Hume Industries (Malaysia) Berhad (Company No

Hume Industries (Malaysia) Berhad (Company No. 4434-A) (Incorporated in Malaysia) and its subsidiaries

Financial statements for the year ended 30 June 2002

Hume Industries (Malaysia) Berhad (Company No. 4434-A) (Incorporated in Malaysia)

Directors

YBhg Tan Sri Quek Leng Chan (Executive Chairman) Mr Kwek Leng San (President & Chief Executive Officer) YBhg Tan Sri Dato’ Ir Talha bin Haji Mohd Hashim Encik Che Ibrahim bin Mustafa Encik Mohd Daim bin Abdul Rahim Mr Wong Ah Lek

Secretary

Ms Queek Chai Choo

Auditors

KPMG Wisma KPMG Jalan Dungun Damansara Heights 50490 Kuala Lumpur Tel: 03-20953388 Fax: 03-20950971

Principal bankers

Citibank Berhad HSBC Bank Malaysia Berhad Malayan Banking Berhad RHB Bank Berhad Standard Chartered Bank Malaysia Berhad

Registrar

Hong Leong Nominees Sendirian Berhad Level 5, Wisma Hong Leong 18 Jalan Perak 50450 Kuala Lumpur Tel: 03-21641818 Fax: 03-21643703

Registered office

Level 9, Wisma Hong Leong 18 Jalan Perak 50450 Kuala Lumpur Tel: 03-21642631 Fax: 03-21642514

Hume Industries (Malaysia) Berhad (Company No. 4434-A) (Incorporated in Malaysia) and its subsidiaries

Directors’ report for the year ended 30 June 2002

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the year ended 30 June 2002.

Principal activities

The Company is principally engaged in the manufacture and sale of concrete products and investment holding, whilst the principal activities of the subsidiaries and associates are as stated in Note 30 to the financial statements. There has been no significant change in the nature of these activities during the financial year.

Results Group Company RM’000 RM’000

Net profit for the year 192,332 85,592 ======

Reserves and provisions

There were no material transfers to or from reserves and provisions during the financial year except as disclosed in the financial statements.

Dividends

Since the end of the previous financial year, the Company paid:

i) a first interim dividend of 6% tax exempt totalling RM14,917,658 in respect of the year ended 30 June 2002 on 28 March 2002; and

ii) a second interim dividend of 2% tax exempt and 20% less tax totalling RM40,882,941 in respect of the year ended 30 June 2002 on 21 June 2002.

The Directors do not recommend any final dividend for the financial year ended 30 June 2002.

Company No. 4434-A

Directors of the Company

Directors who served since the date of the last report are:

In accordance with Article 115 of the Company’s Articles of Association, Encik Che Ibrahim bin Mustafa and Mr Kwek Leng San retire by rotation from the Board at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.

Directors’ interests

No Director holding office at the end of the financial year had any beneficial interest in the ordinary shares and/or stock units and/or warrants/options/irredeemable convertible loan stocks of the Company and/or its related corporations during the financial year as recorded in the Register of Directors’ Shareholdings kept by the Company under Section 134 of the Companies Act 1965 , except as follows: Number of ordinary shares/stock units/ new shares to be issued arising from the exercise of warrants/ irredeemable convertible loan stocks*

Nominal Acquired/ Sold/ value Rights Conversion per share/ issues ~/ of warrants stock unit< At Conversion to At RM 1.7.2001 of warrants+ shares + 30.6.2002 Shareholdings in which Directors have direct interests Interest of YBhg Tan Sri Dato’ Ir Talha bin Haji Mohd Hashim in: Hume Cemboard Berhad 1.00 200,000 - - 200,000 Interests of YBhg Tan Sri Quek Leng Chan in: Hume Industries (Malaysia) Berhad 1.00< 50,000 1,000 - 51,000 Hume Cemboard Berhad 1.00 5,625,000 2,606,400 - 8,231,400 Hong Leong Company (Malaysia) Berhad 1.00 390,000 - - 390,000 Hong Leong Credit Berhad 1.00 4,451,000 745,000~ - 5,717,000 521,000+ 496,000* 25,269@ 521,000+ 269* (Note 1) 400,000* 20,000~ - 420,000* 3

Company No. 4434-A

Number of ordinary shares/stock units/ new shares to be issued arising from the exercise of warrants/ irredeemable convertible loan stocks*

Nominal Acquired/ Sold/ value At Rights Conversion per share/ 1.7.2001/ issues ~/ of warrants stock unit< Date of Conversion to At RM Appointment of warrants+ shares + 30.6.2002 Shareholdings in which Directors have direct interest

Hong Leong Bank Berhad 1.00 40,000 - - 40,000 Hong Leong Industries Berhad 0.50 2,185,000 - 917,000 1,268,000 40,000* - - 40,000* Malaysian Pacific Industries Berhad 0.50 53,500 - - 53,500 Guolene Packaging Industries Berhad 1.00 36,000 - 36,000 - GuoNet Limited USD1.00 1,200 - - 1,200

Interests of Mr Kwek Leng San in: Hong Leong Industries Berhad 0.50 1,550,000 - - 1,550,000 400,000* 250,000* - 650,000* Hong Leong Company (Malaysia) Berhad 1.00 97,500 - - 97,500 HLG Capital Berhad 1.00 119,000 - - 119,000 Hong Leong Bank Berhad 1.00 385,000 - - 385,000 Malaysian Pacific Industries Berhad 0.50 339,000 - 24,000 315,000

Interests of Mr Wong Ah Lek in: Hume Industries (Malaysia) 1.00 - 21,000 - 21,000 Berhad Hong Leong Bank Berhad 1.00 20,000 20,000 40,000 - Hong Leong Properties Berhad 0.50 - 50,000 50,000 - O.Y.L. Industries Bhd. 1.00 - 8,000 - 8,000 Hong Leong Credit Berhad 1.00 - 20,000 20,000 - Hong Leong Industries Berhad 0.50 - 10,000 - 10,000 HLG Capital Berhad 1.00 10,000 - 10,000 - 4

Company No. 4434-A

Number of ordinary shares/stock units/ new shares to be issued arising from the exercise of warrants/ irredeemable convertible loan stocks*

Nominal Acquired/ Sold/ value Rights Conversion per share/ issues ~/ of warrants stock unit< At Conversion to At RM 1.7.2001 of warrants+ shares + 30.6.2002 Shareholdings in which a Director has indirect interest Interests of YBhg Tan Sri Quek Leng Chan in: Hume Industries (Malaysia) Berhad 1.00< 139,616,855 28,463,000 3,284,831 164,795,024 Hume Fibreboard Sdn. Bhd. 1.00 42,000,000 18,000,000 - 60,000,000 37,700,000 - - 37,700,000 (Preference) (Preference) Hume Cemboard Berhad 1.00 39,884,000 2,646,000 - 42,530,000 O.Y.L. Industries Bhd. 1.00 84,919,828 - 7,600 84,912,228 O.Y.L.-Condair Industries Sdn. Bhd. 1.00 5,100,000 - - 5,100,000 York (Malaysia) Sales & Service Sdn. Bhd. 1.00 700,000 - - 700,000 O.Y.L. Steel Centre Sdn. Bhd. 1.00 3,750,000 - - 3,750,000 Wuhan McQuay Air- Conditioning & Refrigeration Co. Ltd. ^ 7,500,000 - - 7,500,000 McQuay Air-conditioning Limited HK$1.00 2,265,000 - - 2,265,000 O.Y.L. - J.M. Co. Ltd. NT$10.00 1,800,000 - - 1,800,000 P.T. O.Y.L. Sentra Rp2,106,000 1,200 - - 1,200 Manufacturing or USD1,000 Shenzhen McQuay Air Conditioning Co., Ltd. ^ 6,040,000 - - 6,040,000 AF Technology Ltd. W5,000 161,725 - 161,725 - McQuay Mediterranean LLC # 88,500 - - 88,500 OYL Way Electronic (Shenzhen) Co. Ltd ^ 200,000 - - 200,000 McQuay Philippines Sales & Service Inc. P1.00 20,000,000 - - 20,000,000 Hong Leong Company (Malaysia) Berhad 1.00 7,487,100 - - 7,487,100 Hong Leong Fund Management Sdn Bhd 1.00 1,400,000 - - 1,400,000 5

Company No. 4434-A

Number of ordinary shares/stock units/ new shares to be issued arising from the exercise of warrants/ irredeemable convertible loan stocks*

MEHY Sdn. Bhd. 1.00 650,000 - - 650,000 GuoNet Limited USD1.00 10,800 - - 10,800 Hong Leong Credit Berhad 1.00 337,817,645 5,511,000 679,200 451,828,024 58,095,198~ 51,083,381+ 48,607,200* 2,476,181@ 51,083,381+ - Hong Leong Assurance Berhad 1.00 90,000,000 10,000,000 - 150,000,000 50,000,000~ BIB Insurance Brokers Sdn. Bhd. 1.00 750,000 - 750,000 - BIB Asia (L) Berhad USD1.00 300,000 - 300,000¢ - 1,500 - 1,500¢ - (Preference) (Preference) Bradstock Aurora Insurance Brokers Inc. P100 30,000 - 30,000¢ - Bradstock Suntek Insurance Brokers Pte. Ltd. S$1.00 255,000 - 255,000¢ - HLG Capital Berhad 1.00 92,590,545 - - 92,590,545 HLG Futures Sdn. Bhd. 1.00 3,500,000 1,500,000 - 5,000,000 Hong Leong Bank Berhad 1.00 979,410,501 - 18,609,001 960,801,500 Hong Leong Properties Berhad 0.50 356,374,211 - 3,802,000 352,572,211 34,322,420* - - 34,322,420* Guoman Hotel & Resort Holdings Sdn Bhd 1.00 277,000,000 - - 277,000,000 HLL-Guoco Vietnam Co. Limited ^ 5,000,592 - - 5,000,592 Treacher Development Sdn. Bhd. 1.00 14,000,000 - - 14,000,000 JB Parade Sdn. Bhd. 1.00 18,000,000 - - 18,000,000 685,940 - - 685,940 (Preference) (Preference) Hong Leong Industries 0.50 133,494,600 - 2,923,600 130,571,000 Berhad 15,275,372* 24,156,612* - 39,431,984* 6

Company No. 4434-A

Number of ordinary shares/stock units/ new shares to be issued arising from the exercise of warrants/ irredeemable convertible loan stocks*

Hong Leong Yamaha Distributors Sdn. Bhd. 1.00 10,360,000 - - 10,360,000 Hong Leong Yamaha Motor Sdn. Bhd. 1.00 17,352,872 - - 17,352,872 Guocera Tile Industries (Meru) Sdn. Bhd. 1.00 17,920,000 - - 17,920,000 Hong Leong Maruken Sdn. Bhd. 1.00 1,750,000 - - 1,750,000 (In members’ voluntary liquidation) Guocera Tile Industries (Labuan) Sdn. Bhd. 1.00 13,090,001 - - 13,090,001 Quayline Fairprice Sdn. Bhd. 1.00 9,600,000 - - 9,600,000 RZA Logistics Sdn. Bhd. 1.00 8,540,000 330,000 - 8,870,000 Malaysian Pacific Industries Berhad 0.50 123,520,009 - 581,000 122,939,009 Carter Realty Sdn. Bhd. 1.00 7 - - 7 Carsem (M) Sdn. Bhd. 1.00 42,000,000 - - 42,000,000 Carsem Semiconductor Sdn. Bhd. 1.00 70,000,000 - - 70,000,000 Guolene Packaging Industries Berhad 1.00 116,638,610 23,112,090 - 139,750,700 Guolene Plastic Films Sdn. Bhd. 1.00 9,350,002 - - 9,350,002

Legend: ^ Capital Contribution in USD ¢ Company ceased to be a related company during the year @ Adjustment in accordance with the Deed Poll arising from the Rights Issue # LLC interest in USD Note 1 All outstanding HLC Replacement Warrants not exercised had lapsed and became null and void on 27 December 2001

Company No. 4434-A

Directors’ benefits

Since the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements or the fixed salary of a full-time employee of the Company or of related corporations) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest, other than YBhg Tan Sri Quek Leng Chan who may be deemed to derive a benefit by virtue of those transactions, contracts and agreements for the acquisitions and/or disposal of stocks and shares, stocks-in-trade, products, parts, accessories, plants, chattels, fixtures, buildings, land and other properties or any interest in any properties; and/or the provision of services including but not limited to project and sales management and any other management and consultancy services; and/or the provision of construction contracts, leases, tenancy, dealership and distributorship agreements; and/or the provision of treasury functions, advances and the conduct of normal trading, insurance, investment, stockbroking and/or other businesses between the Company and its related corporations and corporations in which YBhg Tan Sri Quek Leng Chan is deemed to have interest.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of stock units/shares in or debentures of the Company or any other body corporate.

