krisassets ar05 fin(final)

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Directors' report 28 - 31

Financial statements

Income statements 32

Balance sheets 33

Consolidated statementof changes in equity 34

Company statement ofchanges in equity 35

Cash flow statements 36 - 37

Notes to the financial statements 38 - 57

Statement by Directors 58

Statutory Declaration 59

Report of the auditors to the members 60

ContentsReports and Financial Statements

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Directors’ Reportfor the financial year ended 31 December 2005

The Directors have pleasure in submitting their report to the members together with the audited financial statements ofthe Group and Company for the financial year ended 31 December 2005.

Principal activities and corporate information

The principal activity of the Company during the financial year is that of investment holding. Its principal wholly ownedsubsidiary, Mid Valley City Sdn Bhd, is the owner and operator of Mid Valley Megamall, whereas Mid Valley Capital Sdn Bhdis a special purpose vehicle incorporated for the issuance of RM400 million nominal value redeemable secured bonds.There have been no significant changes in the nature of these activities during the financial year.

The number of employees at the end of the financial year amounted to 379 (2004: 363) employees in the Group and, apartfrom the Group Managing Director, the Company does not have any employee (2004: Nil).

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Main Boardof Bursa Malaysia Securities Berhad ('Bursa Securities').

The address of the registered office of the Company is as follows:

Penthouse, Menara IGBNo. 1, The Boulevard, Mid Valley CityLingkaran Syed Putra, 59200 Kuala Lumpur

The principal place of business of the Company is at Mid Valley City.

Change of name

On 2 June 2005, the Company changed its name from Kris Components Bhd to KrisAssets Holdings Berhad.

Financial resultsGroup Company

RM '000 RM '000Net profit/(loss) for the financial year 52,106 (11,253)

Dividends

Dividends paid, declared or proposed since the end of the Company's previous financial period are as follows:RM '000

(a) In respect of the six-month ended 31 December 2004:

Interim dividend of 8% tax exempt on ordinary shares paid on 28 March 2005. 26,432

(b) In respect of the financial year ended 31 December 2005:

Special interim dividend of 5% tax exempt on ordinary shares paid on 30 May 2005. 16,520

Subsequent to the financial year end, an interim dividend of 10% less 28% tax on ordinary shares amounting toRM23,789,000 has been declared on 22 February 2006 which would be paid on 31 March 2006.

The Directors do not recommend the payment of any final dividend for the financial year ended 31 December 2005.

Reserves and provisions

All material transfers to or from reserves or provisions during the financial year are shown in the financial statements.

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Directors’ Report (cont’d)for the financial year ended 31 December 2005

Redeemable preference shares of RM0.10 each ('RPS')

On 30 December 2005, the Company redeemed 2,000,000 out of 2,930,000 RPS at a redemption price of RM100 perRPS. The redemption was financed by an issuance of RM200 million nominal value 7-year AAA-rated bank guaranteedbonds together with detachable provisional rights to allot 110,134,166 5-year warrants.

Directors

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

Tan Sri Dato' Dr. Lin See YanRobert Tan Chung MengHalim Bin Haji DinLe Ching Tai @ Lee Chen ChongTan Lei ChengTan Boon LeeDaniel Yong Chen-IElizabeth Tan Hui Ning (alternate to Robert Tan Chung Meng)

In accordance with Article 81 of the Company's Articles of Association, Tan Sri Dato' Dr. Lin See Yan and Halim Bin Haji Dinretire by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.

Directors' interests

According to the Register of Directors' Shareholdings, particulars of interests of Directors who held office at the end of thefinancial year in shares in the Company and shares, irredeemable convertible preference shares and options in itsrelated corporations are as follows:

In the Company Number of Ordinary Shares of RM1.00 each1 January Addition Disposal 31 December

Robert Tan Chung MengDirect 0 208,698 0 208,698Indirect 325,197,988 26,242,921 77,669,000 273,771,909

Tan Lei ChengDirect 10,000 85,955 0 95,955Indirect 0 90,084 0 90,084

Tan Boon LeeDirect 0 149,536 0 149,536

Daniel Yong Chen-IDirect 0 7,462 0 7,462

In IGB Corporation Berhad(holding company) Number of Ordinary Shares of RM0.50 each

1 January Addition Disposal 31 DecemberRobert Tan Chung Meng

Direct 1,915,562 2,000,000 0 3,915,562Indirect 470,256,606 23,356,072 0 493,612,678

Tan Lei ChengDirect 1,512,667 300,000 0 1,812,667Indirect 1,690,137 0 0 1,690,137

Tan Boon LeeDirect 1,805,574 1,000,000 0 2,805,574

Daniel Yong Chen-IDirect 120,000 40,000 140,000 20,000

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In IGB Corporation Berhad Number of Irredeemable Convertible Preference Shares of(holding company) RM1.00 each, 2002/2007

Conversion/1 January Addition Disposal 31 December

Robert Tan Chung MengIndirect 29,474,763 0 29,474,763 0

In IGB Corporation Berhad Number of ESOS Options over(holding company) Ordinary Shares of RM0.50 each

1 January Addition Exercised 31 December

Robert Tan Chung Meng 2,000,000 0 2,000,000 0Tan Boon Lee 1,000,000 0 1,000,000 0Daniel Yong Chen-I 200,000 0 40,000 160,000

By virtue of Robert Tan Chung Meng holding more than 15% interests in shares in IGB Corporation Berhad, he is deemedto have interest in the shares in the subsidiaries of IGB Corporation Berhad to the extent IGB Corporation Berhad has aninterest.

Other than as disclosed above, none of the other Directors holding office at the end of the financial year held any interestsin the Company or its related corporations during the financial year.

Directors' benefit

Since the end of the previous financial period, no Director has received or become entitled to receive a benefit (other thanthe fees and other emoluments as disclosed in note 6 to the financial statements) by reason of a contract made by theCompany or a related corporation with the Director or with a firm of which he is a member, or with a company in which hehas a substantial financial interest, except that certain Directors received remuneration as directors/executives in theholding company.

Except as disclosed above, neither during nor at the end of the financial year was the Company or its related corporationsa party to any arrangement whose object was to enable the Directors of the Company to acquire benefits by means of theacquisition of shares in, or debentures of, the Company or any other body corporate.

Statutory information on the financial statements

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

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowancefor doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowancehad 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 businesstheir values as shown in the accounting records of the Group and Company had been written down to an amountwhich 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 the allowance for doubtful debts in thefinancial statements of the Group and Company inadequate to any substantial extent;

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

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

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No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve (12)months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the Group orCompany to meet their obligations when they fall due.

