CONTENTS. 2 4 Notice of Annual General Meeting. 5 Statement Accompanying Notice of Annual General Meeting. 6 Corporate Information

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2 CONTENTS 2 4 Notice of Annual General Meeting 5 Statement Accompanying Notice of Annual General Meeting 6 Corporate Information 7 8 Directors Profile 9 10 Chairman s Statement 11 Other Information Audit Committee Report Statement on Corporate Governance Statement on Internal Control Financial Statements Analysis of Shareholdings 70 Properties Owned By enclosed Proxy Form

3 NOTICE OF ANNUAL GENERAL MEETING 2 NOTICE IS HEREBY GIVEN that the Thirteenth Annual General Meeting of the Company will be held at the Semangkok Room, Level 2, Sunway Hotel, No. 11 Lebuh Tenggiri Dua, Pusat Bandar Seberang Jaya, Seberang Jaya Prai, Penang on Monday, 19th June 2006 at 9.00 a.m. for the transaction of the following businesses: AGENDA AS ORDINARY BUSINESS 1. To receive the Audited Financial Statements for the year ended 31st December 2005 and the Reports of the Directors and Auditors thereon. Resolution 1 2. To re-elect the following Directors who retire in accordance with Article 80 of the Company s Articles of Association: a. Tunku Dato Seri Kamel Bin Tunku Rijaludin b. Ang Sun Tiong Resolution 2 Resolution 3 3. To approve the payment of Directors fees of RM118,000 for the financial year ended 31st December 2005 Resolution 4 4. To re-appoint Messrs. Deloitte KassimChan as Auditors of the Company and to authorise the Directors to fix their remuneration. Resolution 5 AS SPECIAL BUSINESS To consider and if thought fit, pass the following as ordinary resolutions: 5. Authority to Directors to issue shares THAT, subject to the Companies Act, 1965 ( Act ), the Articles of Association of the Company and approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby empowered, pursuant to Section 132D of the Act to allot and issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the Directors may deem fit provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed 10% of the issued and paid-up share capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval of Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued and that such authority shall commence immediately upon passing of this resolution and shall continue in force until the conclusion of the next Annual General Meeting of the Company. Resolution 6 6. Proposed Renewal of Share Buy-Back Authority THAT, subject to the Companies Act, 1965 ( Act ), the provisions of the Company s Memorandum and Articles of Association and the requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) and any other relevant authorities, and other relevant approvals, the Company be and is hereby authorised to purchase its ordinary shares of RM0.50 each ( Welli 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 provided that: a. the aggregate number of Welli Shares purchased does not exceed ten percent (10%) of the issued and paid-up ordinary share capital of the Company at the time of purchase; b. the amount allocated for the purchase of Welli Shares shall not exceed the share premium account of the Company based on the audited financial statements for the year ended 31 December 2005; and c. the Welli Shares purchased are proposed to be cancelled and/or retained as treasury shares which may be distributed as dividends, resold on Bursa Securities and/or cancelled.

4 3 NOTICE OF ANNUAL GENERAL MEETING (cont d) AND THAT such authority shall commence immediately upon passing of this ordinary resolution until: i. the conclusion of the next Annual General Meeting of the Company, at which time it will lapse, unless by a resolution passed at that meeting, the authority is renewed; ii. the expiration of the period within which the next Annual General Meeting of the Company is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or iii. revoked or varied by a resolution passed by shareholders in a general meeting, whichever occurs first, but not so 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 Bursa Securities or any other relevant authorities. AND THAT the Directors of the Company be and are hereby authorised to complete and do all such acts and things as they may consider expedient or necessary to give full effect to the Proposed Renewal of Share Buy-Back Authority. Resolution 7 7. To transact any other business of which due notice shall have been given in accordance with the Articles of Association of the Company and the Companies Act, By Order of the Board Heng Fook Tau Company Secretary MAICSA Penang 26th May 2006

5 NOTICE OF ANNUAL GENERAL MEETING (cont d) 4 Notes: 1. Appointment of Proxy A proxy may but need not be a member of the Company but such appointment must comply with Section 149(1)(b) of the Act which states that a member shall not be entitled to appoint a person who is not a member of the Company as his proxy unless that person is an advocate, an approved auditor or a person approved by the Registrar in a particular case. To be valid, the proxy form duly completed must be deposited at the Registered Office of the Company at No. 85, 1st Floor (Suite B), Beach Street, Penang not less than 48 hours before the time for holding the meeting. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting, provided that the provisions of Section 149(1)(c) of the Act are complied with. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless the member specifies the proportions of holdings to be represented by each proxy. If the appointer is a corporation, the proxy form must be executed under its common seal or under the hand of its attorney. 2. Re-election of Directors Details of Directors who are standing for re-election are set out in the Profile of the Board of Directors. 3. Explanatory notes on Special Business: Resolution 5 Authority to Directors to issue shares The proposed resolution, if passed, will renew the authorisation obtained at the last Annual General Meeting, pursuant to Section 132D of the Act for issuance and allotment of up to 10% of the issued and paid-up share capital of the Company for the time being for such purposes as the Directors of the Company consider in the interest of the Company, subject to compliance with the regulatory requirements. The approval is sought to avoid any delay and cost in convening a general meeting for such issuance of shares. The authorisation, unless in pursuance of offers, agreements or options granted by the Directors while the approval is in force, will expire at the conclusion of the next Annual General Meeting of the Company. Resolution 6 Proposed Renewal of Share Buy-Back Authority The proposed resolution, if passed, will empower the Company to purchase Welli Shares of up to ten percent (10%) of the issued and paid-up share capital of the Company by utilising funds allocated up to the latest audited share premium account of the Company. This authority, unless revoked or varied at general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

6 5 STATEMENT ACCOMPANYING NOTICE OF AGM 1. Re-election of Directors Directors who are standing for re-election at the Thirteenth Annual General Meeting of the Company: Tunku Dato Seri Kamel Bin Tunku Rijaludin Ang Sun Tiong Details of the Directors who are standing for re-election are set out in the Profile of the Board of Directors. Information relating to the Directors interests in shares of the Company and its related corporation are presented in the Analysis of Shareholdings. 2. Board of Directors Meetings For the financial year ended 31st December 2005, a total of five (5) Board Meetings were held, details of which are set out in the Statement on Corporate Governance. 3. Thirteenth Annual General Meeting Date : Monday, 19th June 2006 Time : 9.00 a.m. Venue : Semangkok Room Level 2, Sunway Hotel No. 11 Lebuh Tenggiri Dua Pusat Bandar Seberang Jaya Seberang Jaya Prai, Penang

7 CORPORATE INFORMATION 6 BOARD OF DIRECTORS Tunku Dato Seri Kamel Bin Tunku Rijaludin (Chairman and Independent Non-Executive Director) Ang Sun Beng (Managing Director) CORPORATE INFORMATION REGISTERED OFFICE 85, 1st Floor (Suite B), Beach Street, Penang. Tel. : Fax : COMPANY SECRETARY Heng Fook Tau (MAICSA No. : ) Ang Soon An (Executive Director) Ang Sun Tiong (Executive Director) Tan Kim Oh (Executive Director) Tan Chin Han (Executive Director) AUDITORS Deloitte KassimChan Chartered Accountants 87, Jalan Sultan Abdul Jalil, Ipoh, Perak Tel.: Fax: SHARE REGISTRAR PFA Registration Services Sdn. Bhd Level 13, Uptown 1, No. 1 Jalan SS21/58, Damansara Uptown, Petaling Jaya. Tel. : Fax : SOLICITORS Salina, Lim Kim Chuan & Co C2, Menara BHL, Jalan Sultan Ahmad Shah, Penang. Tel. : Fax : STOCK EXCHANGE LISTING Second Board of Bursa Malaysia Securities Berhad Ooi Hun Pin (Independent Non-Executive Director)

8 7 DIRECTORS PROFILE TUNKU DATO SERI KAMEL BIN TUNKU RIJALUDIN, aged 52, Malaysian (Chairman and Independent Non-Executive Director) Tunku Dato Seri Kamel bin Tunku Rijaludin is the Chairman and Non-Executive Director of Welli Multi Corporation Berhad. He was first appointed as Chairman of the Board in He is also the Chairman of the Audit Committee as well as the Nomination and Remuneration Committees. Tunku Dato Seri Kamel graduated with a Bachelor of Science (Honours) degree majoring in Forestry in 1980 and also holds a Master s Degree in Business Administration from the University of Tennessee in the United States. He began his career in Sycip Gorres and Velayors Kassim Chan Sdn Bhd, a management consultancy firm, as a management consultant in In 1983, he joined Kedah Cement Sdn Bhd, a company involved in the manufacturing and sale of cement, clinker and related products, as the International Sales Manager. In 1989, he joined Asli Jardine Insurance Brokers Sdn Bhd, an insurance broking company, as the Principal Officer and Director. In 1990, he joined Dagang Net Technologies Sdn Bhd, an information technology company. He is also currently a director of Amtel Holdings Bhd and sits on the board of several private companies. He does not have any family relationship with any directors and/or major shareholders of the Company and has no conflict of interest with the Company. He has not been convicted of any offence in the past ten (10) years. He has attended all five (5) Board meetings held during the financial year ended 31st December ANG SUN BENG, aged 60, Malaysian (Managing Director) Mr. Ang Sun Beng left school at a very early age and worked in various businesses including the family coconut oil business. He was first appointed to the Board on 1st August He has over 35 years of experience in the edible oil business and is the principal founding member of Welli Edible Oil Sdn Bhd. He is the Managing Director of the Group. He is the eldest brother of the Ang family and a major shareholder of the Company. He does not have any conflict of interest with the Company and has not been convicted of any offence in the past ten (10) years. He has attended all five (5) Board meetings held during the financial year ended 31st December ANG SOON AN, aged 56, Malaysian (Executive Director) Mr. Ang Soon An was first appointed to the Board on 1st August He is also a member of the Audit Committee as well as the Nomination and Remuneration Committees. He is principally in charge of the finance and administration of the group. He joined the family business upon leaving school and has over 30 years of experience in the milling and trading of edible oils. He is the younger brother of Mr. Ang Sun Beng and older brother of Mr. Ang Sun Tiong and a major shareholder of the Company. He does not have any conflict of interest with the Company and has not been convicted of any offence in the past ten (10) years. He has attended all five (5) Board meetings held during the financial year ended 31st December ANG SUN TIONG, aged 52, Malaysian (Executive Director) Mr. Ang Sun Tiong also left school at an early age to join the family business and has over 25 years of experience in the edible oil business. He was first appointed to the Board on 1st August He is the younger brother of Mr. Ang Sun Beng & Mr. Ang Soon An. He is a major shareholder of the Company and is now in charge of the overall day-to-day operations of the three factories producing palm kernel oil. He does not have any conflict of interest with the Company and has not been convicted of any offence in the past ten (10) years. He has attended all five (5) Board meetings held during the financial year ended 31st December 2005.

9 DIRECTORS PROFILE (cont d) 8 TAN KIM OH, aged 52, Malaysian (Executive Director) Mr. Tan Kim Oh is the founder of the Fourseason Group. He left school at an early age and worked in several businesses before starting his own trading business dealing in confectioneries. He is a major shareholder of the Company and is now primarily in charge of the confectionery business of the Group. He does not have any family relationship with any directors and has no conflict of interest with the Company. He has not been convicted of any offence in the past ten (10) years. He has attended all five (5) Board meetings held during the financial year ended 31st December TAN CHIN HAN, 49, Malaysian (Executive Director) Mr. Tan Chin Han is a member of the MIA (Malaysian Institute of Accountants) and CIMA (Chartered Institute of Management Accountants, UK) and holds a Master s degree in Business Administration from the University of Hull, UK. He first joined the Company as the Group Financial Controller on 1st June 2004, and subsequently was appointed to the Board of the Company as an Executive Director on 1st March He began his career with Coopers Animal Health, UK, a worldwide joint venture company between ICI Plc and Welcome Foundation Worldwide as its Management Accountant (Asia Pacific). He was then promoted to Regional Controller (Asia), and later to General Manager (Malaysia). He was also instrumental in bringing the Cuban made Hepatitis vaccines to Malaysia. He had several years of experience with another German Plc as well as with other listed company before joining Welli Group. He does not have any family relationship with any directors and/or major shareholders of the Company and has no conflict of interest with the Company. He has not been convicted of any offence in the past ten (10) years. He has attended four (4) Board meetings held during the financial year ended 31st December OOI HUN PIN, 43, Malaysian (Independent Non-Executive Director) Mr. Ooi Hun Pin is a member of MICPA (Malaysian Institute of Certified Public Accountants) and MIA (Malaysian Institute of Accountants). He was first appointed to the Board of the Company on 12th March 2002 as an Independent Non-Executive Director. He is also a member of the Audit Committee as well as the Nomination and Remuneration Committees. He obtained his professional qualification from the MICPA in 1987 and was subsequently admitted to the Malaysian Institute of Accountants. He obtained his Master s degree in Business Administration in He was also awarded a DBA doctorate degree from the University of South Australia (UniSA) in December He started his career in early 1983 as an Audit Trainee in Arthur Young and subsequently joined Price Waterhouse as an Audit Assistant from 1983 to early He then joined Datuk Keramat Holdings Berhad as an Accountant after leaving Price Waterhouse. In late 1988, he assumed the responsibility of Assistant Audit Executive in Universal Furniture Limited and left the company in He joined CIMB Securities Sdn Bhd from 1990 to mid 1992 as an Assistant Finance Manager. Thereafter, he was with SJ Securities Sdn Bhd as its Finance Manager. He then left SJ Securities after being promoted to General Manager in 1996 and joined Arab-Malaysian Securities Sdn Bhd as a Remisier until From 1998 to 2001, he was the Director of Finance of Enrich Resowella (M) Sdn Bhd. After that, he joined Avenue Securities Sdn Bhd as its Deputy Chief Executive Officer until 31st March He is now managing his own management consultancy firm called Merit Achievers Sdn Bhd. He is an Independent Non-Executive Director of Pentamaster Corporation Berhad and also sits on the board of several private companies. He does not have any family relationship with any directors and/or major shareholders of the Company and has no conflict of interest with the Company. He has not been convicted of any offence in the past ten (10) years. He has attended all five (5) Board meetings held during the financial year ended 31st December 2005.

