Notes to the Financial Statements...pg 41 Notes to the Financial Statements ...(cont’d) 31st December, 2005 10. TRADE RECEIVABLES GROUP COMPANY 2005 2004 2005 2004 RM RM RM RM Trade

pg 40

Notes to the Financial Statements ...(cont’d)

31st December, 2005

GROUP COMPANY

7. INVESTMENT IN AN ASSOCIATED COMPANY

2005 2004 2005 2004RM RM RM RM

Unquoted shares, at cost 3,220,606 3,220,606 3,220,606 3,220,606Share of post-acquisition profit 335,260 54,155 - -Exchange fluctuation reserve 51,356 - - -

3,607,222 3,274,761 3,220,606 3,220,606

Represented by:

Share of net assets of associated company 2,814,369 2,481,908Goodwill 792,853 792,853

3,607,222 3,274,761

Amount due from/(to) an associated company- trade receivables 3,279 - 3,279 -- trade payables (682,921) (87,021) (682,921) (87,021)

(679,642) (87,021) (679,642) (87,021)

Details of the associated company are as follows:-

Country of Equity InterestName of Company Incorporation 2005 2004 Principal Activity

% %

*Dalian Sunchirin Auto People’s 40 40 Manufacturer of automotive Parts Co. Ltd. Republic of components and parts

China

*Company not audited by Azman, Wong, Salleh & Co.

8. OTHER INVESTMENT

GROUP/COMPANY

2005 2004RM RM

Unquoted shares in Malaysia, at cost 5,000,000 5,000,000

9. INVENTORIES

GROUP COMPANY

2005 2004 2005 2004RM RM RM RM

At cost:-

Raw materials 26,478,653 15,649,220 19,510,677 10,582,848Work-in-progress 2,619,099 2,653,778 2,180,948 2,365,009Finished goods 3,190,952 2,084,653 2,574,745 1,788,476Packing materials and consumables 197,775 147,060 133,310 147,060

32,486,479 20,534,711 24,399,680 14,883,393

pg 41


31st December, 2005

10. TRADE RECEIVABLES

GROUP COMPANY2005 2004 2005 2004

RM RM RM RM

Trade receivables 30,851,161 27,305,545 14,876,521 13,556,886

The currency exposure profile of trade receivables is as follows:

- Ringgit Malaysia 14,399,582 11,804,499 10,926,953 8,331,869- US Dollar 5,462,541 3,423,250 1,791,445 3,185,093- Thai Baht 4,009,410 5,696,390 - -- Singapore Dollar 553,480 516,955 553,480 516,955- Euro 4,811,519 4,341,263 - -- Japanese Yen 1,561,427 1,509,364 1,556,067 1,509,145- Others 53,202 13,824 48,576 13,824

30,851,161 27,305,545 14,876,521 13,556,886

The normal credit terms of trade receivables range from 0 to 90 days (2004 : 0 to 90 days).

11. DEPOSITS, CASH AND BANK BALANCES

GROUP COMPANY2005 2004 2005 2004

RM RM RM RM

Short term deposits with licensed banks 854,769 5,345,342 854,769 5,345,342Cash and bank balances 3,081,438 2,849,250 497,922 1,385,653

3,936,207 8,194,592 1,352,691 6,730,995

The currency exposure profile of deposits, cash and bank balances is as follows:

- Ringgit Malaysia 521,741 4,814,258 455,698 4,727,647- Thai Baht 2,207,511 1,501,034 70,076 769,107- US Dollar 682,809 1,739,868 462,211 1,159,843- Others 524,146 139,432 364,706 74,398

3,936,207 8,194,592 1,352,691 6,730,995

The weighted average interest rates of deposits that were effective during the period were as follows:-

GROUP COMPANY2005 2004 2005 2004

% % % %

Short term deposits with licensed bank 2.38 2.55 2.38 2.55

Deposits of the Group and of the Company have an average maturity of 4 days (2004: 8 days). Bank balances are deposits held at callwith banks.

pg 42


31st December, 2005

GROUP COMPANY

The offshore foreign currency loan amounting USD1,125,000 (2004: USD1,500,000) is secured by guarantees issued byMizuho Bank, Ltd., Kobe - Chuo branch.

The offshore foreign currency loan is repayable in 4 half-yearly instalments of USD375,000 each from 17th October, 2005 to 16thApril, 2007. Interest is charged on the foreign currency loan at LIBOR + 1% per annum.

Interest rates charged during the year on credit facilities utilised by the Group vary between 2.31% to 5.35% (2004: 2.31% to3.40%) per annum.

12. TRADE PAYABLES

2005 2004 2005 2004RM RM RM RM

Trade payables 19,322,667 19,426,620 11,813,746 12,574,912

The currency exposure profile of trade payables is as follows:

- Ringgit Malaysia 4,242,594 4,077,756 4,142,963 3,987,001- US Dollar 3,347,362 3,587,885 2,156,704 2,899,565- Thai Baht 581,590 648,934 - -- Japanese Yen 10,346,525 10,901,906 5,464,770 5,558,065- Others 804,596 210,139 49,309 130,281

19,322,667 19,426,620 11,813,746 12,574,912

The normal credit terms of trade payables range from 30 to 120 days (2004 : 30 to 120 days).

