cover for pdf - fundamental analysis -ar31-12-2003.pdftuan haji ahmad kamal abdullah al-yafii the...

Contents

Notice of Annual General Meeting

Statement Accompanying Notice of 39th Annual General Meeting

Corporate Information

Corporate Structure

Board of Directors

Directors� Profile

Chairman�s Statement

Operation Statement

Liquefied Petroleum Gas (LPG)

Information & Communications Technology (ICT)

Education & Training (E&T)

Food & Beverage (F&B)

Property, Engineering & Construction (PEC)

Statement on Corporate Governance

Statement on Internal Control

Board Audit Committee Report

Analysis of Shareholding

Financial Statements

Directors� Report

Statement By Directors

Statutory Declaration

Reports of the Auditors

Balance Sheet

Income Statement

Statement of Changes in Equity

Cash Flow Statements

Notes to the Financial Statements

List of Properties

Proxy Form

2

3

4

5

6

7

12

15

17

20

23

26

28

34

36

40

44

47

48

49

50

51

52

53

55

86

93

Notice of Annual General Meeting

2

NOTICE IS HEREBY GIVEN THAT the 39th Annual General Meeting of KUB Malaysia Berhad will be heldat the Dewan Tun Dr. Ismail, Putra World Trade Centre (PWTC), 50480 Kuala Lumpur on Wednesday, 30 June 2004 at 10.00 a.m. to conduct the following business:-

Agenda

Ordinary Business1. To receive and adopt the audited Financial Statements of the Company and Group for the financial

year ended 31 December 2003 and the Reports of the Directors and Auditors thereon. (Resolution 1)2. To re-elect the following Directors who retire pursuant to Article 97 of the Company�s Articles of

Association and being eligible offer themselves for re-election:-(i) Datuk Hassan Harun (Resolution 2)(ii) Dato� Ir. Harun Ahmad Saruji (Resolution 3)

3. To re-elect Tuan Haji Ahmad Kamal Abdullah Al-Yafii who retires pursuant to Article 102 of the Company�s Articles of Association and being eligible offer himself for re-election. (Resolution 4)

4. To approve the Directors� fees for the year 2003. (Resolution 5)5. To re-appoint Messrs KPMG Desa Megat & Co. as Auditors of the Company and to authorise the

Directors to fix their remuneration. (Resolution 6)

Special Business6. To consider and if thought fit to pass the following Ordinary Resolution:-

�THAT pursuant to Section 132D of the Companies Act, 1965 and subject always to the approval of the relevant authorities, the Directors be and are hereby empowered to issue share in the Company from time to time and upon such terms and conditions and for such purposes the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.� (Resolution 7)

Any Other Ordinary Business7. To transact any other ordinary business of which due notice shall have been given in accordance with the

Companies Act, 1965.

By Order of the Board

Aida Haniza Adnan (LS006623)Norhashema Saleh (MAICSA 7021781)Secretaries

Kuala Lumpur7 June 2004

Notes :-1. A member of the Company entitled to attend and vote at the abovementioned Meeting is entitled to appoint one other person

or persons, whether a member or not as his/her proxy/proxies to attend and vote in his/her stead. Where a member appoints two or more proxies, the member shall specify the proportion of the member�s shareholding to be represented by each proxy.

2. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised or if the appointer is a corporation, either under its common seal or the hand of its attorney.

3. The Proxy Form must be deposited at the office of the Company's Share Registrar, Malaysian Share Registration Services Sdn Bhd, Level 26, Menara Multi Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur by hand or fax to 03-27212530 not less than twenty-four (24) hours before the time for holding the Meeting or any adjournment thereof.

4. Explanatory Notes on Special Business: Ordinary Resolution (7), if passed, will give the Directors of the Company, from the date of the above Meeting, authority to issue and allot ordinary shares from the unissued capital of the Company being for such purposes as the Directors consider would be in the interest of the Company. This authority will, unless revoked or varied by the Company in the general meeting, expire at the next Annual General Meeting.

Statement Accompanying Notice of the 39th Annual General Meeting

3

The names of retiring Directors who are standing for re-election at the 39th Annual General Meeting:

i. Datuk Hassan Harun

ii. Dato� Ir. Harun Ahmad Saruji

iii. Tuan Haji Ahmad Kamal Abdullah Al-Yafii

The details of Directors who are standing for re-election at the 39th Annual General Meeting are set out

in the Profile of Directors appearing on page 7 to 11 and Directors� shareholding in page 40.

There were 9 Board Meetings held during the financial year.

The Board Meetings and the details of attendance of the Directors for the financial year ended

31 December 2003 are as follows:

Name of Directors Attendance

Datuk Hassan Harun 9/9

Datuk Mohd Hashim Hassan 8/9

Datuk Haji Ahmad Shahibuddin Haji Mohd Nor 9/9

Dato� Kamilia Ibrahim 9/9

Dato� Ir. Harun Ahmad Saruji 8/9

Tan Sri Datuk Dr. Johari Mat 7/9

Ahmad Rodzi Pawanteh 9/9

Che Khalib Mohamad Noh 9/9

Tuan Haji Ahmad Kamal Abdullah Al-Yafii 3/3

* Appointed on 8 August 2003

Dato� Zainal Abidin Putih 4/5

* Resigned on 31 July 2003

The Company�s 38th Annual General Meeting was held at Dewan Tun Hussein Onn, Pusat Dagangan

Dunia Putra (PWTC), 50480 Kuala Lumpur on 25 June 2003 at 10.00 a.m.

4

Corporate Information

Board of Directors

Datuk Hassan HarunNon-Independent Non-Executive DirectorChairman

Datuk Mohd Hashim HassanNon-Independent Non-Executive DirectorDeputy Chairman

Datuk Haji Ahmad Shahibuddin Haji Mohd NorIndependent Non-Executive DirectorDirector

Dato� Kamilia IbrahimIndependent Non-Executive DirectorDirector

Dato� Ir. Harun Ahmad SarujiIndependent Non-Executive DirectorDirector

Tan Sri Datuk Dr. Johari MatIndependent Non-Executive DirectorDirector

Tuan Haji Ahmad Kamal Abdullah Al-YafiiIndependent Non-Executive DirectorDirector

Ahmad Rodzi PawantehNon-Independent Executive DirectorDirector

Che Khalib Mohamad NohNon-Independent Executive DirectorManaging Director & Chief Executive

Board Committees

Audit CommitteeTuan Haji Ahmad Kamal

Abdullah Al-Yafii (Chairman)Dato� Ir. Harun Ahmad Saruji (Member)Datuk Haji Ahmad

Shahibuddin Haji Mohd Nor (Member)

Nomination CommitteeDatuk Haji Ahmad

Shahibuddin Haji Mohd Nor (Chairman)Dato� Kamilia Ibrahim (Member)Dato� Ir. Harun Ahmad Saruji (Member)

Remuneration CommitteeDato� Ir. Harun Ahmad Saruji (Chairman)Datuk Haji Ahmad

Shahibuddin Haji Mohd Nor (Member)Dato� Kamilia Ibrahim (Member)

Executive CommitteeDatuk Mohd Hashim Hassan (Chairman)Ahmad Rodzi Pawanteh (Member)Che Khalib Mohamad Noh (Member)

Company SecretariesAida Haniza Adnan (LS006623)Norhashema Saleh (MAICSA 7021781)

Registered OfficeLevel 21, KUB.com12 Jalan Yap Kwan Seng50450 Kuala LumpurTelephone : 603-2718 9666 Facsimile : 603-2718 9055Website : www.kub.com

Share RegistrarMalaysian Share Registration Services Sdn Bhd(378993-D)Level 26, Menara Multi Purpose, Capital SquareNo.8. Jalan Munshi Abdullah50100 Kuala LumpurTelephone : 603-2721 2222Facsimile : 603-2721 2530

AuditorsMessrs KPMG Desa Megat & Co(Firm No. AF0759)Wisma KPMG, Jalan DungunDamansara Heights50490 Kuala LumpurTelephone : 603-2095 3388Facsimile : 603-2095 0971

Principal BankersBumiputra-Commerce Bank BerhadMalayan Banking BerhadAfffin Bank Berhad

ListingThe Main Board,Bursa Malaysia Securities Berhad

Stock Short CodeKUB 6784

5

KUB Malaysia Berhad

Core Business Information & Communications Technology (ICT)

Group of Companies KUB Telekomunikasi Sdn Bhd 100%

KUB-Fujitsu Telecommunications (Malaysia) Sdn Bhd 70%

KUB Research Sdn Bhd 100%

Tele Dynamics Sdn Bhd 60%

Core Business Education & Training (E&T)

Group of Companies Universiti Tun Abdul Razak Sdn Bhd 100%

ITTAR Sdn Bhd 100%

ITTAR-IPP (PJ) Sdn Bhd 100%

ITTAR-ILP (Prai) Sdn Bhd 100%

Core Business Properties, Engineering & Construction (PEC)

Group of Companies KUB Development Berhad 100%

KUB Realty Sdn Bhd 100%

KUB Realty (PJ) Sdn Bhd 100%

Peraharta Sdn Bhd 100%

KUB Power Sdn Bhd 100%

Bina Alam Bersatu Sdn Bhd 55%

Core Business Liquefied Petroleum Gas (LPG)

Group of Companies KUB Gas Sdn Bhd 100%

Summit Petroleum (Malaysia) Sdn Bhd 100%

Core Business Food & Beverage (F&B)

Group of Companies Restoran Kualiti Sdn Bhd 100%

A&W (Malaysia) Sdn Bhd 100%

A&W Restaurants (Thailand) Co., Ltd 100%

KUB Singgahsana (PJ) Sdn Bhd 100%

Others Manufacturing, Plantation, Listed Associates,

Consumer Products & Others (Others)

Group of Companies KUB Tekstil Sdn Bhd 100%

Creative Communications & Events Sdn Bhd 100%

Pernida Berhad 86%

Utama Steel Works Sdn Berhad 51%

Computer Forms (Malaysia) Berhad 32%

United Chemical Industries Berhad 24.81%

Corporate Structure

Tan Sri Datuk Dr. Johari Mat

Director

Datuk Mohd

Hashim Hassan

Deputy Chairman

Tuan Haji Ahmad

Kamal Abdullah

Al-Yafii

Director

Datuk Hassan

Harun

Chairman

Ahmad Rodzi

Pawanteh

Director

Datuk Haji

Ahmad

Shahibuddin

Haji Mohd Nor

DirectorChe KhalibMohamad Noh

Managing Director &

Chief Executive

Dato� Ir. Harun

Ahmad Saruji

Director

Dato� Kamilia

Ibrahim

Director

Aida Haniza

Adnan

Company

Secretary

Board of Directors

7

Directors� Profiles

Datuk Hassan Harun

Non-Independent Non-Executive Director

Chairman

Datuk Hassan Harun, aged 58, Malaysian,

was appointed to the Board of KUB Malaysia

Berhad on 26 February 1997. Currently, he also

serves as Chairman of another public-listed

company in the KUB Group, Computer Forms

(Malaysia) Berhad. In addition, he chairs

several companies in the Group, including

Universiti Tun Abdul Razak Sdn Bhd (UNITAR),

ITTAR Sdn Bhd, KUB Telekomunikasi

Sdn Bhd, Bina Alam Bersatu Sdn Bhd and

Tele Dynamics Sdn Bhd.

Apart from corporate responsibilities,

Datuk Hassan is involved in politics, nation

building and the development of IT, education

and entrepreneurship. Currently, he is a

member of the UMNO Supreme Council and

Chief Executive of the Institute for Nation-

Building Studies, a non-profit research

organisation. He is a member of the Board

of the National Higher Education Fund

Corporation and a member of both the

Bumiputera Entrepreneur Development Council

and Communications Technology Development

Council.

He was conferred a DBA (Hons) by I.M.C. UK

and a D. Mgmt (Hons) by Universiti Teknologi

Malaysia. Datuk Hassan also graduated with a

Master in Management from the Asian Institute

of Management, Manila and B.A. (Hons) from

Universiti Malaya.

Other than the above and as disclosed in

Directors� Shareholdings on Page 40, he has no

conflict of interest with KUB Malaysia Berhad.

He does not have any family relationship with

any Director of KUB Malaysia Berhad and has

never been convicted of any offence over the

past 10 years.

Datuk Mohd Hashim Hassan


Deputy Chairman

Chairman of Executive Committee (EXCO)

Datuk Mohd Hashim Hassan, aged 58,

Malaysian, was appointed to the Board of KUB

Malaysia Berhad on 1 November 2002.

He has held various key positions throughout

a career spanning almost 33 years in the

government, semi-government and private

sectors. Prominent career highlights include

appointments as Chief Executive Officer,

Kedah State Development Corporation from

1993 until 1996, Managing Director, Kulim

Technology Park Corporation from 1994 until

1996, Executive Chairman, Bina Darulaman

Berhad from 1994 until 1997 and Director/Chief

Executive Officer, Putrajaya Holdings Sdn Bhd

from 1996 until 2002.

He is presently the Chairman of Putrajaya

Holdings Sdn Bhd, Chairman of Padiberas

Nasional Berhad, Director of Bank Kerjasama

Rakyat (M) Berhad and Director of Lebar Daun

Berhad.

He obtained his MBA from Ohio University

USA, as well as an M.Sc (Food Science) from

Michigan State University, USA and a B. Agri.

Sci. from Universiti Malaya.

He does not have any family relationship

with any Director and/or major shareholder

of KUB Malaysia Berhad. He has never been

convicted of any offence over the past 10

years and has no conflict of interest with

KUB Malaysia Berhad.

Directors� Profiles (continued)

8

Datuk Haji Ahmad Shahibuddin Haji Mohd Nor

Independent Non-Executive Director

Director

Member of Board Audit Committee (BAC)

Chairman of Board Nomination Committee

(BNC)

Member of Board Remuneration Committee

(BRC)

Datuk Haji Ahmad Shahibuddin Haji Mohd Nor,

aged 60, Malaysian, was appointed to the Board

of KUB Malaysia Berhad on 28 April 1997.

In addition, he is a Director of Universiti Tun

Abdul Razak Sdn Bhd (UNITAR), ITTAR Sdn

Bhd, ITTAR-IPP (PJ) Sdn Bhd, ITTAR-ILP (Prai)

Sdn Bhd, KUB Agrotech Sdn Bhd and KUB

Sepadu Sdn Bhd.

Although he is a trained teacher, he has gained

substantial experience in government agencies.

He earned his B.A. and Dip. Ed. from Universiti

Malaya and began his teaching career in 1966

before attaining the position of Kelantan Deputy

Director of Education in 1982. In government,

he chaired FELCRA Malaysia Berhad from 1993

until 2000 and was the Chairman of KESEDAR

(South Kelantan Development Authority) from

1991 until 1992. He has served as a Member of

the National Tobacco Board since 1986 until

2002. In politics, he was chief of UMNO Bachok

Division from 1976 until 2003, UMNO Supreme

Council member from 1987 until 1995, UMNO

Liaison Committee�s Secretary of Kelantan from

1984 until 2000 and was also the EXCO

Member for Kelantan from 1986 until 1990.


with any Director and/or major shareholder of

KUB Malaysia Berhad. He has never been

convicted of any offence over the past 10 years

and has no conflict of interest with KUB

Malaysia Berhad.

Dato� Kamilia Ibrahim


Director

Member of Board Nomination Committee (BNC)

Member of Board Remuneration Committee

(BRC)

Dato� Kamilia Ibrahim, aged 52, Malaysian,


Berhad on 28 April 1997.

She sits on the Boards of several KUB Malaysia

Berhad subsidiaries including ITTAR Sdn Bhd,

Universiti Tun Abdul Razak Sdn Bhd (UNITAR)

and Restoran Kualiti Sdn Bhd. In addition, she is

the Chairman of ITTAR-IPP (PJ) Sdn Bhd and

ITTAR-ILP (Prai) Sdn Bhd.

Presently, she is the principal partner in her law

firm, which specialises in property, commercial,

banking and shipping laws. She has served as

a member of the National Islamic Council

Malaysia since 2000 and currently is the

President of the Muslim Women Consultative

Council Malaysia (YADIM) and is a member of

the Royal Police Commission.

She obtained her LLB and LLM from Universiti

Malaya and her Dip. in Syariah Law & Practice

from the International Islamic University of

Malaysia (IIUM).

She does not have any family relationship with

any Director and/or major shareholder of KUB

Malaysia Berhad. She has never been



Malaysia Berhad.

9

Dato� Ir. Harun Ahmad Saruji


Director

Member of Board Audit Committee (BAC)

Member of Board Nomination Committee (BNC)

Chairman of Board Remuneration Committee

(BRC)

Dato� Ir. Harun Ahmad Saruji, aged 67,

Malaysian, has served the Malaysian

Government for 35 years and his last position

was as the Chief Executive Officer of the Perak

State Development Corporation (Perbadanan

Kemajuan Negeri Perak).

He obtained his BSc. in Civil Engineering from

the University of Brighton, UK and is a Member

of the Institute of Engineers, Malaysia and a

Professional Engineer of the Board of

Engineers, Malaysia.

He was appointed to the Board of KUB Malaysia

Berhad on 1 January 1993 and also serves on

the Board of KUB subsidiaries.

He is presently the Chairman of Perak

Corporation Berhad (PCB), a Company listed

on the Main Board of Bursa Malaysia Securities

Berhad and serve as a Director in several PCB

subsidiaries.






Malaysia Berhad.



Director

Tan Sri Datuk Dr. Johari Mat, aged 59,

Malaysian, was appointed to the Board of KUB

Malaysia Berhad on 3 December 2002.

A seasoned administrator, Tan Sri Johari�s

career with the Malaysian Administrative and

Diplomatic Service spanned 33 years. He had

served in different capacities in the Ministries of

Agriculture, Social Development, Domestic

Trade, Education and the Prime Minister�s

Department. At the international level, he had

been researcher, lecturer and consultant to

organisations such as UNCRD, UNESCO,

ASEAN, SEAMEO, APDC and COL.

He obtained his B.A. (Hons) from Universiti

Malaya, M.P.A. and Ph.D from the University

of Southern California, USA. He attended

the Advanced Management Program (AMP)

at Harvard University in 1997. He was conferred

the honorary Dr. Ed by Universiti Malaya in

2002. He is a chartered member of the

Malaysian Institute of Planners.

He is presently the Chairman of Board of

United Plantations Berhad, PJS Environmental

Services Sdn Bhd and Infusion Solutions

Sdn Bhd. He is also on the Board of Universiti

Tun Abdul Razak Sdn Bhd (UNITAR),

International Medical University and Spatial

Consult Sdn Bhd.






Malaysia Berhad.

Directors� Profiles (continued)

10

Tuan Haji Ahmad Kamal Abdullah Al-Yafii


Director

Chairman of Board Audit Committee (BAC)

Tuan Haji Ahmad Kamal Abdullah Al-Yafii, aged65, Malaysian, was appointed to the Board ofKUB Malaysia Berhad on 8 August 2003.

A Chartered Accountant by training, Tuan Haji

Ahmad Kamal has more than 42 years

experience in accounting, management

consulting and senior managerial positions in

local and multinational public listed companies.

He is an Associate Member of the Malaysian

Institute of Accountants, a Fellow of the Institute

of Chartered Accountants (England & Wales)

and a Council Member of the Malaysian Institute

of Certified Public Accountants from 1974 until

2000.

Upon retirement in 1999, Tuan Haji Ahmad Kamal

joined Universiti Utara Malaysia as an Adjunct

Professor. Previously, Tuan Haji Ahmad Kamal

was a Partner of Hanafiah, Raslan & Mohamed

from 1970 until 1999 and Financial Controller

with Malayawata Steel Berhad from 1967 until

1970.

He is presently a Director of Amanah

Raya Berhad and is a Member of its Board

Audit Committee.






Malaysia Berhad.

Ahmad Rodzi Pawanteh

Non-Independent Executive Director

Director

Member of Executive Committee (EXCO)

Ahmad Rodzi Pawanteh, aged 47, Malaysian,


Berhad on 3 December 2002.

He had earlier pursued a profesional banking

career with the Bank of America NT&SA and

Amanah-Chase Merchant Bank Berhad, gaining

wide exposure in international banking and

project finance. Subsequently, he held

Directorship positions in companies related to

the power transmission, food and beverage and

pharmaceutical industries.

He obtained an MBA in General Management

from Southern Cross University, Australia

and an MBA in Banking & Finance from the

University of Hull, UK. Earlier, he earned

a Bachelor of Economics (Hons) from

Universiti Malaya and a Bachelor of Laws

(Hons) from the University of Wolverhampton,

UK. He also holds a Professional Diploma in

Marketing and is a Member of the Chartered

Institute of Marketing, UK.


with any Director and/or major shareholder

of KUB Malaysia Berhad. He has never

been convicted of any offence over the past 10

years and has no conflict of interest with KUB

Malaysia Berhad.

11

Che Khalib Mohamad Noh

Non-Independent Executive Director

Managing Director & Chief Executive

Member of Executive Committee (EXCO)

Che Khalib Mohamad Noh, aged 39, Malaysian,


Berhad on 1 November 2002.

He is a Fellow of the Association of Chartered

Certified Accountants and a member of the

Malaysian Institute of Accountants.

Che Khalib started his career with Messrs Ernst

& Young and later joined Bumiputra Merchant

Bankers Berhad.

Between 1992 and 1999, he served in

several companies within the Renong Group,

including Projek Lebuhraya Utara-Selatan

Berhad, Renong Overseas Corporation Sdn

Bhd and Marak Unggul Sdn Bhd, the

consortium company responsible for the

management of Keretapi Tanah Melayu. In June

1999, he joined Ranhill Utilities Berhad as Chief

Executive Officer.

He also serves on the Boards of Khazanah

Nasional Berhad, United Engineers (Malaysia)

Berhad, Ranhill Utilities Berhad, Computer

Forms (Malaysia) Berhad, UEM World Berhad,

Maika Holdings Berhad, Bank Industri &

Teknologi Malaysia Berhad and several private

limited companies.






Malaysia Berhad.

