CONTENTS

CORPORATE INFORMATION 2

NOTICE OF ANNUAL GENERAL MEETING 3

STATEMENT ACCOMPANYING NOTICE OF

ANNUAL GENERAL MEETING 5

DIRECTORS’ PROFILE 6

CHAIRMAN’S STATEMENT 8

STATEMENT ON CORPORATE GOVERNANCE 10

STATEMENT OF DIRECTORS’ RESPONSIBILITIES 16

AUDIT COMMITTEE REPORT 17

OTHER INFORMATION 22

LIST OF PROPERTIES 56

ANALYSIS OF SHAREHOLDINGS 78

FORM OF PROXY
2

CORPORATE INFORMATION “Acacia Mangium sawlogs ready for processing

at sawmill”

BOARD OF DIRECTORS

Chairman (Independent Non-Executive Director) Datuk Phang Miow Sin

Group CEO and Executive Director Muk Sai Tat
Non-independent Non-Executive Director Peter Wong
Independent Non-Executive Director Ganesan a/l Sundaraj
Independent Non-Executive Director Tunku Makhlad bin Tunku Mohamed Jamil

AUDIT COMMITTEES

Chairman Ganesan a/l Sundaraj

Member Muk Sai Tat
Member Tunku Makhlad bin Tunku Mohamed Jamil

COMPANY SECRETARIES REGISTERED OFFICE

Lim Phooi Kee (MIA 2759) Suite 19.06 19th Floor, Menara MAA
Nuruluyun Binti Abdul Jabar (MIA 9113) No. 12 Jalan Dewan Bahasa
50460 Kuala Lumpur
Wilayah Persekutuan

Tel: +603-2145 1880

Fax: +603-2143 1880

AUDITORS PRINCIPAL BANKERS

PKF Alliance Bank Malaysia Berhad

(Chartered Accountants) Arab Malaysian Finance Berhad
9th Floor, MCB Plaza,
No. 6 Changkat Raja Chulan,
50200 Kuala Lumpur

SHARE REGISTRARS SOLICITORS

Symphony Share Registrars Sdn Bhd Ravi, Beltran & Co.

Level 26, Menara Multi-Purpose
Capital Square
No. 8 Jalan Munshi Abdullah
50100 Kuala Lumpur
Tel: +603-2721 2222
Fax: +603-2721 2530 / +603-2721 2531

STOCK EXCHANGE LISTING

Second Board of the Bursa Malaysia Securities Berhad
 3

NOTICE OF NINTH ANNUAL

GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the Ninth Annual General Meeting of the Company will be held at The Auditorium,
Podium 1, Menara MAA, No.12 Jalan Dewan Bahasa, 50460 Kuala Lumpur on Wednesday, 29 June 2005 at 3.30 p.m
for the following purposes:

• AGENDA

ORDINARY BUSINESS

1) To receive the Audited Financial Statements for the year ended 31 December 2004
together with the Directors’ and Auditors’ Reports thereon. Resolution 1
2) To approve the payment of Directors’ fees for the year ended 31 December 2004. Resolution 2
3) To re-elect the following Directors who are retiring in accordance with Article 80
of the Company’s Articles of Association:
(a) Ganesan A/L Sundaraj Resolution 3
(b) Tunku Makhlad bin Tunku Mohamed Jamil Resolution 4
4) To re-appoint Messrs. PKF, the retiring Auditors, and to authorise the Board of Directors
to fix their remuneration. Resolution 5

SPECIAL BUSINESS

5) To consider and, if thought fit, to pass with or without modifications, the following
resolution as an Ordinary Resolution:-

Ordinary Resolution
Authority for Directors to Allot and Issue Shares

“THAT subject always to the approvals of the relevant authorities, the Directors be and are hereby authorised
pursuant to Section 132D of the Companies Act, 1965, to allot and issue shares in the Company at any time and
upon such terms and conditions and for such purposes as the Directors may deem fit, provided that the
aggregate number of shares to be issued pursuant to this resolution does not exceed ten per centum (10%) of
the total issued capital of the Company at the time of issue and that such authority shall continue to be in force
until the conclusion of the next Annual General Meeting of the Company.”
Resolution 6

ANY OTHER BUSINESS

6) To transact any other ordinary business of the Company of which due notice shall have been given in accordance
with the Company’s Articles of Association and the Companies Act, 1965.

By Order Of The Board

MANGIUM INDUSTRIES BHD.

Lim Phooi Kee (MIA 2759)

Nuruluyun Binti Abdul Jabar (MIA 9113)
Company Secretaries

Dated: 7 June 2005

4

“Bandsaw blade at sawmill in Mempakad”

Notes:

* A member entitled to attend and vote at the Meeting is entitled to appoint a Proxy or Proxies to attend and
vote on his (her) instead. A Proxy may but need not be a member of the Company and the provisions of
Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

* Where a member appoints two (2) or more Proxies to attend and vote at the same Meeting, such
appointment shall be invalid unless the member specifies the proportions of his (her) shareholdings to be
represented by each Proxy.

* Where a member of the Company is an Authorised Nominee as defined under the Securities Industry
(Central Depositories) Act, 1991, it may appoint at least one (1) proxy in respect of each securities account
it holds with ordinary shares of the Company standing to the credit of the said securities account.

* The instrument appointing a proxy shall be in writing under the hand of the appointor or his/her attorney
duly authorised in writing or if the appointor is a corporation/company, either under its common seal or
under the hand of an officer or attorney duly authorised.

* The instrument appointing a Proxy must be deposited at the Registered Office of the Company at Suite
19.06, 19th Floor, Menara MAA, No. 12 Jalan Dewan Bahasa, 50460 Kuala Lumpur, not less than forty-eight
(48) hours before the time set for the Meeting or any adjournment thereof.

Explanatory Note on Special Business

Resolution pursuant to Authority for Directors to Allot and Issue Shares

The proposed Resolution 6 under item 5 above, if passed, will empower the Directors of the Company, from the date of
the above Annual General Meeting, authority to allot and issue shares in the Company up to an amount not exceeding
in total 10% of the issued capital of the Company for such purposes as the Directors consider would be in the best
interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the next Annual
General Meeting.
 5

STATEMENT ACCOMPANYING NOTICE

OF ANNUAL GENERAL MEETING
1. The place, date and hour of the Ninth Annual General Meeting:

Date of Meeting Time of Meeting Place of Meeting

29 June 2005 3.30 p.m The Auditorium, Podium 1, Menara MAA,

No.12, Jalan Dewan Bahasa, 50460 Kuala Lumpur.

2. The names of individuals who are standing for re-election:

To re-elect the following Directors who are retiring in accordance with Article 80 of the Company’s Articles of
Association:
1. Ganesan A/L Sundaraj
2. Tunku Makhlad bin Tunku Mohamed Jamil

3. The details of attendance of Directors at Board Meetings:

PARTICULARS OF MEETINGS

Place: Board Room, Suite 19.06, 19th Floor, Menara MAA, No. 12 Jalan
Dewan Bahasa, 50460 Kuala Lumpur.
DIRECTORS REMARKS
29th Board 30th Board 31st Board 32nd Board 33rd Board
Meeting Meeting Meeting Meeting Meeting
19.02.2004 26.04.2004 21.05.2004 23.08.2004 25.11.2004

1. Datuk Phang - √ √ √ √ 4/4

Miow Sin (appointed w.e.f.
22.03.2004)
2. Muk Sai Tat - √ √ √ √ 4/4
(appointed w.e.f.
02.04.2004)
3. Peter Wong - √ √ √ √ 4/4
(appointed w.e.f.
02.04.2004)
4. Ganesan a/l Sundaraj √ √ √ √ √ 5/5

5. Tunku Makhlad bin √ √ √ √ X 4/5

Tunku Mohamed Jamil

6. Mohd Silahuddin bin √ - - - - 1/5

Jamaluddin (resigned w.e.f.
22.03.2004)
7. Chin Kam Bin @ √ - - - - 1/5
Cheng Kam Meng (resigned w.e.f.
02.04.2004)
8. Tengku Ahmad Fuad X - - - - 0/1
bin Tengku Ahmad (resigned w.e.f
Burhanuddin 02.04.2004)

4. Further details of individuals who are standing for re-election as Directors:

Please refer to the Directors’ Profile appearing on pages 6 to 7.

6

DIRECTORS’ PROFILE “Workers at sawmill in Mempakad”

Name Datuk Phang Muk Sai Tat Peter Wong Ganesan a/l Tunku Makhlad bin
Miow Sin Sundaraj Tunku Mohamed Jamil

Age 66 42 63 43 60

Nationality Malaysian Malaysian Malaysian Malaysian Malaysian

Qualification Primary and Master in Business Management Chartered Diploma in automobile

Secondary School Administration Development Accountant (CA) engineering in association
at Victoria Institute, (General Programme from of the Malaysian with the institute of Road
Singapore from Management) Asian Institute of Institute of Transport Engineers and
1946 to 1956 University of Bath, Management Accountants and Post Diploma in Transport
U.K. , Chartered Associate Member Management from
Accountant (CA) of the Chartered Willesdon College of
Institute of Technology, London
Management
Accountants
(CIMA)

Position on the Board Independent Group CEO and Non-Independent Independent Independent
Non-Executive Executive Director Non-Executive Non-Executive Non-Executive Director
Chairman Director Director

Date appointed to the Board 22.03.2004 02.04.2004 02.04.2004 25.02.2002 04.09.2003

Working experience General Fleet His career started Senior Corporate & Transport
& occupation Manager of Cycle & in audit with Price Management Restructuring Administrator for
Carriage, 1965 to Waterhouse (1983- Executive of Services Malaysia Airline
1972. Self 1990) and Integrated Timber Consultant, Ernst & Berhad from 1981
employed in import thereafter with Complex from Young in Malaysia, to 1994. Transport
/export trading, Ogilvy & Mather 1972 to 1983. 1981 to 1990. Sits Controller for
construction, (M) Sdn. Bhd. as Senior Business on the Board of Malaysia Airline
property Accountant (1990- Development several public and Berhad from 1994
development and 1991), Eveready Executive from private limited to 2000.
timber businesses Battery Co. (M) 1983 till present. companies in
in Malaysia, China Sdn. Bhd. as Sits on the board Malaysia.
and Canada from Accounting of several private
1972 to 1988. Manager (1991- limited companies
Chairman of P & I 1996), Emerson in Malaysia,
Properties Sdn Bhd Electric (M) Sdn including several
from 1998 till Bhd. as Financial subsidiaries of
present. Sits on the Controller - South Mangium
board of several Asia Region (1996- Industries Bhd.
private limited 1999), Pernas Otis
corporations in Elevator Sdn. Bhd.
Malaysia. as Chief Financial
Officer/Financial
Controller (1999-
2000), Skyline
Concept Sdn Bhd.
as Vice President-
General Manager
(2000 - 2001) and
Group CEO of
Concino Sdn. Bhd.
(2001 - 2004)
 7

“Workers at Line 1 of production process at

sawmill in Mempakad”

Name Datuk Phang Muk Sai Tat Peter Wong Ganesan a/l Tunku Makhlad bin
Miow Sin Sundaraj Tunku Mohamed Jamil

Working experience before assuming

& occupation his present
position. Sits on
the board of
several private
limited companies
in Malaysia,
including all
subsidiaries of
Mangium
Industries Bhd
(“MIB”).

Membership of Board • Remuneration • Audit Committee None • Audit Committee • Audit Committee
Committees Committee • Remuneration • Remuneration
• Nomination Committee Committee
Committee • Nomination • Nomination
Committee Committee

Directorships of other None None None • Pan Pacific None

Public Companies Asia Bhd
• Promto Berhad
• CHG Industries
Berhad
• Bukit Katil
Resources Berhad

Securities holdings in the As disclosed in As disclosed in As disclosed in As disclosed in As disclosed in

Company and its page 25 of the page 25 of the page 25 of the page 25 of the page 25 of the
subsidiaries Annual Report Annual Report Annual Report Annual Report Annual Report

Family relationship with None None None None None

any Director and/or major
shareholder

Conflict of interest with None None None None None

the Company

List of convictions for None None None None None

offences within the past 10
years other than traffic
offences
8

CHAIRMAN’S STATEMENT “Acacia Hybrid at SAFODA nursery in Telaga”

Dear Shareholders

2004 was indeed an eventful year. The Malaysian economy is expected to be on target to achieve a 7 percent growth
for 2004 with an outstanding 8 per cent growth in the first half of 2004 and a 6.8 percent growth in the third quarter.
This was despite a more trying worldwide and regional environment with the surge in oil prices, the re-emergence of
SARS and the tsunami devastation in the third and final quarter of 2004.

For 2005, the Malaysian economy is expected to remain resilient despite a slow down in the world economy due to the
high oil prices, inflationary pressures and potential interest rate hikes. The outlook for the timber industry is however,
expected to improve with increasing demand for plantation wood as a result of worldwide pressures championing
sustainable forest management practices. This coupled with the consumption trends for raw wood based products
from the region, notably China and Japan, is anticipated to fuel the positive outlook of the MIB Group.

