For the year under review, the business environment in which the local steel industry operated in was more challenging as compared to the previous year. Overall demand of steel decreased and cost of raw materials and freight was affected by fuel price hike.

Against this background, Masteel achieved a turnover of RM306.4 million and a Profit Before Tax of RM23.3 million for the financial year ended 31 December 2005.

Compared to the previous year, the Company’s revenue grew 9.1% from RM280.8 million, while Profit Before Tax decreased 35.1% from RM35.9 million, which included a RM11.8 million write-back of electricity arrears accrual in previous years. Not considering the write-back, the actual year-to-date reduction in Profit Before Tax was 3.3%.

OPERATION REVIEW

In terms of operation, the year was marked by strategic implementation of cost-cutting measures to increase both cost-efficiency and productivity in the manufacturing of our steel products. The objective was to utilise the best plant and process technology to produce quality steel products at the lowest production cost.

For our meltshop facilities in Bukit Raja, Klang, we had in earlier months of 2005 upgraded all existing machinery to be adapted to use natural gas. In June, the switch from liquefied petroleum gas to natural gas was successfully commissioned. This strategic move was expected to reduce the cost of production by about 10% per annum.

In August, an agreement was signed with Danieli & C SpA of Italy to provide the plant with the latest Supersonic Lancing System (SLS) technology, which would effect in a reduction in production cost by about 5%, and an increase in production capacity by 10% per annum. The technology will be fully utilised in the Bukit Raja plant by second half of 2006 to further enhance our operation’s competitiveness.

OUTLOOK

The Malaysian Iron & Steel Industry Federation (MISIF) forecast the local steel industry to grow by 8% in 2006, based on recovery of construction sector. The overall outlook for 2006 is positive, as supported by the following factors:

1.Construction Industry Recovery

Under the Ninth Malaysia Plan, the Government has recently announced allocations of RM48.6 billion and RM18.4 billion for the development of infrastructure and housing projects respectively. The implementation of the plan, which will start in 2006, is expected to boost the local construction industry at an average of 3.5% for the next five years.

The steel industry is looking to benefit from the positive growth and re-bound of the construction industry.

2. Positive Economic Outlook

The Bank Negara Malaysia projected a strong GDP growth of 6% for the year 2006, underpinned by stronger exports and resilient local demand.

3. Anticipation of Higher Steel Prices

Due to positive outlook in the construction sectors of ASEAN region, prices of steel is on the upswing in the first quarter of 2006. Overall, international steel price increased by 20% in the quarter.

In anticipation of a further increase in steel prices, the Board of Directors is cautiously optimistic of the Company’s performance in 2006.

ACKNOWLEDGEMENTS

After a year of challenges, I wish to thank all the management and staff at Masteel for their contribution to our performance in 2005. On their behalf, I would also like to thank our customers and shareholders for their trust and support, as we continue to put our efforts to build a stronger Masteel for tomorrow and the long term.

TAI HEAN LENG @ TEK HEAN LENG

Managing Director/Chief Executive Officer

The Year 2005 proved to be a challenging 12-month for Malaysia’s steel industry marked by lower steel demand due to continuous contraction of the local construction industry and fluctuation in global steel prices.

Despite the challenging environment, Masteel recorded a revenue growth of 9.1% to RM306.4 million, and a Profit Before Tax of RM23.3 million, which was marginally lower than the adjusted Profit Before Tax of RM24.1 million for 2004.

SUSTAINED PROFITABILITY & DIVIDEND PAYMENT

The result of sustained profitability was achieved on the back of several strategic moves.

Since the second half of year 2005, the management has put in place aggressive cost-cutting measures ranging from switching to lower cost fuel type to investment in technology to reduce electricity consumption and increase production capacity.

With funds raised from the initial public offering, the company’s borrowing was lowered, thereby reducing the overall gearing to about 0.56. In terms of exports, a total of 21% of our products was sold to overseas markets, which includes new markets like Vietnam and Thailand last year.

In view of sustained profitability, the Board of Directors has proposed a dividend payment of 1.5 sen per share, which is not tax exempted for the financial year under review.

POSITIVE OUTLOOK FOR 2006

Looking forward, I am pleased to say that the outlook for Malaysia’s steel industry in 2006 is positive.

