annual report 2006 - weida (m) bhd

Notice Of Seventh Annual General Meeting

2 WEIDA (M) BHD.

NOTICE IS HEREBY GIVEN that the Seventh Annual General Meeting of the Company will beheld at the Company’s premises, Wisma Hock Peng, 2nd Floor, 123, Green Heights, JalanLapangan Terbang, 93250 Kuching, Sarawak on Monday, 4 September 2006 at 10.00 am for thefollowing purposes:-

AGENDA

1. To receive the Audited Financial Statements for the financial year ended31 March 2006 together with the Reports of the Directors and Auditorsthereon.

2. To declare a first and final dividend of 2.0 sen per share less 28% incometax, in respect of the financial year ended 31 March 2006 as recommendedby the Directors.

3. To approve the payment of Directors’ fees amounting to RM324,000 forthe financial year ending 31 March 2007.

4. To re-elect the following Directors who retire in accordance with Article81 of the Company’s Articles of Association and being eligible, offerthemselves for re-election :-

(i) Tuan Haji Su’ut bin Haji Suhaili(ii) YBhg. Dato’ Lee Choon Chin(iii) YBhg. Datu Robert Voon Chen Hian @ Voon Chen Kok

5. To re-appoint Messrs. KPMG as the Company’s Auditors and to authorisethe Directors to fix their remuneration for the ensuing year.

6. As special business

To consider and, if thought fit, pass the following resolution as ordinaryresolution :-

Ordinary Resolutionn Authority to issue shares pursuant to Section 132D of the

Companies Act, 1965

“THAT pursuant to Section 132D of the Companies Act, 1965 and subjectalways to the approval of the relevant authorities, the Directors be andare hereby empowered to issue shares in the Company from time totime and upon such terms and conditions and for such purposes as theDirectors may deem fit, provided that the aggregate number of sharesissued pursuant to this resolution does not exceed 10% of the issuedshare capital of the Company for the time being AND THAT the Directorsbe and are hereby empowered to obtain approval for the listing andquotation of the additional shares so issued on Bursa Malaysia SecuritiesBerhad AND THAT such authority shall continue in force until theconclusion of the next annual general meeting of the Company.”

7. To transact any other business which may properly be transacted at anannual general meeting, due notice of which shall have been previouslygiven in accordance with the Companies Act, 1965 and the Company’sArticles of Association.

Resolution 1

Resolution 2

Resolution 3

Resolution 4Resolution 5Resolution 6

Resolution 7

Resolution 8

NOTICE IS ALSO HEREBY GIVEN that the first and final dividend of 2.0 sen per share less 28%income tax, in respect of the financial year ended 31 March 2006, if approved at the SeventhAnnual General Meeting, will be payable on 20 November 2006 to depositors whose names appearin the Record of Depositors on 1 November 2006.

A Depositor shall qualify for entitlement only in respect of :-

(a) Shares transferred into the Depositor’s Securities Account before 4.00 pm on 1 November2006 in respect of transfer; and

(b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis accordingto the Rules of Bursa Malaysia Securities Berhad.

BY ORDER OF THE BOARD

VOON JAN MOI (MAICSA 7021367)WANG TIN NGEE (MIA 11670)Joint Company Secretaries

Dated : 12 August 2006Kuching, Sarawak

Explanatory note on special business

Ordinary resolution in relation to authority to issue shares pursuant to Section 132D of theCompanies Act, 1965

The proposed resolution No. 8 in relation to authority to issue shares pursuant to Section 132Dof the Companies Act, 1965, if passed, will empower the Directors to issue and allot shares upto an aggregate amount not exceeding 10% of the issued share capital of the Company for thetime being, for such purposes as the Directors consider would be in the interests of the Company.This authority unless revoked or varied at a general meeting will expire at the next annual generalmeeting. With this authority, the Company will be able to raise capital from the equity market ina shorter period of time and the costs to be incurred will also be lower as the need to convenean extraordinary general meeting will be dispensed with.

Notes :-1. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of

the Companies Act, 1965 shall not apply to the Company.2. To be valid, the duly completed proxy form must be deposited at the Registered Office of the Company

at Wisma Hock Peng, Ground Floor to 2nd Floor, 123, Green Heights, Jalan Lapangan Terbang,93250 Kuching, Sarawak not less than 48 hours before the time set for holding the meeting or anyadjournment thereof.

3. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meetingprovided that the provisions of Section 149(1)(c) of the Companies Act, 1965 are complied with.

4. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless hespecifies the proportions of his shareholdings to be represented by each proxy.

5. If the appointor is a corporation, the proxy form must be executed under its common seal or underthe hand of an officer or attorney duly authorised.

Notice Of Dividend Entitlement

Annual Report 2006 3

Statement AccompanyingNotice of Annual General Meeting

4 WEIDA (M) BHD.

1. Names of Directors standing for re-election

Directors who are standing for re-election at the Seventh Annual General Meeting of theCompany are :-

(i) Tuan Haji Su’ut bin Haji Suhaili(ii) YBhg. Dato’ Lee Choon Chin(iii) YBhg. Datu Robert Voon Chen Hian @ Voon Chen Kok

2. Profile of Directors who are standing for re-election

Further details pertaining to Directors standing for re-election are outlined on pages 6 to 9of this Annual Report.

3. Details of attendance of Directors at Board Meetings

Details of attendance of Directors at Board Meetings are outlined on page 29 of this AnnualReport.

4. Place, date and time of the forthcoming annual general meeting

The Seventh Annual General Meeting shall be held at the Company’s premises, WismaHock Peng, 2nd Floor, 123, Green Heights, Jalan Lapangan Terbang, 93250 Kuching,Sarawak on Monday, 4 September 2006 at 10.00 am.

Corporate Information


BANKERS

Malayan Banking BhdRHB Bank BhdUnited Overseas Bank (Malaysia) BhdPublic Bank BhdAlliance Bank BhdHSBC Bank Malaysia BhdOCBC Bank (Malaysia) Bhd

ADVOCATES & SOLICITORS

Alvin Chong & PartnersSio & Ting Advocates

SHARE REGISTRAR

Symphony Share Registrars Sdn BhdLevel 26, Menara Multi Purpose,Capital Square, No. 8,Jalan Munshi Abdullah,50100 Kuala Lumpur, Malaysia.Tel : 03-2721 2222Fax : 03-2721 2530 / 2721 2531E-mail : [email protected]

REGISTERED OFFICE

Wisma Hock Peng,Ground Floor to 2nd Floor,123, Green Heights, Jalan Lapangan Terbang,93250 Kuching, Sarawak, Malaysia.Tel : 082-456 456Fax : 082-459 000E-mail : [email protected]

COUNTRY OF INCORPORATIONAND DOMICILE

Malaysia

STOCK EXCHANGE LISTING

Main Board of Bursa Malaysia Securities BhdStock Name : WEIDAStock Code : 7111

DIRECTORS

Tuan Haji Su’ut Bin Haji SuhailiIndependent Deputy Chairman

YBhg. Dato' Lee Choon ChinGroup Managing Director

YBhg. Datu Voon Chen Hian@ Voon Chen KokIndependent Director

YBhg. Datuk Dr. Stalin HardinIndependent Director

Jee Hon ChongExecutive Director

Chew Chin ChoongExecutive Director

Lai Lim HonExecutive Director

Tok Jiak YongExecutive Director

Chong Kwan WaiExecutive Director

COMPANY SECRETARIES

Voon Jan Moi(MAICSA 7021367)

Wang Tin Ngee(MIA 11670)

AUDITORS

KPMGLevel 6, Westmoore House,Twin Tower Centre, Rock Road,93200 Kuching, Sarawak, Malaysia.Tel : 082-422 699Fax : 082-422 399

Seated, from left

YBhg. Datuk Dr. Stalin HardinIndependent Director

Tuan Haji Su’ut Bin Haji SuhailiIndependent Deputy Chairman

YBhg. Dato’ Lee Choon ChinGroup Managing Director

YBhg. Datu Voon Chen Hian @ Voon Chen KokIndependent Director

Standing, from left

Chew Chin ChoongExecutive Director

Lai Lim HonExecutive Director

Tok Jiak YongExecutive Director

Chong Kwan WaiExecutive Director

Jee Hon ChongExecutive Director

Board of Directors

6 WEIDA (M) BHD.

Tuan Haji Su’ut Bin Haji Suhaili59, Malaysian

Tuan Haji Su’ut Bin Haji Suhaili,the Deputy Chairman of the Board,was appointed as an IndependentDirector of the Company on 25October 2000, before Weida Groupis listed on Bursa MalaysiaSecurities Berhad. He is activelyserving on all Board Committees,namely as Chairman of theRemuneration and CompensationCommittee and as members of theAudit Committee and NominatingCommittee.

Tuan Haji is an MBA graduate fromHenley Brunel University in theUnited Kingdom. His 30 years ofdedicated service with theGovernment took him through tovar ious posi t ions such asPermanent Secretary to Ministriesas well as exposure to a widespectrum of industries before heretired as General Manager ofBintulu Development Authority in2002.

YBhg. Dato' Lee Choon Chin52, Malaysian

YBhg. Dato' Lee Choon Chin, theGroup Managing Director, wasappointed to the Board on 25October 2000. He is also amember of the Remuneration andCompensation Committee.

YBhg. Dato' graduated with aBachelor of Science (Hons) fromUniversity of Malaya in 1978.Starting his career with 3M(Malaysia) Sdn. Bhd., an Americanmultinational company as itsSarawak Manager up to 1983, heincorporated Weida henceforth wasto become the Weida Group today.He led the Group to listing on theSecond Board of Bursa MalaysiaSecurities Berhad on 28 February2001 and the subsequent transferto the Main Board on 28 December2004.

YBhg. Datu Voon Chen Hian @Voon Chen Kok

62, Malaysian

YBhg. Datu Voon Chen Hian @Voon Chen Kok was appointed tothe Board as an IndependentDirector of the Company on 25October 2000. He serves as theChairman of the NominatingCommittee and also as a memberof the Remunerat ion andCompensation Committee.

YBhg. Datu holds a Bachelor ofEngineering (Civil) from Universityof Tasmania, Australia. He startedhis career with the Public WorksDepartment of Sarawak in 1969,serving in various positionsculminating as the Director ofPublic Works for five years beforehe assumed the post of ChiefExecutive Officer to SarawakIncorporated Sdn. Bhd. until 2005.

Profile of Directors



8 WEIDA (M) BHD.

YBhg. Datuk Dr. Stalin Hardin64, Malaysian

YBhg. Datuk Dr. Stalin Hardin wasappointed to the Board as anIndependent Director of theCompany on 16 December 2000.He is the Chairman of the AuditCommittee as well as a memberof the Nominating Committeeand the Remuneration andCompensation Committee. He isalso the Senior IndependentDirector to whom concernsregarding the Company may beconveyed.

YBhg. Datuk obtained his Doctorof Medicine degree from theUniversity Of Toronto, Canada in1966 and a Master of Public Healthpost-graduate degree from TulaneUniversity, United States ofAmerica in 1970. He served withthe Health Department, Sarawakin various capacities for 29 yearsand retired as its Director in 1996.

Jee Hon Chong47, Malaysian

Jee Hon Chong was appointed tothe Board as an Executive Directoron 25 October 2000. He graduatedfrom Tunku Abdul Rahman Collegeand subsequently obtained hisdegree in Mechanical Engineeringfrom the Engineering Council,United Kingdom.

Mr. Jee is one of the pioneers ofthe Group, being the first factoryengineer when Weida commencedmanufacturing operations inKuching in 1988. Subsequently,he successfully commissionedanother two factories in KotaKinabalu and Nilai, which markedthe entry of Weida into Sabah andPeninsular Malaysia. Presently,h e h e a d s t h e G r o u p ’ smanufacturing operations andtelecommunication infrastructuresdivision.

Chew Chin Choong37, Malaysian

Chew Chin Choong was appointedto the Board as an ExecutiveDirector on 27 November 2001.He is also a member of the AuditCommittee. He is an economicsgraduate holding a B. Sc (Hons)degree from the London School ofEconomics and Political Scienceand a Chartered Accountant withthe Inst i tute of CharteredAccountants in England andWales.

Mr. Chew has a total of more than10 years experience in audit,consulting, finance and accountingfunctions in public listed companiesand international accounting firmssuch as RHB, Arthur Anderson andPricewaterhouseCoopers. He isnow the head of the finance andaccounting functions of the Group.


Lai Lim Hon56, Malaysian

Lai Lim Hon was appointed to theBoard as an Executive Director on6 May 2002. He graduated withan Honours Degree in CivilEngineering from University ofMalaya in 1975. He subsequentlyobtained his Master of EngineeringScience from University of NewSouth Wales, Australia.

Mr. Lai started his career with thePublic Works Department ofSarawak (“PWD”) where he servedfor 20 years, specialising in watersupplies and sewage. He left PWDas its Chief Hydraulics Engineer in1995 to be a partner of a leadingfirm of consulting engineers. Hejoined Weida in 1997 and has beenheading the Group’s Engineeringand Technical Divisions since then.

Tok Jiak Yong43, Malaysian

Tok Jiak Yong was appointed tothe Board as an Executive Directoron 6 May 2002. Upon graduationin 1993, he started his career inthe Sa les and Market ingDepartment of Weida as anexecutive.

Mr. Tok was subsequentlypromoted to be a Director of twoof the marketing subsidiaries ofthe Group. Mr. Tok played aninstrumental role in the sales drivengrowth of the Group since the1990s. He is presently responsiblefor the marketing and salesfunctions of major projects inSarawak.

Chong Kwan Wai44, Malaysian

Chong Kwan Wai was appointedto the Board as an ExecutiveDirector on 29 May 2003. Hegraduated from Tunku AbdulRahman College in 1985 andsubsequently obtained his degreein Mechanical Engineering fromthe Engineering Council, UnitedKingdom.

Mr. Chong joined Weida in 1996as Branch Manager in charge ofSabah region and rapid lyestablished Weida’s presence inSabah as the leading manufacturerand polyethelene engineeringproducts. He was subsequentlypromoted to be a Director of oneof the marketing subsidiaries of theGroup. He is presently responsiblefor the business development andimplementation of major projectsin Sabah.

None of the Directors:

l has family relationship with each other or the substantial shareholders except YBhg. Dato’ Lee ChoonChin, whose spouse is one of the substantial shareholders of the Company. There are no material contractsof the Company or its subsidiaries involving Directors and substantial shareholders’ interest subsisting atthe end of the financial year under review or entered into since the end of the previous financial year.Significant related party disclosures are set out in Note 27 in the Notes to the Financial Statements onpages 82 to 83 of the Annual Report.

l holds any directorship in any other public companies except YBhg. Datu Voon Chen Hian @ Voon ChenKok who holds a directorship in one other public company.

l has been convicted of any offences other than traffic offences for the last 10 years

The attendance of the Directors at Board meetings and their shareholdings in Weida (M) Bhd. (“the Company”)are shown on pages 29 and 94 respectively.


10 WEIDA (M) BHD.

Corporate Structure

MANUFACTURING

100% Weida Integrated Industries Sdn. Bhd. (168925-U)

40% Weidasar Sdn. Bhd. (associate) (442825-P)

60% Weidasar Maju Sdn. Bhd. (713247-V)

51% Weida Industrial Systems Sdn. Bhd. (358646-D)

ENGINEERING, WORKS & SERVICES

100% Weida Works Sdn. Bhd. (394352-V)

51% Weida Environmental Technology Sdn. Bhd. (401849-D)

51% Sar-Alam Indah Sdn. Bhd. (590492-H)

30% Renexus-Weida Sdn. Bhd. (associate) (585674-D)

51% UTIC Services Sdn. Bhd. (459079-W)

25% UTIC Services Selatan Sdn. Bhd. (associate) (541792-M)

51% Weidasar Engineering Sdn. Bhd. (618340-M)

49% Weida-Sar Venture Sdn. Bhd. (associate) (720219-M)

100% Weida Engineering Sdn. Bhd. (543455-V)

100% Alamsar Sdn. Bhd. (432176-V)

SALES & MARKETING

100% Weida Water Sdn. Bhd. (543463-H)

51% Weida Marketing Sdn. Bhd. (424868-V)

100% Weidaline Sdn. Bhd. (543459-M)

70% Weidaya Sdn. Bhd. (396558-M)

100% Weida Dagangan Sdn. Bhd. (543794-V)

100% Weida Agrotech Sdn. Bhd. (543457-A)

100% Weida Resources Sdn. Bhd. (242580-H)

WEIDA (M) BHD.

Business Activities

Water Infrastructure 12

Waste Water Infrastructure 15

Bulk Storage Systems 18

Telecommunication Infrastructure 20

Water Infrastructure

WEIDA provides a range of optimal water treatment andsupply solutions to both urban and rural sectors. Besidesconventional technologies, WEIDA is a specialist in state-of-the-art membrane filtration water treatment systems.These modern, high-tech treatment systems and plantsproduce high quality water with superior levels of reliabilityand consistency.

Besides manufacturing high density polyethylene (HDPE)pipes for potable water distribution, WEIDA provides technicalassistance in pipeline designs, pipe laying, installation andwelding services as well as a wide range of accessories andpipe jointing machines.

Being lightweight and highly flexible, as well as chemical,ultraviolet and impact resistant, WEIDALINE smooth-wallwater pipes have distinct advantages over conventionalmetal and concrete pipes. Ideal for a myriad of applicationsfrom portable water distribution to gas pipelines as well asirrigation, agriculture and aquaculture.

A Specialist in State-of-the-Art Water Treatment Systems

Pipelines; from Designs, Manufacturing to Installation and Laying



Network MappingDone using a combination of electromagnetic detection andground penetrating radar (GPR) to detect undergroundpipelines and cables. Accurate utility data is the key toefficient network management, protection, rehabilitation andmodernization.

Pipe Leakage DetectionA practical leakage control program is employed; fromanalyzing the water distribution network, through data loggingand leak detection and monitoring, to surveying pressure inthe system.

WEIDA provides clients with the most appropriate liquidstorage system with a complete range of polyethylene tanksand LIPP steel tanks. WEIDA has the engineering expertiseand experience to design, manufacture, install and constructwater storage systems of any capacity.

