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AYER HITAM TIN DREDGING MALAYSIA BERHAD(27673-W ) (Incorporated in Malaysia)

Annual Report 2003

contents 2003

2003 contents

2 Notice of Annual General Meeting

4 Statement Accompanying Notice of Annual General Meeting

5 Corporate Information 6 Corporate Structure 8 Directors’ Profile

11 Group Financial Highlights 12 Chairman’s Statement 14 Review of Operations

15 Corporate Governance Statement 20 Statement On Internal Control

21 Audit Committee Report 24 Other Compliance Information

25 Financial Statements 70 Analysis of Shareholdings 72 List of Properties

• Form of Proxy

page 12 Chairman’s Statement

page 14 Review of Operations

page 15 Corporate Governance Statement

2 AYER HITAM TIN DREDGING MALAYSIA BERHAD

annual report 2003

notice of annual general meeting

NOTICE IS HEREBY GIVEN THAT the Twenty-Fifth Annual General

Meeting of Ayer Hitam Tin Dredging Malaysia Berhad will be held

at Alamanda Room, Second Floor, Dorsett Regency Hotel, 172, Jalan

Imbi, 55100 Kuala Lumpur on Tuesday, 16 December 2003 at 10.00

a.m. to conduct the following businesses:

AS ORDINARY BUSINESS

1. To receive and adopt the Audited Accounts for the financial year ended 30 June 2003 together with the Reports

of the Directors and Auditors thereon.

2. To re-elect Choo Tong Kin @ Chew Tong Kim who retires in accordance with Article 81 of the Company’s

Articles of Association.

3. To re-elect Mohamed Azahari bin Mohamed Kamil who retires in accordance with Article 88 of the Company’s


4. To re-elect Dato’ Ikhwan Salim bin Dato’ Haji Sujak who retires in accordance with Article 88 of the Company’s


5. To re-appoint Messrs KPMG as Auditors of the Company and to authorise the Directors to fix their remuneration.

AS SPECIAL BUSINESS

6. To consider and, if thought fit, to pass the following Ordinary Resolution with or without modifications:

Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965

“THAT subject to the approvals of all relevant regulatory authorities, the Directors be and are hereby empowered,

pursuant to Section 132D of the Companies Act, 1965, to issue shares in the Company, at any time and upon

such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit,

provided that the aggregate number of shares issued pursuant to this Resolution in any one financial year

does not exceed 10% of the issued capital of the Company for the time being and THAT the Directors be and

Resolution 1

Resolution 2

Resolution 3

Resolution 4

Resolution 5


annual report 2003

Notes:

1. Any member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy to attend in his stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

2. To be valid, the form of proxy duly completed must be deposited at the Company’s Registered Office at Suites 4-6, Level 24, Menara Olympia, 8, Jalan Raja Chulan, 50200 Kuala Lumpur not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

3. A member shall be entitled to appoint not more than two (2) proxies to attend and vote at the same meeting, provided that the provisions of Section 149(1)(c) of the Companies Act, 1965 are complied with.

4. Where a member appoints more than one (1) proxy, the appointment shall be invalid, unless he specifies the proportions of his holdings to be represented by each proxy.

5. If the appointor is a corporation, the form of proxy must be executed under its Common Seal or under the hand of its officer or attorney duly authorised.

EXPLANATORY NOTE ON SPECIAL BUSINESS

Authority to Allot and Issue Shares Pursuant to Section 132D of the Companies Act, 1965

The proposed Ordinary Resolution, if passed, will renew the powers given to the Directors at the last Annual General

Meeting, the authority to issue shares up to 10% of the issued capital of the Company for the time being or such

other purposes as the Directors consider would be in the interest of the Company. This authority, unless revoked

or varied by the Company in general meeting, will expire at the next Annual General Meeting of the Company.

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.”

7. To transact any other business of which due notice shall have been given.

By Order of the Board

WONG YEOW CHOR

Company Secretary

Kuala Lumpur

21 November 2003

Resolution 6


annual report 2003

notice of annual general meeting

statement

1. Particulars of Directors standing for re-election at the 25th Annual

General Meeting

a) Director retiring pursuant to Article 81 of the Company’s Articles of

Association:

– Choo Tong Kin @ Chew Tong Kim

b) Directors retiring pursuant to Article 88 of the Company’s Articles of

Association:

i. Mohamed Azahari bin Mohamed Kamil

ii. Dato’ Ikhwan Salim bin Dato’ Haji Sujak

The details of the abovenamed Directors are set out in the Directors’ Profile

on pages 8 to 10 of this annual report.

2. Details of attendance of Directors at Board Meeting

A total of four (4) Board Meetings were held during the financial year ended

30 June 2003. Details of attendance of Directors are set out on page 16 of this

annual report.

3. Place, date and time of the Meeting

The 25th Annual General Meeting of the Company will be held at Alamanda

Room, Second Floor, Dorsett Regency Hotel, 172, Jalan Imbi, 55100 Kuala

Lumpur on Tuesday, 16 December 2003 at 10.00 a.m.


annual report 2003

accompanying


annual report 2003

Directors

Dato’ Mohd Nadzmi bin Mohd Salleh

(Chairman)

Chow Yeon Loong @ Chow Yoon Loong

(Executive Director)

Dato’ S.S. Subramaniam

Dato’ Ikhwan Salim bin Dato’ Haji Sujak

Mohamed Azahari bin Mohamed Kamil

Choo Tong Kin @ Chew Tong Kim

Date & Place of Incorporation

22 May 1976, Malaysia

Company Secretary

Wong Yeow Chor (MAICSA 0818030)

Audit Committee

Dato’ Mohd Nadzmi bin Mohd Salleh(Chairman)



Nomination Committee




Remuneration Committee




corporate

information

Registered Office

Suites 4-6, Level 24, Menara Olympia

8, Jalan Raja Chulan, 50200 Kuala Lumpur

Tel: 03-2031 9633 Fax: 03-2031 6920

Email: [email protected]

Stock Exchange Listing

Main Board of Kuala Lumpur Stock Exchange

KLSE Stock Number

AHTIN 2119

International Securities Identification Number (ISIN)

MYL2119OO005

Auditors

KPMG, Wisma KPMG, Jalan Dungun

Damansara Heights, 50490 Kuala Lumpur

Tel: 03-20953388 Fax: 03-20950971

Share Registrars

Systems & Securities Sdn Bhd

Wisma Selangor Dredging

6th Floor, South Block, 142-A, Jalan Ampang

50450 Kuala Lumpur

Tel: 03-2161 5466 Fax: 03-2163 6968

Principal Bankers

Alliance Bank Malaysia Bhd

AmBank Berhad


annual report 2003

AYER HITAM TIN DREDGING MALAYSIA BERHAD (27673-W)

stru

ctur

e corp

orat

e

as at 31 October 2003

AHT Estates Sdn Bhd – 100%

AHT Technology Sdn Bhd – 100%

Pembinaan AHT Sdn Bhd – 100%

AHT Management Services Sdn Bhd – 100%

Advantedge Technology Solutions (M) Sdn Bhd – 100%

Motif Harta Sdn Bhd – 100%

Harta AHT Sdn Bhd – 100%

Ganda Kemas Sdn Bhd – 100%

AHT Sdn Bhd – 100%

AHT Nominees (Tempatan) Sdn Bhd – 100%

Seneca Investments Pte Ltd – 100%

Daimaju Enterprise Sdn Bhd – 51%

Ultimate Promotion Services Sdn Bhd – 100%


annual report 2003

Mosko Lumber (PNG) Limited – 100%

Multimedia Aims Sdn Bhd – 100%

Daya Cekap Sdn Bhd – 100%

0.17%

Sababumi (Sandakan) Sdn Bhd 0.17%

28.5%

Subsidiary Companies

Associate Company

Fabulous Edge Sdn Bhd – 100%

AHT Urusmaju Sdn Bhd – 100%

Fortune Hill Sdn Bhd – 100%


annual report 2003

directors’

Dato’ Mohd Nadzmi’s directorships in other public companies are JT

International Berhad, V.S. Industry Berhad,

Ranhill Utilities Berhad, Syarikat Kenderaan Melayu Kelantan Berhad and Park May

Berhad.

Dato’ Mohd Nadzmi does not hold any

shares in AHTIN or its subsidiaries, has no

family relationship with any other Director and/or substantial shareholder of AHTIN

and has no conflict of interest with AHTIN

and has had no convictions for offences within the past ten years other than traffic

offences.

profile Dato’ Mohd Nadzmi Bin Mohd Salleh • Chairman, Independent and Non-Executive

Dato’ Mohd Nadzmi, a Malaysian, aged 49, was appointed to the Board of Ayer Hitam Tin Dredging Malaysia Berhad (“AHTIN”) on 20 December 1996 and was subsequently

appointed as Chairman in January 1997. He is also the Chairman of the Audit Committee,

the Nomination Committee and the Remuneration Committee of AHTIN.

Dato’ Mohd Nadzmi graduated with a

Bachelor of Arts in Economics and Bachelor of Science in Chemistry and

Mathematics from the University of Ohio.

He also holds a Master of Arts in Economics and Statistics from the University of Miami.

Dato’ Mohd Nadzmi began his career as a lecturer in the Faculty of Economics

Resources and Agribusiness in Universiti

Pertanian Malaysia in 1980. He worked as a Marketing Executive with Petrolium

Nasional Berhad (PETRONAS) in 1982 and

as an Assistant Manager with Heavy Industries Corporation of Malaysia Berhad

(HICOM) in 1984. He joined Edaran

Otomobil Nasional Berhad (EON) as a

Mr Chow Yoon Loong graduated with a Bachelor of Science (Economics) from the

London School of Economics and holds a

postgraduate Diploma from the Federal German Institute of Foreign Trade

(Diploma Bundestella fuer

Aussenhandlesgeschellschaft) on a German Government Scholarship from

1966 to 1968. He completed his Master of

Science in International Business from Stratchylde University in 1988.

Prior to joining AHTIN, Mr Chow Yoon Loong was previously a Manager of Sime

Marketing Division Services Manager in

the same year and was promoted to General Manager of the Marketing

Division two years later and subsequently

was appointed as Executive Director with EON in 1990. In 1992, he assumed the

position of Deputy Managing Director of

Perusahaan Otomobil Nasional Berhad (PROTON) and was promoted to Managing

Director the following year, a position he

held until April 1996. Currently, he is the Executive Chairman of Express Rail Link

Sdn Bhd, Trisilco Folec Sdn Bhd and

Nadicorp Holdings Sdn Bhd. He is also the Chairman of NuSkin Malaysia Sdn Bhd and

the President of the Badminton of

Association, Malaysia.

Darby Heavy Equipment Division from 1963 to 1966. He also worked as a senior

officer with Intraco Ltd of Singapore from

1969 to 1972. From 1973 to 1980, he was the Chief Executive Officer of the United

Malaysian Steelmills Berhad, then the 2nd

largest steel mills in Malaysia. In the early 1980’s, he was a resident in the Middle East

and the United Kingdom where he was on

the Executive Board of 3 British public listed companies, namely Elliot Group of

Peterborough, Jenks & Cattel and Bluemel.

Upon returning to Malaysia in 1989, he joined Jova Industries Sdn Bhd as the

Mr Chow Yoon Loong, a Malaysian, aged 67, was appointed to the Board of AHTIN on 2 December 1998. He was subsequently appointed as Executive Director of the Company

on 2 January 2003. He is a member of the Audit Committee, the Nomination Committee

and the Remuneration Committee of AHTIN.

Chow Yeon Loong @ Chow Yoon Loong • Executive Director, Non-Independent and Executive

Executive Director, which he is still now in employment. Jova Industries Sdn Bhd is

the only saw chain manufacturer in Asia.

Mr Chow Yoon Loong is also a Director of

a subsidiary of the AHTIN Group. Mr Chow

Yoon Loong does not hold any shares in AHTIN or its subsidiaries, has no family

relationship with any other Director and/

or substantial shareholder of AHTIN and has no conflict of interest with AHTIN and

has had no convictions for offences within

the past ten years other than traffic offences.


annual report 2003

directo

rs’ pro

file (c on

t’d)

involved in the development of projects

such as Taman Desa, Kuala Lumpur. He was

the General Manager in Columbia

Corporation Sdn Bhd from 1981 to 1986,

Prop Development Sdn Bhd from 1986 to

1990 and PMCC Sdn Bhd from 1990 to

1992. Prior to joining AHTIN in 1993, he

was the General Manager for property

investment in Olympia Land Berhad.

Mr Chew Tong Kim is also a Director of

several other subsidiaries of the AHTIN

Group.

Mr Chew Tong Kim does not hold any


family relationship with any other Director

and/or substantial shareholder of AHTIN


and has had no convictions for offences

within the past ten years other than traffic

offences.

Choo Tong Kin @ Chew Tong Kim • Non-Independent and Non-Executive

Dato’ S.S. Subramaniam • Independent and Non-Executive

General Manager from 1974 to 1982. He

then entered into politics and was the

State Assemblymen for Bukit Raja

Selangor from 1982 to 1986, the member

of Parliament for Hulu Selangor from 1986

to 1990 and the member of Parliament for

Segamat from 1990 to 1995. His last

position was as Parliamentary Secretary of

Ministry of International Trade and

Industry. He is the former Vice-President of

MIC National, the former Vice-Chairman of

MIC Selangor and the former Chairman of

MIC National Small Business Committee.

He is also the past President of the Institute

of Mining and Metallurgy (Malaysia

Section), the Malaysia Mining Employers

Association and the past Council member

of the Malaysia Employers Federation.

Mr Chew Tong Kim graduated with a

Diploma in Building Design from the Kuala

Lumpur Technical College.

Mr Chew Tong Kim has over 30 years of

experience in the building and property

industry. He began his career in 1967 as

Technical Assistant in Jabatan Kerja Raya.

In 1975, he joined Faber Union Sdn Bhd as

a Deputy General Manager where he was

Mr Chew Tong Kim, a Malaysian, aged 59, was appointed to the Board of AHTIN on 25

August 1993. He is also the Technical Adviser to Pembinaan AHT Sdn Bhd, a wholly

owned subsidiary company of AHTIN, which is the main property development arm of

the AHTIN Group.

