Contents. Corporate. Financial Statements

Transcription

1 Contents Corporate 2 Financial Highlights 5 Chairman s Statement 14 Notice of Annual General Meeting 16 Statement Accompanying Notice of Eleventh Annual General Meeting 17 Corporate Information 19 Profile of the Board of Directors 25 Statement of Directors Responsibilities 26 Audit Committee Report 31 Statement on Corporate Governance & Internal Control 39 Analysis of Shareholdings 41 Statement of Directors Interests Financial Statements 46 Directors Report 51 Statement by Directors 51 Statutory Declaration 52 Auditors Report 53 Income Statements 54 Balance Sheets 56 Statements of Changes in Equity 57 Cash Flow Statements 60 Notes to the Financial Statements Proxy Form

2 Revenue (RM) Profit after taxation & minority interest (RM) 30,000,000 8,000,000 25,000,000 20,000,000 7,000,000 6,000,000 5,000,000 15,000,000 4,000,000 10,000,000 3,000,000 2,000,000 5,000,000 1,000, Profit before taxation (RM) Shareholders funds (RM) Totalassets (RM) 15,000, ,000, ,000,000 10,000,000 5,000, ,000, ,000,000 1,000, , ,000, ,000, ,000 50,000,000 50,000,000 50, Profit after taxation (RM) Earnings per share (Sen) Net tangible assets/ (liabilities) per share (RM) 10,000, ,000, ( ) 1,000, , (10,000.00) (15,000.00) (20,000.00) 100,000 50, (25,000.00) (30,000.00) (35,000.00) (40,000.00)

3 Financial Highlights In RM Revenue 25,945 17,924 4,373 Profit Before Taxation 13,695 8,804 1, Profit After Taxation 9,676 6,033 1, Profit After Taxation 7,619 5,205 1, and Minority Interest Shareholders' Funds 150, , ,326 50,028 Earnings per Share (sen) TotalAssets 165, , ,274 75, Net Tangible Assets/(Liabilities) per Share (RM) (35,912.50)

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5 Chairman s Statement YBhg Tan Sri Dato Francis Yeoh Sock Ping On behalf of the Board of Directors ofytl e-solutions Berhad ( YTL e-solutions ), I have the pleasure of presenting to you the Annual Report and Audited Financial Statements of the Group and the Company for the financial year ended 30 June

6 OVERVIEW During the year under review, YTL e-solutions continued to develop and expand on its core competency of investing in and incubating companies developing new evolving technologies for their use and adoption in Malaysia. The Group s highly selective process in identifying suitable incubatees has paid off in terms of revenue and profit growth, and quality of the businesses acquired. The underlying focus is on ideas which can be developed into products, services, applications and solutions that can be marketed to millions of customers viable projects to ensure strong growth. Extiva Communications Sdn Bhd ( Extiva ), a 70%-owned subsidiary of YTL e-solutions, which undertakes value-added Alternative Voice Service Provider ( AVSP ) and telephony solutions and services, launched ExtiSave IDD prepaid cards and ExtiLoad vending machines in August ExtiSave offers a feature unique to the existing IDD prepaid market by enabling customers to top-up and reload value to their cards. 6

7 In June 2003, YTL e-solutions acquired a 70% equity stake in Hipmobile (M) Sdn Bhd (formerly known as Columbia Digital Sdn Bhd) ( Hipmobile ), a content developer and aggregator, specialising in wireless and mobile entertainment, one of the largest potential growth markets in the mobile telecommunications industry. Hipmobile has already entered into a partnership agreement to cross sell its products and services in the extensive Indonesian market. During the year under review, YTL e-solutions also acquired Intellectual Learning Sdn Bhd ( Intellectual Learning ) to provide e-learning services. YTL Info Screen Sdn Bhd ( YTL Info Screen ), a new business being incubated by the Group, is involved in digital content design, development and delivery solutions, and performed well during the year under review, earning revenues from a digital media/advertising sales-based business model. YTL e-solutions was granted Multimedia Super Corridor (MSC) status in November 2002, which carries different capital and tax implications, thereby ensuring that the Group operates in the same environment its industry counterparts. FINANCIAL PERFORMANCE YTL e-solutions continued its stellar performance during the year under review, recording revenue of RM25.9 million, an increase of 44.8% over the financial year ended 30 June For the current financial year, YTL e-solutions registered a consolidated profit before taxation of RM13.7 million, or a 55.6% increase over the year ended 30 June The increases in both turnover and profit before tax were due to the continued high demand for the value-added AVSP and telephony solutions and services of Extiva, and the continued development and enhancement of integrated information management and other business intelligence and monitoring systems and solutions. The higher Group turnover was also partly due to an initial contribution from wholly-owned subsidiary, YTL Info Screen. CORPORATE DEVELOPMENTS On 17 September 2002, the Company acquired two ordinary shares of RM1.00 each in YTL Info Screen Sdn Bhd. The principal activities of YTL Info Screen are to design, create, develop and deliver content and solutions for digital advertising media platforms. On 21 March 2003, the Company acquired two ordinary shares of RM1.00 each in Intellectual Learning Sdn Bhd. The intended principal activity of Intellectual Learning is to provide competitive e-learning business. 7