13. BANK BORROWINGS (UNSECURED)

GROUP COMPANY2005 2004 2005 2004

RM RM RM RM

Classified as current liabilities

Repayable within 12 months:

Bankers’ acceptances 4,762,000 - 4,762,000 -Term loan 2,850,000 1,425,000 2,850,000 1,425,000Revolving credits 1,281,580 1,625,745 - -

8,893,580 3,050,745 7,612,000 1,425,000

Classified as non-current liabilities

Term loan:-

Repayable later than 1 year and not later than 2 years 1,425,000 2,850,000 1,425,000 2,850,000Repayable later than 2 years and not later than 5 years - 1,425,000 - 1,425,000

1,425,000 4,275,000 1,425,000 4,275,000

Total borrowings 10,318,580 7,325,745 9,037,000 5,700,000

Currency exposure profile of bank borrowings is as follows:-

Ringgit Malaysia 4,762,000 - 4,762,000 -US Dollar 4,275,000 5,700,000 4,275,000 5,700,000Thai Baht 1,281,580 1,625,745 - -

10,318,580 7,325,745 9,037,000 5,700,000

pg 43

GROUP/COMPANY


31st December, 2005

14. SHARE CAPITAL

2005 2004RM RM

Ordinary shares of RM1.00 each

Authorised:

Balance at 1st January/31st December 50,000,000 50,000,000

Issued and fully paid:

Balance at 1st January and 31st December 40,956,000 40,956,000

Share options

The Company had implemented an Employees’ Share Option Scheme (“the ESOS”) for the benefit of eligible employees and executivedirectors of the Company.

Under the ESOS,

(i) In aggregrate, the maximum amount of new shares which may be subscribed on the exercise of the options granted under theESOS shall not be more than 10% of the issued and paid-up share capital of the Company during the existence of the ESOS.

(ii) The eligible persons are employees and executive directors of the Group who have served the Group for a continuous period of atleast one (1) year as at the Date of Offer. The eligibility for participation in the ESOS shall be at the absolute discretion of theCommittee appointed by the Board of Directors.

(iii) The number of shares to be offered to any eligible employee shall not be less than 1,000 ordinary shares nor more than themaximum entitlement.

(iv) The Option period is for five (5) calendar years commencing from 2nd December, 2002 and expiring on 1st December, 2007.

(v) The Option price shall be the average of the mean market quotation of shares (calculated as the weighted average of the highest andlowest price transacted) as shown in the daily official list issued by the Bursa Malaysia Securities Berhad for the five (5) precedingmarket days prior to the Date of Offer, subject to a discount of not more than ten percent (10%) which the Company may at itsdiscretion decide to give or at the par value of RM1 of the shares of the Company, whichever is higher.

Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

2005 2004Average Average

exercise price in exercise price inRM per share Options RM per share Options

At 1st January 1.00 3,339,000 1.00 3,250,000

Granted 1.00 30,000 1.00 128,000

Lapsed 1.00 (82,000) 1.00 (39,000)

At 31st December 1.00 3,287,000 1.00 3,339,000

15. SHARE PREMIUM ACCOUNT

This is not distributable by way of cash dividends.

pg 44


31st December, 2005

16. STATUTORY RESERVE

This is a statutory reserve set up by a subsidiary company, Sunchirin Industry (Thailand) Limited during the year. Under the civil and

commercial code in Thailand, prior to dividend payment, the subsidiary company is required to set aside as a statutory reserve at

least 5% of its net profit, after deducting accumulated deficit brought forward (if any), until the reserve reaches 10% of its registered

share capital. The statutory reserve is not distributable by way of dividends.

17. DEFERRED TAXATION

Deferred tax liabilities recognised:-

GROUP/COMPANY2005 2004

RM RM

Deferred tax assets - -

Deferred tax liabilities (1,117,408) (1,239,569)

(1,117,408) (1,239,569)

Deferred tax assets (before offsetting)

- property, plant and equipment 419,749 372,275

- other payables 386,499 407,736

806,248 780,011

Offsetting (806,248) (780,011)

Deferred tax assets (after offsetting) - -

Deferred tax liabilities (before offsetting)

- property, plant and equipment (1,922,932) (1,939,560)

- other payables (724) (80,020)

(1,923,656) (2,019,580)

Offsetting 806,248 780,011

Deferred tax liabilities (after offsetting) (1,117,408) (1,239,569)

Balance at 1st January (1,239,569) (1,554,742)

Credited to income statement

- property, plant and equipment 64,102 269,050

- other payables 58,059 46,123

Balance at 31st December (1,117,408) (1,239,569)

18. OPERATING REVENUE

This represents the invoiced value of goods sold less returns and trade discounts.

pg 45


31st December, 2005

19. PROFIT BEFORE TAXATION

GROUP COMPANY

2005 2004 2005 2004RM RM RM RM

This is arrived at after charging/(crediting):-

Auditors’ remuneration:

- statutory audit 44,469 34,614 23,000 23,000

- non-audit fees 250 250 250 250

Depreciation on property, plant and

equipment (Note 5) 5,760,009 5,325,601 3,206,545 3,239,024

Property, plant and equipment written off 18,389 47,605 18,389 47,605

Non-executive directors’ remuneration:

- fees 100,000 100,000 100,000 100,000

- others 49,500 49,500 49,500 49,500

Executive directors’ salaries, bonuses and

other emoluments:

