Quality - UAC Berhad

ContentsNotice of Annual General Meeting 2Corporate Data 5Financial Calendar 5Five Years Summary of Group Results 6Year in Brief 6Five Years Financial Highlights 7Directors’ Responsibility Statement 8Profile of Directors 10Chairman’s Statement 16Penyata Pengerusi 22Corporate Governance Statement 27Report of The Audit Committee 32Statement of Internal Control 36Financial Statements 41Statement of Shareholdings 81List of Properties 83Proxy FormCover RationaleUAC is not just about products. It is aboutpeople, be they staff, customers or end users.For our staff, we seek to create an environmentthat develops their potential to the full. For ourcustomers, we strive to combine top quality,competitive cost, timely delivery andoutstanding service. For the end users weprovide an environment that is not only safeand functional but aesthetically appealing.It is a total commitment to people thatdetermines the way we run our business.

Notice of Annual General MeetingNOTICE IS HEREBY GIVEN that the Forty Second Annual General Meeting of the Company will be held at 4th Floor,Menara Boustead, 69 Jalan Raja Chulan, 50200 Kuala Lumpur on Wednesday, 29 March 2006 at 11.30 a.m. for thefollowing purposes:ORDINARY BUSINESSTo receive the audited financial statements for the year ended 31 December 2005 and the Reports of the Directors andAuditors thereon. | Resolution 1To approve a final dividend of 12 sen per share less tax and 6 sen per share tax exempt. | Resolution 2To elect the following Directors:Tan Sri Dato' Lodin bin Wok Kamaruddin | Resolution 3Tan Sri Dato' Haji Hanafiah bin Haji Ahmad | Resolution 4Tan Leh Kiah | Resolution 5To consider and, if thought fit, pass the following resolutions:“THAT pursuant to Section 129(6) of the Companies Act, 1965, Jen (B) Tan Sri Dato' Mohd Ghazali bin Haji Che Mat,who is over seventy years of age, be re-appointed a Director of the Company to hold office until the next AnnualGeneral Meeting.” | Resolution 6To approve Directors' fees. | Resolution 7To re-appoint Auditors and to authorise the Directors to fix the Auditors' remuneration. | Resolution 8SPECIAL BUSINESSAuthority for Allotment of SharesTo consider and, if thought fit, pass the following Ordinary Resolution:“THAT pursuant to Section 132D of the Companies Act, 1965, full authority be and is hereby given to the Directors toissue shares in the capital of the Company from time to time, at such price upon such terms and conditions for suchpurposes and to such person or persons whomsoever as the Directors may in their absolute discretion deem fit,provided that the aggregate number of shares to be issued pursuant to this Resolution does not exceed 10% of theissued share capital of the Company for the time being, subject to the Companies Act, 1965, the Articles ofAssociation of the Company and approval from Bursa Malaysia Securities Berhad and other relevant bodies wheresuch approval is necessary AND THAT such authority shall continue in force until the conclusion of the next AnnualGeneral Meeting of the Company.” | Resolution 92

Notice of Annual General MeetingProposed Renewal of Shareholders' Mandate for Recurrent Related Party TransactionsTo consider and, if thought fit, pass the following Ordinary Resolution:“THAT, subject always to the Listing Requirements of Bursa Malaysia Securities Berhad, the Company and its subsidiariesshall be mandated to enter into the category of recurrent transactions of a revenue or trading nature with the relatedparties as specified in Section 2.4 of the Circular to Shareholders dated 6 March 2006 subject further to the following:iiithe transactions are in the ordinary course of business and are on terms not more favourable than those generallyavailable to the public and not to the detriment of the minority shareholders;disclosure will be made of a breakdown of the aggregate value of transactions conducted pursuant to the Mandateduring the financial year based on the following information in the Company's Annual Report and in the AnnualReports for subsequent financial years that the Mandate continues in force:abthe type of the recurrent related party transactions made; andthe names of the related parties involved in each type of the recurrent related party transactions made and theirrelationship with the Company; andiiithat such approval shall continue to be in force until:abcthe conclusion of the next Annual General Meeting (“AGM”) of the Company at which time it will lapse, unlessby a resolution passed at the meeting, the authority is renewed;the expiration of the period within which the next AGM after this date is required to be held pursuant toSection 143(1) of the Companies Act, 1965 (but shall not extend to such extension as may be allowed pursuantto Section 143(2) of the Companies Act, 1965); orrevoked or varied by resolution passed by the shareholders in general meeting,whichever is the earlier.” | Resolution 10By Order of The BoardOoi Lee ChooSecretaryKuala Lumpur6 March 20063

Notice of Annual General MeetingNOTE:A member entitled to attend and vote at the Meeting may appoint a proxy or proxies (not more than two) to attend and vote instead of him. A proxy neednot be a member of the Company.The instrument appointing a proxy must be deposited at the Registered Office of the Company, not less than forty eight hours before the time of the Meeting.EXPLANATORY NOTESOrdinary Resolution No. 9The Company continues to consider opportunities to broaden its earnings potential. If any of the expansion/diversification proposals involves the issue ofnew shares, the Directors, under certain circumstances, would have to convene a general meeting to approve the issue of new shares even though the numberinvolved may be less than 10% of the issued capital.In order to avoid any delay and costs involved in convening a general meeting to approve such issue of shares, it is thus considered appropriate that theDirectors be empowered to issue shares in the Company, up to any amount not exceeding in total 10% of the issued share capital of the Company for the timebeing, for such purposes. This authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the Company.Ordinary Resolution No. 10Ordinary Resolution No. 10, if passed, will authorise the Company and each of its subsidiaries to enter into recurrent related party transactions of a revenueor trading nature in the ordinary course of business.This authority, unless revoked or varied by the Company at general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETINGA total of five Board Meetings were held during the financial year ended 31 December 2005; details of which are as follows:Date & TimeVenue17 February 2005 – 3.55 p.m. 3rd Floor, Menara Boustead, Kuala Lumpur.24 March 2005 – 10.30 a.m. 3rd Floor, Menara Boustead, Kuala Lumpur.30 May 2005 – 9.10 a.m. 36, Jalan Portland, Tasek Industrial Estate, Ipoh.17 August 2005 – 10.30 a.m. 3rd Floor, Menara Boustead, Kuala Lumpur.30 November 2005 – 4.30 p.m. 3rd Floor, Menara Boustead, Kuala Lumpur.The attendance of the Directors standing for election, or re-appointment at the Annual General Meeting at theabovementioned Board Meetings are as follows:Directors standing for election:i Tan Sri Dato' Lodin bin Wok Kamaruddin – attended all of the 5 Board Meetings.ii Tan Sri Dato' Haji Hanafiah bin Haji Ahmad – attended all of the 5 Board Meetings.iii Tan Leh Kiah (Appointed on 14/11/2005) – attended all of the Board Meetings since his appointment.Directors standing for re-appointment under Section 129(6) of the Companies Act, 1965:iJen (B) Tan Sri Dato' Mohd Ghazali bin Haji Che Mat – attended all of the 5 Board Meetings.Profiles of the Directors standing for election and re-appointment are on pages 10 to 14.4

Corporate DataDIRECTORSJen (B) Tan Sri Dato’ Mohd Ghazali bin Haji Che MatChairmanKoo Hock FeeChief Executive Officer/Managing DirectorDatuk Alladin HashimTan Sri Dato’ Haji Hanafiah bin Haji AhmadTan Sri Dato’ Lodin bin Wok KamaruddinDato’ (Dr.) Megat Abdul Rahman bin Megat AhmadTan Leh KiahCHIEF FINANCIAL OFFICER/SECRETARYOoi Lee ChooREGISTERED OFFICE3rd Floor, Menara Boustead69 Jalan Raja Chulan50200 Kuala LumpurTel : 03–21412266Fax: 03–21415160REGISTRARSBoustead Management Services Sdn Bhd13th Floor, Menara Boustead69 Jalan Raja Chulan50200 Kuala LumpurTel : 03–21419044Fax: 03–21443016AUDITORSPricewaterhouseCoopersSTOCK EXCHANGE LISTINGBursa Malaysia Securities BerhadFinancial CalendarFINANCIAL YEAR 1 January 2005 to 31 December 2005RESULTSANNOUNCEDFirst quarter 30 May 2005Second quarter 17 August 2005Third quarter 30 November 2005Final quarter 15 February 2006ANNUAL GENERAL MEETING 29 March 2006DIVIDENDS BOOKS CLOSURE DATE PAYMENT DATEInterim 15 October 2005 to 16 October 2005 7 November 2005Proposed Final 15 April 2006 to 16 April 2006 28 April 20065

Five Years Summary of Group Results2005 2004 2003 2002 2001RM’000 RM’000 RM’000 RM’000 RM’000PROFITS AND DIVIDENDSProfit before taxation 40,406 48,934 44,628 44,389 42,468Taxation (12,216) (13,562) (11,400) (12,025) (10,394)Profit after taxation 28,190 35,372 33,228 32,364 32,074Gross Dividend per share (sen) 24.0 * 29.0 24.0 24.0 24.0Tax Exempt Dividend per share (sen) 6.0 * 6.0 6.0 5.0 6.0Basic earnings per share (sen) 38.5 48.5 46.5 45.6 46.1 **FINANCED BYPaid up capital 73,881 73,238 72,455 70,786 55,100Reserves and retained earnings 211,981 199,101 181,353 159,867 143,478Shareholders’ equity 285,862 272,339 253,808 230,653 198,578* Include final dividend which is subject to the approval of shareholders at the forthcoming Annual General Meeting.** Restated for bonus issue.Year in BriefYear Yearended ended31 Dec 2005 31 Dec 2004RM’000 RM’000Revenue 180,075 189,760Profit before tax 40,406 48,934Profit attributable to shareholders 28,259 35,402Shareholders’ equity 285,862 272,339Total assets 324,552 312,0136

Profile of DirectorsJen (B) Tan Sri Dato' Mohd Ghazali bin Haji Che MatAge 75, Malaysian | Non-Independent, Non-Executive DirectorJen (B) Tan Sri Dato' Mohd Ghazali bin Haji Che Mat was appointed to the Boardon 1 July 1992 as Chairman. He is a member of the Nomination Committee.He is also the Chairman of Lembaga Tabung Angkatan Tentera (LTAT), andBoustead Holdings Berhad (BHB). The latter, listed on Bursa MalaysiaSecurities Berhad (“Bursa Malaysia”), is the largest shareholder of UAC Berhad.He graduated from the Royal Military Academy Sandhurst, UK and theCommand and Staff College, Quetta, Pakistan and served in the MalaysianArmed Forces in various capacities for 34 years, culminating in hisappointment as Chief of the Armed Forces from 1985 to 1987.He sits on the Boards of the following companies which are also listed onBursa Malaysia, The New Straits Times Press (M) Berhad and BousteadProperties Berhad. He is also on the Boards of several private limitedcompanies in which LTAT/BHB have investments.He has no conviction for any offence within the past 10 years.He does not have any family relationship with any director and/or majorshareholder of UAC Berhad, nor any personal interest in any businessarrangement involving the Company, except that he is also the Chairman ofBHB, the largest shareholder of the Company.Koo Hock FeeAge 55, Malaysian | Non-Independent, Executive DirectorKoo Hock Fee was appointed to the Board on 5 January 2004 and became theChief Executive Officer/Managing Director on 1 July 2005. He is a member ofthe Strategic Planning, Option and Share Portfolio Committees.He is also a senior manager of Boustead Holdings Berhad (BHB).He is a Member of the Malaysian Institute of Accountants and a FellowMember of the Institute of Chartered Accountants in England and Wales. Hesits on the Boards of several companies in which BHB has investments,amongst them Royal & Sun Alliance Insurance (M) Berhad, Kao Malaysia SdnBhd and Cadbury Confectionery Malaysia.He has no conviction for any offence within the past 10 years.He does not have any family relationship with any director and/or majorshareholder of UAC Berhad, nor any personal interest in any businessarrangement involving the Company, except that he is also a senior officer ofBHB, the largest shareholder of the Company.10

Profile of DirectorsTan Sri Dato' Lodin bin Wok KamaruddinAge 56, Malaysian | Non-Independent, Non-Executive DirectorTan Sri Dato' Lodin bin Wok Kamaruddin was appointed to the Boardon 1 August 1991. He is a member of the Audit, Strategic Planning,Remuneration and Share Portfolio Committees.He is currently the Chief Executive of Lembaga Tabung Angkatan Tentera(LTAT) and Group Managing Director of Boustead Holdings Berhad (BHB),a company listed on Bursa Malaysia. BHB is the largest shareholder ofUAC Berhad.Tan Sri Dato' Lodin graduated from the College of BusinessAdministration, The University of Toledo, Toledo, Ohio, United States ofAmerica with a Bachelor of Business Administration and Master ofBusiness Administration. Prior to joining LTAT he was the GeneralManager of Perbadanan Kemajuan Bukit Fraser from 1973 to 1983. Hehas extensive experience in general management.Tan Sri Dato' Lodin also sits on the Boards of Affin Holdings Berhad,Affin Bank Berhad, Affin Capital Holdings Sdn Bhd, Affin MerchantBank Berhad, Boustead Properties Berhad, Johan Ceramics Berhad,Power Cables (Malaysia) Sdn Berhad, BP Malaysia Sdn Bhd, RamatexBerhad and several other companies in which LTAT has investments.He is also a member of the Minority Shareholder Watchdog Group.He has no conviction for any offence within the past 10 years.He does not have any family relationship with any director and/or majorshareholder of UAC Berhad, nor any personal interest in any businessarrangement involving the Company, except that he is also the GroupManaging Director of BHB, the largest shareholder of the Company.11

Profile of DirectorsDatuk Alladin HashimAge 67, Malaysian | Independent, Non-Executive DirectorDatuk Alladin Hashim was appointed to the Board on 1 June 1989. He is theChairman of the Audit Committee and the Option Committee as well as amember of the Strategic Planning and Nomination Committees.Datuk Alladin holds a Bachelor of Agricultural Science from UniversitiMalaya and a Master of Science in Agricultural Economics from theUniversity of Massachusetts, U.S.A. He attended the executive developmentprogram of the Harvard Business School. He is also a Fellow of the Academyof Science Malaysia.He served the Federal Land Development Authority (Felda) from 1966 invarious capacities, and was the Director General from 1979 to 1989. He wasalso the Chairman of the Malaysian Rubber Board from 1998 to 2001.He sits on the Boards of the following companies which are also listed onBursa Malaysia, Timberwell Berhad, PK Resources Berhad, Guthrie RopelBerhad and Kumpulan Guthrie Berhad.He has no conviction for any offence within the past 10 years.He does not have any family relationship with any director and/or majorshareholder of UAC Berhad, nor any personal interest in any businessarrangement involving the Company except as disclosed in the Directors' Report.Tan Sri Dato' Haji Hanafiah bin Haji AhmadAge 68, Malaysian | Independent, Non-Executive DirectorTan Sri Dato' Haji Hanafiah bin Haji Ahmad was appointed to the Board on1 January 1991. He is a member of the Nomination, Remuneration, Optionand Audit Committees.Tan Sri Dato’ Haji Hanafiah holds a Bachelor of Arts from Universiti Malaya andhas attended the Advanced Management Program at Harvard Business School.As an officer of the Malaysian Administrative and Diplomatic Service since1962, he served in various capacities in Malaysia and overseas. In 1974, hewas seconded to Lembaga Tabung Haji where he was the Director Generalfrom 1978 to 1989, before becoming the Chairman until retirement in 1992.He sits on the Boards of several companies, including Unilever (Malaysia) SdnBhd and RHB Unit Trust Management Berhad.He has no conviction for any offence within the past 10 years.He does not have any family relationship with any director and/or majorshareholder of UAC Berhad, nor any personal interest in any businessarrangement involving the Company.12