12

Chairman�s StatementAt our last annual general meeting, the Group pledged topursue an extensive restructuring programme that will deliverfuture earnings growth and operating efficiency. I am pleasedto note that this commitment has been fruitful, improving ouroverall performance by leaps and bounds for FY2003.

Financial PerformanceThe improving global and domestic economicclimate of FY2003 revived consumer andbusiness confidence, and helped the Groupgenerate improved numbers last year. For theyear ended 31 December 2003, Group turnoverclimbed 21% to RM625.3 million againstRM515.7 million for FY2002.

I am delighted to note that the intensiverestructuring and consolidation measures thatwe vowed to implement last year have placedthe Group on a stronger financial footing.Operational performance showed a hefty gaindue to the aggressive culture of continuousimprovement that has been put in place. TheGroup recorded earnings before interest, taxand depreciation (EBITDA) of RM46.6 million forFY2003, more than 20-fold improvement overRM1.9 million for FY2002.

However, the Group is still in the red wherepre-tax losses are concerned. But I am pleased tonote that the Group trimmed pre-tax lossesradically to (-RM20.1) million from the pre-tax lossof (-RM274) million for FY2002. Similarly, theGroup slashed after-tax losses drastically to (-RM29.6) million from (-RM276.1) million forFY2002, while losses per share dropped to (-5.9)sen per share compared to (-54.7) sen in FY2002.

To recap, our pre-tax and after-tax losses inFY2002 were substantial due to net provisionsand write-offs. Specifically, the Group madesubstantial provisions in FY2002 for asset write-offs and revaluations resulting fromconsolidation and companies that were shutdown. In addition, MASB23 came into force on1 January 2002, meaning that companies had tomake mandatory provisions for assets that wereimpaired or whose value had decreased. As aresult, the Group wrote off developmentexpenditure, obsolete stocks, and bad debtsand revised the book value of goodwill and realestate to reflect current market values. Theseprovisions, accounted for under the section on

exceptional items, totaled RM204.4 million.

I am also delighted to report that our existingportfolio of assets - which among othersincludes landed assets and plantations - haveappreciated in line with the country�s continuinghealthy economic growth, hence strengtheningthe Group�s financial position.

Core BusinessesThe restructuring programme is designed toencourage rigorous discipline, consistentquality, creativity and �thinking out of the box� at subsidiary level. This culture of continuouslyenhancing productivity, efficiency and innovationhas seen growth and earnings spike uptremendously at individual divisions - andmitigated losses at some divisions.

ICT�s EBITDA jumped 1.5 times to RM11.6 millionfor FY2003 from RM7.3 million in FY2002, eventhough turnover slipped to RM200.9 million forFY2003 against RM208.8 million in FY2002.

Turnover at the Education and Training (E&T)division grew nearly 8% to RM66.4 million in FY2003 against RM61.5 million in FY2002.E&T EBITDA jumped nearly 25% to RM16.5 million for FY2003 from RM13.4 millionin FY2002.

Property, Engineering and Construction (PEC)revenue doubled to RM74.2 million for FY2003against RM35.9 million in FY2002. PEC�s EBITDAjumped to RM5.1 million for FY2003 against anegative EBITDA of RM0.5 million for FY2002.

In the Food and Beverage (F&B) division,losses before interest, tax and depreciation fellto RM2.2 million for FY2003 from RM12.9 millionfor FY2002.

At the same time, some of our newer andunproven businesses have now turned aroundto become powerhouses and saviours for theGroup.

13

After several years of gestation, the pioneering�on-line, on-campus� university UNITAR has produced its maiden pre-tax profit ofRM4.23 million.

LPG, which was lacklustre in FY2002, is now a star performer, spearheaded by SummitPetroleum (Malaysia) Sdn Bhd. Today, Summitis the country�s largest independent LPG bottlerand distributor, and its Solar brand reaches 6%of the market. LPG registered pre-tax profit ofRM2.5 million on turnover of RM148.5 million forFY2003 against last year�s loss before tax andexceptional items of RM10.8 million, on aturnover of RM75.1 million.

The Plantations business grew substantially,driven by sustainable oil palm prices, higheryields from maturing trees, and the outsourcingof management to a professional estatemanagement company. The KUB Agrotechgroup recorded EBITDA of RM7.5 million on a turnover of RM15.3 million compared toEBITDA of RM4.4 million on turnover of RM11 million in FY2002.

In fact, the rejuvenation of these businesses hasvindicated and proven the worth of the Group�slong-term diversification strategy. The diversityof our businesses has often come under debate,particularly in the media and at shareholders�meetings. In the Group�s defense, I must pointout that we adopted the diversity stratagem inorder to broaden the Group�s income streamsand sources of profit. Previously, we wereinvolved only in trading and services, which offerlow margins and low barriers to entry. Today, weare involved in higher education, ICT solutions,manufacturing, LPG bottling and distribution,and fast food - all of which are businesses which have higher value-add than pure tradingand conventional services. The Group is poisedto become one of the nation�s more dynamicconglomerates, which derives strength andstability from its diverse businesses. Throughdiversification, the Group has avoided putting all its eggs in one basket. Each businesspossesses different strengths: different growthand income patterns, different economies ofscale, different markets, and different profitmargins. When one business is in a down cycle, another business in an up cycle cancompensate for the former�s weakness tosmoothen and stabilise the Group�s overallfinancial performance.

Disposal of Non-Strategic AssetsAt the same time, the Group maintained itsongoing disposal programme, which is a crucialelement of our restructuring strategy. Apart fromrealising capital gains and freeing up cash topare debt, the sale of non-essential assets haveenabled the management team to focus on ourmajor businesses. This enhanced attention hascontributed to the general increase in operatingprofit and financial efficiency across our corebusiness sectors.

In January 2004, the Group completed itsdisposal of minority 15% stake in MalaysianSheet Glass Berhad for RM32.62 million, resultingin a gain of RM24.99 million.

The Group has decided to exit the business ofproperty development for the time being toconcentrate on joint-venture construction andinfrastructure projects. Therefore, in April 2004,the Group completed the disposal of its parcel of land in Bukit Jalil for a cash consideration of RM39.3 million, resulted to a gain of RM16.5 million.

Changes in the Board of DirectorsI am pleased to welcome Tuan Haji AhmadKamal Abdullah Al-Yafii to the Board. He joined us as the Chairman of the Board AuditCommittee (BAC) and an independent and non-executive director in August 2003. I ampositive that the company will benefit greatlyfrom Tuan Haji Ahmad Kamal�s substantialexperience in audit and risk management.

Tuan Haji Ahmad Kamal succeeds our previousBAC Chairman Dato� Zainal Abidin Putih, wholeft the Board on 31 July 2003. Many thanks toDato� Zainal for his excellent service to KUB andwe wish him well in his future ventures.

Managing Director Encik Che Khalib MohamadNoh resigned as a member of the Board Audit Committee (BAC) on 26 February 2003.Encik Che Khalib�s resignation is aligned withglobal best practices in corporate governanceand BAC independence, and enhances theGroup�s control environment.

Outlook2004 will herald a further stage in the Group�sevolution. Going forward, we will movepurposefully towards a corporate structurecontaining a narrower spread of growing core

Chairman Statement (continued)

14

businesses. This will be a year of ongoingcorporate activity and change as we continue torestructure ourselves and implement newgrowth strategies in order to deliver furthervalue to shareholders.

Disposals of non-key assets will continue, andthe returns will be used to reduce gearing. As of31 December 2003, bank borrowings wereRM225.4 million. In the first quarter of 2004, theGroup settled approximately RM44 million ofthis debt. The Group proposes to reduce itsborrowings to RM160 million or a gearing ratioof 0.3 times by the end of the second quarter of 2004.

Our strategies for growth and efficiency throughrestructuring will enable us to perform even better in future, and we are confident ofturning in a superior financial and operationalperformance supported by the favourableeconomic forecast for 2004.

AcknowledgementsOn behalf of the Board, I would like to take thisopportunity to record our utmost appreciation toour valued customers, shareholders, businesspartners, various Government authorities andstaff for their ardent support. The valiant anduntiring efforts of the management, especiallyin implementing a difficult and challengingrestructuring exercise, deserve special mentionand heartfelt thanks.

I am confident that with the strong support of our shareholders, guidance from my fellowBoard members, committed and professionalworkforce and the continued support and loyaltyof our clients, the years ahead will be dynamicand exciting indeed for KUB Malaysia Berhad.

Last but definitely not least, the Board extendsits deepest appreciation and sympathies to the1,043 valued employees who forfeited theircareers at KUB to safeguard the Group�slongevity and welfare. It was not an easydecision for the Board and management toterminate the services of these people, whomwe regard as members of the KUB family. Infact, many of these former employees are familymembers of KUB shareholders, and also KUBshareholders in their own right.

These altruistic people opted to accept thevoluntary separation scheme under last year�srestructuring and consolidation exercise, and asa direct result of their sacrifice, the Group isstronger and more efficient and productive thanever. We thank them for their selflessness, andassure them that they will be the first onesrehired when the Group expands operationsand employment in future.

Liquefied Petroleum Gas (LPG) Division

Summit�s Solar brand accounted for 6% of the national LPG market and is a household namein the markets of Johor Bahru, Johor and Prai, Penang. Summit foresees that its share willrise to at least 7% in FY2004.

Encik Wan Mohd Nor Wan Ahmad

Head, Liquefied Petroleum Gas Division at Summit�s ocean terminal and

bottling plant in West Port, Pulau Indah, Klang, Selangor.

16

Encik Wan Mohd Nor, CEO of Summit Petroleum(rightmost) was seen during the media briefing to update the market on Summit's financialperformance and business direction.

Summit Petroleum signed a formal agreements to buy LPG from Singapore Petroleum LimitedCompany (SPC) and Keloil-Petroleum Authority of Thailand (PTT). The contracts were valued atRM100 million.

A Turnaround Success

Financial PerformanceThe LPG division emerged as a new powerhouse for the Group in FY2003. Its return toprofitability was boosted by the resurgence of Summit Petroleum (M) Sdn Bhd (Summit).

The division delivered a reasonable profit for FY2003 compared to FY2002 when it recordedlosses due to certain allowance for impairment losses.

KUB Gas Sdn Bhd on the other hand brought in a positive EBITDA for the first time in 2003.

StrategiesGrowth in sales improved LPG�s bottomline. Total tonnage sold for FY2003 grew to 80,000metric tons (MT) compared to lesser amount in FY2002. Products were distributed througha larger dealer network with expanded reach. For FY2003, Summit appointed 5 new dealersto further penetrate the Klang Valley market.

Costs, productivity and efficiency have been streamlined through restructuring measures.West Port operated double shifts - as opposed to a single shift plus overtime - has increasedoutput and slashed overtime costs. Alternative freight and bottling arrangements havesignificantly reduced logistics and production costs.

OutlookSanguine economic conditions combined with strategies to drive organic growth and raisequality will drive the LPG division�s performance in FY2004.

ConditionsMalaysian GDP growth is pegged at between 5.5% and 6% in FY2004; this will translate intostronger consumer confidence and rising demand for goods, including LPG.

Globally, LPG stocks are expected to be adequate and prices stable. Producers such asRussia and OPEC are keeping output consistent, damping the risks of shocks. The shortNorthern Hemisphere winter also kept prices down; LPG is a popular fuel for winter heatingand global LPG demand usually peaks during long winters.

Organic GrowthSummit intends to entrench its position as the largest independent LPG bottler in Malaysia,and will maintain its aggressive sales and marketing campaign with the focus staying on theKlang Valley. In FY2003, Summit�s Solar brand accounted for 6% of the national LPG market,and is a household name in the markets of Johor Bahru, Johor and Prai, Penang. Summitforesees that its share will rise to at least 7% in FY2004, propelled by an expanding networkof distributors in the Klang Valley and a larger and more effective sales and marketing force.

In future, Summit intends to explore new avenues of growth that will deliver returns toshareholders. Summit is also exploring the possibility of venturing into the supply of servicesto production-sharing contractors (PSCs) via strategic acquisition.

QualityPremium quality and standards are integral values of the Solar brand, which is synonymouswith top-quality cooking gas. In April 2004, Summit successfully achieved the globalISO9000:2001 standard for its processes and products. This international certification atteststo the reliability and quality of Solar products as well as Summit�s culture of superior andconsistent achievement.

Information & Communications Technology (ICT) Division

The ICT division anticipates an improved performance in FY2004, due to a more positiveinvestment climate that will create new opportunities and its ongoing exercise to consolidateand restructure resources.

Encik Ab Aziz Mohamed

Head, Information & Communications Technology Division at Telekom

Malaysia's Cyberjaya Wireless Local Loop (WiLL) Radio Base Station

supplied by KUBTel.

Bahtiar Salleh, Chargeman of KUBTel, carrying outhis routine check on KUBTel�s 1st locally fabricatedRTDSLAM (Remote Terminal Digital SubscriberLine Access Multiplexer) for TMB at Kota Kemuning,Shah Alam, Selangor.

A Consistent Performer

The ICT division maintained its leading role in the Group in FY2003, reporting profit after tax

of RM3.2 million and EBITDA of RM11.6 million on turnover of RM200.9 million. For FY2002,

ICT recorded a profit after tax at only RM0.5 million and EBITDA of RM7.4 million on a

turnover of RM208.8 million.

Turnover was mainly derived from Tele Dynamics Sdn Bhd (Tele Dynamics) (contributing

RM139.9 million), KUB Telekomunikasi Sdn Bhd (KUBTel) (RM29.2 million) and KUB-Fujitsu

Telecommunications (M) Sdn Bhd (KFT) (RM31.5 million).

KUBTel recorded pre-tax profits of RM1.4 million and Tele Dynamics RM2.3 million, but this

was offset by losses of (-RM5.2) million incurred by investment in B-Wise and Somatel

projects.

Strategies

The ICT division continued its winning strategy of tackling Government, corporate and SME

markets in FY2003, supported by resilient economic conditions that bolstered ICT investment

spending.

KUBTel successfully retained incumbent Telekom Malaysia Berhad (TMB) as a major client,

through the following projects:

� Telekom ADSL (Asymmetrical Digital Subscriber Line) contract valued at RM65 million

� Telekom WiLL (Wireless-in-Local-Loop) contract valued at RM318 million

� Telekom BFWA (Broadband Fixed Wireless Access) contract valued at RM63 million

To add value, KUBTel and KFT moved decisively into software applications and maintenance

and support contracts. KUBTel supplied the Predictive Dialer System to the Credit

Management of TMB and Networking system for the University of Malaya Medical Center

project (UMMC) total valued at RM4.6 million. KFT secured an RM11 million Operations

Maintenance and Support agreement with TMB valid until June 2005 and maintained

FELCRA�s networking system for RM0.5 million annually.

Tele Dynamics continued to excel in office automation and business communications

solutions for the SME market, and retained its market leadership in the distribution and sales

of Toshiba-branded products.

Internal restructuring was an important theme in FY2003, designed to eliminate redundancy

and drive productivity and efficiency. Critically, the process created a dedicated sales and

marketing structure targeting differentiated market segments. Now, all government projects

are routed through KUBTel - which is fully-licensed for government tenders, corporate and

enterprise projects through KFT and Tele Dynamics.

Outlook

The ICT division anticipates an improved performance in FY2004, due to a more positive

investment climate that will create new opportunities, and its ongoing exercise to consolidate

and restructure resources.

Growth

Business confidence is on the upsurge due to rosier economic fundamentals, and

government, corporations and SMEs will be more willing to invest in ICT systems.

Mr. Takashi Watanabe, CEO of Tele Dynamics(seated 2nd from left) with Kuching Branch staffduring its official opening on the 23 September2003.

19

KUBTel has already secured two new projects for FY2004 - RTDSLAM (Remote Terminal

Digital Subscriber Line Access Multiplexer System) valued at RM9.29 million and Coins

IPVPN valued at RM30.01 million. KUBTel aims to utilize the existing TMB WiLL contract

which has been extended to 14 May 2006 with balance of RM210 million by proposing the

newest digital wireless IAP (Internet Access Point) system. IAP delivers crystal-clear voice

over PSTN (Public Switched Telephone Network) and data at full capacity of 4Gbps through

IP network and can accommodate up to 2,000 subscribers per Radio Base Station (RBS).

KFT has secured a 2-year DSLAM (Digital Subscriber Line Access Multiplexer System)

contract valued at RM26.36 million and will be implementing the RM46.7 million SDH

(Synchronous Digital Hierarchy) and DWDM (Dense Wavelength Division Multiplexing)

contract secured in August 2003.

Tele Dynamics will maintain its emphasis on the SME market. Although Toshiba notebooks

and accessories are still its bestseller, Tele Dynamics is exploring relationships with Motorola

and Siemens in order to diversify its products and sales mix.

Asset Disposal

Business disposal is an important strategy in the restructuring process; non-strategic

companies will be shut down or sold to redeploy resources more effectively. Currently, the

division is in the process of disposing Cybertrek (vehicle security systems) and B-Wise (rural

wireless broadband services). In FY2003, it sold its stake in MuslimsConnect.com, which

operates a trading portal for halal goods and Somatel, a telecommunications service provider

in Somalia.

Education & Training (E&T) DivisionGlobalisation is a vital strategy and UNITAR and ITTAR are in the midst of forging alliances withinternational universities including the Asian Institute of Management, Manila, the Philippines,the University of Sunderland and the University of Northumbria, UK, Dublin Business Schooland Queens University, Ireland and the University of Northwood, US for FY2004.

Datuk Dr. Syed Othman Alhabshi

Head, Education & Training Division, with students of the ITTAR School

of Hotel & Tourism located at Petaling Jaya, Selangor.

An Integrated System for Higher Education

21

PerformanceThe E&T Division emerged as a significant profit centre for the Group in FY2003, due to aturnaround at its �on-campus, on-line� institution UNITAR.

UNITAR (Universiti Tun Abdul Razak Sdn Bhd) UNITAR recorded its first maiden pre-tax profit of RM4.23 million, due to growth in toplinerevenue and an extensive restructuring programme that generated substantial cost savingsfor the bottomline. While in FY2002, UNITAR made a pre-tax loss of RM9.5 million,shareholders� funds are now positive at RM1.4 million, due to a recognition of deferred taxasset of RM11.76 million. As a good corporate citizen and in compliance with the Islamictenets, UNITAR paid zakat of 2.5 percent on its net income for FY2003.

UNITAR�s FY2003 revenue grew substantially to RM40.97 million from RM36.12 million inFY2002, a growth of 13.4% due to an expanded network of locations, a diversifiedprogramme mix (UNITAR now offers 20 academic programmes) and rebranding for certainkey products. UNITAR opened new regional centers in Malacca in February 2003 and inPenang in August 2003 to accommodate new students.

Two new programmes were introduced: Diploma in Information Technology and Diploma inManagement, which commence in January 2004. The Certificate in Business Administrationwas rebranded as the Foundation Programme (Business Administration), the Certificate inInformation Technology as the Foundation Programme (Information Technology) and theFoundation Course in Management as the Foundation Programme (Management). Apartfrom complying with the regulatory requirements, the renaming of these programmesbroadens their appeal to long-term students embarking on 4-year degree courses.

UNITAR achieved a significant quality milestone when it was certified to ISO9000:2001standard in late FY2003. The MS ISO 9001:2000 Quality System Certification was awardedby SIRIM QAS International Sdn Bhd, and attests to the consistent quality of UNITAR�sservices and programmes at its Kelana Jaya Study Centre location. With this achievement,UNITAR joins a select league of Malaysia universities. It is the ninth unversity in the countryand the second private university to attain the ISO certification.

ITTAR (Institut Tun Abdul Razak Group)In the year under review, ITTAR sustained heavy capital and operating expenditure for threenon-performing branches - the Bandar Penawar branch, the Langkawi Matriculation Centreand the Kota Bharu Training Centre. ITTAR then decided to shut down the Bandar Penawarbranch and the Langkawi Matriculation Centre in order to stem pre-tax losses in FY2003,which amounted to RM3.0 million on revenue of RM23.3 for FY2003. In FY2002, ITTARrecorded a pre-tax profit of RM1.7 million on revenue of RM24.2 million in FY2002.

For FY2003, ITTAR hosted more than 5,000 active students at its campuses in Langkawi,Alor Star, Prai, Petaling Jaya, Kota Bharu, Kuala Lumpur and Johor Bahru. ITTAR provided14 MLVK skills training programmes, 10 diploma programmes, 3 certificate-levelprogrammes and 30 short courses tailored to meet industry requirements. ITTAR addedvalue by incorporating industry-relevant training on Microsoft Office and UBS packageswithin popular programmes like the Diploma of Accounting.

Flexible credit transfer systems are essential to draw students. ITTAR enjoys collaborationswith several international universities and colleges that accept ITTAR students for diplomasand degrees. These schools include UNITAR, the Swiss School of Hotel and Tourism inSwitzerland, the University of South Australia, Le Cordon Bleu Australia, Thames ValleyUniversity, UK and Southern New Hampshire University, US.

YB Datuk Ahmad Nawawi Mohd Zain - SelangorState EXCO (in blue colored tie) during theofficial certification of Malaysia's Longest Popiaby students of ITTAR-IPP (PJ), Academy of Hotel& Tourism.

Dato' Dr. Mohd Ariffin Haji Aton, Chairman,SIRIM QAS International Sdn Bhd (leftmost)delivers the coveted ISO9001:2000 QualitySystem Registration certificate to Datuk Dr.Syed Othman Alhabshi, President & CEO ofUNITAR. Looking on is Prof. Dr. Syed AbdulHamid, Senior Vice President, UNITAR.

22

An Integrated System for Higher Education (continued)

OutlookAggressive tactics to push enrolment and boost revenue will drive the E&T division�sperformance in FY2004.

IntakesMalaysia�s young population will ensure a steady flow of students into tertiary institutions; likethe industry, UNITAR and ITTAR will enjoy constant demand for educational services inFY2004. Active student population numbers are projected to average 7,000 for UNITAR and5,000 for ITTAR in FY2004.

ProgrammesUNITAR expects a sustained take-up for its English-medium hybrid programmes whichcombine the best of e-learning technologies and personalised face-to-face teaching.UNITAR will continue to emphasise its �on-campus, on-line� approach, which appeals to thesophisticated needs of Malaysia�s tech-savvy youth.

