TO

P

GLOVE CORPORA

TION BERHAD

AWARDED ISO 9001

Factory 7

(474423-X) (Hadyaai, ) (474423-X) Factory 8 TOP GLOVE CORPORATION BERHAD (Zhangjiagang, INCORPORATED IN UNDER THE COMPANIES ACT, 1965 Shanghai, )

Factory 6 (Phuket, Thailand)

Factory 9 (Klang, Malaysia)

Factory 5 (Ipoh, Malaysia)

Factory 1 (Klang, Malaysia)

Factory 2 Factory 4 (Klang, Malaysia) (Klang, Malaysia)

Factory 3 (Klang, Malaysia)

PRODUCTION FACILITIES annual report 2003

9 FACTORIES A nnual Report For Financial Year Ended 31 August 2003 7.2 BILLION GLOVES PER ANNUM 96 PRODUCTION LINES 3,000 EMPLOYEES 2003 Top Glove The World’s Largest Natural Rubber Disposable Glove Manufacturer TOP GLOVE CORPORATION BERHAD (474423-X) Lot 5091, Jalan Teratai, Batu 5, Off Jalan Meru, 41050 Klang, Selangor Darul Ehsan “Always Staying On The Top” Tel: 603 - 3392 7880/7350 Fax: 603 - 3392 7229/9160 Website: www.topglove.com.my http://topglove.asiaep.com E-mails: [email protected] [email protected] Top Glove The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Ccorporate directory Top Glove Corporation Berhad Tincorporated in malaysia under the companies act, 1965 CORPORATE OFFICE & FACTORY 3 FACTORY 6 LOT 5091, JALAN TERATAI, BATU 5, OFF JALAN MERU 180/3, M. 7, SRISONTHON RD. A, THALANG, 41050 KLANG, SELANGOR D.E. MALAYSIA PHUKET 93110, THAILAND Tel:603-3392 7880 / 7350 Tel:6676-272572 / 272573 TG’s vision Fax:603-3392 7229 / 9160 Fax:6676-325354 we strive to be the world’s leading E-mails : (i) [email protected] E-mail : (i) [email protected] (ii) [email protected] (ii) [email protected] manufacturer with excellent quality glove Websites : www.topglove.com.my http://topglove.asiaep.com FACTORY 7 products & services that enrich & protect human lives 188, MOO 5, KARNCHANAWANICH RD. FACTORY 1 TAMBON, SUMNUKGRAM SADAO, SONGKHLA BANGUNAN UNITED INDUSTRIES 90320 THAILAND TG’s mission LOT 5019, BATU 5 1/2, OFF JALAN MERU Tel:6674-410000 to be a world class glove manufacturer providing 41050 KLANG, SELANGOR D.E. MALAYSIA FAX:6674-410008 Tel:603-3392 3726 E-mail : (i) [email protected] top quality products with excellent services Fax:603-3392 3726 E-mail : [email protected] FACTORY 8 through continuous improvement & innovation 3, XITANG ROAD, XIZHANG TOWN FACTORY 2 & 9 ZHANGJIAGANG CITY, JIANGSU PROVINCE LOT 4968 & 4969, JALAN TERATAI, BATU 6, OFF JALAN MERU 215614, CHINA TG’s corporate values 41050 KLANG, SELANGOR D.E. MALAYSIA Tel:86-512-5842 2860 • global customer satisfaction Tel:603-3392 1992 / 1905 Fax:86-512-5842 2870 Fax:603-3392 1291 / 8410 E-mail : (i) [email protected] • do it right first time & every time E-mails : (i) [email protected] (ii) [email protected] USA • integrity & total commitment (iii) [email protected] TG MEDICAL (U.S.A.) INC. 9517E, RUSH STREET, UNIT B • excellence in quality & competitiveness FACTORY 4 SOUTH EL MONTE, CA 91733 • environmental friendly & social responsibilities LOT 5987, JALAN TERATAI, BATU 5, OFF JALAN MERU Tel:1-626 448 4445 41050 KLANG, SELANGOR D.E. MALAYSIA Fax:1-626 448 4447 Tel:603-3392 8588 / 8996 E-mail : (i) [email protected] Fax:603-3392 6788 TG’s quality policy E-mail : (i) [email protected] • quality & productivity are our business FACTORY 5 • continuous improvement & innovation are our duties LOT 18, 27, 38 & 57 MEDAN TASEK, KAWASAN PERINDUSTRIAN TASEK • towards zero defect is our target 31400 IPOH, PERAK D.R. MALAYSIA Tel:605-546 6360 / 547 9271 Fax:605-547 8975 Top Glove Corporate Song E-mails : (i) [email protected] (ii) [email protected] All over the world Top Glove is the best We are known Better than the rest For our superior and quality gloves Quality, reliability and consistency remain our policy Through the years we have grown we have shown At Top Glove Group of Companies Our gloves stand out superior in the world page 2 Corporate Information 3 Corporate Structure 4 Seven-Year Group Financial Review contents 2003 5 Quality Awards & Certifications C 6 Export Markets 8 Board Of Directors 9 Profile Of Directors 13 Management Team 14 Executive Chairman’s Statement 21 Corporate Governance Statement 28 Statement On Internal Control 30 Audit Committee Report 33 Financial Statements 70 List Of Properties 72 Analysis Of Shareholdings 76 Notice Of Annual General Meeting Proxy Form

Top Glove Corporation Top Glove Top Glove Berhad – Malaysia – Thailand – China

This year’s design emphasizes Top Glove Corporation Berhad’s high standards of excellence and good corporate governance, accountability and integrity in its business conduct to deliver value growth to its shareholders.

For the coming year, Top Glove intends to showcase this year’s annual report to compliment with our year 2002/2003’s rationale success. The accolade of impressive awards and outstanding track record for marketing and operating excellence befits Top Glove’s status as the world’s leading premier and dynamic integrated latex and synthetics disposable glove manufacturer.

design

1 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Ccorporate information

Board Of Directors

•Dr Lim, Wee-Chai • Tan Sri Datuk (Dr) Arshad Bin Ayub • Tong Siew Bee Chairman/Managing Director Independent Non-Executive Director Executive Director

•Haji Shahadan Bin Haji Abd Manas • Lim Hooi Sin • Sekarajasekaran a/l Arasaratnam Executive Director Executive Director Independent Non-Executive Director

•Lau Boon Ann • Quah Chin Chye • Lee Kim Meow Non-Executive Director Independent Non-Executive Director Executive Director and Alternate Director to Lim Hooi Sin

Audit Committee Auditors •Tan Sri Datuk (Dr) Arshad Bin Ayub Ernst & Young Chairman Chartered Accountants Graha Maju (Bangunan PKNM) •Dr. Lim, Wee-Chai Tingkat 10-Lot 1, Jalan Graha Maju •Sekarajasekaran a/l Arasaratnam 75300 Melaka, Malaysia •Quah Chin Chye Principal Bankers Company Secretary • •Chua Siew Chuan • EON Bank Berhad (MAICSA No: 0777689) • HSBC Bank Malaysia Berhad •Malayan Banking Berhad •Krung Thai Bank Public Company Ltd (Thailand) Registered Office •The Industrial Finance Corporation of Thailand Level 7, Menara Milenium, Jalan Damanlela •Rural Commercial Bank of Zhangjiagang (China) Pusat Bandar Damansara, Damansara Heights 50490 Kuala Lumpur, Malaysia Solicitors Tel:03-2084 9000 Fax:03-2094 9940/2095 0292 •Soo Thien Ming & Nashrah No. 45-47, 1st Floor, Jalan Kapar, 41400 Klang Selangor Darul Ehsan, Malaysia Corporate Office •Ranjit, Ooi & Robert Low Lot 5091, Jalan Teratai, Batu 5, Off Jalan Meru No. 53, Jalan Maarof, Bangsar 41050 Klang, Selangor Darul Ehsan, Malaysia 59000 Kuala Lumpur, Malaysia Tel:03-3392 7880 / 7350 Fax:03-3392 7229 / 9160 •Yong & Rakan-Rakan E-mails : [email protected] No. 26-C (3rd Floor), Persiaran Sultan Ibrahim [email protected] 41300 Klang, Selangor Darul Ehsan, Malaysia Websites : www.topglove.com.my http://topglove.asiaep.com Stock Exchange Listing Kuala Lumpur Stock Exchange Main Board Registrars Securities Services (Holdings) Sdn Bhd Level 7, Menara Milenium, Jalan Damanlela Pusat Bandar Damansara, Damansara Heights 50490 Kuala Lumpur, Malaysia Tel:03-2084 9000 Fax:03-2094 9940/2095 0292

2 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Top Glove Corporation Bhd

Tg Medical (USA) Inc. – 100% corporate structure Top Glove Engineering C Sdn Bhd – 100%

Great Glove Sdn Bhd – 100%

Tg Medical Sdn Bhd – 100%

Top Glove Sdn Bhd – 100%

Great Glove (Thailand) Top Glove Medical Co Ltd – 74% (Thailand) Co Ltd _ Thailand – 60% _ Thailand

Top Glove International Top Glove (Zhangjiagang) Sdn Bhd – 100% Co Ltd – 55% _ China _ Malaysia

3 Annual Report 2003 • Topop GloveGlove CorporationCorporation BerhadBerhad Topop Glove,Glove, TheThe World’sWorld’s LargestLargest NaturalNatural RubberRubber DisposableDisposable GloveGlove ManufacturerManufacturer “Always Staying On The Top” seven-year group S financial review

Financial Year Ended

31.8.1997* 31.8.1998* 31.8.1999* 31.8.2000* 31.8.2001 31.8.2002 31.8.2003 Group (RM’000) (RM’000) (RM’000) (RM’000) (RM’000) (RM’000) (RM’000)

Turnover 35,453 48,493 70,198 103,161 138,862 180,202 265,089 Earning Before Interest, Depreciation & Taxation 6,628 10,757 12,790 17,198 23,865 27,058 39,455 Profit Before Taxation 5,173 8,131 10,137 12,636 17,217 20,186 29,264 Taxation 882 1,059 313 1,012 1,312 2,213 3,547 Profit After Taxation & Minority Interests 4,291 7,072 9,824 11,624 15,902 18,059 25,259 Net Tangible Assets 13,749 20,797 30,228 41,849 93,170 109,137 130,571 Gross Earnings Per Share (RM) 0.19 0.31 0.38 0.48 0.31 0.31 0.32 Net Earnings Per Share (RM) 0.16 0.27 0.37 0.44 0.29 0.28 0.27 Gross Dividend Rate (%) 0.68 1.51 1.58 – 8.00 6.00 12.00 Net Dividend Rate (%) 0.49 1.08 1.58 – 8.00 4.32 10.32 Net Tangible Assets Per Share (RM) 0.52 0.78 1.14 1.57 1.86 1.68 1.42 Number of Shares in Issue 26,575 26,575 26,575 26,575 50,000 65,000 92,197 Share Price - - - – 1.80 2.21 3.96 Market Capitalisation - - - – 90,000 143,650 365,100

*The figures for financial years ended 31 August 1997, 1998, 1999 and 2000 are prepared based on a proforma consolidated basis for illustrative purpose only, based on the assumption that current structure of the Group has been in existence throughout the financial years under review.

The number of shares for financial years 1997, 1998, 1999 and 2000 was based on the issued and paid-up share capital of 26,575,213 ordinary shares before the rights issue and public issue.

Turnover Profit Before Taxation Profit After Taxation & (RM’000) (RM’000) Minority Interests (RM’000) 29,264 265,089 25,259 20,186 18,059 180,202 17,217 15,902 138,862 12,636 1,624 1 10,137 103,161 9,824 8,131 7,072 70,198 5,173 48,493 4,291 35,453 000 10,000 15,000 20,000 25,000 30,000 5,000 10,000 15,000 20,000 25,000 30,000 50,000 100,000 150,000 200,000 250,000 300,000 0 05, 0 1997 1999 2000 2001 2002 2003 1997 1999 2000 2001 2002 2003 1997 1999 2000 2001 2002 2003 1998 1998 1998

4 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” quality awards & Q certifications Since 1991 Since 1994 Since 1997 Since 1997 Since 1998 Since 1998 Since 1998 Since 1998 Since 1998 Since 1999 Since 1999 Since 1999 Since 1999 Since 2001 Since 2002 Since

Mr. Lee Kim Meow (KM Lee), Director of Top Glove receiving the prestigious Enterprise 50 Award from Domestic Trade and Consumer Affairs Minister, Tan Sri Muhyiddin Mohd Yassin.

5 Annual Report 2003 • Topop GloveGlove CorporationCorporation BerhadBerhad Topop Glove,Glove, TheThe World’sWorld’s LargestLargest NaturalNatural RubberRubber DisposableDisposable GloveGlove ManufacturerManufacturer “Always Staying On The Top” Eexport markets

Exports to 128 Countries Worldwide

EUROPE

NORTH AMERICA ASIA REGION MIDDLE EAST

LATIN AMERICA AFRICA REGION

6 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” The World is Our Market

NORTH AMERICA EUROPE AFRICA REGION

Canada Albania Italy Algeria Mozambique Puerto Rico Armenia Kazakhstan Botswana Nigeria USA Austria Kosovo Burundi Sierra Leone Belarus Latvia Congo South Africa LATIN AMERICA Belgium Lithuania Eritrea Sudan Bosnia Herzegovina Mecedonia, FYR Ethiopia Swaziland Bulgaria Netherlands Ghana Tanzania Canary Islands Northern Ireland Ivory Coast Tunisia Croatia Poland Kenya Uganda Cyprus Portugal Libya Zimbabwe Czech Republic Republic of Uzbekistan Madagascar Zambia Denmark Romania Morocco Estonia Russia Finland Senegal France Slovenia ASIA REGION Argentina Guatemala Georgia Spain Barbados Haiti Germany Sweden Bolovia Honduras Greece Switzerland Jamaica Hungary Turkey Chile Mexico Iceland Ukraine Colombia Nicaragua Ireland United Kingdom Cuba Panama Costa Rica Paraguay Dominican Republic Peru MIDDLE EAST Ecuador Uruguay El-Salvador Venezuela Afghanistan Macao French Guyana Australia Mauritius Bangladesh Nepal Brunei New Zealand Cambodia Pakistan China Papua New Guinea Fiji Philippines Hong Kong Singapore India Taiwan Bahrain Oman Indonesia Union of Myanmar Egypt Qatar Japan Uzbekistan Iran Saudia Arabia Korea Israel Syria Jordan UAE Kuwait Yemen Lebanon

7 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Bboard of directors

from left to right:

Lau Boon Ann Lee Kim Meow Non-Executive Director Executive Director and Alternate Director to Lim Hooi Sin Quah Chin Chye Independent Non-Executive Director Sekarajasekaran a/l Arasaratnam Independent Non-Executive Director Tong Siew Bee Executive Director Y. Bhg. Tan Sri Datuk (Dr) Arshad Bin Ayub Independent Non-Executive Director Dr. Lim, Wee-Chai Chairman/Managing Director Lim Hooi Sin Non-Executive Director Haji Shahadan Bin Haji Abd Manas (not in picture) Executive Director

8 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Pprofile of directors

Dr. Lim, Wee-Chai Tong Siew Bee Chairman/ Managing Director Executive Director

Dr. Lim, Wee-Chai, a Malaysian aged 45, is the Chairman and Managing Director as Tong Siew Bee, a Malaysian aged 45, well as founder of the Top Glove Group of Companies. He was appointed to the has been a Director of the Group since Board of Top Glove on 4 September 2000. He graduated with a Bachelor of Science 1991 and is a co-founder of the Top Degree with Honours in Physics in 1982 from the University Malaya and a Master of Glove Group of Companies. She was Business Administration in 1985 from the Sul Ross State University in Texas, USA. He appointed to the Board of Top Glove earned his Doctorate in Business Administration from the Irish International on 4 September 2000. Madam Tong University, London and was awarded with the Fellow Membership of the Business graduated from University Sains Management Association, UK in September 2001. Dr. Lim brings wealth of experience Malaysia in Penang with a Bachelor of in the marketing of consumer products whilst he was the Sales Manager of a Science Degree with Honours in subsidiary company of OYL Industries Bhd., a company listed on the Kuala Lumpur Computer Science in 1983 and Stock Exchange. In 1991, he set up Top Glove Sdn. Bhd., his own glove obtained her Master of Business and trading business with only one factory and has expanded this business to nine Administration from Sul Ross State glove factories by 2003. He has more than 20 years of experience in the rubber and University, Texas, USA in 1985. She is latex manufacturing business. responsible for the computer and information systems, human resource He was the President (1997/99) of the Malaysian Rubber Glove Manufacturers’ and general administration for the Top Association (MARGMA), after having been actively involved in the association Glove Group of Companies. She has holding various portfolios as the ex-Vice President, ex-Honorary Treasurer and ex- more than ten years of experience in Honorary Secretary for the past seven years. He was a Board Member of the Malaysia information technology in the Rubber Board (MRB) in 1998 and 1999, and was a Director of the Association of banking industry. She was formerly Malaysia Medical Industries (AMMI). attached to United Overseas Bank Berhad and Utama Bank Berhad. His business philosophies are: •Must Know, Must Do, Must Teach Tong Siew Bee does not have any • Hands-on leadership by example major shareholdings and directorships •All staff must work extraordinary to achieve extraordinary results in other public corporations for the •Always be on the move, always in the lead. past two years.

Dr. Lim, Wee-Chai does not have any major shareholdings and directorships in other Tong Siew Bee is the wife of Dr. Lim, public corporations for the past two years. Wee-Chai and sister-in-law of Mr. Lim Hooi Sin. Dr. Lim, Wee-Chai is the husband of Madam Tong Siew Bee and brother of Mr. Lim Hooi Sin.

