Annual Report 2 0 0 3huayang.listedcompany.com/misc/ar2003.pdf · Board of Directors Tan Sri...

A n n u a l R e p o r t 22 00 00 33

Corporate Information .......................................................................... 2

Notice of Annual General Meeting ....................................................... 3 - 6

Statement AccompanyingAnnual General Meeting .................................................................. 7

Chairman’s Statement .......................................................................... 8 - 10

Group Corporate Structure .................................................................. 11

Group Financial Highlights ................................................................... 12

Group Financial Performance .............................................................. 13

Board of Directors ................................................................................ 14

Profile of Directors ............................................................................... 15 - 17

Other Information ................................................................................. 18 - 19

Statement of Corporate Governance ................................................... 20 - 24

Statements of Directors’ Responsibility ............................................... 25

Audit Committee Report ...................................................................... 26 - 28

Statement on Internal Control .............................................................. 29

Financial Reports ................................................................................. 30 - 68

List of Group Properties ....................................................................... 69 - 70

Analysis of Shareholdings ................................................................... 71 - 73

Proxy Form........................................................................................... Enclosed

C o n t e n t s

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Hua Yang Berhad 2003 Annual Report

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Board of Directors

Tan Sri Dato’ Seri Dr. Ting Chew Peh(P.S.M., S.P.M.P., D.P.M.S., D.P.M.P.)

(Chairman / Independent Non-Executive Director)

Chor Eng Choon(Chief Executive Officer / Executive Director)

Ho Khon Yok(Executive Director)

Ho Mook Leong(Executive Director)

Lee Kong Yip(Senior Independent Non-Executive Director)

Tan Sri Dato’ Seri Prof. Dr. Yom AhmadBin Ngah Ahmad

(P.S.M., S.P.M.P., D.P.M.P., A.M.P., J.P., P.J.K., PhD)(Independent Non-Executive Director)

Goh Cheng Kin(Non-Independent Non-Executive Director)

Chew Po Sim(Non-Independent Non-Executive Director)

Chew Hoe Soon(Non-Independent Non-Executive Director)

Audit Committee

ChairmanTan Sri Dato’ Seri Dr. Ting Chew Peh(Independent Non-Executive Director)

MembersLee Kong Yip

(Senior Independent Non-Executive Director)

Chew Hoe Soon(Non-Independent Non-Executive Director)

Company Secretaries

Ho Khon Yok (MAICSA 0745721)Chan Sew Moh (MIA 12605)

Leong Oi Wah (MAICSA 7023802)

Registered Office

123A, Jalan Kampar30250 IpohPerak Darul RidzuanTel: 05-2543812Fax: 05-2542625E-mail: [email protected]

Head Office

73, Jalan Datuk Haji EusoffDamai Complex, Off Jalan Ipoh50400 Kuala LumpurTel: 03-40427888Fax: 03-40425172E-mail: [email protected]

Auditors

Ernst & YoungChartered Accountants21 & 23, Jalan Hussein(1st Floor), 30250 IpohPerak Darul Ridzuan

Principal Bankers

OCBC Bank (Malaysia) BerhadAlliance Bank Malaysia BerhadRHB Bank Berhad

Share Registrars

Signet Share Registration Services Sdn Bhd11th Floor, Tower BlockKompleks AntarabangsaJalan Sultan Ismail50250 Kuala LumpurTel: 03-2145 4337Fax: 03-2142 1353E-mail: [email protected]

Stock Exchange Listing

Kuala Lumpur Stock Exchange (Main Board)

Corporate Information

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NOTICE IS HEREBY GIVEN THAT the Twenty-Fourth Annual General Meeting of Hua Yang Berhad will be held atIpoh City & Country Club, Conference Room, 2nd Floor, 283 Jalan Kampar, 30250 Ipoh, Perak Darul Ridzuan onTuesday, 16 September 2003 at 10.30 a.m. for the following purposes:-

AGENDA

1. To receive the Audited Financial Statements for the year ended 31 March 2003 togetherwith the Reports of the Directors and Auditors thereon.

2. To approve a first and final dividend of 7% less 28% income tax for the financial yearended 31 March 2003.

3. To approve payment of Directors’ fees in respect of the financial year ended 31 March2003.

4. To re-elect the following Directors retiring pursuant to Article 100 of the Company’sArticles of Association:-

4.1 Madam Chew Po Sim4.2 Mr Chew Hoe Soon

5. To re-elect the following Directors retiring pursuant to Article 93(1) of the Company’sArticles of Association:-

5.1 Tan Sri Dato’ Seri Dr. Ting Chew Peh5.2 Mr Goh Cheng Kin

6. To consider, and if thought fit, pass the following resolution:-

“THAT Tan Sri Dato’ Seri Prof. Dr. Yom Ahmad Bin Ngah Ahmad, a Director who retirespursuant to Section 129(2) of the Companies Act, 1965, be and is hereby re-appointedDirector of the Company in accordance with Section 129(6) of the Companies Act, 1965and to hold office until the next Annual General Meeting.”

7. To re-appoint Messrs Ernst & Young as the Auditors of the Company for the ensuingyear and to authorise the Board of Directors to fix their remuneration.

8. As Special Business:-

SPECIAL RESOLUTIONProposed amendment to Article 103(d) of the Company’s Articles of Association

“THAT Article 103(d) of the Company’s Articles of Association be amended by addingthe sentence “except when a waiver or exemption is granted by the Kuala Lumpur StockExchange” and the amended Article 103(d) shall be read as follows:-

Article 103(d)

if he is absent from more than fifty (50) per cent of the total meetings of the Board ofDirectors held during the financial year, except when a waiver or exemption is grantedby the Kuala Lumpur Stock Exchange.”

(Resolution 1)

(Resolution 2)

(Resolution 3)

(Resolution 4)(Resolution 5)

(Resolution 6)(Resolution 7)

(Resolution 8)

(Resolution 9)

(Resolution 10)

Notice of Annual General Meeting

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SPECIAL RESOLUTIONProposed insertion of a new Article 114A into the Company’s Articles of Association

“THAT a new Article 114A as follows be inserted into the Company’s Articles of Associationimmediately after Article 114:-

Article 114A

Notice of any meeting of the Directors may be given by telephone or facsimile and thecontemporaneous linking together by telephone or such other electronic communicationof a number of the Directors being not less than the quorum shall be deemed to constitutea meeting of the Directors wherever in the world they are, as long as:-

(i) the quorum of Directors is met;

(ii) at the commencement of the meeting each Director acknowledges the presencethereof to all the other Directors taking part and such participation shall be deemedto be present in person;

(iii) each of the Directors taking part is able to hear each of them subject as hereinaftermentioned throughout the meeting;

(iv) the Directors present at the commencement of the meeting do not leave the meetingby disconnecting the telephone, but the meeting shall be deemed to have beenconducted validly notwithstanding that the telephone or electronic communicationmedia is accidentally disconnected during the meeting and provided that nodiscussions or decisions should be made in respect of matters by the Directorsduring the disconnection and that if the telephone or electronic communicationmedia cannot be re-connected at all, the meeting shall then be adjourned;

(v) all information and documents are made equally available to all participants priorto or during the meeting; and

(vi) a minutes of the proceedings shall be sufficient evidence thereof and of theobservance of all necessary formalities if certified by the Chairman of the Company.”

ORDINARY RESOLUTIONProposed payment of gratuity amounting to RM1.0 million to the estate of Mr HoMok Heng

“THAT approval be and is hereby given to the Company to approve the payment ofgratuity amounting to RM1.0 million to the estate of Mr Ho Mok Heng in recognition ofhis contribution and dedicated services to Hua Yang Berhad Group for the past 24 yearsas the Founder and Managing Director of Hua Yang Berhad since its inception on 28December 1978.”

(Resolution 11)

(Resolution 12)

Notice of Annual General Meeting (Cont’d)

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ORDINARY RESOLUTIONAllotment of Shares Pursuant to Section 132D of the Companies Act, 1965

“THAT, subject always to the Companies Act, 1965, the Articles of Association of theCompany and the approvals of the relevant governmental/regulatory authorities, theDirectors of the Company be and are hereby empowered, pursuant to Section 132D ofthe Companies Act, 1965, to issue shares in the Company from time to time and uponsuch terms and conditions and for such purposes as the Directors of the Company maydeem fit provided that the aggregate number of shares issued pursuant to this resolutiondoes not exceed 10% of the issued share capital of the Company for the time being ANDTHAT the Directors of the Company be and are hereby also empowered to obtain theapproval for the listing of and quotation for the additional shares so issued on the KualaLumpur Stock Exchange AND FURTHER THAT such authority shall continue to be inforce until the conclusion of the next Annual General Meeting of the Company.”

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

NOTICE OF DIVIDEND ENTITLEMENT

NOTICE IS HEREBY GIVEN that the First and Final Dividend of 7% less 28% Income Tax in respect of the financialyear ended 31 March 2003, if approved at the forthcoming Annual General Meeting, will be payable on 26 September2003 to Depositors registered in the Record of Depositors at the close of business on 18 September 2003.

A Depositor shall qualify for entitlement only in respect of:-

a) Shares transferred into the Depositor’s securities account before 4.00 p.m. on 18 September 2003, in respectof ordinary transfers; and

b) Shares bought on the Kuala Lumpur Stock Exchange on a cum entitlement basis according to the Rules of theKuala Lumpur Stock Exchange.

BY ORDER OF THE BOARD

HO KHON YOKCHAN SEW MOHLEONG OI WAHCompany Secretaries

Ipoh25 August 2003


(Resolution 13)

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NOTES:-

1. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy/proxies who may but neednot be a member/members of the Company to attend and vote in his/her stead and the provision of Section 149(1)(b) of theCompanies Act, 1965 shall not apply to the Company.

2. When a member appoints two (2) or more proxies, the appointments shall be invalid unless he/she specifies the proportionsof his/her holdings to be represented by each proxy.

3. The instrument appointing a proxy shall be in writing under the hand of the appointor or his/her attorney duly authorised inwriting or, if the appointor is a Corporation, either under its Common Seal or under the hand of an officer or attorney dulyauthorised.

4. The instrument appointing a proxy must be deposited at the Registered Office at 123A, Jalan Kampar, 30250 Ipoh, PerakDarul Ridzuan at least forty-eight (48) hours before the time appointed for holding the Meeting or any adjournment thereof.

EXPLANATORY NOTES ON SPECIAL BUSINESS:-

1. Special Resolution on proposed amendment to Article 103(d)The proposed Special Resolution No. 10, if passed, will enable the Director who may be absent from more than 50% of thetotal Board of Directors’ meeting held during a financial year due to justifiable reason to seek a waiver from the Exchangefrom vacation of office.

2. Special Resolution on proposed insertion of a new Article 114AThe proposed Special Resolution No. 11, if passed, will enable the Directors to conduct Board meetings by way of tele-conferencing or video-conferencing when the need arises.

3. Ordinary Resolution on proposed payment of gratuityThe proposed Ordinary Resolution No. 12, if passed, will allow the Company to pay gratuity of RM1.0 million (“ProposedGratuity”) to the estate of Mr Ho Mok Heng, in appreciation of the late Mr Ho Mok Heng’s past 24 years services as thefounder and Managing Director of the Company until his demise on 21 May 2002. Under his stewardship and guidance,HYB has grown from a small private Company to a public company now listed on the Main Board of the KLSE. Thebeneficiaries of the estate of Ho Mok Heng are Mr Ho Mok Heng’s wife, Madam Chew Po Sim, his children, Ms Ho Min Yi,Mr Ho Wen Yan, Mr Ho Wen Han, Mr Ho Wen Fan, the executors of his estate and certain charities.

Madam Chew Po Sim, Ms Ho Khon Yok, Mr Ho Mook Leong, Ms Ho Min Yi, Mr Ho Wen Yan, Mr Ho Wen Fan and Mr Ho WenHan, who are the late Mr Ho Mok Heng’s wife, sister, brother and children respectively being the interested parties shallabstain from voting on the Proposed Gratuity. In addition, the person connected to the above interested parties shallabstain from voting on this resolution.

Madam Chew Po Sim, Ms Ho Khon Yok and Mr Ho Mook Leong did not participate in the deliberations of the Board on theProposed Gratuity.

4. Ordinary Resolution on authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965The proposed Ordinary Resolution No. 13, if passed, will give the Directors of the Company, from the date of this AnnualGeneral Meeting, authority to issue and allot ordinary shares from the unissued share capital of the Company for suchpurposes as the Directors of the Company may consider to be in the interest of the Company. The authority will, unlessrevoked or varied by the Company in General Meeting, expire at the next Annual General Meeting of the Company.


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1. Directors who are standing for re-election at the Twenty-Fourth Annual General Meeting of the Company are:-

(a) Pursuant to Article 100 of the Articles of Association of the Company

(i) Madam Chew Po Sim(ii) Mr Chew Hoe Soon

(b) Pursuant to Article 93(1) of the Articles of Association of the Company

(i) Tan Sri Dato’ Seri Dr. Ting Chew Peh(ii) Mr Goh Cheng Kin

(c) Pursuant to Section 129(2) of the Companies Act, 1965

(i) Tan Sri Dato’ Seri Prof. Dr. Yom Ahmad Bin Ngah Ahmad

2. Details of attendance of Directors at Board Meetings:-

There were eight (8) meetings held during the financial year ended 31 March 2003. The details of attendanceof the Directors are set out on page 17 of this Annual Report.

3. Details of place, date and time of the Twenty-Fourth Annual General Meeting:-

Place : Ipoh City & Country Club, Conference Room, 2nd Floor, 283 Jalan Kampar, 30250 Ipoh, PerakDarul Ridzuan

Date : 16 September 2003

Time : 10.30 a.m.

4. Further details of Directors who are standing for re-election at the Twenty-Fourth Annual General Meeting:-

The details of the Directors who are standing for re-election are set out in the Directors’ profile appearing onpages 15 to 17 of this Annual Report.

Their shareholdings in the Company are stated on pages 71 to 73 of this Annual Report.

Statement Accompanying Annual General Meeting

Pursuant to paragraph 8.28(2) of the Listing Requirements of the Kuala Lumpur Stock Exchange

Chairman’s Statement

FINANCIAL REVIEW

For the financial year ended 31 March 2003, the Group recorded a turnover of RM108.406 million, an increase of8.97% compared to RM99.482 million in the previous financial year.

The Group achieved a profit before tax of RM26.559 million for financial year 2003, representing an increase of10.626% compared to RM24.008 million in financial year 2002.

As a result, the Group’s earnings per share increased to 22.00 sen from 21.88 sen. The profit attributable toshareholders stood at RM18.144 million at the financial year end.

DIVIDEND

In line with the Group’s performance and as a recognition of yourcontinuous support, the Board of Directors has recommended afirst and final dividend of 7% per share less 28% Malaysian IncomeTax in respect of the financial year ended 31 March 2003, subjectto the shareholders’ approval at the forthcoming Annual GeneralMeeting of the Company.

CORPORATE DEVELOPMENT

The most significant corporate development during the year underreview was the public listing of HYB. HYB was listed on the MainBoard of the Kuala Lumpur Stock Exchange on 29 November 2002following the Public Issue of 12,871,000 new ordinary shares ofRM1.00 each at an issue price of RM1.75 per ordinary share andOffer for Sale of 27,000,000 ordinary shares of RM1.00 each toBumiputera Investors approved by the Ministry of International Tradeand Industry at an offer price of RM1.75 per ordinary share.

During the financial year under review, HYB had acquired anadditional 4% equity interest of Grandeur Park Sdn Bhd for RM1.5million. Subsequent to the acquisition, Grandeur Park Sdn Bhdbecomes a wholly owned subsidiary of the Company.

On behalf of the Board of Directors of Hua Yang Berhad

(“HYB”), I am pleased to present the Annual Report and

Audited Financial Statements of the Group and the Company

for the financial year ended 31 March 2003.

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REVIEW OF OPERATION

HYB has two flagship development projects, namely, Taman Pulai Indah in Johor Bahruand Bandar Universiti Seri Iskandar in Perak.

The RM 985 million Taman Pulai Indah project, an integrated self-contained township,comprising a mix of residential and commercial units, is located on a 371 acres freeholdland in Johor Bahru. This proposed township is easily accessible via the North-SouthHighway, Senai Highway, Johor Bahru Parkway and the Singapore Second LinkExpressway. It is located within the vicinity of Bandar Baru Kangkar Pulai and is nearbyto Universiti Teknologi Malaysia and the premier Pulai Springs Golf Resort. For the

financial year ended 31 March 2003, Taman Pulai Indah project recognised RM 77.2 million of revenue and up toJune 2003, the project had achieved a total sales value of RM190.04 million since its launch in March 2001. To date,a total of 770 residential units had been completed and handed over to the buyers with certificate of fitness foroccupancy.