The Ninth Malaysia Plan announced by our Prime Minister on 1 April 2006 is expected to boost the local construction industry for the next five (5) years. This prospect will augur well for the steel industry, which will see an increase as well as stable demand for construction-based steel products in the next few years.

At Masteel, we will continue our efforts to reduce cost of production through the deployment of latest technology, and to intensify sales in the local and export markets.

ACKNOWLEDGEMENTS

With the positive outlook, I am confident that the management and staff of Masteel will continue to achieve sustained profitability, if not better results in year 2006.

I would like to take this opportunity to express my appreciation and gratitude to the management and staff for their commitment and efforts last year, and many thanks to our customers, business associates as well as the Government and regulatory bodies for their continuous support and guidance.

SENATOR DATO’ IKHWAN SALIM BIN DATO’ HAJI SUJAK

Chairman

For the financial year ended 31 December 2006, the Company recorded a revenue of RM362.2 million and a profit after tax of RM30 million. As compared to the previous year’s turnover of RM306.4 million and post-tax profit of RM23.3 million, the financial year under review achieved an increase of 18% in revenue and 29% in earnings respectively.

In tandem with the steady growth in revenue and earnings, the Company’s earnings per share also grew by 27% from 17.78 sen to 22.56 sen during the reviewed period.

OPERATION REVIEW

In terms of operation, the year saw the completion of strategic implementation of cost-cutting measures, and the realisation of tangible benefits from these implementations as reflected in the financial year’s positive results.

Since 2005, we had invested in new technology to increase both cost-containment and improvement of productivity in the manufacturing of our steel products, so as to further enhance our operation’s competitiveness.

For our meltshop facilities in Bukit Raja, Klang, we had upgraded all existing machinery to adapt to natural gas usage. This strategic move has helped to reduce the cost of production by about 10% last year.

The 4th strand caster and other upgrades were also fully implemented in the Bukit Raja plant by second quarter of 2006, resulting in a reduction in production cost and increase in production capacity by 10 percent per annum respectively.

CORPORATE DEVELOPMENT

On the corporate front, the Company completed a Private Placement exercise of 13 million new shares on the Main Board of Bursa Malaysia Securities Berhad on 29 January 2007.

OUTLOOK

Going forward into 2007, the performance of the Company is expected to further improve, barring any unforeseen circumstances, with the government’s recent adjustment increasing the prices of steel bars and billets by 20%.

The Malaysian Iron & Steel Industry Federation (MISIF) forecast the local steel industry to grow by 10% in 2007, based on continuous recovery of construction sector. The overall outlook for 2007 is positive, as supported by the following factors:

1. Positive Economic Outlook

The Bank Negara Malaysia projected a continuous and steady GDP growth of 6% for the year 2007 with the construction, services and agriculture sectors being identified as three key sectors of growth.

2. Construction Industry Recovery

The construction sector is projected to turn around in 2007 to register a growth of 3%, against a contraction of 0.5% in 2006.

Under the Ninth Malaysia Plan, the Government has allocated up to RM10 billion for the development of Southern Corridor in the State of Johor, which includes the development of a special economic zone known as the Iskandar Development Region. The implementation of the plan, which will start in 2007, is expected to boost the local construction industry.

The steel industry is looking to benefit from the positive growth and re-bound of the construction industry.

3. Export Potentials

Singapore’s highly profiled casino/resorts mega-project development plan will also augur well for Malaysia’s steel industry due to our proximity to the island city.

4. Foreign Exchange

The strengthening of the Malaysian Ringgit against the US Dollar will reduce the cost of imported materials necessary for our manufacturing process, thereby benefiting our overall cost of production.

ACKNOWLEDGEMENTS

I would like to take this opportunity to thank all employees of the Company for their commitment, dedication and contribution in continuing to improve the Company’s performance. On behalf of all members of the Company, I also want to thank our customers, business associates and shareholders for their valued support and continuing confidence in the Company and its management team.

DATO’ SRI TAI HEAN LENG @ TEK HEAN LENG

Managing Director/Chief Executive Officer

According to the Bank Negara Malaysia economic performance report, Malaysia’s economy strengthened in 2006 with a 5.9% expansion in real gross domestic product (GDP). Both the services and manufacturing sectors continued to be the main drivers of growth. The construction sector saw a gradual recovery registering a positive growth by the final quarter of the year.