9 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” profile of directors (cont’d)

Y. Bhg. Tan Sri Datuk (Dr) Arshad Bin Ayub Haji Shahadan Bin Haji Abd Manas Independent Non-Executive Director Executive Director

Tan Sri Datuk (Dr) Arshad Bin Ayub, a Malaysian aged 75, is an Independent Haji Shahadan Bin Haji Abd Manas, PPT, PMC, PJK, a Non-Executive Director of Top Glove Group. He was appointed to the Board Malaysian aged 68, is the Human Resource Director. of Top Glove on 4 September 2000. He obtained a Diploma in Agriculture from He joined Top Glove Sdn Bhd on 10 June 1996, and College of Agriculture, Serdang, Selangor in 1954 and a Bachelor of Science was appointed to the Board of Top Glove on 4 (Hons) Economics and Statistics from University of Wales, Aberystwyth, United September 2000. He graduated with a Bachelor of Kingdom in 1958. In 1964, he obtained a postgraduate Diploma in Business Arts from University Malaya in 1962 and obtained Administration from Management Development Institute (IMEDE), Lausanne, his Diploma in Public Administration (Australia) in Switzerland. 1968.

Tan Sri Datuk (Dr) Arshad Bin Ayub has previously served as a member of He commenced his career in the Government Sector, numerous bodies in the fields of education, economic planning, finance, as Assistant Secretary (Admin) in the Ministry of regional development, agriculture and science, and was the first Director of Works, Posts & Telekom from 1963 to 1966, Assistant Institute Teknologi Mara from 1965 to 1975. His extensive working experience Secretary (Finance) in the Ministry of National & which led to holding senior positions with various Ministries in the Malaysian Rural Development from 1967 to 1969. He served as Government, from 1951 to 1983, including his appointment as Deputy District Officer and President of the District Councils Governor of Bank Negara Malaysia from 1975 to 1977, and Deputy Director of Rembau, Tampin and Port Dickson consecutively General of Economic Planning Unit, Prime Minister’s Department. He served from 1970 to 1979. From 1980 to 1985, he was the as Secretary-General Ministry of Land & Regional Development, Ministry of Director General of the Department of Community Agriculture and Primary Industries. Tan Sri Datuk (Dr) Arshad Bin Ayub serves Development in the Ministry of National & Rural as Chairman of Malaysia Rubber Export Promotion Council, President of Development. He was the Director of Land Malaysia Rubber Products Manufacturers Association and a Member of Administration and Management from 1986 to 1990. Lembaga Getah Malaysia (LGM). He was a member of Harun’s Salary In 1991, he left to join a Dutch construction company, Commission for Statutory Bodies and Local Government. namely Ballast Nedam (M) Sdn Bhd, as the Public Affairs Advisor until 1995. In 1996, he joined Top Tan Sri Datuk (Dr) Arshad Bin Ayub is also a Director of Kulim Malaysia Bhd, Glove Sdn Bhd as its Group Human Resource Rumpun Hijau Capital Bhd, Tomypak Holdings Bhd, Audrey International (M) Director. Bhd, Sindora Bhd, KPJ Healthcare Bhd, Nationwide Courier Services Bhd and Malayan Flour Mills Bhd. He was a Council member of the University of Malaya, Haji Shahadan Bin Haji Abd Manas does not have University of Malaya Hospital Board and Coorperative College of Malaysia. He any major shareholdings and directorships in is a Council member of KUSZA in Terengganu. He also sits on the Board of other public corporations for the past two years. Bata Sdn Bhd, PFM Capital Holdings Sdn Bhd, Affin Merchant Bank Bhd, CSR Building Materials Sdn Bhd, Nakagawa Rubber Industries Sdn Bhd, Zalaraz Haji Shahadan Bin Haji Abd Manas does not have Sdn Bhd and Pelaburan Johor Bhd. any family relationship with other Directors and/ or any major shareholders of the Company. Tan Sri Datuk (Dr) Arshad Bin Ayub does not have any family relationship with other Directors and/ or any major shareholders of the Company.

10 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” profile of directors (cont’d)

Lim Hooi Sin Sekarajasekaran a/l Arasaratnam Non-Executive Director Independent Non-Executive Director

Lim Hooi Sin, a Malaysian aged 41, has been Sekarajasekaran a/l Arasaratnam, K.M.N., a Malaysian aged 75. is an appointed to the Board of Top Glove since 4 Independent Non-Executive Director of Top Glove and was appointed on September 2000. With TG Medical USA Inc., he 4 September 2000. He graduated from the Technical College of Kuala serve as Vice President since April 2001 and as a Lumpur with a Diploma in Civil Engineering in 1951 and passed the Director since it founded in 1994. He obtained a Membership Examination of the Institute of Civil Engineers, U.K. in 1960. Bachelor of Science Degree in Management Subsequently, he obtained his Diploma in Public Health Engineering from Science from Oklahoma State University, USA in the Imperial College of Science & Technology, U.K. in 1968. From 1951, he 1985, a Master of Business Administration Degree was with the Public Works Department as the Technical Assistant until 1959, from Arizona State University, USA in 1986 and a thereafter as Assistant Resident Engineer, Executive Engineer and Senior Charter Financial Consultant Diploma from Waterworks Engineer. American College, PA, USA in 1990. He is a resident of United States and has spent 14 years of his In 1968, he joined the Ministry of Health as a Senior Public Health Engineer. career with MetLife Financial Services (one of the He was promoted to Chief Public Health Engineer in 1972 and Director of largest insurance & financial services company in Engineering Services in 1980, a position he held until 1983. He is currently the US). He was a Management Trainee, Associate the President of Enrico Sdn Bhd, a company active in various environmental Branch Manager, Regional Marketing Specialist, engineering projects. He has more than 45 years of work experience in Agency Director and Director of Asian Market. His environmental engineering, environmental related studies, design and experience includes product development, implementation of environmental engineering projects. marketing, recruiting, training and supervision of a large highly productive sales force. He is a Fellow in the Institution of Engineers Malaysia, Member of the Institution of Civil Engineers, U.K., Member of the Institution of Water Lim Hooi Sin does not have any major Engineers & Scientists U.K., Member of the American Society of Civil shareholdings and directorships in other public Engineers and Member of the Association of Consulting Engineers corporations for the past two years. Malaysia.

Lim Hooi Sin is the brother of Dr. Lim, Wee-Chai Sekarajasekaran a/l Arasaratnam does not have any major shareholdings and brother-in-law of Madam Tong Siew Bee. and directorships in other public corporations for the past two years.

Sekarajasekaran a/l Arasaratnam does not have any family relationship with other Directors and/ or any major shareholders of the Company.

11 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” profile of directors (cont’d)

Lau Boon Ann Quah Chin Chye Lee Kim Meow Non-Executive Director Independent Non-Executive Director Executive Director and Alternate Director

Lau Boon Ann, a Malaysian aged 48, is a Quah Chin Chye, a Malaysian aged 49, is Lee Kim Meow, a Malaysian aged 44, was Non-Executive Director of Top Glove and an Independent Non-Executive Director appointed on 5 January 2002 as an was appointed on 4 September 2000. He of Top Glove. He was appointed to the Alternate Director to Mr. Lim Hooi Sin and obtained Diplomas in Administrative Board of Top Glove on 28 December on 15 October 2003 as an Executive Management, Organisation and Methods, 2001 and redesignated as Senior Director of Top Glove. He obtained his and Marketing from United Kingdom in Independent Non-Executive Director on Bachelor of Commerce Degree from the 1979 before proceeding with his post 3 November 2003. He is a fellow of the University of New South Wales, Australia Graduate Diploma in Management Chartered Institute of Management in 1982. In 1983, he joined OCBC Finance studies. In 1981, he obtained a Master in Accountants (CIMA), United Kingdom Bhd, the finance subsidiary of OCBC Bank Business Analysis from Lancaster and a Member of Malaysian Institute of Bhd as Trainee Bank Officer. In 1991, he University, United Kingdom. He Accountants. He is also a member of the obtained his Bachelor of Law Degree from commenced his career as a Corporate Chartered Institute of Marketing, United the University of London (External Planner with Kesang Holding Bhd, a private Kingdom. He has wide experience, Degree). He has more than twelve years of investment holding company, in 1981 having worked with both American and experience in the marketing of financial when he returned from U.K. and British multi-national corporations for services and credit control operations in subsequently joined SGV Kassim Chan Sdn more than ten years holding various the finance industry during his Bhd as a Management Consultant in 1982. senior management positions. Currently, with OCBC Finance Bhd and In 1983, he joined Sungei Wang Sdn Bhd he sits on the Board of several private Asia Commercial Finance Bhd. He was as Operations Manager. He left and joined limited companies. Prior to this, he was Branch Manager at Asia Commercial Plaza Damansara Sdn Bhd in 1985 as with another diversified group listed on Finance (M) Bhd in early 1996 before he Marketing Manager. In August 1988, he the KLSE Main Board for about six years. was promoted to Personal Assistant to the was in charge of setting up Top Glove’s Group Executive Director of the Lion Factory 1 for the production of latex Save as disclosed above, Quah Chin Chye Group. He left in 1997 to join Top Glove as examination gloves which was does not have any major shareholdings the General Manager in charge of the subsequently leased to Top Glove Sdn Bhd. and directorships in other public marketing and promotion of the He returned to property development corporations for the past two years. company’s products to more than 118 with Arab Malaysian Development Bhd in countries world-wide. 1990 and served as an Assistant General Quah Chin Chye does not have any Manager. He left in December 1996. He is family relationship with other Directors Lee Kim Meow does not have any major presently involved in the real estate and and/ or any major shareholders of the shareholdings and directorships in other property development sector. Company. public corporations for the past two years. Lau Boon Ann does not have any major Lee Kim Meow does not have any family shareholdings and directorships in other relationship with other Directors and/ or public corporations for the past two years. any major shareholders of the Company. Lau Boon Ann is an Alternate Director in United Gloves Sdn Bhd of which is a Note : None of the Directors has any conviction for offenses, other than traffic offenses, within the past substantial shareholder of Top Glove. ten years. None of the Directors has any conflict of interest with the Company.

12 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Mmanagement team

Front Row - Sitting (From left to right) Middle Row (From left to right) Last Row (From left to right)

○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ ○○○○○○○○○○○○○○○○○ ○○○○○○○○○○○○○○○○○○ Puon Tuck Seng Noor Akilah Saidin Lim Wee Meng Danny Ong Chew Yoke Moi Koo Sing Huat Jeff Lee Audie Seow Mansor Bin Daud Lee Kim Meow (KM Lee) Hue Kon Fah Kenny Lim Dr. Lim, Wee-Chai Kumaskah Sangborisut Edward Ng Madam Tong Siew Bee Ngiam Geok Lian KK Lim Haji Shahadan Bin Haji Abd. Manas Looi Guat Kian Philip Thomas Ken Soo Noraziah Bte Mahmud Eddie Yap Lim Mong Seng Amornrat Sripraphun Yap Kok Wei Chong Yoon Tat Poongothai a/p Munian (Rita) Terence Lee

○○○○○○○ Kelvin Yong ○○○○○○

13 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” executive chairman’s E statement

As part of our daily working philosophy and the importance of working closely as a team, all our staff adhere to my personal belief i.e.‘ Must Know, Must Do, Must Teach’.

...Top Glove’s strengths lie in our good teamwork, good knowledge coupled with accurate information for good interdepartment communications. These are very important elements for the Company to continuously improve to maintain its position at the number one spot in the disposable rubber glove industry.

Imparting good knowledge and continuously training our human resources can come from the whole ecosystem of the business, staff, factory workers, suppliers and customers...

Dr. Lim, Wee-Chai Founder and Executive Chairman, Top Glove Corporation Berhad

14 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” executive chairman’

A BRIEF OVERVIEW Imparting good knowledge and continuously training our human Warm greetings to all of you! resource can come from the whole ecosystem of the business, staff, factory Another fruitful year has passed by and workers, suppliers and customers.

s statement (cont’d) it gives me great pleasure to say a few words in this year’s Annual Report 2003. The Group has worked diligently to increase the efficiency of its operations Top Glove’s achievement is by no means and improve productivity on one hand, attributed to just luck or growth of the whilst also aggressively seeking new industry, with the industry having businesses in many lucrative markets. undergone various challenges and consolidation over the last decade. The Year after year, the Top Glove’s team of Group’s success is a result of highly energized, competent management’s attention to detail, management personnel has put in particularly the approach of the highly relentless efforts and worked very hard professional management team. Our in ensuring that the company is moving management team has also successfully towards the right direction. I am pleased delegated responsibilities to a team of to announce that all our hard work have loyal, committed and dedicated staff to been well rewarded. enable the company to grow rapidly. Independent security analysts have As part of our daily working philosophy, likened the Company as ‘The Latex and the importance of working closely Jewel’, one that comes with solid, as a team, all our staff adhere to one of resilience and strong foundation. my personal beliefs, i.e.‘ Must Know, Consistent growth in revenue and Must Do, Must Teach’. earnings over the past decade has seen Top Glove to be one of the largest I firmly believe that Top Glove’s strengths disposable rubber and synthetic glove lie in our good teamwork, good manufacturers in the world. knowledge coupled with accurate information for good interdepartment I wish to add that Top Glove instils communications. These are very confidence among its investors much important elements for the company to like the sense of ‘protection one gets continuously improve to maintain our from wearing our gloves’. Top Glove will position at the number one spot in the continue to operate based on sound disposable rubber glove industry. earnings record and strong fundamentals.

Accurate pre-shipment water tight test (WTT).

15 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” executive chairman’s statement (cont’d)

Nitrile Glove Surgical Glove Powdered Examination Glove

Supported by 9 modern glove I am truly proud of our many key strengths With a strong customers’ base of about manufacturing plants strategically located that continuously inspire the company to 500 accounts worldwide, Top Glove treads in Malaysia, Thailand and China with a a higher summit of success. With strengths prudently and cautiously in order not to commendable production capacity of such as good customer relationship, large be overly dependant on a single customer about 600 million pieces of gloves per production capacity, worldwide network or market but intends to capture more month or 7.2 billion pieces of gloves per marketing/strategic alliances, technical market share in the world. year (and still increasing) from our 96 know-how and expertise, progressive highly efficient glove production lines, the research and development (R&D), product Powder-free, nitrile, surgical and Group will continue to excel through its and market diversification (just to name a household gloves form 20% of Top Glove’s recipe of prudence, resilience and few), we are able to excel and continue to total exports and generally fetch higher innovation in continuously improving its perform well. Our Company’s success is prices, but Top Glove is also vigorously quality, manufacturing process, product largely attributed to the total dedication marketing its products to increase range and standards. and commitments of our Management penetration in the other segments like the team and staff. electronic and industrial applications. The year 2003, has been a very exciting year for the Group. Both of our The Group continues to stay focused in investments in Thailand and China are on doing what it does best i.e. producing a the right track in terms of its production wide and impressive glove product range timeline and efficiency. They have that comprises premium quality commenced operations within the examination powdered and powder-free stipulated time. Our achievement has not latex gloves, vinyl gloves, surgical gloves, been easy. Many careful steps have been nitrile gloves, long-length 12” high-risk undertaken to ensure proper planning gloves and household gloves. Exports and close monitoring of the set ups of continue to make up about 95% of total both plants to ensure high productivity sales, and the manufacturer’s name TOP and good efficiency. GLOVE is now proudly reflected on products in an impressive 128 countries To further enhance our services to our around the world. wide network of global customers, I am pleased to announce that the manufacturing facility (Factory 8) in China has started producing premium vinyl gloves commercially. This venture in China is expected to spearhead Top Glove’s globalization effort as a “One Stop Glove Sourcing Centre”, bringing our range of comprehensive good quality gloves to all corners of the world in line with one of our favourite taglines of “The World Is Our Modern and efficient auto Market!”. stripping.

16 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” executive chairman’s statement (cont’d)

Powder-free Examination Glove Vinyl Glove Household Gloves

FINANCIAL STRENGTHS AND PERFORMANCE

For the financial year ended 31 August 2003, the Company recorded a total sales revenue Thus, on the full year basis, subject to the of RM265.089 million compared to RM180.202 million achieved in the previous shareholders’ approval for the final and corresponding year, showing a net increase of 47.11% in sales revenue. The sales growth special dividend, the total dividends is in line with the Company’s continuous expansions and improvements in the declared by the Company for financial year production capacity. ended 31 August 2003 is 12.0% (dividend declared for financial year ended 31 The Company also sees a marked improvement in its bottom line achieving a 39.66% August 2002 was 6.0%). increased in its net profit for the current year of RM25.222 million compared to the previous financial year of RM18.059 million. During the financial year ended 31 August 2003, the Company had also made Overall, the Company has a positive outlook towards continuous growth and securing payment on 27 February 2003, the first and better results in the forthcoming financial year 2004 in terms of sales revenue and final dividend of 6.0% (with tax 28%) profitability through the on-going effort in implementing aggressive marketing amounting to RM2.808 million (net of strategies; increase in production capacity to achieve better economies of scale as well 28%) for the financial year ended 31 as further improvement in quality, cost control and efficiency. August 2002 which was approved for payment by the shareholders in the DIVIDENDS Annual General Meeting of the Company held on 9 January 2003. The Board of Directors is pleased to propose payment of the final dividend of 6.0% (with tax 28%) amounting to RM3,999,586.00 (net of 28%) and a special dividend of 2.0% (tax exempt) amounting to RM1,851,660.00 for the financial year ended 31 August 2003. The proposed final dividend and special dividend are subject to the shareholders’ approval in the forthcoming Annual General Meeting.

The Company had on 8 July 2003 declared an interim dividend of 4.0% (tax exempt) amounting to RM3,682,880.00 in conjunction with the current year 3rd quarter ended 31 May 2003 financial results announcement. (Payment of the interim dividend was made on 5 September 2003.)