8 On 27 June 2003, the Company entered into a subscription and shareholders agreement with Fred Chong Kyan Vui, Ho Chi Thin and Hipmobile (M) Sdn Bhd (formerly known as Columbia Digital Sdn Bhd), for the subscription of 70,000 new ordinary shares of RM1.00 each, representing 70% of the equity interest in Hipmobile, at cash consideration of RM100, This transaction was completed on 17 July 2003, making Hipmobile a subsidiary of the Company. REVIEW OF OPERATIONS & INDUSTRY DEVELOPMENTS Investment Objectives YTL e-solutions has developed and refined its selection process to identify businesses which are viable, capable of producing high returns, offer products and services ready to be commercialised, possess a core team capable of implementing its business plans and are realistically valued. The Company continues to focus on incubating and investing in high growth, knowledge-intensive companies that leverage on new technologies. YTL e-solutions' primary objective is to realise high returns through long-term capital appreciation, via equity or equity-related investments or a combination of both. Extiva Extiva undertakes the Group s AVSP telecommunications activities and continues to expand into other high telephony usage enterprise sectors. The business s ExtiNet Postpaid and Prepaid services offer savings of up to 83% on local and long-distance telephone calls, based on normal published rates. In addition to the development and marketing of AVSP telephony technology, Extiva is also involved in the business of developing and marketing advanced network media applications and solutions for service providers and enterprise telephony markets. In August 2003, Extiva launched ExtiSave prepaid IDD calling cards and ExtiLoad vending machines. The ExtiSave prepaid card enables users to make IDD and STD calls at further discounted rates. However, ExtiSave s unique value proposition is the ability to top-up and reload value into the card, a feature not presently available in the IDD prepaid market, and a service only available for mobile prepaid cards. As a result, customers do not have to remember lengthy new personal identification numbers (PIN) and passwords before making a call. The card has the further unique ability to be reloaded. Besides traditional distribution channels, ExtiSave prepaid cards will also be distributed through ExtiLoad vending machines, which provide extensive automated retail sites to broaden the reach to prepaid users on a 24-hour, 7-day basis. The key benefit of these machines is that they offer full sales and reloading facilities for both ExtiSave prepaid cards and other telco mobile prepaid cards. 8

9 Hipmobile The Group s newest incubatee is Hipmobile, a content developer, specialising in digital wireless and mobile entertainment applications that combine information communications technology with lifestyle entertainment. Hipmobile s business comprises the creation of original multimedia messaging content for current and future mobile devices, including downloadable Java and other programming language games, graphic and text animations and polyphonic music ring-tones. Hipmobile is also focusing on the development of other future content and applications transmitted through the Global System for Mobile Communications (GSM) and General Packet Radio Service (GPRS), and provision for third generation (3G) platforms such as Enhanced Data for Global Evolution (EDGE) and WCDMA. Hipmobile has revenue-generating contracts to provide Multimedia Messaging Service (MMS) content to the region s two top mobile service providers StarHub Pte Ltd ( StarHub ) and Maxis Communications Berhad ( Maxis ) (via their payment portal called WAP Portal Sdn Bhd). 9

10 StarHub is a Singapore-based information communications mobile network provider, supplying a full range of information, communications and entertainment services over fixed, mobile and Internet platforms. Maxis Communications is an industry leader and the fastest-growing mobile communications operator in Malaysia. Recently, Hipmobile also signed a mutual wireless and mobile applications content supply and delivery agreement with P.T. Jati Piranti Solusindo, the largest MMS content provider in Indonesia. The success and popularity of Short Message Service and MMS creates a potential market of users who are willing to pay for such services, creating demand for not just static text messaging, but also for unique icons, logos, picture messages, animated graphics and other audio-visual digital content. Hipmobile is well-placed to capitalise on the demand for these products and services, both in Malaysia and other regional markets such as Singapore, Indonesia, the Philippines, Thailand, Hong Kong, China and Japan. The business is also synergistic with Extiva. 10