Manufactured from engineering grade polyethylene, featuringadvanced leakproof one-piece seamless construction,WEIDA’s POLYSTOR water and specialized tanks areavailable in a wide range of sizes and capacities. WEIDAalso offers storage systems comprising of customizedlarge-capacity metal tanks based on the LIPP system.

Pipeline Maintenance and Services

The Flexibily of WEIDA’s Water Storage Systems


14 WEIDA (M) BHD.

Waste Water Infrastructure

With over 20 years of track record in the waste water sector,WEIDA offers a full spectrum of experience and expertisefor optimal process design, treatment, structural integrity,durability and reliability. WEIDA’s POLYPASS systems areproprietary prefabricated modular sewage treatment plantsemploying the extended aeration activated sludge treatmentprocess.

WEIDA designs and builds large capacity, reinforced concretesewage treatment plants, providing extensive service andsupport in their design, supply, installation and turnkeyimplementation. Besides testing, commissioning and training,WEIDA provides inspection, maintenance and troubleshooting services.

Waste Water Treatment


16 WEIDA (M) BHD.

WEIDA’s double wall corrugated high density polyethylenesewer pipe is the preferred and superior alternative toconventional concrete and clay pipes. We provide technicalassistance in pipe laying and installation works.

FLOLINE 3-W pipes are large diameter pipes with superiorring and bending stiffness for use in underground oraboveground gravity and low pressure applications in irrigationand civil works including culverts, drainage and waste waterconveyance.

Manufacturing and Installation of Waste Water Pipelines

Maintenance and Services - Pipeline Rehabilitation

Rehabilitation and relining of underground sewer pipes usingCIPP (Cured In Place Pipe) technology. The processinvolves relining an existing pipe with a resin impregnatedliner that is heat-cured inside the host pipe, thus creating astructurally strong and smooth pipe within the existing hostpipe.

This proven trenchless technology pipeline rehabilitationmethod has been widely used globally and for the first time,is now made available in Malaysia by WEIDA. With therecent signing of a technology transfer agreement betweenPremier-Pipe UK and WEIDA, we are now the sole andexclusive licensee for the Premier-Pipe CIPP liningprocess in Malaysia.

Other pipeline rehabilitation technologies we offer includepatches, spiral wound liners and mechanical seals.

High Pressure JettingFor pipe cleaning and flow management.

Pipeline Radar SurveyFor the inspection of underground pipes and assessmentof condition of surrounding soil, bedding and fill material.

CCTV Inspection and SurveyProvides clients with detailed assessments and reports onthe structural and service conditions of underground pipelines.

Management and Operations of Treatment Plants



The WEIDA Group also provide management, operationand maintenance of sewage and sludge treatment plants.

Bulk Storage Systems

The Fastest, Easiest and Most Modern Way to Build aTankFeaturing a worldwide applied technology for the constructionof tanks employing the LIPP doublefold system. Tanks areconstructed by automated machines on-site within a veryshort span of time. Depending on the specific applicationand client’s requirements, the tank systems can beconstructed using a wide spectrum of materials ranging fromnon-ferrous metals to galvanized or stainless steel and evenhigh alloyed steels.

Efficiency and Quality Through InnovationWEIDA’s LIPP tank system offers a versatile, cost effective,extremely durable and structurally strong storage tanksystem that can meet any storage and applicationrequirement. The system is suitable for variety of sizesranging from 3 metres to over 40 metres in diameter andover 30 metres in height.

Bulk Storage SystemsLIPP Tank Systems

Applications:

l Municipal, industrial and agricultural water/liquidstorage tanks

l Waste water storage and treatment tanks

l Rainwater storage tanks

l Oil and gas storage tanks

l Dry bulk storage tanks

l Silos


Telecommunication Infrastructure

WEIDA offers a full spectrum of telecommunicationnetworking services from initial construction and installationto long term maintenance of these network facilities.

Network Construction Services:

l Construction of towers

l Fully equipped control room

l Telecommunication equipment installation services

l Power supply / generator facilities

Network installation and maintenance services includes:

l Installation of antenna systems

l Provision of mutual or standby power

l Mechanical & electrical maintenance

Telecommunication InfrastructureContributing to Wider Telecommunication Coverage


“During the financial year, the Groupleveraged on its design-and-buildand works capabilities to diversifyinto building telecommunicationinfrastructures and bulk storagesystems. From being a water andsewerage specialist, the Group hasexpanded to become a UtilitiesInfrastructure Specialist.”

Statement fromGroup Managing Director

22 WEIDA (M) BHD.

INTRODUCTION

On behalf of the Board of Directors of Weida (M) Bhd., I am pleased to present the Annual Reportand the Financial Statements of the Group and the Company for the financial year ended 31 March2006.

BUSINESS DEVELOPMENT

The financial year just ended is an important period in the continuing expansion of Weida Group.During the financial year, the Group leveraged on its design-and-build and works capabilities todiversify into building telecommunication infrastructures and bulk storage systems. From beinga water and sewerage specialist, the Group has expanded to become a utilities infrastructurespecialist with four business activities, namely:-

(i) water infrastructure;(ii) waste water infrastructure;(iii) bulk storage systems; and(iv) telecommunication infrastructure.

Moving forward, the Group will continue to pursue a two-pronged strategy of growing its existingbusiness activities and diversifying into new business activities where it can leverage its strengthsand expertise.


Statement from Group Managing Director (con’t)

INDUSTRY TRENDS AND DEVELOPMENT

Water and Waste Water Infrastructures

The Weida Group is a truly integrated specialist in the water and sewerage sectors as a:-

(a) manufacturer of polyethylene engineering products;

(b) design-and-build turnkey specialist of water and sewerage infrastructure;

(c) service provider in trenchless mapping, investigation, repair and rehabilitation of water andsewer pipes and other buried utility assets; and

(d) concessionaire in the management, operation and maintenance of septic sludge treatmentplants.

Manufacturing

As a polyethylene engineering products manufacturer, Weida is the largest player in terms of sizeand product range. In addition, we remain as the only manufacturer with full presence nationwidewith three manufacturing plants strategically located in Nilai, Kuching and Kota Kinabalu. Thebarriers of entry into this industry are high substantial capital investment, intensive research anddevelopment programmes and specialist technological expertise developed in-house over theyears. This industry is generally capital intensive for big scale manufacturers. The industry playershave generally remained the same during the year under review.

Margins for standard products have thinned somewhat but have stabilized during the financialyear under review, as there is a time lag before rising costs of raw material can be passed on.Over the longer term, prospects of the polyethylene products industry remain bright as polyethylenewater storage tanks and sewage tanks are superior to their metal and concrete counterparts dueto their qualities of being corrosion resistant, durable, leakage-proof, lightweight, hygenic andweather resistant. Currently, the trend is that polyethylene water and sewage tanks will graduallyreplace metal and concrete ones in the future.

Design and Build Projects

Beyond manufacturing, Weida also undertakes significant design-and-build projects that involveturnkey engineering works and/or specially designed products manufactured in-house. New waterand sewerage infrastructure in both urban and rural areas will continue to be needed as the countrycontinues to develop. This is particularly so in East Malaysia, which is an area of focus in theGovernment’s development plans and where Weida has a strong presence.

Weida manufactured products specially engineered for design-and-build projects will continue tocommand higher margins than standard products due to our unique and proprietary technologiesincorporated into such products.

Mapping, Investigation and Rehabilitation of Buried Utility Assets

Through its subsidiary, Utic Services Sdn. Bhd., Weida is a market leader in trenchless (i.e. no-dig) pipeline mapping, investigation and rehabilitation services in Malaysia. The demand for suchservices is taking off in Malaysia as a significant portion of water and sewerage networks inMalaysia is more than 30 years old. Given that the country has more than 92,200 km of waterpipeline (in 2003) and 14,800 km of sewerage network (in 2005), the potential for no-dig pipelinerehabilitation solutions are enormous, especially as water and sewerage expenditure rises and amaintenance culture takes hold in Malaysia.

24 WEIDA (M) BHD.


Management, Operation and Maintenance of Septic Sludge Treatment Plants

In many areas in Malaysia which is not connected by central sewerage services, there is a continuingneed for septic sludge treatment plants. As such there will be opportunities for Weida to marketits expertise in the management, operation and maintenance of such plants.


During the financial year under review, our Group has acquired a unique technology to constructcustom-built metal storage tanks for bulk storage purposes. These tanks are configured intoversatile systems built at site to suit client requirements. They come in many sizes and have awide range of applications including water storage, sewage treatment, oil and gas storage anddry bulk silos.

Given the wide applications and a competitive cost structure, we believe the markets for our bulkstorage systems are big in Malaysia. In addition, the water and sewage applications are synergisticto our core business as a water and sewage specialist.

Telecommunication Infrastructures

Our Group has also embarked on the business of building telecommunication infrastructures duringthe financial year just ended. Weida Works Sdn. Bhd., our wholly-owned subsidiary, has forgedan exclusive partnership with Common Tower Technologies Sdn. Bhd. (CTT), the state-backed-company controlled by the State Government of Sabah, to build telecommunication towers in theState of Sabah under the Time 2 Programme under the purview of the Malaysian Communicationsand Multimedia Commission (MCMC).

We are pleased to report that our joint venture with CTT in a public-private-partnership has beensuccessful. The towers constructed by us together with CTT in Sabah under the Time 2 Programmehave been recognized by MCMC as the best in quality among all the states in Malaysia. In termsof speed of implementation of the Time 2 Programme, the State of Sabah is also among thefastest.

In consideration of our role is to finance and construct the infrastructures, we will receive a shareof the rental proceeds from the three telecommunication companies in Malaysia for a period ofat least ten years. This venture has started to contribute positively to the earnings of the Groupfrom the last quarter of the financial year just ended and will continue to do so for a period of atleast ten years.

OPERATING ENVIRONMENT

Our customers are mainly from the construction, property development, plantations and Governmentsectors. Market conditions were soft in the financial year ended 31 March 2006.

The growth of the Malaysian economy moderated to 5.3% in the calendar year 2005 (2004: 7.1%)while the construction sector continued to register a decline for a second year in a row, at -1.6%in 2005 (2004: -1.5%). On the other hand, the plantations sector did well on the back of healthycrude palm oil prices.

In the first quarter ended 31 March 2006, the growth rate of the Malaysian economy remained at5.3%. In the same period, the construction sector continued to be affected by weak civil engineeringactivities and some moderation in demand for residential properties.



In addition, the Government’s development spending was slow as the Eighth Malaysia Plan (8th

MP) drew to a close. Activities in the water and sewerage sectors were also slow pending theestablishment of the Suruhanjaya Perkhidmatan Air Negara (SPAN), which will be operationalisedduring the Ninth Malaysia Plan (9th MP) period to regulate water supply and sewerage servicesin Peninsular Malaysia.

In terms of raw materials, the price of polyethylene, being a petroleum derivative, had risen steadilyin the course of the financial year in line with rising oil prices.

OPERATING RESULTS

Even though operating in a challenging environment, our Group achieved a new record in turnover,registering RM132.7 million for the financial year ended 31 March 2006 compared to RM123.8million in the previous year. However, profit before tax of RM13.9 million for the year under reviewwas lower than the RM17.9 million in the previous year due to pressure on margins.

The financial position of our Group remained strong throughout the year under review. With littlelong term borrowings currently, our Group is well placed to meet future challenges and takeadvantage of business opportunities as they arise.

PROSPECTS

Water and Waste Water Infrastructures

In line with Thrust 4: To Improve The Standard And Sustainability Of Quality Of Life under the 9th

MP, the Federal Government has more than doubled the allocation for Water Supply to RM8.2billion from RM3.9 billion under the 8th MP. For Sewerage, the allocation under the 9th MP hasalso been increased to RM3.1 billion from RM1.3 billion under the previous plan. The allocationfor Rural Water under the Bekalan Air Luar Bandar programme to be undertaken by the Ministryof Rural and Regional Development has also been increased to RM1.2 billion from RM0.7 billionpreviously. In addition, the allocation for Flood Mitigation was also raised to RM4.0 billion fromRM1.8 billion under 8th MP.

Under the 9th MP, Development Allocations together with Private Finance Initiatives for the Statesof Sarawak and Sabah was also increased to RM15.1 billion and RM16.9 billion from RM12.8billion and RM13.2 billion respectively.

The 9th MP emphasis on utilities and rural development spending augurs well for Weida Groupwhich has particular strength in rural utilities infrastructures. Moreover, the Group is the dominantmanufacturer of polyethylene engineering products in East Malaysia where a significant amountof development expenditure will be spent.

The Group is continuing to benefit from government spending on rain water harvesting schemesin East Malaysia in the financial year ending 31 March 2007.

Contributions to current year earnings will also come from the implementation of the first-of-its-kind government contract to rehabilitate 16 kilometers of pipeline between Kuala Lumpur andSeremban.

On the foreign front, the Group is also actively working to secure a water and sewerage projectin the Middle East. If materialized, it is expected to contribute positively to the Group’s earnings.


Weida’s bulk storage systems have wide applications, especially for water and waste water.Coupled with these systems being an innovative product pioneered by Weida in Malaysia, theprospects are good.

Telecommunications Infrastructures

Construction activities are continuing smoothly and more telecommunication towers under theTime 2 Programme will be completed in the financial year ending 31 March 2007. This will boostearnings in the current and future years.

Overall Prospects

The Board is confident that the Group’s two-pronged expansion strategy of growing its existingbusinesses and diversifying into new businesses where it can leverage its strengths and expertisewill continue to enhance its earnings in the future.

DIVIDEND

The Board of Directors are pleased to propose a first and final dividend of 2.0 sen per share onthe share capital of 133,333,332 shares, less income tax, subject to shareholders’ approval at theforthcoming Annual General Meeting of the Company. This represents a 32% distribution of theGroup’s earnings per share of 6.26 sen for the financial year ended 31 March 2006. The Boardbelieves that this is an appropriate distribution ratio given that the amount needed to fund thecontinuing expansion of the Group is more than the cash stream generated from operationscurrently.

ACKNOWLEDGEMENT

On behalf of the Board of Directors, I would like to place on record our appreciation to our customersand shareholders for their support, without which our Group would not have been strong andsuccessful.

I would also like to thank our associates, financiers, advisors, suppliers and sub-contractors fortheir continuing understanding, confidence and support to the Group.

Last but not least, the Board and I wish to thank the management and all employees of the Groupfor their unwavering commitment, contribution and hard work.

YBhg. Dato' Lee Choon ChinGroup Managing Director

20 July 2006


26 WEIDA (M) BHD.

Statement On Corporate Governance


THE CODE

The Board of Directors (“the Board”) is steadfast and committed in ensuring that the higheststandards of corporate governance are observed throughout the Weida (M) Bhd. group of companies(“the Group”) through its support and application of the Principles and Best Practices of goodgovernance set out in Part 1 and Part 2 of the Malaysian Code on Corporate Governance (“theCode”). The Board believes upholding good corporate governance is fundamental in dischargingits fiduciary responsibilities to protect and enhance shareholders’ value and the financial performanceof the Group.

The Board is pleased to disclose the manner in which it has applied the principles of goodgovernance and the extent to which it has complied with the best practices set out in the Code.These disclosures are contained in this statement, the Statement on Internal Control and theReport of the Audit Committee.

THE BOARD OF DIRECTORS

An effective Board leads and controls the Group. In discharging the Board’s stewardshipresponsibilities, the Board explicitly assumes the following six specific responsibilities:

(a) reviewing and adopting a strategic plan for the Group;

(b) overseeing the conduct of the Group’s business to evaluate whether the business is properlymanaged;

(c) identifying principal risks and ensure the implementation of appropriate systems to managethe risks;

(d) succession planning, including appointing, training, fixing the compensation of and whereappropriate, replacing Senior Management;

(e) developing and implementing an investors relations programme or shareholders communicationpolicy for the Group; and

(f) reviewing the adequacy and integrity of the Group’s internal control system, managementinformation system and systems for compliance with applicable laws, regulations, rules,directives and guidelines.

In addition, the Board reserves for itself the following areas of strategic importance to the Groupto ensure that the direction and control of the Group is firmly in its hands:

(a) approval of strategic corporate plans and annual budgets;

(b) announcement of quarterly results;

(c) acquisitions and disposals of business segments and properties of significant value;

(d) major investments and financial decisions;

(e) appointments to the Board; and

(f) changes to the management and control structure within the Group.

28 WEIDA (M) BHD.

Statement On Corporate Governance (con’t)

BOARD BALANCE

The Board currently has nine (9) members, comprising six (6) Executive Directors and three (3)Independent Directors. The Chairman position is presently vacant. The Board is currently ledby the Deputy Chairman who is an Independent Director. Together, the Directors have a widerange of entrepreneurial, management, marketing, manufacturing, technical, financial and civiladministration expertise and experience. This mix of expertise and experience is vital to the successof the Group given its nature of business and customer base. A brief profile of each Director ispresented on pages 6 to 9 of this Annual Report.

The roles of the Deputy Chairman and the Managing Director are clearly separated to ensure abalance of power and authority. The Deputy Chairman heads the Board and leads the planningdiscussion at the Board level, while the Managing Director is responsible for the implementationof policies, Board decisions and executive decision making. The Independent Directors play asignificant role in corporate accountability, providing unbiased and independent views, advice andjudgement to take account of the interests, not only of the Group, but also of all stakeholders,including employees, customers, suppliers and the many communities in which the Group conductsbusiness.

SUPPLY OF INFORMATION

Prior to Board meetings, agenda and Board papers are provided to all Directors in advance toensure they receive sufficient relevant information and to allow sufficient time for their detailedreview and consideration so as to enable them to participate effectively in Board decisions. AllDirectors have the right to make further enquiries where they consider necessary prior to Boardmeetings.

The Board therefore expects to receive, on a timely basis, material information about the Group,its activities and performance, particularly any significant variances from budgets and plans. TheBoard papers include, among others, the following:

i. annual budgets and strategic plans for the Group;ii. quarterly and annual financial reports;iii. reports of all committees of the Board;iv. operational reports and business development issues;v. a summary of all circular Board resolutions for ratification;vi. a summary of correspondences made to Bursa Malaysia Securities Berhad and vice versa;andvii. a summary of announcements made to Bursa Malaysia Securities Berhad.

Every member of the Board has ready and unrestricted access to the Company Secretary foradvice and services in carrying out their duties. In addition, the Directors also have the liberty,at the Company’s expense, to seek independent external professional advice in the furtheranceof their duties.



