Annual Report 2004opcdn.net/file/M_7490/W_243/uploads/file/ar2004.pdfDIRECTORS SHAMSUDIN @ SAMAD BIN KASSIM • (EXECUTIVE CHAIRMAN) GOH BOON KOON • (MANAGING DIRECTOR) GOH BOON

A n n u a l R e p o r t 2 0 0 4

(Incorporated in Malaysia)

No. 1177, Jalan Dato Keramat,14300 Nibong Tebal,

Seberang Perai Selatan, Penang, Malaysia.

Tel : 604 593 1504 (5 lines)Fax : 604 593 3512

Email : [email protected] : www.boonkoon.com

Corporate Information 2

Corporate Milestones/Calendar 3

Products 4 - 5

Profile of Directors 6 - 8

Chairman’s Statement 9 -11

Corporate Structure 12

Notice of Annual General Meeting 13 - 14

Statement Accompanying Notice of AGM 15

Notice of Dividend Entitlement 15

Statement on Corporate Governance 16 - 22

Statement on Internal Control 23 - 24

Audit Committee Report 25 - 27

Other Corporate Disclosure 28 - 29

Directors' Report 30 - 35

Consolidated Balance Sheet 36

Consolidated Income Statement 37

Consolidated Statement of Changes In Equity 38

Consolidated Cash Flow Statement 39 - 40

Balance Sheet 41

Income Statement 42

Statement of Changes In Equity 43

Cash Flow Statement 44

Notes to the Financial Statements 45 - 68

Directors’ Statement and Statutory Declaration 69

Report of the Auditors to the Members 70

Group Properties 71

Analysis of Shareholdings 72 - 74Proxy Form

DIRECTORS

SHAMSUDIN @ SAMAD BIN KASSIM• (EXECUTIVE CHAIRMAN)

GOH BOON KOON• (MANAGING DIRECTOR)

GOH BOON LEONG• (EXECUTIVE DIRECTOR)

LEE TEOH KEE• (EXECUTIVE DIRECTOR)

GOH BOON SIEW• (EXECUTIVE DIRECTOR)

ABD GHANI BIN ALI KADIR• (EXECUTIVE DIRECTOR)

TAN JIN SUN• (EXECUTIVE DIRECTOR)

HO KOK LOON• (INDEPENDENT NON-EXECUTIVE DIRECTOR)

ANG POH GIN• (INDEPENDENT NON-EXECUTIVE DIRECTOR)

MURELIDARAN A/L M NAVARATNAM• (INDEPENDENT NON-EXECUTIVE DIRECTOR)

SECRETARY

TAN CHOONG KHIANG (MAICSA 7018448)

AUDIT COMMITTEE

HO KOK LOON (CHAIRMAN)• (INDEPENDENT NON-EXECUTIVE DIRECTOR)

MURELIDARAN A/L M NAVARATNAM (MEMBER)• (INDEPENDENT NON-EXECUTIVE DIRECTOR)

GOH BOON KOON (MEMBER)• (MANAGING DIRECTOR)

REGISTERED OFFICE

51-8-B Menara BHL BankJalan Sultan Ahmad Shah10050 PenangTel: 604-228 7828Fax: 604-227 9800E-mail: [email protected]

CORPORATE

INFORMATION

BUSINESS ADDRESS

1177 Jalan Dato Keramat14300 Nibong TebalSeberang Perai Selatan, PenangTe : 604-593 1504Fax: 604-593 3512E-mail : [email protected]

SHARE REGISTRAR

Bina Management (M) Sdn. Bhd.Lot 10, The Highway CentreJalan 51/20546050 Petaling Jaya, SelangorTel : 603-7784 3922Fax: 603-7784 1988E-mail : [email protected]

AUDITORS

JB Lau & Associates (AF0042)

Chartered Accountants

SOLICITORS

Ghazi & Lim

PRINCIPAL BANKERS

Malayan Banking BerhadEON Bank BerhadUnited Overseas Bank (Malaysia) BerhadRHB Bank Berhad

STOCK EXCHANGE LISTING

Second Board Of Bursa Malaysia Securities BerhadStock Code : 7187Stock Name : BKOON

BOON KOON GROUP BERHAD(553434-U)02

MILESTONES/CALENDAR

CORPORATE MILESTONES 2004 CORPORATE CALENDAR

Mr. Goh Boon Koon, Boon Koon Group's ManagingDirector started the business as sole proprietorshipprimarily involved in the repair of commercial vehiclebodies.

Obtained the 1st and the onlyCertificate of Recognition*issued by RTD (RoadTransport Department) for therebuilding activity ofcommercial vehicles .

Grand Opening of NewPlant & Launching ofBoonKoon RebuildVehicles by Y.B. Dato' SeriRafidah Aziz.

Singing of UnderwritingAgreement with

AmMerchant BankBerhad in conjunctionwith the listing on the

2nd Board of BursaSecurities.

2003Winners of 2003 Enterprise 50

Award.

Listed on the 2nd Board of Bursa Securities.

SeptemberSigning of Procurement

Agreement with SilverBirdGroup Berhad for RebuiltCommercial Vehicles with

contract sum ofapproximately RM10

million.

SeptemberAttained ISO 9001:2000certification.

1977

2001

2003

February

April

CORPORATE

* as at the date of this report

BOON KOON GROUP BERHAD(553434-U) 03


Malaysia’srenowned

One Stop rebuilt commercial

&distributorvehicles manufacturer


PROFILE OF

DIRECTORS

He was appointed as the Chairman and ExecutiveDirector of the Company on 7 January 2004. Hegraduated with a Bachelor of Economics Degreefrom University of Malaya in 1970 and a Master inPublic and International Affairs Degree from theUniversity of Pittsburgh in 1979.

His career started as an Assistant Secretary inMinistry of Works in 1970 and later as an Economistin the Highway Planning Unit in 1973. In 1974, hewas appointed Assistant Director of the ServicesDivision in the Public Services Department. In 1979,he left the Public Services Department and took upthe position of Senior Assistant Secretary in Ministryof International Trade and Industry ("MITI"). In 1989,he was then posted to be the Trade Commissionerof MITI in Vienna, Austria. In 1996, he was appointedDirector of MITI (Industry Division) in Kuala Lumpur.In 2000, he was appointed Chief Executive Officerof Small and Medium Industries DevelopmentCorporation ("SMIDEC").

He also sits on the boards of several listedcompanies including Century Logistics HoldingBerhad, Supermax Corporation Berhad, KinsteelBerhad, Ingress Corporation Berhad, InfortechAlliance Berhad, Impressive Edge Berhad and MaxBiz Corporation Bhd.


He is the founder of the Boon Koon Group andwas appointed as the Managing Director ofthe Company on 7 January 2004. He is alsoa substantial shareholder of the Company.Having being involved in the commercialvehicles industry for more than 25 years, hehas acquired extensive experience andexposure in the business. He is mainlyresponsible for the long term strategic planningand development of the Company's goals andobjectives and his entrepreneurial quality andspirit has played a vital role in the growth ofthe Boon Koon Group from a small existenceto a leader and pioneer in the used commercialvehicles industry.

He was appointed as the Executive Directorof the Company on 7 January 2004. He is alsoa substantial shareholder of the Company. Hepossess the wide experience in the sales andmarketing of commercial vehicles and mainlyresponsible for domestic sales and marketingfunctions, including the sales dealershipnetwork and development of new businessventures of the Group.

GOH BOON KOON52 •

Managing Director •

SHAMSUDIN @ SAMADBIN KASSIM

• 59• Executive Chairman

GOH BOON LEONG• 45• Executive Director

PROFILE OF

DIRECTORS • • •

He is the Executive Director of the Company.He was appointed to the Board on 7 January2004. He obtained a Diploma in MaterialEngineering from the Tunku Abdul RahmanCollege, Kuala Lumpur in 1984 andsubsequently obtained a Diploma inMechanical Engineering the following yearin 1985 at the same establishment.

He is currently in charge of branchdevelopment for Boon Koon Vehicles IndustriesSdn Bhd and is responsible for the marketingand business development of the largecorporate and fleet customers. He alsoinvolved in generating the Group's publicityand in the organization of promotionaladvertising campaigns.

She is an Executive Director of the Companyand was appointed to the Board on 7 January2004. She is also a substantial shareholder ofthe Company. Over the years in the businesses,she has gained comprehensive knowledgeand vast experience in the field of financialmanagement and presently oversees thefinance, treasury, banking and accountingfunctions of the Group.

He is the Executive Director of the Company. He wasappointed to the Board on 7 January 2004. He obtainedhis Chartered Institute of Transport (CIT), UK in 1979 anda Diploma in Management from Malaysian Institute ofManagement in 1985.

His career started in 1975 as Supervisor at Penang PortCommission and left for Konsortium Perkapalan Berhad,a shipping and logistics services provider as CorporateManager. He undertakes the responsibilities of liasingwith the government departments in application ofgovernmental approvals and certifications of the Group'sproducts.

He is the Executive Director of the Company and wasappointed to the Board on 25 August 2004. He is anAssociate Member of the Chartered Institute ofManagement Accountants (CIMA), awarded in 1996 anda Chartered Accountant with the Malaysian Institute ofAccountants at the same year.

He is the Group General Manager of Boon Koon VehiclesIndustries Sdn Bhd and overall responsible for themanagement and administration functions of the Groupand oversees the lending activities of the subsidiary. Heoversees the corporate planning exercise, investorsrelation, costing, accounts, finance and treasury, businessdevelopment and new ventures and assisting the topmanagement in the formulation and implementation oflong term and short term strategies.

LEE TEOH KEE46 •

Executive Director •

GOH BOON SIEW• 44• Executive Director

ABD GHANI BIN ALI KADIR

TAN JIN SUN• 36• Executive Director

51 •Executive Director •


He is the Independent Non-Executive Directorof the Company. He was appointed to theBoard on 7 January 2004. He graduated witha Bachelor of Accounting (Hons) from theUniversity of Malaya in 1991. He obtained hisMaster of Business Administration from theUniversity of Portsmouth, United Kingdom in1999. He is a Chartered Accountant registeredwith Malaysian Institute of Accountants and aFellow of the Malaysian Institute of Taxation.Upon graduation, he joined PriceWaterhouse,Penang in its Audit and Business AdvisoryServices Group before joining Southern SteelBerhad as Section Head of Internal Audit inyear 1995. He became the Section Head ofBusiness Development in 1996 and later theFinance and Administration Manager in 1997.In 1999, he joined Southern Rubber WorksSdn Bhd as Senior Manager, CorporateFinance & Business Development and waspromoted as Chief Operating Officer in 2003.Presently, he is an Independent Non-ExecutiveDirector of SDKM Fibres, Wires & CablesBerhad.

PROFILE OF

DIRECTORS • • •

Notes :

1. Save as disclosed below, none of the Directors of the Company have any family relationshi p with any Director and/or majorshareholder of the Company :-

- Goh Boon Koon, Goh Boon Leong and Goh Boon Siew are brothers;- Lee Teoh Kee is the spouse of Goh Boon Koon

2. All the Directors of the Company have no conflict of interest with the Company and have not been convicted of any offenceswithin the past ten years other than traffic offences, if any.

HO KOK LOON• 39• Independent Non- Executive Director

He is the Independent Non-Executive Director of theCompany and was appointed to the Board on 24November 2004. He graduated from University of Londonin 1988 with LLB Honors and is a Barrister at law and isa member of the Inner Temple. He was called to the Barof England and Wales in 1989 and to the Malayan Barin 1990.

He started his career as legal assistant with MessrsPregraves and Matthews in 1990 and later joined MessrsGhazi & Lim in 1992 as a legal assistant and wassubsequently made a partner in 1995. In 2003 he retiredfrom the partnership of Messrs Ghazi & Lim to set up hisown legal practice under the name and style of MessrsMureli Navaratnam.

He is the Independent Non-Executive Director of theCompany. He was appointed to the Board on 7 January2004. He has vast experience in the garment industryand is presently attached to Plas Industries Sdn Bhd asthe Branch Manager of the Nibong Tebal Operations.

39 •Independent

Non- Executive Director •

• 51• Independent Non- Executive Director

MURELIDARAN A/L MNAVARATNAM

ANG POH GIN



CHAIRMAN'S

STATEMENT

On behalf of the Board of Directors of Boon KoonGroup Berhad, it is my great pleasure to present toyou the Annual Report and Audited FinancialStatements of the Company for the financial yearended 31 December 2004. This is the first AnnualReport after the official listing and quotation of theCompany on the Second Board of Bursa MalaysiaSecurities Berhad ("Bursa Securities") on 8 April2004.

FINANCIAL PERFORMANCE

The Group recorded a turnover of RM93.31 millionand pre-tax profit of RM19.42 million respectivelyfor the financial year ended 31 December 2004.The profit after tax amounted to RM15.80 millionwas higher than the Group's forecast included inour Prospectus dated 19 March 2004 of RM8.10million. The increased in the Group's net profitcompared with its forecast figures were mainly dueto the overall improved performance of the Groupbusinesses with higher revenue and profit marginrecorded which resulted in the correspondingincrease in the net profit and the written off of thereserve on consolidation amounting to RM5.58million (exceptional item) to the income statement.

OPERATION REVIEW

The Group's performance for the financial yearended 31 December 2004 was satisfactory with acommendable increase in the revenue and net profit(excluding exceptional item) recorded of 14.35%and 24.6% respectively, as compared to its forecastfigures in the Prospectus dated 19 March 2004.

The increase market acceptance of the Group'score product, ie rebuilt commercial vehicles whichfeatures distinct advantages over its competitors interms of competitive pricing, current year registrationand zero odometer resetting, coupled with ease ofend financing of the products has resulted in thegeneral increase in the revenue thus resulting in thecorresponding increase in the net profit.

Moreover, the increase in the profit margin attributedby the economies of scales achieved which resultedfrom the increase in production capacity, overallimproved operational efficiency and productivityand the variation in the sales mix of the productswith higher margin also contributed to the improvedperformance of the Group for the year under review.