11 On 23 September 2003, Hipmobile and Indonesia Media Technologies ( IMT ) signed a partnership agreement to cross sell mobile content and applications in Malaysia and Indonesia. This partnership is well in line with Hipmobile s focus on becoming Malaysia's leading wireless and mobile digital content provider. Under the partnership, Hipmobile will be offering IMT's mobile content and applications to Malaysian cellular subscribers and IMT will in turn offer Hipmobile's award winning ring tones, wall papers, logos, Java games and MMS through its existing network of partnerships with all Indonesian cellular operators. YTL Info Screen During the year under review, YTL Info Screen experienced continued success in its core business of developing content and providing digital media solutions, entailing the use of digital, plasma and liquid crystal display screens with the ability to support dynamic infotainment based content. YTL Info Screen is positioned as a cost-effective, technologically advanced and more effective replacement for conventional means of advertising and media communication. This technology has proven ideal for heavy traffic and pedestrianised areas such as Bintang Walk, and transportation systems such as the KLIA Ekspres, where this technology is already deployed and running effectively. PropertyNetAsia YTL e-solutions subsidiary, PropertyNetAsia (Malaysia) Sdn Bhd, owns, develops and operates the property portal known as PropertyNetAsia.com.my, adopting a B2B and B2C model catering to real estate users with focused contents and online facilities. As a property portal, seeks to derive revenue from advertising, listing service subscriptions paid by property developers who wish to launch online via the portal, and transaction charges for sales conducted through the portal. This scalable portal provides a unique opportunity for property enthusiasts to surf a one stop comprehensive vertical portal for all their real estate and ancillary needs. Competitive advantages include a powerful, user friendly search engine, online applications for real estate services, comprehensive and updated property guides, web design and web hosting for real estate players, and attractive e-commerce capabilities such as booking of properties, sales of related consumer products and customisation capabilities for regular users. Web Development YTL e-solutions conceptualised, designed and developed the award-winning YTL Community website, a lifestyle and information portal for the YTL Group's consumer related and other core businesses. The YTL Community portal complements the YTL Group's consumer related businesses by developing an online customer community to complement its existing consumer "brick and mortar" businesses. The portal is being developed as a fully integrated platform to manage and maximise the value of its large, world-wide customer base, and integrates up-to-the-minute updates of the main community portal and satellite sites such as and 11

12 YTL e-learning The YTL e-learning Initiative, launched in December 2001, has continued to expand in terms of the range of courses offered. The portfolio now offers courses ranging from ICT skills and ICT vendor certification programmes for business and professional development training, to more general corporate training and education solutions. Research & Development YTL e-solutions' R & D activities continue to focus on effective system integration involving a package of total efficient ICT solutions, comprising a combination of ICT services and products ranging from applications and software development, through to wireless networking solutions, all tailored to specific market demand and requirements, driven almost entirely by the requirements of incubatees and clients. These include hardware and software developments for the Group s AVSP technology development, customer care and billing applications and solutions, digital media content, delivery and online marketing solutions, portal and website development, Customer Relationship Management integration, digital wireless and mobile content embedding solutions, network provider platform integration solutions, auditing applications, e-learning businesses and content management applications and solutions. Utilisation of Proceeds As at 30 June 2003, YTL e-solutions had utilised approximately 15.6% of the proceeds raised from its initial public offering. The remaining 84.4% will be utilised in due course for the intended purposes as disclosed in the Company s prospectus dated 30 May FUTURE DEVELOPMENTS & CHALLENGES The Group s prudent investment policy to date has yielded incubatees with solid growth prospects. Although this cautious approach was due in part to the steep upward revaluation of technology businesses brought about by the dotcom bubble, it has since served the Group well in evaluating and appraising on-going potential investment opportunities. The Group intends to pursue this policy in developing its stable of incubatees to which it can add demonstrable value and which display an ability to enhance and integrate the Group s existing businesses. One of the main competitive advantages of YTL e-solutions continues to be the ability to leverage on its availability of funds to identify and develop new evolving and market demand technologies. The integrity and reliability of the selection and assessment process have served to mitigate the risks inherent in the business of technology incubation. YTL e-solutions also benefits from the association with the "YTL" brand name and access to the YTL Group's extensive business networks, which have made it easier to attract and retain knowledge workers and generally enhance the development of the Company. 12