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

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

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

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or thefinancial statements which would render any amount stated in the financial statements misleading.

In the opinion of the Directors:

(a) the results of the Group's and Company's operations during the financial year were not substantially affected by anyitem, transaction or event of a material and unusual nature except as disclosed in the financial statements; 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 theGroup and Company for the financial year in which this report is made.

Significant event

Issuance of RM200 million bank guaranteed bonds with warrants

On 23 December 2005, the Company issued RM200 million nominal value 7-year AAA-rated bank guaranteed bondstogether with detachable provisional rights to allot 110,134,166 5-year warrants. The proceeds were utilised to redeem2,000,000 RPS at a redemption price of RM100 per RPS on 30 December 2005. The Warrants have yet to be issuedpending lifting of suspension from trading in ordinary shares of the Company on Bursa Malaysia Securities Berhad.

Holding company

The Directors regard IGB Corporation Berhad, a company incorporated in Malaysia and listed on the Main Board of BursaSecurities, as the Company's holding company.

Auditors

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

Signed on behalf of the Board of Directors in accordance with their resolution dated 20 March 2006.

Robert Tan Chung MengGroup Managing Director

Halim Bin Haji DinIndependent Non-Executive Director

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Income Statementsfor the financial year ended 31 December 2005

Group Company01.01.2005 01.07.2004 01.01.2005 01.07.2004

to 31.12.2005 to 31.12.2004 to 31.12.2005 to 31.12.2004 Note RM '000 RM '000 RM '000 RM '000

Revenue 4 173,293 53,585 5,049 0

Cost of sales (45,589) (11,382) 0 0

Gross profit 127,704 42,203 5,049 0

Other operating income 7,537 2,546 0 5,999

Administrative expenses (23,103) (9,522) (2,571) (76)

Gain on disposal of assetsand liabilities 0 0 0 85,563

Profit from operations 5 112,138 35,227 2,478 91,486

Finance costs 7 (33,473) (15,651) (12,834) (5,903)

Profit/(loss) from ordinary activitiesbefore tax 78,665 19,576 (10,356) 85,583

Tax 8 (26,559) (6,013) (897) 1,478

Net profit/(loss) for thefinancial year/period 52,106 13,563 (11,253) 87,061

Earnings per ordinary share (sen) 9 15.8 5.3

Dividends per ordinary share (sen) 10 13.0 0

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Balance Sheetsas at 31 December 2005

Group Company2005 2004 2005 2004

Note RM '000 RM '000 RM '000 RM '000

Capital and reservesShare capital 11 330,502 330,502 330,502 330,502Share premium 376,711 376,711 376,711 376,711Reserves on consolidation 19,165 19,165 0 0Treasury shares 12 (220) (220) (220) (220)Capital redemption reserve 13 200 0 200 0Retained earnings 14 119,856 110,902 39,283 93,688Shareholders' equity 846,214 837,060 746,476 800,681Non-current liabilitiesRedeemable preference shares 15 93,000 293,000 93,000 293,000Borrowings 16 563,759 400,000 193,759 0Deferred taxation 17 86,861 73,598 0 0

743,620 766,598 286,759 293,0001,589,834 1,603,658 1,033,235 1,093,681

Represented by:Non-current assetsProperty, plant and equipment 18 4,053 3,613 0 0Investment properties 19 1,480,000 1,480,000 0 0Subsidiaries 20 0 0 1,029,794 1,029,794

1,484,053 1,483,613 1,029,794 1,029,794Current assetsInventories 21 14 15 0 0Trade and other receivables 22 5,110 2,172 1,802 226Amounts owing by holding

company and relatedcompanies 23 4,753 4,581 0 0

Tax recoverable 0 0 51 0Cash and cash equivalents 24 199,786 164,018 60,645 112,158

209,663 170,786 62,498 112,384Less: Current liabilitiesTrade and other payables 25 66,149 50,382 14,477 3,988Amounts owing to holding

company and relatedcompanies 26 2,085 36 0 18

Amount owing to a subsidiary 27 0 0 44,580 44,446Borrowings 16 30,000 0 0 0Taxation 5,648 323 0 45

(103,882) (50,741) (59,057) (48,497)Net current assets 105,781 120,045 3,441 63,887

1,589,834 1,603,658 1,033,235 1,093,681

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Consolidated Statement Of ChangesIn Equityfor the financial year ended 31 December 2005

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Company Statement Of ChangesIn Equity

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Cash Flow Statementsfor the financial year ended 31 December 2005

Group Company01.01.2005 01.07.2004 01.01.2005 01.07.2004


Operating activitiesProfit/(loss) from ordinary activities

before tax 78,665 19,576 (10,356) 85,583Adjustments for:• Property, plant and equipment:

- depreciation 1,185 286 0 0- written off 18 0 0 0- loss on disposal 4 0 0 0

• Gain on disposal of assets andliabilities 0 0 0 (85,563)

• Finance costs 33,473 15,651 12,834 5,903• Allowance for doubtful debts 773 0 0 0• Bad debts written off 144 0 0 0• Amortisation of corporate expenses 44 0 44 0• Interest income (4,194) (976) (2,049) (880)• Dividend income 0 0 (3,000) (5,119)Operating profit/(loss) before working

capital changes 110,112 34,537 (2,527) (76)• Inventories 1 11 0 143• Trade and other receivables (2,280) 3,612 110 9,857• Trade and other payables 5,130 15,472 (39) (332)Cash flow from/(used in) operations 112,963 53,632 (2,456) 9,592Income taxes paid (7,901) (60) (83) (60)Net cash generated from/(used in)

operating activities 105,062 53,572 (2,539) 9,532

Investing activitiesPurchase of property, plant

and equipment (1,678) (279) 0 0Proceeds from sale of property, plant

and equipment 31 0 0 0Proceeds from disposal of assets

and liabilities 0 85,180 0 85,180Acquisition of subsidiaries 0 (87,723) 0 (106,795)Advances from subsidiaries 0 0 19 43,800Interest received 4,305 812 2,049 723Dividends received 0 0 0 5,119Net cash generated from/(used in)

investing activities 2,658 (2,010) 2,068 28,027

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Cash Flow Statements (cont’d)for the financial year ended 31 December 2005