Executive Stock Option Scheme (“ESOS”)

The stockholders of the Company approved the implementation of an ESOS at the Extraordinary General Meeting held on 11 December 1999.

The main features of the ESOS are, inter alia, as follows:

1. Eligible executives are those executives who have served the Group for a period of at least one (1) year and have been confirmed in service on the date of offer, and full time executive directors of the Company whose maximum allowable allotments have been approved by the Company in a general meeting.

2. The aggregate number of stock units to be issued under the ESOS shall not exceed 10% of the total issued and paid-up ordinary share capital of the Company for the time being.

3. The ESOS shall be in force for a period of five (5) years commencing from 24 December 1999, subject however to any extension for a further period of five (5) years provided that the requisite approvals have been obtained for such extension.

4. The option price shall be the average of the mean market quotation of the stock units of the Company as quoted on the Kuala Lumpur Stock Exchange for the five (5) market days preceding the date of offer, or at the par value of the stock units of the Company of RM1.00, whichever is higher. 8

Company No. 4434-A

5. A grantee may exercise up to 20% of stock units comprised in an option in any one (1) year and the number of stock units to be exercised shall be in multiples of and not less than 1,000 stock units provided that if the grantee’s balance of stock units is less than 1,000 stock units, the balance of stock units must be exercised in a single tranche.

6. No executive shall be eligible to participate in more than one (1) ESOS implemented by the subsidiaries within the Hong Leong Company (Malaysia) Berhad Group.

The movements in the Company’s unissued ordinary stocks under the ESOS during the financial year are as follows:

Number of unissued ordinary stocks of RM1.00 each under the ESOS As at Options Options As at 1.7.2001 lapsed exercised 30.6.2002

Option price of RM4.03 2,562,000 (704,200) (1,076,400) 781,400 Option price of RM5.61 383,000 (114,000) (26,000) 243,000 ______2,945,000 (818,200) (1,102,400) 1,024,400 ======

Issue of shares

During the financial year, the issued and paid-up capital of the Company was increased from RM248,190,830 to RM249,293,230 by way of an issue of 1,076,400 new ordinary stocks of RM1.00 each at an option price of RM4.03 per ordinary stock and 26,000 new ordinary stock of RM1.00 each at an option price of RM5.61 per ordinary stock pursuant to the ESOS of the Company. The new ordinary stocks issued rank pari passu with the existing stocks of the Company.

During the financial year, the Company disposed of all its treasury stocks at an average price of RM4.08 per stock. A gain of RM5,036,000 arising from the disposal has been credited to the share premium account.

Options granted over unissued shares

No options were granted to any person to take up unissued shares of the Company during the financial year.

Company No. 4434-A

Other statutory information

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that:

i) all known bad debts have been written off and adequate provision made for doubtful debts, and

ii) all current assets have been stated at the lower of cost and net realisable value.

At the date of this report, the Directors are not aware of any circumstances:

i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group and in the Company inadequate to any substantial extent, or

ii) that would render the value attributed to the current assets in the financial statements of the Group and the Company misleading, or iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or

iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Group and of the Company misleading.

At the date of this report, there does not exist:

i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person, or

ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.

No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

In the opinion of the Directors, except as disclosed in the financial statements, the results of the operations of the Group and of the Company for the financial year ended 30 June 2002 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

Company No. 4434-A

Auditors

The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.

On behalf of the Board of Directors:

……………………………………………………………. Kwek Leng San

……………………………………………………………. YBhg Tan Sri Dato’ Ir Talha bin Haji Mohd Hashim

Kuala Lumpur,

Date:

Hume Industries (Malaysia) Berhad (Company No. 4434-A) (Incorporated in Malaysia) and its subsidiaries

Statement by Directors pursuant to Section 169(15) of the Companies Act, 1965

In the opinion of the Directors, the financial statements set out on pages 15 to 73, are drawn up in accordance with applicable approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company at 30 June 2002 and of the results of their operations and cash flows for the year ended on that date.

On behalf of the Board of Directors:

……………………………………………………………. Kwek Leng San

……………………………………………………………. YBhg Tan Sri Dato’ Ir Talha bin Haji Mohd Hashim

Kuala Lumpur,

Date:

Hume Industries (Malaysia) Berhad (Company No. 4434-A) (Incorporated in Malaysia) and its subsidiaries

Statutory declaration pursuant to Section 169(16) of the Companies Act, 1965

I, Soon Seong Keat, the officer primarily responsible for the financial management of Hume Industries (Malaysia) Berhad, do solemnly and sincerely declare that the financial statements set out on pages 15 to 73, are, to the best of my knowledge and belief, 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 in Kuala Lumpur on …………………………………………..

………………………………. Soon Seong Keat

Before me:

Report of the auditors to the members of Hume Industries (Malaysia) Berhad (Company No. 4434-A) (Incorporated in Malaysia)

We have audited the financial statements set out on pages 15 to 73. The preparation of the financial statements is the responsibility of the Company’s Directors. Our responsibility is to express an opinion on the financial statements based on our audit.

We conducted our audit in accordance with approved Standards on Auditing in Malaysia. These standards require that we plan and perform the audit to obtain all the information and explanations which we consider necessary to provide us with evidence to give reasonable assurance that the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. An audit also includes an assessment of the accounting principles used and significant estimates made by the Directors as well as evaluating the overall adequacy of the presentation of information in the financial statements. We believe our audit provides a reasonable basis for our opinion.

In our opinion:

(a) the financial statements are 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 state of affairs of the Group and of the Company at 30 June 2002 and the results of their operations and cash flows for the year ended on that date; and

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

(b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company and the subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the said Act.

Company No. 4434-A

The subsidiaries in respect of which we have not acted as auditors are identified in Note 30 to the financial statements and we have considered their financial statements and the auditors’ reports thereon.

We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements 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 audit reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment made under subsection (3) of Section 174 of the Act.

KPMG Firm Number: AF 0758 Chartered Accountants

Seow Yoo Lin Partner Approval Number: 1497/02/03(J) Kuala Lumpur,

Date: 15

Hume Industries (Malaysia) Berhad (Company No. 4434-A) (Incorporated in Malaysia) and its subsidiaries

Balance sheets at 30 June 2002

Group Company Note 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000

Property, plant and equipment 2 944,017 981,308 47,714 53,510

Investments in subsidiaries 3 - - 839,761 819,782

Investments in associates 4 125,352 121,688 99,435 99,235

Other investments 5 1,296 1,296 648 648

Goodwill on consolidation 6 509,127 508,598 - -

Other non-current assets 7 15,342 15,776 - - ______1,595,134 1,628,666 987,558 973,175 Current assets Inventories 8 741,225 798,486 22,182 20,915 Trade and other receivables 9 1,191,165 1,264,853 115,339 72,443 Other investments 5 29,537 26,697 15,714 7,869 Tax recoverable 32,578 25,775 31,820 25,225 Cash and cash equivalents 10 287,192 520,844 3,086 243,451 2,281,697 2,636,655 188,141 369,903 Current liabilities Trade and other payables 11 1,047,699 1,079,377 146,003 179,044 Borrowings 12 754,418 785,204 77,528 241,945 Euro Convertible Bonds 13 50,249 24,510 50,249 24,510 Provisions 14 102,604 106,697 - - Taxation 36,569 52,261 - - 1,991,539 2,048,049 273,780 445,499

Net current assets/(liabilities) 290,158 588,606 (85,639) (75,596) ______1,885,292 2,217,272 901,919 897,579 ======16

Company No. 4434-A

Balance sheets at 30 June 2002 (continued)

Group Company Note 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000 Financed by:

Capital and reserves Share capital 15 249,293 248,191 249,293 248,191 Reserves 16 632,317 468,202 215,757 177,548 Treasury stocks 17 - (15,534) - (15,534) ______881,610 700,859 465,050 410,205

Minority shareholders’ interest 18 356,338 283,189 - -

Long term and deferred liabilities Borrowings 12 76,027 581,193 - - Euro Convertible Bonds 13 434,643 484,892 434,643 484,892 Provisions 14 42,651 40,713 - - Retirement benefits 23,664 31,493 2,226 2,482 Deferred taxation 10,187 15,128 - - Other long term liabilities 19 60,172 79,805 - - 647,344 1,233,224 436,869 487,374 ______1,885,292 2,217,272 901,919 897,579 ======

The financial statements were approved and authorised for issue by the Board of Directors on 26 August 2002.

The notes set out on pages 24 to 73 form an integral part of, and, should be read in conjunction with, these financial statements. 17

Hume Industries (Malaysia) Berhad (Company No. 4434-A) (Incorporated in Malaysia) and its subsidiaries

Income statements for the year ended 30 June 2002

Group Company Note 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000

Revenue Sales of goods and services rendered 4,806,816 5,265,558 138,212 129,578 Dividend income 623 470 142,421 132,752 ______4,807,439 5,266,028 280,633 262,330 Cost of sales (3,705,469) (4,052,100) (117,759) (119,275) ______Gross profit 1,101,970 1,213,928 162,874 143,055 Distribution costs (350,120) (345,236) (4,249) (4,410) Administrative expenses (326,111) (387,657) (15,115) (26,083) Other operating expenses (34,866) (239,293) (13,739) (131,934) Other operating income 62,364 154,564 9,296 159,473 ______Operating profit 20 453,237 396,306 139,067 140,101 Interest expense (96,796) (149,906) (28,159) (46,806) Interest income 20,300 26,833 2,684 2,642 Share of profit of associates 6,364 6,602 - - ______Profit before taxation 383,105 279,835 113,592 95,937 Tax expense 22 (66,995) (69,330) (28,000) (26,557) ______Profit after taxation 316,110 210,505 85,592 69,380 Less: Minority interests (123,778) (92,025) - - ______Net profit for the year 192,332 118,480 85,592 69,380 ======Earnings per ordinary stock unit (sen)

Basic 23 78.05 48.76 Dilluted 23 78.01 - ======Dividends per ordinary stock unit – net (sen) 24 22.40 17.96 22.40 17.96 ======

The notes set out on pages 24 to 73 form an integral part of, and, should be read in conjunction with, these financial statements. 18

Hume Industries (Malaysia) Berhad (Company No. 4434-A) (Incorporated in Malaysia) and its subsidiaries

Consolidated statement of changes in equity for the year ended 30 June 2002

______Non-distributable ______Distributable ____ Property Share Share Treasury revaluation Translation Retained capital premium stocks reserve reserve Reserve Reserve profits Total Group Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 July 2000 247,843 101,493 (13,965) 24,368 (16,925) 13,635 4,635 265,903 626,987 Net gain/(loss) not recognised in income statement Net currency translation difference - - - - (8,086) - - - (8,086) Realisation of reserve on disposal of subsidiaries and associates - - - (4,091) - (18,190) (1,592) 23,873 - Acquisition of subsidiaries and other adjustments - - - 299 - 6,545 (79) - 6,765 - - - (3,792) (8,086) (11,645) (1,671) 23,873 (1,321) Net profit for the year ------118,480 118,480 Dividends 24 ------(43,120) (43,120) Issue of share capital 348 1,054 ------1,402 Repurchased stock units - - (1,569) - - - - - (1,569) ______At 30 June 2001 248,191 102,547 (15,534) 20,576 (25,011) 1,990 2,964 365,136 700,859 ======Note 15 Note 17 19