Profile of DirectorsDato' (Dr.) Megat Abdul Rahman bin Megat AhmadAge 66, Malaysian | Non-Independent, Non-Executive DirectorDato' (Dr.) Megat Abdul Rahman bin Megat Ahmad, was appointed tothe Board on 1 March 2002. He is a member of the Audit andStrategic Planning Committees, as well as Advisor to the RiskManagement Committee.He also sits on the Board of Boustead Holdings Berhad (BHB), a companylisted on Bursa Malaysia. BHB is the largest shareholder of UAC Berhad.Dato' (Dr.) Megat Abdul Rahman holds a Bachelor of Commerce degreefrom University of Melbourne, Australia. He is a member of theMalaysian Institute of Certified Public Accountants, a member of theMalaysian Institute of Accountants and a Fellow Member of theInstitute of Chartered Accountants in Australia. He was awarded anHonorary Doctorate in Business Administration [DBA (Hons.)] byUniversiti Kebangsaan Malaysia.He was a partner in KPMG, Managing Partner of KPMG Desa, Megat &Co. for over 10 years and an Executive Director in Kumpulan GuthrieBerhad for 11 years. He sits on the Boards of Press Metal Berhad,Integrated Rubber Corporation Bhd, Tronoh Consolidated MalaysiaBerhad, Royal & Sun Alliance Insurance (M) Berhad and IJMCorporation Berhad. He also sits on the Boards of UniversitiKebangsaan Malaysia and Hospital Universiti Kebangsaan Malaysia.He has no conviction for any offence within the past 10 years.He does not have any family relationship with any director and/ormajor shareholder of UAC Berhad, nor any personal interest in anybusiness arrangement involving the Company, except that he also sitson the Board of BHB, the largest shareholder of the Company.13

Profile of DirectorsTan Leh KiahAge 54, Malaysian | Independent, Non-Executive DirectorTan Leh Kiah was appointed to the Board on 14 November 2005. He is amember of the Audit and Remuneration Committees.Mr Tan is an Advocate and Solicitor of the High Court Malaya and is theManaging Partner of Azman Davidson & Co., Advocates & Solicitors, since1986. Prior to joining the legal profession, he was Company Secretary of theInchcape Group from 1977 to 1985. He has also served as an AssistantRegistrar of Companies. He holds the LL.B degree from the University ofLondon. He is on the rolls of Advocates & Solicitors of Brunei Darussalamand has also been admitted as a Solicitor of the Supreme Court of Englandand Wales. Besides being a member of the Malaya Bar, he is an associate ofthe Institute of Chartered Secretaries and Administrators U.K. and theMalaysian Institute of Taxation.He is currently a member of the Securities Commission. He was firstappointed in May 1998.He has no conviction for any offence within the past 10 years.He does not have any family relationship with any director and/or majorshareholder of UAC Berhad, nor any personal interest in any businessarrangement involving the Company.14

Tang Ling Hsueh | HousewifeSafety & AestheticsBeing happy at home is what matters most to me. Thatmeans that my family’s environment must not only be safeand weather-tight but beautiful and stylish. I love where welive. And UAC has contributed to that. How? Through quality“materials,”attractive designs and sheer good looks.UCO Supertex PlankBungalow, Johore Bahru

Chairman’s StatementTHE BUSINESS ENVIRONMENTFollowing a contraction of 1.5% in 2004, the construction sector of the Malaysian economy continued to registernegative growth ranging from 1.4% to 2.4% in the first three quarters of 2005. This contraction of the sector was feltvery much by the industry with declining demands for building products in the domestic market for the greater partof 2005. In addition to soft market demands in the domestic market, the industry also had to contend with thechallenges of uncertain and at times escalating crude oil prices and higher cost of production. Housing projects in thedomestic market continued to be limited during the year but the silver lining in the midst of a generally depresseddomestic market is the encouraging growth of overseas markets during the year.FINANCIAL PERFORMANCEDespite the many challenges faced, the Group was able to achieve revenue of RM180.10 million. This was down onprevious year by 5.1% with the bulk of the decline coming from Subsidiaries.Group profit before tax of RM40.41 million was down on the previous year by 17.4%. The weaker performance of theGroup's subsidiaries namely UAC Steel Systems Sdn Bhd and UAC Pipes Sdn Bhd was the main set back on the overallperformance of the Group.Net profit after tax and minority interests of RM28.26 million for the year still managed to generate earnings pershare for the year of 38.5 sen (2004: 48.5 sen). This was a satisfactory performance given the challenging businessenvironment of the Group was in.Despite the weaker profit performance this year, the balance sheet of the Group remained healthy with an additionalRM37.38 million cash generated from operating activities (2004: RM29.11 million). Cash and cash equivalents at theend of the financial year increased further to RM168.64 million, up from RM153.95 million a year ago.UCO VistabordYTL Lake Edge, PuchongUCO Supertex PlankKorea16

Chairman’s StatementCOMPANYAt Company level, revenue declined only marginally by 1.0% to RM167.53 million. Demand for building products inthe domestic market was soft but this was partially offset by an encouraging increase in export sales as a result ofintensified efforts to seek higher penetration into overseas markets. Despite a marginal decline in revenue, net profitbefore tax at RM41.88 million (2004: RM50.13 million) was down 16.4% from the preceding year. Selective increasesin selling prices during the year was not sufficient to offset increased costs of production like the cost of importedpulp and medium fuel oil. 2005 did not have the benefit of a boost from a one time write back in 2004 amounting toRM2.40 million in respect of allowance for diminution in the value of investment and the full recovery of a loanacquired previously at a discount.After some delay in the approval process, the Company has started construction of its corporate office building on thecorporate lot at the very successful entertainment, commercial and lifestyle retail hub in Mutiara Damansara. Whencompleted in the 4th quarter of 2007, this office building, to be named Menara UAC, will house the Company'scorporate, marketing and sales operations with the balance of space rented to third party tenants. Depending ontenancy take up rate, this office building could start generating profit and cash flow from the later part of 2008.SUBSIDIARIESS.B. Industries (Sdn) Bhd continued to earn rental income on itspremises in Shah Alam, Selangor Darul Ehsan.UAC Pipes Sdn Bhd registered lower revenue from the sale of polyethylenepipes due mainly to softer demand. It also faced keen price competition inthe face of rising price of polyethylene resins, a by-product of thepetroleum industry. This Subsidiary incurred a loss.UCO Supertex PlankKuala Lumpur Performing Arts Centre, SentulUCO SuperflexAman Sari, Bukit Kuchai17

Chairman’s StatementIn line with the slowdown in the construction industry, demand for steel roof trusses slowed down during the year.Tighter credit control and more selective choice of jobs resulted in UAC Steel Systems Sdn Bhd recording lowerrevenue compared to the previous year. As a result of lower revenue the Subsidiary ended the year with a loss.UAC Reflange Sdn Bhd ceased operations during the year following several years of losses. This Subsidiary has sincechanged its name to UAC Masterflange Sdn Bhd arising from an agreement to purchase the remaining shares of UACReflange Sdn Bhd from minority shareholders. The Company is now a wholly owned subsidiary.ISSUE OF SHARESIn the financial year 2005, 643,000 new shares were issued to eligible employees who exercised their options pursuantto the Employees' Share Option Scheme implemented in April 2002.DIVIDENDSAn interim dividend of 12 sen per share less tax at 28% on paid-up share capital of 73,587,000 ordinary shares ofRM1 each, amounting to RM6.36 million was paid on 7 November 2005.A final dividend of 12 sen per share less tax and a 6 sen tax exempt dividend has been proposed and will be paid outon 28 April 2006, subject to the approval of shareholders at the forthcoming Annual General Meeting.CORPORATE GOVERNANCEThe Group continues to be committed to good corporate governance in all areas of its operations. Our CorporateGovernance Statement on pages 27 to 31 outlines the application and compliance with the principles and bestpractices set out in the Malaysian Code of Corporate Governance.A Statement on Internal Control is alsoset out on pages 36 to 39.UCO SuperspanUCO SupersealNottingham University of Malaysia, SemenyihUCO VistabordNofa Farm Villas, Riyadh, Saudi Arabia18

Chairman’s StatementRELATED PARTY TRANSACTIONSSignificant related party transactions of the Group during the year are disclosed in Note 27 of the financialstatements. This Note also sets out the aggregate value of recurrent related party transactions of revenue or tradingnature, conducted in accordance with the mandate obtained from shareholders at the Annual General Meeting of24 March 2005. Renewal of this mandate will be sought at the forthcoming Annual General Meeting.PROSPECTSThe Malaysian economic outlook for 2006 is encouraging, as it has been forecasted to expand by 5.5%. In particularthe construction sector is expected to reverse the downturn experienced over the past two years to expand by 3%. Allthese augur well for the Group as its operation from production to sales and marketing and the network ofdistributors and dealers in the country are primed to spring ahead to ride the wave of an industry upturn.The year 2006 is likely to be challenging as there are several significant potential challenges looming in the horizon,some of which are beyond the control of the Group. However the Group's intensified efforts in developing new overseasmarkets would enable the Group to overcome these challenges and sustain its profitability in the coming year.BOARD OF DIRECTORSThe year 2005 saw several changes to the composition of the Board.Mr Li Heng Tiong, the Managing Director, retired on 30 June 2005 afterhaving served the Company for many years with distinction. During histenure as the Managing Director for over 15 years, the Companyachieved significant growth in revenue and profits and in the processalso laid the foundation for the future well being of the Company.UCO Lattice (Square)Houses, Johore BahruUCO Lattice (Diamond)Houses, Johore Bahru19

Chairman’s StatementY. Bhg. Dato' Siew Nim Chee retired from the Board on 2 August 2005 after having been a Board Member sinceDecember 1971. Y. Bhg. Dato' Siew had contributed much to the Company during his tenure on the Board.On behalf of the Board, I extend my deepest appreciation to Mr Li Heng Tiong and Y. Bhg. Dato' Siew Nim Chee fortheir invaluable contribution over the years and also wish them good health and happy retirement.Mr Koo Hock Fee was appointed the Chief Executive Officer/Managing Director of the Company on 1 July 2005. Prior tothis appointment he was a Non-Independent, Non-Executive Director. I also extend a warm welcome to Mr Tan Leh Kiahon his appointment as Independent, Non-executive Director on 14 November 2005.APPRECIATIONOn behalf of the Board, I wish to extend my appreciation to management and staff for their invaluable contribution ina very challenging and competitive year.Appreciation also goes to our shareholders, distributors and dealers in Malaysia and overseas and other businesspartners for their continued support and confidence in the Group.My role has been made easier by the wise counsel and strong support of my fellow Board Members whom I thankvery much.Jen (B) Tan Sri Dato' Mohd Ghazali bin Haji Che Mat | ChairmanDate : 15 February 2006UCO Supertex PlankBungalow, Teluk IntanUCO Supertex Woodgrain PlankSemi-D, Chemor20

Mohd Yusouf b Abdul Latif | R&D EngineerQuality & InnovationIn my job, quality and innovation are paramount. We haveintroduced a good range of quality products, such as fibrecement corrugated roofing sheets, patterned and flatboards, eave linings, woodgrained plank, perforated boards“and flush-jointable flat boards.”Research Facility at UAC Factory, Tasek, Ipoh

Penyata PengerusiPERSEKITARAN PERNIAGAANSektor pembinaan ekonomi Malaysia terus mencatatkan pertumbuhan negatif di sekitar 1.4% hingga 2.4% untuksembilan bulan pertama 2005 berikutan penguncupan sebanyak 1.5% dalam tahun 2004. Penguncupan ini amatdirasai dalam industri dengan permintaan untuk bahan-bahan binaan bagi pasaran tempatan merosot bagisebahagian besar 2005. Di samping permintaan menurun dalam pasaran tempatan, industri juga terpaksa berhadapandengan cabaran-cabaran ketidaktentuan dan kadang kala kenaikan harga minyak mentah dan kos pengeluaran yangtinggi. Projek-projek perumahan dalam pasaran tempatan terus terhad sepanjang tahun namun ketika pasarantempatan mengalami kelembapan pada keseluruhannya, pertumbuhan pasaran luar negara pula adalahmemberangsangkan.PRESTASI KEWANGANMeskipun berhadapan dengan pelbagai cabaran, Kumpulan berjaya mencapai hasil pendapatan sebanyak RM180.10juta. Ini adalah lebih rendah daripada tahun sebelumnya sebanyak 5.1% dengan sebahagian besar penurunanberpunca daripada anak-anak syarikat.Keuntungan sebelum cukai Kumpulan sebanyak RM40.41 juta adalah lebih rendah daripada tahun sebelumnyasebanyak 17.4%. Pencapaian yang lemah daripada anak-anak syarikat iaitu UAC Steel Systems Sdn Bhd dan UACPipes Sdn Bhd merupakan penyumbang utama kepada keputusan keseluruhan Kumpulan yang lebih rendah ini.Keuntungan bersih selepas cukai dan kepentingan minoriti sebanyak RM28.26 juta bagi tahun ini masih berupayamenjana perolehan sesaham sebanyak 38.5 sen (2004: 48.5 sen). Pencapaian ini adalah memuaskan di sebalikpersekitaran perniagaan yang amat mencabar yang dialami Kumpulan.Meskipun pencapaian keuntungan merosot tahun ini, kunci kira-kira Kumpulan terus kukuh dengan pertambahantunai berjumlah RM37.38 juta yang dijana daripada aktiviti-aktiviti operasi (2004: RM29.11 juta). Tunai dan setaratunai pada akhir tahun kewangan meningkat kepada RM168.64 juta, naik daripada RM153.95 tahun sebelumnya.UCO ShinglesZoo Negara, Kuala LumpurUCO Supertex PlankBanglo, Kuala Lumpur22

Penyata PengerusiSYARIKATDi peringkat Syarikat, hasil pendapatan merosot sedikit sebanyak 1.0% kepada RM167.53 juta. Permintaan bagibahan-bahan binaan dalam pasaran tempatan adalah lemah tetapi sebahagiannya berjaya diatasi melalui peningkatanjualan ekspot yang menggalakkan hasil daripada usaha gigih yang diambil bagi menembusi pasaran luar negara.Meskipun hasil pendapatan menurun sedikit, keuntungan bersih sebelum cukai pada RM41.88 juta (2004: RM50.13juta) adalah 16.4% lebih rendah daripada tahun sebelumnya. Kenaikan terpilih pada harga-harga jualan sepanjangtahun tidak mencukupi untuk menampung kenaikan kos pengeluaran seperti kos palpa impot dan minyak bahanbakar sederhana. Tahun 2005 tidak mendapat manfaat daripada suntikan pengiraan semula berjumlah RM2.40 jutadalam 2004 berkaitan elaun untuk pengurangan nilai pelaburan dan pemungutan semula sepenuhnya pinjaman yangdiambil alih sebelum ini pada kadar diskaun.Setelah mengalami beberapa kelewatan dalam proses kelulusan, Syarikat telah memulakan pembinaan bangunanpejabat korporatnya di satu kawasan bersebelahan sebuah pusat hiburan, komersil dan gaya hidup yang amat berjayadi Mutiara Damansara. Apabila siap pada suku keempat 2007, bangunan pejabat yang akan diberi nama Menara UAC,akan menempatkan operasi-operasi korporat, pemasaran dan jualan manakala lebihan ruang akan disewa kepadapihak ketiga. Bergantung kepada kadar penyewaan bangunan pejabat ini boleh mula menjana keuntungan dan alirantunai pada akhir tahun 2008.ANAK-ANAK SYARIKATS.B. Industries (Sdn) Bhd terus menerima pendapatan sewa daripadapremis-premisnya di Shah Alam, Selangor Darul Ehsan.UAC Pipes Sdn Bhd mencatatkan hasil pendapatan jualan paippolietilina yang lebih rendah disebabkan terutamanya olehpermintaan yang menurun. Ia juga berhadapan dengan persainganharga yang sengit berikutan kenaikan harga resin polietilina yangtinggi, satu produk sampingan industri petroleum. Anak syarikat initerus mengalami kerugian bagi tahun 2005.UCO Supertex Woodgrain PlankBanglo, Johor BahruUCO CeilMasjid, Shah Alam23

