Annual Report 2002
page CORPORATE VISION 1
“TO BECOME THE PUBLIC TRANSPORT OF CHOICE.”
MISSION STATEMENT
To consolidate our leadership in the public transport industry, ensuring increasing productivity and profitability to stakeholders whilst satisfying customers’ needs, in keeping with our commitment as a responsible corporate citizen in our community. Park May Berhad [13294-A] page 2
Corporate Profile 3 Notice of The Twenty-Ninth Annual General Meeting 4 Notice of The Thirtieth Annual General Meeting 5 Statement Accompanying Notice of The Twenty-Ninth Annual General Meeting 7 Statement Accompanying Notice of The Thirtieth Annual General Meeting 10 Corporate Information 13 contents
Corporate Structure 14 Board of Directors 16 Audit Committee Report 18 Group Five Year Summary 22 Chairman’s Statement 25 Corporate Governance 28 Operations Review 35 Financial Calendar 38 Financial Statements 39 Shareholders’ Information 93 Noteholders’ Information 95 Loan Stock Holders’ Information 95 Property 96 Proxy Form Annual Report 2002
page CORPORATE PROFILE 3
PARK MAY BERHAD, an associate company of Renong Berhad since 1994, provides public bus transportation in Peninsular Malaysia. Its services can be broadly categorized into stage bus and express bus. It currently operates stage buses in the Klang Valley, mainland Penang/ northern Perak, Seremban and its vicinity, and Kuantan. Its express services are predominantly concentrated along the North-South Expressway.
The Company was mandated to jointly lead stage bus operations in the Klang Valley in 1994, as part of the Government’s plan to rationalize and modernize the urban transport system. In response to this, the Company introduced a new fleet of buses, equipped with advanced ticketing system, and expanded its area of operations in the Klang Valley partly through the acquisition of other operators and/or their routes. The Company markets its stage bus operations through its internally developed brand name, Cityliner.
In 1995, Park May Berhad was also appointed to lead one of the two consortia for express bus operations along the North-South Expressway. Its express service is represented by Plusliner, which caters for the lower income group, NiCE and NiCE 2, which are targeted at the higher end market.
Having established a foothold in the Malaysian public bus industry, Park May Berhad is presently undergoing a consolidation phase to strengthen its position in its primary areas of operations. Park May Berhad [13294-A] page 4 NOTICE OF THE TWENTY-NINTH ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Twenty-Ninth Annual General Meeting of the Company will be held at Pelican II, 3rd Floor, Pearl International Hotel, Batu 5, Jalan Kelang Lama, 58000 Kuala Lumpur on Wednesday, 18 June 2003, at 10.30 am, for the purpose of transacting the following businesses:-
AGENDA
As Ordinary Business
1. To receive and adopt the Audited Financial Statements for the period ended 31 December 2002 and the Reports of the Directors and Auditors thereon. (Resolution 1)
2. To approve Directors' fee of RM254,163 for the period ended 31 December 2002. (Resolution 2)
3. To re-elect Mr Chong Yoon Fatt who retires in accordance with Article 87 of the Company's Articles of Association and, being eligible, offers himself for re-election. (Resolution 3)
4. To re-elect YABhg Tun Mohammed Hanif Bin Omar who retires in accordance with Article 80 of the Company's Articles of Association and, being eligible, offers himself for re-election. (Resolution 4)
5. To re-elect YBhg Dato’ Mohd Nor Bin Idrus who retires in accordance with Article 80 of the Company's Articles of Association and, being eligible, offers himself for re-election. (Resolution 5)
6. To re-appoint Messrs Ernst & Young as Auditors and to authorise the Directors to fix their remuneration. (Resolution 6)
7. To transact any other business for which due notice shall have been given. (Resolution 7)
By Order of the Board
ZALILA BINTI MOHD TOON (LS 006641) RAHANAWATI BINTI ALI DAWAM (BC/R/504) Joint Secretaries
Kuala Lumpur 27 May 2003
NOTES :
(i) A member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but need not be a member of the Company.
(ii) The Proxy Form must be deposited at the Company's registered office at Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur not less than forty- eight (48) hours before the time fixed for holding the Meeting and at any adjournment thereof. Annual Report 2002
page NOTICE OF THE THIRTIETH ANNUAL GENERAL MEETING 5
NOTICE IS HEREBY GIVEN that the Thirtieth Annual General Meeting of the Company will be held at Pelican II, 3rd Floor, Pearl International Hotel, Batu 5, Jalan Kelang Lama, 58000 Kuala Lumpur on Wednesday, 18 June 2003, immediately after the conclusion or adjournment (as the case maybe) of the Twenty-Ninth Annual General Meeting of the Company which will be held at 10.30 am on the same day and at the same venue, for the purpose of transacting the following businesses:-
AGENDA As Ordinary Business 1. To re-elect YBhg Datuk Sulaiman Bin Daud who retires in accordance with Article 80 of the Company's Articles of Association and, being eligible, offers himself for re-election. (Resolution 1)
2. To re-elect En. Zainal Abidin Bin Jamal who retires in accordance with Article 80 of the Company's Articles of Association and, being eligible, offers himself for re-election. (Resolution 2)
3. To re-appoint Messrs Ernst & Young as Auditors and to authorise the Directors to fix their remuneration. (Resolution 3)
As Special Business
To consider and if thought fit pass the following Ordinary Resolution:
4. PROPOSED AUTHORITY TO ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965.
To empower the Directors, pursuant to Section 132D of the Companies Act, 1965, to allot and issue shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors, may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued capital of the Company as at the date of this Annual General Meeting and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the Kuala Lumpur Stock Exchange and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company. (Resolution 4)
5. PROPOSED RENEWAL MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE.
That, pursuant to paragraph 10.09 of the Listing Requirements of the Kuala Lumpur Stock Exchange, a mandate be and is hereby granted to allow recurrent related party transactions of a revenue or trading nature, which are necessary for the day-to-day operations of the Company and/or its subsidiaries, entered into or to be entered into by the Company and/or its subsidiaries provided such transactions are in the ordinary course of business and are on terms not more favourable to the related party than those generally available to the public, particulars of which are set out in Section 2.2 of the Circular to the Shareholders of the Company dated 27 May 2003, and that such approval conferred by the mandate shall continue to be in force until:
(a) the conclusion of the next Annual General Meeting ("AGM") of the company following this AGM at which such mandate is passed, at which time it will lapse, unless by a resolution passed at such general meeting whereby the authority is renewed;
(b) the expiration of the period within which the next AGM of the Company after that date is required to be held pursuant to Section 143(1) of the Companies Act, 1965 ("Act") (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or
(c) revoked or varied by resolution passed by the shareholders in a general meeting; whichever is earlier,
And further that the Directors of the Company and/or any of them be and are/is (as the case may be) hereby authorized to complete and do all such acts and things (including executing such documents under the common seal in accordance with the provisions of the Articles of Association of the Company, as may be required) as they may consider expedient or necessary to give effect to the Proposed Shareholders’ Mandate. (Resolution 5) Park May Berhad [13294-A] page 6 NOTICE OF THE THIRTIETH ANNUAL GENERAL MEETING
6. TO TRANSACT ANY OTHER BUSINESS FOR WHICH DUE NOTICE SHALL HAVE BEEN GIVEN. (Resolution 6)
By Order of the Board
ZALILA BINTI MOHD TOON (LS 006641) RAHANAWATI BINTI ALI DAWAM (BC/R/504) Joint Secretaries
Kuala Lumpur 27 May 2003
NOTES :
(i) A member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but need not be a member of the Company.
(ii) The Proxy Form must be deposited at the Company's registered office at Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur not less than forty-eight (48) hours before the time fixed for holding the Meeting and at any adjournment thereof.
(iii) Resolution pursuant to Section 132D of the Companies Act, 1965
The proposed Ordinary Resolution 4, if passed, would enable the Directors to issue up to a maximum of 10% of the issued share capital of the Company as at the date of this Annual General Meeting for such purposes as the Directors consider would be in the best interest of the Company. This authority unless revoked or varied by the Company at a General Meeting will expire at the next Annual General Meeting.
(iii) Resolution pertaining to the Recurrent Related Party Transactions For Resolution 5, further information on the Recurrent Related Party Transactions is set out in Section 2 of the Circular to Shareholders of the Company dated 27 May 2003 which is dispatched together with the Company’s Annual Report 2002. Annual Report 2002
page STATEMENT ACCOMPANYING NOTICE OF 7 THE TWENTY-NINTH ANNUAL GENERAL MEETING
1. Further details of Directors seeking re-election at the Annual General Meeting:
a. Mr. Chong Yoon Fatt (Non-Independent and Non-Executive Director)
Age & Nationality 47, Malaysian
Qualifications - Malaysian Institute of Accountants. - Malaysian Institute of Certified Public Accountants. - Chartered Institute of Management Accountants.
Working Experience - Senior Manager, Ernst & Young - Group Finance Manager, SME Technologies. - General Manager – Finance, Sri Inderajaya (FE) Sdn Bhd - Group Financial Controller, Smith & Nephew/Federal Industries Sdn Bhd - Senior Accountant, PETRONAS (MLNG and MTBE/PPM). - Audit Senior, Kassim Chan & Co.
Occupation - Director, Group Finance, United Engineers (Malaysia) Berhad.
Other directorships of public - Central Malaysian Assets Berhad. Companies - UE Management Services Berhad
Securities holdings in Park May Nil Berhad and its subsidiaries
Family relationships with any Nil Director and/or major shareholder Of Park May Berhad
Any conflict of interest with No Park May Berhad:
List of convictions for offences Nil within the past 10 years other than traffic offences
No. of Board Meetings attended N/A (appointed on 23 April 2002) during the financial year Park May Berhad [13294-A] page 8 STATEMENT ACCOMPANYING NOTICE OF THE TWENTY-NINTH ANNUAL GENERAL MEETING
b. YABhg Tun Mohammed Hanif Bin Omar (Chairman and Independent Non-Executive Director)
Age & Nationality 64, Malaysian
Qualifications - Certificate in Legal Practice from Legal Professional Qualifying Board, Malaysia - LLB (Hons) University Of Buckingham, United Kingdom. - Bachelor of Arts Degree University of Malaya (Singapore)
Working Experience - Inspector-General of Police
Occupation - Chairman, Park May Berhad - Chairman of General Corporation Berhad - Chairman, Maxis Communications Berhad.
Other directorships of public - Genting Berhad Companies - Resorts World Berhad - AMMB Holdings Berhad - AmFinance Holdings Berhad - AmFinance Berhad
Securities holdings in Park May 2,400 ordinary shares in Park May Berhad Berhad and its subsidiaries
Family relationships with any Nil Director and/or major shareholder Of Park May Berhad
Any conflict of interest with No Park May Berhad
List of convictions for offences Nil within the past 10 years other than traffic offences
No. of Board Meetings attended 19/19 during the financial year Annual Report 2002
page STATEMENT ACCOMPANYING NOTICE OF THE TWENTY-NINTH ANNUAL GENERAL MEETING 9
c. YBhg Dato’ Mohd Nor Bin Idrus (Executive Vice-Chairman and Non-Independent Executive Director)
Age & Nationality 51, Malaysian
Qualifications - Bachelor of Science, Civil Engineering Degree from Sunderland Polytechnic, United Kingdom
Working Experience - Ministry of Works - Malaysian Highway Authority - Shapadu Holdings Sdn Bhd - Pernas Construction Sdn Bhd
Occupation - Managing Director of UE Constructions Sdn Bhd
Other directorships of public Ho Hup Construction Company Berhad Companies Intria Berhad Kinta Kellas Public Limited Company
Securities holdings in Park May Nil Berhad and its subsidiaries
Family relationships with any Nil Director and/or major shareholder Of Park May Berhad
Any conflict of interest with No Park May Berhad
List of convictions for offences Nil within the past 10 years other than traffic offences
No. of Board Meetings attended 10/19 during the financial year Park May Berhad [13294-A] page 10 STATEMENT ACCOMPANYING NOTICE OF THE THIRTIETH ANNUAL GENERAL MEETING
1. Further details of Directors seeking re-election at the 30th Annual General Meeting:
a. YBhg Datuk Sulaiman Bin Daud (Independent and Non-Executive Director)
Age & Nationality 57, Malaysian
Qualifications - Diploma in Agriculture, UPM - Master of Business Administration, IMC Buckingham, United Kingdom - Stanford-Insead Advanced Management Programme, Fountainbleu, France
Working Experience - Deputy Chief Executive/Executive Director, Malaysian Tobacco Co. Bhd (MTC) - Chairman, MTC Foundation Executive Committee - Chairman, Twyford Plant Laboratories (M) Sdn Bhd - Chairman, Confederation of Malaysian Tobacco - Board Member, National Tobacco Board
Occupation - Chairman, EPE Power Corporation Berhad. - Chairman, Bank Pertanian Malaysia Berhad
Other directorships of public - Pharmaniaga Berhad. Companies - Axis Systems Holdings Ltd. - Ho Hup Construction Company Berhad
Securities holdings in Park May Nil Berhad and its subsidiaries
Family relationships with any Nil Director and/or major shareholder Of Park May Berhad
Any conflict of interest with No Park May Berhad
List of convictions for offences Nil within the past 10 years other than traffic offences
No. of Board Meetings attended 18/18 during the financial year Annual Report 2002
page STATEMENT ACCOMPANYING NOTICE OF THE THIRTIETH ANNUAL GENERAL MEETING 11
b. En. Zainal Abidin Bin Jamal (Independent and Non-Executive Director)
Age & Nationality 49, Malaysian
Qualifications - LLB (Hons) University of Singapore
Working Experience - First Class Magistrate at the Judicial Department, Brunei - Company Secretary of Harrison Malaysian Plantations Berhad
Occupation - Senior Partner, Messrs Zainal Abidin & Co.
Other directorships of public - Mentakab Rubber Company (Malaya) Berhad Companies - Lam Soon (M) Berhad - Malaysia National Insurance Berhad - Kesas Holdings Berhad - Cement Industries of Malaysia Berhad
Securities holdings in Park May Nil Berhadand its subsidiaries
Family relationships with any Nil Director and/or major shareholder Of Park May Berhad
Any conflict of interest with No Park May Berhad
List of convictions for offences Nil within the past 10 years other than traffic offences
No. of Board Meetings attended 12/18 during the financial year Park May Berhad [13294-A] page 12 STATEMENT ACCOMPANYING NOTICE OF THE THIRTIETH ANNUAL GENERAL MEETING
2. Date, Time and Venue of the Board Meetings.
Date Time Venue
25 August 2001 11.00 a.m Board Room, Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur.
29 October 2001 10.00 a.m Board Room, Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur.
20 November 2001 11.30 a.m Board Room, Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur.
30 November 2001 3.00 p.m Board Room, Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur.
15 February 2002 8.30 a.m MCOBA Building, 42, Jalan Syed Putra, 50460 Kuala Lumpur.
18 February 2002 3.00 p.m Board Room, Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur.
28 February 2002 10.00 a.m Board Room, Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur.
7 March 2002 3.30 p.m Board Room, Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur.
14 March 2002 10.00 a.m Board Room, Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur.
22 March 2002 9.45 a.m Peacock II, 6th Floor, Pearl International Hotel, Batu 5, Jalan Kelang Lama, 58000 Kuala Lumpur.
15 April 2002 10.00 a.m Board Room, Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur.
11 May 2002 10.00 a.m Board Room, Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur.
23 May 2002 5.00 p.m Mayang 3, LL3, JW Marriot Hotel, 183 Jalan Bukit Bintang, Kuala Lumpur
11 June 2002 10.00 a.m Board Room, Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur.
15 July 2002 10.00 a.m Board Room, Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur.
27 August 2002 10.00 a.m Board Room, Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur.
22 November 2002 2.30 p.m Board Room, Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur.
29 November 2002 2.30 p.m Board Room, Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur.
19 December 2002 10.00 a.m Board Room, Lot 18115, Batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur. Annual Report 2002
page CORPORATE INFORMATION 13
BOARD OF DIRECTORS
Name Nationality Other Responsibilities
YABhg Tun Mohammed Hanif Bin Omar Malaysian Chairman, Nomination and (Chairman and Independent Non-Executive Director) Remuneration Committees
YBhg Dato’ Mohd Nor Bin Idrus Malaysian Member, Remuneration Committee (Executive Vice-Chairman)
En. Adnan Mohammad Malaysian - (Managing Director)
YBhg Datuk Sulaiman Bin Daud Malaysian Chairman, Audit Committee (Independent Non-Executive Director) Member, Nomination and Remuneration Committees
En. Zainal Abidin Bin Jamal Malaysian Member, Audit Committee (Independent Non-Executive Director)
Mr Yeo Keng Un Malaysian Member, Nomination Committee (Non-Executive Director)
Mr. Chong Yoon Fatt Malaysian Member, Audit Committee (Non-Executive Director)
JOINT COMPANY SECRETARIES AUDITORS SENIOR MANAGEMENT
Puan Zalila Mohd Toon Ernst & Young En. Adnan Mohammad (LS 006641) Managing Director
Cik Rahanawati Ali Dawam PRINCIPAL SOLICITOR En. Mohd Ali Mohd Nor (BC/R/504) Chief Operating Officer Nik Saghir & Ismail Major (R) Mohd Noor Busu REGISTERED OFFICE Senior General Manager, PRINCIPAL BANKERS Operations & Technical Lot 18115, Batu 5 Affin Discount Berhad Jalan Kelang Lama Puan Zalila Mohd Toon Bumiputra-Commerce Bank Berhad 58100 Kuala Lumpur General Manager, Standard Chartered Bank Tel: 03-7982 7060 Group Finance & Corporate Affairs Fax: 03-7625 4987 Malaysia Berhad Malayan Banking Berhad En. Khairuddin Sulaiman General Manager, REGISTRAR Stage Operations STOCK EXCHANGE LISTING Panama Resources Sdn. Bhd. 23 Jalan Sri Hartamas 7 Main Board Of The Kuala Lumpur Sri Hartamas Stock Exchange 50480 Kuala Lumpur Tel : 03-6201 1120 Fax: 03-6201 3121 Park May Berhad [13294-A] page 14 CORPORATE STRUCTURE Annual Report 2002
page 15 Park May Berhad [13294-A] page 16 BOARD OF DIRECTORS
Standing from left: En Zainal Abidin Bin Jamal, YBhg Dato’ Mohd Nor Idrus & Mr Yeo Keng Un Seating from left: YBhg Datuk Sulaiman Bin Daud & YABhg Tun Mohammed Hanif Omar (Chairman)
En Adnan Mohammad Mr Chong Yoon Fatt Annual Report 2002
page BOARD OF DIRECTORS 17
PROFILE OF THE BOARD OF DIRECTORS
YABhg Tun Mohammed Hanif Omar, 64, was appointed Chairman of Park May Berhad on 14 February 1994. He is also the Chairman of the Nomination and Remuneration Committee. He holds a Bachelor of Arts degree from University of Malaya (Singapore), an LLB from University of Buckingham, United Kingdom and a Certificate in Legal Practice from the Legal Profession Qualifying Board, Malaysia. Prior to his venture into the private sector, he served as Inspector-General of Police for almost 20 years. He is the Chairman of General Corporation Berhad, Maxis Communications Berhad, Deputy Chairman of Genting Berhad and Resorts World Berhad. He sits on the Board of AMMB Holdings Berhad and AmFinance Berhad. He also chairs and sits on the Board of several other private companies.
YBhg Dato’ Mohd Nor Idrus, 51, was appointed as Executive Vice Chairman on 16 July 1999. He is an engineer by profession, and holds a Bachelor of Science, Civil Engineering degree from Sunderland Polytechnic, United Kingdom. Upon graduation, he served in the Ministry of Works and the Malaysian Highway Authority for 7 years. He left the Government service to join Shapadu Holdings Sdn Bhd in 1985, and subsequent to that, Pernas Construction Sdn Bhd in 1987. He joined the Renong Group in 1988. He is currently the Managing Director of UE Construction Sdn Bhd. He holds directorship in Ho Hup Construction Company Bhd, Intria Berhad and Kinta Kellas Public Limited Company.