Company No. 4434-A

Consolidated statement of changes in equity for the year ended 30 June 2002 (continued)

At 1 July 2001 248,191 102,547 (15,534) 20,576 (25,011) 1,990 2,964 365,136 700,859 Net gain not recognised in income statement Net currency translation difference - - - - 19,166 - - - 19,166 Gain on disposal of treasury stock units - 5,036 ------5,036 - 5,036 - - 19,166 - - - 24,202 Net profit for the year ------192,332 192,332 Dividends 24 ------(55,801) (55,801) Issue of share capital 1,102 3,382 ------4,484 Disposal of treasury stock units - - 15,534 - - - - - 15,534 ______At 30 June 2002 249,293 110,965 - 20,576 (5,845) 1,990 2,964 501,667 881,610 ======Note 15 Note 17

The notes set out on pages 24 to 73 form an integral part of, and, should be read in conjunction with, these financial statements. 20

Hume Industries (Malaysia) Berhad (Company No. 4434-A) (Incorporated in Malaysia)

Statement of changes in equity for the year ended 30 June 2002

______Non-distributable ______Distributable ____ Property Share Share Treasury revaluation Retained capital premium stocks reserve Reserve profits Total Company Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 30 June 2000 247,843 101,493 (13,965) 17,929 2,965 27,847 384,112 Net profit for the year - - - - - 69,380 69,380 Dividends 24 - - - - - (43,120) (43,120) Issue of share capital 348 1,054 - - - - 1,402 Repurchased stock units - - (1,569) - - - (1,569) ______At 30 June 2001/1 July 2001 248,191 102,547 (15,534) 17,929 2,965 54,107 410,205 Net gain on disposal of treasury stock units not recognised in income statement - 5,036 - - - - 5,036 Net profit for the year - - - - - 85,592 85,592 Dividends 24 - - - - - (55,801) (55,801) Issue of share capital 1,102 3,382 - - - - 4,484 Disposal of treasury stock units - - 15,534 - - - 15,534 ______At 30 June 2002 249,293 110,965 - 17,929 2,965 83,898 465,050 ======Note 15 Note 17

The notes set out on pages 24 to 73 form an integral part of, and, should be read in conjunction with, these financial statements. 21

Hume Industries (Malaysia) Berhad (Company No. 4434-A) (Incorporated in Malaysia) and its subsidiaries

Cash flow statements for the year ended 30 June 2002

Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000 Cash flows from operating activities Profit before taxation 383,105 279,835 113,592 95,937 Adjustments for: Depreciation and amortisation of property, plant and equipment 129,048 141,553 4,855 5,398 Dividend income (623) (470) (142,421) (132,752) Loss/(Gain) on disposal of shares in subsidiaries 1,906 (122,962) - (148,676) Gain on disposal of property, plant and equipment (2,931) (19,184) (3,819) (3,208) Gain on disposal of quoted investments (2,233) (69) - - Goodwill amortised and written off 6,248 24,624 - - Impairment loss on property, plant and equipment 8,000 - 8,000 - Interest expense 96,796 149,906 28,159 46,806 Interest income (20,300) (26,833) (2,684) (2,642) Investments written down - 34,232 4,500 28,159 Property, plant and equipment written off 197 3,796 4 2,346 Retirement benefits (written back)/ charged (4,513) 9,119 70 (24) Reversal of write down of current investment (6,745) - (1,056) - Share of profit of associates (6,364) (6,602) - - Amortisation of Euro Convertible Bonds deferred expenditure - 8,894 - 8,894 Euro Convertible Bonds put premiums - 53,399 - 53,399 Waiver of amount due from subsidiaries - - - 18,572 Other non-cash items - 758 - - ______Operating profit/(loss) before working capital changes 581,591 529,996 9,200 (27,791) Changes in working capital: Inventories 71,261 12,943 (1,267) 1,903 Trade and other receivables 119,308 (166,360) 6,977 4,518 Trade and other payables (76,972) 86,409 (21,541) 13,024 Provisions (2,155) (4,093) - - ______Cash generated from/(used in) operations 693,033 458,895 (6,631) (8,346)

22 Company No. 4434-A

Cash flow statements for the year ended 30 June 2002

(continued) Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000

Cash generated from/(used in) operations 693,033 458,895 (6,631) (8,346) Dividend received 2,870 1,429 107,826 163,905 Long-term liabilities (19,633) (10,291) - - Non-current assets 434 (10,146) - - Interest expense (96,796) (149,906) (28,159) (46,806) Interest income 20,300 26,833 2,684 2,642 Retirement benefits paid (3,316) (2,835) (326) (246) Income tax (paid)/refunded (96,176) (110,891) - 975 ______Net cash generated from operating activities 500,716 203,088 75,394 112,124 ------Cash flows from investing activities Acquisition of associate (376) - (200) - Acquisition of subsidiaries, net of cash acquired (Note 31) - (31,253) - - Acquisition of additional shares in existing subsidiaries (22,628) (48,251) (31,128) (13,352) Proceeds from disposal of property, plant and equipment 10,564 33,999 7,647 7,260 Proceeds from disposal of other investments 6,138 136 - - Disposal of subsidiaries, net of cash disposed (Note 31) 4,219 284,395 - 252,025 Purchase of property, plant and equipment (105,098) (107,150) (10,891) (2,157) ______Net cash (used in)/generated from investing activities (107,181) 131,876 (34,572) 243,776 ------Cash flows from financing activities Advances to subsidiaries - - (50,013) - Dividends paid to minority shareholders of the subsidiaries (48,501) (73,913) - - Dividends paid to stockholders of the Company (55,801) (68,103) (55,801) (68,103) Issue of share capital 4,484 1,402 4,484 1,402 Proceeds from disposal of treasury stock units 20,570 - 20,570 - Proceeds from subsidiaries’ ESOS 10,272 5,405 - - (Repayment to)/ Proceeds from borrowings (531,643) (74,233) (166,916) 61,141 Repayment to subsidiaries - - (11,500) (121,032) Repurchase of stock units - (1,569) - (1,569) Withdrawn of pledged fixed deposits 13,608 - - - ______Net cash used in financing activities (587,011) (211,011) (259,176) (128,161) ------

23 Company No. 4434-A

Cash flow statements for the year ended 30 June 2002

(continued) Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000 Net (decrease)/increase in cash and cash equivalents (193,476) 123,953 (218,354) 227,739

Translation difference on cash and cash equivalents 2,251 (3,878) - -

Cash and cash equivalents at beginning of year 444,657 324,582 209,502 (18,237) ______Cash and cash equivalents at end of year 253,432 444,657 (8,852) 209,502 ======

Cash and cash equivalents

Cash and cash equivalents included in the cash flow statement comprise the following balance sheet amounts:

Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000

Cash and bank balances 204,671 162,739 3,086 1,017 Deposits (net of deposits pledged) 82,521 344,497 - 242,434 Bank overdrafts (33,760) (62,579) (11,938) (33,949) ______253,432 444,657 (8,852) 209,502 ======

The notes set out on pages 24 to 73 form an integral part of, and, should be read in conjunction with, these financial statements.

Hume Industries (Malaysia) Berhad (Company No. 4434-A) (Incorporated in Malaysia) and its subsidiaries

Notes to the financial statements

1. Summary of significant accounting policies

The following accounting policies are adopted by the Group and the Company and are consistent with those adopted in previous years except for the adoption of Malaysian Accounting Standards Board (“MASB”) 20, Provisions, Contingent Liabilities and Contingent Assets which is applied prospectively.

(a) Basis of accounting

The financial statements of the Group and of the Company are prepared in compliance with applicable approved accounting standards in Malaysia.

(b) Basis of consolidation

Subsidiaries are those enterprises controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control effectively commences until the date that control effectively ceases. Subsidiaries are consolidated using the acquisition method of accounting.

Under the acquisition method of accounting, the results of subsidiaries acquired or disposed during the year are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries’ net assets are determined and these values are reflected in the Group financial statements. The difference between the acquisition cost and the fair values of the subsidiaries’ net assets is reflected as goodwill or reserve on consolidation as appropriate.

Intragroup transactions and balances and the resulting unrealised profits are eliminated on consolidation. Unrealised losses resulting from intra-group transactions are also eliminated unless cost cannot be recovered.

25 Company No. 4434-A

1. Summary of significant accounting policies (continued)

Associates are those enterprises in which the Group has significant influence, but not control, over the financial and operating policies.

The consolidated financial statements include the total recognised gains and losses of associates on an equity accounted basis from the date that significant influence effectively commences until the date that significant influence effectively ceases.

(d) Property, plant and equipment

Property, plant and equipment except for freehold land are stated at cost/valuation less accumulated depreciation.

It is the policy of the Group and Company to state its property, plant and equipment at cost. Notwithstanding that, certain freehold land, long-term leasehold land, short-term leasehold land and buildings of the Group and Company were revalued in 1982 and 1993 by the Directors based on professional valuations using fair market value on the open market value basis. As allowed by MASB, the revaluation was not intended to effect a change in the accounting policy to one of revaluation of properties. Hence, the valuations of these properties have not been updated and they continue to be stated at their existing carrying amounts less accumulated depreciation.

Impairment assessment will be conducted annually on the carrying value of property, plant and equipment to determine whether there has been any impairment in value and, if so, an estimate is made of the recoverable amount and the extent of impairment where the carrying value exceeds the recoverable amount. For the purpose of determining the recoverable amount, the discounted cash flow is estimated. An impairment loss is charged to the income statement except where there is a previous revaluation, in which case the impairment loss is charged to equity to the extent of previously recognised revaluation surplus. Subsequent increases in the recoverable amount is recognised in the income statement except for previously revalued items in which case the increase is taken to equity to the extent of previous impairment loss charged to equity. An increase in the recoverable amount is recognised to the extent that the carrying amount shall not exceed the amount net of amortisation or depreciation had no impairment loss been previously recognised.

Property, plant and equipment retired from active use and held for disposal are stated at the lower of net book value and net realisable value.

26 Company No. 4434-A

1. Summary of significant accounting policies (continued)

(e) Depreciation

Freehold land is not amortised. Leasehold land is amortised in equal instalments over the period of the respective leases which range from ten to ninety-nine years while buildings are depreciated on a straight line basis over the shorter of 50 years or the lease period. The straight line method is used to write off the cost of the other assets over the terms of their estimated useful lives at the following principal annual rates:

Buildings 2% - 5% Plant, equipment and vehicles 5% - 33.3%

(f) Investments

Long-term investments are stated at cost. An allowance is made when the Directors are of the view that there is a diminution in their value which is other than temporary.

Short term investments are stated at the lower of cost and market value.

(g) Goodwill

Goodwill represents the excess of the cost of the acquisition over the fair values of the net identifiable assets acquired and is stated at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised through the Group income statement over forty years. An impairment loss is also recognised when the Directors are of the view that there is a diminution in its value which is other than temporary.

(h) Inventories

Inventories are stated at the lower of cost and net realisable value with weighted average cost being the main basis for cost. For work-in-progress and manufactured inventories, cost consists of materials, direct labour and an appropriate proportion of fixed and variable production overheads.

(i) Receivables

Receivables are stated at cost less allowance for doubtful debts. Known bad debts are written off and specific allowance is made for any debts considered to be doubtful of collection.

27 Company No. 4434-A

1. Summary of significant accounting policies (continued)

(j) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in value. For the purpose of the cash flow statement, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(k) Repurchase of stock units

When stock units are repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as cost and set off against equity.

(l) Taxation

The tax expense in the income statement represents taxation at current tax rates based on profit earned during the year.

Deferred taxation is provided on the liability method for all timing differences except where no liability is expected to arise in the foreseeable future and there are no indications the timing differences will reverse thereafter. Deferred tax benefits are only recognised where there is a reasonable expectation of realisation in the near future.

(m) Retirement benefits

The Group operates both defined benefit and defined contribution schemes for eligible employees.

(i) Malaysia

The Group operates a defined contribution scheme for eligible executives which is administered by the Hume Group Executive Retirement Benefit Fund. The benefits payable on retirement are based on a fixed percentage contribution of the salary of the executive as accrued monthly in the executive’s nominal account.

