Annual Report - Magna Prima Berhad

Annual Report

2004Annual Report

2004

MAGNA PRIMA BERHAD369519-P

magna Cover line atas 27/08/1956 10:36 AM Page 1

Cover Rational

The Avare Rising - a significant and exclusive development within glancing distance of the majestic KLCC.

The Avare - its height symbolising the highes standards thatMagna Prima sets itself and consistently maintains. TheState-Of-The Art styling and design represent Magna Prima's continuous efforts to keep up with the ever-changing technology and systems environment.

The butterfly shape represents Magna Prima's sophisticatedcapabilities and readiness to spread its wings and 'fly' furtherbeyond our shores to provide best services for projets within Malaysia and the world.


MAGNA PRIMA BERHAD, No. 66, Vista Magna, Jalan Prima, Metro Prima, 52100 Kuala Lumpur.Tel: 03-6257 8181 Fax: 03-6257 1941 Website: www.magnaprima.com.my.

MAGNAP R I M ABERHAD369519-P



1Annual Report 2004

CONTENTS

Corporate Information

Chairman’s Statement

Board of Directors & Profile

Group Structure

Senior Management

Calendar of Events

Statement on Corporate Governance

The Audit Committee

Statement on Internal Control

Financial Statements

3

4

8

10

11

12

14

19

24

27

Magna AR P1 P28 line 12/04/2005 05:13 PM Page 1

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2 Annual Report 2004

Avare Glittering in the Night


3Annual Report 2004

CORPORATE INFORMATION

Board of DirectorsY.Bhg. Tan Sri Dato’ Kamaruzzaman bin ShariffIndependent Non-Executive ChairmanY.Bhg. Dato’ Abd. Gani bin YusofNon-Independent, Non-Executive DirectorAhmad Ghazali bin Md KassimChief Executive OfficerN. Chanthiran a/l NagappanChief Operating OfficerNg Yak HeeNon-Independent, Non-Executive DirectorT. A. Rahman bin T. AndakIndependent Non-Executive DirectorKamil bin Datuk Hj. Abdul RahmanIndependent Non-Executive Director

Audit CommitteeKamil bin Datuk Hj. Abdul Rahman - ChairmanT. A. Rahman bin T. AndakNg Yak Hee

Nomination CommitteeY.Bhg. Tan Sri Dato’ Kamaruzzaman bin Shariff

- ChairmanN. Chanthiran a/l NagappanKamil bin Datuk Hj. Abdul RahmanT. A. Rahman bin T. Andak

Remuneration CommitteeY.Bhg. Tan Sri Dato’ Kamaruzzaman bin Shariff

- ChairmanT. A. Rahman bin T. AndakKamil bin Datuk Hj. Abdul Rahman

Joint Company SecretariesAhmad Shahab bin Hj. Din(MAICSA 0689340)Yuen Yoke Ping(MAICSA 7014044)

Registered OfficeNo. 66, Vista Magna, Jalan Prima,Metro Prima, 52100 Kuala LumpurTel: 03-6257 8181Fax: 03-6257 1941Website: www.magnaprima.com.my.

Share RegistrarSymphony Share Registrars Sdn Bhd (378993-D)Level 26, Menara Multi Purpose,Capital Square,No. 8, Jalan Munshi Abdullah,50100 Kuala LumpurTel: 603-2721 2222Fax: 603-2721 2531

AuditorsAnuarul Azizan Chew & Co.Chartered Accountants

SolicitorsNordin Torji & Yussof AhmadSim Hazlina & Co.JT Chong AssociatesSkrine & Co.Zain Megat & Murad

Principal BankersBumiputra Commerce Bank BerhadMalayan Banking Berhad

Stock Exchange ListingBursa Malaysia Securities BerhadSecond BoardListed Since 16 January 1997Bursa’s Code: 7617




CHAIRMAN’S STATEMENT


Dear Shareholders, on behalf of the Board ofDirectors, I have great pleasure in presenting

the Annual Report and Audited FinancialStatement of the Group for the financial

year ended 31 December 2004.


5Annual Report 2004


FINANCIAL REVIEW

The financial year till 31 December 2004 ended with a total group revenue of RM96.741 million. Though this was far below the sum of RM169.641 million in 2003, the gross profit of RM14.802 million was ajump from RM31,000.00 for the preceding year. Profit before tax wasRM3.611 million as against RM1.065 million in 2003. Following tax and setting aside minority interests, the net profit for 2004 was RM1.587 million compared to RM36,000.00 in 2003.

The improved bottom line result has been due to stringent focus onoperational efficiencies as had been promised by your Board. Moreeffort is in the offing to better the financial performance of the Group.

PROPERTY DEVELOPMENT

In recent years this has been our mainstay and we are happy toinform that the JUSCO METRO PRIMA was opened in February 2004and is now a thriving and lively focal point for shoppers in theSelayang-Kepong-Sungei Buloh Triangle. Two more phases of shopcum apartments are currently under construction in Metro Prima and these shall drive the Group’s property development over the next three years.

As reported last year, the Group shall be embarking on the developmentof a luxury condominium project at the fringe of the Kuala LumpurCity Centre (KLCC). We have obtained the development order for theproject from Dewan Bandaraya Kuala Lumpur and expect to startwork on ground before end of 2005. With a development value ofalmost RM190 million, the project, named The Avare’, consists of 78units of luxury apartments. The project is being undertaken by EmbassyCourt Sdn. Bhd. while project management and marketing servicesare provided by Amanabina Sdn. Bhd., both of which are subsidiaries of Magna Park Sdn. Bhd.

CONSTRUCTION & QUARRYING

The total revenue contribution from these activities in 2004 was RM 30.4 million compared to RM58.1 million the year before.

TRADING

Gallery Building Materials Sdn. Bhd. (GB), a dealer in granite flooringmaterials, is now a 51% subsidiary. In its first year of becoming a member of the Magna Prima Group, GB contributed a turnover of






RM14 million and profit after tax of RM1.6 million. GB is expected to capture higher sales and contribute positively to the Group’s earningsin the current year with more upmarket projects being introduced bydevelopers in the Klang Valley.

OUTLOOK & PROSPECTS

Through year 2004, the Malaysian economy expanded by 7.1%, thehighest growth rate since 2000. The resilient national economy had benefited from stronger market demand domestically as well as fromoverseas. The government’s consolidating efforts continue into 2005 withconcerted policies aimed at enhancing the business sector. This augurswell for the Magna Prima Group as we are in property development andconstruction. In particular, more upmarket products are being introducedand Magna Prima Berhad is in tune with the proposed launch of TheAvare’. As for Metro Prima, two new phases brought on stream betweenlate last year and 2005 will continue to bring increase in revenue andprofit to the Group.

ACKNOWLEDGEMENT

On behalf of the Board of Directors, I would like to take the opportunityto sincerely thank all valued shareholders, customers, financiers, governmental authorities and business associates for their continuingsupport and confidence in us. I also wish to thank my fellow Directors,the Management and staff for their dedicated hard work and commitment to the Group. Wholehearted teamwork and sincerityshould help us to overcome all obstacles to achieve our goals. In thisregard, corporate governance and good management practicesshall be upheld at all times.

Lastly, the Directors wish to record their thanks to Mr. Chua Lee Boonwho left the Board in June 2004, for his contribution as a Director since 1997.

May God bless you all and best regards.

Tan Sri Dato’ Kamaruzzaman bin ShariffChairman


7Annual Report 2004

The New Township of Metro Prima


An example of a successful urban and community regeneration project




BOARD OF DIRECTORS AND PROFILE

Ahmad Ghazali bin Md KassimChief Executive Officer

Ahmad Ghazali bin Md Kassim, aged 52, had served asExecutive Director (Finance) for eight years since hisappointment to the Board on 7 November 1996; he wasappointed Chief Executive Officer on 23 March 2005. Hehas had a wide and diverse involvement in various capacities in the corporate and financial sectors. He spent atotal of 17 years in a financial institution where he acquiredadministrative, operational and management skills in newventures, expansion and turnaround situations. In thecourse of his duties in the banking sector, he was involvedwith several international financial institutions including TheWorld Bank, The Islamic Development Bank and TheOverseas Economic Cooperation Fund of Japan.

In 1992, Ahmad Ghazali left the banking sector to set upMagna Resources Sdn Bhd providing financial and corporateservices to a select group of exclusive clients. In the sameyear he acquired a stake in Zelleco Construction Sdn Bhd("Zelleco") and subsequently joined the Board. Zelleco waslater restructured with the participation of MalaysianResources Corporation Berhad (MRCB) and this enabledthe company to venture into large scale projects.

In 1994, through a privatisation exercise and as a stakeholder, Ahmad Ghazali prepared Johore TenggaraOil Palm Berhad, a plantation based company for listingon the then Bursa Malaysia Securities Berhad (BMSB).Currently he is an Independent Director of Emas KiaraIndustries Berhad, a public company listed on Bursa Malaysia.

Magna Prima Berhad’s core activities are in propertydevelopment and construction and Ahmad Ghazali wasinstrumental in the flagship property development knownas Metro Prima Township in Kepong, Kuala Lumpur. This 86acres project is in its 7th year of development and is aredevelopment of a squatter settlement into a new businesshub for the northern suburb of Kuala Lumpur city.

N. Chanthiran a/l NagappanChief Operating Officer

N. Chanthiran a/l Nagappan, aged 40, was appointed tothe Board of Magna Prima Berhad on 5 March 2002 as anindependent non-executive Director and on 26 February2004, Mr. N. Chanthiran was appointed as an ExecutiveDirector, Operations. He was then appointed ChiefOperating Officer on 23 March 2005. He is in theNomination Committee. He holds a Bachelor’s Degree(Hons) in Accounting from University of Malaya and is aMember of the Malaysian Institute of Certified PublicAccountants. He is also a Certified Risk Professional (CRP)and Certified Financial Planner (CFP). He is currently apartner in Chanthiran & Co. He has vast experience infinancial advisory, receivership, liquidation and restructuring as he had served in the corporate finance industry for more than 12 years.

Tan Sri Dato' Kamaruzzaman bin ShariffIndependent Non-Executive Chairman

Tan Sri Dato' Kamaruzzaman bin Shariff, a Malaysian aged63, is Independent Non-Executive Chairman and wasappointed on 27 May 2004.

He holds a Bachelor of Arts Degree from the University ofMalaya. He also holds a Diploma in Public Administrationfrom the Carleton University, Canada and a Masters inPublic Administration (MPA) from the Syracuse University, USA.

Tan Sri Dato' Kamaruzzaman held various senior positions inthe Federal and State Government during his 38 yearstenure in the Malaysian Civil Service. He was engaged withthe Ministry of Education and the Public ServicesDepartment from 1964 to 1972 and from 1972 to 1980,respectively. For the period from 1980 to 1987, he served inthe Prime Minister’s Department where he was the Directorof External Assistance and General Affairs for the EconomicPlanning Unit from 1980 to 1983 and the Secretary of theCabinet Division from 1983 to 1987. From 1988 to 1992, hewas the Penang State Secretary. He rejoined the PublicServices Department as the Deputy Director General in1992 and from 1992 to 1995; he held the post SecretaryGeneral in the Ministry of Defence. He served his last seven (7) years in the Malaysian Civil Service as the Mayor of Kuala Lumpur.

He currently sits as the Executive Chairman of Major TeamHoldings Berhad, Metronic Global Berhad and Emas KiaraIndustries Berhad and the Non-Executive Chairman ofParagon Union Berhad. He is also a director of Kontena Nasional Berhad.

Dato’ Abd. Gani bin YusofNon-Independent, Non-Executive Director

Dato’ Abd. Gani bin Yusof, 50, was appointed a Director ofMPB on 7 November 1996 and was Executive Chairmanuntil he relinquished the post in January 2005. He wasappointed Director of MPK and MR on 1 March 1995 and 15 June 1995 respectively.

In 1980, he graduated from Universiti Sains Malaysia with aBachelor of Science (Hon.) in Housing, Building andPlanning. After graduation, he joined Peremba Berhad, aproperty development company as a Technical Executive.He left Peremba Berhad in 1988 as a Project Manager.From 1988 to 1991, he was the General Manager of UnitedEngineers (M) Berhad and was involved in the implementation of several infrastructure works in the countryincluding the North-South Expressway. Subsequently, hewas promoted to be a Project Director in 1991 to 1992.Following that, he was appointed as Managing Director ofLinkedua (M) Berhad (233673-W) for the duration 1993 to1995. At the same time, he was also the ManagingDirector of Prolink Development Sdn Bhd (252945-M). BothLinkedua (Malaysia) Berhad and Prolink Development SdnBhd which are subsidiaries of Renong Berhad (90894-P)were involved in the construction of the Second Link inJohor and the development of the Nusajaya township inthe vicinity of the aforementioned causeway respectively.


9Annual Report 2004


BOARD OF DIRECTORS AND PROFILE

Ng Yak HeeNon-Independent, Non-Executive Director

Ng Yak Hee, aged 60, was appointed to the Board of MPBon 7 November 1996. He obtained his Bachelor Degree(Hons) in Civil Engineering from University Malaya in 1970.He is a professional Engineer with the Board of Engineers,Malaysia and a corporate member of the Institutes of CivilEngineers Malaysia, Australia and United Kingdom. He hasmore than 26 years of experience in the field of engineeringconsultancy, project management and constructionworks. He started out with Minconsult Sdn Bhd (058835-P)("Minconsult") and served for 5 years.

He later worked in Wan Mohamed & Khoo Sdn Bhd (40213-X)("WMK") for 10 years as the Director responsible for Roadsand Bridges. In 1987 he joined IJM Engineering &Construction Pty Ltd- Australia ("IJM") as its ContractsManager. Prior to returning to Malaysia in 1992, he joinedAirplan-GHD Join Venture ("AGHD") for a year. Upon hisreturn to Malaysia, he joined Ranhill Bersekutu Sdn Bhd(072416-T) ("RB") as its Technical Director. He left RB inDecember 1994. Save for IJM which was a constructioncompany, Minconsult, WMK, AGHD and RB were firmsinvolved in the businesses of providing engineering consultancy services for infrastructure and building projectsamong which were the Malaysia-Singapore SecondCrossing, Light Rapid Transit 2, National Sports Complexand other major projects. Ng is a member of the AuditCommittee, as well as the Employees Share OptionScheme Committee.

Kamil bin Datuk Hj.Abdul RahmanIndependent Non-Executive Director

Kamil bin Datuk Hj.Abdul Rahman, aged 56, is anotherindependent non-executive Director and was appointedon 5 March 2002. Kamil chairs the Audit Committee,Employees Share Option Scheme Committee and sits onthe Nomination Committee and the RemunerationCommittee. His area of specialisation is in corporate governance and corporate finance.

He holds a Bachelor of Commerce degree from theUniversity of Otago and is a Chartered Accountant of theNew Zealand Institute of Chartered Accountants. He is alsoa member of the Malaysian Institute of Accountants,Fellow of the Institute of Chartered Secretaries andAdministrators, United Kingdom and Fellow of the Instituteof Company Secretaries Malaysia. He was a Senior VicePresident of Bank of Commerce (M) Berhad and wasExecutive Director of Commerce International Merchant Bankers Berhad.

He is currently the Executive Chairman of Marska Sdn Bhdwhich is an investment holding company. Kamil is also aDirector of Khind Holdings Berhad, Global Carriers Berhad,Bukit Katil Resources Berhad, WDM Holdings Berhad (notlisted on Bursa Malaysia), National Aerospace andDefence Industries Berhad (not listed on Bursa Malaysia)and the Malaysia South Africa Business Council (company limited by guarantee).