10 9 CHAIRMAN S STATEMENT On behalf of the Board of Directors of Welli Multi Corporation Berhad ( Welli ), I am pleased to present to you the Annual Report and Audited Financial Statements of the Group for the financial year ended 31st December OPERATIONAL REVIEW During the financial year under review, the business environment faced fresh challenges like bird flu, rising crude oil prices, a stronger Ringgit and political uncertainties globally. The high fuel prices created a higher operational cost in many businesses and industries, thus affecting their margin/profitability. However, prices of palm oil products remained fairly stable and comparatively cheap in relation to other vegetable oils in terms of US dollars. The outlook for palm oil products continues to look positive due to the increasing number of bio-diesel plants and oleo-chemical plants anticipated to come on-stream from mid-2006 onwards. To remain competitive, Welli Edible Oil Sdn Bhd will plan to further upgrade and modify its plants and machineries to improve its efficiency cost and productivity. We are in the process of converting a dormant copra plant in Sungai Jawi, Penang to crush palm kernels and increase our market share in the northern region, and to further enhance our productivity. REVIEW OF RESULTS pre-tax profit for the year under review recorded a total of RM4,185,293, a decrease of RM1,179,869 as compared to the previous year. This reduction is attributed primarily to the increase of operational costs incurred by the Group. However, the Group recorded a net profit of RM5,008,294, an improvement of RM566,815 as compared to the previous year, contributed partially by the reversal of deferred tax liabilities. This resulted in the improvement in the basic earnings per share, from 5.15 sen in 2004 to 5.81 sen for the year under review. DIVIDENDS No dividends have been proposed. CORPORATE DEVELOPMENT On 26th July 2005, a share split exercise by Welli Multi Corporation Berhad was successfully conducted and granted listing. On 13th September 2005, Welli Multi Corporation Berhad subscribed for an additional 210,000 ordinary shares of RM1.00 each in Welli Business Ventures Sdn Bhd, a subsidiary of the company, for a cash consideration of RM210,000.

11 CHAIRMAN S STATEMENT(cont d) 10 PROSPECTS The prospect for the palm kernel oil market remains promising, if not positive, as the consumer market tilts more and more towards the vegetable oil market, as is evident by the development of the bio-diesel industry. The intrinsic value of the palm oil itself also has a competitive advantage over other oils as is further evidenced by the current development trends in the palm oil industry. As such, the outlook of the entire palm oil industry is very bright in the near future. The markets in China and India are additional impetuses for the enhancement of the entire industry. In the near future, the Group will explore the possibility of expanding downstream into related palm oil products as a strategy to enhance its earnings base. The future focus of the Group will continue to centre around a committed effort to maintain our position as one of the leading palm kernel oil suppliers in Malaysia. APPRECIATION On behalf of the Board of Directors, I would like to thank our shareholders, customers and business associates for their continued loyal support. I would also like to express my deepest appreciation to the management and employees for their loyalty, dedication and positive effort. Tunku Dato Seri Kamel Chairman

12 OTHER INFORMATION 11 Utilisation of Proceeds No funds were raised by the Company from any corporate proposal during the financial year. Share Buy-Backs There were no share buy-backs during the financial year. Options, Warrants or Convertible Securities No options, warrants or convertible securities were issued by the Company during the financial year. American Depository Receipt (ADR) or Global Depository Receipt (GDR) Programme During the financial year, the Company did not sponsor any ADR or GDR programme. Impositions of sanctions and/or penalties There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management by the relevant regulatory bodies during the financial year. Non -Audit Fees There were no non-audit fees paid and payable to the external auditors by the Company during the financial year. Variation in results There is no material variance between the audited results and the previously announced unaudited results for the financial year ended 31st December Profit Guarantee There was no profit guarantee given by the Company during the financial year. Material Contracts There were no material contracts entered into by the Company and its subsidiaries which involved the Directors and major shareholders interests, either still subsisting at the end of the financial year or entered into since the end of the previous financial year. Material Contracts Related to Loan During the financial year under review, there were no material contracts relating to loans entered into by the Company and/or its subsidiaries which involved the Directors and major shareholders interests. Revaluation Policy on Landed Properties has adopted a revaluation policy where landed properties are appraised once in every five years by independent professional valuers as disclosed in Note 3 to the Financial Statement.

13 AUDIT COMMITTEE REPORT 12 MEMBERS OF THE AUDIT COMMITTEE The present members of the Audit Committee are as follows:- Chairman : Members : Tunku Dato Seri Kamel Bin Tunku Rijaludin Chairman and Independent Non-Executive Director Mr. Ang Soon An Executive Director Mr. Ooi Hun Pin Independent Non-Executive Director TERMS OF REFERENCE The Directors have approved and adopted the following Terms of Reference which set out the roles and responsibilities of the Audit Committee. 1. COMPOSITION The committee is appointed by the Board from amongst the Directors of the Company and shall consist of not less than three (3) members. The majority of the members are independent directors and at least one member of the committee is a member of the Malaysian Institute of Accountants. In the event of any vacancy in the Audit Committee resulting in the non-compliance of the above, the Audit Committee will act to fill such a vacancy within three (3) months of that event. The members of the committee elect a chairman from amongst their number who is also an independent director. No alternate directors are appointed as a member of the committee. The appointed committee member shall hold office until the next Annual General Meeting. An appointment terminates when a member ceases to be a Director. 2. OBJECTIVES The primary objectives of the Audit Committee are to: a. assist the Board in discharging its statutory duties and responsibilities relating to accounting and reporting practices and to ensure the adequacy and effectiveness of the Group s and the Company s internal control systems. b. provide greater emphasis on the audit function by serving as the focal point for communication between non- Committee Directors, the external auditors, internal auditors and the management and providing a forum for discussion that is independent of the management. It is to be the Board s principal agent in assuring the independence of the Company s external auditors, the integrity of the management and the adequacy of disclosure to shareholders. c. Undertake such additional duties as may be appropriate and necessary to assist the Board.

14 AUDIT COMMITTEE REPORT (cont d) FUNCTIONS AND DUTIES The functions and duties of the Audit Committee are as follow: a. Recommend to the Board the appointment of the external auditors, the audit fee and any matters in relation to their resignation or dismissal. b. Review with the external auditors the nature and scope of their audit plan. c. Review the assistance given by the Company s officers to the external auditors. d. Discuss the outcome of the interim and final audits and any matter the auditors may wish to discuss. e. Review quarterly and annual accounts before submission to the Board focusing particularly on: Any changes in accounting policies and practices. Compliance with accounting standards. Compliance with stock exchange and legal requirements. f. Review the effectiveness of the internal control systems. g. Review of Internal Audit function on the scope and effectiveness of internal audit activities and on the Internal Audit Charter. h. Undertake such other functions as may be agreed to by the Audit Committee and the Board of Directors. 4. AUTHORITY The Committee is authorized by the Board to investigate any activity within its terms of reference. It includes: a. Unrestricted access to any information pertaining to the Company and its Subsidiaries. b. Direct communication channels with both the external auditors and internal auditors. c. Free access to any employee or member of the management. The Committee is also authorized by the Board to obtain outside legal or other independent professional advice it considers necessary and reasonable for the performance of its duties. 5. MEETINGS AND PROCEDURES Meetings are conducted at least four (4) times annually, or more frequently as circumstances dictate. Secretary is appointed Secretary of the Committee ( the Secretary ). The Secretary, in conjunction with the Chairman, draws up an agenda, which is circulated together with the relevant supporting papers, at least one (1) week prior to each meeting to the members of the Committee. The minutes are circulated to members of the Committee. The Committee is empowered to invite other Board members, senior management members, and external auditors to attend the meetings as and when demanded. The external auditors may request for a meeting if they consider this necessary. The Committee regulates the manner of proceedings of its meetings, having regard to normal conventions on such matter. During the financial year ended 31st December 2005, the Audit Committee held a total of five (5) meetings.

15 AUDIT COMMITTEE REPORT (cont d) MEETINGS AND PROCEDURES (cont d) The details of attendance of the committee members are as follows:- Name of committee member No. of meetings attended Tunku Dato Seri Kamel Bin Tunku Rijaludin 5/5 Mr. Ang Soon An 5/5 Mr. Ooi Hun Pin 5/5 6. QUORUM The quorum for a meeting shall consist of a majority of independent directors. 7. ACTIVITIES OF THE AUDIT COMMITTEE The following activities were performed by the Audit Committee during the financial year ended 31st December a. Reviewed and approved the external auditors scope of work and their Annual Audit Plan of the Company for the calendar year b. Reviewed the unaudited quarterly financial results announcements before recommending them for the Board of Directors approval. c. Reviewed the audited financial statements of the Company and the Group and recommending the same for approval by the Board, upon being satisfied that inter-alia the financial reporting and disclosure requirements of the relevant authorities had been complied with. d. Reviewed the Internal Audit Department s resources requirement, programmes and plan for the financial year and the annual assessment of the Internal Audit Department s performance. e. Reviewed the internal audit reports, which highlighted the audit issues, recommendations and management s response and ensured that material findings were adequately addressed by management. f. Reviewed the Corporate Governance Statement and Statement of Internal Control for compliance with the Malaysian Code on Corporate Governance. 8. INTERNAL AUDIT FUNCTION The Audit Committee is supported by an independent Internal Audit Department. The principal role of the Internal Audit Department is to undertake regular and systematic reviews of the systems of internal controls so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively. During the financial year, audit assignments, special reviews and follow-up were carried out on all operating units in accordance with the annual audit plan or as special ad-hoc audits at management s request. The results undertaken and the implementation status of the audit recommendations were reported to the Audit Committee to assure that key control issues were being adequately addressed and managed.

16 STATEMENT ON CORPORATE GOVERNANCE 15 The Board of Directors ( The Board ) recognizes the importance of upholding the highest standards of corporate governance in conducting the Group s business activities and discharging the Board s fiduciary responsibilities to protect and enhance shareholders value. Therefore, it is the policy of the Board to manage the business and affairs of the Group in accordance with the appropriate standards of good corporate governance. In line with the revamped Listing Requirements of Bursa Malaysia Securities Berhad, the Board of Directors wishes to report on the manner the Group has applied the principles and the extent of compliance with the best practices set out in the Malaysian Code on Corporate Governance (Code) by the Group. DIRECTORS 1. Composition of the Board The Board presently has seven (7) members of whom five (5) are Executive Directors, and two (2) are Independent Non-Executive Directors. As such 2/7 of the Board is made up of Non-Executive Directors who are independent of management and provide a balanced and independent view to the decision making and corporate issues dealt with at the Board level to safeguard the interest of public shareholders. The Directors have a mix of business knowledge, skills and experience ranging from finance and corporate to operational and technical expertise necessary for managing the Group s businesses. The roles of Chairman and Managing Director are distinct and separate with responsibilities clearly drawn out to ensure a balance of power and authority. The Chairman is responsible for ensuring the Board s effectiveness and conduct while the Managing Director has overall responsibilities over the operating units, organizational effectiveness and implementation of the Board s policies and decisions. Given the nature and scope of the Group s operations, the Board considers that the current size of the Board is adequate. i. Attendance of meetings During the financial year ended 31st December 2005, there were five (5) meetings held. The details of attendance of each member are as follows:- Tunku Dato Seri Kamel Bin Tunku Rijaludin 5/5 Ang Sun Beng 5/5 Ang Soon An 5/5 Ang Sun Tiong 5/5 Tan Kim Oh 5/5 Ooi Hun Pin 5/5 Tan Chin Han (appointed on 1st March 2005) 4/5 2. Board Committees The Board has delegated certain responsibilities to other Board Committees, which operate within approved Terms of Reference. These committees are the Audit Committee, Nomination Committee, and Remuneration Committee. i. Nomination Committee The Nomination Committee comprises three members of which two (2) are Independent Non-Executive Directors and one (1) is an Executive Director. The Committee is empowered to bring to the Board recommendations as to the appointment of any new executive or non-executive director and the Directors to fill the seats on Board Committees. The committee will assess the effectiveness of the Board of Directors as a whole. Currently, the Nomination Committee members are Tunku Dato Seri Kamel Bin Tunku Rijaludin (chairman), Ang Soon An, and Ooi Hun Pin.

