Mengikut peraturan Bilangan 34 Peraturan-Peraturan Tanah Tahun 1966, adalah

Hingga selesai

CATATAN:

Luar Musin 2006 – Padi yang ditanam bermula dari 1 Mac 2006 hingga 31 Julai 2006.

Pejabat Tanah Muar.

30 Mei 2006

[AOM. 26/79 (DUP)]

ABD. RAZAK BIN MD. SALLEH

Pentadbir Tanah

Muar

1640

[22hb Jun 2006

No. 1488.

JOHOR LAND BERHAD

(Company No. 12379–K)

(Incorporated in Malaysia)

AUDITORS REPORT PURSUANT TO SECTION 9 OF THE HOUSING DEVELOPERS’

(CONTROL AND LICENSING) ACT, 1966

We have audited the accompanying balance sheets as of 31 December 2005

and the related statements of income, cash flows and changes in equity for the year then ended. These financial statements are the responsibility of the

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 ma-terial 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 esti-mates made by the directors, as well as evaluating the overall financial state-ments presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion:

The Company is principally involved in housing development, investment holdings, contracting activities and operations of oil palm estates.

The principal activities of the subsidiary companies are described in Note 14.

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

The total number of employees of the Group and of the Company were 151 and 142 (152 and 142 in 2004) respectively.

The registered office of the Company is located at 13th Floor, Menara

Johor Corporation, Kotaraya, 80000 Johor Bahru, Johor.

The principal place of business of the Company is located at 10th Floor,

Kompleks Tun Abdul Razak, Jalan Wong Ah Fook, 80000 Johor Bahru,

Johor.

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 6 March 2006.

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 (“MASB”)

approved accounting standards in Malaysia.

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 include the financial statements of the Company and its subsidiary companies listed under Note 14, made up to 31 December 2005.

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i. Subsidiaries

Subsidiaries are those enterprises in which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.

Subsidiaries are consolidated using the acquisition method of accounting except for Advance Development Sdn. Bhd. which is consolidated under the merger method of accounting in accordance with Malaysian Accounting

Standard No. 2, Accounting for Acquisition and Mergers. In accordance with the transitional provision of FRS122 2004 (previously known as

MASB Standard 21) Business Combinations, the Company applied FRS122 2004 prospectively.

Under the acquisition method of accounting, the results of subsidiaries acquired or disposed of are included from the date of their acquisition up to the date of disposal. At the date of acquisition, the fair value of the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements. The excess between the acquisition and the fair values of the Group’s share of the subsidiaries’ identifiable net assets at the date of acquisition is reflected as goodwill on consolidation.

Minority interest is measured at the minorities’ share of the post acquisition fair values of the identifiable assets and liabilities of the subsidiary companies. Separate disclosure is made of minority interest.

Intragroup transactions, balances and unrealised gains on transactions are eliminated, unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

The gains or losses on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s share of its net assets together with any unamortised balance of goodwill on acquisition.

ii. Associates

Associates are those companies in which the Group exercises significant influence but which it does not control. Significant influence is the power to participate in the financial and operating policy decisions of the associates but not the power to exercise control over those policies.

Investment in associates are accounted for in the consolidated financial statements by the equity method of accounting. Equity accounting involves recognising the Group’s share of the post acquisition results of associates in the income statements. The cumulative post acquisition movements are adjusted against the cost of investment and include goodwill on acquisition (net of accumulated amortisation). Equity accounting is discontinued when the carrying amount of the investment in an associate reaches zero, unless the Group has incurred obligations or made payment on behalf of the associate.

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Premium on acquisition of an associated company represent the excess of the purcharse price over the fair value of the net assets of associated company at date of acquisition and is amortised evenly over a period of twenty (20) years based on industry averange commencing in financial year 31 December 2000.

Unrealised gains on transaction between the Group and its associates are eliminated to the extent of the Group’s interest in the associates, unrealised losses are also eliminated unless the transaction provides evidence on impairment of the asset transferred. Where necessary, in applying the equity method, adjustments are made to the financial statements of associates to ensure consistency of accounting policies with those of the Group.

iii. Goodwill or Reserve on Consolidation

Goodwill represents the excess of the acquisition cost of subsidiaries and associates over the fair values of the Group’s share of their identifiable net assets at the date of acquisition.

Goodwill on consolidation is either written off in the year of acquisition or capitalised and amortised to income statements over twenty (20)

years or the expected useful life, whichever is shorter.

Reserve on consolidation represents the excess of the fair values of the

Group’s share of identifiable net assets acquired over the acquisition cost. It is either capitalised in the year of acquisition or capitalised and amortised to income statements evenly through the income statements overa period of five (5) years or estimated useful life, whichever is shorter, commencing in financial year ended 31 December 2000.

Revenue

Revenue of the Group represents income recognised on development properties, sales of land held for future development, sales of metal door frames, rental income, investment income, management fees and sales of fresh fruit bunches.

Revenue of the Company represents income recognised on development properties, sales of land held for the future development, rental income, investment income, management fees and sales of fresh fruit bunches.

Revenue Recognition

Revenue on development properties and construction contracts are recognised progressively based on the percentage of completion method. When foreseeable losses on development projects are anticipated, full allowances for these losses is made in the financial statements.

Revenue from property investment is recognised on accrual basis.

Income from sales of land and metal door frames, rental income, management fees and fresh fruit bunches are recognised on receivable basis.

Interest on late progress payments from house purchasers are recognised on receipt basis.

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[22hb Jun 2006

Dividend income represents gross dividends from quoted and unquoted investments and is recognised when the shareholder’s right to receive payment is established.

Foreign Currency Conversion

Transactions arising in foreign currencies are converted into Ringgit Malaysia at rates of exchange approximating those ruling at transaction dates or, where settlement has not taken place as of the end of the financial year, the assets and liabilities are converted at the approximate exchange rates prevailing at that date. Gains and losses arising from exchange conversions are taken up in the income statements.

Income Tax

Income tax in the income comprises current and/or deferred tax. Current tax is expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date.

Deferred tax is accounted for in respect of temporary differences arising from differences between the carrying amounts of assets and liabilities in the financial statements and their corresponding tax based 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.

Borrowings Costs

Borrowing costs incurred to finance property development activities 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 or sale.

All other borrowing costs are recognised as an expense in the year in which they are incurred.

Employee Benefits

i. 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 and of the Company. 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 whenthe absences occur.

ii. Defined contribution plans

As required by laws, companies in Malaysia make contributions to the state pension scheme, the Employees’ Provident Fund. Such contributions are recognised as an expenses in the income statements as incurred.

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Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

Gains or losses on disposals are determined by comparing proceeds with the carrying amount and are included in profit from operations.

Repairs and maintenance are charged to income statements during the period in which they are incurred.

Freehold land is not depreciated. Long and short leasehold land is amortised based on straight-line basis over the remaining leasehold periods of 90 and 60 years respectively. Depreciation of other property, plant and equipment is provided on a straight-line basis calculated to write off the cost of each asset to their estimated useful lives at the following annual rates:

Buildings 2%-12%

Plant and machinery 12%-20%

Furniture, fittings and equipment 20%-25% & Replacement basis

Motor vehicles 20%

The plant and machinery belonging to a subsidiary company is depreciated based on the proportion of production units for the financial year to the units of production expected over the life of the plant and machinery.

Property, Plant and Equipment Under Hire-Purcharse Arrangements

Property, plant and equipment acquired under hire-purcharse 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-purcharse liabilities.

Property Development Projects

Property development projects consist of land held for future development and development expenditure which comprise construction and other related development costs including borrowing costs, is stated at cost less accumulated impairment losses.

The Group and the Company consider as current asset that proportion of property development projects on which sales have been launched and/or the project is expected to be completed within the normal operating cycle of two to three years. Costs of property development projects classified as current assets are stated at the lower of cost and net realisable value.

When the outcome of a property development project cannot be estimated reliably, property development revenue is recognised to the extent of property development costs incurred that is probable of recovery.

Any anticipated loss on a property development project (including costs to be incurred over the defects liability period), is recognised as an immediately.

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[22hb Jun 2006

Accrued billings represent the excess of property development revenue recognised in the income statements over the billings to purcharsers while progress billings represent the excess of billings to purcharser over property development revenue recognised in the income statements.

Investments

Investments in subsidiary companies an associated companies are stated in the Company’s financial statements at cost/valuation less accumulated impairment losses.