Penyata PengerusiSelaras dengan kelembapan industri pembinaan, permintaan bagi rangka atap keluli menurun sepanjang tahun.Kawalan kredit yang ketat di samping pemilihan selektif urusniaga mengakibatkan UAC Steel Systems Sdn Bhdmencatatkan hasil pendapatan yang lebih rendah berbanding tahun sebelumnya. Akibat daripada hasil pendapatanyang lebih rendah anak syarikat ini mengakhiri tahun dengan kerugian.UAC Reflange Sdn Bhd menamatkan operasinya dalam tahun setelah mengalami kerugian untuk beberapa tahundahulu. Anak syarikat ini telah menukar namanya kepada UAC Masterflange Sdn Bhd ekoran daripada keputusanuntuk membeli baki saham UAC Reflange Sdn Bhd daripada pemegang-pemegang saham minoriti. Syarikat ini kiniadalah anak syarikat milikan sepenuhnya.TERBITAN SAHAMDalam tahun kewangan 2005, 643,000 saham baru telah diterbitkan kepada pekerja-pekerja yang layak yang telahmelaksanakan opsyen mereka mengikut Skim Opsyen Saham-Saham Pekerja yang dilaksanakan dalam April 2002.DIVIDENDividen awal sebanyak 12 sen sesaham tolak cukai 28% atas modal berbayar berjumlah 73,587,000 saham biasabernilai RM1 setiap satu, berjumlah RM6.36 juta telah dibayar pada 7 November 2005.Dividen akhir sebanyak 12 sen sesaham tolak cukai dan 6 sen dikecualikan cukai telahpun dicadangkan dan akandibayar pada 28 April 2006, tertakluk kepada kelulusan pemegang-pemegang saham di Mesyuarat Agong Tahunanyang akan datang.TADBIR URUS KORPORATKumpulan terus komited kepada tadbir urus korporat yang baik disemua bahagian operasinya. Penyata Tadbir Urus Korporat kamidalam muka surat 27 hingga 31 menggariskan penerimaan pakai danpematuhan dengan prinsip-prinsip dan amalan-amalan terbaikmengikut “Malaysian Code of Corporate Governance”.Penyata mengenai Kawalan Dalaman juga dinyatakan dalam mukasurat 36 hingga 39.UCO VistabordPejabat-pejabat Kerajaan, PutrajayaUCO SuperflexMutiara Puchong24

Penyata PengerusiTRANSAKSI PIHAK BERKAITANUrusniaga pihak berkaitan Kumpulan yang ketara sepanjang tahun ada dinyatakan pada nota 27 dalam penyatakewangan. Nota ini juga mengemukakan nilai keseluruhan urusniaga pihak berkaitan yang berterusan bagi hasilpendapatan atau perniagaan, yang dikendalikan mengikut mandat umum yang diperolehi daripada pemegangpemegangsaham di Mesyuarat Agong Tahunan pada 24 Mac 2005. Pembaruan mandat ini akan diperolehi padaMesyuarat Agong Tahunan yang akan datang.PROSPEKProspek ekonomi Malaysia bagi 2006 adalah menggalakkan, kerana ia diramalkan akan berkembang sebanyak 5.5%.Sektor pembinaan terutamanya dijangka akan pulih daripada penurunan yang dialami lebih dua tahun lepas danberkembang sebanyak 3%. Semua ini adalah petanda baik bagi Kumpulan oleh kerana operasinya daripadapengeluaran ke jualan dan pemasaran dan rangkaian pengedar dan penjual dalam negara berkedudukan terbaik untukmelangkah ke hadapan dan mengharungi gelombang peningkatan industri.Tahun 2006 dijangka lebih mencabar kerana terdapat pelbagai potensi cabaran ketara yang akan timbul di masahadapan yang sebahagiannya adalah di luar kawalan Kumpulan. Namun usaha-usaha gigih Kumpulan dalammengembangkan pasaran luar negara yang baru akan membolehkan Kumpulan mengatasi cabaran-cabaran ini danmengekalkan keuntungannya pada tahun akan datang.LEMBAGA PENGARAHTahun 2005 menyaksikan beberapa pertukaran dalam komposisiLembaga Pengarah. Encik Li Heng Tiong, Pengarah Urusan, bersarapada 30 Jun 2005 setelah berkhidmat dengan Syarikat selama 15 tahundengan cemerlang. Sepanjang tempoh perkhidmatannya sebagaiPengarah Urusan, Syarikat mencapai pertumbuhan ketara bagi hasilpendapatan dan keuntungan dan dalam proses ini turut meletakkanasas masa hadapan Syarikat.UCO VistabordPutrajayaUCO Supertex PlankKaryaneka25

Penyata PengerusiY. Bhg. Dato' Siew Nim Chee bersara daripada Lembaga Pengarah pada 2 Ogos 2005 setelah menjadi Ahli Lembagasejak Disember 1971. Y. Bhg. Dato' Siew telah banyak menyumbang kepada Syarikat sepanjang perkhidmatannyadengan Lembaga.Bagi pihak Lembaga Pengarah, saya mengucapkan setinggi-tinggi penghargaan kepada Encik Li Heng Tiong dan Y. Bhg.Dato' Siew Nim Chee di atas sumbangan mereka yang tidak ternilai sepanjang perkhidmatan mereka danmengharapkan mereka dikurniakan kesihatan yang baik dan selamat bersara.Encik Koo Hock Fee dilantik sebagai Ketua Pegawai Eksekutif/Pengarah Urusan Syarikat pada 1 Julai 2005. Sebelumperlantikan ini, beliau ialah Pengarah Bukan Bebas, Bukan Eksekutif. Saya juga ingin mengucapkan selamat datangkepada Encik Tan Leh Kiah di atas perlantikan beliau sebagai Pengarah Bebas, Bukan Eksekutif pada 14 November 2005.PENGHARGAANBagi pihak Lembaga Pengarah saya ingin mengucapkan setinggi-tinggi penghargaan kepada pengurusan dankakitangan atas sumbangan mereka yang tidak ternilai di dalam tahun yang sungguh mencabar dan kompetitif.Penghargaan saya juga ditujukan kepada Pemegang-Pemegang Saham, Pengedar dan Penjual di Malaysia dan luarnegara dan Rakan-Rakan Niaga di atas sokongan dan keyakinan mereka yang berterusan kepada Kumpulan.Tugas saya dipermudahkan dengan nasihat yang baik dan sokongan berterusan daripada semua Ahli LembagaPengarah dan saya mengucapkan berbanyak-banyak terima kasih.Jen (B) Tan Sri Dato' Mohd Ghazali Hj Che Mat | PengerusiTarikh : 15 Februari 2006UCO VistabordPangsapuri AscottUCO Supertex Woodgrain PlankKelab Golf Kinrara, Kinrara26

Corporate Governance StatementThe Board of UAC BERHAD is pleased to report to shareholders on the manner the Group has applied the principles,and the extent of compliance with the best practices of corporate governance, as set out in Part 1 and Part 2respectively of the Malaysian Code on Corporate Governance (“the Code”), pursuant to Paragraph 15.26 of the ListingRequirements of Bursa Malaysia Securities Berhad.THE BOARD OF DIRECTORSThe Board has the overall responsibility for corporate governance, strategic direction, formulation of policies andoverseeing the investment and business of the Group. The various policies, procedures and guidelines present in theGroup clearly set out the roles, responsibilities and authorities of staff of the Group, and ensure that the direction andcontrol of the Group rests firmly with the Board. The Board has established a formal schedule of matters reserved toitself for decision; this includes the approval of corporate plans and budget, acquisition and divestment policy, majorcapital expenditure and significant financial matters.The Board has in place clear terms of reference for the Board, the Chairman and the Executive Director, spelling outtheir duties and responsibilities.The Board met five (5) times during the year ended 31 December 2005. Details of attendance by Directors are as follows:AttendanceJen (B) Tan Sri Dato' Mohd Ghazali bin Haji Che Mat 5/5Tan Sri Dato' Lodin bin Wok Kamaruddin 5/5Datuk Alladin Hashim 5/5Tan Sri Dato' Haji Hanafiah bin Haji Ahmad 5/5Dato' (Dr.) Megat Abdul Rahman bin Megat Ahmad 5/5Koo Hock Fee 5/5Tan Leh Kiah (Appointed on 14 November 2005) 1/1Li Heng Tiong @ Lee Heng Tiong (Resigned on 30 June 2005) 3/3Dato' Siew Nim Chee (Resigned on 2 August 2005) 2/3BOARD BALANCEThere were some changes to the composition of the Board since the end of the previous financial year. However, thecomposition of the Board was always maintained so that not less than one-third of the Board members wereIndependent Directors in compliance with Paragraph 15.02 of Bursa Malaysia Listing Requirements.At the present moment, the Board has seven members, comprising six non-executive Directors (including theChairman) and one executive Director, with three of the Directors being Independent Directors. Collectively, theDirectors have a wide range of business, financial and technical experience. This mix of skills and experience is vitalfor the successful direction of the Group. A brief profile of each Director is presented on pages 10 to 14.The role of the Chairman and the Chief Executive Officer/Managing Director are separate and clearly defined, so as toensure that there is a balance of power and authority.27

Corporate Governance StatementThe Chairman is responsible for ensuring Board effectiveness and conduct, whilst the Chief ExecutiveOfficer/Managing Director has overall responsibility for the operating units, organizational effectiveness andimplementation of Board policies and decisions. The presence of three independent, non-executive Directors fulfill apivotal role in corporate accountability. Although all the Directors have an equal responsibility for the Group'soperations, the role of these independent, non-executive Directors is particularly important as they provide unbiasedand independent views, advice and judgment. The Board is of the view that it is not necessary to identify a seniorindependent, non-executive Director to whom other directors may bring their concerns to, as all Directors believe thatthey can freely express their views at Board meetings.SUPPLY OF INFORMATIONAll Directors are provided with a monthly report on the performance of the Group. An agenda and a set of Boardpapers are distributed in sufficient time prior to Board meetings to enable the Directors to consider and obtain furtherexplanation/clarification, where necessary, and be properly prepared for discussion and informed decision making.The Board papers include reports on financial, operational, corporate, regulatory, business development matters andminutes of meetings of all Board Committees. Directors may obtain independent professional advice in the furtheranceof their duties. All Directors also have access to the advice and services of the Company Secretary.BOARD COMMITTEESA number of Board Committees are in place to facilitate the smooth transaction of business within the Company. Theterms of reference of each Committee were approved by the Board and where applicable, comply with therecommendations of the Code.NOMINATION COMMITTEEThe Nomination Committee comprises one non-independent, non-executive Director and two independent, nonexecutiveDirectors, as follows:Jen (B) Tan Sri Dato' Mohd Ghazali bin Haji Che Mat (non-independent, non-executive)Datuk Alladin Hashim (independent, non-executive)Tan Sri Dato' Haji Hanafiah bin Haji Ahmad (independent, non-executive)This Committee is responsible for proposing new nominees to the Board and Board Committees, for assessing on anon-going basis, the contribution of each individual Director and the overall effectiveness of the Board. The finaldecision as to who shall be appointed a Director remains the responsibility of the full Board, after considering therecommendations of the Committee.28

Corporate Governance StatementMr. Tan Leh Kiah, a new appointee to the Board had attended the Mandatory Accreditation Training Programme(MAP) prescribed by Bursa Malaysia Securities Berhad. Tan Sri Dato' Haji Hanafiah bin Haji Ahmad attended coursesconducted by Rating Agency Malaysia Berhad on Strategic and Operational Risk Management, PNB InvestmentInstitute on Modern Internal Auditing for Directors, Marcus Evans on Directors Duties 2005 and Strategies forSuccessful Investor Relations and Internal Auditing. Mr Koo Hock Fee attended the briefing by the SecuritiesCommission on updates on new Financial Reporting Standards, Crisis & Media Communications Workshop by WeberShandwick Worldwide (CMGRP (Malaysia) Sdn Bhd), FRS 2 on Share Based Payments conducted byPricewaterhouseCoopers and Public Rulings of the Inland Revenue Board by the Malaysian Institute of Accountants.The rest of the Directors kept themselves informed on latest developments on new Financial Reporting Standards andGoods and Services Tax by attending briefings and courses conducted by Ernst & Young.The Company Secretary ensures that all necessary information is obtained from the Directors and that appointmentsto the Board are properly made in accordance with the regulatory requirements.In accordance with the Company's Articles of Association, all Directors who are appointed by the Board are subject tore-election by shareholders at the next Annual General Meeting immediately after their appointment. Directors overseventy (70) years of age submit themselves for re-appointment annually, in accordance with Section 129(6) of theCompanies Act, 1965. In accordance with the Company's Articles of Association, one-third of the remaining Directors,including the Managing Director, submit themselves for re-election by rotation at each Annual General Meeting.REMUNERATION COMMITTEEThe Remuneration Committee comprises one non-independent, non-executive Director and two independent, nonexecutiveDirectors, as follows:Tan Sri Dato' Lodin bin Wok Kamaruddin non-independent, non-executiveTan Sri Dato' Haji Hanafiah bin Haji Ahmad independent, non-executiveTan Leh Kiah independent, non-executive (Appointed on 15 February 2006)Dato' Siew Nim Chee independent, non-executive (Resigned on 2 August 2005)The Remuneration Committee is responsible for making recommendations on the remuneration of executive Directors.The determination of remuneration packages of non-executive Directors is the responsibility of the Board as a whole.The remuneration package of the executive Director comprises a fixed salary and allowances, and a bonus approvedby the Board, which is linked to Group performance. Non-executive Directors are paid Directors' fees and anattendance allowance for each Board or Committee Meeting they attend. The individuals concerned abstained fromdiscussion of their own remuneration.29

Corporate Governance StatementThe aggregate Directors' remuneration paid or payable or otherwise made to all Directors of the Company who servedduring the financial year are as follows:BenefitsFees Salaries Allowances Bonus in-kind TotalRM RM RM RM RM RMExecutive Directors – 489,776 24,140 57,500 42,544 613,960Non-Executive Directors 180,696 – 36,100 – – 216,796None of the non-executive Directors received directors' remuneration of more than RM50,000 each. The aggregatetotal of Directors' fees are subject to shareholders' approval at the Annual General Meeting. The Board is of theopinion that the non-disclosure of the individual remuneration of each Director will not significantly affect theunderstanding and evaluation of the Group's governance.AUDIT COMMITTEEThe Audit Committee reviews issues of accounting policies, presentation for external financial reporting and the auditfindings of both the external and internal auditors arising from the Company's financial statements, and any otherissues raised by the auditors.The report of the Audit Committee for the year ended 31 December 2005 is set out on pages 32 to 35.SHARE PORTFOLIO COMMITTEEThe Share Portfolio Committee oversees the Company's investment in securities listed on Bursa Malaysia SecuritiesBerhad. The members of the committee are as follows:Tan Sri Dato' Lodin bin Wok KamaruddinKoo Hock Fee (Appointed on 1 July 2005)Li Heng Tiong @ Lee Heng Tiong (Resigned on 30 June 2005)Yu Choong Cheong (Advisor)OPTION COMMITTEEThe Option Committee oversees the Employees' Share Option Scheme of the Company. The members of the committeeare as follows:Datuk Alladin HashimKoo Hock Fee (appointed on 1 July 2005)Tan Sri Dato' Haji Hanafiah bin Haji Ahmad (Appointed on 17 August 2005)Li Heng Tiong @ Lee Heng Tiong (Resigned on 30 June 2005)Dato' Siew Nim Chee (Resigned on 2 August 2005)30

