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The Board of Directors of Malaysia Aica Berhad (“Maica” or “the Company”) wishes to announce that one of its subsidiaries, Maica Wood Industries Sdn Bhd (“MWI”), in which the Company holds 64.4% effective interest, has sustained losses for the past few years consecutively and is anticipated to continue incurring losses if operations continue, based on existing market conditions.

DIRECTORS’ OPINION

The Boards of Maica and MWI have reviewed the feasibility of continuing MWI’s business operations and are of the opinion that MWI would not be able to turnaround in the near future. After careful consideration, the Boards are of the opinion that it is in the best interest of the shareholders of MWI and the Company for MWI to cease operation.

FINANCIAL EFFECTS

The exceptional items relating to the cessation of MWI’s business to be charged to the Group’s financial statement for the financial year ending 31 March 2007 are estimated to be about RM5.2 million, being the impairment of MWI’s fixed assets (RM3.5 million) and the cash payout in relation to the retrenchment exercise (RM1.71 million).

With the cessation of MWI’s business, the Group expects its overall operating results for the 2008 financial year to show improvement.

MWI will continue with the necessary production to fulfill accepted sales orders in hand and is expected to completely cease operation in November 2006.


c.c. Securities Commission