The cost and liability in respect of the defined contribution scheme will be determined by an actuarial valuation to be conducted once in every three years by a qualified actuary. The latest valuation was carried out in June 2001.

28 Company No. 4434-A

1. Summary of significant accounting policies (continued)

(m) Retirement benefits (continued)

(ii) Overseas

Certain overseas subsidiaries have defined benefit pensions plans in effect for substantially of all the hourly employees. Benefits are computed using formulae, which are generally based on age and years of services. Plan assets consist primarily of common stock, insurance contracts and government obligations. The method of funding pension costs is to contribute amounts to the plans sufficient to meet minimum funding requirements, plus such amounts as may be determined to be appropriate from time to time.

Certain overseas subsidiaries also sponsor defined benefit health care plans for certain salaried and non-salaried employees whereby certain health care and life insurance benefits are provided on retirement. The benefits are provided only for frozen group of active employees and retirees.

(n) Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated to Ringgit Malaysia at rates of exchange ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Ringgit Malaysia at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities denominated in foreign currencies, which are stated at historical cost, are translated to Ringgit Malaysia at the foreign exchange rates ruling at the date of the transactions.

(ii) Financial statements of foreign operations

The Group’s foreign operations are not considered an integral part of the Company’s operations. Accordingly, the assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to Ringgit Malaysia at exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to Ringgit Malaysia at average exchange rates applicable throughout the year. Foreign exchange differences arising on translation are recognised directly in equity.

29 Company No. 4434-A

1. Summary of significant accounting policies (continued)

(n) Foreign currency (continued) . The closing rates used in translation of foreign currency monetary assets and liabilities and the financial statements of foreign operations are as follows:

2002 2001 RM RM

1AUD 2.1697 1.9410 1GBP 5.7492 5.3476 1RMB 0.4680 0.4680 1HKD 0.4872 0.4921 1IDR 0.0004 0.0004 1PHP 0.0754 0.0757 1SGD 2.1509 2.1060 1TWD 0.1130 0.1111 1THB 0.0910 0.0865 1USD 3.8000 3.8300

(o) Revenue

i) Goods sold and services rendered

Revenue from sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. Revenue is stated net of discount and returns in the income statement.

Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction at the balance sheet date. The stage of completion is assessed by reference to service performed to date as a percentage of services to be performed. Where the outcome of the transaction cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.

ii) Dividend income

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

iii) Interest and rental income

Interest and rental income is recognised in the income statement on accrual basis.

Company No. 4434-A

1. Summary of significant accounting policies (continued)

(p) Provisions

A provision is recognised when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation (legal or constructive) as a result of a past event and a reliable estimate can be made of the amount.

(i) Provision for warranties

A provision for warranties is recognised when the underlying products or services are sold. It is based on historical warranty data and a weighting of all possible outcomes against the associated probabilities.

(ii) Provision for restructuring cost

A provision for restructuring cost is recognised when the group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly. Future operating costs are not provided for.

(q) Expenses

i) Research and development expenditure

Research and development expenditure is charged to the income statement in the year in which the expenditure is incurred.

ii) Operating lease rentals

Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease.

iii) Financing costs

All interest and other costs incurred in connection with borrowings are expensed to the income statement as incurred.

Company No. 4434-A

2. Property, plant and equipment

Long- Short- term term Plant, lease- lease- equipment Capital Group Freehold hold hold and work-inland land land Buildings vehicles progress Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Cost/Valuation

Opening balance 54,240 89,909 7,493 474,153 1,131,097 14,563 1,771,455 Additions 2,300 10,483 - 6,017 74,031 12,267 105,098 Disposals (1,610) (1,513) - (6,446) (12,766) (112) (22,447) Reclassification/ Transfers - (7,075) 8,385 (820) 16,460 (16,950) - Written off - - - (172) (5,162) - (5,334) Exchange differences 992 324 - 5,741 8,993 - 16,050 ______Closing balance 55,922 92,128 15,878 478,473 1,212,653 9,768 1,864,822 ======Representing items at: Cost 24,328 67,070 8,649 460,343 1,212,653 9,768 1,782,811 Directors’ valuation 31,594 25,058 7,229 18,130 - - 82,011 ______Closing balance 55,922 92,128 15,878 478,473 1,212,653 9,768 1,864,822 ======

32 Company No. 4434-A

2. Property, plant and equipment (continued)

Opening balance - 9,444 1,995 118,868 659,840 - 790,147 Charge for the year - 1,290 217 16,363 111,178 - 129,048 Disposals - (739) - (859) (8,407) - (10,005) Reclassification/ Transfers - (1,389) 1,734 (412) 67 - - Impairment loss - 8,000 - - - - 8,000 Written off - - - (153) (4,984) - (5,137) Exchange differences - 56 - 2,504 6,192 - 8,752 ______Accumulated depreciation - 8,662 3,946 136,311 763,886 - 912,805 Accumulated impairment loss - 8,000 - - - - 8,000

Closing balance - 16,662 3,946 136,311 763,886 - 920,805 ======Net book value At 30 June 2002 55,922 75,466 11,932 342,162 448,767 9,768 944,017 ======At 30 June 2001 54,240 80,465 5,498 355,285 471,257 14,563 981,308 ======For the year ended 30 June 2001 Depreciation charge - 1,166 267 17,237 122,883 - 141,553 ======

33 Company No. 4434-A

2. Property, plant and equipment (continued)

Long- Short- Plant, term term equipment Company Freehold leasehold leasehold and land land land Buildings vehicles Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Cost/Valuation

Opening balance 4,790 19,927 5,476 39,516 78,116 147,825 Additions - 10,450 - - 441 10,891 Disposals - (2,529) - (1,767) (3,489) (7,785) Written off - - - - (13) (13) Reclassification - (3,114) 3,114 - - - ______Closing balance 4,790 24,734 8,590 37,749 75,055 150,918 ======Representing items at:

Cost 4,790 6,955 3,916 36,254 75,055 126,970 Directors’ valuation - 17,779 4,674 1,495 - 23,948 ______Closing balance 4,790 24,734 8,590 37,749 75,055 150,918 ======Accumulated depreciation and impairment loss

Opening balance - 3,769 1,900 20,372 68,274 94,315 Charge for the year - 359 95 759 3,642 4,855 Disposals - (76) (380) (624) (2,877) (3,957) Written off - - - - (9) (9) Reclassification - (1,090) 1,090 - - - Impairment loss - 8,000 - - - 8,000 ______Accumulated depreciation - 2,962 2,705 20,507 69,030 95,204 Accumulated impairment loss - 8,000 - - - 8,000

Closing balance - 10,962 2,705 20,507 69,030 103,204 ======Net book value At 30 June 2002 4,790 13,772 5,885 17,242 6,025 47,714 ======At 30 June 2001 4,790 16,158 3,576 19,144 9,842 53,510 ======For the year ended 30 June 2001 Depreciation charge - 288 142 808 4,160 5,398 ======

34 Company No. 4434-A

2. Property, plant and equipment (continued)

Revaluation The carrying amounts of each class of property, plant and equipment that would have been included in the financial statements had the revalued assets been carried at cost less accumulated depreciation are not disclosed due to absence of historical records.

3. Investments in subsidiaries Company 2002 2001 RM’000 RM’000 At cost Quoted investments 694,370 684,344 Unquoted investments 145,391 135,438 ______839,761 819,782 ======Market value of quoted subsidiaries 1,877,247 1,302,068 ======

Details of the subsidiaries are shown in Note 30.

4. Investments in associates Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000

Quoted investments, at cost 92,834 92,834 92,215 92,215 Unquoted investments, at cost 21,493 21,817 7,220 7,020 Share of post-acquisition reserves 11,025 7,737 - - Premium on acquisition written off - (700) - - ______125,352 121,688 99,435 99,235 ======Represented by: Group’s share of net assets 125,352 121,688 ======

Market value of quoted associates 61,459 43,123 60,707 42,596 ======

Details of the associates are shown in Note 30.

35 Company No. 4434-A

5. Other investments Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000 Long-term Unquoted investments: Others 1,296 1,296 648 648 ======Short-term Quoted investments: Related companies 19,309 17,637 6,789 - Others 10,228 9,060 8,925 7,869 ______29,537 26,697 15,714 7,869 ======Market value of quoted investments: Short-term Related companies 21,407 17,637 8,884 - Others 10,255 9,079 8,925 7,869 ______31,662 26,716 17,809 7,869 ======

6. Goodwill on consolidation Group 2002 2001 RM’000 RM’000

Balance at 1 July 508,598 546,406

Acquisition/Increase in equity interest in subsidiaries 6,777 21,982 ______515,375 568,388

Amount amortised/written off during the year (6,248) (24,624)

Disposal of subsidiaries - (35,166) ______Balance at 30 June 509,127 508,598 ======

7. Other non-current assets

Included in other non-current assets are interest receivable under interest rate swap agreements of RM2,011,000 (2001 - RM5,130,000) and cash surrender value life insurance of RM3,727,000 (2001 - RM3,146,000) in a foreign subsidiary.

36 Company No. 4434-A

8. Inventories Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000 At cost Raw materials 265,090 266,261 2,874 2,372 Work-in-progress 85,516 94,048 313 270 Manufactured and trading inventories 390,619 438,177 18,995 18,273 ______741,225 798,486 22,182 20,915 ======

9. Trade and other receivables Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000

Trade receivables 1,108,696 1,109,227 8,642 6,833 Less: Allowance for doubtful debts (79,776) (77,541) (455) (706) ______1,028,920 1,031,686 8,187 6,127

Subsidiaries - - 91,365 39,891

Associates 994 836 626 597

Related companies 49,688 111,957 326 231 Other receivables, deposits and prepayments 111,563 120,374 14,835 25,597 ______1,191,165 1,264,853 115,339 72,443 ======Group

Included in trade receivables are amount due form substantial shareholders of subsidiaries of RM19,425,000 (2001 - RM18,855,000).

Included in related companies balances are advances of RM48,674,000 (2001 - RM110,637,000) which bear interest rates ranging from 5.5% to 7.0% (2001 - 3.9% to 8.9%) per annum and are unsecured with no fixed terms of repayment.

Company

Included in subsidiaries’ balances are advances of RM60,182,000 (2001 - RM10,169,000) which bear interest rates at 5.0% to 5.5% (2001 - 6.0% to 6.3%) per annum and are unsecured with no fixed terms of repayment.

37 Company No. 4434-A

10. Cash and cash equivalents Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000 Deposits with: Licensed banks 79,721 358,105 - 242,434 Finance companies 2,800 - - - ______82,521 358,105 - 242,434 Cash and bank balances 204,671 162,739 3,086 1,017 ______287,192 520,844 3,086 243,451 ======

Included in the above are amounts kept with related bank as follows:

Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000

Deposits with licensed bank 8,200 257,476 - 242,434 Cash and bank balances 41,706 13,311 2,072 268 ______49,906 270,787 2,072 242,702 ======

In the previous year, certain deposits placed with a licensed bank of a subsidiary amounting to RM13,608,000 were pledged for credit facilities granted to the subsidiary.

11. Trade and other payables Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000 Trade payables 606,469 591,761 15,734 16,020 Subsidiaries - - 101,148 111,051 Associates 1,375 1,388 1,375 1,388 Related companies 232 846 - 250 Other payables and accrued expenses 439,623 485,382 27,746 50,335 ______1,047,699 1,079,377 146,003 179,044 ======

38 Company No. 4434-A

11. Trade and other payables (continued)

Group

Included in trade payables are amount due to substantial shareholders of subsidiaries of RM15,369,000 (2001 - RM27,077,000).

Company

Included in subsidiaries’ balances are advances of RM99,551,000 (2001 - RM111,051,000) which bear interest rates at 2.5 % to 3.0% (2001 - 4.0% to 7.4%) per annum and are unsecured with no fixed terms of repayment.

