Legenda Series

Luxurious high end homes in prestigious, prime locations.

Extensive landscaping creates a revitalizing ambience for wholesome living.

Residence Series

Trend-setting boutique developments: Practical layouts and lush greenery promotes better living.

Perdana Series

Well-planned lifestyle townships, self-contained and easily accessible. Well-maintained parks are community focal points.

Commercial Series

Commercial developments: Grade A offices, resort-like development and retail space for discerning investors.

• CNBCAsiaPacificPropertyAwards2008

• CNBCInternationalPropertyAwards2007

• ForbesAsia’sBestUnderUS$1BillionAward(2005-2007)

• TheEdgeTop100CompanieswithBestReturnsover5years(2006&2007)

• TheEdgeTop30,TopPropertyDevelopersAwards(2006&2007)

• Top1000CompaniesinMalaysia

(bytheMinistryofDomesticTradeandConsumerAffairs)

• MBJBLandscapeAward

The Edge Top 100 Companies with Best Returns over 5 years (2006 & 2007)

The Edge Top 30, Top Property Developers Awards(2006 & 2007)

Our developments in the Klang Valley, Penang Island and Johor Bahru are showcases of contemporary lifestyle statements. An innovator of concept living, we provide harmonious and serene environments with gated and guarded security which is a joy to come home to.

We aim to be a regional world class developer that will leave an enduring legacy of innovation and excellence.

An award winning developer, we remain committed to our corporate philosophy of maximising shareholders’ value by delivering quality driven products and excellent services to our customers.

Mah Sing Group Berhad is Malaysia’s premier

lifestyle developer, synonymous with trendy,

quality homes in prime and strategic locations.

inspiringthe evolution

of lifestyle

Actual photo taken at Aman Perdana.

contents

reaching a global benchmark in real estate° Grand entrances

° Show villages featuring various designs of houses

° Landscaping, recreational parks and lifestyle development themes

° Gated and guarded community living

° Innovative designs and excellent finishes

° Green street concept

003 Group 5–Year Financial Highlights

004 Corporate Information

006 Corporate Profile

007 Group Corporate Highlights

010 Corporate Structure

012 Directors’ Profile

016 Chairman’s Letter to Shareholders

025 Group Managing Director’s Review of Operations

031 Awards & Recognitions

032 Corporate Social Responsibility

034 Calendar of Events

037 Corporate Governance Statement

043 Audit Committee Report

047 Statement of Internal Control

049 Financial Statements

127 Properties Owned by the Group

129 Statistics of Shareholdings

132 Statistics of Warrant Holdings

135 Notice of Annual General Meeting

140 Notice of Dividend Entitlement and Payment

141 Statement Accompanying Notice of Annual General Meeting

Proxy Form

group 5–yearfinancial highlights

corporateinformation

corporate profile

corporate structure

directors’ profile

chairman’s letter to shareholders

group managing director’s review of operations

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group 5-yearfinancial

highlights

Revenue (in RM’000) Shareholders’ funds (in RM’000) Net profit attributable to shareholders (in RM’000)

200�

2004

2005

2006

2007

212,027

�56,455

47�,491

495,625

57�,�65

105,400

214,12�

256,059

�15,777

6�0,�17

14,702

25,062

48,�46

65,�70

81,126

Financial Year ended 31 december 2003 2004 2005 2006 2007 rm’000 rm’000 rm’000 rm’000 rm’000

REvENuE Properties 1�6,220 260,870 �56,255 �87,815 44�,�82 Plastics 75,807 95,291 117,071 107,558 126,�18 Others - 294 165 252 �,665

212,027 �56,455 47�,491 495,625 57�,�65

PROFIt BEFORE tAxAtION Properties 21,19� �4,807 6�,��6 92,�51 11�,4�9 Plastics 2,914 5,528 8,677 2,9�1 7,165 Others (2,9�7) (1,494) (2,�9�) (1,998) (2,899)

21,170 �8,841 69,620 9�,284 117,705

Net Profit Attributable to Shareholders 14,702 25,062 48,�46 65,�70 81,126 Paid-up Share Capital 4�,978 145,127 145,1�1 152,044 �10,671 Shareholders’ Funds 105,400 214,12� 256,059 �15,777 6�0,�17 total Assets Employed �50,111 552,2�6 619,516 746,742 1,110,124 Basic Earnings per Share (sen) 6.5 7.5 12.9 17.0 14.8 Fully Diluted Earnings per Share (sen) NA 7.1 11.7 14.4 14.1 Gross Dividend per Share (%) 4.0 6.0 12.0 12.0 16.0 Net Assets per Share (RM) 1.0 0.6 0.7 0.9 1.0 Return on Equity 14% 12% 19% 21% 1�%Average Return on Equity 15% 16% 21% 2�% 17%

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004

Board of directors

Jen. (r) Tan Sri Yaacob bin maT Zain Chairman/Independent Non-Executive Director

daTo’ Sri leong HoY Kum Group Managing Director/ Group Chief Executive

STeven ng PoH Seng Executive Director/ Chief Financial Officer

lim Kiu HocK Executive Director

leong YueT mei Non-Independent Non-Executive Director

caPTain (rTd) iZaHam bin abd. rani Independent Non-Executive Director

loH KoK leong Independent Non-Executive Director

audit committee

Jen.(r) Tan Sri Yaacob bin maT Zain

caPTain (rTd) iZaHam bin abd. rani

loH KoK leong

corporateinformation

NomiNatioN committee

Jen.(r) Tan Sri Yaacob bin maT Zain

leong YueT mei

caPTain (rTd) iZaHam bin abd. rani

remuNeratioN committee

Jen. (r) Tan Sri Yaacob bin maT Zain

daTo’ Sri leong HoY Kum

leong YueT mei

optioN committee

Jen. (r) Tan Sri Yaacob bin maT Zain

daTo’ Sri leong HoY Kum

loH KoK leong

secretaries

Yang bao ling(MAICSA 7041240)

Kuan Hui Fang (MIA 16876)

registrar

PFA Registration Services Sdn Bhd (Company No. 192�4-W)Level 1�, uptown 1No. 1, Jalan SS21/58Damansara uptown47400 Petaling JayaSelangor Darul Ehsantel : 6-0�-7718 6000Fax : 6-0�-7722 2�11

registered office

Penthouse Suite 1Wisma Mah SingNo. 16�, Jalan Sungai Besi57100 Kuala Lumpurtel : 6-0�-9221 8888Fax : 6-0�-9222 28��E-mail : ir@mahsing.com.mywebsite : www.mahsing.com.my

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auditors

Deloitte KassimChan (AF 0080)Chartered AccountantsLevel 19, uptown 1No. 1, Jalan SS21/58Damansara uptown47400 Petaling JayaSelangor Darul Ehsantel : 6-0�-772� 6500Fax : 6-0�-7726 �986

BaNkers

Affin Bank BerhadAlliance Investment Bank BerhadAlliance Bank Malaysia BerhadAmBank BerhadCIMB Bank BerhadCIMB Islamic Bank BerhadEON Bank BerhadHong Leong Bank BerhadMalayan Banking BerhadOCBC Bank (Malaysia) BhdRHB Bank Berhadunited Overseas Bank (Malaysia) Berhad

Pt Bank Ekonomi Raharjathe Bank of tokyo-Mitsubishi uFJ, Ltd

stock exchaNge ListiNg

Main Board of Bursa Malaysia Securities Berhad

stock short Name

MAHSING (858�)

iNdex

Kuala Lumpur Composite Index (KLCI)

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006

corporateprofile

Mah Sing Group Berhad is

Malaysia’s premier lifestyle

developer, synonymous with

trendy, quality homes and

investment grade, commercial

properties in prime and

strategic locations

Since our inception in 1965, Mah Sing Group Berhad has achieved recognition as an innovative developer of niche products and trend-setting townships and Grade A offices.

Set in prime locations, our developments in the Klang valley, Penang Island and Johor Bahru have cemented our position as Malaysia’s premier lifestyle developer. Our projects are showcases of contemporary lifestyle statements; grand entrances, lush landscaping, and practical yet functional homes with quality finishes within a gated and guarded environment are all hallmarks of Mah Sing’s developments.

Benchmarking ourselves globally, we aim to become a regional world class developer and in our quest for excellence, we remain committed to our corporate philosophy of maximising shareholders’ value by delivering quality driven products and excellent services.

“Benchmarking

ourselves globally,

we aim to become

a regional world class

developer.“

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FebruarY 2007 Acquired prime land in Mont’ Kiara to be developed into the Icon Mont’ Kiara, a commercial development with 27 levels of Grade A offices and retail podium.

maY 2007Mah Sing Plastics Industries Sdn. Bhd. (MSPI) was awarded the Best Supplier Award 2006 for category - Plastic Injection by Samsung Electronics (M) Sdn Bhd. this award recognises Excellence in Delivery of Goods.

June 2007 Acquired 87 acres of prime freehold land in Batu Maung, Penang Island to be developed into the RM1.�5 billion Southbay Penang mixed development.

June 2007 Won the Edge top 100 Companies with Best Returns Award for the second year running.

June 2007 Completed rights issue of 51.� million new ordinary shares.

Completed share split involving the subdivision of every one ordinary share of RM1.00 each into two ordinary shares of RM0.50 each.

JulY 2007 Completed bonus issue of 102.6 million ordinary shares of RM0.50 each.

JulY 2007 Acquired 5-acres of freehold commercial land in Kuala Lumpur to be developed into Southgate Commercial Centre, offering office and retail space.

JulY 2007 Sold the West Wing of the Icon Jalan tun Razak, a Grade A commercial building in Kuala Lumpur to Koperasi Permodalan Felda Berhad for RM174 million.

auguST 2007 Listed in top �0, the Edge’s top Property Developers Awards 2007 based on Qualitative and Quantitative attributes for the second year running.

auguST – november 2007At MSPI, a Factory Improvement Innovation exercise called “PQ�0” was successfully implemented. the objective of “PQ�0” is to improve productivity and quality by �0% as well as factory innovation.

SePTember 2007 Won “Best Development Malaysia” for gated and guarded high-end residential development of Damansara Legenda in Petaling Jaya at the prestigious International Property Awards 2007 in association with CNBC. this is the biggest property award in the world.

ocTober 2007 Awarded Forbes’ “200 Best under uS$1 Billion” Asian company for the third year running.

november 2007 Sold the East Wing of the Icon Jalan tun Razak, a Grade A commercial building in Kuala Lumpur and the Icon Mont’ Kiara to a consortium comprising Kuwait Finance House and Autron Corporation Limited led by an institutional investor for a total of RM560.5 million.

group corporate highlights

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009

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Southgate • Trendy work and lifestyle hub with cutting edge

infrastructure. More than half a million passing traffic daily. Office suites and retail lots.

• e : southgate@mahsing.com.my• m : +6012-227 1998

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corporatestructure

active operating subsidiaries

ProPerTY diviSion

ProPerTYdeveloPmenT

ProPerTYmanagemenT

100% Acacia Springs Management Sdn Bhd

100% Mestika Kenangan Sdn Bhd

100% Prima Peninsular Development Sdn Bhd

100% Quantum Noble Development Sdn Bhd

100% vienna Grand Development Sdn Bhd

100% Mah Sing Properties Sdn Bhd

100% Intramewah Development Sdn Bhd

100% Mestika Bistari Sdn Bhd

100% Nova Century Development Sdn Bhd

100% Nova Legend Development Sdn Bhd

100% venice view Development Sdn Bhd

100% Legend Grand Development Sdn Bhd

100% Star Residence Sdn Bhd

100% Loyal Sierra Development Sdn Bhd

100% Maxim Heights Sdn Bhd

100% Jastamax Sdn Bhd

70% vienna view Development Sdn Bhd

70% vienna Home Sdn Bhd

70% Enrich Property Development Sdn Bhd

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PlaSTicS diviSion PlaSTicS Trading

PlaSTicS manuFacTuring

100% Mah Sing Enterprise Sdn Bhd

100% Mah Sing Plastics Industries Sdn Bhd

100% Kenwira Sdn Bhd

100% vital Routes Sdn Bhd

65% Pt Mah Sing Indonesia

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directors’profile

Jen. (r) Tan Sri Yaacob bin maT Zain Chairman/Independent Non-Executive DirectorMalaysian, 72 years of age

Appointed to the Board on 29 June 1994.

Chairman of the Audit Committee

Chairman of the Nomination Committee

Chairman of the Remuneration Committee

Chairman of the Option Committee

Attended all 4 Board and Audit Committee Meetings convened during the financial year.

JEN. (R) tAN SRI YAACOB had a distinguished career spanning nearly 40 years in Angkatan tentera Malaysia before retiring in 199� as a Panglima Angkatan tentera Malaysia. He had attended courses at the Australian Army General Command and Staff College, the Naval Post Graduate School in Monterey, united States of America, the Royal College of Defence Studies in the united Kingdom, including the Advance Management Programme at Harvard Business School.

Apart from his directorship in the Company, he is the Chairman of Affin Investment Bank Berhad, Syarikat Permodalan Kebangsaan Berhad, SPK Sentosa Corporation Berhad, Nv Multi Corporation Berhad and FtEC Resources Berhad .

there are no conflict of interest between him and the Company nor are there any family relationships between him and any director or major shareholder of the Company. He has not been convicted for any offences within the past 10 years other than for traffic offences, if any.

daTo’ Sri leong HoY Kum, S.S.a.P., d.P.m.S., J.P.

Group Managing Director/ Group Chief ExecutiveMalaysian, 50 years of age

Founder and First Director appointed to the Board on � December 1991.

Member of the Remuneration Committee

Member of the Option Committee

Attended all the 4 Board Meetings convened during the financial year.

Dato’ Sri Leong’s initial training was in plastics technology and he began heading the plastics division in 1979. He has been on the Central Committee of the 900-member Malaysian Plastics Manufacturers Associations since 1986. He has been the Honorary President of the Young Malaysian Movement Association (YMM) since 1999 and of the Dramatic Art Society, Malaysia since 1996. Besides that, he has been the vice-President of the table tennis Association of Malaysia since 1999.

In recognition of his achievements, he was conferred an honorary Doctor of Philosophy (PhD.) in Business Administration by the Honolulu university, Hawaii in 2000. He was conferred the Darjah Paduka Mahkota Selangor (D.P.M.S.) which carries the title of “Dato” and the Jaksa Pengaman (J.P.) awards by his Highness, Sultan of Selangor in 1996 and 2001 respectively. Dato’ Sri Leong Hoy Kum was conferred the Darjah Kebesaran Sultan Ahmad Shah Pahang Yang Amat DiMulia – Peringkat Pertama Sri Sultan Ahmad Shah Pahang (S.S.A.P.), which carries the title “Dato’ Sri” on the Sultan Pahang’s 77th birthday in 2007.

He also sits on the Board of Directors of various other private companies.

He is the brother to Director, Ms Leong Yuet Mei. there are no conflict of interest between him and the Company nor has he been convicted for any offences within the past 10 years other than for traffic offences, if any.

mr STeven ng PoH Seng Executive Director/ Chief Financial OfficerMalaysian, 42 years of age

Appointed to the Board on 27 June 2005.

Attended all 4 Board and Audit Committee Meetings convened during the financial year.

Mr Ng has more than 18 years of experience in corporate finance, accounting and auditing. He holds a Bachelor of Science degree majoring in accounting from the university of Wales (uK). He is a member of both the Institute of Chartered Accountants in England and Wales and Malaysia Institute of Accountants. He worked in a Chartered Accountancy firm in united Kingdom and upon his return to Malaysia, served as a Manager in Malaysian International Merchant Bankers Berhad before joining SP Setia Berhad. After 8 years of service in SP Setia Berhad, he left as Head of Corporate Affairs prior to joining the Company.

He joined the Company as Chief Financial Officer responsible for the Group Corporate and Finance division before being appointed to the Board.

there are no conflict of interest between him and the Company nor are there any family relationships between him and any director or major shareholder of the Company. He has not been convicted for any offences within the past 10 years other than for traffic offences, if any.

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mr lim Kiu HocKExecutive DirectorMalaysian, 52 years of age

Appointed to the Board on �0 October 2006.

Attended all 4 Board Meetings convened during the financial year.

Mr Lim has more than 27 years experience in property development. He holds a Bachelor (Hons) Degree in Housing, Building and Planning from the university of Science, Penang. He is a member of the Chartered Institute of Building, united Kingdom (CIOB). He was the head of the property division of the Berjaya Land Bhd for 1� years, before moving on to MK Land Holdings as Chief Operating Officer, and then on to Zelan Development Sdn Bhd, a subsidiary of tranoh Consolidated Berhad as Managing Director. He is well experienced in handling the development of golf and beach resorts, shopping malls development and management, residential housing schemes and privatisation of projects from the government.

He joined the Company as Business Development Director before being appointed to the Board.

there are no conflict of interest between him and the Company nor are there any family relationships between him and any director or major shareholder of the Company. He has not been convicted for any offences within the past 10 years other than for traffic offences, if any.

mS leong YueT mei Non-Independent Non-Executive DirectorMalaysian, 5� years of age

Appointed to the Board on 17 November 1997.

Member of the Nomination Committee

Member of the Remuneration Committee

Attended all the 4 Board Meetings convened during the financial year.

Ms Leong was previously attached with RHB Securities Sdn Bhd as a Dealers Representative since 1991. Prior to it she was attached to KAF Discount Berhad as a Senior Accountant.

Ms Leong is the elder sister to Dato’ Sri Leong Hoy Kum, the Group Managing Director/Group Chief Executive. there are no conflict of interest between her and the Company nor has she been convicted for any offences within the past 10 years other than for traffic offences, if any.

caPTain (rTd) iZaHam bin abd. rani Independent Non-Executive DirectorMalaysian, 46 years of age

Appointed to the Board on 16 April 2001.

Member of the Nomination Committee

Member of the Audit Committee

Attended all the 4 Board and Audit Committee Meetings convened during the financial year.

Captain Izaham served in the Malaysian Armed Forces for nearly 14 years before his early retirement in 1992. He attended various career courses conducted internally as well as in Australia and Singapore. He was the Business Development Manager at the Kukup Golf Resort in Pontian, Johor before serving Port Dickson Golf & Country Club as the General Manager until end 2004.

Captain Izaham is also a Director for a leading multinational petroleum company from the Sultanate of Oman (MB Petroleum Services Sdn Bhd) and Epicentro Resources Sdn Bhd which deals in Defence Products and is a subsidiary of British Aerospace (BAE Systems).

there are no conflict of interest between him and the Company nor are there any family relationships between him and any director or major shareholder of the Company. He has not been convicted for any offences within the past 10 years other than for traffic offences, if any.

mr loH KoK leong Independent Non-Executive DirectorMalaysian, 4� years of age

Appointed to the Board on 2� September 2002.

Member of the Audit Committee

Member of the Option Committee

Attended � out of the 4 Board and Audit Committee Meetings convened during the financial year.

Mr Loh is an accountant by profession and has been attached with international accounting firms both in Malaysia as well as overseas for more than 20 years, � years of which as a partner of Deloitte touche tohmatsu Kuala Lumpur. He is currently a partner of a professional services firm, Russell Bedford LC & Company.

Apart from his directorship in the Company, he is also a director of tAHPS Group Berhad (formerly known as the Ayer Hitam Planting Syndicate Berhad).

there are no conflict of interest between him and the Company nor are there any family relationships between him and any director or major shareholder of the Company. He has not been convicted for any offences within the past 10 years other than for traffic offences, if any.

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0014

Aman Perdana

• Exclusive semi-detached homes and bungalows set in a lush linear park. Accessible via 7 major highways.• T : +603-3378 5900 / +603-3291 3666

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chairman’s letter to

shareholders

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dear valued Shareholders,Once again, I am pleased to report that our Group has recorded double digit growth in profit after tax for the fifth consecutive year. We registered RM81.1� million net profit attributable to shareholders; a 24% increase, on the back of a revenue of RM57�.�7 million.

this stellar performance underscores Mah Sing’s unique business model of having a quick turnaround which enabled us to achieve 7�% compounded annual growth rate from 2002 to 2007. the Group has also been included in the Kuala Lumpur Composite Index, as a reflection of our achievements and the interest investors have in us.

dividendS

the management believes in rewarding shareholders with handsome dividends whilst accomplishing strong expansion. In line with the Group’s growth and good results, we remain committed to maintaining our dividend payout policy of at least 40% of profit after tax.

In this respect, I am pleased to announce that the Board has proposed a first and final gross dividend of 16% less income tax of 26 % for the financial year ended �1 December 2007. this represents a payout of 46% of net profit attributable to shareholders, subject to approval by shareholders at the forthcoming Annual General Meeting.

corPoraTe HigHligHTS

acquisition of development landthe Group continued to successfully acquire prime land with favourable payment terms, adding to the Group’s good track record of replenishing land to build our development pipeline. With fast project turnaround and strong take-up for our launched projects, this is a crucial part of our business strategy. unlike traditional developers, the Group does not hold large tracts of land; rather, we are focused on extracting the best value from the land we have.

In 2007, the Group acquired 4 pieces of land which gives us a Gross Development value (GDv) of approximately RM2 billion. this is more than double our RM600 million to RM800 million annual land acquisition target in terms of GDv. this is because we not only wish to expand our geographical reach to the North and cement our position in the South and the Klang valley, we are also upbeat about the lands that we acquired as they fit in very well into our quick turnaround

Fully diversified,

full-fledged developer

Quick turnaround

business model

Increasing dividend

payout; 46% of net

profit for financial

year 2007

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business model. these lands are located in very strategic locations with easy accessibility and a ready catchment. to complement these prime locations, we have planned products that take into account the needs, desires and aspirations of buyers. Market research and buyers’ feedback were crafted into the planning of the products.

However, we did not proceed with one of the land due to non-compliance of conditions precedent by the vendor and in January 2008 the vendor agreed to refund the deposit to the Group. this was a 64-acres of land in Puchong which was originally slated for a Perdana series township development – Duta Perdana. With delay in kick-starting the project, Duta Perdana does not fit into the Group’s business model of having a quick turn-around. Hence, the Group made a strategic decision to focus on the other pieces of prime land in the Group’s stable.

there is plenty to keep the Group busy.

the Group’s venture into commercial developments since 2006 has borne fruit, as interest from foreign investors and institutions continue to be strong for investment-grade offices. the Group sold its Grade A offices at benchmark prices to institutional investors in 2007.

the Icon Jalan tun Razak, a 20-storey Grade A office was acquired in October 2006. the West Wing was sold to Koperasi Permodalan Felda Berhad for RM174.4 million, whilst the East Wing was sold to Kuwait Finance House and Autron Corporation Limited for RM255 million in July and November 2007 respectively. In just 1� months, the Icon Jalan tun Razak reaped RM429.4 million for the Group, fitting perfectly into our business model of having a quick turnaround.

The Icon Jalan Tun Razak

& The Icon Mont’ Kiara -

En Bloc sale of Grade A

offices

the en-bloc sale of the Icon Mont’ Kiara to Kuwait Finance House and Autron Corporation Limited for RM�05 million in November 2007 was a coup for the Group, as the land was acquired only in February 2007. Cradled within the vibrant residential and commercial hotspot of Mont’ Kiara and Sri Hartamas, this is a 27-storey office Grade A office, inclusive of a 4-storey retail podium.

At this time of writing, we have already completed � out of 4 conditions precedent to complete the en-bloc sale of the East Wing of the Icon Jalan tun Razak. the Foreign Investment Committee and State Approvals have been obtained, and Due Diligence completed. An administrative detail namely the procurement of a bank guarantee is pending completion. At the

Southgate-

Investment Grade

offices and shops in

Kuala Lumpur

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2007 also saw the Group enter Penang in a big way, with a RM1.�56 billion integrated project in Batu Maung, located just minutes away from the upcoming Second Penang Bridge. the 87-acres of prime freehold land have been carved into � parcels; 2 medium to high end residential (Residence@Southbay and Legenda@Southbay) and 1 commercial parcel (Southbay City). the project is set to be an international destination that will change the face of the island over 5 to 7 years.

Hot on the heels of these acquisitions, the Group purchased a 60-acre piece of land in Skudai, Johor Bahru to replenish our landbank there. this will be developed into Sri Pulai Perdana 2, a new project in our lifestyle township Perdana series to continue our success and tap on the spillover demand from the matured Sri Pulai Perdana township.

corPoraTe exerciSe

During the year, the Group completed corporate exercises involving a Private Placement, Rights Issue, Share Split and Bonus Issue. the proceeds of RM221.8 million are mainly used to fund the working capital of the Group’s development projects.

the enlarged share base better reflects the Group’s scale of operations which now spans 14 projects in Klang valley, Penang Island and Johor. It also enhances the liquidity of the Group’s shares which have attracted strong institutional and retail interest. Amongst the international and

local institutional investors who have become our shareholders include Capital Group International Inc., European Investors Inc., FMR Corp & Fidelity International Ltd., Koperasi Permodalan Felda Berhad, Permodalan Nasional Berhad and the Employees Provident Fund.

Furthermore, the exercise enabled the Group to be in a net cash position as at �1 December 2007, putting it in a good position to gear up to an optimal 0.5 times to capitalise on business opportunities.

awardS and acHievemenTS

In recognition of our achievements, the Group continued to win several international and domestic awards including Best Development Malaysia (for Damansara Legenda) in the International Property Awards 2007 in Association with CNBC. this is the world’s largest property competition and is organised by a distinguished organisation with an in-depth knowledge and passion for the global real-estate market. In 2008, the Group was again honoured with Best Property Malaysia (for Kemuning Residence) in the Asia Pacific Property Awards 2008 in Association with CNBC.

Doubling of

shareholders base

Increased liquidity

Net cash position

Southbay Penang

- residential and

commercial project

New township

project in Iskandar

Malaysia

same time, Foreign Investment Committee and State Approvals for the Icon Mont’ Kiara sale have been obtained.

to further ride upon the continued commercial upswing, the Group purchased one of the last few pieces of freehold land in Kuala Lumpur. the 5-acre freehold land, located at the Southern Gateway to Kuala Lumpur via Jalan tun Razak/Jalan Sungai Besi, is diagonally opposite the Group’s corporate headquarters. Besides � blocks to be opened for sale on a strata basis, Southgate Commercial Centre will have 2 blocks for potential en-bloc sales. the launch in end March 2008 saw good response of about 50% take up.

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corPoraTe Social reSPonSibiliTY (cSr)

Over 7 years of building homes and business premises for Malaysians, we have grown, and understand complex details on the impact of developments on its surroundings. Learning and improvising through the years, we have developed innovative techniques, created award winning concepts and architectural designs to build our homes and business premises in co-existence with the surrounding environment and community. We understand and value sustainable development. We measure our corporate responsibility efforts not just by the input but by the outcomes: the difference we make to the community, the environment, our business networks and our workforce.

Our commitment in taking CSR through all aspects of our business has led us to set up Mah Sing Foundation in year 2005 to carry out the Group’s CSR focuses, activities and projects. through Mah Sing Foundation, the Group has made numerous contributions to various worthy causes.

Year 2007 was an eventful year for us with more than RM600,000 rendered in aid. Activities and aid were extended in the areas of assistance to schools, environmental awareness and education, medical assistance, supporting sports for health, crisis relief and charity for the needy. Mah Sing Foundation actively extended assistance and organised activities consistently throughout the year. In total 14 schools, NGOs and volunteer bodies benefited from Mah Sing Foundation last year.

Human caPiTal

the Group’s employees continue to be our most valuable assets, and an annual get-together was organised in appreciation of their hard work which has contributed to last year’s sterling performance.

It was also an ideal opportunity to set out the aspirations and directions for us to move on to the next level, where mind set and work attitudes would create a high level of positivity and commitment to the company.

As a result-oriented Group, each and every staff is measured by key results areas. the whole is bigger than the sum, and by being focussed, we shall put the Group on a fast tract to realise its full potential.

Sustainable

development

CSR Commitments

Global acclaim

Regional recognition

We were listed in Forbes Asia’s Best under a Billion Award for the third consecutive year. Only 9 Malaysian companies were chosen from more than 20,000 listed companies in Asia this year, and only Mah Sing has been in this list for � years running. the Group was also named by the Edge for top �0, top Property Developers Awards and top 100 Companies with Best Returns over 5 years for the second consecutive year. 2008 also saw the Group included in the Kuala Lumpur Composite Index.

Positive work culture

Energetic vibe

Results oriented

philosophy

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We have instilled a positive work culture where everyone genuinely cares about their work, about their company and about their colleague. there is a good, energetic vibe in which you can be productive and enjoy your work. Committed staff that perform can look forward to a great career path in Mah Sing.

FuTure ProSPecTS

For 2008, the Group has a bullish outlook for the growth market segments namely the medium to high-end residential as well as commercial (Grade A offices and commercial-retail).

Real demand for Grade A offices and mid-to-high end, well located residences with good branding is still intact, reflecting the actual imbalances in demand and supply. Reflecting this sentiment, location, development profile of the area and track record of the developer would be key to the success of real estate properties this year.

the deep under-supply of Grade A offices, especially in the Golden triangle, is reflected by tenancies in excess of 90% and record levels in rental rates. New office supply may not meet demand over the next three years and rents are likely to continue to rise. the service sector is growing at 9.7% a year, and 200,000 new graduates emerge annually to find employment. the driving forces for the office market are the robust growth of the services sector and a growing demand for prime office space by companies in the oil and gas sector, financial institutions and information technology companies.