On behalf of the Board, I am pleased to present this Annual Report and Financial Statements of Mangium Industries Bhd
for the financial year ended 31 December 2004.

YEAR 2004 SUMMARY AND HIGHLIGHTS

Despite the good fundamentals, the industry remains challenging. The Group recorded a turnover of RM41.9 million
and a pre-tax loss of RM9.9 million for the year under review compared to a turnover of RM25.1 million and a pre-tax
loss of RM13.7 million in 2003.

The year witnessed an increase in demand for plantation grown timber, more so for operators who subscribe to
sustainable forest management best practices as worldwide pressure mounts for users to be more responsible to the
environment. The Group’s timber division recorded a turnover increase by 149% while its loss before tax shrunk by
31% compared to the immediate preceding year.

It was also a year where our non-timber sector operated in an unprecedented taxing environment governed by raw
material price increases, the introduction of new government policies and taxes impacting liquor products, employment
of foreign workers as well as a general shrinking expenditure in advertising and printing in the local market. Despite
the unforgiving economic situation, the non-timber sector of the Group managed to pull in a modest profit. The
distribution and blending of alcoholic beverages division’s turnover declined marginally by 6% from 2003 while profit
before tax dropped by 5% compared to the earlier year. The printing division, however, charted a clear improvement,
with turnover and profit before tax increasing by 17% and 222% respectively over 2003.

I am also pleased to report that the Group’s ongoing Corporate Restructuring Scheme has received the approval from
the Securities Commission on 4 March 2005, rewarding the tremendous efforts put in by all parties who have toiled
tirelessly till this point. As the Group now embarks on the implementation of the Scheme, we can look forward to a
brighter future with an organization unimpeded by the shadow of its earlier financial obligations.

I am also happy to announce that our Joint Venture with Telaga Chipmill Sdn Bhd to build and operate a wood chip mill
in Telaga, Pitas is progressing smoothly, thereby securing the majority of sales of our plantation logs. With the current
increase in both demand and prices for quality wood chips from international buyers, I am confident that Telaga Chipmill
Sdn Bhd will increase their off-take of logs from the Group once they commence commercial production. This
mutually beneficial joint venture will also result in the Group participating by way of profit sharing from the sales of
 9

“Acacia Mangium bark”

wood chips and shall contribute positively to the Group’s bottom line in the years to come. Another note worthy of
mention is that this wood chip mill project shall also directly and indirectly contribute to the development of the local
socio-economic status of the people in the area.

DIVIDENDS
After taking into consideration of the Company’s financial position, the Board does not recommend the payment of
dividends for the financial year ended 31 December 2004.

GOING FORWARD
The MIB Group’s core emphasis will remain focused on the consolidation of existing businesses, coupled with ongoing
planning for the future. In addition to the existing plantation division, the Group’s niche businesses in printing,
blending and distribution of alcoholic beverages, as well as media and content development are expected to form the
key engine of growth in the next few years.

In the meantime, to fuel growth and enhance profitability, efforts are ongoing within the Group to target markets and
products with higher margins. 2005 will also see the Group increasing its focus on customer service and adopting more
proactive approaches in Group costs savings to negate the ever rising production costs.

The outlook for the coming financial year is one of vigilance amid concerns and hinges upon trends in world oil prices,
the costs of raw materials and other global macroeconomic factors, the successful sourcing and retention of suitable
key staff, kind weather and operating conditions at our plantation among other factors.

In our effort to enhance internal controls and correspondingly, corporate governance of the Group, the Board of
Directors has appointed a firm to carry out internal audit reviews of companies in the Group. The internal auditors shall
report their findings and recommendations to the Audit Committee after conducting their audits to assist the
committee in formulating strategies and plans to further enhance and improve internal controls and operating
efficiencies of the Group.

OUR HEARTFELT THANKS

On behalf of the Board, I wish to express our appreciation to the management and staff of the Group for their hard work
and dedication. Our thanks also go towards the Malaysian government, the regulatory authorities, the media, our
customers, shareholders, bankers, advisors and business associates for their incalculable support and assistance. On
9 August 2004, Mr. Peter Wong has been designated Non Independent and Non-Executive Director. Besides that, there
were no other changes to the Board composition during the year. Having worked closely together during the past year
has given me the added assurance that each Board member is fully committed to working towards bringing the Group
to profitability and growth in the coming years. Finally, I wish to also record my appreciation to my fellow Directors for
their solid contribution and support during the year.

Thank you.

DATUK PHANG MIOW SIN

CHAIRMAN
10

STATEMENT ON
CORPORATE GORVERNANCE “Mid stream loading to barge of Acacia Mangium
pulp logs”

The Board of Mangium Industries Bhd. (“the Company” or “MIB”) is pleased to report to the shareholders on the
manner the Group has applied the Principles, and the extent of compliance with the Best Practices of good corporate
governance as set out in Part 1 and Part 2 respectively of the Malaysian Code on Corporate Governance (the Code)
pursuant to Paragraph 15.26 of the Listing Requirements of the Bursa Malaysia Securities Berhad (“Bursa Securities”).
The Group recognises that the implementation of the Best Practices set out in the Code is an on-going process, thus
the Company strives to ensure that the areas of the Code which have yet to be implemented are given due attention.

A. THE BOARD OF DIRECTORS

1. The Board and its Responsibilities

The Board consists of five (5) members comprising the Chairman (Independent Non-Executive), the Group CEO
and Executive Director (the Group CEO), one (1) Non-Independent Non-Executive Director and two (2)
Independent Non-Executive Directors. The present Board composition complies with the Listing Requirements of
the Bursa Securities.

The role of the Chairman is to ensure a balance of power and authority. The Board has within it, professionals
drawn from various backgrounds, contributed in-depth and diversity in experience, expertise and perspectives to
the Group’s business operations.

The Group CEO is responsible for making and implementing operational decisions and running the Group’s day to
day business. The Non-Executive Directors support the skills and experience of the Group CEO by reviewing and
approving strategy and policy based on their knowledge and experience of similar and other business fields.

The Board has identified Mr Ganesan a/l Sundaraj, a Senior Independent Non-Executive Director to whom
concerns may be conveyed.

The profiles of the Directors are set out on pages 6 to 7 in this Annual Report.

2. Supply of Information
The Board meets at least four (4) times a year and has a formal schedule of matters reserved to members for
decision. The Board members are supplied with full and timely information to enable them to discharge their
duties.

All Directors have full and complete access to the information and are entitled to obtain full disclosure by the
management. In addition, they also have access to the advice and services of the Company Secretary who is
responsible for ensuring that Board Meeting procedures are followed and that applicable rules and regulations
are complied with. Independent professional advice is also available to them in appropriate circumstances at the
Company’s expenses.
 11

“Sorting of Acacia Mangium logs at

Telaga logyard”

3. Appointment to the Board

In the past, the appointments of the Directors were solely made by the Board. In adopting the Best Practice of the
Code, the Nomination Committee was established on 23 May 2002. Currently, the present members of the
Nomination Committee are as follows:

a. Datuk Phang Miow Sin (Chairman) (appointed w.e.f. 22.04.2004)

b. Mr. Ganesan a/l Sundaraj
c. Tunku Makhlad bin Tunku Mohamed Jamil (appointed w.e.f. 22.04.2004)

The Nomination Committee serves to ensure that the Company has an effective Board comprising Directors of the
required mix of skill, experience and other qualities including core competencies. This Committee shall be
responsible for identifying, recruiting and recommending suitable candidates for directorship as well as to
annually assess the effectiveness of the Board as a whole.

4. Re-election
One-third (1/3) of the Directors shall retire by rotation each financial year in accordance with the Company’s
Articles of Association and being eligible, offer themselves for re-election at the Annual General Meeting. An
election of the Directors of the Company shall take place every year and all the Directors of the Company shall
retire from office once at least in each three (3) years but shall be eligible for re-election. Directors appointed by
the Board to fill vacancies are subject to retirement and election by the shareholders at the next Annual General
Meeting following their appointments.

5. Directors’ Training
“All Directors of the Company have completed the Mandatory Accreditation Programme (MAP) and are now
undergoing the Continuing Education Programme (CEP) as prescribed by the Bursa Malaysia Securities Berhad.”

6. Relationship of the Board to Management

The Management maintains a very close relationship with the Board of Directors in order to implement the
objectives, policies and decisions made by the Board during the Board of Directors’ meetings in the financial year.
12

“Acacia Mangium pulp log loading at logyard in

Talaga”

B. DIRECTORS’ REMUNERATION

1. The Level and Make-up

The remuneration policy of the Company for the Group CEO and the Executive Director is such as to secure and
retain the skills and experience required to meet the challenges of the Group and shall be structured to link
rewards to corporate and individual performance. For Non-Executive Directors, the level of remuneration shall
reflect the experience and level of responsibilities undertaken by the particular Non-Executive Director concerned.

2. Remuneration Committee and Procedure

The remuneration policy of the Company for the Group CEO and the Executive Director shall be fixed and
determined by the Board as a whole with the Directors concerned abstaining from deliberations and voting on
decisions in respect of their individual remuneration. The fees payable to the Independent Non-Executive Directors
shall from time to time be determined by an ordinary resolution of the Company in general meeting.

In compliance with the Code, the Remuneration Committee was established on 23 May 2002. However, the
present members of the Nomination Committee are as follows :

a. Datuk Phang Miow Sin (Chairman) (appointed w.e.f. 22.04.2004)

b. Mr. Ganesan a/l Sundaraj
c. Tunku Makhlad bin Tunku Mohamed Jamil (appointed w.e.f. 22.04.2004)

This Committee shall be responsible to access the appropriate remuneration level and to ensure that the
remuneration of each of the Board member reflects the level of performance and responsibility taken.

3. Disclosure
The details of the Directors’ remuneration for the financial year ended 31 December 2004 are as follows: -

Amount Annually Executive Non-Executive

RM 50,000 & below 1 5

RM 50,001 to RM 100,000 2 -

The aggregate remuneration of the Directors is categorised below:

Salaries & Allowances (RM) Fees (RM) Total(RM)

Executives 234,673 1,500 236,173

Non-Executives - 87,000 87,000

*Note: This is subject to shareholder’s approval at the forthcoming Annual General Meeting.
 13

“Mature Acacia Mangium trees ready for

harvesting at Bengkoka concession”

C. RELATIONSHIP WITH SHAREHOLDERS

The Board maintains an effective communications policy that enables both the Board and the management to
communicate effectively with its shareholders and the public. The policy effectively interprets the operations of
the Company and the Group to the shareholders and accommodates feedback from shareholders, which are
factored into the Group’s business decision.

The Board communicates information on the operations, activities and performance of the Group to the
shareholders, stakeholders and the public through the following:

(i) The Annual Report, which contains the financial and operational review of the Company and the Group’s
business, corporate information, financial statements and information on Audit Committee and Board of
Directors; and
(ii) Various announcements made to the Bursa Securities, which includes announcements on quarterly results.

The Annual General Meeting serves as an important means for shareholders communication. Notice of the Annual
General Meeting and Annual Reports are sent to shareholders twenty one (21) days prior to the meeting. At each
Annual General Meeting, the Board presents the performance and progress of the Company and the Group and
provides shareholders with the opportunity to raise questions pertaining to the Group. The Chairman and the
Board will respond to the questions raised by the shareholders during the Annual General Meeting.

The Board has ensured each item of special business included in the notice will be accompanied by an
explanatory statement on the effects of the proposed resolution.

D. ACCOUNTABILITY AND AUDIT

The Board aims to present a balanced and understandable assessment of the Company and the Group’s position
and prospect through the annual financial statements and quarterly announcements of results to the Bursa
Securities. The Directors are responsible to ensure the annual financial statements are prepared in accordance
with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia.

1. Financial Reporting
The Directors consider that in preparing the financial statements which are set out in this Annual Report in
separate statement, the Company has adopted appropriate accounting policies, consistently applied and
supported by reasonable and prudent judgments and estimates and all applicable approved accounting standards
have been followed in order to present a true and fair view of the state of affairs of the Company and the Group
as at the end of the financial year and of the profit or loss for the year.

The Directors in preparation of the financial statements have requested the Auditors to take whatever steps and
to undertake whatever inspections they consider to be appropriate to enable them to render their audit report.
14

“Sunset at logyard in Telaga”

2. Audit Committee
The Audit Committee consists of two (2) Independent Non-Executive Directors (One (1) of whom is the Chairman
of the Audit Committee) and one (1) Executive Director.

The current composition of the Audit Committee is in compliance with the requirement of Paragraph 15.10 (b) of
the Listing Requirements i.e. a majority of the members should be Independent Non-Executive Directors.

The Audit Committee Report is set out on pages 17 to 21 in this Annual Report.

3. Relationship with Auditors

The Audit Committee always maintains a transparent and professional relationship with the external Auditors. The
external Auditors attended most of the Audit Committee Meetings of the Company. From time to time, they
highlight to the Audit Committee and the Board on matters that require their attention.

