UNITED MALAYAN LAND BHD (Incorporated in Malaysia)

DIRECTORS REPORT AND FINANCIAL STATEMENTS 1144A5/nad

DIRECTORS' REPORT The Directors are pleased to submit to the members their annual report and the audited financial statements of the and Company for the financial year ended 31 December 2004. PRINCIPAL ACTIVITIES The principal activities of the Company are investment holding and the provision of management services. The principal activities of the subsidiary companies of the are as stated in Note 13 to the financial statements. There were no significant changes in the nature of these activities during the financial year. FINANCIAL RESULTS The financial results of the and Company for the financial year ended 31 December 2004 are as follows: Company RM 000 RM 000 Profit from ordinary activities after tax 25,705 10,148 Minority interests (5,140) - Net profit for the financial year 20,565 10,148 DIVIDENDS The dividends paid by the Company since 31 December 2003 were as follows: In respect of the financial year ended 31 December 2003: RM 000 - final dividend of 5.0 sen gross per ordinary share, less income tax of 28%, paid on 21 September 2004 8,354 The Directors now recommend the payment of a final dividend of 7.5 sen gross per ordinary share on 232,034,733 ordinary shares (which is net of 311,900 treasury shares), less income tax of 28%, in respect of the financial year ended 31 December 2004. This final net dividend amounting to RM12,529,876 is subject to the approval of the members at the forthcoming Annual General Meeting of the Company. RESERVES AND PROVISIONS All material transfers to or from reserves and provisions during the financial year are as disclosed in the financial statements. 1

DIRECTORS' REPORT (continued) ISSUANCE OF SHARES During the financial year, 1,000 new ordinary shares of RM1.00 each were issued by the Company at the exercise price of RM1.31 per share for cash by virtue of the exercise of options over ordinary shares pursuant to the Company s Employees Share Option Scheme ("ESOS"). The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company. EMPLOYEES' SHARE OPTION SCHEME ("ESOS") The Company has implemented a new Employees Share Option Scheme ("ESOS") for its eligible employees and Executive Directors of the. The new ESOS was approved by the shareholders at an Extraordinary General Meeting held on 25 June 2003. Details of the new ESOS are as set out in Note 26 to the financial statements. The Company has been granted exemption by Companies Commission of Malaysia pursuant to Section 169(11) of Companies Act, 1965 from having to disclose the list of options holders and details of their holdings other than options holders who hold options over 200,000 ordinary shares and above. The Company has also been granted exemption from having to disclose the list of Directors and details of their holdings of options over ordinary shares. The movements during the financial year in the number of options over ordinary shares of the Company granted to the options holders (excluding Directors) who hold options over 200,000 ordinary shares and above are as follows: Options over ordinary shares of RM1.00 each Exercise As at As at Name of employee price/share 1.1.2004 Granted Exercised Lapsed 31.12.2004 RM 000 000 000 000 000 Chia Lui Meng 1.31 206 - - - 206 Chong Sumi Leong @ 1.31 206 - - (206) - Cheong Sumi Leong Henry Leong Hock Seng 1.31 287 - - - 287 Lau Boon Ann 1.31 216 - - - 216 Lee Ah Choy 1.31 216 - - (216) - Lee Kar Fook 1.31 208 - - - 208 Ng Tay Guan 1.31 216 - - - 216 TREASURY SHARES During the financial year, the Company repurchased its own shares amounting to 21,900 ordinary shares at an average price of approximately RM1.10 per share from the open market on Bursa Malaysia. Details of the treasury shares are as set out in Note 26 to the financial statements. 2

DIRECTORS' REPORT (continued) DIRECTORS The Directors who have held office during the period since the date of the last report are as follows: Alternate Director Tham Kui Seng - Dato Ng Eng Tee - Datuk Mohd Khamil bin Jamil Ahmad Shaifuldin bin Mohamad Sharudi (Appointed on 25 February 2005) Datuk Syed Ahmad Khalid bin Syed Mohammed - Datuk Nur Jazlan bin Tan Sri Mohamed - Dr Choo Kian Koon Jennifer Loh, née Seah Bee Eng (Resigned on 21 July 2004) Rita Lau Chen Chen (Appointed on 21 July 2004) Ng Eng Soon - Dato Mohd Hanafiah bin Omar - (Appointed on 10 January 2005) Mohamed Ali Rashed Alabbar - (Resigned on 4 April 2005) Dato Syed Hamid bin Syed Hussain Alhabshee - (Resigned on 1 November 2004) Pee Tong Lim - (Resigned on 21 March 2005) In accordance with Article 94 of the Company's Articles of Association, Dato Ng Eng Tee, Datuk Mohd Khamil bin Jamil and Datuk Nur Jazlan bin Tan Sri Mohamed retire by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election. In accordance with Article 99 of the Company s Articles of Association, Dato Mohd Hanafiah bin Omar, who was appointed during the period, retires at the forthcoming Annual General Meeting and, being eligible, offers himself for election. DIRECTORS' BENEFITS During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, other than the options over ordinary shares granted by the Company (see Note 7 to the financial statements). Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than the Directors remuneration as disclosed in Note 7 to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except as disclosed in Note 29 to the financial statements. 3