In this respect, the Group will be in a good position to capitalise on this upswing, with 4 investment grade developments in the Klang valley and Penang Island.

According to the 2007 Property Market Report by the National Property Information Centre (NAPIC), the residential segment of the property market is also moving up, reflecting a buoyant property market. this is evidenced by the number of unsold houses in Malaysia falling for the first time since 2002. For 2007, the property market recorded transactions worth RM77.14 billion, with the residential sub-sector remaining the most dominant with 64.5% of the total volume and 47.�% of the total transaction value.

the Group is in a good position to partake in this vibrant market by offering high quality residential properties with good concepts in prime locations, at the right price.

the Group expects another year of good sales, with a conducive environment driven by Malaysia’s sustainable employment prospects and an increase in disposable household income through various measures, including EPF withdrawals to service housing loans, steady increments in wages in the private sector and civil servants’ pay rise. this is augmented with a supportive financial environment that is characterised by low and stable interest rates as well as ample liquidity in the banking system. Pump-priming

from the 9th Malaysia Plan and various government relaxations and incentives to boost property investment are other factors that would contribute to another good year for branded developers with the right products in the right locations.

aPPreciaTion

We endeavour to ensure that whatever the Group does will be for the benefit of all our stakeholders including the community. towards the fulfilment of this objective, the Board of Directors has to thank the top management and all the employees who deliver the Group’s vision.

thus, on behalf of the Board of Directors, I would like to record our sincere appreciation to those who have contributed to our success; the human capital of the Group, consultants, our value chain suppliers, the Government and the local authorities, our shareholders and most of all our customers.

Jen. (r) Tan Sri Yaacob bin mat ZainChairman

Selectively bullish

on Grade A offices

and mid to high end

residential

Positive supply-

demand dynamics

Strong growth ahead

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The Icon Mont’ Kiara• Meeting place : innovative 3 volume sky gardens, Chill out escape : penthouse sky bar• T : +603-9221 8888

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Clubhouse, Residence@Southbay

Grand Entrance, Residence@Southbay

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While year 2006 saw the Group on an acquisition trail with 4 pieces of new land, 2007 saw the fruition of these projects. 2008 is set to be an exciting year as the Group forges ahead to maintain the growth momentum.

viewing land as raw material to be replenished in a timely manner, the Group selectively targets quality land with good catchment, and 2007 saw us actively acquire land bank with a total Gross Development value (GDv) of close to RM2 billion.

With our strong balance sheet and cash position, the Group shall be looking out for more good land to build our development pipeline and we are on track to meet our land acquisition target. We have a head start; in January 2008 itself, we acquired another piece of freehold land in Iskandar Malaysia to continue our success there.

When we embarked on our journey to the next level of growth, we knew what we wanted to achieve.

Our aim was to be a Company that was committed to being not just

a property developer but also a lifestyle enhancer.

A company that never made a promise it could not keep.

A company that sets standards for others to follow.

Having charted our course, we went all out to implement the strategies, and the result was a year of record revenue and profits.

2007 was indeed a year of action; 5 new projects were launched and we were the trailblazer in en-bloc sales of commercial developments, setting new benchmarks for the market.

2007 saw the acquisition of the Group’s biggest project to-date; the RM1.�5 billion Southbay Penang in Batu Maung, Penang Island. this brought together the final jigsaw piece of the puzzle, allowing the Group to be well represented in Malaysia’s economic and property hotspots of Klang valley, Johor Bahru and Penang which accounts for more than 70% of residential property transactions in Malaysia. Continuing 2006’s culture of Building Homes out of vision, Inspired by Passion and being a Leader in Innovation drove the Group to sustain our market trendsetter status.

commercial develoPmenTS

the Group’s commercial portfolio grew at an impressive pace, setting new benchmarks in Malaysia for en-bloc sales and the quality of design. We are close to completing our projects earlier than scheduled. the efficiency of our construction gives us enough time to chart a new course for the future.

The icon Jalan Tun razak, Kuala lumpurthis 20-storey Grade A office just 5 minutes from Kuala Lumpur City Centre (KLCC) was sold en-bloc to institutional investors for a total of RM429 million within 1� months of the Group purchasing the prime land in October 2006. the West Wing and East Wing were sold in July and November 2007 to Koperasi Permodalan Felda Berhad and Kuwait Finance House - Autron

Strong development

pipeline of RM 3 billion

in remaining Gross

Development Value

Trail blazer, setting

new benchmarks

Efficient construction

A milestone year

group managing

director’sreview of

operations

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Corporation Limited respectively. As at May 2008, construction is at level 1� with completion scheduled for mid 2009. upon completion, this office shall be 1 of 2 only new Grade A offices to cater to the increasing demand for quality office space.

The icon mont’ Kiara, mont’ Kiarathe Icon Mont’ Kiara shall pioneer new concepts in office space, not only in Mont’ Kiara but also in Malaysia. Innovative � volume sky gardens will provide alternative meeting places for tenants, who can also relax in the sky bar after a hard day’s work. the Group’s track record, branding and practical yet aesthetic design has resulted in the en-bloc sale of this Grade A office.

Southgate commercial centre, Kuala lumpurWith this proven formula of success, the Group continued to place focus on commercial projects by purchasing 5-acres of freehold commercial land in Kuala Lumpur to develop Southgate Commercial Centre. this well-planned business park with dual access from Jalan Sungai Besi-Jalan tun Razak and Jalan Dua was launched in March 2008. 2 of the 5-acre blocks have been earmarked for en-bloc sale, while � blocks comprising 2 levels of retail space and 5 levels of offices shall be opened up for sale on a strata basis. A covered boulevard shall be the retail and food & beverage spine servicing the whole development.

this prime location has exceptional visibility with more than half a million passing traffic daily. Strategically located in Kuala Lumpur yet away from traffic congestion, Southgate is easily accessible via road and public rail transport. to aid businesses, there shall be high-speed wireless broadband infrastructure as well as active and passive security system.

Work at site is progressing at full speed, and Southgate Commercial Centre is set to be an iconic southern gateway to Kuala Lumpur. Soutbay city@Southbay, batu maung, Penangthe Group’s largest commercial development to-date is Southbay City, a component of the RM1.�5 billion Southbay Penang project in Batu Maung, Penang Island. Conceptualised on the premise that you will live, work and relax amidst a vibrant and exciting residential and commercial hub, the master plan shall fully optimise the sea-facing views and gently sloping landscape. With a modern contemporary theme, it encompasses a host of retail outlets, fine dining restaurants along the shoreline, luxurious serviced suites, 4 & 5-star hotels, proposed malls and other commercial and recreational attractions that are expected to attract visitors, investors and other business opportunities from near and far. this project is expected to be launched in 2009.

reSidenTial develoPmenTS

Our success is attributable to our continued brand building strategies and focus to be customer oriented in knowing, acknowledging and responding to their changing demands, needs and aspirations.

In the residential property division, this is achieved by proffering homes with good concepts and themes, design and layout, quality and timely delivery.

legenda SerieS

the award-winning Legenda series cemented Mah Sing’s reputation as a developer of premium residential developments. Priced from RM1.� million onwards, these boutique developments enjoy the best addresses, the best concepts and the best finishings.

Klang valleY

damansara legenda, Petaling Jayathe maiden project in our high-end Legenda series, Damansara Legenda was fully completed and handed over, and the project won a prestigious global award in 2007. Based on the quality of design, concept and finishing, the development was conferred “Best Development Malaysia” in the International Property Awards 2007 in association with CNBC, the largest property awards in

Good concepts and

themes, design and

layout, quality and

timely delivery

Award winning

Legenda and

Residence series

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the world. the award is endorsed and supported by various world renowned organisations including the International Real Estate Federation (FIABCI), Master Builders of Australia (MBA), International Consortium of Real Estate Agents Association (ICREA) and French Real Estate Federation (FNAIM) amongst others.

Penang iSland

legenda@Southbay, batu maung, PenangIn view of the overwhelming success of this award-winning series, the Group shall launch Legenda@Southbay at the end of 2008. Part of the elite multi-million ringgit project of Southbay Penang, Legenda@Southbay shall comprise 88 units of exclusive designer bungalows. the development will craft another premium address with its impressive landscaping, innovative concept and impeccable facilities. these � and 4-storey bungalows in a gated and guarded community shall cater exclusively to the discerning, and indicative prices shall start from RM2 million onwards. these modern homes with a luxurious resort environment come with numerous bedrooms and attached bathrooms. Generously sized car porches cater to modern lifestyle where families often have more than 2 cars. Other features built into the design would emphasise on sun shading, cross ventilation and rain protection in view of Malaysia’s climate. With superior design coupled with Penang Island’s world-renowned status as a tropical resort haven, we are confident that these homes shall do very well amongst well-heeled local and foreign investors.

reSidence SerieS

the Residence Series first launched in 2006 has proven to be one of our best selling series, as it caters to buyers who wish to live the Legenda lifestyle but with an investment within the RM700,000 to RM1.� million price range. Each Residence development carries its own unique theme that complements its surroundings, embedded with our hallmark features for a well-balanced lifestyle. Features in these gated and guarded � generation homes include lush landscaping, seamless integration between indoors and outdoors, open plan concept, high ceilings and community clubhouse for the larger developments have been well-received by home buyers.

Klang valleY

Perdana residence, SelayangAll 7� units of semi-detached homes and bungalows in Perdana Residence which kick-started the series has been fully sold. Construction is ahead of schedule, and the homes should be handed over in the first half of 2008.

Kemuning residence, Shah alam Launched in 2007, Kemuning Residence has seen good take-up, and construction is also ahead of schedule; the Group should complete the construction of the 141 units of garden bungalows and bungalows before the end of 2008.

In response to customer’s feedback, we have completed a private clubhouse exclusively for residents, incorporating a swimming pool, fully glazed gymnasium and other facilities for the community. the Group was awarded the prestigious “Best Property Malaysia” award in the Asia Pacific Property Awards 2008 in association with CNBC for the Garden Bungalow concept, greatly adding to the cachet of the development. Already sitting on a grid of trunk roads and expressways that provides excellent accessibility, the Kemuning-Shah Alam direct link to the Federal Highway which is under construction shall reduce travel time from the project to the Federal Highway to just 8 minutes during peak hours.

Hijauan residence and one residence, cherasthese 2 projects boast the unique distinction of being located directly next to the Hulu Langat Forest Reserve which provides a natural cool breeze. to enhance Hijauan Residence’s marketability, we are applying for all statutory requirement properties to be relocated to One Residence. this will allow the Group to develop exclusively linked semi-detached

3 generation homes

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homes, semi-detached homes, garden bungalows, hill villas and bungalows in this exclusive development. the first phase of Hijauan Residence comprising 120 units of linked semi-detached and semi-detached homes sold so well that we exceed our sales target by 25%. Construction progress is at 65%. the Group held a buyer’s appreciation night in Hijauan Residence in October 2007 which was well attended by more than 400 home owners, their families and friends. Phases 2 and � of Hijauan Residence comprising Hill villas and Bungalows will be launched in 2008.

Penang iSland

residence@Southbay, batu maung, Penangthis development comprises 288 units of �-storey lifestyle link homes with large built ups. A resort style clubhouse, recreation and community facilities will be built for the enjoyment of residents. this is Penang Island’s first gated and guarded link homes with a dedicated clubhouse surrounded by lush landscapes of tropical gardens. the Southbay development as a whole takes on the theme of a definitive address that depicts its built and design standards. With more than 2,000 registrants for the homes, the Group saw good take up of 50% during the two-day preview.

Perdana SerieS

Lifestyle township projects with an array of residential and commercial properties priced between RM200,000 to RM700,000.

Klang valleY

aman Perdana, meru-Shah alam growth corridorOur flagship Perdana development in the Klang valley is an exclusive enclave of semi-detached homes and bungalows on �15-acres of freehold land.

Being easily accessible via 7 major highways, Aman Perdana has attracted buyers not only from Klang, but also from Petaling Jaya, Subang Jaya, Shah Alam, Puchong and Sungai Buloh. A new access road from the rear of the development, Jalan Sungai Puloh is

slated for completion by June 2009, allowing residents easy access to Jalan Meru and Jalan Kapar.

As of 2007, close to 1,500 units have been completed namely type A (single storey semi-detached homes), type D and Ca (linked semi-detached homes), type B1, B2, B5 and B6 (double storey semi-detached homes), and type E and F (double storey bungalows).

By end 2008, type Ea bungalows and type Ba linked semi-detached homes shall be ready for occupancy by their new owners. the Chinese medium Pin Hwa School which can accommodate �,000 students and tesco hypermarket shall also be completed by the end of 2008.

JoHor baHru

Sierra Perdana, Tebrau - Plentongthe Group organised a Grand Official launch with an “Animal Adventure” theme which was attended by more than 1,000 registrants. A new sales gallery was completed in 2007, and the media conference cum public event attracted more than 2,000 visitors. this is an indication of the keen public interest in this project which comprises link homes, semi detached homes and shops. 2 new show houses of the double storey linked semi-detached homes and double storey link homes were completed, and the show village now boast 14 furnished and basic show homes.

In 2008, approximately 400 units comprising single storey and double storey link homes will be handed over. Responding to customers’ feedback, the Group plans to launch exclusive double

storey linked semi-detached homes, double storey terrace homes and 2 storey shops in 2008.

Works has started on the Coastal Highway, one of the biggest infrastructure projects within Iskandar Malaysia and by the 2nd quarter of 2008, piling works would have begun. the 15 km six-lane highway will cut across Sierra Perdana and provide a fast link to Pasir Gudang and Johor Bahru town. this has greatly enhanced interest in Sierra Perdana.

austin Perdana, TebrauConstruction of this mixed development boasting a Lake Park living theme shall be fully completed by the end of 2008. Currently, occupancy is about 80%, and as a fully gated and guarded development, Austin Perdana has become a much sought after address in Johor Bahru. the Group assisted the residents in forming their own management committee, and also organised a get-together event for residents who have moved into Austin Perdana.

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Sri Pulai Perdana and Sri Pulai Perdana 2, SkudaiSri Pulai Perdana has the distinction of being the first development in Johor to offer gated and guarded living for link homes, which was one of the contributing success factors of the development. As Sri Pulai Perdana is fully matured, the Group bought some 60-acre of land less than 2km away to develop Sri Pulai Perdana 2. taking customer feedback to heart, the Group will offer properties with bigger landsize and built-ups upon launch in early 2009.

moving Forward

2008 will bring us new business environments and new challenges, and we are well poised to meet the challenges head-on.

Our sound market understanding and continuous delivery of promise has earned us valuable credibility in the property industry, in the eyes of property buyers and corporate investors.

Our focus is the growth markets of prime commercial developments and medium to high end residential projects.

Our reputation is cemented as a reliable developer with innovative products in good locations.

Architectural design and innovation are no longer separable in this era with a new level of architecture, design and technology. there is much choice offered in the market. Discerning buyers of high-end homes are more knowledgeable, selective and demanding in their home buying and investment decisions.

We are confident of good growth in the property sector against a backdrop of favourable economic outlook. this optimism is augmented by the Government’s ground-breaking decision to allow monthly EPF withdrawals to fund mortgages. there will be RM9.6 billion available annually from this scheme, and home buyers will see a significant increase in their purchasing power.

Our country has all the fundamentals in place; strong Gross Domestic Product (GDP) growth forecasted at 5% to 6%, healthy employment rate and multiplier effect from the 9th Malaysia Plan. Our savings rate are high and a young population where 64% are within the 15 to 64 years age group means that there there will be new family formations,

and need for new homes. All these shall certainly drive the property sector forward.

In the booming Klang valley, we will continue to concentrate on semi-detached homes and bungalows which makes up only 5% of the sub-segment of residential property supply in the market. the popular Legenda, Residence and Perdana series with exceptional take up rate will enjoy a continued prime brand positioning.

In Johor Bahru, our mainstays in the Perdana series will continue our branding and track record established since 2000.

In Penang Island, our mega project – Southbay Penang will take us through the next 5 to 7 years as we re-invent the southern face of the island, making it a must-visit international destination.

In our endeavour to achieve the qualities that appeal to buyers we continue to deliver our best. We shall strengthen the culture of Mah Sing Group by achieving new benchmarks in Q.E.S.H. – Quality, Environment, Safety and Health in all our offices and development sites.

Our no-nonsense and practical approach to details throughout our processes in design and concept; quality assurance; timely construction and delivery coupled with home buying service are our efforts to ensure a promise of the premier lifestyle delivered.

Our success at home will provide us the needed experience and support structure, as we begin to explore opportunities regionally, in line with our vision to be a Regional, World Class Developer.

dato’ Sri leong Hoy KumGroup Managing Director and Group Chief Executive

Increased production

PlaSTicS

Our plastics division continued to be profitable, contributing 6% to the Group’s profit before taxation. For the past few years, the plastics side of the business has been fully independent and self-managing. In 2007, the plastics division initiated a “PQ�0” programme with the objective of increasing productivity and decreasing rejection rate by �0%. We are pleased that by the end of the programme in December 2007, we exceed the objectives whereby productivity was enhanced by �0% whilst rejection was decreased by 60%. Amongst activities implemented during this programme was to reduce the cycle time for production, reduce manpower by streamlining processes, improve the transfer assembly process and to reduce mould change time. Besides that, the plastics division also practiced the “5S” housekeeping methodology for the shop floor which ensured a lean environment and support the discipline needed for improving the production system.

2008 –

another good

year ahead

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awards& recognitions

corporate socialresponsibility

calendar of events

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Mah Sing Group Berhad’s reputation within the industry was enhanced both locally and at the international level when we garnered several prestigious awards.

In 2007, the Group was awarded for the first time a prestigious International Property Award 2007 for excellence in development under the “Best Development Malaysia” . the award was in recognition of the luxurious Damansara Legenda development.

the Group’s pursuit of excellence was continuously acknowledged with year-on-year awards and recognitions received, namely “Forbes’ 200 Best under uS$1 Billion Award” for the third year running; “the Edge top 100 Companies with Best Returns over 5 years” for the second consecutive year and listed in “the Edge’s top �0, top Property Developers Awards” for the second consecutive year.

Forbes’ Best under A Billion Award2005, 2006, 2007

MBJB Landscape Awardtop 1000 Malaysian CompaniesMinistry of Domestic trade and Consumer Affairs

CNBC International Property Awards 2007

The Edge Top 100 Companies with Best Returns over 5 years (2006 & 2007)

The Edge Top 30, Top Property Developers Awards(2006 & 2007)

march 2007 Received award in MBJB’s Johor State Landscape Competition.

June 2007 Won the Edge top 100 Companies with Best Returns Award for the second year running.

august 2007 Listed in the Edge’s top �0, top Property Developers Awards 2007 based on Qualitative and Quantitative attributes for the second year running.

September 2007 Won “Best Development Malaysia” for gated and guarded high-end residential development of Damansara Legenda in Petaling Jaya at the prestigious International Property Awards 2007 in association with CNBC. this is the biggest property award in the world.

october 2007 Awarded Forbes’ “200 Best under uS$1 Billion” Asian company for the third year running.

awards &recognitions

In 2008, the Group was honoured with Best Property Malaysia in the Asia Pacific Property Awards 2008 in Association with CNBC.

The award recognised the outstanding design of our Garden Bungalows in Kemuning Residence.

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corporate social

responsibility

Over 7 years of building homes and business premises for Malaysians, we have grown and understand the complex details on the impacts of developments to its surroundings. Learning and improvising through the years, we have developed innovative techniques, created award winning concepts and architectural designs to build our homes and business premises in co-existence with the surrounding environment and community. We understand and value sustainable development. We measure our corporate responsibility efforts not just by the input but by the outcomes: the difference we make to the community, the environment, our business networks and our workforce.

Our knowledge and experience from past Corporate Social Responsibility (CSR) projects are shared among our employees to build a ‘feel good’ factor, to cultivate good character and a conscious reminder on the broader impact of business beyond the purely financial. Ethical business practices are weaved in our corporate philosophy to help stimulate better policies, decision-making and our business practices. As a responsible corporate citizen, we will continue to play an active role to build stronger, knowledgeable and healthier communities. Our CSR efforts are focused in the areas of medical assistance, education and charity.

Our commitment in taking CSR through all aspects of our business has led us to set up Mah Sing Foundation in year 2005 to carry out the Group’s CSR focuses, activities and projects. through Mah Sing Foundation, the Group has made numerous contributions to various worthy causes.

Mah Sing Foundation was founded by Mah Sing’s Group Managing Director/Group Chief Executive, Dato’ Sri Leong Hoy Kum as an effort to integrate a combined effort through CSR for bigger and better results in benefiting the needy.

aBout mah siNg fouNdatioN

Mah Sing Foundation is a charitable trust established by Mah Sing Group Berhad, dedicated to helping those in need. to consolidate the Group’s charitable efforts, Mah Sing Foundation has been set up to receive and administer funds solely for medical, educational and charitable purposes as well as to seek and raise more funds via annual fund raising activities and events. Mah Sing Foundation which has a philanthropic model will be the cornerstone of our CSR programmes.

Assistance will be given out based on the following guidelines:

a. Medical assistance for Malaysians who are suffering from disease and disability, or critical illness. the Foundation will also carry out and support schemes by organisations that look after public health and welfare, including giving financial support.

b. Financial assistance and relief schemes for the poor and distressed.

c. Education assistance consisting subsidies and donations to the needy and deserving students. the Foundation will provide assistance to primary, secondary, university and also post graduates students for the advancement of education.

d. Encourage social and sporting activities which will enrich the community and serve to promote national unity.

As an approved tax-exempt charitable organisation by the Inland Revenue Board, all donations made to the Foundation by any corporation or private citizen will be tax exempted.

assistaNce exteNded iN 2007

Year 2007 was an eventful year for us. Activities were organised and funding were extended in the areas of assistance to schools, environmental awareness and education, medical assistance, supporting sports for health, crisis relief and charity for the needy. In total, 14 schools, NGOs and volunteer bodies benefited from Mah Sing Foundation last year.

educatioN

Developments impacts the everyday lives of the community in and around its locality.

Having a strong nation is important to progress with fast developments. And the key to building a strong nation is by being knowledgeable and competitive through education. Providing access to education and support for a good learning environment is the focus of Mah Sing Foundation’s educational initiatives. We fund education projects to help give young children hope, opportunities for success and the chance for a better future. Opportunity to acquire knowledge, understanding and skills from young is formative to young people becoming confident, ambitious and responsible adults and the benefits goes a long way.

Direct funding

More often than not, providing direct funding resolves education woes. By concentrating our resources we can achieve measurable outcomes.

Continuous Learning

In line with the Group’s CSR missions, one of the most effective way of supporting and promoting importance of education is through encouragement of employees’ continuous learning. this is done through human resource policies.

For the full year of 2007, a total of 5 schools in the Klang valley and Johor received aid from Mah Sing Foundation. A total of RM �65,000 was channeled towards supporting education. Funding was used to build new blocks for the schools. the new school blocks have added a total of 87 classrooms for more than 2,600 students in beneficiary schools. Part of the donations also went towards buying much needed computer hardware and software for students’ use.

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medicaL assistaNce

under Medical Assistance initiatives, Mah Sing Foundation works closely with non-governmental organisations with medical aid missions and makes donations for purchases of prosthesis, funding of dialysis treatments and therapies to the organisations.

Medical assistance was extended to :

1. MAA-Medicare Kidney Foundation – Sponsored charity movie

2. Arthritis Foundation Malaysia – Donation via charity dinner

�. Persatuan Kebajikan Harmoni Kuala Lumpur & Selangor in aid of Spastic Children Association of Selangor and Federal territory

date description

08/01/2007 NStP Flood victims Assistance Fund (Assistance for Johor Flood victims) 18/01/2007 Crisis Relief Squad MCA (Assistance for Johor Flood victims)26/01/2007 Yayasan Nanyang Press (Assistance for Chinese School in Johor – Flood affected)26/01/2007 the Star Futsal team (Sponsorship of Jerseys)12/02/2007 SJK (C) Woon Hwa, Johor Bahru (School Building Fund)1�/02/2007 SJK (C) Sam Yoke (Hardware and software)16/02/2007 Yayasan Bandaraya Johor Bahru (Flood relief via charity dinner)09/05/2007 MAA-Medicare Kidney Charity Fund (Charity movie preview sponsorship)22/05/2007 SJK (C) Foon Yew 5, Johor Bahru (School Building Fund)11/06/2007 PJ Autism Learning Centre (Donation via charity dinner)14/09/2007 Arthritis Foundation Malaysia (Donation via charity dinner)22/09/2007 Persatuan Kebajikan Harmoni Kuala Lumpur & Selangor (Assistance for 19 selected orphanage, homes and non-government organisations via sponsorship of charity golf tournament) 02/10/2007 SJK (C) Chung Hwa (P), Kuala Lumpur (School Building Fund)20/10/2007 SMJK (C) Kuen Cheng (1) Primary School (School Building Fund via charity dinner)10/11/2007 SJK (C) Foon Yew 5 (School Building Fund) about mah sing foundation :

• Mah Sing Foundation is the charity arm of Mah Sing Group Berhad.• Incorporated on 1� October 2005 (granted Internal Revenue Board approval on 1 April 2006).• Initial fund of RM1 million. • Board of trustees - Jen. (R) tan Sri Yaacob bin Mat Zain & Dato’ Dr. Manjit Singh

Sachdev.• Members - Dato’ Sri Leong Hoy Kum, Jen. (R) tan Sri Yaacob bin Mat Zain, Dato’ Dr.

Manjit Singh Sachdev and Mah Sing Group Berhad.

csr guidelines

• Medical assistance. • Relief for the poor and distressed (including natural disasters).• Education assistance.• Encourage social and sporting activities for healthy living.

charity

the Foundation also channels assistance towards charitable causes in times of distress and emergencies such as the floods in Johor, the worst in the nation’s history. A total funding of RM165,000 was donated through NStP Flood victims Assistance Fund, MCA Crisis Relief Squad, Yayasan Nanyang Press and Yayasan Bandaraya Johor Bahru.

Mah Sing Foundation will continue to work with a number of leading national non-profit NGO for charitable causes to provide relief to the poor, distressed and needy. Charitable causes would evolve more than just organising fundraisers; it should increase awareness for the causes and ensure actions are taken to achieve a positive impact that matters to our communities and ultimately, our people.

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calendar of events

FebruarY 2007 the official opening of sales office at taman Emas, Cheras. Showcased at the office are Hijauan Residence and One Residence developments.

President & CEO of Bissell Homecare Inc., a client of Samsung visited the factory and showroom at Mah Sing Plastics Industries Sdn. Bhd. for a introduction and knowledge tour.

marcH 2007 Aman Perdana in Meru Shah Alam held “Seconds to Riches” talent contest in conjunction with Chap Goh Mei celebrations.

3 marcH 2007Chinese New Year Celebrations at Damansara Legenda with Lion and Dragon Dance.

4 marcH 2007Annual Football Competition was organised at veteran Field, Port Klang to encourage interaction and foster team spirit among staff.

aPril 2007 Official launch of Sierra Perdana, a mixed development in Johor Bahru with an Adventure Park theme.

maY 2007 Show houses at Hijauan Residence completed and opened for preview.

Eco sanctuary for the privileged few with hill villas, semi-detached homes and bungalows.

9 June 2007Official Launch of Phase 1, Hijauan Residence at Cheras. Full day activities were held.

10 June 2007 Official Launch of Single Storey & 1 ½ Storey town Houses at Sierra Perdana Show village with carnival themed amusements and activities for all ages from Pony Rides, Game Stalls, Mascot Apperances to Animal Zoo Adventures and many others.

19 June 07Annual table tennis Competition organised at Mah Sing Plastics Industries Sdn Bhd (MSPI) as sporting activity and encourage interaction.

28 June 07Fire Fighting training held at MSPI. the program was to help individuals to understand common fire dangers and techniques to reduce risks of death and injury in the event of fire.

28 JulY 07Actual fire drill at MSPI to practise safety and rescue knowledge. Staff are put to test for their skills on using fire extinguishers, first aid basics and other basic rescue techniques. 29 JulY 2007Feng Shui talk by Mr Yap Cheng Hai for the residents of Hijauan Residence as part of community programme organised by Mah Sing.

auguST 2007 Opening of Southbay Penang’s sales office. Over 1,700 registrants registered for 88 units of designer bungalows in our upmarket Legenda@Southbay and 288 units of �-storey link homes under medium high end Residence@Southbay. 2 SePTember 07Annual Bowling Competition held at Klang Superbowl Centre, Klang.

16 - 22 SePTember 2007 Mid Autumn Festival celebrations at Hijauan Residence – In conjunction with the Mid Autumn Festival, all guests were treated to traditional Chinese delicacies and moon cakes. Additional activities were organised and lanterns were handed out to children to add fun and cheer.

ocTober 2007 Launched Mah Sing treasure Blitz, a RM2 million customer reward programme.

6 ocTober 2007Buyer’s Appreciation Night at Hijauan Residence. A get-together was organised in appreciation for new homeowners and their guests. the event was laced with lucky draws and performances of Chinese Classical Instruments.

