annual report 2005 DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) PAGE

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2 Contents 02 Management Philosophy 03 Corporate Information 04 Profile of Directors 08 Corporate Profile 10 Chairman s Statement 11 Penyata Pengerusi 18 Group Structure 20 Group Financial Summary 22 Audit Committee Report 25 Statement on Corporate Governance 29 Statement on Internal Control 30 Financial Statements 87 List of Landed Properties 88 Material Contracts 88 Additional Information 89 List of Regional Offices and Factories 91 Recurrent Related Party Transactions of a Revenue or Trading Nature 94 Statistics on Shareholdings 96 Statement of Directors Shareholdings 97 Notice of Annual General Meeting Form of Proxy

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4 DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) annual report 2005 Dunham-Bush s Management Philosophy 02 Our employees are the Company s most valued resources. They are talented individuals who excel in their respective discipline. They are a team of highly motivated people who are always sensitive to customers needs and satisfaction. Dunham-Bush rewards them on their achievement based on individual performance and Company s overall results. Dunham-Bush s success is based on the success of the Group s performance and contributions from everyone. All problems are everyone s problems and together we will manage and solve them. We are devoted to the development and improvement of Dunham-Bush to the satisfaction of our customers. With total commitment and a diligent workforce, we strive to propel Dunham-Bush to be the industry leader. Things that we do will be the best in terms of:- Dependability in:- Product reliability Product quality Innovative product design Competitive pricing On time delivery Responsive and reliable after sales service Dunham-Bush will always strive to be the industry leader with commitments to:- Product performance to customers satisfaction Product features Comprehensive and user friendly literature Employees discipline Conducting business in a highly professional manner with pride and integrity It is everyone s responsibility to conduct our business consistent with this philosophy.

5 Corporate Information BOARD OF DIRECTORS Datuk Zainun Aishah Binti Ahmad (Chairman) (Independent/Non-Executive) Tan Sri Dato Tan Chee Sing (Deputy Chairman) (Non-Independent/Non-Executive) Yeo Sek Chiong (Managing Director) Kamal Bin Mohamad Noor (Executive Director) Freddie Pang Hock Cheng (Non-Independent/Non-Executive) Tay Thiam Siew (Non-Independent/Non-Executive) Chua Tee Hock (Non-Independent/Non-Executive) Datuk Maizan Bin Shaari (Independent/Non-Executive) Faizal Bin Dato Abdul Aziz (Independent/Non-Executive) DOMICILE AND COUNTRY OF INCORPORATION Malaysia REGISTERED OFFICE 11th Floor, Menara Berjaya KL Plaza, 179 Jalan Bukit Bintang Kuala Lumpur Tel : Fax : SHARE REGISTRARS Berjaya Registration Services Sdn Bhd Lot C1-C3, Block C 2nd Floor, KL Plaza 179 Jalan Bukit Bintang Kuala Lumpur Tel : Fax : PRINCIPAL BANKERS annual report 2005 DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) AUDIT COMMITTEE Datuk Zainun Aishah Binti Ahmad (Chairman) (Independent/Non-Executive) Datuk Maizan Bin Shaari (Independent/Non-Executive) Faizal Bin Dato Abdul Aziz (Independent/Non-Executive) Tay Thiam Siew (Non-Independent/Non-Executive) Alliance Bank Malaysia Berhad Bumiputra-Commerce Bank Berhad EON Bank Berhad HSBC Bank Malaysia Berhad Malayan Banking Berhad OCBC Bank (Malaysia) Berhad United Overseas Bank (Malaysia) Bhd AUDITORS Ernst & Young Chartered Accountants 03 SECRETARIES Su Swee Hong (MAICSA No ) Gan Swee Peng (MAICSA No ) STOCK EXCHANGE LISTING Second Board of Bursa Malaysia Securities Berhad STOCK SHORT NAME DUNBUSH (9164)

6 Profile of Directors DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) annual report Datuk Zainun Aishah Binti Ahmad Chairman Independent/Non-Executive 59 years of age, Malaysian She was appointed to the Board on 22 November She graduated from University Malaya with a Honours Degree in Economics. She began her career with Malaysian Industrial Development Authority ( MIDA ), the Malaysian government s principal agency for the promotion and coordination of industrial development in the country as an Economist where she worked for 35 years. In her 35 years of service, she has held various key positions in MIDA as well as in some of the country s strategic council, notably her pivotal role as National Project Director in the formulation of Malaysia s first Industrial Master Plan and as a member of the Industrial Coordination Council in the implementation of the Second Industrial Master Plan. She was the Director-General of MIDA for 9 years and Deputy Director-General for 11 years. She was appointed as an Independent Non-Executive Director to the Board of Tenaga Nasional Berhad in 1995 and resigned in June She was also a Director of Kulim Technology Park Corporation from 1995 to September Whilst in MIDA, she was also a member of the Industrial Coordination Act Advisory Council, Defence Industry Council and National Committee on Business Competitiveness Council. Tan Sri Dato Tan Chee Sing Deputy Chairman Non-Independent/Non-Executive 50 years of age, Malaysian He was appointed to the Board on 3 May He is a businessman and entrepreneur with extensive experience in property development, restaurant/ resort management, insurance, trading, gaming and stockbroking through his interests in various public and private companies. Currently, he is the Deputy Chairman of Berjaya Group Berhad and Berjaya Land Berhad, the Chairman/Group Chief Executive Officer of Dijaya Corporation Berhad, the Chief Executive Officer of Tropicana Golf & Country Resort Berhad and the Executive Vice-Chairman of TT Resources Bhd. He also holds directorships in Berjaya Capital Berhad, Cosway Corporation Berhad, MTD Capital Berhad, Bukit Kiara Resort Berhad, Tioman Island Resort Berhad, Berjaya General Insurance Berhad, KDE Recreation Berhad and Berjaya Golf Resort Berhad. He is the brother of Tan Sri Dato Seri Vincent Tan Chee Yioun, a major shareholder of the Company. Yeo Sek Chiong Managing Director 53 years of age Permanent Resident in Malaysia A founder member of the Company, he was appointed to the Board on 12 January He graduated from National University of Singapore with a Bachelor of Engineering (Mechanical). Prior to his appointment to the Board, he was the Marketing and Engineering Manager in OYL-Condair Industries Sdn Bhd and was responsible for the local and export sales of the company. He joined OYL-Condair Industries Sdn Bhd in 1977 as a Production Engineer/Quality Controller and served for a period of 10 years during which he was promoted to the position of Production Manager in 1980, Marketing and Production Manager in 1982 and became the Marketing and Engineering Manager in He also holds directorships in all the subsidiary companies of Dunham- Bush (Malaysia) Bhd. Datuk Zainun Aishah Binti Ahmad is the Chairman of the Audit Committee, Nomination Committee and Remuneration Committee of the Company.