DIRECTORS' REPORT (continued) DIRECTORS' INTERESTS IN SHARES AND DEBENTURES According to the Register of Directors' Shareholdings, particulars of interests of Directors who held office at the end of the financial year in the shares and options over ordinary shares in the Company are as follows: Number of ordinary shares of RM1.00 each Shareholdings in the name of the Director As at As at 1.1.2004 Acquired Disposed 31.12.2004 000 000 000 000 Dato Ng Eng Tee 7,888 - - 7,888 Pee Tong Lim 48 - - 48 Ng Eng Soon 7,151 - - 7,151 Shareholdings in which the Director is deemed to have an interest Dato Ng Eng Tee 21,829 - - 21,829 Ng Eng Soon 17,829 - - 17,829 Number of options over ordinary shares of RM1.00 each As at As at 1.1.2004 Granted Exercised Lapsed 31.12.2004 000 000 000 000 000 Dato Ng Eng Tee 500 - - - 500 Dato Ng Eng Tee, Ng Eng Soon and Pee Tong Lim by virtue of their direct and indirect interests in the Company, are deemed to have an interest in the shares of the subsidiary companies to the extent the Company has an interest. Other than as disclosed above, according to the Register of Directors Shareholdings, the Directors in office at the end of the financial year did not hold any interest in shares, options over ordinary shares or debentures in the Company and its related corporations during the financial year. 4

DIRECTORS' REPORT (continued) STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS Before the income statements and balance sheets were made out, the Directors took reasonable steps: (a) (b) 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 satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as shown in the accounting records of the and Company had been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances: (a) (b) (c) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the and Company inadequate to any substantial extent; or which would render the values attributed to current assets in the financial statements of the and Company misleading; or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the and Company misleading or inappropriate. 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 affect the ability of the or Company to meet their obligations when they fall due. 5

DIRECTORS' REPORT (continued) STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (continued) At the date of this report, there does not exist: (a) (b) any charge on the assets of the or Company which has arisen since the end of the financial year which secures the liability of any other person; or any contingent liability of the or Company which has arisen since the end of the financial year. At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading. In the opinion of the Directors: (a) (b) the results of the operations of the and Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the and Company for the financial year in which this report is made. CORPORATE INFORMATION The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Main Board of Bursa Malaysia. The address of the registered office and the principal place of business of the Company is as follows: Suite 1.1, 1st Floor Kompleks Antarabangsa Jalan Sultan Ismail 50250 Kuala Lumpur Malaysia Telephone : (603) 2142 1611 Fax : (603) 2142 1826 Website : http: //www.umland.com.my 6

DIRECTORS' REPORT (continued) AUDITORS The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. Signed on behalf of the Board of Directors in accordance with their resolution dated 22 April 2005. DATO NG ENG TEE DIRECTOR DATUK SYED AHMAD KHALID BIN SYED MOHAMMED DIRECTOR 7

INCOME STATEMENTS Company Note 2004 2003 2004 2003 RM 000 RM 000 RM 000 RM 000 Revenue 4 164,845 108,788 21,213 21,280 Interest income 1,446 2,993 - - Other operating income 1,258 2,262 205 - Development costs recognised as expenses (101,688) (69,392) - - Construction costs recognised as expenses 40 - - - Staff costs 5 (12,547) (15,237) (4,771) (5,641) Depreciation of property, plant and equipment (1,539) (1,773) (158) (246) Property, plant and equipment written off (29) - - - Advertising and promotion expenses (2,739) (2,778) (91) (17) Upkeep, repairs and maintenance of assets (1,303) (1,058) (195) (140) Rental of premises (663) (1,040) (532) (589) Allowance for doubtful debts (3,391) (792) - - Write-back of allowance for doubtful debts 5,084 9,894 - - Professional consultancy fees (2,776) (1,690) (261) (231) Management fees (266) (247) (266) (247) Other operating expenses (7,589) (4,781) (796) (877) Profit from operations c/f 6 38,143 25,149 14,348 13,292 8