FREQUENCY AND ATTENDANCE OF BOARD MEETINGS

At least four regularly scheduled meetings are held annually, with additional meetings for particularmatters convened as and when necessary. Informal meetings and consultations are frequentlyand freely held to share expertise and experiences. There were five Board meetings held duringthe financial year ended 31 March 2006. The attendance record of each Director is as follows:

Number of MeetingsHeld Attended

Independent DirectorsTuan Haji Su’ut Bin Haji Suhaili (Deputy Chairman) 5 5YBhg. Datuk Dr. Stalin Hardin 5 4YBhg. Datu Voon Chen Hian @ Voon Chen Kok 5 3

Executive DirectorsYBhg. Dato’ Lee Choon Chin (Managing Director) 5 4Jee Hon Chong 5 3Chew Chin Choong 5 5Tok Jiak Yong 5 5Lai Lim Hon 5 4Chong Kwan Wai 5 5

BOARD COMMITTEES

The Board has established an Audit Committee, a Nominating Committee and a Remunerationand Compensation Committee to assist the Board in discharging its duties. All Board Committeesdo not have executive powers but report to the Board on all matters considered and theirrecommendations thereon. The terms of reference of each Committee have been approved bythe Board and, where applicable, comply with the recommendations of the Code.

(a) Audit Committee

The Audit Committee was established on 17 May 2001. The Report of the Audit Committeeis set out on pages 34 to 38 of this Annual Report.

(b) Nominating Committee

Chairman: YBhg. Datu Voon Chen Hian @ Voon Chen Kok (Independent Director)Members: Tuan Haji Su’ut Bin Haji Suhaili (Independent Director) YBhg. Datuk Dr. Stalin Hardin (Independent Director)

The Nominating Committee was established on 4 February 2002. It held one meeting duringthe financial year ended 31 March 2006.

The functions of the Nominating Committee are to:

v Determine the core competencies and skills required of Board members to best servethe business and operations of the Group as a whole and the optimum size of theBoard to reflect the desired skills and competencies;

v Review the size of non-executive participation, Board balance and determine ifadditional Board members are required and also to ensure that at least 1/3 of theBoard is independent;

30 WEIDA (M) BHD.


BOARD COMMITTEES (con’t)

(b) Nominating Committee (con’t)

v Recommend to the Board, all candidates for directorships to be filled by the shareholdersor the Board;

v Consider, in making its recommendations, candidates for Directorships proposed bythe Managing Director and, within the bounds of practicality, by any other seniorexecutive or any director or shareholder;

v Recommend to the Board, Directors to fill the seats on Board committees;

v Undertake an annual review of the required mix of skills and experience and otherqualities of Directors, including core competencies which non-executive Directorsshould bring to the Board and to disclose this in the annual report;

v Formulate and implement procedures to be carried out by the Nominating Committeeannually for assessing the effectiveness of the Board as a whole, the Board committeesand for assessing the contributions of each individual director; and

v Introduce such regulations or guidelines, procedures to function effectively and fulfilthe Committee’s objectives.

(c) Remuneration and Compensation Committee

Chairman: Tuan Haji Su’ut Bin Haji Suhaili (Independent Director)Members: YBhg. Datuk Dr. Stalin Hardin (Independent Director)

YBhg. Datu Voon Chen Hian @ Voon Chen Kok (Independent Director)YBhg. Dato’ Lee Choon Chin (Managing Director)

The Remuneration and Compensation Committee (“RACC”) was established on 23 March2001. It held one meeting during the financial year.

The RACC is responsible for recommending the level and make-up of the remunerationof the Executive Directors of Weida (M) Bhd. so as to ensure that the Group attracts andretains Directors of the necessary caliber, experience and quality needed to run the Groupsuccessfully. It is nevertheless the responsibility of the entire Board to approve theremuneration of these Directors.

The fees for the Non-Executive Directors are determined by the Board as a whole.

APPOINTMENTS TO THE BOARD

The Nominating Committee recommends the appointment of new Directors to the Board.



DIRECTORS’ AND SENIOR MANAGEMENT TRAINING

All new Board members and Senior Management are guided on a familiarisation programme,including visits to the Group’s offices and manufacturing facilities and meetings with seniormanagement as appropriate, to facilitate their understanding of the Group.

All the Directors have attended the Mandatory Accreditation Programme (“MAP”) as required bythe Bursa Malaysia. They are also attending courses and seminars under the Continuing EducationProgrammes (“CEP”) from time to time to equip themselves with the knowledge to discharge theirduties effectively.

All the Directors attended seminars and courses during the financial year ended 31 March 2006and have fulfilled the minimum CEP points requirement as at 31 December 2005.

The description of the trainings attended by some of the Directors in addition to the CEP pointsrequirements during the financial year are set out below:

Mode of Number ofTitle of seminar training day spent

International Currency Risk Management In-house seminar 1 dayOff-Balance Sheet Items and Offshore Accounts In-house seminar 1 day and Derivatives

Some of the Directors who did not attend additional trainings during the financial year just endedas they were still attending trainings under the CEP programme. All the Directors have fulfilledthe minimum CEP points requirement as at 31 December 2005.

SUCCESSION PLANNING

The Board recognises human resource development and succession planning as critical factorsin achieving the Group’s business objectives.

The Group reviews its manpower requirements and updates its organisation charts regularly, andconducts periodic recruitment drives to fill vacancies as they arise. The Group’s policy is to promotefrom within where possible.

All staff, including Directors and Senior Management, are encouraged to attend external trainingcourses and seminars to continuously upgrade their skills set. The Group contributes to the HumanResource Development Fund and sets aside an amount for training in its annual budget.

RE-ELECTION OF DIRECTORS

In accordance with the Company’s Articles of Association, all Directors who are appointed by theBoard are subject to election by shareholders at the ensuing Annual General Meeting after theirappointment.

Additionally, in accordance with the Company’s Articles of Association and in compliance withBursa Malaysia Securities Listing Requirements that came into force on 1 June 2001, one-thirdof the remaining Directors, including the Managing Director, are required to submit themselvesfor re-election by rotation at each Annual General Meeting.

Directors over seventy (70) years of age are required to submit themselves for re-appointmentannually in accordance with Section 129(6) of the Companies Act, 1965.

32 WEIDA (M) BHD.


DIRECTORS’ REMUNERATION

Contrary to the disclosure recommendations as indicated in the best practices of the Code, theBoard would not be providing details of remuneration awarded to each Director. The Board is ofthe opinion that matters pertaining to Directors’ remuneration are of a personal nature. However,the Board wishes to confirm that the level and make-up of remuneration for Executive Directorswere reviewed and recommended by the RACC and approved by the Board as a whole.

In compliance with Bursa Malaysia Securities Listing Requirements, the fees and remunerationpaid to Directors during the financial year, in aggregate and analysed into bands of RM50,000 areas follows:

Directors Fees Salaries Bonus EPF Benefits Other Total-in-kind Remuneration

RM RM RM RM RM RM RM

IndependentDirectors 108,000 Nil 27,000 Nil Nil 12,500 147,500

ExecutiveDirectors 216,000 1,164,000 291,000 174,600 2,527 360,000 2,208,127

324,000 1,164,000 318,000 174,600 2,527 372,500 2,355,627

Remuneration Independent Directors Executive DirectorsRM Number Number

1 – 50,000 2 -50,001 – 100,000 1 -100,001 – 150,000 - -300,001 – 350,000 - 5500,001 – 550,000 - 1

INVESTORS RELATIONS AND COMMUNICATIONS TO SHAREHOLDERS

The Board acknowledges the need for shareholders to be informed of all material business mattersaffecting the Group and values dialogue with investors. In addition to various announcementsmade during the financial year, the timely release of financial results on a quarterly basis providesshareholders with an overview of the Group’s performance and operations.

The Group has been using the Annual General Meeting, usually held in August and Septembereach year, as a mean of communicating with shareholders. Shareholders who are unable toattend are allowed to appoint proxies to attend and vote on their behalf. Shareholders areencouraged to participate in the question and answer session. Members of the Board as well asthe Auditors of the Company are present to answer questions raised at the meeting.

Members of the Board have also delivered presentations at seminars attended by analysts andinvestors during the financial year.

The Group has also put in place facility to enable electronic communication with shareholders viaits website www.weida.com.my. Shareholders can obtain information on the Group by accessingits website.

YBhg. Datuk Dr. Stalin Hardin is the Senior Independent Director. Any concerns or queriesconcerning the Group may be conveyed to him.



FINANCIAL REPORTING

In presenting the annual financial statements and quarterly announcements of results to shareholders,the Directors are committed to present a balanced and fair assessment of the Group’s positionand prospects. The financial reports are also reviewed by the Audit Committee to ensure adequacyof information disclosed prior to submission to the Board of Directors for approval.

The Directors consider that in preparing the financial statements, the Group has used appropriateaccounting policies, consistently applied and supported by reasonable and prudent judgementsand estimates. A statement by the Directors of their responsibilities in preparing the financialstatements is set out on page 41 of this Annual Report.

INTERNAL CONTROL

The Directors recognise their responsibility for the Group’s system of internal control, which isdesigned to suit the particular circumstances of the Group and to manage the risks involved inpursuing the Group’s business objectives. The system of internal control currently practised bythe Group spans not only the financial aspect, but also the operational and compliance aspectsof the Group’s activities in order to safeguard the Group’s assets and hence, shareholders’investments. This system, by its nature, can only provide reasonable but not absolute assuranceagainst misstatement or loss.

Some of the key elements of the Group’s internal control system are outlined in the Statement ofInternal Control set out on page 39 and page 40 of this Annual Report.

The Board is committed to undertake regular reviews of key commercial, operational and financialrisks facing the Group’s businesses as well as the more general risks such as those relating tocompliance with laws and regulations. In executing this commitment, the Board has establishedan Internal Audit Department. The scope of the Internal Audit Department is set out in the Reportof the Audit Committee set out on pages 34 to 38 of this Annual Report.

The objectives of periodic reviews of risks and internal audit are to give reasonable assurance thatthe structure of controls and operations is appropriate to the Group’s situation and that there isan acceptable level of risk throughout the Group’s operations.

The Board has implemented a risk management framework in compliance with the guidance issuedby the Task Force on Internal Control, and will continue to enhance it.

RELATIONSHIP WITH THE EXTERNAL AUDITORS

Through the Audit Committee, the Group has established a transparent and appropriate relationshipwith the external auditors. The Audit Committee meets with the external auditors without thepresence of executive members of the Board and Management at least once a year.

The amount of non-audit fees paid to the external auditors, KPMG by the Company and itssubsidiaries during the financial year ended 31 March 2006 amounted to RM47,509.

This statement is made in accordance with a resolution of the Board of Directors dated 20 July2006.

Tuan Haji Su’ut Bin Haji SuhailiDeputy Chairman

YBhg. Dato’ Lee Choon ChinManaging Director

34 WEIDA (M) BHD.

Report Of The Audit Committee

COMPOSITION OF AUDIT COMMITTEE

The Audit Committee comprises the following Directors:

YBhg. Datuk Dr. Stalin Hardin Chairman(Senior Independent Director)

Tuan Haji Su’ut Bin Haji SuhailiMember(Deputy Chairman & Independent Director)

Chew Chin ChoongMember(Executive Director)

Chew Chin Choong is a member of one of the associations of accountants specified in Part II ofthe 1st Schedule of the Accountants Act 1967.

TERMS OF REFERENCE

The terms of reference of the Audit Committee are as follows:

n Constitution

The Audit Committee was established on 17 May 2001. The functions and authority of theCommittee extend to Weida (M) Bhd. and all its subsidiaries collectively referred to as “the Group”.

n Primary objectives

The Audit Committee has been formed with the following objectives:

a. enhance openness, integrity and accountability in the Group’s activities so as to safeguardthe rights and interests of the shareholders;

b. provide assistance to the Board of Directors in fulfilling its fiduciary responsibilities relatingto corporate accounting and reporting practices;

c. enhance the Group’s business effectiveness and efficiency, quality of the accounting andaudit functions and strengthen the public’s confidence in the Group’s reported results;

d. maintain, through regularly scheduled meetings, a direct line of communication betweenthe Board of Directors and the External and Internal Auditors; and

e. enhance the independence of the internal audit functions.

n Membership

The Audit Committee shall be appointed by the Board of Directors from amongst their number andshall consist of not less than three (3) members. The majority of the Committee members shallbe Independent Directors and no alternate directors shall be appointed as a member of the AuditCommittee.


Report Of The Audit Committee (con’t)

At least one member of the Committee:

v must be a member of Malaysian Institute of Accountants (MIA); or

v must have at least three (3) years working experience and:

- must have passed the examinations specified in Part I of the 1st Schedule of theAccountants Act 1967; or

- must be a member of the associations of accountants specified in Part II of the 1st

Schedule of the Accountants Act 1967.

If membership of the Audit Committee for any reason falls below three (3) members, the Boardof Directors shall, within three (3) months of that event, appoint such number of new membersas may be required to fulfil the minimum requirement.

n Chairman

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

n Secretary

The Secretary to the Committee shall be any of the Joint Company Secretaries.

n Quorum

A quorum shall consist of a majority of independent directors and shall not be less than two (2)independent directors.

n Meetings and Minutes

The Committee shall hold four (4) meetings a year. Additional meetings may be held as and whennecessary, upon request by any Committee member, the Management, Internal or ExternalAuditors. The Internal Audit Manager and the Group Financial Controller are normally invited toattend the meetings. Other members of the Board of Directors, employees and representativesof External Auditors shall attend the meetings upon the invitation of the Committee.

The Audit Committee shall meet with the External Auditors without the presence of ExecutiveDirectors and the Management at least once a year.

Minutes of meetings shall be kept and distributed to each member of the Audit Committee andthe Board of Directors. The Chairman of the Committee shall report on each meeting to the Boardof Directors.

During the financial year ended 31 March 2006, the Audit Committee held a total of 5 meetings.The details of attendance of each Committee member are as follows:

Number of MeetingsHeld Attended

YBhg. Datuk Dr. Stalin Hardin 5 5

Tuan Haji Su’ut Bin Haji Suhaili 5 5

Chew Chin Choong 5 5

36 WEIDA (M) BHD.

n Review of the composition of the Audit Committee

The term of office and performance of the Audit Committee and each of the members shall bereviewed by the Board of Directors at least once every three (3) years to determine whether theAudit Committee and its members have carried out their duties in accordance with their terms ofreference.

n Authority

The Audit Committee is authorised by the Board of Directors to:

i. investigate any activity within its terms of reference and shall have unrestricted access toall employees of the Group;

ii. have the resources in order to perform its duties as set out in its terms of reference;iii. have full and unrestricted access to information pertaining to the Company and the Group;iv. have direct communication channels with the internal and external auditors; andv. obtain external legal or other independent professional advice as necessary.

Notwithstanding anything to the contrary hereinbefore stated, the Committee does not haveexecutive powers and shall report to the Board of Directors on matters considered and itsrecommendations thereon, pertaining to the Company and the Group.

n Responsibility

Where the Committee is of the view that a matter reported by it to the Board of Directors has notbeen satisfactorily resolved resulting in a breach of the Bursa Malaysia Securities ListingRequirements, the Committee has the responsibility to promptly report such matter to BursaMalaysia Securities Berhad.

n Functions and Duties

The duties of the Committee are to:

a. consider the appointment, resignation and dismissal of External Auditors and the audit fee;

b. review the nature and scope of audit plans prepared by the Internal and External Auditors;

c. review the audit reports prepared by the Internal and External auditors, the major findingsand management’s responses thereto;

d. discuss problems and reservations arising from the interim and final audits, and any matterthe external auditors may wish to bring up;

e. review the quarterly and annual financial statements of the Company and the Group primarilyfocusing on the matters set out below, before submission to the Board:

v changes in accounting policies and practices, where applicable;

v significant audit adjustments;

v the going concern assumption; and

v compliance with accounting standards and regulatory requirements.



f. consider the internal audit reports, major findings and management’s responses thereto onany internal investigations carried out by the Internal Auditors and ensure that appropriateaction is taken by management in respect of the audit observations and the committee’srecommendations;

g. review the auditors’ evaluation of the systems of internal controls;

h. review the scope, functions and resources of the internal audit department and whether ithas the necessary authority to carry out its work;

i. review any appraisal or assessment of the performance of the staff in the internal auditdepartment;

j. approve appointment or termination of senior executives in the internal audit department;

k. be informed of any resignation of executives in the internal audit department and to providethe resigning executive an opportunity to submit his or her reason for resigning;

l. review the assistance given by the Company and the Group’s employees to the auditors;

m. review related party transactions entered into by the Company and the Group to ensurethat such transactions are undertaken on the Group’s normal commercial terms and on anarm’s length basis; and

n. perform such other functions as may be agreed to by the Committee and the Board ofDirectors.

SUMMARY OF ACTIVITIES

The Audit Committee, had in line with its terms of reference, carried out the following activities inthe discharge of its functions and duties for the financial year ended 31 March 2006:

a. review of the Group’s Risk Profile, a risk assessment report prepared by the Management,prior to submission to the Board of Directors’ for consideration and approval;

b. review of the quarterly financial results and annual reports of the Company prior to submissionto the Board of Directors for consideration and approval;

c. review of the annual audit strategy and review planning memorandum of the ExternalAuditors;

d. review and deliberate the External Auditors’ reports in relation to the statutory audit andissues arising from the audit;

e. review and approve the annual internal audit plan and quarterly updates thereof preparedby the Internal Audit Department;

f. review and deliberate the quarterly internal audit reports presented by the Internal AuditDepartment on findings, recommendations (incorporating Management’s response) andaction plans with persons responsible and a time frame for implementation of therecommendations;


38 WEIDA (M) BHD.

g. review of any related party transactions to be entered into by the Company and the Groupprior to submission to the Board of Directors for consideration and approval;

h. review adequacy of the disclosure on related party transactions entered into by the Companyand the Group in the quarterly and annual reports of the Company;

i. meet with the External Auditors without the presence of any executives, except the JointCompany Secretaries;

j. consider the nomination and appointment of External Auditors, as well as their fees; and

k. review the Statement on Internal Control prior to submission to the Board for its approval.