ITTAR is reinventing itself as an English-medium institution in order to fulfill the needs ofindustry and employers. In addition to attracting multi-racial and international students, thisstrategy will enable it to play the role of a feeder institute to UNITAR, which conducts allcourses in English.

With the wholesale implementation of English and the facilitation of student transfers, theGroup�s E&T division will thus become a vertically integrated unit; qualified candidates canenjoy a full spectrum of educational opportunities at UNITAR and ITTAR, from certificate,diploma and degree level right up to Masters and PhD level.

Diversification is key to tapping new markets. For FY2004, UNITAR proposes new career-oriented and industry-relevant programmes, which have been submitted for the Ministry ofEducation�s approval. These are: Diploma in Accounting, Bachelor of Accounting, Bachelorof English for Speakers of other Languages, Bachelor of e-Commerce and Bachelor ofManagement in Hospitality and Tourism.

ITTAR is introducing the Diploma in Business and Information Technology, Diploma inMarketing Management and Diploma in Food Services Management, subject to approvalfrom LAN (the National Accreditation Board) to further diversify its products.

AlliancesGlobalisation is a vital strategy, and UNITAR and ITTAR are in the midst of forging allianceswith international universities of good standing. UNITAR plans collaborations with the AsianInstitute of Management, Manila, the University of Sunderland and the University ofNorthumbria, UK, Dublin Business School and Queens University, Ireland, the University ofNorthwood, US and other accredited universities in the UK, Australia, New Zealand and theUS for FY2004.

On the domestic front, UNITAR has formed an alliance with Cosmopoint Institute ofTechnology, which will be a feeder institute; qualified Cosmopoint students can progress todiploma and degree programmes at UNITAR, opening up a new national market for UNITAR.

Restructuring UNITAR will continue to identify new avenues to cut costs for FY2004, which will enhance itsbottomline. ITTAR is in the process of shutting down its Bandar Penawar branch, its LangkawiMatriculation Centre and its Kada Resort center in Kota Baru, which will minimise costssignificantly and place it on a stronger footing for the future. Going forward, both UNITAR andITTAR expect their productivity measures to offer better prospects for profit in FY2004.

Food & Beverage (F & B) Division

GDP is expected to grow between 5.5% to 6% in FY2004; this will translate into increasedconsumer confidence and higher disposable incomes which will have a positive impact on thefast-food and hotel industries.

Encik Ahmad Rodzi Pawanteh

Head, Food & Beverage Division at the A&W Drive-In Restaurant located

at Petaling Jaya, Selangor.

Aggressive Strategies for a Better

24

YB Dato' Seri Shahrizat Abdul Jalil, Minister ofWomen Family and Community Development atthe A&W Malaysia's 40th Anniversary Celebrationwhich was held at A&W Drive-In Restaurant inPetaling Jaya.

YB Dato' Paduka Abdul Kadir Hj. Sheikh Fadzir,former Minister of Culture, Art & Tourism (in darkblue suit) at the launching of Promosi Mai Makan-Makan by Hotel Singgahsana Petaling Jaya.

PerformanceThe F&B Division remained in the red in FY2003, although after-tax loss narrowedsignificantly to (-RM10.4) million on turnover of RM46.4 million against (-RM24) million (loss after tax and before provisions) on revenue of RM50.9 million for FY2002.

Fast FoodThe A&W Group accounted for 91.3% of divisional turnover, and 82% of losses. Turnoverwas RM42.2 million for FY2003, compared to RM46.7 million in FY2002. EBITDA hasimproved to almost breakeven level at (-RM0.3) million and loss after tax to (-RM8.52) millioncompared to the previous year�s (-RM5.2) million (EBITDA) and (-RM14.5) million (loss after-tax and before provisions).

Three factors aided sales in FY2003: the opening of new outlets in strategic locations,marketing and a greater focus on bulk catering services.

A&W Malaysia opened outlets at 3K, Subang Jaya, Carrefour Subang Jaya, Bukit TinggiKlang and Taman Skudai, Johor. The Bukit Tinggi and Taman Skudai outlets are housedwithin Petronas service stations, which is part of A&W�s new strategy to team up with petrolstation chains. As at 31 December 2003, A&W owned and operated 25 outlets in Malaysia.In Thailand, A&W opened 2 new outlets bringing the year end number to 28 which recordedRM8.62 million turnover and after-tax loss of RM1.02 million for FY2003.

Marketing campaigns centered on A&W�s 40th year celebrations, which capitalised on itshistory as the oldest fast-food franchise in Malaysia, and the launch of the Rootbear Club, amembership programme designed to build brand loyalty among children aged 4-12. TheGroup also introduced traditional dishes during limited time periods to appeal to localtastebuds, such as offering beriyani dishes during the Ramadan window.

A&W began emphasising on catering and new distribution channels to diversify and growsales. It catered for major events including LIMA, the University Malaya convocation, the TV3Sureheboh Karnival, the Middle-eastern Film Festival, the Paloh movie rail hunt and joint Hi-tea promotion with Hotel Singgahsana PJ.

Restructuring operations and shutting down non-performing outlets in Malaysia, Thailand,and Singapore were key factors in trimming costs. For instance, A&W cut costs by almost33% by overhauling supply chain management and centralising logistics and warehousemanagement.

During the year, A&W closed 4 under-performing outlets in Malaysia, and 2 in Thailand.Performance deteriorated in Singapore and all A&W outlets there were shut down by June 2003. During SARS, all its operations in Singapore ceased, and this crisis acceleratedthe Group�s exit from Singapore. For FY2003, Singapore generated RM1.89 million revenueand RM2.63 million in after-tax loss.

HotelHotel Singgahsana Petaling Jaya recorded EBITDA of (-RM0.6) million and an after-tax lossof (-RM1.8) million on revenue of RM4.3 million for FY2003. In FY2002, EBITDA was (-RM1.5) million and loss after tax and before provisions stood at (-RM2.8) million on aturnover of RM4.2 million.

Revenue was derived from a mix of room occupancy, F&B sales and new business. TheHotel�s occupancy rate averaged 65% in FY2003. The SARs crisis had little impact onoccupancy rates.

25

Banquet sales improved due to aggressive promotions, such as the regional food fairs andthe Ramadan breaking-of-fast packages, while integrated wedding planning services andconference packages proved to be bestsellers given competitive pricing and service.

The Hotel ventured into the new business of industrial catering in FY2003, providing F&Bservices for global and national events such as the OIC (Organisation of Islamic Countries)conference and the NAM conference.

Aggressive restructuring enhanced the Hotel�s bottomline. Staff, purchasing, supply chainmanagement and logistics were streamlined to create further cost efficiencies in running theF&B and hotel operations.

OutlookMassive restructuring and fresh growth tactics have placed the F&B division on a vastlystronger footing, and both A&W and the Hotel anticipate an improved performance forFY2004. The strong projected GDP of 5.5% - 6% in FY2004 will create increased consumerconfidence and higher disposable incomes, which augur well for the local fast food and hotelindustries. Internally, the division will maintain the restructuring and growth strategies set intrain last year, which will spur efficiency, productivity and a better performance on all counts.

Fast FoodFor FY2004, A&W is confident to repeat FY2003�s fruitful steps for growth - targeting to openmore outlets, creating hard-hitting marketing campaigns and emphasising on field catering.

A&W Malaysia targets to open 11 new outlets in high-growth areas for FY2004. Outlets at 1-Utama New Wing, Kota Damansara Petronas Station and Perangin Mall, Penang will beopened in second quarter of 2004. The A&W Group is also planning to set-up outlets atUniversiti Hospital, the Malacca Central Bus Station and the Alamanda Shopping Mall inPutrajaya. This expanded network will enable the Group to tap larger customers in high-potential locations where it currently lacks presence. The A&W Group expects to investapproximately RM7 million in capital expenditure for these new branches. A&W Thailandplans for 5 new outlets in FY2004, all of which will be attached to petrol stations such as Shelland Conoco. Today it runs only 3 non-petrol station outlets in Thailand; the balance of 23 (2 outlets were closed in first quarter FY2004) are all housed in petrol stations.

New marketing initiatives in FY2004 include the launch of the A&W Fraternity Club, aimingto build brand loyalty among customers of all ages.

Although the Group is a profit-oriented organization, it is mindful of its social obligations as agood corporate citizen. In FY2004, the Group plans to sponsor food for rural schoolprogrammes, orphanages and old folks� homes.

HotelThe Hotel will focus on refurbishment and promotions to drive sales in FY2004.Refurbishment of the rooms and public areas will be a key strategy, enabling the Hotel toattract a larger pool of patrons.

The Hotel will repeat the F&B initiatives that showed success in FY2003. Regional food fairswill highlight traditional fare from various states, in alignment with its branding as a centre forMalay hospitality and cuisine. Furthermore, the Hotel will offer seasonal discounts topopularise its F&B services, such as the weekly lunch buffets and high teas. The Hotel willalso continue to highlight its wedding and conference packages, which enjoyed greatdemand in FY2003.

Property, Engineering & Construction (PEC) Division

Construction will maintain its momentum as PEC�s primary earnings generator for FY2004.Bina Alam will continue work on ILP Kuala Langat, ILP Mersing and the Pusrawi Hospital.

Dato� Khalid Abd Rahim

Head, Property, Engineering & Construction Division at the

Pusat Rawatan Islam (PUSRAWI) construction site located at

Jalan Tun Razak, Kuala Lumpur.

Construction and Infrastructure Signal the Way

YAB Dato' Haji Abdul Ghani Bin Othman, ChiefMinister of Johore (seated 1st row 1st fromright) with YBhg. Dato' Siah Teong Boon,Managing Director of Bina Alam (2nd row 2nd from right) during the ground-breakingceremony of ILP Mersing.

Performance

Despite the extensive reorganisation and restructuring of several subsidiaries, the PEC

division recorded higher EBITDA of RM5.1 million for FY2003, compared to loss before

interest, depreciation and amortisation of RM0.5 million in the previous year. Revenue

doubled to RM74.3 million for FY2003 against RM35.9 million in FY2002. However, after-tax

losses reduced to (-RM9.8) million for FY2003 against an after-tax loss of (before provisions

and write-offs) of (-RM11.3) million in FY2002.

83% of revenue was derived from 55% - owned subsidiary Bina Alam Bersatu Sdn Bhd

(Bina Alam). For FY2003, Bina Alam�s revenue increased almost four-fold from

FY2002�s RM16.6 million to RM60.4 million, most of it derived from the ILP Kuala Langat

(RM25.2 million), ILP Mersing (RM17.5 million) and Hospital Pusrawi (RM15.5 million)

projects. Bina Alam�s EBITDA more than tripled to RM4.3 million from FY2002�s

RM1.4 million while after-tax profit grew to RM2.2 million from RM0.3 million in FY2002.

Outlook

FY2003�s consolidation and restructuring exercise has put PEC on a stronger footing for the

future. Going forward, PEC will target new projects and alliances with the Government and

private sector. Construction and infrastructure will be the focus, while property development,

which requires heavy upfront investment in land, will be de-emphasised.

Construction will maintain its momentum as PEC�s primary earnings generator in FY2004.

Bina Alam will continue work on ILP Kuala Langat (46% completed as at 31 December 2003),

ILP Mersing (27% completed) and the Hospital Pusrawi (27% completed). The PEC division

has also submitted numerous tenders for new construction and infrastructure projects, and

is initiating joint venture projects in the high-potential sectors of sewerage and waste

management and water infrastructure, which has been allocated a budget of RM4 billion

under the 8th Malaysia Plan.

Power infrastructure is anticipated to perform better and diversify PEC�s revenue and

earnings mix in FY2004. KUB Power Sdn Bhd (KUB Power) is building 2 substations valued

at RM23.3 million on a joint-venture basis in Terengganu for Huntsman Tioxide (M) Sdn Bhd.

Going forward, KUB Power intends to grow its share in this niche market via the exclusive

distribution and supply of an intelligent fire-prevention device that can easily be incorporated

into existing substations.

PEC�s property development companies have been selling down their landbank, signaling

the Group�s exit from pure property development; the parcel in Bukit Jalil was recently sold

for a gain to facilitate the Group�s debt management strategies. In future, PEC will forego

independent property development in favour of less risky joint ventures with either private

sector developers or government agencies.

YBhg. Dato' Siah Teong Boon (2nd from left)and Puan Hanim Laham, Executive Director ofBina Alam during the cake cutting ceremony tomark Bina Alam's 23rd Anniversary. Bina Alamwas incorporated in 19 March 1980.

28

Statement On Corporate Governance

KUB Malaysia Board of Directors is wholly

committed to preserving the highest standards

of corporate governance practiced throughout

the Group. The Group�s corporate governance

practices adhere to the principles of

accountability, transparency and integrity, and

promote the protection and enhancement of

shareholders� value in accordance with the

Malaysian Code of Corporate Governance (�the

Code�) and Listing Requirements of Bursa

Malaysia Securities Berhad (�BMSB�).

The Board is pleased to make disclosure to

shareholders the manner in which it has applied

the principles of good governance and the

extent to which it has complied with the best

practice as set out by the Code.

A The Board of Directors

The Board is responsible to lead and control the

Company in an effective manner and discharge

its responsibilities in the manner as illustrated

below:

1 Board Composition and Balance

The Board is ultimately responsible for

Group corporate governance, strategic

directions, overseeing the investments of

the Company and establishing goals for

management and monitoring the

achievement of these goals. The Board�s

authority is defined and communicated

through KUB Management Guide.

The Board plays an important role in the

stewardship of Group direction and

operations, and ultimately, the creation and

enhancement of shareholder value.

Therefore, it is imperative that Board

members are drawn from fields synergistic

with diverse Group businesses, and that

they possess relevant contributory skills.

The Board members with their different

background and specialisations, collectively

bring with them a wide range of expertise in

areas such as finance, business, legal, and

technical experience. A brief profile of each

director is presented on pages 7 and 11

of this annual report.

The Board consists of one (1)

Non-Independent Non-Executive Chairman,

two (2) Executive Directors, one (1)


and five (5) Independent Directors. The

Board believes that the existing size and

structure to fairly reflect the shareholders�

investment and minority interest.

There is a clear division of responsibilities

at the head of the Company to ensure

balance of authority and power. The Board

is led by Datuk Hassan Harun as the

Non-Independent Non-Executive Chairman

and the executive management of the

Company is led by Encik Che Khalib

Mohamed Noh, the Managing Director

& Chief Executive.

The roles of Chairman and the Managing

Director & Chief Executive are clearly

defined in their individual position

descriptions. The Chairman is responsible

for the Board effectiveness and conduct.

The Managing Director & Chief Executive is

responsible for the day-to-day management

of the operating units, organisational

effectiveness as well as implementation of

Board�s policies and decisions.

2 Board Meetings & Attendance

The Board ordinarily meets at least four

(4) times a year at a quarterly interval with

additional meetings convene when urgent

and important decisions needs to be taken

between the scheduled meeting. During

the financial year ended 31 December 2003,

nine (9) Board meetings were held.

29

The record of attendance at Board Meetings is as follows:

Director Status No. of Meetings Attended

Datuk Hassan Harun Non-independent 9/9(Chairman) Non-executiveDatuk Mohd Hashim Hassan Non-independent 8/9(Deputy Chairman) Non-executiveChe Khalib Mohamad Noh Non-independent 9/9(Managing Director & Chief Executive) ExecutiveAhmad Rodzi Pawanteh Non-independent 9/9

ExecutiveDatuk Haji Ahmad Shahibuddin Haji Mohd Nor Independent 9/9

Non-executiveDato� Kamilia Ibrahim Independent 9/9

Non-executiveDato� Ir. Harun Ahmad Saruji Independent 8/9

Non-executiveTan Sri Datuk Dr. Johari Mat Independent 7/9

Non-executiveTuan Haji Ahmad Kamal Abdullah Al-Yafii Independent 3/3(Appointed on 4 August 2003) Non-executiveDato� Zainal Abidin Putih Independent 4/5(Appointed on 26 February 2003) Non-executive(Resigned on 31 July 2003)

3 Supply of InformationThe Board recognises that the decision making process is highly dependent on the quality of information furnished.

In each of the meeting, the Board deliberated upon and considered variety of matters including the Group�s Financial Results, major investments, business directions and corporate governance matters.

The Board receives documents on matters requiring it consideration prior to and in advance of each meeting. The Board papers are comprehensive and encompass both qualitative and quantitative factors so that informed decisions are made.

All Board papers will have to be tabled to theExecutive Committee for prior review beforethey are presented to the Board for review and deliberation. This is to ensure that information contained therein is complete, accurate and pertinent, enabling the Board to make an informed decision based on the facts provided.

The Management provides the Board with all information of which it is aware for the discharge of the Board�s responsibilities. For

further clarity, relevant management representatives are requested to make themselves available for Board Meetings. Management representatives provide detailed explanations for issues under deliberation, enabling Board members to make informed decisions based on in-depth knowledge.

All Directors have unrestricted access to all information within the Company, as well as access to the advice and services of the Company Secretary.

In addition, a corporate calendar has been proposed for year 2004 to reserve the Board�s time to review specific matters requiring the Board�s attention and decision-making powers.

B Board Structure And EffectivenessIn executing its responsibilities, the Boarddelegates certain responsibilities to itscommittees as follows:

a Board Audit Committee (�BAC�)b Board Nomination Committee (�BNC�)c Board Remuneration Committee (�BRC�)d Executive Committee (�EXCO�)

All committees have written terms of reference

outlining their responsibilities and operating

procedures. The Chairman of the various

committees will report to the Board the outcome

of the committees meetings and such report are

incorporated in the minutes of the full Board

meeting. These committees were formed in

order to enhance business and operational

efficiency as well as efficacy. The Board retains

full responsibilities for the direction and control

of the Company and the Group.

1 Board Audit Committee

Explained on pages 36 to 39 of this annual

report.

2 Board Nomination Committee

The Board Nomination Committee was

established on 24 April 2001 comprising

exclusively of Non-Executive Directors, all of

whom are independent. The Chairman is

Datuk Haji Ahmad Shahibuddin Haji Mohd

Nor with Dato� Ir. Harun Ahmad Saruji and

Dato� Kamilia Ibrahim as members to the

Committee.

The Committee has been discharged

with identifying and recommending the

Directorship�s candidates of the Boards of

KUB Malaysia Berhad and its subsidiaries.

However, all decisions on appointments are

made by the respective Boards after

considering the recommendations made by

the Committee.

In addition, the Committee will review the

required mix of skills, experience and other

core competencies which the non-executive

directors should bring to the Board. The

Committee believes that the Board�s

current composition possesses the required

mix of skills and core competencies

necessary for the Board�s effective

discharge of its duties.

3 Board Remuneration Committee

The Group aims to provide remuneration

packages necessary to attract, retain and

motivate the Directors of the quality required

to manage the businesses of the Group and

to align the interests of the Directors with

those of the shareholders.

The Board Remuneration Committee,

formed on 24 April 2001, is comprised

entirely of Independent Non-Executive

Directors i.e. Datuk Haji Ahmad Shahibuddin

Haji Mohd Nor and Dato� Kamilia Ibrahim

chaired by Dato� Ir. Harun Ahmad Saruji.

This Committee is responsible for setting

the remuneration framework and making

recommendations to the Board on all

matters relating to the remuneration

packages of Executive Director of the

Company in all forms, and to review the

benefits and entitlement of the Directors.

It is, nevertheless, the ultimate responsibility

of the entire Board to approve the

remuneration of the Directors. None of

the executive Directors participated in any

way in determining their individual

remuneration.

The Executive Directors� remuneration

comprises basic salary and Group�s other

customary benefits made available where

appropriate. The Non-Executive Directors�

remuneration comprises fees and

allowances where the determination is

balanced with their expected roles and

responsibilities. The Committee believes

that the remuneration packages are

competitive and are broadly comparable to

those awarded by other relevant companies.

30

Statement On Corporate Governance (continued)

31

No. of Directors Executive Directors Non Executive TotalDirectors

(RM)

0 - 50,000 6 650,001 - 100,000 1 1100,001 - 150,000150,001 - 200,000 1 1200,001 - 250,000 1 1250,001 - 300,000300,001 - 350,000350,001 - 400,000400,001 - 450,000450,001 - 500,000 1 1Total 2 8 10

4 Executive CommitteeEXCO is delegated with such powers to ensure the smooth and effective running of the Company and their authority is stated in KUB Management Guide. As a general rule, EXCO meets twice a month and during the financial year, twenty (20) meetings were held. Datuk Mohd Hashim Hassan is the Chairman of EXCO with Encik Ahmad Rodzi Pawanteh and Encik Che Khalib Mohamad Noh as members.

Terms of Reference of Executive Committeei) Objective

The EXCO is established as an executive committee to the Board to take care of the daily activities of the Company and the Group. The EXCO is to be chaired by the Deputy Chairman of the Board. All major decisions would have to be referred to the EXCO for review and deliberation and if the approval of the Board is required, EXCO would then refer it to the Board.

ii) Duties and ResponsibilitiesTo carry out the delegated function ofthe Board in relation to the proper management and administration of the

Company and the Group, in particular, to:� Review the Annual Business Plan

and Budget and Mid - Year Budget review of the Company and the Group prior submission to the Board.

� Review monthly Group operational and financial results, operational issues and propose improvement measures to enhance the Group�s performance.

� Deliberate on all business proposals that have been evaluated by both the Group Finance Division and Group Planning and Restructuring Division.

� Review and approve capital and operating expenditure of above RM200,000 but not exceeding RM2 million for non budgeted items.

� Review and approve capital and operating expenditure of above RM500,000 but not exceeding RM5 million for budgeted items.

� Approve purchase of quoted marketable securities within the guidelines as approved by the Board.

� Approve Memorandum of Understanding and Letter of Intent.

� Review the terms of agreements that have to be approved by the Board.

� Deliberate on all other major

Salaries Allowances Benefits in Fees Total

(RM) (RM) Kind (RM) (RM)

Executive Directors 480,000 144,000 7,350 18,000 649,350

Non-Executive Directors - 240,000 245,226 485,226

Total 480,000 384,000 7,350 263,226 1,134,576

Total remuneration during the financial year disclosed by category of Directors� and in the

successive band of RM50,000 are as follows:-

32

business transactions and issues related to the Company and the Group that require Board�s deliberation and approval.