T. A. Rahman bin T. AndakIndependent Non-Executive Director

T. A. Rahman bin T. Andak, aged 53, was appointed aDirector of MPB on 24 June 1996. Following listing of theCompany, he became an independent and non-executive Director. He is on the Audit Committee,Nomination Committee and Remuneration Committee. Heis also on the Boards of DE, GBM and PH. He graduatedfrom Universiti Pertanian Malaysia with a Diploma inAgriculture in 1973. Following the attainment of his Diplomain agriculture, he has had over 23 years of experience in the agriculture field specilising in landscape work and agricultural projects. From 1980 – 1989, he was theOperations Manager with Permint Suterasemai Sdn Bhd("Permint") for 10 years. Permint was involved in the business of silk worm rearing, silk fabric production andlandscaping activities. He later joined Eastern Empress SilkSdn Bhd as a Management Consultant for a year from1990. He was self-employed from 1992 – 1994 and wasinvolved in the distribution and cultivation of fruits. Herejoined Permint in 1994 as a Project Manager before leaving the firm in 1995. He is currently the GeneralManager of Alpha Scapes (M) Sdn Bhd (369540-M), a landscaping and project management company which he joined on 1 August1996.

All Directors of Magna Prima Berhad listed above are Malaysiancitizens. They each do not have family ties with the others on theBoard nor with any major shareholder or the management. Noneof the Directors has been penalized for any offence within the past6 years (other than minor traffic offences, if any).

NB – The following references apply:MPB – Magna Prima Berhad MR – Magna Realty Sdn BhdMPC – Magna Prima Construction Sdn Bhd MPM – Magna Park (Mentakab) Sdn Bhd

(formerly known as Kelana Molek Sdn Bhd)

DE – Dunia Epik Sdn Bhd MQS – Magna Quarry Services Sdn Bhd

(formerly known as Magna-Idaman Sdn Bhd)

CO – Crest Overseas Sdn Bhd GBM – Gallery Building Materials Sdn BhdPH – Prima Hardware Sdn Bhd




GROUP STRUCTURE

PROPERTY DEVELOPMENT100%

MAGNA REALTY SDN BHD

90.69%MAGNA PARK

SDN BHD

100%MAGNA PARK (SEREMBAN)

SDN BHD

100%CREST OVERSEAS

SDN BHD

100%MAGNA QUARRY

SERVICES SDN BHD

100%MAGNA PARK

(MENTAKAB) SDN BHD

100%PRIMA HARDWARE

SDN BHD

51%GALLERY BUILDING

MATERIALS SDN BHD

100%HEXAGON NORTH

SDN BHD

100%STONE COLLECTIONS

SDN BHD

55%AMANABINA

SDN BHD

100%EMBASSY COURT

SDN BHD

CIVIL ENGINEERING & BUILDING CONSTRUCTION

100%MAGNA PRIMA CONSTRUCTION

SDN BHD

SPECIALISED ENGINEERING,QUARRY SERVICES AND

TRADING OF CONSTRUCTION MATERIALS

100%DUNIA EPIK SDN BHD

MAGNA PRIMA BERHAD

TRADING


11Annual Report 2004


SENIOR MANAGEMENT

MAGNA PRIMA GROUP

Zulkafli bin AbdullahExecutive Director, MPK

Lai Way FattManaging Director, GBM

Quah Huat HockDirector, AMB

Low Kim LanDirector, AMB

Vignesh Naidu A/L Kuppusamy NaiduDirector, AMB

Norhanum binti NordinAssistant General Manager, MPB

Chua Hok EimAssistant General Manager, MPC

Siti Sarbiah binti Mohamad SaidSenior Manager, MPB

Puad bin YaakubSenior Manager, MPB

Mohammad Nasir bin Mohd NoorSenior Manager, MPK

Yusof bin ZakariaSenior Manager, MPC

Devaprasad Jasonolivo a/l N. Samuel GnanaolivoSenior Manager, MPC

Ang Tang PewSenior Quantity Surveyor, MPC

Mohd Farish bin NordinManager, MPB

Rozita binti Mohamad YusofManager, MPB

Crissy Lee Pooi LingManager, MPB

Mohd Saiful bin MustaphaAccountant, MPB

Adzhar bin Mohammad NordinManager, MPK

Othman bin Hj. MohammadManager, MPK

NB – The following references apply:MPB – Magna Prima Berhad MPC – Magna Prima Construction Sdn Bhd DE – Dunia Epik Sdn Bhd MPK – Magna Park Sdn Bhd GBM – Gallery Building Materials Sdn BhdAMB – Amanabina Sdn Bhd




CALENDAR OF EVENTS

2017 June 2004 – 19 June 2004Value Management Workshoporganised by Magna Park Sdn Bhd at Kelab GolfPerkhidmatan Awam

24 June 20049th Annual General Meeting ofMagna Prima Berhad held atKuala Lumpur Golf & CountryClub (KLGCC)

22 June 2004Representative fromJabatan PerumahanNegara along withDBKL’s officer visitedMetro PrimaDevelopment

17 July 2004Staff participation in MagnaPrima Sports Carnival atNPNG, Sg. Buloh, Selangor




CALENDAR OF EVENTS

26 August 2004 – 29 August 2004Magna Prima Berhad's participation in "Expo InvestMalaysia" held at PWTC

4 December 2004Hari Raya Open House at sales office Show Unit inMetro Prima

26 September 2004Sales Launch of Plaza PrimaCondominiums at Metro Prima

2004




STATEMENT ON CORPORATE GOVERNANCE

The Board of Directors is committed to ensuringthat the highest standards of corporate governanceare practiced throughout the Group as a fundamental part of discharging its responsibilitiesto protect and enhance shareholders value andthe financial performance of the Company.Towards this end, the Board fully supports the recommendations of the Malaysian Code ofCorporate Governance.

The Board of Directors confirms that, with theexceptions set out below, the Group has complied with the best practices in the Codethroughout the 12 months ended 31 December 2004.

BOARD OF DIRECTORS

The Board

An effective Board leads and controls theGroup. This entails reviewing and adopting strategic plans for the Company, setting direction,overseeing the conduct of the business andmanaging the Company. Key matters such as

approval of annual and quarterly results, acquisitions and disposals, capital expenditures,budgets, material contracts and businessengagements, succession planning for top management are reserved for the Board.

The Board is assisted by various Committeesincluding the Management Committee, whichoversees the day-to-day operations of the Groupincluding review of monthly performance, budgets, capital investment proposals and manyother operating issues arising out of the ordinarycourse of business.

The Board has also delegated certain responsibilities to other Board committees, whichoperate within clearly defined terms of reference.Standing committees of the Board include theAudit Committee, the Nomination Committee,the Remuneration Committee and the ESOS Committee.

The composition of the Board is as follows:

DirectorsExecutiveDirector

Non-Independent

Non-ExecutiveDirector

IndependentNon-Executive

Director

Y. Bhg. Tan Sri Dato' Kamaruzzaman bin Shariff*

Y. Bhg. Dato’ Abd. Gani bin Yusof**

Ahmad Ghazali bin Md. Kassim

Ng Yak Hee***

N. Chanthiran a/l Nagappan

T. A. Rahman bin T. Andak

Kamil bin Datuk Hj. Abdul Rahman

* Appointed as Non-Executive Director on 11 May 2004

** Re-designated as Non-Independent Non-Executive Director with effect from 1 February 2005

*** Re-designated as Non-Independent Non-Executive Director with effect from 1 April 2005

✓

✓

✓

✓

✓

✓

✓





Board Meetings

The Board met a total of thirteen (13) times during the year ended 31 December 2004.

In advance of each Board meeting, the membersof the Board are each provided with relevantdocuments and information to enable them todischarge their duties.

The Directors have access to the advice andservices of the Company Secretary, who isresponsible for ensuring that Board Meeting

procedures are followed and that applicablerules and regulations are complied with. In addition,the Directors may also seek independent professional advise, at the Company’s expense,if required.

Details of attendance by the Directors at Boardmeetings: -

Board of DirectorsNo. of Meetings

Attended%

Y. Bhg. Tan Sri Dato’ Kamaruzzaman bin Shariff

Y. Bhg. Dato’ Abd. Gani bin Yusof

Ahmad Ghazali bin Md. Kassim

Ng Yak Hee

N. Chanthiran a/l Nagappan



8/8

11/13

13/13

12/13

13/13

11/13

13/13

100

85

100

92

85

Supply of Information

Prior to the Board Meeting, an agenda and a Board report will be issued to all Directors for theirreview. This is issued in sufficient time to enable the Directors to obtain further explanation, where necessary, in order to be properly briefed before the meeting. The Board report contains relevant information on the business of the meeting, which may include among others:-

• performance of the Group • operational matters• business development issues and market responses• capital expenditure proposals• acquisitions and disposals proposals• appointment of senior executives

100

100





Directors have access to all information withinthe Company, whether as a full Board or in theirindividual capacity, in the furtherance of their duties.

Directors also have access to the advice andservices of the Company Secretary who isresponsible for ensuring that Board procedures are followed.

Directors Training

All the Directors have completed theirMandatory Accreditation Programme ("MAP")conducted by the Bursa Malaysia SecuritiesBerhad. The Directors will continue to undertakeother relevant training programmes to further enhance their skills and knowledge.

Re-election

In accordance with the Company’s Articles ofAssociation, at least one third of the Directors arerequired to retire by rotation at each AnnualGeneral Meeting and can offer themselves forre-election at the Annual General Meeting. TheDirectors shall also retire from office at least oncein three years but shall be eligible for re-election.

THE AUDIT COMMITTEE

The Board is also assisted by the AuditCommittee whose members, terms of referenceand activities for the year under review are stated in pages ( page 19-23 ) of the Annual Report.

THE NOMINATION COMMITTEE

The Board has established a NominationCommittee, which has the primary responsibilityto assess the suitability of proposed board membersand to recommend such appointments to theBoard. The objective of the establishment of this

Committee is to ensure independent assessmentof appointments to the Board. The committee isalso responsible for annual assessment of the mix,skills and experience possessed by Board members to ensure effectiveness of the Board,the committees of the Board, and the contributionof individual Directors. In the financial year, theCommittee met eight (8) times.

The Nomination Committee has four (4) members comprising three (3) Independent Non Executive Directors and one (1) Executive Director.

THE REMUNERATION COMMITTEE

The Remuneration Committee reviews and recommends to the Board the remunerationpackage of the executive directors and seniormanagement of the Group with the main aim ofproviding the level of remuneration sufficient toattract and retain key personnel needed to runthe Group successfully. In the financial year, theCommittee met three (3) times.

The Remuneration Committee has three (3)members comprising exclusively IndependentNon Executive Directors.





EMPLOYEE SHARE OPTION SCHEME (ESOS) COMMITTEE

The ESOS Committee was established of with delegated authority by the Board to administerthe ESOS of the Group in accordance with Bye-Laws thereof and to exercise any discretionunder the Bye-Laws with regards to the eligibilityof employees to participate in the ESOS, shareoffers and share allocations and to attend tosuch other matters as may be required.Meetings of the ESOS Committee are held when necessary. In the financial year, theCommittee met four (4) times.

The ESOS Committee has four (4) members comprising one (1) Independent Non ExecutiveDirector and three (3) Executive Directors.

INVESTOR RELATIONS

It has always been the Company’s practice tomaintain good relationship with its shareholders.Major corporate developments and happeningsin the Company have always been promptlyannounced to all shareholders, in line with BursaMalaysia Securities Berhad’s (Bursa Malaysia)objectives of ensuring transparency and goodcorporate governance practice.

The financial performance of the Group, majorcorporate developments and other relevantinformation are promptly disseminated to shareholders and investors via announcementsof its quarterly performance, annual report and corporate announcements to Bursa Malaysia.During the Annual General Meeting, shareholders

are usually given a briefing on the performanceand major activities of the Group during the yearunder review, whereby the shareholders haveopportunity to enquire and comment on theCompany’s performance and operations.

ACCOUNTABILITY AND AUDIT

Financial Reporting

In its financial reporting via quarterly announcements of results, annual financial statements and annual report presentationsincluding the Chairman’s Statement and Reviewof Operations, the Board of Directors always provides a comprehensive assessment of theGroup’s performance and prospects for thebenefit of shareholders, investors and interestedparties. The Audit Committee also assists theBoard in overseeing the financial reportingprocesses of the Group and quality of its financial reporting.

Range of Remuneration Executive

Up to 50,000

RM200,000 - RM260,000

RM300,000 – RM350,000

Non-Executive

1

3

3

Details of Directors’ remuneration in 2004 are as follows:-



Relationship with the Auditors

Through the Audit Committee of the Board, the Group has established transparent and appropriate relationship with the Group’s auditors, both internal and external. The AuditCommittee also meets the external auditors atleast once a year without the presence of the management.


Directors’ responsibility in financial reporting

The Board of Directors is responsible for thepreparation of the annual financial statements ofthe Group and to ensure that the financial statements give a true and fair view of the stateof affairs of the Group and its result and cashflow for the financial year.

The Board of Directors has ensured that thefinancial statements have been prepared inaccordance with applicable approved accounting standards in Malaysia, the requirements of the Companies Act 1965 andother regulatory provisions. In preparing thefinancial statements, the Board of Directors hasascertained that reasonable prudent judgementand estimates have been consistently appliedand the accounting policies adopted havebeen complied with.

The Directors have a general responsibility of taking reasonable steps to safeguard the assetsof the Group and to prevent and detect anyirregularities.






%

THE AUDIT COMMITTEE

The Audit Committee was established on 13th January 1997 to act as a committee of the Board ofDirectors.

Members

Members of the Audit Committee during the financial year ended 31 December 2004 are as follows:

Members

Kamil bin Datuk Hj. Abdul Rahman (Chairman)

T.A.Rahman bin T.Andak

Ng Yak Hee

Non-Executive

Independent Non-Executive Director

Independent Non-Executive Director

Executive Director

Meetings

The Audit Committee convened ten meetings during the financial year. The meetings wereappropriately structured through the use of agendas and meeting papers, which were distributed tomembers with sufficient notification.

Members

Kamil bin Datuk Hj. Abdul Rahman (Chairman)

T.A.Rahman bin T.Andak

Ng Yak Hee

No. of meetings attended

No. of meetings held during tenure

The Executive Director for Finance & Corporate Services and the Executive Director for Operationswere invited to all meetings. Representatives of the external auditors as well as the Group InternalAuditor also attended the meetings upon invitation.

90

100

100

10

9

10

10

10 10




THE AUDIT COMMITTEE

SUMMARY OF THE ACTIVITIES OF THE AUDIT COMMITTEE FOR THE FINANCIAL YEAR ENDEDDECEMBER 31, 2004

During the year under review, the AuditCommittee carried out the following duties inaccordance with its terms of reference:

• reviewed and sought management explanations and recommended actions on the quarterly and annual financial resultsand performance of the Company and theGroup prior to submission to the Board of Directors for consideration and approval

• reviewed and sought management explanation on related party transactions entered into by the Company and the Group, and reported the same to the Board of Directors

• reviewed and discussed with the external auditors the nature and scope of their auditbefore reporting the same to the Board of Directors

• reviewed and sought management explanation on the Management Letters from the external auditor

• reviewed the internal audit plan, considered the major findings of internal audit and recommended actions to be taken by the management in response to the findings

• reviewed the relevance and adequacy of the scope, functions and resources of internal audit and the necessary authority to carry out the function

• reported to the Board on its activities and significant findings and results

SUMMARY OF THE ACTIVITIES OF THE INTERNAL AUDIT DEPARTMENT FOR THEFINANCIAL YEAR ENDED DECEMBER 31, 2004

Magna Prima Berhad has an Internal AuditDepartment whose primary responsibility is toconduct regular and systematic review of thesystems, operation and internal control processesof the Group, its subsidiary companies and business units. The reviews were performed inorder to provide reasonable assurance that thesystems, operations and procedures continue tooperate satisfactorily and effectively in theGroup, its subsidiary companies and business units.