INTERNAL AUDIT FUNCTIONS AND ACTIVITIES

The Company has an Internal Audit Department (“IAD”) which assists the Audit Committee in thedischarge of its duties and responsibilities. The Internal Audit Charter sets out the responsibility,scope and objectives, independence and authority of the internal audit function. The principalresponsibility of the Internal Audit Department is to undertake regular and systematic reviews ofthe system of controls based on the risks identified in the Risk Profile so as to provide reasonableassurance to the Committee on the adequacy of internal controls and that they have been operatingsatisfactorily and effectively.

In attaining these objectives, the scopes of activities of the IAD include the following:

a. review and appraise the soundness, adequacy and application of the system of internalcontrols and recommend improvements thereon;

b. ascertain the extent of compliance with established policies, procedures and statutoryrequirements;

c. appraise the reliability, integrity and usefulness of financial and management informationdeveloped;

d. carry out audit work in liaison with the External Auditors to maximise the use of resourcesand for effective coverage of relevant risks;

e. review the controls for safeguarding assets and as appropriate, verify the existence ofassets;

f. carry out special reviews and investigations requested by the Audit Committee, Board ofDirectors and Managing Director; and

g. identify ways and opportunities to improve the effectiveness and efficiency of the operationsand processes of the Group.

The Internal Audit Department has, during the financial year, conducted evaluations of the systemof internal controls encompassing the Group’s governance, operations, and information systemsof major areas of its operation. The internal audit reports were deliberated by the Audit Committeeand recommendations were duly acted upon by the management.

This report of the Audit Committee is made in accordance with a resolution of the Board of Directorsdated 20 July 2006.



BOARD RESPONSIBILITY

The Board of Directors recognises the importance of maintaining a sound system of internal controland the proper management of risks throughout its operations in order to safeguard shareholders’investments. The Board affirms its overall responsibility for the Group’s systems of internal controland risk management, and for reviewing the adequacy and integrity of those systems. It shouldbe noted, however, that such systems are designed to manage rather than eliminate the risk offailure to achieve business objectives. Accordingly, these systems can provide only reasonable,and not absolute, assurance against material misstatement or loss.

RISK MANAGEMENT FRAMEWORK

The Board confirms that it has an ongoing process of identifying, documenting, evaluating,monitoring and managing significant risks affecting the achievement of its business objectives.Following the completion of an extensive risk assessment of the Group in the previous year, aGroup Risk Profile has been set up to document, inter alia:

i. the principal risks faced by the Group under appropriate risk categories, levels and sub-levels;

ii. the likelihood of risks crystalising and the resulting impact; andiii. the internal controls framework that exists within the Group to address those risks.

The Group’s Risk Profile, which also provides a two-dimensional scoring by reference to thelikelihood of crystalisation of the risks and the materiality of impact, is subject to periodic reviewsand updates.

In addition, the Board has established an organisational structure with clearly defined lines ofaccountability and authority for each Board member. The responsibility of the Audit Committeeincludes monitoring of internal controls of the Group, with the assistance of the Internal AuditDepartment. The scope of the activities of the Internal Audit Department is set out in the Reportof the Audit Committee on pages 34 to 38 of this Annual Report.

The Internal Audit Department (“IAD”) prepares its annual audit plan based on the likelihood andimpact of risks identified in the Group’s Risk Profile and adopts risk-based approach in carryingout its work. The annual audit plan is updated and presented to the Audit Committee for approvalon a quarterly basis. Its scope of works includes periodic review and evaluation of variousoperational controls, financial controls and regulatory compliance. The IAD presents its report tothe Audit Committee on a quarterly basis on key audit findings, recommendations (incorporatingmanagement’s response) and action plans, identifying the persons responsible and a time framefor implementation of the recommendations. The Chairman of the Audit Committee presentssummaries of the internal audit reports at Board meetings. The IAD continuously monitors theimplementation of its recommendations by the management.

The monitoring, review and reporting process in place gives reasonable assurance that the structureof controls is appropriate to the Group’s operations and that risks are at an acceptable levelthroughout the Group’s business.

Statement On Internal Control

40 WEIDA (M) BHD.

OTHER PRINCIPAL INTERNAL CONTROL FEATURES

The other principal control features established within the Group include:

v clearly defined terms of reference, responsibilities and authorities of the various committees.The Committees established are:

- Audit Committee- Nominating Committee- Remuneration and Compensation Committee;

v Nominating Committee recommends to the Board, candidates for directorship;

v Remuneration and Compensation Committee reviews the remuneration package of eachDirector by reference to the performance of the Director;

v the Audit Committee and the Board review the Group’s financial performance prior toannouncements to Bursa Malaysia Securities Berhad;

v comprehensive and detailed monthly financial reports for review by Senior Management;

v a detailed budgeting process where operating units prepare budgets for approval by theBoard on a yearly basis;

v quarterly monitoring of actual results against budgets, with major variances being followedup and management actions being taken, where necessary;

v major capital expenditure and asset disposals are appraised and approved by the Board;and

v regular visits to operating units by members of the Board and Senior Management.

CONTROL WEAKNESSES THAT RESULT IN MATERIAL LOSSES

During the financial year, a number of minor to moderate internal control weaknesses wereidentified, all of which have been, or are being, addressed. None of the weaknesses have resultedin any material losses, contingencies or uncertainties that would require disclosure in the Group’sAnnual Report.


Statement On Internal Control (con’t)


The Directors are required by the Companies Act, 1965 (“the Act”) to prepare financial statementsfor each financial year which give a true and fair view of the state of affairs of the Company andthe Group at the end of the financial year and the results and cash flows of the Company and theGroup for the financial year.

As required by the Act, the financial statements have been prepared in accordance with theapplicable approved accounting standards in Malaysia and the provisions of the Act. The Directorshave considered that in preparing the financial statements for the financial year ended 31 March2006 set out on pages 50 to 90 of this Annual Report, appropriate accounting policies have beenadopted and are consistently applied and supported by reasonable and prudent judgements andestimates.

The Directors have responsibility to ensure the Company and the Group maintain proper accountingrecords which disclose with reasonable accuracy, the financial position and performance of theCompany and the Group, and to enable them to ensure the financial statements comply with theAct. The Directors have overall responsibility for taking such steps as are reasonably open tothem to safeguard the assets of the Company and the Group and to prevent and detect fraud andother irregularities.


Statement Of Directors’ ResponsibilitiesFor Preparing The Annual Financial Statements

Financial Highlights 2002 - 2006

2002 2003 2004 2005 2006RM '000 RM '000 RM '000 RM '000 RM '000

Revenue 77,848 96,921 123,254 123,846 132,709Profit Before Tax 7,342 11,783 20,294 17,949 13,946Net Profit 4,791 9,460 12,347 12,413 8,351Total Assets 99,883 107,391 130,122 146,341 165,427Net Tangible Assets 65,291 73,938 85,664 98,803 105,333Shareholders' Fund 64,611 73,206 84,689 99,014 105,445Total Number Of Shares 40,000 40,000 40,000 133,333 133,333

Sen Sen Sen Sen Sen

Group Earnings Per Share 3.6 7.1 9.3 9.3 6.3Net Tangible Assets Per Share 49.0 55.4 64.4 74.1 79.0

Revenue(RM ’000)

Profit Before Tax(RM ’000)

Group Earnings Per Share(Sen)

Net Tangible Assets Per Share(Sen)

132,709

123,846

123,254

96,921

77,848

13,946

17,949

20,294

11,783

7,342

6.3

9.3

9.3

7.1

3.6

79.0

74.1

64.4

55.4

49.0

2006

2005

2004

2003

2002

2006

2005

2004

2003

2002

2006

2005

2004

2003

2002

2006

2005

2004

2003

2002

42 WEIDA (M) BHD.

Statutory Financial Statements

Directors’ Report 44

Statement By Directors 48

Statutory Declaration 48

Report Of The Auditors 49

Balance Sheets 50

Income Statements 52

Statement Of Changes In Equity 53

Cash Flow Statements 54

Notes To The Financial Statements 57

The Directors have pleasure in submitting their report and the audited financial statements of theGroup and of the Company for the financial year ended 31 March 2006.

PRINCIPAL ACTIVITIES

The Company is principally engaged in investment holding and provision of management servicesto subsidiaries, whilst the principal activities of the subsidiaries are stated in Note 3 to the financialstatements. Except for a new activity involving the construction and financing of the constructionof telecommunication towers by a subsidiary, there have been no significant changes in the natureof these activities during the financial year.

RESULTSGroup Company

RM RM

Net profit for the financial year 8,350,935 2,042,865

DIVIDENDS

Since the end of the previous financial year, the Company paid a first and final dividend of 2.0 senper share less tax totalling RM1,920,000 in respect of the financial year ended 31 March 2005 on21 November 2005.

The Directors recommend a first and final dividend of 2.0 sen per share less tax totaling RM1,920,000in respect of the financial year ended 31 March 2006.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves and provisions during the financial year exceptas disclosed in the financial statements.

DIRECTORS OF THE COMPANY

Directors who served since the date of the last report are:

Tuan Haji Su’ut Bin Haji SuhailiDato’ Lee Choon ChinDatu Voon Chen Hian @ Voon Chen KokDatuk Dr. Stalin HardinJee Hon ChongChew Chin ChoongLai Lim HonTok Jiak YongChong Kwan Wai

Directors' ReportFor The Financial Year Ended 31 March 2006

44 WEIDA (M) BHD.

The holdings and deemed holdings in the ordinary shares of the Company and of its relatedcorporations (other than wholly-owned subsidiaries) of the Directors at financial year end asrecorded in the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares of RM0.50 each

At 1.4.2005 Bought Sold At 31.3.2006Shareholdings in Weida (M) Bhd. in which Directors have direct interests

Tuan Haji Su’ut Bin Haji Suhaili 33,334 - - 33,334

Dato’ Lee Choon Chin 7,074,242 - - 7,074,242

Datu Voon Chen Hian @ Voon Chen Kok 33,334 6,666 - 40,000

Datuk Dr. Stalin Hardin 33,334 - - 33,334

Jee Hon Chong 15,226 - - 15,226

Lai Lim Hon 4,280 - - 4,280

Tok Jiak Yong 1,894 - - 1,894

Chong Kwan Wai 10,000 - - 10,000

Number of ordinary shares

Par Value At 1.4.2005 Bought Sold At 31.3.2006Shareholdings in which a Director, Dato’ Lee Choon Chin, has deemed interests

Weida (M) Bhd.* 0.50 29,124,524 - - 29,124,524

Weidaya Sdn. Bhd.** 1.00 350,000 - - 350,000

Weida Industrial System Sdn. Bhd.** 1.00 102,000 153,000 - 255,000

Weida Marketing Sdn. Bhd.** 1.00 255,000 - - 255,000

Weida Enviromental Technology Sdn. Bhd.** 1.00 51,000 - - 51,000

Sar-Alam Indah Sdn. Bhd.** 1.00 5,100 - - 5,100

UTIC Services Sdn. Bhd.** 1.00 1,020,000 - - 1,020,000

Weidasar Enginering Sdn. Bhd.** 1.00 2 509,998 - 510,000

* Deemed interest by virtue of his substantial interest in Weida Management Sdn. Bhd..** Deemed interest by virtue of his substantial interest in Weida (M) Bhd..

None of the other Directors holding office at 31 March 2006 had any interest in the ordinary sharesof the Company and of its related corporations during the financial year.

Directors' ReportFor The Financial Year Ended 31 March 2006 (con’t)


46 WEIDA (M) BHD.

DIRECTORS' BENEFITS

Since the end of the previous financial year, no Director of the Company has received nor becomeentitled to receive any benefit (other than a benefit included in the aggregate amount of emolumentsreceived or due and receivable by certain Directors as shown in the financial statements) by reasonof a contract made by the Company or a related corporation with the Director or with a firm ofwhich the Director is a member, or with a company in which the Director has a substantial financialinterest, other than certain Directors who have significant financial interests in companies whichtraded with certain companies in the Group in the ordinary course of business.

There were no arrangements during and at the end of the financial year which had the object ofenabling Directors of the Company to acquire benefits by means of the acquisition of shares inor debentures of the Company or any other body corporate.

ISSUE OF SHARES

There were no changes in the issued and paid-up capital of the Company during the financial year.

OPTIONS GRANTED OVER UNISSUED SHARES

No options were granted to any person to take up unissued shares of the Company during thefinancial year.

OTHER STATUTORY INFORMATION

Before the financial statements of the Group and of the Company were made out, the Directorstook reasonable steps to ascertain that:

i. all known bad debts have been written off and adequate provision made for doubtful debts,and

ii. all current assets have been stated at the lower of cost and net realisable value.

At the date of this report, the Directors are not aware of any circumstances:

i. that would render the amount written off for bad debts, or the amount of the provision fordoubtful debts, in the Group and in the Company inadequate to any substantial extent, or

ii. that would render the value attributed to the current assets in the financial statements ofthe Group and of the Company misleading, or

iii. which have arisen which render adherence to the existing method of valuation of assets orliabilities of the Group and of the Company misleading or inappropriate, or

iv. not otherwise dealt with in this report or in the financial statements, that would render anyamount stated in the financial statements of the Group and of the Company misleading.

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

i. any charge on the assets of the Group or of the Company that has arisen since the end ofthe financial year and which secures the liabilities of any other person, or

ii. any contingent liability in respect of the Group or of the Company that has arisen since theend of the financial year.


No contingent liability or other liability of any company in the Group has become enforceable, oris likely to become enforceable within the period of twelve months after the end of the financialyear which, in the opinion of the Directors, will or may substantially affect the ability of the Groupand of the Company to meet their obligations as and when they fall due.

In the opinion of the Directors except as disclosed in the financial statement, the results of theoperations of the Group and of the Company for the financial year ended 31 March 2006 havenot been substantially affected by any item, transaction or event of a material and unusual naturenor has any such item, transaction or event occurred in the interval between the end of that financialyear and the date of this report.

SIGNIFICANT EVENT DURING THE FINANCIAL YEAR

On 27 May 2005, the Securities Commission approved the Company’s proposal to issue up toRM100 million of Murabahah Underwritten Notes/Islamic Medium Term Notes (“MUNIF/IMTNNotes”).

On 24 August 2005, the Company issued RM5 million worth of MUNIF Notes which were fullyredeemed before the end of financial year.

AUDITORS

The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.

Signed in accordance with a resolution of the Directors:

Tuan Haji Su’ut Bin Haji Suhaili

Dato’ Lee Choon Chin

Kuching,Date: 20 July 2006



Statement By DirectorsPursuant To Section 169(15) Of The Companies Act, 1965

In the opinion of the Directors, the financial statements set out on pages 50 to 90 are drawn upin accordance with the provisions of the Companies Act, 1965 and applicable approved accountingstandards in Malaysia, so as to give a true and fair view of the state of affairs of the Group andof the Company at 31 March 2006 and of the results of their operations and cash flows for thefinancial year ended on that date.

Signed in accordance with a resolution of the Directors:

Tuan Haji Su’ut Bin Haji Suhaili

Dato’ Lee Choon Chin


Statutory DeclarationPursuant To Section 169(16) Of The Companies Act, 1965

I, Chew Chin Choong, the Director primarily responsible for the financial management of Weida(M) Bhd., do solemnly and sincerely declare that the financial statements set out on pages 50 to90 are, to the best of my knowledge and belief, correct and I make this solemn declarationconscientiously believing the same to be true, and by virtue of the provisions of the StatutoryDeclarations Act, 1960.

Subscribed and solemnly declared by the abovenamed in Kuching in the State of Sarawak on 20July 2006.

Chew Chin Choong

Before me:Chua Hian ChongCommissioner For OathsKuching, Sarawak

48 WEIDA (M) BHD.

We have audited the financial statements set out on pages 50 to 90. The preparation of thefinancial statements is the responsibility of the Company's Directors.

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

We have conducted our audit in accordance with approved Standards on Auditing in Malaysia.These standards require that we plan and perform the audit to obtain all the information andexplanations, which we consider necessary to provide us with evidence to give reasonableassurance that the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence relevant to the amounts and disclosures in the financialstatements. An audit also includes an assessment of the accounting principles used and significantestimates made by the Directors as well as evaluating the overall adequacy of the presentationof information in the financial statements. We believe our audit provides a reasonable basis forour opinion.

In our opinion:

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

i. the state of affairs of the Group and of the Company at 31 March 2006 and of theresults of their operations and cash flows 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 inthe financial statements of the Group and of the Company;

and

(b) the accounting and other records and the registers required by the Companies Act, 1965to be kept by the Company and the subsidiaries have been properly kept in accordancewith the provisions of the said Act.

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

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

KPMGFirm Number: AF 0758Chartered Accountants

Chin Chee KongPartnerApproval Number: 1481/1/07 (J)


Report Of The Auditors ToThe Members Of Weida (M) Bhd.


Note Group Company2006 2005 2006 2005

(Restated)RM RM RM RM

Property, plant and equipment 2 54,683,519 54,301,487 1,599,538 2,266,742

Investment in subsidiaries 3 - - 25,054,047 24,391,049

Investment in associates 4 267,937 59,187 - -

Other investments 5 526,176 525,247 76,176 75,247

Intangible assets 6 1,119,428 1,269,868 - -

Long term receivables 10 18,417,044 - 16,279,292 27,075,123

Deferred tax assets 7 1,761,000 1,795,000 - -

Current assets

Inventories 8 29,270,717 30,456,736 - -Properties held for resale 9 725,746 426,847 - -Trade and other receivables 10 38,258,250 26,650,775 26,358,709 20,983,906Tax recoverable 1,143,030 1,938,934 1,792,047 3,172,082Cash and cash equivalents 11 19,253,784 28,916,675 747,911 1,780,383

88,651,527 88,389,967 28,898,667 25,936,371

Current liabilities

Trade and other payables 12 27,691,442 18,198,044 1,634,585 9,076,262Borrowings 13 16,115,491 15,100,412 - -Tax payable 2,078,410 1,025,160 - -

45,885,343 34,323,616 1,634,585 9,076,262

Net current assets 42,766,184 54,066,351 27,264,082 16,860,109

119,541,288 112,017,140 70,273,135 70,668,270

50 WEIDA (M) BHD.

Balance Sheets At 31 March 2006




Financed by:

Capital and reserves

Share capital 14 66,666,666 66,666,666 66,666,666 66,666,666Reserves 15 38,777,916 32,346,981 2,415,469 2,292,604

105,444,582 99,013,647 69,082,135 68,959,270

Negative goodwill on consolidation 16 1,008,033 1,059,507 - -

Minority shareholders’ interests 17 6,229,955 5,373,027 - -

Long term and deferred liabilities

Borrowings 13 974,718 455,959 - -Deferred tax liabilities 7 5,884,000 6,115,000 1,191,000 1,709,000

119,541,288 112,017,140 70,273,135 70,668,270

The financial statements were approved and authorised for issue by the Board of Directors on 20July 2006.