12. Borrowings Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000 Current Term loans - secured 52,151 23,440 - - - unsecured 20,364 107,857 - - Overdrafts - secured 19,809 25,163 - - - unsecured 13,951 37,416 11,938 33,949 Other borrowings - secured 137,279 280,292 - - - unsecured 151,058 311,036 65,590 207,996 Senior notes - unsecured 359,806 - - - ______754,418 785,204 77,528 241,945 ======Non-current Senior notes - unsecured - 418,094 - - Term loans - secured 38,076 85,283 - - - unsecured 37,951 77,816 - - ______76,027 581,193 - - ======Company

The bank overdrafts and other borrowings of the Company are subject to interest at rates ranging from 3.4% to 7.4% (2001 - 3.20% to 8.30%) per annum.

39 Company No. 4434-A

12. Borrowings (continued)

Group

The secured borrowings are supported by substantially all the assets of AAF-McQuay Inc. (“AMI”), a subsidiary incorporated in the United States of America, and its subsidiaries. These borrowings will be repaid by funds generated from these subsidiaries.

The term loans, overdrafts and other borrowings of the Group are subject to interest at rates ranging from 2.9% to 8.15% (2001 - 3.1% to 12.0%) per annum.

The senior notes were issued in February 1996 at 8.875% per annum and are not redeemable prior to the maturity date of 15 February 2003. During the year, AMI repurchased USD15,000,000 equivalent to RM57,450,000 (2001 - USD16,200,000 equivalent to RM61,560,000) of its senior notes. AMI plans to hold these repurchased notes until their maturity date of 15 February 2003.

During the year, a foreign subsidiary signed a letter of intent to enter into a new bank credit agreement to replace its existing Bank Credit Agreement and Senior Notes which mature in February 2003 and upon finalisation, an amount of RM387 million (equivalent to USD101 million) will be reclassified into long term portion according to the terms of the new credit agreement.

The non-current portion of the borrowings are payable as follows: Group 2002 2001 RM’000 RM’000

Within two years 23,809 511,293 Within two to five years 30,789 48,808 After five years 21,429 21,092 ______76,027 581,193 ======

40 Company No. 4434-A

13. Euro Convertible Bonds Group and Company 2002 2001 RM’000 RM’000

Principal 434,643 434,643 Premium 50,249 74,759 ______484,892 509,402 Less: Non-current portion payable after twelve months classified as deferred liabilities (434,643) (484,892) ______50,249 24,510 ======

The USD114,380,000 nominal value of 10 years Euro Convertible Bonds (“ECB”) issued by the Company entitles the registered Bondholders to convert the ECB into fully paid ordinary stock units of the Company at an initial conversion price of RM11.75 per stock unit and with a fixed rate of exchange on conversion of RM2.544 = USD1.00 during the conversion period commencing 5 April 1996 to 5 January 2006. The ECB are redeemable by the Company at its nominal value on or before 31 December 2001 to 31 December 2004 and the outstanding premium on a proportional basis. The Bondholders have a put option to require the Company to redeem the ECB on 31 December 2004 at its nominal value.

The ECB bear interest at a rate of 1.8% (2001 - 1.8%) above Singapore inter bank offer rate per annum. In addition, the Company will pay a participation fee of 0.2% (2001 - 0.2%) annually on the balance outstanding at the beginning of each year beginning from 5 January 2002.

The premium is due for payment on 31 December 2002.

As at 15 May 2002, the Company entered into a redemption agreement with the trustee of the ECB. In the agreement, it is stipulated that if the proposed capital distribution and rights issue as stated in Note 33 are completed on or before 30 June 2003, the Company will redeem USD94,380,000 of the ECB within 30 days. As the redemption is contingent upon the successful implementation of the proposed capital distribution and rights issue, USD94,380,000 of the ECB has not been classified as current liabilities.

In addition, upon successful implementation of the proposed capital distribution and rights issue, the conversion price of the ECB into fully paid ordinary stock units of the Company will be revised to RM1.00 per stock unit, if all the rights issue are fully subscribed.

41 Company No. 4434-A

14. Provisions Group Warranties Restructuring Total

Group RM’000 RM’000 RM’000

Balance at 1 July 2001 141,901 5,509 147,410 Provision made during the year 53,004 1,809 54,813 Provision used during the year (50,813) (6,155) (56,968) ______Balance at 30 June 2002 144,092 1,163 145,255 ======

Current 101,441 1,163 102,604 Non-current 42,651 - 42,651 ______144,092 1,163 145,255 ======

Warranties

The provision for warranties relates to air filtration, heating, ventilation and air- conditioning equipment, electronic controllers and other related electronics products sold. The provision is based on estimates made from historical warranty data associated with similar products and services. The Group expects to incur the liability over the range of 2 to 7 years.

Restructuring

The provision for restructuring costs relates to the restructuring of AMI’s air- filteration business undertaken by the Group. The costs mainly associated with the severance packages to senior management staff to be paid within next twelve months.

15. Share capital Group and Company 2002 2001 RM’000 RM’000 Authorised Ordinary shares of RM1.00 each Opening balance 700,000 700,000 Increase during the year 310,000 - ______Closing balance 1,010,000 700,000 ======Issued and fully paid and converted into ordinary stock units of RM1.00 each 249,293 248,191 ======

42 Company No. 4434-A

15. Share capital (continued)

No treasury stocks were held as at 30 June 2002.

Of the total 248,190,830 issued and fully paid ordinary stock units as at 30 June 2001, 5,036,000 were held as treasury stocks by the Company. As at 30 June 2001, the number of outstanding stock units in issue and fully paid is 243,154,830 of RM1.00 each.

16. Reserves Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000

Non-distributable Share premium 110,965 102,547 110,965 102,547 Property revaluation reserve 20,576 20,576 17,929 17,929 Translation reserve (5,845) (25,011) - - Reserve 1,990 1,990 - - Distributable Reserve 2,964 2,964 2,965 2,965 Retained profits 501,667 365,136 83,898 54,107 ______632,317 468,202 215,757 177,548 ======

Subject to agreement by the Inland Revenue Board, the Company has sufficient Section 108 tax credit and tax exempt income to frank in full all its retained profits at 30 June 2002 if paid out as dividend.

17. Treasury stocks

Treasury stocks were stated at cost.

The stockholders of the Company, via an ordinary resolution passed at the extraordinary general meeting held on 25 October 2000, approved the Company’s plan to purchase its own stock units. The Directors of the Company are committed to enhance the value of the Company to its stockholders and believe that the stock unit buyback plan can be applied in the best interest of the Company and its stockholders.

In the previous year, the Company purchased 466,000 of its issued stock capital from the open market. The average price paid for the stock units purchased was RM3.06 per ordinary stock unit. The repurchase transactions were financed by internal fund. The repurchased stock units were subsequently sold in the current year.

During the year, the Company reissued 5,036,000 (2001 - Nil) treasury stocks in the open market. The average re-sale price of the treasury stocks was RM4.08 (2001 - Nil) per stock. The proceeds from the re-sale will be utilised for working capital purposes.

43 Company No. 4434-A

18. Minority shareholders’ interest

This consists of the minority shareholders’ proportion of share capital and reserves of subsidiaries, net of their share of subsidiary’s goodwill on consolidation and amortisation of goodwill charged to the minority shareholders.

19. Other long term liabilities

Included in other long term liabilities of the Group are accrual for environmental liability of RM53,831,000 (2001 - RM53,831,000) in a foreign subsidiary.

20. Operating profit Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000 Operating profit is arrived at after crediting:

Gain on disposal of property, plant and equipment (2,931) (19,184) (3,819) (3,208) Gain on disposal of quoted investments in Malaysia (2,233) (69) - - Gross dividends from: Quoted investments in Malaysia (623) (470) (135,936) (125,395) Unquoted investments - - (6,485) (7,357) Reversal of write down of current investments (6,745) - (1,056) - Retirement benefits charged written back (4,513) - - (24) Allowance for doubtful debts written back (844) - (251) - Consequential loss claim (9,597) - - - Rental income on land and buildings (1,022) (1,424) (422) (1,946) ======

44 Company No. 4434-A

20. Operating profit (continued) Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000 after charging:

Amortisation/Write off of goodwill 6,248 24,624 - - Auditors’ remuneration Holding company auditors 529 613 120 120 Other auditors 3,300 4,304 - - Other services 843 3,780 360 - Directors’ remuneration Fee 356 420 200 206 Other emoluments 940 2,986 940 2,141

Bad debts written off - 1,502 - 1,471 Depreciation and amortisation of property, plant and equipment 129,048 141,553 4,855 5,398 Impairment loss of property, plant and equipment 8,000 - 8,000 - Investment in unquoted subsidiary written down - - 4,500 - Hire of machinery 8,519 2,527 1,447 983 Lease rental of properties and equipment 16,391 21,976 - - Loss on disposal of investment in a subsidiary 1,906 - - - Property, plant and equipment written off 197 3,796 4 2,346 Allowance for doubtful debts 19,415 14,061 - 634 Retirement benefits charged - 9,119 70 - Royalties expense 3,953 5,185 - 13 Provision for warranty 53,004 58,767 - - Rental expense on land and buildings 26,105 28,662 417 4,480 Research and development expenditure 55,571 49,069 - 469

Provision for restructuring cost 1,809 28,004 - - Plantation development expenditure written off - 758 - - Retrenchment benefits - 13,440 - 13,440 Foreign exchange loss - unrealised 464 1,179 336 12 - realised - - 142 - Waiver of amount due from subsidiaries - - - 18,572 ======

Company No. 4434-A

20. Operating profit (continued)

and after exceptional items as follows: Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000

Gain on disposal of investments in subsidiaries - (122,962) - (148,676) Investments written down - Unquoted subsidiary and associate - - - 6,003 - Quoted investment - 34,232 - 22,156 Amortisation of Euro Convertible Bonds deferred expenditure - 8,894 - 8,894 Euro Convertible Bonds put premiums - 53,399 - 53,399 ======

The estimated monetary value of Directors’ benefits-in-kind of the Group and Company are RM53,000 (2001 - RM127,000) and RM53,000 (2001 - RM118,000) respectively.

21. Employees information Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000

Staff costs 847,819 845,395 10,683 19,632 ======

The number of employees of the Group and of the Company (excluding Directors) at the end of the financial year was 10,603 (2001 - 11,183) and 326 (2001 - 685) respectively.

22. Tax expense Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000 Current tax expense Malaysian - current 32,020 39,001 28,000 26,557 - prior years (381) (9,029) - - Overseas - current 39,639 59,146 - - - prior years (189) - - - ______71,089 89,118 28,000 26,557 ------

Company No. 4434-A

22. Tax expense (continued) Group Company 2002 2001 2002 2001 RM’000 RM’000 RM’000 RM’000 Deferred tax expense Malaysian - current (40) 99 - - Overseas - current (4,895) (21,024) - - ______(4,935) (20,925) ------Tax expense on share of profit of associates 841 1,137 ------66,995 69,330 28,000 26,557 ======

The Group’s effective tax rate is lower than the statutory tax rate mainly due to the availability of double deduction incentives and certain tax allowances, and certain foreign subsidiaries which are having lower tax rates.

The Company’s effective tax rate is lower than the statutory tax rate mainly due to certain tax allowances.

Subject to agreement by the Inland Revenue Board, the Company has potential deferred tax benefits not taken up in the financial statements under the liability method in respect of the following items: Company 2002 2001 RM’000 RM’000

Unutilised tax losses 30,710 30,710 Other timing differences 49,019 57,140 ======

23. Earnings per ordinary stock unit - Group

Basic earnings per ordinary stock unit

The calculation of basic earnings per ordinary stock unit is based on the net profit attributable to ordinary stockholders of RM192,332,000 (2001 - RM118,480,000) and the weighted average number of ordinary stock units outstanding during the year of 246,436,262 (2001 - 242,963,677) calculated as follows:

47 Company No. 4434-A

23. Earnings per ordinary stock unit - Group (continued)

Weighted average number of ordinary stock units (net of treasury stocks)

Group 2002 2001 ’000 ’000

Issued ordinary stock units at beginning of the year 243,155 243,273 Effect of ordinary stock units issued during the year 276 8 Effect of treasury stocks reissued/(repurchased) during the year 3,005 (317) ______Weighted average number of ordinary stock units 246,436 242,964 ======

Diluted earnings per stock unit The calculation of diluted earnings per ordinary stock unit is based on the net profit attributable to ordinary stockholders of RM192,332,000 (2001 - RM118,480,000) and the weighted average number of ordinary stock unit (diluted) outstanding during the year of approximately 246,561,000 calculated as follows: Group 2002 ’000

Weighted average number of ordinary stock units as above 246,436 Effect of Executive Stock Option Scheme 125 ______Weighted average number of ordinary stock units (diluted) 246,561 ======

In the previous financial year, the diluted earnings per ordinary stock unit was not presented as there was no dilutive effect.

