisk The Group has significant exposure to a few large customers and as such a concentration of credit risks. The

potential for default is however expected to be minimal as the customers are of high creditworthiness and of international reputation.

Foreigncurrencyrisk The Group and the Company incur foreign currency risk on revenue and purchases that are denominated in a

currency other than Ringgit Malaysia.

The currency giving rise to this risk is primarily US dollar.

The Group and the Company do not have a fixed policy to hedge their revenue and purchases in forward contracts. However, the exposure to foreign currency risk is monitored from time to time by management.

Interestraterisk The Group and the Company borrow for construction projects and for working capital purposes from banks and

financial institutions, and have fixed deposits placed with licensed banks. Interest rate exposure is managed through the use of fixed and floating rate debts.

Effectiveinterestratesandrepricinganalysis In respect of interest-earning financial assets and interest-bearing financial liabilities, the following table indicates

their average effective interest rates at the balance sheet date and the periods in which they mature, or if earlier, reprice.

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

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36. FINANCIAL INSTRUMENTS (cont’d)

Effectiveinterestratesandrepricinganalysis(cont’d)

Effective Lessthan 1to5 interest rate 1 financial financial Group perannum Total year years % RM RM RM

2008 Financialassets Deposits at licensed banks 3.70 36,191,276 36,191,276 -

Financialliabilities Bank overdrafts 8.75 - 9.00 7,660,133 7,660,133 - Bills payable 8.00 9,432,511 9,432,511 - Term loans 8.49 5,804,248 281,117 5,523,131 Bonds 5.35 50,000,000 25,000,000 25,000,000

72,896,892 42,373,761 30,523,131

Fairvalues The carrying amounts of all financial assets and liabilities of the Group and the Company at the balance sheet

date approximate their fair values.

37. SIGNIFICANT EVENTS

a. On 30 April 2008, the Company acquired the entire issued and paid up capital of Vastalux Sdn. Bhd. comprising 5,000,000 ordinary shares of RM1.00 each for a total purchase consideration of RM27,799,999 satisfied via issuance of the Company’s 111,199,996 new ordinary shares of RM0.25 each at par value. Consequently, the Company increased its issued and paid up capital from RM1 to RM27,800,000.

b. On 30 May 2008, the Company increased its paid-up capital from RM27,800,000 to RM37,252,000 by the issuance of Non-Renounceable rights issue of 37,808,000 new ordinary shares of RM0.25 each, on the basis of approximately 34 new ordinary shares for every 100 existing ordinary shares held.

c. On 8 September 2008, in conjunction with the Listing on the Second Board of Bursa Securities, the Company carried out the initial public offering of 90,232,000 ordinary shares of RM0.25 each comprising:

i. Public issue of 57,232,000 new ordinary shares of RM0.25 each consists as follows:

a. 12,000,000 new ordinary shares for application by the Malaysian Public;

b. 4,240,000 new ordinary shares for application by the eligible senior management, business associates, Directors and Promoters of the Vastalux Energy Berhad Group; and

c. 40,992,000 new ordinary shares for placement to selected investors.

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37. SIGNIFICANT EVENTS (cont’d)

ii. Offer for sale of 26,000,000 ordinary shares of RM0.25 each available for placement to selected investors at RM0.75 per ordinary share.

iii. Restricted offer for sale of 7,000,000 ordinary shares of RM0.25 each available for application by the eligible employees of the Vastalux Energy Berhad group and its subsidiaries at RM0.75 per ordinary shares.

d. On 12 September 2008, the Company was officially listed on the Second Board of the Bursa Malaysia.

38. DIVIDENDS

At the forthcoming Annual General Meeting, a first and final dividend in respect of the financial year ended 31 December 2008 of 1.0 sen per ordinary share less 26% taxation, will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December 2009.

39. COMPARATIVE INFORMATION

a. The comparative figures for the Company are for the financial period from 22 September 2007 (date of incorporation) to 31 December 2007.

b. No comparative figures for the Group are given as this is the first year for which financial statements are prepared.