13 APPRECIATION The Board of Directors of YTL e-solutions would like to take this opportunity to extend its appreciation to all our customers and business associates, the regulatory authorities and shareholders for their continuing strong support, without which the Group would not have been able to achieve its success this year. We would also like to thank the Management and Staff for their ongoing dedication and commitment to the ideals of the Group. Our achievements are a result ofthe concerted effort and contribution of the entire team. YBhg Tan Sri Dato Francis Yeoh Sock Ping PSM, SIMP, DPMS, DPMP, JMN, JP Executive Chairman and Managing Director 13

14 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN THAT the Eleventh Annual General Meeting of YTL e-solutions Berhad will be held at Starhill 2, Level 4, JW Marriott Hotel Kuala Lumpur, 183 Jalan Bukit Bintang, Kuala Lumpur on Thursday, the 11th day of December, 2003 at a.m. to transact the following business: AS ORDINARY BUSINESS 1 To receive the Audited Financial Statements for the year ended 30 June 2003 together with the Reports of the Directors and Auditors thereon; RESOLUTION 1 2 To re-elect the following Directors who retire pursuant to Article 83 of the Company s Articles of Association: i) Y Bhg Dato Yeoh Seok Hong RESOLUTION 2 ii) Y Bhg Dato Michael Yeoh Sock Siong RESOLUTION 3 iii) Y Bhg Dato Mark Yeoh Seok Kah RESOLUTION 4 3 To re-elect En Mohamad Zaid Bin Dato' Hj Mohd Zainal Abidin who retires pursuant to Article 90 of the Company's Articles of Association; RESOLUTION 5 4 To approve the payment of Directors Fees amounting to RM100, for the financial year ended 30 June 2003; RESOLUTION 6 5 To re-appoint the Auditors and to authorise the Directors to fix their remuneration. RESOLUTION 7 AS SPECIAL BUSINESS To consider and, if thought fit, pass the following resolution: 14

15 ORDINARY RESOLUTION 6 PROPOSED AUTHORITY TO ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 THAT subject to the Companies Act, 1965 and the Articles of Association of the Company, the Directors be and are hereby authorised to allot and issue shares in the Company at any time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued does not exceed ten per centum (10%) of the issued and paid-up 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 and quotation for the additional shares so issued on the Kuala Lumpur Stock Exchange. RESOLUTION 8 By Order of the Board, Ho Say Keng Secretary KUALA LUMPUR 19 November 2003 Notes A member entitled to attend and vote at the meeting mayappoint a proxy to vote in his stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his holding to be represented by each proxy. The instrument appointing a proxy or proxies, in the case of an individual, shall be signed by the appointer or his attorney and in the case of a corporation, either under seal or under the hand of an officer or attorney duly authorised in writing. An instrument appointing a proxy shall be deposited at the Registered Office of the Company at least 48 hours before the appointed time for holding the meeting. Resolution pursuant to Section 132D of the Companies Act, 1965 The Company is actively pursuing business opportunities in prospective areas so as to broaden the operating base and earnings potential of the Company. Such expansion plans may require the issue of new shares not exceeding ten per centum of the Company s issued share capital. With the passing of the Resolution 8 mentioned above by the shareholders of the Company at the forthcoming Annual General Meeting, the Directors would avoid delay and cost of convening further general meetings to approve issue of such shares for such purposes. 15

16 Statement Accompanying Notice of Eleventh Annual General Meeting 1 The names of individuals who are standing for re-election Directors retiring by rotation pursuant to Article 83 of the Articles of Association YBhg Dato Yeoh Seok Hong YBhg Dato Michael Yeoh Sock Siong YBhg Dato Mark Yeoh Seok Kah Director retiring pursuant to Article 90 of the Articles of Association En Mohamad Zaid Bin Dato Hj Mohd Zainal Abidin 2 Number of Board Meetings Held There were five (5) Board meetings held during the financial year ended 30 June th Annual General Meeting of YTL e-solutions Berhad Place : Starhill 2, Level 4 JW Marriott Hotel Kuala Lumpur 183 Jalan Bukit Bintang Kuala Lumpur Date & Time : 11 December 2003 at a.m. 4 Further details of Directors who are standing for re-election Details of Directors who are standing for re-election are set out in the Directors Profile appearing on pages 19 to 24 of the Annual Report. Information relating to the Directors securities holdings in the Company and its subsidiaries is presented on pages 41 to 43 of the Annual Report. 16

