Idaman Unggul 2005 Annual Report

8/14/2019 Idaman Unggul 2005 Annual Report

1/102Idaman Unggul Berhad Annual Report 2005 l 1

annual report 2005A New Era

Idaman Unggul Berhad(279343-W)



Content

Directors Report And Financial Statements

23-27 Directors Report

28 Statement By Directors

28 Statutory Declaration

29-30 Report Of The Auditors

31 Income Statements

32-33 Balance Sheets

34 Consolidated Statement Of Changes In Equity

35 Statement Of Changes In Equity

36-37 Cash Flow Statements

38-87 Notes To The Financial Statements

2 Corporate Structure

3-4 Notice Of Annual General Meeting

5 Corporate Information

6-7 Profiles Of Directors

8-12 Corporate Governance Statements13-14 Statement of Internal Control

15-17 Report On Audit Committee

18 Additional Compliance Information

19-21 Chairman s Statement

88-89 Statement Of Shareholdings

90 Substantial Shareholders

90 Directors Shareholdings

91-92 Statement Of Iculs-A Holdings

93 Directors Iculs-A Holdings

94-95 Statement Of Iculs-B Holdings

96 Directors Iculs-B Holdings

97-98 List Of Properties

99 Proxy Form



Tahan Insurance

Malaysia Berhad

100%

PCM Synergy Sdn Bhd100%

F. T. Land Sdn Bhd

100%

Waikiki Beach Hotel

Sdn Bhd

100%

Talapia Jati Sdn Bhd

100%

IUB Asset Management

Sdn Bhd

100%

Corporate Structure(as at 1 August 2006)

IDAMAN UNGGUL BERHAD(279343-W)

(Incorporated in Malaysia)

Special Purpose

Vehicle

Information and

Communication

Technology

Financial ServicesInvestment

Holding

Lambang Pertama Sdn Bhd

100%

Idris Hydraulic

(Malaysia) Bhd100%

PICT Solution Sdn Bhd

100%

Straight Effort Sdn. Bhd.

100%

Idaman Investment Ltd

100%

Idaman Solar

(Indonesia) Ltd

51%

Idaman Monarch(Philippines) Ltd

100%

Kenangan Cergas

(M) Sdn. Bhd.

100%

Sagisan Sdn.

Bhd.

100%

Syarikat Sogon

Bersaudara

Sdn.Bhd.

100%

Tenju Sdn. Bhd.

100%

Bintang Tawau

Sdn. Bhd.

100%Syarikat Sabakina

Sdn Bhd

100%

Resolute

Enterprise

Sdn Bhd

100%

Mee Cheong

Sdn Bhd

100%

IHMB Wood

Holdings Sdn Bhd

100%

IHMB Timber

Sdn Bhd100%

Naluri Ultra

Sdn Bhd

100%

Societe Forestiere

de Tchibanga

48%

Idris Hydraulic

Industries

Sdn. Bhd.

100%

Wiragain Sdn.

Bhd.

100%

Idris Bersatu

Management

Sdn Bhd

100%

Magnitude Ace

(M) Sdn. Bhd.

100%

Prisma Pertiwi

Sdn Bhd

100%

Teras Hemat

Sdn Bhd

100%

Idris Hydraulic

Properties

Sdn. Bhd.

100%

Fujasa Sdn. Bhd.

100%

Idris Hydraulic

Investment

(Myanmar) Ltd.

100%

Hasrat Sanjung

(M) Sdn. Bhd.

100%

Idris Hydraulic

Vencap Sdn. Bhd.

100%

Idris Hydraulic

Realty Sdn. Bhd.

100%

Simfoni Pedoman

Sdn. Bhd.

100%

Edisi Dekad

Sdn. Bhd.

100%Naungan Erat

Sdn. Bhd.

100%

Klinker

Investments Ltd

100%

Anscan

International Ltd

50% + 1

Finmark Ltd

100%

APW Pty Ltd

100%

Fiowin

Investments

Limited

100%

Inlandpark

Sdn. Bhd.

100%

Kekal Asal

Sdn. Bhd.

100%

Idris Hydraulic

Leisure Services

Sdn. Bhd.

100%

Keys

Directly held by IUB

Indirectly held by IUB

AE Kredit

Sdn. Bhd.

100%

Idris Hydraulic

Capital Sdn. Bhd.

100%



Notice Of 3rd Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Third Annual General Meeting of the Company will be held at Royal

Ballroom, Kelab Golf Sultan Abdul Aziz Shah, No. 1, Rumah Kelab, Jalan Kelab Golf 13/6, Seksyen 13, 40100

Shah Alam, Selangor Darul Ehsan on Wednesday, 30 August 2006 at 9.00 a.m to transact the following business :

1. To receive and adopt the Audited Financial Statements of the Company for the year

ended 31 December 2005 and the Reports of the Directors and Auditors thereon.

[Resolution 1]

2. To re-elect Dato Ab. Halim bin Mohyiddin who retires by rotation in accordance with

Article 97 of the Company s Articles of Association and being eligible, offers himself

for re-election.

[Resolution 2]

3. To re-elect Datuk Che Mokhtar bin Che Ali who retires by rotation in accordance with

Article 97 of the Company s Articles of Association and being eligible, offers himself

for re-election.

[Resolution 3]

4. To approve the payment of Directors fees. [Resolution 4]

5. To re-appoint Messrs. Ernst & Young as Auditors of the Company and to hold office

until the conclusion of the next Annual General Meeting, at a remuneration to be

determined by the Directors.

[Resolution 5]

AS SPECIAL BUSINESS

6. To consider and if thought fit, to pass the following Ordinary Resolution :

Authority to Allot and Issue Shares Pursuant to Section 132D of the Companies

Act 1965

THAT, subject always to the Companies Act, 1965, the Articles of Association

of the Company and the approvals of the relevant governmental and/or regulatory

authorities, the Directors be and are hereby empowered pursuant to Section 132D of

the Companies Act, 1965, to issue and allot shares in the Company from time to time

and upon such terms and conditions and for such purposes as the Directors may deem

fit provided that the aggregate number of shares issued pursuant to this resolution doesnot exceed 10% of the issued share capital of the Company and that such authority

shall continue in force until the conclusion of the next Annual General Meeting of the

Company.

[Resolution 6]

7. To transact any other ordinary business of which due notice shall have been given.

BY ORDER OF THE BOARD

QUAH KHIAN KHOON (MAICSA 7030264)

Secretary

9 August 2006



Notice Of 3rd Annual General Meeting (Contd)

Notes :

1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his

stead. A proxy need not be a member of the Company.

2. Subject to the Act, where a member appoints two proxies, the appointment shall be invalid unless he specifies

the proportions of his holding to be represented by each proxy.

3. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly

authorised in writing or if such appointor is a corporation, either under its common seal or the hand of an

officer or attorney duly authorised.

4. The Form of Proxy must be completed, signed and deposited at the Company s Registered Office not less than

48 hours before the time set for the meeting or adjourned meeting.

EXPLANATORY NOTES ON SPECIAL BUSINESS

Resolution No. 6 : Authority to Issue and Allot Shares

The proposed ordinary resolution is primarily to give flexibility to the Board of Directors to issue and allot shares

at any time in their absolute discretion without convening a general meeting.

1. DIRECTORS WHO ARE STANDING FOR RE-ELECTION

The Directors retiring by rotation pursuant to Article 97 of the Articles of Association are :

(a) Dato Ab. Halim bin Mohyiddin; and

(b) Datuk Che Mokhtar bin Che Ali

The details of the Directors seeking for re-election are outlined on pages 6 & 7 of the Annual Report 2005.

2. DETAILS OF ATTENDANCE AT BOARD MEETING

A total of seven (7) Board Meetings were held during the financial year ended 31 December 2005.

Details of attendance of the Directors are set out in the Profile of Directors appearing on page 9 of the Annual

Report.

3. PLACE, DATE & TIME OF THE GENERAL MEETING

The Second Annual General Meeting of the Company was held during the financial year ended 31 December

2004 at the Royal Ballroom, Kelab Golf Sultan Abdul Aziz Shah, No. 1, Rumah Kelab, Jalan Kelab Golf 13/6,

Seksyen 13, 40100 Shah Alam, Selangor Darul Ehsan on Thursday, 30 June 2006 at 9.00 a.m.