NOTES TO THE FINANCIAL STATEMENTS31December2008(cont’d)

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ANALYSIS OFSHAREHOLDINGS asat30April2009

Authorised share capital : RM 100,000,000

Issued and fully paid-up capital : RM 51,560,000

Class of share : ordinary shares of RM 0.25 each

Voting right by show of hand : one vote for any member

Voting right by poll : one vote for every shares held

ANALYSIS BY SIZE OF SHARE HOLDINGS AS AT 30 APRIL 2009

No.of %of No.of %ofSizeofShareholdings ShareholdersShareholders Shares Shares

Less than 100 1 0.09 4 0.00

100 - 1,000 817 74.61 137,100 0.07

1,001 - 10,000 130 11.87 794,896 0.38

10,001 - 100,000 98 8.95 3,579,200 1.74

100,001 - less than 5% of the shares 45 4.11 60,228,243 29.20

5% and above of Issued shares 4 0.37 141,500,557 68.61

1,095 100.00 206,240,000 100.00

DIRECTORS’ SHAREHOLDINGS AS PER REGISTER OF DIRECTORS’ SHAREHOLDINGAS AT 30 APRIL 2009

INFORMATION OF SUBSTANTIAL SHAREHOLDERS AS AT 30 APRIL 2009

No.of No.of SharesHeld SharesHeld Through Through TotalNo Name OwnName Nominees Shareholdings %

1 Mohamad Nor Bin Abdul Rashid 54,946,446 12,774,389 67,720,835 32.83 Registered with: KAF Nominees (Tempatan) Sdn Bhd

2 Nor Sabri Bin Hamzah 37,861,554 8,802,356 46,663,910 22.63

3 KAF Investment Bank Berhad 35,918,168 - 35,918,168 17.42 As Beneficial Owner

Total 128,726,168 21,576,745 150,302,913 72.88

NameNo.ofSharesHeldThrough

OwnName

No.ofSharesheld

throughNominees

TotalShareholdings %

1 Tan Sri Dato’ Zainol Abidin Bin Abd Rashid 90,000 - 90,000 0.042 Dato’ Mohamed Salleh Bin Bajuri 80,000 - 80,000 0.043 Munawir Bin Mohammad 70,000 - 70,000 0.034 Mohamad Nor Bin Abdul Rashid 54,946,446 12,774,389 67,720,835 32.845 Nor Sabri Bin Hamzah 37,861,554 8,802,356 46,663,910 22.636 Azman Bin Abd Ghafar - 3,923,255 3,923,255 1.90

Total 93,048,000 25,500,000 118,548,000 57.48

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ANALYSIS OF SHAREHOLDINGSasat30April2009(cont’d)

LIST OF TOP 30 SHAREHOLDERS AS AT 30 APRIL 2009

Name Share %

1 MOHAMAD NOR BIN ABDUL RASHID 54,946,446 26.64

2 NOR SABRI BIN HAMZAH 37,861,554 18.36

3 KAF INVESTMENT BANK BERHAD 35,918,168 17.42 AS BENEFICIAL OWNER

4 KAF NOMINEES (TEMPATAN) SDN BHD 12,774,389 6.19 KAF INVESTMENT BANK BERHAD FOR MOHAMAD NOR BIN ABDUL RASHID

5 RNZ INTEGRATED (M) SDN BHD 10,000,000 4.85

6 KAF NOMINEES (TEMPATAN) SDN BHD 8,802,356 4.27 KAF INVESTMENT BANK BERHAD FOR NOR SABRI BIN HAMZAH

7 TA SECURITIES HOLDINGS BERHAD 5,168,732 2.51 IVT (DDG)

8 BARNMIN ENTERPRISE SDN BHD 4,010,000 1.95

9 KAF NOMINEES (TEMPATAN) SDN BHD 3,923,255 1.90 KAF INVESTMENT BANK BERHAD FOR AZMAN BIN ABD GHAFAR

10 KAF TRUSTEE BERHAD 3,644,000 1.77 KAF FUND MANAGEMENT SDN BHD FOR KAF SEAGROATT & CAMPBELL BERHAD

11 NG HOCK GUAN 3,289,700 1.60

12 TASEC NOMINEES (TEMPATAN) SDN BHD 2,500,000 1.21 TA FIRST CREDIT SDN BHD FOR SAIFUL FAIZ BIN MOHD AZIZ @ AHMAD LATFI

13 EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD 2,104,400 1.02 PLEDGED SECURITIES ACCOUNT FOR ZAI IZZUDDIN SHAM BIN ZAINUDDIN SHAH (SFC)

14 RAGAYAH BINTI MOHD EUSOFF 2,000,000 0.97

15 VERTICAL SOURCE SDN BHD 1,494,600 0.73

16 TASEC NOMINEES (TEMPATAN) SDN BHD 1,412,500 0.69 TA FIRST CREDIT SDN BHD FOR A. BAKAR BIN A. WAHAB

17 KAF NOMINEES (TEMPATAN) SDN BHD 1,400,000 0.68 PLEDGED SECURITIES ACCOUNT FOR TENGKU ABDULLAH IBNI SULTAN HJ AHMAD SHAH (TE1113)

