CORPORATE INFORMATION 2

CORPORATE DIRECTORY 3

GROUP STRUCTURE 4

GROUP BUSINESS CAPABILITIES 5

FINANCIAL HIGHLIGHTS 6

LETTER TO SHAREHOLDERS 8

MANAGEMENT’S DISCUSSION AND ANALYSIS 13

PROFILE OF BOARD OF DIRECTORS 16

AUDIT COMMITTEE REPORT 20

STATEMENT ON CORPORATE GOVERNANCE 25

STATEMENT ON INTERNAL CONTROL 31

FINANCIAL STATEMENTS 33

OTHER INFORMATION REQUIRED BY

THE LISTING REQUIREMENTS OF BURSA SECURITIES 73

STATISTICS ON SHAREHOLDINGS 76

PROPERTIES OF JHB GROUP 79

NOTICE OF ELEVENTH ANNUAL GENERAL MEETING 80

STATEMENT ACCOMPANYING NOTICE OF ELEVENTH

ANNUAL GENERAL MEETING 82

FORM OF PROXY

CONTENTS

PRINCIPAL BANKERS

• United Overseas Bank (M) Berhad

• Affin Bank Berhad

• OCBC Bank (Malaysia) Berhad

SOLICITORS

• Teh & Lee

• Azam – Malek & Soh

AUDITORS

• KPMG

• Russell Bedford LC & Co.

REGISTERED OFFICE

Lot 6, Jalan 6/4, KawasanPerindustrian Seri Kembangan, 43300 Seri Kembangan,Daerah Petaling, Selangor Darul Ehsan, Malaysia.Tel: (603) 8945 4288Fax: (603) 8945 4688Website: www.jotech.com.my

SHARE REGISTRAR

Symphony Share Registrars Sdn BhdLevel 26, Menara Multi Purpose,Capital Square,No. 8, Jalan Munshi Abdullah,50100 Kuala Lumpur.Tel: (603) 2721 2222Fax: (603) 2721 2530

CCOOMMPPAANNYY SSEECCRREETTAARRIIEESS

Ng Yim KongLS 0008343

Leong Lup YanMIA 11572

Jotech Holdings Berhad• Lim Siok Hui

Chief Executive Officer• Raymond Fam Chye Soon

Deputy Chief Executive Officer• Leong Lup Yan

Chief Financial Officer

Prodelcon Sdn Bhd & Multimatic Systems Sdn Bhd• Chang Chuen Bin

Executive Director• Pung Kok Guan

Production Manager• Teoh Seng Hong

Senior Engineering Manager• Ooi Chee Keong

Senior Manager – Tooling

Jotech Metal Fabrication Industries Sdn Bhd• Ronn Chan

Executive Director• Low Mee Chin

Head – Finance Department• Lo Li Li

Head – Procurement Department• Ratnakumar A/L Manickam

Head – Operation Department• Jamil Jamingin

Head – General Affair Department• Koh Lee Huat

Head – Laser Department

PT Indotech Metal Nusantara• Indra S. Susanto

President Director• Suwardi Hassan

Finance Manager

JP Metal Sdn Bhd• Ronn Chan

Managing Director• Yong Kin Choon

Assistant General Manager• Tee Ah Bee

Senior Manager – Human Resource & Administration

GuangDong Jotech Kong Yue Precision Industries Ltd• Ronn Chan

Managing Director• Cheok Kiet Guan

Assistant General Manager

Palladine Technology Pte Ltd• Bennie Tan

Managing Director• Jeffrey Chan

Executive Director – Sales & Marketing• Lu Cheet Oei

Senior Manager – Procurement & Logistic

Palladine (M) Sdn Bhd• Andy Goh

Senior Manager

Cabletron Electronics Sdn Bhd & Cabletron (M) Sdn Bhd• Chandran. S

General Manager• Steve Sia

Marketing Manager• Raymond Tan

Senior Manager – Service• Heng Wei Sheong

Sales Manager – Northern Region

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BOARD OF DIRECTORS

• Non-Executive ChairmanYg. Bhg. Datuk Haji Sarip bin Hamid

• Chief Executive OfficerLim Siok Hui

• Non-Independent Non-Executive DirectorsTuan Haji Mohd Ali bin BawalLiew Cheng YorkOoi Boon PinChew Siew Hong

• Independent Non-Executive DirectorsAshari bin AyubLasa bin Mat DesaYg. Bhg. Lt. Jen (B) Datuk Haji Abdul Aziz bin Hasan

SENIOR MANAGEMENT

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CORPORATE DIRECTORY

HEAD OFFCE

Jotech Holdings BerhadLot 6, Jalan 6/4, Kawasan Perindustrian Seri Kembangan,43300 Seri Kembangan, Daerah Petaling,Selangor Darul Ehsan, Malaysia.Tel: (603) 8945 4288 Fax: (603) 8945 4688Website: www.jotech.com.my

PRECISION STAMPING

Jotech Metal Fabrication Industries Sdn Bhd20 & 22, Jalan Masyhur 1,Taman Perindustrian Cemerlang,81800 Ulu Tiram, Johor Darul Takzim, Malaysia.Tel: (607) 861 6613Fax: (607) 861 6620

JP Metal Sdn BhdLot 6, Jalan 6/4, KawasanPerindustrian Seri Kembangan,43300 Seri Kembangan, Daerah Petaling,Selangor Darul Ehsan, Malaysia.Tel: (603) 8942 6371 Fax: (603) 8942 6507

GuangDong Jotech Kong YuePrecision Industries LtdKong Yue Industrial Park,18, Kong Yue Road, XinHui District, Jiang Men City, GuangDong Province,People Republic of China.Tel: 00 86 750 639 0222 Fax: 00 86 750 639 0111

PT Indotech Metal NusantaraKawasan Industri KIIC,Lot C-7C, Jl. Tol Jakarta - Cikampek,KM 47, Karawang 41361 Jawa Barat, Indonesia.Tel: 00 62 218 904587 Fax: 00 62 267 643888

SEMICONDUCTOR TOOLING &AUTOMATION

Prodelcon Sdn Bhd78, Lintang Bayan Lepas, Phase IV,Kawasan Perindustrian Bayan Lepas,11900 Pulau Pinang, Malaysia.Tel: (604) 643 8913 Fax: (604) 643 8914Website: www.prodelcon.com.my

Multimatic Systems Sdn Bhd78, Lintang Bayan Lepas, Phase IV,Kawasan Perindustrian Bayan Lepas,11900 Pulau Pinang, Malaysia.Tel: (604) 643 8913 Fax: (604) 643 8914

ELECTRONICS

Palladine Technology Pte Ltd10, Upper Aljunied Link, # 03-07/09, York International Industrial Building, Singapore 367904.Tel: (602) 6858 6166 Fax: (602) 6858 6066Website: www.palladine.com

Palladine (M) Sdn Bhd9, Jalan Seroja 47, Taman Johor Jaya,81100 Johor Bahru, Johor.Tel: (607) 3577 898 Fax: (607) 3544 581

Cabletron Electronics (M) Sdn BhdA148, A149, Jalan 3,Kawasan Perusahaan Miel,Sungai Lalang, 08000 Sungai Petani,Kedah, Malaysia.Tel: (604) 448 1111 Fax: (604) 448 1110Website: www.cabletron.com.my

Cabletron (M) Sdn Bhd15 & 17, Jalan TPP 5/5,Taman Perindustrian Puchong,47100 Puchong, Selangor Darul Ehsan,Malaysia.Tel: (603) 8060 2731Fax: (603) 8060 3731