Balance Sheets At 31 March 2006 (con’t)

The notes set out on pages 57 to 90 form an integral part of, and should be read in conjunction with, thesefinancial statements.

52 WEIDA (M) BHD.


(Restated) (Restated)RM RM RM RM

Revenue 18 132,708,788 123,845,719 10,397,453 26,369,051

Other operating income 2,348,756 1,332,358 264,311 434,922Changes in inventories 2,610,294 603,409 - -Raw materials and consumables used (37,625,395) (39,832,107) - -Purchase of finished goods (7,458,699) (14,319,233) (4,094) -Contractors’ fees (30,981,467) (7,800,806) - -Staff costs 19 (17,730,216) (15,624,022) (3,026,149) (2,655,076)Depreciation and amortisation expenses (5,225,760) (5,035,695) (746,321) (901,591)Plant and production overheads (8,833,547) (8,731,841) - -Transportation charges (4,113,098) (4,314,044) (3,798) -Other operating expenses (10,469,072) (12,107,223) (2,404,624) (2,765,768)

Operating profit 20 15,230,584 18,016,515 4,476,778 20,481,538

Interest income 336,088 323,863 822,558 66,537Financing costs 21 (1,608,892) (392,976) (1,213,490) -Share of (loss)/profit of associates (12,145) 1,184 - -

Profit before taxation 13,945,635 17,948,586 4,085,846 20,548,075

Tax expense 22 (5,187,542) (5,118,947) (2,042,981) (6,094,568)

Profit after taxation 8,758,093 12,829,639 2,042,865 14,453,507

Minority interests (407,158) (417,035) - -

Net profit for the financial year 8,350,935 12,412,604 2,042,865 14,453,507

Basic earnings per ordinary share (sen) 23 6.26 9.31

Dividend per ordinary share - net (sen) 24 1.44 1.44 1.44 1.44

Income StatementsFor The Financial Year Ended 31 March 2006



Non-distributable DistributableShare Share Revaluation Merger Retained

Capital Premium Reserve Deficit Profits TotalRM RM RM RM RM RM

GroupAt 1 April 2004 40,000,000 5,671,557 5,040,098 (16,983,045) 50,960,691 84,689,301

Bonus issue 26,666,666 (5,363,147) - - (21,303,519) -Share issue expenses - (158,410) - - - (158,410)Surplus arising from revaluation of land and buildings of a subsidiary - - 3,510,152 - - 3,510,152Net gains and losses not recognised in the income statement - (158,410) 3,510,152 - - 3,351,742Realisation of revaluation reserve - - (112,784) - 112,784 -Net profit for the financial year - - - - 12,412,604 12,412,604Dividend (Note 24) - - - - (1,440,000) (1,440,000)

At 31 March 2005 66,666,666 150,000 8,437,466 (16,983,045) 40,742,560 99,013,647

Realisation of revaluation reserve - - (167,841) - 167,841 -Net profit for the financial year - - - - 8,350,935 8,350,935Dividend (Note 24) - - - - (1,920,000) (1,920,000)

At 31 March 2006 66,666,666 150,000 8,269,625 (16,983,045) 47,341,336 105,444,582

(Note 14) (Note 15) (Note 15) (Note 15) (Note 15)

CompanyAt 1 April 2004 40,000,000 5,521,557 10,582,616 56,104,173

Bonus issue 26,666,666 (5,363,147) (21,303,519) -Share issue expenses (not recognised in the income statement) - (158,410) - (158,410)

Net profit for the financial year - - 14,453,507 14,453,507Dividend (Note 24) - - (1,440,000) (1,440,000)

At 31 March 2005 66,666,666 - 2,292,604 68,959,270

Net profit for the financial year - - 2,042,865 2,042,865Dividend (Note 24) - - (1,920,000) (1,920,000)

At 31 March 2006 66,666,666 - 2,415,469 69,082,135

(Note 14) (Note 15) (Note 15)

Statement Of Changes In EquityFor The Financial Year Ended 31 March 2006


54 WEIDA (M) BHD.

Group Company2006 2005 2006 2005

RM RM RM RM

Cash flows from operating activities

Net profit for the financial year 8,350,935 12,412,604 2,042,865 14,453,507Adjustments for:Amortisation of licence 21,858 7,286 - -Amortisation of goodwill on consolidation 48,436 23,809 - -Negative goodwill on consolidation recognised (51,474) (51,474) - -Depreciation 5,182,361 5,004,600 746,321 901,591Dividend income (2,268) (1,871) (5,999,853) (21,957,851)Gain on deemed disposal of a Subsidiary (Note 30) (5,332) - - -Impairment loss on investment in associate - 3,749 - -Financing costs 1,608,892 392,976 1,213,490 -Interest income (336,088) (323,863) (822,558) (66,537)Licence written off 80,146 - - -Loss/(Gain) on disposal of property, plant and equipment 104,346 (479,121) 23,040 (236,398)Minority interests 407,158 417,035 - -Reversal of revaluation deficit - (259,851) - -Share of loss/(profit) of associates 12,145 (1,184) - -Tax expense 5,187,542 5,118,947 2,042,981 6,094,568

Operating profit/(loss) beforeworking capital changes 20,608,657 22,263,642 (753,714) (811,120)

(Increase)/Decrease in working capital:Inventories 1,186,019 (5,806,236) - -Properties held for resale (298,899) - - -Trade and other receivables (30,024,519) 17,597,907 4,413,028 (863,824)Trade and other payables 9,493,398 (3,200,217) (7,441,677) (6,983,157)

Cash generated from /(used in) operations 964,656 30,855,096 (3,782,363) (8,658,101)

Financing costs (208,040) (358,127) - -Interest received 336,088 323,863 822,558 66,537Income taxes (paid)/refunded (3,532,283) (6,585,438) 499,269 258

Net cash (used in)/generatedfrom operating activities (2,439,579) 24,235,394 (2,460,536) (8,591,306)

Cash Flow StatementsFor The Financial Year Ended 31 March 2006


Group Company2006 2005 2006 2005

RM RM RM RM

Cash flows from operating activities

Acquisition of associate (224,000) - - -Investment in subsidiaries - - (662,998) (140,000)Acquisition of subsidiaries, net of cash acquired (Note 30) - (1,409,550) - -(Increase)/Decrease in deposits pledged with licensed banks (379,244) 1,037,564 - -Purchase of property, plant and equipment [Note (i)] (6,124,398) (7,400,309) (349,572) (172,149)Purchase of other investments (929) (4,044) (929) (4,044)Proceeds from disposal of property, plant and equipment 1,249,454 1,563,755 247,415 986,794Purchase of licence - (109,290) - -Dividends received 2,268 1,871 5,327,638 10,769,737

Net cash (used in)/generated from investing activities (5,476,849) (6,320,003) 4,561,554 11,440,338

Cash flows from financing activities

Proceeds from issuance of shares by subsidiaries to minority shareholders 637,000 947,000 - -Share issue expenses - (158,410) - (158,410)Proceeds from borrowings 940,000 700,000 - -Repayment of borrowings (199,957) (2,678,558) - -Proceeds from bonds issued 5,000,000 - - -Redemption of bonds (5,000,000) - - -Dividends paid to:~ Shareholders of the Company (1,920,000) (1,440,000) (1,920,000) (1,440,000)~ Minority shareholders of subsidiaries (181,898) (397,455) - -Financing costs (1,400,852) (34,849) (1,213,490) -

Net cash used in financing activities (2,125,707) (3,062,272) (3,133,490) (1,598,410)

Cash Flow StatementsFor The Financial Year Ended 31 March 2006 (con’t)

Group Company2006 2005 2006 2005

RM RM RM RM

Net (decrease)/increase in cash and cash equivalents (10,042,135) 14,853,119 ( 1,032,472) 1,250,622Cash and cash equivalents at beginning of financial year 28,055,621 13,202,502 1,780,383 529,761

Cash and cash equivalents at end of financial year [Note (ii)] 18,013,486 28,055,621 747,911 1,780,383

Notes

(i) Purchase of property, plant and equipment

During the financial year, the Group and the Company acquired property, plant and equipmentas follows:

Group Company2006 2005 2006 2005

RM RM RM RM

Paid for in cash 6,124,398 7,400,309 349,572 172,149Acquired~ using hire purchase loans - 438,823 - -~ under finance lease 793,795 - - -

6,918,193 7,839,132 349,572 172,149

(ii) Cash and cash equivalents

Cash and cash equivalents included in the cash flow statements comprise the following balancesheet amounts:

Group Company2006 2005 2006 2005

RM RM RM RM

Fixed deposits (excluding deposits pledged) 8,523,214 4,215,277 - 350,000Short-term cash fund invested via a licensed bank - 11,586,341 - -Cash and bank balances 9,490,272 12,254,003 747,911 1,430,383

18,013,486 28,055,621 747,911 1,780,383

Cash Flow StatementsFor The Financial Year Ended 31 March 2006 (con’t)


56 WEIDA (M) BHD.


Notes To The Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following accounting policies are adopted by the Group and by the Company and areconsistent with those adopted in previous financial years.

(a) Basis Of Accounting

The financial statements of the Group and of the Company are prepared on thehistorical cost basis (except as disclosed in the notes to the financial statements) andin compliance with the provisions of the Companies Act, 1965 and applicable approvedaccounting standards in Malaysia.

(b) Basis Of Consolidation

Subsidiaries are those enterprises controlled by the Company. Control exists whenthe Company has the power, directly or indirectly, to govern the financial and operatingpolicies of an enterprise so as to obtain benefits from its activities. The financialstatements of subsidiaries are included in the consolidated financial statements fromthe date that control effectively commences until the date that control effectivelyceases. Subsidiaries are consolidated using the acquisition method of accountingexcept for three subsidiaries which are consolidated using the merger method ofaccounting. These three subsidiaries were acquired prior to 1 April 2002 and themerger method of accounting adopted accords with the Malaysian Accounting StandardNo. 2, Accounting for Acquisitions and Mergers, the generally accepted accountingprinciples prevailing at the dates of acquisition.

A subsidiary is excluded from consolidation when either control is intended to betemporary if the subsidiary is acquired and held exclusively with a view of its subsequentdisposal in the near future and it has not previously been consolidated or it operatesunder severe long term restrictions which significantly impair its ability to transferfunds to the Company. Subsidiaries excluded on these grounds are accounted foras investments.

Under the acquisition method of accounting, the results of subsidiaries acquired ordisposed of during the financial year are included from the date of acquisition or upto the date of disposal. At the date of acquisition, the fair values of the subsidiaries’net assets are determined and these values are reflected in the Group financialstatements. The difference between the acquisition cost and the fair values of thesubsidiaries’ net assets is reflected as goodwill or negative goodwill on consolidationas appropriate.

Under the merger method of accounting, the results of the subsidiaries are presentedas if the companies had been combined throughout the current and previous financialyears. The difference between the cost of acquisition and the nominal value of theshare capital and reserves of the merged subsidiaries is taken to merger reserve ordeficit, as the case may be.

Intra-group transactions and balances and the resulting unrealised profits are eliminatedon consolidation. Unrealised losses resulting from intra-group transactions are alsoeliminated unless cost cannot be recovered.

58 WEIDA (M) BHD.

(c) Associates

Associates are the enterprises in which the Group has significant influence, but notcontrol, over the financial and operating policies.

The consolidated financial statements include the total recognised gains and lossesof associates on an equity accounted basis from the date that significant influenceeffectively commences until the date that significant influence effectively ceases.

Unrealised profits arising on transactions between the Group and its associates whichare included in the carrying amount of the related assets and liabilities are eliminatedpartially to the extent of the Group’s interests in the associates. Unrealised losseson such transactions are also eliminated partially unless cost cannot be recovered.

Goodwill on acquisition is calculated based on the fair value of net assets acquired.

(d) Property, Plant And Equipment

Freehold land and capital work-in-progress are stated at cost. All other property,plant and equipment are stated at cost/valuation less accumulated depreciation.

The Group engages external independent valuers to revalue its property comprisingland and buildings every five (5) years and at shorter intervals whenever the fair valueof the revalued assets is expected to differ materially from their carrying value.Additions to land and buildings in between revaluation are stated at cost.

Surpluses arising from revaluation are dealt with in the property revaluation reserveaccount. Any deficit arising is offset against the revaluation reserve to the extent ofa previous increase for the same property. In all other cases, a decrease in carryingamount is charged to the income statement.

Property, plant and equipment retired from active use and held for disposal are statedat the carrying amount at the date when the asset is retired from active use, lessimpairment loss, if any.

Capital work-in-progress

Costs incurred on the construction and installation of plant and machinery arecapitalised as capital work-in-progress until they are fully commissioned and operational.

Notes To The Financial Statements (con’t)


Depreciation

Freehold land is not amortised. Leasehold land is amortised in equal instalments overthe remaining lease terms ranging from 39 to 60 years from the date of acquisitionwhile buildings are depreciated on a straight line basis over the shorter of 50 yearsor the unexpired lease terms. The straight line method is used to write off the costof the other assets over the term of their estimated useful lives at the following principalannual rates:

Electrical installation and renovation 10% - 20%Equipment and tools 12% - 33%Infrastructure 5%Motor vehicles 20%Office equipment, furniture and fittings 10% - 331/3%Plant, machinery and moulds 10% - 331/3%Site equipment 10%

Depreciation on capital work-in-progress commences when the plant and equipmentare ready for their intended use.

(e) Investments

Long term investments, other than in subsidiaries and associates, are stated at cost.An allowance is made when the Directors are of the view that there is a diminutionin their value which is other than temporary.

Long term investments in subsidiaries and associates are stated at cost less impairmentloss where applicable.

(f) Goodwill And Negative Goodwill

Goodwill represents the excess of the cost of acquisition over the fair values of thenet identifiable assets acquired and is stated at cost less accumulated amortisation.

In respect of associates, the carrying amount of goodwill is included in the carryingamount of the investment in the associate, where applicable.

Negative goodwill represents the excess of the fair values of the net identifiable assetsacquired over the cost of acquisition.

Goodwill/Negative goodwill is amortised/recognised on a straight line basis to theincome statement over 25 years, subject, in the case of goodwill, to annual reviewfor any impairment in its carrying value.

(g) Inventories

Inventories are stated at the lower of cost and net realisable value. Costs of rawmaterials, consumables and building materials are determined using the first in firstout method while cost of finished goods is determined on the weighted average basis.

For finished goods manufactured in-house, cost consists of materials, direct labourand an appropriate proportion of fixed and variable production overheads. Forconsumables, building materials and finished goods sourced externally, cost includesexpenditure incurred in bringing the inventories to their present location and condition.


60 WEIDA (M) BHD.

(h) Trade And Other Receivables

Trade and other receivables are stated at cost less allowance for doubtful debts.

(i) Amount Due From Contract Customers

Amount due from contract customers on construction contracts are stated at cost plusattributable profits less foreseeable losses and less progress billings. Cost includesall direct construction costs and other related costs. Where progress billings exceedthe aggregate costs plus attributable profits less foreseeable losses, the net creditbalance on all such contracts is shown in trade and other payables as amount dueto contract customers.

(j) Properties Held For Resale

Properties held for resale are stated at the lower of cost and net realisable value.

(k) Cash And Cash Equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits withbanks and highly liquid investments which have an insignificant risk of changes invalue. For the purpose of the cash flow statement, cash and cash equivalents arepresented net of bank overdrafts and pledged deposits.

(l) Impairment

The carrying amounts of assets, other than inventories [refer Note 1(g)], assets arisingfrom construction contracts [refer Note 1(i)], deferred tax assets [refer Note 1(p)] andfinancial assets (excluding investments in subsidiaries and associates), are reviewedat each balance sheet date to determine whether there is any indication of impairment.If any such indication exists, the asset’s recoverable amount is estimated. Animpairment loss is recognised whenever the carrying amount of an asset or the cash-generating unit to which it belongs exceeds its recoverable amount. An impairmentloss is charged to the income statement, unless the asset is carried at a revaluedamount, in which case the impairment loss is charged to equity.

The recoverable amount is the greater of the asset’s net selling price and its valuein use. In assessing value in use, estimated future cash flows are discounted to theirpresent value using a pre-tax discount rate that reflects current market assessmentsof the time value of money and the risks specific to the asset. For an asset that doesnot generate largely independent cash inflows, the recoverable amount is determinedfor the cash-generating unit to which the asset belongs.

An impairment loss in respect of goodwill is not reversed unless the loss was causedby a specific external event of an exceptional nature that is not expected to recur andsubsequent external events have occurred that reverse the effect of that event.

In respect of other assets, an impairment loss is reversed if there has been a changein the estimates used to determine the recoverable amount and is reversed only tothe extent that the asset’s carrying amount does not exceed the carrying amount thatwould have been determined, net of depreciation or amortisation, if no impairmentloss had been recognised. The reversal is recognised in the income statement,unless it reverses an impairment loss on a revalued asset, in which case it is takento equity.



(m) Liabilities

Borrowings and trade and other payables are stated at cost.

(n) Hire Purchase Loans

Property, plant and equipment acquired using hire purchase loans are capitalisedand depreciated in accordance with Note 1(d). Outstanding hire purchase instalmentsafter deducting interest yet to fall due are disclosed as borrowings in the balancesheet. Hire purchase interest is charged to the income statement over the loan tenorusing the ‘sum-of-digit’ method.

(o) Finance Leases

Leases in which the Group assumes substantially all the risks and rewards of ownershipare classified as finance leases. Assets acquired by way of finance leases are statedat an amount equal to the lower of their fair values and the present value of theminimum lease payments at the inception of the leases, less accumulated depreciationand impairment losses.

In calculating the present value of the minimum lease payments, the discount rateis the interest rate implicit in the lease, if this is practicable to determine, if not, theGroup’s incremental borrowing rate is used.