Investments in quoted shares are stated at the lower of cost and market value.

Impairment of Assets

At each balance sheet date, the Group and the Company review the carrying amounts of assets (other than inventories, deferred tax assets and financial assets which are dealt with in their respective policies) to determine if there is any indication that those assets may be impaired. If any such indication exists, the assets’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 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 revaluated assets, in which case, the reversal is treated as a revaluation increase.

Inventories

Inventories of completed houses are stated at the lower of cost and net realisable value. Cost is mainly determined on specific identification basis an includes the cost of freehold/leasehold land and construction, and the appropriate development overheads.

Inventories, other than completed houses, are stated at the lower of cost

(determined on the ‘first-in, first-out’ basis and the weighted-average method)

and net realisable value. The cost of raw materials, consumables and other inventories comprise the original cost of purchase plus the cost of bringing the inventories to their present location. The costs of work-in-progress and finished goods consist of cost of raw materials, direct labour and an appropriate proportion of the manufacturing overheads. Net realisable value represents the estimated selling price in the ordinary course of business less selling and distribution costs and all other estimated costs to completion.

Receivables

Receivables are carried at invoiced amount less an allowance for doubtful debts. The allowance is established when there is objective evidence that the Group and the Company will not be able to collect all amounts due according to the original terms of receivables. The amount of the allowances is the diferrence between the carrying amount and the recoverable amount.

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Short-term Investments

Short-term investments are stated at the lower of cost and market value, determined on a portfolio basis by comparing aggregate cost against aggregate market value. Market value is calculated by reference to stock exchange quoted selling price at the close of business on the balance sheet date. All increases or decrease in the carrying amount of marketable securities are taken up in the income statements.

Treasury shares

Shares repurcharsed are held as treasury shares and are accounted for using treasury stock method. Treasury shares are carried at cost of repurcharse, including direct attributable cost, and are set-off against equity. When the treasury shares are reissued by resale in the open market, the differences between the sales consideration and the cost of the treasury shares is taken directly into the share premium account.

Cash Flow Statements

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

For the purpose of the cash flow statements, cash and cash equivalents comprise cash in hand, bank balances, fixed deposits less bank overdrafts and short-term, higly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.

The Group

The Company 2005 2004 2005 2004

Profit development 69,404,689 69,253,917 56,041,347 56,559,829

Sales of land held for future development 14,916,630 33,602,686 14,916,630 33,602,686

Sales of goods 3,412,479 4,599,241 2,613,136 3,836,198

Management fee 277,186 246,880 531,222 480,722

Rental income 772,173 708,418 772,173 708,418

Investment income

—

5,125 13,637,168 669,943 88,783,157 108,416,267 88,511,676 95,857,796

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[22hb Jun 2006

The operating costs classified by nature, applicable to revenue, are as follows:

The Group

The Company 2005 2004 2005 2004

Changes in inventories of finished goods and work-in-progress 493,368 1,993

—

—

Raw materials and consumables used 277,851 390,368

—

—

Staff costs 6,249,670 6,174,238 5,937,665 5,850,058

Depreciation of property, plant and equipment 805,610 757,435 499,493 483,497

Cost of land sold 5,407,758 19,677,894 5,407,758 19,677,894

Contract cost recognised 45,497,816 49,717,255 39,443,191 39,428,877

Directors’ remuneration 681,104 610,002 681,104 610,002

Other operating expenses 10,393,544 8,133,242 8,911,058 7,065,287 69,806,721 85,462,427 60,880,269 73,115,615

Employees’ Provident Fund contributions included in staff costs and directors’ remuneration of the Group and of the Company are as follows:

The Group

The Company 2005 2004 2005 2004

Staff costs 603,431 585,465 585,049 565,130

Directors’ remuneration 41,472 43,140 41,472 43,140 6.

SEGMENTAL ANALYSIS

Segment information is presented in respect of the Group’s bussiness segments.

The primary format, business segments, is based upon the industry of the underlying investments.

No geographical segmental analysis is presented as the Group operates principally in Malaysia.

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Business segments

For management purposes, the Group is organised into the following operating divisions:

–Property development (include sales of land held for future development)

–Property management

–Manufacturing and trading (include metal door and window frames, and rubber products)

–Plantation of fresh fruits bunches

Inter-segment sales are charged at cost plus a percentage profit mark-up

Property

Property

Manufacturing

Development management and trading

Plantation

Elimination

Consolidated

The Group 2005

Revenue

External sales 84,321,319 1,049,359 799,343 2,613,136

—

88,783,157

Inter-segment sales 1,108,030 254,036 12,708,743

—

(14,070,809)

—

Total revenue 85,429,349 1,303,395 13,508,086 2,613,136

(14,070,809)

88,783,157

Results

Profit(Loss) from operations 19,414,774 994,377 13,068,521 943,154

(13,760,954)

20,659,872

Finance costs

(14,518,451)

Share of results of an associated company 10,864,891

Amortisation of premium on acquisition

(1,019,100)

Income from other investments 413,316

Profit before tax 16,400,528

Income tax expense

(4,832,554)

Profit after tax 11,567,974

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[22hb Jun 2006

Property

Property

Manufacturing development management and trading

Plantation

Elimination

Consolidated

Other information

Capital additions 485,438

—

4,730

—

—

490,168

Depreciation of property, plant and equipment 570,495

—

235,115

—

—

805,610

Consolidated Balance Sheet

Assets

Segment assets 625,030,931 3,071,548 5,129,917 70,193,686

—

703,426,082

Investment in associated companies

—

—

42,281,112

—

—

42,281,112

Consolidated total assets 745,707,194

Liabilities

Segments liabilities 388,026,254

—

2,692,289

—

—

390,718,543

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Property

Property

Manufacturing

The Group development management and trading

Plantation

Elimination

Consolidated 2004

Revenue

External sales 102,861,728 955,298 763,043 3,836,198

—

108,416,267

Inter-segment sales 664,818 233,843

—

—

(898,661)

—

Total revenue 103,526,546 1,189,141 763,043 3,836,198

(898,661)

108,416,267

Results

Profit (Loss) from operations 24,204,350 803,408

(333,439)

1,828,535

(1,279,719)

25,223,135

Finance costs

(3,320,319)

Share of results of associated Companies 14,877,964

Amortisation of premium on acquisition

(1,019,100)

Income from other investments 464,645

Profit before tax 36,226,325

Income tax expense

(9,924,959)

Profit after tax 26,301,366

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[22hb Jun 2006

Property

Property development management

Manufacturing

Plantation

Elimination

Consolidated

Other information

Capital additions 1,153,639

—

17,950

—

—

17,171,589

Depreciation of property, plant and equipment 512,495

—

244,940

—

—

757,435

Amortisation of reserve on consolidation

(1,022,522)

—

(200,076)

—

—

(1,222,598)

Consolidated Balance Sheet

Assets

Segments assets 594,949,215 3,084,000 4,436,319 71,122,724

—

673,592,258

Investment in associated

Companies

—

—

47,959,757

—

—

47,959,757

Consolidated total assets 721,552,015

Liabilities

Segment liabilities 368,382,485

—

6,259,245

—

—

374,641,730

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Profit from operations is arrived at after charging (crediting) the following:

The Group

The Company 2005 2004 2005 2004

Loss (Gain) on disposal of:

Unquoted investment in an associated company 1,623,786

—

—

—

Property, plant and equipment

—

(108,960)

—

(108,960)

Quoted investments

(12,612)

(26,926)

(12,612)

(26,926)

Directors’ remuneration: Fees 189,400 192,000 189,400 192,000

Other emoluments 491,704 418,002 491,704 418,002

Fees paid/payable to external auditors:

Statutory audit:

Auditors of the Company 89,000 79,000 70,000 60,000

Special audit:

Other auditors

—

40,000

—

40,000

Allowances for:

Inventories obsolescence 76,972

—

—

—

Doubtful debts

—

30,961

—

—

Diminution in value of investment in a subsidiary

Company

—

—

1,500,000

—

Diminution in value of investments in a associated company no longer required

—

—

—

(1,837,500)

Amount written-off for:

Inventories 54,062

—

—

—

Property, plant and equipment 4,869 7,540 3,823 5,736

Gross dividends from:

Unquoted investments

Associated company

—

—

(12,529,138)

—

Subsidiary company

—

—

(1,108,030)

(664,818)

Other investments, quoted in Malaysia

(5,641)

(7,798)

(5,641)

(7,798)

Liquidated ascertained damages:

Paid to customers 22,450 77,319 22,450 77,319

Received from suppliers

(107,930)

(35,374)

(107,930)

(35,374)

Interest income

(140,309)

(152,366)

(127,569)

(127,617)

Rental expense (income) of:

Premises 517,685 436,696 517,685 436,696

Equipment 500 8,240 500 8,240

Premises

(913,173)

(792,418)

(772,173)

(708,418)

Impairment loss on property, plant and equipment no longer required (1,065,754)

—

—

—

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[22hb Jun 2006

The estimated monetary value of other benefits-in-kind received by a director of the Company and not included in the above was RM52,430 (RM52,878

in 2004).