- Company’s directors 1,048,106 1,015,552 899,656 890,827

- other directors 28,276 128,160 - -

Interest expense 380,889 129,677 253,399 109,980

Rental of premises 90,000 180,784 - 92,950

Royalties payable 547,378 544,368 547,378 544,368

Gain on disposal of property, plant and

equipment (58,556) (339,413) (59,567) (338,697)

Dividend income from a subsidiary

company - - (2,212,800) -

Royalty income from subsidiary

company - - (729,491) (489,343)

Interest income from short term

deposits (83,378) (136,278) (59,998) (133,224)

Income from short term loan to a

subsidiary company - - (321,684) (326,992)

Dividend income from unit trust (556) (502) (556) (502)

Realised foreign exchange

losses/(gains) 138,915 (111,963) 133,803 (7,004)

Unrealised foreign exchange

losses/(gains) 247,658 (331,437) 183,107 (179,513)

Bad debts written off 30,240 - 30,240 -

Staff costs (including executive directors’

remuneration)

- Salaries, allowances and bonuses 15,578,880 13,791,026 11,785,650 11,424,109

- Contributions to Employees Provident

Fund 1,016,976 933,603 1,016,976 933,603

- Others 1,123,466 925,997 1,123,466 925,997

17,719,322 15,650,626 13,926,092 13,283,709

pg 46


31st December, 2005

The tax savings for the year from the utilisation of reinvestment allowances amounted to RM323,904 (2004: RM381,514). Thesubsidiary company in Thailand is exempted from tax for a period of 7 years with effect from 5th June, 2000.

The Company has a tax exempt income account of RM5,711,976 (2004: RM5,711,976) which is available for distribution as taxexempt dividend.

Subject to agreement by the Inland Revenue Board, the Company has adequate tax exempt income under Schedule 7A of the IncomeTax Act, 1967 to allow the distribution of approximately RM17,240,790 (2004: RM16,084,000) of tax exempt dividends out of itsunappropriated profits as at 31st December, 2005. The Company also has estimated tax credit under Section 108 of the Income TaxAct, 1967 to frank the payment of approximately RM3,089,000 (2004: RM4,121,000) of net dividends out of its unappropriatedprofits as at 31st December, 2005. Any distribution in excess of available tax credits will be subject to income tax at 28% of thegross distribution.

20. TAXATION

GROUP COMPANY

2005 2004 2005 2004RM RM RM RM

Current year’s taxation

- Malaysian income tax 124,434 198,127 124,324 198,127- Foreign income tax 159,183 129,772 159,183 129,772Transfer from deferred taxation account (122,161) (315,173) (122,161) (315,173)

161,456 12,726 161,346 12,726(Over)/underprovision in respect of prior year:-

- Malaysian income tax (16,086) 42,009 (16,086) 42,008145,370 54,735 145,260 54,734

A reconciliation between the Malaysian tax rate and the average effective tax rate is as follows:-

GROUP COMPANY

2005 2004 2005 2004% % % %

Malaysian tax rate 28 28 28 28

Tax effect of:

Expenses not deductible for tax purposes 1 2 9 6Income not subject to tax (23) (22) (6) (1)Tax incentives- reinvestment allowances (3) (7) (20) (25)- double deduction of expenses - - (1) (1)Different tax rate in foreign jurisdiction (1) (2) (5) (7)Current year unrecognised tax losses - 1 - -Under/(over)provision in prior years - 1 (1) 3Effective tax rate 2 1 4 3

pg 47


31st December, 2005

21. EARNINGS PER ORDINARY SHARE

GROUP COMPANY

2005 2004 2005 2004RM RM RM RM

Earnings per ordinary share is calculated as follows:

Basic:

Profit after taxation 9,125,470 5,577,626 3,813,835 1,463,322Weighted average number of ordinary shares in issue during the year 40,956,000 40,956,000 40,956,000 40,956,000

Fully diluted:

Profit after taxation 9,125,470 5,577,626 3,813,835 1,463,322Weighted average number of ordinary

shares in issue during the year 40,956,000 40,956,000 40,956,000 40,956,000Weighted average number of shares

under ESOS - *3,211,350 - * 3,211,350Weighted average number of shares

under ESOS that would have been issued at fair value - *(2,924,155) - *(2,924,155)

Adjusted weighted average number of ordinary shares in issue during

the year 40,956,000 41,243,195 40,956,000 41,243,195

* The weighted average number of ordinary shares under ESOS of 3,257,082 were not included in the calculation of diluted EPS because they are antidilutive for the year ended 31st December, 2005.

22. DIVIDENDS PER SHARE

Net dividend No. of shares Dividends per share

amount at financial Gross NetRM year end sen sen

GROUP/COMPANY - 2005

Proposed final dividend in respect of year ended 31st December, 2005 1,474,416 40,956,000 5.00 3.60

GROUP/COMPANY - 2004

Proposed final dividend in respect of year ended 31st December, 2004 1,032,091 40,956,000 3.50 2.52

The directors recommend the payment of a first and final dividend in respect of the financial year ended 31st December, 2005 of 5% lessincome tax at 28% amounting to RM1,474,416 which will be subjected to shareholders’ approval at the forthcoming Annual GeneralMeeting.