Group Company01.01.2005 01.07.2004 01.01.2005 01.07.2004


Financing activitiesInterest paid (22,805) (23,368) 0 0Expenses on corporate and fund

raising exercise (1,800) (5,848) (1,800) (4,568)Net inter-company balances movement 1,877 (149,012) (18) 0Dividends paid (42,952) 0 (42,952) 0Payment for redemption of redeemable

preference shares (200,000) 0 (200,000) 0Repayments of loans and borrowings 0 (200,000) 0 0Proceeds from issuance of redeemable

secured bonds 0 400,000 0 0Proceeds from issuance of bank

guaranteed bonds 193,728 0 193,728 0Net cash (used in)/generated from

financing activities (71,952) 21,772 (51,042) (4,568)

Net increase/(decrease) in cashand cash equivalents during thefinancial year/period 35,768 73,334 (51,513) 32,991

Cash and cash equivalents atbeginning of financial year/period 164,018 90,684 112,158 79,167

Cash and cash equivalents at end offinancial year/period 24 199,786 164,018 60,645 112,158

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1. General information

The principal activity of the Company during the financial year is that of investment holding. Its principal whollyowned subsidiary, Mid Valley City Sdn Bhd, is the owner and operator of Mid Valley Megamall, whereas Mid ValleyCapital Sdn Bhd is a special purpose vehicle incorporated for the issuance of RM400 million nominal valueredeemable secured bonds.

As at 31 December 2005, all assets and liabilities of the Group and Company are denominated in Ringgit Malaysia.

2. Summary of significant accounting policies

The following accounting policies have been used consistently in dealing with items that are considered materialin relation to the financial statements.

(a) Basis of preparation of the financial statements

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

The financial statements of the Group and Company comply with the provisions of the Companies Act, 1965and MASB approved accounting standards in Malaysia.

The preparation of financial statements in conformity with the provisions of the Companies Act, 1965 andMASB approved accounting standards in Malaysia requires the use of estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dateof the financial statements and the reported amounts of revenues and expenses during the reported period.Although these estimates are based on the Directors' best knowledge of current events and actions, actualresults may differ from those estimates.

(b) Basis of consolidation

The consolidated financial statements include the financial statements of the Company and all its subsidiariesmade up to the end of the financial year. Subsidiaries are those enterprises in which the Group has power toexercise control over the financial and operating policies so as to obtain benefits from their activities.Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longerconsolidated from the date that control ceases. Subsidiaries are consolidated using the acquisition methodof accounting. Under the acquisition method of accounting, the results of the subsidiaries acquired or disposedof during the financial year are included in the consolidated income statement from the date of acquisition orup to the date of their disposal. Inter-company transactions are eliminated on consolidation and consolidatedfinancial statements reflect external transactions only. Where necessary, adjustments are made to the financialstatements of subsidiaries to ensure consistency of accounting policies with those of the Group.

(c) Reserve on consolidation

Reserve or capital reserve arising on consolidation represents the excess or deficit of purchase considerationover the Group's share of the fair value of the identifiable net assets of subsidiaries acquired at the date ofacquisition. Reserve or capital reserve arising on consolidation is written off or credited to reserves in theperiod of acquisition.

(d) Subsidiaries

Subsidiaries are those corporations, in which the Group has power to exercise control over the financial andoperating policies so as to obtain benefits from their activities.

Notes To The Financial Statementsfor the financial year ended 31 December 2005

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Notes To The Financial Statements (cont’d)for the financial year ended 31 December 2005

2. Summary of significant accounting policies (cont’d)

(d) Subsidiaries (cont’d)

Investments in subsidiaries are stated at cost. Where an indication of impairment exists, the carrying amountof the investment is assessed and written down immediately to its recoverable amount. Refer to accountingpolicy in note 2(n) to the financial statements on impairment of assets.

On disposal of an investment, the difference between net disposal proceeds and its carrying amount ischarged or credited to the income statement.

(e) Investment properties

Investment properties are held for long term rental yields and are not substantially occupied by the Group.These properties are treated as long term investments. The properties are measured initially at their costsand they are subsequently carried at fair value determined at regular intervals by external independent valuersbased on their open market values with additional valuations performed in the intervening years wheremarket conditions indicate that the carrying amounts on the revalued assets are materially different from themarket values.

Increases in their carrying amount are credited to revaluation reserve. Decreases that offset previous increasesof the same assets are charged against revaluation reserve; all other decreases are charged to incomestatement.

On disposal of an investment property, the difference between the net disposal proceeds and the carryingamount is charged or credited to the income statement; any amount in revaluation reserve relating to thatinvestment property is transferred to retained earnings.

(f) Property, plant and equipment

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

Gains and losses on disposals are determined by comparing proceeds with carrying amounts and areincluded in profit/(loss) from operations.

Depreciation on property, plant and equipment is calculated to write-off the cost of the assets on straight linebasis over their estimated useful lives, summarised as follows:

Motor vehicles 20%Furniture and fittings 12.5% to 33 1/3%Equipment 12.5%Computers 33 1/3%

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

(g) Revenue recognition

Rental income is recognised on accrual basis in accordance with the substance of the relevant agreementsunless collectibility is in doubt in which case the recognition of such income is suspended. Other rent relatedand carpark income is recognised upon services being rendered.

Interest income is recognised on a time proportion basis, taking into account the principal outstanding andthe effective rate over the period to maturity, when it is determined that such income will accrue to the Group.

Dividend income from investments is taken up when shareholders' right to receive payment is established.

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(h) Inventories

Inventories represent consumables and are stated at the lower of cost and net realisable value. Cost isdetermined using the first in first out method, whereas net realisable value is the estimated selling price in theordinary course of business less the selling expenses.

(i) Receivables

Trade receivables are carried at invoiced amount less all allowance for doubtful debts. Known bad debts arewritten off in the period in which they are identified and specific allowance is made for debt considered to bedoubtful of collection.

(j) Income taxes

Current tax expense is determined according to the tax laws of jurisdiction in which the Group operates andincludes all taxes based upon the taxable profits and real property gains taxes payable on disposal ofproperties.

Deferred tax is recognised in full, using the liability method, on temporary difference arising between theamounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financialstatements.

Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available againstwhich the deductible temporary differences or unused tax losses can be utilised.

Deferred tax is recognised on temporary differences arising from investments in subsidiaries, except wherethe timing of the reversal of temporary difference can be controlled and it is probable that the temporarydifference will not reverse in the foreseeable future.

Tax rates enacted or substantively enacted by the balance sheet date are used to determine the deferred tax.

(k) Cash and cash equivalents

For the purpose of cash flow statement, cash and cash equivalents consist of cash on hand, deposits held atcall with banks, other short term, highly liquid investments that are readily convertible to known amounts ofcash and which are subject to an insignificant risk of changes in value, and bank overdrafts.