The major activities conducted by the InternalAudit Department for the year ended December31, 2004 for the Group are summarised as follows:

• formulated the internal audit plan, strategy and scope of work

• performed ten (10) audits for the year 2004,evaluated and assessed the internal controls and efficiency of processes, and provided appropriate recommendations to management to address the issues highlighted in the internal audit reports

• sought management explanations and action plans on issues highlighted in the internal audit reports, and conducted subsequent follow-up reviews

• issued ten (10) internal audit reports

• compiled, reviewed and updated the yearly Corporate Governance report of theGroup

• reviewed and provided recommendations on the adequacy and effectiveness of policies and procedures manuals and standards relating to subsidiary companies and business unit of the Group






• conducted site visits to the project sites andprovided appropriate recommendations.

• monitored compliance with policies and procedures and reviewed the adequacy and effectiveness of the internal control structure of the Company

• conducted a series of risk assessment workshops with the Group’s business units and departments

• performed other additional tasks such budgets, project status, risk management.




1. COMPOSITION

The Audit Committee shall be appointed bythe Board of Directors and shall consist of atleast three and a maximum of five directors.The majority of the members are independentof senior management and operational functions and unencumbered by any relationship that might, in the opinion of the Board of Directors, be considered to be conflict of interest.

All members of the Audit Committee including the Chairman shall hold office only as long as they serve as Directors of the Company. The members of the Audit Committee shall elect a Chairman from among their members who is not an executive director or employee of the Company or any related corporation. Should any member of the Audit Committee cease to be a Director of the Company, his membership in the Audit Committee would cease forthwith.

2. OBJECTIVES

The primary objectives of the Audit Committee are to:-

• maintain a direct line of communication between the Board, external auditors, management and internal auditors throughregularly scheduled meetings.

• avail to the external and internal auditors private and confidential audiences at any time they desire with or without prior knowledge of management.

• review existing practice and recommend toManagement to formalise an ethics code for all executives and staff of the Group.

3. AUTHORITY

The Committee is authorised by the Board to:

• investigate any activity within its terms of reference

• obtain resources which are reasonably required to enable performance ofits duties

• have free access to all information and documents it requires for the purpose of discharging its functions and responsibilities

• maintain direct communication channels with the external auditors and the Internal Audit Department

• procure the service of external independent professional advisors when deemed necessary

• convene meetings with the external auditors, without the attendance of the management, whenever deemed necessary.

4. MEETINGS

The Audit Committee shall meet at least fivetimes a year. Additional meetings may be calledat the Chairman’s discretion. The Committee has the discretion to invite relevant personnelincluding external auditors and other advisors, ifdeemed necessary. The quorum for each meeting shall be two members.

Minutes of each meeting shall be kept and distributed to each member of the Committeeand also members of the Board. The CommitteeChairman shall report to the Board on activitiesof the Committee.

TERMS OF REFERENCE OF THE AUDIT COMMITTEE




TERMS OF REFERENCE OF THE AUDIT COMMITTEE

5. SECRETARY

The Company Secretary shall be the secretary ofthe Committee and be responsible for drawingup agendas in consultation with the Chairman.The agenda, together with the relevant documentation shall be circulated to theCommittee members, one week prior to eachmeeting. The Secretary shall be responsible forrecording attendance, keeping minutes of meetings and circulating minutes of meetings to the Committee members and members of the Board of Directors.

6. DUTIES AND RESPONSIBILITIES

The duties and responsibilities of the Committeeare to:

• review all financial information for publication,including quarterly and annual financial statements prior to submission to the Board of Directors. The review shall focus on:- changes in accounting policies and

practices- major judgmental areas- significant audit adjustments from the

external auditors- compliance with accounting standards- compliance with Bursa Malaysia

Securities Berhad (BMSB) and other regulatory and legal requirements

• discuss with the external auditor, the nature,scope and approach of the audit of the financial statements

• discuss with the external auditor on areas ofconcern arising from the audit of the financial statements

• assess the adequacy and effectiveness of the accounting procedures and the internal control systems of the Company by reviewing management letters from external auditors

• discuss problems and reservations arising from the interim and final audits and any matters the auditors may wish to discuss in the absence of the management, where necessary

• review the internal audit plan and processes, consider major findings of internal audit andrecommend actions and steps to be taken by management in response to the findings

• review the relevance and adequacy of the scope, functions and resources of internal audit and the necessary authority to carry out the function

• determine extent of cooperation and assistance given by the employees

• review related party transactions and conflict of interest situations that may arise within the Company

• consider the appointment of the external auditors, the terms of reference of their appointment and any questions on resignation and dismissal before recommendation to the Board

• undertake such other responsibilities as maybe agreed to by the Committee and the Board

• report its activities, significant results and findings.




STATEMENT ON INTERNAL CONTROL

The Board of Directors is pleased to submit herewiththe Statement on Internal Control of the Group.

Board’s Responsibility

The Board of Directors recognises the importanceof sound internal controls and risk managementpractices for good corporate governance.

The Board acknowledges that it is responsible forthe Group’s system of internal control to safeguardshareholders’ investment and the Group’s assetsand for the continuing review of its adequacyand integrity.

For the year under review, the Group had inplace a system of internal control and hadestablished an on-going process of reviewing,identifying, evaluating and managing significant risks faced by the Group.

The system of internal control and the process ofrisk management are reviewed regularly by the Board with the assistance of the AuditCommittee, Internal Audit Department and allrelevant personnel of the Group through a combination of key processes.

It must be noted however, the system of internalcontrol is designed to manage rather than toeliminate the risk of failure to achieve businessobjectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

CONTROL ENVIRONMENT AND STRUCTURE

The Board recognized that in order to achieve asound system of internal control, a conducivecontrol environment must be established. TheBoard is fully committed to the maintenance ofsuch a control environment within the Groupand in discharging their responsibilities,enhanced the following key system of internalcontrol within the Group to govern the manner inwhich the Group and its employees conductthemselves. The key elements of internal controls comprise the following:

• Management Committee comprising all executive members of the Board that schedules weekly meetings with the management staff of each business unit of the Group to closely monitor among other things, operational, project implementation,new business prospects, human resource and financial issues and to identify risks and control issues that may require further action.

• The Board meets regularly to monitor and review the overall performance of the Group, to consider the findings and recomendations of committees and to consider and approve measures to be taken and changes in policies and proceduresnecessary to address risks and to enhance the system of internal control.

• Audit Committee Composition comprising amajority of independent non-executive directors was maintained throughout the financial year. Audit Committee members were briefed and updated on the matters of corporate governance practice and legal and regulatory matters. The current composition of members brings with them awide variety of experience from different fields and background. They have full and unimpeded access to both the internal as well as external auditors during the financialyear. On occasion they also met with the external auditors without any management presence.






• Internal Audit continues to independently assure the Board, through the Audit Committee, that the internal control system functions as intended. Their work practice as governed by their audit plan is derived on a risk-based approach. A peer review was benchmarked against best practices and their findings were highlighted to the Audit Committee. Their annual audit plans are presented and approved by the Audit Committee annually before the commencement of the following financial year and updates are given as and when there are any changes.

• Financial and Operational Informationcontinue to be prepared and presented to the Board. A detailed budget is prepared and presented to the Board before the commencement of a new financial year. Upon approval of the budget, the Group’s performance is then tracked and measuredagainst the approved budget on quarterly basis. All major variances and critical operational issues are followed up with action taken thereon. On a quarterly basis, the results are reviewed by the Audit Committee and Board to enable them to gauge the Group’s overall performance compared to the approved budgets.

• The Limits of Authority determines the respective levels of authority which are delegated to staff of the respective levels to enable control of the Group’s commitmentof both capital and operational expenditure.The authority limits are subject to periodic review throughout the year as to their implementation and for the continuing suitability.

• Policies and Procedures for key business processes are formalised and documented for each significant operating unit.

• Tender Committee functions to ensure transparency in the award of contracts.

• An ISO 9001 Quality Management System which has been in practice to manage and control the quality requirement for the Company’s work done and services rendered.

RISK MANAGEMENT FRAMEWORK

Risk Management Framework. The AuditCommittee and the Management have initiatedthe following steps during the year in order toset-up a formalized Risk ManagementFramework :-

• A Risk Management Awareness session was carried out by Internal Audit to familiarise the Management on the significance of key parameters involved in managing the enterprise risk within the Group.

• Risk Monitoring and Compliance. The Audit Committee with the assistance of the Internal Audit Department has also set in place an on-going process of further fomalising the risk management systems.

• Assistant General Manager, RiskManagement is in charge of identifying principal risks involved in each business unit and establish relevant processes and systemsto monitor and manage those risks.

• Employees are encouraged to give feed-back on risk management issues and make suggestions for improvement at the operating unit level.

The system of internal control described in thisstatement is considered by the Board to be adequate and risks are considered by the Boardto be at an acceptable level within the contextof the business environment throughout theGroup’s business. However, such systems aredesigned to manage rather than eliminate therisk of failure to achieve business objectives andthus they can only provide reasonable assurance




and not absolute assurance against materialsmisstatement. Nevertheless, the system of internal control that exist throughout the financialyear under review provide a level of confidenceon which the Board relies for assurance. Thiscomplies with the provisions recommended inthe Bursa Malaysia’s Statement on InternalControl: Guidance for Directors of Public Listed Companies.

For the financial year under review, the Board issatisfied with the adequacy and integrity of theGroup’s system of internal control and that nomaterial losses, contingencies or uncertaintieshave arisen from any inadequate or failure ofthe Group’s system of internal control that wouldrequire separate disclosure in the Group’s Annual Report.

This Statement is made in accordance with theresolution of the Board dated 23 March 2005.






FINANCIAL STATEMENTS


Report of the Directors

Statement by Directors

Statutory Declaration

Report of the Auditors to the Members

Balance Sheets

Income Statements

Consolidated Statement of Changes in Equity

Company Statement of Changes in Equity

Cash Flow Statements

Notes to the Financial Statements

Summary of Landed Properties

Analysis by Size of Shareholdings

Notice of Annual General Meeting

Statement Accompaying Notice of Annual General Meeting

Proxy Form

29

34

34

35

36

37

38

39

40

70

42

71

73

75


28 Annual Report 2004 The Grand Entrance of Avare!




REPORT OF THE DIRECTORS

The directors hereby present their report together with the audited financial statements of the Group and of theCompany for the financial year ended 31 December 2004.

Principal Activities

The principal activities of the Company are investment holding and the provision of management services. The principal activities of the subsidiary companies are set out in Note 5 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

Financial ResultsGroup Company

RM RM

Profit after taxation 2,867,281 2,846Minority interests (1,234,005) -Net profit for the financial year 1,633,276 2,846

In the opinion of the directors, the results of the operations of the Group and of the Company for the financial yearhave not been substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen during the interval between the end of the financial year and the date of this report any item,transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the current financial year.

Dividends

No dividend has been paid or declared by the Company since the end of the previous financial year. The Board ofDirectors does not recommend any dividend to be paid for the financial year under review.

Reserves and Provisions

There were no material transfers to or from reserves or provisions during the financial year other than those disclosedin the financial statements.

Issue of Shares and Debentures

During the financial year, the issued and paid-up share capital of the Company was increased from RM39,362,429to RM42,415,179 by the issuance of:

(a) 1,198,250 new ordinary shares of RM1 each for cash pursuant to the exercise of options granted under the Magna Prima Berhad Employees Share Option Scheme (ESOS) at the option price of RM1.19 each;

(b) 38,100 new ordinary shares of RM1 each for cash pursuant to the exercise of options granted under the Magna Prima Berhad ESOS at the option price of RM1.23 each; and

(c) 1,816,400 new ordinary shares of RM1 each through a private placement at an issue price of RM1.85 each for cash, for additional working capital purposes.

All new shares issued rank pari passu in all respects with the existing issued share capital of the Company.

There were no issues of debentures during the financial year under review.

Employees Share Option Scheme

The Magna Prima Berhad Employees Share Option Scheme (ESOS) was approved by shareholders at theExtraordinary General Meeting on 28 April 2003.

The main features of the ESOS are as follows:

(a) Eligible employees who fulfil the following conditions shall be eligible to participate in the Scheme:




(i) An eligible employee need not be a Malaysian citizen but must be at least eighteen (18) years of age on or before the date of offer. An executive director must be at least eighteen (18) years of ageon or before the date of offer and need not be a Malaysian;

(ii) An eligible employee or an executive director must fall under one of the categories of employees listed in By-Law 6.1;

(iii) An eligible employee or an executive director must be employed in the Group and his employment must have been confirmed on or prior to the date of offer;

(iv) If an eligible employee or an executive director is employed by a company which is acquired by theGroup during the duration of the Scheme and becomes a subsidiary company of the Company upon such acquisition, the employment of the eligible employee or executive director must have been confirmed on or prior to the date of offer; and

(v) If an eligible employee is employed by way of contract, he must, in addition to the conditions stipulated in paragraphs (i) to (iv) above, also fulfil the following conditions:

• the employee must be serving the Group on a full time basis; and

• in the event that the employee is serving under an employment contract, the contract shouldbe for a duration of at least one (1) year.

(b) The maximum number of new ordinary shares which may be available under the ESOS shall not exceed 10% of the total issued and paid-up share capital of the Company at the point in time during the tenure of the ESOS.

(c) The ESOS shall be in force for a period of five years with effect from the date of the confirmation letter from the Securities Commission (SC) dated 9 July 2003, subject to any extension of the ESOS as may be approvedby the relevant authorities. However, as per clause 19.1 of the ESOS By-Laws, the Company may, if the Boarddeems fit upon recommendation of the ESOS Committee, renew the ESOS for a further five years as approved by the SC.

(d) The option is personal to the grantee and is non-assignable.

(e) The option price shall be determined at a discount of not more than 10% from the weighted average market price of the Company’s ordinary shares of RM1.00 each for five (5) market days preceeding the date of offer, or the par value of the shares, whichever is higher.

(f) The options granted may be exercised in full or in lesser number of ordinary shares provided that the numbershall be in multiples of 100 shares.

(g) The options granted may be exercised at any time within a period of five years from the date of offer of the option or such period as may be specifically stated in the offer upon giving notice in writing.

(h) The persons to whom the options have been granted shall not participate in more than one employee share option scheme implemented by any company within the Group.

The movements of options over unissued shares of the Company granted under the ESOS during the financial yearare as follows:

<---------------- Number of share options -------------------> Subscription priceAt At per ordinary Exercise

1.1.2004 Granted Exercised 31.12.2004 share period2,623,000 - 1,198,250 1,424,750 1.19 9.7.2003 to 8.7.2008

- 90,300 38,100 52,200 1.23 15.4.2004 to 8.7.2008

2,623,000 90,300 1,236,350 1,476,950



Directors

The directors who served since the date of the last report are as follows:

Tan Sri Dato’ Kamaruzzaman bin Shariff (appointed on 11.5.2004)Dato’ Abd Gani bin YusofAhmad Ghazali bin Md KassimN. Chanthiran a/l NagappanNg Yak HeeKamil bin Datuk Hj. Abdul RahmanT. A Rahman bin T. AndakChua Lee Boon (not re-elected during the 9th Annual General Meeting

held on 24.6.2004)

Directors’ Interests

Details of holdings and deemed interests in the shares and options over shares of the Company or its related corporations by the directors in office at the end of the financial year, according to the register required to be keptunder Section 134 of the Companies Act, 1965, were as follows:

No. of ordinary shares of RM1 eachAt At

1.1.2004 Acquired Disposed 31.12.2004Magna Prima BerhadDirect interest:

Dato’ Abd Gani bin Yusof 5,789,313 - (1,000,000) 4,789,313Ahmad Ghazali bin Md. Kassim 702,000 339,269 (1,032,000) 9,269Ng Yak Hee 800,930 230,000 (200,000) 830,930

Indirect interest:Ahmad Ghazali bin Md. Kassim 3,244,207 1,052,000 - 4,296,207Ng Yak Hee 4,063,384 - - 4,063,384

No. of ordinary shares of RM1 eachAt At

1.1.2004 Acquired Disposed 31.12.2004Magna Park Sdn. Bhd.Indirect interest:-

Dato’ Abd Gani bin Yusof 675,000 - - 675,000Ahmad Ghazali bin Md. Kassim 675,000 - - 675,000

No. of options over ordinary sharesof RM1 each (ESOS)

At AtMagna Prima Berhad 1.1.2004 Exercised 31.12.2004

Dato’ Abd Gani bin Yusof 100,000 - 100,000Ahmad Ghazali bin Md. Kassim 330,000 (330,000) -Ng Yak Hee 230,000 (230,000) -

None of the other directors holding office at the end of the financial year had any interest in the shares of theCompany or it related corporations during the financial year under review.