Dato’ S.S. Subramaniam, a Malaysian, aged 67, was appointed to the Board of AHTIN on

2 December 1998. He is a member of the Audit Committee, the Nomination Committee

and the Remuneration Committee of AHTIN.

Dato’ S.S. Subramaniam is a Chartered and

Professional Mining Engineer from the

Camborne School of Mines, Cornwall,

United Kingdom. He is also a fellow

member of the Institute of Cost and

Management Accountants (London), the

Institute of Mining and Metallurgy, London

and the Institute of Mineral Engineers

Malaysia.

Dato’ S.S. Subramaniam began his career

as a Mining Engineer and later promoted

to Mine Manager with Associated Mines

(M) Sdn Bhd from 1961 to 1970. From 1970

to 1974, he was the Chief Mining Engineer

with Paranapanema S/A of Sau Paulo,

Brazil. He joined Hongkong Tin Ltd and

Killinghall Tin (Malaysia) Bhd as the

Currently, he is the member of the

Malaysian Institute of Management and

Malaysian Geological Society.

Dato’ S.S. Subramaniam is also a Director

of several other subsidiaries of the AHTIN

Group.

Dato’ S.S. Subramaniam does not hold any







offences.


annual report 2003

Dato’ Ikhwan Salim Bin Dato’ Haji Sujak • Independent and Non-Executive

Dato’ Ikhwan Salim, a Malaysian, aged 47, was appointed to the Board of AHTIN on 1

July 2003. He holds a Bachelor of Economics/Accounting degree from the Queen’s

University, Belfast, United Kingdom.

Dato’ Ikhwan Salim began his career as an

auditor with Messrs Coopers & Lybrand, a

firm of Chartered Accountants in Belfast,

United Kingdom. Upon returning to

Malaysia in 1979, he worked in Nestle (M)

Sdn Bhd as a Finance Executive. In 1980,

he joined Kumpulan Low Keng Huat

Construction Sdn Bhd, a property and

investment holding company as Group

Financial Planning Manager. Since 1992,

he is the Managing Director of Jaya

Holdings Sdn Bhd, an investment holding

company.

Dato’ Ikhwan Salim’s directorships in

other public companies are Glomac

Berhad, Kumpulan Perangsang Selangor

Berhad and Malaysia Steel Works Berhad.

Dato’ Ikhwan Salim does not hold any







offences.

directors’ profile (cont’d)

Encik Mohamed Azahari, a Malaysian, aged 44, was appointed to the Board of AHTIN

on 8 March 2002 and subsequently resigned on 22 November 2002. He was re-

appointed to the Board of AHTIN on 1 July 2003.

Mohamed Azahari Bin Mohamed Kamil • Independent and Non-Executive

Encik Mohamed Azahari graduated with

a Master of Business Administration

(Finance) from the University of Central

Michigan in 1983. He began his career

as a Fund Manager within the PNB

Group of Companies. He is presently the

Managing Director of JMF Asset

Management Sdn Bhd, a company

principally involved in fund

management.

Encik Mohamed Azahari does not hold

any shares in AHTIN or its subsidiaries,

has no family relationship with any

other Director and/or substantial

shareholder of AHTIN and has no

conflict of interest with AHTIN and has

had no convictions for offences within

the past ten years other than traffic

offences.


annual report 2003

Year Ended

2003 2002 2001 2000 1999

Revenue (RM’000) 6,005 10,239 8,856 14,757 16,138

Net (Loss)/Profit for the year (RM’000) (8,688) 21,831 (14,772) (19,121) (3,300)

Issued And Fully Paid-up Capital (RM’000) 67,760 67,760 67,760 67,760 61,600

Shareholders’ Funds (RM’000) 19,914 28,602 6,771 21,543 34,504

(Loss)/Earnings Per Ordinary Share (Sen) (12.8) 32.2 (21.8) (28.8) (5.4)

Net Tangible Assets Per Share (RM) 0.29 0.42 0.10 0.32 0.56

R E V E N U E R E V E N U E (RM’000)

ISSUED AND FULLY PAID-UP CAPITAL I S S U E D A N D F U L LY P A I D - U P C A P I TA L (RM’000)

S H A R E H O L D E R S ’ F U N D S S H A R E H O L D E R S ’ F U N D S

(RM’000)

financial group

highlights

2003

6,0051999

16,138

2000

14,757

2002

10,239

2001

8,856

2003

67,7601999

61,600

2000

67,760

2002

67,760

2001

67,760

2003

19,9141999

34,504

2000

21,543

2002

28,602

2001

6,771

12AYER HITAM TIN DREDGING MALAYSIA BERHAD

annual report 2003

statementchairman’s

On behalf of the Board of

Directors, I would like to present

the Annual Report and Audited

Accounts of the Company and

the Group for the year ended 30

June 2003.

Dato’ Mohd Nadzmi Bin Mohd Salleh • Chairman


annual report 2003

Financial Results

During the financial year ended 30 June

2003, we have focused our resources on

our core activity i.e., property

development. Despite our efforts, the

Group suffered a pre-tax loss of RM8.6

million compared to a pre-tax profit of

RM23.2 million in the previous year. The

pre-tax losses incurred in the current

financial year were mainly due to the

unfavourable property market condition.

The pre-tax profit achieved last year was

mainly attributable to the disposal of a

parcel of leasehold land measuring

154.506 acres held under title grant no. H.S.

(D) 2487, P.T. No. 6250, located in the

Mukim of Dengkil, Daerah Sepang,

Selangor for RM31 million.

The Group’s revenue declined to RM6

million from RM10.2 million in the

previous corresponding year. The lower

revenue is mainly due to the unfavourable

property market condition that has

affected the development progress in the

Taman Juara Jaya (“TJJ”) project in

Balakong, which belongs to the Company’s

wholly-owned subsidiary, Pembinaan AHT

Sdn Bhd. Correspondingly, the Group’s

shareholders’ funds had decreased to

RM19.9 million from RM28.6 million,

previously.

Prospects

I would like to inform that TJJ, Phase 5 (114

double storey link houses) is

approximately 75% sold as at 30

September 2003. The Company will

aggressively be working towards further

developing of our existing land bank.

The prospect for AHTIN in the property

development sector is good given various

incentives provided under the stimulus

package announced in May 2003. We are

confident that the Malaysian economy will

continue to improve and AHTIN is able to

benefit from it.

In terms of new land banks, we are actively

sourcing new land banks that will further

enhance our balance sheet and bottom-

line. With continued dedication, focus and

determination of the Management, we are

confident that, barring unforeseen

circumstances, the Group is expected to

improve its performance in the coming

year.

Directorate

The Board and I welcome Dato’ Ikhwan

Salim bin Dato’ Haji Sujak and Encik


who joined the Board on 1 July 2003.

Dividend

In order to conserve the Company’s cash

flow so as to reduce the Group’s debt, and

at the same time be able to finance the

Group’s ongoing business plan, the Board

is recommending that no dividends be

declared for the financial year ended 30

June 2003.

Appreciation

To our loyal shareholders, business

associates, regulatory authorities and

employees, I take this opportunity to

thank you for your firm support of and

confidence in the Group and wish you all

a healthy and prosperous year.

Dato’ Mohd Nadzmi Bin Mohd Salleh

Chairman

”“ The prospect for AHTIN in the property development sector is good

given various incentives provided under the stimulus package announced

in May 2003. We are confident that the Malaysian economy will continue

to improve and AHTIN is able to benefit from it.


annual report 2003

operationsDear Shareholders,

To keep you informed, we append hereunder a review of the

Company’s operations for the year 2003:

1. Taman Juara Jaya project (“the Project”)

During the year, the Company’s wholly-owned subsidiary,

Pembinaan AHT Sdn Bhd successfully completed its Block

A, Phase 2, Juara Suria Apartments consisting of 130 units

of medium-cost apartments and obtained the Certificate

of Fitness for occupation on 2 June 2003. Handing-over of

these units to purchasers is currently in progress and the

whole process is expected to be completed by end of the

year. Todate, 101 units had been handed-over.

Phase 5 of the Project, Amber Homes, which consists of

114 units of double storey terrace houses was re-launched

during the year. As at 30 September 2003, 75% of the units

had been sold. Construction works of these units are

currently in progress and completion is expected by June

2004.

The Group will concentrate its efforts to complete the

balance phases of the Project. Owing to poor market

demand of high-rise apartments presently, the Company

is studying the possibility of constructing more terrace

houses instead of high-rise units. It has been proposed to

revise the existing components of Phase 4 from 300 units

of medium-cost apartments to 58 units of semi-detached

houses and to develop 81 units of double storey terrace

houses on the piece of land currently reserved for school,

kindergarten and surau; subject to the approval of the

relevant authorities.

2. Ambassador Hotel, Melaka

The Ambassador Hotel project, which was undertaken by

the Company’s wholly owned subsidiary, Motif Harta Sdn

Bhd was stalled in early 1998 due to the economic crisis. It

consists of a 365-room hotel and 135 units of service

apartments, with construction 55% completed. Presently,

the Company is studying several proposals to resolve the

matter.

3. Other Business

The Company is looking at various projects and businesses

to improve the performance of the Group for the future.

The Company is always seeking opportunities to improve

on the financial performance of the Group with investment

prudence foremost on our mind.

review of


annual report 2003

The Board of Directors of Ayer Hitam Tin Dredging Malaysia Berhad (“AHTIN”)

acknowledges the importance of maintaining good corporate governance. This

Statement aims to explain how the Company has applied the Principles and the extent

of its compliance with the Best Practices and good governance as set out in the

Malaysian Code on Corporate Governance.

corporategovernance

Dato’ S.S. Subramaniam has been identified as the

Senior Independent Non-Executive Director of the

Board to whom concerns may be conveyed.

All Directors have given their undertaking to comply

with the Listing Requirements and the independent

Directors have confirmed their independence in

writing.

A2. Supply of Information

All Directors are provided with appropriate and timely

information, which enable them to discharge their

responsibilities. Board papers and agenda are

circulated to the Directors in advance of each Board

Meeting. This is to ensure that the Directors have access

to further explanations, and where necessary, to be

briefed prior to each Board Meeting. If required, senior

management and auditors are invited to be present at

the Board Meeting to provide further explanation to

the Board.

The Board has access to the services of the Company

Secretary and independent professional advice at the

Company’s expense whenever required in furtherance

of their duties.

A. Board of Directors

A1. Board Composition and Balance

The Company is led and controlled by an effective

Board comprising a balanced mix of Directors with both

professional and business experience. Such

composition enables the Board to consider issues

comprehensively from variety of perspectives. As at the

date of this Statement, the Board consists of six (6)

members; comprising an Independent Non-Executive

Chairman, three (3) Independent Non-Executive

Directors, one (1) Non-Independent Non-Executive

Director and an Executive Director. As such, the

Company is in compliance with the Listing

Requirements of Kuala Lumpur Stock Exchange

(“Listing Requirements”), which requires that at least

two (2) Directors or one third (1/3) of the Board of

Directors, whichever is higher, are Independent

Directors. The profile of each Director is presented on

pages 8 to 10 of this annual report.

The roles of Chairman and the Executive Director are

separated to ensure a balance of power and authority.

The Board is chaired by Dato’ Mohd Nadzmi bin Mohd

Salleh, the Independent Non-Executive Chairman

whereas Mr Chow Yeon Loong @ Chow Yoon Loong,

the Executive Director, leads the Management of the

Company in the day-to-day management of the

Group’s business operations and implementation of the

Board’s policies and decisions.

statement


annual report 2003

A3. Board Meetings

The Board meets at least four (4) times a year with additional meetings convened when urgent and important decisions

need to be taken between the scheduled meetings. During the financial year, the Board met four (4) times and their

attendance are as follows:

Number of Board Meetings*

Directors Held During Tenure in Office Attended

Dato’ Mohd Nadzmi Bin Mohd Salleh 4 4

Chow Yeon Loong @ Chow Yoon Loong 4 3

Choo Tong Kin @ Chew Tong Kim 4 4

Dato’ S.S. Subramaniam 4 3

Mohamed Azahari Bin Mohamed Kamil ** 2 2

Dato’ Ikhwan Salim Bin Dato Haji Sujak *** Not Applicable Not Applicable

Nikmat bin Abdullah **** 2 2

corporate governance statement (cont’d)

Notes:* Meetings were held on 16 October 2002, 20 November 2002, 26 February 2003 and 21 May 2003 respectively.** Resigned on 22 November 2002; Re-appointed on 1 July 2003.*** Appointed on 1 July 2003**** Resigned on 31 December 2002

A4. Restriction on Directorships

All Directors are in full compliance with the requirement of directorships as set out under Paragraph 15.06 of the Listing

Requirements.

A5. Appointments to the Board

The Nomination Committee of the Board is responsible for proposing new nominees for the Board and appraising Directors

on an on-going basis in accordance with their terms of reference. The decision as to who shall be nominated remains the

responsibility of the full Board after considering the recommendations of the Nomination Committee. The Board, through

the Nomination Committee, reviews its required mix of skills and experience and other qualities, including core competencies,

which non-executive Directors should bring to the Board. The Nomination Committee will assess the effectiveness of the

Board, the Committee and the contribution of each individual Director annually or as and when necessary in the best interests

of the Company.

The members of the Nomination Committee who are mainly independent non-executive Directors are as follows:-

1. Dato’ Mohd Nadzmi bin Mohd Salleh

2. Chow Yeon Loong @ Chow Yoon Loong

3. Dato’ S.S. Subramaniam (Appointed on 31 December 2002)

The Nomination Committee held four (4) meetings, which were attended by all the members during the financial year.


annual report 2003


A6. Re-election

In accordance with the Company’s Articles of

Association, one third (1/3) of the Board shall retire by

rotation at each Annual General Meeting. In any case,

each Director shall retire from office at least once in every

three (3) years and shall be eligible for re-election. Newly

appointed Directors shall hold office until the next

Annual General Meeting and shall be eligible for re-

election.