A–Stringent quality control (QC). B–Clean and efficient packing process. A B 17 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” executive chairman’s statement (cont’d)

FUTURE AND PROSPECTS

Although Top Glove ranks among the 2 My vision for the Group is to be the world’s Our target market segments are also very largest disposable latex glove number one latex and synthetic diversified in ensuring that we do not manufacturers in the world, opportunities disposable glove-manufacturer by the depend only on certain sectors. We are no for growth remains bright from the year 2004. The target of becoming the longer dependant on the medical industry consolidation of the market with a smaller world leader in the industry is very real alone, our customers’ base now include number of small and medium sized still in indeed. Continuous improvements and Food Processors, Veterinary, Dental, operation. innovations have helped to steer the Government Sector (Customs), Group on course to our top destination. Manufacturing, Beauty & Saloon, Presently, with a huge capacity of 7.2 Mechanical, Laboratory and Household billion gloves per annum, the Group is We will continue to embark on healthy General Cleaning usage segments. These supplying about 10% of the global market. ‘capital return’ expansion programmes new forays have given the Group a There is still much potential even if Top and forming strategic alliances with significant growth in market share. Glove doubles up its capacity in the next overseas business partners to 3 years. continuously tap on their expertise in that respective region. In the pipeline, is to The Company’s good performance also build more glove production lines and owes much to the prevailing global expand internally to continue enjoying backdrop. There is a growing awareness of good economies of scale and at the same safety and hygiene, along with an time not compromising on the quality of omnipresent threat of biological and our gloves. chemical warfare. The Group is well prepared for all eventualities, and Top Glove will actively look into strategic meanwhile, is conquering new territories expansion of production lines in existing as well. A lot of unconventional users have factories as well as at strategic new been brought in as a result of the recent locations abroad. SARS incidents in countries like Hong Kong, Taiwan, Singapore and Canada.

A– Top 10 finalist for the prestigious Master Entrepreneur Award. B– Winner of the Productivity Award. A B

18 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” executive chairman’s statement (cont’d)

GOOD CORPORATE CITIZEN

The Group aims to set a good example to A scholarship scheme is in place for the poor and needy students that are determined fellow Malaysian companies by to make a difference in their lives through academic studies. The company further offers championing in exporting the “Made-in- job opportunities for these students after having completed their studies in the learning Malaysia” products to the world. Our institutions. The Group also provides industrial training for university students as part winning of both the Export Excellence of their course requirements. Award 2002 and National Productivity Award 2002 had proven our efforts. We will strive to further improve our global positioning by promoting the “Made-in- Malaysia” rubber gloves to protect, enrich and enhance human lives to all corners of the world.

As a society responsible corporate citizen, the Group’s charitable programs reach all levels of the society, for example, we have been providing gloves for the local St. John Ambulance uniform body on a quarterly basis. We believe our gloves will be put into good use and protect these good Samaritans in providing their services to the public.

A

A–Accolades of prestigious awards. B & C–Celebrating the yearly annual dinner. B C

19 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” executive chairman’s statement (cont’d)

WORDS OF THANKS AND APPRECIATION

On behalf of the Board of Directors, I would like to thank all our valued customers, business associates, shareholders, fund managers and investment analysts as well as the regulatory bodies for their continued support and understanding during the past year.

I would also like to take this opportunity to thank my fellow Directors for their invaluable advice and contributions to the Group. We look forward to the benefit of their wisdom and experience which I believe will be of great value to the Group.

To the management and staff, I would like to express my sincere gratitude for the unfailing support and commitment you have shown during the past year. I am very confident that with your continued support and dedication, the Group will be able to weather the challenges ahead and forge forward to greater heights.

Dr. Lim, Wee-Chai Founder and Executive Chairman, Top Glove Corporation Berhad 18 November 2002

A B

A & B – Well controlled container loading. C–Glove tumbling process. D–Hi-tech and high productivity glove C D lines.

20 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” corporate C governance statement

Top Glove Corporation Bhd (‘Top Glove’ or the ‘Company’) recognizes that its existence in the business community relies on the support, trust and confidence of our shareholders, business associates, customers, suppliers, financiers and various other group of people with whom it interacts and conducts business with.

Its Board of Directors is therefore THE BOARD OF DIRECTORS committed to formulate policies and direct the Company to achieve its Top Glove is led by an experienced Board comprising members who are specialized in objectives by enhancing shareholders’ the glove manufacturing and various business sectors supported by a wide range of value with corporate accountability and other professionals in the legal and accounting sectors. This wide spectrum of skills and openness, taking into account the experience provide the strength that is needed to lead the Company to meet its interests of other shareholders. objectives and enable the Company to rest in the firm control of an accountable and competent Board of Directors. The Board of Directors recognizes the importance of the role of good corporate The Board currently comprises nine (9) members: five (5) executive directors including governance in assisting the Company to the Chairman / Managing Director, three (3) independent non-executive directors and achieve its corporate mission and in one (1) non-executive director. The composition reflects a balance of executive directors enhancing its shareholders’ value. Thus, and non-executive directors (including independent non-executive directors) such that the Board of Directors is committed to no individual or small group of individuals can dominate the Board’s decision making. ensure that the corporate governance A brief description of the background of each Director is presented on pages 9 to 12. adopted by the Company is in line with the principles set out in Part 1 of the Malaysian The Board has identified Mr Quah Chin Chye to be the senior independent non-executive Code on Corporate Governance (“the director of the Board to whom concerns may be conveyed. Code”) to the Company’s particular The Board meets quarterly to review its quarterly performances and discuss new policies circumstances. The Board further and strategies. Additional meetings will be called as and when necessary. During the acknowledges the recommended best year ended 31 August 2003, four Board Meetings were held and the attendance of Board practices as set out in Part 2 of the Code members are as follows: and continues to evaluate the status of the practices and the adopted alternatives. Name of Director No. of Meetings Attended

Dr. Lim, Wee-Chai 4/4 Tan Sri Datuk (Dr) Arshad Bin Ayub 3/4 Tong Siew Bee 4/4 Haji Shahadan Bin Haji Abd Manas 4/4 Lim Hooi Sin 3/4 Sekarajasekaran a/l Arasaratnam 3/4 Lau Boon Ann 4/4 Quah Chin Chye 4/4 Lee Kim Meow (Alternate Director to Lim Hooi Sin, also appointed as an Executive Director on 15 October 2003) 4/4

21 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” corporate governance statement (cont’d)

All of the above meetings were held in the Company’s Board Room at Lot 5091, Jalan The presence of the independent non- Teratai, Batu 5, Off Jalan Meru, 41050 Klang, Selangor Darul Ehsan, Malaysia. executive Directors are essential as they provide the unbiased and independent All the Board members have attended the Mandatory Accreditation Programme view, advice and judgement as well as to conducted by the Research Institute of Investment Analysts Malaysia. It is the Company’s safeguard the interest of other parties like intention that each new director is given a comprehensive briefing on the Company’s minority shareholders and the history, operations, financial control system and plant visit to enable them to have first community. hand understanding of the Company’s operation. This orientation programme had been implemented since 31 December 2001. In accordance with the Company’s Articles of Association, all Directors who are Clear demarcation of duties, responsibilities and authority are being practiced by the appointed by the Board are subject to Board. The position of Chairman and Managing Director is held by Dr. Lim, Wee-Chai. retirement at the first Annual General The Chairman/Managing Director is primarily responsible for the orderly conduct of Meeting (AGM) of the Company the board meeting and working of the Board. The Chairman/Managing Director, assisted subsequent to their appointment. One by the Executive Directors is subject to the control of the Board and is responsible for third of all the other Directors shall retire the implementation of Board policies, making operational decisions and monitoring by rotation at each AGM provided always the day to day running of the business. He also defines the limits of the management’s that all Directors shall retire from office at responsibilities. The Executive Directors are responsible for the day to day operations least once in three (3) years. The Directors of the Group whereby operational issues and problems are discussed, major transactions retiring from office shall be eligible for re- and matters relating to the Group are reviewed and also to formulate operational election by the shareholders. strategies. Directors standing for the re-election at The non-executive Directors are to deliberate and discuss policies and strategies the Annual General Meeting of the formulated and proposed by the management with the view of the long-term interests Company to be held are Lee Kim Meow, of all stakeholders. They contributed to the formulation of policies, and decision making Tong Siew Bee, Haji Shahadan Bin Haji Abd using their expertise and experience. They also provide guidance and promote Manas, Tan Sri Datuk (Dr) Arshad Bin Ayub professionalism to the management. and Sekarajasekaran a/l Arasaratnam.

The Board has delegated certain responsibilities to several Board Committees which operates within clearly defined terms of reference. The Chairman of the various Committees will report to the Board the outcome of the Committee meetings and such reports are incorporated in the minutes of the Board meetings. The various Committees are:

22 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” corporate governance statement (cont’d)

Audit Commitee Nomination Committee

This Committee was established on 5 September 2000. The terms This Committee was established on 7 November 2001. The terms of reference of the Audit Committee was reviewed by the Board of reference of the Nomination Committee was reviewed by the and all the members of the Committee was re-nominated and Board and all the members of the Committee was re-nominated re-appointed on 4 September 2003. The terms of office of the and re-appointed on 4 September 2003. The terms of office of Committee is 2 years and may be re-nominated and re-appointed this Committee is 2 years and may be re-nominated and re- by the Board. Its role and function is to assist the Board in appointed by the Board. Its role is to assist the Board of Directors overseeing the Group’s activities within its clear defined terms in their responsibilities in nominating new nominees to the Board of reference. Best Practices BB Part 2 and Part 4 of the Code and of Directors. The Nomination Committee shall also assess the performance of the Directors of the Company on an on-going basis. Paragraph 15.13 of the Listing Requirements of Kuala Lumpur The members of the Nomination Committee are as follows: Stock Exchange (KLSE) spell out the duties of an Audit Committee. (a) Tan Sri Datuk (Dr) Arshad Bin Ayub The scope of the duties of Top Glove’s Audit Committee includes (Independent Non-Executive Director) - Chairman primarily the duties detailed therein. Pursuant to Paragraph 15.26 (b) Lau Boon Ann of the Listing Requirements of KLSE, the Audit Committee Report (Non-Executive Director) for the current financial year can be found in pages 30 to 32 of (c) Sekarajasekaran a/l Arasaratnam this Annual Report which also contain other information as (Independent Non-Executive Director) required under the Code. (d) Quah Chin Chye (Independent Non-Executive Director) The Board shall review the term of office and performance of the Audit Committee and each of its members at least once every The duties and responsibilities of the Nomination Committee are two (2) years to determine whether such Audit Committee and as follows: members have carried out their duties in accordance with their •To recommend to the Board of Directors, candidates for all terms of reference. directorships to be filled by the Shareholders or the Board of Directors; The Board has full access to both internal and external auditors •To consider, in making its recommendations, candidates for and receive reports on all audits performed via this committee. directorships proposed by the Chief Executive Officer and, within the bounds of practicability, by any other senior executive or any Director or Shareholder; •To recommend to the Board of Directors the nominees to fill the seats on Board Committees; •To assess the effectiveness of the Board of Directors as a whole and each individual Directors/committees of the Board; •To act in line with the directions of the Board of Directors; and •To consider and examine such other matters as the Nomination Committee considers appropriate.

23 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” corporate governance statement (cont’d)

Remuneration Committee Directors’ Remuneration

This Committee was established on 7 1) Aggregate remuneration of Directors categorized into appropriate components are November 2001. The terms of reference of as follows: the Remuneration Committee was reviewed by the Board and all the Benefits members of the Remuneration Committee Salaries Fees Bonus in-kind Total was re-nominated and re-appointed on 4 RM’000 RM’000 RM’000 RM’000 RM’000 September 2003. The terms of office of this Executive Directors 1,291 131 0 32 1,454 Committee is 2 years and may be re- Non-Executive Directors 0 98 0 0 98 nominated and re-appointed by the Board. Its role is to assist the Board of Directors 2) Directors’ remuneration are broadly categorized into the following bands: in their responsibilities in assessing the remuneration packages of the executive Number of Directors directors. The members of the Range of Remuneration Executive Non-Executive Remuneration Committee are as follows: Below RM50,000 0 4 (a) Dr. Lim, Wee-Chai RM100,000 to RM150,000 2 0 (Chairman/Managing Director) RM200,001 to RM250,000 1 0 - Chairman RM850,001 to RM900,000 1 0 (b) Sekarajasekaran a/l Arasaratnam (Independent Non-Executive Director) ESOS Option Committee (c) Lau Boon Ann (Non-Executive Director) The Company, with approval of the shareholders during its Extraordinary General Meeting (EGM) held on 9 January 2003, has implemented the ESOS ( Employee Share The duties and responsibilities of the Option Scheme ) officially on 29 April 2003. Remuneration Committee are as follows: •To review and assess the An ESOS Option Committee was appointed by the Board on 11 April 2003 to oversee remuneration packages of the the administration as well as to ensure proper implementation of the ESOS according executive directors in all forms, with or to the Bye-laws of the scheme. Currently the ESOS Option Committee comprises the without other independent following members: professional advice or other outside advice; •Dr. Lim, Wee-Chai – Chairman •To ensure the levels of remuneration • Haji Shahadan Bin Haji Abd. Manas – member be sufficiently attractive and be able • Mr Lee Kim Meow – member to retain directors needed to run the • Mr Lim Mong Seng – member Company successfully; •To structure the component parts of remuneration so as to link rewards to corporate and individual performance and to assess the needs of the Company for talent at Board level at a particular time; •To recommend to the Board of Directors the remuneration packages of the executive directors; •To act in line with the directions of the Board of Directors; and •To consider and examine such other matters as the Remuneration Committee considers appropriate. 24 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” corporate governance statement (cont’d)

SUPPLY OF INFORMATION TO THE RELATIONSHIP WITH THE SHAREHOLDERS BOARD The Company views the timely and equal dissemination of information to shareholders All Directors are provided with an agenda and stakeholders as important. It strictly adheres to the disclosure requirements of the of the meeting and board papers which KLSE. The Company is cautious not to provide undisclosed material information about contain Company’s financial performance, the Company to any shareholder or stakeholder group. business outlook, various committees’ reports and disclosures by Directors of In addition to the various announcements made during the year, the timely release of their interest in shares and their interest financial results on a quarterly basis in line with the Listing Requirements of KLSE, the in contracts, properties and offices Company provides shareholders with an overview of the Company’s performance and pursuant to S135 and S131 of the progress. During the year, the Executive Directors and senior management had regular Companies Act, 1965 respectively prior to dialogues and meetings with both local and overseas institutional investors, fund the Board meeting. The board papers are managers, analysts, research houses and members of the press media to brief them and issued in advance to facilitate informed to keep them updated on the various announcements relating to the Company’s decision-making. The Managing Director financial performance, major corporate proposals and pertinent issues within the will lead the presentation of board papers disclosure requirements of the KLSE. and provide comprehensive explanations of pertinent issues. Any proposals and The AGM is an important forum where communications with shareholders can be recommendations by the management effectively conducted. Shareholders are notified of the meeting together with a copy of will be deliberated and discussed by the the Company’s Annual Report at least 21 days before the meeting. At each AGM, Board before a decision is made. Minutes shareholders are given ample time and opportunity to ask for more information, without are prepared on all board proceedings and limiting the type of questions asked, prior to seeking approval by show of hands from will be signed by the Chairman of the the members and proxies on the audited financial statements. During the meeting, the meeting in accordance with the provision Chairman and the Board members are prepared to response to all queries and undertake of S156 of the Companies Act, 1965. The to provide sufficient clarification on issues and concerns raised by the shareholders. Board is kept updated on the Company’s The external auditors are also present to provide their professional and independent financial activities and operations on a clarification on issues and concerns raised by the shareholders. Status of all resolutions regular basis. proposed at the AGM are submitted to KLSE at the end of the meeting day. The Board has ensured that each item of special business included in the notice of the annual or The Directors are also notified of any extraordinary general meeting are accompanied by a full explanation of the effects of a corporate announcement released to the proposed resolution. KLSE and the impending restriction on dealing with the securities of the Institutional investors and analysts are welcomed and have equal opportunity to meet Company prior to the announcement of our management about performance, corporate governance and other matters related the quarterly financial results. to shareholders’ interest.

All Directors have access to the advice and The Company also maintain two websites at www.topglove.com.my and http:// services of the Company Secretary and topglove.asiaep.com from which shareholders and stakeholders can access for they have been issued with the Code of information. Ethics for Directors and Secretaries. The Company Secretary also acts as the Secretary for all the Board Committees.

25 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” corporate governance statement (cont’d)

ACCOUNTABILITY AND AUDIT

Financial Reporting

Statement of Directors’ Responsibilities in respect of Audited Financial Statements pursuant to Paragraph 15.27 (a) of the Listing Requirements of KLSE.

The Directors are responsible to ensure that financial statements are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia. In presenting the financial statements, the Company has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates and prepared on a going concern basis. The Directors also strive to ensure that financial reporting present a balanced and understandable assessment of the Company’s position and prospects.

Quarterly financial statements are reviewed by the Audit Committee and approved by the Board of Directors prior to release to KLSE within stipulated time frame.

Internal Control

The Board acknowledges that it is responsible for maintaining a sound system of internal controls, which provides reasonable assessment of effective and efficient operations, internal financial controls, and compliance with laws and regulations as well as with internal procedures and guidelines. The internal control system also aims at identifying and managing any risks that the Company may encounter in pursuit of its business objectives. A Statement on Internal Control of the Company is set out on pages 28 and 29 of the Annual Report.

Relationship with the Auditors

The external auditors, Messrs. Ernst & Young and Messrs. William C.H. Tan & Associates have continued to report to members of the Company on their findings which are included as part of the Company’s statutory financial statements. The Company has thus established a transparent arrangement with the auditors to meet auditors’ professional requirements. From time to time, the auditors highlight to the Audit Committee and Board of Directors on matters that require Board’s attention through the issuance of management letters.

