ANNUAL REPORT

Middle East Development Singapore ltdannual report 2007 69NOTES TO FINANCIALSTATEMENTS30 June 200720. INCOME TAX EXPENSE/(CREDITS) (Cont’d)Net change inincomeBalance sheetstatement2007 2006 2007 2006$ $ $ $Company:Deferred tax liabilities:Excess of net book value of plant and equipment (4,720) (5,892) 1,172 9,988Total deferred tax liabilities (4,720) (5,892) 1,172 9,988Deferred tax assets:Provision 25,201 – 25,201 –Tax losses carryforwards 73,520 10,331 63,189 34,607Others – 561 ( 561) 561Total deferred tax assets 98,721 10,892 87,829 35,168Net deferred tax assets 94,001 5,000 89,001 45,156Deferred tax assets valuation allowance (94,001) (5,000) (89,001) (45,156)Balance – – – –Included in the accompanying balance sheet as follows:GroupCompany2007 2006 2007 2006$ $ $ $Deferred tax assets (11,833) (11,540) – –Deferred tax liabilities 106,388 46,656 – –Net balance 94,555 35,116 – –The deferred tax (assets)/ liabilities are not expected to be settled/ used within one year.An allowance is made to the extent that it is not probable that taxable profit will be available against which the unused tax losscarryforwards can be utilised. The realisation of the future income tax benefits from tax loss carryforwards and temporarydifferences from capital allowances is available for an unlimited future period subject to the conditions imposed by law includingthe retention of majority shareholders as defined. Where provision for deferred tax arising from temporary differences has beenoffset against the above tax loss carryforwards, such provision for deferred tax will be required to be set up when the tax lossesare utilised in the future.There are no income tax consequences of dividends to shareholders of the Company.Temporary differences arising in connection with interests in subsidiaries are insignificant.