� Review all Board papers prior to their submission to the Board for deliberation.

iii) Membership CompositionThe EXCO shall comprise at least two (2) members who are the Deputy Chairman and Managing Director & Chief Executive.

The Deputy Chairman of the Board shall be the Chairman of the EXCO.

iv) Conduct and Frequency of MeetingA meeting is to be held once a week or at the discretion of the Chairman.

At least two (2) members must be present to constitute a valid quorum.

The Company Secretary will act as Secretary. In her absence, the joint Company Secretary shall be the secretary.

External parties and other Company or Group personnel may be invited from time to time to attend the meeting to provide expert opinions for the subject matter discussed.

v) Decision Any decision of the EXCO shall be made by consensus. If there is no consensus, the matter shall be referred to the Board for decision. Minutes of the EXCO meeting would be maintained by the Secretary and shall be available for Board members� inspection.

5 Provision of Directors� Continuous Education & TrainingAll the Directors have attended and successfully completed the Mandatory Accreditation Programme (�MAP�) conducted by the Research Institute of Investment Analyst Malaysia, the training arm of BMSB. Directors will continue to undergo the Continuing Education Programme (�CEP�), as a continuation to MAP as prescribed by BMSB, pursuant to the requirements under the ListingRequirements to further enhance their skills and knowledge where relevant.

In addition, Malaysian resident directors of the Group�s non-listed subsidiaries have attended the Corporate Directors� training programme as recommended by the Companies Commission of Malaysia.

6 Re-election of DirectorsIn accordance with the Company�s Articles of Association, all of the Directors who are appointed by the Board are subject to election by shareholders at the first Annual General Meeting after their appointment and are subject to re-election once every 3 years.

C Continuous Communication with Shareholders

The Company strives to maintain open channels of dialogue with its shareholders, inorder to provide shareholders with the clearestand most complete picture of the Company�sperformance and financial position.

The Company communicates with itsshareholders and investors primarily through itsAnnual General Meeting (AGM), Annual Report,the quarterly financial statements and thevarious disclosures and announcements madeto the BMSB.

At each AGM, the shareholders are invited toask questions and seek clarification on thebusinesses and performance of the Group.Directors, senior management staff and external auditors are present at the AGM toanswer questions raised by the shareholder.Shareholders are welcome to raise queries bycontacting the Company at any time throughoutthe year and not just at the AGM.

Additionally, shareholders can obtaininformation on the Group�s financial information,and event and activities by accessing itswebsite at www.kub.com.

D Accountability and Audit

1 Financial Reporting The Board aims to provide and present a balance and meaningful assessment of the Group�s financial performance and prospects at the end of the financial year, primarily through the annual financial statements, quarterly announcement to shareholders as well as Chairman�s statement and review of operations in the annual report.

Statement On Corporate Governance (continued)

33

BAC assists the Board in scrutinising information for disclosure in the reports and the over all quality of the financial reporting.

2 Directors� Responsibility StatementThe Board is responsible for ensuring that the financial statements gives a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial year and of their profit and loss and cashflows for the year then ended. In preparing the financial statements, the Directors have ensured that applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 have been applied.

In preparing the financial statements, the Directors have selected and applied consistently suitable accounting policies and made reasonable and prudent judgements and estimates.

The Directors also have general responsibilities 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 regularities.

3 Relationship with AuditorsBAC meets with the external Auditors without the presence of management and Secretary at least once a year in its aim to establish transparent and appropriate relationship with the Group�s auditors, internal and external. The BAC reports are stated on pages 36 to 39.

4 Internal ControlBursa Malaysia Securities Berhad�s�Statement on Internal Control: Guidance for Directors of Public Listed Companies� provides guidance for compliance with the Code. The Statement of Internal Control laid out on pages 34 to 35 of this annual report provides an overview on the state of Internal Control within the Group.

5 Compliance StatementThe Company has complied throughout the financial year with all the best practices of corporate governance set out in Part 2 of the code, except for Best Practice AAVII in respect of the nomination of a Senior Independent Non�Executive Director. Given the current composition of the Board which reflects a strong independent element and

separation of the roles of Chairman and Managing Director & Chief Executive, the Board does not consider it necessary at this juncture to nominate a Senior Independent Non- Executive Director.

E Additional Compliance InformationThe following information is provided incompliance with Paragraph 9.25 of the ListingRequirements of BMSB:-

a) Non-audit feesThe amount of non-audit fees paid to the External Auditors by the Group for the financial year ended 31 December 2003, amounted to RM35,708.

b) Recurrent Related Party TransactionsThe Company has obtained professional services from certain of its non-executive directors. These services were in relation to legal advisory services. The amount was not significant, since it did not exceed RM 1 million per year and did not surpass the 1% of revenue threshold, and thus did not warrant an announcement.

c) Imposition of Sanctions/PenaltiesDuring the financial year, no sanctions and/or penalties were imposed on the Company, its subsidiaries, Directors or Management by the relevant regulatory authority.

d) Material ContractsDuring the financial year, there were no financial contracts entered into by the Company and its subsidiaries (not being contracts entered into in the ordinary course of business) involving directors and substantial shareholders.

e) Variation in ResultsThere was no variance of 10% or more between the results of the financial year 2003 and the unaudited results previously announced.

f) Revaluation Policy on Landed PropertyThe revaluation policy on landed properties is as set out in the financial statements.

g) Profit GuaranteeThe Company did not give any profit guarantee during the financial year.

h) Share BuybackThere is no share buyback during the financial year.

i) American Depository Receipt (�ADR�) or Global Depository Receipt (�GDR�)The Company did not sponsor any ADR or GDR programme during the financial year.

This statement is made in accordance with a resolution of the Board of Directors dated 27 April 2004.

34

Statement On Internal Control

Internal Control and Risk Management

The Board is ultimately responsible for the

Group�s system of internal control which

includes the establishment of an appropriate

control environment and framework as well as

reviewing its adequacy and integrity. In this

respect, the Board of Directors is committed

to establishing a sound system of internal

controls essential to safeguard shareholders�

investments and Group�s assets and to provide

assurances on the reliability of the financial

statements. The internal control systems

currently in place cover the whole spectrum of

the Group�s operations and include both

financial and non-financial activities.

The internal control system is also designed to

provide reasonable assurance of the effective

operations and compliance with laws and

regulations but any system of internal control

can only provide reasonable, not absolute,

assurance against material misstatement or

loss.

Following the publication of the Statement on

Internal Control : Guidance for Directors of

public listed companies (�the internal control

guidance�), the Board confirms that there is an

ongoing process for identifying, evaluating and

managing significant risks faced by the Group,

that has been in place throughout the year 2003

and up to the date of approval of the annual

report and financial statements, and this

process is regularly reviewed by the Board and

accords with the Internal Control Guidance.

The key elements of the Group�s internal control

system include:

� The delegation of responsibilities to the

Board Committees and the management as

well as the delineation of their respective

authority limits have been clearly defined in

the KUB Management Guide (KUBMaG).

� The Board approved the implementation of

the KUBMaG, an important management

control tool, effective July 1999. The

KUBMaG outlines the major policies, limits

of authority, key business processes and

internal control systems of the Company.

Revision was undertaken in April 2003 to

update the KUBMaG, reflecting the changes

in the Company�s decision-making

hierarchy. Further the company has also in

December 2003, revised and published

Terms and Conditions of Service for

employees and Training Development

Calendar which highlights policies on staff

benefits, staff performance and misconduct,

equality of opportunities and training and

development.

� Major policies and procedures for key

business processes are formalized and

documented for each of the Group�s

operating units. The major policies are

documented in the KUBMaG while the

procedures are contained in the various

work procedures of the operating units.

� The establishment of similar authority

guides for all the active subsidiaries of the

Group which have since being reviewed and

approved for implementation by KUB

management as well as the respective

Board of the subsidiaries.

� The establishment of an Internal Audit

Department since 1997 to specifically

implement internal audit functions.

Functionally, the Internal Audit Department

reports directly to the Board Audit

Committee (�BAC�). The BAC review the risk

monitoring and compliance procedures

ensuring that an appropriate amount of

techniques are used to ascertain level of

assurance required by the Board.

� The Internal Audit Department develops an

internal audit plan and executes internal

audit projects based on this plan. The

internal audit functions adopt a risk-based

approach with independent and objective

reports on the state of internal control. The

Department also assists the BAC and

Managing Director & Chief Executive in

investigating issues identified.

� The Board and the senior management

receives periodically, the financial results

from each business unit, and the Group

reports quarterly to shareholders based on a

standard reporting process.

35

� Heads of operations are responsible for:

- establishing operating budgets and

performance of their business

- ensuring that business risk management

processes are operating effectively in

order to manage changes in risks over

time and that appropriate management

action are being undertaken; and

- meeting defined reporting timetables

and ensuring compliance with the

Groups� policies and controls.

� In recognizing the importance of quality

control and management, the Group has

embarked on the implementation of ISO

certification for a few subsidiaries in MS ISO

9001:2000 Quality System Certification, ISO

9002 version 2002 Manufacture of

Telecommunication and Electronic Products

and Provision of Engineering & Support

Services and ISO9001:2000 Storage,

Bottling and Distribution of Liquefied

Petroleum Gas.

Currently, the Board is continuing its

ongoing process of identifying, assessing

and managing the key business, operational

and financial risks faced by the Group�s

operating units. The Company has

conducted a risk management workshop to

assist the Internal Audit Department in

developing the risk profile of the Group�s

operating units. The company is in the midst

of finalising the selection of engaged

external advisory services to assist in

identifying and procure a risk management

system and has also initiated the setting up

of an in-house risk management team.

This Statement is made in accordance with the resolution of the Board of Directors dated 27 April 2004.

Board Audit Committee Report

36

B. Terms of ReferenceBAC was established to assist the Board to implement and support the oversight function for KUB Group of Companies in accordance with the terms of reference set out below:

1. ObjectivesThe primary function of the Board Audit Committee is to assist the Board Audit Members in fulfilling the following oversight objectives on the group activities :

� Assess the Group�s processes relating to its risks and control environment;

� Oversee financial reporting; � Evaluate the internal and external audit

processes;� Maintain, through regularly scheduled

meetings, a direct line of communication between the Board, external auditors, management and internal auditors;

� Avail to the external and internal auditors a private and confidential audience at any time they desire and request, through the Chairman of the Committee; and

� Review existing practices and recommend to management to formalise

a code of conduct for all executives and staff of the Group.

2. Appointment and CompositionThe Board of Directors shall appoint the members of the Committee, and their period of appointment shall be concurrent with their tenure on the Board unless otherwise decided by the Board.

The number of members for the Committee shall comprise at least three (3) members, where the majority shall be Independent Directors, thus complying with the Listing Requirements of the Bursa Malaysia Securities Berhad (�BMSB�). At all times, the Committee shall comply with the relevant provisions of the Listing Requirements. The members of the Committee shall elect a Chairman from among their number 36who is an Independent 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 of Directors shall within three (3) months of the event appoint such number of new members as may be required to fill the vacancy.

The Board of Directors is pleased to present the report on the Board Audit Committee for the year ended

31 December 2003.

The Board Audit Committee (�BAC�) was established by a resolution of the Board on 7 May 1997.

A. Membership and CompositionThe members of BAC during the year comprised the Directors listed below:

Name Status of Directorship Appointment Resignation

Tuan Haji Ahmad Kamal Independent 8 August 2003Abdullah Al-Yafii Non- ExecutiveChairman from Director and a member 8 August 2003 to date of the Malaysian Institute

of AccountantsDato� Zainal Abidin Putih Independent 26 February 2003 31 July 2003Chairman Non- Executive26 February 2003 to Director31 July 2003Datuk Haji Ahmad Independent 7 May 1997 Shahibuddin Haji Mohd Nor Non-Executive DirectorDato� Ir. Harun Ahmad Saruji Independent 24 April 2001Chairman from Non-Executive Director 1 November 2002 to 26 February 2003Che Khalib Mohamad Noh Non-Independent 1 November 2002 26 February 2003

Executive Director

37

3. ResponsibilityThe Committee is:� Responsible to the Board of Directors.� Responsible, to a limited extend,

establishing an effective control environment but not for the day-to-day running of business and making operating decision.

4. AuthorityThe Committee shall have:� The authority to investigate into any

activities within its terms of reference. It is authorised to seek any information it requires from any employee and all employees are directed to cooperate on any request made by the Board Audit Committee.

� The authority to obtain outside legal or other independent professional advice and to secure the attendance of outside parties with relevant experience and expertise, if it considers this necessary.

� Direct communication channels with both external and internal auditors.

� The authority to convene meetings with external auditors, with no executives present, when deemed necessary.

5. Duties and ResponsibilityThe Committee shall undertake the following responsibilities and duties:

(a) Risk Management and Internal Audit� Review the adequacy of the scope,

functions and resources of the internal audit functions and that it has the necessary authority to carry out its works.

� Review the internal audit program, processes, the results of the internal audit program, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function.

� Evaluate the performance of the Internal Audit Department.

� Reviewed the Internal Audit Reports, which highlighted the operational risks, recommendation and management�s response.

� Discussed with management on actions taken to improve the system of internal controls, based on operational risks identified in the Internal Audit Reports.

(b) External Audit� Review with the external auditors

their audit plan, scope of their audits, their evaluation of the system of internal controls and their audit report.

� Evaluate with the external auditors the assistance given by the employees to the external auditor.

� Evaluate the performance of the external auditors and make recommendations to the Board of Directors on their appointment and remuneration.

� Review any letter of resignation from the external auditors.

� Where there is reason (supported by grounds) to believe that the external auditors are not suitable for reappointment, the committee is to recommend the nomination and remuneration of a person or persons as external auditors.

(c) Financial Reporting� Meet with management and the

external auditors to discuss the scope of their audit, to evaluate the audit report on the financial statements and the results of the audit before recommending for approval by the Board.

� Review the quarterly results and year end financial statements for recommendation to the Board of Directors for approval, focusing particularly on:- Changes in or implementation of

new accounting policies;- Significant and unusual events;- The going concern assumption;

and- Compliance with accounting

standards and other legal requirements.

� Review the nature and resolution of any significant accounting and auditing problems encountered during examination, the nature of any significant adjustments, reclassifications or additional disclosures proposed by the external auditors that are currently significant or may become significant in the future, the adequacy and impact of any changes in the accounting policies or principles during the year,

Board Audit Committee Report (continued)

38

reasons for major fluctuations in financial statement balances for the current year compared to prior year.

(d) Related Party Transactions� Review any related party

transactions and conflict of interest situation that may arise within the Group including any transaction, procedure or course of conduct that raises the question of management integrity.

(e) Others� Consider and evaluate other matters

as judged appropriate by the Committee or as authorised by the Board and as required by the Listing Requirements of BMSB or any other government authorities.

� Act upon the Board of Directors�request to investigate and report on any issues or concerns in regard to the management of the Company.

� To promptly report to the BMSB, of matters reported by the Audit Committee to the Board of Directors of the Company which has not been satisfactorily resolved, resulting in a breach of the Listing Requirements of BMSB.

� Upon the request of the external auditor, the Chairman of the Audit Committee shall convene a meeting of the Audit Committee to consider any matter the external auditor believes should be brought to the attention of the Directors or shareholders.

6. MeetingsMeetings shall be conducted as and when it is deemed necessary by the Chairman of the Committee which shall be not less than four (4) times in a year.

7. QuorumIn order to form a quorum for the meeting, any two (2) members must be present. The majority of the members present must be Independent Non-Executive Directors. In the absence of the Chairman, the members present shall elect a Chairman for the meeting from amongst members present.

C. Activities in this Financial YearThe main activities undertaken by the Committee during the year were as follow:

(a) Financial Results and Corporate Governance� Reviewed the External Auditors�

scope of work and audit plans for the year.

� Reviewed the quarterly unaudited financial results and announcements to BMSB before recommending to the Board for approval.

� Reviewed the Company�s compliance, in particular the quarterly and year-end financial statements, with the Listing Requirements of BMSB, MASB and other relevant legal regulatory requirements.

� Reviewed the annual report and audited financial statements of the Company prior submission to the Board for their consideration and approval. The review was to ensure that the audited financial statements were drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standards approved by the BMSB.

� Reviewed with External Auditors theresults of the audit, the audit report and the management letter, including management�s response.

� Reviewed the minutes of meeting of the Committee.

� Considered and recommended to the Board for approval of the audit fees payable to the External Auditors as disclosed in Note 17 of the Financial Statements.

� Met with the External Auditors once during the year without the presence of Executive Director and management.

� Reviewed the application of corporate governance principles and extent of the Group�s compliance with the best practices under the Malaysian Code of Corporate Governance for the purpose of preparing the Corporate Governance Statement and Statement of Internal Control for disclosure in this Annual Report.

39

(b) Internal Audit and Risk Management� Reviewed the audit reports

presented by the Internal Audit Department on findings and recommendation with respect to system and control weaknesses. Discussed with management, actions taken to improve the system of internal control based on improvement opportunities identified in the internal audit reports.

� Reviewed the Internal Audit Plan for 2004.

� Reviewed program and resource requirement of the internal audit for the year.

� Discussed and reviewed the adequacy and effectiveness of the system of control for the Group.

D. MeetingsThe Committee convened six (6) meetingsduring the financial year. The meetings wereappropriately structured via agendas, whichwere distributed to members with sufficientnotification.

The Managing Director & Chief Executive andthe Company Secretary were present during allthe meetings except for the private session withthe external auditors. Head of Internal Auditattended and representatives of the ExternalAuditors, Messrs KPMG Desa Megat & Co., aswell as the Senior Management also attendedrelevant meetings upon invitation.

E. Internal Audit FunctionThe Company has an Internal AuditDepartment, which assist the Board AuditCommittee in the discharge of its duties andresponsibilities. Its role is to undertakeindependent regular and systematic reviews ofthe systems of internal control, so as to providethe Board Audit Committee with independentand objective feedback and reports that suchsystems continue to operate satisfactorily andeffectively. The Internal Audit Departmentadopts a risk-based approach when preparingits audit strategy and plan.

During the financial year, a total of eight (8) auditassignments were carried, of which seven (7)have been completed and tabled to the BoardAudit Committee for deliberation. These auditscarried out by the Internal Audit Departmentcovers the various operating units of the Groupinvolving in Information & CommunicationTechnology (ICT), Liquefied Petroleum Gas(LPG), Properties, Engineering & Construction(PEC), Education & Training (E&T), Food &Beverage (F&B) and others. The audits carriedout covered both financial and operationalmatters.

The audit encompasses the following activities:

� Reviewed and appraised the soundness, adequacy and application of accounting, financial and other controls promoting effective control in the Company and Group.

� Ascertained the extent to which the Company�s and the Group�s assets are safeguarded.

� Ascertained the reliability and usefulness of the information developed within the Company and the Group for management.

� Recommending improvements to the existing systems of control.

Name of Committee Members

Tuan Haji Ahmad Kamal Abdullah Al-Yafii

Dato� Zainal Abidin PutihDatuk Haji Ahmad

Shahibuddin Haji Mohd NorDato� Ir. Harun Ahmad SarujiChe Khalib Mohamad Noh

No. ofMeetingsAttended

3/3

3/36/6

5/61/1

This statement is made in accordance with a resolution of the Board of Directors dated 27 April 2004.

40

Analysis of Shareholding

Distribution of Shareholding as at 30 April 2004

List of Substantial Shareholders as at 30 April 2004

Notes:* The indirect shareholding of Sumber Serata Sdn Bhd is registered in the name of Cimsec Nominee

(Tempatan) Sdn Bhd.** The indirect shareholding of Pengurusan Danaharta Nasional Berhad is registered in the name of

Cimsec Nominee (Tempatan) Sdn Bhd.

* Deemed interest held through his substantial shareholding in Daya Profil Sdn Bhd, a major shareholder of Sumber Serata Sdn Bhd, which is a substantial shareholder of KUB Malaysia Berhad.

