MS CorporateFA 05 - Mah Sing Groupmahsing.com/Files/FinanceReport/AR2005.pdfJEN. (R) TAN SRI YAACOB had a distinguished career spanning nearly 40 years in Angkatan Tentera Malaysia

Contents

Group 5-Year Financial HighlightsCorporate InformationCorporate ProfileCorporate StructureBoard Of DirectorsDirectorsʼ ProfileChairmanʼs StatementManaging Directorʼs Review Of OperationsAwards & RecognitionsCorporate Social ResponsibilityCorporate Calendar

23

4-58-9

10-1112-1316-1922-25

2627

28-31

34-3839-42

4344

46-106107

108-110111-112113-117

118118

Corporate Governance StatementAudit Committee ReportStatement Of Internal ControlStatement Of Directorsʼ ResponsibilityFinancial Statements Properties Owned By The GroupStatistics Of ShareholdingsStatistics Of Warrant HoldingsNotice Of Annual General MeetingStatement Accompanying Notice Of Annual General MeetingNotice Of Dividend Entitlement And Payment• Proxy Form

O U R V I S I O N I S T O B E A

Group Five-YearFinancial Highlights

2005RMʼ000

2004RMʼ000

2003RMʼ000

2002RMʼ000

2001RMʼ000

RevenueProperties

Plastics

Others

Profit Before TaxationProperties

Plastics

Others

Net Profit Attributableto Shareholders

Paid-Up Share Capital

Shareholders Funds

Total Assets Employed

Basic Earningsper Share (sen)

Fully Diluted Earningsper Share (sen)

Gross Dividendper Share (sen)

Net Tangible Assetsper Share (RM)

Return on Equilty

356,255

117,071

165

473,491

63,336

8,677

(2,393)

69,620

48,346

145,131

256,059

619,516

33.3

30.2

12.0

1.76

19%

260,870

95,291

294

356,455

34,807

5,528

(1,494)

38,841

25,062

145,127

214,123

552,236

19.2

18.2

6.0

1.48

12%

136,220

75,807

-

212,027

21,193

2,914

(2,937)

21,170

14,702

43,978

105,400

350,111

16.6

NA

4.0

2.40

14%

98,589

72,014

-

170,603

10,883

173

(2,586)

8,470

5,307

43,978

91,014

248,834

12.1

NA

1.0

2.07

6%

115,084

62,967

2,362

180,413

7,154

(689)

(565)

5,900

5,098

43,978

86,340

289,843

11.6

NA

2.0

1.96

6%

01 02 03 04 05

180,

413

170,

603

212,

027

356,

455

473,

491

01 02 03 04 05

Revenue(in RM’000)

Net Profit Attributable to Shareholders(in RM’000)

5,09

8

5,30

7 14,7

02

25,0

62

48,3

46

01 02 03 04 05

ShareholdersFunds(in RM’000)

86,3

40

91,0

14

105,

400

214,

123 25

6,05

9

2Mah Sing Group Annual Report 2005


REGISTRAR

PFA Registration Services Sdn Bhd(Company No. 19234-W)Level 13, Uptown 1Jalan SS21/58, Damansara Uptown47400 Petaling Jaya, Selangor Darul EhsanTel : 603-7725 4888Fax : 603-7722 2311

REGISTERED OFFICE

Penthouse Suite 1, Wisma Mah SingNo. 163, Jalan Sungai Besi57100 Kuala LumpurTel : 603-9221 8888Fax : 603-9222 2833

AUDITORS

Deloitte KassimChanChartered AccountantsLevel 19, Uptown 11 Jalan SS 21/58, Damansara Uptown47400 Petaling Jaya, Selangor Darul EhsanTel : 603-2693 1077Fax : 603-2693 0997

BANKERS

Alliance Bank Malaysia BerhadAmBank BerhadBumiputra-Commerce Bank BerhadHong Leong Bank BerhadMalayan Banking BerhadOCBC Bank (Malaysia) BhdSouthern Bank BerhadUnited Overseas Bank (Malaysia) Berhad

STOCK EXCHANGE LISTING

Main Board of Bursa Malaysia Securities Berhad

CorporateInformation

BOARD OF DIRECTORS

JEN. (R) TAN SRI YAACOB BIN MAT ZAINChairman

DATO ̓LEONG HOY KUMGroup Managing Director

LIM CHING CHOYExecutive Director / Chief Executive Officer

STEVEN NG POH SENGExecutive Director / Chief Financial Officer

LEONG YUET MEINon-Independent Non-Executive Director

CAPTAIN (RTD) IZAHAM BIN ABD. RANIIndependent Non-Executive Director

LOH KOK LEONGIndependent Non-Executive Director

AUDIT COMMITTEE


STEVEN NG POH SENG

CAPTAIN (RTD) IZAHAM BIN ABD. RANI

LOH KOK LEONG

NOMINATION COMMITTEE


LEONG YUET MEI

CAPTAIN (RTD) IZAHAM BIN ABD. RANI

REMUNERATION COMMITTEE


DATO ̓LEONG HOY KUM

LEONG YUET MEI

OPTION COMMITTEE

JEN. (R) TAN SRI YAACOB BIN MAT ZAIN Chairman

DATO ̓LEONG HOY KUM

LOH KOK LEONG

SECRETARIES

YANG BAO LING

KUAN HUI FANG

CorporateProfile

Since our inception in 1965, Mah Sing Group Berhad has achieved recognition as an innovative developer of niche products and trend-setting townships.

Set in prime locations, our developments in the Klang Valley and Johor Bahru have cemented our position as Malaysiaʼs premier lifestyle developer. Our projects are showcases of contemporary lifestyle statements; grand entrances, lush landscaping and practical yet functional homes with quality finishes within a guarded and gated environment are all hallmarks of Mah Singʼs developments.

Benchmarking ourselves globally, we aim to become a world class developer and in our quest for excellence, we remain committed to our corporate philosophy of maximizing shareholder value by delivering quality driven products and excellent service to our customers.

MilestonesOctober 1992 Listed on the Second Board of KLSE (now known as Bursa Malaysia Securities Berhad)

February 1994 First venture into property development in the Klang Valley

February 2000 Started our branding exercise with our maiden project in Johor, the lifestyle township of Sri Pulai Perdana in Skudai on 303 acres of freehold development land

December 2000 Reclassified to Property Sector

June 2003 Lifestyle township of Austin Perdana in Tebrau, Johor Bahru on 168 acres of freehold development land sets a new standard for trendy, quality homes

October 2003 Re-entry into the Klang Valley with the niche, high-end lifestyle development of Damansara Legenda on 17 acres of freehold development land in Tropicana, Petaling Jaya

Mah Sing Group Annual Report 2005 4

ONE TEAM


CorporateProfile (Contʼd)

March 2004 Completed private placement of 4.4 million new ordinary shares of RM1.00 each

April 2004 First lifestyle township in the Klang Valley – Aman Perdana on 315 acres of freehold development land in the Meru-Shah Alam growth corridor offering only semi-detached homes and bungalows

June 2004 Completed a corporate exercise involving a rights issue of 80.6 million ordinary shares of RM1.00 each with 48.4 million warrants and a bonus issue of 16.1 million shares

July 2004 Transferred to Main Board, Bursa Malaysia

July 2005 Niche lifestyle development of Perdana Residence on 8 acres of freehold development land in Selayang, Selangor an overwhelming success

November 2005 Awarded Forbes Asiaʼs “Best Under A Billion Award” for the Asia-Pacific region

December 2005 Continued Mah Singʼs presence in Johor with the lifestyle township of Sierra Perdana developed on 261 acres of freehold development land in the high growth Tebrau-Plentong corridor in Johor Bahru

January 2006 Awarded Certificate of Excellence for Successful Listing among Top 1000 Companies in Malaysia for 2004/2005 by the Ministry of Domestic Trade and Consumer Affairs, Malaysia

March 2006 One Residence on 10 acres of freehold development land in Cheras will raise the bar again for trendy lifestyle homes

May 2006 Ranked 1st in the Property Sector, in The Edgeʼs Top 100 Companies with Best Returns over 5 years

ONE VISION

A SensoryLivingExperience

PROPERTYDIVISION

CorporateStructureActive OperatingSubsidiaries


100% Mah Sing Properties Sdn Bhd

100% Intramewah Development Sdn Bhd

100% Mestika Bistari Sdn Bhd

100% Nova Century Development Sdn Bhd

100% Nova Legend Development Sdn Bhd

100% Venice View Development Sdn Bhd

100% Multi Synergy Group Sdn Bhd

100% Acacia Springs Management Sdn Bhd

100% Mestika Kenangan Sdn Bhd

100% Prima Peninsular Development Sdn Bhd

100% Quantum Noble Development Sdn Bhd

PROPERTY DEVELOPMENT

PROPERTY INVESTMENT

PROPERTY MANAGEMENT

PLASTICSDIVISION

PLASTICS TRADING


100% Mah Sing Enterprise Sdn Bhd

100% Mah Sing Plastics Industries Sdn Bhd

100% Kenwira Sdn Bhd

PLASTICS MANUFACTURING

100% Acacia Springs Management Sdn Bhd

100% Mestika Kenangan Sdn Bhd

100% Prima Peninsular Development Sdn Bhd

100% Quantum Noble Development Sdn Bhd

CorporateStructureActive OperatingSubsidiaries

65% PT Mah Sing Indonesia(held via Vital Routes Sdn Bhd)

Board of Directors


(From left)• JEN. (R) TAN SRI YAACOB BIN MAT ZAIN (Chairman)

• CAPTAIN (RTD) IZAHAM BIN ABD. RANI (Director)

• MS LEONG YUET MEI (Director)

• MR LOH KOK LEONG (Director)

• MR STEVEN NG POH SENG (Executive Director / Chief Financial Officer)

• DATOʼ LEONG HOY KUM, D.P.M.S., J.P., HON. PHD. (Group Managing Director)

• MR LIM CHING CHOY (Executive Director / Chief Executive Officer)


DirectorsʼProfile


JEN. (R) TAN SRI YAACOB BIN MAT ZAIN Chairman (Independent Non-Executive)Malaysian, 71 years of ageAppointed to the Board on 29 June 1994Chairman of the Audit CommitteeChairman of the Nomination CommitteeChairman of the Remuneration CommitteeAttended all the 5 Board and 4 Audit Committee Meetings convened during the financial year

JEN. (R) TAN SRI YAACOB had a distinguished career spanning nearly 40 years in Angkatan Tentera Malaysia before retiring in 1993 as a Panglima Angkatan Tentera Malaysia. He attended courses at the Australian Army General Command and Staff College, the Naval Post Graduate School in Monterey, United States of America, the Royal College of Defence Studies in the United Kingdom and the Advance Management Programme at Harvard Business School.

Apart from his directorship in the Company, he is the Chairman of Affin Merchant Bank Berhad, Syarikat Permodalan Kebangsaan Berhad, SPK Sentosa Corporation Berhad, NV Multi Corporation Berhad, FTEC Resources Berhad as well as a Board Member of Rating Agency Malaysia Berhad.

There are no conflict of interest between him and the Company nor are there any family relationships between him and any director or major shareholder of the Company. He has not been convicted for any offences within the past 10 years other than for traffic offences, if any.

DATO ̓LEONG HOY KUM, D.P.M.S., J.P. HON. PHD. Group Managing Director/Group Chief Executive OfficerMalaysian, 49 years of ageFounder and First Director Appointed to the Board on 3 December 1991Member of the Remuneration CommitteeAttended all the 5 Board Meetings convened during the financial year

His initial training was in plastics technology and he began heading the plastics division in 1979. He has been on the Central Committee of the 900-member Malaysian Plastics Manufacturers Associations since 1986. He has been the Honorary President of the Young Malaysian Movement Association (YMM) since 1999 and of The Dramatic Art Society, Malaysia since 1996. Besides that, he has been the Vice-President of the Table Tennis Association of Malaysia since 1999.

In recognition of his achievements, he was conferred an honorary Doctor of Philosophy (Hon.PhD.) in Business Administration by Honolulu University, Hawaii in 2000. He was conferred the Darjah Paduka Mahkota Selangor (D.P.M.S) which carries the title of “Datoʼ” and the Jaksa Pengaman (J.P) awards by his Highness, Sultan of Selangor in 1996 and 2001 respectively.

He also sits on the Board of Directors of various other private companies.

He is the brother of Director, Ms Leong Yuet Mei. There are no conflict of interest between him and the Company nor has he been convicted for any offences within the past 10 years other than for traffic offences, if any.

MR LIM CHING CHOY Executive Director/Chief Executive OfficerMalaysian, 45 years of ageAppointed to the Board on 1 July 2002Attended all the 5 Board Meetings convened during the financial year

Mr Lim has extensive experience of more than 22 years in the banking and financial services industry of which 12 years was with the Arab-Malaysian Banking Group. He subsequently joined Bolton Finance Bhd as Chief Executive Officer in 1996, a post which he held for 5 years until 2001. In that year he was appointed Chief Executive Director of Alliance Finance Berhad (previously Bolton Finance Bhd).


MR NG POH SENG Executive Director/Chief Financial OfficerMalaysian, 41 years of ageAppointed to the Board on 27 June 2005Member of the Audit CommitteeAttended all the 2 Board and Audit Committee Meetings convened during the financial year which were held since his appointment

Mr Ng has more than 15 years experience in corporate finance, accounting and auditing. He holds a Bachelor of Science degree majoring in accounting from the University of Wales (UK). He is a member of both the Institute of Chartered Accountants in England and Wales and the Malaysian Institute of Accountants. He worked in a Chartered Accountancy firm in the United Kingdom and upon his return to Malaysia, served as a Manager in Malaysian International Merchant Bankers Berhad before joining S P Setia Berhad. After 8 years of service in S P Setia Berhad, he left as Head of Corporate Affairs prior to joining the Company.

He joined the Company as Chief Financial Officer responsible for the Group Corporate and Finance division before being appointed to the Board.



DirectorsʼProfile (Contʼd)

MS LEONG YUET MEI Non-independent Non-Executive DirectorMalaysian, 52 years of ageAppointed to the Board on 17 November 1997Member of the Nomination CommitteeMember of the Remuneration CommitteeAttended all the 5 Board Meetings convened during the financial year

Ms Leong has been attached to RHB Securities Sdn Bhd as a Dealers Representative since 1991. Prior to that she was attached to KAF Discount Berhad as a Senior Accountant.

Ms Leong is the elder sister of Datoʼ Leong Hoy Kum, the Group Managing Director. There are no conflict of interest between her and the Company nor has she been convicted for any offences within the past 10 years other than for traffic offences, if any.

CAPTAIN (RTD) IZAHAM BIN ABD. RANI Independent Non-Executive DirectorMalaysian, 44 years of ageAppointed to the Board on 16 April 2001Member of the Audit CommitteeMember of the Nomination CommitteeAttended all the 5 Board and 4 Audit Committee Meetings convened during the financial year

Captain Izaham served in the Malaysian Armed Forces for nearly 14 years before his early retirement in 1992. He attended various career courses conducted internally as well as in Australia and Singapore. He was the Business Development Manager at the Kukup Golf Resort in Pontian, Johor before serving Port Dickson Golf & Country Club as the General Manager until end 2004.

Captain Izaham is also a Director of a leading multinational petroleum company from the Sultanate of Oman, (MB Petroleum Services Sdn Bhd) and Epicentro Resources Sdn Bhd which deals in Defence Products and is a subsidiary of British Aerospace (BAE Systems).


MR LOH KOK LEONG Independent Non-Executive DirectorMalaysian, 42 years of ageAppointed to the Board on 23 September 2002Member of the Audit CommitteeAttended all the 5 Board and 4 Audit Committee Meetings convened during the financial year

Mr Loh is an accountant by profession and has been attached with international accounting firms both in Malaysia as well as overseas for more than 20 years, 3 years of which as a partner of Deloitte Touche Tohmatsu Kuala Lumpur. He is currently a partner of a professional services firm, Russell Bedford LC & Company (formerly known as Lean Chin & Co.).

Apart from his directorship in the Company, he is also a director of The Ayer Hitam Planting Syndicate Berhad.


The Perfect Symphony Of Life

ChairmanʼsStatement


OVERVIEWMah Sing Group Berhad (The Group) continued to experience exponential growth with commendable increases in both revenue and profits in 2005, allowing the Group to reward shareholders with better dividends. The encouraging accolades we have received are testimonials to our commitment, performance and unwavering pursuit of excellence.

FINANCIAL PERFORMANCEFor the financial year ended 31 December 2005, the Group reported a 93% surge in net profit to RM48.3 million and total Group revenue increased by 33% to RM473.50 million. Despite the challenging market conditions, Mah Sing Group managed to chalk up RM509 million in sales in 2005, a 68% increase compared to 2004ʼs sales of RM303 million. The strong performance is because the Groupʼs projects in Malaysiaʼs high growth corridors of Klang Valley and Johor Bahru are all located on prime, freehold land and have been well received. The Groupʼs strong branding and our fast

turnaround business model have helped the strong take-up rate of more than 80% for all our niche developments of landed lifestyle homes.

DIVIDENDSWe will continuously strive to create and enhance shareholdersʼ value and emphasize on maximizing returns to our stockholders, having achieved a return on equity of 19% for 2005. I am pleased to share with you that in appreciation of shareholdersʼ loyalty, the Board has recommended a first and final dividend of 12 sen per share less income tax of 28% for the financial year ended 31 December 2005.

Compared to 2004ʼs gross dividend of 6 sen representing 25% of net profit, 2005ʼs distribution of 26% of net profit to shareholders is significantly higher in quantum as our profit growth has almost doubled. The increase in the pay out is to show our commitment to reward our faithful shareholders for their trust and confidence in Mah Sing.

ON BEHALF OF THE BOARD OF DIRECTORS, I AM PLEASED TO PRESENT THE ANNUAL REPORT AND FINANCIAL STATEMENTS OF MAH SING GROUP BERHAD FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2005.

ChairmanʼsStatement(Contʼd)


CORPORATE DEVELOPMENTMah Singʼs business model in maintaining earnings growth and visibility is to continuously scout for prime land in multiple growth locations. The Groupʼs track record can be seen by the successful acquisitions of choice land at appropriate times from 2000 to 2006, when we grew our business from 1 development to 7 developments. We turnaround the land quickly to optimize our resources by mobilizing them from one location to another and our multiple locations allow us to have concurrent launches to tap unsaturated markets which can readily absorb our offerings.

A good example is the 8 acres of freehold land in Selayang, Klang Valley which was acquired for approximately RM4.84 million on 19 July 2005. The development, Perdana Residence was the first in that matured neighbourhood to exclusively offer semi-detached homes and garden bungalows in a gated and guarded environment and is slated for launch in the second half of 2006. A recent project preview received overwhelming response with 10 times oversubscription of interest for the 75 units of semi-detached homes and garden bungalows being offered.

The Group hopes to replicate this success with One Residence, Cheras, which will be developed on 9.906 acres of freehold land in Cheras. The land was purchased for approximately RM10.57 million on 20 March 2006, another coup for the Group as the scarcity of freehold land in the vibrant township is widely known. One Residence will be an exclusive enclave of approximately 70 units of semi-detached homes and garden bungalows within a gated and guarded community.

Our land in Selayang and Cheras share striking similarities. They are both manageable parcels of prime, freehold land in established neighbourhoods. Both are easily accessible and are served by wide networks of highways and trunk roads. Established amenities near the two sites include reputable schools, popular shopping complexes and renowned healthcare centres. Being matured neighbourhoods, there are ready pools of potential house buyers who are looking to upgrade their present homes. The younger generation forming new households will also be keen to set up their first home near where their parents live.

In Johor, the Group has a strong branding following the success of Sri Pulai Perdana in Skudai and Austin Perdana in Tebrau, Johor Bahru. A third project, Sierra Perdana will be launched to continue the Groupʼs presence in the state. The mixed residential housing and commercial project will be developed on 261.22 acres of freehold land in the Tebrau-Plentong growth corridor in Johor Bahru. The land was acquired on 21 December 2005 by the Groupʼs wholly owned subsidiary Venice View Development Sdn. Bhd for approximately RM61.5 million.


Sierra Perdana is only 10 minutes away from Austin Perdana and the Group foresees spillover demand from home buyers who are already familiar and comfortable with the Mah Sing brand name. As the area is well established, there is a large population pool which is ready to absorb the offerings from Sierra Perdana. Johor Bahru itself has a vibrant population growth rate of 4.58% compared to the national growth rate of 2.6% and a correspondingly higher appetite for residential property.

According to the Ninth Malaysia Plan, RM10.2 billion of the budget has been earmarked for Johor and the stateʼs economy is set for a big boost. The South Johor Economic Region will be a triangle of growth stretching from Mukim Serkat in the west to Pasir Gudang in the east and from Kulai in the north down to Johor Bahru in the South. There are plans to develop Johor as a logistic hub, which include 2 international seaports and an international airport. Other plans include developing Bandar Nusajaya as the new state administrative centre, as well as the development of an education hub, which will be co-ordinated by Khazanah Nasional under the leadership and support of the Federal & Johor state government.

Plans to build two integrated resorts in Singapore could create numerous jobs and for Malaysians who are planning to work there, it is a natural progression for them to buy homes in Johor Bahru, which are affordable and provide a quick commute to Singapore. These developments could create a potential upside to house prices in Johor and with our established reputation, we are well positioned to reap the benefits.

AWARDS AND ACKNOWLEDGEMENTS Benchmarking ourselves globally, we are resolutely committed to becoming a world class developer. Our efforts have earned us awards and accolades which have increased our competitive edge.

With data provided by iDs, The Edge published an article on 20 June 2005 about the Top 100 companies that gave the best returns, and Mah Sing ranked number 1 in Shareholdersʼ Returns over 5 years in the Property Sector. Mah Sing was named Forbes Asia “Best under US1 Billion”, one of only 10 Malaysian companies which made it to the Top 200 listed companies in Asia Pacific. Furthermore, the company received a Certificate of Excellence and was named as one of the Top 1000 Companies in Malaysia for 2004/2005 by the Ministry of Domestic Trade and Consumer Affairs, Malaysia.

Moving forward, we are determined not only to continuously increase revenues and profits, but also to maximize returns to shareholders as thanks for their unwavering confidence in us.

CORPORATE SOCIAL RESPONSIBILITY The Groupʼs abiding principal in doing business is to give back to the communities in which we operate. Our commitment towards corporate social responsibility is deeply embedded in our corporate philosophy.

During the Asian Tsunami Disaster, the Groupʼs donations added more than RM150,000 to the Tsunami Disaster Fundʼs coffers. Besides disaster relief, medical and charitable organizations also received contributions from the Group. In addition to that, the Group funded a national drugs awareness campaign jointly organized by the National Anti Drugs Campaign Secretariat and the Internal Security Ministry. The Group is a stalwart supporter of education, with contributions to numerous schools and educational foundations.

To consolidate our corporate social responsibility efforts, the Group has set up Mah Sing Foundation to provide medical and educational assistance to the needy and deserving. The Foundation will receive and administer funds solely for medical, educational and charitable purposes as well as seek to raise more funds via annual fund raising activities and events.

In conjunction with the launch of Aman Perdana, YAB Datoʼ Seri Dr Haji Mohamad Khir bin Toyo, the Menteri Besar of Selangor witnessed Mah Sing Groupʼs charitable donation to two recipients; a sum of RM20,000 to Majlis Belia Daerah Klangʼs Sports Club and RM45,000 to Yayasan Kebajikan SSL Haemodialysis, towards the purchase of a dialysis machine for the centre. This dedication to corporate social responsibility will continue as we seek to further grow our business in the years ahead.

STAFF DEVELOPMENTMah Sing believes in nurturing our human capital to their full potential as our people is one of our greatest competitive edge. To ensure our staff stays motivated and enjoys professional growth, we provide on-the-job training, induction programs, technical skills and soft skills such as leadership and management courses.

Mah Singʼs sports club actively conduct activities such as weekly badminton sessions and regular table tennis sessions to promote a healthy balance between work and play. These sessions also help to enhance interaction among our staff.




As in the previous years, we held an annual dinner cum company trip to foster camaraderie and reward our staff for their hard work. The 3-day event was held in January 2005 in Malacca and was filled with fun and games culminating in a “Red Hot Nite” annual dinner. The Group also presented Long Service Awards to several staff that have been with the Company for more than 10 years.

The remarkable teamwork between all departments has been the cornerstone of our success. Our good set of results has been achieved by our team of skilled, diligent employees and we shall strive to continue being their preferred employer.

FUTURE PROSPECTSOur projects are focused on the economic epicenters of the Klang Valley and Johor. We have achieved good take-up and will continue to build on our success to achieve greater heights.

For 2006, we expect a challenging business environment for the property market with consumers adjusting to the interest rate hike and higher fuel prices. We see a buyerʼs market which will favour industry players that are sensitive to current trends and needs, and are versatile in launching projects to capture the demand. We believe Mah Sing will be a beneficiary as we are a very market driven developer. We are confident that good opportunities still exist for us as we have always been a trendsetter.

With 5.3% Gross Domestic Product (GDP) growth recorded in 2005 and 6% GDP growth forecast for 2006, the general economic outlook continues to be positive. Malaysia has a large working age population of between 15-64 years accounting for 63% of the population and this provides a healthy core demand for homes. There is also a high savings rate at 37.1% to Gross National Product (GNP) (Bank Negara Malaysia 2005 Annual Report).

