MALAYAN CEMENT BERHAD (1877-T)Level 12, Bangunan TH Uptown 3

No. 3, Jalan SS21/39, 47400 Petaling Jaya

Selangor Darul Ehsan

Tel 603 7723 8200

Fax 603 7722 4100

Web www.malayancement.com.my

MALAYAN CEMENT BERHAD (1877-T)

A n n u a l R e p o r t 2 0 0 2 L a p o r a n Ta h u n a n

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Co nt e nt sCompany Overview 1

Corporate Information 2

Chairmans Statement 5

Chief Executives Review 9

Corporate Governance Statement 15

Statement On Internal Control 19

Report Of The Audit Committee 21

Financial Statements 23

List Of Properties 61

Five-Year Statement 67

Analysis Of Shareholdings 68

Notice Of Meeting 72

Statement Accompanying The Notice Of Annual General Meeting 76

Form Of Proxy

OUR CORE BUSINESSES

Cement

Market leader with 3 integrated plants in Rawang, Kanthan and Langkawi, a grinding plant in Pasir Gudang, a dry-mixcementitious product plant in Rawang and nationwide distribution channels by road, rail & sea in Peninsular Malaysia. Wealso operate a bulk import terminal and a dry-mix cementitious product plant in Singapore.

Main operating companies:

Malaysia Associated Pan Malaysia Cement Sdn BhdMalayan Cement Industries Sdn BhdSouthern Cement Industries Sdn Bhd

Singapore Lafarge Cement Singapore Pte Ltd

Ready-Mixed Concrete

Major supplier with more than 30 plants throughout Peninsular Malaysia, 4 plants in East Malaysia, 6 plants in Singaporeand 2 plants in Vietnam.

Main operating companies:

Malaysia Supermix Concrete (Malaysia) Sdn BhdSupermix Concrete (East Malaysia) Sdn BhdSupermix Concrete Industries Sdn Bhd

Singapore Supermix Concrete Pte LtdVietnam Supermix Concrete (Vietnam) Co Ltd

Trading Of Building Materials

Major distributor of building materials in Malaysia and Singapore. We specialise in cement and cementitious productsand also distribute a wide range of other building materials.

Main operating companies:

Malaysia Simen Utama Sdn BhdCMCM Perniagaan Sdn Bhd

Singapore Lafarge Cement Singapore Pte Ltd

Co m p a ny O ve r v i e w

Incorporated in 1950 and starting with Malaysias first cement plant in 1953, Malayan Cement Berhad is today the parentof a group of companies in Malaysia and Singapore with leading position in each of our core businesses.

We are a member of the Lafarge Group, world leader in building materials with operations in 75 countries and 77,000employees worldwide.

Fi n a n c i a l H i g h l i g ht s(RM000 unless indicated) 2002 2001

Revenue 1,674,005 1,657,299

Profit before tax 101,495 74,562

Profit after tax 89,395 69,539

Net profit for the year 83,385 64,801

Net earnings per share (sen) 2.9 2.2

Registered Office Level 12, Bangunan TH Uptown 3

No. 3, Jalan SS21/39, 47400 Petaling Jaya, Selangor Darul Ehsan

Tel 603 7723 8200

Fax 603 7722 4100

Website www.malayancement.com.my

Auditors Deloitte & Touche

Share Registrars Malaysian Share Registration Services Sdn Bhd

7th Floor, Exchange Square, Bukit Kewangan, 50200 Kuala Lumpur

Tel 603 2026 8099

Fax 603 2026 3736

Stock Exchange Listing Kuala Lumpur Stock Exchange Main Board

Company Secretaries Teoh Yow Kee

Chew Tee Kheng

B o a rd O f D i re c t o r s

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Co r p o rat e I n fo r m at i o n

Y.A.M. Tunku Tan Sri Abdullah ibni Almarhum Tuanku Abdul Rahman DKYR, PSM, PPTIndependent Non-Executive Director (Chairman) (Age 77, Malaysian)

An independent non-executive director since April 1965, and appointed as Chairman in July 1979.Academic qualifications include a Diploma in Public Administration from the University of Glasgow,Scotland. A member of the Negeri Sembilan Royal Family and served as a Member of Parliament forthe constituency of Rawang from 1964 to 1974. Chairman of the Melewar Group Berhad, MAAHoldings Berhad, Georgetown Holdings Berhad, Maruichi Malaysia Steel Tube Berhad and DatukKeramat Holdings Berhad. He is the Senior Independent Director.

Guillaume RouxNon-Executive Director (Vice Chairman) (Age 43, French)

He was appointed as director and Vice Chairman of the Board on 1 March 2002. Graduated with adegree in Business Administration from the Institute of Political Studies, Paris in 1980 and joined theLafarge Group Headquarters in the same year. Between 1996 to 1999, he was Vice President,Strategic Planning and Marketing at Lafarge North America. He was appointed Chief ExecutiveOfficer of Lafarges Turkey operations in 1999 where he served until his appointment as President ofLafarges ASEAN Region on 1 March 2002.

Quah Thain KhanExecutive Director (President & CEO) (Age 45, Malaysian)

He was appointed President & Chief Executive Officer of the Company on 1 March 2002. Hegraduated with a Bachelors degree in Mechanical Engineering (Honours) from Monash University,Australia in 1980 and obtained his Masters degree in Business Administration from Cranfield in1987. He is also a member of the Institute of Engineers, Malaysia and the Malaysian chapter of theAmerican Concrete Institute. Following an early career in engineering, manufacturing, marketingand management consultant, he joined a subsidiary of the company, APMC, in 1993 as its DeputyGeneral Manager, a position he held until 1996 when he was appointed as the General Manager ofSimen Utama, the marketing arm of APMC. He was later appointed as Marketing Director of theCompanys Malaysian cement operations in July 1999, a position he held until his appointment asChief Executive Officer of the Companys Malaysian cement operations on 1 April 2000.

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Yeoh Khoon ChengExecutive Director (Senior Vice President & CFO) (Age 44, Malaysian)

Appointed Finance Director in January 1999. Qualified as an accountant in 1983 after four years ofarticleship with a professional firm of accountants, and is a member of the Malaysian Institute ofAccountants and the Malaysian Institute of Certified Public Accountants. He joined Malayan Cementin 1987 as Finance Manager, and has held various positions involving business development,mergers and acquisitions and corporate finance activities and acting as Company Secretary from1990 to 1998 before taking up his current position.

Chan Hua Eng R OBEIndependent Non-Executive Director (Age 74, Malaysian)

An independent non-executive director since July 1979. Graduated with a Bachelor of Law (Honours)degree from Bristol University in 1952. Called to the English Bar in 1953 and the Malayan Bar in1955. He started his career in legal practice in 1954 in Shearn Delamore & Co. and Drew & Napierwhere he remained until his retirement in January 1987 as a Senior Partner. Areas of specialisationduring his legal career were in corporate, banking and land law. He was formerly a Chairman of theMalayan Bar. A part time Judicial Commissioner and Chairman of the Sabah Inquiry Commission. Hecurrently sits on the Board of Directors of Pacific & Orient Berhad, Rohas-Euco Industries Berhad,Carlsberg Brewery Malaysia Berhad and Lingui Developments Berhad and Gleanealy Plantations(Malaya) Berhad. He was appointed Chairman of the Audit Committee of the Company with effectfrom 1 January 2003.

Y.A.M. Tunku Tan Sri Imran ibni Tuanku Jaafar DKYR, PSM, SPSN, AMN, PJKIndependent Non-Executive Director (Age 55, Malaysian)

An independent non-executive director since July 1979. Graduated with a Bachelor of Law (Honours)degree from Nottingham University, UK in 1970 and called to the Bar at Grays Inn in 1971. TunkuImran has held senior management positions with various companies including PerbadananNasional Berhad and Haw Par (Malaysia) Sdn Bhd from 1971 to 1976. He was the Chief ExecutiveOfficer of the Antah Group of Companies from 1976 until he stepped down at the end of February2001. He currently sits on the Board of several other public listed companies, namely AluminiumCompany of Malaysia Berhad, Austral Enterprises Berhad, Hwang-DBS (Malaysia) Berhad, Island & Peninsular Berhad and Minho (Malaysia) Berhad. He is a member of the Audit Committee and wasappointed Chairman of the Remuneration and Nomination Committee of the Company with effectfrom 1 January 2003.

Dato Dr Ikmal Hisham Albakri @ Ikmal Hisham Hariri bin Mustapha Albakri DPCM, DPMSIndependent Non-Executive Director (Age 72, Malaysian)

An independent non-executive director since July 1979. Graduated with a Diploma in Architecturefrom Sheffield University in 1956 and later a Diploma in Tropical Architecture from AA School ofArchitecture, UK in 1962. He is the Executive Director of Kumpulan Akitek Sdn Bhd, an architecturalpractice, since 1964. He was also President of the Malaysian Institute of Architects from 1967 to1969 and 1973 to 1975, President of the Commonwealth Association of Architects from 1987 to1989 and has been Vice President of the International Union of Architects since 1999. He wasconferred many awards and honours in recognition of his contribution to the architecturalprofession. He is a member of the Remuneration and Nomination Committee of the Company.

James R H LoudonNon-Executive Director (Age 60, British)

Appointed as non-executive director in May 1989. Graduated with a Bachelor of Arts degree fromMagdalene College, Cambridge, UK in 1965 and a Masters degree in Business Administration fromStanford Graduate School of Business, USA in 1971. Joined Blue Circle in 1977. In 1983, he becamethe Finance Director of Blue Circles operations in the United States, and in September 1987 wasappointed Group Finance Director for Blue Circle Group. His position was renamed Chief FinancialOfficer in 1999, a position he held until his retirement in year 2001. He is Deputy Chairman ofCaledonia Investments Plc and also a non-executive director of James Hardie Industries N.V.