Directors over seventy (70) years of age are required to

submit themselves for re-appointment annually in

accordance with Section 129(6) of the Companies Act,

1965.

A7. Directors’ Training

All Directors have attended and successfully completed

the Mandatory Accreditation Programme conducted

by the Research Institute of Investment Analysts

Malaysia. The Directors will also continue to undergo

other relevant training programmes to further enhance

their skills and knowledge where relevant.

B. Directors’ Remuneration

B1. Remuneration Committee

The Remuneration Committee is responsible for

recommending to the Board the remuneration packages

of executive Directors. The Board as a whole determine

the remuneration of non-executive Directors. Individual

Directors abstain from discussion in respect of their own

remuneration. It is the policy of the Remuneration

Committee to structure the remuneration packages

necessary to attract, retain and motivate the Directors

of the Company.

The remuneration of executive Directors is structured

so as to link rewards to corporate and individual

performance. The remuneration of the non-executive

Directors is linked to their experience and level of

responsibilities undertaken.

The members of the Remuneration Committee are as

follows:

1. Dato’ Mohd Nadzmi bin Mohd Salleh

2. Chow Yeon Loong @ Chow Yoon Loong

3. Dato’ S.S. Subramaniam

(Appointed on 31 December 2002)

The Remuneration Committee held four (4) meetings,

which were attended by all the members during the

financial year.


annual report 2003

B2. Disclosure on Directors’ Remuneration

Details of the remuneration of the Directors for the Group for the year ended 30 June 2003, are as follows: -

Directors Basic Salary Allowance & Statutory Benefits-in-Kind Total

(RM) Contributions (RM) & Bonus (RM) (RM)

Executive 290,306 60,540 56,448 407,294

Non-Executive - 179,200 18,500 197,700

The number of Directors whose remuneration falls into the following bands are as follows:-

Number of Directors

Range of Remuneration Executive Non-Executive

Below RM50,000 - 3

RM50,001 to RM100,000 1 -

RM100,001 to RM150,000 - 1

RM150,001 to RM330,000 1 -

C. Shareholders

The Board recognises the importance of timely and accurate

dissemination of information to shareholders in respect of

all material business and corporate developments

concerning the Group. Such information is disseminated via

the Company’s annual reports, circular to shareholders,

quarterly financial results and various announcements

made from time to time.

Annual General Meetings serve as an important means for

communication with shareholders. Notice of the Annual

General Meeting and Annual Reports are sent to

shareholders twenty one (21) days prior to the meeting. At

this Meeting, the Board provides opportunities to

shareholders to participate and seek clarification on the

development in the Company. Explanatory notes are

provided for special business and its effect thereto.

D. Accountability And Audit

The Board aims to present a balanced and understandable

assessment of the Group’s position and prospect through

the annual financial statements and quarterly

announcements of results to the Kuala Lumpur Stock

Exchange. The Directors are responsible to ensure the

annual financial statements are prepared in accordance with

the provisions of the Companies Act, 1965 and applicable

approved accounting standards in Malaysia. A statement

by the Directors of their responsibilities in preparing the

financial statements is set out on page 19 of the annual

report.

The Group’s statement on internal control is set out on page

20 of this annual report.

The Board maintains formal and transparent relationship

with its external auditors. The Board through the Audit

Committee reviews the external auditors’ services, fees and

appointment.

This Corporate Governance Statement is made pursuant to

a resolution of the Board of Directors dated 27 October 2003.



annual report 2003


DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors are responsible in the preparation of financial

statements for each financial year which, give a true and fair view

of the state of affairs of the Group and the Company as at the

end of the financial year and of the results and cash flow of the

Group and the Company for the financial year then ended.

In the preparation of these financial statements, the Directors

have: -

• Adopted suitable accounting policies and apply them

consistently;

• Made judgements and estimates that are reasonable and

prudent; and

• Ensured that applicable approved accounting standards in

Malaysia and the provisions of the Companies Act, 1965, have

been applied.

The Directors are responsible for ensuring that proper accounting

and other records are kept which disclose with reasonable

accuracy at any time the financial position of the Group and the

Company and to enable them to ensure that the financial

statements comply with the provisions of the Companies Act,

1965 and the applicable approved accounting standards in

Malaysia.

The Directors also have a general responsibility for taking such

steps as are reasonably open to them to safeguard the assets of

the Group and to prevent and detect fraud and other

irregularities.

This Statement is made pursuant to a resolution of the Board of

Directors dated 27 October 2003.


annual report 2003

The Board of Directors of Ayer Hitam Tin Dredging Malaysia Berhad acknowledges the importance

of the systems of internal control and affirms that it is their responsibility to maintain a sound system

of internal control including review of its adequacy and integrity in order to safeguard the

shareholders’ investment and the Group’s assets. However, it should be noted that such system of

internal control is designed to manage rather than eliminate the risk of failure to achieve business

objectives. Therefore these systems can only provide reasonable and not absolute assurance against

material misstatements or losses.

statement on

control

The Group’s key controls include:

• Management structure, which defines the functions and

responsibilities and segregation of duties;

• Timely generation of financial information for Board and

management review. Announcement of financial

information is subjected to Audit Committee’s reviews with

the present of management;

• Independent review of internal control system by the

internal auditor; and

• Insurance program to mitigate risks of the Group.

This Statement is made pursuant to a resolution of the Board of

Directors dated 27 October 2003.

The process of identifying, evaluating and managing

significant risks faced by the Group is practiced continuously

and subjected to on-going improvement. Meetings are held

regularly at the Management Committee level to review

changes in the business environment and its’ impact on the

operations. Business strategies are reviewed and refined at

the same time to ensure that operations are in accordance

with the corporate expectation. Corporate matters and

significant issues are brought to Board level for further

deliberation to ensure that risks are appropriately considered

and adequately addressed.

internal


annual report 2003

auditreportThe Audit Committee (the “Committee”) was established

on 26 May 1994. The present members of the Committee

comprise:

committee

• Dato’ Mohd Nadzmi Bin Mohd Salleh

(Chairman, Independent Non-Executive Director)

• Dato’ S. S. Subramaniam

(Independent Non-Executive Director)

• Chow Yeon Loong @ Chow Yoon Loong

(Executive Director)

Terms of reference of the Committee

Primary purpose

The Committee shall:

a) assist the Board in fulfilling its fiduciary responsibility as to accounting policies and

reporting practices of the Company and its subsidiaries (“Group”);

b) improve the Group’s business efficiency, the quality of the accounting and audit

function and strengthen the confidence of the public in the Group’s reported results;

c) serve as a focal point for communications between Non-Executive Directors, the

external auditors and internal auditors and the Company’s management as their

duties relate to financial accounting, reporting and controls through regularly

scheduled meetings; and

d) be the Board’s principal agent to ensure the independence of the Company’s external

auditors, internal auditors and the integrity of management and the adequacy of

disclosures to shareholders at all times.

Composition

The Committee shall be appointed by the

Board of Directors from amongst its

members and shall be composed of not

fewer than three (3) members, the majority

of whom shall be Independent Directors.

At least one (1) member of the Committee

shall be a member of the Malaysian

Institute of Accountants or complies with

Paragraph 15.10 of the Listing

Requirements.

The members of the Committee shall elect

a Chairman from amongst their number

who is an Independent Non-Executive

Director.

If a member of the Committee resigns, dies

or for any reason ceases to be a member

with the result that the number of

members is reduced to below three (3), the

Board shall, within three (3) months of that

event, appoint such number of new

members as may be required to make up

the minimum number of three (3)

members. The appointment of a

Committee member terminates when the

member ceases to be a Director.

The Board shall review the term of office

and the performance of the Committee

and each of its members at least once in

every three (3) years.

The Company Secretary shall be the

Secretary of the Committee.


annual report 2003

audit committee report (cont’d)

Functions

The Committee shall, amongst others, discharge the following functions:

1. Review the following and report the same to the Board:

a) With the external auditor, the audit plan;

b) With the external auditor, their evaluation of the system of internal controls;

c) With the external auditor, their audit report;

d) The assistance given by the employees of the Company to the external auditor;

e) The adequacy of the scope, functions and resources of the internal audit

functions and to ensure that it has the necessary authority to carry out its work;

f ) The internal audit programme, processes, the results of the internal audit

programme, processes or investigation undertaken and whether or not

appropriate action is taken on the recommendations of the internal audit

function;

g) The quarterly results and year end financial statements, prior to the approval

by the Board, focusing particularly on:

i) Changes in or implementation of major accounting policy changes;

ii) Significant and unusual events; and

iii) Compliance with accounting standards and other legal requirements;

h) Any related party transaction and conflict of interest situation that may arise

within the Company or the Group including any transaction, procedure or course

of conduct that raises questions of management integrity;

i) Any letter of resignation from the external auditors of the Company; and

j) Whether there is reason (supported by grounds) to believe that the Company’s

external auditor is not suitable for re-appointment; and

2. Recommend the nomination of a person or persons as external auditors.

Authority

The Committee is authorised by the Board

to investigate any activity of the Company

and its subsidiaries within its terms of

reference. It is authorised to seek any

information it requires from any employee

and all employees are directed to

cooperate with any request made by the

Committee.

The Committee is authorised by the Board

to obtain outside legal or other

independent professional advice and to

secure the attendance of outsiders with

relevant experience and expertise if it

considers this necessary.

The Committee shall have the power to

instruct internal auditors to carry out

investigations if deemed necessary.


annual report 2003

audit committee report (cont’d)

Meetings

Minimums of four (4) meetings per year are to be scheduled, although additional meetings may be convened at any time at the Chairman’s

discretion. An agenda shall be sent to all members of the Committee and any other persons who may be required to attend. The

quorum for each meeting shall be two members of whom must be independent directors. The Committee may invite other Directors

and/or employees and/or the auditor to attend its meetings. The Committee may establish any regulations from time to time to govern

its administration.

During the financial year, the Committee convened five (5) meetings and their attendance are as follows:

Number of Committee Meetings*

Members Held during Tenure in Office Attended

Dato’ Mohd Nadzmi Bin Mohd Salleh 5 5

Chow Yeon Loong @ Chow Yoon Loong** 5 4

Dato’ S. S. Subramaniam 5 4

Note:* Meetings were held on 22 August 2002, 16 October 2002, 20 November 2002, 26 February 2003 and 21 May 2003 respectively.

** Was an Independent Non-Executive Director before being appointed as Executive Director on 2 January 2003.

Representatives of the external auditors, Messrs KPMG attended the meeting held on 16 October 2002 upon invitation.

Summary of Activities

The activities of the Committee for the financial year were summarised as below: -

a) Reviewed draft audited financial statements together with external auditors.

b) Reviewed unaudited quarterly results prior to recommendation to the Board for

approval.

c) Reviewed with the internal auditors, their internal audit plans/reports and discuss

findings and recommendations made by them.

d) Reviewed and discussed with the external auditors the external audit plan and

approach, results of their findings, examinations, auditors report and management

letters relating to audit and updates on new developments on accounting standards.

Internal Audit Function

Th e I n te r n a l Au d i t Fu n c t i o n wa s

e s t a b l i s h e d to a s s i s t t h e Au d i t

Committee in discharging its duties

and responsibilities in reviewing the

effectiveness of systems of internal

control.

D u r i n g t h e f i n a n c i a l ye a r u n d e r

review, the Internal Auditors have

carried out their review in accordance

with the approved annual audit plan.

In each quarter, the Internal Auditors

present their reports and findings to

t h e Au d i t Co m m i t te e. Are a s o f

improvement were identi f ied and

m o n i to r e d t o e n s u re co n t i n u o u s

i m p rove m e nt i n t h e b u s i n e s s

processes.


annual report 2003

info

rmat

ion

oth

er c

om

plia

nce a) Share-Buy Backs

The Company did not purchase any of its own shares for the financial year ended 30

June 2003.

b) Options, Warrants or Convertible Securities

The Company has not issued any options, warrants or convertible securities for the

financial year ended 30 June 2003.

c) American Depository Receipt (ADR)/Global Depository Receipt (GDR)

The Company does not sponsor any ADR or GDR programme.

d) Sanctions and/or Penalties

Save for Pembinaan AHT Sdn Bhd, a 100% owned subsidiary of the Company, which

had been imposed a 15% penalty by the Inland Revenue Board on the outstanding

tax for year assessment 2000, amounting to RM108,131.70, there were no other

sanctions and/or penalties imposed on the Company and its subsidiaries or

Management by the relevant regulatory bodies for the financial year ended 30 June

2003.

e) Non-Audit Fees

There was no non-audit fees paid to the external auditors for the financial year ended

30 June 2003.

f) Variations in Results

There were no profit estimates, forecasts or projections or unaudited results released

which differ by 10% or more from the audited results.

g) Profit Guarantee

There were no profit guarantees given in respect of the Company.

h) Revaluation Policy on Landed Properties

The Group does not adopt a policy of regular revaluation of its landed properties.

i) Recurrent Related Party Transaction

The Company did not enter into any recurrent related party transaction, which requires

the shareholders’ mandate for the financial year ended 30 June 2003.

j) Material Contracts Involving Directors’ and Substantial Shareholders’ Interests

For the financial year ended 30 June 2003, neither the Company nor its subsidiaries

entered into any material contractors involving Directors and substantial shareholders

of the Company.

26 Director’s Report 30 Statement by Directors

30 Statutory Declaration 31 Report of the Auditors

33 Balance Sheets 34 Income Statements 35 Statement of Changes in Equity

36 Cash Flow Statements 39 Notes to the Financial Statements

financial statements

2003


annual report 2003

directors’ report for the year ended 30 June 2003

The Directors hereby submit their report and the audited financial statements of the Group and of the Company for the year ended 30

June 2003.

PRINCIPAL ACTIVITIES

The Company is principally engaged in investment holding, whilst the principal activities of the subsidiaries are as stated in Note 4 to

the financial statements. There has been no significant change in the nature of these activities during the financial year.