The RM 660 million Bandar Universiti Seri Iskandar project, also anintegrated self-contained township is located on a 728 acres leaseholdland that offers a mix of residential, commercial, educational andrecreational units. This proposed township is easily accessible via theNorth-South Highway, Ipoh-Lumut Highway and the proposed Ipoh-LumutExpressway. It is located within the Ipoh-Lumut Growth Corridor and inthe vicinity of Universiti Teknologi Petronas and Universiti Teknologi Mara.Bandar Universiti Seri Iskandar project recognised a revenue of RM 21.7million for the year ended 31 March 2003. Up to June 2003, the projecthad achieved a total sales value of RM 42.95 million since its launch inJune 2001. To date, a total of 618 residential and commercial units hadbeen completed and handed over to the buyers with certificate of fitnessfor occupancy.

In September 2002, HYB launched Medan Selayang, a moderncommercial property project, as part of its strategy to expand into theKlang Valley. The project comprises shop offices with a total grossdevelopment value of approximately RM60 million and is scheduled forcompletion at the end of 2004. HYB has also plans to further develop946 units quality and affordable service apartments, which will be targetedmainly for middle income earners.

PROSPECT

With the stimulus package implemented by the Malaysian Governmentto further strengthen domestic demand and to generate growth, suchas reduction of interest rate for home loans, waiver of stamp duty forsale and purchase agreement for properties and incentive fordevelopment of low and medium cost of residential home, the Groupexpects demand for affordable residential properties to remaingenerally positive. The Group will continue to focus on developingvalue-added affordable homes within planned township. Movingforward, the Company would continue to explore other propertydevelopment opportunities to increase sources of revenue especiallyin Klang Valley.

Chairman’s Statement (Cont’d)

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However, the property development industry is highly dependent on the supplyof the foreign labour and sensitive to the national economic performance as it isprimarily reliant on the changes in the regulation on employment of foreign labouras well as purchasing power of customers. In view of the current uncertainty ineconomic climate, this year would be a challenging year for the Group to sustainits growth in financial performance.

Barring any unforeseen circumstances, the Group is expected to register positiveresults for the financial year 2004.

ACKNOWLEDGEMENT

On behalf of the Board, I would like to extend my sincere appreciationto the Management and staff of the Group for their dedication,commitment and contribution and a warm welcome to Madam ChewPo Sim and Mr Chew Hoe Soon on their appointment as fellowBoard members.

I also wish to thank my fellow members of the Board for theirtremendous efforts which have contributed to the improvedperformance of the Group and our valued shareholders, customers,business associates and the regulatory authorities for their trustand support for the Group.

TAN SRI DATO’ SERI DR. TING CHEW PEH(P.S.M., S.P.M.P., D.P.M.S., D.P.M.P.)Chairman

Chairman’s Statement (Cont’d)

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Group Corporate Structure

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Group Financial Highlights

Year Ended 31 March 2003 2002 2001RM’ 000 RM’ 000 RM’ 000

Turnover 108,406 99,482 49,681

Profit before taxation 26,559 24,008 14,536

Profit after taxation 18,379 17,211 11,587

Profit attributable to shareholders 18,144 16,873 11,198

Issued and paid up capital 90,000 77,129 12,230

Shareholders’ equity 135,143 97,431 91,665

Total tangible assets 222,306 188,597 150,632

Net tangible assets 123,413 85,701 79,935

Earnings per share (sen) 22 22 91

Net tangible assets per share (sen) 137 111 654

Return on average shareholders’ equity (%) 16% 18% 12%

Operating profit in % of turnover 25% 25% 30%

Gearing ratio (times) 0.20 0.41 0.40

Current ratio (times) 1.26 0.79 1.00

Group Financial Performance

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Board of Directors

SITTING FROM LEFT TO RIGHT:

CHEW HOE SOON(Non-Independent Non-Executive Director)

CHEW PO SIM(Non-Independent Non-Executive Director)

LEE KONG YIP(Senior Independent Non-Executive Director)

GOH CHENG KIN(Non-Independent Non-Executive Director)

TAN SRI DATO’ SERI DR. TING CHEW PEH(Chairman / Independent Non-Executive Director)(P.S.M., S.P.M.P., D.P.M.S., D.P.M.P.)

TAN SRI DATO’ SERI PROF. DR. YOM AHMAD BIN NGAH AHMAD(Independent Non-Executive Director)(P.S.M., S.P.M.P., D.P.M.P., A.M.P., J.P., P.J.K., PhD)

STANDING FROM LEFT TO RIGHT:

HO KHON YOK(Executive Director)

HO MOOK LEONG(Executive Director)

CHOR ENG CHOON (Not Present)(Chief Executive Officer / Executive Director)

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Profile of Directors

TAN SRI DATO’ SERI DR. TING CHEW PEH(P.S.M., S.P.M.P., D.P.M.S., D.P.M.P.)(Chairman / Independent Non-Executive Director)

Chairman of Nomination Committee and Audit CommitteeMember of Remuneration Committee

Aged 60, Malaysian, was appointed to the Board of Hua Yang Berhad (“HYB”) on 1 June 2000. He graduated witha Degree in Malay Studies from University of Malaya, Kuala Lumpur in 1970 and then obtained his Masters fromUniversity of London, England in Sociology in 1972. Subsequently he obtained his Doctorate in Sociology fromUniversity of Warwick, England in 1976.

He was a lecturer in the Faculty of Humanities and Social Science at Universiti Kebangsaan Malaysia between 1974and 1980 and was subsequently an Associate Professor of the said Faculty until 1987. He has been a Member ofParliament for Gopeng since 1987 and the Secretary General of the Malaysian Chinese Association (“MCA”) since1990. He previously served as Parliamentary Secretary of the Ministry of Health (1988 - 1989), Deputy Minister inthe Prime Minister’s Department (1989 - 1990) before being made Minister for Housing and Local Government, apost he held between 1990 and 1999. He was awarded Dato’ Paduka Mahkota Perak (“DPMP”) in 1992, Dato’Paduka Mahkota Selangor (“DPMS”) in 1996, Seri Paduka Mahkota Perak (“SPMP”) in 2001 and recently theDarjah Panglima Setia Mahkota (P.S.M.).

He is currently the Chairman of Port Klang Authority. He also sits on the Boards of Pan Malaysia Holdings Bhd, PanMalaysia Capital Bhd, Puncak Niaga Holdings Bhd, Malaysian South South Corporation Berhad and Malsuria HoldingsBerhad.

CHOR ENG CHOON(Chief Executive Officer / Executive Director)

Aged 44, Malaysian, was appointed to the Board of HYB on 1 June 2000. He was appointed Chief Executive Officer/Executive Director on 29 May 2002. He graduated with a 1st Class Honours Degree in Accounting from the Universityof Malaya, Kuala Lumpur in 1984. He is a member of the Malaysian Association of Certified Public Accountants(“MACPA”) and Malaysian Institute of Accountants (“MIA”).

His professional experience includes being attached with KPMG Peat Marwick, Kuala Lumpur from 1984 to 1988and KPMG Peat Marwick in London from 1988 to 1990. He was then Financial Controller of Marshall Cavendish Ltd,London from 1991 to 1995. Thereafter, he was the General Manager of BBN Development Sdn Bhd, a member ofthe Peladang Kimia group of companies from 1996 to 2000. He is currently responsible in leading and supervisingthe preparation of development plans, feasibility studies and implementation of development schemes in HYB. Inaddition to that, his responsibilities also extend to the coordination of the projects, marketing, financial andadministrative teams of HYB Group.

HO KHON YOK(Executive Director)

Aged 49, Malaysian, was appointed to the Board on 31 January 2002. She holds a Diploma in Commerce fromTunku Abdul Rahman College and is a member of the Malaysian Association of Institute of Chartered Secretariesand Administrators (“MAICSA”). Prior to joining HYB, she was attached to Excelsior Services Sdn Bhd as a SecretarialManager between 1978 and 1981. She joined the HYB Group on 1 April 1981 as the Company Secretary cumBranch Manager of HYB’s Ipoh branch and is currently in charge of office administration and managing the sales,marketing and coordinating of the development projects in Perak.

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HO MOOK LEONG(Executive Director)

Aged 43, Malaysian, was appointed to the Board of HYB on 31 January 2002. He graduated with a Degree in CivilEngineering from Ohio State University, United States of America. After graduation, he worked as a Site Engineerwith Lam Soon Huat Development Sdn Bhd (currently known as IOI Properties Bhd) from 1984 to 1988. He thenjoined HYB as a Project Manager from 1988 to 1990. Thereafter, he was attached to a development company,Trans-M Bina Sdn Bhd as a Project Manager from 1991 to 1997. He then rejoined HYB as General Manager from1997 to 1999. Between 2000 and 2001, he was self-employed as a consultant on a free-lance basis. He is ashareholder of HYB and has more than 10 years experience in the property development sector. He is currentlyresponsible in overseeing the overall development projects within the Group.

LEE KONG YIP(Senior Independent Non-Executive Director)

Chairman of Remuneration CommitteeMember of Audit Committee and Nomination Committee

Aged 59, Malaysian, was appointed to the Board of HYB on 31 January 2002. He graduated with a Degree withhonours in Economics, majoring in Statistics, from University of Malaya in 1969. He then graduated with the ExecutiveProgram in the Graduate School of Business Administration from University of California Berkeley, USA in 1988.

He held various executive positions in the Oversea-Chinese Banking Corporation Limited and its finance subsidiary,the Oversea-Chinese Finance Company Berhad between 1969 and 1994. He was appointed Executive Vice Presidentand Director of the OCBC Bank (Malaysia) Berhad in 1995, a post he held until his retirement in April 2000.

He is currently the Director of Overseas Assurance Corporation (M) Berhad, Overseas Assurance Corporation(Holdings) Berhad, Great Eastern Life Assurance (M) Berhad and Fraser & Neave Holdings Bhd.

TAN SRI DATO’ SERI PROF. DR. YOM AHMAD BIN NGAH AHMAD(P.S.M., S.P.M.P., D.P.M.P., A.M.P., J.P., P.J.K., PhD)(Independent Non-Executive Director)

Aged 81, Malaysian, was appointed to the Board of HYB on 1 December 1996. He was conferred an honorarydoctorate in Business and Financial Management by Pacific Western University, Hawaii, in 1989. In 1998 he wasappointed as Professor and Fellow, International Business Relations by the same University. He is a well-respectedBumiputera entrepreneur with business interests via several private limited companies, involved in construction, tin-mining, plantation, transportation and haulage. He also acts as adviser to various Bumiputera trade associationsand education institutions in Perak.

He is currently the Chairman of Seacera Tiles Berhad.

GOH CHENG KIN(Non-Independent Non-Executive Director)

Member of Nomination Committee and Remuneration Committee

Aged 67, Malaysian, was appointed to the Board of HYB on 3 January 1979. He graduated with a Degree withhonours in Economics from the University of Malaya, Kuala Lumpur. He worked with Asiatic Navigation Ltd &Seaservices Pte. Ltd. as a Financial Controller from 1972 to 1975. Since then, he started his business in importationand distribution of construction equipment and machineries in Malaysia and Singapore, in Land & Marine Pte. Ltd.Currently he is a Director of Land & Marine Pte. Ltd. and Cornweld Sdn Bhd.

Profile of Directors (Cont’d)

17


CHEW PO SIM(Non-Independent Non-Executive Director)

Aged 60, Malaysian, was appointed to the Board of HYB on 27 January 2003. She holds a teaching certificate. Shehas been a small business proprietress for the last 20 years. She is now the Director of Heng Holdings Sdn Bhd andHeng Jaya Sdn Bhd, the major shareholders of the Company, which she has contributed significantly towards theirsuccess.

CHEW HOE SOON(Non-Independent Non-Executive Director)

Member of Audit Committee

Aged 52, Malaysian, was appointed to the Board of HYB on 2 June 2003. He holds a Degree in Economics(Accounting) Degree with Honours from University of Malaya and a Diploma in Accounting from University of Malaya.He is a member of the Malaysian Institute of Accountants (MIA). He has 29 years of working experience in financeand consumer products and currently he is the Managing Director of Hagemeyer (M) Sdn Bhd and Amtek MarketingServices Sdn Bhd.

OTHER INFORMATION OF DIRECTORS

Family Relationship

None of the Directors have any relationship with each other and major shareholders of HYB except that Ho KhonYok and Ho Mook Leong are siblings, Chew Po Sim and Chew Hoe Soon are also siblings and Chew Po Sim is thesister-in-law of Ho Khon Yok and Ho Mook Leong.

Chew Po Sim is the mother of Ho Min Yi, Ho Wen Yan, Ho Wen Fan and Ho Wen Han, the major shareholders ofHYB.

Conflict of Interest

None of the Directors have any conflict of interest with the Group.

List of Convictions for Offence

None of the Directors have been convicted for offence within the past 10 years other than traffic offences.

Attendance of the Board

There were total eight (8) Board meetings held during financial year ended 31 March 2003, details of which are asfollows:

Name of Director Attendance

1. Tan Sri Dato’ Seri Dr. Ting Chew Peh 8/82. Ho Mok Heng (Deceased on 21 May 2002) –3. Chor Eng Choon 8/84. Ho Khon Yok 8/85. Ho Mook Leong 8/86. Tan Sri Dato’ Seri Prof. Dr. Yom Ahmad Bin Ngah Ahmad 4/87. Goh Cheng Kin 8/88. Lee Kong Yip 7/89. Chew Po Sim 2/210. Chew Hoe Soon (Appointed on 2 June 2003) Not Applicable

Profile of Directors (Cont’d)

18


Share Buyback

The Company did not enter into any share buyback transactions during the financial year.

Options, Warrants or Convertible Securities

No options, warrants or convertible securities were issued during the financial year.

American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) Programme

The Company did not sponsor any ADR or GDR programme during the financial year.

Sanctions and/or Penalties

There were no public sanctions and/or penalties imposed on the Company and its subsidiaries, Directors orManagement by the relevant regulatory bodies during the financial year.

Non-Audit Fees

The Company paid a non-audit fees of RM238,500 to the external auditors for the listing exercise of the Companyduring the financial year.

Variation in Results

There were no material variations between the audited results for the financial year ended 31 March 2003 and theunaudited results released for the financial quarter ended 31 March 2003.

Profit Variance

The unaudited profit after tax and minority interest of the Group for the financial year ended 31 March 2003 comparedto the profit forecast as set out in the prospectus of the Group dated 30 September 2002 is summarised below:-

Actual Forecast Variance

RM’000 RM’000 RM’000 %

Profit After Tax and Minority Interest 18,144 26,012 (7,868) (30)

The profit shortfall is due to the prolonged labour shortage in the housing and construction industry during most partof the second half of the calendar year 2002. In addition, the construction industry was also experiencing materialsshortage during the beginning of year 2003.

The other factor contributing to the profit shortfall was the delay in the launching of the Phase 4 of the BandarUniversiti Seri Iskandar, Perak as originally forecasted in year 2003 as the approval for conversion of land from theState Authorities was received later than anticipated.

Other Information

19


Profit Guarantee

During the financial year, there were no profit guarantees given by the Company and its subsidiaries.

Material Contracts

Other than those related party transactions disclosed in note 34 to the financial statements, there were no materialcontracts, including contract relating to loan, entered into by the Company and/or its subsidiaries involving Directorsand major shareholders that are still subsisting at the end of financial year or since the end of the previous financialyear.

Revaluation Policy on Landed Properties

There was no revaluation on landed properties for the financial year under review.

Utilisation of Proceeds

The Company was listed on the Main Board of the KLSE on 29 November 2002. The proceeds arising from PublicIssue of 12,871,000 new ordinary shares of RM1.00 each at issue price of RM1.75 per share for cash has been fullyutilised as follows:-

Approved bySecurities

Commission UtilisedRM’000 RM’000

Repayment of Group’s Borrowings 15,000 15,000Working Capital 5,024 5,024Listing expenses 2,500 2,500

22,524 22,524

Other Information (Cont’d)

20


Statement of Corporate Governance

INTRODUCTION

The Board of Directors (“the Board”) of Hua Yang Berhad (“HYB” or “the Company”) is committed towards ensuringthat the highest standards of Corporate Governance are observed throughout the Group as a fundamental part ofdischarging its responsibilities to protect and enhance shareholders value and financial performance of the Companyand its subsidiary (“the Group”). To this end, the Board welcomes the recommendations of the Malaysian Code ofCorporate Governance (“the Code”) which sets out the principles and best practices that the Company may use intheir operation towards achieving the optimal governance framework.