26 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” corporate governance statement (cont’d)

OTHER COMPLIANCE INFORMATION

1. Utilisation Of Proceeds From Initial Public Offer 8. Profit Guarantees Following its Initial Public Offer in March 2001, the During the financial year, there were no profit guarantees Company has raised gross proceeds amounting to given by the Company. RM38.738 million and was fully utilised as at 28 February 2003, of which RM24.361 million were used to repay bank 9. Material Contracts borrowings, RM4.800 million for purchase of plant and During the financial year, there were no material contracts machinery, RM1.540 million for IT and office equipment, entered into by the Company and its subsidiaries involving RM1.472 million for listing expenses and RM6.565 million Directors’ and major shareholders’ interests. for working capital. Utilisation of the listing proceed was in accordance to the plan as stated in the Listing Proposal. 10. Contracts Relating To Loans There were no material contracts relating to loans entered 2. Recurrent Related Party Transactions into by the Company involving Directors and major During the financial year there were no recurrent related shareholders. party transactions involving the Directors or Substantial Shareholders of the Company. 11. Options, Warrants or Convertible Securities The ESOS of the Company was officially implemented on 29 3. Share Buyback April 2003. During the current financial year ended 31 August During the financial year, there were no share buyback by 2003, a total of 1,197,000 new ordinary shares were issued the Company. and allotted pursuant to the exercise of the ESOS. The details of the issued and paid-up share capital of the Company as at 4. American Depository Receipt (ADR) Or Global 31 August 2003 are as follow :- Depository Receipt (GDR) Programmes During the financial year, the Company did not sponsor No. of shares RM any ADR or GDR programmes. As at 29 April 2003(prior to 91,000,000 91,000,000 ESOS implementation) 5. Imposition Of Sanctions And/Or Penalties Ordinary shares issued 1,197,000 1,197,000 There were no sanctions and/or penalties imposed on the pursuant to the ESOS Company and its subsidiaries, Directors or Management As at 31 August 2003 92,197,000 92,197,000 by the relevant regulatory bodies. Other than the above, there were no issuance of options, 6. Non-Audit Fees warrants or convertible securities during the financial year. No non-audit fees was paid to the external auditors during the year. 12. Revaluation of Landed Properties The Company does not have a revaluation policy on landed 7. Variation In Results properties. There was no material variance between the results of the financial year and the unaudited results previously announced. The Company did not make any release on the profit estimate, forecast or projections for the financial year.

27 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Sstatement on internal control

The Board acknowledges its responsibility for establishing an efficient and effective system of internal control covering not only financial controls but also controls relating to operational compliance and risk management to safeguard shareholders’ investment and the Group’s assets. There is an on- going review process by the Board to ensure the adequacy and integrity of the system. Such a system is designed to identify and to manage rather than eliminate the risk of failure. Accordingly, the system can only provide reasonable and not absolute assurance against material misstatement, loss or fraud.

The Group’s internal control The Audit Committee is also mechanism is embedded in the responsible for reviewing and various work processes and monitoring the effectiveness of the procedures at appropriate levels in the Group’s system of internal control. In Group. The Managing Director (MD) this respect, the Internal Audit and senior management team, Department of the Company which comprising experienced personnel was set up during the current financial with vast specialised industry year, which is independent of experience, are assigned the management, conducts regular responsibility of managing the Group. reviews on the Group’s various They are accountable for the conduct operations and reports directly to the and performance of their operations Audit Committee. The external within their respective businesses. The auditors provide assurance in the form MD and senior management monitor of their annual statutory audit of the the day-to-day affairs of the Group financial statements. Further areas for through review of performance and improvement identified during the operations reports, as well as by course of the statutory audit by the attending management meetings. Any external auditors are brought to the significant issues are immediately attention of the Audit Committee brought to the attention of the MD, through management letters, or who in turn, will bring these matters discussed at Audit Committee before the Board. meetings.

28 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” statement on internal control (cont’d)

The key processes that the Group has established in The Board remains committed towards operating a sound reviewing the adequacy and integrity of the Group’s system system of internal control and therefore recognises that the of internal control include the following: system must continuously evolve to support the type of business and size of operations of the Group. As such, the 1) Company’s Policies and Procedures which set out Board will, when necessary, put in place appropriate action guidelines and the expected standards for the Group’s to further enhance the Group’s system of internal control. operations. The policies and procedures are under regular review and update so as to maintain its There were no material internal control failures nor have effectiveness at all time. any of the reported weaknesses resulted in material losses 2) Periodical and/or annual budgeting and target setting or contingencies during the financial year. and review system for every operation of the Group. Analysis, data comparison and reporting of variances This statement is made in accordance with a resolution of against targets are presented in the Group’s various the Board of Directors dated 3 November 2003. management meetings which provides the framework for monitoring and controlling mechanism. 3) Requirement for the submission of regular and timely financial and comprehensive management reports to the management. 4) Clearly defined organisation structure of the various departments with clearly defined delegation of responsibilities and accountability. It sets out the decision that needs to be taken and the appropriate approving authority at various levels of the management including matters that requires Board’s approval. 5) Setting up monetary limits to the various level of delegated authority in order to minimize the risks of unauthorized transactions. 6) Regular internal audit visits by the Company’s Internal Audit Department to assess and provide independent reports and assurance on the state of the internal control system of the Group’s various operations. 7) Continuous training and development programmes covering all level of the Group’s employees to ensure and to maintain the competency and efficiency of the employees. 8) Compliance review functions to ensure adherence to rules and regulations laid down by the various regulators and authorities.

29 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Aaudit committee report

TERMS OF REFERENCE OF AUDIT COMMITTEE

1. MEMBERSHIP

Members Designation

(a) Tan Sri Datuk (Dr) Arshad Bin Ayub Chairman & Independent Non-Executive Director (Chairman) (b) Dr. Lim, Wee-Chai Executive Director (Member) (c) Sekarajasekaran a/l Arasaratnam Independent Non-Executive Director (Member)

(d) Quah Chin Chye Independent Non-Executive Director (Member)

2. COMPOSITION OF MEMBERS 3. CHAIRMAN

The Board shall elect the Audit Committee members from amongst themselves, The Chairman of the Audit Committee, comprising no fewer than three (3) directors, where the majority shall be elected from amongst the Audit independent directors. The term of office of the audit committee is 2 years and may Committee members, shall be an be re-nominated and appointed by the Board of Directors. independent director. The Chairman of the Committee shall be approved In this respect, the Board adopts the definition of “independent director” as defined by the Board of Directors. under the Listing Requirements of Kuala Lumpur Stock Exchange (KLSE). 4. SECRETARY At least one member of the Audit Committee must be: (a) a member of the Malaysia Institute of Accountant (MIA); or The Secretary of the Audit Committee (b) if he is not a member of MIA, he must have at least 3 years of working experience shall be the Company Secretary. and: i. he must have passed the examinations specified in Part 1 of the 1st Schedule The Secretary shall be responsible for of the Accountants Act 1967; or drawing up the agenda with ii. he must be a member of one of the associations of the accountants specified concurrence of the Chairman and in Part 11 of the First Schedule of the Accountants Act 1967; circulating it, supported by or explanatory documentation to (c) fulfills such other requirements as prescribed by the Exchange members of the Audit Committee prior to each meeting. No alternate director of the Board shall be appointed as a member of the Audit Committee. The Secretary shall also be responsible for keeping the minutes of meetings Retirement and resignation of the Audit Committee and to the other members of the Board of If a member of the Audit Committee resigns, dies, or for any reason ceases to be a Directors and for following up member with the result that the number of members is reduced below three (3), outstanding matters. the Board shall within three (3) months of the event appoint such number of the new members as may be required to fill the vacancy.

30 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” audit committee report (cont’d)

5. MEETINGS 6. QUORUM 9. AUTHORITY

The Audit Committee meetings shall The quorum for the Audit Committee The Audit Committee shall, in be conducted at least four (4) times meeting shall be the majority of accordance with a procedure to be annually, or more frequently as members present whom must be determined by the Board of Directors circumstances dictate. In addition, the independent directors. and at the expense of the Company: Chairman may call for additional meetings at any time at the Chairman’s 7. REPORTING (a) authorize to investigate any discretion. activity within its terms of The Audit Committee shall report to reference. All employees shall be In the absence of the Chairman, the the Board of Directors, either formally directed to co-operate as other independent director shall be in writing, or verbally, as it considers requested by members of the the Chairman for that meeting. appropriate on the matters within its Audit Committee; terms of reference at least once a year, (b) have full and unlimited/ The members of the Audit Committee, but more frequently if it so wishes. unrestricted access to all General Manager (Corporate Affairs, information and documents/ Finance and Administration), Finance The Audit Committee shall report to resources which are required to Manager and the head of internal the Board of Directors on any specific perform its duties as well as to the audit will normally be in attendance matters referred to it by the Board for internal and external auditors and at the meetings. Representatives of investigation and report. senior management of the the external auditors are to be in Company and Group; attendance at meeting where matters 8. OBJECTIVES (c) obtain, at the expense of the relating to the audit of the statutory Company, other independent accounts and/or external auditors are The principal objectives of the Audit professional advice or other to be discussed. Committee is to assist the Board of advice and to secure the Directors in discharging its statutory attendance of outsiders with Other directors, officers and duties and responsibility relating to relevant experience and expertise employees of the Company and/or accounting and reporting practices of if it considers necessary; Group may be invited to attend, the holding company and each of its (d) be able to convene meetings with except for those portions of the subsidiaries. In addition, the Audit the external auditors, without the meetings where their presence is Committee shall: attendance of the executive considered inappropriate, as members of the Audit Committee, determined by the Audit Committee. a) evaluate the quality of the audits whenever deemed necessary; However, at least once a year the Audit performed by the internal and (e) be able to make relevant reports Committee shall meet with the external auditors; when necessary to the relevant external auditors without any b) provide assurance that the authorities if a breach of the executive board member present. financial information presented Listing Requirements occurred. by management is relevant, Minutes of each meeting shall be kept reliable and timely; and distributed to each member of c) oversee compliance with laws and the Audit Committee and also to the regulations and observance of a other members of the Board of proper code of conduct; and Directors. The Audit Committee d) determine the quality, adequacy Chairman shall report on each and effectiveness of the Group’s meeting to the Board of Directors. control environment.

31 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” audit committee report (cont’d)

10. DUTIES AND RESPONSIBILITIES d) Emerging financial reporting issues pursuant to the introduction of new accounting standards and additional The duties and responsibilities of the Audit Committee are statutory/regulatory disclosure requirements; as follow: e) Best Board practices for meeting market expectations and protecting shareholders’ interests that were a) To review the maintenance and control of an effective highlighted by the External Auditors; accounting system; f) Measures being taken to fortify the existing risk b) To review the Groups’ public accountability and assessment and management processes. compliance with the law; c) To ensure the adequacy of internal and external audit 12. SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT procedures; DEPARTMENT d) To evaluate the quality of external auditors and make recommendations concerning their appointment and The Company has an Internal Audit Department whose remuneration and to consider the nomination of a person principal objective is to undertake regular reviews of the or persons as external auditors; systems of controls, procedures and operations so as to e) To provide liaison between the external auditors, the provide reasonable assurance that the internal control system management and the Board of Directors and also to is sound, adequate and satisfactory. The Internal Audit review the assistance given by the management to the Department reports direct to the Audit Committee. Its role is external auditors; to provide the Committee with independent and objective f) To review the findings of the internal and external reports on the state of internal controls of the operating units auditors; within the Group and the extent of compliance by such units g) To review the quarterly results and financial statements with the Group’s established policies and procedures and the and annual report prior to submission to the Board of regulatory requirements of the relevant authorities. The Audit Directors; Committee reviews and approves the internal audit plan of h) To monitor any related party transactions that may within the Group submitted by the internal audit manager. the Group and to report, if any, transactions between the Group and any related party outside the Group which During the financial year ended 31 August 2003, the areas are not based on arms-length terms and on terms which audited included audits of the various departments covering are disadvantageous to the Group; all the factories and subsidiaries within the Group. Internal i) To report its findings on the financial and management audit reports were issued to the Audit Committee regularly performance, and other material matters to the Board of and tabled in the Audit Committee meetings. The reports Directors; are also issued to the respective operations management, j) To act in line with the directions of the Board of Directors; incorporating audit recommendations and management and responses with regards to any audit findings on the k) To consider and examine such other matters as the Audit weaknesses in the systems and controls of the operations. Committee considers appropriate. The internal audit department also follows up with management on the implementation of the agreed audit 11. SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE recommendations.

The Audit Committee has discharged its duties as set out in MEETINGS AND ATTENDANCE OF AUDIT COMMITTEE its Terms of Reference. The major areas reviewed by the Audit Committee are as follows: The Members of Audit Committee met four times during the financial year ended 31 August 2003. a) Review of Quarterly Reports and the Annual Report to ensure adherence to legal and regulatory reporting No. of requirements and appropriate resolution of all accounting matters requiring significant judgment; Members Meetings Attended b) Review and deliberation of significant risk areas, internal (a) Dr. Lim, Wee-Chai 4/4 control and financial matters coming to the attention of (b) Tan Sri Datuk (Dr) Arshad Bin Ayub 3/4 the external auditors in the course of their work; (c) Sekarajasekaran a/l Arasaratnam 3/4 c) Related party transactions which are required to be (d) Quah Chin Chye 4/4 transacted at an arm’s length basis and are not detrimental to the interest of minority shareholders;

32 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” F financial statement 2003

page

34 Directors’ Report

39 Statement By Directors

39 Statutory Declaration

40 Report Of The Auditors

41 Income Statements

42 Balance Sheets

43 Statements Of Changes In Equity

44 Cash Flow Statements

46 Notes To The Financial Statements

Top Glove Corporation Top Glove Top Glove Berhad – Malaysia – Thailand – China Ddirectors’ report

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 August 2003.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding and the provision of management services.

The principal activities of the subsidiaries are described in Note 11 to the financial statements.

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

RESULTS Group Company RM RM

Net profit for the year 25,258,803 6,506,384

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the statements of changes in equity. In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature.

DIVIDENDS

The amount of dividends paid by the Company since 31 August 2002 were as follows :

RM

In respect of the financial year ended 31 August 2002 : First and final dividend of 6% less 28% taxation, paid on 27 February 2003. 2,808,000

In respect of the financial year ended 31 August 2003 : Interim tax exempt dividend of 4%, paid on 5 September 2003. 3,682,880

At the forthcoming Annual General Meeting, a final dividend of 6% on 92,583,000 ordinary shares less 28% taxation amounting to RM3,999,586 (4.32 sen per share) and a special dividend of 2% tax exempt amounting to RM1,851,660 (2 sen per share) in respect of the current financial year ended 31 August 2003 will be proposed for shareholders approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in shareholders’ equity as an appropriation of retained profits in the next financial year ending 31 August 2004.

DIRECTORS

The names of the directors of the Company in office since the date of the last report and at the date of this report are :

•Dr. Lim, Wee-Chai • Tan Sri Datuk (Dr.) Arshad Bin Ayub •Tong Siew Bee • Haji Shahadan Bin Haji Abd Manas • Lim Hooi Sin • Sekarajasekaran a/l Arasaratnam • Lau Boon Ann • Quah Chin Chye •Lee Kim Meow (alternate to Lim Hooi Sin) (appointed on 15 October 2003) 34 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” directors’ report (cont’d)

DIRECTORS’ BENEFITS

Neither at the end of the financial year, nor at any time during Since the end of the previous financial year, no director has that year, did there subsist any arrangement to which the received or become entitled to receive a benefit (other than Company was a party, whereby the directors might acquire benefits included in the aggregate amount of emoluments benefits by means of acquisition of shares in or debentures of received or due and receivable by the directors as shown in Note the Company or any other body corporate, other than as may 5 to the financial statements or the fixed salary of a full-time arise from the share options to be granted pursuant to the employee of the Company) by reason of a contract made by the Employee Share Options Scheme. Company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company during the financial year were as follows:

Number of Ordinary Shares of RM1 Each 1 September Bonus 31 August 2002 Issue Bought Sold 2003

Dr. Lim, Wee-Chai - direct 19,091,556 8,116,623 1,380,000 - 28,588,179 - indirect 11,194,537 4,497,814 240,000 - 15,932,351 Tan Sri Datuk Arshad Bin Ayub 1,926,600 770,640 - (649,240) 2,048,000 Tong Siew Bee - direct 1,187,213 474,885 80,000 - 1,742,098 - indirect 29,098,880 12,139,552 1,540,000 - 42,778,432 Haji Shahadan Bin Haji Abd Manas 13,000 5,200 30,000 (10,000) 38,200 Lim Hooi Sin - direct 1,813,975 745,590 130,000 - 2,689,565 - indirect 28,472,118 11,868,847 1,490,000 - 41,830,965 Sekarajasekaran a/l Arasaratnam 2,695,850 1,085,140 17,000 - 3,797,990 Lau Boon Ann 13,000 5,200 - - 18,200 Quah Chin Chye - - - - - Lee Kim Meow 280,647 112,259 45,600 - 438,506

Number of Options over Ordinary Shares of RM1 Each 1 September 31 August 2002 Granteed Exercised 2003

Dr. Lim, Wee-Chai - 180,00 180,000 - Tong Siew Bee - 80,00 80,000 - Lim Hooi Sin - 80,00 80,000 - Haji Shahadan Bin Haji Abd Manas - 80,00 30,000 50,000 Lee Kim Meow - 80,00 40,000 40,000

Dr. Lim, Wee-Chai, Tong Siew Bee and Lim Hooi Sin by virtue of their interest in shares of the Company are also deemed interested in shares of all the subsidiaries to the extent the Company has an interest.

None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations or in share options in the Company during the financial year.

35 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” directors’ report (cont’d)

ISSUE OF SHARES

During the financial year, the Company increased its : (b) Eligible persons are employees of the Group (including executive directors) who have been confirmed in the (a) authorised share capital from RM100,000,000 to employment of the Group and have served for at least one RM200,000,000 through the creation of 100,000,000 ordinary year before the date of the offer. The eligibility for shares of RM1 each; and participation in the ESOS shall be at the discretion of the Options Committee appointed by the Board of Directors. (b) issued and paid-up share capital from RM65,000,000 to RM92,197,000 by way of: (c) The total number of shares to be issued under the ESOS shall not exceed in aggregate 10% of the issued share capital of (i) the issuance of 26,000,000 ordinary shares of RM1 each the Company at any point of time during the tenure of the via bonus issue on the basis of 2 new ordinary shares of ESOS. RM1 each for every 5 existing ordinary shares of RM1 each held in the Company, by way of capitalisation of (d) The option price for each share shall be the 5-days weighted RM13,516,522 from the share premium account and average market price of the underlying shares at the time RM12,483,478 from the retained profits account; and the ESOS Options are granted, with a discount of not more than ten percent (10%) if deemed appropriate, or the par (ii) the issuance of 1,197,000 ordinary shares of RM1 each value of the ordinary shares of the Company of RM1, pursuant to the Employee Share Options Scheme whichever is the higher. (“ESOS”) at an option price of RM1.73 and RM2.92 per ordinary share. (e) No option shall be granted for less than 1,000 shares to any eligible employee. Subsequent to the end of the financial year, the Company increased its issued and paid-up share capital from RM92,197,000 (f) An option granted under the ESOS shall be capable of being to RM92,583,000 by way of the issuance of 386,000 ordinary excercised by the grantee by notice in writing to the shares of RM1 each pursuant to the ESOS at an option price of Company commencing from the date of the offer but before between RM1.73 to RM3.55 per ordinary share. the expiry of five years from the date of the receipt of the last of the requisite approvals. All the new ordinary shares that were issued rank pari passu in all respects with the existing shares. (g) All new ordinary shares issued upon exercise of the options granted under the ESOS will rank pari passu in all respect with the existing ordinary shares of the Company other than as EMPLOYEE SHARE OPTIONS SCHEME may be specified in a resolution approving the distribution of dividends prior to their exercise dates. The Company’s Employee Share Options Scheme (“ESOS”) is governed by the by-laws which was approved by the (h) The persons to whom the options have been granted have shareholders at the Extraordinary General Meeting held on 9 no right to participate by virtue of the options in any share January 2003 and became effective on 29 April 2003. issue of any other company.