Charles Tan Poh TeiIndependent Non-Executive Director (Age 64, Malaysian)

Appointed as non-executive director in January 1999 following his retirement as the FinanceDirector, a position he had held since August 1978. An accountant by profession, he joined the Groupin 1964 and held various positions prior to his appointment as Finance Director. A member of theMalaysian Institute of Accountants, the Australian Society of Certified Practising Accountants andthe Institute of Chartered Secretaries & Administrators, UK. He also sits on the Board of Directors ofCourts Mammoth Berhad. He is a member of the Audit Committee of the Company.

Saw Ewe SengIndependent Non-Executive Director (Age 64, Malaysian)

Appointed as an executive director in April 2000 and has been a non-executive director sinceOctober 2000 following his retirement after 36 years of service with the Group. He became anindependent non-executive director on 1 December 2002. Obtained his fellowship Diploma in CivilEngineering from the Royal Melbourne Institute of Technology, Australia in 1960 and is a member ofthe Institute of Engineers (Malaysia). He joined the Group in 1964, and had held various positionsuntil his appointment as Managing Director/Group Chief Executive of the Groups operating units in1981, a position he held until his retirement in September 2000. He holds 55,000 shares directly and110,000 shares indirectly in the Company.

Michel RoseNon-Executive Director (Age 60, French)

Appointed as a director on 18 February 2002. Graduated from Ecole des Mines, France and obtaineda Masters degree in Business Administration from IMI, Geneva. Joined the Lafarge Group in 1970and became Executive Vice President for Human Resource and Corporate Communications in 1984.He was appointed to his current position as Senior Executive Vice President in the Lafarge Group in1989, and also held the position of President & Chief Executive Officer, Lafarge Corporation in NorthAmerica from 1992 to 1996. He is also a Director of Lafarge S.A., the ultimate holding company ofMalayan Cement Berhad.

Jean-Jacques GauthierNon-Executive Director (Alternate to Michel Rose) (Age 43, French)

Appointed as an alternate director to Mr Michel Rose on 18 February 2002. Holds an Accountingdegree in Economic Science and a Masters degree in Business Law. He joined the Lafarge Group inFebruary 2001 as Executive Vice President and Chief Financial Officer. Prior to that, he was ChiefFinancial Officer of the French-British Matra-Marconi Space, a position which he retained followingthe merger between Matra-Marconi Space and the aerospace operations of Daimler-Benz in 2000.He is also a member of the Executive Committee of Lafarge S.A., the ultimate holding company ofMalayan Cement Berhad.

OTHER INFORMATION ON DIRECTORS

Save as disclosed, none of the Directors holds any securities in the Company or its subsidiaries nor has any family relationship with

any director/substantial shareholder of the Company, nor any personal interest in any business arrangement involving the Company.

Save and except for traffic offences, if any, none of the Directors has been convicted for any offences within the past ten years.

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B o a rd o f D i re c t o r s ( co nt d )

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Penyata Pengerusi

On behalf of the Board of Directors, it is my pleasure topresent to you the Annual Report and the Annual FinancialStatements of Malayan Cement Berhad (MCB) for thefinancial year ended 31 December 2002.

FINANCIALS

Cement demand in Peninsular Malaysia was showingpositive growth during the first half-year of 2002 but thiswas negated by a decline in cement consumption in thesecond half-year following a slow down in constructionactivities caused by labour shortage. As a result, cementdemand for the year ended up relatively flat compared tothe previous year. Despite the lower domestic cement salesin Malaysia, the Group recorded net revenue of RM1.67billion, representing a marginal growth of 1% over theprevious year. This was mainly attributed to higher exportsand higher ready-mixed concrete sales (a full year impactof an acquisition in March 2001). The sales mix in 2002was less favourable than in 2001 due to the higherproportion of exports and ready-mixed concrete sales andthis had affected the overall operating margin in 2002.

The rectification works for the clinker coolers at Rawangand Kanthan Works during the first half-year also had anegative impact on the years results. However, since thecompletion of the rectification, plant performance hasimproved in the second half-year and this coupled withimprovement in various other areas helped offset theimpact of lower construction activities. With lowerfinancing cost achieved through a number of refinancing

Bagi pihak Lembaga Pengarah, saya dengan sukacitanya

membentangkan Laporan Tahunan dan Penyata Kewangan

Tahunan Malayan Cement Berhad (MCB) bagi tahun kewangan

berakhir 31 Disember 2002.

KEWANGAN

Permintaan simen di Semenanjung Malaysia telah menunjukkan

pertumbuhan yang positif pada setengah tahun pertama 2002,

tetapi ianya telah diimbangi oleh kemerosotan dalam penggunaan

simen pada setengah tahun kedua, berikutan kelembapan

aktiviti-aktiviti pembinaan yang disebabkan oleh kekurangan

tenaga kerja. Akibatnya, permintaan simen bagi tahun tersebut

berakhir dengan mendatar berbanding tahun sebelumnya.

Meskipun jualan simen domestik di Malaysia adalah lebih rendah,

Kumpulan telah mencatatkan pendapatan bersih sebanyak RM1.67

bilion, iaitu pertumbuhan marginal sebanyak 1% berbanding tahun

sebelumnya. Ini disebabkan terutamanya oleh eksport dan jualan

konkrit siap-bancuh yang lebih tinggi (kesan sepanjang tahun dari

pengambilalihan pada Mac 2001). Gabungan jualan pada

2002 kurang memuaskan berbanding 2001 disebabkan oleh

kadar eksport dan jualan konkrit siap-bancuh yang lebih tinggi dan

ini telah memberi kesan negatif terhadap margin operasi

keseluruhan pada 2002.

Kerja-kerja pembaikan bagi penyejuk klinker di Kilang Rawang

dan Kanthan pada setengah tahun pertama mempunyai kesan

yang negatif terhadap keputusan tahun tersebut. Namun begitu,

semenjak penyempurnaan kerja pembaikan tersebut, prestasi

kilang telah meningkat pada setengah tahun kedua dan

ini ditambah lagi dengan peningkatan dalam pelbagai bidang yang

...Despite the lower domestic cement sales inMalaysia, the Group recorded net revenue of RM1.67billion, representing a marginal growth of 1% overthe previous year...

...Meskipun jualan simen domestik di Malaysiaadalah lebih rendah, Kumpulan telah mencatatkanpendapatan bersih sebanyak RM1.67 bilion, iaitupertumbuhan marginal sebanyak 1% berbandingtahun sebelumnya...

Y.A.M. Tunku Tan Sri Abdullah ibni Almarhum Tuanku Abdul Rahman

C h a i r m a ns S t at e m e nt

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exercises during the year, pre-tax profit for the year underreview improved by 36% from RM74.6 million to RM101.5 million. After tax and minority interest, Groupprofit attributable to shareholders in 2002 amounted toRM83.4 million, a 29% improvement over RM64.8 millionin the previous year. Earnings per share improved from 2.2 sen in 2001 to 2.9 sen in 2002.

Operating cashflow remained strong despite the paymentof RM217 million in December 2002 for the remaining 23%equity interest in Kedah Cement Holdings Berhad (KCHB)and we ended the year with net borrowings of RM941 million compared to RM876 million in the previousyear. Excluding the RM217 million payment for the KCHBacquisition, net debt for the Group would have beenreduced by RM152 million compared to end 2001.

The Board has declared an interim dividend (tax exempt)of 1.5 sen per ordinary share in respect of the financial yearended 31 December 2002. The total dividend to be paidout will be RM43.4 million, representing an increase of4.1% over last year. Your directors do not propose any finaldividend for the financial year ended 31 December 2002.

CORPORATE GOVERNANCE

The Board continued to fully subscribe and support theMalaysian Code on Corporate Governance. We arecommitted to ensure that good corporate governance ispractised throughout the Group. Reflecting thatcommitment, I am pleased to report that we received theKLSE Corporate Merit Award 2002 in March 2003, havingwon the KLSE Corporate Sectoral Award 2001 under theIndustrial Products Sector in March 2002.

OUTLOOK

The Asean Free Trade Agreement (AFTA) came into effectin beginning of 2003 and this may impact the competitivelandscape of the cement industry in Malaysia. For the past

lain, telah membantu mengimbangi kesan dari aktiviti-aktiviti

pembinaan yang berkurangan. Dengan kos pembiayaan

lebih rendah yang dicapai melalui beberapa usaha pembiayaan

semula pada tahun tersebut, keuntungan sebelum cukai telah

meningkat sebanyak 36% dari RM74.6 juta kepada RM101.5 juta.

Selepas pencukaian dan kepentingan minoriti, keuntungan

Kumpulan yang diagihkan kepada para pemegang saham pada

2002 berjumlah RM83.4 juta, peningkatan sebanyak 29%

dibandingkan dengan RM64.8 juta pada tahun sebelumnya.

Pendapatan sesaham meningkat dari 2.2 sen pada 2001 kepada

2.9 sen pada 2002.

Aliran tunai operasi kekal kukuh meskipun pembayaran sebanyak

RM217 juta pada Disember 2002 bagi baki 23% kepentingan ekuiti

di dalam Kedah Cement Holdings Berhad (KCHB) dan kami

mengakhiri tahun tersebut dengan pinjaman bersih sebanyak

RM941 juta berbanding dengan RM876 juta pada tahun

sebelumnya. Jika pembayaran bagi pengambilalihan KCHB

sebanyak RM217 juta tidak diambil kira, hutang bersih bagi

Kumpulan dapat dikurangkan sebanyak RM152 juta berbanding

penghujung tahun 2001.