7 ocTober 2007During the Ramadan month at Sierra Perdana, a RM1 Bazaar was organised to encourage community involvement. Stalls selling Food, Watches, t-shirts and Home Accessories were opened at the bazaar. 21 & 28 ocTober 2007A photo competition themed “the Best Family” and “Couple with Raya Sedondon” was held. the competition was held to promote positive family values and activities to residents of Sierra Perdana. 21 ocTober 2007 A dual celebration of Hari Raya and Family Day was held at MSPI Hostel. Fun and games, colour competitions and sporting activities for the whole family was organised to add fun to the whole day event. 10 november 2007 Festival of Lights celebration at Hijauan Residence. traditional Indian dance, musical performances and kolam-design contest for the children were among highlights of the celebration.

18 november 2007 & 2 december 2007 Art & Craft Workshop were organised for children at Sierra Perdana as a get-together activity among residents.

december 2007 Second monthly draw for Mah Sing treasure Blitz held at Sierra Perdana in Johor Bahru.

9 december 2007 A Holiday Fun training Camp For Kids was organised at Sierra Perdana for outdoor recreation. 16 december 2007 Christmas was celebrated with fun games and kids competitions at Sierra Perdana.

everY TueSdaY & FridaY Badminton as a healthy get-together for MSPI staff every tuesday & Friday at Bandar Sultan Suleiman Court.

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FEBRuARY 2007

10 JuNE 2007 6 OCtOBER 2007

16 - 22 SEPtEMBER 2007

2 SEPtEMBER 2007

29 JuLY 2007

19 JuNE 2007

4 MARCH 2007

� MARCH 2007

7 OCtOBER 2007

21 & 28 OCtOBER 2007

21 OCtOBER 2007

28 JuNE 2007

28 JuLY 2007

10 NOvEMBER 2007

18 NOvEMBER & 2 DECEMBER 2007

9 DECEMBER 2007

16 DECEMBER 2007

2007 ANNuAL DINNER

2007 ANNuAL DINNER

2007 ANNuAL DINNER

EvERY tuESDAY & FRIDAY

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corporate governance statement

audit committee report

statement of internal control

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corporategovernance

statement

corPoraTe governance STaTemenT

the Board of Directors (“the Board”) recognises the importance of the principles and best practices set out in the Malaysian Code on Corporate Governance (“the Code”) as a key factor towards achieving optimal governance framework and process in managing the business and operational activities of Mah Sing Group (“the Group”).

the Board is committed to ensure the highest standards of corporate governance is practised throughout the Group as a fundamental part of discharging its responsibilities to protect and enhance shareholders’ value and the financial performance of the Group. to this end, the Board fully supports the recommendations of the Code and has taken appropriate steps to ensure compliance.

Set out below is a statement of how the Group has applied the principles of the Code. the Board confirms that the Group has sought to comply with the best practices in the Code throughout the financial year ended �1 December 2007.

a. board oF direcTorS

THe board

the Board takes full responsibility for the performance of the Group and guides the Group on its short and long term goals, providing advice and devising strategies on management and business development issues.

the Board met four (4) times during the financial year to monitor and control the development of the Group. Besides Board meetings, the Board also exercises control on matters that require its approval by way of circular resolutions and informal meetings. Proceedings of the relevant meetings have been properly recorded.

the attendance of each Director at the Board meetings is as tabulated below:

name of directors Total meeting Percentage of attended attendance (%)

JEN. (R) tAN SRI YAACOB BIN MAt ZAIN 4/4 100

DAtO’ SRI LEONG HOY KuM 4/4 100

StEvEN NG POH SENG 4/4 100

LIM KIu HOCK 4/4 100

LEONG YuEt MEI 4/4 100

CAPtAIN (RtD) IZAHAM BIN ABD. RANI 4/4 100

LOH KOK LEONG �/4 75

board balance

the Board currently has seven (7) members of whom three (�) are Independent Non-Executive Directors (including the Chairman). A brief profile of each Director is presented on pages 012 to 01� of this Annual Report.

All Board members bring a wide range of business experience, expertise and professional judgment to bear on issues of strategy, performance, resources and standards of conduct. Although all the Directors have equal responsibilities for the Group’s operations, the role of the Independent Non-Executive Directors are particularly important in ensuring all issues proposed by the executive management are fully discussed and examined and take into account the long term interests, not only of the shareholders, but also of the employees, customers and business associates. Any concerns and queries relating to the Group may be conveyed to any of the Independent Non-Executive Directors.

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board balance (cont’d)

there is a clear division of responsibilities between the Group’s Chairman and the Group Managing Director / Group Chief Executive to ensure a balance of power and authority. the Group’s Chairman is responsible for ensuring Board effectiveness and standard of conduct while the management of the Group’s businesses and implementation of policies and day-to-day running of the businesses are handled by the Group Managing Director / Group Chief Executive and Executive Directors. the Independent Non-Executive Directors provide independent views to safeguard the interests of shareholders.

SuPPlY oF inFormaTion

Sufficient notice of Board meetings is given and specific matters requiring Board’s decision are listed down in the agenda.

During Board meetings, the Non-Executive Directors are briefed on changes in management and control structure of the Group, business outlook, major acquisition and disposal of assets including investments and changes in the requirements of regulatory bodies.

All Directors have access to the advice and services of the Company Secretaries.

the Directors, whether as a full Board or in their individual capacity have access to all information within the Group and may seek independent professional advice, where necessary, in the furtherance of their duties and they may do so at the Group’s expense.

aPPoinTmenTS and re-elecTion oF direcTorS To THe board

Appointments to the Board are made based on the recommendation of the Nomination Committee.

In accordance with Mah Sing Group Berhad’s Articles of Association, at least one third of the Directors shall retire from office every year provided always that all Directors shall retire from office at least once in every three (�) years but shall be eligible for re-election in the Annual General Meeting.

direcTorS’ Training

All the Directors have attended the Mandatory Accreditation Program prescribed by Bursa Malaysia Securities Berhad (“Bursa Securities”). the Group acknowledges the fact that continuous education is vital for the Board to gain insight into the state of the economy, changing commercial risks, technological advances in our core businesses, latest regulatory requirements and management strategies. As such, the Directors are provided from time to time on relevant new laws and regulations or will attend relevant trainings and workshops, when necessary to equip themselves with the necessary knowledge to discharge their responsibilities and duties more effectively.

board commiTTeeS

the Board has delegated specific responsibilities to four (4) board committees which include the Audit Committee, Nomination Committee, Remuneration Committee and Option Committee. these Committees have the authorities to examine particular issues within their terms of reference and report back to the Board with their recommendations. the ultimate responsibility for the final decision on all matters, however, lies with the entire Board.

audit committee

the composition and terms of reference of the Audit Committee are set out separately in the Audit Committee Report on pages 04� to 046 of this Annual Report.

corporate governance statement (cont’d)

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nomination committee

composition

the Nomination Committee comprises Non-Executive Directors, the majority of whom are Independent.

members

Jen. (r) Tan Sri Yaacob bin maT ZainChairman (Independent Non-Executive)

leong YueT meiDirector (Non-Independent Non-Executive)

caPTain (rTd) iZaHam bin abd. raniDirector (Independent Non-Executive)

Terms of reference of nomination committee:

• to consider, in making its recommendation to the Board, candidates for all directorships/ board committees including the position of Independent Non-Executive Director, in respect of their skills, knowledge, expertise, experience, professionalism and integrity; and in the case of Independent Non-Executive Directors, their abilities to discharge such responsibilities/ functions as expected from an Independent Non-Executive Director;

• to assist the Board in reviewing on an annual basis the required mix of skills and experience of the Directors of the Board/ Board Committees;

• to recommend the appropriate Board balance and size of non-executive participation; and • to establish procedures and processes towards an annual assessment of the effectiveness of the Board as a

whole and contribution of each individual Director and Board Committee member including Independent Non-Executive Directors as well as the Group Chief Executive. the assessments and evaluations are properly documented.

remuneration committee

composition

the majority of the Remuneration Committee consists of Non-Executive Directors.

members

the members of the Remuneration Committee are:

Jen. (r) Tan Sri Yaacob bin maT ZainChairman (Independent Non-Executive)

daTo’ Sri leong HoY KumGroup Managing Director / Group Chief Executive

leong YueT meiDirector (Non-Independent Non-Executive)

One (1) meeting was held during the financial year and it was attended by all the members.

Terms of reference of remuneration committee:

• to study and periodically review remuneration packages of all Executive Directors; and • to make recommendations to the Board on all elements of remuneration and terms of employment for

Executive Directors.

In the case of Non-Executive Directors, the determination of their remuneration is a matter for the Board as a whole and the level of remuneration reflects the experience and level of responsibilities undertaken by each Non-Executive Director.

corporate governance statement (cont’d)

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remuneration committee (cont’d)

Individual Directors do not participate in the decisions regarding their individual remuneration.

The level and make-up of remuneration

the remuneration of Executive Directors are so determined to ensure that the Group attracts and retains the Directors needed to run the Group successfully. In the case of Executive Directors, the remuneration is structured so as to link rewards to corporate and individual performance. Survey data on the remuneration practices of comparable companies are taken into consideration in determining the remuneration package.

disclosure on directors’ remuneration

the number of Directors whose total remuneration falls into the following bands for the financial year ended �1 December 2007:

remuneration band(rm) number of executive directors number of non-executive directors

up to 50,000 - �50,001 to 100,000 - 1550,001 to 600,000 1 -750,001 to 800,000 1 -1,000,001 to 1,050,000 1 -

total � 4

the aggregate remuneration of the Directors categorized into appropriate components:

benefits- Total 2007 Total 2006 Fees Salaries bonus ePF in-kind remuneration remuneration (rm) (rm) (rm) (rm) (rm) (rm) (rm)

Executive Directors - 1,�56,000 870,986 267,240 104,948 2,599,174 2,�87,299Non-Executive Directors 150,000 - - - 18,�00 168,�00 168,�00

total 150,000 1,�56,000 870,986 267,240 12�,248 2,767,474 2,555,599

option committee

the Option Committee was established to administer the implementation of the Group’s Employees’ Share Option Scheme (“ESOS”) and is vested with such powers and duties as are conferred upon it by the Board and the By-Laws of the ESOS. In addition, the Option Committee may, for the purpose of administering the ESOS, make rules and regulations or impose terms and conditions which the Option Committee may in its discretion consider to be necessary or desirable for giving full effects to the ESOS.

members

the members of the Option Committee are:

Jen. (r) Tan Sri Yaacob bin maT ZainChairman (Independent Non-Executive)

daTo’ Sri leong HoY KumGroup Managing Director / Group Chief Executive

loH KoK leongDirector (Independent Non-Executive)

Meetings of the Option Committee are held when necessary. During the financial year, there were two (2) circular resolutions over the administration of the ESOS.

corporate governance statement (cont’d)

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b. relaTionSHiP wiTH SHareHolderS and inveSTorS

the Group recognises the importance of communication and proper dissemination of information to its shareholders and investors. In this respect, the Executive Directors hold briefings with investment research analysts, fund managers, financiers, and the media as and when appropriate to explain the Group’s strategies, performance and major developments. the annual reports, announcements through Bursa Securities and press release provide valuable insight on the latest developments of the Group.

For the latest information on the Group, shareholders and members of the public may access the Group’s website at www.mahsing.com.my and the Bursa Securities’ website at www.bursamalaysia.com.my.

annual general meeting

the Annual General Meeting is the principal forum for dialogue with shareholders. It provides shareholders with an opportunity to seek clarification on the Group’s business and performance.

c. accounTabiliTY and audiT

Financial reporting

In presenting the annual audited financial statements and quarterly announcements of un-audited consolidated results to shareholders, the Directors have taken reasonable steps to ensure a balanced and understandable assessment of the Group’s financial position and prospects. the Board is assisted by the Audit Committee in overseeing the Group’s financial reporting processes and the quality of its financial reporting.

internal control

the Directors’ Statement on the Group’s Internal Control is set out on page 047 of this Annual Report.

relationship with auditors

the Group maintains a transparent relationship with the External Auditors in seeking the professional advice and towards ensuring compliance with accounting standards. the Group Internal Auditor was present at the Audit Committee meetings while the External Auditors were invited to participate and brief the Audit Committee on specific issues at the Audit Committee meetings.

d. direcTorS’ reSPonSibiliTY STaTemenT

the Board of Directors is responsible for ensuring the financial statements of the Group and of the Company have been drawn up in accordance with the applicable approved accounting standards in Malaysia and the Companies Act, 1965 and give a true and fair view of the state of affairs of the Group and of the Company at the end of the financial year and of the results and cash flows of the Group and of the Company for the financial year.

the Board of Directors is satisfied that in preparing the financial statements of the Group and of the Company for the financial year ended �1 December 2007, the Group has adopted the appropriate accounting policies and applied them consistently; and that all applicable approved accounting standards have been followed.

e. addiTional comPliance inFormaTion

options, warrants or convertible Securities

the Group has completed its corporate exercises involving Private Placement, Rights Issue, Share Split and Bonus Issue (“Corporate Exercises”) during the financial year as detailed on pages 050 to 052 of the financial statements.

As a result of the Corporate Exercises, the exercise price and number of warrants and ESOS had been adjusted in accordance to the Deed Poll (governing the warrants) and the By-Law (governing the ESOS) respectively (“Warrants and ESOS Adjustments”). the details of the Warrants and ESOS Adjustments and the movement of warrants and ESOS during the financial year are as disclosed in Note 24 on pages 102 to 107 of the financial statements.

the Company did not issue any convertible securities during the financial year.

corporate governance statement (cont’d)

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e. addiTional comPliance inFormaTion (cont’d)

non-audit Fees Paid/Payable

For the financial year ended �1 December 2007, the amount of non-audit fees paid/ payable to the External Auditors and their affiliates amounted to RM29,500.

material contracts involving directors’ and major Shareholders’ interests

there were no material contracts entered into by the Group involving Directors’ and major shareholders’ interests which were still subsisting as at the end of the financial year under review or which were entered into since the end of the previous financial year except for the following and those as disclosed in Note �8 on page 121 of the financial statements:

major Shareholder

Koperasi Permodalan Felda Berhad (“Koperasi Felda”) being a major shareholder for the period from 8 January 2007 to 14 May 2007 which was within the preceding six (6) months of the date of the material contract

recurrent related Party Transactions

the existing shareholders’ mandate for the Company and/or its subsidiaries to enter into recurrent related party transactions of revenue or trading nature (“Shareholders’ Mandate”) which is necessary for its day-to-day operations shall expire at the conclusion of the forthcoming Annual General Meeting and is subject to renewal by the shareholders at the said Annual General Meeting.

the aggregate value of transactions conducted pursuant to the Shareholders’ Mandate during the financial year is as disclosed in Note �8 on page 121 of the financial statements.

Share buyback

the existing authority for Mah Sing Group Berhad to purchase up to 10% of its issued and paid-up share capital shall expire at the conclusion of the forthcoming Annual General Meeting and is subject to renewal by the shareholders at the said Annual General Meeting.

During the financial year, there were no share buyback by the Company.

revaluation of landed Properties

the Company does not have a revaluation policy on landed properties.

Details on revaluation of landed properties by the Directors in prior year are as disclosed in Note 14 on page 089 to 090 of the financial statements.

Status of utilisation of Proceeds raised from corporate exercises Status of utilisation of proceeds raised from the Corporate Exercises undertaken during the financial year is as

follows: Proceeds utilised as at raised 18 april 2008 balance rm’000 rm’000 rm’000

Working capital 219,216 195,669 2�,547Incidental expenses 2,590 2,065 525

221,806 197,7�4 24,072

corporate governance statement (cont’d)

Particulars of material contract

On 26 July 2007, Star Residence Sdn Bhd (“Star Residence”), a wholly-owned subsidiary of Mah Sing Group Berhad (“Mah Sing”) entered into a Sale & Purchase Agreement with Koperasi Felda for the en bloc sale of net lettable area of 24�,8�0 square feet out of a total of 507,265 square feet in a purpose-built grade A office building known as the Icon@tun Razak (“Subject Property”) for a total cash consideration of RM174,�98,000 (“the Sale Consideration”)

On 26 July 2007, Star Residence also entered into a Leaseback & Guaranteed Rental Return Agreement with Koperasi Felda for the leaseback of the Subject Property by Star Residence from Koperasi Felda for a period of three (�) years at a guaranteed rental of 7% p.a. over the Sale Consideration

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audit committee

report

comPoSiTion

the Audit Committee comprises three (�) members, all of whom are Independent Non-Executive Directors. One (1) of the Audit Committee members is member of an accounting association as disclosed in Directors’ Profile on pages 012 to 01� of this Annual Report.

the Audit Committee convened four (4) meetings during the financial year which were attended by the members as tabulated below:

name of members attendance at meetings

Jen. (r) Tan Sri Yaacob bin maT Zain 4/4(Chairman, Independent Non-Executive Director)

caPTain (rTd) iZaHam bin abd. rani 4/4(Independent Non-Executive Director)

loH KoK leong �/4 (Independent Non-Executive Director)

STeven ng PoH Seng – resigned on 28 February 2008 4/4(Executive Director)

the Group Internal Auditor and External Auditors have attended all the meetings.

TermS oF reFerence oF audiT commiTTee

membership

According to the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”), the Audit Committee shall be appointed by the Board from amongst the Directors and shall consist of not less than three (�) members, all of whom shall be Non-Executive Directors, with a majority being Independent Directors. At least one member of the Audit Committee must be a member of the Malaysian Institute of Accountants or possesses such other qualifications and/or experience as approved by Bursa Securities.

the Chairman of the Audit Committee shall be an Independent Director appointed by the Board.

retirement and resignation

If a member of the Audit Committee resigns, retires or for any other reason ceases to be a member with the result that the number of members is reduced to below three (�), the Board of Directors shall, within three (�) months of that event, appoints such number of new members as may be required to make up the minimum number of three (�) members.

review of the audit committee

the term of office and performance of the Audit Committee and each of its members shall be reviewed by the Board of Directors at least once every three (�) years to determine whether the Audit Committee and members have carried out their duties in accordance to their terms of reference.

meetings and minutes

In assisting the Board to effectively discharge its fiduciary responsibility for corporate governance, timely and accurate financial reporting and development of sound internal control, Board meetings which shall be held preferably not less than four (4) times a year will normally be attended by the Department Head charged with the responsibility of the Group’s financial reporting, the Group Internal Auditor together with the Chairman of the Audit Committee. the presence of External Auditors for a meeting will be requested if required.

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meetings and minutes (cont’d)

Attendance of other Directors and employees at any particular Audit Committee meeting will be at the invitation of the Audit Committee.

A quorum shall consist of two (2) members and the majority of the members present must be Independent Directors.

the Company Secretary shall be the Secretary of the Audit Committee and shall be responsible, in conjunction with the Chairman, for drawing up the agenda and circulating it, supported by explanatory documentation to the Audit Committee members prior to each meeting.

the Secretary shall also be responsible for keeping the minutes of meetings of the Audit Committee and circulating them to the Audit Committee members and to the other members of the Board.

authority

the Audit Committee is authorised by the Board to investigate any activity within its terms of reference and shall have unrestricted access to both the Internal and External Auditors and to all employees of the Group. the Audit Committee is also authorised by the Board to obtain external legal or other independent professional advice as necessary.

the Audit Committee is also authorised to convene meeting with the External Auditors without the presence of the executive members of the Board of Directors, whenever deemed necessary.

duties

the duties of the Audit Committee shall be:

oversee all matters relating to external audit:

• discuss with the External Auditors where necessary, the nature and scope of the audit and ensure co-ordination of audit where more than one audit firm is involved;

• discuss problems and reservations arising from the interim and final audits and any matter the auditors may wish to discuss (in the absence of management where necessary);

• review with the External Auditors, their evaluation of the system of internal controls, their management letter and management’s response;

• consider the nomination & appointment of the External Auditors as well as their audit fee;• consider any letter of resignation of External Auditors and any questions of resignation and dismissal; and • review the assistance given by the employees of the Group to the External Auditors.

review of reports by the chairmen of the risk management Teams in relation to the adequacy and integrity of the group’s internal control systems

oversee all matters relating to internal audit:

• to review the adequacy, scope, functions and resources of the internal audit function and that it has the necessary authority to carry out its work;

• to review the internal audit program;• to ensure co-ordination of external audit with internal audit;• to consider major findings of internal audit reviews and management’s response and ensure that appropriate

actions are taken on the recommendations of the internal audit function;• to review any assessment of the performance of the staff of the internal audit function; • to approve any appointment or termination of senior staff members of the internal audit function; and• to keep itself informed of resignations of internal audit staff members and provide resigning staff member an

opportunity to submit his/ her reasons for resigning.

audit committee report (cont’d)

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review of financial statements:

to review the quarterly and year-end financial statements of the Group before submission to the Board, focusing particularly on:

• any changes in accounting policies and practices;• significant adjustments arising from the audit;• going concern assumption;• compliance with the applicable approved accounting standards and regulatory requirements; and• compliance with the Listing Requirements of Bursa Securities and other legal requirements.

additional duties and responsibilities:

• to consider any related party transactions and conflict of interest situation that may arise within the Group or the Company including any transaction, procedure or course of conduct that raises questions of management integrity. they are also required to ensure that the Directors report such transactions annually to shareholders via the annual report;

• where the Audit 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 Listing Requirements of Bursa Securities, the Audit Committee must promptly report such matter to Bursa Securities; and

• to carry out such other responsibilities, functions or assignments as may be defined jointly by the Audit Committee and the Board from time to time.

SummarY oF acTiviTieS oF THe audiT commiTTee For THe Financial Year

During the financial year, the Audit Committee carried out its duties as set out in the terms of reference and discussed the following issues:

• reviewed the extent of the Group’s compliance with the provisions set out under the Malaysian Code on Corporate Governance for the purpose of preparing the Corporate Governance Statement and Statement of Internal Control pursuant to the Listing Requirements of Bursa Securities;

• reviewed the Risk Management teams’ reports on the risk profile of the Group and the adequacy and integrity of internal control systems to manage these risks;

• reviewed with the External Auditors the audit plan and to ensure co-ordination of audit of the various companies within the Group with different External Auditors;

• reviewed with the External Auditors any significant findings in relation to audits;

• considered and recommended to the Board for approval of the audit fees payable to the External Auditors;

• reviewed the internal audit plan and internal audit reports and considered the major findings of internal audit reviews and management’s response;

• reviewed and discussed the internal audit function, its authorities, resources and scope of work;

• reviewed related party transactions entered into by the Group and the draft proposal to seek shareholders’ mandate pursuant to Paragraph 10.09 of the Listing Requirements of Bursa Securities to authorise the Group to enter into recurrent related party transaction of a revenue or trading nature; and

• reviewed the quarterly reports on the Group’s un-audited consolidated results and the year end audited financial statements before recommending them to the Board for their approval for announcement to Bursa Securities.

audit committee report (cont’d)

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046

STaTemenT on grouP’S emPloYeeS’ SHare oPTion ScHeme (“eSoS”) bY THe commiTTee

During the financial year, there were no allocation of options by the Company.

SummarY oF acTiviTieS oF grouP inTernal audiT deParTmenT For THe Financial Year

the Group Internal Audit Department which reports to the Audit Committee also assists the Board of Directors in monitoring and managing risks and internal controls. their role is to undertake independent regular and systematic reviews of the systems of internal controls so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively. Internal audit plans are approved by the Audit Committee and the scope of internal audit covers the audits of all units and operations, including subsidiaries. the internal audits are on a risk-based approach process by which significant risks are identified, assessed and managed. Such audits also ensure instituted controls are appropriate and are effectively applied to achieve acceptable risk exposures.

During the financial year, the Group Internal Audit Department conducted independent reviews and evaluated risk exposures relating to the Group’s operations and information systems as follows:

• reliability of financial and operational information;• effectiveness and efficiency of operations;• safeguarding of assets; and • compliance with policies, procedures, laws & regulations and contracts.

At the conclusion of the various audits carried out, the weaknesses together with the recommended corrective action to be taken were highlighted to the management. there were no material losses incurred during the current financial year as a result of the weaknesses in the internal control and the management continues to take measures to strengthen the internal control environment. Subsequently, follow-up reviews were conducted to ensure that corrective actions were implemented accordingly.

audit committee report (cont’d)

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THe board’S reSPonSibiliTY

the Board of Directors affirms its overall responsibility for the Group’s systems of internal controls and risk management and for reviewing the adequacy and integrity of those systems. the Board of Directors ensures the effectiveness of financial, organisational, operational and compliance controls through regular reviews.

It should be noted, however, that such systems are designed to manage

statement of internal

control

rather than eliminate the risk of failure to achieve business objectives, and as such, can provide only reasonable and not absolute assurance against material misstatement or loss.

THe riSK managemenT ProceSS

the Board of Directors confirms that the Group has in place an Enterprise Risk Management Framework for the on-going process of identifying, evaluating, monitoring and managing the significant risks affecting the achievement of its business objectives through out the financial year under review. this process is regularly reviewed by the Board of Directors and is in accordance with the Internal Control Guidance.

the key aspects of the risk management process are:

• the Risk Management teams comprising management staff of the property and plastics divisions as well as the Corporate Office are charged with the responsibilities of continuous monitoring and management of risks of the Group;

• Risk Management Workshops are conducted and chaired by the Executive Directors to identify, assess and prioritise the risks faced by the Group based on the likelihood of occurrence and magnitude of impact and also to assist management in identifying procedures or steps to be taken to manage or control these risks;

• the key risks identified in the Risk Management Workshops together with the controls for managing them and the management action plans to be implemented are summarised in the Key Risk Profiles and Risk Registers, serving as the means for assuring the Audit Committee that the processes are effective. Independent compliance reviews are carried out by the Group Internal Auditors on a continuous basis to ensure the controls for managing risks are functioning effectively; and

• the Audit Committee upon receiving reports from Group Internal Auditors shall review and monitor the effectiveness of the Group’s systems of internal controls before onward submission to the Board of Directors for endorsement.

THe inTernal conTrol ProceSS

the key elements of the Group’s internal control system are:

• Operational structure with defined lines of responsibility and delegation of authority is in place. A process of hierarchical reporting has been established which provides for a documented and auditable trail of accountability;

• Standard operating policies and procedures are in place and are regularly updated to reflect changing risks or to resolve operational deficiencies. Instances of non-compliance with such policies and procedures are reported thereon by Group Internal Audit function to the Board of Directors via the Audit Committee;

• Key functions such as business development, human resources, finance, tax, treasury, insurance, secretarial and legal matters are centralised at the head office;

• Detailed budgeting process is established requiring all business units to prepare budget and business plan on an annual basis. the Board of Directors reviews and approves the annual budget and business plan;

• Effective reporting systems which expose significant variances against budget and plan are in place to monitor performance. Key variances are followed up by the management and management action is taken, where necessary and reported to senior management on a monthly basis. the Group Managing Director / Group Chief Executive meets on a monthly basis with all divisional heads to consider the Group’s financial performance, business developments, management and corporate issues;

• Regular visits to the operating units by the members of the Board and senior management;

• An on-going training and educational program for Directors and staff relevant in assessing the adequacy and integrity of the Group’s risks and control process;

• the professionalism and competence of staff are being continually upgraded through training and regular performance evaluation; and

• Group Internal Audit independently reviews the internal controls to provide the Audit Committee with sufficient assurance that the systems of internal controls are effective in addressing the risks identified. On a quarterly basis, Group Internal Audit submits reports and plans for review and approval by the Audit Committee.

directors’ report

report of the auditors

income statements

balance sheets

consolidated statementof changes in equity

company statement of changes in equity

cash flow statements

notes to the financialstatements

statement by directors

statutory declaration

properties owned

statistics of shareholdings

statistics of warrant holdings

notice of annual general meeting

notice of dividend entitlementand payment

statement accompanying notice of annual general meeting

form of proxy

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directors’report

for the financial year ended31 december 2007

The directors are pleased to submit their report and the audited financial statements of the group and of the Company for the financial year ended 31 december 2007.

Principal activities The principal activities of the Company are investment holding and provision of management services to subsidiary companies in the group. The principal activities of the subsidiary companies are set out in note 17 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’000 RM’000

profit before tax 117,705 271,240

income tax expense (35,447) (73,241)

profit for the year 82,258 197,999

in the opinion of the directors, the results of the operations of the group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature.

Dividends on 17 august 2007, the Company paid a first and final gross dividend of 12% on ordinary share, less income tax of 27%, amounting to rM27,180,889 in respect of the financial year ended 31 december 2006 as approved by the shareholders at the last annual general Meeting. in respect of the current financial year, the directors have proposed a first and final gross dividend of 16% on ordinary share (inclusive of 425,317 ordinary shares issued after the financial year end as disclosed in note 41 to the financial statements), less income tax of 26%, estimated at rM36,808,591. The first and final dividend is subject to the approval of the shareholders at the forthcoming annual general Meeting of the Company and has not been included as a liability in the financial statements for the current financial year. Such dividend when approved by shareholders will be accounted for in equity as an appropriation of retained earnings during the financial year ending 31 december 2008.

Movements on reserves and provisions There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements.