Corporate Governance StatementSTRATEGIC PLANNING COMMITTEEThe Strategic Planning Committee advises the Board on the strategic direction of the various businesses within theGroup. The members of the committee are as follows:Dato' (Dr.) Megat Abdul Rahman bin Megat AhmadTan Sri Dato' Lodin bin Wok KamaruddinDatuk Alladin HashimKoo Hock Fee (Appointed on 1 July 2005)Li Heng Tiong @ Lee Heng Tiong (Resigned on 30 June 2005)DIALOGUE BETWEEN COMPANIES AND INVESTORSThe Board acknowledges the need for shareholders to be informed of all material business matters affecting theCompany. Announcements and release of financial results on a quarterly basis provide the shareholders and theinvesting public with an overview of the Group's performance and operations. Summaries of the Group's financialresults are advertised in a major newspaper and copies of the full announcement are supplied on request.THE ANNUAL GENERAL MEETINGThe Annual General Meeting provides a means of communication with shareholders. At each Annual GeneralMeeting, the Board presents the progress and performance of the business, and encourages shareholders to participatein the question and answer session.The Board has identified Datuk Alladin Hashim, a senior independent Director to whom any queries or concernsregarding UAC BERHAD group may be conveyed.FINANCIAL REPORTINGIn presenting the annual financial statements and quarterly announcement of results to shareholders, the Directorsaim to present a balanced and understandable assessment of the Group's position and prospects.INTERNAL CONTROLThe Directors acknowledge the responsibility of maintaining a good system of internal control, including riskassessments, and the need to review its effectiveness regularly in order to safeguard the Group's assets and thereforeshareholders' investments in the Group. This system, by its nature, can only provide reasonable but not absoluteassurance against misstatement or loss. A Risk Management Committee is in place to assist the Board in identifyingand assessing risks and the control measures within the Group. The Group's Statement on Internal Control for the yearended 31 December 2005 is set out on pages 36 to 39 of this annual report.RELATIONSHIP WITH THE AUDITORSThe role of the Audit Committee in relation to the auditors is described on pages 32 to 35.This statement is made in accordance with a resolution by the Board dated 15 February 2006.31

Report of The Audit CommitteeThe Board of Directors has pleasure in submitting the report of the Audit Committee of the Board for the year ended31 December 2005.TERMS OF REFERENCE OF THE AUDIT COMMITTEE1 CompositionThe Audit Committee shall consist of at least three Directors, a majority of whom are independent. The Chairmanof the Audit Committee shall be an independent, non-executive Director.2 AuthorityThe Audit Committee shall have explicit authority to investigate any matter within its terms of reference, theresources which it needs to do so, and full access to information. The Committee should be able to obtain externalprofessional advice and to invite outsiders with relevant experience to attend its meetings, if necessary.3 ResponsibilityThe Audit Committee shall be the focal point for communication between external auditors, internal auditors,Directors and the management on matters in connection with financial accounting, reporting and controls. It shallalso ensure that accounting policies and practices are adhered to by the Company and its subsidiaries.4 FunctionsThe duties of the Audit Committee shall include the following:iiiTo consider the appointment of the external auditor, the audit fees and any questions of their resignation or dismissal;To discuss with the external auditor before the audit commences, the nature and scope of the audit;iii To review the quarterly and year-end financial statements of the Company and the Group, focusing particularly on:• Any changes in major accounting policies and practices;• Significant adjustments arising from the audit;• Significant and unusual events;• The going concern assumption; and• Compliance with accounting standards and other legal requirements;iv To discuss problems and reservations arising from the interim and final audits, and any matter the auditor maywish to discuss;vTo review the external auditor's audit report, management letter and management's response;vi To review the assistance given by the employees of the Company and its subsidiaries to the external auditor;vii To consider the appointment of the internal auditor, the audit fees and any questions of their resignation or dismissal;32

Report of The Audit Committeeviii To review the internal audit functions namely:• The adequacy of the scope, functions and resources of the internal audit function, and that it has thenecessary authority to carry out its work;• The internal audit programme and results of the internal audit process and where necessary, ensure thatappropriate action is taken on the recommendations of the internal auditor; and• The performance of the internal auditor, whose role includes the examination and evaluation of theGroup's operations and their compliance with the relevant policies, codes and legislations;ix To consider any related party transactions and conflict of interest situations that may arise within theCompany or Group;xxixiiTo consider the major findings of internal investigations and management's response;To review and monitor the effectiveness of the Group's system of internal control; andTo consider other matters as defined by the Board.5 Meetings and minutesiiiiiiThe Audit Committee shall meet regularly, with due notice of issues to be discussed and should record itsconclusions in discharging its duties and responsibilities.The quorum for any meeting shall be at least two, the majority of whom must be independent Directors.The Secretary of the Committee shall be the internal auditor. Minutes of each meeting are to be prepared andsent to the Committee members, the Company's Directors who are not members of the Committee and theCompany Secretary.MEMBERSThe Audit Committee comprises three independent, non-executive Directors and two non-independent, non-executiveDirectors, as follows:Independent, non-executiveDatuk Alladin Hashim (Chairman of the Audit Committee)Tan Sri Dato' Haji Hanafiah bin Haji AhmadTan Leh Kiah (Appointed on 14 November 2005)Dato' Siew Nim Chee (Resigned on 2 August 2005)Non-Independent, non-executiveTan Sri Dato' Lodin bin Wok KamaruddinDato' (Dr.) Megat Abdul Rahman bin Megat Ahmad33

Report of The Audit CommitteeMEETINGSThe Audit Committee held a total of four (4) meetings during the year ended 31 December 2005. Details of attendanceby Directors are as follows:AttendanceDatuk Alladin Hashim 4/4Tan Sri Dato' Haji Hanafiah bin Haji Ahmad 4/4Tan Sri Dato' Lodin bin Wok Kamaruddin 4/4Dato' (Dr.) Megat Abdul Rahman bin Megat Ahmad 4/4Tan Leh Kiah (Appointed on 14/11/2005) 1/1Dato' Siew Nim Chee (Resigned on 2 August 2005) 3/3The Chief Executive Officer/Managing Director and the Chief Financial Officer were invited and attended all themeetings. The Group's external auditors attended two (2) of the meetings during this period. The Audit Committee hadthe opportunity to meet up with the external auditors without the presence of management.INTERNAL AUDIT FUNCTIONThe Audit Committee is assisted by the Internal Audit team from Boustead Holdings Berhad (a significant shareholderof UAC BERHAD) in maintaining a sound system of internal control. This team is staffed by competent personnel withwide knowledge of the industry.The Internal Audit team undertakes internal audit functions based on the audit plan that is reviewed by the AuditCommittee and approved by the Board. The audit plan covered a review of operational controls, the effectiveness ofmanagement in identifying and managing principal risks, compliance with law and regulations, quality of assets andmanagement efficiencies, amongst others.The internal audit reports are deliberated by the Audit Committee and recommendations are duly acted upon bymanagement.ACTIVITIESDuring the year, the Audit Committee carried out its duties as set out in its terms of reference. The main activitiesundertaken by the Audit Committee during the year under review were as follows:abreviewed the quarterly financial statements and Annual Report of the Group prior to presentation for the Board's approval;reviewed the related party transactions that had arisen within the Company or the Group;c reviewed the audit fees payable to external and internal auditors;dreviewed with the external auditors their audit plan prior to commencement of audit;34

Report of The Audit Committeeefghijdiscussed and reviewed the Group's financial year end statements with the external auditors including issues andfindings noted in the course of the audit of the Group Financial Statements;reviewed the enterprise risk management framework and the effectiveness of the system of internal control of the Group;reviewed and discussed with the internal auditors their evaluation of the system of internal control of the Group;reviewed and appraised the audit reports submitted by the internal auditors. The audit reports covered all businesssectors of the Group incorporating audit findings and recommendations on system and control weaknesses notedduring the course of the audit;reviewed the credit policy of the Group; andreviewed and verified that the allocation of share options was in accordance with the criteria as set out in the UACBerhad Employees' Share Option Scheme.The Committee also appraised the adequacy of actions and remedial measures taken by the management in resolvingthe audit issues reported.35

Statement on Internal ControlINTRODUCTIONThis Statement on Internal Control is made in accordance with Paragraph 15.27(b) of the Listing Requirements ofBursa Malaysia Securities Berhad, which requires Malaysian public listed companies to make a statement about theirstate of internal control, as a Group, in their Annual Report.RESPONSIBILITYThe Board of Directors recognises that it is responsible for the Group's system of internal control and for reviewing itsadequacy and integrity. The Group's internal control system is designed to manage rather than eliminate the risk offailure to achieve business objectives. Notwithstanding, due to the limitations that are inherent in any system of internalcontrol, the system can only provide reasonable and not absolute assurance against material misstatement or loss.THE GROUP'S SYSTEM OF INTERNAL CONTROLKey Features of the System of Internal ControlThe Board entrusts the daily running of the business to the Chief Executive Officer/Managing Director (‘CEO/MD') andhis management team. The Board members receive timely information pertaining to performance and profitability ofthe Group through monthly management reports and quarterly Board papers, both of which include quantitative andqualitative trends and analyses. At quarterly Board meetings, the Directors manage the principal risks affecting theGroup through discussion and deliberation of the strategic issues facing the businesses, and resolve on actions tomitigate such risks.The CEO/MD plays a pivotal role in communicating the Board's expectations of the system of internal control tomanagement. This is achieved, on a day-to-day basis, through his active participation in the operations of thebusiness as well as attendance at various scheduled management and operational level committee meetings whereoperational and financial risks are discussed and dealt with. The CEO/MD will update the Board of any significantmatters that require the latter's immediate attention.The Board believes that the existing oversight structure of the Group has an appropriate balance of both the Board'sand Management's involvement in managing the Company. This is illustrated in the diagram on the following page.36

Statement on Internal ControlUAC BERHAD OVERSIGHT STRUCTUREUAC BERHADBoard of DirectorsExternal Audit Nomination Remuneration Chief Strategic Share OptionAudit Committee Committee Committee Executive Planning Portfolio CommitteeOfficer/ Committee CommitteeInternalManagingAuditDirectorOperationsRisk Budget and Subsidiary Establishment Quality Credit Work Safety TechnologyManagement Operations Management Committee Management Committee Committee ReviewCommittee Review Committees Committee CommitteeCommitteeThe functions of the Board committees above are described in the Corporate Governance Statement on pages 27 to 31.The key roles of the abovementioned management committees are depicted below:Management CommitteeRisk Management CommitteeBudget and OperationsReview CommitteeSubsidiary Management CommitteesEstablishment CommitteeQuality Management CommitteeCredit CommitteeWork Safety CommitteeTechnology Review CommitteeFunctionsResponsible for monitoring the risk management activities of the Group.Additional details are given in the following page on Enterprise RiskManagement Framework.Responsible for monitoring both the financial and non-financialperformance of the Company as well as evaluation of other factorsaffecting operations.Responsible for the monitoring both the operational and financialperformance of subsidiary companies as well as evaluation of otherfactors affecting their operations.Responsible for focusing on policy setting in relation to employeerelated issues.Responsible for all MS ISO 9001:2000 related matters includingmonitoring compliance and resolution of audit findings.Responsible for reviewing credit policies and monitoring the creditposition of customers.Responsible for monitoring occupational health and safety practices.Responsible for setting the direction and monitoring of research anddevelopment activities37

Statement on Internal ControlENTERPRISE RISK MANAGEMENT FRAMEWORKThe Group has established an Enterprise Risk Management (‘ERM') framework to formalise the identification ofprincipal risks affecting the achievement of the Group's business objectives. The Board believes that such a frameworkprovides a structured and focused approach in managing the Group's significant business risks and enables the Groupto effectively adopt a risk-based internal control system that is embedded within the Group.The ERM framework encompasses the following key elements:• Adoption of a Risk Management Policy (‘RMP'), endorsed by the Board. The RMP incorporates, amongst others, astructured process for identifying, evaluating and prioritising risks as well as clearly defining the riskresponsibilities and the escalation process.• Maintenance of a consolidated risk profile populated into the specialist risk management software. Changes in therisk profile and the corresponding action plans are reported to the Board.• A Risk Management Committee (‘RMC'), chaired by the CEO/MD, with an oversight function to ensure thecontinued efficiency and effectiveness of the ERM framework. A non-executive member of the Board undertakesthe role of advisor, ensuring that the views of the entire Board are also represented on the RMC.• Services of a dedicated Risk Coordinator, tasked with ensuring the smooth operation of the ERM framework.• Periodic audit of the ERM framework by the internal auditor.ASSURANCE MECHANISMThe Audit Committee (‘AC') is tasked by the Board with the duty of reviewing and monitoring the effectiveness of theGroup's system of internal control. The AC periodically receives reports from the independent assurance functions ofthe Group. The Internal Audit function provides the AC with an assessment on the adequacy and integrity of theGroup's system of internal control via reports from visits conducted at various operating units. The external auditorsconduct an annual statutory audit on the financial statements. Areas for improvement, if any, identified during thecourse of the statutory audit by the external auditors are brought to the attention of the AC through managementletters, or at AC meetings.The Board reviews the minutes of the AC's meetings. The Report of the AC is set out on pages 32 to 35 of the Annual Report.Additionally, as part of the requirements of the MS ISO 9001:2000 certification, scheduled audits are conductedinternally as well as by SIRIM QAS auditors. Results of audits are reported to the Quality Management Committeewhich is chaired by the CEO/MD. Any pertinent or unresolved issues arising out of these audits are escalated to theBoard for its attention.The Board of UAC remains committed towards keeping abreast with the ever-changing business environment in orderto support the Group's businesses and size of operations. Cognisant of this fact, the Board of UAC in striving forcontinuous improvement will put in place appropriate measures, when necessary, to further enhance the Group'ssystem of internal control.This statement is made in accordance with a resolution by the Board dated 15 February 2006.38

Statement on Internal ControlFEATURES OF UAC'S INTERNAL CONTROL SYSTEM• Formal Enterprise Risk Management Framework• Mission Statement and Quality Policy clearly outlining the Group's direction• Clear organisation structure with delineated reporting lines• Defined levels of authority• Scheduled operations and management meetings• Board approved annual financial budgets• MS ISO 9001:2000 certification• Monthly management reports to the Board• Board papers which include both financial and non-financial information• Position descriptions for non-unionised employees• Staff handbooks for both unionised and non-unionised employees• Formal employee appraisal system• Structured training for employees based on an annual training plan• Frequent dialogues with union representatives• Quarterly newsletters i.e. Berita UAC• Annual statutory audit• Annual field visits by the Board to the plant in Ipoh, Perak• Regular internal audit visits39

Financial StatementsDirectors’ Report 42Statement by Directors 46Statutory Declaration 46Report of The Auditors 47Income Statements 48Balance Sheets 49Consolidated Statement of Changes in Equity 50Company Statement of Changes in Equity 51Consolidated Cash Flow Statement 52Company Cash Flow Statement 53Notes to The Financial Statements 54