Lembaga telah mengumumkan dividen interim (dikecualikan

cukai) 1.5 sen untuk setiap saham biasa pada tahun kewangan

berakhir 31 Disember 2002. Jumlah dividen yang akan dibayar

adalah RM43.4 juta, iaitu peningkatan sebanyak 4.1% berbanding

tahun lepas. Para pengarah anda tidak mencadangkan sebarang

dividen akhir untuk tahun kewangan berakhir 31 Disember 2002.

TADBIR URUS KORPORAT

Lembaga Pengarah terus menyokong dan menyumbang penuh

kepada Kod Tadbir Urus Korporat Malaysia. Kami komited untuk

memastikan tadbir urus korporat yang baik diamalkan dalam

Kumpulan. Bagi mencerminkan komitmen ini, saya dengan

sukacitanya melaporkan bahawa Syarikat telah menerima

Anugerah Merit Korporat BSKL 2002 pada Mac 2003 setelah

memenangi Anugerah Sektor Korporat BSKL 2001 untuk Sektor

Barangan Perindustrian pada Mac 2002.

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few years, we have been preparing ourselves for the start of the AFTA through a combination of strategicinvestments and cost and quality related measures tocounter any potential competitive threat. With thetechnical difficulties at the plants we had in the past twoyears now behind us, we are well positioned to competemore effectively in an industry that is still suffering fromexcess capacity.

Despite the uncertainty in the global economy, we arehopeful that the Malaysian economy in 2003 will continueto improve and that the Singapore economy will recoverfrom its low base in 2002. With the labour shortage facedby the construction industry substantially resolved, thelarge number of infrastructure and public sector projectsunder construction and more pump priming expected in2003 to stimulate the local economy, we expect a moreactive construction sector in 2003 with improved demandfor cement and other building materials. Barringunforeseen circumstances, the Group is optimistic that itwill be able to improve on its 2002 financial performance.

ACKNOWLEDGEMENT AND APPRECIATION

I will be retiring after 38 years of directorship with theGroup, the last 24 years as Chairman of the Board and I willnot seek re-appointment at the coming Annual GeneralMeeting. The last 38 years have been thoroughlychallenging and satisfying at the same time as I witnessedthe growth of the Group from a relatively small cementplant to its current size, with facilities spanning the wholePeninsular Malaysia and contributing to the nationsdevelopment along the way.

Over the last 38 years, I have known and worked with manydirectors, managers and employees of the Group. I wouldlike to thank them all for their contributions to makingwhat Malayan Cement is today and it has been a delight

TINJAUAN

Perjanjian Perdagangan Bebas Asean (AFTA) yang bermula pada

awal 2003 mungkin membawa kesan kepada suasana saingan

industri simen di Malaysia. Sejak beberapa tahun yang lepas, kami

telah bersiap sedia untuk permulaan AFTA melalui gabungan

pelaburan strategik dan langkah-langkah berkaitan kos dan kualiti

untuk menghadapi sebarang ancaman persaingan yang mungkin

wujud. Kesukaran teknikal yang kami hadapi di kilang-kilang

selama dua tahun yang lepas telah diatasi. Dengan itu, kami berada

di kedudukan yang mantap untuk bersaing dengan lebih berkesan

di dalam industri yang masih mengalami kapasiti berlebihan.

Walaupun ekonomi global tidak menentu, kami berharap ekonomi

Malaysia pada 2003 akan terus meningkat dan ekonomi Singapura

pula akan pulih dari kegawatannya pada 2002. Dengan

penyelesaian sebahagian besar kekurangan tenaga kerja di dalam

industri pembinaan, sejumlah besar projek-projek infrastruktur

dan sektor awam yang masih dijalankan dan lebih bantuan

kewangan dari kerajaan yang dijangka pada tahun 2003 untuk

merangsang ekonomi tempatan, kami menjangka sektor

pembinaan akan lebih giat lagi pada tahun 2003 dengan

permintaan yang meningkat untuk simen dan lain-lain bahan

binaan. Sekiranya tiada keadaan yang tidak dijangka berlaku,

Kumpulan optimistik bahawa kami akan dapat meningkatkan

prestasi kewangan tahun ini berbanding 2002.

PENGIKTIRAFAN DAN PENGHARGAAN

Saya akan bersara selepas 38 tahun sebagai pengarah Kumpulan,

24 tahun terakhir sebagai Pengerusi Lembaga Pengarah dan saya

tidak akan meminta pelantikan semula dalam Mesyuarat Agung

Tahunan yang akan datang. 38 tahun yang berlalu ini amat

mencabar dan pada masa yang sama amat memuaskan, di mana

saya telah menyaksikan perkembangan Kumpulan dari sebuah

kilang simen yang agak kecil kepada saiznya sekarang, dengan

kemudahan yang menjangkau seluruh Semenanjung Malaysia di

samping menyumbang kepada kemajuan negara.

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for me to have known and worked with them over theyears. I would also like to take this opportunity to thank theholding company of Malayan Cement, Blue CircleIndustries PLC for many years and now Lafarge, for theirconfidence and trust in me and for the support given to me all these years. I am pleased to report that Y.A.M. TunkuTan Sri Imran ibni Tuanku Jaafar, who has been a directorof the Company since 1979, will succeed me as Chairmanof the Board upon my retirement. I am confident that youwill give Y.A.M. Tunku Tan Sri Imran the same level ofsupport in the years ahead as the Group strives to improveits performance.

In closing, I would like to thank all employees of the Groupfor their commitment, dedication and contributions inwhat has been a very challenging year. I would also like tothank my fellow directors for their invaluable support andadvice and also to our shareholders, business associatesand customers for their valued support and confidence inthe Group.

Y.A.M. TUNKU TAN SRI ABDULLAH IBNI ALMARHUM TUANKU ABDUL RAHMANDKYR, PSM, PPT

Chairman

April 2003

Dalam 38 tahun yang akhir ini, saya telah mengenali dan bekerja

dengan ramai pengarah, pengurus dan kakitangan Kumpulan. Saya

ingin mengucapkan terima kasih kepada mereka di atas

sumbangan mereka yang telah menjadikan Malayan Cement

seperti mana ianya hari ini dan saya amat berbesar hati dapat

mengenali dan bekerja dengan mereka selama ini. Saya juga ingin

mengambil kesempatan ini untuk merakamkan penghargaan

kepada syarikat induk Malayan Cement, Blue Circle Industries PLC

selama ini dan kini Lafarge, di atas keyakinan dan kepercayaan

mereka terhadap saya serta sokongan yang telah diberikan kepada

saya selama ini. Saya dengan sukacitanya memaklumkan bahawa

Y.A.M. Tunku Tan Sri Imran ibni Tuanku Jaafar, pengarah syarikat

sejak 1979, akan menggantikan saya sebagai Pengerusi Lembaga

Pengarah selepas persaraan saya. Saya yakin anda akan

memberikan tahap sokongan yang sama kepada Y.A.M. Tunku Tan

Sri Imran dalam tahun-tahun yang akan datang apabila Kumpulan

terus berusaha meningkatkan prestasinya.

Sebagai penutup, saya ingin mengucapkan terima kasih kepada

semua kakitangan Kumpulan di atas komitmen, dedikasi dan

sumbangan mereka dalam tahun yang penuh cabaran ini. Saya juga

ingin merakamkan penghargaan saya kepada para pengarah di atas

sokongan dan nasihat mereka yang amat berharga serta kepada

pemegang saham, rakan niaga dan pelanggan di atas sokongan

dan keyakinan mereka terhadap Kumpulan.

Y.A.M. TUNKU TAN SRI ABDULLAH IBNI ALMARHUM TUANKU ABDUL RAHMAN DKYR, PSM, PPT

Pengerusi

April 2003

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C h i e f Exe c u t i ve s Rev i e w Tinjauan Ketua Eksekuti f

...Despite the difficult market conditions in bothMalaysia and Singapore, we were able to post a pre-tax profit of RM101.5 million, a 36% improvementover 2001 pre-tax profit of RM74.6 million...

...Walaupun keadaan pasaran di Malaysia danSingapura kurang memuaskan, kami dapat mencatatkankeuntungan sebelum cukai sebanyak RM101.5 juta,peningkatan 36% dari keuntungan sebelum cukaisebanyak RM74.6 juta pada tahun 2001...

Quah Thain Khan

As I complete my first full year as the President and ChiefExecutive Officer, I am pleased to present my review of theoperations for the financial year ended 31 December 2002.

Despite the difficult market conditions in both Malaysiaand Singapore, we were able to post a pre-tax profit ofRM101.5 million, a 36% improvement over 2001 pre-taxprofit of RM74.6 million. This was achieved by maintainingthe same level of operating profit as 2001 (mainly throughan improvement in plant performance) while reducing ourfinancing cost as a result of the refinancing exercisesundertaken during the year.

CEMENT OPERATIONS

Malaysia

In Malaysia, we started the year well with relatively stronggrowth in cement consumption in the first half-year.Earnings in the first half-year were however constrained bythe weaker plant performance with the resulting highercosts due to the need to carry out rectification to the clinkercoolers in Rawang and Kanthan Works which had notperformed to specification since its installations in early2001. Following the successful rectification of the coolersby June 2002, the performance of the plants showed asteady improvement with clinker production for the yearincreasing by 14% as well as a reduction in both fixed andvariable production costs compared to 2001. With theimproved plant performance, the Company wasanticipating an improvement in operating margins andearnings in the second half-year. Unfortunately, thedomestic cement market took a turn for the worsefollowing the repatriation of illegal foreign workers in July2002 which resulted in a labour shortage in the

Dengan penyempurnaan tahun pertama saya sebagai Presiden dan

Ketua Pegawai Eksekutif, saya dengan sukacitanya

membentangkan tinjauan saya mengenai operasi bagi tahun

kewangan berakhir 31 Disember 2002.