Assets 88 Sdn BhdLot 6, Jalan 6/4, Kawasan PerindustrianSeri Kembangan,43300 Seri Kembangan, Daerah Petaling,Selangor Darul Ehsan, Malaysia.Tel: (603) 5512 2428 Fax: (603) 5513 2349

Star Annexe Sdn BhdLot 6, Jalan 6/4, Kawasan PerindustrianSeri Kembangan,43300 Seri Kembangan, Daerah Petaling,Selangor Darul Ehsan, Malaysia.Tel: (603) 8068 2731Fax: (603) 8060 3731

Jotech Metal Fabrication Industries Sdn Bhd

Jotech Holdings Berhad and JP Metal Sdn Bhd

Prodelcon Sdn Bhd

GuangDong Jotech Kong Yue Precision Industries Ltd PT Indotech Metal Nusantara

Palladine Technology Pte Ltd Cabletron Electronics (M) Sdn Bhd

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Jotech MetalFabricationIndustries Sdn Bhd

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JP MetalSdn Bhd

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PT IndotechMetal

Nusantara #60%

GuangDongJotech KongYue Precision

Industries Ltd ^60%

ProdelconSdn Bhd

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CabletronElectronics (M)

Sdn Bhd60%

Cabletron (M)Sdn Bhd

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Star AnnexeSdn Bhd

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Assets 88Sdn Bhd

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MultimaticSystems Sdn Bhd

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PalladineTechnology Pte Ltd *

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Palladine (M)Sdn Bhd

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Precision Stamping

Semiconductor

Electronic

* Incorporated in Singapore# Incorporated in Indonesia^ Incorporated in China

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SEMICONTOOLING ANDAUTOMATION

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Marketing

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After Sales Service

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Toolings

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(RM’000) Year Ended 31 December AUDITED 2001 2002 2003 2004 2005

Revenue 87,898 87,627 117,953 158,007 201,200Profit/ (Loss) Before Tax 3,990 4,557 10,998 (335) 3,351Profit After Tax & Minority Interests 3,033 3,323 8,338 1,566 2,421Earnings Per Share (sen) Property, Plant & Equipment 44,875 42,432 67,841 73,923 72,233Cash Reserves & Short Term Investment 16,980 65,757 32,330 15,246 19,121Total Assets 94,913 143,292 167,932 175,898 190,033Shareholders’ Funds 64,504 66,628 75,556 76,032 76,976Long Term Debts 8,066 48,741 43,199 47,811 47,749Long Term Debts/ Shareholders’ Funds (Times) 0.13 0.73 0.57 0.63 0.62

Pre-Tax Profit/Revenue 4.54% 5.20% 9.32% NA 1.67%Pre-Tax Profit/Equity 9.98% 11.39% 26.38% NA 5.19%Pre-Tax Profit/Total Assets 4.20% 3.18% 6.55% NA 1.76%Pre-Tax Profit/Shareholders’ Funds 6.19% 6.84% 14.56% NA 4.35%

* Adjusted by bonus issue of 21,532,500 which was allotted on 5 August 2004 respectively.# Based on year 2003 and 2004 reinstated weighted average share capital in issue of 60,356,000 and 63,882,000 respectively.

Group Quarterly Performance and Financial Calendar

Quarter 1 Quarter 2 Quarter 3 Quarter 4RM’000 RM’000 RM’000 RM’000

Financial CalendarFinal dividend of 2 sen• Announced 20/2/2006• Entitlement date 1/8/2006• Payable 15/8/2006• Subject to Shareholders’ approval 25/5/2006

Issue of Financial Year 2005 Annual Report 28/4/2006

Annual General Meeting 25/5/2006

Quarter 1 Quarter 2 Quarter 3 Quarter 4

Financial PerformanceRevenue 38,986 44,922 54,397 62,895(Loss)/ Profit Before Tax (2,016) 1,296 1,458 2,613(Loss)/ Profit After Tax & Minority Interests (1,991) 703 816 2,893Earnings Per Share (sen) (3.08) 1.09 1.26 4.48

Announcement of Results 11/5/2005 24/8/2005 18/11/2005 20/2/2006

5.05* 5.54* 13.81*# 2.45*# 3.75

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Datuk Haji Sarip bin Hamid, Chairman

Dear FellowShareholders

The 2005 achievement isthe testimony to thecollective effort &greater management

discipline by ourmanagement &staff members instriving towardsattainingbusiness targets.

and competitivechallenges torealize ourcommitmentto all ourshareholdersandstakeholders.

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Lim Siok Hui, Chief Executive Officer

OVERVIEWThe Malaysian economy continues to grow althoughmoderated at GDP of 5.3% in Year 2005. The overallbusiness performance was dampened by the continualincrease of crude oil prices to new highs in 2005.Despite such unfavorable business environment, weare pleased to report to you that Jotech Group haddelivered commendable results in 2005 with revenueregistered a 27% improvement to close at RM201.2million whilst net profit rose by 55% to register atRM2.42 million. Jotech achieved another significantmilestone in 2005 with the Group’s revenue surpassedthe RM200 million mark. Syabas to my fellow Boardmembers and staff of Jotech Group for yourcommitment and hardwork to accomplish Jotech’smission in scaling new heights. Teamwork as weimpressed upon in our 2004 report is the pillar ofsuccess for the Group to effectively overcome serious

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BUSINESS OPERATIONS REVIEW

We recognize the key to stay ahead in the competition will be our ability to remainresolute and focused in expanding business and exercising prudence inoperational costs even in the ever-demanding business environment. The 2005achievement is the testimony to the collective effort & greater managementdiscipline by our management & staff members in striving towards attainingbusiness targets.

The core business divisions of the Group, Precision Stamping Division (“PSD”) andSemiconductor Tooling and Automation Division (“STAD”) have performedcommendably in 2005 despite the tough environment caused by the surging oilprices and moderated business sentiments. Both divisions continued to deliverimproved performance although operating margins deteriorated amidst furtherintensification of competitiveness coupled with sharp rise in raw materials andcomponents costs. PSD turned in a profit before tax (“PBT”) of RM6.84 million andSTAD contributed RM3.32 million to the Group’s PBT. Expanding and constantpursuit of niche products and services offerings are among the key initiativesimplemented by the core divisions to enhance our position in staying ahead in theintensely competitive market in 2005.

The Electronics Division (“ED”) contributed strongly to the 2005 revenue growth ofthe Group. About RM30 million or 70% revenue growth was contributed by the ED.Palladine Technology Pte Ltd which develops and markets the high end consumerelectronics products such as LCD TVs and plasma TVs under its own brand name,Palladine, has gained wider market recognition and acceptance in 2005 and posted38% revenue contribution to the ED. Subsequent to the reorganization ofCabletron group of companies with the dismissal of its former managing directorof the Cabletron group in late 2004, vast improvement had been achieved on itsoperations and business and are reflected in the 2005 results. The Cabletron grouphas primarily executed expansionary strategy to regain and grow on its business.Encouraging results are evident with its revenue being more than double to reachRM36 million level in just one year. Whilst Cabletron group has yet to fully turnaround in its profitability, more than half of its losses were cut in 2005. With theprogressive market penetration strategies continued to be undertaken for localand overseas markets, the ED is on better footing to contribute positively to theGroup’s future performances.

FINANCIAL REVIEW

Jotech Group delivered a turnaround performance in 2005. It registered a turnoverof RM201.2 million and profit after tax and minority interest (“PATMI”) of RM2.42million compared to RM158.0 million turnover and RM1.57 million PATMI postedlast year.

Shareholders’ funds improved from RM76 million to RM77 million as at 31December 2005. Net tangible assets (“NTA”) rose from RM68.7 million to RM70.0million and based on share capital of RM64.6 million at the end of 2005, the NTAper share stood at RM1.08.