Directors’ ReportFor The Financial Year Ended 31 December 2005The directors have pleasure in submitting their report to the members together with the audited financial statementsof the Group and the Company for the financial year ended 31 December 2005.PRINCIPAL ACTIVITIESThe principal activities of the Company are the manufacture and distribution of fibre cement building products. Theprincipal activities of the subsidiary companies during the financial year are set out in Note 13 to the financialstatements. There were no significant changes in the nature of these activities during the financial year.FINANCIAL RESULTSGroupRM'000CompanyRM'000Profit after taxation 28,190 31,594Minority interests 69 0Net profit for the financial year 28,259 31,594DIVIDENDSDividends declared and paid and payable since 31 December 2004 are as follows:RM'000In respect of the financial year ended 31 December 2004,as shown in the Directors' report of that year:- a final dividend of 12 sen per share less tax at 28% and6 sen per share tax exempt was paid on 29 April 2005 10,749In respect of the financial year ended 31 December 2005:- an interim dividend of 12 sen per share less tax at 28% was paid on 7 November 2005 6,358The Directors now recommend the payment of a final dividend of 12 sen per share less tax at 28% and 6 sen per sharetax exempt in respect of the financial year ended 31 December 2005 which, subject to the approval of members at theforthcoming Annual General Meeting of the Company, will be paid on 28 April 2006 to the shareholders registered onthe Company's Register of Members at the close of business on 14 April 2006.RESERVES AND PROVISIONSAll material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements.ISSUES OF SHARESDuring the financial year, the Company increased its issued and fully paid up share capital from RM73,238,000 toRM73,881,000 as a result of the issuance and allotment of 444,000, 77,000, 81,000 and 41,000 new ordinary shares ofRM1.00 each at an option price of RM3.48, RM3.77, RM4.40 and RM4.37 per share respectively, to eligible employeeswho had exercised their options pursuant to the Employees' Share Option Scheme (“ESOS”).The newly issued shares rank pari passu in all respects with the existing ordinary shares of the Company.42 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Directors’ ReportFor The Financial Year Ended 31 December 2005EMPLOYEES' SHARE OPTION SCHEMEThe Company implemented an Employees' Share Option Scheme (“ESOS”) on 29 April 2002 for a period of 5 years.The ESOS is governed by the by-laws which were approved by the shareholders at the Extraordinary General Meetingof the Company held on 18 February 2002.Details of the ESOS are set out in Note 23 to the financial statements.The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose thenames of employees who have been granted option to subscribe for less than 100,000 shares of RM1.00 each. Duringthe financial year, no option to subscribe for 100,000 or more shares of RM1.00 each was granted to any employee.DIRECTORSThe directors in office since the date of the last report are:Jen (B) Tan Sri Dato' Mohd. Ghazali bin Haji Che Mat ChairmanTan Sri Dato' Lodin bin Wok KamaruddinDatuk Alladin HashimTan Sri Dato' Haji Hanafiah bin Haji AhmadDato' (Dr.) Megat Abdul Rahman bin Megat AhmadKoo Hock Fee Managing Director/CEO (appointed 1 July 2005)Tan Leh Kiah (appointed 14 November 2005)Li Heng Tiong @ Lee Heng Tiong Managing Director (resigned 30 June 2005)Dato' Siew Nim Chee (resigned 2 August 2005)DIRECTORS' INTERESTS IN SHARESAccording to the Register of Directors' Shareholdings, particulars of interests of those directors holding office at theend of the financial year in shares in the Company are as follows:Number of ordinary shares of RM1 eachBalanceBalanceatat1.1.2005 Bought Sold 31.12.2005Shares in the CompanyDirectDatuk Alladin Hashim 1 0 0 1Other than as stated above, the directors have no interests in shares in the Company or its related corporations duringthe financial year.UAC BERHAD (5149-H) (Incorporated in Malaysia) 43

Directors’ ReportFor The Financial Year Ended 31 December 2005DIRECTORS' BENEFITSDuring and at the end of the financial year, no arrangements subsisted to which the Company is a party, beingarrangements with the object or objects of enabling directors of the Company to acquire benefits by means of theacquisition of shares in, or debentures of, the Company or any other body corporate.Since the end of the previous financial year, no director has received or become entitled to receive a benefit otherthan the fees, emoluments and money value of benefits disclosed in Note 7 to the financial statements by reason of acontract made by the Company or a related corporation with the director or with a firm of which he is a member, orwith a company in which he has a substantial financial interest.DIRECTORS' ROTATIONIn accordance with Article 105 of the Company's Articles of Association, Tan Sri Dato' Lodin bin Wok Kamaruddinand Tan Sri Dato' Haji Hanafiah bin Haji Ahmad retire by rotation from the Board at the forthcoming Annual GeneralMeeting and being eligible, offer themselves for re-election.DIRECTORS' RETIREMENTIn accordance with Article 112 of the Company's Articles of Association, Tan Leh Kiah who was appointed on14 November 2005 retires from the Board at the forthcoming Annual General Meeting and being eligible, offershimself for re-election.In accordance with Section 129 (2) of the Companies Act, 1965, Jen (B) Tan Sri Dato' Mohd. Ghazali bin Haji Che Matwho is over seventy years of age, retires from the Board at the forthcoming Annual General Meeting and the directorsrecommend his reappointment under Section 129 (6) of the said Act.STATUTORY INFORMATION ON THE FINANCIAL STATEMENTSBefore the income statements and balance sheets of the Group and the Company were made out, the directors tookreasonable steps:abto ascertain that proper action had been taken in relation to the writing off of bad debts and the making ofallowance for doubtful debts and have satisfied themselves that all known bad debts had been written off and thatadequate allowance had been made for doubtful debts; andto ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course ofbusiness, their values as shown in the accounting records of the Group and the Company had been written downto an amount which they might be expected so to realise.At the date of this report, the directors are not aware of any circumstances:abwhich would render the amounts written off for bad debts or the amount of the allowance for doubtful debts inthe financial statements of the Group and the Company inadequate to any substantial extent; orwhich would render the values attributed to current assets in the financial statements of the Group and theCompany misleading; or44 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Directors’ ReportFor The Financial Year Ended 31 December 2005cwhich have arisen which render adherence to the existing method of valuation of assets or liabilities of the Groupand the Company misleading or inappropriate.No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelvemonths after the end of the financial year which, in the opinion of the directors, will or may affect the ability of theGroup and the Company to meet their obligations when they fall due.At the date of this report, there does not exist:abany charge on the assets of the Group and the Company which has arisen since the end of the financial year whichsecures the liabilities of any other person; orany contingent liability of the Group or the Company which has arisen since the end of the financial year.At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report orthe financial statements which would render any amount stated in the financial statements misleading.In the opinion of the directors:abthe results of the Group's and the Company's operations during the financial year were not substantially affectedby any item, transaction or event of a material and unusual nature; andthere has not arisen in the interval between the end of the financial year and the date of this report any item,transaction or event of a material and unusual nature likely to affect substantially the results of the operations ofthe Group or the Company for the financial year in which this report is made.AUDITORSThe auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.Signed on behalf of the Board of Directors in accordance with a resolution dated 15 February 2006.Jen (B) Tan Sri Dato' Mohd.Ghazali bin Haji Che MatChairmanKoo Hock FeeManaging DirectorUAC BERHAD (5149-H) (Incorporated in Malaysia) 45

Statement by DirectorsPursuant to Section 169(15) of the Companies Act, 1965We, Jen (B) Tan Sri Dato' Mohd. Ghazali bin Haji Che Mat and Koo Hock Fee, being two of the directors of UACBerhad state that, in the opinion of the directors, the financial statements set out on pages 48 to 80 are drawn up soas to give a true and fair view of the state of affairs of the Group and the Company as at 31 December 2005 and ofthe results and cash flows of the Group and the Company for the financial year ended on that date in accordance withthe provisions of the Companies Act, 1965 and the MASB approved accounting standards in Malaysia.Signed on behalf of the Board of Directors in accordance with a resolution dated 15 February 2006.Jen (B) Tan Sri Dato' Mohd.Ghazali bin Haji Che MatChairmanKoo Hock FeeManaging DirectorStatutory DeclarationPursuant to Section 169(16) of the Companies Act, 1965I, Ooi Lee Choo, being the officer primarily responsible for the financial management of UAC Berhad, do solemnly andsincerely declare that to the best of my knowledge and belief the financial statements set out on pages 48 to 80 are, inmy opinion, correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue ofthe provisions of the Statutory Declarations Act, 1960.Subscribed and solemnly declared by the abovenamed Ooi Lee Choo at Kuala Lumpur on 15 February 2006.Before me,Lam Theng Sum(No. W244)Commissioner for OathsSuite 6.02, Tingkat 6Wisma Lim Foo Yong86, Jalan Raja Chulan50200 Kuala Lumpur46 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Report of The AuditorsTo The Members of UAC Berhad (Company No. 5149-H)(Incorporated in Malaysia)We have audited the financial statements set out on pages 48 to 80. These financial statements are the responsibility ofthe Company's directors. It is our responsibility to form an independent opinion, based on our audit, on these financialstatements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 andfor 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 approved auditing standards in Malaysia. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and significant estimates madeby directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.In our opinion:athe financial statements have been prepared in accordance with the provisions of the Companies Act, 1965 and theMASB approved accounting standards in Malaysia so as to give a true and fair view of:iiithe matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements;andthe state of affairs of the Group and the Company as at 31 December 2005 and of the results and cash flows ofthe Group and the Company for the financial year ended on that date;andbthe accounting and other records and the registers required by the Act to be kept by the Company and itssubsidiary companies have been properly kept in accordance with the provisions of the Act.We are satisfied that the financial statements of the subsidiary companies that have been consolidated with theCompany's financial statements are in form and content appropriate and proper for the purposes of the preparation ofthe consolidated financial statements and we have received satisfactory information and explanations required by usfor those purposes.Our audit reports on the financial statements of the subsidiary companies were not subject to any qualification anddid not include any comment made under subsection 3 of section 174 of the Act.PricewaterhouseCoopers[No. AF: 1146]Chartered AccountantsLim Teong Kean[No. 2499/12/07 (J)]Partner of the firm1st Floor, Standard Chartered Bank Chambers,21-27 Jalan Dato' Maharaja Lela30000 IpohPerak Darul Ridzuan15 February 2006UAC BERHAD (5149-H) (Incorporated in Malaysia) 47

Income StatementsFor The Financial Year Ended 31 December 2005GroupCompanyNote 2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000Revenue 6 180,075 189,760 167,531 169,270Other operating income 6,027 5,128 6,018 7,597Changes in inventories of work in progress andfinished goods 472 80 500 110Raw materials and consumables used (79,440) (81,864) (72,319) (69,746)Trading goods used (605) (589) (548) (312)Staff cost (31,545) (31,244) (29,387) (28,787)Depreciation and amortisation expense (6,421) (6,701) (5,370) (5,641)Freight and handling charges (18,409) (16,288) (17,741) (15,400)Other operating expenses (9,748) (9,345) (6,803) (6,966)Profit from operations 7 40,406 48,937 41,881 50,125Finance cost 8 0 (3) 0 0Profit from ordinary activitiesbefore taxation 40,406 48,934 41,881 50,125Taxation 9 (12,216) (13,562) (10,287) (13,163)Profit after taxation 28,190 35,372 31,594 36,962Minority interests 69 30 0 0Net profit for the financial year 28,259 35,402 31,594 36,962Earnings per share (sen) 10- basic 38.5 48.5- diluted 38.3 48.3Dividends per share (sen)Paid interim- gross dividends 11 12.0 17.0- net of tax 8.6 12.2- tax exempt 0 0- total net dividends 8.6 12.2Proposed final- gross dividends 11 18.0 18.0- net of tax 8.6 8.6- tax exempt 6.0 6.0- total net dividends 14.6 14.6The notes on pages 54 to 80 form part of these financial statements.48 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Balance SheetsAs At 31 December 2005GroupCompanyNote 2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000Non current assetsProperty, plant and equipment 12 73,916 74,226 67,805 67,501Investments in subsidiary companies 13 0 0 10,984 10,984Investments in quoted shares 14 16,739 9,575 16,739 9,575Deferred tax assets 15 820 2,685 0 091,475 86,486 95,528 88,060Current assetsInventories 16 28,374 29,853 24,301 25,136Trade and other receivables 17 36,066 41,721 32,430 34,793Amounts due from subsidiary companies 18 0 0 7,274 6,750Fixed deposits 19 162,620 148,286 158,146 145,213Cash and bank balances 19 6,017 5,667 4,835 4,591233,077 225,527 226,986 216,483Current liabilitiesTrade and other payables 20 20,545 21,336 19,017 17,157Amounts due to subsidiary companies 21 0 0 5,220 5,220Taxation 4,004 5,255 3,997 5,25524,549 26,591 28,234 27,632Net current assets 208,528 198,936 198,752 188,851Non current liabilitiesProvision for warranties 22 5,240 4,115 4,200 3,700Deferred tax liabilities 15 8,901 8,899 8,589 8,57814,141 13,014 12,789 12,278285,862 272,408 281,491 264,633Capital and reservesShare capital 23 73,881 73,238 73,881 73,238Share premium 12,496 10,768 12,496 10,768Asset revaluation reserve 24 4,304 4,304 3,743 3,743Retained earnings 25 195,181 184,029 191,371 176,884Shareholders' equity 285,862 272,339 281,491 264,633Minority interests 0 69 0 0285,862 272,408 281,491 264,633The notes on pages 54 to 80 form part of these financial statements.UAC BERHAD (5149-H) (Incorporated in Malaysia) 49

Consolidated Statement of Changes in EquityFor The Financial Year Ended 31 December 2005GroupIssued andAssetsfully paid Share revaluation Retainedshare capital premium reserve earnings TotalNote RM'000 RM'000 RM'000 RM'000 RM'000At 1 January 2004 72,455 8,778 4,304 168,271 253,808Net profit for the financial year 0 0 0 35,402 35,402Dividends for the financialyear ended:- 31 December 2003 (paid) 11 0 0 0 (10,686) (10,686)- 31 December 2004 (paid) 11 0 0 0 (8,958) (8,958)Issue of shares:- exercise of share options 23 783 1,990 0 0 2,773At 31 December 2004 73,238 10,768 4,304 184,029 272,339At 1 January 2005 73,238 10,768 4,304 184,029 272,339Net profit for the financial year 0 0 0 28,259 28,259Dividends for the financialyear ended:- 31 December 2004 (paid) 11 0 0 0 (10,749) (10,749)- 31 December 2005 (paid) 11 0 0 0 (6,358) (6,358)Issue of shares:- exercise of share options 23 643 1,728 0 0 2,371At 31 December 2005 73,881 12,496 4,304 195,181 285,862The notes on pages 54 to 80 form part of these financial statements.50 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Company Statement of Changes in EquityFor The Financial Year Ended 31 December 2005Non distributable DistributableIssued andAssetsfully paid Share revaluation Retainedshare capital premium reserve earnings TotalNote RM'000 RM'000 RM'000 RM'000 RM'000CompanyAt 1 January 2004 72,455 8,778 3,743 159,566 244,542Net profit for the financial year 0 0 0 36,962 36,962Dividends for the financialyear ended:- 31 December 2003 (paid) 11 0 0 0 (10,686) (10,686)- 31 December 2004 (paid) 11 0 0 0 (8,958) (8,958)Issue of shares:- exercise of share options 23 783 1,990 0 0 2,773At 31 December 2004 73,238 10,768 3,743 176,884 264,633At 1 January 2005 73,238 10,768 3,743 176,884 264,633Net profit for the financial year 0 0 0 31,594 31,594Dividends for the financialyear ended:- 31 December 2004 (paid) 11 0 0 0 (10,749) (10,749)- 31 December 2005 (paid) 11 0 0 0 (6,358) (6,358)Issue of shares:- exercise of share options 23 643 1,728 0 0 2,371At 31 December 2005 73,881 12,496 3,743 191,371 281,491The notes on pages 54 to 80 form part of these financial statements.UAC BERHAD (5149-H) (Incorporated in Malaysia) 51