RESULTS Group Company

RM’000 RM’000

Net loss for the year 8,688 8,973

RESERVES AND PROVISIONS

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

statements.

DIVIDEND

No dividend was paid during the year and the Directors do not recommend any dividend to be paid for the year under review.

DIRECTORS OF THE COMPANY

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

Dato’ Mohd Nadzmi bin Mohd Salleh

Choo Tong Kin @ Chew Tong Kim




(appointed on 8.3.2002; resigned on 22.11.2002 and re-appointed on 1.7.2003)

Dato’ Ikhwan Salim bin Dato’ Haji Sujak

(appointed on 1.7.2003)

Nikmat bin Abdullah

(resigned on 31.12.2002)

In accordance with Article 81 of the Company’s Articles of Association, Choo Tong Kin @ Chew Tong Kim retires by rotation from the

Board at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election.

In accordance with Article 88 of the Company’s Articles of Association, Mohamed Azahari bin Mohamed Kamil and Dato’ Ikhwan Salim

bin Dato’ Haji Sujak, who were appointed during the year retire from the Board at the forthcoming Annual General Meeting and, being

eligible, offer themselves for re-election.


annual report 2003

directors’ report (cont’d) for the year ended 30 June 2003

DIRECTORS’ INTERESTS

None of the Directors holding office at 30 June 2003 had any interest in the ordinary shares of the Company and of its related corporations

during the financial year.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other

than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial

statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the

Director is a member, or with a company in which the Director has a substantial financial interest.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to

acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

ISSUE OF SHARES

There were no changes in the issued and paid-up capital of the Company during the financial year.

OPTIONS GRANTED OVER UNISSUED SHARES

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

OTHER STATUTORY INFORMATION

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

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

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

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

i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group and in the

Company inadequate to any substantial extent, or

ii) that would render the value attributed to the current assets in the Group and in the Company financial statements misleading, or

iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the

Company misleading or inappropriate, or

iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements

of the Group and of the Company misleading.


annual report 2003

OTHER STATUTORY INFORMATION (CONT’D)

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

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

liabilities of any other person, or

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

No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within

the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the

ability of the Group and of the Company to meet their obligations as and when they fall due.

In the opinion of the Directors, except for the impairment loss on property, plant and equipment as disclosed in Note 2 to the financial

statements, the results of the operations of the Group and of the Company for the financial year ended 30 June 2003 have not been

substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event

occurred in the interval between the end of that financial year and the date of this report.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

i) A wholly owned subsidiary, named Vivace Limited, was de-registered from the Hong Kong Companies Registry on 6 June 2003.

ii) On 19 December 2002, Pembinaan AHT Sdn. Bhd. (“PAHT”), a wholly owned subsidiary entered into a Supplemental Facility

Agreement with its lending institution to restructure and convert the bridging loan facility and the bank overdraft facility into a

term loan facility of up to a maximum aggregate principal amount of RM20,000,000.

Upon acceptance of the restructured loan facility, the Company has made a principal repayment of RM2,200,000 on behalf of the

subsidiary. The restructured term loan bears interest at 1.5% per annum above the lending institution’s base lending rate (“BLR”)

for the first and second year and 1.75% per annum above funding institution’s BLR for the remaining three (3) years. It is repayable

in eight (8) instalments totalling RM17,800,000, commencing on 30 June 2003 and shall be fully repaid to the lending institution

on or before a period of five (5) years from the Conversion Date, which was on 24 January 2003. During the year, PAHT made

repayments of RM607,000 and subsequent to year end an amount of RM293,000 was paid in order to fulfill the repayment of

RM900,000 as set out in the agreement, which was due on 30 June 2003.



annual report 2003


SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONT’D)

iii) On 21 August 2002, Motif Harta Sdn. Bhd. (“MHSB”), a wholly owned subsidiary entered into a Supplemental Facility Agreement

with its lending institution to restructure its term loan amounting to RM20,296,000 as at 30 June 2002. During the year, a principal

amount of RM275,000 which was to be paid on or before 30 September 2002 was subsequently paid on 8 October 2002. A

principal amount of RM2,475,000 is to be paid to the lending institution via sixteen (16) monthly instalments of RM150,000 each

and a final instalment of RM75,000 or 27.5% on the amount to be received from the sale proceeds from the disposal of leasehold

land by the Company pursuant to the Option Agreement entered into by the Company with a third party, whichever is higher,

commencing from 31 October 2002. During the financial year, the Company made principal repayments of RM1,625,000 on

behalf of MHSB.

The remaining principal amount outstanding of RM18,671,000 is repayable on or before 30 June 2004. Subsequent to year end,

the Company, as corporate guarantor for the term loan, has been in negotiation with the lending institution to extend the repayment

of the remaining principal amount beyond 30 June 2004.

AUDITORS

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

Signed in accordance with a resolution of the Directors:



Kuala Lumpur,

27 October 2003


annual report 2003

statement by directors pursuant to section 169(15) of the Companies Act, 1965

statutory declaration pursuant to section 169(16) of the Companies Act, 1965

In the opinion of the Directors, the financial statements set out on pages 33 to 69 are 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 the state of affairs

of the Group and of the Company at 30 June 2003 and of the results of their operations and cash flows for the year ended on that date.

Signed in accordance with a resolution of the Directors:

Dato’ S.S. Subramaniam Chow Yeon Loong @ Chow Yoon Loong

Kuala Lumpur,

27 October 2003

I, Chow Yeon Loong @ Chow Yoon Loong, the Director primarily responsible for the financial management of Ayer Hitam Tin Dredging

Malaysia Berhad, do solemnly and sincerely declare that the financial statements set out on pages 33 to 69 are, to the best of my

knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the

provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed in Kuala Lumpur on 27 October 2003.


Before me:

Faisal Meerangkutty bin K.M. Mohd Maulabi

No. W300

Commissioner for Oaths


annual report 2003

We have audited the financial statements set out on pages 33 to 69. The preparation of the financial statements is the responsibility of

the Company’s Directors. Our responsibility is to express an opinion on the financial statements based on our audit.

We conducted our audit in accordance with approved Standards on Auditing in Malaysia. These standards require that we plan and

perform the audit to obtain all the information and explanations which we consider necessary to provide us with evidence to give

reasonable assurance that the financial statements are free of material misstatement. An audit includes examining, on a test basis,

evidence relevant to the amounts and disclosures in the financial statements. An audit also includes an assessment of the accounting

principles used and significant estimates made by the Directors as well as evaluating the overall adequacy of the presentation of

information in the financial statements. We believe our audit provides a reasonable basis for our opinion.

In our opinion:

(a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable

approved accounting standards in Malaysia so as to give a true and fair view of:

i) the state of affairs of the Group and of the Company at 30 June 2003 and the results of their operations and cash flows for the

year ended on that date; and

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

of the Company; and

(b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company and its

subsidiaries have been properly kept in accordance with the provisions of the said Act.

We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial

statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial

statements and we have received satisfactory information and explanations required by us for those purposes.

The audit reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any

comment made under sub-section (3) of Section 174 of the Act.

Without qualifying our opinion, we draw attention to the following:

1. The Company incurred a net loss of RM8,973,000 during the year ended 30 June 2003.

2. The Group incurred a net loss of RM8,688,000 during the year ended 30 June 2003 and, as of that date, the Group’s current

liabilities exceeded its current assets by RM18,885,000.

3. As stated in Note 12 to the financial statements, the Group had completed negotiations with its lending institutions to

restructure the repayment schedules of both of its existing term loan facilities and bank overdraft facility during the year.

Subsequent to year end, it is also in negotiation with a lending institution to extend the principal repayment of one of its term

loan, which is due on 30 June 2004 to beyond 30 June 2004.

report of the auditors to the members of Ayer Hitam Tin Dredging Malaysia Berhad


annual report 2003

report of the auditors (cont’d) to the members of Ayer Hitam Tin Dredging Malaysia Berhad

4. The continuation of the Group and the Company as going concerns and the appropriateness of preparing the financial

statements on a going concern basis will be dependent on the continuous financial support from the shareholders, bankers

and creditors, they achieving future profitable operations and attaining cash inflows to sustain their operations and pending

the favourable outcome from the negotiation with the lending institution for the extention of principal repayment of one of

the term loans as stated in Note 12.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets

amounts and classification of liabilities that may be necessary if the Group and the Company are unable to continue as going

concerns. The assumption is premised on future events, the outcome of which is inherently uncertain.

5. As stated in Note 2 to the financial statements, a subsidiary of the Group has suspended the construction work of its hotel

project since January 1998 due to weak property market conditions. The construction expenditure (inclusive of the leasehold

land) incurred of RM60,139,000 as at 30 June 2000 was capitalised into hotel-in-progress. The hotel-in-progress was written

down to RM40,000,000 in prior years due to impairment.

Based on a professional valuation performed by an independent firm of professional valuers during the year on the basis of

cost and comparison method, which indicated a market value of RM38,000,000, the Board of Directors recognised further

impairment loss of RM2,000,000 on the hotel-in-progress to a net carrying amount of RM38,000,000. The valuation was

carried out for corporate management purpose.

KPMG

Firm Number: AF 0758

Chartered Accountants

Tang Seng Choon

Partner

Approval Number: 2011/12/03(J)

Kuala Lumpur,

27 October 2003


annual report 2003

balance sheets at 30 June 2003

Group Company

Note 2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

Property, plant and equipment 2 38,801 41,148 612 957

Land held for development 3 8,430 7,691 8,430 7,691

Investments in subsidiaries 4 - - - 1,100

Investment in associate 5 6,034 6,221 3,660 3,660

Other investments 6 361 361 361 361

Current assets

Inventories 7 304 470 - -

Properties under development 8 6,487 7,326 - -

Land held for development 3 2,111 3,693 2,111 3,693

Trade and other receivables 9 9,626 12,279 7,106 12,035

Tax recoverable 1,489 1,362 1,473 1,348

Cash and cash equivalents 10 2,823 4,997 450 2,656

22,840 30,127 11,140 19,732

Current liabilities

Trade and other payables 11 15,038 13,531 1,067 1,246

Borrowings 12 21,193 2,620 21 87

Taxation 1,645 1,811 2,417 2,384

Provision 13 3,849 2,827 - -

41,725 20,789 3,505 3,717

Net current (liabilities)/assets (18,885) 9,338 7,635 16,015

34,741 64,759 20,698 29,784

Represented by:

Capital and reserves

Share capital 14 67,760 67,760 67,760 67,760

Accumulated losses and other reserves (47,846) (39,158) (47,186) (38,213)

Shareholders’ funds 19,914 28,602 20,574 29,547

Long term liability

Borrowings 12 14,827 36,157 124 237

34,741 64,759 20,698 29,784

The financial statements were approved and authorised for issue by the Board of Directors on 27 October 2003.

The notes set out on pages 39 to 69 form an integral part of, and should be read in conjunction with, these financial statements.


annual report 2003

income statements for the year ended 30 June 2003

Group Company

Note 2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

Revenue

- contract revenue 5,616 9,510 - -

- sale of goods 140 411 - -

- services 225 318 - -

- dividends 24 - 464 -

6,005 10,239 464 -

Contract costs (4,641) (7,097) - -

Cost of sales (129) (599) - -

Cost of services (21) (134) - -

(4,791) (7,830) - -

Gross profit 1,214 2,409 464 -

Distribution costs (102) (48) - -

Administration expenses (3,830) (3,401) (1,749) (1,833)

Other operating expenses (3,565) (1,086) (7,781) (22,349)

Other operating income 505 27,306 133 27,412

Operating (loss)/profit 16 (5,778) 25,180 (8,933) 3,230

Interest expense 18 (2,993) (2,834) (20) (69)

Interest income 22 619 22 618

Share of profit of associate 190 218 - -

(Loss)/profit before taxation (8,559) 23,183 (8,931) 3,779

Tax expense – Company and subsidiaries 19 (73) (1,288) (42) (1,168)

– associate 19 (56) (64) - -

Net (loss)/profit for the year (8,688) 21,831 (8,973) 2,611

(Loss)/earnings per ordinary share (sen) 20 (12.8) 32.2



annual report 2003

statement of changes in equity for the year ended 30 June 2003

Non-distributable

Share Share Capital General Accumulated

capital premium reserves reserves losses Total

Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 July 2001 67,760 55,972 585 595 (118,141) 6,771

Net profit for the year - - - - 21,831 21,831

At 30 June 2002/

1 July 2002 67,760 55,972 585 595 (96,310) 28,602

Net loss for the year - - - - (8,688) (8,688)

At 30 June 2003 67,760 55,972 585 595 (104,998) 19,914

Note 14

Company

At 1 July 2001 67,760 55,972 585 620 (98,001) 26,936

Net profit for the year - - - - 2,611 2,611

At 30 June 2002/

1 July 2002 67,760 55,972 585 620 (95,390) 29,547

Net loss for the year - - - - (8,973) (8,973)

At 30 June 2003 67,760 55,972 585 620 (104,363) 20,574

Note 14



annual report 2003

cash flow statements for the year ended 30 June 2003

Group Company

2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities

(Loss)/profit before taxation (8,559) 23,183 (8,931) 3,779

Adjustments for:

Allowance for diminution in value of quoted shares - 21 - -

Allowance for doubtful debts - subsidiaries - - 6,681 17,036

Depreciation 276 367 222 345

Dividend income (24) - (339) -

Loss/(gain) on disposal of property, plant and equipment 6 (242) (7) (242)

Gain on disposal of leasehold land - (26,829) - (26,829)

Gain on novation and disposal of leasehold land - (133) - (133)

Gain on de-registration of a subsidiary (113) - - -

Impairment losses on property, plant and equipment 2,000 - - -

Impairment losses on investment in subsidiaries - - 1,100 5,000

Interest income (99) (669) (22) (618)

Interest expense 2,993 2,834 20 69

Property, plant and equipment written off 6 3 6 1

Share of profit of associate (190) (218) - -

Operating loss before working capital changes (3,704) (1,683) (1,270) (1,592)

Changes in working capital:

Land held for development 843 1,617 843 1,617

Inventories 166 (336) - -

Properties under development 839 (3,330) - -

Trade and other receivables 2,653 (3,202) 3,048 (1,773)

Trade and other payables 1,620 (6,744) (179) (3,326)

Provision 1,093 595 - -

Cash generated from/(used in) operations 3,510 (13,083) 2,442 (5,074)

Interest received 77 50 - -

Income tax paid (366) (42) (134) (18)

Liquidated ascertained damages paid (71) (595) - -

Net cash generated from/

(used in) operating activities 3,150 (13,670) 2,308 (5,092)



annual report 2003

cash flow statements (cont’d) for the year ended 30 June 2003

Group Company

2003 2002 2003 2002

Note RM’000 RM’000 RM’000 RM’000

Cash flows from investing activities

Dividends received from associate

and other investment 345 - 339 -

Interest received 22 619 22 618

Proceeds from disposal of property,

plant and equipment (i) 306 75 285 75

Purchase of property, plant and

equipment (ii) (97) (130) (11) (17)

Proceeds from disposal of leasehold

land and buildings - 22,500 - 22,500

Net cash generated from investing activities 576 23,064 635 23,176

Cash flows from financing activities

Advances to subsidiaries - - (4,800) (15,542)

Drawdown of term loans - 3,049 - -

Repayments of term loans (2,570) (8,151) - -

Hire purchase interest paid (22) (70) (20) (69)

Interest paid (2,971) (2,764) - -

Repayments of hire purchase liabilities (337) (227) (329) (221)

Interest on term loan converted into

principal amount - 2,246 - -

Bank overdraft converted into term loan - 5,336 - -

Net cash used in financing activities (5,900) (581) (5,149) (15,832)

Net (decrease)/increase in cash and cash equivalents (2,174) 8,813 (2,206) 2,252

Cash and cash equivalents at beginning of year 4,997 (3,816) 2,656 404

Cash and cash equivalents at end of year (iii) 2,823 4,997 450 2,656



annual report 2003

cash flow statements (cont’d) for the year ended 30 June 2003


i) Proceeds from disposal of property, plant and equipment

During the year, the Group and the Company disposed of property, plant and equipment for RM306,000 (2002 - RM275,000) and

RM285,000 (2002 - RM275,000) respectively, of which Nil (2002 - RM200,000) was for settlement of debt due to a third party.

ii) Purchase of property, plant and equipment

During the year, the Group and the Company acquired property, plant and equipment with an aggregate cost of RM247,000

(2002 - RM155,000) and RM161,000 (2002 - RM17,000) respectively, of which RM150,000 (2002 - RM25,000) and RM150,000

(2002 - Nil) respectively were acquired by means of hire purchases.

iii) Cash and cash equivalents

Group Company

2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

Cash and bank balances 2,823 2,786 450 556

Deposits placed with financial institutions - 2,211 - 2,100

2,823 4,997 450 2,656

iv) De-registration of a subsidiary

During the year, the Group de-registered Vivace Limited from the Hong Kong Companies Registry. The de-registration had the

following effect on the Group’s liabilities as at 30 June 2003.

2003

RM’000

Current liabilities (113)

Gain on de-registration 113

Cash flow on de-registration -


annual report 2003

notes to the financial statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following accounting policies are adopted by the Group and by the Company and are consistent with those adopted in

previous years except for adoption of the following:

(i) MASB 22, Segmental Reporting;

(ii) MASB 23, Impairment of Assets;

(iii) MASB 24, Financial Instruments: Disclosure and Presentation;

(iv) MASB 25, Income Taxes; and

(v) MASB 27, Borrowing Costs.

Apart from the inclusion of the new policies and extended disclosures where required by these new standards, the effects of the

changes in the above accounting policies are disclosed in Note 27 to these financial statements.

(a) Basis of accounting

The financial statements of the Group and of the Company are prepared on the historical cost basis except as disclosed in

the notes to the financial statements, in compliance with the provisions of the Companies Act, 1965 and applicable approved

accounting standards in Malaysia and on a going concern basis. The validity of the going concern assumption is dependent

on the continuous financial support from the shareholders, bankers and creditors, they achieving future profitable operations

and cash inflows to sustain their operations and pending the favourable outcome from negotiation with a lending institution

for the extention of principal repayment of one of the term loans as stated in Note 12.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets

amounts and classification of liabilities that may be necessary if the Group and the Company are unable to continue as a

going concern. The assumption is premised on future events, the outcome of which is inherently uncertain.


annual report 2003

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(b) Basis of consolidation

Subsidiaries are those enterprises controlled by the Company. Control exists when the Company has the power, directly or

indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The

financial statements of subsidiaries are included in the consolidated financial statements from the date that control effectively

commences until the date that control effectively ceases. Subsidiaries are consolidated using the acquisition method of

accounting.

A subsidiary is excluded from consolidation when either control is intended to be temporary if the subsidiary is acquired

and held exclusively with a view of its subsequent disposal in the near future and it has not previously been consolidated or

it operates under severe long term restrictions which significantly impair its ability to transfer funds to the Company.

Subsidiaries excluded on these grounds are accounted for as investments.

Under the acquisition method of accounting, the results of subsidiaries acquired or disposed of during the year are included

from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries’ net

assets are determined and these values are reflected in the Group financial statements. The difference between the acquisition

cost and the fair values of the subsidiaries’ net assets is reflected as goodwill or negative goodwill as appropriate.

Intra-group transactions and balances and the resulting unrealised profits are eliminated on consolidation. Unrealised losses

resulting from intragroup transactions are also eliminated unless cost cannot be recovered.

(c) Associate

Associate is an enterprise in which the Group has significant influence, but not control, over the financial and operating

policies.

The consolidated financial statements include the total recognised gains and losses of associate on an equity accounted

basis from the date that significant influence effectively commences until the date that significant influence effectively

ceases.

Unrealised profits arising on transactions between the Group and its associate which are included in the carrying amount of

the related assets and liabilities are eliminated partially to the extent of the Group’s interests in the associate. Unrealised

losses on such transactions are also eliminated partially unless cost cannot be recovered.

Goodwill on acquisition is calculated based on the fair value of net assets acquired.

notes to the financial statements (cont’d) for the year ended 30 June 2003


annual report 2003



(d) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

Property, plant and equipment retired from active use and held for disposal are stated at the carrying amount at the date

when the asset is retired from active use, less impairment losses, if any.

Depreciation

Property, plant and equipment are depreciated on a straight line basis to write off the cost of the assets over the term of their

estimated useful lives at the following principal annual rates:

Buildings 2%

Renovation, furniture, fittings and office equipment 10% - 20%

Computers 50%

Motor vehicles 20%

Hotel-in-progress is not depreciated. It comprises land, incidental acquisition cost and initial development expenditure

incurred up to the end of the financial year. Interest cost incurred on the construction is also capitalised and included as part

of hotel-in-progress. Following the cessation of the construction of the hotel-in-progress, interest cost incurred is charged

to the income statement.

With effect from the current financial year, the Group and the Company changed the annual depreciation rate for computers,

which ranged from 10% to 20% to 50% so as to better reflect their estimated useful lives. The effect of this change in

accounting estimate is that there are additional depreciation charge of RM41,921 and RM16,606 for the Group and for the

Company respectively.

(e) Investments

Long term investments other than in subsidiaries and associate are stated at cost. An allowance is made when the Directors

are of the view that there is a diminution in their value, which is other than temporary.

Long term investments in subsidiaries and associate are stated at cost in the Company, less impairment loss where applicable.

Current unquoted investments are stated at the lower of cost and net realisable value while current quoted investments are

stated at the lower of cost and market value on an individual investment basis.


annual report 2003



(f) Inventories

i) Developed properties

Completed properties held for resale are stated at the lower of cost and net realisable value. Cost is determined on a

specific identification basis and includes land, all direct building costs and other related development costs.

ii) Trading inventories

Trading inventories are stated at the lower of cost and net realisable value with first-in-first-out (FIFO) being the main

basis for cost. Cost comprises cost of purchase and incidental costs of bringing the inventories to their present location

and condition.

(g) Properties under development

Properties under development comprising land and development costs are stated at cost plus attributable profit less

foreseeable losses, net of progress billings. Development costs includes interest expense on loans and advances utilised to

finance on-going development. Properties under development (including land costs) are stated as current assets when

significant development work has been undertaken and is expected to be completed within the normal operating cycle.

(h) Land held for development

Land held for development consist of freehold land held for future developments, which are stated at cost of acquisition and

are transferred to properties under development at carrying value or to the current assets when significant development

work is undertaken or to be undertaken and is expected to be completed within the normal operating cycle.

(i) Trade and other receivables

Trade and other receivables are stated at cost less allowance for doubtful debts.

(j) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which

have an insignificant risk of changes in value.

(k) Liabilities

Trade and other payables and borrowings are stated at cost.

(l) Accounting for hire purchase

Assets acquired under hire purchase arrangements are capitalised at their purchase cost and are depreciated on the same

basis as owned assets. The total amount payable under hire purchase agreements is shown under hire purchase liabilities.


annual report 2003



(m) Provision

A provision is recognised when it is probable that an outflow of resources embodying economic benefits will be required to

settle a present obligation (legal or constructive) as a result of a past event and a reliable estimate can be made of the

amount.

Provision for liquidated ascertained damages

A provision for liquidated ascertained damages is recognised when late handover of vacant possession of housing units are

anticipated. It is based on the planned handover date to the expected handover of vacant possession to purchasers.

(n) Impairment

The carrying amount of the Group’s assets, other than inventories, deferred tax assets and financial assets (financial assets in

this context exclude investments in subsidiaries and associate), are reviewed at each balance sheet date to determine whether

there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment

loss is recognised whenever the carrying amount of an asset or the cash-generating unit to which it belongs exceeds its

recoverable amount. Impairment losses are recognised in the income statement.

The recoverable amount is the greater of the asset’s net selling price and its value in use. In assessing value in use, estimated

future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments

of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash

inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and

is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been

determined, net of depreciation or amortisation, if no impairment loss had been recognised. The reversal is recognised in

the income statement.

(o) Capitalisation of borrowing costs

Borrowing costs incurred on properties under development are capitalised. Capitalisation of borrowing costs will cease

when the assets are ready for their intended use.

The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is the weighted average

of the borrowing costs applicable to the Group’s borrowings that are outstanding during the year, other than borrowings

made specifically for the purpose of financing properties under development, in which case the actual borrowing cost

incurred on that borrowing less any investment income on the temporary investment of that borrowing will be capitalised.

Capitalisation of borrowing costs is suspended during extended periods in which active development is interrupted.


annual report 2003



(p) Income tax

Tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement

except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially

enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided, using the liability method, on temporary differences arising between the tax bases of assets and

liabilities and their carrying amounts in the financial statements. Temporary differences are not recognised for the initial

recognition of assets or liabilities that at the time of the transaction affects neither accounting nor taxable profit. The amount

of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and

liabilities, using tax rates enacted or substantially enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against

which the asset can be utilised.

(q) Foreign currency

i) Foreign currency transactions

Transactions in foreign currencies are translated to Ringgit Malaysia at rates of exchange ruling at the date of the

transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated

to Ringgit Malaysia at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation

are recognised in the income statement.

ii) Financial statements of foreign operations

The Group’s foreign operations are not considered an integral part of the Company’s operations. Accordingly, the assets

and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated

to Ringgit Malaysia at exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations

are translated to Ringgit Malaysia at average exchange rates applicable throughout the year. Foreign exchange differences

arising on translation are recognised directly in equity.

The closing rates used in the translation of foreign currency monetary assets and liabilities and the financial statements of

foreign operations are as follows:

USD1 N/A (2002 : RM3.8000)

HK$1 N/A (2002 : RM0.4823)

SGD1 RM2.1620 (2002 : RM2.1220)

Kina1 RM1.0870 (2002 : RM0.9330)


annual report 2003



(r) Revenue

i) Property development

Profit from property development is recognised using the percentage of completion method. Where foreseeable losses

are anticipated, full provision for these losses is made in the financial statements.

ii) Goods sold

Revenue from sale of goods is measured at the fair value of the consideration receivable and is recognised in the

income statement when the significant risks and rewards of ownership have been transferred to the buyer.

iii) Services rendered

Revenue from services rendered is recognised in the income statement based on the invoiced value of maintenance

charges and insurance fee charged to the house owners.

iv) Dividend income

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

v) Interest income

Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset.

(s) Interest expense

All interest and other costs incurred in connection with borrowings, other than that capitalised in accordance with Note 1(o),

are expensed as incurred. The interest component of hire purchase payments is recognised in the income statement so as to

give a constant periodic rate of interest on the outstanding liability at the end of each accounting period.


annual report 2003

2. PROPERTY, PLANT AND EQUIPMENT

Renovation,

furniture,

fittings Hotel-

Group and office Motor in-

Buildings equipment Computers vehicles progress Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost

At 1 July 2002 1,591 1,329 198 1,342 40,000 44,460

Additions - 47 47 153 - 247

Disposals - - - (706) - (706)

Written off - (9) (15) - - (24)

At 30 June 2003 1,591 1,367 230 789 40,000 43,977

Accumulated depreciation

and impairment loss

Accumulated depreciation 1,590 708 89 925 - 3,312

Accumulated impairment loss - - - - - -

At 1 July 2002 1,590 708 89 925 - 3,312

Charge for the year - 117 70 89 - 276

Disposals - - - (394) - (394)

Written off - (6) (12) - - (18)

Impairment loss for the year - - - - 2,000 2,000

Accumulated depreciation 1,590 819 147 620 - 3,176

Accumulated impairment loss - - - - 2,000 2,000

At 30 June 2003 1,590 819 147 620 2,000 5,176

Net book value

At 30 June 2003 1 548 83 169 38,000 38,801

At 30 June 2002 1 621 109 417 40,000 41,148

Depreciation charge

for the year ended

30 June 2002 - 114 16 237 - 367



annual report 2003


2. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Renovation,

furniture,

fittings

Company and office Motor

Buildings equipment Computers vehicles Total

RM’000 RM’000 RM’000 RM’000 RM’000

Cost

At 1 July 2002 1,591 1,210 131 1,261 4,193

Additions - - 8 153 161

Disposals - - - (666) (666)

Written off - (9) (9) - (18)

At 30 June 2003 1,591 1,201 130 748 3,670

Accumulated depreciation

At 1 July 2002 1,590 682 47 917 3,236

Charge for the year - 103 42 77 222

Disposals - - - (388) (388)

Written off - (6) (6) - (12)

At 30 June 2003 1,590 779 83 606 3,058

Net book value

At 30 June 2003 1 422 47 142 612

At 30 June 2002 1 528 84 344 957

Depreciation charge for the

year ended 30 June 2002 - 104 12 229 345

Assets under hire purchase arrangements

Included in property, plant and equipment of the Group and of the Company are motor vehicles with net book values of RM169,000

(2002 - RM370,000) and RM143,000 (2002 - RM336,000) respectively, which are acquired under hire purchase arrangements.