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050

Share capital on 26 June 2007, the Company completed a share split exercise which involved the subdivision of one (1) ordinary share of rM1.00 each into two (2) ordinary shares of rM0.50 each (“Share Split”) and the alteration of the authorised share capital of the Company of rM500,000,000 comprising 500,000,000 ordinary shares of rM1.00 each into rM500,000,000 comprising 1,000,000,000 ordinary shares of rM0.50 each. during the financial year, the Company increased its issued and paid-up ordinary share capital from rM152,044,349 to rM310,670,715 by way of: (a) issuance of 10,640,000 new ordinary shares of rM1.00 each at a price of rM3.30 per ordinary share pursuant to a private

placement; (b) issuance of 2,000,000 new ordinary shares of rM1.00 each at a price of rM3.70 per ordinary share pursuant to a private

placement; (c) issuance of 2,560,000 new ordinary shares of rM1.00 each at a price of rM3.95 per ordinary share pursuant to a private

placement; (d) issuance of 51,267,197 new ordinary shares of rM1.00 each at an issue price of rM3.30 per ordinary share pursuant to the

renounceable rights issue on the basis of one (1) rights share for every four (4) existing ordinary shares held; (e) issuance of 37,901,140 new ordinary shares of rM1.00 each at an exercise price of rM1.00 per ordinary share pursuant to the

exercise of Warrants prior to Share Split; (f ) issuance of 1,163,010 new ordinary shares of rM0.50 each at an exercise price of rM0.50 per ordinary share pursuant to the

exercise of Warrants after Share Split; (g) issuance of 4,699,294 new ordinary shares of rM0.50 each at an exercise price of rM0.77 per ordinary share pursuant to the

exercise of share options under the Company’s employees’ Share option Scheme, after Share Split; and (h) issuance of 102,653,753 new ordinary shares of rM0.50 each pursuant to the bonus issue on the basis of one (1) new ordinary

share of rM0.50 each for every five (5) ordinary shares of rM0.50 held, by way of capitalisation of rM51,326,876 from the share premium account of the Company (“Bonus issue”).

The new ordinary shares issued rank pari passu with the then existing ordinary shares of the Company.

The related share premium arising from the aforementioned shares issues amounting to rM102,804,705 has been credited to the share premium account during the financial year.

Warrants

The Warrants 2004/2009 (“Warrants”) are constituted by a deed poll dated 2 april 2004 (“deed poll”). The salient features of the Warrants 2004/2009 are as follows: (a) The issue date of the Warrants is 7 June 2004 and the expiry date is 6 June 2009. any Warrants not exercised at the expiry date

will lapse and cease to be valid for any purpose; (b) each Warrant entitles the registered holder to subscribe for one (1) new ordinary share of rM1.00 in the Company at an

exercise of rM1.00 per ordinary share before the Share Split and to subscribe for one (1) new ordinary share of rM0.50 in the Company at an exercise of rM0.50 per ordinary share after the Share Split;

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(c) The exercise price and the number of Warrants are subject to adjustments in the event of alteration to the share capital of the Company in accordance with the provisions in the deed poll. however, no adjustment shall be made in any event whereby the exercise price would be reduced to below the par value of ordinary share in the Company;

(d) The Warrant holders are not entitled to participate in any distribution and/or offer of further securities in the Company (except

for the issue of new warrants pursuant to adjustment as mentioned in item (c) above), until and unless such holders exercise the rights under the Warrants to subscribe for new ordinary shares; and

(e) The new ordinary shares to be issued upon exercise of the Warrants shall, upon allotment and issue, rank pari passu with the

then existing ordinary shares, including the entitlement to dividends, rights, allotments or other distributions, except that they will not be entitled to the rights, allotments or other distributions, declared by the Company which entitlement thereof precedes the allotment date of the new ordinary shares allotted pursuant to the exercise of the Warrants.

during the financial year ended 31 december 2007, the number of Warrants have been adjusted in accordance with the provisions in the deed poll (as mentioned in item (c) above) as a result of the rights issue, Share Split and Bonus issue. Save for the adjustment in exercise price arising from Share Split as mentioned in item (b) above, there is no other adjustment in exercise price. The movements in the Company’s Warrants are as follows:

Before Share Split After Share Split(Unit’000) Entitlement for ordinary shares of Entitlement for ordinary shares of RM1.00 each RM0.50 each

Balance at Adjusted for Adjusted for Adjusted for Balance at 1.1.2007 Exercised Rights Issue Share Split Bonus Issue Exercised 31.12.2007 number of unexercised Warrants 41,459 (37,901) 264 3,822 1,440 (1,163) 7,921

Employees’ share option scheme The Company implemented an employees’ Share option Scheme (“eSoS”) which is governed by the eSoS By-Laws (“By-Laws”) and was approved by the shareholders at the extraordinary general Meeting held on 8 March 2004. The salient features of the eSoS are as follows: (a) The eSoS was implemented on 12 July 2004, and shall be in force for a period of 5 years (“initial period”), subject however

to any extension or renewal, at the discretion of the option Committee, provided that the initial period and such extended period shall not in aggregate exceed a period of 10 years;

(b) The total number of new shares to be offered pursuant to the exercise of options granted under the eSoS (“option”) shall be

subject to a maximum of 10% of the Company’s issued and paid-up share capital at the time of the offer; (c) employees (including executive directors) of the Company or its subsidiary companies shall be eligible to participate in the

eSoS, if as at the date of offer, the employee: (i) has attained the age of eighteen (18) years; (ii) is employed full-time by and on the payroll of the Company or its subsidiary companies; and (iii) is a confirmed employee of the Company or its subsidiary companies.

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052

directors’report

(cont’d)

The allocation criteria of new ordinary shares comprising in the options to eligible employees shall be determined at the discretion of the option Committee. The participation of an executive director of the Company in the eSoS shall be approved by the shareholders of the Company in the general meeting;

(d) The price payable upon exercise of an option shall be based on the weighted average market price of the Company’s shares

as shown in the daily official List of the Bursa Malaysia Securities Berhad for the five (5) market days immediately preceding the date of offer with an allowance of a discount of not more than 10%, or at the par value of the Company’s share, whichever is higher;

(e) in the event that a share buy-back exercise of the Company results in the number of options that have been offered under the

eSoS exceeding 10% of the issued capital of the Company, there shall be no granting of additional options at any point in time after the share buy-back, unless the number of options that have been granted under the eSoS falls below 10% of the issued capital of the Company;

(f ) The new ordinary shares to be issued upon exercise of the options shall, upon allotment and issue, rank pari passu with the

then existing ordinary shares, including the entitlement to dividends, rights, allotments or other distributions, except that they will not be entitled to the rights, allotments or other distributions, declared by the Company which entitlement thereof precedes the allotment date of the new ordinary shares allotted pursuant to the exercise of the options; and

(g) The exercise price and the number of new ordinary shares comprised in the options are subject to adjustment in the event of alteration to the share capital of the Company in accordance with the provisions in the By-Laws. however, no adjustment shall be made in any event whereby the exercise price would be reduced to below the par value of ordinary share in the Company.

during the financial year ended 31 december 2007, the exercise price and number of options over ordinary shares have been adjusted in accordance with the provisions in the By-Laws (as mentioned in item (g) above) as a result of the rights issue, Share Split and Bonus issue. The adjustments in exercise price of eSoS are as follows:

Exercise price per Option On Offer After Rights After Share After BonusOffer Date Date Issue Split Issue

RM RM RM RM 9 June 2006 2.00 1.86 0.93 0.77 The movements in the Company’s options are as follows: Before Share Split After Share Split Number of options over ordinary shares Number of options over ordinary shares of(Unit’000) of RM1.00 each RM0.50 each

Offer Date Balance at Adjusted for Adjusted for Adjusted for Balance at 1.1.2007 Cancelled Rights Issue Share Split Bonus Issue Exercised Cancelled 31.12.2007 9 June 2006 2,453 (91) 172 2,534 1,014 (4,699) (46) 1,337

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Directors The directors who have held office during the financial year since the date of the last report are as follows: Jen. (r) Tan Sri Yaacob bin Mat Zain dato’ Sri Leong hoy Kum ng poh Seng Lim Kiu hock Leong Yuet Mei Captain (rtd) izaham bin abd. raniLoh Kok Leong Jen. (r) Tan Sri Yaacob bin Mat Zain who is over the age of 70 years retires pursuant to Section 129(2) of the Companies act, 1965, and a resolution will be proposed for his re-appointment as a director under the provision of Section 129(6) of the said act to hold office until the next annual general Meeting of the Company. in accordance with article 102 of the Company’s articles of association, Leong Yuet Mei and ng poh Seng retire at the forthcoming annual general Meeting and, being eligible, offer themselves for re-election.

Directors’ interests according to the register of directors’ Shareholdings, the interests of the directors who held office at the end of the financial year in the ordinary shares, options over ordinary shares and warrants of the Company are as follows: (a) Shares in the Company

Before Share Split After Share Split Number of ordinary shares of Number of ordinary shares of RM0.50 each(Unit’000) RM1.00 each

Balance at Rights Share Bonus Balance at 1.1.2007 Acquired Transferred** Issue Split Issue Acquired Sold 31.12.2007Direct Interestdato’ Sri Leong hoy Kum 62,715 20,343 (79,507) 888 4,438 1,775 - - 10,652 ng poh Seng - - - - - - 515 (509) 6 Indirect Interestdato’ Sri Leong hoy Kum * 102 79,507 - 19,902 99,512 39,805 268 - 239,096 Leong Yuet Mei * 44 - - 11 54 22 - - 131 By virtue of dato’ Sri Leong hoy Kum having an interest of more than 15% of the shares in the Company, he is deemed interested in the shares of all the Company’s subsidiaries to the extent the Company has an interest. * restated to include disclosure of interest held by family member(s) pursuant to the new requirement under Section 134(12)(c) of the

Companies act, 1965.

** The ordinary shares held directly by dato’ Sri Leong hoy Kum were transferred to a company controlled by him.

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054

(b) Share options in the Company Before Share Split After Share Split Number of options over ordinary Number of options over ordinary shares of(Unit’000) shares of RM1.00 each RM0.50 each

Balance at Adjusted for Adjusted for Adjusted for Balance at 1.1.2007 Exercised Rights Issue Share Split Bonus Issue Exercised Cancelled 31.12.2007Direct Interest dato’ Sri Leong hoy Kum 200 - 14 215 86 - - 515 ng poh Seng 200 - 14 215 86 (515) - - Indirect Interest dato’ Sri Leong hoy Kum * 125 - 9 134 54 (268) - 54 * restated to include disclosure of interest held by family member(s) pursuant to the new requirement under Section 134(12)(c) of the

Companies act, 1965 (c) Warrants in the Company Before Share Split After Share Split(Unit’000) Number of warrants for share of RM1.00 each Number of warrants for share of RM0.50 each

Adjusted Adjusted Adjusted Balance at Acquired for Rights for Share for Bonus Acquired Balance at 1.1.2007 /(Sold) Exercised Issue Split Issue /(Sold) Exercised 31.12.2007Direct interest dato’ Sri Leong hoy Kum 21,343 - (20,343) 73 1,073 429 - - 2,575

Indirect interest dato’ Sri Leong hoy Kum * 36 - - 3 39 15 - - 93

* restated to include disclosure of interest held by family member(s) pursuant to the new requirement under Section 134(12)(c) of the Companies act, 1965

none of the other directors in office at the end of the financial year held any interest in the shares of the Company and its related corporations during the financial year. Directors’ benefits Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than the fees, other emoluments and benefits-in-kind as shown in note 38 to the Financial Statements) by reason of a contract made by the Company or by a related corporation with the director or with a firm of which he is a member or with a company in which he has a substantial financial interest except for those benefits which may be deemed to have arisen by virtue of those transactions entered into in the ordinary course of business by the Company and its subsidiary companies with the companies in which the directors are deemed to have substantial financial interests. The transactions are disclosed in note 38 to the Financial Statements. neither during nor at the end of the financial year was the Company or any of its related corporations a party to any arrangement whose object was to enable the directors to acquire benefits through the acquisition of shares in, or debentures of, the Company or any other body corporate other than the aforementioned eSoS and Warrants entitlements to subscribe for new ordinary shares.

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Other statutory information Before the income statements and balance sheets of the group and of the Company were made out, the directors took reasonable steps: (a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for

doubtful debts and had satisfied themselves that all known bad debts have been written off and that adequate allowance had been made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise their book values in the ordinary course of

business had been written down to their estimated realisable values. at the date of this report, the directors are not aware of any circumstances: (a) which would render the amount written off as bad debts or the amount of allowance for doubtful debts in the financial

statements of the group and of the Company inadequate to any substantial material extent; or (b) which would render the values attributed to current assets in the financial statements of the group and of the Company

misleading; or (c) which have arisen and render adherence to the existing method of valuation of assets or liabilities of the group and of the

Company misleading or inappropriate; or (d) not otherwise dealt with in this report or financial statements which would render any amount stated in the financial

statements of the group and of the Company misleading. at the date of this report, there does not exist: (a) any charge on the assets of the group and of the Company which has arisen since the end of the financial year and secures the

liability of any other person; or (b) any contingent liability of the group and of the Company which has arisen since the end of the financial year. no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the group and of the Company to meet their obligations as and when they fall due. in the opinion of the directors, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of operations of the group and of the Company for the financial year ended 31 december 2007.

Auditors The auditors, Messrs deloitte KassimChan, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the Board of directors dated 28 February 2008.

Jen. (R) Tan Sri Yaacob bin Mat Zain Dato’ Sri Leong Hoy Kum Chairman Managing director

Kuala Lumpur28 February 2008

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We have audited the accompanying balance sheets as of 31 december 2007 and the related statements of income, cash flows and changes in equity for the year then ended. These financial statements are the responsibility of the Company’s directors. it is our responsibility to form an independent opinion, based on our audit, on these financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies act, 1965 and for no other purpose. We do not assume responsibility towards any other person for the contents of this report. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. an audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. an audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. in our opinion: (a) the abovementioned financial statements are properly drawn up in accordance with the provisions of the Companies act,

1965 and the applicable Malaysian accounting Standards Board approved accounting Standards in Malaysia so as to give a true and fair view of:

(i) the state of affairs of the group and of the Company as of 31 december 2007 and of the results and the cash flows of the

group and of the Company for the financial year ended on that date; and (ii) the matters required by Section 169 of the Companies act, 1965 to be dealt with in the financial statements; and (b) the accounting and other records and the registers required by the act to be kept by the Company and by the subsidiary

companies of which we have acted as auditors, have been properly kept in accordance with the provisions of the act. We have considered the financial statements and auditors’ reports of the subsidiary companies, of which we have not acted as auditors, as mentioned under note 17 to the Financial Statements, being financial statements that have been included in the consolidated financial statements. We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations as required by us for these purposes. The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualification and did not include any comment made under Subsection (3) of Section 174 of the act.

DELOITTE KASSIMCHANAF0080Chartered Accountants

HIEW KIM TIAMNo.1717/08/09(J)Partner

Kuala Lumpur28 February 2008

report of the auditors

to the members of Mah Sing group Berhad

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incomestatements

for the financial year ended31 december 2007

Group Company

Note 2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

revenue 5 573,365 495,625 280,764 42,628 Cost of sales 6 (388,053) (354,643) - -

gross profit 185,312 140,982 280,764 42,628 other operating income 1,441 2,997 - 486 Selling and marketing expenses (16,234) (14,017) - - administrative expenses (47,525) (32,418) (6,555) (2,049)interest income 9 1,306 1,347 - - Finance costs 10 (6,595) (5,607) (2,969) (2,913)

profit before tax 7 117,705 93,284 271,240 38,152 income tax expense 11 (35,447) (27,594) (73,241) (10,406)

profit for the year 82,258 65,690 197,999 27,746

Attributable to: equity holders of the Company 81,126 65,370 197,999 27,746 Minority interest 1,132 320 - -

82,258 65,690 197,999 27,746

earnings per ordinary share (sen) - Basic 12(a) 14.82 17.03 - Fully diluted 12(b) 14.09 14.42

gross dividend on ordinary share (%) - proposed 13 16 12 16 12

The above income statements are to be read in conjunction with the notes to the financial statements on pages 65 to 125.

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Group Company

Note 2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

ASSETS

Non-current assets property, plant and equipment 14 53,907 52,159 194 166 prepaid lease payments 15 5,542 6,067 - - intangible assets 16 20 28 - - investment in subsidiaries 17 - - 61,718 56,508 investment in associates 18 26 26 26 26 other investment 19 1 1 - -

Total non-current assets 59,496 58,281 61,938 56,700

Current assets property development cost 20 569,325 490,168 - - inventories 21 43,018 16,254 - - Trade and other receivables 22 234,558 139,026 466,966 166,472 deposits, cash and bank balances 23 203,727 43,013 154,312 8,523

Total current assets 1,050,628 688,461 621,278 174,995

Total assets 1,110,124 746,742 683,216 231,695

balance sheets

as at 31 december 2007

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Group Company

Note 2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

EQUITY AND LIABILITIES

Capital and reserves Share capital 24 310,671 152,044 310,671 152,044 reserves 25 138,423 37,439 134,167 32,347 retained earnings / (accumulated losses) 26 181,223 126,294 167,999 (3,803)

equity attributable to equity holders of the Company 630,317 315,777 612,837 180,588 Minority interest 5,455 4,522 - -

Total equity 635,772 320,299 612,837 180,588

Non-current liabilities Term loans - non-current portion 27 142,984 73,396 35,185 29,888 Long term and deferred payables 28 52,576 59,318 - - deferred tax liabilities 29 7 1,543 - 10,665

Total non-current liabilities 195,567 134,257 35,185 40,553

Current liabilities Trade and other payables 30 258,850 232,999 34,608 3,733 Term loan - current portion 27 6,125 24,890 586 629 Short-term borrowings 31 7,832 22,540 - 6,192 Bank overdrafts 32 385 643 - - Current tax liabilities 5,593 11,114 - -

Total current liabilities 278,785 292,186 35,194 10,554

Total liabilities 474,352 426,443 70,379 51,107

Total equity and liabilities 1,110,124 746,742 683,216 231,695

balance sheets

as at 31 december 2007(cont’d)

The above balance sheets are to be read in conjunction with the notes to the financial statements on pages 65 to 125.

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Distributable Non-distributable reserves reserve

Equity-settled Attributable employees Exchange to equity Note Share Share benefit fluctuation Retained holders of Minority capital premium reserve reserve earning the Company interest Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2007 152,044 31,104 1,243 5,092 126,294 315,777 4,522 320,299 Currency translation differences - recognised directly in equity - - - (836) - (836) (289) (1,125)profit for the financial year - - - - 81,126 81,126 1,132 82,258 Total recognised income and expense for the year - - - (836) 81,126 80,290 843 81,133 dividends 13 - - - - (27,181) (27,181) - (27,181)issuance of shares of subsidiaries to minority interest - - - - - - 90 90 issuance of shares of the Company pursuant to: 24 - Warrants exercised 38,483 - - - - 38,483 - 38,483 - eSoS exercised 2,350 1,268 - - - 3,618 - 3,618 - private placement 15,200 37,424 - - - 52,624 - 52,624 - rights issue 51,267 117,915 - - - 169,182 - 169,182 - Bonus issue 51,327 (51,327) - - - - - - reclassification of reserves arising from eSoS exercised/cancelled - - (984) - 984 - - - expenses for issuance of equity securities - (2,476) - - - (2,476) - (2,476) At 31 December 2007 310,671 133,908 259 4,256 181,223 630,317 5,455 635,772

At 1 January 2006 145,131 31,104 - 5,860 73,965 256,060 4,467 260,527 Currency translation differences - recognised directly in equity - - - (768) - (768) (265) (1,033)profit for the financial year - - - - 65,370 65,370 320 65,690 Total recognised income and expense for the year - - - (768) 65,370 64,602 55 64,657 recognition of share-based payment 25 - - 1,243 - - 1,243 - 1,243 dividends 13 - - - - (13,041) (13,041) - (13,041)issuance of shares of the Company pursuant to : Warrants exercised 24 6,913 - - - - 6,913 - 6,913 At 31 December 2006 152,044 31,104 1,243 5,092 126,294 315,777 4,522 320,299

consolidated statement of

changes in equity

for the financial year ended 31 december 2007

The above consolidated statement of changes in equity is to be read in conjunction with the notes to the financial statements on pages 65 to 125.

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company statement of

changes in equity

for the financial year ended 31 december 2007

The above company statement of changes in equity is to be read in conjunction with the notes to the financial statements on pages 65 to 125.

Distributable Non-distributable reserves reserves Retained Equity-settled earnings/ Share Share employees benefit (accumulated Note capital premium reserve losses) Total RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2007 152,044 31,104 1,243 (3,803) 180,588 profit for the financial year - - - 197,999 197,999 Total recognised income and expense for the year - - - 197,999 197,999 dividends 13 - - - (27,181) (27,181)issuance of shares of the Company pursuant to: 24 - Warrants exercised 38,483 - - - 38,483 - eSoS exercised 2,350 1,268 - - 3,618 - private placement 15,200 37,424 - - 52,624 - rights issue 51,267 117,915 - - 169,182 - Bonus issue 51,327 (51,327) - - - reclassification of reserves arising from eSoS exercised/cancelled - - (984) 984 - expenses for issuance of equity securities - (2,476) - - (2,476) At 31 December 2007 310,671 133,908 259 167,999 612,837

At 1 January 2006 145,131 31,104 - (18,508) 157,727 profit for the financial year - - - 27,746 27,746 Total recognised income and expense for the year - - - 27,746 27,746 recognition of share-based payment 25 - - 1,243 - 1,243 dividends - - - (13,041) (13,041)issuance of shares of the Company pursuant to: Warrants exercised 24 6,913 - - - 6,913

At 31 December 2006 152,044 31,104 1,243 (3,803) 180,588

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Group Company

Cash flows generated from / (used in) 2007 2006 2007 2006operating activities RM’000 rM’000 RM’000 rM’000

Profit before tax 117,705 93,284 271,240 38,152 adjustments for: depreciation of property, plant and equipment 8,042 8,244 26 22 amortisation of prepaid lease payments 348 361 - - amortisation of licence fee 8 8 - - employees share option scheme expense - 1,243 - 17 gain on disposal of property, plant and equipment (69) (33) - - net reversal of impairment loss of property, plant and equipment (211) (317) - - property, plant and equipment written off 127 12 - - allowance for doubtful debts / (allowance for doubtful debts no longer required) 2,256 (70) - - Bad debts written off 4 - - - allowance for inventory obsolescence no longer required (245) (354) - - allowance for amounts due from subsidiary companies - - - 16 allowance for diminution in value of investments in subsidiaries no longer required - - - (48)reversal of provision for liabilities in respect of bank borrowings obtained by an associated company - (426) - (426)Finance costs 13,354 9,487 2,969 2,913 interest income (4,971) (1,599) (6,752) (3,116)gross dividend income from subsidiary companies - - (274,000) (39,500)unrealised foreign exchange loss 40 291 - -

Operating profit / (loss) before working capital changes 136,388 110,131 (6,517) (1,970)

cash flow statements

for the financial year ended31 december 2007

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cash flow statements

for the financial year ended31 december 2007

(cont’d)

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

Changes in working capital increase in property development cost (132,219) (125,340) - - (increase) / decrease in inventories (26,812) 800 - - (increase) / decrease in receivables (60,577) (6,733) 44 (88)increase in payables 38,114 122,536 203 321 Net changes in working capital (181,494) (8,737) 247 233

Cash (used in) / generated from operations (45,106) 101,394 (6,270) (1,737) interest received 3,436 252 3,436 252 interest paid (13,341) (13,699) (2,572) (2,913)income tax paid (47,643) (25,744) - - Net cash (used in) / generated from operating activities (102,654) 62,203 (5,406) (4,398) Cash flows generated from / (used in) investing activities payment for investment in subsidiaries - - (5,210) (4,050)dividends received - - 28,835 16,632 net advances to subsidiary companies - - (105,687) (4,741)net advances from associated companies - 2 - 2 interest received from deposits with licensed banks 373 314 - - payment for property, plant and equipment * (5,382) (5,317) (54) (50)proceeds from disposal of property, plant and equipment 89 179 - - Net cash (used in) / generated from investing activities (4,920) (4,822) (82,116) 7,793

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Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

Cash flows generated from / (used in) financing activitiesproceeds from short-term borrowings 40,617 20,840 - 3,860 repayment of short-term borrowings (55,119) (17,414) (6,193) - proceeds from term loans 244,404 19,755 21,700 - repayment of term loans (193,093) (68,200) (16,446) (1,631)dividend paid (27,181) (13,041) (27,181) (13,041)proceeds from private placement 52,624 - 52,624 - proceeds from rights issue 169,182 - 169,182 - proceeds from Warrants exercised 38,483 6,913 38,483 6,913 proceeds from eSoS exercised 3,618 - 3,618 - proceeds from minority interest of subsidiaries 90 - - - incidental costs for corporate exercise (2,476) - (2,476) - repayment of hire purchase and finance lease liabilities (2,616) (2,376) - -

Net cash generated from / (used in) financing activities 268,533 (53,523) 233,311 (3,899)

Net increase / (decrease) in cash and cash equivalents 160,959 3,858 145,789 (504)Cash and cash equivalents at beginning of the financial year 42,305 38,486 8,523 9,027 Currency translation differences 13 (39) - -

Cash and cash equivalents at end of the financial year (Note 33) 203,277 42,305 154,312 8,523

Note: * net cash outlay for the acquisition of property, plant and equipment during the financial year is as follows: Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

Total acquisition (note 14) 10,799 10,008 54 50 Less: amount payable for acquisition of property, plant and equipment (3,233) (3,550) - - Less: amount financed by hire purchase and finance lease (2,184) (1,141) - -

net cash outlay for the financial year 5,382 5,317 54 50

cash flow statements

for the financial year ended31 december 2007

(cont’d)

The above cash flow statements are to be read in conjunction with the notes to the financial statements on pages 65 to 125.

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1 General information

The principal activities of the Company are investment holding and provision of management services to subsidiary companies in the group. The principal activities of the subsidiary companies are set out in note 17 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Main Board of Bursa Malaysia Securities Berhad. The address of the registered office and principal place of business of the Company is as follows: penthouse Suite 1Wisma Mah Sing163, Jalan Sungai Besi57100 Kuala Lumpur

2 Summary of significant Group accounting policies

Basis of preparation of the financial statements The financial statements have been prepared in accordance with the provisions of the Companies act, 1965 and Financial reporting Standards (“FrS”), the applicable approved accounting standards in Malaysia issued by the Malaysian accounting Standards Board (“MaSB”). The financial statements of the group and of the Company have been prepared under the historical cost convention except as disclosed in the significant group accounting policies. The financial statements are presented in ringgit Malaysia (“rM”) which represents the functional currency of the group and of the Company and all financial information presented in rM are rounded to the nearest thousand (“rM’000”), unless otherwise stated. The financial statements of the group and of the Company have been approved by the Board of directors for issuance on 28 February 2008.

a) Changes in accounting policies

The significant accounting policies adopted are consistent with those adopted in the immediate preceding financial year except for the adoption of the following new/revised FrSs which are relevant to the group’s operations:

Effective dates Accounting Standards

1 october 2006 FrS 117 Leases1 october 2006 FrS 124 related party disclosures1 January 2007 amendment to FrS 119 : employee Benefits - actuarial gains and Losses, group plans and disclosure

The adoption of the above FrSs does not have significant financial impact on the financial statements of the group and the Company. The principal effects of the changes in accounting policies resulting from the adoption of FrS 117 and FrS 124 are as follows:

notes to the financial

statements

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2 Summary of significant Group accounting policies (cont’d) a) Changes in accounting policies (cont’d) i) FRS 117: Leases

prior to 1 January 2007, the leasehold land was classified as property, plant and equipment and was stated at cost less accumulated amortisation and impairment loss, if any.

upon the adoption of FrS 117, leasehold land is classified as an operating lease and the up-front payments made on the leasehold land represent prepaid lease payments.

in accordance with the transitional provision of FrS 117, the unamortised amount of leasehold land of rM6,067,054 as at 1 January 2007 is retained as the surrogate carrying amount of prepaid lease payments and presented as a separate line item under non-current assets and are amortised on a straight line basis over the remaining lease terms.