7 annual report 2005 Kamal Bin Mohamad Noor Executive Director 48 years of age, Malaysian He was appointed to the Board on 1 July He graduated from University Teknologi Malaysia with a Diploma in Mechanical Engineering and joined Guthrie Engineering Sdn Bhd from 1979 to 1982 as a Dealer Sales Executive. From 1982 to 1983, he was with Mulpha Engineering Sdn Bhd as the Acting Sales Manager in the Air-Condition Division. From 1983 to 1988, he joined Pathfinder Sdn Bhd as the Managing Director. Overall, he has more than 20 years of working experience in the airconditioning and refrigeration industry with particular emphasis in the sales division. Freddie Pang Hock Cheng Non-Independent/Non-Executive 50 years of age, Malaysian He was appointed to the Board on 10 March He began his career with Messrs Ernst & Young where he worked for seven years until 1982 during which he qualified for entry as a member of the Malaysian Institute of Certified Public Accountants. He is also a member of the Malaysian Institute of Accountants. In the same year, he joined the Corporate Advisory Department of Malaysian International Merchant Bankers Berhad where he was actively involved in a wide variety of corporate exercises in an advisory capacity until his departure in 1990 to join Berjaya Group Berhad. He is currently an Executive Director of Berjaya Group Berhad and Berjaya Sports Toto Berhad, a Director of Nexnews Berhad, MOL.com Berhad, Intan Utilities Berhad, Informatics Holdings Ltd, Singapore, Berjaya Vacation Club Berhad and several other private limited companies. Freddie Pang Hock Cheng is a member of the Nomination Committee and Remuneration Committee of the Company. Tay Thiam Siew Non-Independent/Non-Executive 54 years of age, Malaysian He was appointed to the Board on 10 March He is a member of Malaysian Institute of Certified Public Accountants ( MICPA ) and Malaysian Institute of Accountants. He joined the Berjaya Group of Companies in November 1991 and his previous appointments include Senior General Manager (Corporate Services) of Cosway Corporation Berhad and Executive Director of New Pantai Expressway Sdn Bhd. Prior to joining the Berjaya Group of Companies, he worked as an auditor in Messrs Ernst & Young for six years before leaving the firm in 1978 to join Jardine Matheson Holdings (M) Sdn Bhd as an Accountant. Subsequent to this, he held senior positions in several public listed companies including MWE Holdings Berhad, Guinness Anchor Berhad and Jacks International Limited. Currently, he is also an Executive Director of MOL.com Berhad. Tay Thiam Siew is a member of the Audit Committee of the Company. DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) 05

8 DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) annual report Chua Tee Hock Non-Independent/Non-Executive 59 years of age, Malaysian He was appointed to the Board on 8 May He graduated from the University of Malaya with a Bachelor of Mechanical Engineering (Honours) and a post graduate Diploma in Business Administration in 1971 and 1978 respectively. He is a member of the Institution of Engineers Malaysia and Institute of Mechanical Engineers, United Kingdom. He has more than 20 years of general management experience in a variety of industries ranging from steel, consumer durables to textiles, prior to joining Berjaya Soutex Sdn Bhd in He is currently the Executive Director for the textile companies of Berjaya Group Berhad. He also sits on the Board of a number of subsidiary companies of Berjaya Group Berhad. Datuk Maizan Bin Shaari Independent/Non-Executive 58 years of age, Malaysian He was appointed to the Board on 22 November He joined the Royal Malaysian Police in 1973 and rose to become the Director of the Narcotics Department in Prior to 1998, he had held various positions in Police Force. From 1999 to 2000, he was the Deputy Director of Criminal Investigation Department. He was also the Director of Commercial Crime Division since 2000 before retiring from the civil service in September Currently, he is also a Director of Berjaya Land Berhad. Datuk Maizan Bin Shaari is a member of the Audit Committee and Remuneration Committee of the Company. Faizal Bin Dato Abdul Aziz Independent/Non-Executive 37 years of age, Malaysian He was appointed to the Board on 15 June He began his career as an articled clerk in Hanafiah Raslan Mohammad upon completion of his General Certificate of Education in From 1989 to 1994, he was involved in the engineering sector before joining TA Securities Berhad as an investment analyst. He was attached to TA Securities Sdn Bhd for 3 years before he left to venture his own business. Faizal Bin Dato Abdul Aziz is a member of the Audit Committee and Nomination Committee of the Company. Save as disclosed, none of the Directors have:- 1. any family relationship with any Director and/or major shareholder of the Company; 2. any conflict of interest with the Company; and 3. any convictions for offences within the past 10 years other than traffic offences.