Set out below is a statement on the manner the Company has applied the principles of good governance and theextent of compliance with the Best Practices in Corporate Governance as set out in Part 1 and Part 2 of the Code.

BOARD OF DIRECTORS

Composition and Balance

The Company is led and managed by an experienced Board comprising members with a wide range of experiencein relevant fields such as entrepreneurship, economics, accounting, finance, administration, project development,management, marketing and public service. Together, the Directors bring a broad range of skills, experience andknowledge to successfully direct and supervise the Group’s business activities.

At the date of this Statement, the Board consists of nine (9) members, comprising three (3) Executive Directors,three (3) Independent Non-Executive Directors and three (3) Non-Independent and Non-Executive Directors. TheBoard composition complies with the Paragraph 15.02 of the Listing Requirements of the Kuala Lumpur StockExchange (“KLSE”) which requires one-third (1/3) of the Board members be independent directors. The profiles ofthe Directors are set out on pages 15 to 17 of this annual report.

The Executive Directors are generally responsible for making and implementing operational decisions whilst theNon-Executive Directors support the skills and experience of the Executive Directors, contributing to the formulationof policy and decision-making through their knowledge and experience of other business sectors.

The Independent Non-Executive Directors, who are independent of management and free from any businessrelationship which could materially interfere with the exercise of their judgement play an important role in ensuringthat the strategies proposed by the Management are fully deliberated and examined, taking into consideration thelong term interests of shareholders, employees, customers, and other stakeholders in which the Group conducts itsbusinesses.

The roles of the Chairman and Chief Executive Officer (“CEO”) are separate with clear division of responsibilitiesbetween them to ensure balance of power and authority. The Chairman leads the strategic planning at the Boardlevel, while the CEO is responsible for the implementation of the policies laid down and executive decision making.

The Board has appointed Mr Lee Kong Yip as the Senior Independent Non-Executive Director, to whom concernsregarding the Group may be conveyed.

The Board recognises that its composition should fairly reflect the investment in the Company by significantshareholders. In line with this, the Board members also comprise Directors representing significant shareholders ofthe Company.

21


Board Meetings and Supply of Information

Board meetings are held at regular intervals with additional meetings taking place when necessary. During thefinancial year, the Board met eight (8) times to review the Group’s operations, review and approve the quarterly andannual financial statements and any other matters that requires the Board’s approval. Details of each Director’sattendance for the financial year ended 31 March 2003 are set out on page 17 of this annual report.

Notice of meetings, setting out the agenda and accompanied by the Board papers are given to all Directors prior toeach Board Meeting to enable the Directors to peruse, obtain further information and/or to seek further clarificationon the matters to be deliberated. The Board papers encompass all aspects of the matters being considered thusenabling the Board to look at both the quantitative and qualitative factors so that informed decisions are made.

It is the primary responsibility for the Chairman of the Board to organise such information necessary for the Boardto deal with agenda and the Board had adopted a formal schedule of matters specifically for decision makingpurpose. Directors have the right to access to all information within the Company in furtherance of their duties.

The appointment of the Company Secretary is based on the capability and proficiency determined by the Board. AllDirectors have access to the advice and services of the Company Secretaries who are responsible for ensuring thatBoard procedures are followed and that all applicable rules and regulations are complied with. The Articles ofAssociation of the Company permits the removal of Company Secretary by the Board of Director as a whole. Inaddition, the Directors are also empowered to seek external independent professional advice at the Company’sexpense, to enable them to make well-informed decisions.

Board Committees

(i) Audit Committee

The Board is assisted by an Audit Committee, which operates within clearly defined terms of reference. Thecomposition, terms of reference and activities of the Audit Committee are set out on pages 26 to 28 of thisannual report.

(ii) Nomination and Remuneration Committees

The Nomination and Remuneration Committees were formed on 22 November 2002 and their compositionare as follows:

Nomination Committee

Tan Sri Dato’ Seri Dr. Ting Chew Peh - Chairman (Independent Non-Executive Director)Mr Lee Kong Yip - Member (Senior Independent Non-Executive Director)Mr Goh Cheng Kin - Member (Non-Independent Non-Executive Director)

Remuneration Committee

Mr Lee Kong Yip - Chairman (Senior Independent Non-Executive Director)Tan Sri Dato’ Seri Dr. Ting Chew Peh - Member (Independent Non-Executive Director)Mr Goh Cheng Kin - Member (Non-Independent Non-Executive Director)

The Nomination Committee met once (1) during the financial year and once (1) on 20 May 2003 after financialyear end.

Statement of Corporate Governance (Cont’d)

22


The activities which had been carried out were as follows:

i. Reviewed the terms of reference of Nomination Committee;ii. Proposed to the Board on the policies pertaining to the selection of candidates for directorship, directors’

training and orientation programme, process for determining the Board’s required mix of skills, experienceand effectiveness;

iii. Evaluated the performance of each individual Director and effectiveness of the Board as a whole;iv. Reviewed the existing balance, mix of skills of Board of Director; andv. Recommended appointments of new Directors to the Board.

The Remuneration Committee met once (1) during the financial year and once (1) on 20 May 2003 afterfinancial year end.

The activities which had been carried out were as follows:

i. Reviewed the terms of reference of Remuneration Committee;ii. Proposed to the Board on the remuneration policies for Executive Directors and Non-Executive Directors;iii. Reviewed the Human Resource Guide Book;iv. Reviewed the bonus and increment of the staff, senior staff and Executive Directors; andv. Reviewed the remuneration policy for the Non-Executive Directors.

Directors do not participate in decision on their own remuneration. The Director concerned had abstainedfrom discussion of his own remuneration.

A Board Executive Committee was in existence to advise and direct the management on the operational andadministrative matters of the Group. This Committee was dissolved upon the listing of the Company andreplaced by a Management Committee.

Appointments and Re-election

In accordance with the Company’s Articles of Association, one-third (1/3) or nearest to one-third (1/3) of the Directorsshall retire from office and be eligible for re-election at each Annual General Meeting provided that all Directors shallretire from office once at least in each three (3) years but shall be eligible for re-election. Directors appointed duringthe year will be subjected to retirement and re-election by shareholders in the next following Annual General Meeting.A retiring Director shall retain office until the close of the meeting at which he retires.

Directors who are over 70 years of age are required to submit themselves for re-appointment and re-election annuallyin accordance with Section 129(2) and Section 129(6) of the Companies Act, 1965.

Directors’ Training

The Company acknowledges that continuing education is vital for Board members to gain insight into the state ofthe economy, technological development and latest regulatory developments and management strategies in relationto the Group’s business to enable Board members to discharge their responsibilities effectively.

Besides attending seminars and conferences, all Directors have attended the Mandatory Accreditation Programmeorganised by the Research Institute of Investment Analysis Malaysia (RIIAM).

The Board will continue to undergo further Continuous Education Programme to keep abreast with the new regulatorydevelopment and KLSE’s Listing Requirements.


23


DIRECTORS’ REMUNERATION

Other than the CEO and Executive Directors, all Non-Executive Directors are paid a fixed fee per year. Non-ExecutiveDirectors receive meeting allowance for each Board meeting they attended. Directors’ fees are subject to theapproval of shareholders. The Chairman of the Board and Board Committees is paid a higher fee compared to otherBoard members and Board Committee members in recognition of his additional responsibilities.

The CEO and Executive Directors’ remuneration are contractual and reflects the Board’s recognition of their skillsand experience in the industry, job responsibilities and the Group’s performance against financial objectives.

Directors do not participate in discussion on their own remuneration. It is the ultimate responsibility of the entireBoard to approve the remuneration of the Directors.

The details of the remuneration of the Directors of the Company in respect of the financial year ended 31 March2003 are as follows:

Category of Remuneration Executive Directors Non-Executive Directors(received from the Group) (RM’) (RM’)

Fee – 104,500Salary & EPF 823,466 –Allowance – 27,000Bonus 122,430 –

Total 945,896 131,500

The number of Directors whose total remuneration during the year fell within the following bands are as follows:

Number of DirectorsExecutive Non-Executive

Below RM50,000 – 5RM50,001 to RM100,000 1 –RM100,001 to RM150,000 – –RM150,001 to RM200,000 – –RM200,001 to RM250,000 1 –RM250,001 to RM300,000 1 –RM300,001 to RM350,000 – –RM350,001 to RM400,000 1 –

SHAREHOLDERS

An Investor Relations and Shareholder Communication Policy has been adopted by the Board to enable the Companyto communicate effectively with its shareholders, major investors, other stakeholders and public generally.

Dialogue with Investors

The Group always recognises the importance of informing shareholders of all major developments of the Group ona timely basis. However, any information that may be regarded as undisclosed material information about the Groupwill not be given to any shareholder.


24


Apart from the mandatory announcements of the Group’s financial results and corporate developments to the KLSE,investors and members of the public who wish to contact the Group on any matters can channel their queriesthrough e-mail ([email protected]) to contact the CEO.

The Board recognises the use of the Annual General Meeting (AGM) as a principal forum for dialogue and tocommunicate with shareholders. Extraordinary General Meetings are held as and when required.

All shareholders, whatever the size of shareholding, through the AGM, shall have direct public access to the Board.

ACCOUNTABILITY AND AUDIT

Financial Reporting

The Directors are required by the Companies Act, 1965 to ensure that financial statements prepared for eachfinancial year give a true and fair view of the state of affairs of the Company and the Group. The Directors considerthe presentation of the financial statements and that the Group has used appropriate accounting policies, consistentlyapplied and supported by reasonable and prudent judgements and estimates. The Audit Committee assists theBoard by scrutinizing the information to be disclosed, to ensure accuracy and adequacy. The Group’s financialreports are presented on pages 30 to 68 of this annual report.

Risk Management Framework and Internal Control

The Board acknowledges their responsibility for the Group’s system of internal controls and reviewing its effectivenessregularly by setting up an internal audit department which provides support to Audit Committee in discharging itsduties with respect to the adequacy and integrity of the system of internal control within the Group. A Statement onInternal Control is set out on page 29 of this annual report.

Relationship with the Auditors

Through the Audit Committee of the Board, the Group has established a transparent and appropriate relationshipwith the Group’s auditors, both internal and external. The external auditors are invited to attend meetings on specialmatters when necessary.


25


The Board of Directors is required under Paragraph 15.27(a) of the KLSE’s Lisitng Requirements to issue a statementexplaining their responsibility in preparation of the annual financial statements. The Directors are also required bythe Companies Act, 1965 to prepare financial statements for each financial year which have been made out inaccordance with the applicable approved accounting standards in Malaysia and give a true and fair view of thefinancial position of the Group and Company at the end of the financial year and of the results and cash flows of theGroup and Company for the financial year.

The Directors have responsibility for ensuring that the Company keeps accounting records which disclose withreasonable accuracy of the financial position of the Group and Company and which enable them to ensure that thefinancial statements comply with the Companies Act, 1965.

The Directors have overall responsibilities for taking such steps as are reasonably open to them to safeguard theassets of the Group and to prevent and detect fraud and other irregularities.

Statements of Directors’ Responsibility

26


Audit Committee Report

The Audit Committee was established on 25 September 2002 and currently comprises of the following:-

Chairman

Tan Sri Dato’ Seri Dr. Ting Chew Peh (Independent Non-Executive Director)

Members

Lee Kong Yip (Senior Independent Non-Executive Director)Chor Eng Choon (Chief Executive Officer/Executive Director) - Resigned on 2.6.2003Chew Hoe Soon (Non-Independent Non-Executive Director) - Appointed on 2.6.2003

TERMS OF REFERENCE

1. Composition of Audit Committee

The Committee shall be appointed by the Board from amongst the Directors and shall consist of not less thanthree members, a majority of whom shall be Independent Non-Executive Directors. The members of theCommittee shall elect a chairman from among their members who shall be an Independent Non-ExecutiveDirector. An alternate Director must not be appointed as a member of the Committee.

At least one member of the Committee:-

• Must be a member of the Malaysian Institute of Accountants; or

• If not a member of the Malaysian Institute of Accountants, that member must have at least 3 years’working experience and; must have passed the examinations specified in Part I of the 1st Schedule ofthe Accountants Act, 1967; or must be a member of one of the associations of the accountants specifiedin Part II of the 1st Schedule of the Accountants Act, 1967; or

• Must have a degree/masters/doctorate in accounting or finance and at least 3 years’ post qualificationin accounting or finance; or

• Must have at least 7 years’ experience being a chief financial officer of a corporation or having thefunction of being primarily responsible for the management of the financial affairs of a corporation.

2. Authority

The Committee shall have the authority to investigate any matter of the Company and its subsidiaries withinits terms of reference or otherwise directed by the Board. It shall have

i. Unrestricted access to any information pertaining to the Company and its subsidiaries;

ii. The resources which are required to perform its duties;

iii. Direct communication channels with both the external auditors and internal auditors;

iv. Full access to all employees of the Group; and

v. The rights to convene meetings with the external auditors, excluding the attendance of the executivemembers of the committee, whenever deemed necessary.

The Committee is also authorised by the Board to obtain outside legal or other independent professionaladvice and to secure the attendance of outsiders with relevant experience and expertise if it considers thisnecessary and reasonable for the performance of its duties.

27


3. Meetings and Minutes

The Committee shall meet at least four times a year and such additional meetings as the Chairman shalldecide in order to fulfill its duties.

The Committee may invite any person to be in attendance to assist it in its deliberations.

The Company Accountant, Head of Internal Audit Division and the External Auditors or their representativesshall be expected to attend all meetings of the Committee. At least once a year the Committee shall meet theExternal Auditors without the presence of the Executive Board members.

A quorum shall consist of a majority of Independent Non-Executive Directors and shall not be less than two.

The decision of the Audit Committee shall be decided by a majority of votes. In the case of an equality of votes,the Chairman shall have a second or casting vote, provided that where two (2) members form a quorum, theChairman of a meeting at which only such a quorum is present, or at which only two (2) Directors are competentto vote on the question in issue, the Chairman shall not have a casting vote.

The Company Secretary shall act as Secretary of the Committee and shall be responsible for drawing up theagenda with the concurrence of the Chairman and circulating it, supported by explanatory documentation toCommittee members prior to each meeting.

The Committee shall be reporting to the full Board from time to time its recommendation for consideration andimplementation and the actual decision shall be the responsibility of the Board of Director after consideringthe recommendation of the Committee.

The Secretary shall also be responsible for recording the proceedings of the Audit Committee and the minutesof meetings tabled at Board meetings.

4. Duties

The duties of the Committee should include the following:-

• To consider any related party transaction and conflict of interest situation that may arise within theGroup including any transaction, procedure or course of conduct that raises questions of managementintegrity;

• To review the quarterly unaudited financial results announcements, the audited financial statements ofthe Group before recommending for the Board of Directors’ approval, focusing on:– compliance with accounting standards and regulatory requirements– any changes in accounting policies and practices– compliance with Stock Exchange and other statutory requirements– going concern issues of any activities– significant and unusual issues arising from the audit

• To support and to provide directions to the Internal Audit Division to ensure its effectiveness in carryingout its duties;

• To consider the findings arising from internal audit report or other internal investigations andmanagement’s response and to determine appropriate corrective actions required by management;

• To discuss with the external auditor, the evaluation of the system of internal controls;

Audit Committee Report (Cont’d)

28


• To consider and recommend the appointment of the external auditors, their remuneration and anyquestions of resignation or dismissal;

• To recommend the nomination of a person or persons as external auditors;

• To assist the Board in the review of adequacy and effectiveness of the internal control system;

• To review the risk management policies and practices of the Group to ensure their effectiveness;

• To assist the Board in the preparation of the Audit Committee Report for inclusion in the Annual Report;

• To discuss with the external auditors, their audit plan and the scope of audit;

• To review the assistance given by the employees of the Group to the external auditors;

• To carry out such other responsibilities, functions or assignments as may be directed by the Board ofDirectors from time to time.

SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

The Committee had three (3) meetings during the financial year ended 31 March 2003, which were attended by allthe members in office during that period.