18 TASEC NOMINEES (TEMPATAN) SDN BHD 1,000,000 0.48 TA FIRST CREDIT SDN BHD FOR ANNUAR BIN TUMAR

19 ZAI IZZUDDIN SHAM BIN ZAINUDDIN SHAH 895,000 0.43

20 CHRISTIAAN MARINUS PRINCE 520,000 0.25

21 SAARI BIN AHMAD 500,000 0.24

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(789

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75Annual Report 2008

ANALYSIS OF SHAREHOLDINGSasat30April2009(cont’d)

LIST OF TOP 30 SHAREHOLDERS AS AT 30 APRIL 2009 (cont’d)

Name Share %

22 TASEC NOMINEES (TEMPATAN) SDN BHD 500,000 0.24 TA FIRST CREDIT SDN BHD FOR MOHD ZHAMRY BIN ABDUL MADZA

23 NEXT PETROLEUM SDN BHD 500,000 0.24

24 MERCSEC NOMINEES (TEMPATAN) SDN BHD 500,000 0.24 PLEDGED SECURITIES ACCOUNT FOR MOHD SHUKRY BIN PAUZI

25 KENANGA NOMINEES (TEMPATAN) SDN BHD 500,000 0.24 KENANGA CAPITAL SDN BHD FOR NOVA DOMINO SDN BHD

26 AZRI BIN ABDULLAH 500,000 0.24

27 WONG SIAH PING 490,000 0.24

28 KAF TRUSTEE BERHAD 360,000 0.17 KAF FUND MANAGEMENT SDN BHD FOR AHMAD BIN KADIS

29 KAF TRUSTEE BERHAD 360,000 0.17 KAF FUND MANAGEMENT SDN BHD FOR KHATIJAH BINTI AHMAD (DATUK)

30 AHMAD ASLAM BIN KAMARUDIN 341,000 0.17

TotalShare 198,216,100 96.11

NOTES

FORM OF PROXY

I/We __________________________________________________________________________________________ (full name as per NRIC/company name in block capitals)

NRIC or Company No. __________________________________ CDS Account No. __________________________

of ___________________________________________________________________________________________ (full address)

being a member of VASLATUXENERGYBERHAD hereby appoint:

_____________________________________________________________________________________________, (full name as per NRIC in block capitals)

I.C. No. _______________________________________________________________________________________, (new and old NRIC Nos.)

of ___________________________________________________________________________________________ (full address)

or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf, at the Second Annual General Meeting of the Company to be held at the Ballroom Mahkota 3, Hotel Istana Kuala Lumpur, No. 73, Jalan Raja Chulan, 50200 Kuala Lumpur on 15 June 2009 at 9:30 a.m. or any adjournment thereof.

This proxy is to vote on the resolutions set out in the Notice of the Meeting as indicated with an “X” in the appropriate spaces. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.

OrdinaryResolutions For Against

Resolution 1 - To receive and adopt the Audited Financial Statements

Resolution 2 - To approve the payment of Directors’ fees

Resolution 3 - To declare a final dividend

Resolution 4 - Re-election of Director 1

Resolution 5 - Re-election of Director 2

Resolution 6 - To re-appoint Messrs Wan Nadzir & Co. as the Company’s Auditors and to authorise the Directors to fix their remuneration

Resolution 7 - Authorisation for Directors to Allot and Issue Shares

Signed this ____________ day of _________________, 2009. ____________________________________ Signature of Shareholder(s) or Common Seal

Notes:1. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act shall not

apply to the Company.

2. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting.

3. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

4. Where a member is an authorized nominee as defined under the Central Depositories Act, it may appoint at least one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

5. If the appointer is a corporation, the proxy form must be executed under its Common Seal or under the hand of its attorney.

6. The instrument appointing a proxy must be deposited at the Company’s Registered Office at 7th Floor, Tower Block, Plaza Dwi Tasik, No. 21, Jalan Sri Permaisuri, Bandar Sri Permaisuri, 56000 Kuala Lumpur not less than 48 hours before the time appointed for holding the Meeting or any adjournment thereof.

NumberofSharesHeld (Incorporate In Malaysia)

Fold this flap for sealing

Then fold here

1st fold here

STAMP

TheCompanySecretary

VASTALUXENERGYBERHAD (789373-V)

7th Floor, Tower Block, Plaza Dwi TasikNo. 21, Jalan Sri PermaisuriBandar Sri Permaisuri56000 Kuala Lumpur

www.vastalux.com.my

4th - 7th Floor, Tower Block, Plaza Dwi Tasik, No. 21, Jalan Sri Permaisuri,Bandar Sri Permaisuri, 56000 Kuala Lumpur.

+603 9172 6666 +603 9172 4588 enquiry@vastalux.com.my www.vastalux.com.my