Domestic demand for steel in 2006 grew in tandem to the moderate growth in manufacturing and construction sectors. Overall, steel was traded at higher prices in the year due to increase in global steel prices.

The Southeast Asia region saw a significant reduction in supply of steel from China as a result of the country’s tightening controls on steel exports. This drove ASEAN member countries to source steel supplies within the region.

FINANCIAL RESULTS

For the financial year ended 31 December 2006, Masteel reported a 18% year-on-year increase in revenue to RM362.2 million and an 29% year-on-year increase in profit after tax to RM30 million.

The healthy growth in both revenue and earnings was contributed by a combination of factors, namely the increase in domestic and regional demand of steel, higher selling prices, and onset of cost savings from production during the period.

DIVIDEND PAYMENT

In respect of the positive financial results, the Board is pleased to recommend a first and final dividend of 2.1 sen per share less 27% taxation totaling RM2,238,180.00 for the financial year ended 31 December 2006.

This proposed dividend is subject to the approval of shareholders at the Company’s forthcoming Annual General Meeting.

OUTLOOK

The surge of global steel consumption and steel prices are expected to lead the industry into a more interesting business environment in 2007.

Singapore’s casino/resorts mega-projects projects are expected to boost steel demand in the Southeast Asia region.

On the local front, we are optimistic that the Ninth Malaysia Plan outlining the Malaysian Government’s efforts to boost the construction industry will further improve domestic demand of steel in 2007, barring any unforeseen circumstances. We are also optimistic that the Company will benefit from the Government’s investment in the Iskandar Development Region in the State of Johor.

All the above mentioned prospects will augur well for the steel industry, which will see an increase in as well as stable demand of construction-based steel products in the next few years.

ACKNOWLEDGEMENTS

On behalf of the Board of Directors, I wish to express our sincere gratitude and appreciation for the support of our valued customers, business associates, bankers, government authorities and shareholders, and we look forward to your continued support in the future.

To all our management and staff, we thank you for your untiring efforts in helping the Company achieve its good performance for the financial year under review. My sincere thanks and appreciation also goes out to the Board members for their counsel and guidance during the past year.

SENATOR DATO’ IKHWAN SALIM BIN DATO’ HAJI SUJAK

Chairman

Once again, year 2007 represented another historical landmark for the Group with its steel business achieving its highest turnover of RM548 million since its inception in 1971.

The strong performance was complimented by the Group achieving its highest profit before tax of RM46 million surpassing all previous PBT records.

This strong performance for year 2007 was primarily attributed to the raise of domestic and global demand for steel coupled together with the successful implementation of various technologies by the Management to improve plant efficiency.

BUSINESS OUTLOOK

Looking forward to 2008, we expect to benefit from the beginning of the ‘Super Cycle’ for steel products worldwide.

This ‘Super Cycle’ is underscored by the surge of demand primarily from China, India, Middle East and Russia. As the economics of these regions begin to decouple from the US economy, the impact of a possible onset of a U.S. recession is expected to be well cushioned.

With the potential merger of two of the three major iron ore producers in the world that contribute up to 80% of the international supply of this basic feedstock and the scaling of historical records of crude oil prices, steel prices are expected to continue to climb in the foreseeable future. And domestically, the pace for the implementation of the RM220 billion, 9th Malaysia Plan (2006-2010) is expected to be quicken in year 2008 as the bulk of projects earmarked is expected to be constructed within the next 3 years.

The Group is confident that it is well poise to fully capitalize on these favorable business environment. Operationally, the Management of the Group is continuing its relentless efforts to ‘Cost Down’ its production costs to counter the effects of rising consumables and raw materials prices.

CORPORATE DEVELOPMENT

The company had successfully placed out to institutional investors through the issuance of 13,000,000 new share capital or 10% of paid up share capital during the financial year and the exercise was completed in January 2007. The total issued share capital is 146 million ordinary shares.