(p) Income Tax

Tax on the profit or loss for the financial year comprises current and deferred tax.Income tax is recognised in the income statement except to the extent that it relatesto items recognised directly in equity, in which case it is recognised in equity.

Current tax expense is the expected tax payable on the taxable income for the financialyear, using tax rates enacted or substantially enacted at the balance sheet date, andany adjustment to tax payable in respect of previous financial years.

Deferred tax is provided, using the liability method, on temporary differences arisingbetween the tax bases of assets and liabilities and their carrying amounts in thefinancial statements. Temporary differences are not recognised for goodwill notdeductible for tax purposes and the initial recognition of assets or liabilities that at thetime of the transaction affects neither accounting nor taxable profit. The amount ofdeferred tax provided is based on the expected manner of realisation or settlementof the carrying amount of assets and liabilities, using tax rates enacted or substantiallyenacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that futuretaxable profits will be available against which the asset can be utilised.


62 WEIDA (M) BHD.


(q) Foreign Currency Transactions

Transactions in foreign currencies are translated to Ringgit Malaysia at rates ofexchange ruling at the transaction dates. Monetary assets and liabilities denominatedin foreign currencies at the balance sheet date are translated to Ringgit Malaysia atthe foreign exchange rates ruling at that date. Foreign exchange differences arisingon translation are recognised in the income statement.

The closing rates used in the translation of foreign currency monetary liabilities areas follows:

2006 20051USD = RM3.72 1USD = RM3.801SGD = RM2.30 1SGD = RM2.301GBP = RM6.49 1GBP = RM7.14

(r) Employee Benefits

(i) Short term employee benefits

Wages, salaries and bonuses are recognised as expenses in the year in whichthe associated services are rendered by employees of the Group. Short termaccumulating compensated absences such as paid annual leave are recognisedwhen services are rendered by employees that increase their entitlement tofuture compensated absences, and short term non-accumulating compensatedabsences such as sick leave are recognised when absences occur.

(ii) Defined contribution plans

Obligations for contributions to defined contribution plans are recognised asan expense in the income statement as incurred.

(s) Revenue

(i) Goods sold and services rendered

Revenue from sale of goods is measured at the fair value of the considerationreceivable and is recognised in the income statement when the significant risksand rewards of ownership have been transferred to buyers.

Revenue from services rendered and sale of sewage systems are recognisedin the income statement in proportion to the stage of completion of the transactionat the balance sheet date. The stage of completion is assessed by referenceto services performed to date as a percentage of total services to be performed.Where the outcome of the transaction cannot be estimated reliably, revenueis recognised only to the extent of the expenses recognised that are recoverable.

Revenue from provision of sludge treatment and disposal service is recognisedin the income statement as it accrues, based on rates agreed with customer.



(ii) Construction contracts

Revenue from construction contracts is recognised on the percentage ofcompletion method, measured by reference to the proportion that contractcosts incurred for contract work performed todate that reflect work performedbear to the total estimated contract costs.

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

An expected loss on a contract is recognised immediately in the incomestatement.

(iii) Dividend income

Dividend income is recognised when the right to receive payment is established.

(iv) Interest income

Interest income is recognised in the income statement as it accrues, takinginto account the effective yield on the assets.

(v) Management fee

Management fee is recognised as it accrues at contracted rates.

(vi) Rental income

Rental income is recognised as it accrues at contracted rates.

(t) Interest Expense

All interest and other costs incurred in connection with borrowings are expensed asincurred.

64 WEIDA (M) BHD.


2. PROPERTY, PLANT AND EQUIPMENT

Plant, machinery OfficeLong-term Short-term and moulds equipment,

Freehold leasehold leasehold Outright Under furnitureland land land Buildings purchase leasing and fittings

Group RM RM RM RM RM RM RM

Cost/ValuationOpening balance 3,651,045 11,780,000 4,380,000 14,909,567 25,255,309 - 3,948,193

Additions - - - 127,292 2,529,264 793,795 950,087

Disposals - - - - (1,635,610) - (141,557)

Reclassification - - - - 415,636 - 550,893

Closing balance 3,651,045 11,780,000 4,380,000 15,036,859 26,564,599 793,795 5,307,616

Representing items at:Cost - - - 628,859 26,564,599 793,795 5,307,616

Directors’ valuation 3,651,045 11,780,000 4,380,000 14,408,000 - - -

Closing balance 3,651,045 11,780,000 4,380,000 15,036,859 26,564,599 793,795 5,307,616

DepreciationOpening balance - 45,080 18,446 93,352 14,878,363 - 2,150,092

Charge for the financial year - 215,652 119,136 298,852 2,287,709 39,690 674,998

Disposals - - - - (1,041,834) - (78,397)

Reclassification - - - - - - -

Closing balance - 260,732 137,582 392,204 16,124,238 39,690 2,746,693

Net book valueAt 31 March 2006 3,651,045 11,519,268 4,242,418 14,644,655 10,440,361 754,105 2,560,923

At 31 March 2005 3,651,045 11,734,920 4,361,554 14,816,215 10,376,946 - 1,798,101

Depreciation charge for the financial year ended 31 March 2005 - 180,634 101,489 259,982 2,249,354 - 520,262



ElectricalMotor vehicles installation Capital

Equipment Outright Under hire and Site work-in- and tools purchase purchase renovation equipment Infrastructure progress Total

RM RM RM RM RM RM RM RM

2,617,630 4,398,376 1,147,028 1,433,313 1,469,956 2,838,606 397,072 78,226,095

170,526 1,290,733 - 54,172 - 374,318 628,006 6,918,193

(144,677) (695,320) (275,177) (35,216) - - - (2,927,557)

- 130,476 (130,476) - - - (966,529) -

2,643,479 5,124,265 741,375 1,452,269 1,469,956 3,212,924 58,549 82,216,731

2,643,479 5,124,265 741,375 1,452,269 1,469,956 3,212,924 58,549 47,997,686

- - - - - - - 34,219,045

2,643,479 5,124,265 741,375 1,452,269 1,469,956 3,212,924 58,549 82,216,731

1,459,864 2,998,895 466,451 750,917 485,760 577,388 - 23,924,608

273,447 557,846 189,676 225,251 146,995 153,109 - 5,182,361

(66,000) (297,578) (68,795) (21,153) - - - (1,573,757)

- 124,676 (124,676) - - - - -

1,667,311 3,383,839 462,656 955,015 632,755 730,497 - 27,533,212

976,168 1,740,426 278,719 497,254 837,201 2,482,427 58,549 54,683,519

1,157,766 1,399,481 680,577 682,396 984,196 2,261,218 397,072 54,301,487

287,696 805,937 99,008 288,016 72,920 139,302 - 5,004,600

66 WEIDA (M) BHD.


2. PROPERTY, PLANT AND EQUIPMENT (con’t)

Office equipment, Motorfurniture and fittings vehicles Renovation Total

Company RM RM RM RM

CostOpening balance 1,229,836 1,450,473 1,125,063 3,805,372

Additions 277,325 38,103 34,144 349,572

Disposals (19,949) (432,617) (550) (453,116)

Closing balance 1,487,212 1,055,959 1,158,657 3,701,828

DepreciationOpening balance 473,116 581,785 483,729 1,538,630

Charge for the financial year 278,750 248,738 218,833 746,321

Disposals (10,617) (171,705) (339) (182,661)

Closing balance 741,249 658,818 702,223 2,102,290

Net book valueAt 31 March 2006 745,963 397,141 456,434 1,599,538

At 31 March 2005 756,720 868,688 641,334 2,266,742

Depreciation charge for the financial year ended 31 March 2005 234,085 448,839 218,667 901,591

Depreciation charge for the year is allocated as follows:

Group Company2006 2005 2006 2005

RM RM RM RM

Income statement (Note 20) 5,155,466 5,004,600 746,321 901,591Amount due from contract customers (Note 10) 26,895 - - -

5,182,361 5,004,600 746,321 901,591



2. PROPERTY, PLANT AND EQUIPMENT (con’t)

Revaluation

The land and buildings of a subsidiary are stated at Directors’ valuation based on theprofessional valuation made by independent valuers, on the open market basis conductedin February 2005. The additions to the revalued assets subsequent to their revaluation arestated at cost in the financial statements.

Had the land and buildings been carried at historical cost less accumulated depreciation,the carrying amounts of the revalued assets that would have been included in the financialstatements at the end of the financial year are as follows:

Group2006 2005

RM RM

Freehold land 4,323,737 4,323,737Long-term leasehold land 3,697,761 3,768,912Short-term leasehold land 2,063,869 2,117,126Buildings 13,226,028 13,398,816

23,311,395 23,608,591

Restrictions on titles of land

One parcel of freehold land and one parcel of long-term leasehold land of the Group withcarrying value of RM1,991,045 and RM11,519,268 (2005: RM1,991,045 and RM11,734,920)respectively have only been issued with provisional land titles.

3. INVESTMENT IN SUBSIDIARIES

Company2006 2005

RM RM

Unquoted shares, at cost 25,054,047 24,391,049

The principal activities of the subsidiaries, all of which were incorporated in Malaysia, andthe Company’s interest therein are as follows:

68 WEIDA (M) BHD.


3. INVESTMENT IN SUBSIDIARIES (con’t)Effective

ownershipinterest

Subsidiaries Principal activities 2006 2005% %

Weida Integrated Manufacturing of high density polyethylene (“HDPE”) 100 100 Industries Sdn. Bhd.# engineering products

Weida Resources Trading of HDPE engineering products, fittings 100 100 Sdn. Bhd.# and other engineering products

Weida Works Sdn. Bhd.# Construction of water supply and other specialised 100 100 systems involving the use of HDPE engineering

products, construction and financing theconstruction of telecommunication towers

Weida Water Sdn. Bhd. Trading of water storage tanks, chemical tanks, 100 100fittings, other specialised technical and engineeringproducts, and the provision of specialisedinstallation services for these products

Weidaline Sdn. Bhd. Trading of HDPE pipes, other specialised technical 100 100and engineering products, and the provision ofspecialised installation services for these products

Weida Agrotech Sdn. Bhd. Trading of HDPE agriculture products, other 100 100 specialised technical and engineering products,

and the provision of specialised installationservices for these products

Weida Dagangan Trading of HDPE engineering products, other 100 100 Sdn. Bhd. specialised technical and engineering products,

and the provision of specialised installationservices for these products

Weida Engineering Dormant 100 100 Sdn. Bhd.

Weidasar Engineering Construction and installation of sewage treatment 51 100 Sdn. Bhd. plants and bulk storage tanks

Weidaya Sdn. Bhd. Trading of HDPE engineering products and the 70 70provision of specialised installation servicesfor these products

Weida Industrial Intending to manufacture and trade in HDPE 51 51 Systems Sdn. Bhd. construction materials

Weida Marketing Trading of HDPE engineering products and the 51 51 Sdn. Bhd. provision of specialised installation services

for these products

Weida Environmental Provision of sewage treatment services comprising 51 51 Technology Sdn. Bhd. the design, supply and installation, commissioning

and maintenance of sewage systems

Sar-Alam Indah Sdn. Bhd. Provision of treatment and disposal of sludge services 26* 26*

UTIC Services Sdn. Bhd. Provision of underground mapping of buried utilities, 26* 26* closed circuit television survey and investigation and

rehabilitation of underground sewer and pipelinenetworks and storm water culverts

# Consolidated using merger method of accounting.* The Group’s equity interest in Sar-Alam Indah Sdn. Bhd. and UTIC Services Sdn. Bhd. are held

through a subsidiary, Weida Environmental Technology Sdn. Bhd..



4. INVESTMENT IN ASSOCIATES

Group2006 2005

RM RM

Unquoted shares, at cost 267,750 43,750Impairment loss (3,749) (3,749)

264,001 40,001Share of post-acquisition reserves 3,936 19,186

267,937 59,187

Represented by:Group’s share of net assets 267,937 59,187

Details of the associates of the Group, which were incorporated in Malaysia, are as follows:

Effective ownershipinterest

Associates Principal activities 2006 2005% %

Weidasar Sdn. Bhd. Manufacturing of HDPE 40^ 40^ engineering products, general

trading and project management

Renexus-Weida Sdn. Bhd. Construction and installation(”RWSB”) of treatment plants 15** -

Weida-Sar VenturesSdn. Bhd. (”WSVSB”) Dormant 25@ -

^ Held through a subsidiary, Weida Integrated Industries Sdn. Bhd.* Held through a subsidiary, Weida Environmental Technology Sdn. Bhd..@ Held through a subsidiary, Weidasar Engineering Sdn. Bhd..

70 WEIDA (M) BHD.


5. OTHER INVESTMENTS

Group Company2006 2005 2006 2005

RM RM RM RM

At costQuoted shares 76,176 75,247 76,176 75,247Unquoted shares 450,000 450,000 - -

526,176 525,247 76,176 75,247

The market value of the quoted shares is shown in Note 29.

6. INTANGIBLE ASSETS - GROUP

Goodwill Licence TotalRM RM RM

CostOpening balance 1,210,925 109,290 1,320,215Amount written off - (109,290) (109,290)

Closing balance 1,210,925 - 1,210,925

AmortisationOpening balance 43,061 7,286 50,347Amortisation charge (Note 20) 48,436 21,858 70,294Amount written off - (29,144) (29,144)

Closing balance 91,497 - 91,497

Net book valueAt 31 March 2006 1,119,428 - 1,119,428

At 31 March 2005 1,167,864 102,004 1,269,868

Amortisation charge for the financial year ended 31 March 2005 23,809 7,286 31,095



7. DEFERRED TAXATION

The amounts of deferred tax, determined after appropriate offsetting, are as follows:

Group Company2006 2005 2006 2005

RM RM RM RM

Deferred tax liabilities 5,884,000 6,115,000 1,191,000 1,709,000

Deferred tax assets (1,761,000) (1,795,000) - -

Total 4,123,000 4,320,000 1,191,000 1,709,000

Deferred tax assets and liabilities are offset when there is a legally enforceable right to setoff current tax assets against current tax liabilities and when the deferred taxes relate to thesame taxation authority.

Movements in deferred tax assets and liabilities (prior to offsetting of balances) during theyear are as follows:

At Credited/ At1.4.2005 (Charged) to 31.3.2006

(Restated) income statementRM RM RM

GroupDeferred tax assetsProperty, plant and equipment (15,000) 18,000 3,000Allowance for doubtful debts 1,515,000 (26,000) 1,489,000Unabsorbed capital allowances 268,000 117,000 385,000Unutilised tax losses 147,000 190,000 337,000

1,915,000 299,000 2,214,000

Deferred tax liabilitiesProperty, plant and equipment (2,954,000) (167,000) (3,121,000)Revaluation reserve (3,281,000) 65,000 (3,216,000)

(6,235,000) (102,000) (6,337,000)

Total (4,320,000) 197,000 (4,123,000)

(Note 22)CompanyDeferred tax liabilitiesProperty, plant and equipment (17,000) 19,000 2,000Unabsorbed capital allowances 268,000 107,000 375,000Dividend receivables (1,960,000) 392,000 (1,568,000)

(1,709,000) 518,000 (1,191,000)

(Note 22)


7. DEFERRED TAXATION (con’t)

Unrecognised deferred tax

No deferred tax has been recognised for the following items:

Group2006 2005

RM RM

Allowance for doubtful debts 44,000 187,000Property, plant and equipment (45,000) 5,000Unabsorbed capital allowances 264,000 153,000Unutilised tax losses 1,101,000 139,000

1,364,000 484,000

The unutilised tax losses and other deductible temporary differences do not expire undercurrent tax legislation. Deferred tax assets of RM345,000 (2005: RM97,000) have not beenrecognised in respect of the above items because it is not probable that future taxable profitswill be available against which the affected subsidiaries can utilise the benefits.

8. INVENTORIES

Group2006 2005

RM RM

Construction materials 1,893,076 -Consumables 526,848 16,884Raw materials 10,457,735 17,446,267Finished goods 15,105,038 12,993,585Repair and rehabilitation materials 1,288,020 -

29,270,717 30,456,736

Finished goods of RM836,970 (2005: RM273,763) are carried at net realisable value.

9. PROPERTIES HELD FOR RESALE - GROUP

Properties held for resale represent properties received in exchange for settlement of tradereceivables, and are held with a view to realisation in cash.

Certain strata titles to the properties are in the process of being issued to the subsidiaries.

72 WEIDA (M) BHD.



10. TRADE AND OTHER RECEIVABLES

Group Company2006 2005 2006 2005

RM RM RM RM

CurrentTrade receivables 22,290,528 23,764,459 - -Amount due from contract customers 11,440,815 1,370,490 - -Subsidiaries - - 21,743,067 15,588,160Associates 580,283 - - -Other receivables, deposits and prepayments 3,946,624 1,515,826 583,642 355,746Dividends receivable - - 4,032,000 5,040,000

38,258,250 26,650,775 26,358,709 20,983,906

Non-currentTrade receivables 18,417,044 - - -Subsidiary - - 16,279,292 27,075,123

18,417,044 - 16,279,292 27,075,123

Included in the trade receivables of the Group are retention sums of RM1,849,521 (2005:RM440,762).

An amount of RM19,939,337 (2005: RM nil) included in trade receivables, comprising currentand non-current balances of RM1,522,293 and RM18,417,044 respectively, bears interestat 9.5% per annum.

The amount due from subsidiaries is non-trade in nature, unsecured and bears interest at4% (2005: Nil) per annum. The non-current amount due from a subsidiary is not repayableduring the next twelve months. Nevertheless, the subsidiary may make repayments so longas such repayments do not adversely affect the ability of the subsidiary to meet its liabilitieswhen due.

Amount due from contract customersGroup

2006 2005RM RM

Value of work performed to-date 71,171,876 34,814,618Progress billings (61,808,588) (34,936,865)

9,363,288 (122,247)Amount due to contract customers reclassified to trade and other payables (Note 12) 2,077,527 1,492,737

Amount due from contract customers 11,440,815 1,370,490

Additions to the value of work performed to-date include:Group

2006 2005RM RM

Depreciation (Note 2) 26,895 -Rental of premises 34,800 14,800

74 WEIDA (M) BHD.


11. CASH AND CASH EQUIVALENTS

Group Company2006 2005 2006 2005

RM RM RM RM

Fixed deposits placed with licensed banks 9,763,512 5,076,331 - 350,000Short-term cash fund invested via a licensed bank - 11,586,341 - -Cash and bank balances 9,490,272 12,254,003 747,911 1,430,383

19,253,784 28,916,675 747,911 1,780,383

Fixed deposits of the Group amounting to RM1,240,298 (2005: RM861,054) are pledgedto licensed banks to secure bank guarantee facilities granted.