On 2 September 2004, Boon Koon VehiclesIndustries Sdn Bhd ("BKVI"), the subsidiary of theCompany entered into a Procurement Agreementwith a subsidiary of Silverbird Group Berhad, namelyStanson Marketing Sdn Bhd for the supply of 160units of rebuilt light rigid commercial vehiclescompleted with bodywork with a total contract sumof approximately RM10 million. The deal was anhistoric occasion whereby it marks the biggest saleof rebuilt commercial vehicles to a single customerto-date.

During the year, the Group through its wholly-ownedsubsidiary, BKVI had also obtained the MS ISO9001:2000 certification for its activities of "Rebuildingof Commercial Vehicles and Manufacturing ofBodyworks" and this demonstrates the Group'scontinuing commitment and effort of enhancing theproduct quality supplied to achieve total customersatisfaction.

DIVIDENDS

The Board is grateful to all the loyalshareholders for their continuedsupport and has recommended afirst and final tax exempt dividendof 3.75 sen per share amountingto RM 3.0 million for the financialyear ended 31 December 2004.The proposed dividend is subjectto shareholders' approval at theforthcoming Annual GeneralMeeting.


CORPORATE DEVELOPMENT

Year 2004 marked a significant milestone in thehistory of the Company with the successful listingof its 80,000,000 ordinary shares of RM0.50 eachon the Second Board of Bursa Securities.

During the financial year, the Company entered intoa Share Sale Agreement to acquire the remaining35% equity stake in Boon Koon Marketing (EastMalaysia) Sdn Bhd ("BKM"). The acquisition wascompleted on 30 June 2004, which has resulted inBKM become a wholly-owned subsidiary of theCompany.

On 1 March 2005, the Company announced aproposed private placement of 2,000,000 newordinary shares of RM0.50 each to third partyinvestors to be identified, a proposed bonus issueof 41,000,000 new ordinary shares of RM0.50 eachon the basis of one (1) new ordinary share for everytwo (2) existing ordinary shares held and a proposedtransfer of the listing and quotation for the entireenlarged issue and paid up share capital from theSecond Board to the Main Board of Bursa Securities.The proposals are subject to the approval of there levant author i t ies and shareholders .

BOARD CHANGES

During the year, Mr. Goh Ho Seng and Mr. Loo CheeHin resigned from the Board and I would like to takethis opportunity to record our sincere appreciationfor their contribution to the Company.

Besides that, the Board had appointed Mr. Tan JinSun, an Accountant and a member of the CharteredInstitute of Management Accountants (CIMA) as anExecutive Director of the Company.

In addition, the Board had also appointed Mr.Murelidaran A/L M Navaratnam as an IndependentNon-Executive Director of the Company.

On behalf of the Board, I welcome Mr. Tan and Mr.Mureli and believe they will be able to contribute tothe continued growth of the Company.

PROSPECTS

Looking ahead, the Group is operating in an industry,which by nature is moderately competitive. TheGroup's present market share in commercial vehicleswhich include rebuilt, reconditioned and newcommercial vehicles is approximately 2% only thusprovides ample room for the Group to grow itsbusiness and profitability. The continual growth trendof the demand for commercial vehicles in generalalso provides the platform for the Group tocontinuously sustain its business growth byincreasing its production capacity and improvingoperational efficiency. The Group will continue tobuild upon its competitive strengths andstrong fundamentals in order to further improverevenue growth in the domestic market.

The Group's second manufacturing plant which islocated at Tawau, Sabah is scheduled to startoperation in the year 2005. This expansion willenable the Group to increase its production capacity,achieve economies of scale and further strengthenits market presence in the East Malaysia whichpresently contributing 35% of total revenue of theGroup.

On 6 January 2005, the Company incorporated awholly-owned subsidiary known as Boon KoonVehicles Pte Ltd ("BKVPL"), in the Republic ofSingapore in view to diversify the Group's businessinto trading of commercial vehicles (new or used)and accessories, parts and components outsidedomestic market.

The Company had also, on 7 March 2005, acquiredthe entire equity interest of BK Continental VehiclesSdn Bhd ("BKCV") and then subsequently enteredinto a Shareholders' Agreement with Truck Zone SdnBhd to jointly undertake the business of sellingreconditioned, rebuilt and used continentalcommercial vehicles on the equity ratio of 51% : 49%.

CHAIRMAN'S

STATEMENT • • •


Both investment in BKVPL and BKCV is expectedto contribute to the future earnings of the Group.These investments are in line with the Group'sstrategy to diversify its product range and marketpenetration as well as to undertake new businessactivities.

We are confident that with various steps andmeasures taken will benefit all shareholders of theCompany and ultimately enhance shareholders'value.

APPRECIATION

On behalf of my Board colleagues, I would like toconvey our gratitude and appreciation to themanagement team and staff for their hard work,persistent dedication and undivided loyalty to thegrowth and financial well being of the Group duringthe year. Our sincere thanks also go to our valuableshareholders, customers, suppliers, businessassociates, financial institutions and the regulatoryauthorities for their trust and confidence in the Groupthroughout the year and I look forward to yourcontinued support in the future.

Lastly, allow me to express sincere gratitude to myfellow Board members for the support, cooperationand sound advice extended during the year.

Thank You.

Shamsudin @ Samad Bin KassimChairman

CHAIRMAN'S



CORPORATE

STRUCTURE

BOON KOON GROUP BERHAD(BKG)

100%

First Peninsula CreditSdn. Bhd.(FPC)

100%

Boon Koon Marketing(East Malaysia) Sdn. Bhd.(BKM)100%

Boon Koon VehiclesIndustries Sdn. Bhd.(BKVI)

BK Continental VehiclesSdn. Bhd.(BKCV)51%

Boon Koon VehiclesPte. Ltd.(BKVPL)100%

GENERAL MEETING


NOTICE OF ANNUAL

NOTICE IS HEREBY GIVEN that the Third Annual General Meeting of the Company will be held at MerbahRoom, Hotel Equatorial, Penang, 1 Jalan Bukit Jambul, Bayan Lepas, 11900 on Thursday, 19 May 2005at 10.30 a.m. for the following purposes :-

AGENDA

1. To receive and consider the Audited Financial Statements for the financial yearended 31 December 2004 together with the Reports of the Directors and Auditorsthereon.

2. To approve the payment of a first and final tax exempt dividend of 3.75 sen pershare for the financial year ended 31 December 2004.

3. To approve the payment of Directors' fees of RM31,000.00 for the financial yearended 31 December 2004.

4. To re-elect the following Directors who retire in accordance with Article 95 of theCompany's Articles of Association:-

(i) Encik Shamsudin @ Samad Bin Kassim

(ii) Mr. Goh Boon Koon

(iii) Mr. Goh Boon Leong

5. To re-elect the following Directors who retire in accordance with Article 102 of theCompany's Articles of Association:-

(i) Mr. Tan Jin Sun

(ii) Mr. Murelidaran A/L M Navaratnam

6. To re-appoint Messrs. JB Lau & Associates as auditors of the Company for theensuing year and to authorise the Directors to fix their remuneration.

As special business :To consider and if thought fit, to pass with or without modifications the followingordinary resolution :-

7. AUTHORITY TO ISSUE SHARES"That pursuant to Section 132D of the Companies Act, 1965, and subject to theapprovals of the relevant Governmental and/or regulatory authorities, the Directorsbe and are hereby empowered to issue shares in the Company, at such time andupon such terms and conditions and for such purposes as the Directors may, intheir absolute discretion deem fit, provided that the aggregate number of sharesissued pursuant to this resolution in any one financial year does not exceed 10%of the issued share capital of the Company for the time being and that the Directorsbe and are also empowered to obtain the approval from Bursa Malaysia SecuritiesBerhad for the listing and quotation of the additional shares so issued and that suchauthority shall continue to be in force until the conclusion of the next Annual GeneralMeeting of the Company."

Resolution 1

Resolution 2

Resolution 3

Resolution 4

Resolution 5

Resolution 6

Resolution 7

Resolution 8

Resolution 9

Resolution 10

GENERAL MEETING • • •


NOTICE OF ANNUAL

8. To transact any other business of which due notices shall have been given.

By Order of the Board,

Tan Choong KhiangCompany Secretary(MAICSA 7018448)

Penang

Date : 26 April 2005

Notes :

1. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) ofthe Companies Act, 1965 shall not apply to the Company.

2. To be valid this form duly completed must be deposited at the Registered Office of the Company, 51-8-B Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang not less than forty-eight (48) hoursbefore the time for holding the meeting.

3. A member shall be entitled to appoint one (1) or more proxies (subject to a maximum of two (2) proxiesat each meeting) to attend and vote at the same meeting.

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

5. If the appointor is a corporation, this form must be executed under its Common Seal or under the handof its attorney.

Explanatory Note on item 7 of the AgendaThe ordinary resolution proposed under item 7, if passed, will give the Directors of the Company authorityto issue shares in the Company up to an amount not exceeding 10% of the total issued capital of theCompany for the time being for such purposes as the Directors consider would be in the best interest ofthe Company. This would avoid any delay and costs in convening a general meeting to specifically approvesuch an issue of shares. This authority, unless revoked or varied by the shareholders of the Company ingeneral meeting will expire at the conclusion of the next Annual General Meeting.


STATEMENT ACCOMPANYING

NOTICE OF AGM

NOTICE OF DIVIDEND

ENTITLEMENT

NOTICE IS HEREBY GIVEN that a first and final tax exempt dividend of 3.75 sen per share in respect ofthe financial year ended 31 December 2004, if approved, will be paid on 10 June 2005 to depositorsregistered in the Record of Depositors at the close of business on 23 May 2005.

A depositor shall qualify for entitlement to the dividend only in respect of :

a. Shares transferred into the depositor's securities account before 4.00 p.m. on 23 May 2005 in respectof ordinary transfers.

b. Shares bought on the Exchange on a cum entitlement basis according to the Rules of the Exchange.

By Order of the Board,

TAN CHOONG KHIANGCompany Secretary(MAICSA 7018448)

Penang

26 April 2005

1. The details of the place, date and hour of the Third Annual General Meeting are as follows:-

Place : Merbah Room, Hotel Equatorial, Penang. 1, Jalan Bukit Jambul, Bayan Lepas, 11900 Penang

Date : 19 May 2005Hour : 10.30 a.m.

2. The Directors who are standing for re-election at the Third Annual General Meeting are as follows:-

2.1 Encik Shamsudin @ Samad Bin Kassim2.2 Mr. Goh Boon Koon2.3 Mr. Goh Boon Leong2.4 Mr. Tan Jin Sun2.5 Mr. Murelidaran A/L M Navaratnam

Biographical details of each of the Directors standing for re-election can be found in the Directors'profile on pages 6 to 8 of this Annual Report.

3. The details of attendance of Directors of the Company at Board meetings held during the financialyear ended 31 December 2004 are disclosed in the Corporate Governance Report set out in page 17of this Annual Report.

pursuant to Paragraph 8.28(2) of the Listing Requirements of Bursa Malaysia Securities Berhad


STATEMENT ON CORPORATE

GOVERNANCE

INTRODUCTION

The Board of Directors of Boon Koon Group Berhad is committed to pursuing and ensuring that the higheststandards of corporate governance are practiced throughout the Company and Group. The Board viewsthis as a crucial and fundamental part of its responsibilities to protect and enhance shareholders' value.The Board embraces the principles laid out in the Malaysian Code on Corporate Governance ("the Code")and believes that good corporate governance is essential to attain the Group's business and socialobjective.

The Board is pleased to disclose the Company's application of the principles and extent to which theCompany has complied with the Best Practices of the Code during the financial year ended 31 December2004. Any departures from best practices are explained for in the respective sections stated therein.

PRINCIPLES STATEMENT AND COMPLIANCE WITH BEST PRACTICES

A. Board of Directors

Board Responsibility

The Board has overall responsibility for the strategic direction and control of the Company. It focusesmainly on strategies, financial performance, critical and material business issues and specific areassuch as principal risks and their management internal control systems and succession plan for seniormanagement.

The Board has a formal schedule of matters reserved to itself for decision, which includes the overallGroup strategy and direction, acquisition and disposal policy, approval of major capital expenditureprojects, consideration of significant financial matter and it reviews the financial and operatingperformance of the Group.

Board Meetings

Board meetings are scheduled in advance at the beginning of each calendar year to enable Directorsto fit the year's meetings into their own schedule. The Board meets at least four (4) times a year atquarterly intervals with additional meetings convened when urgent and important decisions need tobe taken between the scheduled meetings. During the year ended 31 December 2004, there werethree (3) scheduled meetings held; where it deliberated upon and considered a variety of mattersincluding the Group's financial results, investment and strategic decisions and the business plan ofthe Group.


Name

Shamsudin @ Samad Bin KassimGoh Boon KoonGoh Boon LeongLee Teoh KeeGoh Boon SiewAbd Ghani Bin Ali KadirTan Jin Sun (Appointed on 25-8-2004)Ho Kok LoonAng Poh GinMurelidaran A/L M Navaratnam (Appointed on 24-11-2004)Goh Ho Seng (Resigned on 25-8-2004)Loo Chee Hin (Resigned on 24-11-2004)

Attendance

3/33/33/33/33/33/32/23/33/31/12/23/3

A. Board of Directors • • •

Board Meetings • • •

Details of attendance of the Directors at Board meetings held during the financial year are as follows:-


Board Composition and Balance

The Board is adequately represented by a wide range of expertise from diverse backgrounds withcore competencies in corporate, financial, business, accounting, industry knowledge and legal. TheBoard consists of 10 members, comprising 1 Managing Director, 6 Executive Directors and 3 IndependentNon-Executive Directors. The composition of the Board reflects the varied skills and breadth ofexperience necessary for the effective management of the Group's business. The Board compositioncomplies with the requirements of the Code and Paragraph 15.02 of the Listing Requirements of BursaMalaysia Securities Berhad.