Walaupun keadaan pasaran di Malaysia dan Singapura kurang

memuaskan, kami dapat mencatatkan keuntungan sebelum cukai

sebanyak RM101.5 juta, peningkatan 36% dari keuntungan sebelum

cukai sebanyak RM74.6 juta pada tahun 2001. Ini dapat dicapai

dengan mengekalkan tahap keuntungan operasi tahun 2001

(kebanyakannya melalui peningkatan prestasi kilang) di samping

mengurangkan kos pembiayaan hasil daripada usaha-usaha

pembiayaan semula yang dilaksanakan dalam tahun tersebut.

OPERASI SIMEN

Malaysia

Di Malaysia, kami telah memulakan tahun dengan pertumbuhan

yang agak kukuh di dalam penggunaan simen pada separuh tahun

pertama. Walau bagaimanapun, perolehan pada separuh tahun

pertama dihadkan oleh prestasi kilang yang lebih lemah, di mana

terdapatnya kos yang lebih tinggi disebabkan oleh keperluan untuk

menjalankan kerja-kerja membaik pulih terhadap penyejuk klinker

di Kilang Rawang dan Kanthan yang tidak menunjukkan prestasi

yang ditentukan semenjak pemasangannya pada awal 2001.

Berikutan kejayaan di dalam kerja-kerja membaik pulih penyejuk-

penyejuk pada Jun 2002, prestasi kilang-kilang telah menunjukkan

peningkatan yang mantap di mana pengeluaran klinker bagi tahun

tinjauan naik sebanyak 14%. Di samping itu, terdapat juga

pengurangan dalam kedua-dua kos pengeluaran tetap dan

berubah berbanding tahun 2001. Dengan peningkatan prestasi

kilang, Syarikat telah menjangka peningkatan dalam margin

operasi dan perolehan pada separuh tahun kedua. Malangnya,

pasaran simen tempatan telah mengalami kesukaran berikutan

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construction industry, a sector which relied heavily onforeign workers. The 15% decline in cement demand in thelast five months of 2002 compared to the first half-yearaffected market stability and resulted in keen competitionamong the cement producers. To counter the negativeimpact of the lower domestic sales, we stepped up ourefforts in the export market, pushing exports higher by 22%in 2002 compared to 2001. However, the difficult marketenvironment in the second half-year resulted in lowerdomestic cement sales and lower selling prices and,although mitigated by the internal improvements achievedin 2002, operating profit of the cement operations inMalaysia was still 7% lower compared to 2001.

Singapore

In Singapore, the economic slow down and residentialproperty overhang resulted in a 4% decline in cementconsumption in 2002 compared to 2001. The Groupscement sales in Singapore however recorded an increaseover 2001 due to higher market share, contributed in partby some construction projects secured during the year.Competition remained very keen in Singapore but sellingprices showed some improvement towards the end of2002. With higher export of oil well cement and animprovement in the export margin, the cement operationsin Singapore managed to record an improvement in itsoperating profit.

TRADING OPERATIONS

As an integral part of the cement operations, the Groupwas also involved in the trading of cementitious productsand other building materials in both Malaysia (underCMCM Perniagaan Sdn Bhd) and Singapore (under LafargeCement Singapore Pte Ltd). In the year under review, thetrading operations in Malaysia continued to showimprovement with higher revenue and contributioncompared to previous year due to the successful efforts toenlarge its customer base as well as its product range. Thetrading operation in Singapore, however, suffered a declinein business volume as well as selling prices due to thelower construction activities especially in the housing

penghantaran pulang pekerja-pekerja asing haram pada Julai 2002

yang mengakibatkan kekurangan tenaga kerja dalam sektor

pembinaan, sebuah sektor yang banyak bergantung kepada

pekerja-pekerja asing. Kemerosotan sebanyak 15% di dalam

permintaan simen pada lima bulan terakhir 2002 berbanding

separuh tahun pertama membawa kesan kepada stabiliti pasaran

dan mengakibatkan persaingan yang sengit di antara

pengeluar-pengeluar simen. Untuk mengimbangi kesan negatif

jualan tempatan yang lebih rendah, kami telah meningkatkan

usaha-usaha kami di dalam pasaran eksport, dengan memesatkan

eksport yang lebih tinggi iaitu sebanyak 22% pada 2002 berbanding

2001. Walau bagaimanapun, kesukaran suasana pasaran pada

separuh tahun kedua menyebabkan jualan simen tempatan yang

lebih rendah dan harga jualan yang lebih rendah dan, walaupun

dikurangkan dengan peningkatan dalaman yang dicapai pada

2002, keuntungan operasi dari operasi simen di Malaysia masih

7% lebih rendah berbanding tahun 2001.

Singapura

Di Singapura, kelembapan ekonomi dan hartanah perumahan

menyebabkan kemerosotan sebanyak 4% dalam penggunaan

simen pada tahun 2002 berbanding 2001. Walau bagaimanapun,

jualan simen Kumpulan di Singapura mencatatkan peningkatan

berbanding tahun 2001 disebabkan oleh bahagian pasaran yang

lebih tinggi, sebahagiannya hasil daripada beberapa projek

pembinaan yang diperolehi dalam tahun tinjauan. Persaingan tetap

sengit di Singapura tetapi harga jualan telah menunjukkan sedikit

sebanyak peningkatan pada akhir 2002. Dengan eksport yang lebih

tinggi bagi simen telaga minyak dan kenaikan margin eksport,

operasi simen di Singapura telah berjaya mencatatkan peningkatan

dalam keuntungan operasinya.

OPERASI PERDAGANGAN

Sebagai sebahagian penting operasi simen, Kumpulan juga terlibat

di dalam perdagangan produk-produk berdasarkan simen dan

lain-lain bahan binaan di Malaysia (di bawah CMCM Perniagaan

Sdn Bhd) dan Singapura (di bawah Lafarge Cement Singapore Pte

Ltd). Di dalam tahun tinjauan, operasi perdagangan di Malaysia

terus menunjukkan peningkatan dengan pendapatan dan

sumbangan yang lebih tinggi berbanding tahun lepas, hasil dari

kejayaan usaha-usaha untuk meluaskan asas pelanggan serta

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sector. On the whole, the performance of the Groupstrading business was satisfactory with a positivecontribution to operating profit as well as providing strongstrategic support to the Groups cement operations.

READY-MIXED CONCRETE OPERATIONS

Malaysia

Our ready-mixed concrete operations in Malaysia, throughSupermix Concrete Sdn Bhd (SPMM) recorded a 24%increase in sales volume due to higher market share as wellas a marginal increase in demand for concrete in 2002. Theincrease in market share is due to the full year impact of anacquisition in March 2001 as well as organic growththrough its ability to win several large contracts andopening of new locations. Average selling prices in 2002were maintained at 2001 level, but SPMM benefited froman improvement in its overall cost base with the help of aperformance improvement programme available fromLafarge. The improvement in volume and contributionmargin enabled SPMM to record an increase in itsoperating profit in 2002.

Singapore

In Singapore, demand for ready-mixed concrete in 2002was marginally higher compared to 2001 and SupermixConcrete Pte Ltd (SPMS) was able to maintain its marketshare in a very difficult market and achieved a marginalincrease in concrete sales. Selling prices suffered furtherdecline in 2002 but lower costs, also with the help of theLafarge performance improvement programme, enabledthe contribution margin to be marginally better than 2001.With higher volume and better margin, SPMS was able torecord a lower loss in 2002 compared to 2001.

Vietnam

Our ready-mixed operations in Vietnam, which turnedaround to record a profit in 2001 after two years of losses,continued to maintain the same profit level in 2002 asdemand for concrete in Ho Chi Minh City, where weoperate, remained satisfactory.

rangkaian produk. Walau bagaimanapun, operasi perdagangan di

Singapura telah mengalami kemerosotan dalam jumlah perniagaan

serta harga jualan akibat pengurangan dalam aktiviti-aktiviti

pembinaan terutamanya dalam sektor perumahan. Pada

keseluruhannya, prestasi perniagaan perdagangan Kumpulan

memuaskan dengan sumbangan yang positif terhadap keuntungan

operasi di samping memberi sokongan kukuh yang strategik

kepada operasi simen Kumpulan.

OPERASI KONKRIT SIAP-BANCUH

Malaysia

Operasi konkrit siap-bancuh kami di Malaysia, melalui Supermix

Concrete Sdn Bhd (SPMM) mencatatkan kenaikan sebanyak

24% dari segi jumlah jualan akibat daripada bahagian pasaran yang

lebih tinggi dan juga kenaikan marginal di dalam permintaan

konkrit pada 2002. Kenaikan di dalam bahagian pasaran ini

disebabkan oleh kesan sepanjang tahun pengambilalihan pada

Mac 2001 serta pertumbuhan organik melalui kemampuan

memperolehi beberapa kontrak yang besar dan pembukaan

lokasi-lokasi baru. Harga jualan purata pada 2002 telah dikekalkan

pada tahap 2001, tetapi SPMM telah mendapat faedah

dari peningkatannya dalam asas kos pada keseluruhannya dengan

bantuan program peningkatan prestasi dari Lafarge. Peningkatan

di dalam jumlah dan penyumbangan margin telah membolehkan

SPMM mencatatkan peningkatan keuntungan operasinya

pada 2002.