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DIVIDEND

The Board is pleased to recommend a first and final dividend of 2% or 2 sen lesstax per share (2004 : 3 sen per share, comprising 2% less tax and 1% tax exemptdividend per ordinary share) amounting to RM0.9 million (2004 : RM1.6 million) forthe financial year 2005 which represents a 53% payout from the earnings per shareof 3.75 sen. This represents an approximate yield of about 2.7% based on theaverage share price of about RM0.75 for year 2005. We seek your favourableconsideration and approval on the proposed dividend in the forthcoming AGM.

STRATEGIC DIRECTION

The Group strives to build up every business division to generate a sustainablegrowth in business and earnings base. We will continue to leverage newtechnology to redefine new products and markets to offer more innovative, highervalue added services and products whilst ensuring excellent service to ourcustomers.

The Precision Stamping Division’s pioneering attempts in producing higherprecision and bigger size metal parts for plasma and LCD TV and consumerelectronics automation products in recent years have proven to be a soundinvestment which will generate a strong revenue growth for the next few yearsahead. Semiconductor Division’s diversification into high volume precisionmachining parts for the photonics and microwave applications products have alsoproven successful and possess high growth business potential in the near tomedium term. Electronics Division will expand its business regionally tapping intothe advantage of the AFTA and capture a wider market share of the higher enddigital display products which is rising on the wave of conversion and upgrade onthe display products by consumers worldwide.

We are committed to continue to nurture and grow our valued employees throughcontinuous training and upgrading of skills, providing good working environment,encouraging teamwork and offering appropriate rewards and incentives for amutual benefits long term relationship.

LOOKING FORWARD

Looking ahead, we anticipate an exciting year as the Malaysian economy isexpected to strengthen further with GDP projected to grow at a faster rate of 6%in 2006. Having strategic business plans which provide strong growth impetus foreach divisions of the Group, we expect the Group’s performance to furtherimprove in 2006. We invite you to stay on course with us and assure you of ourcollective commitment to deliver satisfactory returns to our fellow shareholders.

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ACKNOWLEDGEMENTS

We, on behalf of the Board members of Jotech, would like to sincerely thank all our esteemedcustomers, business associates, partners and bankers for their invaluable support to Jotech. Welook forward to another year of greater mutually beneficial business and forge a closerrelationship for the coming years.

We, once again would like to thank all our staff, on whom our success depends upon, for theirdedication and loyalty shown to Jotech.

Appreciations are also due to the Bursa Malaysia Securities Berhad, Securities Commission, BankNegara Malaysia, Foreign Investment Committee, Ministry of International Trade and Industry aswell as Federal and State Authorities and other governmental authorities for their help, guidanceand support.

A big thank you to all our loyal shareholders. We reaffirm our commitment of further enhancingyour shareholders’ value.

Our personal appreciation to our fellow Board members for their commitment, continued supportand contribution to Jotech.

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FINANCIAL HIGHLIGHTS

• Revenue continued to grow for the third consecutive year from RM158.0 million in FY2004 to RM201.2 million in FY2005 at a commendable growth rate of 27%.

• Group EBITDA improved from RM11.8 million to RM16.7 million and PBT turned around from an operating loss of RM0.3 million to a profit of RM3.3 million. PATMI for FY2005 registered a remarkable increase of 55% from RM1.6 million to RM2.4 million and this translated to a stronger return on capital employed from 2% to 3%.

• Earnings per share increased from 2.45 sen to 3.75 sen in FY2005.

• A first and final dividend pay-out of 2% less tax per ordinary share is proposed for FY2005 which represent a 53% payout from the earnings per share of 3.75 sen. The proposed dividend represents a yield of about 2.7% based on Jotech’s average share price of about RM0.75 for FY2005.

• Financial reserves of the Group continued to grow with shareholders’ funds increased from RM76.0 million to RM77.0 million as at 31 December 2005. Net tangible assets (“NTA”) rose from RM68.7 million to RM70.0 million and the NTA per share improved from RM1.06 at the end of 2004 to RM1.08 based on 64.6 million shares as at 31 December 2005.

• Cash reserves and short term funds placement stood at RM19.1 million improved from RM15.2 million at the end of 2004. The funds will be used for business expansion in 2006 to yield a better return for the coming years.

• In FY2005, the group invested RM6.8 million in capital expenditure, mainly on plant and machinery and factory buildings for expansion of capacity to cater for production of the higher value added products such as photonics and microwave application components and plasma and LCD TV covers and frames.

• The segmental analysis of Revenue and EBITDA contribution by the respective Divisions of the Group are as follows :

2005 2004RM’million RM’million

REVENUEPrecision Stamping 110.4 103.1 Semiconductor Tooling & Automation 25.8 20.6Electronics 65.0 34.3Investment Holdings - -

EBITDAPrecision Stamping 12.5 13.5Semiconductor Tooling & Automation 6.1 5.4Electronics (1.3) (5.8)Investment Holdings (0.6) (1.3)

• Precision Stamping Division generated RM12.5 million EBITDA compared to RM13.5 million in FY2004. The lower EBITDA secured was mainly attributable to the contraction in profit margins resulting from higher material costs such as coated and electro-galvanised steel in 2005. Semiconductor Tooling and Automation Division continued to register improvement in EBITDA with a growth rate of 13%. The reorganization of Cabletron Electronics Sdn Bhd and its group of companies in the last quarter of 2004 since the dismissal of the former Managing Director has been successfully executed as evident from the substantial reduction in losses of the Electronics Division. Investment Holding’s losses had also been substantially reduced.

DIVISIONAL PERFORMANCE

Precision Stamping Division

Precision Stamping Division (“PSD”) remained as the main contributor to theGroup’s revenue and earnings. PSD’s principal business activities comprisemainly design of toolings, prototyping, precision metal stamping and subassembly services. It strives to stay ahead in the highly competitive market byproviding higher value added products and services as well as diversifying itscustomer base in various business segments to ensure sustainable growth inbusiness and profit margins.

There are 4 companies under PSD with 2 plants located in Malaysia, 1 inIndonesia and 1 in China. Malaysian plants contributed about 78% revenue orRM85.7 million and 83% PBT or RM5.7 million for the Division. Indonesia plantregistered a strong revenue growth in 2005 with a 36% improvement comparedto 2004. It posted a PBT of RM1.6 million on the back of RM20.8 millionrevenue registered. China plant’s revenue continues to improve from RM2.4million in 2004 to RM4.0 million in 2005 and its gestation losses had beenhalved in 2005 with RM0.4 million incurred. We expect that this plant willcontribute positively to the Group’s performance in 2006.

PSD’s constant pursuit on the higher value added products and services inprototype development for new products and products which demand hightechnical competency has gained a reputation as a progressive precision metalstamper. It has successfully won over customers to localize the supply ofprecision metal frames and back panel covers for Plasma and LCD TVs whichhas huge potential in the current marketplace. This successful localizationmission will provide the Division impetus growth and credibility as a leader inthis field.

Semiconductor Tooling & Automation Division

Semiconductor Tooling & Automation Division’s (“STAD”) core activities aredesign and manufacturing of tools and dies and also design and assembly ofhigh-end automation equipment for the semiconductor industries like automoldand trim and form machines. It also manufactures precision machining parts andcomponents for the broadband and telecommunication industries.

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Two subsidiaries were grouped under the STAD and both companies are based in Penang.Prodelcon Sdn Bhd (“Prodelcon”) provides semiconductor tooling and high precisionmachining expertise whilst Multimatic Systems Sdn Bhd (“MMS”) develops and supplyautomation system and equipment for semiconductor IC assembly end of line processes.This Division achieved a strong revenue growth in 2005 with RM25.7 million postedcompared to RM20.6 million in 2004. PBT increased from RM2.6 million in 2004 to RM3.3million this year, in tandem with the revenue growth.