(l) Share capital

(i) Classification

Ordinary shares are classified as equity. Other shares are classified as equity and/or liability accordingto the economic substance of the particular instrument.

(ii) Share issue costs

Incremental external costs directly attributable to the issue of new shares are shown as a deduction, netof tax, in equity from the proceeds.

(iii) Dividends

Dividends on ordinary shares are recognised as liabilities when declared by the balance sheet date.Dividends on preference shares are recognised as expenses in the period in which they are incurred.


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(l) Share capital (cont’d)

(iv) Treasury shares

When shares are repurchased, the amount of the consideration paid, including directly attributablecosts, is recognised as a change in equity. Repurchased shares are reclassified as treasury sharesand presented as a deduction from equity.

(m) Borrowings

Borrowings are initially recognised based on the proceeds received, net of transaction costs incurred. Insubsequent periods, borrowings are stated at amortised cost using the effective yield method; any differencebetween proceeds (net of transaction costs) and the redemption value is recognised in the income statementover the period of the borrowings.

(n) Impairment of assets

Property, plant and equipment and other non-current assets, are reviewed for impairment losses wheneverevents or changes in circumstances indicate that the carrying amount may not be recoverable. Impairmentloss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount.The recoverable amount is the higher of an asset's net selling price and value in use. For the purposes ofassessing impairment, assets are grouped at the lowest level for which there are separately identifiable cashflows.

The impairment loss is charged to the income statement unless it reverses a previous revaluation in whichcase it is charged to the revaluation surplus. Any subsequent increase in recoverable amount is recognisedin the income statement unless it reverses an impairment loss on a revalued asset in which case it is takento revaluation surplus.

(o) Employee benefits

(i) Short term employee benefits

Wages, salaries, bonuses, paid annual leaves and non-monetary benefits are accrued in the period inwhich the associated services are rendered by employees of the Group.

(ii) Defined contribution plans

The Group's contributions to defined contribution plans are charged to the income statement in theperiod to which they relate. Once the contributions have been paid, the Group has no further paymentobligations.

(p) Segment reporting

The segmental financial information by business or geographical segments is not presented as the Group'sactivities only comprise as the owner and operator of Mid Valley Megamall of which its entire business isconducted in Malaysia.


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(q) Financial instruments

(i) Description

A financial instrument is any contract that gives rise to both a financial asset of one enterprise and afinancial liability or equity instrument of another enterprise.

A financial asset is any asset that is cash, a contractual right to receive cash or another financial assetfrom another enterprise, a contractual right to exchange financial instruments with another enterpriseunder conditions that are potentially favourable, or an equity instrument of another enterprise.

A financial liability is any liability that is a contractual obligation to deliver cash or another financial assetto another enterprise, or to exchange financial instruments with another enterprise under conditionsthat are potentially unfavourable.

(ii) Fair value estimation for disclosure purposes

In assessing the fair value of financial instruments, the Group uses a variety of methods and makesassumptions that are based on market conditions existing at each balance sheet date. Quoted marketprices or dealer quotes for the specific or similar instruments are used for long term debts. Othertechniques, such as option pricing models and estimated discounted value of future cash flows, areused to determine fair value for the remaining financial instruments. In particular, the fair value offinancial liabilities is estimated by discounting the future contractual cash flows at the current marketinterest rate available to the Group for similar financial instrument.

The face values of financial assets (less any estimated credit adjustments) and financial liabilities withmaturity period of less than one year are assumed to approximate their face values.

(iii) Financial instruments recognized on the balance sheets

The particular recognition method adopted for other financial instruments recognised on the balancesheet is disclosed in the individual accounting policy statements associated with each items.

3. Financial risk management objectives and policies

The Group's activities expose it to a variety of financial risks, including interest rate risk, credit risk, liquidity and cashflow risk. The Group's overall financial risk management objective is to ensure that the Group creates value for itsshareholders. The Group focuses on the unpredictability of financial markets and seeks to minimise potentialadverse effects on the financial performance of the Group. Financial risk management is carried out through riskreviews, internal control systems, insurance programmes and adherence to Group financial risk managementpolicies. The management regularly reviews these risks and approves the treasury policies, which cover themanagement of these risks.

(a) Interest rate risk

The Group's income and operating cash flows are substantially independent of changes in market interestrates. Interest rate exposure arises mainly from the Group's borrowings and deposits. The Group managesits interest rate exposure by maintaining a prudent mix of fixed and/or floating rate borrowings.


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3. Financial risk management objectives and policies (cont’d)

(b) Credit risk

Credit risk arises when revenue or income is on deferred credit term. The Group controls these risks by theapplication of credit approvals, limits and monitoring procedures. Credit risks are minimised and monitoredby strictly limiting the Group's associations to business partners with high creditworthiness. Trade receivablesare monitored on an on-going basis via Group management reporting procedures. The Group does not haveany significant exposure to any individual customer or counterparty nor does the Group have any majorconcentration of credit risk related to any financial instruments.

Concentration of credit risk with respect to trade receivables is limited due to the Group's nature of businesswhich is predominately rental related and cash-based. The Group's historical experience in collection of tradereceivables falls within the recorded allowances. Due to these factors, management believes that no additionalcredit risk beyond amounts allowed for collection losses is inherent in the Group's trade receivables.

The deposits are placed with credit worthy financial institutions. The Group also seeks to control credit risk byensuring that revenue or income is from customers or tenants with an appropriate credit history. The Groupconsiders the risk of material loss in the event of non-performance by a financial counterparty to be unlikely.

(c) Liquidity and cash flow risk

The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so asto ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquiditymanagement, the Group maintains sufficient levels of cash or cash convertible investments to meet itsworking capital requirements. In addition, the Group strives to maintain available banking facilities of areasonable level to its overall debt position. As far as possible, the Group raises committed funding fromcapital markets and prudently balances its portfolio with short term funding so as to achieve overall costeffectiveness.