Statement Accompanying Notice OfAnnual General Meeting



Corporate Information

Board Of Directors

Dato Che Mohd Annuar bin Che Mohd Senawi

(Executive Chairman)

Dato Ab. Halim bin Mohyiddin

(Independent, Non-Executive Director)

Datuk Che Mokhtar bin Che Ali

(Non-Independent, Non-Executive Director)

Haji Hussein bin Hamzah


Brig. Jen. (B) Dato Pahlawan Hj Jamil bin Tahir


Dr. Radzuan bin Abdul Rahman


Audit Committee

Haji Hussein bin Hamzah

(Chairman/Independent, Non-Executive Director)



Brig. Jen (B) Dato Pahlawan Hj Jamil bin Tahir




Company Secretary

Quah Khian Khoon

(MAICSA No. 7030264)

Registered Office

Level 20, Menara MRCB

No. 2, Jalan Majlis 14/10, Seksyen 14

40000 Shah Alam

Selangor Darul Ehsan

Tel : 03-55103222 Fax : 03-55102333

Share Registrar

Symphony Share Registrars Sdn. Bhd.

Level 26, Menara Multi Purpose

Capital Square

No. 8 Jalan Munshi Abdullah

50100 Kuala Lumpur

Tel : 03-27212222 Fax : 03-27212530

Auditors

Messrs. Ernst & Young

Principal Bankers

Bumiputra Commerce Bank Berhad

Stock Exchange

The Main Board of the Bursa Malaysia Securities

Berhad



Profile Of Directors

Dato Che Mohd Annuar Bin Che MohdSenawiExecutive Chairman Member of the Remuneration

Committee

Dato Che Mohd Annuar Bin Che Mohd Senawi (Dato

Annuar), aged 58, a Malaysian, was appointed to the Board

of Idaman Unggul Sdn Bhd on 17 December 1993. He

holds a Bachelor of Arts Degree in Actuarial Science and

Demography from Macquarie University, Sydney, Australia

in 1972 and is an Associate Member of the Institute of

Actuaries (London).

Dato Annuar joined the public service as an Actuarial

Officer at the Prime Ministers Department in 1973. Prior

to joining the private sector in 1984 he held the position of

Government Actuary. He was the Chief Executive Officer

of Malaysian Cooperative Insurance Society from 1984 to

1989 and held the position of the Executive Chairman of

Malaysia Nasional Insurance Berhad from 1989 to 1996. He

was the Director of various corporations such as Employees

Provident Fund, United Malayan Banking Corporation Bhd,

Island and Peninsular Bhd, Landmarks Bhd and Shangri-la

Hotel Bhd.

He currently sits on the Board of Tahan Insurance Malaysia

Berhad.

Dato Annuar is deemed to have an indirect interest in

the subsidiaries of IUB by virtue of Section 6A(4) of

the Companies Act, 1965 held through IUB. He has no

relationship with any other director and/or substantial

shareholders of IUB, has no conflict of interests with IUB

and has had no convictions for offences within the past 10

years.

Dato Ab. Halim Bin MohyiddinIndependent Non-Executive Director - Chairman of the

Nomination Committee, Remuneration Committee and

Member of the Audit Committee

Dato Ab. Halim bin Mohyiddin (Dato Halim), DPMS,

aged 60, a Malaysian, was appointed to the Board on

23 September 2003. He graduated with a Bachelor of

Economics (Accounting) from University of Malaya in

1971. Upon graduation, he joined University Kebangsaan

Malaysia as a Faculty Member of the Faculty of Economics.

In 1973 he obtained his Masters of Business Administrationfrom University of Alberta, Edmonton, Canada and in 1975

he obtained Diploma in Accountancy (post-grad) from

University of Malaya. In 1977, he joined KPMG/ KPMG

Desa Megat & Co and was made partner of the firm in 1985.He retired from the firm in 2001.

He is currently President of the Malaysian Institute of

Certified Public Accountants (MICPA) and the Chairman

of the Education and Training Committee of the Institute.

He also sits on the International Federation of Accountants

(IFAC), Education Committee. He is also a Council Member

of Malaysia Institute of Accountants (MIA) and Chairman

of its Qualifying Examination Committee.

Dato Halim is currently serving on the Board of several

private and public listed companies namely Hei Tech Padu

Berhad, Arab Malaysian Corporation Berhad, Utusan Melayu

Malaysia Berhad, Digi.Com Berhad, MCM Technologies

Berhad, KNM Group Berhad, Amway (Malaysia) Holdings

Bhd and Kumpulan Perangsang Selangor Bhd.

Dato Halim does not hold any shares in the Group and has

no relationship with any other director and/or substantial



years.

Datuk Che Mokhtar Bin Che AliNon-Independent, Non-Executive Director

Datuk Che Mokhtar bin Che Ali (Datuk Che Mokhtar),

aged 52, a Malaysian, was appointed to the Board on 23

September 2003. He graduated with a Bachelor of Arts

(B.A.) and Bachelor of Law (LLB) degrees from Victoria

University of Wellington, New Zealand. He was a former

Magistrate and Deputy Public Prosecutor. He has been an

Advocate and Solicitor of the High Court of Malaya since

1983. He is a Notary Public and a member of Advocates and

Solicitors Disciplinary Committee. He currently sits on theBoard of Focal Aims Holdings Berhad.

Datuk Che Mokhtar does not hold any shares in the Group

and has no relationship with any other director and/or

substantial shareholders of IUB and has had no convictions

for offences within the past 10 years.



Profile Of Directors

Haji Hussein Bin HamzahIndependent, Non-Executive Director - Chairman of the

Audit Committee, Member of the Nomination Committee and

Remuneration Committee

Haji Hussein bin Hamzah (Tuan Hj Hussein), aged 62,

a Malaysian, was appointed to the Board on 23 September

2003. He holds Associateship in Architecture from

Western Australian Institute of Technology and Diploma in

Architecture from MARA Institute of Technology.

Tuan Hj Hussein is a Registered Architect in Board

of Architects, Malaysia and held various positions inProfessional Institutes including Pertubuhan Arkitek

Malaysia (PAM) serving as president from 1989 to 1990,

and Institut Rekabentuk Dalaman Malaysia (IPDM)

serving as president from 1992 to 1994. He has served as

a member representing PAM on the Board of Architects

(1990 to 1992), the Committee for GATT and Trade in

Services, Ministry of Finance, the consultative Panel for the

National Housing Policy and as Chairman for the Standards

Committee on use of buildings by the handicapped in the

Ministry of Housing and Local Government. He is currently

a Director of Federal Furniture Holdings (M) Berhad.

Tuan Hj Hussein does not hold any shares in the Group andhas no relationship with any other director and/or substantial



years.

Brig. Jen. (B) Dato Pahlawan Hj Jamil

Bin TahirIndependent, Non-Executive Director - Member of the Audit

Committee

Brig Jen (B) Dato Pahlawan Hj. Jamil bin Tahir (Dato

Jamil) aged 58, a Malaysian, was appointed to the Board

on 31 May 2004. As an Army Officer from the Engineering

Corps, he attended all the necessary professional courses.

Apart from Military Engineering, other courses include

those on Military Operations, Training, Logistics,

Management and Strategic Studies. Some of the courses are

attended overseas, namely the United Kingdom, Australia,

the United States of America, Indonesia and Bangladesh.

Throughout his 35 years career in the Army, Dato Jamil has

held various command and staff appointments ranging froman Engineer Troop Commander in 1972 up to the Chief

Engineer of the Malaysian Army in 2003 until his retirement

in 2004. Other notable appointments include those as the

Chief Secretariat of the Army Headquarters, a DirectingStaff at the Malaysian Armed Forces Staff College and as

Director of Defence Mapping at the Department of Survey

and Mapping, Malaysia.

Dato Jamil does not hold any shares in the Group and has

no relationship with any other director and/or substantial

shareholders of IUB, has no conflict of interest with IUB and

has no convictions for offences within the past 10 years.

Dr. Radzuan Bin Abdul RahmanIndependent, Non-Executive Director - Member of the

Audit Committee, Nomination Committee and Remuneration

Committee

Dr. Radzuan bin Abdul Rahman (Dr Radzuan) aged 63,

a Malaysian was appointed to the Board on 28 December

2004. He is the Chairman of Kenangan Cergas (M) Sdn.

Bhd., a wholly owned subsidiary of Idris Hydraulic

(Malaysia) Bhd.

He graduated with Bachelor in Agricultural Science,

University Malaya and later pursued his Masters in Science

and Doctorate in Resource Economics at Cornell University,New York. His early calling was to teach, a passion that

has remained with him until today. A devoted academician,

Dr Radzuan was the Dean at the Faculty of Resource

Economics and Agribusiness, University Putra Malaysia

until March 1980.

Dr Radzuan first expanded his horizon to Sime Darby

Plantations and in 1984, he joined Golden Hope Plantations

Berhad as a director of corporate planning and worked his

way up to be Group Director of the Plantation Division. The

16 fruitful years spent at Golden Hope Plantations served

as a nursery that had nurtured and articulated his corporate,management and business acumen.