The classifications have been applied retrospectively, and accordingly, the comparatives have been restated as disclosed in note 15. There is no financial impact on the income statement of the group.

ii) FRS 124: Related Party Disclosure

This standard affects the identification of related parties and some other related party disclosures. The related party disclosures are set out in note 38 to the financial statements.

b) New/FRSs, amendments to FRSs and IC Interpretations that are not yet effective and have not been early adopted

The new FrS, amendments to FrSs and iC interpretations that are not yet effective and the group has not early adopted, are as follows:-

Effective Dates FRSs / amendment to FRS and IC Interpretations

1 July 2007 FrS 107 Cash Flow Statements 1 July 2007 FrS 112 income Taxes 1 July 2007 FrS 118 revenue 1 July 2007 amendment to FrS 121 The effects of Changes in Foreign exchange rates - net investment in a Foreign operation 1 July 2007 FrS 137 provisions, Contingent Liabilities and Contingent assets Yet to be determined FrS 139 Financial instruments: recognition and Measurement 1 July 2007 iC interpretation 1 Changes in existing decommissioning, restoration and Similar Liabilities 1 July 2007 iC interpretation 8 Scope of FrS 2

These new/revised FrSs will be adopted by the group and the Company from the financial year beginning 1 January 2008. The adoption of these new/revised FrSs will not have any significant impact on the financial statements of the group and of the Company.

notes tothe financial

statements(cont’d)

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2 Summary of significant Group accounting policies (cont’d) c) FRSs, amendments to FRS and IC Interpretations that are not yet effective and are not relevant for the Group’s operations

The new standards, amendments to FrS and iC interpretations that are not yet effective and not relevant to the group ‘s operations, are as follows:-

Effective Dates FRSs / amendment to FRS and IC Interpretations

1 July 2007 FrS 111 Construction Contracts 1 July 2007 FrS 120 accounting for government grants and disclosure of government assistance 1 July 2007 iC interpretation 2 Members’ Shares in Co-operative entities and Similar instruments 1 July 2007 iC interpretation 5 rights to interests arising from decommissioning, restoration and environmental rehabilitation Funds 1 July 2007 iC interpretation 6 Liabilities arising from participating in a Specific Market - Waste electrical and electronic equipment 1 July 2007 iC interpretation 7 applying the restatement approach under FrS 129 2004 - Financial reporting in hyperinflationary economies

Economic entities in the Group (a) Subsidiaries

Subsidiaries are those corporations, partnerships or other entities (including special purpose entities) in which the group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are consolidated using the purchase method of accounting except for certain subsidiaries acquired prior to 1 January 2002 which have been consolidated using the merger method (as disclosed in note 17 ) in accordance with Malaysian accounting Standard 2 ‘’accounting for acquisitions and Merger’’, the generally accepted accounting principles prevailing at that time. The group has taken advantage of the exemption provided by FrS 1222004 and FrS 3 to apply these Standard prospectively. accordingly, business combinations entered into prior to the respective effective dates have not been restated to comply with these Standards. The consolidated financial statements include the financial statements of the Company and all its subsidiary companies made up to the end of the financial year. under the acquisition method, the difference between the fair value of the cost of acquisition of subsidiary companies and the group’s share of the fair value of the identifiable net assets of subsidiaries acquired is included in the consolidated financial statements as goodwill. if the cost of acquisition is less than the fair value of the net assets of the subsidiaries acquired, the difference is recognised directly in the income statement.

Subsidiary companies are consolidated from the date on which control is transferred to the group and are de-consolidated from the date that control ceases. The cost of an acquisition is measured as fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

notes tothe financial

statements(cont’d)

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

(a) Subsidiaries (cont’d) The gain or loss on disposal of a subsidiary of the group is the difference between net disposal proceeds and the group’s share of its net assets with any unamortised balance of goodwill on consolidation. Minority interest represents that portion of the profit or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent. Minority interest is measured at the minorities’ share of the fair values of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the minorities’ share of changes in the subsidiaries’ equity since that date. acquisition of subsidiary companies that meets the criteria for merger accounting is accounted for using merger accounting principles. When the merger method is used, the cost of investment in the Company’s books is recorded at the nominal value of the shares issued and the difference between the carrying value of the investment and the nominal value of shares transferred, if any, is treated as merger reserve. The results of these subsidiary companies are presented as if the merger had been effected throughout the current or previous financial years. intragroup transactions, balances and unrealised gains on transactions between group companies are eliminated. unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

(b) Associated companies

an associated company is a non-subsidiary company in which the group holds not less than 20% of the equity voting rights as long-term investment and in which the group is in a position to exercise significant influence in its management. investment in associated company is stated at cost in the Company’s financial statements. The group’s investment in associated company is accounted for under the equity method of accounting based on the latest audited and/or the management financial statements of the associated company made up to 31 december 2007. under this method of accounting, the group’s interest in the post-acquisition profit and reserves of the associated company is included in the consolidated results while dividend received is reflected as a reduction of the investment in the consolidated balance sheet. The carrying amount of such investment is reduced to recognise any decline, other than a temporary decline, in the value of the investment. Where a group entity transacts with an associate of the group, profits and losses are eliminated to the extent of the group’s interest in the relevant associate.

Foreign currencies (a) Functional and presentation currency

items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The financial statements are presented in ringgit Malaysia, which is the Company’s functional and presentation currency.

notes tothe financial

statements(cont’d)

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

Foreign currencies (cont’d)

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statements.

(c) Group companies

assets and liabilities of a foreign subsidiary company are translated to ringgit Malaysia at rates of exchange ruling at the balance sheet date and the results of foreign subsidiary are translated at the average rate of exchange for the financial year. exchange differences arising from the translation are recognised as a separate component of equity. on consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to shareholders’ equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statements as part of the gain or loss on sale.

Revenue recognition

revenue comprises the fair value of the consideration, received or receivable for the sales of goods or services in the ordinary course of business. Sales of goods are recognised upon delivery of products and where the risks and rewards of ownership have passed to the customers, or performance of services, net of sales taxes and discounts and after eliminating sales within the group.

revenue from development projects is accounted for under the percentage of completion method where the outcome of the development can be reliably estimated and is in respect of sales where agreements have been finalised by the end of the financial year. The percentage/stage of completion is measured by reference to the cost incurred to date compared to the estimated total cost of the development.

other revenue earned by the group is recognised on the following bases:

interest income - accrual basis unless collectibility is in doubt dividend income - when the group’s right to receive payment is established Maintenance charges and management fee - upon performance of services rental income - accrued on a time basis, by reference to the agreements entered

Income tax

income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date. deferred tax is accounted for using the liability method in respect of temporary differences arising from differences between the carrying amounts of assets and liabilities in the financial statements and their corresponding tax bases used in the computation of taxable profit.

notes tothe financial

statements(cont’d)

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

Income Tax (cont’d)

deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the deferred tax assets can be utilised. deferred tax is measured at tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. deferred tax is recognised in the income statements, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity.

Property, plant and equipment and depreciation Buildings are stated at cost or valuation less accumulated amortisation/depreciation and accumulated impairment losses. other property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The costs of property, plant and equipment comprise their purchase costs and any expenditure that is directly attributable to the acquisition of the assets. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. all other repairs and maintenance are charged to the income statements during the financial year in which they are incurred. Certain leasehold buildings were revalued by the directors based on valuations carried out by independent professional valuers. The directors have applied the transitional provisions when MaSB first adopted iaS16 - property, plant and equipment. By virtue of this transitional provision, upon implementation in 1998 of MaSB approved accounting Standard iaS16 for the first time, an enterprise is allowed to continue carrying those assets at their previous valuations subject to continuity in depreciation policy on the requirement to write an asset down to its recoverable amount. accordingly, these valuations have not been updated. Surpluses arising on revaluation are credited to the revaluation reserve. any deficit arising from revaluation is charged against the revaluation reserve to the extent of a previous surplus held in the revaluation reserve for the same asset. in all other cases, a decrease in carrying amount is charged to income statements. on disposal of revalued assets, amounts in the revaluation reserve relating to those assets are transferred to retained earnings. depreciation of other assets is calculated so as to write off the costs or valuations of the assets, to their estimated residual values, on a straight line basis over the expected useful economic lives of the assets concerned. The principal annual rates are:

Buildings 3.33% - 10% renovations 3.33% - 10% plant, machinery and factory equipment 10% - 25% Motor vehicles 12.5% - 15% Furniture, fittings and office equipment 8% - 25%

notes tothe financial

statements(cont’d)

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2 Summary of significant Group accounting policies (cont’d) Property, plant and equipment and depreciation (cont’d)

depreciation for certain moulds by a foreign subsidiary for specific projects is determined using the units of production method with expected year ranging between 2 to 10 years. The residual value and the useful life of an asset is reviewed at each financial year-end and, if expectations differ from previous estimates, the changes will be accounted for as a change in an accounting estimate. at each balance sheet date, the group assesses whether there is any indication of impairment. if such indications exist, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. a write-down is made if the carrying amount exceeds the recoverable amount. gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in profit/(loss) from operations. on disposal of revalued assets, amounts in revaluation reserve relating to those assets are transferred to retained earnings.

Finance leases - for lessee Leases of property, plant and equipment where the group assumes substantially all the benefits and risks of ownership are classified as finance leases. property, plant and equipment under finance leases are capitalised and the capital element of the lease commitments is reflected as lease payables. The capital element of the lease instalments is applied to reduce the outstanding obligations whereas the interest element is charged against the income statement so as to give a constant periodic rate of charge on the remaining balance outstanding at the end of each accounting period. property, plant and equipment acquired under finance lease are capitalised and depreciated over the same useful economic lives as similar equivalent owned property, plant and equipment. Operating leases - for lessee Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. payments made under operating leases are charged to the income statement over the lease period. Prepaid lease payment Leasehold land that has an indefinite economic life and title that is not expected to pass to the group by the end of the lease period is classified as operating lease. The up front payments for right to use the leasehold land over a predetermined period are accounted for as prepaid lease payments and are stated at cost less amount amortised. Where the leasehold land had been previously revalued, the group retained the unamortised revalued amount as the surrogate carrying amount of prepaid lease payments as allowed under the transitional provisions of FrS 117. Certain leasehold land of a subsidiary company was last revalued in 1992. as allowed by the transitional provision of FrS 117, the prepaid lease payments at valuation are stated on the basis of its 1992 valuation and the said valuation has not been updated.

notes tothe financial

statements(cont’d)

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2 Summary of significant Group accounting policies (cont’d) Prepaid lease payment (cont’d)

Short term and long term leasehold land recognised as prepaid lease payments are amortised in equal instalments over the respective lease periods as follows:-

Short term leasehold land 26 to 30 years Long term leasehold land 95 years Intangible assets (a) Goodwill

goodwill arising on consolidation represents the excess of the cost of acquisition of subsidiary companies over the group’s share of the fair value of their identifiable net assets at the date of acquisition. goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. impairment losses on goodwill are not reversed. on disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

(b) Licence fee

all costs incurred in the acquisition of licence for assembly of certain plastic products are capitalised and amortised on a straight line basis over a period of 10 years and they will be written off when, in the opinion of the directors, the future economic benefits are uncertain. Where an indication of impairment exists, the carrying amount of the intangible assets are assessed and written down immediately to its recoverable amount.

Investments investments in subsidiaries and associated companies are shown at cost in the Company’s financial statements. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down to its recoverable amount. investments in other non-current investments are shown at cost and an allowance for diminution in value is made where, in the opinion of the directors, there is a decline other than a temporary decline in the value of an investment, such a decline is recognised as an expense in the year in which the decline is identified. on disposal of an investment, the difference between net disposal proceeds and its carrying amount is charged/credited to the income statements.

Property development activities (a) Land held for property development

Land held for property development consists of land on which no significant development work has been undertaken or where development activities are not expected to be completed within the normal operating cycle. Such land is classified as non-current asset and is stated at cost less accumulated impairment losses.

notes tothe financial

statements(cont’d)

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2 Summary of significant Group accounting policies (cont’d) Property development activities (cont’d) (a) Land held for property development (cont’d)

Costs associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other relevant levies. Where the group had previously recorded the land at a revalued amount it continues to retain this amount as its surrogate cost as allowed by FrS 2012004. Where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its recoverable amount. Land held for property development is transferred to property development costs (under current assets) when development activities have commenced and where the development activities can be completed within the group’s normal operating cycle.

(b) Property development costs

property development costs comprise costs associated with the acquisition of land and all costs directly attributable to development activities or that can be allocated on a reasonable basis to these activities. When the outcome of the development activity can be estimated reliably, property development revenue and expenses are recognised by using the stage of completion method. The stage of completion is measured by reference to the proportion that property development costs incurred bear to the estimated total costs for the property development.

When the outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable. irrespective of whether the outcome of a property development activity can be estimated reliably, when it is probable that total property development costs (including expected defect liability expenditure) will exceed total property development revenue, the expected loss is recognised as an expense immediately. property development costs not recognised as an expense are recognised as an asset and are stated at the lower of cost and net realisable value. Where revenue recognised in the income statements exceeds billings to purchasers, the balance is shown as accrued billings under trade and other receivables (within current assets). Where billings to purchasers exceed revenue recognised in the income statements, the balance is shown as progress billings under payables (within current liabilities).

Impairment of non-financial assets

assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. an impairment loss is recognised for the amount by which the carrying amount of the asset or Cash-generating unit (“Cgu”) exceeds its recoverable amount. The recoverable amount is the higher of an asset’s or Cgu’s fair value less costs to sell and value in use. For the purpose of assessing impairment, the group estimates the recoverable amount of the Cgu to which the assets belongs. non-financial assets other than goodwill that suffer an impairment are reviewed for possible reversal of the impairment at each reporting date.

notes tothe financial

statements(cont’d)

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

Impairment of non-financial assets (cont’d)

The impairment loss is charged to the income statements unless it reverses a previous revaluation in which case it is charged to the revaluation surplus. impairment losses on goodwill are not reversed. an impairment loss is only reversed to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. a reversal is recognised in the income statement, unless it reverses an impairment loss on revalued assets, in which case, the reversal is treated as a revaluation increase.

Inventories inventories of completed properties are stated at the lower of cost and net realisable value. Cost includes the relevant cost of land and development expenditure. inventories of raw materials, work-in-progress and finished goods are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method. The cost of raw materials comprises the original purchase price plus cost incurred in bringing the inventories to their present location. The costs of finished goods and work-in-progress comprise raw materials, direct labour, other direct costs and an appropriate proportion of production overheads. net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and applicable variable selling expenses.

Receivables receivables are reduced by the appropriate allowances for estimated irrecoverable amounts. allowance for doubtful debts is made based on estimates of possible losses which may arise from non-collection of certain receivable accounts. Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. The amount of borrowing costs eligible for capitalisation is determined based on actual interest incurred on borrowings made specifically for the purpose of obtaining a qualifying asset and less any investment income on the temporary investment of that borrowing. all other borrowing costs are recognised as finance cost in the income statement in the year in which they are incurred.

Provisions provisions for liabilities are recognised when the group has a present or contructive 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 estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

notes tothe financial

statements(cont’d)

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

Contingent liabilities and contingent assets

The group does not recognise a contingent liability but discloses its existence in the financial statements. a contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. a contingent liability also arises in the extremely rare case where there is a liability that cannot be recognised because it cannot be measured reliably. a contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the group. The group does not recognise contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain.

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 and the Company. Short term accumulating compensated absences for paid annual leave when services are rendered by employees that increase their entitlement to future compensated absences are recognised based on the experience that absences will occur.

ii) Defined contribution plan

The group and the Company are required by law to make monthly contributions to the employees provident Fund (epF), a statutory defined contribution plan for all their eligible employees based on certain prescribed rates of the employees’ salaries. The group’s and the Company’s contributions to epF are disclosed separately. The employees’ contributions to epF are included in salaries and wages.

iii) Defined benefit plans

a foreign subsidiary operates a defined retirement Benefit Scheme (“rBS”) for its eligible employees. The foreign subsidiary’s obligations under rBS are determined based on external actuarial valuation in accordance with the labour law requirements in that country where the amount of benefits that employees have earned in return for their service in the current and prior years is estimated. That benefit is discounted using the projected unit Credit Method in order to determine its present value. actuarial gains and losses are recognised as income or expense over the expected average remaining working lives of the participating employees when the cumulative unrecognised actuarial gains or losses for rBS exceed 10% of the higher of the present value of the defined benefit obligation and the fair value of plan assets. past service cost is recognised immediately to the extent that the benefits are already vested; otherwise, it is amortised on a straight-line basis over the average period until the benefits become vested.

The amount recognised in the balance sheet represents, the present value of the defined benefit obligations adjusted for unrecognised actuarial gains and losses and unrecognised past service cost, and reduced by the fair value of plan assets. plan assets resulting from this calculation are to be used only to settle the employee benefit obligations and only can be returned to the enterprise if the remaining assets of the fund are sufficient to meet the plan’s obligation to pay the related employee benefits directly.

notes tothe financial

statements(cont’d)

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

Employee benefits (cont’d)

(iv) Employees’ share option scheme (“ESOS”)

The group operates an eSoS plan for the employees of the group as set out in note 24. The fair value of the employee services received in exchange for the grant of the share options is recognised as an expense in the income statement over the vesting periods of the grant with a corresponding increase in equity. The total amount to be expensed over the vesting period is determined by reference to the fair value of the share options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). non-market vesting conditions are included in assumptions about the number of options that are expected to vest. at each balance sheet date, the group revises its estimates of the number of share options that are expected to vest. it recognises the impact of the revision of original estimates, if any, in the income statement, with a corresponding adjustment to equity.

When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.

Share capital (a) Classification

ordinary shares with discretionary dividends are classified as equity. other shares are classified as equity and/or liabilities according to the economic substance of the particular instrument.

(b) Share issue costs

Transaction costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(c) Dividends to shareholders of the Company

dividends are recognised as a liability in the period in which they are declared. Cash and cash equivalents

The group and the Company adopt the indirect method in the preparation of the cash flow statements. Cash and cash equivalents are short-term, highly liquid investments with maturities of three months or less from the date of acquisition and are readily convertible to cash with insignificant risk of changes in value.

Fair value estimation for disclosure purposes

in assessing the fair value of financial instruments, the group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. The fair value of quoted investments is based on its quoted market price at the balance sheet date. For current financial assets and liabilities, the carrying amounts are assumed to approximate their fair values because of the short maturity of these instruments. The fair value of financial liabilities is estimated by discounting the future contractual cash flows at the current market interest rate available to the group for similar financial instruments.

notes tothe financial

statements(cont’d)

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2 Summary of significant Group accounting policies (cont’d) Segment reporting

Segment reporting is presented for enhanced assessment of the group’s risks and returns. a business segment is a group of assets and operations engaged in providing products or services that are subject to risk and returns that are different from those of other business segments. a geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those components operating in other economics environment. Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. Segment revenue, expense, assets and segment liabilities are determined before intra-group balances and intra-group transactions are eliminated as part of the consolidation process, except to the extent that such intra-group balances and transactions are between group enterprises within a single segment. inter-segment pricing is based on similar terms as those available to other external parties.

3 Critical accounting judgements and key sources of estimation uncertainty

(a) Critical judgements in applying the Group accounting policies

Critical judgements in applying the group accounting policies, management is of the opinion that there are no instances of application of judgement which are expected to have a significant effect on the amounts recognised in the financial statements.

(b) Key sources of estimation uncertainty

Management believes that there are no key assumptions made concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of a causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year except for recognition of property development cost and revenue.

The group recognised property development revenue based on percentage of completion method. The percentage of completion is measured by reference to the contract costs incurred to date to the estimated total costs for the contract. The percentage of completion method requires the group to make reasonably dependable estimates of progress towards completion of property development projects and costs in determining the percentage of completion, and the recoverability of development projects. in making the estimate, management relied on opinion/service of experts, past experience and a continuous monitoring mechanism.

4 Financial risk management objective and policies

The operations of the group and of the Company are subject to a variety of financial risks, including foreign currency risk, interest rate risk, market risk, credit risk, liquidity and cash flow risk. The group and the Company have formulated a financial risk management framework whose principal objective is to minimise the group’s and the Company’s exposure to risks and/or costs associated with the financing, investing and operating activities of the group and the Company.

notes tothe financial

statements(cont’d)

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4 Financial risk management objective and policies (cont’d)

The group focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the group. Financial risk management is carried out through risk reviews, internal control systems and adherence to group financial risk management policies. The Board regularly reviews these risks and approves the treasury policies, which cover the management of these risks.

Foreign currency risk The group is exposed to foreign exchange rate risks as certain transactions are entered into by subsidiaries in currencies other than their functional currency. The Company’s foreign subsidiary enters into a cross currency swap contract to protect the group from movements in exchange rates and interest rates by establishing the rates at which a foreign currency liability will be settled. The said foreign subsidiary has an outstanding cross currency swap transaction contract with a foreign bank with termination date in november 2008 and october 2009 respectively. at 31 december 2007, the loan balance in foreign currency, the contractual foreign exchange rates and the contractual interest rates were as follows:

Currency RM’000 Contractual rate Hedged item to be paid equivalent Forex rates Interest rates

Borrowing: rp2,475,000,000 uS dollar 890 1 uSd = rp9,200 13.25% rp4,125,000,000 uS dollar 1,505 1 uSd = rp9,070 10.85% Interest rate risk

The group enters into various interest rate risk management transactions, including using a combination of fixed and floating rate loans to manage net interest rates within a predictable, desired range. The cross currency swap contract of the foreign subsidiary entitles it to pay interest at fixed rates on notional principal amounts. The foreign subsidiary agreed to receive interest rate equal to SiBor plus certain margin on the uSd amount and pay interest rate of 13.25% and 10.85% respectively on rupiah amount.

Market risk

The group has in place policies to manage the group’s exposure to fluctuation in the prices of the key raw materials used in the operations through close monitoring and buying ahead in anticipation of significant price increase, where necessary. For sales to key original equipment Manufacturing customers, the group establishes a floating raw material pricing mechanism in determining the selling price where changes in raw material component prices beyond a certain range are passed on to customers.

notes tothe financial

statements(cont’d)

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4 Financial risk management objective and policies (cont’d)

Market risk (cont’d)

For property development, the group is actively sourcing for new development land in prime locations to increase its development land bank. properties developed by the group range from affordable homes to high-end products depending on the location of the development project and the profile of its target market.

Credit risk

The group is exposed to credit risk mainly from its customer base, including trade receivables. The group extends credit to its customers based upon careful evaluation of the customer’s financial condition and credit history. Trade receivables are monitored on an ongoing basis by the group’s credit control department.

Liquidity risk

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

Cash flow risk

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

5 Revenue

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

Sale of goods 126,318 107,558 - - property development revenue 443,214 387,703 - - gross dividend income from subsidiaries: - non tax exempt - - 274,000 39,500 interest income on: - bank deposits 3,665 252 3,665 252 - advances to subsidiaries - - 3,087 2,864 rental income 168 112 - - Management fees from a subsidiary company - - 12 12

573,365 495,625 280,764 42,628

notes tothe financial

statements(cont’d)

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6 Cost of sales Group

2007 2006 RM’000 rM’000

Cost of goods sold 108,670 94,228 property development costs 279,383 260,415

388,053 354,643

included in cost of goods sold are the following:

raw materials and consumables used 83,960 66,327 Changes in inventories of finished goods and work in progress 1,996 (780)

85,956 65,547

7 Profit before tax Group Company

2007 2006 2007 2006 Note RM’000 rM’000 RM’000 rM’000

Profit before tax is arrived at after charging: Staff costs 8 38,382 29,519 4,425 792 auditors’ remuneration - current year 220 196 17 20 - (over) / under provision in prior years (3) 1 (3) 3 - non-audit fee 9 9 5 5 property, plant and equipment - depreciation 14 8,042 8,244 26 22 - written-off 127 12 - - raw materials and consumables used 83,960 66,327 - - allowance for doubtful debts: - non-trade 22 2,351 - - - - subsidiary companies - - - 16 Bad debts written off 4 - - - amortisation of licence fee 16 8 8 - - amortisation of prepaid lease payments 15 348 361 - - Changes in inventories of finished goods and work in progress 1,996 - - - impairment loss on investment in subsidiaries 17 - - - 13 rental of buildings 471 349 - - net loss on foreign exchange: - unrealised 40 291 - - - realised 181 4 - - interest expenses in development costs 6,759 3,880 - -

notes tothe financial

statements(cont’d)

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7 Profit before tax (cont’d) Group Company

2007 2006 2007 2006 Note RM’000 rM’000 RM’000 rM’000

and crediting: gain on disposal of property, plant and equipment 69 33 - -

allowance for doubtful debts no longer required : - trade receivables 22 95 70 - - allowance for inventory obsolescence no longer required 21 245 354 - - Changes in inventories of finished goods and work in progress - 780 - - reversal of provision for liabilities in respect of bank borrowing obtained by an associated company - 426 - 426 reversal of impairment losses - property, plant and equipment 14 211 317 - - - investment in subsidiaries 17 - - - 61 rental income from letting of premises * 200 495 - -

* excluding those classified as revenue in note 5.

8 Staff costs

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

Wages and Salaries 31,045 22,403 3,946 629 employees provident Fund contributions and social security costs 3,083 2,358 383 63 Short term accumulating compensated absences 378 141 81 39 pension costs - defined benefit plan (note 40 ) 227 235 - - employees’ Share option Scheme - 1,243 - 17 other staff related expenses 3,649 3,139 15 44

38,382 29,519 4,425 792

included in staff costs are directors’ remuneration for the group and of the Company respectively as further disclosed in note 38.

notes tothe financial

statements(cont’d)

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9 Interest income

Group

2007 2006 RM’000 rM’000

interest on bank deposits 14 10 interest on project accounts 359 304 interest on late payment from property buyers 933 1,033

1,306 1,347

10 Finance costs Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

interest expenses on: - term loans 11,861 11,691 2,721 2,622 - bank overdrafts 298 362 8 65 - hire purchase 470 438 - - - other borrowings 1,109 1,208 240 226

13,738 13,699 2,969 2,913 Less: interest capitalised in development properties (note 20) (7,143) (8,092) - -

6,595 5,607 2,969 2,913

11 Income tax expense

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

Current tax expense: - Local 34,325 28,722 84,645 6,591 - Foreign 595 - - - under / (over) provision in prior years 2,063 547 (739) (382)deferred taxation (note 29) : Current year (1,536) (1,675) (10,665) 4,197

35,447 27,594 73,241 10,406

notes tothe financial

statements(cont’d)

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11 Income tax expense (cont’d) a reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the group and of the Company is as follows:

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

profit before tax 117,705 93,284 271,240 38,152

Tax at Malaysian statutory tax rate @ 27% (2006 : 28%) 31,780 26,120 73,235 10,683 Tax effects of: expenses not deductible for tax purposes 1,385 1,750 745 105 Lower tax rate for small and medium companies (221) - - - effect of different tax rates in other jurisdictions 123 19 - - utilisation of deferred tax assets not previously recognised - (842) - - deferred tax assets not recognised 317 - - -

under / (over) provision in prior years 2,063 547 (739) (382)

Tax expense for the year 35,447 27,594 73,241 10,406

12 Earnings per ordinary share

(a) Basic

The earnings per ordinary share for the financial year has been calculated based on the profit attributable to ordinary equity holders of the Company for the financial year divided by the weighted average number of ordinary shares in issue during the financial year as follows:

Group

2007 2006

profit attributable to equity holders of the Company (rM’000) 81,126 65,370 Weighted average number of ordinary shares in issue (unit’000) ** 547,387 383,843 Basic earnings per ordinary share (sen) 14.82 17.03

(b) Fully diluted

The diluted earnings per share has been calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of shares that would have been in issue upon full exercise of the remaining options under the Warrants and eSoS, adjusted for the number of such shares that would have been issued at fair value as follows:

notes tothe financial

statements(cont’d)

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12 Earnings per ordinary share (cont’d)

(b) Fully diluted (cont’d)

Group

2007 2006

profit attributable to equity holders of the Company (rM’000) 81,126 65,370 Weighted average number of ordinary shares in issue (unit’000)** 547,387 383,843 Weighted average number of ordinary shares deemed issued at no consideration (unit’000)**: - Warrants 25,997 68,485 - eSoS 2,448 1,033 Fully diluted weighted average number of shares (unit’000)** 575,832 453,361

Fully diluted earnings per ordinary share (sen) 14.09 14.42

** Comparative figures for the weighted average number of ordinary shares for both basic and fully diluted earnings per

ordinary share computation have been restated to reflect the adjustment arising from the rights issue, Share Split and Bonus issue completed during the current financial year.