17 STATEMENT ON CORPORATE GOVERNANCE (cont d) Board Committees (cont d) ii. Remuneration Committee The Remuneration Committee comprises three members of which two (2) are Independent Non- Executive Directors and one (1) is an Executive Director. The determination of the remuneration of the Non-Executive Directors is a matter for the Board as a whole. The individuals concerned abstain from discussion of their own remuneration and no director is involved in deciding his own remuneration. The remuneration of Directors is generally based on market conditions, responsibilities held and the Group s overall financial performance. Decisions and recommendations of the committee shall be reported to the Board for approval and where required by the rules and regulations governing the Company, for approval of Shareholders at the Annual General Meeting. Currently, the Remuneration Committee members are Tunku Dato Seri Kamel Bin Tunku Rijaludin (chairman), Ang Soon An and Ooi Hun Pin. The details of the Directors remuneration for the financial year ended 31st December 2005 are as follows: Categorization Aggregate Remuneration (in RM) paid/payable to Executive Directors Non-Executive Directors Directors Fees 50,000 68,000 Other Emolument Salaries and other emoluments 1,052,334 Contribution by employer to Employees Provident Fund 125,409 Total 1,227,743 68,000 The number of Directors whose remuneration for the financial year ended 31st December 2005 fall into the respective ranges are as follows:- Range of Remuneration Number of Directors Executive Directors Non-Executive Directors Below RM50,000 2 RM50,001 - RM100,000 RM100,001 - RM200,000 1 RM200,001 - RM300,000 4 Total 5 2 iii. Audit Committee The composition and functions of the Audit Committee are detailed in the Audit Committee Report on pages 12 to Re-election of Directors In accordance with the Company s Articles of Association ( Article ), at least one-third of the Directors are subject to retirement by rotation at each Annual General Meeting and that all Directors shall retire from office at least once in every three years but shall be eligible for re-election. The Article also provides that all Directors appointed by the Board are subject to election by the shareholders at the next Annual General Meeting after their appointment.

18 STATEMENT ON CORPORATE GOVERNANCE (cont d) Directors Training All directors have completed the Mandatory Accreditation Programme ( MAP ) as prescribed by the Bursa Securities Malaysia Berhad. The directors will continue to undergo relevant training programmes and seminars to further enhance their knowledge to enable them to discharge their duties and responsibilities more effectively. In line with the recent amendments to the Listing Requirements of Bursa Securities Malaysia Berhad, the Company is looking into initiating its own comprehensive training programme to be tailored to the needs of the Board of Directors. During the financial year, all directors have attended the training courses. The following are the details of the training programmes; Name Tunku Dato Seri Kamel Bin Tunku Rijaludin Ang Sun Beng Ang Soon An Ang Sun Tiong Tan Kim Oh Ooi Hun Pin Programme In-house training programme on Risk Awareness conducted by SH Associates Consulting Sdn Bhd In-house training programme on Risk Awareness conducted by SH Associates Consulting Sdn Bhd In-house training programme on Risk Awareness conducted by SH Associates Consulting Sdn Bhd In-house training programme on Risk Awareness conducted by SH Associates Consulting Sdn Bhd In-house training programme on Risk Awareness conducted by SH Associates Consulting Sdn Bhd In-house training programme on Risk Awareness conducted by SH Associates Consulting Sdn Bhd Awarded DBA doctorate degree from University of South Australia (UniSA) Tan Chin Han (appointed on 1st March 2005) MAP conducted by Bursatra Sdn. Bhd. (Formerly known as Bursa Malaysia Training Sdn. Bhd.) 5. Supply of Information In-house training programme on Risk Awareness conducted by SH Associates Consulting Sdn Bhd The Board members are provided with relevant information to discharge their duties and responsibilities, including quarterly, half yearly and annual financial statements, minutes of meetings and board papers which include the agenda and reports relevant to the issues of the meetings covering the areas of strategic, financial and operational matters. The Directors have direct access to the advice and the services of the Group s Company Secretary for ensuring that Board procedures are followed. The Directors may access all information within the Group in furtherance of their duties.

19 STATEMENT ON CORPORATE GOVERNANCE (cont d) Supply of Information(cont d) RELATIONSHIP WITH SHAREHOLDERS recognizes the importance of communication with its shareholders and investors. meets with requests from any group or individuals for information and the AGM serves as the main forum for dialogue with its shareholders. At each AGM, the Board presents the progress and performance of the business as contained in the annual report and encourages shareholders to participate in question and answer session. The Directors are available to provide responses to questions from the shareholders during the meeting. also makes timely announcements through the Bursa Securities Malaysia Berhad of any material information, corporate proposals, financial results and other announcements that are required to be made pursuant to the Listing Requirements. ACCOUNTABILITY AND AUDIT 1. Financial Reporting For the financial reporting through the quarterly reports to Bursa Malaysia Securities Berhad and the annual report to shareholders, the Directors have a responsibility to present a fair assessment of the Group s financial performance, position and prospects. The Statement by Directors pursuant to Section 169(15) of the Companies Act 1965 is set out in Page 66 of the Annual Report. 2. Internal Control The information on the Group s internal control is presented in the Statement on Internal Control in Page 19 to Relationship with Auditors A transparent and appropriate relationship is maintained with the external auditors of Welli Group through the Audit Committee. The audit Committee has been explicitly accorded the authority to communicate directly with both the internal and external auditors. 4. Directors Responsibilities in Respect of Audited Financial Statements The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Group and of the Company as 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 then ended. In preparing the financial statements for the year ended 31 December 2005, The Directors have: i. Adopted the appropriate accounting policies, which are consistently applied. ii. Made judgments and estimates that are reasonably prudent and iii. Ensured that the applicable approved accounting standards in Malaysia and provisions of the Act are complied with. The Directors have the responsibility for ensuring that the Company and the Group keeps proper accounting records which disclose with reasonable accuracy the financial position of the Company and the Group and which will enable them to ensure that the financial statements comply with the Act. The Directors have the general responsibility for taking such steps as are necessary to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

20 STATEMENT ON INTERNAL CONTROL 19 The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of internal control to safeguard shareholders investment and the Group s assets. The Board is pleased to present below the Internal Control Statement, which has been prepared in accordance with the Statement on Internal Control: Guidance for Directors of Public Listed Companies. Board Responsibility The Board affirms its overall responsibility for the Group s system of internal control, which is designed to identify and manage the risks faced by the business in pursuit of its objectives and for reviewing its adequacy and integrity. The system of internal control covers risk management, financial, operational and compliance controls. The system is designed to manage, rather than to eliminate, the risk of failure to achieve business objectives and can only provide reasonable but not absolute assurance against material misstatement or loss. Key Elements Of Internal Control The internal control systems are embedded within the overall management process where there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group. The following are the key elements of the Group s system of internal control: Clearly defined delegation of responsibilities from Board to management including charters, organizational structures with appropriate authority limits; Management meetings are carried out by the Group Managing Director together with Operations Heads and the Finance Department to identify, discuss and resolve operational, financial and key management issues. Reviews are also carried out to ensure that actual performance is in compliance with the agreed targets set by the Group Managing Director and that corrective actions are taken to rectify any discrepancies in a timely and effective manner; Review and update on policies and procedures, and practices to be adopted by the Group to ensure clear accountability and control as well as proper segregation of tasks among departments and staff; Regular and comprehensive information provided to management, covering financial performance and key business indicators; The compliance function, which includes the Audit Committee and internal audit function, assists the Board to oversee the management of risks and review the efficiency and effectiveness of the internal controls of the Group. Regular internal audits are carried out to review the adequacy and integrity of the systems of internal control of the Group with the continuous improvement of controls and procedures. The reports are submitted to the Audit Committee, which reviews the findings with management at its quarterly meetings.

21 STATEMENT ON INTERNAL CONTROL (cont d) 20 Risk Management Framework The Board reviews the financial statements and status reports of the Group on a quarterly basis, assessing the risk strategy and the overall management of principal areas of risk. During the current financial year, the risk management committee continued to develop the risk profile of the Group. The risk profile assessment were categorized under market and environment, financial, reporting and planning, credit, data integrity, process, product, security, customer and employees integrity. This risk management exercise is an ongoing process which is undertaken at each critical area of the Company and the major subsidiaries of the Group, and will be subject to review by the Board. Conclusion The review of the adequacy and the integrity of internal control is a continuous process and the Board will from time to time review the monitoring and reporting processes to ensure their effectiveness on the whole. There are no significant control failings or weaknesses that would result in material loss and require disclosure in the Group s annual report for the financial year under review.

22 FINANCIAL STATEMENTS Directors Report 26 Report Of The Auditors 27 Income Statements 28 Balance Sheets 29 Statements Of Changes In Equity Cash Flow Statements Notes To The Financial Statements 66 Statement By Directors 66 Declaration By The Directors enclosed Proxy Form

23 DIRECTORS REPORT 22 The directors of WELLI MULTI CORPORATION BERHAD have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended December 31, PRINCIPAL ACTIVITIES is principally involved in investment holding and providing management services. The principal activities of the subsidiary companies are disclosed in Note 14 to the Financial Statements. There have been no significant changes in the nature of the activities of the Company and its subsidiary companies during the financial year. RESULTS OF OPERATIONS The results of operations of the Group and of the Company for the financial year are as follows: RM RM Profit/(Loss) before tax 4,185,293 (2,250,042) Income tax credit 843,423 Profit/(Loss) after tax 5,028,716 (2,250,042) Minority interest (20,422) Net profit/(loss) for the year 5,008,294 (2,250,042) In the opinion of the directors, the results of operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature. DIVIDENDS No dividend has been paid or declared by the Company since the end of the previous financial year. The directors also do not recommend any dividend payment in respect of the current financial year. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements. ISSUE OF SHARES AND DEBENTURES At an Extraordinary General Meeting held on June 20, 2005, the shareholders approved the subdivision of 43,136,364 existing ordinary shares of RM1.00 each into 86,272,728 new ordinary shares of RM0.50 each. has not issued any debentures during the financial year.

24 DIRECTORS REPORT ( cont d) 23 SHARE OPTIONS No options have been granted by the Company to any parties during the financial year to take up unissued shares of the Company. No shares have been issued during the financial year by virtue of the exercise of any option to take up unissued shares of the Company. As of the end of the financial year, there were no unissued shares of the Company under options. OTHER FINANCIAL INFORMATION Before the income statements and the 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 have satisfied themselves that all known bad debts have been written off and that adequate allowance had been made for doubtful debts; and b. to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business have been written down to their estimated realisable values. At the date of this report, the directors are not aware of any circumstances: a. which would render the amount written off as bad debts or the amount of allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial 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 which 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 and 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 succeeding financial year.

25 DIRECTORS REPORT (cont d) 24 DIRECTORS The following directors served on the Board of the Company since the date of the last report: MR. ANG SUN BENG MR. ANG SOON AN MR. ANG SUN TIONG MR. OOI HUN PIN MR. TAN CHIN HAN MR. TAN KIM OH TUNKU DATO SERI KAMEL BIN TUNKU RIJALUDIN In accordance with Article 80 of the Company s Articles of Association, Tunku Dato Seri Kamel Bin Tunku Rijaludin and Mr. Ang Sun Tiong retire by rotation and, being eligible, offer themselves for re-election. DIRECTORS INTERESTS The shareholdings in the Company of those who were directors at the end of the financial year, as recorded in the Register of Directors Shareholdings kept by the Company under Section 134 of the Companies Act, 1965, are as follows: No. of ordinary shares of RM1.00 each No. of ordinary shares of RM0.50 each Balance as of Bought Sold Share Split Bought Sold Balance as of Registered in the name of directors Mr. Tan Kim Oh 2,113,091 (1,550,000) 563,091 1,126,182 Mr. Ang Sun Beng 138, ,526 (276,000) 1,052 Mr. Ang Soon An 118, ,316 (200,000) 36,632 Mr. Ang Sun Tiong 38,316 38,316 76,632 Indirect interest Mr. Ang Sun Beng 5,729,000 5,729, ,000 11,734,000 Mr. Ang Soon An 4,240,000 (450,000) 3,790,000 1,900,000 9,480,000 Mr. Ang Sun Tiong 3,602,000 (772,000) 2,830,000 5,660,000 By virtue of their interests in the shares of the Company, Messrs. Ang Sun Beng, Ang Soon An and Ang Sun Tiong are also deemed to have an interest in the shares of the subsidiary companies to the extent that the Company has interest. None of the other directors in office at the end of the financial year held shares or have beneficial interest in the shares of the Company or its related companies during the financial year. DIRECTORS BENEFITS Since the end of the previous financial year, none of the directors of the Company has received or become entitled to receive any benefit (other than the benefit included in the aggregate amount of emoluments received or due and receivable by directors as disclosed in the financial statements) by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except for any benefit which may be deemed to have arisen by virtue of the transactions between the Company and certain companies in which certain directors of the Company are also directors and/or shareholders as disclosed in Note 20 to the Financial Statements.