In addition to being the Council Member at the Kuala

Lumpur University and Malaysian Agricultural Research

and Development Institute (MARDI), Dr Radzuan currently

sits on the Board of Fraser & Neave Holding Berhad,

Tradewinds (M) Berhad, Inch Kenneth Kajang Rubber

Plc, Kuwait Finance House (Malaysia) Bhd, F&N Diaries

Sdn Bhd, Premier Milk Malaya, UNIKL Sdn Bhd and

Marditech Sdn Bhd. He is currently the Managing Director

of Tradewinds Plantation Bhd.

Dr Radzuan does not hold any shares in the Group and hasno relationship with any other director and/or substantial



years.



Statement Of Corporate Governance

INTRODUCTION

The Malaysian Code of Corporate Governance (theCode) introduced in March 2000, sets out principles andbest practices on structures and processes that corporationsmay use in their operations towards achieving the optimalgovernance framework. The principles and best practicesof the Code were incorporated into the revamped ListingRequirements of Bursa Malaysia Securities Berhad(Bursa Malaysia) and listed companies are required todisclose the extent of compliance or provide alternative

measures in areas where there are deviations from theprinciples and/or best practices.

The Board of Directors (the Board) remain unreservedlycommitted in applying and ensuring that the higheststandards of Corporate Governance as set out in the Codeare well observed and practised throughout the Group inupholding its fundamental duty to safeguard the interestsof all stakeholders and to enhance stakeholders value.Thus, will continuously evaluate the Groups CorporateGovernance practices and procedures and whereappropriate will adopt and implement the best practicesas enshrined in the Code, in accordance with Paragraph

15.26 of the Bursa Malaysia Listing Requirement.

The Board is hereby pleased to report herein the manner inwhich the Company has applied the principles containedin the Code and the extent of compliance with the bestpractices of the Code as required under the ListingRequirement of Bursa Malaysia for the financial yearended 31 December 2005 in an effort to observe highstandards of transparency, accountability and integrity.

BOARD OF DIRECTORS

The Board

The Board is controlled and led by an effective Boardwhich has overall responsibility in corporate governance,financial performance, establishing goals and strategicdirection, overseeing the investments and attainments ofthe corporate plans and objectives of the Company.

Specific responsibilities have been assigned to three (3)sub-committees namely Audit Committee, NominationCommittee and Remuneration Committee. TheseCommittees have the authority to examine particular issuesand report back to the Board with their recommendations,whereby the ultimate responsibility for the final decisionon all matters lies with the entire Board.

Composition of the Board

As at the date of this report, the Board comprises of thefollowing :-

Directorship Percentage

Executive Director (also the Executive Chairman) 1/6 (16.7%)

Independent, Non-Executive Director 4/6 (66.7%)

Non-Independent, Non-Executive Director 1/6 (16.6%)

This is in compliance with Paragraph 15.02 of the Bursa

Malaysia Listing Requirement that requires at least two(2) Directors or one-third of the Board members compriseof Independent Directors to fairly reflect the interest ofthe minority shareholders. The profile of each director ispresented on pages 6 to 7 of the Annual Report.

The Board of Directors is entrusted with the responsibilityto exercise reasonable and proper care of the Companysresources for the best interests of its shareholders and tosafeguard the Companys assets. Members of the Boardhave been selected based on their character, caliber,extensive experience and expertise in a wide range of bothrelated and unrelated industries, as well as their ability toadd strength to the stewardship of the Company. Thus,collectively bring together a wide range of experienceand expertise in areas such as finance, legal, corporateaffairs and operations.

The Independent Directors play crucial role by providingindependence and broader views to the management toensure balance of power and authority amongst the Board.The presence of the Independent Director is essential inproviding unbiased and independent views, advice andjudgement as well as safeguarding the interests of otherparties such as minority shareholders of the Company.

The concept of independence adopted by the Board isin accordance with the definition of an IndependentDirector in Paragraph 1.01 of the Bursa Malaysia ListingRequirement.

The Executive Chairman has overall responsibilityfor the Groups business operations, organizationaleffectiveness and the implementation of the Boardpolicies and decisions. Nevertheless, the ultimateresponsibility for the final decision on all matters lies withthe Board of Directors. According to Best Practices ofCorporate Governance, the roles of Chairman and Chief

Executive Officer should be distinct and segregated toensure a balance of power and authority, such that no oneindividual can dominate the boards decision. The Boardis aware of the dual role held by Dato Annuar Senawi




(Dato Annuar) who is also the Executive Chairman.His success in improving the performance of the Groupenables him to continue his legacy as the major playerin maintaining the survival and growth of the Group asa whole.

Dato Ab. Halim bin Mohyiddin has been identified asthe Senior Independent, Non-Executive Director of theBoard to whom concerns of shareholders, Managementand investors may be conveyed.

Directorships in Other Companies

Each of the Directors of Idaman Unggul Berhad meet therequirements of Paragraph 15.06 of the Bursa MalaysiaListing Requirement which restricts the number ofdirectorship of not more than ten (10) in any publiclisted companies and not more than fifteen (15) in othercompanies (other than listed companies). This ensures theDirectors commitment, resources and time are focusedfor effective input to the Board. The directorships of eachdirector are set out in the Profile of Directors on pages 6to 7 of the Annual Report.

Board Meetings

Board meetings are scheduled at least four (4) timesa year and additional meetings are held as and whenrequired. The Board will meet to discuss and reviewthe financial performance of the Group and to adopt thequarterly financial reports. A total of seven (7) Board ofDirectors Meetings were held during the financial yearended 31 December 2005 and the details of attendance ofeach Director are set out as follows :

Name of Director Number of

meetingsattended


(Executive Chairman)7/7


(Independent, Non-Executive Director)6/7


(Non-Independent, Non-Executive Director)5/7

Tuan Haji Hussein bin Hamzah


Brig. Jen. (B) Dato Pahlawan Hj Jamil bin

Tahir


6/7

Dr Radzuan bin Abdul Rahman


All the Directors have complied with the minimum 50%attendance requirement at Board Meetings during thefinancial period as stipulated by the Listing Requirementof Bursa Malaysia.

Supply of Information

The Board has unrestricted access to timely and accurateinformation on various aspects concerning the Company.Prior to the date of the scheduled meetings, the agenda

for every Board Meeting together with comprehensivemanagement reports, proposal papers and supportingdocuments are furnished to the Directors for their perusalwell in advance of the Board meeting date, so thatthe Directors have ample time to review matters to bedeliberated and to facilitate informed decision makingby the Directors. Minutes of every Board meetingare circulated to all Directors for their perusal prior toconfirmation of the minutes at the following Boardmeeting.

As and when necessary, the Directors, in furtherance oftheir duties may seek independent professional advice at

the expense of the Company. All Directors have full accessto the senior management and the advice and services ofthe Company Secretary who ensures that all appointmentare properly made and that all necessary information isobtained from the Directors, both for the Companysown records or for the purposes of meeting statutoryobligations, as well as obligations arising from the ListingRequirement or other regulatory requirements.

Appointment of Directors

The Code endorses as a good practice, a formal procedure

for appointments of Directors, with a NominationCommittee making recommendations to the Board.The Nomination Committee currently comprises thefollowing members :

(a) Dato Ab. Halim bin Mohyiddin(Chairman/Independent, Non-Executive Director);

(b) Tuan Haji Hussein bin Hamzah(Independent, Non-Executive Director); and

(c) Dr. Radzuan bin Abdul Rahman(Independent, Non-Executive Director).

The committee is primarily empowered to recommend tothe Board, new candidates as Board members or Boardcommittee members to ensure mix of skills and experienceand other qualities including core competencies whichthe Non-Executive Directors should bring to the Board.




In addition to recommending candidates to the Board,the Nomination Committee also assesses and reviews theeffectiveness of the Board as a whole and contribution ofeach individual Director.

Re-election of Directors

Paragraph 7.28 of the Bursa Malaysia Listing Requirementrequires all Directors to submit for re-election once atleast in each three (3) years. In accordance with theCompanys Articles of Association, one-third of the

Directors shall retire at each Annual General Meetingand the retiring directors are eligible for re-election.Any Directors appointed during the year are subject toretirement and re-election at the next Annual GeneralMeeting.

Directors over seventy (70) years of age are requiredto submit themselves for re-appointment annually inaccordance with Section 129(6) of the Companies Act,1965. However, the Board has decided not to re-elect anyDirectors above 70 years of age.The retiring Directors who are standing for re-election in

accordance to Article 97 of the Articles of Association atthe forthcoming Annual General Meeting are as follows :-

Dato Ab. Halim bin Mohyiddin (Independent, Non-Executive Director); and

Datuk Che Mokhtar bin Che Ali (Non-Independent,Non-Executive Director)

DIRECTORS TRAINING

As at the date of this Statement, all Directors have attended

the Mandatory Accreditation Program (MAP) andContinuing Education Programme (CEP) conducted byvarious course leaders such as Rating Agency MalaysiaBerhad, Research Institute of Investment AnalystsMalaysia, BDO Governance Advisory, and Busatra SdnBhd (an affiliate Company of Bursa Malaysia).