Singapura

Di Singapura, permintaan terhadap konkrit siap-bancuh pada 2002

adalah tinggi sedikit jika dibandingkan dengan 2001 dan Supermix

Concrete Pte Ltd (SPMS) telah dapat mengekalkan bahagian

pasarannya di dalam pasaran yang agak sukar dan telah mencapai

kenaikan marginal dalam jualan konkrit. Harga jualan terus

mengalami kejatuhan pada 2002 tetapi dengan kos rendah serta

bantuan dari program peningkatan prestasi Lafarge telah

membolehkan penyumbangan kepada margin menjadi lebih baik

secara marginal dari 2001. Dengan jumlah yang lebih tinggi dan

margin yang lebih baik, SPMS telah mencatatkan kerugian yang

lebih rendah pada 2002 berbanding 2001.

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OTHER ACTIVITIES

In addition to improving the performance of ourproduction facilities and sales activities, our focus in 2002was also to dispose of non-core and idle assets of theGroup, improve the backroom support services andstreamline business processes. To that end, significantresources were allocated to the implementation of a newfully integrated Enterprise Resources Planning Systemcovering financial, sales order entry, procurement andinventory for the cement operations in Malaysia. Thesuccessful roll out of the new ERP system will enable us toimprove business efficiency and customer service. As partof an on-going programme to reduce our asset base, wewere also successful in the disposal of some propertiesduring the year, which brought in sales proceeds close toRM10 million.

HEALTH, SAFETY & ENVIRONMENT

As I mentioned in last years annual report, we see theattainment of a high level of health and safety as well as environmental protection as an integral andfundamental part of excellence in the workplace.Following the example of all three of our integratedcement plants which have been certified to OHSAS(Occupational Health and Safety Management System)18001, our cement grinding plant in Pasir Gudang(Southern Cement Industries Sdn Bhd) obtained theOHSAS 18001 certification in November 2002. This meansall our production facilities are now OHSAS 18001certified. While this by itself is a significant achievement,we are more proud of our actual performance on safety.

Having reported a 45% reduction in number of Lost TimeAccidents (LTAs) in 2001, I am pleased to report that weachieved further improvement in safety, recording a 40%reduction from 2001 to 20 LTAs in 2002. The consecutivereduction in LTAs in the last two years is an improvementtrend we are proud of. However, I regret to report that thegood safety record was marred by a fatality at one of ourplants in November 2002 involving an employee of acontractor. This fatality was a clear reminder to us thatsafety cannot be taken for granted and will drive us tofocus even more on our safety performance and to achieveour target, which is zero LTA i.e. no one getting injured

Vietnam

Operasi siap-bancuh kami di Vietnam yang telah mencatatkan

keuntungan pada 2001 setelah mengalami kerugian selama dua

tahun, terus mengekalkan tahap keuntungan yang sama pada 2002

setelah permintaan bagi konkrit di Ho Chi Minh City, di mana kami

beroperasi, kekal memuaskan.

AKTIVITI-AKTIVITI LAIN

Sebagai tambahan kepada usaha untuk memperbaiki prestasi

kemudahan pengeluaran dan aktiviti-aktiviti jualan kami, tumpuan

kami pada 2002 adalah juga untuk melupuskan aset-aset bukan

teras dan terbiar Kumpulan, memperbaiki perkhidmatan sokongan

dan memudahkan proses-proses perniagaan. Untuk tujuan

tersebut, banyak sumber telah diperuntukkan untuk perlaksanaan

integrasi penuh yang baru iaitu Sistem Perancangan Sumber

Perusahaan (Enterprise Resources Planning System atau ERP) yang

meliputi kewangan, pencatatan pesanan jualan, pemerolehan dan

inventori bagi operasi-operasi simen di Malaysia. Kejayaan

pelancaran sistem ERP yang baru ini akan membolehkan kami

meningkatkan kecekapan perniagaan dan perkhidmatan

pelanggan. Sebagai sebahagian dari program yang berterusan

untuk mengurangkan asas aset kami, kami juga telah berjaya

melupuskan beberapa hartanah sepanjang tahun tersebut yang

telah membawa hasil jualan hampir RM10 juta.

KESIHATAN, KESELAMATAN & PERSEKITARAN

Seperti yang telah saya jelaskan dalam laporan tahunan tahun

lepas, kami melihat pencapaian tahap kesihatan dan keselamatan

yang tinggi serta perlindungan alam sekitar sebagai sebahagian

yang penting bagi kecemerlangan di tempat kerja. Mengikuti

contoh ketiga-tiga kilang simen integrasi kami yang telah diiktiraf

dalam OHSAS (Sistem Pengurusan Kesihatan dan Keselamatan

Pekerjaan) 18001, kilang pengisar simen kami di Pasir Gudang

(Southern Cement Industries Sdn Bhd) telah memperolehi

pensijilan OHSAS 18001 pada November 2002. Ini bermakna

semua kemudahan pengeluaran kami kini telah mendapat

pengiktirafan OHSAS 18001. Walaupun pencapaian ini amat

penting, kami lebih bangga dengan pencapaian sebenar kami dari

segi keselamatan.

Setelah mencatatkan penurunan sebanyak 45% dalam Jumlah

Kehilangan Masa akibat Kemalangan (LTA) pada 2001, saya

dengan sukacitanya melaporkan bahawa kami telah mencapai

peningkatan dalam keselamatan dengan mencatatkan penurunan

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while working anywhere in the Group.

On environment, we are guided by our EnvironmentalPolicy and we will stay focused on establishing anenvironmental management system with strict measuresat each of our locations and recovering valuable resourcesin our kilns. While all of our cement plants and majorready-mixed concrete batching plants are already certifiedto ISO 14001, we are committed to the certification of all remaining facilities. I welcome you to read ourEnvironmental Policy which is posted in our website atwww.malayancement.com.my.

COMMUNITY RELATIONS

As part of our commitment to the communities in whichwe operate, we have always aimed to integrate ourselvesinto each local community where we operate andcontribute to its development. As such, we have continuedwith our Schools Project in Langkawi, Kanthan andRawang. In 2002, we gave out bursaries to more than 160deserving and needy students and excellence awards to 48students who excelled in their SPM and UPSRexaminations at the 16 schools that we sponsored. Wehave also continued to involve the local community andauthorities by holding open days at all the plants as well asquarterly dialogues. Besides these and other regularprogrammes, 2002 also saw a series of gotong-royongactivities, sports carnivals and a special charity drive inLangkawi as we celebrated the plants 20th anniversary,and a Charity Fun Day in our Rawang Sports Clubhousewhere we played host to some 120 residents from sevenwelfare centres in the vicinity.

OUR PRIORITIES IN 2003

The outlook for 2003, as mentioned by our Chairman, willbe challenging due to the global economic uncertainty stillprevailing. Despite that, we are still optimistic that theMalaysian and Singaporean economies will improve toallow us to perform better than 2002.

As I mentioned in last years review, 2003 also marks theyear in which the Asean Free Trade Agreement (AFTA)comes into force for us. The resultant opening up of ourmarket to the rest of ASEAN on 1 January 2003 had been

sebanyak 40% dari 2001. Penurunan LTA yang berturut-turut

dalam dua tahun yang lepas ini adalah hala peningkatan yang kami

amat banggakan. Walau bagaimanapun, saya dengan dukacitanya

melaporkan bahawa rekod keselamatan kami yang baik telah

tercemar dengan satu kes kematian di salah satu kilang kami pada

November 2002 yang melibatkan seorang pekerja kontraktor kami.

Kematian ini merupakan peringatan kepada kami bahawa

keselamatan tidak boleh dipandang ringan dan akan mendorong

kami untuk lebih menumpukan perhatian terhadap prestasi

keselamatan kami di samping mencapai sasaran LTA sifar, iaitu

untuk memastikan tiada kecederaan berlaku semasa bekerja di

mana-mana sahaja dalam Kumpulan ini.

Dari segi alam sekitar, kami dipandukan oleh Polisi Alam Sekitar

kami dan tumpuan kami akan kekal terhadap menubuhkan sistem

pengurusan alam sekitar dengan langkah-langkah ketat di setiap

lokasi kami serta memulihkan sumber bernilai di relau kami.

Walaupun kesemua kilang simen dan loji konkrit siap-bancuh

utama kami telah mendapat pensijilan ISO 14001, kami komited

terhadap pensijilan kesemua kemudahan yang lain. Saya mengalu-

alukan anda membaca Polisi Alam Sekitar kami di laman web kami

di www.malayancement.com.my.

HUBUNGAN KOMUNITI

Sebagai sebahagian daripada komitmen kami terhadap komuniti di

mana kami beroperasi, kami sentiasa berusaha berintegrasi dengan

setiap komuniti tempatan di mana kami beroperasi dan

menyumbang ke arah pembangunan mereka. Justeru itu, kami

telah meneruskan Projek Sekolahkami di Langkawi, Kanthan dan

Rawang. Pada tahun 2002, kami telah memberikan dermasiswa

kepada lebih daripada 160 pelajar yang layak dan memerlukan

bantuan dan anugerah kecemerlangan akademik kepada 48 pelajar

yang mencapai keputusan cemerlang dalam peperiksaan SPM dan

UPSR di 16 sekolah yang kami tajai. Kami juga telah terus

melibatkan komuniti tempatan dan pihak berkuasa tempatan

dengan menganjurkan hari-hari terbuka di semua kilang serta

dialog-dialog suku tahunan. Selain daripada ini dan program-

program biasa yang lain, tahun 2002 telah menyaksikan satu siri

aktiviti gotong-royong, karnival sukan dan program menderma

yang istimewa di Langkawi apabila kami menyambut ulang tahun

ke-20 kilang tersebut, dan satu Hari Amal di Rumah Kelab Sukan

Rawang kami di mana kami menjadi tuan rumah kepada 120 orang

penghuni dari tujuh pusat kebajikan di persekitaran kilang kami.