4. RevenueGroup Company

01.01.2005 01.07.2004 01.01.2005 01.07.2004to 31.12.2005 to 31.12.2004 to 31.12.2005 to 31.12.2004

RM '000 RM '000 RM '000 RM '000

Rental and rent related income 158,132 49,367 0 0Car park income 13,112 4,218 0 0Dividend income 0 0 3,000 0Interest income 2,049 0 2,049 0

173,293 53,585 5,049 0


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5. Profit from operationsGroup Company

01.01.2005 01.07.2004 01.01.2005 01.07.2004to 31.12.2005 to 31.12.2004 to 31.12.2005 to 31.12.2004

Note RM '000 RM '000 RM '000 RM '000

Profit from operations is statedafter charging:Auditors' remuneration 64 43 3 5Property, plant and equipment:

- depreciation 1,185 286 0 0- written off 18 204 0 0- loss on disposal 4 0 0 0

Hire of machinery and equipment 59 24 0 0Rental expense for buildings 346 115 0 0Staff costs:

- Directors' remuneration 6 630 274 197 66- other staff costs 11,543 4,176 0 0- defined contribution plan 1,131 513 0 0

Allowance for bad and doubtful debts 773 719 0 0Bad debts written off 144 0 0 0And crediting:Bad debts recovered (5) 0 0 0Dividend income 0 0 (3,000) (5,119)Interest income (4,194) (976) (2,049) (880)Interest income on overdue

balances (185) (365) 0 0

6. Directors' remunerationGroup Company

01.01.2005 01.07.2004 01.01.2005 01.07.2004to 31.12.2005 to 31.12.2004 to 31.12.2005 to 31.12.2004

RM '000 RM '000 RM '000 RM '000

Fees• Directors of the Company 90 26 70 26• Directors of subsidiaries 50 100 0 0Other emoluments• Directors of the Company 110 40 110 40• Directors of subsidiaries 325 92 0 0Defined contribution plan• Directors of the Company 17 0 17 0• Directors of subsidiaries 38 16 0 0

630 274 197 66


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7. Finance costsGroup Company

01.01.2005 01.07.2004 01.01.2005 01.07.2004to 31.12.2005 to 31.12.2004 to 31.12.2005 to 31.12.2004

RM '000 RM '000 RM '000 RM '000

Interest expense on borrowings 22,914 10,393 0 0RPS dividends 10,528 5,258 10,528 5,258Amortisation of discount on bonds 31 0 31 0Interest on advances from a subsidiary 0 0 2,275 645

33,473 15,651 12,834 5,903

8. TaxGroup Company

01.01.2005 01.07.2004 01.01.2005 01.07.2004to 31.12.2005 to 31.12.2004 to 31.12.2005 to 31.12.2004

Note RM '000 RM '000 RM '000 RM '000

Current tax - Malaysia tax:- Current financial year 13,005 323 606 (1,427)- Prior financial period 291 0 291 0

Deferred taxation 17- Origination and reversal of

temporary differences 13,263 5,690 0 (51)26,559 6,013 897 (1,478)

The explanation of the relationship between tax expense and profit/(loss) from ordinary activities before tax is asfollows:

Group Company01.01.2005 01.07.2004 01.01.2005 01.07.2004

to 31.12.2005 to 31.12.2004 to 31.12.2005 to 31.12.2004% % % %

Numerical reconciliation between theaverage effective tax rate and theMalaysian income tax rate

Malaysian income tax rate 28 28 (28) 28

Tax effects of :- expenses not deductible for tax purpose 5 3 27 0- income not subject to tax 0 0 0 (28)- under provisions in prior financial period 1 0 10 0- others 0 0 0 (2)Average effective tax rate 34 31 9 (2)


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9. Earnings per ordinary share

Earnings per ordinary share of the Group is calculated by dividing the net profit for the financial year/period by theweighted average number of ordinary shares in issue during the financial year/period.

01.01.2005 01.07.2004to 31.12.2005 to 31.12.2004

Net profit for the financial year/period (RM '000) 52,106 13,563Weighted average number of ordinary shares in issue ('000) 330,402 257,915Earnings per ordinary share (sen) 15.8 5.3

10. Dividends

Dividends declared or paid during the financial year ended 31 December 2005 are as follows:

Group and Company01.01.2005 to 31.12.2005 01.07.2004 to 31.12.2004

Gross Amount of Gross Amount ofdividend dividend, dividend dividend,

per share net of tax per share net of taxSen RM '000 Sen RM '000

Interim dividend for ordinary shares- 8% tax exempt for financial period

ended 31 December 2004 8.0 26,432 0 0- 5% tax exempt for financial year

ended 31 December 2005 5.0 16,520 0 013.0 42,952 0 0

Interim dividend of 10% less 28% tax on ordinary shares for the financial year ended 31 December 2005 wasdeclared on 22 February 2006 which would be paid on 31 March 2006.

11. Share capital

Group and Company Group and Company2005 2004

No. of Nominal No. of Nominalshares value shares value

'000 RM'000 '000 RM'000

AuthorisedOrdinary shares of RM1.00 eachAt start of financial year/period 499,700 499,700 200,000 200,000Created during the financial year/period 500,000 500,000 299,700 299,700At end of financial year/period 999,700 999,700 499,700 499,700

Issued and fully paidOrdinary shares of RM1.00 eachAt start of financial year/period 330,502 330,502 78,502 78,502Issued during the financial year/period 0 0 252,000 252,000At end of financial year/period 330,502 330,502 330,502 330,502


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12. Treasury shares

During the financial year ended 30 June 2003, shareholders' of the Company, by a special resolution passed in ageneral meeting on 8 April 2003, approved the Company's plan to repurchase its own shares.

Subsequently, the Company repurchased 100,000 of its own shares from the open market. The average purchaseprice for the shares repurchased was RM2.20 per share. The repurchase transaction was financed by internallygenerated funds. The shares repurchased are held as treasury shares in accordance with Section 67A of theCompanies Act, 1965 and carried at historical cost of repurchase.

13. Capital redemption reserveGroup Company

2005 2004 2005 2004RM' 000 RM' 000 RM' 000 RM' 000

At start of financial year/period 0 0 0 0Created by transfer from retained

earnings 200 0 200 0At end of financial year/period 200 0 200 0

The capital redemption reserves was created as a result of the redemption of 2,000,000 out of 2,930,000 redeemablepreference shares of RM0.10 each at a redemption price of RM100 per share on 30 December 2005, in accordancewith Section 61 of the Companies Act, 1965. The redemption was financed by the issuance of RM200 millionnominal value bank guaranteed bonds.

14. Retained earnings

Subject to agreement by the Inland Revenue Board, the Company has sufficient tax credit under Section 108 of theIncome Tax Act, 1967 to frank the payment of net dividends of approximately RM8,345,000 (2004: RM5,974,000) outof its distributable reserves of approximately RM39,283,000 as at 31 December 2005 (2004: RM93,688,000)without incurring any additional tax liabilities.