The roles of the Chairman and the Managing Director are segregated and each has clearly accepteddivision of responsibilities. The Chairman is responsible for representing the Board to shareholdersand stakeholders, ensuring integrity and effectiveness of the governance process of the Board. TheManaging Director is responsible for the day to day management of the Group's operations and effectiveimplementation of strategic business plan, annual operating plan, budget, policies and decisions asapproved by the Board. The presence of Independent Non-Executive Directors is necessary for thecorporate accountability as they provide unbiased and independent views. Even thought all Directorshave equal responsibility for the Group's operations, the role of Independent Non-Executive Directorsis particularly relevant in ensuring the strategies proposed by the Executive management are discussedand examined while taking into account the long-term implications of the business, the Group,shareholders and other stakeholders interests.

Supply of Information to the Board

Prior to the Board meeting, all Directors are furnished with agenda and Board papers on mattersrequiring consideration and discussion in advance of each meeting. The information is given sufficienttime to enable the Directors to have detailed knowledge on the issues to be discussed in the meeting.The management is required to provide further information in meetings to facilitate the Directors inmaking decisions.

GOVERNANCE • • •



Supply of Information to the Board • • •

The Board is provided with the services of the Company Secretary who keeps the Board informed ofall administrative and statutory obligations. The Company Secretary is responsible to ensure that properBoard procedures are being followed and relevant rules and regulations are complied with. Directorshave access to all information and records of the Company and also have direct access to the adviceand services of the Company Secretary and the senior management.

Whenever necessary, the Board is entitled to seek independent professional advice and consultationto effectively discharge its duties and responsibilities.

Board Committees

The Board of Directors delegates certain responsibilities to the Board Committees namely NominationCommittee, Remuneration Committee and Audit Committee in order to enhance business and corporateefficiency and effectiveness.

Nomination Committee

The Nomination Committee was formed on 2 August 2004 and has met twice since its formation. TheCommittee consists of the following members:-

Chairman : Mr. Ho Kok Loon (Independent Non-Executive Director)Members : Mr. Ang Poh Gin (Independent Non-Executive Director)

: Mr. Murelidaran A/L M Navaratnam* (Independent Non-Executive Director)

* Mr. Murelidaran was appointed as member with effect from 24 November 2004 in place of Mr. Loo Chee Hin who resigned as member with effect from 24 November 2004.

The Committee consists entirely of Independent Non-Executive Directors. A formal set of terms ofreference had been adopted by the Committee to carry out its functions. The Nomination Committeeis empowered to assist the Board on the following functions:-

1. Identify candidates with the relevant expertise and experience and recommends to the Boardcandidates for directorships;

2. Nominate directors for re-election purpose;3. Recommend candidates to fill the seats for Board's committees; and4. Review the Board's structure, size and composition in order to establish an effective Board.

The Board is to make the final decisions on appointments recommended by the Nomination Committee.The Committee shall meet whenever there is a need for the Committee to perform its functions, andat least once every year in carrying out an annual review of the Board.





Directors' Training

Pursuant to Practice Note No. 5/2001 of Bursa Malaysia Securities Berhad ("Bursa Securities") onTraining for Directors, the Mandatory Accreditation Programme (MAP), conducted by KLSE TrainingSdn. Bhd. (formerly known as the Research Institute of Investment Analysis Malaysia), was attendedby all the Directors except Mr. Mureli who had only appointed to the Board on 24 November 2004.He has applied for an extension of time to attend the MAP in April 2005 and the extension was grantedby the Bursa Securities. The Directors are encouraged to attend the Continuing Education Programme(CEP) prescribed by Bursa Securities so as to be kept informed of the latest regulatory and marketdevelopments.

Shamsudin @ Samad Bin Kassim, Encik Abd Ghani Bin Ali Kadir and Mr. Ho Kok Loon will continueto attend the CEP to collect the minimum number of 72 points by 31 December 2005.

The Company also provides an in-house orientation programmes for new Directors on the businessoverview and directions of the Group.

Board Appointment

The Board appoints its members through a formal and transparent selection process. This processhas been reviewed, approved and adopted by the Board. New appointees will be considered andevaluated by the Nomination Committee. The committee will then recommend the candidates to beapproved and appointed by the Board. The Company Secretary will ensure that all appointments areproperly made, that all information necessary is obtained, as well as all legal and regulatory obligationsare met.

Re-Election of Directors

In accordance with the Company's Articles of Association, one-third (1/3) of the Board of Directorsshall retire at each Company's Annual General Meeting ("AGM") so that all Directors shall retire fromoffice at least once in every three (3) years but shall be eligible for re-election. Any Directors appointedby the Board during the year are subject to retirement and re-election by the shareholders at theCompany's AGM subsequent to their appointments. Currently, there are five (5) Directors of the Companysubject to re-election.

The Nomination Committee reviews the suitability, competencies and contributions of Directors for re-election before recommending to the Board for submission to shareholders for approval at the Company'sAGM.

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



B. Directors' Remuneration

The Remuneration Committee was formed on 2 August 2004 and has met once since its formation.The Committee consists of the following members:-

Chairman : Mr. Ho Kok Loon (Independent Non-Executive Director)Members : Mr. Murelidaran A/L M Navaratnam* (Independent Non-Executive Director)

Mr. Goh Boon Koon (Managing Director)

* Mr. Murelidaran was appointed as member of the Committee with effect from 24 November 2004 in place of Mr. Loo Chee Hin who resigned as member on 24 November 2004.

The Committee consists of majority of Independent Non-Executive Directors. The RemunerationCommittee recommends to the Board for approval of the remuneration package of Directors. Theremuneration system takes into account individual performance, Company's performance, responsibilityof the Directors as well as the prevailing rates in the market.

The component parts of remuneration are structured so as to link rewards to corporate and individualperformance. This is to ensure that the Company may attract, motivate and retain the Directors neededto manage the Company successfully.

None of the Executive Directors participated in any way in determining their individual remuneration.The Board as a whole determines the remuneration of all Directors abstaining from decision in respectof their individual remuneration.

Details of the Directors' remuneration during the year are as follows:-


Category

ExecutiveDirectorsNon-ExecutiveDirectorsTotal

FeesRM

-31,00031,000

AllowanceRM

1,800-

1,800

SalariesRM

782,011-

782,011

BonusesRM

5,100-

5,100

EPF &SOCSO

RM

75,289-

75,289

TotalRM

864,20031,000

895,200

The Number of Directors whose remuneration falls into the following bands comprises:-

Range ofRemunerationRM

50,000 and below50,001 - 100,000100,001 - 150,000150,001 - 200,000201,000 - 250,000

Executive

31211

IndependentNon-Executive

3----

Number of Directors

Individual remuneration of each Director is not disclosed as the Directors are of the view that thedisclosure by bands above provides sufficient information.



C. Shareholders

Communication with Investors

The Company is ever conscious of the importance and need to communicate with its shareholders,stakeholders and potential investors to keep them well informed concerning the Group's operationsand latest developments. As such, the Company always makes the necessary and relevantannouncements and timely release of quarterly financial results via various channels such as BursaLink, annual reports, press conferences and newspaper publications, whenever deemed relevant andnecessary.

The Company's website www.boonkoon.com has been established to facilitate access on pertinentinformation concerning the Group and its operations by the shareholders, customers and public. Thewebsite is updated periodically. The Company also organises analyst briefing and plant tour in responseto the requests from institutional investors and analyst.

Company's Annual General Meeting /Extraordinary General Meeting

The Company's Annual General Meeting ("AGM") constitutes the main forum to communicate andinteract with its shareholders. On the other hand, the Company is made aware of the concerns raisedand thus will be able to take the necessary actions to explain and/or address them, where applicable.

Notice of AGM and annual reports are sent at least 21 days before the meeting and shareholders whoare unable to attend will have the right to appoint proxy to attend and vote on their behalf. In the caseof any major /significant corporate proposal to be implemented, a circular containing information onsuch proposal is circulated to the shareholders and if their approval is required, an ExtraordinaryGeneral Meeting ("EGM") will be convened.

Shareholders are encouraged to attend the Company's AGM and EGM and the shareholders are giventhe opportunity to raise any questions about the resolutions being proposed and concerns pertainingto the Company's and Group's financial performance and future direction and undertakings.

D. Accountability and Audit

Responsibility Statement by Directors

The Directors acknowledge responsibility in ensuring that the financial statements of the Company andGroup give a true and fair view of the state of affairs of the Company and Group at the end of thefinancial year and of their results and cash flows for the financial year ended. The Directors have alsoensured those applicable approved accounting standards in Malaysia and the accounting provisionsof the Companies Act, 1965 have been complied with.

In preparing the financial statements, the Directors have:

• applied consistently the appropriate accounting policies adopted;• made reasonable and prudent judgments and estimates; and• maintained proper accounting records to enable the preparation of the financial statements

with reasonable accuracy.

In addition, the Directors are also responsible for taking reasonable steps to safeguard the assets ofthe Company and Group and to prevent and detect frauds and other irregularities.





D. Accountability and Audit • • •

Financial Reporting

In presenting the annual financial statements and quarterly announcements of results to the shareholdersand to the regulatory authorities, the Board aims to present a balanced and meaningful assessmentof the Group's financial position and prospects.

The Audit Committee assists the Board in ensuring the accuracy, adequacy and completeness of thefinancial information to be disclosed. The financial reports will be reviewed and approved by the AuditCommittee prior to tabling them to the Board of Directors for approval.

Internal Control

The Board is responsible for ensuring that the Group maintains a sound system of Internal Control andrisk management including review for adequacy and integrity of those systems in order to safeguardshareholders' investment and the Group's assets.

In formulating this process, the Board has engaged Braxton Consulting Sdn. Bhd. to carry out a reviewof the Company's key internal controls on business risks underlying the Group strategy and businessoperations vis-a-vis corporate governance best practices as provided in the Code.

The Statement on Internal Control as set out in pages 23 and 24 of this Annual Report provides anoverview of the state of internal controls within the Group.

Relationship with the Auditors

The Board through the Audit Committee has established an appropriate and transparent relationshipwith the external auditors of the Company.

The Audit Committee serves as an independent channel of communication with the external auditors.The Audit Committee seeks professional advice of the external auditors and ensures compliance withthe approved accounting standards in preparing the financial statements.

A summary of the activities of the Audit Committee during the year, including the evaluation of theindependent audit process, are set out in the Audit Committee Report on pages 25 to 27 of the annualreport.




STATEMENT ON

INTERNAL CONTROL

This Statement is made in pursuant to paragraph 15.27(b) of the Listing Requirements of Bursa MalaysiaSecurities Berhad, which requires a listed issuer to ensure its board of directors makes additionalstatements in its annual report pertaining to the state of internal control of the listed issuer as a group.

The Board's Responsibility

The Board is fully responsible for the Group's internal control system, which encompasses the setting upof proper control framework, and assesses its effectiveness, adequacy and integrity. The Board is responsiblefor identifying the major business risks faced by the Group and for determining the appropriate courseof action to mitigate and manage those risks. The Group will continually strive to identify, assess, mitigateand manage such risks and conduct periodical reviews as planned.

The Board maintains full control over operational, strategic, financial, environmental, technological,organisational and compliance issues and has put in place in the Group with formal lines of responsibilitiesin terms of Authority Matrix to facilitate delegation of authority. The Board and Audit Committee havedelegated to executive management the implementation of the internal control system within the frameworkthroughout the Group.

Internal Control Structure and Processes

The internal control system is designed to safeguard the assets of the Group in ensuring the maintenanceof proper accounting records and providing reliable financial information for use within the business andfor publication. However, these controls provide only reasonable and not absolute assurance againstmaterial error, misstatement, loss or breach of set regulations. The primary framework of the Group's internalcontrol is summarized as follows:

Board Committees

There is a clear terms of reference and responsibilities set for the sub-committees of the Board of Directors.They are Audit Committee, Nomination Committee and Remuneration Committee.

Organisational structure and Authority Matrix

The Group has a well-defined organisational structure with clear lines of accountability and job descriptionsfrom divisions, departments, sections and straight down to individual employees with prescribed AuthorityMatrix set for various activities, operation, approval and control such as purchasing, outsourcing, capitalexpenditures, signing of contracts, business acquisition, and other significant transactions.

The Board's approval is required for significant transactions such as incorporation of new company,amendments and changes to financial facilities, cheque signatories and the opening of bank accounts,etc.

Policy and Control

Policy and control at Group and individual business unit levels and on staff policies have been established.The integrity and competence of employees are ensured through high recruitment standards, a comprehensiveperformance management framework that encompasses formulation of proper job descriptions, performancestandards, performance appraisal and employee development programme.


STATEMENT ON

Reporting and Review

The Group's management team regularly monitors the monthly reporting and reviews the financial resultsand forecasts for all the businesses within the Group against the plans. The results are communicated ona regular basis to employees

The preparation of quarterly and full year financial results and the state of affairs, as published toShareholders, are reviewed and approved by the Board. The full year financial statements are also auditedby External Auditors.

Information Technology (IT) and ERP

The Group has embarked on Enterprise Resources Planning (ERP) to integrate its production processesin streamline manners. Management information system and the data captured have been fully securedwith firewall and antiviral application with regular updates in protecting the possible unauthorized accessto the system.

The Board has also caused to adopt the IT policy in ensuring all operating systems and applicationssoftware are legitimate.

Internal Compliance

The Board, Audit Committee and Management regularly review the internal audit reports and monitor thestatus of the implementation of corrective actions to address internal control weaknesses.

Update on Developments

Whenever necessary, submission is made to the Board at its meetings on the economic trend of theindustry, macro environment, legal implication and development of accounting and financial reportingstandards.

The outsourced Internal Audit function independently focuses on the areas of critical business risk basedon a schedule agreed annually with the Audit Committee, and reports on the systems of financial andoperation controls on a quarterly basis to the Audit Committee.

The Internal Audit team advises executive and operational management on areas for improvement andsubsequently reviews the extent to which its recommendations have been implemented. The extent ofcompliance is reported to the Audit Committee on a regular basis. The Audit Committee in turn reviewsthe effectiveness of the system of internal controls in operation and reports the results thereon to the Board.