13 Dividend dividend proposed in respect of the current financial year ended 31 december 2007 is as follows:

Company Company

2007 2006 Gross Amount of gross amount of dividend on dividend, dividend on dividend, ordinary share net of tax ordinary share net of tax % RM’000 % rM’000

proposed first and final dividend 16 36,809 12 27,181

on 17 august 2007, the Company paid a first and final gross dividend of 12% on ordinary share, less income tax of 27%, amounting to rM27,180,889 in respect of the financial year ended 31 december 2006 as approved by the shareholders at the last annual general Meeting.

in respect of the current financial year, the directors have proposed a first and final gross dividend of 16% on ordinary share (inclusive of 425,317 ordinary shares issued after the financial year end as disclosed in note 41 to the financial statements), less income tax of 26%, estimated at rM36,808,591. The first and final dividend is subject to the approval of the shareholders at the forthcoming annual general Meeting of the Company and has not been included as a liability in the financial statements for the current financial year. Such dividend when approved by shareholders will be accounted for in equity as an appropriation of retained earnings during the financial year ending 31 december 2008.

notes tothe financial

statements(cont’d)

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notes tothe financial

statements(cont’d)

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ad

optio

n of

FrS

117

(1

0,53

1)

-

-

-

-

-

(10,

531)

as

rest

ated

-

3

4,87

6

443

8

1,96

4

4,9

55

6,6

62

128

,900

Cu

rren

cy tr

ansl

atio

n di

ffere

nces

: a

s pr

evio

usly

repo

rted

(3

37)

(590

) -

(2

,177

) (4

6)

(36)

(3

,186

)ad

optio

n of

FrS

117

3

37

-

-

-

-

-

337

a

s re

stat

ed

-

(590

) -

(2

,177

) (4

6)

(36)

(2

,849

) ad

ditio

ns

-

633

17

0

7,8

45

642

7

18

10,

008

dis

posa

ls

-

-

-

(635

) (3

65)

(16)

(1

,016

)W

ritte

n off

-

-

-

-

(7

) (1

2)

(19)

at 3

1 d

ecem

ber

-

34,

919

6

13

86,

997

5

,179

7

,316

1

35,0

24

notes tothe financial

statements(cont’d)

087

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h S

ing

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erh

ad

a

nnua

l rep

ort

2007

14

Prop

erty

, pla

nt a

nd e

quip

men

t (co

nt’d

)

A

t Cos

t/Va

luat

ion

At c

ost

2006

Plan

t,

Furn

itur

e,

m

achi

nery

fitti

ngs

and

and

fact

ory

Mot

or

office

La

nd

Build

ings

Re

nova

tion

s eq

uipm

ent

vehi

cles

eq

uipm

ent

Tota

lG

roup

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

Acc

umul

ated

dep

reci

atio

n a

t 1 Ja

nuar

y :

as

prev

ious

ly re

port

ed

3,8

96

11,

799

4

3

59,

356

2

,494

3

,454

8

1,04

2 ad

optio

n of

FrS

117

(3

,896

) -

-

-

-

-

(3

,896

)a

s re

stat

ed

-

11,

799

4

3

59,

356

2

,494

3

,454

7

7,14

6 Cu

rren

cy tr

ansl

atio

n di

ffere

nces

: a

s pr

evio

usly

repo

rted

(1

30)

(168

) -

(1

,762

) (3

4)

(25)

(2

,119

)ad

optio

n of

FrS

117

1

30

-

-

-

-

-

130

a

s re

stat

ed

-

(168

) -

(1

,762

) (3

4)

(25)

(1

,989

) Ch

arge

for t

he fi

nanc

ial y

ear :

a

s pr

evio

usly

repo

rted

3

61

1,4

90

49

5

,503

6

06

596

8

,605

ad

optio

n of

FrS

117

(3

61)

-

-

-

-

-

(361

)a

s re

stat

ed

-

1,4

90

49

5

,503

6

06

596

8

,244

d

ispo

sals

-

-

-

(6

12)

(250

) (8

) (8

70)

Writ

ten

off

-

-

-

-

(4)

(3)

(7)

at 3

1 d

ecem

ber

-

13,

121

9

2

62,

485

2

,812

4

,014

8

2,52

4

Acc

umul

ated

impa

irm

ent l

oss

at 1

Janu

ary

-

-

-

658

-

-

65

8 re

vers

al fo

r the

fina

ncia

l yea

r -

-

-

(3

17)

-

-

(317

)

at 3

1 d

ecem

ber

-

-

-

341

-

-

3

41

Net

boo

k va

lue

At 3

1 D

ecem

ber 2

006

-

21,

798

5

21

24,

171

2

,367

3

,302

5

2,15

9

notes tothe financial

statements(cont’d)

088

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ort

2007

14 Property, plant and equipment (cont’d) Analysis of buildings 2007 At valuation At cost Leasehold Leasehold Total buildings buildings Buildings buildingsGroup RM’000 RM’000 RM’000 RM’000

Cost/valuation at 1 January 6,297 19,410 9,212 34,919 Currency translation differences - (565) - (565)additions - 649 39 688 disposal - (15) - (15)

at 31 december 6,297 19,479 9,251 35,027

Accumulated depreciation at 1 January 3,350 6,343 3,428 13,121 Currency translation differences - (179) - (179)Charge for the financial year 239 909 332 1,480 disposal - (3) - (3)

at 31 december 3,589 7,070 3,760 14,419

Net book value At 31 December 2007 2,708 12,409 5,491 20,608

2006Cost/valuation at 1 January 6,297 19,557 9,022 34,876 Currency translation differences - (590) - (590)additions - 443 190 633

at 31 december 6,297 19,410 9,212 34,919

Accumulated depreciation at 1 January 3,111 5,603 3,085 11,799 Currency translation differences - (168) - (168)Charge for the financial year 239 908 343 1,490

at 31 december 3,350 6,343 3,428 13,121

Net book value

At 31 December 2006 2,947 13,067 5,784 21,798

notes tothe financial

statements(cont’d)

089

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2007

14 Property, plant and equipment (cont’d) Company 2007 Furniture Office and Fittings Equipment TotalCost RM’000 RM’000 RM’000

at 1 January 6 292 298 additions 34 20 54

at 31 december 40 312 352

Accumulated depreciation at 1 January 1 131 132 Charge for the financial year 3 23 26

at 31 december 4 154 158

Net book value At 31 December 2007 36 158 194

2006 Furniture Office and Fittings Equipment TotalCost RM’000 RM’000 RM’000

at 1 January - 248 248 additions 6 44 50

at 31 december 6 292 298

Accumulated depreciation at 1 January - 110 110 Charge for the financial year 1 21 22

at 31 december 1 131 132

Net book value At 31 December 2006 5 161 166 Valuation The leasehold buildings of a subsidiary company were valued by the directors in 1992 based on a valuation carried out by independent professional valuers on the open market value basis. The surplus arising from the revaluation amounting to rM2,040,529 has been credited to the revaluation reserve account and eliminated upon consolidation.

notes tothe financial

statements(cont’d)

090

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2007

14 Property, plant and equipment (cont’d)

The net book values of revalued leasehold buildings of the subsidiary company that would have been included in the financial statements had these assets been carried at cost less accumulated depreciation, are as follows:

Group

2007 2006Net Book Value RM’000 rM’000

Leasehold buildings 1,489 1,621 Assets with restricted title at the balance sheet date, the net book values of property, plant and equipment of the group pledged to financial institutions to secure term loans, borrowings and bank overdrafts as shown in notes 27, 31 and 32 respectively are as follows:

Group

2007 2006Net Book Value RM’000 rM’000

Freehold buildings 5,493 5,786 Leasehold buildings 8,494 8,798 plant, machinery and equipment 13,382 12,220

27,369 26,804 Assets held under hire purchase and finance lease agreements at the balance sheet date, the net book values of property, plant and equipment of the group held under hire purchase and finance leases are as follows:

Group

2007 2006Net Book Value RM’000 rM’000

plant, machinery and factory equipment 4,774 6,027Motor vehicles 3,563 1,667 Furniture, fittings and office equipment - 226

8,337 7,920

notes tothe financial

statements(cont’d)

091

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2007

15 Prepaid lease payments

Group

2007 2006Leasehold land RM’000 rM’000

Cost/valuation (2006 : Adoption of FRS 117)at 1 January 10,194 10,531 Currency translation differences (307) (337)

at 31 december 9,887 10,194

Accumulated amortisation (2006 : Adoption of FRS 117) at 1 January 4,127 3,896 Currency translation differences (130) (130)amortisation for the financial year 348 361

at 31 december 4,345 4,127

Net book value at 31 December 5,542 6,067

The unexpired portion of the leasehold land as of 31 december 2007 are within the range of 12 years to 89 years (2006 : 13 years to 90 years).

Certain prepaid lease payments on leasehold land of the group with a carrying value of rM3,970,365 (2006 : rM4,354,744) are pledged to financial institutions to secure term loan, borrowings and bank overdrafts as shown in notes 27, 31 and 32.

16 Intangible assets Group

Licence fee

2007 2006Cost RM’000 rM’000

at 1 January 82 82 (Written off)/addition - -

at 31 december 82 82

Accumulated amortisationat 1 January 54 46 amortisation for the financial year 8 8

at 31 december 62 54

Net book value at 31 December 20 28

notes tothe financial

statements(cont’d)

092

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2007

17 Investment in subsidiaries

Company

2007 2006 RM’000 rM’000

unquoted shares, at cost 72,485 67,275 Less: accumulated impairment losses (10,767) (10,767)

61,718 56,508

The following subsidiaries were acquired or incorporated during the financial year:

(a) on 15 February 2007, the Company acquired 2 ordinary shares of rM1 each representing 100% of the issued and paid-up share capital of Suria Lagenda development Sdn Bhd for a cash consideration of rM2.

(b) on 15 February 2007, the Company acquired 2 ordinary shares of rM1 each representing 100% of the issued and paid-up

share capital of ideal Sierra development Sdn Bhd for a cash consideration of rM2. (c) on 15 February 2007, the Company acquired 2 ordinary shares of rM1 each representing 100% of the issued and paid-up

share capital of enrich property development Sdn Bhd for a cash consideration of rM2. (d) on 10 May 2007, the Company acquired 2 ordinary shares of rM1 each representing 100% of the issued and paid-up share

capital of Vienna home Sdn Bhd for a cash consideration of rM2. (e) on 22 august 2007, the Company acquired 2 ordinary shares of rM1 each representing 100% of the issued and paid-up

share capital of Supreme Springs Sdn Bhd for a cash consideration of rM2.

(f ) on 19 december 2007, the Company acquired 2 ordinary shares of rM1 each representing 100% of the issued and paid-up share capital of oasis garden development Sdn Bhd for a cash consideration of rM2.

(g) on 8 June 2007, the Company incorporated a wholly owned subsidiary, Mah Sing investment Singapore pte Ltd, with paid

up share capital of Sgd1. (h) on 10 august 2007, the Company incorporated a wholly owned subsidiary, Mah Sing international Ltd with paid up share

capital of uSd1. Mah Sing international Ltd has, on the same date, incorporated a wholly owned subsidiary, Mah Sing Vietnam Ltd with paid up share capital of uSd1.

(i) on 13 december 2007, a wholly owned subsidiary company, Mah Sing international Ltd incorporated a wholly owned

subsidiary, Mah Sing Vina Ltd with paid up share capital of uSd1.

during the financial year, the issued and paid up share capital of Vienna View development Sdn Bhd, enrich property Sdn Bhd and Vienna home Sdn Bhd were increased from rM2.00 comprising 2 ordinary shares of rM1 each to rM100,000 comprising 100,000 ordinary shares of rM1 each respectively of which 69,998 ordinary shares were subscribed by the Company at cash consideration of rM69,998 in each of the said subsidiary companies.

notes tothe financial

statements(cont’d)

093

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2007

17 Investment in subsidiaries (cont’d)

during the financial year, the following wholly-owned subsidiary companies increased their issued and paid up share capital which were fully subscribed by the Company:

(a) Star residence Sdn Bhd increased its issued and paid up share capital from rM2, comprising 2 ordinary shares of rM1 each to rM1,000,000 comprising 1,000,000 ordinary shares of rM1 each at par.

(b) Loyal Sierra development Sdn Bhd increased its issued and paid up share capital from rM2, comprising 2 ordinary shares

of rM1 each to rM2,000,000 comprising 2,000,000 ordinary shares of rM1 each at par. (c) Maxim heights Sdn Bhd increased its issued and paid up share capital from rM2, comprising 2 ordinary shares of rM1

each to rM2,000,000 comprising 2,000,000 ordinary shares of rM1 each at par.

The subsidiary companies are as follows :

Country of Group’s effectiveName of company incorporation equity interest Principal activities

2007 2006 % %Subsidiary companies of Mah Sing Group Berhad Mah Sing properties Sdn Bhd Malaysia 100 100 property investment and development

Mah Sing plastics industries Sdn Bhd+ @ Malaysia 100 100 Manufacture of plastic moulded products and property development Mah Sing enterprise Sdn Bhd+ @ Malaysia 100 100 Trading of plastic and other related products Mah Sing Components Manufacturing Sdn Bhd Malaysia 100 100 inactive Jastamax Sdn Bhd Malaysia 100 100 property development Multi Synergy group Sdn Bhd Malaysia 100 100 property investment Vital routes Sdn Bhd @ Malaysia 100 100 investment holding

Champion Computers Sdn Bhd Malaysia 100 100 inactive

notes tothe financial

statements(cont’d)

094

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2007

17 Investment in subsidiaries (cont’d) Country of Group’s effectiveName of company incorporation equity interest Principal activities

2007 2006 % %Subsidiary companies of Mah Sing Group Berhad

peninsular Connection Sdn Bhd Malaysia 100 100 inactive pleasant network Sdn Bhd Malaysia 100 100 inactive insan Johan Sdn Bhd Malaysia 100 100 inactive Vital roles Sdn Bhd Malaysia 90 90 inactive Mah Sing precision engineering Sdn Bhd Malaysia 100 100 inactive Konsortium Lingkaran Lembah Kinta Sdn Bhd Malaysia 51 51 dormant gentali Motor Corpn. Sdn Bhd Malaysia 60.5 60.5 inactive Superior Focus Sdn Bhd Malaysia 80 80 inactive intramewah development Sdn Bhd Malaysia 100 100 property development Legend grand development Sdn Bhd Malaysia 100 100 property development nova Legend development Sdn Bhd Malaysia 100 100 property development nova Century development Sdn Bhd Malaysia 100 100 property development Venice View development Sdn Bhd Malaysia 100 100 property development golden Venice development (MM2h) Sdn Bhd Malaysia 100 100 inactive Loyal Sierra development Sdn Bhd Malaysia 100 100 property development Star residence Sdn Bhd Malaysia 100 100 property development Sierra peninsular development Sdn Bhd Malaysia 100 100 property development Maxim heights Sdn Bhd Malaysia 100 100 property development

notes tothe financial

statements(cont’d)

095

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2007

17 Investment in subsidiaries (cont’d) Country of Group’s effectiveName of company incorporation equity interest Principal activities

2007 2006 % %Subsidiary companies of Mah Sing Group Berhad

Vienna View development Sdn Bhd Malaysia 70 100 property development enrich property development Sdn Bhd Malaysia 70 - property development Vienna home Sdn Bhd Malaysia 70 - property development Suria Lagenda development Sdn Bhd Malaysia 100 - dormant ideal Sierra development Sdn Bhd Malaysia 100 - dormant Supreme Springs Sdn Bhd Malaysia 100 - dormant oasis garden development Sdn Bhd Malaysia 100 - dormant Mah Sing international Ltd British Virgin islands 100 - dormant Mah Sing investment Singapore pte Ltd* Singapore 100 - dormant Subsidiary companies of Mah Sing International Ltd

Mah Sing Vietnam Ltd British Virgin islands 100 - dormant Mah Sing Vina Ltd British Virgin islands 100 - dormant Subsidiary company of Mah Sing Plastics Industries Sdn Bhd Kenwira Sdn Bhd Malaysia 100 100 assembly of helmets

notes tothe financial

statements(cont’d)

096

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2007

17 Investment in subsidiaries (cont’d) Country of Group’s effectiveName of company incorporation equity interest Principal activities

2007 2006 % %Subsidiary companies of Mah Sing Properties Sdn Bhd acacia Springs Management Sdn Bhd Malaysia 100 100 property management

Mestika Kenangan Sdn Bhd Malaysia 100 100 property management

Mestika Bistari Sdn Bhd Malaysia 100 100 property development Vienna grand development Sdn Bhd Malaysia 100 100 property management Quantum noble development Sdn Bhd Malaysia 100 100 property management prima peninsular development Sdn Bhd Malaysia 100 100 property management Subsidiary company of Pleasant Network Sdn Bhd Vican Technology Sdn Bhd** Malaysia 68 68 inactive, under court winding up order Subsidiary company of Vican Technology Sdn Bhd Vican electronics Sdn Bhd # Malaysia 68 68 inactive Subsidiary company of Vital Routes Sdn Bhd p.T.Mah Sing indonesia* @ indonesia 65 65 Manufacture of plastic moulded products

* audited by other firms of auditors.

** This subsidiary company is under a court winding-up order and was deconsolidated from the group results in 2000. The cost of investment in this subsidiary company had been fully provided for.

# This company has not been consolidated as its immediate holding company was deconsolidated from the group.

+ Consolidated using merger method. @ Shares of these subsidiaries are pledged to a bank for loan facilities granted to the Company as shown in note 27.

notes tothe financial

statements(cont’d)

097

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2007

18 Investment in associates

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

Interest in associated companies: unquoted shares, at cost 936 936 225 225 Less: accumulated impairment losses - - (199) (199)group’s share of post-acquisition accumulated losses (910) (910) - -

26 26 26 26

The group’s share in the accumulated losses of associated companies as shown below has not been recognised in the group’s income statement as equity accounting ceased when the group’s share of losses of associated companies exceeded the carrying amount of its investment in the associates.

Group

2007 2006 RM’000 rM’000

Accumulated lossesas at 1 January (3,781) (3,797)Share of (loss)/profit from ordinary activities after taxation (4) 16

as at 31 december (3,785) (3,781)

details relating to the associated companies are as follows: Country of EffectiveName of company incorporation equity interest Principal activities

2007 2006 % %

Associated companies of Mah Sing Group Berhad perstorp Sdn Bhd * Malaysia 42 42 inactive

prestige greenery Sdn Bhd * Malaysia 39.5 39.5 dormant

Associated company of Peninsular Connection Sdn Bhd True Mineral Water Sdn Bhd Malaysia 50 50 inactive

* audited by other firms of auditors

notes tothe financial

statements(cont’d)

098

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2007

19 Other investment

Group

2007 2006 RM’000 rM’000

Quoted shares in Malaysia, at cost 4 4 Less: allowance for diminution in value (3) (3) 1 1

Market value of quoted shares in Malaysia 1 1

20 Property development activities (i) Land held for property development

Group

2007 2006 Note RM’000 rM’000

Freehold land at cost - -

at 1 January - 61,520 Transfer to property development costs 20(ii) - (61,520)

at 31 december - -

(ii) Property development cost

Group

2007 2006 Note RM’000 rM’000

At 1 January Land cost 488,633 309,017 development costs 944,365 666,668 Cost recognised to date: Land cost (179,626) (133,739) development costs (763,204) (548,676) 490,168 293,270

Cost incurred during the year: Land costs: Transfer from land held for property development 20(i) - 61,520 additions of land during the year 38,500 118,096 development costs 344,270 277,697 382,770 457,313

notes tothe financial

statements(cont’d)

099

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2007

20 Property Development Activities (cont’d)

Group

2007 2006 RM’000 rM’000

Cost recognised during the year: Land cost (48,938) (45,887)development costs (230,445) (214,528) (279,383) (260,415) Transfer to inventories : Land cost (4,190) - development costs (20,040) - (24,230) -

At 31 December Land cost 294,379 309,007 development costs 274,946 181,161 569,325 490,168

The titles to parcels of freehold land and freehold commercial land with a cost of rM26,389,715 and rM53,000,000 respectively which were acquired in 2006 have been transferred to the group during the financial year 2007. included in development costs is interest on borrowings capitalised during the financial year amounting to rM7,143,495 (2006: rM8,092,443). included under land cost is freehold land and leasehold land costing rM279,938,054 (2006: rM202,214,951) and rM21,237,084 (2006: 26,001,500) respectively which have been charged to certain financial institutions as security for term loans and bank overdrafts as shown in notes 27 and 32 respectively. also, a piece of leasehold land costing rM1,741,858 (2006: rM1,741,858) has been pledged as security for short-term borrowings granted to the Company as shown in note 31.

21 Inventories

Group

2007 2006 RM’000 rM’000

Completed properties 28,883 4,653 raw materials 6,792 6,826 Work-in-progress 1,703 576 Finished goods 5,640 4,199

43,018 16,254

notes tothe financial

statements(cont’d)

100

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2007

21 Inventories (cont’d) The group reversed an amount of rM245,365 (2006: rM353,776) in respect of allowance for inventory obsolescence made in prior years that was subsequently not required as the group was able to sell these inventories at above their carrying amount. inventories of a subsidiary company amounting to rM4,864,848 (2006: rM4,922,977) are pledged to financial institutions to secure foreign term loans, short-term borrowings and bank overdrafts as shown in notes 27, 31 and 32. Completed properties of subsidiary companies amounting to rM6,395,049 (2006: nil) are pledged to financial institutions to secure term loans as shown in note 27.

22 Trade and other receivables

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

Trade receivables 107,054 76,110 - - Less: allowance for doubtful debts (840) (935) - - 106,214 75,175 - - other receivables 3,681 3,126 8,340 8,091 Less: allowance for doubtful debts (2,427) (76) (8,053) (8,053) 1,254 3,050 287 38 accrued billings in respect of property development 82,498 50,860 - - amounts due from subsidiary companies - - 464,397 154,162 Tax recoverable 9,380 4,219 2,224 12,150 deposits for land acquisitions 23,611 - - - deposits for property, plant and equipment 3,669 745 - - other deposits 6,009 2,960 34 2 prepayments 1,923 2,017 24 120

234,558 139,026 466,966 166,472

The currency exposure profile of trade receivables is as follows:

Group

2007 2006 RM’000 rM’000

- ringgit Malaysia 94,234 68,802 - united States dollar 1,868 1,581 - indonesian rupiah 10,274 5,324 - Singapore dollar 678 403

107,054 76,110

notes tothe financial

statements(cont’d)

101

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2007

22 Trade and other receivables (cont’d) Trade receivables of the group amounting to rM10,830,186 (2006: rM6,130,010) are pledged to financial institutions to secure foreign term loans, short-term borrowings and bank overdrafts as shown in notes 27, 31 and 32. Trade receivables comprise amounts receivable for the sale of goods of rM24,057,860 (2006: rM18,255,595) and amounts receivable from customers for property development projects of rM82,156,429 (2006: rM56,918,755). other receivables comprise mainly balance of property management fee and duty drawback. The terms for sale of goods range from payment in advance to 90 days (2006: 90 days) credit whilst the credit term for receivables from property development is 21 days (2006: 21 days). amounts due from subsidiary companies which arose mainly from intercompany advances and payments on behalf are unsecured and interest free except for an amount of rM3,525,150 (2006: rM3,748,800) which bears interest at rates ranging between 4.46% and 5.71% (2006: 4.55% and 5.35%) per annum and advances amounting to rM167,718,799 (2006: rM114,941,335) which bear interest at 2% (2006: 2.20% to 8.50%) per annum.

Concentration of credit risk with respect to trade receivables are limited due to the group’s large number of customers, which are widely distributed and covers a broad range of end markets. The group’s historical experience in collection of accounts receivable falls within the recorded allowances. due to these factors, the management believes there is no additional credit risk beyond amounts provided for doubtful debts for the group’s trade receivables.

23 Deposits, cash and bank balances

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

Cash and bank balances 20,790 17,243 1,110 973 project accounts 29,030 18,155 - - deposits with licensed banks 153,907 7,615 153,202 7,550

203,727 43,013 154,312 8,523

The interest rates per annum for deposits and project accounts during the financial year are:

Group Company

2007 2006 2007 2006 % % % %

project accounts 2.0 2.0 - -deposits with licensed banks 2.3 - 3.5 2.1 - 3.3 2.3 - 3.5 2.1 - 2.7 deposits have an average maturity of 30 days (2006: 30 days). Bank balances are deposits held on call with licensed banks.

notes tothe financial

statements(cont’d)

102

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2007

23 Deposits, cash and bank balances (cont’d)

deposits with licensed banks of the group amounting to rM65,000 (2006: rM65,000) have been pledged as collateral for guarantees issued on behalf of a subsidiary company.

project accounts are bank accounts maintained in accordance with Section 7a of the housing developers act, 1966. These accounts, which consist of monies received from purchasers, are for the payment of property development expenditure incurred. The surplus monies, if any, will be released to the respective subsidiary companies upon the completion of the property development projects and after all property development expenditure have been fully settled. The currency exposure profile of cash and bank balances is as follows:

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

- ringgit Malaysia 203,169 42,604 154,312 8,523 - united States dollar 204 206 - - - indonesian rupiah 354 203 - -

203,727 43,013 154,312 8,523

24 Share capital

Group and Company Number of shares Par ValueOrdinary shares Unit ‘000 RM RM’000

Authorised : 2007

at 1 January 500,000 1.00 500,000 Subdivision 1 : 2 500,000 -

at 31 december 1,000,000 0.50 500,000

2006

at 1 January / 31 december 500,000 1.00 500,000

notes tothe financial

statements(cont’d)

103

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24 Share capital (cont’d)

2007 2006 Unit’000 RM’000 unit’000 rM’000

Issued and fully paid : Ordinary shares Before share split (2007 / 2006 : RM1.00 each) at 1 January 152,044 152,044 145,131 145,131 private placement 15,200 15,200 - - exercise of Warrants 37,901 37,901 6,913 6,913 rights issue 51,267 51,267 - - 104,368 104,368 6,913 6,913

256,412 256,412 152,044 152,044

After share split (2007 : RM0.50 each / 2006 : RM1.00 each) Subdivision of ordinary share of rM1.00 each into rM0.50 each 256,412 - - - exercise of Warrants 1,163 582 - - exercise of eSoS 4,699 2,350 - -Bonus issue 102,654 51,327 - - 364,928 54,259 - -

at 31 december 621,340 310,671 152,044 152,044

on 26 June 2007, the Company completed a share split exercise which involved the subdivision of one (1) ordinary share of rM1.00 each into two (2) ordinary shares of rM0.50 each (“Share Split”) and the alteration of the authorised share capital of the Company of rM500,000,000 comprising 500,000,000 ordinary shares of rM1.00 each into rM500,000,000 comprising 1,000,000,000 ordinary shares of rM0.50 each. during the financial year, the Company increased its issued and paid-up ordinary share capital from rM152,044,349 to rM310,670,715 by way of:

(a) issuance of 10,640,000 new ordinary shares of rM1.00 each at a price of rM3.30 per ordinary share pursuant to a private placement;

(b) issuance of 2,000,000 new ordinary shares of rM1.00 each at a price of rM3.70 per ordinary share pursuant to a private

placement; (c) issuance of 2,560,000 new ordinary shares of rM1.00 each at a price of rM3.95 per ordinary share pursuant to a private

placement; (d) issuance of 51,267,197 new ordinary shares of rM1.00 each at an issued price of rM3.30 per ordinary share pursuant to

the renounceable rights issue on the basis of one (1) rights share for every four (4) existing ordinary shares held (“rights issue”);

notes tothe financial

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24 Share capital (cont’d)

(e) issuance of 37,901,140 new ordinary shares of rM1.00 each at an exercise price of rM1.00 per ordinary share pursuant to the exercise of Warrants prior to Share Split;

(f ) issuance of 1,163,010 new ordinary shares of rM0.50 each at an exercise price of rM0.50 per ordinary share pursuant to

the exercise of Warrants after Share Split; (g) issuance of 4,699,294 new ordinary shares of rM0.50 each at an exercise price of rM0.77 per ordinary share pursuant to

the exercise of share options under the Company’s employees’ Share option Scheme, after Share Split; and

(h) issuance of 102,653,753 new ordinary shares of rM0.50 each pursuant to the bonus issue on the basis of one (1) new ordinary share of rM0.50 each for every five (5) ordinary shares of rM0.50 held, by way of capitalisation of rM51,326,876 from the share premium account of the Company (“Bonus issue”).

The new ordinary shares issued rank pari passu with the then existing ordinary shares of the Company. The related share premium arising from the aforementioned share issues amounting to rM102,804,705 has been credited to the share premium account during the financial year.

Warrants The Warrants 2004/2009 (“Warrants”) are constituted by a deed poll dated 2 april 2004 (“deed poll”).

The salient features of the Warrants 2004/2009 are as follows:

(a) The issue date of the Warrants is 7 June 2004 and the expiry date is 6 June 2009. any Warrants not exercised at the expiry date will lapse and cease to be valid for any purpose;

(b) each Warrant entitles the registered holder to subscribe for one (1) new ordinary share of rM1.00 in the Company at an

exercise of rM1.00 per ordinary share before the Share Split and to subscribe for one (1) new ordinary share of rM0.50 in the Company at an exercise of rM0.50 per ordinary share after the Share Split;

(c) The exercise price and the number of Warrants are subject to adjustments in the event of alteration to the share capital of the Company in accordance with the provisions in the deed poll. however, no adjustment shall be made in any event whereby the exercise price would be reduced to below the par value of ordinary share in the Company;

(d) The Warrant holders are not entitled to participate in any distribution and/or offer of further securities in the Company (except for the issue of new warrants pursuant to adjustment as mentioned in item (c) above), until and unless such holders exercise the rights under the Warrants to subscribe for new ordinary shares; and

(e) The new ordinary shares to be issued upon exercise of the Warrants shall, upon allotment and issue, rank pari passu with the then existing ordinary shares, including the entitlement to dividends, rights, allotments or other distributions, except that they will not be entitled to the rights, allotments or other distributions, declared by the Company which entitlement thereof precedes the allotment date of the new ordinary shares allotted pursuant to the exercise of the Warrants.

during the financial year ended 31 december 2007, the number of Warrants have been adjusted in accordance with the provisions in the deed poll (as mentioned in item (c) above) as a result of the rights issue, Share Split and Bonus issue. Save for the adjustment in exercise price arising from Share Split as mentioned in item (b) above, there is no other adjustment in exercise price. The movements in the Company’s Warrants are as follows:

notes tothe financial

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24 Share capital (cont’d)

Warrants (cont’d)

2007 2006Before Share Split Unit’000 unit’000

Warrants over ordinary shares (2007/2006 : RM1.00 each) at 1 January 41,459 48,372 exercised (37,901) (6,913)adjusted for rights issue 264 -

3,822 41,459 After Share Split Warrants over ordinary shares (2007 : RM0.50 each/2006 : RM1.00 each) adjusted for Share Split 3,822 - adjusted for Bonus issue 1,440 - exercised (1,163) -

at 31 december 7,921 41,459

Employees’ share option scheme The Company implemented an employees’ Share option Scheme (“eSoS”) which is governed by the eSoS By-Laws (“By-Laws”) and was approved by the shareholders at the extraordinary general Meeting held on 8 March 2004. The salient features of the eSoS are as follows:

(a) The eSoS was implemented on 12 July 2004, and shall be in force for a period of 5 years (“initial period”), subject however to any extension or renewal, at the discretion of the option Committee, provided that the initial period and such extended period shall not in aggregate exceed a period of 10 years;

(b) The total number of new shares to be offered pursuant to the exercise of options granted under the eSoS (“option”) shall

be subject to a maximum of 10% of the Company’s issued and paid-up share capital at the time of the offer; (c) employees (including executive directors) of the Company or its subsidiary companies shall be eligible to participate in

the eSoS, if as at the date of offer, the employee: (i) has attained the age of eighteen (18) years; (ii) is employed full-time by and on the payroll of the Company or its subsidiary companies; and (iii) is a confirmed employee of the Company or its subsidiary companies.