The external Auditors also present at the Company’s Annual General Meeting and they work closely with the Board
in attending to questions raised by shareholders, specifically in relation to the financial reports of the Company.

4. Internal Control
The Directors acknowledge their responsibilities for maintaining a sound system of internal control to safeguard
shareholders’ investment and the Group’s assets. The internal control system covers not only financial controls
but operational and compliance controls, and risk management. The internal control system is designed to enable
the Company and the Group to manage the risk of failure to achieve business objectives. The internal control
system is designed to provide reasonable and not absolute assurance against material misstatement and losses.
The Group is continuously looking into the adequacy and integrity of its systems of internal control.

The Directors are currently taking steps to enhance the Group’s overall control system which include:

• Clearly established policies and procedures;

• Regular review and update of policies and procedures to meet business needs;
• Clearly defined job responsibilities and appropriate segregation of duties;

Processes shall also be established for identifying, evaluating and managing the significant risks facing the Group
in accordance with the guidance “Statement of Internal Control: Guidance for Directors of Public Listed
Companies” issued by the Bursa Securities.
 15

“MR Print Office in Kepong”

D. STATEMENT OF INTERNAL CONTROL

The Malaysian Code on Corporate Governance sets out as a principal that the Board of Directors of a listed
company should maintain a sound system of internal control to safeguard shareholders’ investment and the
Group’s assets. The Board is committed to maintaining a sound system of the internal controls in the Group and
is pleased to provide the following statement in accordance with the Listing Requirements.

1. Key Processes
The Board has the overall responsibility for the Group’s system of internal control and for reviewing its
effectiveness. However, the system of internal control is designed to manage rather than eliminate the risk of
failure to achieve business objectives, and can provide reasonable and not absolute assurance against material
misstatement and losses. The internal control system covers not only financial controls but operational and
compliance controls, and risk management.

The Board and management are responsible for the ongoing identification, evaluation and managing of significant
risks.

During the financial year ended 31 December 2004 and prior to signing of the published financial statements, the
Board has continued its ongoing process of identifying, evaluating and managing of key financial, operational and
compliance risks facing the business. Details are as follows:

• The Board receives and reviews regular reports from management on the business’ performances updates
of the Group and on current regulatory matters. The Board adopts and approves appropriate policies or
amendments to the Group’s policies and procedures;
• The Audit Committee, on behalf of the Board, reviews and holds discussions with management on the
actions on internal control issues identified by both the management and by the external Auditors;
• There is an organisation structure with clearly defined authority lines;
• Management holds weekly meetings to review operational matters which include sales and marketing,
production, debtors’ collection and cashflow. Detailed minutes are recorded during these meetings;
• The Audit Committee reviews and approves the quarterly financial results. The Audit Committee reports the
quarterly financial results to the Board for their adoption and approval; and
• The Board holds periodic meetings to review operations of the Company.

2. Weaknesses in Internal Control Resulting in Material Losses

There were no material losses incurred during the current financial year as a result of weaknesses in internal
control. The management of the Company continues to take measures to strengthen the internal control
environment.

3. Summary
The Board is pleased to disclose that the Group’s internal control systems are adequate in line with the Code given
the current level of activities of the Group.
16

STATEMENT OF
DIRECTORS’ RESPONSIBILITIES “Printers configuring equipment for next print
run at MR Print”

STATEMENT OF DIRECTORS’ RESPONSIBILITIES FOR PREPARING THE ANNUAL AUDITED FINANCIAL STATEMENTS

In accordance with the requirements in Paragraph 15.27 (a) of the Listing Requirements of Bursa Securities, the Board
of Directors are required to issue a statement explaining their responsibility for preparing the annual audited financial
statements.

The Directors are responsible for the preparation of the financial statements for each financial year which give a true
and fair view of the state of affairs of the Company and of the Group as at the financial year end and of the results and
cashflows of the Company and of the Group for the financial year then ended.

In ensuring the preparation of these financial statements, the Directors have:

• Adopted suitable accounting policies and apply them consistently;

• Made judgements and estimates that are reasonable and prudent;
• Ensures that applicable approved accounting standards have been complied with and confirm that the financial
statements have been prepared on a going concern basis.

The Directors are accountable for ensuring that proper accounting and other records are kept which disclose with
reasonable accuracy at any time the financial position of the Company and of the Group and to enable them to ensure
that the financial statements comply with approved accounting standards and the provisions of the Companies Act,
1965.

The Directors are also responsible to safeguard the assets of the Company and of the Group and to prevent and detect
fraud and other irregularities.
 17

AUDIT COMMITTEE REPORT

MEMBERS OF THE AUDIT COMMITTEE

Ganesan a/l Sundaraj Independent Non-Executive Director (Chairman)

Muk Sai Tat Group CEO and Executive Director

Tunku Makhlad bin Tunku Mohamed Jamil Independent Non-Executive Director

ROLE OF AUDIT COMMITTEE

1. Assisting the Board of Directors in the discharge of their statutory duties and responsibilities in the following area:

a. Preparation of quarterly financial reports and annual financial statements that give a true and fair view of the
Group’s affairs and results.
b. Manage the Group’s affairs in compliance with laws and regulations and proper standards of conduct.
c. Establishment and maintenance of internal controls for areas of risks to provide reasonable and reliable
financial information.
d. Review of the quality and performance of the internal and external audit function.

2. Provide, by the way of regular meetings, a line of communication between the Board and the internal and
external Auditors.

3. Enhance the perception held by other interested parties (shareholders, regulators, creditors, etc) of the
credibility and objectivity of the financial reports.

TERMS OF REFERENCE

1. Primary Objectives:

The Committee shall:

1.1 Provide assistance to the Board in fulfilling its fiduciary responsibilities relating to corporate accounting and
reporting practices for the Company and all its subsidiaries (“Group”).
1.2 Improve the Group’s business efficiency, the quality of the accounting and audit function and strengthen the
confidence of the public in the Group’s reported results.
1.3 Maintain, through regularly scheduled meetings, a direct line of communication between the Board and the
internal and external Auditors.
1.4 Enhance the independence of both the external and internal audit functions through active participation in
the audit process.
1.5 Strengthen the role of the Non-Executive Directors by giving them a greater depth of knowledge as to the
operations of the Group through their participation in the Committee.
1.6 Create a climate of discipline and control which will reduce the opportunity for fraud.
1.7 Provide a framework within which the external Auditors can assert their independence in the event of a
dispute with management.
18

“Workers regularly check and maintain

equipment at MR Print”

2. Appointment/Composition:

2.1 The members of the Committee shall be appointed by the Board and their period of appointment shall be
concurrent with their tenure in the Board.
2.2 The Audit Committee shall consist of not less than three (3) members of whom:
a) a majority shall be Independent Directors;
b) at least one (1) member of the Committee:
(i) must be a member of the Malaysian Institute of Accountants; or
(ii) if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3)
years’ working experience; and

• he must have passed the examinations specified in Part I of the First Schedule of the
Accountants Act, 1967; or
• he must be a member of one (1) of the associations of accountants specified in Part II of
the First Schedule of the Accountants Act, 1967; or

(iii) fulfils such other requirements as prescribed the Exchange.

c) he must have a degree/masters/doctorate in accounting or finance and at least 3 years’ post
qualification experience in accounting or finance; or
d) he must have at least 7 years’ experience being a chief financial officer of a corporation or having the
function of being primarily responsible for the management of the financial affairs of a corporation.

2.3 No Alternate Director shall be appointed as a member of the Committee.

2.4 A quorum shall be two (2) members and composed of a majority of Independent Directors.
2.5 The Chairman of the Committee shall be appointed by the members of the Committee among their number
who is an Independent Director.
2.6 The Board must review the term of office and performance of the Committee and each of its members at
least once every three (3) years to determine whether such Committee and members have carried out their
duties in accordance with their terms of reference.
2.7 The Board shall, within three (3) months of a vacancy occurring in the Audit Committee which result in the
number of members reduced to below three (3), appoint such number of new members as may be required
to make up the minimum number of three (3) members.

3. Meetings:

3.1 Meetings shall be held not less than four (4) times in a year. In addition, the Chairman may call a meeting
of the Committee if a request is made by any Committee members, the Company’s Executive Chairman/CEO
or the internal or external Auditors if they consider it necessary.

3.2 Meeting will be attended by the members of the Committee and the Company Secretary who shall act as the
Secretary, or any representative of the Secretary.

3.3 Participants may be invited from time to time to attend the meeting depending on the nature of the subject
under review. These participants may include the Directors, General Managers, Division Heads,
representatives from the Finance and Internal Audit Departments and external Auditors.
 19

“Capping process at Duncan Gilbey”

4. Authority:

4.1 The Committee is authorised by the Board to carry out the duties mentioned below and the Board and
Management shall give all assistance that is necessary to enable the Committee to discharge its duties.
4.2 The Committee shall, whenever necessary and reasonable for the performance of its duties and in
accordance with a procedure to be determined by the Board and at the Company’s cost:
(a) have authority to investigate any matter within its terms of reference;
(b) have the resources which are required to perform its duties;
(c) have full and unrestricted access to any information pertaining to the Company;
(d) have direct communication channels with the external Auditors and person(s) carrying out the
internal audit function or activity (if any);
(e) be able to obtain independent professional or other advice; and
(f) be able to convene meetings with the external Auditors, excluding the attendance of the executive
members of the Committee, whenever deemed necessary.

5. Functions and Responsibilities:

The functions and responsibilities of the Committee shall include the following:
(a) to discuss and liaise with the external Auditors to ensure the smooth implementation of the audit plan,
review and forward the evaluation of the system of internal controls and audit report to the Board;
(b) to review the assistance given by employees of the Group to the external Auditors;
(c) to assist in the development of an environment in which controls can operate effectively and to keep under
review of the effectiveness of internal control systems and the findings of the internal Auditors, if available;
(d) to review quarterly report and annual financial statements prior to the approval of the Board, focusing
particularly on:
(i) changes in or implementation of major accounting policy changes;
(ii) significant and unusual events; and
(iii) compliance with accounting standards and other legal requirements;
(e) to review any related party transactions and conflict of interest situation that may rise within the Company
and the Group including any transaction, procedure or course of conduct that raise questions of
management integrity;
(f) to review and report the same to the Board any letter of resignation from the external Auditors of the
Company as well as whether there is any reason (supported by grounds) to believe that the Company’s
external Auditors are not suitable for re-appointment;
(g) to make recommendations concerning the appointment of the external Auditors and their remuneration to
the Board;
(h) to review major and extraordinary transactions which have a material impact on the Group; and
(i) to perform any other such functions as may be agreed by the Committee and the Board.

The reports of the Committee and the external and internal Auditors and corrective action taken shall be tabled for
discussion by the Board of Directors.
20

“Bottling process at Duncan Gilbey”

6. Minutes:

The Secretary shall maintain minutes of the proceedings of the meetings and circulate such minutes to all
members of the Committee.

7. Audit Committee Report:

The Committee shall ensure that an audit committee report is prepared at the end of each financial year that
complies with subparagraph (7.1) and (7.2) below:

7.1 The audit committee report shall be clearly set out in the Annual Report of the Company;

7.2 The audit committee report shall include the following:

(a) the composition of the Committee, including the name, designation (indicating the chairman) and
directorship of the members (indicating whether the Directors are independent or otherwise);
(b) the terms of reference of the Committee;
(c) the number of Committee meetings held during the financial year end and details of attendance of each
member;
(d) a summary of activities of the Committee in the discharge of its functions and duties for that financial
year of the Company; and
(e) the existence of an internal audit function or activity and where there is such a function or activity, a
summary of the activities of the function or activity. Where such a function or activity does not exist,
an explanation of the mechanism that exist to enable the Committee to discharge its functions
effectively.

8. Internal Audit Function :

The Group will focus on risk-based approach to the implementation and monitoring of internal controls. The
monitoring process also forms the basis for continually improving the risk management process in the context of
the Group’s overall goals.

To assist the Board of Directors in monitoring and managing risks and internal controls, the Group appointed
Messrs CGRM Infocomm Sdn Bhd to provide internal audit services.

9. Reporting of Breaches To The Exchange:

Where the Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved
resulting in a breach of the Bursa Securities’s Listing Requirements, the Committee shall promptly report such
matter to the Exchange.
 21

“Anika Import & Duncan Gilbey

Office in Kepong”

ATTENDANCE AT MEETINGS

The majority of members present in order to form a quorum necessary for the transaction of business of the Audit
Committee shall be the independent non-executive directors, and in any case shall be two (2) members and composed
of a majority of Independent Directors.