17 Corporate Information YBhg Tan Sri Dato Seri Dr Md Noordin Bin Md Sopiee PSM, DIMP, DMSM, DGPN, National Order of Merit (Ordre National-du Merite) by the French Government B Sc (Econ) (First Class), Ph D in Political Science/International Relations YBhg Dato Lau Yin Lau Yen Beng DPMT, ASM, JP Diploma, Commerce YBhg Dato Yeoh Seok Hong DSPN, JP BE (Hons) Civil & Structural Engineer, FFB BOARD OF DIRECTORS Executive Chairman and Managing Director YBhg Tan Sri Dato Francis Yeoh Sock Ping PSM, SIMP, DPMS, DPMP, JMN, JP B Sc (Hons) CIV ENG, FFB, F Inst D, MBIM, RIM YBhg Dato Michael Yeoh Sock Siong DIMP BE (Hons), Civil & Structural Engineer, FFB YBhg Dato Mark Yeoh Seok Kah DSSA LLB (Hons) King s College London, Barrister-At-Law (Gray s Inn) Tuan Syed Abdullah Bin Syed Abd. Kadir B Sc (Engineering Production) & B Com (Economics) Mr Loh Mun San System Engineer (QuickStart Newport Beach, CA) Mr Amarjit Singh Chhina CIOB I (Eng), Reg. Rep. London Stock Exchange, Dealers Rep. Stock Exchange of Singapore En Mohamad Zaid Bin Dato Hj Mohd Zainal Abidin BEng (Hons) Automotive Engineering COMPANY SECRETARY Ms Ho Say Keng (MIA 3708) 17

18 REGISTERED OFFICE 11th Floor, Yeoh Tiong Lay Plaza 55 Jalan Bukit Bintang Kuala Lumpur T F BUSINESS OFFICE Level 1 & 3, Annexe Block Lot 10 Shopping Centre 50 Jalan Sultan Ismail Kuala Lumpur T F REGISTRAR YTL Corporation Berhad 11th Floor, Yeoh Tiong Lay Plaza 55 Jalan Bukit Bintang Kuala Lumpur T F SPONSOR Commerce International Merchant Bankers Berhad 8th Floor, Bangunan CIMB Jalan Semantan Damansara Heights Kuala Lumpur T F SOLICITORS Lee, Perara & Tan AUDIT COMMITTEE YBhg Dato Lau Yin Lau Yen Beng (Committee Chairman and Independent Non-Executive Director) YBhg Tan Sri Dato Seri Dr Md Noordin Bin Md Sopiee (Independent Non-Executive Director) Mr Loh Mun San (Executive Director) AUDITORS Ler Lum & Co. (AF 0276) Chartered Accountants (Associated worldwide with Jeffreys Henry International) PRINCIPAL BANKERS OF THE GROUP Bumiputra-Commerce Bank Berhad Malayan Banking Berhad STOCK EXCHANGE LISTING Kuala Lumpur Stock Exchange MESDAQ Market ( ) 18

19 Profile of the Board of Directors Malaysian, aged 49, was appointed to the Board of the Company on 26 April 2000 as Executive Chairman and Managing Director. Y Bhg Tan Sri Dato Francis Yeoh had his secondary education in Victoria Institution, Malaysia in which he was the Head Boy. He obtained his Bachelor of Science (Hons) Degree in Civil Engineering from Kingston University, United Kingdom in He joined Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd as an Executive Director since October 1978 and is presently the Managing Director of that company. Y Bhg Tan Sri Francis Yeoh became the Managing Director of YTL Group in Under his stewardship, YTL Group has grown from a single listed entity in 1985 to a force comprising five listed companies - YTL Corporation Berhad, YTL Power International Berhad, YTL Cement Berhad, YTL Land & Development Berhad and YTL e-solutions Berhad. He currently serves as a Member of the Malaysian Business Council (MBC), Malaysian Pacific Basin Economic Council (PBEC), Commonwealth Partnership for Technology Management (CPTM), The Capital Markets Advisory Council, The Nature Conservancy Asia Pacific Council and the Asia Business Council. He is also the Trustee of the Asia Society. He was the President of the Kuala Lumpur Symphony Orchestra Society (KLSO), Board Member of SEI for Advanced Studies in Management Wharton School and the Founder President of the famous Eastern and Orient Express train. On 16 January 2003, he won the First Malaysian Ernst & Young Master Entrepreneur of the Year 2002 Award Recipient. He holds fellowships in many of the Chartered Institutions in the United Kingdom and is also the recipient of many major awards. He was appointed to the Board of YTL Corporation Berhad on 6 April 1984 and has been the Group Managing Director of that company since April On 19 March 1992, 18 October 1996 and 10 May 2001, he was appointed to the Board of YTL Cement Berhad, YTL Power International Berhad and YTL Land & Development Berhad respectively. He also serves on the Board of YTL Industries Berhad, YTL Foundation, Wessex Water Limited and Wessex Water Services Limited. Y Bhg Tan Sri Dato Francis Yeoh Sock Ping is the brother of Y Bhg Dato Yeoh Seok Hong, Y Bhg Dato Michael Yeoh Sock Siong and Y Bhg Dato Mark Yeoh Seok Kah. He has no conflict of interest with the Company and he has not been convicted of any offences in the past ten (10) years. YBhg Tan Sri Dato Francis Yeoh Sock Ping Executive Chairman and Managing Director 19