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anticipated. In the last few years, we have been gearingourselves for AFTA through a combination of strategicinvestments as well as cost and quality related measuresto ensure that we are competitive vis--vis other ASEANmanufacturers. These measures, together with the Lafargenetwork, will enable our Company to compete successfully.Nevertheless, we will be continuing to take appropriatemeasures as and when necessary. We will also naturallycontinue to improve our cost and quality as a way toimprove our overall competitiveness. To this end, one of ourkey priorities for 2003 will be in the area of plantperformance where we have plans to make furtherimprovements to kiln reliability and continue our costreduction programmes. Another key priority will be toexpand our cement market by accelerating productdevelopment and promoting the usage of cement in newareas. Finally, our people have always been one of our keypriorities and we remain committed to ensuring theirsafety and personal development. We will continue to takemeasures to provide a safe, challenging and stimulatingworking environment where our people can flourish intheir respective areas of expertise and contribute to theGroups progress.

ACKNOWLEDGEMENT

I would like to thank all my teammates in Malayan Cementfor their fine efforts in ensuring the best possibleperformance by the Company despite a very challengingyear. On behalf of them, I would like to express our sinceregratitude to the Board for their understanding and supportthroughout the year. Finally, I would also like to thank our customers and suppliers for their continuing strong support, and our local communities for their close cooperation.

As I close, it is with a tinge of sadness that I take thisopportunity to thank our Chairman, Y.A.M. Tunku Tan SriAbdullah, for his many years of service and dedication tothe Group. His commitment to Malayan Cement has beenevident all these years and we will miss his strongguidance and support as we wish him all the best for hiswell-earned retirement.

QUAH THAIN KHAN

President & Chief Executive Officer

April 2003

KEUTAMAAN-KEUTAMAAN KAMI PADA 2003

Tinjauan bagi 2003, seperti yang dimaklumkan oleh Pengerusi kami,

adalah amat mencabar disebabkan oleh ketidakpastian dalam

ekonomi global yang masih wujud. Walau bagaimanapun, kami

yakin bahawa ekonomi Malaysia dan Singapura akan meningkat dan

membolehkan kami mencapai prestasi yang lebih baik dari 2002.

Seperti yang saya maklumkan dalam tinjauan tahun lepas, 2003

menandakan tahun di mana Perjanjian Perdagangan Bebas Asean

(AFTA) berkuatkuasa. Hasil daripada pembukaan pasaran kami

kepada negara-negara ASEAN yang lain pada 1 Januari 2003 telah

dijangkakan. Dalam beberapa tahun kebelakangan ini, kami telah

bersiap-sedia untuk AFTA melalui gabungan pelaburan-pelaburan

strategik serta langkah-langkah berkaitan dengan kos dan kualiti untuk

memastikan kami dapat bersaing dengan pengeluar-pengeluar

ASEAN yang lain. Langkah-langkah ini, bersama-sama dengan

rangkaian Lafarge, membolehkan Syarikat kami bersaing dengan

berjaya. Bagaimanapun, kami akan terus mengambil langkah-langkah

yang wajar bila diperlukan. Kami juga akan terus memperbaiki kos dan

kualiti kami sebagai cara untuk meningkatkan daya saingan

keseluruhan kami. Sehubungan dengan itu, salah satu keutamaan

kami bagi 2003 adalah dari segi prestasi kilang di mana kami

mempunyai rancangan untuk terus memperbaiki reliabiliti relau dan

meneruskan program pengurangan kos. Satu lagi keutamaan adalah

untuk meluaskan pasaran simen kami dengan memesatkan

pembangunan produk dan mempromosikan penggunaan simen di

bidang-bidang yang baru. Akhirnya, pekerja-pekerja kami sentiasa

merupakan salah satu keutamaan kami dan kami kekal komited untuk

memastikan perkembangan peribadi dan keselamatan mereka. Kami

akan terus mengambil langkah-langkah untuk menyediakan tempat

kerja yang selamat, mencabar dan memberangsangkan di mana

pekerja kami dapat mengembangkan kemahiran mereka dalam bidang

masing-masing dan menyumbang kepada perkembangan Kumpulan.

PENGIKTIRAFAN

Saya ingin mengucapkan terima kasih kepada semua temankerja

saya di Malayan Cement atas usaha-usaha mereka untuk

memastikan prestasi yang sebaik mungkin dicapai oleh syarikat

walaupun menghadapi tahun yang amat mencabar. Bagi pihak

mereka, saya ingin menyampaikan penghargaan ikhlas kami kepada

Lembaga Pengarah atas pemahaman dan sokongan mereka

sepanjang tahun ini. Akhir kata, saya ingin mengucapkan terima

kasih kepada para pelanggan dan pembekal kami atas sokongan

kuat mereka, dan kepada komuniti tempatan atas kerjasama mereka.

Sebagai penutupnya, dengan rasa berat hati, saya mengambil

peluang ini untuk mengucapkan terima kasih kepada Pengerusi

kami, Y.A.M. Tunku Tan Sri Abdullah, atas perkhidmatan dan

dedikasi beliau dalam Kumpulan selama ini. Komitmen beliau

kepada Malayan Cement adalah jelas selama ini dan kami akan

merasa kehilangan bimbingan serta sokongan kuat beliau. Kami

mengucapkan selamat bersara kepada beliau.

QUAH THAIN KHAN

Presiden & Ketua Pegawai Eksekutif

April 2003

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Co r p o rat e G ove r n a n c e S t at e m e nt

The Malaysian Code On Corporate Governance (Code)

The Board of Directors is fully committed to ensuring that the Group continues to practise the principles and best practicesin corporate governance as set out in the Code as a fundamental part of discharging its continual responsibilities to theshareholders.

The Board is pleased to provide the following statement, which outlines the main corporate governance practices thatwere in place throughout the financial year, unless otherwise stated.

A. BOARD OF DIRECTORS

Board Composition And Balance

The Board comprises eleven (11) members of whom two (2) are Directors holding Executive Office. As at 31 December2002, out of the nine (9) Non-Executive Directors, six (6) are considered by the Board to be independent. TheChairman of the Board is one of the Independent Non-Executive Directors. The number of Independent Non-Executive Directors on the Board complies with paragraph 15.02 of the Listing Requirements of the Kuala LumpurStock Exchange (KLSE Listing Requirements) which requires at least two (2) Directors or one-third of themembership of the Board to be independent.

The Directors with their different backgrounds and specialisations, collectively bring with them a wide range ofexperience and expertise to ensure that the Group continues to be a leader in the industry. A brief profile of eachDirector is presented on pages 2 to 4 of this annual report.

To ensure a balance of power and authority, there is a clear division of responsibility between the Chairman and thePresident & Chief Executive Officer. The Board is led by Y.A.M. Tunku Tan Sri Abdullah ibni Almarhum Tuanku AbdulRahman as the independent non-executive Chairman and the executive management of the Company is led by QuahThain Khan, President & Chief Executive Officer.

Meetings

The Board ordinarily meets at least four (4) times a year at quarterly intervals with additional meetings convenedwhen urgent important decisions need to be taken between the scheduled meetings. During the year ended 31 December 2002, the Board met on four (4) occasions and the attendance record of each Director is as follows:

Name Attendance

Y.A.M. Tunku Tan Sri Abdullah ibni Almarhum Tuanku Abdul Rahman 4/4

Guillaume Roux (Appointed on 1 March 2002) 3/3

Quah Thain Khan (Appointed on 1 March 2002) 3/3

Yeoh Khoon Cheng 4/4

Chan Hua Eng 3/4

Y.A.M. Tunku Tan Sri Imran ibni Tuanku Ja'afar 4/4

Dato Dr Ikmal Hisham Albakri 4/4

James R H Loudon 3/4

Charles Tan Poh Tei 3/4

Saw Ewe Seng 4/4

Michel Rose (Appointed on 18 February 2002) 2/4

Jean-Jacques Gauthier (Alternate to Mr Michel Rose, appointed on 18 February 2002) 2/4

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Board Committees

The Board of Directors delegates certain responsibilities to the Board Committees, namely an Audit Committee and aRemuneration and Nomination Committee in order to enhance business and operational efficiency as well as efficacy.

All committees have written terms of reference and the Board receives reports of their proceedings and deliberations.

Senior Independent Director

Y.A.M. Tunku Tan Sri Abdullah ibni Almarhum Tuanku Abdul Rahman was appointed as the Senior IndependentDirector on 29 November 2000. In his capacity, he provides a focus for the Non-Executive Directors to express anyconcerns that they may have.

Supply Of Information

Prior to the meetings of the Board and the Board Committees, the papers which include the agenda and reportsrelevant to the issues of the meetings are circulated to all the Directors. These papers are issued in sufficient time toenable the Directors to obtain further explanation, where necessary, in order to be properly briefed before themeeting. The papers include, among others, minutes of preceding meetings of the Board and Board Committees,reports on group financial performance, industry trend, quarterly results announcements, review of the internalcontrols and risks and other relevant information.

All Directors have access to the advice and services of the company secretaries in carrying out their duties. The Boardof Directors, whether as a full board or in their individual capacity, may also take independent professional advice,where necessary and in appropriate circumstances, in furtherance of their duties, at the Groups expense.