The recent interest rate hike has been expected and mortgage rates are still manageable with banks offering competitive, innovative and attractive housing loan packages. Historical data also tells us that income growth and level of employment are more relevant to serious buyers when making property investment decisions.

The Ninth Malaysia Plan has been tabled to provide a blueprint for the nationʼs continued growth and has a record RM200 billion expenditure allocation. Its implementation will be a big boost to the economy in general, generating and spreading wealth to Malaysians. RM46.8 billion or 23.4% of the budget has been set aside for infrastructure and utilities development and property developers shall benefit as improved transportation networks will make our developments more attractive to homebuyers. This is especially applicable to developers like Mah Sing as our projects are in multiple prime locations in the Klang Valley and Johor Bahru which have been earmarked for further improvements in infrastructure.

The good economic growth over the past few years has contributed to the affluence and evolving lifestyles of Malaysians and medium to high-end landed developments in prime locations will still do well. We are confident by continuously launching competitively priced products in preferred locations, we will continue to do well as our medium to high end developments are more resilient to inflation. We feel that with cost push inflation, our target market will hedge against inflation by investing in property.

The challenge lies in having the correct balance between pricing and product offering as projects with innovative concepts and designs will still attract the discerning buyer. Our commitment to quality has earned us a strong branding and many loyal customers, and we aim to become the industry standards for the niche products we offer. With our proven track record of securing prime landbank, product innovation, on-time delivery, as well as our trendy concepts and interesting themes, we are confident of the positive reception and continued strong sales of our homes.

Barring any unexpected changes to the Malaysian and international economic environment, the Group is confident of performing better next year.

ACKNOWLEDGEMENTSWe are pleased to welcome Mr Steven Ng Poh Seng as an Executive Director to the Board of Mah Sing on 27 June 2005. Mr Ngʼs corporate finance, accounting and auditing experience of more than 15 years will stand him in good stead as he heads up the Group Corporate and Finance division in his capacity as the Chief Financial Officer.

On behalf of the Board of Directors, I would also like to extend my heartfelt appreciation to all our customers and shareholders for their faith and confidence in us. We would like to thank the government authorities, our consultants and our business associates for their support and assistance, and our suppliers who have grown with us over the past few years. And last but not least, my sincere gratitude to our employees whose stanch loyalty and untiring efforts are the core of our success.

Jen. (R) Tan Sri Yaacob Bin Mat ZainChairman

Lake Park Living

Managing Directorʼs Review of Operations


2005 has been a stellar year for us, with several strategic land acquisitions which increased our total number of projects to 7; 4 in Klang Valley and 3 in Johor. Our market share has also increased significantly from RM303 million sales in 2004 to RM509 million sales in 2005, an improvement of 68% despite the challenging business environment. We are targeting RM600 million sales in 2006 as we believe our quality, branded lifestyle homes in prime locations will again do well in 2006.

In todayʼs business environment, we are faced with challenges and uncertainty in our daily endeavor. It is imperative for the Company to not just master the art of adaptability but to be innovative and proactive in order to be successful. We must be very good at running efficient operations, rolling out new products of a global standard and exploiting our existing assets.

As a niche developer, Mah Singʼs strength lies in being nimble and spotting trends and opportunities in the marketplace. We are starting a brand new year on an upbeat note and with optimism of an even better showing as all our 7 projects in multiple prime locations go full swing. To stay ahead of the league, Mah Sing will continue to be a trendsetter in coming up with creative housing designs and trendsetting development concepts that mirror current lifestyles.

We have grown from strength to strength because of our business model which has a proven track record. Our capability to source for prime landbank and a quick turnaround time ensures a healthy take-up rate and minimum holding costs.

PROPERTY DEVELOPMENTWe registered strong sales of RM509 million from the 1,462 units of properties sold for the financial year under review. The strong performance is driven by the strong sales recorded by our Klang Valley as well as Johor Bahru projects.

Increased focus in Klang ValleyGoing forward, Mah Sing will increase its focus on Klang Valley whose contribution to property revenue is expected to increase to 76% in 2006. Not only is the Klang Valley Malaysiaʼs economic nexus, there is constant inward migration which provides a steady demand for residential homes.

Leveraging on the growing affluence and evolving lifestyle of the people, we are catering to the increasing demand for medium to high end homes by replicating the success of our up market development of Damansara Legenda in the Klang Valley. We are focused on the medium to high end market which is more resilient towards inflationary pressures. Furthermore, semi-detached homes and bungalows are in short supply as this sub-sector accounts for only 4% of the total residential supply in Klang Valley. We are well positioned to tap this market since we are a niche premier lifestyle developer of quality homes.

Dato ̓Leong Hoy KumGroup Managing Director

Managing Directorʼs Review of Operations(Contʼd)


Damansara Legenda – Tropicana, Petaling JayaThe Perfect Symphony of LifeSet in a tropical resort environment with extensive landscaping, this gated and guarded, low density development houses only 116 high end semi-detached homes and bungalows. Each of these spacious homes has seven bedrooms with attached bathrooms. Damansara Legenda is strategically located in the heart of Damansara and is easily accessible from the North-South Highway, North Klang Valley Expressway (NKVE), Sprint Highway and Lebuhraya Damansara-Puchong.

The project was completed 6 months ahead of schedule and it has indeed been gratifying to receive the positive feedback from the owners who are pleased with the design, quality and overall delivery of their homes. Many residents have started renovating and moving into their homes which were completed with Certificate of Fitness for Occupation after we handed over the keys on 21 January 2006.

Aman Perdana-Meru-Shah Alam Growth CorridorA Sensory Living ExperienceOffering only semi-detached homes and bungalows, Aman Perdana has been launched slightly over a year and contributed sales of RM263 million. Our gated and guarded homes are with an attractive pricing strategy of semi-detached homes at link house prices and bungalows at semi-detached prices, which makes them a value investment.

The new NKVE-Jalan Meru Link is expected to be completed in the first half of 2006 and this further reduces traveling time from Shah Alam, Subang and Damansara. Phase One comprising 134 units of single storey semi-detached homes and 306 units of double storey semi-detached homes are scheduled to be completed around the same time, and owner occupiers would be able to enjoy a shorter travel time to Kuala Lumpur City.

Perdana Residence, SelayangSanctuary of better livingOur recent project preview of Perdana Residence graced by Datuk Tan Chai Ho, Deputy Minister Home Affairs was a resounding success with more than 800 potential buyers registering their interest for 75 units of semi-detached homes and garden bungalows slated for launching in the second half of 2006. Set amidst idyllic surroundings with gated and guarded security, these uniquely designed homes boast of functional interiors that open into the garden to give a sense of spaciousness and airy brightness. Conveniently located just 15 minutes away from Kuala Lumpur City Centre in the south and Damansara in Petaling Jaya to the west, 10 minutes to Rawang in the north and 5 minutes to Batu Caves, it fringes the green belt of the Forest Research Institute of Malaysia.

To provide the up-market atmosphere, we have gone out of our way to provide manicured gardens, a green perimeter buffer, courtyards, health paths, meandering garden walkways and seating spots in Perdana Residence. The homes have wide forecourts which can accommodate up to four cars parked side by side.

One Residence, CherasThe Epitome of LuxuryOne Residence, an exclusive development of only semi-detached homes and garden bungalows within a gated and guarded community will sit on 9.906 acres of freehold land purchased in March 2006. We hope to replicate our success in Selayang by offering a similar concept in One Residence, targeting new buyers who will appreciate the concept and theme of our interesting product range.

One Residence is located 15 kilometers or 15 to 20 minutes from Kuala Lumpur, near the established Taman Segar, Cheras Hartamas, and Taman Cuepacs. The Hulu Langat Forest Reserve nearly acts as a green lung, providing a refreshing, natural environment.

One Residence is conveniently located near reputable schools, popular shopping complexes, renowned healthcare centers and other amenities. Served by a wide network of integrated highways and trunk roads such as the Cheras-Kajang Highway, Middle Ring Road II, East-West Link, Kesas Highway and Sistem Lingkaran-Lebuhraya Kajang (SILK Highway), travelling to Kuala Lumpur City Center and other parts of the Klang Valley is swift and hassle-free.

Well positioned in Johor BahruWith two hugely successful projects in Johor Bahru, Mah Singʼs brand name has been entrenched in the mind of home buyers. Thanks to the Groupʼs good track record with Sri Pulai Perdana since 2000 and Austin Perdana since 2003, the population in Johor associates Mah Sing with quality homes at good locations and affordable pricing.

With the implementation of the Ninth Malaysia Plan and construction of the proposed integrated resorts in Singapore, we foresee an up beat trend in business activities in the South. Coupled with the fact that Johor Bahru has a vibrant population growth rate of 4.58% as compared to the national growth rate of 2.6%, these will all in turn translate into higher demand for homes in Johor Bahru.



Sierra Perdana, Tebrau-Plentong JohorAdventure Park LivingSierra Perdana is a mixed residential housing and commercial project with an estimated gross development value of RM513 million. The development is just 18km from Johor Bahru City Center, and 10 minutes from Austin Perdana. We are leveraging on the strength of our two previous successful projects in Austin Perdana and Sri Pulai Perdana and we foresee spillover demand from home buyers. Sierra Perdana is well connected by a network of road linkages and highways such as Jalan Masai, the Pasir Gudang Highway and proposed Coastal Highway. This makes traveling to key destinations such as Johor Bahru City Centre, Johor Port and the Senai International airport convenient and easy especially once the Pasir Gudang Highway is upgraded from four-lanes to six-lanes as planned under the Ninth Malaysia Plan.

Ever the trendsetter, we will be creating a unique lifestyle adventure-park community in Sierra Perdana. An exciting safari entrance, lush landscaped grounds and dedicated parks with a wealth of innovative and unusual features are just some of the attractions of this development.

Austin Perdana-Tebrau, Johor BahruLake Park LivingThis 168-acre township of Austin Perdana in Johor with some 2,298 mixed residential units is strategically situated in Mount Austin, just 10km from Johor Bahru City Centre. It is easily accessible via the Pasir Gudang Highway, Johor Bahru – Kota Tinggi Highway and the North South Highway.

All the residential properties in this gated township boasting a central lake will be completed by 2006. Certificate of fitness for occupancy for the 379 units of double storey terrace homes of Lake Palm A and Lake Palm B has been obtained, and possession has also been delivered for the 139 units of Lake Casita double storey terrace homes.

We have just recently launched shophouses in Austin East and Austin Centerpoint and construction for Austin Eastʼs 3-storey waterfront shops with unique double frontage has started. With buildings of various sizes to suit every need, astute investors are spoilt for choice and so far, response from buyers has been very encouraging.

Sri Pulai Perdana-Skudai, JohorGarden Park LivingOur maiden project launched in 2000, the 303-acre township of Sri Pulai Perdana in Skudai, Johor, comprises some 4,399 units of mixed residential development. The township is adjacent to the Pulai Springs Golf and Country Resort and just 1.5km from University Teknologi Malaysia. Accessible via the six-lane Skudai Highway, the development is just 23km from Johor Bahru City Center and fronts the Johor Bahru – Pontian main road which puts it smack in the middle of the South Johor Economic region.

It is one of the first developments in Johor offering a gated and guarded lifestyle for link homes and a specially designed main entrance streetscape. The large 12 acres landscaped central park boasts a classical European theme and has become a focal point for residents to gather. The project is nearing maturity with a 94% take-up rate. The project will launch its last phase of 141 units double storey superlinks terrace houses to meet changing market needs.



PLASTICSThe Malaysian operations has been awarded the ISO9001 Certification since 2000 and registered with USA Underwriters Laboratories since 1985. It is mainly involved in OEM (Original Equipment Manufacturers) of electronic and electrical high end precision moulded parts to multinational companies based in Malaysia. Mah Sing Plastic Industries launched its ISO14001 Environment Management System (EMS) on 12 July 2005 and is working to obtain the certificate by the third quarter of 2006. To achieve the objective of producing quality products that are also environmentally friendly, all employees are committed to preserving the environment by controlling chemicals used, improving safety and implementing new regulations under the new EMS.

The Indonesian operations received ISO9001 certification by TUV Indonesia in November 2003 and their major products are ultra large automotive parts with clients such as Toyota, Daihatsu, Suzuki and Isuzu and Mitsubishi. Other OEM products include automotive battery casing and electrical items such as television and washing machines.They are also preparing for audit certification as they work towards getting an ISO14001 Environment Management System (EMS) by the third quarter of 2006.

MOVING FORWARDAppreciation of prices for properties has been moderate and homes are still very affordable. We are confident that good opportunities still exist for us. Our strategy of focusing on mid to high end properties in multiple prime locations that are easily accessible and in close proximity to amenities have borne fruit, judging from our good take up rates of more than 80% for every project. The challenge lies in having the correct balance between pricing and product offering as projects with innovative concepts and designs will still attract the discerning buyer, and we expect strong take up for our projects in the Klang Valley and Johor Bahru.

Consolidating our strategic branding exercise which began in year 2000, we have positioned our products to cater to the needs and preference of different segments of buyers. The key is to be able to product differentiate to attract the interest of the house buyers by offering them a product range that they cannot resist.

The luxurious Legenda series is for the elite, the crème de la crème who reward themselves with a home in a prestigious, prime location. Damansara Legenda in Tropicana, Petaling Jaya is the epitome of sumptuous living where every detail adds to the high-end lifestyle they deserve. Manicured landscaping and lush greenery creates a revitalizing ambience for wholesome living. Smart home features enhance comfort and convenience, while state of the art security features ensure tranquility unperturbed by the outside world. The best money can buy starts at RM1.3million.

The trend-setting Residence series will appeal to those who aspire to better living. The medium high to high end projects in this series are Perdana Residence in Selayang and One Residence in Cheras. Thoughtful details in both the interior and exteriors of the homes will be characteristics of these boutique developments. Extensive landscaping including green perimeter buffers, manicured gardens and courtyards will add to the spacious airiness, allowing the project to blend seamlessly with nature. The Residence series is tagged between RM700,000 to RM1.3 million.

The Perdana series is synonymous with well-planned lifestyle townships. Projects in this affordable series include Aman Perdana in the Klang Valley and Sierra Perdana, Austin Perdana and Sri Pulai Perdana in Johor Bahru. The townships will be self contained yet easily accessible. Generous, well maintained central parks will become community focal points. The Perdana series is priced between RM200,000 to RM700,000.

Regardless of the product series, all our products will carry the hallmarks of innovative designs and quality finishes, majestic grand entrances, security, extensive landscaping and greenstreet concept. Emphasis will also be placed on exemplary customer service as we believe in the creation of a conducive and safe living environment by providing and maintaining parks and facilities and in ensuring effective security. We will continue to build eco-sensitive and environmentally friendly developments so that our homebuyers can enjoy life amidst greenery, in harmony with nature.

Having established a proven track record and undeniably strong reputation as a premier lifestyle developer, we are confident of achieving our aim of being a world class developer and delivering long-term value to our customers.


Awards &Recognitions


Forbes Asiaʼs “Best under US1 Billion”

Mah Sing was among the 10 Malaysian listed companies which made it to the Top 200 listed companies in the Asia-Pacific region selected for the prestigious award. Being one of the only 3 local property developers selected for the award bears testimony of the Companyʼs steadfast commitment to maximizing returns to shareholders. The award was judged based on sustained gains in sales, earnings growth and 5-years return on capital of more than 5%. Selected from a total of 25,864 public listed companies in the Asia-Pacific region, the Asiaʼs Best Under A Billion list comprises the top 200 listed companies in Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan and Thailand.

Top 1000 Malaysian Companies, MDTCA

Mah Sing received a Certificate of Excellence and was named as one of the Top 1000 Companies in Malaysia for 2004/2005 by the Ministry of Domestic Trade and Consumer Affairs, Malaysia.

CorporateSocialResponsibility

27

13 January 2005Disaster ReliefDuring the Asian Tsunami Disaster, the Groupʼs donations added more than RM150,000 to the Tsunami Disaster Fundʼs coffers. RM120,000 was channeled through the Malaysian Red Cresent and RM20,000 through Majlis Belia Malaysia.

1 March 2005Community awareness of the Drugs ScourgeMah Sing funded a national drugs awareness campaign jointly organized by the National Anti Drugs Campaign Secretariat and the Internal Security Ministry. Datoʼ Leong Hoy Kum handed the RM50,000 donation to our Prime Minister, YAB Datoʼ Seri Abdullah Ahmad Badawi and the Deputy Minister of Internal Security, YB Datoʼ Noh Omar.

10 September 2005Donations and contributionsIn conjunction with the launch of Aman Perdana, YAB Datoʼ Seri Dr Haji Mohamad Khir bin Toyo the Menteri Besar of Selangor witnessed Mah Sing Groupʼs charitable donation to two recipients; a sum of RM20,000 to Majlis Belia Daerah Klangʼs Sport Club and RM45,000 to Yayasan Kebajikan SSL Haemodialysis, towards the purchase of a dialysis machine for the centre.

This dedication to corporate social responsibility will continue as we seek to further grow our business in the years ahead.

17 April 2006Contribution to Charity Fund in KaparMah Sing contributed RM30,000 to a charity fund in Kapar and Datoʼ Leong Hoy Kum presented the contribution to the Menteri Besar of Selangor, YAB Datoʼ Seri Dr Haji Mohamad Khir bin Toyo.

Mah Sing Group Annual Report 2005

CorporateCalendar


1 January 2005A passing out parade was held for the first in-house security division for Sri Pulai Perdana in Skudai, Johor. The recruits went through intensive training covering fire fighting, arresting procedure and customer service standards before being confirmed as staff of the security division. The team is led by former Royal Malaysian Navy and Armed Forces veterans with years of experience including international missions.

30 January to 1 February 2005Mah Singʼs staff from the Klang Valley and Johor Bahru met halfway in Malacca for 3 days of fun and camaraderie during Mah Singʼs Annual Trip cum Company dinner. Everyone was dressed to the hilt for the highlight of the trip, the “Red Hot Nite” theme annual dinner. Several staff who has been with the company for 10 and 15 years received “Long Service Awards” in appreciation of their loyalty.

13 February 2005Mah Sing hosted a Chinese New Year Carnival to usher in the Year of the Rooster. Some 600 guests enjoyed an acrobatic display, kung fu demonstrations and a sumptuous lunch. The God of Prosperity made several appearances during the day to distribute good luck oranges, goodie bags and angpows to the guests who also visited the lifestyle show houses at the show village in Aman Perdana.

5 March 2005Damansara Legenda organized a Property Forum where renowned cartographer Mr Ho Chin Soon from Ho Chin Soon Research Sdn Bhd shared his knowledge on the next property hotspots. It was an informative seminar with strong participation from the crowd.

10 March 2005Mah Sing Plastics Industries Sdn. Bhd. received the “Industry Excellence Award 2004 – Innovative Product Award” for our folding plastic chair, awarded by the Ministry Of International Trade And Industry. The chairʼs innovative features also earned us the U.S. Patent in 2003 from the U.S. Patent and Trademark Office. The award was presented by the Prime Minister, YAB Datoʼ Seri Abdullah Haji Ahmad Badawi.


CorporateCalendar(Contʼd)

7 May 2005Public Bankʼs credit card holders and Public Mutual Trust Fundʼs depositors were invited to Austin Perdana for an investment talk on the Art of Retiring Gracefully by Public Mutual Trust Fund.

29 May 2005Aman Perdanaʼs colouring contest with the theme “Colour your dream home at Aman Perdana” for children between the ages of 7 to 12 from primary schools around the Klang Valley attracted more than 800 people. Other activities included face painting, caricature sessions & balloon sculpture clown.

2 & 3 July 2005More than 500 visitors thronged to the first ever Aero Show in Klang, organized by Aman Perdana. Highlights of the event included aerobatic plane display, aerobatic paragliding display and also toy parachute drop.

11 & 12 July 2005Sri Pulai Perdana staff attended a “Teaming for Excellence” staff training. More than 30 staff attended the training by an external consultant.

25 April 2005Mah Sing conducted a training, “The Sales Funnel” to train the sales staff on sales techniques. This is part of the continuous effort to improve their abilities by imparting relevant skills via interactive training.

10 September 2005Mah Sing launched Aman Perdana, the lifestyle township in Meru-Shah Alam, witnessed by the Menteri Besar of Selangor, YAB Datoʼ Seri Dr Haji Mohamad Khir bin Toyo.

10 November 2005Mah Sing was named one of Forbes Asiaʼs “Best Under A Billion”, one of only 10 Malaysian companies in the top 200 list of companies in the Asia-Pacific region. Datoʼ Leong Hoy Kum attended the awards ceremony in Singapore to receive the certificate.

30


12 July 2005Mah Sing Plastics Industries launched its ISO14001 Environmental Management System (EMS) with a training and briefing session. To produce quality products that are also environmentally friendly, all employees need to do their part by controlling the chemicals used, improving safety and implementing new regulations under the new system.

1 & 2 October 2005Children between 7 to 12 years old participated in a handicraft and art competition organised by Sri Pulai Perdana in Skudai, Johor. They were provided with photo frames decorated with clay accessories and were taught the correct technique and method of colouring. The children also enjoyed pony and horse cart rides.


31


15 &16 November 2005Mah Sing group organized a training session titled “Building a high performance team” for the staff in the corporate headquarters in Wisma Mah Sing.

3 & 4 December 2005Aman Perdana treated some 200 guests to 36 fl avours of Baskin Robbins ice-cream.

14 January 2006Mah Sing received a Certifi cate of Excellence and was named as one of the Top 1000 Companies in Malaysia for 2004/2005 by the Ministry of Domestic Trade and Consumer Affairs, Malaysia.

24 February 2006Datuk Tan Chai Ho, Deputy Minister Home Affairs graced our project preview of Perdana Residence. It was a resounding success with more than 800 potential buyers registering their interest for 75 units of semi-detached homes and garden bungalows being offered.

16 November 2005Mah Sing hosted a Hari Raya Open House for some 60 guests including analysts, fund managers, business associates and members of the media.


14 January 2006

Garden Park Living

Corporate GovernanceStatement


The Board of Directors is committed to ensuring that the highest standard of corporate governance is practiced throughout the Group as a fundamental part of discharging its responsibilities to protect and enhance shareholders value and the financial performance of Mah Sing Group Berhad. To this end, the Board of Directors fully supports the recommendations of the Malaysian Code on Corporate Governance (“the Code”) and has taken appropriate steps to ensure compliance.

Set out below is a statement of how the Group has applied the principles of the Code. Save where otherwise identified, the Board of Directors confirms that the Group has sought to comply with the best practices in the Code throughout the financial year ended 31 December 2005.

THE BOARD OF DIRECTORS

THE BOARD

The Board takes full responsibility for the performance of the Group and guides the Company on its short and long term goals, providing advice and devising strategies on management and business development issues.

The Board has delegated specific responsibilities to 4 sub-committees (Audit, Nomination, Remuneration and Option Committees). These Committees have the authority to examine particular issues within their terms of reference and report back to the Board with their recommendations. The ultimate responsibility for the final decision on all matters, however, lies with the entire Board.

The Board met 5 times during the financial year to monitor and control the development of the Group. Besides Board Meetings, the Board also exercises control on matters that require its approval by way of circular resolutions and informal meetings.

The attendance of each Director at the Board Meetings is as tabulated below:

NAME OF DIRECTOR ATTENDANCE AT BOARD MEETINGS

JEN. (R) TAN SRI YAACOB BIN MAT ZAINChairman (Independent Non-Executive)


LIM CHING CHOYExecutive Director

STEVEN NG POH SENGExecutive Director

LEONG YUET MEI Director (Non-Independent Non-Executive)

CAPTAIN (RTD) IZAHAM BIN ABD. RANIDirector (Independent Non-Executive)

LOH KOK LEONGDirector (Independent Non-Executive)

5/5

5/5

5/5

2/2*

5/5

5/5

5/5

* There were 2 Board Meetings held since his appointment on 27 June 2005.


Corporate GovernanceStatement(Contʼd)

BOARD BALANCE

The Board currently has 7 members of whom 3 are Independent Non-Executive Directors (including the Chairman). A brief profile of each Director is presented on pages 12 to 13 of this Annual Report.

All Board members bring a wide range of business experience, expertise and professional judgment to bear on issues of strategy, performance, resources and standards of conduct. Although all the Directors have equal responsibility for the Groupʼs operations, the role of the Independent Non-Executive Directors are particularly important in ensuring that the strategies proposed by the executive management are fully discussed and examined and take into account the long term interests, not only of the shareholders, but also of employees, customers and business associates.

Any concerns relating to the Group may be conveyed to any of the Independent Non-Executive Directors.

There is a clear division of responsibilities between the Companyʼs Chairman and Group Managing Director to ensure a balance of power and authority. The management of the Groupʼs businesses and implementation of policies and day-to-day running of the businesses are handled by the Group Managing Director and Executive Directors. The Independent Non-Executive Directors provide independent views to safeguard the interests of shareholders.

SUPPLY OF INFORMATION

Sufficient notice of Board Meetings is given and specific matters requiring Boardʼs decision are listed down in the Agenda.