INCOME STATEMENTS (continued) Company Note 2004 2003 2004 2003 RM 000 RM 000 RM 000 RM 000 Profit from operations b/f 38,143 25,149 14,348 13,292 Finance cost 8 (1,240) (1,100) (11) - Share of results of an associated company (1,885) (394) - - Profit from ordinary activities before tax 35,018 23,655 14,337 13,292 Tax - Company and subsidiary companies 9 (9,313) (6,341) (4,189) (3,896) Profit from ordinary activities after tax 25,705 17,314 10,148 9,396 Minority interests (5,140) (3,113) - - Net profit for the financial year 20,565 14,201 10,148 9,396 Earnings per share (sen) - basic 10 8.9 6.1 Not Not - diluted 10 applicable applicable Dividend per share (sen) 11 7.5 5.0 7.5 5.0 9

BALANCE SHEETS As at 31 December 2004 Company Note 2004 2003 2004 2003 RM 000 RM 000 RM 000 RM 000 NON-CURRENT ASSETS Property, plant and equipment 12 344,163 391,222 312 534 Investments in subsidiary companies 13 - - 597,041 584,541 Investment in an associated company 14 2,740 4,625 - - Other investments 15 9 9 - - Land held for property development 16 206,985 111,860 - - Long term trade receivables 17 3,774 4,246 - - Deferred tax assets 18 14,658 15,466-491 572,329 527,428 597,353 585,566 CURRENT ASSETS Completed properties 19 83,419 92,131 - - Property development costs 20 391,284 263,549 - - Tax recoverable 6,258 3,161 291 396 Trade and other receivables 21 72,161 74,056 155,791 166,288 Deposits, bank and cash balances 22 18,089 18,155 881 401 571,211 451,052 156,963 167,085 LESS: CURRENT LIABILITIES Trade and other payables 23 61,068 55,090 1,478 1,470 Provision 24 20,777 21,459 - - Borrowings (secured) - bank overdraft 25 8,060 108 - - - revolving credit 25 100,675 89,400 - - - term loan 25 30,400 - - - Current tax liabilities 8,089 6,038 3,322 3,456 229,069 172,095 4,800 4,926 NET CURRENT ASSETS 342,142 278,957 152,163 162,159 LESS : NON-CURRENT LIABILITIES Deferred tax liabilities 18 36,506 39,065 22 - Borrowings 25 89,600 - - - 788,365 767,320 749,494 747,725 CAPITAL AND RESERVES Share capital 26 232,347 232,346 232,347 232,346 Reserves 27 501,623 487,219 517,147 515,379 Shareholders' equity 733,970 719,565 749,494 747,725 Minority interests 54,395 47,755 - - 788,365 767,320 749,494 747,725 Net tangible assets per share 10 RM3.16 RM3.10 10

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Share Share Revaluation Capital Treasury Retained Revaluation Note capital premium reserves reserves shares earnings reserves* Total RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 As at 1 January 2004 232,346 60,429 243,527 (41,300) (349) 171,123 53,789 719,565 Share issue expenses - (1) - - - - - (1) Treasury shares acquired (21,900 ordinary shares) 26 - - - - (25) - - (25) Issuance of ordinary shares on exercise of ESOS 1 - - - - - - 1 Realisation of revaluation reserves - - (777) - - - 777 - Reversal of deferred tax liabilities - - 2,219 - - - - 2,219 Net profit for the financial year - - - - - 20,565-20,565 Dividends paid for the financial year ended 31.12.2003 11 - - - - - (8,354) - (8,354) As at 31 December 2004 232,347 60,428 244,969 (41,300) (374) 183,334 54,566 733,970 * This represents the accumulated revaluation reserves which have already been realised. 11

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued) Share Share Revaluation Capital Treasury Retained Revaluation Note capital premium reserves reserves shares earnings reserves* Total RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 As at 1 January 2003 231,634 60,304 244,150 (41,300) (121) 165,250 53,166 713,083 Share issue expenses - (95) - - - - - (95) Treasury shares acquired (245,000 ordinary shares) 26 - - - - (228) - - (228) Issuance of ordinary shares on exercise of ESOS 712 220 - - - - - 932 Realisation of revaluation reserves - - (623) - - - 623 - Net profit for the financial year - - - - - 14,201-14,201 Dividends paid for the financial year ended 31.12.2002 11 - - - - - (8,328) - (8,328) As at 31 December 2003 232,346 60,429 243,527 (41,300) (349) 171,123 53,789 719,565 * This represents the accumulated revaluation reserves which have already been realised. 12