The main features of the ESOS are as follows: (i) The options shall not carry any right to vote at a general meeting of the Company. (a) The ESOS shall be in force for a period of five years from the date of the receipt of the last of the requisite approvals.

The movements in the options to take up unissued new ordinary shares of RM1 each during the financial year are as follows:

Number of Share Options 2003 2002 At 1 September - - Granted 1,871,000 - Exercised (1,197,000) - Lapsed (3,000) -

At 31 August 671,000 -

36 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” directors’ report (cont’d)

Details of share options granted during the financial year are as follows :

Exercise Period Exercise Price Number of Share Options RM 2003 2002

5.6.2003 - 29.4.2008 1.73 1,810,000 - 7.7.2003 - 29.4.2008 2.32 25,000 - 6.8.2003 - 29.4.2008 2.92 36,000 -

1,871,000 -

Details of share options exercised during the financial year are as follows:

Considerations Exercise Date Exercise Price Received Number of Share Options RM RM 2003 2002

5.7.2003 1.73 1,354,590 783,000 - 21.7.2003 1.73 294,100 170,000 - 5.8.2003 1.73 205,870 119,000 - 21.8.2003 1.73 - 2.92 218,630 125,000 -

2,073,190 1,197,000 -

Details of share options outstanding as at the end of the financial year are as follows:

Exercise Period Exercise Price Number of Share Options RM 2003 2002

5.6.2003 - 29.4.2008 1.73 612,000 - 7.7.2003 - 29.4.2008 2.32 25,000 - 6.8.2003 - 29.4.2008 2.92 34,000 -

671,000 -

The name of employee who has been granted options above 80,000 ordinary shares of RM1.00 each during the year is as follows:

Number of Options over Ordinary Shares of RM1 Each Offered and 31 August Accepted Exercised 2003

Dr. Lim, Wee-Chai 180,00 180,000 - Tong Siew Bee 80,00 80,000 - Lim Hooi Sin 80,00 80,000 - Haji Shahadan Bin Haji Abd Manas 80,00 30,000 50,000 Lee Kim Meow 80,00 40,000 40,000

The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the list of option holders and their holdings which is less than 80,000 ordinary shares of RM1.00 each.

37 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” directors’ report (cont’d)

OTHER STATUTORY INFORMATION

(a) Before the income statements and balance sheets of the (d) At the date of this report, the directors are not aware of any Group and of the Company were made out, the directors took circumtances not otherwise dealt with in this report or reasonable steps: financial statements of the Group and of the Company which render any amount stated in the financial statements (i) to ascertain that proper action had been taken in relation misleading. to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that (e) As at the date of this report, there does not exist: there were no known bad debts and that no provision for doubtful debts was necessary; and (i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which (ii) to ensure that any current assets which were unlikely to secures the liabilities of any other person; or realise their value as shown in the accounting records in the ordinary course of business had been written down (ii) any contingent liability of the Group or of the Company to an amount which they might be expected so to realise. which has arisen since the end of the financial year.

(b) At the date of this report, the directors are not aware of any (f) In the opinion of the directors: circumtances which would render: (i) no contingent or other liability has become enforceable (i) it necessary to write off any bad debts or to make any or is likely to become enforceable within the period of provision for doubtful debts in respect of the financial twelve months after the end of the financial year which statements of the Group and of the Company; and will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; (ii) the values attributed to the current assets in the financial and statements of the Group and of the Company misleading. (ii) no item, transaction or event of a material and unusual (c) At the date of this report, the directors are not aware of any nature has arisen in the interval between the end of the circumstances which have arisen which would render financial year and the date of this report which is likely adherence to the existing method of valuation of assets or to affect substantially the results of the operations of the liabilities of the Group and of the Company misleading or Group or of the Company for the financial year in which inappropriate. this report is made.

AUDITORS

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

Signed on behalf of the Board in accordance with a resolution of the directors

DR. LIM, WEE-CHAI

QUAH CHIN CHYE

Klang, Selangor Darul Ehsan Malaysia 7 November 2003

38 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Sstatement by directors PURSUANT TO SECTION 169 (15) OF THE COMPANIES ACT, 1965

We, DR. LIM, WEE-CHAI and QUAH CHIN CHYE, being two of the directors of TOP GLOVE CORPORATION BHD., do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 41 to 69 are drawn up in accordance with applicable Approved Accounting Standards in Malaysia and the provisions of Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as at 31 August 2003 and of the results and the cash flows of the Group and of the Company for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the directors

DR. LIM, WEE-CHAI

QUAH CHIN CHYE

Klang, Selangor Darul Ehsan Malaysia 7 November 2003

Sstatutory declaration PURSUANT TO SECTION 169 (16) OF THE COMPANIES ACT, 1965 I, QUAH CHIN CHYE, the director primarily responsible for the financial management of TOP GLOVE CORPORATION BHD., do solemnly and sincerely declare that the accompanying financial statements set out on pages 41 to 69 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act 1960.

Subscribed and solemnly declared } by the abovenamed QUAH CHIN CHYE } QUAH CHIN CHYE at Klang in the State of Selangor on } 7 November 2003 }

Before me,

RAHMAH HAJI ISMAIL Commissioner for Oaths

Klang, Selangor Darul Ehsan Malaysia

39 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Rreport of the auditors TO THE MEMBERS OF TOP GLOVE CORPORATION BHD.

We have audited the financial statements set out on pages 41 to 69. These financial statements are the responsibility of the Company’s directors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant 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 Act, 1965 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 August 2003 and of the results and the cash 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 its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

We have considered the financial statements and the auditors’ report thereon of all the subsidiaries of which we have not acted as auditors, as indicated in Note 11 to the financial statements, being financial statements that have been included in the consolidated financial statements. We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification material to the consolidated financial statements and, in respect of subsidiaries incorporated in Malaysia, did not include any comment required to be made under Section 174 (3) of the Act.

Ernst & Young AF: 0039 Chartered Accountants

Lee Ah Too No. 2187/09/05(J) Partner

Melaka, Malaysia 7 November 2003

40 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Iincome statements FOR THE YEAR ENDED 31 AUGUST 2003

Group Company Note 2003 2002 2003 2002 RM RM RM RM

Revenue 3 265,089,094 180,202,451 7,980,000 14,177,778

Cost of sales (206,370,701) (136,164,582) - -

Gross profit 58,718,393 44,037,869 7,980,000 14,177,778

Other operating income 426,299 228,391 - -

Distribution and selling costs (15,998,598) (13,528,586) - -

Administrative and general expenses (12,881,938) (9,911,683) (381,616) (325,751)

Profit from operations 4 30,264,156 20,825,991 7,598,384 13,852,027

Finance costs, net 6 (1,000,166) (639,731) - -

Profit before taxation 29,263,990 20,186,260 7,598,384 13,852,027

Taxation 7 (3,546,554) (2,212,821) (1,092,000) (2,457,778)

Profit after taxation 25,717,436 17,973,439 6,506,384 11,394,249

Minority interests (458,633) 85,967 - -

Net profit for the year 25,258,803 18,059,406 6,506,384 11,394,249

Earnings per share (sen)

Basic 8 27.71 19.85 Diluted 8 27.60 -

The accompanying notes form an integral part of the financial statements. 41 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Bbalance sheets AS AT 31 AUGUST 2003

Group Company Note 2003 2002 2003 2002 RM RM RM RM

NON-CURRENT ASSETS

Property, plant and equipment 10 137,134,137 86,273,929 - - Investments in subsidiaries 11 - - 25,975,213 25,975,213 Other investment 12 15,900 15,300 - - Due from a subsidiary 13 - - 49,867,647 48,001,941

137,150,037 86,289,229 75,842,860 73,977,154

CURRENT ASSETS

Inventories 14 32,166,214 27,007,673 - - Trade receivables 15 45,678,367 28,290,008 - - Other receivables 16 5,100,800 4,323,896 20,982,806 17,374,506 Cash and bank balances 17 17,003,689 16,906,977 226,163 7,935

99,949,070 76,528,554 21,208,969 17,382,441

CURRENT LIABILITIES

Borrowings 18 21,521,733 7,735,339 - - Trade payables 20 33,103,131 22,962,757 - - Other payables 21 19,630,153 10,707,642 244,000 225,000 Tax payable 565,311 323,749 - - Dividends payable 3,682,880 - 3,682,880 -

78,503,208 41,729,487 3,926,880 225,000

NET CURRENT ASSETS 21,445,862 34,799,067 17,282,089 17,157,441

158,595,899 121,088,296 93,124,949 91,134,595

FINANCED BY :

Share capital 22 92,197,000 65,000,000 92,197,000 65,000,000 Reserves 38,373,641 44,136,602 927,949 26,134,595

Shareholders’ equity 130,570,641 109,136,602 93,124,949 91,134,595 Minority interests 11,502,477 3,548,163 - -

142,073,118 112,684,765 93,124,949 91,134,595

Borrowings 18 11,767,806 5,700,531 - - Deferred taxation 23 4,754,975 2,703,000 - -

Non-current liabilities 16,522,781 8,403,531 - -

158,595,899 121,088,296 93,124,949 91,134,595

The accompanying notes form an integral part of the financial statements. 42 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Sstatements of changes in equity FOR THE YEAR ENDED 31 AUGUST 2003

Non distributable Distributable Foreign Share Share exchange Retained capital premium reserve profits Total Group RM RM RM RM RM

At 1 September 2001 50,000,000 13,840,708 30,528 29,299,155 93,170,391 Issuance of bonus shares 15,000,000 - - (15,000,000) - Share issue expenses - (225,840) - - (225,840) Currency translation differences * - - (367,355) - (367,355) Net profit for the year - - - 18,059,406 18,059,406 Dividends (Note 9) - - - (1,500,000) (1,500,000) At 31 August 2002 65,000,000 13,614,868 (336,827) 30,858,561 109,136,602 Issuance of bonus shares 26,000,000 (13,516,522) - (12,483,478) - Issuance of shares under ESOS 1,197,000 876,196 - - 2,073,196 Share issue expenses - (98,346) - - (98,346) Currency translation differences * - - 691,266 - 691,266 Net profit for the year - - - 25,258,803 25,258,803 Dividends (Note 9) - - - (6,490,880) (6,490,880)

At 31 August 2003 92,197,000 876,196 354,439 37,143,006 130,570,641

Non distributable Distributable Share Share Retained capital premium profits Total Company RM RM RM RM

At 1 September 2001 50,000,000 13,840,708 17,625,478 81,466,186 Issuance of bonus shares 15,000,000 - (15,000,000) - Share issue expenses - (225,840) - (225,840) Net profit for the year - - 11,394,249 11,394,249 Dividends (Note 9) - - (1,500,000) (1,500,000) At 31 August 2002 65,000,000 13,614,868 12,519,727 91,134,595 Issuance of bonus shares 26,000,000 (13,516,522) (12,483,478) - Issuance of shares under ESOS 1,197,000 876,196 - 2,073,196 Share issue expenses - (98,346) - (98,346) Net profit for the year - - 6,506,384 6,506,384 Dividends (Note 9) - - (6,490,880) (6,490,880)

At 31 August 2003 92,197,000 876,196 51,753 93,124,949

* Representing net gain/(loss) not recognised in the income statement.

The accompanying notes form an integral part of the financial statements. 43 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Ccash flow statements FOR THE YEAR ENDED 31 AUGUST 2003

Group Company 2003 2002 2003 2002 RM RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 29,263,990 20,186,260 7,598,384 13,852,027

Adjustments for : Depreciation 9,081,769 6,038,718 - - Gain on disposals of property, plant and equipment (188,870) (62,912) - - Interest expense 1,109,432 833,092 - - Interest income (109,266) (193,361) - -

Operating profit before working capital changes 39,157,055 26,801,797 7,598,384 13,852,027 Increase in receivables (18,165,263) (8,177,048) (5,474,006) (9,702,881) Increase in inventories (5,158,541) (3,981,857) - - Increase in payables 19,062,885 14,832,151 19,000 33,813

Cash generated from operations 34,896,136 29,475,043 2,143,378 4,182,959 Interest paid (1,109,432) (833,092) - - Tax paid (1,253,017) (1,644,677) (1,092,000) (2,457,778)

Net cash generated from operating activities 32,533,687 26,997,274 1,051,378 1,725,181

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (61,062,704) (21,970,114) - - Interest received 109,266 193,361 - - Purchase of investment (600) - - - Proceeds from disposals of property, plant and equipment 1,309,597 1,323,903 - -

Net cash used in investing activities (59,644,441) (20,452,850) - -

44 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” cash flow statements (cont’d)

Group Company 2003 2002 2003 2002 RM RM RM RM

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of shares 2,073,196 - 2,073,196 - Proceeds from issuance of shares by subsidiaries 8,186,947 2,946,642 - - Share issue / listing expenses (98,346) (225,840) (98,346) (225,840) Payment of dividends (2,808,000) (1,500,000) (2,808,000) (1,500,000) Repayments of hire purchase payables (166,796) (556,526) - - Drawdown of term loans 12,386,910 1,890,189 - - Repayment of term loans (3,534,642) (783,277) - - Short term borrowings 11,374,238 272,657 - -

Net cash generated from/(used in) financing activities 27,413,507 2,043,845 (833,150) (1,725,840)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 302,753 8,588,269 218,228 (659) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 16,631,171 8,042,902 7,935 8,594

CASH AND CASH EQUIVALENTS AT END OF YEAR 16,933,924 16,631,171 226,163 7,935

Cash and cash equivalents comprise : Cash and bank balances 17,003,689 16,906,977 226,163 7,935 Bank overdraft (69,765) (275,806) - -

16,933,924 16,631,171 226,163 7,935

The accompanying notes form an integral part of the financial statements. 45 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Nnotes to the financial statements 31 AUGUST 2003

1. CORPORATE INFORMATION

The principal activities of the Company are investment holding and the provision of management services. The principal activities of the subsidiaries are described in Note 11. There were no significant changes in the nature of these activities during the financial year.

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Board of the Kuala Lumpur Stock Exchange. The principal place of business of the Company is located at Lot 5091, Jalan Teratai, Batu 5, off Jalan Meru, 41050 Klang, Selangor.

The number of employees in the Group at the end of the financial year was 2,757 (2002 : 1,500).

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 7 November 2003.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation

The financial statements of the Group and of the Company have been prepared under the historical cost convention and comply with the provisions of the Companies Act, 1965 and applicable Approved Accounting Standards in Malaysia.

During the financial year ended 31 August 2003, the Group and the Company adopted the following MASB Standards for the first time:

MASB 25 Income Taxes MASB 27 Borrowing Costs

The adoption of MASB 25 and MASB 27 have not given rise to any adjustments to the opening balances of retained profits of the prior and current year or to changes in comparatives.

(b) Basis of Consolidation

The consolidated financial statements include the financial statements of the Company and all its subsidiaries. Subsidiaries are those companies in which the Group has a long term equity interest and where it has power to exercise control over the financial and operating policies so as to obtain benefits therefrom.

Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. The assets and liabilities of a subsidiary are measured at their fair values at the date of acquisition and these values are reflected in the consolidated balance sheet. The difference between the cost of an acquisition and the fair value of the Group’s share of the net assets of the acquired subsidiary at the date of acquisition is included in the consolidated balance sheet as goodwill or reserve arising on consolidation.

46 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

(b) Basis of Consolidation (continued)

Intragroup transactions, balances and resulting unrealised gains are eliminated on consolidation and the consolidated financial statements reflect external transactions only. Unrealised losses are eliminated on consolidation unless costs cannot be recovered.

The gain or loss on disposal of a subsidiary company is the difference between net disposal proceeds and the Group’s share of its net assets together with any unamortised balance of goodwill and exchange differences which were not previously recognised in the consolidated income statement.

Minority interest is measured at the minorities’ share of the post acquisition fair values of the identifiable assets and liabilities of the acquiree.

(c) Property, Plant and Equipment and Depreciation

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

Freehold land and capital work-in-progress are not depreciated. Leasehold land is depreciated over the period of the respective lease which ranges from 50 years to 72 years. Depreciation of other property, plant and equipment is provided for on a straight line basis to write off the cost of each asset to its residual value over the estimated useful life at the following annual rates :

Buildings 2% Plant and equipment 10% Other assets 10% - 20%

Upon the disposal of an item of property, plant or equipment, the difference between the net disposal proceeds and the carrying amount is recognised in the income statement.

(d) Inventories

Inventories are stated at the lower of cost (determined on the first-in, first-out basis) and net realisable value. Cost of finished goods and work-in-progress includes direct materials, direct labour, other direct costs and appropriate production overheads. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution.

(e) Cash and Cash Equivalents

For the purposes of the cash flow statements, cash and cash equivalents include cash on hand and at bank and deposits at call, net of outstanding bank overdrafts.

47 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

(f) Hire Purchases

Assets acquired by way of hire purchase are stated at an amount equal to the lower of their fair values and the present value of the minimum hire purchase payments at the inception of the hire purchase, less accumulated depreciation and impairment losses. The corresponding liability is included in the balance sheet as borrowings. In calculating the present value of the minimum hire purchase payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Company’s incremental borrowing rate is used.

Hire purchase payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total hire purchase commitments and the fair value of the assets acquired, are recognised as an expense in the income statement over the term of the relevant hire purchase so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

The depreciation policy for assets purchased under hire purchase is consistent with that for depreciable property, plant and equipment as described in Note 2(c).