26 DIRECTORS REPORT (cont d) 25 During and at the end of the financial year, no arrangement subsisted to which the Company was a party whereby directors of the Company might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. AUDITORS The auditors, Messrs. Deloitte KassimChan, have indicated their willingness to continue in office. SIGNED ON BEHALF OF THE BOARD IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS, MR. ANG SUN BENG MR. ANG SOON AN Ipoh, April 27, 2006

27 REPORT OF THE AUDITORS TO THE MEMBERS OF WELLI MULTI CORPORATION BERHAD (Incorporated in Malaysia) 26 We have audited the accompanying balance sheets as of December 31, 2005 and the related statements of income, changes in equity and cash flows for the year then ended. These financial statements are the responsibility of the Company s 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 content of this report. We conducted our audit in accordance with approved standards on auditing in Malaysia. These 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 statements 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: and i. the state of affairs of the Group and of the Company as of December 31, 2005 and of the results and the cash flows of the Group and of the Company for the 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 consolidated financial statements; b. the accounting and other records and the registers required by the Companies Act, 1965 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 Companies Act, We have considered the financial statements and the auditors reports of the subsidiary companies, of which we have not acted as auditors, as mentioned under Note 14 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 auditors reports on the financial statements of the subsidiary companies were not subject to any qualification and did not include any comment made under Sub-section (3) of Section 174 of the Companies Act, The financial statements of the preceding year were examined by other auditors and are presented here merely for comparative purposes. DELOITTE KASSIMCHAN Chartered Accountants AF 0080 April 27, 2006 WONG GUANG SENG Partner 787/03/07(J/PH)

28 INCOME STATEMENTS Note(s) RM RM RM RM Revenue 4&5 572,533, ,209, , ,760 Cost of sales and services (550,701,450) (418,066,189) Gross profit 21,832,186 23,143, , ,760 Other operating income 7 1,254,758 1,612,126 15, ,500 Distribution costs (6,214,512) (5,390,278) Administration expenses (5,926,054) (7,512,601) (3,018,952) (842,822) Other operating expenses (201,357) (685,401) (2,856) Profit/(Loss) from operations 10,745,021 11,167,053 (2,200,669) 251,582 Finance costs 10 (6,912,314) (6,176,179) (49,373) (107,246) Interest on fixed deposits 352, ,288 Profit/(Loss) before tax 4,185,293 5,365,162 (2,250,042) 144,336 Income tax credit/ (expense) ,423 (973,775) Profit/(Loss) after tax 5,028,716 4,391,387 (2,250,042) 144,336 Minority interest (20,422) 50,092 Net profit/(loss) for the year 5,008,294 4,441,479 (2,250,042) 144,336 Earnings per ordinary share Basic/Diluted (sen) The accompanying Notes form an integral part of the Financial Statements.

29 BALANCE SHEETS AS OF DECEMBER 31, Note RM RM RM RM ASSETS Property, plant and equipment 13 99,903, ,958, , ,990 Investments in subsidiary companies 14 67,574,445 68,882,578 Other investments , ,880 20,480 21,880 Deferred expenditure 16 21,955 31,161 Goodwill on consolidation 17 9,204,249 9,204,249 Other receivables , ,800 CURRENT ASSETS Inventories 18 29,411,137 31,943,897 Trade receivables ,273, ,202,752 Amount owing by subsidiary companies ,751 1,238,441 Other receivables, deposits and prepaid expenses 19 5,280,647 3,143,158 20,236 9,411 Tax recoverable 320, , Fixed deposits, cash and bank balances 21 11,266,084 12,618,004 14,185 74,774 Total Current Assets 181,551, ,333, ,852 1,323,222 CURRENT LIABILITIES Trade payables 22 11,226,210 9,897,604 Other payables and accrued expenses 22 5,561,622 7,809, , ,096 Amount owing to subsidiary companies 20 1,073,356 1,090,068 Hire-purchase payables , ,444 8,648 49,016 Bank borrowings ,819, ,752, , ,056 Provision 25 3,700,000 3,700,000 3,700,000 3,700,000 Tax liabilities 92,924 85,728 Total Current Liabilities 163,187, ,993,753 5,627,262 5,682,236 Net Current Assets/(Liabilities) 18,364,357 10,339,387 (5,450,410) (4,359,014) 127,967, ,003,119 62,328,232 64,724,434 LONG-TERM AND DEFERRED LIABILITIES Hire-purchase payables - non-current portion 23 2,139,062 2,872,810 8,648 Bank borrowings - non-current portion 24 12,050,159 10,868, ,512 Deferred tax liabilities 26 12,533,127 14,117,600 Total Long-term and Deferred Liabilities (26,722,348) (27,859,029) (146,160) Minority interests (110,422) Net Assets 101,134,809 96,144,090 62,328,232 64,578,274 Represented By: Issued capital 27 43,136,364 43,136,364 43,136,364 43,136,364 Reserves 28 60,667,799 60,685,374 32,810,299 32,810,299 Accumulated loss (2,669,354) (7,677,648) (13,618,431) (11,368,389) Shareholders Equity 101,134,809 96,144,090 62,328,232 64,578,274 The accompanying Notes form an integral part of the Financial Statements.

30 Non-distributable Reserves Net Issued Share Revaluation Reserve on Translation Accumulated Shareholders Capital Premium Reserve Consolidation Reserve Loss Equity RM RM RM RM RM RM RM Balance as of January 1, ,136,364 32,810,299 1,665,338 (138,237) (12,129,035) 65,344,729 Surplus on revaluation of property, plant and equipment 26,363,037 26,363,037 Currency translation differences (15,063) (15,063) Net gain/(loss) not recognised in the income statements 26,363,037 (15,063) 26,347,974 Accretion arising from issue of new shares of a subsidiary company 9,908 9,908 Net profit for the year 4,441,479 4,441,479 Balance as of December 31, ,136,364 32,810,299 26,363,037 1,665,338 (153,300) (7,677,648) 96,144,090 Net loss not recognised in the income statements: Currency translation differences (17,575) (17,575) Net profit for the year 5,008,294 5,008,294 Balance as of December 31, ,136,364 32,810,299 26,363,037 1,665,338 (170,875) (2,669,354) 101,134,809 Issued Capital Nondistributable Reserve Share Premium Accumulated Loss Net Shareholders Equity RM RM RM RM Balance as of January 1, ,136,364 32,810,299 (11,512,725) 64,433,938 Net profit for the year 144, ,336 Balance as of December 31, ,136,364 32,810,299 (11,368,389) 64,578,274 Net loss for the year (2,250,042) (2,250,042) Balance as of December 31, ,136,364 32,810,299 (13,618,431) 62,328,232 The accompanying Notes form an integral part of the Financial Statements. STATEMENTS OF CHANGES IN EQUITY 29

31 CASH FLOW STATEMENT Note RM RM CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES Profit before tax 4,185,293 5,365,162 Adjustments for: Finance costs 6,912,314 6,176,179 Depreciation of property, plant and equipment 6,877,995 5,025,789 Inventories written off 92,164 Allowance for doubtful debts 89,028 1,965,716 Write down in value of inventories 79, ,938 Provision for employee benefits 20,782 48,937 Amortisation of deferred expenditure 8,819 8,940 Property, plant and equipment written off 7,371 9,908 Loss/(Gain) on disposal of property, plant and equipment 3,452 (12,802) Allowance for diminution in value of quoted investments 2,500 Allowance for doubtful debts no longer required (755,546) (184,029) Interest income (360,134) (379,477) Allowance for diminution in value of quoted investments no longer required (1,100) Dividend income (300) (280) Bad debts written off 22,916 Deficit on revaluation of property, plant and equipment 440,634 Tax penalty 69,061 Bad debts recovered (146) Write back of provision for corporate guarantee (800,000) Operating Profit Before Working Capital Changes 17,162,293 17,882,446 (Increase)/Decrease in: Inventories 2,360,941 (3,383,569) Trade receivables (29,403,937) (16,097,710) Other receivables, deposits and prepaid expenses (2,142,681) (183,170) Increase/(Decrease) in: Trade payables 1,328,606 (7,049,566) Other payables and accrued expenses (2,208,857) (97,773) Cash Used In Operations (12,903,635) (8,929,342) Interest received 7,548 5,189 Dividend received Income tax paid (629,072) (185,399) Employee benefits paid (59,763) (35,362) Net Cash Used In Operating Activities (13,584,706) (9,144,673) CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES Withdrawal/(Placement) of fixed deposits 827,936 (411,527) Interest on fixed deposits received 352, ,288 Proceeds from disposal of property, plant and equipment 42,428 14,916 Purchase of property, plant and equipment 30(a) (2,840,921) (6,207,785) Net Cash Used In Investing Activities (1,617,971) (6,230,108) The accompanying Notes form an integral part of the Financial Statements.

32 CASH FLOW STATEMENT (cont d) Note RM RM CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES Proceeds from short-term bank borrowings 19,874,314 25,288,454 Proceeds from term loans 4,175,647 Proceeds from issuance of shares to minority shareholders 90,000 60,000 Finance costs paid (6,912,314) (6,176,179) Repayment of term loans (2,448,647) (2,194,607) Repayment of hire-purchase payables (748,966) (556,237) Net Cash From Financing Activities 14,030,034 16,421,431 NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (1,172,643) 1,046,650 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (5,506,185) (6,553,780) Currency translation differences on opening balances 1, CASH AND CASH EQUIVALENTS AT END OF YEAR 30(b) (6,677,545) (5,506,185) RM RM CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES (Loss)/Profit before tax (2,250,042) 144,336 Adjustments for: Impairment loss of investments in subsidiary companies 1,518,133 Finance costs 49, ,246 Depreciation of property, plant and equipment 34,581 80,612 Provision for employee benefits 3,956 4,641 Allowance for diminution in value of quoted investments 2,500 Allowance for diminution in value of quoted investments no longer required (1,100) Dividend income (300) (280) Write back of provision for corporate guarantee (800,000) Operating Loss Before Working Capital Changes (642,899) (463,445) (Increase)/Decrease in: Trade receivables 57,980 (57,980) Other receivables, deposits and prepaid expenses (10,825) 415 Increase/(Decrease) in other payables and accrued expenses 30,241 (137,327) Cash Used In Operations (565,503) (658,337) Dividend received Net Cash Used In Operating Activities (565,287) (658,096)

33 CASH FLOW STATEMENT (cont d) Note RM RM CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES Repayment from subsidiary companies 1,038, ,893 Acquisition of additional shares in subsidiary company (210,000) (500,000) Purchase of property, plant and equipment (39,308) (2,508) Acquisition of subsidiary companies (140,002) Net Cash From Investing Activities 789, ,383 CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES Repayment of term loan (169,603) (140,083) Finance costs paid (49,373) (107,246) Repayment of hire-purchase payable (49,016) (44,098) (Repayment to)/advances received from subsidiary companies (16,712) 655,600 Net Cash (Used In)/From Financing Activities (284,704) 364,173 NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (60,589) 31,460 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 74,774 43,314 CASH AND CASH EQUIVALENTS AT END OF YEAR 30(b) 14,185 74,774 The accompanying Notes form an integral part of the Financial Statements.

34 NOTES TO THE FINANCIAL STATEMENTS GENERAL INFORMATION is a limited liability company, incorporated and domiciled in Malaysia and listed on the Second Board of Bursa Malaysia Securities Berhad. is principally involved in investment holding and providing management services. The principal activities of the subsidiary companies are disclosed in Note 14. There have been no significant changes in the nature of the activities of the Company and its subsidiary companies during the financial year. The total number of employees of the Group and of the Company as of December 31, 2005 were 314 (2004: 291) and 16 (2004: 9) respectively. The registered office of the Company is located at 85, 1st Floor (Suite B), Beach Street, Penang. The principal place of business of the Company is located at Lot 2688, MK1, Jalan Perusahaan, Kawasan Perindustrian Prai, Prai, Penang. The financial statements of the Group and of the Company were authorised for issue by the Board of Directors in accordance with a resolution of the directors on April 27, BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The financial statements of the Group and of the Company have been prepared in accordance with the provisions of the Companies Act, 1965 and the applicable Malaysian Accounting Standards Board approved accounting standards in Malaysia. 3. SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The financial statements of the Group and of the Company have been prepared under the historical cost convention, unless otherwise indicated in the accounting policies stated below. Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and of the subsidiary companies controlled by the Company made up to December 31, A subsidiary company is a company where the Group has control through the power to govern the financial and operating policies of the subsidiary so as to obtain benefits therefrom. Control is presumed to exist when the Group owns, directly or indirectly through subsidiary companies, more than one half of the voting rights of the subsidiary. Subsidiary companies are consolidated using the acquisition method of accounting. On acquisition, the assets and liabilities of the relevant subsidiary companies are measured at their fair values at the date of acquisition. The interest of minority shareholders is stated at the minority s proportion of the fair values of the assets and liabilities recognised. The results of subsidiary companies acquired or disposed of during the financial year are included in the consolidated financial statements from the effective date of acquisition or up to the effective date of disposal. All significant intercompany transactions, balances and resulting unrealised gains are eliminated on consolidation. Unrealised losses are eliminated on consolidation unless costs cannot be recovered.

35 NOTES TO THE FINANCIAL STATEMENTS (cont d) SIGNIFICANT ACCOUNTING POLICIES (cont d) Revenue Recognition Sale of goods are recognised upon delivery of products and when the risks and rewards of ownership have passed to the customers. Sales represent gross invoiced value of goods sold. Income from consultancy services and transportation are recognised as and when services are provided. Income from trading commission and brokerage are recognised when contracts are executed. Interest income is accrued on a time basis, by reference to the principal outstanding and at the interest rate applicable. Dividend income represents gross dividends from quoted and unquoted investments and is recognised when the shareholder s rights to receive payment is established. Rental income and management fees are accrued on a time basis, by reference to the agreements entered. Foreign Currency Transactions in foreign currencies are converted into Ringgit Malaysia at exchange rates prevailing at the transaction dates or, where settlement has not yet been made at the end of the financial year, the assets and liabilities are converted at approximate exchange rates prevailing at that date. All foreign exchange gains or losses are taken up in the income statements. For the purpose of consolidation, the financial statements of foreign incorporated subsidiary have been translated into Ringgit Malaysia as follows: Assets and liabilities Issued capital Revenue and expenses at closing rate at historical rate at average rate The closing rate per unit of Ringgit Malaysia used in the translation of foreign incorporated subsidiary company s financial statements is as follows: Currency Vietnamese Dong 4, , All translation gains or losses are taken up and reflected in the translation reserve account under shareholders equity. Such translation gains or losses are recognised as income or expenses in the income statements, in the year in which the subsidiary is disposed of. Deferred Taxation Deferred tax is accounted for 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.