During Board Meetings, the Non-Executive Directors are briefed on changes in management and control structure of the Group, business outlook, major acquisition and disposal of assets including investments and changes in requirements of regulatory bodies.

All directors have access to the advice and services of the Company Secretaries.

The Directors, whether as a full Board or in their individual capacity may seek independent professional advice, where necessary, in the furtherance of their duties and they may do so at the Groupʼs expense.

APPOINTMENTS TO THE BOARD

NOMINATION COMMITTEE

Composition

The Nomination Committee which is empowered by the Board comprises Non-Executive Directors, the majority of whom are independent.

Members


LEONG YUET MEIDirector (Non-Independent Non-Executive)

CAPTAIN (RTD) IZAHAM BIN ABD. RANIDirector (Independent Non-Executive)

This sub-committee held 1 meeting during the financial year to consider the appointment of an Executive Director to the Board.

The appointment was properly made and all relevant information that the Company required from the new Director to meet statutory



and regulatory obligations were obtained.

NOMINATION COMMITTEE (Contʼd)

Terms of Reference of the Nomination Committee:

• to identify and evaluate new appointees to the Board;• to make recommendations to the Board on all new Board members and appointments / resignations of Board Committee members;• to assist the Board in reviewing on an annual basis the required mix of skills and experience of the Directors of the Board;• to recommend the appropriate Board balance and size of non-executive participation; and• to establish procedures and processes towards an annual assessment of the effectiveness of the Board as a whole and contribution

of each individual Director and Board Committee member.

Directors ̓Training

All the Directors have attended the Mandatory Accreditation Program. The Group acknowledges the fact that continuous education is vital for the Board to gain insight into the state of the economy, changing commercial risks, technological advances in our core businesses, latest regulatory requirements and management strategies. As such, the Directors have attended relevant seminars and conferences to equip themselves with the necessary knowledge to discharge their responsibilities and duties more effectively.

Re-election of Directors

In accordance with the Companyʼs Articles of Association, at least one third of the Directors shall retire from office every year provided always that all Directors shall retire from office at least once in every 3 years but shall be eligible for re-election.

REMUNERATION COMMITTEE

Composition

The majority of the Remuneration Committee consists of Non-Executive Directors. Executive Directors may attend the meetings at the invitation of the Remuneration Committee.

Members

The members of the Remuneration Committee during the financial year were:



LEONG YUET MEIDirector (Non-Independent Non-Executive)

The 1 meeting held during the financial year was attended by all members.

37Mah Sing Group Annual Report 2005 37Mah Sing Group Annual Report 2005


REMUNERATION COMMITTEE (Contʼd)

Terms of Reference of the Remuneration Committee:

• to study and periodically review and implement policies governing the remuneration of all Executive Directors; and• to make recommendations to the Board on all elements of remuneration and terms of employment for Executive

Directors.

In the case of Non-Executive Directors, the determination of their remuneration is a matter for the Board as a whole and the level of remuneration reflects the experience and level of responsibilities undertaken by the particular Non-Executive Director concerned.

Individual Directors do not participate in decisions regarding their individual remuneration.

The Level and Make-up of Remuneration

The remuneration of Executive Directors are so determined to ensure that the Company attracts and retains the Directors needed to run the Group successfully. In the case of Executive Directors, the remuneration is structured so as to link rewards to corporate and individual performances. Survey data on the remuneration practices of comparable companies are taken into consideration in determining the remuneration package.

Disclosure on Directors ̓Remuneration

The number of Directors whose total remuneration falls into the following bands for the financial year ended 31 December 2005:

Remuneration band (RM) Number of Executive Directors Number of Non-Executive DirectorsUp to 50,00050,001 to 100,000150,001 to 200,000700,001 to 750,000

Total

--12

3

31--

4

Fees(RM)

Salaries(RM)

Bonus(RM)

EPF(RM)

Benefits-in-kind(RM)

Total 2005 Remuneration

(RM)

Total 2004 Remuneration

(RM)Executive DirectorsNon-Executive Directors

Total

-

150,000

150,000

1,105,167

-

1,105,167

301,250

-

301,250

168,780

-

168,780

80,716

12,784

93,500

1,655,913

162,784

1,818,697

1,068,726

148,700

1,217,426




OPTION COMMITTEE

The Option Committee was established to administer the implementation of the Groupʼs Employeesʼ Share Option Scheme (“Scheme”) and is vested with such powers and duties as are conferred upon it by the Board and the By-Laws of the Scheme. In addition, the Option Committee may, for the purpose of administering the Scheme, make rules and regulations or impose terms and conditions which the Option Committee may in its discretion consider to be necessary or desirable for giving full effects to the Scheme.

Members

Members of the Option Committee are:

JEN. (R) TAN SRI YAACOB BIN MAT ZAIN Chairman (Independent Non-Executive)

DATO ̓LEONG HOY KUM Group Managing Director

LOH KOK LEONG Director (Independent Non-Executive)

Meetings of the Option Committee are held when necessary.

SHAREHOLDERS

Investor Relations

The Group recognizes the importance of communication and proper dissemination of information to its shareholders. In this respect, the Executive Directors hold briefings with investment research analysts, fund managers, financiers and the media as and when appropriate to explain the Groupʼs strategies, performance and major developments. The annual reports, announcements through Bursa Securities and the Companyʼs quarterly newsletters provide valuable insight on the latest developments of the Group.

For the latest information on the Group, shareholders and members of the public can access the Groupʼs website at www.mahsing.com.my and the Bursa Securities website at www.bursamalaysia.com.my.

Annual General Meeting

The Annual General Meeting is the principal forum for dialogue with shareholders. Shareholders are encouraged to participate in the proceedings and ask questions on the progress and performance of the Group. Where it is not appropriate to provide immediate answers, the Chairman will undertake to furnish the shareholder with a written answer after the Annual General Meeting.

ACCOUNTABILITY AND AUDIT

Financial Reporting

In presenting the annual financial statements and quarterly announcements of unaudited consolidated results to shareholders, the Directors have taken reasonable steps to ensure a balanced and understandable assessment of the Groupʼs financial position and prospects. The Board is assisted by the Audit Committee in overseeing the Groupʼs financial reporting processes and the quality of its financial reporting.

Internal Control

The Directorsʼ Statement on the Groupʼs Internal Control is set out on page 43 of this Annual Report.

Relationship with Auditors

The Company maintains a transparent relationship with the external auditors in seeking their professional advice and towards ensuring compliance with accounting standards. The Head of Group Internal Audit Department was present at the Audit Committee meetings while the external auditors were invited to brief the Audit Committee and the Board on specific issues at certain meetings.

The Report by the Audit Committee for the financial year under review is set out on pages 39 to 42 of this Annual Report.


AuditCommitteeReport

MEMBERSHIP

The Audit Committee comprises 4 Directors, 3 of whom are Independent Non-Executive Directors:

JEN. (R) TAN SRI YAACOB BIN MAT ZAIN (Chairman/Independent Non-Executive Director)

STEVEN NG POH SENG(Executive Director)

CAPTAIN (RTD) IZAHAM BIN ABD. RANI (Independent Non-Executive Director)

LOH KOK LEONG (Independent Non-Executive Director)

TERMS OF REFERENCE OF THE AUDIT COMMITTEE

MEMBERSHIP

The Audit Committee shall be appointed by the Board from amongst the Directors and shall consist of not less than 3 members, the majority of whom shall be Independent Directors. At least one member of the Audit Committee must be a member of the Malaysian Institute of Accountants or possesses such other qualifications and/or experience as approved by Bursa Malaysia Securities Berhad (“Bursa Securities”).

QUORUM

A quorum shall consist of 2 members and the majority of the members present must be Independent Directors.

RETIREMENT AND RESIGNATION

If a member of the Audit Committee resigns, retires or for any other reason ceases to be a member with the result that the number of members is reduced to below 3, the Board of Directors shall, within 3 months of that event, appoint such number of new members as may be required to make up the minimum number of 3 members.

REVIEW OF THE AUDIT COMMITTEE

The term of office and performance of the Audit Committee and each of its members shall be reviewed by the Board of Directors at least once every 3 years to determine whether the Audit Committee and members have carried out their duties in accordance to their terms of reference.

CHAIRMAN

The Chairman of the Audit Committee shall be an Independent Director appointed by the Board. He shall report on each meeting of the Committee to the Board.

SECRETARY

The Company Secretary shall be the Secretary of the Audit Committee and shall be responsible, in conjunction with the Chairman, for drawing up the agenda and circulating it, supported by explanatory documentation to the Committee members prior to each meeting.

The Secretary shall also be responsible for keeping the minutes of meetings of the Committee and circulating them to the Committee members and to the other members of the Board.


AuditCommitteeReport (Contʼd)


FREQUENCY OF MEETINGS

Meetings shall be held preferably not less than 4 times a year and will normally be attended by the Department Head charged with the responsibility of the Groupʼs financial reporting and Head of Internal Audit. The presence of external auditors will be requested if required and the external auditors may also request a meeting if they consider it necessary.

ATTENDANCE OF OTHER DIRECTORS AND EMPLOYEES

Attendance of other Directors and employees at any particular Audit Committee meeting will be at the invitation of the Audit Committee.

AUTHORITY

The Committee is authorized by the Board to investigate any activity within its terms of reference and shall have unrestricted access to both the internal and external auditors and to all employees of the Group. The Committee is also authorized by the Board to obtain external legal or other independent professional advice as necessary.

The Committee is also authorized to convene meetings with the external auditors without the presence of the executive members of the Committee, whenever deemed necessary.

DUTIES

The duties of the Audit Committee shall be:

Oversee all matters relating to External Audit:

• discuss with the external auditors where necessary, the nature and scope of the audit and ensure co-ordination of audit where more than one audit firm is involved;

• discuss problems and reservations arising from the interim and final audits and any matter the auditors may wish to discuss (in the absence of management where necessary);

• review with the external auditors, their evaluation of the system of internal controls, their management letter and managementʼs response; and

• consider the nomination & appointment of the external auditors, the audit fee and any questions of resignation and dismissal.

Review the half-yearly reports by the Chairman of the Risk Management Team in relation to the adequacy and integrity of the Groupʼs internal control systems.

Oversee all matters relating to Internal Audit:

• to review the adequacy, scope, functions and resources of the internal audit function and that it has the necessary authority to carry out its work;

• to review the internal audit program;• to ensure co-ordination of external audit with internal audit;• to consider the major findings of internal audit investigations and managementʼs response and ensure that appropriate

actions are taken on the recommendations of the internal audit function;• to review any assessment of the performance of the staff of the internal audit function; • to approve any appointment or termination of senior staff members of the internal audit function; and• to keep itself informed of resignations of internal audit staff members and provide resigning staff member an opportunity to

submit his reasons for resigning.



Review of financial statements:

To review the quarterly and year-end financial statements of the Group before submission to the Board, focusing particularly on:

• any changes in accounting policies and practices;• significant issues arising from the audit;• going concern assumption;• compliance with the applicable approved accounting standards and regulatory requirements; and• compliance with Bursa Securities listing and other legal requirements.

Additional duties and responsibilities:

• to consider any related party transactions and conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity. They are also required to ensure that the Directors report such transactions annually to shareholders via the annual report;

• where the Audit Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Bursa Securities Listing Requirements, the Audit Committee must promptly report such matters to Bursa Securities; and

• to carry out such other responsibilities, functions or assignments as may be defined jointly by the Audit Committee and the Board from time to time.

SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE FOR THE FINANCIAL YEAR

The Committee convened 4 meetings during the financial year which were attended by all the members and the Group Internal Auditors. A newly appointed Executive Director attended all the 2 meetings since his appointment during the period. The Groupʼs external auditors were present at 2 meetings.

During the financial year, the Audit Committee carried out its duties as set out in the terms of reference and discussed the following issues:

• reviewed the extent of the Groupʼs compliance with the provisions set out under the Malaysian Code on Corporate Governance for the purpose of preparing the Corporate Governance Statement and the Statement of Internal Control pursuant to the Bursa Securities Listing Requirements;

• reviewed the Risk Management Teamʼs reports on the risk profile of the Group and the adequacy and integrity of internal control systems to manage these risks;

• reviewed with the external auditors the audit plan and to ensure co-ordination of audit of the various companies within the Group with different external auditors;

• reviewed with the external auditors the results of the audit, the audit report and the management letter, including managementʼs response;

• considered and recommended to the Board for approval of the audit fees payable to the external auditors as disclosed in Note 8 to the financial statements;

• reviewed the internal audit plan and internal audit reports and considered the major findings of internal audit investigations and managementʼs response;

• reviewed and discussed the internal audit function, its authority, resources and scope of work;• reviewed related party transactions entered into by the Group and the draft proposal to seek shareholdersʼ mandate pursuant

to Paragraph 10.09 of the Bursa Securities Listing Requirements to authorize the Group to enter into recurrent related party transaction of a revenue or trading nature; and

• reviewed the Quarterly Reports on the Companyʼs unaudited consolidated results and the year end financial statements before recommending them to the Board for their approval for announcement to Bursa Securities.

42Mah Sing Group Annual Report 2005Mah Sing Group Annual Report 2005 42

SUMMARY OF ACTIVITIES OF GROUP INTERNAL AUDIT DEPARTMENT FOR THE FINANCIAL YEAR

The Group Internal Audit Department which reports to the Audit Committee also assists the Board of Directors in monitoring and managing risks and internal controls. Their role is to undertake independent regular and systematic reviews of the systems of internal control so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively. Internal audit plans are approved by the Audit Committee and the scope of internal audit covers the audits of all units and operations, including subsidiaries and associate companies. The internal audits are on a risk-based approach process by which significant risks are identified, assessed and managed. Such audits also ensure instituted controls are appropriate and are effectively applied to achieve acceptable risk exposures.

During the financial year the Group Internal Audit Department conducted independent reviews and evaluated risk exposures relating to the Groupʼs operations and information systems as follows:

• reliability of financial and operational information;• effectiveness and efficiency of operations;• safeguarding of assets; and • compliance with policies, procedures, laws and regulations and contracts. At the conclusion of the various audits carried out, the weaknesses together with the recommended corrective action to be taken were highlighted to the management. There were no material losses incurred during the current financial year as a result of weaknesses in internal control and management continues to take measures to strengthen the control environment. Subsequently, follow-up reviews were conducted to ensure that corrective actions were accordingly implemented.



Statementof InternalControl

THE BOARDʼS RESPONSIBILITY

The Board of Directors affirms its overall responsibility for the Groupʼs systems of internal controls and risk management and for reviewing the adequacy and integrity of those systems. The Board of Directors ensures the effectiveness of financial, organizational, operational and compliance controls through regular review.

It should be noted, however, that such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and as such, can provide only reasonable and not absolute assurance against material misstatement or loss.

THE RISK MANAGEMENT PROCESS

The Board of Directors confirms that the Group has in place an Enterprise Risk Management Framework for the on-going process of identifying, evaluating, monitoring and managing the significant risks affecting the achievement of its business objectives through out the financial year under review. This process is regularly reviewed by the Board of Directors and is in accordance with the Internal Control Guidance.

The key aspects of the risk management process are:

• The Risk Management Team comprising management staff of the property and plastics divisions as well as the Corporate Office is charged with the responsibilities of continuous monitoring and management of risks of the Group;

• The Risk Management Team will meet every half yearly for a risk management workshop to be conducted and chaired by the Chief Executive Officer to identify, assess and prioritize the risks faced by the Group based on the likelihood of occurrence and magnitude of impact and also to assist management in identifying procedures or steps to be taken to manage or control these risks;

• The key risks identified in the risk management workshops are summarized in the Key Risk Profile and Risks Report together with the controls and processes for managing them and the means for assuring the Audit Committee that the processes are effective and/or management action plans are implemented. Independent compliance reviews are carried out by group internal auditors on a continuous basis to ensure that the controls for managing the risks are functioning effectively; and

• The Audit Committee upon receiving reports from group internal auditors shall review and monitor the effectiveness of the Groupʼs system of internal control before onward submission to the Board of Directors for endorsement.

THE INTERNAL CONTROL PROCESS

The other key elements of the Groupʼs internal control process are:

• Operational structure with defined lines of responsibility and delegation of authority is in place. A process of hierarchical reporting has been established which provides for a documented and auditable trail of accountability;

• Internal policies and procedures are in place and are regularly updated to reflect changing risks or resolve operational deficiencies. Instances of non-compliance with such policies and procedures are reported thereon by the group internal audit function to the Board of Directors via the Audit Committee;

• Key functions such as finance, tax, treasury, insurance and legal matters are centralized at the head office;• Detailed budgeting process established requiring all business units to prepare budgets and business plans on an annual basis.

The Board of Directors reviews and approves annual budget;• Effective reporting systems which expose significant variances against budget and plan are in place to monitor performance.

Key variances are followed up by the management and management action taken where necessary, and reported to senior management on a monthly basis. The Group Managing Director and Chief Executive Officer meet on a monthly basis with all divisional heads to consider the Groupʼs financial performance, business development, management and corporate issues;

• Regular visits to operating units by members of the Board and senior management;• An on-going training and educational program for Directors and staff relevant in assessing the adequacy and integrity of the

Companyʼs risks and control process;• The professionalism and competence of staff are being continually upgraded through training and regular performance evaluation;

and• Group internal audit independently reviews the internal controls to provide the Audit Committee with sufficient assurance that the

systems of internal control are effective in addressing the risks identified. On a quarterly basis, group internal audit submits reports and plans for review and approval by the Audit Committee.


Statement of Directorsʼ ResponsibilityFor Preparing The Financial Statements

The Board of Directors is responsible for ensuring that the financial statements of the Group and of the Company have been drawn up in accordance with the applicable approved accounting standards in Malaysia and the Companies Act 1965 and give a true and fair view of the state of affairs of the Group and of the Company at the end of the financial year and of the results and cash flows of the Group and of the Company for the financial year.

The Board of Directors is satisfied that in preparing the financial statements of the Group and of the Company for the financial year ended 31 December 2005, the Group has adopted the appropriate accounting policies and applied them consistently; and that all applicable approved accounting standards have been followed.

ADDITIONAL COMPLIANCE INFORMATION

Options, Warrants or Convertible Securities

No options, warrants or convertible securities were issued by the Company during the financial year ended 31 December 2005.

Pursuant to the 48,375,800 free detachable warrants issued on the basis of 3 free detachable warrants for every 5 rights shares subscribed, which were listed and quoted on 11 June 2004, 3,600 warrants were exercised and converted into shares during the financial year ended 31 December 2005.

Non-audit fees paid/payable to External Auditors

For the financial year ended 31 December 2005, non-audit fees payable to the external auditors amounted to RM5,000 for the review of internal control statement.

Material Contracts

There were no material contracts by the Company and its subsidiaries involving Directorsʼ and major shareholdersʼ interests.

Recurrent Related Party Transactions

The existing Shareholdersʼ Mandate for the Company and/or its subsidiaries to enter into recurrent related party transactions of revenue or trading nature which is necessary for its day-to-day operations shall expire at the conclusion of the forth-coming Annual General Meeting and is subject to renewal by the shareholders at the said Annual General Meeting.

The aggregate value of transactions conducted pursuant to the shareholdersʼ mandate during the financial year is as disclosed in Note 37 on page 103 of the financial statements.

Share Buybacks

The existing authority for the Company to purchase up to 10% of its issued and paid-up share capital shall expire at the conclusion of the forth-coming Annual General Meeting and is subject to renewal by the shareholders at the said Annual General Meeting.

During the financial year, there were no share buybacks by the Company.

Revaluation of Landed Properties

Details on revaluation of landed properties are as disclosed in Note 3 on page 63 of the financial statements.


Statement of Directorsʼ ResponsibilityFor Preparing The Financial Statements

The Board of Directors is responsible for ensuring that the financial statements of the Group and of the Company have been drawn up in accordance with the applicable approved accounting standards in Malaysia and the Companies Act 1965 and give a true and fair view of the state of affairs of the Group and of the Company at the end of the financial year and of the results and cash flows of the Group and of the Company for the financial year.

The Board of Directors is satisfied that in preparing the financial statements of the Group and of the Company for the financial year ended 31 December 2005, the Group has adopted the appropriate accounting policies and applied them consistently; and that all applicable approved accounting standards have been followed.

ADDITIONAL COMPLIANCE INFORMATION

Options, Warrants or Convertible Securities

No options, warrants or convertible securities were issued by the Company during the financial year ended 31 December 2005.

Pursuant to the 48,375,800 free detachable warrants issued on the basis of 3 free detachable warrants for every 5 rights shares subscribed, which were listed and quoted on 11 June 2004, 3,600 warrants were exercised and converted into shares during the financial year ended 31 December 2005.

Non-audit fees paid/payable to External Auditors

For the financial year ended 31 December 2005, non-audit fees payable to the external auditors amounted to RM5,000 for the review of internal control statement.

Material Contracts

There were no material contracts by the Company and its subsidiaries involving Directorsʼ and major shareholdersʼ interests.

Recurrent Related Party Transactions

The existing Shareholdersʼ Mandate for the Company and/or its subsidiaries to enter into recurrent related party transactions of revenue or trading nature which is necessary for its day-to-day operations shall expire at the conclusion of the forth-coming Annual General Meeting and is subject to renewal by the shareholders at the said Annual General Meeting.

The aggregate value of transactions conducted pursuant to the shareholdersʼ mandate during the financial year is as disclosed in Note 37 on page 103 of the financial statements.

Share Buybacks

The existing authority for the Company to purchase up to 10% of its issued and paid-up share capital shall expire at the conclusion of the forth-coming Annual General Meeting and is subject to renewal by the shareholders at the said Annual General Meeting.

During the financial year, there were no share buybacks by the Company.

Revaluation of Landed Properties

Details on revaluation of landed properties are as disclosed in Note 3 on page 63 of the financial statements.


fin

an

cia

l s

tate

me

nts

46 Directors’ Report

51 Report of the auditors

52 Income statements

53 Balance sheets

55 Consolidated statement of changes in equity

56 Company statement of changes in equity

57 Cash flow statements

60 Notes to the financial statements

106 Statement by Directors

106 Statutory declaration by the Director primarily responsible for the financial management of the Company


Directorsʼ reportfor the financial year ended 31 December 2005

The Directors are pleased to submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2005.

Principal activities

The principal activities of the Company are that of investment holding and provision of management services to subsidiary companies in the Group. The principal activities of the subsidiary companies are set out in Note 22 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

Financial results

GroupRM

CompanyRM

Profit from ordinary activities before taxation Taxation Profit from ordinary activities after taxation Minority interests Net profit attributable to shareholders

69,620,399(19,896,069)49,724,330(1,378,420)48,345,910

20,797,134(5,894,302)14,902,832

-14,902,832

In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature.

Dividends

On 26 July 2005, the Company paid a first and final gross dividend of 6 sen per share, less income tax, amounting to RM6,269,659 in respect of the financial year ended 31 December 2004 as approved by the shareholders at the last Annual General Meeting. The directors have proposed a first and final gross dividend in respect of the financial year ended 31 December 2005 of 12 sen per share, less income tax, amounting to RM12,562,992 on 145,131,000 ordinary shares as at 31 December 2005 (including 3,600 warrants converted during the year) and 274,000 new ordinary shares issued pursuant to the exercise of Warrants after 31 December 2005 up to the date of this report as disclosed in Note 15(b). The proposed first and final gross dividend is subject to approval by the shareholders at the forthcoming Annual General Meeting and has not been included as a liability in the financial statements.

Movements on reserves and provisions

All material transfers to or from reserves or provisions during the financial year have been disclosed in the financial statements.


Directorsʼ report (contʼd)

for the financial year ended 31 December 2005

Share capital

The Company increased its issued and paid-up ordinary share capital from RM145,127,400 to RM145,131,000 from the conversion of 3,600 Warrants during the year.

The new ordinary shares issued rank pari passu with the then existing ordinary shares of the Company.

The proceeds raised from the companyʼs renounceable rights issue on 18 May 2004 have been fully utilised by 13 April 2005 as follows:

Approved forutilisation by

Securities Commission

RM

Utilised as at13.04.2005

RM

Balance yet tobe utilised

RMWorking capital Repayment of bank borrowings Incidental expenses

39,126,33340,000,000

1,500,00080,626,333

39,126,33340,000,000

1,500,00080,626,333

----

Warrants

The Warrants 2004/2009 were constituted under the Deed Poll dated 2 April 2004.

The salient features of the Warrants 2004/2009 are as follows:

(i) Each Warrant carries the entitlement to subscribe for one new ordinary share at an exercise price of RM1.00;

(ii) The issue date for the Warrants is on 7 June 2004 and the expiry date is on 6 June 2009;

(iii) The holder of the Warrants shall pay cash based on the exercise price of RM1.00 per Warrant when subscribing for new ordinary shares;

(iv) The Warrant holders are not entitled to participate in any distribution and/or offer of further securities in the Company until and unless such holders exercise the rights under the Warrants for new ordinary shares;

(v) The adjustments to the exercise price and the number of Warrants in the event of alteration to the share capital of the Company are set out in the Deed Poll; and

(vi) The new ordinary shares to be issued upon exercise of the Warrants shall, upon allotment and issue, rank pari passu with the then existing ordinary shares, including the entitlement to dividends, rights, allotments or other distributions, except that they will not be entitled to the rights, allotments or other distributions, declared by the Company which entitlement thereof precedes the allotment date of the new ordinary shares allotted pursuant to the exercise of the Warrants.