This proposed final dividend will be reflected in the financial statements for the year ending 31st December, 2006 upon approval byshareholders.

pg 48


31st December, 2005

23. DIRECTORS’ BENEFITS-IN-KIND

The approximate cash value of benefits-in-kind of directors is RM68,830 (2004: RM71,200).

24. CAPITAL COMMITMENTS

GROUP COMPANY

2005 2004 2005 2004RM RM RM RM

Capital expenditure not provided for in the financial statements:

Authorised and contracted for 3,719,000 568,000 390,000 442,000Authorised but not contracted for 5,945,000 - 5,919,000 -

25. CONTINGENT LIABILITIES

GROUP COMPANY

2005 2004 2005 2004RM RM RM RM

Unsecured:

Financial guarantee issued to a bank for banking facilities extended to a subsidiary company - - 5,532,000 5,841,000

26. SEGMENT INFORMATION

The Group operates in a single industry segment and as such, no segment information in respect of analysis by activity has beenprovided. The analysis of Group operations by geographical location of assets is as follows:-

Malaysia Thailand India TotalRM RM RM RM

2005

OPERATING REVENUETotal sales 87,024,661 55,676,027 - 142,700,688Intersegment sales (14,017,563) (7,090,977) - (21,108,540)External sales 73,007,098 48,585,050 - 121,592,148

RESULTSSegment results (external) 1,741,864 7,938,652 (309,892) 9,370,624Unallocated income/costs :Unallocated costs -Profit from operations 9,370,624Finance cost (253,399) (127,490) - (380,889)Share of profit in an associated company 281,105 - - 281,105Profit from ordinary activities before tax 9,270,840Taxation (145,370) - - (145,370)Net profit for the year 9,125,470

pg 49


31st December, 2005

26. SEGMENT INFORMATION (CONT’D)

The Group operates in a single industry segment and as such, no segment information in respect of analysis by activity has beenprovided. The analysis of Group operations by geographical location of assets is as follows:-

Malaysia Thailand India TotalRM RM RM RM

2005 (cont’d)

OTHER INFORMATION

Segment assets 81,972,993 42,962,487 372,437 125,307,917Unallocated assets -Total assets 125,307,917

Segment liabilities 25,840,740 10,177,323 56,775 36,074,838Unallocated liabilities -Total liabilities 36,074,838

Capital expenditure 4,035,774 2,690,135 18,638 6,744,547Depreciation 3,228,701 2,530,905 403 5,760,009

2004

OPERATING REVENUE

Total sales 72,357,382 32,680,145 - 105,037,527Intersegment sales (7,930,836) (3,419,961) - (11,350,797)External sales 64,426,546 29,260,184 - 93,686,730

RESULTS

Segment results (external) 1,073,966 4,633,917 - 5,707,883Unallocated income/costs -Unallocated costs -Profit from operations 5,707,883Finance cost (109,980) (19,697) - (129,677)Share of profit in an associated company 54,155 - - 54,155Profit from ordinary activities before tax 5,632,361Taxation (54,735) - - (54,735)Net profit for the year 5,577,626

OTHER INFORMATION

Segment assets 76,367,872 37,863,192 - 114,231,064Unallocated assets -Total assets 114,231,064

Segment liabilities 22,518,704 9,473,115 - 31,991,819Unallocated liabilities -Total liabilities 31,991,819

Capital expenditure 2,279,708 6,891,433 - 9,171,141Depreciation 3,241,614 2,083,987 - 5,325,601

pg 50


31st December, 2005

27. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS

Related party relationships exist between the Company and the following entities:-

(a) Sunchirin Industry (Thailand) Ltd., as the Company holds 100% equity interest in the ordinary shares of the subsidiary company;

(b) Sunchirin Production Services Sdn. Bhd., as the Company holds 100% equity interest in the ordinary shares of the subsidiarycompany;

(c) Sunchirin Corporation Sdn. Bhd., as the Company holds 100% equity interest in the ordinary shares of the subsidiary company;

(d) Nichirin Co. Ltd., as it holds 20% equity interest in the ordinary shares of the Company;

(e) Nichirin (Thailand) Co. Ltd., Nichirin U.K. Ltd. and Shanghai Nichirin Co. Ltd., as these companies are connected to Nichirin Co. Ltd.;

(f) Sunrise Industry Co. Ltd., as it holds 20% equity interest in the Company and a director of the Company, Masahito Hiraishi, holdssubstantial interests in this entity;

(g) Suntrade Inc., as the company is connected to Sunrise Industry Co. Ltd.; and

(h) Dalian Sunchirin Auto Parts Co. Ltd., as the Company holds 40% equity interest in the ordinary shares of the associated company.