STAD had ventured in new product capabilities by providing high precision machining of thecomponents for photonics and microwave transmissions primarily used for broadband andtelecommunication industries. Due to the strong outsourcing trend by manufacturers ofthese components from Europe and US to this region, this new business segment holdsstrong growth potentials to secure higher revenue in the near to medium term timeframe.

The Semiconductor Industry Association had announced in February 2006 that the 2006worldwide sales of semiconductors will grow by 7.9% to USD245 billion. With the outlook forsemiconductor industry remains robust, this Division shall benefit from the growth foreseenin 2006.

Electronics Division

Jotech formed the Electronics Division in 2003 to spearhead its downstream activity toidentify and market end products in the marketplace. This fits in to the Group’s longer termplan to grow from component manufacturing into the end product development andmarketing. Jotech sees a good fit of this Division as it has identified good potentialproducts, in particular, the high end displays such as large screen Plasma and LCD TVproducts for its marketing channels.

This Division consist of two 60% owned subsidiaries with Palladine Technology Pte Ltd(“Palladine”) which is based in Singapore and Cabletron Electronics Sdn Bhd, based inSungai Petani. The former’s principal activity is product identification and development,distribution and marketing of plasma and LCD display products. The latter is involved inproduct development, manufacturing and distribution of competitively priced householdelectrical and electronics products. This Division posted a remarkable growth in revenue in2005 with a revenue of RM65 million which was almost double the 2004 revenue of RM34.3million. Palladine reported a PBT of RM0.2 million in 2005 whilst Cabletron group hadsubstantially reduced its losses from RM6.9 million in 2004 to RM2.9 million this year.

The key initiatives for this Division are to expand its products range, improve on after salesservice and intensify marketing activities to widen the market and customer bases. Greateremphasis and effort is undertaken in promoting the plasma and LCD range of displayproducts locally and overseas to meet the increasing market demand for such products.With the AFTA environment, it provides the Division better access to channel its products tothe fast growing ASEAN market like Thailand, Indonesia, Vietnam and Philippines.

2006 OUTLOOK

Market consensus projects global economy growth to be sustainable for 2006, especially, inmost emerging markets and developing countries in Asia which expect continued stronggrowth. Whilst the 2006 outlook is generally good, the underlying pressure for interest ratesincrease and higher oil prices may stem the growth potential as expected. Nevertheless, theGroup is positive that with the strategic plans and expansionary measures being put in placeby each division of the Group, we are ready to face the competitive and challenging marketahead.

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YG. BHG. DATUK HAJI SARIP BIN HAMIDMalaysian, Aged 58

Datuk Haji Sarip Bin Hamid was appointed to the Board of Directors of Jotech on 30 April 1997 andsubsequently as Executive Chairman on 20 October 1999. He was redesignated as the Non-Executive Chairman on 11 November 2002. He graduated with a Bachelor of Economics degreefrom the University of Malaya in 1974, a Masters of Business Management degree from the AsianInstitute of Management, Manila, the Philippines in 1979 and a Post-Graduate Diploma in IslamicStudies from the Universiti Kebangsaan Malaysia in 1985.

He has more than 31 years of invaluable managerial and entrepreneurial experience in businessranging from banking, manufacturing, trading, import and export, property development and theautomobile industry. He commenced his career as a teacher in 1966. He worked at Bank BumiputraMalaysia Berhad as an Accountant from 1974 to 1980 and Patco Malaysia Berhad, a manufacturerand assembler of air-conditioners for motor vehicles from 1980 to 1986 as a Director and GeneralManager. He left Patco Malaysia Berhad in 1986 to join Asteria Sdn Bhd, an investment holdingcompany and then the holding company of AIC Corporation Berhad (“AIC”) as the ExecutiveChairman. He was appointed as the Chairman of AIC in 1990 and later became the ExecutiveChairman at the time of its listing on the Bursa Securities in 1994. He was redesignated as the Non-Executive Chairman of AIC on 11 November 2002. He was a board member of Kumpulan WangSimpanan Pekerja from 1986 to 1988 and presently, he also holds chairmanship in AV VenturesCorporation Berhad. He also sits on the board of several other private companies.

LIM SIOK HUI Singaporean, Age 56

Lim Siok Hui was appointed to the Board of Directors of Jotech on 7 August 1995. He wasappointed as the Chief Executive Officer on 11 November 2002. He has been the Managing Directorof Jotech Metal Fabrication Industries Sdn Bhd (“JoMetal”) since 1994. He has more than 34 yearsof experience in the field of metal stamping, having worked with Japanese and Hong Kong metalstamping companies. He started his career in 1970 as a supervisor in Alloy Industries (S) Pte. Ltd., acompany involved in trading and manufacturing of aluminium cans, and was promoted to FactoryManager in 1972. He was subsequently appointed as Director in 1974. He joined Intergrate (S) Pte.Ltd., a metal stamping company specialising in tools and dies, as its Managing Director in 1989.

LIEW CHENG YORKMalaysian, Aged 43

Liew Cheng York was appointed to the Board of Directors of Jotech on 7 August 1995. She has beenthe Executive Director of Jotech Metal Fabrication Industries Sdn Bhd (“JoMetal”) since itsincorporation. She started her career in Compact Metal (S) Pte. Ltd., a manufacturer of window anddoor frames for buildings. In 1988, she joined Abis Electronics (S) Pte. Ltd., a company principallyinvolved in metal stamping as Administrative Manager and left to set up JoMetal in 1989.

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Chew Siew Hong was appointed tothe Board of Directors of Jotech on30 April 1997. He graduated with aBachelor degree in MechanicalEngineering from National ChengKung University, Taiwan in 1973. Inthe same year, he joined Lindeteves- Jacoberg (M) Sdn Bhd, a companyprincipally involved in trading, as asales executive and was in chargeof the engineering division. In1978, he joined Micro-MachiningSdn Bhd, a company principallyinvolved in the manufacture ofautomation system and precisiontools as a Sales Engineer and waslater promoted to Sales Manager,where he was responsible for thesales department. He later set upProdelcon Sdn Bhd (“Prodelcon”)together with Ooi Boon Pin in 1985and held the position as ExecutiveDirector of Prodelcon until heretired in 2001.

Haji Mohd Ali Bin Bawal wasappointed to the Board of Directorsof Jotech on 6 December 1995. Hehas more than 34 years of invaluablemanagerial and entrepreneurialexperience in businesses rangingfrom plantation management,property development, manufacturingand trading. He graduated with adiploma in Plantation IndustriesManagement from the MARAInstitute of Technology in 1970 and aMasters of Business Administrationdegree from the Oklahoma CityUniversity, United States of Americain 1990. Prior to his appointment tothe Board of Directors of Jotech, heworked as Manager with KumpulanGuthrie Berhad, a group ofcompanies which is involved in theplantation industry, from 1968 to1987 and as the Managing Directorwith Hamodal Sdn Bhd, a propertyinvestment company, in 1990. He hadbeen the Executive Director of AICsince 1990 until he resigned on1 June 2005. He also holds directorshipin several other private companies.