24. Dividends Group and Company 2002 2001 RM’000 RM’000 Paid: First interim of 6% tax exempt (2001 - 8% less tax) per ordinary 14,918 13,986 Second interim of 2% tax exempt and 20% less tax (2001 - 5% tax exempt and 10% less tax) per ordinary stock unit 40,883 29,627 Dividend written back on treasury stocks - (493) ______55,801 43,120 ======

48 Company No. 4434-A

25. Segmental information

Geographical segments Profit Total before assets Revenue taxation employed 2002 RM’000 RM’000 RM’000

North America 1,939,163 66,531 1,129,408 Europe 1,019,370 50,650 768,216 Asia 1,848,906 259,560 1,979,207 ______4,807,439 376,741 3,876,831 ======Share of profit in associates 6,364 ______Profit before taxation 383,105 ======2001

North America 2,144,628 83,307 1,262,931 Europe 941,245 14,901 771,443 Asia 2,180,155 175,025 2,230,947 ______5,266,028 273,233 4,265,321 ======Share of profit in associates 6,602 ______Profit before taxation 279,835 ======

49 Company No. 4434-A

25. Segmental information (continued)

Business segments Profit Total before assets Revenue taxation employed 2002 RM’000 RM’000 RM’000

Concrete products 150,396 8,920 145,214 Heating, ventilation and air-conditioning, air filtration and industrial refrigeration 4,332,582 327,501 2,835,285 Building boards and panels 323,838 52,499 403,352 Others 623 (12,179) 492,980 ______4,807,439 376,741 3,876,831 ======Share of profit in associates 6,364 ______Profit before taxation 383,105 ======

2001

Concrete products 159,131 (18,146) 153,298 Heating, ventilation and air-conditioning, air filtration and industrial refrigeration 4,565,551 289,217 2,914,446 Building boards and panels 327,421 35,986 484,738 Media and publication 213,455 4,043 - Others 470 (37,867) 712,839 ______5,266,028 273,233 4,265,321 ======Share of profit in associates 6,602 ______Profit before taxation 279,835 ======

50 Company No. 4434-A

26. Operating leases

The Group leases a number of factory facilities and plant and machinery under operating leases. It is expected that, in the normal course of business, leases that expire will be renewed or replaced by new leases.

Total future minimum lease payments under non-cancellable operating leases are as follows: Group 2002 2001 RM’000 RM’000

Less than one year 30,665 28,559 Between one and five years 70,580 58,507 More than five years 40,751 46,822 ______141,996 133,888 ======

27. Contingent liabilities - unsecured Company 2002 2001 RM’000 RM’000 Guarantees and contingencies relating to borrowings of subsidiaries - 28,952 ======

28. Commitments

Group

2002 2001 RM’000 RM’000 Capital commitments: Authorised but not contracted for 9,590 1,102 Contracted but not provided for 35,940 4,411 ______45,530 5,513 ======

Other than the above commitments, the Company has also commitments arising from several agreements entered into to acquire investments or to subscribe for shares as disclosed in Note 33 which have yet to be completed as at year end.

51 Company No. 4434-A

29. Holding company

The holding company is Hong Leong Company (Malaysia) Berhad, a company incorporated in Malaysia.

30. Companies in the Group

The principal activities of the companies in the Group, their place of incorporation and the interest of the Company as at 30 June 2002 are as follows:

Effective ownership Country of interest Name of company Principal activities incorporation 2002 2001 % %

Hume Industries (Malaysia) Manufacture and sale of Malaysia Berhad concrete products and investment holding Subsidiaries: Hume Concrete (EM) Sdn. Manufacture and sale Malaysia 100 100 Bhd. of concrete pipes and products

Hume Construction Sdn. Bhd. Contractor of civil Malaysia 100 100 infrastructure works

Hume Concrete Marketing Sdn. Marketing of precast Malaysia 100 100 Bhd. concrete products

Hume Concrete Products Research and develop- Malaysia 100 100 Research Centre Sdn. Bhd. ment on concrete products

Hume Furniture Industries Manufacture and sale Malaysia 100 100 Sdn. Bhd. of solid wood furniture

Hume Fibreboard Sdn. Bhd. Manufacture and sale Malaysia 100 70 of medium density fibreboard

Hume Wood Resources Sawmilling and Malaysia 100 100 Sdn. Bhd. processing of rubber wood

52 Company No. 4434-A

30. Companies in the Group (continued) Effective Country of interest Name of company Principal activities incorporation 2002 2001 % %

Hume Plastics (Malaysia) Investment dealing and Malaysia 100 100 Sdn. Berhad holding

Hume-G.N. Roofing System Investment holding Malaysia 100 100 Sdn. Bhd.

Hume Roofing Industries Investment holding Malaysia 100 100 Sdn. Bhd.

HIMB Overseas Limited Investment holding Jersey, 100 100 Channel Islands

Hume Cement Sdn. Bhd. Investment holding Malaysia 100 100 and its subsidiary:

Tokoh Kurnia Sdn. Bhd. Dormant Malaysia 100 100

Hume Forest Sdn. Bhd. Undertake rubber Malaysia 100 100 reforestation project

* Noewell Management Ceased operations Malaysia 100 100 Company Sdn. Bhd. (Formerly known as Hume Management Co. Sdn. Bhd.)

Hume Quarry (Sarawak) Dormant Malaysia 100 100 Sdn. Bhd.

Hongvilla Development Dormant Malaysia 100 100 Sdn. Bhd.

Concrete Products Marketing Dormant Malaysia 100 100 Sdn. Bhd.

Hume Flow Control Sdn. Bhd. Dormant Malaysia 100 100

@ Oplino Investments Limited In member’s voluntary Hong Kong 100 100 liquidation

Hume Roofing Tiles Sendirian In member’s voluntary Malaysia 100 100 Berhad liquidation

53 Company No. 4434-A

30. Companies in the Group (continued) Effective Country of interest Name of company Principal activities incorporation 2002 2001 % %

Hume Poly Products Sdn. Bhd. In member’s voluntary Malaysia 100 100 liquidation

@ Oplino Private Limited In member’s voluntary Singapore 100 100 liquidation

Konsortium Lebuhraya Struck off Malaysia - 100 Ekspres Kuala Lumpur Sdn. Bhd.

Hume Cemboard Berhad Manufacture and sale of Malaysia 68.33 65.11 and its subsidiary: cement bonded particle boards and cellulose and asbestos fibre cement products

Malex Industrial Products Manufacture and sale of Malaysia 68.33 65.11 Sdn. Bhd. fibre cement sheets and boards

*Hume Philippines, Inc. Investment holding Philippines 99.99 99.99 and its subsidiaries:

*Hume Readymix Struck off Philippines - 52.00 Philippines, Inc.

*Hume Concrete Dormant Philippines 52.00 52.00 Philippines, Inc.

O.Y.L. Industries Bhd. Investment holding and Malaysia 64.99 65.41 and its subsidiaries: letting of properties

O.Y.L. Manufacturing Manufacture and sale of Malaysia 64.99 65.41 Company Sdn. Bhd. air-conditioners

O.Y.L.-Condair Industries Manufacture and sale of Malaysia 33.14 33.36 Sdn. Bhd. packaged and plant air- conditioning units

O.Y.L. Appliances Sdn. Manufacture and sale of Malaysia 64.99 65.41 Bhd. air-conditioners, refrigerators, freezers and other related products

54 Company No. 4434-A

30. Companies in the Group (continued) Effective Country of interest Name of company Principal activities incorporation 2002 2001 % %

@ AAF Group Pte Ltd Investment holding Singapore 64.99 65.41 (Formerly known as Glitter Lite Pte. Ltd.) and its subsidiaries:

AAF Asia Pte Ltd Manufacture, sale and Singapore 64.99 65.41 service of air filtration products

AAF (Shenzhen) Co., Dormant China 64.99 - Ltd.

@ Shenzhen McQuay Air Manufacture and sale China 49.07 49.38 Conditioning Co., Ltd. of air-conditioners

O.Y.L. Electronics Sdn. Manufacture and sale Malaysia 64.99 65.41 Bhd. of electronic products and its subsidiary:

@ OYL Way Electronic Manufacture and sale of China 51.99 52.33 (Shenzhen) Co. Ltd. electronic products

Acson Malaysia Sales & Marketing and servicing Malaysia 64.99 65.41 Service Sdn. Bhd. of air-conditioners, freezers and other related products

York (Malaysia) Sales & Marketing and provision Malaysia 45.49 45.79 Service Sdn. Bhd. of technical support services for air- conditioners

* OYL (BVI) Limited Investment holding The British 64.99 65.41 Virgin Islands

55 Company No. 4434-A

30. Companies in the Group (continued) Effective Country of interest Name of company Principal activities incorporation 2002 2001 % %

Group Associated (C & L) Marketing and servicing Malaysia 64.99 65.41 Sdn. Bhd. of air-conditioners and and its subsidiaries: freezers

Group Associated Investment holding Malaysia 64.99 65.41 (Penang) Sdn. Bhd.

American Air Filter Dormant Malaysia 64.99 65.41 Manufacturing Sdn. Bhd. (Formerly known as O.Y.L. Appliances Distributors Sdn. Bhd.)

American Air Filter Sdn. Marketing and sale of Malaysia 64.99 65.41 Bhd. air filtration products

J & E Hall (Malaysia) Sdn. Dormant Malaysia 64.99 65.41 Bhd.

McQuay (Malaysia) Sdn. Dormant Malaysia 64.99 65.41 Bhd.

O.Y.L. Research & Research and develop- Malaysia 64.99 65.41 Development Centre ment on the manufacture Sdn. Bhd. of air-conditioners, refrigerators and related electrical and electronic products

O.Y.L. Steel Centre Sdn. Steel processing Malaysia 48.74 49.06 Bhd.

LeGuo Home Centre Operating of a chain of Malaysia 64.99 65.41 Sdn. Bhd. retail outlets for electrical products, furniture and other home improvement products

O.Y.L. Overseas Limited Investment holding Jersey, 64.99 65.41 and its subsidiaries: Channel Islands

@ O.Y.L. Sales & Service Sale and service of air- Singapore 64.99 65.41 (Singapore) Pte. Ltd. conditioners and refrigerators and contractors for mechanical and electrical services

56 Company No. 4434-A

30. Companies in the Group (continued) Effective Country of interest Name of company Principal activities incorporation 2002 2001 % % @ P.T. O.Y.L. Sentra Manufacture and sale of Indonesia 38.99 39.25 Manufacturing air-conditioners

@ O.Y.L. (Philippines) Investment holding Philippines 64.99 65.41 Holdings Inc. and its subsidiary:

@ McQuay Philippines Sale of air-conditioners, Philippines 33.79 34.01 Sales & Service Inc. ventilation equipment and accessories

@ McQuay Air- Sale of air-conditioners, Hong Kong 49.07 49.38 conditioning Limited related raw materials and spareparts

@ O.Y.L.-J.M. Co. Ltd. Design, manufacture Taiwan 38.99 39.25 and sale of electronic products

@ McQuay Asia Investment holding Hong Kong 64.99 65.41 (Hong Kong) Ltd. and its subsidiary:

@ Wuhan McQuay Design, manufacture, China 38.99 39.25 Air-Conditioning sale and service of & Refrigeration refrigeration and air- Co. Ltd. conditioning equipment

@ Shanghai McQuay Air Sale, marketing and China 64.99 65.41 Conditioning Co. servicing of air- Ltd. conditioners

* O.Y.L. (Thailand) Investment holding Thailand 64.99 65.41 Limited and its subsidiary:

* McQuay (Thailand) Distribution and service Thailand 31.85 32.05 Company Limited of HVAC

@ McQuay Air Sale, service and Singapore 64.99 65.41 Conditioning installation of HVAC (Singapore) Pte. Ltd. and contractors for mechanical and electrical services

57 Company No. 4434-A

30. Companies in the Group (continued) Effective Country of interest Name of company Principal activities incorporation 2002 2001 % % @ McQuay Australia Pty Ltd. Sale of air-conditioning Australia 64.99 65.41 products

* AMG Holdings B.V. Investment holding Netherlands 64.99 65.41 and its subsidiary:

*AMG Holdings N.V. Investment holding Netherlands 64.99 65.41 and its subsidiaries:

* AAF-McQuay Investment holding USA 64.99 65.41 Group Inc. and its subsidiaries:

* AAF-McQuay Inc. Manufacture, sale and USA 64.99 65.41 service of HVAC and air filtration products

* McQuay Espana S.A. Sale/service and Spain 64.99 65.41 distribution of HVAC

* AAF-McQuay Investment holding USA 64.99 65.41 Holdings Inc.