En Adnan Mohammad, 42, was appointed as Managing Director of Park May Berhad on 1 May 2003, prior to which he served as the Chief Operating Officer of Intria Berhad. He has served in various capacities within the UEM Group, including as the Managing Director of TIME dotNet Berhad and as Senior General Manager Finance in Projek Lebuhraya Utara Selatan Berhad. En. Adnan holds a Bachelor of Business Administration (Finance) from University of Missouri Kansas City, United States of America, and a Diploma in Banking Studies from Mara Institute of Technology. He is a member of the Management Institute of Malaysia.
YBhg Datuk Sulaiman Bin Daud, 57, was appointed Director of Park May Berhad on 23 October 2001. He is the Chairman of the Audit Committee and member of the Nomination Committee and Remuneration Committee. He is also the Senior Independent Director of the Company. He obtained a Masters of Business Administration from IMC, Buckingham for which he was the Most Outstanding Student, Worldwide. He has had an illustrious career with Malaysian Tobacco Company Berhad, where he started as a Trainee Executive in 1968 and progressed to become the Deputy Chief Executive until 1992. His involvement in the tobacco industry includes being the Chairman of the Confederation of Malaysian Tobacco Manufacturers and a member of the National Tobacco Board. He is currently the Chairman of Bank Pertanian Malaysia Berhad and EPE Power Corporation Berhad. He is also a director in Pharmaniaga Berhad, Director of Ho Hup Construction Co Bhd and Director of Axis System Holdings Ltd.
Mr Yeo Keng Un, 45, was appointed as a Director of Park May Berhad on 23 October 2001. He holds a Bachelor of Business Administration degree from Universiti Kebangsaan Malaysia and a Diploma in Public Administration, INTAN. He is presently the General Manager (Investments) in Khazanah Nasional Berhad. Prior to joining Khazanah in 1994, he was with the Administrative and Diplomatic Service, attached to the Ministry of Finance from 1984 to 1994. He also holds other directorships by appointment in Expressway Lingkaran Tengah Sdn Bhd (“ELITE”) and Linkedua (Malaysia) Bhd.
En Zainal Abidin Bin Jamal, 49, was appointed as a Director of Park May Berhad on 23 October 2001. He read law at the University of Singapore and is currently a senior partner of Messrs Zainal Abidin & Co, a law firm in Kuala Lumpur. He was enrolled as an Advocate & Solicitor in Malaysia, Singapore and Brunei and has served as a First Class Magistrate at the Judicial Department, Brunei. He has also held the position of Company Secretary of Harrison Malaysian Plantations Berhad. He currently sits on the Board of Mentakab Rubber Company (Malaya) Berhad, Lam Soon (M) Berhad, Malaysia National Insurance Berhad, Kesas Holdings Berhad and Cement Industries of Malaysia Berhad.
Mr Chong Yoon Fatt, 47, joined the Board on 23 April 2003. He is a member of Malaysian Institute of Accountants, Malaysian Institute of Certified Public Accountants and Chartered Institute of Management Accountants. He is currently the Group Finance Director of United Engineers (Malaysia) Berhad. He sits on the Board of Central Malaysian Assets Berhad and UE Management Services Berhad. Park May Berhad [13294-A] page 18 AUDIT COMMITTEE REPORT
COMPOSITION
The Malaysian Code on Corporate Governance and the KLSE’s Revamped Listing requirements specify that an Audit Committee shall be established by the Board of Directors from amongst their numbers via a Director’s resolution. The requirements include the following:-
1. The Audit Committee shall comprise no fewer than 3 members; 2. A majority of the Audit Committee shall be independent directors; 3. At least one member must also fulfills the following additional requirements; • Must be a member of the Malaysian Institute of Accountants (MIA); or • If not a member of MIA, must have at least 3 years working experience and; - must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants act 1967; or - must be a member of one of the associations of accountants specified in Part 11 of the 1st Schedule of the Accountants Act 1967; or • Fulfills such other requirements as prescribed by exchange.
The members of the Audit Committee shall elect from amongst themselves a Chairman who is an independent non- executive director. Members of the Audit Committee including the Chairman shall only hold office as long as they serve as Directors of the Company.
An alternate Director shall not be appointed as a member of the Audit Committee.
Any member of the Audit Committee shall relinquish his membership with prior written notice to the Company Secretary, and may continue to serve as a Director of the Company.
Any vacancy in the Audit Committee, which results in a contravention of the KLSE Listing rules on composition of the Audit Committee, must be filled within three months. The Nomination Committee will review and recommend to the Board, another director to fill the vacancy.
OBJECTIVES
The Audit Committee was established by the Board to: -
1. provide assurance to the shareholders that the directors of the Company have complied with specified financial standards and required disclosure policies developed and administered by the Kuala Lumpur Stock Exchange (KLSE) and other approved accounting standards/regulatory authorities.
2. reinforce the independence of the auditors, ensuring that they are given free rein in the audit process and a line of communication and forum for discussion that is independent of Management.
3. ensure consistency with the KLSE’s commitments to encourage high standards of corporate transparency and disclosure with the Malaysian Code on Corporate Governance.
4. endeavour to adopt certain practices to maintain standards of corporate responsibility, integrity and accountability to all the Company’s shareholders.
Park May Berhad’s Company Secretary shall be the Secretary of the Audit Committee. Annual Report 2002
page AUDIT COMMITTEE REPORT 19
MEMBERS, DETAILS OF MEETINGS AND ATTENDANCE
The members of the Audit Committee in the eighteen months to 31 December 2002 and their attendance at meetings were as follows:-
Date of YBhg. Datuk En. Zainal Ms Tan YABhg.Tun Mr Lee YH Dato’ En Mohamad Meeting Sulaiman Abidin Siew Hoon Mohammed Siew Choon Md Sharif Fakhri Bin Bin Daud Bin Jamal Hanif Omar Shamsuddin Abd Rashid (appointed (appointed (appointed (resigned (resigned (resigned (resigned w.e.f. w.e.f. w.e.f. w.e.f. w.e.f. w.e.f. w.e.f. 23.10.2001) 23.10.2001) 27.3.2002) 23.10.2001) 23.10.2001) 23.10.2001) 27.3.2002)
Non- Non- Non- Non- Non- Non- Executive, Executive, Executive, Executive, Executive, Executive, Executive, Non- Independent Independent Non- Independent Non Independent Independent Director Director Independent Director Independent Director Director Director Director
25.8.2001 ••••
20.11.2001 • • •
27.12.2001 • • •
25.2.2002 • • •
23.5.2002 • • •
22.8.2002 • • •
18.11.2002 • • •
Ms Tan Siew Hoon, the non-independent non-executive director who is also the MIA member resigned from the Board w.e.f. 1 April 2003.
Mr Chong Yoon Fatt a non-independent non executive director who is MIA member has been appointed as Director and member of the audit committee w.e.f. 23 April 2003.
PARTICULARS OF OTHER DIRECTORSHIPS
YBhg Datuk Sulaiman Bin Daud 1. Bank Pertanian Malaysia Berhad 2. EPE Power Corporation Berhad 3. Pharmaniaga Berhad 4. Axis System Holding Ltd 5. Ho Hup Construction Company Berhad
En Zainal Abidin Bin Jamal 1. Mentakab Rubber Company (Malaya) Berhad 2. Lam Soon (M) Berhad 3. Malaysia National Insurance Berhad 4. Kesas Holding Berhad 5. Cement Industries of Malaysia Berhad Park May Berhad [13294-A] page 20 AUDIT COMMITTEE REPORT
Mr Chong Yoon Fatt 1. Central Malaysian Assets Bhd 2. UE Management Services Bhd
DUTIES AND RESPONSIBILITIES
The duties and responsibilities of the Audit Committee include:
• To oversee all matters relating to external audit, including the appointment, resignation or dismissal of the external auditor and the review of the audit plan, audit report, external auditor’s management letter and management responses. The committee also, in the absence of Management, where necessary, is to discuss problems and reservations on interim and final audit and other matters;
• To oversee the Internal Audit Department, including the appointment, resignation or dismissal of senior internal auditors, the evaluation of internal control standard, assessing the scope and resources of the department, and appraising the performance of the internal audit function as well as considering major findings of internal investigations and the management response thereto;
• To review the financial statements and standard of financial reporting, including changes to accounting policy, fundamental accounting principles and compliance with, inter-alia, approved accounting standards and the KLSE Listing Requirements;
• To review the assistance and cooperation rendered by the Company’s officers to the external and internal auditors and to appraise the efficiency and effectiveness with which Company resources are employed;
• To review the level of compliance to established policies and procedures and the various regulatory requirements;
• To review any related party transactions or conflict of interests situation that may arise within the Company or the Group; and
• To promptly notify the KLSE of any such matters which may result in a breach of the listing requirements where such matters, in the committee’s opinion, have not been resolved by the Board of directors.
AUTHORITY
The Audit Committee shall have the following authority as empowered by the Board of Directors: -
• Have the resources required to perform its duties;
• Have full, free and unrestricted access to any information, records, properties and personnel of the Company and any other companies within the Group;
• Have explicit authority to investigate any matter within its terms of reference;
• Have direct communication channels with the external auditor and person (s) carrying out the internal audit function;
• Have the right to obtain independent Professional or other advice and to invite outsiders with relevant experience to attend the Committee’s meetings (if required) and to brief the Committee thereof;
• Be able to convene meetings with the external auditor and non executive Audit Committee members, whenever deemed necessary;
• The attendance of any particular Audit Committee meeting by other Directors and Employees of the Company shall be at the Committee’s invitation and discretion and specific to the relevant meeting. Annual Report 2002
page AUDIT COMMITTEE REPORT 21
MEETINGS
The Audit Committee shall meet at least four times in a financial year at the very minimum. Additional meetings may be called at any time at the discretion of the Chairman. A notice of meetings, agenda and papers are distributed to the Audit Committee members and other relevant representatives prior to the meetings. The meetings are attended by the Head of Internal Audit and the Managing Director. The Secretary of the Audit Committee (the Company Secretary) records the minutes of the proceedings. Representatives of the external auditors are invited to meetings on matters relating to the statutory accounts.
Minutes of the meetings are distributed to the Audit Committee members and also the Board members. The Chairman of the Audit Committee, as a member of the Board shall report matters discussed at the Audit committee meetings to the Board. The quorum for the audit committee meeting is two, a majority of whom shall be independent.
ACTIVITIES
During the financial period, the Audit Committee undertook the following activities:-
1. Reviewing the quarterly report on consolidated results;
2. Reviewing the external auditor’s management letter and management response;
3. Reviewing the status of compliance to the Malaysian Code on Corporate Governance and the KLSE’s Revamped Listing Requirements;
4. Reviewing the scope of work, resources and annual audit plan of the internal audit department;
5. Reviewing the audit and investigation reports issued by the internal audit department, discussing the findings and recommendations with Management and ensuring timely resolution of all findings and recommendations;
6. Reviewing and deliberating the annual audited financial statements with the external auditors, submissions to the various regulatory authorities and circulars to shareholders including the general mandate on recurrent related party transactions;
7. Ensuring adequacy, objectivity and effectiveness of the internal audit function;
The activities of the internal audit department which supports the Audit committee during the financial period were as follows:-
1. Assessing the effectiveness of the system of internal control by performing comprehensive audits focusing on reinforcing and improving operational, financial and administrative systems and processes. These audits were performed with impartiality, proficiency and with the exercise of due professional care;
2. Reviewing compliance to internal and regulatory requirements, e.g. compliance to the Company’s Discretionary Authority Limits, the Malaysian Code on Corporate Governance and KLSE’s Revamped Listing Requirements, rules of the Motor Vehicles Licensing Board and the Occupational Health and Safety Act.
3. Tabling of the audit reports to the audit Committee and follow up on the status of management’s action plans to rectify weaknesses identified.
4. Facilitating the development of the Board Policy Manual, the Risk Management framework and performance of the risk assessment and management exercise. Park May Berhad [13294-A] page 22 GROUP FIVE YEAR SUMMARY
RM'000 1998 1999 2000 2001 2002*
Turnover 100,438 102,984 108,173 126,422 177,845
(Loss)/Profit before tax (34,341) (29,157) (29,436) (17,327) (42,209)
(Loss)/Profit attributable to shareholders (34,874) (25,987) (27,315) (15,824) (43,647)
Total assets (fixed + current) 232,870 196,108 173,335 156,951 117,097
Shareholders' funds 39,860 13,869 (13,446) 18,214 (25,433)
Pre tax return on shareholders' funds -86% ->100% n/a -85% ->100%
(Loss)/ Earnings per share (sen) ** (96.9) (72.2) (75.9) (33.9) (61.9)
Net dividend per share (sen) - - - - -
Net tangible asset per share (sen) 50.0 2.6 (54.0) 12.2 (35.0)
Gearing ratio 3.88 10.43 n/a 6.37 n/a
Earnings before interest, tax, 17,349 17,927 7,532 16,406 20.502 depreciation & amortisation
* Figures for the 18-months period. ** Restated to take account of the capital reduction and consolidation. Annual Report 2002
page GROUP FIVE YEAR SUMMARY 23
* Figures for the 18-months period.
Annual Report 2002
page CHAIRMAN’S STATEMENT 25
Dear Shareholders,
It is the time of year again to evaluate the Group’s performance for the financial period ended 31 December 2002, and to gauge our prospects for the year ahead.
The financial period under review was very trying for the Group. The Group had to face manifold challenges ranging from escalating costs of diesel and spare parts to maintaining an ageing fleet of buses to our struggle to survive in an increasingly competitive business environment. The 18-month period ending 31 December 2002 had been a difficult period for the public bus transportation industry in general, and the Group, in particular. Tun Mohammed Hanif Omar Chairman
REVIEW OF FINANCIAL approximately RM178 million, the PERFORMANCE annualised turnover being RM119 million, which was 6.3% lower than To streamline with its major the previous year. (2001: RM126 shareholder (i.e. Renong Bhd), the million). Group has changed its financial year from 30 June to 31 December. As Further compounding the lower such, the financial performance under turnover was the additional expenses review is for the-18 month period incurred during the year. Major ended 31 December 2002. overhaul exercises had to be carried out to maintain our ageing fleet of The Group posted a loss before buses which average at 7 years. The taxation of RM41.5 million for the 18- Group is also currently exposed to the month ended 31 December 2002. The fluctuating prices of materials such as annualised loss for the period under diesel, tyres, spare parts and review is RM27 million, which is lubricants which account for almost approximately RM10 million higher 45% of our total direct operating compared to RM17.3 million recorded costs. in the previous year. Putting matters into perspective, the loss is partially I hasten to add that the Group is attributable to the Malaysian unable to share any cost increases Accounting Standards’ Board Note 23, with its commuters due to price which prescribes the writing-off of regulation. Inelastic bus fares pose a goodwill and the provisioning for problem when operational costs do impairment in value of assets ( buses), not remain static. Equally noteworthy amounting to RM19 million. is the fact that the revision of bus fares represents a marginal increment of Revenue for the 18-month period 3% to 4.5% per annum, which is lower ended December 2002 was than the average rate of inflation over Park May Berhad [13294-A] page 26 CHAIRMAN’S STATEMENT
the same period. Ultimately, Lumpur Stock Exchange ("KLSE")’s commuters bear the brunt of this Practice Note 4 ("PN4"), which unhealthy operating environment, indicates that the Group is technically because the level of service will be in financial distress. On 12 March less than satisfactory. 2003, an announcement was made to the KLSE of our condition. On 13 Be that as it may, the Group will strive March 2003, KLSE announced that the to mitigate its decelerating Group has been reclassified from the performance through this difficult trading sector to the "PN4 Condition" period by continuing with cost sector. However, no trading restriction containment measures as best it can, has been imposed on the Group.
by divesting non-core assets and The Group has until 11 September shedding certain non-viable routes. In 2003 to regularise its financial addition to that, to mitigate the condition. We are currently assessing uncertainty in prices, the Group has various options to address this matter. undertaken a series of measures to hedge and minimise the impact of the Apart from the aforementioned issue, escalation in its direct operating costs among the challenges that lie ahead which include entering into contracts include control over costs and the that range from 3 to 5 years with some destructive competition plaguing the of our suppliers, which essentially industry. As the Group’s fleet of buses locks the price upfront. ages, the cost of repairs and fleet maintenance would invariably escalate. While the ideal solution to PROSPECTS this would be to replace our fleet as time progresses, it remains the The continued losses recorded by the Group’s key objective to decrease its Group over the past 6 years have had a debt to a more manageable level. As corresponding effect on its such, capital expenditure is accorded shareholders’ funds, with a second priority until this aim is met. In shareholders’ deficit of RM23 million the interim, the Group will continue to as at the end of the recently concluded exercise prudence over its costs. financial year (2001: Shareholders’ surplus of RM18m). There is no The highly fragmented nature of the guarantee that this trend will come to industry is yet another pressing issue a halt, despite the Group’s efforts to that must be addressed, urgently. The arrest it. Group is currently urging the Government to revive the efforts It is also with deep regret that I report towards consolidation of stage bus that, with the deficit in the operations within the Klang valley shareholders’ funds, the Group has fallen within the ambit of Kuala Annual Report 2002
page CHAIRMAN’S STATEMENT 27
(mooted in the early 1990s) that we Independent Director, have left the believe will yield significant economies Group. On behalf of the Board, of scale and improve service levels, in I would like to thank them for their addition to lessening the unhealthy contribution and dedication to the competition currently occurring. Group’s cause.
The fare revision implemented in late Despite it being a very challenging 2000 (8 years after the last revision year, the Board of Directors recognises was effected) was a welcome respite, the effort and commitment though it only served to mitigate the demonstrated by the management inflationary pressures suffered in the team and staff over the years, and
past. While the new fare regime would like to record our gratitude to offered temporary cashflow relief to each and every one of them. operators, it did not significantly enhance the sustainability of the We appreciate the co-operation and business. The collapse of bus support extended by the Commercial operators such as Len Omnibus and Vehicles Licensing Board, the Road Foh Hup Omnibus (both of which had Transport Department, the Ministry of been in business for decades) bear Entrepreneur Development, the testimony to this. Ministry of Transport, the Dewan Bandaraya Kuala Lumpur and various An urgent restructuring exercise must other Government ministries and be undertaken by the Government to agencies. address these pressing issues pertaining to the public transportation I would also like to thank our bankers industry. In May 2003, PMB had and creditors, who have stood by us submitted a proposal to the through both good and trying times. Government highlighting this matter. Our appreciation, too, goes to all our If the status quo is allowed to prevail, suppliers. the predicament suffered by the aforementioned companies is likely to Last but not least, may I express my be shared by PMB, which will lead to deepest gratitude to all the the inevitable collapse of the entire shareholders and fellow Board industry sooner than later. members for your confidence, support and guidance over the years.
ACKNOWLEDGEMENTS
En Mohamad Fakhri Abd Rashid, the Tun Mohammed Hanif Omar Group’s Managing Director and Ms Tan Chairman Siew Hoon, our Non-Executive, Non- Park May Berhad [13294-A] page 28 CORPORATE GOVERNANCE
Park May Berhad’s (PMB) Board of Directors fully subscribes to practising good corporate governance to safeguard shareholder value. The Board believes in ensuring that the Principles and Best Practices of the Malaysian Code on Corporate Governance are consistently applied and complied in order to achieve good governance. The latest development towards this end was the adoption of a formal Board policy Manual on 27 August 2002 by the Board of Directors. The Board Policy Manual encompasses the principles and best practices advocated by the Malaysian Code on Corporate Governance and the KLSE’s Revamped Listing Requirements and serves as a point of reference for the Board Members for self-governance.