The Group

The Company 2005 2004 2005 2004

Interest on:

Convertible Unsecured

Loan Stocks (CULS)

11,983,234 153,698 11,983,234 153,698

Bank overdraft 1,996,394 1,410,098 1,996,394 1,410,098

Revolving credit 390,646 1,049,167 228,762 889,263

Term loan 107,582 675,692 107,582 675,692

Hire-purchase 36,441 27,510 33,197 24,266

Others 4,154 4,154 4,154 4,154 14,518,451 3,320,319 14,353,323 3,157,171

Interest expense on the CULS is calculated on the effective yield basis by applying the effective interest rate (5.745%) for an equivalent non-convertible loan stock to the liability component of the CULS. This effective interest rate is obtained from Bank Negara Malaysia.

In 2005, the interest on CULS amounted to RM11,983,234 of which

RM2,263,929 was made by cash payment. The remaining amount of

RM9,719,305 was accrued in CULS as mentioned in Note 25.

The Group

The Company 2005 2004 2005 2004

The Group

The Company 2005 2004 2005 2004

Estimated tax payable/paid:

Current year Under 6,259,075 6,598,312 8,304,618 6,384,331

(Over) provision in prior years 57,745

(59,723)

48,602

(57,028)

6,316,820 6,538,589 8,353,220 6,327,303

Deferred tax (Note 17)

(4,526,436)

189,700

(4,506,436)

—

Share of income tax expense of associated companies 3,042,170 3,196,670

—

—

4,832,554 9,924,959 3,846,784 6,327,303

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A numerical reconciliation of income tax expense at the applicable income tax rate to income tax expense at the effective income tax rate is as follows:

The Group

The Company 2005 2004 2005 2004

Profit before tax 16,400,528 36,226,325 13,682,093 22,367,653

Tax at the applicable tax rate of 28% (also 28% in 2004)

4,592,148 10,143,371 3,830,986 6,262,943

Tax effects of:

Expenses that are not deductible in determining taxable profit 2,084,912 831,771 1,508,335 865,360

Income that are not assessable in determining taxable profit

(398,052)

(969,160)

(139,641)

(743,972)

Under(over)provision in prior years 57,745

(59,723)

48,602

(57,028)

Underprovision of income tax in current year

(169,224)

—

(169,224)

—

Temporary differences not recognised previously *

(10,701)

(62,300)

—

—

Temporary differences not recognised **

(92,000)

41,000

—

—

Discount on CULS capitalised

(1,232,274)

—

(1,232,274)

—

Tax expense for the year 4,832,554 9,924,959 3,846,784 6,327,303

*

The temporary differences were not recognised previously in the financial statements as the effect on the financial statements was not material.

** No deferred tax assets has been recognised (all pertaining to a subsidiary company) in respect of unutilised tax losses of RM514,000 (RM422,000

in 2004) due to the unpredictability of future profit streams. The unutilised tax losses, subject to agreement by tax authorities, are available to offset against future taxable profits.

As of 31 December 2005 the Company has tax-exempt income amounting to

RM3,356,812 (also RM3,356,812 in 2004) arising from the tax payable on chargeable income waived in 1999 in accordance with the Income Tax

(Amendment) Act, 1999. This tax exempt income account, which is subject to approval by the tax authorities, are available for the distributions of tax exempt dividends to the shareholders of the Company.

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The Group 2005 2004

Basic

Net profit attributable to ordinary shareholders 11,679,549 26,354,999

Units

Units

Number of shares in issue at beginning of year 122,000,000 100,000,000

Treasury shares

(833,000)

(681,035)

Effect of shares issued for acquisition of land held for future development in December 2004

—

904,110

Weighted average number of ordinary shares in issue 121,167,000 100,223,075

Basic earnings per share (sen)

64 26.30

Fully Diluted

Net profit attributable to ordinary shareholders 11,679,549 26,354,999

Add: Assuming saving in interest expense on

Convertible Unsecured Loan Stocks (CULS), Net of tax 7,395,798 110,663

Adjusted net profit for calculating diluted earnings per ordinary share 19,075,347 26,465,662

Weighted averange number of ordinary shares (units):

In issue 121,167,000 100,223,075

Assuming full conversion of CULS as at the date of issue (which are convertible only on or after 16 December 2006)

330,000,000 15,369,863

Adjusted weighted average number of ordinary shares for calculating diluted earnings per ordinary share 451,167,000 115,592,938

Fully diluted earnings per share (sen)

23 22.90

The adjusted weighted average number of shares in issue and issuable for the year has been arrived at after taking into account the dilutive effect of the conversion of all outstanding Convertible Unsecured Loan Stocks

(“CULS”) of the Group and of the Company and the net profit is adjusted to eliminate the applicable interest expense less the associated tax effect in accordance with FRS133 2004 (previously known as MASB 13),

Earnings Per Share. The dilutive effect is computed assuming full conversion of the CULS as at the date of issue (which are convertible only on or after 16 December 2006).

22hb Jun 2006]

1665

An interim dividend of 3%, less tax, amounting to RM2,142,007 was declared in respect of ordinary shares for the previous financial year was paid by the Company during the financial year.

A final dividend of 4%, less tax, amounting to RM3,489,610 in respect of ordinary shares for the previous financial year was declared and paid by the Company during the financial year.

The directors declared an interim dividend of 4%, less tax, amounting to

RM3,489,610 in respect of the current financial year on 27 February 2006.

The said dividend will be paid by the Company on 21 April 2006.

Dividends per share (sen) during the financial year is 2.88 (5.04 in 2004).

Cost

Beginning

End of year

Additions Disposals Write-off of year

The Group

Freehold land 1,380,027

—

—

— 1,380,027

Short leasehold land 165,264

—

—

—

165,264

Long leasehold land 2,225,240

—

—

— 2,225,240

Buildings 3,300,038 139,286

—

— 3,439,324

Plant and machinery 1,047,289

—

—

— 1,047,289

Furniture, fittings and equipment 1,112,132 205,581

— (57,469) 1,260,244

Motor vehicles 738,285 145,301

—

—

883,586

Motor vehicles under hire-purchase 1,110,692

—

—

—

1,110,692

Total 11,078,967 490,168

— (57,469) 11,511,666

Accumulated Depreciation

Beginning

Charge for

End of year the year

Disposals Write-off of year

Short leasehold land 50,681 6,194

—

—

56,875

Long leasehold land 166,976 37,087

—

—

204,063

Buildings 907,775 228,541

—

— 1,136,316

Plant and machinery 318,920 3,324

—

—

322,244

Furniture, fittings and equipment 713,862 191,997

—

(52,600)

853,259

Motor vehicles 536,449 116,328

—

—

652,777

Motor vehicles under hire-purchase 318,614 222,139

—

—

540,753

Total 3,013,277 805,610

—

(52,600) 3,766,287

1666

[22hb Jun 2006

Net Book Value

Beginning

End of year of year

Freehold land 1,380,027 1,380,027

Short leasehold land 114,583 108,389

Long leasehold land 2,058,264 2,021,177

Buildings 2,392,263 2,303,008

Plant and machinery 728,369 725,045

Furniture, fittings and equipment 398,270 406,985

Motor vehicles 201,836 230,809

Motor vehicles under hire-purchase 792,078 569,939 8,065,690 7,745,379

Less: Impairment loss

(1,065,754)

—

6,999,936 7,745,379

Cost

Beginning

End of year

Additions Disposals Write-off of year

The Company

Freehold land 984,677

—

—

—

984,677

Buildings 778,603 3,510

—

—

782,113

Furniture, fittings and equipment 994,306 110,335

— (47,711) 1,056,930

Motor vehicles 712,026 145,301

—

—

857,327

Motor vehicles under hire-purchase 1,014,879

—

—

— 1,014,879

Total 4,484,491 259,146

— (47,711) 4,695,926

Accumulated Depreciation

Beginning Charge for

End of year the year Disposals Write-off of year

Buildings 129,672 15,444

—

—

145,116

Furniture, fittings and equipment 621,029 164,745

—

(43,888)

741,886

Motor vehicles 510,190 116,328

—

—

626,518

Motor vehicles under hire-purchase 272,304 202,976

—

—

475,280

Total 1,533,195 499,493

—

(43,888) 1,988,800

22hb Jun 2006]

1667

Net Book Value

Beginning

End of year of year

Freehold land 984,677 984,677

Buildings 648,931 636,997

Furniture, fittings and equipment 373,277 315,044

Motor vehicles 201,836 230,809

Motor vehicles under hire-purchase 742,575 539,599

Total 2,951,296 2,707,126

Included in freehold/long leasehold land and buildings of the Group (all pertaining to the Company) are investment properties with carrying values totalling RM627,098 (RM642,542 in 2004).