(g) Provisions for Liabilities

Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying ecomonic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

(h) Income Tax

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date.

Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.

48 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

i) Revenue Recognition Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably.

(i) Sale of goods Revenue relating to sale of goods is recognised net of sales taxes, discounts and returns upon the transfer of risks and rewards.

(ii) Revenue from services Revenue from services rendered is recognised net of service taxes and discounts as and when the services are performed.

(iii) Interest income Interest is recognised on a time proportion basis that reflects the effective yield on the asset.

(iv) Dividend income Dividend income is recognised when the right to receive payment is established.

(j) Foreign Currencies

(i) Foreign currency transactions Transactions in foreign currencies are initially recorded in Ringgit Malaysia at rates of exchange ruling at the date of the transaction. At each balance sheet date, foreign currency monetary items are translated into Ringgit Malaysia at exchange rates ruling at that date, unless hedged by forward foreign contracts, in which case the rates specified in such forward contracts are used. Non-monetary items initially denominated in foreign currencies, which are carried at historical cost are translated using the historical rate as of the date of acquisition and non monetary items which are carried at fair value are translated using the exchange rate that existed when the values were determined. All exchange differences are taken to the income statement.

(ii) Foreign entities Financial statements of foreign consolidated subsidiary are translated at year-end exchange rates with respect to the assets and liabilites, and at exchange rates at the date of the transactions with respect to the income statement. All resulting translation differences are included in the foreign exchange reserve in shareholders’ equity.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the Company and translated at the exchange rate ruling at the date of the transaction.

The principal exchange rates for every unit of foreign currency ruling at balance sheet date used are as follows :

2003 2002 RM RM

United States Dollar 3.80 3.80 Singapore Dollar 2.16 2.17 Thailand Baht 0.09 0.09 China, Yuan Renminbi 0.46 0.45

49 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

(k) Impairment of Assets

At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is any indication of impairment. If any such indication exists, impairment is measured by comparing the carrying values of the assets with their recoverable amounts. Recoverable amount is the higher of net selling price and value in use, which is measured by reference to discounted future cash flows.

An impairment loss is recognised as an expense in the income statement immediately. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased.

(l) Financial Instruments

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

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

(i) Other Non-Current Investments Non-current investments other than investments in subsidiaries are stated at cost less impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2(k).

On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in the income statement.

(ii) Receivables Trade and other receivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date.

(iii) Payables Trade and other payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received.

(iv) Interest-Bearing Borrowings Interest-bearing bank loans and overdrafts are recorded at the amount of proceeds received, net of transaction 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 or sale, are capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. The amount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate which is the weighted average of the borrowing costs applicable to the Group’s borrowings that are outstanding during the year, other than borrowings made specifically for the purpose of obtaining another qualifying asset. For borrowings made specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of that borrowing.

All other borrowing costs are recognised as an expense in the income statement in the period in which they are incurred.

(v) Equity Instruments Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

50 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

3. REVENUE

Revenue of the Group and the Company consist of the following :

Group Company 2003 2002 2003 2002 RM RM RM RM

Sales of goods net of discounts 265,089,094 180,202,451 - - Management fees receivable from subsidiaries - - 280,000 120,000 Dividends received from subsidiaries - - 7,700,000 14,057,778

265,089,094 180,202,451 7,980,000 14,177,778

4. PROFIT FROM OPERATIONS

Profit from operations is stated after charging/(crediting) :

Group Company 2003 2002 2003 2002 RM RM RM RM

Auditors’ remuneration 71,760 60,841 15,000 15,000 Depreciation 9,081,769 6,038,718 - - Executive directors’ remuneration (Note 5) 1,422,164 857,090 131,000 80,000 Non-executive directors’ remuneration (Note 5) 98,000 215,500 98,000 130,000 Net foreign exchange losses : Realised 100,792 - - - Unrealised 130,725 - - - Staff costs 24,407,152 19,274,820 - - Rental expenses 1,132,049 1,137,546 - - Gain on disposal of property, plant and equipment (188,870) (62,912) - - Rental income (52,200) - - -

51 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

5. DIRECTORS’ REMUNERATION

Group Company 2003 2002 2003 2002 RM RM RM RM Directors of the Company

Executive: Salaries and other emoluments 1,291,164 637,090 - - Fees 131,000 220,000 131,000 80,000 Benefits-in-kind 31,600 42,700 - -

1,453,764 899,790 131,000 80,000

Non-executive : Fees 98,000 215,500 98,000 130,000

Analysis excluding benefits-in-kind: Total executive directors’ remuneration (Note 4) 1,422,164 857,090 131,000 80,000 Total non-executive directors’ remuneration (Note 4) 98,000 215,500 98,000 130,000

Total directors’ remuneration 1,520,164 1,072,590 229,000 210,000

6. FINANCE COSTS, NET

Included in finance costs of the Group are :

2003 2002 RM RM

Interest expenses on borrowings 1,109,432 833,092 Interest income on deposits (109,266) (193,361)

1,000,166 639,731

52 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

7. TAXATION

Group Company 2003 2002 2003 2002 RM RM RM RM

Tax expense for the year: Malaysian income tax 1,388,416 1,201,100 1,092,000 2,457,778 Foreign tax 165,464 49,516 - -

1,553,880 1,250,616 1,092,000 2,457,778

Deferred tax: Relating to origination and reversal of temporary differences (Note 23) 2,043,975 970,000 - - Relating to reduction in foreign income tax rate (Note 23) 8,000 - - -

2,051,975 970,000 - -

Overprovided in prior years: Malaysian income tax (59,301) (7,795) - -

3,546,554 2,212,821 1,092,000 2,457,778

Domestic income tax is calculated at the Malaysian statutory tax rate of 28% (2002 : 28%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows:

2003 2002 RM RM Group

Profit before taxation 29,263,990 20,186,260

Taxation at Malaysian statutory tax rate of 28% (2002 : 28%) 8,193,917 5,652,153 Effect of reduction in income tax rate (9,517) - Effect of different tax rates in other countries (21,138) 57,837 Income not subject to tax (403,761) (2,406) Expenses not deductible for tax purposes 527,837 583,732 Utilisation of current year’s reinvestment allowances (666,800) - Utilisation of unabsorbed reinvestment allowance (2,163,000) (2,018,597) Deferred tax assets recognised during the year (1,956,115) (1,011,000) Deferred tax assets not recognised in prior years - (1,612,937) Underprovision of deferred tax in prior year - 563,735 Underprovision of income tax expense in prior years 44,931 304

Tax expense for the year 3,546,354 2,212,821

53 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

7. TAXATION (continued)

2003 2002 RM RM Company

Profit before taxation 7,598,384 13,852,027

Taxation at Malaysian statutory tax rate of 28% (2002 : 28%) 2,127,548 3,878,568 Income not subject to tax (1,064,000) (1,478,400) Expenses not deductible for tax purposes 28,452 57,610

Tax expense for the year 1,092,000 2,457,778

8. EARNINGS PER SHARE

(a) Basic

Basic earnings per share is calculated by dividing the net profit for the year by the weighted average number of ordinary shares in issue during the financial year.

Group 2003 2002 RM RM

Net profit for the year 25,258,803 18,059,406 Weighted average number of ordinary shares in issue 91,153,000 91,000,000

Basic earnings per share (sen) 27.71 19.85

The number of ordinary shares used in the computation of earnings per share for 2002 has been adjusted for the bonus issue of 26,000,000 ordinary shares during the year.

54 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

8. EARNINGS PER SHARE (continued)

(b) Diluted

For the purpose of calculating diluted earnings per share, the weighted average number of ordinary shares in issue during the financial year have been adjusted for the effects of dilutive potential ordinary shares from the assumed conversion of the Employee Share Options Scheme. The adjusted weighted average number of ordinary shares is the weighted average number of ordinary shares in issue during the financial year plus the weighted average number of ordinary shares which would be issued on the conversion of the unexercised share options into ordinary shares. The share options are deemed to have been converted into ordinary shares at the date of issue of the share options.

Group 2002 RM

Net profit for the year 25,258,803

Weighted average number of ordinary shares in issue 91,153,000 Assumed exercise of dilutive share options 364,000

91,517,000

Diluted earnings per share (sen) 27.60 Comparative diluted earnings per share has not been presented as there was no potential ordinary shares outstanding during the previous financial year.

9. DIVIDENDS

Amount Net Dividends per Share 2003 2002 2003 2002 RM RM Sen Sen

Group and Company

Ordinary final tax exempt dividend of 3%, in respect of financial year 2001, paid on 1 March 2002 - 1,500,000 - 3.00 First and final dividend of 6% less 28% taxation, in respect of financial year 2002, paid on 27 February 2003 2,808,000 - 4.32 - Interim tax exempt dividend of 4%, in respect of current financial year, paid on 5 September 2003 3,682,880 - 4.00 -

6,490,880 1,500,000

55 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

9. DIVIDENDS (continued)

At the forthcoming Annual General Meeting, a final dividend of 6% on 92,583,000 ordinary shares less 28% taxation amounting to RM3,999,586 (4.32 sen per share) and a special dividend of 2% tax exempt amounting to RM1,851,660 (2 sen per share) in respect of the current financial year ended 31 August 2003 will be proposed for shareholders approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in shareholders’ equity as an appropriation of retained profits in the next financial year ending 31 August 2004.

10. PROPERTY, PLANT AND EQUIPMENT

* Land Plant Capital and and ** Other work-in- buildings equipment assets progress Total RM RM RM RM RM Group

Cost

At 1 September 2002 39,357,039 56,063,360 6,529,479 3,502,935 105,452,813 Additions 9,461,823 36,437,077 2,654,665 12,509,139 61,062,704 Reclassification 4,032,346 6,166,360 1,374,477 (11,573,183) - Disposals (494,745) (337,696) (493,424) - (1,325,865)

At 31 August 2003 52,356,463 98,329,101 10,065,197 4,438,891 165,189,652

Accumulated Depreciation

At 1 September 2002 2,160,023 14,665,500 2,353,361 - 19,178,884 Charge for the year 810,309 7,187,869 1,083,591 - 9,081,769 Disposals (84,263) (99,046) (21,829) - (205,138)

At 31 August 2003 2,886,069 21,754,323 3,415,123 - 28,055,515

Net Book Value

At 31 August 2003 49,470,394 76,574,778 6,650,074 4,438,891 137,134,137

At 31 August 2002 37,197,016 41,397,860 4,176,118 3,502,935 86,273,929

Depreciation charge for 2002 654,318 4,599,782 784,618 - 6,038,718

56 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

10. PROPERTY, PLANT AND EQUIPMENT (continued)

* LAND AND BUILDINGS

Long term Freehold leasehold land land Buildings Total RM RM RM RM

Cost

At 1 September 2002 10,814,364 2,900,000 25,642,675 39,357,039 Additions 181,282 3,123,531 6,157,010 9,461,823 Reclassification 55,864 - 3,976,482 4,032,346 Disposals (95,000) - (399,745) (494,745)

At 31 August 2003 10,956,510 6,023,531 35,376,422 52,356,463

Accumulated Depreciation

At 1 September 2002 - 99,708 2,060,315 2,160,023 Charge for the year - 99,997 710,312 810,309 Disposals - - (84,263) (84,263)

At 31 August 2003 - 199,705 2,686,364 2,886,069

Net Book Value

At 31 August 2003 10,956,510 5,823,826 32,690,058 49,470,394

At 31 August 2002 10,814,364 2,800,292 23,582,360 37,197,016

Depreciation charge for 2002 - 42,732 611,586 654,318

** Other assets comprise motor vehicles, office furniture and equipment.

(a) Property, plant and equipment of the Group with the following carrying values are pledged to banks for banking facilities granted to the Group as referred to in Note 18.

2003 2002 RM RM

Land and buildings 21,251,890 25,799,427 Plant and equipment 29,069,467 11,606,944 Other assets 354,147 407,913

50,675,504 37,814,284

(b) Included in the above property, plant and equipment are motor vehicles with net book value of RM471,840 (2002: RM1,339,331) held under hire purchase arrangements. 57 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

11. SUBSIDIARIES

Company 2003 2002 RM RM

Unquoted shares, at cost : - in Malaysia 25,170,022 25,170,022 - outside Malaysia 805,191 805,191

25,975,213 25,975,213

(a) Details of the subsidiaries are as follows :

Country of Equity interest (%) Name of company incorporation 2003 2002 Principal activities

Top Glove Sdn. Bhd. (“TGSB”) Malaysia 100 100 Manufacture and trading of gloves

TG Medical Sdn. Bhd. * Malaysia 100 100 Manufacture and trading of gloves

Great Gloves Sdn. Bhd. * Malaysia 100 100 Trading of gloves

Top Glove Engineering Sdn. Bhd. * Malaysia 100 100 Property investment

TG Medical (U.S.A.) Inc * United States 100 100 Trading of gloves of America

Subsidiaries of TGSB :

Great Glove (Thailand) Co. Ltd.* Thailand 74 74 Manufacture of gloves

Top Glove Medical (Thailand) Co. Ltd.* Thailand 60 60 Manufacture of gloves

Top Glove (Zhangjiagang) Co. Ltd.* China 55 55 Manufacture of gloves

Top Glove International Sdn. Bhd. (“TGI”) * Malaysia 100 -Dormant

* Audited by firms of auditors other than Ernst & Young.

(b) Acquisition of subsidiary :

On 21 March 2003, the Company through its wholly owned subsidiary, TGSB acquired the entire issued and paid up share capital of TGI, comprising 2 ordinary shares of RM1 each in TGI, for a cash consideration of RM2. TGI is incorporated in Malaysia and its intended principal activities are to engage in the trading of latex gloves.

58 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

12. OTHER INVESTMENT

Group 2003 2002 RM RM

Golf resort membership at cost 15,900 15,300

13. DUE FROM A SUBSIDIARY

The amount due from a subsidiary is unsecured, interest free and with no fixed terms of repayment.

14. INVENTORIES

Group 2003 2002 RM RM

At cost - Raw materials 5,285,794 3,748,018 Consumables and hardware 3,697,946 1,762,178 Work-in-progress 4,854,905 5,123,323 Finished goods 18,327,569 16,374,154

32,166,214 27,007,673

15. TRADE RECEIVABLES

Group 2003 2002 RM RM

Trade receivables 45,685,093 28,296,734 Less: Provision for doubtful debts (6,726) (6,726)

45,678,367 28,290,008

The Group’s normal trade credit term ranges from 30 to 90 days. Other credit terms are assessed and approved on a case-by-case basis.

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

59 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

16. OTHER RECEIVABLES

Included in other receivables of the Company are amounts due from subsidiaries of RM20,980,576 (2002 : RM17,373,276) which are unsecured, interest free and with no fixed terms of repayment.

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

17. CASH AND CASH EQUIVALENTS

Group Company 2003 2002 2003 2002 RM RM RM RM

Cash on hand and in banks 14,169,294 10,876,050 226,163 7,935 Fixed deposits with a licensed bank 2,834,395 6,030,927 - -

17,003,689 16,906,977 226,163 7,935 Less : Bank overdrafts (Note 18) (69,765) (275,806) - -

16,933,924 16,631,171 226,163 7,935

Fixed deposits amounting to RM712,619 (2002 : RM2,479,752) are registered in the name of directors, who are holding them in trust for the Group.

Deposits with a licensed bank of the Group amounting to RM1,317,654 (2002 : RM1,393,406) are pledged to banks as securities.

The weighted average effective interest rates at the balance sheet date and maturities at the end of the financial year of the deposits were as follows:

Group 2003 2002 %Days%Days

Licensed banks 3.1 365 3.2 180

60 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

18. BORROWINGS

Group 2003 2002 RM RM Short Term Borrowings

Secured: Bank overdrafts (Note 17) 69,765 275,806 Bankers’ acceptances 8,196,895 - Export credit refinancing 7,608,000 4,430,657 Term loans 5,492,159 2,651,141 Hire purchase payables (Note 19) 154,914 377,735

21,521,733 7,735,339

Long Term Borrowings

Secured: Term loans 11,573,291 5,562,041 Hire purchase payables (Note 19) 194,515 138,490

11,767,806 5,700,531

Total Borrowings

Bank overdrafts (Note 17) 69,765 275,806 Bankers’ acceptances 8,196,895 - Export credit refinancing 7,608,000 4,430,657 Term loans 17,065,450 8,213,182 Hire purchase payables (Note 19) 349,429 516,225

33,289,539 13,435,870

Maturity of borrowings (excluding hire purchase) within one year 21,366,819 7,357,604 More than 1 year and less than 2 years 2,063,080 2,498,847 More than 2 years and less than 5 years 4,487,127 3,063,194 5 years or more 5,023,084 -

32,940,110 12,919,645

The weighted average effective interest rates at the balance sheet date for borrowings, excluding hire purchase payables were as follows:

Group 2003 2002 %%

Bank overdrafts 7.1 7.7 Bankers’ acceptances 3.1 N/A Export credit refinancing 3.1 3.5 Term loans 6.5 7.7

The above bank borrowings of the Group are secured by way of fixed and floating charges over certain property, plant and equipment of the Group as disclosed in Note 10(a). 61 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

19. HIRE PURCHASE PAYABLES

Group 2003 2002 RM RM

Minimum hire purchase payments: Not later than 1 year 223,249 469,966 Later than 1 year and not later than 2 years 142,515 140,674

365,764 610,640 Less : Future finance charges (16,335) (94,415)

Present value of hire purchase payables 349,429 516,225

Present value of hire purchase payables: Not later than 1 year 154,914 377,735 Later than 1 year and not later than 2 years 147,858 138,490 Later than 2 years and not later than 5 years 46,657 -

349,429 516,225

Analysed as: Due within 12 months (Note 18) 154,914 377,735 Due after 12 months (Note 18) 194,515 138,490

349,429 516,225

The hire purchase bore interest at the balance sheet date of between 4% to 5.7% (2002 : 5.6% to 6.4%) per annum.

20. TRADE PAYABLES

Included in trade payables is an amount of RM451,651 (2002: RM56,611) due to a corporate shareholder of a subsidiary of the Company.

The normal trade credit term granted to the Group ranges from 30 to 90 days.