BOARD OF DIRECTORS
COMPOSITION
PMB’s Board of Directors has the overall responsibility for determining the strategic direction of the Group. It meets regularly to discuss the corporate strategy, business operations and results of the various business units/sectors within the Group.
Up to October 2001, the Board consisted of five Directors, two of whom including the Chairman, were independent non- executive directors. In October after the restructuring of Renong Bhd, two of the directors, Mr. Lee Siew Choong and YH Dato’ Md Sharif Bin Shamsuddin resigned from the Board and were replaced by three new directors. An additional director was appointed in March 2002. As at May 2003, the Board of Directors comprised three independent, non-executive directors, two non-independent, non-executive directors, an Executive Vice Chairman and the Managing Director.
The Board has appointed YBhg Datuk Sulaiman Bin Daud as the Senior Independent Non Executive Director to whom concerns may be addressed.
BOARD BALANCE
PMB is led and managed by a Board of Directors of calibre, with a good mix of skills and experience ranging from Engineering to Legal, Business Administration, Accountancy and Finance. The appointment of independent directors is pivotal to good corporate governance accountability as they provide independent perspectives and judgement such that the interest of the Company, its shareholders, stakeholders, employees and customers are given due consideration.
There is a clear division of responsibilities between the Chairman and the Managing Director to maintain the status quo in the balance of power and authority in managing the Company. Annual Report 2002
page CORPORATE GOVERNANCE 29
BOARD MEETINGS
In the 18 months to 31 December 2002, 19 Board meetings were convened. The record of attendance is as follows:
Directors Status Appointed/Resigned No. of meetings held/attended
YABhg. Tun Mohammed Hanif Omar Chairman, Appointed 14.2.1994 19/19 Independent, Non-Executive Director YBhg. Dato’ Mohd Nor Idrus Executive Appointed 16.7.1999 10/19 Vice Chairman En. Mohamad Fakhri Abdul Rashid Managing Director Resigned 10.2.2003 18/19 Mr Yeo Keng Un Non-Independent Appointed 23.10.2001 17/18 Non-Executive Director YBhg. Datuk Sulaiman Bin Daud Independent Appointed 23.10.2001 18/18 Non-Executive Director Tuan Hj. Zainal Abidin Bin Jamal Independent Appointed 23.10.2001 12/18 Non-Executive Director Ms Tan Siew Hoon Non-Independent Resigned 1.4.2003 9/9 Non-Executive Director Mr Lee Siew Chooong Non-Independent Resigned 23.10.2001 1/1 Non-Executive Director YH. Dato’ Md Sharif Shamsuddin Independent Resigned 23.10.2001 1/1 Non-Executive Director
The Board meets regularly with due notice of issues for discussion and deliberation. The agenda for the meeting is prepared and circulated prior to each meeting such that the Board has sufficient time to prepare for the meetings. Information plays a key role in the Board’s decision-making process. In furtherance of their duties, the Board has unrestricted access to timely and accurate information.
The Board also has full access to both Management, internal and external auditors and is encouraged to keep abreast with the nature of business and industry through site visits and meetings with Senior Management. Apart from access to internal information, the Board also has access to information outside of Board Meetings. Where required, the Board has the authority to source for independent professional advice at the company’s expense. Additionally, the Board is also entitled to avail of itself, the services of the Company Secretary.
APPOINTMENT AND RE-ELECTION OF DIRECTORS
Appointment of new Directors and members of Board Committees will be recommended by the Nomination Committee, and approved by the Board of Directors. In accordance with the Company’s Articles of Association, all Directors are subject to re-election at least once every three years.
BOARD COMMITTEES
The Board delegates certain responsibilities to Board Committees. These are as follows: - • Nomination Committee • Remuneration Committee • Audit Committee Park May Berhad [13294-A] page 30 CORPORATE GOVERNANCE
NOMINATION COMMITTEE
The Committee comprises exclusively non – executive directors, a majority of whom are independent. It is responsible for reviewing the composition, structure and size of the Board, recommending to the Board candidates for directorships, reviewing the mix of skills, performance and contribution of each individual director. The Nomination Committee met twice in the financial period.
REMUNERATION COMMITTEE
The remuneration framework for non- executive directors is recommended by the Remuneration Committee and approved by the Board. The Committee comprises three members, two of whom are non – executive, independent directors and the Managing Director. This Committee’s main objective is to ensure that the remuneration packages of the directors and selected senior officers are able to attract and retain the best candidates. The Remuneration Committee met once during the financial period.
AUDIT COMMITTEE
The terms of reference and other information on the Audit Committee is disclosed in the Audit Committee Report.
DIRECTORS’ REMUNERATION
The remuneration framework for non - executive Directors was recommended by the Remuneration Committee and approved by the Board of Directors.
Details of Directors’ Remuneration during the financial period are as follows:
Monthly Fee Attendance Fee Total (incl Emoluments) RM RM RM Executive Directors 569,223 - 569,223 Non-Executive Directors 254,163 83,500 337,663 TOTAL 906,886
The number of Directors whose total remuneration fall within the following bands during the financial period are as follows:-
Non-executive directors
Remuneration No. of Directors Executive directors Remuneration No. of Directors RM300,000-RM600,000 1 Annual Report 2002 page CORPORATE GOVERNANCE 31 TRAINING FOR DIRECTORS In line with the best practices of the Code and the KLSE Listing Requirements, all directors have attended the Management Accreditation Programme. Directors are encouraged to attend continuous education programmes to keep abreast of changes and new developments. SHAREHOLDERS DIALOGUE BETWEEN COMPANY, SHAREHOLDERS AND INVESTORS PMB has always placed huge emphasis on communication with its shareholders, investors and the general public on major developments of the Group on a timely basis. Comprehensive corporate information is provided in the Company’s Annual Report. Quarterly announcements, press releases of the quarterly and annual results provide the investors and the general public with pertinent information. Members of the public may also access the Company’s website www.parkmayberhad.com for current information on the Group and details of the various bus services offered. The shareholders are encouraged to attend the Annual General Meeting (AGM). Notice for the AGM is published in the leading national newspapers. Shareholders are encouraged to enter into dialogue with the Board of Directors and to vote on all resolutions. The external auditors are present at the AGM to address questions raised by the shareholders. Shareholders who are unable to attend the AGM are encouraged to nominate proxies in accordance with the Company’s constitution. Shareholders may also contact the Company Secretary at all times for any further information available to shareholders. ACCOUNTABILITY AND AUDIT FINANCIAL REPORTING The Board of Directors is required to ensure that financial statements are prepared in accordance with the provisions of the Companies Act, 1965 and applicable accounting standards in Malaysia. Following discussions with the Auditors, the Board has to ensure that the Company has used appropriate, consistently applied accounting polices, and that the assessment of the company’s operations and prospects are presented in a true and fair, easily understood manner. The Board and Board Committees have the general responsibility of taking steps to safeguard the assets of the Company, to detect as well as to prevent fraud and other irregularities. The Audit Committee is responsible for reviewing the year-end and quarterly financial results before approval by the Board and prior to the release of financial statements to the KLSE. STATEMENT OF INTERNAL CONTROL INTRODUCTION Public listed companies are required by the Malaysian Code on Corporate Governance (the Code) to maintain a sound system of internal control to safeguard the shareholders’ investment and the assets of the Group. Para 15.27(b) of the Kuala Lumpur Stock Exchange (KLSE’)’s Revamped Listing Requirements indicates the need for the directors to include a statement in the annual report on the state of internal control in the company and its subsidiaries as a group. The KLSE’s Statement on Internal Control: Guidance for Directors of Public Listed Companies (Guidance’) provides guidance for compliance with these requirements. The Board is pleased to present the Statement on Internal Control, which has been prepared in accordance with the Guidance. RESPONSIBILITY OF THE BOARD The Board acknowledges its responsibility for the Group’s system of internal control, which is designed to ensure effective and efficient operations, internal control, financial reporting and compliance with legal and regulatory requirements, directives Park May Berhad [13294-A] page 32 CORPORATE GOVERNANCE and guidelines. It is also responsible for the Group’s approach to assessing risks and managing risks. The role of executive management is to implement the Board’s policies on risk and control and present assurance on compliance with these policies. Further independent assurance is provided by an internal audit function and the external auditors. All employees are accountable for operating within these policies. However, due to inherent limitations in any system of internal control, such systems are designed to mitigate rather than eliminate risks. Hence, these systems can only provide reasonable and not absolute assurance against material misstatement or loss. RISK ASSESSMENT The Board has delegated the risk assessment function to the Audit Committee at its meeting held on 7 February 2003 including the monitoring of all internal controls, on its behalf. To this end, the Group has developed an integrated risk management framework comprising: • The corporate risk management policy and risk management processes; • Role of the Board of Directors, Risk Management Committee and the Risk Management Working Committee. Some of the key benefits of a structured integrated risk management framework are: • Balancing of risks against rewards; • Eliminating duplicate internal controls; • Fewer unexpected shocks; • Less management time spent fire-fighting problems; • Enhancing shareholders’ value. The Group has in place an ongoing risk assessment process for identifying, evaluating, monitoring and managing the significant risks affecting the business throughout the financial year under review and up to the date of this report. The risk assessment is carried out on a continual and consistent basis by management of each business area and key support functions who identify their key risks, the probability of those risks occurring, the impact if they do occur and the actions taken to manage those risks to the desired level. This is communicated upwards on a filter basis culminating in a written report by the Chief Operating Officer to the Audit Committee. The report will define the likelihood and magnitude of the risks together with measures to manage these risks. The Audit Committee will then report to the Board the respective significant business changes and external factors that affect key risks. The Group’s individual business areas / support functions Risk Registers are reviewed and updated by the Risk Management Working Committee on a semi-annual basis, taking into account significant business risks. These will then be presented to the Risk Management Committee comprising the Group’s senior management team. The Risk Management Committee will meet at least once a year to review and update the Corporate Risk Register and consider changes and recommendations to the risk management and control processes. The Audit Committee may, as and when required, request the Risk Management Committee for an update on the Corporate Risk register. The Corporate Risk Framework and Register for Year 2002 was approved for adoption by the Board on 23 April 2003. CONTROL PROCEDURES AND ENVIRONMENT The Board whilst maintaining full control and direction over appropriate strategic, financial, organisational and compliance issues has delegated to executive management the implementation of the systems of internal control within an established framework. The Group’s current system of internal control and risk management include the following key elements: • An effective Board and Audit Committee which retains control over the Group, reviews the business operations, approves significant transactions, monitors management and assesses the effectiveness of internal controls; Annual Report 2002 page CORPORATE GOVERNANCE 33 • Clear Group vision, mission and strategic direction, as embodied in the business plan; • Clearly defined lines of authority and divisionalised organization structure to achieve the Group’s objectives and monitor the conduct and operations within the Group; • Approved annual budgets, quarterly results and press releases of the Group’s financial performance are presented to the Audit Committee for recommendation for adoption by the Board. Monthly management accounts with comparisons of actual performance against budgets are reviewed at the Management Committee Meetings. Minutes of this meeting are circulated to the Chairman and Executive Vice Chairman of the Group. • Regular management meetings (weekly/monthly) comprising the senior management to review and discuss significant issues relating to financial performance, operations, technical and key support functions for example Human Resources, Purchasing, Management Information System and Services Planning; • Cascading of the Group objectives into key result areas (KRA) for the main business and support functions, subsequently into respective units /departments and eventually to the individual; • A systematic performance appraisal system that is guided by the abovementioned KRAs; • Individual divisions/departments also conduct regular meetings e.g. weekly operations and technical meetings; • The risk registers of key business units and support functions are reviewed by the Risk Management Working Committee half-yearly. This is then discussed by the Risk Management Committee to update the Corporate Risk Register. • Documented corporate values, policies and procedures which are communicated to employees; • Existence of a Code of Ethics and Conduct representing employees mutual subscription to a minimum standard of behaviour and conduct; • Segregation of duties and physical safeguarding of assets for example limiting access to assets, documents and records and establishing custodial responsibilities; • Clearly defined recruitment processes and relevant training to enhance staff competency levels; • Continuous quality improvement initiatives in line with ISO certification requirements; • Establishment of various committees, for example the Vendor Review Committee for appointment of new vendors, the Occupational, Health and Safety Committee to coordinate and provide advice on occupational health and safety matters; • Regular internal audits of operating units and support functions to provide independent assurance on the effectiveness of the Group’s system of internal controls, advising management on areas for further improvement. Additional assurance is provided by the quality audits performed by the ISO accreditation body. INTERNAL AUDIT The Internal Audit function monitors compliance with the policies and procedures, statutory and regulatory requirements and provides assurance on the effectiveness of the internal control system within the Group. The function undertakes regular reviews of the Group’s operations and the system of internal controls. It provides continuous improvements to the controls and risk management procedures. Internal audit findings are discussed at management levels and actions are agreed in response to the internal audit’s recommendations. The status of the implementation of the agreed actions is followed-up to ensure satisfactory controls are maintained. Park May Berhad [13294-A] page 34 CORPORATE GOVERNANCE The work of the internal audit function is focused on areas of high risk as determined by a risk assessment approach. The annual audit plan is prepared after: • Performing the audit risks profiling exercise to determine audit priorities; • Reviewing the business plan and financial performance of each subsidiary and function; • Considering prior internal audit findings and status of rectification; and • Taking into account the Corporate Risk Register developed by the Risk Management Committee. The areas deemed to be more risky i.e. areas with moderate to high risks according to the above processes were reviewed and selected to determine the auditable areas. ROLE OF AUDIT COMMITTEE. An Audit Committee assists the Board in fulfilling its responsibilities on maintaining a sound system of internal control and risk management. The Audit Committee monitors the levels of assurance within the Group through their review of the reports of the internal and external auditors, nature and scope of their work and by monitoring the implementation progress of audit recommendations. The Audit Committee reviews the annual internal and external audit plan. The external auditors are also invited to attend the Audit Committee meetings as and when required and provide input where necessary. The Board reviews the minutes of the Audit Committee meetings. The role of the Audit Committee in relation to the external and internal auditors and its terms of reference are disclosed in the Audit Committee Report OTHER ASSURANCE FUNCTION. The Group, being in the public transportation business is additionally governed by strict statutory rules and regulations prescribed by the Motor Vehicle Licensing Board and Road Transport Department. Two of the Group’s core business subsidiaries, Plusliner Sdn. Bhd. (express bus services) and Cityliner Sdn. Bhd. (stage bus services) have been accorded ISO 9001:2000 certification by SIRIM, which also demonstrates a high commitment towards providing better service quality and safeguarding the interest of the shareholders. The attached Group’s organizational structure spells out the clear reporting and accountability lines between the Board, the Audit Committee, Internal Audit and Management. ASSOCIATED COMPANIES Representatives from the Group are appointed to the Board of Directors of associated companies and attend board meetings. For active associated companies, key financial information of these companies is reviewed and significant risks are reported to the PMB Board. CONCLUSION The Board remains committed towards operating a sound system of internal controls, recognizing that the system must continually evolve to support the types of business and size of operations of the Group. As such, the Board will when necessary, put in place appropriate action plans to further enhance the Group’s system of internal controls. The Board is also committed towards ensuring that a risk management and corporate governance process is effectively. Annual Report 2002 page OPERATIONS REVIEW 35 further integrating their networks. Consequently, this mode of travel became increasingly appealing to members of the commuting public, thereby providing further competition for the Group’s stage bus operations. Without doubt, the financial EXPRESS BUS OPERATIONS period under review was especially critical for the Group After experiencing a tremendous surge in revenue growth in the due to its slide into PN4 status as previous period, the Group’s express prescribed by the Kuala Lumpur division’s turnover tapered off and Stock Exchange. The current actually registered a negative growth of 3.5% in the financial period under policies governing the public bus review. This is primarily attributable to transportation industry have led stiff competition from other operators which are rolling out new buses which to most public bus operators have, to a certain extent, captured a continuing to sustain operational fraction of the Group’s market share. losses. As one of the measures taken to counter the migration of passengers to competitors, the Group introduced the NiCE 2 semi double-decker coach, the STAGE BUS OPERATIONS first of its kind in Peninsula Malaysia. Officiated by the Prime Minister, YAB The Group’s stage bus operations Dato’ Seri Dr. Mahathir Mohamad on 2 continued to sustain losses during the May 2002, in Kedah, NiCE 2 made its financial period in review. Overall maiden voyage from Kuala Lumpur to turnover for the period in review Singapore on 9 August 2002. Equally decreased by 2% vis-à-vis the previous noteworthy is the official launching of financial period. Not unlike the the NiCE 2 service from Singapore to previous years, this dismal trend is due Kuala Lumpur, which was duly to the internecine competition among executed by the Malaysian Deputy the increasing number of operators Commissioner to Singapore, Mr. and the decrease in the number of bus Ramlan Ibrahim, on 12 August 2002. passengers in general. To date, 8 Nice 2 buses are already on the road. Keen competition amongst several bus operators within the Klang Valley It is envisaged that with the has resulted in lower passenger introduction of the Nice 2 semi double distribution per operator levels. This, deck, the Group will be better poised as well as rising affluence among city to compete for larger market shares in dwellers, have led to an increase in the the future. purchase of private vehicles, which serve to further reduce the number of public bus passengers. CHARTER BUS OPERATIONS In addition, in tandem with the The Group was selected to exclusively Government’s drive to encourage provide charter services in the form of Malaysians to commute via public two NiCE 2 semi double-decker transport, the year in review saw the coaches to the Honorable Prime rail-based public transport companies Minister, YAB Dato’ Seri Dr. Mahathir Park May Berhad [13294-A] page 36 OPERATIONS REVIEW Mohamad, for the Prime Minister’s shortage of drivers, as a consequence Class of ’47 Reunion, on of numerous recruitment drives to 14 September 2002. enlist drivers of caliber. In addition, the Group organized several incentive In addition, we continue to provide schemes for its drivers, notably the daily charter services to Government Drivers’ Commission Scheme (whose staff, who are based in Putrajaya. first award ceremony was held on 17 August 2001), a new performance- The Group has also ventured, with based scheme, where drivers are several other companies, to jointly accorded commissions based on the promote Malaysia by providing quantum of their collections. transport in the form of Plusliner, NiCE Taking cognizance of the fact that SOURCES OF REVENUE and NiCE 2 coaches, as and when there can be no substitute for the Total revenue: required. safety of its employees, the Group RM126.4 million signed a Memorandum of Understanding with the Transport Klang Valley (stage) 46.0% QUALITY MATTERS Workers’ Union (TWU) on 15 October Southern Region (stage) 5.6% 2002, with the aim of fostering a safer The Group is proud to announce its and healthier workplace environment. Northern Region (stage) 5.9% express bus subsidiary’s success in The ceremony was graced by the Eastern Region (stage) 1.2% attaining ISO9001:2000 Certification in Honorary Minister of Human Express 41.2% January 2002 – a landmark in local Resources, YB Dato’ Dr. Fong Chan public transport history, since it is the Onn and the Secretary General of the Others 0.2% first express bus service operator in TWU. the country to be accorded such recognition. Needless to say, the Group remains committed in its perpetual drive to Following in the footsteps of this develop its human resources, by success is the Group’s stage bus employing various means such as the division, which attained ISO9001:2000 provision of quality training courses, a Certification in March 2003. conducive working environment and career prospects. Plans are currently underway to establish the Group’s HUMAN RESOURCE own training institute, which is DEVELOPMENT anticipated to further propel the The Group recognizes its employees Group’s human resources capacity to as its most valuable assets. During greater heights. the financial year in review, the Group managed to narrow the gap in the Annual Report 2002 page OPERATIONS REVIEW 37 COMMUNITY SERVICES has, and will continue be contained where possible. As per the previous years, the Group continues to make significant Notwithstanding the above, if the contributions to charitable, non-profit current policies governing the public organizations. Most of these bus transportation industry prevails, contributions come in the form of bus the ability of the Group, as well as transportation to orphanages and old other bus operators to exist as a going- folks’ homes, as well as during social concern will be untenable. The closure events organized by the Government. of well-established bus companies like The Group also contributed towards – Len Omnibus and Foh Hup Omnibus, and participated in – a `Buka Puasa’ demonstrate that it is high time for the FLEET DISTRIBUTION and Tarawikh prayers evening with the authorities to step in and resolve the Bandar Baru Sri Petaling Mosque in Total fleet: 763 inherent pressing problem faced by Kuala Lumpur, on 20 November 2002. the public bus transportation Klang Valley (stage) 61% operators. Unless this is done, it will not be long before the industry breaks Southern Region (stage) 8% FUTURE OUTLOOK down. Northern Region (stage) 8% The Group has always endeavoured to Eastern Region (stage) 2% find ways and means to improve its Express 21% performance. Its express division has recently paved a new route to Haadyai, which is expected to boost revenue. In addition, the Group is diversifying upstream into tourism. The Group’s subsidiary, Plusliner Travel & Tours, which offers tour packages, has expanded into Batam and Bintan, to complement its existing destination, Haadyai. Efforts are underway to further venture into other lucrative overseas market. It is foreseen that there will be a substantial growth in this area for the Group. To cushion the impact of declining revenue from normal routes, the Group is actively seeking to secure contract charters that assures fixed monthly revenue. Meanwhile, cost Park May Berhad [13294-A] page 38 FINANCIAL CALENDAR 29 AUG 2001 14 FEB 2002 15 JUL 2002 Announcement of unaudited results of Trading of PMB shares was Companies’ Commission approved the Group for the financial year ended suspended for 3 days effective today PMB’s application to change the 30 June 2001. financial year-end from 30 June to 31 December. 