In addition to internal controls, the Board has also ensured that occupational safety, health act andregulations and environmental risks have been complied with. The Group has adopted customer andmarket oriented strategy. In this context, with the ISO 9001:2000 in place, the Group strictly emphasizesproducts and services quality. Quality Assurance and Quality Control are prime considerations and in linewith this, the Group strictly complies with the ISO 9001: 2000 Standard Operating Procedures (SOPs).

Conclusion

The Directors have appraised the effectiveness, adequacy and integrity of the internal control system inoperation during the financial year through the monitoring process set out above. As such, there wereneither material internal control failings nor significant problems that had arisen during the financial year.

INTERNAL CONTROL • • •

AUDIT COMMITTEE

REPORT

MEMBERS

Mr. Ho Kok Loon - ChairmanIndependent Non-Executive Director

Mr. Murelidaran A/L M Navaratnam - MemberIndependent Non-Executive Director

Mr. Goh Boon Koon - MemberManaging Director

CONSTITUTION

The Audit Committee of Boon Koon Group Berhad was established by the Board of Directors on 8 January2004.

MEETINGS

The Company was listed on the Second Board of Bursa Malaysia Securities Berhad ("Bursa Securities")on 8 April 2004 and since then, five (5) meetings were held during the financial year ended 31 December2004. Details of attendance of the members at the respective Audit Committee Meetings were as follows:-

Name

Mr. Ho Kok Loon

Mr. Murelidaran A/L M Navaratnam(Appointed on 24 November 2004)

Mr. Loo Chee Hin(Resigned on 24 November 2004)

Mr. Goh Boon Koon

No. of meetings attended

5/5

1/1

5/5

5/5

TERMS OF REFERENCE

1. MEMBERSHIP

The Committee shall be appointed by the Board from amongst the Directors of the Company, a majorityof whom must be independent. At least one member of the Committee:-

• must be member of the Malaysian Institute of Accountants; or

• if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years ofworking experience and- he must have passed the examination specified in Part I of the 1st Schedule to the Accountants

Act, 1967; or- he must be a member of one of the associations of accountants specified in Part II of the 1st

schedules to the Accountants Act, 1967

The members of the Committee shall elect the Chairman from among their number who shall bean Independent Director.


AUDIT COMMITTEE

2. SECRETARY OF THE AUDIT COMMITTEE

The Company Secretary shall be the secretary of the Committee.

3. FREQUENCY AT MEETINGS

Meetings will be held not less than four times a year. The external auditors may request a meeting ifthey consider that one is necessary. The quorum for any meeting shall be two members of the Committeewho shall be Independent Non-Executive Directors.

4. AUTHORITY

The committee is authorized by the Board to investigate any activity within its terms of reference. It isauthorized to seek any information it requires from any employee and all employees are directed toco-operate with any request made by the Committee.

5. DUTIES

The duties of the Committee shall include:-

a) To recommend the appointment of the external auditors, their audit fee and any question of theirresignation or dismissal to the Board.

b) To discuss the nature and scope of the audit with the external auditors before the audit commences.

c) To review the financial statements of the Company and the Group before submission to the Board,focusing particularly on :-

• public announcements of results and dividend payment;• any changes in accounting policies and practices;• major judgmental areas;• significant adjustments resulting from the audit;• the going-concern assumption;• compliance with accounting standards; and• compliance with stock exchange and legal requirements.

d) To discuss problems and reservations arising from the interim and final audits and any matters theauditors may wish to discuss (in the absence of management where necessary).

e) To do the following :-

• to review the internal audit programme, consider the major findings of internal audit investigationsand management's response and ensure co-ordination between the internal and external auditors;

• to review the adequacy of the scope, functions and resources of the internal audit function andto ensure that it has the necessary authority to carry out its work;

• to review the appraisal or assessment of the performance of the staff of the internal audit function;• to approve any appointment or termination of senior staff of the internal audit function; and• to be informed of resignation of any internal audit staff members.

f) To keep under review the effectiveness of internal control system and, in particular, review externalauditors' management letter and management's response.

g) To review any related party transactions that may arise within the Company or Group.

h) To carry out such other functions and consider other topics, as may be agreed upon by the Board.


REPORT • • •


AUDIT COMMITTEE

6. REPORTING PROCEDURES

The Company Secretary shall circulate the minutes of meetings of the Committee to all members ofthe Board.

ACTIVITIES

In line with the Terms of Reference of the Audit Committee, the following activities were carried out by theAudit Committee during the financial year ended 31 December 2004, in discharging its functions:-

1. Reviewed the recurrent related party transactions of the Group prior to the listing of the Company onthe Bursa Securities.

2. Reviewed the quarterly financial results and recommended to the Board of Directors for considerationand approval.

3. Reviewed the scope of work of the Risk Management and Internal Audit functions of the Group.

REPORT • • •


OTHER CORPORATE

DISCLOSURE

Utilisation of proceeds

The total gross proceeds of RM16,231 million arising from the rights issue and public issue pertaining tothe public listing of Boon Koon Group Berhad on the Second board of the Bursa Securities has beenutilised according to the schedule as stated in the Prospectus of Boon Koon Group Berhad dated 19 March2004 except for the following:

Utilisation

Listing Expenses

ApprovedRM'000

1,600

UtilisedRM'000

1,344

BalanceRM'000

256

The balance unutilised for the estimated listing expenses have been used as working capital.

Share Buybacks, Options, Warrants or Convertible Securities

No Options, Warrants or Convertible Securities were exercised by the Company during the financial year.

Sanctions and/or Penalties

There were no sanctions and/or penalties imposed on the Company or its subsidiaries, Directors ormanagement by the relevant regulatory bodies during the financial year ended 31 December 2004.

Non Audit fees

During the financial year ended 31 December 2004, the Group's non -audit fees paid to the externalauditors amounted to RM80,000.

Profit Estimated, Forecast, Projection or Unaudited Results

In conjunction with the Initial Public Offering exercise on the Second Board of Bursa Securities, the Directorshad forecast the Group's net profit of RM8.10 million for the financial year ended 31 December 2004 inthe Prospectus dated 19 March 2004. However, for the financial year ended 31 December 2004, the Groupregistered net profit of RM15.67 million, the increase in the actual Group's net profit as compared with itsforecast figures were mainly due to the following:-

(a) The write off of the reserve on consolidation to the income statement thereby increasing net profit byRM5.58 million.

(b) The increase market acceptance of the Group's core product, ie rebuilt commercial vehicles whichfeatures distinct advantages over its competitors in terms of competitive pricing, current year registrationand zero odometer resetting, coupled with ease of end financing of the products has resulted in thegeneral increase in the revenue thus resulting in the corresponding increase in the net profit.

(c) The increase in the profit margin attributed by the economies of scales achieved which resulted fromthe increase in production capacity, overall improved operational efficiency and productivity and thevariation in the sales mix of the products with higher margin also contributed to the improved performanceof the Group for the year under review.

There was no significant variance between the results for the financial year and the unaudited resultspreviously announced.


OTHER CORPORATE

Profit Guarantee

During the financial year, there was no profit guarantee given by the Company.

Revaluation Policy

The Group currently had not adopted a policy of regular revaluation on its landed properties and will doso only when the need arises.

Material contracts involving Directors and major shareholders

There is no material contract involving the Company and its subsidiaries with Directors and majorshareholders of the Company either still subsisting at the end of the financial year ended 31 December2004 or entered into since the end of that financial year.

DISCLOSURE • • •


The directors have pleasure in submitting their report and the audited financial statements of the Groupand of the Company for the year ended 31 December 2004.

PRINCIPAL ACTIVITIES

The Company commenced operations on 7 January 2004 as an investment holding company whilst theprincipal activities of the subsidiary companies are disclosed in Note 4 to the financial statements.

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

RESULTS

DIRECTORS'

FOR THE YEAR ENDED 31 DECEMBER 2004REPORT

DIVIDENDS

No dividends have been declared or paid by the Company since the end of the previous financial year.

The directors now recommend the payment of a first and final tax exempt dividend of 3.75 sen per shareamounting to RM3,000,000 for the financial year ended 31 December 2004.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year other than thosedisclosed in the notes to the financial statements.

Profit after taxationMinority interest

Net profit for the year

COMPANYRM

15,663,920-

15,663,920

GROUPRM

15,804,668(134,234)

15,670,434

SHARE CAPITAL

During the financial year, the Company increased its authorised share capital to RM50,000,000 by thecreation of 49,900,000 ordinary shares of RM1.00 each followed by a share split to subdivide the nominalvalue of the ordinary shares of the Company from RM1.00 each to RM0.50 each. Accordingly the authorisedshare capital of RM50,000,000 comprises of 100,000,000 ordinary shares of RM0.50 each.

The issued and paid-up share capital was increased from RM2 to RM40,000,000 by the following issues :

DIRECTORS'

FOR THE YEAR ENDED 31 DECEMBER 2004

Number ofordinary

shares ofRM1.00*/

RM0.50 each

* 30,568,841

* 2,631,157

13,600,000

Issued andpaid-up

share capitalRM

30,568,841

2,631,157

6,800,000

39,999,998

The proceeds from the rights and public issue were used for the repayment of bank borrowings, paymentof listing expenses and for working capital purposes.

The above new shares rank pari passu with the existing shares of the Company in all respects.

Other than the foregoing, the Company did not grant any option to anyone to take up unissued shares ofthe Company.

EMPLOYEE SHARE OPTION SCHEME

The Company had on 31 October 2003 and 13 February 2004 obtained approvals from the SecuritiesCommission and the shareholders respectively to establish an Employee Share Option Scheme (“ESOS”)with duration of five years expiring on 6 April 2009.

As at balance sheet date, no options were granted.

The salient features of the ESOS are disclosed in Note 10 to the financial statements.

Terms of Issue

Issued for the acquisition of the entire share capital of asubsidiary company, Boon Koon Vehicles Industries Sdn.Bhd. at an issue price of approximately RM1.06 per share.

Rights issue on the basis of approximately 86 new ordinaryshares for every 1,000 ordinary shares of RM1.00 each heldat an issue price of RM1.00 per share.

Public issue of 13,600,000 new ordinary shares of RM0.50 atan issue price of RM1.00 per share.


REPORT • • •

DIRECTORS

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

Shamsudin @ Samad Bin KassimGoh Boon KoonGoh Boon LeongLee Teoh KeeGoh Boon SiewAbd Ghani Bin Ali KadirTan Jin Sun (Appointed 25.8.04)Ho Kok LoonAng Poh GinMurelidaran A/L M Navaratnam (Appointed 24.11.04)Loo Chee Hin (Resigned 24.11.04)Goh Ho Seng (Resigned 25.8.04)

In accordance with the Company's Articles of Association, Encik Shamsudin @ Samad Bin Kassim andMessrs Goh Boon Koon, Goh Boon Leong, Tan Jin Sun and Murelidaran A/L M Navaratnam retirefrom the Board at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.

DIRECTORS' INTERESTS IN SHARES

According to the Register of Directors' Shareholdings, the interests of directors in office at the endof the financial year in shares in the Company and its related corporations are as follows :

DIRECTORS'


The CompanyDirect interestShamsudin @ Samad Bin KassimGoh Boon KoonGoh Boon LeongLee Teoh KeeGoh Boon SiewAbd Ghani Bin Ali KadirTan Jin SunHo Kok LoonAng Poh GinMurelidaran A/L M Navaratnam

No. of ordinary shares of RM0.50 eachBalance

at1.1.04 Allotment

6,113,76816,653,28416,287,99212,489,970

422,0066,113,768

----

-----

-

--

Bought

906,2322,298,4005,822,4581,457,3523,364,3241,097,432

20,00020,000

1,952,200 *

10,000 *

Sold

(5,570,000)(3,412,500)(7,229,846)(2,559,378)

(96,476)(6,297,900)

----

Balanceat

31.12.04

1,450,00015,539,18414,880,60411,387,9443,689,854

913,3001,952,200

20,00020,00010,000

* At date of appointment

The allotment was in respect of new shares issued by the Company for the acquisition of Boon KoonVehicles Industries Sdn. Bhd..


REPORT • • •

DIRECTORS' BENEFITS

Since the end of the previous financial year, no director of the Company has received or become entitledto receive any benefit (other than a benefit included in the aggregate amount of emoluments received ordue and receivable by the directors shown in the financial statements) by reason of a contract made bythe Company or a related corporation with a director or with a firm of which the director is a member orwith a company in which the director has a substantial financial interest, other than those transactionsentered into in the ordinary course of business by certain subsidiary companies with a company in whichall the directors of the Company have substantial financial interests.

During and at the end of the year, no arrangements subsisted to which the Company is a party, with theobjects of enabling directors of the Company to acquire benefits by means of the acquisition of sharesin or debentures of the Company or any other body corporate, other than those arising from the shareoptions granted under the Employee Share Option Scheme.

OTHER STATUTORY INFORMATION

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

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

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

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

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

ii) that would render the value attributed to the current assets in the financial statements of the Groupand of the Company misleading, or

iii) that would render any amount stated in the financial statements of the Group and of the Companymisleading, other than those already dealt with in this report and in the relevant financial statements,or

iv) which have arisen which render adherence to the existing methods of valuation of assets or liabilitiesof the Group and of the Company misleading or inappropriate.

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

i) any charge on the assets of the Group and of the Company that has arisen since the end of the financialyear which secures the liabilities of any other person, or

ii) any contingent liability in respect of the Group and of the Company that has arisen since the end ofthe financial year.

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

DIRECTORS'



REPORT • • •

OTHER STATUTORY INFORMATION • • •

In the opinion of the directors, the results of the operations of the Group and of the Company for thefinancial year ended 31 December 2004 have not been substantially affected by any item, transaction orevent of a material and unusual nature except for the write off of the reserve on consolidation amountingto RM5,577,338. No item, transaction or event of a material and unusual nature has arisen in the intervalbetween the end of that financial year and the date of this report which is likely to affect substantially theresults of the operations of the Group or of the Company for the financial year in which this report is made.