In 2004, certain freehold land of the Company with carrying value of

RM198,600 are in the process of being registered in the name of the

Company.

The Company 2005 2004

Unquoted shares in subsidiary companies

– At cost 18,548,000 18,548,000

– At directors’ valuation in 1996 10,030,027 10,030,027 28,578,027 28,578,027

Less: Allowance for diminution in value

(1,500,000)

—

27,078,027 28,578,027

The subsidiary companies (all incorporated in Malaysia) are as follows:

Effective Equity

Interest

Name of Company 2005 2004

Principal Activities

Pembinaan Prefab Sdn.

100%

100%

Construction of houses

Bhd.

and manufacturer of ready mixed concrete*

Johor Land Manufacturing 75%

75%

Manufacturer of metal

Sdn. Bhd.

door frames and trading of building materials

Advance Development 100%

100%

Property developer

Sdn. Bhd.

1668

[22hb Jun 2006

* In 1998 and 1999, the subsidiary company ceased to be involved in the construction of houses and manufacturing and selling of ready mixed concrete respectively. In 2003, the company entered into a conditional agreement with a related company to develop houses for a total cash consideration of RM856,079. The subsidiary company has yet to com-mence the development activity during the financial year.

The Group

The Company 2005 2004 2005 2004

Unquoted shares in associated companies:

At cost 45,712,420 53,062,420 45,712,420 53,062,420

Allowance for diminution in value

—

—

— (5,512,500)

Share of post-acquisition results of associated companies 5,092,391 3,421,036

—

—

Dividend received out of pre-acquisition profits

(8,523,699)

(8,523,699)

(8,523,699) (8,523,699)

42,281,112 47,959,757 37,188,721 39,026,221

The share of post-acquisition results of associated companies is stated after deducting dividends (net) of RM9,020,979 (RMNil in 2004) received.

Analysis of associated companies is as follows:

The Group 2005 2004

Group’s share of net tangible assets 27,831,289 32,665,271

Premium on acquisition net of amortisation 14,267,411 15,286,511

Share in foreign exchange fluctuation of associated company 182,412 7,975 42,281,112 47,959,757

Details of associated companies (all incorporated in Malaysia) are as follows:

Effective Equity

Interest

Name of Company 2005 2004

Principal Activities

Revertex (Malaysia) Sdn. Bhd.

07%

The Group

The Company 2005 2004 2005 2004

At cost:

Freehold land 460,618,208 115,556,115 447,361,653 102,299,560

Long leasehold land 42,210,730 46,345,924 42,210,730 46,345,924

At beginning of year 502,828,938 161,902,039 489,572,383 148,645,484

Cost incurred during the year:

Freehold land

— 364,355,987

— 364,355,987 502,828,938 526,258,026 489,572,383 513,001,471

Disposal during the year:

Freehold land

— (19,293,894)

— (19,293,894)

Long leasehold land

(2,091,050)

—

(2,091,050)

—

(2,091,050) (19,293,894)

(2,091,050) (19,293,894)

Transfer to land and development expenditure

(Note 22):

Freehold land

(1,224,705)

—

—

—

Leasehold land

(594,518)

(4,135,194)

(594,518)

(4,135,194)

At end of year 498,918,665 502,828,938 486,886,815 489,572,383

As of to-date, certain land titles of the Group (all pertaining to the Company)

with carrying value of RM35,629,661 and RM368,186,500 (RM38,315,229

and RM368,186,500 in 2004) are registered under the name of the ultimate holding corporation and are in the process of being transferred to the name of the Company respectively.

Freehold land of the Group (all pertaining to the Company) with carrying value of RM69,980,554 (also RM69,980,554 in 2004) are charged to a licensed bank to secure a term loan facility of RM43,000,000 (also

RM43,000,000 in 2004) as indicated in Note 24.

1670

[22hb Jun 2006

The Group (pertaining to a subsidiary company)

2005 2004

At beginning of year

—

189,700

Transfer from income statements (Note 10)

—

(189,700)

At end of year

—

—

The net deferred tax asset is in respect of accelerated depreciation.

The Group

The Company 2005 2004 2005 2004

At beginning of year

(7,522,199)

(21,000)

(7,501,199)

—

Transfer to income statements (Note 10)

4,526,436

—

4,506,436

—

Amount charged to equity

—

(7,501,199)

—

(7,501,199)

At end of year

(2,995,763)

(7,522,199)

(2,994,763)

(7,501,199)

The deferred tax liabilities are in respect of the following:

The Group

The Company 2005 2004 2005 2004

Tax effects of:

Temporary differences arising from:

Property, plant and equipment

(82,000)

(21,000)

(81,000)

—

Convertible

Unsecured Loan

Stocks (Note 25) (3,547,763)

(7,501,199)

(3,547,763)

(7,501,199)

Other 634,000

—

634,000

—

At end of year

(2,995,763)

(7,522,199)

(2,994,763)

(7,501,199)

22hb Jun 2006]

1671

The Group

The Company 2005 2004 2005 2004

At cost:

Completed houses 47,103,605 44,203,542 45,737,417 36,856,681

Raw materials and consumables 192,312 266,134

—

—

Work-in-progress 60,362 6,151

—

—

Finished goods 2,821 3,198

—

—

Other inventories 14,978 25,961 14,978 25,961 47,374,078 44,504,986 45,752,395 36,882,642

Less: Allowance for inventories obsolescence

(76,972)

—

—

—

Net 47,297,106 44,504,986 45,752,395 36,882,642

As of to-date, certain titles of the completed houses of the Group (all pertaining to the Company) with carrying value amounting to RM42,891,009

(RM34,010,273 in 2004) are held in escrow by the ultimate holding cor-poration.

The Group

The Company 2005 2004 2005 2004

Trade receivables 38,378,561 22,422,214 31,645,714 16,911,520

Less: Allowance for doubtful debts

(30,961)

(30,961)

—

—

38,347,600 22,391,253 31,645,714 16,911,520

Accrued billings

—

1,468,221

—

—

Other receivables 35,304 245,328 33,863 201,768

Prepayments 104,753 56,902 93,459 46,976

Deposits 878,635 758,843 661,428 542,435 39,366,292 24,920,547 32,434,464 17,702,699

Amount due from ultimate holding corporation (Note 29)

872,930 1,337,082 872,930 1,337,082

Amount due from subsidiary companies

(Note 29)

—

—

17,081,353 14,340,104

Amount due from other related companies (Note 29)

443,092 1,238,205 443,092 1,238,205 40,682,314 27,495,834 50,831,839 34,618,090

1672

[22hb Jun 2006

Trade receivables comprise amounts receivable from customers for property development projects. Other receivables comprise mainly expenditure incurred which is claimable from third parties.

The credit period granted on property development projects is 180 days

(also 180 days in 2004).

Included in deposits of the Group (all pertaining to a subsidiary company)

is an amount of RM85,608 (also RM85,608 in 2004) paid to a related company to acquire a piece of land held for property development for a total consideration of RM865,079. The balance of the consideration will be payable upon delivery of the land title to the subsidiary company and after obtaining the approval from the relevant authorities.