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10 Corporate Profile DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) annual report 2005 Dunham-Bush (Malaysia) Bhd, ( DBM ) is a multinational company with manufacturing facilities in Malaysia, USA, UK, and China.! Dunham-Bush s headquarters and factory at Kidamai Industrial Park, Kajang, Selangor Darul Ehsan, Malaysia DBM s headquarters is located on a 12-acre site in Kajang with a total built-up area of about 27,774 square meters. The factory in Kajang has the most modern facility for the manufacturing and testing of packaged chillers up to 1,100 refrigeration tons in the South East Asia. DBM also has a factory and office complex in Bangi located on a 6-acre plot of industrial land in Bandar Baru Bangi, Selangor, Malaysia and a total built-up area of about 28,378 square meters. The Group s operations in Malaysia is principally involved in manufacture, distribution and sale of a complete range of air-conditioning & refrigeration equipment and associated products. They include water-cooled and air-cooled chillers; heat pumps; water-cooled and air-cooled packaged and split air-conditioners; air-handling units; fancoil units; low temperature condensing and fancoil units for refrigeration purposes; close-controlled air-conditioning equipment; grilles; diffusers; acoustic silencers; variable air-volume boxes; cooling towers; exhaust and ventilation fans. These are marketed and sold under the brand names such as Dunham-Bush, Topaire, DBAire, Anemostat and Polacel. The Group also manufactures air-conditioners under an original equipment manufacturer (OEM) arrangement for Singer (Malaysia) Sdn Bhd, marketed under the Singer brand name as well as for a certain Japanese company under its own brand. 08 With the acquisition of USA-based Dunham-Bush s heating, ventilating, air-conditioning and refrigeration (HVAC and R) business on 6 January 1995, DBM now owns a host of intellectual property rights, trademarks and patents recognised worldwide. Dunham-Bush, with almost 100 years of history, is the pioneer in the usage of rotary screw compressor technology in large air-conditioning and refrigeration equipment. Today, DBM is one of the largest manufacturers of rotary screw compressor-type water chillers in the world. In the USA, an office is maintained in Harrisonburg, Virginia for the sale of parts and the service of existing products in the field. It also sells chillers and related air-conditioning products from Malaysia. The factory in West Hartford, Connecticut manufactures open drive horizontal screw compressors (100-2,200 hp), hermetic vertical screw compressors ( hp), and semi-hermetic direct drive reciprocating compressors (3-60 hp). The manufacturing cum office building of 11,500 square meters and a 2,000 square meters R&D building sit on a 12-acre plot of land. The Group acquired a 51% controlling stake in Rossmont plc. in April 1996 and subsequently assumed its present name of Dunham-Bush (Europe) plc., on 21 February Dunham-Bush (Europe) plc. now owns 100% of Dunham-Bush Limited which manufactures a wide range of heating products including fancoil units, fan convectors, hydraulic unit ventilators, Walvector radiators, warm air door curtains, low surface temperature convectors, cabinet unit heaters, fin vector perimeter heating, and radiant heating panels. Dunham-Bush Limited operates in a 9,990 square meters manufacturing cum office complex in a 4.32-acre site in Havant, UK. In China, DBM owns 55% of Dunham-Bush Yantai Co. Ltd., a joint-venture factory set up with Yantai Moon Co. Ltd. Dunham-Bush Yantai Co. Ltd. officially commenced production of WCFX rotary screw chillers, heat pumps, air-handling units and other associated air-conditioning products in December 1996.

11 The Dunham-Bush Yantai Co. Ltd. s office and factory complex has a covered area of about 18,700 square meters on a land area of 6.3-acre. The Group has also set up sales and service offices in 25 cities in China with the Headquarters based in Shanghai. A 55%-owned manufacturing factory, Hartford Compressors Yantai Co. Ltd., was set up in the Shandong Province on 6 December 2001 to produce rotary screw compressors. The Hartford Compressors Yantai Co. Ltd. s factory building has 12,160 square meters of floor space including the office building. Total area of land and building is 17,380 square meters. Dunham-Bush Yantai Co. Ltd. in June 2005 entered into a Purchase Contract with the Administrative Committee of Yantai Laishan Economic Development Zone of Shandong, China for the purchase of a piece of factory land of approximately 100,000 square meters located at Laishan Economic Development Zone and in the west of Qinglai Road, Shandong, China. A new Hartford Compressors Yantai Co. Ltd. s factory in China! Dunham-Bush s factory at Yantai,! Hartford Compressors Division at! the People s Republic of China Hartford, Connecticut, USA factory cum office building with a built-up area of about 40,000 square meters will be constructed and upon completion, the operations of both the companies will be relocated to the new building. The Company also operates regional sales and service offices in Singapore, Shanghai, Dubai, Holland, Hong Kong, Mexico, South Africa and Thailand. In Dubai, a sales office was set up in March 1996, to handle the Middle Eastern market. Consequently, the Group increased its export sales to Middle- Eastern countries such as Iran, Kuwait, UAE, Saudi Arabia, Oman, Qatar, and Yemen through some very strong distributors. Dunham-Bush s factory at Havant, England! annual report 2005 DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) A Dunham-Bush sales company, Dunham-Bush de Mexico SA de CV, was set up in Mexico on 2 January It now sells applied products from the Malaysian factory. This sales company is registered with Pemex, the National Gas and Oil Group, and Bufete Industrial, one of the largest engineering and contracting firms in Latin America. In addition, Dunham-Bush de Mexico SA de CV is also registered with all government institutions in Mexico. Also, in January 1998, a sales company, Dunham-Bush International (Europe) BV, was set up in Amersfoort, The Netherlands, to cover sales and services in continental Europe through distributors. Distributors in Norway, Sweden, Denmark, The Netherlands, Portugal, Switzerland, Austria, Slovenia, Hungary, Czech Republic, Poland and the Commonwealth of Independent States (including Russia) have contributed to a successful start. The Group has also set up a sales office in South Africa to cover the various countries in the African continents. In August 2000, DBM s wholly-owned subsidiary in Singapore acquired 48.99% equity interest in Dunham-Bush International (Thailand) Ltd., a company incorporated in Thailand, to provide the base to launch Dunham-Bush s products into Thailand, Laos, Vietnam and Myanmar. 09 In November 2001, Dunham-Bush International (Cayman) Limited entered into a joint-venture agreement with IPROKOM Ltd. of the Federation of Russia for the setting up of a new company, DB Eurasia Limited, to manufacture air-handling units and fancoils units. This company, DB Eurasia Limited was incorporated on 20 May As a major global player in air-conditioning and refrigeration industry, the Group s R&D units in West Hartford, Connecticut, Harrisonburg, Virginia, USA, and in Bangi and Kajang, Malaysia, are constantly coming out with new cutting-edge technologies to ensure that DBM stays competitive. Today, the Group has two large manufacturing facilities in Malaysia, one in the USA, one in the UK, and two in China; its own Regional Sales Offices in Singapore, Hong Kong, Shanghai, Dubai, Holland, Mexico, South Africa and Thailand; and a whole network of sales agents and distributors in almost every country in the world. The total employee strength including the USA, UK and China facilities, together with its sales offices worldwide, is approximately 1,524 people.