18 FEB 2002 26 NOV 2001 PMB announced to KLSE that it had 16 JUL 2002 entered into a Heads of Agreement Announcement of unaudited results of PMB announced that the Heads of the Group for the financial year ended with Renong Berhad and Kumpulan Kenderaan Malaysia Berhad Agreement entered into on 18 30 September 2001. February 2002 with Kumpulan Kenderaan Malaysia Berhad and Renong Berhad was mutually 27 NOV 2001 19 FEB 2002 terminated. Notice of EGM was issued for the Trading of PMB shares resumed purpose of amending the M&A, 30 JUL 2002 ratifying the recurrent related party transactions and obtaining general 28 FEB 2002 PMB announced to KLSE that it had mandate for recurrent related party entered into 2 separate Sale & Announcement of unaudited results of transactions Purchase Agreement to dispose the Group for the financial quarter properties in Kuantan and Parit Buntar. ended 31 December 2001. 27 NOV 2001 19 AUG 2002 Notice of AGM was issued 14 MAR 2002 PMB announced that it had entered PMB announced to KLSE that the term into an agency agreement with Irisbus 20 DEC 2001 of the Heads of Agreement signed on France. 18 February 2002 is extended to 17 April 2002. The 28th Annual General Meeting was 27 AUG 2002 held at The Pearl International Hotel, Kuala Lumpur. Announcement of unaudited results of 17 APR 2002 the Group for the financial quarter ended 30 June 2002. 15 JAN 2002 PMB announced to KLSE that the term of the Heads of Agreement signed on Conversion of RM10,700,174 18 February 2002 be extended to 17 27 NOV 2002 Irredeemable Convertible Unsecured May 2002. Loan Stock 2000/2005 into 5,631,670 Announcement of unaudited results of new ordinary shares the Group for the financial quarter 17 MAY 2002 ended 30 September 2002. 23 JAN 2002 PMB announced to KLSE that the term of the Heads of Agreement signed on 5 DEC 2002 Announcement to the KLSE that PMB 18 February 2002 is extended to 17 PMB announced to KLSE that it had has issued RM120 million Commercial July 2002. entered into a Sale & Purchase Paper/Medium Term Notes Agreement to dispose property in 24 MAY 2002 Kuantan. 6 FEB 2002 Announcement of unaudited results of 18 DEC 2002 Conversion of RM2,334,795 the Group for the financial quarter Irredeemable Convertible Unsecured ended 31 March 2002. Notice of EGM to renew General Loan Stock 2000/2005 into 1,228,839 Mandate for Recurrent Related Party new ordinary shares Transaction. Annual Report 2002 page 39 FINANCIAL STATEMENTS Directors’ Report 40 Statement By Directors 44 Statutory Declaration 44 Report of the Auditors 45 Income Statements 46 Balance Sheets 47 Statement of Changes in Equity 48 Cash Flow Statement 49 Notes To The Financial Statements 54 Park May Berhad [13294-A] page 40 DIRECTORS’ REPORT The directors present their report together with the audited financial statements of the Group and of the Company for the financial period ended 31 December 2002. PRINCIPAL ACTIVITIES The principal activity of the Company is that of a management and investment holding company. The subsidiary companies are primarily engaged in the operating of public bus transport services, trading and property holding. There have been no significant changes in the nature of these activities during the financial period. CHANGE IN FINANCIAL YEAR END During the current financial period, the Group and the Company changed their financial year end from 30 June to 31 December, to be coterminous with that of their corporate shareholder. Accordingly, the current financial period covers an 18-month period from 1 July 2001 to 31 December 2002. RESULTS ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Group Company RM'000 RM'000 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Loss after taxation (43,765) (97,677) Minority interests 118 - ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Loss for the period (43,647) (97,677) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– There were no material transfers to or from reserves or provisions during the financial period other than as disclosed in the statement 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 period have not been substantially affected by any item, transaction or event of a material and unusual nature. DIVIDEND No dividend was proposed by the directors for the financial period ended 31 December 2002. Since the end of previous financial year, no dividend was proposed or paid by the Company. 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: Tun Mohammed Hanif Bin Omar Dato' Mohd Nor Bin Idrus Datuk Sulaiman Bin Daud Yeo Keng Un Zainal Abidin Bin Jamal Annual Report 2002 page DIRECTORS’ REPORT (continued) 41 DIRECTORS (CONTINUED) Chong Yoon Fatt (appointed on 23.4.2003) Tan Siew Hoon (appointed on 27.3.2002, resigned on 1.4.2003) Mohamad Fakhri Bin Abd Rashid (resigned on 10.2.2003) DIRECTORS' BENEFITS Neither at the end of the financial period, nor at any time during that period, did there subsist any arrangements to which the Company was a party, whereby the Directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Since the end of the previous financial year, no director 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 the directors shown in the 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 he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 7 to the financial statements. DIRECTORS' INTEREST The following Director who held office at the end of the financial period, had according to the register required to be kept under Section 134 of the Companies Act 1965, an interest in shares in the Company as stated below: ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Number of Ordinary Shares of RM1.00 each ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1 Jul 31 Dec Name 2001 Bought Sold 2002 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Tun Mohammed Hanif Bin Omar 2,400 - - 2,400 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– SHARE CAPITAL During the financial period, RM13,034,968 nominal value Zero Coupon Irredeemable Convertible Unsecured Loan Stocks 2000/2005 ("ICULS") were converted into 6,860,508 ordinary shares of RM1.00 each at the conversion price of RM1.90 ICULS for each new RM1.00 ordinary share. SIGNIFICANT EVENTS Significant events during the period is disclosed in Note 37 to the financial statements. There were no significant events occuring after the balance sheet date. 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 Park May Berhad [13294-A] page 42 DIRECTORS’ REPORT (continued) OTHER STATUTORY INFORMATION (CONTINUED) (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 have 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 not otherwise dealt with in this report or financial statements of the Group and of the Company which would render:- (i) the amount written off for bad debts or the amount of the provision for doubtful debts in respect of these financial statements 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 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 period which secures the liabilities of any other person; or (ii) any contingent liability in respect of the Group and of the Company which has arisen since the end of the financial period which has not been disclosed in the financial statements. (f) In the opinion of the Directors:- (i) no contingent 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 Company to meet its obligations when they fall due except as disclosed in Note 36 to the financial statements; and (ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial period 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 period in which this report is made. (g) As at 31 December 2002, the Group and the Company incurred a net loss of RM43.65 million (2001: RM15.82 million) and RM97.68 million (2001:RM6.36 million) respectively, and as that date, the financial statement record a shareholders' deficit for the Group and the Company of RM25.43 million (2001:shareholders' surplus of RM18.21 million) and RM26.04 million (2001:shareholders' surplus of RM71.63 million) respectively. Accordingly, the Group is within the ambit of Kuala Lumpur Stock Exchange, Practice Note 4 which indicates that the Group is in financial difficulty. To date, the Group is still assessing various options to regularise its financial situation. The ability of the Group and the Company to operate as a going concern is dependent on several factors including support from shareholders, financial institutions and creditors and the successful formulation and implementation of a restructuring scheme. Annual Report 2002 page DIRECTORS’ REPORT (continued) 43 AUDITORS Ernst & Young have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors TUN MOHAMMED HANIF BIN OMAR DATO' MOHD NOR BIN IDRUS Kuala Lumpur, Malaysia 23 April 2003 Park May Berhad [13294-A] page 44 STATEMENT BY DIRECTORS >>pursuant to Section 169 (15) of the Companies Act, 1965 We, TUN MOHAMMED HANIF BIN OMAR and DATO' MOHD NOR BIN IDRUS, being two of the directors of PARK MAY BERHAD, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 45 to 92 are drawn up in accordance with applicable Approved Accounting Standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2002 and of the results and the cash flows of the Group and of the Company for the period then ended. Signed on behalf of the Board in accordance with a resolution of the directors TUN MOHAMMED HANIF BIN OMAR DATO' MOHD NOR BIN IDRUS Kuala Lumpur, Malaysia 23 April 2003 STATUTORY DECLARATION >>pursuant to Section 169 (16) of the Companies Act, 1965 I, ZALILA BINTI MOHD TOON, being the officer primarily responsible for the financial management of PARK MAY BERHAD, do solemnly and sincerely declare that the accompanying financial statements set out on pages 45 to 92 are in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the abovenamed ZALILA BINTI MOHD TOON at Kuala Lumpur in the Federal Territory on 23 April 2003 ZALILA BINTI MOHD TOON Before me, Annual Report 2002 page REPORT OF THE AUDITORS TO THE MEMBERS OF PARK MAY BERHAD 45 >>(Incorporated in Malaysia) - 13294-A We have audited the accompanying financial statements set out on pages 45 to 92. These financial statements are the responsibility of the Company's Directors. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Directors, as well as evaluating the overall presentation of financial statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion:- (a) the financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable Approved Accounting Standards in Malaysia so as to give a true and fair view of: (i) the financial position of the Group and of the Company as at 31 December 2002 and of the results and the cash flows of the Group and of the Company for the period then ended; and (ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and (b) the accounting and other records and the registers required by the Act to be kept by the Company and by its subsidiary companies have been properly kept in accordance with the provisions of the Act. We have considered the financial statements and the auditors' reports thereon of the subsidiary companies, as indicated in Note 32 to the financial statements, being financial statements that have been included in the consolidated financial statements. We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The auditors' reports on the financial statements of the subsidiaries were not subject to any qualification material to the consolidated financial statements and did not include any comment made under Section 174(3) of the Act. In forming our opinion, we have considered the adequacy of the disclosures made in Note 2 of the financial statements. Given the significance that preparation of the financial statements of the Group and of the Company on the going concern basis is dependant on the outcome of the Group's plan to regularise its financial condition as well as continuing support from shareholders, financial institutions and creditors and achieving profitable operations, we consider that this disclosure should be drawn to your attention. Our opinion is not qualified in this respect. ERNST & YOUNG TAN SOO YAN AF: 0039 No. 1307/03/04 (J/PH) Chartered Accountants Partner Kuala Lumpur, Malaysia 23 April 2003 Park May Berhad [13294-A] page 46 INCOME STATEMENTS >>for the period ended 31 December 2002 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP COMPANY ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1.7.2001 1.7.2000 1.7.2001 1.7.2000 to to to to 31.12.2002 30.6.2001 31.12.2002 30.6.2001 Note RM'000 RM'000 RM'000 RM'000 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Revenue 4 177,845 126,422 412 275 Cost of sales 5 (110,245) (81,708) - - ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Gross profit 67,600 44,714 412 275 Other operating income 5,649 1,200 244 149 Other operating expenses (46,346) (32,261) - - Administration expenses (37,870) (19,912) (7,205) (3,307) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Operating loss (10,967) (6,259) (6,549) (2,883) Interest expense (11,683) (11,395) (11,526) (10,996) Interest income 214 227 16,025 7,519 Share of (loss)/profit in associated companies (477)100 - - Impairment losses 6 (a) (19,296)-(19,967)- Provision for doubtful debts for amounts due from subsidiary companies 6 (b) - -(75,660)- ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Loss before taxation 7 (42,209) (17,327) (97,677) (6,360) Taxation 10 (1,556) 1,357 - - ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Loss after taxation (43,765) (15,970) (97,677) (6,360) Minority interests 118 146 - - ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Net loss for the period/year (43,647) (15,824) (97,677) (6,360) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Basic loss per share (sen) 31 (61.9) (33.9) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Diluted loss per share (sen) 31 (61.9) (33.9) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– The accompanying notes form an integral part of the financial statements. Annual Report 2002 page BALANCE SHEETS 47 >>as at 31 December 2002 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP COMPANY ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 31.12.2002 30.6.2001 Note RM'000 RM'000 RM'000 RM'000 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– PROPERTY, PLANT AND EQUIPMENT 11 89,202 125,823 2,558 1,920 SUBSIDIARY COMPANIES 12 - - 8,014 27,981 ASSOCIATED COMPANIES 13 1,096 1,573 3,334 3,334 OTHER INVESTMENTS 14 118 124 - - GOODWILL ON CONSOLIDATION 15 597 10,145 - - CURRENT ASSETS Inventories 16 2,424 3,244 - - Trade receivables 17 6,935 3,755 - - Other receivables 18 9,480 3,704 103,992 156,350 Tax recoverable 1,917 1,809 1,087 1,087 Deposits with licensed banks 19 1,100 4,106 885 1,688 Cash and bank balances 4,228 2,763 1,109 108 –––––––––––––––––––––––––––––––––––––––––––––––––– 26,084 19,381 107,073 159,233 –––––––––––––––––––––––––––––––––––––––––––––––––– CURRENT LIABILITIES Provision for retirement benefit 20 184 - - - Short term borrowings 21 233 866 179 - Trade payables 25 10,467 8,904 - - Other payables 26 8,315 7, 0 1 2 31,493 6,176 Taxation 226 181 - - –––––––––––––––––––––––––––––––––––––––––––––––––– 19,425 16,963 31,672 6,176 –––––––––––––––––––––––––––––––––––––––––––––––––– NET CURRENT ASSETS 6,659 2,418 75,401 153,057 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 97,672 140,083 89,307 186,292 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– FINANCED BY: SHARE CAPITAL 27 73,006 66,145 73,006 66,145 SHARE PREMIUM 28 6,698 524 6,698 524 LOAN STOCKS 29 3,781 16,816 3,781 16,816 ACCUMULATED LOSSES (108,918) (65,271) (109,530) (11,853) –––––––––––––––––––––––––––––––––––––––––––––––––– SHAREHOLDERS' EQUITY (25,433) 18,214 (26,045) 71,632 MINORITY INTERESTS 3,232 3,350 - - PROVISION FOR RETIREMENT BENEFIT 20 1,776 2,186 - - LONG TERM LIABILITIES 21 115,622 115,197 115,352 114,660 DEFERRED TAXATION 30 2,475 1,136 - - ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 97,672 140,083 89,307 186,292 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– The accompanying notes form an integral part of the financial statements. Park May Berhad [13294-A] page 48 STATEMENT OF CHANGES IN EQUITY >>for the period ended 31 December 2002 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Non- Distributable Distributable ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Share Loan Share Accumulated capital stocks premium losses Total RM'000 RM'000 RM'000 RM'000 RM'000 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP At 1 July 2000 45,001 - - (58,447) (13,446) Capital reduction and consolidation (9,000) - - 9,000 - Issue of shares arising from - conversion of financial instrument debt to equity 28,800 - - - 28,800 - conversion of main supplier debt to equity 1,344 - 524 - 1,868 Issue of loan stocks arising from conversion of main supplier debt - 16,816 - - 16,816 Net loss for the year - - - (15,824) (15,824) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 30 June 2001 66,145 16,816 524 (65,271) 18,214 Issue of shares arising from - conversion of loan stocks to equity 6,861 (13,035) 6,174 - - Net loss for the period - - - (43,647) (43,647) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 31 December 2002 73,006 3,781 6,698 (108,918) (25,433) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– COMPANY At 1 July 2000 45,001 - - (14,493) 30,508 Capital reduction and consolidation (9,000) - - 9,000 - Issue of shares arising from - conversion of financial instrument debt to equity 28,800 - - - 28,800 - conversion of main supplier debt to equity 1,344 - 524 - 1,868 Issue of loan stocks arising from conversion of main supplier debt - 16,816 - - 16,816 Net loss for the year - - - (6,360) (6,360) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 30 June 2001 66,145 16,816 524 (11,853) 71,632 Issue of shares arising from - conversion of loan stocks to equity 6,861 (13,035) 6,174 - - Net loss for the period - - - (97,677) (97,677) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 31 December 2002 73,006 3,781 6,698 (109,530) (26,045) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– The accompanying notes form an integral part of the financial statements Annual Report 2002 page CASH FLOW STATEMENT 49 >>for the period ended 31 December 2002 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1.7.2001 1.7.2000 to to 31.12.2002 30.6.2001 RM'000 RM'000 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP CASH FLOWS FROM OPERATING ACTIVITIES Loss before taxation (42,209) (17,327) Adjustments for:- Amortisation of goodwill on consolidation 1,046 697 Goodwill on consolidation written off 8,502 - Impairment loss of property, plant and equipment 10,794 - Depreciation 31,206 20,862 Property, plant and equipment written off 871 383 Gain on disposal of property, plant and equipment (1,245) (65) Provision for retirement benefits 439 561 Share of loss/(profit) in associated companies 477 (100) Provision for stocks 62 - Provision for doubtful debts 4,024 - Provision for diminuition in value in other invesment 6 - Interest expense 11,683 11,395 Interest income (214) (227) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Operating profit before working capital changes 25,442 16,179 Changes in working capital: Inventories 758 260 Trade and other receivables (8,494) (3,205) Trade and other payables 3,043 (1,069) Holding and related company balances - 935 Associated company balances 208 (487) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Cash generated from operations 20,957 12,613 Retirement benefits paid (665) (78) Tax paid (280) (294) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Net cash from operating activities 20,012 12,241 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Park May Berhad [13294-A] page 50 CASH FLOW STATEMENT (CONTINUED) >>for the period ended 31 December 2002 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1.7.2001 1.7.2000 to to 31.12.2002 30.6.2001 Note RM'000 RM'000 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP (CONTINUED) CASH FLOWS FROM INVESTING ACTIVITIES Dividends received from associated company - 179 Interest received on deposits 214 227 Purchase of property, plant and equipment (i) (6,372) (4,764) Proceeds from disposal of property, plant and equipment 1,976 512 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Net cash used in investing activities (4,182) (3,846) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– CASH FLOWS FROM FINANCING ACTIVITIES Net decrease in fixed deposits pledged with licensed banks for securing banking facilities 4 92 Interest paid - on term loans and bank overdrafts (220) (1,000) - on hire purchase (29) (288) - Redeemable Convertible Secured Bonds ("RCB") coupon (2,946) (2,974) Proceeds from isssuance of Commercial Papers/ Medium Term Notes ("CPs/MTNs") 106,119 - Redemption of RCB (119,198) (3,653) Repayment of hire purchase creditors (88) (1,150) Repayment of term loans (268) (78) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Net cash used in financing activities (16,626) (9,051) NET DECREASE IN CASH AND CASH EQUIVALENTS (796) (656) CASH AND CASH EQUIVALENTS AS AT 1 JULY 5,960 6,616 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– CASH