rhb.com · rashid hussain berhad (“rhb”) on 19 february 2003 and is currently the non executive...

RASHID HUSSAIN BERHADANNUAL REPORT 2005

d e l i v e r i n g r e s u l t srhb.com.my

cont

ents

Delivering Results

Our philosophy is simple - treatcustomers as real people withreal needs. Then follow it upwith innovative products andservices that surpass theirexpectations. You can’t get anymore customer centric than that.After all, we are in the businessof delivering results for ourcustomers.

corporate sectionGroup Financial Highlights 4Corporate Information 6Board of Directors 8Profile of the Board of Directors 10RHB Group Corporate Structure 16Chairman’s Report 2005 18Operations Review 24RHB Group Achievements and Awards 37RHB Group Corporate Highlights 38Corporate Governance Statement 42Internal Control Statement 47Audit Committee Report 49Responsibility Statement 52

financial sectionStatutory Financial Statements 53Analysis of Shareholdings 163List of Top Thirty (30) Shareholders 164Analysis of Warrantholdingsfor Warrants 1997/2007 166List of Top Thirty (30) Holdersof Warrants 1997/2007 167Analysis of Warrantholdingsfor Warrants 1999/2009 169List of Top Thirty (30) Holdersof Warrants 1999/2009 170Analysis of Warrantholdingsfor Warrants 2001/2007 172List of Top Thirty (30) Holdersof Warrants 2001/2007 173Analysis of Warrantholdingsfor Call Warrants 2003/2007 175List of Top Thirty (30) Holdersof Call Warrants 2003/2007 176Analysis of Holdings for 2002/2012(“RHB ICULS-A”) 178List of Top Thirty (30) Holdersof RHB ICULS-A 179Analysis of Holdings for 2002/2012(“RHB ICULS-B”) 181List of Top Thirty (30) Holdersof RHB ICULS-B 182Substantial Shareholders 184List of Directors’ Interests in Securities of theCompany and its Related Corporations 185Sanctions and Penalties 187Material Contracts 187List of Properties 188Notice of Annual General Meeting 199Statement Accompanying Notice of Annual General Meeting 201Proxy Form

RHB CAPITAL BERHAD • 312952-H ◆ ANNUAL REPORT 2005 1

annos. Quid,qui deperiitminor uno




We know that customers – individuals and businesses alike – requireproducts and services that are easy and intuitive to use, andcustomer interactions as straightforward and hassle-free as possible.And that’s just the way our approach has been for all our customerssince day one of our operations.

Our goal is to introduce cutting-edge technologies that drivemarkets and bring tangible benefits to our customers, helpingbusinesses to be more productive and more competitive – locallyor regionally. And we will continue to be there, for each and everyone of our customers.

We are passionate about our brand promise of providing superiorcustomer satisfaction. It is in our DNA. We are and will always betrue to this commitment. That’s why our focus is always centredaround our customers. And this will never change.

group financial highlights

2005 2004* 2003 2002 2001

RM million RM million RM million RM million RM million

RESULTS

Operating revenue 4,405.8 5,470.6 3,330.3 3,193.3 3,409.0

Operating profit 1,090.5 1,164.7 854.8 775.2 818.3

Profit before INCPS** dividends, taxation and zakat 564.1 446.4 200.2 4.8 267.7

Net profit/(loss) for the financial period/year 56.5 (95.3) (130.7) (293.2) (222.1)

BALANCE SHEETS

Paid-up capital 725.5 724.2 704.0 463.6 463.5

Shareholders’ equity 490.0 435.2 475.2 171.1 449.0

Total assets 90,327.8 82,696.8 70,319.1 58,660.2 58,976.2

RATIOS

Net assets per share – (RM) 0.68 0.60 0.68 0.37 0.97

Net tangible liabilities per share – (RM) (2.62) (2.71) (2.75) (3.18) (2.94)

SHARE PRICES AND MARKETCAPITALISATION***

Share prices – (RM) 0.67 0.65 0.98 1.57 1.33

Market capitalisation 486.1 470.7 690.0 727.9 616.5

* The Company changed its financial year end from 30 June to 31 December with effect from the financial period ended 31 December 2004and accordingly, the results for that financial period are for eighteen months. Certain figures have been restated arising from the retrospectiveapplication of the Revised Guidelines on Financial Reporting for Licensed Institutions (BNM/GP8) issued by Bank Negara Malaysia.

** Irredeemable Non-cumulative Convertible Preference Shares.*** Share prices are closing price at financial period/year end.

RASHID HUSSAIN BERHAD • 163211-V ◆ ANNUAL REPORT 20054

(222

.1)

(293

.2) (1

30.7

)

(95.

3)

RASHID HUSSAIN BERHAD • 163211-V ◆ ANNUAL REPORT 2005 5

0.97

0.37

0.68

0.60

0.68

267.

7

4.8

200.

2

446.

4

564.

1

’01 ’02 ’03 ’04* ’05

58,9

76.2

58,6

60.2

70,3

19.1

82,6

96.8

90,3

27.8

’01 ’02 ’03 ’04* ’05 ’01 ’02 ’03 ’04* ’05

profitbefore

INCPS**dividends,

taxationand zakat

(RM million)3,

409.

0

3,19

3.3

3,33

0.3

5,47

0.6

4,40

5.8

’01 ’02 ’03 ’04* ’05

operatingrevenue

(RM million)

totalassets

(RM million)

449.

0

171.

1

475.

2

435.

2 490.

0

’01 ’02 ’03 ’04* ’05

shareholders’equity

(RM million)

net assetsper share

(RM)

56.5

’01 ’02 ’03 ’04* ’05

netprofit/(loss)for

the financialperiod/year

(RM million)

* The Company changed its financial year end from 30 June to 31 December with effect from the financial period ended 31 December 2004and accordingly, the results for that financial period are for eighteen months. Certain figures have been restated arising from the retrospectiveapplication of the Revised Guidelines on Financial Reporting for Licensed Institutions (BNM/GP8) issued by Bank Negara Malaysia.

** Irredeemable Non-cumulative Convertible Preference Shares.


corporate information – As at 14 April 2006

BOARD OF DIRECTORS

YBhg Dato Sri Sulaiman AbdulRahman TaibNon Executive Chairman

YBhg Datuk Azlan ZainolNon Independent Non Executive Director

Puan Azian Mohd NohIndependent Non Executive Director

YBhg Dato’ Mohamed KhadarMericanSenior Independent Non Executive Director

YBhg Dato Sri Liang Kim BangNon Independent Non Executive Director

YBhg Datuk Wan Ali Abdul Kadir @Wan Ali Wan Yubi @ Tuanku YubiNon Independent Non Executive Director

Encik Vaseehar Hassan Abdul Razack Non Independent Non Executive Director

YBhg Dato’ Paduka Nik Hashim NikYusoffNon Independent Non Executive Director

YBhg Datin Khamarzan Ahmad MeahIndependent Non Executive Director

Encik Johari Abdul MuidNon Independent Non Executive Director

SECRETARY

Encik Azman Shah Md Yaman(LS 0006901)

AUDIT COMMITTEE

YBhg Dato’ Mohamed KhadarMericanChairman

YBhg Dato Sri Liang Kim Bang

YBhg Datin Khamarzan Ahmad Meah

NOMINATION COMMITTEE

YBhg Dato’ Mohamed KhadarMericanChairman

YBhg Datuk Wan Ali Abdul Kadir @Wan Ali Wan Yubi @ Tuanku Yubi

YBhg Datin Khamarzan Ahmad Meah


HUMAN RESOURCECOMMITTEE

YBhg Dato Sri Sulaiman AbdulRahman TaibChairman

YBhg Dato’ Mohamed KhadarMerican

YBhg Dato Sri Liang Kim Bang

EMPLOYEES’ SHAREOPTION SCHEME (ESOS)COMMITTEE

YBhg Dato’ Paduka Nik Hashim NikYusoffChairman

Encik Vaseehar Hassan Abdul Razack

YBhg Dato Abdullah Mat Noh

REGISTERED OFFICE

Level 10, Tower OneRHB CentreJalan Tun Razak50400 Kuala Lumpur.Tel : 603-90852233Fax : 603-92819314

COMPANY NO.

163211-V

AUDITORS

PricewaterhouseCoopersChartered Accountants11th Floor, Wisma Sime DarbyJalan Raja Laut50350 Kuala Lumpur.Malaysia

SHARE REGISTRAR

Symphony Share Registrars Sdn BhdLevel 26, Menara Multi-PurposeCapital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala LumpurMalaysiaTel : 603-27212222Fax : 603-27212530/2531

STOCK EXCHANGE LISTING

Main Board of Bursa MalaysiaSecurities Berhad


from left to right:

Dato Sri Sulaiman Abdul Rahman TaibDatuk Azlan ZainolJohari Abdul MuidAzian Mohd NohDato Sri Liang Kim BangDatin Khamarzan Ahmad MeahDato’ Paduka Nik Hashim Nik YusoffDatuk Wan Ali Abdul Kadir @ Wan Ali Wan Yubi @ Tuanku YubiVaseehar Hassan Abdul Razack Dato’ Mohamed Khadar Merican

board of


directors

YBHG DATO SRI SULAIMAN ABDUL RAHMAN TAIB(37 years of age – Malaysian)Non Executive Chairman

YBhg Dato Sri Sulaiman Abdul Rahman Taib (“YBhg Dato Sri Sulaiman”) was appointed as a Non Executive Director ofRashid Hussain Berhad (“RHB”) on 19 February 2003 and is currently the Non Executive Chairman of RHB.

YBhg Dato Sri Sulaiman holds a Bachelor of Science Degree in Business Administration from the University of SanFrancisco, USA.

YBhg Dato Sri Sulaiman is also currently the Group Chairman of Cahya Mata Sarawak Berhad (“CMSB”), aconglomerate listed on the Main Board of Bursa Malaysia Securities Berhad with financial services and infrastructuredevelopment as its main business. He was appointed as Group Chairman of CMSB in May 2002, having been on theBoard of CMSB since January 1995. He was Acting Group Chief Executive Officer for the conglomerate in 2001,before assuming the position as Group Deputy Chairman from January till May 2002.

YBhg Dato Sri Sulaiman also serves as the Chairman of the Human Resource Committee of RHB. Other directorshipsin public companies include RHB Capital Berhad, Utama Banking Group Berhad, K&N Kenanga Holdings Berhad, CMSWorks International Ltd, CMS Global (BVI) Ltd, CMS I-System Berhad (formerly known as I-Systems Group Berhad) andMalaysian Industry-Government Group for High Technology.

YBhg Dato Sri Sulaiman has attended eleven out of the twelve Board meetings held for the financial year. He has nofamily relationship with any Director of RHB. He is the brother of Tuan Haji Mahmud Abu Bekir Taib, an indirect majorshareholder of RHB. He has no conflict of interest with RHB and has never been charged for any offence.


profile of the board of directors


YBHG DATUK AZLAN ZAINOL(56 years of age – Malaysian)Non Independent Non Executive Director

YBhg Datuk Azlan Mohd Zainol (“YBhg Datuk Azlan”) was appointed as a Non Independent Non Executive Directorof RHB on 6 July 2005, as a nominee of the Employees Provident Fund, Malaysia (“EPF”), a substantial shareholder ofRHB.

YBhg Datuk Azlan is a Fellow of the Institute of Chartered Accountants in England & Wales, Member of theMalaysian Institute of Accountants and Member of the Malaysian Institute of Certified Public Accountants.

YBhg Datuk Azlan is currently the Chief Executive Officer of EPF. He has more than 25 years of experience in thefinancial sector, having been appointed as the Managing Director of Arab-Malaysian Bank Berhad (now known asAmBank Berhad) and prior to that, as the Managing Director of Arab-Malaysian Finance Berhad (now known asAmFinance Berhad).

His other directorships in public companies include RHB Capital Berhad, RHB Bank Berhad (Chairman), RHB SakuraMerchant Bankers Berhad, Malaysian Resources Corporation Berhad (Chairman), Jardine Cycle & Carriage Limited,Commonwealth Africa Investments Limited, ASIA Ltd and MCL Land Limited.

YBhg Datuk Azlan has attended four out of the five Board meetings held in the financial year since the date of hisappointment. He has no family relationship with any Director and/or major shareholder of RHB. He has no conflict ofinterest with RHB and has never been charged for any offence.


YBHG DATO’ MOHAMED KHADARMERICAN(50 years of age – Malaysian)Senior Independent Non Executive Director

YBhg Dato’ Mohamed Khadar Merican (“YBhg Dato’Khadar”) was appointed as an Independent NonExecutive Director of RHB on 28 June 2002 and has beenthe Senior Independent Non Executive Director since 28May 2003. He is a Member of the Institute of CharteredAccountants in England and Wales and is also a Memberof the Malaysian Institute of Accountants. He was a pastPresident of the Malaysian Association of Hotel Owners.

YBhg Dato’ Khadar has had more than 20 years ofexperience in financial and general management. Heserved as an auditor and a consultant in an internationalaccounting firm, before joining a financial services groupin 1986. YBhg Dato’ Khadar has held various seniormanagement positions in Pernas International HoldingsBerhad, a company listed on the Main Board of BursaMalaysia Securities Berhad between 1988 and April2003, including those of President and Chief OperatingOfficer. He currently manages his own financialconsultancy practice.

YBhg Dato’ Khadar is the Chairman of RHB’s AuditCommittee and Nomination Committee and a Memberof its Human Resource Committee.

Other directorships in public companies include RHBSakura Merchant Bankers Berhad, RHB Bank Berhad,RHB Insurance Berhad and Astro All Asia Networks plc(“AAAN”). He is the Chairman of the NominationCommittee and Corporate Governance Committee ofAAAN and a Member of its Audit Committee andRemuneration Committee.

YBhg Dato’ Khadar has attended ten out of the twelveBoard meetings held for the financial year. He has nofamily relationship with any Director and/or majorshareholder of RHB. He has no conflict of interest withRHB and has never been charged for any offence.

PUAN AZIAN MOHD NOH (53 years of age – Malaysian)Independent Non Executive Director

Puan Azian Mohd Noh (“Puan Azian”) was appointed asan Independent Non Executive Director of RHB on 5 July2005, as a nominee of the Kumpulan Wang AmanahPencen (“KWAP”). She is currently the Director of KWAP,Accountant General’s Department, a position she hasheld since 1997. She holds a Bachelor of EconomicsDegree (Majoring in Accountancy (Hons)) from Universityof Malaya, an Advanced Diploma in Accounting fromUniversity of Malaya and a Master of BusinessAdministration (“MBA”) from University KebangsaanMalaysia. She began her career in 1980 as a TreasuryAccountant in the Investment and Loan Division,Accountant General’s Department before beingappointed as an Accountant in the Ministry of PublicEnterprise in 1981. She joined Kraftangan Malaysia as aSenior Accountant in 1982 and in 1985, joined SIRIM asDeputy Director of Finance. Subsequently, she wasappointed as the Deputy Director of KWAP, AccountantGeneral’s Department from 1991 to 1992. Aftercompleting her MBA in 1994, she was appointed asDeputy Director, Bahagian Korporat dan BantuanPengurusan, Accountant General’s Department andthereafter in 1995, assumed the position of DeputyDirector, KWAP, Accountant General’s Department.

She is also an alternate director on the Board of TimedotCom Berhad.

Puan Azian has attended four out of the five Boardmeetings held in the financial year since the date of herappointment. She has no family relationship with anyDirector and/or major shareholder of RHB. She has noconflict of interest with RHB and has never been chargedfor any offence.



YBHG DATUK WAN ABDUL KADIR @ WANALI WAN YUBI @ TUANKU YUBI(56 years of age – Malaysian)Non Independent Non Executive Director

YBhg Datuk Wan Abdul Kadir @ Wan Ali Wan Yubi @Tuanku Yubi (“YBhg Datuk Wan Ali”) was appointed asa Non Independent Non Executive Director of RHB on 19February 2003, as a nominee of Utama Banking GroupBerhad, a substantial shareholder of RHB. He had a longcareer in public service having served as the SarawakState Financial Secretary (1995-2000), as PermanentSecretary in the Ministry of Land Development and asGeneral Manager of the Land Custody and DevelopmentAuthority. He was the Chief Executive Officer / Directorof Sarawak Enterprise Corporation Berhad fromDecember 2002 to June 2005. He holds a Bachelor ofEconomics Degree and a graduate Diploma in Educationfrom University of Malaya and a Master of Educationfrom Birmingham University, England.

YBhg Datuk Wan Ali is also a Member of theNomination Committee of RHB. He is also a Director ofCahya Mata Sarawak Berhad and an Executive Directorof several non-listed companies.

YBhg Datuk Wan Ali has attended six out of the twelveBoard meetings held for the financial year. He has nofamily relationship with any Director and/or majorshareholder of RHB. He has no conflict of interest withRHB and has never been charged for any offence.

YBHG DATO SRI LIANG KIM BANG(69 years of age – Malaysian)Non Independent Non Executive Director

YBhg Dato Sri Liang Kim Bang (“YBhg Dato Sri Liang”)was appointed as a Non Independent Non ExecutiveDirector of RHB on 19 February 2003, as a nominee ofUtama Banking Group Berhad, a substantial shareholderof RHB. He is also the Non Executive Chairman of CMSCement Sdn Bhd, CMS Steel Berhad, CMS Infra TradingSdn Bhd, CMS Wires Sdn Bhd and WAB-LCDA Sdn Bhdand a Non Executive Director of Cahya Mata SarawakBerhad, PPB Group Berhad, PPB Oil Palms Berhad, MISCBerhad (formerly known as Malaysia InternationalShipping Corporation Berhad) and CMS TrustManagement Berhad.

He studied at the University of Malaya, Singapore (1957-1961), graduating with B.A. and B.A. (Hons) degrees andat the University of Cambridge (Trinity College), England(1962-1963) in Public Administration. He joined theSarawak Civil Service in 1961, served in variouscapacities and retired in 1994. He was Sarawak’s StateFinancial Secretary from 1984 to 1994.

YBhg Dato Sri Liang also serves as a Member of theAudit Committee of RHB.

YBhg Dato Sri Liang has attended eight out of thetwelve Board meetings held for the financial year. He hasno family relationship with any Director and/or majorshareholder of RHB. He has no conflict of interest withRHB and has never been charged for any offence.


ENCIK VASEEHAR HASSAN ABDUL RAZACK(54 years of age – Malaysian)Non Independent Non Executive Director

Encik Vaseehar Hassan Abdul Razack (“Encik VaseeharHassan”) was appointed as a Non Independent NonExecutive Director of RHB on 19 February 2003, as anominee of Utama Banking Group Berhad, a substantialshareholder of RHB.

Encik Vaseehar Hassan who has a Bachelor Degree inAccounting, Masters in Business Administration as wellas Specialised Masters in Consulting and Coaching iscurrently pursuing a Doctoral Research at the VrijeUniversiteit, Amsterdam.

Encik Vaseehar Hassan has 26 years of experience in thefinancial sector. In addition to being the Chief Executiveand Director of the Malaysian subsidiary of DallahAlBaraka Group of Saudi Arabia, his current directorshipsin public companies include RHB Capital Berhad, RHBBank Berhad, RHB Sakura Merchant Bankers Berhad,RHB Insurance Berhad, RHB Islamic Bank Berhad(Chairman), Utama Banking Group Berhad, CMS TrustManagement Berhad and Ingress Corporation Berhad.

Encik Vaseehar Hassan has attended eleven out of thetwelve Board meetings held for the financial year. He hasno family relationship with any Director and/or majorshareholder of RHB. He has no conflict of interest withRHB and has never been charged for any offence.

YBHG DATO’ PADUKA NIK HASHIM NIKYUSOFF(68 years of age – Malaysian)Non Independent Non Executive Director

YBhg Dato’ Paduka Nik Hashim Nik Yusoff (“YBhg Dato’Paduka Nik Hashim”) graduated from MelbourneUniversity, Australia with a Bachelor of Arts (Honours)Degree in 1964 and holds a Masters in PublicAdministration from Harvard University (1970). He wasappointed as a Non Independent Non Executive Directorof RHB on 26 February 2003, as a nominee of UtamaBanking Group Berhad, a substantial shareholder of RHB.He has held senior executive positions in various financialinstitutions. He was the Executive Director of MUI BankBerhad in 1983 and was made its Managing Director in1991. Following the acquisition of MUI Bank Berhad bythe Hong Leong Group in 1994, he was appointed asAdvisor and continued to be on the Board of HongLeong Bank Berhad until December 1995.

YBhg Dato’ Paduka Nik Hashim is the Chairman of theESOS Committee and a Member of the Human ResourceCommittee of RHB. Current directorships in publiccompanies include Utama Banking Group Berhad(Chairman), UBG Enterprise Bhd, CMS TrustManagement Berhad, Genting Berhad and MalayanUnited Industries Berhad.

YBhg Dato’ Paduka Nik Hashim has attended all thetwelve Board meetings held for the financial year. He hasno family relationship with any Director and/or majorshareholder of RHB. He has no conflict of interest withRHB and has never been charged for any offence.



ENCIK JOHARI ABDUL MUID (48 years of age – Malaysian)Non Independent Non Executive Director

Encik Johari Abdul Muid (“Encik Johari”) was appointedas a Non Independent Non Executive Director of RHB on15 December 2004, as a nominee of the EPF, asubstantial shareholder of RHB.

Encik Johari is an Associate Member of the CharteredInstitute of Management Accountants, United Kingdom.

Encik Johari has more than 21 years experience in thefinancial sector, starting his career as a Money MarketDealer with Asian International Merchant BankersBerhad in 1981. From 1983 to 1994, he was withCommerce International Merchant Bankers Berhad,working in the Treasury Division and was made the Headof Treasury in 1988. He became the Senior Vice Presidentof Institutional Sales in 1995, within a year of joiningCIMB Securities Sdn Bhd ("CIMB Securities"), where hewas responsible in setting up the Institutional Sales Teamof CIMB Securities. Prior to joining EPF in August 2004,he was the Chief Investment Officer of ValueCap SdnBhd which he joined in February 2003. He is currentlythe Chief Investment Officer (Equity) of EPF.

Encik Johari has attended all the twelve Board meetingsheld for the financial year. He has no family relationshipwith any Director and/or major shareholder of RHB. Hehas no conflict of interest with RHB and has never beencharged for any offence.

YBHG DATIN KHAMARZAN AHMED MEAH(54 years of age – Malaysian)Independent Non Executive Director

YBhg Datin Khamarzan Ahmed Meah (“YBhg DatinKhamarzan”) was appointed as an Independent NonExecutive Director of RHB on 28 May 2003. She waspreviously the Deputy Director, Privatisation Division,Economic Planning Unit from 1992 to 1995. Prior tothat, she was the Principal Assistant Secretary of theBanking and International Financing Section, Ministry ofFinance from 1982 until 1991. She holds a Bachelor ofEconomics (Honours) Degree from University of Malayaand a Masters in Development Economics from BostonUniversity, USA.

YBhg Datin Khamarzan also serves as a Member of theAudit Committee and Nomination Committee of RHB.Her current directorships in public companies includeRHB Delta Finance Berhad, RHB Bank (L) Ltd and RHBSakura Merchant Bankers Berhad.

YBhg Datin Khamarzan has attended ten out of thetwelve Board meetings held for the financial year. Shehas no family relationship with any Director and/or majorshareholder of RHB. She has no conflict of interest withRHB and has never been charged for any offence.

RHB Sakura Merchant Bankers Berhad

RHB Unit Trust Management Berhad

RHB Merchant Nominees (Tempatan) Sdn Bhd

RHB Merchant Nominees (Asing) Sdn Bhd

RHB Holdings Sdn Bhd

RHB Venture Capital Sdn Bhd

RHB Securities Sdn Bhd

RHB Nominees Sdn Bhd

RHB Nominees (Tempatan) Sdn Bhd

RHB Nominees (Asing) Sdn Bhd

Straits Nominees (Tempatan) Sdn Bhd^^

Straits Nominees (Asing) Sdn Bhd^^

RHB Futures Sdn Bhd

RHB Marketing Services Sdn Bhd

Straits Asset Holdings Sdn Bhd

SSSB Services (Melaka) Sdn Bhd

SFSB Services (Melaka) Sdn Bhd

RHB Research Institute Sdn Bhd

RHB Asset Management Sdn Bhd

RHB Management Services (Jersey) Limited


RHB group corporate structure – As at 14 April 2006

RHB Bank Berhad (70%)

Utama Gilang Sdn Bhd

CMS Trust Management Berhad (49%)

Utama Assets Sdn Bhd

U.B. Nominees (Tempatan) Sdn Bhd

RHB Bank (L) Ltd

RHB Delta Finance Berhad ^

RHB Leasing Sdn Bhd

RHB Delta Nominees (Tempatan) Sdn Bhd

RHB Capital Properties Sdn Bhd

RHB Capital Nominees (Tempatan) Sdn Bhd

RHB Capital Nominees (Asing) Sdn Bhd

RHB ISLAMIC Bank Berhad

RHB Bank Nominees Pte Ltd

Banfora Pte Ltd

RHB Investment Ltd

RHB Trade Services Limited

UMBC Sdn Bhd

INFB Jaya Sdn Bhd

USB Nominees Sdn Bhd

USB Nominees (Asing) Sdn Bhd

USB Nominees (Tempatan) Sdn Bhd

COMMERCIAL BANKING GROUP INVESTMENT BANKING GROUP

RHB CAPITAL BERHAD (64.87%)

RASHID HUSSAIN BERHAD


The subsidiary companies are wholly-owned unless otherwise stated.

Dormant company

Associate company

* With effect from 1 July 2001, the company's activities pertainprimarily to recovery of outstanding debts.

** The company has ceased operations from the close of businesson 10 December 2001.

*** The company has ceased operations on 31 July 2001 andcommenced proceedings for shareholders' voluntarydissolution.

^ With effect from 1 January 2006, the company's assets andliabilities were vested to RHB Bank Berhad and RHB ISLAMICBank Berhad (for the Islamic assets and liabilities), accordingly.

^^ The company has commenced members’ voluntary winding upon 30 March 2006.

RHB Property Management Sdn Bhd

RHB-DAEWOO Sdn Bhd (80%)

Bandar Wawasan Management Sdn Bhd

RHB Kawal Sdn Bhd

RHB Management Company Sdn Bhd

RHB Modal-Ekuiti Sdn Bhd

RHB Health Care Sdn Bhd

RHB Noble 1 (L) Ltd

RHB Insurance Berhad (79.5%)

RHB International Trust (L) Ltd

RHB Corporate Services Sdn Bhd(formerly known as RHB International Trust (Labuan) Sdn Bhd)

RHB Equities Sdn Bhd *

KYB Sdn Bhd

RHB Capital (Jersey) Limited

RHB Overseas Limited

Rashid Hussain Securities (PhiIippines) Inc **

PT Rashid Hussain Securities (85%) ***

RHB Asia Pte Ltd

RHB Hartanah Sdn Bhd

Positive Properties Sdn Bhd (50%)

RHB Dynamic Technologies Sdn Bhd

RHB Bena Sdn Bhd

KYB Trust Management Sdn Bhd

Kwong Yik Nominees (Asing) Sdn Bhd

Kwong Yik Nominees (Tempatan) Sdn Bhd

RHBF Sdn Bhd

KYF Sdn Bhd

OTHERS


chairman’s report 2005

“The Group is vigilant of the need to

sharpen its competitive edge and has

embarked on new technology-driven

initiatives to boost operational efficiency

and fuel future growth. We have

invested in new IT systems across the

Group and introduced new Internet

Banking packages such as an online

travel service and online Initial Public

Offering (“IPO”) application.”


It is my privilege, on behalf of theBoard of Directors, to present theAnnual Report for the financial yearended 31 December 2005. Thismarks the Group’s first 12-monthperiod following the shift in ourfinancial year-end from 30 June to31 December. I am pleased to reportfor the financial year ended 31December 2005, RHB Groupattained a net profit of RM56.5million, a turnaround from a net lossof RM95.3 million for the previousfinancial period of 18 months.

The transformation of Malaysia’sfinancial sector is accelerating at adizzying pace as the countrygradually opens up and becomesmore integrated with the globaleconomy. Revolutionary changesswept across the country’s financiallandscape in 2005, redefining theboundaries of growth and charting anew phase of development for theindustry. In confronting thesechallenges, RHB relies on integrityand innovation as the two keycornerstones of our growth. Webelieve success can be reaped byadjusting swiftly to the dynamicmarketplace and respondingpromptly to the changing needs ofour customers and clients. To dothis, we have to think out of thebox, be different in our approachesand distinguish ourselves from therest of the pack.

The Group is vigilant of the need tosharpen its competitive edge andhas embarked on new technology-driven initiatives to boost operationalefficiency and fuel future growth.We have invested in new IT systemsacross the Group and introducednew Internet Banking packages suchas an online travel service and onlineInitial Public Offering (“IPO”)application. By integrating the righttechnology with financial productsand services, we are confident it willboost efficiency, bring customersatisfaction to a higher level andincrease our earnings. We willcontinue to leverage on newtechnologies to drive growth,especially with Internet Bankingtaking on renewed importance in an

increasingly seamless globaleconomy. The Group is determinedto keep pace with the wind ofchange blowing across the world offinance as we put new buildingblocks for future growth.

Shareholders will be inspired by theGroup’s strong performance duringthe year under review. The Group,through its key subsidiary RHBCapital Berhad (“RHB Capital”),defied a tough operatingenvironment to bolster its marketposition and strengthen itscompetitiveness through a three-prong strategy of stricter control ofcosts, improved risk managementand strategic realignment of corebusinesses. The Group’s ability tobreak new grounds, such as thehistoric launch of its full-fledgedIslamic bank and expansion of ourgeographical footprints, is atestament of our resolution to reachever-higher growth goals. RHB BankBerhad (“RHB Bank”) moved closerto becoming a complete, one-stopfinancial services provider byabsorbing the Group's financecompany business, and raised itsprofile by tying up with new globalpartners in Japan and Thailand. Ithas truly been an exhilarating year,capped with new successes for the

Group. We are prepared to shift intoa higher gear as we close in on ourvision to become a dominantfinancial services group in thecountry and beyond.

FINANCIAL PERFORMANCE

The Group’s improved financialresults for the year under review arean affirmation of the effectiveexecution of our broad growthstrategies. It is the result of hardwork arising from the earlier periodof reshaping and transition for allour companies. The Group’s flagship,RHB Capital, chalked up a net profitof RM315.8 million during the year,while its consolidated profit beforeIrredeemable Non-cumulativeConvertible Preference Shares("INCPS") dividends, taxation andzakat amounted to RM689.1 million.It generated a total net interestincome of RM1.6 billion, up sharplyby 16% compared to the annualisednet interest income for 2004, thanksto steady loans growth andsustained strong asset quality. Othernon-interest income rose toRM782.0 million while revenue fromthe Islamic Banking business wascommendable at RM147.7 million.


equity of 18.6% during the year. Itposted a profit before tax of RM33.9million, which marked a 49% surgefrom the 2004 annualised pre-taxprofit.

The Group made significant stridesin improving its asset quality and riskprofile. Non-performing loans(“NPL”) continued its decliningtrend, underpinned by proactiverecovery efforts, prudent lendingpolicies and an efficient creditmanagement framework. The periodof default for NPLs was shortenedfrom six months to three months inSeptember 2005 in line with industrybest practices. Despite the morestringent classification, RHB Capital’snet NPL ratio dropped to 5.1%, waybelow the banking industry averageof 5.8% and down from its 6.0%level as at 31 December 2004 whenit was based on a six-month defaultperiod. At the same time, its grossloans and advances surged toRM51.0 billion at the end of 2005,from RM47.2 billion as at the end of2004, buoyed by higher vehiclefinancing and lending to small andmedium-enterprises. Similarly, RHBBank’s net NPL ratio dipped to 5.2%in December 2005 based on a three-month default period, compared to6.3% in December 2004 based on a6-month classification.

We are vigorously working toenhance the Group’s financialstanding by improving themanagement of our debtobligations. During the year, wecompleted the sale of Office Tower 3in RHB Daewoo’s Vision Project andproceeds were used to reduce debtslevels and provide working capital.We will continue to cut the effectivecost of the Group’s financialcommitments by matching debtobligations with our cash flows,implement new debt refinancingschemes and manage our gearinglevels to optimise the overall cost ofcapital.

RHB Bank remained the largestrevenue contributor, with a profitbefore INCPS dividends, taxation andzakat of RM478.3 million during theyear under review. This marked a21% rise compared to theannualised pre-tax profit in 2004.

On the Group’s investment bankingfront, RHB Sakura Merchant BankersBerhad (“RHB Sakura”) withstoodvolatility in the market to emergestronger. It achieved a profit beforetax of RM101.4 million, up sharplyby 57% over the annualised pre-taxprofit in 2004. However, RHBSecurities Sdn Bhd (“RHB Securities”)recorded a lower profit before tax ofRM4.5 million as earnings wererestrained by a frail equity market.Other subsidiaries however, chartedgood growth. RHB Delta FinanceBerhad (“RHB Delta Finance”) andRHB Leasing Sdn Bhd (“RHBLeasing”) registered a combinedprofit before tax of RM63.1 millionduring the financial year. RHB AssetManagement Sdn Bhd (“RHBAM”)made a pre-tax profit of RM4.0million, while RHB Unit TrustManagement Berhad (“RHB UnitTrust“) achieved a profit before taxof RM2.9 million as sales of unittrusts surged. RHB Insurance Berhad(“RHB Insurance”) was the Group'stop performer, with a return on

DEVELOPMENTS DURINGTHE YEAR

Despite record-high global oil prices,Malaysia's economy remained on astrong footing in 2005 withconsumer and business confidencesustained at high levels. The country’s financial sectorwitnessed intensified consolidation,and a number of key policy changeswere made during the year aimed atincreasing the industry's resilienceand ability to weather the challengesof globalisation.

Among major developments duringthe year were the emergence ofinvestment banks, the removal offoreign exchange controls and theliberalisation of the Islamic bankingsector. The Group has seized thewindow of opportunity toimplement new strategies forgrowth. The Group set a new recordin history with the launch of RHBISLAMIC Bank Berhad (“RHBISLAMIC”) on 16 March 2005, thenation’s first Islamic banking windowto evolve into a full-fledged bank. Itis also the Islamic bank with thewidest distribution network in thecountry as it operates from theGroup’s 200-odd branchesnationwide. This milestone marks anew chapter in this area of ourbusiness and will spearhead theGroup’s expansion in the rapidly-growing Islamic banking sector.

RHB Bank moved a step nearertoward becoming a complete, one-stop financial services provider byabsorbing the Group's financecompany business under RHB DeltaFinance. The merger, which tookeffect from 1 January 2006, is partof efforts to consolidate the Group'soperations and will further expandRHB Bank's stable of products andservices. To drive future growth, RHBBank introduced an online travelservice and IPO application tocapture a bigger slice of the InternetBanking market and willprogressively roll out other packagesin 2006. It has enhanced its credit


“During the year, the Group seta new pace for futureexpansion by moving toenhance its presencedomestically and abroad, aswell as to grow cross-borderbusinesses. Our RHB Di Hatiroadshow swung into newmomentum, with a tour ofthree East Coast states, Melakaand Negeri Sembilan as weramp out our drive to expandour reach nationwide.”

card business by teaming up withconsumer electronics retailerSenheng Electric (Malaysia) Sdn Bhdto launch the RHB Plus OneMasterCard in April 2006 to increasevalue for card-holders. It remainsfocused on building its consumerbanking business, taking this a stephigher with the launch of theexclusive Visa Infinite Card in January2005 targeted at affluent, upscaleand high net worth customers. Themost significant milestone for RHBBank was the launch of its StrategicInitiative blueprint for growth, whichmaps out its Vision, Mission andCore Values for the future. Itoutlines goals and commitment tobecome the financial Provider ofChoice, Employer of Choice andInvestment of Choice.

During the year, the Group set anew pace for future expansion bymoving to enhance its presencedomestically and abroad, as well asto grow cross-border businesses. OurRHB Di Hati roadshow swung intonew momentum, with a tour ofthree East Coast states, Melaka andNegeri Sembilan as we ramp out ourdrive to expand our reachnationwide. We believe thecampaign is an effective vehicle tobring our products and services tothe people, and to establish ourbrand name especially for the newlylaunched RHB ISLAMIC. We intendto keep up the pace for the rest ofthe tour to cover the whole country.

At the same time, the Group also setits sight on expanding in theSoutheast Asian market. RHB Bank isalready present in Singapore,Thailand and Brunei. We picked anovel route to grow our business,banking on none other than themost popular sport in the world. InMarch 2005, RHB Bank inked a deal

with the Football Association ofSingapore to be the main titlesponsor of the Singapore Cup forthe next three years. The Bank willalso participate actively in otherprograms such as youthdevelopment, community andwomen’s football under a widespectrum of its corporate support tothe Singapore League. Ourpartnership with the SingaporeLeague will enable us to createalliances with the youngergeneration and solidify our presencein the city-state, while driving ourregional ambitions by providing uswith a powerful brand visibility inthe region.

During the year, RHB Bank alsoteamed up with the Office of theBoard of Investment of Thailand toexplore new business and


investment activities between thetwo countries. As we enhanceawareness of the RHB brand, it willsupport the Group’s future plans ofestablishing full-fledged banks inSingapore, Thailand and Brunei. Itwill also lay the foundation for RHBISLAMIC to tap growth opportunitiesin the region in the future.

The Group’s other achievementswere the launch of a multi-exchangetrading platform allowing clientsaccess to various regional boursesand the establishment of the DowJones-RHB Islamic Malaysia Index,which set a new benchmark intracking Shariah-compliant stocks onthe Bursa Malaysia Securities Berhad(“Bursa Securities”) based on globalstandards. Apart from catering tothe needs of domestic investors, thenew Islamic index is also expected todraw new investors from the Gulfstates, Europe and the United Statesto Malaysia and other Asianmarkets.

While boosting revenue growth, theGroup has not neglected its role as agood corporate citizen. We havemade donations to variouscommunity projects. In addition, ourannual charity drive by RHB UnitTrust also raised RM300,000 thatwas distributed to 30 organisationsfor the poor and underprivileged.

FUTURE PROSPECTS

Entering 2006, RHB is confident ofbolstering its business through ouraggressive business acumen.However, we recognise that therewill be new tests and uncertainties inthe face of a more liberalised andde-regulated financial sector. Thesecond phase of Malaysia’s FinancialSector Masterplan spells increasedaccess for foreign players, and willlead to rising competition from othernon-bank financial institutions andcapital markets. An upturn in thecountry’s interest rate cycle since late2005 may also have repercussions

on private consumption and loangrowth, further pressing margins.But we believe there will also benew opportunities for growth.

We are in the midst of creating aninvestment bank in 2006 that willrevolutionise the way we work andspur new growth. Work is inprogress but when the investmentbank takes off, it is expected to be akey revenue earner and will be anew platform to take the Group to ahigher level.

With a robust economy andincreased spending under the NinthMalaysia Plan, we foresee stronggrowth in the Group's consumerdivisions, corporate loans, Islamicbanking, automotive financing andtreasury corporations. Malaysia'seconomy is expected to expand at afaster pace of 6% in 2006, from5.3% in 2005, despite the threat ofhigh global oil prices and inflationarypressure. The growth momentum isexpected to be sustained under theNinth Malaysia Plan, which envisagesthe economy growing by an average6% a year until 2010. With thesefavorable conditions, the Groupexpects to post continuous solidgrowth.

Islamic banking will be a niche areain which the Group aims to expand.We see great promises in this sectorwith the Government's push tointegrate Islamic banking with themainstream financial sector andmake Malaysia a global Islamic hub.Total assets in Islamic banking isexpected to surge to 20% of thecountry’s total banking system by2010, from the current 11%. RHB’sinitial focus will be to build its sharein the domestic market and toemerge as one of the top threeIslamic in the country. But beyondour shores, there are vastopportunities in the region thatremain untapped.

“The Group will continue tostreamline its core businesses tooptimise resources for growth,harness cross-selling processesto strengthen synergies withinthe Group and upgrade ourhuman resources capital to facefuture challenges. We arehiving-off non-core assets andexiting our property business.”


What lies ahead? Undoubtedly morechanges and greater challenges butthe Group is prepared. We have laida concrete foundation for futuregrowth and fully geared up for therace in a competitive and liberalisedfinancial industry. We intend toexecute firm plans to strengthen andadd on to our capabilities as westrive to expand customer and clientrelationship across the country. Weare relentless in our drive to delivercommendable returns to ourshareholders and to become thepreferred partner for our clients in asophisticated marketplace.

Ladies and gentlemen, we spare noefforts in our quest to become apremier financial services provider inthe country. We have built a strongand competitive presence. All sectorsof the Group are growing and wewill continue down this proven path.Let us send a clear signal to ourcustomers and to the marketplacethat the RHB Group is going on theoffensive as it strives to be the best.We look forward to excel andsurpass our projections in the currentfinancial year.

Dato Sri SulaimanAbdul Rahman TaibChairman29 April 2006

At the same time, we will moveaggressively to tap newopportunities in neighbouringnations to capitalise on ongoingefforts to integrate regionaleconomies. We are re-examining ouroverseas presence and exploring thepossibilities of applying for fullbanking licenses in Singapore,Thailand and Brunei to drive ourgrowth goals and catapult theGroup into a major regional player.

The Group will continue tostreamline its core businesses tooptimise resources for growth,harness cross-selling processes tostrengthen synergies within theGroup and upgrade our humanresources capital to face futurechallenges. We are hiving-off non-core assets and exiting our propertybusiness. We have completed thesale of Office Tower 3 in RHBDaewoo’s Vision City Project and areactively scouting for potential buyersfor the remaining properties. Weremain open to new proposals andfuture alliances that will enhancevalue for shareholders and propelthe Group to greater heights.

AWARDS

The Group's ability to provide topquality services to clients and otherfinancial institutions came into thelimelight when RHB Bank wonaccolades at the Asiamoney AnnualAwards 2006. RHB Bank was namedBest Domestic Providers of FXServices in the Foreign Exchange Pollas voted by financial institutions.This award was made meaningful asthe bank was voted by its peers inthe industry. RHB Bank also baggedthe same award in the voteconducted among markets. Inaddition, it was named the third bestlocal cash management bank byAsiamoney. Overall, Rashid HussainBerhad was acknowledged as

Industry Leader in Financial Servicesin the Malaysia 1000 Award 2005,which groups the country's top1,000 companies and businesses.Our strength was also recognisedglobally. RHB improved its ranking to1754 in Forbes’ 2000 LeadingCompanies of the World, up from its2004 position of 1807. It is one ofonly 14 Malaysian companies thatmade it to the listing of the world’stop publicly-listed companies.

ACKNOWLEDGEMENTS

We could not have delivered withoutour management team consisting ofseasoned, ambitious and pro-activeindividuals. Their dedication inimplementing growth strategies andskills in navigating the Groupthrough rough periods will ensurewe can meet future challenges head-on and seize the opportunities withthe same energy and enthusiasmthat had led to our success. Strongteamwork across the Group isanother key pillar and for that, wethank all our employees at all levelsfor their unwavering loyalty and thepassion they put into their work. Toour shareholders, we express ourdeepest appreciation for yourstaunch support and we pledge thatwe will not let you down.


The world economy moderated in2005 as oil prices skyrocketed tonew record highs and interest ratescontinued to rise. In line with globaltrends, Malaysia’s gross domesticproduct growth eased to 5.3%,compared to a 7.1% expansion in2004. However, the country’seconomic fundamentals remainedsolid as reflected in strong domesticdemand, which grew 7.3%.Consumer and business confidence

sustained at high levels, with privateconsumption surging 9.2% in theyear supported by rising jobvacancies, growing disposableincomes and accommodativefinancing conditions.

Like the rest of corporate Malaysia,RHB benefited from a robustnational economy in 2005. TheGroup turned in a commendableperformance despite new challengesarising from major changes in thecountry’s banking and financialpolicies. Our improved financial

operations review 2005


standing is the result of hard work inthe past year to create more efficientstructures and enhance enterprisevalue. Our businesses have beenreinvigorated and taken to higherlevels of growth with a series ofcutting-edge initiatives to boostefficiency and the introduction of awide array of innovative productsand services that have helped winover new customers.

For the financial year ended 31December 2005 RHB Group attaineda net profit of RM56.5 million, aturnaround from a net loss ofRM95.3 million for the previousfinancial period of 18 months. Forthe financial year ended 31December 2005, the Group’s mainsubsidiary, RHB Capital, recorded anet profit of RM315.8 million on the

back of a consolidated profit beforeINCPS dividends, taxation and zakatof RM689.1 million. Buoyed bystrong growth in loans, RHB Capital’stotal net interest income surged toRM1.6 billion, up 16% over theannualised net interest income for2004. Its other operating income,which includes fee-income, gainsfrom security sales and gross


dividend income, soared to RM782.0million during the year, up by 22%compared to the annualised figurefor 2004. Income from its IslamicBanking business remainedencouraging at RM147.7 million.RHB Capital's shareholders fundsrose to RM4.5 billion, compared toRM4.2 billion as at 31 December2004. Total asset base grew toRM89.9 billion as at 31 December2005, up by 10% from RM82.1billion the previous year. Return onequity was sustained at 7.3%. Grossloans and advances rose 8% toRM51.0 billion, underpinned byefforts to boost consumer andcommercial banking. The financingof landed residential property,

purchase of transport vehicles andconsumption credit now constitute38% of its portfolio.