Subject to agreement by the Inland Revenue Board, the Company also has tax exempt income as at 31 December2005 amounting to RM25,847,000 (2004: RM63,999,000) available for distribution as tax exempt dividends toshareholders.


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15. Redeemable preference shares ('RPS')Group and Company Group and Company

2005 2004No. of Nominal No. of Nominal

shares value shares value'000 RM'000 '000 RM'000

AuthorisedRedeemable preference shares

of RM0.10 eachAt start of financial year/period 3,000 300 0 0Created during the financial year/period 0 0 3,000 300At end of the financial year/period 3,000 300 3,000 300

Issued and fully paidRedeemable preference shares

of RM0.10 eachAt start of financial year/period 2,930 293 0 0Issued during the financial year/period 0 0 2,930 293Redeemed during the financial year/period (2,000) (200) 0 0At end of the financial year/period 930 93 2,930 293

Share premiumRedeemable preference shares

of RM0.10 eachAt start of financial year/period 292,707 0Issued during the financial year/period 0 292,707Redeemed during the financial year/period (199,800) 0At end of the financial year/period 92,907 292,707

Total RPS 93,000 293,000

On 30 December 2005, the Company has redeemed 2,000,000 out of 2,930,000 RPS at RM100.00 per RPS withthe proceeds raised from the issuance of bank guaranteed bonds.

The salient terms of the RPS are as follows:

(a) As at 31 December 2005, the RPS consist of 930,000 redeemable preference shares of RM0.10 each in theCompany issued at RM100.00 per RPS to IGB Corporation Berhad;

(b) The RPS are entitled to annual cumulative preferential dividend rate of 5,000% calculated based on the parvalue of RM0.10 each, equivalent to 5% calculated based on the issue price of RM100.00 each;

(c) The RPS have a tenure of 5 years from the date of issue on 23 August 2004;

(d) The RPS shall subject to Section 61 of the Companies Act, 1965, be redeemed upon and subject to thefollowing terms and conditions:

(i) The Company shall redeem all of the RPS at the end of the fifth (5th) year of the issuance of the RPS butshall have the rights, at any time to redeem such RPS (in full or in part) at a redemption price ofRM100.00 per redeemable preference share provided not less than three (3) business days' notice orsuch shorter notice as the holder may agree in writing to be given. In addition, the Company may,commencing from the first (1st) anniversary of the date of issue of the RPS until maturity date of the RPS,redeem (in full or in part) at the option of the holder of the RPS at a redemption price of RM100.00 pereach RPS, provided that not less than three (3) months notice is given;


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15. Redeemable preference shares ('RPS') (cont’d)

(ii) The notice of the Company to redeem shall be given to the holder of the RPS to be redeemed. The noticeshall be in writing and shall fix the time and place for such redemption. At the time and place so fixed theregistered holder of the RPS to be redeemed shall be bound to deliver to the Company the relevantshare certificates for cancellation, and the Company shall pay to holder the redemption value in respectof such RPS together with any arrears or accruals of the cumulative preferential dividend. If the redemptionis not on a dividend date, then the pro-rated dividend for the period since the last dividend date would bepaid as part of the redemption value; and

(iii) No RPS redeemed by the Company shall be capable of reissue.

(e) With respect to the payment of dividends which have been declared and amounts payable upon liquidation,dissolution or winding-up of the Company, the holder of RPS shall rank in priority to the holders of ordinaryshares;

(f) The RPS shall carry no right to vote at any general meeting of the Company except with regards to anyproposal to reduce the capital of the Company, to dispose of the whole of the Company's property, businessand undertaking, to wind-up the Company, during the winding-up of the Company, when the RPS dividend orpart of the RPS dividend is in arrears for more than six (6) months, and on any proposal that affects rightsattached to the RPS. In any such case, the holder of RPS shall be entitled to vote together with the holders ofordinary shares and to one (1) vote for each RPS held; and

(g) The RPS shall entitle a holder to one (1) vote at any class meeting in relation to any proposal by the Companyto vary or abrogate the rights of RPS as stated in the Articles of Association of the Company. In all classmeetings, each RPS shall entitle the holder to one (1) vote.

16. Borrowings

Group Company2005 2004 2005 2004

RM' 000 RM' 000 RM' 000 RM' 000

Non-current: SecuredRedeemable secured bonds 370,000 400,000 0 0Bank guaranteed bonds

- Principal 200,000 0 200,000 0- Discount on bonds (6,241) 0 (6,241) 0

563,759 400,000 193,759 0

Current: SecuredRedeemable secured bonds 30,000 0 0 0

30,000 0 0 0

Group Company2005 2004 2005 2004

% per annum % per annum % per annum % per annum

Weighted average effective interestrates at balance sheet date:

Redeemable secured bonds 5.8 5.8 0 0Bank guaranteed bonds 4.0 0 4.0 0


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16. Borrowings (cont’d)

Group borrowings: maturity and exposure to finance rate risk

Laterthan 1 Later than

year and 2 yearsNot later not later and not Later

than 1 than 2 later than thanyear years 5 years 5 years Total

Group RM '000 RM '000 RM '000 RM '000 RM '000

At 31 December 2005- Fixed finance rate 30,000 40,000 130,000 400,000 600,000

At 31 December 2004- Fixed finance rate 0 30,000 120,000 250,000 400,000

Fair value

The carrying amounts of the borrowings due within one (1) year approximate its fair value at balance sheet date. Thefair values of the borrowings due after one year are as follows:

Group Company2005 2004 2005 2004

RM' 000 RM' 000 RM' 000 RM' 000

Redeemable secured bonds 387,000 400,000 0 0Bank guaranteed bonds 182,000 0 182,000 0

569,000 400,000 182,000 0

In September 2004, a subsidiary, Mid Valley Capital Sdn Bhd, issued 2 classes of RM400 million nominal valueredeemable secured bonds ('MVCap Bonds'). Class 1 Bonds comprises 6 series with issue amount up to RM285million and Class 2 Bonds comprises 4 series with issue amount up to RM115 million.

The MVCap Bonds are secured as follows:

(a) Legal assignment of all cashflows, tenancy agreements and insurance policies in relation to the Mid ValleyMegamall;

(b) Third party first rank fixed and floating charge over the Mid Valley Megamall and by way of debenture overassets, undertakings and paid-up capital of Mid Valley City Sdn Bhd and Mid Valley Capital Sdn Bhd; and

(c) Power of Attorney granted in favour of the trustee for the MVCap Bonds for the sale of Mid Valley Megamall.