The number of Audit Committee meetings held during the financial year and the attendance of each Audit Committee
members are as follows:

Meetings of The Audit Committee (“ACM”) For The Year 2004

PARTICULARS OF MEETINGS

Place: Board Room, Suite 19.06, 19th Floor, Menara MAA, No. 12 Jalan
Dewan Bahasa, 50460 Kuala Lumpur.
COMMITTEE REMARKS
MEMBERS 23rd ACM 24th ACM 25th ACM 26th ACM 27th ACM
Date: Date: Date: Date: Date:
19.02.2004 26.04.2004 21.05.2004 23.08.2004 25.11.2004

1. Ganesan a/l Sundaraj √ √ √ √ √ 5/5

2. Mohd Silahuddin bin √ - - - - 1/1

Jamaluddin (resigned w.e.f.
22.03.2004)

3. Chin Kam Bin @ √ - - - - 1/1

Cheng Kam Meng (resigned w.e.f.
02.04.2004)

4. Tunku Makhlad bin - √ √ √ X 3/4

Tunku Mohamed Jamil (appointed w.e.f.
22.04.2004)

5. Muk Sai Tat - √ √ √ √ 4/4

(appointed w.e.f.
22.04.2004)

ACTIVITIES OF THE AUDIT COMMITTEE DURING THE FINANCIAL YEAR

In line with the Terms of Reference of the Committee, the Committee carried out the following activities during the
financial year ended 31 December 2004 in discharging its duties and functions:

1. Review the Group’s year end audited financial statements presented by the external Auditors and recommend the
same to the Board for approval.
2. Review of the quarterly results of the Group for the financial quarters ended 31 December 2003, 31 March 2004,
30 June 2004 and 30 September 2004 prior to submission to the Board of Directors for consideration and
approval.
3. Met with the external Auditors to discuss the audit plan and proposed audit fees.
22
OTHER INFORMATION REQUIRED
BY THE LISTING REQUIREMENTS OF
THE BURSA SECURITIES
OTHER INFORMATION REQUIRED BY THE LISTING REQUIREMENTS OF THE BURSA SECURITIES

Utilisation of proceeds from corporate proposal

There were no proceeds raised from any corporate proposal during the financial year 2004.

Share buy-back
There was no share buy-back carried out during the financial year 2004.

Options/Warrants/Convertible Securities
There were no options, warrants nor convertible securities issued by the Company during the year.

American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) Programme

During the financial year, the Company did not sponsor any ADR or GDR programme.

Imposition of sanctions and penalties

There were no sanctions or penalties imposed on the Company and its subsidiaries, Directors and management by the
relevant regulatory bodies during the financial year.

Non-Audit Fees
There were no non-audit fees paid to external Auditors during the financial year 2004.

Profit Guarantee
For the financial year ended 31 December 2002, the Group’s audited financial results showed a loss before taxation
amounted to RM19,570,366. Based on the Profit Guarantee and stakeholder Agreement dated 9 December 1997 and
subsequent revised agreement dated 8 September 1998, the guarantors are liable to compensate the company for the
deficiency arising thereof, being the difference between the Group’s audited profit before taxation and the profit
guarantee amount of RM8,500,000 for the financial year ended 31 December 2002.

The Company has on 5 March 2004, notified the Securities Commission of the breach of the Profit Guarantee and
Stakeholder Agreement dated 9 December 1997 and subsequently revised agreement dated 8 September 1998 in
respect of RM8,500,000 and the Company has on 22 March 2005 obtained judgement in default against the guarantors
concerned. The income from the profit guarantee will only be recognized upon full receipt of the guaranteed sum.

Material Contracts Involving Directors’ and Major Shareholders’ Interest

There were no material contracts entered into by the Company and its subsidiaries involving the Directors’ and major
shareholders’ interests.

MANGIUM INDUSTRIES BHD

MR PRINT SDN BHD

DUNCAN GILBEY (M) SDN BHD

ANIKA IMPORT & EDAR SDN BHD
FURNEFLEX MARKETING SDN BHD

MS RESEARCH SDN BHD

 FINANCIAL STATEMENTS
DIRECTORS’ REPORT 24

FINANCIAL STATEMENTS

INCOME STATEMENTS 28

STATEMENT OF CHANGES IN EQUITY 29

BALANCE SHEETS 30

CASH FLOW STATEMENTS 31-32

NOTES TO THE FINANCIAL STATEMENTS 33-53

STATEMENT BY DIRECTORS 54

STATUTORY DECLARATION 54

AUDITORS’ REPORT 55

MANGIUM SAWMILL SDN BHD

MANGIUM PLANTATION SDN BHD

ANIKA TIMBER SDN BHD

ANIKA PLANTATION SERVICES

SDN BHD

Acacia Mangium concession at Pitas Sabah

24

DIRECTORS REPORT
The directors have pleasure in presenting their report and the audited financial statements of the Company and of the
Group for the financial year ended 31 December 2004.

• PRINCIPAL ACTIVITIES
The principal activity of the Company is investment holding. The principal activities of its subsidiary companies are
described in Note 12 to the financial statements. There have been no significant changes in the nature of these
activities during the financial year.

• FINANCIAL RESULTS

GROUP COMPANY
RM RM

Loss before taxation (9,971,658) (2,713,739)

Taxation (502,723) -

Loss after taxation (10,474,381) (2,713,739)

Minority interest (110,450) -

Loss after taxation and minority interest (10,584,831) (2,713,739)

• DIVIDEND
No dividend has been paid or declared by the Company since the end of the previous financial year.

• RESERVES AND PROVISIONS

There were no material transfers to or from reserves and provisions during the financial year except as disclosed in Note
21 to the financial statements.

• SHARE CAPITAL
During the financial year, there was no issue of shares.

• DIRECTORS
The directors who have held office during the period since the date of the last report are:-

Ganesan A/L Sundaraj

Tunku Makhlad Bin Tunku Mohamed Jamil
Datuk Phang Miow Sin
Peter Wong
Muk Sai Tat

In accordance with Article 80 of the Company’s Articles of Association, Tunku Makhlad Bin Tunku Mohamed Jamil and
Ganesan A/L Sundaraj retire at the forthcoming Annual General Meeting and being eligible, offer themselves for
re-election.
 25

• DIRECTORS’ BENEFITS
During and at the end of the financial year, no arrangements subsisted to which the Company is a party, 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.

Since the end of the previous financial year, no director of the Company has received or become entitled to receive any
benefit (other than the benefits disclosed as directors’ remuneration 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 the director is a
member or with a company in which the director has a substantial financial interest.

• DIRECTORS’ INTEREST IN SHARES

According to the register of directors’ shareholdings, the following persons who were directors of the Company at the
end of the financial year have interest in shares of the Company and its subsidiary companies as set out below:-

• INTEREST IN THE COMPANY

Number of ordinary shares of RM1.00 each

Balance Balance
At 01.01.2004 Acquired Disposed At 31.12.2004

Direct Shareholdings
Ganesan A/L Sundaraj - - - -
Muk Sai Tat - - - -
Peter Wong - - - -
Chin Kam Bin @ Cheng Kam Meng - - - -
Tunku Makhlad Bin Tunku Mohamed Jamil - - - -
Datuk Phang Miow Sin - - - -

Indirect Shareholdings
Ganesan A/L Sundaraj - - - -
Muk Sai Tat - 4,735,000 - 4,735,000
Peter Wong - 4,735,000 - 4,735,000
Tunku Makhlad Bin Tunku Mohamed Jamil - - - -
Datuk Phang Miow Sin - 600 - 600

• INTEREST IN SUBSIDIARY COMPANIES

By virtue of their interest in the Company, none of the directors except for Muk Sai Tat, Peter Wong and Datuk Phang
Miow Sin are deemed interested in shares of all the subsidiary companies to the extend the Company has an interest.

• SIGNIFICANT EVENTS
On 27 February 2004 the Company announced that its wholly owned subsidiary, Mangium Sawmill Sdn Bhd has not
paid, and is deemed to have defaulted in its repayments on facilities granted by two financial institutions which are
unsecured amounting to RM11,028,329 as at 31 January 2005. Currently the Company is in active negotiations with
the financial institutions to normalise and regularise their banking facilities.
26

• EVENTS SUBSEQUENT TO BALANCE SHEET DATE

On 7 March 2005, the Company announced that the Securities Commission (“SC”) vide its letter dated 4 March 2005
has approved the Company’s Restructuring Proposals in the following manner:-

(i) The proposed debt settlement between the Company and the secured and unsecured creditors amounting to
RM58.52 million be made by way of a combination of new MIB shares, Irredeemable Convertible Unsecured Loan
Stocks (“ICULS”), Redeemable Convertible Secured Loan Stocks (“RCSLS”) and cash payment;

(ii) The proposed renounceable rights issue of RM16 million nominal value zero coupon 5-year ICULS together with
16 million free detachable Warrants attached on the basis of RM1.00 nominal value ICULS be made with one (1)
free detachable Warrant attached for every two (2) existing MIB shares held together with an additional RM8
million nominal value ICULS, which would serve as the up-front coupon of 10% per annum for the RM16 million
ICULS for a period of five (5) years;

(iii) The proposed joint-venture between MIB and Telaga Chipmill Sdn Bhd (“TCSB”) be established;

(iv) The proposed employee share option scheme for executive directors and eligible employees of MIB and its
subsidiary companies be adopted; and

(v) The proposed increase in the authorized share capital of MIB from RM50million comprising 50 million MIB shares
to RM200 million comprising 200 million MIB shares be made.

The net tangible assets at 31 December 2004 was RM758,184. The Company’s Restructuring Proposals when fully and
successfully implemented in total would maintain the Group’s net tangible assets at the current level if not increase it.

• STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS

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

(a) to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for
doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision
had been made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of
business their value as shown in the accounting records of the Company and of the Group have 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) which would render the amounts written off for bad debts or the amount of provision for doubtful debts in the
financial statements of the Company and of the Group inadequate to any substantial extent; or

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

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the
Company and of the Group misleading or inappropriate.
 27

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

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

(a) any charge on the assets of the Company or of the Group which has arisen since the end of the financial year
which secures the liabilities of any other person; or

(b) any contingent liability in respect of the Company or of the Group which has arisen since the end of the financial
year.

• OTHER STATUTORY INFORMATION

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

(b) 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 Company and of the Group for the financial year in which this report is made.

• AUDITORS
The retiring auditors, PKF, have expressed their willingness to be re-appointed in accordance with Section 172 (2) of
the Companies Act, 1965.

Signed on behalf of the Board of Directors in accordance with a Resolution of the Directors.

MUK SAI TAT DATUK PHANG MIOW SIN

Director Director

KUALA LUMPUR.

Dated : 25 April 2005

28

INCOME STATEMENTS
INCOME STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004

GROUP COMPANY
NOTE 2004 2003 2004 2003
RM RM RM RM

Revenue 4 41,884,256 25,141,273 - -

Cost of sales (37,309,060) (21,322,095) - -

Gross profit 4,575,196 3,819,178 - -

Other operating income 5 270,321 624,009 1,542,909 1,466,745

Selling and distribution costs (3,437,024) (3,059,278) - -

Administrative expenses (5,794,219) (10,038,325) (1,689,320) (2,702,052)

Loss from operations (4,385,726) (8,654,416) (146,411) (1,235,307)

Finance costs 6 (5,585,932) (5,067,989) (2,567,328) (2,191,349)

Loss before taxation 7 (9,971,658) (13,722,405) (2,713,739) (3,426,656)

Taxation 8 (502,723) (523,012) - 30,725

Loss after taxation (10,474,381) (14,245,417) (2,713,739) (3,395,931)

Minority interest (110,450) (34,306) - -

Net loss after taxation

from ordinary activities (10,584,831) (14,279,723) (2,713,739) (3,395,931)

Extraordinary items - - - -

Net loss for the year (10,584,831) (14,279,723) (2,713,739) (3,395,931)

Loss per share (sen) 10 (33) (45)

The notes on pages 33 to 53 form an integral part of these financial statements.

 29

STATEMENTS OF CHANGES IN EQUITY

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2004

Non- Distributable Distributable

Share Share Revaluation Merger Retained

NOTE Capital Premium Reserve Reserve Profit Total
RM RM RM RM RM RM

GROUP
2004
Balance at 01.01.2004 32,000,000 583,668 8,190,790 (20,843,753) (8,587,690) 11,343,015

Net loss for the year - - - - (10,584,831) (10,584,831)

Balance at 31.12.2004 32,000,000 583,668 8,190,790 (20,843,753) (19,172,521) 758,184

2003
Balance at 01.01.2003
As previously reported 32,000,000 583,668 8,190,790 (20,843,753) 5,303,224 25,233,929
Prior year adjustment 9 - - - - 388,809 388,809

As restated 32,000,000 583,668 8,190,790 (20,843,753) 5,692,033 25,622,738

Net loss for the year - - - - (14,279,723) (14,279,723)

Balance at 31.12.2003 32,000,000 583,668 8,190,790 (20,843,753) (8,587,690) 11,343,015

COMPANY
2004
Balance at 01.01.2004 32,000,000 583,668 - - 12,614,177 45,197,845

Net loss for the year - - - - (2,713,739) (2,713,739)

Balance at 31.12.2004 32,000,000 583,668 - - 9,900,438 42,484,106

2003
Balance at 01.01.2003 32,000,000 583,668 - - 16,010,108 48,593,776

Net loss for the year - - - - (3,395,931) (3,395,931)

Balance at 31.12.2003 32,000,000 583,668 - - 12,614,177 45,197,845

The notes on pages 33 to 53 form an integral part of these financial statements.