During the financial year, the Audit Committee carried out its duties as set out in the terms of reference, whichinclude:-

i. Reviewed the Terms of Reference of Audit Committee;

ii. Reviewed the quarterly unaudited results of the Group before submission to the Board for approval, focusingparticularly on significant and unusual events and compliance with accounting standards and other legalrequirements;

iii. Discussed with the external auditors, their audit plan and scope of audit; and

iv. Discussed on the internal audit function and risk management framework

Audit Committee Report (Cont’d)

29


The Board recognises that it is responsible for the Group’s system of internal control and for reviewing its adequacyand integrity. As with any internal control system, controls can only provide reasonable but not absolute assuranceagainst material misstatement or loss, as it is designed to manage rather than eliminate the risk of failure to achievebusiness objectives.

The Board’s primary objective and direction in managing the Group’s risks are focused on the achievement of theGroup’s business objectives. The Board, during the current financial year, has managed the risks faced by theGroup through the monitoring of the Group’s operational efficiency and profitability at its Board meetings. Further,the Board has set up a Management Committee on 15 April 2003 after listing in place of the Board ExecutiveCommittee with the responsibility of monitoring and reviewing strategic and significant operational matters of theGroup.

The Board recognises that the Group’s risk management practices will be enhanced with the development of a riskmanagement framework and that there is a requirement to bring greater awareness of employees towards riskidentification, evaluation, control and monitoring. Subsequent to the financial year end, the Board has outsourcedthe development of such a framework to a reputable accounting firm.

Scheduled meetings are held at Board executive and operational levels to identify, discuss and resolve businessand operational issues. These include operational meetings at branch level, project coordination meetings and sitemeetings which are minuted. The Board is aware of, and involved in when necessary in resolving, any significantissue identified at these meetings. The Group is structured such that the heads of each operational unit has clearreporting line.

The Board has a formal organisation structure with authority limits and responsibilities. There is segregation ofduties to ensure safe custody of the Group’s assets.

Regular meetings are held at operational and management levels to identify, discuss and resolve business andoperational issues.

Three of the Board’s members are Executive Directors and are actively involved in the day-to-day operations of theGroup. The Employees’ Code of Conduct is documented in the Human Resource Guide Book which is accessibleto employees within the Group. With the Group’s low employee turnover, most of the employees are experiencedand efficient in their respective job functions. Employees are sent for training in areas relevant to their job functionswhen the need arises. There is a structured and formal employee appraisal system that ensures employees areremunerated based on their performance.

The Board has reviewed the Group’s budget for the year. The budgeting process includes the preparation of budgetsby individual operating units, which are approved at Board Executive level and ultimately the Board. Actualperformance and results are monitored against budgets, with reasons for significant variances identified andhighlighted to Management Committee and the Board for the appropriate corrective measure.

During the financial year under review, the Board has reviewed its internal control system and recognises that thereare opportunities for enhancing the current system of internal control. Subsequent to the financial year end, theBoard had outsourced its Internal Audit function to a reputable accounting firm, whose remit is to the Audit Committee.

In the next financial year, a programme of action plans to enhance the system of internal control will be approved bythe Board and these enhancements are expected to put in place a formalised process to conduct a specific andregular review of the system of internal control.

The Board of DirectorsHUA YANG BERHAD

Date : 16 July 2003

Statement on Internal Control

Directors’ Report .................................................................................. 31 - 34

Balance Sheets .................................................................................... 35

Income Statements .............................................................................. 36

Statements of Changes in Equity ......................................................... 37

Cash Flow Statements ......................................................................... 38 - 39

Notes to the Financial Statements ....................................................... 40 - 66

Statement by Directors ......................................................................... 67

Statutory Declaration ............................................................................ 67

Report of the Auditors .......................................................................... 68

F i n a n c i a l R e p o r t s

30


31


Directors’ Report

The Directors have pleasure in presenting their report together with the audited financial statements of the Groupand of the Company for the financial year ended 31 March 2003.

PRINCIPAL ACTIVITIES

The principal activities of the Company consist of investment holding, property development and provision ofmanagement and secretarial services.

The principal activities of the subsidiary companies are stated in Note 4 to the financial statements.

There have been no significant changes in the nature of these activities during the year.

RESULTS

Group CompanyRM RM

Profit after taxation 18,379,023 943,866Pre-acquisition profits (234,549) –

Profits attributable to shareholders of the Company 18,144,474 943,866

There were no material transfers to or from reserves or provisions during the year other than as disclosed in thestatements of changes in equity.

In the opinion of the Directors, the results of the operations of the Group and of the Company during the financialyear have not been substantially affected by any item, transaction or event of a material and unusual nature.

DIVIDENDS

No dividend was paid during the year.

At the forthcoming Annual General Meeting, a final dividend in respect of the current financial year ended 31 March2003, of 7% less 28% taxation on 90,000,000 ordinary shares, amounting to a total dividend of RM4,536,000 (5.04sen net per share) will be proposed for shareholders' approval. The financial statements for the current financialyear do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for inshareholders' equity as an appropriation of retained profits in the next financial year ending 31 March 2004.

HOLDING COMPANY

As a result of the listing exercise of the Company's shares on the Kuala Lumpur Stock Exchange, Heng HoldingsSdn Bhd ("HHSB") ceased to be the holding company of the Company. HHSB, however, remains as a substantialshareholder in the Company.

32


DIRECTORS

The names of the Directors of the Company in office since the date of the last report and at the date of this reportare:-

Tan Sri Dato’ Seri Dr. Ting Chew PehChor Eng ChoonHo Khon YokHo Mook LeongTan Sri Dato Seri Prof. Dr. Yom Ahmad Bin Ngah Ahmad, PSM, SPMP, DPMP, AMP, JP, PJK, Ph(D)Goh Cheng KinLee Kong YipChew Po Sim - appointed w.e.f. 27.1.2003Chew Hoe Soon - appointed w.e.f. 2.6.2003

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to whichthe Company was a party, whereby Directors might acquire benefits by means of the acquisition of shares in, ordebentures of, the Company or any other body corporate.

The following Directors who held office at the end of the financial year had, according to the register required to bekept under Section 134 of the Companies Act 1965, an interest in shares of the Company and its related corporationsas stated below:-

Number of ordinary shares of RM1 eachBalance

as at1.4.2002/ Balance

Date of Bought Sold as atName of Directors appointment During the year 31.3.2003

Interest in the CompanyHUA YANG BERHAD

Direct interest

Tan Sri Dato’ Seri Dr. Ting Chew Peh – 110,000 – 110,000Tan Sri Dato Seri Prof. Dr. Yom Ahmad

Bin Ngah Ahmad 157,664 2,000,000 1,055,192 1,102,472Goh Cheng Kin 5,359,299 – – 5,359,299Ho Mook Leong 1,700,666 1,852,000 – 3,552,666Ho Khon Yok 5,180,824 316,000 226,059 5,270,765Lee Kong Yip 945,981 25,000 331,153 639,828Chor Eng Choon – 99,000 – 99,000

Deemed interest

Chew Po Sim 45,955,185 – – 45,955,185

Since the end of the previous financial year, no Director has received or become entitled to receive any benefit(other than a benefit included in the aggregate amount of emoluments received or due and receivable by theDirectors shown in the Group financial statements or the fixed salary of a full-time employee of the Company) byreason of a contract made by the Company or a related corporation with any Director or with a firm of which theDirector is a member or with a company in which the Director has a substantial financial interest required to bedisclosed by Section 169(8) of the Companies Act 1965 except for any benefit which may be deemed to have arisenby virtue of those transactions entered in the ordinary course of business between such parties as disclosed in Note34 to the financial statements.

Directors’ Report (Cont’d)

33


SHARE CAPITAL

During the year, the issued and fully paid share capital of the Company was increased from RM77,129,000 toRM90,000,000 in conjuction with the listing of its shares on the Main Board of the Kuala Lumpur Stock Exchange byway of a public issue of 12,871,000 new ordinary shares of RM1 each at an issue price of RM1.75 per share.

The Company's shares were listed on the Main Board of the Kuala Lumpur Stock Exchange on 29th November2002.

OTHER STATUTORY INFORMATION

(a) Before the income statements and balance sheets of the Group and of the Company were made out, theDirectors took reasonable steps:-

(i) to ascertain that proper action has been taken in relation to the writing off of bad debts and the makingof allowance for doubtful debts and satisfied themselves that all known bad debts had been written offand that adequate allowance had been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accountingrecords in the ordinary course of business had been written down to an amount which they might beexpected so to realise.

(b) At the date of this report, the Directors are not aware of circumstances which would render:-

(i) the amount written off for bad debts or the amount of the allowance for doubtful debts in the Group andthe Company inadequate to any substantial extent; and

(ii) the values attributed to current assets in the financial statements of the Group and of the Companymisleading.

(c) At the date of this report, the Directors are not aware of any circumstances which have arisen which wouldrender adherence to the existing method of valuation of assets or liabilities of the Group and of the Companymisleading or inappropriate.

(d) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in thisreport or financial statements of the Group and of the Company which would render any amount stated in theconsolidated financial statements and financial statements misleading.

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

(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financialyear which secures the liabilities of any other person; or

(ii) any contingent liability in respect of the Group or of the Company which has arisen since the end of thefinancial year.

(f) In the opinion of the Directors:-

(i) no contingent liability or other liability has become enforceable or is likely to become enforceable withinthe period of twelve months after the end of the financial year which will or may affect the ability of theGroup or of the Company to meet their obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the endof the financial year and the date of this report which is likely to affect substantially the results of theoperations of the Group or of the Company for the financial year in which this report is made.


34


AUDITORS

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

Signed for and on behalf of the Board in accordance with a resolution of the Directors.

CHOR ENG CHOON HO KHON YOK

Ipoh, Perak Darul Ridzuan, Malaysia

Date : 16 July 2003


35


Balance Sheets

as at 31 March 2003

Group Company2003 2002 2003 2002

Note RM RM RM RM

NON-CURRENT ASSETSProperty, plant and equipment 3 3,276,977 35,484,614 1,668,317 21,315,779Subsidiary companies 4 – – 42,267,655 40,892,054Land and development expenditure 5 113,645,732 85,389,396 45,668,718 25,002,944Goodwill on consolidation 6 11,730,186 11,730,201 – –Long term receivables 7 – 3,850,000 – 3,850,000

128,652,895 136,454,211 89,604,690 91,060,777

CURRENT ASSETSInventories 8 1,857,780 633,732 745,273 –Development properties 9 60,004,349 34,980,067 2,196,707 –Trade receivables 10 39,016,786 29,722,950 6,998,744 12,623,063Other receivables, deposits

and prepayments 11 1,573,561 4,396,344 301,524 3,153,362Amounts owing by subsidiary

companies 12 – – 54,400,169 39,639,263Tax recoverable 1,785,109 – 904,660 –Cash and bank balances 13 1,146,260 1,481,867 42,143 46,139

105,383,845 71,214,960 65,589,220 55,461,827

CURRENT LIABILITIESTrade payables 14 41,714,203 33,894,884 2,987,611 616,196Other payables and accruals 15 10,651,499 11,760,985 9,621,602 10,755,105Amounts owing to subsidiary

companies 12 – – 3,515,138 1,090,500Bank borrowings 16 27,627,072 40,004,723 24,144,160 36,391,349Taxation 3,685,583 2,589,998 799,790 773,043

83,678,357 88,250,590 41,068,301 49,626,193

NET CURRENT ASSETS/(LIABILITIES) 21,705,488 (17,035,630) 24,520,919 5,835,634

150,358,383 119,418,581 114,125,609 96,896,411

SHAREHOLDERS’ EQUITYShare capital 17 90,000,000 77,129,000 90,000,000 77,129,000Share premium 18 6,696,849 – 6,696,849 –Reserves 19 38,446,383 20,301,909 8,946,244 8,002,378

135,143,232 97,430,909 105,643,093 85,131,378Minority interests – 142,612 – –

LONG TERM LIABILITIESDeferred taxation 20 6,714,857 7,342,212 – –Deferred payable 21 5,882,516 11,765,033 5,882,516 11,765,033Hire purchase creditors 22 17,778 71,112 – –Term loans 23 2,600,000 2,666,703 2,600,000 –

15,215,151 21,845,060 8,482,516 11,765,033

150,358,383 119,418,581 114,125,609 96,896,411

The annexed notes form an integral part of these financial statements.

36


Income Statements

for the year ended 31 March 2003

Group Company2003 2002 2003 2002

Note RM RM RM RM

Revenue 24 108,405,839 99,482,416 3,755,813 12,674,910

Cost of sales (74,497,652) (69,742,929) (2,389,238) (9,790,021)

Gross profit 33,908,187 29,739,487 1,366,575 2,884,889

Other operating income 25 655,736 971,192 5,411,682 52,130,905

Administrative andgeneral expenses (7,442,652) (5,730,757) (4,190,165) (3,087,967)

Profit from operations 27,121,271 24,979,922 2,588,092 51,927,827

Finance costs 26 (562,058) (971,522) (534,713) (949,018)

Profit before taxation 27 26,559,213 24,008,400 2,053,379 50,978,809

Taxation 28 (8,180,190) (6,797,117) (1,109,513) (14,003,000)

Profit after taxation 18,379,023 17,211,283 943,866 36,975,809

Pre-acquisition profits (234,549) – – –

Minority interests – (338,317) – –

Profit for the year 18,144,474 16,872,966 943,866 36,975,809

Basic earnings per share 29 0.22 0.22


37


Statements of Changes in Equity


Non-distributable DistributableCapital

Share Share redemption Reserve on Retainedcapital premium reserve consolidation profits Total

Group Note RM RM RM RM RM RM

Balance as at 1 April 2001 12,230,000 8,610,000 500,000 302,926 70,021,593 91,664,519Bonus issue of shares 64,899,000 (8,610,000) – – (56,289,000) –Profit for the year – – – – 16,872,966 16,872,966Dividend 30 – – – – (11,106,576) (11,106,576)

Balance as at 31 March 2002 77,129,000 – 500,000 302,926 19,498,983 97,430,909Net loss not recognised in

the income statements- Write off of listing expenses – (2,956,401) – – – (2,956,401)

Public issue of shares 12,871,000 9,653,250 – – – 22,524,250Profit for the year – – – – 18,144,474 18,144,474

Balance as at 31 March 2003 90,000,000 6,696,849 500,000 302,926 37,643,457 135,143,232

Company

Balance as at 1 April 2001 12,230,000 8,610,000 500,000 – 37,922,145 59,262,145Bonus issue of shares 64,899,000 (8,610,000) – – (56,289,000) –Profit for the year – – – – 36,975,809 36,975,809Dividend 30 – – – – (11,106,576) (11,106,576)

Balance as at 31 March 2002 77,129,000 – 500,000 – 7,502,378 85,131,378Net loss not recognised in

the income statement- Write off of listing expenses – (2,956,401) – – – (2,956,401)

Public issue of shares 12,871,000 9,653,250 – – – 22,524,250Profit for the year – – – – 943,866 943,866

Balance as at 31 March 2003 90,000,000 6,696,849 500,000 – 8,446,244 105,643,093


38


Cash Flow Statements


Group Company2003 2002 2003 2002

Note RM RM RM RM

CASH FLOWS FROMOPERATING ACTIVITIES

Profit before taxation 26,559,213 24,008,400 2,053,379 50,978,809Adjustments for:-

Allowance for diminution in value – – 124,399 –Allowance for doubtful debts 332,000 – 332,000 –Bad debts written off 9,270 – 3,770 –Dividend income – – (5,200,000) (51,871,500)Gain on disposal of

property, plant and equipment (27,393) (39,598) (27,612) (1,100)Depreciation of property, plant

and equipment 374,725 493,678 99,537 180,496Property, plant and equipment

written off 12,254 11 11,705 1Goodwill written off 15 – – –Interest income (665,178) (881,213) (396,080) (612,165)Interest expense 562,058 971,522 534,713 949,018

Profit/(loss) before workingcapital changes 27,156,964 24,552,800 (2,464,189) (376,441)

Changes in working capital:-Receivables (2,962,324) (5,684,751) 11,990,387 5,675,211Amounts due from customer for

contract works – (230,360) – –Progress billings 7,458,063 49,510,287 4,625,315 (4,514,403)Inventories (1,224,048) 176,335 (745,273) –Development properties (10,423,469) (54,987,413) (6,822,022) 9,211,919Holding company – 19,154,000 – 19,154,000Subsidiary companies – – (12,460,667) (41,013,597)Payables 827,316 23,122,781 (4,644,605) 5,122,793

Cash generated from/(used in)operation 20,832,502 55,613,679 (10,521,054) (6,740,518)

Dividend received – – 3,744,000 37,876,680Tax paid (9,497,069) (7,147,054) (531,426) –Interest received 665,178 881,213 396,080 612,165Interest paid (2,887,094) (4,081,394) (1,143,645) (1,808,260)

Net cash from/(used in)operating activities 9,113,517 45,266,444 (8,056,045) 29,940,067

39


Group Company2003 2002 2003 2002

Note RM RM RM RM

CASH FLOWS FROMINVESTING ACTIVITIES

Land and development expenditure (14,723,153) (11,343,977) (305,340) (691,368)Proceeds from sale of property,

plant and equipment 40,419 40,100 34,600 1,600Acquisition of additional shares

in subsidiary companies 31(a) (1,500,000) (15,430,000) (1,375,601) (15,430,000)Acquisition of property, plant

and equipment 31(b) (336,551) (4,542,534) (222,270) (4,062,336)

Net cash used in investing activities (16,519,285) (31,276,411) (1,868,611) (20,182,104)

CASH FLOWS FROMFINANCING ACTIVITIES

Public issue of shares 19,567,849 – 19,567,849 –Repayment of revolving loan (18,182,026) (2,818,826) (18,182,026) (2,818,826)Revolving loan drawdown – 3,170,000 – 3,170,000Term loan drawdown 3,900,000 – 3,900,000 –Repayment of term loan (2,666,703) (5,333,297) – –Payment of hire purchase payable (53,334) (35,555) – –Dividend paid – (11,106,576) – (11,106,576)Dividend paid to minority interest – (198,720) – –

Net cash from/(used in)financing activities 2,565,786 (16,322,974) 5,285,823 (10,755,402)

Net decrease in cash andcash equivalents (4,839,982) (2,332,941) (4,638,833) (997,439)

Cash and cash equivalentsas at 1 April (2,883,384) (550,443) (705,738) 291,701

Cash and cash equivalentsas at 31 March 13 (7,723,366) (2,883,384) (5,344,571) (705,738)


Cash Flow Statements (Cont’d)


40


Notes to the Financial Statements

– 31 March 2003

1. GENERAL INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on theMain Board of the Kuala Lumpur Stock Exchange.

The principal activities of the Company consist of investment holding, property development and provision ofmanagement and secretarial services. The principal activities of its subsidiary companies are set out in Note4 to the financial statements.