Directors’ Benefits

Since the end of the previous financial year, no director of the Company has received or become entitled toreceive any benefit (other than a benefit included in the aggregate amount of emoluments received or due andreceivable by directors as shown in the financial statements) by reason of a contract made by the Company or arelated corporation with the director or with a firm of which the director is a member, or with a company in whichthe director has a substantial financial interest.

Neither during nor at the end of the financial year, was the Company or any of its subsidiary companies a party toany arrangement the object of which is to enable the directors to acquire benefits by means of the acquisition ofshares in or debentures of the Company or any other body corporate.

Other Statutory Information

(a) Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonable steps

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

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the directors are not aware of any circumstances which would render:

(i) the amount written off for bad debts or the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent;

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading;

(iii) any amount stated in the financial statements of the Group and of the Company misleading; and

(iv) adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

(c) No contingent or other liabilities of the Group and of the Company have become enforceable, or are likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may affect the ability of the Group or the Company to meet their obligations as and when they fall due.

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

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

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




Significant Events

The significant events are disclosed in Note 34 to the financial statements.

Subsequent Events

The subsequent events are disclosed in Note 35 to the financial statements.

Staff Information

The total number of employees of the Group and of the Company (excluding directors) at the end of the financialyear were 191 and 36 (2003 : 295 and 15) respectively.

Auditors

The auditors, Anuarul Azizan Chew & Co., have expressed their willingness to accept re-appointment.

Signed in accordance with a resolution of the directors.

KUALA LUMPUR

23 March 2005


TAN SRI DATO’ KAMARUZZAMAN BIN SHARIFF KAMIL BIN HJ ABDUL RAHMAN


STATEMENT BY DIRECTORSPursuant to Section 169(15) of the Companies Act, 1965

We, TAN SRI DATO’ KAMARUZZAMAN BIN SHARIFF and KAMIL BIN HJ ABDUL RAHMAN , being two of the directors ofMAGNA PRIMA BERHAD, do hereby state that, in the opinion of the directors, the financial statements set out onpages 27 to 69 are drawn up in accordance with the applicable approved accounting standards in Malaysia andthe provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group andof the Company as at 31 December 2004 and of their results and the cash flows of the Group and of the Companyfor the financial year ended on that date.

Signed in accordance with a resolution of the directors.

KUALA LUMPUR

23 March 2005

Before me,


TAN SRI DATO’ KAMARUZZAMAN BIN SHARIFF KAMIL BIN HJ ABDUL RAHMAN

Subscribed and solemnly declared by the abovenamedN.CHANTHIRAN A/L NAGAPPAN at KUALA LUMPUR in theFederal Territory this 23 March 2005

)))

N.CHANTHIRAN A/L NAGAPPAN

STATUTORY DECLARATIONPursuant to Section 169(16) of the Companies Act, 1965

I, N.CHANTHIRAN A/L NAGAPPAN, being the director primarily responsible for the financial management of MAGNAPRIMA BERHAD, do solemnly and sincerely declare that the financial statements set out on pages 27 to 69 are tothe best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing thesame to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

COMMISSIONER FOR OATHS

No. 66 Jalan Tun Perak50050 Kuala Lumpur


REPORT OF THE AUDITORS TO THE MEMBERS OF MAGNA PRIMA BERHAD

We have audited the financial statements set out on pages 36 to 69 of Magna Prima Berhad.

The financial statements are the responsibility of the Company’s directors.

It is our responsibility to form an independent opinion, based on our audit, on those financial statements and toreport our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no otherpurpose. We do not assume responsibility towards any other person for the content of this report.

We conducted our audit in accordance with approved standards on auditing in Malaysia. These standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are freeof 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 significantestimates made by directors, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion:

(a) the financial statements are properly drawn up in accordance with the applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of:-

(i) the state of affairs of the Group and of the Company as at 31 December 2004 and of their 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 of the Group and of the Company.

(b) the accounting and other records and the registers required by the Act to be kept by the Company and byits subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

We are satisfied that the financial statements of the subsidiary companies that are consolidated with theCompany’s financial statements are in form and content appropriate and proper for the purposes of the preparationof consolidated financial statements and have received satisfactory information and explanations as required by usfor those purposes.

The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualificationand did not include any comment made under subsection (3) of Section 174 of the Act.

KUALA LUMPUR

23 March 2005


ANUARUL AZIZAN CHEW & CO.Firm Number: AF 0791Chartered Accountants

SATHIEA SEELEAN A/L MANICKAMApproved Number: 1729/05/06 (J/PH) Partner of Firm


BALANCE SHEETS AS AT 31 DECEMBER 2004

Group Company2004 2003 2004 2003

Non-Current Assets Note RM RM RM RMProperty, plant and equipment 3 8,061,240 5,881,244 2,142,581 171,733Interest in jointly controlled entities 4 - 3,536,086 - -Investment in subsidiary companies 5 - - 36,360,998 30,750,998Other investment 6 325,000 425,000 - -Property development costs 7 5,024,136 - - -Deferred taxation 8 - 224,785 - -Goodwill arising on consolidation 9 5,626,572 - - -

19,036,948 10,067,115 38,503,579 30,922,731Current AssetsInventories 10 8,030,286 6,817,659 - -Property development costs 7 47,048,396 35,654,370 - -Other receivables 11 22,149,618 43,060,588 - -Amount owing by customers on contract 12 8,702,862 17,174,937 276,061 4,730,461Trade receivables 13 7,940,020 4,242,227 - -Tax recoverable 6,832 - - -Amount owing by subsidiary companies 14 - - 22,818,599 15,079,359Fixed deposits with licensed banks 15 5,525,969 2,669,551 - -Cash held under Housing DevelopmentAccounts 16 963,482 2,225,122 - -Cash and bank balances 3,644,148 4,989,503 199,165 3,198,719

104,011,613 116,833,957 23,293,825 23,008,539

Current LiabilitiesTrade payables 17 23,316,217 39,678,625 - -Other payables 18 13,887,561 11,900,609 1,104,325 3,091,376Amount owing to subsidiary company 14 - - 7,252,345 3,355,891Hire purchase payables 19 351,586 472,324 51,194 -Bank borrowings 20 14,395,516 15,305,080 793,953 -Taxation 7,068,459 7,585,163 18,652 48,114

59,019,339 74,941,801 9,220,469 6,495,381Net current assets 44,992,274 41,892,156 14,073,356 16,513,158

64,029,222 51,959,271 52,576,935 47,435,889

Financed By:

Share capital 21 42,415,179 39,362,429 42,415,179 39,362,429Reserves 22 12,664,325 9,433,173 9,790,409 8,059,960Total shareholders’ funds 55,079,504 48,795,602 52,205,588 47,422,389Minority interests 4,004,076 2,226,633 - -

59,083,580 51,022,235 52,205,588 47,422,389

Deferred and Non-Current Liabilities

Deferred taxation 8 161,377 - 14,300 13,500Hire purchase payables 19 1,103,910 853,735 357,047 -Bank borrowings 2 0 3,680,355 83,301 - -

64,029,222 51,959,271 52,576,935 47,435,889

The accompanying notes form an integral part of the financial statements.



INCOME STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2004

Group Company2004 2003 2004 2003

Note RM RM RM RM

Revenue 23 99,380,571 169,640,976 4,337,177 500,000

Cost of sales (80,725,545) (169,610,381) - -

Gross profit 18,655,026 30,595 4,337,177 500,000

Other operating income 3,417,776 5,243,174 27,267 1,295,441

Distribution expenses (197,809) (199,831) - -

Administration expenses (15,628,716) (5,186,069) (4,186,330) (486,842)

Other operating expenses (1,075,971) (576,663) (119,497) (17,477)

Share of results of jointly - 3,856,140 - - controlled entities

Profit from operations 24 5,170,306 3,167,346 58,617 1,291,122

Finance costs 25 (1,545,249) (2,102,455) (10,165) (15,948)

Profit before taxation 3,625,057 1,064,891 48,452 1,275,174

Taxation 26 (757,776) (924,154) (45,606) (17,182)

Profit after taxation 2,867,281 140,737 2,846 1,257,992

Minority interests (1,234,005) (105,237) - -

Net profit for the financial year 1,633,276 35,500 2,846 1,257,992

Earnings per share (sen)Basic 28(a) 3.9 0.1Diluted 28(b) 3.8 0.1




CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2004

Non-distributable Distributable

Share Share Capital Reserves on Retained Capital Premium Reserve Consolidation Profits Total

RM RM RM RM RM RM

At 1 January 2003 33,300,000 1,729,442 29,994 389,182 3,279,060 38,727,678

Issued during the financial year 6,062,429 4,379,423 - - - 10,441,852

Amount credited to income statement - - - (259,455) - (259,455)

Shares issue expenses - (149,973) - - - (149,973)

Net profit for the financial year - - - - 35,500 35,500

At 31 December 2003 39,362,429 5,958,892 29,994 129,727 3,314,560 48,795,602

At 1 January 2004 39,362,429 5,958,892 29,994 129,727 3,314,560 48,795,602

Issued during the financial year 3,052,750 1,780,371 - - - 4,833,121

Amount credited toincome statement - - - (129,727) - (129,727)

Shares issue expenses - (52,768) - - - (52,768)

Net profit for the financial year - - - - 1,633,276 1,633,276

At 31 December 2004 42,415,179 7,686,495 29,994 - 4,947,836 55,079,504




COMPANY STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2004

Non-distributable Distributable

Share Share RetainedCapital Premium Profits Total

RM RM RM RM

At 1 January 2003 33,300,000 1,729,442 843,076 35,872,518

Issued during the financial year 6,062,429 4,379,423 - 10,441,852

Shares issue expenses - (149,973) - (149,973)

Net profit for the financial year - - 1,257,992 1,257,992

At 31 December 2003 39,362,429 5,958,892 2,101,068 47,422,389

At 1 January 2004 39,362,429 5,958,892 2,101,068 47,422,389

Issued during the financial year 3,052,750 1,780,371 - 4,833,121

Shares issue expenses - (52,768) - (52,768)

Net profit for the financial year - - 2,846 2,846

At 31 December 2004 42,415,179 7,686,495 2,103,914 52,205,588




CASH FLOW STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2004

Group Company2004 2003 2004 2003

Note RM RM RM RMCash Flows From Operating Activities

Profit before taxation 3,625,057 1,064,891 48,452 1,275,174Adjustment for:-

Depreciation of property, plant and equipment 1,732,026 2,995,692 114,454 63,154

Gain on disposal of property, plant and equipment (394,550) (3,117,928) - (1,294,344)

Property, plant and equipment written off 261,921 56,225 - -

Allowance for diminution in value onother investment 100,000 - - -Interest income (96,637) (506,227) (4,967) (910)Interest expense 1,545,249 2,102,455 10,165 15,948Reserve on consolidation recognised (129,727) (259,455) - -Bad debts written off 1,942 317,952 - -Write back of provision for expenses

no longer required (151,068) (277,603) - -Share of joint venture profit - (3,856,140) - -

Operating profit/(loss) before working capital changes 6,494,213 (1,480,138) 168,104 59,022

(Increase)/Decrease in working capital

Inventories 2,533,219 940,449 - -Amount owing by customers on contract (3,697,793) 711,184 - -Development properties and real

property assets (16,418,162) 55,185,163 - -Trade receivables 24,275,319 (2,503,197) - -Other receivables 8,430,749 5,785,232 3,232,376 529,752Trade payables (18,163,320) (29,712,124) - -Other payables (4,944,791) (3,270,032) (1,987,051) 2,303,410Amount owing to directors - 98,370 - (3,000)Amount owing by subsidiary companies - - (3,842,786) (3,469,646)

(7,984,779) 27,235,045 (2,597,461) (639,484)Cash (used in)/generated from operations (1,490,566) 25,754,907 (2,429,357) (580,462)

Taxation paid (767,992) (2,327,883) (74,267) (159,236)Interest received 96,637 506,227 4,967 910Interest paid (1,545,249) (2,102,455) (10,165) (15,948)

(2,216,604) (3,924,111) (79,465) (174,274)Net cash (used in)/from operating activities (3,707,170) 21,830,796 (2,508,822) (754,736)

Cash Flows From Investing Activities

Purchase of property, plant andequipment 29 (1,396,722) (211,130) (439,279) (74,889)

Investment in subsidiary companies - - (5,610,000) -Cash outflow on acquisition of

subsidiary companies (5,264,602) - - -Net proceeds from disposal of property,

plant and equipment 1,856,864 2,531,246 - -Investment in joint venture 3,536,086 2,372,705 - -

Net cash (used in)/from investing activities (1,268,374) 4,692,821 (6,049,279) (74,889)


Group Company2004 2003 2004 2003

Note RM RM RM RMCash Flows From Financing Activities

Repayment of hire purchase liabilities (972,363) (2,205,495) (15,759) -Repayment of bank borrowings (5,332,328) (24,163,068) - (1,078,447)Drawdown from bank borrowings 4,486,204 - - -Increase in fixed deposits pledged (4,524,281) - - -Proceeds from the issuance of shares 4,833,121 5,252,301 4,833,121 5,252,301Shares issue expenses (52,768) (149,952) (52,768) (149,952)

Net cash (used in)/from financing activities (1,562,415) (21,266,214) 4,764,594 4,023,902

Net (decrease)/increase in cash and cashequivalents (6,537,959) 5,257,403 (3,793,507) 3,194,277

Cash and cash equivalents at beginningof the financial year (361,186) (5,618,589) 3,198,719 4,442

Cash and cash equivalents at end of the financial year (6,899,145) (361,186) (594,788) 3,198,719

Cash and cash equivalents at end of the financial year comprises:

Cash and bank balances 3,644,148 7,214,625 199,165 3,198,719Cash held under Housing Development

Accounts 963,482 - - -Fixed deposits with licensed bank 5,525,969 2,669,551 - -Bank overdraft (11,506,775) (10,245,362) (793,953) -Less: Deposits pledged with licensed bank (5,525,969) - - -

(6,899,145) (361,186) (594,788) 3,198,719



CASH FLOW STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2004



NOTES TO THE FINANCIAL STATEMENTS

1. Corporate Information

The principal activities of the Company are investment holding and the provision of management services. The principal activities of the subsidiary companies are set out in Note 5 to the financial statements.

The Company is a public limited liability company, incorporated under the Companies Act, 1965 and domiciled in Malaysia, and is listed on the Second Board of Bursa Malaysia Securities Berhad.

2. Significant Accounting Policies

(a) Basis of accounting

The financial statements of the Group and of the Company have been prepared on the historical cost basis except as disclosed in the notes to the financial statements and in compliance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia.

During the financial year, the Group and the Company adopted the following Malaysian AccountingStandards Board (MASB) Standard for the first time:

MASB 32 Property Development Activities

The adoption of MASB 32 has not given rise to any adjustments to the opening balances of retained profits of the prior and current financial year. Comparatives, however, have been restated, as disclosed in Note 38 to conform to changes in presentation required by MASB 32 that have been applied retrospectively.