21. OTHER PAYABLES

Included in other payables is an amount of RM267,198 (2002: RM2,831) due to a director. The amount due is unsecured, interest free and has no fixed terms of repayment.

62 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

22. SHARE CAPITAL Group and Company Number of Ordinary Shares of RM1 Each Amount 2003 2002 2003 2002 RM RM

Authorised : At 1 September 100,000,000 0,000,000 100,000,000 50,000,000 Created during the year 100,000,000 50,000,000 100,000,000 50,000,000

At 31 August 200,000,000 100,000,000 200,000,000 100,000,000

Issued and fully paid : At 1 September 65,000,000 50,000,000 65,000,000 50,000,000 Issued and paid up during the year - Bonus issue 26,000,000 15,000,000 26,000,000 15,000,000 - ESOS issue 1,197,000 - 1,197,000 -

At 31 August 92,197,000 65,000,000 92,197,000 65,000,000

Subsequent to the end of the financial year, the Company increased its issued and paid-up share capital from RM92,197,000 to RM92,583,000 by way of the issuance of 386,000 ordinary shares of RM1 each pursuant to the ESOS at an option price of between RM1.73 to RM3.55 per ordinary share.

All the new ordinary shares that were issued rank pari passu in all respects with the existing shares.

The Company’s Employee Share Options Scheme (“ESOS”) is governed by the by-laws which was approved by the shareholders at the Extraordinary General Meeting held on 9 January 2003 and became effective on 29 April 2003.

The main features of the ESOS are as follows:

(a) The ESOS shall be in force for a period of five years from the date of the receipt of the last of the requisite approvals. b) Eligible persons are employees of the Group (including executive directors) who have been confirmed in the employment of the Group and have served for at least one year before the date of the offer. The eligibility for participation in the ESOS shall be at the discretion of the Options Committee appointed by the Board of Directors. (c) The total number of shares to be issued under the ESOS shall not exceed in aggregate 10% of the issued share capital of the Company at any point of time during the tenure of the ESOS. (d) The option price for each share shall be the 5-days weighted average market price of the underlying shares at the time the ESOS Options are granted, with a discount of not more than ten percent (10%) if deemed appropriate, or the par value of the ordinary shares of the Company of RM1, whichever is the higher. (e) No option shall be granted for less than 1,000 shares to any eligible employee. (f) An option granted under the ESOS shall be capable of being excercised by the grantee by notice in writing to the Company commencing from the date of the offer but before the expiry of five years from the date of the receipt of the last of the requisite approvals. (g) All new ordinary shares issued upon exercise of the options granted under the ESOS will rank pari passu in all respect with the existing ordinary shares of the Company other than as may be specified in a resolution approving the distribution of dividends prior to their exercise dates. (h) The persons to whom the options have been granted have no right to participate by virtue of the options in any share issue of any other company. (i) The options shall not carry any right to vote at a general meeting of the Company. 63 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

22. SHARE CAPITAL (continued)

The movements in the options to take up unissued new ordinary shares of RM1 each during the financial year are as follow:

Number of Share Options 2003 2002

At 1 September - - Granted 1,871,000 - Exercised (1,197,000) - Lapsed (3,000) -

At 31 August 671,000 -

Details of share options granted during the financial year are as follows :

Exercise Period Exercise Price Number of Share Options RM 2003 2002

5.6.2003 - 29.4.2008 1.73 1,810,000 - 7.7.2003 - 29.4.2008 2.32 25,000 - 6.8.2003 - 29.4.2008 2.92 36,000 -

1,871,000 -

Details of share options exercised during the financial year are as follows:

Considerations Exercise Date Exercise Price Received Number of Share Options RM RM 2003 2002

5.7.2003 1.73 1,354,590 783,000 - 21.7.2003 1.73 294,100 170,000 - 5.8.2003 1.73 205,870 119,000 - 21.8.2003 1.73 - 2.92 218,630 125,000 -

2,073,190 1,197,000 -

Details of share options outstanding as at the end of the financial year are as follows:

Exercise Period Exercise Price Number of Share Options RM 2003 2002

5.6.2003 - 29.4.2008 1.73 612,000 - 7.7.2003 - 29.4.2008 2.32 25,000 - 6.8.2003 - 29.4.2008 2.92 34,000 -

671,000 -

64 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

23. DEFERRED TAXATION

Group 2003 2002 RM RM

At 1 September 2,703,000 1,733,000 Recognised in the income statement (Note 7) 2,043,975 970,000 Effect of reduction in foreign income tax rate (Note 7) 8,000 -

At 31 August 4,754,975 2,703,000

Represented after appropriate offsetting as follows: Deferred tax assets (7,047,000) (5,137,000) Deferred tax liabilities 11,801,975 7,840,000

4,754,975 2,703,000

The components and movements of deferred tax liabilities and assets of the Group during the financial year prior to offsetting are as follows:

Deferred Deferred Tax Liabilities Tax Assets

Accelerated Unutilised Capital Reinvestment Allowances Allowance RM RM

At 1 September 7,840,000 (5,137,000) Recognised in the income statements 3,961,975 (1,910,000)

At 31 August 11,801,975 (7,047,000)

24. COMMITMENTS

Group 2003 2002 RM RM

Capital expenditure: Approved and contracted for 3,218,000 2,629,000 Approved but not contracted for - 8,117,000

65 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

25. SIGNIFICANT RELATED PARTY TRANSACTIONS

2003 2002 RM RM Group

Purchases of raw materials from Titi Latex Sdn Bhd, a company in which a director, Dr. Lim, Wee-Chai has interest - 4,801,880

Company Gross dividends from subsidiaries 7,700,000 14,057,778 Management fees from subsidiaries 280,000 120,000

The directors are of the opinion that the transaction above have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.

26. CONTINGENT LIABILITIES

Company 2003 2002 RM RM

Corporate guarantee issued to financial institutions for credit facilities granted to subsidiaries (unsecured) 20,866,652 9,263,062

In addition, a wholly owned subsidiary of the Company, Top Glove Sdn. Bhd. (“TGSB”) is subject to a litigation suit, which details are set out below :

Pursuant to Shah Alam High Court Civil Suit No. MT3-22-431-2000, a writ of summons was served by Supermax Glove Manufacturing Sdn. Bhd. (“SGM”) (“the Plaintiff”) against TGSB on 8 November, 2000 claiming damages in the region of USD 2 million. The claim alleges passing off by TGSB of certain coloured boxes bearing the device of a glove containing gloves manufactured by TGSB under the brand name “SAFEMAX” as boxes containing gloves manufactured by SGM under the brand name “SUPERMAX”. The alleged infringing boxes are also alleged to carry notations of the various certifications of quality/accreditation belonging to SGM. Apart from damages, SGM have, inter alia, sought by way of relief injunctions preventing TGSB from carrying on certain acts relating to the alleged infringement and an order for the delivery up or destruction of the infringing goods.

TGSB’s appointed solicitors have opined that SGM’s case against TGSB is weak and unlikely to succeed. As such, the directors are of the opinion that no provision for any liabilities are required in the financial statements. The hearing of the Plaintiff’s application to attend Pre-Trial Case Management was deferred to 6 July 2004 instead of the earlier fixed date of 20 October 2003.

66 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

27. FINANCIAL INSTRUMENTS

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its interest rate, foreign exchange, credit and liquidity risks.

(a) Interest Rate Risk The Group’s primary interest rate risk relates to interest-bearing debt, as the Group had no substantial long-term interest- bearing assets as at 31 August 2003. The investments in financial assets are mainly short term in nature and they are not held for speculative purposes but have been mostly placed in fixed deposits.

The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowings. The Group actively reviews its debt portfolio, taking into account the investment holding period and nature of its assets. This strategy allows it to capitalise on cheaper funding in a low interest rate environment and achieve a certain level of protection against rate hikes.

The information on maturity dates and effective interest rates of financial assets and liabilities are disclosed in their respective notes.

(b) Foreign Exchange Risk The Group is exposed to various currencies especially in United States Dollar. Foreign currency denominated assets and liabilities together with expected cash flows from highly probable purchases and sales give rise to foreign exchange exposures.

Foreign exchange exposures in transactional currencies are kept to an acceptable level. The Group does not enter into derivative foreign exchange contract to hedge its foreign currency risk.

(c) Credit Risk Credit risks or the risk of customers defaulting are minimised and monitored via strictly limiting the Group’s associations to business partners with high creditworthiness. Trade receivables are monitored on an ongoing basis via Group management reporting procedures.

The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial instruments.

(d) Liquidity The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities of a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from financial institutions and prudently balances its portfolio with some short term funding so as to achieve overall cost effectiveness.

(e) Fair Values There are no material differences between the book value and fair value of the Group’s financial assets and liabilities.

67 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

28. SEGMENTAL INFORMATION

(a) Primary reporting segment - Geographical segments

The Group operates in three principal geographical areas of the world and is primarily involved in the gloves manufacturing industry.

The directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.

31 August 2003

Malaysia Thailand Others Eliminations Consolidated RM RM RM RM RM

Revenue 231,479,106 19,821,919 13,788,069 - 265,089,094 Inter-segment sales 21,837,542 25,111,824 174,388 (47,123,754) -

Total revenue 253,316,648 44,933,743 13,962,457 (47,123,754) 265,089,094

Result Profit/(loss) from operations 28,362,960 2,141,504 (240,308) 30,264,156 Finance costs, net (1,000,166) Taxation (3,546,554)

Profit after taxation 25,717,436 Minority interests (458,633)

Net profit for the year 25,258,803

Assets Segment assets 174,284,121 41,537,637 21,277,349 237,099,107

Liabilities Segment liabilities 66,140,212 20,243,253 8,642,524 95,025,989

Other information Capital expenditure 33,580,068 15,551,198 11,931,438 61,062,704 Depreciation 7,873,452 1,067,974 140,343 9,081,769

68 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notes to the financial statements (cont’d)

28. SEGMENTAL INFORMATION (continued)

31 August 2002

Malaysia Thailand Others Eliminations Consolidated RM RM RM RM RM

Revenue External sales 160,421,245 2,668,159 17,113,047 - 180,202,451 Inter-segment sales 18,041,077 11,349,377 - (29,390,454) -

Total revenue 178,462,322 14,017,536 17,113,047 (29,390,454) 180,202,451

Result Profit/(loss) from operations 20,839,137 (35,154) 22,008 20,825,991 Finance costs, net (639,731) Taxation (2,212,821)

Profit after taxation 17,973,439 Minority interests 85,967

Net profit for the year 18,059,406

Assets Segment assets 145,544,681 11,117,270 6,155,833 162,817,784

Liabilities Segment liabilities 45,130,597 3,939,500 1,062,921 50,133,018

Other information Capital expenditure 15,810,578 6,171,958 147,578 22,130,114 Depreciation 5,886,260 131,551 19,907 6,037,718

(b) Secondary reporting segment -Business segments

As the Group is principally involved in gloves manufacturing industry, segment reporting by business segment is not prepared.

69 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Llist of properties

The landed properties owned by Top Glove as at 31 August 2003 are set out below:

Audited Date of Age of Net Book Value Particulars Acquisition (A)/ Building Description/ Land area/ As At 31.8.2003 of Property Revaluation (R) (Years) Tenure Exisiting Use Build-Up Area (RM)

Top Glove Sdn Bhd 18, Jalan Mempari 10, HS (M) 15256, PT 8368, 23/10/97 (A) 6 Freehold Terrace house/ 1,300 square feet/ 119,453 1 Taman Bayu, Batu5 /2,Mukim of Kapar, Accommodation 1,100 square feet Jalan Meru, Klang District of Selangor for staff

36, Jalan Mempari 1, HS (M) 15297, PT 8411, 13/2/98 (A) 6 Freehold Terrace house/ 1,300 square feet/ 117,014 1 Taman Bayu,Batu 5 /2,Mukim of Kapar, Accommodation 1,100 square feet Jalan Meru, Klang District of Selangor for staff

11, Jalan Mempari 11, HS (M) 15238, PT 8349, 15/9/97 (A) 6 Freehold Terrace house/ 1,300 square feet/ 111,337 1 Taman Bayu, Batu 5 /2, HS (M) 15238, PT 8445, Accommodation 1,100 square feet Jalan Meru, Klang Mukim of Kapar, for staff District of Selangor

Lot 4968, Jalan Teratai, EMR 6629, Lot 4968, 13/10/93 (A) 12 Freehold Factory/Glove 3 acres/ 6,153,705 Batu 6, Off Jalan Meru, Mukim of Kapar, manufacturing 66,980 square feet 41050 Klang District of Klang and State of Selangor

4, Jalan Seri Kenangan 8, HS (M) 10354, PT 15485, 29/7/95 (A) 10 Freehold Terrace house/ 1,640 square feet/ 90,328 Taman Meru 3, Meru, Mukim of Kapar, Accommodation 1,400 square feet 41050 Klang District of Selangor for staff

6, Jalan Seri Kenangan 8, HS (M) 10355, PT 15486, 29/7/95 (A) 10 Freehold Terrace house/ 1,640 square feet/ 90,328 Taman Meru 3, Meru, Mukim of Kapar, Accommodation 1,400 square feet 41050 Klang District of Selangor for staff

23, Jalan Seri Kenangan 8, HS (M) 10314, PT 15442, 23/5/96 (A) 10 Freehold Terrace house/ 1,608 square feet/ 113,439 Taman Meru 3, Meru, Mukim of Kapar, Accommodation 1,350 square feet 41050 Klang District of Selangor for staff

22, Jalan Mempari 1, HS (M) 15304, PT 8419, 15/9/97 (A) 10 Freehold Terrace house/ 1,300 square feet/ 119,731 1 Taman Bayu, Batu 5 /2,Mukim of Kapar, Accommodation 1,100 square feet Jalan Meru, Klang District of Selangor for staff

Lot 5987, Jalan Teratai EMR 8780, Lot No 5987, 18/4/96 (A) 4 Freehold Factory/Glove 2.8 acres/ 3,546,334 Batu 5, Off Jalan Meru, Mukim of Kapar, manufacturing 57,250 square feet 41050 Klang District of Klang

Lot 4969, Jalan Teratai, G.M. 2143, Lot No 4969, 11/10/00 (A) 1 Freehold Factory & Office 3 acres 5,955,829 Batu 6, Off Jalan Meru, Mukim of Kapar, Building 41050 Klang District of Klang

Lot 18, 27, 38 & 57, Lot 18, 27, 38 & 57, 22/11/99 (A) 16 Leasehold Factory/Glove 31,192 9,599,942 Medan Tasek, Medan Tasek, expiring on: manufacturing square feel/ Kawasan Perindustrian Kawasan Perindustrian Lot 18-30.9.2072 197,675 Tasek, Ipoh, Perak Tasek, Ipoh, Perak Lot 27-28.12.2063 square feel Lot 38-23.12.2069 Lot 57-1.10.2064)

70 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” list of properties (cont’d)

Audited Date of Age of Net Book Value Particulars Acquisition (A)/ Building Description/ Land area/ As At 31.8.2003 of Property Revaluation (R) (Years) Tenure Exisiting Use Build-Up Area (RM)

TG Medical Sdn Bhd Lot 5091, Jalan Teratai, EMR 6510, Lo No 5091, 8/5/98 (A) 6 Freehold Factory/Glove 3 acress/ 6,002,200 Batu 5, Off Jalan Meru, Mukim of Kapar, manufacturing 68,490 41050 Klang Districtof Klang, square feet State of Selangor

19, Jalan Mempari 11, HS (M) 15241, PT No 8352, 25/10/95 (A) 6 Freehold Terrace house/ 1,300 square feet 110,265 1 Batu 5 /2, Jalan Meru, HS (M) 15325, PT No 8442, Accommodation 1,100 square feet Klang Mukim of Kapar, for staff District of Selangor

Lot 5972 & 5974, EMR 8769, Lot 5972 & 5974, 1/7/99 (A) 3 Freehold Factory/Glove Approx 4,042,992 Jalan Teratai, Batu 5, Mukim of Kapar, manufacturing 3 acres Jalan Meru, 41050 Klang District of Klang, State of Selangor

Top Glove Engineering Sdn Bhd Lot 5987, Jalan Teratai, EMR 8780, Lot No 5987, 18/4/96 (A) 4 Freehold Factory/Glove 2.8 acres/ 2,106,872 Batu 5, Off Jalan Meru, Mukim of Kapar, manufacturing 57,250 41050 Klang District of Klang, square feet State of Selangor

Top Glove Medical (Thailand) Co Ltd 188, Moo 5, Nor Sor 3 Kor 5/10/01 (A) 1 Freehold Factory & Office Approx 5,850,767 Karnchanawanich Road No. 2655, Building 16.06 acres (Thai Baht Tambon Sumnukgarm Tambon Sumnukgarm 63,344,898) Sadao, Songkhla Ampur Sadao 90320 Thailand Songkhla, Thailand

Top Glove (ZhangJiaGang) Co Ltd 3, Xitang Road, No. 21-7-14, 10/09/02 (A) 1 Leasehold Factory & Office Approx 5,339,858 Xizhang Town, ZhangJiaGang City, Building 607,143 (RMB11,619,531) ZhangJiaGang Xizhang Town, 215614, Jiang Su, China West Road, Southern Side

71 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Aanalysis of shareholdings AS AT 20 OCTOBER 2003

Authorised Share Capital : RM200,000,000

Issued and Paid-Up Share Capital : RM92,473,000

Class of Shares : Ordinary Shares of RM1.00 each

Voting Rights : One vote per ordinary share

Distribution of Shareholdings

No. of No. of Size of Shareholdings Shareholders % Shares Held %

1 - 99 162 12.40 4,355 0.00 100 - 1,000 223 17.08 166,806 0.18 1,001 - 10,000 734 56.20 2,303,920 2.49 10,001 - 100,000 109 8.35 3,038,120 3.29 100,001 - 4,623,649 (less than 5% of issued shares) 74 5.67 50,179,585 54.26 4,623,650 (5% of issued shares) and above 4 0.31 36,780,214 39.77

TOTAL 1,306 100.00 92,473,000 100.00

List of Substantial Shareholders

The Substantial Shareholders of Top Glove based on the Register of Substantial Shareholders of the Company and their respective shareholdings are as follows:-

DIRECT INTEREST INDIRECT INTEREST No. of No. of Name Shares Held % Shares Held %

Dr. Lim, Wee-Chai 28,588,179 30.92 15,932,351 (a) 17.23 Tong Siew Bee (f) 1,742,098 1.88 42,778,432 (b) 46.26 Lim Hooi Sin 2,689,565 2.91 41,830,965 (c) 45.24 Lim Quee Choo (f) 1,143,239 1.24 43,377,291 (d) 46.91 Top Glove Holdings Sdn. Bhd. 10,357,449 11.20 - - United Gloves Sdn. Bhd. 4,933,985 5.34 - - Mayban Trustees Berhad for Public Ittikal Fund 5,157,700 5.58 - -

72 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” analysis of shareholdings (cont’d)

Note:

(a) Deemed interested through Tong Siew Bee(f), Lim Hooi Sin, Lim Quee Choo(f) and Top Glove Holding Sdn. Bhd.’s direct interest in Top Glove Corporation Berhad.