The registered office of the Company is located at 123A Jalan Kampar, 30250 Ipoh, Perak Darul Ridzuanwhilst the principal place of business is located at 73 Jalan Datuk Haji Eusoff, Damai Complex, off Jalan Ipoh,50400 Kuala Lumpur.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolutionof the Directors on 16 July 2003.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

The financial statements of the Group and of the Company are prepared under the historical costconvention unless otherwise indicated in this summary of significant accounting policies and complywith applicable approved accounting standards in Malaysia and the provisions of the Companies Act1965.

During the current financial year, the Company adopted the following new standards issued by MalaysianAccounting Standards Board (MASB):-

MASB 19 - Events After The Balance Sheet Date

MASB 20 - Provisions, Contingent Liabilities and Contingent Assets

MASB 23 - Impairment of Assets

MASB 24 - Financial Instruments: Disclosures and Presentation

The adoption of the above new standards has not given rise to any adjustments to the opening balancesof retained profits of prior and current year or to changes in comparatives.

(b) Basis of consolidation

The Group's financial statements consolidate the audited financial statements of the Company and itssubsidiary companies, which have been prepared in accordance with the Group’s accounting policiesand drawn up to the same reporting date.

A subsidiary company is an enterprise that is controlled by the Company. Control is the power to governthe financial and operating policies of the Company so as to obtain benefits from its activities. Investmentin subsidiary companies is stated at cost less impairment losses in accordance with Note 2(p).

Subsidiary companies are consolidated using the acquisition method of accounting from the date onwhich control is transferred to the Group and are no longer consolidated from the date that controlceases. The difference between the acquisition cost and the fair values of the subsidiary companies’ netassets is reflected as goodwill or reserves on consolidation as appropriate.

41


(b) Basis of consolidation (Cont’d)

All intercompany transactions, balances and unrealised gains on transactions between group companiesare eliminated. Unrealised losses are also eliminated unless cost cannot be recovered.

The gain or loss on disposal of a subsidiary company is the difference between net disposal proceedsand the Group's share of its net assets together with any unamortised balance of goodwill or reserve onacquisition.

Minority interest is measured at the minorities' share of the post acquisition fair values of the identifiableassets and liabilities of the acquiree.

(c) Goodwill and reserve on consolidation

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group'sinterest in the fair value of the identifiable assets and liabilities of a subsidiary company at the date ofacquisition. Goodwill is recognised as an asset and is not amortised but is reviewed annually forimpairment in value and written down where it is considered necessary. The policy for the recognitionand measurement of impairment losses is in accordance with Note 2(p).

Conversely, reserve arising from consolidation, which represents the excess of the fair value of theidentifiable assets and liabilities of a subsidiary company over the cost of acquisition, is taken to reserve.

On disposal of a subsidiary company, the attributable amount of goodwill or reserve on acquisition isincluded in the determination of the profit or loss on disposal.

(d) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.The policy for recognition and measurement of impairment losses is in accordance with Note 2(p).

Freehold land is not amortised.

Leasehold land is amortised over its remaining lease period of 77 years.

Other property, plant and equipment are depreciated on a straight line basis to write off the cost of eachasset to its residual value over the estimated useful life using the following annual rates:-

%

Buildings 2Farm equipment, machinery, cabin, signboards and electrical installation 10 - 20Furniture, fittings, office equipment and renovation 10 - 20Motor vehicles 20

Assets held under hire purchase schemes are depreciated over their expected useful lives on the samebasis as owned assets.

Assets in the course of construction are carried at cost, less any impairment loss where the recoverableamount of the assets is estimated to be lower than its carrying amount. Cost includes borrowing costsdealt with in accordance with the Company's and the Group's accounting policy. Depreciation of suchasset commences when the asset is ready for its intended use.

The gain or loss arising on the disposal or retirement of an asset is determined as the differencebetween the sales proceeds and the carrying amount of the asset and is taken to the income statement.

Property, plant and equipment depreciated to a nominal value of RM1 each are retained in the financialstatements until they are no longer in use.

Notes to the Financial Statements (Cont’d)

– 31 March 2003

42


(e) Land and development expenditure

This is stated at cost and reflected as long term assets unless significant development work has beenundertaken and is expected to be completed within the normal operating cycle, in which case, suchland and development expenditure will then be reclassified to development properties. Cost includescost of land and attributable development expenditure.

(f) Development properties

This is stated at costs plus attributable profits less foreseeable losses and progress billings. Cost includescost of land, all direct building cost and other related development expenditure, including interest expensesincurred during the period of active development.

Profit accruing on a development project is accounted for on the percentage of completion methodwhen the development work has progressed to a stage where the profit can be reliably measured. Thepercentage of completion is measured by reference to the proportion of actual accumulated cost ofdevelopment as at the balance sheet date against the total estimated cost of development. Full allowanceis made for anticipated losses.

(g) Construction contract

This is stated at aggregate costs incurred up to balance sheet date plus the profit or loss recognised oneach contract and compared against progress billings up to balance sheet date. Where the aggregatecosts and the recognised profit or loss exceeds the progress billings receivable, the balance is shownas "Amounts due from customers on contracts works". Conversely, should the progress billings exceedthe aggregate costs and recognised profits or losses, the balance is then shown as "Amounts due tocustomers on contract works". Cost includes cost of material, labour, direct overheads and a proportionof indirect overhead.

Profit accruing on a construction contract is accounted for on the percentage of completion methodwhen the contract work has progressed to a stage where the profit can be reliably measured. Thepercentage of completion is measured by reference to the proportion of actual accumulated cost ofcontract up to the balance sheet date against the total estimated cost of contract. Full allowance ismade for anticipated losses.

(h) Capitalisation of borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,which are assets that necessarily take a substantial period of time to get ready for their intended use orsale, are added to the cost of those assets, until such time as the assets are substantially ready for theirintended use or sale. All other borrowing costs are dealt with in the income statement in the period inwhich they are incurred.

(i) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost of unsold completed propertiescomprise cost of land and development expenditure incurred thereon. Net realisable value representsestimated selling price less costs to be incurred in marketing and selling.

(j) Receivables

Receivables are carried at anticipated realisable value. Known bad debts are written off and specificallowance is made for any debts considered doubtful of collection.


– 31 March 2003

43


(k) Payables

Payables are stated at cost which is the fair value of the consideration to be paid in the future, whetheror not billed to the Group.

(l) Hire purchase

Assets held under hire purchase contracts, which are those where substantially all risks and rewards ofownership of the assets have passed to the Company, are capitalised in the balance sheet and aredepreciated over their useful lives as stated in Note 2(d).

The interest element of the hire purchase obligations is charged to the income statement over theperiod of the hire purchase and represents a constant proportion of the balance of capital repaymentsoutstanding.

(m) Revenue recognition

Revenue from property development and construction contracts is recognised when persuasive evidencesuggest that sales arrangement have been concluded with collectibility reasonably assured, developmentor construction work has commenced, and the financial outcome of the development and constructionactivities can be reliably estimated. Such revenue is recognised using the percentage of completionmethod determined by reference to the proportion of actual cost incurred against estimated total cost ofdevelopment or contract.

Revenue from sale of completed property units and land is recognised when the risk and rewardsassociated with ownership are transferred to the purchasers with no further substantial contractual actsto complete.

Dividend income from subsidiary companies is recognised when the right to receive is established.

Revenue from sale of agricultural products is recognised upon acceptance of delivery.

Administrative fee, management fees and secretarial fee is recognised over the period where suchservice is provided.

Interest income is recognised on a time proportion basis that reflects the effective yield on the assets.

Rental income is recognised over the period of tenancy.

(n) Deferred taxation

Deferred taxation is provided for on all material timing differences using the liability method.

Deferred tax benefits are not recognised in the financial statements unless there is a reasonableexpectation of realisation.

(o) Cash and cash equivalents

Cash and cash equivalents include cash on hand and at bank, deposit at call and short term, highlyliquid investments that are readily convertible to known amounts of cash and which are subject to aninsignificant risk of changes in value, net of bank overdrafts.


– 31 March 2003

44


(p) Impairment of assets

At each balance sheet date, the Group reviews the carrying amounts of its assets, other than inventories,deferred tax assets, and financial assets to determine whether there is any indication that those assetshave suffered an impairment loss. If any such indication exists, impairment is measured by comparingthe carrying values of the assets with their recoverable amounts. Recoverable amount is the higher ofnet selling price and value in use, which is measured by reference to discounted future cash flows.Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generatingunit to which the asset belongs.

An impairment loss is charged to the income statement immediately.

Reversal of impairment losses recognised in prior years is recorded when there is an indication that theimpairment losses recognised for the asset no longer exist or have decreased. The reversal is recognisedto the extent of the carrying amount of the asset that would have been determined (net of amortisationand depreciation) had no impairment loss been recognised. The reversal is recognised in the incomestatement immediately.

(q) Financial instruments

Financial instruments are recognised in the balance sheet when the Group has become a party to thecontractual provisions of the instrument.

Financial instruments are classified as liabilities or equity in accordance with the substance of thecontractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classifiedas a liability, are reported as expense or income. Distributions to holders of financial instruments classifiedas equity are charged directly to equity. Financial instruments are offset when the Group has a legallyenforceable right to offset and intends to settle either on a net basis or to realise the asset and settle theliability simultaneously.

The particular recognition method adopted for financial instruments recognised at balance sheet dateis disclosed in the individual policy statement of each item, where applicable.


– 31 March 2003

45


3. PROPERTY, PLANT AND EQUIPMENT

Farm equipment,machinery, cabin, Furniture,

Long term signboards and fittings, office CapitalFreehold leasehold electrical equipment Motor work-in-

land land Buildings installation and renovation vehicles progress TotalGroup RM RM RM RM RM RM RM RM

CostAs at 1 April 2002 20,650,476 6,760,694 650,000 52,092 1,300,183 2,870,297 5,997,926 38,281,668Additions 92,580 1,589 – 3,650 220,870 18,300 – 336,989Disposals – – – – (111,411) (160,588) – (271,999)Reclassifications (290) (148) – – – – – (438)Transferred to:- land and development

expenditure (19,751,502) (3,451,888) – – – – (3,237,681) (26,441,071)- development

properties – (2,942,866) – – – – (2,760,245) (5,703,111)

As at 31 March 2003 991,264 367,381 650,000 55,742 1,409,642 2,728,009 – 6,202,038

Accumulated depreciationAs at 1 April 2002 – 7,390 98,100 49,078 572,888 2,069,598 – 2,797,054Charge during the year – 1,961 13,000 1,176 112,145 246,443 – 374,725Disposals – – – – (86,131) (160,587) – (246,718)

As at 31 March 2003 – 9,351 111,100 50,254 598,902 2,155,454 – 2,925,061

Carrying amountsAs at 31 March 2003 991,264 358,030 538,900 5,488 810,740 572,555 – 3,276,977

As at 31 March 2002 20,650,476 6,753,304 551,900 3,014 727,295 800,699 5,997,926 35,484,614

Depreciation for theyear 2002 – 7,390 98,100 49,079 572,888 2,069,597 – 2,797,054

The title deeds to certain leasehold land with carrying amount of RMNil (2002 - RM6,953,700) has yet to beissued by the relevant authorities.


– 31 March 2003

46


3. PROPERTY, PLANT AND EQUIPMENT (Cont’d)

Freehold Furniture Office Motor Officeland Buildings and fittings equipment vehicles renovation Total

Company RM RM RM RM RM RM RM

CostAs at 1 April 2002 20,465,373 410,000 200,829 641,639 1,031,573 – 22,749,414Additions 92,580 – 5,650 60,171 – 63,869 222,270Disposals – – (41,536) (59,025) (160,588) – (261,149)Reclassifications (19,751,502) – – – – – (19,751,502)

As at 31 March 2003 806,451 410,000 164,943 642,785 870,985 63,869 2,959,033

Accumulated depreciationAs at 1 April 2002 – 88,500 165,562 248,451 931,122 – 1,433,635Charge during the year – 8,200 7,212 56,563 27,030 532 99,537Disposals – – (36,675) (45,194) (160,587) – (242,456)

As at 31 March 2003 – 96,700 136,099 259,820 797,565 532 1,290,716

Carrying amountsAs at 31 March 2003 806,451 313,300 28,844 382,965 73,420 63,337 1,668,317

As at 31 March 2002 20,465,373 321,500 35,267 393,188 100,451 – 21,315,779

Depreciation for theyear 2002 – 88,500 7,531 53,772 30,693 – 180,496

Group

Motor vehicles of the Group with an aggregate carrying amount of RM158,667 (2002 - RM206,267) areacquired under hire purchase arrangement.

The title deeds of certain freehold and leasehold land with aggregate carrying amounts of RMNil (2002 -RM26,612,622) have yet to be registered in the Company's and subsidiary company's name.

Company

A freehold land and building with a carrying amount of RM400,017 (2002 - RM403,317) is held in trust by asubsidiary company.

Freehold land and buildings belonging to the Company with a carrying amount of RM1,119,751 (2002 -RM1,127,951) are charged as securities for banking facilities obtained.

The title deeds of certain freehold land with a carrying amount of RMNil (2002 - RM19,658,922) has yet to beregistered in the Company's name.