Amounts due (to)/from related parties at year end included in the balance sheet are as follows:-

GROUP COMPANY2005 2004 2005 2004

RM RM RM RM

Trade payables -Nichirin Co. Ltd. (1,605,235) (1,699,181) (1,434,203) (1,550,453)Nichirin U.K. Ltd. - (79,858) - -Suntrade Inc. (7,354,868) (8,698,078) (3,142,784) (3,555,330)Sunchirin Industry (Thailand) Ltd. - - (1,684,748) (1,256,713)Sunchirin Production Services Sdn. Bhd. - - (383,958) (43,138)Dalian Sunchirin Auto Parts Co. Ltd. (682,921) (87,021) (682,921) (87,021)

Trade receivables -Sunchirin Industry (Thailand) Ltd. - - 4,436,154 6,464,134Nichirin (Thailand) Co. Ltd. 1,781,346 1,247,413 - -Nichirin U.K. Ltd. 4,811,519 4,341,263 - -Nichirin Co. Ltd. 32,874 - 32,874 -Suntrade Inc. 5,167 - - -Shanghai Nichirin Co. Ltd. 189,246 - - -Sunchirin Production Services Sdn. Bhd. - - 133,425 -Dalian Sunchirin Auto Parts Co. Ltd. 3,279 - 3,279 -

Other payables -Sunrise Industry Co. Ltd. (67,470) (326,621) - (326,621)Nichirin Co. Ltd. - - - (217,747)Nichirin U.K. Ltd. (7,424) - - -

Other receivables -Sunchirin Industry (Thailand) Ltd. - - 2,942,291 489,343Sunchirin Production Services Sdn. Bhd. - - 3,852,630 3,807,630Sunchirin Corporation Sdn. Bhd. - - 303,992 -Sunrise Industry Co. Ltd. 11,594 - - -

Loan due from -Sunchirin Industry (Thailand) Ltd. - - 5,304,819 5,601,130

pg 51


31st December, 2005

27. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (CONT’D)

Details of significant transactions between the related parties and the Group and the Company during the year are as follow:-

PurchaseSale of of Raw Other Royalties/Goods Materials Purchases Interest

RM RM RM RM

GROUP - 2005

Nichirin Co. Ltd. 81,929 4,811,651 522,335 218,951Nichirin U.K. Ltd. 12,438,163 - - -Nichirin (Thailand) Co. Ltd. 4,580,883 - - -Sunrise Industry Co. Ltd. 171 - 17,641 328,427Suntrade Inc. 19,929 24,103,932 1,039,841 -Shanghai Nichirin Co. Ltd 930,255 - - -Dalian Sunchirin Auto Parts Co. Ltd 69,025 2,229,569 - -

18,120,355 31,145,152 1,579,817 547,378GROUP - 2004

Nichirin Co. Ltd. 15,242 3,022,250 332,866 217,747Nichirin U.K. Ltd. 10,515,294 - - -Nichirin (Thailand) Co. Ltd. 2,344,502 - - -Sunrise Industry Co. Ltd. - - - 326,621Suntrade Inc. - 22,513,825 643,810 -Shanghai Nichirin Co. Ltd. 583,073 - - -Dalian Sunchirin Auto Parts Co. Ltd. - 160,722 - -

13,458,111 25,696,797 976,676 544,368

COMPANY - 2005

Nichirin Co. Ltd. 81,929 4,524,515 426,138 218,951Sunrise Industry Co. Ltd. 171 - 17,641 328,427Suntrade Inc. - 13,234,035 514,530 -Sunchirin Industry (Thailand) Ltd. 11,992,915 7,090,975 42 1,051,175Sunchirin Production Services Sdn. Bhd. - - 2,024,648 -Dalian Sunchirin Auto Parts Co. Ltd. - 2,229,569 - -

12,075,015 27,079,094 2,982,999 1,598,553

COMPANY - 2004

Nichirin Co. Ltd. 15,242 2,870,928 242,394 217,747Sunrise Industry Co. Ltd. - - - 326,621Suntrade Inc. - 10,169,062 428,709 -Sunchirin Industry (Thailand) Ltd. 7,329,410 3,419,961 71,790 816,336Sunchirin Production Services Sdn. Bhd. - - 601,426 -Dalian Sunchirin Auto Parts Co. Ltd. - 160,722 - -

7,344,652 16,620,673 1,344,319 1,360,704

The directors are of the view that the above transactions have been entered into in the normal course of business under terms andconditions no less favourable to the Group and the Company than those arranged with independent third parties.

pg 52


31st December, 2005

28. FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of financial assets and liabilities of the Group and the Company at the balance sheet

date are as follows:-

GROUP COMPANY

Carrying Fair Carrying FairAmount Value Amount Value

RM RM RM RM

2005

Financial Assets

Other long term investment for which it is not

practical to estimate fair value 5,000,000 5,000,000 5,000,000 5,000,000

Trade and other receivables 33,116,944 33,116,944 15,630,506 15,630,506

Amount due from subsidiary company - - 14,904,605 14,904,605

Deposits, cash and bank balances 3,936,207 3,936,207 1,352,691 1,352,691

Financial Liabilities

Bank borrowings 10,404,237 10,404,237 9,037,000 9,037,000

Trade and other payables 24,990,959 24,990,959 15,835,101 15,835,101

Amount due to an associated company 679,642 679,642 679,642 679,642

2004

Financial Assets

Other long term investment for which it is not

practical to estimate fair value 5,000,000 5,000,000 5,000,000 5,000,000

Trade and other receivables 30,169,525 30,169,525 14,323,282 14,323,282

Amount due from subsidiary company - - 15,148,662 15,148,662

Deposits, cash and bank balances 8,194,592 8,194,592 6,730,995 6,730,995

Financial Liabilities

Bank borrowings 7,325,745 7,325,745 5,700,000 5,700,000

Trade and other payables 24,579,053 24,579,053 16,599,493 16,599,493

Amount due to an associated company 87,021 87,021 87,021 87,021

pg 53

28. FINANCIAL INSTRUMENTS (CONT’D)

The following methods and assumptions are used to estimate the fair value of each class of financial assets and liabilities:-

(a) Trade and other receivables and payables

The carrying amounts of trade receivables and payables which are subject to normal trade credit terms approximate fair values.The carrying amounts of other receivables and payables are reasonable estimates of fair values because of their short maturity.