Security

Included in hotel-in-progress of the Group is leasehold land at cost of RM9,334,000 (2002 - RM9,334,000), which has been pledged

to a financial institution as security to secure a term loan obtained by a subsidiary (Note 12).


annual report 2003

2. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

A subsidiary has suspended the construction of its hotel project since January 1998 due to weak property market conditions. The

construction expenditure (inclusive of the leasehold land) incurred of RM60,139,000 as at 30 June 2000 was capitalised into hotel-

in-progress. The hotel-in-progress was written down to RM40,000,000 in prior years due to impairment.

Based on a professional valuation performed by City Valuers and Consultants Sdn. Bhd., an independent firm of professional

valuers during the year on the basis of cost and comparison method, which indicated a market value of RM38,000,000, the Board

of Directors have recognised further impairment loss of RM2,000,000 on the hotel-in-progress to a net carrying amount of

RM38,000,000. The valuation was carried out for corporate management purpose. Market value is defined by Malaysian Valuation

Standards: Standard 1 – Market Value Basis of Valuation as the estimated amount for which an asset should exchange on the date

of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties

had each acted knowledgeably, prudently and without compulsion.

3. LAND HELD FOR DEVELOPMENT

Group and Company

2003 2002

RM’000 RM’000

Freehold land, at cost 10,541 11,384

Less: Current portion classified under current assets (2,111) (3,693)

8,430 7,691

The portion of land held for development in respect of which significant development work is expected to be undertaken is

considered as current asset.

The freehold land at cost of RM10,541,000 (2002 - RM11,384,000) is pledged to a financial institution as security to secure a term

loan and bank overdraft obtained by a subsidiary (Note 12).

4. INVESTMENTS IN SUBSIDIARIES

Company

2003 2002

RM’000 RM’000

Unquoted shares, at cost 9,280 9,280

Less: Impairment losses (9,280) (8,180)

- 1,100



annual report 2003


4. INVESTMENTS IN SUBSIDIARIES (CONT’D)

The principal activities of the companies in the Group, their places of incorporation and the interests of Ayer Hitam Tin Dredging

Malaysia Berhad are as follows:

Name Principal Activities Country of Effective

Incorporation Group Interest

2003 2002

Subsidiaries:

Ganda Kemas Sdn. Bhd. Investment holding Malaysia 100% 100%

and its subsidiaries:

Vivace Limited * Dormant Hong Kong - 100%

Fortune Hill Sdn. Bhd. Dormant Malaysia 100% 100%

Mosko Lumber (PNG) Limited Dormant Papua New Guinea 100% 100%

Daimaju Enterprise Sdn. Bhd. Investment holding Malaysia 51% 51%

and its subsidiary:

Daya Cekap Sdn. Bhd. Investment holding Malaysia 51% 51%

AHT Nominees (Tempatan) Sdn. Bhd. Nominees company Malaysia 100% 100%

AHT Management Services Sdn. Bhd. Dormant Malaysia 100% 100%

AHT Sdn. Bhd. Dormant Malaysia 100% 100%

Harta AHT Sdn. Bhd. Dormant Malaysia 100% 100%

Seneca Investments Pte. Ltd. Dormant Singapore 100% 100%

Motif Harta Sdn. Bhd. Hotel development Malaysia 100% 100%

and management

Ultimate Promotion Services Sdn. Bhd. Dormant Malaysia 100% 100%

Pembinaan AHT Sdn. Bhd. Property development Malaysia 100% 100%

and its subsidiaries:

AHT Urusmaju Sdn. Bhd. Rendering of Malaysia 100% 100%

management services

Fabulous Edge Sdn. Bhd. Dormant Malaysia 100% 100%

Advantedge Technology Dormant Malaysia 100% 100%

Solutions (M) Sdn. Bhd.

and its subsidiary:

Multimedia Aims Sdn. Bhd. Dormant Malaysia 100% 100%

AHT Technology Sdn. Bhd. Dormant Malaysia 100% 100%

AHT Estates Sdn. Bhd. Dormant Malaysia 100% 100%

* Vivace Limited was de-registered from the Hong Kong Companies Registry on 6 June 2003.


annual report 2003


5. Investment in associate

Group Company

2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

Unquoted shares, at cost 11,660 11,660 3,660 3,660

Less: Impairment losses (4,635) (4,635) - -

7,025 7,025 3,660 3,660

Share of post acquisition reserves 2,578 2,444 - -

Dividends (3,569) (3,248) - -

6,034 6,221 3,660 3,660

Group

2003 2002

Represented by: RM’000 RM’000

Group’s share of net assets 6,034 6,221

The details of the associate are as follows:

Name Principal Country of Effective

Activity Incorporation Group Interest

2003 2002

Sababumi (Sandakan) Sdn. Bhd. Dormant Malaysia 28.8% 28.8%


annual report 2003


6. OTHER INVESTMENTS

Group Company

2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

Unquoted shares:

- in Malaysian corporations 532 532 527 527

- in Australian corporation 325 325 - -

Less: Allowance for diminution in value (496) (496) (166) (166)

361 361 361 361

Quoted shares - overseas 261 261 - -

Less: Allowance for diminution in value (261) (261) - -

- - - -

361 361 361 361

Market value of quoted shares - - - -

7. INVENTORIES

Group

2003 2002

RM’000 RM’000

Developed properties 304 404

Trading goods - 66

304 470

Developed properties of RM304,000 are carried at net realisable value.

8. PROPERTIES UNDER DEVELOPMENT

Group

2003 2002

RM’000 RM’000

At cost

Freehold land 13,328 12,485

Development expenditure 53,693 49,400

Attributable profits 10,350 9,375

77,371 71,260

Less: Progress billings (70,884) (63,934)

6,487 7,326


annual report 2003

8. PROPERTIES UNDER DEVELOPMENT (CONT’D)

Included in properties under development is interest capitalised for the year amounting to RM437,243 (2002 - RM1,130,880) at

interest rate of 1.5% (2002 - 1.75% to 2.50%) per annum above the lending institution’s base lending rate.

The portion of properties under development in respect of which significant development work has been undertaken and which

is expected to be completed within the normal operating cycle is considered as current asset.

The freehold land at cost of RM13,328,000 (2002 - RM12,485,000) is pledged to a financial institution as security to secure a term

loan and bank overdraft obtained by a subsidiary (Note 12).

9. TRADE AND OTHER RECEIVABLES

Group Company

2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

Trade receivables 1,803 1,570 - -

Less: Allowance for doubtful debts (3) (3) - -

1,800 1,567 - -

Other receivables 10,520 11,669 7,312 10,360

Less: Allowance for doubtful debts (2,694) (957) (206) (206)

7,826 10,712 7,106 10,154

Amount due from subsidiaries - - 66,390 61,641

Less: Allowance for doubtful debts - - (66,390) (59,760)

- - - 1,881

Amount due from associate 205 205 205 205

Less: Allowance for doubtful debts (205) (205) (205) (205)

- - - -

9,626 12,279 7,106 12,035



annual report 2003


9. TRADE AND OTHER RECEIVABLES (CONT’D)

Other receivables, deposits and prepayments

Included in the other receivables is the following:

Group Company

2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

Properties held as settlement of debts 7,000 10,000 7,000 10,000

The above properties were received from the purchaser as part of the settlement for the purchase consideration for the disposal

of a leasehold land situated in Lot No. P.T. 6250 in the Mukim of Dengkil, District of Sepang, State of Selangor Darul Ehsan in the

previous year.

The land disposal was deemed completed pursuant to receipt of the balance of the purchase consideration in the previous year

in the form of:

a) RM18,000,000 cash; and

b) RM10,000,000 worth of properties (“Real Properties”).

On 19 September 2001 a professional valuation performed by Azmi & Co Sdn. Bhd. an independent firm of professional valuers on

the basis of comparison method had indicated a market value of RM9,000,000 for the said properties above. Subsequently, an

additional RM1,000,000 worth of properties were received by the Company.

On 16 November 2001, the Company had entered into an Option Agreement (“Put Option”) with the above purchaser, an irrevocable

Put Option for the Company to sell and the purchaser to repurchase the Real Properties. The Put Option is to be exercised in two

equal sums of instalment. The purchaser has defaulted both instalments. As at to date, the purchaser had yet to respond formally

on the matter. However, the purchaser has made cash payments of RM3,000,000 to the Company during the year and RM400,000

subsequent to year end.

Simultaneously, the Company has received a Deed of Indemnity and Guarantee dated 16 November 2001 from a third party who

has agreed to provide personal guarantee for the performance of the Option Agreement entered into between purchaser and

the Company.

Amount due from subsidiaries

Amount due from subsidiaries relate to advances and payments made on behalf that are unsecured, interest free and have no

fixed terms of repayment.

Amount due from associate

The amount due from associate relate to advances that are unsecured, interest free and have no fixed terms of repayment.


annual report 2003


10. CASH AND CASH EQUIVALENTS

Group Company

2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

Deposits are placed with:

- Licensed bank - 111 - -

- Finance company - 2,100 - 2,100

- 2,211 - 2,100

Cash and bank balances 2,823 2,786 450 556

2,823 4,997 450 2,656

Included in the Group’s cash and bank balances is an amount of RM2,169,515 (2002 - RM2,079,130), the utilisation of which is

subject to the Housing Development (Housing Development Account) Regulation 1991.

11. TRADE AND OTHER PAYABLES

Group Company

2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

Trade payables 7,824 8,183 - -

Other payables and accrued expenses 6,859 5,028 712 926

Amount due to Directors 355 320 355 320

15,038 13,531 1,067 1,246

Included in trade payables are retentions amounting to RM4,252,000 (2002 - RM5,296,000) for the Group.

Included in other payables and accrued expenses in the previous year was RM500,000 received from the purchaser of the leasehold

land that was disposed in the previous year. This amount was recognised as repayment from purchaser during the year ended 30

June 2003.

Amount due to Directors relates to Directors’ allowances, which are interest free and have no fixed terms of repayment.


annual report 2003


12. BORROWINGS

Group Company

2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

Current

Term loans - secured 21,164 2,525 - -

Hire purchase liabilities 29 95 21 87

21,193 2,620 21 87

Non-current

Term loans - secured 14,700 35,909 - -


14,827 36,157 124 237

Terms and debt repayment schedule

The first term loan amounting to RM17,193,000 (2002 – RM12,802,000) obtained by a subsidiary is secured by a corporate guarantee

issued by the Company and a first fixed charge over the land held by the Company.

On 19 December 2002, the subsidiary entered into a Supplemental Facility Agreement with its lending institution to restructure

the term loan of RM12,802,000 and to convert the existing bank overdraft facility of RM5,336,000 into a term loan facility.

Upon acceptance of the restructured loan facility, the Company has made a principal repayment of RM2,200,000 on behalf of the

subsidiary. The restructured term loan bears interest at 1.5% per annum above the lending institution’s base lending rate (“BLR”)

for the first and second year and 1.75% per annum above funding institution’s BLR for the remaining three (3) years and is repayable

in eight (8) instalments totalling RM17,800,000, commencing on 30 June 2003 and shall be fully repaid to the lending institution

on or before a period of five (5) years from the Conversion Date, which was on 24 January 2003. During the year, the subsidiary

made repayments of RM607,000 and subsequent to year end an amount of RM293,000 was paid in order to fulfill the repayment

of RM900,000 as set out in the agreement, which was due on 30 June 2003.

The second term loan amounting to RM18,671,000 (2002 - RM20,296,000) obtained by another subsidiary is secured against a

first fixed charge over the leasehold land held by the subsidiary, debenture on the fixed and floating assets of the subsidiary and

the corporate guarantee issued by the Company.

On 21 August 2002, the second term loan was restructured by the subsidiary. A principal amount of RM275,000, which was to be

paid on or before 30 September 2002 was subsequently paid on 8 October 2002. A further principal amount of RM2,475,000 is to

be paid to the lending institution via sixteen (16) monthly instalments of RM150,000 each and a final instalment of RM75,000 or

27.5% on the amount to be received from the sale proceeds from the disposal of leasehold land by the Company pursuant to the

Option Agreement entered into by the Company with a third party, whichever is higher, commencing from 31 October 2002.

During the financial year, the Company made principal repayments of RM1,625,000 on behalf of the subsidiary. The remaining

principal amount outstanding of RM18,671,000 is repayable on or before 30 June 2004.


annual report 2003


12. BORROWINGS (CONT’D)

The second term loan bears interest at 1% per annum and is subject to a yield to maturity at the rate of 9% commencing from 1

July 2001 until the final date of full repayment of the second term loan, which is on or before 30 June 2004.

Subsequent to year end, the Company, as corporate guarantor for the second term loan, has been in negotiation with the lending

institution to extend the repayment of the remaining principal amount beyond 30 June 2004.