36 NOTES TO THE FINANCIAL STATEMENTS (cont d) SIGNIFICANT ACCOUNTING POLICIES (cont d) Property, Plant and Equipment Property, plant and equipment are stated at cost or valuation less accumulated depreciation and accumulated impairment losses. Property, plant and equipment stated at valuation are revalued at regular intervals of at least once in every five years by the directors with additional valuation in the intervening years where market conditions indicate that the carrying values of the revalued assets differ materially from the market value. The revaluation of freehold and leasehold properties and plant and machinery are based on valuation reports of independent professional valuers using the open market value basis and the depreciated replacement cost basis respectively. An increase in the carrying amount arising from revaluation of property, plant and equipment is credited to the revaluation reserve account as revaluation surplus. Any deficit arising from revaluation is charged against the revaluation reserve account to the extent of a previous surplus held in the revaluation reserve account for the same class of asset. In all other cases, a decrease in carrying amount is charged to income statements. An increase in revaluation directly related to a previous decrease in carrying amount for that same class of asset that was recognised as an expense, is credited to income statements to the extent that it offsets the previously recorded decrease. On disposal of revalued assets, the amounts in revaluation reserve account relating to the assets disposed are transferred to unappropriated profit account. Freehold land is not depreciated. Leasehold land are amortised evenly over the lease periods ranging from 20 to 99 years. All other property, plant and equipment are depreciated on the straight-line method to their residual values at rates based on the estimated useful lives of the various assets. The annual depreciation rates are as follows: Buildings 1.75% to 20% Plant and machinery 5% to 25% Motor vehicles 10% to 20% Office equipment, furniture and fittings 8% to 33 1/3% 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. Investments Investments in subsidiary companies, which are eliminated on consolidation, are stated in the Company s financial statements at cost. Investments in quoted shares are stated at the lower of cost and market value. Investments in unquoted shares are stated at cost less allowance for diminution in value of investments to recognise any decline, other than a temporary decline, in the value of the investments.

37 NOTES TO THE FINANCIAL STATEMENTS (cont d) SIGNIFICANT ACCOUNTING POLICIES (cont d) Goodwill/Reserve Goodwill arising on consolidation represents the excess of purchase consideration over the share of the fair values of the identifiable net assets of the subsidiary companies at the date of acquisition. Goodwill is recognised as an asset and is not amortised, but is written down when there is impairment in its carrying value. Reserve on consolidation represents the excess of the fair values of the identifiable net assets of the subsidiary companies over the purchase consideration at the date of acquisition. Impairment of Assets At each balance sheet date, the Group reviews the carrying amounts of assets (other than inventories 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 asset s 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 statements unless the asset is carried at revalued amount, in which case, the impairment loss is treated as a revaluation decrease. An impairment loss in respect of goodwill is not reversed unless the loss is caused by a specific 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 asset s 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 statements, unless it reverses an impairment loss on revalued assets, in which case, the reversal is treated as revaluation increase. Inventories Inventories are valued at the lower of cost and net realisable value. Cost is determined on the Weighted Average method. The cost of raw materials and trading inventories comprise the original purchase price plus cost incurred in bringing the inventories to their present location. The cost of finished goods comprises the cost of raw materials, direct labour and a proportion of production overheads. Net realisable value represents the estimated selling price in the ordinary course of business less selling and distribution costs and all other estimated costs to completion. Deferred Expenditure Trademark and design expenditure are stated at cost and amortised over a period of 10 years. Provisions Provisions for liabilities are recognised when the Group has a present obligation (legal or constructive) 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 when 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.

38 NOTES TO THE FINANCIAL STATEMENTS (cont d) SIGNIFICANT ACCOUNTING POLICIES (cont d) 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. Employee Benefits Short-term employee 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. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur. Defined contribution plan 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 employees salaries. s and the Company s contributions to the EPF are disclosed separately. The employees contributions to EPF are included in salaries. Cash Flow Statements and the Company adopt the indirect method in the preparation of the cash flow statements. 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 risks of changes in value. 4. REVENUE RM RM RM RM Sale of goods 570,328, ,036,275 Transportation revenue 2,205,139 2,172,841 Dividend income Management fees 802, , ,533, ,209, , ,760

39 NOTES TO THE FINANCIAL STATEMENTS (cont d) OPERATING COSTS APPLICABLE TO REVENUE The operating costs classified by nature, applicable to revenue, are as follows: Note RM RM RM RM Changes in inventories of finished goods, trading merchandise and work-inprogress 1,075,722 (1,097,091) Purchase of finished goods and trading merchandise 196,660,402 93,300,878 Raw materials and consumables used 333,482, ,849,391 Directors remuneration 8 1,295, , , ,240 Staff costs 7 5,527,950 5,890, , ,621 Depreciation of property, plant and 13 equipment 6,877,995 5,025,789 34,581 80,612 Impairment loss of investments in 1,518,133 subsidiary companies Deficit on revaluation of property, plant 440,634 and equipment Other operating costs 7 18,123,215 18,306, , , ,043, ,654,469 3,018, , SEGMENT REPORTING Business segments For management purposes, the Group is organised into the following operating divisions: processing of copra and palm kernel and trading of palm kernel oil, coconut oil, palm kernel cake and copra cake manufacturer, trader and distributor of all kinds of foodstuff transportation management services and investment holding futures brokers others (includes importing, exporting, distribution and general trading of flexible packaging, plastic sheet products, plastic lighting diffuser, fast-moving consumer products and health-related food)

40 NOTES TO THE FINANCIAL STATEMENTS (cont d) SEGMENT REPORTING (cont d) Processing of copra and palm kernel and trading of palm kernel oil, coconut oil, palm kernel cake and copra cake Manufacturer, trader and distributor of all kinds of foodstuff Transportation Management services and investment holding Futures brokers - discontinuing operation Others Eliminations Consolidated 2005 RM RM RM RM RM RM RM RM Revenue External sales 535,032,378 22,787,143 2,205, ,508, ,533,636 Inter-segment sales 8,636, , ,266 6,000 (9,737,809) Total revenue 535,032,378 31,423,530 2,498, ,566 12,514,676 (9,737,809) 572,533,636 Results Profit/(Loss) from operations 11,475,661 (83,254) (181,827) (682,844) (47,381) 264,666 10,745,021 Finance costs (6,912,314) Interest on fixed deposits 352,586 Profit before tax 4,185,293 Income tax credit 843,423 Profit after tax 5,028,716 Other information Capital additions 2,747,767 86,313 13,838 39,309 15,704 (8,310) 2,894,621 Depreciation of property, plant and equipment 5,614, , ,573 34,581 3,712 63,070 (1,858) 6,877,995 Amortisation of deferred expenditure 8,819 8,819 Assets Segment assets 243,475,394 26,131,853 2,483, ,618 1,100,223 6,353, ,783,637 Unallocated corporate assets 11,371,291 Consolidated total assets 291,154,928

41 NOTES TO THE FINANCIAL STATEMENTS (cont d) SEGMENT REPORTING (cont d) Processing of copra and palm kernel and trading of palm kernel oil, coconut oil, palm kernel cake and copra cake Manufacturer, trader and distributor of all kinds of foodstuff Transportation Management services and investment holding Futures brokers - discontinuing operation Others Eliminations Consolidated 2005 RM RM RM RM RM RM RM RM Liabilities Segment liabilities 11,744,627 3,396, , ,294 51, ,193 16,787,832 Unallocated corporate liabilities 173,121,865 Consolidated total liabilities 189,909, Revenue External sales 415,718,075 23,043,515 2,172, , ,209,396 Inter-segment sales 6,130,350 6,348, , ,480 24,000 (13,017,294) Total revenue 421,848,425 29,391,577 2,393, , ,685 (13,017,294) 441,209,396 Results Profit/(Loss) from operations 12,236,376 (808,699) (198,386) 251,582 (41,683) (272,137) 11,167,053 Finance costs (6,176,179) Interest on fixed deposits 374,288 Profit before tax 5,365,162 Tax expense (973,775) Profit after tax 4,391,387

42 NOTES TO THE FINANCIAL STATEMENTS (cont d) SEGMENT REPORTING (cont d) Processing of copra and palm kernel and trading of palm kernel oil, coconut oil, palm kernel cake and copra cake Manufacturer, trader and distributor of all kinds of foodstuff Transportation Management services and investment holding Futures brokers - discontinuing operation Others Eliminations Consolidated 2004 RM RM RM RM RM RM RM RM Other information Capital additions 5,939, , ,033 2, ,217 7,021,785 Depreciation of property, plant and equipment 3,747, , ,097 80,612 6,780 41,846 5,025,789 Amortisation of deferred expenditure 8,940 8,940 Assets Segment assets 210,647,689 28,963,881 2,822,617 9,489,304 1,013,674 1,755, ,692,947 Unallocated corporate assets 12,303,925 Consolidated total assets 266,996,872 Liabilities Segment liabilities 11,376,493 5,177, , ,101 59, ,520 17,707,064 Unallocated corporate liabilities 153,145,718 Consolidated total liabilities 170,852,782

43 NOTES TO THE FINANCIAL STATEMENTS (cont d) SEGMENT REPORTING (cont d) operates only in Malaysia and in Vietnam. In Malaysia, the Group s areas of operation are principally in processing of copra and palm kernel and trading of palm kernel oil, coconut oil, palm kernel cake and copra cake, manufacturing, trading and distribution of all kinds of foodstuff, transportation, management services and investment holding, futures brokers and importing, exporting, distribution and general trading of flexible packaging, plastic sheet products, plastic lighting diffuser, fast-moving consumer products and health-related food. In Vietnam, the main operation is manufacturing, trading and distribution of all kinds of foodstuff. The following is an analysis of the Group s sales by geographical market, irrespective of the origin of the goods: Sales revenue by geographical market RM RM Malaysia 545,588, ,566,740 The Netherlands 20,478,264 1,179,332 Germany 18,609,849 Vietnam 4,566,148 4,565,907 Other countries 1,900,410 2,287, ,533, ,209,396 The following is an analysis of the carrying amounts of segment assets and capital additions by geographical area in which the assets are located: Carrying amounts of segment assets Capital additions RM RM RM RM Malaysia 275,475, ,415,330 2,844,801 6,954,300 Vietnam 4,308,232 4,277,617 49,820 67, ,783, ,692,947 2,894,621 7,021, OTHER OPERATING INCOME/(COSTS) AND STAFF COSTS Included in other operating income/(costs) are the following: RM RM RM RM Allowance for doubtful debts no longer required 755, ,029 Rental income 174, ,200 14,617 Interest income 7,548 5,189 Allowance for diminution in value of quoted investments no longer required 1,100 1,100 Write back of provision for corporate guarantee 800, ,000 Bad debts recovered 146

44 NOTES TO THE FINANCIAL STATEMENTS (cont d) OTHER OPERATING INCOME/(COSTS) AND STAFF COSTS (cont d) RM RM RM RM Rental of: Premises (225,623) (170,311) (31,700) Motor vehicles (6,178) (25,866) Office equipment (2,755) (1,595) Realised loss on foreign exchange (129,886) (19,408) Inventories written off (92,164) Allowance for doubtful debts (89,028) (1,965,716) Write down in value of inventories (79,655) (125,938) Auditors remuneration (71,800) (58,047) (20,000) (5,000) Amortisation of deferred expenditure (8,819) (8,940) Property, plant and equipment written off (7,371) (9,908) (Loss)/Gain on disposal of property, plant and equipment (3,452) 12,802 Allowance for diminution in value of quoted investments (2,500) (2,500) Bad debts written off (22,916) Preliminary expenses written off (4,914) Included in staff costs of the Group and of the Company are the following charges: RM RM RM RM EPF contributions 341, ,195 59,868 22,320 Provision for employee benefits 20,782 13,575 3,956 4, DIRECTORS REMUNERATION RM RM RM RM Executive directors: Fees 50,000 40,000 50,000 40,000 Other emoluments 1,177, , , ,400 1,227, , , ,400 Non-executive directors: Fees 68,000 30,000 68,000 30,000 Other emoluments 21,840 21,840 68,000 51,840 68,000 51,840 1,295, , , ,240 Included in directors other emoluments are contributions made by the Group and by the Company to the EPF of RM125,409 (2004: RM54,996) and RM43,200 (2004: RM25,740) respectively.