MASB 31, Accounting for Government Grants and Disclosure of Government Assistance is not adopted as it is not applicable to the Group and to the Company.

(b) Basis of consolidation

The consolidated financial statements include the financial statements of the Company and all its subsidiary companies made up to the end of the financial year. Subsidiary companies are consolidated using the acquisition method of accounting except for Dunia Epik Sdn. Bhd., Magna Prima Construction Sdn. Bhd. and Magna Realty Sdn. Bhd., which are consolidated on the merger method of accounting in accordance with the provisions of Malaysian Accounting Standard No. 2 prior to 2002.

Under the acquisition method of accounting, companies acquired or disposed of are included in theconsolidated financial statements from the date of acquisition or to the date of disposal.

Under the merger method of accounting, the results of the subsidiary companies are accounted on a full year basis irrespective of the date of merger. The difference between nominal value of shares issued as consideration for merger and nominal value of shares of the subsidiary companies is taken to Merger Reserve, which in turn is transferred to the Income Statement over a period of 5 years.

The Group has chosen to apply MASB 21, Business Combinations, prospectively as allowed for under the transitional provision of MASB 21 in the preparation of the financial statements of the Group. Accordingly, business combinations effected prior to 1st January 2002 have not been restated to comply with MASB 21.

All inter-company transactions, balances and unrealised surpluses and deficits on transactions with and between subsidiary companies are eliminated.

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

(c) Goodwill arising on consolidation

Goodwill arising on consolidation represents the excess of the acquisition cost over the fair value of the net assets of the subsidiary companies at the date of acquisition.

Goodwill on consolidation is reviewed at each balance sheet date and will be written down for impairment where it is considered necessary.




The gain or loss on disposal of a subsidiary company is the difference between net disposal proceedsand the Group’s share of its net assets together with any unamortised balance of goodwill which were not previously recognised in the consolidate income statement.

(d) Subsidiary companies

A subsidiary company is a company in which the Group owns, directly or indirectly, more than 50% ofthe equity share capital and has control over its financial and operating policies so as to obtain benefits from its activities.

Investment in subsidiary companies is stated at cost unless, in the opinion of the directors, a permanent diminution in value of the investments has arisen.

(e) Property, plant and equipment

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

Freehold land and building under construction are not depreciated. Long term leasehold land is amortised over the remaining lease period. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life at the following annual rates:

Buildings 2%Plant and machinery 10% - 20%Furniture, fittings and equipment 8% - 20%Motor vehicles 20%Container store and cabin 10% - 20%Office renovation 10%

Gains or losses on disposals are determined by comparing net disposal proceeds with carrying amount and are included in profit/(loss) from operations.

(f) Impairment

The carrying values of assets are reviewed for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with theirrecoverable amounts. The recoverable amount is the higher of an asset’s net selling price and its value in use, which is measured by reference to discounted future cash flows.

An impairment loss is charged to the income statement immediately, unless the asset is carried at revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of previously recognised revaluation surplus for the same asset.

Subsequent increase in the recoverable amount of an asset is treated as reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income statement immediately, unless the asset is carried at revalued amount. A reversal of an impairment loss on a revalued asset is credited directly to revaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the income statement, a reversal of that impairment loss is recognised as income in the income statement.

(g) Other investments

Other investments are stated at cost less allowance for diminution in value.

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




(h) Land held for property development

Land held for property development consists of land held for future development activities where no significant development has been undertaken or where development activities are not expected to be completed within normal operating cycle. Such land is classified as non current assets and is stated at cost less any accumulated impairment losses. The policy of recognition and measurement of impairment losses is in accordance with Note 2(f).

Land held for property development is reclassified as current assets when the development activities have been commenced and where it can be demonstrated that the development activities can becompleted within the normal operating cycle.

Cost 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 Company or its subsidiary companies had previously recorded the land at revalued amount, it continues to retain this amount as its surrogate cost as allowed by MASB 32, Property Development Activities.

(i) Property development costs

Property development costs comprise of all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities.

Property development costs not recognised as an expense are recognised as an asset, which measured at the lower of cost and net realisable value.

Property development costs shall be classified as non-current asset where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle.

Property development costs shall be reclassified to current assets when the development activities have been commenced and expected to be completed within the normal operating cycle.

When the financial outcome of development activity can be reliably estimated, property development revenue and expenses are recognised in the income statement by using the stage of completion. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.

When the financial outcome of a development activity cannot be reliably estimated property development revenue is recognised only to the extent of property development costs incurred that isprobable will be recoverable, and property development costs on units sold are recognised as an expense in the period in which they are incurred.

When the revenue recognised in the income statement exceed billings to purchaser, the balance is shown as accrued billings under current assets. When the billings to purchaser exceed the revenue recognised in the income statement, the balance is shown as progress billings under current liabilities.

(j) Inventories

(i) Properties development

Inventories represent cost of unsold completed development units which is determined on a specific identification basis. The inventories are stated at the lower of cost and net realisable value.

(ii) Other inventories

Inventories are valued at the lower of cost and net realisable value after adequate allowance has been made for all deteriorated, damage, obsolete or slow-moving inventories.

Net realisable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling expenses.




(k) Receivables

Trade and other receivables are carried at anticipated realisable value. Bad debts are written off when identified. Doubtful debts are provided based on specific review of the receivables.

(l) Cash and cash equivalents

Cash and cash equivalent consist of cash in hand, bank balances and deposits with banks and highlyliquid investments which have an insignificant risk of changes in value. For the purpose of the cash flow statement, cash and cash equivalent are presented net of bank overdrafts.

(m) Construction contracts

Construction contracts are stated at cost plus the attributable profits less applicable progress billings and provision for foreseeable losses, if any.

When the outcome of a construction contract can be estimated reliably, contract revenue and contract cost are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activities at the balance sheet date. The stage of completion is determined by the proportion that contract cost incurred for the work performed to date as a percent of the estimated contract costs.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that it is probable will be recoverable and contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

The aggregate of the costs incurred and the profit/loss recognised on each contract is compared against the progress billings up to the period end. Where costs incurred and recognised profits (less recognised losses) exceed progress billings, the balance is shown as amount owing by customers on contracts. Where progress billings exceed costs incurred plus recognised profits (less recognised losses),the balance is shown as amount owing to customers on contracts.

(n) Payables

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

(o) Hire purchase

Assets acquired by way of hire purchase are stated at an amount equal to the lower of their fair values and the present value of the minimum hire purchase payments at the inception of the hire purchase, less accumulated depreciation and impairment losses. The corresponding liability is included in the balance sheet as liabilities. In calculating the present value of the minimum hire purchase payments, the discount factor used is the interest rate implicit in the hire purchase, when it is practical to determine; otherwise, the Group’s incremental borrowing rate is used.

Hire purchase payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised as an expense in the incomestatement over the term of the relevant hire purchase so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

The depreciation policy for hire purchase assets is consistent with that for depreciable property, plantand equipment which are owned.




(p) 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.

When the borrowings are made specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of fundsdrawdown from that borrowing facility.

When the borrowings are made generally, and used for the purpose of obtaining a qualifying asset, the borrowing costs eligible for capitalisation are determined by applying a capitalisation rate which is the weighted of the borrowing costs applicable to the Group’s borrowings that are outstanding during the financial year, other than borrowings made specifically for the purpose of acquiring another qualifying asset.

Borrowing costs which are not eligible for capitalisation are recognised as an expense in the income statement in the period in which they are incurred.

(q) Revenue recognition

(i) Property development

When property development units/properties are sold, the attributable portion of property development costs shall be recognised as an expense in the period in which the related revenue is recognised.

Revenue derived from property development activities is recognised based on the percentage of completion method. The stage of completion is determined based on the total actual costs incurred to date over the estimated total contract costs.

Any expected loss on a development project including costs to be incurred over the defects liability period shall be recognised as an expense immediately.

(ii) Construction contracts

Revenue from work done on construction contracts is recognised based on the percentage of completion method. The stage of completion is determined based on the total costs incurred to date over the estimated total project costs. Allowance for foreseeable losses is made in the financial statements when such losses can be determined.

(iii) Goods sold and services rendered

Revenue from sales of goods and services is recognised when significant risk and rewards have been transferred to the buyer, if any, net of sales taxes and discounts.

(iv) Rental and interest income

Rental income and interest income are recognised as it accrues unless ability to collect is in doubt.

(r) 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 recognised on the liability method for all temporary differences between the carrying amount of an assets or liabilities in the balance sheet and its tax base at the balance sheet date. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are 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 deductible




temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax asset and liability is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted by the balance sheet date. The carrying amount of a deferred tax asset is reviewed at each balance sheet date and is reduced to the extent that it becomes probable that sufficient future taxable profit will be available.

Deferred tax is recognised in the income statement, except when it arises from a transaction which isrecognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.

(s) 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/Company. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

The expected cost of accumulating compensated absences is measured as additional amount expected to be paid as a result of the unused entitlement that has accumulated at the balance sheet date.

(ii) Defined contribution plans

As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund ("EPF"). Such contributions are recognised as an expense in theincome statement in the period to which they relate.

(iii) Equity compensation benefits

The Magna Prima Berhad Employees Share Options Scheme ("ESOS") allows the Group’s employees to acquire ordinary shares of the Company. No compensation cost or obligation isrecognised. When the options are exercised, equity is increased by the amount of the proceeds received.

(t) Financial instruments

Financial instruments carried on the balance sheet include cash and bank balances, deposits, other investments, receivables, payables and borrowings. Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument.

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

The particular recognition method adopted for financial instruments recognised on the balance sheet is disclosed in the individual accounting policy statements associated with each item.



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Long termleasehold Furnitureland and and Office Motor Office

Company building fittings equipment Computers vehicle renovation TotalRM RM RM RM RM RM RM

CostAt 1.1.2004 - 31,261 49,212 86,484 - 102,120 269,077Additions - - 75,394 41,107 472,110 274,668 863,279Other movements 1,215,510 - - - - - 1,215,510At 31.12.2004 1,215,510 31,261 124,606 127,591 472,110 376,788 2,347,866

Accumulated depreciation

At 1.1.2004 - 19,014 20,858 45,095 - 12,377 97,344Charge for the financial year 45,004 3,201 6,810 10,372 35,175 13,892 114,454

Other movements (6,513) - - - - - (6,513)At 31.12.2004 38,491 22,215 27,668 55,467 35,175 26,269 205,285

Carrying amountAt 31.12.2004 1,177,019 9,046 96,938 72,124 436,935 350,519 2,142,581

At 31.12.2003 - 12,247 28,354 41,389 - 89,743 171,733Depreciation

charge for thefinancial year ended 31.12.2003 43,153 3,021 4,853 8,113 - 4,014 63,154

(a) Included in the property, plant and equipment of the Group and of the Company are the following assets under hire purchase with carrying amount of RM1,243,334 and RM35,175 (2003: RM2,605,483 and Nil) respectively:

Group Company2004 2003 2004 2003

RM RM RM RM

Motor vehicles 1,112,667 1,185,935 35,175 -Plant and machinery 130,667 1,419,548 - -

1,243,334 2,605,483 35,175 -

(b) Included in the property, plant and equipment of the Group are freehold land and building pledged to financial institutions as security for credit facilities granted to subsidiary company with carrying amount of RM1,320,133 (2003 : RM1,008,292).

(c) The building under construction included in the property, plant and equipment of the Group is located on land belongs to a third party.

(d) Other movements represent the restatement of building units in the current financial year, due to rescission of a Sales and Purchase agreement entered between the Company and a third party.

(e) The remaining period of the long term leasehold land ranges from 24 to 91 years.




4. Interest in Jointly Controlled Entities Group

2004 2003RM RM

Current account with jointly controlled entities - (5,129,609)Accumulated share of profit - 8,665,695

- 3,536,086

Details of the joint ventures carried out through jointly controlled entities in Malaysia are as follows:

Country of EffectiveName of entity Legal Form incorporation Interest Principal activity

2004 2003% %

Konsortium Marimas Joint venture Civil works’ - Magna Prima agreement Malaysia - 75 contractors

Konsortium Supply, installationMarimas Joint venture and maintenance of - Magna Prima agreement Malaysia - 56 equipment

Jayarena Joint venture Civil works’- Dunia Epik JV agreement Malaysia - 30 contractors

(a) The Group’s proportionate interest in the jointly controlled entities are analysed are follows:

Group2004 2003

RM RM

Receivables - 17,376,689Fixed deposits with a licensed bank - 3,199,513Cash and bank balances - 122,638Payables - (17,340,224)

- 3,358,616Amount owing by other joint partners - 177,470Net assets - 3,536,086

(b) The Group’s proportionate share of results of the jointly controlled entities are as follows:

Group 2004 2003

RM RM

Revenue - 11,235,239Cost of sales - (7,416,018)Gross profit - 3,819,221Other operating income - 37,067Operating expenses - (148)Net profit for the financial year - 3,856,140




5. Investment in Subsidiary Companies

(a) Investment in subsidiary companiesCompany

2004 2003RM RM

Unquoted shares, at cost- ordinary shares 36,359,998 30,749,998- redeemable preference shares 1,000 1,000

36,360,998 30,750,998

(b) The subsidiary companies and shareholdings therein are as follows:

Country EffectiveName of company of incorporation interest Principal activities

2004 2003% %

Direct holding -Dunia Epik Sdn. Bhd. Malaysia 100 100 Specialist in quarrying and

crushing services for construction, engineering, and property maintenance services

Magna Prima Malaysia 100 100 Specialist in earthworks, Construction drainage works,Sdn. Bhd. specialist engineering and

building construction

Magna Realty Sdn. Bhd. Malaysia 100 100 Investment holding

Prima Hardware Malaysia 100 100 DormantSdn. Bhd.

Gallery Building Materials Sdn. Bhd. Malaysia 51 - Importing, distribution, sales

and marketing of building materials and relatedservices

Indirect holding -Magna Park (Mentakab) Sdn. Bhd. Malaysia 100 100 Property development

Magna Park Sdn. Bhd. Malaysia 91 91 Property development

Crest Overseas Sdn. Bhd. Malaysia 100 100 Dormant

Magna Quarry Services Sdn. Bhd Malaysia 100 100 Dormant

Magna Park (Seremban) Sdn. Bhd. Malaysia 100 100 Dormant

Hexagon North Sdn. Bhd. Malaysia 100 - Trading in building materials

Stone Collection Sdn. Bhd Malaysia 100 - Trading in building materials

Embassy Court Sdn. Bhd. Malaysia 100 - Property development

Amanabina Sdn. Bhd. Malaysia 55 - Marketing of properties and project management services




(c) Acquisition of subsidiary companies

The effect of the acquisition on the financial results of the Group during the financial year is as follows:

Group2004RM

Revenue 16,735,295Cost of sales (10,590,393)Gross profit 6,144,902Other operating income 130,412Administrative expenses (3,342,630)Finance costs (126,480)Taxation (441,000)Minority interest (928,640)Net profit for the financial year 1,436,564

The summary of effects of the acquisition on the financial position of the Group as at 31 December 2004 is as follows:

Group2004RM

Goodwill on consolidation 5,626,572Property, plant and equipment 2,453,215Property development costs 5,024,136Inventories 4,957,205Trade and other receivables 3,261,856Fixed deposits with licensed bank 1,136,101Cash and bank balances 339,514Trade and other payables (7,052,517)Amount owing to ultimate holding company (2,669,463)Amount owing to immediate holding company (811,645)Hire purchase payables (279,814)Bank borrowings (3,152,210)Deferred taxation (44,557)Minority interest (1,472,079)Taxation (6,000)Group’s share of net assets 7,310,314




The fair values of the assets acquired and liabilities assumed from the acquisition of subsidiary companies are as follows:

Group2004RM

Net assets acquired:Goodwill on consolidation 5,626,572Property, plant and equipment 2,476,913Inventories 3,745,847Trade and other receivables 3,866,060Fixed deposits with licensed bank 1,001,688Cash and bank balances 719,148Trade and other payables (8,331,382)Hire purchase payables (338,392)Bank borrowings (2,273,509)Deferred taxation (44,558)Taxation (31,198)Minority interest (543,439)Cost of acquisition 5,873,750

Net cash inflow arising on acquisition:Cash and cash equivalent acquired (609,148)Cash outflow on acquisition of subsidiary companies 5,264,602

6. Other Investment

Group2004 2003

RM RMQuoted shares in Malaysia :

At cost 1,525,000 1,525,000Less : Allowance for diminution in value (1,200,000) (1,100,000)

325,000 425,000

Market value 325,000 425,000

7. Property Development Costs

Group2004 2003

RM RMNon-Current

Leasehold land, at costAt 1 January - 1,549,596Transferred to income statement - (1,549,596)At 31 December - -

Development Costs

At 1 January - 129,099Addition during the financial year 5,024,136 20,666Transferred to income statement - (149,765)At 31 December 5,024,136 -

5,024,136 -




Group2004 2003

RM RM

Current

Leasehold land, at costAt 1 January 5,252,694 6,379,943Transferred to income statement (180,809) (1,127,249)At 31 December 5,071,885 5,252,694

Development Costs

At 1 January 100,906,660 169,469,601Addition during the financial year 73,940,636 70,872,794Transferred to inventories - (2,509,067)Transferred to income statement (96,105,314) (134,552,643)Other movements - (2,374,025)At 31 December 78,741,982 100,906,660

Cost recognised as expenses in the income statementAt 1 January 70,504,985 81,090,974Recognised during the financial year 62,330,190 123,680,908Transferred to income statement (96,069,704) (134,266,898)At 31 December 36,765,471 70,504,984

41,976,511 30,401,67647,048,396 35,654,370

(a) A subsidiary company entered into privatisation agreements with third party (land owner) to developseveral leasehold lands, solely at the cost of the subsidiary company and based on the agreements, the landowners are entitled to certain percentage of development profits.