The Group’s largest earningscontributor was once again RHBBank. It attained a profit beforeINCPS dividends, taxation and zakatof RM478.3 million, up 21%compared to the annualised pre-taxprofit in 2004. RHB Bank remainsstrongly capitalised, withshareholders' equity and INCPSamounting to RM5.5 billion as at31 December 2005. Its Risk-Weighted Capital Adequacy Ratiostood at a comfortable 12.6%, andcore capital ratio at 10.6%.

RHB Sakura was also a starperformer with a profit before tax ofRM101.4 million, which marked a57% surge from the annualised pre-

tax profit in 2004. Its otheroperating income surged toRM147.6 million, up substantially by120% from the 2004 annualisedfigure. RHB Sakura successfullyarranged issuances totalling RM9.1billion in the primary debt markets in2005, with several big-ticket deals.

However, a weak equity marketdampened earnings for RHBSecurities, which recorded a lowerprofit before tax of RM4.5 million.RHB Delta Finance and RHB Leasing,registered a combined profit beforetax of RM63.1 million during thefinancial period, RHBAM made apre-tax profit of RM4.0 million, whileRHB Unit Trust achieved a profitbefore tax of RM2.9 million as salesof unit trusts surged. RHB Insuranceposted a profit before tax of RM33.9million, up 49% from the 2004annualised pre-tax profit.


BANK

The year under review marked aperiod of change for RHB Bank asmany new initiatives wereimplemented, that set the tone andpace for future growth. Despite atough operating environment, RHB

Bank sustained its healthy growththrough a strategy of market sharegrowth whilst optimising costs. Thebank has expanded its stable ofproducts and services, whileconstantly improving deliverychannels, implementing Group-widecross-selling initiatives and moreimportantly, dedicated to its aim ofstrengthening its relationships withcustomers and stakeholders. With anew CEO at the helm, RHB Bank’shas recharged itself to be a stepahead of competition.

One of the biggest events during theyear was the establishment of RHBISLAMIC on 16 March 2005. RHBBank made history as the firstcommercial bank to set up astandalone Islamic subsidiary,

licensed by Bank Negara Malaysia(“BNM”), with its own capital base,balance sheet and board. It opensup a new chapter for the Group as itwill strengthen the institutional


structure of Islamic bankingoperations within the RHB Group.The prospects in Islamic bankingsector are rosy. The sector currentlyaccounts for 11% of the country’stotal banking system but this isexpected to nearly double to 20%by 2010. As a pioneer in this area,we have certain advantages that willhelp us expand our market shareeven further as we tap newopportunities and adjacencies. As afull-fledged standalone bank with itsown paid-up capital, RHB ISLAMICoperates independently in delivering

Shariah compliant Islamic bankingproducts and services to meetcustomers’ requirements. A SyariahCommittee consisting of local andinternational experts also gives usadded weight, as we are able toconsistently deliver Syariah compliantproducts and services that are ofglobal standards. RHB ISLAMIC isalso able to leverage on synergiesand existing infrastructure within theGroup. It still maintains close links toRHB Bank, with several processessuch as Human Resource mattersbeing handled by the latter for cost-effectiveness and greater synergy.

RHB ISLAMIC has movedaggressively to stamp its footprint byopening its first marketing centre inKota Bharu to grow its presence inthe East Coast. The centre will serveas the launch pad for RHB ISLAMICto reach out to clients in Kelantanand neighbouring states, andposition the brand in the localmarket.

Streamlining efforts were furtheramplified with the transfer of thefinance company business of RHBDelta Finance to RHB Bank. Themerger, effective 1 January 2006,


signals the start of another newphase for RHB Bank as it movesahead with greater agility to becomea complete, one-stop financialservices provider.

During the year, RHB Bank alsogained from key changes inMalaysia's monetary policy. BNMrelaxed foreign exchangeadministration rules in April 2005and again in July 2005, that saw aconversion from a fixed exchangerate regime of US$1= RM3.80 to amanaged float against a basket ofcurrencies. These changes allowedRHB Bank to once again offer andexpand its portfolio of financialservices to customers such as thehedging of all types of foreignexchange financial obligatorypayables or receivables, forinvestments or for education abroad.The increased services will boost ourtreasury income.

RHB Bank raised its profile duringthe year as it tied-up with JapanBank for International Cooperationto disburse a US$100 million loanfinancing for small and mediumindustries in Malaysia. It is the firstforeign bank to have such analliance with the Japaneseinstitution, reflecting its growingstature in the international arena. Aspart of its expansion in Thailandwhere it already has a presence, RHBBank joined hands with the Office ofthe Board of Investment of Thailandto explore cross-border business andinvestment.

Among new products and serviceslaunched during the year wereInfinity Banking. Formerly known asPremium Banking, it was re-launched in January 2005 to providecomprehensive money managementadvice and services. With a currentretail database of over 2 million

active customers, there istremendous growth potential forInfinity Banking. RHB Bank has alsosought to increase business in theSmall and Medium Enterprises(“SME”) segment with newcompetitive loan packages andservices and the establishment of adedicated bumiputera businessdevelopment team to targetbumiputera SME businesses. We seetremendous potential for goodreturns in this segment, balancedwith credit risk, which is well spreadout among smaller borrowers.

At the same time, RHB Bankcontinued to grow its credit cardbusiness, increasing circulation by25% to 570,000 cards during theyear through numerous offers andinnovative contests. RHB AirAsiaCredit Card, which surpassed itstarget of 100,000 cardholders inAugust 2005, won the Gold Award


for Best Chip Card Programme atthe 2005 MasterCard Asia-PacificMarketing Leadership Awards. Theintroduction of the Visa Infinite Cardin January 2005, which is strictly byinvitation only for affluent, upscaleand high net worth customers, hashelped us tap into profitablesegments with a “Beyond Platinum”benefit. In April 2006, the Banklaunched the RHB PlusOneMasterCard, a joint lifestyle cardwith electronics consumer retailerSenheng Electric (Malaysia) Sdn Bhdto increase shopping pleasure forour customers.

With technology being a mainbusiness enabler, RHB Bankcontinued to invest in enhancing ITcapabilities to improve customerservice and fuel growth. In 2005, theBank implemented a fully integratedcustomer information system (“CIS”)and data warehouse to furtherenhance the suite of products andservices to meet customers' needsand expectations. During the year,Internet Banking usage grew by30% as customers becameincreasingly aware of the time andcost efficiencies of utilising RHBBank’s online banking facility. Billpayments via Internet Banking

increased by 41% following theintroduction of new services such asonline IPO application in December2005 and an online travel service.For greater efficiency of processesand improved cost effectiveness, theimplementation of an EnterpriseApplication Integration (“EAI”)platform designed to connect,consolidate and coordinate systems,applications, data, business processand people across the Bank will becompleted by the end of the 2006financial year.

By far, the most significant milestonecapping the year for RHB Bank wasthe rollout of its Strategic Initiative in


the final quarter of 2005, definingits Vision, Mission and Core Valuesfor future growth. The StrategicInitiative places the customer at theapex of all our activities and focuseson RHB Bank as the Provider ofChoice, Employer of Choice andInvestment of Choice. Withstrategies well defined and theprocesses clearly outlined, theStrategic Initiative will serve as ourcompany ethos and blueprint forfuture growth. It creates a cohesiveand realistic set of objectives, whichemployees can readily embrace andwork towards.

INSURANCE

RHB Insurance emerged as theGroup's top performing unit with areturn on equity of 18.6% for the2005 financial year, up from 13.6%the previous year, strengthened byefforts to entrench its position as aleading provider of insuranceservices. During the year, it opened anew branch in Sandakan, Sabah totap growing demand for crop andmarine insurances, expected to comefrom some 1,000 plantations in thearea. It has launched the eMarine to

enable customers to buy marineinsurance through the Internet, inaddition to its eForeignWorkers,eTravel and eMotor packages. Itsmain products are in the propertyand casualty classes, which togetheraccount for more than 70% of totalinsurance underwritten by thecompany.

The RHB Di Hati roadshow hashelped to expand our reach fromurban markets to small towns,especially in the East Coast. Therestructuring of our risk profile to


strengthen assessments and cutcosts have helped increase value andcost savings for the customer. RHBInsurance has put in place strategicmeasures to improve yields forreinsurance premiums and to furtherstrengthen our return of equity rate.

As a result of all these efforts, grosspremium written by RHB Insuranceexpanded to RM179.2 million, led byfire and motor sectors, while netpremium rose to RM123.3 million.Similarly, the underwriting surplussurged to RM23.7 million while netinvestment income remained strongat RM10.3 million.

MERCHANT BANK

RHB Sakura stood tall in the face ofa volatile equity market andchallenging operating environment.It leveraged on its strengths andfranchises to drum up newbusinesses. RHB Sakura againmaintained its leading position in theprimary debt markets by successfullyarranging issuances totaling RM9.1billion in 2005, with several big-ticket deals. The most outstandingtransaction was the RM5.9 billionIslamic securities issue for JimahEnergy Ventures Sdn Bhd which itjointly lead arranged with 3 otherbanks. This landmark deal markedseveral new firsts, not just for thefinancing of independent powerplants but also for project andIslamic financing in general. The dealhas won four prestigious local and

international awards, including the"Best Project Finance Award (Asia-Pacific) 2005" by Euromoney,"Malaysian Deal of the Year" by theAsset Magazine's Triple A CountryAward, "Asia Pacific Bond Deal ofthe Year" by Project FinanceInternational and “Best CorporateFinance Deal of the Year” by theEdge. Other notable Islamicmandates were a RM2.2 billionMurabahah Medium Term NotesProgramme for Putrajaya HoldingsSdn Bhd, a RM240.0 million SukukIjarah for Sarawak Gateway Sdn Bhdand a RM150.0 million Serial SukukMusyarakah bonds issue for ASSARChemicals Sdn. Bhd. The ASSARChemicals transaction deservesspecial mention as it utilizes the lesspopular Musyarakah, or ‘profit andloss sharing’, in the structure of thefinancing.


Despite a lacklustre equity market,RHB Sakura undertook several majorprimary and secondary offerings in2005. These included:

• CNI Holdings Berhad’s IPO onthe Main Board of BursaSecurities, raising a total ofRM81.9 million

• MMS Ventures Berhad’s IPO onthe Mesdaq market of BursaSecurities, raising a total ofRM9.9 million

• Prestar Resources Berhad’s rightsissue of warrants of RM4.4million

• Poly Tower Resources Berhad’srights issue of RM17.6 million

• Lion Corporation Berhad’srestricted offer for sale ofRM67.6 million

• BIMB Holdings Berhad’s rightsand restricted issue of up toRM803.6 million

In the areas of acquisitions anddivestitures, RHB Sakura advised ormanaged a number of sizeabletransactions including:

• Intan Utilities Berhad’sacquisition of a 27.5% equityinterest in Berjaya Sports TotoBerhad and acquisition offreehold land and shoppingcomplex for a total RM1.2billion

• Scomi Group Berhad’s disposalof the entire equity interests inOMS Oilfield Holdings (Malaysia)Sdn Bhd, Oiltools Pte. Ltd.,Scomi Transportation Solutionsand Scomi Sdn Bhd for a totalRM285.0 million, resulting in areverse takeover of Bell & OrderBerhad


• Kinsteel Berhad’s acquisition ofa 51% equity interest inPerwaja Steel Sdn Bhd andother assets located in Gurun,Kedah for RM297.6 million

• Idaman Unggul Berhad’sdisposal of its wholly-ownedunit, Tahan Insurance MalaysiaBerhad, to Advanced Electronics(M) Sdn Bhd for RM124.0million

• Maxis Communications Berhad’sacquisition of 74% equity inIndia’s Aircel Limited for a totalvalue of USD$800 million(RM3.04 billion).

During the year, RHB Sakurawidened its market reach by openingnew desk offices in Kuching, JohorBahru and Penang to better servethe needs of its clients in these keymarketplaces. It also continued withkey initiatives to enhance its riskmanagement capabilities to preparefor the implementation of the BaselII Standardised Approach for creditrisk which is targeted for 2008.

Its brokerage arm, RHB Securities,branched out during the year, with astrategic tie-up in Singapore withPhillip Securities Pte Ltd to offerclients a multi-exchange tradingplatform with access to markets inSingapore, Hong Kong, Thailand,Japan, United States, United Kingdomand Australia via the Internet. This

spells new opportunities for RHBSecurities and will help augment itsrevenues in an increasinglycompetitive domestic market. RHBSecurities also teamed up with DowJones Indexes to set a newbenchmark by launching the DowJones-RHB Islamic Malaysia Index,which tracks Shariah-compliant stockson the Bursa Malaysia based onglobal standards. The new Indexcould also be a platform for theGroup to launch new Islamic capitalproducts. In 2006, RHB Securitiesplans to strengthen its position in thedomestic market as well as inSingapore, through bold and growth-focus activities. It will also continuewith its rationalisation exercise toachieve better cost-efficiency.

RHB Unit Trust improved itsperformance as sales of its unit trustfunds breached the RM800.0 millionmark. Its total fund size under


management reached RM1.6 billionas at the end of 2005, from RM1.5billion the previous year. Theliberalisation of foreign exchangecontrols in April 2005 was a definingpoint for the unit trust industry, as ittook an exciting new turn toward

global and regional funds, offeringinvestors diversification in theirportfolio. RHB Unit Trust was amongthe first few to launch a regionalfund, the RHB Dividend ValuedEquity Fund ("RHB Diva Fund"), with

70% exposure to Asia-Pacificexcluding Japan, and 30% inMalaysia. The fund's performancehas been favorable, with a totalreturn of 11.7% for a 3-monthperiod as at 3 February 2006.Among the company's existingfunds, RHB Capital Fund won TheEdge-Lipper Malaysian Unit TrustFund Award for best performingEquity Growth Fund in 2005 for a10-year performance.

Overall, the Group has reinvigoratedits operations and greatly enhancedefficiencies and synergies throughgroup-wide cross-selling processesand new initiatives. We have shiftedfrom our traditional corporatesegment to become a more retail-oriented and progressive lookingorganisation.


FUTURE PROSPECTS

The Group expects to continue itsevolution as it embarked on atransformation to become aninvestment bank this year. BankNegara Malaysia in March 2005announced the framework for thecreation of full-fledged investmentbanks that would mainly be involvedin capital market activities andformed through mergers betweenmerchant banks, stock-brokingcompanies and discount houses.Their amalgamation is envisaged toboost efficiency and effectiveness byminimising duplication of resources,leveraging on common infrastructureand tapping the benefits ofsynergies and economies of scale.We believe such a rationalisation willhelp create new businesses,strengthen the Group's capacity tocapitalise on new growth andefficiently marshal resources to meetthe challenges of an open market.

The introduction of the depositinsurance system in September 2005also augurs well for the financialsector. By enhancing consumerprotection infrastructure and provideincentives for financial institutions toadopt sound financial and businesspractices, it will boost publicconfidence in the country's financialsystem by providing explicitprotection of deposits.

A stronger economy in 2006 isanother plus for the financial sector.Gross domestic product ( “GDP”) isprojected to grow at a faster pace of6% in 2006, driven by higherdomestic demand and strengtheningexports. Under the Ninth MalaysiaPlan, the financial services sector isenvisaged to grow by an average7% a year, with its share of GDPincreasing to 15.8% by 2010.

But there will be new challenges andintensified competition as theFinancial Sector Masterplan isalready in the second of its three-phase growth. Locally-incorporatedforeign banks (LiFB) will be allowedto establish up to four additionalbranches in 2006, giving themgreater operational flexibility underthe first of a phased approach ofbranch liberalization. From next year,these LiFBs will be given access tothe MEPS Inter-bank GIRO ATMnetwork, posing further challengesto domestic banks. In the emerginginvestment bank landscape, BNMhas raised the limit of foreignownership to 49%, compared with30% for domestic banking groups,which could lead to the entry ofnew foreign players. Theappointment of five universalbrokers and five foreign researchhouses will intensify competition inthis sector for end-clients both in thedomestic and overseas markets.Financial banking institutions willface progressively greater rivalry notjust among themselves, but alsofrom other non-bank financialentities and capital markets.

The battle for market share has alsoheightened in the Islamic bankingsector as BNM issued permits tomore players. In addition to RHBISLAMIC, three other new playersentered the fray in 2005 including aforeign institution, and more areexpected to jump on thebandwagon this year.

Higher domestic interest rates mayalso impact loans growth and pressuremargins. BNM raised its OvernightPolicy Rate (“OPR”) for the first time inseven years in November 2005, againin February 2006 and April 2006 amidrising inflationary pressure. The OPRwas increased by a total 80 basis

points from 2.7% to 3.5% currently,which led to a corresponding increasein banks’ base lending rate andfunding costs. At the same time,deposit rates rose but at a slower rate.The ability of households to borrowhas not been impaired so far as ratesremained relatively low but there areconcerns the scenario may change ifBNM further raises the OPR to curbinflation, which is expected to climb toas high as 4% this year from 3% in2005.

The road ahead will not be easy butRHB is geared up for another bumperyear in 2006. We will take advantageof our solid foundation to propel theGroup into the next phase of growth.We will beef up our human resourcescapital and speed up high-techinitiatives to create better productsand services. However, we willcontinue to safeguard our financialstability through prudentialprovisioning, and will not lower orcompromise on loan quality. We willincrease efforts to further strengthenrecognition of the RHB brand as onethat is synonymous with the deliveryof high quality service andoutstanding returns to shareholders.We will continue to be innovative inrolling our new products and servicesto meet the modern-day needs ofincreasingly discerning customers. Ourfriendly, personalised services andcompetitive range of products will addvalue for customers in urban marketsas well as in small towns, for largecompanies as well as for consumers.

The Group will continue to be retail-oriented, and see strong growthflowing from the consumer divisions,corporate loans, Islamic banking,auto financing and treasurycorporations sectors. In Islamicbanking, we have a pole positionand are determined to use this toour advantage to build RHB ISLAMICinto one of the top three Islamicbanks in the country. Governmentincentives to develop Malaysia into aglobal Islamic financial hub will alsoserve as a platform in the future forthe Group to explore new venturesand tap markets abroad. Overall, theGroup remains open to strategicalliances or investments that willshore up competitiveness and createvalue for shareholders. RashidHussain Berhad holds greatexpectations for the future and seesan exciting year in 2006. We willexcel and we will deliver.

1

32 4

65 7

98 10

RHB Group achievements & awards

4. Best Domestic Providers of FXServicesAs Voted By Financial InstitutionsRHB Bank Berhad

5. ACM 2005 Best @ Show AwardWinner, Best New ServiceRHB Bank Berhad

6. Standard & Poor’s Malaysia FundAwards 2005 by The StarRHB Islamic Bond Fund

7. Best Project Finance Award (Asia-Pacific) 2005 Jimah Energy Ventures SdnBhd by EuromoneyRHB Sakura Merchant Bankers Berhad

1. Gold AwardBest Chip Card Programme for AirAsiaCredit CardRHB Bank Berhad

2. Special Award in Recognition ofInitiativeAs the First VISA Infinite Card Issuer inMalaysiaRHB Bank Berhad

3. Best Domestic Providers of FXServicesAs Voted By Malaysia MarketRHB Bank Berhad

8. Malaysian Deal of the YearJimah Energy Ventures Sdn Bhd by theAsset Magazine’s Triple A Country AwardRHB Sakura Merchant Bankers Berhad

9. Asia Pacific Bond Deal of the YearJimah Energy Ventures Sdn Bhd byProject Finance InternationalRHB Sakura Merchant Bankers Berhad

10. House of the Year Malaysia 2005 byAsia RiskRHB Securities Sdn Bhd

11. Best Corporate Finance Deal of theYear Jimah Energy Ventures Sdn Bhd byThe EdgeRHB Sakura Merchant Bankers Berhad(not in picture)

12. Best Local Brokerage (rank 3) & Bestin Sales Trading in Malaysia (rank 3)by Asia Money Brokers Poll 2005RHB Securities Sdn Bhd(not in picture)

13. Best Performing Equity Growth Fundfor 2005 for a 10-year Performance byThe Edge-LipperRHB Unit Trust Management Berhad(not in picture)


busi

ness

act

iviti

es

5. RHB Bank: Star Wars Episode IIISpend & Win ContestMay 2005

6. RHB Securities: Dow Jones-RHBIslamic Malaysia IndexJune 2005

7. RHB Securities: Multi ExchangeTrading Platform with PhillipSecurities Pte LtdJune 2005

8. RHB Unit Trust: RHB DividendValued Equity Fund (DIVA)LaunchJuly 2005

9. RHB Sakura: IJN Capital SdnBhd Signing CeremonyJuly 2005

1. RHB ISLAMIC Bank: Opening ofMain BranchMarch 2005, RHB Centre

2. RHB Bank: Sponsorship ofSingapore CupMarch 2005

3. RHB Sakura: Jimah EnergyVentures Sdn Bhd SigningCeremonyApril 2005

4. RHB Sakura: PharmaniagaBerhad Signing CeremonyMay 2005

RHB group

corporate highlights

1 2 3

4 5 6

7 8 9


busi

ness

act

iviti

es5. RHB Securities: 3rd

International Islamic Banking &Finance ConferenceNovember 2005

6. RHB Bank: Japan Bank forInternational Cooperation(JBIC) Signing CeremonyDecember 2005

7. RHB Insurance: OfficialOpening of Sandakan Branch,SabahDecember 2005

1. Rashid Hussain Berhad:Malaysia 1000 Award 2005 -Industry Leader in FinancialServicesAugust 2005

2. RHB Bank: Gold Award BestChip Card Programme forAirAsia MasterCard Credit CardAugust 2005

3. RHB Unit Trust: Third PartyFunds Investment PlatformSeptember 2005

4. RHB ISLAMIC Bank: OfficialOpening of Kota BharuMarketing Centre, KelantanOctober 2005

1 2 3

4 5

6 7


3. Bandar Melaka, MelakaJune 2005

1. Kota Bharu, KelantanMarch 2005

2. Seremban, Negeri SembilanMay 2005

RHB Di Hati

1 1

2 2

3 3


busi

ness

& s

ocia

l act

iviti

es3. RHB Group Iftar With the

UnderprivilegedOctober 2005

1. RHB Unit Trust: MudharabahFund Cleansed ProceedsDistributionAugust 2005

2. Merdeka Celebrations, RHBCentreAugust 2005

3 3 3

3 3

1 2



corporate governance statement

INTRODUCTION

The Board of Directors (‘Board’) of RHB is pleased to report on the application by the Group of the principles containedin the Malaysian Code on Corporate Governance (‘Code’) and the extent of compliance with the best practices of theCode as required under the Listing Requirements (‘LR’) of Bursa Malaysia Securities Berhad (‘Bursa Securities’).

BOARD OF DIRECTORS

Board Responsibility

The Board subscribes to theprinciples of good corporategovernance and as such, will alwaysensure that the Company and theGroup achieve best practice in theconduct of the Company’s and ofthe Group’s business and operationalactivities. An indication of theBoard’s commitment is reflected inthe conduct of regular Boardmeetings by the Company and theincorporation of various processesand systems to achieve a riskawareness culture as well as theestablishment of relevant BoardCommittees and ManagementCommittees at the Company and itsprincipal operating subsidiaries.

Composition of the Board

The Board currently has ten (10)members, comprising the NonExecutive Chairman, one (1) SeniorIndependent Non Executive Director,two (2) Independent Non ExecutiveDirectors and six (6) NonIndependent Non ExecutiveDirectors. This is in line with the LRof Bursa Securities which requires

two (2) or one-third (1/3) of theBoard members, whichever is higher,to be Independent Directors to fairlyreflect the interest of the minorityshareholders.

The Directors bring together a widerange of business management skillsas well as banking and financialexperience required for themanagement of a large, diversifiedand expanding Group. All Boardmembers participate fully in thedeliberation and decision makingprocess on the key issues involvingthe Group.

In the principal operatingsubsidiaries, there are clear divisionof responsibilities between the Boardand the Managing Director / ChiefExecutive Officer to ensure thebalance of power and authority. Atthe Company level, the Board hastaken an active role to oversee theGroup’s operations and to ensurethat strategies are fully discussedand examined, taking into accountthe long term interests of the variousstakeholders including shareholders,employees, customers, suppliers andthe various communities in whichthe Group conducts its business. In

addition to the role and guidance ofthe Independent Non ExecutiveDirectors, each Director neverthelessbrings an independent judgement tobear on issues of strategy,performance, resources andstandards of conduct.

All decisions of the Board are basedon the decision of the majority andno single Board member can makeany decision on behalf of the Board,unless duly authorised by the Boardof Directors. As such, no individualor a group of individuals dominatethe decision making process. Thisenables the Board to effectivelydischarge its principal responsibilitiesas set out in the Code.

The profile of each Director ispresented on page 10 to page 15 ofthe Annual Report.

Board Meetings

The Board meets on a scheduledbasis at least four (4) times a yearwith additional meetings held whenurgent issues and importantdecisions are required to be takenbetween the scheduled meetings.


All the Directors have complied withthe minimum 50% attendancerequirement at Board meetings duringthe financial year as stipulated by theLR of Bursa Securities.

Scheduled Board meetings arestructured with a pre-set agenda. TheBoard’s principal focus is the overallstrategic direction, financial andcorporate developments of theGroup. Minutes of meetings of thevarious committees within the Groupare tabled to the Board for notation.Key matters such as the Group’sbusiness strategy and budget,Group’s annual interim results,material contracts, major capitalexpenditure and investors relationprogramme are reserved for theBoard’s decision. Agenda and Boardpapers are circulated to members ofthe Board prior to the Board meetings

so as to give Directors sufficient timeto consider and deliberate on theissues to be raised at the Boardmeetings. The Directors have fullaccess to the senior management ofthe Group and the advice andservices of the Company Secretary.

In addition, the Directors may alsoseek independent professionaladvice, at the Company’s expense, ifrequired. Directors may also consultwith the Non Executive Chairmanand other Board members prior toseeking any independentprofessional advice.

Directors’ Training

All Directors have attended therequired Mandatory AccreditationProgramme within the stipulated

timeframe. The Directors also attendtraining programmes and seminarsto keep abreast with relevantdevelopments in the businessenvironment as well as newregulatory requirements on acontinuous basis in compliance withParagraph 15.09 of the LR of BursaSecurities. To encourage Directors’continuous training, the Group hadalso conducted 2 sessions ofDirectors’ Training Programmes,which consist of a full one-daysession each during the financialyear. The topics presented at thetraining programmes are wide-ranging and provide the Directorswith current updates on variousbusiness, management and legalissues appropriate to furtherenhance their knowledge and skills.

During the financial year ended 31 December 2005, twelve (12) Board meetings were held. The attendance of eachDirector in office at the end of the financial year at the aforesaid Board meetings are set out below:

Name of Director Total meetings attended Percentage of attendance (%)

YBhg. Dato Sri Sulaiman Abdul Rahman Taib 11/12 92YBhg. Datuk Azlan Zainol# 4/5 80- Appointed on 6 July 2005

Puan Azian Mohd Noh# 4/5 80- Appointed on 5 July 2005

YBhg. Dato’ Mohamed Khadar Merican 10/12 83YBhg. Dato Sri Liang Kim Bang 8/12 67YBhg. Datuk Wan Ali Abdul Kadir @

Wan Ali Wan Yubi @ Tuanku Yubi 6/12 50Encik Vaseehar Hassan Abdul Razack 11/12 92YBhg. Dato’ Paduka Nik Hashim Nik Yusoff 12/12 100YBhg. Datin Khamarzan Ahmed Meah 10/12 83Encik Johari Abdul Muid 12/12 100

Notes:-# Based on the number of Board meetings held since the Director was appointed to the Board. The first Board meeting for the financial year

under review was held on 18 February 2005.


APPOINTMENT OFDIRECTORS

The Nomination Committee assiststhe Board in discharging its dutiesand responsibilities in relation to theappointment of new directors. TheNomination Committee has writtenterms of reference requiring it toidentify and select candidates inconnection with any proposed newappointment of Directors and makesrecommendations to the Board onsuch appointments. In identifyingand selecting the candidates, theNomination Committee must givedue consideration to the mix ofexpertise and experience required foran effective Board.

BOARD COMMITTEES

Audit Committee

The Audit Committee of the Boardhas been in place since 29 July 1994.Each of the principal operatingsubsidiaries of the Group, namelyRHB Capital Berhad (“RHB Capital”),RHB Bank Berhad (“RHB Bank”), RHBISLAMIC Bank Berhad (“RHB IslamicBank”), RHB Sakura MerchantBankers Berhad (“RHB Sakura”), RHBInsurance Berhad (“RHB Insurance”)and RHB Securities Sdn Bhd (“RHBSecurities”) have separate AuditCommittees of the Boards. All AuditCommittees in the Group holdregular meetings to deliberate onfindings by the internal auditors andexternal auditors and to dischargetheir duties and responsibilities asspelt out in the Terms of Reference.

The Audit Committee presentlycomprises two (2) Independent NonExecutive Directors and one (1) NonIndependent Non Executive Director.

The Audit Committee meets regularlywith the internal auditors andwhenever deemed necessary,together with the relevant Group’sSenior Management and the externalauditors to review the Company’s andthe Group’s financial reporting, thenature, scope and results of auditreviews, and the effectiveness of thesystem of internal controls. Forfinancial year ended 31 December2005, a total of five (5) AuditCommittee meetings were held.

The composition, terms of referenceand the activities of the AuditCommittee during the financial yearended 31 December 2005 are setout in the Audit Committee Reporton page 49 to page 51 of thisAnnual Report.

Nomination Committee

Apart from identifying and selectingcandidates for new appointments,the Nomination Committee is alsoresponsible for assessing existingDirectors and identifying, nominatingand orientating new Directors toenhance corporate governance. TheNomination Committee reviewsannually the required mix of skills,experience and other qualitiesincluding core competencies whichdirectors should bring to the Boardand which the Board requires for itto function completely andefficiently.

The Boards of RHB Capital, RHB Bank,RHB Islamic Bank and RHB Sakurahave also formed their respectiveNominating Committees to assist inassessing existing Directors and therespective Chief Executive Officers aswell as identifying and nominatingnew Directors to their respective

Boards. These Nominating Committeeshave also been actively involved inidentifying and selecting the ChiefExecutive Officers of the relevantsubsidiaries for recommendation tothe respective Boards for approval. TheNominating Committee of RHB Capitalalso serves as the NominatingCommittee of RHB Insurance.

The Nomination Committeepresently comprises two (2)Independent Non Executive Directorsand one (1) Non Independent NonExecutive Director.

Human Resource Committee

The Human Resource Committeewas formed on 8 November 2001 toassist the Board in ensuring that theexecutive directors and seniormanagement of the Company andits direct subsidiary companies arefairly rewarded for their individualcontributions to the Group’s overallperformance and the levels of theremuneration are sufficient to attractand retain the best executivedirectors and senior management tomanage the Group successfully. TheHuman Resource Committee is alsoresponsible for the formulation ofbroad human resource policies andguidelines to be adopted by theGroup and its subsidiaries.

The Boards of RHB Capital, RHBBank, RHB Islamic Bank and RHBSakura are also assisted by theirrespective Remuneration and HumanResource Committees to evaluatethe performance and remunerationof the executive directors and seniormanagement and to recommend onthe policies and framework inrelation to rewards and benefits. TheRemuneration and Human Resource



Committee of RHB Capital alsoserves as the Remuneration andHuman Resource CommitteeCommittee of RHB Insurance.

The Human Resource Committeepresently comprises one (1)Independent Non-Executive Directorand two (2) Non Independent NonExecutive Directors.

Employees’ Share Option Scheme(‘ESOS’) Committee

The ESOS Committee was formedon 22 July 2002 and is responsiblefor assisting the Board in theadministration of ESOS andidentifying eligible employees underthe ESOS as well as deciding on thenumber of shares to be offered toeligible employees taking intoconsideration the seniority,performance and length of theirservices.

Risk Management Committee

The Group’s subsidiaries, namely,RHB Capital, RHB Bank, RHB IslamicBank and RHB Sakura and RHBInsurance have established itsrespective Risk ManagementCommittees to further strengthenthe risk management process withinthe respective subsidiaries. Thesecommittees, which report to theirrespective Boards, meet regularly tooversee the development of generalrisk policies and procedures, andmonitor and evaluate the numerousrisks that may arise from theirrespective business activities.

The members of the respectiveBoard Committees of the Companyare set out on page 6 and page 7 ofthe Annual Report.

RE-ELECTION OF DIRECTORS

In accordance with the Company’sArticles of Association, one-third (1/3)of the Directors shall retire from officeat each Annual General Meeting,subject to the retirement of allDirectors at least once in every three(3) years. Retiring Directors can offerthemselves for re-election. Directorswho are appointed by the Boardduring the financial year are subjectto re-election by the shareholders atthe next Annual General Meetingheld following their appointments.

DIRECTORS’REMUNERATION

The remuneration of Directors isdetermined at levels which enablethe Group to attract and retain theDirectors with the relevantexperience and expertise needed toassist in managing the Groupeffectively. In the case of ExecutiveDirectors of the Group, theirremuneration are structured to linkrewards to corporate and individualperformance. For the Non ExecutiveDirectors, the level of remunerationreflects the level of responsibilitiesundertaken by the particular NonExecutive Director concerned in theCompany and in the Group.

Being an investment holdingcompany, the Non Executive Directorsreceive Directors’ fees from theCompany for the services renderedwhich are approved at the AnnualGeneral Meeting by the shareholdersbefore payment is made. Directorswho hold full time executive positionsin the relevant operating subsidiarycompanies receive remuneration

which is determined based on theirlevel of responsibilities, skills,experience and job performance.

Directors’ remuneration includessalaries, bonuses, benefits in kind,Directors’ fees, Board committeeallowance and meeting attendanceallowance. The Directors’ fees aresubject to shareholders’ approval atthe Annual General Meeting beforepayment is made.

The aggregate remuneration paid toDirectors of the Company comprisingremuneration received from theCompany and the subsidiaries of theCompany the financial year ended 31December 2005, analysed into thefollowing bands are as follows:

Aggregate Number ofremuneration Directors

Current Directors

RM nil - RM50,000 4RM50,001 – RM100,000 1RM100,001 – RM150,000 1RM150,001 – RM200,000 1RM250,001 – RM300,000 1RM450,001 – RM500,000 1RM3,050,001 – RM3,100,000 1*

Directors who had resigned

RM nil - RM50,000 1

* Former Executive Director –Remuneration (including incentivepayment) is based on his ServiceContract with RHB Capital.

The disclosure of Directors’remuneration is made in accordancewith Appendix 9C, Part A, Item 10of the LR of Bursa Securities.


INVESTOR RELATIONS ANDCOMMUNICATION WITHSHAREHOLDERS

The RHB Group recognises that it isvital to keep open all lines ofcommunication with fund managersand analysts, bearing in mind that theinvesting community – particularlyinstitutional investors – rely on theiranalyses when making investmentdecisions on the Group. In line withthat, they are kept abreast of allmajor developments within theGroup. Information on milestonesand other developments within theRHB Group is communicated to themon a timely basis, even as feedback issought and received from them on aregular basis.

The investing community is keptinformed of developments withinthe RHB Group in several ways. Forinstance, it is mandatory that thequarterly results of the Group bereported to Bursa Securities. Theresults are also communicated to thepublic through the newspapers,whose reports are based on pressreleases issued through the GroupCorporate Communications Division.

To inform fund managers andanalysts about the Group’s financialperformance, and to give them anopportunity to ask questions andprovide feedback, regular discussionsand briefing sessions are held. Forthe financial year 2005, two suchsessions were held, during whichDirectors, Heads of Companies andsenior management personnelbriefed fund managers and analystson corporate developments andfinancial performance of the group.They also fielded questions from thefund managers and analysts who,

themselves, provided valuablefeedback on market sentiments withregards to the group’s performance.On 30 August 2005, a full briefingwas held to provide analysts andfund managers with details of theresults for the six-month period to30 June 2005. Another briefing washeld on 28 February 2006 to providethem with details of the results ofthe financial year ended 31December 2005.

During the year, we also met fundmanagers and analysts from varioushouses individually or in small groupson 15 separate occasions. Most ofthese meetings were held at therequest of the fund managers oranalysts who themselves had specificquestions they wanted to ask ormerely to seek clarification onvarious matters.

To keep the investing publicinformed of developments withinthe Group, press releases are issuedand at times press conferences areheld during which journalists aregiven the opportunity to askquestions on the Group. The pressreleases are issued and pressconferences held when newproducts and services are launchedor when results are announced.Press releases that have been issuedare also posted in the Group’sinternet and intranet sites.

The Annual General Meeting of theCompany also represents theprincipal forum for dialogue andinteraction with all shareholders. Ateach Annual General Meeting, theBoard presents the performance ofthe Group’s businesses andencourages shareholders toparticipate in the question and

answer session. Directors, theChairman of the Audit Committeeand the external auditors areavailable to respond to shareholders’questions during the Annual GeneralMeeting.

ACCOUNTABILITY ANDAUDIT

Financial Reporting

In presenting the annual auditedfinancial statements and quarterlyannouncements of results toshareholders, the Directors takeresponsibility to present a balancedand understandable assessment ofthe Group’s position and prospects.The Audit Committee of the Boardassists by scrutinising theinformation to be disclosed, toensure accuracy and adequacy. AStatement by Directors of theirresponsibilities in preparing thefinancial statements is set out onpage 52 of this Annual Report.

Internal Control

The Statement on Internal Controlset out on page 47 and page 48 ofthis Annual Report provides anoverview of the state of internalcontrols within the Group.

Relationship with the Auditors

The Board maintains a formal andtransparent professional relationshipwith the auditors, through the AuditCommittee. The role of the AuditCommittee in relation to the internaland external auditors is described inthe Audit Committee Report set outon page 49 to page 51 of thisAnnual Report.



internal control statement

INTRODUCTION

The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of internalcontrols to safeguard shareholders' investments and the Group's assets. The Bursa Malaysia Securities Berhad’s ListingRequirements require directors of listed companies to include a statement in their annual reports on the state of theirinternal controls. The guidelines for directors on internal control, the Statement on Internal Control : Guidance forDirectors of Public Listed Companies ("Guidance") provides guidance for compliance with these requirements.

Set out below is the Board of Directors’ (“Board”) Internal Control Statement, which has been prepared inaccordance with the Guidance.

RESPONSIBILITY OF THEBOARD

The Board recognises the importanceof maintaining a sound system ofinternal controls and riskmanagement practices as well asgood corporate governance. TheBoard affirms its overall responsibilityfor the Group's system of internalcontrols and for reviewing itsadequacy and integrity. Such systemcovers not only financial controls butalso controls relating to operational,risk management and compliancewith applicable laws, regulations,rules, directives and guidelines.

The system of internal controlsinvolves each key operatingcompany in the Group and itsmanagement, including the Board,and is designed to meet the Group’sbusiness objectives and to managethe risks to which it is exposed. TheBoard acknowledges that riskscannot be completely eliminated.The system, by its nature, can onlyprovide reasonable and not absoluteassurance against materialmisstatement, loss or fraud.

RISK MANAGEMENTFRAMEWORK

The Group has in place an ongoingprocess for identifying, evaluating,managing and reporting on thesignificant risks that may affect theachievement of its businessobjectives throughout the financialyear under review and up to thedate of this report. This process isregularly reviewed by the Board toensure proper management of risksand appropriate measures are timelytaken to mitigate any identifiedweaknesses in the controlenvironment.

The Group’s subsidiaries, namelyRHB Capital Berhad, RHB BankBerhad, RHB Islamic Bank Berhad,RHB Sakura Merchant BankersBerhad and RHB Insurance Berhadhave established their respective RiskManagement Committees to furtherstrengthen the risk managementprocess. These committees, whichreport to their respective Boards,meet regularly to oversee thedevelopment of general risk policiesand procedures, and monitor andevaluate the numerous risks thatmay arise from their respectivecompanies’ business activities.

Risk Management Units have alsobeen established at thesesubsidiaries to assist their respectiveRisk Management Committees indischarging their duties.

Amongst the other committees setup at major subsidiaries in the Groupto manage specific areas of risk arethe Asset & Liability Committee, theUnderwriting and Credit Committee,Loan Committee, IT SteeringCommittee and Basel II SteeringCommittee.

The Group Chief Risk Officer is inthe process of developing a group-wide Enterprise Risk ManagementFramework that would ensure theGroup has a consistent andacceptable approach to themanagement and monitoring of riskacross all business units.

CONTROL SELF-ASSESSMENT PROCESS

One of the key elements of theGroup's internal control system is itsControl Self-Assessment (“CSA”)process which covers all keyoperating companies in the Group.These companies are required tocontinuously identify as well as


document the controls andprocesses for managing the risksarising from their business activities,and assess their effectiveness.

The Audit Committee regularlyreviews the CSA process beingimplemented at the key operatingcompanies as well as the results ofreview by the internal auditors onthe CSA activities undertaken bythese companies.

OTHER KEY ELEMENTS OFINTERNAL CONTROL

Apart from the above, the other keyelements of the Group's internalcontrol system which have beenreviewed by the Board are describedbelow:-

• The management of the variouscompanies in the Group isdelegated to the respectiveChief Executive Officers and/orChief Operating Officers, andManagement Committee,whose responsibilities andauthority limits are set by therespective Boards. Appointmentof such officers at thecompanies concerned requiresthe approval of their respectiveBoards and relevant regulatoryauthorities, where applicable;

• Specific responsibilities havebeen delegated to the relevantBoard committees, all of whichhave written terms of reference.These committees have theauthority to examine all matterswithin their scope ofresponsibility and report back tothe Board with their

recommendations. The ultimateresponsibility for the finaldecision on all matters howeverlies with the entire Board;

• Delegation of authorityincluding authorisation limits atvarious levels of managementand those requiring the Board’sapproval are documented anddesigned to ensureaccountability and responsibility;

• Policies and procedures manualsfor key processes aredocumented and regularlyupdated for application acrossthe Group. These aresupplemented by operatingstandards set by the individualcompany, as required for thetype of business or geographicallocation of each company;

• To enhance the overallcompliance framework of theGroup, compliance function isalso established at RHB CapitalBerhad in addition to theCompliance Units set up at theoperating subsidiaries in theGroup;

• There is clear procedure forinvestment appraisal includingcapital expenditure;

• There are proper guidelines forhiring and termination of staff,training programmes for staff,annual performance appraisaland other relevant procedures inplace to achieve the objective ofensuring staff are competent tocarry out their responsibilities;

• Regular and comprehensiveinformation is provided tomanagement for monitoring ofperformance against thestrategic plan approved by theBoard, covering all key financialand operational indicators;

• A detailed budgeting process isestablished requiring all keyoperating companies in theGroup to prepare budgetsannually which are discussedand approved by the Board.Effective reporting system onactual performance againstapproved budgets is in placeand significant variances arefollowed up by managementand reported at the Board;

• Ongoing reviews of the internalcontrol system are carried outby the internal auditors. Resultsof such reviews are reported tothe Audit Committee. The workof the internal auditors isfocused on areas of priority asidentified by risk analysis and inaccordance with the annualinternal audit plans approved bythe Audit Committee. The headof internal audit functionreports to the Audit Committee;and

• The Audit Committee holdsregular meetings to deliberateon findings andrecommendations forimprovement by both theinternal and external auditorson the state of the internalcontrol system. The minutes ofthe Audit Committee meetingsare tabled to the Board.

internal control statement


audit committee report

ACTIVITIES OF THE AUDIT COMMITTEE AND THE INTERNAL AUDIT FUNCTION DURINGTHE FINANCIAL YEAR ENDED 31 DECEMBER 2005

Activities Of The Audit Committee

During the financial year ended 31 December 2005 (“year”), a total of 5 Audit Committee (“Committee”) meetingswere held. The Committee comprises the following members and details of attendance of each member at theCommittee meetings held during the year are as follows:-

On 14 March 2005, YBhg DatinKhamarzan Ahmed Meah wasappointed as a member of theCommittee while YBhg Dato’ OthmanAbdullah resigned as the Committeemember on 21 March 2005.