COMPANY STATEMENT OF CHANGES IN EQUITY Non-distributable Distributable Share Share Revaluation Treasury Retained Revaluation Note capital premium reserves shares earnings reserves* Total RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 As at 1 January 2004 232,346 60,429 385,808 (349) 54,235 15,256 747,725 Share issue expenses - (1) - - - - (1) Treasury shares acquired (21,900 ordinary shares) 26 - - - (25) - - (25) Issuance of ordinary shares on exercise of ESOS 1 - - - - - 1 Net profit for the financial year - - - - 10,148-10,148 Dividends paid for the financial year ended 31.12.2003 11 - - - - (8,354) - (8,354) As at 31 December 2004 232,347 60,428 385,808 (374) 56,029 15,256 749,494 * This represents the accumulated revaluation reserves which have already been realised. 13

COMPANY STATEMENT OF CHANGES IN EQUITY (continued) Non-distributable Distributable Share Share Revaluation Treasury Retained Revaluation Note capital premium reserves shares earnings reserves* Total RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 As at 1 January 2003 231,634 60,304 385,808 (121) 53,167 15,256 746,048 Share issue expenses - (95) - - - - (95) Treasury shares acquired (245,000 ordinary shares) 26 - - - (228) - - (228) Issuance of ordinary shares on exercise of ESOS 712 220 - - - - 932 Net profit for the financial year - - - - 9,396-9,396 Dividends paid for the financial year ended 31.12.2002 11 - - - - (8,328) - (8,328) As at 31 December 2003 232,346 60,429 385,808 (349) 54,235 15,256 747,725 * This represents the accumulated revaluation reserves which have already been realised. 14

CASH FLOW STATEMENTS CASH FLOW FROM OPERATING ACTIVITIES Company 2004 2003 2004 2003 RM 000 RM 000 RM 000 RM 000 Net profit for the financial year 20,565 14,201 10,148 9,396 Adjustments for: Allowance for doubtful debts 3,391 792 - - Write-back of allowance for doubtful debts (5,084) (9,894) - - Depreciation of property, plant and equipment 1,539 1,773 158 246 Property, plant and equipment written off 29 - - - Gain on disposal of property, plant and equipment (467) (2) (205) - Gross dividend income from a subsidiary company - - (11,620) (11,585) Interest expense 1,240 1,100 11 - Interest income (1,467) (3,000) (5,333) (5,435) Loss on disposal of property, plant and equipment 52 329-328 Minority interests 5,140 3,113 - - Share of results of an associated company 1,885 394 - - Tax 9,313 6,341 4,189 3,896 36,136 15,147 (2,652) (3,154) (Increase)/decrease in land held for property development, completed properties and property development costs (147,639) 12,721 - - Decrease/(increase) in receivables 4,335 34,917 12,146 (4,281) (Decrease)/increase in payables (12,756) 2,920 8 213 Net cash flow from operations c/f (119,924) 65,705 9,502 (7,222) 15

CASH FLOW STATEMENTS (continued) Company 2004 2003 2004 2003 RM 000 RM 000 RM 000 RM 000 Net cash flow from operations b/f (119,924) 65,705 9,502 (7,222) Interest paid (4,471) (5,471) (11) - Interest received 1,192 1,897 3,684 7,127 Tax paid (9,891) (8,092) (451) (1,129) Net cash flow from operating activities (133,094) 54,039 12,724 (1,224) CASH FLOW FROM INVESTING ACTIVITIES Investment in subsidiary companies - - (12,500) - Net dividend income from a subsidiary company - - 8,366 8,341 Proceeds from disposal of property, plant and equipment 906 1 300 - Purchase of property, plant and equipment (226) (729) (31) (460) Treasury shares acquired (25) (228) (25) (228) Net cash flow from investing activities 655 (956) (3,890) 7,653 CASH FLOW FROM FINANCING ACTIVITIES Dividends paid (8,354) (8,328) (8,354) (8,328) Net drawdown/(repayment) of borrowings 131,275 (42,750) - - Proceeds from issuance of shares in a subsidiary company to a minority interest 1,500 - - - Proceeds from issuance of ordinary shares on exercise of ESOS 1 932 1 932 Share issue expenses (1) (95) (1) (95) Net cash flow from financing activities 124,421 (50,241) (8,354) (7,491) 16