Share options

The Company implemented an Employeesʼ Share Option Scheme (“ESOS”) which is governed by the ESOS By-Laws and was approved by the shareholders at the Extraordinary General Meeting held on 8 March 2004.

The salient features of the ESOS are as follows:

(i) the total number of new shares to be offered pursuant to the ESOS shall be subject to a maximum of 10% of the Companyʼs issued and paid-up share capital at the time of the offer;

(ii) only eligible employees and Executive Directors of the Company and its subsidiary companies (provided they are not dormant) will be eligible to participate in the ESOS. An ESOS committee comprising members of the Board will determine the share allocation criteria. A set of criteria on eligibility and allocation will be clearly specified and all eligible employees will be made aware of it;

(iii) the price payable upon exercise of an option granted under the Proposed ESOS will be based on the five (5)-day weighted average market price preceding the offer date with a discount of not more than 10% and further subject to the provision that the exercise price per share shall in no event be less than the par value of the Companyʼs shares;

(iv) the duration of the ESOS will be for five (5) years and may, at the option committeeʼs discretion, be extended or renewed (as the case may be), subject to an aggregate duration of ten (10) years;

(v) the Company shall be allowed to terminate the ESOS in mid-stream by fulfilling the following conditions:

(a) approval from the Securities Commission of Malaysia;

(b) consent from the Companyʼs shareholders at a general meeting; and

(c) written consent of all options holders who have yet to exercise their options, either in part or in whole; and

(vi) in the event that a share buy-back exercise of the Company results in the number of options that have been offered under the Scheme exceeding 10% of the issued capital of the Company, there shall be no granting of additional options at any point in time after the share buy-back, unless the number of options that have been granted under the Scheme falls below 10% of the issued capital of the Company.

No options have been granted under the ESOS by the Company to any parties during the financial year to take up unissued shares of the Company.

Directors

The Directors who have held office during the financial year since the date of the last report are as follows:

Jen. (R) Tan Sri Yaacob bin Mat Zain Dato ̓Leong Hoy Kum Lim Ching Choy Ng Poh Seng (Appointed on 27.06.2005) Leong Yuet Mei Captain (Rtd) Izaham bin Abd. Rani Loh Kok Leong

Jen. (R) Tan Sri Yaacob bin Mat Zain retires pursuant to Section 129(2) of the Companies Act, 1965, and a resolution will be proposed for his re-appointment as a Director under the provision of Section 129(6) of the said Act to hold office until the next Annual General Meeting of the Company.




Directors (contʼd)

In accordance with Article 102 of the Companyʼs Articles of Association, Mr Lim Ching Choy and Mr Loh Kok Leong retire at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.

In accordance with Article 109 of the Companyʼs Articles of Association, Mr Ng Poh Seng who was appointed to the Board since the last Annual General Meeting, retires at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election.

Directors ̓interests

According to the Register of Directorsʼ Shareholdings, the interests of the Directors who held office at the end of the financial year in the shares and warrants of the Company are as follows:

Number of ordinary shares of RM1.00 each1.1.2005 Acquired Sold 31.12.2005

Direct interest in the CompanyDatoʼ Leong Hoy Kum 62,714,844 - - 62,714,844

Number of warrants1.1.2005 Acquired Sold 31.12.2005

Direct interest in the CompanyDatoʼ Leong Hoy Kum 21,343,080 - - 21,343,080

By virtue of Datoʼ Leong Hoy Kum having an interest of more than 15% of the shares in the Company, he is deemed interested in the shares of all the subsidiary companies 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 the shares of the Company and its related corporations during the financial year.

Directors ̓benefits

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than the fees, other emoluments and benefits-in-kind as shown in Note 10 to the Financial Statements) by reason of a contract made by the Company or by 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 except for those benefits which may be deemed to have arisen by virtue of those transactions entered into in the ordinary course of business by the Company and its subsidiary companies with the companies in which the Directors are deemed to have substantial financial interests. The transactions are disclosed in Note 37 to the Financial Statements.

Neither during nor at the end of the financial year was the Company or any of its related corporations a party to any arrangement whose object was to enable the Directors to acquire benefits through the acquisition of shares in, or debentures of, the Company or any other body corporate other than the aforementioned Warrants entitlement to subscribe for new ordinary shares.

Other statutory information

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

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and had satisfied themselves that there are no known bad debts to be written off and that adequate allowance had been made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values.


Other statutory information (contʼd)

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

(a) which would require the write off of bad debts or render the amount of allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial material extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or

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

(d) not otherwise dealt with in this report or financial statements which would render any amount stated in the financial statements of the Group and of the Company misleading.

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

(a) any charge on the assets of the Group and of 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 of the Company which has arisen since the end of the financial year.

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

In the opinion of the Directors, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of operations of the Group and of the Company for the financial year ended 31 December 2005.

Auditors

The auditors, Deloitte KassimChan, have expressed their willingness to continue in office.

Signed on behalf of the Boardin accordance with a resolution of the Board of Directors dated 18 April 2006.

Jen. (R) Tan Sri Yaacob bin Mat ZainChairman


Kuala Lumpur




Report of theauditorsto the members ofMah Sing Group Berhad

We have audited the accompanying balance sheets as of 31 December 2005 and the related statements of income, cash flows and changes in equity for the year then ended. These financial statements are the responsibility of the Companyʼs Directors. It is our responsibility to form an independent opinion, based on our audit, on these financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility towards any other person for the contents of this report.

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

In our opinion:

(a) the abovementioned financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable Malaysian Accounting Standards Board approved accounting standards in Malaysia so as to give a true and fair view of:

(i) the state of affairs of the Group and of the Company as at 31 December 2005 and of the results and cash flows of the Group and of the Company for the financial year ended on that date; and

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

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

We have considered the financial statements and auditorsʼ reports of the subsidiary companies, of which we have not acted as auditors, as mentioned under Note 22 to the Financial Statements, being financial statements that have been included in the consolidated financial statements.

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

The auditorsʼ reports on the financial statements of the subsidiary companies were not subject to any qualification and did not include any comment made under Subsection (3) of Section 174 of the Act.

DELOITTE KASSIMCHANAF:0080Chartered Accountants

HIEW KIM TIAMNo.1717/08/07(J)Partner

Kuala Lumpur18 April 2006


Note Group Company2005RM

2004RM

2005RM

2004RM

Revenue Cost of sales Gross profit Other operating income Selling and distribution costs Administrative expenses Other operating expenses Profit from operations Finance costs Share of results in associated companies Profit from ordinary activities before taxation TaxationProfit from ordinary activities after taxationMinority interestsNet Profit attributable to shareholdersEarnings per ordinary share (sen)- Basic- Fully diluted Dividend per share (sen)

56

7

7811

12

1313

14

473,490,653 (362,780,047)110,710,606

3,967,055 (3,039,118)

(37,668,402)(8,396)

73,961,745 (4,341,346)

- 69,620,399

(19,896,069)49,724,330 (1,378,420)48,345,910

33.31 30.19

12

356,455,162 (282,947,958)

73,507,204 4,232,243

(2,933,452)(30,702,947)

(368,733)43,734,315 (4,891,813)

(1,948)38,840,554 (13,118,849)25,721,705

(659,901)25,061,804

19.22 18.24

6

23,530,596 -

23,530,596 113,465

- (1,522,622)

(85,983)22,035,456 (1,238,322)

- 20,797,134 (5,894,302)14,902,832

- 14,902,832

12

14,866,340 -

14,866,340 17

- (2,760,274)

(60,096)12,045,987

(519,396)-

11,526,591 (3,001,128)8,525,463

- 8,525,463

6

The above income statements are to be read in conjunction with the notes to the financial statements on pages 60 to 105.

IncomeStatementsfor the financial year ended 31 December 2005


Balance Sheetsas at 31 December 2005


2004RM

2005RM

2004RM

Capital and reservesShare capitalReserves

Minority interest Long-term liabilities Term loans Long-term and deferred payables Deferred tax liabilities

Assets Property, plant and equipmentIntangible assets Subsidiary companies Associated companies Investments Land held for property development

1516

171819

202122232425

145,131,000 110,928,330 256,059,330

4,467,481

116,147,824 56,313,344

3,218,000

175,679,168 436,205,979

57,731,138 36,488 -

25,524 1,080

61,520,145 119,314,375

145,127,400 68,995,144

214,122,544 3,125,365

138,720,118 5,978,743 1,002,000

145,700,861 362,948,770

65,274,425 44,898 -

25,524 1,080 -

65,345,927

145,131,000 12,595,551

157,726,551 -

32,148,073 -

6,468,000

38,616,073 196,342,624

137,754 -

64,051,396 25,524 - -

64,214,674

145,127,400 3,962,378

149,089,778 -

- -

3,500,000

3,500,000 152,589,778

137,022 -

55,826,459 25,524 - -

55,989,005

The above balance sheets are to be read in conjunction with the notes to the financial statements on pages 60 to 105.


Balance Sheets (contʼd)

as at 31 December 2005


2004RM

2005RM

2004RM

Current assets Property development cost Inventories Trade and other receivables Deposits, cash and bank balances Current liabilities Trade and other payables Provision for liability Term loans - current portion Short-term borrowings Bank overdrafts Taxation

Net current assets

25262728

2930173132

293,269,316 17,053,476

150,969,511 38,909,676

500,201,979

125,097,458 425,775

30,643,819 19,125,039

358,541 7,659,743

183,310,375

316,891,604

436,205,979

319,015,282 12,495,510

119,350,979 36,028,447

486,890,218

124,402,756 506,130

23,573,942 31,262,322

849,507 8,692,718

189,287,375

297,602,843

362,948,770

- -

130,614,984 9,027,131

139,642,115

4,756,104 425,775

- 2,332,286

- -

7,514,165

132,127,950

196,342,624

- -

107,478,355 2,734,226

110,212,581

1,695,155 506,130

- 11,000,000

410,523 -

13,611,808

96,600,773

152,589,778

The above balance sheets are to be read in conjunction with the notes to the financial statements on pages 60 to 105.


Consolidated statement of changes in equityfor the financial year ended 31 December 2005

Issu

ed a

nd fu

lly p

aid

ordi

nary

sha

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43,9

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- - -

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32,7

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,103

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501,

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- 50

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501,

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501,

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- - - 50

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- - - 50

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350,

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7 - - -

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350,

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7

- - - 35

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7

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6,00

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6

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7,82

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7,36

7,82

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214,

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6,14

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The

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hang

es in

equ

ity is

to b

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ad in

con

junc

tion

with

the

note

s to

the

finan

cial

sta

tem

ents

on

page

s 60

to 1

05.


Company statement of changes in equityfor the financial year ended 31 December 2005

Issued and fully paid ordinary shares of RM1

eachNon-

distributable

Note Number of shares

Nominal valueRM

Share premium

RM

Accumulated losses

RM

Total

RMAt 1 January 2005Warrant conversion Net profit for the financial year Dividend paid in respect of financial year 2004 At 31 December 2005 At 1 January 2004 Private placement Rights issue Bonus issue Rights issue expenses Net profit for the financial year Dividend paid in respect of financial year 2003

At 31 December 2004

16

14

145,127,400 3,600

145,131,000

145,131,000

43,978,000 4,397,800

80,626,333 16,125,267

145,127,400

145,127,400

145,127,400 3,600

145,131,000

145,131,000

43,978,000 4,397,800

80,626,333 16,125,267

145,127,400

145,127,400

31,103,622 -

31,103,622 -

-

31,103,622

47,199,112 1,671,164

- (16,125,267)32,745,009 (1,641,387)

-

-

31,103,622

(27,141,244)-

(27,141,244)14,902,832

(6,269,659)

(18,508,071)

(34,273,484)- - -

(34,273,484)-

8,525,463

(1,393,223)

(27,141,244)

149,089,778 3,600

149,093,378 14,902,832

(6,269,659)

157,726,551

56,903,628 6,068,964

80,626,333 -

143,598,925 (1,641,387)

8,525,463

(1,393,223)

149,089,778

The above company statement of changes in equity is to be read in conjunction with the notes to the financial statements on pages 60 to 105.


Cash FlowStatementsfor the financial year ended 31 December 2005

Group Company2005RM

2004RM

2005RM

2004RM

Profit before taxationAdjustments for:DepreciationAmortisation of licence feeGoodwill written offGain on disposal of property, plant and equipmentNet (reversal) / impairment loss of property, plant and equipmentProperty, plant and equipment written offNet (reversal) / allowance for doubtful debtsNet (reversal) / written-down/written-off of inventories obsolescenceAllowance for amounts due from subsidiary companiesAllowance for diminution in value of investment in subsidiary companiesAllowance for diminution in value of investment in associated companyRecover for amount due from associated companiesReversal of provision in respect of loan granted by a financial

institution to an associated companyInterest expensesInterest incomeDividend for redeemable preference sharesGross dividend income from subsidiary companiesShare of results in associatesNet unrealised foreign exchange gainOperating profit/(loss) before working capital changes

69,620,399

12,995,615 8,396 -

(964,470)(319,183)

1,577 (161,169)(457,544)

- - - -

(80,355)9,353,482 (457,066)

- - -

(169,198)89,370,484

38,840,554

14,645,223 8,405

1 (773,671)163,070 224,190 394,551 900,078

- - -

(75)

- 9,736,286

(1,310,284)(300,000)

- 1,948

(205,006)62,325,270

20,797,134

19,047 - - - - - - - 2,740

(27,482)- -

(80,355)1,238,322 (417,096)

- (23,100,000)

- -

(1,567,690)

11,526,591

17,902 - - - - - - -

1,493,132 58,148

1,948 (75)

- 519,396

(354,340)-

(14,500,000)- -

(1,237,298)


Cash FlowStatements(contʼd)


Group Company2005RM

2004RM

2005RM

2004RM

(Increase) / decrease in working capitalDevelopment propertiesInventoriesReceivablesPayables

Net change in working capital

Cash generated from / (used in) operations

Interest receivedInterest paidTaxation paid

Net cash from / (used in) operating activities

Cash flows from / (used in) investing activities:Investment in subsidiary companiesProceeds from disposal of subsidiary companyNet advances to subsidiary companiesNet advances (to) / from associated companiesInterest received from deposits with licensed banksPurchase of property, plant and equipment (Note)Proceeds from disposal of property, plant and equipment

Net cash used in investing activities

(27,827,572)(4,158,409)

(31,602,831)49,689,405

(13,899,407)

75,471,077

8,291 (14,671,010)(18,697,421)

42,110,937

- - - (1,500)

448,775 (4,574,546)1,462,930

(2,664,341)

(114,266,886)(5,204,288)

(50,596,439)(44,139,661)

(214,207,274)

(151,882,004)

667,425 (10,137,278)(10,349,028)

(171,700,885)

- 2

- 75

642,859 (9,980,004)1,056,586

(8,280,482)

- -

(25,400)337,332

311,932

(1,255,758)

417,096 (1,238,322)

-

(2,076,984)

(4,000,002)-

(4,412,607)(1,500)-

(19,779)-

(8,433,888)

- -

368,852 164,542

533,394

(703,904)

354,340 (519,396)

-

(868,960)

(5)2

(80,212,843)75

- (17,303)

-

(80,230,074)


Group Company2005RM

2004RM

2005RM

2004RM

Cash flows from/(used in) financing activities :

Proceeds from short-term borrowingsRepayment of short-term borrowingsProceeds from term loansDividend paidRepayment of term loansProceeds from private placement and rights issueProceeds from warrant conversionRepayment of hire purchase and finance lease liabilities

Net cash (used in) / from financing activities

Net increase in cash and cash equivalents during the financial year

Cash and cash equivalents at beginning of the financial yearCurrency translation differencesCash and cash equivalents at end of the financial year (Note 33)

8,580,000 (20,660,541)53,418,300 (6,269,659)

(68,722,958)- 3,600

(2,460,260)

(36,111,518)

3,335,078 35,113,940

37,117 38,486,135

37,603,715 (43,239,521)181,122,193

(1,393,223)(46,588,927)85,053,910

- (2,185,036)

210,373,111

30,391,744 4,686,328

35,868 35,113,940

- (8,667,714)32,148,073 (6,269,659)

- - 3,600 -

17,214,300

6,703,428 2,323,703

- 9,027,131

2,500,000 - -

(1,393,223)-

85,053,910 - -

86,160,687

5,061,653 (2,737,950)

- 2,323,703

Note: Net cash outlay for the acquisition of property, plant and equipment during the financial year is as follows:

Group Company2005RM

2004RM

2005RM

2004RM

Total acquisition (Note 20)Less: amount payable for acquisition of property, plant and equipmentLess: amount financed by hire purchase and leaseNet cash outlay for the financial year

5,933,331 (495,664)(863,121)

4,574,546

13,552,945 (2,317,753)(1,255,188)9,980,004

19,779 - -

19,779

17,303 - -

17,303

The above cash flow statements are to be read in conjunction with the notes to the financial statements on pages 60 to 105.

Cash FlowStatements(contʼd)



Notes to the Financial Statements for the financial year ended 31 December 2005

1 General information

The principal activities of the Company are that of investment holding and provision of management services to subsidiary companies in the Group. The principal activities of the subsidiary companies are set out in Note 22 to the financial statements.

The number of employees in the Group and the Company at the end of the financial year was 1,109 (2004: 997) and 9 (2004: 11) respectively.

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

The address of the registered office and principal place of business of the Company is as follows:

Penthouse Suite 1 Wisma Mah Sing 163, Jalan Sungai Besi

57100 Kuala Lumpur 2 Basis of preparation of the financial statements

The financial statements of the Group and of the Company have been prepared under the historical cost convention except as disclosed in the significant Group accounting policies.

The financial statements comply with the applicable Malaysian Accounting Standards Board (“MASB”) approved accounting

standards in Malaysia and the provisions of the Companies Act, 1965. The preparation of the financial statements in compliance with the applicable MASB approved accounting standards in

Malaysia and the provisions of the Companies Act, 1965 requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the financial year. Actual results could differ from those estimates.

The financial statements of the Group and of the Company have been approved by the Board of Directors for issuance on 18

April 2006.

3 Significant Group accounting policies

The Groupʼs accounting policies set out below have been used consistently with items that are considered material in relation to the financial statements.

The following accounting policies adopted by the Group and the Company are consistent with those adopted in the previous years.

Basis of consolidation

The Group adopts the acquisition method for consolidation, except for certain subsidiaries acquired prior to 1 January 2002 which have been consolidated using the merger method of accounting.


3 Significant Group accounting policies (contʼd)

Basis of consolidation (contʼd) The consolidated financial statements include the financial statements of the Company and all its subsidiary companies

made up to the end of the financial year. Subsidiary companies are those companies in which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities. Subsidiary companies are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.

Acquisition method

Under the acquisition method, the difference between the fair value of the purchase consideration of subsidiary companies and the Groupʼs share of the fair value of the separable net assets of subsidiaries acquired is included in the consolidated financial statements as goodwill or reserve on consolidation. The results of the subsidiary companies acquired or disposed of during the financial year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of their disposal.

All significant inter-company transactions and balances are eliminated on consolidation.

Minority interest is measured at the minoritiesʼ share of the post acquisition fair values of the identifiable assets and liabilities of the acquiree. Separate disclosure is made for minority interest.

Merger method

Acquisition of subsidiary companies which meets the criteria for merger accounting is accounted for using merger accounting principles. When the merger method is used, the cost of investment in the Companyʼs books is recorded at the nominal value of the shares issued and the difference between the carrying value of the investment and the nominal value of shares transferred, if any, is treated as merger reserve. The results of these subsidiary companies are presented as if the merger had been effected throughout the current or previous financial years.

Associated companies

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

Investment in associated company is stated at cost in the Companyʼs financial statements. The Groupʼs investment in associated company is accounted for under the equity method of accounting based on the latest audited and/or the management financial statements of the associated company made up to 31 December 2005. Under this method of accounting, the Groupʼs interest in the post-acquisition profit and reserves of the associated company is included in the consolidated results while dividend received is reflected as a reduction of the investment in the consolidated balance sheet. The carrying amount of such investment is reduced to recognise any decline, other than a temporary decline, in the value of the investment.

Unrealised profits and losses arising from transactions between the Group and its associated company are eliminated to the extent of the Groupʼs equity interest in the associated company except where transactions provide evidence of an impairment of the asset transferred.

Currency translations

Foreign currency monetary assets and liabilities are translated to Ringgit Malaysia at rates of exchange ruling at the balance sheet date and foreign currency transactions during the financial year are translated at rates ruling on the transaction dates. Exchange differences are taken to the income statement in the financial year in which they arise.

Assets and liabilities of foreign subsidiary company are translated to Ringgit Malaysia at rates of exchange ruling at the balance sheet date and the results of foreign subsidiary and associated company are translated at the average rate of exchange for the financial year. Exchange differences arising from the translation are taken to reserves.

Notes to the Financial Statements(contʼd)




Currency translations (contʼd)

The principal closing rates used in the translation of foreign currency amounts were as follows:

Foreign currency 2005 2004 1 United States Dollar (USD) RM3.7500 RM3.8000 100 Indonesian Rupiah (IDR) RM0.0387 RM0.0409 100 Japanese Yen RM3.2247 RM3.6987 Revenue recognition

Sales of goods are recognised upon delivery of products and where the risks and rewards of ownership has passed to the customers, if any, or performance of services, net of sales taxes and discounts and after eliminating sales within the Group.

Revenue from development projects is accounted for under the percentage of completion method where the outcome of the development can be reliably estimated. The percentage/stage of completion is measured by reference to the cost incurred to date compared to the estimated total cost of the development.

Other revenue earned by the Group is recognised on the following bases:

Interest income - accrual basis unless collectibility is in doubt Dividend income - when the Groupʼs right to receive payment is established Maintenance charges and management fee - upon performance of services

Income Tax

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.

Deferred tax is accounted for using the “balance sheet liability” method in respect of temporary differences arising from

differences between the carrying amounts of assets and liabilities in the financial statements and their corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally

recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the deferred tax assets can be utilised.

Deferred tax is measured at tax rates that are expected to apply in the period 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 recognised directly in equity, in which case the deferred tax is also charged or credited directly in 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.

Property, plant and equipment

Land and buildings are stated at cost or valuation less accumulated amortisation, depreciation and impairment. Other property, plant and equipment are stated at cost less accumulated depreciation and impairment loss. The costs of property, plant and equipment comprise their purchase costs and any incidental costs of acquisition.





Property, plant and equipment (contʼd)

Certain leasehold land and buildings were revalued by the Directors based on valuations carried out by independent professional valuers. The Directors have applied the transitional provisions of FRS 1162004 - Property, plant and equipment, which allow those assets to be stated at their 1992 valuations. Accordingly, these valuations have not been updated.

Surpluses arising on revaluation are credited to the revaluation reserve. Any deficit arising from revaluation is charged against the revaluation reserve to the extent of a previous surplus held in the revaluation reserve for the same asset. In all other cases, a decrease in carrying amount is charged to income statement. On disposal of revalued assets, amounts in the revaluation reserve relating to those assets are transferred to retained earnings.

Freehold land is not amortised as it has an infinite life. Short term leasehold land is amortised in equal instalments over the

periods of the respective leases that range from 26 to 30 years. Long term leasehold land is amortised over the unexpired lease tenure of 95 years.

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

Depreciation of other assets is calculated so as to write off the costs or valuations of the assets, to their estimated residual values, on a straight line basis over the expected useful economic lives of the assets concerned. The principal annual rates are:

Buildings 3.33% - 10% Renovations 3.33% - 10% Plant, machinery and factory equipment 10% - 25% Motor vehicles 12.5% - 15% Furniture, fittings and office equipment 8% - 25%

Certain moulds acquired in 2004 by a foreign subsidiary for specific projects have been depreciated using the units of

production method with expected total production output ranging from 27,000 to 156,000 units. Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in profit/(loss)

from operations.

Finance leases Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are

classified as finance leases.

Property, plant and equipment under finance leases are capitalised and the capital element of the lease commitments is reflected as lease payables. The capital element of the lease instalments is applied to reduce the outstanding obligations whereas the interest element is charged against the income statement so as to give a constant periodic rate of charge on the remaining balance outstanding at the end of each accounting period.

Property, plant and equipment acquired under finance lease is capitalised and depreciated over the useful economic lives of equivalent owned property, plant and equipment.





Property, plant and equipment under hire-purchase arrangements

Property, plant and equipment 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.

Operating leases

Leases of assets under which all the risks and benefits of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement over the lease period.

Intangible assets

(a) Goodwill

Goodwill arising on consolidation represents the excess of the purchase price of subsidiary companies over the Groupʼs share of the fair value of their identifiable net assets at the date of acquisition.

Goodwill is recognised as an asset and amortised through the consolidated income statement on a systematic basis following an assessment of the economic useful life of the assets, subject to a maximum of 25 years. The carrying amount of goodwill is reviewed annually for impairment and written off when, in the opinion of the Directors, it is considered necessary.

(b) Licence fee

All costs incurred in the acquisition of licence for assembly of certain plastic products are capitalised and amortised on a straight line basis over a period of 10 years and they will be written off when, in the opinion of the Directors, the future economic benefits are uncertain.