(b) Deemed interested through Dr. Lim, Wee-Chai, Lim Hooi Sin, Lim Quee Choo(f) and Top Glove Holding Sdn. Bhd.’s direct interest in Top Glove Corporation Berhad.

(c) Deemed interested through Dr. Lim, Wee-Chai, Tong Siew Bee(f), Lim Quee Choo(f) and Top Glove Holding Sdn. Bhd.’s direct interest in Top Glove Corporation Berhad.

(d) Deemed interested through Dr. Lim, Wee-Chai, Tong Siew Bee(f), Lim Hooi Sin and Top Glove Holding Sdn. Bhd.’s direct interest in Top Glove Corporation Berhad.

Dr. Lim, Wee-Chai and Tong Siew Bee(f) are husband and wife. Lim Hooi Sin and Lim Quee Choo(f) are the brother and sister respectively to Dr. Lim, Wee-Chai. No other Directors and Senior Management of Top Glove Group are related to each other.

List of Directors’ Shareholdings

The Directors’ Shareholdings of Top Glove based on the Register of Directors’ Shareholdings of the Company are as follows:-

DIRECT INTEREST INDIRECT INTEREST No. of No. of Name Shares Held % Shares Held %

Dr. Lim, Wee-Chai 28,588,179 30.92 15,932,351 (a) 17.23 Tan Sri Datuk (Dr) Arshad Bin Ayub 1,974,300 2.14 - - Tong Siew Bee (f) 1,742,098 1.88 42,778,432 (b) 46.26 Haji Shahadan Bin Haji Abd Manas 35,200 0.04 - - Lim Hooi Sin 2,689,565 2.91 41,830,965 (c) 45.24 Sekarajasekaran A/L Arasaratnam 3,797,989 4.11 - - Lau Boon Ann 18,200 0.02 - - Quah Chin Chye ---- Lee Kim Meow 228,506 0.25 - -

Note:

(a) Deemed interested through Tong Siew Bee(f), Lim Hooi Sin, Lim Quee Choo(f) and Top Glove Holding Sdn. Bhd.’s direct interest in Top Glove Corporation Berhad.

(b) Deemed interested through Dr. Lim, Wee-Chai, Lim Hooi Sin, Lim Quee Choo(f) and Top Glove Holding Sdn. Bhd.’s direct interest in Top Glove Corporation Berhad.

(c) Deemed interested through Dr. Lim, Wee-Chai, Tong Siew Bee(f), Lim Quee Choo(f) and Top Glove Holding Sdn. Bhd.’s direct interest in Top Glove Corporation Berhad.

Dr. Lim, Wee-Chai and Tong Siew Bee(f) are husband and wife. Lim Hooi Sin and Lim Quee Choo(f) are the brother and sister respectively to Dr. Lim, Wee-Chai. No other Directors and Senior Management of Top Glove Group are related to each other.

73 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” analysis of shareholdings (cont’d)

THIRTY LARGEST SECURITIES ACCOUNTS HOLDERS

No.Name of Shareholders No. of Shares Held %

1. Dr. Lim, Wee-Chai 17,796,787 19.25 2. Top Glove Holding Sdn. Bhd. 7,496,565 8.11 3. Dr. Lim, Wee-Chai 6,329,162 6.84 4. Mayban Nominees (Tempatan) Sdn. Bhd. 5,157,700 5.58 Mayban Trustees Berhad for Public Ittikal Fund 5. Dr. Lim, Wee-Chai 3,986,230 4.31 6. Sekarajasekaran A/L Arasaratnam 3,237,439 3.50 7. United Gloves Sdn. Bhd. 3,093,162 3.34 8. Amanah Raya Nominees (Tempatan) Sdn. Bhd. 2,155,600 2.33 Public Islamic Equity Fund 9. Arshad Bin Ayub 1,974,300 2.14 10. Lim Hooi Sin 1,394,571 1.51 11. Lembaga Tabung Haji 1,388,800 1.50 12. Mayban Nominees (Tempatan) Sdn. Bhd. 1,321,100 1.43 Mayban Trustees Berhad for Public Regular Savings Fund 13. Amanah Raya Nominees (Tempatan) Sdn. Bhd. 1,281,000 1.39 Public Equity Fund 14. AMMB Nominees (Tempatan) Sdn. Bhd. 1,278,000 1.38 AmTrustee Berhad for Pacific Pearl Fund 15. Top Glove Holding Sdn. Bhd. 1,276,855 1.38 16. Amanah Raya Nominees (Tempatan) Sdn. Bhd. 1,235,600 1.34 Public Savings Fund 17. Amanah Raya Nominees (Tempatan) Sdn. Bhd. 1,231,780 1.33 Public Smallcap Fund 18. Citicorp Nominees (Asing) Sdn. Bhd. 1,208,800 1.31 CB Lux for The Batterymarch Global Emerging Markets Fund 19. Top Glove Holding Sdn. Bhd. 1,038,029 1.12 20. Citicorp Nominees (Asing) Sdn. Bhd. 1,000,000 1.08 CB LDN for Stichting Shell Pensioenfonds

74 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” analysis of shareholdings (cont’d)

No. Name of Shareholders No. of Shares Held %

21. HSBC Nominees (Tempatan) Sdn. Bhd. 1,000,000 1.08 Pledged Securities Account for United Gloves Sdn. Bhd. 22. Lim Hooi Sin 918,702 0.99 23. Tong Siew Bee 898,771 0.97 24. United Gloves Sdn. Bhd. 840,823 0.91 25. DB (Malaysia) Nominee (Asing) Sdn. Bhd. 817,800 0.88 DB AG Frankfurt for Internationale Kapitalanlagegesellschaft Mbh 26. John Hancock Life Insurance (Malaysia) Berhad 800,000 0.87 27. HSBC Nominees (Asing) Sdn. Bhd. 693,000 0.75 Bob HK Branch for Target Asia Fund Limited 28. Mayban Nominees (Tempatan) Sdn. Bhd. 658,100 0.71 Mayban Trustees Berhad for Public Aggressive Growth Fund 29. Malaysia Nominees (Asing) Sendirian Berhad 613,000 0.66 British and Malayan Trustees Limited for Savers Capital Fund 30. MIDF Sisma Nominees (Asing) Sdn. Bhd. 610,100 0.66 CLSA for Capital Intelligence Limited

75 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Nnotice of annual general meeting NOTICE IS HEREBY GIVEN that the Fifth Annual General Meeting of the Company will be held at East VIP Lounge, Kuala Lumpur Golf & Country Club, No. 10, Jalan 1/70D, Off Jalan Bukit Kiara, 60000 Kuala Lumpur on Friday, 9 January 2004 at 9.30 a.m. for the following purposes:-

A G E N D A

1. To receive the Audited Financial Statements for the financial year ended 31 August 2003 together with the (Resolution 1) Reports of the Directors and the Auditors thereon.

2. To approve the declaration of a Final Dividend of 6% less 28% income tax for the financial year ended 31 August (Resolution 2) 2003.

3. To approve the declaration of the Special Tax Exempt Dividend of 2% for the financial year ended 31 August (Resolution 3) 2003.

4. To approve the payment of Directors’ Fees for the financial year ended 31 August 2003. (Resolution 4)

5. To re-elect the Director, Mr. Lee Kim Meow who retires pursuant to Article 100 of the Company’s Articles of (Resolution 5) Association and being eligible, has offered himself for re-election.

6. To re-elect the following Directors who retire pursuant to Article 94 of the Company’s Articles of Association and being eligible, have offered themselves for re-election:- (a) Ms. Tong Siew Bee (Resolution 6) (b) Tuan Haji Shahadan Bin Haji Abd Manas (Resolution 7)

7. To pass the following resolution pursuant to Section 129(6) of the Companies Act, 1965 :- “That pursuant to Section 129(6) of the Companies Act, 1965, the following Directors who have attained the age of seventy (70) years, be and are hereby re-appointed as Directors of the Company and to hold office until the conclusion of the next Annual General Meeting:- (a) Tan Sri Datuk (Dr) Arshad Bin Ayub (Resolution 8) (b) Mr. Sekarajasekaran a/l Arasaratnam” (Resolution 9)

8. To re-appoint Messrs. Ernst & Young as Auditors of the Company until the conclusion of the next Annual General (Resolution 10) Meeting and to authorise the Directors to fix their remuneration.

9. As Special Business To consider and, if thought fit, with or without any modification, to pass the following resolutions as Ordinary Resolution and Special Resolution:-

Ordinary Resolution – Authority To Issue Shares Pursuant To Section 132D Of The Companies Act, 1965

“THAT subject to Section 132D of the Companies Act, 1965 and the approvals of the relevant governmental/ (Resolution 11) regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company, at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this Resolution in any one financial year does not exceed ten per centum (10%) of the issued and paid-up share capital of the Company for the time being; AND THAT the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the Kuala Lumpur Stock Exchange; AND THAT such authority shall commence immediately upon the passing of this Resolution and continue to be in force until the conclusion of the next Annual General Meeting of the Company.” 76 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notice of annual general meeting (cont’d)

Special Resolution – Proposed Amendment To The Articles of Association

“THAT the Articles of Association of the Company be amended by deleting the existing Article 165 in its entirety (Resolution 12) and to adopt the following new Article 165:- Existing Article 165 Subject to the provisions of any written law, a notice may be given by the Company to any Member either by serving it on him personally or by sending it by post to him at his address as shown in the Register or the Record of Depositors or the address (if any) in Malaysia supplied by him to the Company for the giving of notices to him. In the case of overseas Securities holders, any notice or other documents shall be forwarded by airmail or any speedier form of transmission. New Article 165 Subject to the provisions of any written law, a notice may be given by the Company to any Member either by serving it on him personally or by sending it by post to him at his address as shown in the Register or the Record of Depositors or the address (if any) in Malaysia supplied by him to the Company for the giving of notices to him.” 10. To transact any other ordinary business of which due notice shall have been given.

NOTICE OF DIVIDENDS ENTITLEMENT

NOTICE IS ALSO HEREBY GIVEN that the Final Dividend of 6% less 28% income tax and the Special Tax Exempt Dividend of 2% in respect of the financial year ended 31 August 2003 will be payable on 3 March 2004 to depositors who are registered in the Record of Depositors at the close of business on 18 February 2004, if approved by Members at the forthcoming Fifth Annual General Meeting on Friday, 9 January 2004.

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

(a) Shares transferred into the Depositor’s Securities Account before 4 p.m. on 18 February 2004 in respect of ordinary transfers; and (b) Shares bought on the Kuala Lumpur Stock Exchange on a cum entitlement basis according to the Rules of the Kuala Lumpur Stock Exchange.

By Order of the Board

CHUA SIEW CHUAN (MAICSA 0777689) Company Secretary

Kuala Lumpur 18 November 2003

Explanatory Notes to Special Business: 1. Authority pursuant to Section 132D of the Companies Act, 1965. The proposed adoption of the Ordinary Resolution is primarily to give flexibility to the Board of Directors to issue and allot shares at any time in their absolute discretion without convening a general meeting. 2. Authority to amend the Articles of Association. The proposed adoption of the Special Resolution is primarily to reduce cost as well as to improve the efficiency of the Company. Notes:- 1. A member of the Company entitled to attend and vote at the Meeting 3. The instrument appointing a proxy shall be in writing under the hand is entitled to appoint one or more proxies to attend and vote in his of the appointor or of his attorney duly authorised in writing or, if the stead. A proxy may but need not be a member of the Company and a appointor is a corporation, either under its seal or under the hand of member may appoint any person to be his proxy without limitation an officer or attorney duly authorised. and the provisions of Section 149(1) (a), (b), (c) and (d) of the Companies 4. The instrument appointing a proxy must be deposited at the Act, 1965 shall not apply to the Company. Registered Office of the Company at Level 7, Menara Milenium, Jalan 2. Where a holder appoints two or more proxies, the appointment shall Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala be invalid unless he specifies the proportion of his shareholdings to Lumpur not less than 48 hours before the time for holding the Meeting be represented by each proxy. or at any adjournment thereof. 77 Annual Report 2003 • Top Glove Corporation Berhad Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” notice of annual general meeting (cont’d)

STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING

The Directors who are standing for re-election at the Fifth Annual General Meeting of the Company to be held at East VIP Lounge, Kuala Lumpur Golf & Country Club, No. 10, Jalan 1/70D, Off Jalan Bukit Kiara, 60000 Kuala Lumpur on Friday, 9 January 2004 at 9.30 a.m. are as follows:

Details of Attendance Details of Individual Director and Name of Directors at Board Meeting other Disclosure Requirements

Lee Kim Meow Refer to page 21 Refer to page 12 (Article 100 of the Company’s Articles of Association) of the Annual Report of the Annual Report

Tong Siew Bee Refer to page 21 Refer to page 9 (Article 94 of the Company’s Articles of Association) of the Annual Report of the Annual Report

Haji Shahadan Bin Haji Abd Manas Refer to page 21 Refer to page 10 (Article 94 of the Company’s Articles of Association) of the Annual Report of the Annual Report

Tan Sri Datuk (Dr) Arshad Bin Ayub Refer to page 21 Refer to page 10 (Section 129 (6) of the Companies Act, 1965) of the Annual Report of the Annual Report

Sekarajasekaran a/l Arasaratnam Refer to page 21 Refer to page 11 (Section 129 (6) of the Companies Act, 1965) of the Annual Report of the Annual Report

78 Top Glove Corporation Berhad • Annual Report 2003 Top Glove, The World’s Largest Natural Rubber Disposable Glove Manufacturer “Always Staying On The Top” Fform of proxy

*I/We (full name in capital letters) (NRIC/Company No. ) of (full address) being a *Member/Members of TOP GLOVE CORPORATION BERHAD (“the Company”), do hereby appoint (full name in capital letters) (NRIC No ) of (full address) or failing him/her, (full name in capital letters) NRIC No ) of (full address) or failing him/her, *the CHAIRMAN OF THE MEETING, as *my/our proxy to attend and vote for *me/us, and on *my/our behalf at the Fifth Annual General Meeting of the Company to be held at East VIP Lounge, Kuala Lumpur Golf & Country Club, No. 10, Jalan 1/70D, Off Jalan Bukit Kiara, 60000 Kuala Lumpur on Friday, 9 January 2004 at 9.30 a.m. and at any adjournment thereof. Please indicate with an “X” in the spaces provided below how you wish your votes to be casted. If no specific direction as to voting is given, the Proxy will vote or abstain from voting at his/her discretion. No. Resolutions ForAgains 1To receive the Audited Financial Statements for the financial year ended 31 August, 2003 together with the Reports of the Directors and the Auditors thereon. 2To approve the declaration of a final dividend of 6% less 28% income tax for the financial year ended 31 August, 2003. 3To approve the declaration of the Special Tax Exempt Dividend of 2% for the financial year ended 31 August, 2003. 4To approve the payment of Directors’ Fees for the financial year ended 31 August, 2003. 5To re-elect the Director, Mr. Lee Kim Meow who retires pursuant to Article 100 of the Company’s Articles of Association. 6To re-elect the Director, Ms. Tong Siew Bee who retires pursuant to Article 94 of the Company’s Articles of Association. 7To re-elect the Director, Tuan Haji Shahadan Bin Haji Abd Manas who retires pursuant to Article 94 of the Company’s Articles of Association. 8To re-elect the Director, Tan Sri Datuk (Dr) Arshad Bin Ayub who retires pursuant to Section 129 (6) of the Companies Act, 1965. 9To re-elect the Director, Mr. Sekarajasekaran a/l Arasaratnam who retires pursuant to Section 129 (6) of the Companies Act, 1965. 10 To re-appoint Messrs. Ernst & Young as Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration. 11 As Special Business Ordinary Resolution Authority to issue shares pursuant to Section 132D of the Companies Act, 1965. 12 As Special Business Special Resolution Proposed amendment to the Articles of Association. * Strike out whichever not applicable.

As witness my/our hand this day of 2003/2004

Number of Shares held CDS Account No.

Signature of Member/Common Seal

Notes:

1. A member of the Company entitled to attend and vote at the Meeting is 3. The instrument appointing a proxy shall be in writing under the hand of entitled to appoint one or more proxies to attend and vote in his stead. A the appointor or of his attorney duly authorised in writing or, if the appointor proxy may but need not be a member of the Company and a member may is a corporation, either under its seal or under the hand of an officer or appoint any person to be his proxy without limitation and the provisions attorney duly authorised. of Section 149(1) (a), (b), (c) and (d) of the Companies Act, 1965 shall not apply to the Company. 4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at Level 7, Menara Milenium, Jalan Damanlela,79 Pusat 2. Where a holder appoints two or more proxies, the appointment shall be Bandar Damansara,Annual Report Damansara 2003 •Heights, Top Glove 50490 Corporation Kuala Lumpur Berhad not less than invalid unless he specifies the proportion of his shareholdingsTop Glove, to The be World’s48 Largesthours before Natural the timeRubber for Disposableholding the MeetingGlove Manufacturer or at any adjournment represented by each proxy. thereof. “Always Staying On The Top” FOLD HERE

Stamp

The Company Secretary

Top Glove Corporation Berhad (474423-X) Level 7, Menara Milenium Jalan Damanlela, Pusat Bandar Damansara Damansara Heights, 50490 Kuala Lumpur, Malaysia

FOLD HERE