20 YBhg Tan Sri Dato Seri Dr Md Noordin Bin Md Sopiee Independent Non-Executive Director Malaysian, aged 58, was appointed to the Board of the Company on 19 February 2001 as an Independent Non-Executive Director. He holds a First Class Division in Bachelor of Science (Economics) degree from the London School of Economics and a Doctorate of Philosophy from the University of London. He is currently the Chairman and Chief Executive Officer of Institute of Strategic and International Studies Malaysia and Chairman of the Malaysia National Committee for Pacific Economic Cooperation. He also serves on the Board of Bank Negara Malaysia, Kulim (Malaysia) Berhad, Reliance Pacific Berhad, Sunway Holdings Incorporated Berhad, YTL Power International Berhad and YTL Land & Development Berhad. He does not have any family relationship with any directors and/or major shareholder of the Company and has no conflict of interest with the Company. He has not been convicted of any offences within the past ten (10) years. YBhg Dato Lau Yin Lau Yen Beng Independent Non-Executive Director Malaysian, aged 54, was appointed to the Board of the Company on 7 January 2002 as an Independent Non-Executive Director. He obtained a Diploma in Commerce with distinction from Tunku Abdul Rahman College in In 1987, he became a graduate member of the Institute of Chartered Secretaries and Administrators, United Kingdom, and in 1981 was made a Fellow of the Chartered Association of Certified Accountants of the United Kingdom. He has been a member of the Malaysian Institute of Accountants since He was appointed to the Board of the former Lembaga Letrik Negara on 1 October 1988 and now serves on the Board of Tenaga Nasional Berhad, the successor to Lembaga Letrik Negara. He is the Chairman of the Board for Matang Holdings Berhad as well as the Chairman of Koperasi Serbaguna Malaysia Berhad, a cooperative registered under the Cooperative Societies Act. He also serves on the Board of YTL Corporation Berhad, YTL Power International Berhad, YTL Cement Berhad and YTL Land & Development Berhad. In addition, he has been appointed as a member of the Senate of the Malaysian Parliament. He does not have any family relationship with any directors and/or major shareholder of the Company and has no conflict of interest with the Company. He has not been convicted of any offences within the past ten (10) years. 20

21 Malaysian, aged 44, was appointed to the Board of the Company on 26 April 2000 as an Executive Director. He obtained his Bachelor of Engineering (Hons) Degree in Civil Engineering from the University of Bradford, United Kingdom in He is a member of the Faculty of Building, United Kingdom. Y Bhg Dato' Yeoh Seok Hong has vast experience in the construction industry, being the Executive Director responsible for the YTL Group's construction division. He was the project director responsible for the development and the construction of the two Independent Power Producer power stations owned by YTL Power Generation Sdn Bhd. He continues to be actively involved in the construction activities of the YTL Group, his most recent project being the construction of the Express Rail Link between the Kuala Lumpur International Airport and the Kuala Lumpur Sentral Station, and is also responsible for developing the power and utility businesses of the YTL Power International Berhad Group. He is also a Director of YTL Corporation Berhad since 19 June 1985 and YTL Power International Berhad since 18 October He also serves on the Board of YTL Land & Development Berhad, YTL Industries Berhad, YTL Foundation, Wessex Water Limited and Wessex Water Services Limited. Y Bhg Dato Yeoh Seok Hong is the brother of Y Bhg Tan Sri Dato Francis Yeoh Sock Ping, Y Bhg Dato Michael Yeoh Sock Siong and Y Bhg Dato Mark Yeoh Seok Kah. He has no conflict of interest with the Company and he has not been convicted of any offences in the past ten (10) years. YBhg Dato Yeoh Seok Hong Executive Director Malaysian, aged 43, was appointed to the Board of the Company on 15 May 2000 as an Executive Director. He graduated from the University of Bradford, United Kingdom in 1983 with a Bachelor of Engineering (Hons) Civil & Structural Engineering Degree. He is primarily responsible for YTL Group's Manufacturing Division which activities involve cement manufacturing, ready-mixed concrete, transportable cabins and other building material industries. On 19 June 1985, 1 September 1985 and 21 October 1996, he was appointed to the Board of YTL Corporation Berhad, YTL Cement Berhad and YTL Power International Berhad respectively. He is also currently sitting on the Board of YTL Land & Development Berhad, YTL Industries Berhad, Sentul Raya Golf Club Berhad and Wessex Water Limited. Y Bhg Dato Michael Yeoh Sock Siong is the brother of Y Bhg Tan Sri Dato Francis Yeoh Sock Ping, Y Bhg Dato Yeoh Seok Hong and Y Bhg Dato Mark Yeoh Seok Kah. He has no conflict of interest with the Company and he has not been convicted of any offences in the past ten (10) years. YBhg Dato Michael Yeoh Sock Siong Executive Director 21