SIGNIFICANT EVENTS

The significant events during the financial year are as follows :

The Company completed the following in connection with the listing of its shares on the Second Board ofBursa Malaysia Securities Berhad, as approved by the Securities Commission and all the other relevantauthorities:

(i) On 7 January 2004, the Company

- increased its authorised share capital from RM100,000 to RM50,000,000 by the creation of anadditional 49,900,000 ordinary shares of RM1.00 each,

- acquired the entire share capital of Boon Koon Vehicles Industries Sdn. Bhd. comprising 11,673,640ordinary shares of RM1.00 each for a total consideration of RM32,402,971 satisfied by the issueof 30,568,841 new ordinary shares of RM1.00 each at an issue price of approximately RM1.06 perordinary share,

- acquired the entire share capital of First Peninsula Credit Sdn. Bhd. comprising 299,200 ordinaryshares of RM1.00 each for a total cash consideration of RM683,443,

- acquired 65% of the share capital of Boon Koon Marketing (East Malaysia) Sdn. Bhd. comprising65,000 ordinary shares of RM1.00 each for a total cash consideration of RM212,085,

(ii) On 11 February 2004, the Company completed the rights issue of 2,631,157 ordinary shares of RM1.00each at an issue price of RM1.00 per ordinary share on the basis of approximately 86 new ordinaryshares for every 1,000 ordinary shares held after the above mentioned acquisitions,

(iii) A split of the par value of the ordinary shares from RM1.00 to RM0.50 each, which accordingly increasesthe enlarged share capital from 33,200,000 ordinary shares of RM1.00 each to 66,400,000 ordinaryshares of RM0.50 each,

(iv) On 2 April 2004, the Company completed the public issue of 13,600,000 ordinary shares of RM0.50each at an issue price of RM1.00 per ordinary share, and

(v) On 8 April 2004, the Company's shares were officially listed and quoted on the Second Board of BursaMalaysia Securities Berhad.

On 1 June 2004, the Company announced that it had entered into a Share Sale Agreement with Mr. TanPoo Chuan and Madam Tan Geik Ee for the acquisition of 35,000 ordinary shares of RM1.00 each in BoonKoon Marketing (East Malaysia) Sdn. Bhd., representing 35% of its issued and paid-up share capital fora total cash consideration of RM990,500. The acquisition was completed on 30 June 2004.

DIRECTORS'



REPORT • • •

SIGNIFICANT EVENTS • • •

On 2 September 2004, the Company announced that its subsidiary company, namely Boon Koon VehiclesIndustries Sdn. Bhd. had entered into a Procurement Agreement with a subsidiary company of SilverbirdGroup Berhad, namely Stanson Marketing Sdn. Bhd. for a total contract sum of approximately RM10 millionfor the supply of 160 units of rebuilt light duty rigid commercial vehicles complete with bodywork. Thevehicles will be delivered in stages over a period of 15 months.

AUDITORS

The auditors, JB LAU & ASSOCIATES, have expressed their willingness to continue in office.

Signed in accordance with a resolution of the directors :

Goh Boon Koon

Goh Boon Leong

Penang,

Date : 22 February 2005

DIRECTORS'



REPORT • • •


RM

32,673,324

33,911,51025,785,501

1,675,07733,464

3,000,0005,407,849

69,813,401

5,011,3693,228,214

28,729,0821,329,596

38,298,261

31,515,140

64,188,464

40,000,0007,290,208

15,662,493

62,952,701961,605274,158

64,188,464

CONSOLIDATED

AT 31 DECEMBER 2004BALANCE SHEET

PROPERTY, PLANT AND EQUIPMENT

CURRENT ASSETSInventoriesTrade receivablesOther receivables, deposits and prepaymentsTax recoverableFixed deposits with a licensed bankCash and bank balances

CURRENT LIABILITIESTrade payablesOther payables and accrualsBank borrowingsProvision for taxation

NET CURRENT ASSETS

FINANCED BY :SHARE CAPITALSHARE PREMIUMRETAINED PROFIT

SHAREHOLDERS' FUNDSDEFERRED TAXATIONNON-CURRENT LIABILITIES

NOTE

3

56

8

9

1011

1314

The notes set out on pages 45 to 68 form an integral part of these financial statements.


CONSOLIDATED

INCOME STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2004

REVENUE

COST OF SALES

GROSS PROFIT

OTHER OPERATING INCOME

ADMINISTRATIVE EXPENSES

PROFIT FROM OPERATIONS

FINANCE COSTS

PROFIT AFTER FINANCE COSTS

RESERVE ON CONSOLIDATION WRITTEN OFF

PROFIT BEFORE TAXATION

TAXATION

PROFIT AFTER TAXATION

MINORITY INTEREST

NET PROFIT FOR THE YEAR

EARNINGS PER SHARE (SEN)

DIVIDEND PER SHARE (SEN,NET)


NOTE

15

16

17

18

19

RM

93,313,861

(69,707,701)

23,606,160

233,581

(9,089,156)

14,750,585

(903,692)

13,846,893

5,577,338

19,424,231

(3,619,563)

15,804,668

(134,234)

15,670,434

20.96

3.75


CONSOLIDATED STATEMENT OF

CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2004

Balance at beginning

Issue of shares- Acquisition of a subsidiary company

- Rights issue

- Public issue

Listing expenses


Balance at end

NOTE

10 & 11

SHARECAPITAL

RM

2

30,568,841

2,631,157

6,800,000

-

-

40,000,000

Non -distributable

SHAREPREMIUM

RM

-

1,834,130

-

6,800,000

(1,343,922)

-

7,290,208

Distributable

RETAINEDPROFIT

RM

(7,941)

-

-

-

-

15,670,434

15,662,493

TOTALRM

(7,939)

32,402,971

2,631,157

13,600,000

(1,343,922)

15,670,434

62,952,701



CONSOLIDATED CASH FLOW

STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2004

RM

19,424,231

9,0001,803,676

(8,461)203,000903,692

(538,745)1,076

(5,577,338)16,220,131(7,974,953)

(13,496,899)(171,581)

(5,423,302)(903,692)

(2,488,167)(8,815,161)

(1,452,050)4,297,295

538,745269,001

(4,258,489)(605,498)

4,241,000(143,776)

(1,343,922)300,000

16,231,157(490,579)(986,456)

17,807,4248,386,765

2

8,386,767

CASH FLOWS FROM OPERATING ACTIVITIESProfit before taxationAdjustments for :

Amortisation of goodwillDepreciationGain on disposal of property, plant and equipmentGoodwill written offInterest expenseInterest incomeProperty, plant and equipment written offReserve on consolidation written off

Operating profit before working capital changesInventoriesReceivablesPayablesCash used in operationsInterest paidIncome tax paidNet cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIESCash flow on acquisition of subsidiary companies *Fixed depositsInterest receivedProceeds from disposal of property, plant and equipmentPurchase of property, plant and equipmentNet cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIESBankers acceptanceDirectors' accountPayment of listing expensesProceeds from hire purchaseProceeds from issuance of sharesRepayment of hire purchase payablesRepayment of term loansNet cash from financing activitiesNET INCREASE IN CASHCASH AT BEGINNING

CASH AT END



CONSOLIDATED CASH FLOW


Represented by:

Fixed deposits with a licensed bankCash and bank balancesBank overdraft

Cash flow on acquisition of subsidiary companies *

Property, plant and equipmentGoodwillInventoriesReceivablesTax recoverableFixed deposits with a licensed bankCash and cash equivalentsPayablesBank borrowingsProvision for taxationMinority interestDeferred taxationNon-current liabilitiesShare of net assets acquiredReserve on consolidationTotal purchase consideration

Purchase consideration satisfied by cashPurchase consideration satisfied by shares

Cash flow on acquisition of subsidiary companies

Purchase consideration by cashCash and cash equivalents acquired

RM

3,000,0005,407,849

(21,082)8,386,767

30,480,127212,000

25,936,55713,963,679

14,0824,297,295(461,550)

(8,424,828)(24,505,785)

(196,500)134,234

(1,534,579)(943,923)

38,970,809(5,577,338)33,393,471

990,50032,402,97133,393,471

(990,500)(461,550)

(1,452,050)




BALANCE

SHEETAT 31 DECEMBER 2004

INVESTMENT IN SUBSIDIARY COMPANIES

CURRENT ASSETSOther receivablesAmount due from subsidiary companiesCash and bank balances

CURRENT LIABILITIESOther payables and accrualsProvision for taxation

NET CURRENT ASSETS/(LIABILITIES)

FINANCED BY :

SHARE CAPITALSHARE PREMIUMRETAINED PROFIT/(ACCUMULATED LOSSES)


NOTE

4

7

1011

12

2004RM

34,288,999

16,168 28,571,665

113,151 28,700,984

41,000 2,796

43,79628,657,188

62,946,187

40,000,0007,290,208

15,655,979

62,946,187

2003RM

-

--

22

7,941-

7,941(7,939)

(7,939)

2-

(7,941)

(7,939)



INCOME

STATEMENT

REVENUE

OTHER OPERATING INCOME

ADMINISTRATIVE EXPENSES

PROFIT/(LOSS) BEFORE TAXATION

TAXATION

NET PROFIT/(LOSS) FOR THE YEAR

NOTE

15

16

17

2004RM

17,040,334

21,182

(65,596)

16,995,920

(1,332,000)

15,663,920

2003RM

-

-

(2,638)

(2,638)

-

(2,638)




STATEMENT OF

CHANGES IN EQUITY

2004


Issue of shares- Acquisition of a subsidiary company- Rights issue- Public issue

Listing expenses


Balance at end

2003


Loss for the year

Balance at end

SHARECAPITAL

RM

2

30,568,8412,631,1576,800,000

-

-

40,000,000

2

-

2

Non -distributable

SHAREPREMIUM

RM

-

1,834,130-

6,800,000

(1,343,922)

-

7,290,208

-

-

-

DistributableRETAINED PROFIT/

(ACCUMULATEDLOSSES)

RM

(7,941)

---

-

15,663,920

15,655,979

(5,303)

(2,638)

(7,941)

TOTALRM

(7,939)

32,402,9712,631,157

13,600,000

(1,343,922)

15,663,920

62,946,187

(5,301)

(2,638)

(7,939)

NOTE

10 & 11




CASH FLOW

STATEMENT

CASH FLOWS FROM OPERATING ACTIVITIES

Profit/(Loss) before taxationAdjustment for : Interest incomeOperating profit/(loss) before working capital changesWorking capital changesReceivablesPayablesCash generated from operationsIncome tax paidNet cash from operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Investment in subsidiary companiesInterest receivedNet cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Payment of listing expensesProceeds from issuance of sharesSubsidiary companies

Net cash used in financing activities

NET INCREASE IN CASH

CASH AT BEGINNING

CASH AT END

2004RM

16,995,920

(21,182)16,974,738

(16,168)33,059

16,991,629(1,329,204)15,662,425

(1,886,028)21,182

(1,864,846)

(1,343,922)16,231,157

(28,571,665)

(13,684,430)

113,149

2

113,151

2003RM

(2,638)

-(2,638)

-2,638

---

---

---

-

-

2

2



NOTES TO THE

31 DECEMBER 2004FINANCIAL STATEMENTS

1. GENERAL INFORMATION

The Company is a public limited company, incorporated and domiciled in Malaysia.

The Company commenced operations on 7 January 2004 as an investment holding company whilstthe principal activities of the subsidiary companies are disclosed in Note 4 to the financial statements.

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

On 8 April 2004, the Company's shares were officially listed and quoted on the Second Board of BursaMalaysia Securities Berhad.

The number of employees of the Group at balance sheet date is 320. The Company has no employeesat balance sheet date.

The financial statements were approved and authorised for issue by the Board of Directors in accordancewith a resolution of the directors on 22 February 2005.

2. SIGNIFICANT ACCOUNTING POLICIES

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

2.1 Basis of Accounting

The financial statements of the Group and of the Company are prepared under the historical costconvention unless otherwise indicated in the accounting policies below and comply with theprovisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia.

2.2 Basis of Consolidation

The financial statements of the Group include the audited financial statements of the Companyand all its subsidiary companies made up to the end of the financial year. Subsidiary companiesare those companies in which the Group has a long term equity interest and where it has powerto exercise control over the financial and operating activities so as to obtain benefits therefrom.Subsidiary companies are consolidated using the acquisition method of accounting.

Under the acquisition method of accounting, the results of the subsidiary companies acquiredor disposed of are included from the date of acquisition or up to the date of disposal. The assetsand liabilities of the subsidiary companies are measured at their fair values at the date of acquisition.

The difference between the cost of acquisition and the fair value of the Group's share of the netassets of the acquired subsidiary company at the date of acquisition is written off immediatelyin the income statement as goodwill or reserve arising on consolidation.

Inter-company balances, transactions and resulting unrealised gains are eliminated on consolidationand the consolidated financial statements reflect external transactions only. Unrealised lossesare eliminated on consolidation unless costs cannot be recovered. Where necessary, adjustmentsare made to the financial statements of the subsidiary companies to ensure consistency ofaccounting policies with those of the Group.

Minority interests in the consolidated balance sheet consist of the minorities' share of the fairvalues of the identifiable assets and liabilities of the acquiree company as at acquisition date andthe minorities' share of movements in the acquiree's equity since then.


2. SIGNIFICANT ACCOUNTING POLICIES • • •

2.3 Property, Plant and Equipment

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

The policy for the recognition and measurement of impairment losses is in accordance with theaccounting policy as set out in Note 2.13 below.

Property, plant and equipment are depreciated over their estimated useful lives on the straightline method at the following annual rates :

Factory building and shophouse 2%Machinery and factory equipment 10% - 20%Office equipment, furniture and fittings 8% - 20%Renovation 10%Motor vehicles 20%

Long leasehold land is amortised over its lease period of 51 years.

Freehold land is not amortised as it has an infinite life.

Upon the disposal of an item of property, plant and equipment, the difference between the netdisposal proceeds and the carrying amount is charged or credited to the income statement.