Where an indication of impairment exists, the carrying amount of the intangible assets are assessed and written down immediately to its recoverable amount.

Investments

Investments in subsidiaries and associated companies are shown at cost in the Companyʼs financial statements. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down to its recoverable amount.

Investments in other non-current investments are shown at cost and an allowance for diminution in value is made where, in the opinion of the Directors, there is a decline other than temporary in the value of an investment, such a decline is recognised as an expense in the year in which the decline is identified.

i) Land held for property development

Land held for property development consists of land on which no significant development work has been undertaken or where development activities are not expected to be completed within the normal operating cycle. Such land is classified as non-current asset and is stated at cost less accumulated impairment losses.

Land held for property development is transferred to property development costs (under current assets) when development activities have commenced and where the development activities can be completed within the Groupʼs normal operating cycle of 2 to 4 years.





i) Land held for property development (contʼd)

Costs associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other relevant levies. Where the Group had previously recorded the land at a revalued amount it continues to retain this amount as its surrogate cost as allowed by FRS 2012004 . Where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its recoverable amount.

ii) Property development costs

Property development costs comprise costs associated with the acquisition of land and all costs directly attributable to development activities or that can be allocated on a reasonable basis to these activities.

When the outcome of the development activity can be estimated reliably, property development revenue and expenses are recognised by using the stage of completion method. The stage of completion is measured by reference to the proportion that property development costs incurred bear to the estimated total costs for the property development.

When the outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable; property development costs on the development units sold are recognised when incurred.

Irrespective of whether the outcome of a property development activity can be estimated reliably, when it is probable that total property development costs (including expected defect liability expenditure) will exceed total property development revenue, the expected loss is recognised as an expense immediately.

Property development costs not recognised as an expense is recognised as an asset and is stated at the lower of cost and net realisable value.

Where revenue recognised in the income statement exceed billings to purchasers, the balance is shown as accrued billings under receivables, deposits and prepayments (within current assets). Where billings to purchasers exceed revenue recognised in the income statement, the balance is shown as progress billings under payables (within current liabilities).

Impairment of assets At each balance sheet date, the Group and the Company review the carrying amounts of assets (other than inventories,

deferred tax assets and financial assets, which are dealt with in their respective policies) to determine if there is any indication that those assets may be impaired. If any such indication exists, the assetʼs recoverable amount, which is the higher of net selling price and value in use, is estimated.

Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in the income statement, unless the asset is carried at revalued amount, in which case, the impairment loss is treated as a revaluation decrease.





Impairment of assets (contʼd)

An impairment loss in respect of goodwill is not reversed unless the loss is caused by a specified external event of an exceptional nature that is not expected to recur and subsequent external events have occurred that reverse the effect of that event. In respect of other assets, an impairment loss is reversed if there has been a change in the estimate used to determine the recoverable amount.

An impairment loss is only reversed to the extent that the assetʼs carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. A reversal is recognised in the income statement, unless it reverses an impairment loss on revalued assets, in which case, the reversal is treated as a revaluation increase.

Inventories

Inventories of completed properties are stated at the lower of cost and net realisable value. Cost includes the relevant cost of land and development expenditure.

Inventories of raw materials, work-in-progress and finished goods are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method. The cost of raw materials comprises the original purchase price plus cost incurred in bringing the inventories to their present location. The costs of finished goods and work-in-progress comprise raw materials, direct labour, other direct costs and an appropriate proportion of production overheads.

Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses.

Receivables

Receivables are reduced by the appropriate allowances for estimated irrecoverable amounts. Allowance for doubtful debts is made based on estimates of possible losses which may arise from non-collection of certain receivable accounts.

Borrowings

Borrowings are initially recognised based on the proceeds received. In subsequent periods, borrowings are stated with accumulated outstanding interest and net of repayment during the period. Portions repayable after 12 months are disclosed as non-current liabilities.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

The amount of borrowing costs eligible for capitalisation is determined based on actual interest incurred on borrowings made specifically for the purpose of obtaining a qualifying asset and less any investment income on the temporary investment of that borrowing.

All other borrowing costs are recognised as an expense in the income statement in the period in which they are incurred.




3 Significant Group accounting policies (contʼd) Provision for liabilities Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable

that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

Employee Benefits

i) Short term benefits

Wages, salaries, 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 and the Company. Short term accumulating compensated absences for paid annual leave when services are rendered by employees that increase their entitlement to future compensated absences are recognised based on the past experience that the absences will occur.

ii) Defined contribution plan

The Group and the Company are required by law to make monthly contributions to the Employees Provident Fund (EPF), a statutory defined contribution plan for all their eligible employees based on certain prescribed rates of the employeesʼ salaries. The Groupʼs and the Companyʼs contributions to EPF are disclosed separately. The employeesʼ contributions to EPF are included in salaries and wages.

iii) Termination benefits The Group pays termination benefits in cases of termination of employment within the framework of a restructuring.

Termination benefits are recognised as a liability and an expense when the Group has a detailed formal plan for the termination and is without realistic possibility of withdrawal.

(iv) Defined benefit plans

A foreign subsidiary operates a defined Retirement Benefit Scheme (“the Scheme”) for its eligible employees. The foreign subsidiaryʼs obligations under the Scheme are determined based on external actuarial valuation in accordance with the labour law requirements in that country where the amount of benefits that employees have earned in return for their service in the current and prior years is estimated. That benefit is discounted using the Projected Unit Credit Method in order to determine its present value. Actuarial gains and losses are recognised as income or expense over the expected average remaining working lives of the participating employees when the cumulative unrecognised actuarial gains or losses for the Scheme exceed 10% of the higher of the present value of the defined benefit obligation and the fair value of plan assets. Past service cost is recognised immediately to the extent that the benefits are already vested; otherwise, it is amortised on a straight line basis over the average period until the benefits become vested.

The amount recognised in the balance sheet represents, the present value of the defined benefit obligations adjusted for unrecognised actuarial gains and losses and unrecognised past service cost, and reduced by the fair value of plan assets. Plan assets resulting from this calculation are to be used only to settle the employee benefit obligations and only can be returned to the enterprise only if the remaining assets of the fund are sufficient to meet the planʼs obligation to pay the related employee benefits directly.







(v) Employees Share Options Scheme

The Companyʼs Employees Share Options Scheme (“ESOS”) allows the Groupʼs employees to acquire shares of the Company. No compensation cost or obligation is recognised. When the options are exercised, equity is increased by the amount of the proceeds received.

Share capital

Ordinary shares with discretionary dividends are classified as equity. Other shares are classified as equity and/or liabilities according to the economic substance of the particular instrument.

Cash and cash equivalents

The Group and the Company adopt the indirect method in the preparation of the cash flow statements. Cash and 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 with insignificant risk of changes in value.

Fair value estimation of financial instruments for disclosure purposes

In assessing the fair value of financial instruments, the Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. The fair value of quoted investments is based on its quoted market price at the balance sheet date. For current financial assets and liabilities, the carrying amounts are assumed to approximate their fair values because of the short maturity of these instruments. The fair value of financial liabilities is estimated by discounting the future contractual cash flows at the current market interest rate available to the Group for similar financial instruments.

4 Financial risk management objective and policies

The operations of the Group and of the Company are subject to a variety of financial risks, including foreign currency risk, interest rate risk, market risk, credit risk, liquidity and cash flow risk.

The Group and the Company have formulated a financial risk management framework whose principal objective is to minimise the Groupʼs and the Companyʼs exposure to risks and/or costs associated with the financing, investing and operating activities of the Group and the Company.

The Group focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. Financial risk management is carried out through risk reviews, internal control systems and adherence to Group financial risk management policies. The Board regularly reviews these risks and approves the treasury policies, which cover the management of these risks.

Foreign currency risk

The Group is exposed to foreign exchange rate risks as certain transactions are denominated in the United States Dollar.

Interest rate risk The Group enters into various interest rate risk management transactions, including using a combination of fixed and floating

rate loans to manage net interest rates within a predictable, desired range.




4 Financial risk management objective and policies (contʼd)

Market risk

The Group has in place policies to manage the Groupʼs exposure to fluctuation in the prices of the key raw materials used in the operations through close monitoring and buying ahead in anticipation of significant price increase, where necessary.

For sales to key Original Equipment Manufacturing customers, the Group establishes a floating raw material pricing mechanism in determining the selling price where changes in raw material component prices beyond a certain range are passed on to customers.

For property development, the Group is actively sourcing for new development land in prime locations to increase its development land bank. Properties developed by the Group range from affordable homes to high-end products depending on the location of the development project and the profile of its target market.

Credit risk

The Group is exposed to credit risk mainly from its customer base, including trade receivables. The Group extends credit to its customers based upon careful evaluation of the customerʼs financial condition and credit history. Trade receivables are monitored on an ongoing basis by the Groupʼs credit control department.

Liquidity risk

The Group and the Company practise prudent liquidity risk management to minimise the mismatch of financial assets and liabilities and to maintain sufficient credit facilities for contingent funding requirement of working capital.

Cash flow risk

The Group and the Company review their cash flow position regularly to manage their exposure to fluctuations in future cash flows associated with their monetary financial instruments.

5 Revenue

Group Company2005RM

2004RM

2005RM

2004RM

Sale of goods Property development revenue Sale of completed properties Dividend income - non tax exempt - tax exempt Interest income Management fee

117,071,360 356,254,825

-

- -

162,968 1,500

473,490,653

95,291,259 259,917,230

953,125

- -

293,548 -

356,455,162

- - -

23,100,000 -

417,096 13,500

23,530,596

- - -

12,500,000 2,000,000

354,340 12,000

14,866,340




6 Cost of sales

Group2005RM

2004RM

Cost of inventories soldProperty development costs Cost of completed properties sold

101,829,609 260,950,438

- 362,780,047

81,484,996 200,723,868

739,094 282,947,958

7 Impairment losses

Group Company2005RM

2004RM

2005RM

2004RM

Included in other operating income is the reversal of impairment losses in respect of : - Property, plant and equipment (Note 20) - Investment in subsidiaries (Note 22 )

Included in other operating expenses are impairment losses in respect of :- Investment in subsidiaries (Note 22) - Investment in associates (Note 23) - Plant and machinery

(319,183)-

(319,183)

- - - -

(197,257)-

(197,257)

- -

360,327 360,327

- (113,465)(113,465)

85,983 - -

85,983

- - -

58,148 1,948 -

60,096

The reversal of impairment loss of plant and machinery is in respect of certain moulds, factory equipment, machinery, renovation, office equipment and furniture and fittings for which depreciation is continuing during the year.

Impairment loss for investment in subsidiaries is in respect of dormant subsidiaries where the net tangible asset value is below the cost of investment and for which there are no business plans to generate future income. For investment in associates impairment is recognised on the basis of the Groupʼs share of post-acquisition accumulated losses.

The impairment loss of plant and machinery in 2004 was in respect of certain moulds, factory equipment, machinery, renovation, office equipment and furniture and fittings for which the Group has no future plans for utilisation.




8 Profit from operations

Note Group Company 2005RM

2004RM

2005RM

2004RM

Profit from operations is stated after charging:

Amortisation of licence fee Auditorsʼ remuneration

- current year - non-audit fee

Property, plant and equipment - depreciation - written-off

Goodwill written off Inventories write-down Inventories written-off Staff costs Rental of buildings Allowance for doubtful debts:

- subsidiary companies - associated companies - trade receivable

Realised loss on foreign exchange - netInterest expenses in cost of sales

and crediting: Gross dividend from subsidiary companiesGain on disposal of property, plant and equipmentInterest income received from:

- deposits and projects accounts with licensed banks- customers - subsidiary company

Management fees from: - a subsidiary company - an associated company

Allowance for doubtful debts no longer required:- trade receivable - non-trade receivable

Allowance for inventory obsolescence no longer requiredUnrealised gain on foreign exchange - netDebts waived by a creditor Reversal of provision in respect of loan granted by a

financial institution to an associated companyRental income from letting of premises

21

20

21

9

30

8,396

183,575 5,000

12,995,615 1,577 - - -

24,586,156 366,771

- - -

172,931 5,012,136

- 964,470

448,775 8,291 -

- 1,500

161,169 -

457,544 169,198

-

80,355 510,143

8,405

150,300 5,000

14,645,223 224,190

1 850,314

49,764 21,322,598

547,803

- (75)

398,407 58,686

4,844,473

- 773,671

642,859 667,425

-

- -

- 3,856 -

205,006 400,583

- 382,200

-

16,000 5,000

19,047 - - - -

677,550 -

2,740 - - - -

23,100,000 -

162,968 -

254,128

12,000 1,500

- - - - -

80,355 -

-

13,000 5,000

17,902 - - - -

700,298 -

1,493,132 (75)

- - -

14,500,000 -

293,548 -

60,792

12,000 -

- - - - -

- -




9 Staff costs

Group Company2005RM

2004RM

2005RM

2004RM

Wages and salaries Employees Provident Fund contributions

and social security costsShort term accumulating compensated absencesPension costs - defined benefit plan (Note 39 )Other staff related expenses

18,810,783

2,147,050 85,920

104,543 3,437,860

24,586,156

16,231,853

1,652,522 73,407

168,902 3,195,914

21,322,598

596,223

49,683 9,701 -

21,943 677,550

614,728

45,644 7,745 -

32,181 700,298

Included in staff costs of the Group and of the Company are directorsʼ remuneration amounting to RM1,725,197 (2004: RM1,156,400) and RM150,000 (2004: RM138,600) respectively as further disclosed in Note 10.

10 Directors ̓remuneration

The aggregate amount of emoluments receivable by Directors of the Company during the financial year were as follows:

Group Company2005RM

2004RM

2005RM

2004RM

Non-executive Directors: - Fees

Executive Directors: - Other emoluments - Employees Provident Fund contributions

150,000

1,406,417 168,780

1,725,197

138,600

935,000 82,800

1,156,400

150,000

- -

150,000

138,600

- -

138,600

The estimated monetary value of benefits-in-kinds received and receivable by the directors otherwise in cash from the Group and the Company amounted to RM93,500 (2004: RM61,026 ) and RM Nil (2004: RM Nil ) respectively.

11 Finance costs

Group Company2005RM

2004RM

2005RM

2004RM

Interest expenses on: - term loans - bank overdrafts - hire purchase - other borrowings Dividend for redeemable preference shares waived

Less: Interest capitalised in development properties (Note 25)

11,718,993 818,412 485,780

1,647,825 -

14,671,010

(10,329,664)4,341,346

6,043,626 2,199,363

598,092 1,596,197 (300,000)

10,137,278

(5,245,465)4,891,813

731,156 99,991 -

407,175 -

1,238,322

- 1,238,322

- 154,152

- 365,244

- 519,396

- 519,396




12 Taxation

Taxation based on the results of the financial year:Group Company

2005RM

2004RM

2005RM

2004RM

Current tax expense: - Local - Foreign

Overprovision in prior years - MalaysiaDeferred taxation (Note 19):

- Current year - Underprovision in prior years

15,048,140 3,010,519 (378,590)

2,216,000 -

2,216,000 19,896,069

12,087,377 1,009,093

(44,913)

(342,066)409,358

67,292 13,118,849

3,000,000 -

(73,698)

2,968,000 -

2,968,000 5,894,302

1,200,000 -

(298,872)

2,100,000 -

2,100,000 3,001,128

The tax charge for the Company is in respect of dividends from a subsidiary company.

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

Group Company2005RM

2004RM

2005RM

2004RM

Profit before taxationTaxation at Malaysian statutory tax rate @ 28%

Tax effects of: - Expenses not deductible for tax purposes- Tax exempted income

Effect of different tax rates in other jurisdictionsUtilisation of current yearʼs tax lossesUtilisation of deferred tax assets not previously recognised(Over) / under provision in prior yearsTax expense for the year

69,620,399 19,493,711

1,725,713 -

140,207 (270,220)(814,752)(378,590)

19,896,069

38,840,554 10,875,355

2,528,773 -

74,568 (282,250)(442,042)364,445

13,118,849

20,797,134 5,823,198

415,022 - -

(270,220)-

(73,698) 5,894,302

11,526,591 3,227,445

914,805 (560,000)

- (282,250)

- (298,872)

3,001,128

13 Earnings per ordinary share

(a) Basic

The earnings per ordinary share for the financial year has been calculated based on the net profit for the financial year divided by the weighted average number of ordinary shares in issue during the financial year as follows:

Group2005 2004

Net profit for the financial year (RM)Total number of ordinary shares in issueWeighted average number of ordinary shares in issueBasic earnings per share (sen)

48,345,910 145,131,000 145,130,400

33.31

25,061,804 145,127,400 130,409,109

19.22




13 Earnings per ordinary share (contʼd)

(b) Fully diluted

The diluted earnings per share has been calculated by dividing the net profit for the period by the weighted average number of shares that would have been in issue upon full exercise of the remaining options under the Warrants, adjusted for the number of such shares that would have been issued at fair value as follows:

Group2005 2004

Weighted average number of ordinary shares in issueWarrants Fully diluted weighted average number of sharesFully diluted earnings per share (sen)

145,130,400 15,012,060

160,142,460 30.19

130,409,109 6,975,649

137,384,758 18.24

14 Dividend

Dividend proposed in respect of financial year ended 31 December 2005 is as follows:

Group and Company Group and Company2005 2004

Gross dividend per share

Sen

Amount of dividend

net of taxRM

Gross dividend per share

Sen

Amount of dividend

net of taxRM

Proposed first and final dividend 12 12,562,992 6 6,269,659

On 26 July 2005, the Company paid a first and final gross dividend of 6 sen per share, less income tax, amounting to RM6,269,659 in respect of the financial year ended 31 December 2004 as approved by the shareholders at the last Annual General Meeting.

The directors have proposed a first and final gross dividend in respect of the financial year ended 31 December 2005 of 12 sen per share, less income tax, amounting to RM12,562,992 on 145,131,000 ordinary shares as at 31 December 2005 (including 3,600 warrants converted during the year) and 274,000 new ordinary shares issued pursuant to the exercise of Warrants after 31 December 2005 up to the date of this report as disclosed in Note 15(b). The proposed first and final gross dividend is subject to approval by the shareholders at the forthcoming Annual General Meeting and has not been included as a liability in the financial statements.

15 Share capital

Number of OrdinaryShares of RM1.00 each

Group and Company Amount

2005 2004 2005RM

2004RM

Authorised : At 1 January Created during the year At 31 December

500,000,000 -

500,000,000

100,000,000 400,000,000 500,000,000

500,000,000 -

500,000,000

100,000,000 400,000,000 500,000,000




15 Share capital (contʼd)

Number of OrdinaryShares of RM1.00 each

Group and Company Amount

2005 2004 2005RM

2004RM

Issued and fully paid : At 1 January Private placement Warrant conversion Rights issue Bonus issue Issued and paid up during the yearAt 31 December

145,127,400 - 3,600 - - 3,600

145,131,000

43,978,000 4,397,800

- 80,626,333 16,125,267

101,149,400 145,127,400

145,127,400 - 3,600 - - 3,600

145,131,000

43,978,000 4,397,800

- 80,626,333 16,125,267

101,149,400 145,127,400

(a) Ordinary shares

The Company increased its issued and paid-up ordinary share capital from RM145,127,400 to RM145,131,000 from the conversion of 3,600 warrants during the year.

The new ordinary shares issued rank pari passu with the then existing ordinary shares of the Company.

(b) Warrants

The Warrants 2004/2009 were constituted under the Deed Poll dated 2 April 2004.

The salient features of the Warrants 2004/2009 are as follows:

(i) Each Warrant carries the entitlement to subscribe for one new ordinary share at an exercise price of RM1.00;

(ii) The issue date for the Warrants is on 7 June 2004 and the expiry date is on 6 June 2009;

(iii) The holder of the Warrants shall pay cash based on the exercise price of RM1.00 per Warrant when subscribing for new ordinary shares;

(iv) The Warrant holders are not entitled to participate in any distribution and/or offer of further securities in the Company until and unless such holders exercise the rights under the Warrants for new ordinary shares;

(v) The adjustments to the exercise price and the number of Warrants in the event of alteration to the share capital of the Company are set out in the Deed Poll; and

(vi) The new ordinary shares to be issued upon exercise of the Warrants shall, upon allotment and issue, rank pari passu with the then existing ordinary shares, including the entitlement to dividends, rights, allotments or other distributions, except that they will not be entitled to the rights, allotments or other distributions, declared by the Company which entitlement thereof precedes the allotment date of the new ordinary shares allotted pursuant to the exercise of the Warrants.




15 Share capital (contʼd)

The movement in the Companyʼs Warrants which remain unexercised as at the date of this report are as follows:

Number of ordinary shares of RM1.00 eachBalance at1.1.2005 Issued Exercised

Balance at18.04.2006

Number of unexercised warrants 48,375,800 - (277,600) 48,098,200

(c) Share options

The Company implemented an Employeesʼ Share Option Scheme (“ESOS”) which is governed by the ESOS By-Laws and was approved by the shareholders at the Extraordinary General Meeting held on 8 March 2004.

The salient features of the ESOS are as follows:

(i) the total number of new Company shares to be offered pursuant to the ESOS shall be subject to a maximum of 10% of the Companyʼs issued and paid-up share capital at the time of the offer;

(ii) only eligible employees and Executive Directors of the Company and its subsidiary companies (provided they are not dormant) will be eligible to participate in the ESOS. An ESOS committee comprising members of the Board will determine the share allocation criteria. A set of criteria on eligibility and allocation will be clearly specified and all eligible employees will be made aware of it;

(iii) the price payable upon exercise of an option granted under the Proposed ESOS will be based on the five (5)-day weighted average market price preceding the offer date with a discount of not more than 10% and further subject to the provision that the exercise price per share shall in no event be less than the par value of the Companyʼs shares;

(iv) the duration of the ESOS will be for five (5) years and may, at the option committeeʼs discretion, be extended or renewed (as the case may be), subject to an aggregate duration of ten (10) years;

(v) the Company shall be allowed to terminate the ESOS in mid-stream by fulfilling the following conditions:

(a) approval from the Securities Commission of Malaysia;

(b) consent from the Companyʼs shareholders at a general meeting; and

(c) written consent of all options holders who have yet to exercise their options, either in part or in whole; and

(vi) in the event that a share buy-back exercise of the Company results in the number of options that have been offered under the Scheme exceeding 10% of the issued capital of the Company, there shall be no granting of additional options at any point in time after the share buy-back, unless the number of options that have been granted under the Scheme falls below 10% of the issued capital of the Company.

No options have been granted under the ESOS by the Company to any parties during the financial year to take up unissued shares of the Company.




16 Reserves

Group Company2005RM

2004RM

2005RM

2004RM

Non- distributable reserves: Share premium Capital reserve Reserve on consolidation Exchange fluctuation

Retained profit / (accumulated losses)

31,103,622 350,927 501,000

5,860,121

37,815,670

73,112,660

110,928,330

31,103,622 350,927 501,000

6,003,186

37,958,735

31,036,409

68,995,144

31,103,622 - - -

31,103,622

(18,508,071)

12,595,551

31,103,622 - - -

31,103,622

(27,141,244)

3,962,378

Group

Capital reserve

Capital reserve arose from the difference between the purchase price and the fair values of the net assets of the foreign subsidiary company at the date of acquisition of additional investment.

Reserve on consolidation

Reserve on consolidation represents the excess of the net assets of the subsidiary company acquired at the date of acquisition over the purchase consideration paid.

Company

Dividends are available for distribution out of its net profit for the financial year or distributable reserves.

Net profit for the financial year

As at 31 December 2005, the Company has tax exempt profits available for distribution of approximately RM7,684,160 (2004: RM5,684,160), subject to the agreement of the Inland Revenue Board.

The Company has, subject to confirmation by the Director General of Inland Revenue Board, sufficient tax credit under Section 108 of the Income Tax Act 1967 and tax exempt account to frank the payment of net dividends out of all its net profit for the financial year.

Accumulated losses

The accumulated losses include the net profit for the financial year which is subject to the distribution of dividends as disclosed in Note 14.




17 Term loans

Secured:Group

2005RM

2004RM

Term loan 1 Term loan 2 Term loan 3 Term loan 4 Term loan 5 Term loan 6 Term loan 7 Term loan 8 Term loan 9 Term loan 10 Term loan 11 Term loan 12Term loan 13 Term loan 14 Term loan 15 Term loan 16 Term loan 17 Term loan 18 Term loan 19 Term loan 20

Company Term loan 21 Term loan 22

- 2,460,000

270,833 830,414

1,115,474 53,863,961

- -

11,274,544 -

2,615,858 404,703

5,620,923 12,000,000

1,602,236 762,968 215,091 606,565

12,200,000 8,800,000

114,643,570

4,148,073 28,000,000 32,148,073

146,791,643

737,626 130,522 527,779

1,132,212 4,784,212

75,000,000 5,340,000 2,455,615

30,000,000 2,800,000 2,615,858

404,70326,952,730

8,490,277 - - - - - -

161,371,534

- - -

161,371,534

GroupUnsecured: Group

2005RM

2004RM

Term loan 23Total

- 146,791,643

922,526 162,294,060

Group2005RM

2004RM

Repayable not later than 1 year (included under current liabilities)Repayable later than 1 year and not later than 2 yearsRepayable later than 2 years and not later than 5 yearsRepayable later than 5 yearsNon-current portion

30,643,819 30,012,003 86,135,821

- 116,147,824 146,791,643

23,573,942 42,791,528 91,241,090

4,687,500 138,720,118 162,294,060


Term loans Terms of repayment SecurityTerm loan 1

Term loan 2

Term loan 3

Term loan 4

Term loan 5

Term loan 6

Term loan 7

Term loan 8

Term loan 9

Term loan 10

16 quarterly instalments commencing September 2003 or by way of redemption of the property sold on the project, whichever is earlier.