The Committee’s activities areconcentrated at Rashid HussainBerhad and its direct subsidiaries asRHB Capital Berhad and its majorsubsidiaries have separate auditcommittees at the respectivecompanies’ level. The main activitiesundertaken by the Committeeduring the year are as follows:-

• Reviewed the quarterlyunaudited financial results andthe annual audited financialstatements of the Company andthe Group as well as theappropriate announcements toBursa Malaysia Securities Berhadbefore recommending them forthe approval of the Board;

• Reviewed the related partytransactions (“RPTs”) and theadequacy of the Group’sprocedures for monitoring andreviewing of RPTs;

Composition Of The Committee No. Of Meeting AttendedWhilst In Office

YBhg. Dato’ Mohamed Khadar Merican 5 out of 5 meetings(Chairman / Senior Independent Non-Executive Director)

YBhg. Dato’ Sri Liang Kim Bang 5 out of 5 meetings(Member / Non-Independent Non-Executive Director)

YBhg. Datin Khamarzan Ahmed Meah 4 out of 4 meetings- appointed on 14/3/2005(Member / Independent Non-Executive Director)

YBhg. Dato’ Othman Abdullah 1 out of 1 meeting- resigned on 21/3/2005(Member / Independent Non-Executive Director)

• Reviewed with the externalauditors, their audit plan, auditstrategy and scope of work forthe year, their fees as well as thefindings emanating from theirannual audit. It also consideredthe reappointment of the externalauditors for recommendation tothe Board and the shareholdersfor their approval;

• Reviewed and approved thescope and adequacy of theinternal audit plan, includingresource needs;

• Reviewed the status ofcompletion of the internal auditplan, the internal audit reports,audit recommendations madeand management’s response tothese recommendations, andactions taken to improve thesystem of internal control andprocedures;

• Reviewed the control self-assessment (“CSA”) exerciseimplemented at principaloperating companies in theGroup and the results of thereview by the internal auditors

on the CSA activitiesundertaken by each principaloperating company concerned;

• Reviewed the minutes ofmeetings of other auditcommittees in the Group to theextent permitted by the relevantregulatory authorities to satisfyitself that all matters arisingtherefrom have beenappropriately addressed by suchother audit committees; and

• Tabled the minutes of eachCommittee meeting to theBoard for notation, and forfurther direction by the Board,where necessary.

INTERNAL AUDIT FUNCTION

The internal audit function is guidedby its Audit Charter and reports tothe Committee. Its primary role is toassist the Committee to discharge itsduties and responsibilities byindependently reviewing andreporting on the adequacy andintegrity of the Group’s system ofinternal controls.

The internal auditors adopt a risk-based approach towards theplanning and conduct of auditswhich is consistent with the Group’sframework in designing,implementing and monitoring itsinternal control system.

The CSA exercise rolled out by theinternal auditors during the year forimplementation throughout theprincipal operating companies in theGroup, is in alignment with thepractice of generating an embeddedrisk management capability andacceptable risk culture.


Upon completion of the audits, theinternal auditors have closelymonitored the implementationprogress of their auditrecommendations in order to obtainassurance that all major risk andcontrol concerns have been dulyaddressed by the management. Allaudit reports on the results of workundertaken together with therecommended action plans and theirimplementation status werepresented to the management andthe Committee.

The internal auditors work closelywith the external auditors to resolveany control issues as raised by themto ensure that significant issues areduly acted upon by themanagement.

TERMS OF REFERENCE OFTHE AUDIT COMMITTEE

Objectives

1. To assist the Board discharge itsresponsibilities by reviewing theadequacy and integrity of theCompany’s and the Group’sinternal control systems andmanagement informationsystems, including systems forcompliance with applicablelaws, regulations, rules,directives and guidelines.

2. To reinforce the independenceof the external auditors andthereby help assure that theywill have free rein in the auditprocess.

3. To provide, by way of regularmeetings, a line ofcommunication between theBoard and the external auditors.

4. To provide emphasis on theinternal audit function byincreasing the objectivity andindependence of the internalauditors and provide a forumfor discussion that isindependent of themanagement.

5. To review the quality of theaudits conducted by the internaland external auditors of theCompany.

6. To enhance the perceptions heldby stakeholders (includingshareholders, regulators,creditors and employees) of thecredibility and objectivity offinancial reports.

Duties and Responsibilities

1. To review the quarterly resultsand year-end financialstatements of the Company andthe Group, and to recommendthe same to the Board forapproval whilst ensuring thatthey are prepared in a timelyand accurate manner complyingwith all applicable accountingand regulatory requirementsand are promptly published.

2. To review any related partytransaction and conflict ofinterest situation that may arisewithin the Company or theGroup, including anytransaction, procedure or courseof conduct that raises questionsof management integrity.

3. To review the risk managementframework of the Company andthe Group to ensure theexistence of effective riskmanagement policies, structuresand limits to be consistent withthe Group’s methodologies andrisk return directions and tokeep abreast of both currentrisk management techniquesand theories, and any possibleor actual changes in theregulatory environment, and torecommend the appropriateaction.

4. To review with the external andinternal auditors whether theemployees of the Group havegiven them appropriateassistance in discharging theirduties.

5. To review the adequacy of thescope, functions and resourcesof the internal audit functionand that it has the necessaryauthority to carry out its work.

6. To review the internal audit planand processes, the results of theinternal audit programme orinvestigation undertaken andwhether or not appropriateaction is taken by managementon the recommendations of theinternal auditors.

7. To appraise the performance ofthe head of internal audit andto review the appraisals ofsenior staff members of theinternal audit function.

8. To approve any appointment ortermination of the head ofinternal audit and senior staffmembers of the internal auditfunction and to review anyresignations of internal auditstaff members and provideresigning staff members anopportunity to submit reasonsfor resigning, where necessary.

9. To review with the externalauditors, the nature and scopeof their audit plan, theirevaluation of the system ofinternal controls and theirmanagement letter and discussany matter that the externalauditors may wish to raise inthe absence of management,where necessary.

10. To recommend to the Board onthe appointment and theannual reappointment of theexternal auditors and their auditfee, after taking intoconsideration the independenceand objectivity of the externalauditors and the costeffectiveness of their audit.

11. To discuss and review with theexternal auditors any proposalfrom them to resign as auditors.

audit committee report


12. To review the co-ordination ofthe audit approach where morethan one audit firm of externalauditors is involved and the co-ordination between the externaland internal auditors.

13. To review the minutes ofmeetings of other auditcommittees within the Groupand be satisfied that all mattersarising therefrom are beingappropriately addressed bythese other audit committees.

14. To perform any other functionsas authorised by the Board.

Authority

1. The Committee is authorised bythe Board to investigate anymatter within its terms ofreference, to obtain theresources which it needs, and tohave full and unrestricted accessto information. It is alsoauthorised to seek anyinformation it requires from anyemployee of the Group and allemployees are directed to co-operate with any request madeby the Committee.

2. The Committee shall have directcommunication channels withthe external and internalauditors.

3. The Committee is authorised bythe Board to obtainindependent professional orother advice at the Company’sexpense and to invite outsiderswith relevant experience andexpertise to attend meetings if itconsiders this necessary.

4. Where the Committee is of theview that a matter reported byit to the Board has not beensatisfactorily resolved resultingin a breach of the ListingRequirements of Bursa MalaysiaSecurities Berhad (“BursaSecurities”), the Committeeshall promptly report suchmatter to the Bursa Securities.

Meetings

1. Meetings shall be held at leastfour (4) times a year with aminimum quorum of two (2)members and the majority ofmembers present shall beindependent non-executivedirectors. Additional meetingsmay be called at any time at thediscretion of the Chairman ofthe Committee.

2. The head of internal audit shallbe in attendance at meetings ofthe Committee. The Committeemay invite the external auditors,the chief financial officer, anyother directors or members ofthe management andemployees of the Group to bein attendance during meetingsto assist in its deliberations.

3. At least once a year, theCommittee shall meet with theexternal auditors without anyexecutive Board memberpresent and upon the request ofthe external auditors, theChairman of the Committeeshall convene a meeting toconsider any matter which theexternal auditors believe shouldbe brought to the attention ofthe Board or shareholders.

4. The Company Secretary shall bethe Secretary of the Committee.

5. The minutes of each Committeemeeting shall be tabled to theBoard by the Chairman of theCommittee.

Membership

1. The Committee shall beappointed by the Board fromamongst its number and shallcomprise not less than three (3)members, the majority of whomare independent non-executivedirectors.

2. The Chairman of theCommittee shall be anindependent non-executivedirector appointed by theBoard.

3. No alternate director shall beappointed as a member of theCommittee.

4. At least one member of theCommittee:-

(i) shall be a member of theMalaysian Institute ofAccountants ; or

(ii) if he is not a member ofthe Malaysian Institute ofAccountants, he shall haveat least three (3) years’working experience and:-

(a) he must have passedthe examinationsspecified in Part I ofthe 1st Schedule of theAccountants Act 1967;or

(b) he must be a memberof one of theassociations ofaccountants specifiedin Part II of the 1stSchedule of theAccountants Act 1967;or

(c) fulfils such otherrequirements asprescribed by BursaSecurities.

5. The term of office andperformance of the Committeeand each of its members mustbe reviewed by the Board atleast once every three (3) years.

6. If a member of the Committeeresigns or for any other reasonceases to be a member with theresult that the number ofmembers is reduced to belowthree (3), the Board shall withinthree (3) months of that event,appoint such number of newmembers as may be required tomake up the minimum numberof three (3) members.


responsibility statementby the board of directors

In the course of preparing the annual financial statements of the Group andof the Company, the Directors are collectively responsible in ensuring thatthese financial statements are drawn up in accordance with the MalaysianAccounting Standards Board approved accounting standards in Malaysia,Bank Negara Malaysia Guidelines, the provisions of the Companies Act, 1965and the Listing Requirements of the Bursa Securities Malaysia Berhad.

It is the responsibility of the Directors to ensure that the financial reporting ofthe Group and of the Company present a true and fair view of the state ofaffairs of the Group and of the Company as of the end of the financial yearand the results and cash flows for the financial year ended 31 December2005.

The Directors have applied the appropriate and relevant accounting policieson a consistent basis and made judgments and estimates that are reasonableand fair in preparing the financial statements of the Group and of theCompany.

The financial statements are prepared on the going concern basis and theDirectors have ensured that proper accounting records are kept so as toenable the presentation of the financial statements with reasonable accuracy.

The Directors have also taken the necessary steps to ensure that appropriatesystems are in place for the assets of the Group and of the Company to beproperly safeguarded for the prevention and detection of fraud and otherirregularities. The systems, by their nature, can only provide reasonable andnot absolute assurance against material misstatements, loss and fraud.

The Statement by Directors pursuant to Section 169 of the Companies Act,1965 is set out on page 161 of the Annual Report.

directors’ report 54

balance sheets 65

income statements 67

statements of changes in shareholders’ equity 68

cash flow statements 71

summary of significant accounting policies 75

notes to the financial statements 86

statement by directors 161

statutory declaration 161

report of the auditors 162

stat

utor

yfin

anci

al

stat

emen

ts


directors’ report

The directors submit herewith their report together with the audited financial statements of the Group and theCompany for the financial year ended 31 December 2005.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding. The Group is involved in commercial banking, Islamicbanking, merchant banking, finance company business, leasing, offshore banking, offshore trust services, stockbrokingand other securities related business, general insurance, unit trust management, asset management, nominee andcustodian services and property investment and management.

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

FINANCIAL RESULTS

Group CompanyRM'000 RM'000

Profit/(Loss) before Irredeemable Non-cumulative Convertible Preference Shares ('INCPS') dividends, taxation and zakat 564,127 (218,514)

INCPS dividends (110,447) –

Profit/(Loss) after INCPS dividends and before taxation and zakat 453,680 (218,514)Taxation and zakat (134,964) –

Profit/(Loss) after INCPS dividends, taxation and zakat 318,716 (218,514)Minority interests (262,228) –

Net profit/(loss) for the financial year 56,488 (218,514)

DIVIDENDS

No dividends were paid or declared by the Company since the end of the previous financial period.

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

RESERVES AND PROVISIONS

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


ISSUE OF SHARES

During the financial year ended 31 December 2005, the issued and paid-up share capital of the Company was increasedas follows:

Number ofordinary sharesof RM1.00 each

As at 1 January 2005 724,203,089

Issued pursuant to – conversion of RM335,300 RHB 0.5% Irredeemable Convertible Unsecured Loan

Stocks ('ICULS')-A by the holders of the RHB ICULS-A 335,300

– conversion of RM17,000 RHB 3% ICULS-B by the holders of the RHB ICULS-B at the rate of RM1.00 nominal value of ICULS plus RM0.13 in cash per RHB share 17,000

– conversion of RM1,034,417 RHB 3% ICULS-B by the holders of the RHB ICULS-B at the conversion price of RM1.13 per RHB share 915,410

As at 31 December 2005 725,470,799

The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinaryshares of the Company.

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and the Company were made out, the directors took reasonable steps toascertain that proper actions have been taken in relation to the writing off of bad debts and the making of allowancefor doubtful debts, and satisfied themselves that all known bad debts have been written off and that adequateallowance had been made for doubtful debts.

At the date of this report, the directors are not aware of any circumstances which would render the amount written offfor bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and theCompany inadequate to any substantial extent.

CURRENT ASSETS

Before the financial statements of the Group and the Company were made out, the directors took reasonable steps toensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business, theirvalues as shown in the accounting records of the Group and the Company, had been written down to an amount whichthey might be expected so to realise.

At the date of this report, the directors are not aware of any circumstances which would render the values attributedto the current assets in the financial statements of the Group and the Company misleading.

directors’ report (continued)


VALUATION METHOD

At the date of this report, the directors are not aware of any circumstances which have arisen which render adherenceto the existing methods of valuation of assets or liabilities of the Group and the Company misleading or inappropriate.

CONTINGENT AND OTHER LIABILITIES

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

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

(b) any contingent liability of the Group and the Company which has arisen since the end of the financial year otherthan in the normal course of business.

No contingent or other liability of the Group and the Company has become enforceable, or is likely to becomeenforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors,will or may substantially affect the ability of the Group or the Company to meet their obligations when they fall due.

CHANGE OF CIRCUMSTANCES

At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report orthe financial statements of the Group and the Company which would render any amount stated in the financialstatements misleading or inappropriate.

ITEMS OF AN UNUSUAL NATURE

The results of the Group and the Company for the financial year have not been substantially affected by any item,transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transactionor event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of theoperations of the Group or the Company for the financial year in which this report is made.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

Significant events during the financial year are disclosed in Note 45 to the financial statements.



DIRECTORS

The directors of the Company in office since the date of the last report are:

Dato Sri Sulaiman Abdul Rahman TaibDatuk Azlan Zainol (appointed on 6 July 2005)Azian Mohd Noh (appointed on 5 July 2005)Dato' Mohamed Khadar MericanDato Sri Liang Kim BangDatuk Wan Abdul Kadir @ Wan Ali Wan Yubi @ Tuanku Yubi Vaseehar Hassan Abdul RazackDato' Paduka Nik Hashim Nik YusoffDatin Khamarzan Ahmed MeahJohari Abdul Muid

In accordance with Article 87 of the Company's Articles of Association, Dato' Paduka Nik Hashim Nik Yusoff, DatinKhamarzan Ahmed Meah and Vaseehar Hassan Abdul Razack retire at the forthcoming Annual General Meeting of theCompany and, being eligible, offer themselves for re-election.

In accordance with Article 91 of the Company's Articles of Association, Azian Mohd Noh and Datuk Azlan Zainol retireat the forthcoming Annual General Meeting of the Company and, being eligible, offer themselves for re-election.

DIRECTORS' INTERESTS IN SECURITIES

According to the register of directors' shareholdings, the interests of directors in office at the end of the financial yearin the securities of the Company and its related corporations were as follows:

Number of ordinary shares of RM1.00 eachAs at Bought/ As at

1.1.2005 Converted Sold 31.12.2005The Company

Dato Sri Sulaiman Abdul Rahman Taib– indirect 1 238,127,000 – – 238,127,000

Vaseehar Hassan Abdul Razack– indirect 1 238,127,000 – – 238,127,000

Dato' Mohamed Khadar Merican – direct 5,000 – – 5,000

SubsidiaryRHB Capital Berhad ('RHB Capital')

Dato Sri Sulaiman Abdul Rahman Taib – indirect 2 1,182,896,459 – – 1,182,896,459

Vaseehar Hassan Abdul Razack– indirect 2 1,182,896,459 – – 1,182,896,459

Dato' Mohamed Khadar Merican– direct 10,000 – – 10,000



DIRECTORS' INTERESTS IN SECURITIES (CONTINUED)

Number of Warrants 2001/2007As at Sold/ As at

1.1.2005 Bought Converted 31.12.2005

The Company


Vaseehar Hassan Abdul Razack – indirect 1 8,000,000 – – 8,000,000

Each warrant of the Company ('Warrants 2001/2002') entitles the registered holder to subscribe for one new ordinaryshare of RM1.00 each in the Company at any time from the date of issue on 4 April 2001 at an exercise price of RM1.90per share. The exercise price is subject to adjustments from time to time in accordance with the conditions stipulated inthe Deed Poll executed on 13 February 2001. Pursuant to a Supplemental Deed Poll dated 20 March 2002, the exerciseperiod of the Warrants 2001/2002 has been extended by five (5) years to expire on 24 March 2007 and the Warrants2001/2002 are now known as Warrants 2001/2007.

Number of Call Warrants 2003/2007As at Sold/ As at

1.1.2005 Bought Converted 31.12.2005

The Company

Dato Sri Sulaiman Abdul Rahman Taib– indirect 1 – 92,461,730 – 92,461,730

Each call warrant ('Call Warrants 2003/2007') holder is entitled to purchase from the Company one existing ordinaryshare of RM1.00 each of RHB Capital held by the Company at an exercise price of RM2.96 per share. The exercise priceof the Call Warrants 2003/2007 is subject to adjustments in accordance with the provisions of the Trust Deed executedon 21 February 2003. The exercise period of the Call Warrants 2003/2007 commenced on 23 April 2003, being thesixty-first (61st) day after the date of issue of the Call Warrants 2003/2007 and shall end on the expiration date of 15June 2007.

Nominal Amount (RM) of 2002/20120.5% Irredeemable Convertible Unsecured Loan Stocks

of RM1.00 each nominal value ('RHB ICULS-A')

As at Sold/ As at1.1.2005 Bought Converted 31.12.2005

The Company





DIRECTORS' INTERESTS IN SECURITIES (CONTINUED)

The RHB ICULS-A entitle the registered holders to convert their RHB ICULS-A into new ordinary shares of RM1.00 eachin the Company ('New Shares') at the conversion price of RM1.00 per New Share ('Conversion Price') at any time withina period of ten (10) years from the date of issue on 24 December 2002 in accordance with the Trust Deed constitutingthe RHB ICULS-A dated 24 December 2002. The Conversion Price shall be satisfied by surrendering for conversion intoNew Shares such nominal value of RHB ICULS-A which equal to the Conversion Price.

Nominal Amount (RM) of 2002/20123.0% Irredeemable Convertible Unsecured Loan Stocks

of RM1.00 each nominal value ('RHB ICULS-B')

As at Sold/ As at1.1.2005 Bought Converted 31.12.2005

The Company



The RHB ICULS-B entitle the registered holders to convert their RHB ICULS-B into new ordinary shares of RM1.00 eachin the Company ('New Shares') at the conversion price of RM1.13 per New Share ('Conversion Price') at any time withina period of ten (10) years from the date of issue on 24 December 2002 in accordance with the Trust Deed constitutingthe RHB ICULS-B dated 24 December 2002. The Conversion Price shall be satisfied by surrendering for conversion intoNew Shares such nominal value of RHB ICULS-B which equal to the Conversion Price or a combination of such nominalvalue of RHB ICULS-B and cash which aggregates to the Conversion Price, provided that at least RM1.00 nominal valueof RHB ICULS-B is surrendered for conversion into one (1) New Share.

Notes:

1 Deemed interest pursuant to Section 6A of the Companies Act, 1965 by virtue of his indirect substantial interest in UtamaBanking Group Berhad ('UBG'), a substantial shareholder of the Company.

2 Deemed interest pursuant to Section 6A of the Companies Act, 1965 by virtue of his indirect substantial interest in the Company.

By virtue of their indirect substantial interests in the shares of the Company, Dato Sri Sulaiman Abdul Rahman Taib andVaseehar Hassan Abdul Razack are also deemed to have an indirect substantial interest in the securities of thesubsidiaries of the Company to the extent the Company has an interest.

Other than the above, none of the other directors holding office at the end of the financial year had any interest in thesecurities of the Company or its related corporations during the financial year.



WARRANTS 1997/2007

On 4 June 1999, the shareholders of the Company approved the extension of the exercise period of the warrants issuedon 25 June 1997 for a further five (5) years to expire on 24 March 2007. A Supplemental Deed Poll dated 23 June 1999was executed to reflect the said extension of the exercise period of the warrants ('Warrants 1997/2007'). The exerciseprice of the Warrants 1997/2007 is RM18.30 per new ordinary share of RM1.00 each in the Company.

On 2 June 2000, the Company announced the proposed issue of up to 55,038,988 replacement warrants('Replacement Warrants') to holders of the existing Warrants 1997/2007 to replace their Warrants 1997/2007, on thebasis of one (1) Replacement Warrant for every one (1) existing Warrant 1997/2007 held at an issue price to bedetermined later ('Proposed Replacement Warrants').

On 4 August 2000, the Company announced that the Securities Commission ('SC') has on 2 August 2000 approved theProposed Replacement Warrants as proposed and at an issue price of RM0.10 per Replacement Warrant ('ReplacementWarrants Issue'). The proceeds from the Replacement Warrants Issue were utilised for working capital purposes of theRHB Group while the proceeds from the exercise of the Replacement Warrants have been set aside and will be utilisedfor the repayment of the Company's borrowings.

At an Extraordinary General Meeting of the Company held on 15 September 2000, the shareholders of the Companyapproved the Replacement Warrants Issue which involves a non-renounceable issue of up to 55,038,988 ReplacementWarrants by the Company to the entitled holders on the basis of one (1) Replacement Warrant for every one (1) existingWarrant 1997/2007 held at an issue price of RM0.10 per Replacement Warrant payable in full upon acceptance. Onthe same day, the Company announced that the exercise price of each Replacement Warrant has been fixed at RM2.85per new ordinary share of RM1.00 each in the Company.

Subsequently, on 14 February 2001, the Company announced that the exercise price of each Replacement Warrant hasbeen revised from RM2.85 per new ordinary share of RM1.00 each in the Company to RM1.90 per new ordinary shareof RM1.00 each in the Company. Out of the 55,038,988 Warrants 1997/2007, 21,733,460 Warrants 1997/2007 weresurrendered and exchanged for the Replacement Warrants. The 21,733,460 Replacement Warrants ('Warrants2001/2002') were issued on 4 April 2001 and listed on the Kuala Lumpur Stock Exchange (now known as Bursa MalaysiaSecurities Berhad) ('Bursa Securities') on 12 April 2001.

The movement in the Warrants 1997/2007 to take up unissued ordinary shares of RM1.00 each in the Company duringthe financial year was as follows:

Number of warrants

As at 1 January 2005 33,305,528Exercise of Warrants 1997/2007 –

As at 31 December 2005 33,305,528

WARRANTS 1999/2009

On 17 August 1999, the Company issued 135,020,204 new warrants ('Warrants 1999/2002') with an expiry date of 24March 2002 to the entitled shareholders of the Company, on the basis of seven (7) new Warrants 1999/2002 for everytwenty (20) shares held at an issue price of RM0.10 per warrant. The Warrants 1999/2002 were listed on Bursa Securitieson 2 September 1999. The initial exercise price of the Warrants 1999/2002 is RM4.35 per new ordinary share of RM1.00each in the Company. The exercise price is subject to adjustments from time to time in accordance with the conditionsstipulated in the Deed Poll executed on 23 June 1999.



WARRANTS 1999/2009 (CONTINUED)

On 20 March 2002, the Company's shareholders and holders of Warrants 1999/2002 approved the extension of theexercise period of the Warrants 1999/2002 by approximately seven (7) years to expire on 16 August 2009. ASupplemental Deed Poll was executed on 20 March 2002 to reflect the said extension of the exercise period of theWarrants 1999/2002. The Warrants 1999/2002 are now known as Warrants 1999/2009.


Number of warrants


As at 31 December 2005 135,015,204

WARRANTS 2001/2007

On 4 April 2001, the Company issued 21,733,460 Warrants 2001/2002 with an expiry date of 24 March 2002 to holdersof the existing Warrants 1997/2007 who surrendered and exchanged their Warrants 1997/2007, on a non-renounceablebasis of one (1) Warrant 2001/2002 for every one (1) existing Warrant 1997/2007 held, at an issue price of RM0.10 perWarrants 2001/2002. The Warrants 2001/2002 were listed on Bursa Securities on 12 April 2001. The exercise price ofthe Warrants 2001/2002 is RM1.90 per new ordinary share of RM1.00 each in the Company. The exercise price is subjectto adjustments from time to time in accordance with the conditions stipulated in the Deed Poll on 13 February 2001.

On 20 March 2002, the Company's shareholders and holders of Warrants 2001/2002 approved the extension of theexercise period of the Warrants 2001/2002 by five (5) years to expire on 24 March 2007. A Supplemental Deed Poll wasexecuted on 20 March 2002 to reflect the said extension of the exercise period of the Warrants 2001/2002. TheWarrants 2001/2002 are now known as Warrants 2001/2007.


Number of warrants


As at 31 December 2005 21,564,372

CALL WARRANTS 2003/2007

On 21 February 2003, the Company issued 340,438,934 call warrants ('Call Warrants 2003/2007') pursuant to therestructuring of the USD200 million nominal value of the Company's 1.5% Exchangeable Bonds due 2007. Each CallWarrant 2003/2007 entitles the registered holder to purchase from the Company one existing ordinary share of RM1.00each in RHB Capital at an exercise price of RM2.96 per RHB Capital share. The exercise price of the Call Warrants2003/2007 is subject to adjustments in accordance with the provisions of the Trust Deed executed on 21 February 2003.



CALL WARRANTS 2003/2007 (CONTINUED)

The Call Warrants 2003/2007 were listed on Bursa Securities on 7 March 2003. The exercise period of the Call Warrants2003/2007 commenced on 23 April 2003 being the sixty-first (61st) day after the date of issue of the Call Warrants2003/2007 and shall end on the expiration date of 15 June 2007 (both dates inclusive).

The movement in the Call Warrants 2003/2007 to take up ordinary shares of RM1.00 each in RHB Capital from theCompany during the financial year was as follows:

Number of warrants

As at 1 January 2005 340,438,934Exercise of Call Warrants 2003/2007 –

As at 31 December 2005 340,438,934

The proceeds from the exercise of the Call Warrants 2003/2007 will be utilised for the redemption of the Company'sUSD265,205,000 2% stepping up to 4% in 2005 Bonds due 2007.

2002-2012 10-YEAR 0.5% IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKSDESIGNATED AS 'RHB ICULS-A' IN NOMINAL AMOUNT OF RM1.00 EACH

On 24 December 2002, the Company issued RM463,646,102 nominal value RHB ICULS-A as part payment of thepurchase price for the entire issued and paid-up capital of Bank Utama (Malaysia) Berhad (now known as Utama GilangSdn Bhd) ('Bank Utama') on behalf of RHB Bank Berhad ('RHB Bank') to UBG pursuant to the completion of the Saleand Purchase Agreement ('SPA') dated 20 March 2002 between Cahya Mata Sarawak Berhad ('CMS'), UBG, RHB Bankand the Company. The RHB ICULS-A are constituted by a trust deed dated 24 December 2002 made by the Companyand Malaysian Trustee Berhad, the Trustee for the holders of the RHB ICULS-A ('Trust Deed').

UBG undertook a Renounceable Restricted Offer for Sale ('ROS') on the RM463,646,102 nominal value of RHB ICULS-A at an offer price of RM1.00 per RHB ICULS-A to the entitled shareholders of the Company on the basis of RM1.00nominal value RHB ICULS-A for every one (1) existing ordinary share of RM1.00 each in the Company held as at 13December 2002. The prospectus in respect of the Renounceable ROS was issued on 14 January 2003.

The RHB ICULS-A were listed on Bursa Securities on 7 March 2003 and are convertible into ordinary shares of RM1.00each in the Company ('New Shares') at the conversion price of RM1.00 per New Share ('Conversion Price') from the dateof issue of the RHB ICULS-A, up to the maturity date which falls on 23 December 2012 ('Maturity Date'). The Companyshall after the Maturity Date, compulsorily convert all outstanding RHB ICULS-A by allotting and issuing in full and finalsatisfaction of the nominal value of such RHB ICULS-A, New Shares credited as fully paid in accordance with theprovisions of the Trust Deed.

The Conversion Price shall be satisfied by surrendering for conversion into New Shares such nominal value of RHB ICULS-A which equal to the Conversion Price.

The movement in the RHB ICULS-A to take up unissued ordinary shares of RM1.00 each in the Company during thefinancial year was as follows:

Nominal Value of RHB ICULS-A (RM)

As at 1 January 2005 451,387,802Conversion of RHB ICULS-A (335,300)

As at 31 December 2005 451,052,502



2002-2012 10-YEAR 3.0% IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKSDESIGNATED AS 'RHB ICULS-B' IN NOMINAL AMOUNT OF RM1.00 EACH

On 24 December 2002, the Company issued RM620,940,385 nominal value RHB ICULS-B in the following manner:

1. RM403,471,898 nominal value RHB ICULS-B as part payment of the purchase price for the entire issued and paid-up capital of Bank Utama on behalf of RHB Bank to UBG pursuant to the completion of the SPA dated 20 March2002 between CMS, UBG, RHB Bank and the Company; and

2. RM217,468,487 nominal value RHB ICULS-B to the accepting shareholders and warrantholders of RHB Capitalpursuant to the Voluntary Partial Offer ('VPO') by the Company to increase its equity interest in shares and warrantsof RHB Capital.

The RHB ICULS-B are constituted by a trust deed dated 24 December 2002 made by the Company and Malaysian TrusteeBerhad, the Trustee for the holders of the RHB ICULS-B ('Trust Deed'). The RHB ICULS-B were listed on Bursa Securitieson 31 December 2002 and are convertible into ordinary shares of RM1.00 each in the Company ('New Shares') at theconversion price of RM1.13 per New Share ('Conversion Price') from the date of issue of the RHB ICULS-B, up to thematurity date which falls on 23 December 2012 ('Maturity Date'). The Company shall after the Maturity Date,compulsorily convert all outstanding RHB ICULS-B by allotting and issuing in full and final satisfaction of the nominalvalue of such RHB ICULS-B, New Shares credited as fully paid in accordance with the provisions of the Trust Deed.

The Conversion Price shall be satisfied by surrendering for conversion into New Shares such nominal value of RHB ICULS-B which equal to the Conversion Price or a combination of such nominal value of RHB ICULS-B and cash whichaggregates to the Conversion Price, provided that at least RM1.00 nominal value of RHB ICULS-B is surrendered forconversion into one (1) New Share.

The movement in the RHB ICULS-B to take up unissued ordinary shares of RM1.00 each in the Company during thefinancial year was as follows:

Nominal Value of RHB ICULS-B (RM)

As at 1 January 2005 607,040,500Conversion of RHB ICULS-B (1,051,417)

As at 31 December 2005 605,989,083

DIRECTORS' BENEFITS

Since the end of the previous financial period, no director of the Company has received or become entitled to receiveany benefit (other than directors' remuneration and benefits-in-kind as disclosed in Notes 33 and 34 to the financialstatements) by reason of 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 financial interest (other thanthose disclosed in Note 43 to the financial statements).

During and at the end of the financial year, no arrangements subsisted to which the Company or its subsidiaries is aparty, being arrangements with the object or objects of enabling the directors of the Company to acquire benefits bymeans of the acquisition of shares in, or debentures of, the Company or any other body corporate.



BUSINESS STRATEGY FOR THE CURRENT FINANCIAL YEAR

Going forward, the financial services sector faces new challenges from new Islamic banks and investment banks. TheGroup itself is rationalising its businesses in merchant banking, securities and futures broking to create an investmentbank. This will strengthen the Group's infrastructure and multiple financial services platform to meet increasingly opencompetition in the form of a liberalised financial services sector, which include new entrants and established foreigninstitutions.

Amidst this challenging landscape, the Group will continue to concentrate on its core activities. In banking, the Groupwill intensify its focus on product innovation and customer segmentation to better serve customer needs. With themerger of RHB Bank and RHB Delta Finance Berhad ('RHB Delta Finance'), the banking group will realign its deliverynetwork and reposition itself based on market opportunities and customer segments. The banking group will alsocontinue its program to enhance its IT platform to provide firm support for business requirements including systemavailability, flexibility and scalability. This will also cover critical aspects of risk management as it strives to comply withBasel II's Standardised Approach by the year 2007.

The Company will continue to address its debt position with a view to bringing it to a more manageable position.

AUDITORS

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

Signed in accordance with a resolution of the Board of Directors dated 29 April 2006.

DATO SRI SULAIMAN ABDUL RAHMAN TAIB AZLAN ZAINOLDIRECTOR DIRECTOR



Group Company2005 2004 2005 2004

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

ASSETS

Cash and short term funds 2 11,385,303 12,755,451 63,760 15,648Securities purchased under resale agreements 2,219,491 40,458 – –Deposits and placements with banks

and other financial institutions 3 2,620,331 549,167 1,835 1,763Securities held-for-trading 4 3,368,967 1,693,501 – –Securities available-for-sale ('Securities AFS') 5 2,161,637 6,892,514 490 502Securities held-to-maturity 6 13,827,110 10,769,522 – –Loans, advances and financing 7 48,273,708 43,911,737 – –Clients' and brokers' balances 8 247,268 272,079 – –Other assets 9 448,071 292,009 9,363 8,629Derivative assets 10 47,554 33,524 – –Amounts due from subsidiaries 11 – – 361,156 448,522Statutory deposits 12 1,695,831 1,424,381 – –Tax recoverable 108,889 127,481 48,823 61,505Deferred tax assets 13 247,658 208,763 – –Investments in subsidiaries 14 – – 4,440,688 4,440,688Investments in associates 15 15,734 16,135 – –Real property assets 16 421,787 423,714 – –Property, plant and equipment 17 844,865 888,384 – 63Goodwill 18 2,393,566 2,398,017 – –

TOTAL ASSETS 90,327,770 82,696,837 4,926,115 4,977,320

The accompanying accounting policies and notes form an integral part of these financial statements.

balance sheetsas at 31 December 2005


Group Company2005 2004 2005 2004

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

LIABILITIES, SHAREHOLDERS' EQUITY AND MINORITY INTERESTS

Deposits from customers 19 49,861,515 50,155,229 – –Deposits and placements of banks

and other financial institutions 20 11,028,831 7,123,942 – –Obligations on securities sold

under repurchase agreements 10,942,799 7,944,641 – –Bills and acceptances payable 3,313,060 2,622,931 – –Clients' and brokers' balances 21 198,490 297,534 – –Other liabilities 22 1,641,441 1,432,656 32,410 11,027Derivative liabilities 10 140,743 155,627 71,492 110,643Recourse obligation on loans sold

to Cagamas Berhad ('Cagamas') 3,356,992 3,366,851 – –Amounts due to subsidiaries 11 – – 1,554,406 1,232,450Taxation 28,560 10,725 – –Deferred tax liabilities 13 2,904 4,453 – –Borrowings 23 3,419,270 3,441,161 1,701,835 1,838,716Subordinated obligations 24 1,530,252 1,533,080 – –ICULS 25 1,057,041 1,058,428 1,057,041 1,058,428INCPS 26 1,104,469 1,104,469 – –

TOTAL LIABILITIES 87,626,367 80,251,727 4,417,184 4,251,264

Share capital 27 725,471 724,203 725,471 724,203Reserves 28 1,775,252 1,693,360 1,090,501 1,090,380Accumulated losses (2,010,716) (1,982,336) (1,307,041) (1,088,527)

TOTAL SHAREHOLDERS' EQUITY 490,007 435,227 508,931 726,056

MINORITY INTERESTS 2,211,396 2,009,883 – –

TOTAL LIABILITIES, SHAREHOLDERS' EQUITY AND MINORITY INTERESTS 90,327,770 82,696,837 4,926,115 4,977,320

COMMITMENTS AND CONTINGENCIES 40 46,115,240 43,957,706 – –


balance sheetsas at 31 December 2005 (continued)


Group Company12 months 18 months 12 months 18 months

ended ended ended ended31.12.2005 31.12.2004 31.12.2005 31.12.2004

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

Interest income 29 3,430,177 4,354,315 1,485 52,848Interest expense 30 (2,075,387) (2,640,657) (272,897) (375,539)

Net interest income/(expense) 1,354,790 1,713,658 (271,412) (322,691)Other operating income 31 827,998 919,224 86,167 82,720

2,182,788 2,632,882 (185,245) (239,971)Income from Islamic Banking business 32 147,674 197,068 – –

Net income/(expense) 2,330,462 2,829,950 (185,245) (239,971)Other operating expenses 33 (1,239,951) (1,665,249) (5,259) (6,666)

Operating profit/(loss) 1,090,511 1,164,701 (190,504) (246,637)Allowance for losses on loans and financing 35 (537,093) (670,869) (28,010) –Impairment loss 36 10,186 (50,051) – –

563,604 443,781 (218,514) (246,637)Share of profit of associates 523 2,663 – –

Profit/(Loss) before INCPS dividends, taxation and zakat 564,127 446,444 (218,514) (246,637)

INCPS dividends 37 (110,447) (152,915) – –

Profit/(Loss) after INCPS dividends and before taxation and zakat 453,680 293,529 (218,514) (246,637)

Taxation 38 (133,815) (105,790) – 1,774Zakat (921) (3) – –Share of taxation of associates (228) (802) – –

Profit/(Loss) after INCPS dividends, taxation and zakat 318,716 186,934 (218,514) (244,863)

Minority interests (262,228) (282,249) – –

Net profit/(loss) for the financial year/period 56,488 (95,315) (218,514) (244,863)

Earnings/(Loss) per share (sen)

– basic 39 7.8 (13.4)

– diluted 39 4.1 N/A


income statementsfor the financial year ended 31 December 2005


Share Share Reserve Capital AFS Accumulatedcapital premium funds reserves reserves losses Total

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

Balance as at 1 January 2005– as previously reported 724,203 1,075,250 606,696 15,130 – (1,935,334) 485,945– prior year adjustments 49 – – 2,594 – (6,310) (47,002) (50,718)

– as restated 724,203 1,075,250 609,290 15,130 (6,310) (1,982,336) 435,227

Issue of shares pursuant to:– conversion of ICULS-A 336 – – – – – 336– conversion of ICULS-B 932 121 – – – – 1,053

Net profit for the financial year – – – – – 56,488 56,488

Transfer in respect of statutory requirements – – 78,142 – – (78,142) –

Net loss not recognised in the income statement– translation differences – – – – – (6,726) (6,726)

Unrealised net loss on revaluation of securities AFS – – – – (13,145) – (13,145)

Net transfer to income statement on disposal or impairment – – – – 18,814 – 18,814

Deferred tax – – – – (2,040) – (2,040)

Balance as at 31 December 2005 725,471 1,075,371 687,432 15,130 (2,681) (2,010,716) 490,007


statements of changes in shareholders’ equityfor the financial year ended 31 December 2005


Share Share Reserve Capital AFS Accumulatedcapital premium funds reserves reserves losses Total

Group (continued) Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Balance as at 1 July 2003– as previously reported 703,977 1,074,211 515,106 15,130 – (1,833,188) 475,236– prior year adjustments 49 – – 2,305 – 18,173 27,066 47,544

– as restated 703,977 1,074,211 517,411 15,130 18,173 (1,806,122) 522,780

Issue of shares pursuant to:– conversion of ICULS-A 12,231 – – – – – 12,231– conversion of ICULS-B 7,995 1,039 – – – – 9,034

Net loss for the financial period – – – – – (95,315) (95,315)

Transfer in respect of statutory requirements – – 91,879 – – (91,879) –

Net gain not recognised in the income statement– translation differences – – – – – 10,980 10,980

Unrealised net loss on revaluation of securities AFS – – – – (26,979) – (26,979)

Net transfer to income statement on disposal or impairment – – – – (4,646) – (4,646)

Deferred tax – – – – 7,142 – 7,142

Balance as at 31 December 2004 724,203 1,075,250 609,290 15,130 (6,310) (1,982,336) 435,227


statements of changes in shareholders’ equityfor the financial year ended 31 December 2005 (continued)


Non-distributableShare Share Capital Accumulated

capital premium reserves losses TotalCompany Note RM'000 RM'000 RM'000 RM'000 RM'000

Balance as at 1 January 2005– as previously reported 724,203 1,075,250 15,130 (1,040,891) 773,692– prior year adjustments 49 – – – (47,636) (47,636)

– as restated 724,203 1,075,250 15,130 (1,088,527) 726,056

Issue of shares pursuant to:– conversion of ICULS-A 336 – – – 336– conversion of ICULS-B 932 121 – – 1,053

Net loss for the financial year – – – (218,514) (218,514)

Balance as at 31 December 2005 725,471 1,075,371 15,130 (1,307,041) 508,931

Balance as at 1 July 2003– as previously reported 703,977 1,074,211 15,130 (859,627) 933,691– prior year adjustments 49 – – – 15,963 15,963

– as restated 703,977 1,074,211 15,130 (843,664) 949,654

Issue of shares pursuant to:– conversion of ICULS-A 12,231 – – – 12,231– conversion of ICULS-B 7,995 1,039 – – 9,034

Net loss for the financial period – – – (244,863) (244,863)

Balance as at 31 December 2004 724,203 1,075,250 15,130 (1,088,527) 726,056


statements of changes in shareholders’ equityfor the financial year ended 31 December 2005 (continued)


12 months 18 monthsended ended

31.12.2005 31.12.2004Group RM'000 RM'000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before INCPS dividends, taxation and zakat 564,127 446,444Adjustments for:Allowance for losses on loans and financing 867,784 1,249,311Property, plant and equipment– depreciation 106,338 168,241– impairment loss 1,365 13,039– gain on disposal (1,725) (3,269)– written off 195 3,727Impairment loss on securities 84,447 37,012Interest suspended 75,078 127,777Unrealised foreign exchange loss/(gain) 11,818 (17,965)Amortisation of premium less accretion of discount 8,645 22,140Unrealised loss on revaluation of securities held-for-trading 8,258 31,116Loss on liquidation of an associate 7,440 –Accretion of discount for USD Sub-Notes 236 358Interest income from securities (596,519) (714,789)Net gain arising from sale/redemption of securities (156,326) (110,390)Reversal of impairment loss on real property assets (95,998) –Gross dividend income from securities (6,439) (8,691)Gain on disposal of real property assets (4,601) –Share of profit of associates (523) (2,663)Gain on disposal of an indirect subsidiary – (107)

Operating profit before working capital changes 873,600 1,241,291

(Increase)/Decrease in operating assets:Securities purchased under resale agreements (2,179,033) 14,942Deposits and placements with banks and other financial institutions (2,071,164) (207,002)Securities held-for-trading (1,603,130) 6,047,978Loans, advances and financing (5,321,097) (3,188,202)Clients' and brokers' balances 24,811 (128,771)Other assets (31,340) 265,013Statutory deposits (271,450) (146,060)

(11,452,403) 2,657,898

Increase/(Decrease) in operating liabilities:Deposits from customers (293,714) 1,633,798Deposits and placements of banks and other financial institutions 3,904,889 3,243,361Obligations on securities sold under repurchase agreements 2,998,158 4,764,248Bills and acceptances payable 690,129 (876,566)Clients' and brokers' balances (99,044) 160,330Other liabilities 232,006 194,214Recourse obligation on loans sold to Cagamas (9,859) 2,790,280

7,422,565 11,909,665

Cash (used in)/generated from operations (3,156,238) 15,808,854


cash flow statementsfor the financial year ended 31 December 2005



31.12.2005 31.12.2004Group (continued) RM'000 RM'000

CASH FLOWS FROM OPERATING ACTIVITIES (CONTINUED)

Taxation and zakat paid (179,636) (202,705)Taxation recovered 36,018 80,017

Net cash (used in)/generated from operating activities (3,299,856) 15,686,166

CASH FLOWS FROM INVESTING ACTIVITIES

Net sale/(purchase) of securities 1,686,624 (8,099,759)Interest received from securities 430,020 463,875Net proceeds from disposal of real property assets 102,594 –Proceeds from disposal of property, plant and equipment 7,359 12,689Dividend income received from securities 4,637 6,258Capital repayment upon liquidation of an associate 4,025 –Dividend income received from an associate 716 3,957Capital repayment upon liquidation of securities AFS 12 –Purchase of property, plant and equipment (73,052) (153,051)Increase in investments in an associate (20) (20)Proceeds from disposal of an indirect subsidiary – 377

Net cash generated from/(used in) investing activities 2,162,915 (7,765,674)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of bonds 600,000 –Drawdown of borrowings 455,577 921,950Repayment of borrowings (783,600) (641,750)Redemption of bonds (325,000) –INCPS dividends paid to other shareholders by a subsidiary (79,522) (103,363)Dividends paid to minority interests in subsidiaries (68,270) (92,478)Payment to hire-purchase creditors (631) (404)Proceeds from issuance of share capital 2 60

Net cash (used in)/generated from financing activities (201,444) 84,015

Net (decrease)/increase in cash and cash equivalents (1,338,385) 8,004,507Cash and cash equivalents at the beginning of the financial year/period 12,719,515 4,715,008

Cash and cash equivalents at the end of the financial year/period 11,381,130 12,719,515


cash flow statementsfor the financial year ended 31 December 2005 (continued)



31.12.2005 31.12.2004Group (continued) RM'000 RM'000

Cash and cash equivalents comprise the following:Cash and short term funds 11,385,303 12,755,451Overdrafts (4,173) (35,936)

11,381,130 12,719,515

Analysis of purchase of property, plant and equipment:Cash 73,052 153,051Hire-purchase arrangement – 2,060

73,052 155,111

The following cash and cash equivalents are not readily available for use by the Group:

Cash and short term funds of banking subsidiaries for utilisation in the ordinary course of banking business 11,265,806 12,458,192

Accounts held in trust for clients and remisiers 57,079 133,746Sinking fund accounts 31,687 115,411Deposits pledged to licensed banks 21,083 21,213

11,375,655 12,728,562





31.12.2005 31.12.2004Company RM'000 RM'000

CASH FLOWS FROM OPERATING ACTIVITIES

Loss before taxation (218,514) (246,637)Adjustments for: Depreciation of property, plant and equipment 63 103Interest income (1,485) (52,848)Interest expense 171,570 375,539Dividend income (41,695) (118,412)

Operating loss before working capital changes (90,061) (42,255)

Increase in inter-company balances 409,322 304,897(Increase)/Decrease in deposits and placements with banks and other

financial institutions (72) 1,036(Increase)/Decrease in other assets (734) 7,027(Decrease)/Increase in other liabilities (37,807) 18,859

Cash generated from operations 280,648 289,564Taxation recovered 24,356 19,370

Net cash generated from operating activities 305,004 308,934

CASH FLOWS FROM INVESTING ACTIVITIES

Dividend income received from subsidiaries 29,809 85,169Interest income received 1,485 432Dividend income received from securities AFS 212 88Capital repayment upon liquidation of securities AFS 12 –

Net cash generated from investing activities 31,518 85,689

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of borrowings (335,000) (245,000)Drawdown of borrowings 130,125 25,000Interest expense paid (83,537) (162,134)Proceeds from issuance of share capital 2 24

Net cash used in financing activities (288,410) (382,110)

Net increase in cash and cash equivalents 48,112 12,513Cash and cash equivalents at the beginning of the financial year/period 15,648 3,135

Cash and cash equivalents at the end of the financial year/period 63,760 15,648

Cash and cash equivalents comprise the following:Cash and short term funds 63,760 15,648




The following accounting policies have been used consistently in dealing with items which are considered material inrelation to the financial statements except as disclosed below:

(1) Basis of preparation of the financial statements

The financial statements of the Group and the Company have been prepared under the historical cost conventionexcept as disclosed in the summary of significant accounting policies and are in accordance with the MalaysianAccounting Standards Board ('MASB') approved accounting standards in Malaysia together with directives andguidelines issued by Bank Negara Malaysia ('BNM') and comply with the provisions of the Companies Act, 1965.