2.4 Investment in Subsidiary Companies

Investment in subsidiary companies which is eliminated on consolidation is stated at cost lessimpairment losses in the Company's financial statements. The policy for the recognition andmeasurement of impairment losses is in accordance with the accounting policy as set out in 2.13below.

On disposal of investment in subsidiary companies, the difference between net disposal proceedsand their carrying amount is charged or credited to the income statement.

2.5 Goodwill

Goodwill arising on purchase of partnership business represents the excess of the purchaseconsideration over the share of the fair values of the identifiable net assets of partnership businessat the date of acquisition.

Goodwill is written off immediately in the income statement.

2.6 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost of finished goods andwork-in-progress includes materials, direct labour and attributable production overheads. Netrealisable value represents estimated selling price less all estimated costs to completion and costto be incurred in the marketing, distribution and selling.

Cost is determined on the first-in first-out basis.

NOTES TO THE

31 DECEMBER 2004FINANCIAL STATEMENTS • • •



2.7 Receivables

Receivables are stated at their anticipated realisable values.

Known bad debts are written off and specific allowance is made for any debts considered to bedoubtful of collection.

2.8 Payables

Payables are stated at cost which is the fair value of the consideration to be paid in future forgoods and services received.

2.9 Provisions for Liabilities

Provisions for liabilities are recognised when the Group has a present obligation as a result of apast event and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation, and a reliable estimate of the amount can be made. Provisionsare reviewed at each balance sheet date and adjusted to reflect the current best estimate. Wherethe effect of the time value of money is material, the amount of a provision is the present valueof the expenditure expected to be required to settle the obligation.

2.10 Hire Purchase

Property, plant and equipment financed under hire purchase are capitalised in the financialstatements and are depreciated in accordance with the accounting policy as set out in 2.3 above.Outstanding obligations due under hire purchase after deducting finance costs are included asliabilities in the financial statements. The finance costs are charged to the income statement overthe period of the respective agreements using the straight line method.

2.11 Revenue Recognition

Revenue from sale of goods is recognised in the income statement when the significant risks andrewards of ownership have been transferred to the buyer.

Interest income from hire purchase is recognised evenly over the period of financing on thestraight line method.

Insurance commission is recognised on the accrual basis.

Dividend income is recognised in the income statement when the right to receive payment isestablished.

2.12 Employee Benefits

Short term benefitsWages, salaries, bonuses and social security contributions are recognised as an expense in theyear in which the associated services are rendered by employees of the Group. Short termaccumulating compensated absences such as paid annual leave are recognised when servicesare rendered by employees that increase their entitlement to future compensated absences, andshort term non-accumulating compensated absences such as sick leave are recognised whenthe absences occur.

NOTES TO THE




2.12 Employee Benefits • • •

Defined contribution plansAs required by law, companies in Malaysia make contributions to the state pension scheme, theEmployees Provident Fund ("EPF"). Such contributions are recognised as an expense in theincome statement as incurred.

Equity compensation benefitsThe Company's Employee Share Option Scheme ("ESOS") allows the Group's employees toacquire ordinary shares of the Company. No compensation cost or obligation is recognised. Whenthe options are exercised, equity is increased by the amount of the proceeds received.

2.13 Impairment of Assets

At each balance sheet date, the Group and the Company review the carrying amounts of theirassets to determine whether there is any indication of impairment. If any such indication exists,impairment is measured by comparing the carrying values of the assets with their recoverableamounts. Recoverable amount is the higher of net selling price and value in use, which is measuredby reference to discounted future cash flows.

An impairment loss is recognised as an expense in the income statement immediately, unlessthe asset is carried at a revalued amount. Any impairment loss of a revalued asset is treated asa revaluation decrease to the extent of any unutilised previously recognised revaluation surplusfor the same asset. Reversal of impairment losses recognised in prior years is recorded whenthe impairment losses recognised for the asset no longer exist or have decreased.

2.14 Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction, production orpreparation of assets until they are ready for their intended use or sale are capitalised as partof the cost of those assets. Other borrowing costs are recognised as expenses in the year inwhich they are incurred.

2.15 Income Taxes

Current tax expense is determined according to the Malaysian tax laws and include all taxesbased upon taxable profits.

Deferred tax is recognised in full, using the liability method, on temporary differences arisingbetween the amounts attributed to assets and liabilities for tax purposes and their carrying amountsin the financial statements.

Deferred tax assets are recognised to the extent that it is probable that taxable profit will beavailable against which the deductible temporary differences or unused tax losses can be utilised.

Deferred tax is recognised on temporary differences arising on investments in subsidiary companiesexcept where the timing of the reversal of the temporary difference can be controlled and it isprobable that the temporary difference will not reverse in the foreseeable future.

Tax rates enacted or substantially enacted by the balance sheet date are used to determinedeferred tax.

NOTES TO THE



NOTES TO THE

31 DECEMBER 2004


2.16 Foreign Currency Translation

Transactions in foreign currencies are translated into Ringgit Malaysia at rates of exchange rulingat the dates of the transactions.

At each balance sheet date, foreign currency monetary items are translated into Ringgit Malaysiaat the exchange rates ruling at that date, unless hedged by forward foreign exchange contracts,in which case the rates specified in such forward contracts are used.

All exchange gains or losses are included in the income statement.

The closing rates of exchange of the foreign currencies used in the preparation of the financialstatements are as follows :

2.17 Cash and Cash Equivalents

Cash comprises cash in hand and demand deposits. Cash equivalents are short term and highlyliquid investments that are readily convertible to known amount of cash and which are subjectto an insignificant risk of changes in value, against which bank overdraft balances, if any, arededucted.

2.18 Financial Instruments

Financial instruments are recognised in the balance sheet when the Group has become a partyto the contractual provisions of the instrument.

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

The particular recognition methods adopted are disclosed in the individual accounting policyassociated with each item.

1 Singapore Dollar1 US Dollar

2003RM

2004RM

2.203.80

--

FINANCIAL STATEMENTS • • •


NOTES TO THE

31 DECEMBER 2004

GROUP

At costFreehold landLong leasehold landFactory building and shophouseMachinery and factory equipmentOffice equipment, furniture and fittingsRenovationMotor vehicles



3. PROPERTY, PLANT AND EQUIPMENT

Balanceat

1.1.04RM

--------

Acquisitionof

subsidiarycompanies

RM

11,569,432-

14,041,5874,367,5362,029,845

10,0002,960,363

34,978,763

AdditionsRM

-863,908

1,974,614906,966355,471

-157,530

4,258,489

DisposalsRM

(30,000)-

(200,763)-

(30,853)(10,000)(63,000)

(334,616)

Written-offRM

----

(1,550)--

(1,550)

Balanceat

31.12.04RM

11,539,432863,908

15,815,4385,274,5022,352,913

-3,054,893

38,901,086

--------------------------- Accumulated Depreciation ---------------------------

Balanceat

1.1.04RM

--------

Acquisitionof

subsidiarycompanies

RM

--

563,6141,851,803

714,663334

1,368,2224,498,636

Currentcharge

RM

--

296,904790,777281,283

916433,796

1,803,676

DisposalsRM

--

(15,057)-

(14,836)(1,250)

(42,933)(74,076)

Written-offRM

----

(474)--

(474)

Net bookvalue at31.12.04

RM

11,539,432863,908

14,969,9772,631,9221,372,277

-1,295,808

32,673,324

Balanceat

31.12.04RM

--

845,4612,642,580

980,636-

1,759,0856,227,762



NOTES TO THE

31 DECEMBER 2004

3. PROPERTY, PLANT AND EQUIPMENT • • •

GROUP

The net book value of property, plant and equipment being acquired under hire purchase loans areas follows :

2004RM

34,288,999

COMPANY2003

RM

-Unquoted shares, at cost

4. INVESTMENT IN SUBSIDIARY COMPANIES

MachineryMotor vehicles

GROUP2004

RM

433,5001,002,207

1,435,707

Details of the subsidiary companies which are all incorporated in Malaysia are as follows :

2003

-

-

-

PrincipalActivity

Manufacture and assembly ofcommercial vehicles and theprovision of its relatedservices

Sale of commercial vehiclesand the provision of itsrelated services

Provision of hire purchasefinancing and insuranceagent

2004

100%

100%

100%

Boon Koon Vehicles Industries Sdn. Bhd.

Boon Koon Marketing (East Malaysia) Sdn. Bhd.

First Peninsula Credit Sdn. Bhd.

NameEffective Equity

Interest



NOTES TO THE

31 DECEMBER 2004

4. INVESTMENT IN SUBSIDIARY COMPANIES • • •

The effect of the acquisitions on the financial results of the Group for the financial year ended31 December 2004 is as follows :

RM

93,313,861(69,707,701)

23,606,160212,399

(9,023,560)

14,794,999(903,692)

13,891,3075,577,338

19,468,645(3,619,563)

15,849,082(134,234)

15,714,848

RevenueCost of sales

Gross profitOther operating incomeAdministrative expenses

Operating profitFinance costs

Profit after finance costsReserve on consolidation written off

Profit before taxationTaxation

Profit after taxationMinority interest

Increase in Group's net profit

The effect of the acquisitions on the financial position of the Group as at 31 December 2004 is asfollows :

Property, plant and equipmentInventoriesTrade receivablesOther receivables, deposits and prepaymentsTax recoverableFixed deposits with a licensed bankCash and bank balancesTrade payablesOther payables and accrualsBank borrowingsProvision for taxationDeferred taxationNon-current liabilities

Increase in Group's net assets

RM

32,673,32433,911,51025,785,501

1,658,90933,464

3,000,0005,294,698

(5,011,369)(3,187,214)

(28,729,082)(1,326,800)

(961,605)(274,158)

62,867,178



NOTES TO THE

31 DECEMBER 2004

5. INVENTORIES

At costRaw materialsWork-in-progressFinished goods

GROUP2004

RM

13,984,9406,939,976

12,986,594

33,911,510

6. TRADE RECEIVABLES

* Represents portion of hire purchase receivables which is due after twelve months.

GROUP2004

RM

3,959,478(778,732)

3,180,746

22,727,438

(122,683)

22,604,755

25,785,501

24,398,2491,387,252

25,785,501

Hire purchase receivablesUnearned interest income

Other receivables

Less : Allowance for doubtful debts- Arising from the acquisition of subsidiary companies

ReceivableWithin one yearMore than one year and less than five years *



NOTES TO THE

31 DECEMBER 2004

7. AMOUNT DUE FROM SUBSIDIARY COMPANIES

COMPANY

The amount due from subsidiary companies is unsecured, interest free and has no fixed terms ofrepayment.

8. FIXED DEPOSITS WITH A LICENSED BANK

GROUP

The effective interest rate of fixed deposits at balance sheet date is 2.00% per annum.

9. BANK BORROWINGS

The bank borrowings of a subsidiary company are secured by way of :

(i) Corporate guarantee of the Company and

(ii) Negative pledge over the assets of the subsidiary company.

The effective rates per annum of bankers acceptance and bank overdraft at balance sheet date are2.40% to 2.91% and 7.00% to 7.25% respectively.

Bankers acceptanceBank overdraft

GROUP2004

RM

28,708,00021,082

28,729,082



NOTES TO THE

31 DECEMBER 2004

10. SHARE CAPITAL

Authorised :Balance at beginningOrdinary shares of RM1.00 each- CreationSubdivision of par value into RM0.50 each

Balance at endOrdinary shares of RM0.50 each (2003 : RM1.00 each)

Issued and fully paid :Balance at beginningOrdinary shares of RM1.00 each- Acquisition of a subsidiary companyRights IssueSubdivision of par value into RM0.50 eachPublic Issue

Balance at endOrdinary shares of RM0.50 each (2003 : RM1.00 each)

2004

100,00049,900,000

50,000,000

100,000,000

2

30,568,8412,631,157

33,200,00013,600,000

80,000,000

2003

100,000-

-

100,000

2

--

--

2

2004RM

100,00049,900,000

-

50,000,000

2

30,568,8412,631,157

-6,800,000

40,000,000

2003RM

100,000-

-

100,000

2

--

--

2

Number of Ordinary Shares Amount



NOTES TO THE

31 DECEMBER 2004

10. SHARE CAPITAL • • •

Issuance of Ordinary Shares

(a) During the financial year, the Company issued 30,568,841 new ordinary shares of RM1.00 eachat an issue price of approximately RM1.06 per ordinary share as consideration for the acquisitionof the entire share capital of Boon Koon Vehicles Industries Sdn. Bhd.,

(b) After completion of the above acquisition, the Company undertook a Rights Issue of 2,631,157ordinary shares of RM1.00 each at an issue price of RM1.00 per ordinary share on the basis ofapproximately 86 new ordinary shares for every 1,000 ordinary shares held after the abovementioned acquisition,

(b) After completion of the Rights Issue, the Company undertook a share split whereby its existingordinary shares of RM1.00 each were split into ordinary shares of RM0.50 each and

(c) Thereafter, the Company made a Public Issue of 13,600,000 new ordinary shares of RM0.50 eachat an issue price of RM1.00 per ordinary share.

Employee Share Option Scheme

The Company had on 31 October 2003 and 13 February 2004 obtained approvals from the SecuritiesCommission and the shareholders respectively to establish an Employee Share Option Scheme ("ESOS")with duration of five years expiring on 6 April 2009.

As at balance sheet date, no options were granted.