(b) The long term leasehold land of a subsidiary company with carrying amount of RM5,071,885 (2003: RM5,252,694) is yet to be registered under the name of the subsidiary company.

(c) Included in the development costs for the financial year are the following:

GroupNote 2004 2003

RM RMDepreciation of property, plant and

equipment - 200,258Finance costs 25 293,966 1,737,821Directors’ remuneration- Salaries and other emoluments 384,550 -- EPF 27,386 -

8. Deferred TaxationGroup

Company2004 2003 2004 2003

RM RM RM RM

At 1 January (224,785) 1,143,400 13,500 16,100Recognised in income statement (105,872) (1,369,282) (1,500) (2,600)Acquisition of subsidiary

companies 44,557 - - -Under provision in prior

financial year 447,477 1,097 2,300 -At 31 December 161,377 (224,785) 14,300 13,500




Presented after appropriate offsetting as follows:

Group Company 2004 2003 2004 2003

RM RM RM RM

Deferred tax liabilities 207,391 104,011 14,300 13,500Deferred tax assets (46,014) (328,796) - -

161,377 (224,785) 14,300 13,500

The components and movements of deferred tax liabilities and assets of the Group and of the Company during the financial year prior to offsetting are as follows:

Deferred tax liabilities of the Group:

Acceleratedcapital

allowancesRM

At 1 January 2004 104,011Acquisition of subsidiary companies 44,557Recognised in income statement 56,523Under provision in prior financial year 2,300At 31 December 2004 207,391

Deferred tax assets of the Group:

Unabsorbed business

lossesRM

At 1 January 2004 (328,796)Recognised in income statement 282,782At 31 December 2004 (46,014)

Deferred tax liabilities of the Company:

Accelerated capital

allowancesRM

At 1 January 2004 13,500Recognised in income statement (1,500)Under provision in prior financial year 2,300At 31 December 2004 14,300

9. Goodwill on ConsolidationGroup

2004 2003RM RM

At 1 January - -Acquisition of subsidiary companies 5,626,572 -At 31 December 5,626,572 -




10. InventoriesGroup

2004 2003RM RM

At costFinished good 4,957,205 -Unsold units of completed properties 3,073,081 6,817,659

8,030,286 6,817,659

11. Trade ReceivablesGroup

2004 2003RM RM

Trade receivables 22,149,618 37,452,108Accrued billings in respect of

property development costs - 5,608,48022,149,618 43,060,588

The Group’s normal trade credit terms ranges from 30 to 120 days (2003 : 30 to 120 days).

12. Other ReceivablesGroup Company

2004 2003 2004 2003RM RM RM RM

Other receivables 8,309,006 16,900,453 271,861 4,726,861Deposits 348,343 87,485 2,200 1,600Prepayments 45,513 186,999 2,000 2,000

8,702,862 17,174,937 276,061 4,730,461

13. Amount Owing by Customers on Contract Group

2004 2003RM RM

Contract costs 36,350,157 55,737,795Attributable profits 5,096,438 4,041,887

41,446,595 59,779,682Progress billings included retention sum (33,506,575) (55,537,455)

7,940,020 4,242,227

Retention sums included in progress billings 1,882,184 1,678,820

Included in the contract costs during the financial year is staff costs of RM714,005 (2003 : RM171,022).

14. Amount Owing by/to Subsidiary Companies

These represent unsecured interest free advances with no fixed term of repayment.

15. Fixed Deposits with licensed banks

Included in the above is an amount of RM5,525,969 (2003 : RM2,669,551) pledged to licensed banks as security for banking facilities granted to the Group.

The Group’s interest rates and maturities of deposits are on the following page:




Group2004 2003

RM RM

Interest rates (%) 2.5 - 3 2.5 - 3Maturities (days) 30 - 365 365

16. Cash Held Under Housing Development Accounts

Cash held under the Housing Development Accounts represents monies received from purchasers of properties less payments or withdrawals in accordance with the Housing Development (Controls and Licensing) Act 1966.

The interest earned on the above ranges from 1.81% to 2.66% (2003: 1.81% to 2.04%).

17. Trade PayablesGroup

2004 2003RM RM

Trade payables 18,265,876 39,678,625Progress billings in respect

of property development costs 5,050,341 -23,316,217 39,678,625

The Group’s normal trade credit terms range from 30 to 90 days (2003 : 30 to 90 days).

18. Other PayablesGroup Company

2004 2003 2004 2003RM RM RM RM

Other payables 12,037,688 10,482,944 1,004,227 3,043,036Deposits 903,905 836,809 - -Accruals 945,968 580,856 100,098 48,340

13,887,561 11,900,609 1,104,325 3,091,376

19. Hire Purchase Payables Group Company

2004 2003 2004 2003RM RM RM RM

(a) Future minimum payments

Payable within one year 455,806 588,326 73,164 -Payable between one and

five years 1,123,093 950,777 289,967 -Payable after five years 168,888 110,272 124,728 -

1,747,787 1,649,375 487,859 -Less: Finance charges (292,291) (323,316) (79,618) -

1,455,496 1,326,059 408,241 -

(b) Present value representing hire purchase liabilities

Repayable within one year 351,586 472,324 51,194 -Repayable between one and five years 943,830 764,280 237,796 -Repayable after five years 160,080 89,455 119,251 -

1,455,496 1,326,059 408,241 -




Group Company2004 2003 2004 2003

RM RM RM RM

Analysed as:Repayable within twelve

months 351,586 472,324 51,194 -Repayable after twelve

months 1,103,910 853,735 357,047 -1,455,496 1,326,059 408,241 -

The hire purchase bear interest at the balance sheet date at rates between 2.75% to 8% (2003: 2.75% to 8%) per annum

20. Bank BorrowingsGroup Company

2004 2003 2004 2003RM RM RM RM

Secured:Term loans 5,104,363 5,143,019 - -Bank overdraft 11,506,775 10,245,362 793,953 -Bills payables 1,464,733 - - -

18,075,871 15,388,381 793,953 -Maturity of borrowings is as

follows:

Repayable within twelve monthsSecured:

Term loans 1,424,008 10,245,362 - -Bank overdrafts 11,506,775 5,059,718 793,953 -Bills payables 1,464,733 - - -

14,395,516 15,305,080 793,953 -

Repayable after twelve monthsSecured:

Term loans 3,680,355 83,301 - -3,680,355 83,301 - -

18,075,871 15,388,381 793,953 -

The above credit facilities obtained from licensed banks/financial institutions are secured on the followings:

(a) Assignment of surplus fund in the Housing Development Account for the related projects;

(b) Assignment of Project Account for development of the related projects;

(c) Facility Agreement for the total borrowing which amounts to RM15,000,000;

(d) Fixed charge over the subsidiary company’s freehold land and building;

(e) Corporate guarantee by the ultimate holding company;

(f) Credit Guarantee Corporation (CGC) guarantee under New Principal Guarantee Scheme; and

(g) joint and several guarantee by all the directors of the Company.

The Group’s bank overdraft is secured by a pledge of fixed deposits as disclosed in Note 15 to the financial statements and guaranteed by the Company.




The Group’s term loans are repayable by monthly instalments over 1 to 15 years.

The Group’s interest rates of credit facilities range from 7.5% to 8.4% (2003: 7.9% to 8.4%) per annum.

21. Share CapitalGroup/Company

2004 2003RM RM

Ordinary shares of RM1 each Authorised

At 1 January 100,000,000 50,000,000Created during the financial year - 50,000,000At 31 December 100,000,000 100,000,000

Issued and fully paidAt 1 January 39,362,429 33,300,000Issued during the financial year 3,052,750 6,062,429At 31 December 42,415,179 39,362,429

During the financial year, the issued and paid-up share capital of the Company was increased from RM39,362,429 to RM42,415,179 by the issuance of:

(a) 1,198,250 new ordinary shares of RM1 each for cash pursuant to the exercise of option granted underMagna Prima Berhad Employees Share Option Scheme (ESOS) at the option price of RM1.19 each;

(b) 38,100 new ordinary shares of RM1 each for cash pursuant to the exercise of option granted under Magna Prima Berhad ESOS at the option price of RM1.23 each; and

(c) 1,816,400 new ordinary shares of RM1 each through a private placement at an issue price of RM1.85 each for cash, for additional working capital purposes.

22. ReservesGroup Company

2004 2003 2004 2003RM RM RM RM

Share premium 7,686,495 5,958,892 7,686,495 5,958,892Capital reserve 29,994 29,994 - -Reserves on consolidation - 129,727 - -Retained profits 4,947,836 3,314,560 2,103,914 2,101,068

12,664,325 9,433,173 9,790,409 8,059,960

23. RevenueGroup Company

2004 2003 2004 2003RM RM RM RM

Sale of development properties 65,175,779 123,727,334 - -Value of construction and

quarrying works 11,333,214 25,941,323 - -Sale of completed properties 4,788,339 8,384,859 - -Rental of properties - 30,000 - -Hire of plant 352,042 1,917,986 - -Contract fees 757,789 8,338,854 - -Management fee

received/receivable from subsidiary companies - - 4,337,177 500,000

Trading and other income 16,973,408 1,300,620 - -99,380,571 169,640,976 4,337,177 500,000




24. Profit from Operations

Profit from operations is derived after charging/(crediting):-

Group Company2004 2003 2004 2003

RM RM RM RMAuditor’s remuneration

- current year 133,550 113,000 22,000 22,000- under provision in prior year - 2,620 - -

Company’s directors- salaries and other emoluments 1,273,000 958,000 1,270,000 -- EPF 138,900 189,825 138,900 -- allowance 141,942 69,875 131,442 -- benefits in kind 25,000 50,000 - -

Other directors- salaries and other emoluments 797,380 372,662 - -- EPF 87,072 55,524 - -

Depreciation of property, plant and equipment 1,732,026 2,995,692 114,454 63,154

Property, plant and equipment written off 261,921 56,225 - -

Hire of machineries 2,520 2,673,014 - -Hire of motor vehicles 45,519 - - -Hire of office equipment 6,087 - - -Rental of premises 435,641 56,550 18,375 5,250Allowance for diminution in value

of other investment 100,000 - - -Bad debts written off 1,942 317,952 - -Interest expense 1,545,249 2,102,455 10,165 15,948Interest income (96,637) (506,227) (4,967) (910)Hiring income (443,504) (283,572) - -Rental income (132,000) (11,500) - -Rental income from unsold

completed properties (46,626) (82,391) - -Write back of provision for expenses

no longer required (151,068) (277,603) - -Gain on disposal of property, plant

and equipment (394,550) (3,117,928) - (1,294,343)Reserves on consolidation recognised (129,727) (259,455) - -

25. Finance CostsGroup Company

2004 2003 2004 2003RM RM RM RM

Finance costs on:Bank borrowings 637,367 3,186,481 - 15,948Term loans 10,606 - - -Bill payables 85,935 - - -Hire purchase 600,255 389,409 8,442 -Overdraft 306,152 - 1,723 -Others 198,900 264,386 - -

1,839,215 3,840,276 10,165 15,948Less : Finance costs capitalised:

Property development Costs (293,966) (1,737,821) - -

1,545,249 2,102,455 10,165 15,948




26. Taxation Group Company

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Tax expenses for the financial year:-- Current tax provision 1,561,102 2,287,339 24,000 19,782- (Over)/Under provision in

prior financial year (1,144,931) - 20,806 -- Real property gains tax - 5,000 - -

416,17 2,292,339 44,806 19,782

Deferred tax:-- Relating to origination and

reversal of temporary differences (105,872) (1,369,282) (1,500) (2,600)

- Under provision in prior financial year 447,477 1,097 2,300 -

341,605 (1,368,185) 800 (2,600)757,776 924,154 45,606 17,182

Income tax is calculated at the statutory rate of 28% on chargeable income of the estimated assessable profit for the financial year.

A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and the Company is as follows:

Group Company 2004 2003 2004 2003

RM RM RM RM

Profit before taxation 3,625,057 1,064,891 48,452 1,275,174

Taxation at statutory tax rate of 28% (2003: 28%) 1,015,016 298,169 13,566 357,049Income not subject to tax (106,760) (434,177) - (362,416)Expenses not deductible for tax

purposes 418,596 182,528 8,934 23,155Deferred tax assets not recognised 235,951 917,045 - -Reversal of deferred tax assets

not recognised (46,927) (83,114) - (606)Real property gains tax - 5,000 - -(Over)/Under provision of current

taxation in respect of prior years (1,144,931) - 20,806 -Under provision of deferred

taxation in respect of prior years 447,477 1,097 2,300 -Tax incentives for small and

medium scale companies at 20% tax rate (60,646) 37,606 - -

Tax expense for the financial year 757,776 924,154 45,606 17,182




Deferred tax assets/(liabilities) have not been recognised in respect of the following temporary differences:

Group2004 2003

RM RM

Excess of capital allowance over depreciation (534,827) (1,579,670)Unabsorbed capital allowances 2,108,397 2,425,231Unabsorbed tax losses 8,338,461 8,223,785Other temporary differences 675,000 675,000

10,587,031 9,744,346

27. Section 108 Tax Credit and Tax Exempt Income

The Company has sufficient tax credit under Section 108 of the Income Tax Act, 1967 and tax exempt income under Income Tax (Amendment) Act, 1999 to frank the payment of dividends of approximately RM1,438,647 (2003 : RM1,247,678) out of its retained profits without incurring any additional tax liability. If the balance of the retained profits were to be distributed as dividends, the Company would have Section 108 shortfall of approximately RM258,715 (2003 : RM331,874).

28. Earnings Per Share

(a) Basic earnings per share

The earnings per share has been calculated based on the consolidated profit after taxation of RM1,633,276 (2003 : RM35,500) for the Group and the weighted average number of ordinary shares inissue during the financial year of 41,852,584 (2003 : 35,124,445).