In December 2005, the Company issued RM200 million nominal value 7-year AAA-rated bank guaranteed bonds('BG Bonds') with detachable provisional rights to allot 110,134,166 5-year warrants.

The BG Bonds are secured as follows:

(a) Third-party third legal charge over Mid Valley Megamall;(b) Third-ranking legal assignment created by Mid Valley City Sdn Bhd over all its insurance policies; and(c) Debenture to create a third-ranking fixed and floating charge over all of Mid Valley City Sdn Bhd's assets and

undertakings, both present and future.


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17. Deferred taxation

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assetsagainst current tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts,determined after appropriate offsetting, are shown in the balance sheet:

Group Company2005 2004 2005 2004

Note RM' 000 RM' 000 RM' 000 RM' 000

At start of financial year/period 73,598 10,217 0 51Charged/(credited) to

income statement:- property, plant and equipment 2,949 (1,284) 0 (51)- tax losses 10,786 6,974 0 0- others (472) 0 0 0

8 13,263 5,690 0 (51)Disposal of subsidiaries 0 (10,217) 0 0Arising from acquisition of

subsidiaries 0 67,908 0 0At end of financial year/period 86,861 73,598 0 0

Group Company2005 2004 2005 2004

RM' 000 RM' 000 RM' 000 RM' 000

Subject to income taxDeferred tax assets- Tax losses 0 10,786 0 0- Other items 472 0 0 0- Offsetting (472) (10,786) 0 0

0 0 0 0Deferred tax liabilities- Property, plant and equipment 50,652 47,703 0 0- Offsetting (472) (10,786) 0 0Net deferred tax liabilities 50,180 36,917 0 0

Subject to real property gains taxDeferred tax liabilities- Investment properties 36,681 36,681 0 0


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18. Property, plant and equipment

Group Motor Furniture andvehicles fittings Equipment Computers TotalRM '000 RM '000 RM '000 RM '000 RM '000

At costAt 1 January 2005 383 2,885 2,543 1,464 7,275Additions 59 53 171 1,395 1,678Write-off (76) (7) (33) (21) (137)Disposals (24) 0 (23) (13) (60)At 31 December 2005 342 2,931 2,658 2,825 8,756

Accumulated depreciationAt 1 January 2005 268 1,346 777 1,271 3,662Charge for the financial year 35 368 313 469 1,185Write-off (76) (3) (19) (21) (119)Disposals (4) 0 (11) (10) (25)At 31 December 2005 223 1,711 1,060 1,709 4,703

Net book valueAt 31 December 2005 119 1,220 1,598 1,116 4,053

Net book valueAt 31 December 2004 115 1,539 1,766 193 3,613

19. Investment propertiesGroup

2005 2004RM '000 RM '000

At cost 1,480,000 1,480,000

The investment properties have been charged as security for borrowings as disclosed in note 16 to the financialstatements.

20. SubsidiariesCompany

2005 2004RM '000 RM '000

Unquoted shares, at cost 1,029,794 1,029,794


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20. Subsidiaries (cont’d)Place of Group's interest (%)

Name of company Principal activities incorporation 2005 2004

Mid Valley City Sdn Bhd Owner and operator Malaysia 100.0 100.0of Mid Valley Megamall

Mid Valley MC Sdn Bhd 1 Dormant Malaysia 100.0 100.0Mid Valley Mulia Sdn Bhd 1 Dormant Malaysia 100.0 100.0Mid Valley Properties Sdn Bhd 1 Dormant Malaysia 100.0 100.0X-Speed Skatepark Sdn Bhd 1 Dormant Malaysia 100.0 100.0Mid Valley Capital Sdn Bhd Special purpose vehicle Malaysia 100.0 100.0

for issuance of bonds

Notes:1 - Held by Mid Valley City Sdn Bhd

All subsidiaries are audited by PricewaterhouseCoopers, Malaysia

The unquoted shares have been pledged for borrowings granted to a subsidiary.

21. InventoriesGroup

2005 2004RM '000 RM '000

At costConsumables 14 15

22. Trade and other receivablesGroup Company

2005 2004 2005 2004RM' 000 RM' 000 RM' 000 RM' 000

Trade receivables 2,759 1,430 0 0Less: Allowance for doubtful debts (206) (151) 0 0

2,553 1,279 0 0Other receivables 197 295 46 226Sundry deposits 191 187 0 0Prepayments 2,169 411 1,756 0

5,110 2,172 1,802 226

Credit terms of trade receivables range from payment in advance to seven (7) days (2004: ranging from payment inadvance to seven (7) days).

The concentration of credit risk is limited due to the Group's large number of customers and tenants. The Group'shistorical experience in collection of trade receivables falls within the recorded allowances. Due to these factors,management believes that no additional credit risk beyond amounts allowed for collection losses is inherent in theGroup's trade receivables.


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23. Amounts owing by holding company and related companiesGroup

2005 2004RM '000 RM '000

Amount owing by holding company 0 1,170Amount owing by related companies 4,753 3,411

4,753 4,581

The amounts owing by holding company and related companies are unsecured, interest free and have no fixedterms of repayment.

24. Cash and cash equivalents

Cash and cash equivalents included in the cash flow statements comprised the following balance sheet amounts:

Group Company2005 2004 2005 2004

RM '000 RM '000 RM '000 RM '000

Deposits with licensed banks 187,997 133,999 58,740 110,715Cash and bank balances 11,789 30,019 1,905 1,443

199,786 164,018 60,645 112,158

The weighted average annual interest rate of deposits with licensed banks that was effective at the balance sheetdate was as follows:

Group Company2005 2004 2005 2004

% per annum % per annum % per annum % per annum

Deposits with licensed banks 2.8 2.6 2.8 2.6

Deposits of the Group and Company have an average maturity period of 21 days (2004: 26 days). Bank balancesare deposits held at call with banks and earn no interest.

25. Trade and other payablesGroup Company

2005 2004 2005 2004RM '000 RM '000 RM '000 RM '000

Trade payables 32,570 35,126 0 0Other payables 1,485 3,385 87 160Accrued expenses 17,780 8,085 76 42Accrued preference shares dividend 4,550 3,786 4,550 3,786Preference shares dividends payable 9,764 0 9,764 0

66,149 50,382 14,477 3,988

Credit terms of trade payables vary from cash term to 90 days (2004: vary from no credit to 90 days).