– 31 March 2003

47


4. SUBSIDIARY COMPANIES

Company2003 2002

RM RM

Unquoted shares at cost 42,392,054 40,892,054Less: Impairment losses (124,399) –

42,267,655 40,892,054

The details of the subsidiary companies, all of which are incorporated in Malaysia, are as follows:

Effectiveequity interest2003 2002 Principal activities

Direct subsidiary companies % %

Prop Park Sendirian Berhad 100 100 Inactive

Daya Niaga Sdn Bhd 100 100 Property development

HYB Trading Sdn Bhd 100 100 Inactive

Tinggian Development Sendirian Berhad 100 100 Provision of propertymanagement services

Yoon Lian Realty Sendirian Berhad 100 100 Property development,investment holding andprovision of management services

Setaramaju Sdn Bhd 100 100 Inactive

Bison Holdings Sdn Bhd 100 100 Property investment holding

Pembinaan Hua Yang Sdn Bhd 100 100 Inactive

Grandeur Park Sdn Bhd 100 96 Property development

HYB Management Services Sdn Bhd 100 100 Dormant

Prisma Pelangi Sdn Bhd 100 100 Property development

Agro-Mod Industries Sdn Bhd 100 100 Property development

Indirect subsidiary companies

Fanoor Sdn Berhad 100 100 Property development

Daya Niaga Development Sdn Bhd 100 100 Dormant

Bukit Selim Sdn Bhd 100 100 Property development

Bidor Enterprise Sdn Bhd 100 100 Property development


– 31 March 2003

48


5. LAND AND DEVELOPMENT EXPENDITURE

Leasehold Freehold Developmentland land expenditure TotalRM RM RM RM

Group

As at 1 April 2001 6,229,660 22,179,784 25,215,690 53,625,134Additions 180,453 95,564 13,008,651 13,284,668Reclassification (Note 37) 1,122,170 4,858,068 252,587 6,232,825Arising from acquisition of

additional equity interestin subsidiary companies 2,986,723 9,272,735 – 12,259,458

Adjustment 294,820 5,010,981 – 5,305,801Disposals (54,645) (35,303) (349) (90,297)Transfer to development properties (24,189) (3,355,097) (1,848,907) (5,228,193)

As at 31 March 2002 10,734,992 38,026,732 36,627,672 85,389,396Additions 5,116,195 43,873 11,970,738 17,130,806Transfer from property, plant

and equipment 3,451,888 19,661,727 3,327,456 26,441,071Arising from acquisition of

additional equity interestin subsidiary companies – 858,362 – 858,362

Adjustment on reductionof land cost (87,345) – – (87,345)

Transfer to development properties (2,776,763) (3,636,100) (9,002,572) (15,415,435)Disposals (194,486) (56,387) (420,250) (671,123)

As at 31 March 2003 16,244,481 54,898,207 42,503,044 113,645,732

Company

As at 1 April 2001 3,403,714 6,295,243 13,884,262 23,583,219Additions 22,120 27,616 1,369,989 1,419,725Transfer to development properties – (252,587) 252,587 –

As at 31 March 2002 3,425,834 6,070,272 15,506,838 25,002,944Transfer from property, plant

and equipment – 19,661,727 89,775 19,751,502Additions 50,942 39,624 808,032 914,272

As at 31 March 2003 3,476,776 25,771,623 16,404,645 45,668,718

The adjustment relates to reclassification of goodwill arising from acquisition of additional equity interests insubsidiary companies in prior year. The Directors are of the opinion that the consideration previously paid toacquire the additional equity interests were attributable to the fair values of the land owned by these subsidiarycompanies. The additions arising from acquisitions of additional equity interests in subsidiary companies inprior year are in respect of the same subsidiary companies and same land owned.


– 31 March 2003

49


5. LAND AND DEVELOPMENT EXPENDITURE (Cont’d)

Group Company2003 2002 2003 2002

RM RM RM RM

Additions during the year includethe following expenditure:

Interest expenses 1,083,334 1,850,394 608,932 728,357

Certain freehold and leasehold land belonging to subsidiary companies with carrying amount of RM15,839,397(2002 - RM14,489,570) are charged as security for banking facilities granted to the Company and certainsubsidiary companies.

Certain freehold and leasehold land belonging to subsidiary companies with carrying amount of RM509,730(2002 - RM1,008,520) are held in trust by the Company.

Company

The title deed of a freehold land with a carrying amount of RM19,767,177 (2002 - RMNil) has yet to beregistered in the Company's name.

6. GOODWILL ON CONSOLIDATION

Group2003 2002

RM RM

At costBalance brought forward 11,730,201 17,989,872Written off (15) –Adjustment – (6,259,671)

Balance carried forward 11,730,186 11,730,201

The adjustment relates to reclassification of goodwill arising from acquisition of additional equity interests insubsidiary companies in prior year to land and development expenditure or development properties. TheDirectors are of the opinion that the consideration previously paid to acquire the additional equity interestswere attributable to the fair values of the land owned by these subsidiary companies. The additions arisingfrom acquisitions of additional equity interests in subsidiary companies in prior year were in respect of thesame subsidiary companies and same land owned.


– 31 March 2003

50


7. LONG TERM RECEIVABLES

Group and Company2003 2002

RM RM

At costAmounts receivable 4,800,132 10,190,019Less: Current portion of long term receivables (Note 10) (4,800,132) (6,340,019)

– 3,850,000

Group and Company

The long term receivables arose from a financing scheme granted by the Company to purchasers for thepurchase of a piece of leasehold land and orchard land from its subsidiary companies. The Company is ableto finance these deals as it has exemption from the Moneylenders Act 1951 Section 2A (2) obtained fromMinistry of Housing and Local Government.

8. INVENTORIES

Group Company2003 2002 2003 2002

RM RM RM RM

At costCompleted commercial units 405,916 400,263 – –Completed residential units 1,451,864 233,469 745,273 –

1,857,780 633,732 745,273 –

The cost of inventories recognised as an expense during the financial year in the Group amounted to RM171,745(2002 - Nil).

9. DEVELOPMENT PROPERTIES

Group Company2003 2002 2003 2002

RM RM RM RM

At costLeasehold land 7,422,914 1,523,968 – –Freehold land 8,767,904 8,273,478 – –Development expenditure 89,829,140 68,513,975 5,701,855 –

As at 31 March 106,019,958 78,311,421 5,701,855 –Attributable profits accrued 28,844,758 24,070,950 1,120,167 –Less: Progress billings (74,860,367) (67,402,304) (4,625,315) –

60,004,349 34,980,067 2,196,707 –

Capitalised in developmentexpenditure during the year are:

Interest expenses 1,241,702 1,259,478 – 130,885

Certain land with carrying amounts aggregating RM8,404,917 (2002 - RM2,474,645) are charged as securityfor banking facilities granted to the Company and certain subsidiary companies.


– 31 March 2003

51


10. TRADE RECEIVABLES

Group Company2003 2002 2003 2002

RM RM RM RM

At cost

Trade receivables 34,216,654 23,382,931 2,198,612 6,283,044Current portion of long term

receivables (Note 7) 4,800,132 6,340,019 4,800,132 6,340,019

39,016,786 29,722,950 6,998,744 12,623,063

Included in trade receivables is an amount of approximately RM222,000 owing by a utility company to asubsidiary company for acquiring land on compulsory basis in prior years. Although this amount has beenlong overdue, the Directors, after taking consideration of all available information, are confident of its ultimaterecovery. Accordingly, no allowance for doubtful recovery has been made in respect of this amount in thefinancial statements.

The Group's normal trade credit term is 14 to 21 days. Other credit terms are assessed and approved on acase-by-case basis.

The Group has no significant concentration of credit risk that may arise from exposures to a single debtor orto groups of debtors.

11. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

Group Company2003 2002 2003 2002

RM RM RM RM

Balance as at 31 March 1,905,561 4,396,344 633,524 3,153,362Allowance for doubtful debts (332,000) – (332,000) –

1,573,561 4,396,344 301,524 3,153,362

Group

Included in other receivables is an overdue amount of RM317,952 (2002 - RM317,952) owing by a third partywhich represents a deposit paid for a proposed acquisition of land which did not materialise. The Companyhas commenced legal action to recover this amount and the Directors are confident of ultimate recovery.Accordingly, no allowance for doubtful debt has been made in respect of this amount in the financial statements.

The Group has no significant concentration of credit risk that may arise from exposures to a single debtor orto groups of debtors.


– 31 March 2003

52


12. AMOUNTS OWING BY/(TO) SUBSIDIARY COMPANIES

Company

The amounts owing by/to subsidiary companies are unsecured, interest free and without fixed terms ofrepayment. However, interest cost incurred on the Company's revolving credit facilities, utilised to financeacquisition of property and development expenditure by the subsidiary companies are allocated directly to thesubsidiary companies for the portion incurred. The rates of interest allocated is similar to those as disclosedin Note 16 to financial statements.

13. CASH AND CASH EQUIVALENTS

Group Company2003 2002 2003 2002

RM RM RM RM

Cash in hand and at bank 207,686 178,347 7,605 16,346Housing Development Accounts 938,574 1,303,520 34,538 29,793

Cash and bank balances 1,146,260 1,481,867 42,143 46,139Less: Bank overdraft (Note 16) (8,869,626) (4,365,251) (5,386,714) (751,877)

Cash and cash equivalents (7,723,366) (2,883,384) (5,344,571) (705,738)

The Housing Development Accounts are held pursuant to Section 7A of the Housing Developers (Control andLicensing) Act 1966 and therefore restricted from use in other operations.

14. TRADE PAYABLES

The normal trade credit term granted to the Group ranges from 30 to 60 days.

15. OTHER PAYABLES AND ACCRUALS

Group Company2003 2002 2003 2002

RM RM RM RM

Other payables 3,098,999 6,924,062 2,466,520 6,458,877Current portion of deferred

payable (Note 21) 5,882,517 3,921,678 5,882,517 3,921,678Advances from a shareholder

of a subsidiary company – 198,720 – –Accruals 1,616,650 663,192 1,272,565 374,550Hire purchase creditors (Note 22) 53,333 53,333 – –

10,651,499 11,760,985 9,621,602 10,755,105


– 31 March 2003

53


16. BANK BORROWINGS

Group Company2003 2002 2003 2002

RM RM RM RM

Bank overdrafts 8,869,626 4,365,251 5,386,714 751,877Revolving loans 17,457,446 35,639,472 17,457,446 35,639,472Term loan (Note 23) 1,300,000 – 1,300,000 –

27,627,072 40,004,723 24,144,160 36,391,349

The bank borrowings bear interest at the following rates:

Group Company2003 2002 2003 2002

Bank overdrafts 8.15% - 8.9% 8.15% - 9.3% 8.4% 8.4% - 8.8%Revolving loans 8.4% 8.4% - 8.8% 8.4% 8.4% - 8.8%Term loan 8.15% - 8.9% 8.9% - 9.3% 8.15% –

Group

The overdraft facilities of certain subsidiary companies are secured by the following:-

(i) Legal charge over the Company's freehold property and land and first legal charge over certain landheld under development properties belonging to one of its subsidiary company.

(ii) Joint and several guarantee of the Directors of the subsidiary companies and the company.

Company

(a) The Company's overdraft facilities are secured by a first fixed charge over one of its freehold land andbuildings and third party legal charges over certain land held for development and development propertiesbelonging to certain of its subsidiary companies.

(b) The revolving loan facilities with a limit of RM22 million are secured by first legal third party charges overland belonging to certain subsidiary companies and land registered in the name of a third party.


– 31 March 2003

54


17. SHARE CAPITAL


Number Numberof shares RM of shares RM

AuthorisedOrdinary shares of RM1 each

Balance brought forward 500,000,000 500,000,000 50,000,000 50,000,000Created during the year – – 450,000,000 450,000,000

Balance carried forward 500,000,000 500,000,000 500,000,000 500,000,000

Issued and fully paidOrdinary shares of RM1 each

Balance brought forward 77,129,000 77,129,000 12,230,000 12,230,000Public issue 12,871,000 12,871,000 – –Bonus issue – – 64,899,000 64,899,000

Balance carried forward 90,000,000 90,000,000 77,129,000 77,129,000

The issued and fully paid share capital of the Company was increased from RM77,129,000 to RM90,000,000in conjunction with the listing of its shares on the Main Board of the Kuala Lumpur Stock Exchange by way ofa public issue of 12,871,000 new ordinary shares of RM1 each at an issue price of RM1.75 per share.

The Company's shares were listed on the Main Board of the Kuala Lumpur Stock Exchange on 29th November2002.

18. SHARE PREMIUM


RM RM

Balance brought forward – 8,610,000Add: Arising from Public Issue of 12,871,000 new shares

in conjunction with the listing of the Company’s shareson the Main Board of the Kuala Lumpur Stock Exchangeat an issue price of RM1.75 per share 9,653,250 –

Less: Capitalised for bonus issue – (8,610,000)Listing expenses (2,956,401) –

Balance carried forward 6,696,849 –

Included in listing expenses is non-audit fee of RM238,500 paid to the Company’s auditors.


– 31 March 2003

55


19. RESERVES

Group Company2003 2002 2003 2002

RM RM RM RM

DistributableRetained profits 37,643,457 19,498,983 8,446,244 7,502,378

Non-distributableCapital redemption reserve 500,000 500,000 500,000 500,000Reserve on consolidation 302,926 302,926 – –

802,926 802,926 500,000 500,000

38,446,383 20,301,909 8,946,244 8,002,378

The capital redemption reserve arose from redemption of 5,000,000 redeemable preference shares of RM0.10each in year ended 1998 and can be applied in paying up unissued shares of the Company to be issued tomembers of the Company as fully paid bonus shares.

Reserve on consolidation comprise reserve arising on acquisition of subsidiary companies as stated in Note2(c).

Based on estimated tax credit under Section 108 of the Income Tax Act 1967 accrued up to balance sheetdate and estimated tax exempt account balances available, the Company is able to distribute the entireretained profits as at balance sheet date by way of dividends without having to incur additional tax liability.

20. DEFERRED TAXATION

Group2003 2002

RM RM

Balance brought forward 7,342,212 (670,634)Reclassification – 8,019,566Transfer from income statement (Note 28) (627,355) (6,720)

Balance carried forward 6,714,857 7,342,212

The deferred taxation is in respect of the following timing differences:-

Group2003 2002

RM RM

Deferred tax benefits on unrealised profits arising frominter-company transactions in prior years (677,354) (677,354)

Deferred tax liabilities on reclassification of goodwill arising fromacquisition of equity interest in subsidiary companies to landand development expenditure and development properties 7,392,211 8,019,566

6,714,857 7,342,212

The deferred taxation will reverse when the assets related to the transactions are sold to third parties.


– 31 March 2003

56


21. DEFERRED PAYABLE


RM RM

Consideration payable 19,608,389 19,608,389Less: Amount paid (7,843,356) (3,921,678)

Balance payable 11,765,033 15,686,711Payable within a year (Note 15) (5,882,517) (3,921,678)

Balance payable within 3 years 5,882,516 11,765,033

The deferred payable relates to the acquisition of a freehold land in prior year.

22. HIRE PURCHASE CREDITORS

Group2003 2002

RM RM

Hire purchase liability - total minimum payments 82,311 144,045Finance charge (11,200) (19,600)

Present value of hire purchase facility 71,111 124,445

Represented by:-

Payable not later than 1 year (Note 15) 53,333 53,333Payable later than 1 year and not later than 5 years 17,778 71,112

71,111 124,445

23. TERM LOANS

Group Company2003 2002 2003 2002

RM RM RM RM

Balance as at 1 April 2,666,703 8,000,000 – –Drawdown 3,900,000 – 3,900,000 –Repayment (2,666,703) (5,333,297) – –

Balance as at 31 March 3,900,000 2,666,703 3,900,000 –Repayable within 12 months

months included undercurrent liabilities (Note 16) (1,300,000) – (1,300,000) –

Repayable after 12 months 2,600,000 2,666,703 2,600,000 –


– 31 March 2003

57


23. TERM LOANS (Cont’d)

Group

The term loans of certain subsidiary companies, which have been fully settled during the year were securedby:-

(i) Legal charges over certain leasehold land held under development of the Group;

(ii) Corporate guarantee from the Company

and are repayable as follows:-

(i) By way of redemption of property titles based on redemption sum; or

(ii) By 4 quarterly instalments of RM750,000 and RM1,250,000 each commencing March 2003 andDecember 2002 respectively

whichever is earlier.

Group and Company

The salient terms of the term loans of the Company are:-

(i) Third party legal charges over certain land held under development and development properties ofcertain of its subsidiary companies;

(ii) Letter of undertaking from the Company not to encumber the piece of vacant land of the company.

and is repayable by 36 monthly instalments of RM122,482 each commencing April 2003.