20 quarterly instalments commencing July 2001 or by way of redemption of the property sold on the project, whichever is earlier.

25 monthly instalments commencing January 2005.

60 monthly instalments commencing October 2004.

24 monthly instalments commencing May 2004.

16 quarterly instalments commencing June 2006 or by way of redemption of the property sold on the project, whichever is earlier.

24 monthly instalments commencing January 2006 or by way of redemption of the property sold on the project, whichever is earlier.

16 quarterly instalments commencing April 2005 or by way of redemption of the property sold on the project, whichever is earlier.



Secured by a second fixed charge over a piece of mixed development land and a debenture over the same development land of a subsidiary company and a guarantee from the Company.

Secured by a first fixed charge over a piece of mixed development land and a debenture over the same development land of a subsidiary company and a guarantee from the Company.

Secured by a fixed charge over the leasehold land and buildings, plant, machinery and equipment of a subsidiary company.

Secured by a first fixed charge over a building of a subsidiary company and a guarantee from the Company.

Secured by Fiduciary Transfer Ownership of Moulds of a subsidiary company.

Secured by a second fixed charge over a piece of mixed development land of a subsidiary company and a guarantee from the Company.

Secured by a Special Assignment of Rights over certain completed properties of a subsidiary company and a guarantee from the Company.

Secured by a first fixed charge over a piece of mixed development land of a subsidiary company and a guarantee from the Company.





Company2005RM

2004RM

Repayable later than 1 year and not later than 2 yearsRepayable later than 2 years and not later than 5 years

1,037,018 31,111,055

32,148,073

- -

-

17 Term loans (contʼd)




Term loans Terms of repayment SecurityTerm loan 11

Term loan 12

Term loan 13

Term loan 14

Term loan 15

Term loan 16

Term loan 17

Term loan 18

Term loan 19

Term loan 20

Term loan 21

Term loan 22

UnsecuredTerm loan 23

8 quarterly instalments commencing August 2005 or by way of redemption of the property sold on the project, whichever is earlier.

8 quarterly instalments commencing September 2005 or by way of redemption of the property sold on the project, whichever is earlier.


16 quarterly instalments commencing August 2006 or by way of redemption of the property sold on the project, whichever is earlier.

36 monthly instalments commencing February 2006.

48 monthly instalments commencing July 2006.

24 monthly instalments commencing January 2005.

36 monthly instalments commencing March 2005.

16 quarterly instalments commencing May 2007 or by way of redemption of the property sold on the project, whichever is earlier.

16 quarterly instalments commencing January 2007 or by way of redemption of the property sold on the project, whichever is earlier.


4 quarterly instalments commencing March 2009 or by way of redemption of the property sold on the project, whichever is earlier.

24 monthly instalments commencing April 2006.




Secured by a second fixed charge over a piece of mixed development land of a subsidiary company and a guarantee from the Company.

Secured by a fixed charge over plant, machinery and equipment of a subsidiary company.

Secured by a fixed charge over plant, machinery and equipment of a subsidiary company.

Secured by Fiduciary Transfer Ownership of Moulds of a subsidiary company.

Secured by a fixed charge over the leasehold land and buildings, plant, machinery and equipment, inventories and trade receivables of a subsidiary company.



Secured by a specific debenture and assignment of rights over some completed properties of a subsidiary company.

Secured by deed of assignment and legal charges over some parcels of land in a subsidiary company.

Granted on negative pledge over the present and future assets of a subsidiary company and a guarantee from the Company.


17 Term loans (contʼd)

The currency exposure profile of the term loans are:

Group2005RM

2004RM

United States Dollar Indonesian Rupiah Ringgit Malaysia

270,833 4,302,334

142,218,476 146,791,643

527,779 5,706,738

156,059,543 162,294,060

All term loans bear interest at floating rates and their fair values approximate their carrying values at the balance sheet date.

As at 31 December 2005, the weighted average effective interest rate of the term loans denominated in United States Dollar, Indonesia Rupiah and Ringgit Malaysia were 7.52% (2004: 6.00%), 8.19% (2004: 7.62%) and 7.58% (2004: 7.63%) per annum respectively.

During the year the interest rates were in the following range :

Group2005

% 2004

% Foreign currency facilities (United States Dollar)Local currency facilitiesForeign currency facilities (Indonesian Rupiah)

6.00 - 8.50 7.50 - 8.50 8.20 - 17.00

6.00 - 7.507.50 - 8.257.62 - 16.50

18 Long-term and deferred payablesGroup

2005RM

2004RM

Finance lease and hire purchase liabilitiesRetirement benefit obligations (Note 39)Payables for acquisition of land (Note 29)

4,020,597372,405

51,920,34256,313,344

5,707,310 271,433

- 5,978,743

Finance lease and hire purchase liabilities

Group2005RM

2004RM

Minimum finance lease and hire purchase payments: - not later than 1 year - later than 1 year and not later than 5 years

Future finance charges on finance lease and hire purchase liabilitiesPrincipal of finance lease and hire purchase liabilities

Principal of finance lease and hire purchase liabilities: - not later than 1 year (Note 29) - later than 1 year and not later than 5 years

2,747,033 4,866,032 7,613,065

(1,280,270)6,332,795

2,312,198 4,020,597 6,332,795

2,775,498 6,813,935 9,589,433

(1,659,499)7,929,934

2,222,624 5,707,310 7,929,934






18 Long-term and deferred payables (contʼd)

It is the Groupʼs policy to acquire certain property, plant and equipment under finance lease and hire-purchase arrangements. The average term for finance lease and hire-purchase is between 3 to 5 years. For the financial year ended 31 December 2005, the average effective borrowing rate was 4.27% (2004: 4.32%) per annum. Interest rates are fixed at the inception on the hire-purchase arrangements.

The Groupʼs finance lease and hire-purchase payables are secured by assets acquired under finance lease and hire-purchase

agreements as disclosed under Note 20.

19 Deferred tax

Group Company2005RM

2004RM

2005RM

2004RM

At 1 January Transfer from income statement (Note 12)At 31 December

1,002,000 2,216,000 3,218,000

934,708 67,292

1,002,000

3,500,000 2,968,000 6,468,000

1,400,000 2,100,000 3,500,000

The amount of the deferred tax assets and liabilities recognised in the balance sheet are as follows:

Tax effects of: Temporary differences in respect of :- Property, plant and equipment- Property development expenditure- Payables - Recognition of dividends proposed by wholly owned subsidiary

694,100 3,221,900 (698,000)

- 3,218,000

812,200 889,800

(700,000)

- 1,002,000

- - -

6,468,000 6,468,000

- - -

3,500,000 3,500,000

Details of net deferred tax assets pertaining to certain subsidiary companies which have not been recognised in the financial statements are as follows:

Group2005RM

2004RM

Tax effects of:Temporary differences in respect of:- Property, plant and equipment- OthersUnutilised tax lossesUnabsorbed capital allowancesDeferred tax assets - net

(1,333,787)1,038,237 4,492,279 5,082,153 9,278,882

(1,587,598)567,005

5,605,626 5,508,601

10,093,634

The unutilised tax losses and unabsorbed capital allowances in Malaysia are available indefinitely for offset against future taxable profits of the subsidiaries. Net deferred tax assets have not been recognised in the financial statements as they may not be used to offset taxable profits of other subsidiaries in the Group and they have arisen in subsidiaries that have a recent history of losses. The unutilised tax losses and unabsorbed capital allowances are subject to agreement by the tax authorities.




20

Prop

erty

, pla

nt a

nd e

quip

men

t

2005

At C

ost/V

alua

tion

At c

ost

Gro

upLa

ndR

MB

uild

ings

RM

Ren

ovat

ions

RM

Plan

t, m

achi

nery

an

d fa

ctor

y eq

uipm

ent

RM

Mot

or

vehi

cles

RM

Furn

iture

, fit

tings

and

of

fice

equi

pmen

tR

MTo

tal

RM

Cos

t/val

uatio

nAt

1 J

anua

ry

Fore

ign

exch

ange

fluc

tuat

ion

Addi

tions

D

ispo

sals

(W

ritte

n of

f)/w

ritte

n ba

ck

At 3

1 D

ecem

ber

A

ccum

ulat

ed d

epre

ciat

ion

At 1

Jan

uary

Fo

reig

n ex

chan

ge fl

uctu

atio

n

C

harg

e fo

r the

fina

ncia

l yea

r

Dis

posa

ls

(Writ

ten

off)/

writ

ten

back

At

31

Dec

embe

r

Acc

umul

ated

impa

irmen

t los

s

At

1 J

anua

ry

Rev

ersa

l for

the

finan

cial

yea

r (N

ote

7)

At

31

Dec

embe

r

Net

boo

k va

lue

A

t 31

Dec

embe

r 200

5

At 3

1 D

ecem

ber 2

004

10,6

04,0

85

(73,

300)

- - - 10

,530

,785

3,55

3,89

5 (2

3,96

3)36

6,39

6 - -

3,89

6,32

8

- - -

6,63

4,45

7

7,05

0,19

0

31,5

89,9

25

(83,

962)

3,37

0,16

2 - -

34,8

76,1

25

10,4

45,4

17

(27,

835)

1,38

0,96

6 - -

11,7

98,5

48

- - -

23,0

77,5

77

21,1

44,5

08

123,

000

- 31

9,50

0 - -

442,

500

7,17

5 -

35,6

83

- - 42

,858

- - -

399,

642

115,

825

81,5

69,0

28

(466

,240

)1,

160,

174

(298

,756

)-

81,9

64,2

06

49,7

00,6

25

(278

,082

)10

,047

,657

(1

14,2

65)

- 59

,355

,935

977,

130

(319

,183

)65

7,94

7

21,9

50,3

24

30,8

91,2

73

5,75

1,24

2 (1

0,92

6)76

2,10

0 (1

,544

,237

)(2

,978

)4,

955,

201

3,11

8,28

5 (6

,622

)61

8,91

8 (1

,235

,639

)(1

,402

)2,

493,

540

- - -

2,46

1,66

1

2,63

2,95

7

6,33

0,97

6 (6

,002

)32

1,39

5 (6

,670

)22

,106

6,

661,

805

2,89

1,30

4 (3

,779

)54

5,99

5 (1

,299

)22

,107

3,

454,

328

- - -

3,20

7,47

7

3,43

9,67

2

135,

968,

256

(640

,430

)5,

933,

331

(1,8

49,6

63)

19,1

28

139,

430,

622

69,7

16,7

01

(340

,281

)12

,995

,615

(1

,351

,203

)20

,705

81

,041

,537

977,

130

(319

,183

)65

7,94

7

57,7

31,1

38

65,2

74,4

25




20

Prop

erty

, pla

nt a

nd e

quip

men

t (co

ntʼd

)

A

naly

sis

of la

nd a

nd b

uild

ings

2005

At v

alua

tion

At C

ost

At v

alua

tion

At C

ost

Gro

up

Shor

t ter

mle

aseh

old

land

RM

Long

term

le

aseh

old

land

RM

Shor

t ter

m

leas

ehol

d la

ndRM

Tota

l lan

dRM

Leas

ehol

d bu

ildin

gsRM

Leas

ehol

d bu

ildin

gsRM

Free

hold

bu

ildin

gsRM

Tota

l bu

ildin

gsRM

Cos

t/val

uatio

n At

1 J

anua

ry

Fore

ign

exch

ange

fluc

tuat

ion

Addi

tions

At

31

Dec

embe

r A

ccum

ulat

ed d

epre

ciat

ion

At 1

Jan

uary

Fo

reig

n ex

chan

ge fl

uctu

atio

n C

harg

e fo

r the

fina

ncia

l yea

r At

31

Dec

embe

r N

et b

ook

valu

e A

t 31

Dec

embe

r 200

5 At

31

Dec

embe

r 200

4

3,68

2,63

9 - -

3,68

2,63

9

1,68

8,85

4 -

140,

738

1,82

9,59

2

1,85

3,04

7

1,99

3,78

5

1,35

0,69

2 - -

1,35

0,69

2

43,8

37

- 14

,218

58

,055

1,29

2,63

7

1,30

6,85

5

5,57

0,75

4 (7

3,30

0)-

5,49

7,45

4

1,82

1,20

4 (2

3,96

3)21

1,44

0 2,

008,

681

3,48

8,77

3

3,74

9,55

0

10,6

04,0

85

(73,

300)

- 10

,530

,785

3,55

3,89

5 (2

3,96

3)36

6,39

6 3,

896,

328

6,63

4,45

7

7,05

0,19

0

6,29

7,36

1 - -

6,29

7,36

1

3,00

4,81

6 -

106,

084

3,11

0,90

0

3,18

6,46

1

3,29

2,54

5

16,3

12,3

44

(83,

962)

3,32

8,45

6 19

,556

,838

4,70

0,61

0 (2

7,83

5)93

0,48

5 5,

603,

260

13,9

53,5

78

11,6

11,7

34

8,98

0,22

0 -

41,7

06

9,02

1,92

6

2,73

9,99

1 -

344,

397

3,08

4,38

8

5,93

7,53

8

6,24

0,22

9

31,5

89,9

25

(83,

962)

3,37

0,16

2 34

,876

,125

10,4

45,4

17

(27,

835)

1,38

0,96

6 11

,798

,548

23,0

77,5

77

21,1

44,5

08


20 Property, plant and equipment (contʼd)

Company2005RM

Office equipment Cost At 1 January Additions At 31 December Accumulated depreciation At 1 January Charge for the financial year At 31 December Net book value At 31 December 2005 At 31 December 2004

228,362 19,779

248,141

91,340 19,047

110,387

137,754

137,022

Valuation The short term leasehold land and buildings of a subsidiary company were valued by the Directors in 1992 based on a valuation

carried out by independent professional valuers on the open market value basis. The surplus arising from the revaluation amounting to RM4,224,379 has been credited to the revaluation reserve account and eliminated upon consolidation.

The net book values of revalued short term leasehold land and buildings of the subsidiary company that would have been included in the financial statements had these assets been carried at cost less accumulated amortisation/depreciation, are as follows:

Group2005RM

2004RM

Net book value Short term leasehold land and buildings 6,618,684 7,211,688

Assets with restricted title At the balance sheet date, the net book value of property, plant and equipment of the Group pledged to financial institutions to secure term loans, borrowings and bank overdrafts as shown in Notes 17, 31 and 32 respectively are as follows:

Group2005RM

2004RM

Net book valueFreehold building Short term leasehold land and buildingsLong term leasehold land and buildingsPlant, machinery and equipment

5,937,538 10,666,285

3,446,403 8,239,911

28,290,137

6,240,229 8,015,194 3,543,725

14,300,026 32,099,174






20 Property, plant and equipment (contʼd)

Assets held under hire purchase and finance lease agreements

At the balance sheet date, the net book value of property, plant and equipment of the Group held under hire purchase and finance leases are as follows:

Group2005RM

2004RM

Net book value Plant, machinery and factory equipment Motor vehicles Furniture, fittings and office equipment

6,602,762 2,295,804 1,091,607 9,990,173

7,123,038 2,473,730

665,345 10,262,113

21 Intangible assets

Group Goodwill Licence fee

Cost2005RM

2004RM

2005RM

2004RM

At 1 January Foreign exchange fluctuation (Written off)/addition At 31 December Accumulated amortisation At 1 January Foreign exchange fluctuation Written off Amortisation for the financial year At 31 December Net book value

1 -

(1)-

1 -

(1)- -

-

- - 1 1

- - - 1 1

-

81,794 (24)

- 81,770

36,896 (10)

- 8,396

45,282

36,488

81,794 - -

81,794

28,491 - - 8,405

36,896

44,898


22 Subsidiary companies

Interest in subsidiary companies:Company

2005RM

2004RM

Unquoted shares, at costLess: accumulated impairment losses

Amounts due from subsidiary companiesLess : amounts receivable within 12 months (Note 27)

Less: allowance for doubtful debts

63,225,257 (10,814,681)52,410,576

134,581,902 (122,847,696)

11,734,206 (93,386)

11,640,820 64,051,396

59,225,255 (10,842,163)48,383,092

110,813,678 (103,279,665)

7,534,013 (90,646)

7,443,367 55,826,459

Amounts due from subsidiary companies arose mainly from inter-company advances and payments on behalf and are receivable after 12 months, unsecured and interest free except for an amount of RM3,993,750 (2004: RM4,047,000) which bears interest at rates ranging between 2.56% and 4.40% (2004: 1.03% and 2.34%) per annum and an amount of RM7,204,881 (2004: RM7,204,839) which bears interest at rates at 1.50% (2004: 0%) per annum.

It is impracticable to determine the fair value of the amount due from subsidiary companies as these are interest free and have no fixed terms of repayment. However, the carrying amounts recorded are not anticipated to significantly differ from its fair value at balance sheet date.

During the financial year, these wholly-owned subsidiaries companies increased their issued and paid up share capital:

(a) Intramewah Development Sdn Bhd increased its issued and paid up share capital from RM2,000,000, comprising 2,000,000 ordinary shares of RM1 each to RM5,000,000 comprising 5,000,000 ordinary shares of RM1 each at par, which was fully subscribed by the Company.

(b) Nova Century Development Sdn Bhd increased its issued and paid up share capital from RM2, comprising 2 ordinary shares of RM1 each to RM1,000,000 comprising 1,000,000 ordinary shares of RM1 each at par, which was fully subscribed by the Company.

These subsidiaries were acquired during the financial year:

(a) On 26 April 2005, the Company acquired 2 ordinary shares of RM1.00 each representing 100% of the issued and paid-up share capital of Nova Legend Development Sdn Bhd for a cash consideration of RM2.00.

(b) On 8 July 2005, the Company acquired 2 ordinary shares of RM1.00 each representing 100% of the issued and paid-up share capital of Nova Century Development Sdn Bhd and Quantum Noble Development Sdn Bhd for a cash consideration of RM2.00 respectively.

(c) On 21 October 2005, the Company acquired 2 ordinary shares of RM1.00 each representing 100% of the issued and paid-up share capital of RM2.00 of Venice View Development Sdn Bhd for a cash consideration of RM2.00.

(d) On 21 October 2005, a wholly owned subsidiary company, Mah Sing Properties Sdn Bhd, acquired 2 ordinary shares

of RM1.00 each representing 100% of the issued and paid-up share capital of RM2.00 of Vienna Grand Development Sdn Bhd for a cash consideration of RM2.00.






22 Subsidiary companies (contʼd)

The subsidiary companies are:

Effective equity interest

Name of company Country of

incorporationBy Company By

subsidiary companyPrincipal activities

Subsidiary companies of Mah Sing Group Berhad

2005%

2004%

2005%

2004%

Mah Sing Properties Sdn Bhd

Mah Sing Plastics Industries Sdn Bhd+

Mah Sing Enterprise Sdn Bhd+

Mah Sing Components Manufacturing Sdn Bhd

Jastamax Sdn Bhd

Multi Synergy Group Sdn Bhd

Vital Routes Sdn Bhd

Champion Computers Sdn Bhd

Peninsular Connection Sdn Bhd

Pleasant Network Sdn Bhd

Insan Johan Sdn Bhd

Vital Roles Sdn Bhd

Mah Sing Precision Engineering Sdn Bhd

Konsortium Lingkaran Lembah Kinta Sdn Bhd

Gentali Motor Corpn. Sdn Bhd

Superior Focus Sdn Bhd

Intramewah Development Sdn Bhd

Legend Grand Development Sdn Bhd

Nova Legend Development Sdn Bhd

Nova Century Development Sdn Bhd

Venice View Development Sdn Bhd

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

100

100

100

100

100

100

100

100

100

100

100

90

100

51

60.5

80

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

90

100

51

60.5

80

100

100

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Property investment and development

Manufacture of plastic moulded products and property development

Trading of plastic and other related products

Inactive

Inactive

Property investment

Investment holding

Investment holding

Investment holding

Investment holding

Inactive

Inactive

Inactive

Dormant

Inactive Inactive

Property development

Dormant

Dormant




22 Subsidiary companies (contʼd)

The subsidiary companies are:

Effective equity interest


incorporationBy Company By

subsidiary companyPrincipal activities

Subsidiary company of Mah Sing PlasticIndustries Sdn Bhd

2005%

2004%

2005%

2004%

Kenwira Sdn Bhd Malaysia - - 100 100 Assembly of helmets

Subsidiary companies of Mah Sing Properties Sdn BhdAcacia Springs Management Sdn Bhd

Mestika Kenangan Sdn Bhd

Mestika Bistari Sdn Bhd

Vienna Grand Development Sdn Bhd

Quantum Noble Development Sdn Bhd^

Prima Peninsular Development Sdn Bhd^

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

-

-

-

-

-

-

-

-

-

-

-

100

100

100

100

100

100

100

100

100

100

-

-

-

Property management

Property management


Dormant

Property management

Property management

Subsidiary company of Pleasant Network Sdn BhdVican Technology Sdn Bhd** Malaysia - - 68 68 Inactive, under court

winding up orderSubsidiary company of Vican Technology Sdn BhdVican Electronics Sdn Bhd # Malaysia - - 100 100 Inactive

Subsidiary company of Vital Routes Sdn BhdP.T.Mah Sing Indonesia* Indonesia - - 65 65 Manufacture of plastic

moulded products

* Audited by other firms of auditors** This subsidiary company is under a court winding-up order and was deconsolidated from the Group results in 2000. The cost

of investment in this subsidiary company had been fully provided for. # This company has not been included in the Group consolidation as its immediate holding company was deconsolidated from

the Group. + Consolidated by merger method^ These subsidiaries companies were transferred from the Company to a wholly-owned subsidiary company.






23 Associated companies

Group Company2005RM

2004RM

2005RM

2004RM

Interest in associated companies:Unquoted shares, at cost Less: accumulated impairment lossesGroupʼs share of post-acquisition accumulated losses

Amount due from an associated companyLess: repayable within 12 months (Note 27)

936,248 -

(910,724)25,524

1,500 (1,500)-

25,524

936,248 -

(910,724)25,524

---

25,524

224,750(199,226)

- 25,524

1,500(1,500)-

25,524

224,750(199,226)

- 25,524

-- -

25,524

Amount due from an associated company is unsecured, interest free and full allowance for doubtful debts has been made.

The Groupʼs share in the accumulated losses of associated companies as shown below has not been recognised in the Groupʼs income statement as equity accounting ceased when the Groupʼs share of losses of associated companies exceeded the carrying amount of its investment in the associates.

Group2005RM

2004RM

Accumulated losses As at 1 JanuaryLoss from ordinary activities after taxationAs at 31 December

(3,748,481)(48,940)

(3,797,421)

(3,326,932)(421,549)

(3,748,481)

Details relating to the associated companies are as follows:


incorporationEffective equity

interest Principal activities2005

%2004

%Associated companies of Mah Sing

Group Berhad

Perstorp-Mah Sing Sdn Bhd*Prestige Greenery Sdn Bhd * Associated company of Peninsular Connection Sdn Bhd

True Mineral Water Sdn Bhd

MalaysiaMalaysia

Malaysia

42 39.5

50

42 39.5

50

InactiveDormant

Inactive

* Audited by other firms of auditors




24 InvestmentsGroup

2005RM

2004RM

Quoted shares in Malaysia, at cost Less: allowance for diminution in value

Unquoted shares in Malaysia, at cost Disposal

Market value of quoted shares in Malaysia

3,700 (2,620)1,080 - - - 1,080

900

3,700 (2,620)1,080

2 (2)

- 1,080

1,080

25 Property Development Activities

(i) Land held for property developmentGroup

Note2005RM

2004RM

Freehold land at cost

At 1 January Addition during the yearTransfer to property development costsAt 31 December

25(ii)

61,520,145 61,520,145

- 66,514,896 (4,994,751)61,520,145

- - -

111,291,084 (111,291,084)

-

The title to a parcel of freehold land with a cost of RM61,520,145 which was acquired during the financial year has not been transferred to the Company as it is pending the fulfillment of certain conditions precedent as at 31 December 2005.




(ii) Property development costGroup

Note2005RM

2004RM

At 1 January Land cost Development costsAccumulated cost charged to income statement

Cost incurred during the year:Transfer from land under property development Development costs

Cost charged to income statement

At 31 December Land cost Development costsAccumulated cost charged to income statementTransfer to inventories

25(i)

308,946,333 678,883,777

(668,814,828)319,015,282

4,994,751 233,964,090 238,958,841

(260,950,438)

313,941,084 912,847,867

(929,765,266)(3,754,369)

293,269,316

197,655,249 462,657,893 (467,170,119)193,143,023

111,291,084 216,225,884 327,516,968

(201,644,709)

308,946,333 678,883,777

(668,814,828)-

319,015,282

Included in development expenditure is interest on borrowings capitalised during the financial year amounting to RM10,329,664 (2004: RM5,245,465).