CORPORATE SOCIAL RESPONSIBILITY

Under the Corporate Social Responsibility (CSR) initiatives, the Group has set its sights to make the reduction of Green House gases from the environment as its main CSR agenda. The creation of 2 acres ‘Green Lung’ has been initiated with the planting of suitable flora species. It is the objective of the Group to increase the acreage of the ‘Green Lung’ within its 40 acres industrial complex to eventually cover 15% of its real estate within the next 3 years. In order not to deplete the valuable water resources needed to maintain these ‘Green Lung’, appropriate rain ‘Catchment Devices’ is being install to minimize the used of Jabatan Bekalan Air (JBA) water supply.

The Group’s aspiration to venture into the high growth and high margin Bio Technology section has became a reality in 2007, with the conferment by Malaysian Biotechnology Corporation Sdn Bhd to Bio Molecular Industries Sdn Bhd, a wholly owned subsidiary of Masteel, the very stringent and prestigious Bio Nexus status certification in July 2007. The construction of its RM40 million facility in Sepang has also commenced in late 2007 and market is expected to receive its first batch of high grade radiopharmaceuticals product by year 2009.

APPRECIATION

On behalf of the Board, I would like to take this opportunity to thank our invaluable shareholders, customers, bankers, suppliers and government authorities and without doubt, our achievements will not has been made possible without the driving force of our prudent management team and dedicated employees, whom have dedicated their unwavering commitments, time and energy to ensure the success of our businesses. I gratefully salute all of you!

DATO’ SRI TAI HEAN LENG @ TEK HEAN LENG

Managing Director/Chief Executive Officer

The year was endowed with particularly strong earning for the 2nd half of 2007. This was underpinned by surge of domestic demand for steel bars by vibrant construction activities and the improvement of international steel prices that have spurred the demand for our steel exports.

FINANCIAL RESULTS

2007 has been an outstanding year for Masteel, thanks to the remarkable team spirits of the Group whom have work hard to strive to gain more markets share both locally and internationally. The turnover grew by more than 51% compared to 2006’s and also achieved an outstanding profit of RM44.33 million which is 48% higher than the previous year. The other contributing factors are higher selling price and cost savings measures being undertaken during the financial year.

DIVIDEND PAYMENT

In respect of the financial year ended 31 December 2007, the Board of Directors is recommending a first and final single tier dividend of 3.0 sen per share amounting to RM4,380,000.

The proposed dividend is subject to the approval of shareholders at the Company’s forthcoming Annual General Meeting.

OUTLOOK

The prospect for the year 2008 is expected to be better than 2007. With the much publicized national election over, the ruling coalition party is expected to follow through with the implementation of the 9th Malaysia Plan which will help to sustain the forecasted 5.2% national growth rate for 2008, we expect the country will continue to enjoy moderate and sustainable growth throughout the year.

ACKNOWLEDGEMENTS

The support and confidence shown by the Group’s shareholders, valued customers, bankers, suppliers and business associates are much appreciated. It has been an eventful year and the Board acknowledges the dedication and commitment of its Management team.

In closing, I take this opportunity to thank my fellow Board members, for their professionalism and hard work that was dedicated to the Group.

SENATOR DATO’ IKHWAN SALIM BIN DATO’ HAJI SUJAK

Chairman

During the financial year under review, 2008 represents significant improvement of sale and profit over the previous year. A turnover of RM881.2million was achieved with a profit before tax of RM85.7million.

This performance was attributed to the exceptional demand and high prices of steel from China and the Middle East. The previous years’ investment by the company in technological equipment, process and training for cost reduction had resulted in improved operational efficiency which was completed in time to capitalize on the exceptional market condition of 2008.

The management’s conservative stance in late July 2008 that resulted in the rapid reduction in the company’s raw material purchase for the 3rd quarter and 4th quarter had spared the company from severe stock value impairment and write downs.

BUSINESS OUTLOOK

With the onset of the global financial crisis triggered by the widespread U.S subprime housing mortgage defaults in the 2nd half of 2008, this had resulted in the substantial contraction of Gross Domestic Product (GDP) in many countries worldwide.

And as a consequence, the demand for steel is expected to be significantly reduced. A period of soft uptake and price volatility is expected to prevail for most part of 2009.