(b) Fully diluted earnings per share

Fully diluted earnings per share has been calculated based on the consolidated profit after taxation of RM1,633,276 (2003: RM35,500) for the Group and the adjusted weighted average number of ordinary shares issued and issuable of 42,747,334 (2003: 37,747,445) shares. The adjusted weighted average number of ordinary shares issued and issuable has been arrived at based on the assumptionthat all the ESOS are converted to ordinary shares on 31 December 2004.

29. Purchase of Property, Plant and Equipment

Group Company 2004 2003 2004 2003

RM RM RM RM

Aggregate cost 1,937,322 4,853,738 863,279 3,773,699Less: Hire purchase

financing (540,600) (743,539) (424,000) -Less: Other financing - (3,899,069) - (3,698,810)Cash payment 1,396,722 211,130 439,279 74,889

30. Employee Information

Group Company2004 2003 2004 2003

RM RM RM RM

Staff costs (excluding directors) comprise:- charged to income statement 5,780,627 12,587,694 1,174,987 227,457- capitalised in amount owing by

customers 714,005 171,022 - -6,494,632 12,758,716 1,174,987 227,457




The total number of employees (excluding directors) of the Group and of the Company at the end of the financial year were 191 and 36 (2003 : 295 and 15) respectively.

Included in staff costs above are contribution made to the Employees Provident Fund under a defined contribution plan for the Group and the Company of RM567,720 and RM135,994 (2003 : RM274,481 and RM25,931) respectively.

31. Significant Related Parties Transactions

Group Company2004 2003 2004 2003

RM RM RM RM

Rental income paid/payable to Fook Hua Holdings Sdn. Bhd. a substantial shareholder of the Company 88,500 84,000 - -

Certified value of contract work charged by Jayarena-Dunia Epik JV, in which Dunia Epik Sdn. Bhd., a subsidiary company is a member - 15,343,708 - -

Management fee received/ receivable from subsidiarycompanies: Magna Park Sdn. Bhd. - - 987,212 500,000Dunia Epik Sdn. Bhd. - - 987,212 -Embassy Court Sdn. Bhd. - - 917,027 -Magna Prima Construction Sdn. Bhd. - - 987,212 -Gallery Building Materials Sdn. Bhd. - - 458,514 -

Purchase of developmentproperties from a subsidiary company, Magna Park Sdn. Bhd. - - - 3,698,810

32. Contingent Liabilities

Group Company 2004 2003 2004 2003

RM RM RM RM

Guarantees given tofinancial institutions forfacilities granted to subsidiary companies:- Secured on assets of

subsidiary companies - - 64,136,583 55,076,315- Unsecured - - 1,500,000 1,500,000

Guarantees given to tradepayables of subsidiarycompanies for credit facilities granted to subsidiary companies:- unsecured - - 6,600,000 6,100,000

Limit of guarantees - - 72,236,583 62,676,315




Group Company 2004 2003 2004 2003

RM RM RM RM

Amount utilised by subsidiary companies - - 21,333,377 21,442,660Banker’s guarantees in favour of

the local authorities for the purposeof development projects- secured 2,044,106 2,683,856 - -- unsecured 588,500 591,750 - -

Portion of late paymentinterest claimed by tradepayables and hire purchase payables under appeal and notrecognised in the financialstatements 1,720,084 1,876,642 - -

4,352,690 5,152,248 21,333,377 21,442,660

33. Segmental Reporting

Segment information is primarily presented in respect of the Group’s business segment which is based on theGroup’s management and internal reporting structure.

Segment revenue, results, assets and liabilities include items directly attributable to a segment and those where a reasonable basis of allocation exists. Unallocated items mainly comprise interest-earning assets andrevenue, interest-bearing borrowings and expenses, and corporate assets and expenses.

Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used during more than one period.

No segmental information is provided on a geographical basis as all the Group’s activities are carried out in Malaysia.

The accounting policies of the segments are consistent with the accounting policies of the Group.

The main business segments of the Group comprise the following:




Construction and

2004 Engineering Properties Trading Others ConsolidatedRM RM RM RM RM

RevenueTotal revenue 39,470,126 68,831,792 14,672,969 4,337,177 103,717,748Intersegment revenue (23,594,316) - - (4,337,177) (4,337,177)Total segment revenue 15,875,810 68,831,792 14,672,969 - 99,380,571

ResultsSegment result 1,899,127 1,318,966 1,913,965 (58,389) 5,073,669Unallocated corporate

income - - - - 96,637Profit from operations - - - - 5,170,306Finance costs - - - - (1,545,249)Profit before taxation - - - - 3,625,057Taxation - - - - (757,776)Profit after taxation - - - - 2,867,281Minority Interests - - - - (1,234,005)Net profit for the

financial year - - - - 1,633,276

Other InformationSegment assets 33,463,901 64,062,577 10,652,324 3,385,386 111,564,188

Unallocated corporate assets - - - - 11,484,373

Consolidated total assets - - - - 123,048,561

Segment liabilities 16,808,434 13,291,803 5,891,775 1,211,766 37,203,778Unallocated

corporate liabilities - - - - 26,761,203Consolidated total

liabilities - - - - 63,964,981

Capital expenditure 2,940,825 531,899 2,436,561 2,151,955 8,061,240

Depreciation 1,133,082 259,489 221,852 117,603 1,732,026

Non-cash expenses other than depreciation 394,550




Constructionand

2003 Engineering Properties Trading Others ConsolidatedRM RM RM RM RM

RevenueTotal revenue 58,128,839 132,142,193 - 500,000 190,771,032Intersegment revenue (20,630,056) - - (500,000) (21,130,056)Total segment revenue 37,498,783 132,142,193 - - 169,640,976

ResultsSegment result (3,771,595) 1,634,262 - - (2,137,333)Unallocated corporate

income - - - - 2,079,765Unallocated corporate

expenses - - - - (631,226)Share of result of jointly

controlled entity 3,856,140 - - - 3,856,140Profit from operations - - - - 3,167,346Finance costs - - - - (2,102,455)Profit before taxation - - - - 1,064,891Taxation - - - - (924,154)Profit after taxation - - - - 140,737Minority Interests - - - - (105,237)Net profit for the

financial year - - - - 35,500

Other InformationSegment assets 44,721,269 73,747,294 - 1,577,087 120,045,650Investment in jointly

controlled entity 3,536,086 - - - 3,536,086Unallocated corporate

assets - - - - 3,319,336Consolidated total

assets - - - - 126,901,072

Segment liabilities 25,759,633 23,030,537 - 2,789,064 51,579,234Unallocated corporate

liabilities - - - - 24,299,603Consolidated total

liabilities - - - - 75,878,837

Capital expenditure 770,814 309,225 - 3,773,699 4,853,738

Depreciation 2,895,924 233,722 - 66,304 3,195,950

Non-cash expenses other than depreciation 402,212




34. Significant Events

During the financial year, the following significant events took place for the Company and its subsidiary companies:-

(a) Magna Prima Berhad (the Company)

(i) On 16 January 2004, the Company had issued 1,816,400 new ordinary shares of RM1 each through a private placement at an issue price of RM1.85 each for cash, for additional workingcapital purposes.

(ii) On 30 January 2004, the Company acquired a 51% equity interest in Gallery Building Material Sdn. Bhd. ("GBM") for a consideration of RM5,610,000. The principal activities of GBM are thoseof trading in building materials and other related products.

(iii) On 10 February 2004, the Company secured a contract from Telekom Malaysia Berhad to jointly develop a parcel of land within the vicinity of the Kuala Lumpur City Center. This project will be undertaken by the property development arm of the Company, Magna Park Sdn Bhd through its subsidiary Embassy Court Sdn.Bhd.

(b) Magna Park Sdn. Bhd. (MPK)

(i) On 15 July 2004, Embassy Court Sdn. Bhd. (ECSB) increased its issued and paid-up share capital from RM3 to RM250,000 by the issue of 249,997 new ordinary shares of RM1 each at par for cash. On 28 December 2004, MPK acquired the entire issued and paid-up share capital of ECSB for a purchase consideration of RM250,000 and consequently became its holding company.

(ii) On 31 March 2004, Amanabina Sdn. Bhd. (ASB), a wholly owned subsidiary company of MPK increased its issued and paid-up share capital from RM2 to RM25,000 by the issue of 24,998 new ordinary shares of RM1 each at par. Out of the total new issue of shares, 13,748 shares were subscribed by MPK for a cash consideration of RM13,748. Consequently, MPK’s shareholding in ASB decreased from 100% to 55%.

35. Subsequent Events

(a) On 30 November 2004, the Company proposed to implement a private placement of up to 4,239,700 new ordinary shares of RM1 each in MPB representing approximately 10% of the existing issued and paid-up share capital of the Company at an indicative issue price of RM1.50 per share forworking capital purposes. The said application was approved by the Securities Commission on 31 December 2004 and the shares were granted listing and quotation on the Second Board of Bursa Malaysia Securities Berhad on 14 February 2005.

(b) On 19 January 2005, the Company proposed to implement a renounceable rights issue of up to 23,779,765 warrants ("Warrants") on the basis of one Warrant for every two existing ordinary shares of RM1 each held in MPB at an issue price of RM0.30 per warrant. The exercise price of the Warrants hasbeen fixed at RM1.30 per warrant commencing from the date of issue of the Warrants until the date preceding the second anniversary and RM1.50 per warrant commencing from the second anniversary from the date of issue of the Warrants until the maturity date. The said application is pending approval by relevant authorities.

36. Financial Instruments

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its financial risk. The Group operates within guidelines that are approved by the Boards and the Group’s policy is not to engage in speculative transactions.

The main areas of financial risks faced by the Group and the policy in respect of the major areas of treasury activity are set out as follows:




(a) Interest Rate Risk

The Group’s income and operating cash flows are substantially independent of changes in market interest rates. Interest rate exposure arises from the Group’s borrowings and deposits. The Group monitors the interest rates constantly although the prevailing interest rates are low.

(b) Credit Risk

Credit risk, or the risk of counterparties defaulting, is controlled by the application of credit approvals,limits and monitoring procedures. Credit risks are minimised and monitored via strictly limiting the Group’s associations to business partners with high creditworthiness. Trade receivable are monitored on an ongoing basis via management reporting procedure and action is taken to recover debts when due.

At balance sheet date, there was no significant concentration of credit risk. The maximum exposure to credit risk for the Company is the carrying amount of the financial assets shown in the balance sheet.

(c) Liquidity and Cash Flow Risks

Liquidity and cash flow risks are addressed by continuous review and forward planning of cash flow by the management.

The Group seeks to achieve a flexible and cost effective borrowing structure to ensure that the projected net borrowing needs are covered by available committed facilities. Debt maturities are structured in such a way to ensure that the amount of debt maturing in any one year is within the Group’s ability to repay and refinance.

The Group also maintains a certain level of cash and cash convertible investments to meet its working capital requirements.

(d) Fair values

The carrying amounts of financial assets and liabilities of the Group and of the Company at the balance sheet date approximated their fair values except for the following:

2004 2003Carrying Carryingamount Fair value amount Fair value

Group RM RM RM RM

Financial liabilitiesHire purchase payables 1,103,910 1,171,929 853,735 866,945Long term bank borrowings 3,680,355 3,680,355 83,301 83,301

CompanyFinancial assetsAmount owing by

subsidiary companies 22,818,599 * 15,079,359 *

Financial liabilitiesAmount owing to

subsidiary company 7,252,345 * 3,355,891 *Hire purchase payables 357,047 301,932 - -

* It is not practicable to estimate the fair values of amounts owing by/to subsidiary companies due principally to a lack of fixed repayment terms entered into by the parties involved and without incurring excessive costs.

The fair value of long term bank borrowings is estimated based on the quoted market prices for the same or similar issues or on the current rates available for borrowings with the same maturity profile.

The following methods and assumptions are used to estimate the fair values of the following classes of financial instruments:




(i) Cash and Cash Equivalents, Trade and Other Receivables/Payables and Short Term BorrowingsThe carrying amounts approximate fair values due to the relatively short term maturity of these financial instruments.

(ii) Other InvestmentThe fair value of quoted shares is determined by reference to stock exchange quoted marketbid prices at the close of the business on the balance sheet date.

(iii) BorrowingsThe fair value of borrowings is estimated by discounting the expected future cash flows using the current interest rates for liabilities with similar risk profiles.

The fair values of financial assets and financial liabilities of the Group approximate their carrying value and the Group does not anticipate the carrying amounts recorded at the balance sheet date to be significantlydifferent from the values that would eventually be settled or received.

37. Material Litigation

A police report was lodged on 23 October 2000 that a sum of RM22,100,000, as detailed below was withdrawn from the bank accounts of two subsidiary companies on 16 October 2000 without proper authorisation from the Board of the respective subsidiary companies:-

Subsidiary companies RM

Magna Prima Construction Sdn. Bhd. 16,684,300Dunia Epik Sdn. Bhd. 5,415,700

22,100,000

The withdrawals were made by a former director of the Company who was also a former director of the respective subsidiary companies.

The amount of RM22,100,000 had been written off in full in 2000 because the prospect of recovery of the said sum cannot be ascertained and will be recognised as income when and to the extent there is realisation.As at the date of this report, a sum of RM357,856 has been recovered.

The legal action on this case is still ongoing.

38. Change in Accounting Policies

During the financial year, the Group adopted MASB 32, Property Development Activities for the first time. The adoption of MASB 32 did not give rise to any adjustments to the opening balances of the retained profits of the prior and current financial year.

Comparative figures, however, have been restated as follows:

As previously Asstated Adjustment restated

RM RM RM

Property development costs 41,262,850 (5,608,480) 35,654,370Accrued billing included in trade

receivables - 5,608,480 5,608,480

39. Comparative Figures

Certain comparative figures have been restated to conform with the presentation of current financial year as disclosed in Note 38 to the financial statements.

40. Date of Authorisation For Issue

The financial statements of the Company for the financial year ended 31 December 2004 were authorised for issue in accordance with a resolution of the Board of Directors on 23 March 2005.