CASH FLOW STATEMENTS (continued) Company 2004 2003 2004 2003 RM 000 RM 000 RM 000 RM 000 NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (8,018) 2,842 480 (1,062) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 18,047 15,205 401 1,463 CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 10,029 18,047 881 401 Cash and cash equivalents comprise: Bank and cash balances (Note 22) 3,894 2,703 881 401 Bank balances under Housing Development Accounts ( HDA ) (Note 22) 14,195 15,452 - - Bank overdraft (Note 25) (8,060) (108) - - 10,029 18,047 881 401 17

NOTES TO THE FINANCIAL STATEMENTS 1 PRINCIPAL ACTIVITIES The principal activities of the Company are investment holding and the provision of management services. The principal activities of the subsidiary companies of the are as stated in Note 13 to the financial statements. There were no significant changes in the nature of these activities during the financial year. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements. (a) Basis of preparation The financial statements of the and Company have been prepared under the historical cost convention (as modified to include the revaluation of certain property, plant and equipment and investment in subsidiary companies), unless otherwise indicated in this summary of significant accounting policies. The financial statements comply with Malaysian Accounting Standards Board ( MASB ) approved accounting standards in Malaysia and the provisions of Companies Act, 1965. The new MASB approved accounting standard adopted in these financial statements is as follows: MASB Standard 32 Property Development Activities The impact on the financial statements as a result of the adoption of the above standard is disclosed in Note 28 to the financial statements. The preparation of the financial statements in conformity with MASB approved accounting standards in Malaysia and the provisions of Companies Act, 1965 requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported financial year. Although these estimates are based on the Directors best knowledge of current events and actions, actual results may differ from these estimates. 18

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (b) Basis of consolidation The consolidated financial statements include the financial statements of the Company and all its subsidiary companies made up to the end of the financial year. Subsidiary companies are those companies in which the has power to exercise control over the financial and operating policies so as to obtain benefits from their activities. Subsidiary companies are consolidated using the acquisition method of accounting except for a subsidiary company (as disclosed in Note 13 to the financial statements) which was accounted for using the merger method of accounting. The subsidiary was consolidated prior to 1 January 2002 in accordance with Malaysian Accounting Standard No. 2 "Accounting for Acquisitions and Mergers", the generally accepted accounting principle prevailing at that time. The has used the exemption provided by MASB Standard 21 Business Combinations to apply this Standard prospectively. Accordingly, business combinations entered into prior to 1 January 2002 have not been restated to comply with this Standard. Under the acquisition method of accounting, subsidiary companies are consolidated from the date control is transferred to the and are no longer consolidated from the date that control ceases. The results of subsidiary companies acquired or disposed of during the financial year are included from the date of acquisition up to the date of disposal. At the date of acquisition, the fair values of the subsidiary companies net assets are determined and these values are reflected in the consolidated financial statements. The difference between the cost of acquisition over the fair values of the s share of the subsidiary companies identifiable net assets at the date of acquisition is reflected as goodwill or negative goodwill. See accounting policy Note 2(d) on goodwill on consolidation. The cost of acquisition is the amount of cash paid and the fair value at the date of acquisition of other purchase consideration together with directly attributable expenses of the acquisition. Under the merger method of accounting, the results of the subsidiary companies are presented as if the merger had been effected throughout the current and previous financial years. The cost of investment in a merger is recorded at the aggregate of the nominal value of equity shares issued, cash and cash equivalents and fair values of other considerations. Expenditure incurred in connection with the merger is recognised as an expense in the income statement. On consolidation, the cost of the merger is cancelled with the nominal values of the shares received. The excess of the carrying value of the investment over the nominal value of the shares acquired is treated as a reduction of reserves, whereas an excess of the nominal value of the shares acquired over the carrying value of the investment is treated as reserve arising on merger and included as part of shareholders equity. All inter-company transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless costs cannot be recovered in which case such costs are charged to the income statement immediately. Where necessary, accounting policies for subsidiary companies have been changed to ensure consistency with the policies adopted by the. Minority interests are measured at the minority shareholders share of the post acquisition fair values of the identifiable assets and liabilities of the acquiree. Separate disclosure is made of minority interests. 19