The salient features of the ESOS are as follows :

(i) the total number of options offered under the ESOS shall not exceed ten per centum (10%) of theissued and paid-up share capital of the Company at any point in time during the duration of theESOS or such additional number that may be permitted by the relevant authorities during theduration of the ESOS,

(ii) an employee (including Executive Directors) shall be eligible to participate in the ESOS if theemployee is at least eighteen (18) years of age on the date of offer; employed full time by andon the payroll of any company in the Group and must have been employed for a continuousperiod of at least six (6) months in the Group and his employment must have been confirmed onthe date of offer,

(iii) not more than fifty per centum (50%) of the shares available under the ESOS should be allocated,in aggregate, to directors and senior management of the Group. In addition, not more than tenper centum (10%) of the shares available under the ESOS should be allocated to any individualdirector or employee who, either singly or collectively through his/her associates, holds twentyper centum (20%) or more in the issued and paid-up share capital of the Company,

(iv) the price at which the grantee is entitled to subscribe for each new share shall be the higher ofa price which is at a discount of not more than ten per centum (10%) from the weighted averagemarket price of the shares as shown in the daily official list issued by the Bursa Malaysia SecuritiesBerhad for the five (5) market days immediately preceding the date of offer and the par value ofthe shares, or such adjustments in accordance with any prevailing guidelines issued by theSecurities Commission or any other relevant authorities as amended from time to time and



NOTES TO THE

31 DECEMBER 2004

10. SHARE CAPITAL • • •

Employee Share Option Scheme • • •

(v) the new shares to be issued and allotted upon any exercise of the option will upon allotment andissuance rank pari passu in all respect with the then existing issued shares except that the sharesso issued will not be entitled for any dividend, rights, allotments or other distribution declared,made or paid to shareholders unless the shares so allotted have been credited into the relevantsecurities accounts maintained by the Bursa Malaysia Depository Sdn. Bhd. before the entitlementdate and will be subject to all the provisions of the Articles of Association of the Company relatingto the transfer, transmission and otherwise and

(vi) the ESOS shall come into force for a period of five (5) years from the date of confirmation by theadviser of the Company to the Securities Commission. The Company may, if the Board of Directorsand the ESOS Committee deem fit, extend the ESOS for another five (5) years.

11. SHARE PREMIUM

Included in listing expenses is an amount of RM80,000 paid to the auditors for non-audit services.

Acquisition of Boon Koon Vehicles Industries Sdn. Bhd. - issue of 30,568,841 ordinary shares of RM1.00 each at a premium of approximately RM0.06 per share

Public issue of 13,600,000 ordinary shares of RM0.50 each at a premium of RM0.50 per share

Less : Listing expenses

2003RM

-

-

--

-

2004RM

1,834,130

6,800,000

8,634,130(1,343,922)

7,290,208



NOTES TO THE

31 DECEMBER 2004

12. RETAINED PROFIT

COMPANY

The Company has sufficient tax credit and tax exempt income under the Income Tax Act, 1967, tofrank the payment of net dividends out of all its retained profit at balance sheet date.

13. DEFERRED TAXATION

Arising from the acquisition of subsidiary companiesTransfer from income statement

Balance at end

GROUP2004

RM

943,92317,682

961,605

The temporary differences on which deferred taxation has been provided for are in respect of theexcess of capital allowances over depreciation on property, plant and equipment.

14. NON-CURRENT LIABILITIES

Hire purchase payables

Total amount payableLess : Interest in suspense

Less : Payable within the next one yearincluded in other payables and accruals

Payable more than one year and less than five years

GROUP2004

RM

834,041(67,689)

766,352

(492,194)

274,158

The effective interest rates of hire purchase payables at balance sheet date is 6.05% to 7.40% perannum.



NOTES TO THE

31 DECEMBER 2004

15. REVENUE

Invoiced value of goods sold less returns and discountsInsurance commissionHire purchase interest incomeGross dividend from subsidiary companies

2003RM

---

-

-

2004RM

---

17,040,334

17,040,334

2004RM

92,853,13427,860

432,867

-

93,313,861

GROUP COMPANY

16. PROFIT/(LOSS) BEFORE TAXATION

This is arrived at : -

2004RM

-10,000

--

31,000--------

-

17,040,33421,182

-

After charging :

Amortisation of goodwillAudit fee - current year

- under provision in previous year

Depreciation* Directors' emoluments

- Present directors- Past directorGoodwill written offInterest expenseProperty, plant and equipment written offRealised loss on foreign exchangeRental of equipmentRental of premises

** Staff costs (excluding directors)

And crediting :

Gain on disposal of property, plant and equipmentGross dividend from subsidiary companiesInterest incomeRental income

2004RM

9,00029,000

3,0001,803,676

870,40124,800

203,000903,692

1,0767,7824,849

113,5506,817,393

8,461

-538,745

1,500

GROUP2003

RM

-600

--

---------

-

---

COMPANY



NOTES TO THE

31 DECEMBER 2004

16. PROFIT/(LOSS) BEFORE TAXATION • • •

* Directors' emoluments

Present directors

Executive directors :- Salaries and allowances- Fees- EPF- SOCSO

Non-executive directors :- Fees

Past director

Executive director :- Salaries and allowances

2003RM

----

-

-

-

2004RM

----

-

31,000

31,000

-

2004RM

764,111-

74,880410

839,401

31,000

870,401

24,800

GROUP COMPANY

The number of Directors of the Company whose total emoluments fell within the following bands areas follows :

Executive directors :

RM1 - RM50,000RM50,001 - RM100,000RM100,001 - RM150,000RM150,001 - RM250,000

Non-executive directors

RM1 - RM50,000

2004

2122

3



NOTES TO THE

31 DECEMBER 2004

16. PROFIT/(LOSS) BEFORE TAXATION • • •

** Staff costs (excluding directors)

Salaries and wagesEPFSOCSO

Number of employees at balance sheet date

17. TAXATION

Based on profit for the year- Malaysian income tax- Transfer to deferred taxation

Over/(Under) provision in previous years- Malaysian income tax- Deferred tax

2003RM

---

-

-

2004RM

---

-

-

2004RM

6,372,471398,955

45,967

6,817,393

320

GROUP COMPANY

2003RM

--

-

-

2004RM

1,332,000-

1,332,000

--

1,332,000

GROUP2004

RM

3,471,396120,532

3,591,928

130,485(102,850)

3,619,563

COMPANY



NOTES TO THE

31 DECEMBER 2004

17. TAXATION • • •

The reconciliation of the income tax expense is as follows :

Profit/(Loss) before taxation

Taxation at Malaysian statutory tax rate of 28%Expenses not deductible for tax purposesReduced tax rate on first RM500,000 chargeable incomeIncome not subject to taxUtilisation of reinvestment allowance

Over/(Under) provision in previous years- Malaysian income tax- Deferred tax

2003RM

(2,638)

(739)

739

---

-

--

-

2004RM

16,995,920

4,758,858

15,232

-(3,442,090)

-

1,332,000

--

1,332,000

GROUP2004

RM

19,424,231

5,438,785

195,577

(52,719)(1,561,655)

(428,060)

3,591,928

130,485(102,850)

3,619,563

COMPANY

18. EARNINGS PER SHARE

Basic earnings per share

Basic earnings per share of the Group is calculated by dividing the net profit attributable to shareholdersby the weighted average number of ordinary shares in issue during the financial year calculated asfollows :

GROUP2004

15,670,434

74,771,090

20.96

There is no diluted earnings per share as the Company does not have any convertible financialinstruments as at the financial year end.

Net profit for the year (RM)

Weighted average number of ordinary shares

Basic earnings per share (sen)



NOTES TO THE

31 DECEMBER 2004

19. DIVIDEND

At the forthcoming Annual General Meeting, a first and final tax exempt dividend of 3.75 sen per shareamounting to RM3,000,000 for the financial year ended 31 December 2004 will be proposed forshareholders' approval. Such dividend, if approved by the shareholders, will be accounted for in theshareholders' equity as an appropriation of retained profits in the next financial year ending 31 December2005.

20. SEGMENTAL INFORMATION

Segmental information is presented in respect of the Group's business segments. The primary format,business segments, is based on the Group's management and internal reporting structure.

Inter-segment pricing is determined based on negotiated terms.

Segment results, assets and liabilities include items directly attributable to a segment as well as thosethat can be allocated on a reasonable basis. Unallocated items mainly comprise interest-earning assetsand revenue, interest-bearing loans, borrowings and expenses and corporate assets and expenses.

No geographical segment information has been presented as the Group's activities and customersare primarily based in Malaysia.

Business Segments

The Group comprises the following main business segments :

1) Commercial vehicles and bodyworks Manufacture and trading of rebuilt, reconditioned andnew commercial vehicles and the manufacture ofbodyworks and their related services

2) Insurance and financing Insurance agent, provision of hire purchase financing andits related services



NOTES TO THE

31 DECEMBER 2004

GROUP

Revenue from external customersInter-segment revenue

Total revenue

Segment resultsInterest incomeUnallocated corporate expensesReserve on consolidation written offProfit before taxationTaxationProfit after taxationMinority interest


AssetsSegment assetsUnallocated corporate assets

Consolidated total assets

LiabilitiesSegment liabilitiesUnallocated corporate liabilities

Consolidated total liabilities

Other information

Capital expenditureDepreciationAmortisationNon-cash expenses other than depreciation and amortisation

Commercialvehicles

andbodyworks

RM

92,853,134-

92,853,134

13,732,151

98,811,960

37,179,256

4,255,4761,784,379

9,000

5,641,038

Insuranceand

financingRM

460,727-

460,727

159,156

3,511,982

22,567

3,01319,297

-

148,837

EliminationRM

--

-

-

-

-

---

-

TotalRM

93,313,861-

93,313,861

13,891,30721,182

(65,596)5,577,338

19,424,231(3,619,563)15,804,668

(134,234)

15,670,434

102,323,942162,783

102,486,725

37,201,8232,332,201

39,534,024

4,258,4891,803,676

9,000

5,789,875

11,861,040

20. SEGMENTAL INFORMATION • • •



NOTES TO THE

31 DECEMBER 2004

21. RELATED PARTY TRANSACTIONS

Rental income from a related party- Austnet Computer Sdn. Bhd.

Insurance commission income from a related party- Angkasa Barisan Sdn. Bhd.

Austnet Computer Sdn. Bhd. is a company in which Mr. Goh Boon Leong and Madam Lee TeohKee, directors of the Company and Mr. Goh Chin Aun, a director of a subsidiary company andwho is also a person connected to Messrs Goh Boon Koon, Goh Boon Siew, Goh Boon Leongand Madam Lee Teoh Kee have substantial financial interests.

Angkasa Barisan is a company in which Encik Abd Ghani Bin Ali Kadir and Mr. Goh Boon Leong,directors of the Company have substantial financial interests.

The directors of the Company are of the opinion that the above transactions were entered intoin the normal course of business and the terms of which have been established on a negotiatedbasis.

22. CONTINGENT LIABILITY (UNSECURED)

GROUP2004

RM

1,500

2,256

Corporate guarantee extended to banks for creditfacilities granted to subsidiary companies

- Limit

- Utilised as at balance sheet date

23. CAPITAL COMMITMENT

Contracted but not provided for :- To purchase property, plant and equipment

COMPANY2004

RM

80,023,000

28,729,082

GROUP2004

RM

176,751



NOTES TO THE

31 DECEMBER 2004

24. FINANCIAL INSTRUMENTS

Financial risk management objectives and policies

The Group's financial risk management policy seeks to ensure that adequate resources are availablefor the development of the Group's business whilst managing its liquidity, interest rate and credit risks.The Board reviews regularly the policies in place to manage these risks as summarised below.

Liquidity Risk

The Group actively manages its debt maturity profile, operating cash flows and availability of fundingso as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudentliquidity management, the Group maintains sufficient levels of cash and cash equivalents to meet itsworking capital requirements.

Interest Rate Risk

The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rateborrowings. The Group actively reviews its debt portfolio, and nature of its assets. This strategy allowsit to capitalise on cheaper funding in a current low interest rate environment and achieve a certain levelof protection against interest rate hikes.

The information on maturity dates and effective interest rates of financial assets and liabilities aredisclosed in their respective notes.

Credit Risk

Credit risk, or the risk of counterparties defaulting, is controlled by the application of credit approvals,limits and monitoring procedures. Credit risks are minimised and monitored via strictly limiting theGroup's associates to business partners with high creditworthiness. Trade receivables are monitoredon an ongoing basis via the Group's management reporting procedures.

The Group does not have any significant exposure to any individual customer or counterparty nor doesit have any major concentration of credit risk related to any financial instrument.

The normal credit terms for trade receivables and payables are 30 to 150 days. Other credit terms areassessed and approved on a case-by-case basis.

Fair Values

The carrying amounts of financial assets and financial liabilities of the Group and the Company as atbalance sheet date approximate their fair values.

The nominal/notional amount and net fair value of contingent liability (as disclosed in Note 22) are notrecognised in the balance sheet as at 31 December 2004 as it is not practicable to make a reliableestimate due to the uncertainties of timing, costs and eventual outcome.



NOTES TO THE

31 DECEMBER 2004

25. SIGNIFICANT EVENTS

The significant events during the financial year are as follows :

(a) In connection with the listing of its shares on the Second Board of Bursa Malaysia Securities Berhad,the Company undertook the following exercise as approved by the Securities Commission and allother relevant authorities:

(i) On 7 January 2004, the Company

- increased its authorised share capital from RM100,000 to RM50,000,000 by the creation ofan additional 49,900,000 ordinary shares of RM1.00 each,

- acquired the entire share capital of Boon Koon Vehicles Industries Sdn. Bhd. comprising11,673,640 ordinary shares of RM1.00 each for a total consideration of RM32,402,971 satisfiedby the issue of 30,568,841 new ordinary shares of RM1.00 each at an issue price ofapproximately RM1.06 per ordinary share,

- acquired the entire share capital of First Peninsula Credit Sdn. Bhd. comprising 299,200ordinary shares of RM1.00 each for a total cash consideration of RM683,443, and

- acquired 65% of the share capital of Boon Koon Marketing (East Malaysia) Sdn. Bhd.comprising 65,000 ordinary shares of RM1.00 each for a total cash consideration of RM212,085,

(ii) On 11 February 2004, the Company completed a rights issue of 2,631,157 ordinary shares ofRM1.00 each at an issue price of RM1.00 per ordinary share on the basis of approximately 86new ordinary shares for every 1,000 ordinary shares held after the above mentioned acquisitions,

(iii) A split of the par value of the ordinary shares from RM1.00 to RM0.50 each, which accordinglyincreases the enlarged share capital from 33,200,000 ordinary shares of RM1.00 each to66,400,000 ordinary shares of RM0.50 each,

(iv) On 2 April 2004, the Company completed the public issue of 13,600,000 ordinary shares ofRM0.50 each at an issue price of RM1.00 per ordinary share, and

(v) On 8 April 2004, the Company's shares were officially listed and quoted on the Second Boardof Bursa Malaysia Securities Berhad.