The Board recognizes the importance of training to aidthem in discharging their duties to the Company. As such,the Directors will continue to attend training programmesand seminars from time to time to keep abreast of relevantdevelopment and current regulatory issues despite therepeal of Practice Note 15/2003 (PN 15/2003) of theBursa Malaysia Listing Requirement with effect from 1January 2005, whereby the Directors are not obligated toattend the CEP as prescribed under PN 15/2003.

Details of training attended by each Director are set outas below :-

Name of

Director

Training(s) Attended

Dato Che

Mohd

Annuar bin

Che Mohd

Senawi

(a) Succession Planning & Talent

Pool Development on 9 June

2005.

Dato Ab. Halim

bin Mohyiddin

(a) MICPA Business Forum 2005

on 5-6 September 2005.Datuk Che

Mokhtar bin Che

Ali

(a)

(b)

Going for Listing on 17-18

May 2005; and

Succession Planning & Talent

Pool Development on 9 June

2005.

Tuan Hj Hussein

bin Hamzah

(a) The Audit Committee on 15

June 2005.

Brig. Jen.

(B) Dato

Pahlawan

Hj Jamil bin

Tahir

(a)

(b)

The Audit Committee on 14

September 2005; and

Understanding and Making

Effective Use of Consolidated

Financial statements on 18November 2005.

Dr Radzuan bin

Abdul Rahman

(a) National Integrity Plan-

Reinventing the Future

Through Good Governance on

8-9 August 2005.

Directors Remuneration

The Remuneration Committee currently comprises thefollowing members :

(a) Dato Ab. Halim bin Mohyiddin(Chairman/Independent, Non-Executive Director);

(b) Dato Che Mohd Annuar bin Che Mohd Senawi(Executive Director);

(c) Tuan Haji Hussein bin Hamzah(Independent, Non-Executive Director); and

(d) Dr. Radzuan bin Abdul Rahman(Independent, Non-Executive Director).

The remuneration packages for the Directors aredeliberated by the Remuneration Committee, whichensures that the Directors are well rewarded in accordance

with their contribution and performance of the Company,hence motivating and retaining the best candidate torun the Company successfully. Remuneration packages




of Executive Directors are structured to commensuratewith corporate and individuals performance, seniority,experience and scope of responsibility and is benchmarkedto market/industry standards. The Non-ExecutiveDirectors are remunerated based on fixed annual feesapproved by the shareholders of the Company. Theremuneration packages of the Directors are decidedby the Board as whole, with the Director concernedabstaining from participating on decisions in respect ofhis individual remuneration.

Details on the remuneration of the Directors are asfollows :

Basic

Salary/

Fees

RM000

Other

Benefits

RM000

Total

2005

RM000

Total

2004

RM000

Executive Director

Dato Che Mohd

Annuar bin Che

Mohd Senawi

540 249 789 756

Dato Dr. Abdul

Razak bin Abdul(resigned on

31.8.2004)

- - - 844

540 249 789 1600

Non-Executive

Directors

Dato Ab. Halim bin

Mohyiddin12 16 28 27

Datuk Che Mokhtar

bin Che Ali12 1 13 14

Tuan Haji Hussein

bin Hamzah12 40 52 50

Brig. Jen. (B) Dato

Pahlawan Hj Jamil

bin Tahir

12 15 27 12

Dr Radzuan bin

Abdul Rahman12 14 26 -

Mohd Mahyudin bin

Zainal (resigned on

31.8.2004)

- - - 33

60 86 146 136

Grand Total 600 335 935 1736

INVESTORS RELATION AND SHAREHOLDERSCOMMUNICATION

The Board recognises the importance of establishinga direct line of communication with shareholders andinvestors through timely dissemination of information ofthe Groups performance. Dissemination of informationincludes the distribution of Annual Report and relevantcircular to shareholders, issuance of press releases,announcement of quarterly financial results to providethe shareholders and the general public with an overview

of the Groups business activities and performance of theCompany to Bursa Malaysia and the public as well asholding press conference.

The Annual General Meeting is a crucial mechanismin shareholders communication with the opportunity togain first-hand exposure on the Companys operationsand performance. It provides an opportunity fordirect interaction with shareholders where questionsand concerns raised on the operational and financialperformance are addressed and are served as a feedbackto be factored into the Companys business or corporate

decisions. Thus, by having a better understanding of theCompanys activities, the shareholders will have a greatersense of belonging to the Company. Such two-waycommunication increases corporate transparency andhelps shareholders take a longer view of their investmenton the back of a better understanding of the Companyscorporate strategy and operations.

Shareholders and members of the public are invited toaccess the Bursa Malaysia website at www.bursamalaysia.com to obtain the latest corporate and market informationof the Company and the Group.

ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board aims to provide and present a balancedand meaningful assessment of the Groups financialperformance and prospects at the end of the financialyear, primarily through the annual financial statements,quarterly and half yearly announcement of results toshareholders as well as the Chairmans statement andreview of operations in the annual report.

The Audit Committee assists by scrutinizing theinformation to be disclosed, to ensure accuracy andadequacy by overseeing the Groups financial reportingprocesses and the quality of its financial reporting.



Statement of Directors Responsibility in Respect ofthe Preparation of the Audited Financial Statements

Pursuant to Paragraph 15.27(a) of the Bursa MalaysiaListing Requirement, all the Directors are collectivelyresponsible in ensuring that the financial statements aredrawn up in accordance with the approved accountingstandards adopted by the Malaysian Accounting StandardsBoard (MASB), the provisions of the Companies Act1965 and the Bursa Malaysia Listing Requirement.

In preparing those financial statements, the Directors arerequired to :-

Ensure that the financial statements give a true andfair view of the state of affairs of the Group and ofthe Company as at the end of the accounting periodand of their profit and loss and cash flows for theperiod then ended;

Ensure that applicable approved accounting standardsin Malaysia and the provisions of the CompaniesAct, 1965 have been applied;

Select and applied consistently suitable accountingpolicies and made reasonable and prudent judgments

and estimates; and The Directors also have a general responsibility

for taking steps as are reasonably open to them tosafeguard the assets of the Group and to prevent anddetect fraud and other irregularities.

Internal Control

The Board acknowledges that it is responsible formaintaining a sound system of internal controls, whichprovides reasonable assessment of effective operations,internal financial controls and compliance with laws

and regulations as well as with internal procedures andguidelines. Information on the Groups internal control ispreserved in the Statement on Internal Control laid out onthe accompanying section.

Relationship with Auditors

Through the Audit Committee, the Company hasestablished a transparent professional relationship withthe Groups external auditors. The Audit Committeerecommends the appointment of the external auditorsand their remuneration. The appointment of the externalauditors is subject to the approval of the shareholdersin the general meeting whilst their remuneration isdetermined by the Board.

CONCLUSION

The Board believes that the development of the systemof internal control is an ongoing process and continuousto take steps to improve the internal control system.During the year under review, no material weaknesseshave been identified which would result in any materiallosses, contingencies or uncertainties that would requiredisclosure in the Groups Annual Report.




Statement Of Internal Control

Paragraph 15.27(b) of the Bursa Malaysia Listing

Requirement requires all the Directors of listed

companies to include a statement in the Annual Report

on the state of the Companys internal control. The

Code of Corporate Governance amongst other requires

the Board to identify the Groups critical business

risks and implement a system to manage these risks

as well as to review the adequacy and the integrity

of the Companys internal control system. The Board

of Directors of Idaman Unggul Berhad is pleased to

provide the following statement on the state of internalcontrol of the Group for the financial year ended 31

December 2005.

Responsibility

The Board affirms and acknowledges its overall

responsibility for the Groups internal control

system in instituting a system of internal controls

that covers all aspects of the business including

strategic, commercial, operational and financial areas.

It recognises that reviewing the Groups system ofinternal control is a concerted and continuing process,

designed to manage rather than eliminate the risk of

failure to achieve business objectives. Thus, the Board

is pleased to provide the following statement on the

state of internal control of the Group. For the purposes

of this statement, the Group refers to the Company and

its subsidiaries, excluding its associated companies.

Internal Control System

The Board confirms that there is a continuous processfor identifying, evaluating and managing the significant

risks faced by the Group, which has been in place

for the financial year under review and up to date of

approval of the annual report and financial statements.

The process is regularly reviewed by the Board and is

in accordance with the guidance as contained in the

publication - Statement of Internal Control : Guidance

for Directors of Public Listed Companies.