OOI BOON PIN Malaysian, Aged 48

CHEW SIEW HONGMalaysian, Aged 62

TUAN HAJI MOHD ALI BINBAWAL Malaysian, Aged 57

Ooi Boon Pin was appointed to theBoard of Directors of Jotech on 30April 1997. He has been a ManagingDirector of Prodelcon since 1985. Hegraduated with an honours degreein Manufacturing Technology fromthe National Institute for HigherEducation (University of Limerick),Ireland in 1981. In 1978, he joinedAnalog Devices B.V., Ireland, acompany involved in design andwafer fabrication, assembly and testof semiconductors, as a ProductDevelopment Engineer and later asProcess Engineer in the assemblydepartment. Upon his return toMalaysia in 1981, he joined Micro-Machining Sdn Bhd, as QualityAssurance Engineer where he was incharge of quality assurance in toolroom and lead frame stampingfacility. He later assumed theposition of Project EngineeringManager and was responsible forthe development of new toolsdesigns and end-of-line assemblyequipment from design tomanufacturing. He later set upProdelcon together with Chew SiewHong in 1985.

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Ashari Bin Ayub is an independentDirector of Jotech. He wasappointed to the Board ofDirectors of Jotech on 9 June 2000.He is a member of the MalaysianInstitute of Certified PublicAccountants and the MalaysianInstitute of Accountants. He hasbeen a senior partner in Coopers &Lybrand since 1974 until hisretirement in 1994. He joinedseveral other private companiessubsequent to his retirement. He iscurrently a director of several listedcompanies such as AV VenturesCorporation Berhad, BCB Berhad,Metrod Malaysia Berhad andRanhill Utilities Berhad and he alsosits on the Board of several otherprivate companies.

Lasa Bin Mat Desa is anindependent Director of Jotech. Hewas appointed to the Board ofDirectors of Jotech on 9 June 2000.He obtained an L.L.B degree fromthe University of Melbourne,Australia in 1990. He was formerlyattached to the Royal Customs andExcise Department, Malaysia, whichhe joined as assistantsuperintendent of customs, for 35years and retired in 1998 as theState Director of Customs, Johor, aposition which he held from July1992 to January 1998. He hasserved the various branches of theRoyal Customs and Excisedepartment and is well-versed withthe custom laws and proceduresand has vast experience inenforcement work and in the field ofadministration. Presently, he is theManaging Partner of a customs andmanagement consultancy firm whichhe joined in 1998.

Lt. Jen (B) Datuk Haji Abdul AzizBin Hasan is an independentDirector of Jotech. He was appointedto the Board of Directors of Jotechon 1 August 2001. He obtained hisMasters in Business Administrationfrom the National University ofMalaysia in 1986. He was formerlyattached to the Royal MalaysianArmy where he has served for 37years until retirement as theDeputy Chief of Army in March2001. He had held variouscommand and staff appointmentsat different levels of command.Datuk Haji Abdul Aziz is a Directorof Tien Wah Press Holdings Bhd,Tenggara Oil Berhad, Hap SengConsolidated Berhad and Nam FattCorporation Berhad. He also sits onthe board of several other privatecompanies.

ADDITIONAL INFORMATION

Family relationship with any Director and/ or major shareholder

• There is no family relationship among the Directors

Conviction for offences (within the past 10 years, other than traffic offences)• None of the Directors have any conviction for offences other than traffic

offences, if any

Conflict of interest with the Group• None of the Directors have any conflict of interest with the Group

ASHARI BIN AYUB Malaysian, Aged 63

LASA BIN MAT DESA P.J.K.,Malaysian, Aged 63

YG. BHG. LT. JEN (B)DATUK HAJI ABDUL AZIZBIN HASAN Malaysian, Aged 60

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Members of the Committee(from top to bottom:)

CHAIRMANEncik Ashari bin AyubIndependent Non-Executive Director

MEMBERSEncik Lasa bin Mat DesaIndependent Non-Executive Director

Mr. Lim Siok HuiChief Executive Officer

AUDIT COMMITTEE REPORT

1. ROLE OF AUDIT COMMITTEE (“COMMITTEE”)

The Committee shall:

• Provide assistance to the Board of Directors (“Board”) in fulfilling its fiduciary responsibilities relating to the corporate accounting and reporting practices of the Company and the Group.

• Monitor the Group’s business efficiency, the quality of the accounting and audit function and strengthen the confidence of the public in the Group’s reported results.

• Maintain, through regularly scheduled meetings, a direct line of communication between the Board and the external auditors as well as internal auditors.

• Avail to the external and internal auditors as a private and confidential audience at any time they desire and request through the Committee Chairman, with or without the prior knowledge of Management.

• Act upon the Board’s request to investigate and report on any issues or concerns with regard to the Management of the Group.

2. TERMS OF REFERENCE

• COMPOSITION

The Committee shall be appointed by the Board from amongst its Directors and consist of at least three and not more than five members, the majority of whom shall be independent Directors, independent of senior management and operating executive and unencumbered by any relationships that might, in the opinion of the Board be consideredto be a conflict of interest.

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5The members of the Committee shall elect a Chairman from among their number who shall be an independent and non-executive Director. At least one member of the Committee must be a member of the Malaysian Institute of Accountants (“MIA”).

An alternate Director must not be appointed as a member of the Committee. In the event of any vacancy in the Committee, the Company shall fill the vacancy within three months.

The Board must review the term of office and performance of the Committee and each of its members at least once in every three years to determine whether such Committee and its members have carried out their duties in accordance with their terms of reference.

• AUTHORITY

The Committee is authorised by the Board:

a) to investigate any matter within its terms of reference;

b) to have the resources which are required to perform its duties;

c) to request with full authority for and shall have unrestricted access to any information it seeks as relevant to its activities from any employees of the Company or the Group and all employees are directed to co-operate with any request made by the Committee;

d) to have direct communication channels with the external auditors and the Company’s internal auditors;

e) to seek and accept independent professional advice and to secure the attendance of any person with relevant experience and expertise as it considers necessary; and

f) to be able to convene meetings with the external auditors, excluding the attendance of the executive members of the committee, whenever deemed necessary.

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• ATTENDANCE AND FREQUENCY OF MEETINGS

The minimum quorum for the meeting is two members of the Committee, the majority of members present must be independent and non-executive Directors.

The Deputy Chief Executive Officer (“DCEO”), Chief Financial Officer cum Joint Company Secretary and internal auditors are normally invited for attendance at each meeting. Representatives of the external auditors are also invited from time to time to brief the Committee on related audit matters.

A minimum of four meetings per year is planned, although additional meetings may be called at any time at the Committee Chairman’s discretion.

At least once a year, the Committee shall meet with the external auditors, without the presence of any executives of the Group.

• PROCEDURES OF MEETINGS

a) The Committee Chairman shall preside at all meetings. In his absence, Committee members present shall elect among themselves an independent and non-executive director to be the chairman of the meeting.

b) The Committee Chairman may call for a meeting upon the request of the internal or external auditors or any Committee Member or Company’s Non-Executive Chairman or CEO; in order to consider any matter that should be brought to the attention of the Directors or shareholders.

c) The Secretary of the Committee shall draw up the agenda for the meeting and the agenda shall be sent to all members of the Committee and any other persons who may be required to attend.

d) A minimum seven days’ notice shall be given for all meetings. Nevertheless, a shorter notice is permitted subject to agreement by all Committee members.

e) All decisions are determined by a majority of votes. In case of equality of votes, the Committee Chairman shall have a casting vote.

f) A resolution in writing signed by a majority of the Committee members and constituting a quorum shall be effective as a resolution passed at a meeting of the Committee.

• MINUTES OF MEETINGS

The Company Secretary shall attend the meetings of the Committee and minute all the proceedings of the meetings. Minutes of meetings must be signed by the Chairman of the meeting and are kept at the registered office of the Company.