24. REVENUE

Group Company2003 2002 2003 2002

RM RM RM RM

Proportional sales value ofdevelopment properties in progress 77,552,033 76,780,919 3,321,601 –

Completed development properties 28,171,896 21,018,370 – 12,030,791Sales of vacant land 2,297,690 90,949 – –Sales of agricultural products 7,828 30,525 – –Management, administrative

and secretarial services 49,280 49,980 149,100 149,100Contract revenue – 1,013,654 – –Interest income 285,112 495,019 285,112 495,019Rental income 42,000 3,000 – –

108,405,839 99,482,416 3,755,813 12,674,910


– 31 March 2003

58


25. OTHER OPERATING INCOME

Group Company2003 2002 2003 2002

RM RM RM RM

Dividend income – – 5,200,000 51,871,500Maintenance fee 19,776 78,400 19,776 78,400Deposits forfeited 111,632 31,097 6,000 21,000Sundry income 71,650 24,513 16,726 12,559Gain on disposal of property, plant

and equipment 27,612 39,598 27,612 1,100Adjustment in revenue and cost

of land sold in prior year – 376,490 – –Interest income 380,066 386,194 110,968 117,146Rental income 45,000 34,900 30,600 29,200

655,736 971,192 5,411,682 52,130,905

26. FINANCE COSTS

Group Company2003 2002 2003 2002

RM RM RM RM

Interest cost incurred on- bank overdraft 408,559 342,152 100,511 33,344- revolving loan 2,391,408 3,055,515 1,027,459 1,649,916- term loan 78,127 553,127 15,675 –- hire purchase 8,400 5,600 – –- others 600 125,000 – 125,000

2,887,094 4,081,394 1,143,645 1,808,260

Less: Amount capitalised indevelopment expenditure (2,325,036) (3,109,872) (608,932) (859,242)

562,058 971,522 534,713 949,018


– 31 March 2003

59


27. PROFIT BEFORE TAXATION

Group Company2003 2002 2003 2002

RM RM RM RM

(a) This is arrived at after charging:-

Impairment losses – – 124,399 –Allowance for doubtful debts 332,000 – 332,000 –Auditors’ remuneration

- current year 74,700 49,700 26,000 14,000- under provision in prior year – 7,450 – 1,500

Bad debts written off 9,270 140,360 3,770 140,360Depreciation of property,

plant and equipment 374,725 493,678 99,537 180,496Non-executive directors’

remuneration (Note 27(c)) 131,500 56,000 131,500 46,000Gratuity payable to the

estate of Ho Mok Heng 1,000,000 – 1,000,000 –Goodwill written off 15 – – –

Interest- bank overdraft 118,856 50,248 100,511 33,344- hire purchase 8,400 5,600 – –- revolving loan 434,202 790,674 – 790,674- others 600 125,000 – 125,000- late payment 140,873 – – –

Loss on disposal of property,plant and equipment 219 – – –

Property, plant and equipmentwritten off 12,254 11 11,705 1

Rental of premises 128,300 153,600 70,700 96,000

and crediting:

Gain on disposal of property,plant and equipment 27,612 39,598 27,612 1,100

Gross dividends from unquotedsubsidiary companies – – 5,200,000 51,871,500

Interest income 665,178 881,213 396,080 612,165Rental income 87,000 37,900 30,600 29,200

(b) Staff information

Staff cost (includingexecutive directors) 3,282,048 3,112,530 1,478,552 1,614,735

Number of employees atthe end of the financial year(including executive directors) 69 65 19 24

Included in staff costs of the Group and of the Company are executive directors’ remuneration amountingto RM945,896 (2002 - RM925,388) and RM690,836 (2002 - RM897,388) respectively as further disclosedin Note 27(c) below.


– 31 March 2003

60


27. PROFIT BEFORE TAXATION (Cont’d)

Group Company2003 2002 2003 2002

RM RM RM RM

(c) Directors’ remuneration

Directors of the Company

Executive:-Salaries and

other emoluments 823,466 722,638 608,406 719,638Fees – 25,000 – –Bonus 122,430 177,750 82,430 177,750

945,896 925,388 690,836 897,388

Non-Executive:-Fees 104,500 38,000 104,500 38,000Other emoluments 27,000 8,000 27,000 8,000

131,500 46,000 131,500 46,000

Other Directors

Non-Executive:-Fees – 10,000 – –

Total 1,077,396 981,388 822,336 943,388

The number of directors of the Company whose total remuneration during the year fell within the followingbands is analysed below:-

Number of DirectorsExecutive Non-Executive

2003 2002 2003 2002

Below RM50,000 – 1 5 4RM50,001 - RM100,000 1 1 – –RM100,001 - RM150,000 – – – –RM150,001 - RM200,000 – – – –RM200,001 - RM250,000 1 – – –RM250,001 - RM300,000 1 – – –RM300,001 - RM350,000 – – – –RM350,001 - RM400,000 1 1 – –Above RM400,000 – 1 – –


– 31 March 2003

61


28. TAXATION

Group Company2003 2002 2003 2002

RM RM RM RM

Current year provision (8,754,630) (6,701,667) (1,163,000) (14,003,000)Deferred taxation (Note 20) 627,355 6,720 – –

(8,127,275) (6,694,947) (1,163,000) (14,003,000)

(Under)/Over provision in prior year (52,915) (102,170) 53,487 –

(8,180,190) (6,797,117) (1,109,513) (14,003,000)

Group and Company

The effective tax rate for the Group and Company is higher than the statutory tax rate mainly due to certainexpenses disallowed for tax purposes.

Details of potential deferred taxation not provided as at 31 March 2003 are as follows:-

Group Company2003 2002 2003 2002

RM RM RM RM

Cumulative timing differences- excess of capital allowances over

book depreciation (331,022) (467,528) (378,000) (381,000)- unutilised tax losses 1,325,000 1,465,000 1,309,000 1,465,000- unabsorbed capital allowances 543,000 141,000 539,000 141,000- others 1,000,000 – 1,000,000 –

Net deferred benefits 2,536,978 1,138,472 2,470,000 1,225,000

Potential deferred tax benefitsat 28% (2002 - 28%) 710,000 319,000 690,000 343,000

The Group utilised approximately RM140,000 (2002 - RM499,000) and RMNil (2002 - RM465,000) of itsunutilised tax losses and unabsorbed capital allowances brought forward respectively giving rise to a taxsaving of approximately RM39,000.

The unutilised tax losses and unabsorbed capital allowances are subject to agreement with the Inland RevenueBoard.

29. EARNINGS PER SHARE

The basic earnings per share for the year has been calculated based on the consolidated profit after taxationand minority interest of RM18,144,474 (2002 - RM16,872,966) and on the weighted average number of ordinaryshares in issue during the year of 82,491,917 (2002 - 77,129,000).


– 31 March 2003

62


30. DIVIDENDS


RM RM

Dividends paidInterim dividends of Nil (2002 - 20% less tax at 28%) – 11,106,576

Net dividend per share – 14-4 sen

Dividends proposedProposed final dividend of 7% less tax at 28% 4,536,000 –

Net dividend per share 5-04 sen –

The proposed dividends have not been accounted for in the financial statements.

31. NOTES TO THE CASH FLOW STATEMENTS

(a) Acquisition of additional shares in subsidiary companies

The Group increased its equity interest in Grandeur Park Sdn Bhd in the current year and Agro-ModIndustries Sdn Bhd, Prisma Pelangi Sdn Bhd and Grandeur Park Sdn Bhd in the previous year. Theeffects of acquisition in the current year on the financial results of the Group are as follows:-

Year ended2003 2002After Before

increase in equity interestRM RM

Revenue 77,199,418 47,176,863Cost of sales (55,751,841) (34,481,200)

Gross profit 21,447,577 12,695,663Other operating income 352,537 257,139Administrative and general expenses (1,713,367) (1,294,876)

Profit before taxation 20,086,747 11,657,926Taxation (5,660,912) (3,200,000)

Profit after taxation 14,425,835 8,457,926Minority interest – (338,317)

Profit after taxation and minority interest 14,425,835 8,119,609


– 31 March 2003

63


31. NOTES TO THE CASH FLOW STATEMENTS (Cont’d)

(a) Acquisition of additional shares in subsidiary companies (Cont’d)

Group

The net cash flows on the acquisitions of additional equity interests are as follows:-

2003 2002RM RM

Property, plant and equipment 519,241 582,196Land and development expenditure 23,798,093 42,369,339Development properties 17,232,000 9,957,916Receivables 8,436,884 599,184Holding company’s account (21,443,639) (22,301,420)Related companies’ accounts (5,525,000) (50,000)Cash and bank balances 483,447 383,468Payables (11,791,730) (1,802,751)Taxation (310,056) (76,519)Bank overdraft (847,371) (1,677,762)Term loan – (8,000,000)

10,551,869 19,983,651Less: Fair value of assets already owned by group 9,051,869 4,550,636

Fair value of assets retained by minority interest – 3,015

Purchase consideration 1,500,000 15,430,000

(b) Property, plant and equipment

Group Company2003 2002 2003 2002

RM RM RM RM

Purchase of property, plantand equipment during the year 336,989 20,389,245 222,270 19,749,047

Less: Amount outstanding – (15,686,711) – (15,686,711)

336,989 4,702,534 222,270 4,062,336

Financed by:-

Cash 336,989 4,542,534 222,270 4,062,336Hire purchase arrangement – 160,000 – –

336,989 4,702,534 222,270 4,062,336


– 31 March 2003

64


32. CONTINGENT LIABILITIES

Company

A third party has taken legal action against the Company to claim RM1,360,000 being interest on paymentdue for alleged late delivery of land titles to the third party by the Company. This claim has not been accruedin the financial statements as the Directors are of the opinion that it is unlikely that the third party will besuccessful in its claim.

In previous year, the Company disclosed corporate guarantee given to finance companies for term loan andoverdraft facilities granted to its subsidiary companies and bank guarantee facility utilised as contingent liabilities.

With the adoption of MASB 20 - Provisions, Contingent Liabilities and Contingent Assets, the Directors are ofthe opinion that the abovementioned are not contingent liabilities as the likelihood of an outflow of resourcesfrom these corporate and bank guarantees are remote. In addition, the subsidiary company is within thecontrol of the Company.

33. CAPITAL COMMITMENT


RM RM

Approved but not contracted for – 900,000

34. RELATED PARTY TRANSACTIONS

With subsidiary companies

Pembinaan Grandeur Prisma TinggianHua Yang Park Prop Park Pelangi Daya Niaga DevelopmentSdn Bhd Sdn Bhd Sdn Bhd Sdn Bhd Sdn Bhd Sdn Bhd Total

RM RM RM RM RM RM RMCompany

2003

Land owner entitlement payable – – – – 949,275 – 949,275Management fees received

and receivable 12,000 60,000 1,200 12,000 12,000 24,000 121,200

12,000 60,000 1,200 12,000 961,275 24,000 1,070,475

Amount outstanding as at31 March 2003 12,000 60,000 – 12,000 961,275 24,000 1,069,275

2002

Management fees receivedand receivable 12,000 60,000 1,200 12,000 12,000 24,000 121,200

Amount outstanding as at31 March 2002 12,000 60,000 – 12,000 12,000 24,000 120,000

Related party transactions with the estate of a deceased director is as disclosed in Note 27. Chew Po Sim andHo Mook Leong are beneficiaries of the estate whilst Ho Mook Leong is also the executor.


– 31 March 2003

65


34. RELATED PARTY TRANSACTIONS (Cont’d)

With companies where certain Directors have substantial financial interests- management fees received and receivable

GroupInterested Director/Directors deemedto have substantialinterest/significant Amount Amount outstanding

Transacting party influence 2003 2002 2003 2002RM RM RM RM

Heng Holdings Sdn Bhd Chew Po Sim 1,200 1,200 – –

Peringkat Enterprise Sdn Bhd Chew Po Sim 6,000 6,000 – –Ho Khon YokGoh Cheng Kin

Peringkat Development Sdn Bhd Chew Po Sim 6,000 6,000 – –

Hua Yang Management Sdn Bhd Ho Khon Yok 2,400 2,400 – –Ho Mook Leong

Heng Jaya Sdn Bhd Chew Po Sim 1,200 1,200 – –

The Directors are of the opinion that the above transactions were in the normal course of business and onterms mutually agreed between the parties.

35. SEGMENT INFORMATION

Segment information is not presented as the Group operates solely in Malaysia and the combined revenues,operating results and assets employed of business segments other than property development segmentrepresents less than 10% of Group's revenue, operating results and assets employed respectively.

36. FINANCIAL INSTRUMENTS

(a) Financial risk management objectives and policies

The Group's financial risk management policy seeks to ensure that adequate financial resources areavailable for the development of the Group’s businesses whilst managing its interest rate, liquidity andcredit risks. The Group's policy is not to engage in any speculative transactions.

(b) Interest rate risk

The Group's primary interest rate risk relates to interest-bearing debt. The investment in financialassets are mainly short term in nature and they are not held for speculative purposes but have beenplaced in fixed deposits which yield better returns than cash at bank.

The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rateborrowings. This strategy allows it to capitalise on cheaper funding in a low interest rate environmentand achieve a certain level of protection against rate hikes.


– 31 March 2003

66


36. FINANCIAL INSTRUMENTS (Cont’d)

(c) Liquidity risk

The Group actively manages its debt maturity profile, operating cash flows and the availability of fundingso as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudentliquidity management, the Group maintains sufficient levels of cash or cash convertible investments tomeet its working capital requirements.

(d) Credit risk

Credit risks, or the risk of counterparties defaulting, is controlled by the application of credit approvals,limits and monitoring procedures. Credit risks are minimised and monitored via strictly limiting theGroup’s associations to business partners with high creditworthiness. Trade receivables are monitoredon an ongoing basis via Company management reporting procedures.

(e) Fair values

The carrying amounts of the Group's financial assets and financial liabilities approximate their fair values.The following methods and assumptions are used to estimate the fair value of each class of financialinstruments:

(i) Trade and other receivables/payables

The historical cost carrying amounts of receivables and payables that are subject to normal creditterms approximate fair value. The carrying amounts of other receivables and payables arereasonable estimates of fair value because of their nature and short maturity.

(ii) Cash and cash equivalents

The carrying amounts of cash and bank balances and bank overdraft approximate fair values dueto the relatively short term nature.

(iii) Borrowings and hire purchase obligations

The carrying amounts of short term borrowings approximate fair value because of the nature andshort period to maturity of these instruments. The hire purchase is stated after deducting financeexpenses.

(iv) Amounts owing by/to subsidiary companies, amount owing to Directors

The carrying amount of amounts owing by/to subsidiary companies and amount owing to Directorsapproximate fair value because the carrying amounts are receivable and repayable on demand.

37. COMPARATIVE FIGURES

Group

Land and development expenditure and development properties which were previously stated net of deferredtaxation was regrossed and thus reclassified to conform with the current year's presentation:-

As previously Asstated restated

RM RM

Land and development expenditure 79,156,571 85,389,396Development properties 33,193,326 34,980,067Deferred taxation (677,354) 7,342,212


– 31 March 2003

67


Statement by Directors

We, the undersigned, being two of the Directors of HUA YANG BERHAD, do hereby state that in the opinion of theDirectors, the accompanying financial statements, together with the notes thereto, are drawn up in accordance withapplicable Approved Accounting Standards in Malaysia and the provisions of the Companies Act, 1965, so as togive a true and fair view of the financial position of the Group and of the Company as at 31 March 2003 and of theresults of the business of the Group and of the Company and of the cash flows of the Group and of the Company forthe year ended on that date.

Signed for and on behalf of the Board in accordance with a resolution of the Directors.

CHOR ENG CHOON HO KHON YOK


Date : 16 July 2003

I, CHOR ENG CHOON, being the Director primarily responsible for the financial management of HUA YANG BERHAD,do solemnly and sincerely declare that the accompanying financial statements together with the notes thereto, are,to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing thesame to be true and by virtue of the provisions of the Statutory Declarations Act 1960.

Subscribed and solemnly declared by the )abovenamed at Ipoh in the State of Perak )Darul Ridzuan on 16 July 2003 ) CHOR ENG CHOON

Before me,

NG HAI SENG, P.P.T.Commissioner for Oaths

Statutory Declaration

pursuant to section 169(16) of the Companies Act, 1965

68


Report of the Auditors to the Members of Hua Yang Berhad

We have audited the finanical statements set out on pages 35 to 66. These financial statements are the responsibilityof the Company’s Directors. Our responsibility is to express an opinion on these financial statements based on ouraudit.

We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.We believe that our audit provides a reasonable basis for our opinion.

In our opinion:

(a) the financial statements have been properly drawn up in accordance with the provisions of the Companies Act1965 and applicable Approved Accounting Standards in Malaysia so as to give a true and fair view of:

(i) the financial position of the Group and of the Company as at 31 March 2003 and of the results and thecash flows of the Group and of the Company for the year then ended; and

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

(b) the accounting and other records and the registers required by the Act to be kept by the Company and by itssubsidiary companies of which we have acted as auditors have been properly kept in accordance with theprovisions of the Act.