12 DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) annual report 2005 DATUK ZAINUN AISHAH BINTI AHMAD Chairman s Statement On behalf of the Board of Directors, it is my pleasure to present the Annual Report and Audited Financial Statements of Dunham-Bush (Malaysia) Bhd ( Company ) for the financial year ended 30 April FINANCIAL HIGHLIGHTS During the financial year ended 30 April 2005, the Group recorded improved revenue of RM million for the financial year under review compared to RM million in the previous year. The increase in revenue was mainly attributed to higher sales order received from the Asian operations. The Group, however, recorded a lower profit before tax of RM14.68 million compared to a profit before tax of RM22.18 million in the preceding financial year (which included a one time write back of net provision for pension amounting to RM7.97 million). Excluding the write back, the Group s operating profit improved from RM14.21 million in the year ended 30 April 2004 to RM14.68 million for the financial year under review. The Asian operations continued to be the major contributor to the Group financial results.

13 Penyata Pengerusi annual report 2005 Production and assembly at Vessels shop Bagi pihak Lembaga Pengarah, saya dengan sukacitanya membentangkan Laporan Tahunan dan Penyata Kewangan Beraudit Dunham- Bush (Malaysia) Bhd ( Syarikat ) bagi tahun kewangan yang berakhir pada 30 April SOROTAN KEWANGAN! State-of-the-art ARI rated testing facility for! Sheet metal processing line! packaged chillers up to 1,100 refrigeration tons Pada tahun kewangan yang berakhir 30 April 2005, Kumpulan ini mencatatkan peningkatan hasil kepada RM juta bagi tahun kewangan yang ditinjau berbanding RM juta pada tahun sebelumnya. Peningkatan hasil ini berpunca terutamanya daripada pesanan jualan yang lebih tinggi daripada operasi Rantau Asia. Walau bagaimanapun, Kumpulan ini mencatatkan keuntungan sebelum cukai yang lebih rendah, iaitu RM14.68 juta berbanding keuntungan sebelum cukai RM22.18 juta pada tahun kewangan sebelum ini (yang termasuk kira semula satu kali peruntukan bersih bagi pencen berjumlah RM7.97 juta). Tanpa masuk kira semula ini, keuntungan kendalian Kumpulan ini meningkat daripada RM14.21 juta bagi tahun yang berakhir pada 30 April 2004 kepada RM14.68 juta bagi tahun kewangan yang ditinjau. PERKEMBANGAN KORPORAT 1. Seperti yang diumumkan pada 24 Mac dan 30 April 2004 yang lalu, Syarikat telah mendapat kelulusan, masing-masing daripada Kementerian Perdagangan Antarabangsa dan Industri (MITI) dan Suruhanjaya Sekuriti bagi Cadangan Tawaran Persendiriannya sebanyak 9,036,000 saham biasa baru ( Saham Tawaran ) yang merupakan kira-kira 10% daripada modal sahamnya yang dikeluarkan dan berbayar yang sedia ada. Harga terbitan Saham Tawaran ditetapkan pada RM1.10 sesaham. Hasilnya akan digunakan untuk memenuhi keperluan modal kerja Syarikat ini. Cadangan ini masih belum disempurnakan. DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) 11 Operasi Rantau Asia terus menjadi penyumbang utama kepada kejayaan kewangan Kumpulan ini. DIVIDEN Lembaga Pengarah tidak mengesyorkan apa-apa pembayaran dividen bagi tahun kewangan berakhir 30 April Installing of compressor for Water-Cooled Chiller!

14 DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) annual report 2005! Assembly of ACFX Air-Cooled Rotary Screw Chiller DIVIDEND The Board did not recommend any dividend to be paid for the financial year ended 30 April February The action was taken due to the limited liquidity and movement in DBE s shares on the London Stock Exchange and the cost savings to be achieved from the cancellation of its listing. 3. On 20 June 2005, Dunham-Bush Yantai Co. Ltd. ( DB Yantai ), a company incorporated in The People s Republic of China ( China ), and is a 55%-owned subsidiary of the Company entered into a Purchase Contract with the Administrative Committee of Yantai Laishan Economic Development Zone of Shandong, China ( Seller ) for the purchase of a piece of factory land of approximately 100,000 square meters located at Laishan Economic Development Zone in the west of Qinglai Road, Shandong, China ( Property ). Total cash purchase consideration amounted to RMB4.5 million or an equivalent of RM2.1 million. DB Yantai will be granted a period of 50 years of Right to Use on the Property. DB Yantai, together with its related company, Hartford Compressors Yantai Co. Ltd., which is 55%-owned by the Company, are currently operating in two leased buildings from Yantai Moon Co. Ltd. (which holds 45% of DB Yantai), occupying a land area of 44,648 square meters with a total built-up area of 30,944 square meters at APEC Industrial Park Yantai, Shandong, China. 12 CORPORATE DEVELOPMENTS 1. As announced on 24 March and 30 April 2004, the Company obtained the approval from the Ministry of International Trade and Industry and the Securities Commission respectively for its Proposed Private Placement of 9,036,000 new ordinary shares ( Placement Shares ) representing about 10% of its existing issued and paid-up share capital. The issue price of the Placement Shares has been fixed at RM1.10 per share. The proceeds from this exercise will be used to meet the working capital needs of the Company. The said proposal is still pending completion. At the Property, DB Yantai will be building a factory/ office building occupying a built-up area of 40,000 square meters. The building cost, after taking into 2. On 12 January 2005, the Company announced that Dunham-Bush (Europe) plc ( DBE ), a 51%-owned subsidiary of Dunham-Bush International (Cayman) Limited, which in turn is a 100%-owned subsidiary of the Company, cancelled its listing on the Official List of the United Kingdom Listing Authority effective 8! Signing of Factory Land Purchase Contract by Dunham-Bush s MD with the Administrative Committee of Yantai Laishan Economic Development Zone of Shandong, China