• FUNCTIONS

The Committee shall review, appraise and report to the Board on:

a) The discussion with the external auditors, prior to the commencement of audit, the audit plan which states the nature and scope of the audit and to ensure co-ordination of audit where more than one audit firm is involved;

b) The review with the external auditors, his evaluation of the system of internal controls, his management letter and management’s response;

c) The discussion of problems and reservations arising from the audits, the audit report and any matters the external auditors may wish to discuss (in the absence of Management, where necessary);

d) The assistance given by the employees of the Group to the external and internal auditors;

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e) The review of the following in respect of internal audit:

• Adequacy of the scope, functions and resources of the internal auditors and that it has the necessary authority to carry out its work;

• Internal Audit programme;

• The major findings of internal audit investigations and management’s responses, and ensure that appropriate actions are taken on the recommendations of the internal auditors;

• Co-ordination of external audit with internal audit;

• Approval of any appointment or termination of the internal auditors;

• Resignations of internal auditors and provide the resigning internal auditors an opportunity to submit his/her reason for resignation.

f) The review of quarterly reporting to the Bursa Malaysia Securities Berhad (“Bursa”) and year end financial statements of the Group before the submission to the Board, focusing particularly on:-

• Changes in or implementation of major accounting policy changes;

• Significant and unusual events; and

• Compliance with accounting standards and other legal requirements.

g) The review of any related party transaction and conflict of interest situation that may arise within the Group or Company, including any transaction, procedure or course of conduct that raises questions of Management’s integrity;

h) The review of any letter of resignation from the external auditors and any questions of resignation or dismissal;

i) The review where appropriate whether there is a reason (supported by grounds) to believe that the Group’s external auditors is not suitable for re-appointment;

j) The recommendation of the nomination and appointment of external auditors as well as the audit fee;

k) The promptly reporting to the Bursa on anymatter reported by the Committee to the Board which has not been satisfactorily resolved resulting in a breach of the Bursa Listing Requirements;

l) Any other function that may be mutually agreed upon by the Committee and the Board, which would be beneficial to the Company and ensure the effective discharge of the Committee’s duties and responsibilities.

3. MEMBERS OF THE COMMITTEE

ChairmanEncik Ashari bin AyubIndependent Non-Executive Director(The Committee Chairman is a member of the MIA)

MembersEncik Lasa bin Mat DesaIndependent Non-Executive Director

Mr Lim Siok HuiChief Executive Officer

4. MEETINGS OF THE COMMITTEE

The details of attendance at the Committee meetings in 2005:

* A discussion was held between the Committee and external auditors without the presence of any management executives of the Group on 20 February 2006.

The details of attendance by individual CommitteeMember in 2005:

5. INTERNAL AUDIT FUNCTION

The Committee is supported by the outsourced internal auditors whose internal audit function is independent of the activities or operations of its auditees. The Committee is aware that this internal audit function is essential to assist in the obtaining the assurance it requires regarding the effectiveness of the system of internal control.

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Name of Total Meetings PercentageDirector Attended by Directors Attendance

1. Encik Ashari 5/5 100%bin Ayub

2. Encik Lasa 5/5 100%bin Mat Desa

3. Mr. Lim Siok Hui 5/5 100%

Attendance byDate of Total Committee Committee Members (%)Meeting Members Independent Non-Independent

1. 07/02/05 3 2 (100%) 1 (100%)

2. 23/03/05 3 2 (100%) 1 (100%)

3. 11/05/05 3 2 (100%) 1 (100%)

4. 24/08/05 3 2 (100%) 1 (100%)

5. 17/11/05 3 2 (100%) 1 (100%)

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The main role of the internal audit function is to review the effectiveness of the system of internal control and this is performed with impartially, proficiency and due professional care.

Following a review by the management on the requirement of internal audit function, it was approved by the Committee and the Board that the internal audit function would be more cost effective if it is outsourced and Messrs Russell Bedford LC & Company was appointed as the company’s internal audit service provider as they are an independent and effective unit capable of undertaking the task.

6. ACTIVITIES DURING THE YEAR

The Committee met at scheduled times; with due notices of meeting issued, and with agendas planned and itemised so that issues raised in the audit reports by the internal auditors in respect of financial statements were deliberated and discussed in a focused and detailed manner.

The Committee has reviewed annual internal audit work-plans and reports to ensure the scope of work and conclusions of reports are adequate to assist the Committee to appraise and report to the Board on the financial affairs of the Group.

The Committee also reviewed with the external auditors on audit strategy and plan for the statutory audit of the Group accounts for the year ended 31 December 2005.

At every Committee meeting during the financial year, the internal audit reports of the Group of companies (incorporating therein, the internal audit findings, internal audit recommendations and management’s responses) were tabled and deliberated. In its undertaking of each audit, the internal auditors reviewed the internal control system of the major risk areas and performed relevant compliance audit procedures of the auditee in those areas.

The Committee through the internal and external auditors has carried out the above functions in the areas as follows:-

a) Review the accounting and internal controls systems of the companies’ major risk areas within the Group to ensure effectiveness and reliability in the preparation of financial statements. The systems documentation has also been reviewed and updated to ensure completeness and effective functioning of all required internal controls.

b) Review the presentation of the financial statements of the Group with the external auditors to ensure adequacy of disclosure of information essential to a fair and full presentation of the financial affairs of the Group for recommendation to the Board for approval.

c) Review the adequacy and effectiveness of the management’s responses and authorise the management to implement the recommendations proposed by internal auditors and external auditors through the Management Letters raised.

d) Review the computer software licensing of all the companies within the Group to ensure that the software program in custody / purchased are original, authentically licensed and conform to Copyright Act 1987 and Trade Description Act 1972 Rules and Regulation.

e) Review the operating / business licenses issued by the respective Municipal Councils, Ministry of International Trade and Industry and Royal Malaysian Custom for all the manufacturing companies within the Group to ensure compliance with the relevant statutory Rules and Regulations.

f) Review the inter-company transactions and any related / interested party transactions that may arise within the Company and the Group to ensure compliance with Malaysian Accounting Standards Board, Bursa Listing Requirements and other relevant statutory authorities and to ensure that such transactions are:

• Undertaken in the ordinary course of business;

• Carried out at arm’s length and based on normal commercial terms consistent with the Group’s usual business practices and policies;

• On terms not more favourable to the related parties than those generally available to the public; and

• Not detrimental to the minority shareholders of the Company.

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The Board of Directors acknowledges the importance of adopting high standards of corporate governance within theGroup and strives to maintain as well as continuously enhance the management of the Group with integrity,transparency and accountability. The Board also supports the principles of self-regulation and prudent managementof shareholders’ funds to safeguard and enhance shareholders’ investment and value as well as protect the interest ofminority shareholders.

In compliance with the Revamped Listing Requirements of the Bursa Malaysia Securities Berhad (“BMSB”), the Boardis pleased to report that the Company has applied the Principles and explain the state of compliance in accordancewith the Best Practice provisions of the Malaysian Code of Corporate Governance (“the Code”).

PRINCIPLES STATEMENT

The following statement sets out how the Company has applied the principles in Part 1 of the Code.

A. Board of Directors

I) The Board

The Board acknowledges its fundamental role to chart and monitor the Group’s directions and operations with the ultimate objective of enhancement of long-term shareholders’ value. To fulfil this role, the Board reserves appropriate strategic, organisational and financial matters for its collective decision.

Meetings

The Board meets at least four times a year at quarterly intervals with additional meetings convened as necessary. During the year ended 31 December 2005, the Board had met on a total of five occasions, where it deliberated upon and considered a variety of matters including the Group’s financial and operational performance, budgets, outlook of each division and strategic decisions as well as the business plans and direction of the Group.

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All Directors’ meetings are preceded with a formal agenda. Members of the Board are provided with documents on information requiring its consideration before each meeting so that informed decisions are made. All proceedings from the Board meetings are minuted by the Company Secretary.