The Group and the Company 2005 2004

At cost:

Shares in corporations, quoted in Malaysia 114,618 99,935

The Group

The Company 2005 2004 2005 2004

Deposits with licensed banks 12,630,060 15,321,850

—

—

Bank and cash balances 508,144 774,428 75,998 135,320

Housing Development

Accounts with licensed banks 7,741,132 1,059,578 1,095,500 1,034,052 20,879,336 17,155,856 1,171,498 1,169,372

The Housing Development Account is maintained by the Company and a subsidiary company in accordancewith Section 7(A) of the Housing

Developers (Control and Licensing) Act, 1966. These accounts, which consist of monies received from purchasers, are for the payment of property development expenditure incurred. The surplus monies, if any, will be released to the Company and the subsidiary company upon the completion of the property development projects and after all property development expenditure has been fully settled.

22hb Jun 2006]

1673

The average effective interest rates are as follows:

The Group

The Company 2005 2004 2005 2004

%

%

%

%

Deposits with licensed banks 3.90 3.50

—

—

Housing Development

Accounts 1.50 1.50 1.50 1.50

Deposits of the Group (all pertaining to subsidiary companies) have an average maturity of 30 days (also 30 days in 2004).

The Group

The Company 2005 2004 2005 2004

At cost:

Freehold land 1,176,335 1,176,335

—

—

Long leasehold land 12,649,966 12,235,510 12,649,966 12,235,510

Development expenditure 97,886,514 72,737,420 64,656,437 46,125,945

At beginning of year 111,712,815 86,149,265 77,306,403 58,361,455

Cost incurred during the year:

Long leasehold land

—

498,543

—

498,543

Development expenditure 66,578,550 60,166,496 50,532,147 47,085,847 66,578,550 60,665,039 50,532,147 47,584,390 178,291,365 146,814,304 127,838,550 105,945,845

Cost recognised as an expense in Income

Statements:

Previous year

(37,206,042)

(28,695,354)

(16,254,163) (18,335,466)

Current year

(34,309,348)

(38,128,872)

(27,821,083) (27,536,881)

(71,515,390)

(66,824,226)

(44,075,246) (45,872,347)

Transfers from (to):

Land held for future development

(Note 16)

1,819,223 4,135,194 594,518 4,135,194

Inventories

(20,806,534)

(9,618,499)

(20,806,534)

(3,156,452)

At end of year 87,788,664 74,506,773 63,551,288 61,052,240

The title to the long leasehold land is held in escrow by the ultimate holding corporation.

In 2005, borrowing costs of RM5,436,181, arising on funds borrowed specifically for property development activities, were capitalised during the period and are included in development expenditure incurred during the period.

1674

[22hb Jun 2006

The Group

The Company 2005 2004 2005 2004

Trade payables 8,066,005 5,913,594 7,829,973 5,909,684

Amount due to ultimate holding corporation

(Note 29)

683,882 697,537 166,802 190,157

Amount owing to subsidiary companies

(Note 29)

—

—

16,500 61,427

Amount due to other related companies

(Note 29)

110,874 161,054 110,874 161,054

Other payables 2,298,173 3,457,022 2,283,818 3,419,949

Accruals 10,074,603 9,350,628 10,010,247 9,315,707

Progress billings 946,369

—

798,649

—

Deposits for disposal of land 90,000 339,000

—

297,000 22,269,906 19,918,835 21,216,863 19,354,978

The amounts owing mainly arose from trade transactions, rental payables, advances and payments on behalf. The amounts owing are interest-free and have no fixed terms of repayment. Transactions with related parties are disclosed in Note 30.

The Group

The Company 2005 2004 2005 2004

Current:

Unsecured:

Bank overdraft 37,415,483 27,085,128 37,415,483 27,085,128

Revolving credits 9,045,030 9,043,153 5,045,030 5,043,153

Secured:

Term loan

—

4,095,694

—

4,095,694

Hire-purchase payables 275,000 275,000 259,200 259,200 46,735,513 40,498,975 42,719,713 36,483,175

Non-current:

Secured:

Hire-purchase payables 69,202 341,641 59,987 316,626

Total 46,804,715 40,840,616 42,779,700 36,799,801

22hb Jun 2006]

1675

The term loan of the Company is secured by legal charges over certain parcels of land belonging to the Company as disclosed in Note 16 and repayable by 20 equal quarterly instalments of RM2,818,786 (inclusive of interest) commencing October 2000.

The term loan was fully repaid during the financial year.

the average effective interest rates are as follows:

The Group and the Company 2005 2004

%

%

Term loan 8.40 8.40

Bank overdraft 7.25 7.25

Revolving credits 4.56 6.85

The non-current portion of the hire-purchase payables is repayable as follows:

The Group

The Company 2005 2004 2005 2004

Financial years ending

December 31:

2006

—

275,000

—

259,200 2007 69,202 66,641 59,987 57,426 69,202 341,641 59,987 316,626

It is the Group’s and the Company’s policy to acquire certain of the property, plant and equipment under hire-purchase arrangements. The average term for hire-purchase is about 3 to 5 years. For the financial year ended 31

December 2005, the average effective interest rate was 7.09% (also 7.09%

in 2004) per annum. Interest rates are fixed at the inception of the hire-purchase arrangements.

The Group’s and the Company’s hire-purchase payables are secured by the financial institutions’ charge over the assets under hire-purchase.

The Group and the Company 2005 2004

At beginning of year 330,000,000

—

Issued during the year:

Liability component

—

303,210,004

Equity component, net of deferred tax liability

—

19,288,797

Deferred tax liability (Note 17)

—

7,501,199

—

330,000,000

At end of year 330,000,000 330,000,000

1676

[22hb Jun 2006

The movement of the liability component of the CULS during the year was as follows:

The Group and the Company 2005 2004

At beginning of year 303,210,004

—

Issued during the year

—

303,210,004

Interest accrued 17,419,415

—

Interest paid

(3,290,959)

—

At end of year 317,338,460 303,210,004

On 15 December 2004, the Company issued 330,000,000 five (5) years

Convertible Unsecured Loan Stocks (“CULS”) at nominal value of RM1

each as part of purchase consideration for the acquisition of freehold agricultural land zoned for development measuring approximately 1,474.25

acres located at Mukim of Tebrau, Johor Bahru from its ultimate holding corporation. It was issued pursuant to the Memorandum and Articles of

Association, the Board of Directors’ resolution passed on 9 September 2004 and constituted by a Trust Deed dated 24 November 2004 between the Company and Amanah Raya Berhad.

The salient features of the CULS are as follows:

Period (from issue date)

Interest rate per annum

First 24 months (Year 1 and 2)

1%

Next 36 months (Year 3, 4 and 5)

6%

The interest rate is payable annually in arrears on the last day of every 12 months period commencing from the issus date, 15 December 2004

until the maturity date, 15 December 2009 (‘Interest Payment Date’), calculated on the basis of a year of 365 days and on the actual number of days elapsed and accrues daily from and including the issue date or the previous Interest Payment Date;

22hb Jun 2006]

1677

The CULS have been classified separately into their components parts as liability or as equity on the balance sheet in accordance with FRS1322004

(previously known as MASB24), Financial Instruments: Disclosure and

Presentation. The fair value of the liability component is calculated using a prevailing market interest rate at the date of issuance for a similar nonconvertible loan stock. The residual amount, representing the fair value of the equity component, net of deferred tax liability, is included in shareholder’s equity.

The Group and the Company 2005 2004

Authorised:

Ordinary shares of RM1 each

At beginning of year 500,000,000 200,000,000

Created during the year

—

300,000,000

At end of year 500,000,000 500,000,000

Issued and fully paid:

Ordinary shares of RM1 each

At beginning of year 122,000,000 100,000,000

Issued during the year

—

22,000,000

At end of year 122,000,000 122,000,000

At the Extraordinary General Meeting held on 24 May 2005 the Company’s shareholders renewed the scheme to repurchase its own shares. The Directors of the Company are committed to enhance the value of the Company to its shareholders and believe that the repurchase scheme can be applied in the best interest of the Company and its shareholders.

During the financial year, the Company did not repurchase any of its own shares (repurchased in the open market a total of 192,500 of its issued ordinary shares in 2004). The average repurchase price in 2004 was about

RM0.87 per ordinary share.

The number of outstanding shares in issue after deducting treasury shares held at the financial year end is 121,167,000 (also 121,167,000 in 2004)

ordinary shares of RM1 each.