The key elements of the internal control structure

and assurance processes, inter alia, encompass thefollowing:-

The Group is headed by the Executive Chairman

and assisted by the management team. There is

an operating structure in place, with clear defined

lines of accountability.

The Audit Committee was established to assist the

Board in discharging its duties.

Periodical Board and Audit Committee meetings

are held. Quarterly financial results and status of

corporate proposals are presented during these

meetings.

Regular Management Meetings are conductedto obtain feedback on the progress of activities

undertaken in order to rectify any shortcomings or

problems affecting the implementation plan.

The Group has engaged an internal auditor, which

will report directly to the Audit Committee.

The internal auditor has the objective to carry

out reviews of the internal control systems to

determine if accepted accounting and control

procedures have been complied with as well as

to identify recommendations to strengthen the

overall internal control environment. The Board of the active subsidiaries, particularly

the insurance subsidiary, receives and reviews

regular reports from the management on key

operating statistics, legal, environmental and

regulatory matters. The Head of the respective

subsidiary reports regularly to Management and

occasionally to the Board.

Each active business unit submits a Business

Plan annually for approval by the Board of the

respective subsidiaries. The results of each line

of business are reported monthly and variancesagainst budgets are analyzed.

At its core insurance subsidiary, regular meetings

are held by its Board, Investment Committee,

Management Committee and Audit Committee

to review the performances and internal controls.

The Internal Audit function also assists the Audit

Committee in discharging their duties. During

the financial year, 64 Internal Audit Reports

were tabled to the Audit Committee. The Board

and Management of the insurance subsidiary

are continuously evaluating the effectivenessof its Credit Control Department to enhance the

monitoring of its receivables.



In addition, there is a Risk Management Committee

comprising of three (3) Independent Non-Executive

Directors to review and recommend risk management

strategies, policies and risk tolerance limits for the

Boards approval.

STATEMENT OF COMPLIANCE WITH THE

BEST PRACTICES OF THE CODE

The Company is committed to achieving high standardsof corporate governance throughout the Group and to

Statement Of Internal Control

the highest level on integrity and ethical standards in

all its business dealings. The Board considers that it

has complied throughout the financial year with the

Best Practices as set out in the Code.

Statements made in accordance with the resolution of

the Board of Directors dated 20 July 2006


Executive Chairman



Report On Audit Committee

The Board of Directors is pleased to present the Report

of the Audit Committee for the financial year ended 31

December 2005.

Composition of the Audit Committee

(a) Tuan Haji Hussein bin Hamzah

(Chairman/Independent, Non-Executive Director);

(b) Dato Ab. Halim bin Mohyiddin

(Independent, Non-Executive Director);

(c) Brig. Jen (B) Dato Pahlawan Hj Jamil bin Tahir

(Independent, Non-Executive Director); and

(d) Dr. Radzuan bin Abdul Rahman

(Independent, Non-Executive Director).

TERMS OF REFERENCES

Members

An independent Audit Committee shall exist to

implement and support the functions of the Board.

Members of the Committee shall elect the Chairman,

and all members of the Committee including theChairman shall hold office as long as they serve as

Directors of the Company.

Based on Part-C Audit Committee of the Listing

Requirement, the Committee shall be appointed from

amongst the Directors and no alternate Director shall

be a member of the Committee.

Composition

The Audit Committee shall be appointed by the Boardfrom its members fulfilling the following requirements :-

(a) The Committee shall comprise at least three (3)

members, majority of whom shall be Independent

Directors, and the Chairman of the Committee

shall be appointed by the Board from among the

Independent Non-Executive Directors;

(b) At least one member of the Committee shall be :-

A member of the Malaysia Institute of

Accountants (MIA) ;

If he/she is not a member of the MIA,

must have had at least three years workingexperience; and

He/she must have passed the examinations

specified in Part I of the First Schedule of the

Accountants Act, 1967; or

He/she must be a member of one of the

associations of accountants specified in Part II

of the First Schedule of the Accountants Act,

1967.

Members of the Committee may relinquish their

membership with prior written notice to the Company

Secretary and may continue to serve as Director

of the Company. In the event of any vacancy in the

Committee, the vacancy shall be filled within three (3)

months and the Nomination Committee shall review

and recommend for the Boards approval another

appropriate Director to fill the vacancy.

Objectives

In compliance with the Listing Requirement and Best

Practices recommended by the Finance Committee on

Corporate Governance stipulated in the Malaysia Code

on Corporate Governance, it is the objective of theCommittee to assure the shareholders of the Company

that the Directors have complied with specified

financial standards and required disclosure policies

developed and administered by the Bursa Malaysia

and other approved accounting standard bodies.

Further, the Committee shall ensure consistency with

Bursa Malaysias commitments to encourage high

standards of corporate disclosure and transparency.

The Committee also endeavours to adopt practices

aimed at maintaining appropriate standards of

corporate responsibility, integrity and accountabilityto the Company s shareholders.

Frequency of Meetings

The Committee meets at least four (4) times annually,

or more frequently as circumstances dictate. As part

of its duty to foster open communication, the Senior

Vice President, Group Chief Accountant and a

representative of the external auditors will normally

attend the meetings. Other Board members may attend

the meetings upon invitation of the Committee.




Attendance of Meetings

The quorum for all meetings of the Committee shall

be not less than two (2) members, a majority of

whom shall be Independent Directors. Apart from

the members of the Committee who will be present

at the meetings, the Committee may request any

member of the Management and representatives of the

external/internal auditors to be present at meetings of

the Committee. The Company Secretary shall be the

Secretary of the Committee.

Five (5) Audit Committee meetings were held in the

financial year ended 31 December 2005 and details of

attendance of the Committee Members are as follows :-

Name of Director

Number of

meetings

attended

Percentage of

attendance

(%)

Tuan Haji Hussein bin Hamzah

(Independent,

Non-Executive Director)

5/5 100%

Dato Ab. Halim bin Mohyiddin(Independent,


5/5 100%

Brig. Jen. (B) Dato Pahlawan

Hj Jamil bin Tahir

(Independent,


5/5 100%

Dr Radzuan bin Abdul Rahman

(Independent,


5/5 100%

Duties and Responsibilities

The principal duties and responsibilities of the

Committee have been expanded to include the matters

specified in the Code of Corporate Governance:-

(a) To consider the appointment of a suitable

accounting firm to act as the external auditors.

Amongst the factors considered for the appointment

are the adequacy of experience and resources of

the firm, the individuals assigned to the audits and

the recommended audit fees payable;

(b) To discuss the nature and scope of audit with the

external auditors (before the audit commences)

and ensure coordination (where more than one

audit firm is involved);

(c) To review the quarterly interim results and annual

financial statements focusing particularly on :

Any changes in accounting policies and

practices.

Significant adjustments arising from the

external audits.

The ongoing concern assumptions.

Compliance with accounting standards and

other legal requirements.

(d) To discuss issues and concerns arising from

interim and final audits and any other matters

external auditors wish to discuss, in the absence

of management if necessary;

(e) To review the external auditors management letter

and managements responses;

(f) To review assistance and cooperation given by

the Company, its business units and its officers to

auditors;

(g) To review and ensure the Company s internal audit

function is adequately resourced, has appropriate

standing within the Company and has adequate

standards of internal controls, reporting and

processes;(h) To consider the major findings of internal audits

and investigations, managements responses,

remedial actions taken and follow-ups;

(i) To review and consider any related party

transactions and conflict of interest situation that

may arise within the Company or the business

units; and

(j) To consider and examine any other matters/topics

as defined by the Board.

Authority

In conducting its duties and responsibilities, the

Committee shall have the following rights :

To explicit authority to investigate any matter

within its terms of reference;

To obtain independent legal or other professional

advice if considers necessary;

To secure full, free and unrestricted access to any

information, records, properties and personnel of

the Company and of any other companies within

the Company; To communicate directly with the external and

internal auditors;




To be able to obtain external independent

professional advice and to invite external parties

with relevant experience to attend the Committee

meetings;

To have the discretion to invite other Directors

and/or employees of the Company to attend any

particular Committee meeting to discuss specific

issues; and

To be able to convene meetings with external and

internal auditors, excluding the attendance of the

executive members of the Committee if deemed

necessary.

Reporting Procedures

Minutes of the meetings shall be distributed to each

member of the Committee. In addition to performing

its principal duties and responsibilities and discussing

matters at the Committee meetings, the Committee shall

perform or has performed the following functions :

To review and approve quarterly reports;

To review and approve press releases toshareholders, investors and regulatory

authorities;

To review and approve the annual and revised

audit plans;

To review and discuss risk analysis of the

Companies and the business units of the Group;

and

Attend seminars, trainings and conferences

relating to Corporate Governance, Bursa Malaysia

Listing Requirement and other relevant subjects.