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (c) Accounting for associated companies Associated companies are companies in which the exercises significant influence and which are neither subsidiary companies nor joint ventures of the. Significant influence is the power to participate in the financial and operating policy decisions of the associated companies but not control over those policies. Investments in associated companies are accounted for in the consolidated financial statements using the equity method of accounting. Equity accounting involves recognising in the income statement the s share of the results of associated companies for the financial year. The s investments in associated companies are carried in the balance sheet at an amount that reflects its share of the net assets of the associated companies. Equity accounting is discontinued when the carrying amount of the investment in an associated company reaches zero, unless the has incurred obligations or guaranteed obligations in respect of the associated company. Unrealised gains on transactions between the and its associated companies are eliminated to the extent of the s interest in the associated companies; unrealised losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred in which case such impairment is charged to the income statement immediately. Where necessary, in applying the equity method of accounting, adjustments are made to the financial statements of associated companies to ensure consistency of accounting policies with those of the. (d) Goodwill on consolidation Goodwill arising on consolidation represents the excess of the cost of acquisition over the fair values of the 's share of the subsidiary and associated companies' identifiable net assets at the date of acquisition. Goodwill arising on consolidation is firstly written off against capital reserve arising on consolidation to the extent of the amount maintained in the balance sheet. In all other cases, goodwill arising on consolidation is charged to the income statement immediately. Negative goodwill represents the excess of the fair values of the 's share of the subsidiary and associated companies' identifiable net assets over the cost of acquisition at the date of acquisition. Negative goodwill is credited to capital reserve arising on consolidation. 20

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (e) Revenue recognition Revenue from sale of development properties is recognised net of discounts, based on the percentage of completion method. The stage of completion is measured by reference to the physical proportion of work completed as a percentage of total physical work of the project as certified by duly appointed consultants. Revenue from sale of completed properties is recognised net of discounts, in accordance with the terms of the sale and purchase agreements. The sales consideration of completed properties under instalment schemes are recorded at their fair value, which is determined by discounting all future receipts using an imputed rate of interest. The difference between the fair value and the nominal value of the sales consideration is recognised as interest income and taken to the income statement on a time proportion basis that takes into account the effective yield on the receivables arising from the sale of completed properties under the instalment schemes over the term of the instalment period. Revenue from construction contracts is recognised based on the percentage of completion method. The stage of completion is measured by reference to the proportion that the contract costs incurred for work performed to date bears to the estimated total costs for the contract as certified by duly appointed consultants. Gross dividends from investments are taken up in the financial statements when the Company's right to receive payment is established. The following income is recognised on a receivable basis: - quarry lease rental, land lease rental and rental from properties. - management fees and project management fees. - interest income. Interest on overdue amounts receivable from house buyers is recognised in the income statement as it accrues. An allowance for doubtful debts is made when the collectibility of this interest is in doubt. (f) Construction contracts When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised over the period of the contract as revenue and expenses respectively. The uses the percentage of completion method to determine the appropriate amount of revenue and costs to recognise in a given period; the stage of completion is measured by reference to the proportion that the contract costs incurred for work performed to date bears to the estimated total costs for the contract. 21

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (f) Construction contracts (continued) When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that is probable will be recoverable; contract costs are recognised as expenses in the financial year in which they are incurred. Irrespective of whether the outcome of a construction contract can or cannot be estimated reliably, when it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. The aggregate of the costs incurred and the profit/loss recognised on each contract is compared against the progress billings up to the end of the financial year. Where costs incurred and recognised profits (less recognised losses) exceed progress billings, the balance is shown as an amount due from customer on construction contracts under trade and other receivables. Where progress billings exceed costs incurred plus recognised profits (less recognised losses), the balance is shown as an amount due to customer on construction contracts under trade and other payables. (g) Property, plant and equipment Freehold land is stated at cost or valuation. Freehold land is not depreciated as it has an infinite life. The freehold land was revalued by the Directors based on professional valuations carried out by independent professional valuers. The Directors have applied the transitional provision issued by Malaysian Accounting Standards Board on adoption of MASB Standard 15 "Property, Plant and Equipment", which allows these assets to be stated at their 1990 and 1996 valuations. Accordingly, the valuations have not been updated. Surpluses arising on revaluation are credited to non-distributable revaluation reserves. Deficits arising on revaluation are charged against non-distributable revaluation reserves to the extent of previous surpluses credited to non-distributable revaluation reserves of the same asset. In all other cases, a decrease in carrying amount is charged to the income statement. All other property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. All other property, plant and equipment are depreciated on a straight line basis over their estimated useful lives, summarised as follows: Buildings 5% Furniture, fittings and equipment 20% - 33.33% Motor vehicles 20% Plant and machinery 20% Stable and equestrian equipment 20% 22