(b) Deposits, cash and bank balances

The carrying amount of deposits, cash and bank balances approximates fair value because of their short maturity.

(c) Bank borrowings

The carrying amount of short term borrowings approximate fair value because of their short term maturity.

(d) Amount due from/(to) subsidiary companies and associated company

It is not practical to estimate the fair values of the amount due from/(to) subsidiary companies and associated company dueprincipally to the fact that there are no fixed repayment terms on the indebtedness. However, the Company does not anticipate thecarrying amount recorded at the balance sheet date to be significantly different from the value that would eventually be settled.

29. SIGNIFICANT EVENT DURING THE YEAR

In the previous year, the Company disclosed that it had entered into a Memorandum of Understanding (“MoU”) with two other parties inIndia (hereinafter individually referred to as “Seller” and “Investor”) to set up a new company in India (“Newco”) to purchase thebusiness/assets conducted by a sole proprietorship under the name and style of “Sebros Enterprises” from the Seller (“Transaction”)for a total cash consideration of Indian Rupees equivalent to USD4,000,000 only. Sebros Enterprises is principally involved in themanufacturing and selling of parts of automotive car aircond systems. The Company will hold 60.1% of Newco’s total shares and theremaining 39.9% will be held by the Seller and Investor.

During the year, the parties concerned mutually agreed not to proceed with the Transaction.


31st December, 2005

pg 54

We, MASAHITO HIRAISHI and KIT LEW LIN, being two of the directors of SUNCHIRIN INDUSTRIES (MALAYSIA) BERHAD, state that in theopinion of the directors, the financial statements set out on pages 28 to 53 are drawn up in accordance with the applicable approved accountingstandards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group andof the Company as at 31st December, 2005 and of their results and cash flows for the year ended on that date.

Signed in accordance with a resolution of the Board of Directors,

MASAHITO HIRAISHIEXECUTIVE CHAIRMAN

KIT LEW LINMANAGING DIRECTOR

Shah Alam,Date: 17 February, 2006

STATUTORY DECLARATION

I, KIT LEW LIN, the director primarily responsible for the financial management of SUNCHIRIN INDUSTRIES (MALAYSIA) BERHAD, do solemnlyand sincerely declare that the financial statements set out on pages 28 to 53 are in my opinion correct and I make this solemn declarationconscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the )abovenamed KIT LEW LIN at Kuala Lumpur in )Wilayah Persekutuan on 17 February, 2006 ) KIT LEW LIN

Before me,

No. W299N. Namasivayam P. P. NPesuruhjaya SumpahMalaysia

Statement by Directors

pg 55

We have audited the financial statements as set out on pages 28 to 53. These financial statements are the responsibility of the directors.

It is our responsibility to form an independent opinion, based on our audit, on these financial statements and to report our opinion to you, as abody, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility towards any otherperson for the content of this report.

We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we plan and perform theaudit to obtain reasonable assurance as to whether the financial statements are free of material misstatement. Our audit includes an examination,on a test basis, of evidence supporting the amounts and disclosures in the financial statements. Our audit also includes an assessment of theaccounting principles used and significant estimates made by the directors, as well as an evaluation of the overall presentation of the financialstatements. We believe that our audit provides a reasonable basis for our opinion.

In our opinion:-

(a) the financial statements have been properly drawn up in accordance with the applicable approved accounting standards in Malaysia andthe provisions of the Companies Act, 1965 so as to give a true and fair view of:-

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

(ii) the state of affairs of the Group and of the Company as at 31st December, 2005 and of their results and cash flows for the year thenended;

and

(b) the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiary companies, for whichwe have acted as auditors namely, Sunchirin Production Services Sdn. Bhd. and Sunchirin Corporation Sdn. Bhd., have been properlykept in accordance with the provisions of the Act.

We have considered the financial statements and the auditors’ report of the subsidiary companies, for which we have not acted as auditorsnamely, Sunchirin Industry (Thailand) Ltd., Sunchirin Autoparts India Pvt. Ltd. and Sunchirin Sebros Autoparts (India) Pvt. Ltd..

We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the Company’s financial statementsare in form and content appropriate and proper for the purposes of the preparation of the Group financial statements and we have receivedsatisfactory information and explanations required by us for these purposes.

The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualification and did not include anycomments made under subsection (3) of Section 174 of the Act.