INTERNAL AUDIT FUNCTION

The Audit Committee of the Company is supported

by an internal auditor and Audit Committee of its

core insurance subsidiary. The Committee is aware of

the fact that an independent and adequately resource

internal audit function is essential to assist the

assurance it requires regarding the effectiveness of the

system of internal control.

The main role of the internal audit function is to review

the effectiveness of the system of internal control andthis is performed with impartiality, proficiency and

due professional care.

During the financial year, the core insurance

subsidiary s internal audit activities have been carried

out according to the internal audit plan which, have

been approved by its Audit Committee.



Additional Compliance Information

STATUS OF UTILIZATION OF PROCEEDS RAISED

FROM CORPORATE EXERCISE

Pursuant to the Restructuring Exercise, the total proceedsarising from the Shares Subscription, Rights Share Issue andRights Issue of ICULS-B amounting to RM213.073 millionhave been utilized as follows:

Approved

Utilization

RM000

Utilized as at

31.12.2005

RM000

Repayment to SchemeCreditors

188,394 188,394

Repayment to bank

borrowings

139 139

Defray expenses of the

Restructuring Exercise

8,000 6,794

Working capital 16,540 16,540213,073 211,867

SANCTIONS AND/OR PENALTIES IMPOSED

There were no sanctions and/or penalties imposed on the

Company and its subsidiaries, directors or management bythe relevant regulatory authorities.

SHARE BUYBACKS

During the financial year, there were no share buybacks ofthe Companys own shares.

AMERICAN DEPOSITORY RECEIPTS (ADR) AND

GLOBAL DEPOSITORY RECEIPTS (GDR)

During the financial year, the Company did not sponsor any

ADR or GDR program.

OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES

As of 31 December 2005, a total of 15,315,000 out of16,318,075 Irredeemable Convertible Unsecured LoanStocks-A (ICULS-A) have been converted into ordinaryshares since the beginning of the financial year.

There was no conversion of Irredeemable ConvertibleUnsecured Loan Stocks-B (ICULS-B) into ordinary sharesin respect of the financial year.

NON-AUDIT FEES

The amount of non-audit fees paid to the external auditorsby the Group and by the Company for the financial year isdisclosed in Note 5 to the financial statements.

UNAUDITED RESULTS, PROFIT ESTIMATE,

FORECAST OR PROJECTIONS

UNAUDITED RESULTS

The audited results for the financial year ended 31 December2005 differ by more than 10% from the unaudited resultspreviously announced on 28 February 2006 as follows:

Group

Unaudited

Results

31.12.2005Group

RM000

Audited

Results

31.12.2005Group

RM000

Difference

RM000

Loss after tax and

minority interest

(13,427) (25,399) (11,972)

The deviation was mainly due to the following :

(a) Increase in net claims incurred as a

result of revision of claims estimates. (6,480)(b) Increase in provision for bad and

doubtful debts for balances above 6

months arising from verification with

re-insurers, brokers, co-insurers and

agents.

(3,437)(c) Impairment of land and buildings in

insurance subsidiary following approval

of revaluation by the authority.

(2,571)(d) Others 516

Total Deviation (11,972)

PROFIT ESTIMATE, FORECAST OR PROJECTION

No profit estimate, forecast or projection were announcedduring the financial year.

PROFIT GUARANTEE

During the financial year, there were no profit guaranteesgiven by the Company.

MATERIAL CONTRACTS

There was no material contracts entered into between theCompany and the Directors of the Company during thefinancial year.



Chairmans Statement

Dear Shareholders,

On behalf of the Board of Directors, I would like to present the third Annual Report and Audited Financial

Statements of the Group and the Company (or IUB) for the financial year ended 31 December 2005.

Industry Trend and Development

The insurance industry continued to register positive growth of 6.9% in 2005 (2004: 17.2%) with a combined

premium income for life and general insurance business of RM23.56 billion (2004: RM 22.04 billion).

The general insurance industry registered a net premium growth of 9.3% to RM7.55 billion (2004: 7.3% toRM6.91 billion) propelled by strong private consumption. Growth in the life insurance industry moderated in

2005 with an increase of 5.8% to RM16.01 billion in premium income (2004: 22.3% to RM15.13 billion) after

two consecutive years of exceptional growth.

Although there was positive growth in premium the combined premium income of the insurance industry declined

marginally relative to the GNP from 5.2% to 5.0%. Total insurance assets recorded 11.4% in growth, increasing

to RM96.74 billion (2004: 13.1% to RM86.85 billion). This represented 5.1% of the total assets of the financial

system (2004: 4.9%).

Summary of Results

For the year ended 31 December 2005, the Group recorded a loss of RM25.40 million on a revenue base of

RM117.54 million compared to a profit of RM0.47 million on the back of the revenue of RM141.68 million in

the previous year.

The loss for the year was mainly attributed to its insurance subsidiary which reported a loss of RM20.21 million

compared to a profit of RM1.77 million in the previous year.

Notable Events

The main notable events during the period under review were as follows:

On 18 November 2005, the Company announced that its insurance subsidiary, Tahan Insurance Malaysia

Berhad (Tahan), entered into a business transfer agreement (BTA) with Affin Holdings Berhad

(AHB) and National Mutual International Pty Ltd ((NMI), a wholly-owned subsidiary of Axa Asia

Pacific Holdings Ltd) for the proposed disposal of its life insurance business for a total cash consideration

of RM121.0 million to a company to be incorporated by AHB and NMI.

On 30 June 2006, the disposal of the life insurance business (Life Business) was completed upon

approval of the vesting order by the High Court of Malaya in Kuala Lumpur, for the transfer of the assets

and liabilities of Life Business to Axa Affin Life Insurance Berhad.



Chairmans Statement

As disclosed in note 12 to the financial statements, with the completion of the disposal of the Life

Business and the receipt of proceeds from the disposal of Life Business of RM121.0 million on 4 July

2006, the shortfall in the general business margin of solvency as at 31 December 2005 has been reduced

to approximately RM54.21 million. Appropriate action plans are being formulated to dispose the non-

admitted corporate bonds of the general business amounting to RM87.13 million before the end of the

year in order to rectify the margin of solvency position.

The disposal of the Life Business resulted in a gain on disposal of approximately, RM86 million which will

correspondingly improved the Groups shareholders equity as at 31 December 2005 to RM116 million on

a pro-forma basis compared to RM30 million prior to completion of the disposal of the Life Business.

Insurance

The general insurance business recorded a 148.4% increase in underwriting surplus before management expenses

of RM17.29 million compared to RM6.96 million in the previous year. Net premium however registered a drop to

RM104.24 million (2004 : RM127.81 million). It must be noted that there was a significant improvement in claims

ratio to 75.1% (2004: 87.7%), lower management expenses of RM40.99 million (2004: RM41.66 million) and

3.9% improvement in net other operating expenses to RM8.70 million (2004: RM9.05 million). Notwithstanding

this the general insurance business reported a net deficit for the year 2005 of RM19.77 million compared to a

net deficit of RM5.54 million in the previous year. The 2004 results had been influenced substantially from the

improved credit control performance that managed to recover RM24.10 million a one off recovery in the doubtful

debts provision compared to a smaller recovery of RM0.299 million in 2005.

The life insurance business registered a decrease of 8.1% in net premium to RM27.04 million from RM29.44

million in the previous year. Total net deficit remained almost flat at RM9.85 million (2004: RM9.79 million).

Life policyholders fund as at 31 December 2005 stood at RM162.07 million compared to RM171.92 million

in the previous year while the total life business assets decreased by 4.3% to RM217.33 million compared to

RM227.12 million in the previous year.

Outlook

The insurance industry is expected to remain competitive in 2006 with the challenging economic prospectsdomestically and globally. Tahan will continue to focus its strategies on improving its performance through the

effective use of marketing and distribution resources, the knowledge and skills of the workforce and information

technology infrastructure.

In order to focus on Tahans core competency and strength, Tahan had divested its life insurance business and

the proceeds of RM121.0 million from the disposal of Life Business has been injected into the general insurance

business to grow and strengthen its general insurance activities.

Barring unforeseen circumstances, the Group expects to improve its results in the current financial year and will

continue to focus on improving the performance of its core insurance business.



Chairmans Statement

Redeemable Secured Loan Stocks

As part of the restructuring exercise of IHMB in 2003 which IUB participated, a special purpose vehicle company,

Lambang Pertama Sdn Bhd (LPSB), was incorporated with a specific purpose to redeem the Redeemable

Secured Loan Stocks (RSLS) amounting to RM233.989 million issued by LPSB to the scheme creditors on 20

November 2003. The RSLS has a nominal value of RM1 each with zero coupon and is not listed, not transferable

with a maturity date of two (2) years from the date of issue. On 9 December 2005, approval was granted by the

Securities Commission (SC) for LPSB to extend the maturity date of its existing RSLS for another two (2) years

to expire in November 2007 (Extension Period) and the RSLS now bear a coupon of 4% per annum from year

three (3) onwards until redemption date.