30

BALANCE SHEETS
BALANCE SHEETS 31 DECEMBER 2004

GROUP COMPANY
NOTE 2004 2003 2004 2003
RM RM RM RM

NON-CURRENT ASSETS
Property, plant and equipment 11 46,944,259 50,161,871 605,315 431,679
Investment in subsidiary
companies 12 - - 33,493,755 33,493,753
Goodwill on consolidation 13 2,788,346 2,952,367 - -

CURRENT ASSETS
Inventories 14 5,674,499 9,325,241 - -
Trade and other receivables 15 17,958,479 15,151,635 124,457 143,906
Amount due from subsidiary
companies 16 - - 37,661,125 35,880,954
Deposit with a licensed bank - 19,000 - -
Cash and bank balances 2,398,960 1,332,065 71,536 170,905

26,031,938 25,827,941 37,857,118 36,195,765

CURRENT LIABILITIES
Short term borrowings 17 31,452,184 29,322,490 81,987 31,410
Trade and other payables 18 14,864,427 12,168,821 4,599,310 2,797,742
Taxation 2,627,145 2,704,035 - -

48,943,756 44,195,346 4,681,297 2,829,152

NET CURRENT (LIABILITIES)/

ASSETS (22,911,818) (18,367,405) 33,175,821 33,366,613

26,820,787 34,746,833 67,274,891 67,292,045

FINANCED BY :-
SHARE CAPITAL 19 32,000,000 32,000,000 32,000,000 32,000,000
RESERVES 21 (31,241,816) (20,656,985) 10,484,106 13,197,845

SHAREHOLDERS’ FUND 758,184 11,343,015 42,484,106 45,197,845

MINORITY INTEREST 445,152 334,702 - -

NON-CURRENT LIABILITIES
Long term borrowings 22 25,487,213 23,006,031 24,790,785 22,094,200
Deferred taxation 23 130,238 63,085 - -
26,820,787 34,746,833 67,274,891 67,292,045

The notes on pages 33 to 53 form an integral part of these financial statements

 31

CASH FLOW STATEMENTS

CASH FLOW STATEMENTS FOR THE YEAR ENDE 31 DECEMBER 2004

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

CASH FLOW FROM OPERATING

ACTIVITIES

Net loss for the year (9,971,658) (13,722,405) (2,713,739) (3,426,656)

Adjustment for:-
Amortisation of goodwill 164,021 164,021 - -
Bad debts 10,398 - - -
Depreciation 3,793,065 3,763,165 90,114 77,005
Property, plant and equipment written off 14,334 36,757 - -
Interest income (8,089) (9,016) (1,182,443) (1,014,601)
Hire purchase interest 137,114 127,506 10,856 7,850
Gain on disposal of property, plant
and equipment (37,092) (291,474) - -
Bankers’ acceptance interest 350,669 334,700 - -
Bank overdraft interest 992,600 940,581 - -
Lease interest 29,620 96,251 - -
Interest 1,252,961 1,139,737 - 55
Term loan interest 2,822,968 2,429,214 2,556,472 2,183,444
Allowance for doubtful debts (75,796) 3,440,901 - -
Loss on fire 162,676 - - -

OPERATING LOSS BEFORE WORKING

CAPITAL CHANGES (362,209) (1,550,062) (1,238,740) (2,172,903)

(Increase)/decrease in trade and other

receivables (2,797,904) (127,491) 19,449 32,526
Increase in subsidiary company - - (1,780,171) (5,200,864)
Increase in trade and other payables 2,695,606 3,349,334 1,801,568 2,194,597
Decrease/(increase) use in inventories 3,650,742 (4,302,072) - -

Cash generated from/(used in) operations 3,186,235 (2,630,291) (1,197,894) (5,146,644)

Bankers’ acceptance interest (350,669) (334,700) - -

Bank overdraft interest (992,600) (940,581) - -
Lease interest (29,620) (96,251) - -
Hire purchase interest (137,114) (127,506) (10,856) (7,850)
Interest (1,252,961) (1,139,737) - (55)
Term loan interest (2,822,968) (2,429,214) (2,556,472) (2,183,444)
Taxation paid (456,001) (425,482) - -

Net cash used in from operating activities (2,855,698) (8,123,762) (3,765,222) (7,337,993)
32

CASH FLOW STATEMENTS

CASH FLOW STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

CASH FLOWS FROM INVESTING

ACTIVITIES

Interest income 8,089 9,016 1,182,443 1,014,601

Proceeds from disposal of property, plant
and equipment 85,000 3,361,413 - -
Purchase of property, plant and
equipment (352,472) (1,431,843) (38,750) (48,150)
Acquisition of subsidiary company - (7,332) (2) -

Net cash (used in)/generated from

investing activities (259,383) 1,931,254 (1,143,691) 966,451

CASH FLOWS FROM FINANCING

ACTIVITIES

Payment of hire purchase creditors (498,314) (353,377) (34,300) (31,400)

Proceeds from term loans 2,556,472 6,472,878 2,556,472 6,472,878

Net cash generated from financing activities 2,058,158 6,119,501 2,522,172 6,441,478

NET (DECREASE)/INCREASE IN CASH

AND CASH EQUIVALENTS (1,056,923) (73,007) (99,359) 69,936

CASH AND CASH EQUIVALENTS

BROUGHT FORWARD (21,191,172) (21,118,165) 170,895 100,959

CASH AND CASH EQUIVALENTS

CARRIED FORWARD (22,248,095) (21,191,172) 71,536 170,895

Cash and cash equivalents comprise:-

Cash and bank balances 2,398,960 1,332,065 71,536 170,905
Bank overdrafts (24,647,055) (22,542,237) - (10)
Deposit with a licenced bank - 19,000 - -

(22,248,095) (21,191,172) 71,536 170,895

The notes on pages 33 to 53 form an integral part of these financial statements.

 33

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2004

1. PRINCIPAL ACTIVITIES
The principal activity of the Company is investment holding. The principal activities of its subsidiary companies
are described in Note 12 to the financial statements.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements of the Company and of the Group have been prepared in accordance with the provisions
of the Companies Act, 1965 and applicable approved accounting standards in Malaysia.

3. SIGNIFICANT ACCOUNTING POLICIES

All significant accounting policies set out below are consistent with those applied in the previous financial year.

(a) Basis of Accounting

The financial statements are prepared under the historical cost convention modified by the revaluation of
certain property, plant and equipment.

(b) Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and its
subsidiary companies as mentioned in Note 12 to the financial statements made up to the end of the
financial year. The subsidiary companies are consolidated on the acquisition method of accounting except
Mangium Sawmill Sdn Bhd. Mangium Plantations Sdn Bhd is consolidated on the merger method of
accounting in accordance with the provisions of the Malaysian Accounting Standards Board No. 21.

Under the acquisition method of accounting, the results of the subsidiary companies acquired or disposed
during the financial year are included from the date of acquisition or up to the date of disposal. The
difference between the acquisition cost and the fair value of the net assets of the subsidiary companies at
the date of acquisition is reflected as goodwill or reserve on consolidation as appropriate.

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.

All significant inter-company transactions are eliminated on consolidation and the consolidated financial
statements reflect external transactions only.

(c) Property, Plant and Equipment

Property, plant and equipment are stated at cost or valuation less accumulated depreciation, amortisation
and impairment losses. The cost of other property, plant and equipment comprises their purchase cost and
all incidental costs of acquisition. However, such assets acquired since the last valuation are maintained at
cost.

The long leasehold land is amortised over the remaining leasehold periods of between 51 to 927 years. No
depreciation is provided on infrastructure work in progress. Depreciation on other property, plant and
equipment is charged on the straight line basis so as to write off the cost of the property, plant and
equipment over their expected useful lives at the following rates:-
34

(c) Property, Plant and Equipment (cont’d)

(i) Buildings, log yard and infrastructure 5% - 10%
(ii) Equipment, furniture and fittings 10%
(iii) Plant, machinery and motor vehicles 10% - 20%
(iv) Renovation 10%
(v) Vessels 20%
(vi) Signboard 10%

Revaluation of land and buildings is undertaken every 5 years. Surplus arising from revaluation is credited
directly to revaluation reserve. Deficit in excess of the revaluation reserve arising from previous revaluation
is charged to the income statement. In all other cases, the deficit will be charged to the income statement.

In previous years, the depreciation rate on road included in Log Yard and Infrastructure was 5%. With effect
from 1 January 2003 the Company changed its accounting policy in which the road is depreciated over
the remaining concession period of 56 years to 58 years. The effects on the change in accounting policy
are disclosed in Note 9 and Note 11 to the financial statements.

(d) Subsidiary Companies

Subsidiary companies are companies controlled by the Company. Control exists when the Company has
power, directly or indirectly, to govern the financial and operating policies of the subsidiary companies so
as to obtain benefits from their activities. The financial statements of the subsidiary companies are
included in the consolidated financial statements from the date that control effectively commences until the
date that control effectively ceases.

Investment in subsidiary companies is stated at cost except when directors are of the opinion that there is
a permanent diminution in value of an investment. In such event, provision in diminution in value of the
investment will be made.

(e) Impairment of assets

The carrying amounts of the Group’s and Company’s assets and inventories are reviewed at each balance
sheet date to determine whether there is any indication of impairment. If any such indication exists, the
asset’s recoverable amount is estimated and an impairment loss is recognised whenever the recoverable
amount is less than the carrying amount of the assets. The impairment loss is recognised in the income
statement immediately except for the impairment on revalued assets where the impairment loss is
recognized directly against the revaluation surplus account to the extent of the surplus credited from the
previous revaluation for the same assets with the excess of the impairment loss charged to the income
statement. All reversals of an impairment loss are recognised as income immediately in the income
statement except for the reversal of impairment loss on revalued assets where the reversal of the
impairment loss is treated as a revaluation increase and credited to the revaluation surplus account of the
same assets.

(f) Financial Instruments

Financial instruments are recognised in the balance sheet when the Group has become a party to the
contractual provisions of the instrument.
 35

(f) Financial Instruments (cont’d)

Financial instruments are classified as liabilities or equity in accordance with the substance of the
contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as
a liability, are reported as expense or income. Distributions to holders of financial instruments classified as
equity are charged directly to equity. Financial instruments are offset when the Group has a legally
enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the
liability simultaneously.

(i) Trade Receivables

Trade receivables are carried at anticipated realisable values. Bad debts are written off when identified.
An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance
sheet date.

(ii) Trade Payables

Trade payables are stated at cost which is the fair value of the consideration to be paid in the future
for goods and services received.

(iii) Interest-Bearing Borrowings

Interest-bearing bank borrowings are recorded at the amount of proceeds received, net of transaction
costs.

Borrowing costs directly attributable to the acquisition of property, plant and equipment are capitalised
as part of the cost of those assets, until such time as the assets are ready for their intended use or
sale. All other borrowing costs are charged to the income statement as an expense in the period in
which they are incurred.

(iv) Equity Instruments

Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the
period in which they are declared.

(g) Provisions for Liabilities

Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event
and it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet
date and adjusted to reflect the current best estimates. Where the effect of the time value of money is
material, the amount of a provision is the present value of the expenditure expected to be required to settle
the obligation.

(h) Inventories
Inventories comprise logs, timber products, alcoholic beverages, concentrates, bottling, packing,
advertising materials and printing materials. Inventories are valued at the lower of cost and net realisable
value. Cost in respect of these inventories is stated on the weighted average cost basis. The cost of
finished goods and work-in-progress includes the cost of materials and, where applicable, the cost of direct
labour and appropriate overheads.
36

(i) Goodwill on Consolidation

The difference between the purchase price and the value of the net assets of the subsidiary companies at
the date of acquisition is included in the consolidated balance sheet as goodwill or reserve arising on
consolidation. Goodwill is retained in consolidated balance sheet at cost and is amortised over a period of
twenty years commencing from 12th December 2002.

(j) Cash and Cash Equivalents

Cash and cash equivalents include cash and bank balances, bank overdrafts, deposits and other short-term
highly liquid investments which are readily convertible to cash and which are subject to insignificant risk of
change in value.

(k) Hire Purchase and Lease

Property, plant and equipment under finance lease and hire purchase that give rights approximating to
ownership are capitalised in the financial statements and the corresponding obligation treated as a liability.
The total interest, being the difference between the total instalments payable and the capitalised amount, is
charged to the income statement over the period of the lease and hire purchase in proportion to the balance
of capital repayments outstanding.

(l) Income Tax

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

Deferred tax liabilities and assets are provided for under the liability method at the current tax rate in respect
of all temporary differences between the carrying amount of an asset or liability in the balance sheet and its
tax base including unused tax losses and capital allowances.

A deferred tax asset is recognised only to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences or unused tax losses can be utilised.