Consolidated Cash Flow StatementFor The Financial Year Ended 31 December 2005Note 2005 2004RM'000 RM'000Operating activitiesProfit after taxation 28,190 35,372Adjustments for:Waiver of royalties and technology transfer feesby a former corporate shareholder in a subsidiary (160) 0Taxation 12,216 13,562Depreciation and amortisation 6,421 6,701Gains on disposal of property, plant and equipment (423) (93)Gains on disposal of quoted investments (264) (511)Plant and equipment written off 7 10Dividend income (693) (330)Allowance for diminution in value of quoted shares 366 0Interest income (4,363) (4,090)Interest expenses 0 341,297 50,624Decrease / (Increase) in inventories 1,478 (6,591)Decrease / (Increase) in trade and other receivables 5,533 (4,607)Increase in trade and other payables and provision for warranties 493 2,090Cash from operations 48,801 41,516Tax paid (11,422) (12,410)Net cash from operating activities 37,379 29,106Investing activitiesProceeds from disposal of property, plant and equipment 456 108Proceeds from disposal of quoted investments 1,789 2,881Purchase of property, plant and equipment (5,804) (6,262)Purchase of quoted investments (9,055) (5,727)Dividend received 520 251Interest received 4,135 3,842Net cash used in investing activities (7,959) (4,907)Financing activitiesNet proceeds from issue of share capital 2,371 2,773Dividends paid (17,107) (19,644)Interest paid 0 (3)Net cash used in financing activities (14,736) (16,874)Net increase in cash and cash equivalents during the financial year 14,684 7,325Cash and cash equivalents at beginning of the financial year 153,953 146,628Cash and cash equivalents at end of the financial year 19 168,637 153,953The notes on pages 54 to 80 form part of these financial statements.52 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Company Cash Flow StatementFor The Financial Year Ended 31 December 2005Note 2005 2004RM'000 RM'000Operating activitiesProfit after taxation 31,594 36,962Adjustments for:Taxation 10,287 13,163Depreciation and amortisation 5,370 5,641Gains on disposal of property, plant and equipment (389) (28)Gains on disposal of quoted investments (264) (511)Dividend income (693) (330)Allowance for diminution in value of quoted shares 366 0Interest income (4,240) (3,996)Rental income (166) (128)Write back of allowance for impairment losses of investment in subsidiary 0 (1,265)Gain on full recovery of loan which was acquired at a discount 0 (1,071)41,865 48,437Decrease / (Increase) in inventories 834 (5,289)Decrease / (Increase) in trade and other receivables 2,645 (3,847)Increase in trade and other payables and provision for warranties 2,361 993Cash from operations 47,705 40,294Tax paid (11,361) (12,355)Net cash from operating activities 36,344 27,939Investing activitiesProceeds from disposal of property, plant and equipment 422 28Proceeds from disposal of quoted investments 1,789 2,881Purchase of property, plant and equipment (5,707) (5,695)Purchase of quoted investments (9,055) (5,727)Payments for acquisition of remaining shares in a subsidiary * 0Dividend received 520 251Interest received 4,023 3,749Rental received 164 108Advances given to subsidiary companies (587) (2,843)Repayments of loan by subsidiary companies 0 2,372Net cash used in investing activities (8,431) (4,876)Financing activitiesNet proceeds from issue of share capital 2,371 2,773Dividends paid (17,107) (19,644)Net cash used in financing activities (14,736) (16,871)Net increase in cash and cash equivalents during the financial year 13,177 6,192Cash and cash equivalents at beginning of the financial year 149,804 143,612Cash and cash equivalents at end of the financial year 19 162,981 149,804* RM2The notes on pages 54 to 80 form part of these financial statements.UAC BERHAD (5149-H) (Incorporated in Malaysia) 53

Notes to The Financial StatementsFor The Financial Year Ended 31 December 20051 GENERAL INFORMATIONThe principal activities of the Company are the manufacture and distribution of fibre cement building products. Theprincipal activities of the subsidiary companies during the financial year are set out in Note 13 to the financial statements.The Company is a public limited company, incorporated and domiciled in Malaysia.The number of employees as at 31 December 2005 amounted to 642 (2004: 644) employees in the Group and 614(2004: 618) employees in the Company.2 BASIS OF PREPARATIONThe financial statements of the Group and the Company have been prepared under the historical cost conventionunless stated otherwise in the individual policy statements set out below.The financial statements comply with the provisions of the Companies Act, 1965 and the MASB approvedaccounting standards in Malaysia.The preparation of financial statements in conformity with the provisions of the Companies Act, 1965 and theMASB approved accounting standards in Malaysia requires the directors to make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expenses during the reported year. Actualresults could differ from those estimates.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe following accounting policies have been used consistently in dealing with items which are considered materialin relation to the financial statements.aBasis of consolidationThe consolidated income statement and balance sheet include the financial statements of the Company and itssubsidiary companies made up to the end of the financial year. The results of the subsidiary companiesacquired or disposed during a financial year are included in the consolidated income statement from the date ofacquisition or up to the date of disposal.The excess of the purchase price over the fair value of the net assets of subsidiary companies at the date ofacquisition is included in the consolidated balance sheet as goodwill arising on consolidation. Goodwill isretained in the consolidated balance sheet at cost. At each balance sheet date, the Group assesses whether thereis any indication of impairment. If such indication exists, an analysis is performed to assess whether thecarrying amount of the asset is fully recoverable. A write down is made if the carrying amount exceeds therecoverable amount.Intragroup balances and intragroup transactions, and resulting unrealised profits are eliminated in full.Unrealised losses resulting from intragroup transactions are eliminated unless cost cannot be recovered.54 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Notes to The Financial StatementsFor The Financial Year Ended 31 December 20053 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)aBasis of consolidation (continued)The gain or loss on disposal of a subsidiary company is the difference between net disposal proceeds and theGroup's share of its net assets and together with any exchange differences and goodwill on acquisition notpreviously charged to the income statement.bProperty, plant and equipmentAll property, plant and equipment were initially stated at cost. Certain land and buildings were subsequentlyshown at market value, based on valuations of external independent valuers, less subsequent accumulateddepreciation and impairment losses. All other property, plant and equipment are stated at historical cost lessaccumulated depreciation and impairment losses.The directors have applied the transitional provision of International Accounting Standard No. 16 (Revised)Property, Plant and Equipment as adopted by Malaysian Accounting Standards Board where certain land andbuildings are stated at their 1984 valuation less accumulated depreciation and impairment losses. Accordingly,these valuations have not been updated.Freehold land is not amortised as it is deemed to have an indefinite life. The revalued amount of leasehold landis amortised in equal instalments over the periods of the respective leases that range from 81 to 91 years.All other property, plant and equipment are depreciated on a straight line basis to write off the cost of eachasset, to their residual values over their estimated useful lives at the following annual rates:Buildings 2 - 4Plant, machinery and motor vehicles 5 - 25Furniture, fittings and equipment 10 - 50%Assets under construction are carried as capital work in progress and depreciation commences when the assetsare ready for their intended use.At each balance sheet date, the Group assesses whether there is any indication of impairment. If suchindication exists, an analysis is performed to assess whether the carrying amount of the asset is fullyrecoverable. A write down is made if the carrying amount exceeds the recoverable amount.Gains and losses on disposal of property, plant and equipment are determined by reference to their carryingamount and are recognised as income or expense in the income statement. On disposal of revalued assets,amounts in revaluation reserve relating to those assets are transferred to retained earnings.cNon current investmentsInvestments in subsidiaries are shown at cost. Where an indication of impairment exists, the carrying amountof the investment is assessed and written down immediately to its recoverable amount.UAC BERHAD (5149-H) (Incorporated in Malaysia) 55

Notes to The Financial StatementsFor The Financial Year Ended 31 December 20053 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)cNon current investments (continued)Investments in quoted shares are shown at cost and an allowance is made when, in the opinion of the directors,there is a permanent diminution in value. Permanent diminution in the value of an investment is recognised asan expense in the financial year in which the diminution is identified.On disposal of an investment, the difference between the net disposal proceeds and its carrying amount ischarged or credited to the income statement.dInventoriesInventories are stated at the lower of cost and net realisable value.Cost is determined using the first in, first out method. The cost of work in progress and finished goodscomprises raw materials, direct labour, other direct costs and related production overheads.Net realisable value is the estimate of the selling price in the ordinary course of business, less the costs ofcompletion and selling expenses.eTrade receivablesTrade receivables are carried at anticipated realisable value. Bad debts are written off in the year in which theyare identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at thefinancial year end.fEmployee benefitsiShort term employee benefitsWages, salaries, social security contribution, bonuses, and non-monetary benefits are accrued in the periodin which the associated services are rendered by the employees. The Group and the Company accrue forstaff annual leave which are unutilised and carried forward into future periods. The cost accrued is based onthe basic salary and the number of days of unutilised annual leave.iiPost-employment benefitsThe Group contributes to the Employees Provident Fund (EPF), the national defined contribution plan. Thecontributions are charged to the income statement in the period to which they relate. Once the contributionshave been paid, the Group has no further payment obligations.iii Equity compensation benefitsDetails of the Group's Employees' Share Option Scheme are set out in Note 23 to the financial statements.The Group does not make a charge to the income statement in connection with share options granted. Whenthe share options are exercised, the proceeds received, net of any transaction costs, are credited to sharecapital and share premium.56 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Notes to The Financial StatementsFor The Financial Year Ended 31 December 20053 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)gForeign currenciesForeign currency transactions are recorded in Ringgit Malaysia at rates of exchange ruling at the date of thetransactions. Foreign currency monetary assets and liabilities are translated at exchange rates ruling at thebalance sheet date, unless hedged by forward contracts, in which case, the rates specified in such forwardcontracts are used. Exchange differences arising from the settlement of foreign currency transactions and fromthe translation of foreign currency monetary assets and liabilities are included in the income statement.The principal closing rates used in the translation of foreign currency amounts are as follows:2005 2004Foreign currency RM RM1 USD 3.8 3.81 SGD 2.3 2.31 CAD 3.3 3.11 GBP 6.7 7.4hRevenue recognitionRevenue for sales is recognised upon delivery of goods where risks and rewards are transferred to the buyers orperformance of services.Other revenue earned by the Group is recognised on the following bases:Interest incomeDividend income- as it accrues unless collectibility is in doubt- when the shareholder's right to receive payment is establishediTaxationTaxation in the income statement comprises current and deferred tax. Taxation is recognised in the incomestatement except to the extent that it relates to items recognised directly to equity, in which case the taxation isrecognised in equity. Current tax expense is the expected tax payable on the taxable income for the year, usingtax rates enacted or substantially enacted at the balance sheet date.Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amountsattributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements.Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available againstwhich the deductible temporary differences or unused tax losses can be utilised.Tax rates enacted or substantively enacted by the balance sheet date are used to determine deferred tax.UAC BERHAD (5149-H) (Incorporated in Malaysia) 57

Notes to The Financial StatementsFor The Financial Year Ended 31 December 20053 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)jDividendsDividends are recognised as liabilities when declared and accounted for in shareholders' equity as anappropriation of retained earnings in the year.kCash and cash equivalentsFor the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand, bank balances,fixed deposits and short term, highly liquid investments that are readily convertible to known amounts of cashand which are subject to an insignificant risk of changes in value.lProvision for warrantiesProvision for warranties is recognised when the underlying products and services are sold. This provision is based onthe past history of the level of replacements and a review of possible outcomes against the associated probabilities.m Financial instrumentsiFinancial instruments recognised on the balance sheetThe particular recognition method adopted for financial instruments recognised on the balance sheet isdisclosed in the individual policy statements associated with each item.iiFinancial instruments not recognised on the balance sheetThe Company is a party to financial instruments which comprise foreign currency forward contracts andthese instruments are not recognised in the financial statements on inception.The Company enters into foreign currency forward contracts to hedge its risks from movements in exchangerates by establishing the rate at which a foreign currency liability will be settled.Exchange gains and losses arising on contracts entered into as hedges of anticipated future transactions aredeferred until the date of such transaction, at which time they are included in the measurement of suchtransactions.iii Fair value estimation for disclosure purposesThe market value of publicly traded securities based on quoted market prices at the balance sheet datereflect their fair values.The fair values of financial liabilities and guarantees are estimated by discounting the future estimated cashflows at the current market interest rates available to the Group for similar financial instruments.The carrying amounts of financial assets and liabilities with a maturity of less than one year are assumed toapproximate their fair values.58 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Notes to The Financial StatementsFor The Financial Year Ended 31 December 20053 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)nOperating leasesLeases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor areclassified as operating leases. Payments made under operating leases (net of any incentives received from thelessor) are charged to the income statement on the straight line basis over the lease period.4 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIESThe Group's activities expose it to a variety of financial risks, including foreign currency exchange risk, interestrate risk, credit risk, liquidity and cash flow risk. The Group's overall financial risk management objective is toensure that the Group creates value for its shareholders. Financial risk management is carried out through riskreviews, internal control systems and a comprehensive insurance programme.iForeign currency exchange riskThe Group is exposed to foreign currency exchange risk as a result of the foreign currency transactionsdenominated in currencies other than Ringgit Malaysia. The currency giving rise to this risk is primarily US dollar.The Company is involved in financial instruments that help to reduce the risk of exposure to fluctuations onforeign currency receivables and payables. These are mainly foreign currency forward contracts and are notrecognised in the financial statements.iiInterest rate riskThe Group's income and operating cash flows are subject to insignificant exposure to fluctuations in interest rates.iii Credit riskThe Group manages credit risk by setting credit limits and ensuring that sales of products and services aremade to customers with an appropriate credit history. Where necessary, customers may also be requested toprovide security or advance payment. Exposure to credit risk is monitored on an ongoing basis.iv Liquidity and cash flow riskThe Group maintains sufficient cash, marketable securities and adequate credit facilities to ensure that ampleworking capital is available at any one time.UAC BERHAD (5149-H) (Incorporated in Malaysia) 59

Notes to The Financial StatementsFor The Financial Year Ended 31 December 20055 SEGMENTAL INFORMATIONThe Group is organised into two business segments:• Building & construction products - relates to the manufacture and sale of fibre cement boards, polyethylenepipes and fittings and steel roof trusses.• Others - comprise property holding, sale of specialised connectors and provision ofonsite installation and related services.aBy business segmentBuilding &constructionproducts Others GroupRM'000 RM'000 RM'0002005RevenueTotal sales 179,862 931 180,793Inter segment sales (478) (240) (718)External sales 179,384 691 180,075ResultsSegment results 35,380 72 35,452Unallocated income 5,320Unallocated expense (366)Profit from operations 40,406Finance cost 0Profit from ordinary activities before taxation 40,406Taxation (12,216)Profit after taxation 28,190Minority interests 69Net profit for the financial year 28,259Other informationSegment assets 300,994 4,265 305,259Unallocated assets 19,293Total assets 324,552Segment liabilities 25,651 134 25,785Unallocated liabilities 12,905Total liabilities 38,690Capital expenditure 6,151 0 6,151Depreciation of property, plant and equipment 6,370 51 6,42160 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Notes to The Financial StatementsFor The Financial Year Ended 31 December 20055 SEGMENTAL INFORMATION (continued)aBy business segment (continued)Building &constructionproducts Others GroupRM'000 RM'000 RM'0002004RevenueTotal sales 189,029 1,895 190,924Inter segment sales (924) (240) (1,164)External sales 188,105 1,655 189,760ResultsSegment results 44,058 (52) 44,006Unallocated income 4,931Profit from operations 48,937Finance cost (3)Profit from ordinary activities before taxation 48,934Taxation (13,562)Profit after taxation 35,372Minority interests 30Net profit for the financial year 35,402Other informationSegment assets 293,801 4,401 298,202Unallocated assets 13,811Total assets 312,013Segment liabilities 25,117 334 25,451Unallocated liabilities 14,154Total liabilities 39,605Capital expenditure 6,262 0 6,262Depreciation of property, plant and equipment 6,650 51 6,701UAC BERHAD (5149-H) (Incorporated in Malaysia) 61

Notes to The Financial StatementsFor The Financial Year Ended 31 December 20055 SEGMENTAL INFORMATION (continued)aBy business segment (continued)Unallocated income includes interest income, gross dividends from quoted investments and gains from disposalof quoted investments. Unallocated expenses for the current financial year represents allowance for diminutionin value of quoted shares.Unallocated assets consist primarily of investment in quoted shares, taxation recoverable, deferred tax assetsand interest income receivable. Unallocated liabilities include taxation and deferred tax liabilities.bBy geographical segmentRevenue Total Assets Capital Expenditure2005 2004 2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000 RM'000 RM'000Malaysia 124,728 144,162 324,552 312,013 6,151 6,262East Asia 34,404 19,559 0 0 0 0Other countries 20,943 26,039 0 0 0 0180,075 189,760 324,552 312,013 6,151 6,262Other than Malaysia and East Asia, no individual country contributed more than 10% of consolidated revenueor assets.6 REVENUERevenue, which in the consolidated Group income statement excludes intragroup sales, represents sales of finishedand trading goods at invoiced value less returns and sales tax, and billings for services rendered for onsiteinstallation and related works.62 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Notes to The Financial StatementsFor The Financial Year Ended 31 December 20057 PROFIT FROM OPERATIONSGroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000Profit from operations is stated after charging:Directors' remunerationFees- directors of the Company 181 202 181 202Other emoluments- directors of the Company 608 615 608 615- other directors 161 164 0 0Auditors' remuneration- statutory audit 83 83 53 53- non-audit services 11 28 11 28Depreciation of property, plant and equipment 6,421 6,701 5,370 5,641Defined contribution plan expense 3,129 3,101 2,975 2,917Rental of land and buildings 432 441 416 416Recovery for doubtful debts (615) (667) (22) (58)Bad debts written off 1 126 0 5Provision for warranties 1,240 700 615 650Allowance for diminution in value of quoted shares 366 0 366 0and crediting:Interest income 4,363 4,090 4,240 3,996Rental income 0 0 166 128Gains on disposal of property, plant and equipment 423 93 389 28Foreign exchange gain / (loss)- realised (264) (14) (239) (4)- unrealised 7 8 7 8Dividends (gross) received from investmentsquoted in Malaysia 693 330 693 330Gains on disposal of quoted investments 264 511 264 511Write back of allowance for impairment lossesof investment in subsidiary 0 0 0 1,265Gain on full recovery of loan whichwas acquired at a discount 0 0 0 1,071Money value of benefits given to- directors of the Company 43 71 43 71- other directors 22 23 0 0UAC BERHAD (5149-H) (Incorporated in Malaysia) 63

