Notes to the Financial Statements

1. PRINCIPAL ACTIVITIES AND GENERAL INFORMATION

The Company is principally involved in the production, marketing and sale of beverage and food products.

The subsidiary companies are principally involved in the production, marketing and distribution of beverage and food products.

There have been no significant changes in the nature of the activities of the Company and its subsidiary companies during the financial year.

The total number of employees of the Group and of the Company at year end were 2,455 and 1,102 (2,477 and 935 in 2000) respectively.

The registered office and the principal place of business is located at 7, Jalan Tandang, 46050 Petaling Jaya, Selangor Darul Ehsan.

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements of the Group and of the Company have been approved by the Board of Directors for issuance on 27th February, 2002.

The financial statements of the Group and of the Company have been prepared in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standards of the Malaysian Accounting Standards Board.

3. SIGNIFICANT ACCOUNTING POLICIES

Accounting Basis

The financial statements of the Group and of the Company have been prepared under the historical cost convention modified to include the revaluation of certain property, plant and equipment. The directors have applied the transitional provisions of International Accounting Standard No. 16 (Revised), Property, Plant and Equipment by virtue of which a reporting enterprise which does not adopt a policy of revaluation is allowed to retain revalued amounts on the basis of their previous revaluation (subject to continuity in depreciation policy and the requirement to write an asset down to its recoverable amount).

Revenue

Sales of goods are recognised upon delivery of products and when the risks and rewards of ownership has passed. Revenue of the Group and of the Company represents gross invoiced value of sales less discounts and returns. All significant intercompany sales are eliminated on consolidation. Group sales do not include the applicable share of associated companies' sales.

Rental and interest income earned by the Group and the Company is recognised on accruals basis and dividend income earned by the Company is recognised when the shareholder's right to receive payment is established.

Foreign Currency Conversion

Foreign currency transactions are converted into Malaysian Ringgit at exchange rates prevailing at the transaction dates or, where settlement has not yet been made at the end of the financial year, at the approximate exchange rates prevailing on that date. All foreign exchange gains or losses are taken up in the income statement.

For the purposes of consolidation, the financial statements of the foreign subsidiary and associated companies, have been translated into Ringgit Malaysia as follows:

The closing rate per unit of Ringgit Malaysia used in the translation of foreign subsidiary and associated companies' financial statements are as follows:

* Not applicable as of 31st December, 2000.

All translation gains or losses are taken up and reflected in the translation reserve account under shareholders' equity. Such translation gains or losses are recognised as income or expenses in the income statements, in the period in which those companies are disposed of.

Difference in exchange arising from the translation of the results of those companies at the average exchange rate, are taken to translation reserve account.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the Company and are translated at the exchange rate rulling at the date of the transaction.

Income Tax

The tax effects of transactions are generally recognised, using the 'liability' method, when such transactions enter into the determination of net income regardless of when they are recognised for tax purposes. However, when timing differences would result in net future tax benefits, such benefits are recognised only on actual realisation.

Property, Plant and Equipment and Depreciation

Property, plant and equipment are stated at cost or valuation less accumulated depreciation.
Freehold land and property, plant and equipment under construction are not depreciated. Land under long and short leases are amortised evenly over the term of the lease. Depreciation of all other property, plant and equipment is computed on the straight-line method based on the estimated useful lives of the various assets. The annual depreciation rates are as follows:

Leased Assets

Assets under leases which in substance transfer the risks and benefits of ownership of the assets are capitalised under property, plant and equipment. The assets and the corresponding lease obligations are recorded at the lower of the present value of the minimum lease payments or the fair value of the leased assets at the beginning of the respective lease terms. Leases which do not meet such criteria are classified as operating leases and the related rentals are charged to income statements as incurred.

Property, Plant and Equipment Acquired Under Hire-Purchase Agreements

Assets acquired under hire-purchase arrangements are capitalised in the financial statements and the corresponding obligations treated as liabilities. Finance charges are allocated to the income statements to give a constant periodic rate of interest on the remaining hire-purchase liabilities.

Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and all its subsidiary companies made up to the end of the financial year. Financial statements of subsidiary companies are consolidated using the acquisition method of accounting. On acquisition, the assets and liabilities of the relevant subsidiary companies are measured at their fair values at the date of acquisition.

The result of subsidiary companies acquired are included in the consolidated financial statements from the effective date of acquisition. All significant inter-company balances and transactions are eliminated on consolidation.

Goodwill arising on consolidation represents the excess of the purchase consideration over the share of fair values of the identifiable net assets of a subsidiary company at the date of acquisition.

Goodwill is recognized as an asset and amortised on a straight-line basis over a period of 20 years commencing in the current financial year.

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

Investments

Investments in unquoted subsidiary companies, which are eliminated on consolidation, investment in unquoted associated companies and other investments are stated at cost in the Company's financial statements. Allowance for diminution in value is made when, in the opinion of the directors, there is a permanent impairment in the value of the investments.

Associated Companies

An associated company is non-subsidiary company in which the Company holds not less than 20% of the equity voting rights as long term investment and in which the Company is in a position to exercise significant influence in its management.

The Company's investments in associated companies are accounted for by the equity method of accounting based on management or audited financial statements made up to 31st December, 2001. Under this method of accounting, the Company's interest in the post acquisition profit and reserve of the associated companies are included in the consolidated results while dividends received from associated companies are reflected as a reduction of the investment in the consolidated balance sheet. The carrying values of these investments approximate the underlying equities in net assets of the associated companies.

Inventories

Inventories, other than bottles and cases, are valued at the lower of cost (determined principally on the first-in, first-out basis) and net realisable value. The cost of raw materials and other inventories comprises the original cost of purchase plus cost of bringing the inventories to location. The cost of finished goods and work-in-process includes the cost of raw materials, direct labour and a proportion of the manufacturing overheads. Net realisable value represents the estimated selling price in the ordinary course of business less selling and distribution costs and all other estimated costs to completion.

Bottles and cases are stated at cost less amounts written off in respect of losses arising from obsolescence, breakages and non-return. The cost of bottles and cases is written off on a straight-line basis over a period of five years.

Receivables

Trade and other receivables are stated at nominal value as reduced by the appropriate allowance for estimated irrecoverable amounts. Allowance for doubtful receivables is made based on estimates of possible losses which may arise from non-collection of certain receivable accounts.

Cash Flow Statement

The Group and the Company adopt the indirect method in the preparation of the cash flow statement.

Cash equivalents are short-term, highly liquid investments with maturities of three months or less from the date of acquisition and are readily convertible to cash in value with insignificant risk of changes in value.

4. DIRECTORS' REMUNERATION

5. PROFIT FROM OPERATIONS

Include in profit from operations are the following:

Staff  costs include salaries, bonuses, contributions to employees' provident fund, retirement benefit and all other payroll costs.

6. FINANCE COSTS

7. INCOME FROM OTHER INVESTMENTS

8. INCOME TAX EXPENSE

Income tax expense of the Group and of the Company are as follows:

The tax charge for the Group in 2001 and for the Company in 2001 and 2000 reflects an effective rate which is lower than the statutory tax rate due mainly to investment incentives which are available for set off against part of the income that would otherwise be taxable.

As of 31st December, 2001, the subsidiary companies have unabsorbed capital allowances and unutilised tax losses totaling about RM10,147,000 (RM10,060,000 in 2000) which, subject to agreement by the tax authorities, are available for set off against future taxable income of the respective subsidiary companies.

9. EARNINGS PER ORDINARY SHARE

Earnings per ordinary share in 2001 and 2000 is calculated by dividing the Group profit after tax and minority interest of RM16,257,169 in 2001 (RM13,228,935 in 2000) by the weighted average number of 98,565,181 (83,800,000 in 2000) ordinary shares of the Company in issue during the financial year.