In prior years, deferred tax was provided for at the applicable current tax rates for all material timing
differences where it was reasonable probable that such timing differences where it was reasonable
probable that such timing differences will not crystallize in the foreseeable future. In addition, deferred tax
benefits were recognised only when there was reasonable assurance of their realisation.

(m) Employee Benefits

(i) Short term benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year
in which the associated services are rendered by employees of the Group.

(ii) Defined contribution plan

Contributions to the Employees’ Provident Fund are charged to the income statement in the year to
which they relate.
 37

(m) Employee Benefits (cont’d)

(iii) Termination benefits
Employee termination benefits are payments due to employees as a result of redundant employment
and are recognised when the Group has a detailed formal plan for termination and has made a
decision to offer the termination benefits and the employees have accepted voluntary redundancy in
exchange for those benefits.

(n) Foreign Transactions

Transactions arising in foreign currencies during the financial year have been converted into Ringgit
Malaysia at the exchange rate ruling at the transaction dates. Assets and liabilities in foreign currencies at
balance sheet date have been translated into Ringgit Malaysia at rates of exchange approximating those
ruling at that date. Exchange gains and losses have been taken to the income statement.

The principal closing rate used in translation of foreign currency amount is as follows:-

2004 2003
RM RM

Foreign Currency
1 US Dollar 3.80 3.80

(o) Revenue Recognition

Revenue from the sale of timber products, alcoholic beverages, general trading and printing services is
recognised at the point of invoicing and delivery of the products and services. Interest income and dividend
income are recognised on the accrual basis.

4. REVENUE

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

Revenue of the Company and the

Group consists of :-
Sales of goods 782,789 1,252,619 - -
Sales of alcoholic beverages 5,805,770 5,598,523 - -
Sales of timber products 23,414,482 7,645,193 - -
Provision of printing services 11,068,634 9,259,362 - -
Sales of furniture 812,581 1,385,576 - -

41,884,256 25,141,273 - -
38

5. OTHER OPERATING INCOME

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

Other operating income of the Company

and the Group consists of :-
Gain on disposal of
property, plant
and equipment 37,092 295,527 - -
Interest income 8,089 9,016 1,182,443 1,014,601
Others 225,140 319,466 360,466 452,144

270,321 624,009 1,542,909 1,466,745

6. FINANCE COSTS

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

Interest on :-
- bankers’ acceptance 350,669 334,700 - -
- bank overdrafts 992,600 940,581 - -
- term loan 2,822,968 2,429,214 2,556,472 2,183,444
- hire purchase 137,114 127,506 10,856 7,850
- lease 29,620 96,251 - -
- others 1,252,961 1,139,737 - 55

5,585,932 5,067,989 2,567,328 2,191,349

 39

7. LOSS BEFORE TAXATION

The loss before taxation for the financial year is arrived at after charging the following items:-

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

Allowance for doubtful debts - 3,440,901 - -

Amortisation of goodwill 164,021 164,021 - -
Auditors’ remuneration 59,700 71,200 10,000 10,000
Bad debts 10,398 - - -
Depreciation 3,793,065 3,763,165 90,114 77,005
Directors’ remuneration
- fee 88,500 58,000 88,500 58,000
- salaries and allowances 663,430 407,436 166,500 -
- others 9,250 - 9,250 -
Hiring charges 279,536 180,674 743 -
Loss on disposal of property, plant
and equipment - 4,053 - -
Loss on fire 162,676 - - -
Property, plant and equipment
written off 14,334 36,757 - -
Rental
- land and road 517,495 71,148 - -
- office premises 376,049 524,635 194,497 203,040

And crediting:-
Gain on disposal of property, plant
and equipment 37,092 295,527 - -
Gain on foreign exchange 106 - - -
Interest income 8,089 9,016 1,182,443 1,014,601
Write back of doubtful debts 75,796 - - -
40

8. TAXATION
GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

In Malaysia
Current taxation 464,415 282,663 - -
In respect of prior years (28,845) 251,289 - -

435,570 533,952 - -
Deferred taxation 67,153 (10,940) - (30,725)

Total taxation charged to

income statement 502,723 523,012 - (30,725)

The Company has sufficient tax credit under Section 108 of the Income Tax Act, 1967 to frank the payment of net
dividend amounting to RM343,000 out of the balance of its retained profit which is not tax exempted as at
31 December 2004.

9. PRIOR YEAR ADJUSTMENT

The prior year adjustments of the Group were in respect of financial year ended 31 December 2003.

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

Effects on retained profits:

At 1st January as previously stated - 5,303,224 - -

Effects of change in depreciation

rate - 532,254 - -
Effects of taxation undertaken
up - (143,445) - -

- 388,809 - -

At 1st January, as restated - 5,692,033 - -

 41

9. PRIOR YEAR ADJUSTMENT (cont’d)

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

Effects on net loss for the year:

Net loss before changes - (14,681,671) - -

Effects of change in depreciation

rate - 401,948 - -
Effects of taxation undertaken
up - - - -

- 401,948 - -

Net loss for the year - (14,279,723) - -

10. LOSS PER SHARE

The loss per share is computed based on the loss after taxation of RM10,584,831 (2003: loss after taxation of
RM14,279,723) and on the number of ordinary shares in issue during the financial year of 32,000,000 shares
(2003: 32,000,000 shares).
42

11. PROPERTY, PLANT AND EQUIPMENT

AT REVALUATION AT COST
Buildings,
Long Log Yard Equipment, Infrastructure Long Plant, Machinery Renovation
Leasehold And Furniture Work in Leasehold Motor Vehicle and
Buildings Land Infrastructure And Fittings Progress Land and Vessels Signboard Total
RM RM RM RM RM RM RM RM RM

Group

2004
At Revaluation/Cost
At 01.01.2004 16,894,631 2,783,666 19,942,858 1,825,551 5,576,000 4,850,994 28,349,052 262,324 80,485,076
Additions - - 12,501 200,809 - - 584,954 2,108 800,372
Disposals (324,734) - - (42,563) - - (159,616) (23,850) (550,763)
Reclassification - - 5,576,000 - (5,576,000) - - - -

At 31.12.2004 16,569,897 2,783,666 25,531,359 1,983,797 - 4,850,994 28,774,390 240,582 80,734,685

Accumulated
Depreciation
At 01.01.2004 6,985,106 14,208 2,066,300 807,908 - 8,721 20,322,733 118,229 30,323,205
Depreciation for the
year 871,383 4,736 663,315 199,569 - 2,907 2,016,138 35,017 3,793,065
Disposals (162,058) - - (40,520) - - (110,283) (12,983) (325,844)

At 31.12.2004 7,694,431 18,944 2,729,615 966,957 - 11,628 22,228,588 140,263 33,790,426

Net Book Value

Cost 4,702,445 1,813,378 22,801,744 1,016,840 - 4,839,366 6,545,802 100,319 41,819,894
Revaluation 4,173,021 951,344 - - - - - - 5,124,365

Total 8,875,466 2,764,722 22,801,744 1,016,840 - 4,839,366 6,545,802 100,319 46,944,259

2003
At Revaluation/Cost
At 01.01.2003 16,894,631 2,783,666 19,895,340 1,625,956 5,576,000 7,860,538 27,189,837 348,741 82,174,709
Additions - - 47,518 281,275 - - 1,242,765 17,285 1,588,843
Disposals - - - (81,680) - (3,009,544) (83,550) (103,702) (3,278,476)

At 31.12.2003 16,894,631 2,783,666 19,942,858 1,825,551 5,576,000 4,850,994 28,349,052 262,324 80,485,076

Accumulated
Depreciation
At 01.01.2003 6,107,358 9,472 2,004,690 683,848 - 5,814 18,285,712 167,180 27,264,074

Prior year adjustment - - (532,254) - - - - - (532,254)

As restated 6,107,358 9,472 1,472,436 683,848 - 5,814 18,285,712 167,180 26,731,820

Depreciation for the
year 877,748 4,736 593,864 182,037 - 2,907 2,061,503 40,370 3,763,165
Disposals - - - (57,977) - - (24,482) (89,321) (171,780)

At 31.12.2003 6,985,106 14,208 2,066,300 807,908 - 8,721 20,322,733 118,229 30,323,205

Net Book Value

Cost 5,349,179 1,816,756 17,876,558 1,017,643 5,576,000 4,842,273 8,026,319 144,095 44,648,813
Revaluation 4,560,346 952,702 - - - - - - 5,513,048

Total 9,909,525 2,769,458 17,876,558 1,017,643 5,576,000 4,842,273 8,026,319 144,095 50,161,871
 43

11. PROPERTY, PLANT AND EQUIPMENT (cont’d)

Equipment,
Computer,
Furniture And Motor
Fittings Vehicles Renovation Signboard Total
RM RM RM RM RM

Company

2004
At Cost
At 01.01.2004 317,126 203,500 51,815 865 573,306
Additions 6,910 254,732 2,108 - 263,750

At 31.12.2004 324,036 458,232 53,923 865 837,056

Accumulated Depreciation
At 01.01.2004 78,788 42,658 20,146 35 141,627
Depreciation for the year 32,056 52,682 5,289 87 90,114

At 31.12.2004 110,844 95,340 25,435 122 231,741

Net Book Value 213,192 362,892 28,488 743 605,315

2003
At Cost
At 01.01.2003 292,841 23,500 51,815 - 368,156
Additions 24,285 180,000 - 865 205,150

At 31.12.2003 317,126 203,500 51,815 865 573,306

Accumulated Depreciation
At 01.01.2003 47,699 1,958 14,965 - 64,622
Depreciation for the year 31,089 40,700 5,181 35 77,005

At 31.12.2003 78,788 42,658 20,146 35 141,627

Net Book Value 238,338 160,842 31,669 830 431,679

The long leasehold land and buildings of a subsidiary company were revalued during the financial year ended 31
December 1997 by an independent professional firm of valuers using the open market value based on the
Comparison Method and Net Current Replacement Cost Approach respectively.

As at balance sheet date, plant and machinery and motor vehicles of the Group with net book value of
RM2,897,260 (2003: RM2,864,144) and RM416,606 (2003:RM631,606) were acquired under hire purchase and
lease arrangements respectively.

Details of bank borrowings for which there is a charge over certain property, plant and equipment are disclosed
under Note 17 to the financial statements.

Leasehold land and buildings with net book value of RM13,628,742 (2003: RM14,810,706) are charged to banks
for bank facilities granted to a subsidiary company.
44

12. INVESTMENT IN SUBSIDIARY COMPANIES

COMPANY
2004 2003
RM RM

Unquoted shares, at cost 33,493,753 33,493,753

Add: Additions 2 -

33,493,755 33,493,753

Country of Equity
Name of Companies Principal Activities Incorporation Holding
2004 2003
% %

Mangium Sawmill Sdn Bhd

Manufacturing and marketing Malaysia 100 100
of timber and timber related
products
Mangium Plantations Sdn Bhd
Harvesting and marketing of Malaysia 100 100
plantation timber and
plantation timber related
products
Furneflex Marketing Sdn Bhd * General trading Malaysia 100 100

Anika Impot & Edar Sdn Bhd * General trading Malaysia 100 100

Anika Plantation Services Sdn Bhd * Dormant Malaysia 100 -

Subsidiary of Furneflex
Marketing Sdn Bhd
MR Print Sdn Bhd * Provision of printing services Malaysia 90 90
MS Reseach Sdn Bhd * Publisher, printers consultants Malaysia 100 -
and advertisers

Subsidiary of Anika
Impot & Edar Sdn Bhd
Duncan Gilbey (M) Blending and distribution of Malaysia 100 100
Sdn Bhd * alcoholic beverages
Anika Timber Sdn Bhd * Marketing of timber products Malaysia 100 100

* Subsidiary companies not audited by PKF

 45

13. GOODWILL ON CONSOLIDATION

GROUP
2004 2003
RM RM

At the beginning of the year 3,280,023 3,272,691

Arising from acquisition of subsidiary companies - 7,332
3,280,023 3,280,023
Less: Accumulated amortisation (491,677) (327,656)

At the end of the year 2,788,346 2,952,367

14. INVENTORIES
GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

At Cost
Finger jointed timber 144,679 425,257 - -
Sawn timber 2,391,685 4,594,961 - -
Moulded timber 486,754 1,355,896 - -
Concentrates, bottling, packing
and advertising materials 360,420 410,614 - -
Printing materials
- Raw materials 112,519 138,611 - -
- Work-in-progress 21,446 23,699 - -
Timber products 1,719,011 1,777,051 - -
Finished goods
- Printed materials - 70,928 - -
- Alcohol beverages 437,985 528,224 - -

5,674,499 9,325,241 - -
46

15. TRADE AND OTHER RECEIVABLES

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

Trade receivables 20,515,001 19,546,921 - -

Less: Allowance for doubtful debts (15,610,612) (15,821,635) - -

4,904,389 3,725,286 - -

Other receivables 2,167,054 1,957,790 1,849 1,849

Less: Allowance for doubtful debts (206,998) (206,998) - -

1,960,056 1,750,792 1,849 1,849

Deposits paid to a government agency
for the supply of logs 9,434,863 8,484,639 - -
Other deposits 675,656 658,765 115,785 134,585
Prepayments 983,515 532,153 6,823 7,472

11,094,034 11,426,349 124,457 143,906

17,958,479 15,151,635 124,457 143,906

16. AMOUNT DUE FROM SUBSIDIARY COMPANIES

The amounts due from subsidiary companies represent advances and payments made on behalf which are
unsecured and have no fixed term of repayment. Interest is charged at 11% (2003: 11%) per annum.