22 YBhg Dato Mark Yeoh Seok Kah Executive Director Malaysian, aged 38, was appointed to the Board of the Company on 26 April 2000 as an Executive Director. He graduated from King's College, University of London with an LLB (Hons) and was subsequently called to the Bar at Gray's Inn, London on 28 July He chambered at Messrs Shook Lin & Bok and in August 1989, he joined YTL Group. He is presently the Executive Director responsible for the Hotels and Resorts Division of the YTL Group. He represents the YTL Group on the Board of Eastern & Oriental Express Limited, a company incorporated in Bermuda, which owns and operates the Eastern & Oriental Express luxury train service between Bangkok and Singapore. He also serves on the Board of YTL Corporation Berhad, YTL Power International Berhad, YTL Land & Development Berhad, YTL Vacation Club Berhad and Wessex Water Limited. Y Bhg Dato Mark Yeoh Seok Kah is the brother of Y Bhg Tan Sri Dato Francis Yeoh Sock Ping, Y Bhg Dato Yeoh Seok Hong and Y Bhg Dato Michael Yeoh Sock Siong. He has no conflict of interest with the Company and he has not been convicted of any offences in the past ten (10) years. Tuan Syed Abdullah Bin Syed Abd. Kadir Executive Director Malaysian, aged 49, was appointed to the Board of the Company on 26 April 2000 as an Executive Director. He graduated from the University of Birmingham in 1977 with a Bachelor of Science (Engineering Production) and a Bachelor of Commerce (Economics) Double Degree. He has extensive experience in banking and financial services, having been with Bumiputra Merchant Bankers Berhad from 1984 to 1994, holding the position of general manager immediately prior to his departure from the Bank. Prior to joining YTL Corporation Berhad Group, he was the general manager of Amanah Capital Partners Berhad, a public listed company with subsidiaries involved in, inter alia, discount, money broking, unit trusts, finance and fund management operations from November 1994 to February He also serves on the Board of YTL Corporation Berhad, YTL Power International Berhad, Iris Corporation Berhad, Malaysian South-South Corporation Berhad and AE Multi Holdings Berhad. He does not have any family relationship with any directors and/or major shareholder of the Company and has no conflict of interest with the Company. He has not been convicted of any offences in the past ten (10) years. 22