The attendance of the Board meetings by the Directors for the year 2005 is presented in the statement accompanying the notice of annual general meeting on page 80.

Board Committees

The Board has delegated specific responsibilities to Board Committees, namely Audit Committee, Nomination Committee, Remuneration Committee and Executive Share Option Scheme (“ESOS”) Committee in order to enhance business, operational and administration efficiency as well as efficacy.

All committees have written terms of reference approved by the Board. The members of the committees appointed the Chairmen of the various committees. These committees have the authority to examine particular issues and report to the Board with recommendations. The ultimate responsibility for the final decision on all matters, however, lies with the entire Board.

Succession to the Board is proposed to the Nomination Committee for evaluation and recommendation to the Board for approval. To this intent, there are senior management personnel being groomed to understudy the incumbent Directors at both subsidiary and company level.

Audit Committee

The Audit Committee report is presented on pages 20 to 24 of this annual report.

Nomination Committee and Remuneration Committee

Reports of the Nomination and Remuneration Committees are set out below.

II) Board Balance

The Board comprises nine members, a Non-Independent Non-Executive Chairman, a Chief Executive Officer (“CEO”), four Non-Independent Non-Executive Directors and three Independent Non-Executive Directors. A brief description of the background of each Director is presented on pages 17 to 19 of this annual report.

The Directors, with their diverse background and specialisations, bring together a wide resources of business, technical and financial knowledge and experience to support the Group’s continuous growth. The CEO is responsible for implementing the policies and decisions of the Board, overseeing the operations as well as co-ordinating the development and implementation of business and corporate strategies. The Non-Independent Non-Executive Directors are entrusted with policy and strategy development, performance monitoring, allocation of resources as well as improving governance and controls. The Independent Non-Executive Directors provide objective and independent judgement to the decision making of the Board which serves as a capable check and balance for the Directors.

There is a clear division of responsibilities at the head of the Company to ensure a balance of authority and power. The Board is led by Yg. Bhg. Datuk Haji Sarip Bin Hamid as the Non-Independent Non-Executive Chairman. He is responsible for running the Board and ensures that all Directors receive sufficient relevant information on financial and operational matters to enable them to participate actively in Board discussions and decisions. On the other hand, the executive management of the Company is led by the CEO, Mr. Lim Siok Hui. He is responsible for the day to day management of the business as well as the implementation of Boards’ policies and decisions.

En. Ashari Bin Ayub acts as the Senior Independent Non-Executive Director. Any concerns regarding the Group may be conveyed to him.

The Board is satisfied that the current Board composition fairly reflects the interests of minority shareholders in the Company.

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III) Supply of Information

The Board recognises that the decision making process is highly dependent on the strength of information furnished.

The Chairman ensures that all Directors have full and unrestricted access to timely information, necessary in the furtherance of their duties. Every Director also has unhindered access to the advice and services of the Company Secretary and where required and in appropriate circumstances, take independent professional advice at the Company’s expense.

Prior to the meetings of the Board and the Board Committees, the requisite Board papers which include the agenda and reports relevant to the agenda of the meetings covering the areas of strategic, financial, operational and regulatory compliance matters will be circulated to all the Directors.

In addition, there is a schedule of matters reserved specifically for the Board’s decision, including the approval of corporate plans and budgets, acquisition and disposal of assets that are material to the Group, major investments, changes to management and control structure of the Group, including keypolicies, procedure and authority limits.

IV) Appointments to the Board

Nomination Committee

The Nomination Committee comprises three Board members as follows:-

ChairmanLasa bin Mat Desa – Independent Non-Executive Director

MembersAshari bin Ayub – Independent Non-Executive DirectorLt. Jen. (B) Datuk Haji Abdul Aziz bin Hasan – Independent Non-Executive Director

The Committee consists entirely of Non-Executive Directors, all of whom are independent.

The primary objectives of the Nomination Committee are to evaluate suitability of candidates and make recommendations to the Board on all new Board appointments. The Committee is also empowered to assess the effectiveness of the Board as a whole on an annual basis.

The Nomination Committee met once since the last report. The meeting was attended by all members of the Committee.

Appointment process

The Board, through the Nomination Committee’s appraisal, believes that the current composition of the Board brings the required mix of skills and core competencies required and its size and composition are appropriate to ensure the effective functioning of the Board.

The Board appoints its members through a formal and transparent selection process approved by the Board. New appointees will be considered and evaluated by the Nomination Committee. The Committee will then recommend the candidates to be approved and appointed by the Board. The Company Secretary will ensure that all appointments are properly made, that all information necessary is obtained, as well as all legal and regulatory obligations are met.

Directors’ training

The Board, through the Nomination Committee, ensures that the Board has an appropriate balance ofexpertise and ability. The senior management will organise orientation program for new Board members. These include visits to major subsidiaries and meeting with key senior executives. All Directors have completed the Mandatory Accreditation Programme (MAP) and attended various training programmes under the Continuing Education Programmes (“CEP”) for Directors pursuant to the requirements of BursaMalaysia Securities Berhad.

The Directors are mindful of receiving continuous training to keep abreast with the new statutory, regulatory requirements and market developments. The seminars attended by Directors in 2005 are on areas relating to corporate governance practices, company valuation, restructuring and funding, risk management and financial reporting.

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V) Re-election

In accordance with the Articles of Association, one third of the Board is subject to retirement by rotation at each Annual General Meeting. The Directors to retire in each year are the Directors who have been longest in office since their appointment or re-appointment. A retiring Director is eligible for re-appointment. The Articles of Association also provide that the CEO who shall be elected from amongst the Board members shall also retire once at least in each three years and shall be eligible for re-election. These provide an opportunity for the shareholders to renew the mandates. The election of each Director is voted on separately. To assist shareholders in their decision, sufficient information such as personal profile, meetings attendance and the shareholdings in the Group of each Director standing for election are furnished in a separate statement accompanying the notice of annual general meeting.

B. Directors’ Remuneration

Remuneration Committee

The Remuneration Committee comprises three Board members as follows:

ChairmanLt. Jen. (B) Datuk Haji Abdul Aziz bin Hasan – Independent Non-Executive Director

MembersLasa bin Mat Desa – Independent Non-Executive DirectorAshari bin Ayub – Independent Non-Executive Director

The committee consists entirely of Independent Non-Executive Directors.

The Remuneration Committee is responsible for recommending to the Board a remuneration framework for Directors with the objective to provide the remuneration packages necessary to attract, retain and motivate Directors of the quality required to manage the business and to align the interest of the Directors with those of the shareholders. In framing the Directors’ remuneration policy, the Remuneration Committee consults and receives advice from external consultants. Information prepared by independent consultants on the remuneration practices of comparable companies are taken into consideration in determining the remuneration packages.

None of the other Directors participated in any way in determining their individual remuneration. The Board as a whole determines the remuneration of Non-Executive Directors with individual Directors abstaining from decisions in respect of their individual remuneration.

The Remuneration Committee met once since the last report. The meeting was attended by all members of the Committee.

Details of the Directors’ Remuneration

The aggregate remuneration of the Directors categorised into the appropriate components is as follows:

Amount in RM’000

Salaries and other emoluments 510 588 11

Fees 18 36 108

Non-ExecutiveDirectors of

the Company

Executive Directorsof subsidiaries whoare Non-Executive

Directors of theCompany

Executive Director of

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The disclosure of Directors’ remuneration is made in accordance with Appendix 9C, Part A, item 10 of the Listing Requirements of the BMSB. This method of disclosure represents a deviation from the Best Practice set out in the Code, which suggests separate disclosure of each Director’s remuneration. The Board of Directors is of the opinion that separate disclosure would impinge upon the Directors’ right of privacy and would not add significantly to the understanding of shareholders and other interested investors in this area.