As at 31 December 2005, the RSLS principal outstanding amounted to RM213.989 million. Subsequent to the

financial year 2005, LPSB has redeemed RM2.485 million of the RSLS principal following the completion of the

disposal of Advanced Electronics (M) Sdn Bhd on 12 July 2006.

On 30 July 2004, LPSBs subsidiary, Klinker Investments Ltd (KIL) entered into a Share Sale & Purchase

Agreement (SSPA) with OKeeffe and/or Nominees (the Purchaser) for the proposed disposal of 2,750,001

issued and paid up ordinary shares of USD1.00 each in Anscan International Limited (AIL) representing 50%

plus 2 share of equity interest in AIL for a total consideration of RM7,000,000 (Proposed Disposal). The salient

terms of the SSPA include, amongst others: (a) the payment of RM2.0 million by AIL to KIL as full discharge of

all amounts owed by AIL to KIL and/or IHMB; and (b) the payment of RM8.0 million by the Purchaser to KIL as

profit sharing for the development of certain projects undertaken by the Purchaser on a date to be agreed by KIL

and the Purchaser or whatever sum to be agreed by both parties. The Proposed Disposal is pending completion.

On 3 May 2006, the Company announced that it was negotiating with a few potential investors to explore the

possibility of entering into a joint-venture agreement and any other arrangement to undertake the forest operations

and the related activities pursuant the rights of a subsidiary granted under the Sustainable Forest Management

License Agreement dated 10 September 1997 (SFMLA). The SFMLA is for 100 years from 10 September 1997

and expiring on 9 September 2097.

The Group is continuously exploring various options to maximize recovery value of the assets of LPSB with a

view that the value will be sufficient to redeem the RSLS.

Acknowledgements

On behalf of the Board, I would like to take this opportunity to express our gratitude and appreciation to the

various Government authorities and agencies, including the Director General of Insurance, for their ongoing

support and guidance to the Group. I would also like to thank our shareholders, valued clients, customers, business

associates and understanding financiers and creditors for their continuing confidence and support to the Group.

I am also grateful to the management and staff at all levels within the Group for their contribution, dedication and

valuable effort.

DATO CHE MOHD ANNUAR CHE MOHD SENAWI

Executive Chairman

Dated: 1 August 2006



Directors Report AndFinancial Statements

23-27 Directors Report

28 Statement By Directors

28 Statutory Declaration

29-30 Report Of The Auditors

31 Income Statements

32-33 Balance Sheets

34 Consolidated Statement Of Changes In Equity

35 Statement Of Changes In Equity

36-37 Cash Flow Statements

38-87 Notes To The Financial Statements



PRINCIPAL ACTIVITIES

RESULTS

Group Company

RM'000 RM'000

Loss after taxation 25,403 2,729

Minority interests (4) -

Net loss for the year 25,399 2,729

DIVIDEND

The directors hereby present their report together with the audited financial statements of the

Group and of the Company for the financial year ended 31 December 2005.

The principal activities of the Company are that of investment holding and providing corporate,

administrative and management support to its subsidiaries.

There have been no significant changes in the nature of the principal activities during the

financial year.

There were no material transfers to or from reserves or provisions during the financial year other

than as disclosed in the financial statements.

No dividend has been paid or declared by the Company since the end of the previous financial

year.

The principal activities of the subsidiaries are disclosed in Note 12 to the financial statements.

In the opinion of the directors, the results of the Group and the Company during the financial

year were not substantially affected by any item, transaction or event of a material and unusual

nature.

Directors' Report



Directors' Report

DIRECTORS

Dato' Che Mohd Annuar bin Che Mohd Senawi

Dato' Ab. Halim bin Mohyiddin


Haji Hussein bin HamzahBrig. Jen. (B) Dato' Pahlawan Hj. Jamil bin Tahir


DIRECTORS' BENEFITS

DIRECTORS' INTERESTS

1 January 31 December

2005 Purchased Sold 2005

The Company

Direct Interest

Dato' Che Mohd Annuar

bin Che Mohd Senawi 60,709,989 200,000 - 60,909,989

Number of Ordinary Shares of RM1 Each

Since the end of the previous financial year, no director has received or become entitled to

receive a benefit (other than benefits included in the aggregate amount of emoluments received or

due and receivable by the directors as shown in Note 6 to the financial statements or the fixed

salary of a full time employee of the Company) by reason of a contract made by the Company or

a related corporation with any director or with a firm of which he is a member, or with a company

in which he has a substantial financial interest, except as disclosed in Note 29 to the financial

statements.

Neither at the end of the financial year, nor at any time during that year, did there subsist any

arrangement to which the Company was a party, whereby the directors might acquire benefits by

means of the acquisition of shares, irredeemable convertible unsecured loan stocks ("ICULS") or

debentures of the Company or any other body corporate.

According to the register of directors shareholdings, the interests of directors in office at the end

of the financial year in shares or ICULS in the Company and its related corporations during the

financial year were as follows:

The names of the directors of the Company in office since the date of the last report and at the

date of this report are:



Directors' Report

DIRECTORS' INTERESTS (CONTD.)

1 January 31 December

2005 Purchased Sold 2005

The Company

Direct InterestDato' Che Mohd Annuar

bin Che Mohd Senawi 113,359,991 - - 113,359,991

ISSUE OF SHARES

OTHER STATUTORY INFORMATION

(a)

(i)

(ii)

Number of ICULS-B of RM0.10 Each

Before the income statements and balance sheets of the Group and of the Company were

made out, the directors took reasonable steps:

to ensure that any current assets which were unlikely to realise their value as shown in

the accounting records in the ordinary course of business had been written down to an

amount which they might be expected so to realise.

to ascertain that proper action had been taken in relation to the writing off of bad debts

and the making of provision for doubtful debts and satisfied themselves that there were

no known bad debts and that adequate provision had been made for doubtful debts; and

Dato' Che Mohd Annuar bin Che Mohd Senawi by virtue of his interest in shares in the Company

is also deemed interested in shares of all the Company's subsidiaries to the extent the Company

has an interest.

None of the other directors in office at the end of the financial year had any interest in shares or

ICULS in the Company or its related corporations during the financial year.

During the financial year, the Company increased its issued and paid-up share capital from

RM379,252,447 to RM394,567,447 by way of conversion of 15,315,000 ICULS-A of RM1 each

for 15,315,000 new ordinary shares of RM1 each.

The new ordinary shares issued during the financial year rank pari passu in all respects with the

existing ordinary shares of the Company.



Directors' Report

OTHER STATUTORY INFORMATION (CONTD.)

(b)

(i)

(ii)

(c)

(d)

(e) As at the date of this report, there does not exist:

(i)

(ii)

(f) In the opinion of the directors:

(i)

(ii)

SIGNIFICANT ANDSUBSEQUENT EVENTS

At the date of this report, the directors are not aware of any circumstances which have arisen

which would render adherence to the existing method of valuation of assets or liabilities of

the Group and of the Company misleading or inappropriate.

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

dealt with in this report or financial statements of the Group and of the Company which

would render any amount stated in the financial statements misleading.

any charge on the assets of the Group or of the Company which has arisen since the end

of the financial year which secures the liabilities of any other person; or

any contingent liability of the Group or of the Company which has arisen since the end

of the financial year.

it necessary to write off any bad debts or the amount of the provision for doubtful debts

inadequate to any substantial extent; and

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

render:

the values attributed to the current assets in the financial statements of the Group and ofthe Company misleading.

no contingent or other liability has become enforceable or is likely to becomeenforceable within the period of twelve months after the end of the financial year which

will or may affect the ability of the Group or of the Company to meet their obligations

when they fall due; and

no item, transaction or event of a material and unusual nature has arisen in the interval

between the end of the financial year and the date of this report which is likely to affect

substantially the results of the operations of the Group or of the Company for the

financial year in which this report is made.

The significant and subsequent events are disclosed in Note 26 to the financial statements.



Directors' Report

AUDITORS

Signed on behalf of the Board in accordance with a resolution of the directors.

Dato' Che Mohd Annuar bin Datuk Che Mokhtar bin Che Ali

Che Mohd Senawi

Selangor, Malaysia

20 July 2006

The auditors, Ernst & Young, have expressed their willingness to continue in office.



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

Statutory DeclarationPursuant To Section 169(15) Of The Companies Act, 1965

Signed on behalf of the Board in accordance with a resolution of the directors.