Remuneration And Nomination Committee

The Remuneration and Nomination Committee during the financial year consisted of wholly non-executive Directors(majority of whom are independent), as follows:

p Y.A.M. Tunku Tan Sri Abdullah ibni Almarhum Tuanku Abdul Rahman (Chairman, Independent Non-Executive Director)

p Y.A.M. Tunku Tan Sri Imran ibni Tuanku Jaafar (Independent Non-Executive Director)

p Chan Hua Eng (Independent Non-Executive Director)

p Charles Tan Poh Tei (Independent Non-Executive Director)

p Saw Ewe Seng (Non-Executive Director) (became independent w.e.f. 1 December 2002)

The composition of the Remuneration and Nomination Committee was reviewed and with effect from 1 January2003, the total number of members of the Committee was reduced to four (4), comprising the following:

1. Y.A.M. Tunku Tan Sri Imran ibni Tuanku Jaafar (Independent Non-Executive Director) Chairman

2. Dato Dr Ikmal Hisham Albakri (Independent Non-Executive Director) Member

3. Saw Ewe Seng (Independent Non-Executive Director) Member

4. Guillaume Roux (Non-Executive Director) Member

The Committee is responsible for recommending to the Board, candidates for directorship on the Board, assessing theeffectiveness of the Board, its Committees and the contribution of each individual Director.

In addition, the Committee is also responsible for recommending to the Board the remuneration packages of theExecutive Directors. The determination of the remuneration packages of Directors is a matter for the Board as a wholeand individuals are required to abstain from discussion on their own remuneration. The Committee met twice duringthe financial year.

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Appointment Process

The Board through the Remuneration and Nomination Committees appraisal believes that the current compositionof the Board brings the required mix of skills and core competencies required for the Board to discharge its dutieseffectively. Furthermore, the Board continuously reviews its size and composition with particular consideration on itsimpact on the effective functioning of the Board.

The Board appoints its members through a formal transparent selection process. This process has been reviewed,approved and adopted by the Board. New appointees will be considered and evaluated by the Remuneration andNomination Committee. The Committee will then recommend the candidates to be approved and appointed by theBoard. The Company Secretary will ensure that all appointments are properly made, that all information necessary isobtained, as well as all legal and regulatory obligations are met.

Directors Training

The Board through the Nomination Committee ensures that it recruits to the Board only individuals of sufficientcalibre, knowledge and experience to fulfil the duties of a Director appropriately. There is no formal trainingprogramme for Directors. However, all Directors have attended and successfully completed the MandatoryAccreditation Programme conducted by the Research Institute of Investment Analysis Malaysia. The Directors areencouraged to continue to undergo other relevant training programmes to further enhance their skills andknowledge where relevant.

The Company does not have a formal training programme for its new Directors as it is the Companys policy toappoint to the Board individuals of sufficient calibre and experience to carry out the necessary duties of a Director.The Board is mindful of the code of best practice in this regard and will review the necessity for formal training fromtime to time.

Re-election

In accordance with the Companys Articles of Association, all Directors who are appointed by the Board are subject toelection by the shareholders at the Annual General Meeting subsequent to their appointment. The Articles ofAssociation of the Company also provided that all Directors (including the President & Chief Executive Officer) arerequired to submit themselves for re-election at least once every three years. These provide opportunity for theshareholders to renew their mandates. The election of each Director is voted on separately.

Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordancewith Section 129 (6) of the Companies Act 1965.

Directors Remuneration

Details of Directors remuneration are set out below and in Note 4 to the financial statements.

(a) Aggregate remuneration of Directors categorised into appropriate components:

Other Benefits-Fees Salaries Emoluments* In-Kind TotalRM RM RM RM RM

Executive Directors 814,729 222,284 99,646 1,136,659

Non-Executive Directors 216,712 32,200 248,912

* Other emoluments include bonus and the Companys contribution to Employees Provident Fund.

(b) The number of Directors of the Company whose total remuneration falls within the following bands:

Number Of DirectorsRange Of Remuneration Executive Non-Executive

Below RM50,000 7

RM50,001 to RM100,000 1* 1

RM500,001 to RM550,000 2**

* In respect of an executive director who resigned on 1 March 2002.

** Includes an executive director who was appointed on 1 March 2002.

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Executive Directors receive bonuses based on the achievement of specific goals related to the performance of the Group (including operational results and cash flow). Non-executive Directors do not receive any performancerelated remuneration.

B. SHAREHOLDERS

In line with good corporate governance, the Group adopts an open and transparent policy in respect of its relationshipwith its shareholders and investors. The Company communicates with its shareholders and investors through theannual report, Annual General Meeting, Company website (www.malayancement.com.my) and analyst meetings. Inaddition, the timely public announcements made by the Company through the Kuala Lumpur Stock Exchange andthe quarterly financial results released by the Company provides shareholders and investors with an overview of theGroups performance and operations.

While the Company endeavours to provide as much information as possible to its shareholders and stakeholders, it isalso mindful of the legal and regulatory framework governing the release of material and price-sensitive information.

During the financial year, the President & Chief Executive Officer and the Chief Financial Officer meet regularly withanalysts and institutional shareholders and investors.

C. ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board aims to provide and present a balanced and meaningful assessment of the Groups financial performanceand prospects at the end of the financial year, primarily through the annual financial statements, quarterly and halfyearly announcement of results to shareholders as well as the Chairmans statement and review of operations in theannual report. The Board is assisted by the Audit Committee, established since 1994 to oversee the Groups financialreporting process and the quality of its financial reporting.

Directors Responsibility Statement In Respect Of The Preparation Of The Audited Financial Statements

The Board is responsible for ensuring that the financial statements of the Group give a true and fair view of the stateof affairs of the Group and of the Company as at the end of the accounting period and of their profit or loss andcashflows for the period then ended. In preparing the financial statement, the Directors have ensured that applicableapproved accounting standards in Malaysia and the provisions of the Companies Act, 1965 have been applied.

In preparing the financial statements, the Directors have selected and applied consistently suitable accountingpolicies and made reasonable and prudent judgement and estimates.

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

State Of Internal Controls

The Statement on Internal Control furnished on pages 19 to 20 of the annual report provides an overview of the stateof internal controls within the Group.

Relationship With The Auditors

Key feature underlying the relationship of the Audit Committee with the external auditors are included in the AuditCommittees terms of reference as detailed on pages 21 to 22 of the annual report.

D. ADDITIONAL STATEMENT

Material Contracts Involving Substantial Shareholders

On 19 and 22 July 2002, the Company entered into various agreements with Standard Chartered Bank MalaysiaBerhad as Facility Agent and Arranger and a substantial shareholder of the Company, namely, the EmployeesProvident Fund Board, to raise financing via the Term Unsecured Loan Incorporating Preference Shares (TULIPS)facility for a total amount of RM500 million which comprised a RM499.5 million term loan facility and 500redeemable preference shares (RPS) of RM1.00 each in the Company issued at RM1,000 per RPS for a totalconsideration of RM500,000. The TULIPS facility allows the Company the option of paying dividends on preferenceshares in lieu of interest. The 500 redeemable preference shares were issued to Standard Chartered Bank MalaysiaBerhad on 26 July 2002 following the full draw down of the said facility on the same date.

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A. INTRODUCTION

The Malaysian Code of Corporate Governance requires listed companies to maintain a sound system of internalcontrol to safeguard shareholders investments and the Groups assets. Paragraph 15.27(b) of the ListingRequirements of Kuala Lumpur Stock Exchange requires the Board of Directors of public listed companies to includein its annual report a statement about the state of their internal controls.

B. BOARD RESPONSIBILITY

The Board of Directors recognises the importance of good corporate governance and is committed to maintaining asound system of internal control and risk management. This includes the establishment of an appropriate controlenvironment and risk management framework, and reviewing the adequacy and integrity of the said systems, tosafeguard shareholders investment and the Groups assets. The Board is pleased to provide the following statement,which outlines the nature and scope of internal control of the Group during the year.

Whilst acknowledging its responsibilities, the Board is aware that due to the limitations that are inherent in anysystems of internal control and risk management, such systems are designed to manage, rather than eliminate, therisk that may impede the achievement of the Group's business objectives. Accordingly, it can only provide reasonablebut not absolute assurance against material misstatement or losses, fraud or breaches or laws or regulations.

The Groups system of internal control has been in place for the entire year under review. The key features of theinternal control systems which operated throughout the period covered by the financial statements are describedunder the following headings:

Risk Management

The Group has an embedded process for the identification, evaluation and reporting of the major business riskswithin the Group. Policies and procedures have been laid down for the regular review and management of these risks.Regular reviews of the most significant areas of risk are undertaken to ensure that key control objectives remain inplace. Reports on such regular reviews are presented to the Board and the Audit Committee on a regular basis.

Internal Control Structure

The group has in place a sound internal control structure with sufficient assurance mechanism to safeguard theGroups assets. There is a clearly defined operating structure with lines of responsibilities and delegated authority.The control structure and environment are supported by the following activities:

Main Control Procedures

The Group has defined procedures and controls, including information systems controls, to ensure the reporting ofcomplete and accurate financial information. These procedures and controls include obtaining authority for majortransactions and ensuring compliance with laws and regulations that have significant financial implications.Procedures are also in place to ensure that assets are subject to proper physical controls and that the organisationremains structured to ensure appropriate segregation of duties.

Reporting

There is a comprehensive budgeting system with an annual budget approved by the Board each year. Managementaccounts containing actual and budget results and revised forecasts for the year are prepared and reported to theBoard. These management reports analyse and explain variances against plan and report on key indicators.