Notes to The Financial StatementsFor The Financial Year Ended 31 December 20058 FINANCE COSTGroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000This comprised interest expense on:- bankers' acceptances 0 3 0 09 TAXATIONGroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000Based on the profit of the financial year:Malaysian income tax 11,224 13,429 11,151 13,383Deferred taxation- Origination and reversal of temporary differences 1,867 254 11 (99)13,091 13,683 11,162 13,284Overprovision of income tax in respect ofprevious financial years (875) (121) (875) (121)12,216 13,562 10,287 13,163The explanation of the relationship between tax expense and profit from ordinary activities before taxation is as follows:GroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000Profit from ordinary activities before taxation 40,406 48,934 41,881 50,125Tax calculated at the Malaysian income tax rateof 28% (2004: 28%) 11,314 13,701 11,727 14,035Tax effects of:Expenses not deductible for tax purposes 358 280 349 248Income not subject to tax (132) (158) (132) (811)Reinvestment allowances (782) (188) (782) (188)Temporary difference on tax losses not recognised 368 48 0 0Reversal of deductible temporary difference notexpected to be utilised 1,965 0 0 0Overprovision in respect of previous financial years (875) (121) (875) (121)Tax expense 12,216 13,562 10,287 13,16364 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Notes to The Financial StatementsFor The Financial Year Ended 31 December 200510 EARNINGS PER SHARE (SEN)aBasic earnings per share (sen)Basic earnings per share of the Group is calculated by dividing the net profit for the financial year by theweighted average number of ordinary shares in issue during the financial year.2005 2004Net profit for the financial year (RM'000) 28,259 35,402Weighted average number of ordinary shares in issue ('000) 73,478 72,963Basic earnings per share (sen) 38.5 48.5bDiluted earnings per share (sen)For the diluted earnings per share calculation, the weighted average number of ordinary shares in issue isadjusted to assume conversion of all dilutive potential ordinary shares arising from share options granted toemployees. No adjustment is made to net profit for the financial year for the share options calculation.2005 2004Net profit for the financial year (RM'000) 28,259 35,402Weighted average number of ordinary shares in issue ('000) 73,478 72,963Adjustment for share options ('000) 239 358Weighted average number of ordinary shares for diluted earnings per share ('000) 73,717 73,321Diluted earnings per share (sen) 38.3 48.311 DIVIDENDSGroup & Company2005 2004RM'000 RM'000PaidInterim of 12 sen per share less tax at 28% (2004: 12 sen per share less taxat 28% and a special dividend of 5 sen per share less tax at 28%) in respectof financial year ended 31 December 2005 6,358 8,958Final of 12 sen per share less tax at 28% and 6 sen per share tax exempt(2004: 12 sen per share less tax at 28% and 6 sen per share tax exempt)in respect of financial year ended 31 December 2004 10,749 10,68617,107 19,644A proposed final dividend of 12 sen per share less tax at 28% and 6 sen per share tax exempt in respect of thefinancial year ended 31 December 2005 (2004: 12 sen per share less tax at 28% and 6 sen per share tax exempt)will be recognised in the financial statements upon the approval by shareholders at the forthcoming AnnualGeneral Meeting.UAC BERHAD (5149-H) (Incorporated in Malaysia) 65

Notes to The Financial StatementsFor The Financial Year Ended 31 December 200512 PROPERTY, PLANT AND EQUIPMENTLongPlant, Furniture,term Long machinery fittingsFreehold leasehold term and and Capitalland Freehold land leasehold Buildings motor equip- work inat land at land at Buildings vehicles ment progressvaluation at cost valuation at cost valuation at cost at cost at cost at cost TotalGroup RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000Cost/ValuationAt 1.1.2005 946 9,871 8,325 0 9,785 9,702 127,191 5,791 3,472 175,083Additions 0 0 0 108 0 259 47 30 5,707 6,151Transfers 0 0 0 0 0 1,412 4,850 166 (6,428) 0Disposals 0 0 0 0 0 0 (1,256) (40) 0 (1,296)Written off 0 0 0 0 0 0 0 (27) 0 (27)At 31.12.2005 946 9,871 8,325 108 9,785 11,373 130,832 5,920 2,751 179,911AccumulateddepreciationAt 1.1.2005 0 0 2,013 0 8,214 2,700 83,164 4,766 0 100,857Charge for thefinancial year 0 0 98 0 390 272 5,300 361 0 6,421Disposals 0 0 0 0 0 0 (1,223) (40) 0 (1,263)Written off 0 0 0 0 0 0 0 (20) 0 (20)At 31.12.2005 0 0 2,111 0 8,604 2,972 87,241 5,067 0 105,995Net book valueAt 31.12.2005 946 9,871 6,214 108 1,181 8,401 43,591 853 2,751 73,916Net book valueAt 31.12.2004 946 9,871 6,312 0 1,571 7,002 44,027 1,025 3,472 74,22666 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Notes to The Financial StatementsFor The Financial Year Ended 31 December 200512 PROPERTY, PLANT AND EQUIPMENT (continued)LongPlant,termmachinery Furniture,Freehold leasehold and fittings Capitalland Freehold land Buildings motor and work inat land at at Buildings vehicles equipment progressvaluation at cost valuation valuation at cost at cost at cost at cost TotalCompany RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000Cost/ValuationAt 1.1.2005 946 9,871 6,930 8,870 9,551 113,943 5,138 3,436 158,685Additions 0 0 0 0 0 0 0 5,707 5,707Transfers 0 0 0 0 1,412 4,814 166 (6,392) 0Disposals 0 0 0 0 0 (1,044) (16) 0 (1,060)At 31.12.2005 946 9,871 6,930 8,870 10,963 117,713 5,288 2,751 163,332AccumulateddepreciationAt 1.1.2005 0 0 1,700 7,583 2,625 74,946 4,330 0 91,184Charge for thefinancial year 0 0 83 360 266 4,388 273 0 5,370Disposals 0 0 0 0 0 (1,011) (16) 0 (1,027)At 31.12.2005 0 0 1,783 7,943 2,891 78,323 4,587 0 95,527Net book valueAt 31.12.2005 946 9,871 5,147 927 8,072 39,390 701 2,751 67,805Net book valueAt 31.12.2004 946 9,871 5,230 1,287 6,926 38,997 808 3,436 67,501UAC BERHAD (5149-H) (Incorporated in Malaysia) 67

Notes to The Financial StatementsFor The Financial Year Ended 31 December 200513 INVESTMENTS IN SUBSIDIARY COMPANIES (continued)The subsidiary companies are:Equity interestCountry of 2005 2004Name of company incorporation % % Principal activitiesS.B. Industries (Sdn.) Bhd. Malaysia 100.0 100.0 Property holding.Fitek (M) Sdn. Bhd. Malaysia 100.0 100.0 Dormant.UAC Marketing Sendirian Berhad Malaysia 100.0 100.0 Dormant.UAC Pipes Sdn. Bhd. Malaysia 100.0 100.0 Manufacture and sale ofpolyethylene pipes and fittings.UAC Masterflange Sdn. Bhd. Malaysia 100.0 82.8 Sale of specialised pipe(formerly known asconnectors and fittings andUAC Reflange Sdn. Bhd.)the provision of onsiteinstallation and related services.Ceased operations during thefinancial year.UAC Steel Systems Sdn. Bhd. Malaysia 100.0 100.0 Manufacture, sale andinstallation of steel rooftruss systems.On 22 December 2005, the Company acquired the remaining 17.2% shareholding in UAC Masterflange Sdn. Bhd.(formerly known as UAC Reflange Sdn. Bhd.) from the subsidiary's minority shareholders at a total purchaseconsideration of RM2.14 INVESTMENTS IN QUOTED SHARESGroup & Company2005 2004RM'000 RM'000Shares at cost in corporations quoted in Malaysia 17,105 9,575Allowance for diminution in value (366) 016,739 9,575Market value of quoted shares at 31 December 17,817 11,228UAC BERHAD (5149-H) (Incorporated in Malaysia) 69

Notes to The Financial StatementsFor The Financial Year Ended 31 December 200515 DEFERRED TAXATIONDeferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assetsagainst current tax liabilities and when the deferred taxation relates to the same tax authority.The deferred tax assets and liabilities are made up of temporary differences arising from:GroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000Subject to income taxDeferred tax assets (before offsetting)Provisions 2,410 2,278 1,718 1,521Tax losses 164 1,746 0 0Property, plant and equipment 20 766 0 02,594 4,790 1,718 1,521Offsetting (1,774) (2,105) (1,718) (1,521)Deferred tax assets (after offsetting) 820 2,685 0 0Deferred tax liabilities (before offsetting)Property, plant and equipment (10,630) (10,959) (10,262) (10,054)Offsetting 1,774 2,105 1,718 1,521Deferred tax liabilities (after offsetting) (8,856) (8,854) (8,544) (8,533)Subject to capital gains taxDeferred tax liabilitiesProperty, plant and equipment (45) (45) (45) (45)70 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Notes to The Financial StatementsFor The Financial Year Ended 31 December 200515 DEFERRED TAXATION (continued)The net movements in deferred taxation credited and charged to the income statement are as follows:GroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000At 1 January (6,214) (5,960) (8,578) (8,677)Credited/(charged) to income statement- property, plant and equipment (417) 13 (208) 28- provisions 132 (200) 197 71- tax losses (1,582) (67) 0 0(1,867) (254) (11) 99At 31 December (8,081) (6,214) (8,589) (8,578)Represented by:Deferred tax assets 820 2,685 0 0Deferred tax liabilities- subject to income tax (8,856) (8,854) (8,544) (8,533)- subject to capital gains tax (45) (45) (45) (45)(8,901) (8,899) (8,589) (8,578)(8,081) (6,214) (8,589) (8,578)During the financial year, certain subsidiaries reversed their deferred tax assets amounting to RM1,965,000 as it isnot probable that taxable profit will be available against which the deductible temporary differences can be utilised.The amounts of unabsorbed capital allowances, unused tax losses and other deductible temporary differences(which have no expiry date) for which no deferred tax asset is recognised in the balance sheet are as follows:GroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000Unused tax losses 6,464 171 0 0Unabsorbed capital allowances 3,664 0 0 0Provisions 65 0 0 0UAC BERHAD (5149-H) (Incorporated in Malaysia) 71

Notes to The Financial StatementsFor The Financial Year Ended 31 December 200516 INVENTORIESGroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000At cost,Consumable stores 5,520 5,330 5,447 5,186Raw materials 11,608 13,730 9,898 11,341Work in progress 1,947 1,678 1,947 1,678Finished goods 9,084 8,727 6,805 6,575Trading goods 215 388 204 35628,374 29,853 24,301 25,13617 TRADE AND OTHER RECEIVABLESGroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000Trade receivables 38,234 44,236 31,979 33,719Allowance for doubtful debts (5,361) (6,007) (1,781) (1,834)32,873 38,229 30,198 31,885Other receivables 2,344 2,996 1,750 2,439Deposits and prepayments 849 496 482 46936,066 41,721 32,430 34,793The currency exposure profile of trade receivables is as follows:GroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000Ringgit Malaysia 31,763 39,354 25,551 28,965US Dollar 6,223 4,462 6,223 4,462Others 248 420 205 292Other receivables are wholly denominated in Ringgit Malaysia.38,234 44,236 31,979 33,71972 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Notes to The Financial StatementsFor The Financial Year Ended 31 December 200517 TRADE AND OTHER RECEIVABLES (continued)Credit terms of trade receivables range from payment in advance to 60 days (2004: Payment in advance to 60 days).Concentrations of credit risk with respect to trade receivables are limited due to the Group's large number ofcustomers, who are involved in distribution, trading and construction activities and the variety of end markets inwhich they sell. The Group's historical experience in collection of accounts receivable falls within the recordedallowances. The Group believes that no additional credit risk beyond amounts allowed for collection losses isinherent in its trade receivables.18 AMOUNTS DUE FROM SUBSIDIARY COMPANIESCompany2005 2004RM'000 RM'000Trade 0 91Non-trade 11,274 10,81611,274 10,907Allowance for doubtful debts (4,000) (4,157)7,274 6,750Amounts due from subsidiary companies are denominated in Ringgit Malaysia.Non-trade balances are interest free, unsecured and carry no fixed terms of repayment. Trade balances as atprevious financial year end were subject to 60 days credit.19 CASH AND CASH EQUIVALENTSCash and cash equivalents included in the cash flow statements comprise the following:GroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000Fixed deposits placed with- licensed banks 162,620 128,574 158,146 125,987- licensed finance companies 0 19,712 0 19,226162,620 148,286 158,146 145,213Cash and bank balances 6,017 5,667 4,835 4,591168,637 153,953 162,981 149,804UAC BERHAD (5149-H) (Incorporated in Malaysia) 73

Notes to The Financial StatementsFor The Financial Year Ended 31 December 200519 CASH AND CASH EQUIVALENTS (continued)The currency exposure profile of fixed deposits, cash and bank balances is as follows:GroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000Ringgit Malaysia 168,603 153,943 162,947 149,794US Dollar 34 10 34 10168,637 153,953 162,981 149,804The weighted average interest rates of conventional fixed deposits, short term funds, cash and bank balances thatwere effective during the financial year are as follows:GroupCompany2005 2004 2005 2004% % % %Deposits with licensed banks 2.8 2.8 2.8 2.8Deposits with licensed finance companies 0 3.2 0 3.3The average maturity of conventional fixed deposits for the Group is 202 days (2004: 234 days) and for theCompany is 196 days (2004: 220 days). Bank balances are deposits placed in current accounts with licensed bankswhich do not earn any interest.20 TRADE AND OTHER PAYABLESGroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000Trade payables 7,128 8,354 5,991 4,688Trade accruals 11,891 11,559 11,576 11,119Accrued expense for staff annual leave 1,526 1,423 1,450 1,35020,545 21,336 19,017 17,15774 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Notes to The Financial StatementsFor The Financial Year Ended 31 December 200520 TRADE AND OTHER PAYABLES (continued)The currency exposure profile of trade payables is as follows:GroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000Ringgit Malaysia 4,202 6,597 3,115 3,071US Dollar 2,573 1,289 2,573 1,149Others 353 468 303 468Trade accruals are denominated in Ringgit Malaysia.7,128 8,354 5,991 4,688Credit terms of trade payables granted to the Group vary from no credit to 90 days (2004: No credit to 90 days).21 AMOUNTS DUE TO SUBSIDIARY COMPANIESCompany2005 2004RM'000 RM'000Non-trade 5,220 5,220Amounts due to subsidiary companies are denominated in Ringgit Malaysia.Non-trade balances are interest free, unsecured and carry no fixed terms of repayment.22 PROVISION FOR WARRANTIESGroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000At 1 January 4,115 3,565 3,700 3,200Charge to income statement 1,240 700 615 650Utilised during the financial year (115) (150) (115) (150)At 31 December 5,240 4,115 4,200 3,700UAC BERHAD (5149-H) (Incorporated in Malaysia) 75