We are satisfied that the financial statements of the subsidiary companies that have been consolidated with thefinancial statements of the Company are in form and content appropriate and proper for the purposes of the preparationof the consolidated financial statements and we have received satisfactory information and explanations requiredby us for those purposes.

The Auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualificationmaterial to the consolidated financial statements and did not include any comment required to be made underSection 174(3) of the Act.

ERNST & YOUNG LEONG KENG YUENAF: 0039 No. 1851/09/03 (J)Chartered Accountants Partner


Date : 16 July 2003

69


List of Group Properties

as at 31 March 2003

Registered/Age of Net book Year of Beneficial

Description and existing use Location Tenure Land area building value acquisition owner(RM’ 000)

Agriculture land to be converted PTD No. 71927 Mukim Freehold 106.11 acres N/A 19,767 2001 Minadchi Rajini #as part of Taman Pulai Indah of Pulai, District of Thuraisingam/township, currently an oil palm Johor Bahru, Johor. Hua Yang Berhadestate.

4 ½ storey shop office for office 73, Jalan Datuk Haji Freehold 0.04 acres 27 years 552 1990 Hua Yang Berhaduse. Eusoff, Damai Complex,

Off Jalan Ipoh,50400 Kuala Lumpur.

4 ½ storey shop office for office 123, Jalan Kampar, Freehold 0.04 acres 22 years 367 1993 Yoon Lian Realtyuse. 30250 Ipoh, Perak. Sdn Bhd/Hua Yang

Berhad

Homestead agriculture lot PT No. 2922, 2928, Freehold 48.5 acres N/A 19,237 1995 Creative Range (M)and development land 2929, 2931, 2938-2940, Sdn Bhd/Hua Yangapproved for residential 2944, 2945,2950, 2951, Berhaddevelopment. 2958, 2968-2988,

2914-2920, 5399-5413Bukit Desa Seremban,Jalan Tembaga,Seremban,Negeri Sembilan.

10 units of semi-detached PT No. 215 – 224 Leasehold 2.02 acres N/A 6,665 1995 Ramandavacant lots for development SB Jaya Industrial Park, 99 years, Developmentof industrial units. Pekan Sungai Buloh, expiring on Sdn Bhd/Hua Yang

Daerah Gombak, 3 February BerhadNegeri Selangor. 2101

Homestead agriculture lot, PT No. 1898 Mukim of Freehold 1.44 acres N/A 185 1996 Bison Holdingscurrently vacant. Teras, Daerah Raub, Sdn Bhd

Pahang.

Double-storey split-levelled PT 1877 Mukim Ulu Leasehold 8,751 sq. ft. 25 years 584 1995 Bison Holdingsdetached house, currently Kelang, Daerah Gombak, 99 years, Sdn Bhdrented. Negeri Selangor, expiring on

also known as No. 6, 17 JuneJalan 5, 2078Taman Tun Abdul Razak,68000 Ampang, Selangor.

Development land approved PT 474, Bandar Selayang, Leasehold 6.76 acres N/A 13,480 1989 Perbadananfor commercial development. Mukim of Batu, 99 years, Kemajuan NegeriCommercial development District of Gombak, expiring on Selangor/Daya Niagain progress. Selangor. 10 April Sdn Bhd

2101

70


Registered/Age of Net book Year of Beneficial

Description and existing use Location Tenure Land area building value acquisition owner(RM’ 000)

Development land approved PTD No. 111209-111806; Freehold 229.63 acres(1) N/A 53,447 1994 Grandeur Parkfor mixed development. 111812-112227; Sdn BhdResidential development 112230-112434;in progress. 116789-116791

Taman Pulai Indah,Mukim of Pulai,District of Johor Bahru,Johor.

Development land approved PTD No. 112435-112690; Freehold 141.31 acres(1) N/A 7,485 1993 Prisma Pelangifor mixed development. 112694;113367-113816; Sdn BhdResidential development 116794 Taman Pulai Indah,in progress. Mukim of Pulai,

District of Johor Bahru,Johor.

Development land approved Registration No. 149839 Pending 658.14 acres(2) N/A 18,365 1991 Agro-Mod Industriesfor mixed development. Lot 12670 Bandar sub-division, Sdn BhdResidential and commercial Universiti Seri Iskandar, after whichdevelopment in progress. Mukim of Bota, leasehold

District of Perak Tengah, 99 yearsPerak.

Development land approved PTD No. 2062-2409; Leasehold 38 acres(2) N/A 5,940 1996 Agro-Mod Industrialfor mixed development. 2699-2713 & 2715 99 years, Sdn BhdCommercial development Bandar Universiti expiring onin progress. Seri Iskandar, 16 April

Mukim of Bota, 2095 andDistrict of Perak Tengah, 9 AprilPerak. 2096

Development land approved PTNo. 162399 &162400; Freehold 4.76 acres N/A 2,521 1994 Hua Yang Berhad/for mixed development. 162370-162382; Yoon Lian RealtyResidential development 142780-142786; Sdn Bhdin progress. 142789-142795;

142800-142809Anjung Bercham Megah,Mukim of Hulu Kinta,District of Kinta,Perak.

Development land approved PT No. 9715-9737; Leasehold 4.5 acres N/A 553 1996 Bukit Selim Sdn Bhdfor mixed development. 9752-9778 99 years,Residential and Commercial Taman Pinggiran Saujana, expiring ondevelopment in progress. Mukim of Sungai Terap, 13 October

District of Kinta, 2097Perak.

Notes:

# Pending transfer of title

(1) Gross development area as at commencement of development as at March 2001

(2) Gross development area as at commencement of development as at June 2001

List of Group Properties (Cont’d)

as at 31 March 2003

71


Analysis of Shareholdings

as at 21 July 2003

Authorised share capital : RM500 millionIssued and Paid-Up Capital : RM90,000,000Class of Shares : Ordinary Shares of RM1.00 eachVoting Rights : One vote per ordinary share

No. of % of No. of % of IssuedSize of Holdings Shareholders Shareholders Shares Held Capital

1 - 99 – – – –100 - 1,000 840 54.26 837,009 0.93

1,001 - 10,000 546 35.27 2,176,200 2.4210,001 - 100,000 114 7.37 3,446,977 3.83

100,001 - 4,499,999* 46 2.97 39,923,130 44.364,500,000 and above** 2 0.13 43,616,684 48.46

Total 1,548 100.00 90,000,000 100.00

Notes:

* Less than 5% of issued shares** 5% and above of issued shares

DIRECTORS’ SHAREHOLDINGS AS PER REGISTER OF DIRECTORS’ SHAREHOLDINGSAS AT 21 JULY 2003

Direct DeemedName of Directors Interest % Interest %

1. Tan Sri Dato’ Seri Dr. Ting Chew Peh 110,000 0.12 – –2. Chor Eng Choon 99,000 (1) 0.11 – –3. Ho Khon Yok 5,277,765 (2) 5.86 – –4. Ho Mook Leong 3,552,666 (3) 3.95 – –5. Lee Kong Yip 639,828 0.71 – –6. Tan Sri Dato’ Seri Prof. Dr. Yom

Ahmad Bin Ngah Ahmad 1,102,472 1.22 – –7. Goh Cheng Kin 5,359,299 (4) 5.95 – –8. Chew Po Sim – – 45,955,185 (5) 51.069. Chew Hoe Soon 96,000 0.11 – –

Notes:

(1) 99,000 shares are held through EB Nominees (Tempatan) Sdn Bhd.

(2) 1,587,555 shares are held through Tasec Nominees (Tempatan) Sdn Bhd.

(3) 595,340 shares are held through Aseam Malaysia Nominees (Tempatan) Sdn Bhd, 2,790,326 shares heldthrough Mayban Securities Nominees (Tempatan) Sdn Bhd.

2,528,271 shares held under his personal account as Executor to the Estate of Mr. Ho Mok Heng are notincluded in the disclosure of Directors’ Shareholdings.

(4) 1,876,092 shares are held through Aseam Malaysia Nominees (Tempatan) Sdn Bhd.

(5) Deemed interest by virtue of her substantial shareholdings in Heng Holdings Sdn Bhd and Heng Jaya SdnBhd.

72


SUBSTANTIAL SHAREHOLDERSAS AT 21 JULY 2003

Direct DeemedName Interest % Interest %

1. Heng Holdings Sdn Bhd 43,616,684 (1) 48.46 2,338,501 (2) 2.602. Heng Jaya Sdn Bhd 2,338,501 (3) 2.60 43,616,684 (2) 48.463. Chew Po Sim – – 45,955,185 (4) 51.064. Ho Min Yi – – 45,955,185 (4) 51.065. Ho Wen Yan – – 45,955,185 (4) 51.066. Ho Wen Fan – – 45,955,185 (4) 51.067. Ho Wen Han – – 45,955,185 (4) 51.068. Goh Cheng Kin 5,359,299 (5) 5.95 – –9. Ho Khon Yok 5,277,765 (6) 5.86 – –

Notes:

(1) 16,028,540 shares are held through PM Nominees (Tempatan) Sdn Bhd

(2) Deemed interest by virtue of common substantial shareholders of Heng Holdings Sdn Bhd and Heng JayaSdn Bhd

(3) 801,430 shares are held through PM Nominees (Tempatan) Sdn Bhd

(4) Deemed interest by virtue of his/her substantial shareholdings in Heng Holdings Sdn Bhd and Heng Jaya SdnBhd

(5) 1,876,092 shares are held through Aseam Malaysia Nominees (Tempatan) Sdn Bhd

(6) 1,587,555 shares are held through Tasec Nominees (Tempatan) Sdn Bhd

LIST OF 30 LARGEST SHAREHOLDERSAS AT 21 JULY 2003

No. Name of shareholders No. of Shares %

1. Heng Holdings Sdn Bhd 27,588,144 30.65

2. PM Nominees (Tempatan) Sdn BhdFor Heng Holdings Sdn Bhd 16,028,540 17.81

3. Ho Khon Yok 3,690,210 4.10

4. Goh Swee Boh @ Goh Cheng Kin 3,483,207 3.87

5. Mayban Securities Nominees (Tempatan) Sdn BhdPledged Securities Account for Ho Mook Leong 2,790,326 3.10

6. Ho Mook Leong 2,528,271 2.81

7. Ho Mook Sing 2,160,039 2.40

8. Ng Keat Siew 1,905,093 2.12

9. Aseam Malaysia Nominees (Tempatan) Sdn BhdGoh Swee Boh @ Goh Cheng Kin 1,876,092 2.08

Analysis of Shareholdings (Cont’d)

as at 21 July 2003

73


Analysis of Shareholdings (Cont’d)

as at 21 July 2003

LIST OF 30 LARGEST SHAREHOLDERS (Cont’d)AS AT 21 JULY 2003

No. Name of shareholders No. of Shares %

10. Tasec Nominees (Tempatan) Sdn BhdHo Khon Yok 1,587,555 1.76

11. Heng Jaya Sdn Bhd 1,537,071 1.71

12. Alliancegroup Nominees (Tempatan) Sdn BhdPheim Asset Management Sdn Bhd for Employees Provident Fund 1,440,000 1.60

13. Chong Sing Shee @ Tjong Sin Se 1,183,086 1.31

14. Tasec Nominees (Tempatan) Sdn BhdHo Mook Sing 1,147,262 1.27

15. Yom Ahmad Bin Ngah Ahmad 1,102,472 1.22

16. Permodalan Negeri Selangor Berhad 1,090,000 1.21

17. Tasec Nominees (Tempatan) Sdn BhdNg Keat Siew 1,036,875 1.15

18. Amanah Saham Mara Berhad 1,000,000 1.11

19. PM Nominees (Tempatan) Sdn BhdFor Heng Jaya Sdn Bhd 801,430 0.89

20. Universal Trustee (Malaysia) BerhadAlliance First Fund 801,000 0.89

21. Lee Tock Loe 780,300 0.87

22. Tay Boon Ling 702,878 0.78

23. Lee Ah Har @ Lee Kong Yip 639,828 0.71

24. Hoo Ah Kar @ Ho Khoon Tai 634,828 0.71

25. Aseam Malaysia Nominees (Tempatan) Sdn BhdChong Sing Shee @ Tjong Sin Se 604,906 0.67

26. Aseam Malaysia Nominees (Tempatan) Sdn BhdHo Mook Leong 595,340 0.66

27. Loo Hooi Eng 491,121 0.55

28. Hoo Kiew @ Ho Khoon Dai 471,121 0.52

29. RC Nominees (Tempatan) Sdn BhdRaja Noora Ashikin Binti Raja Abdullah 400,000 0.44

30. Malaysia Nominees (Tempatan) Sendirian BerhadMalaysian Trustees Berhad for Alliance Vision Fund 340,000 0.38

(This page has been intentionally left blank)

✄

PROXY FORM

*I/*We .....................................................................................................................................................................................

of ............................................................................................................................................................................................

being a member of HUA YANG BERHAD hereby appoint “the Chairman of the meeting” or

Mr/Ms .....................................................................................................................................................................................

of ............................................................................................................................................................................................

or failing whom .......................................................................................................................................................................

of ............................................................................................................................................................................................

as *my/*our proxies to vote for *me/*us and on *my/*our behalf at the Twenty-Fourth Annual General Meeting of the Companyto be held on Tuesday, 16 September 2003 at 10.30 a.m. and at any adjournment thereof.

*My/*Our proxy(ies) is/are to vote as indicated below:-

No. Resolution For Against

1. To receive the Audited Financial Statements for the year ended 31 March 2003 togetherwith the Reports of the Directors and Auditors thereon. (Resolution 1)

2. To approve a first and final dividend of 7% less 28% income tax for the financial yearended 31 March 2003 (Resolution 2)

3. To approve payment of Directors’ fees in respect of the financial year ended 31 March2003. (Resolution 3)

4. To re-elect the following Directors retiring pursuant to Article 100 of the Company’s Articlesof Association:-4.1 Madam Chew Po Sim (Resolution 4)

4.2 Mr Chew Hoe Soon (Resolution 5)

5. To re-elect the following Directors retiring pursuant to Article 93(1) of the Company’sArticles of Association:-5.1 Tan Sri Dato’ Seri Dr. Ting Chew Peh (Resolution 6)

5.2 Mr Goh Cheng Kin (Resolution 7)

6. To consider, and if thought fit, pass the following resolution:-“THAT Tan Sri Dato’ Seri Prof. Dr. Yom Ahmad Bin Ngah Ahmad, a Director who retirespursuant to Section 129(2) of the Companies Act, 1965, be and is hereby re-appointedDirector of the Company in accordance with Section 129(6) of the Companies Act, 1965and to hold office until the next Annual General Meeting.” (Resolution 8)

7. To re-appoint Messrs Ernst & Young as the Auditors of the Company for the ensuing yearand to authorise the Board of Directors to fix their remuneration. (Resolution 9)

8. Special Business:-Special Resolution - Proposed amendment to Article 103(d) of the Company’s Articles ofAssociation. (Resolution 10)

Special Resolution - Proposed insertion of a new Article 114A into the Company’s Articlesof Association. (Resolution 11)

Ordinary Resolution - Proposed payment of gratuity amounting to RM1.0 million to theestate of Mr Ho Mok Heng. (Resolution 12)

Ordinary Resolution - Allotment of Shares Pursuant to Section 132D of the CompaniesAct, 1965 (Resolution 13)

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

Dated this ..........................day of ...................................... 2003NUMBER OF SHARES HELD

......................................................................[Signature(s)/Common Seal of Shareholder(s)][*Delete if not applicable]

NOTES:-1. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy/proxies who may but need

not be a member/members of the Company to attend and vote in his/her stead and the provision of Section 149(1)(b) of theCompanies Act, 1965 shall not apply to the Company.

2. When a member appoints two (2) or more proxies, the appointments shall be invalid unless he/she specifies the proportionsof his/her holdings to be represented by each proxy.

3. The instrument appointing a proxy shall be in writing under the hand of the appointor or his/her attorney duly authorised inwriting or, if the appointor is a Corporation, either under its Common Seal or under the hand of an officer or attorney dulyauthorised.

4. The instrument appointing a proxy must be deposited at the Registered Office at 123A, Jalan Kampar, 30250 Ipoh, PerakDarul Ridzuan at least forty-eight (48) hours before the time appointed for holding the Meeting or any adjournment thereof.

HUA YANG BERHAD(Company No: 44094-M)

123A, Jalan Kampar30250 Ipoh

Perak Darul Ridzuan

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