Audit Committee

The Audit Committee includes independent non-executive members of the Board and provides direction andoversight over the internal audit function to enhance its independence from management. The Audit committeemeets quarterly to review internal audit findings, discuss risk management issues and ensures that weaknesses incontrols highlighted are appropriately addressed by management.

Internal Audit

An annual risk based internal audit plan is reviewed and approved by the Audit Committee at the beginning of theyear. The objective of the said audit plan is to ensure, through regular internal audit reviews, that the Groups policiesand procedures are being complied with in order to provide assurance on the adequacy and effectiveness of theGroups system of internal controls. Follow up reviews on previous audit reports are carried out to ensure thatappropriate actions are taken to address internal control weaknesses highlighted.

S t at e m e nt O n I nt e r n a l Co nt ro l

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Monitoring

The monitoring of control procedures is achieved through management review by the responsible Executive Directorreporting to the Board. These are supplemented by comprehensive reviews undertaken by the internal audit functionon the controls in operation in each individual business. Regular reports are produced for senior management toassess the impact of control issues and recommend appropriate actions.

Control Environment

The group has in place a proper control environment which emphasises on quality and performance of the Groupsemployees through the development and implementation of human resource policies and programmes which aredesigned to enhance the effectiveness and efficiency of the individual and the organisation.

During the year, the Internal Audit Department has successfully launched a pilot project on Control Self-Assessment(CSA), a self-assurance mechanism, whereby process owners of the units will be trained to perform self-audits. CSAwill be introduced to the group's business units progressively. The CSA would provide a platform for risk assuranceand target audits could be carried out efficiently and effectively by the Internal Audit Department.

The system of internal control was satisfactory and has not resulted in material losses, contingencies or uncertaintiesthat would require disclosure in the Group's annual report.

Signed on behalf of the Board of Directors in accordance with resolution dated 28 February 2003.

CHAN HUA ENG

Chairman of Audit Committee

QUAH THAIN KHAN

President & Chief Executive Officer

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A. MEMBERS AND MEETINGS

A total of four (4) meetings were held during the year. As at 31 December 2002, the membership status andattendance record of each of the members were as follows:

Name Membership Status Attendance

Y.A.M. Tunku Tan Sri Abdullah Chairman, Independent Non-Executive 4/4ibni Almarhum Tuanku Abdul Rahman Director

Chan Hua Eng Independent Non-Executive Director 3/4

Y.A.M. Tunku Tan Sri Imran ibni Tuanku Jaafar Independent Non-Executive Director 4/4

Dato Dr Ikmal Hisham Albakri Independent Non-Executive Director 4/4

Charles Tan Poh Tei Independent Non-Executive Director 3/4(a member of the Malaysian Institute of Accountants)

Y.A.M. Tunku Tan Sri Abdullah relinquished his chairmanship of the Audit Committee with effect from 1 January2003, and the composition of the Audit Committee was revised to a total of four (4) members, including theChairman, as follows:

1. Chan Hua Eng Chairman, Independent Non-Executive Director

2. Y.A.M. Tunku Tan Sri Imran ibni Tuanku Jaafar Independent Non-Executive Director

3. Charles Tan Poh Tei Independent Non-Executive Director

4. Guillaume Roux (appointed on 1 January 2003) Non-Executive Director

B. TERMS OF REFERENCE

Structure Of The Audit Committee

The Audit Committee shall be appointed by the Board and shall comprise at least three (3) directors with the majorityof the members to be independent non-executive directors. The Chairman of the Committee shall be an independentnon-executive director and be elected from amongst their members. All members of the Committee, including theChairman, will hold office until otherwise determined by the Board. In the event of any vacancy in the AuditCommittee resulting in non compliance with the Listing Requirements, the Board of Directors shall within three (3)months of that event appoint such new member(s) as may be required to comply with the Listing Requirements.

Authority

The Committee is authorised by the Board to investigate any activity within its terms of reference and to seek any information it requires from any employee. All employees are directed to cooperate with any request made by the Committee.

The Committee is authorised by the Board to obtain independent legal and professional advice and to secure theattendance of outsiders with relevant experience and expertise if it considers this to be necessary.

Functions

i. To review the Interim and Annual financial statements before approval by the Board, focusing particularly on:

any change in accounting policies and practices;

major judgemental areas;

significant audit adjustments;

departure from accounting standards; and

compliance with KLSE and other statutory requirements.

ii. To discuss with the external auditors the scope of their audit findings.

iii. To discuss with the external auditor their evaluation of the system of internal controls.

iv. To review the adequacy of the scope, functions and resources of the internal audit functions, the internal auditprogramme, processes, the result thereto and recommendations made by the internal audit function.

v. To review from time to time management information received by the Board.

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vi. To make recommendations to the Board on the appointment and remuneration of the external auditors andquestions of resignation or dismissal.

vii. To review any related party transaction and conflict of interest situation that may arise including any transaction,procedure or course of conduct that raises questions of management integrity.

viii. To carry out any additional duties as may from time to time be prescribed by the Board.

Meetings And Minutes

The Committee shall meet at least four times a year and the quorum for any meeting shall be three (3) members,majority of members present must be independent directors. The President & Chief Executive Officer, the ChiefFinancial Officer and the Group Internal Auditor will normally be invited to attend all meetings of the Committee andthe external auditors will be invited to attend when appropriate. The external auditors may request a meeting if theyconsider one necessary.

The Company Secretary shall be the secretary of the Committee and as a reporting procedure, the minutes shall becirculated to all members of the Board.

C. SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

The Audit Committee carried out its duties in accordance with its terms of reference during the year.

The main activities undertaken by the Committee during the year were as follows:

Financial Results

a. Reviewed the quarterly unaudited financial results of the Group prior to recommending them for approval by the Board.

b. Reviewed the annual financial statements of the Group prior to submission to the Board for their consideration andapproval focusing particularly on any changes of accounting policy, significant and unusual event and compliancewith applicable accounting standards approved by MASB and other legal requirements.

Internal Audit

a. Reviewed the rolling assessment of key risks areas and the means of assurance through monitoring by managementand internal audit review.

b. Reviewed the annual audit plan to ensure adequate scope and coverage on the activities of the Group, taking intoconsideration the assessment of key risk areas.

c. Reviewed the audit programmes, resource requirements and skill levels of the internal auditors for the year andassessed the performance of the Internal Audit Department.

d. Reviewed the internal audit reports, audit recommendations made and management response to theserecommendations and actions taken to improve system of internal control and procedures.

e. Monitored the implementation of the audit recommendations to ensure that all key risks and controls have been addressed.

f. Reviewed and approved the proposal to implement Internal Control Self-Assessment.

External Audit

a. Reviewed with external auditors the audit planning memorandum covering the audit objectives and approach,audit plan, key audit areas and relevant technical pronouncements and accounting standards issued by MASB.

b. Reviewed with external auditors the results of the audit and the audit report in particular, reviewed accountingissues and significant audit adjustments arising from the external audit.

c. Reviewed with external auditors the memorandum of comments and recommendations arising from their studyand evaluation of the system of internal accounting control together with management's response to thefindings of the external auditors.

d. Evaluate the performance of the external auditors and made recommendations to the Board on theirappointment and remuneration.

Related Party Transactions

Reviewed the related parties transactions entered into by the Group.

Fi n a n c i a l S t at e m e nt sDirectors Report 24

Statement By Directors 29

Statutory Declaration 29

Report Of The Auditors 30

Income Statements 31

Balance Sheets 32

Statement Of Changes In Equity 33

Cash Flow Statements 34

Notes To The Financial Statements 36

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D i re c t o r s Re p o r t

The Directors submit their report and the audited nancial statements of the Group and of the Company for the nancialyear ended 31 December 2002.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are set out in Note 9 to the nancial statements. There have been no signicant changes in the nature of these activities during thenancial year.

FINANCIAL RESULTS

GROUP COMPANYRM000 RM000

Net prot for the year 83,385 43,613Retained earnings brought forward 506,489 186,165__________ __________Prot available for appropriation 589,874 229,778Transfer from revaluation reserve 256 Dividend paid (41,669) (41,669)__________ __________Retained earnings carried forward 548,461 188,109__________ __________

There were no material transfers to or from reserves or provisions during the nancial year other than those disclosed inthe nancial statements.

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

DIVIDENDS

Dividends paid by the Company since the end of the previous nancial year are as follows:

(a) An interim dividend of 2.0 sen per share, less tax at 28%, amounting to RM41,669,000 declared in respect of ordinaryshares in previous nancial year and dealt with in the previous directors report was paid by the Company on 22 May 2002;

(b) An interim dividend of RM7,145,000, less tax at 28%, amounting to RM5,148,000 declared in respect of the 250 Class A redeemable preference shares of the Company then in issue was paid on 27 January 2003; and

(c) An interim dividend of RM7,343,000, less tax at 28%, amounting to RM5,287,000 declared in respect of the 250 Class B redeemable preference shares of the Company then in issue was paid on 27 January 2003.

The Term Unsecured Loan Incorporating Preference Shares (TULIPS) facility is classied as debt instruments and henceare reported as liabilities. Accordingly, the annual net dividend payment is classied as interest expense in the incomestatement.

Subsequent to the end of the nancial year, the directors declared an interim tax exempt dividend of 1.5 sen per share,amounting to RM43,405,000 in respect of ordinary shares for the year ended 31 December 2002. The said dividend ispayable on 22 April 2003.

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ISSUE OF SHARES AND DEBENTURES

As approved by the shareholders at an Extraordi