The applicable BNM's guideline adopted in these financial statements is the Revised Guidelines on FinancialReporting for Licensed Institutions ('BNM/GP8') which became effective for the current financial year. The adoptionof the revised BNM/GP8 has resulted in changes in the accounting policies of the Group and the Company whichhave been applied retrospectively as disclosed in Note 49.

However, BNM has granted indulgence to the Group from complying with the requirement on the impairment ofloans under the revised BNM/GP8. The Group will be deemed to be in compliance with the requirement on the loanimpairment under the revised BNM/GP8 if the allowance for non-performing debts and financing are computedbased on BNM's guidelines on the Classification of Non-Performing Loans and Provision for Substandard, Bad andDoubtful Debts ('BNM/GP3') requirements.

The financial statements of the Group incorporate all activities relating to the Islamic Banking business undertakenby the Group in compliance with Shariah principles.

The preparation of financial statements in conformity with the provisions of the Companies Act, 1965, MASBapproved accounting standards in Malaysia and BNM's guidelines requires the use of estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at thedate of the financial statements and the reported amounts of revenues and expenses during the reported year.Although these estimates are based on the directors' best knowledge of current events and actions, actual resultsmay differ from estimates.

(2) Basis of consolidation

The consolidated financial statements include the financial statements of the Company and all its subsidiaries madeup to the end of the financial year.

Subsidiaries are consolidated using the acquisition method of accounting except for certain subsidiaries which wereaccounted for using the merger method of accounting prior to 1 April 2002 in accordance with MalaysianAccounting Standard 2 - Accounting for Acquisitions and Mergers, the generally accepted accounting principlesprevailing at that time.

Under acquisition method of accounting, the results of subsidiaries acquired or disposed of during the financial yearare included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values ofthe subsidiaries' net assets are determined and these values are reflected in the consolidated financial statements.The excess of the acquisition cost over the fair values of the Group's share of the subsidiaries' identifiable net assetsat the date of acquisition is reflected as goodwill.

Under merger accounting, the results of subsidiaries are presented as if the merger had been effected throughoutthe current and previous years.

summary of significant accounting policiesfor the financial year ended 31 December 2005


(2) Basis of consolidation (continued)

All material inter-company and intra-group transactions and balances have been eliminated on consolidation.Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency ofaccounting policies with those of the Group.

The gain or loss on disposal of a subsidiary is the difference between the net disposal proceeds and the Group'sshare of its net assets together with the goodwill on acquisition.

Minority interest is measured as the minorities' share of the post acquisition fair values of the identifiable assets andliabilities of the acquiree. Separate disclosure is made of minority interest.

Investments in associates are accounted for in the consolidated financial statements by the equity method ofaccounting based on the latest audited or management financial statements of the associates. Under the equitymethod of accounting, the Group's share of the results of associates during the financial year is included in theconsolidated financial statements. In the consolidated balance sheet, the Group's interest in associates is stated atcost less goodwill on acquisition, plus the Group's share of post-acquisition retained profits and reserves and net offoreign currency translation differences, which are taken to reserves.

(3) Investments in subsidiaries

Subsidiaries are those corporations or other entities in which the Group has the power to exercise control over thefinancial and operating policies so as to obtain benefits from their activities.

Investments in subsidiaries are stated at cost less any impairment loss. At each balance sheet date, the Companyassesses whether there is any indication of impairment. Where an indication of impairment exists, the carryingamount of the investment is assessed and written down immediately to its recoverable amount.

(4) Investments in associates

Associates are defined as those corporations or other entities in which the Group exercises significant influence overthe financial and operating policies through representation on the Board but not the power to exercise control overthose policies.

Investments in associates are stated at cost less any impairment loss. At each balance sheet date, the Group assesseswhether there is any indication of impairment. Where an indication of impairment exists, the carrying amount ofthe investment is assessed and written down immediately to its recoverable amount.

(5) Goodwill

Goodwill arising on consolidation represents the excess of the purchase price over the Group's share of the fairvalue of the separable net assets of subsidiaries and associates at the date of acquisition.

Goodwill is retained in the consolidated balance sheet and is stated at cost less any impairment loss. At eachbalance sheet date, the Group assesses whether there is any indication of impairment in goodwill. If suchindications exist, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. Awrite down is made if the carrying amount exceeds the recoverable amount.

summary of significant accounting policiesfor the financial year ended 31 December 2005 (continued)


(6) Securities

The Group and the Company classify its securities portfolio into securities held-for-trading, securities held-to-maturity or securities AFS. Classification of the securities is determined at initial recognition.

(a) Securities held-for-trading

Securities held-for-trading are securities acquired or incurred principally for the purpose of selling orrepurchasing in the near term or is part of a portfolio of identified securities that are managed together andfor which there is evidence of a recent actual pattern of short-term profit-taking. Securities held-for-trading arestated at fair value at initial recognition. Any gain or loss arising from a change in the fair value or arising fromderecognition of such securities is recognised in the income statement.

Interest calculated using the effective interest method is recognised in the income statement.

(b) Securities held-to-maturity

Securities held-to-maturity are securities with fixed or determinable payments and fixed maturity that theGroup has the positive intention and ability to hold to maturity. Securities held-to-maturity are measured atamortised cost using the effective interest method. Any gain or loss is recognised in the income statementthrough the amortisation process, when the securities are derecognised or impaired.

(c) Securities available-for-sale ('Securities AFS')

Securities AFS are securities that are not classified as held-for-trading or held-to-maturity. Securities AFS aremeasured at fair value at initial recognition. Equity instruments that do not have a quoted market price in anactive market and where the fair values cannot be reliably measured are stated at cost. Any gain or loss arisingfrom a change in fair value is recognised directly in equity through the statement of changes in equity, exceptfor impairment loss and foreign exchange gain and loss. In the event that the financial assets are derecognised,the cumulative gain or loss previously recognised in equity shall be transferred to the income statement.

Interest calculated using the effective interest method is recognised in the income statement.

Dividends on AFS equity instruments are recognised in the income statement when the right to receivepayment has been established.

The fair values of quoted investments in active markets are based on current bid prices. If the market for a financialasset is not active (and for unlisted securities), the Group and the Company establish fair values using valuationtechniques. These include the use of recent arm's length transactions, discounted cash flow analysis, option pricingmodels and other valuation techniques commonly used by market participants.

Previously, securities held by the Group and the Company were classified as either 'Dealing' or 'Investment'securities. Under Dealing securities classification, the securities were stated at the lower of cost and market valueon portfolio basis. Under Investment securities classification, the securities, according to type, were either stated atcost, adjusted for amortisation of premium or accretion of discount, or at the lower of cost and market valuedetermined on a portfolio basis with allowance made for any permanent diminution in value. The effects of prioryear adjustments are disclosed in Note 49.



(7) Receivables

Receivables are carried at anticipated realisable values. An estimate is made for doubtful debts based on the reviewof all outstanding amounts at the end of the financial year. Bad debts are written off during the financial year inwhich they are identified.

(8) Repurchase agreements

Securities purchased under resale agreements are securities which the banking subsidiaries have purchased with acommitment to resell at future dates. The commitment to resell the securities is reflected as an asset on the balancesheet.

Conversely, obligations on securities sold under repurchase agreements are securities which the banking subsidiarieshave sold from its portfolio, with a commitment to repurchase at future dates. Such financing and the obligationto repurchase the securities is reflected as a liability on the balance sheet.

(9) Foreclosed properties

Foreclosed properties are stated at cost. Where an indication of impairment exists, the carrying amount of theforeclosed properties is assessed and written down immediately to its recoverable amount.

(10) Real property assets

Real property assets are intended for sale and comprise land and the related development expenditure. Realproperty assets are stated at cost less impairment loss, if any. Where the carrying amount of the asset is greaterthan its estimated recoverable amount, it is written down to its recoverable amount.

Borrowing costs incurred on external borrowings in respect of developing the properties are capitalised as part ofdevelopment expenditure until the development is completed or active development is suspended or has ceased.

(11) Property, plant and equipment and depreciation

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

Freehold land, buildings in progress, renovations in progress and computer software in progress are notdepreciated. Other property, plant and equipment are depreciated on a straight line basis over their estimated usefullives at the following annual depreciation rates:

Leasehold land Amortised over the periods of the leases. The remaining period of the leases range from 11 to 888 years

Buildings 2%Renovations and improvements 71/2% to 20% or lease periodComputer equipment and software 20% to 331/3%Furniture, fittings and equipment 71/2% to 20%Motor vehicles 20% to 25%

At each balance sheet date, the Group assesses whether there is any indication of impairment. Where an indicationof impairment exists, the carrying amount of the asset is written down to its recoverable amount.



(12) Derivative financial instruments and hedge accounting

Derivative financial instruments are initially recognised at fair values on the date on which derivative contracts areentered into and are subsequently remeasured at their fair values. Fair values are obtained from quoted marketprices in active markets, including recent market transactions, and valuation techniques, including discounted cashflow models and option pricing models, as appropriate. All derivatives are carried as assets when fair values arepositive and as liabilities when fair values are negative.

The best evidence of the fair value of a derivative at initial recognition is the transaction price (i.e. the fair value ofthe consideration given or received) unless the fair value of that instrument is evidenced by comparison with otherobservable current market transactions in the same instrument (i.e. without modification or repackaging) or basedon a valuation technique which variables include only data from observable markets. When such evidence exists,the Group recognises profits on initial recognition.

The method of recognising the resulting fair value gain or loss depends on whether the derivative is designated asa hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives aseither: (1) hedges of the fair value of recognised assets or liabilities or firm commitments (fair value hedge); or (2)hedges of highly probable future cash flows attributable to a recognised asset or liability, or a forecasted transaction(cash flow hedge). Hedge accounting is used for derivatives designated in this way provided certain criteria are met.

The Group documents, at the inception of the transaction, the relationship between hedging instruments andhedged items, as well as its risk management objective and strategy for undertaking various hedge transactions.The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether thederivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flowsof hedged items.

(a) Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in theincome statement, together with any changes in the fair value of the hedged assets or liabilities that areattributable to the hedged risk.

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of ahedged item for which the effective interest method is used is amortised to income statement over the periodto maturity. The adjustment to the carrying amount of a hedged equity security remains in retained earningsuntil the disposal of the equity security.

(b) Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flowhedges are recognised in equity. The gain and loss relating to the ineffective portion is recognised immediatelyin the income statement.

Amounts accumulated in equity are recycled to the income statement in the periods in which the hedged itemwill affect income statement (for example, when the forecast sale that is hedged takes place).

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedgeaccounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised whenthe forecast transaction is ultimately recognised in the income statement. When a forecast transaction is nolonger expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred tothe income statement.



(12) Derivative financial instruments and hedge accounting (continued)

(c) Derivatives that do not qualify for hedge accounting

Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivativeinstrument that does not qualify for hedge accounting are recognised immediately in the income statement.

Previously, interest income or interest expense associated with interest rate swaps that qualify as hedges isrecognised over the life of the swap agreement as a component of interest income or interest expense. Gain andloss on interest rate swaps, futures, forward and option contracts that qualify as hedges are deferred and amortisedover the life of the hedged assets or liabilities as adjustments to interest income or interest expense. Gain and losson interest rate swaps, futures, forward and option contracts that do not qualify as hedges are recognised in thecurrent financial year using the mark-to-market method, and are included in the income statement. The effects ofthe prior year adjustments are disclosed in Note 49.

(13) Bills and acceptances payable

Bills and acceptances payable represent the banking subsidiaries' own bills and acceptances rediscounted andoutstanding in the market.

(14) Recourse obligation on loans sold to Cagamas Berhad ('Cagamas')

In the normal course of commercial banking operations and finance company business, the commercial bank andfinance company subsidiaries sell loans to Cagamas but undertake to administer the loans on behalf of Cagamasand to buy back any loans which are regarded as defective based on prudence. Such financing transactions and theobligation to buy back the loans are reflected as a liability on the balance sheet.

For Islamic Banking, the sale of Islamic debt to Cagamas is deemed as a sale and purchase transaction from Shariahpoint of view. Such financing transactions are netted off with the assets sold on the balance sheet and theobligations to buy back the loans are reflected as assets sold with recourse as commitments and contingencies.

In the normal course of merchant banking operations, the merchant bank subsidiary enters into agreements withthird parties to acquire loans for onward sale to Cagamas. The merchant bank subsidiary is liable in respect of loanswhich are regarded as defective and this obligation is reflected as a liability on the balance sheet. The liability is fullyindemnified by the originator of the loans and accordingly, the amount indemnified is recognised as an asset onthe balance sheet.

(15) Assets sold under lease - finance lease

When assets are leased out under a finance lease, the present value of the lease payment is recognised as areceivable. The difference between the gross receivable and the present value of the receivable is recognised asunearned finance income. Lease income is recognised over the term of the lease using the sum-of-digits methodso as to reflect a constant periodic rate of return on the balance outstanding.

(16) Assets purchased under lease

(a) Operating lease

Leases of assets under which all the risks and benefits of ownership are retained by the lessor are classified asoperating leases. Payments made under operating leases are charged to the income statement on a straightline basis over the period of the lease.



(16) Assets purchased under lease (continued)

(a) Operating lease (continued)

Where an operating lease is terminated before the lease period has expired, any payment required to be madeto the lessor by way of penalty is recognised as an expense in the period when termination takes place.

(b) Finance lease

Leases of assets where the Group assumes substantially all the risks and benefits of ownership of the assetsare classified as finance leases. The assets are capitalised under property, plant and equipment and subject todepreciation consistent with that of depreciable assets which are owned. The assets and the correspondinglease obligations are recorded at the lower of present value of the minimum lease payments and the fair valueof the leased assets at the beginning of the lease term. Each lease payment is allocated between the liabilityand finance charges using effective yield basis. The corresponding rental obligations, net of finance charges,are included in liabilities. The finance charges are charged to the income statement over the lease period.

(17) Assets purchased under hire-purchase

Assets purchased under hire-purchase arrangements are capitalised at inception of the hire-purchase. Outstandingobligations due under hire-purchase agreements after deducting finance charges are treated as liabilities in thebalance sheet. The interest element of the finance charges is charged to the income statement over the hire-purchase period.

(18) Other provisions

Provisions other than for non-performing debts and provisions for outstanding claims are recognised when theGroup has a present legal or constructive obligation, as a result of past events, it is probable that an outflow ofresources will be required to settle the obligation and a reliable estimate of the amount of obligation can be made.

(19) Borrowings

Borrowings are initially recognised based on the proceeds received, net of transaction costs incurred. In subsequentperiods, borrowings are stated at amortised cost using the effective yield method. Any difference between proceeds(net of transaction costs) and the redemption value is recognised in the income statement over the period of theborrowings.

Preference shares which carry a mandatory coupon, or are redeemable on a specific date or at the option of theshareholder, are classified as financial liabilities and are presented in other borrowed funds. The dividends on thesepreference shares are recognised in the income statement on an amortised cost basis using the effective interestmethod.

(20) Profit Equalisation Reserve ('PER') on Islamic Banking business

PER on Islamic Banking business refers to the amount appropriated out of the total gross income to mitigate theundesirable fluctuation of income and to maintain a certain level of return to depositors. The amount is providedbased on BNM's circular on 'The Framework of The Rate of Return'. PER is shared by both the depositors and thebanking subsidiary and hence can be appropriated from and written back to total gross income in deriving thedistributable income. PER is reflected under other liabilities in the balance sheet.



(21) Income recognition

(a) Interest income is recognised on accruals basis. Income earned on hire-purchase, block discounting and leasingbusiness is recognised on the 'sum-of-digits' method.

Where a loan becomes non-performing, interest accrued and recognised as income prior to the date the loansare classified as non-performing are reversed out of the income statement and set off against the accruedinterest receivable account in the balance sheet. Subsequently, the interest earned on the non-performingloans shall be recognised as income on cash basis.

(b) Loan arrangement fees, commissions and placement fees are recognised as income when all conditionsprecedent are fulfilled.

(c) Guarantee fees are recognised as income upon issuance of guarantees.

(d) Commitment fees are recognised as income based on time apportionment.

(e) Income from Islamic Banking business is recognised on accruals basis in accordance with the principles ofShariah.

(f) Brokerage commission is recognised when contracts are executed. Interest income from margin financing,clients' overdue outstanding purchases and contra loss is recognised on accruals basis. When an account isclassified as non-performing, recognition of interest income is suspended until it is realised on a cash basis.

(g) Premium income from general insurance business (net of all reinsurance) is recognised on the date ofassumption of risks. Premium in respect of risk incepted, for which policies have not been raised as at thebalance sheet date, are accrued at that date.

(h) Corporate advisory fees are recognised as income on completion of each stage of the engagement andissuance of invoice.

(i) Management fees of the unit trust management company are recognised on accruals basis. Sales value of trustunits is recognised on the approval of a unitholder's application. Value from the cancellation of trust units isrecognised upon approval of the trustee.

(j) Dividends from subsidiaries and associates are recognised when the shareholders' right to receive payment isestablished, while dividends from other investments are recognised on receipts basis.

(k) Revenue from real property assets is recognised on the percentage of completion method in respect of allproperties under development that have been sold. The percentage of completion is measured by reference tothe construction costs incurred to date against the estimated total construction costs of the properties.Revenue from the sale of other real property assets, whether completed or otherwise, is recognised based onthe contracted sale value of such properties when all conditions precedent have been met.

(22) Allowance for non-performing debts and financing

Specific allowances are made for non-performing debts and financing which have been individually reviewed andspecifically identified as bad, doubtful or substandard.



(22) Allowance for non-performing debts and financing (continued)

A general allowance for banking operations based on a percentage of the loan portfolio is also made to coverpossible losses which are not specifically identified. A general allowance for securities operations is made based ona percentage of the total amounts due from clients after deducting the amount of interest-in-suspense and specificallowance for bad and doubtful debts. These percentages are reviewed annually in the light of past experience andprevailing circumstances and an adjustment is made on the overall general allowance, if necessary.

An uncollectible loan or portion of a loan classified as bad is written off after taking into consideration the realisablevalue of collateral, if any, when in the judgement of the management, there is no prospect of recovery.

During the financial year, the Group has changed its basis for classification of non-performing debts and financingby changing the period of default for non-performing loans from 6 months to 3 months.

The Group's allowance for non-performing debts and financing is in conformity with the minimum requirementsof BNM/GP3, which is deemed as in conformity with the requirement on the allowance for loan impairment underthe revised BNM/GP8.

The stockbroking subsidiary's policy of classifying an account as a non-performing debt is in conformity with therequirements of Chapter 11, Schedule 7, Rule 1104.1 of Rules of the Bursa Securities.

(23) General insurance

General insurance underwriting surplus before management expenses are determined after accounting for netpremium, unearned premium reserves, net claims incurred and net commissions.

Allowances or reserves for unearned premiums are calculated in accordance with the fixed percentage method ortime apportionment method, where applicable. Allowance is made for outstanding claims based on the estimatedcost of claims, less reinsurance recoveries in respect of claims notified and include claims incurred but not reportedat the balance sheet date ('IBNR'). Allowance for IBNR is computed using a mathematical method of estimation andis based on an actuarial valuation carried out by an independent actuarial firm.

(24) Employee benefits

(a) Short term employee benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the yearin which the associated services are rendered by employees of the Group.

(b) Defined contribution plans

A defined contribution plan is a pension plan under which the Group pays fixed contributions to the nationalpension scheme, Employees' Provident Fund ('EPF'). The Group's contributions to defined contribution plansare charged to the income statement in the year to which they relate. Once the contributions have been paid,the Group has no further legal or constructive obligations.

(c) Termination benefits

Termination benefits are payable whenever an employee's employment is terminated before the normalretirement date or whenever an employee undergoes voluntary redundancy in exchange for these benefits.



(25) Impairment of assets

Property, plant and equipment and other non-current assets, including intangible assets, are reviewed forimpairment loss whenever events or changes in circumstances indicate that the carrying amount may not berecoverable. Impairment loss is recognised for the amount by which the carrying amount of the asset exceeds itsrecoverable amount.

The recoverable amount is the higher of an asset's net selling price and its value in use. For the purpose of assessingimpairment, assets are grouped at the lowest level for which there are separately identifiable cash flows.

The impairment loss is charged to the income statement. Any subsequent increase in recoverable amount isrecognised in the income statement.

(26) Impairment of securities

The Group assesses at each balance sheet date whether there is objective evidence that a security is impaired. Asecurity is impaired and impairment loss are incurred if, and only if, there is objective evidence of impairment as aresult of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event(or events) has an impact on the estimated future cash flows of the securities that can be reliably estimated.

(a) Securities carried at amortised cost

If there is objective evidence that an impairment loss on securities held-to-maturity carried at amortised costhas been incurred, the amount of the loss is measured as the difference between the asset's carrying amountand the present value of estimated future cash flows discounted at the financial asset's original effectiveinterest rate. The carrying amount of the asset is reduced through the use of an allowance account and theamount of the loss is recognised in the income statement. If a security held-to-maturity has a variable interestrate, the discount rate for measuring any impairment loss is the current effective interest rate determined underthe contract.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be relatedobjectively to an event occurring after the impairment was recognised, the previously recognised impairmentloss is reversed by adjusting the allowance account. The amount of the reversal is recognised in the incomestatement.

(b) Securities carried at fair value

In the case of securities classified as AFS, a significant or prolonged decline in the fair value of the securitybelow its cost is considered in determining whether the assets are impaired. If any such evidence exists, thecumulative loss, measured as the difference between the acquisition cost and the current fair value, less anyimpairment loss on that financial asset previously recognised, is removed from equity and recognised in theincome statement. Impairment loss recognised in the income statement on equity instruments are not reversedthrough the income statement. If, in a subsequent period, the fair value of a debt instrument classified assecurities AFS increases and the increase can be objectively related to an event occurring after the impairmentloss was recognised in the income statement, the impairment loss is reversed through the income statement.

(27) Income taxes and zakat

Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates andinclude all taxes based upon the taxable profits, including witholding taxes payable by foreign subsidiaries andassociates and arising from distributions of retained earnings to companies in the Group, and real property gainstaxes payable on disposal of properties.



(27) Income taxes and zakat (continued)

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the taxbases of assets and liabilities and their carrying amounts in the financial statements.

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

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available againstwhich the temporary differences can be utilised.

Zakat is payable by banking subsidiaries to comply with the principles of Shariah and as approved by the ShariahSupervisory Council.

(28) Currency conversion and translation

The financial statements are presented in Ringgit Malaysia.

Transactions in foreign currencies are converted into Ringgit Malaysia at the rates of exchange ruling at transactiondates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translatedinto Ringgit Malaysia at rates of exchange approximating to those ruling at that date. Exchange differences arisingfrom the settlement of foreign currency transactions and from the translation of foreign currency monetary assetsand liabilities are included in the income statement.

The results of foreign entities are translated into the Group's reporting currency at average exchange rates for thefinancial year and the balance sheets are translated at the exchange rates ruling at balance sheet date. Exchangedifferences arising from the translation of the net investment in foreign entities are charged to retained profits inthe shareholders' equity.

The principal closing rates used in translation of foreign currency amounts are as follows:

2005 2004Foreign currency RM RM

1 US Dollar 3.78 3.801 Singapore Dollar/Brunei Dollar 2.27 2.331 Sterling Pound 6.52 7.33100 Thai Baht 9.21 9.77100 Philippine Peso 6.32 6.77100 Hong Kong Dollar 48.75 48.88

(29) Dividends

Dividends on ordinary shares are recognised as liabilities when shareholders' right to receive the dividends isestablished.

(30) Cash and cash equivalents

Cash and cash equivalents consist of cash and bank balances and short term deposits, that are readily convertibleto known amounts of cash and which are subject to an insignificant risk of changes in value.

For the purpose of the cash flow statements, cash and cash equivalents are presented net of bank overdrafts.



1 GENERAL INFORMATION

The Company is a public limited company, incorporated and domiciled in Malaysia and listed on the Main Board ofBursa Securities.

The principal activity of the Company is investment holding. The Group is involved in commercial banking, Islamicbanking, merchant banking, finance company business, leasing, offshore banking, offshore trust services,stockbroking and other securities related business, general insurance, unit trust management, asset management,nominee and custodian services and property investment and management.

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

The number of employees at financial year end are 10,566 (2004: 10,391) in the Group and Nil (2004: Nil) in theCompany.

The address of the registered office of the Company is at Level 10, Tower One, RHB Centre, Jalan Tun Razak, 50400Kuala Lumpur, Malaysia.

2 CASH AND SHORT TERM FUNDS

Group Company2005 2004 2005 2004

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

Cash and balances with banks andother financial institutions (a) 702,706 827,143 266 355

Money at call and deposit placements maturing within one month (b) 10,682,597 11,928,308 63,494 15,293

11,385,303 12,755,451 63,760 15,648

(a) Included in cash and balances with banks and other financial institutions are:

Group2005 2004

RM'000 RM'000

Accounts held in trust for clients 7,625 10,958

(b) Included in money at call and deposit placements are:

Group Company2005 2004 2005 2004

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

Accounts held in trust for clients and remisiers 49,454 122,788 – –Sinking fund accounts 31,687 115,411 30,266 10,000Deposits pledged to licensed banks 21,083 21,213 3,899 3,793

notes to the financial statementsfor the financial year ended 31 December 2005


3 DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS

Group Company2005 2004 2005 2004

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

Licensed banks 317,315 476,573 1,835 1,763Licensed finance companies 36,500 14,070 – –Licensed merchant banks 15,084 623 – –BNM 2,249,100 45,000 – –Other financial institutions 2,332 12,901 – –

2,620,331 549,167 1,835 1,763

Included in deposits and placements with licensed banks are:

Group Company2005 2004 2005 2004

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

Sinking fund accounts 86,440 – – –Deposits pledged to licensed banks 8,874 8,358 1,835 1,763

4 SECURITIES HELD-FOR-TRADING

Group2005 2004

RM'000 RM'000At fair value

Money market instruments:

QuotedSingapore government stocks 317,799 150,921Government investment issues 208,084 –Khazanah bonds 198,389 –Malaysian government securities 25,030 –

UnquotedPrivate debt securities 800,332 77,466Bankers' acceptances and Islamic accepted bills 763,727 977,401BNM bills 444,592 –Fixed rate notes 249,057 –Negotiable instrument of deposits 59,994 170,117Malaysian government treasury bills 20,654 –Singapore government treasury bills – 46,360

3,087,658 1,422,265

notes to the financial statementsfor the financial year ended 31 December 2005 (continued)


4 SECURITIES HELD-FOR-TRADING (CONTINUED)

Group2005 2004

RM'000 RM'000At fair value

Quoted securities:

In MalaysiaShares 44,008 39,186Unit trust 4,416 5,867Warrants – 1,816

Outside MalaysiaOther government securities 126,856 135,318Bonds 105,289 88,221Shares 424 509

Unquoted securities:

Outside MalaysiaShares 316 319

3,368,967 1,693,501

5 SECURITIES AVAILABLE-FOR-SALE ('SECURITIES AFS')

Group Company2005 2004 2005 2004

RM'000 RM'000 RM'000 RM'000At fair value


QuotedCagamas bonds and Cagamas Mudharabah bonds 585,534 590,588 – –Government investment issues – 1,013,637 – –Khazanah bonds – 393,321 – –Malaysian government securities – 349,743 – –Singapore government stocks – 107,253 – –BNM negotiable notes – 1,328 – –Malaysian government treasury bills – 40 – –

UnquotedPrivate debt securities 736,520 1,438,098 – –BNM bills 99,575 807,072 – –Singapore government treasury bills 56,761 57,950 – –Malaysian government treasury bills 42,534 24,653 – –Other government securities 4,546 24,858 – –Negotiable instrument of deposits – 999,004 – –Bankers' acceptances and Islamic accepted bills – 186,833 – –Danaharta bonds – 149,035 – –Thailand government treasury bills – 29,106 – –

1,525,470 6,172,519 – –



5 SECURITIES AVAILABLE-FOR-SALE ('SECURITIES AFS') (CONTINUED)

Group Company2005 2004 2005 2004

RM'000 RM'000 RM'000 RM'000At fair value

Quoted securities:

In MalaysiaCorporate loan stocks 74,849 92,657 – –Shares 44,353 107,603 – –Malaysian government securities 22,134 22,094 – –Private debt securities 4,433 – – –Warrants – 41 – –

Outside MalaysiaFloating rate notes 313 4,204 – –Shares 135 825 – –


In MalaysiaCorporate loan stocks 193,691 217,108 – –Shares 168,642 181,279 490 502Corporate debt securities 85,350 85,187 – –Private debt securities 38,386 – – –

Outside MalaysiaPrivate debt securities 3,298 7,383 – –Shares 345 1,364 – –Trading rights 238 250 – –

2,161,637 6,892,514 490 502

Included in securities AFS is an amount of RM375,000,000 (2004: RMNil) being pledged to third parties in relationto securities sold under repurchase agreements.



6 SECURITIES HELD-TO-MATURITY

Group2005 2004

RM'000 RM'000At amortised cost


QuotedMalaysian government securities 2,424,601 2,500,274Cagamas bonds and Cagamas Mudharabah bonds 656,125 500,325Khazanah bonds 635,686 47,995

UnquotedNegotiable instrument of deposits 5,367,009 2,333,489Prasarana bonds 2,052,791 2,055,811Private debt securities 1,140,381 1,999,594Bankers' acceptances and Islamic accepted bills 714,033 329,665Other government securities 140,747 109,414Malaysian government treasury bills 73,406 34,742Thailand government treasury bills 47,235 80,563BNM bills – 84,820Singapore government treasury bills – 46,523Danaharta bonds – 6,814

13,252,014 10,130,029

Quoted securities:

In MalaysiaFloating rate notes 100,162 100,700

Outside MalaysiaFloating rate notes – 19,453


In MalaysiaPrivate debt securities 399,183 448,064Corporate loan stocks 187,992 241,645Bonds 29,070 29,070Shares 2,700 2,700Promissory notes 375 375Floating rate notes – 18,971

Outside MalaysiaCredit link notes 37,796 –

14,009,292 10,991,007Accumulated impairment loss (182,182) (221,485)

13,827,110 10,769,522



6 SECURITIES HELD-TO-MATURITY (CONTINUED)

Included in securities held-to-maturity is an amount of RM8,879,125,000 (2004: RM4,157,442,000) being pledgedto third parties in relation to securities sold under repurchase agreements.

Included in unquoted shares is a third party redeemable preference shares amounting to RM1,500,000 (2004:RM1,500,000) with a nominal value of RM1.00 each charged to a third party as part of financing transactionsfacilitated by subsidiaries.

7 LOANS, ADVANCES AND FINANCING

Group2005 2004

RM'000 RM'000

Overdrafts 6,465,593 6,006,116Term loans/financing– housing loans/financing 11,706,298 9,749,377– syndicated term loans/financing 2,335,285 2,008,379– hire-purchase receivables 7,669,206 4,901,383– lease receivables 295,953 260,014– other term loans/financing 11,438,603 11,747,517Bills receivable 1,628,524 1,443,917Trust receipts 498,867 555,315Claims on customers under acceptance credits 4,124,751 4,588,864Staff loans/financing 425,831 425,951Credit/charge cards receivables 994,954 720,281Revolving credits 4,707,948 5,559,106

52,291,813 47,966,220Unearned interest and income (1,281,394) (774,006)

Gross loans, advances and financing 51,010,419 47,192,214Allowance for bad and doubtful debts and financing– general (921,583) (824,954)– specific (1,815,128) (2,455,523)

Net loans, advances and financing 48,273,708 43,911,737

Included in term loans are housing loans sold to Cagamas with recourse amounting to RM3,356,992,000 (2004:RM3,366,851,000).



7 LOANS, ADVANCES AND FINANCING (CONTINUED)

Group2005 2004

RM'000 RM'000

(a) Loans, advances and financing analysed by type of customers are as follows:

Domestic non-bank financial institutions– stockbroking companies 2,862 226,526– others 1,538,252 1,984,495Domestic business enterprises– small medium enterprises 9,094,506 7,685,975– others 18,564,041 18,473,193Government and statutory bodies 167,350 219,511Individuals 21,173,785 18,183,088Other domestic entities 54,419 39,624Foreign entities 415,204 379,802

51,010,419 47,192,214

(b) Loans, advances and financing analysed by type of interest/profit rate sensitivity are as follows:

Fixed rate– housing loans/financing 1,447,587 310,730– hire-purchase receivables 6,485,481 4,177,284– other fixed rate loans/financing 2,965,560 2,852,677Variable rate– base lending rate plus 19,155,385 18,992,018– cost-plus 16,761,171 16,657,587– other variable rates 4,195,235 4,201,918

51,010,419 47,192,214




Group2005 2004

RM'000 RM'000

(c) Loans, advances and financing analysed by their economic sectors are as follows:

Agriculture, hunting, forestry and fishing 2,002,593 1,711,082Mining and quarrying 89,257 145,718Manufacturing 9,432,189 10,053,540Electricity, gas and water 483,322 815,884Construction 2,895,777 2,950,266Real estate 1,302,063 1,282,595Purchase of landed property:– residential 12,221,500 11,317,308– non-residential 1,073,864 1,134,858Wholesale & retail trade and restaurants & hotels 5,768,925 5,182,180Transport, storage and communication 2,809,321 1,295,071Finance, insurance and business services 2,544,843 2,834,612Purchase of securities 2,005,575 2,048,068Purchase of transport vehicles 4,449,684 2,651,368Consumption credit 2,812,850 2,681,625Others 1,118,656 1,088,039

51,010,419 47,192,214

(d) Non-performing loans, advances and financing analysed by their economic sectors are as follows:

Agriculture, hunting, forestry and fishing 26,326 102,090Mining and quarrying 2,102 2,363Manufacturing 702,227 1,376,133Electricity, gas and water 210,255 255,281Construction 497,646 703,997Real estate 312,341 485,212Purchase of landed property:– residential 1,173,786 782,897– non-residential 167,653 173,421Wholesale & retail trade and restaurants & hotels 221,653 353,059Transport, storage and communication 73,585 75,422Finance, insurance and business services 287,889 303,381Purchase of securities 109,823 85,795Purchase of transport vehicles 262,348 102,367Consumption credit 199,914 217,830Others 84,407 99,809

4,331,955 5,119,057




Group2005 2004

RM'000 RM'000

(e) Movements in non-performing loans, advances and financing are as follows:

Balance as at the beginning of the financial year/period 5,119,057 6,359,089Classified as non-performing during the financial year/period 2,523,170 2,839,316Amount recovered (391,096) (670,324)Reclassified as performing during the financial year/period (1,695,732) (2,049,251)Amount written off (1,190,825) (952,050)Loans/financing converted to securities (29,131) (416,533)Exchange difference (3,488) 8,810

Balance as at the end of the financial year/period 4,331,955 5,119,057Specific allowance (1,814,999) (2,455,225)

Net non-performing loans, advances and financing 2,516,956 2,663,832

Ratio of net non-performing loans, advances and financing as % of gross loans, advances and financing less specific allowance 5.11% 5.95%

(f) Movements in allowance for bad and doubtful debts and financing accounts are as follows:

Specific allowance

Balance as at the beginning of the financial year/period 2,455,523 2,612,002Allowance made during the financial year/period 757,958 1,245,794Transferred to accumulated impairment loss in value of securities (12,498) (69,619)Amount recovered (186,810) (444,477)Amount written off (1,197,510) (893,828)Amount transferred from allowance for commitments and contingencies – 39Exchange difference (1,535) 5,612

Balance as at the end of the financial year/period 1,815,128 2,455,523

General allowance

Balance as at the beginning of the financial year/period 824,954 791,932Net allowance made during the financial year/period 97,689 30,577Exchange difference (1,060) 2,445

Balance as at the end of the financial year/period 921,583 824,954

As % of gross loans, advances and financing less specific allowance 1.87% 1.84%



8 CLIENTS' AND BROKERS' BALANCES

Clients' and brokers' balances are stated net of specific and general allowance for doubtful debts of RM16,419,000(2004: RM6,882,000) and RM974,000 (2004: RM905,000) respectively.

9 OTHER ASSETS

Group Company2005 2004 2005 2004

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

Other debtors, deposits and prepayments 281,363 213,392 9,327 8,593Accrued interest receivable 166,708 78,617 36 36

448,071 292,009 9,363 8,629

Other debtors, deposits and prepayments of the Group are stated net of allowance for doubtful debts ofRM4,461,000 (2004: RM9,652,000).

Included in the other debtors, deposits and prepayments of the Group is a deposit of RM32,800,000 (2004:RM32,800,000) paid by RHB Capital pursuant to the sale and purchase agreement dated 7 November 2000between Carta Bintang Sdn Bhd ('CBSB') and RHB Capital for the sale and purchase of 60 million shares in SJSecurities Sdn Bhd ('SJ Securities') as disclosed in Note 46.

10 DERIVATIVE ASSETS/(LIABILITIES)

Group Company2005 2004 2005 2004

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

Derivative assets 47,554 33,524 – –Derivative liabilities (140,743) (155,627) (71,492) (110,643)

(93,189) (122,103) (71,492) (110,643)

GroupContract or underlying Year-end Year-end

principal positive negative amount fair value fair value

2005 RM'000 RM'000 RM'000

Foreign exchange related contracts:– forwards/swaps 6,605,093 13,179 16,042– options 929,564 20,149 19,759– cross-currency interest rate swaps 188,975 167 59– spots 353,437 256 121



10 DERIVATIVE ASSETS/(LIABILITIES) (CONTINUED)

GroupContract or underlying Year-end Year-end

principal positive negative amount fair value fair value

2005 (continued) RM'000 RM'000 RM'000

Interest rate related contracts:– futures 3,331,000 2,677 1,235– swaps 3,862,403 11,126 32,035

Call Warrants 2003/2007 – – 71,492

47,554 140,743

2004

Foreign exchange related contracts:– forwards/swaps 12,788,609 23,836 9,824– options 371,671 3,255 2,072– cross-currency interest rate swaps 190,000 – 1,383– spots 748,808 757 511

Interest rate related contracts:– futures 1,739,000 2,281 1,239– swaps 1,427,000 3,395 29,955

Call Warrants 2003/2007 – – 110,643

33,524 155,627

CompanyYear-end

negative fair value

2005 RM'000

Call Warrants 2003/2007 71,492

2004

Call Warrants 2003/2007 110,643



11 AMOUNTS DUE FROM/(TO) SUBSIDIARIES

The amounts due from subsidiaries are stated net of allowance for doubtful debts of RM29,294,000 (2004:RM1,284,000). In previous financial period, the amount due from a subsidiary of approximately RM448,521,000carried interest at 1% per annum above the Company's cost of funds.

The amounts due to subsidiaries are unsecured and have no fixed terms of repayments. ApproximatelyRM11,386,000 (2004: RM199,961,000) amounts due to subsidiaries are interest free while the remaining amountsbear interest at 0% to 0.2% (2004: 0.2%) above the cost of funds of the subsidiaries.

12 STATUTORY DEPOSITS

Included in statutory deposits are:

(a) non-interest bearing statutory deposits of RM1,695,632,000 (2004: RM1,424,281,000) relating to the bankingand finance subsidiaries which are maintained with BNM in compliance with Section 37(1)(c) of the CentralBank of Malaysia Act, 1958 (revised-1994), with the Ministry of Finance, Negara Brunei Darussalam incompliance with Section 6A of the Banking Act, and with the Monetary Authority of Singapore in compliancewith Banking Act, Cap. 19 and Singapore Finance Companies Act, Cap. 108. The amounts are determined bythe respective authorities.

(b) interest bearing statutory deposits of RM100,000 (2004: RM100,000) favouring the Accountant General thathas been placed by a subsidiary which is maintained with a banking subsidiary in accordance with Section4(2)(d) of the Labuan Trust Companies Act, 1990.

The subsidiary has notified the Accountant General regarding surrendering of its trust licence to the LabuanOffshore Financial Services Authority ('LOFSA') and thus requested for the withdrawal of the said fixed deposit.As at the balance sheet date, the subsidiary is awaiting the approval from the Accountant General to refundthe said deposit.

(c) non-interest bearing statutory deposits of RM99,000 (2004: RMNil) relating to a trust subsidiary which ismaintained with the LOFSA in accordance with Section 4(2)(d)(ii) of the Labuan Trust Companies (Amendment)Act 2002.