No.Name Shareholding % of Shareholding

1 Sumber Serata Sdn Bhd

Indirect* 146,844,520 29.10

2 Pengurusan Danaharta

Nasional Berhad

Indirect** 79,500,000 15.75

3 Mohamed Raslan

Bin Abdul Rahman

Direct 35,684,458 7.07

Directors� Shareholding as at 30 April 2004(as shown in the Register of Director�s Shareholding)

Datuk Hassan Harun 926,259 146,844,520* 29.28

Datuk Mohd Hashim Hassan - - 0.00

Datuk Haji Ahmad Shahibuddin Haji Mohd Nor 12,000 - 0.00

Dato� Kamilia Ibrahim 3,000 - 0.00

Dato� Ir. Harun Ahmad Saruji 10,105 - 0.00

Tan Sri Datuk Dr. Johari Mat - - 0.00

Tuan Haji Ahmad Kamal Abdullah Al-Yafii - - 0.00

Ahmad Rodzi Pawanteh - - 0.00

Che Khalib Mohamad Noh - - 0.00

No. of Shares No. of Shares % of

Direct Indirect Shareholding

Less than 1,000 38,665 56.97 22,749,671 4.51

1,001 to 10,000 27,035 39.84 76,704,012 15.20

10,001 to 100,000 2,066 3.05 53,672,354 10.64

100,001 to less than 5% 96 0.14 89,465,376 17.73

5% and above 3 0.00 262,028,978 51.92

Total 67,865 100.00 504,620,391 100.00

Size of No. of % of No. of % of

Shareholdings Shareholders Shareholders Shares Held Shareholding

41

List of 30 Largest Shareholders as at 30 April 2004

Nos Names Shareholding % of

Shareholding

1 Cimbsec Nominees (Tempatan) Sdn Bhd 146,844,520 29.10

A/C Pengurusan Danaharta Nasional Berhad

for Sumber Serata Sdn Bhd



3 Mohamed Raslan Bin Abdul Rahman 35,684,458 7.07



for Sasaran Era Sdn Bhd

5 Menteri Kewangan Malaysia 15,008,813 2.97

6 OSK Nominees (Tempatan) Sdn Bhd 14,202,114 2.81

A/C Danaharta Managers Sdn Bhd

for Puncak Kinta Sdn Bhd

7 Amanah Raya Berhad 6,658,900 1.32

A/C SBB Value Fund

8 Minister of Finances 5,195,711 1.03

9 Allianz Life Insurance Malaysia Berhad 3,191,500 0.63

10 HSBC Nominees (Asing) Sdn Bhd 2,325,00 0.46

A/C Mscoil for Ht Asian Catalyst Fund LLC

11 RC Nominees (Tempatan) Sdn Bhd 2,000,000 0.40

A/C Perbadanan Kemajuan Negeri Perak

12 Allianz General Insurance Malaysia Berhad 1,515,700 0.30

13 Citicorp Nominees (Asing) Sdn Bhd 1,251,400 0.25

A/C CBNY for DFA Emerging Markets Fund

14 Asia Life (M) Berhad 1,099,900 0.22

A/C Beneficial Owner (PF)

15 Southern Nominees (Tempatan) Sdn Bhd 922,500 0.18

A/C Southern Bank Berhad (03)

16 Kenanga Nominees (Tempatan) Sdn Bhd 535,630 0.11

A/C Datuk Hassan Bin Harun

Analysis of Shareholding (continued)

42

Nos Names Shareholding % of

Shareholding

17 Abu Hassan Bin Omar 510,585 0.10

18 Soon Foo Mun 510,000 0.10

19 Lim Shiu Ho 500,018 0.10

20 Syed Mohd Yusof Bin Tun Syed Nasir 438,160 0.09

21 Farudah @ Faridah Binti Abu Hassan 420,000 0.08

22 RHB Capital Nominees (Tempatan) Sdn Bhd

A/C Datuk Hassan Bin Harun 390,629 0.08

23 Mohamad Daud Bin Mohd Yusoff 390,502 0.08

24 Gan Lam Seong 380,000 0.08

25 Bumiputra Commerce Nominees (Tempatan) Sdn Bhd 350,205 0.07

A/C Dato� Abdullah B Ahmad

26 Hong Bi Si 325,000 0.06

27 Tan Mei Phing 315,000 0.06

28 BBMB Securities Nominees (Tempatan) Sdn Bhd 309,100 0.06

A/C Koay Giam Shia

29 Bimsec Nominees (Tempatan) Sdn Bhd 300,000 0.06

A/C Syarikat Takaful Malaysia Berhad

30 Choo Tiang Choo 288,000 0.06

Financial Statements 2003

KUB Malaysia BerhadCompany No. 6022-D

(Incorporated in Malaysia)

Directors� Report 44

Statement by Directors 47

Statutory Declaration 48

Reports of the Auditors 49

Balance Sheet 50

Income Statement 51

Statement of Changes in Equity 52

Cash Flow Statements 53

Notes to the Financial Statements 55

List of Properties 86

Proxy Form 93

The Directors hereby submit their report and the audited financial statements of the Group and of the

Company for the year ended 31 December 2003.

Principal activities

The Company is principally engaged in investment holding and the provision of management services

to companies in the Group, whilst the principal activities of the subsidiaries are mainly in the business

of education and training, information and communications technology, liquefied petroleum gas, food

and beverages and properties, engineering and construction. The details of the subsidiaries� principal

activities are as stated in Note 25 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 (29,615) (40,490)

Reserves and provisions

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

in the financial statements.

Dividends

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:

Datuk Hassan Harun



Ahmad Rodzi Pawanteh

Datuk Haji Ahmad Shahibuddin Haji Mohd Nor

Dato� Kamilia Ibrahim

Dato� Ir. Harun Ahmad Saruji


Ahmad Kamal Abdullah Al-Yafii (appointed on 8.8.2003)

Dato� Zainal Abidin Putih (resigned on 31.7.2003)

Directors� Report

44

for the year ended 31 December 2003

The holdings and deemed holdings in the ordinary shares of the Company and of its related

corporations (other than wholly-owned subsidiaries) of those who were Directors at year end as

recorded in the Register of Directors� Shareholdings are as follows:

Number of ordinary shares

At At

1.1.2003 Bought Sold 31.12.2003

Shareholdings in the Company in

which Directors have direct interest

Datuk Hassan Harun 390,629 - - 390,629

Datuk Haji Ahmad Shahibuddin

Haji Mohd Nor 12,005 - - 12,005

Dato� Kamilia Ibrahim 3,000 - - 3,000

Dato� Ir. Harun Ahmad Saruji 15,105 - - 15,105

Shareholdings in the Company in

which a Director has indirect interest

Datuk Hassan Harun* 147,580,150 - - 147,580,150

* Deemed interest held through his substantial shareholdings in Daya Profil Sdn. Bhd., a major shareholder

of Sumber Serata Sdn. Bhd., which is a substantial shareholder in KUB Malaysia Berhad.

None of the other Directors holding office at 31 December 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, other

than rental and legal fees paid to firms in which Directors are members as disclosed in Note 24 to the

financial statements.

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 share 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 financial

year.

45

Directors� Report (continued)for the year ended 31 December 2003

46

Directors� Report (continued)for the year ended 31 December 2003

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.

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, other than as disclosed in the financial statements, the results of the

operations of the Group and of the Company for the financial year ended 31 December 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.

Auditors

The auditors, Messrs KPMG Desa Megat & Co., have indicated their willingness to accept re-

appointment.

Signed in accordance with a resolution of the Directors:

Datuk Hassan Harun


Kuala Lumpur,

Date: 27 April 2004

In the opinion of the Directors, the financial statements set out on pages 50 to 85 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 31 December 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:

Datuk Hassan Harun


Kuala Lumpur,

Date: 27 April 2004

Statement by Directors

47

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

I, Che Khalib Mohamad Noh, the Director primarily responsible for the financial management of KUB

Malaysia Berhad, do solemnly and sincerely declare that the financial statements set out on pages

50 to 85 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 April 2004.


Before me:

Commissioner for Oaths

Kuala Lumpur

Statutory Declaration

48

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

We have audited the financial statements set out on pages 50 to 85. 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 31 December 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 the subsidiaries of which we have acted as auditors have been properly kept

in accordance with the provisions of the said Act.

The subsidiaries in respect of which we have not acted as auditors are identified in Note 25 of the

financial statements and we have considered their financial statements and the auditors� reports

thereon.

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

Company�s financial statements are in form and content appropriate and proper for the purposes of the

preparation of the consolidated financial statements and we have received satisfactory information and

explanations required by us for those purposes.

The audit reports on the financial statements of the subsidiaries which have been audited were not

subject to any qualification and did not include any comment made under subsection (3) of Section 174

of the Act.

KPMG Desa Megat & Co.

Firm Number: AF 0759

Chartered Accountants

Abdullah Abu Samah

Partner

Approval Number: 2013/06/04(J)

Kuala Lumpur,

Date: 27 April 2004

Report of the Auditors

49

to the members of KUB Malaysia Berhad

Property, plant and equipment 2 366,602 419,382 6,603 5,062

Investments in subsidiaries 3 - - 214,945 214,895

Amount due from subsidiaries 4 - - 426,869 451,059

Investments in associates 5 22,577 21,897 20,894 20,894

Other investments 6 35,204 30,564 34,706 29,401

Development expenditure 7 110,939 128,397 3,021 4,876

Intangible assets 8 54,255 58,256 - -

Deferred tax assets 9 11,940 13,036 - -

601,517 671,532 707,038 726,187

Current assets

Inventories 10 45,064 47,856 - -

Other investments 6 7,625 - 7,625 -

Development expenditure 7 25,269 20,892 - -

Trade and other receivables 11 241,073 221,911 7,519 18,813

Tax recoverable 4,244 2,923 - -

Cash and cash equivalents 12 57,674 83,466 4,597 23,085

380,949 377,048 19,741 41,898

Current liabilities

Trade and other payables 13 319,232 335,892 49,261 44,773

Borrowings 14 123,136 123,639 22,296 53,412

Taxation 1,176 3,894 - -

443,544 463,425 71,557 98,185

Net current liabilities (62,595) (86,377) (51,816) (56,287)

538,922 585,155 655,222 669,900

Financed by:

Capital and reserves

Share capital 15 504,620 504,620 504,620 504,620

Reserves (100,965) (67,631) 114,547 155,037

403,655 436,989 619,167 659,657

Minority shareholders� interests 16 28,260 29,237 - -

Long term and deferred liabilities

Amount due to subsidiaries 4 - - 13,383 10,243

Borrowings 14 102,306 114,999 22,672 -

Deferred tax liabilities 9 4,701 3,930 - -

107,007 118,929 36,055 10,243

538,922 585,155 655,222 669,900

The financial statements were approved and authorised for issue by the Board of Directors on 27 April 2004.

The notes set out on pages 55 to 85 form an integral part of, and should be read in conjunction with,

these financial statements.

Balance Sheets

50

at 31 December 2003

Group Company

Note 2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

Revenue 17 625,281 515,691 3,361 5,069

Operating loss 17 (4,216) (259,416) (36,311) (138,973)

Interest expense (17,737) (16,220) (4,130) (2,494)

Interest income 1,134 2,793 216 1,267

Share of profit/(loss) of associates 680 (1,188) - -

Loss before tax (20,139) (274,031) (40,225) (140,200)

Tax expense 19 (7,323) (5,249) (265) (1,695)

Loss after taxation (27,462) (279,280) (40,490) (141,895)

Less: Minority interests (2,153) 3,137 - -

Net loss for the year (29,615) (276,143) (40,490) (141,895)

Basic loss per ordinary share (sen) 20 (5.9) (54.7)



Income Statements

51


Group Company

Note 2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

Group

At 1 January 2002 504,620 295,862 15,715 1,435 (115,317) 702,315

Effect of adopting

MASB 25 - - - - 11,081 11,081

Restated balance 504,620 295,862 15,715 1,435 (104,236) 713,396

Net loss for the year - - - - (276,143) (276,143)

Currency translation

differences - - - (264) - (264)

At 31 December 2002 504,620 295,862 15,715 1,171 (380,379) 436,989


Currency translation

differences - - - (3,719) - (3,719)

At 31 December 2003 504,620 295,862 15,715 (2,548) (409,994) 403,655

Company

At 1 January 2002 504,620 295,862 4,613 - (3,543) 801,552


At 31 December 2002 504,620 295,862 4,613 - (145,438) 659,657


At 31 December 2003 504,620 295,862 4,613 - (185,928) 619,167



Non distributable

Share Share Capital Translation Accumulated

capital premium reserves reserves losses Total

RM�000 RM�000 RM�000 RM�000 RM�000 RM�000

Statement Of Changes In Equity

52


I← I←

Cash flows from operating activities

Loss before taxation (20,139) (274,031) (40,225) (140,200)

Adjustments for:

Allowance for diminution in value of other

investment 31 304 31 300

Allowance for amount due from subsidiaries - - 37,759 94,921

Amortisation 9,062 10,925 ,647 1,056

Depreciation 40,622 43,193 1,072 866

Gain on disposal of property, plant and

equipment (2,605) (533) (1,594) -

Impairment loss on goodwill on acquisition

of a subsidiary - 38,121 - -

Impairment loss on investment of associates - 20,471 - 20,471

Impairment loss on investment in a subsidiary - - - 5,008

Impairment losses on property, plant

and equipment 3,378 50,862 - 1,718

Interest expense 17,737 16,220 4,130 2,494

Interest income (1,134) (2,793) (216) (1,267)

Loss on disposal of subsidiaries 1,600 - - -

Share of (profit)/loss of associates (680) 1,188 - -

Write off of development expenditure 952 48,359 952 811

Operating profit/(loss) before working

capital changes 48,824 (47,714) 2,556 (13,822)

(Increase)/Decrease in working capital:

Inventories 11,081 9,929 - -

Trade and other receivables (20,614) 17,601 7,710 3,138

Trade and other payables (22,324) 53,057 3,261 3,739

Cash generated from/(used in) operations 16,967 32,873 13,527 (6,945)

Income taxes paid (8,174) (13,216) (265) (5,549)

Net cash generated from/(used in)

operating activities 8,793 19,657 13,262 (12,494)

Cash Flow Statements

53


Group Company

2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

Group Company

2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

Group Company

2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

Cash flows from investing activitiesPurchase of property, plant and equipment (22,337) (32,287) (4,112) (3,346)Development expenditure (1,477) (2,512) - -Acquisition of a subsidiary company, net

of cash and cash equivalents acquired - (67,266) (50) (65,448) Proceeds from disposal of subsidiaries, net

of cash and cash equivalent (Note 28) 380 - - -Proceeds from disposal of property, plant

and equipment 18,622 11,382 3,093 -Advances to subsidiaries - - (38,471) (48,570) Repayment from subsidiaries - - 20,148 20,305Interest received 1,134 2,793 216 1,267 Decrease/(Increase) in pledged deposits

with licensed banks 7,628 (100) 7,738 (7,747)Net cash generated from/(used in)

investing activities 3,950 (87,990) (11,438) (103,539)

Cash flows from financing activitiesInterest paid (17,737) (16,220) (4,130) (2,494)Drawdown/(Payment) of finance lease/hire

purchase liabilities 1,206 (113) (8,444) 412Drawdown/(Repayment) of short term

borrowings 10,549 (26,937) - -(Repayment)/drawdown of term loans (23,417) 45,000 - 45,000Net cash (used in)/generated from

financing activities (29,399) 1,730 (12,574) 42,918

Net decrease in cash and cash equivalents (16,656) (66,603) (10,750) (73,115)Cash and cash equivalents at beginning of year 23,404 89,981 15,338 88,453Foreign exchange differences , 25 26 - - Cash and cash equivalents at end of year 6,773 23,404 4,588 15,338

i) Cash and cash equivalents

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

Cash and bank balances 36,175 35,352 278 109Deposits (excluding Group:

RM9,432,000 (2002 - RM17,060,000); Company: RM9,000 (2002 - RM7,747,000)pledged as security forbanking facilities) 12,067 31,054 4,310 15,229

Bank overdrafts (41,469) (43,002) - - 6,773 23,404 4,588 15,338

The notes set out on pages 55 to 85 form an integral part of, and should be read in conjunction with,these financial statements.

Cash Flow Statements (continued)

54


1. Summary of significant accounting policies

The following accounting policies are adopted by the Group and by the Company and are consistentwith those adopted in previous years except for the adoption of the following:

(i) MASB 25, Income Taxes;(ii) MASB 27, Borrowing Costs;(iii) MASB 28, Discontinuing Operations; and(iv) MASB 29, Employee Benefits.

In addition to the new policies and extended disclosures where required by these new standards, the effects of changes in the above accounting policies are disclosed in Note 30 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 and in compliance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia.

(b) Basis of consolidation Subsidiaries are those enterprises controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an enterpriseso 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 except for certain subsidiaries which are consolidated using the merger 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 reserve on consolidation as appropriate.

Under the merger method of accounting, the results of the subsidiaries are presented as if the companies had been combined throughout the current and previous financial years. The difference between the cost of acquisition and the nominal value of the share capital and reserves of the subsidiaries is taken to merger reserve.

Intragroup 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.

In accordance with the transitional provision under MASB 21, Business Combination, the group chooses to apply this Standard prospectively.

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

Notes To The Financial Statements

55

1. Summary of significant accounting policies (continued)

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

Unrealised profits arising on transactions between the Group and its associates 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 associates. Unrealised losses on such transactions are also eliminated partially unless cost cannot be recovered.

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

(d) Property, plant and equipmentFreehold land is stated at cost less accumulated impairment losses. All other property, plant and equipment are stated at cost/valuation less accumulated depreciation and accumulated impairment losses.

The revaluation in 1980 by the Directors was not intended to effect a change in accounting policy and factory and buildings are continued to be stated at their existing carrying amounts less accumulated depreciation.

Depreciation Freehold land is not amortised. Leasehold land is amortised in equal installments over the period of the respective leases which ranges from 50 to 99 years. The straight-line method is used to write off the cost of the assets over the term of their estimated useful lives at the following principal annual rates:

Factory and buildings 2% - 10%Plant, equipment and vehicles 10% - 33 1/3%Coursewares 12.5%

(e) Intangible asset(i) Goodwill

Goodwill represents the excess of the cost of acquisition over the fair values of the net identifiable assets acquired and is stated at cost less accumulated amortisation and accumulated impairment losses (refer Note 1(o)).

Goodwill is amortised from the date of initial recognition over its estimated useful life of not more than 20 years.

In respect of associates, the carrying amount of goodwill is included in the carrying amount of the investment in the associate.

(ii) Concession costsConcession costs are in respect of the rights to operate Institute Latihan Perindustrian Prai. Concession costs are stated at cost less accumulated amortisation. The concession costsare amortised over the concession period of 25 years.

(f) Development expenditure(i) Development Costs

Development cost comprises expenditure incurred on a plan or design for the production of new products or services prior to the commencement of commercial production or use. The expenditure is capitalised if the products or services are technically and commercially feasible and the Group has sufficient resources to complete the development. It includes cost of materials, direct labour and appropriate proportion of overheads. Capitalised development expenditure is amortised over a period of 5 to 10 years on a straight line basis so as to reflect the pattern over which the related future economic benefits is expected to flow from the development activities. The amortisation commences when the product or services is available for sale.

Notes To The Financial Statements (continued)

56


(ii) Plantation development expenditurePlantation development expenditure includes the costs incurred on the land, plantation infrastructure and development and capitalisation of interest expense on loans and advances utilised to finance on-going development. The capitalisation of interest is ceased when the plantation is ready for its intended use.

Plantation expenditure incurred for the land development, planting and trees maintenance is capitalised until maturity in the plantation development accounts. Upon maturity, the expenditure incurred is amortised based on estimated annual yield over 25 years.

(iii)Properties under developmentProperties under development comprising land and development expenditure are stated at cost plus attributable profit less foreseeable losses, net of progress billings. Development expenditure includes capitalisation of interest expense on loans and advances utilised to finance on-going development.

(g) Amount due from contract customersAmount due from contract customers on construction contracts is stated at cost plus attributable profits less foreseeable losses and less progress billings. Cost includes all direct construction costs and other related costs. Where progress billings exceed the aggregate amount due from contract customers plus attributable profits less foreseeable losses, the net credit balance on all such contracts is shown in trade and other payables as amount due to contract customers.

(h) Finance leases Leases in which the Group and the Company assume substantially all the risks and rewards of ownership are classified as finance leases. Assets acquired by way of finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses.

In calculating the present value of the minimum lease payments, the discount rate is the interest rate implicit in the lease, if this is practicable to determine; if not, the Group�s incremental borrowing rate is used.

(i) Investments Long term investments in subsidiaries and associates are stated at cost in the Company, less impairment loss where applicable.

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

Current unquoted investments are stated at the lower of cost and net realisable value.

(j) Trade and other receivablesTrade and other receivables are stated at cost less allowance for doubtful debts.

(k) ProvisionsA 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.

(l) LiabilitiesBorrowings and trade and other payables are stated at cost.

57



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

(n) Cash and cash equivalentsCash and cash equivalents consist of cash on hand, balances and deposits with banks. For the purpose of the cash flow statement, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(o) ImpairmentThe carrying amount of the Group�s assets, other than inventories, assets arising from construction contracts, deferred tax assets and financial assets (other than investments in subsidiaries and associates), 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 in respect of goodwill is not reversed unless the loss was caused by a specific external event of an exceptional nature that is not expected to recur and subsequent external events have occurred that reverse the effect of that event.

In respect of other assets, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.

An impairment loss is reversed only to the extent that the asset�s carrying amount does not exceed the carrying amount that would have determined, net of depreciation or amortisation, if no impairment loss has been recognised. The reversal is recognised in the income statement.

(p) Capitalisation of borrowing costsBorrowing costs incurred on capital work-in-progress, properties under development and gross amount due from contract customers 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 a specific capital work-in-progress, property under development or gross amount due from contract customers, 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.


58


(q) Income taxTax 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 goodwill not deductible for tax purposes and 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.

(r) Foreign currency(i) Foreign currency transactions

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

(ii) Financial statements of foreign operationsThe 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:

1USD RM3.80 (2002: 1USD RM3.80)1SGD RM2.23 (2002: 1SGD RM2.17)100Baht RM9.58 (2002: 100Baht RM8.56)

(s) Discontinuing operationsA discontinuing operation is a clearly distinguishable component of the Group�s business that is disposed or terminated pursuant to a single plan which represents a separate major line of business or geographical area of operations and can be distinguished operationally and for financial reporting purposes.

59



(t) Revenue

(i) Goods sold and services renderedRevenue 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.Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction at the balance sheet date. The stage of completion ismeasured by reference to the proportion that contract costs incurred for contract work performed to date that reflect work performed bear to the total estimated contract costs. Where the outcome of the transaction cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.

(ii) Construction contractsRevenue from fixed price construction contracts is recognised on the proportion that contract costs incurred for contract work performed to date that reflect work performed bear to the total estimated contract costs.

When the outcome of a construction contract cannot be estimated reliably, revenue is recognised only to the extent of contract costs incurred that is probable to be recoverable and contract costs are recognised as an expense in the period in which they are incurred.

An expected loss on a contract is recognised immediately in the income statement.

(iii)Property developmentProfit from property development is recognised based on the proportion that contract costs incurred for contract work performed to date that reflect work performed bear to the total estimated contract costs. Where foreseeable losses are anticipated, full allowance for these losses is made in the financial statements.

(iv)Dividend incomeDividend income is recognised when the right to receive payment is established.

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

(u) ExpensesFinancing costsAll interest and other costs incurred in connection with borrowings, other than that capitalised in accordance with Note 1(p), are expensed as incurred. The interest component of finance lease 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.

(v) Employee benefits(i) Short term benefits

Wages, salaries, bonuses and society security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accummulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Defined contribution plansObligations for contributions to defined contribution plans are recognised as an expense in the income statement as incurred.