Treasury shares have no rights to voting, dividends and participation in any other distribution. Treasury shares shall not be taken into account in calculating the number or percentage of shares or of a class of shares in the Company for any purposes including substantial shareholding, take-overs, notices, the requisitioning of meetings, the quorum for a meeting and the result of a vote on a resolution at a meeting.

None of the treasury shares has been resold or distributed as share divi-dends during the financial year.

1678

[22hb Jun 2006

The Group

The Company 2005 2004 2005 2004

Non-distributable reserves:

Share premium 78,581,839 78,581,839 78,581,839 78,581,839

Revaluation reserve

—

—

2,530,027 2,530,027

Distributable reserve:

Unappropriated profit 135,805,760 127,615,821 108,825,489 102,479,790 214,387,599 206,197,660 189,937,355 183,591,656

Share Premium

Share premium arose from the following:

The Group and the Company 2005 2004

Special issue of 42,952,000 ordinary shares of RM1 each at RM2.20 per share for acquisition of land and landed properties 51,542,400 51,542,400

Restricted public issue of 10,000,000 new 12,000,000 12,000,000

ordinary shares of RM1 each RM2.20 per share to the entitled shareholders of Kulim

(Malaysia) Berhad

Public issue of 15,000,000 new ordinary shares of RM1 each at RM2.20 per share 18,000,000 18,000,000

Less: Listing expenses

(2,960,561) (2,960,561)

78,581,839 78,581,839

Revaluation Reserve

The revaluation reserve is used to record increase and decrease in revaluation of non-current assets, as described in accounting policies. The amount arose from the revaluation of a subsidiary company in 1996 as follows:

The Company 2005 2004

Revaluation surplus arising from revaluation of a subsidiary company 7,530,027 7,530,027

Less: Bonus issue

(5,000,000) (5,000,000)

2,530,027 2,530,027

22hb Jun 2006]

1679

Unappropriated Profit

Distributable reserves are those available for distribution by way of divi-dends. Based on the prevailing tax rate applicable to dividends and the estimated tax credits and the tax-exempt account balance as mentioned in

Note 10, the unappropriated profit of the Company as of 31 December 2005 is available for distribution by way of cash dividends without additional tax liabilities being incurred.

Cash and cash equivalents comprise the following

The Group

The Company 2005 2004 2005 2004

Bank and cash 508,144 774,428 75,998 135,320

balances

Housing Development

Accounts 7,741,132 1,059,578 1,095,500 1,034,052 8,249,276 1,834,006 1,171,498 1,169,372

Deposits with licensed banks 12,630,060 15,321,850

—

—

Banks overdraft

(Note 24)

(37,415,483) (27,085,128) (37,415,483)

(27,085,128)

(16,536,147)

(9,929,272) (36,243,985)

(25,915,756)

The Company’s Immediate and Ultimate Holding Corporation is Johor

Corporation, a body corporate established under the Johor Corporation

Enactment (No. 4 of 1968) (as amended by Enactment No. 5 1995).

The amount due from/to ultimate holding corporation arose mainly from trade transactions which are unsecured, interest free and have no fixed terms of repayment.

The amount due from/to subsidiary companies and other related companies arose mainly from advances and payments on behalf which are unsecured, interest free and have no fixed terms of repayment.

1680

[22hb Jun 2006

Significant transactions undertaken with its related companies during the financial year are as follows:

The Group

The Company 2005 2004 2005 2004

Expenses (Income):

Ultimate holding corporation (Johor

Corporation):

Interest expense on

Convertible Unsecured

Loan Stocks 3,290,959 153,698 3,290,959 153,698

Secretarial fee 37,480 25,220 24,000 16,280

Consultancy fee 33,827 64,788 33,827 64,788

Rental of office 21,650

—

21,650

—

Sales commission

—

(39,981)

—

(39,981)

Management fee

(67,185)

(23,419)

(67,185)

(23,419)

Other related companies

(subsidiaries of Johor

Corporation):

Kulim (Malaysia)

Berhad

Management fee 267,442 317,126 267,442 317,126

Sales commission 65,328 95,905 65,328 95,905

Sales of fresh fruit bunches

(2,613,136) (3,836,198) (2,613,136) (3,836,198)

Harta Consult Sdn.

Bhd.

Rental of office 492,135 435,246 492,135 435,246

Security service 7,726 421,130

—

421,130

Office maintenance 2,496

—

2,496

—

Willis (Malaysia) Sdn.

Bhd.

Insurance 159,375 110,331 147,309 98,060

Expenses (Income):

Teraju Fokus Sdn. Bhd.

Security service 683,270

—

683,270

—

Pro Communication

Sdn. Bhd.

Advertising and promotion 170,515

—

170,515

—

Tiram Travel Sdn.

Bhd.

Sports and recreation 103,670

—

103,670

—

Johor Silica Industries

Sdn. Bhd.

Corporate fee

(24,000)

(24,000)

(24,000)

(24,000)

22hb Jun 2006]

1681

In additon, the Group and the Company acquired the following from its related companies:

The Group

The Company 2005 2004 2005 2004

Ultimate holding corporation (Johor

Corporation):

Purchase of:

Land held for future development

—

353,000,000

—

353,000,000

Another related company

(subsidiary of Johor

Corporation):

Johor Ventures Sdn.

Bhd.

Purchase of:

Property, plant and equipment

—

192,000

—

192,000

Golf club membership

—

180,000

—

180,000

For the following intercompany transactions, the identities of the other related companies (subsidiaries of Johor Corporation) are not disclosed because no single transaction is significant enough to warrant separate disclosure:

The Group

The Company 2005 2004 2005 2004

Expenses (Income):

Registration fee 38,743 24,956 38,743 24,956

Printing and stationery 36,023 23,889 36,023 23,889

Advertising and promotion 7,684 13,552 7,684 13,552

Rental of office 3,900 1,200 3,900 1,200

Sports and recreation 2,450

—

2,450

—

Sales commissions 904 1,199 904 1,199

Translation service fee 347

—

347

—

Rental of equipment 200

—

200

—

Travelling/transportation

—

56,384

—

56,384

Training fee

—

1,900

—

1,900

Corporate fee

(12,000)

(12,000)

(12,000)

(12,000)

The directors of the Group and of the Company are the opnion that the above transactions have been entered into the normal course of business and have been established under terms that are no less favourable than those arranged with independent third parties.

1682

[22hb Jun 2006

Financial Risk Management Objectives and Policies

The operations of the Group and of the Company are subject to a variety of financial risks, including interest rate risk, credit risk, liquidity risk and cash flow risk. The Group and the Company have formulated a financial risk management framework whose 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.

Various risk management policies are approved by the Board for observation in the day-to-day operations for the controlling and management of the risks associated with financial instruments.

Interest Rate Risk

The Group and the Company enter into various interest rate risk management transactions fot the purpose of reducing net interest costs and to achieve interest rates within predictable, desired ranges.

Credit Risk

The Group and the Company are exposed to credit risk mainly from trade receivables and cash and cash equivalents.

The Group and the Company extend credit to its customers based upon careful evaluation of the customers’ financial condition.

Management believes that Group’s and the Company’s exposure on credit risk of cash and cash equivalents is limited as it is placed with credit worthy financial institutions.

Liquidity Risk

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

Cash Flow Risk

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

Financial Assets

The Group’s and the Company’s principal financial assets are deposits, cash and bank balances, trade and other receivables and equity investments.

The accounting policies applicable to the major financial assets are as disclosed in Note 3.

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1683

Financial Liabilities And Equity Instruments

Debts and equity instruments are classified as either liabilities or equity in accordance with the substance of the contractual arrangement.

Significant financial liabilities of the Group and of the Company are trade and other payables, bank borrowings and Convertible Unsecured Loan Stocks.

Bank borrowings are recorded at the proceeds received net of direct issue costs.

Finance Charges Are Accounted For On Accrual Basis

Equity instruments are recorded at the proceeds received net of direct issue costs.

Fair Values

The carrying amounts and the estimated fair values of the Group’s and of the Company’s financial instruments as of 31 December 2005 are as follows:

The Group and the Company 2005 2004

Carrying

Fair

Carrying

Fair

Amount

Value

Amount

Value

Note

Financial assets

Short-term investment-quoted shares 20 114,618 110,850 99,935 112,900

Financial

Liabilities

Borrowings-term loan 24

—

—

4,095,694 4,095,694

Convertible

Unsecured Loan

Stocks-liability

Component 25 317,338,460 317,338,460 303,210,004 303,210,004

Cash and cash equivalents, trade and other receivables, trade and other payables and other bank borrowings

The fair value of these financial instruments approximate their carrying amounts due to the short maturities of these instruments.