Included under land cost is freehold land costing RM305,928,705 (2004: RM300,933,954) which has been charged to financial institutions as security for the term loans and bank overdrafts as shown in Notes 17 and 32 respectively. Also, a piece of leasehold land costing RM1,741,858 (2004: RM1,741,858) has been pledged as security for short-term borrowings granted to the Company as shown in Note 31.

26 Inventories

Group2005RM

2004RM

At cost:Completed propertiesRaw materials Work-in-progress Finished goods

4,652,509 6,184,948 1,552,379 4,663,640

17,053,476

898,140 6,041,856 2,657,962 2,897,552

12,495,510

Inventories of a subsidiary company amounting to RM5,754,923 (2004: RM4,407,080) are pledged to financial institutions to secure foreign term loans, short-term borrowings and bank overdrafts as shown in Notes 17, 31 and 32.




27 Trade and other receivables

Group Comapany2005RM

2004RM

2005RM

2004RM

Trade receivables Less: allowance for doubtful debts

Other receivables

Accrued billings in respect of property developmentAmounts due from subsidiary companies (Note 22)

Amount due from an associated company (Note 23)Tax recoverable Deposits Prepayments

73,407,735 (1,005,528)72,402,207

1,162,709 73,564,916

68,814,021 -

1,500 3,397,930 3,585,778 1,605,366

150,969,511

76,158,490 (1,759,016)74,399,474

3,134,727 77,534,201

36,965,578 -

- 780,274

3,333,366 737,560

119,350,979

- - -

38,097 38,097

- 122,847,696

1,500 7,694,570

900 32,221

130,614,984

- - -

37,520 37,520

- 103,279,665

- 4,152,872

1,900 6,398

107,478,355

The currency exposure profile of trade receivables is as follows:

Group2005RM

2004RM

- Ringgit Malaysia - United States Dollar - Singapore Dollar

66,545,969 6,417,691

444,075 73,407,735

66,570,200 9,148,714

439,576 76,158,490

Trade receivables of the Group amounting to RM5,713,174 (2004: RM8,581,722) are pledged to financial institutions to secure foreign term loans, short-term borrowings and bank overdrafts as shown in Notes 17, 31 and 32.

Trade receivables comprise amounts receivable for the sale of goods of RM18,021,435 (2004: RM19,254,311) and amounts receivable from customers for property development projects of RM54,380,772 (2004: RM55,145,163). Other receivables comprise mainly balance of property management fee and rental receivable.

The terms for sale of goods range from payment in advance to 90 days (2004: 90 days) credit whilst the credit term for receivables from property development is 21 days (2004: 21 days).

Concentration of credit risk with respect to trade receivables are limited due to the Groupʼs large number of customers, which are widely distributed and covers a broad range of end markets to which the Group sells. The Groupʼs historical experience in collection of accounts receivable falls within the recorded allowances. Due to these factors, management believes there is no additional credit risk beyond amounts provided for doubtful debts for the Groupʼs trade receivables.

Amounts due from subsidiary companies which are receivable within 12 months are unsecured, interest free, comprising mainly of inter-company advances and payments on behalf.




28 Deposits, cash and bank balances

Group Company2005RM

2004RM

2005RM

2004RM

Cash and bank balances Project accounts Deposits with licensed banks

16,647,011 13,547,665

8,715,000 38,909,676

21,931,723 11,334,724 2,762,000

36,028,447

377,131 -

8,650,000 9,027,131

37,226 -

2,697,000 2,734,226

The interest rates per annum for deposits and project accounts during the financial year are:

Group2005

%2004

% Project accounts Deposits with licensed banks

2.0 1.5 - 3.0

2.0 3.0

Deposits have an average maturity of 30 days (2004: 30 days). Bank balances are deposits held on call with licensed banks.

Deposits with licensed banks of the Group amounting to RM65,000 (2004: RM65,000) have been pledged as collateral for guarantees issued on behalf of subsidiary companies.

Project accounts are bank accounts maintained in accordance with Section 7A of the Housing Developers Act, 1966. These accounts, which consist of monies received from purchasers, are for the payment of property development expenditure incurred. The surplus monies, if any, will be released to the respective subsidiary companies upon the completion of the property development projects and after all property development expenditure have been fully settled.

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

Group Company2005RM

2004RM

2005RM

2004RM

- Ringgit Malaysia - United States Dollar

38,557,510 352,166

38,909,676

34,791,441 1,237,006

36,028,447

9,027,131 -

9,027,131

2,734,226 -

2,734,226




29 Trade and other payablesGroup Company

2005RM

2004RM

2005RM

2004RM

Trade payables Payables for acquisition of land Less: amount payable more than 1 year (Note 18)

Retention sumOther payables

Progress billings in respect of property developmentFinance lease and hire purchase liabilities (Note 18)Amounts due to subsidiary companiesAmounts due to associated companiesAmount due to minority shareholder of a subsidiary companyPayable for acquisition of property, plant and equipmentDeposits received from customersAccrued operating expenses

63,499,229 62,148,858

(51,920,342)10,228,516

19,606,209 6,451,512

99,785,466

13,833,4662,312,198

- 109,985

1,968,750 495,664 703,252

5,888,677 125,097,458

52,910,630 21,030,000

- 21,030,000

15,051,756 6,520,473

95,512,859

11,204,387 2,222,624

-109,985

1,995,0003,469,2482,832,437 7,056,216

124,402,756

- - - -

- - -

--

4,204,311----

551,793 4,756,104

- - - -

- - -

- -

1,480,694----

214,4611,695,155

Amounts payable for acquisition of property, plant and equipment are denominated in United States Dollar and interest-free (2004: denominated in Japanese Yen, guaranteed by the Company and interest-free).

The terms of payment for trade payables and other payables granted to the Group range from cash basis to 90 days (2004: 90 days) credit.

The amount payables for acquisition of lands by a wholly-owned subsidiary company of RM49,420,342 is to be secured by a bank guarantee upon fulfillment of all conditions precedent.

The currency exposure profile of trade payables including retention sum and other payables are as follows:

Group2005RM

2004RM

- Ringgit Malaysia - United States Dollar

93,954,876 5,830,590

99,785,466

88,113,738 7,399,121

95,512,859


29 Trade and other payables (contʼd)

Amounts due to subsidiary companies are unsecured, interest free, arose mainly from inter-company advances and payments on behalf and have no fixed term of repayment.

Amounts due to associated companies are unsecured, interest free and have no fixed term of repayment.

Amount due to minority shareholder of a subsidiary company is unsecured, bears interest at rates varying between 2.56% and 4.40% (2004: 1.03% and 2.34%) per annum and has no fixed term of repayment.

30 Provision for liabilityGroup Company

Current 2005RM

2004RM

2005RM

2004RM

Provision in respect of loan granted by a financial institution to an associated company 425,775 506,130 425,775 506,130

The provision is in respect of a loan granted to an associated company for which the Company has given a corporate guarantee. The associated company had ceased operation in 2004 and is not in a position to settle the outstanding amount pending disposal of its assets.

31 Short-term borrowingsGroup Company

Secured:2005RM

2004RM

2005RM

2004RM

Short-term foreign credit facilitiesRevolving credit

Unsecured:Revolving credit Bankers acceptances

Total

572,231 -

572,231

12,022,808 6,530,000

18,552,808

19,125,039

4,312,322 6,000,000

10,312,322

16,000,000 4,950,000

20,950,000

31,262,322

- - -

2,332,286 -

2,332,286

2,332,286

- 6,000,000 6,000,000

5,000,000 -

5,000,000

11,000,000

Group

The secured short-term foreign credit facilities obtained by a subsidiary company are secured by legal charges over leasehold land and buildings, plant, machinery and equipment, inventories and trade receivables of the said subsidiary company.

Secured revolving credit of RM6,000,000 in 2004 was secured by first and second fixed legal charge over a piece of vacant commercial site owned by a wholly owned subsidiary company.

Both unsecured revolving credit and bankers acceptances are granted on negative pledges over the present and future assets of the respective subsidiary companies and are guaranteed by the Company.




31 Short-term borrowings (contʼd)

The currency exposure profile of the borrowings is as follows:

Group Company2005RM

2004RM

2005RM

2004RM

United States Dollar Indonesian Rupiah Ringgit Malaysia

- 572,231

18,552,808 19,125,039

3,230,000 1,082,322

26,950,000 31,262,322

- -

2,332,286 2,332,286

- -

11,000,000 11,000,000

Group

As at 31 December 2005, the weighted average effective interest rates of the borrowings denominated in United States Dollar, Indonesian Rupiah and Ringgit Malaysia were 6.00% (2004: 6.00%), 8.20% (2004: 7.62%) and 5.41% (2004: 4.75%) per annum respectively.

The borrowings bear interest at floating rates and their fair values approximate their carrying values at balance sheet date.

Company

The unsecured revolving credit is repayable on demand and will not be available for further drawdown after the repayment.

As at 31 December 2005, the weighted average effective interest rates of the borrowings was 5.10% (2004: 5.10%) per annum.

During the year, the interest rates were in the following range :

Group Company2005

%2004

%2005

%2004

%Foreign facilities : - United States Dollar - Indonesian Rupiah Local facilities

6.00 - 8.508.20 - 17.003.50 - 7.75

6.00 - 7.507.62 - 16.503.39 - 5.40

--

5.10

--

5.10

32 Bank overdrafts

Group Company2005RM

2004RM

2005RM

2004RM

Secured Unsecured

358,541 -

358,541

409,862 439,645 849,507

- - -

- 410,523 410,523




32 Bank overdrafts (contʼd)

Group The secured bank overdrafts of the Group are secured by legal charges over the leasehold land and buildings, plant, machinery

and equipment, inventories and trade receivables, by a first fixed charge over a building and by a second fixed charge over a piece of mixed development land, a specific debenture over the same development land of respective subsidiary companies and are guaranteed by the Company.

The unsecured bank overdraft facilities are granted on negative pledges over the present and future assets of the Company and respective subsidiary companies.

Company

The unsecured bank overdraft facility is granted on negative pledges over the present and future assets of the Company.

The currency exposure profile of the bank overdrafts is as follows:

Group Company2005RM

2004RM

2005RM

2004RM

- Indonesian Rupiah - Ringgit Malaysia

358,541 -

358,541

- 849,507 849,507

- - -

- 410,523 410,523

As at 31 December 2005, the weighted average effective interest rate of the bank overdrafts denominated in Indonesian Rupiah was 13.75% (2004: 13.75%) per annum and local currency overdraft was 7.75% (2004: 7.76%) per annum.

The above overdrafts bear interest at floating rates. During the financial year, the interest rates were in the following range:

Group Company2005

%2004

%2005

%2004

%Foreign facilities - Indonesian Rupiah Local facilities

13.75 -16.507.00 - 8.25

13.757.00 - 8.25

-7.75

-7.75




33 Cash and cash equivalents

Cash and cash equivalents at end of the financial year comprise the following balance sheet items:

Group Company2005RM

2004RM

2005RM

2004RM

Cash and bank balances Project accounts Deposits with licensed banks Bank overdrafts (Note 32)

Less: deposits pledged as collateral (Note 28)

16,647,011 13,547,665

8,715,000 (358,541)

38,551,135

(65,000)38,486,135

21,931,723 11,334,724 2,762,000 (849,507)

35,178,940

(65,000)35,113,940

377,131 -

8,650,000 -

9,027,131

- 9,027,131

37,226 -

2,697,000 (410,523)

2,323,703

- 2,323,703

34 Contingent liabilities (unsecured)

Company2005RM

2004RM

Corporate guarantees issued to financial institutions in respect of credit facilities granted to :- subsidiary companies

Corporate guarantees issued to third parties in respect of the acquisition of :- property, plant and equipment

126,291,000

496,000 126,787,000

182,995,000

3,469,000 186,464,000

In the ordinary course of business, certain companies within the Group are defendants in various legal actions for breach of contracts and claims for service rendered which have no material impact. In the opinion of the Directors, after taking appropriate legal advice, the outcome of such actions are remote and therefore, no provisions have been made in the financial statements.

35 Segmental information

The Group is organised into two main business segments:

i) Properties - investment, construction, management and development of residential, commercial and industrial properties

ii) Plastics - manufacture, assembly and sale of a range of plastic moulded products

Other operations of the Group include investment holding operations which are not of a sufficient size to be reported separately.

Inter-segment revenue comprise dividend income, interest charges and management fee undertaken on an arms length basis.






35 Segmental information (contʼd)

(a) Primary reporting format - business segments

2005 PropertiesRM

PlasticsRM

OthersRM

GroupRM

Revenue Total revenue Inter-segment revenue External revenue

356,254,825 -

356,254,825

117,071,360 -

117,071,360

23,415,318 (23,250,850)

164,468

496,741,503 (23,250,850)473,490,653

2005 PropertiesRM

PlasticsRM

OthersRM

GroupRM

Results Segment results Inter-segment results Profit from operations Finance cost Share of results of associates Profit from ordinary activities before taxationTaxation Profit from ordinary activities after taxationMinority interest Net profit for the financial year

Other information Capital expenditure Depreciation and amortisation Reversal of impairment loss -

Property, plant and equipment

Consolidated Balance SheetSegment assets Investment in associates Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities

64,481,778 (7,500)

64,474,278

1,089,184 1,303,886

-

512,976,551 -

512,976,551

261,702,208

261,702,208

10,410,642 7,500

10,418,142

4,824,368 11,681,078

(319,183)

93,425,502 -

93,425,502

28,278,623

28,278,623

25,793,514 (26,724,189)

(930,675)

19,779 19,047

-

9,690,847 25,524

9,716,371

2,123,355

2,123,355

100,685,934 (26,724,189)73,961,745 (4,341,346)

- 69,620,399

(19,896,069)49,724,330 (1,378,420)48,345,910

5,933,331 13,004,011

(319,183)

616,092,900 25,524

3,397,930 619,516,354

292,104,186 66,885,357

358,989,543



2004 PropertiesRM

PlasticsRM

OthersRM

GroupRM

Revenue Total revenue Inter-segment revenue External revenue

260,870,355 -

260,870,355

95,291,259 -

95,291,259

14,866,340 (14,572,792)

293,548

371,027,954 (14,572,792)356,455,162

2004 PropertiesRM

PlasticsRM

OthersRM

GroupRM

Results Segment results Inter-segment results Profit from operations Finance cost Share of results of associates Profit from ordinary activities before taxationTaxation Profit from ordinary activities after taxationMinority interest Net profit for the financial year Other information Capital expenditure Depreciation and amortisation Impairment loss - Property, plant and equipmentReversal of impairment loss - Property, plant and equipment

Consolidated Balance SheetSegment assets Investment in associates Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities

36,973,433 (1,200)

36,972,233

2,102,977 1,114,913

- -

444,538,432 - -

444,538,432

250,694,991 -

250,694,991

7,365,155 1,200

7,366,355

11,432,665 13,520,813

360,327 (197,257)

103,530,692 - -

103,530,692

31,334,692 -

31,334,692

13,216,480 (13,820,753)

(604,273)

17,303 17,902 - -

3,361,223 25,524 -

3,386,747

1,937,556 -

1,937,556

57,555,068 (13,820,753)43,734,315 (4,891,813)

(1,948)38,840,554 (13,118,849)25,721,705

(659,901)25,061,804

13,552,945 14,653,628

360,327 (197,257)

551,430,347 25,524

780,274 552,236,145

283,967,239 51,020,997

334,988,236







(b) Secondary reporting format - geographical segments

Segment assets include real property assets, investments, current assets that are used in the operating activities of the segment, property, plant and equipment and intangible assets. Segment liabilities include trade payables, other payables and accrued liabilities. Capital expenditure comprise additions to property, plant and equipment.

With the exception of a manufacturing set up for plastic moulded products in Indonesia, the entire Groupʼs operations are located in Malaysia.

The following is an analysis of the Groupʼs external sales by location of customers, irrespective of the origin of the goods/services:

Sales revenue by geographical market 2005RM

2004RM

Malaysia IndonesiaOther countries

413,929,579 52,875,263

6,685,811 473,490,653

309,804,121 38,715,947

7,935,094 356,455,162

The following is an analysis of the carrying amount of segment assets and capital expenditure by geographical areas in which the assets are located:

Carrying amount of segment assets Capital expenditure

2005RM

2004RM

2005RM

2004RM

Malaysia Indonesia

583,589,845 32,503,055

616,092,900

511,804,311 39,626,036

551,430,347

1,921,872 4,011,459 5,933,331

2,707,741 10,845,204 13,552,945

36 Commitments

Non-cancellable operating lease commitments for rental of premises are as follows:

2005 2004

Group

Future minimum

lease payments

RM

Future minimum sub-lease receipts

RM

Future minimum

lease payments

RM

Future minimum sub-lease receipts

RM- not later than 1 year 58,960

58,96033,000 33,000

58,960 58,960

33,000 33,000


37 Related party disclosures

(a) Related party and relationship

Name of related party Relationship(i) Principal View Sdn Bhd

(ii) Leong Yuet Mei

(iii) Harian Madu Sdn Bhd

(iv) Lim Kim Hooi

- Company in which Datoʼ Leong Hoy Kum has substantial financial interest

- Director of the Company and sister of Datoʼ Leong Hoy Kum

- Company in which two directors are brothers-in-law to Datoʼ Leong Hoy Kum

- Brother-in-law to Datoʼ Leong Hoy Kum

(b) Related party disclosures

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other related party transactions and balances. The related party transactions described below were carried out on terms and conditions obtainable in transactions with unrelated parties:

Group2005RM

2004RM

(i) Rental expenses paid and payable to Principal View Sdn Bhd (ii) Rental expenses paid to Leong Yuet Mei(iii) Maintenance charges paid and payable to Harian Madu Sdn Bhd(iv) Transportation services paid and payable to Lim Kim Hooi Outstanding balance

241,956 -

155,520 32,129

-

212,416 6,000

155,520 56,127

5,784

38 Financial instruments

Estimated fair values The carrying amounts of the financial assets and liabilities of the Group and Company at the balance sheet date approximate

their fair values except as set out below:

Note Group CompanyCarrying amount

RM

FairvalueRM

Carrying amount

RM

FairvalueRM

Financial liabilities At 31 December 2005: Finance lease liabilities At 31 December 2004: Finance lease liabilities

18

18

6,332,795

7,929,934

6,528,862

8,661,772

-

-

-

-






38 Financial instruments (contʼd)

There is no disclosure of fair value for investment in subsidiary and associated companies as these are excluded from MASB Standard 24 Financial Instruments: Disclosure and Presentation.

39 Retirement benefit obligations

A foreign subsidiary operates an unfunded defined Retirement Benefit Scheme (“the Scheme”) for its eligible employees.

The amounts recognised in the balance sheet are determined as follows:

Group2005RM

2004RM

Present value of benefit obligations Fair value of plan assets Unrecognised actuarial losses Unrecognised past service cost - non vested

704,491 -

704,491 (154,327)(177,759)372,405

770,854 -

770,854 -

(499,421)271,433

The amounts recognised in the income statement are as follows:

Group2005RM

2004RM

Current service cost Interest on obligation Net actuarial losses recognized in yearAmortisation of past service cost -vestedAmortisation of past service cost -non vestedUnrealised foreign exchange gain Total included in staff cost (Note 9 )

61,286 67,104

9,362 (17,399)

4,916 (20,726)104,543

110,386 30,056

- 17,399 11,061

- 168,902

The Group charge for the year of RM104,543 (2004: RM168,902) has been included in the administrative expenses.

Movements in the net liability in the current year are as follows:

Group2005RM

2004RM

At 1 January Foreign exchange fluctuationAmounts recognised in the income statementAt 31 December

271,433 (3,571)

104,543 372,405

102,531 -

168,902 271,433




39 Retirement benefit obligations (contʼd)

Principal actuarial assumptions used: Group2005 2004

Discount rate Expected return on plan assets Expected rate of salary increase

12.00%N/A

10.00%

10.00%10.00%

8.00%

40 Significant post balance sheet events On 14 March, 22 March and 3 April, 12 April 2006, an additional 55,000, 92,000, 42,000 and 85,000 new ordinary shares of RM1.00 each, were issued respectively pursuant to the exercise of Warrants which were listed subsequently and quoted on the Main Board of Bursa Malaysia Securities Berhad.

On 20 March 2006, Nova Legend Development Sdn Bhd, a wholly-owned subsidiary of Mah Sing Group Berhad, acquired a piece of freehold land from Tapak Semangat Sdn Bhd for a cash consideration of approximately RM10 million.

On 29 March 2006, the Company acquired Golden Venice Development Sdn Bhd (“GVD”), Loyal Sierra Development Sdn Bhd (“LSD”) and Star Residence Sdn Bhd (“SRSB”), 3 private limited companies incorporated in Malaysia on 10 March 2006,13 December 2005 and 9 March 2006 under the Companies Act, 1965. The authorised share capital of GVD, LSD and SRSB are RM100,000 respectively, divided into 100,000 ordinary shares of RM1.00 each, of which 2 ordinary shares have been fully issued and paid-up respectively.

41 Comparative figures

Certain comparative figures have been reclassified to conform with current yearʼs presentation.


Statements By DirectorsPursuant to Section 169(15) of the CompaniesAct,1965

We, Jen. (R) Tan Sri Yaacob bin Mat Zain and Datoʼ Leong Hoy Kum, being two of the Directors of Mah Sing Group Berhad, state that, in the opinion of the Directors, the financial statements set out on pages 52 to 105 are drawn up so as to give a true and fair view of the state of affairs of the Group and the Company as at 31 December 2005 and of the results and cash flows of the Group and the Company for the financial year ended on that date in accordance with the applicable MASB approved accounting standards in Malaysia and the provisions of the Companies Act, 1965.

Signed on behalf of the BoardIn accordance with a resolution of the Board of Directors dated 18 April 2006.

Jen. (R) Tan Sri Yaacob bin Mat ZainChairman


I, Ng Poh Seng, being the Director primarily responsible for the financial management of Mah Sing Group Berhad, do solemnly and sincerely declare that the financial statements set out on pages 52 to 105 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.

Ng Poh Seng Subscribed and solemnly declared at Kuala Lumpur this 18 April 2006.