13 DEFERRED TAX ASSETS/(LIABILITIES)

Group2005 2004

RM'000 RM'000

Deferred tax assets 247,658 208,763Deferred tax liabilities (2,904) (4,453)

244,754 204,310

Balance as at the beginning of the financial year/period– as previously reported 197,422 155,811– prior year adjustments 6,888 (17,884)

– as restated 204,310 137,927Amount arising from disposal of a subsidiary – 27Transfer from income statement (Note 38) 47,172 55,026Transfer (to)/from equity (6,657) 11,101Exchange difference (71) 229


The movements in deferred tax assets and liabilities during the financial year/period comprise the following:

General allowance on loans,

Property, advances Provision OtherLeasing plant and Securities and Tax Derivative for temporary

Group business equipment AFS financing losses assets liability differences Total2005 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Balance as at the beginning of the financial year– as previously reported 7,964 (36,398) – 218,220 5,009 – 515 2,112 197,422– prior year adjustments – – 6,234 – – 753 – (99) 6,888

– as restated 7,964 (36,398) 6,234 218,220 5,009 753 515 2,013 204,310

Transfer from income statement – 5,943 – 27,774 4,501 – 2 8,952 47,172

Transfer to equity – – (6,657) – – – – – (6,657)

Exchange difference – – – – (71) – – – (71)

Balance as at the end of the financial year 7,964 (30,455) (423) 245,994 9,439 753 517 10,965 244,754



13 DEFERRED TAX ASSETS/(LIABILITIES) (CONTINUED)

General allowance on loans,

Property, advances Provision OtherLeasing plant and Securities and Tax Derivative for temporary

Group (continued) business equipment AFS financing losses assets liability differences Total2004 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Balance as at the beginning of the financial period– as previously reported (25,333) (40,169) – 211,420 8,279 – 336 1,278 155,811– prior year adjustments – – (4,867) – – (6,406) – (6,611) (17,884)

– as restated (25,333) (40,169) (4,867) 211,420 8,279 (6,406) 336 (5,333) 137,927

Amount arising from disposal of a subsidiary – – – – – – – 27 27

Transfer from/(to) income statement 33,297 3,771 – 6,800 (3,300) 7,159 (22) 7,321 55,026

Transfer from equity – – 11,101 – – – – – 11,101

Exchange difference – – – – 30 – 201 (2) 229

Balance as at the end of the financial period 7,964 (36,398) 6,234 218,220 5,009 753 515 2,013 204,310

Deferred tax assets have not been recognised on the following as it is not probable that the relevant subsidiarieswill generate sufficient future taxable profits available against which the deductible temporary differences can beutilised:

Group2005 2004

RM'000 RM'000

Unabsorbed tax losses carried forward 3,291,380 3,251,696Unabsorbed capital allowances carried forward 4,070 162

3,295,450 3,251,858



14 INVESTMENTS IN SUBSIDIARIES

Company2005 2004

RM'000 RM'000

In Malaysia

Quoted shares, at cost 4,435,603 4,435,603Unquoted shares, at cost 154,292 154,292

4,589,895 4,589,895Accumulated impairment loss on subsidiaries (149,207) (149,207)

4,440,688 4,440,688

Market value of quoted shares 2,614,201 2,767,978

The quoted shares in a subsidiary were pledged as security for the Company's RM5 million (2004: RM95 million)revolving credit facilities, RM260 million (2004: RM310 million) term loan facilities, RM200 million (2004: RM200million) Bank Guaranteed Bonds and USD265 million (2004: USD265 million) Secured Bonds respectively (Asdisclosed in Note 23).

The details of the subsidiaries are as follows:

Paid-upshare capital

(in RM unless Effective equity Country of otherwise interest

Name of company incorporation stated) 2005 2004 Principal activities% %

Direct subsidiaries of Rashid Hussain Berhad

RHB Capital Berhad Malaysia 1,823,474,695 64.9 64.9 Investment holding

RHB Property Management Malaysia 500,000 100 100 Property managementSdn Bhd

RHB-DAEWOO Sdn Bhd Malaysia 186,508,950 80 80 Property investment

RHB Kawal Sdn Bhd Malaysia 1,500,000 100 100 Security services

RHB Management Company Malaysia 150,000 100 100 Management and consultancySdn Bhd services

RHB Noble 1 (L) Ltd 1 Malaysia USD1.00 100 – Special purpose vehicle



14 INVESTMENTS IN SUBSIDIARIES (CONTINUED)




Subsidiaries of RHB Capital

RHB Bank Berhad Malaysia 1,949,985,976 45.4 45.4 Commercial banking

RHB Islamic Bank Berhad 2 Malaysia 523,424,002 45.4 – Islamic Banking

RHB Bank (L) Ltd Malaysia USD54,000,000 45.4 45.4 Offshore banking

RHB Capital Nominees Malaysia 10,000 45.4 45.4 Nominee services for Malaysian(Tempatan) Sdn Bhd beneficial shareholders

RHB Capital Nominees Malaysia 10,000 45.4 45.4 Nominee services for foreign (Asing) Sdn Bhd beneficial shareholders

RHB Investment Ltd 3 Singapore S$19,000,000 45.4 45.4 Property investment and rental

Banfora Pte Ltd 3 Singapore S$25,000,000 45.4 45.4 Property investment and rental

RHB Bank Nominees Pte Ltd 3 Singapore S$100,000 45.4 45.4 Nominee services

RHB Delta Finance Berhad Malaysia 175,000,000 45.4 45.4 Finance company

RHB Leasing Sdn Bhd Malaysia 10,000,000 45.4 45.4 Leasing and hire-purchase

RHB Trade Services Limited 4 Hong Kong HK$2 45.4 45.4 Processing of letters of credits reissuance favouring Hong Kongbeneficiaries

RHB Capital Properties Sdn Bhd Malaysia 21,800,000 45.4 45.4 Property investment

Utama Assets Sdn Bhd Malaysia 2,300,000 45.4 45.4 Property investment

RHB Sakura Merchant Bankers Malaysia 338,646,000 64.9 64.9 Merchant bankingBerhad

RHB Unit Trust Management Malaysia 2,000,000 64.9 64.9 Management of unit trust fundsBerhad

RHB Merchant Nominees Malaysia 10,000 64.9 64.9 Nominee services for Malaysian(Tempatan) Sdn Bhd beneficial shareholders

RHB Merchant Nominees Malaysia 10,000 64.9 64.9 Nominee services for foreign(Asing) Sdn Bhd beneficial shareholders







Subsidiaries of RHB Capital (continued)

RHB Securities Sdn Bhd Malaysia 200,000,000 64.9 64.9 Stockbroking

RHB Nominees Sdn Bhd Malaysia 25,000 64.9 64.9 Nominee and custodian services

RHB Nominees (Asing) Malaysia 25,000 64.9 64.9 Nominee and custodian Sdn Bhd services for foreign beneficial

shareholders

RHB Nominees (Tempatan) Malaysia 25,000 64.9 64.9 Nominee and custodian Sdn Bhd services for Malaysian

beneficial shareholders

RHB Asset Management Malaysia 2,000,000 64.9 64.9 Asset management servicesSdn Bhd

RHB Research Institute Sdn Bhd Malaysia 500,000 64.9 64.9 Research services

RHB Futures Sdn Bhd Malaysia 13,500,000 64.9 64.9 Futures and options broking

RHB Marketing Services Sdn Bhd Malaysia 100,000 64.9 64.9 Investment holding

Straits Asset Holdings Sdn Bhd Malaysia 45,000,000 64.9 64.9 Investment holding

RHB Management Services Jersey, GBP12 64.9 64.9 Management services(Jersey) Limited Channel Islands

RHB Insurance Berhad Malaysia 100,000,000 51.6 51.6 General insurance

RHB International Trust (L) Ltd Malaysia USD40,000 64.9 64.9 Offshore trust company

RHB Corporate Services Sdn Bhd Malaysia 150,000 64.9 64.9 Corporate secretarial services(formerly known as RHB International Trust(Labuan) Sdn Bhd) 5

RHB Hartanah Sdn Bhd Malaysia 100,000 64.9 64.9 Property investment

RHB Equities Sdn Bhd 6 Malaysia 20,000,000 64.9 64.9 Equity related services

RHB Asia Pte Ltd 3 Singapore S$12,000,000 64.9 64.9 Investment holding







Subsidiaries of RHB Capital (continued)

RHB Capital (Jersey) Limited Jersey, GBP4,012 64.9 64.9 Investment holdingChannel Islands

RHB Overseas Limited Jersey, GBP100 64.9 64.9 Investment holdingChannel Islands

Rashid Hussain Berhad's dormant subsidiaries

Bandar Wawasan Malaysia 2 80 80 DormantManagement Sdn Bhd

RHB Health Care Sdn Bhd Malaysia 2 100 100 Dormant

RHB Modal-Ekuiti Sdn Bhd Malaysia 3,000,000 100 100 Dormant

Malaysian Mint Sdn Bhd 7 Malaysia 2 – 100 Dormant

Spektra Perkasa Sdn Bhd 7 Malaysia 2 – 100 Dormant

RHB Capital's dormant subsidiaries

RHB Bena Sdn Bhd Malaysia 5,000,000 64.9 64.9 Dormant

RHBF Sdn Bhd Malaysia 148,145,176 64.9 64.9 Dormant

KYF Sdn Bhd Malaysia 50,000,000 64.9 64.9 Dormant

Kwong Yik Nominees Malaysia 10,000 64.9 64.9 Dormant(Tempatan) Sdn Bhd

Kwong Yik Nominees (Asing) Malaysia 10,000 64.9 64.9 DormantSdn Bhd

KYB Trust Management Sdn Bhd Malaysia 2 64.9 64.9 Dormant

RHB Dynamic Technologies Malaysia 100,000 64.9 64.9 DormantSdn Bhd

KYB Sdn Bhd Malaysia 1,735,137,489 64.9 64.9 Dormant







RHB Capital's dormant subsidiaries (continued)

Rashid Hussain Securities Philippines PHP180,000,000 64.9 64.9 Dormant(Philippines) Inc 3,8

PT Rashid Hussain Securities 3,9 Indonesia IDR35,000,000,000 55.2 55.2 Dormant

RHB Bank's dormant subsidiaries

UMBC Sdn Bhd Malaysia 499,999,818 45.4 45.4 Dormant

USB Nominees Sdn Bhd Malaysia 10,000 45.4 45.4 Dormant

USB Nominees (Tempatan) Malaysia 10,000 45.4 45.4 DormantSdn Bhd

USB Nominees (Asing) Sdn Bhd Malaysia 10,000 45.4 45.4 Dormant

RHB Delta Nominees Malaysia 10,000 45.4 45.4 Dormant(Tempatan) Sdn Bhd

INFB Jaya Sdn Bhd Malaysia 50,000,000 45.4 45.4 Dormant

Utama Gilang Sdn Bhd Malaysia 800,000,000 45.4 45.4 Dormant

U.B. Nominees (Tempatan) Malaysia 10,000 45.4 45.4 DormantSdn Bhd

RHB Sakura Merchant Bankers Berhad's ('RHB Sakura') dormant subsidiaries

RHB Venture Capital Sdn Bhd Malaysia 2 64.9 64.9 Dormant

RHB Holdings Sdn Bhd Malaysia 2 64.9 64.9 Dormant

Semara Jaya Sdn Bhd 10 Malaysia 2 – 64.9 Dormant

Straits Nominees (Tempatan) Malaysia 25,000 64.9 64.9 DormantSdn Bhd 11







RHB Sakura's dormant subsidiaries (continued)

Straits Nominees (Asing) Malaysia 25,000 64.9 64.9 DormantSdn Bhd 11

SFSB Services (Melaka) Sdn Bhd Malaysia 5,000,000 64.9 64.9 Dormant

SSSB Services (Melaka) Sdn Bhd Malaysia 40,000,000 64.9 64.9 Dormant

Notes:

1. The company was incorporated in the Federal Territory of Labuan on 25 November 2005, under the Offshore CompaniesAct, 1990.

2. The company was incorporated on 2 February 2005.

3. Subsidiaries audited by overseas firms associated with PricewaterhouseCoopers, Malaysia.

4. Subsidiaries not audited by PricewaterhouseCoopers.

5. With effect from 27 May 2005, the company became a wholly-owned subsidiary of RHB International Trust (L) Ltd.

6. With effect from 1 July 2001, the company's activities relate primarily to recovery of outstanding debts.

7. The company was struck-off via a notice from the Companies Commissions of Malaysia ('CCM') dated 18 November 2005pursuant to Section 308 of the Companies Act, 1965, and ceased to be a subsidiary of the Company with effect from thesame date.

8. The company has ceased operations effective from the close of business on 10 December 2001.

9. The company has ceased operations on 31 July 2001 and commenced proceedings for members' voluntary dissolution.

10. The company was struck-off via a notice from the CCM dated 7 February 2005 pursuant to Section 308 of the CompaniesAct, 1965, and ceased to be a subsidiary of RHB Sakura with effect from the same date.

11. The company has commenced members' voluntary winding-up pursuant to Section 254(1)(b) of the Companies Act, 1965on 30 March 2006.



15 INVESTMENTS IN ASSOCIATES

Group2005 2004

RM'000 RM'000

Share of net assets– in Malaysia 15,734 16,135

The details of the associates are as follows:




Positive Properties Sdn Bhd Malaysia 23,040,000 32.5 32.5 Property investment

RHB-Cathay Securities Pte Ltd 1 Singapore S$3,000,000 31.8 31.8 Dormant

CMS Trust Management Berhad Malaysia 6,765,300 22.3 22.3 Management of unit trust funds

Note:

1. The company commenced members' voluntary winding up on 21 December 2003 and it was completed on 27 December2005. Pursuant to the Companies Act of Singapore, the company is deemed to be dissolved on 27 March 2006, threemonths after the date of filing of a return upon the holding of the final meeting.

16 REAL PROPERTY ASSETS

Group2005 2004

RM'000 RM'000

Freehold land, at cost 102,511 127,029Development expenditure 319,276 428,289

421,787 555,318Less: Impairment loss (a) – (131,604)

421,787 423,714

(a) Movements of impairment loss in real property assets are as follows:

Balance as at the beginning of the financial year/period 131,604 131,604Realisation due to sale of real property asset (35,606) –Write back during the financial year/period (95,998) –

Balance as at the end of the financial year/period – 131,604



16 REAL PROPERTY ASSETS (CONTINUED)

The real property assets comprise an uncompleted Retail Centre, Apartment Podium and a vacant Office Tower 4Land of a subsidiary. These assets have been pledged as collateral for the revolving credit facilities granted to thesubsidiary and a credit facility granted to the Company.

As at 31 December 2005, Management has assessed the recoverable amount of the properties based on the netselling price, which is the amount obtainable from the sale of the asset in an arm's length transaction betweenknowledgeable, willing parties, after deducting any direct incremental disposal cost. The net selling price has beendetermined based on an offer of RM450,000,000, on an 'as-is where is' basis, received from a potential buyer forthe above properties, less the cost of disposal. The amount recoverable has been assessed to be higher than thecarrying amount of the assets.

Based on this, the Directors are of the opinion that the impairment loss previously recognised for the properties ofRM95,998,000 is no longer necessary and accordingly is written back to the income statement for the year ended31 December 2005.

17 PROPERTY, PLANT AND EQUIPMENT

Computer Furniture,Leasehold land Renovations equipment fittings

Freehold Less than 50 years and and and MotorGroup land 50 years or more Buildings improvements software equipment vehicles Total2005 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

CostBalance as at the beginning

of the financial year 122,604 1,047 134,372 473,150 143,852 662,869 215,474 27,997 1,781,365Additions – – – 3,518 11,516 47,739 7,701 2,578 73,052Disposals – – (3,299) (2,128) (789) (2,040) (3,368) (5,284) (16,908)Written off – – – – (5,495) (25,715) (4,826) (12) (36,048)Exchange difference (35) – (2,242) (1,174) (204) (460) (333) (46) (4,494)Reclassifications – – – – 7,997 1,572 (9,241) (328) –

Balance as at the end of the financial year 122,569 1,047 128,831 473,366 156,877 683,965 205,407 24,905 1,796,967

Accumulated depreciationBalance as at the beginning of

the financial year – 384 3,842 69,554 110,888 464,266 195,691 17,918 862,543Charge for the financial year – 28 444 9,619 9,228 73,058 10,760 3,201 106,338Disposals – – (218) (438) (406) (2,015) (3,259) (4,938) (11,274)Written off – – – – (5,419) (25,625) (4,803) (6) (35,853)Exchange difference – – (1) (238) (119) (252) (321) (41) (972)Reclassifications – – – – 1,783 1,442 (4,425) 1,200 –

Balance as at the end of the financial year – 412 4,067 78,497 115,955 510,874 193,643 17,334 920,782

Accumulated impairment lossBalance as at the beginning of

the financial year – – 24,005 3,508 – 2,925 – – 30,438Charge for the financial year – – – – – 1,365 – – 1,365Exchange difference – – (470) (13) – – – – (483)

Balance as at the end of the financial year – – 23,535 3,495 – 4,290 – – 31,320

Net book value as at the end of the financial year 122,569 635 101,229 391,374 40,922 168,801 11,764 7,571 844,865



17 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Computer Furniture,Leasehold land Renovations equipment fittings

Freehold Less than 50 years and and and MotorGroup (continued) land 50 years or more Buildings improvements software equipment vehicles Total2004 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Cost 122,604 1,047 134,372 473,150 143,852 662,869 215,474 27,997 1,781,365Accumulated depreciation – 384 3,842 69,554 110,888 464,266 195,691 17,918 862,543Accumulated impairment loss – – 24,004 3,509 – 2,925 – – 30,438

Net book value as at the end of the financial period 122,604 663 106,526 400,087 32,964 195,678 19,783 10,079 888,384

Included in the net book value of motor vehicles is an amount of RM1,789,000 (2004: RM2,631,000) which ispurchased under hire-purchase arrangement.

Included in the freehold land and buildings is a property at net book value of RM262,197,000 (2004:RM267,052,000) belonging to the Group which has been charged as collateral for a subsidiary's borrowings as at31 December 2005.

The above property, plant and equipment include the following assets under construction:

Group2005 2004

RM'000 RM'000

At costRenovations 5,013 5,992Computer equipment and software 12,750 11,232

17,763 17,224



17 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Renovations Furniture,and fittings and

Company improvements equipment Total2005 RM'000 RM'000 RM'000

CostBalance as at the beginning of the financial year 703 65 768Additions – – –

Balance as at the end of the financial year 703 65 768

Accumulated depreciationBalance as at the beginning of the financial year 640 65 705Charge for the financial year 63 – 63

Balance as at the end of the financial year 703 65 768

Net book value as at the end of the financial year – – –

2004

Cost 703 65 768Accumulated depreciation 640 65 705

Net book value as at the end of the financial period 63 – 63

18 GOODWILL

Group2005 2004

RM'000 RM'000

Balance as at the beginning of the financial year/period 2,398,017 2,411,640Goodwill written off (4,025) –Fair value adjustment on assets acquired in previous year (426) (13,623)

Balance as at the end of the financial year/period 2,393,566 2,398,017



19 DEPOSITS FROM CUSTOMERS

Group2005 2004

RM'000 RM'000

Demand deposits 13,641,429 12,747,474Savings deposits 4,722,989 4,521,857Fixed deposits 29,463,323 32,551,105Promissory notes – 199,000Negotiable instrument of deposits 2,033,774 135,793

49,861,515 50,155,229

(a) The maturity structure of fixed deposits, promissory notes andnegotiable instrument of deposits is as follows:

Due within six months 24,996,305 25,677,741Six months to one year 5,992,128 6,679,131One year to three years 418,740 454,580Three years to five years 86,059 74,436Over five years 3,865 10

31,497,097 32,885,898

(b) The deposits are sourced from the following classes of customers:

Government and statutory bodies 3,181,956 4,125,423Business enterprises 22,590,100 22,831,664Individuals 22,823,334 22,079,018Others 1,266,125 1,119,124

49,861,515 50,155,229

20 DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS

Group2005 2004

RM'000 RM'000

Licensed banks 7,179,159 4,411,084Licensed finance companies 62,770 219,220Licensed merchant banks 523,788 478,065BNM 948,947 861,763Other financial institutions 2,314,167 1,153,810

11,028,831 7,123,942



21 CLIENTS' AND BROKERS' BALANCES

Included in clients' and brokers' balances are clients' trust balances held by the stockbroking subsidiary in trust ofRM43,894,000 (2004: RM128,862,000).

22 OTHER LIABILITIES

Group Company2005 2004 2005 2004

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

Other creditors and accruals 468,209 335,327 12,214 10,870Accrued interest payable 365,684 291,874 20,196 157Amount due to BNM (a) 256,738 223,414 – –Accruals for operational expenses 147,050 144,018 – –General insurance fund (b) 130,055 115,265 – –Short term employee benefits 84,262 46,586 – –Lessee deposits 80,935 74,063 – –Hire-purchase instalment received in advance 51,594 53,547 – –Amount claimed by contractor 42,136 64,350 – –Remisiers' trust deposits 8,954 13,085 – –Hire-purchase creditors (c) 2,346 2,977 – –Amount due to Danaharta (d) 1,909 53,355 – –Amount payable for creation of

units due to funds 865 14,038 – –Credit Guarantee Corporation

Funding Program 704 757 – –

1,641,441 1,432,656 32,410 11,027

(a) Amount due to BNM

The amount due to BNM mainly comprises collections on ex-Sime Bank's non-performing loans sold to BNMwhich are managed by RHB Bank. Amount due to BNM was subject to interest at rates ranging from 2.79%to 2.88% (2004: 2.80% to 3.27%) per annum.

(b) General insurance fund

Group2005 2004

RM'000 RM'000

Provision for outstanding claims 80,153 74,801Unearned premium reserve 49,902 40,464

130,055 115,265



22 OTHER LIABILITIES (CONTINUED)

(c) Hire-purchase creditors

Group2005 2004

RM'000 RM'000

Minimum lease payments– not later than one year 784 784– later than one year and not later than two years 784 1,254– later than two years and not later than five years 1,016 1,330

2,584 3,368Future finance charges on hire-purchase (238) (391)

Present value of hire-purchase creditors 2,346 2,977

Current 669 631Non-current 1,677 2,346

2,346 2,977

Present value of hire-purchase creditors– not later than one year 669 631– later than one year and not later than two years 709 1,115– later than two years and not later than five years 968 1,231

2,346 2,977

Hire-purchase are effectively secured as the rights to the leased assets revert to the lessor in the event ofdefault.

The effective interest rates of hire-purchase creditors at balance sheet date range from 5.28% to 6.54% (2004:5.40% to 6.54%) per annum.

(d) Amount due to Danaharta

The amount due to Danaharta mainly comprises collections on ex-Sime Bank's overseas branches non-performing loans sold to Danaharta which is managed by RHB Bank's overseas branches.



23 BORROWINGS

Group Company2005 2004 2005 2004

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

Secured:Revolving credits (a) 349,125 607,900 92,625 232,500Term loans (a) 716,000 750,000 260,000 310,000USD265 million 2.0% stepping up to 4.0%

in 2005 Secured Bonds due 2007 (b) 1,063,020 1,000,125 1,149,210 1,081,2164.3% Bank Guaranteed Bonds (c) 200,000 200,000 200,000 200,000

Unsecured:Revolving credits (d) 111,952 147,200 – 15,000Overdrafts (e) 4,173 35,936 – –Redeemable Serial Fixed Rate Bonds 2002/2007 (f ) 375,000 500,000 – –7.5% Bonds 2003/2009 (g) – 200,000 – –RM600 million 6 years Serial Fixed Rate Bonds (h) 600,000 – – –

3,419,270 3,441,161 1,701,835 1,838,716

Maturity period of borrowings:

Repayable within one year 640,250 1,146,036 142,625 297,500One year to three years 2,104,020 1,685,125 1,484,210 1,391,216Three years to five years 375,000 610,000 75,000 150,000Over five years 300,000 – – –

3,419,270 3,441,161 1,701,835 1,838,716

The borrowings of the Group and the Company are as follows:

(a) Revolving credits and term loans (secured)

Revolving credit and term loan facilities of RM349,125,000 (2004: RM607,900,000) and RM716,000,000(2004: RM750,000,000) respectively are secured against:

(i) properties of wholly-owned subsidiaries;(ii) shares of a subsidiary;(iii) fixed deposits of the Company and subsidiaries of RM2,718,000 (2004: RM5,556,000) and

RM23,351,000 (2004: RM23,459,000) respectively;(iv) assignment of rental proceeds from a property of a subsidiary;(v) corporate guarantee by a subsidiary of RM260,000,000 (2004: RM260,000,000); and(vi) standby letter of credit from Labuan offshore banks.

The secured revolving credit facilities and term loans bear interest at rates ranging from 3.50% to 7.50%(2004: 3.58% to 7.25%) and 4.20% to 8.30% (2004: 4.20% to 8.00%) per annum respectively.



23 BORROWINGS (CONTINUED)

(b) USD265 million 2.0% stepping up to 4.0% in 2005 Secured Bonds due 2007

In 2002, the Company proposed to the holders of the USD200 million 1.5% Redeemable Exchangeable Bonds('Bonds 97/07') ('Bondholders') to restructure the Bonds 97/07 by way of an exchange of the Bonds 97/07 attheir accreted value for approximately USD265.184 million nominal amount of Rashid Hussain Berhad SecuredBonds 2002/2007 ('New Bonds') with approximately 340.439 million detachable warrants ('New Warrants')('Bond Restructuring'). The New Warrants entitled its holder to purchase shares of RHB Capital held by theCompany at an exercise price of RM2.96 per share, by way of cash payment or the surrender for cancellationof the New Bonds at their accreted value or a combination of both. At the Bondholders' meeting held on 21June 2002, the Bondholders had approved the settlement of the Bonds 97/07.

The Bond Restructuring enabled the Company to defer its repayment obligations under the Bonds 97/07 andis expected to ultimately enable the redemption of the Secured Bonds without a significant amount of cashoutlay or fund raising by the Company. Proceeds from the exercise of New Warrants, which have an exerciseprice that is more reflective of the current market price of RHB Capital shares, will be used to redeem theSecured Bonds.

The Company had obtained the approval from Foreign Investment Committee ('FIC'), BNM and SC, respectivelyon the Bond Restructuring. In a letter dated 28 November 2002, SC had approved the following:

(i) issuance of up to USD265.485 million nominal amount of 2% stepping up to 4% in 2005, bonds due2007 ('Secured Bonds') together with up to 340,440,000 detachable call warrants ('New Warrants')('Secured Bonds with New Warrants'); and

(ii) the listing of and quotation for the New Warrants on the Bursa Securities.

The shareholders of the Company had approved the Bond Restructuring at an Extraordinary General Meetingheld on 12 December 2002 and the Company has successfully fulfilled all conditions precedent for therestructuring of the Bonds 97/07 on 31 December 2002.

The Bond Restructuring was successfully completed on 21 February 2003 with the issuance of the SecuredBonds with New Warrants. The nominal value of Secured Bonds and the number of New Warrants issued bythe Company were USD265,205,000 and 340,438,934 units respectively.

The facility is secured against shares in a subsidiary.

(c) 4.3% Bank Guaranteed Bonds

On 31 December 2002, the Company issued RM200 million nominal amount of 5-year 4.30% bankguaranteed bonds ('Bank Guaranteed Bonds'). The Bank Guaranteed Bonds bear interest at the rate of 4.30%per annum, payable semi-annually in June and December every year, from June 2003. The facility is securedagainst shares in a subsidiary and fixed deposits of RM3,016,000 (2004: RM2,913,000).

A sinking fund is created by the Company and administered by the trustee of the Guaranteed Bonds to ensurerepayment of the Guaranteed Bonds on maturity date.

Minimum balanceRM'million

As at 31 December 2004 10.0As at 31 December 2005 30.0As at 31 December 2006 50.0As at 31 December 2007 200.0




(d) Revolving credits (unsecured)

The unsecured revolving credit facilities of RM111,952,000 (2004: RM147,200,000) bear interest at ratesranging from 4.21% to 5.90% (2004: 3.97% to 5.75%) per annum.

(e) Overdrafts (unsecured)

The unsecured overdrafts bear interest at rates ranging from 8.00% to 8.30% (2004: 7.25% to 8.00%) perannum.

(f) Redeemable Serial Fixed Rate Bonds 2002/2007

On 1 November 2002, RHB Capital issued RM500 million in aggregate nominal value of redeemable unsecuredserial fixed rate bonds ('Serial Bonds'). The Serial Bonds comprising 3 series, are as follows:

Series Nominal value Maturity date Coupon rate (per annum)RM'million

1 125.0 1 November 2005 6.0%2 125.0 1 November 2006 6.2%3 250.0 1 November 2007 6.4%

The coupon payment is payable semi-annually in arrears in May and November each year, from May 2003 withthe final coupon payment to be made on the respective maturity dates of each series.

A sinking fund is created by RHB Capital and administered by the trustee of the Serial Bonds to ensurerepayment of the Serial Bonds on maturity date. Dividend income from subsidiaries of RHB Capital received byRHB Capital will first be credited into the said sinking fund to ensure the following balances are met at theirrespective dates:

Minimum balanceRM'million

As at 30 April 2004 50.0As at 30 April 2005 125.0As at 30 April 2006 125.0As at 30 April 2007 125.0

(g) 7.5% Bonds 2003/2009

RHB Capital had on 4 April 2003 issued RM200 million nominal amount of bonds 2003/2009 ('Bonds2003/2009'). The Bonds 2003/2009, with a tenure of 6 years, bear interest at the rate of 7.5% per annum,payable semi-annually in arrears, from October 2003.

RHB Capital had on 17 January 2005 fully redeemed the Bonds 2003/2009 by utilising part of the proceedsfrom the RM600 million 6 years Serial Fixed Rate Bonds as disclosed in Note 23(h).




(h) RM600 million 6 years Serial Fixed Rate Bonds

On 11 January 2005, RHB Capital issued RM600 million nominal value of 6 years Serial Fixed Rate Bonds. TheSerial Bonds comprising 3 series, are as follows:

Series Nominal value Maturity date Coupon rate (per annum)RM'million

1 150.0 11 January 2009 6.2%2 150.0 11 January 2010 6.7%3 300.0 11 January 2011 7.2%

The coupon payment is payable semi-annually in arrears in July and January each year, with the final couponpayment to be made on the respective maturity dates of each series.

24 SUBORDINATED OBLIGATIONS

Group2005 2004

RM'000 RM'000

8.2% RM165 million Tier II Subordinated Bonds 2002/2012 (a) 165,000 165,0006.85% RM800 million Tier II Subordinated Bonds 2002/2012 (b) 800,000 800,0006.625% USD150 million Tier II Subordinated Notes 2002/2013* (c) 565,252 568,080

1,530,252 1,533,080

* Net of unaccreted discount of RM1.7 million (2004: RM1.9 million).

(a) 8.2% RM165 million Tier II Subordinated Bonds 2002/2012

On 9 December 2002, RHB Sakura issued a 10-year non-callable 5-year Subordinated Bonds for an aggregatenominal value of RM165 million at par ('Sub Bonds'). The Sub Bonds are redeemable unsecured subordinatedobligations of RHB Sakura and qualified as Tier II capital for the purpose of BNM's capital adequacyrequirements.

The Sub Bonds constitute redeemable unsecured obligations of RHB Sakura, subordinated in right and priorityof payment, to the extent and in the manner provided in the terms of the Sub Bonds, to all deposit liabilitiesand other liabilities of RHB Sakura except those liabilities which by their terms rank pari passu in right of priorityof payment with or subordinate to the Sub Bonds. The Sub Bonds are, in the event of a distribution of assetsin the winding up or liquidation of RHB Sakura, rank senior to the share capital of RHB Sakura.

The Sub Bonds was used as part settlement of the transfer consideration paid by RHB Sakura for the Transferof the Securities and Securities Related Business Entities from RHB Capital to RHB Sakura pursuant to the GroupRestructuring Scheme of the RHB Group.

The coupon for the Sub Bonds shall be accrued at the rate of 8.2% per annum and commencing from thebeginning of the sixth year from the issue date, the coupon rate shall be stepped up to 10.7% per annum tothe maturity date. Coupon payments are payable semi-annually in arrears, with the last payment to be madeon the maturity date.



24 SUBORDINATED OBLIGATIONS (CONTINUED)

(b) 6.85% RM800 million Tier II Subordinated Bonds 2002/2012

On 24 December 2002, RHB Bank issued a RM800 million nominal value 10-year redeemable unsecuredSubordinated Bonds ('Sub-Bonds'). The Sub-Bonds are due in 2012. The Sub-Bonds may be redeemed at parat the option of RHB Bank on its fifth anniversary date ('First Redemption Date') or on each anniversary of theFirst Redemption Date up to the maturity date.

Interest on the Sub-Bonds shall be accrued at 6.85% per annum for the first five years ('Initial Coupon'). Fromthe First Redemption Date onwards until the maturity date, the coupon rate shall be increased by 1.5% abovethe Initial Coupon rate or be equivalent to the base lending rate of Malayan Banking Berhad prevailing as atthe First Redemption Date plus 1.5% whichever is higher. Interest is payable semi-annually in arrears from thedate of issuance until the maturity date.

The Sub-Bonds constitute direct, unconditional, subordinated and unsecured obligations of RHB Bank, and willrank pari passu without any preference amongst themselves.

(c) 6.625% USD150 million Tier II Subordinated Notes 2002/2013

On 27 December 2002, RHB Bank issued a USD150 million nominal value (RM570 million equivalent) 10-yearSubordinated Notes ('Sub-Notes') due 2013, callable with step-up in 2008 at 6.625% maturing on 25 January2013. RHB Bank may at its option, subject to prior written approval of BNM, redeem the Sub-Notes on 25January 2008 at their principal amount plus accrued interest. In addition, RHB Bank may at its option, subjectto prior written approval as aforesaid, redeem the Sub-Notes at any time at their principal amount plus accruedinterest in the event of certain changes affecting taxation in Malaysia as described under the 'Terms andConditions of the Notes - Redemption and Purchase'.

Interest on the Sub-Notes shall be accrued at 6.625% per annum from issue date to, but excluding 25 January2008 and, thereafter, at rate per annum equal to the US Treasury Rate (as defined under 'Terms and Conditionsof the Notes - Interest') plus 6.475%. Interest is payable in arrears on 25 July and 25 January in each year,commenced on 25 July 2003.

The Sub-Notes constitute direct, unsecured and subordinated obligations of RHB Bank, and will rank pari passuwith the RM800 million Sub-Bonds due 2012. The Sub-Notes will rank pari passu without any preferenceamongst themselves.

25 IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS ('ICULS')

Group/Company2005 2004

RM'000 RM'000

0.5% ICULS 2002/2012 of RM1.00 each ('RHB ICULS-A') 451,052 451,3883% ICULS 2002/2012 of RM1.00 each ('RHB ICULS-B') 605,989 607,040

1,057,041 1,058,428

On 24 December 2002, the Company issued RM463,646,102 nominal value of 10-year 0.5% ICULS 2002/2012designated as RHB ICULS-A and RM620,940,385 value of 10-year 3% ICULS 2002/2012 designated as RHBICULS-B.



25 IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS ('ICULS') (CONTINUED)

The details of the ICULS are as follows:

RHB ICULS-A


RM'000 RM'000

Balance as at the beginning of the financial year/period 451,388 463,619Amount converted into ordinary shares during the financial year/period (336) (12,231)


(a) Conversion rights - the registered holders of RHB ICULS-A have the option at any time from 24 December 2002to 23 December 2012 to convert the ICULS into new ordinary shares of RM1.00 each in the Company ('RHBShares') at a conversion price of RM1.00 per RHB Share (subject to adjustments under certain circumstancesas provided in the Trust Deed).

(b) All outstanding RHB ICULS-A will be automatically converted into new RHB Shares by the Company on23 December 2012 at the said conversion price.

(c) The RHB ICULS-A bear interest at 0.5% per annum payable semi-annually in arrears on every 30 June and31 December, with the first payment due on 30 June 2003.

(d) The new RHB Shares to be allotted and issued upon conversion of the RHB ICULS-A will rank pari passu in allrespects with the then existing ordinary shares of the Company.

RHB ICULS-B


RM'000 RM'000

Balance as at the beginning of the financial year/period 607,040 616,050Amount converted into ordinary shares during the financial year/period (1,051) (9,010)


(a) Conversion rights - the registered holders of RHB ICULS-B have the option at any time from 24 December 2002to 23 December 2012 to convert the ICULS into new RHB Shares at a conversion price of RM1.13 per RHBShare (subject to adjustments under certain circumstances as provided in the Trust Deed).

(b) All outstanding RHB ICULS-B will be automatically converted into new RHB Shares by the Company on23 December 2012 at the said conversion price.

(c) The RHB ICULS-B bear interest at 3% per annum payable semi-annually in arrears on every 30 June and31 December, with the first payment due on 30 June 2003.

(d) The new RHB Shares to be allotted and issued upon conversion of the RHB ICULS-B will rank pari passu in allrespects with the then existing ordinary shares of the Company.



26 IRREDEEMABLE NON-CUMULATIVE CONVERTIBLE PREFERENCE SHARES ('INCPS')

The salient features of the INCPS are as follows:

(a) A non-cumulative preferential dividend (less tax) at the following rates:

(i) for the period from the date of issue of INCPS to the day preceding the fifth anniversary date of issue ofthe INCPS, a non-cumulative preferential dividend at the rate of 8% (less tax) per annum; and

(ii) thereafter, a non-cumulative preferential dividend at the rate of 10% (less tax) per annum.

(b) Save and except that the INCPS shall rank in priority to RHB Bank ordinary shares with regards to thepreferential dividend, and with regards to the return of capital in the event of winding up, the INCPS holdershave no right to participate in the surplus assets and profits of RHB Bank.

(c) The INCPS carry no right to attend and vote at general meetings of RHB Bank unless the dividends on the INCPSare in arrears for more than 3 months or the general meeting is:

(i) for any resolution which varies or is deemed to vary the rights and privileges of such INCPS; or

(ii) for any resolution for winding up of RHB Bank.

(d) Holders of the INCPS have the option of converting the INCPS into new RHB Bank ordinary shares in the first5 years from the date of issue of the INCPS ('Conditional Conversion Period') should:

(i) RHB Bank cease to be a subsidiary of RHB Capital; or

(ii) the risk weighted capital adequacy ratio of RHB Bank falls to a level at or below 8.5% and this is notremedied within 3 months from the occurrence of such event; or

(iii) at any time the aggregate of dividends which are missed and not paid, exceed 4% of the par value of theINCPS; or

(iv) at any time after the Conditional Conversion Period, at the Optional Conversion Price. The OptionalConversion Price means the consolidated net assets per RHB Bank ordinary share based on its consolidatedmanagement financial statements immediately preceding the date of conversion multiplied by 1.2 times.The Optional Conversion Price is subject to adjustments under certain circumstances in accordance withthe terms of the INCPS.

(e) In the event RHB Bank undertakes an initial public offering of shares for the purpose of seeking a listing on theBursa Securities, the outstanding INCPS will be mandatorily converted based on a specified price which wouldyield a return of 12% per annum on the INCPS.



27 SHARE CAPITAL

Company2005 2004

RM'000 RM'000Authorised:Ordinary shares of RM1.00 eachBalance as at the beginning/end of the financial year/period 2,500,000 2,500,000

Issued and fully paid:Ordinary shares of RM1.00 eachBalance as at the beginning of the financial year/period 724,203 703,977Issue of shares pursuant to:– conversion of ICULS-A 336 12,231– conversion of ICULS-B 932 7,995


28 RESERVES

(a) The reserve funds represent non-distributable profits held by the banking and finance subsidiaries incompliance with Section 36 of the Banking and Financial Institutions Act, 1989 and Section 18 of theSingapore Finance Companies (Amendment) Act 1994. These funds are not distributable as cash dividends.

(b) Capital reserves


RM'000 RM'000The capital reserves comprises:

Arising from issuance of Warrants 1999/2009 13,502 13,502Arising from issuance of Warrants 2001/2007 2,173 2,173Warrants issuance expenses written off (530) (530)Arising from conversion of Warrants 2001/2007 (15) (15)

15,130 15,130

(c) The AFS reserves are in respect of unrealised fair value gain and loss on securities AFS.



29 INTEREST INCOME



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

Loans, advances and financing– interest income other than recoveries

from non-performing loans 2,345,866 3,140,594 – –– recoveries from non-performing loans 180,131 339,069 – –Money at call, deposits and placements with

financial institutions 380,790 296,794 1,485 438Securities held-for-trading 94,602 221,833 – –Securities AFS 71,525 95,332 – –Securities held-to-maturity 430,392 397,624 – –Margin financing 7,461 5,818 – –Others 3,133 7,168 – 52,410

3,513,900 4,504,232 1,485 52,848Amortisation of premium less accretion of

discount (8,645) (22,140) – –Interest suspended (75,078) (127,777) – –

3,430,177 4,354,315 1,485 52,848

30 INTEREST EXPENSE



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

Deposits and placements of banks andother financial institutions 192,337 174,408 – –

Deposits from customers 1,179,330 1,616,775 – –Borrowings 265,650 349,948 151,123 225,864Subordinated obligations 106,079 159,815 – –Recourse obligation on loans sold to Cagamas 156,770 167,734 – –ICULS 20,447 30,887 20,447 30,887Others 154,774 141,090 101,327 118,788

2,075,387 2,640,657 272,897 375,539



31 OTHER OPERATING INCOME



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

Fee incomeService charges and fees 147,581 176,741 – –Commission 95,606 125,857 – –Brokerage 51,167 109,746 – –Commitment fees 37,760 52,770 – –Guarantee fees 30,405 44,407 – –Unit trust fee income 24,433 37,599 – –Arrangement fees 15,316 10,106 – –Corporate advisory fees 7,850 15,684 – –Fund management fees 6,567 9,059 – –Underwriting fees 5,476 6,842 – –Rollover fees 5,388 815 – –Placement fees 634 3,400 – –Other fee income 13,322 28,391 – –

441,505 621,417 – –

Net gain/(loss) arising from sale/redemption of securities and derivatives

Net gain from sale of – securities held-for-trading 80,594 52,075 – –– securities AFS 48,498 57,958 – –Net gain from redemption of– securities held-to-maturity 27,234 357 – –Derivatives (33) (1,032) – –

156,293 109,358 – –

Unrealised gain/(loss) on revaluation of securities and derivatives

Securities held-for-trading (8,258) (31,116) – –Derivatives 45,849 (43,897) 39,150 (35,746)

37,591 (75,013) 39,150 (35,746)

Gross dividend income fromSecurities held-for-trading 1,746 7,758 – –Securities AFS 4,013 123 294 122Securities held-to-maturity 680 810 – –Subsidiary – – 41,401 118,290

6,439 8,691 41,695 118,412



31 OTHER OPERATING INCOME (CONTINUED)



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

Other incomeForeign exchange gain/(loss)– realised 150,210 151,694 – –– unrealised (11,818) 17,965 4,786 –Underwriting surplus before management

expenses 23,152 41,528 – –Gain on disposal of real property assets 4,601 – – –Rental income 2,726 3,887 36 54Net gain on disposal of property, plant and

equipment 1,725 3,295 – –Gain on allocation of Bursa Malaysia shares – 12,492 – –Management fees – 292 – –Other operating income 13,299 20,061 – –Other non-operating income 2,275 3,557 500 –

186,170 254,771 5,322 54

827,998 919,224 86,167 82,720

32 INCOME FROM ISLAMIC BANKING BUSINESS

Group12 months 18 months

ended ended31.12.2005 31.12.2004

RM'000 RM'000

Income derived from investment of depositors' fund 261,627 320,383Income derived from investment of shareholders' fund 39,572 40,201

301,199 360,584Transfer (to)/from PER (13,277) 6,970

287,922 367,554Income attributable to deposits (140,248) (170,486)

147,674 197,068



33 OTHER OPERATING EXPENSES



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

Personnel costsSalaries, bonus, wages and allowances 529,565 734,324 – –Defined contribution plan 79,475 109,052 – –Other staff related costs 55,636 78,184 235 298

664,676 921,560 235 298

Establishment costsProperty, plant and equipment– depreciation 106,338 168,241 63 103– written off 195 3,727 – –Information technology expenses 74,577 100,319 – –Repair and maintenance 43,775 68,070 – –Rental of premises 31,672 46,128 – –Water and electricity 18,475 26,978 – –Rental of equipment 6,991 8,206 – –Insurance 5,087 6,807 1 1Others 7,022 9,412 – –

294,132 437,888 64 104

Marketing expensesDealers' handling fee 51,741 33,854 – –Advertisements and publicity 42,184 41,415 802 834Sales commission 24,488 14,879 – –Others 24,903 27,489 120 46

143,316 117,637 922 880

Administration and general expensesAuditors' remuneration– statutory audit 2,609 1,295 86 59– special audit – 2,264 – 72– non-audit 579 449 30 63Communication expenses 76,295 93,807 – 10Legal and professional fee 18,614 20,620 1,504 2,334Loss on liquidation of an associate 7,440 – – –Others 32,290 69,729 2,418 2,846

137,827 188,164 4,038 5,384

1,239,951 1,665,249 5,259 6,666

Included in the personnel costs of the Group and Company are directors' remuneration (excluding estimatedmonetary value of benefits-in-kind) totalling RM4,332,000 (2004: RM14,844,000) and RM209,000 (2004:RM284,000) respectively as disclosed in Note 34.



34 DIRECTORS' REMUNERATION



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

Executive directorSalaries, bonus and other remuneration 2,568 11,240 – –Defined contribution plan 514 2,248 – –Estimated monetary value of benefits-in-kind 69 21 – –

3,151 13,509 – –

Non-executive directorsFees 473 531 82 118Other remuneration 777 825 127 166

1,250 1,356 209 284

4,401 14,865 209 284

The list of directors is disclosed in the Directors' Report.