45 NOTES TO THE FINANCIAL STATEMENTS (cont d) DISCONTINUING OPERATION On April 18, 2003, the subsidiary company, Pro Futures Sdn. Bhd. ceased its futures trading business operations. The effects of the discontinuing operations on the financial results and cash flows of the Group are as follows: Continuing operations Discontinuing operation RM RM RM RM RM RM Revenue 572,533, ,209, ,533, ,209,396 Other operating income 1,254,758 1,606,424 5,702 1,254,758 1,612,126 Interest on fixed deposits 352, , , ,288 Operating costs (563,019,992) (431,631,084) (23,381) (23,385) (563,043,373) (431,654,469) Finance costs (6,912,314) (6,176,179) (6,912,314) (6,176,179) Profit/(Loss) before tax 4,208,674 5,382,845 (23,381) (17,683) 4,185,293 5,365,162 Income tax credit/(expense) 843,423 (963,429) (10,346) 843,423 (973,775) Profit/(Loss) from ordinary activities after tax 5,052,097 4,419,416 (23,381) (28,029) 5,028,716 4,391,387 Cash Flows From/(Used In): Operating activities (13,559,665) (9,030,005) (25,041) (114,668) (13,584,706) (9,144,673) Investing activities (1,617,971) (6,230,108) (1,617,971) (6,230,108) Financing activities 14,030,034 16,421,431 14,030,034 16,421,431 Net cash flows (1,147,602) 1,161,318 (25,041) (114,668) (1,172,643) 1,046,650 The carrying amounts of total assets and liabilities of Pro Futures Sdn. Bhd. as of the balance sheet date are as follows: RM RM Total assets 1,103,136 1,119,221 Total liabilities 51,378 59,082

46 NOTES TO THE FINANCIAL STATEMENTS (cont d) FINANCE COSTS RM RM RM RM Interest on: Other short-term bank borrowings 3,374,976 2,787,067 Term loans 1,114,881 1,067,747 19,805 33,542 Bank overdrafts 538, ,624 Hire-purchase 297, ,787 3,483 8,402 Others 4,252 20,990 Advances from subsidiary company 25,203 65,149 Bank charges and commission 1,581,847 1,357, ,912,314 6,176,179 49, , INCOME TAX CREDIT/(EXPENSE) RM RM RM RM Malaysian Income tax: Current year (883,500) (484,979) Prior year 142,450 (74,538) (741,050) (559,517) Deferred tax (Note 26) 1,584,473 (414,258) 843,423 (973,775) As of December 31, 2005, the Company has tax credits of approximately RM532,000 (2004: RM532,000). As of December 31, 2005, certain subsidiary companies have tax credits of approximately RM11,217,000 (2004: RM10,544,000) and tax-exempt accounts balances of approximately RM38,309,000 (2004: RM38,309,000). The taxexempt accounts, arising from chargeable income waived in 1999 in accordance with the Income Tax (Amendment) Act, 1999 and reinvestment allowances claimed and utilised under Schedule 7A of the Income Tax Act, 1967, are available for distribution as tax-exempt dividends to the shareholders of the subsidiary companies. As of December 31, 2005, the estimated unabsorbed reinvestment allowances of the Group which is available for offset against future taxable income amounts to approximately RM9,003,000 (2004: RM1,260,000). The unabsorbed reinvestment allowances are subject to agreement by the tax authorities.

47 NOTES TO THE FINANCIAL STATEMENTS (cont d) INCOME TAX CREDIT/(EXPENSE)(cont d) A numerical reconciliation of income tax credit/(expense) at the applicable income tax rate to income tax credit/ (expense) at the effective income tax rate is as follows: RM RM RM RM Profit/(Loss) before tax 4,185,293 5,365,162 (2,250,042) 144,336 Tax at the applicable statutory income tax rate of 28% (1,171,900) (1,502,200) 630,000 (40,400) Tax effects of: Temporary differences between tax capital allowances and book depreciation of property, plant and equipment 1,135,543 Expenses that are not deductible in determining taxable profit (313,130) (481,139) (501,000) (71,600) Unutilised tax losses and unabsorbed tax capital allowances carried forward (292,900) (566,491) (133,000) (112,000) Utilisation of reinvestment allowances 1,025,000 1,386,000 Utilisation of unabsorbed tax capital allowances and unutilised tax losses 139,260 90,097 Income that are not taxable in determining taxable profit 214, ,992 4, ,000 Effect of difference in tax rate applicable to small and medium scale companies (25,100) (94,896) Effect of difference in tax rate in foreign country (9,800) (8,600) Income tax - prior year 142,450 (74,538) Income tax credit/(expense) for the year 843,423 (973,775) 12. EARNINGS PER ORDINARY SHARE The basic and diluted earnings per share are calculated as follows: RM RM Net profit attributable to ordinary shareholders 5,008,294 4,441, Shares Shares Number of ordinary shares in issue as of January 1 43,136,364 43,136,364 Effect of subdivision of shares 43,136,364 43,136,364 Weighted average number of ordinary shares in issue 86,272,728 86,272,728 Basic/Diluted earnings per ordinary share (sen) Comparative figures of the basic and diluted earnings per ordinary share have been restated to reflect the subdivision of shares during the financial year.

48 NOTES TO THE FINANCIAL STATEMENTS (cont d) PROPERTY, PLANT AND EQUIPMENT Cost (except as otherwise stated) Currency At beginning translation Disposals/ At end of year differences Additions Write off Reclassification of year RM RM RM RM RM RM Freehold land: At valuation 5,891,000 5,891,000 At cost 455, ,560 Long-term leasehold land: At valuation 8,961,000 8,961,000 Short-term leasehold land: At valuation 1,371,930 1,371,930 At cost 652,907 (8,879) 644,028 Buildings: At valuation 34,255,754 34,255,754 At cost 2,435,454 (7,136) 1,252,904 3,681,222 Plant and machinery: At valuation 37,421,244 (16,251) 56,620 37,461,613 At cost 6,471,878 (189) 1,491,075 (4,268) 7,958,496 Plant and machinery underhire-purchase: At valuation 5,399,620 (56,620) 5,343,000 Motor vehicles 3,449,980 (2,548) 11,500 (68,266) 3,390,666 Motor vehicles under hire-purchase 1,640,140 59,700 1,699,840 Office equipment, furniture and fittings 2,185,580 (716) 79,442 (94,106) 2,170,200 Total 110,592,047 (35,719) 2,894,621 (166,640) 113,284,309

49 NOTES TO THE FINANCIAL STATEMENTS (cont d) PROPERTY, PLANT AND EQUIPMENT(con td) Accumulated Depreciation Currency At beginning translation Charge for Disposals/ At end of year differences the year Write off Reclassification of year RM RM RM RM RM RM Freehold land: At valuation At cost Long-term leasehold land: At valuation 131, ,102 Short-term leasehold land: At valuation 29,825 29,825 At cost 107,436 (3,020) 32, ,752 Buildings: At valuation 716, ,398 At cost 337,691 (2,264) 36, ,538 Plant and machinery: At valuation (9,842) 4,490,550 6,233 4,486,941 At cost 1,424,684 (12) 258,441 (773) 1,682,340 Plant and machinery under hire-purchase: At valuation 594,428 (6,233) 588,195 Motor vehicles 2,891,248 (1,512) 194,935 (26,644) 3,058,027 Motor vehicles under hire-purchase 288, , ,583 Office equipment, furniture and fittings 1,584,059 (598) 141,573 (85,972) 1,639,062 Total 6,633,405 (17,248) 6,877,995 (113,389) 13,380,763

50 NOTES TO THE FINANCIAL STATEMENTS (cont d) PROPERTY, PLANT AND EQUIPMENT(con td) Net Book Value RM RM Freehold land: At valuation 5,891,000 5,891,000 At cost 455, ,560 Long-term leasehold land: At valuation 8,829,898 8,961,000 Short-term leasehold land: At valuation 1,342,105 1,371,930 At cost 507, ,471 Buildings: At valuation 33,539,356 34,255,754 At cost 3,309,684 2,097,763 Plant and machinery: At valuation 32,974,672 37,421,244 At cost 6,276,156 5,047,194 Plant and machinery under hire-purchase: At valuation 4,754,805 5,399,620 Motor vehicles 332, ,732 Motor vehicles under hire-purchase 1,159,257 1,351,853 Office equipment, furniture and fittings 531, ,521 Total 99,903, ,958,642 Cost At beginning At end of year Additions Disposals of year RM RM RM RM Motor vehicles 486, ,973 Motor vehicles under hire-purchase 260, ,000 Office equipment, furniture and fittings 86,972 39, ,280 Total 833,945 39, ,253 Accumulated Depreciation Net Book Value At beginning Charge for At end of year the year Disposals of year RM RM RM RM RM RM Motor vehicles 486, ,973 Motor vehicles under hire-purchase 100,506 25, , , ,494 Office equipment, furniture and fittings 67,476 8,582 76,058 50,222 19,496 Total 654,955 34, , , ,990

51 NOTES TO THE FINANCIAL STATEMENTS (cont d) PROPERTY, PLANT AND EQUIPMENT(con td) s freehold and leasehold properties and plant and machinery were revalued by the directors in 2004 using open market value basis and depreciated replacement cost basis respectively. No revaluation of leasehold land and building of Fourseason (Vietnam) Co., Ltd. has been made as the directors are of the opinion that the fair values of the leasehold land and building are not materially different from their carrying amounts and that it will involve undue cost for their valuation. Had these assets been carried at historical costs, the carrying amounts of the revalued assets of the Group will be as follows: RM RM Freehold land 5,679,677 5,679,677 Leasehold land 4,821,337 4,897,219 Buildings 31,428,720 32,150,847 Plant and machinery 10,044,619 14,175,559 51,974,353 56,903,302 Land and buildings and plant and machinery of the Group with total carrying amounts of RM44,371,075 (2004: RM44,630,256) and RM3,461,294 (2004: RM3,935,294) respectively are pledged to licensed banks for banking facilities granted to the Group as disclosed in Note 24. Included in property, plant and equipment of the Group and of the Company are fully depreciated assets which are still in use, with the following costs: RM RM RM RM Plant and machinery 4,623, ,109 Motor vehicles 697, , , ,973 Office equipment, furniture and fittings 1,023, ,029 57,989 37,399 6,344,949 2,091, , , INVESTMENTS IN SUBSIDIARY COMPANIES RM RM Unquoted shares, at cost 69,092,578 68,882,578 Less: Accumulated impairment losses (1,518,133) Net 67,574,445 68,882,578

52 NOTES TO THE FINANCIAL STATEMENTS (cont d) INVESTMENTS IN SUBSIDIARY COMPANIES(cont d) The subsidiary companies are as follows: Effective Equity Interest Country of Name of Company Incorporation % % Principal Activities Fourseason Foodstuff Industries (M) Sdn.Bhd. * Malaysia Manufacturing and distributing all kinds of foodstuff. Fourseason Trading Sdn. Bhd. * Malaysia Trading and distributing all kinds of foodstuff and toys. Welli Edible Oil Sdn.Bhd. Malaysia Processing of copra and palm kernel and trading of palm kernel oil, coconut oil, palm kernel cake and copra cake. Welli International Education Malaysia Dormant. Centre Sdn. Bhd. Welli Business Ventures Sdn. Bhd. Malaysia Importing, exporting, distribution and general trading of flexible packaging, plastic sheet products, plastic lighting diffuser, fast-moving consumer products and health-related food. Held through Fourseason Foodstuff Industries (M) Sdn. Bhd. Fourseason Business Systems Sdn. Bhd. * Malaysia Property investment. Held through Fourseason Trading Sdn. Bhd. Fourseason (Vietnam) Co., Ltd. * Vietnam Manufacturing and processing of all kinds of foodstuff. Held through Welli Edible Oil Sdn. Bhd. Welli Transport Sdn. Bhd. * Malaysia Transport and forwarding agent. Pro Futures Sdn. Bhd. * # Malaysia Futures broker in the Bursa Malaysia Derivatives Bhd.. Welli International Sdn. Bhd. Malaysia Trading of all kinds of oil and commodities. * The financial statements of these companies are examined by auditors other than the auditors of the Company. # The subsidiary company has ceased operations as futures broker in OTHER INVESTMENTS RM RM RM RM Quoted shares in Malaysia,at cost 715, , , ,092 Less: Allowance for diminution in value (694,612) (693,212) (694,612) (693,212) 20,480 21,880 20,480 21,880 Unquoted shares in Malaysia, at cost 200, , , ,880 20,480 21,880 Market value of quoted shares 20,480 31,350 20,480 31,350

53 NOTES TO THE FINANCIAL STATEMENTS (cont d) DEFERRED EXPENDITURE RM RM Trademark and design, at cost 100, ,812 Currency translation differences (12,990) (11,780) 87,822 89,032 Less: Accumulated amortisation 66,690 58,319 Currency translation differences (823) (448) (65,867) (57,871) Net 21,955 31, GOODWILL ON CONSOLIDATION RM RM Goodwill 9,204,249 9,204,249 Less: Accumulated impairment losses Net 9,204,249 9,204, INVENTORIES RM RM At cost: Finished goods 14,472,900 15,241,597 Raw materials 13,225,400 14,345,769 Trading merchandise 857,452 1,289,352 Consumables 639, ,652 Goods-in-transit 43, ,140 Work-in-progress 7,838 17,407 At net realisable value: Trading merchandise 164,424 29,980 29,411,137 31,943,897

54 NOTES TO THE FINANCIAL STATEMENTS (cont d) TRADE RECEIVABLES, OTHER RECEIVABLES, DEPOSITS AND PREPAID EXPENSES RM RM Trade receivables 137,890, ,556,597 Less: Allowance for doubtful debts (2,616,979) (3,353,845) Net 135,273, ,202,752 The currency profile of trade receivables is as follows: RM RM Ringgit Malaysia 128,688, ,930,329 United States Dollar 7,725, ,706 Vietnamese Dong 1,344,226 1,145,452 Hong Kong Dollar 132,180 66, ,890, ,556,597 The credit period granted for sale of goods ranged from 25 to 120 days (2004: 25 to 120 days). Other receivables, deposits and prepaid expenses consist of: RM RM RM RM Other receivables 3,662,059 2,642, Less: Non-current portion (252,992) (247,800) Current portion 3,409,067 2,394, Refundable deposits 1,174, ,877 12,825 2,315 Prepaid expenses 696, ,920 6,693 6,995 5,280,647 3,143,158 20,236 9,411 Other receivables comprise mainly proceeds receivable from the sale of property, plant and equipment in prior years and advance payments to suppliers for purchase of raw materials and finished goods which are unsecured, interestfree and have no fixed terms of repayment. Included in proceeds from sale of property, plant and equipment is an amount of RM288,992 (2004: RM318,600) which is receivable by RM3,000 equal monthly instalments or 10% of the monthly sales from the subsidiary to a third party, whichever is higher commencing May The currency profile of other receivables is as follows: RM RM RM RM Ringgit Malaysia 3,075,635 2,526, United States Dollar 481,568 Vietnamese Dong 104, ,238 3,662,059 2,642,