AND CASH EQUIVALENTS AS AT 31 DECEMBER / 30 JUNE (ii) 5,164 5,960 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Annual Report 2002 page CASH FLOW STATEMENT (CONTINUED) 51 >>for the period ended 31 December 2002 GROUP (CONTINUED) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1.7.2001 1.7.2000 to to 31.12.2002 30.6.2001 RM'000 RM'000 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– NOTES TO THE CASH FLOW STATEMENT (i) Property, plant and equipment Total property, plant and equipment purchased 6,981 4,459 Property, plant and equipment accruals at previous balance sheet date 4 18,993 Conversion of main supplier liabilities to shares and loan stocks - (18,684) Property, plant and equipment accruals at balance sheet date (613) (4) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Payments for property, plant and equipment 6,372 4,764 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– (ii) Cash and cash equivalents Cash and cash equivalents comprise the following balance sheet amounts:- Deposits with licensed banks 1,100 4,106 Cash and bank balances 4,228 2,763 Bank overdrafts - (741) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 5,328 6,128 Less : Fixed deposits pledged with licensed banks for securing banking facilities (Note 19) (164) (168) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 5,164 5,960 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Deposits with licensed banks also include an amount of RM835,000 being held in the Security Account maintained by the Group with a licensed bank for the purposes of redemption of the CPs/MTNs, in accordance with the conditions contained in the Trust Deed for the CPs/MTNs as elaborated under Note 24 to the financial statements. Park May Berhad [13294-A] page 52 CASH FLOW STATEMENT (CONTINUED) >>for the period ended 31 December 2002 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1.7.2001 1.7.2000 to to 31.12.2002 30.6.2001 RM'000 RM'000 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– COMPANY CASH FLOWS FROM OPERATING ACTIVITIES Loss before taxation (97,677) (6,360) Adjustments for:- Depreciation 448 281 Property, plant and equipment written off - 105 Gain on disposal of property, plant and equipment (79) (29) Impairment loss on investment on subsidiary companies 19,967 - Provision for doubtful debt for amount due from subsidiary companies 75,660 - Interest expense 11,526 10,996 Interest income (92) (7,519) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Operating profit/(loss) before working capital changes 9,753 (2,526) Changes in working capital: Other receivables 1,111 (141) Other payables 188 (659) Holding and related company balances - (133) Subsidiary company balances 8,201 566 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Net cash from/(used in) operating activities 19,253 (2,893) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– CASH FLOWS FROM INVESTING ACTIVITIES Interest received on deposits 92 174 Purchase of property, plant and equipment (555) (256) Proceeds from disposal of property, plant and equipment 161 46 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Net cash used in investing activities (302) (36) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Annual Report 2002 page CASH FLOW STATEMENT (CONTINUED) 53 >>for the period ended 31 December 2002 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1.7.2001 1.7.2000 to to 31.12.2002 30.6.2001 RM'000 RM'000 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– COMPANY (CONTINUED) CASH FLOWS FROM FINANCING ACTIVITIES Net increase in fixed deposits pledged with licensed bank for securing banking facilities - (1) Interest paid - on term loan - (889) - on hire purchase (29)- - RCB coupon (2,946) (2,974) Proceeds from issuance of CPs/MTNs 106,119 - Redemption of RCB (119,198) (3,653) Repayment of hire purchase creditors (82)- Net (repayment from)/advance to subsidiary companies (2,617) 6,503 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Net cash used in financing activities (18,753) (1,014) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 198 (3,943) CASH AND CASH EQUIVALENTS AS AT 1 JULY 1,746 5,689 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– CASH AND CASH EQUIVALENTS AS AT 31 DECEMBER / 30 JUNE 1,944 1,746 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– ANALYSIS OF CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise the following balance sheet amounts:- Deposits with licensed banks 885 1,688 Cash and bank balances 1,109 108 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1,994 1,796 Less : Fixed deposits pledged with licensed bank for securing banking facilities (Note 19) (50) (50) ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1,944 1,746 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Deposits with licensed banks also include an amount of RM835,000 being held in the Security Account maintained by the Company with a licensed bank for the purposes of redemption of the CPs/MTNs, in accordance with the conditions contained in the Trust Deed for the CPs/MTNs as elaborated under Note 24 to the financial statements. The accompanying notes form an integral part of the financial statements. Park May Berhad [13294-A] page 54 NOTES TO THE FINANCIAL STATEMENTS >>31 December 2002 1. CORPORATE INFORMATION The principal activities of the Company is that of a management and investment holding company. The subsidiary companies are primarily engaged in the operating of public bus transport services, trading and property holding. There have been no significant changes in the nature of the principal activities during the financial period. The Company is a public limited liability company, incorporated and domicile in Malaysia, and is listed on the Main Board of the Kuala Lumpur Stock Exchange. The registered office of the Company is located at Lot 18115, Batu 5, Jalan Kelang Lama 58100 Kuala Lumpur. The number of employees in the Group and in the Company at end of the financial period were 1,679 (2001: 1,804) and 9 (2001: 11) respectively. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 23 April 2003. 2. FUNDAMENTAL ACCOUNTING CONCEPT For the financial period ended 31 December, 2002 and as at that date, the Group and the Company incurred a net loss of RM43.65 million (2001: RM15.82 million) and RM97.68 million (2001: RM6.36 million) respectively, and as that date, the financial statements record a shareholders' deficits for the Group and of the Company of RM25.43 million (2001: shareholders' surplus of RM18.21 million) and RM26.04 million (2001: shareholders' surplus of RM71.63 million) respectively. As at 31 December 2002, the Group is within the ambit and implications of Kuala Lumpur Stock Exchange (“KLSE”)’s Practice Note 4 ("PN4"), which indicates that the Group is in financial distress. It is anticipated that the Group and the Company will face difficulty in meeting its first tranche of principal repayment of the RM120 million CPs/MTNs which will be due in February 2004, amounting to RM17 million. The Directors are taking steps to address the financial position of the Group. Under clause 9.1 (m) of the CPs/MTNs Program Agreement, an event of default has been triggered. However, the lending financial institution has granted indulgence to the Group on 12 January 2003 and has therefore not exercise its rights under the Agreement. The Group’s ability to continue as a going-concern is dependent on the Group's ability to successfully regularise its financial situation. The Directors are currently assessing various options and are of the opinion that the Group will be successful in formulating and implementing the restructuring plan. The financial statements have been prepared on the going concern basis which assumes that the Group and the Company will continue in operational existence for the foreseeable future. The validity of this assumption depends on the Group's continuing support from the shareholders, financial institutions and creditors and achieving profitable operations. The financial statements do not include any adjustments that would be required if the restructuring is not concluded and implemented successfully. 3. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of preparation The financial statements of the Group and of the Company are prepared under the historical cost convention and comply with the provisions of the Companies Act, 1965 and applicable Approved Accounting Standards in Malaysia unless otherwise indicated in the significant accounting policies. Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 55 >>31 December 2002 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of preparation (Continued) The new applicable Approved Accounting Standards adopted in these financial statements since the previous financial year and their impact to the financial statements are as follows: (i) MASB 19, Events After Balance Sheet Date (ii) MASB 20, Provisions, Contingent Liabilities and Contingent Assets (iii) MASB 21, Business Combinations (iv) MASB 22, Segment Reporting These four standards require retrospective application. However, this has not had an effect on the financial statements presented, nor led to a restatement of prior year results as the Group and the Company were already following the recognition and measurement principles in the standards, where applicable. The Group has also applied the following accounting standards before the effective date: (i) MASB 23, Impairment of Assets This is to be applied prospectively and hence, the restatement of comparative figures and prior year adjustments are not presented. (ii) MASB 24, Financial Instruments: Disclosure and Presentation The Group adopted the requirements of this standard for disclosure of the policy on financial instruments, which is disclosed in Note 3 (m) while the policy on significant financial risk management objectives and policies are disclosed in Note 33. As allowed under the transitional provision of the standard, the reclassification of compounded financial instruments will only be adopted with effect 1 January 2003. Comparative information for prior periods is not disclosed as allowed by the standard. Apart from the inclusion of the new policies and extended disclosures as required by the standard, the adoption of this standard has not had an effect on the financial statements. (b) Basis of Consolidation (i) Subsidiaries The consolidated financial statements include the financial statements of the Company and all its subsidiaries. Subsidiaries are those companies in which the Group has long term equity interest and where it has power to exercise control over the financial and operating policies so as to obtain benefits therefrom. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. The assets and liabilities of subsidiaries are measured at their fair values at the date of acquisition and these values are reflected in the consolidated balance sheet. The difference between the cost of acquisition and the fair value of the Group's share of net assets of the acquired at the date of acquisition is reflected in the financial statements as goodwill or negative goodwill arising on consolidation. Goodwill arising from consolidation is written off against reserves. Park May Berhad [13294-A] page 56 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Basis of Consolidation (Continued) (i) Subsidiaries (Continued) Material intragroup transactions, balances and resulting unrealised gains are eliminated on consolidation and the consolidated financial statements reflect external transactions only. Unrealised losses are eliminated on consolidation unless costs cannot be recovered. The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group's share of its net assets together with any unamortised balance of goodwill and exchange differences which were not previously recognised in the consolidated income statement. Minority interest is measured at the minorities' share of the post acquisition fair values of the identifiable assets and liabilities of the acquiree. (ii) Associates The Group treats associates as those enterprise in which it has a long term effective equity interest of between 20% and 50% and where it exercises significant influence through management and/or Board participation. Significant influence is the power to participate in the financial and operating policy decisions of the associates but not control over these policies. The difference between the purchase consideration and the fair value of net identifiable assets acquired is reflected as premium or discount on acquisition. Premium or discount arising on acquisition is written off or credited against reserves. Equity accounting involves recognising in the consolidated income statements the Group's share of financial results of associates based on the latest audited or management financial statements of the enterprises concerned. In the consolidated balance sheet, the Group's interest in associates is stated at cost plus the Group's share of post acquisition retained profit and reserves, after adjusting for premium or discount on acquisition. Equity accounting is discontinued when the carrying amount of the investment in an associate reaches zero, unless the Group has incurred obligations or guaranteed obligations in respect of the associates. Unrealised gains on transactions between the Group and the associates are eliminated to the extent of the Group's interest in the associates. Unrealised losses are eliminated unless cost cannot be recovered. (c ) Goodwill Goodwill represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of subsidiaries and associates at the date of acquisition. Goodwill is stated at cost less accumulated amortisation and impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(r). Goodwill arising on the acquisition of subsidiaries is presented separately in the balance sheet while goodwill arising on the acquisition of associates is included within the carrying amount of investment in associates. Goodwill is amortised on a straight-line basis over its estimated useful life of not more than 25 years. Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 57 >>31 December 2002 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d) Investment in Subsidiaries and Associates The Company's investments in subsidiaries and associates are stated at cost less impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(r). On disposal of such investments, the difference between net disposal proceeds and their carrying amount is charged or credited to income statement. (e) Other investments Other investments other than subsidiaries and associates, held for long term are stated at cost less accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(r). On disposal of such investments, the difference between net disposal proceeds and their carrying amount is charged or credited to income statement. (f) Property, Plant and Equipment, and Depreciation Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(r). Freehold land is not depreciated. Depreciation of other property, plant and equipment is calculated on the straight line method to write off the cost of property, plant and equipment over the estimated useful lives of the assets concerned. The estimated useful lives of the assets are as follows :- Long term leasehold land and buildings Over the remaining period of the lease Buildings 50 years Motor vehicles 7 years Workshop, tools and equipment 5 to 10 years Renovations 10 years Buses 10 years Furniture, fittings and office equipment 3 to 10 years Ticketing machines 5 years With effect from the current financial period, certain subsidiaries changed the annual depreciation rate for plant and equipment from 10 years to 3 years so as to better reflect their estimated useful lives. The effect on the financial statements of this change in accounting estimate is not material. Upon the disposal of an item of property, plant or equipment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the income statement and the attributable portion of the revaluation surplus is taken directly to retained profits. (g) Deferred Expenditure Deferred expenditure comprises cost of routes and permits acquired for transport services. This expenditure is amortised on a straight line basis over a period of 25 years commencing from the date of operations on these routes, unless the directors consider that a continuing benefit will not accrue. Park May Berhad [13294-A] page 58 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (h) Inventories Inventories are valued at the lower of cost and net realisable value. Cost is determined on a first-in first-out basis and includes the actual cost of materials and all incidentals incurred in bringing the inventories into store. In arriving at net realisable value, due allowance is made for all damaged, obsolete and slow moving items. (i) Trade Receivables Trade receivables are carried at anticipated realisable value. Bad debts are written off in the year in which they are identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the year end. (j) Revenue Recognition Sales are recognised based on bus fare collections and upon rendering of bus charter services. Dividend income is recognised when the shareholder's right to receive payment is established. (k) Foreign Currency Translation (i) Foreign currency transactions Transactions in foreign currencies are initially converted into Ringgit Malaysia at rates of exchange ruling at the transaction dates, unless hedged by forward foreign exchange contracts, in which case the rates specified in such forward contracts are used. At each balance sheet date, foreign currency monetary items are translated into Ringgit Malaysia at exchange rates ruling at that date, unless hedged by forward foreign exchange contracts, in which case the rates specified in such forward contracts are used. Non-monetary items which are carried at historical cost are translated using the historical rate as of the date of acquisition and non monetary items which are carried at fair value are translated using the exchange rate that existed when the values were determined. All exchange rate differences are taken to the income statement with the exception of differences on foreign currency borrowings, that provide a hedge against a net investment in a foreign entity. These exchange differences are taken directly to equity until the disposal of the net investment, at which time they are recognised in the income statement. (ii) Foreign entities Financial statements of foreign consolidated subsidiaries are translated at year-end exchange rates with respect to the assets and liabilities, and at exchange rates at the dates of the transactions with respect to the income statement. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the Company and translated at the exchange rate ruling at the date of the transaction. The principal exchange rates for every unit of foreign currency ruling at balance sheet date used are as follows: –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 RM RM –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Singapore Dollar 2.19 2.06 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 59 >>31 December 2002 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Deferred Tax The tax expense for the period is based on the profit for the period, as adjusted for tax purposes, together with a charge or credit for deferred taxation. Deferred taxation is provided for by the liability method for all timing differences except when there is reasonable evidence that these timing differences will not reverse in the foreseeable future. Deferred tax benefits are only recognised when there is a reasonable expectation of realisation in the near future. (m) Financial Instruments Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. (i) Other Non-Current Investments Non-current investments other than investments in subsidiaries and associates are stated at cost less provision for any permanent diminution in value. Such provision is made when there is a decline other than temporary in the value of investments and is recognised as an expense in the period in which the decline occurred. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is charged or credited to the income statement. (ii) Marketable Securities Marketable securities are carried at the lower of cost and market value, determined on an aggregate basis. Cost is determined on the weighted average basis while market value is determined based on quoted market values. Increases or decreases in the carrying amount of marketable securities are credited or charged to the income statement. On disposal of marketable securities, the difference between net disposal proceeds and the carrying amount is charged or credited to the income statement. (iii) Trade Receivables Trade receivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date. (iv) Trade Payables Trade payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received. (v) Interest-Bearing Borrowings Interest-bearing bank loans and overdrafts are recorded at the amount of proceeds received, net of transaction costs. Park May Berhad [13294-A] page 60 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (m) Financial Instruments (Continued) (vi) Convertible Bonds Convertible bonds are regarded as compound instruments, consisting of a liability component and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible bond. The difference between the proceeds of issue of the convertible bonds and the fair value assigned to the liability component, representing the conversion option is included in shareholders’ equity. The liability component is subsequently stated at amortised cost using the effective interest rate method until extinguished on conversion or redemption whilst the value of the equity component is not adjusted in subsequent periods. Attributable transaction costs are apportioned and deducted directly from the liability and equity component based on their carrying amounts at the date of issue. Under the effective interest rate method, the interest expense on the liability component is calculated by applying the prevailing market interest rate for a similar non-convertible bond to the instrument. The difference between this amount and the interest paid is added to the carrying value of the convertible bond. (vii) Equity Instruments Ordinary shares are classified as equity. The portion of a convertible bond representing the value of the conversion option at the date of issue is included in equity. The transaction costs of an equity transaction, other than in the context of a business combination, are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided. Cost of issuing equity securities in connection with a business combination are included in the cost of acquisition. Dividends on ordinary shares are recognised in equity in the period in which they are declared. When the share capital of the Company is repurchased, the consideration paid, including any attributable transaction costs is presented as a change in equity. Repurchased shares are classified as treasury shares and presented as a deduction from equity. No gain or loss is recognised in the income statement on the sale, re-issuance or cancellation of treasury shares. Consideration received is presented in the financial statements as a change in equity. (n) Retirement Benefits Provision for retirement benefits, under a defined benefit plan which is unfunded, is made in accordance with the provisions stipulated in the Collective Agreements for all eligible employees. This is calculated based on the employees' current emoluments and the length of their service with the Group. An actuarial valuation by a professional actuary has not been carried out in relation to the Group's retirement benefit scheme. The Directors are of the opinion that the amounts provided is a fair approximation of the potential obligation of the Group in respect of the retirement benefits and any potential adjustment arising from an actuarist valuation would not have a material impact on the financial statements. Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 61 >>31 December 2002 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (o) Leases A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incident to ownership. All other leases are classified as operating leases. (i) Finance Leases Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the balance sheet as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Company’s incremental borrowing rate is used. Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are charged to the income statement over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period. The depreciation policy for leased assets is consistent with that for depreciable property, plant and equipment as described in Note 3(f). (ii) Operating Leases Operating lease payments are charged to the income statement on a straight-line basis over the term of the relevant lease. (p) Cash and cash equivalent For the purposes of the cash flow statements, cash and cash equivalents include cash on hand and at bank and deposits at call, net of outstanding bank overdrafts. These are highly liquid assets that are readily convertible to known amount of cash and are subject to insignificant risk of changes in values. (q) Provisions for Liabilities Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation. (r) Impairment of Assets At each balance sheet date, the Group reviews the carrying amounts of its assets, other than inventories, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, impairment is measured by comparing the carrying values of the assets with their recoverable amounts. Recoverable amount is the higher of net selling price and value in use, which is measured by reference to discounted future cash flows. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit to which the asset belongs. An impairment loss is charged to the income statement immediately, unless the asset is carried at revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of any available previously recognised revaluation surplus for the same asset. Park May Berhad [13294-A] page 62 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (r) Impairment of Assets (Continued) Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. The reversal is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income statement immediately, unless the asset is carried at revalued amount. A reversal of an impairment loss on a revalued asset is credited directly to revaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the income statement, a reversal of that impairment loss is recognised as income in the income statement. 4. REVENUE Revenue of the Group and of the Company consists of the following: –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP COMPANY –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1.7.2001 1.7.2000 1.7.2001 1.7.2000 to to to to 31.12.2002 30.6.2001 31.12.2002 30.6.2001 RM'000 RM'000 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Management fees - - 412 275 Rendering of bus services 177,241 125,748 - - Receipt from advertisement 391 586 - - Premises rental income 210 77 - - Others 3 11 - - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 177,845 126,422 412 275 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 5. COST OF SALES Cost of sales represents cost of operating public bus transport services, cost of providing charter services and the cost incurred in purchasing the vehicles parts and diesel and outsourcing the service maintenance. Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 63 >>31 December 2002 6. (a) IMPAIRMENT LOSSES The impairment losses of the Group and the Company include the following: –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP COMPANY –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1.7.2001 1.7.2000 1.7.2001 1.7.2000 to to to to 31.12.2002 30.6.2001 31.12.2002 30.6.2001 RM'000 RM'000 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Impairment loss on property, plant and equipment (Note 11) (i) 10,794 - - - Impairment loss on investment in subsidiary companies (Note 12) (ii) - - 19,967 - Impairment loss on goodwill (iii) 8,502 - - - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 19,296 - 19,967 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– (i) An impairment loss on property, plant and equipment has been recognised due to the existence of increasing operating loses for each cash generating unit identified. The Group identifies the buses as being the asset impaired and the bus company as the cash generating unit to which the asset belongs to. The recoverable amount of the cash generating unit has been determined based on the value in use discounted at 8 % (ii) An impairment loss on investment in subsidiary companies has been provided based on recoverable amounts. The recoverable amount of the investments is based on net realisable value as indicated by the company's excess of liabilities over assets. (iii) An impairment loss on goodwill has been provided based on recoverable amounts. The recoverable amount of the goodwill is based on net realisable value as indicated by the company's excess of liabilities over assets. 6. (b) PROVISION FOR DOUBTFUL DEBTS FOR AMOUNTS DUE FROM SUBSIDIARY COMPANIES Provision for doubtful debts is made for amounts due from subsidiary companies where recoverability is uncertain due to deteriorating financial performance and position indicated by continuing losses, excess of liabilities over assets and also companies that are no longer in operation. Park May Berhad [13294-A] page 64 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 7. LOSS BEFORE TAXATION Loss before taxation is stated after charging/(crediting): –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP COMPANY –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1.7.2001 1.7.2000 1.7.2001 1.7.2000 to to to to 31.12.2002 30.6.2001 31.12.2002 30.6.2001 RM'000 RM'000 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– This is arrived at after charging/(crediting):- Auditors' remuneration 165 162 15 15 Amortisation of goodwill on consolidation 1,046 697 - - Bad debts written off - 56 - - Depreciation (Note 11) 31,206 20,862 448 281 Directors' remuneration - fees 257 80 254 80 - benefits-in-kind 87 10 87 10 Interest expense - CPs/MTNs 4,634 - 4,634 - - yield on RCB 6,863 6,706 6,863 6,706 - term loans and bank overdrafts 132 4,401 - 4,290 - hire purchase 30 288 15 - - others 24 - 14 - Provision for impairment loss in other invesment 6 - - - Property, plant and equipment written off 871 383 - 105 Provision for stock obsolescence 62 - - - Provision for doubtful debts 4,024 - - - Staff costs (Note 8) 63,030 42,394 1,853 1,202 Professional fees paid to a firm in which a former Director is a member 7 47 7 47 Provision for retirement benefits 439 561 - - Rent of premises 3,470 2,025 38 24 Rent of equipment 98 39 47 28 Interest receivable from subsidiary companies - -(15,933) (7,345) Interest income on deposits (214) (227) (92)(174) Income from rental of premises (501) (308) (160) (120) Income from rental of buses - (181) - - Management fees receivable from subsidiary companies - -(413) (275) Gain on disposal of property, plant and equipment (1,245) (65) (79) (29) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 8. STAFF COSTS Included in staff costs of the Group and of the Company are executive directors' remuneration amounting to RM506,000 (2001: RM331,000) respectively as further disclosed in Note 9. Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 65 >>31 December 2002 9. DIRECTORS' REMUNERATION –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP COMPANY –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1.7.2001 1.7.2000 1.7.2001 1.7.2000 to to to to 31.12.2002 30.6.2001 31.12.2002 30.6.2001 RM'000 RM'000 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Directors of the Company Executive: Salaries and other emoluments 480 331 480 331 Benefits-in-kind 87 10 87 10 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 567 341 567 341 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Non-Executive: Fees 254 80 254 80 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Other Directors Executive: Salaries and other emoluments 26 - - - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 26 - - - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Non-Executive: Fees 3 - - - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Tot al 850 421 821 421 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Analysis excluding benefits-in-kind: Total executive directors' remuneration excluding benefits-in-kind (Note 8) 506 331 480 331 Total non-executive directors' remuneration excluding benefits-in-kind 257 80 254 80 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Total directors' remuneration excluding benefits-in-kind 763 411 734 411 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– The number of directors of the Company whose total remuneration during the period fell within the following bands is analysed below: –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Number of Directors –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 2002 2001 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Executive directors: Below RM350,000 - 1 RM450,001 - RM500,000 1 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Park May Berhad [13294-A] page 66 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 10. TAXATION –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP COMPANY –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1.7.2001 1.7.2000 1.7.2001 1.7.2000 to to to to 31.12.2002 30.6.2001 31.12.2002 30.6.2001 RM'000 RM'000 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Malaysian taxation based on results for the period: - Current 267 199 - - - Deferred (Note 30) 1,339 (1,439) - - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1,606 (1,240) - - Over provision in prior years (50)(117) - - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1,556 (1,357) - - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– The estimated deferred taxation benefits not accounted for in accordance with the accounting policy, are as follows:- –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP COMPANY –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1.7.2001 1.7.2000 1.7.2001 1.7.2000 to to to to 31.12.2002 30.6.2001 31.12.2002 30.6.2001 RM'000 RM'000 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Unabsorbed tax losses 37,029 7,196 6,523 1,613 Unabsorbed capital allowances 96,089 24,851 1,635 289 Other timing differences 839 1,255 - 847 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 133,957 33,302 8,158 2,749 Excess of capital allowances over book depreciation (101,701) (16,126) (846) (108) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 32,256 17,176 7,312 2,641 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 67 >>31 December 2002 ) ) 6,981 4,534 2,932 10,794 99,507 31,206 225,330 138,575 125,823 ---- Long termLong Furniture, RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 land and land and motor office Ticketing tools and Work-in- Freehold leasehold Buses and and fittings Workshop, buildings buildings Renovations vehicles equipment machines equipment progress Total (Note 6 (a)) - - - 10,794 At 31 December 2002 10,750 14,146 1,943 178,597 7,029 12,390 2,395 527 227,777 Disposals and write offs (376) (165) - (3,972) (11) (10) - - ( GROUP Cost 2001At 1 July 11,126 14,311 1,326 178,210 5,741 12,358 2,258 - Additions - - 4,359 1,299 617 42 137 527 Accumulated and Depreciation Losses Impairment 2001At 1 July 691 1,951 219 86,672 2,516 6,647 811 - Charge for the periodCharge for Impairment losses 257 387 193 26,051 1,204 2,803 311 - Disposals and write offs (42) (25) - (2,857) (3) (5) - - ( At 31 December 2002 906 2,313 412 120,660 3,717 9,445 1,122 - Net Book Value Net Book As at 31 December 2002 9,844 2001 at 30 June As 11,833 10,435 1,531 12,360 57,937 1,107 3,312 91,538 2,945 3,225 1,273 5,711 527 1,447 89,202 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 11. PROPERTY, PLANT AND EQUIPMENT Park May Berhad [13294-A] page 68 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 11. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Long term Furniture, leasehold fittings and land and office Motor buildings equipment vehicles Total RM'000 RM'000 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– COMPANY Cost At 1 July 1,413 982 375 2,770 Additions - 908 260 1,168 Disposals - - (371) (371) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 31 December / 30 June 1,413 1,890 264 3,567 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Accumulated Depreciation At 1 July 109 474 267 850 Charge for the period 33 361 54 448 Disposals - - (289) (289) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 31 December / 30 June 142 835 32 1,009 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Net Book Value As at 31 December 2002 1,271 1,055 232 2,558 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– As at 30 June 2001 1,304 508 108 1,920 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 69 >>31 December 2002 the e of Securing term loans 30.6.2001 Securing RCB and overdrafts 11,290 1,304 1,070 11,290 - 10,043 -10,043 392 - 21,333 1,304 1,462 - RM'000 RM'000 RM'000 RM'000 Net book value of landed properties pledged of landed properties Net book value 31.12.2002 MTNs facility loans term Securing Securing CPs/ Securing 8,454 - - 274 10,863 1,270 10,863 - - 19,317 1,270 19,317 274 - GROUP COMPANY GROUP COMPANY GROUP COMPANY GROUP COMPANY RM'000 RM'000 RM'000 RM'000 and buildings The landed properties of the Group and the Company have been pledged as security for the CPs/MTNs issued by the Company during the Company been pledged as security the CPs/MTNs issued by for have landed properties of the Group and Company The period and also other banking facilities of the Group, as follows:- period and also other banking facilities Long term leasehold land Long Freehold land and buildings Freehold Included in property, plant and equipment are buses and motor vehicles under hire purchase financing which have a net book valu have financing which under hire purchase plant and equipment are buses motor vehicles Included in property, RM569,784 (2001: RM129,053). RM569,784 (2001: –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 11. PROPERTY,AND EQUIPMENT (CONTINUED) PLANT Park May Berhad [13294-A] page 70 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 12. SUBSIDIARY COMPANIES –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– COMPANY –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Unquoted shares, at cost 30,851 30,851 Accumulated impairment losses (22,837) (2,870) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 8,014 27,981 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Details of the subsidiary companies are disclosed in Note 32 to the financial statements. The shares held in subsidiary companies have been pledged as security for the CPs/MTNs issued by the Company as disclosed in Note 24 to the financial statements. 13. ASSOCIATED COMPANIES –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP COMPANY –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 31.12.2002 30.6.2001 RM'000 RM'000 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– In Malaysia: Unquoted shares, at cost 4,434 4,434 3,334 3,334 Share of losses (3,338) (2,861) - - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1,096 1,573 3,334 3,334 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Represented by: Share of net assets 1,096 1,573 - - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– There are no contingencies and commitments relating to the Group's interest in the associated companies. The details of the associated companies are disclosed in Note 32 to the financial statements. 14. OTHER INVESTMENTS –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Unquoted shares, at cost 125 125 Provision for impairment loss (7) (1) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 118 124 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 71 >>31 December 2002 15. GOODWILL ON CONSOLIDATION –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– AT COST At 1 July 16,555 19,393 Amount written off - (2,838) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 31 December/30 June 16,555 16,555 ACCUMULATED AMORTISATION At 1 July 6,410 8,551 Amortisation during the period/year 1,046 697 Reversal - (2,838) Impairment loss 8,502 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 31 December / 30 June 15,958 6,410 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– NET BOOK VALUE At 31 December/30 June 597 10,145 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 16. INVENTORIES –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At cost: Spare parts and consumables 2,376 3,244 At net realisable value: Spare parts and consumables 48 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 2,424 3,244 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Park May Berhad [13294-A] page 72 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 17. TRADE RECEIVABLES –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP COMPANY –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 31.12.2002 30.6.2001 RM'000 RM'000 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Trade receivables 11,008 3,832 - - Less: Provision for doubtful debts (4,073) (77) - - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 6,935 3,755 - - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Included in trade receivables is an amount of RM103,346 (2001 : RM103,346) due from Airport Coach Sdn. Bhd., an associated company. The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors other than disclosed in Note 36 to the financial statements. 18. OTHER RECEIVABLES –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP COMPANY –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 31.12.2002 30.6.2001 RM'000 RM'000 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Amount due from subsidiary companies - - 204,684 184,517 Amount due from associated companies 684 444 - - Other receivables 3,652 1,350 167 107 Deposits 1,123 1,189 152 40 Prepayments 4,049 721 3,047 84 Less: Provision for doubtful debts (28)- (104,058) (28,398) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 9,480 3,704 103,992 156,350 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– The loans to subsidiary companies are unsecured, interest free and have no fixed repayment terms except for a loan amounts of RM115,000,000 (2001: RM112,382,000) which bore interest during the year at rates ranging from 5.2% to 6.4% (2001: 4.00% to 8.80%) per annum. The amount due from associated companies are unsecured, interest free and have no fixed terms of repayment. The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors. Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 73 >>31 December 2002 19. DEPOSITS WITH LICENSED BANKS Included in previous year's deposits with licensed banks ("agent bank") of the Company and thereby the Group was an amount of RM1 million being held in the Surplus Cash Account maintained with the agent bank for the purpose of redemption of the RCB. Following the refinancing of the RCB and the issuance of CPs/MTNs during the period as further elaborated under Note 24 to the financial statements, this amount had been utilised for the full redemption of RCB during the period. In the current period, deposits with licensed banks of the Company and the Group include an amount of RM835,000 being held in the Security Account maintained with a licensed bank for the purposes of redemption of the CPs/MTNs, in accordance with the conditions contained in the Trust Deed for the CPs/MTNs as elaborated under Note 24 to the financial statements. Deposits with licensed banks of the Company and the Group also include deposits of RM50,000 (2001: RM50,000) and RM164,000 (2001: RM168,000) respectively which have been pledged as security for bank guarantee facilities granted to the Company and certain subsidiary companies. 20. PROVISIONS FOR RETIREMENT BENEFIT –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 1 July 2002 2,186 1,703 Additional provision during the period/year 439 561 Utilisation of provision during the period/year (665) (78) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 31 December/ 30 June 1,960 2,186 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Within one year 184 - More than one year 1,776 2,186 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 31 December/ 30 June 1,960 2,186 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Park May Berhad [13294-A] page 74 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 21. BORROWINGS –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP COMPANY –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 31.12.2002 30.6.2001 RM'000 RM'000 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Short Term Borrowings Secured: Bank overdrafts - 380 - - Term loans 49 72 - - Hire purchase and finance lease payables (Note 22) 184 53 179 - Unsecured: Bank overdrafts - 361 - - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 233 866 179 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Long Term Borrowings Secured: Term loans 269 514 - - RCB (Note 23) - 114,660 - 114,660 CPs/MTNs (Note 24) 115,000 - 115,000 - Hire purchase and finance lease payables (Note 22) 353 23 352 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 115,622 115,197 115,352 114,660 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Total Borrowings Bank overdrafts - 741 - - Term loans 318 586 - - RCB (Note 23) - 114,660 - 114,660 CPs/MTNs (Note 24) 115,000 - 115,000 - Hire purchase and finance lease payables (Note 22) 537 76 531 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 115,855 116,063 115,531 114,660 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Maturity of borrowings (excluding hire purchase and finance lease): Within 1 year 49 813 - - More than 1 year and less than 2 years 17,181 148 17,000 - More than 2 years and less than 5 years 98,088 114,997 98,000 114,600 5 years or more - 29 - - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 115,318 115,987 115,000 114,600 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 75 >>31 December 2002 21. BORROWINGS (CONTINUED) The average effective interest rates during the financial period/year for borrowings, excluding hire purchase and finance lease payables, were as follows: –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP COMPANY –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 31.12.2002 30.6.2001 % % % % –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Bank overdrafts - 8.9 - - Term loans 8.4 8.8 - - RCB (Note 23) - yield 10.0 10.0 10.0 10.0 - coupon 4.0 4.0 4.0 4.0 CPs/MTNs (Note 24) 5.7 - 5.7 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Company Under the refinancing scheme as further elaborated under Note 37 to the financial statements, the RCB has been fully redeemed with the new issue of CPs/MTNs. During the period an event of default as stipulated under Clause 9.1(m) of the Program Agreement had occurred and thus, each of the CPs/MTNs is deemed to have matured and is payable by the Company immediately. However, the financial institution had subsequently granted their indulgence by allowing the Company to continue with the facility on the condition that the Company continues servicing the interest accruing on the facility. Group The term loans and bank overdrafts are secured on the landed properties of the companies concerned. Park May Berhad [13294-A] page 76 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 22. HIRE PURCHASE CREDITORS –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP COMPANY –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 31.12.2002 30.6.2001 RM'000 RM'000 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Due within 12 months (Note 21) 184 53 179 - Due after 12 months (Note 21) 353 23 352 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 537 76 531 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Future minimum hire purchase payments:- Within 1 year 218 72 212 - More than 1 year and less than 2 years 212 35 212 - More than 2 years and less than 5 years 143 - 143 - 5 years or more 49 - 48 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 622 107 615 - Future finance charges (85) (31) (83)- –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Present value of hire purchase liabilities 537 76 532 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Present value of hire purchase liabilities:- Within 1 year 184 53 180 - More than 1 year and less than 2 years 180 23 180 - More than 2 years and less than 5 years 96 - 96 - 5 years or more 77 - 76 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 537 76 532 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 77 >>31 December 2002 23. REDEEMABLE CONVERTIBLE BONDS (SECURED) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– COMPANY/GROUP –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 4% Redeemable Convertible Secured Bonds 2000/2005 ("RCB"): At 1 July - - Conversion of financial institution debt to RM149,934,561 nominal value of RCB (at present day value at date of issue) 114,660 115,202 Accreted interest 6,863 6,706 Less: Coupon paid on 23 November 2001/22 May 2001 (2,325) (2,974) Less: Coupon payable within next 12 months classified under current liabilities (Note 26) - (621) 4,538 3,111 Less: Redemption of RM4,642,524 nominal value of RCB on coupon payment date on 22 May 2001 (at accreted value on redemption date) - (3,653) Less: Redemption of RM8,471,601 nominal value of RCB on coupon payment date on 23 November 2001 (at accreted value on redemption date) (6,830)- Less: Full redemption of RM136,820,436 nominal value of RCB on 31 January 2002 (at accreted value on redemption date) (112,368)- –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– - 114,660 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– On 22 November 2000, the Company issued a total of RM149,934,561 nominal value of 4% Coupon Redeemable Convertible Secured Bonds 2000/2005 in settlement of RM115,201,920 of the financial institution debt, on the basis of approximately RM1.30 nominal value of RCB for every RM1.00 owed by the Company to the financial institutions. On 31 January 2002, the RCB was redeemed in full. 24. COMMERCIAL PAPERS / MEDIUM TERM NOTES ("CPS/MTNS") (SECURED) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– COMPANY/GROUP –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– RM 120,000,000 Commercial Papers and Medium Term Notes: At nominal value 115,000 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Park May Berhad [13294-A] page 78 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 24. COMMERCIAL PAPERS / MEDIUM TERM NOTES ("CPS/MTNS") (SECURED) (CONTINUED) Drawdowns and repayments of CPs during the period are as follows: –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Drawdown Repayment Tenor RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31 January 2002 3 months 110,000 - 30 April 2002 3 months 110,000 110,000 31 July 2002 3 months 110,000 110,000 31 October 2002 6 months 115,000 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– The CPs/MTNs were constituted by a Trust Deed Program Agreement, Tender Panel Agreement and Underwriting Facility Agreement dated 23 January 2002 between the Company and the financial institutions concerned in relation to the refinancing of RCB. The CPs/MTNs have no listing status, and the terms and conditions of the CPs/MTNs issued are as follows:- (i) The CPs constitute several series of non-guaranteed and underwritten notes having a maximum principal limit of issue of RM120,000,000 which will subsequently reduce as follows: –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Maximum Principal Period of Issue Limit of Issue (from date of Agreement) RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– First 24 months 120,000 25th to 36th month 98,000 37th to 48th month 74,000 49th to 60th month 50,000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– (ii) The CPs are issued at a discount with yield to maturity ranging from 5.5% to 5.9% per annum. The yield to maturity is based on the cost of fund plus underwriting fee of 1% of the Financial Institution and refers to the rate at which Ringgit deposits are offered for relevant maturity period of the CPs to the Financial Institution in the Kuala Lumpur Inter-bank Market. (iii) Tenor and Redemption The facility shall unless prepaid, redeemed or cancelled be for a tenor of five years commencing from the date of the Program Agreement or until all amounts payable or repayable in respect of the CPs and MTNs have been made in full which ever occurs first. All Notes shall be redeemed in accordance with the Redemption Schedule and shall be redeemed in full on the Final Maturity Date as follows: –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Redemption Dates Amount (months from first Issue Date) RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Last day of 24th month 22,000 Last day of 36th month 24,000 Last day of 48th month 24,000 Last day of 60th month 50,000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 120,000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 79 >>31 December 2002 24. COMMERCIAL PAPERS / MEDIUM TERM NOTES ("CPS/MTNS") (SECURED) (CONTINUED) In the event the Company fails to pay any sum on its due date for payment under this Note, the Company shall pay interest calculated on a daily basis on such sum from the due date up to the date of actual payment. The Trust Deed also contained covenants that: (i) the Gearing Ratio shall not be more than 1.5 times with the Gearing Ratio being deemed to be the ratio of Total Liabilities over Total Assets. (ii) after the first anniversary date of the first issue of the CPs, the Debt Service Coverage Ratio shall be at least 1.5 times for the period commencing 6 months prior to each redemption date and ending on that redemption date. The Company shall within 7 days after each month end, deposit and cause to be maintained in the Security Account and amount equal to or greater than the Net Surplus Cash. The Net Surplus Cash is defined as the consolidated revenue and income from operations including proceeds from disposal of assets, equity contribution, insurance proceeds, any other income or amount received by the Company and its subsidiary companies less operating expenditure but excluding interest amount payable under the Facility. The funds available for redemption are the monies standing to the credit of the Security Account, being bank account maintained in accordance with the conditions in the Trust Deed for the following purposes:- (a) transfer to the Sinking Fund Account an amount equal to the shortfall to meet the Redemption Amount due on the Redemption Date referred to in note 24 (iii) above. (b) transfer to the Debt Service Reserve Account an amount equal to the shortfall to meet the interest payment due on the Maturity Date. (c) effecting or undertaking any Permitted Investment(s) provided that Permitted Investments will not in the opinion of the Company, adversely affect the Company's obligations under (a) and (b). The following are material Events of Default where the CPs or MTNs may become repayable:- (i) the Company fails to pay the amount of principal due in respect of the CPs or MTNs on the due dates thereof or if so payable, on demand; (ii) the Company fails to pay the amount (other than principal) due in respect of the CPs or MTNs on the due date thereof; (iii) the Company or any Security Provider (which include the third party chargors and subsidiary companies of the Group), is deemed unable to pay its debts within the meaning of Section 218 of the Companies Act 1965 or becomes unable to pay its debts as they fall due or suspends or threatens to suspend making payments (whether of principal or interest) with respect to all or any class of its debts; (iv) the Company or any Security Provider convenes a meeting of its creditors or proposes or makes any arrangement or composition with, or any assignment for the benefit of, its creditors or a petition is presented or a meeting is convened for the purpose of considering a resolution for the winding up of, or for making an administration order against, the Company or any Security Provider; (v) the Company is de-listed or ceases to be listed on the KLSE by reason of the Company's default of any guidelines, circulars or directives of the KLSE; Park May Berhad [13294-A] page 80 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 24. COMMERCIAL PAPERS / MEDIUM TERM NOTES ("CPS/MTNS") (SECURED) (CONTINUED) (vi) any licence or authorization is revoked, withheld or modified to the extent that such revocation, withholding or modification impairs or prejudices the Company's or any Security Provider's ability to comply with the terms and conditions of the Transaction Documents (which includes all of the agreements entered into by the Company as mentioned above, the Depository Agreement, the CPs or MTNs and the Security Documents); (vii) the CPs or MTNs are assigned a rating that falls below the investment grade as prescribed by the relevant rating authorities or cease to be rated by the relevant rating authorities; (viii) if the proceeds of the CP Facility and/or the MTN Facility are utilised for purposes other than those mentioned in Notes 37 (c) to the financial statements; (ix) any legal proceeding, suit or action is instituted against the Company or any Security Provider which could reasonably be expected to have a Material Adverse Effect. If any of the Events of Default has occurred, each of the CPs and MTNs shall be deemed to have matured and the nominal amount of the CPs and MTNs then outstanding together with CP Default Rate and the MTN Default Rate commencing from the immediately preceding interest payment date until the date of payment to the Trustee for the Noteholders of preceding interest payment the amount of principal in respect of the CPs and MTNs shall immediately become payable by the Company and the Trust Deed and the securities created under the Security Documents shall become enforceable. The security of the facility comprises of:- (i) The charge over the designated accounts (ii) legal charges over all landed properties of the Company and also legal charges over certain landed properties of subsidiary companies in the Group (iii) Deed of assignment (iv) a debenture creating a fixed and floating charge over all assets of the Company, and also third party debentures creating fixed and floating charges over the assets of all subsidiary companies in the Group; 25. TRADE PAYABLES The normal trade credit term granted to the Group is 30 to 90 days. Trade payables include an amount of RM3.65 million which is in dispute as disclosed in note 36 to the financial statements. Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 81 >>31 December 2002 26. OTHER PAYABLES –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP COMPANY –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 31.12.2002 30.6.2001 RM'000 RM'000 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Amounts due to subsidiary companies - - 30,844 5,094 Amounts due to associated companies 543 95 - - Other payables 2,727 1,700 106 263 Accruals 4,397 4,015 543 198 Deposits 648 581 - - Coupon payable on RCB (Note 23) - 621 - 621 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 8,315 7, 0 1 2 31,493 6,176 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– The amounts due to subsidiary companies, associated companies are unsecured, interest-free and have no fixed terms of repayment. 27. SHARE CAPITAL –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Number of Ordinary Shares of RM1.00 each Amount –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 31.12.2002 30.6.2001 Note '000 '000 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Authorised: At 1 July 500,000 100,000 500,000 100,000 Created during the year - 400,000 - 400,000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 31 December / 30 June 500,000 500,000 500,000 500,000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Issued and fully paid: At 1 July 66,145 45,001 66,145 45,001 Capital reduction and consolidation - (9,000) - (9,000) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 66,145 36,001 66,145 36,001 Conversion of financial institution debt to equity - 28,800 - 28,800 Conversion of main supplier debt to equity - 1,344 - 1,344 Conversion of loan stocks to equity (i) 6,861 - 6,861 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 31 December / 30 June 73,006 66,145 73,006 66,145 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– (i) The conversion of loan stocks to equity during the financial period involved the conversion of RM13,034,968 nominal value ICULS into 6,860,508 new ordinary shares of RM1.00 each in the Company credited as fully paid. Park May Berhad [13294-A] page 82 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 28. SHARE PREMIUM (NON-DISTRIBUTABLE) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– COMPANY/GROUP –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 1 July 524 - Arising from conversion of main supplier into new ordinary shares - 524 Arising from conversion of loan stocks into new ordinary shares 6,174 - –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 31 December / 30 June 6,698 524 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 29. LOAN STOCKS –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– COMPANY/GROUP –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Zero coupon Irredeemable Convertible Unsecured Loan Stocks 2000/2005 ("ICULS"): At 1 July 16,816 - Conversion of main supplier debt to loan stocks - 16,816 Conversion of loan stocks to equity (13,035)- –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 31 December / 30 June 3,781 16,816 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– The ICULS were constituted by a Subscription Agreement dated 20 November 2000 between the Company and the three main suppliers (“Subscribers”), and were issued by the Company on 22 November 2000. The ICULS have no listing status, and the terms and conditions of the ICULS issued are as follows:- (i) Conversion Price – by tendering the nominal value RM1.90 of the ICULS in exchange for one new ordinary share of RM1.00 each in the Company. (ii) Conversion Period – period commencing from the first day of the 13th month from and including the date of issue of the ICULS to the maturity date or the date of declaration of an Event of Default, whichever is earlier. (iii) Conversion Rights – the registered holders of the ICULS will have the right to convert such nominal amount of ICULS at the Conversion Price, into new ordinary shares of RM1.00 each in the Company during the Conversion Period. (iv) Automatic Conversion – on maturity date, being five years from the date of issue of the ICULS, all outstanding ICULS will be mandatorily converted by the Company into new ordinary shares of RM1.00 each in the Company at the Conversion Price. The new ordinary shares to be issued and allotted upon conversion of the ICULS shall be credited as fully paid, and shall rank pari passu in all respects with the existing ordinary shares of the Company except that they will not rank for any dividend or other distribution declared in respect of the financial period prior to the financial period in which the shares are issued or any interim dividend or distribution, the declaration date of which is on or before the date of conversion of the ICULS. Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 83 >>31 December 2002 29. LOAN STOCKS (CONTINUED) The following are material Events of Default where the ICULS may become repayable:- (i) if the Company fails to observe or perform any of its material obligations under the Subscription Agreement or the conditions or commits a material breach of any of the terms of the Subscription Agreement or the conditions, which is not remedied within forty five days of the Subscribers notifying the Company of such default or within such longer period as the Subscribers may grant to the Company; (ii) if a petition is presented for the winding up of the Company which is not withdrawn, discharged or stayed within forty five days of presentation of the petition; (iii) if an encumbrancer takes possession or an administrator or other receiver is appointed of the whole or part of the assets or undertaking of the Company, if a distress or execution is levied or enforced upon or sued out against any part of the assets or undertaking of the Company and is not discharged, removed or taken out within thirty days after being executed; (iv) if the Company ceases to carry on its business which it now conducts directly or indirectly and the result of the foregoing has or would have a material and adverse effect on the financial condition of the Company or its ability to observe or perform its obligations under the Subscription Agreement or the conditions; or (v) if it is or will become unlawful for the Company to perform or comply with any one or more of its obligations under the Subscription Agreement and/or the conditions and in relation to the ICULS and such unlawfulness, in the opinion of the Subscribers, affects the rights of the Subscribers. If any Event of Default shall occur, the Subscribers may declare the nominal amount of the ICULS then outstanding as immediately payable by the Company, and in such event, the Company shall upon instructions being given by the Subscribers either:- (i) issue and allot to the Subscribers shares credited as fully paid-up, determined in accordance with the Conversion Price; or (ii) pay the nominal amount of such ICULS in Ringgit Malaysia. The Directors are of the opinion that the possibility is remote that a default condition could arise and result in the ICULS being required to be settled in cash. Accordingly, with the adoption of MASB 24- Financial Instruments: Disclosure and Presentation in the current year (before its effective date), the ICULS have been recognised and presented in the balance sheet of the Company and the Group as an equity instrument. 30. DEFERRED TAXATION –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 1 July 1,136 2,575 Transfer from/ (to) income statement (Note 10) 1,339 (1,439) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– At 31 December / 30 June 2,475 1,136 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Park May Berhad [13294-A] page 84 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 31. LOSS PER SHARE The calculation of loss per share is based on the Group's loss after taxation and minority interest of RM43,647,622 (2001: RM15,823,609) and on the weighted average number of ordinary shares in issue during the period of 70,482,297 (2001: 46,654,485). The Group's loss after taxation and minority interest and the weighted average number of ordinary shares for the purpose of calculating the diluted loss per ordinary share are identical to those used for the basic loss per ordinary share. This is because the assumed conversion of the ICULS during the period to ordinary shares would have the effect of reducing the loss per ordinary share and are therefore anti-dilutive. 32. SUBSIDIARY AND ASSOCIATED COMPANIES The subsidiary and associated companies, which are all incorporated in Malaysia except for Bacius Pte. Ltd. which is incorporated in Singapore, are as follows:- –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Group's Effective Interest –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Name of Company Principal Activities 31.12.2002 30.6.2001 % % –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Subsidiaries of Park May Berhad 1. ^The Kuala Lumpur, Klang Operating of public bus 100.0 100.0 And Port Swettenham transport services and Omnibus Company Berhad investment holding 2. ^Landvest Sdn. Bhd. Property holding 100.0 100.0 3. ^Yee Yow Coachbuilders Dormant 100.0 100.0 Sdn. Bhd. 4. ^Jurubas Sdn. Bhd. Dormant 100.0 100.0 5. ^ Siana Corporation Trading 100.0 100.0 Sdn. Bhd. 6. ^ Tulus Hebat Sdn. Bhd. Investment holding 100.0 100.0 7. ^Plusliner Travel & Tours Domestic travel & tour 100.0 100.0 Sdn. Bhd. 8. ^Nikra Sdn. Bhd. Investment holding 95.0 95.0 9. ^Min Sen Holdings Sdn. Management, investment 67.3 67.3 Bhd. holding and property holding 10. ^Ulung Perkasa Sdn. Bhd. Investment holding 100.0 100.0 11. ^Plusliner Sdn. Bhd. Operating of public bus 100.0 100.0 transport services and investment holding –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 85 >>31 December 2002 32. SUBSIDIARY AND ASSOCIATED COMPANIES (CONTINUED) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Group's Effective Interest –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Name of Company Principal Activities 31.12.2002 30.6.2001 % % –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Subsidiaries of Park May Berhad (Continued) 12. ^City Profile Sdn. Bhd. Dormant 100.0 100.0 13. Jelebu Holdings Sdn. Bhd. Investment holding 83.2 83.2 Subsidiaries of The Kuala Lumpur, Klang And Port Swettenham Omnibus Company Berhad 14. ^The Kuala Selangor Operating of public bus 90.4 90.4 Omnibus Company, Berhad transport services 15. ^Tg. Karang Transportation Operating of public bus 70.0 70.0 Sdn. Bhd. transport services Subsidiaries of Tulus Hebat Sdn. Bhd. 16. ^Cityliner Sdn. Bhd. Operating of public bus 100.0 100.0 transport services 17. ^Len Chee Omnibus Operating of public bus 85.4 85.4 Company Sdn. Berhad transport services 18. Forefront Achievement Investment holding 100.0 100.0 Sdn. Bhd. Subsidiary of Nikra Sdn. Bhd. 19. ^Central Province Wellesley Operating of public bus 95.0 95.0 Transport Company transport services Sdn. Berhad Subsidiaries of Min Sen Holdings Sdn. Bhd. 20. ^The Min Sen Omnibus Operating of public bus 67.3 67.3 Company Sdn. Berhad transport services 21. ^ Sam Lian Enterprise Property holding 67.3 67.3 Sdn. Bhd. 22. ^Sam Lian Omnibus Operating of public bus 41.9 41.9 Company Sendirian Berhad transport services –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Park May Berhad [13294-A] page 86 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 32. SUBSIDIARY AND ASSOCIATED COMPANIES (CONTINUED) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Group's Effective Interest –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Name of Company Principal Activities 31.12.2002 30.6.2001 % % –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Subsidiaries of Ulung Perkasa Sdn. Bhd. 23. ^Kuantan Town Service Operating of public bus 97.0 97.0 Company, Sdn. Berhad transport services 24. ^Leng Huat Omnibus Dormant 96.8 96.8 Company Sdn. Berhad 25. ^Kuala Trengganu Kuantan Dormant 81.4 81.4 Express Company Sdn. Berhad 26. ^Syarikat Ekspres Kuala Operating of public bus 99.9 99.9 Trengganu - Kuala Lumpur transport services Sendirian Berhad 27. ^The Kuantan Kuala Operating of public bus 95.1 95.1 Lumpur Express Omnibus transport services Company Sdn. Berhad Subsidiaries of Plusliner Sdn. Bhd. 28. ^Raya Express Sdn. Berhad Dormant 100.0 100.0 29. Pengangkutan Sri (Perak) Bhd. Operating of public bus 90.5 90.5 transport services 30. ^Syarikat Ebban Sendirian Operating of public bus 61.6 61.6 Berhad transport services 31. Bacius Pte. Ltd. Provision of ticketing 100.0 100.0 services Subsidiaries of Jelebu Holdings Sdn. Bhd. 32. Kenderaan Bas Port Operating of public bus 77.3 77.3 Dickson Sdn. Bhd. transport services 33. Kenderaan Bas Linggi Operating of public bus 73.1 73.1 Sdn. Bhd. transport services 34. ^Kenderaan Bas Jelebu Operating of public bus 83.2 83.2 Sdn. Bhd. transport services –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 87 >>31 December 2002 32. SUBSIDIARY AND ASSOCIATED COMPANIES (CONTINUED) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Group's Effective Interest –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Name of Company Principal Activities 31.12.2002 30.6.2001 % % –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Subsidiaries of Jelebu Holdings Sdn. Bhd. (Continued) 35. ^Kenderaan Bas Seremban Operating of public bus 57.1 57.1 Sdn. Bhd. transport services Associated Companies 1. Rangkaian Segar Operating of central 20.0 20.0 Sdn. Bhd. clearing house for contactless smartcards and related services 2. *Airport Coach Sdn. Bhd. Operating of public bus 39.1 39.1 transport services –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– * Associated company not audited by Ernst & Young ^ Subsidiary companies with auditors' reports that refer to the going concern assumptions and/or recoverability of related company balances being dependent on the outcome of the Group's plan to regularise its financial condition as well as continuing support from shareholders, financial institutions and creditors and achieving profitable operations as disclosed in Note 2 to the financial statements. These reports are not qualified. 33. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT Financial risk management objectives and policies The principal financial instruments held by or issued by the Group are cash and deposits, trade receivables and payables, bank borrowings which include term loans and overdrafts, ICULS, RCB and CPs/MTNs. The Group does not use derivative financial instruments for hedging purposes. The main risks associated with the Group’s financial instruments are interest rate risk and liquidity risk, in particular in relation to the bonds and CPs in issue. The Board of Directors reviews the Group’s exposure to these risks periodically, to ensure that the significant debt obligations are met based on the planned business strategies for the Group and also aim to maintain the interest cost of the Group at an acceptable level. Interest rate risk The Group’s significant interest bearing financial assets and financial liabilities are mainly its deposit placements, and also its long term debt obligations comprising the term loans and the CPs/MTNs in issue. The deposit placements at balance sheet date, which bear interest at rates ranging from 2.65% to 4.25% per annum, are short term and therefore its exposure to the effects of future changes in the prevailing level of interest rates is limited. Park May Berhad [13294-A] page 88 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 33. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED) Interest rate risk (Continued) The term loans of the Group as at 31 December 2002 are floating rate financial liabilities, which bear interest based on the base lending rates of the financial institutions with the average rates that applied during the year disclosed under Note 21 to the financial statements. The CPs/MTNs issued during the period bore yield to maturity from 5.5% to 5.9% and is thus exposed to interest rate price risk which the Group periodically reviews in conjunction with the formulation of its overall strategies for the redemption of the CPs/MTNs. Credit risk Credit risk refers to the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Group is not exposed to significant credit risk as its business is substantially conducted on cash terms. The Group’s exposure to credit risk in relation to its trade receivables, should all its counterparties fail to perform their obligations as at 31 December 2002, is the carrying amount of these receivables as disclosed in the balance sheet. Foreign currency risk The Group has neither material liabilities nor assets that are denominated in foreign currencies as at 31 December 2002. As such, the Group’s direct exposure to foreign currency risk is minimal. Liquidity risk The Group periodically reviews, under its overall strategies, its funding requirements to ensure sufficient liquidity is available to meet its financials commitments in relation to its significant financial liabilities (which includes the interest cost). The maturity profile of the Group’s bonds, CPs and bank borrowings are disclosed under Note 21 to the financial statements. Fair values of financial assets and financial liabilities The carrying amounts of the Group's financial assets and liabilities approximate their fair values. Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 89 >>31 December 2002 34. SIGNIFICANT RELATED PARTY TRANSACTIONS –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 1.7.2001 1.7.2000 to to 31.12.2002 30.6.2001 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP Rental of buses to - Airport Coach Sdn. Bhd., an associated company 29 887 - Faber Group Berhad, a company related to a corporate shareholder Renong Berhad 30 142 - Projek Usahasama Transit Ringan Automatik Sdn.Bhd., a company related to a corporate shareholder Renong Berhad 549 - Legal fees paid to Rashid & Lee, a firm in which a former director Lee Siew Choong, is a partner 7 47 Bus repair services provided to Projek Usahasama Transit Ringan Automatik Sdn. Bhd., a company related to a corporate shareholder 103 104 Renong Berhad Management services provided by UEM Group Management Sdn. Bhd. (formerly known as HBN Management Sdn. Bhd.), a company related to a corporate shareholer Renong Berhad 697 332 Management and related services provided to Projek Usahasama Transit Ringan Automatik Sdn. Bhd., a company related to a corporate shareholder Renong Berhad - 100 Sale of buses and ticketing machines to - Airport Coach Sdn. Bhd., an associated company - 475 - Projek Usahasama Transit Ringan Automatik Sdn.Bhd., a company related to a corporate shareholder Renong Berhad - - Progress billings in relation to acquisition of buildings on freeehold land from Prolink Nusajaya Sdn. Bhd., a company related to a corporate shareholder, Renong Berhad - 253 Purchase of diesel from a petrol kiosk owned by a director of a subsidiary company, Jitinder Singh a/l C. Jaginder Singh 380 329 COMPANY Management fees receivable from subsidiary companies 412 275 Interest receivable from subsidiary companies 15,933 7,345 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Park May Berhad [13294-A] page 90 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 35. CAPITAL COMMITMENTS –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP COMPANY –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 31.12.2002 30.6.2001 31.12.2002 30.6.2001 RM'000 RM'000 RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Capital expenditure - approved and contracted for - 1,107 - 446 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 36. CONTINGENT LIABILITIES GROUP (i) In June 1997, a claim had been submitted against a subsidiary company, The Kuala Selangor Omnibus Company, Berhad, by a former landlord for an amount ranging between RM540,000 to RM650,000 for breach of tenancy agreement where the rented property had been left in a dilapidated condition. The claim continues to be defended and the Directors of the subsidiary company, in consultation with legal advisors, are of the view that the amount claimed is excessive. The plaintiff's application for summary judgement against the subsidiary company was dismissed by the Shah Alam High Court on 13 January 2000 and is pending appeal. On 18 February 2002, the Shah Alam High Court struct off the plaintiff's appeal with cost due to the absence of the plaintiff's solicitor in Court. On 18 November 2002, the plaintiff's application to reinstate the suit was again struck off for the same reason. The consolidated financial statements include a provision of RM100,000 in relation to this claim. (ii) On 26 December 2002, a subsidiary company Siana Corporation Sdn Bhd ("Siana") terminated the contract with Exing Sdn Bhd ("Exing"), a maintenance contractor for failing to fulfil its contractual obligations. Subsequently, Exing issued a letter of demand dated 14 January 2003 for a sum of RM4.02 million being amounts due for services provided to Siana. On 27 February 2003, Siana had issued a letter of demand to Exing for a sum of RM4.95 million for penalty interest and purchases made on behalf of Exing. As at the date of this financial statement, this dispute has yet to be resolved. 37. SIGNIFICANT EVENTS (a) On 23 November 2001, the Company redeemed RM8,471,601 nominal value RCB for cash of RM6,829,892 (accreted value on redemption date). Subsequently, the Company refinance the RCB with accreted value of RM112,368,619 with the issue of secured CPs/MTNs of up to the combined aggregate principal amount of RM120,000,000 only. (b) On 15 January 2002 and 6 February 2002, there was a conversion of RM13,034,968 nominal value ICULS into 6,860,508 new ordinary shares of RM1.00 each in the Company credited as fully paid. Further details on the ICULS are set out in Note 29 to the financial statements. Annual Report 2002 page NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 91 >>31 December 2002 37. SIGNIFICANT EVENTS (CONTINUED) (c ) On 23 January 2002, the Company entered into the following agreements for the issuance of secured CPs/MTNs of up to the combined aggregate principal amount of RM120,000,000 only. (i) Program Agreement between the Company and the Lending Financial Institution ("LFI")(as Lead Arranger/Manager, Facility Agent, Authorised Depository, Issuing Agent and Paying Agent); (ii) Underwriting Facility Agreement between the Company and LFI (as Lead Arranger/Manager, Facility Agent, Authorised Depository and Issuing and Paying Agent) and LFI (as Underwriter) which sets out the terms and conditions upon which the Underwriter agrees to underwrite the CPs; (iii) Tender Panel Agreement between PMB and LFI (as Facility Agent) and LFI (as the Tender Panel Member) which sets out the terms and conditions which Tender Panel Member agrees to tender for the CPs and/or subscribe for the MTNs; (iv) Trust Deed between the Company and Trustees for the holders of the CPs and MTNs ("Note Holders") and LFI (as Lead Arranger/Manager, Facility Agent, Authorised Depository and Issuing and Paying Agent); which constitutes the CPs and MTNs and the conditions thereof; (v) Issuing and Paying Agency Agreement between the Company and Trustees for the Note Holders and LFI (as the Authorised Depository and Paying Agent), which sets out the functions and obligations of LFI as the Authorised Depository and Paying Agent in connection with the CPs and MTNs. The tenure for the CPs and MTNs is five years from the date of the first issue ("Maximum Tenure"). The proceeds thereof shall be utilized for the following purposes:- (i) to refinance the outstanding amount under the Company's existing RCB Issue of up to RM110,000,000; (ii) to finance the acquisition of buses of up to RM10,000,000; and (iii) as working capital requirements provided that the CPs or MTNs have been redeemed in part or in full on their relevant maturity periods for the purposes specified in paragraphs (i) and (ii) above. (d) A Heads of Agreement dated 18 February 2002 between the Company, Kumpulan Kenderaan Malaysia Berhad ("KKMB") and Renong in which the parties thereto have agreed to record their understanding and intention in respect of the sale and purchase of the issued ordinary shares in Kenderaan Langkasuka Sdn Berhad (18,000 shares), Kenderaan Klang Banting Berhad (7,600,250 shares), Kenderaan Labu Sendayan Sdn Berhad (381,000 shares), Starise Sdn Berhad (60,002 shares), Syarikat Rembau Tampin Sdn Berhad (605,002 shares), Transnasional Express Sdn Berhad (8,920,002 shares), Syarikat Kenderaan Melayu Kelantan Berhad (6,922,950 shares and 200,000 cumulative redeemable preference shares of RM1.00 each), Syarikat Tanjong Keramat Temerloh Utara Omnibus Berhad (1,036,137 shares) and Ekpres Nasional Berhad (12,804,967 shares) held by KKMB. The Heads of Agreement was terminated on 16 July 2002. (e) On 1 May 2002, a subsidiary company, Siana had entered into a Service Contract ("Contract") for outsourcing the Group's bus maintenance with Exing. The purpose of the Contract was to reduce the maintenance cost faced by the Group. However, on 26 December 2002 , Siana has terminated the contract and issued a letter of demand as disclosed in Note 36 to Exing for a sum of RM4.95 million which comprise of penalty and other charges arising from the non performance of the Contract. Park May Berhad [13294-A] page 92 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) >>31 December 2002 37. SIGNIFICANT EVENTS (CONTINUED) (f) On 17 August 2002, the Company announced that it had entered into an Agency Agreement with IRISBUS FRANCE ("IRISBUS"), a company incorporated in France, wherein the Company had been appointed as the sole and exclusive agent of IRISBUS to promote the sales of a new mass transit system vehicle ("CIVIS System Vehicle") for urban transport, and the provision of after sales services of the CIVIS System Vehicle or any produce in respect thereof. 38. SEGMENT REPORTING The Group is principally engaged in the public bus transport business. The other segments are not significant to be disclosed under the requirements of MASB 22 Segment Reporting. 39. COMPARATIVE FIGURES The following comparative figures in the financial statements have also been restated to conform with current period’s presentation:- –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– GROUP –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– As previously As reported Restated RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– BALANCE SHEET Associated companies 2,025 1,573 Trade receivables 3,652 3,755 Other receivables 3,260 3,704 Other payables 6,917 7,012 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– COMPANY –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– As previously As reported Restated RM'000 RM'000 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Subsidiary companies 179,006 27,981 Other receivables 231 156,350 Other payables 1,082 6,176 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– The restated comparatives are to present a more appropriate classification of the receivables and payables. Annual Report 2002 page SHAREHOLDERS’ INFORMATION as at 30 April 2003 93 Authorised Capital : RM500,000,000 Issued and Fully Paid : RM73,005,822 Class of Shares : Ordinary shares of RM1.00 each No of Shareholders : 3,497 Voting Rights : 1 vote per ordinary share ANALYSIS OF SHAREHOLDINGS Size of Holdings No of Shares % No of Holders % < 1,000 543,699 0.74 776 22.19 1,000 – 10,000 7,639,432 10.46 2,271 64.94 10,001 – 100,000 11,365,578 15.57 401 11.47 100,001 – less than 5% 16,422,313 22.49 47 1.33 > 5% 37,034,800 50.73 2 0.05 Total 73,005,822 100.0 3,497 100.0 SUBSTANTIAL SHAREHOLDERS (AS SHOWN IN THE REGISTER OF SUBSTANTIAL SHAREHOLDERS) Name of Shareholders No of Shares Held Direct No of Shares Held Indirect % Renong Berhad 32,437,800@ - 44.43 Cycle & Carriage Bintang Berhad 4,597,000 - 6.30 Notes: @ Held through RHB Merchant Nominees (Tempatan) Sdn. Bhd. Park May Berhad [13294-A] page 94 SHAREHOLDERS’ INFORMATION as at 30 April 2003 (continued) LIST OF 30 LARGEST SHAREHOLDERS No. Name No of Shares % 1. RHB Merchant Nominees (Tempatan) Sdn. Bhd. 32,437,800 44.43 - United Engineers (M) Berhad 2. Cycle & Carriage Bintang Berhad 4,597,000 6.30 3. Bumiputra-Commerce Nominees (Tempatan) Sdn. Bhd. 2,668,371 3.66 - Bumiputra-Commerce Bank Berhad 4. Yee Hoong Hing 1,475,840 2.02 5. Transcoach Sdn. Bhd. 1,415,473 1.94 6. Employees Provident Fund Board 1,011,200 1.39 7. Liew Sau Peng 934,000 1.28 8. Yeo Kean Hua 619,000 0.85 9. JB Nominees (Tempatan) Sden. Bhd. 578,000 0.79 Kimzen Capital Services Sdn. Bhd. - for Hi Geok Kim @ Hi Peh Lang 10. CIMSEC Nominees (Tempatan) Sdn Bhd 450,000 0.62 - Pledged securities account for Cheng Chin Heng 11. Fong LaiYing 412,000 0.56 12. Yee Kee 365,000 0.50 13. Yee Fook Loong 360,800 0.49 14. BBMB Securities Nominees (Tempatan) Sdn Bhd 350,000 0.48 - Pledged securities account for Lim Back Kooi 15. Denso (Malaysia) Sdn. Bhd. 302,269 0.41 16. Ismail Bin Asha’ari 300,000 0.41 17. Ho Woon Kim 296,000 0.40 18. Neo Chong Jin 266,600 0.36 19. Yee Fook Leong 239,000 0.33 20. Ho Yip Yin 231,000 0.32 21. Chin Kiam Hsung 214,800 0.29 22. BIMSEC Nominees (Tempatan) Sdn. Bhd. 210,000 0.29 - Pledged securities account for Mohamad Nor bin Abu Bakar 23. JB Nominees (Tempatan) Sdn. Bhd. 210,000 0.29 Kimzen Capital Services S/B for Anuar bin Sujud 24. Cimsec Nominees (Tempatan) Sdn. Bhd. 207,000 0.28 Pledged Security AC for Mohammed Amin bin Mahmud 25. Cheah Nyuk San 181,000 0.25 26. Lim Lee Kim 172,000 0.24 27. AmFinance Berhad 164,600 0.23 - Pledged securities account for Rajalingam A/L RVR Singam 28. Chock Kok Huat 162,400 0.22 29. Ng Yoke Ken 161,000 0.22 30. Tan Lee Hwa 150,000 0.21 TOTAL 51,142,153 70.05 Annual Report 2002 page NOTEHOLDERS’ INFORMATION as at 30 April 2003 95 Note holder : Affin Discount Berhad Type : Commercial Paper/Medium Term Notes (CP/MTN) Facility Available : RM120,000,000 Drawndown value : RM115,000,000 Maturity : 22 November 2005 Interest : 5.5% - 5.9% LOAN STOCK HOLDERS’ INFORMATION as at 30 April 2003 Type : Irredeemable Convertible Unsecured Loan Stock Nominal Value : RM3,781,380 Maturity : 22 November 2005 Conversion Price : RM1.90 No of Bondholders/ : 1 LIST OF LOAN STOCK HOLDERS No. Name No of Shares % 1. Denso (Malaysia) Sdn Bhd 3,781,380 100.0 Tot al 3,781,380 100.0 Park May Berhad [13294-A] page 96 PROPERTY Address Area in Age Tenure Description Net book (Date of acquisition) sq meters (years) value (RM’000) Lot 18115, Batu 5 14,156 13 Leasehold Office building, 9,961 Jalan Kelang Lama workshop and 58000 Kuala Lumpur (expiring 2065) depot (December 1989) Lot 476, Seksyen 55 3,970 6 Leasehold Training center 1,007 Kuala Lumpur (expiring 2056) and office (September 1996) Lot 821, Batu 3 22,170 5 Freehold Bus depot 1,982 Jalan Kapar 42100 Rantau Panjang Selangor (June 1997) No 83D, 2nd Floor 48 >30 Freehold strata Flat - Hock Lee Mansion Jalan Union, 51000 Sentul Kuala Lumpur (n/a) No 85D, 2nd Floor 48 >30 Freehold strata Flat - Hock Lee Mansion Jalan Union, 51000 Sentul Kuala Lumpur (n/a) Lot 1512 48 >30 Freehold strata Flat - Selangor Mansion 5th Floor, Jalan Masjid India Kuala Lumpur (n/a) Lot 3988-3989 7,151 9 Freehold Office building 1,443 Oakland Industrial Park with depot Seremban Negeri Sembilan (April 1993) Lot 104-108, 407-408 5,547 9 Freehold Office building, 1,709 Jalan Kg Gajah bus depot 12200 Butterworth and workshop Pulau Pinang (1993) No 411 8,533 9 Freehold Office building, 449 Jalan Permatang Batu bus depot 14000 Bukit Mertajam and workshop Pulau Pinang (1993) Annual Report 2002 page PROPERTY (continued) 97 Address Area in Age Tenure Description Net book (Date of acquisition) sq meters (years) value (RM’000) Lot No 462 & 1004 2,452 9 Freehold Commercial building 2,708 No 3967, Jalan Bagan Luar Butterworth, Pulau Pinang (1993) Lot No 2729 & 2730 323 12 Freehold Bus workshop 99 No 354, Jalan Ria cum depot 34200 Parit Buntar, Perak (1990) Lot 9613, Jalan Tronoh 11,509 10 Freehold Bus workshop 60 Kg Pancho cum depot Bota Kanan, Perak (April 1992) G73, Pine Resort 126 12 Leasehold Holiday apartment 263 Condominium (expiring 2082) 49000 Bukit Fraser (March 1990) Lot No. PT 6301 8,094 12 Leasehold Office building 558 Lot 34, Semambu (expiring 2041) with depot Industrial Estate 25350 Kuantan, Pahang (June 1990) Lot 1802 207 8 Freehold A single-storey - No 46, Ruby Garden terrace house 27000 Jerantut, Pahang (June 1994) No 1,3,5 & 7 657 7 Freehold 2-storey light industrial 274 Jalan Industrial 1/3 terrace factories Temerloh Industial Park 28400 Mentakab, Pahang (July 1995) Lot No 77675 1,540 5 Freehold Shoplot 496 Taman Nusa Perintis 1 HS(D) 258267 Bandar Nusajaya Mukim of Pulai, Johor Bahru (July 1997) Lot No 77676 1,540 5 Freehold Shoplot 652 Taman Nusa Perintis 1 HS(D) 258268 Bandar Nusajaya Mukim of Pulai, Johor Bahru (July 1997) Park May Berhad [13294-A] page 98 (This page is intentionally left blank) PROXY FORM OF THE TWENTY-NINTH (13294-A) PARK MAY BERHAD ANNUAL GENERAL MEETING (Incorporated in Malaysia) NO. OF ORDINARY SHARES HELD I/We of being member/members of PARK MAY BERHAD, hereby appoint of or failing him/her, the Chairman of the Meeting, as my/our proxy to vote for me/us and on my/our behalf at the Twenty-Ninth Annual General Meeting of the Company to be held at Pelican II, 3rd Floor, Pearl International Hotel, Batu 5, Jalan Kelang Lama, 58000 Kuala Lumpur on Wednesday, 18 June 2003, at 10.30 am and at any adjournment thereof, in the manner indicated below:- RESOLUTION FOR AGAINST Resolution 1 Adoption of Accounts and Reports for the period ended 31 December 2002 Resolution 2 Approval of Directors’ fee Resolution 3 Re-election of Director under Article 87: Mr. Chong Yoon Fatt Resolution 4 Re-election of Director under Article 80: YABhg Tun Mohammed Hanif Bin Omar Resolution 5 Re-election of Director under Article 80: YBhg Dato’ Mohd Nor Bin Idrus Resolution 6 Re-appointment of Messrs Ernst & Young as Auditors of the Company Resolution 7 Any other business (Please indicate with an "X" in the spaces provided how you wish your vote to be cast. If you do not so, the proxy will vote or abstain from voting his/her discretion) Signed this day of 2003 Signature/Seal NOTES: 1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy/proxies to attend and vote in his stead. A proxy may but need be a member of the company. 2. The proxy form must be deposited at the Company’s registered office at Lot 18115, batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur not less than forty- eight (48) before the time fixed for holding the Meeting and at any adjournment thereof. 3. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting. Where a member appoints two (2) proxies, the appointment shall be invalid unless the proportion of the holding to be represented by each proxy is specified. 4. The proxy form must be signed by the appointer or his attorney duly athourised in writing or if the appointer is a corporation, either under is seal or the hand of its attorney duly athourised. Fold here for sealing STAMP Company Secretary Park May Berhad (13294-A) Lot 18115, Batu 5 Jalan Kelang Lama 58100 Kuala Lumpur 1st fold here 2nd fold here PROXY FORM OF THE THIRTIETH (13294-A) PARK MAY BERHAD ANNUAL GENERAL MEETING (Incorporated in Malaysia) NO. OF ORDINARY SHARES HELD I/We of being member/members of PARK MAY BERHAD, hereby appoint of or failing him/her, the Chairman of the Meeting, as my/our proxy to vote for me/us and on my/our behalf at the Thirtieth Annual General Meeting of the Company to be held at Pelican II, 3rd Floor, Pearl International Hotel, Batu 5, Jalan Kelang Lama, 58000 Kuala Lumpur on Wednesday, 18 June 2003, at 11.00 am, or immediately after the conclusion or adjournment (as the case maybe) of the Twenty-ninth General Meeting of the Company which will be held at 10.30 am on the same day and at the same venue whichever is later and at any adjournment thereof, in the manner indicated below:- RESOLUTION FOR AGAINST Resolution 1 Re-election of Director under Article 80: YBhg Datuk Sulaiman Bin Daud Resolution 2 Re-election of Director under Article 80: En. Zainal Abidin Bin Jamal Resolution 3 Re-appointment of Messrs Ernst & Young as Auditors of the Company Resolution 4 Special Business: Section 132(D), Companies Act 1965 – Issuance of New Shares Resolution 5 Re-newal mandate for Recurrent Related Party Transaction Resolution 6 Any other business (Please indicate with an "X" in the spaces provided how you wish your vote to be cast. If you do not so, the proxy will vote or abstain from voting his/her discretion) Signed this day of 2003 Signature/Seal NOTES: 1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy/proxies to attend and vote in his stead. A proxy may but need be a member of the Company. 2. The proxy form must be deposited at the Company’s registered office at Lot 18115, batu 5, Jalan Kelang Lama, 58100 Kuala Lumpur not less than forty- eight (48) before the time fixed for holding the Meeting and at any adjournment thereof. 3. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting. Where a member appoints two (2) proxies, the appointment shall be invalid unless the proportion of the holding to be represented by each proxy is specified. 4. The proxy form must be signed by the appointer or his attorney duly authorised in writing or if the appointer is a corporation, either under is seal or the hand of its attorney duly athourised. Fold here for sealing STAMP Company Secretary Park May Berhad (13294-A) Lot 18115, Batu 5 Jalan Kelang Lama 58100 Kuala Lumpur 1st fold here 2nd fold here