35 ALLOWANCE FOR LOSSES ON LOANS AND FINANCING



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

Specific allowance– made during the financial year/period 769,909 1,213,754 28,010 –– written back (188,169) (415,640) – –

581,740 798,114 28,010 –General allowance– made during the financial year/period 97,758 29,882 – –Bad debts– written off 117 123 – –– recovered (57,081) (44,556) – –(Write-back)/allowance on amount recoverable

from Danaharta during the financial year/period (78,795) 5,552 – –Final settlement received from Danaharta (6,646) (118,246) – –

537,093 670,869 28,010 –

The Group evaluated its portfolio of non-performing loans that had been in default and remained uncollected formore than 7 years and also those non-performing loans in default for more than 5 years but less than 7 years. Forthe loans in default for more than 7 years, no value is assigned as the realisable value of collateral. For the loans indefault for more than 5 years but less than 7 years, 50% of the realisable value of asset held has been assigned ascollateral value. The effect of this exercise amounted to RM179,409,000 (2004: RM86,599,000).



36 IMPAIRMENT LOSS


ended ended31.12.2005 31.12.2004

RM'000 RM'000

Charged for the financial year/period– securities AFS 103,963 29,669– securities held-to-maturity 13,294 56,497– property, plant and equipment 1,365 13,039

118,622 99,205

Reversal for the financial year/period– securities AFS (7,797) (34,656)– securities held-to-maturity (25,013) (14,498)– real property assets (95,998) –

(128,808) (49,154)

(10,186) 50,051

37 IRREDEEMABLE NON-CUMULATIVE CONVERTIBLE PREFERENCE SHARES ('INCPS')DIVIDENDS


ended ended31.12.2005 31.12.2004

RM'000 RM'000

INCPS dividends paid and payable– 10% (2004: 8% to 10%) per annum (gross) 110,447 152,915

The INCPS dividends are paid in accordance with the terms of the INCPS (As disclosed in Note 26).

38 TAXATION



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

Income tax based on profit/(loss) for the financial year/period– Malaysian income tax 226,852 223,067 – 2,922– overseas tax 795 4,948 – –

Deferred tax (Note 13) (47,172) (55,026) – –Tax on INCPS dividends (30,925) (42,817) – –

149,550 130,172 – 2,922Over provision in respect of prior years (15,735) (24,382) – (4,696)

133,815 105,790 – (1,774)



38 TAXATION (CONTINUED)

The tax rates applicable to the respective countries at the balance sheet date are as follows:

2005 2004% %

Malaysia 28.0 28.0Singapore 20.0 20.0

The numeric reconciliation between the applicable statutory income tax rate to the effective income tax rate of theGroup and of the Company is as follows:



% % % %

Tax at Malaysian statutory tax rate 28.0 28.0 (28.0) (28.0)

Tax effects in respect of:Effect of first RM500,000 chargeable income

at lower tax rate of 20% – (0.1) – –Effect of different tax rate in Labuan/other

countries (3.7) (11.4) – –Non taxable income (6.6) (1.7) – –Non allowable expenses 17.7 40.6 28.0 29.2Over provision in respect of prior years (3.5) (11.5) – (1.9)Other temporary differences not recognised

in prior years (2.2) (7.6) – –

Effective tax rate 29.7 36.3 – (0.7)


ended ended31.12.2005 31.12.2004

RM'000 RM'000

Tax savings recognised during the financial year/period arising from utilisation of tax losses brought forward from previous financial years 8,289 15,572



39 EARNINGS/(LOSS) PER SHARE


ended ended31.12.2005 31.12.2004

RM'000 RM'000

(a) Basic earnings/(loss) per share

Net profit/(loss) for the financial year/period 56,488 (95,315)

Weighted average number of ordinary shares in issue ('000) 724,698 709,435

Basic earnings/(loss) per share (sen) 7.8 (13.4)

(b) Fully diluted earnings/(loss) per share

Net profit/(loss) for the financial year/period 56,488 (95,315)Adjustment for interest expense on ICULS 16,423 –*

Adjusted net profit/(loss) 72,911 (95,315)

Weighted average number of ordinary shares in issue ('000) 724,698 709,435Adjustment for assumed conversion of ICULS 1,057,814 –*

Adjusted weighted average number of ordinary shares ('000) 1,782,512 709,435

Fully diluted earnings per share (sen) 4.1 N/A

Based on FRS 133 (formerly known as MASB 13), 'Earnings Per Share', conversion of warrants is considered dilutivewhen they would result in the issue of new ordinary shares for less than the market value of the shares. Therefore,the warrants are not taken into account in the computation of diluted earnings per share as the current exerciseprice of the warrants is higher than the market value of the ordinary shares.

* Not taken into account in the computation of diluted loss per share because the effect is anti-dilutive.



40 COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Group makes various commitments and incurs certain contingent liabilitieswith legal recourse to its customers. Apart from the allowance for commitments and contingencies already madein the financial statements, no material losses are anticipated as a result of these transactions.

The commitments and contingencies comprise the following:

2005 2004Credit Risk Credit Risk

Principal equivalent weighted Principal equivalent weightedamount amount * amount amount amount * amount

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

Direct credit substitutes 1,633,122 1,633,122 1,471,038 1,796,398 1,796,398 1,614,548Transaction-related contingent items 2,372,978 602,990 482,809 1,052,316 526,158 432,957Short term self-liquidating trade-

related contingencies 1,978,963 395,793 211,860 1,923,997 384,799 179,089Obligations under underwriting

agreements 511,353 131,620 131,620 409,444 204,722 204,722Housing loans sold directly and

indirectly to Cagamas with recourse 44,062 44,062 22,031 54,080 54,080 27,040Irrevocable commitments to

extend credit– maturity not exceeding one year 20,135,748 – – 17,671,810 – –– maturity exceeding one year 3,605,340 1,802,669 1,471,014 3,243,485 1,621,743 1,219,927

Foreign exchange-related contracts– less than one year 7,924,399 116,479 38,257 13,899,588 172,469 19,060– one year to less than five years 152,670 9,364 5,665 199,500 15,860 3,078

Interest rate-related contracts– less than one year 1,154,000 634 127 990,000 1,503 363– one year to less than five years 5,850,918 111,743 34,874 2,176,000 40,956 12,565– more than five years 188,485 6,633 2,021 – – –

Others 563,202 21,079 21,032 541,088 – –

46,115,240 4,876,188 3,892,348 43,957,706 4,818,688 3,713,349

* The credit equivalent amount is arrived at using the credit conversion factors as per BNM's circulars.

RHB Bank has given a continuing guarantee to BNM to meet the liabilities and financial obligations andrequirements of its subsidiary, RHB Bank (L) Ltd, arising from offshore banking business in the Federal Territory ofLabuan.



41 NON-CANCELLABLE OPERATING LEASE COMMITMENTS

The Group has lease commitments in respect of rented premises which are classified as operating leases. A summaryof the non-cancellable long term commitments, net of sub-leases, is as follows:

Group2005 2004

RM'000 RM'000Rental of premisesWithin one year 19,772 19,011Between one to five years 16,551 16,927More than five years 1,483 505

37,806 36,443

42 CAPITAL COMMITMENTS

Group2005 2004

RM'000 RM'000

Capital expenditure for property, plant and equipment:– authorised and contracted for 42,900 31,913– authorised but not contracted for 36,290 44,449

79,190 76,362

43 SIGNIFICANT RELATED PARTY DISCLOSURES

Related parties and relationships

The related parties of, and their relationship with the Company are as follows:

Related parties Relationship

RHB Capital Berhad }RHB Property Management Sdn Bhd }RHB-DAEWOO Sdn Bhd }Bandar Wawasan Management Sdn Bhd }RHB Kawal Sdn Bhd } SubsidiariesRHB Management Company Sdn Bhd }RHB Modal-Ekuiti Sdn Bhd }RHB Health Care Sdn Bhd }RHB Noble 1 (L) Ltd }

Subsidiaries of RHB Capital as disclosed in Note 14 Indirect subsidiaries



44 SEGMENT INFORMATION

Segment information is presented in respect of the Group's business segments and geographical segments.

Inter-segment transactions are conducted on an arm's length basis and on normal commercial terms not morefavourable than those generally available to the public.

Unallocated expenses comprise all back-office processes, cost centres which support the operating businesses andnon-profit generating divisions in the Group. It includes corporate expenses that are not allocated to individualbusiness segments. These expenses are not directly attributed to the business segments and cannot be allocated ona reasonable basis. The funding cost of subsidiaries and associates are included in this category.

(a) Primary reporting format - by business segments

The Group's business segments can be organised into the following main segments reflecting the Group'sinternal reporting structure:

Wholesale banking

Wholesale banking caters to funding or lending needs of corporate customers including public listedcorporations and its related entities, multinational corporations (including Japanese), financial institutions,Government and state owned entities and small and medium enterprises. Included under wholesale bankingare offshore banking activities carried out by RHB Bank (L) Ltd, of which borrowing and lending facilities areoffered in major currencies mainly to corporate customers. This segment also includes lease financing activitiescarried out by RHB Leasing Sdn Bhd which is predominantly to middle market customers.

Retail banking

Retail banking focuses on providing products and services to individual customers. The products and servicesoffered to customers include credit facilities (mortgages, hire-purchase financing, study loans and personalloans), credit cards, remittance services, deposit collection and investment products.

Treasury and money market

Treasury and money market operations are involved in proprietary trading in fixed income securities and foreignexchange, derivatives trading and structuring, managing customer-based foreign exchange and money markettransactions, funding and investments in ringgit and foreign currencies.

Islamic Banking business

Islamic Banking business focuses on providing a full range of commercial banking products and services inaccordance with the principles of Shariah to individual customers, corporate clients, Government and stateowned entities and small and medium sized enterprises.

Financial advisory and underwriting

Financial advisory and underwriting services cover corporate and debt restructuring, stock market listings,public offering of equity and debt instruments, private placement of securities and financial advisory services.



44 SEGMENT INFORMATION (CONTINUED)

(a) Primary reporting format - by business segments (continued)

Stockbroking and other securities related business

This segment comprises institutional and retail broking business for securities listed on the Bursa Securities,investment management services, unit trust funds management, futures and options broking and researchservices.

Insurance

Insurance segment focuses on the underwriting of general insurance business.

Properties

This segment comprises property investment and rental.

Others

Other business segments in the Group include nominee services, dormant operations and other relatedfinancial services, which results are not material to the Group and therefore do not render separate disclosurein the financial statements and have been reported in aggregate.

Stockbrokingand other

Treasury Islamic Financial securities Wholesale Retail and money Banking advisory and related Intersegment

banking banking market business underwriting business Insurance Properties Others elimination Total2005 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

External revenue 1,551,625 1,429,433 1,069,885 147,674 10,774 99,670 31,875 7,217 57,696 – 4,405,849Intersegment revenue 15,305 6,750 93,027 – – – 16,894 28,929 6,759 (167,664) –

Segment revenue 1,566,930 1,436,183 1,162,912 147,674 10,774 99,670 48,769 36,146 64,455 (167,664) 4,405,849

Profit/(Loss) before unallocated expenses 405,731 247,605 353,745 107,123 4,324 13,951 24,143 108,476 (6,590) 1,258,508

Unallocated expenses (694,904)

Profit after unallocated expenses 563,604Share of profit/(loss) of associates – – – – – 541 – (18) – 523

Profit before INCPS dividends, taxation and zakat 564,127

INCPS dividends (110,447)

Profit after INCPS dividends and before taxation and zakat 453,680

Taxation and zakat (134,964)

Profit after INCPS dividends, taxation and zakat 318,716






Treasury Islamic Financial securities Wholesale Retail and money Banking advisory and related

banking banking market business underwriting business Insurance Properties Others Total2005 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Segment assets 27,337,677 20,960,288 29,407,006 7,603,890 8,762 292,756 252,690 451,986 287,648 86,602,703Investments in associates – – – – – 4,199 – 11,535 – 15,734Goodwill 2,393,566Tax recoverable 108,889Deferred tax assets 247,658Unallocated assets 959,220

Total assets 90,327,770

Segment liabilities 23,726,598 18,069,695 30,530,077 7,050,168 195 228,081 153,587 52,272 156,402 79,967,075Taxation 28,560Deferred tax liabilities 2,904Borrowings 3,419,270Subordinated obligations 1,530,252INCPS 1,104,469ICULS 1,057,041Unallocated liabilities 516,796

Total liabilities 87,626,367

Other segment itemsCapital expenditure 4,433 20,413 4,115 6,485 593 2,084 1,545 2,642 2,166 44,476 1

Depreciation of property, plant and equipment 2,931 36,420 3,197 576 301 4,548 1,480 5,578 2,463 57,494 1

Other non-cash expenses other than depreciation 439,041 262,449 15,284 16,430 472 19,444 608 95,998 5,794 855,520 2

Notes:

1. Excluding capital expenditure and depreciation of support divisions that are not directly attributed to the business segments and cannot be allocated on areasonable basis amounting to RM28,576,000 and RM48,844,000 respectively.

2. Included in other non-cash expenses other than depreciation are allowance for losses on loans and financing, impairment loss, interest suspended and accretionof discount less amortisation of premium.






Treasury Islamic Financial securities Wholesale Retail and money Banking advisory and related Intersegment

banking banking market business underwriting business Insurance Properties Others elimination Total2004 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

External revenue 2,232,106 1,730,647 1,056,111 197,068 28,165 186,108 58,335 8,981 (26,914) – 5,470,607Intersegment revenue 6,772 11,673 38,059 – – 838 12,358 35,065 2,202 (106,967) –

Segment revenue 2,238,878 1,742,320 1,094,170 197,068 28,165 186,946 70,693 44,046 (24,712) (106,967) 5,470,607

Profit/(Loss) before unallocated expenses 617,510 382,157 297,263 67,971 21,741 64,801 42,317 (40,865) (49,130) 1,403,765

Unallocated expenses (959,984)

Profit after unallocated expenses 443,781Share of profit/(loss) of associates – – – – – 2,693 – (30) – 2,663

Profit before INCPS dividends, taxation and zakat 446,444

INCPS dividends (152,915)

Profit after INCPS dividends and before taxation and zakat 293,529

Taxation and zakat (106,595)

Profit after INCPS dividends, taxation and zakat 186,934






Treasury Islamic Financial securities Wholesale Retail and money Banking advisory and related

banking banking market business underwriting business Insurance Properties Others Total2004 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Segment assets 27,052,550 17,381,759 27,006,546 6,203,333 3,651 346,227 220,896 465,222 358,652 79,038,836Investments in associates – – – – – 4,601 – 11,534 – 16,135Tax recoverable 127,481Deferred tax assets 208,763Goodwill 2,398,017Unallocated assets 907,605

Total assets 82,696,837

Segment liabilities 24,539,965 16,476,188 25,057,267 5,706,425 699 339,432 136,034 73,745 176,330 72,506,085Taxation 10,725Deferred tax liabilities 4,453Borrowings 3,441,161Subordinated obligations 1,533,080INCPS 1,104,469ICULS 1,058,428Unallocated liabilities 593,326

Total liabilities 80,251,727

Other segment itemsCapital expenditure 7,033 59,629 11,146 627 262 4,867 3,166 2,036 4,625 93,391 1

Depreciation of property, plant and equipment 3,960 68,991 3,245 429 254 10,106 1,843 8,565 2,602 99,995 1

Other non-cash expensesother than depreciation 562,063 194,748 21,746 66,178 (4,621) 491 (294) – 7,130 847,441 2

Notes:

1. Excluding capital expenditure and depreciation of support divisions that are not directly attributed to the business segments and cannot be allocated on areasonable basis amounting to RM61,720,000 and RM68,246,000 respectively.

2. Included in other non-cash expenses other than depreciation are allowance for losses on loans and financing, impairment loss, interest suspended and accretionof discount less amortisation of premium.




(b) Secondary reporting format - by geographical segments

The geographical information is prepared based on the location of the assets. The Group's activities areprincipally conducted in Malaysia.

CapitalRevenue Total assets expenditure

2005 RM'000 RM'000 RM'000

Malaysia 4,233,045 85,771,562 70,716Outside Malaysia 172,804 4,556,208 2,336

4,405,849 90,327,770 73,052

2004

Malaysia 5,286,524 78,578,089 143,674Outside Malaysia 184,083 4,118,748 11,437

5,470,607 82,696,837 155,111

45 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) RM600 million nominal value of 6 years Serial Fixed Rate Bonds ('RM600 million Bonds')

On 11 January 2005, RHB Capital issued RM600 million Bonds. The proceeds from the issuance of the RM600million Bonds were utilised as follows:

RM'million

Partial repayment of RHB Capital's existing short term borrowings 250.0Early redemption of RHB Capital's 7.5% Bonds 2003/2009 220.0Working capital 122.3

592.3

The balance of RM7.7 million represents discount on the RM600 million Bonds which is amortised throughoutthe tenure of the Bonds.

(b) Approval to establish an Islamic Banking subsidiary

On 2 February 2005, an Islamic Banking subsidiary was incorporated under the name of RHB Islamic BankBerhad ('RHB Islamic Bank') following the receipt of relevant authorities approval. RHB Islamic Bank is a wholly-owned subsidiary of RHB Bank, a 70% subsidiary of RHB Capital, which in turn is a 64.87% subsidiary of theCompany.



45 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONTINUED)

(b) Approval to establish an Islamic Banking subsidiary (continued)

On 1 March 2005, RHB Islamic Bank received its licence to transact Islamic Banking business with effect from1 March 2005.

On 10 March 2005, RHB Capital announced that a vesting order has been obtained from the High Court ofMalaya on 8 March 2005 which gave full effect to a business transfer agreement executed between RHBIslamic Bank and RHB Bank on 4 March 2005 for the transfer and vesting of the Islamic Banking business ofRHB Bank to RHB Islamic Bank ('vesting') subsisting as of 15 March 2005 ('cut off date'). The vesting took effecton 16 March 2005 which was also the date RHB Islamic Bank began its operations.

The said business transfer agreement was executed after receipt of approval from the Minister of Finance.

In consideration of the said vesting, RHB Islamic Bank had issued ordinary shares of RM1.00 each equal to thenet book value of the assets less the liabilities of the Islamic Banking business of RHB Bank as at the cut-offdate ('Final Transfer Consideration').

Prior approvals were obtained from SC for the issue of the said shares to satisfy the Final Transfer Considerationand the FIC for the transfer and vesting of the Islamic Banking business of RHB Bank to RHB Islamic Bank.

On 27 April 2005, RHB Capital announced that the Final Transfer Consideration has been determined atRM523,424,000 and was satisfied in two tranches, with the first tranch of 455,642,000 ordinary shares ofRM1.00 each on 16 March 2005 and the second and final tranch of 67,782,000 ordinary shares of RM1.00each on the date of the said announcement.

The first tranch represents the audited net book value of the assets less liabilities of the Islamic Bankingbusiness of RHB Bank as at 30 June 2004 ('Provisional Transfer Consideration') whilst the second and finaltranch is equal to the difference between the Provisional Transfer Consideration and the Final TransferConsideration.

RHB Islamic Bank now has a total issued share capital of 523,424,002 ordinary shares of RM1.00 each, all ofwhich has been credited as fully paid-up.

(c) Merger of RHB Bank and RHB Delta Finance's operations

On 12 December 2005, RHB Capital announced that it had been informed by BNM that the Minister of Financehad given approval for the transfer of the finance company business of RHB Delta Finance to RHB Bank andRHB Islamic Bank (for the Islamic assets and liabilities).

On 29 December 2005, the High Court granted two vesting orders for:

(i) The transfer of RHB Delta Finance's assets and liabilities (excluding the Islamic assets and liabilities) to RHBBank; and

(ii) The transfer of RHB Delta Finance's Islamic assets and liabilities to RHB Islamic Bank.

Both vesting orders took effect on 1 January 2006 ('Effective Date').



45 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONTINUED)

(c) Merger of RHB Bank and RHB Delta Finance's operations (continued)

With effect from the Effective Date:

(i) All assets and liabilities of RHB Delta Finance with the exception of the Islamic assets and liabilities, weretransferred to RHB Bank;

(ii) All businesses and operations of RHB Delta Finance will be conducted through RHB Bank;

(iii) The Islamic assets and liabilities of RHB Delta Finance were transferred to RHB Islamic Bank; and

(iv) RHB Leasing Sdn Bhd and RHB Delta Nominees (Tempatan) Sdn Bhd will become direct subsidiaries of RHBBank.

(d) Proposed issue of up to USD190 million nominal value three (3)-year credit-enhanced exchangeable bonds('Exchangeable Bonds')

The Company announced on 16 December 2005 that the Company, through its wholly-owned offshore specialpurpose company incorporated in the Federal Territory of Labuan, RHB Noble 1 (L) Ltd ('RNLL' or 'Issuer'), isproposing to issue up to USD190 million nominal value of 3-year credit-enhanced Exchangeable Bonds. TheExchangeable Bonds are exchangeable into existing ordinary shares of RM1.00 each in RHB Capital currentlyheld by the Company and will be credit enhanced by an irrevocable direct pay letter of credit provided by afinancial institution.

The Exchangeable Bonds will be exchangeable into existing RHB Capital shares at the option of thebondholders at any time within a specified period during the tenure of the Exchangeable Bonds at an exchangeprice to be determined.

Approvals for the proposed Exchangeable Bonds have been obtained from the SC, BNM and the LabuanOffshore Financial Services Authority. In addition to that, the proposed Exchangeable Bonds are subject to interalia, the Company's receipt of approvals from the following parties:

(i) Bursa Malaysia Depository Sdn Bhd;(ii) Shareholders of RHB at an Extraordinary General Meeting to be convened; and(iii) Any other relevant parties/lenders, if necessary.

The Exchangeable Bonds will be listed on the Labuan International Financial Exchange, the approval-in-principle of which has been obtained. An application will be made to list the Exchangeable Bonds on a foreignstock exchange to be identified.

The Extraordinary General Meeting of the Company convened on 25 April 2006 to approve the issuance of theproposed Exchangeable Bonds has been adjourned to a date to be determined later.



46 CONTINGENT LIABILITIES

Guarantees issued

(a) The Company

As at balance sheet date, the Company has extended unsecured guarantees totalling RM252,400,000 (2004:RM273,120,000) for borrowings of its subsidiaries. As at balance sheet date, RM252,400,000 (2004:RM257,120,000) of the above extended facilities were utilised by the subsidiaries of the Company.

(b) RHB Capital

As at balance sheet date, RHB Capital has extended unsecured guarantees totalling RM169,500,000 (2004:RM179,500,000) and RM100,000,000 (2004: RM145,000,000) for borrowings and performance of itssecurities subsidiaries respectively. As at balance sheet date, RM1,000,000 (2004: RM6,000,000) of theborrowings were utilised by the securities subsidiaries of RHB Capital.

Other contingent liabilities

(a) RHB Capital

On 19 October 2001, RHB Capital filed a suit against CBSB, the vendor of SJ Securities, for the recovery of thedeposit of RM32,800,000 ('Deposit') paid by RHB Capital pursuant to the sale and purchase agreement dated7 November 2000 between CBSB and RHB Capital for the sale and purchase of 60 million shares in SJSecurities. CBSB subsequently filed a counterclaim of RM258,688,153.42 together with interest thereon, andcosts.

The suit is still ongoing and the solicitors for RHB Capital are of the opinion that the chances of successfullyrecovering the Deposit are good. In addition, the solicitors for RHB Capital are also of the opinion that theprospects of successfully defending the counterclaim filed by CBSB against RHB Capital are good and that thesaid counterclaim is unlikely to succeed.

In view of the above, RHB Capital has not made any provision in relation to the said counterclaim, in thefinancial statements for the financial year ended 31 December 2005.

(b) RHB-DAEWOO Sdn Bhd ('RHB-DAEWOO')

(i) On 12 August 2003, a suit was filed against RHB-DAEWOO, a 80% direct subsidiary of the Company byDaewoo Engineering & Construction Co. Ltd ('DEC') for claims in relation to the construction andcompletion of the Bandar Wawasan Development Project ('Project'). The total amount claimed isRM60,339,057. As at 31 December 2005, provision has been made to the said claim. RHB-DAEWOO hasinstructed its solicitors to defend the claim and to examine the possibility of a counterclaim.

RHB-DAEWOO was subsequently served with an application for summary judgment by DEC on 29September 2003 and has since filed and served its affidavit in reply to the said application.

On 12 May 2004, RHB-DAEWOO was served with an amended statement of claim by DEC. There is nochange in the amount claimed by DEC. RHB-DAEWOO has since filed an application to strike out the saidamendments.

On 19 August 2004, RHB-DAEWOO's application to strike out DEC's amendments to statement of claimwas granted. DEC served the Notice of Appeal against the striking out on RHB-DAEWOO on 23 August2004.

DEC's application for summary judgment was dismissed with costs on 28 October 2004. Hearing datesfor both of DEC's Notices of Appeal have yet to be fixed by the Court.



46 CONTINGENT LIABILITIES (CONTINUED)

Other contingent liabilities (continued)

(b) RHB-DAEWOO Sdn Bhd ('RHB-DAEWOO') (continued)

(ii) On 20 February 2004, RHB-DAEWOO received a Notice of Arbitration from DEC for claims totallingRM244,439,725 ('said Claims') in relation to the construction and completion of the Project. The saidClaims are in addition to the claim in the suit mentioned in (i) above.

RHB-DAEWOO has since rejected the Notice of Arbitration on the grounds that the claimant is not theparty with whom RHB-DAEWOO contracted. In addition, RHB-DAEWOO's solicitors are of the view thatthere is no basis or validity for the said Claims and that they can be successfully defended by RHB-DAEWOO.

In view of the above, RHB-DAEWOO has not made any provision in relation to the said Claims in thefinancial statements for the financial year ended 31 December 2005.

(c) RHB Securities Sdn Bhd ('RHB Securities') and RHB Equities Sdn Bhd ('RHB Equities')

RHB Securities and RHB Equities, both wholly-owned subsidiaries of RHB Capital, are parties, as the first andsecond defendants, to a suit for damages and for the return of shares pledged by the plaintiff as third partycollateral for margin finance facilities initially provided by RHB Equities, which were subsequently transferredto RHB Securities together with the third party collateral. The plaintiff claimed that the transfer was madewithout the plaintiff's consent and has obtained an interim injunction to restrain disposal of the collateral. RHBSecurities and RHB Equities have filed a defence and counterclaim against the said suit.

Plaintiff's suit against RHB Securities and RHB Equities was dismissed with costs on 19 May 2005. Plaintiff filedNotice of Appeal against the dismissal on 30 May 2005. With the dismissal, the injunction previously obtainedagainst RHB Securities to deal with the collateral lapses. On 14 June 2005, the plaintiff filed an application fora stay of execution.

RHB Securities won in its counterclaim against the plaintiff with costs on 24 June 2005. On 4 August 2005,the Plaintiff's stay application was allowed with costs. As such, RHB Securities is prohibited from disposing theshares until the hearing and disposal of the Appeal to the Court of Appeal.

47 FINANCIAL INSTRUMENTS

(a) Financial risk management objectives and policies

The Group's financial risk management policy is adopted from the main operating subsidiaries' riskmanagement policies. Various programs have been initiated at the operating subsidiaries in order to identify,measure, control and monitor all identifiable risks.

The Group operates within a clearly defined set of principles and guidelines based on best practices that havebeen approved by the Board. Various working committees were formed at the operating subsidiaries incarrying out the process to ensure that all identifiable risks are addressed and managed adequately.

The main areas of financial risks faced by the Company and the Group and the policies to address thesefinancial risks in respect of the Company and the major areas of banking activities represented by thecommercial bank, RHB Bank, the merchant bank, RHB Sakura and the securities operations, RHB Securities areset out as follows:



47 FINANCIAL INSTRUMENTS (CONTINUED)

(a) Financial risk management objectives and policies (continued)

RASHID HUSSAIN BERHAD

Liquidity risk

The Company manages its debt maturity profile, operating cash flows and the availability of funding so as toensure that all repayment and funding requirements are met. The Company's cash flows is reviewed regularlyto ensure that it has sufficient level of cash and cash equivalents to meet its working capital requirements andis able to settle its commitments when they fall due.

Interest rate risk

The Company's primary interest rate risk relates to interest-bearing borrowings. The Company manages itsinterest rate exposure through the use of fixed and floating rate debt. The objectives for the mix between fixedand floating rate borrowings are set to manage the fluctuations in interest rates and their impact on theCompany.

BANKING SUBSIDIARIES: RHB BANK & RHB SAKURA

Market risk

Market risk is the risk of potential loss resulting from adverse movements in the level of market prices or rates,the key components being interest rate risk and foreign currency exchange risk. It is incurred as a result oftrading and non-trading activities.

The primary objective of market risk management is to ensure that losses from market risk can be promptlyaddressed, such that losses are contained within acceptable levels.

A framework of approved risk policies, methodologies and limits, as approved by the respective Boards,controls financial market activities. The Asset Liability Committees ('ALCOs') play a fundamental role in theasset/liability of the banking subsidiaries, and establishes strategies which assist in controlling and reducing anypotential exposures to market risk. The Risk Management Divisions play independent roles in the monitoringand assessing of risk exposures arising from these, and report independently to Risk Management Committeesof the Boards.

Apart from monitoring compliance with risk policies, methodologies and limits, a number of techniques, bothstatistical and non-statistical are used to measure and control market risks. Value at Risk ('VAR') method is usedfor estimation of potential loss arising from positions held for a specified period of time with back-testingagainst actual financial results.

Extreme market movements are simulated under stress testing scenarios. Stress testing examines the impactthat abnormally large movements in market factors, and years of prolonged inactivity, might have onportfolios. The stress test is carried out using multiple scenarios that are continually reviewed and updated toreflect changes in economic events.

Derivative financial instruments are used principally to hedge exposures to fluctuations in foreign exchangerates and interest rates. Risk of market rate change subsequent to acquisition is generally offset by oppositeeffects on the items being hedged.





Market risk (continued)

Some specific methods for managing the various types of market risks are:

(i) Currency risk

Currency risk refers to the risk that earnings and the value of financial instruments will fluctuate due tochanges in foreign exchange rates.

There are approved position limit for each currency and an overall total limit. Trading loss limits areimposed on each trading desk and on each individual dealer. The levels of these exposures (including off-balance sheet items) by currency and overall total for both intra-day and overnight positions are monitoreddaily for compliance with the approved limits. These limits are reviewed regularly and are in line withstrategies set by the respective ALCOs.

Foreign and overseas investments, which are funded by purchases with resultant open foreign exchangepositions, are monitored and appropriate hedging strategies are undertaken in line with market trends.

(ii) Interest rate risk

Interest rate risk is the risk to earnings and the value of financial instruments held by the bankingsubsidiaries caused by fluctuation in the interest rates. Interest rate risks arise from differences in maturitiesand repricing dates of assets, liabilities and off-balance sheet items.

The respective ALCOs monitor the balance sheet position and assesses it for profit and loss impacts arisingfrom sensitivity to interest rate movements. There are set limits on the level of mismatch of interest raterepricing that may be undertaken, which are monitored monthly. VAR and sensitivity analysis areundertaken to provide guidance towards limiting interest rate risks.

Liquidity risk

The primary objective of liquidity risk management is to ensure that the banking subsidiaries maintain sufficientliquid assets to meet its financial commitments and obligations when they fall due at a reasonable cost.

The banking subsidiaries' liquidity risk management is modeled based on BNM's New Liquidity Framework('NLF'). The NLF analyses cash flows of assets, liabilities and potential off-balance sheet funding requirementsunder specific normal behaviour assumptions to ensure that the banking subsidiaries have sufficient liquidityto meet potential future cash requirements. In addition to NLF, the banking subsidiaries use various qualitativeand quantitative tools and techniques to manage and control liquidity risk.

Credit risk

Credit risk represents the possibility of loss due to changes in the quality of counterparties and the market pricefor credit risk assets (collateral).





Credit risk (continued)

Credit risk arises from the lending activities, primarily through loans and advances and guarantees. In addition,credit risk also occurs from the funding, investment, trading and derivatives activities, where counterpartiesmay not be able to fulfil their obligations when they fall due.

The primary objective of credit risk management is to keep the banking subsidiaries' exposure to credit riskwithin its capability and financial capacity to withstand potential financial losses.

In this respect, both RHB Bank and RHB Sakura have carried out the following various initiatives:

RHB Bank

(i) During the year, the credit policy has been updated and revised to incorporate further market bestpractices. The credit policy is to develop a strong credit culture with the objective of maintaining a welldiversified, evaluated and current portfolio, fully satisfied for credit risk, giving no concern for unexpectedlosses and which ensures a reliable and satisfactory risk weighted return. This policy, the bedrock of creditrisk management, is in the form of a written statement of credit standards, principles and guidelines,which is distributed bank-wide and used as a common source of reference.

(ii) Stringent measures and processes are in place before credit proposals are approved. All credit proposalsare first evaluated by the originating business units before being independently evaluated by the ChiefCredit Officer ('CCO'). The Credit Committee and the Loans Committee of the Board sanction creditsbeyond the individual discretionary limit of the CCO. The strict adherence to the discretionary powerssanctioned by the Board is monitored by the Compliance Division.

(iii) A risk rating system is used to categorise the risk of individual credits and determine whether RHB Bankis adequately compensated. Client accounts are reviewed at regular intervals and weakening credits aretransferred to the Special Assets Management Division for more effective management.

(iv) RHB Bank strives to maintain a diverse credit profile and track changing risk concentrations in response tomarket changes and external events. Risks are further mitigated through counterparty, industry andproduct exposure limits and risk reward mapping. A sector lending direction guide has been updated for2005.

(v) RHB Bank is committed to its Basel II journey. To this end, RHB Bank has beefed up its Basel II ProgramOffice with additional dedicated resources.

RHB Sakura

(i) The credit approving authority has been delegated to the Underwriting and Credit Committee comprisingsenior executives of RHB Sakura. An Internal Risk Rating System has been developed and implemented toensure credits are objectively measured and rated using a consistent methodology. All credit facilities areassigned an internal rating on a scale of one to thirteen based on a standard set of qualitative andquantitative factors. The internal rating process is a two-tier approach that assigns rating to obligor andfacility separately. In addition, an independent Compliance and Credit Review Department ('CARE')performs pre-approval credit review to ensure that credit proposals are independently evaluated andadherence to RHB Sakura's Credit Policy. Credit Administration & Rehabilitation Department is alsoresponsible for managing problem credits.





Credit risk (continued)

(ii) Credit exposures are reviewed at least once a year for signs of deterioration in financial condition, whichcould affect the client's ability to meet its obligation to RHB Sakura. Frequency of credit review isdependent on the internal rating assigned whereby higher risk credits are reviewed more than once a year.

(iii) CARE works in tandem with Risk Management Department to formulate policies, limits, guidelines andrisk measurement methodologies. These models are subject to ongoing review and back-testing to ensurethe continuing validity of their parameters.

RHB SECURITIES

Market risk

Market risk relates to the risk of an adverse fluctuation in equity prices.

Market risk arising from trading activities can result either from client-related business or from proprietarypositions. Market risk is managed as follows:

• Clients' purchase positions are secured against collateral pledged by commissioned dealer'srepresentatives and clients by way of cash or shares.

• Assignment of appropriate trading limits.

• Daily monitoring of large exposure risk to single equity and single client to manage the concentration risk.

• Requirement of upfront payment for purchases of stocks with 'designated' status and 'PN4' conditionstocks under trading restriction prior to the execution of the transaction. Exposures to such counters aremonitored closely.

• In compliance with the Business Rules of Bursa Securities, clients must settle all positions on the thirdmarket day following the transaction date (i.e. T+3), otherwise the outstanding positions will be force soldby RHB Securities on the following market day. Hence, market risk is contained within four market daysfollowing the transaction date.

• The Business Rules of Bursa Securities on Capital Adequacy Requirements restrict stockbroking companies'exposure in relation to position risk, counter party risk, large exposure risk, underwriting risk andoperational risk.





Credit risk

Credit or counterparty risk refers to the potential loss attributable to an unexpected default or deterioration ina client's creditworthiness.

In trading activities, credit risk arises from the possibility that the counterparty is unable or not willing to fulfilits obligation on a transaction on or before settlement date.

The Credit Control Division of RHB Securities ensures that credit risk is mitigated by:

• Structured and systematic credit checking and processing based on approved policies, procedures andguidelines.

• Proper trading limit structure for dealer's representatives and clients are in place and in line with the creditpolicies.

• Daily review and monitoring of exposure and adequacy of collateral.

• Requirement of upfront payment for purchase positions prior to the execution of trade for any exposureswhich is beyond acceptable risk tolerance level.

• Internal policy on suspension of clients from trading once their accounts are overdue. Clients' loss isreviewed daily and recovery action initiated as and when appropriate.

• All loss incurred by clients are secured against the dealer representatives' collaterals and/orcommissions/incentives.

Interest rate risk

RHB Securities' financial position is not significantly affected by changes in market interest rate. Any exposureis minimum as the funds placed are for short term.

Liquidity and cash flow risk

RHB Securities maintains sufficient cash, has access to sufficient funding through an adequate amount ofcommitted credit facilities and the ability to close out market positions. RHB Securities has in place thefollowing measures to manage such risks:

• Arrangement with licensed banks to maintain credit facilities for trade payments.

• RHB Securities monitors its level of funds on a daily basis.




(b) Interest/Profit rate risk

The tables below summarise the Group's and the Company's exposure to interest rate risks. The assets andliabilities at carrying amount are categorised by the earlier of contractual repricing or maturity dates:

<---------------------------------------- Non-trading book -------------------------------------->Up to >1-3 >3-12 >1-5 Over 5 Non-interest Trading Effective

Group 1 month months months years years bearing book Total interest rate2005 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 %

ASSETS

Cash and short term funds 11,070,017 – – – – 315,286 – 11,385,303 2.83-3.01Securities purchased under

resale agreements 907,147 1,252,377 59,967 – – – – 2,219,491 3.00Deposits and placements

with banks and other financial institutions 280,021 2,283,123 57,187 – – – – 2,620,331 2.70-3.08

Securities held-for-trading – – – – – 740 3,368,227 3,368,967 3.23-4.04Securities AFS 170,164 467,306 431,634 795,186 218,143 79,204 – 2,161,637 3.46-6.33Securities held-to-maturity 1,730,533 1,764,960 3,352,671 4,471,733 2,686,672 (179,459) – 13,827,110 3.46-5.55Loans, advances and

financing– performing 27,035,101 4,746,067 3,876,081 6,793,917 4,227,122 47 – 46,678,335 6.38-6.42– non-performing * – – – – – 1,595,373 – 1,595,373

Clients' and brokers' balances 85,048 – – – – 162,220 – 247,268 8.80

Other assets and derivative assets 150 – 167 631 1,301 445,822 47,554 495,625 3.92-4.29

Statutory deposits – – – 100 – 1,695,731 – 1,695,831 3.00Tax recoverable – – – – – 108,889 – 108,889Deferred tax assets – – – – – 247,658 – 247,658Investments in associates – – – – – 15,734 – 15,734Real property assets – – – – – 421,787 – 421,787Property, plant and

equipment – – – – – 844,865 – 844,865Goodwill – – – – – 2,393,566 – 2,393,566

TOTAL ASSETS 41,278,181 10,513,833 7,777,707 12,061,567 7,133,238 8,147,463 3,415,781 90,327,770

* This is arrived at after deducting the general allowance and specific allowance from the outstanding non-performing loans.




(b) Interest/Profit rate risk (continued)


Group (continued) 1 month months months years years bearing book Total interest rate2005 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 %


Deposits from customers 19,787,510 6,485,876 10,223,129 523,227 3,865 12,837,908 – 49,861,515 2.76-2.85Deposits and placements

of banks and other financial institutions 5,840,946 2,720,626 1,144,412 1,239,611 79,556 3,680 – 11,028,831 2.97-3.17

Obligations on securities sold under repurchase agreements 8,562,259 1,760,202 620,338 – – – – 10,942,799 2.86

Bills and acceptances payable 1,094,038 1,329,676 550,901 – – 338,445 – 3,313,060 3.31


Other liabilities and derivative liabilities 256,735 109 505 1,677 – 1,382,415 140,743 1,782,184 2.85-6.28

Recourse obligation on loans sold to Cagamas – – 441,711 1,600,025 1,315,256 – – 3,356,992 4.44

Taxation – – – – – 28,560 – 28,560Deferred tax liabilities – – – – – 2,904 – 2,904Borrowings 988,250 – 318,000 1,813,020 300,000 – – 3,419,270 4.75-8.00Subordinated obligations – – – 1,530,252 – – – 1,530,252 6.63-8.20ICULS – – – – 1,057,041 – – 1,057,041 1.93

Effective dividend rate

%

INCPS – – – 1,104,469 – – – 1,104,469 10.00

Total liabilities 36,565,532 12,296,489 13,298,996 7,812,281 2,755,718 14,756,608 140,743 87,626,367

Shareholders' equity – – – – – 490,007 – 490,007Minority interests – – – – – 2,211,396 – 2,211,396

TOTAL LIABILITIES, SHAREHOLDERS' EQUITY AND MINORITY INTERESTS 36,565,532 12,296,489 13,298,996 7,812,281 2,755,718 17,458,011 140,743 90,327,770

TOTAL INTEREST- SENSITIVITY GAP 4,712,649 (1,782,656) (5,521,289) 4,249,286 4,377,520







ASSETS

Cash and short term funds 12,327,567 – – – – 427,884 – 12,755,451 2.76-2.91Securities purchased under

resale agreements 40,458 – – – – – – 40,458 0.45Deposits and placements

with banks and otherfinancial institutions 276,592 241,862 30,713 – – – – 549,167 2.21-3.38

Securities held-for-trading – – – – – 828 1,692,673 1,693,501 1.81-2.86Securities AFS 1,182,630 1,259,821 1,086,191 2,525,931 610,698 227,243 – 6,892,514 4.04-7.00Securities held-to-maturity 1,091,216 884,365 1,521,835 4,171,216 3,319,652 (218,762) – 10,769,522 2.94-6.12Loans, advances and

financing– performing 27,027,905 5,008,125 2,555,054 4,235,928 3,246,145 (298) – 42,072,859 5.87-6.09– non-performing * – – – – – 1,838,878 – 1,838,878

Clients' and brokers' balances 23,528 71,358 – – – 177,193 – 272,079 7.74

Other assets and derivative assets – – 212 464 1,182 290,151 33,524 325,533 4.00

Statutory deposits – – – 100 – 1,424,281 – 1,424,381 4.00Tax recoverable – – – – – 127,481 – 127,481Deferred tax assets – – – – – 208,763 – 208,763Investments in associates – – – – – 16,135 – 16,135Real property assets – – – – – 423,714 – 423,714Property, plant and

equipment – – – – – 888,384 – 888,384Goodwill – – – – – 2,398,017 – 2,398,017

TOTAL ASSETS 41,969,896 7,465,531 5,194,005 10,933,639 7,177,677 8,229,892 1,726,197 82,696,837

* This is arrived at after deducting the general allowance and specific allowance from the outstanding non-performing loans.