SUMMARY OF LANDED PROPERTIES

Description Land / Built- Age of Net Book Registered and up Area Properties / Value

Owner Location Existing Use Tenure (sq.ft.) Buildings RM

Magna Developer’s Unit No. A three storey Leasehold 5,942 2 years 1,277,485Prima G63, Block G, intermediate (Expiring on

Berhad Vista Magna shopoffice 2092)under Master

Title H.S (D) 87302, No. P.T 1544,

Mukim Batu Daerah Kuala Lumpur

Dunia Epik H.S.(D) 6614 PT Semi- Leasehold 3,249 13 years 116,459.96Sdn Bhd 4211 Mukim Detached (Expiring

Mentakab, Daerah House on 2088)Temerloh

Hexagon Lot 121, Land proposed Leasehold 43,560 5 years 27,040.00North Sublot 27 and 28, for (Expiring on

Sdn. Bhd. Sungai Jemukan Ulu, industrial area. 2041)Sadong Jaya,

Simunjan, Sarawak



ANALYSIS BY SIZE OF SHAREHOLDINGSAS AT MARCH 24, 2005

Nos. Names Shareholdings %

1 INMIND HOLDINGS (M) SDN BHD 4,239,700 9.06

2 CONCRETE PANEL CONSTRUCTION SDN BHD 4,063,384 8.69

3 MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD 3,264,207 6.98(A/C FOR AHMAD GHAZALI BIN MD KASSIM)

4 DATO’ ABD GANI BIN YUSOF 2,889,313 6.81

5 INTRA PROGRESSION SDN BHD 1,816,400 3.88

6 NBH SDN BHD 1,602,819 3.43

7 FOOK HUA HOLDINGS SDN BHD 1,506,724 3.22

8 PUBLIC NOMINEES (TEMPATAN) SDN BHD 1,367,800 2.92(A/C FOR YAP FATT THAI)

9 HSBC NOMINEES (TEMPATAN) SDN BHD 1,329,682 2.84(HRBS SG FOR CHUA SUYA HONG @ CHUA LEE HOON)

10 CIMSEC NOMINEES (TEMPATAN) SDN BHD 1,016,800 2.17(CIMB FOR AHMAD GHAZALI BIN MD KASSIM)

11 CHUN MEI NGOR 1,000,000 2.14

12 HDM NOMINEES (TEMPATAN) SDN BHD 1,000,000 2.14(A/C FOR CHUN MEI NGOR)

13 AMSEC NOMINEES (TEMPATAN) SDN BHD 967,600 2.07(A/C FOR CHUN MEI NGOR)

14 LOW YIT HO 965,000 2.06

15 AMSEC NOMINEES (TEMPATAN) SDN BHD 956,300 2.04(A/C FOR HENRY WAN)

16 AFFIN NOMINEES (TEMPATAN) SDN BHD 892,000 1.91(A/C FOR TANG CHEE MENG)


THIRTY (30) LARGEST SHAREHOLDERS (including substantial shareholders) AS AT MARCH 24, 2005

NO. OF % OF NO. OF % OF SIZE OF SHAREHOLDINGS SHAREHOLDERS SHAREHOLDERS SHARES HELD SHAREHOLDINGS

Less Than 100 7 0.42 350 0.00

100 to 1,000 819 48.61 810,020 1.73

1,001 to 10,000 667 39.58 2,662,171 5.69

10,001 to 100,000 146 8.66 3,967,600 8.48

100,001 to Less Than 5% 42 2.49 24,883,934 53.20

5% And Above 4 0.24 14,456,604 30.90

TOTAL 1,685 100.00 46,780,679 100.00

LIST OF DIRECTORS’ SHAREHOLDINGS AS AT MARCH 24, 2005

Nos. Names Direct % Indirect %Shareholdings Shareholdings

1 DATO’ ABD GANI BIN YUSOF 2,889,313 6.18 - -

2 NG YAK HEE 830,930 1.78 4,063,384 8.69

3 AHMAD GHAZALI BIN MD KASSIM 9,269 0.02 4,296,207 9.18

4 TAN SRI DATO’ KAMARUZZAMAN BIN SHARIFF - - - -

5 N. CHANTHIRAN A/L NAGAPPAN - - - -

6 KAMIL BIN DATUK HJ. ABDUL RAHMAN - - - -

7 T. A. RAHMAN BIN T. ANDAK - - - -


ANALYSIS BY SIZE OF SHAREHOLDINGS

Nos. Names Shareholdings %

17 AMSEC NOMINEES (TEMPATAN) SDN BHD 883,900 1.89(A/CFOR LOW KIM LENG)

18 AMSEC NOMINEES (TEMPATAN) SDN BHD 875,100 1.87(A/CFOR MANJIT SINGH A/L HARBAN SINGH)

19 NG YAK HEE 830,930 1.78

20 MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD 741,200 1.58(ASEAM CREDIT SDN BHD FOR FOOK HUA HOLDINGS SDN BHD)

21 MANJIT SINGH A/L HARBAN SINGH 600,000 1.28

22 LIEW YUEAH CIN 600,000 1.28

23 PLY CENTURY SDN BHD 600,000 1.28

24 RHB NOMINEES (TEMPATAN) SDN BHD 511,000 1.09(A/C FOR NG SING MIN)

25 LIEW AH KAU @ LIEW KONG YONG 505,700 1.08

26 CHUA LEE BOON 485,930 1.04

27 LEE CHOON HOOI 460,000 0.98

28 PUBLIC NOMINEES (TEMPATAN) SDN BHD 438,700 0.94(A/C FOR KOK SEW HONG)

29 LEE KUNG WAH 321,300 0.69

30 AMSEC NOMINEES (TEMPATAN) SDN BHD 315,800 0.68(A/C FOR ONG TEIK KOOI)



NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Tenth Annual General Meeting of MagnaPrima Berhad will be held at the Tournament Room, Ground Floor, KualaLumpur Golf & Country Club (KLGCC), No. 10, Jalan 1/70D, Off Jalan BukitKiara, 60000 Kuala Lumpur on Wednesday, 11 May 2005 at 10.00 a.m. for the following purposes:

1. To receive the Audited Financial Statements for the year ended 31 December 2004 and the Reports of the Directors and Auditors thereon.

2. To re-elect the following Directors who retire in accordance with Article 100 of the Company’s Articles of Association: -T. A. Rahman bin T. AndakKamil bin Datuk Hj. Abdul Rahman

3. To approve payment of Directors’ fees for the year ended 31 December 2004

4. To re-appoint Messrs Anuarul Azizan Chew & Co. as Auditors of the Company and to authorise the Directors to fix their remuneration.

5. As Special Business:As SPECIAL BUSINESS, to consider and, if thought fit, pass the following ordinary resolutions: -

(a) Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions. "That, subject to the Companies Act, 1965 ("Act"), the Memorandum and Articles of Association of the Company and the Listing Requirements of the Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company to enter into all transactions involving the Related Parties as specified in Section 2.3 of the Circular to Shareholders dated 18 April 2005 provided that such transactions are:

(i) recurrent transactions of a revenue or trading nature;(ii) necessary for the day-to-day operations;(iii) carried out in the ordinary course of business on normal

commercial terms which are not more favourable to the Related Parties than those generally available to the public; and

(iv) are not to the detriment of the minority shareholders.

And that the Mandate, unless revoked or varied by the Company in a general meeting, shall continue in force until the next Annual General Meeting of the Company or the expiration of the period within which the next Annual General Meeting is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extensions as may be allowed pursuant to Section 143(2) of the said Act);

And further that the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the Mandate.

(b) "That pursuant to Section 132D of the Companies Act, 1965, and subject to the approvals of the relevant government and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company, at any time, at such price, uponsuch terms and conditions and for such purposes and to such person or persons whomsoever as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this resolution in any one financial year does not exceed 10% of the issued share capital of the Company for the time being and that the Directors be and are


Resolution 1

Resolution 2Resolution 3

Resolution 4

Resolution 5

Resolution 6


NOTICE OF ANNUAL GENERAL MEETING

also empowered to obtain the approval from the Bursa MalaysiaSecurities Berhad for the listing of and quotation for the additional shares so issued and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company."

By order of the Board

AHMAD SHAHAB BIN HJ. DIN (MAICSA 0689340)YUEN YOKE PING (MAICSA 7014044)Joint Company Secretaries

Kuala Lumpur18 April 2005

Note:

1. A member of the Company entitled to attend and vote at this Meeting is entitled to appoint a proxy or proxies to attend and vote on his behalf.

2. A proxy need not be a Member of the Company. Where a Member of the Company is an authorised nominee as defined in the Securities Industry (Central Depositories) Act 1991, it may appoint at least one proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

3. Where a Member of the Company appoints two or more proxies, the appointment shall be invalid unless the member specifies the proportion of his shareholding to be represented by each proxy. Duplication of this proxy form is allowed for appointment of additional proxies.

4. A member should state in the box provided, the number of shares to be used by the proxy for voting. If the information is not recorded, this form shall be deemed to relate to all shares held by the member.

5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation either under seal or under the hand of the appointer or his attorney duly authorised.

6. If no name is inserted in the space provided for name of proxy, Chairman of the Meeting shall act as proxy.

7. The instrument appointing a proxy must be deposited at the Registered Office of the Company at the No. 66 Vista Magna, Jalan Prima, Metro Prima, 52100 Kuala Lumpur not less than forty eight (48) hours before the time set for holding the Meeting or adjourned Meeting.

8. Explanatory Notes on special business:The Ordinary Resolution 6 under item 5 if passed, will authorise the Company and each of its subsidiaries to enter into recurrent related party transactions of revenue or trading nature which are necessary for its day to day operation. The recurrent related party transactions are in the ordinary course of business and which are on terms not more favourable to the related party than those generally available to the public. This authority unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the Company. Please refer to the Circular to Shareholders dated 18 April 2005 with regard to Ordinary Resolution 6.

The Ordinary Resolution 7 proposed under item 5, if passed, will give the Directors of Company, from the date of the above General Meeting, authority to issue and allot ordinary shares from the unissued capital of the Company being for such purposes as the Directors consider would be in the interest of the Company. 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 expiration of the period within which the next Annual General Meeting is required by law to be held, whichever is the earlier.


Resolution 7


STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING(PURSUANT TO PARAGRAPH 8.28 (2) OF THE LISTING

REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD)

1. Directors who are standing for re-election at the 10th Annual General Meeting of the Company

Pursuant to Article 100 of the Company’s Articles of Association



2. Details of attendance of Directors at Board Meetings

There were thirteen (13) Board meetings held during the financial year ended 31 December 2004. Details of attendance of the Directors are set out on page 15 of the Annual Report.

3. Date, Place and Time of Board MeetingThe date, place and time of Board Meetings held during the financial year ended 31 December 2004 were as follows: -


Date of Meeting Place Time

15 January 2004 No. 2, Jalan Prima 5, 10.00 amMetro Prima, 52100 Kuala Lumpur

29 January 2004 No. 2, Jalan Prima 5, 3.45 pmMetro Prima, 52100 Kuala Lumpur

26 February 2004 No. 2, Jalan Prima 5, 11.00 amMetro Prima, 52100 Kuala Lumpur

15 April 2004 No. 2, Jalan Prima 5, 11.00 amMetro Prima, 52100 Kuala Lumpur

11 May 2004 No. 2, Jalan Prima 5, 11.00 amMetro Prima, 52100 Kuala Lumpur

27 May 2004 No. 2, Jalan Prima 5, 11.00 amMetro Prima, 52100 Kuala Lumpur

14 July 2004 No. 2, Jalan Prima 5, 3.00 pmMetro Prima, 52100 Kuala Lumpur

27 August 2004 No. 2, Jalan Prima 5, 3.00 pmMetro Prima, 52100 Kuala Lumpur

3 September 2004 No. 2, Jalan Prima 5, 3.00 pmMetro Prima, 52100 Kuala Lumpur

14 September 2004 No. 2, Jalan Prima 5, 11.00 pmMetro Prima, 52100 Kuala Lumpur


STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

Date of Meeting Place Time

21 October 2004 No. 66, Vista Magna, 10.00 amJalan Prima, Metro Prima,52100 Kuala Lumpur

25 November 2004 No. 66, Vista Magna, 3.30 pmJalan Prima, Metro Prima,52100 Kuala Lumpur

17 December 2004 No. 66, Vista Magna, 2.00 pmJalan Prima, Metro Prima,52100 Kuala Lumpur


I/We(FULL NAME IN CAPITALS)

of(ADDRESS)

being a member/members of Magna Prima Berhad, hereby appoint(FULL NAME)

of (ADDRESS)

or failing him/her, (FULL NAME)

of (ADDRESS)

or failing him/her, the Chairman of the Meeting as my/our proxy to attend and vote for me/us on my/our behalf at the Annual GeneralMeeting of the Company to be held at the Tournament Room, Kuala Lumpur Golf & Country Club (KLGCC) No. 10, Jalan 1/70D, Off JalanBukit Kiara, 60000 Kuala Lumpur on Wednesday, 11 May 2005 at 10.00 am and at any adjournment thereof.

PROXY FORM


No.

1 To receive the audited financial statements for the year ended 31 December 2004 and the Reports of the Directors and Auditors thereon.

5 To re-appoint Messrs. Anuarul Azizan Chew & Co. as Auditors of the Company and to authorise the Directors to fix their remuneration

4 Directors’ fees for the year ended 31 December 2004

To re-elect the following Directors who retire in accordance withArticle 100 of the Company’s Articles Of Association: -

2 T. A. Rahman bin T. Andak

3 Kamil bin Datuk Hj. Abdul Rahman

As Special Business:

6 (a) Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions.

7 (b) Grant of authority pursuant to Section 132D of the Companies Act, 1965

Resolutions For Against

Signed this ___________ day of ___________ 2005

Signature of Member and/or Common Seal

Number of Shares(Please indicate with an "X" in the space provided below how you wish your votes to becast on the resolutions specified in the Notice of Annual General Meeting. If you do not do so,the proxy/proxies will vote or abstain from voting on the resolutions as he/they may think fit.)

NOTE:

1. A member of the Company entitled to attend and vote at this Meeting is entitled to appoint a proxy or proxies to attend and vote on his behalf.

2. A proxy need not be a Member of the Company. Where a Member of the Company is an authorised nominee as defined in the Securities Industry (Central Depositories) Act 1991, it may appoint at least one proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

3. Where a Member of the Company appoints two or more proxies, the appointment shall be invalid unless the member specifies the proportion of his shareholding to be represented by each proxy. Duplication of this proxy form is allowed for appointment of additional proxies.

4. A member should state in the box provided, the number of shares to be used by the proxy for voting. If the information is not recorded, this form shall be deemed to relate to all shares held by the member.

5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation either under seal or under the hand of the appointer or his attorney duly authorised.

6. If no name is inserted in the space provided for name of proxy, the Chairman of the Meeting shall act as proxy.

7. The instrument appointing a proxy must be deposited at the Registered Office of the Company at the No. 66 Vista Magna, Jalan Prima, Metro Prima, 52100 Kuala Lumpur not less than forty eight (48) hours before the time set for holding the Meeting or adjourned Meeting.

My/our proxy shall vote as follows: -


BALANCE SHEETS AS AT 31 DECEMBER 2004

Group Company2004 2003 2004 2003

Non-Current Assets Note RM RM RM RMProperty, plant and equipment 3 8,061,240 5,881,244 2,142,581 171,733Interest in jointly controlled entities 4 - 3,536,086 - -Investment in subsidiary companies 5 - - 36,360,998 30,750,998Other investment 6 325,000 425,000 - -Property development costs 7 5,024,136 - - -Deferred taxation 8 - 224,785 - -Goodwill arising on consolidation 9 5,626,572 - - -

19,036,948 10,067,115 38,503,579 30,922,731Current AssetsInventories 10 8,030,286 6,817,659 - -Property development costs 7 47,048,396 35,654,370 - -Trade receivables 11 22,149,618 43,060,588 - -Other receivables 12 8,702,862 17,174,937 276,061 4,730,461Amount owing by customers on contract 13 7,940,020 4,242,227 - -Tax recoverable 6,832 - - -Amount owing by subsidiary companies 14 - - 22,818,599 15,079,359Fixed deposits with licensed banks 15 5,525,969 2,669,551 - -Cash held under Housing DevelopmentAccounts 16 963,482 2,225,122 - -Cash and bank balances 3,644,148 4,989,503 199,165 3,198,719

104,011,613 116,833,957 23,293,825 23,008,539

Current LiabilitiesTrade payables 17 23,316,217 39,678,625 - -Other payables 18 13,887,561 11,900,609 1,104,325 3,091,376Amount owing to subsidiary company 14 - - 7,252,345 3,355,891Hire purchase payables 19 351,586 472,324 51,194 -Bank borrowings 20 14,395,516 15,305,080 793,953 -Taxation 7,068,459 7,585,163 18,652 48,114

59,019,339 74,941,801 9,220,469 6,495,381Net current assets 44,992,274 41,892,156 14,073,356 16,513,158

64,029,222 51,959,271 52,576,935 47,435,889

Financed By:

Share capital 21 42,415,179 39,362,429 42,415,179 39,362,429Reserves 22 12,664,325 9,433,173 9,790,409 8,059,960Total shareholders’ funds 55,079,504 48,795,602 52,205,588 47,422,389Minority interests 4,004,076 2,226,633 - -

59,083,580 51,022,235 52,205,588 47,422,389

Deferred and Non-Current Liabilities

Deferred taxation 8 161,377 - 14,300 13,500Hire purchase payables 19 1,103,910 853,735 357,047 -Bank borrowings 2 0 3,680,355 83,301 - -

64,029,222 51,959,271 52,576,935 47,435,889



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Annual Report - Magna Prima Berhad

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