60

2. Property, plant and equipment

61


Opening balance 13,216 18,230 242,684 360,840 30,549 665,519

Additions - 2,500 6,398 11,509 1,930 22,337

Disposals - (9,434) (1,382) (13,390) - (24,206)

Transfers - (2,722) - (8,694) - (11,416)

Disposal of a subsidiary - - (1,300) (10,692) - (11,992)

Reclassification 1,071 - (5,897) 4,826 - -

Exchange difference - - 983 468 - 1,451

Closing balance 14,287 8,574 241,486 344,867 32,479 641,693

Representing items at:

Cost 14,287 8,574 239,515 344,867 32,479 639,722

Directors� valuation - - 1,971 - - 1,971

Closing balance 14,287 8,574 241,486 344,867 32,479 641,693

Depreciation and

impairment losses

Accumulated depreciation - 1,542 31,907 152,578 9,248 195,275

Accumulated impairment losses 1,361 - 9,846 39,655 - 50,862

Opening balance 1,361 1,542 41,753 192,233 9,248 246,137

Depreciation charge for the year - 68 5,343 30,261 4,950 40,622

Disposals - (11) (173) (6,046) - (6,230)

Transfers - - - (752) - (752)

Disposal of a subsidiary - - (61) (7,495) - (7,556)

Impairment losses for the year - - - 3,378 - 3,378

Reclassification - (367) 367 - - -

Exchange difference - - (172) (336) - (508)

Accumulated depreciation - 1,232 37,211 168,210 14,198 220,851

Accumulated impairment losses 1,361 - 9,846 43,033 - 54,240

Closing balance 1,361 1,232 47,057 211,243 14,198 275,091

Net book value

At 31 December 2003 12,926 7,342 194,429 133,624 18,281 366,602

At 31 December 2002 11,855 16,688 200,931 168,607 21,301 419,382

For the year ended

31 December 2002

Depreciation charge - 67 6,725 32,755 3,646 43,193

Impairment losses 1,361 - 9,846 39,655 - 50,862

Long

term Plant,

lease- Factory equipment

Group Freehold hold and and Course-

land land buildings vehicles ware Total

Cost/Valuation RM�000 RM�000 RM�000 RM�000 RM�000 RM�000

Opening balance 5,975 3,768 9,743

Additions 2,500 1,612 4,112

Disposals (1,336) (1,794) (3,130)

Closing balance 7,139 3,586 10,725

Representing items at:

Cost 5,168 3,586 8,754

Directors� valuation 1,971 - 1,971


Depreciation and impairment losses

Accumulated depreciation 777 2,186 2,963

Accumulated impairment losses 1,718 - 1,718

Opening balance 2,495 2,186 4,681

Depreciation charge for the year 97 975 1,072

Disposals (747) (884) (1,631)

Accumulated depreciation 127 2,277 2,404

Accumulated impairment losses 1,718 - 1,718


Net book value

At 31 December 2003 5,294 1,309 6,603

At 31 December 2002 3,480 1,582 5,062

For the year ended 31 December 2002

Depreciation charge 52 814 ,866

Impairment losses 1,718 - 1,718

Revaluation

Certain buildings of the Group and Company are stated at Directors� valuation based on

independent professional valuation in 1980. In accordance with the transitional provisions issued

by the Malaysian Accounting Standards Board (�MASB�) upon adoption of International

Accounting Standards Board No. 16 (Revised) Property, Plant and Equipment, the valuation of

these assets has not been updated, and they continue to be stated at their existing carrying

amounts less accumulated depreciation.

Company Factory Equipment

and and

buildings vehicles Total

Cost/Valuation RM�000 RM�000 RM�000


62

2. Property, plant and equipment (continued)

2. Property, plant and equipment (continued)

Security

The following property, plant and equipment are pledged to banks as security for borrowings

purposes:

At net book value:

Freehold land 1,447 1,447

Long term leasehold land 971 10,252

Factory and buildings 111,775 117,170

Plant, equipment and vehicles 3,775 4,998

117,968 133,867

Assets under hire purchase and finance lease

Included in the property, plant and equipment of the Group are plant, equipment and motor

vehicles acquired under hire purchase and lease agreements with net book value amounting to

RM3,848,000 (2002 - RM3,760,000).

3. Investments in subsidiaries

Unquoted shares, at cost 230,130 230,080

Less: Impairment loss (15,185) (15,185)

214,945 214,895

Details of the subsidiaries are shown in Note 25.

4. Amount due from/(to) subsidiaries

Amount due from subsidiaries 572,819 559,252

Less: Allowance for doubtful debts (145,950) (108,193)

426,869 451,059

Amount due to subsidiaries (13,383) (10,243)

The amounts due from/(to) subsidiaries are non-trade in nature, interest free and unsecured except

for the following amounts due from subsidiaries:

Unsecured, bear interest at 6.1% to 9.5% per annum

(2002 - 6.1% to 12% per annum) 13,300 21,996

Group

2003 2002

RM�000 RM�000

Company

2003 2002

RM�000 RM�000

Company

2003 2002

RM�000 RM�000

63


Company

2003 2002

RM�000 RM�000

5. Investments in associates

Quoted shares 35,096 35,096 35,096 35,096

Unquoted shares 17,993 17,993 16,269 16,269

Share of post acquisition reserves 725 45 - -

Less: Impairment loss (31,237) (31,237) (30,471) (30,471)

22,577 21,897 20,894 20,894

Represented by:

Group�s share of net assets other

than goodwill 26,021 25,341

Less: Impairment loss other than goodwill (10,000) (10,000)

16,021 15,341

Goodwill on acquistion 27,793 27,793

Less: Impairment loss on goodwill (21,237) (21,237)

6,556 6,556

22,577 21,897

Market value of quoted associates 15,967 10,037 15,967 10,037

Details of the associates are shown in Note 26.

6. Other investments

Quoted shares 2 2,543 - -

Unquoted shares 43,162 30,178 42,662 29,701

43,164 32,721 42,662 29,701

Less: Allowance for diminution in value

Quoted shares - (1,853) - -

Unquoted shares (335) (304) (331) (300)

42,829 30,564 42,331 29,401

Less: Unquoted shares � current portion

(see Note 29(i)) (7,625) - (7,625) -

35,204 30,564 34,706 29,401

Market value of quoted investment 2 690


64

Group Company

2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

Group Company

2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

7. Development expenditure

Development costs (Note 7.1) 9,649 13,992 712 2,314

Plantation development expenditure

(Note 7.2) 56,414 56,863 2,309 2,562

Properties under development

(Note 7.3) 70,145 78,434 - -

136,208 149,289 3,021 4,876

Less: Properties under development

- current portion (Note 7.3) (25,269) (20,892) - -

Non-current portion 110,939 128,397 3,021 4,876

7.1 Development costs

At 1 January 42,975 52,634 3,928 5,260

Additions during the year 328 - - -

Transfer to property, plant and

equipment - (9,659) - -

Transfer to property, plant and -

equipment of a subsidiary - - - (1,332)

Transfer to other investment (256) - (256) -

43,047 42,975 3,672 3,928

Accumulated amortisation (20,891) (17,428) (1,197) (803)

Impairment loss on development

costs (12,507) (11,555) (1,763) (811)

At 31 December 9,649 13,992 712 2,314

Amortisation during the year 3,463 5,897 394 803

7.2 Plantation development expenditure

At 1 January

Long term leasehold land

- at cost 20,450 20,450 2,312 2,312

Plantation infrastructure 8,859 8,859 - -

Plantation development 33,163 30,653 1,883 1,883

62,472 59,962 4,195 4,195

Additions during the year 1,149 2,510 - -

63,621 62,472 4,195 4,195

Accumulated amortisation (7,207) (5,609) (1,886) (1,633)

At 31 December 56,414 56,863 2,309 2,562

Amortisation during the year 1,598 1,505 253 253

65


Group Company

2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

Group Company

2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

Group Company

2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

7.2 Plantation development expenditure (continued)

Addition to plantation development during the year include:

Interest expense - 286

Leasehold land amounting to RM16,128,000 (2002 - RM18,138,000) are charged to the

banks for banking facilities of the Group.

7.3 Properties under development

At cost

Freehold land � at cost 40,579 58,549

Long term leasehold land � at cost 21,859 29,717

Development expenditure 12,767 53,285

Interest capitalised 4,618 4,618

Attributable (losses)/profits (197) 1,295

Impairment loss on development expenditure - (36,804)

79,626 110,660

Less: Progress billings (9,481) (32,226)

70,145 78,434

Less: Non-current portion (44,876) (57,542)

Current portion 25,269 20,892

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 of two to three years is considered as a current asset.

Properties amounting to RM19,395,000 (2002 - RM27,087,000) have been charged to secure

banking facilities granted to the Group.


66

Group

2003 2002

RM�000 RM�000

Group

2003 2002

RM�000 RM�000

8. Intangible assets

CostAt 1 January/ 31 December 99,291 1,946 101,237

Amortisation and impairment lossesAccumulated amortisation 4,524 336 4,860Accumulated impairment losses 38,121 - 38,121

Opening balance 42,645 336 42,981Charge for the year 3,917 84 4,001

Accumulated amortisation 8,441 420 8,861Accumulated impairment losses 38,121 - 38,121Closing balance 46,562 420 46,982

Net book valueAt 31 December 2003 52,729 1,526 54,255At 31 December 2002 56,646 1,610 58,256

9. Deferred taxThe amounts, determined after appropriate offsetting, are as follows:

Deferred tax liabilities 4,701 3,930Deferred tax assets (11,940) (13,036)

(7,239) (9,106)

Deferred tax liabilities and assets are offset where there is a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred taxes relate to the same taxation authority.

The recognised deferred tax assets and liabilities (before offsetting) are as follows:

Property, plant and equipment - capital allowance 10,357 8,773Unabsorbed capital allowances (7,639) (8,759)Unutilised tax losses (6,221) (6,221)Allowances (3,736) (2,899)

(7,239) (9,106)

No deferred tax assets have been recognised for the following items:

Unutilised tax losses 130,868 134,564 10,200 10,200Unabsorbed capital allowances 25,981 20,345 2,579 2,446Deductible temporary differences 60,323 40,641 1,179 1,114

217,172 195,550 13,958 13,760

67


Group Company2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

Concession Group Goodwill costs Total

RM�000 RM�000 RM�000

Group2003 2002

RM�000 RM�000

Group2003 2002

RM�000 RM�000

9. Deferred tax (continued)

The above 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 can utilise the benefits.

The Group and Company have tax losses carried forward of RM153 million (2002 - RM157 million) and RM10 million (2002 - RM10 million) respectively which give rise to the recognised and unrecognised deferred tax assets in respect of unutilised tax losses above.

10. Inventories

At cost:Raw materials 4,108 2,792Work-in-progress 3,530 3,585Finished goods 29,237 32,683Parts and components 8,189 8,796

45,064 47,856

Finished goods of RM1,402,000 (2002 - RM4,489,000) are carried at net realisable value.

11. Trade and other receivables

Trade receivables 167,256 175,899 - -Amount due from contract customers

(Note 11.1) 3,751 1,220 - - 171,007 177,119 - -

Other receivables, deposits andprepayments 69,559 44,297 7,519 18,813

Amount due from associates 507 495 - - 241,073 221,911 7,519 18,813

11.1 Amount due (to)/from contract customers

Aggregate cost incurred to date 275,521 218,739Add: Attributable profit 21,621 17,156

297,142 235,895Less: Progress billings (299,317) (234,675)Amount due (to)/from contract customers (2,175) 1,220Amount due to contract customers (Note 13) 5,926 - Amount due from contract customers 3,751 1,220

GroupProgress billing receivableIncluded in progress billings receivable are retentions amounting to RM2,087,000 (2002 - RM3,204,000).


68

Group2003 2002

RM�000 RM�000

Group2003 2002

RM�000 RM�000

Group Company2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

12. Cash and cash equivalents

Cash and bank balances 36,175 35,352 278 ,109Deposits - Licensed banks 21,499 48,114 4,319 22,976

57,674 83,466 4,597 23,085

GroupIncluded in the Group�s cash and bank balances is RM2,146,000 (2002 - RM2,091,000), the utilisation of which is subject to the Housing Developers (Housing Development Account) Regulations 2002.

Included in fixed deposits is RM9,432,000 (2002 - RM17,060,000) pledged for banking facilities of the Group.

13. Trade and other payables

Trade payables 83,056 71,784 - -Amount due to Koperasi Usaha

Bersatu Malaysia Berhad foracquisition of land (Note 15) 37,580 37,580 37,580 37,580

Unearned tuition fees 35,870 45,299 - - Deposits received 34,319 32,877 - -Accrued contract cost 20,033 31,109 - - Other payables and accrued expenses 95,710 98,941 11,681 7,193Amount due to associates 6,738 18,302 - - Amount due to contract customers

(Note 11.1) 5,926 - - - 319,232 335,892 49,261 44,773

14. Borrowings

CurrentRevolving credit - unsecured 5,263 12,064 1,000 8,000

- secured 10,420 10,920 - -Term loans - secured 41,796 53,048 21,000 45,000Overdrafts - secured 27,600 28,146 - -

- unsecured 13,869 14,856 - - Banker�s acceptances - secured 6,802 3,600 - -

- unsecured 16,235 - - -Finance lease and hire purchase liabilities 1,151 1,005 ,296 ,412

123,136 123,639 22,296 53,412Non-current

Long term loans - secured 100,051 112,868 21,000 - Finance lease and hire purchase liabilities 2,255 2,131 1,672 -

102,306 114,999 22,672 - Total 225,44 2 238,638 44,968 53,412

69


Group Company

2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

Group Company2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

Group Company2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000


70

14. Borrowings (continued)

Terms and debt repayment scheduleThe revolving credit is subject to interest rates between 1.25% to 2.25% (2002 - 1.25% to 2.25%) above the cost of funds and the lenders� base lending rates. The overdrafts and term loans are subject to interest rates between 6.4% to 9.5% (2002 - 5.3% to 10%). Hire purchase/finance leases are subject to a fixed interest rates of between 3.9% to 12% (2002 - 4.3% to 12.5%). Bankers�acceptances are subject to interest between 1.0% and 8.5% (2002 - 0.8% to 9.7%).

Overdrafts and term loans of certain subsidiaries are secured by way of fixed and floating charges over the subsidiaries� property, plant and equipment (Note 2).

The term loans are repayable in equal monthly and yearly instalments over periods ranging from 1 year to 15 years.

Finance lease and hire purchase liabilities

Finance lease and hire purchase liabilities are payable as follows:

Less than one year 1,529 378 1,151 1,263 258 1,005

Between one and five years 2,737 482 2,255 2,611 480 2,131

4,266 860 3,406 3,874 738 3,136

Company

Less than one year 473 177 296 513 101 412

Between one and five years 2,106 434 1,672 - - -

2,579 611 1,968 513 101 412

15. Share capital

Ordinary shares of RM1.00 each

Authorised 1,000,000 1,000,000

Issued and fully paid 504,620 504,620

On 25 April 1997, KUB entered into a supplemental Sale and Purchase Agreement with Koperasi

Usaha Bersatu Malaysia Berhad (in liquidation) to amend the Sale and Purchase Agreement dated

21 August 1996 whereby part of the Koperasi�s assets to be acquired under the KUB Ekuiti Sdn.

Bhd.�s acquisition were the Malay Reserve Land and Restriction-in-Title land.

The acquisition value of the non-transferred land is RM48.08 million and this value will be satisfied

by the issuance of 26,711,111 new ordinary shares of RM1 each in KUB at an issue price of RM1.80

per share. Upon the approvals being obtained for the transfer of the non-transferred land, the issued

and paid-up share capital of KUB would increase from 504,620,391 shares to 531,331,502 shares.

Certain land titles with purchase considerations of RM37.58 million have been transferred but the

related number of shares of 20,877,778 have yet to be issued. The Securities Commission (�SC�)

Payments Interest Principal Payments Interest Principal

2003 2003 2003 2002 2002 2002

Group RM�000 RM�000 RM�000 RM�000 RM�000 RM�000

Group and Company

2003 2002

RM�000 RM�000

15. Share capital (continued)

vide its letter dated 7 January 2004 has approved the issuance of those shares. The remaining land

with a value of RM10.50 million comprising 34 individual plots will be transferred to the Company

with the exclusion of 1 individual plot, upon obtaining the approvals of the relevant state land offices.

The exclusion of 1 individual plot and a further extension of time to 30 June 2004 for the transfer of

the remaining lands have also been approved by the SC in the aforesaid letter.

16. Minority shareholders� interests

This consists of minority shareholders� proportion of share capital and reserves of subsidiaries.

17. Operating loss

Revenue

- contract revenue 122,820 102,736 - -

- sale of goods 423,232 331,173 - -

- services 74,355 70,707 2,126 3,429

- sale of properties 4,874 11,075 - -

- interest - - 1,235 1,640

625,281 515,691 3,361 5,069

Contract costs recognised as

an expense (104,326) (81,226) - -

Cost of sales (337,772) (258,147) - -

Cost of services (46,454) (68,756) - -

Cost of properties sold (4,954) (9,849) - -

(493,506) (417,978) - -

Gross profit 131,775 97,713 3,361 5,069

Distribution costs (19,107) (18,633) - -

Administration expenses (94,805) (107,572) (4,771) (6,408)

Other operating expenses (52,520) (250,482) (45,552) (138,573)

Other operating income 30,441 19,558 10,651 939

(135,991) (357,129) (39,672) (144,042)

Operating loss (4,216) (259,416) (36,311) (138,973)

Operating loss is arrived at

after crediting:-

Gain on disposal of property, plant

and equipment 2,605 533 1,594 -

Rental income 199 145 ,113 145

Write back of allowance for doubtful

debts ,410 - - -

Write back of allowance for amount due

from subsidiaries - - 6,927 -

Write back of allowance for foreseeable

loss 136 - - -

Write back of over accruals 5,704 520 - -

71


Group Company2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

17. Operating loss (continued)

and after charging:

Allowance for amount due from subsidiaries - - 37,759 94,921

Amortisation of development costs 3,463 5,897 394 803

Allowance for diminution in value of

other investment 31 304 31 300

Allowance for doubtful debts 5,812 34,696 - 7,198

Amortisation of intangible assets 4,001 3,524 - -

Amortisation of plantation

development expenditure 1,598 1,505 253 253

Auditors� remuneration 422 490 23 22

Company�s Directors

Remuneration 864 771 864 771

Fees 263 408 263 408

Depreciation 40,622 43,193 1,072 866

Impairment losses on goodwill - 38,121 - -

Impairment loss on investment in associates - 20,471 - 20,471

Impairment loss on investment in a subsidiary - - - 5,008

Impairment losses on property, plant

and equipment 3,378 50,862 - 1,718

Inventories written down 1,638 11,667 - -

Loss on disposal of subsidiaries 1,600 - - -

Provision for retrenchment benefits - 1,923 - -

Rental expense on land and buildings 11,401 11,097 969 1,003

Realised loss on foreign exchange 65 - - -

Write off of development expenditure 952 48,359 952 811

The estimated monetary value of Directors� benefits-in-kind is RM7,350 (2002 - RM23,000).

18. Employee information

Employees Provident Fund 7,507 8,568 544 683

Other staff costs

(emoluments of Directors and staff) 59,591 64,439 4,456 5,593

The number of employees of the Group and of the Company (including Directors) at the end of the

year was 2,878 (2002 - 3,492) and 65 (2002 - 70) respectively.


72

Group Company2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

Group Company2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

19. Tax expense

Current tax expense

Malaysian - current 5,068 3,595 265 -

- prior year 388 2,865 - 1,695

5,456 6,460 265 1,695

Deferred tax expense

Origination and reversal of temporary

differences 771 744 - -

Benefit of previously unrecognised

tax losses 1,096 (1,955) - -

7,323 5,249 265 1,695

Reconciliation of effective tax expense

Loss before taxation (20,139) (274,031) (40,225) (140,200)

Income tax using Malaysian tax rate (5,639) (76,729) (11,263) (39,256)

Non-deductible expenses 7,579 72,979 11,473 39,159

Effect of deferred tax assets not

recognised 6,054 6,236 55 97

Tax incentives (1,059) (102) - -

6,935 2,384 265 -

Underprovision in prior years 388 2,865 - 1,695

Tax expense 7,323 5,249 265 1,695

20. Loss per ordinary share - group

Basic loss per share

The calculation of basic loss per share is based on the net loss attributable to ordinary shareholders

of RM29,615,000 (2002 - RM276,143,000) and the number of ordinary shares outstanding during

the year of 504,620,000 (2002 - 504,620,000).

Diluted loss per share

The calculation of diluted loss per share is based on the net loss attributable to ordinary shareholders

of RM29,615,000 (2002 - RM276,143,000) and the weighted average number of ordinary shares

outstanding during the year of 531,196,466 (2002 - 531,331,111) calculated as follows:

Number of ordinary shares (diluted)

Issued ordinary shares at beginning of the year 504,620 504,620

Effect of new issue of ordinary shares as consideration for

acquisition of certain Malay-Reserve and Restriction-in-

Title land (Note 15) 26,576 26,711

Number of ordinary shares (diluted) 531,196 531,331

The diluted loss per share results in decreased loss per share and therefore it is not shown.

73


Group Company2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

2003 2002

Units�000 Units�000

21. Segmental information

Segment information is presented in respect of the Group�s business. 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.

Segment results, assets and liabilities include items directly attributable to a segment as well as

those that can be allocated on a reasonable basis.

Segment capital expenditure is the total cost incurred during the period to acquire segment assets

that are expected to be used for more than one accounting period.

Business segments:

The Group comprises the following main business segments:

Education and Training ("E&T") Online and conventional education.

Information and Information technologies, telecommunication

Communications Technology ("ICT") services and their related infrastructures.

Liquefied Petroleum Gas ("LPG") Bottling and trading of LPG.

Food and Beverages ("F&B") Quick - service restaurants and hotelier.

Properties, Engineering & Construction Development, construction and management

("PEC") of residential and commercial properties,

including engineering and civil works.

Others Investment holding, manufacturing of mild

steel pipes and garments, oil palm plantation,

trading of consumer products and advertising/

event management services.

The Group operates mainly in Malaysia.