<---------------------------------------- Non-trading book ------------------------------------>Up to >1-3 >3-12 >1-5 Over 5 Non-interest Trading Effective



Deposits from customers 20,405,131 5,930,889 10,799,708 565,052 3,652 12,450,797 – 50,155,229 2.76-2.96Deposits and placements

of banks and other financial institutions 3,586,496 1,138,048 859,464 1,485,864 51,104 2,966 – 7,123,942 2.69-2.99

Obligations on securities sold under repurchase agreements 7,899,741 44,900 – – – – – 7,944,641 2.64-2.66

Bills and acceptances payable 878,404 1,007,828 369,377 – – 367,322 – 2,622,931 2.99


Other liabilities and derivative liabilities 235,674 411 467 2,284 – 1,193,820 155,627 1,588,283 2.80-6.27

Recourse obligation on loans sold to Cagamas – – 30,483 2,775,184 561,184 – – 3,366,851 4.43

Taxation – – – – – 10,725 – 10,725Deferred tax liabilities – – – – – 4,453 – 4,453Borrowings 1,541,036 – 125,000 1,775,125 – – – 3,441,161 3.61-7.94Subordinated obligations – – – 1,533,080 – – – 1,533,080 6.63-8.20ICULS – – – – 1,058,428 – – 1,058,428 1.93

Effectivedividend rate

%

INCPS – – – 1,104,469 – – – 1,104,469 8.00-10.00

Total liabilities 34,652,179 8,122,076 12,184,499 9,241,058 1,674,368 14,221,920 155,627 80,251,727

Shareholders' equity – – – – – 435,227 – 435,227Minority interests – – – – – 2,009,883 – 2,009,883

TOTAL LIABILITIES, SHAREHOLDERS' EQUITY AND MINORITY INTERESTS 34,652,179 8,122,076 12,184,499 9,241,058 1,674,368 16,667,030 155,627 82,696,837

TOTAL INTEREST- SENSITIVITY GAP 7,317,717 (656,545) (6,990,494) 1,692,581 5,503,309






Company 1 month months months years years bearing book Total interest rate2005 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 %

ASSETS

Cash and short term funds 63,494 – – – – 266 – 63,760 2.76Deposits and placements

with banks and other financial institutions – – 1,835 – – – – 1,835 2.70

Securities AFS – – – – – 490 – 490Other assets – – – – – 9,363 – 9,363Amounts due from

subsidiaries – – – – – 361,156 – 361,156Tax recoverable – – – – – 48,823 – 48,823Investments in subsidiaries – – – – – 4,440,688 – 4,440,688

TOTAL ASSETS 63,494 – 1,835 – – 4,860,786 – 4,926,115

LIABILITIES AND SHAREHOLDERS' EQUITY

Other liabilities and derivative liabilities – – – – – 32,410 71,492 103,902

Amounts due to subsidiaries 1,543,020 – – – – 11,386 – 1,554,406 7.02

Borrowings 352,625 – – 1,349,210 – – – 1,701,835 4.75ICULS – – – – 1,057,041 – – 1,057,041 1.93

Total liabilities 1,895,645 – – 1,349,210 1,057,041 43,796 71,492 4,417,184Shareholders' equity – – – – – 508,931 – 508,931

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,895,645 – – 1,349,210 1,057,041 552,727 71,492 4,926,115

TOTAL INTEREST-SENSITIVITY GAP (1,832,151) – 1,835 (1,349,210) (1,057,041)






Company (continued) 1 month months months years years bearing book Total interest rate2004 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 %

ASSETS

Cash and short term funds 15,293 – – – – 355 – 15,648 2.91Deposits and placements

with banks and other financial institutions – – 1,763 – – – – 1,763 3.28

Securities AFS – – – – – 502 – 502Other assets – – – – – 8,629 – 8,629Amounts due from

subsidiaries 448,521 – – – – 1 – 448,522 8.28Tax recoverable – – – – – 61,505 – 61,505Investments in subsidiaries – – – – – 4,440,688 – 4,440,688Property, plant and

equipment – – – – – 63 – 63

TOTAL ASSETS 463,814 – 1,763 – – 4,511,743 – 4,977,320

LIABILITIES AND SHAREHOLDERS' EQUITY

Other liabilities and derivative liabilities – – – – – 11,027 110,643 121,670

Amounts due to subsidiaries 1,032,489 – – – – 199,961 – 1,232,450 6.47

Borrowings 557,500 – – 1,281,216 – – – 1,838,716 3.61ICULS – – – – 1,058,428 – – 1,058,428 1.93

Total liabilities 1,589,989 – – 1,281,216 1,058,428 210,988 110,643 4,251,264Shareholders' equity – – – – – 726,056 – 726,056

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,589,989 – – 1,281,216 1,058,428 937,044 110,643 4,977,320

TOTAL INTEREST-SENSITIVITY GAP (1,126,175) – 1,763 (1,281,216) (1,058,428)




(c) Credit risk

Credit risk exposure analysed by industry in respect of the Group's and the Company's financial assets,including off-balance sheet financial instruments, are set out below:

Short termfunds and

deposits and Securities Loans, placements purchased Securities Securities advances Other Commitments

with financial under resale held-for- Securities held-to- and financial On-balance andGroup institutions agreements trading AFS maturity financing * assets sheet total contingencies2005 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Agriculture, hunting, forestry and fishing – – – 9,922 52,431 1,791,656 335 1,854,344 724,014

Mining and quarrying – – – 4,872 – 89,006 – 93,878 50,453Manufacturing – – 303,314 181,532 337,127 8,835,423 3,001 9,660,397 10,286,138Electricity, gas and water – – 314,697 29,970 – 299,206 4,942 648,815 1,734,185Construction – – 39,760 23,318 15,177 2,429,568 271 2,508,094 2,836,216Real estate – – 29,577 144,267 65,207 1,265,008 2,183 1,506,242 405,329Purchase of landed property – – – – – 13,030,537 2,037 13,032,574 1,648,832Wholesale & retail trade

and restaurants & hotels – – 29,963 51,026 18,187 5,653,212 606 5,752,994 5,707,016Transport, storage and

communication – – 75,715 43,748 2,079,319 2,771,719 801 4,971,302 1,134,712Finance, insurance and

business services 12,765,078 2,213,042 1,096,125 1,225,693 7,901,144 2,268,528 160,982 27,630,592 13,431,697Government and

government agencies 545,300 6,449 1,310,760 226,247 3,185,557 309,186 133,736 5,717,235 705,603Purchase of securities – – – 3,298 – 1,978,471 226,976 2,208,745 242,962Purchase of transport

vehicles – – – – – 4,346,921 – 4,346,921 131,801Consumption credit – – – – – 2,746,906 – 2,746,906 2,898,004Others – – 119,892 4,269 171,739 1,379,944 388,131 2,063,975 4,178,278

13,310,378 2,219,491 3,319,803 1,948,162 13,825,888 49,195,291 924,001 84,743,014 46,115,240

* Excludes general allowance amounting to RM921,583,000.




(c) Credit risk (continued)

Short termfunds and

deposits and Securities Loans, placements purchased Securities Securities advances Other Commitments

with financial under resale held-for- Securities held-to- and financial On-balance andGroup (continued) institutions agreements trading AFS maturity financing * assets sheet total contingencies2004 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Agriculture, hunting, forestry and fishing – – – 9,281 97,361 1,248,832 132 1,355,606 772,766

Mining and quarrying – – – – – 145,589 – 145,589 65,117Manufacturing – – – 295,031 491,556 9,149,179 2,196 9,937,962 9,434,912Electricity, gas and water – – 88,221 222,960 – 496,643 2,753 810,577 564,293Construction – – – 52,147 225,698 2,550,200 102 2,828,147 2,742,539Real estate – – 57,399 261,877 163,573 1,090,459 2,620 1,575,928 430,926Purchase of landed property – – – 459 – 12,256,650 1,278 12,258,387 1,965,524Wholesale & retail trade

and restaurants & hotels – – – 35,803 34,311 4,966,045 964 5,037,123 4,636,326Transport, storage and

communication – – – 186,962 2,082,490 1,245,800 3,082 3,518,334 1,111,039Finance, insurance and

business services 11,787,251 40,458 1,167,587 2,475,861 3,515,892 2,572,052 312,462 21,871,563 15,079,075Government and

government agencies 703,900 – 332,597 2,980,089 4,100,556 820,405 96,442 9,033,989 –Purchase of securities – – – 7,383 3,434 1,986,889 256,570 2,254,276 262,404Purchase of transport

vehicles – – – – – 2,528,884 35 2,528,919 83,428Consumption credit – – – – – 2,587,991 11 2,588,002 4,078,555Others – – – 73,549 53,429 1,091,073 233,191 1,451,242 2,730,802

12,491,151 40,458 1,645,804 6,601,402 10,768,300 44,736,691 911,838 77,195,644 43,957,706

* Excludes general allowance amounting to RM824,954,000.




(c) Credit risk (continued)

Short termfunds and

deposits andplacements Amounts Other

with financial due from financial On-balanceCompany institutions subsidiaries assets sheet total2005 RM'000 RM'000 RM'000 RM'000

Finance, insurance and business services 65,595 – 36 65,631Others – 361,156 2 361,158

65,595 361,156 38 426,789

2004

Finance, insurance and business services 17,411 – 126 17,537Others – 448,522 2 448,524

17,411 448,522 128 466,061

48 FAIR VALUES OF FINANCIAL INSTRUMENTS

Financial instruments comprise financial assets, financial liabilities and also off-balance sheet financial instruments.The fair value of a financial instrument is the amount at which the instrument could be exchanged or settledbetween knowledgeable and willing parties in an arm's length transaction, other than in a forced or liquidationsale. The information presented herein represents estimates of fair values as at the balance sheet date.

Quoted and observable market prices, where available, are used as the measure of fair values. However, for asignificant portion of the financial instruments, including loans and advances to customers, such market prices donot exist as there is currently no ready market wherein exchanges between willing parties occur.

Accordingly, various methodologies have been used to estimate what the approximate fair values of suchinstruments might be. These methodologies involve uncertainties and are significantly affected by the assumptionsused and judgements made regarding risk characteristics of various financial instruments, discount rates, estimatesof future cash flows, future expected loss experience and other factors. Changes in the uncertainties andassumptions could significantly affect these estimates and the resulting fair value estimates. Where thesemethodologies are not able to estimate the approximate fair values, such instruments are stated at carrying amount.

In addition, fair value information is not provided for non-financial instruments and financial instruments that areexcluded from the scope of FRS 132 (formerly known as MASB Standard 24) which requires fair value informationto be disclosed. These include property, plant and equipment, investments in subsidiaries and associates andintangibles.



48 FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

Therefore, for a significant portion of the Group's financial instruments, including loans and advances to customers,their respective fair value estimates do not purport to represent, nor should they be construed to represent, theamount that the Group could have realised in a sales transaction at the balance sheet date.

Furthermore, it is the Group's intention to hold most of its financial instruments to maturity and, therefore, it is notprobable that the fair value estimates shown will be realised.

The following table summarises the carrying amounts and estimated fair values of those financial assets andliabilities not presented on the Group's and the Company's balance sheets at their fair values:

Group CompanyCarrying Estimated Carrying Estimated

value fair value value fair value2005 RM'000 RM'000 RM'000 RM'000

Financial assetsLoans, advances and financing 48,273,708 48,583,940 – –Securities held-to-maturity 13,827,110* 13,824,873 – –

Financial liabilitiesDeposits and placements of banks and

other financial institutions 11,028,831 11,028,821 – –Recourse obligation on loans sold to Cagamas 3,356,992 3,365,638 – –Borrowings 3,419,270 3,556,860 1,701,835 1,814,810Subordinated obligations 1,530,252 1,592,535 – –ICULS 1,057,041 703,226 1,057,041 703,226INCPS 1,104,469 1,918,860 – –Hire-purchase creditors 2,346 2,117 – –

2004

Financial assetsLoans, advances and financing 43,911,737 44,013,196 – –Securities held-to-maturity 10,769,522* 10,707,164 – –

Financial liabilitiesDeposits and placements of banks and

other financial institutions 7,123,942 7,124,813 – –Recourse obligation on loans sold to Cagamas 3,366,851 3,372,081 – –Borrowings 3,441,161 3,578,827 1,838,716 1,951,276Subordinated obligations 1,533,080 1,624,687 – –ICULS 1,058,428 657,072 1,058,428 657,072INCPS 1,104,469 1,875,124 – –Hire-purchase creditors 2,977 2,641 – –

* The carrying amount is not written down to the fair value, as the amount is deemed to be recoverable, assubstantially, it relates to government guaranteed bonds.




The fair values are based on the following methodologies and assumptions:

Loans, advances and financing

For floating rate loans, the carrying value is generally a reasonable estimate of fair value.

For fixed rate loans, the fair value is estimated by discounting the estimated future cash flows using the prevailingmarket rates of loans with similar credit risk and maturities.

The fair values of impaired floating and fixed rate loans are represented by their carrying values, net of specificallowance, being the expected recoverable amount.

Securities held-to-maturity

The estimated fair value is generally based on quoted and observable market prices at the balance sheet date.Where such quoted or observable market prices are not available on certain securities, the fair value is estimatedby reference to market indicative yields or net tangible asset backing of the investee. Where discounted cash flowtechnique is used, the estimated future cash flows are discounted using the prevailing market rates for a similarinstrument at the balance sheet date.

Deposits and placements of banks and other financial institutions

The estimated fair values of deposits and placements of banks and other financial institutions with maturities of lessthan one year approximate the carrying amounts. For deposits and placements with maturities of one year or more,fair values are estimated based on discounted cash flows using prevailing money market interest rates for depositsand placements with similar maturities.

Recourse obligation on loans sold to Cagamas

For recourse obligation on loans sold to Cagamas with maturities of less than one year, the carrying amounts are areasonable estimate of their fair values. For recourse obligation on loans sold to Cagamas with maturities of morethan one year, fair values are estimated based on discounted cash flows using prevailing money market interestrates with similar remaining period to maturity.

Borrowings

The estimated fair values of borrowings are based on discounted cash flow model using a current yield curveappropriate for the remaining term to maturity.

Subordinated obligations

The estimated fair values of subordinated obligations are generally based on quoted and observable market pricesat the balance sheet date.

ICULS

The estimated fair value of the ICULS is based on quoted and observable market prices at the balance sheet date.




INCPS

The estimated fair value of the INCPS is based on the price over net assets value of comparable banks, adjusted forthe conversion option of the INCPS.

Hire-purchase creditors

The estimated fair values of hire-purchase creditors are based on discounted expected future cash flows using thecurrent interest rates for liabilities with similar risk profiles.

49 PRIOR YEAR ADJUSTMENTS AND COMPARATIVE FIGURES

(a) Prior year adjustments

During the current financial year, the Group and the Company have adopted the revised BNM/GP8 which isoperative with effect from 1 January 2005.

The adoption of the revised BNM/GP8 has resulted in the changes in the accounting policies for securities,derivatives and interest income recognition for non-performing loans as further explained under the summaryof significant accounting policies.

The changes in the above accounting policies have been applied retrospectively and have the following effectsto the opening reserves and accumulated losses of the Group and the Company:

Group2005 2004

RM'000 RM'000(i) Reserve funds

Balance as at 1 January 2005/1 July 2003

As previously reported 606,696 515,106

Transfer from accumulated losses 2,594 2,305

As restated 609,290 517,411

(ii) AFS reserves


As previously reported – –

Effect of adopting the fair value accounting for securities AFS (12,584) 18,630

Effect of previously recognised loss on securities AFS 3,412 3,773

Effect on deferred tax 2,862 (4,230)

(6,310) 18,173

As restated (6,310) 18,173



49 PRIOR YEAR ADJUSTMENTS AND COMPARATIVE FIGURES (CONTINUED)

(a) Prior year adjustments (continued)

(iii) Accumulated losses

Group2005 2004

RM'000 RM'000


As previously reported (1,935,334) (1,833,188)

Effect of adopting the fair value accounting for securities held-for-trading 15,460 29,520

Effect of previously recognised (gain)/loss on securities AFS transferred to equity 1,224 (384)

Effect of adopting the fair value accounting for derivatives (61,028) 5,892

Effect on deferred tax (64) (5,657)

Transfer to statutory reserve (2,594) (2,305)

(47,002) 27,066

As restated (1,982,336) (1,806,122)

Company2005 2004

RM'000 RM'000


As previously reported (1,040,891) (859,627)

Effect of adopting the fair value accounting for derivatives (47,636) 15,963

As restated (1,088,527) (843,664)




(b) Restatement of comparative figures

The following comparative figures have been restated for the effects of adopting the above changes inaccounting policies:

GroupAs

previously Effect of the As reported change restated

RM'000 RM'000 RM'000

Balance sheet as at 31 December 2004

Dealing securities 6,067,030 (6,067,030) –Investment securities 13,355,726 (13,355,726) –Securities held-for-trading – 1,693,501 1,693,501Securities AFS – 6,892,514 6,892,514Securities held-to-maturity – 10,769,522 10,769,522Other assets 338,678 (46,669) 292,009Derivative assets – 33,524 33,524Tax recoverable 128,038 (557) 127,481Deferred tax assets 200,087 8,676 208,763Other liabilities 1,461,292 (28,636) 1,432,656Derivative liabilities – 155,627 155,627Deferred tax liabilities 2,665 1,788 4,453Borrowings 3,585,259 (144,098) 3,441,161Reserves 1,697,076 (3,716) 1,693,360Accumulated losses (1,935,334) (47,002) (1,982,336)Minority interests 2,016,091 (6,208) 2,009,883

CompanyAs

previously Effect of the As reported change restated

RM'000 RM'000 RM'000

Balance sheet as at 31 December 2004

Investment securities 502 (502) –Securities AFS – 502 502Derivative liabilities – 110,643 110,643Borrowings 1,901,723 (63,007) 1,838,716Accumulated losses (1,040,891) (47,636) (1,088,527)




(b) Restatement of comparative figures (continued)

GroupAs

previously Effect of thereported change As restated

RM'000 RM'000 RM'000

Income statement for the eighteen months ended 31 December 2004

Interest income 4,360,192 (5,877) 4,354,315Interest expense (2,634,268) (6,389) (2,640,657)Net interest income 1,725,924 (12,266) 1,713,658Other operating income 935,729 (16,505) 919,224Net income 2,858,721 (28,771) 2,829,950Other operating expenses (1,646,846) (18,403) (1,665,249)Operating profit 1,211,875 (47,174) 1,164,701Impairment loss – (50,051) (50,051)Profit before INCPS dividends, taxation and zakat 543,669 (97,225) 446,444Taxation and zakat (117,162) 10,567 (106,595)Profit after INCPS dividends, taxation and zakat 273,592 (86,658) 186,934Minority interests (295,128) 12,879 (282,249)Net loss for the financial period (21,536) (73,779) (95,315)

CompanyAs

previously Effect of thereported change As restated

RM'000 RM'000 RM'000

Income statement for the eighteen months ended 31 December 2004

Interest expense (347,686) (27,853) (375,539)Net interest expense (294,838) (27,853) (322,691)Other operating income 118,466 (35,746) 82,720Net expense (176,372) (63,599) (239,971)Operating loss (183,038) (63,599) (246,637)Loss before INCPS dividends, taxation and zakat (183,038) (63,599) (246,637)Loss after INCPS dividends, taxation and zakat (181,264) (63,599) (244,863)Net loss for the financial period (181,264) (63,599) (244,863)

50 APPROVAL OF FINANCIAL STATEMENTS

The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on29 April 2006.



We, Dato Sri Sulaiman Abdul Rahman Taib and Azlan Zainol, being two of the directors of Rashid Hussain Berhad statethat, in the opinion of the directors, the accompanying financial statements set out on pages 65 to 160 are drawn upso as to give a true and fair view of the state of affairs of the Group and the Company as at 31 December 2005 and ofthe results and cash flows of the Group and the Company for the financial year ended 31 December 2005 in accordancewith MASB approved accounting standards in Malaysia, Bank Negara Malaysia Guidelines and the provisions of theCompanies Act, 1965.

Signed in accordance with a resolution of the Board of Directors dated 29 April 2006.

DATO SRI SULAIMAN ABDUL RAHMAN TAIB AZLAN ZAINOLDIRECTOR DIRECTOR

statutory declarationpursuant to section 169(16) of the Companies Act, 1965

I, Wong Yoke Ming, being the officer primarily responsible for the financial management of Rashid Hussain Berhad, dosolemnly and sincerely declare that the accompanying financial statements set out on pages 65 to 160 are, in myopinion, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of theprovisions of the Statutory Declarations Act, 1960.

WONG YOKE MING

Subscribed and solemnly declared by the abovenamed Wong Yoke Ming at Kuala Lumpur in Malaysia on 29 April 2006before me.

JAYAM GNANAPRAGASAMCOMMISSIONER FOR OATHS

statement by directorspursuant to section 169(15) of the Companies Act, 1965


We have audited the financial statements set out on pages 65 to 160. These financial statements are the responsibilityof the Company's directors. It is our responsibility to form an independent opinion, based on our audit, on thesefinancial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act,1965 and for no other purpose. We do not assume responsibility to any other person for the content of this report.

We have conducted our audit in accordance with approved auditing standards in Malaysia. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principles used and significant estimatesmade by directors, as well as evaluating the overall financial statement presentation. We believe that our audit providesa reasonable basis for our opinion.

In our opinion:

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

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

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

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

The names of the subsidiaries of which we have not acted as auditors are indicated in Note 14 to the financialstatements. We have considered the financial statements of these subsidiaries and the auditors' report thereon.

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

The auditors' reports on the financial statements of the subsidiaries were not subject to any qualification and did notinclude any comments made under subsection (3) of Section 174 of the Act.

PRICEWATERHOUSECOOPERS UTHAYA KUMAR S/O K.VIVEKANANDA(No. AF: 1146) (No.1455/06/06(J))Chartered Accountants Partner of the firm

Kuala Lumpur29 April 2006

report of the auditorsto the members of Rashid Hussain Berhad


AUTHORISED SHARE CAPITAL : RM2,500,000,000 comprising 2,500,000,000 ordinary shares of RM1.00each.

ISSUED AND PAID-UP SHARE CAPITAL : RM726,159,169 comprising 726,159,169 ordinary shares of RM1.00.

CLASS OF SHARES : Ordinary shares of RM1.00.

VOTINGS RIGHTS : Each shareholder present in person or by proxy at any Shareholders’ Meetingshall be entitled on a show of hands to one vote, and on a poll, eachshareholder who is present in person or by proxy shall have one vote for eachordinary share held.

NUMBER OF SHAREHOLDERS : 18,193

No. of % of No. of % of size of shareholdings shareholders shareholders shares held shareholdings

Less than 100 106 0.58 2,557 0.00100 - 1,000 5,195 28.55 4,937,557 0.681,001 - 10,000 10,373 57.02 45,130,630 6.2110,001 - 100,000 2,322 12.76 67,273,763 9.26100,001 – 36,307,957 194 1.07 82,237,662 11.33(Less than 5% of issued shares) 36,307,958 (5%) and above 3 0.02 526,577,000 75.52

Total 18,193 100.00 726,159,169 100.00

analysis of shareholdingsas at 14 April 2006


Name No. of Ordinary %Shares

1 SOUTHERN NOMINEES (TEMPATAN) SDN BHD 226,127,000 31.14<UTAMA BANKING GROUP BERHAD>

2 EMPLOYEES PROVIDENT FUND BOARD 222,472,100 30.64

3 KUMPULAN WANG AMANAH PENCEN 77,977,900 10.74

4 HSBC NOMINEES (TEMPATAN) SDN BHD 12,000,000 1.65<UTAMA BANKING GROUP BERHAD>

5 AM NOMINEES (TEMPATAN) SDN BHD 4,205,300 0.58<PERTUBUHAN KESELAMATAN SOSIAL>

6 LIM SAY CHONG 3,082,000 0.42

7 CIMSEC NOMINEES (ASING) SDN BHD 2,292,719 0.32<EXEMPT AN FOR CIMB-GK SECURITIES PTE LTD (RETAIL CLIENTS)>

8 T A R KELUARGA SDN BHD 2,109,000 0.29

9 PERTUBUHAN KESELAMATAN SOSIAL 2,000,000 0.28

10 NARAIN JIWANSINGH BALCHANDANI 2,000,000 0.28

11 LIM HUN SWEE 1,778,000 0.24

12 HSBC NOMINEES (ASING) SDN BHD 1,670,300 0.23<MSCO NY FOR LEGEND GLOBAL VALUE FUND, L.P.>

13 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 1,650,000 0.23<GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (PAR 2)>

14 CITIGROUP NOMINEES (ASING) SDN BHD 1,556,500 0.21<EXEMPT AN FOR MERRILL LYNCH PIERCE FENNER & SMITH INCORPORATED (FOREIGN)>

15 UNITED OVERSEAS NOMINEES (TEMPATAN) SDN BHD 1,508,300 0.21<TAN SENG LEONG>

16 CITIGROUP NOMINEES (ASING) SDN BHD 1,500,000 0.21<UBS AG SINGAPORE FOR HIGH-WORTH RESOURCES LIMITED>

17 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 1,493,000 0.21<ALLIANCE CAPITAL ASSET MANAGEMENT SDN BHD FOR EMPLOYEES PROVIDENT FUND>

18 MAYBAN NOMINEES (TEMPATAN) SDN BHD 1,325,500 0.18<DAYA SEBATI SDN BHD>

19 DAVINDER KAUR A/P GURCHARAN SINGH 1,233,000 0.17

20 CITIGROUP NOMINEES (ASING) SDN BHD 1,140,000 0.16<LEGAL AND GENERAL ASSURANCE (PENSIONS MANAGEMENT)LIMITED ASIA EMERGING MARKET EQUITY INDEX FUND>

list of top thirty (30) shareholdersas at 14 April 2006


Name No. of Ordinary %Shares

21 TAN MEI LING @ JUNE TAN MEI LING 1,003,000 0.14

22 HSBC NOMINEES (TEMPATAN) SDN BHD 900,000 0.12<HSBC (MALAYSIA) TRUSTEE BERHAD FOR AMANAH SAHAM SARAWAK>

23 HSBC NOMINEES (ASING) SDN BHD 763,600 0.11<MSCO NY FOR HFR FOR HE GLOBAL VALUE MASTER TRUST>

24 CITIGROUP NOMINEES (ASING) SDN BHD 687,500 0.09<MELLON BANK, N.A. FOR COMMONWEALTH OF PENNSYLVANIAPUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM>

25 KUMPULAN SENTIASA CEMERLANG SDN BHD 678,700 0.09<TIO POH CHOO>

26 CIMSEC NOMINEES (TEMPATAN) SDN BHD 600,000 0.08<CIMB FOR ANG ENG HUAT>

27 DAVID LEE CHUEN CHIEH 600,000 0.08

28 HSBC NOMINEES (TEMPATAN) SDN BHD 512,900 0.07<OH KIM SUN>

29 PACIFIC & ORIENT INSURANCE CO BERHAD 500,000 0.07

30 HSBC NOMINEES (ASING) SDN BHD 500,000 0.07<MSCOIL FOR RIZE CONSULTANTS LIMITED>

list of top thirty (30) shareholdersas at 14 April 2006 (continued)


analysis of warrantholdings for Warrants 1997/2007as at 14 April 2006

NO. OF WARRANTS IN ISSUE : RM33,305,528

EXERCISE PRICE OF WARRANTS : RM18.30

EXPIRY DATE OF WARRANTS ; 24 March 2007

VOTING RIGHTS : Each warrantholder present in person or by proxy at any Warrantholders'Meeting shall be entitled on a show of hands to one vote, and on a poll,warrantholder who is present in person or by proxy shall have one vote foreach Warrant 1997/2007 held.

NUMBER OF WARRANTHOLDERS : 3,093

No. of % of No. of % ofSize of warrantholdings warrantholders warrantholders warrants held warrantholdings

Less than 100 76 2.46 3,444 0.01100 – 1,000 1,194 38.60 1,015,325 3.051,001 – 10,000 1,484 47.98 6,438,321 19.3310,001 – 100,000 317 10.25 8,675,641 26.05100,001 – 1,665,276 20 0.65 3,156,671 9.48(Less than 5% of the warrants in issue)1,665,277 (5%) and above 2 0.06 14,016,126 42.08

Total 3,093 100.00 33,305,528 100.00


Name No. of Warrants %

1 MALAYSIAN RESOURCES CORPORATION BERHAD 10,724,856 32.20

2 AM NOMINEES (TEMPATAN) SDN BHD 3,291,270 9.88<PERTUBUHAN KESELAMATAN SOSIAL>

3 CIMSEC NOMINEES (ASING) SDN BHD 289,371 0.87<EXEMPT AN FOR CIMB-GK SECURITIES PTE LTD (RETAIL CLIENTS)>

4 OOI ENG HONG 270,500 0.81

5 MAYBAN NOMINEES (TEMPATAN) SDN BHD 220,000 0.66<TING SEE ENG>

6 LIEW CHOON NUM 184,100 0.55

7 KONG MAY CHU 180,000 0.54

8 YONG HENG SENG 177,000 0.53

9 ASOKAN A/L PONNAMPALAM 162,800 0.49

10 HDM NOMINEES (ASING) SDN BHD 160,000 0.48<UOB KAY HIAN PTE LTD FOR LIM KE>

11 HASBULLAH BIN HUSSEIN 150,500 0.45

12 LIM KOOI 150,000 0.45

13 MOHD TAHIR BIN ABDUL RAHIM 140,000 0.42

14 MAYBAN NOMINEES (TEMPATAN) SDN BHD 132,000 0.40<CONRADO DE PHEYNO PUI>

15 MAYBAN NOMINEES (TEMPATAN) SDN BHD 130,000 0.39<LOW ENG LEE>

16 PHANG WAI KEEN 120,000 0.36

17 TOK YIK CHEN 120,000 0.36

18 LIEW CHOON NUM 119,400 0.36

19 HDM NOMINEES (ASING) SDN BHD 114,000 0.34<UOB KAY HIAN PTE LTD FOR LIM HAI LIANG>

20 BONG SIAU CHOO 113,000 0.34

list of top thirty (30) holders of Warrants 1997/2007as at 14 April 2006



21 YIAP CHIN SWEE 112,700 0.34

22 OSK NOMINEES (TEMPATAN) SDN BERHAD 111,300 0.33<KANG SAI CHU>

23 AFFIN NOMINEES (TEMPATAN) SDN BHD 100,000 0.30<MAJNON BIN KARIM>

24 CHUAH AH KHEE 100,000 0.30

25 BEE CHE GUAN 100,000 0.30

26 ONG CHEE SIONG 97,900 0.29

27 MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD 85,700 0.26<LEE SUN>

28 KHOO THENG 80,000 0.24

29 MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD 79,700 0.24<ANG KOK KENG>

30 HDM NOMINEES (ASING) SDN BHD 73,000 0.22<DBS VICKERS SECS (S) PTE LTD FOR TEOH LAY CHENG>

list of top thirty (30) holders of Warrants 1997/2007as at 14 April 2006 (continued)


NO. OF WARRANTS IN ISSUE : 135,015,204


EXPIRY DATE OF WARRANTS : 16 August 2009

VOTING RIGHTS : Each warrantholder present in person or by proxy at any Warrantholders’Meeting shall be entitled on a show of hands to one vote, and on a poll, eachwarrantholder who is present in person or by proxy shall have one vote foreach Warrant 1999/2009 held.



Less than 100 136 1.64 6,691 0.00100 – 1,000 1,922 23.20 1,739,790 1.301,001 – 10,000 4,479 54.07 21,065,311 15.6010,001 – 100,000 1,578 19.05 53,228,237 39.42100,001 – 6,750,760 169 2.04 58,975,175 43.68(Less than 5% of the warrants in issue)6,750,761 (5%) and above 0 0.00 0 0.00

Total 8,284 100.00 135,015,204 100.00




1 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 6,499,450 4.81<MALAYSIAN RESOURCES CORPORATION BERHAD>

2 PACIFIC & ORIENT INSURANCE CO BERHAD 3,732,000 2.76

3 PACIFIC & ORIENT INSURANCE CO BERHAD 2,000,000 1.48

4 HUANG WEI NEE 1,933,000 1.43

5 MOHD JAMEL BIN ABDUL MUNIN 1,608,400 1.19

6 MAK NGIA NGIA @ MAY YOKE LUM 1,304,000 0.97

7 MAYBAN NOMINEES (TEMPATAN) SDN BHD 1,258,700 0.93<LOH LEE HONG (712PD1128)>

8 LTG DEVELOPMENT SDN BHD 1,231,000 0.91

9 ONG IT SHAW 1,195,000 0.89

10 TAN ENG HUAT 1,158,200 0.86

11 CHEAH MING CHIEW 1,000,000 0.74

12 CARTABAN NOMINEES (ASING) SDN BHD 810,000 0.60<EXEMPT AN FOR BANK SARASIN-RABO (ASIA) LIMITED (AC CLIENT FRGN)>

13 TAN ENG HUAT 676,700 0.50

14 NG KOK CHENG @ NG KEE SENG 650,000 0.48

15 KE-ZAN NOMINEES (TEMPATAN) SDN BHD 610,000 0.45<KIM ENG SECURITIES PTE LTD FOR AHMAD FUAD BIN MD ALI>

16 TAN POH HWA 600,000 0.44

17 CIMSEC NOMINEES (TEMPATAN) SDN BHD 524,500 0.39<CIMB FOR CHAN HUA ENG>

18 CHONG KOON FOONG 500,000 0.37

19 LIAW MENG HUI 500,000 0.37

20 PACIFIC & ORIENT INSURANCE CO BERHAD 500,000 0.37




21 MOHD RAZALI BIN ABDUL RAHMAN 500,000 0.37

22 CHAN KOK CHYE 480,000 0.36

23 CHONG TECK SENG 480,000 0.36

24 LAW JIN HO 445,000 0.33

25 LEE SENG TECK 432,000 0.32

26 NG BOK WAH 420,000 0.31

27 TAN CHUNG KEONG 410,000 0.30

28 ISMAIL BIN KATIM 405,000 0.30

29 HONG CHIN TECK 400,000 0.30

30 TAN YIN HENG 400,000 0.30





EXPIRY DATE OF WARRANTS : 24 March 2007

VOTING RIGHTS : Each warrantholder present in person or by proxy at any Warrantholders’Meeting shall be entitled on a show of hands to one vote, and on a poll, eachwarrantholder who is present in person or by proxy shall have one vote foreach Warrant 2001/2007 held.

NUMBER OF WARRANTHOLDERS : 759


Less than 100 21 2.77 911 0.00100 – 1,000 260 34.26 226,770 1.051,001 – 10,000 342 45.06 1,540,364 7.1410,001 – 100,000 121 15.94 3,554,057 16.48100,001 – 1,078,218 13 1.71 2,848,270 13.22(Less than 5% of the warrants in issue)1,078,219 (5%) and above 2 0.26 13,394,000 62.11

Total 759 100.00 21,564,372 100.00




1 UTAMA BANKING GROUP BERHAD 8,000,000 37.10

2 RC NOMINEES (ASING) SDN BHD 5,394,000 25.01<BNP PARIBAS (SINGAPORE BRANCH)>

3 CIMSEC NOMINEES (TEMPATAN) SDN BHD 473,000 2.19<CIMB FOR MAK NGIA NGIA @ MAK YOKE LUM>

4 MAK NGIA NGIA @ MAK YOKE LUM 445,900 2.07

5 HDM NOMINEES (TEMPATAN) SDN BHD 333,000 1.54<LIM KAM SENG>

6 CHONG HON CHOI 265,900 1.23

7 DAYA SEBATI SDN BHD 250,070 1.16

8 HDM NOMINEES (TEMPATAN) SDN BHD 220,000 1.02<TEH KOK LIM>

9 PHUI JIN MIAW 175,000 0.81

10 FRANCIS LEE BAN CHENG 160,000 0.74

11 AHMAD NAZIR BIN SULAIMAN 115,000 0.53

12 EE SU HUA 105,000 0.49

13 HDM NOMINEES (TEMPATAN) SDN BHD 104,000 0.48<DBS VICKERS SECS (S) PTE LTD FOR CHANG FATT BOON>

14 CHAW NAM TAI 101,000 0.47

15 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 100,400 0.47<LIM LIAN SENG (800394)>

16 TANG KEE HIONG 100,000 0.46

17 LIM SOON CHWEE @ OH SOON CHWEE 98,000 0.45

18 YONG VOON YUI 94,000 0.44

19 LAP AH TOH 90,000 0.42

20 FOO SET TONG 82,700 0.38




21 LIM PENG YAH 82,700 0.38

22 CHEN CHIN PENG 76,000 0.35

23 MAYBAN NOMINEES (TEMPATAN) SDN BHD 76,000 0.35<DAYA SEBATI SDN BHD (014011224127)>

24 CARTABAN NOMINEES (ASING) SDN BHD 73,000 0.34<DBSVICKERS FOR TAY BOON HUAT (0162151)>

25 MAYBAN NOMINEES (TEMPATAN) SDN BHD 72,000 0.33<HO KIN CHAI (101AB0449)>

26 MOY MEI LING 70,000 0.32

27 RHB NOMINEES (TEMPATAN) SDN BHD 67,071 0.31<RHB ASSET MANAGEMENT SDN BHD FOR YAYASAN SELANGOR>

28 KALLAYIL SATHYANATHAN NAIR 62,700 0.29

29 MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD 60,000 0.28<LIN KEE HUA (DEALER 007)>




EXERCISE PRICE OF WARRANTS : RM2.96 per existing RHB Capital Berhad share held by Rashid HussainBerhad

EXPIRY DATE OF WARRANTS : 16 June 2007

VOTING RIGHTS : Each warrantholder present in person or by proxy at any Warrantholders’Meeting shall be entitled on a show of hands to one vote, and on a poll, eachwarrantholder who is present in person or by proxy shall have one vote foreach Call Warrant 2003/2007 held.



Less than 100 4 0.25 78 0.00100 – 1,000 75 4.78 70,722 0.021,001 – 10,000 769 48.89 4,982,331 1.4610,001 – 100,000 566 35.98 20,961,510 6.16100,001 – 17,021,946 155 9.85 119,650,210 35.15(Less than 5% of the warrants in issue)17,021,947 (5%) and above 4 0.25 194,774,083 57.21

Total 1,573 100.00 340,438,934 100.00

analysis of warrantholdings for Call Warrants2003/2007 as at 14 April 2006


Name No. of Call Warrants %

1 SOUTHERN NOMINEES (TEMPATAN) SDN BHD 90,000,000 26.44<UTAMA BANKING GROUP BERHAD>

2 CITIGROUP NOMINEES (ASING) SDN BHD 50,864,300 14.94<UBS AG FOR ARTRADIS BARRACUDA FUND>

3 MAYBAN NOMINEES (ASING) SDN BHD 33,958,783 9.97<CANTRADE PRIVATBANK AG>

4 CITIGROUP NOMINEES (ASING) SDN BHD 19,951,000 5.86<GOLDMAN SACHS INTERNATIONAL>

5 HSBC NOMINEES (ASING) SDN BHD 11,030,500 3.24<MSCOIL FOR CHEYNE FUND LP>

6 CITIGROUP NOMINEES (ASING) SDN BHD 10,000,272 2.94<CITIGROUP GLOBAL MARKETS LIMITED>

7 CITIGROUP NOMINEES (ASING) SDN BHD 8,641,000 2.54<UBS AG FOR AB2 FUND>

8 MAYBAN NOMINEES (TEMPATAN) SDN BHD 6,810,000 2.00<MAYBAN INVESTMENT MANAGEMENT SDN BHD FOR MALAYAN BANKING BERHAD>

9 CITIGROUP NOMINEES (ASING) SDN BHD 6,808,779 2.00<GOLDMAN SACHS ASIA FINANCE>

10 DB (MALAYSIA) NOMINEE (ASING) SDN BHD 5,956,000 1.75<DEUTSCHE BANK AG LONDON FOR CHEYNE LEVERAGE FUND INC>

11 CARTABAN NOMINEES (ASING) SDN BHD 5,787,462 1.70<STATE STREET MUNICH FUND U90A FOR HSH NORDBANK INTERNATIONAL S.A.>

12 CIMB NOMINEES (TEMPATAN) SDN BHD 4,887,246 1.44<COMMERCE INTERNATIONAL MERCHANT BANKERS BERHAD>

13 CITIGROUP NOMINEES (ASING) SDN BHD 4,283,200 1.26<CLSA CAPITAL LIMITED (CUST-NON RES)

14 TAN BOON HAR 2,788,700 0.82

15 MAYBAN NOMINEES (TEMPATAN) SDN BHD 2,650,000 0.78<KEK LIAN LYE>


17 MAYBAN NOMINEES (TEMPATAN) SDN BHD 2,000,000 0.59<MAYBAN TRUSTEES BERHAD FOR BALANCED RETURNS FUND (N14011980060)>

18 HSBC NOMINEES (ASING) SDN BHD 1,702,195 0.50<MSCOIL FOR KHI OVERSEAS LIMITED>

19 MAYBAN NOMINEES (TEMPATAN) SDN BHD 1,370,000 0.40<LIM CHUNG TOUNG (10107AK2018)>

20 CITIGROUP NOMINEES (ASING) SDN BHD 1,276,650 0.38<CITIGROUP GLOBAL MARKETS INC.>

list of top thirty (30) holders of Call Warrants2003/2007 as at 14 April 2006


Name No. of Call Warrants %

21 MANULIFE INSURANCE (MALAYSIA) BERHAD 1,000,000 0.29

22 SIOW KON SANG @ SIAU KAM SANG 1,000,000 0.29

23 HSBC NOMINEES (ASING) SDN BHD 975,000 0.29<BBH AND CO BOSTON FOR RUPERT OLIVER RITTSON-THOMAS>

24 TAN ENG HUAT 896,500 0.26

25 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 860,100 0.25<JANAKI @ MALLIKA A/P PALANIAPPAN (471512)>

26 CIMSEC NOMINEES (TEMPATAN) SDN BHD 856,000 0.25<EXEMPT AN FOR CIMB-GK SECURITIES PTE LTD (RETAIL CLIENTS)>

27 TIM CHAI @ NG TIAM CHAI 850,000 0.25

28 THANG GEK HONG 837,000 0.25

29 UNIVERSAL TRUSTEE (MALAYSIA) BERHAD 800,000 0.23<MALAYSIAN ASSURANCE ALLIANCE BHD>

30 CHIA SEE HUAT 783,000 0.23

list of top thirty (30) holders of Call Warrants2003/2007 as at 14 April 2006 (continued)


NOMINAL VALUE OF OUTSTANDING RHB ICULS-A : RM451,008,302

CONVERSION PRICE OF RHB ICULS-A : RM1.00

MATURITY DATE OF RHB ICULS-A : 23 December 2012

VOTING RIGHTS : Each RHB ICULS-A holder present in person or by proxy at anyRHB ICULS-A holders’ Meeting shall be entitled on a show ofhands to one vote, and on a poll, each RHB ICULS-A holderwho is present in person or by proxy shall have one vote forevery RM1.00 nominal value of RHB ICULS-A held.

NUMBER OF RHB ICULS-A HOLDERS : 311

NominalNo. of % of value of No. of

Size of RHB ICULS-A (RM) RHB ICULS-A RHB ICULS-A RHB ICULS-A RHB ICULS-Aholders holders held (RM) holdings

Less than 100 1 0.32 2 0.00100 – 1,000 111 35.69 109,700 0.021,001 – 10,000 185 59.49 757,050 0.1710,001 – 100,000 11 3.54 261,071 0.06100,001 – 22,550,414 1 0.32 674,000 0.15(Less than 5% of RHB ICULS-A in issue)22,550,415 (5%) and above 2 0.64 449,206,479 99.60

Total 311 100.00 451,008,302 100.00

analysis of holdings for 2002/2012Rashid Hussain Berhad 0.5% irredeemable convertible unsecured loan stocks-A of RM463,646,102 nominal value ("RHB ICULS-A")

as at 14 April 2006


Nominal Value of Name RHB ICULS-A (RM) %


2 SOUTHERN NOMINEES (TEMPATAN) SDN BHD 176,100,000 39.05 <PLEDGED SECURITIES ACCOUNT FOR UTAMA BANKING GROUP BERHAD>

3 AM NOMINEES (TEMPATAN) SDN BHD 674,000 0.15 <PERTUBUHAN KESELAMATAN SOSIAL>

4 HENG NAM IMPORT & EXPORT (M) SDN BHD 67,000 0.01

5 ZALARAZ SDN BHD 57,500 0.01

6 AM NOMINEES (TEMPATAN) SDN BHD 25,000 0.01 <MALAYSIAN SOUTH-SOUTH CORPORATION BHD>

7 WONG YONG PEK 15,000 0.00

8 MAYBAN SECURITIES NOMINEES (ASING) SDN BHD 15,000 0.00 <LIM & TAN SECURITIES PTE LTD FOR LOW SUE LEONG>

9 CHIN MEE WAH 15,000 0.00

10 ECM LIBRA SECURITIES NOMINEES (TEMPATAN) SDN BHD 15,000 0.00 <PLEDGED SECURITIES ACCOUNT FOR LEAN CHEE SENG>

11 NG WAH YIK 15,000 0.00

12 ONG ENG KOON 14,000 0.00

13 FOO LEE BOON 12,000 0.00

14 IAN MILTON HUDSON 10,571 0.00

15 KHOH SWEE HOE 10,000 0.00

16 TAN SEU KIM 10,000 0.00

17 CHEONG HAEE LEE @ CHONG HAEE LEE 10,000 0.00

18 HSBC NOMINEES (ASING) SDN BHD 10,000 0.00 <PLEDGED SECURITIES ACCOUNT FOR PHILLIP JOHN SMITH>

19 THO SIEW WAH 10,000 0.00

20 MAYBAN SECURITIES NOMINEES (ASING) SDN BHD 10,000 0.00 <OCBC SECURITIES PRIVATE LIMITED FOR TAN KAY CHOON>

list of top thirty (30) holders of RHB ICULS-Aas at 14 April 2006


Nominal Value of Name RHB ICULS-A (RM) %

21 MEGAMIX SDN BHD 10,000 0.00

22 HDM NOMINEES (TEMPATAN) SDN BHD 10,000 0.00 <PHILLIP SECURITIES PTE LTD FOR NG GIN SIM>

23 HDM NOMINEES (ASING) SDN BHD 10,000 0.00 <LIM & TAN SECURITIES PTE LTD FOR TOO ABA @ THOO CHONG HUAT>

24 LOW KOK KON 10,000 0.00

25 NG SI ENG 10,000 0.00

26 FOO KOK LEANG 10,000 0.00

27 CHOK KWEE WAH 10,000 0.00

28 CIMSEC NOMINEES (ASING) SDN BHD 10,000 0.00 <EXEMPT AN FOR CIMB-GK SECURITIES PTE LTD (RETAIL CLIENTS)>

29 KHOO TEIK CHOOI 10,000 0.00

30 TAN GEOK CHUAN 10,000 0.00

list of top thirty (30) holders of RHB ICULS-Aas at 14 April 2006 (continued)


NOMINAL VALUE OF OUTSTANDING RHB ICULS-B : RM605,261,169

CONVERSION PRICE OF RHB ICULS-B : RM1.13

MATURITY DATE OF RHB ICULS-B : 23 December 2012

VOTING RIGHTS : Each RHB ICULS-B holder present in person or by proxy at anyRHB ICULS-B holders’ Meeting shall be entitled on a show ofhands to one vote, and on a poll, each RHB ICULS-B holderwho is present in person or by proxy shall have one vote forevery RM1.00 nominal value of RHB ICULS-B held.