The allocation criteria of new ordinary shares comprising in the options to eligible employees shall be determined at the discretion of the option Committee. The participation of an executive director of the Company in the eSoS shall be approved by the shareholders of the Company in the general meeting;

notes tothe financial

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24 Share capital (cont’d)

Employees’ share option scheme (cont’d)

(d) The price payable upon exercise of an option shall be based on the weighted average market price of the Company’s shares as shown in the daily official List of the Bursa Malaysia Securities Berhad for the five (5) market days immediately preceding the date of offer with an allowance of a discount of not more than 10%, or at the par value of the Company’s share, whichever is higher;

(e) in the event that a share buy-back exercise of the Company results in the number of options that have been offered under the eSoS exceeding 10% of the issued capital of the Company, there shall be no granting of additional options at any point in time after the share buy-back, unless the number of options that have been granted under the eSoS falls below 10% of the issued capital of the Company;

(f ) The new ordinary shares to be issued upon exercise of the options shall, upon allotment and issue, rank pari passu with the then existing ordinary shares, including the entitlement to dividends, rights, allotments or other distributions, except that they will not be entitled to the rights, allotments or other distributions, declared by the Company which entitlement thereof precedes the allotment date of the new ordinary shares allotted pursuant to the exercise of the options; and

(g) The exercise price and the number of new ordinary shares comprised in the options are subject to adjustment in the event of alteration to the share capital of the Company in accordance with the provisions in the By-Laws. however, no adjustment shall be made in any event whereby the exercise price would be reduced to below the par value of ordinary share in the Company.

during the financial year ended 31 december 2007, the exercise price and number of options over ordinary shares have been adjusted in accordance with the provisions in the By-Laws (as mentioned in item (g) above) as a result of the rights issue, Share Split and Bonus issue. The adjustments in exercise price of eSoS are as follows: Exercise price per Option On Offer After Rights After Share After BonusOffer Date Date Issue Split Issue RM RM RM RM

9 June 2006 2.00 1.86 0.93 0.77

The movements in the Company’s options are as follows:

2007 2006Before Share Split Unit’000 unit’000

Options over ordinary shares of RM1.00 each (2006 : RM1.00 each) at 1 January 2007 2,453 - granted - 2,453 Cancelled (91) - adjusted for rights issue 172 -

2,534 2,453

notes tothe financial

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24 Share capital (cont’d)

Employees’ share option scheme (cont’d)

2007 2006After Share Split Unit’000 unit’000

Options over ordinary shares of RM0.50 each (2006 : RM1.00 each) adjusted for Share Split 2,534 - adjusted for Bonus issue 1,014 - exercised (4,699) - Cancelled (46) -

at 31 december 2007 1,337 2,453

25 Reserves

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

non- distributable reserves: Share premium (note 24) 133,908 31,104 133,908 31,104 equity-settled employees benefit reserve 259 1,243 259 1,243 exchange fluctuation reserve 4,256 5,092 - -

138,423 37,439 134,167 32,347

Group

Employees’ share option scheme

on 9 June 2006, 2,452,800 employees’ share options were granted to eligible employees of the group at fair value of 50.69 sen per option. accordingly, the group and the Company recognised total employees’ share option expenses of rM1,243,324 and rM17,235 respectively in the financial year ended 2006. The fair value per option was calculated using the Black-Scholes pricing Model based on the following factors:- 2006 Weighted average share price rM 2.18 exercise price rM 2.00 expected volatility 45% expected life 1 to 3 yearsrisk free rate 4.06% - 4.38% expected dividend yield 6% expected volatility was determined by calculating the historical volatility of the Company’s share price over the previous 12 months. The expected life used in the model is based on the assumption that eSoS is exercised equally after 1, 2 and 3 years, for the effects of non-transferability, exercise restrictions and behavioural consideration.

The options outstanding at the end of the year have a remaining contractual life of 1.5 years (2006 : 2.5 years).

notes tothe financial

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26 Retained earning Company

as at 31 december 2007, the Company has tax exempt profits available for distribution of approximately rM7,684,160 (2006: rM7,684,160), subject to the agreement of the inland revenue Board. Based on the prevailing tax rate applicable to dividends and the estimated tax credits and the tax exempt account balances, the entire retained earnings of the Company as of 31 december 2007 are available for distribution by way of cash dividends without incurring additional tax liabilities.

27 Term loans

Group Company

2007 2006 2007 2006Secured RM’000 rM’000 RM’000 rM’000

Term loans (a) 133,002 77,365 35,771 30,517 Bridging loans (b) 10,506 14,544 - - Foreign term loans (c) 5,601 6,377 - -

149,109 98,286 35,771 30,517

The term loans are repayable as follows:

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

Current portion: repayable not later than 1 year (under current liabilities) 6,125 24,890 586 629 Non-current portion: repayable later than 1 year and not later than 2 years 83,235 16,983 10,335 1,259 repayable later than 2 years and not later than 5 years 59,749 56,413 24,850 28,629 non-current portion 142,984 73,396 35,185 29,888

149,109 98,286 35,771 30,517

notes tothe financial

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27 Term loans (cont’d) (a) Term loans

Group

as of 31 december 2007, the group has term loans obtained from certain local licensed banks totalling rM359,383,666 (2006: rM162,985,169).

The term loans are secured by way of first and second legal charges, deed of assignment, specific debenture and assignment of right over the development lands and completed properties of the group and guaranteed by the Company.

Company

as of 31 december 2007, the Company has term loans obtained from certain local licensed banks totalling rM64,070,542 (2006: rM30,517,011). The term loans are secured by way of legal charges, specific debenture and assignment of right over the certain development lands and completed properties of subsidiary companies and pledge of shares of the subsidiaries as shown in note 17.

(b) Bridging loans

as of 31 december 2007, the group has bridging loans obtained from local licensed banks totalling rM63,012,500 (2006: rM39,000,000). The bridging loans are secured by way of legal charges and specific debenture over the development lands of its subsidiary companies, negative pledge over the present and future assets of the group and guaranteed by the Company.

(c) Foreign term loans

as of 31 december 2007, a foreign subsidiary has foreign term loans obtained from certain foreign licensed banks totalling rM5,601,298 (2006: rM6,376,923).

The foreign term loans are secured by way of a fixed charge over certain plant, machinery and equipment and negative pledges over the present and future assets of a foreign subsidiary.

The currency exposure profile of the term loans is as follows:

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

united States dollar 3,154 2,000 - - indonesian rupiah 2,447 4,377 - - ringgit Malaysia 143,508 91,909 35,771 30,517

149,109 98,286 35,771 30,517

notes tothe financial

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27 Term loans (cont’d)

during the year the interest rates were in the following range :

Group Company

2007 2006 2007 2006 % % % %

Foreign currency facilities: - united States dollar 6.25 - 8.50 8.50 - - - indonesian rupiah 11.50 - 14.25 10.75 - 17.00 - - Local currency 5.55 - 8.50 7.25 - 8.50 5.80 - 8.50 8.00 - 8.50

28 Long-term and deferred payables

Group

2007 2006 RM’000 rM’000

Finance lease and hire purchase liabilities 2,396 2,725 retirement benefit obligations (note 40) 760 575 payables for acquisition of land 49,420 56,018

52,576 59,318 Finance lease and hire purchase liabilities Minimum finance lease and hire purchase payments: - not later than 1 year 2,681 2,799 - later than 1 year and not later than 5 years 2,726 3,259

5,407 6,058 Future finance charges on finance lease and hire purchase liabilities (741) (960)

principal of finance lease and hire purchase liabilities 4,666 5,098 principal of finance lease and hire purchase liabilities: - not later than 1 year (shown under current liabilities-note 30) 2,270 2,373 - later than 1 year and not later than 5 years 2,396 2,725

4,666 5,098

notes tothe financial

statements(cont’d)

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28 Long-term and deferred payables (cont’d) it is the group’s policy to acquire certain property, plant and equipment under finance lease and hire-purchase arrangements. The average term for finance lease and hire-purchase is between 3 to 5 years. For the financial year ended 31 december 2007, the average effective borrowing rate was 7.12% (2006: 7.19%) per annum. interest rates are fixed at the inception on the hire-purchase arrangements. The group’s finance lease and hire-purchase payables are secured by assets acquired under finance lease and hire-purchase agreements as disclosed under note 14. Payables for acquisition of land

Group

2007 2006 RM’000 rM’000

repayable according to the terms in the sales and purchase agreements: - not later than 1 year (shown under current liabilities-note 30) 63,697 88,734 - later than 1 year and not later than 5 years 49,420 56,018

113,117 144,752

The amount payables for acquisition of land by wholly-owned subsidiary companies are interest free. The amount payable for acquisition of lands by wholly-owned subsidiary companies of rM49,420,342 (2006:rM49,420,342) is secured by bank guarantee. in 2006, the amount payable for acquisition of lands by wholly-owned subsidiary companies of rM70,131,240 is secured by corporate guarantee from the Company.

29 Deferred tax

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

at 1 January 1,543 3,218 10,665 6,468 Transfer (to) / from income statement (note 11) (1,536) (1,675) (10,665) 4,197

at 31 december 7 1,543 - 10,665

notes tothe financial

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29 Deferred tax (cont’d) deferred tax assets and liabilities recognised in the balance sheet are as follows:

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

Tax effects of: Temporary differences in respect of : - property, plant and equipment 745 594 - - - property development expenditure 258 2,030 - - - payables (996) (1,081) - - - recognition of dividends proposed by wholly owned subsidiary companies - - - 10,665

7 1,543 - 10,665

details of net deferred tax assets pertaining to certain subsidiary companies which have not been recognised in the financial statements are as follows:

Group

2007 2006 RM’000 rM’000

Tax effects of:Temporary differences in respect of:- property, plant and equipment (2,662) (2,146)- property development expenditure 3,422 2,123 - others 1,370 682 unutilised tax losses 4,904 4,948 unabsorbed capital allowances 2,996 4,106

deferred tax assets - net 10,030 9,713

The unutilised tax losses and unabsorbed capital allowances in Malaysia are available for offset against future taxable profits of the subsidiaries.

The unutilised tax losses and unabsorbed capital allowances are subject to agreement by the tax authorities.

notes tothe financial

statements(cont’d)

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30 Trade and other payables

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

Trade payables 108,662 81,076 - - payable for acquisition of land (note 28) 63,697 88,734 - - retention sum 44,922 40,006 - - other payables 8,842 4,666 - -

226,123 214,482 - - progress billings in respect of property development 11,529 1,703 - - Finance lease and hire purchase liabilities (note 28) 2,270 2,373 - - amounts due to subsidiary companies - - 33,134 2,860 amounts due to associated companies 110 110 - - amounts due to a minority shareholder of subsidiary companies 2,124 1,848 - - payable for acquisition of property, plant and equipment 6,571 3,550 - - deposits received from customers 507 1,730 - - accrued operating expenses 9,616 7,203 1,474 873

258,850 232,999 34,608 3,733

The terms of payment for trade payables and other payables granted to the group range from cash basis to 90 days (2006: 90 days) credit. amounts payable for acquisition of property, plant and equipment are denominated in Japanese Yen (2006: Japanese Yen) and interest-free.

amounts due to subsidiary companies which are unsecured and interest free, arose mainly from inter-company advances and payments on behalf and have no fixed terms of repayment. amounts due to associated companies are unsecured, interest free and have no fixed terms of repayment. amount due to minority shareholder of a subsidiary company is unsecured, bears interest at rates varying between 4.46% and 5.71% (2006: 4.55% and 5.35%) per annum and has no fixed terms of repayment.

The currency exposure profile of trade payables including retention sum and other payables are as follows:

Group

2007 2006 RM’000 rM’000

- ringgit Malaysia 218,583 209,728 - united States dollar 7,540 4,754

226,123 214,482

notes tothe financial

statements(cont’d)

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31 Short-term borrowings

Group Company

2007 2006 2007 2006Secured: RM’000 rM’000 RM’000 rM’000

Foreign revolving credits 1,892 3,398 - - revolving credits - 9,992 - 6,192

1,892 13,390 - 6,192

Unsecured: revolving credits 3,500 6,500 - - Bankers acceptances 2,440 2,650 - -

5,940 9,150 - -

Total 7,832 22,540 - 6,192

Group as of 31 december 2007, the group has revolving credit facilities obtained from local and foreign licensed banks totalling rM38,300,000 (2006: rM37,293,000) and rM7,114,339 (2006: rM4,178,000) respectively. The secured foreign revolving credit facilities obtained by a subsidiary company are secured by legal charges over leasehold land and buildings, plant, machinery and equipment, inventories and trade receivables of the said subsidiary company.

The secured local revolving credit facilities are secured by first and second fixed legal charges over the completed properties owned by a wholly owned subsidiary company.

Both unsecured local revolving credits and bankers acceptances are granted on negative pledges over the present and future assets of the respective subsidiary companies and are guaranteed by the Company.

The borrowings bear interest at floating rates and their fair values approximate their carrying values at balance sheet date.

Company as of 31 december 2007, the Company has short term credit facilities obtained from local licensed banks totalling rM6,000,000 (2006: rM6,193,000),which is secured by first and second fixed legal charge over the completed properties owned by a wholly owned subsidiary company. The secured revolving credit of rMnil (2006: rM192,262) is repayable on demand and will not be available for further drawdown after the repayment.

notes tothe financial

statements(cont’d)

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31 Short-term borrowings (cont’d) The currency exposure profile of the short term borrowings is as follows:

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

united States dollar 662 1,056 - - indonesian rupiah 1,230 2,342 - - ringgit Malaysia 5,940 19,142 - 6,192

7,832 22,540 - 6,192

during the year, the interest rates were in the following range :

Group Company

2007 2006 2007 2006 % % % %

Foreign revolving credits : - united States dollar 8.50 8.50 - -- indonesian rupiah 11.50 - 14.25 15.50 - 17.00 - -Local bankers acceptances 4.11 - 5.60 3.70 - 5.90 - -Local revolving credits 5.10 - 5.75 5.15 - 7.35 - 5.30 - 6.20

32 Bank overdrafts The currency exposure profile of the bank overdrafts is as follows:

Group

2007 2006 RM’000 rM’000

Secured Foreign - indonesian rupiah 385 195 Local - ringgit Malaysia - 448

385 643

notes tothe financial

statements(cont’d)

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32 Bank overdrafts (cont’d) The above overdrafts bear interest at floating rates in the following range :

Group

2007 2006 % %

Foreign bank overdrafts - indonesian rupiah 11.50 - 14.25 15.50-17.00Local bank overdrafts 7.75 - 8.75 7.75 - 8.75 Group as of 31 december 2007, the group has secured overdraft facilities obtained from local and foreign licensed banks totalling rM12,950,000 (2006: rM9,950,000) and rM702,835 (2006: rM780,000) respectively. The secured local bank overdrafts of the group are secured by legal charges over a building and certain pieces of mixed development land and specific debenture over the said development land. The secured foreign bank overdrafts are secured by certain fixed assets, inventories and trade receivables. Company as of 31 december 2007, the Company has unsecured overdraft credit facilities obtained from local licensed banks totalling rMnil (2006: rM3,000,000). The unsecured bank overdraft facility is granted on negative pledges over the present and future assets of the Company.

33 Cash and cash equivalents Cash and cash equivalents at the end of the financial year comprise the following balance sheet items:

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

Cash and bank balances 20,790 17,243 1,110 973 project accounts 29,030 18,155 - - deposits with licensed banks 153,907 7,615 153,202 7,550 Bank overdrafts (note 32) (385) (643) - -

203,342 42,370 154,312 8,523 Less: deposits pledged as collateral (note 23) (65) (65) - -

203,277 42,305 154,312 8,523

notes tothe financial

statements(cont’d)

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34 Contingent liabilities

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

Corporate guarantees issued to financial institutions in respect of credit facilities granted to subsidiary companies - - 113,677 74,791 Corporate guarantees issued to third parties in respect of: - acquisition of property, plant and equipment - - - - - acquisition of development land - - - 70,131

- - 113,677 144,922

in the ordinary course of business, certain companies within the group are defendants in various legal actions for breach of contracts and claims for service rendered which have no material impact. in the opinion of the directors, after taking appropriate legal advice, the outcome of such actions are remote and therefore, no provisions have been made in the financial statements.

35 Segmental information The group is organised into two main business segments: i) properties - investment, construction, management and development of residential, commercial and industrial properties ii) plastics - manufacture, assembly and sale of a range of plastic moulded products other operations of the group include investment holding operations which are not of a sufficient size to be reported separately. inter-segment revenue comprise dividend income, interest charges and management fee which are undertaken on an arms length basis.

notes tothe financial

statements(cont’d)

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35 Segmental information (cont’d) (a) Primary reporting format - business segments 2007 Properties Plastics Others Group RM’000 RM’000 RM’000 RM’000

Revenue Segment revenue 443,382 126,318 280,940 850,640 inter-segment revenue - - (277,275) (277,275)

443,382 126,318 3,665 573,365

Results Segment results 117,155 9,140 275,805 402,100 inter-segment results - - (279,106) (279,106)

117,155 9,140 (3,301) 122,994

interest income 1,306 Finance costs (6,595)

profit before tax 117,705 income tax expenses (35,447)

profit for the year 82,258

Other information Capital expenditure 3,254 7,491 54 10,799 depreciation and amortisation 1,630 6,742 26 8,398 reversal of impairment loss - property, plant and equipment - (211) - (211) Consolidated Balance Sheet Segment assets 853,105 92,372 155,241 1,100,718 investment in associates - - 26 26 unallocated assets 9,380

Total assets 853,105 92,372 155,267 1,110,124

Segment liabilities 380,751 34,104 2,024 416,879 unallocated liabilities 57,473

Total liabilities 380,751 34,104 2,024 474,352

notes tothe financial

statements(cont’d)

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35 Segmental information (cont’d) (a) Primary reporting format - business segments (cont’d)

2006 Properties Plastics Others Group RM’000 RM’000 RM’000 RM’000

Revenue Segment revenue 387,815 107,558 42,571 537,944 inter-segment revenue - - (42,319) (42,319)

387,815 107,558 252 495,625 Results Segment results 93,613 5,378 41,024 140,015 inter-segment results - - (42,471) (42,471)

93,613 5,378 (1,447) 97,544

interest income 1,347 Finance costs (5,607)

profit before tax 93,284 income tax expenses (27,594)

profit for the year 65,690 Other informationCapital expenditure 1,327 8,630 51 10,008 depreciation and amortisation 1,331 7,260 22 8,613 reversal of impairment loss - property, plant and equipment - (317) - (317) Consolidated Balance Sheet Segment assets 652,886 80,873 8,738 742,497 investment in associates - - 26 26 unallocated assets 4,219

Total assets 652,886 80,873 8,764 746,742 Segment liabilities 321,987 28,768 2,007 352,762 unallocated liabilities 73,681

Total liabilities 321,987 28,768 2,007 426,443 Segment assets consist of property, plant and equipment, intangible assets, land held for property development, inventories, property development cost, investments, current assets that are used in the operating activities of the segment and excluding current tax assets. Segment liabilities include trade payables, other payables and accrued liabilities and exclude items such as taxation and borrowings. Capital expenditure comprise additions to property, plant and equipment.

notes tothe financial

statements(cont’d)

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35 Segmental information (cont’d)

(b) Secondary reporting format - geographical segments With the exception of a manufacturing set up for plastic moulded products in indonesia, the entire group’s operations are located in Malaysia. The following is an analysis of the group’s external sales by location of customers, irrespective of the origin of the goods/services: Sales revenue by geographical market

2007 2006 RM’000 rM’000

Malaysia 510,947 449,930 Indonesia 52,738 38,420 Other countries 9,680 7,275

573,365 495,625 The following is an analysis of the carrying amount of segment assets and capital expenditure by geographical areas in which the assets are located: Carrying amount of Carrying amount of segment assets capital expenditure 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000

Malaysia 1,055,634 706,372 6,176 2,574 Indonesia 45,084 36,125 4,623 7,434

1,100,718 742,497 10,799 10,008

36 Operating lease commitments

non-cancellable operating lease commitments for rental of premises are as follows:

2007 2006

Future Future Future Future minimum minimum minimum minimum lease sub-lease lease sub-lease payments receipts payments receipts

Group RM’000 RM’000 RM’000 RM’000

- not later than 1 year 78 - 59 33

notes tothe financial

statements(cont’d)

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37 Land acquisition commitments

Group

2007 2006 RM’000 rM’000

Contractual commitments to purchase development land: - Mukim of dengkil, daerah Sepang, Selangor darul ehsan 20,558 - - Mukim 12, daerah Barat daya, negeri pulau penang 97,101 -

117,659 -

38 Related party disclosures a) Significant related party disclosures during the financial year are as follows:

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

Transactions with directors of the Company Transaction value (i) rental expenses paid to principal View Sdn Bhd 317 242 - - (ii) Maintenance charges paid to harian Madu Sdn Bhd 156 156 - - (iii) Sales of properties to dato’ Sri Leong hoy Kum - 5,000 - - (iv) Sales of a property to Leong Yuet Mei and Kwong Yat Tung 2,500 - - - Balance Outstanding (i) Sales of properties to dato’ Sri Leong hoy Kum - 4,500 - - Related party and relationship Name of related party Relationship (i) principal View Sdn Bhd - Company in which dato’ Sri Leong hoy Kum has substantial financial interest

(ii) harian Madu Sdn Bhd - Company in which two directors are brothers-in-law to dato’ Sri Leong hoy Kum (iii) dato’ Sri Leong hoy Kum - director of the Company (iv) Leong Yuet Mei - director of the Company and sister to dato’ Sri Leong hoy Kum (v) Kwong Yat Tung - Son of Leong Yuet Mei

notes tothe financial

statements(cont’d)

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38 Related party disclosures (cont’d) b) Key management personnel compensation

Group Company

2007 2006 2007 2006 RM’000 rM’000 RM’000 rM’000

Directors directors’ fees 150 150 150 150 other emoluments 3,973 2,722 2,227 - Benefits-in-kind 201 147 123 109

Total short-term employment benefits 4,324 3,019 2,500 259 post employment benefits: - epF 463 322 267 - - employees’ Share options - 366 - -

4,787 3,707 2,767 259

Other key management personnel remuneration 1,927 482 780 - Benefits-in-kind 100 35 50 -

Total short-term employment benefits 2,027 517 830 - post employment benefits: - epF 250 82 94 - - employees’ Share options - 137 - -

2,277 736 924 -

Total Compensation 7,064 4,443 3,691 259

Movements in share options granted under the eSoS to key management personnel during the financial year are as follows: 2007 2006 Unit’000 unit’000

Directors at 1 January 898 - granted - 898 adjusted 1,413 - exercised (1,404) -

at 31 december 907 898

Other key management personnel at 1 January 271 - granted - 271 adjusted 427 - exercised (551) -

at 31 december 147 271

notes tothe financial

statements(cont’d)

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39 Financial instruments Estimated fair values The carrying amounts of the financial assets and liabilities of the group and Company at the balance sheet date approximate their fair values except as set out below:

Group

Note Carrying amount Fair value RM’000 RM’000

At 31 December 2007 Finance lease and hire purchase liabilities 28 4,666 4,545

Payable for acquisition of land 28 113,117 102,499

Term loan with cross currency swap 4 2,395 2,416

at 31 december 2006

Finance lease and hire purchase liabilities 28 5,098 5,257

payable for acquisition of land 28 144,752 126,078

Term loan with cross currency swap 4 1,980 2,089

The method by which fair value information was determined and the significant assumptions made in its application are as follows: i) Finance lease and hire purchase liabilities

Financial liabilities, future contractual cash flows discounted at current market interest rates available for similar financial instruments.

ii) Payable for acquisition of land

payable for acquisition of land, future contractual cash flows discounted at current market interest rates available for similar financial instruments.

iii) Term loan with cross currency swap

estimated based on the carrying amount at the loans adjusted for the fair value of the cross currency swap contract which is based on market price at the balance sheet date.

Save for the term loan with cross currency swap as mentioned under item (iii) above, the group’s long term loan bear interest at floating rate and hence their carrying amount approximates fair value.

it is not practical to estimate the fair values of inter-company collectible and payables due principally to the absence of fixed repayment terms.

notes tothe financial

statements(cont’d)

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40 Retirement benefit obligations a foreign subsidiary operates an unfunded defined retirement Benefit Scheme (“the Scheme”) for its eligible employees. The amounts recognised in the balance sheet are determined as follows:

Group

2007 2006 RM’000 rM’000

present value of benefit obligations 1,176 904 unrecognised actuarial losses (266) (155)unrecognised past service cost - non vested (150) (174)

760 575

The amounts recognised in the income statement are as follows:

Group

2007 2006 RM’000 rM’000

Current service cost 142 105 interest on obligation 89 82 net actuarial losses recognised in year 12 7 amortisation of past service cost -non vested 8 8 unrealised foreign exchange gain (24) 33

Total included in staff cost (note 8 ) 227 235

The group charge for the year of rM227,684 (2006: rM234,929) has been included in the administrative expenses. Movements in the net liability in the current year are as follows:

Group

2007 2006 RM’000 rM’000

at 1 January 575 372 Currency translation differences (42) (32)amounts recognised in the income statement 227 235

at 31 december 760 575

principal actuarial assumptions used:

Group

2007 2006

discount rate 10.50% 11.00%expected return on plan assets N/A n/aexpected rate of salary increase 9.00% 9.00%

notes tothe financial

statements(cont’d)

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41 Subsequent events

a) Subsequent to 31 december 2007, the issued and paid up share capital of the Company was increased from rM310,670,715 to rM310,883,373 by way of:

i) issuance of 230,332 new ordinary shares of rM0.50 each at an exercise price of rM0.50 per ordinary share pursuant

to the exercise of Warrants; and

ii) issuance of 194,985 new ordinary shares of rM0.50 each at an exercise price of rM0.77 per ordinary share pursuant to the exercise of eSoS.

b) on 3 January 2008, the Company’s wholly-owned subsidiary, Mah Sing properties Sdn Bhd, entered into the respective sale and purchase agreements with eight (8) vendors for the proposed acquisition of eight (8) pieces of contiguous prime freehold land located in Kangkar pulai, Mukim Senai-Kulai, Johor Bahru, measuring approximately 60.43 acres for a total cash consideration of rM21,095,853.

42 Comparative figures

Certain comparative figures have been restated upon adoption of FrS 117: As Previously Effects on As Stated FRS 117 RestatedGroup Note RM RM RM

Balance sheet as at 31 December 2006 i) property plant and equipment 15 58,226 (6,067) 52,159 - net book value ii) prepaid lease payment 16 - 6,067 6,067 Income Statement for the financial year ended 31 December 2006 i) depreciation of property, plant and equipment 7 8,605 (361) 8,244 ii) amortisation of prepaid lease payment 7 - 361 361

notes tothe financial

statements(cont’d)

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statement by directors

We, Jen. (r) Tan Sri Yaacob bin Mat Zain and dato’ Sri Leong hoy Kum, being two of the directors of Mah Sing group Berhad, state that, in the opinion of the directors, the financial statements set out on pages 57 to 125 are drawn up so as to give a true and fair view of the state of affairs of the group and the Company as at 31 december 2007 and of the results and cash flows of the group and the Company for the financial year ended on that date in accordance with the applicable Malaysian accounting Standards Board approved accounting Standards in Malaysia and the provisions of the Companies act, 1965.