12. TRADE AND OTHER PAYABLES

Group Company2006 2005 2006 2005

RM RM RM RM

Trade payables 12,192,215 3,863,063 - -Amount due to contract customers (Note 10) 2,077,527 1,492,737 - -Subsidiaries - - - 8,273,519Associates - 78,991 - -Dividend payable to minority shareholders of subsidiaries - 1,310,400 - -Advanced payment received from contract customers 4,362,500 - - -Accrued expenses 5,509,868 6,005,755 254,554 744,670Other payables and deposits 3,549,332 5,447,098 1,380,031 58,073

27,691,442 18,198,044 1,634,585 9,076,262

Included in the trade payables of the Group are retention sums of RM1,550,902 (2005:RM380,769).

The amounts due to subsidiaries and associates were non-trade in nature, unsecured andinterest free.



13. BORROWINGS

Group2006 2005

RM RM

CurrentBankers’ acceptances – unsecured 15,854,000 14,214,000Finance lease – secured 96,872 -Hire purchase loans – secured 164,619 186,412Revolving credits – unsecured - 700,000

16,115,491 15,100,412

Non currentFinance lease – secured 678,046 -Hire purchase loans – secured 296,672 455,959

974,718 455,959

Total 17,090,209 15,556,371

Terms and debt repayment schedule

The bankers’ acceptances are covered by a negative pledge over a subsidiary’s presentand future assets and a corporate guarantee from the Company.

The bankers’ acceptances bear interest ranging from 0.50% to 1.00% (2005: 0.50% to1.00%) per annum above the lender banks’ cost of funds. The revolving credits in the lastfinancial year bore interest at 0.75% per annum above the lender bank’s cost of funds.

On 27 May 2005, the Securities Commission approved the Company’s proposal to issueup to RM10 million of Murabahah Underwritten Notes/Islamic Medium Term Notes(”MUNIF/IMTN Notes”), which range from 1 to 12 months and 1 to 7 years in maturitiesrespectivly. These notes are unsecured and are available to the Company till 2011.

During the financial year, the Company issued RM5 million worth of MUNIF Notes whichwere fully redeemed before the end of financial year.

76 WEIDA (M) BHD.


13. BORROWINGS (con’t)

Hire purchase loans

Hire purchase loans of the Group are subject to interest ranging from 3.4% to 6.9% (2005:3.4% to 6.9%) flat per annum. The loans are repayable as follows:

2006 2005

Payments Interest Principal Payments Interest PrincipalRM RM RM RM RM RM

Less than one year 197,098 32,479 164,619 235,183 48,771 186,412Between one and five years 322,253 25,581 296,672 514,026 58,067 455,959

519,351 58,060 461,291 749,209 106,838 642,371

Finance lease

The finance lease is payable as follows:

2006 2005

Payments Interest Principal Payments Interest PrincipalRM RM RM RM RM RM

Less than one year 128,578 31,706 96,872 - - -Between one and five years 771,467 93,421 678,046 - - -

900,045 125,127 774,918 - - -

14. SHARE CAPITAL

Group and Company2006 2005

RM RM

Ordinary shares

Authorised:Opening balances 100,000,000* 100,000,000^

Closing balances 100,000,000* 100,000,000*

Issued and fully paid:Opening balance 66,666,666* 40,000,000^Bonus issue - 26,666,666

Closing balance 66,666,666* 66,666,666*

^ Par value of RM1.00 per share.* Par value of RM0.50 per share (see Note 23).


15. RESERVES

Group Company2006 2005 2006 2005

RM RM RM RM

Share premium 150,000 150,000 - -Revaluation reserve 8,269,625 8,437,466 - -Merger deficit (16,983,045) (16,983,045) - -Retained profits 47,341,336 40,742,560 2,415,469 2,292,604

38,777,916 32,346,981 2,415,469 2,292,604

Revaluation reserve - Group

Revaluation reserve represents surplus arising from the revaluation of leasehold land andlanded properties of a subsidiary (Note 2) and is non-distributable. The surplus arising fromthe revaluation is realised to retained profits over the estimated useful lives of the revaluedproperties commencing in the year the valuation exercise is carried out.

Retained profits - Company

Subject to agreement by the Inland Revenue Board, the Company has sufficient Section108 tax credit to distribute all its retained profits at 31 March 2006 as dividends.

16. NEGATIVE GOODWILL ON CONSOLIDATION - GROUP

RMCostOpening and closing balances 1,286,851

RecognitionOpening balance 227,344Recognised during the year (Note 20) 51,474

Closing balance 278,818

Net book valueAt 31 March 2006 1,008,033

At 31 March 2005 1,059,507

Negative goodwill on consolidation recognised for the year ended 31 March 2005 51,474

17. MINORITY SHAREHOLDERS’ INTERESTS

This consists of the minority shareholders’ proportion of share capital and reserves ofsubsidiaries, net of their share of subsidiary’s goodwill on consolidation and amortisationof goodwill charged to the minority shareholders.

78 WEIDA (M) BHD.


18. REVENUE

Group Company2006 2005 2006 2005


Sale of goods 73,732,660 81,496,154 - -Services 13,840,256 9,537,652 - -Contract revenue 45,135,872 32,811,913 - -

Dividend income from:- other investments - - 2,268 1,871- subsidiaries - - 5,997,585 21,955,980Management fees - - 3,038,400 3,266,400Rental of furnished premises - - 1,359,200 1,144,800

132,708,788 123,845,719 10,397,453 26,369,051

19. EMPLOYEE INFORMATION

The number of employees of the Group and of the Company (including Directors) at theend of the financial year was 569 (2005: 573) and 28 (2005: 29) respectively.

Staff costs of the Group and of the Company include contributions to the Employees ProvidentFund of RM1,704,140 (2005: RM1,373,610) and RM455,391 (2005: RM267,715) respectively.

20. OPERATING PROFIT

Group Company2006 2005 2006 2005

RM RM RM RM

Operating profit is arrived at after crediting:

Dividend income from:- subsidiaries - - 5,997,585 21,955,980- other investments 2,268 1,871 2,268 1,871Gain on disposal of property, plant and equipment - 479,121 - 236,398Income from rental of furnished premises 130,740 27,840 1,359,200 1,144,800Negative goodwill on consolidation recognised (Note 16) 51,474 51,474 - -Realised foreign exchange gain 8,467 12,447 - -Reversal of revaluation deficit - 259,851 - -



20. OPERATING PROFIT (con’t)

Group Company2006 2005 2006 2005

RM RM RM RM

and after charging:Audit fee- current financial year 131,500 116,000 20,000 20,000- prior financial year (600) (500) - -Allowance for doubtful debts 4,188 2,220,601 - -Amortisation of licence (Note 6) 21,858 7,286 - -Amortisation of goodwill on consolidation (Note 6) 48,436 23,809 - -Bad debts written off - 23,545 - -Depreciation (Note 2) 5,155,466 5,004,600 746,321 901,591Directors’ remuneration- fees 336,500 363,500 336,500 363,500- other emoluments 1,649,202 3,227,259 1,080,600 1,248,560Impairment loss on investment in associate - 3,749 - -Inventories written down - 750,000 - -Hire of plant and machinery 127,146 67,661 - -Licence written off (Note 6) 80,146 - - -Loss on disposal of property, plant and equipment 104,346 - 23,040 -Rental of premises and office equipment 901,720 873,448 631,800 480,000

The estimated monetary values of Directors’ benefits-in-kind of the Group and of the Companythrough usage of motor vehicles are RM2,527 (2005: RM61,439) and RM2,527 (2005:RM22,530) respectively.

21. FINANCING COST

Group Company2006 2005 2006 2005

RM RM RM RM

Islamic bond issuance expenses and profit payments 1,213,490 - 1,213,490 -Interest expense 395,402 392,976 - -

1,608,892 392,976 1,213,490 -

80 WEIDA (M) BHD.


22. TAX EXPENSE

Group Company2006 2005 2006 2005

RM RM RM RM

Current tax expense- current financial year 4,972,676 5,253,539 2,138,000 4,251,000- prior financial years 408,761 (87,938) 422,981 1,568

5,381,437 5,165,601 2,560,981 4,252,568

Deferred tax expense (Note 7)- current financial year (228,000) (7,059) (484,000) 1,842,000- prior financial years 31,000 (40,118) (34,000) -

(197,000) (47,177) (518,000) 1,842,000

Tax expense on share of profit of associate 3,105 523 - -

5,187,542 5,118,947 2,042,981 6,094,568

Reconciliation of tax expense

Profit before taxation 13,945,635 17,948,586 4,085,846 20,548,075

Income tax using Malaysian tax rates 3,905,000 5,026,000 1,144,000 5,753,000Non-deductible expenses 1,070,676 998,539 510,000 340,000Double deduction for expenses - (13,000) - -Utilisation of reinvestment allowance (414,000) (664,000) - -Reversal of deferred tax provided on revaluation of property, plant and equipment (65,000) (44,059) - -Reversal of revaluation deficit - (73,000) - -Movement in unrecognised deferred tax assets 248,000 16,000 - -

4,744,676 5,246,480 1,654,000 6,093,000Under/(Over) provision in prior financial years- current tax 408,761 (87,938) 422,981 1,568- deferred tax 31,000 (40,118) (34,000) -

439,761 (128,056) 388,981 1,568Tax expense on share of profit of associate 3,105 523 - -

Tax expense 5,187,542 5,118,947 2,042,981 6,094,568



23. BASIC EARNINGS PER ORDINARY SHARE - GROUP

The calculation of basic earnings per ordinary share is based on the net profit attributableto ordinary shareholders of RM8,350,935 (2005: RM12,412,604) and the number of ordinaryshares of 50 sen outstanding during the financial year of 133,333,332 (2005: 133,333,332as follows:

Number of ordinary shares2006 2005

Number Number

Issued ordinary shares at beginning of the financial year 133,333,332 40,000,000Bonus Issue - 26,666,666Share split - 66,666,666

Number of ordinary shares at end of financial year 133,333,332 133,333,332

24. DIVIDEND

Group and Company2006 2005

RM RM

OrdinaryFinal paid:2.0 sen# (2005: 5.0 sen*) per share less tax for the financial year ended 31 March 2005 (2005: for the financial year ended 31 March 2004) 1,920,000 1,440,000

# Based on issued and paid-up share capital of 133,333,332 ordinary shares of RM0.50 each.* Based on issued and paid-up share capital of 40,000,000 ordinary shares of RM1.00 each.

The proposed first and final dividend of 2.0 sen per share less tax at 28% in respect of thefinancial year ended 31 March 2006 has not been accounted for in the financial statements.The net dividends per ordinary shares as disclosed in the Income Statement takes intoaccount the proposed first and final dividend for the financial year.

25. CAPITAL COMMITMENTS

Group Company2006 2005 2006 2005

RM RM RM RM

Property, plant and equipment- Authorised but not contracted for 3,455,000 4,766,000 - 702,000- Contracted but not provided for in the financial statements 3,838,000 5,393,000 3,500,000 3,500,000

7,293,000 10,159,000 3,500,000 4,202,000

82 WEIDA (M) BHD.


26. CONTINGENT LIABILITIES - UNSECURED

Group Company2006 2005 2006 2005

RM RM RM RM

Guarantees relating to banking facilities of subsidiaries - - 73,100,000 76,690,00

27. RELATED PARTIES

Controlling related party relationships are as follows:

(i) Its subsidiaries as disclosed in Note 3;(ii) Associates as disclosed in Note 4;(iii) Companies in which certain Directors have substantial interests; and(iv) The Directors of the Company.

Transactions with subsidiariesCompany

2006 2005Nature of transactions RM RM

Dividends receivable (5,997,585) (21,955,980)Management fees receivable (3,038,400) (3,266,400)Rental income receivable on motor vehicles (7,790) (5,215)Rental income for furnished premises, inclusive of maintenance (1,240,700) (1,080,000)Sale of property, plant and equipment (1,465) (97,764)Purchase of property, plant and equipment 1 -Interest income (809,462) -

Transactions with Weidasar Sdn. Bhd., an associateGroup

2006 2005Nature of transactions RM RM

Commission fees payable 348,500 166,000Rental income for furnished office, inclusive of maintenance (16,800) (16,800)

Transactions with companies in which Dato’ Lee Choon Chin and Jee Hon Chonghave substantial interests

Group2006 2005

Nature of transaction RM RM

Rental payable - Premium Fortune Sdn. Bhd. 60,000 60,000



27. RELATED PARTIES (con’t)

Transactions with Directors of the company, namely Dato’ Lee Choon Chin, JeeHon Chong, Lai Lim Hon, Chew Chin Choong and Chong Kwan Wai

Group Company2006 2005 2006 2005

Nature of transactions RM RM RM RM

Sales of property, plant and equipment - (640,000) - (340,000)

These transactions have been entered into in the normal course of business and have beenestablished under negotiated terms.

28. SEGMENTAL INFORMATION

Segment information is presented in respect of the Group’s business segments. The primaryformat, business segments, is based on the Group’s management and internal reportingstructure. Inter-segment pricing is determined based on negotiated terms.

Segment results, assets and liabilities include items directly attributable to a segment aswell as those that can be allocated on a reasonable basis. Unallocated item mainly comprisesprincipally corporate expenses.

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

Business segments

The Group comprises the following main business segments:

Manufacturing - Manufacturing, marketing and trading of HDPE products and trading ofother specialised and technical engineering products.

Works - Installation of water treatment and sewage treatment plants as well asconstruction of telecommunication towers and bulk storage tanks.

Services - Sewage treatment services, treatment and disposal of sludge servicesas well as underground mapping of buried utilities, circuit televisionsurvey and investigation and rehabilitation of underground sewer andpipeline networks and storm water culverts.

84 WEIDA (M) BHD.


28. SEGMENTAL INFORMATION (con’t)

All the business segments are operated solely in Malaysia.

Manufacturing Works Services Consolidated2006 2006 2006 2006

RM RM RM RM

Revenue

External customers 73,732,660 45,135,872 13,840,256 132,708,788

Segment results 11,507,455 3,338,220 2,070,533 16,916,208

Unallocated corporate expenses (1,685,624)

Operating profit 15,230,584Interest income 336,088Financing costs (1,608,892)Share of loss of associates (12,145)

Profit before taxation 13,945,635Tax expense (5,187,542)Minority interests (407,158)

Net profit for the financial year 8,350,935

Segment assets 111,049,059 43,358,628 11,792,831 166,200,518

Long-term investments 794,113

Total assets 166,994,631

Segment liabilities 37,278,518 15,522,162 1,511,381 54,312,061

Capital expenditure 4,615,291 967,605 1,335,297 6,918,193Depreciation and amortisation 4,596,435 113,380 515,945 5,225,760

There are no significant non cash expenses other than depreciation and amortisation.

No segmental information was presented in the prior financial year as the Group wasprincipally involved in the homogeneous activity of manufacturing, trading, marketing ofHDPE engineering products and its related turnkey project and project management services.



29. FINANCIAL INSTRUMENTS

Exposure to credit, interest rate, foreign currency and liquidity risk arises in the normalcourse of the Group’s business. The objective of the Group’s financial risk managementis to ensure the Group creates value for its shareholders by taking steps to manage therisks through review of risk exposures, internal control systems and adherence to the Group’sfinancial risk management policies.

Credit risk

Credit risk arises from sales made or services provided on credit terms. The Group seeksto control its credit risk by setting credit limits and ensuring that sales of products andservices are made to customers with an appropriate credit history. Credit evaluations ofcustomers are carried out on an ongoing basis.

Cash and cash equivalents are only placed with licensed banks.

At balance sheet date, other than receivables and amount due from a single contractcustomer constituting 45% of the total trade and other receivables of the Group, there wereno significant concentrations of credit risk. The receivables and amount due from thecontract customer are repayable over 10 years and are secured by an assignment of rentalproceeds payable by cellular telecommunication service providers leasing thetelecommunication towers constructed by the Company for the contract customer. Themaximum exposure to credit risk is represented by the carrying amount of each financialasset.

Interest rate risk

The Group’s primary interest rate risk exposure relates to short term financing facilities andfixed deposits placed with licensed banks. The interest-earning assets and interest-bearingliabilities are negotiated and monitored according to changes in the interest rate regime toensure that the Group is exposed to minimal interest rate risk.

Foreign currency risk

The Group is exposed to foreign currency risk arising mainly from purchases of raw materialsdenominated in a currency other than Ringgit Malaysia. The currencies giving rise to thisrisk are mostly United States Dollar (USD), Great Britain Pound (GBP) and Singapore Dollar(SGD). As it is not possible to predict, with any certainty, the movements of the exchangerates of the currencies, this risk is managed on an on going basis and the Group will considerhedging its foreign currency exposure should the need arise.

As at balance sheet date, the Group does not have any outstanding forward foreign exchangecontract.

Liquidity risk

The Group monitors and maintains a level of bank facilities and cash and cash equivalentsdeemed adequate by management to finance the Group’s operations and to mitigate theeffects of fluctuations in cash flows.

Effective interest rates and repricing analysis

In respect of interest-earning assets and interest-bearing liabilities, the following tableindicates their effective interest rates at the balance sheet date and the period in which theyreprice or mature, whichever is earlier.

86 WEIDA (M) BHD.


29. FINANCIAL INSTRUMENTS (con’t)

Effective interest rate Total Within 1 yearGroup % RM RM

2006

Financial assetsFixed deposits 2.10 – 3.13 9,763,512 9,763,512

Financial liabilitiesBankers’ acceptances - unsecured 3.00 – 3.85 15,854,000 15,854,000

2005

Financial assetsFixed deposits 2.00 – 3.00 5,076,331 5,076,331Short-term cash fund 2.40 11,586,341 11,586,341

Financial liabilitiesRevolving credits - unsecured 3.90 700,000 700,000Bankers’ acceptances - unsecured 2.80 – 3.70 14,214,000 14,214,000

Company

The effective interest rate of the fixed deposits subsisting as at 31 March 2005 of RM350,000was 2.25% per annum.