Before me:

P. SAROJA PPNNo: W 402

Commissioner for Oaths

StatutoryDeclaration by the Director

primarily responsible for the Financial Managementof the Company


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233

209

,227

17,

280

32,

872

107

,747

- - - - - -

14

10 8

8 - - - - - -

9,6

61,8

08

5,9

37,5

38

3,4

46,4

03

10,

666,

285

61,

520,

145

4,99

4,75

1

18,

826,

926

26,

955,

528

27,

041,

117

97,

458,

154


Statistics ofShareholdingsAs at 8 May 2006

Authorised Share Capital : RM500,000,000Issued and Fully Paid Share Capital : RM146,276,360Class of Shares : Ordinary shares of RM1.00 eachVoting Rights : One vote per ordinary share on a poll

ANALYSIS OF SHAREHOLDINGSSize of Holdings No. of Holders No. of Shares %1 – 99100 – 1,0001,001 – 10,00010,001 – 100,000100,001 – 7,313,817*7,313,818 and above**

Total

1381,0752,012

369 46

3

3,643

2,256958,780

8,375,760 8,956,260 68,878,420

59,104,884

146,276,360

0.002 0.655

5.726 6.123 47.088 40.406

100.000

Remarks: * Less than 5% of issued shares ** 5% and above of issued shares

SUBSTANTIAL SHAREHOLDERSName No. of Shares %Datoʼ Leong Hoy Kum

FMR Corp. & Fidelity International Limited

Koperasi Permodalan Felda Berhad

Total

62,714,844

9,661,600

9,000,000

71,188,844

42.874

6.605

6.153

48.667

DIRECTORS ̓SHAREHOLDINGSName No. of Shares %Datoʼ Leong Hoy Kum 62,714,844 42.874

* 39,517,684 shares are held directly and the remaining 23,197,160 shares are held through various nominee companies

LIST OF TOP THIRTY SHAREHOLDERSName No. of Shares %1. Datoʼ Leong Hoy Kum

2. Southern Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Datoʼ Leong Hoy Kum

3. HSBC Nominees (Asing) Sdn Bhd BBH (LUX) SCA for Fidelity Funds Malaysia

4. HSBC Nominees (Asing) Sdn Bhd Silver Glass Continental S.A.

39,517,684

11,113,200

8,474,000

7,230,200

27.016

7.597

5.793

4.943


LIST OF TOP THIRTY SHAREHOLDERS (contʼd)Name No. of Shares %5. Bumiputra-Commerce Nominees (Tempatan) Sdn Bhd Pledged Securitites Account for Datoʼ Leong Hoy Kum

6. Koperasi Permodalan Felda Berhad

7. HSBC Nominees (Asing) Sdn Bhd Calim Finance Ltd

8. Cartaban Nominees (Asing) Sdn Bhd Lehman Brothers Securities Asia Limited for Lehman Brothers Commercial Corporation Asia Limited

9. HSBC Nominees (Asing) Sdn Bhd Exempt An For Morgan Stanley & Co. International Limited

10. HSBC Nominees (Asing) Sdn Bhd Shea Butter Financial Corp.

11. HSBC Nominees (Asing) Sdn Bhd Monarto South Invest Corp.

12. HSBC Nominees (Asing) Sdn Bhd Venderson Invest & Trade Inc.

13. HSBC Nominees (Asing) Sdn Bhd DZ Bank Intl For UNI Em Fernost Treuhandkonto, Luxembourg

14. Malaysia Nominees (Tempatan) Sendirian Berhad Pledged Securities Account For Datoʼ Leong Hoy Kum

15. Citigroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Datoʼ Leong Hoy Kum

16. HSBC Nominees (Asing) Sdn Bhd HSBC-FS For GSI Asian Capital Growth Fund (GSI Asia Fund)

17. HSBC Nominees (Asing) Sdn Bhd Crownpro Investments Limited

18. HSBC Nominees (Asing) Sdn Bhd BBH (LUX) SCA For Fidelity Funds – Asia Pacific Growth & Income Fund

19. HSBC Nominees (Asing) Sdn Bhd HPBS SG For Tenacious Hold Limited

20. AMMB Nominees (Tempatan) Sdn Bhd Amtrustee Berhad for Pacific Pearl Fund (5/1-9)

7,000,200

7,000,000

5,712,300

5,000,000

4,700,000

3,573,300

3,176,200

3,067,800

3,000,000

2,543,760

2,540,000

1,876,700

1,541,900

1,100,000

1,058,600

732,700

4.786

4.785

3.905

3.418

3.213

2.443

2.171

2.097

2.051

1.739

1.736

1.283

1.054

0.752

0.724

0.501

Statistics ofShareholdings(contʼd)

As at 8 May 2006


Statistics ofShareholdings(contʼd)

As at 8 May 2006

LIST OF TOP THIRTY SHAREHOLDERS (contʼd)Name No. of Shares %21. Universal Trustee (Malaysia) Berhad Pacific Premier Fund

22. HSBC Nominees (Asing) Sdn Bhd Dobson Agents Ltd

23. Amanah Raya Nominees (Tempatan) Sdn Bhd Kumpulan Wang Am

24. Wong Swee Yee

25. Lim Yoke Hiap

26. Sze See Chuen

27. ECM Libra Securities Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Bonnie Yong @ Yong Yoon Kong

28. Citigroup Nominees (Asing) Sdn Bhd GSI For Alcor Capital Asia Fund Ltd

29. HSBC Nominees (Asing) Sdn Bhd HSBC-FS For Asian Small Companies Fund (Series 1)

30. Mayban Securities Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Phan Swee Kim (Dealer 011)

Total

714,700

521,500

500,000

478,600

466,000

405,700

397,780

370,900

300,200

300,000

124,413,924

0.489

0.357

0.342

0.327

0.319

0.277

0.272

0.254

0.205

0.205

85.054


No. of Outstanding Warrants : 47,226,840 Exercise Price of Warrants : RM1.00Exercise Period of Warrants : 7 June 2004 to 6 June 2009Exercise Rights : Each warrant entitles the holder to subscribe for one new ordinary share of RM1.00 each in the CompanyVoting Rights at Meetings of Warrant Holders : One vote per warrant on a poll

ANALYSIS OF SHAREHOLDINGSSize of Holdings No. of Holders No. of Warrants %

1 – 99100 – 1,0001,001 – 10,00010,001 – 100,000100,001 – 2,361,341*2,361,342 and above**

Total

198446934

125 23

5

1,731

4,971372,120

3,034,0693,773,600

12,248,00027,794,080

47,226,840

0.0110.7886.4257.990

25.93458.852

100.000

Remarks: * Less than 5% of warrants outstanding ** 5% and above of warrants outstanding

WARRANT HOLDING OF DIRECTORSName No. of Warrants %

Datoʼ Leong Hoy Kum 21,343,080 45.193

* 12,286,380 warrants are held directly and the remaining 9,056,700 warrants are held through various nominee companies.

LIST OF TOP THIRTY WARRANT HOLDERSName No. of Shares %

1. Datoʼ Leong Hoy Kum

2. Southern Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Datoʼ Leong Hoy Kum

3. HSBC Nominees (Asing) Sdn Bhd Dobson Agents Ltd

4. Bumiputra-Commerce Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Datoʼ Leong Hoy Kum

5. HSBC Nominees (Asing) Sdn Bhd Crownpro Investments Limited

6. HSBC Nominees (Asing) Sdn Bhd Calim Finance Ltd

7. Lee Hiok Kui @ Jimmy Lingam

8. RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Looi Boon Han (CEB)

9. HSBC Nominees (Asing) Sdn Bhd HPBS SG For Tenacious Hold Limited

12,286,380

5,556,600

3,505,700

3,500,100

2,945,300

1,965,200

1,445,600

1,098,400

1,048,400

26.016

11.766

7.423

7.411

6.236

4.161

3.061

2.326

2.220

Statistics ofWarrant HoldingsAs at 8 May 2006


Statistics ofWarrant Holdings(contʼd)

As at 8 May 2006

LIST OF TOP THIRTY WARRANT HOLDERS (contʼd)Name No. of Shares %10. Wong Swee Yee

11. Lim Yoke Hiap

12. Cartaban Nominees (Asing) Sdn Bhd Credit Suisse Securities (Europe) Limited For Value Catalyst Fund Ltd

13. Cartaban Nominees (Asing) Sdn Bhd Credit Suisse Securities (Europe) Limited For LP Value Limited

14. Hoh Sin Lien

15. RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Susy Ding (CEB)

16. Looi Boon Han

17. Cartaban Nominees (Asing) Sdn Bhd Credit Suisse Securities (Europe) Limited For Laxey Investors LP

18. Cartaban Nominees (Asing) Sdn Bhd Credit Suisse Securities (Europe) Limited For National Bank of Canada

19. Ngu Ung Ha

20. HSBC Nominees (Asing) Sdn Bhd Idealist Finance Limited

21. Lim Woon Sze 22. Loi Pui Khim

23. Cartaban Nominees (Asing) Sdn Bhd Credit Suisse Securities (Europe) Limited For Laxey Universal Value LP

24. Mayban Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Cheong Tuck Chee

25. Cheah See Han

26. Ngu Ung Ha

27. Sze See Chuen

28. Cartaban Nominees (Asing) Sdn Bhd Credit Suisse Securities (Europe) Limited For Leaf Limited

29. Bok Soon Boey

30. BHLB Trustee Berhad Exempted – Trust Account For EPF Investment For Member Savings Scheme

Total

1,033,500

901,400

780,700

596,400

400,000

359,000

320,000

290,700

269,800

239,500

200,000

200,000

170,000

162,600

156,300

145,500

130,000

120,000

110,000

105,000

97,200

40,139,280

2.188

1.909

1.653

1.263

0.847

0.760

0.678

0.616

0.571

0.507

0.424

0.424

0.360

0.344

0.331

0.308

0.275

0.254

0.233

0.222

0.206

84.993


Notice ofAnnual GeneralMeeting

NOTICE IS HEREBY GIVEN THAT the Fourteenth Annual General Meeting of the Mah Sing Group Berhad (“Mah Sing” or “Company”) will be held at Penthouse Suite 1, Wisma Mah Sing, No. 163, Jalan Sungai Besi, 57100 Kuala Lumpur on Monday, 19 June 2006 at 10.00 a.m. for the following purposes:-

AGENDA

As Ordinary Businesses:-

1.

2.

3.

4.

5.

6.

To adopt the Audited Financial Statements for the financial year ended 31 December 2005 together with the Directorsʼ and Auditorsʼ Reports thereon.

To approve the declaration of a first and final dividend of 12 sen per ordinary share of RM1.00 each less Malaysian Income Tax at 28% in respect of the financial year ended 31 December 2005.

To approve the Directorsʼ fees for the financial year ended 31 December 2005.

To re-elect the following Directors who are retiring pursuant to Article 102 of the Companyʼs Articles of Association:-

(i) Mr Lim Ching Choy(ii) Mr Loh Kok Leong

To re-elect Mr Ng Poh Seng, the Director retiring pursuant to Article 109 of the Companyʼs Articles of Association.

To re-appoint Messrs Deloitte KassimChan as Auditors and to authorise the Directors to fix their remuneration.

(Resolution 1)

(Resolution 2)

(Resolution 3)

(Resolution 4)(Resolution 5)

(Resolution 6)

(Resolution 7)

As Special Businesses:-

7. To consider and if thought fit, pass the following resolution pursuant to Section 129(6) of the Companies Act, 1965:-

“THAT Jen. (R) Tan Sri Yaacob Bin Mat Zain who is over the age of seventy years and retiring in accordance with Section 129(2) of the Companies Act, 1965 be and is hereby re-appointed as a Director of the Company and to hold office until the next Annual General Meeting of the Company.” (Resolution 8)


Notice ofAnnual GeneralMeeting(contʼd)

To consider and if thought fit, to pass the following resolutions, with or without any modification, as Ordinary Resolutions of the Company:-

8.

9.

AUTHORITY TO ISSUE SHARES

“THAT subject always to the Companies Act, 1965, and the approval of the regulatory authorities, the Directors be and are hereby empowered, pursuant to Section 132D of the Companies Act, 1965, to issue shares in the Company from time to time at such price, upon such terms and conditions, for such purposes and to such person or persons whomsoever as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being AND THAT the Directors be and are also empowered to obtain the approval from the Bursa Malaysia Securities Berhad for listing of and quotation for the additional shares so issued AND FURTHER THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

PROPOSED RENEWAL OF EXISTING SHAREHOLDERS ̓ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE AS SPECIFIED IN SECTION 2.3.1 OF THE CIRCULAR TO SHAREHOLDERS DATED 26 MAY 2006

“THAT subject always to the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company and its subsidiaries (“Mah Sing Group”) to enter into and give effect to specified recurrent related party transactions of a revenue or trading nature of Mah Sing Group with specified classes of Related Parties (as defined in the Listing Requirements of Bursa Malaysia Securities Berhad) as specified in Section 2.3.1 of the Circular to Shareholders dated 26 May 2006, which are necessary for the day-to-day operations of Mah Sing Group provided that:-

(a) the transactions are in the ordinary course of business and are carried out at armsʼ length basis on normal commercial terms of Mah Sing Group and on terms not more favourable to the Related Parties than those generally available to the public and are not detrimental to the minority shareholders of the Company; and

(b) disclosure is made in the Annual Report of the aggregate value of transactions conducted pursuant to the shareholdersʼ mandate together with a breakdown of the aggregate value of the transactions during the financial year based on the type of transactions, names of the related parties and their relationship.

AND THAT such approval, shall continue to be in force until:-

(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company at which time it will lapse, unless the authority is renewed by a resolution passed at a general meeting; or

(b) the expiration of the period within which the next AGM after that date is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (“Act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

(c) revoked or varied by a resolution passed by the shareholders of the Company in a general meeting;

whichever is earlier.

AND FURTHER THAT authority be and is hereby given to the Directors of the Company to complete and do all such acts, deeds and things as they may consider expedient or necessary in the best interest of the Company (including executing all such documents as may be required) to give effect to the transactions contemplated and/or authorised by this Ordinary Resolution.”

(Resolution 9)

(Resolution 10)



10.

11.

PROPOSED NEW SHAREHOLDERS ̓MANDATE FOR ADDITIONAL RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE AS SPECIFIED IN SECTION 2.3.2 OF THE CIRCULAR TO SHAREHOLDERS DATED 26 MAY 2006

“THAT subject always to the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company and its subsidiaries (“Mah Sing Group”) to enter into and give effect to specified recurrent related party transactions of a revenue or trading nature of Mah Sing Group with specified classes of Related Parties (as defined in the Listing Requirements of Bursa Malaysia Securities Berhad) as specified in Section 2.3.2 of the Circular to Shareholders dated 26 May 2006, which are necessary for the day-to-day operations of Mah Sing Group provided that the transactions are in the ordinary course of business and are carried out at armsʼ length basis on normal commercial terms of Mah Sing Group and on terms not more favourable to the Related Parties than those generally available to the public and are not detrimental to the minority shareholders of the Company.

AND THAT such approval, shall continue to be in force until:-

(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company at which time it will lapse, unless the authority is renewed by a resolution passed at a general meeting; or

(b) the expiration of the period within which the next AGM after that date is required to be held pursuant

to Section 143(1) of the Companies Act, 1965 (“Act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

(c) revoked or varied by a resolution passed by the shareholders of the Company in a general meeting;

whichever is earlier.

AND FURTHER THAT authority be and is hereby given to the Directors of the Company to complete and do all such acts, deeds and things as they may consider expedient or necessary in the best interest of the Company (including executing all such documents as may be required) to give effect to the transactions contemplated and/or authorised by this Ordinary Resolution.”

PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY

“THAT subject to the Companies Act, 1965, provisions of the Companyʼs Memorandum and Articles of Association and the Listing Requirements of the Bursa Malaysia Securities Berhad (“Bursa Securities”) and any applicable laws, regulations and guidelines issued by other regulatory authorities, and the approvals of all relevant governmental and/or regulatory authorities, the Company be and is hereby authorised to purchase and/or hold such amount of its ordinary shares of RM1.00 each (“Shares”) on the market of Bursa Securities at any time upon such terms and conditions as the Directors in their absolute discretion deem fit and expedient in the interest of the Company (“Proposed Share Buy-Back”) provided that:-

(a) the aggregate number of shares which may be purchased and/or held by the Company shall not exceed ten percent (10%) of the total issued and paid-up ordinary share capital of the Company;

(b) the maximum amount of funds to be allocated by the Company for the purpose of purchasing its Shares shall not exceed the retained profit and/or share premium account of the Company based on the latest audited financial statements available up to the transaction date of the Proposed Share Buy-back;

(Resolution 11)



11.

12.

PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY (contʼd)

(c) upon completion of the purchase(s) of the Shares by the Company, the Shares shall be dealt with in the following manner:

(i) to cancel the Shares so purchased; or (ii) to retain the Shares so purchased in treasury, either to be distributed as dividends to the

shareholders of the Company and/or to be resold on the market of Bursa Securities; or

(iii) to retain part of the Shares so purchased as treasury shares and cancel the remainder; or (iv) any combination of the three.

AND THAT the authority conferred by this resolution will be effective upon the passing of this resolution and will continue to be in force until:-

(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company at which time it will lapse, unless the authority is renewed by a resolution passed at a general meeting, either unconditionally or subject to conditions; or

(b) the expiration of the period within which the next AGM after that date is required by law to be held;

or

(c) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting;

whichever occurs first, but not as to prejudice the completion of purchase(s) by the Company before the aforesaid expiry date, and in any event, in accordance with the provisions of the guidelines issued by the Bursa Securities or any other relevant authorities, relevant requirements and guidelines.

AND FURTHER THAT authority be and is hereby given to the Directors of the Company to do all such acts, deeds and things as they may consider expedient or necessary in the best interest of the Company (including executing all such documents as may be required) to give full effect to the Proposed Share Buy-Back with full power to assent to any condition, variation, modification and/or amendment as may be required by any relevant authorities and to deal with all matters relating thereto and take all steps and do all acts and things in any manner as they may deem necessary in connection with the Proposed Share Buy-Back in the interest of the Company.”

To transact any other business of which due notice shall have been given.

(Resolution 12)

BY ORDER OF THE BOARD

YANG BAO LING (MAICSA 7041240)KUAN HUI FANG (MIA 16876)Company Secretaries

Kuala Lumpur26 May 2006


NOTES:

1. A member entitled to attend and vote at the Fourteenth Annual General Meeting is entitled to appoint a proxy or attorney or in the case of a corporation, to appoint a duly authorised representative to attend and vote in his place. A proxy or attorney or duly authorised representative may but need not be a member of the Company.

2. The power of attorney or a notarially certified copy thereof or the Form of Proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing. If the appointor is a corporation, it must be executed under its seal or under the hand of its officer or its attorney duly authorised on its behalf.

3. Where a member appoints more than one (1) proxy (subject always to a maximum of two (2) proxies at each meeting), the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

4. The Form of Proxy together with the power of attorney (if any) under which it is signed or a duly notarially certified copy thereof must be deposited at the registered office of the Company at Penthouse Suite 1, Wisma Mah Sing, No. 163, Jalan Sungai Besi, 57100 Kuala Lumpur not less than forty eight (48) hours before the time appointed for holding the Fourteenth Annual General Meeting or any adjournment thereof.

EXPLANATORY NOTES ON SPECIAL BUSINESSES 5. Resolution 8:- The re-appointment of Jen. (R) Tan Sri Yaacob Bin Mat Zain, a person over the age of 70 years as Director of the Company to

hold office until the conclusion of the next Annual General Meeting of the Company shall take effect if the proposed Resolution 8 has been passed by a majority of not less than three-fourths (3/4) of such members as being entitled to vote in person or, where proxies are allowed, by proxy, at a general meeting of which not less than 21 daysʼ notice specifying the intention to propose the resolution has been duly given.

6. Resolution 9: The proposed resolution is in relation to authority to allot shares pursuant to Section 132D of the Companies Act, 1965, and if

passed, will give the Directors of the Company, from the date of the above Annual General Meeting, authority to issue and allot shares from the unissued capital of the Company for such purposes as the Directors may deem fit and in the interest of the Company. This would avoid any delay and costs in convening a general meeting to specifically approve such issue of shares. This authority will, unless revoked or varied by the Company in general meeting, expire at the conclusion of the next Annual General Meeting of the Company.

7. Resolutions 10 and 11: The proposed resolutions, if passed, will enable the Company and its subsidiaries to enter into recurrent related party

transactions of a revenue or trading nature with related parties which are necessary for the Groupʼs day-to-day operations and are in the ordinary course of business carried out on an armʼs length basis on normal commercial terms and on terms not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company. The details of the proposals are set out in the Circular to Shareholders dated 26 May 2006 accompanying the Companyʼs Annual Report for the financial year ended 31 December 2005.

8. Resolution 12: The proposed resolution, if passed, will empower the Directors of the Company to exercise the power of the Company to

purchase the Companyʼs shares up to ten percent (10%) of the total issued and paid-up share capital of the Company by utilising the funds allocated which shall not exceed the retained profit and/or share premium account of the Company. This authority will, unless revoked or varied at a general meeting, expire at the conclusion of the next Annual General Meeting of the Company. The details of the proposal are set out in the Share Buy-Back Statement dated 26 May 2006, accompanying the Companyʼs Annual Report for the financial year ended 31 December 2005.



StatementAccompanyingNotice of Annual General Meeting

Notice of dividendentitlement and payment

1.

2.

3.

The name of Directors who are standing for re-election and re-appointment at the Fourteenth Annual General Meeting:-

a. Mr Lim Ching Choy (retiring pursuant to Article 102 of the Companyʼs Articles of Association) b. Mr Loh Kok Leong (retiring pursuant to Article 102 of the Companyʼs Articles of Association) c. Mr Ng Poh Seng (retiring pursuant to Article 109 of the Companyʼs Articles of Association)

d. Jen. (R) Tan Sri Yaacob Bin Mat Zain (re-appointment pursuant to Section 129(6) of the Companies Act, 1965)

The details of the four Directors seeking for re-election and re-appointment are set out in their respective profiles which appear on pages 12 to 13 of the Annual Report.

The details of the attendance of the Directors at Board Meetings during the financial year ended 31 December 2005 are as follows:-

Board of Directors No. of AttendanceJen. (R) Tan Sri Yaacob bin Mat Zain 5Datoʼ Leong Hoy Kum 5Lim Ching Choy 5Ng Poh Seng 2*Leong Yuet Mei 5Captain (Rtd) Izaham bin Abd. Rani 5Loh Kok Leong 5

* There were two (2) Board of Directorsʼ Meetings held since his appointment on 27 June 2005.

The Fourteenth Annual General Meeting of Mah Sing Group Berhad will be held at Penthouse Suite 1, Wisma Mah Sing, No. 163, Jalan Sungai Besi, 57100 Kuala Lumpur on Monday, 19 June 2006 at 10.00 a.m.

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENTNOTICE IS HEREBY GIVEN THAT the first and final dividend of 12 sen per ordinary share of RM1.00 each less Malaysian Income Tax at 28%, in respect of the financial year ended 31 December 2005, if approved at the Fourteenth Annual General Meeting, will be paid on 26 July 2006 to Depositors of ordinary shares registered in the Record of Depositors on 20 July 2006.

A Depositor shall qualify for entitlement to the dividend only in respect of:a) Shares transferred into the Depositorʼs Securities Account before 4.00 p.m. on 20 July 2006 in respect of transfers; andb) Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa

Malaysia Securities Berhad.

BY ORDER OF THE BOARD

YANG BAO LING (MAICSA 7041240)KUAN HUI FANG (MIA 16876)Company Secretaries

Kuala Lumpur26 May 2006

FORM OF PROXY No. of ordinary shares held(Before completing the form please refer to notes below)

I/We ……………………………………………………………………………………………………………………………………….................. (FULL NAME IN CAPITAL LETTERS)

I.C. or Company No. …………………………………………….………………CDS Account No…………………….……………................. (NEW I.C. NO. OR COMPANY NO.)

of ……………………………………………………………………………………………………………………………………………............... (FULL ADDRESS)

being a member/members of MAH SING GROUP BERHAD hereby appoint* the Chairman of the Meeting or failing him

………………………………………………………………………………………I.C. No….………………………………………….................. (FULL NAME IN CAPITAL LETTERS)

of ……………………………………………………………………………………………………………………………………………............... (FULL ADDRESS)

or failing him, ………………………………………………………………………I.C. No……..………………………………………................ (FULL NAME IN CAPITAL LETTERS)

of ……………………………………………………………………………………………………………………………………………............... (FULL ADDRESS)

as my/our proxy to vote for me/us and on my/our behalf, at the Fourteenth Annual General Meeting of the Company (“AGM”), to be held at Penthouse Suite 1, Wisma Mah Sing, No. 163, Jalan Sungai Besi, 57100 Kuala Lumpur on Monday, 19 June 2006 at 10.00 a.m., or any adjournment thereof, on the following resolutions referred to in the notice of the AGM:

My/our proxy is to vote as indicated below:No. Resolution For Against1. Adoption of the Audited Financial Statements and Reports2. Declaration of First and Final Dividend3. Payment of Directorsʼ fees4. Re-election of Mr Lim Ching Choy as Director5. Re-election of Mr Loh Kok Leong as Director 6. Re-election of Mr Ng Poh Seng as Director7. Re-appointment of Deloitte KassimChan as Auditors8. Re-appointment of Jen. (R) Tan Sri Yaacob Bin Mat Zain as Director9. Authority to issue and allot shares pursuant to Section 132D of the Companies Act, 1965

10. Proposed renewal of existing Shareholdersʼ Mandate as specified in Section 2.3.1 of the Circular to Shareholders dated 26 May 2006

11. Proposed new Shareholdersʼ Mandate as specified in Section 2.3.2 of the Circular to Shareholders dated 26 May 2006

12. Proposed renewal of share buy-back authority(Please indicate with an “X” in the space provided whether you wish your votes to be cast for or against the resolutions. In the absence of specific direction, your proxy will vote or abstain as he/she thinks fit).

Dated this .................... day of .....................….…...... 2006 .....…………………...................................... Signature: Shareholder or Common Seal of Appointor

* Delete the words “the Chairman of the Meeting or” if you wish to appoint some other person to be your proxy.

Notes:1. A member entitled to attend and vote at the Fourteenth Annual General Meeting is entitled to appoint a proxy or attorney or in the case of a corporation, to appoint a

duly authorised representative to attend and vote in his place. A proxy or attorney or duly authorised representative may but need not be a member of the Company. 2. The power of attorney or a notarially certified copy thereof or the Form of Proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in

writing. If the appointor is a corporation, it must be executed under its seal or under the hand of its officer or its attorney duly authorised on its behalf. 3. Where a member appoints more than one (1) proxy (subject always to a maximum of two (2) proxies at each meeting), the appointment shall be invalid unless he

specifies the proportions of his holdings to be represented by each proxy.4. This Form of Proxy together with the power of attorney (if any) under which it is signed or a duly notarially certified copy thereof must be deposited at the registered

office of the Company at Penthouse Suite 1, Wisma Mah Sing, No. 163, Jalan Sungai Besi, 57100 Kuala Lumpur not later than forty-eight (48) hours before the time appointed for holding the Fourteenth Annual General Meeting or any adjournment thereof.

(Company No. 230149-P)(Incorporated In Malaysia)

Fold this flap for sealing

1st fold here

Then fold here

THE COMPANY SECRETARYMAH SING GROUP BERHAD

Penthouse Suite 1Wisma Mah Sing

No. 163, Jalan Sungai Besi57100 Kuala Lumpur

AFFIX STAMP

MAH SING GROUP BERHAD (230149-P)Penthouse Suite 1, Wisma Mah Sing, No. 163, Jalan Sungai Besi, 57100 Kuala Lumpur.

Email : [email protected] : www.mahsing.com.my

Tel : 603-9221 8888Fax : 602-9222 3988

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Documents

MS CorporateFA 05 - Mah Sing Groupmahsing.com/Files/FinanceReport/AR2005.pdfJEN. (R) TAN SRI YAACOB had a distinguished career spanning nearly 40 years in Angkatan Tentera Malaysia