ESOS Committee

The ESOS Committee comprises four Board members as follows:

ChairmanAshari Bin Ayub

MembersLiew Cheng York Ooi Boon Pin Lasa Bin Mat Desa

ESOS Committee was formed primarily to establish and administer the ESOS. The Committee met from time to time at the discretion of the Chairman or the Board. The Committee met once since the last report. The meeting was attended by all members of the Committee.

C. Shareholders

Dialogue between the Company and Investors

The Group values dialogue with investors. The Company communicates with its investors during the annual general meeting, extraordinary general

meeting and analyst meetings, with the intention of giving the investors a clear and complete picture of the Group’ performance and position. Regular discussions were held between the senior management and shareholders, investment analysts and investors throughout the year. Presentations based on permissible disclosures are made to explain the Group’s performance and major development program.

Annual General Meeting

At the Company’s annual general meeting, shareholders have direct access to the Board and are encouraged to participate in the open question and answer session. Members of the Board and the external auditor of the Company are present to answer questions raised during the meeting. The Chairman and members of the Board held a press conference immediately after the annual general meeting where questions on the Group’s activities and performance from reporters were addressed.

D. Accountability and audit

I) Financial reporting

The Board aims to provide and present a balanced and meaningful assessment of the Group’s financial performance and prospects at the end of the financial year, primarily through the annual financial statements, quarterly results announcements to BMSB as well as the letter to shareholders jointly addressed by the Chairman and CEO in the annual report. The Board is assisted by the Audit Committee to oversee the Group’s financial reporting processes and the quality of its financial reporting.

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The remuneration paid to the Directors within the following bands is summarised as follows:

Less than RM50,000 - - 6

RM250,001 to RM300,000 - 1 -

RM350,001 to RM400,000 - 1 -

RM500,001 to RM550,000 1 - -

Non-ExecutiveDirectors of

the Company

Executive Directorsof subsidiaries whoare Non-Executive

Directors of theCompany

Executive Director of

the CompanyAmount of Remunerationa

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Statement of Directors’ responsibility in respect of the preparation of the audited financial statements

The Board is responsible for ensuring that the financial statements of the Group give a true and fair view of the state of affairs of the Group and of the Company as at the end of the accounting period and of the results of the operations and cash flows for the period then ended. The Directors have ensured the financial statements are drawn up to comply with applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965.

In preparing the financial statement, the Directors have selected and applied consistently suitable accounting policies and made reasonable and prudent judgments and estimates. The Directors also have a general responsibility for taking such steps as are reasonable to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

II) State of Internal Controls

The Statement on Internal Control furnished on pages 31 and 32 of the annual report provides an overview on the state of internal controls within the Group.

III) Relationships with the Auditors

The Audit Committee has always maintained a transparent relationship with the external auditors. The role of the Audit Committee in relation to the external auditors is described on pages 20 to 24 of the annual report.

The above Statement is made in accordance with the resolution of the Board of Directors dated 4 April 2006.

INTRODUCTION

The Board, pursuant to Listing Requirements of the Bursa Malaysia Securities Berhad (“BMSB”)and in adopting the Malaysian Code on Corporate Governance’s Principles and Best Practices(“the Code”), is pleased to provide the following statement regarding the state of internalcontrol of the Group for the financial year under review. This statement is guided by theStatement on Internal Control : Guidance for Directors of Public Listed Companies issued byThe Institute Of Internal Auditors Malaysia (“the Internal Control Guidance”).

BOARD’S RESPONSIBILITIES

The Board acknowledges its overall responsibility for the Group’s systems on internal controland risk management which include the establishment of an appropriate control environmentand framework as well as reviewing the adequacy and integrity of the systems. It should benoted, however, that such systems are designed to manage rather than eliminate the risk offraud and failure to achieve business objectives. In addition, it should be noted that thesesystems can only provide reasonable but not absolute assurance against material misstatementor loss.

The Group has in place an on-going process for identifying, evaluating and managingsignificant risks faced by the Group throughout the year up to the date of approval of theannual report and financial statements. This process is regularly reviewed by the managementand reported to the Board as and when required and it accords with the Internal ControlGuidance.

The key features of the internal control systems are described under the following headings.

RISK MANAGEMENT FRAMEWORK

The management has formulated a risk management framework for the Group. The frameworkof the risk management encompasses the following key elements:

• Risks identified and proposed action plans were presented by the management to the Board on the strategic and operational risks facing the Group’s core business divisions and the actions required to deal with risks. These risk areas are also identified in the internal auditors’ review and are checked for adherence. The respective companies’ management and staff execute the confirmed action plans and reinforced the existing control practices particularly on segregation of responsibilities and their accountabilities in their day-to-day operations.

• Risk profile is maintained by the respective companies in the Group. Key risks identified to each company’s objectives are aligned to the Division’s and Group’s strategic objectives. These risks were measured in relation to their likelihood of occurrence and the magnitude of impact.

The formalised assessment takes into account all significant aspects of internal control, whichencompass the establishment of an appropriate control environment and framework, as well asreviewing the adequacy and integrity of the internal control.

All the above-mentioned initiatives would ensure that the Group has in place a formalisedongoing process to identify and manage the significant risks to ensure the achievement ofbusiness objectives.

STRATEGIC DIRECTION AND PLANNING

We considered the risk profiles of the Group in formulating our strategies and plans which wereapproved and adopted by the Board. The strategies and plans are monitored and revised asthe need arises.

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INTERNAL AUDIT FUNCTION

The internal audit function was outsourced to an independent audit firm, Russell Bedford LC & Co.. Theyreport directly and provide assistance to the Audit Committee (“AC”) and Board in obtaining an independentassurance they require regarding the effectiveness of the system of internal controls.

The internal audit function’s principal responsibility is to undertake regular and systematic reviews of thesystem of internal controls so as to provide reasonable assurance that such system operates satisfactorily andeffectively in the Group and report to the AC on a quarterly basis. The annual internal audit work plan andaudit programs are presented to and approved by the AC.

OTHER KEY ELEMENTS OF INTERNAL CONTROLS

• Board Meetings

The Board meets on a quarterly basis and has a formal agenda of matters for discussion. The Chief Executive Officer (“CEO”) and senior management lead the presentation and briefing to the Board based on the Board papers circulated prior to the meeting. In arriving at any decision, a recommendation by the management followed by a thorough deliberation and question and answer session is a prerequisite. In addition, the Board is kept updated on the progress of the Board’s decision until a satisfactory conclusion is arrived at.

• Organisational Structure

The Group has a well defined organisational structure with clear lines of accountability including a written terms of reference (“TOR”) that sets out the authority delegated to the Board Committees. The TOR is reviewed and approved by the Board annually.

• Performance Management Framework

Management reports are presented to the Board as and when required to facilitate the review of financial and operational performance of the business divisions. The review encompasses areas such as financial and operational key performance indicators, variances between budget and operating results and compliance with laws and regulations.

There is also a budgeting process where annual budgets would be prepared and proposed by the business divisions’ management each year. The budgets are presented to the Board for approval.

• Operational policies and procedures

The documented policies and procedures form an integral part of the internal control system to safeguard the Group’s assets against material losses and ensure complete, timely and accurate financial information. The documents consist of manual and handbooks that are revised as and when required to meet operational needs.

BOARD’S CONCLUSION

Based on the above, the Board is pleased to disclose that the Group’s internal control systems are sufficientlyin line with the Code and the Internal Control Guidance.

The external auditors have reviewed this Statement on Internal Control, dated 4 April 2006 and reported tothe Board that the statement appropriately reflects the process adopted by the Board in reviewing theadequacy and integrity of internal control of the Group.