15 2. Pada 12 Januari 2005, Syarikat mengumumkan bahawa Dunham-Bush (Europe) plc ( DBE ), anak syarikat milik 51% Dunham-Bush International (Cayman) Limited, iaitu anak syarikat milik 100% Syarikat ini, membatalkan penyenaraiannya di dalam Senarai Rasmi Lembaga Penyenaraian United Kingdom mulai 8 Februari Tindakan ini diambil kerana pergerakan dan kecairan terhad saham DBE di Bursa Saham London serta penjimatan kos yang dijangka diperoleh selepas penyenaraiannya dibatalkan. 3. Pada 20 Jun 2005, Dunham-Bush Yantai Co. Ltd. ( DB Yantai ), syarikat yang diperbadankan di Republik Rakyat China ( China ), dan anak syarikat milik 55% Syarikat ini menandatangani Kontrak Pembelian dengan Jawatankuasa Pentadbiran Zon Pembangunan Ekonomi Yantai Laishan di Shandung, China ( Penjual ) untuk membeli sebidang tanah kilang seluas kira-kira 100,000 meter persegi yang terletak di Zon Pembangunan Ekonomi Laishan di barat Qinglai Road, Shandung, China ( Harta Tanah ). Imbalan belian tunai berjumlah RMB4.5 juta, iaitu bersamaan dengan RM2.1 juta. DB Yantai akan diberikan Hak Penggunaan selama 50 tahun terhadap Harta Tanah tersebut. DB Yantai, bersama-sama syarikat berkaitannya, Hartford Compressors Yantai Co. Ltd. yang dimiliki 55% Syarikat, kini beroperasi di dua bangunan yang dipajak daripada Moon Group (yang memiliki 45% DB Yantai), dengan di atas tanah seluas 44,648 meter persegi dengan jumlah kawasan binaan seluas 30,944 meter persegi di Taman Perindustrian APEC Yantai, Shandung, China. Di tapak Harta Tanah ini, DB Yantai akan membina sebuah bangunan kilang/pejabat dengan kawasan binaan seluas 40,000 meter persegi. Kos pembinaan, setelah mengambil kira insentif yang diberikan Penjual, ialah kira-kira AS$6 juta (kira-kira RM22.8 juta) dan akan dibiayai dari dana dalaman DB Yantai dan pinjaman bank. Perluasan ini sejajar dengan jualan yang dijangka akan bertambah. TINJAUAN OPERASI Operasi Rantau Asia Dunham-Bush participated in the Exhibition Mosbuild 2005, Russia Operasi Rantau Asia terus menjadi penyumbang utama kepada hasil Kumpulan ini. Operasi Kumpulan ini di China terus maju dengan aktiviti pemasaran yang lebih agresif meskipun pelbagai langkah ekonomi diambil oleh Kerajaan China untuk melaraskan pertumbuhan ekonominya. Ekonomi negara lain Rantau Asia masih menggalakkan dan ini membolehkan operasi Rantau Asia Kumpulan ini mencapai peningkatan hasil jualan berbanding tahun sebelumnya. Meskipun hasil meningkat, keuntungan yang diperoleh daripada rantau ini menyusut sedikit disebabkan terutamanya oleh kenaikan harga bahan mentah dan margin yang lebih kecil akibat saingan sengit di kalangan peserta industri.! annual report 2005 DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) 13 Exchanging of signed ACMV Contract with! Jamuna Builder Pte Ltd of Bangladesh Pada tahun yang ditinjau, operasi Kumpulan ini di Malaysia terus bertindak agresif untuk meningkatkan jualan eksport bagi mengimbangi jualannya yang lebih rendah daripada pasaran domestik. Operasi di Malaysia mencapai peningkatan jualan eksport yang menggalakkan, iaitu sebanyak 46% berbanding kenaikan 13.8% pada tahun kewangan yang lalu.

16 DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) annual report ! Various internationally recognised certificates awarded for Dunham-Bush s chillers and other HVACR products consideration incentives provided by the Seller, is approximately US$6 million (approximately RM22.8 million) and will be financed by internal fund of DB Yantai and via bank borrowings. This expansion is in line with the expected increase in sales. REVIEW OF OPERATIONS Asia Operations The Asian operations continued to be the most significant contributor to the Group s revenue. The Group s China operations continued to push forward with more aggressive marketing activities despite the various economic measures taken by the Government of China to moderate its economic growth. Other parts of the Asia Region remained buoyant, thus enabled the Group s Asian operations to achieve improved sales revenue compared to the previous year. Despite the increase in revenue, the profit generated from this region reduced marginally primarily due to the price increase in raw materials and lower margins brought about by stiff competition within the industry. For the year under review, the Group s Malaysian operations continued to pursue aggressively in its export market to offset the lower sales volume from the domestic market. The Malaysian operations achieved a credible 46% increase in export sales compared to a 13.8% increase in the previous financial year. products from the Malaysian operations were able to further penetrate into these countries and other countries worldwide. On 29 March 2005, Dunham-Bush Industries Sdn Bhd, a wholly-owned subsidiary of the Group was awarded the ACMV contract from Jamuna Builder Pte Ltd of Bangladesh worth US$16.5 million. North America, Europe and Other Regions Operations The revenue of the North America and the Europe Regions remained stable for the financial year under review despite the competitive market conditions. Operating results from these two regions showed improvement as compared to that of the previous year. The other sales and marketing subsidiaries in Africa and Middle-East, achieved improved results. During the year, the Group via its sales office in Europe, successfully completed the design, manufacture and supply of chillers and other related products for a major oil refinery project in Kazakhstan worth about US$2 million. RESEARCH AND DEVELOPMENT The Malaysian research and development engineering group continues to work closely with the engineers from Hartford Compressor Inc and Dunham-Bush Inc in USA to develop new products and upgrade its existing products to meet the stringent international standards of higher efficiency and performance requirements. The lower domestic sales in Malaysia were still affected by the continuing lack of activities in the commercial and industrial building sectors in the country. However, with the various internationally recognized certifications from countries such as USA (ARI standards, ASME, UL), Europe (PED, CE), China (SQUAREL), Poland (UDT), etc awarded for its chillers and other HVACR products, the During the year under review, the team successfully designed, tested, upgraded and introduced the following new products to keep up with the customers demands which require products to meet the ASHRAE 90.1 minimum energy efficiency standards:

17 annual report 2005 New 50Hz WCHDX Water-Cooled Screw Chiller Jualan domestik yang lebih rendah di Malaysia adalah disebabkan oleh masih kekurangan aktiviti yang berterusan dalam sektor bangunan perdagangan dan perindustrian di negara ini. Walau bagaimanapun, dengan pelbagai persijilan yang diiktiraf antarabangsa seperti dari Amerika Syarikat (ARI standards, ASME, UL), Eropah (PED, CE), China (SQUAREL), Poland (UDT), dan sebagainya, yang diiktirafkan bagi produk pendinginan dan produk-produk HVACR yang lain, produk daripada operasi Malaysia terus boleh menembusi pasaran negaranegara ini dan juga negara-negara lain seluruh dunia. Pada 29 Mac 2005, Dunham-Bush Industries Sdn Bhd, anak syarikat milik penuh Kumpulan ini telah diberi kontrak ACMV bernilai AS$16.5 juta oleh Jamuna Builder Pte Ltd di Bangladesh. Operasi di Amerika Utara, Eropah dan Rantau Lain Hasil dari rantau Amerika Utara dan Eropah masih stabil bagi tahun kewangan yang ditinjau meskipun pasaran sangat kompetitif. Hasil operasi dua rantau ini menunjukkan peningkatan berbanding hasil tahun sebelumnya. Anak syarikat penjualan dan pemasaran di Afrika dan Timur Tengah mencapai hasil yang meningkat. Sepanjang tahun ini, Kumpulan ini, melalui pejabat jualannya di Eropah, berjaya mereka, membentuk dan membekal pendingin dan produk-produk lain yang berkaitan bagi satu projek penapisan minyak yang besar bernilai kirakira AS$2 juta di Kazakhstan. PENYELIDIKAN DAN PEMBANGUNAN! New Series of AFHX Air-Cooled! PCXI Water-Cooled! Horizontal Screw Chiller Horizontal Screw Chiller Kumpulan pembangunan kejuruteraan dan penyelidikan Malaysia terus bekerja rapat dengan para jurutera-jurutera dari Hartford Compressor Inc dan Dunham-Bush Inc di Amerika Syarikat bagi menghasilkan produk baru serta menaiktaraf produk sedia ada bagi menepati piawaian antarabangsa yang lebih ketat untuk mencapai kecekapan dan prestasi yang lebih baik. Sepanjang tahun yang ditinjau, pasukan ini berjaya mereka bentuk, menguji, menaiktarafkan dan memperkenalkan produk-produk baru yang berikut untuk memenuhi keperluan pelanggan mencapai piawaian kecekapan tenaga minimum ASHRAE 90.1: 1. Siri baru Pendingin Skru Penyejukan Air Besar WCHXi dengan keupayaan antara 1,100 tan hingga 1,500 tan, menggunakan pemampat skru separa kedap. Pendingin ini direka dengan pengendalian cekap berbilang pemampat skru yang digandingkan dengan kitaran penjimat dan kawalan mikropemampat Visi 2020i baru untuk memberikan kecekapan tenaga beban penuh dan beban separa yang baik. Bahan pendingin R22 atau R134a boleh digunakan. 2. Pendingin Skru Mendatar Penyejukan Air HWSC yang disemak semula dengan julat keupayaan daripada 50 tan hingga 300 tan menggunakan penyejuk bersirip dalam berpaten Dunham-Bush dan pemeluwap dengan tiub permukaan yang ditingkatkan untuk menambah keupayaan penyejukan dan prestasi input kuasa. Reka bentuk yang disemak semula ini menepati keperluan piawaian kecekapan kuasa minimum ASHRAE 90.1 di Amerika Syarikat. 3. Pendingin Skru Penyejukan Air WCHDX 50Hz yang baru dengan julat keupayaan daripada 53 tan hingga 199 tan diperkenalkan sebagai pendingin pengembangan langsung yang alternatif bagi barisan pendingin limpah yang sedia ada. Produk-produk ini menggunakan bahan pendingin baru R407C, R134a atau HCFC22. DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) 15

18 DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) annual report A new series of WCHXi Large Water-Cooled Screw Chillers of between 1,100 tons to 1,500 tons, using semi-hermetic screw compressors. These chillers were designed with efficient operation of multiple screw compressors combined with an economizer cycle and new Vision 2020i microprocessor control to deliver the excellent full load and part load energy efficiency. The refrigerant used can be either R22 or R134a. 2. The revised HWSC Water-Cooled Horizontal Screw Chillers with capacity range from 50 tons to 300 tons using Dunham-Bush s patented inner-finned coolers and condensers with enhanced surface tubes for cooling capacity and power input performance improvement. The revised design will meet the ASHRAE 90.1 minimum energy efficiency standard requirement in the USA. 3. The new 50Hz WCHDX Water-Cooled Screw Chillers with capacity ranging from 53 tons to 199 tons were introduced as an alternative direct expansion chiller to the existing flooded chiller lines. These products use the new refrigerant R407C, R134a or HCFC The new series of AFHX Air-Cooled Horizontal Screw Chillers of between 90 tons to 636 tons capacities were introduced as a low cost alternative to the existing superior ACFX line. The refrigerant used can be either R22, R134a or R The revised ACPSB-P Air-Cooled Single Package Air Conditioners with cooling capacity from 30 MBH to 1,360 MBH using high efficiency scroll compressors. This revision includes the large capacity units which are mainly exported to South Africa. The refrigerant used can be either R22 or R407C. Reverse Cycle Heatpumps versions were also available. For the Malaysian operations, the Group expects an improvement in revenue and profitability with the implementation of the forthcoming 9 th Malaysian Plan ( ) which will help to boost the industrial and commercial building sectors of the country. On the global front, the Asian Region is expected to continue providing business opportunities for the Group s export markets. However, the timing and extent of any further changes to the recent exchange rate policies of China and Malaysia may have impact on the Group s Asian operations and profitability. The Group will continue to focus on research and development, not only to improve efficiency and reliability of its existing product lines but also to introduce new and innovative products for the demanding global market. Among the Group s priorities for the current year are the continuous training and upgrading of the employees skill knowledge and expertise as well as cost reduction efforts. This includes the search for lower cost and better quality components to ensure the products being made are competitively priced, reliable and efficient. The Group, backed by a strong team of research and development personnel, with proven sales track record, a wide global network and a strong brand name Dunham-Bush, will continue to be a competitive player in the global HVACR market. ACKNOWLEDGEMENTS On behalf of the Board, I would like to extend the Group s gratitude and appreciation for the continuous support of our shareholders, customers, business partners, financiers and all other relevant authorities. Our sincere thanks also go out to all the management and staff for their commitment and dedication towards the Group. PROSPECTS AND STRATEGY The global heavy commercial and industrial HVACR market is a very niche market dominated by only a handful of strong global players including the Group. This stems from the Group s ability to manufacture large scale commercial and industrial rotary screw compressor type chillers which require lower maintenance costs. This capability provides the Group the competitive edge in the market. DATUK ZAINUN AISHAH BINTI AHMAD Chairman 6 September 2005