* AAF-McQuay Investment holding USA 64.99 65.41 International, Inc.

* AAF-McQuay Sale and service of Canada 64.99 65.41 Canada, Inc. HVAC * AAF-McQuay Investment holding United 64.99 65.41 UK Limited Kingdom

* AAF Italia S.r.I. Investment holding Italy 64.99 65.41 * McQuay Italia Manufacture and sale Italy 64.99 65.41 S.p.A. of HVAC

* American Air Dormant USA 64.99 65.41 Filter Company, Inc.

* AAF-McQuay Investment holding Netherlands 64.99 65.41 Netherlands B.V.

58 Company No. 4434-A

30. Companies in the Group (continued) Effective Country of interest Name of company Principal activities incorporation 2002 2001 % %

* McQuay Sale, distribution and USA 35.09 38.59 Mediterranean LLC service of HVAC and refrigeration products

* McQuay Beirut Sale, distribution and Lebanon 38.34 38.59 (Offshore), Inc. service of HVAC and S.A.L refrigeration products

* AAF Luftreinigung- Sale of air filtration Austria 64.99 65.41 ssysteme products Gessellschaft m.b.H.

* AAF-Lufttechnik Sale of air filtration Germany 64.99 65.41 GmbH products

* AAF-McQuay Investment holding France 64.99 65.41 France

* AAF-Limited Manufacture and sale United 64.99 65.41 and its subsidiary: of air and pollution Kingdom control and environmental control products

AAF-McQuay Marketing, distributing Mexico 64.99 - S.A. de C.V. selling, servicing, sourcing and manufacturing of HVAC, air pollution control market and g environmental products

* AAF S.r.I Sale of air filtration Italy 64.99 65.41 products

* AAF International Manufacture and sale Netherlands 64.99 65.41 B.V. of air filtration products

* AAF, S.A. Manufacture and sale Spain 64.99 65.41 of air filtration and environmental products

59 Company No. 4434-A

30. Companies in the Group (continued) Effective Country of interest Name of company Principal activities incorporation 2002 2001 % %

* AAF-SA Manufacture and sale France 64.99 65.41 of air filtration products

* AAF Hava Filtreleri Sale of air filtration Turkey 64.99 65.41 ve Ticaret A.S. products

* AAF, S.de.R.L. Manufacture and sale Mexico 64.99 65.41 de C.V. of air pollution control and environmental products

* Purificacion de Dormant Venezuela 64.99 65.41 Aire Venezolana, C.A.

* AAF Enviromental Sale of air filtration Greece 64.99 65.41 Control E.P.E. products

* AAF-SA Sale of air filtration Belgium 64.99 65.41 products

* McQuay-Perfex Domestic sales USA 64.99 65.41 Export Co. corporation

* J & E Hall Limited Manufacture of HVAC United 64.99 65.41 and after market sales Kingdom and service

* American Air Filter Sale and service of air Brazil 64.99 65.41 Brasil LTDA. filtration products and HVAC

* AF Technology Ltd Manufacture, marketing Korea - 35.32 and sale of air filtration products and pollution control products

* AAF-McQuay Foreign sales corporation Barbados 64.99 65.41 Export Inc.

* AAF-McQuay Investment holding France 64.99 65.41 Holding France

60 Company No. 4434-A

30. Companies in the Group (continued) Effective Country of interest Name of company Principal activities incorporation 2002 2001 % %

* McQuay-TPC Corp. Investment holding USA 64.99 65.41

* Beth Lufftechnik Manufacture of fabric Germany 64.99 65.41 GmbH filters/environmental products equipment

* Coulstock & Place Service of electrical United 64.99 65.41 Engineering motors Kingdom Co. Ltd.

* Balmsound Limited Dormant United 64.99 65.41 Kingdom

* McQuay (UK) Manufacture and sale United 64.99 65.41 Limited of HVAC Kingdom

* Air Filters Limited Manufacture and sale United 64.99 65.41 of air filtration products Kingdom

* McQuay-Ar Dormant Brazil 64.99 65.41 Condicionado Brasil Ltda

* McQuay Latin Sale, distribution and USA 64.99 65.41 America L.C. service of HVAC

* McQuay de Dormant Venezuela 64.99 65.41 Venezuela C.A.

61 Company No. 4434-A

30. Companies in the Group (continued) Effective Country of interest Name of company Principal activities incorporation 2002 2001 % % Associates:

Telecast Usahasama Sdn. Trading in precast man- Malaysia 30.00 30.00 Bhd. holes and accessories

* Philippine Malaysia Water Dormant Philippines 45.00 45.00 Consortium, Inc.

* P.T. HIMB Concrete Manufacture of precast Indonesia 50.00 50.00 Manufacturer concrete products

Precast Products Sdn. Bhd. Marketing, sale, design, Malaysia 40.61 40.61 manufacture and installation of precast concrete systems and products

* John Holland Asia Holdings In creditors’ voluntary Hong Kong 50.00 50.00 Limited and its subsidiaries liquidation

Industrial Concrete Products Manufacture and trading Malaysia 34.28 34.28 Berhad of concrete products

* Hume Holdings, Inc Dormant Philippines 20.00 20.00

* Jelutong Development Civil construction Malaysia 50.00 50.00 Sdn. Bhd and property development

* Kami Builders Sdn. Bhd. Non-operating Malaysia 50.00 50.00

HLI-Hume Management Provision of management Malaysia 49.00 - Co. Sdn. Bhd. services

* Malaysian Fabricated Engaged in construction Malaysia 40.00 40.00 Building Systems Sdn Bhd activities

* AAF Saudi Arabia Ltd. Manufacture and Saudi 31.85 32.05 marketing of air filtration Arabia products

* Kirloskar AAF Ltd. Manufacture and sale of India 32.50 32.71 industrial products and systems related to pollution control, surface coating and others

62 Company No. 4434-A

30. Companies in the Group (continued) Effective Country of interest Name of company Principal activities incorporation 2002 2001 % %

OYME Engineering In creditors’ winding-up Malaysia 22.75 22.89 Sdn. Bhd.

* Aerofil Filtration de Aire, In members’ voluntary Venezuela 12.93 13.02 C.A. liquidation

* McQuay Caribe, Inc. Sale, distribution and Puerto 26.00 26.16 service of HVAC Rico

* AAF-McQuay L.L.C. Air conditioning trading, U.A.E. 31.85 32.05 air conditioning and refrigeration spare parts trading, ventilation trading, central air conditioning equipment and accessories trading.

* Equipos McQuay, S.A. Sale, distribution and Mexico 32.50 32.71 de C.V. service of HVAC

* Janitrol de Mexico S.A. Sale, distribution and Mexico 32.50 32.71 de C.V. service of HVAC

* Kirloskar-McQuay Pvt. Ltd. Manufacture, sale and India 32.50 32.71 distribution of air conditioning products

* OYL Holdings, Inc. Investment holding Philippines 26.00 26.16

* McQuay Hellas Air- Marketing, sale, Greece 32.50 32.71 Conditioning and distribution and service Refrigeration SA of HVAC

* Tristate HVAC Marketing and distribution USA 32.50 32.71 Equipment, LLP of commercial, industrial and institutional HVAC, systems and after-market parts

63 Company No. 4434-A

30. Companies in the Group (continued) Effective Country of interest Name of company Principal activities incorporation 2002 2001 % %

* McQuay of Georgia, LLP Distribution and sale of USA 32.50 32.71 and its subsidiaries HVAC

* McQuay Southeast Service of HVAC USA 32.50 32.71 Service, LLC equipment

* McQuay Southeast Distribution and sale of USA 32.50 32.71 Supply, LLC McQuay spare parts

* Applied Control Sale and installation of USA 32.50 32.71 Systems, LLC HVAC control systems

* McQuay Szanyo Trading, distributing, Hungary 29.25 29.43 Klimatechnika kft. sale and services of HVAC

* McQuay New York, LLC Marketing, distribution USA - 26.16 and selling of commercial, industrial and institutional HVAC products, systems and after-market parts

* McQuay Service S.r.I. Installation, maintenance, Italy 26.00 26.16 assistance and repair of air-conditioning and heating machinery

* Companies not audited by KPMG.

@ Companies audited by affiliates of KPMG.

HVAC Heating, ventilation and air-conditioning equipment.

64 Company No. 4434-A

31. Acquisition and disposal of subsidiaries

Acquisition

In the previous financial year, the Group had acquired the following:

i) On 10 July 2000, O.Y.L. Industries Bhd.’s (“OYLI”) indirect wholly owned subsidiary, AAF-Mc-Quay Inc., increased its interest in McQuay Espana S.A. from 40% to 100% for a total cash consideration of 157,500,000 Pesetas (equivalent to RM3,465,000).

ii) On 31 July 2000, Malex Industrial Products Sdn. Bhd. became a wholly owned subsidiary of Hume Cemboard Berhad.

The subsidiaries acquired contributed RM67,907,000 and RM8,475,000 respectively to the consolidated revenue and net profit after taxation for the year ended 30 June 2001 respectively.

Disposals

On 30 January 2002, the Group disposed of its entire equity interest in AF Technology Ltd. The subsidiary does not contribute materially to the Group.

In the previous financial year, the Company had disposed of the following:

i) On 28 April 2001, the Company completed the disposal of its entire 100% equity interest in Hume Steel Industries Sdn. Bhd. for a total cash consideration of RM6,394,765.

ii) On 14 May 2001, the Company completed the disposal of its entire 100% equity interest in Kota Kinabalu Water Sdn. Bhd. (“KKW”) for a total cash consideration of RM65,000,000.

iii) On 31 May 2001, the Company and its wholly owned subsidiary, Hume Plastics (Malaysia) Sdn. Bhd., completed the sale of 41,840,902 ordinary shares of RM1.00 each in aggregate representing 72.14% as at 31 May 2001 in Nanyang Press Holdings Berhad (“NPHB”) for a total cash consideration of RM230,124,961 or RM5.50 per NPHB share. On 31 July 2001, the Securities Commission approved the utilisation of the proceeds received from the disposal of NPHB for the repayment of the Company’s bank borrowings, and the proceeds had been fully deployed for that purpose by end of August 2001.

The subsidiaries disposed of contributed RM223,068,000 and RM62,153,000 respectively to the consolidated revenue and net profit after taxation for the year ended 30 June 2001 respectively.