74

Business segments

Revenue from external

customers 66,399 200,926 148,530 46,478 74,229 88,719 - 625,281

Inter-segment revenue - - - - 7,539 2,011 (9,550) -

Total revenue 66,399 200,926 148,530 46,478 81,768 90,730 (9,550) 625,281

Segment result

Operating profit/(loss) (1,835) 6,985 3,315 (8,338) (1,390) (2,953) - (4,216)

Interest expenses (717) (799) (859) (2,411) (5,866) (7,085) - (17,737)

Interest income - 158 - 390 441 145 - 1,134

Share of profit/(loss)

of associates - 1,258 - - - (578) - 680

Tax expense (514) (3,172) (316) - (2,091) (1,230) - (7,323)

Minority interests - (1,219) - - (934) -. - (2,153)

Net profit/(loss) for the year (3,066) 3,211 2,140 (10,359) (9,840) (11,701) - (29,615)

2003 E&T ICT LPG F&B PEC Others Elimination Consolidated

RM�000 RM�000 RM�000 RM�000 RM�000 RM�000 RM�000 RM�000

Business segments

Revenue from external

customers 61,497 208,790 75,059 50,863 35,932 83,550 - 515,691

Inter-segment revenue - - 972 - 16,526 9,797 (27,295) -

Total revenue 61,497 208,790 76,031 50,863 52,458 93,347 (27,295) 515,691

Segment result

Operating profit /(loss) (6,120) 896 (22,284) (60,527) (51,069) (120,312) - (259,416)

Interest expenses (1,885) (1,373) (685) (2,410) (3,586) (6,281) - (16,220)

Interest income 6 ,483 - ,390 461 1,453 - 2,793

Share of profit/(loss)

of associates - ,390 - - - (1,578) - (1,188)

Tax expense 1,325 (1,804) (1,905) - (818) (2,047) - (5,249)

Minority interests - 1,869 - - (94) 1,362 - 3,137

Net profit /(loss) for the year (6,674) ,461 (24,874) (62,547) (55,106) (127,403) - (276,143)

Segment assets 125,913 166,055 125,558 62,043 298,819 181,502 - 959,890

Investment in associates - 2,238 - - - 20,338 - 22,576

Total assets 125,913 168,293 125,558 62,043 298,819 201,840 - 982,466

Total liabilities 57,283 97,192 64,996 54,993 131,662 172,685 - 578,811

Capital expenditure 4,312 5,802 4,594 3,571 1,155 2,903 - 22,337

Impairment losses 20 2,041 - 1,317 - - - 3,378

Depreciation and

amortisation 18,335 4,493 8,361 5,691 6,055 6,749 - 49,684

Segment assets 136,861 158,514 139,094 68,637 299,133 224,550 - 1,026,789

Investment in associates - 1,370 - - - 20,421 - 21,791

Total assets 136,861 159,884 139,094 68,637 299,133 244,971 - 1,048,580

Segment liabilities 64,915 87,590 69,746 59,330 118,719 211,291 - 611,591

Capital expenditure 11,213 6,851 5,655 4,190 3,912 2,978 - 34,799

Impairment losses 1,152 900 12,075 38,084 43,802 61,800 - 157,813

Depreciation and

amortisation 18,411 5,120 5,588 9,116 6,268 9,615 - 54,118

22. Contingent liabilities - unsecured

Guarantees and contingencies relatingto borrowings of subsidiaries 98,445 93,087

75








Company

2003 2002

RM�000 RM�000

21. Segmental information (continued)


76

22. Contingent liabilities - unsecured (continued)

LitigationClaims brought against two subsidiaries by suppliers totaling RM4,100,000 for debt recovery for which the cases are still pending resolution are as follows:(i) Claim, wherein the Company was also named as co-defendant, for goods delivered and sold for

RM1,100,000. The Directors, based on legal advice, are of the opinion that maximum exposure of the case is to be approximately RM185,000 and thus this amount has been provided in the financial statements. Full trial of the case is fixed on 16 and 17 May 2004; and

(ii) Claim for supply of computer software, hardware and consultancy services for RM3,036,345. The subsidiary filed counterclaim for RM404,343 in aggregate comprising liquidated ascertained damages and payment for supply of equipment.

The Court directed a particular IT Consultant be appointed to determine the validity of the claim and counterclaim. On 23 October 2003, the appointed consultant attended the Court hearing and was given directions by the Court as to the scope of the appointment. The Court has fixed 13 May 2004for further case management unless both parties should agree on the settlement amount prior to that.

Claims brought by Joint-Venture Partner of a Subsidiary against that subsidiary: (i) Claim for business losses and damages initiated in 2001 for RM15,000,000 under the joint

venture agreement. Court proceedings have been stayed pending reference of the matter by the Joint Venture partner to an arbitrator. The subsidiary is disputing the claim and is taking necessary legal actions to counter the claim. The plaintiff has yet to refer the dispute to the arbitrator.

The Director, based on legal advice, are of the opinion that case is in favour of them, hence no allowance was made in the financial statements.

Claims brought by the Company against various parties totaling RM5,292,000 as follows:(i) Claim arising from a Sale Agreement ("the Sale Agreement") for RM192,000 being the 5%

liquidated and ascertained damages and RM2,100,000 being the outstanding rental guarantee under the Sale Agreement. On 29 September 2003, the Court informed both parties that the Defendant�s application to file for defence out of time was struck out on 7 April 2003 due to the party�s absence but it was later reinstated on 8 December 2003. On 18 March 2004, the Court granted KUB�s application to file further affidavit for the purpose of hearing of the defendant�s application. The hearing is now postponed to 29 April 2004;

(ii) Claim for refund of RM3,000,000 upon Letter of Undertaking due to an aborted acquisition of equity. Case is yet to be fixed for trial.

23. Commitments

Capital commitments:Property, plant and equipment

Authorised but not contracted for 39,339 - 68 -Contracted but not provided for in

the financial statements 10,257 10,500 10,257 10,50049,596 10,500 10,325 10,500

InvestmentsContracted but not provided for in

the financial statements 1,000 5,320 1,000 5,32050,596 15,820 11,325 15,820

24. Related partiesControlling related party relationships are as follows:i) Its subsidiaries as disclosed in Note 25.ii) The major shareholder of the Company, Datuk Hassan Harun, through his substantial

shareholdings in Daya Profil Sdn. Bhd., which in turn is a major shareholder of Sumber Serata Sdn. Bhd., a major shareholder in KUB Malaysia Berhad.

Group Company2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

Group Company2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000

24. Related parties (continued)

Transactions with DirectorsSignificant transactions and balances with Directors other than those disclosed elsewhere in the financial statements are as follows:

Transactions

Datuk Hassan HarunRental payable 26 137 - -

With firm in which Dato� Kamilia Ibrahim, a Director, has interests:Kamilia Ibrahim & Co.

Legal fees payable 8 45 - -With company in which Datuk Hassan Harun, a Director, has interests:

Sumber Serata Sdn. Bhd.Rental payable - 96 - -

BalancesDatuk Hassan Harun

Rental payable 2 96 - -

Other related party transactionsSignificant related party transactions other than those disclosed elsewhere in the financial statements are as follows:

SubsidiariesRental payable - - 969 1,003Service and maintenance fees

payable - - 315 315Administration and support

fees receivable - - 781 2,518Interest income - - 1,235 1,640

AssociatesPurchases of telecommunications equipment 12,010 21,856

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

25. Subsidiaries The principal activities of the companies in the Group, all incorporated in Malaysia (unless otherwise stated) and the interest of KUB Malaysia Berhad are shown below:-

Equity InterestName of Company Principal Activities 2003 2002

25.1 Direct subsidiaries of the CompanyKUB Ekuiti Sdn. Bhd. Investment holding. 100% 100%KUB Prasarana Sdn. Bhd. Building and construction of 100% 100%

infrastructure works.Peraharta Sdn. Bhd. Property management. 100% 100%

77


Group Company2003 2002 2003 2002

RM�000 RM�000 RM�000 RM�000


25. Subsidiaries (continued)Equity Interest

Name of Company Principal Activities 2003 2002

Perbiba Sdn. Bhd. Property development. 100% 100%Pernida Berhad Distributor of cigarettes. 86% 86%Peramining Sdn. Bhd.+ Investment trading. 100% 100%Utama Steel Works Sdn. Bhd. Manufacturing and installation of 51% 51%

steel pipes and fittings.Pelita Espipi Sdn. Bhd. Ceased operations during the year. 100% 100%Restoran Kualiti Sdn. Bhd. Investment holding. 100% 100%Summit Petroleum (Malaysia) Bottling and trading of liquefied 100% 100%

Sdn. Bhd. petroleum gas.Gerik Timber Industries Dormant. 100% 100%

Sdn. Bhd.+MuslimsConnect Sdn. Bhd. Dormant. - 100%

(formerly known as KUB Network Sdn. Bhd.)## +

Perdaris Development Sdn. Bhd.+ Dormant. 100% 70%Perinding Plantations Sdn. Bhd.+ Dormant. 100% 100%Creative Communications Provision of event management 100% -

& Events Sdn. Bhd.#~ and advertising services.

25.2 Subsidiaries of KUB Ekuiti Sdn. Bhd.Bina Alam Bersatu Sdn. Bhd. Civil engineering works, building 55% 55%

works and housing development.ITTAR Sdn. Bhd.~ Education and training. 100% 100%KUB Agrotech Sdn. Bhd. Plantation and estate management. 100% 100%KUB Development Berhad Property development and project 100% 100%

management.KUB Gas Sdn. Bhd.~ Bottling and trading of liquefied 100% 100%

petroleum gas.KUB Power Sdn. Bhd. Constructions of power substations. 100% 100%KUB Realty Sdn. Bhd.~ Property management and 100% 100%

investment holding.KUB Teknologi Sdn. Bhd. Dormant. 100% 100%KUB Telekomunikasi Sdn. Bhd. Assembling and commissioning 100% 100%

of telecommunication equipment.KUB Sistem Sdn. Bhd.+ Dormant. 100% 60%KUB Tekstil Sdn. Bhd. Garment manufacturing and trading. 100% 100%KUBTrus Sdn. Bhd.+ Dormant. 100% 73.5%Maga Textile (M) Sdn. Bhd.+ Dormant. 100% 100%Pembinaan Efektif (M)

Sdn. Bhd. Dormant. 60% 60%Tele Dynamics Sdn. Bhd. Providing information communication 60% 60%

technology systems, solutions and services.

Universiti Tun Abdul Razak Higher education and training. 100% 100%Sdn. Bhd.

Affluent Vision Sdn. Bhd. Dormant. 100% 100%KUBAKI Pte. Ltd. * + Dormant. 60% 60%KUB Drilling Sdn. Bhd.+ Dormant. 100% 78.4%KUB Hotel and Resort Dormant. 100% 100%

Management Sdn. Bhd.+KUB Microelectronics Sdn. Bhd.+ Dormant. 78.5% 78.5%KUB-TIS Controls Sdn. Bhd.+ Dormant. 100% 100%Perumahan KUB Sdn. Bhd.+ Dormant. 100% 100%Verein Sdn. Bhd.+ Dormant. 100% 100%

78



25.3 Subsidiaries of Bina Alam Bersatu Sdn. Bhd.Cocoa Valley Sdn. Bhd. Property development. 70% 70%Apsley Sdn. Bhd. Dormant. 100% 100%Bina Alam Development Sdn. Bhd. Dormant. 100% 100%Bina Alam Management Sdn. Bhd. Dormant. 75% 75%

25.4 Subsidiaries of ITTAR Sdn. Bhd.ITTAR-IPP (PJ) Sdn. Bhd. Hospitality education and training. 100% 100%ITTAR-ILP (Prai) Sdn. Bhd. Technical and vocational training. 100% 100%

25.5 Subsidiaries of KUB Agrotech Sdn. Bhd.KUB Sepadu Sdn. Bhd. Oil palm plantation. 60% 60%Radiant Orchards Sdn. Bhd.+ Dormant. 100% 100%

25.6 Subsidiaries of KUB Hotel and Resort Management Sdn. Bhd.KUB Singgahsana (PJ) Sdn. Bhd.~ Hotel management. 100% 100%KUB Sajilera Sdn. Bhd.+ Dormant. 100% 100%KUB Singgahsana (Langkawi) Dormant. 100% 100%

Sdn. Bhd.+

25.7 Subsidiaries of KUB Telekomunikasi Sdn. Bhd.KUB-Fujitsu Telecommunications Assembling and commissioning 70% 70%

(Malaysia) Sdn. Bhd. of telecommunication equipment.KUB Research Sdn. Bhd.~ Technical research. 100% 100%Cybertrek (Malaysia) Sdn. Bhd. Ceased operations during the year. 100% 51%Somatel (Malaysia) Sdn. Bhd.## Dormant. - 70%

25.8 Subsidiaries of KUB Teknologi Sdn. Bhd.VisionScape Sdn. Bhd. Dormant. - 51%

(in liquidation) +MuslimsConnect.com Pte. Ltd. Electronic commerce ("EC") - 61%

* ## services.

25.9 Subsidiaries of Tele Dynamics Sdn. Bhd.Tele Dynamics Global Com Providing information communication 100% 100%

Sdn. Bhd. (formerly known as technology systems, solutions Tele Dynamics Metro Sdn. Bhd.) and services.

Tele Portable Sdn. Bhd. Rental of information 100% 100%communication system.

Tele Dynamics Atec Sdn. Bhd. Providing information communication 100% 100%technology systems, solutions and services.

Tele Dynamics SWD Provision software research, 60% -Sdn. Bhd.# development, solutions and services.

25.10 Subsidiary of Universiti Tun Abdul Razak Sdn. Bhd.United Multimedia Sdn. Bhd.~ Trading of multimedia learning 100% 100%

and provision of IT related services.

25.11 Subsidiaries of KUB Realty Sdn. Bhd.KUB Realty (PJ) Sdn. Bhd. Property management. 100% 100%KUB Sinar Sdn. Bhd. (formerly Dormant. 100% 100%

known as KUB Realty (Prai)Sdn. Bhd.)+

79



80



25.12 Subsidiaries of KUB Development BerhadKesina Development Sdn. Bhd. Property development and 100% 100%

project management.KUB-Astana Development Dormant. 51% 51%

Sdn. Bhd.+Adil Perdana Sdn. Bhd.+ Dormant. 70% 70%

25.13 Subsidiary of KUB Microelectronics Sdn. Bhd.KUB Microelectronics Sales Dormant. 100% 100%

and Service Sdn. Bhd.+

25.14 Subsidiary of Perbiba Sdn. Bhd.Principal Properties Sdn. Bhd. Dormant. 100% 100%

25.15 Subsidiary of Peraharta Sdn. Bhd.Villa-Annexe Sdn. Bhd.+ Dormant. 100% 100%

25.16 Subsidiary of Apsley Sdn. Bhd.Lembayung Sukma Sdn. Bhd. Dormant. 80% 80%

25.17 Subsidiaries of Restoran Kualiti Sdn. Bhd.A&W (Malaysia) Sdn. Bhd. Operating a chain of restaurants. 100% 100% A&W (Singapore) Pte. Ltd. *+< Ceased operations during the year. 100% 100%

25.18 Subsidiaries of A&W (Malaysia ) Sdn. Bhd.A&W Properties Sdn. Bhd. Properties management. 100% 100%TDM Mark-Well Sdn. Bhd. Dormant. 100% 100%Prosperous Avenue Sdn. Bhd. Dormant. 100% 100% Dysec (M) Sdn. Bhd. Ceased operations during the year. 60% 60%Limpahan Laksana Sdn. Bhd. Dormant. 60% 60%Pleasant Harmony Sdn. Bhd. Dormant. 60% 60%Syarikat Ayam Mutiara Sdn. Bhd. Dormant. 55% 55%

25.19 Subsidiaries of A&W (Singapore) Pte. Ltd.A&W Restaurants (Thailand) Food and beverage catering 100% 100%

Company Limited ^@~ through retail outlets.Harbour Place Developments Dormant. 100% 100%

Pte. Ltd.*+<

25.20 Subsidiary of A&W Restaurants (Thailand) Company LimitedA&W Distribution Company Dormant. 95% 95%

Limited^@

* Incorporated in Singapore. ^ Incorporated in Thailand. # Acquired during the year.## Disposed during the year.@ Audited by member firm of KPMG International.+ The financial statements are audited by another firm of accountants. ~ The auditors report on the financial statements includes an emphasis of matter on the uncertainty

over the ability to continue on a going concern. The financial statements have been prepared on a going concern basis as the Directors of these companies believe that there would be continued financial support from KUB. Where necessary, appropriate adjustments have been made to carrying value of investments at Company level and to the carrying value of assets at Group level.

< Consolidated using unaudited management accounts.

26. Associates The associates of the Group, all incorporated in Malaysia, are as follows:-

Equity InterestName of Company Principal Activities 2003 2002

26.1 Direct associates of the CompanyMambang Di Awan Sdn. Bhd. Extraction of tin ore. 37.5% 37.5%Polyolefins Pipe Berhad Manufacture, marketing and 30% 30%

installation of polyethelene and polypropylene pipes.

Rimba Raya Sdn. Bhd. Agriculture, tourism and 20% 20%recreational services.

Computer Forms (Malaysia) Printing and distributing of 32% 32%Berhad * computer forms, stock forms

and specialised forms.United Chemical Industries Ceased operations during the year. 24.8% 24.8%

Berhad Editry Sdn. Bhd. Dormant. 41% 41%

26.2 Associates of United Multimedia Sdn. Bhd.UMM Nadi Sdn. Bhd. Development of multimedia 30% 30%

learning materials.UMM Hijau Sdn. Bhd. Development of multimedia 30% 30%

learning materials.UMM Synergy Corporation Development of multimedia 30% 30%

Sdn. Bhd. learning materials.UMM BT Media Sdn. Bhd. Development of multimedia 30% 30%

learning materials.UMM Avex Sdn. Bhd. Development of multimedia 30% 30%

learning materials.

26.3 Associate of KUB Telekomunikasi Sdn. Bhd.Sphairon (Malaysia) Sdn. Bhd. Manufacturing and distribution of 49% 49%

wireless local loop system.

26.4 Associate of Aspley Sdn. Bhd.Lambaian Indah Sdn. Bhd. Dormant. 50% 50%

26.5 Associate of Lembayung Sukma Sdn. Bhd.Lembayung Greens Sdn. Bhd. Dormant. 40% 40%

26.6 Associates of A&W (Malaysia) Sdn. Bhd.Success United Corporation Fast food outlets and retailing. 40% 40%

Sdn. Bhd.Relk Food Services Sdn. Bhd. Fast food outlets and retailing. 49% 40%

26.7 Associate of Villa-Annexe Sdn. Bhd.Pembinaan Efektif (M) Sdn. Bhd. Dormant. 40% 40%

* The Group�s share of results in Computer Forms (Malaysia) Berhad, a company listed on the Bursa Malaysia Securities Berhad, which has a 31 March year end, has been equity accountedfor based on the announcement of its results.

81


82

27. Financial instruments

Financial risk management objectives and policiesExposure to credit, interest rate and currency risk arises in the normal course of the Group and the Company�s business. The Board reviews and agrees policies for managing each of these risks and they are summarised below.

Credit riskManagement has a credit policy in place and the exposure to credit risk is monitored on an ad-hoc basis. Credit evaluations are performed on all customers requiring credit over a certain amount. The Group and the Company do not require collateral in respect of financial assets. Fixed deposits are placed only with licensed financial institutions.

At balance sheet date, there were no significant concentrations of credit risk within the Group. The maximum exposure to credit risk for the Group and for the Company was represented by the carrying amount of each financial asset.

Foreign currency riskThe Group and the Company incur foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than Ringgit Malaysia. The currencies giving rise to this risk are primarily US dollars, Singapore dollars and Thailand bahts.

The Group and Company do not hedge transactions denominated in US dollars by purchasing forward currency contracts at present given the government�s "peg". The Group and Company also do not hedge the exposures in Singapore dollars and Thailand bahts as these transactions are funded by the operations in these countries. However, the Board keeps this policy under review.

The following table shows information about the Group�s exposure to interest rate risk.

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.


2003 2002Effective Effective

interest Within 1-5 After interest Within 1-5 Afterrate Total 1 year years 5 years rate Total 1 year years 5 years

% RM�000 RM�000 RM�000 RM�000 % RM�000 RM�000 RM�000 RM�000GroupFinancial assetsCash and cash equivalents 2.7 57,674 57,674 - - 2.9 83,466 83,466 - -

Financial liabilitiesSecured revolving credit 7.6 10,420 10,420 - - 8.0 10,920 10,920 - -Unsecured revolving credit 6.6 5,263 5,263 - - 6.2 12,064 12,064 - -Secured term loans:

RM fixed rate loans 8.2 141,847 - 68,121 73,736 7.5 165,525 45,000 34,026 86,499Thailand baht fixed rate loan - - - - - 10.0 391 391 - -

Secured overdrafts:RM 8.3 27,600 27,600 - - 7.8 24,746 24,746 - -Singapore dollar - - - - - 5.3 3,400 3,400 - -

Unsecured overdrafts 8.1 13,869 13,869 - - 8.2 14,856 14,856 - -Secured bankers acceptance 4.7 6,802 6,802 - - 5.7 3,600 3,600 - -Unsecured bankers acceptance 1.9 16,235 16,235 - - - - - - -

222,036 80,189 68,121 73,726 235,502 114,977 34,026 86,499

27. Financial instruments (continued)

2003 2002Effective Effective

interest Within 1-5 After interest Within 1-5 Afterrate Total 1 year years 5 years rate Total 1 year years 5 years

% RM�000 RM�000 RM�000 RM�000 % RM�000 RM�000 RM�000 RM�000CompanyFinancial assetsCash and cash equivalents 2.9 4,597 4,597 - - 2.8 23,085 23,085 - -

Financial liabilitiesUnsecured revolving credits 4.8 1,000 1,000 - - 5.7 8,000 8,000 - -Secured term loans 7.5 42,000 - 42,000 - 5.3 45,000 45,000 - -

43,000 1,000 42,000 - 53,000 53,000 - -

Fair values

Recognised financial instrumentsIn 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 liabilities on the balance sheet as at 31 December are represented in the following tables.