Fair Values

Recognised financial instruments

In respect of cash and cash equivalents, trade and other receivables, trade and otherpayables and short term borrowings, the carrying amounts approximate fair value due tothe relatively short term nature of these financial instruments.

The aggregate fair values of the long-term financial assets carried on the balance sheet asat 31 March are shown below:

2006 2005Carrying Fair Carrying Fairamount value amount value

RM RM RM RM

Financial assetsQuoted shares- Group and Company 76,176 78,989 75,247 93,922Long-term receivables- Group 18,417,044 18,417,044 - -

The fair value of quoted shares is their quoted bid price at the balance sheet date.

It is not practicable to estimate the fair value of the unquoted shares of RM450,000 of theGroup. However, based on the unaudited management accounts of the investee companiesfor the financial year ended 31 March 2006, the Group’s share of their net tangible assetsamounts to RM529,921.

Unrecognised financial instruments

There are no unrecognised financial instruments as at 31 March 2006 and 31 March 2005.



30. ACQUISITION AND DISPOSAL OF SUBSIDIARIES

(a) Deemed Disposal Of Subsidiary

During the year ended 31 March 2006, the Group is deemed to have partially disposedof a subsidiary, Weidasar Engineering Sdn. Bhd., due to the latter issuing new sharesto a third party by increasing its share capital from 2 ordinary shares of RM1.00 eachto 1,000,000 ordinary shares of RM1.00 each, rendering the Group’s equity interesttherein to be 51% (2005: 100%). The fair values of the assets deemed disposed ofand liabilities deemed discharged were as follows:

Group2006 2005

RM RM

Cash and bank balances 12,652 -Amount due to holding company (21,736) -Sundry payables (1,796) -

(10,880) -

Less: Net book value of the subsidiary retained 5,548 -

Net liabilities deemed disposed of (5,332) -Gain on deemed disposed of subsidiary 5,332 -

Sale consideration - -

(b) Acquisition Of Subsidiaries

(i) Additional investment in existing subsidiary

On 14 May 2005, the Company subscribed additional 153,000 new ordinaryshares of RM1.00 each in Weida Industrial System Sdn. Bhd., a 51% ownedsubsidiary for a cash consideration of RM153,000.

In the previous financial year, the Company subscribed additional 140,000 newordinary shares of RM1.00 each in Weida Works Sdn. Bhd., a wholly-ownedsubsidiary for a cash consideration of RM140,000.

88 WEIDA (M) BHD.


30. ACQUISITION AND DISPOSAL OF SUBSIDIARIES (con’t)

(b) Acquisition Of Subsidiary (con’t)

(ii) Acquisition of new subsidiary

In the previous financial year, one of the subsidiaries, Weida EnvironmentalTechnology Sdn. Bhd. (”WET”) acquired a 51% equity interest in UTIC ServicesSdn. Bhd. (”UTIC”) for a consideration of RM1,500,000, satisfied by cash.Subsequent to the acquisition, WET subscribed additional 918,000 shares ofRM1.00 each in UTIC for a cash consideration of RM985,654 before the endof the last financial year.

The acquisition was accounted for using the acquisition method of accounting.

The fair value of assets acquired and liabilities assumed in the acquisition ofthe abovementioned subsidiary and its cash flow effects were as follows:

Group2006 2005

RM RM

Non-current assets- Property, plant and equipment - 1,228,087- Investment in an associate - 3,750

- 1,231,837

Current assets - 4,048,290Current liabilities - (4,049,522)Long-term liabilities - (257,854)Deferred taxation - (101,118)Minority interests - (427,099)

Net assets - 444,534Goodwill on consolidation - 1,055,466

Consideration paid, satisfied in cash - 1,500,000Cash acquired - (90,450)

Net cash outflow on acquisition - 1,409,550



30. ACQUISITION AND DISPOSAL OF SUBSIDIARIES (con’t)

(b) Acquisition Of Subsidiaries (con’t)

(ii) Acquisition of new subsidiary (con’t)

Effect of acquisition

The acquisition of the subsidiary had the following effect on the Group’soperating results, assets and liabilities as at 31 March 2005:

Income statement

The Group’s share of the net loss in UTIC for the period subsequent to theacquisition up to 31 March 2005 was approximately RM64,000.

Balance sheet

Group2006 2005

RM RM

Property, plant and equipment - 2,084,714Investment in an associate - 1Intangible assets - 102,004

- 2,186,719Current assets - 5,239,571Current liabilities - (4,167,522)Long-term liabilities - (455,959)Deferred taxation - (90,000)

Net assets acquired - 2,712,809Minority interests - (1,329,273)

Group’s share of net assets - 1,383,536Goodwill on consolidation, net of amortisation - 1,037,875

Increase in Group’s net assets - 2,421,411

90 WEIDA (M) BHD.


31. EVENT SUBSEQUENT TO THE BALANCE SHEET DATE

On 12 June 2006, the Company acquired the entire equity interest comprising 100,000ordinary shares of RM1.00 each in Alamsar Sdn. Bhd. (“ASB”), for a cash consideration ofRM100,000. ASB has thereupon become a subsidiary of the Company.

32. COMPARATIVE FIGURES

The following comparatives have been restated to conform with the current year’s presentation.

GroupAs As previously

restated statedRM RM

Balance sheetInventories- Consumables 16,884 -- Raw materials 17,446,267 17,273,961- Finished goods 12,993,585 13,182,775

30,456,736 30,456,736

Tax recoverable 1,938,934 3,898,934Deferred tax liability 6,115,000 8,075,000

Income statementRevenue- Sale of goods 81,496,154 102,393,835- Sale of sewage systems - 7,904,825- Services 9,537,652 9,537,652- Contract revenue 32,811,913 4,009,407

123,845,719 123,845,719

Group CompanyAs As previously As As previously

restated stated restated statedRM RM RM RM

Income statementRevenue - - 26,369,051 25,290,788Other operating income 1,332,358 1,650,003 434,922 1,579,722Interest income 323,863 - 66,537 -Depreciation and amortisation expenses 5,035,695 5,011,886 - -Other operating expenses 12,107,223 12,124,814 - -


Location Usage Tenure Date of Land Approximate Net Book Date of Expiry Area/ Age of Value as at Last

Sq Metre Building 31/03/2006 Revaluation(year) (RM)

Lot 472, Block 8, Office and Leasehold 7/7/2058 70,380.0 8 18,875,990 15/2/2005Muara Tebas manufacturingLand District, buildings andJalan Bako, 93050 storage yardKuching, Sarawak

Lot 56, Sedco-Lok Storage yard Leasehold 31/12/2042 3,747.8 N/A 612,213 15/2/2005Kawi IndustrialEstate, 88801 KotaKinabalu, Sabah

Lot 58, Sedco-Lok Manufacturing Leasehold 31/12/2042 4,185.3 4 1,820,824 15/2/2005Kawi Industrial building andEstate, 88801 Kota storage yardKinabalu, Sabah

Lot 57, Sedco-Lok Office and Leasehold 31/12/2042 8,704.4 10 3,679,335 15/2/2005Kawi Industrial manufacturingEstate, 88801 Kota buildingKinabalu, Sabah

Lot 48, Lok Kawi Storage yard Leasehold 31/12/2042 3,298.6 N/A 550,052 15/2/2005Industrial Estate,Papar, 88801 KotaKinabalu, Sabah

Lot 59, District of Storage yard Leasehold 31/12/2042 4,165.6 N/A 968,396 15/2/2005Papar, Lok Kawi,Kinarut, Papar,88801 KotaKinabalu, Sabah

Lot 109, Jalan AM2, Office and Freehold N/A 12,311.5 9 5,451,724 15/2/2005Arab-Malaysian manufacturingIndustrial Park, building and71800 Nilai, storage yardSeremban,Negeri Sembilan

Lot 108, Jalan AM2, Storage yard Freehold N/A 14,900.2 N/A 2,098,850 N/A*Arab-MalaysianIndustrial Park,71800 Nilai,Seremban,Negeri Sembilan

List of Propertiesas at 31 March 2006

Note: The revaluation policy on landed property is disclosed under Note 1(d) and 2 to the Financial Statementsas outlined on pages 59 and 67 of the Annual Report.

* No revaluation was made as the land was acquired in May 2004 and its carrying amount approximated market value as at 15 February 2005.

Authorised Share Capital : RM100,000,000.00Issued and Paid-up Capital : RM66,666,666.00Class of Shares : Ordinary Shares of RM0.50 eachVoting Rights : One vote per ordinary share

Holdings No. of Holders Total Holdings %

Less than 100 shares 72 2,715 0.00#

100 to 1,000 shares 452 182,948 0.141,001 to 10,000 shares 568 2,836,191 2.13

10,001 to 100,000 shares 178 5,539,996 4.15100,001 to less than 5% of issued shares 45 45,899,718 34.42

5% and above of issued shares 7 78,871,764 59.16

Total 1,322 133,333,332 100.00

# less than 0.01%

LIST OF THIRTY LARGEST SECURITIES ACCOUNTS HOLDERS

No. Name No. of shares held %

1. Weida Management Sdn. Bhd. 29,124,524 21.84

2. HLG Nominee (Tempatan) Sdn. Bhd.- Assar Asset Management Sdn. Bhd. for

Assar Industri Sdn. Bhd. 11,333,332 8.50

3. Universal Trustee (Malaysia) Berhad- Mayban Unit Trust Fund 9,656,000 7.24

4. Permodalan Nasional Berhad 8,017,334 6.01

5. Dato' Lee Choon Chin 7,074,242 5.31

6. Employees Provident Fund Board 6,999,666 5.25

7. Lembaga Tabung Haji 6,666,666 5.00

8. Mayban Nominees (Tempatan) Sdn. Bhd.- Mayban Investment Management Sdn. Bhd.

for Kumpulan Wang Simpanan Pekerja(N14011980810) 5,424,000 4.07

9. HSBC Nominees (Tempatan) Sdn. Bhd.- HSBC (M) Trustee Bhd for OSK-UOB Small

Cap Opportunity Unit Trust (3548) 4,834,000 3.63

10. Sim Hong Swee 4,326,756 3.25

11. Universal Trustee (Malaysia) Berhad- Mayban Balanced Trust Fund 4,144,500 3.11

12. Lim Wei Wui 2,685,000 2.01

Analysis Of Shareholdingsas at 13 July 2006

92 WEIDA (M) BHD.

Analysis Of Shareholdings (con’t)


LIST OF THIRTY LARGEST SECURITIES ACCOUNTS HOLDERS (con’t)

No. Name No. of shares held %

13. Malaysia Nominees (Tempatan) Sendirian Berhad- Great Eastern Life Assurance (Malaysia) Berhad

(PAR 1) 2,550,000 1.91

14. HSBC Nominees (Asing) Sdn. Bhd.- BBH and Co Boston for Unidynamicfonds: Asia 2,269,666 1.70

15. Amanah Raya Nominees (Tempatan) Sdn. Bhd.- Mayban Dana Yakin 1,763,666 1.32

16. Mayban Nominees (Tempatan) Sdn. Bhd.- Malaysian Trustees Berhad for Mayban Smallcap

Trust Fund (240165) 1,666,666 1.25

17. Universal Trustee (Malaysia) Berhad- SBB Dana Al-Azam 1,460,000 1.10

18. Lembaga Tabung Angkatan Tentera 1,333,334 1.00

19. HSBC Nominees (Tempatan) Sdn. Bhd.- HSBC (M) Trustee Bhd for OSK-UOB Emerging

Opportunity Unit Trust (4611) 1,232,766 0.92

20. HSBC Nominees (Tempatan) Sdn. Bhd.- HSBC (M) Trustee Bhd for OSK-UOB

Kidsave Trust (3621) 1,200,000 0.90

21. Amanah Raya Nominees (Tempatan) Sdn. Bhd.- Amanah Saham Malaysia 1,000,000 0.75

22. Amanah Raya Nominees (Tempatan) Sdn. Bhd.- Mayban Dana Ikhlas 1,000,000 0.75

23. HSBC Nominees (Tempatan) Sdn. Bhd.- HSBC (M) Trustee Bhd for Mayban Ethical

Trust Fund (4256) 955,734 0.72

24. Yayasan Sarawak 913,196 0.68


(NON PAR 1) 718,000 0.54

26. Mayban Nominees (Tempatan) Sdn. Bhd.- Pledged Securities Account for Siaw Teck Siong

(178AW0250) 680,600 0.51

27. Universal Trustee (Malaysia) Berhad- SBB Emerging Companies Growth Fund 600,066 0.45

28. Amanah Raya Nominees (Tempatan) Sdn. Bhd.- Amanah Saham Johor 546,000 0.41

29. Amanah Raya Nominees (Tempatan) Sdn. Bhd.- Dana Johor 529,300 0.40


(BR) 506,334 0.38

94 WEIDA (M) BHD.

Analysis Of Shareholdings (con’t)

LIST OF SUBSTANTIAL SHAREHOLDERS

No. of shares held Total

Direct IndirectNo. Name Interest Interest Shareholding %

1. Dato' Lee Choon Chin 7,074,242 29,124,524(1) 36,198,766 27.15

2. Datin Liew Kee Moi - 29,124,524(2) 29,124,524 21.84

3. Weida Management Sdn. Bhd. 29,124,524 - 29,124,524 21.84

4. Employees Provident Fund Board 12,423,666(3) - 12,423,666 9.32

5. Assar Industri Sdn. Bhd. 11,400,656(4) - 11,400,656 8.55

6. Universal Trustee (Malaysia)Berhad 9,656,000 - 9,656,000 7.24

7. HSBC Holdings Plc 8,222,500(5) - 8,222,500 6.17

8. Permodalan Nasional Berhad 8,017,334 - 8,017,334 6.01

9. Yayasan Pelaburan Bumiputra - 8,017,334(6) 8,017,334 6.01

10. Lembaga Tabung Haji 6,666,666 - 6,666,666 5.00

Notes:(1) Deemed interested by virtue of his substantial shareholding in Weida Management Sdn. Bhd..(2) Deemed interested by virtue of her spouse’s, Dato’ Lee Choon Chin and her substantial shareholdings

in Weida Management Sdn. Bhd..(3) 5,424,000 shares are held through Mayban Investment Management Sdn. Bhd..(4) 11,333,332 shares are held through Assar Management Sdn. Bhd..(5) Held through HSBC (Malaysia) Trustee Berhad.(6) Deemed to have indirect interest through its shareholding of 100% less one share of Permodalan

Nasional Berhad by virtue of Section 6A of the Companies Act, 1965.

DIRECTORS' INTERESTS

No. of shares held Total

No. Name of Director Direct % Indirect % Shareholding %

1. Haji Su’ut Bin Haji Suhaili 33,334 0.03 - - 33,334 0.03

2. Dato' Lee Choon Chin 7,074,242 5.31 29,124,524* 21.84 36,198,766 27.15

3. Datu Voon Chen Hian @Voon Chen Kok 40,000 0.03 - - 40,000 0.03

4. Datuk Dr. Stalin Hardin 33,334 0.03 - - 33,334 0.03

5. Jee Hon Chong 15,226 0.01 - - 15,226 0.01

6. Lai Lim Hon 4,280 0.00# - - 4,280 0.00#

7. Tok Jiak Yong 1,894 0.00# - - 1,894 0.00#

8. Chew Chin Choong - - - - - -

9. Chong Kwan Wai 10,000** 0.01 - - 10,000** 0.01

* Deemed interested by virtue of his substantial shareholding in Weida Management Sdn. Bhd..# Less than 0.01%.** Held through Mayban Nominees (Tempatan) Sdn. Bhd..

I/We ................................................................................ (Name in full) ....................................... (NRIC No.)

of ........................................................................................................................ (Address) being a member/members of the abovenamed Company hereby appoint ................................................................ (Name in full)of ...................................................................................................................................................... (Address)or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us and on my/our behalf at theSeventh Annual General Meeting of the Company to be held at the Company’s premises, Wisma Hock Peng,2nd Floor, 123, Green Heights, Jalan Lapangan Terbang, 93250 Kuching, Sarawak on Monday, 4 September2006 at 10.00 am and any adjournment thereof.Please indicate with an “X” in the appropriate box against each resolution how you wish your vote to be cast. If you do notindicate how you wish your proxy to vote on any resolution, the proxy shall vote as he thinks fit, or at his discretion, abstainfrom voting.

My/our proxy is to vote as indicated below :-

Form Of Proxy

1. To receive the Audited Financial Statements for the financial year ended31 March 2006 and the Reports of the Directors and Auditors thereon.

2. To declare a first and final dividend of 2.0 sen per share less 28% incometax, in respect of the financial year ended 31 March 2006.

3. To approve the payment of Directors’ fees for the financial year ending 31March 2007.

4. To re-elect Tuan Haji Su’ut bin Haji Suhaili as Director.

5. To re-elect YBhg. Dato’ Lee Choon Chin as Director.

6. To re-elect YBhg. Datu Robert Voon Chen Hian @ Voon Chen Kok asDirector.

7. To re-appoint Messrs. KPMG as auditors.

8. Special BusinessOrdinary Resolution - Authority to issue shares pursuant to Section 132Dof the Companies Act, 1965.

Shareholding Represented by Proxy

Dated this .......... day of ..................... 2006 ..................................................................Signature of shareholder(s)/common seal

Notes :-1. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies

Act, 1965 shall not apply to the Company.2. To be valid, the duly completed proxy form must be deposited at the Registered Office of the Company at Wisma

Hock Peng, Ground Floor to 2nd Floor, 123, Green Heights, Jalan Lapangan Terbang, 93250 Kuching, Sarawaknot less than 48 hours before the time set for holding the meeting or any adjournment thereof.

3. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting providedthat the provisions of Section 149(1)(c) of the Companies Act, 1965 are complied with.

4. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies theproportions of his shareholdings to be represented by each proxy.

5. If the appointor is a corporation, the proxy form must be executed under its common seal or under the hand of anofficer or attorney duly authorised.

No. RESOLUTIONS FOR AGAINST

The Company SecretaryWEIDA (M) BHD.(Company No. 504747-W)

Wisma Hock Peng, Ground Floor - Second Floor,123, Green Heights, Jalan Lapangan Terbang,

P.O. Box 2424, 93748 Kuching, Sarawak.

Affix Stamp

annual report 2006 - weida (m) bhd

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