17. SHORT TERM BORROWINGS

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

Unsecured
Bank borrowings
- bank overdrafts - 10 - 10

Secured
Bank borrowings
- bank overdrafts 24,647,055 22,542,227 - -
- bankers’ acceptance 3,300,000 3,300,000 - -
- term loans 2,117,090 2,117,090 - -
 47

17. SHORT TERM BORROWINGS (cont’d)

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

Hire purchase creditors 1,347,769 1,297,361 81,987 31,400

Lease creditors 40,270 65,802 - -

31,452,184 29,322,480 81,987 31,400

31,452,184 29,322,490 81,987 31,410

The bank borrowings and term loans of the subsidiary companies are secured by way of a legal charge over a
subsidiary company’s long leasehold land, a fixed and floating charge over the subsidiary companies’ entire
assets, two shophouses belonging to two third parties, a corporate guarantee by the Company and a subsidiary
company and a joint and several guarantee by three third parties.

Interest on bank overdrafts and term loans of the subsidiary companies is charged at 2.5% (2003: 2.5%) above
the banks’ base lending rate.

Details of hire purchase and lease creditors are as follows:-

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

Minimum hire purchase and lease

payments:
- not later than one year 1,679,103 1,650,973 106,252 39,252
- later than one year but not later
than five years 1,188,574 1,297,489 305,503 117,746

2,867,677 2,948,462 411,755 156,998

Less: Future interest charges (548,897) (579,268) (95,455) (31,398)
Present value of hire purchase and
lease creditors 2,318,780 2,369,194 316,300 125,600

Current:
- not later than one year 1,388,039 1,363,163 81,987 31,400
Non-current:
- later than one year but not later
than five years 930,741 1,006,031 234,313 94,200
2,318,780 2,369,194 316,300 125,600
48

18. TRADE AND OTHER PAYABLES

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

Trade payables 6,523,408 4,251,060 - -

Other payables and accruals 8,272,219 7,899,263 4,530,510 2,779,244
Amount due to directors 68,800 18,498 68,800 18,498

14,864,427 12,168,821 4,599,310 2,797,742

19. SHARE CAPITAL

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

AUTHORISED
Ordinary shares of RM1.00 each
At the beginning and end of the
year 50,000,000 50,000,000 50,000,000 50,000,000

ISSUED AND FULLY PAID

Ordinary shares of RM1.00 each
At the beginning and end of the
year 32,000,000 32,000,000 32,000,000 32,000,000

20. MERGER RESERVE

Pursuant to the relief given under Section 60(4) of the Companies Act, 1965 the Company has not recorded the
share premium arising from the issue of 21,093,753 ordinary shares of RM1.00 each for the acquisition of the
subsidiary company. As such, the investment in the subsidiary company has been recorded in the Company’s
book at the nominal value of shares issued of RM21,093,753.

The difference between the nominal value of shares of the Company issued as consideration and the nominal value
of the subsidiary company shares transferred to the Company has been classified as a merger reserve in the
Group’s financial statements.
 49

21. RESERVES

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

Distributable reserves:-
Retained profit
At the beginning of the year (8,587,690) 5,303,224 12,614,177 16,010,108
Prior year adjustment - 388,809 - -

As restated (8,587,690) 5,692,033 - -

Accumulated loss
for the year (10,584,831) (14,279,723) (2,713,739) (3,395,931)

At the end of the year (19,172,521) (8,587,690) 9,900,438 12,614,177

Non-distributable reserves:-
Share premium 583,668 583,668 583,668 583,668

Revaluation surplus 8,190,790 8,190,790 - -

8,774,458 8,774,458 583,668 583,668

(10,398,063) 186,768 10,484,106 13,197,845

Merger reserve (20,843,753) (20,843,753) - -

At the end of the year (31,241,816) (20,656,985) 10,484,106 13,197,845

As at 31 December 2004 the Company and its subsidiary companies have tax exempt income available for
distribution amounting to RM16,591,000 (2003: RM16,591,000) and RM10,180,000 (2004: RM10,180,000)
respectively under the Promotion of Investments Act, 1986.

Due to the waiver of tax on income for the basis year 1999, the Company and its subsidiary companies have a
special exempt income account of RM90,744 and RM2,886,000 respectively. These tax exempt income, if
confirmed by Inland Revenue Board, will enable the Company and its subsidiary companies to distribute tax
exempt dividends up to the same amount.
50

22. LONG TERM BORROWINGS

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

Unsecured
Term loan 24,556,472 22,000,000 24,556,472 22,000,000

Secured
Hire purchase creditors 840,741 995,761 234,313 94,200
Lease creditors 90,000 10,270 - -
930,741 1,006,031 234,313 94,200

25,487,213 23,006,031 24,790,785 22,094,200

Interest on term loan of the Company is charged at 11% (2003: 11%) monthly rest.

23. DEFERRED TAX ASSETS/LIABILITIES

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

At the beginning of the year 63,085 74,025 - 30,725

Transfer (to)/from income statement 67,153 (10,940) - (30,725)

At the end of the year 130,238 63,085 - -

The unrecognised deferred tax assets are as follows:-

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

Unabsorbed capital allowances 8,476,608 6,516,511 251,217 193,316

Unutilised tax losses 42,640,754 35,589,335 1,908,390 1,042,987

51,117,362 42,105,846 2,159,607 1,236,303

 51

23. DEFERRED TAX ASSETS/LIABILITIES (cont’d)

The unutilised tax losses and unabsorbed capital allowance are available indefinitely for offset against future
taxable income of the Group in which those items arose. Deferred tax assets have not been recognised in respect
of these items as the Group has a history of tax losses.

There are no timing differences for which deferred taxation has not been accounted for in the financial statements.

24. SIGNIFICANT RELATED PARTY TRANSACTIONS

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

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

Transactions between the Company with

subsidiary companies:-
Mangium Sawmill Sdn Bhd
- Interest income - - 601,020 541,422
- Management fee - - 180,000 180,000
Mangium Plantations Sdn Bhd
- Interest income - - 581,225 472,750
- Management fee - - 180,000 180,000
MR Print Sdn Bhd
- Printing services - - 106,700 -

25. SEGMENTAL REPORTING

Loss Before Total Assets

Revenue Taxation Employed
RM RM RM

2004
a) Analysis by Industries
- Timber manufacturing and
marketing of timber and timber
related products 24,227,063 (11,647,139) 62,607,577
- Provision of printing services 11,068,634 1,154,318 7,214,700
- Trading in alcoholic beverages 5,805,770 511,242 5,903,558
- General trading 782,789 9,921 38,708

41,884,256 (9,971,658) 75,764,543

b) Analysis by Geographical Location

- Malaysia 41,884,256 (9,971,658) 75,764,543
52

25. SEGMENTAL REPORTING (cont’d)

2003
a) Analysis by Industries
- Timber manufacturing and
marketing of timber and timber
related products 9,030,769 (14,294,406) 69,444,459
- Provision of printing services 9,259,362 477,855 6,472,121
- Trading in alcoholic beverages 5,598,523 74,397 2,973,789
- General trading 1,252,619 19,749 51,810

25,141,273 (13,722,405) 78,942,179

b) Analysis by Geographical Location

- Malaysia 25,141,273 (13,722,405) 78,942,179

26. SIGNIFICANT EVENTS

On 27 February 2004 the Company announced that its wholly owned subsidiary, Mangium Sawmill Sdn Bhd
has not paid, and is deemed to have defaulted in its repayments on facilities granted by two financial institutions
which are unsecured amounting to RM11,028,329 as at 31 January 2005. Currently the Company is in active
negotiations with the financial institutions to normalize and regularize their banking facilities.

27. EVENTS SUBSEQUENT TO BALANCE SHEET DATE

On 7 March 2005, the Company announced that the Securities Commission (“SC”) vide its letter dated 4 March
2005 has approved the Company’s Restructuring Proposals in the following manner:-

(i) The proposed debt settlement between the Company and the secured and unsecured creditors amounting
to RM58.52 million be made by way of an issue of a combination of new MIB shares, Irredeemable
Convertible Unsecured Loan Stocks (“ICULS”), Redeemable Convertible Secured Loan Stocks (“RCSLS”)
and a cash payment;

(ii) The proposed renounceable rights issue of RM16 million nominal value zero coupon 5-year ICULS
together with 16 million free detachable Warrants attached on the basis of RM1.00 nominal value ICULS be
made with one (1) free detachable Warrant attached for every two (2) existing MIB shares held together with
an additional RM8 million nominal value ICULS, which would serve as the up-front coupon of 10%
per annum for the RM16 million ICULS for a period of five (5) years;

(iii) The proposed joint-venture between MIB and Telaga Chipmill Sdn Bhd (“TCSB”) be established;

(iv) The proposed employee share option scheme for executive directors and eligible employees of MIB and its
subsidiary companies be adopted; and

(v) The proposed increase in the authorized share capital of MIB from RM50million comprising 50 million MIB
shares to RM200 million comprising 200 million MIB shares be made.

The net tangible assets at 31 December 2004 was RM758,184. The Company’s Restructuring Proposals when fully and
successfully implemented in total would maintain the Group’s net tangible assets at the current level if not increase it.
 53

28. FINANCIAL INSTRUMENTS

(a) Financial, Interest Rate and Liquidity Risks
The Group’s interest rate and liquidity risks relate to its short term interest-bearing debts. However, the
Group had defaulted on some of its borrowings and some of its credit facilities had been recalled.

(b) Foreign Exchange Risk

The Group’s exposure to foreign exchange risk during the financial year is minimal as most transactions
were denominated in Ringgit Malaysia. The Group did not enter into any forward currency contracts during
the financial year.

(c) Credit Risk

Credit risk or the risk of counterparties defaulting, is controlled by the application of credit approvals, limits
and monitoring procedures. Trade receivables are monitored on an on going basis via Group management
reporting procedures.

(d) Fair value

The carrying amounts of the financial assets and liabilities of the Group and the Company as at 31
December 2004 approximate their fair value.

29. CONTINGENT LIABILITY

A corporate guarantee given by the Company to a licensed bank for bank facilities granted to a subsidiary
company amounting to approximately RM12,500,000.

30. STAFF COSTS

GROUP COMPANY
2004 2003 2004 2003
RM RM RM RM

Staff costs 4,239,078 4,126,556 396,471 716,764

Number of staff employed at

the end of the year 250 321 11 24

Staff costs include salaries, commissions, allowances, wages, contributions to employees’ provident fund, and
all other staff related expenses.
54

STATEMENT BY DIRECTORS
STATEMENT BY DIRECTORS
PURSUANT TO SECTION 169 (15) OF THE COMPANIES ACT, 1965

We, MUK SAI TAT and DATUK PHANG MIOW SIN, being two of the directors of MANGIUM INDUSTRIES BHD, do
hereby state that, in the opinion of the directors, the financial statements and notes on pages 28 to 53 are drawn up so
as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2004 and of
the results of the operations of the Company and of the Group, changes in cash flow position and changes in equity of
the Company and of the Group for the financial year ended on that date, and are properly drawn up in accordance with
applicable approved accounting standards in Malaysia.

Signed on behalf of the Board of Directors in accordance with a Resolution of the Directors.

MUK SAI TAT DATUK PHANG MIOW SIN

Director Director

KUALA LUMPUR.

Dated : 25 April 2005

STATUTORY DECLARATION
PURSUANT TO SECTION 169 (16) OF THE COMPANIES ACT, 1965

I, MUK SAI TAT, being the officer primarily responsible for the financial management of MANGIUM INDUSTRIES BHD,
do solemnly and sincerely declare that the financial statements and notes on pages 28 to 53 are to the best of my
knowledge and belief, correct, and I make this solemn declaration conscientiously believing the same to be true and by
virtue of the provisions of the Statutory Declaration Act, 1960.

Subscribed and solemnly declared by the)

abovenamed MUK SAI TAT )
at KUALA LUMPUR in the state of )
WILAYAH PERSEKUTUAN )
on this 25th day of April 2005 ) MUK SAI TAT

Before me,

HARON HASHIM
(W128)

COMMISSIONER OF OATHS
 55

REPORT OF THE AUDITORS

PKF
(Chartered Accounts)
9th Floor, MCB Plaza,
No. 6, Changkat Raja Chulan,
50200 Kuala Lumpur
REPORT OF THE AUDITORS
To the MEMBERS OF MANGIUM INDUSTRIES BHD AND ITS SUBSIDIARIES
We have audited the accompanying financial statements of MANGIUM INDUSTRIES BHD. These financial statements
are the responsibility of the Company’s Directors. Our responsibility is to express an opinion on the financial
statements based on our audit.