Signed on behalf of the Board in accordance with a resolution of the Board of directors dated 28 February 2008. Jen. (R) Tan Sri Yaacob bin Mat Zain Dato’ Sri Leong Hoy Kumdirector director

i, ng poh Seng, being the director primarily responsible for the financial management of Mah Sing group Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 57 to 125 are 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. Ng Poh Seng Subscribed and solemnly declared at Kuala Lumpur this Before me: Commissioner for oaths

statutory declaration

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properties owned

by the group as at 31 december 2007

Location Description DateofAcquisition/ Tenure LandArea NetBookValue DateofValuation (Acre) (RM)

Lot 9, Lingkaran Sultan Mohamed 1 industrial Building 8-aug-1992 Leasehold 7.0 8,194,335 Kawasan perindustrian (age: 16 years) (expiring on Bandar Sultan Suleiman 2-Mar-2019)42000 port KlangSelangor darul ehsan

Wisma Mah Sing 31 units office lots 1995 Freehold - 5,493,186 163 Jalan Sungai Besi (age: 12 years)57100 Kuala Lumpur

Kawasan industri Jababeka industrial Building 25-Jun-1997 Leasehold 5.2 9,211,879 J1 Jababeka XiiB, Blok W17-20 (age: 10 years) (expiring on Cikarang industrial estate 29-Jun-2022)Bekasi, indonesia

Lot pT 38513 Seksyen u5 Workers dormitory 12-dec-1997 Leasehold 1.4 3,251,761 Mah Sing integrated (age: 10 years) (expiring on industrial park 11-dec-2096)40150 Shah alamSelangor darul ehsan

Sri pulai perdana Mixed 23-Feb-2000 Freehold 53.0 16,592,481 Mukim pulai developmentdaerah Johor Bahru LandJohor darul Takzim

austin perdana Mixed 30-Jun-2003 Freehold 37.3 9,907,098 Mukim Tebrau developmentdaerah Johor Bahru LandJohor darul Takzim

aman perdana Mixed 2-apr-2004 Freehold 76.4 22,820,795 Mukim Kapar developmentdaerah Klang LandSelangor darul ehsan

Sierra perdana Mixed 21-dec-2005 Freehold 227.3 55,805,566 Mukim plentong developmentdaerah Johor Bahru LandJohor darul Takzim

one residence residential 20-Mar-2006 Freehold 9.9 10,927,518 Mukim pekan Cheras developmentdaerah hulu Langat LandSelangor darul ehsan

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properties owned

(cont’d)

Location Description DateofAcquisition/ Tenure LandArea NetBookValue DateofValuation (Acre) (RM)

Kemuning residence residential 18-Jul-2006 Leasehold 12.3 15,083,334 Mukim dan daerah Klang development (expiring on Selangor darul ehsan Land 3-Sep-2105)

hijauan residence residential 30-oct-2006 Freehold 29.5 20,120,684 Mukim dan daerah ulu Langat developmentSelangor darul ehsan Land

Southgate Commercial 27-Jul-2007 Freehold 4.8 52,056,325 geran 40915 Lot 217 and developmenthSd 27710, pT61 LandSeksyen 92Bandar Kuala Lumpur

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statistics of shareholdings

as at 28 april 2008

authorised Share Capital : rM500,000,000issued and Fully paid Share Capital : rM310,922,973Class of Shares : ordinary shares of rM0.50 eachVoting rights : one vote per ordinary share on a poll

ANALYSISOFSHAREHOLDINGS

SizeofHoldings No.ofHolders No.ofWarrants %

1 - 99 231 5,241 0.001100 - 1,000 1,210 1,054,025 0.1691,001 - 10,000 4,537 19,666,077 3.16310,001 - 100,000 1,175 29,461,178 4.738100,001 - 31,092,296* 130 225,390,236 36.24531,092,297 and above ** 5 346,269,189 55.684

Total 7,288 621,845,946 100.000

remark: * Less than 5% of issued shares ** 5% and above of issued shares

SUBSTANTIALSHAREHOLDERS No.ofOrdinarySharesHeldName Direct % Indirect %

dato’ Sri Leong hoy Kum 10,652,040 1.713 a 238,521,732 38.357 Mayang Teratai Sdn Bhd 238,521,732 38.357 - - Koperasi permodalan Felda Berhad 53,151,939 8.547 - - Capital group international, inc - - b 59,091,451 9.503

notes:a deemed interested by virtue of the shareholdings of Mayang Teratai Sdn Bhdb deemed interested by virtue of shares owned by accounts under discretionery investment management

DIRECTORS’SHAREHOLDINGS No.ofOrdinarySharesHeldName Direct % Indirect %

dato’ Sri Leong hoy Kum 10,652,040 1.713 a 239,095,972 38.449 Leong Yuet Mei - - b 130,814 0.021

notes:a deemed interested by virtue of the shareholdings of Mayang Teratai Sdn Bhd and his family member(s)b deemed interested by virtue of the shareholdings of her family member(s)

DIRECTORS’OPTIONSOFEMPLOYEES’SHAREOPTIONSCHEME

No.ofESOSOptionsName Direct % Indirect %

dato’ Sri Leong hoy Kum 515,021 b 45.409 a 53,648 b 4.730

notes:a deemed interested by virtue of eSoS options held by his family member(s)b Based on 1,134,174 outstanding eSoS options granted and accepted

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statistics of shareholdings

(cont’d)

LISTOFTOPTHIRTYHOLDERSASAT28APRIL2008

NO NAME No.ofShares %

1 Mayang Teratai Sdn Bhd 111,521,732 17.934

2 CiMB group nominees (Tempatan) Sdn Bhd 100,000,000 16.081 pledged Securities account For Mayang Teratai Sdn Bhd (49643 JpLe)

3 Koperasi permodalan Felda Berhad 53,151,939 8.547

4 hSBC nominees (asing) Sdn Bhd 47,937,401 7.709 exempt an For Credit Suisse (Sg Br-TST-asing)

5 hSBC nominees (asing) Sdn Bhd 33,658,117 5.413 exempt an For JpMorgan Chase Bank, national association (u.S.a.)

6 eB nominees (Tempatan) Sendirian Berhad 27,000,000 4.342 pledged Securities account For Mayang Teratai Sdn Bhd (CSC)

7 amanah raya nominees (Tempatan) Sdn Bhd 15,182,800 2.442 amanah Saham Wawasan 2020

8 hSBC nominees (asing) Sdn Bhd 14,861,824 2.390 exempt an For J.p. Morgan Bank Luxembourg S.a.

9 employees provident Fund Board 14,382,300 2.313

10 amanah raya nominees (Tempatan) Sdn Bhd 13,579,400 2.184 amanah Saham Malaysia

11 amanah raya nominees (Tempatan) Sdn Bhd 12,769,600 2.053 Skim amanah Saham Bumiputera

12 dato’ Sri Leong hoy Kum 10,652,040 1.713

13 Citigroup nominees (asing) Sdn Bhd 7,834,187 1.260 exempt an For Mellon Bank (Mellon)

14 hSBC nominees (asing) Sdn Bhd 7,723,800 1.242 hSBC-FS i For Lim asia alternative real estate Fund SpC (LaareF Sh CLS a)

15 Cartaban nominees (asing) Sdn Bhd 6,390,000 1.027 SSBT Fund 22g8 For Federated international Small Company Fund

16 Lembaga Tabung haji 6,263,000 1.007

17 hSBC nominees (asing) Sdn Bhd 5,596,000 0.900 BBh (Lux) SCa For Fidelity Funds Malaysia

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statistics of shareholdings

(cont’d)

LISTOFTOPTHIRTYHOLDERSASAT28APRIL2008(cont’d)

NO NAME No.ofShares %

18 amanah raya nominees (Tempatan) Sdn Bhd 5,135,700 0.826 Kumpulan Wang Bersama

19 hSBC nominees (asing) Sdn Bhd 5,000,000 0.804 BBh (Lux) SCa For Fidelity Funds - asia pacific growth & income Fund

20 Cartaban nominees (asing) Sdn Bhd 4,483,000 0.721 State Street London Fund 2FBM For amadeus asian real estate Securities Fund

21 amanah raya nominees (Tempatan) Sdn Bhd 4,000,000 0.643 Sekim amanah Saham nasional

22 hSBC nominees (asing) Sdn Bhd 3,906,900 0.628 rBS Coutts hK For neranti investments Limited

23 hSBC nominees (asing) Sdn Bhd 3,258,000 0.524 exempt an For erste Bank der oesterreichischen Sparkassen ag

24 hSBC nominees (asing) Sdn Bhd 3,120,000 0.502 dZ Bank intl For uni em Fernost Treuhandkonto, Luxembourg

25 Citigroup nominees (asing) Sdn Bhd 2,770,080 0.445 uBS ag For npJ global opportunities Master Fund (pledged)

26 hSBC nominees (asing) Sdn Bhd 2,367,000 0.381 exempt an For Morgan Stanley & Co. international plc (ipB Client acct)

27 hSBC nominees (asing) Sdn Bhd 2,230,761 0.359 TnTC For government of Singapore investment Corporation pte Ltd

28 amanah raya nominees (Tempatan) Sdn Bhd 2,083,900 0.335 public islamic opportunities Fund

29 hSBC nominees (asing) Sdn Bhd 1,956,700 0.315 hSBC Tub Lux For Trinkaus inhouse portfolio

30 hSBC nominees (asing) Sdn Bhd 1,682,036 0.270 BBh and Co Boston For Capital guardian emerging Markets equity Master Fund (dC)

Total 530,498,217 85.310

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statistics of warrant

holdingsas at 28 april 2008

no. of outstanding Warrants : 7,619,985exercise price of Warrants : rM0.50exercise period of Warrants : 7 June 2004 to 6 June 2009exercise rights : each warrant entitles the holder to subscribe for one new ordinary share of rM0.50

each in the CompanyVoting rights at Meetings of Warrant holders : one vote per warrant on a poll

ANALYSISOFWARRANTHOLDINGS

SizeofHoldings No.ofHolders No.ofWarrants %

1 - 99 204 4,668 0.061100 - 1,000 162 54,032 0.7091,001 - 10,000 453 1,795,433 23.56210,001 - 100,000 90 1,904,051 24.988100,001 - 380,998* 3 540,766 7.097380,999 and above ** 2 3,321,035 43.583

Total 914 7,619,985 100.000

remark: * Less than 5% of issued warrants ** 5% amd above of issued warrants

WARRANTHOLDINGOFDIRECTORS

No.ofWarrantsHeldName Direct % Indirect %

dato’ Sri Leong hoy Kum 2,575,104 33.794 a 92,702 1.216

a deemed interested by virtue of the shareholdings of his family member(s)

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statistics of warrant

holdings(cont’d)

LISTOFTOPTHIRTYWARRANTHOLDERSASAT28APRIL2008

NO. NAME No.ofWarrants %

1 dato’ Sri Leong hoy Kum 2,575,104 33.794

2 rhB Capital nominees (Tempatan) Sdn Bhd 745,931 9.789 pledged Securities account For Susy ding (CeB)

3 Saw Kean hock 234,333 3.075

4 pang Tee Chew 154,504 2.027

5 Santhirasthipam a/L Thambynathan 151,929 1.994

6 datin Sri Lim Suat Kiew 92,702 1.217

7 public nominees (Tempatan) Sdn Bhd 92,400 1.213 pledged Securities account For Beh Lee Fong (e-SS2)

8 ng Kok Beng 77,251 1.014

9 oSK nominees (Tempatan) Sdn Bhd 63,000 0.827 pledged Securities account For ngu ung ha

10 hdM nominees (Tempatan) Sdn Bhd 51,501 0.676 Kim eng Securities pte Ltd For hii Yu guan

11 uoBM nominees (Tempatan) Sdn Bhd 46,351 0.608 golden Touch asset Management Sdn Bhd For Bee garden holdings Sdn Bhd (Trust aC/Client)

12 ooi Kok Kee 43,776 0.574

13 Beh ah Lan 40,531 0.532

14 Tan diam Koon 39,151 0.514

15 Tan eng Bouy 38,625 0.507

16 Teoh phaik See 38,625 0.507

17 Mayban nominees (Tempatan) Sdn Bhd 37,600 0.493 pledged Securities account For Beh hang Kong

18 Lai Kek Chau 36,050 0.473

19 Mayban nominees (Tempatan) Sdn Bhd 33,475 0.439 pledged Securities account For Liew Kok Chee

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statistics of warrant

holdings(cont’d)

LISTOFTOPTHIRTYWARRANTHOLDERSASAT28APRIL2008(cont’d)

NO. NAME No.ofWarrants %

20 Wong Wai Fong 33,475 0.439

21 affin nominees (Tempatan) Sdn Bhd 30,900 0.405 pledged Securities account For Liau guan Seng (Lia0047C)

22 uoBM nominees (Tempatan) Sdn Bhd 27,349 0.359 golden Touch asset Management Sdn Bhd For golden Touch allweather Fund

23 CiMSeC nominees (Tempatan) Sdn Bhd 25,750 0.338 CiMB For Sze See Chuen (pB)

24 Balraaj Singh a/L Tarlachon Singh 25,749 0.338

25 Cheng ah nga 25,749 0.338

26 ivy ong Mun Yee 25,749 0.338

27 Segarajah ratnalingam a/L a. Segarajah 25,749 0.338

28 Siti Medan Binti abdul rahman 25,749 0.338 29 ooi oon Seong 25,599 0.336 30 Lim Kee Yek 21,700 0.285

4,886,357 64.125

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notice of annual general

meeting

AGENDA

AsOrdinaryBusinesses:-

1. To adopt the audited Financial Statements for the financial year ended 31 december 2007 together with the directors’ and auditors’ reports thereon.

2. To approve the declaration of a first and final dividend of 16% per ordinary share less Malaysian income Tax at 26% in respect of the financial year ended 31 december 2007.

3. To approve the directors’ fees for the financial year ended 31 december 2007.

4. To re-elect the following directors who are retiring pursuant to article 102 of the Company’s articles of association:-

(i) ng poh Seng (ii) Leong Yuet Mei

5. To re-appoint Messrs deloitte KassimChan as auditors and to authorise the directors to fix their remuneration.

AsSpecialBusinesses:-

6. To consider and if thought fit, pass the following resolution pursuant to Section 129(6) of the Companies act, 1965:-

“ThaT Jen. (r) Tan Sri Yaacob Bin Mat Zain who is over the age of seventy years and retiring in accordance with Section 129(2) of the Companies act, 1965 be and is hereby re-appointed as a director of the Company and to hold office until the next annual general Meeting of the Company.”

To consider and if thought fit, to pass the following resolutions, with or without any modification, as ordinary resolutions of the Company:-

7. ORDINARYRESOLUTIONI AUTHORITYTOISSUESHARES

“ThaT subject always to the Companies act, 1965, and the approval of the regulatory authorities, the directors be and are hereby empowered, pursuant to Section 132d of the Companies act, 1965, to issue shares in the Company from time to time at such price, upon such terms and conditions, for such purposes and to such person or persons whomsoever as the directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being and ThaT the directors be and are also empowered to obtain the approval from the Bursa Malaysia Securities Berhad for listing of and quotation for the additional shares so issued and FurTher ThaT such authority shall continue to be in force until the conclusion of the next annual general Meeting of the Company.”

NOTICEISHEREBYGIVENTHAT the Sixteenth annual general Meeting of the Mah Sing group Berhad (“Mah Sing” or “Company”) will be held at penthouse Suite 1, Wisma Mah Sing, no. 163, Jalan Sungai Besi, 57100 Kuala Lumpur on Monday, 23 June 2008 at 10.00 a.m. for the following purposes:-

(Resolution1)

(Resolution2)

(Resolution3)

(Resolution4)(Resolution5)

(Resolution6)

(Resolution7)

(Resolution8)

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notice of annual general

meeting(cont’d)

8. ORDINARYRESOLUTIONII PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY

TRANSACTIONSOFAREVENUEORTRADINGNATUREASSPECIFIEDINSECTION2.3(a)TO(c)OFTHECIRCULARTOSHAREHOLDERSDATED30MAY2008(“CIRCULAR”)

“ThaT subject always to the Listing requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company and its subsidiaries (“Mah Sing group”) to enter into and give effect to specified recurrent related party transactions of a revenue or trading nature of Mah Sing group with specified classes of related parties (as defined in the Listing requirements of Bursa Malaysia Securities Berhad) as specified in Section 2.3 (a) to (c) of the Circular, which are necessary for the day-to-day operations of Mah Sing group provided that:-

(a) the transactions are in the ordinary course of business and are carried out at arms’ length basis on normal commercial terms of Mah Sing group and on terms not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company; and

(b) disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the shareholders’ mandate together with a breakdown of the aggregate value of the transactions during the financial year based on the type of transactions, names of the related parties and their relationship.

and ThaT such approval, shall continue to be in force until:-

(a) the conclusion of the next annual general Meeting (“agM”) of the Company at which time it will lapse, unless the authority is renewed by a resolution passed at a general meeting; or

(b) the expiration of the period within which the next agM after that date is required to be held pursuant to Section 143(1) of the Companies act, 1965 (“act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the act); or

(c) revoked or varied by a resolution passed by the shareholders of the Company in a general meeting;

whichever is earlier.

and FurTher ThaT authority be and is hereby given to the directors of the Company to complete and do all such acts, deeds and things as they may consider expedient or necessary in the best interest of the Company (including executing all such documents as may be required) to give effect to the transactions contemplated and/or authorised by this ordinary resolution.”

9. ORDINARYRESOLUTIONIII PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY

TRANSACTIONS OF A REVENUE OR TRADING NATURE AS SPECIFIED IN SECTION 2.3 (d) OF THECIRCULAR

“ThaT subject always to the Listing requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company and its subsidiaries (“Mah Sing group”) to enter into and give effect to specified recurrent related party transactions of a revenue or trading nature of Mah Sing group with specified classes of related parties (as defined in the Listing requirements of Bursa Malaysia Securities Berhad) as specified in Section 2.3 (d) of the Circular, which are necessary for the day-to-day operations of Mah Sing group provided that:-

(Resolution9)

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(a) the transactions are in the ordinary course of business and are carried out at arms’ length basis on normal commercial terms of Mah Sing group and on terms not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company; and

(b) disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the shareholders’ mandate together with a breakdown of the aggregate value of the transactions during the financial year based on the type of transactions, names of the related parties and their relationship.

and ThaT such approval, shall continue to be in force until:-

(a) the conclusion of the next annual general Meeting (“agM”) of the Company at which time it will lapse, unless the authority is renewed by a resolution passed at a general meeting; or

(b) the expiration of the period within which the next agM after that date is required to be held pursuant to Section 143(1) of the Companies act, 1965 (“act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the act); or

(c) revoked or varied by a resolution passed by the shareholders of the Company in a general meeting;

whichever is earlier.

and FurTher ThaT authority be and is hereby given to the directors of the Company to complete and do all such acts, deeds and things as they may consider expedient or necessary in the best interest of the Company (including executing all such documents as may be required) to give effect to the transactions contemplated and/or authorised by this ordinary resolution.”

10. ORDINARYRESOLUTIONIV PROPOSEDRENEWALOFSHAREBUY-BACKAUTHORITY

“ThaT subject to the Companies act, 1965, provisions of the Company’s Memorandum and articles of association and the Listing requirements of the Bursa Malaysia Securities Berhad (“Bursa Securities”) and any applicable laws, regulations and guidelines issued by other regulatory authorities, and the approvals of all relevant governmental and/or regulatory authorities, the Company be and is hereby authorised to purchase and/or hold such amount of its ordinary shares on the market of Bursa Securities at any time upon such terms and conditions as the directors in their absolute discretion deem fit and expedient in the interest of the Company (“proposed Share Buy-Back”) provided that:-

(a) the aggregate number of shares which may be purchased and/or held by the Company shall not exceed ten percent (10%) of the total issued and paid-up ordinary share capital of the Company;

(b) the maximum amount of funds to be allocated by the Company for the purpose of purchasing its shares shall not exceed the retained profit and/or share premium account of the Company based on the latest audited financial statements and/or the latest management accounts (where applicable) available up to the transaction date of the proposed Share Buy-Back;

(c) upon completion of the purchase(s) of the shares by the Company, the shares shall be dealt with in the following manner:

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notice of annual general

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(i) to cancel the shares so purchased; or

(ii) to retain the shares so purchased in treasury, either to be distributed as dividends to the shareholders of the Company and/or to be resold on the market of Bursa Securities; or

(iii) to retain part of the shares so purchased as treasury shares and cancel the remainder; or

(iv) any combination of the three.

and ThaT the authority conferred by this resolution will be effective upon the passing of this resolution and will continue to be in force until:-

(a) the conclusion of the next annual general Meeting (“agM”) of the Company at which time it will lapse, unless the authority is renewed by a resolution passed at a general meeting, either unconditionally or subject to conditions; or

(b) the expiration of the period within which the next agM after that date is required by law to be held; or

(c) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting;

whichever occurs first, but not as to prejudice the completion of purchase(s) by the Company before the aforesaid expiry date, and in any event, in accordance with the provisions of the guidelines issued by the Bursa Securities or any other relevant authorities, relevant requirements and guidelines.

and FurTher ThaT authority be and is hereby given to the directors of the Company to do all such acts, deeds and things as they may consider expedient or necessary in the best interest of the Company (including executing all such documents as may be required) to give full effect to the proposed Share Buy-Back with full power to assent to any condition, variation, modification and/or amendment as may be required by any relevant authorities and to deal with all matters relating thereto and take all steps and do all acts and things in any manner as they may deem necessary in connection with the proposed Share Buy-Back in the interest of the Company.”

11. To transact any other business of which due notice shall have been given.

BY order oF The Board

Yang Bao Ling (MaiCSa 7041240)Kuan hui Fang (Mia 16876)Company Secretaries

Kuala Lumpur30 May 2008

(Resolution11)

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NOTES:

1. a member entitled to attend and vote at the Sixteenth annual general Meeting is entitled to appoint a proxy or attorney or in the case of a corporation, to appoint a duly authorised representative to attend and vote in his place. a proxy may but need not be a member of the Company and provisions of Section 149(1)(b) of the Companies act, 1965 shall not apply to the Company.

2. The power of attorney or a notarially certified copy thereof or the Form of proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing. if the appointor is a corporation, it must be executed under its seal or under the hand of its officer or its attorney duly authorised on its behalf.

3. Where a member appoints more than one (1) proxy (subject always to a maximum of two (2) proxies at each meeting), the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

4. The Form of proxy together with the power of attorney (if any) under which it is signed or a duly notarially certified copy thereof must be deposited at the registered office of the Company at penthouse Suite 1, Wisma Mah Sing, no. 163, Jalan Sungai Besi, 57100 Kuala Lumpur not less than forty eight (48) hours before the time appointed for holding the Sixteenth annual general Meeting or any adjournment thereof.

EXPLANATORYNOTESONSPECIALBUSINESSES

5. Resolution7: The re-appointment of Jen. (r) Tan Sri Yaacob Bin Mat Zain, a person over the age of 70 years as director of the Company to hold office until the

conclusion of the next annual general Meeting of the Company shall take effect if the proposed resolution 7 has been passed by a majority of not less than three-fourths (¾) of such members as being entitled to vote in person or, where proxies are allowed, by proxy, at a general meeting of which not less than 21 days’ notice specifying the intention to propose the resolution has been duly given.

6. Resolution8: The proposed resolution is in relation to authority to allot shares pursuant to Section 132d of the Companies act, 1965, and if passed, will

give the directors of the Company, from the date of the above annual general Meeting, authority to issue and allot shares from the unissued capital of the Company for such purposes as the directors may deem fit and in the interest of the Company. This would avoid any delay and costs in convening a general meeting to specifically approve such issue of shares. This authority will, unless revoked or varied by the Company in general meeting, expire at the conclusion of the next annual general Meeting of the Company.

7. Resolutions9and10: The proposed resolutions, if passed, will enable the Company and its subsidiaries to enter into recurrent related party transactions of a revenue

or trading nature with related parties which are necessary for the group’s day-to-day operations and are in the ordinary course of business carried out on an arm’s length basis on normal commercial terms and on terms not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company. The details of the proposals are set out in the Circular to Shareholders dated 30 May 2008 accompanying the Company’s annual report for the financial year ended 31 december 2007.

8. Resolution11: The proposed resolution, if passed, will empower the directors of the Company to exercise the power of the Company to purchase the

Company’s shares up to ten percent (10%) of the total issued and paid-up share capital of the Company by utilising the funds allocated which shall not exceed the retained profit and/or share premium account of the Company. This authority will, unless revoked or varied at a general meeting, expire at the conclusion of the next annual general Meeting of the Company. The details of the proposal are set out in the Share Buy-Back Statement dated 30 May 2008, accompanying the Company’s annual report for the financial year ended 31 december 2007.

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notice of dividend

entitlement and payment

NOTICEISHEREBYGIVENTHAT the first and final dividend of 16% per ordinary share less Malaysian income Tax at 26%, in respect of the financial year ended 31 december 2007, if approved at the Sixteenth annual general Meeting, will be paid on 18 august 2008 to depositors of ordinary shares registered in the record of depositors on 4 august 2008.

a depositor shall qualify for entitlement to the dividend only in respect of:

a) Shares transferred into the depositor’s Securities account before 4.00 p.m. on 4 august 2008 in respect of transfers; and

b) Shares bought on the Bursa Malaysia Securities Berhad up to 5.00 p.m. on 30 July 2008 i.e. on a cum entitlement basis according to the rules of the Bursa Malaysia Securities Berhad.

BY order oF The Board

Yang Bao Ling(MaiCSa 7041240)Kuan hui Fang (Mia 16876)Company Secretaries

Kuala Lumpur30 May 2008

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1. The name of directors who are standing for re-election and re-appointment at the Sixteenth annual general Meeting:-

a. NgPohSeng (retiring pursuant to article 102 of the Company’s articles of association)

b. LeongYuetMei (retiring pursuant to article 102 of the Company’s articles of association)

c. Jen.(R)TanSriYaacobbinMatZain (re-appointment pursuant to Section 129(6) of the Companies act, 1965)

The details of the four directors seeking for re-election and re-appointment are set out in their respective profiles which appear on pages 012 to 013 of the annual report. The shareholdings of the directors in the Company are disclosed under Statistics of Shareholdings on page 129 of this annual report.

2. The details of the attendance of the directors at Board Meetings during the financial year ended 31 december 2007 are as follows:-

BoardofDirectors’ No.ofAttendance Jen. (r) Tan Sri Yaacob bin Mat Zain 4/4 dato’ Sri Leong hoy Kum 4/4 ng poh Seng 4/4 Lim Kiu hock 4/4 Leong Yuet Mei 4/4 Captain (rtd) izaham bin abd. rani 4/4 Loh Kok Leong 3/4

3. The Sixteenth annual general Meeting of Mah Sing group Berhad will be held at penthouse Suite 1, Wisma Mah Sing, no. 163, Jalan Sungai Besi, 57100 Kuala Lumpur on Monday, 23 June 2008 at 10.00 a.m.

statement accompanying

notice of annual general meeting

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No. of ordinary shares heldFORM OF PROXY

(Before completing the form please refer to notes below)

I/We …………………………………………………………………………Telephone No.……………………………………………… (FULL NAME IN CAPITAL LETTERS)

I.C. or Company No. ……………………………………….………………CDS Account No…………………….………………………… (NEW I.C. NO. OR COMPANY NO.)

of ………………………………………………………………………………………………………………………………………………… (FULL ADDRESS)

being a member/members of MAH SING GROUP BERHAD hereby appoint* the Chairman of the Meeting or failing him

……………………………………………………………….…………………I.C. No….…………………………………………………… (FULL NAME IN CAPITAL LETTERS)

of.………………………………………………………………………………………………………………………………………………… (FULL ADDRESS)

or failing him, …………………………………………………………………I.C. No…………………….………………………………… (FULL NAME IN CAPITAL LETTERS)

of …………………………………………………………………………………………………………………………………………………… (FULL ADDRESS)

as my/our proxy to vote for me/us and on my/our behalf, at the Sixteenth Annual General Meeting of the Company (“AGM”), to be held at Penthouse Suite 1, Wisma Mah Sing, No. 163, Jalan Sungai Besi, 57100 Kuala Lumpur on Monday, 23 June 2008 at 10.00 a.m., or any adjournment thereof, on the following resolutions referred to in the notice of the AGM:

My/our proxy is to vote as indicated below:

No. Resolution For Against

1 Adoption of the Audited Financial Statements and Reports

2 Declaration of First and Final Dividend

3 Payment of Directors’ fees

4 Re-election of Ng Poh Seng as Director

5 Re-election of Leong Yuet Mei as Director

6 Re-appointment of Deloitte KassimChan as Auditors

7 Re-appointment of Jen. (R) Tan Sri Yaacob Bin Mat Zain as Director

8 Authority to issue and allot shares pursuant to Section 132D of the Companies Act, 1965

9 Proposed renewal of existing Shareholders’ Mandate as specified in Section 2.3 (a) to (c) of the Circular to Shareholders dated 30 May 2008

10 Proposed renewal of existing Shareholders’ Mandate as specified in Section 2.3 (d) of the Circular to Shareholders dated 30 May 2008

11 Proposed renewal of share buy-back authority

(Please indicate with an “X” in the space provided whether you wish your votes to be cast for or against the resolutions. In the absence of specific direction, your proxy will vote or abstain as he/she thinks fit).

Dated this .................... day of ....................................... 2008 ............................................................. Signature: Shareholder or Common Seal of Appointor

* Delete the words “the Chairman of the Meeting or” if you wish to appoint some other person to be your proxy.

Notes:1. A member entitled to attend and vote at the Sixteenth Annual General Meeting is entitled to appoint a proxy or attorney or in the case of a corporation,

to appoint a duly authorised representative to attend and vote in his place. A proxy or attorney or duly authorised representative may but need not be a member of the Company.

2. The power of attorney or a notarially certified copy thereof or the Form of Proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing. If the appointor is a corporation, it must be executed under its seal or under the hand of its officer or its attorney duly authorised on its behalf.

3. Where a member appoints more than one (1) proxy (subject always to a maximum of two (2) proxies at each meeting), the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

4. This Form of Proxy together with the power of attorney (if any) under which it is signed or a duly notarially certified copy thereof must be deposited at the registered office of the Company at Penthouse Suite 1, Wisma Mah Sing, No. 163, Jalan Sungai Besi, 57100 Kuala Lumpur not later than forty-eight (48) hours before the time appointed for holding the Sixteenth Annual General Meeting or any adjournment thereof.

Then fold here

1st fold here

THE COMPANY SECRETARYMAH SING GROUP BERHAD

Penthouse Suite 1Wisma Mah Sing

No. 163, Jalan Sungai Besi57100 Kuala Lumpur

AFFIXSTAMP

Fold this flap for sealing

(230149-P)(Incorporated In Malaysia)

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