The effects of various governments’ rescue packages are expected to be felt in late 2009 onwards. The Malaysian government’s stimulus budgets of RM7.0 billion and RM60.0 billion coupled with the expenditure from the 9th Malaysia Plan is expected to help to stabilise steel prices domestically and improve the demand for steel products during the later part of 2009.

CORPORATE DEVELOPMENT

There is no placement took place during the year as the investment community took a cautious stand on various sectors and with the lower share price, the management decided to wait for the right opportunity to come by again when the stock market improves in the future.

CORPORATE SOCIAL RESPONSIBILITY

Under the Corporate Social Responsibility (CSR) initiatives, the Group continues to improve on our plant environment by planting trees to enhance our ‘green lung’ programme initiated during 2007. A sum of RM130,000 has been spent on this CSR project.

APPRECIATION

On behalf of the board, I would like to take this opportunity to thank our valuable clients, shareholders, bankers, suppliers, and relevant government authorities for their continuous supports to our group. My appreciation is also extended to the management and staffs for their hard work and contributions during the year.

DATO’ SRI TAI HEAN LENG @ TEK HEAN LENG

Managing Director/Chief Executive Officer

Masteel responded well to the favorable business environment and continued to excel in both the local and international market. Masteel achievement is reflected in the commendable financial results over the previous years. China’s imposition of export duties on billets and bars as well as removal of rebates for steel products had helped to increase the prices of steel billets and bars. Meanwhile, the cost of raw materials and other consumables had also increased in tandem with the higher finished steel products.

The gradual implementation of the 9th Malaysia Plan had also spurred the demand for steel for most part of 2008. However, in 4th quarter, the effects of the global financial crisis have started to impact the demand and prices of steel. Overall the performance of Masteel was satisfactory and a new level of profitability was achieved for this year.

FINANCIAL PERFORMANCE

During the year under review, Masteel had achieved a starling revenue of RM 881.2 million and net profit before tax of RM 85.7 million. These results also showed a 61% and 86% increase respectively over its 2007 performance. The robust demand and higher selling price for steel bars and billets as well as the various cost reduction programmes that was successfully carried out and plant capacity improvement also helped in contributing to the better bottom line.

The government’s lifting of the ceiling control price for billets and bars during first half of 2008 had also aided the rapid raised of turnover for the company and ended many decades of government intervention in domestic steel prices.

DIVIDENDS

The Board of Directors is pleased to announce a first and final single tier dividend of 2.5 sen per share (2007 : 3 sen per share) net dividend payable. If approved at the Annual General Meeting, will amount to RM 4.87 million (2007 : RM 4.38 million).

OUTLOOK

The financial performance of 2009 will largely be dependent on the effectiveness of the various stimulus packages and the restructuring of the financial and banking sectors in America and European Community countries. With the new government headed by Yang Amat Berhormat Dato’ Sri Najib Tun Razak, the effects of the RM 60.0 billion stimulus plan is expected to be felt by the 4th quarter of 2009. However, the demand and prices of steel globally are expected to be substantially reduced for 2009. The performance of the company is expected to gradually improved form the latter part of the year.

ACKNOWLEDGEMENTS

On behalf of the Board, I would like to extend our deepest appreciation to our valued clients, shareholders, business associates, financiers and relevant authorities for their continuous supports and confidence shown to us. I would like to take this opportunity to extend my appreciation to our management and staff for their continued dedications and contribution toward the future growth of the Group.

DATO’ IKHWAN SALIM BIN DATO’ HAJI SUJAK

Chairman

For the Financial year ended 31 December 2009, the Group recorded a turnover of RM687.3 million with a marginal loss before tax of RM8.5million.

The weaker financial performance was attributed to the poor demand and low margin of steel products during the 1st half of 2009 in which the effects of the global financial crisis had reached its crescendo. During the 2nd half of 2009, Masteel’s customers returned to the market and eagerly bought up stock piles of steel products to replenish their depleted inventories due to abating market uncertainty and liquidity paralyses. This was reflected in the company’s return to profitability during the 2nd half of 2009.

The Group had also made significant progress in the export of its steel products to all major cities of Australia and the new export markets had contributed positively towards the bottom line of the Group in the second half of 2009.