Under 1 - 2 2 - 5

Total 1 year years years

RM’000 RM’000 RM’000 RM’000

Group

Secured term loans 35,864 21,164 6,000 8,700


36,020 21,193 6,024 8,803

Company


Hire purchase liabilities

Hire purchase liabilities are payable as follows:

Payments Interest Principal Payments Interest Principal

2003 2003 2003 2002 2002 2002

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group

Less than one year 36 (7) 29 131 (36) 95

Between one and five years 152 (25) 127 340 (92) 248

188 (32) 156 471 (128) 343

Company

Less than one year 26 (5) 21 121 (34) 87

Between one and five years 149 (25) 124 327 (90) 237

175 (30) 145 448 (124) 324

The hire purchase liabilities bear interest at rates of 6.0% (2002 - 6.5%) per annum.


annual report 2003


13. PROVISION

Group

2003 2002

RM’000 RM’000

Provision for liquidated ascertained damages

Opening balance 2,827 2,827

Provision made during the year 1,093 865

Provision used during the year (71) (595)

Provision reversed during the year - (270)

Closing balance 3,849 2,827

The provision for liquidated ascertained damages is recognised when late handover of vacant possession of housing units are

anticipated. It is based on the planned handover date to the expected handover of vacant possession to purchasers.

14. SHARE CAPITAL

Company

2003 2002

RM’000 RM’000

Ordinary shares of RM1.00 each:

Authorised 500,000 500,000

Issued and fully paid 67,760 67,760

15. DEFERRED TAX

No deferred tax has been recognised for the following items:

Group Company

2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

Deductible temporary differences 5,100 4,100 (240) (400)

Unabsorbed capital allowances 160 - 200 100

Unutilised tax losses 11,500 9,700 9,400 8,700

16,760 13,800 9,360 8,400

The unutilised tax loses and deductible temporary differences do not expire under current tax legislation. Deferred tax assets have

not been recognised in respect of these items because it is not probable that future taxable profit will be available against which

the Group and the Company can utilise the benefits.

The Group and the Company have tax losses carried forward of RM11,500,000 (2002 - RM9,700,000) and RM9,400,000 (2002 –

RM8,700,000) respectively, which give rise to the unrecognised deferred tax assets in respect of unutilised tax losses above.


annual report 2003


16. OPERATING (LOSS)/PROFIT

Group Company

2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

Operating (loss)/profit is arrived at after charging:

Allowance for diminution in value of quoted shares - 21 - -

Allowance for doubtful debts - subsidiaries - - 6,681 17,036

- others 183 - - -

Auditors’ remuneration 54 55 13 13

Depreciation (Note 2) 276 367 222 345

Directors’

- remuneration 682 751 538 703

- benefit-in-kind 42 58 41 57

Impairment loss on property, plant and equipment 2,000 - - -

Impairment loss on investment in subsidiaries - - 1,100 5,000

Inventories written down 166 9 - -

Office rental 280 229 76 49

Property, plant and equipment written off 6 3 6 1

Provision for liquidated ascertained damages 1,093 865 - -

Loss on disposal of property, plant and equipment 13 - - -

and after crediting:

Gain on de-registration of a subsidiary 113 - - -

Gain on disposal of property, plant and equipment 7 242 7 242

Gross dividend

- associate - - 446 -

- other investment 24 - 18 -

Interest income

- HDA account 39 23 - -

- Others 38 27 - -

Reversal of provision for liquidated ascertained damages - 270 - -

Exceptional items:

Gain on disposal of leasehold land

(net of real property gains tax of RM850,000) - 26,829 - 26,829

Gain on novation and disposal of leasehold land - 133 - 133


annual report 2003


17. EMPLOYEE INFORMATION

Group Company

2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

Staff costs 1,517 1,624 782 775

The number of employees of the Group and of the Company (including Directors) at the end of the financial year was 15 (2002 -

29) and 3 (2002 - 8) respectively.

18. INTEREST EXPENSE

Group Company

2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

Interest expense:

Bank overdraft 190 162 - -

Term loans 2,781 2,602 - -

Hire purchase 22 70 20 69

2,993 2,834 20 69

19. TAX EXPENSE

Group Company

2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

Current tax expense

- Current year provision (73) (308) (42) (176)

- Under provision in previous year - (980) - (992)

(73) (1,288) (42) (1,168)

Tax expense on share of associate’s profit (56) (64) - -

(129) (1,352) (42) (1,168)


annual report 2003

19. TAX EXPENSE (CONT’D)

Reconciliation of effective tax rate

% 2003 % 2002

RM’000 RM’000

Group

(Loss)/profit before taxation (8,559) 23,183

Income tax using Malaysian tax rates (28) (2,396) 28 6,491

Non-deductible expenses - - 7 1,657

Tax exempt income - 2 (33) (7,790)

Other items 1 71 - 14

Current year tax losses not recognised 28 2,396 - -

1 73 2 372

Under provision in previous year - - 4 980

Tax expense 1 73 6 1,352

Company

(Loss)/profit before taxation (8,931) 3,779

Income tax using Malaysian tax rates (28) (2,500) 28 1,058

Non-deductible expenses - - 170 6,427

Tax exempt income - - (193) (7,309)

Other items 0.5 42 - -

Current year tax losses not recognised 28 2,500 - -

0.5 42 5 176

Under provision in previous year - - 26 992

Tax expense 0.5 42 31 1,168

20. (LOSS)/EARNINGS PER ORDINARY SHARE - GROUP

Basic (loss)/earnings per ordinary share

The calculation of basic (loss)/earnings per ordinary share is based on the net loss for the year of RM8,688,000 (2002 - net profit for

the year of RM21,831,000) and the number of ordinary shares outstanding during the year of 67,760,000 (2002 - 67,760,000).



annual report 2003


21. CONTINGENT LIABILITIES

Company

2003 2002

RM’000 RM’000

Guarantees and contingencies relating to:

Secured

Borrowings of subsidiaries 83,000 83,000

Amount utilised are as follows:

Borrowings of subsidiaries 35,864 38,434

Litigations

i) Company

In the previous years, a third party claimed for general and special damages against the Company for a sum of RM3,834,000 or

alternatively RM573,000 plus a reasonable sum for various alleged works carried out under the said alleged contract of 19

September 1984, interest at 13% per annum or such other rate from 27 August 1987 to the date of judgement and further

interest on the judgement at 8% per annum from date of judgement.

On 1 March 1993, the High Court held that the letter of 19 September 1984 was a contract and granted judgement in favour

of the third party.

On appeal by the Company, the Supreme Court had on 20 June 1994, held that the letter on 19 September 1984 was not a

concluded contract and set aside the High Court judgement on 1 March 1993 and further held that the Company is only liable

on a quantum merit basis up to a maximum sum of RM300,000 subject to assessment. This is on the basis that the letter of 19

September 1984 was a letter of intent.

The assessment of damages was ordered to be confined to expenses incurred in relation to the filling and leveling of the site

only on 16 June 1999 and was eventually dismissed on 28 July 1999.

The third party has appealed to the Court of Appeal against both orders. On 9 September 2003, the Court of Appeal unanimously

dismissed the appeal with costs.


annual report 2003

21. CONTINGENT LIABILITIES (CONT’D)

ii) Subsidiary

a) A subsidiary has been served a writ of summons from the Government of Malaysia at the Kuala Lumpur High Court on 8

September 2003 for outstanding payment of tax liability for the year of assessment 2000 amounting to RM614,000 due to

the Inland Revenue Board (“IRB”).

The subsidiary’s tax consultant is presently in negotiation with the IRB to conclude the final assessment.

b) In the previous years, a claim was made by a third party against a subsidiary for the sum of RM165,000 being monies

alleged to be commission for the procurement of supply of goods and services for the hotel-in-progress.

The subsidiary has filed a counter claim for a sum of RM9,000, being balance of deposit due to the Company. The Plaintiff’s

application to admit documents as evidence on 17 October 2002 was allowed by the Court. The suit has been fixed for full

trial at the Sessions Court on 8 March 2004.

The legal advisers are of the opinion that there exist strong grounds to maintain defences against the above claim. As

such, no allowance has been made for the claim.

22. SEGMENTAL INFORMATION

Segment information is presented in respect of the Group’s business segments. The primary format, business segments, is based

on the Group’s management and internal reporting structure. Inter-segment pricing is determined based on negotiated terms.

There is no information on geographical segments as the Group only operates in Malaysia.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a

reasonable basis.

Segmental capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used

for more than one period.

Business segments

The Group comprises the following main business segments:

Investment holding Investments in quoted and unquoted shares.

Property development Development of residential and commercial properties.

Trading and services Trading of goods and services.



annual report 2003


22.

SEG

MEN

TAL

INFO

RM

ATI

ON

(CO

NT

’D)

Pro

per

ty

Inve

stm

ent

Trad

ing

an

d

dev

elo

pm

ent

ho

ldin

g

serv

ices

El

imin

atio

ns

Co

nso

lidat

ed

2003

20

02

2003

20

02

2003

20

02

2003

20

02

2003

20

02

RM

’000

RM

’000

R

M’0

00

RM’0

00

RM

’000

RM

’000

R

M’0

00

RM’0

00

RM

’000

RM

’000

Reve

nu

e fr

om

ext

ern

al c

ust

om

ers

5,61

6 9,

510

24

- 36

5 72

9 -

- 6,

005

10,2

39

Inte

r seg

men

t rev

enu

e -

- 4

46

-

- -

(446

) -

- -

Tota

l rev

enu

e 5,

616

9,51

0 47

0 -

365

729

(4

46

) -

6,0

05

10

,239

Seg

men

t res

ult

s (1

7,93

7)

397

(8,9

69)

3,18

9 (6

66)

(412

) 2

1,79

4 22

,006

(5

,778

) 25

,180

Inte

rest

exp

ense

(2

,993

) (2

,834

)

Inte

rest

inco

me

22

619

Shar

e o

f pro

fit o

f ass

oci

ate

- -

190

21

8 -

- -

- 19

0 21

8

(Lo

ss)/

pro

fit b

efo

re ta

xati

on

(8

,559

) 23

,183

Tax

exp

ense

s

- Co

mp

any

and

su

bsi

dia

ries

(7

3)

(1,2

88)

- Ass

oci

ate

(56)

(6

4)

Net

(lo

ss)/

pro

fit fo

r th

e ye

ar

(8,6

88)

21,8

31

Seg

men

t ass

ets

49,7

34

52,0

03

20,1

41

26,5

32

557

792

- -

7

0,4

32

79

,327

Inve

stm

ent i

n a

ssoc

iate

-

- 6

,034

6,

221

- -

- -

6

,03

4 6,

221

Tota

l ass

ets

49,7

34

52,0

03

26,1

75

32,7

53

557

792

- -

7

6,4

66

85

,548

Seg

men

t lia

bili

ties

52

,544

52

,773

3,

653

3,96

7 35

5 20

6 -

- 56

,552

56

,946

Cap

ital

exp

end

itu

re

- 36

16

1 17

86

10

2 -

- 24

7 15

5

Imp

airm

ent l

oss

2,

000

- -

- -

- -

- 2,

000

-

Dep

reci

atio

n

16

11

222

345

38

11

- -

276

367


annual report 2003

23. COMMITMENTS

Group

2003 2002

RM’000 RM’000

Capital commitments:

Property, plant and equipment

Authorised and contracted for 6,246 6,246

24. RELATED PARTIES

Identity of related parties

Controlling related party relationships are as follows:

i) Its substantial shareholders.

ii) Its subsidiaries as disclosed in Note 4.

A) Transaction with Associate

Significant transaction with associate other than that disclosed elsewhere in the financial statements is as follows:

Company

2003 2002

RM’000 RM’000

Dividend received 446 -

B) Transactions with Subsidiaries

Transfer of land held for development to a subsidiary for property development 843 1,617

Management fee receivable 120 204

Office rental receivable 188 180

These transactions have been entered into in the normal course of business and have been established under negotiated terms.

25. Acquisition of subsidiaries

In the previous year, the Group acquired all the ordinary shares in Fabulous Edge Sdn. Bhd. for a cash consideration of RM2. The

acquisition was accounted for using the acquisition method of accounting. The subsidiary has not commenced operations at the

previous year end.



annual report 2003


26. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

i) A wholly owned subsidiary, named Vivace Limited, was de-registered from the Hong Kong Companies Registry on 6 June

2003.

ii) On 19 December 2002, Pembinaan AHT Sdn. Bhd. (“PAHT”), a wholly owned subsidiary entered into a Supplemental Facility

Agreement with its lending institution to restructure and convert the bridging loan facility and the bank overdraft facility into

a term loan facility of up to a maximum aggregate principal amount of RM20,000,000.

Upon acceptance of the restructured loan facility, the Company has made a principal repayment of RM2,200,000 on behalf of

the subsidiary. The restructured term loan bears interest at 1.5% per annum above the lending institution’s base lending rate

(“BLR”) for the first and second year and 1.75% per annum above funding institution’s BLR for the remaining three (3) years. It

is repayable in eight (8) instalments totalling RM17,800,000, commencing on 30 June 2003 and shall be fully repaid to the

lending institution on or before a period of five (5) years from the Conversion Date, which was on 24 January 2003. During the

year, PAHT made repayments of RM607,000 and subsequent to year end an amount of RM293,000 was paid in order to fulfill

the repayment of RM900,000 as set out in the agreement, which was due on 30 June 2003.

iii) On 21 August 2002, Motif Harta Sdn. Bhd. (“MHSB”), a wholly owned subsidiary entered into a Supplemental Facility Agreement

with its lending institution to restructure its term loan amounting to RM20,296,000 as at 30 June 2002. During the year, a

principal amount of RM275,000 which was to be paid on or before 30 September 2002 was subsequently paid on 8 October

2002. A principal amount of RM2,475,000 is to be paid to the lending institution via sixteen (16) monthly instalments of

RM150,000 each and a final instalment of RM75,000 or 27.5% on the amount to be received from the sale proceeds from the

disposal of leasehold land by the Company pursuant to the Option Agreement entered into by the Company with a third

party, whichever is higher, commencing from 31 October 2002. During the financial year, the Company made repayments of

RM1,625,000 on behalf of MHSB.

The remaining principal amount outstanding of RM18,671,000 is repayable on or before 30 June 2004. Subsequent to year

end, the Company, as corporate guarantor for the term loan has been in negotiation with the lending institution to extend the

repayment of the remaining principal amount beyond 30 June 2004.