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 all the information and explanations, which we considered necessary to
provide us with sufficient evidence to give reasonable assurance that the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the
financial statements. An audit also includes an assessment of the accounting principles used and significant
estimates made by the Directors, as well as evaluating the overall adequacy of the presentation of information in the
financial statements. We believe our audit provides a reasonable basis for our opinion.
In our opinion :-
a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and
the applicable approved accounting standards in Malaysia so as to give a true and fair view of :
(i) the state of affairs of the Group and of the Company as at 31 December 2004 and of the results of their
operations and the cash flows of the Group and of the Company for the year ended on that date; and

(ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements
of the Group and of the Company;
and
b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the
Company and by the subsidiaries of which we have acted as auditors have been properly kept in accordance with
the provisions of the said Act.
We have considered the financial statements and the auditor’s report thereon of the subsidiaries of which we have not
acted as auditors, as indicated in Note 12 to the financial statements.

We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s
financial statements are in form and content appropriate and proper for the purposes of the preparation of the
consolidated financial statements and we have received satisfactory information and explanations required by us
for those purposes.

The auditors’ report on the financial statements of the subsidiaries were not subject to any qualification and did not
include any comment made under subsection (3) of Section 174 of the Act.

PKF ANTHONY JOSEPH SKELCHY

(AF : 0911) 251/03/07 (J/PH)
CHARTERED ACCOUNTANTS PARTNER

Kuala Lumpur
Dated : 25 April 2005
56

LIST OF PROPERTIES
Proprietor Description Existing Use Tenure (years) Date of Land Built-Up Age of Net BooK
/ Period from Acquisition / Area (ha.) Area Building Value as at
Revaluation(*) (sq. ft.) (years) 31 December
2004

MSSB CL235082925 Kg. Sawmill, moulding factory, 999 / 12.02.1997* 8.42 47,506 8-11 RM700,373
Mempakad, KM38 Jln finger-joint factory, 27.04.1918
Kota Marudu - Pitas, stacking area, timber to 26.04.2916
Sabah storage sheds, generator
shed, workshop, office
building, guard house,
sawdoctor room,
pressurized impregnation
treatment plant, general
store, sundry shop,
canteen and
residential quarters

MSSB CL235017713 Kg. Vacant land 999 / 12.02.1997* 8.37 - - RM696,611

Mempakad, KM38 Jln 04.12.1895
Kota Marudu - Pitas, to 03.12.2893
Sabah

MSSB CL236078069 Kg. Furniture plant, sawmill 999 / 12.02.1997* 2.73 16,774 8-14 RM227,400
Mempakad, KM38 Jln and sawdoctor room 22.04.1929
Kota Marudu - Pitas, to 21.04.2927
Sabah

MSSB CL235157196 Kg. Furniture plant 999 / 12.02.1997* 2.39 35,200 8 RM199,361
Mempakad, KM38 Jln 22.04.1929
Kota Marudu - Pitas, to 21.04.2927
Sabah

MSSB CL235157187 Kg. Mini sawmill 999 / 12.02.1997* 1.38 31,200 8 RM114,988
Mempakad, KM38 Jln 22.01.1932
Kota Marudu - Pitas, to 21.01.2930
Sabah

MSSB CL235310602 Kg. Kiln dryer plant 99 / 12.02.1997* 1.87 45,900 8 RM139,306
Mempakad, KM38 Jln 01.01.1997
Kota Marudu - Pitas, to 31.12.2095
Sabah

MSSB CL235310611 Kg. Kiln dryer plant, 99 / 12.02.1997* 0.99 109,042 8 RM76,184
Mempakad, KM38 Jln concrete apron and 01.01.1997
Kota Marudu - Pitas, boiler head to 31.12.2095
Sabah

MSSB CL235310148 Kg. Vacant land 99 / 21.10.1996 10.37 - - RM75,734

Mempakad, KM38 Jln 01.01.1964
Kota Marudu - Pitas, to 31.12.2062
Sabah

MSSB CL235157212 Kg. Vacant land 99 / 23.10.1996 5.81 - - RM44,532

Mempakad, KM38 Jln 01.01.1956
Kota Marudu - Pitas, to 31.12.2054
Sabah
 57

Proprietor Description Existing Use Tenure (years) Date of Land Built-Up Age of Net BooK
/ Period from Acquisition / Area (ha.) Area Building Value as at
Revaluation(*) (sq. ft.) (years) 31 December
2004

MSSB CL235311172 Kg. Vacant land 999 / 12.02.1997* 2.63 - - RM204,583

Mempakad, KM38 Jln 04.12.1895
Kota Marudu - Pitas, to 03.12.2894
Sabah

MSSB CL235311556 Kg. Vacant land 999 / 02.10.2000 16.25 - - RM632,102

Mempakad, KM38 Jln 04.12.1895
Kota Marudu - Pitas, to 03.12.2894
Sabah

MSSB Phase 3 on Lot 83 Vacant land - 19.12.2002 0.34 - - RM4,000,000

comprising part & parcel
of the project known as
Proposed Medium-
Density Development for
Phase 2 & Phase 3 on Lot
L.670, L.551, L.810 &
L.10264 at 2 1/2 mile,
Off Jln Tuaran, District of
Kota Kinabalu, Sabah

Note: MSSB - Mangium Sawmill Sdn Bhd

58

ANALYSIS OF SHAREHOLDINGS
ANALYSIS OF SHAREHOLDINGS AS AT 12 MAY 2005

ANALYSIS BY SIZE OF HOLDINGS

Class of Shares: Ordinary Share of RM1.00 each

Voting Rights: One (1) vote per ordinary share

Size of Holdings No. of Percentage No. of Percentage

Shareholders (%) Shares (%)

Less than 100 2 0.06 69 0.00

100 to 1,000 1,084 33.86 1,071,687 3.35
1,001 to 10,000 1,831 57.18 7,457,472 23.30
10,001 to 100,000 259 8.09 7,152,823 22.35
100,001 to less than 5% of issued shares 25 0.78 11,582,949 36.20
5% and above of issued shares 1 0.03 4,735,000 14.80
Total 3,202 100.00 32,000,000 100.00

DIRECTORS’ SHAREHOLDINGS

Name Direct No. Percentage Indirect No. Percentage

of Shares (%) of Shares (%)

1. Datuk Phang Miow Sin 600 0.002 - -

2. Tunku Makhlad bin Tunku - - - -
Mohamed Jamil
3. Ganesan a/l Sundaraj - - - -
4. Peter Wong - - 4,735,000(*) 14.80
5. Muk Sai Tat - - 4,735,000(*) 14.80
Total 600 0.002

(*)This block of shares is indirectly held through M. K. Assets Sdn. Bhd.

SUBSTANTIAL SHAREHOLDERS

Name Direct No. Percentage Indirect No. Percentage

of Shares (%) of Shares (%)

1. M. K. Assets Sdn. Bhd. 4,735,000 14.80 - -

2. Peter Wong - - 4,735,000(*) 14.80
3. Muk Sai Tat - - 4,735,000(*) 14.80
4. Loh Hien Hua 2,016,000 6.30 - -
Total 6,751,000 21.10

(*)This block of shares is indirectly held through M. K. Assets Sdn. Bhd.

 59

LIST OF TOP 30 SHAREHOLDERS AS AT 12 MAY 2005

No. Name/Company No. of ordinary shares Percentage of

of RM1.00 each issued capital (%)

1 M. K. Assets Sdn. Bhd. 4,735,000 14.80

2 Charming Vanguard Sdn. Bhd. 1,595,000 4.98
3 Dirihill Development Sdn. Bhd. 1,594,700 4.98
4 Malaysian Assurance Alliance Berhad 1,590,000 4.97
As Beneficial Owner
5 HDM Nominees (Tempatan) Sdn. Bhd. 1,200,000 3.75
HDM Capital Sdn. Bhd. for Loh Hien Hua
6 Kok Yen Chu 719,000 2.25
7 Prima Optra Sdn Bhd 715,000 2.23
8 Mak Soak Fong 500,000 1.56
9 Abdul Hamid Egoh 418,000 1.31
10 Cimsec Nominees (Tempatan) Sdn. Bhd. 409,500 1.28
CIMB for Wuan Thong Lok
11 Ong Kok Thye 350,000 1.09
12 Skyline Yield Sdn Bhd 328,200 1.03
13 Citicorp Nominees (Tempatan) Sdn. Bhd. 267,000 0.83
Pledged Securities Account for Sim Woi Sin
14 TCL Nominees (Tempatan) Sdn. Bhd. 204,000 0.64
Pleadged Securities Account for Lee Sun Ming
15 Khor Kien Eow 200,000 0.63
16 Ong Kok Thye 191,900 0.60
17 Sandy Loi Pei Lee 177,749 0.56
18 Amsec Nominees (Tempatan) Sdn. Bhd. 140,100 0.44
Pledged Securities Account for Chong Mee Fah @ Frederick Chong
19 Tiong Ngee Min 139,800 0.44
20 OSK Nominees (Tempatan) Sdn. Berhad 139,000 0.43
Pledged Securities Account For Loi Hien Khong
21 Cham Chee Khim 138,000 0.43
22 Affin Nominees (Tempatan) Sdn Bhd 125,000 0.39
Pledged Securities Account for Ong Aik Lin
23 Leong Ka Cheong 120,000 0.38
24 Seah Peik Hock 110,000 0.34
25 Goh Wak Kheng 108,000 0.34
26 HLB Nominees (Tempatan) Sdn Bhd 103,000 0.32
Pledged Securities Account For Chantika Holdings Sdn Bhd
27 Siow Loo Chin 100,000 0.31
28 Lee Saw Looi 100,000 0.31
29 Affin Nominees (Tempatan) Sdn. Bhd. 100,000 0.31
Pledged Securities Account For How Kim Lian
30 Public Nominees (Tempatan) Sdn Bhd 100,000 0.31
Pledged Securities Account for Goh Chai Hong

Total 16,717,949 52.24

THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
 NOTICE
No door gift
MANGIUM INDUSTRIES BHD. will be distributed
(Company No. 356031-H) but parking will
(Incorporated in Malaysia) be provided

FORM OF PROXY

I/We
of being a
member of MANGIUM INDUSTRIES BHD. hereby appoint * the Chairman of the meeting or
of

or failing whom
of
as my/our Proxy to vote for me/us and on my/our behalf at the Ninth Annual General Meeting of the Company to be held at The
Auditorium, Podium 1, Menara MAA, No.12, Jalan Dewan Bahasa, 50460 Kuala Lumpur on Wednesday, 29 June 2005 at 3.30
p.m and at any adjournment thereof.

*My/*our Proxy(ies) is/are to vote as indicated below:-

No. Resolutions For Against

1. To receive the Audited Financial Statements for the year ended 31 December 2004
together with the Directors’ and Auditors’ Reports thereon.
2. To approve the payment of Directors’ fees for the year ended 31 December 2004.
3. To re-elect Mr. Ganesan A/L Sundaraj who is retiring in accordance with Article 80 of
the Company’s Articles of Association.
4. To re-elect Tunku Makhlad bin Tunku Mohamed Jamil who is retiring in accordance with
Article 80 of the Company’s Articles of Association.
5. To re-appoint Messrs. PKF, the retiring Auditors, and to authorise the Board of Directors
to fix their remuneration.
6. The authority for Directors to allot and issue shares pursuant to Section 132D of the
Companies Act, 1965

[Please indicate with (X) in the spaces provided how you wish your vote to be casted. If no specific direction as to voting is given, the Proxy will vote or abstain at
his(her) discretion]

Dated this day of 2005 Number of

shares held :

[Signature/Common Seal of Member]

[* Delete if not applicable]

NOTES:

• A member entitled to attend and vote at the Meeting is entitled to appoint a Proxy or Proxies to attend and vote on his (her) instead. A Proxy may but need
not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
• Where a member appoints two (2) or more Proxies to attend and vote at the same Meeting, such appointment shall be invalid unless the member
specifies the proportions of his (her) shareholdings to be represented by each Proxy.
• Where a member of the Company is an Authorised Nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at
least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.
• The instrument appointing a proxy shall be in writing under the hand of the appointor or his/her attorney duly authorised in writing or if the appointor is a
corporation/company, either under its common seal or under the hand of officer or attorney duly authorised.
• The instrument appointing a Proxy must be deposited at the Registered Office of the Company at Suite 19.06 19th Floor, Menara MAA, No. 12 Jalan Dewan
Bahasa, 50460 Kuala Lumpur, not less than forty-Eight ( 48 hours) before the time set for the Meeting or any adjournment thereof.
Last Fold Here For Sealing

Then Fold Here

STAMP

The Company Secretary

MANGIUM INDUSTRIES BHD
(Company No. 356031-H)
(Incorporated in Malaysia)

SUITE 19.06, 19TH FLOOR, MENARA MAA,

NO. 12, JALAN DEWAN BAHASA,
50460 KUALA LUMPUR

First Fold Here