AZMAN, WONG, SALLEH & CO.AF: 0012Chartered Accountants

NG ENG KIAT1064/03/07(J/PH)Partner of the Firm

Kuala Lumpur,Date: 17 February, 2006

Report of the AuditorsTo the members of Sunchirin Industries (M) Berhad (Company No. 157215-V)

pg 56

Analysis of Shareholdings

Authorised Share Capital : RM50,000,000.00 (50,000,000 Ordinary Shares of RM1.00 each)Issued and fully paid-up Share Capital : RM40,956,000.00 (40,956,000 Ordinary Shares of RM1.00 each)Class of Shares : Ordinary Shares of RM1.00 EachVoting Rights : One Vote per Ordinary Share held

ANALYSIS BY SIZE OF HOLDINGS AS AT 20 MARCH, 2006

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

1 - 99 5 215 0.00100 - 1,000 555 540,900 1.321,001 - 10,000 756 3,108,085 7.5910,001 - 100,000 166 4,610,100 11.26100,001 - 2,047,799* 17 9,046,500 22.09 2,047,800** and above 3 23,650,200 57.74TOTAL 1,502 40,956,000 100.00

Notes : * Less than 5% of the issued and paid-up share capital ** 5% and above of the issued and paid-up share capital

THIRTY (30) LARGEST SHAREHOLDERS AS AT 20 MARCH, 2006

Names No. of Shares %

1. Sunrise Industry Company Limited 8,318,100 20.312. Nichirin Co., Ltd. 8,318,100 20.313. Permodalan Nasional Berhad 7,014,000 17.134. Takatoshi Yamamoto 1,317,000 3.225. Masahito Hiraishi 1,235,600 3.026. Lembaga Tabung Haji 776,000 1.897. Mayban Nominees (Asing) Sdn. Bhd.

Pledged Securities Account For Masahito Hiraishi 764,400 1.878. CIMSEC Nominees (Tempatan) Sdn. Bhd.

CIMB for Dato’ Wan Mohamad Zin Bin Mat Amin 648,750 1.589. Tsunetane Nakamura 630,000 1.5410. Mayban Nominees (Tempatan) Sdn. Bhd.

Pledged Securities For Dato’ Wan Mohamad Zin Bin Mat Amin 551,250 1.3511. RHB Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account For Ridfan Bin Abd Hamid 531,000 1.3012. Kit Lew Lin 473,000 1.1513. RHB Capital Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account For Ridfan Bin Abd Hamid 440,000 1.0714. RHB Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account For Datin Nik Radiah Binti Nik Hassan 396,100 0.9715. CIMSEC Nominees (Tempatan) Sdn. Bhd.

CIMB for Dato’ Wan Mohamad Zin Bin Mat Amin 300,000 0.7316. CitiGroup Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account for Susy Ding 266,200 0.6517. Datin Nik Radiah Binti Nik Hassan 250,000 0.6118. Inter-Pacific Equity Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account For Ridfan Bin Abd Hamid 196,800 0.4819. Lee Kow Chai @ Lee Peng Saw 151,400 0.3720. BIMB Securities Sdn. Bhd.

IVT for Dato’ Dr Abdul Halim Ismail 119,000 0.2921. Low Suan Kong 98,000 0.2422. Chong Kah Yin 85,000 0.2123. Wong Lok Jee @ Ong Lok Jee 83,000 0.2024. Chan Foong May 81,000 0.20

pg 57

Analysis of Shareholdings

...(cont’d)

Notes : * Out of this block of shares, 764,400 ordinary shares are held by Mayban Nominees (Asing) Sdn. Bhd.** Deemed interest through his directorship in Sunrise Industry Company Limited and Sunrise Asia Management Pte. Ltd. and substantial shareholdings in Sunrise Asia

Management Pte. Ltd.*** Out of this block of shares, 396,100 ordinary shares are held by RHB Nominees (Tempatan) Sdn. Bhd.**** Out of this block of shares, 551,250 ordinary shares are held by Mayban Nominees (Tempatan) Sdn. Bhd. and 948,750 ordinary shares are held by CIMSEC

Nominees (Tempatan) Sdn Bhd.

Notes : (1) Deemed interest through its substantial shareholdings in Sunrise Industry Company Limited by virtue of Section 6A(4) of the Companies Act, 1965(2) Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965.(3) Deemed interest through his directorship in Sunrise Industry Company Limited and Sunrise Asia Management Pte. Ltd. and substantial shareholdings in Sunrise Asia Management Pte. Ltd.(4) Indirect interest through its shareholding of 100% less one share in Permodalan Nasional Berhad by virtue of Section 6A(4) of the Companies Act, 1965.

THIRTY (30) LARGEST SHAREHOLDERS AS AT 20 MARCH, 2006 (cond’t)

Names No. of Shares %

25. Lee Siew Hong 76,000 0.1926. Tan Boon Tong 75,500 0.1827. TA Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account for Phua Lee Ping 75,000 0.1828. Ong Bee Chu 70,000 0.1729. Peter Su Holdings Sdn. Bhd. 70,000 0.1730. Leo Soon Eng 68,000 0.17

Total 33,478,200 81.74

SUBSTANTIAL SHAREHOLDERS AS AT 20 MARCH, 2006

Substantial Shareholders Direct No. % Indirect No. %Of Shares Of Shares

1. Nichirin Co., Ltd. 8,318,100 20.31 8,318,100(1) 20.312. Sunrise Industry Company Limited 8,318,100 20.31 - -3. Sunrise Asia Management Pte. Ltd. - - 8,318,100(1) 20.314. New Era Co., Ltd. - - 8,318,100(1) 20.315. Taiyo Koko Co., Ltd. - - 16,636,200(2) 40.626. Tadano Ltd. - - 8,318,100(2) 20.317. Masahito Hiraishi 2,000,000 4.88 8,318,100(3) 20.318. Permodalan Nasional Berhad 7,014,000 17.13 - -9. Yayasan Pelaburan Bumiputra - - 7,014,000(4) 17.13