(b) On 1 June 2004, the Company announced that it had entered into a Share Sale Agreement withMr. Tan Poo Chuan and Madam Tan Geik Ee for the acquisition of 35,000 ordinary shares of RM1.00each in Boon Koon Marketing (East Malaysia) Sdn. Bhd., representing 35% of its issued and paid-up share capital for a total cash consideration of RM990,500. The acquisition was completed on30 June 2004.

(c) On 2 September 2004, the Company announced that its subsidiary company, namely Boon KoonVehicles Industries Sdn. Bhd. had entered into a Procurement Agreement with a subsidiary companyof Silverbird Group Berhad, namely Stanson Marketing Sdn. Bhd. for a total contract sum ofapproximately RM10 million for the supply of 160 units of rebuilt light duty rigid commercial vehiclescomplete with bodywork. The vehicles will be delivered in stages over a period of 15 months.


NOTES TO THE

31 DECEMBER 2004

26. EVENT AFTER BALANCE SHEET DATE

On 6 January 2005, the Company announced that it had on the same date incorporated a wholly-owned subsidiary company known as Boon Koon Vehicles Pte. Ltd., in the Republic of Singapore witha paid-up capital of SGD1. The proposed principal activities of this subsidiary company are the tradingof commercial vehicles (new or used), accessories, parts, components and the provision of relatedservices.

27. COMPARATIVE FIGURES

There are no comparative figures for the consolidated financial statements as this is the first year suchconsolidated financial statements are prepared.




DIRECTORS'

STATEMENT

We, Goh Boon Koon and Goh Boon Leong being two of the directors of Boon Koon Group Berhadstate that in our opinion, the financial statements set out on pages 36 to 68 are properly drawn up inaccordance with the provisions of the Companies Act, 1965 and applicable approved accounting standardsin Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company at31 December 2004 and of the results of the operations and cash flows of the Group and of the Companyfor the year ended on that date.

Signed in accordance with a resolution of the directors:

Goh Boon Koon

Goh Boon Leong

Date : 22 February 2005

STATUTORY

DECLARATION

I, Lee Teoh Kee, the director primarily responsible for the financial management of Boon Koon GroupBerhad do solemnly and sincerely declare that the financial statements set out on pages 36 to 68 are tothe best of my knowledge and belief, correct and I make this solemn declaration conscientiously believingthe same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by ]the abovenamed at Penang, this 22nd ]day of February 2005. ] Lee Teoh Kee

]

Before me,

Govindasamy A/L G. Muttusamy, PJM.Commissioner for Oaths


REPORT OF THE AUDITORS

TO THE MEMBERS

We have audited the financial statements set out on pages 36 to 68. The preparation of the financialstatements is the responsibility of the Company's directors. Our responsibility is to express an opinion onthe financial statements based on our audit.

We conducted our audit in accordance with approved Standards on Auditing in Malaysia. These standardsrequire that we plan and perform the audit to obtain all the information and explanations which we considernecessary to provide us with evidence to give reasonable assurance that the financial statements are freeof material misstatement. An audit includes examining, on a test basis, evidence relevant to the amountsand disclosures in the financial statements. An audit also includes an assessment of the accountingprinciples used and significant estimates made by the directors, as well as evaluating the overall adequacyof the presentation of information in the financial statements. We believe our audit provides a reasonablebasis for our opinion.

In our opinion :

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

(i) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financialstatements; and

(ii) the state of affairs of the Group and of the Company at 31 December 2004 and of the results ofthe operations and cash flows of the Group and of the Company for the year ended on that date;

and

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

We are satisfied that the financial statements of the subsidiary companies that have been consolidatedwith the Company's financial statements are in form and content appropriate and proper for the purposesof the preparation of the consolidated financial statements and we have received satisfactory informationand explanations required by us for those purposes.

The auditors' reports on the financial statements of the subsidiary companies were not subject to anyqualification and did not include any adverse comment made under subsection (3) of Section 174 of theAct.

JB LAU & ASSOCIATESNO. AF : 0042CHARTERED ACCOUNTANTS

JOHN LAU TIANG HUANO. 1107/03/06 (J)

DATE : 22 FEBRUARY 2005


Location OfProperty

GM 975, Lot 1804Mukim 91177, Jalan DatoKeramat14300 Nibong TebalSeberang PeraiSelatan,Penang

GM 454, Lot 1808Mukim 91177, Jalan DatoKeramat14300 Nibong TebalSeberang PeraiSelatan, Penang



H.S. (M) 592, Lot5025Mukim 91177, Jalan DatoKeramat14300 Nibong TebalSeberang PeraiSelatan, Penang

GM 145, Lot 219Mukim 6, DaerahSeberang PeraiSelatan, Penang

PM 462 Lot 2819Tempat Bt 18, JlnK. Selangor, MukimSungai Buluh,Daerah Petaling,Selangor

Tenure

Freehold

Freehold

Freehold

Freehold

Freehold

Freehold

99 yearsLeaseholdExpiring on

29 September2055

Area

2 ,853

6 ,490

6 ,490

18,818

7 ,356

12,141

7,425

Description

Office &Factory

Office &Factory

Office &Factory

Office &Factory

Office &Factory

Vacant Landused as storearea

Vacant Land

ApproximateAge of Building

1-6 years

1-6 years

1-6 years

1-6 years

1-6 years

Date ofacquisition/*revaluation

12 October1999

9,11 and 13December

1999

9,11 and 13December

1999

12 October1999

20 October1999

15,20 and 26December

2001

14 October2004

Net BookValue

(RM'000)

1,643

3,811

3,811

10,851

5,463

930

864

(Square metre)

GROUP

PROPERTIES

1 100

1,001 10,001

100,001 Over

- 99- 1,000- 10,000- 100,000- 1,000,000- 1,000,000

DIRECTORS' SHAREHOLDINGS

SUBSTANTIAL SHAREHOLDERS

ANALYSIS OF

SHAREHOLDINGS


AS AT 5 APRIL 2005

Authorised : RM 50,000,000.00Issued and Fully paid-up : RM 40,000,000.00Class of Share : Ordinary shares of RM0.50 eachVoting Rights : On a show of hands - One vote for one ordinary share

On a poll - One vote for one ordinary share

DISTRIBUTION SCHEDULE OF SHAREHOLDINGS

Size of Holdings No of Shareholders % No. of Shares %

TOTAL

3587300922812

1,022

0.2957.4429.359.002.751.17

100.00

104224,700

1,359,1003,261,210

10,657,00064,497,886

80,000,000

-0.281.704.08

13.3280.62

100.00

No

12345678910

Name

Goh Boon KoonGoh Boon LeongLee Teoh KeeGoh Boon SiewTan Jin SunShamsudin @ Samad Bin KassimAbd Ghani Bin Ali KadirHo Kok LoonAng Poh GinMurelidaran A/L M Navaratnam

No. of Shares

15,539,18414,880,60411,387,9443,679,8541,940,4001,350,000

533,10020,00020,00013,000

19.4218.6014.234.602.431.690.670.030.030.02

% No. of Shares

----------

%

----------

Direct Indirect

No

1234

Name

Goh Boon KoonGoh Boon LeongLee Teoh KeeHSBC Holdings plc

No. of Shares

15,539,18414,880,60411,387,9448,790,000

19.4218.6014.2310.99

% No. of Shares

----

%

----

Direct Indirect

ANALYSIS OF

SHAREHOLDINGS • • •


AS AT 5 APRIL 2005

LIST OF THIRTY ( 30 ) LARGEST SHAREHOLDERS

No

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

Name

Goh Boon Koon

Goh Boon Leong

Lee Teoh Kee

HSBC Nominees (Tempatan) Sdn Bhd(HSBC (M) Trustee Bhd For Value Fund)

HSBC Nominees (Tempatan) Sdn Bhd(HSBC (M) Trustee Bhd For Hwang-DBS Select Small Caps Fund)

Goh Boon Siew

Amanah Raya Nominees (Tempatan) Sdn Bhd(Public Smallcap Fund)

HDM Nominees (Tempatan) Sdn Bhd(Pledged Securities Account For Tan Ba Tong)

Amanah Raya Berhad(SBB Dana Al-Faiz)

Inter-Pacific Equity Nominees (Tempatan) Sdn Bhd(Pledged Securities Account For Tan Jin Sun)

Mayban Nominees (Tempatan) Sdn Bhd(Avenue Asset Management Services Sdn Bhd For Perusahaan OtomobilNasional Berhad)

Alliancegroup Nominees (Tempatan) Sdn Bhd(Pledged Securities Account For Shamsudin @ Samad Bin Kassim)

HDM Nominees (Tempatan) Sdn Bhd(Pledged Securities Account For Lee Mun Seng)

Employees Provident Fund Board

AMMB Nominees (Tempatan) Sdn Bhd(AmTrustee Berhad For HLG Penny Stock Fund)

Mayban Nominees (Tempatan) Sdn Bhd(Mayban Trustees Berhad For Hidden Treasures Fund)

Amanah Raya Nominees (Tempatan) Sdn Bhd(PB Growth Fund)

No. of Shares

15,319,184

14,652,304

11,387,944

5,000,000

3,790,000

3,679,854

2,898,000

2,167,600

1,951,000

1,625,300

1,500,000

1,350,000

938,700

899,500

807,000

700,000

670,000

%

19.15

18.32

14.23

6.25

4.74

4.60

3.62

2.71

2.44

2.03

1.88

1.69

1.17

1.12

1.01

0.88

0.84

ANALYSIS OF

SHAREHOLDINGS • • •


LIST OF THIRTY ( 30 ) LARGEST SHAREHOLDERS • • •

No

18

19

20

21

22

23

24

25

26

27

28

29

30

Name

Abd Ghani Bin Ali Kadir

Noorsa Merican Bin Ghouse

EB Nominees (Tempatan) Sendirian Berhad(Pledged Securities Account For Yeoh Kee Kuan)

Mayban Nominees (Tempatan) Sdn Bhd(Mayban Trustees Berhad For Avenue Versatileextra Fund)

HDM Nominees (Tempatan) Sdn Bhd(Pledged Securities Account For Tan Poo Chuan)

Alliancegroup Nominees (Tempatan) Sdn Bhd(Alliance Capital Asset Management Sdn Bhd For Employees ProvidentFund)

Tan Poo Chuan

Maxi Support Sdn Bhd

Gaintrack Sdn Bhd

A.A. Assets Nominees (Tempatan) Sdn Bhd(Pledged Securities Account For Ooi Boon Leong)

Tan Yong Siang

Ke-Zan Nominees (Tempatan) Sdn Bhd(Goh Boon Leong)

HDM Nominees (Tempatan) Sdn Bhd(Pledged Securities Account For Goh Boon Koon)

No. of Shares

533,100

511,000

500,000

445,000

356,400

348,600

345,000

318,000

315,000

305,000

293,700

228,300

220,000

%

0.67

0.64

0.63

0.56

0.45

0.44

0.43

0.40

0.39

0.38

0.37

0.29

0.28

AS AT 5 APRIL 2005

FORMPROXY

* I / We

of

being a *member/members of the abovenamed Company, hereby appoint

of

or failing him,

of

as * my / our proxy to vote for * me / us on * my / our behalf at the Third Annual General Meeting of theCompany to be held at Merbah Room, Hotel Equatorial, Penang, 1 Jalan Bukit Jambul, Bayan Lepas,11900 Penang on Thursday, 19 May 2005 at 10.30 a.m. and any adjournment thereof.

No. ofResolution

12

3

45678910

ResolutionsTo receive and consider the Reports and Financial StatementsTo approve the payment of a first and final tax exempt dividend of3.75 sen per shareTo approve the payment of Directors' fees of RM31,000To re-elect the following Directors retiring in accordance with theArticles of Association of the Company :-a) Encik Shamsudin @ Samad Bin Kassimb) Mr. Goh Boon Koonc) Mr. Goh Boon Leongd) Mr. Tan Jin Sune) Mr. Murelidaran A/L M NavaratnamTo re-appoint AuditorsTo authorise Directors to allot and issue shares pursuant to Section132D of the Companies Act, 1965

For

Please indicate with an "x" in the appropriate spaces provided above on how you wish your vote to becast. If no specific direction for voting is given, the proxy may vote as he thinks fit.

No. of shares held

Signed this day of , 2005.

(Full Name in Block Letters)

(Address)


(Address)

(Address)


Notes : 1. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965

shall not apply to the Company.2. To be valid this form duly completed must be deposited at the registered office of the Company, 51-8-B Menara BHL Bank,

Jalan Sultan Ahmad Shah, 10050 Penang not less than forty-eight (48) hours before the time for holding the meeting.3. A member shall be entitled to appoint one (1) or more proxies (subject to a maximum of two (2) proxies at each meeting) to

attend and vote at the same meeting.4. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of

his holdings to be represented by each proxy.5. If the appointor is a corporation, this form must be executed under its Common Seal or under the hand of its attorney.

Against

Signature of Member (s)

BOON KOON GROUP BERHAD(NO. SYARIKAT: 553434-U)(Incorporated in Malaysia)

Please fold across the line and close

The Company SecretaryBOON KOON GROUP BERHAD (553434-U)

51-8-B Menara BHL Bank, Jalan Sultan Ahmad Shah10050 Penang

stamp

Please fold across the line and close

Annual Report 2004opcdn.net/file/M_7490/W_243/uploads/file/ar2004.pdfDIRECTORS SHAMSUDIN @ SAMAD BIN KASSIM • (EXECUTIVE CHAIRMAN) GOH BOON KOON • (MANAGING DIRECTOR) GOH BOON

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