NUMBER OF RHB ICULS-B HOLDERS : 1,219

NominalNo. of % of value of % of

Size of RHB ICULS-B (RM) RHB ICULS-B RHB ICULS-B RHB ICULS-B RHB ICULS-Bholders holders held (RM) holdings

Less than 100 26 2.13 1,351 0.00100 – 1,000 307 25.18 288,194 0.051,001 – 10,000 690 56.60 2,970,200 0.4910,001 – 100,000 176 14.45 5,134,276 0.85100,001 – 30,263,057 17 1.39 14,438,150 2.39(Less than 5% of RHB ICULS-B in issue)30,263,058 (5%) and above 3 0.25 582,428,998 96.22

Total 1,219 100.00 605,261,169 100.00

analysis of holdings for 2002/2012Rashid Hussain Berhad 3.0% irredeemable convertible unsecured loan stocks-B of RM620,940,385 nominal value ("RHB ICULS-B")

as at 14 April 2006


Nominal Value of Name RHB ICULS-B (RM) %


2 EMPLOYEES PROVIDENT FUND BOARD 178,957,100 29.57

3 SOUTHERN NOMINEES (TEMPATAN) SDN BHD 177,344,898 29.30<PLEDGED SECURITIES ACCOUNT FOR UTAMA BANKING GROUP BERHAD>



6 HSBC NOMINEES (ASING) SDN BHD 1,623,900 0.27<BNY BRUSSELS FOR THE GREAT EASTERN LIFE ASSURANCE CO LTD>

7 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 1,493,000 0.25<ALLIANCE CAPITAL ASSET MANAGEMENT SDN BHD FOR EMPLOYEES PROVIDENT FUND>

8 CIMSEC NOMINEES (ASING) SDN BHD 399,250 0.07<EXEMPT AN FOR CIMB-GK SECURITIES PTE LTD (RETAIL CLIENTS)>

9 UOBM NOMINEES (TEMPATAN) SDN BHD 372,000 0.06<GOLDEN TOUCH ASSET MANAGEMENT SDN BHD FOR COUNTRY HEIGHTSHOLDINGS BERHAD (TRUST AC/CLIENT)>

10 LIEW SIP 350,000 0.06

11 SANG LEE COMPANY SDN BHD 320,000 0.05

12 ONN KOK PUAY (WENG GOUPEI) 302,000 0.05

13 INTER-PACIFIC EQUITY NOMINEES (TEMPATAN) SDN BHD 200,000 0.03<KIM ENG SECURITIES PTE LTD FOR KOK TIU WAN>

14 CHOONG YAT CHIN @ CHONG YAT CHIN 150,000 0.02

15 YEE CHONG HING 146,000 0.02

16 YEE CHONG HOCK 146,000 0.02

17 INTER-PACIFIC EQUITY NOMINEES (TEMPATAN) SDN BHD 142,000 0.02<KIM ENG SECURITIES PTE LTD FOR KWAN FOOK NGAH>

18 WONG MAY PEARL 125,000 0.02

19 AMSEC NOMINEES (ASING) SDN BHD 120,000 0.02<UOB KAY HIAN PTE LTD FOR NG LEE KIANG>

20 KUALA LUMPUR CITY NOMINEES (TEMPATAN) SDN BHD 120,000 0.02<PLEDGED SECURITIES ACCOUNT FOR NG KIM CHENG>

list of top thirty (30) holders of RHB ICULS-Bas at 14 April 2006


Nominal Value of Name RHB ICULS-B (RM) %

21 HDM NOMINEES (ASING) SDN BHD 100,000 0.02<UOB KAY HIAN PTE LTD FOR CHUNG CHEE JIN>

22 HDM NOMINEES (ASING) SDN BHD 100,000 0.02<KIM ENG SECURITIES PTE LTD FOR NEO KA CHIAM>

23 AMSEC NOMINEES (ASING) SDN BHD 100,000 0.02<PLEDGED SECURITIES ACCOUNT FOR NG ENG TEE>

24 MAYBAN NOMINEES (TEMPATAN) SDN BHD 100,000 0.02<PLEDGED SECURITIES ACCOUNT FOR YEK NAI SING>

25 HENG AIK FONG 100,000 0.02

26 CIMSEC NOMINEES (TEMPATAN) SDN BHD 100,000 0.02<PLEDGED SECURITIES ACCOUNT FOR LOH SUN WAI (MUTIARA BRANCH)>

27 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 100,000 0.02<ALLIANCE CAPITAL ASSET MANAGEMENT SDN BHD FOR THE

INSTITUTE OF STRATEGIC AND INTERNATIONAL STUDIES MALAYSIA>

28 PANG PEEK LING 76,000 0.01

29 CHUAH TEIK WAH 73,600 0.01

30 YAP AH NGAH @ YAP NEO NYA 67,800 0.01

list of top thirty (30) holders of RHB ICULS-Bas at 14 April 2006 (continued)


Substantial Shareholders No. of SharesDirect Indirect %

Utama Banking Group Berhad (“UBG”) 238,127,000 – 32.79

Employees' Provident Fund Board1 224,115,100 – 30.86

Kumpulan Wang Amanah Pencen 77,977,900 – 10.74

Concordance Holdings Sdn Bhd2 (“Concordance”) – 238,127,000 32.79

Cahya Mata Sarawak Berhad3 (“CMSB”) – 238,127,000 32.79

YBhg Dato Sri Sulaiman Abdul Rahman Taib4 – 238,127,000 32.79

Tuan Haji Mahmud Abu Bekir Taib5 – 238,127,000 32.79

Encik Vaseehar Hassan Abdul Razack6 – 238,127,000 32.79

Notes:

1. The interest of Employees' Provident Fund Board is held through various nominees and fund managers in additionto its direct shareholdings.

2. Concordance is a substantial shareholder of UBG. Under Section 6A of the Companies Act, 1965, Concordance isdeemed interested in UBG's interest in Rashid Hussain Berhad (“RHB”).

3. CMSB holds 100% equity interest in Concordance. Under Section 6A of the Companies Act, 1965, CMSB is deemedinterested in Concordance's deemed interest in RHB.

4. YBhg Dato Sri Sulaiman Abdul Rahman Taib (“YBhg Dato Sri Sulaiman”) is a substantial shareholder of CMSB. UnderSection 6A of the Companies Act, 1965, YBhg Dato Sri Sulaiman is deemed interested in CMSB's deemed interest inRHB.

5. Tuan Haji Mahmud Abu Bekir Taib (“Tuan Haji Mahmud”) is a substantial shareholder of CMSB. Under Section 6A ofthe Companies Act, 1965, Tuan Haji Mahmud is deemed interested in CMSB's deemed interest in RHB.

6. Encik Vaseehar Hassan Abdul Razack (“Encik Vaseehar”) is an indirect substantial shareholder of UBG. Under Section6A of the Companies Act, 1965, Encik Vaseehar is deemed interested in UBG's interest in RHB.

substantial shareholdersas at 14 April 2006


Ordinary shares of RM1.00 eachNo. %

The Company

YBhg Dato Sri Sulaiman Abdul Rahman Taib 238,127,000 32.79– indirect 1

YBhg Dato’ Mohamed Khadar Merican– direct 5,000 *

Encik Vaseehar Hassan Abdul Razack– indirect 1 238,127,000 32.79

Subsidiary Company

RHB Capital Berhad

YBhg Dato Sri Sulaiman Abdul Rahman Taib – indirect 2 1,182,896,459 64.87

YBhg Dato’ Mohamed Khadar Merican– direct 10,000 *

Encik Vaseehar Hassan Abdul Razack 1,182,896,459 64.87-–indirect 2

Warrants 2001/2007No. %

The Company

YBhg Dato Sri Sulaiman Abdul Rahman Taib – indirect 1 8,000,000 37.10

Encik Vaseehar Hassan Abdul Razack 8,000,000 37.10– indirect 1

Call Warrants 2003/2007No. %


list of directors’ interests in securities of the companyand its related corporations as at 14 April 2006


Nominal Amount (RM) of 2002/20120.5% Irredeemable Convertible Unsecured Loan Stocks of

RM1.00 each nominal value (“RHB ICULS-A”)No. %



Nominal Amount (RM) of 2002/20123.0% Irredeemable Convertible Unsecured Loan Stocks of

RM1.00 each nominal value (“RHB ICULS-B”)No. %



Notes:

1 Deemed interest pursuant to Section 6A of the Companies Act, 1965 by virtue of his indirect substantial interest in UtamaBanking Group Berhad (‘UBG’), a substantial shareholder of the Company.

2 Deemed interest pursuant to Section 6A of the Companies Act, 1965 by virtue of his indirect substantial interest in the Company.

* Negligible percentage.

By virtue of their indirect substantial interests in the securities of the Company, YBhg Dato Sri Sulaiman Abdul Rahman Taib and EncikVaseehar Hassan Abdul Razack are deemed to have an indirect substantial interest in the securities of the Company and its relatedcorporations to the extent the Company has an interest.

list of directors’ interests in securities of the companyand its related corporations as at 14 April 2006 (continued)


sanctions and penalties

There were no public sanctions and/or penalties imposed on Rashid Hussain Berhad and its subsidiaries, Directors orManagement by the relevant regulatory bodies for the period from 1 January 2005 to 31 December 2005.

material contracts

There were no material contracts of Rashid Hussain Berhad and its subsidiaries involving directors' and majorshareholders' interests which subsisted at the end of 12 months financial period from 1 January 2005 to 31 December2005 or, if not then subsisting, entered into since the end of the financial year ended 31 December 2004.


Year ofAge of Year of Net Acquisition

Description Area building Expiry Book orLocation Owner of Property (sq. m.) Usage (Years) Tenure on Lease Value Revaluation

MALAYSIA

Kuala Lumpur

1. 18, Jalan Silang RHB Bank 4 storey 1,379 Credit 52 Freehold – 686 1967Berhad shop lot Card

Centre

2. 58, 58A, 58B, 58C RHB Bank 2 units of 1,412 Bank 41 Freehold – 688 199760, 60A, 60B, 60C Berhad 4 storey BranchJalan Bukit Bintang shophouses

3. 75, Jalan Tun H.S.Lee RHB Bank 13 storey 6,000 Bank 40 Freehold – 1,696 1997Berhad building Branch

4. 424 Jalan Tun Razak RHB 12 storey 20,440 Office 15 Freehold – 133,917 1989Hartanah office building SpaceSdn Bhd

5. 426 Jalan Tun Razak RHB 16 storey 22,516 Office 9 Freehold – 130,061 1989Hartanah office building SpaceSdn Bhd

6. 19-21 Medan Pasar RHB Bank 5 storey 1,298 Bank 23 Freehold – 1,926 1983Berhad building Collection

Centre

7. 50, 52 Jalan Pasar RHB Bank 2 units of 1,326 Bank 36 Freehold – 782 1997Berhad 3 storey Branch

shophouses

8. Lot 114-116 RHB Bank 2 units of 259 Bank 32 Freehold – 365 1997Ampang Park Berhad Shop lots BranchShopping Complex in shoppingJalan Ampang complex

9. No. 30, Jalan 7/108C RHB Bank 2 units of 980 Bank 12 Leasehold 2085 696 1992Taman Sungai Besi Berhad 3 storey Branch

shop lots

10. 178, 180 Main Street RHB Bank 2 units of 972 Bank 28 Leasehold 2073 697 1997Salak South Berhad 4 storey Branch

building

11. 257, Jalan RHB Bank 3 storey 127 Bank 20 Leasehold 2075 615 1999Genting Kelang Berhad shophouse Branch

12. 259, Jalan RHB Bank 3 storey 127 Bank 20 Leasehold 2075 627 1999Genting Kelang Berhad shophouse Branch

13. 19 & 21 RHB Bank 2 units of 589 Bank 7 Freehold – 9,480 1999Jalan Tun Perak Berhad 3 storey BranchKuala Lumpur shophouse

list of properties




Kuala Lumpur

14. Lot 1628 to 1633 Sec. 46 RHB Bank Vacant land 929 Car Park – Freehold – ) 1937Lorong Haji Taib 1 & 2 Berhad )

)15. 318C-E Lorong Haji Taib 2 RHB Bank Vacant land 324 TNB 15 Freehold – ) 4,157 1937

Berhad sub-station ))

16. 318A Jalan Raja Laut RHB Bank 1 unit of 3,029 Vacant 15 Freehold – ) 1937Berhad 6 1/2 storey )

building )

17. Lots 1 & 2 RHB Bank 2 units of 221 Bank 15 Leasehold 2074 1,073 1995Jati Shop Houses Berhad 3 storey BranchOff Jln Tun Mustapha shophousesLabuan

18. Unit 15(05) RHB Bank Condominium 156 Residential 9 Leasehold 2090 414 1997Alpha Tower (L) LtdFinancial ParkLabuan

19. Unit 12(06) RHB Bank Condominium 189 Residential 9 Leasehold 2090 501 1997Alpha Tower (L) LtdFinancial ParkLabuan

20. Along Jln Sultan Ismail RHB Daewoo Land Under 19,157 For Retail – Freehold – ) 1995Kuala Lumpur Sdn Bhd Development Complex )Geran 43759 Lot 2523 Bandar )Section 41 Wawasan )Wilayah Persekutuan Project ) 326,378

)21. Along Jln Sultan Ismail RHB Daewoo Vacant Land 397 For – Freehold – ) 1995

Kuala Lumpur Sdn Bhd Commercial )Geran 43756 Lot 2520 Development )Section 41Wilayah Persekutuan

22. Along Jln Sultan Ismail RHB Daewoo Land Under 4,164 For Retail – Freehold – 56,125 1995Kuala Lumpur Sdn Bhd Development & ApartmentsGeran 43758 Lot 2522 Bandar Section 41 WawasanWilayah Persekutuan Project

23. Along Jln Sultan Ismail RHB Daewoo Land Under 5,012 For Office – Freehold – 51,334 1995Kuala Lumpur Sdn Bhd Development BuildingGeran 43757 Lot 2521 Bandar Section 41 Wawasan Wilayah Persekutuan Project

Selangor

24. No. 1 & 3 RHB Capital 2 units of 670 Bank 20 Freehold – 475 1984Jalan Senangin Satu Properties 2 storey BranchTanjung Sepat Sdn Bhd shop lots

list of properties (continued)




Selangor

25. 33 Persiaran Sultan RHB Bank 3 storey building 995 Bank 78 Freehold – 556 1997Ibrahim, Klang Berhad Branch

26. 76, 77 Jalan Besar RHB Bank 2 units of 499 Bank 25 Freehold – 185 1997Sg. Pelek, Sepang Berhad 2 storey building Branch

27. 11,13 & 15 RHB Bank 3 units of 1,505 Bank 24 Freehold – 580 1997Jalan SS24/11 Berhad 3 storey BranchTaman Megah shop lotsPetaling Jaya

28. 47 & 49 RHB Bank 2 units of 982 Bank 9 Freehold – 2,779 1997Jalan USJ 10/1 Berhad 3 storey BranchUEP Subang Jaya shophousesPetaling Jaya

29. 11, Jalan Niaga 16/3A RHB Capital 1 unit of 468 Bank 21 Leasehold 2076 262 1983Shah Alam Properties 2 storey Branch

Sdn Bhd shop lot

30. 25, Jalan Raja Haroun RHB Capital 2 units of 1,041 Bank 19 Leasehold 2067 973 1985Taman Hijau, Kajang Properties 3 storey Branch

Sdn Bhd shop lots

31. 37 & 38 RHB Bank 2 units of 2,169 Bank 14 Leasehold 2088 3,729 1997Jalan Memanda 7 Berhad 4 1/2 storey BranchAmpang building

32. No. 1, 3 & 5 RHB Capital 3 units of 1,702 Bank 22 Leasehold 2067 2,355 1982Jalan 52/18 Properties 3 storey BranchNew Town Centre Sdn Bhd shop lotsPetaling Jaya

33. 13 & 15, Jalan 52/2 RHB Bank 2 units of 699 Infiinity 46 Leasehold 2058 130 1997Seksyen 52 Berhad 2 storey BankingPetaling Jaya shop lots

34. 1, Jalan 14/20 RHB Bank 1 unit of 892 Bank 27 Leasehold 2068 345 1997Petaling Jaya Berhad 3 storey Branch

building

35. No. 54A & 54B RHB Bank 2 units of 266 Bank 14 Freehold – 989 1999Jalan SS1/22 Berhad 2 storey BranchPetaling Jaya shophouses

36. 391 & 392 RHB Bank 2 units of 354 Bank 17 Leasehold 2087 616 1999Jalan 1A/1 Berhad 2 storey BranchBandar Baru shophousesSungai Buloh

37. 157 & 159 RHB Bank 2 units of 518 Bank 27 Freehold – 2,051 1999Jalan SS2/24 Berhad 2 storey BranchSg.Way/Subang shophousesPetaling Jaya





Selangor

38. Lot No. 8 RHB Bank 6 storey office 56,188 Training 4 Leasehold 2090 120,123 1999Jalan Institusi Berhad Block,5 storey CentreBandar Baru Bangi Training Block, 7

storey IT Block &5 storey Car ParkBlock

39. 19, Taman Seri RHB Bank 1 unit of 456 Bank 15 Freehold – 2,161 1999Selayang Berhad 4 storey Branch

shophouse

40. 24-26, Jalan Stesen RHB Bank 3 storey 385 Bank 37 Freehold – 1,269 1999Kelang Berhad commercial Branch

building

41. 33, Persiaran RHB Bank 5 storey 527 Bank 40 Leasehold 2064 2,746 1999Raja Muda Berhad commercial & otherMusa, Port Kelang building tenants

42. Lot Nos. PT30324 RHB Bank Vacant land 23,154 Vacant – Leasehold 2093 10,172 1996PT30325, PT30326, BerhadPT30327HS(D) 3696236963, 36964, 36965Bangi Business ParkKajang.

Negeri Sembilan

43. 158, 159 Jalan Besar RHB Bank 2 units 570 Bank 23 Freehold – 317 1997Rantau Berhad of 2 storey Branch

shophouses

44. PT 9 & 10 RHB Bank 2 units of 300 Bank 44 Leasehold 2078 689 1999Jalan Raja Melewar Berhad 3 storey BranchKuala Pilah shophouses

45. 10 & 11 RHB Bank 2 units of 456 Bank 41 Freehold – 1,444 1999Jalan Dato' Abdul Berhad 3 storey BranchRahman, Seremban shophouses

46. Unit B1.16 RHB Bank Resort apartment 80 Resort 16 Freehold – 111 1999Tanjung Biru Berhad ApartmentCondominiumPort Dickson

47. Unit C4.21 RHB Bank Resort apartment 80 Resort 16 Freehold – 111 1999Tanjung Biru Berhad ApartmentCondominiumPort Dickson

48. Unit B2. 16 RHB Bank Resort apartment 80 Resort 16 Freehold – 116 1999Tanjung Biru Berhad ApartmentCondominiumPort Dickson





Negeri Sembilan

49. E105, B205, B305, B303 RHB Bank 4 units of 324 Resort 17 Freehold – 496 1995PD Perdana Condo Berhad resort ApartmentResorts, Port Dickson apartments

50. 71, Jalan Murray RHB Bank 2 storey 194 Vacant 79 Freehold – 3 1925Seremban Berhad shophouse

(Prewar)

Pahang

51. No. 45 RHB Bank Converted 886 Bank 55 Freehold – 2,991 1994Jalan Telok Sisek Berhad bungalow lot BranchKuantan

52. 23, Jalan Tun Ismail RHB Bank 1 unit of 527 Collection 26 Freehold – 450 1997Kuantan Berhad 3 1/2 storey Centre

building

53. Lot 13 & 14 RHB Capital 2 units of 892 Bank 21 Freehold – 546 1981Jalan Loke Yew Properties 2 storey BranchBentong Sdn Bhd shop lots

54. PT No. 16477 & 16478 RHB Bank 2 units of 862 Bank 9 Leasehold 2092 810 1996HS(D) 6797 & 6798 Berhad 2 storey BranchMukim Gali, Raub shop lots

55. Penn Cottage RHB Bank 1 storey 6,953 Resort 59 Leasehold 2024 527 1999Fraser's Hill Berhad bungalow Bungalow

Terengganu

56. 59 Jalan Sultan Ismail RHB Bank 5 1/2 storey 2,960 Bank 44 Leasehold 2048 2,541 1999Kuala Terengganu Berhad office building Branch

Kelantan

57. No.782-786 RHB Bank 4 storey 393 Bank 42 Freehold – 1,342 1999Jalan Tok Hakim Berhad commercial BranchKota Bharu building

58. 18-A, Jalan Tengku RHB Bank 3 units of 335 Bank 43 Leasehold 2017 507 1999Ahmad, Pasir Mas Berhad 2 storey Branch

shophouses

59. Ground & First Floor RHB Bank Ground & First 1,377 Vacant 10 Freehold – 2,045 1995No.164, Jalan Pintu Berhad Floor of officePong, Kota Bharu complex

Kedah

60. 27 & 28 RHB Bank 2 units of 3-storey 1,130 Bank 9 Freehold – 740 1996Jalan Bakar Arang Berhad shops lots BranchSungai Petani



Age of Year of Net AcquisitionDescription Area building Expiry Book or

Location Owner of Property (sq. m.) Usage (Years) Tenure on Lease Value Revaluation

Kedah

61. Ground & First Floor RHB Bank 2 units of 443 Bank 31 Leasehold 2075 192 1994No. 5 & 6 Block C Berhad 2 storey BranchBangunan Peruda shop lotsKuala Kedah

62. 1519, Jalan Tuanku RHB Capital 3 storey 531 Bank 25 Leasehold 2027 238 1979Ibrahim, Properties shop lot BranchP.O.Box No. 3, Sdn BhdAlor Setar

63. 97J, Seberang Jalan RHB Bank 2 storey 654 Bank 28 Leasehold 2033 740 1999Putera, Alor Setar Berhad shoplot Branch

64. Lot Nos. 104, 105 & 106 RHB Bank 3 units of 1,560 Bank 10 Leasehold 2091 1,211 1997Taman Pekan Baru Berhad 3 1/2 storey BranchSungai Petani shop lots

65. No. 44 & 45 RHB Bank 2 units of 457 Bank 43 Freehold – 651 1999Jalan Raya, Kulim Berhad 2 1/2 storey Branch

shophouses

66. No. 13 & 15 RHB Bank 2 units of 268 Bank 17 Freehold – 720 1999Jalan Pandak Mayah 1 Berhad 2 storey BranchKuah, Langkawi shophouses

67. 11 & 12 RHB Bank 2 units of 271 Bank 16 Freehold – 408 1999Lorong Berkat Satu Berhad 2 storey BranchTaman Berkat shophousesPadang Serai

Pulau Pinang

68. Unit 11, 12 RHB Bank 2 units of 2,363 Bank 10 Freehold – 3,985 19952784 & 2785 Jalan Berhad 3 storey BranchChain Ferry, Tmn shop lotsInderawasihSeberang Prai

69. 6774, 6775 & 6776 RHB Bank 3 units of 1,404 Bank 20 Freehold – 988 1997Jalan Kg. Gajah Berhad 3 storey BranchButterworth building

70. Lot No. A16 & A17 RHB Bank 2 units of 709 Bank 11 Freehold – 841 1997Taman Inderawasih Berhad 2 storey Collection Seberang Prai shop lots Centre

71. Lots 112 & 114 RHB Bank 2 units of 1,419 Bank 13 Leasehold 2086 2,420 1996Jalan Tan Sri Berhad 3 storey BranchTeh Ewe Lim shop lotsJelutong

72. No 93-A Jalan RHB Delta 1 unit of 4 567 Finance 10 Freehold – 1,318 1996Gurdwara Finance storey Branch10300 Penang Berhad shoplot





Pulau Pinang

73. 44 Lebuh Pantai RHB Bank 6 1/2 storey 702 Bank 45 Freehold – 4,738 1999Georgetown Berhad office Branch

74. 15, Jalan Pasar RHB Bank 2 storey 265 Bank 16 Freehold – 1,083 1999Ayer Itam Berhad commercial Branch

building

75. 1244-1246 RHB Bank 2 units of 522 Bank 20 Freehold – 980 1999Jalan Padang Lallang Berhad 2 storey BranchBukit Mertajam shophouses

76. 1319 Jalan Bharu RHB Capital 1 unit of 885 Vacant 18 Freehold – 910 1986Chai Leng Park Properties 2 storeySeberang Prai Sdn Bhd shop lot

77. Lots No. 10 & 11 RHB Bank 2 units of 856 Vacant 10 Freehold – 686 1995Sg Bakap Berhad 3 storeyBusiness Park shop lotsSeberang Prai

Perak

78. 81, Jalan Gopeng RHB Bank 1 unit of 2 storey 223 Bank 68 Freehold – 67 1975Kampar Berhad shop lot Branch



81. 33A & 33B Jln Besar RHB Bank 2 units of 2 storey 743 Bank 38 Freehold – 339 1979Ayer Tawar Berhad shop lots Branch

82. 18, 19 Jalan Besar RHB Bank 2 units of 2 storey 758 Bank 16 Freehold – 393 1997Sungkai Berhad shop lots Branch

83. 433 & 435 RHB Capital 2 units of 908 Bank 21 Leasehold 2073 567 1983Jalan Silibin Properties 2 storey BranchTaman Silibin Sdn Bhd shop lotsJelapang

84. 57, 59 RHB Bank 2 units of 1,104 Bank 25 Leasehold 2077 354 1997Medan Gopeng Satu Berhad 3 storey BranchGunung Rapat shophousesIpoh

85. 11, 12 Lorong Medang RHB Bank 2 units of 654 Bank 19 Leasehold 2081 321 1999Taman Simpang Berhad 2 storey BranchSimpang, Taiping shophouses

86. No.37, Jalan Medan RHB 2 storey 514 Insurance 12 Leasehold 2092 619 1999Ipoh 5, Bandar Baru Insurance shophouse BranchMedan Ipoh,Ipoh Berhad





Perak

87. No. 243, (Lot 8806 ) RHB Bank 2 storey 151 Bank 43 Freehold – ) 1999Jalan Besar Berhad commercial Branch )Bagan Serai building ) 931

)88. No. 243, (Lot 8808 ) RHB Bank 2 storey 303 Bank 46 Freehold – ) 1999

Jalan Besar Berhad commercial BranchBagan Serai building

89. Lots PT 1374 & 1375 RHB Bank 2 units of 388 Bank 16 Leasehold 2085 345 1999Jalan Hutan Melintang Berhad 2 storey BranchTaman Sri Perak shophousesSimpang EmpatHutan Melintang

90. 7, Jalan Daeng Selili RHB Bank 2 storey 128 Bank 44 Freehold – 96 1999Kuala Kangsar Berhad shophouse Branch

91. 139 & 140 RHB Bank 2 units of 446 Bank 43 Freehold – 401 1999Jalan Besar Berhad 2 storey BranchSungai Siput shophouses

92. No. 68 & 70 RHB Bank 2 units of 303 Bank 44 Freehold – 656 1999Jalan Kota Berhad 3 storey BranchTaiping shophouses

93. No. 2, 4, 6 & 8 RHB Bank 4 storey office 630 Bank 7 Freehold – 6,231 1999Jalan Tun Sambathan Berhad Building BranchIpoh

94. 31 & 33 Jln Intan 2 RHB Bank 3 storey 338 Bank 7 Freehold – 745 1999Bandar Baru Berhad shoplot BranchTeluk Intan

95. 44, Jln Tok Peh Kong RHB Bank 2 storey 399 Bank 18 Freehold – 591 1999Parit Buntar Berhad commercial Branch

building

96. 6, Jalan Daeng Selili RHB Bank 2 storey 129 Bank Pre war Freehold – 279 1999Kuala Kangsar Berhad shophouse Branch

97. 25C, Jalan Datuk RHB Bank 3 1/2 storey 327 Bank 21 Freehold – 678 1999Ahmad Yunos Berhad commercial BranchSitiawan building

98. 699-710 Jalan Tasek RHB Bank 2 units of 286 Bank 19 Freehold – 394 1999Ipoh Berhad 2 storey Branch

shophouses

99. No. 62, RHB Bank 4 storey 409 Bank 13 Leasehold 2894 2,296 1999Persiaran Greenhill Berhad shophouse BranchIpoh

100. Geran 8444 RHB Capital Vacant land 669 Vacant 20 Freehold – 1,836 1984Lot 189N, 191N Properties193N, Sekyen 27 Sdn BhdJalan Tun Sambathan Ipoh





Johor

101. 4 & 5 Jalan Raya RHB Capital 2 units of 858 Bank 19 Freehold – 457 1985Taman Seraya Properties 3 storey BranchKulai Sdn Bhd shop lots

102. Ground Floor 35 & 37 RHB Bank 2 units of 1,428 Bank 9 Freehold – 2,086 1997Jalan Permas Jaya Berhad 4 storey Branch10/2 Bandar Baru shophousesPermas Jaya

103. 1 & 2, Jalan Raya RHB Bank 4 storey 1,312 Bank 19 Freehold – 848 1997Taman Tiram Baru Berhad building BranchUlu Tiram

104. 10-A1, A2, A3 & A4 RHB Bank 1 unit of 1,399 Bank 11 Leasehold 2089 1,460 1994Pusat Perdagangan Berhad 4 storey BranchJalan Bandar shop lotPasir Gudang

105. 105 & 106 RHB Bank 2 units of 372 Bank 43 Freehold – 692 1999Jalan Besar Berhad 2 storey BranchYong Peng shophouses

106. 9, Jalan Abdullah RHB Bank 3 1/2 Storey 737 Bank 28 Freehold – 3,412 1999Muar Berhad commercial Branch

building

107. 89, Jalan Rahmat RHB Bank 4 storey 462 Bank 20 Freehold – 1,807 1999Batu Pahat Berhad office building Branch

108. 110 & 111 RHB Bank 4 1/2 storey 382 Bank 13 Freehold – 1,305 1999Jalan Genuang Berhad commercial BranchSegamat building

109. 8 & 9 Jalan Kijang RHB Bank 2 units of 164 Bank 20 Freehold – 865 1999Taman Mohd Yassim Berhad 3 storey BranchSimpang Renggam shophouses

110. 2-6, Jalan Ronggeng 1 RHB Bank 3 storey 544 Bank 18 Leasehold 2082 1,474 1999Taman Skudai Baru Berhad commercial BranchJohor Bahru building

111. No 45 Jalan Kuning Dua RHB Delta 1 unit of 439 Finance 17 Freehold – 1,656 1996Taman Pelangi Finance 3 storey Branch80400 Johor Bahru Berhad intermediate

shoplot

112. Ground & Mezzanine RHB Capital 2 floors of 748 Vacant 14 Freehold – 1,223 1990Floor, Wisma Eng Lam Properties office space9, Jalan Ismail Sdn BhdBatu Pahat





Johor

113. 43, Jalan Bakawali 37 RHB Bank 1 unit of 143 Vacant 15 Freehold – 313 1999Taman Johor Jaya Berhad 2 storeyJohor Bahru shophouse

114. 45 & 47 RHB Bank 2 units of 353 Vacant 17 Freehold – 697 1999Jalan Bakawali 37 Berhad 2 storeyTaman Johor Jaya shophousesJohor Bahru

Melaka

115. 477A-C RHB Bank 3 units of 1,931 Bank 21 Freehold – 1,555 1997Plaza Melaka Berhad 4 1/2 storey BranchJalan Hang Tuah shop lotsMelaka

116. No. 339 RHB 1 unit of 462 Insurance 20 Leasehold 2082 426 1999Taman Melaka Raya Insurance 3 storey BranchMelaka Tengah Berhad shophouse

117. No. 181, Jalan Munshi RHB Bank 4 1/2 storey 164 Bank 45 Freehold – 718 1999Abdullah, Melaka Berhad shophouse Branch

118. No. 5, 5-1, 5-2 RHB Bank 2 adjoining 830 Bank 7 Freehold – 940 1999No. 6, 6-1, 6-2 Berhad units of ground, BranchDelima Raya 1st and 2nd floorBukit Baru

Sarawak

119. 256, Jalan Padungan RHB Bank 4 storey 510 Bank 21 Leasehold 2782 1,958 1999Kuching Berhad shophouse Branch

120. No 85-89 RHB Delta 2 units of 230 Finance 23 Freehold – 1,515 1992Jalan Kampung Finance 4 storey BranchNyabor Berhad shoplots96000 Sibu

121. Lot 362 Block 9 RHB Bank Land 502 Bank 15 Leasehold 2042 82 1982Miri Concession Land Berhad BranchDistrict, Jalan Nakhoda BuildingGampar, Miri Sarawak

Lot 362 Block 9 Utama Assets 4 storey building 502 Bank 15 Leasehold 2042 2,216 1991Miri Concession Land Sdn Bhd BranchDistrict, Jalan NakhodaGampar, Miri Sarawak

122. Lot 6969 Block 59 Utama Assets Land with 122 Bank 12 Leasehold 2053 ) 1994Muara Tuang Land Sdn Bhd 3 storey Branch )District intermediate )Kota Samarahan shophouse ) 601

)Lot 6970 Block 59 Utama Land with 178 Bank )Muara Tuang Land Assets 3 storey Branch )District Sdn Bhd cornerKota Samarahan shophouse





Sabah

123. 81 & 83, Jalan Gaya RHB Bank 2 units of 786 Bank 51 Leasehold 2053 533 1954Kota Kinabalu Berhad 3 storey Branch

shop lots

124. Ground & First Floor RHB Bank Ground , First & 1,319 Bank 13 Leasehold 2095 1,607 1994Lot No. 5, Block 27 Berhad Second Floor of BranchFajar Complex Tawau office complex

125. Lot No. 1 & 2, Block A RHB Bank 2 units of 752 Bank 10 Leasehold 2085 1,058 1995Metro Shopping Berhad 3 storey BranchComplex shop lotsLahad Datu

126. Sub-Lot 1, Ground RHB Capital Ground Floor of 702 Bank 20 Leasehold 2891 1,931 1984Floor, Wisma Khoo Properties Office complex BranchSiak Chiew, Sandakan Sdn Bhd

Singapore

127. 10, Jalan Besar RHB Bank Ground floor of 543 Bank 26 Freehold – 27,043 199901-03 Berhad Office buildings BranchSim Lim Tower

128. No. 537/539 RHB Bank 3 storey 374 Bank 81 Freehold – 8,733 1999Geylang Road Berhad shophouse Branch

129. 14A/B, 16A/B & 18A/B RHB Bank 3 units of 3 storey 442 Bank 46 Freehold – 14,274 1999East Coast Road Berhad shophouses Branch

130. 1/1A / 1B RHB Bank First Floor of 101 Bank 24 Freehold – 10,808 1999Yio Chu Kang Road Berhad Office buildings Branch

131. 64, South Bridge Road RHB 5 1/2 storey 139 Vacant 28 Leasehold 2050 3,126 1999Investment shophouseLtd

132. 727/A/B RHB 3 storey 146 Tenanted Pre war Freehold – 3,603 1999Havelock Road Investment shophouse

Ltd

133. Block 65 RHB Ground Floor 299 Tenanted 10 Leasehold 2077 3,159 1999Telok Blangah Drives Investment and First Floor

Ltd of housing develomentboard (HDB)

134. 90 Cecil Street Benfore Pte 2 commercial 796 Commercial 24 Leasehold 2980 95,305 1997Ltd buildings Building

135. Block 131, #01-1577/9 RHB Bank Grd Floor - Office 140 Bank 24 Leasehold 2075 3,507 2001Jln Bukit Merah Berhad building 2nd Flr BranchSingapore Ancillary



notice of annual general meeting

NOTICE IS HEREBY GIVEN that the Eighteenth Annual General Meeting of the Company will be held at Grand PrinceBallroom, Level 3, Prince Hotel & Residence, Jalan Conlay, 50450 Kuala Lumpur on Thursday, 8 June 2006 at 11.30 a.m.or immediately after the conclusion of the Eleventh Annual General Meeting of RHB Capital Berhad, whichever is later,and at any adjournment thereof, to transact the following business:-

As Ordinary Business:-

1. To receive and adopt the Audited Financial Statements of the Company for the financial year ended 31 December2005 and the Directors' and Auditors' Reports thereon. Ordinary Resolution 1

2. To re-elect the following Directors retiring under the Company's Articles of Association and who, being eligible,offer themselves for re-election:-

(i) Article 87YBhg. Dato’ Paduka Nik Hashim Nik Yusoff Ordinary Resolution 2YBhg. Datin Khamarzan Ahmed Meah Ordinary Resolution 3Encik Vaseehar Hassan Abdul Razack Ordinary Resolution 4

(ii) Article 91YBhg. Datuk Azlan Zainol Ordinary Resolution 5Puan Azian Mohd Noh Ordinary Resolution 6

3. To approve the payment of Directors' fees totalling RM82,000.00 for the financial year ended 31 December 2005.Ordinary Resolution 7

4. To re-appoint Messrs. PricewaterhouseCoopers as Auditors of the Company, to hold office until the conclusion ofthe next Annual General Meeting of the Company, at a remuneration to be determined by the Directors.

Ordinary Resolution 8

As Special Business:-

5. To consider and, if thought fit, to pass the following Ordinary Resolution:-

Authority under Section 132D of the Companies Act, 1965 for the Directors to issue shares

“That pursuant to Section 132D of the Companies Act, 1965, and subject to the approvals of the relevantgovernmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in theCompany, at any time, at such price, upon such terms and conditions and for such purpose or purposes and to suchperson or persons whomsoever as the Directors may, in their absolute discretion, deem fit, provided that theaggregate number of shares issued pursuant to this resolution for the following period of twelve (12) months afterthe date of this resolution does not exceed 10% of the issued share capital of the Company for the time being andthat the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for thelisting of and quotation for the additional shares so issued and that such authority shall continue in force until theconclusion of the next Annual General Meeting of the Company.” Ordinary Resolution 9

6. To transact any other business of which due notice shall have been given.

By Order of the Board

Azman Shah Md YamanCompany Secretary(LS 0006901)

Kuala Lumpur16 May 2006


NOTES:

(1) Appointment of Proxy

A member of the Company entitled to attend and vote at the meeting is entitled to appoint not more than two (2)proxies to attend and vote in his stead. Where a member appoints two (2) proxies, the appointment shall be invalidunless he specifies the proportion of his holdings to be represented by each proxy. Where a member of theCompany is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it mayappoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Companystanding to the credit of the said securities account. A proxy may but need not be a member of the Company anda member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of theCompanies Act, 1965 shall not apply to the Company. The instrument appointing a proxy shall be in writing underthe hand of the appointor or his attorney duly authorised in writing or if such appointor is a corporation; eitherunder its common seal or under the hand of the attorney duly authorised on its behalf.

The instrument of proxy and the power of attorney (if any) under which it is signed or a notarially certified copythereof shall be deposited at the office of Symphony Share Registrars Sdn Bhd, the Share Registrar of the Company,at Level 26, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur not lessthan forty-eight (48) hours before the time appointed for holding the Meeting or any adjournment thereof.

(2) Statement accompanying Notice of Annual General Meeting

Additional information as required under Appendix 8A pursuant to Paragraph 8.28(2) of the Listing Requirementsof Bursa Malaysia Securities Berhad is set out in Attachment A.

(3) Explanatory Note On Special BusinessResolution pursuant to Section 132D of the Companies Act, 1965

In line with the Company's plan for expansion/diversification, the Company is actively looking into prospective areasso as to broaden its operating base and earning potential. As the expansion/diversification may involve the issue ofnew shares, the Directors, under present circumstances would have to call for a general meeting to approve theissue of new shares even though the number involved is less than 10% of the issued share capital.

In order to avoid any delay and costs involved in convening a general meeting to approve such issue of shares, it isthus considered appropriate that the Directors be now empowered to issue shares in the Company up to an amountnot exceeding in total 10% of the issued share capital of the Company for the time being for such purpose. Thisauthority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of theCompany.

notice of annual general meeting (continued)


Statement accompanying notice of annual general meeting – Attachment A

1. DIRECTORS WHO ARE STANDING FOR RE-ELECTION:-

Article 87YBhg. Dato’ Paduka Nik Hashim Nik YusoffYBhg. Datin Khamarzan Ahmed MeahEncik Vaseehar Hassan Abdul Razack

Article 91YBhg. Datuk Azlan ZainolPuan Azian Mohd Noh

The details of the above Directors who are standing for re-election are set out from page 10 to page 15 of thisAnnual Report. Their holdings in the securities of the Company and its related corporations, if any, are set out onpage 185 and page 186 of this Annual Report.

2. DETAILS OF ATTENDANCE OF DIRECTORS AT BOARD MEETINGS:-

Twelve (12) Board Meetings were held during the financial year ended 31 December 2005, the details of which areset out on page 37 of this Annual Report.

3. DATE, TIME AND PLACE OF THE ANNUAL GENERAL MEETING:-

Date Time Place

8 June 2006 11.30 a.m. or immediately Grand Prince Ballroomafter the conclusion of the Level 3Eleventh Annual General Prince Hotel & ResidenceMeeting of the RHB Capital Jalan ConlayBerhad 50450 Kuala Lumpur

This page is intentionally left blank

I/We NRIC/Passport/Company No.(Name in block letters)

of(Full address)

being a member of RASHID HUSSAIN BERHAD hereby appoint(Name in block letters)

NRIC/Passport No. of

(Full 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 theEighteenth Annual General Meeting of the Company to be held at Grand Prince Ballroom, Level 3, Prince Hotel &Residence, Jalan Conlay, 50450 Kuala Lumpur, on Thursday, 8 June 2006 at 11.30 a.m. or immediately after theconclusion of the Eleventh Annual General Meeting of RHB Capital Berhad, whichever is later, and at any adjournmentthereof.

My/Our proxy is to vote as indicated below:

No. Resolutions For Against

1. To receive and adopt the AuditedFinancial Statements and Reports (Ordinary Resolution 1)

2. Re-election of Directors:-(i) Under Article 87

YBhg. Dato’ Paduka Nik Hashim Nik Yusoff (Ordinary Resolution 2)YBhg. Datin Khamarzan Ahmed Meah (Ordinary Resolution 3)Encik Vaseehar Hassan Abdul Razack (Ordinary Resolution 4)

(ii) Under Article 91YBhg. Datuk Azlan Zainol (Ordinary Resolution 5)Puan Azian Mohd Noh (Ordinary Resolution 6)

3. Approval for payment of Directors’ Fees (Ordinary Resolution 7)

4. Re-appointment of Auditors (Ordinary Resolution 8)

5. Authorisation for Directors to issue sharesnot exceeding 10% of the issued share capital (Ordinary Resolution 9)

(Please indicate with an “X” in the space provided as to how you wish your vote to be cast. If no specific direction asto voting is given, the proxy will vote or abstain from voting at his/her full discretion.)

Dated , 2006Signature

Notes:1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint not more than two (2) proxies to attend and vote in

his stead. Where a member appoints two (2) proxies, the appointment shall be invalid unless he specifies the proportion of his holdings to berepresented by each proxy. Where a member of the Company is an authorised nominee as defined under the Securities Industry (CentralDepositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Companystanding to the credit of the said securities account. A proxy may but need not be a member of the Company and a member may appoint anyperson to be his proxy without limitation and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if suchappointor is a corporation; either under its common seal or under the hand of the attorney duly authorised on its behalf.

2. The instrument of proxy and the power of attorney (if any) under which it is signed or a notarially certified copy thereof shall be deposited at theoffice of Symphony Share Registrars Sdn Bhd, the Share Registrar of the Company, at Level 26, Menara Multi-Purpose, Capital Square, No. 8, JalanMunshi Abdullah, 50100 Kuala Lumpur not less than forty-eight (48) hours before the time appointed for holding the Meeting or any adjournmentthereof.

3. Registration counter will open from 10.00 a.m. to 11.30 a.m. on the meeting day to facilitate registration of shareholders/proxies.

RASHID HUSSAIN BERHAD(Company No. 163211-V)(Incorporated in Malaysia under the Companies Act, 1965)

(If shareholder is a corporation, this part should be executed under seal)

Proxy Form No. of Ordinary Shares Held

SYMPHONY SHARE REGISTRARS SDN BHDShare Registrarfor RASHID HUSSAIN BERHADLevel 26, Menara Multi-PurposeCapital Square,No.8, Jalan Munshi Abdullah50100 Kuala Lumpur

STAMP

FOLD HERE

FOLD HERE

rhb.com · rashid hussain berhad (“rhb”) on 19 february 2003 and is currently the non executive...

Documents