19 4. Siri baru Pendingin Skru Mendatar Penyejukan Air AFHX dengan keupayaan daripada 90 tan hingga 636 tan diperkenalkan sebagai alternatif kos rendah bagi barisan ACFX sedia ada yang bertaraf lebih tinggi. Bahan pendingin R22, R134a atau R507 boleh digunakan. 5. Penyaman Udara Pakej Tunggal Penyejukan Udara ACPSB-P yang disemak semula dengan keupayaan penyejukan daripada 30 MBH hingga 1,360 MBH menggunakan pemampat tatal kecekapan tinggi. Semakan semula ini merangkumi unit-unit keupayaan besar yang kebanyakannya dieksport ke Afrika Selatan. Bahan pendingin R22 atau R407c boleh digunakan. Versi Pam Haba Kitaran Songsang juga boleh didapati. PROSPEK DAN STRATEGI Pasaran global bagi perindustrian dan perdagangan HVACR berat merupakan pasaran yang sangat khusus, yang dikuasai hanya segelintir peserta global yang kuat, termasuklah Kumpulan ini. Ini berpunca daripada kemampuan Kumpulan ini untuk membuat pendingin jenis pemampat skru putar perdagangan dan perindustrian yang besar yang memerlukan kos penyenggaraan yang lebih rendah. Kemampuan ini memberi Kumpulan ini kelebihan saingan di pasaran. Bagi operasi di Malaysia, Kumpulan ini menjangka hasil dan keuntungan akan meningkat dengan pelaksanaan Rancangan Malaysia ke-9 ( ) yang akan membantu merangsang sektor bangunan perindustrian dan perdagangan di negara ini. Dari sudut global, Rantau Asia dijangka akan terus memberi peluang perniagaan kepada pasaran eksport Kumpulan ini. Walau bagaimanapun, masa dan keluasan sebarang perubahan lanjut pada dasar kadar pertukaran mata wang sekarang oleh China dan Malaysia akan mempengaruhi operasi dan keuntungan Kumpulan ini di Rantau Asia. Kumpulan ini akan terus bertumpu kepada penyelidikan dan pembangunan, bukan hanya untuk meningkatkan kecekapan dan kepercayaan produk-produk yang sedia ada, malah juga untuk memperkenalkan produk inovatif yang baru bagi permintaan pasaran dunia. Antara keutamaan Kumpulan ini bagi tahun ini ialah latihan dan penaikan taraf pengetahuan dan kemahiran pekerjanya secara berterusan, di samping usaha pengurangan kos. Ini merangkumi pencarian komponen yang berkos lebih rendah dan bermutu lebih tinggi untuk memastikan produk yang dihasilkan berharga kompetitif, boleh dipercayai dan cekap. Kumpulan ini, dengan sokongan ahli-ahli pasukan penyelidikan dan pembangunan yang teguh, rekod prestasi jualan yang terbukti, rangkaian global yang luas dan jenama Dunham-Bush yang kukuh, akan terus menjadi peserta yang memberikan saingan di pasaran global HVACR. PENGHARGAAN Copper tubes expanding process in coil assembly line! Bagi pihak Lembaga Pengarah, saya ingin menyuarakan setinggi-tinggi penghargaan daripada Kumpulan ini atas sokongan berterusan oleh para pemegang saham, pelanggan, rakan niaga, pembiaya dan semua pihak berkuasa yang berkenaan. Kami juga amat berterima kasih kepada semua anggota pengurusan dan kakitangan atas komitmen dan dedikasi yang telah hulurkan kepada Kumpulan ini. DATUK ZAINUN AISHAH BINTI AHMAD Pengerusi 6 September 2005 annual report 2005 DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) 17

20 DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) annual report 2005 Group Structure As At 30 August % 100% 100% 100% 86% Dunham-Bush Industries Sdn Bhd, Malaysia Dunham-Bush Sales & Services Sdn Bhd, Malaysia Topgroup Polacel Sdn Bhd, Malaysia Dunham-Bush Parts & Services Sdn Bhd, Malaysia Anemostat Topgroup Sdn Bhd, Malaysia 55% 55% Dunham-Bush Yantai Co Ltd, China Hartford Compressors Yantai Co Ltd, China 100% 100% 100% Dunham-Bush Holdings (HK) Limited, Hong Kong Dunham-Bush International Limited, Hong Kong Top-Aire Air-Conditioning (China) Limited, Hong Kong 85% Dunham-Bush Topaire Sdn Bhd, Malaysia 18 85% Topgroup Data-Aire Sdn Bhd, Malaysia 60% Topaire Sales & Services Sdn Bhd, Malaysia 80% Topgroup M&E Service Sdn Bhd, Malaysia 70% Topgroup Parts & Services (Kuantan) Sdn Bhd, Malaysia

21 100% 100% 100% 100% 49% Dunham-Bush International Pte Ltd, Singapore Dunham-Bush Sales & Services (S) Pte Ltd, Singapore Dunham-Bush International (Europe) BV, The Netherlands Dunham-Bush International (Africa) (Pty) Ltd, South Africa Dunham-Bush International (Thailand) Ltd, Thailand 100% 100% *Dunham-Bush Industries de Mexico SA de CV, Mexico **Dunham-Bush Industrias SA de CV, Mexico 100% 100% 100% 100% Dunham-Bush International (Cayman) Limited, Cayman Islands Dunham-Bush Inc, United States of America 100% #Dunham-Bush de Mexico SA de CV, Mexico Hartford Compressors Inc, United States of America Dunham-Bush North America Inc, United States of America annual report 2005 DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) 51% Dunham-Bush (Europe) plc, United Kingdom 100% Dunham-Bush Limited, United Kingdom % Dunham-Bush AP Limited, United Kingdom 100% Dunham-Bush Engineering Ltd, United Kingdom # Dunham-Bush de Mexico SA de CV is 50% owned by Dunham-Bush International (Cayman) Limited and 50% by Dunham-Bush Inc. * Dunham-Bush Industries de Mexico SA de CV is 99.86% owned by Dunham-Bush (Malaysia) Bhd and the remaining 0.14% is held by Dunham-Bush International (Cayman) Limited. ** of which one (1) share of one (1) peso is held by Dunham-Bush de Mexico SA de CV.