55 NOTES TO THE FINANCIAL STATEMENTS (cont d) RELATED PARTY TRANSACTIONS The amount owing by/(to) subsidiary companies arose mainly from advances and expenses paid on behalf which are unsecured, interest-free and have no fixed terms of repayment except for advances from a subsidiary company, Welli Edible Oil Sdn. Bhd. amounting to RM280,000 (2004: RM882,000) which bear interest rate of 10% (2004: 10%) per annum. During the financial year, significant related party transactions are as follows: RM RM Subsidiary companies Management fees received 802, ,480 Interest paid on loans 25,203 65,149 The transactions with subsidiary companies are aggregated as these transactions are similar in nature and also no single transaction is significant enough to be disclosed separately in the financial statements. 21. FIXED DEPOSITS, CASH AND BANK BALANCES RM RM RM RM Fixed deposits with licensed banks 11,050,660 11,878,596 Cash on hand and at banks 215, ,408 14,185 74,774 11,266,084 12,618,004 14,185 74,774 The fixed deposits of the Group are pledged to licensed banks for banking facilities granted to the subsidiary companies as disclosed in Note 24. The deposits of the Group have maturity period ranging from 1 to 15 months (2004: 1 to 15 months) with effective interest rates ranging from 1.20% to 6.53% (2004: 0.40% to 6.35%) per annum. Analysis of fixed and short-term deposits, cash and bank balance by currency: Ringgit Vietnamese Malaysia Dong Total 2005 RM RM RM Fixed deposits 10,655, ,220 11,050,660 Cash on hand and at banks 172,444 42, ,424 10,827, ,200 11,266, Fixed deposits 11,483, ,296 11,878,596 Cash on hand and at banks 539, , ,408 12,023, ,880 12,618, Cash on hand and at banks 14,185 14, Cash on hand and at banks 74,774 74,774

56 NOTES TO THE FINANCIAL STATEMENTS (cont d) TRADE PAYABLES, OTHER PAYABLES AND ACCRUED EXPENSES Trade and other payables comprise amounts outstanding for trade purchases and ongoing costs. The average credit period granted to the Group for trade purchases ranged from 25 to 120 days (2004: 25 to 120 days). The currency profile of trade payables is as follows: RM RM Ringgit Malaysia 8,933,094 8,292,516 United States Dollar 1,415, ,139 Vietnamese Dong 877,221 1,289,704 Singapore Dollar 727 3,245 11,226,210 9,897,604 Other payables and accrued expenses consist of: RM RM RM RM Other payables 4,515,735 6,556, , ,498 Deposits received 14,400 18,400 1,000 Accrued expenses 1,031,487 1,234, , ,598 5,561,622 7,809, , ,096 The currency profile of other payables is as follows: RM RM RM RM Ringgit Malaysia 4,413,808 6,454, , ,498 United States Dollar 63,895 40,767 Vietnamese Dong 38,032 61,156 The amounts owing to other payables are unsecured and interest-free. 4,515,735 6,556, , ,498

57 NOTES TO THE FINANCIAL STATEMENTS (cont d) HIRE-PURCHASE PAYABLES RM RM RM RM Total outstanding 3,378,158 4,360,758 8,750 61,250 Less: Interest-in-suspense outstanding (452,170) (739,504) (102) (3,586) Principal outstanding 2,925,988 3,621,254 8,648 57,664 Less: Amount due within 12 months (shown under current liabilities) (786,926) (748,444) (8,648) (49,016) Non-current portion 2,139,062 2,872,810 8,648 The non-current portion is repayable as follows: RM RM RM RM Financial years ending December 31: ,438 8, , , , , , , ,059 67, and thereafter 50,742 34,098 2,139,062 2,872,810 8,648 It is the Group s and the Company s policy to acquire certain of their property, plant and equipment under hire-purchase arrangements. The terms for hire-purchase ranged from 5 to 7 years. For the financial year ended December 31, 2005, the effective borrowing rates ranged from 6.55% to 11.27% (2004: 6.55% to 11.27%) per annum. Interest rates are fixed at the inception of the hire-purchase arrangements. s and the Company s hire-purchase payables are secured by the assets under hire-purchase. 24. BANK BORROWINGS RM RM RM RM Unsecured: Bank overdrafts 4,200,646 4,303,572 Term loans 139, , , ,568 Bills payable 9,555,126 7,471,401 Secured: Bank overdrafts 2,692,323 1,942,021 Term loans 14,567,856 12,477,168 Bills payable 122,713, ,663,321 Export credit refinancing 3,260, ,869, ,621, , ,568

58 NOTES TO THE FINANCIAL STATEMENTS (cont d) BANK BORROWINGS(cont d) RM RM RM RM Less: Amount due within 12 months (shown under current liabilities) (141,819,667) (120,752,517) (139,965) (172,056) Non-current portion 12,050,159 10,868, ,512 The non-current portion is repayable as follows: RM RM RM RM Financial years ending December 31: ,026, , ,760,627 1,895, ,417,183 1,984, ,165,077 1,684, ,879,282 1,357, and thereafter 2,827,990 1,921,509 12,050,159 10,868, ,512 Analysis of bank borrowings by currency: Ringgit Vietnamese United States Malaysia Dong Dollar Total 2005 RM RM RM RM Bills payable 131,121, ,960 1,025, ,269,036 Term loans 14,707,821 14,707,821 Bank overdrafts 6,892,969 6,892, ,721, ,960 1,025, ,869, Bills payable 108,004,401 98,407 1,031, ,134,722 Term loans 12,980,821 12,980,821 Bank overdrafts 6,245,593 6,245,593 Export credit refinancing 3,260,000 3,260, ,490,815 98,407 1,031, ,621,136 Term loan 139, , Term loan 309, ,568

59 NOTES TO THE FINANCIAL STATEMENTS (cont d) BANK BORROWINGS(cont d) The effective interest rates are as follows: % % % % Bills payable Term loans Bank overdrafts Export credit refinancing The secured borrowings of the Group are secured by: a. legal charges over the freehold and leasehold properties of the subsidiary companies; b. pledge of fixed deposits belonging to the subsidiary companies; c. debenture incorporating a first fixed charge on certain property, plant and equipment of a subsidiary company; and jointly and severally guaranteed by certain directors of the subsidiary companies. The unsecured borrowings of the Group are guaranteed by the Company. has twelve term loans: a. a ten (10) year term loan of RM720,000 (2004: RM720,000) which is repayable by equal monthly instalments commencing April 4, 1997; b. a ten (10) year term loan of RM3,247,000 (2004: RM3,247,000) which is repayable by equal monthly instalments commencing August 1, 1999; c. a ten (10) year term loan of RM1,950,000 (2004: RM1,950,000) which is repayable by equal monthly instalments commencing May 1, 2001; d. a three (3) year term loan of RM145,000 (2004: RM145,000) which is repayable by equal monthly instalments commencing February 1, 2002; e. a ten (10) year term loan of RM5,600,000 (2004: RM5,600,000) which is repayable by equal monthly instalments commencing May 1, 2003; f. a seven (7) year term loan of RM5,140,000 (2004: RM5,140,000) which is repayable by equal monthly instalments commencing May 1, 2003; g. a three (3) year term loan of RM376,064 (2004: RM376,064) which is repayable by equal monthly instalments commencing October 1, 2003; h. a seven (7) year term loan of RM1,522,500 (2004: RM1,522,500) which is repayable by equal monthly instalments commencing June 1, 2005; i. a seven (7) year term loan of RM1,242,500 (2004: RM1,242,500) which is repayable by equal monthly instalments commencing June 1, 2005; and j. a seven (7) year term loan of RM794,000 (2004: RMNil) which is repayable by equal monthly instalments commencing upon full release of the loan.

60 NOTES TO THE FINANCIAL STATEMENTS (cont d) PROVISION and RM RM Provision for corporate guarantee 3,700,000 3,700, DEFERRED TAX LIABILITIES RM RM At beginning of year 14,117,600 3,610,600 Amount charged to equity 10,092,742 Transfer (to)/from income statements (Note 11) (1,584,473) 414,258 At end of year 12,533,127 14,117,600 Represented by: RM RM Tax effects of: Temporary differences arising from: Property, plant and equipment 2,452,000 2,994,000 Revaluation surplus on property, plant and equipment 10,115,227 11,158,400 Unutilised tax losses and unabsorbed tax capital allowances (34,100) (34,800) 12,533,127 14,117,600 As of December 31, 2005, the amount of estimated net deferred tax assets of the Group and of the Company calculated at applicable tax rate, which is not recognised in the financial statements, are as follows: Deferred Tax Assets/(Liabilities) RM RM RM RM Tax effects of: Temporary differences arising from property, plant and equipment (441,000) (400,000) (12,000) (13,000) Unutilised tax losses and unabsorbed tax capital allowances 2,594,000 2,930, , ,000 2,153,000 2,530, , ,000 The unutilised tax losses and unabsorbed tax capital allowances are subject to agreement by the tax authorities.

61 NOTES TO THE FINANCIAL STATEMENTS (cont d) SHARE CAPITAL and Par Number of Number of value ordinary ordinary RM shares shares RM RM Authorised: At beginning of year ,000, ,000, ,000, ,000,000 Effect of subdivision of shares 100,000,000 At end of year ,000, ,000, ,000, ,000,000 Issued and fully paid: At beginning of year ,136,364 43,136,364 43,136,364 43,136,364 Effect of subdivision of shares 43,136,364 At end of year ,272,728 43,136,364 43,136,364 43,136,364 At an Extraordinary General Meeting held on June 20, 2005, the shareholders approved the subdivision of 43,136,364 existing ordinary shares of RM1.00 each into 86,272,728 new ordinary shares of RM0.50 each. 28. RESERVES RM RM RM RM Non-distributable reserves: Share premium 32,810,299 32,810,299 32,810,299 32,810,299 Revaluation reserve 26,363,037 26,363,037 Reserve on consolidation 1,665,338 1,665,338 Translation reserve (170,875) (153,300) 60,667,799 60,685,374 32,810,299 32,810, FINANCIAL INSTRUMENTS Financial instruments are contracts that give rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. Financial Risk Management Objectives and Policies The operations of the Group and of the Company are subject to a variety of financial risks, including foreign currency exchange risk, interest rate risk, market risk, credit risk, liquidity risk and cash flow risk. s and the Company s principal objective is to minimise the Group s and the Company s exposure to risks and/or costs associated with the financing, investing and operating activities of the Group and of the Company. Foreign currency exchange risk is exposed to currency risk as a result of the foreign currency transactions entered into by the subsidiary companies in currencies other than their functional currency. enters into foreign currency forward contracts in the normal course of business to manage its exposure against foreign currency fluctuations on trade transactions denominated in foreign currencies.

62 NOTES TO THE FINANCIAL STATEMENTS (cont d) FINANCIAL INSTRUMENTS(cont d) Interest rate risk s and the Company s income and operating cash flows are substantially independent of changes in market interest rates. Interest rate exposure arises from the Group s and the Company s borrowings and deposits, and is managed through the use of fixed and floating rate debt. Market risk Market risk is the risk that the value of the financial instruments will fluctuate as a result of changes in market prices of the financial instruments, such as derivative instruments. constantly monitor fluctuations in market prices of these instruments to minimise its exposure. Credit risk Credit risk arises when derivative instruments are used or when sales are made on deferred credit terms. seeks to invest cash assets safely and profitably. It also seeks to control credit risk by setting sales limits and ensuring that sale of products are made to customers with an appropriate credit history. Liquidity risk and the Company practice 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 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. Financial Assets s principal financial assets are fixed deposits, cash and bank balances, trade and other receivables and equity investments. s principal financial assets are cash and bank balances, other receivables, amount owing by subsidiary companies and equity investments. The accounting policies applicable to the major financial assets are as disclosed in Note 3. Financial Liabilities s principal financial liabilities are trade and other payables and borrowings. s principal financial liabilities are other payables, amount owing to subsidiary companies and borrowings. Borrowings are recorded at proceeds received net of direct issue costs. Finance charges are accounted for on accrual basis. Off Balance Sheet Derivative Financial Instruments enters into various financial derivative transactions to control and manage financial risks arising from its operations. The use of derivative instruments is to manage its exposure to fluctuations in foreign currency exchange rates. These instruments are not recognised in the financial statements on inception.