Equity Investments

The market values of quoted shares as at balance sheet date approximates their fair values.

Term Loan

The fair value of term loan is estimated using discounted cash flow analysis based on current borrowing rates for similar types of borrowing arrangements.

Convertible Unsecured Loan Stocks

The carrying amount of Convertible Unsecured Loan Stocks approximates fair value as the instrument is calculated using a prevailing market interest rate at the date of issuance for a similar convertible loan stocks.

1684

[22hb Jun 2006

As of 31 December 2005, the Company has commitments under non-cancellable rental agreements in respect of rental of premises. The aggregate commitments for future rental payments are as follows:

The Group and the Company 2005 2004

Financial year ending 31 December 2006:

509,568

—

During the financial year,

The principal activity of the Company is that of a property developer.

There has been no significant change in the nature of the activity of the

Company during the financial year.

The total number of employees of the Company as of 31 December 2005

was Nil (also Nil in 2004).

The registered office of the Company is located at 13th Floor, Menara

Johor Corporation Kotaraya, 80000 Johor Bahru, Johor.

The principal place of business of the Company is located at 10th Floor,

Kompleks Tun Abdul Razak, Jalan Wong Ah Fook, 80000 Johor Bahru,

Johor.

The financial statements of the Company were authorised for issue by the

Board of Directors in accordance with a resolution of the directors on 20

February 2006.

The financial statements of the Company have been prepared in accordance with the provisions of the Companies Act, 1965 and the applicable Malaysian

Accounting Standards Board (“MASB”) approved accounting standards in

Malaysia.

Basis of Accounting

The financial statements have been prepared under the historical-cost convention.

Revenue Recognition

Revenue represents income recognised on development properties net of cancelled sales contracts.

Revenue on development properties and construction contracts are recognised progressively based on the percentage of completion method. When foreseeable losses on development projects are anticipated, full allowance for these losses is made in the financial statements.

1690

[22hb Jun 2006

Income Tax

Income tax in the income statement comprises current and/or deferred tax.

Current tax is expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date.

Deferred tax is accounted for 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.

Property, Plant and Equipment and Depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and impairment loss.

Gains or losses on disposals are determined by comparing proceeds with the carrying amount and are included in profit from operations.

Repairs and maintenance are charged to income statements during the period in which they are incurred.

Freehold land is not depreciated. Depreciation of other property, plant and equipment is provided on a straight-line basis calculated to write off the cost of each asset to their estimated useful lives at the following annual rates:

The annual depreciation rates are as follows:

Buildings 10%-20%

Furniture, fittings and equipment 20%–25%

Property Development Projects

Property development projects consist of land held for future development and development expenditure which comprise construction and other related development costs including borrowing costs, is stated at cost less accumulated impairment losses.

The Company considers as current asset that proportion of property development projects on which sales have been launched and/or the projects is expected to be completed within the normal operating cycle of two to three years. Cost of property development projects classified as current assets are stated at the lower of cost and net realisable value.

When the outcome of a property development project cannot be estimated reliably, property development revenue is recognised to the extent of property development costs incurred that is probable of recovery.

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Any anticipated loss on a property development project (including costs to be incurred over the defects liability period), is recognised as an expense immediately.

Accrued billings represent the excess of property developement revenue recognised in the income statement over the billings to purchasers while progress billings represent the excess of billings to purchasers over property development revenue recognised in the income statement.

Inventories

Inventories on completed houses are stated at the lower of cost and net realisable value. Cost is mainly determined on specific identification basis and includes the cost of freehold land and the appropriate development 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.

Impairment of Assets

At each balance sheet date, the Company reviews the carrying amounts of assets (other than inventories, deferred tax assets and financial assets which are dealt with in their respective policies) to determine if there is any indication that those assets may be impaired. If any such indication exists, the asset’s recoverable amount, which is the higher of net selling price and value is use, is estimated.

Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in the income statement.

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, if no impairment loss had been recognised.

A reversal is recognised in the income statement.

Receivables

Receivables are carried at invoiced amount less an allowance for doubtful debts. The allowance is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. The amount of the allowance is the difference between the carrying amount and the recoverable amount.

Cash Flow Statement

The Company adopts the indirect method in the preparation of the cash flow statement.

For the purpose of the cash flow statement, cash and cash equivalents comprise cash in hand, bank balances, fixed deposits and short term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.

1692

[22hb Jun 2006

2005 2004

Revenue from development properties 13,363,342 12,694,089 5.

OPEATING COSTS APPLICABLE TO REVENUE

The operating costs classified by nature, applicable to revenue, are as follows:

2005 2004

Depreciation of property, plant and equipment 71,002 28,998

Contract cost recognised 6,488,265 10,591,991

Other operating expenses 979,546 750,941 7,538,813 11,371,930 6.

PROFIT FROM OPERATIONS

Profit from operations is arrived at after crediting (charging) the following items:

2005 2004

Interest income on late payment 11,373 21,225

Audit fee

(10,000)

(10,000)

Property, plant and equipment written-off

—

(1,504)

PROFIT

Estimated tax paid/payable:

Current year 1,695,031 130,674

Underprovision in prior year 9,143

Deferred tax (Note 10)

—

189,700 1,704,174 320,374

A numerical reconciliation of income tax expense at the applicable income tax rate to income tax expense at the effective income tax rate is as follows:

2005 2004

Profit before tax 5,822,048 1,345,032

Tax at the applicable tax rate of 28%

(also 28% in 2004)

1,630,173 376,609

Tax effects of expenses that are not deductible in determining taxable profit 75,559 6,065

Temporary differences not recognised *

(10,701)

(62,300)

Underprovision in prior year 9,143

—

Income tax expense 1,704,174 320,374

22hb Jun 2006]

1693

* The temporary differences were not recognised in the financial state-ments as the effect on the financial statements was not material.

As of 31 December 2005, the Company has tax-exempt income amounting to RM3,196,304 (also RM3,196,304 in 2004) arising from tax payable on chargeable income waived in 1999 in accordance with the Income Tax

(Amendment) Act, 1999. This tax-exempt income account, which is sub-ject to approval by tax authorities, is available for distribution of tax exempt dividends to the shareholder of the Company.

Based on the estimated tax credit available and the prevailing tax rate applicable to dividends, the Company will incur additional tax of about

RM203,000 (Nil in 2004) if all the unappropriated of the Company is to be distributed as dividend.

Furniture,

Land and

Fittings and

Building

Equipment

Total

At Cost

Beginning of year 659,042 17,969 677,011

Additions 135,776 90,516 226,292

Disposal

—

—

—

End of year 794,818 108,485 903,303

Accumulated Depreciation

Beginning of year 25,735 7,768 33,503

Charge for the year 51,287 19,715 71,002

Disposal

—

—

—

End of year 77,022 27,483 104,505

Net Book Value

Beginning of year 633,307 10,201 643,508

End of year 717,796 81,002 798,798 9.

LAND HELD FOR FUTURE DEVELOPMENT

2005 2004

At cost:

Freehold Land

At beginning of year 13,256,555 13,256,555

Transfer to land and development expenditure (Note 11)

(1,224,705)

—

At end of year 12,031,850 13,256,555

1694

[22hb Jun 2006

2005 2004

At beginning of year

—

189,700

Transfer from income statement (Note 7)

—

(189,700)

At end of year

—

—

The deferred tax asset is in respect of tax effects of the temporary arising from unutilised tax losses.

2005 2004

At cost:

Freehold land 1,176,335 1,176,335

Development expenditure 33,195,381 26,611,475

At beginning of year 34,371,716 27,787,810

Cost incurred during the year:

Development expenditure 16,043,568 13,045,953 50,415,284 40,833,763

Cost recognised as an expense in

Income Statement:

Previous year

(20,951,879)

(10,359,888)

Current year

(6,488,265)

(10,591,991)

(27,440,144)

(20,951,879)

Transfer from (to):

Land held for future development

(Note 9)

1,224,705

—

Inventories (Note 12)

—

(6,462,047)

At end of year 24,199,845 13,419,837 12.

INVENTORIES

Completed houses – At cost 1,366,188 7,346,861 13.