22 Group Financial Summary DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) annual report / / / / / / / / / / /96 Description US$ 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Revenue 101, , , , , , , , , , ,895 Profit/(Loss) before taxation 3,864 14,682 22,182 (32,046) (62,520) (12,793) (13,109) (25,878) (6,360) 20,608 29,420 Profit/(Loss) after taxation 3,717 14,125 20,172 (37,536) (65,482) (15,177) (16,485) (29,092) (11,170) 15,105 20,504 Profit/(Loss) attributable to shareholders 2,373 9,019 12,976 (40,887) (69,525) (17,798) (19,450) (31,867) (7,996) 16,798 19,133 Share capital 23,911 90,864 90,364 90,364 88,331 88,331 44,148 43,998 43,998 43,998 39,999 Share premium 30, , , ,518 94,552 94,552 88,723 88,527 88,527 88,527 52,999 Reserves (27,500) (104,498) (111,757) (123,905) (70,012) (156) 20,208 45,578 81,405 36,078 26,281 Shareholders equity 26, ,862 93,125 80, , , , , , , ,279 ICULS ,999 21,999 21,999 21,999 21, Minority interests 7,666 29,129 29,475 29,547 28,226 20,091 15,595 15,692 10,254 12,768 13,145 Reserve on consolidation Capital funds 34, , , , , , , , , , ,424 Deferred liabilities 13,145 49,951 37,069 44,660 25,144 9,177 48,198 19,660 51,629 35,136 13,422 Current liabilities 47, , , , , , , , , , ,754 95, , , , , , , , , , ,600 Property, plant and equipment 25,677 97,571 99,147 94,398 93, , , , , , ,666 Intangible assets ,906 27,777 28,954 35,182 35,097 21,896 15,067 Investments & long term receivables 1,619 6, Current assets 68, , , , , , , , , , ,829 Total assets 95, , , , , , , , , , ,600 Net tangible assets per share 20 (cent/sen) Net assets per share (cent/sen) Earnings/(Loss) per share (cent/sen) (45) (79) (33) (44) (72) (18) Dividend rate (%) Dividend amount (US$ 000/RM 000) ,325 1,892 4,030 6,776 6,000 Exchange Rate: US$1.00 = RM3.80 Notes:- - Figures for FY 1994/96 are for the 18 months period ended 30 April. - Figures for FY 1996/97 onwards are for the year ended 30 April. - Where additional shares are issued, the earnings per share are calculated on a weighted average number of shares. - Dividend for FY 1997/98 and FY 1998/99 included a tax exempt dividend of 7% & 2.5% respectively. - Dividend for FY 1994/96 and FY 1999/2000 is tax exempt.

23 annual report 2005 DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) 21

24 Audit Committee Report DUNHAM-BUSH (MALAYSIA) BHD ( X) (Incorporated in Malaysia) annual report 2005 The Board of Directors of Dunham-Bush (Malaysia) Bhd is pleased to present the report of the Audit Committee for the financial year ended 30 April AUDIT COMMITTEE MEMBERS AND MEETING ATTENDANCES The Audit Committee comprises the following members:- Datuk Zainun Aishah Binti Ahmad (Chairman) (Appointed on 22 November 2004) - Independent/Non-Executive Director Datuk Maizan Bin Shaari (Appointed on 13 December 2004) - Independent/Non-Executive Director Faizal Bin Dato Abdul Aziz (Appointed on 25 June 2004) - Independent/Non-Executive Director Tay Thiam Siew - Non-Independent/Non-Executive Director The Audit Committee held six (6) meetings during the financial year ended 30 April The details of attendance of the Audit Committee members are as follows:- SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE The activities undertaken by the Audit Committee during the financial year ended 30 April 2005 included the following:- 1. Reviewed the quarterly and year-to-date unaudited financial results before submission to the Board for consideration and approval; 2. Reviewed and discussed the external auditors audit report and management s response thereof; 3. Reviewed the external auditors scope of work and audit plan for the year; 4. Reviewed the internal audit reports presented and considered the major findings of internal audit in the Group s operating subsidiaries through the review of the internal audit reports tabled and management responses thereof and ensuring significant findings are adequately addressed by Management; 5. Reported to the Board on its activities and significant findings and results; 6. Reviewed the shareholders circular in relation to the recurrent related party transactions. 22 Name Attendance Datuk Zainun Aishah Binti Ahmad 2/2* Datuk Maizan Bin Shaari 1/1* Faizal Bin Dato Abdul Aziz 5/5* Tay Thiam Siew 5/6 * Reflects the attendance and the number of meetings held during the period the Director held office. The General Manager of Internal Audit of Cosway Corporation Berhad, the senior finance officers of the Company and the Senior General Manager of Group Accounts and Budgets were also invited to attend the audit committee meetings. The external auditors were also invited to attend two of these meetings. SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION The services of the Internal Audit Department of Cosway Corporation Berhad (the Company s intermediate holdings company) was engaged to undertake the internal audit function that would enable the Audit Committee to discharge its function. The activities undertaken by the Internal Audit Department of Cosway Corporation Berhad during the financial year ended 30 April 2005 included the following:- 1. Reviewed the existing systems, controls and procedures of various operating units within the Group; 2. Provided recommendations to assist the various operating units and the Group in accomplishing its internal control requirements by suggesting improvements to the effectiveness of such control processes;