D I Rectors' Report

7296/MinHo Final AR04 P17-32 DT 28/5/04 5:11 PM Page 26 Di r ectors’ Report The Directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2003. PRINCIPAL ACTIVITIES The principal activity of the Company is investment holding. The principal activities of the subsidiary companies consist of the following :- (i) Kiln drying and chemical preservative treatment; (iv) Manufacturing and distribution of industrial paper bags; (ii) Manufacturing, exporting and dealing in moulded (v) Trading in log supply and its related products; timber and its related products; (vi) Exploitation of timber concessions; and (iii) Export of processed timber products; (vii) The operation of a fully integrated timber complex. There have been no significant changes in the nature of these activities during the year. FINANCIAL RESULTS GROUP COMPANY RM’000 RM’000 Loss after taxation (31,809) (33,048) Minority interest (1,860) - Net loss for the year (33,669) (33,048) There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the statements of changes in equity. In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction, or event of a material and unusual nature. DIVIDEND No dividend has been paid or declared by the Company since the end of the previous financial year and the Directors do not propose any dividend in respect of the current financial year. DIRECTORS The names of the Directors of the Company in office since the date of the last report and at the date of this report are:- Y.A.M. Tunku Tan Sri Imran Ibni Tuanku Ja'afar Loo Say Leng Dato' Loo Keng An @ Lee Kim An Ng Hoe Chang Dato' Ismail bin Yusof Khibir Bin Razali Dato' Dr. Salleh bin Mohd Nor Mohd. Faizal bin Abd Majid (Appointed w.e.f 28.08.03) Yap Leong Seng (Alternate Director to Khibir bin Razali) Christoper Wan Tiong Seah Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company is a party, whereby Directors might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate other than those pursuant to the Minho's warrants. The following Directors who held office at the end of the financial year had, according to the register required to be kept under Section 134 of the Companies Act 1965, an interest in shares and warrants of the Company as stated below :- Ordinary Shares of RM1 each As at Bought Sold As at 1.1.2003 During the year 31.12.2003 Interest in shares of the Company Direct interest: Y.A.M. Tunku Tan Sri Imran Ibni Tuanku Ja'afar 610,000 -- 610,000 Ng Hoe Chang 10,000 -- 10,000 Mohd Faizal bin Abd Majid 1,000 -- 1,000 Indirect interest: Dato’ Loo Keng Ang @ Lee Kim An 380,000 -- 380,000 Ng Hoe Chang 168,600 -- 168,600 Loo Say Leng 1,100,002 -- 1,100,002 Yap Leong Seng 245,865 -- 245,865 26 MINHO (M) BE R H A D 7296/MinHo Final AR04 P17-32 DT 28/5/04 5:11 PM Page 27 Di r ectors’ Report Interest in warrants of the Company Number of units As at Bought Sold As at 1.1.2003 During the year 31.12.2003 Y.A.M. Tunku Tan Sri Imran Ibni Tuanku Ja'afar 535,000 -- 535,000 Ng Hoe Chang 10,000 -- 10,000 None of the other directors of the Company at the end of the year held any interest in shares and warrants of the Company or its related corporations. Since the end of the previous financial year, no Director has received or become entitled to receive any benefits (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the Directors as shown in the Group financial statements or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with any 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 the following transactions, as disclosed in Note 9 to the financial statements, between the Group and companies in which the Directors are deemed interested :- Name of Directors Nature of Benefits Dato' Loo Keng An @ Lee Kim An ) Sale and purchase of timbers, logging Loo Say Leng ) contracts, kiln drying and preservative Ng Hoe Chang ) treatments OTHER STATUTORY INFORMATION (a) Before the income statements and balance sheets of the Group and of the Company were made out, the Directors took reasonable steps :- (i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and (ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise. (b) At the date of this report, the Directors are not aware of any circumstances which would render :- (i) 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; and (ii) the values attributed to current assets in the financial statements of the Group and of the Company misleading. (c) At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. (d) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements and consolidated financial statements misleading. (e) As at the date of this report, there does not exist :- (i) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or (ii) any contingent liabilities in respect of the Group and of the Company which have arisen since the end of the financial year other than those disclosed in the financial statements. Annual Report 2003 27 7296/MinHo Final AR04 P17-32 DT 28/5/04 5:11 PM Page 28 Di r ectors’ Report OTHER STATUTORY INFORMATION (cont’d) (f) In the opinion of the Directors :- (i) no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due; and (ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made. AUDITORS The auditors, A. Razak & Co., have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the Directors DATO’ ISMAIL BIN YUSOF LOO SAY LENG Klang, Malaysia 28 MINHO (M) BE R H A D 7296/MinHo Final AR04 P17-32 DT 28/5/04 5:11 PM Page 29 Income Statements for the year ended 31 December 2003 Group Company 2003 2002 2003 2002 Note RM’000 RM’000 RM’000 RM’000 Revenue 3 301,978 281,567 7,819 25,697 Cost of sales (255,799) (259,092) - - Gross profit 46,179 22,475 7,819 25,697 Other operating income 4,038 4,151 758 547 Selling and marketing expenses (15,434) (2,020) - - Administrative expenses (17,933) (23,706) (2,548) (7,752) Other operating expenses (32,258) (154) (32,258) (16,130) (Loss)/profit from operations 4 (15,408) 746 (26,229) 2,362 Finance costs 5 (8,756) (8,458) (6,695) (7,294) Loss before taxation (24,164) (7,712) (32,924) (4,932) Taxation 6 (7,645) (6,146) (124) (3,933) Loss after taxation (31,809) (13,858) (33,048) (8,865) Minority interests (1,860) (2,230) - - Net loss for the year (33,669) (16,088) (33,048) (8,865) Loss per share (sen) - Basic 7 (30.6) (14.6) - Diluted 7 (30.6) (14.6) The accompanying notes form an integral part of the financial statements. Annual Report 2003 29 7296/MinHo Final AR04 P17-32 DT 28/5/04 5:11 PM Page 30 Balance Sheets as at 31 December 2003 Group Company 2003 2002 2003 2002 Note RM’000 RM’000 RM’000 RM’000 NON-CURRENT ASSETS Property, plant and equipment 8 180,914 186,328 1,682 1,686 Investments in subsidiaries 9 - - 242,171 274,429 Other investments 10 750 500 500 500 Goodwill on consolidation 11 9 32,266 - - CURRENT ASSETS Inventories 12 77,159 58,989 - - Trade receivables 13 39,678 48,328 - - Other receivables 14 20,434 21,871 11 34 Tax recoverable 1,424 1,204 1,221 1,078 Amount due from affiliated company 15 323 323 - - Amount due from subsidiary companies 9 - - 15,269 18,350 Deposits with licensed banks 16 6,063 6,698 2,232 1,167 Cash and bank balances 9,302 9,872 3,664 2,130 154,383 147,285 22,397 22,759 CURRENT LIABILITIES Trade payables 17 8,310 11,077 - - Other payables 18 19,434 22,292 1,027 1,240 Amount due to a subsidiary company 9 - - 13,853 13,216 Hire purchase obligations 19 591 483 - - Borrowings 20 33,283 26,939 - - Bank overdrafts 2,679 3,276 - - Tax payable 26,197 26,681 - - 90,494 90,748 14,880 14,456 NET CURRENT ASSETS 63,889 56,537 7,517 8,303 245,562 275,631 251,870 284,918 FINANCED BY : Share capital 21 109,851 109,851 109,851 109,851 Reserves 22 10,217 43,886 59,830 92,878 Shareholders’ equity 120,068 153,737 169,681 202,729 Minority interests 11,779 10,414 - - 131,847 164,151 169,681 202,729 Deferred taxation 23 30,961 29,103 - - Hire purchase obligations 19 565 188 - - Borrowings 20 82,189 82,189 82,189 82,189 Non-current liabilities 113,715 111,480 82,189 82,189 245,562 275,631 251,870 284,918 The accompanying notes form an integral part of the financial statements.

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