TRADE AND OTHER RECEIVABLES

Trade receivables 6,322,142 5,222,197

Other receivables 1,002

—

Deposits 97,299 96,500

Accrued billings

—

1,468,221

Prepayments

—

778 6,420,443 6,787,696

22hb Jun 2006]

1695

Trade receivables comprise amounts receivable from customers for property development projects. The credit period granted on sales of development properties is 14 days (also 14 days in 2004).

The Company is a wholly-owned subsidiary company of Johor Land Berhad

(12379-K), a company incorporated in Malaysia. The Company’s Ultimate

Holding Corporation is Johor Corporation, a body corporate established under the Johor Corporation Enactment (No. 4 of 1968) (as amended by

Enactment No. 5 of 1995).

The amount owing to ultimate holding corporation and immediate holding company arose mainly from expenses paid on behalf which are unsecured, interest-free and have no fixed terms of repayment.

The amount owing to another related company arose mainly from trade transactions which are unsecured and interest free.

Significant transactions undertaken with its related companies during the financial year are as follows:

2005 2004

Ultimate holding corporation:

Secretarial fee paid/payable 4,850 3,780

Immediate holding company:

Dividend paid/payable 797,781 487,670

Management fee paid/payable 155,579 233,843

Corporate fee paid/payable 48,000 54,000

Related company:

Johor Land Manufacturing Sdn. Bhd.

Purchase of goods

—

8,800

The directors of the Company are of the opinion that the above transactions have been entered into in the normal course of business and have been established under terms that are no less favourable than those arranged with independent third parties.

2005 2004

Deposits with a licensed bank 2,044,773 5,086,200

Housing Development Account with a licensed bank 6,645,632 380,274

Cash and bank balances 269,125 25,526

Total 8,959,530 5,492,000

1696

[22hb Jun 2006

The Housing Development Account is maintained by the Company in accordance with Section 7(A) of the Housing Developers (Control and

Licensing) Act, 1966. This account, which consists of monies received from purchasers, are for the payment of property development expenditure incurred. The surplus monies, if any, will be released to the Company upon the completion of the property development projects and after all property development expenditure has been fully settled.

The average effective interest rates per annum are as follows:

2005 2004

Deposits 3.3%

2%

Housing Development Account 1.22%

22%

Deposits of the Company have an average maturity of 30 days (also 30 days in 2004).

Trade and other payables comprise amounts outstanding for trade purchases and ongoing costs. The average credit period granted to the Company for trade purchases is 75 days (also 75 days in 2004).

2005 2004

Trade payables 3,828

—

Progress billings 147,720

—

Accruals 14,000 13,800

Amount owing to ultimate holding corporation (Note 14)

512,230 507,380

Amount owing to ultimate holding company (Note 14)

15,010,236 12,281,045

Amount owing to another related company (Note 14)

—

8,800 15,688,014 12,811,025 18.

BORROWING

Unsecured:

Revolving credit 4,000,000 4,000,000

The average effective interest rate is 4% (also 4% in 2004) per annum.

2005 2004

Authorised:

230,000 ordinary shares of RM100 each 23,000,000 23,000,000

Issued and fully paid:

221,606 ordinary shares of RM100 each 22,160,600 22,160,600

22hb Jun 2006]

1697

04 2003

Interim dividend paid/payable 5% less tax for 2005; 3% lesstax for 2004 797,781 478,670

Dividend per share is about 3.6 sen (2.20 sen in 2004).

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 Company are subject to a variety of financial risks, including interest rate risk, credit risk, liquidity risk and cash flow risk.

The Company has formulated a financial risk management framework whose principal objective is to minimize the Company’s exposure to risks and/or costs associated with the financing, investing and operating activities of the Company.

Various risk management policies are approved by the Board for observation in the day-to-day operations for the controlling and management of the risks associated with financial instruments.

Interest rate risk

The Company enters into various interest risk management transactions for the purpose of reducing net interest cost and to achieve interest rates within predictable, desired ranges.

Credit risk

The Company is exposed to credit risk mainly from trade receivables and bank balances.

The Company extends credit to its customers based upon careful evaluation of the customers’ financial condition.

Management believes that the Company’s exposure on credit risk of bank balances is limited as it is placed with credit worthy financial institutions.

Liquidity risk

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

Cash flow risk

The Company reviews its cash flow position regularly to manage its exposure to fluctuations in future cash flows associated with its monetary financial instrumets.

Financial Assets

The Company’s principal financial assets are deposits, cash and bank balances, trade and other receivables.

The accounting policies applicable to the major financial assets are as disclosed in Note 3.

1698

[22hb Jun 2006

Financial Liabilities and Equity Instruments

Debts and equity instruments are classified as either liabilities or equity in accordance with the substance of the contractual arrangement.

Significant financial liabilities of the Company are trade and other payables, inter-company indebtedness and borrowing.

Short term loans are recorded at the proceeds received net of direct issue costs. Finance charges are accounted for on accrual basis.

Equity instruments are recorded at the proceeds received.

Fair Values

Deposits, cash and bank balances, trade and other receivables, inter-company indebtedness, trade and other payables and borrowing.

The carrying amounts approximate fair value because of the short matu-rity of these instruments.

During the financial year, a Bridging Finance-I facility of RM59 million was approved by a local bank to be granted to the Company. This facility is to be secured by certain land held for future development of the Company with carrying amount of RM4,267,390 as of 31 December 2005, guaran-teed by the immediate holding company.

As of the date of report, the Company is in the process of registering the charge of these land held for future development.

STATEMENT BY DIRECTORS

The Directors of Advance Development Sdn. Bhd. state that, in their opinion, the accompanying balance sheet and the related statements of income, cash flows and changes in equity are drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable MASB approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the Company as of 31 December 2005 and of the results of its business and the cash flows of the Company for the year ended on that date.

Signed in accordance with a resolution of the Directors,

A.F.M. SHAFIQUL HAFIZ

ABDUL MALEK BIN TALIB

Johor Bahru 20 February 2006

DECLARATION BY THE OFFICER PRIMARILY RESPONSIBLE FOR THE FINANCIAL

MANAGEMENT OF THE COMPANY

I, Mariana bte Sidi, the Officer Primarily responsible for the financial management of Advance Development Sdn. Bhd., do solemnly and sincerely declare that the accompanying balance sheet and the related statements of income, cash flows and changes in equity 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, 1960.

22hb Jun 2006]

1699

Subscribed and solemnly declared by the abovenamed Mariana bte Sidi at Johor Bahru in the State of

Johor on 20 February 2006

Before me,

HJ. A. HAMID BIN HJ. HASSAN

Commissioner for Oaths

AUDITORS’ REPORT PURSUANT TO REGULATION 12 OF THE HOUSING

DEVELOPERS’ (HOUSING DEVELOPMENT ACCOUNT) REGULATIONS 1991

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005

In the course of our audit as external auditors of Advance Development Sdn.

Bhd. for the year ended 31 December 2005, we have audited the Housing

Development Account required to be opened and maintained pursuant to the

Housing Developers (Housing Development Account) Regulations 1991.

The audit involves the examination of withdrawals from the Housing

Development Account maintained. The account maintained is for the following projects in Taman Bukit Tiram, Ulu Tiram, Johor:

i.

Phase 2;

- 170 units 2-storey low cost terrace

- 146 units 2-storey low medium cost terrace

- 132 units 2-storey low medium cost terrace

- 139 units 1 1/2 storey terrace

- 129 units 2-storey terrace

- 210 units 2-storey terrace

- 42 units 2-storey detached

- 56 units 2-storey shop houses

- 16 units stalls ii.

Phase 2;

- 84 units 2-storey low cost terrace

- 64 units 2-storey low medium cost terrace

- 54 units 2-storey low medium cost terrace

- 213 units 2-storey terrace

- 23 units 2-storey terrace

- 39 units 3-storey shop office; and

- 20 units 2-storey semi-detached

Based on our work done, nothing has come to our attention that causes us to believe that the monies in the Housing Development Account have not been withdrawn in accordance with the Regulations:

Chartered Accountants

Partner

Johor Bahru 20 February 2006

1700

[22hb Jun 2006

AKTA PENGAMBILAN TANAH, 1960

(Seksyen 8)

LAND ACQUISITION ACT, 1960

(Section 8)

PERISYTIHARAN PENGAMBILAN YANG DICADANGKAN

DECLARATION OF INTENDED ACQUISITION