63 NOTES TO THE FINANCIAL STATEMENTS (cont d) FINANCIAL INSTRUMENTS(cont d) Foreign Currency Forward Contracts In order to manage its exposure to foreign exchange risks, the Group enters into foreign currency forward contracts. At the balance sheet date, the Group had contracted to sell the following amounts under forward contracts: Average Exchange Rate per unit of Ringgit Malaysia RM RM United States Dollar 6,187,834 5,130, All of these contracts mature within six months from the balance sheet date. Fair Values The carrying amounts and the estimated fair values of the Group s and of the Company s financial instruments as of December 31, 2005 are as follows: Carrying Fair Carrying Fair Amount Value Amount Value 2005 Note RM RM RM RM Financial Assets Investment in quoted shares 15 20,480 20,480 20,480 20,480 Investments in unquoted shares ,000 Other receivables - non-current portion ,992 Financial Liabilities Bank borrowings - term loans 24 14,707,821 11,484, , ,704 Off Balance Sheet Item Foreign currency forward contracts 6,145, Financial Assets Investment in quoted shares 15 21,880 31,350 21,880 31,350 Investments in unquoted shares ,000 Other receivables - non-current portion ,800 Financial Liabilities Bank borrowings - term loans 24 12,980,821 9,213, , ,665 Off Balance Sheet Item Foreign currency forward contracts 5,130,937

64 NOTES TO THE FINANCIAL STATEMENTS (cont d) FINANCIAL INSTRUMENTS(cont d) Cash and cash equivalents, trade and other receivables, trade and other payables and short-term bank borrowings The carrying amounts of the short-term financial assets and financial liabilities approximate their fair values due to the short-term maturities of these instruments. Amount owing by/(to) subsidiary companies No disclosure is made as it is impractical to determine their fair values with sufficient reliability given these balances have no fixed terms of repayment. Investment in quoted shares The market values of quoted shares as of balance sheet date approximate their fair values. Investments in unquoted shares No disclosure is made as it is impractical to estimate the fair values of unquoted investments due to lack of quoted market prices and the inability to establish their fair values without incurring excessive cost. Other receivables - non-current portion No disclosure is made as it is impractical to estimate the fair value due to lack of market information for similar type of lending arrangement. Term loans The fair values of term loans are estimated using discounted cash flow analysis based on current borrowing rates for similar types of borrowing arrangements. Foreign currency forward contracts The fair values of foreign currency forward contracts are calculated by reference to the current rates for contracts with similar maturity profiles. 30. CASH FLOW STATEMENTS a. Purchase of property, plant and equipment Property, plant and equipment were acquired by the following means: RM RM Cash purchase 2,840,921 6,207,785 Hire-purchase 53, ,000 2,894,621 7,021,785 The principal amounts of instalment repayments for property, plant and equipment acquired by hire-purchase is reflected as cash outflows from financing activities.

65 NOTES TO THE FINANCIAL STATEMENTS (cont d) CASH FLOW STATEMENTS(cont d) b. Cash and cash equivalents Cash and cash equivalents comprise the following: RM RM RM RM Fixed deposits 11,050,660 11,878,596 Cash and bank balances 215, ,408 14,185 74,774 Bank overdrafts (6,892,969) (6,245,593) 4,373,115 6,372,411 14,185 74,774 Less: Fixed deposits pledged to banks (11,050,660) (11,878,596) (6,677,545) (5,506,185) 14,185 74, CONTINGENT LIABILITIES RM RM Corporate guarantee given to financial institutions for banking facilities granted to subsidiary companies 171,701, ,304, COMPARATIVE FIGURES Certain comparative figures in the financial statements have been reclassified to conform with current year s presentation. As previously As previously reported As restated reported As restated RM RM RM RM Income Statements: Other operating income 1,986,414 1,612,126 Interest on fixed deposits 374,288 Balance Sheets: Trade receivables 57,980 Amount owing by subsidiary companies 1,180,461 1,238,441 Other payables and accrued expenses 7,743,018 7,809, , ,096 Provision 3,766,442 3,700,000 3,706,679 3,700,000

66 NOTES TO THE FINANCIAL STATEMENTS (cont d) COMPARATIVE FIGURES (cont d) Cash Flow Statements: As previously As previously reported As restated reported As restated RM RM RM RM Cash Flows From/(Used In) Operating Activities Adjustments for: Finance costs 4,818,215 6,176, , ,246 Provision for employee benefits 13,575 48,937 4,641 4,641 Preliminary expenses written off 4,914 Dividend income (280) (280) Interest income (379,477) (374,288) Interest received 379,477 Dividend received Interest paid (4,818,215) (107,093) Income tax paid (185,438) (185,399) (39) Employee benefits paid (35,362) Cash Flows From/(Used In) Investing Activities Preliminary expenses incurred (4,914) Interest on fixed deposits received 374,288 Cash Flows From/(Used In) Financing Activities Finance costs paid (6,176,179) (107,246) Notes to the Financial Statements: Segment reporting Profit/(Loss) from operations: Processing of copra and palm kernel and trading of palm kernel oil, coconut oil, palm kernel cake and copra cake 8,369,313 12,236,376 Manufacturer, trader and distributor of all kinds of foodstuff (1,668,872) (808,699) Transportation (239,593) (198,386) Management services and investment holding 251, ,582 Segment liabilities: Processing of copra and palm kernel and trading of palm kernel oil, coconut oil, palm kernel cake and copra cake 116,923,772 11,376,493 Manufacturer, trader and distributor of all kinds of foodstuff 18,083,190 5,177,896 Transportation 830, ,972 Management services and investment holding 4,371, ,101 Operating costs applicable to revenue Staff costs 6,104,557 5,890, , ,621

67 STATEMENT BY DIRECTORS 66 The directors of WELLI MULTI CORPORATION BERHAD state that, in their opinion, the accompanying balance sheets and the related statements of income, changes in equity and cash flows are 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 the state of affairs of the Group and of the Company as of December 31, 2005 and of the results of their businesses and the cash flows of the Group and of the Company for the year ended on that date. Signed in accordance with a resolution of the Directors, MR. ANG SUN BENG MR. ANG SOON AN Ipoh, April 27, 2006 DECLARATION BY THE DIRECTOR PRIMARILY RESPONSIBLE FOR THE FINANCIAL MANAGEMENT OF THE COMPANY I, MR. ANG SOON AN, the director primarily responsible for the financial management of WELLI MULTI CORPORATION BERHAD, do solemnly and sincerely declare that the accompanying balance sheets and the related statements of income, changes in equity and cash flows 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 Declarations Act, MR. ANG SOON AN Subscribed and solemnly declared by the abovenamed MR. ANG SOON AN at IPOH this 27th day of April, Before me, COMMISSIONER FOR OATHS

68 ANALYSIS OF SHAREHOLDINGS as at 28th April SHARE CAPITAL Authorised Share Capital : RM100,000,000 Issued and Fully Paid Capital : RM 43,136,364 Class of Share : Ordinary share of RM0.50 each DISTRIBUTION OF SHAREHOLDERS Size of Holdings No. of Holders % No. of Shares % , , ,001 10,000 1, ,667, , , ,612, ,001 4,313,635 ( * ) ,628, ,313,636 and above ( ** ) ,354, TOTAL 1, ,272, Remark : * Less than 5% of issued shares ** 5% and above of issued shares LIST OF TOP 30 HOLDERS No.Name Shareholdings % 1 CIMSEC Nominees (Tempatan) Sdn Bhd CIMB For Ang Sun Beng (PB-Retail Banking) 5,354, M & A Nominees (Tempatan) Sdn Bhd Insas Credit & Leasing Sdn Bhd for Ong Li Nah 4,126, Ke-Zan Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Lim Bee Ling 4,112, EB Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Ang Soon An (SBK) 3,640, PM Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Yoon Kok Chuan (A) 3,372, OSK Nominees (Tempatan) Sdn Bhd EON Finance Berhad for Ang Sun Tiong 3,020, OSK Nominees (Tempatan) Sdn Bhd EON Finance Berhad for Ang Sun Beng 3,020, OSK Nominees (Tempatan) Sdn Bhd EON Finance Berhad for Ang Soon An 2,840, Mayban Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Tan Kim Boon (14589MK0041) 2,700, Ke-Zan Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Yeoh Chee Oo 2,445,

69 ANALYSIS OF SHAREHOLDING(cont d) as at 28th April LIST OF TOP 30 HOLDERS No Name Shareholdings % 11 EB Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Ang Sun Kin (SBK) 2,400, EB Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Ang Sun Beng (SBK) 2,400, EB Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Ang Siew See (SBK) 2,204, Tan Kim Oh 2,126, Ng Soo Gin 2,000, M & A Nominees (Tempatan) Sdn Bhd Insas Credit & Leasing Sdn Bhd for Chiam Gaik Chye 1,898, Mayban Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Ang Soon An (14589MK0042) 1,700, EB Nominees (Tempatan) Sdn Bhd Pledges Securtties Account for Ang Sun Hing (SBK) 1,600, Mayban Nominees (Tempatan) Sdn BHd Pledged Securities Account for The Gek Neong (14570MZ0385) 1,600, Mayban Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Yeoh Chee Oo (14570MZ0386) 1,600, PM Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Lim Chee Chuan (D) 1,502, Lee Moi Tiang 1,500, PM Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Chew Beng Huat (D) 1,475, EB Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Ang Sun Tiong (SBK) 1,400, Khor Peng Chai 1,360,

70 ANALYSIS OF SHAREHOLDINGS as at 28th April LIST OF TOP 30 HOLDERS No Name Shareholdings % 26 ABB Nominee (Tempatan) Sdn Bhd Pledged Securities Account for Ang Soon An 1,300, Bank Pembangunan Malaysia Berhad 1,156, PM Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Saharuddin Bin Abu Samah (A) 1,100, ABB Nominee (Tempatan) Sdn Bhd Pledged Securities Account for Ang Sun Beng 1,060, ABB Nominee (Tempatan) Sdn Bhd Pledged Securities Account for Ang Sun Tiong 1,040, Total 67,051,

71 PROPERTIES OWNED BY THE GROUP as at 31st December, Last date Approximate Revaluation Land area/ age of Net book or if none; (Build up) building value date of Locations Tenure sq. m. Description (years) RM acquisition H.S.(D) 4493 P.T. No.3186, Lot 2688 Mk.1 Jalan Perusahaan Kawasan Perindustrian Prai, Prai. Leasehold expiring on 6/6/50 8, (6,074,.20) Factory building with an integral three storey administrative office 13 6,427, No.1671 MAP 03, No.6/38, Tan Ky, Tan Quy St. Binh Hung Hoa, Binh Chanh Dist. Ho Chi Minh City, Vietnam. Leasehold expiring on , (1,018.00) Factory building with single storey administrative office 8 736, GM 78, GM79 & GM 80 Lot 216, 221 & 223 No. 107 Mukim 6 Jalan Kerian Kedah, Sungai Jawi Seberang Prai Selatan Pulau Pinang Freehold 26, (3,852.79) A main single-storey oil factory building, a single storey office building, a carton factory building where part of the front corner is partitioned up to accommodate a double storey office, a facial cotton factory with office rooms on mezzanine floor in front ,734, No.5002 M-3,Mukim of Leasehold 20, Factory building 11 15,705, Lumut,District of Manjung expiring on (14,424.50) three storey Lot M-3, Lumut Port administrative Industrial Park,Jalan office Kampong Acheh, Sitiawan GM 941 Mukim of Jeram Freehold 9, Factory building 8 7,583, Lot No.2196 ( ) with double storey Jalan Raja Abdullah, administrative office Jeram,Selangor. H.S.(D) PTD Leasehold 17, Factory building 4 14,895, , Plentong PLO (7,406.42) with double storey Jalan Keluli 9, Pasir administrative Gudang Industrial Estate, office Pasir Gudang,Johor Plot 20, Geran No Freehold 169 Double storey , P.T. No.488, Mukim 2, (301) light industrial Daerah Seberang Perai factory cum office Tengah, Pulau Pinang Plot 21,Geran No Freehold 169 Double storey , P.T. No. 488, Mukim 2, (301) light industrial Daerah Seberang Perai factory cum office Tengah, Pulau Pinang.

72 PROXY FORM WELLI MULTI CORPORATION BERHAD ( W) (Incorporated in Malaysia) I / We, (full name in block capitals) NRIC No. (new and old)/company No. CDS Account No. of (full address) being a member of Welli Multi Corporation Berhad hereby appoint (full name as per NRIC in block capitals) NRIC No. (new and old) of (full address) or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my behalf at the Thirteenth Annual General Meeting of the Company to be held at the Semangkok Room, Level 2 Sunway Hotel, 11 Lebuh Tenggiri Dua, Pusat Bandar Seberang Jaya, Seberang Jaya Prai, Penang on Monday, 19 June 2006 at 9.00 a.m. and at any adjournment thereof. My/Our proxy is to vote as indicated below: Resolution For Against 1. Adoption of Audited Financial Statement and Reports 2. Re-election of Tunku Dato Seri Kamel Bin Tunku Rijaludin 3. Re-election of Ang Sun Tiong 4. To approve the payment of Directors fees 5. Appointment of Deloitte KassimChan as Auditors 6. Authority to directors to issue shares 7. Proposed Renewal of Share Buy-Back Authority Dated this day of 2006 No. of shares held Signature of shareholder Note : A proxy may but need not be a member of the Company but such appointment must comply with the provisions of Section 149(1)(b) of the Companies Act, 1965 which states that a member shall not be entitled to appoint a person who is not a member of the Company as his proxy unless that person is an advocate, an approved auditor or a person approved by the Registrar in a particular case. To be valid, this proxy form duly completed must be deposited at the Registered Office of the Company at No. 85, 1st Floor (Suite B), Beach Street, Penang not less than 48 hours before the time for holding the meeting. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting, provided that the provisions of Section 149(1)(c) of the Companies Act, 1965 are complied with. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless the member specifies the proportions of holdings to be represented by each proxy. If the appointer is a corporation, this proxy form must be executed under its common seal or under the hand of its attorney.

73 please fold along the line please fold along the line postage To The Secretary WELLI MULTI CORPORATION BERHAD ( W) (Incorporated in Malaysia) 85, 1st Floor, (Suite B), Beach Street, Penang, Malaysia. please fold along the line

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