Notes to The Financial StatementsFor The Financial Year Ended 31 December 200523 SHARE CAPITALGroup & Company2005 2004RM'000 RM'000Authorised ordinary shares of RM1 each 100,000 100,000Issued and fully paid ordinary shares of RM1 eachAt 1 January 73,238 72,455Issued during the financial year:- exercise of share options 643 783At 31 December 73,881 73,238Employees' Share Option SchemeThe Company implemented an Employees' Share Option Scheme (“ESOS”) on 29 April 2002 for a period of 5 years.The ESOS is governed by the by-laws which were approved by the shareholders at the Extraordinary GeneralMeeting of the Company held on 18 February 2002.The main features of the ESOS are as follows:• The total number of ordinary shares to be issued by the Company under the ESOS shall not exceed 10% of thetotal issued and paid-up ordinary shares of the Company.• Eligible persons are employees and full time executive directors who have served the Group for a continuousperiod of at least one (1) year and have been confirmed in service on the date of offer. The eligibility forparticipation in the ESOS shall be at the discretion of the Option Committee administering the ESOS.• The option price under the ESOS is to be at a discount of not more than 10% of the average of the mean marketquotation of the shares of the Company as quoted in the Daily Official List issued by Bursa Malaysia SecuritiesBerhad for the five market days preceding the offer date, or the par value of the shares of the Company ofRM1.00, whichever is the higher.• The options granted may be exercised at any time before the expiry of the ESOS on 28 April 2007. Theemployees' entitlements to the options are vested (i.e. they are not conditional on future employment) as soonas they are allocated and become exercisable.• No option shall be granted for less than 2,000 shares or more than 250,000 shares. The option may be exercisedin full or such lesser number of ordinary shares provided the number shall be in multiples of 1,000 shares.• Details of the share option allocation criteria can be obtained from the Company's Personnel Department.• The persons to whom the options have been granted have no right to participate by virtue of the options in anyother company.76 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Notes to The Financial StatementsFor The Financial Year Ended 31 December 200523 SHARE CAPITAL (continued)Employees' Share Option Scheme (continued)Set out below are details of options over the ordinary shares of the Company granted under the ESOS:Number of sharesExercise At start At endprice of year Granted Exercised Lapsed of yearGrant date Expiry date RM/share '000 '000 '000 '000 '000Year ended31.12.20056 May 2002 28 April 2007 3.48 807 0 (444) 0 36323 June 2003 28 April 2007 3.77 138 0 (77) (2) 5916 Aug 2004 28 April 2007 4.40 296 0 (81) (10) 20510 Aug 2005 28 April 2007 4.37 0 199 (41) 0 1581,241 199 (643) (12) 785Year ended31.12.20046 May 2002 28 April 2007 3.48 1,476 0 (669) 0 80723 June 2003 28 April 2007 3.77 232 0 (90) (4) 13816 Aug 2004 28 April 2007 4.40 0 331 (24) (11) 2961,708 331 (783) (15) 1,24131.12.2005 31.12.2004'000 '000Number of options vested at balance sheet date 785 851Details relating to options exercised during the financial year are as follows:Fair value of shares atNumber of shares issuedshare issue date 2005 2004Exercise date RM/share Exercise price RM/share '000 '000January - April 2004 4.98 - 5.08 3.48 - 3.77 0 539June - November 2004 4.80 - 4.89 3.48 - 4.40 0 230December 2004 5.08 3.77 - 4.40 0 14January - April 2005 4.96 - 5.05 3.48 - 4.40 186 0May - October 2005 4.81 - 4.87 3.48 - 4.40 234 0November - December 2005 4.78 - 4.79 3.48 - 4.40 223 0643 783UAC BERHAD (5149-H) (Incorporated in Malaysia) 77

Notes to The Financial StatementsFor The Financial Year Ended 31 December 200523 SHARE CAPITAL (continued)Employees' Share Option Scheme (continued)2005 2004RM'000 RM'000Ordinary share capital - at par 643 783Share premium 1,728 1,990Proceeds received on exercise of share options 2,371 2,773Fair value of shares issued at exercise date 3,137 3,922The fair value of shares issued on the exercise of options is the monthly mean market price at which theCompany's share were traded on Bursa Malaysia Securities Berhad in the month of the exercise of the options.24 ASSETS REVALUATION RESERVEGroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000Revaluation surplus- Gross 5,773 5,773 4,993 4,993- Deferred tax (1,469) (1,469) (1,250) (1,250)4,304 4,304 3,743 3,74325 RETAINED EARNINGSSubject to the agreement with the Inland Revenue Board, the Company has sufficient exempt income account andtax credit under Section 108 of the Income Tax Act, 1967 to frank the payment of dividends out of all its retainedearnings as at 31 December 2005.78 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Notes to The Financial StatementsFor The Financial Year Ended 31 December 200526 COMMITMENTSGroupCompany2005 2004 2005 2004RM'000 RM'000 RM'000 RM'000Approved capital expenditure notprovided for in the financial statements:Property, plant and equipment- contracted 50,862 389 50,473 389- not contracted 7,895 52,043 7,895 52,01158,757 52,432 58,368 52,40027 SIGNIFICANT RELATED PARTY DISCLOSURESaThe Group has transactions at negotiated prices established between the related parties as follows:2005 2004Group Note RM'000 RM'000Sales of goods to- Boustead Realty Sdn. Bhd. (i) 0 7,589- Boustead Building Materials Sdn. Bhd. (i) 26,070 17,922Rental of premises charged by- Boustead Realty Sdn. Bhd. (i) 417 416Purchase of services from- Boustead Shipping Agencies Sdn. Bhd. (i) 256 177- Boustead Travel Services Sdn. Bhd. (i) 270 256Purchase of fuel from- Boustead Petroleum Marketing Sdn. Bhd. (i) 145 0Purchase of asset from- Boustead Holdings Bhd. (i) 276 0Purchase of insurance from- Royal & Sun Alliance Insurance (M) Bhd. (ii) 617 620Note:(i) Boustead Holdings Bhd. is a significant shareholder of the Company. Boustead Realty Sdn. Bhd. (formerly known as Boustead JohanEdaran Sdn. Bhd.), Boustead Building Materials Sdn. Bhd., Boustead Shipping Agencies Sdn. Bhd., Boustead Travel Services Sdn. Bhd.and Boustead Petroleum Marketing Sdn. Bhd. are subsidiary companies of Boustead Holdings Bhd.(ii) Royal & Sun Alliance Insurance (M) Bhd. is an associate company of a significant shareholder, Boustead Holdings Bhd.UAC BERHAD (5149-H) (Incorporated in Malaysia) 79

Notes to The Financial StatementsFor The Financial Year Ended 31 December 200527 SIGNIFICANT RELATED PARTY DISCLOSURES (continued)bIndividually significant outstanding balance arising from sales of goods during the financial year is as follows:2005 2004Related party Type of transaction RM'000 RM'000Boustead Building Materials Sdn. Bhd. Sales of goods 8,548 6,39928 CONTINGENT LIABILITIES (UNSECURED)Company2005 2004RM'000 RM'000Guarantee given to a third party for the supply of goods to a subsidiary company 2,000 2,000It is not practicable to estimate the fair value of the contingent liabilities as the maturity term cannot be determined.29 FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES ON THE BALANCE SHEET DATEThe carrying amounts of recognised financial assets and liabilities of the Group and Company as at 31 December 2005and 31 December 2004 approximated their fair values except for investments in quoted shares and contingentliabilities as disclosed in Note 14 and Note 28 to the financial statements respectively.30 OFF BALANCE SHEET FINANCIAL INSTRUMENTSAt 31 December 2005 and 31 December 2004, the Group does not have any open foreign currency forward contract.31 APPROVAL OF FINANCIAL STATEMENTSThe financial statements have been approved for issue in accordance with a resolution of the Board of Directors on15 February 2006.80 UAC BERHAD (5149-H) (Incorporated in Malaysia)

Statement of ShareholdingsAs At 27 January 2006Authorised share capitalPaid-up share capitalClass of stockVoting rightsRM100,000,000RM73,918,000RM1.00 ordinary share1 vote per shareDIRECTORS’ SHAREHOLDINGSDirect % of Deemed % ofName of Directors Interest Shares Interest Shares1 Jen (B) Tan Sri Dato’ Mohd Ghazali bin Haji Che Mat - - - -2 Koo Hock Fee - - - -3 Datuk Alladin Hashim 1 - - -4 Tan Sri Dato’ Haji Hanafiah bin Haji Ahmad - - - -5 Tan Sri Dato’ Lodin bin Wok Kamaruddin - - - -6 Dato’ (Dr.) Megat Abdul Rahman bin Megat Ahmad - - - -7 Tan Leh Kiah - - - -SIZE OF SHAREHOLDINGS AS AT 27 JANUARY 2006Total No. ofNo. ofShares ofSize of Shareholdings Shareholders % RM1.00 each %1 - 999 479 12.29 127,520 0.171,000 - 10,000 2,940 75.44 9,205,561 12.4510,001 - 100,000 434 11.14 10,804,302 14.62100,001 - 3,695,899* 43 1.10 25,140,454 34.013,695,900 and above** 1 0.03 28,640,163 38.75Total 3,897 100.00 73,918,000 100.00* Less than 5% of issued shares** 5% and above of issued shares30 LARGEST SHAREHOLDERS AS AT 27 JANUARY 2006Total No. of SharesName of Shareholders of RM1.00 each %1 Boustead Holdings Berhad 28,640,163 38.752 Valuecap Sdn Bhd 3,286,700 4.453 HSBC Nominees (Tempatan) Sdn BhdHSBC (M) Trustee Bhd for OSK-UOB Small Cap Opportunity Unit Trust 3,271,500 4.434 Pertubuhan Keselamatan Sosial 2,734,200 3.705 Lembaga Kemajuan Tanah Persekutuan (Felda) 2,435,000 3.2981

Statements of ShareholdingsAs At 27 January 200630 LARGEST SHAREHOLDERS AS AT 27 JANUARY 2006 (continued)Total No. of SharesName of Shareholders of RM1.00 each %6 Employees Provident Fund Board 2,307,050 3.127 Lembaga Tabung Haji 2,204,086 2.988 HSBC Nominees (Tempatan) Sdn BhdHSBC (M) Trustee Bhd for Prudential Equity Income Fund 1,010,800 1.379 Yeo Khee Nam 659,425 0.8910 Asia Life (M) Berhad as beneficial owner (PF) 650,200 0.8811 Universiti Malaya 540,026 0.7312 MCIS Zurich Insurance Berhad 516,000 0.7013 MCIS Zurich Insurance Berhad 453,300 0.6114 Jerneh Insurance Bhd 400,000 0.5415 Chan Boon Teik 260,041 0.3516 Mrs. Li Heng Tiong nee Too Kim Neo 252,000 0.3417 Yeo Khee Huat 250,500 0.3418 Yeo Khee Lian 230,000 0.3119 Lim Swee Bee 200,625 0.2720 Malaysian National Reinsurance Berhad 200,000 0.2721 Dr. Yeoh Kim Leng 197,500 0.2722 Mayban Nominees (Tempatan) Sdn BhdMayban Trustees Berhad for Avenue Versatile Extra Fund 197,000 0.2723 TA Nominees (Tempatan) Sdn BhdPledged Securities Account for Wong Ah Tim @ Ong Ah Tin 180,000 0.2424 HSBC Nominees (Tempatan) Sdn BhdHSBC (M) Trustee Bhd for Mayban Lifestyle Trust Fund Today 162,400 0.2225 BHLB Trustee BerhadPrusmall-Cap Fund 161,800 0.2226 Lee Hoey Kee Sdn Bhd 154,000 0.2127 District Grand Lodge of the Eastern Archipelago 150,000 0.2028 BHLB Trustee BerhadTA Small Cap Fund 146,700 0.2029 Lee Sim Kuen 141,875 0.1930 Soon and Saw Investment Trust Sdn. Berhad 140,000 0.19Total 52,132,891 70.53SUBSTANTIAL SHAREHOLDERS ACCORDING TO THE REGISTER OF SUBSTANTIAL SHAREHOLDERSDirect % of Deemed % ofName of Shareholders Interest Shares Interest Shares1 Boustead Holdings Berhad 28,640,163 38.75 - -2 HSBC Holdings plc - - 4,569,700 6.18HSBC (Malaysia) Trustee Berhad (Shares heldas Trustees for Unit Trust and DiscretionaryInvestment Management)82

List of PropertiesAs at 31 December 2005Net Year ofBook LastAge of Value Revaluation/Description Location Buildings Tenure Area RM'000 Acquisition#Industrial land 36 Jalan Portland Leaseholdwith office and Tasek Industrial Estatefactory building 31400 IpohPerak Darul RidzuanLot No. 1468/65 1-39 yrs Expiry 12.1.2065 12.2 hectares 9,633 1984Lot No. 67889 4-9 yrs Expiry 1.9.2075 2.6 hectares 2,997 1984Industrial land Lots 32 & 34 14-35 yrs Leasehold 4,320.0 sq m 1,388 1984with office and Jalan Beliong Expiry 13.5.2070factory building 40000 Shah AlamSelangor Darul EhsanResidential land 7 Laman Tunku 40 yrs Freehold 3,179.3 sq m 994 1984with detached Bukit Tunkubungalow 50480 Kuala LumpurResidential 18413 Ria Apartment 19 yrs Freehold 103.3 sq m 193 1988#apartment 69000 Genting HighlandsSelangor Darul EhsanCommercial Mukim of Sungai Buloh N/A Freehold 5,665.6 sq m 9,871 2003#land to develop District of Petalingoffice building Selangor Darul EhsanPT44585 H.S.(D)183244Residential land No. DT1613 1 yr Leasehold 121.0 sq m 180 2005#with double Jalan Angkasa Nuri 4 Expiry 30.10.2099storey terrace Taman Angkasa Nurihouse76100 Durian TunggalMelakaResidential land No. 3 Jalan BB1/11 1 yr Leasehold 111.0 sq m 188 2005#with double Taman Bachang Baru Expiry 27.2.2101storey terrace 75350 Melakahouse83

Notes84

Proxy FormUAC BERHAD(5149-H)I/We,(block letters)ofBeing member/members of UAC Berhad hereby appointofOr failing him,ofas my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held onWednesday, 29 March 2006 and at every adjournment thereof on the following resolutions referred to in the notice ofthe Annual General Meeting.No. Resolution For Against1 Adoption of Report & Accounts2 Approval of final dividend3 Re-election of Tan Sri Dato' Lodin bin Wok Kamaruddin4 Re-election of Tan Sri Dato' Haji Hanafiah bin Haji Ahmad5 Election of Mr. Tan Leh Kiah6 Re-appointment of Jen (B) Tan Sri Dato' Mohd Ghazali bin Haji Che Mat7 Approval of Directors' fees8 Re-appointment of Auditors9 Approval for Directors to allot and issue shares10 Approval of Shareholders' mandate for recurrent related party transactionsof a revenue or trading natureDated this day of 2006Signature or common seal of Shareholder(s)Number of sharesNOTES1 A member entitled to attend or vote at the meeting may appoint a proxy or proxies (not more than two) to attend and vote instead of him. A proxyneed not be a member.2 Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to berepresented by each proxy.3 The instrument appointing a proxy in the case of any individual shall be signed by the appointor or his attorney and in the case of acorporation under its common seal or under the hand of the officer duly authorised.4 Unless voting instructions are indicated in the spaces provided above, the proxy may vote as he thinks fit.5 The instrument appointing a proxy must be deposited at the Registered Office of the Company, located at 3rd Floor, Menara Boustead, 69 JalanRaja Chulan, 50200 Kuala Lumpur not less than forty eight hours before the time of the Meeting or any adjournment thereof.

fold hereAffixStampHereUAC BERHAD3rd FloorMenara Boustead69, Jalan Raja Chulan50200 Kuala LumpurMalaysiafold here