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26. Amounts owing to holding company and related companies

Group Company2005 2004 2005 2004

RM '000 RM '000 RM '000 RM '000

Amount owing to holding company 3 23 0 18Amount owing to related companies 2,082 13 0 0

2,085 36 0 18

The amounts owing to holding company and related companies are unsecured, interest free and have no fixedterms of repayment.

27. Amount owing to a subsidiary

The amount owing to a subsidiary is unsecured, bearing 5% (2004: 5%) interest per annum and has no fixed termsof repayment.

28. Segment reporting - Group

The segmental financial information by business or geographical segments is not presented as the Group'sactivities comprise only as the owner and operator of Mid Valley Megamall of which its entire business is conductedin Malaysia.

29. Capital commitmentGroup Company

2005 2004 2005 2004RM '000 RM '000 RM '000 RM '000

Property, plant and equipment:- approved but not contracted for 789 458 0 0- contracted but not provided for in

the financial statements 0 81 0 0789 539 0 0

30. Significant related party disclosures

In addition to related party disclosures mentioned in the Directors' report and elsewhere in the financial statements,the significant related party transactions set out below are carried out in the normal course of business on termsand conditions obtainable in transactions with unrelated parties.

The holding company is IGB Corporation Berhad, a company incorporated in Malaysia and listed on the Main Boardof Bursa Securities.


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30. Significant related party disclosures (cont’d)

Related parties RelationshipIGB Corporation Berhad Holding companyMVEC Exhibition and Event Services Sdn Bhd A fellow subsidiaryIGB Properties Sdn Bhd A fellow subsidiaryEnsignia Construction Sdn Bhd A fellow subsidiaryTanah Permata Sdn Bhd A fellow subsidiaryMid Valley City Enterprise Sdn Bhd A fellow subsidiaryTechnoltic Engineering Sdn Bhd A fellow subsidiarySweat Club Sdn Bhd A subsidiary of Goldis Berhad, a substantial shareholder

of IGB Corporation BerhadMacro Lynx Sdn Bhd A subsidiary of Goldis Berhad, a substantial shareholder

of IGB Corporation Berhad

01.01.2005 01.07.2004to 31.12.2005 to 31.12.2004

Significant related party transactions RM '000 RM '000

Receivables:Rental of premise charged to MVEC Exhibition and

Event Services Sdn Bhd 3,984 1,992Rental of premise and car park charged to Sweat Club Sdn Bhd 223 621Rental of premise and car park charged to IGB Corporation Berhad 322 133Utilities charges charged to IGB Properties Sdn Bhd 678 345Utilities charges, rental of premise and car park charged to

Mid Valley City Enterprise Sdn Bhd 454 0Utilities charges and rental of car park charged to Tanah Permata Sdn Bhd 1,308 564Payables:Maintenance work charged by Ensignia Construction Sdn Bhd 6,344 846Rental of premise and utilities charges charged by IGB Properties Sdn Bhd 385 193Lift and escalator repair and maintenance charged by

Technoltic Engineering Sdn Bhd 434 0Support cost charged by IGB Corporation Berhad 2,031 240Property, plant & equipment purchased from Macro Lynx Sdn Bhd 1,195 0

31. Significant event

Issuance of RM200 million bank guaranteed bonds with warrants

On 23 December 2005, the Company issued RM200 million nominal value 7-year AAA-rated bank guaranteedbonds together with detachable provisional rights to allot 110,134,166 5-year warrants. The proceeds were utilisedto redeem 2,000,000 RPS at a redemption price of RM100 per RPS on 30 December 2005. The Warrants have yetto be issued pending lifting of suspension from trading in ordinary shares of the Company on Bursa MalaysiaSecurities Berhad.


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32. Comparatives

Due to the significant change in the nature of the Group and Company's business direction from previous businessof manufacturing and stamping of precision metal parts and anodising high-end cosmetic surface finishing metalproducts to be the owner and operator of Mid Valley Megamall since September 2004, the Company presented itsincome statement in the current financial year by classifying expenses by function, a change in prior period wherethe income statement was presented by classifying expenses by nature. The Directors are of the opinion that thisbasis provides a more appropriate basis of presentation of the Group's operations. The comparative incomestatements have been amended accordingly to conform to current year presentation.

33. Approval of financial statements

The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on20 March 2006.


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Statement By Directorspursuant to Section 169(15) of the Companies Act, 1965

We, Robert Tan Chung Meng and Halim Bin Haji Din, two of the Directors of KrisAssets Holdings Berhad (formerly knownas Kris Components Bhd), state that, in the opinion of the Directors, the financial statements set out on pages 32 to 57 aredrawn up so as to exhibit a true and fair view of the state of affairs of the Group and Company as at 31 December 2005and of the results and cash flows of the Group and Company for the financial year ended on that date in accordance withthe provisions of the Companies Act, 1965 and MASB approved accounting standards in Malaysia.

Signed on behalf of the Board of Directors in accordance with their resolution dated 20 March 2006.

Robert Tan Chung MengGroup Managing Director

Halim Bin Haji DinIndependent Non-Executive Director

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I, Chai Lai Sim, the officer primarily responsible for the financial management of KrisAssets Holdings Berhad (formerlyknown as Kris Components Bhd), do solemnly and sincerely declare that the financial statements set out on pages 32 to57 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and byvirtue of the provisions of the Statutory Declarations Act, 1960.

Chai Lai Sim

Subscribed and solemnly declared by the abovenamed Chai Lai Sim at Kuala Lumpur on 20 March 2006.

Before me:

S. Masahood OmarCommissioner for Oaths

Statutory Declarationpursuant to Section 169(16) of the Companies Act, 1965

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We have audited the financial statements set out on pages 32 to 57. These financial statements are the responsibility ofthe Company's Directors. It is our responsibility to form an independent opinion, based on our audit, on these financialstatements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 andfor no other purpose. We do not assume responsibility to any other person for the content of this report.

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

In our opinion:

(a) the financial statements have been prepared in accordance with the provisions of the Companies Act, 1965 andMASB approved accounting standards in Malaysia so as to give a true and fair view of:

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

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

(b) the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiarieshave been properly kept in accordance with the provisions of the Act.

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

Our audit reports on the financial statements of the subsidiaries were not subject to any qualification and did not includeany comment made under subsection (3) of section 174 of the Act.

PricewaterhouseCoopers(AF: 1146)Chartered Accountants

Shirley Goh(No. 1778/08/06(J))Partner of the firm

Kuala Lumpur20 March 2006

Report Of The Auditorsto the members of KrisAssets Holdings Berhad (formerly known as Kris Components Bhd)for the financial year ended 31 December 2005

krisassets ar05 fin(final)

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