DIRECTORS’ SHAREHOLDINGS AS AT 20 MARCH, 2006

Names Direct No. % Indirect No. %of Shares of Shares

Masahito Hiraishi 2,000,000* 4.88 8,318,100** 20.31Kit Lew Lin 483,000 1.18 - -Datin Nik Radiah Binti Nik Hassan 646,100*** 1.58 - -Dato’ Wan Mohamad Zin Bin Mat Amin 1,500,000**** 3.66 - -Toyofumi Katsuda 21,000 0.05 - -Dato’ Mohd Ali Bin Abd Samad - - - -Kim Kwei Tsang - - - -Mitsuru Ishimoto 51,000 0.12 - -Michiaki Nagai (Alternate Director to Masahito Hiraishi) - - - -

OPTIONS ALLOCATED TO THE DIRECTORS PURSUANT TO THE EMPLOYEES’ SHARE OPTION SCHEME AS AT 20 MARCH, 2006

Exercised as atNames Granted % 20 March, 2006 %

Masahito Hiraishi 409,000# 1.00 - -Kit Lew Lin 500,000# 1.22 - -Mitsuru Ishimoto 48,000* 0.12 - -

Notes :

# Share options at an option price of RM1.00 each.* 42,000 share options at an option price of RM1.00 each and 6,000 share options at an option price of RM1.02 each.

pg 58

List of Landed Properties

31st December, 2005

LIST OF LANDED PROPERTIES as at 31 December, 2005

The freehold land and buildings are valued at cost with subsequent improvements and additions valued at cost as appropriate. No revaluationexercise has been carried out and these properties continue to be stated at their existing carrying amounts less accumulated depreciation whereapplicable. The Directors have not adopted a policy of regular revaluation of these properties.

Location Approx. Land / Built-up Description/ Net BookAge of Area (Square Existing Use Value RMBuildings Metres)

HS(D) 71238 PT 7 17 years 15,019 / Freehold land with 6,071,043Mukim of Damansara 6,963 two-storey officeDistrict of Petaling cum two single-Selangor storey factories(Acquired on 5 June, 1987) and stores, a three-

storey factory cumstaff amenities.

EMR 7697 Lot 1290 - 30,730 Vacant freehold 10,868,113Mukim of Klang industrial land forDistrict of Klang future development.Selangor(Acquired on 8 January, 1997)

G109/1, Amata Nakorn 6 years 7,904 / Freehold land with 4,328,050Industrial Estate 4,020 single storey factory,Muang District, Chonburi two-storey officeThailand building and three(Acquired on 30 June, 1999) storey utility cum

amenities building

G108/3, Amata Nakorn 2 years 4,423 / Freehold land with 3,522,664Industrial Estate 2,640 single storey factoryMuang District, Chonburi cum warehouseThailand(Acquired on 22 August, 2003)

pg 59

NUMBER OFSHARES HELD

FORM OF PROXY

I/We

of

being a member of SUNCHIRIN INDUSTRIES (MALAYSIA) BERHAD hereby appoint * the Chairman of the meeting or

of

or failing whom

of

as my/our Proxy to vote for me/us and on my/our behalf at the Nineteenth Annual General Meeting of the Company to be held at the First Floor,

Bilik Langat, Kelab Shah Alam Selangor, No. 1A, Jalan Aerobik 13/43, Section 13, 40100 Shah Alam, Selangor Darul Ehsan on Tuesday, 16 May,

2006 at 10.00 a.m. and at any adjournment thereof.

*My/*our Proxy(ies) is/are to vote as indicated below :-

No. Resolutions For Against

1 Resolution 1

2 Resolution 2

3 Resolution 3

4 Resolution 4

5 Resolution 5

6 Resolution 6

7 Resolution 7

8 Resolution 8

9 Resolution 9

[Please indicate with (X) in the spaces provided how you wish your vote to be casted. If no specific direction as to voting is given, the Proxy will vote or abstain at his(her) discretion.]

Dated this day of 2006.

Signature/Common Seal of Member

[*Delete if not applicable]

Notes :-

* A member entitled to attend and vote at the Meeting is entitled to appoint a Proxy or Proxies to attend and vote on his(her) behalf. A Proxy may but need not be a member of the Company andthe provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

* Where a member appoints two (2) or more Proxies, the appointment shall be invalid unless he(she) specifies the proportions of his(her) holdings to be represented by each Proxy.* The Form of Proxy shall be signed by the appointor or his(her) attorney duly authorised in writing or, if the member is a corporation, must be executed under its common seal or, by its duly

authorised attorney or officer.* The instrument appointing a Proxy must be deposited at the Registered Office of the Company at Lot 7, Jalan Api-api 26/1, Hicom Industrial Estate, Section 26, 40400 Shah Alam, Selangor Darul

Ehsan, not less than forty-eight (48) hours before the time set for the Meeting or any adjournment thereof.

(Company No. 157215-V)(Incorporated in Malaysia)

Documents

Notes to the Financial Statements...pg 41 Notes to the Financial Statements ...(cont’d) 31st December, 2005 10. TRADE RECEIVABLES GROUP COMPANY 2005 2004 2005 2004 RM RM RM RM Trade