Dato' Che Mohd Annuar bin Datuk Che Mokhtar bin Che Ali

Che Mohd Senawi

Selangor, Malaysia

20 July 2006

Khoo Sai Woon

Before me,

Haron Hashim

No. W128

Commissioner for Oaths

We, Dato' Che Mohd Annuar bin Che Mohd Senawi and Datuk Che Mokhtar bin Che Ali, being

two of the directors of Idaman Unggul Berhad, do hereby state that, in the opinion of the directors,

the accompanying financial statements set out on pages 31 to 87 are drawn up in accordance with

applicable MASB Approved Accounting Standards in Malaysia and the provisions of the

Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and

of the Company as at 31 December 2005 and of the results and the cash flows of the Group and of

the Company for the year then ended.

I, Khoo Sai Woon, being the officer primarily responsible for the financial management of Idaman

Unggul Berhad, do solemnly and sincerely declare that the accompanying financial statements set

out on pages 31 to 87 are in my opinion correct, and I make this solemn declaration conscientiously

believing the same to be true and by virtue of the provisions of the Statutory Declarations Act,

1960.

Subscribed and solemnly declared by the

abovenamed Khoo Sai Woon at Kuala Lumpur

in the Federal Territory on 20 July 2006



Report Of The AuditorsTo The Members Of Idaman Unggul Berhad

In our opinion:

(a)

(i)

(ii)

(b)

the financial statements have been properly drawn up in accordance with the provisions of

the Companies Act, 1965 and applicable MASB Approved Accounting Standards in

Malaysia so as to give a true and fair view of:

the financial position of the Group and of the Company as at 31 December 2005 and of

the results and the cash flows of the Group and of the Company for the year then ended;

and

the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the

financial statements; and

the accounting and other records and the registers required by the Act to be kept by the

Company and by its subsidiaries have been properly kept in accordance with the provisionsof the Act.

We have audited the accompanying financial statements set out on pages 31 to 87. These financial

statements are the responsibility of the Company's directors.

It is our responsibility to form an independent opinion, based on our audit, on the financial

statements and to report our opinion to you, as a body, in accordance with Section 174 of the

Companies Act, 1965 and for no other purpose. We do not assume responsibility to any other

person for the content of this report.

We conducted our audit in accordance with applicable Approved Standards on Auditing in

Malaysia. Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free of material misstatement. An audit

includes examining, on a test basis, evidence supporting the amounts and disclosures in the

financial statements. An audit also includes assessing the accounting principles used and

significant estimates made by the directors, as well as evaluating the overall presentation of the

financial statements. We believe that our audit provides a reasonable basis for our opinion.



Report Of The AuditorsTo The Members Of Idaman Unggul Berhad

Ernst & Young George Koshy

AF: 0039 No. 1846/07/07(J)

Chartered Accountants Partner

Kuala Lumpur, Malaysia

20 July 2006

We are satisfied that the financial statements of the subsidiaries that have been consolidated with

the financial statements of the Company are in form and content appropriate and proper for the

purposes of the preparation of the consolidated financial statements and we have received

satisfactory information and explanations required by us for those purposes.

The auditors' reports on the financial statements of the subsidiaries other than an emphasis of

matter as disclosed in Note 12 to the financial statements were not subject to any qualification

material to the consolidated financial statements and did not include any comment required to be

made under Section 174 (3) of the Act.



Income StatementsFor The Year Ended 31 December 2005

Note 2005 2004 2005 2004

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

Revenue 3 117,539 141,682 1,559 380

Staff costs 4 (24,311) (26,020) (1,416) (2,445)

Depreciation (2,065) (2,691) (215) (308)

Other income 12,886 32,410 161 539

Other operating expenses (129,440) (152,200) (2,818) (381)Loss before taxation 5 (25,391) (6,819) (2,729) (2,215)

Taxation 7 (12) 7,176 - (1)

(Loss)/profit after taxation (25,403) 357 (2,729) (2,216)

Minority interests 8 4 119 - -

Net (loss)/profit for the year (25,399) 476 (2,729) (2,216)

(Loss)/earnings per share (sen)

- Basic 9 (a) (6.57) 0.13

- Diluted 9 (b) - 0.12

Group Company

The accompanying notes form an integral part of the financial statements.



Balance SheetsAs At 31 December 2005

Note 2005 2004 2005 2004

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

ASSETS

Property, plant and

equipment 10 34,921 38,280 707 902

Investment properties 11 32,150 34,703 - -Investment in subsidiaries 12 - - 18,314 18,620

Other investments 13 316,722 475,608 - -

Loans receivable 14 13,994 14,561 - -

Trade receivables 15 48,323 31,917 - -

Other receivables 16 28,357 29,236 41,889 44,227

Cash and bank balances 17 159,075 75,770 976 1,969

Total assets 633,542 700,075 61,886 65,718

LIABILITIES

Trade payables 18 344,936 372,124 - -

Other payables 19 37,331 36,931 11,125 12,062

Hire purchase payables 20 993 1,307 618 784

Taxation 4,477 4,808 - -

Deferred tax liabilities 21 970 827 - -

Total liabilities 388,707 415,997 11,743 12,846

INSURANCE RESERVES

Life assurance fund 22 172,743 185,154 - -

General insurance fund 23 41,763 44,545 - -Total insurance reserves 214,506 229,699 - -

Group Company



Balance SheetsAs At 31 December 2005

Note 2005 2004 2005 2004

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

FINANCED BY:

Share capital 24 394,567 379,252 394,567 379,252

ICULS 25 18,382 33,697 18,382 33,697

Reserves (382,630) (358,584) (362,806) (360,077)Shareholders' equity 30,319 54,365 50,143 52,872

Minority interests 8 10 14 - -

30,329 54,379 50,143 52,872

Total liabilities, insurance

reserves and shareholders' equity


633,542 700,075 61,886 65,718

Group Company



Consolidated Statement Of Changes In EquityFor The Year Ended 31 December 2005

Asse

t

Share

Exchange

Revaluation

Accumulated

Capital

ICULS-A

ICU

LS-B

Reserve

Reserve

Losses

Total

RM'000

RM'000

RM'000

RM'000

RM'000

RM'000

RM'000

At1January2004

372,8

21

22,7

50

17,3

78

-

-

(359,0

60)

53,8

89

ConversionofICULS-A(Notes24and25)

6,4

31

(6,4

31)

-

-

-

-

-

Netprofitfortheyear

-

-

-

-

-

476

476

At31D

ecember2004

379,2

52

16,3

19

17,3

78

-

-

(358,5

84)

54,3

65

At1January2005

379,2

52

16,3

19

17,3

78

-

-

(358,5

84)

54,3

65

ConversionofICULS-A(Notes24and25)

15,3

15

(15,3

15)

-

-

-

-

-

Revalua

tionsurplus:

Landandbuildings(Note10)

-

-

-

-

1,59

8

-

1,5

98

Transfertodeferredtaxation(Note21)

-

-

-

-

(242)

-

(242)

Currenc

ytranslationdifferences

-

-

-

(3)

-

-

(3)

Netloss

fortheyear

-

-

-

-

-

(25,3

99)

(25,3

99)

At31D

ecember2005

394,5

67

1,0

04

17,3

78

(3)

1,35

6

(383,9

83)

30,3

19

Theacc

ompanyingnotesforma

nintegralpartofthefinancialstatements.



Statement Of Changes In EquityFor The Year Ended 31 December 2005

Share Accumulated

Capital ICULS-A ICULS-B Losses Total

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

At 1 January 2004 372,821 22,750 17,378 (357,861) 55,088

Conversion of ICULS-A

(Notes 24 and 25) 6,431 (6,431) - - -

Net loss for the year - - - (2,216) (2,216)

At 31 December 2004 379,252 16,319 17,378 (360,077) 52,872

At 1 January 2005 379,252 16,319 17,378 (360,077) 52,872

Conversion of ICULS-A

(Notes 24 and 25) 15,315 (15,315) - - -

Net loss for the year - - - (2,729) (2,729)

At 31 December 2005 394,567 1,004 17,378 (362,806) 50,143




Cash Flow StatementsFor The Year Ended 31 December 2005

2005 2004 2005 2004

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

CASH FLOWS FROM OPERATING

ACTIVITIES

Loss before taxation (25,391) (6,819) (2,729) (2,215)

Movement in insurance funds (12,739) (26,627) - -

Adjustment for:Provision for/(write back of)

doubtful debts

- non-consolidated

subsidiaries - (2,110) 827 (2,110)

- others 72 (24,096) - -

Depreciation of property, plant

and equipment 2,549 3,422 215 308

Impairment losses on property,

plant and equipment 2,571 370 - -

(Write back of)/provisionfor dim

Idaman Unggul 2005 Annual Report

Documents