27. CHANGES IN ACCOUNTING POLICIES

In the current financial year, the Group and the Company adopted five new MASB Standards. The adoption of these new standards

resulted in changes in accounting policies as follows:

(a) MASB 22, Segmental Reporting and MASB 24, Financial Instruments: Disclosure and Presentation, which have been adopted

prospectively;

(b) MASB 23, Impairment of Assets, which is applied prospectively. The restatement of comparative figures and prior year

adjustment are therefore not presented. The adoption of this standard has no material impact on the financial statements;

(c) MASB 25, Income Taxes, which has been adopted retrospectively. The adoption of this Standard has no material impact on the

financial statements; and

(d) MASB 27, Borrowing Costs, which is applied retrospectively. Comparative figures have not been restated as the previous

accounting policy was in line with the accounting standard.


annual report 2003

notes to the financial statements (cont’d)for the year ended 30 June 2003

28. FINANCIAL INSTRUMENTS

Financial risk management objectives and policies

Exposure to credit, interest rate and liquidity risks arise in the normal course of the Group and of the Company’s business. These

risks are summarised below.

Credit risk

The Group and the Company have informal credit policy in place and management carries out a continuing review over the

Group’s and the Company’s exposure to credit risk, which is monitored on an ongoing basis.

At balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk for the Group

and for the Company are represented by the carrying amount of each financial asset.

Interest rate risk

The Group’s primary interest rate risk relates to interest bearing borrowings. In relation to this, the Group had completed

negotiations with its lending institutions to restructure the repayment schedules of both of its existing term loan facilities during

the year. In view of the low interest rate scenario, exposure to fluctuation of interest rate risk is minimal.

In addition, the Group also earns interest income from funds placed in HDA accounts, where the interest rates are fixed. Management

reviews the rates at regular interval.

Foreign currency risk

The Group and the Company are not exposed to any foreign currency risk as there is no foreign currency transaction entered into

or borrowing incurred that is denominated in foreign currency.

The Group and the Company are also not exposed to foreign currency risk in respect of their investments in foreign subsidiaries

as these subsidiaries are dormant and their investments have been fully impaired.

Liquidity risk

The Group and the Company actively manage its debt maturity profile, operating cash flows and the availability of funding so as

to ensure that all refinancing repayments and funding needs are met. The Group has obligation to make term loans repayment to

financial institutions amounting to RM35,864,000 according to the restructured repayment schedules.

As part of its overall prudent liquidity management, the Group and the Company maintains sufficient levels of cash to meet its

working capital requirements.

Effective interest rates and repricing analysis

In respect of interest-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective

interest rates at the balance sheet date and the periods in which they reprice or mature, whichever is earlier.


annual report 2003


28. FINANCIAL INSTRUMENTS (CONT’D)

Effective

interest rate Within 1 - 5

per annum Total 1 year years

% RM’000 RM’000 RM’000

Group

2003

Financial assets

Cash and cash equivalents - HDA 2.0 2,170 2,170 -

Financial liabilities

Secured term loans 8.5 35,864 35,864 -

2002

Financial assets

Deposits placed with finance company and licensed bank 3.2 2,211 2,211 -

Cash and cash equivalents - HDA 2.0 2,079 2,079 -


Secured term loans 8.39 38,434 38,434 -

Company

2002

Financial assets

Deposits placed with finance company and licensed bank 3.2 2,100 2,100 -


annual report 2003


28. FINANCIAL INSTRUMENTS (CONT’D)

Fair values

Recognised financial instruments

In respect of cash and cash equivalents, trade and other receivables, trade and other payables and short term borrowings, the

carrying amounts approximate fair value due to the relatively short term nature of these financial instruments.

The aggregate fair values of other financial assets and financial liabilities carried on the balance sheet as at 30 June are shown

below:

2003 2002

Carrying Fair Carrying Fair

amount value amount value

RM’000 RM’000 RM’000 RM’000

Group

Financial assets

Unquoted shares - long term 361 361 361 361


Term loans - secured 35,864 35,864 38,434 38,434

Company

Financial assets

Unquoted shares - long term 361 361 361 361

The fair value of the unquoted shares is determined based on the net tangible assets approximate to date of financial statements.

It is not practical to estimate the fair values for term loans as the loans have been restructured with lending institutions during the

year. In the opinion of the Directors, the fair values of term loans are approximate to their carrying amounts at the balance sheet

date.


annual report 2003


29. COMPARATIVE FIGURES

The following comparatives have been restated to conform with current year’s presentation.

Group Company

As As

As previously As Fair

restated stated restated stated

RM’000 RM’000 RM’000 RM’000

Balance sheets

Trade and other receivables 12,279 13,641 12,035 11,502

Tax recoverable 1,362 - 1,348 -

Amount due from subsidiaries - - - 1,881

Cash flow statements

Adjustments for:

Provision for liquidated ascertained damages - 865 - -

Reversal of provision of liquidated damages - (270) - -

Operating loss before working capital changes

Changes in working capital:

Provision 595 - - -


annual report 2003

analysis of shareholdingsas at 15 October 2003

Authorised Capital RM500,000,000

Issued & Paid-Up Capital RM67,760,223

Class of Share Ordinary shares of RM1.00 each

Voting Rights One vote per ordinary share

Number of shareholders 8,138

DISTRIBUTION OF SHAREHOLDERS

No. of % of No. of % of

Size of Holdings Holders Holders Holdings Issued Capital

Less than 100 151 1.86 5,313 0.01

100 - 1,000 3,822 46.96 2,974,715 4.39

1,001 - 10,000 3,751 46.09 12,635,506 18.65

10,001 - 100,000 387 4.76 9,761,791 14.41

100,001 - to less than 5% of issued shares 25 0.31 11,210,898 16.54

5% and above of issued shares 2 0.02 31,172,000 46.00

8,138 100.00 67,760,223 100.00

DIRECTORS’ INTEREST IN THE COMPANY AS AT 15 OCTOBER 2003

Number of ordinary shares of RM1.00 each

Direct Indirect

Name Interest % Interest %

Dato’ Mohd Nadzmi bin Mohd Salleh – – – –

Chow Yeon Loong @ Chow Yoon Loong – – – –

Dato’ S.S. Subramaniam – – – –

Dato’ Ikhwan Salim bin Dato’ Haji Sujak – – – –

Mohamed Azahari bin Mohamed Kamil – – – –

Choo Tong Kin @ Chew Tong Kim – – – –

SUBSTANTIAL SHAREHOLDERS AS AT 15 OCTOBER 2003

Number of ordinary shares of RM1.00 each

Direct Indirect

Name Interest % Interest %

Malar Cemerlang Sdn Bhd 18,839,000 27.80 – –

Brigman Investments Limited 12,333,000 18.20 – –


annual report 2003

analysis of shareholdings (cont’d)as at 15 october 2003

TOP THIRTY LARGEST SHAREHOLDERS

No. of % of

No. Name Shares Held Issued Capital

1. Malar Cemerlang Sdn Bhd 18,839,000 27.802. Brigman Investments Limited 12,333,000 18.20

3. Tsang Jat Meng 2,700,000 3.98

4. Botly Nominees (Tempatan) Sdn Bhd 1,659,400 2.45Qualifier: Pledged securities account for Yap Pin Ho

5. Ipoh Fieldwork Sdn Bhd 782,000 1.15

6. Tan Chow On 729,200 1.087. Cartaban Nominees (Asing) Sdn Bhd 668,985 0.99

Qualifier: Straits Trading Co. Ltd.

8. Lim Kee Seng @ Ning Soy Tee 531,000 0.789. HSBC Nominees (Asing) Sdn Bhd 500,000 0.74

Qualifier: Ting Bin-Shun Nicole (301-521183-091)

10. Yap Pin Ho 484,000 0.71

11. Woo Wing Kong 413,000 0.61

12. Goh Kiang Kiong @ Jimmy 325,000 0.4813. Amsec Nominees (Asing) Sdn Bhd 279,000 0.41

Qualifier: Fraser Securities Pte Ltd for The Asia Life Assurance Society Ltd (SLF-70691)

14. Tan Siang Ling 250,000 0.3715. Menteri Kewangan Malaysia 227,863 0.34

Qualifier: Section 29 (SICDA)

16. Yap Pin Ho 164,100 0.2417. Loo Kok Kean 160,000 0.24

18. Affin-UOB Nominees (Tempatan) Sdn Bhd 157,000 0.23

Qualifier: Pledged securities account for Hooi Kow Moi

19. TA Nominees (Tempatan) Sdn Bhd 155,000 0.23

Qualifier: Pledged securities account for Wan Heng Chee

20. Tan Chow On 153,000 0.2321. Mayban Nominees (Asing) Sdn Bhd 150,750 0.22

Qualifier: Malayan Securities Private Limited (N14011200396)

22. Parajati Corporation Sdn Bhd 133,900 0.2023. Botly Nominees (Tempatan) Sdn Bhd 129,700 0.19

Qualifier: Pledged securities account for Look Chee Wong

24. Fan Kwai Fong 127,000 0.1925. Teong Teck Lai 120,000 0.18

26. Tong Jau Han @ Tong Jeng Gee 109,000 0.16

27. Lee Wai Chew 102,000 0.1528. HDM Nominees (Tempatan) Sdn Bhd 100,000 0.15

Qualifier: Pledged securities account for Dynamic Fable Sdn Bhd (MEMO)

29. HSBC Nominees (Tempatan) Sdn Bhd 100,000 0.15Qualifier: Shenyin for Teh Hong Eng

30. Teh Giek Hooi 100,000 0.15

42,682,898 63.00


annual report 2003

list of properties

Location Description Tenure Land Approximately Date of Last Net Book

/Existing Use Area Age of Building Revaluation (R) Value

(Sq. Ft.) (years) or Acquisition (A) (RM’000)

H.S.(D) 4708 Lot 210 Hotel 99 years 80,740 7 11 August 2003 (R) 38,000

Kawasan Bandar XXXIX Development leasehold

Bandar Melaka, (the construction expiring in

Daerah Melaka Tengah, has been shelved) August 2075

Melaka

CT9098 Lot 1092 & Commercial Freehold 2,268,388 N/A 17 June 1994 (A) 17,028

EMR 3116 Lot 1536, /residential

Mukim of Cheras, development

Daerah Ulu Langat, in progress

Selangor Darul Ehsan

as at 30 June 2003


annual report 2003

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form of proxyAYER HITAM TIN DREDGING MALAYSIA BERHAD (27673-W)REGISTERED OFFICESuites 4-6, Level 24, Menara Olympia, No. 8, Jalan Raja Chulan, 50200 Kuala Lumpur

Signature (If shareholder is a corporation, this part should be executed under seal)

Dated this day of , 2003

ORDINARY RESOLUTION 1 To receive and adopt the Audited Accounts for the financial yearended 30 June 2003 together with the Reports of the Directors andAuditors thereon.

ORDINARY RESOLUTION 2 To re-elect Choo Tong Kin @ Chew Tong Kim who retires in accordancewith Article 81 of the Company’s Articles of Association.

ORDINARY RESOLUTION 3 To re-elect Mohamed Azahari bin Mohamed Kamil who retires inaccordance with Article 88 of the Company’s Articles of Association.

ORDINARY RESOLUTION 4 To re-elect Dato’ Ikhwan Salim bin Dato’ Haji Sujak who retires inaccordance with Article 88 of the Company’s Articles of Association.

ORDINARY RESOLUTION 5 To re-appoint Messrs. KPMG as Auditors of the Company and toauthorise the Directors to fix their remuneration.

ORDINARY RESOLUTION 6 To authorise the Directors of the Company to issue and allot sharespursuant to Section 132D of the Companies Act, 1965.

*I/We

being a member of AYER HITAM TIN DREDGING MALAYSIA BERHAD (“the Company”) hereby appoint *the Chairman or

of

or failing *him/her,

of

as *my/our proxy to vote for *me/our behalf at the Twenty-Fifth Annual General Meeting of the Company to be held at Alamanda Room,

Second Floor, Dorsett Regency Hotel, 172, Jalan Imbi, 55100 Kuala Lumpur on Tuesday, 16 December 2003 at 10.00 a.m. and at any

adjournment thereof.

Please indicate the manner in which you wish your votes should be cast with an “X” in the appropriate spaces below. Unless voting

instructions are specified therein, the proxy will vote or abstain from voting, as he/she thinks fit.

No. of Ordinary Shares Held

Notes:

1. Any member of the Company entitled to attend and vote at the meeting isentitled to appoint a proxy to attend in his stead. A proxy may but need notbe a member of the Company and the provisions of Section 149(1)(b) of theCompanies Act, 1965 shall not apply to the Company.

2. To be valid, the form of proxy duly completed must be deposited at theCompany’s Registered Office at Suites 4-6, Level 24, Menara Olympia, 8 JalanRaja Chulan, 50200 Kuala Lumpur not less than 48 hours before the timeappointed for holding the meeting or any adjournment thereof.

3. A member shall be entitled to appoint not more than two (2) proxies to attendand vote at the same meeting, provided that the provisions of Section 149(1)(c) of the Companies Act, 1965 are complied with.

4. Where a member appoints more than one (1) proxy, the appointment shallbe invalid unless he specifies the proportions of his holdings to be representedby each proxy.

5. If the appointor is a corporation, the form of proxy must be executed underits Common Seal or under the hand of its attorney duly authorised.

* Delete where not applicable

RESOLUTION FOR AGAINST

THE COMPANY SECRETARY

AYER HITAM TIN DREDGING MALAYSIA BERHAD (27673-W)


8, Jalan Raja Chulan

50200 Kuala Lumpur

AFFIX STAMP

HERE

3RD FOLD HERE

2ND FOLD HERE

AYER HITAM TIN DREDGING MALAYSIA BERHAD

(27673-W ) (Incorporated in Malaysia)


No. 8, Jalan Raja Chulan, 50200 Kuala Lumpur

Tel: 03-2031 9633 Fax: 03-2031 6920

Email : [email protected]

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