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (g) Property, plant and equipment (continued) Depreciation on assets under construction commences when the assets are ready for their intended use. Where an indication of impairment exists at the balance sheet date, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A writedown is made if the carrying amount exceeds the recoverable amount. See accounting policy Note 2(j) on impairment of assets. On disposal of an asset, the difference between the net disposal proceeds and its carrying amount is charged or credited to the income statement. In the case of revalued land, the amount in non-distributable revaluation reserve relating to these revalued land which had been disposed is transferred to distributable reserves. Interest costs on borrowings to finance the construction of property, plant and equipment are capitalised as part of the cost of the asset during the period of time that is required to complete and prepare the asset for its intended use. (h) Subsidiary companies Investments in subsidiary companies are stated at valuation based on the net tangible assets value of the subsidiary companies, less accumulated impairment losses. Acquisitions subsequent to valuation date are stated at cost until the next revaluation. A valuation is conducted at least once in every five years. An increase in carrying amount arising from revaluation of investments in subsidiary companies is credited directly to shareholders equity as non-distributable revaluation reserves. To the extent that a decrease in carrying amount offsets a previous increase, for the same investment, that has been credited to non-distributable revaluation reserves and not subsequently reversed or utilised, it is charged against that non-distributable revaluation reserves. In all other cases, a decrease in carrying amount is charged to the income statement. An increase on revaluation which is directly related to a previous decrease in carrying amount for the same investment that was charged to the income statement is credited to the income statement to the extent that it offsets the previously recorded decrease. On disposal of a subsidiary company, the difference between the net disposal proceeds and the s share of the subsidiary company s net assets is charged or credited to the income statement. The amount in non-distributable revaluation reserves relating to these subsidiary companies will be transferred to distributable reserves. Goodwill on acquisition which has been credited or charged to capital reserve arising on consolidation and retained earnings will be deducted when determining the gain or loss on disposal of a subsidiary company. Where an indication of impairment exists, the carrying amount of the investments in subsidiary companies is assessed and written down immediately to its recoverable amount. See accounting policy Note 2(j) on impairment of assets. 23

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (i) Investments Investments in associated companies are shown at cost less accumulated impairment losses. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. Investments in other non-current investments are shown at cost and an allowance for diminution in value is made where, in the opinion of the Directors, there is a decline other than temporary in the value of such investments. Where there has been a decline other than temporary in the value of an investment, such a decline is recognised as an expense in the period in which the decline is identified. On disposal of an investment, the difference between the net disposal proceeds and its carrying amount is charged or credited to the income statement. (j) Impairment of assets Property, plant and equipment and other non-current assets, including intangible assets, are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. Recoverable amount is the higher of an asset s net selling price and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows. The impairment loss is charged to the income statement unless it reverses a previous revaluation in which case it is charged to the revaluation reserves. Any subsequent increase in recoverable amount is recognised in the income statement unless it reverses an impairment loss on a revalued asset in which case it is credited to revaluation reserves. (k) Trade receivables Trade receivables are carried at invoiced amount less an allowance for doubtful debts. The allowance is established when there is objective evidence that the will not be able to collect all amounts due according to the original terms of the receivables. Trade receivables arising from the sale of completed properties under instalment schemes are recorded at their fair value, which is determined by discounting all future receipts using an imputed rate of interest. 24

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (l) Income taxes Current tax expense is determined according to the tax law of the jurisdiction in which the operates. It includes all taxes chargeable upon the taxable profits, and real property gains tax payable on disposal of properties. Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences or unused tax losses can be utilised. Deferred tax is recognised on temporary differences arising on investments in subsidiary companies and associated companies except where the timing of reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Tax rates enacted or substantively enacted by the balance sheet date are used to determine the deferred tax. (m) Land held for property development Land held for property development consists of land upon which no significant development work has been undertaken or where development activities are not expected to be completed within the normal operating cycle. Such land is classified as non-current asset and is stated at cost less accumulated impairment losses. Cost of land includes the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other relevant levies. Where the had previously recorded the land at revalued amount, it continues to retain this amount as its surrogate cost as allowed by MASB Standard 32. Where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its recoverable amount. See accounting policy Note 2(j) on impairment of assets. Land held for property development is transferred to Property development costs (under current assets) upon commencement of development activities and where the development activities can be completed within the s normal operating cycle. (n) Completed properties Properties which have been completed but not sold are classified as Completed properties and are stated at the lower of cost and net realisable value. Net realisable value is the estimate of the selling price in the ordinary course of business, less the cost of completion and selling expenses. 25