65 Company No. 4434-A

31. Acquisition and disposal of subsidiaries (continued)

Effect of acquisitions and disposals

The acquisitions and disposals had the following effect on the Group’s assets and liabilities.

i) Acquisitions Group 2002 2001 RM’000 RM’000 Assets Property, plant and equipment - 45,716 Inventories - 13,866 Trade and other receivables - 41,237 Goodwill - 2,034 Cash and bank deposits - 493 ______- 103,346 Liabilities Current liabilities - (28,950) Bank borrowings - (41,288) ______Net assets acquired - 33,108 Goodwill on acquisition - 209 Investment in associate - (1,571) ______Purchase price paid - 31,746 Less: Cash and bank deposits - (493) ______Cash flow on acquisition, net of cash acquired - 31,253 ======

66 Company No. 4434-A

31. Acquisition and disposal of subsidiaries (continued)

ii) Disposal Group 2002 2001 RM’000 RM’000 Assets Property, plant and equipment 4,808 96,986 Investment - 25,247 Goodwill on consolidation - 35,166 Deferred expenditure - 1,082 Associates - 72,862 Current assets 12,402 246,801 Cash and bank deposits 2,076 10,645 ______19,286 488,789 Liabilities Current liabilities (4,273) (147,325) Bank borrowings - (110,921) Bank overdrafts - (1,142) Minority interest (6,812) (43,198) Long term liabilities - (15,267) ______8,201 170,936 Net (loss)/gain on disposal (1,906) 122,962 ______Net proceeds from disposals* 6,295 293,898 Less: Cash and bank deposits (2,076) (10,645) Add: Bank overdrafts - 1,142 ______Net cash flows from disposals 4,219 284,395 ======

* Net proceeds from disposals consist of the following: Total consideration 6,295 301,520 Less: Incidental cost - (7,622) ______6,295 293,898 ======

67 Company No. 4434-A

32. Related parties

The Company has controlling related party relationship with its holding company and subsidiaries.

The Group has related party transactions with corporations which are related to the Directors and/or substantial shareholders of the Company and/or related corporations and/or persons connected with them as follows:

i. Hong Leong Company (Malaysia) Berhad (“HLCM”) is a substantial stockholder of the Company. YBhg Tan Sri Quek Leng Chan (“Tan Sri Quek”), a Director, a stockholder and a deemed substantial stockholder of the Company, is a Director and a substantial shareholder of HLCM. Mr Kwek Leng San (“Mr Kwek LS”), a Director of the Company, is a brother of Tan Sri Quek. Tan Sri Quek and Mr Kwek LS are persons connected to HLCM;

ii. Gamuda Berhad (“Gamuda”) is a person connected to YBhg Tan Sri Dato’ Ir Talha bin Hj Mohd Hashim, a Director of the Company;

iii. Min Industries Sdn Bhd (“Min Industries”), Elite Precision Components Sdn Bhd (“Elite”), Group Associated Sdn Bhd (“Group Associated”) and United Straits M & E Sdn Bhd (“United Straits”) are persons connected to Mr Liu Wan Min, a Director of certain subsidiaries of the Company;

iv. Min Industries and Elite are persons connected to Mr Foo Ah Sek @ Foo Chak Kuen, a Director of certain subsidiaries of the Company;

v. Hong Bee Hardware Co. Sdn Bhd (“Hong Bee Hardware”) is a person connected to Mr Chuah Chuan Thye, a Director of certain related companies of the Company;

vi. BIB Insurance Brokers Sdn Bhd (“BIB”) is a person connected to YBhg Tan Sri Dato’ Zaki bin Tun Azim, a Director of a subsidiary and a related company of the Company; and

BIB ceased to be a subsidiary of Hong Leong Credit Berhad (“HLC”) on 29 January 2002;

vii. Syarikat Ong Yoke Lin Sdn Bhd (“Syarikat Ong Yoke Lin”) and Multi Trans Services are persons connected to YAB Tun Dato’ Seri Haji Omar Yoke Lin Ong (“YAB Tun Omar”), a Director of certain subsidiaries of the Company;

viii. RZA Forwarding Sdn Bhd (“RZA Forwarding”) and RZA Warehousing Sdn Bhd (“RZA Warehousing”) are persons connected to YM Raja Zainal Abidin bin Raja Haji Tachik, a Director of certain related companies of the Company;

68 Company No. 4434-A

32. Related parties (continued)

ix. Hong Leong Properties Berhad (“HLP”), Hong Leong Industries Berhad (“HLI”), HLG Capital Berhad (“HLG”), HLC, HLI-HUME Management Co Sdn Bhd (“HHMC”) and Hong Leong Bank Berhad (“HLB”) are subsidiaries of HLCM (“Hong Leong Group”);

x. Southern Steel Berhad (“SSB”) and Guardian Securities Consultancy Sdn Bhd (“GSC”) are indirect associates of HLCM;

xi. York International Corporation (“York”) and Toyota Tsuho Corporation (“Toyota Tsusho”) are substantial shareholders of certain subsidiaries of the Company.

Significant transactions with related parties are as follows:

Transaction Related party Group 2002 2001 RM’000 RM’000

a) Sale of concrete products HLI and its subsidiaries 28,323 27,700

b) Purchase of raw materials HLI and its subsidiaries; 36,303 34,320 for concrete products; SSB and its subsidiaries parts and components for machinery and equipment

c) Leasing/rental of offices HLP and its subsidiaries 442 1,191

d) Receipt of services: 3,866 5,683

Stock broking, underwriting HLG and its subsidiaries and placement; shares and securities services, corporate advisory services, investment and fund management services

Insurance and insurance Hong Leong Assurance broking services Berhad, a wholly owned subsidiary of HLC and BIB

Hotel related services HLP and its subsidiaries

Sale and marketing services HLI and its subsidiaries

Security services GSC

e) Receipt of corporate HHMC 3,458 -

office support services

69 Company No. 4434-A

32. Related parties (continued)

Transaction Related party Group 2002 2001 RM’000 RM’000

f) Receipt of group management HLCM 8,966 10,691 and/or support services

g) Receipt of meeting/convention HLB and its subsidiaries 200 315 and corporate dining facilities

h) Payment for usage of the HLCM 33 47

Hong Leong logo and trade mark

i) Sale of concrete products Gamuda - 149

j) Sale of concrete products Hong Bee Hardware 13,047 9,824

k) Sales of goods Syarikat Ong Yoke Lin 8,460 18,121

l) Purchase of raw materials Hong Bee Hardware 12,469 12,254 for concrete products

m) Purchase of components Elite 18,877 19,277 and parts

n) Purchase of components Min Industries 317 241 and parts

o) Provision of air-conditioning United Straits 40 36 and maintenance services

p) Receipt of transportation Multi Trans Services 1,562 2,367 services

q) Receipt of warehousing and RZA Forwarding and 5,980 6,554 forwarding services RZA Warehousing

r) Rental of properties Group Associated 317 311

s) Sales of goods York 32,973 36,665

t) Purchase of raw materials Toyota Tshuso 32,722 55,783

u) Purchase of goods York 15,145 34,136

v) Licence for usage of trademark York 1,134 1,236 and technical and management assistance

70 Company No. 4434-A

32. Related parties (continued)

Significant transactions entered into by the Company with related corporations are as follows: Company 2002 2001 RM’000 RM’000 Subsidiaries

Gross dividend from: Quoted subsidiaries (133,403) (89,782)

Unquoted subsidiaries (6,485) (888) Gross sales of products (121,027) (124,030) Management fee receivable - (1,708) Management fee payable - 740 Rental income on land and buildings (368) (1,177) Research and development expenditure - 469 Sales of property, plant and equipment (3,115) (231) Purchase of property, plant and equipment 16 110 Commission payable 4,249 4,410 Interest payable 318 10,882 Interest receivable (1,616) (1,118)

The above transactions have been carried out at arm’s length and based on normal commercial terms consistent with the usual business practices and policies of the Group and the Company, on terms not more favourable to the related party than those generally available to the public and are not detrimental to the minority stockholders.

33. Significant events during the financial year

During the year:

1) Corporate Exercises

a) the Company’s stockholders and the relevant authorities approved the following proposals:

i) right issues of up to 250,335,630 new ordinary stock units of RM1.00 each at an issue price of RM2.00 per stock unit on the basis of one (1) new stock unit for every one (1) existing stock unit held (“Rights Issue”);

ii) bonus issue of up to 500,671,260 new ordinary stock units of RM1.00 each on the basis of one (1) new stock unit for every one (1) existing ordinary stock unit held after the Rights Issue (“Bonus Issue”);

71 Company No. 4434-A

33. Significant events during the financial year (continued)

iii) distribution of up to 83,445,210 ordinary shares in O.Y.L. Industries Bhd (“OYL”), representing the Company’s equity interest in OYL, a subsidiary of the Company, to the stockholders of the Company by way of capital distribution on the basis of one (1) OYL ordinary share of RM1.00 each for every twelve (12) ordinary stock units held in the Company after the Rights Issue and the Bonus Issue to be effected by reduction in share premium reserve account and cancellation of ten (10) ordinary stock units for every twelve (12) ordinary stock units held in the Company after the Rights Issue and Bonus Issue (“Capital Distribution”); and

iv) acquisition of 115,061,324 ordinary shares of RM1.00 each representing 40.75% equity interest in Southern Steel Berhad (“SSB”) from Camerlin Group Berhad for a total cash consideration of RM132,320,523.

The Company had announced on 14 August 2002, that the Securities Commission (“SC”) had approved the Company’s application for waiver under Practice Note 2.9.3 from the obligation to undertake a mandatory offer for the remaining SSB shares subject to the condition that the purchase price to be paid for the SSB shares is based on the 5-days weighted average market price of SSB shares prior to the date of acquisition (“the condition”). The Company has decided to appeal to the SC on the condition imposed. An application will be made to the SC in due course.

The holders of the Company’s USD114,380,000 3% Euro Convertible Bonds (“ECB”) approved the Capital Distribution and the Company’s stockholders also approved the issuance to the holders of the ECB of up to 24,764,487 new stock units in the Company (“HIMB Stocks”) pursuant to the conversion of the ECB as the total new stock units to be issued would exceed 10% of the resultant reduced share capital of the Company after the Capital Distribution.

72 Company No. 4434-A

33. Significant events during the financial year (continued)

1) Corporate Exercises

b) the Company entered into a Share Subscription Agreement with Ambang Subur Sdn Bhd (“ASSB”) to subscribe for 50,000,000 ordinary shares of RM1.00 each representing 99.9% equity interest in ASSB. ASSB in turn had entered into an Asset Purchase Agreement and Share Purchase Agreement with HCB to acquire the business and assets of HCB and its entire equity interest in MIP for a total cash consideration of RM310,000,000.

c) HCB proposed to undertake the following proposals which were pending approvals from the relevant authorities and shareholders:

i) bonus issue of up to 248,884,800 new ordinary shares of RM1.00 each in HCB on the basis of four (4) new ordinary shares for every one (1) existing ordinary share held in HCB (“Proposed HCB Bonus Issue”); and

ii) cash distribution to all its shareholders of up to RM248,884,800 from the proceeds of the proposed disposal of the business and assets of HCB and its entire equity interest in MIP to ASSB by way of cancellation of the entire new ordinary shares to be issued pursuant to the Proposed HCB Bonus Issue.

2) Acquisition

The Company acquired the balance 30% equity interest comprising 18,000,000 ordinary shares of RM1.00 each in Hume Fibreboard Sdn. Bhd. (“HFB”) for a total cash consideration of RM12,600,000 from Marubeni Corporation. Upon completion of the acquisition on 20 June 2002, HFB became a wholly-owned subsidiary of the Company.

3) Disposal

OYL’s wholly-owned subsidiary, AAF-McQuay Inc., entered into an agreement with Century Corporation (“CC”) and Mr Han Ig Yu (“HIY”) to dispose of its entire equity interest in AF Technology Ltd, comprising 161,725 common stocks of par value Korean Won 5,000 per stock to CC and HIY, for a total cash consideration of Korean Won 2,159,352,200 (equivalent to RM 6,295,360).

73 Company No. 4434-A

34. Comparatives

The following comparatives have been restated to conform with the current year’s presentation. Group Company As previously As previously As restated stated As restated stated RM’000 RM’000 RM’000 RM’000

Income Statement Other operating expenses (239,293) (142,768) (131,934) (41,482) Other operating income 154,564 31,602 159,473 10,797 Exceptional items - 26,437 - 58,224

Balance Sheet Current liabilities Trade and other payables 1,079,377 1,186,074 - - Provisions 106,697 - - -

Long term and deferred liabilities Other long term liabilities 79,805 120,518 - - Provisions 40,713 - - -