2003 2002 2003 2002Carrying Fair Carrying Fairamount value amount value

Group RM�000 RM�000 RM�000 RM�000

Financial assetsQuoted shares � long term 16,583 15,969 17,271 10,727

Financial liabilitiesSecured term loans:

RM 141,847 142,510 165,525 163,571Thailand baht fixed rate loan - - 391 391

The fair value of the quoted shares is their quoted bid price at the balance sheet date. For other financial instruments listed above, fair values have been determined by discounting the relevant cash flow using current interest rates for similar instruments at the balance sheet date.

28. Acquisition and disposal of subsidiaries

AcquisitionOn 21 January 2003, KUB completed the acquisition of 100% interest in Creative Communications and Events Sdn. Bhd. (formerly known as A-Centric Designs Sdn. Bhd.) for a cash consideration of RM2.

Disposals(i) On 17 June 2003, KUB Teknologi Sdn. Bhd., a wholly-owned subsidiary of KUB Malaysia Berhad ("KUB")

disposed off its 43.5% interest in MuslimsConnect.com. Pte. Ltd., via a Management Buy-Out Scheme for a cash consideration of RM1.00, resulting in a gain of RM294,000. The Company contributed turnover and loss after tax of nil and RM86,000 respectively of the Group results for the financial year ended 31 December 2003; and

83


28. Acquisition and disposal of subsidiaries (continued)

(ii) On 17 June 2003, KUB disposed off its 100% interest in MuslimsConnect Sdn. Bhd. for a cash consideration of RM1 resulting in a gain of RM498. The Company contributed turnover and loss after tax of nil of the Group results for the financial year ended 31 December 2003; and

(iii) On 11 November 2003, KUB Telekomunikasi Sdn. Bhd., a wholly owned subsidiary of KUB disposed off its 51% interest in Somatel (Malaysia) Sdn. Bhd. to Abdi Rahman Yasin Mohamud for USD430,000 (equivalent to RM1,634,000) resulting in a loss of RM1,894,000. The Company contributed a turnover and loss after tax of nil and RM1,925,000 respectively of the Group results for the financial year ended 31 December 2003.

The disposal had the following effect on the Group�s assets and liabilities as at 31 December 2003:

2003RM�000

AssetsProperty, plant and equipment 4,436Current assets 313

Current liabilities (1,515)

Net assets 3,234Loss on disposal (1,600)

Total consideration 1,634Consideration in form of receivables (1,254)Net cash inflow 380

29. Events subsequent to the balance sheet date(i) On 19 January 2004, KUB completed the disposal of its 15% interest in Malaysian Sheet Glass

Berhad for a total consideration of RM32.6 million or RM2.68 per share, resulting in a gain of RM25 million;

(ii) Pembinaan Efektif (M) Sdn. Bhd., a 100% subsidiary of KUB, entered into a Sale and Purchase Agreement ("the SPA") with Perumahan Kinrara Berhad ("the Vendor") on 27 August 2003 for the disposal of 50.86 acres of land at Bukit Jalil, Kuala Lumpur for RM39.3 million. The disposal is conditional upon the approval from the Foreign Investment Committee ("FIC") and Jawatankuasa Kerja Tanah Kuala Lumpur ("KL Land Committee") and if necessary, the Vendor�s Shareholders�approval. The approval from the FIC and KL Land Committee was obtained on 23 December 2003 and 26 January 2004 respectively. When completed, the disposal will result in a gain to the Group of approximately RM16.5 million.

(iii) KUB entered into a Sale and Purchase Agreement ("the SPA") with Edaran Intan Sdn. Bhd. on 25 August 2003 for the disposal of Lot PTG GK 4A/067/73 at Gerik, Perak Darul Ridzuan for RM1.76 million, which was conditional upon the consent given by the Menteri Besar of Perak Darul Ridzuan�s office ("MB office"). The consent by the MB office was obtained in January 2004. The disposal resulted in a gain of RM0.5 million to the Group.

(iv) KUB entered into a Sale and Purchase Agreement ("the SPA") with Serata Dagang Sdn. Bhd. on19 November 2003 for the disposal of Lot 400, Lumut, Perak Darul Ridzuan for RM4.2 million which was conditional upon the consent given by the Menteri Besar of Perak Darul Ridzuan�s office ("MB office"). The consent by the MB office was obtained in February 2004. The disposal resulted to a gain of RM1.7 million to the Group.

30. Changes in accounting policies and prior year adjustments

Changes in accounting policiesIn the current financial year, the Group and the Company adopted four new MASB Standards. The adoption of these new standards resulted in changes in accounting policies as follows:-

(a) MASB 25, Income Taxes which has been adopted retrospectively. Comparative figures have been adjusted to reflect the change in this accounting policy;

84


85


30. Changes in accounting policies and prior year adjustments (continued)

(b) 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;

(c) MASB 28, Discontinuing Operations which is applied prospectively; and(d) MASB 29, Employee Benefit, which has been and adopted retrospectively. The adoption of this

standard has no material effect on there financial statement.

The adoption of MASB 25 has resulted in the recognition in full of all taxable temporary differences. Previously, deferred tax liabilities were not provided if no liability was expected to arise in the foreseeable future and there were no indications the timing differences would reverse thereafter. Deferred tax assets are now recognised when it is probable that taxable profits will be available against which the deferred tax asset can be utilised (previously only recognised where there was a reasonable expectation of realisation in the near future).

This change in accounting policies, applied retrospectively, has the following impact on results as follow: -

Net profit before change in accounting policy (28,680) (278,098)Effect of adopting MASB 25 (935) 1,955Net loss for the year (29,615) (276,143)

Prior year adjustments

Change in accounting policiesThe change in accounting policies due to the adoption of MASB 25 has been accounted for by restating comparatives and adjusting the opening balance of retained profits at 1 January 2003 as disclosed in Note 31 and the statement of changes in equity respectively.

31. Comparative figuresThe following comparatives have been restated to reflect the change in accounting policies as explained in Note 30.

Balance sheetsDeferred tax assets 11,940 -

Income statementTaxation (5,249) (7,204)Loss after taxation (279,280) (281,235)Basic earnings per ordinary share (54.7) (55.1)Diluted earnings per ordinary share (52.0) (52.3)

STATEMENTS OF CHANGES IN EQUITYAccumulated losses at 1 January 2002 (104,236) (115,317)Accumulated losses at 31 December 2002 (380,379) (393,415)

Group

2003 2002

RM�000 RM�000

GroupAs

As previouslyrestated statedRM�000 RM�000

Net Age ofBook Building

Location/ Description Usage Area Tenure Value (years)Address (RM�000)

KUB MALAYSIA BERHAD

Lot 10026 & 10027,Mukim of Bruas, District of Manjung, Perak

Lot 8982, 8983, 8984, 461 & 480 Town of Tanjung Malim, Perak

KUB REALTY SDN BHD

Lot 411, Section 41, Kuala Lumpur

PT 34 & 35 (E9-11)PT 49 (H4), PT 50-53 (H6, 8, 10, 11, 12)PT 46 & 47 (F31-33)Pekeliling Business Centre, Kuala Lumpur

PT No. 51, Section16 Town and District of Kota Bharu, Kelantan

PT No. TLO 184, Town of Mersing, Johor

PT No. 3722 to 3728,Mukim of Damansara,District of Petaling, Selangor

KUB REALTY (PJ) SDN BHD

KUB.com, Block D, Ground Level, Level 1,Level 6 to Level 23, Megan Phileo Avenue, Jalan Yap Kwan Seng,Kuala Lumpur

KUB.com, Block D, Megan Phileo Avenue, Jalan Yap Kwan Seng,Kuala Lumpur

Oil Palm Plantation

Shopoffice

Development

Office

Shoplot Malay

Reserve

Shoplot Malay

Reserve

OfficeBuilding

OfficeBuilding

4 Levels ofCar Park

Agricultural

Commercial

Commercial

Commercial

Commercial

Commercial

Commercial

Commercial

Commercial

853.9 and305.7 acresrespectively

5,187 sq. feet

1.33 acres

143,829 sq. meter

9,845 sq. meter

1,470 sq. feet

16,065sq. feet

198,000 sq. feet

138,877 sq. feet

Leasehold (50 years

expiring 2021)

Leasehold (99 years

expiring 2083)

Freehold

Freehold

Leasehold (66 years

expiring 2061)

Leasehold (99 years

expiring 2088)

Freehold

Freehold

Freehold

1,357

1,569

18,000

15,191

1,655

264

20,411

57,210

5,698

-

6

-

8

13

8

9

5

5

List of Properties

86

as at 30 April 2004

87

Lot No. H.S(D) 7082, PT 12093 & Lot No. H.S.(D)7083 P.T. 12094, Mukim ofDengkil, District of Sepang,Selangor

KUB SEPADU SDN BHD

Lot 221, Block 7, Oya Dalat Land District



Lot 1, Oya Dalat Land District

Lot 5,Oya Dalat Land District

Lot 6, Oya Dalat Land District

KUB AGROTECH SDN BHD

PTD No. 3545, Mukim of Paloh, PTD No. 3796, Mukim of Kahang, Kluang District, Johor

PT No. 4901, Mukim of Kahang, PT No. 26005 & 26006,Kluang District,Johor

Vacant Land

Oil PalmPlantation

Oil PalmPlantation

Oil PalmPlantation

Oil PalmPlantation

Oil PalmPlantation

Oil PalmPlantation

Oil PalmPlantation

Oil PalmPlantation

Building

Agricultural

Agricultural

Agricultural

Agricultural

Agricultural

Agricultural

Agricultural

Agricultural

1,0874hectares

1,053hectares

1,718hectares

1,242hectares

2,728hectares

1,040hectares

872hectares

956.3hectares

1,700hectares

Freehold

Leasehold (60 years

expiring 2024)

Leasehold (60 years

expiring 2024)

Leasehold (60 years

expiring 2030)

Leasehold (60 years

expiring 2050)

Leasehold (60 years

expiring 2050)

Leasehold (60 years

expiring 2052)

Leasehold (99 years

expiring 2086)

Leasehold (99 years

expiring 2093)

5,178

66

71

53

5,629

1,451

1,293

1,846

5,067

-

-

-

-

-

-

-

-

-



List of Properties (continuued)

List of Properties (continued)

88



KUB TEKSTIL SDN BHD

Lot PT 4256, Pengkalan Chepa IIIndustrial Area, Mukim Of Panchor,Kemumim District, 16100 Kota Bharu,Kelantan

KUB DEVELOPMENT BHD

Lot No. 2198, 2199, 3578,3579, 3580 & 3581, Mukim of Tawar, Baling District, Kedah

Lot No. 55, Mukim of Tawar, Baling District, Kedah

PT No. 3617, Mukim of Sungai Buloh,Petaling District, Selangor

PT No. 606, Mukim of Serting Ulu,Jempol District, Negeri Sembilan

PEMBINAAN EFEKTIF (M) SDN BHD

Lot No. 37230 & Lot No. 37231, Mukim of Petaling, Kuala Lumpur District

ADIL PERDANA SDN BHD

Lot No. 272, 273 & 274,Mukim of Teloi Kiri, Kuala Muda District, Kedah

UTAMA STEEL WORKSSDN BHD

H.S,(D)ka, 1337/85, Lot 134905, Mukim of Hulu Kinta, Perak

Factory

VacantDevelopment

Land

VacantDevelopment

Land

VacantDevelopment

Land

VacantIndustrial

Land

VacantDevelopment

Land

VacantDevelopment

Land

Factory and Office

Building

Commercial

Agricultural

Agricultural

Building

Industrial

Building

Agricultural

Industrial

3.8 acres

144.8 acres

145.23acres

6 acres

16.82 acres

50.86 acres

209.85acres

9.6 acres

Leasehold (66 years)

Freehold

Freehold

Leasehold(expiring 2071)

Leasehold (99 years

expiring 2083)

Leasehold (99 years

expiring 2094)

Freehold

Leasehold (60 years

expiring 2045)

3,255

4,015

3,368

2,181

809

9,613

9,000

2,467

7

-

-

-

-

-

-

18

89



A&W (MALAYSIA) SDN BHD

H.S.(M) 6245 P.T. 5070,Mukim of Chukai, Kemaman District,Terengganu

Lot No. 1897, Township of Johor Bahru,Johor Bahru District, Johor

A&W PROPERTIES SDN BHD

Unit No. LG-07, HS(D)39250 PT No. 4, Mukim of Petaling Jaya, PetalingJaya District, Selangor

A&W RESTAURANTS(THAILAND) CO., LTD.

Imperial World Court Ltd.999 Room ABF3-4Basement Moo 1, No. 1North Samrong Muang,Samuthprakarn, Thailand

Silom Complex, Unit 020 &021, Basement Floor,Kompleks Silom, ShoppingPlaza Project Silom Road,Bangkrak District, Bangkok

Siam Square, 430/439-40 Siam Square 7,Paruthmwan, Bangkok

KUB TELEKOMUNIKASISDN BHD

Lot No. F1, Mukim of Klang,Klang District, Selangor

PERAHARTA SDN BHD

Lot 4180N, Bangunan SriKinta, Jalan Sultan IdrisShah, Ipoh, Perak

Land

Land

Retail Lot

Retail Lot

Ratail Lot

Retail Lot

FactoryBuilding &

3 StoreyOffice Annex

4-storeyPodium Blockand 9-storeyTower Block

Commercial

Commercial

Commercial

Commercial

Commercial

Commercial

Industrial &Commercial

Commercial

56,037 sq. feet

13,966 sq. feet

4,605 sq. feet

4,057 sq. feet

3,455 sq. feet

4,821 sq. feet

75,804 sq. feet

15,667.4 sq. metres

Leasehold (60 years

expiring 2053)

Freehold

Leasehold (99 years

expiring 2088)

Leasehold (25 years

expiring 2017)

Leasehold (20 years

expiring 2011)

Leasehold (6 years

expiring 2005)

Freehold

Grant inperpetuity

242

473

2,687

889

1,098

113

8,065

12,519

-

-

5

12

14

6

3

21



90



Lot 534, 535, 539 & 541,Wisma Gerik, Jalan SultanIskandar, Gerik, Perak

Lot PT 2684 � 2686 APMFactory, Jelapang IndustrialEstate, Ipoh, Perak

Lot 193003-193005, No. 26, 28 & 39, Persiaran Orkid 1, Taman Orkid, Batu Gajah,Perak

Lot PT 122810-122813, No. 24, 26, 28 & 30,Laluan Rokan 15,Pekan Razaki, Ipoh, Perak

Industrial Estate SriManjung

Wisma Espipi, Kg. Baru,Kuala Lumpur

SUMMIT PETROLEUM (M) SDN BHD

PT PTBM/A/146/69 Plot 91Mukim 1, Seberang PeraiTengah District

Lot 941 & 942, Section 9W, Bandar Georgetown

PTD 40053 Mukim Tebrau,Johor Bahru District

KUB GAS SDN BHD

PT No. 64540,Pulau Indah Industrial Park,West Port, Port Klang,Selangor

BINA ALAM BERSATUSDN BHD

Lot No. 30960 & 30961,Mukim and District ofPetaling, Selangor

4 1/2�storeyBuilding

Factory

3 Units ofdouble-storey

Shoplots

4 Units ofShophouses

Industrial Land

Commercial Building

Office & Plant

Open-sidedstructure for

storage purposes

Office & Plant

Industrial Land

2 terrace factorylots rectangular

in shape withbuilding erected

Commercial

Commercial

Commercial&

Residential

Commercial&

Residential

Industrial

Commercial

Industrial

Industrial

Industrial

Commercial

Industrial

2,050 sq. metres

3,523 sq. metres

5,120 sq. metres

6,337 sq. metres

21,780 sq. feet.

18,425 sq. feet

3.35 acres

15,926 sq. feet

143,609 sq. feet

7.77 acres

251 sq. metres

per lot

Leasehold (60 years

expiring 2035)

Leasehold (60 years

expiring 2036)

Leasehold (99 years

expiring 2090)

Leasehold (99 years

expiring 2090)

Pendingissuance of title

Malay Reserve

Leasehold (99 years

expiring 2070)

Interest-inperpetuity first

grade

Interest-inperpetuity

freehold

Leasehold(99 years

expiring 2097)

Leasehold (99 years

expiring 2086)

963

787

391

547

68

2,463

1,876

4,051

1,443

4,714

550

28

27

12

12

-

9

13

2

15

-

17

91



PT No. 1101-1121, Mukim of Belanja, Kinta District, Perak

PT No. 9139, Mukim of Setapak, GombakDistrict, Selangor

Lot 806, Mukim of Batu Berendam,Melaka

Lot 8713U, Title No. H.S.(D) KA 30729Ipoh, Kinta District, Perak

Lot 30713, 30701, 30803, 30908 Taman Batu Permai, Kuala Lumpur

PT No. 19355, Mukim of Batu Selangor,Gombak, Selangor

Lot 49781, Batu Mukim District, Taman Batu Permai, Kuala Lumpur

2-8-5, Menara Bukit Ceylon, Jalan Ceylon, Kuala Lumpur

C-4-5, Kondo Idaman Putera, & Jalan 6/21D, Medan Idaman, Kuala Lumpur

Commercial&

Residential

Commercial

Commercial

Commercial

Residential

Agricultural

Residential

Residential

Residential

1,171 acres(1,1583

acresagriculturalstatus and12.7 acres

commercialstatus)

1,920 sq. feet

354,246 sq. feet

2,149 sq. metres

266.36 sq. metres

1,654 acres

111sq. feet

1,410 sq. feet

120.10 sq. feet

Leasehold (99 years

expiring 2095)

Freehold

Freehold

Leasehold (99 years

expiring 2092)

Leasehold(95 years

expiring 2086)

Freehold

Leasehold (99 years

expiring 2086)

Strata title

Strata title

2,614

253

46

185

166

347

98

327

170

9

20

-

-

12

-

12

5

5

19 plots ofdevelopment

land and 2plots of

commercialland

End terraceshoplot

rectangular in shape with

3-storeyshopoffice

Development

A parcel oflimited

commercial(free standingdevelopment

land)

4 apartments

AgriculturalLand

Double StoreyTerrace House

Condominium

Condominium




92


MAGA TEXTILE (M) SDN BHD

Bayan Lepas Free Industrial Zone, Phase 3, Penang

Lot No. 876, 5773 & 5774,Mukim 15, h Seberang PeraiTengah District, Penang

No. 10 & 12, Lorong Sejahtera 29, Taman Industri CerukTo�Kun, Alma, BukitMertajam, Penang

TELEDYNAMICS SDN BHD

44, Jalan Molek 2/1, Taman Molek, 81100 Johor Bahru,Johor

Lot 188, HICOM GlenmarieIndustrial Park, Shah Alam,Selangor

PERNIDA BERHAD

Lot No. 2891, 2894, 2983,2984, 2992, 2993, 2995,2996, 3001, 3002, 3005,3008, 3011, 3039, 3040-3042, 3044, 3054, 3055,3057, 3058, 3277, 3794 -3796, 3812, Mukim of Bidor, Batang PadangDistrict, Perak

Factory

Factory

Terrace House

2-storeyShophouses

Industrial Land

Mining Land

Industrial

Industrial

Residential

Commercial

Commercial

Mining

46,941 sq. feet

71,095 sq. feet

333 sq. metres

1,920 sq. feet

67,404 sq. feet

79.32 acres

Leasehold (60 years

expiring 2040)

Freehold

Freehold

Freehold

Freehold

Freehold

535

1,382

91

287

13,000

1,107

23

13

11

13

-

-

I/We NRIC

of

being a member/members of KUB Malaysia Berhad, hereby appoint CHAIRMAN OF THE MEETING*

or NRIC

of

or failing him NRIC

of

as my/our proxy to vote for me/us on my/our behalf at the 39th Annual General Meeting of the Company to be held

on Wednesday, 30 June 2004 and at any adjournment thereof.

* If you wish to appoint other person(s) as your proxy/proxies, kindly delete the words �CHAIRMAN OF THE

MEETING� and insert name(s) of the desired person(s).

My/our proxy is to vote as indicated below:-

Notes:-1. A member of the Company entitled to attend and vote at the abovementioned Meeting is entitled to appoint one other person or persons,

whether a member or not as his/her proxy/proxies to attend and vote in his/her stead. Where a member appoints two or more proxies, the member shall specify the proportion of the member�s shareholding to be represented by each proxy.

2. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised or if the appointer is a corporation, either under its common seal or the hand of its attorney.

3. The Proxy Form must be deposited at the office of the Company's Share Registrar, Malaysian Share Registration Services Sdn Bhd, Level 26, Menara Multi Purpose Capital Square. No 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur by hand or fax to 03-2721 2530 not less than twenty-four (24) hours before the time for holding the Meeting or any adjournment thereof.

Number of

Shares Held

39th (Please see the notes before completing this form)

(Block Letters)

(Full Address)

(Block Letters)

(Full Address)

(Block Letters)

(Full Address)

RESOLUTIONS FOR AGAINST

Resolution 1 To adopt the audited Financial Statements of the Company and Group and the

Reports of the Directors and Auditors thereon.

Resolution 2 To re-elect the Directors retiring under Article 97, Articles of Association of the Company.(i) Datuk Hassan Harun

Resolution 3 (ii) Dato� Ir. Harun Ahmad Saruji

Resolution 4 To re-elect Tuan Haji Ahmad Kamal Abdullah Al-Yafii retiring under Article 102,

Articles of Association of the Company.

Resolution 5 To approve the Directors� fees for the year 2003.

Resolution 6 To re-appoint Messrs KPMG Desa Megat & Co as Auditors of the Company and

to authorise the Directors to fix their remuneration.

Resolution 7 To give authority to the Directors to issue shares under Section 132D of the

Companies Act, 1965.

With reference to the Agenda set out in the Notice of the Meeting, please indicate an �X� in the spaces provided above on how

you wish your vote to be cast.

Signed this day of 2004.

Signature/Seal

PROXY FORM Annual General Meeting

KUB Malaysia Berhad (6022-D)

Pendaftar Saham

Malaysian Share Registration Services Sdn Bhd (378993-D)

Tingkat 26

Menara Multi Purpose Capital Square

No 8 Jalan Munshi Abdullah

50100 Kuala Lumpur

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