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (o) Property development costs Property development costs comprise cost of land and all costs directly attributable to development activities or that can be allocated on a reasonable basis to those activities. It includes borrowing costs related to the financing of development activities of the land, related development costs common to the development project and direct construction costs. Borrowing costs are included in the property development costs until the completion of the development projects. When the outcome of the development activities can be estimated reliably, property development revenue and expenses are recognised by using the stage of completion method as mentioned in Note 2(e) on revenue recognition. When the outcome of the development activities cannot be estimated reliably, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable; property development costs on the development units sold are recognised when incurred. Irrespective of whether the outcome of property development activities can or cannot be estimated reliably, when it is probable that total property development costs will exceed total property development revenue, the expected loss is recognised as an expense immediately. Property development costs not recognised as an expense is recognised as an asset and is stated at the lower of cost and net realisable value. Where revenue recognised in the income statement exceeds billings to purchasers, the balance is presented as accrued billings under Trade and other receivables (within current assets). Where billings to purchasers exceed revenue recognised in the income statement, the balance is presented as progress billings under Trade and other payables (within current liabilities). (p) Provisions Provision are recognised when the has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources will be required to settle the obligation, and when a reliable estimate of the amount can be made. 26

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (q) Share capital (i) Classification Ordinary shares are classified as equity. Distributions to holders of a financial instrument classified as an equity instrument are charged directly to equity. (ii) Share issue costs Incremental external costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. (iii) Dividends to shareholders of the Company Interim dividends on ordinary shares are recognised as liabilities when proposed. Final dividend proposed after the balance sheet date is not recognised as a liability at the balance sheet date until its approval by the shareholders at the Annual General Meeting. (r) Treasury shares Where the Company or its subsidiary companies purchase the Company s equity share capital, the consideration paid, including any attributable transaction costs is deducted from total shareholders equity as treasury shares until they are cancelled. Where such shares are subsequently sold or reissued, any consideration received is included in shareholders equity. (s) Employee benefits (i) Short term employee benefits Wages, salaries, paid annual leave, sick leave, bonuses, and non-monetary benefits are accrued in the period in which the associated services are rendered by the employees (including Executive Directors) of the. (ii) Post-employment benefits The has a post-employment benefit scheme whereby contributions are made to Employees Provident Fund ("EPF"), the national defined contribution plan. The s contributions to EPF are charged to the income statement in the financial period to which they relate. Once the contributions have been paid, the has no further payment obligations. (iii) Equity compensation benefits Details of the s Employees' Share Option Scheme ( ESOS ) are set out in Note 26 to the financial statements. The does not make a charge to the income statement in connection with options over ordinary shares granted. When the options over ordinary shares are exercised, the proceeds received, net of any transaction costs, are credited to share capital and share premium. 27

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (t) Contingent liabilities and contingent assets The does not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be recognised because it cannot be measured reliably. A contingent asset is a possible asset that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the. The does not recognise a contingent asset but discloses its existence where inflows of economic benefits are probable, but not virtually certain. (u) Cash and cash equivalents For the purposes of the cash flow statements, cash and cash equivalents comprise cash in hand, bank balances, deposits held at call with banks, bank overdrafts and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are included within Borrowings in current liabilities in the balance sheet. (v) Reporting currency The financial statements are presented in Ringgit Malaysia. (w) Financial instruments Description A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise, a contractual right to exchange financial instruments with another enterprise under conditions that are potentially favourable, or an equity instrument of another enterprise. A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable. 28

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (w) Financial instruments (continued) Financial instruments recognised in the balance sheet Financial instruments recognised in the balance sheet include deposits, cash and bank balances, investments, receivables, payables and borrowings. The recognition method adopted for financial instruments recognised in the balance sheet is disclosed in the individual accounting policy statements associated with each item. The financial assets and liabilities of the and Company are denominated in Ringgit Malaysia. Fair value estimation for disclosure purposes In assessing the fair value of financial instruments, the uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. In particular, the fair value of financial assets and financial liabilities is estimated by discounting the future contractual cash flows at the current market interest rate available to the for similar financial instruments. Fair value of other investments is determined based on the market value at the balance sheet date. The face values of financial assets (less any estimated credit adjustments) and financial liabilities with a maturity period of less than one year are assumed to approximate their fair values. 3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The is exposed to various financial risks including foreign currency exchange risk, interest rate risk, credit risk, liquidity risk and cash flow risk in the normal course of business. The s overall financial risk management objective is to ensure that the creates value for its shareholders. The focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the. Financial risk management is carried out through risks review and internal control systems. The Board of Directors regularly reviews these risks to ensure that the s financial risk management policies are adhered to. Foreign currency exchange risk The is not exposed to currency risk as foreign currency transactions entered into within the are minimal. Interest rate risk The s income and operating cash flows are substantially independent of changes in market rates. Interest rate exposure arises from the s borrowings. Currently all borrowings are through floating rate bank loans which are continually monitored to ensure that the will benefit most from the operating environment. 29