BUSINESS OUTLOOK

In view of the positive Gross Domestic Product (GDP) growth for most Asian Countries, which is led by China and further reinforced by the recovery in the US and Brazil, the demand for steel products is expected to increase by 25% as compared to 2009. Prices of steel products have continued to rise underscored by the 100% increase of iron ore prices effective from April 2010.

With the commissioning of the new slit rolling equipment from Italy in the Petaling Jaya rolling mill, Masteel is expected to improve its margin by producing smaller diameter steel bars which sell at a price premium over conventional steel bars.

The timely installation of this equipment will help enhance Masteel’s steel bar market shares domestically and abroad.

With the overall strengthening of demand and prices of steel bars and billets, Masteel is expected to be able to price in any rise of raw material costs to its products without impeding its targeted sale volumes for the year.

CORPORATE DEVELOPMENT

The earlier approval received for the private placement has lapsed and no placement had taken place during the year due to weak market sentiments. The management has decided to time its next placement when the market improves its valuation of the company’s stocks to better reflect the underlying value of its business.

CORPORATE SOCIAL RESPONSIBILITY

We recognize the importance of the implementation of comprehensive Corporate Social Responsibility (CSR) policies on our business operations and will continue to incorporate the appropriate CSR framework in our tactical business plans especially in the areas of conservation of environment and enhancing the positive impact of our business activities on the community.

APPRECIATION

On behalf of the Board, I would like to thank all our valuable clients, shareholders, bankers, suppliers and relevant government authorities for their continuous support to our Group.

DATO’ SRI TAI HEAN LENG @ TEK HEAN LENG

Managing Director/Chief Executive Officer

Masteel had not been spared by the impact of the financial crisis emanating from the US sub prime fall out. The crisis had resulted in the dramatic reduction of global liquidity and demand that had led to a substantial plunge in selling price and sale volumes for steel. The negative impact was most prominent during the first half of 2009.

Fortunately, global and domestic restocking activities for steel products commenced in earnest in July 2009 and consequently the company enjoyed better sale volume and margin during the second half of 2009. However, this recovery in earnings was insufficient to offset the weak performance of the 1st half of 2009.

On a positive note, Masteel has continued to manufacture higher quality products. Our efforts have culminated in gaining the endorsement from the Australian Certification Authority for Reinforcing Steels Ltd certifying that Masteel steel products conformed to the very stringent Australian Standard. This accolade had led to the signing of a RM120million off-take agreement with Stemcor UK for sale of steel bars to Australia.

Despite the difficult business environment this year, Masteel continued to improve its productivity and product quality to pave the way for better times ahead.

OUTLOOK

With strong growth being registered this year in Brazil, Russia, India, Indonesia and China as well as overall economic recovery in other Asian countries, the overall demand for Masteel’s steel products are expected to recover from the lows of 2009. The economy of United States of America have also continued to stabilise and register a positive growth which will further drive the global recovery. Owing to higher steel prices and better demand from the various stimulus packages that are being implemented by various governments, the performance of the company is expected to improve in 2010.

ACKNOWLEDGEMENTS

I would like to extend my sincere appreciation to the management and staff for their performance, dedication and hardwork. Last but not least, my heartfelt thanks to our valued customers, stakeholders, business, financial partners and the relevant authorities for their strong support and confidence they have had in the Group.

DATO’ IKHWAN SALIM BIN DATO’ HAJI SUJAK

Chairman

PROPOSED RENOUNCEABLE RIGHTS ISSUE OF UP TO 107,066,666 FIVE (5)-YEAR WARRANTS ON THE BASIS OF ONE (1) WARRANT FOR EVERY TWO (2) EXISTING ORDINARY SHARES OF RM0.50 EACH IN MALAYSIA STEEL WORKS (KL) BHD HELD ON AN ENTITLEMENT DATE TO BE DETERMINED LATER AT AN INDICATIVE ISSUE PRICE OF RM0.20 PER WARRANT

“In our 40 years of history since establishment, Masteel  has emerged as one of the top 5 integrated steel mills in Malaysia supplying international-quality steel products to the local and global markets… We will continue to invest in new technologies to enhance our production capability to generate superior shareholder’s returns… “

– Dato’ Sri Tai Hean Leng, Managing Director & CEO

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