23 Malaysian, aged 47, was appointed to the Board of the Company on 26 April 2000 as an Executive Director and has been the General Manager of the Company since 1 May He completed his Systems Engineer training with QuickStart Technologies Inc. in both Los Angeles and Newport Beach, California, USA in May He has 12 years experience in Information Technology. He was responsible for setting up the regional IT network of PT Sempati Air (the second largest Indonesian Airline) in 1994, and acted as its IT Consultant until He was one of the founder members of the Malaysia Airlines Boeing B747 & B777 Aircraft Acceptance Team, responsible for the Aircraft interior and In-flight Audio and Video on Demand Computer entertainment system, in terms of Software and Hardware trouble shooting, recovery, operation and implementation. He does not have any family relationship with any directors and/or major shareholder of the Company and has no conflict of interest with the Company. He has not been convicted of any offences within the past ten (10) years. Mr Loh Mun San Executive Director British, aged 36, was appointed to the Board on 26 April 2000 as an Executive Director. He has been a member of the Institute of Bankers (U.K.), and attained professional qualifications from the London International Stock Exchange and the Stock Exchange of Singapore and has previously been licensed by the Securities and Futures Authority (U.K.) and the Monetary Authority of Singapore. He has 12 years of international investment and equity market experience, beginning his career in the Fund Management Department of Grieveson Grant & Co. in London (later acquired by Kleinwort Benson PLC) and last held the position of UK Equity Fund Manager with Kleinwort Benson Investment Management. In 1990, he joined Barclays de Zoete Wedd Securities Ltd. ("BZW") in London as a UK Building and Construction Sector Analyst. He has advised on a number of equity capital raisings for listed UK Building & Construction companies, and acted as one of the advisors to Steetley PLC in its defence of the USD1.2 billion hostile takeover bid from Redland PLC. In 1993, he was seconded to BZW Asia and over the next 5 years held posts with BZW in Hong Kong, Singapore and Malaysia, holding the position of Associate Director in Singapore and Malaysia. In 1998, he was appointed Associate Sales Director of HSBC Securities Pte. Ltd. in Singapore, leaving to found a high technology manufacturing company. He does not have any family relationship with any directors and/or major shareholder of the Company and has no conflict of interest with the Company. He has not been convicted of any offences within the past ten (10) years. Mr Amarjit Singh Chhina Executive Director 23

24 En Mohamad Zaid Bin Dato Hj Mohd Zainal Abidin Independent Non-Executive Director Malaysian, aged 24, was appointed to the Board of the Company on 20 October 2003 as an Independent Non-Executive Director. He graduated from University of Hertfordshire, Hatfield, Hert in 2003 with Bachelor of Engineering (Hons) in Automotive Engineering. Mohamad Zaid Bin Dato Hj Mohd Zainal Abidin underwent 9 months of industrial placement at Perusahaan Otomobil Nasional Berhad under Research & Development Department. He is experienced in design using CATIA and simulation using LS-DYNA. He does not have any family relationship with any directors and/or major shareholder of the Company and has no conflict of interest with the Company. He has not been convicted of any offences within the past ten (10) years. 24

25 Statement of Directors Responsibilities The Directors are required by law to prepare financial statements for each financial year which give a true and fair view of the state of affairs ofthe Group and of the Company at the end of the financial year and of the results and cash flows of the Group and of the Company for the financial year then ended. The Directors consider that, in preparing the financial statements for the financial year ended 30 June 2003, the Group has used appropriate accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent. The Directors also consider that all applicable approved accounting standards have been followed and confirm that the financial statements have been prepared on a going concern basis. The Directors are responsible for ensuring that the Group and the Company keep accounting records which disclose with reasonable accuracy at any time the financial position of the Group and of the Company and which enable them to ensure that the financial statements comply with the provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia. 25

26 Audit Committee Report MEMBERS YBhg Dato Lau Yin Lau Yen Beng (Chairman/Independent Non-Executive Director) YBhg Tan Sri Dato Seri Dr Md Noordin Bin Md Sopiee (Member/Independent Non-Executive Director) Mr Loh Mun San (Member/Executive Director) TERMS OF REFERENCE Primary Purposes The Committee shall: 1 Provide assistance to the Board in fulfilling its fiduciary responsibilities relating to the corporate accounting and practices for YTL e-solutions Berhad and all its wholly and majority owned subsidiaries ( Group ). 2 Improve the Group s business efficiency, the quality of the accounting function, the system of internal controls and audit function and strengthen the confidence of the public in the Group s reported results. 3 Maintain through regularly scheduled meetings, a direct line of communication between the Board and the external auditors as well as internal auditors. 4 Enhance the independence of both the external and internal auditors function through active participation in the audit process. 5 Strengthen the role of the Independent Directors by giving them a greater depth of knowledge as to the operations of the Company and the Group through their participation in the Committee. 6 Act upon the Board of Directors request to investigate and report on any issues or concerns in regard to the management of the Group. 7 Review existing practices and recommend to Management to formalise an ethics code for all executives and members of the staff of the Group. 8 Create a climate of discipline and control which will reduce opportunity of fraud. 26

27 Membership 1 The Committee shall be appointed by the Board from amongst their number and shall be composed of no fewer than three (3) members, majority of whom should be Independent Directors. 2 The members of the Committee shall elect a Chairman from amongst their number who shall be an Independent Director. 3 The Board must ensure that the chief executive officer shall not be a member of the Audit Committee. Authority The Committee shall in accordance with the procedure determined by the Board and at the cost of the Company: a) have explicit authority to investigate any matter within its terms of reference; b) have the resources which are required to perform its duties; c) have full and unrestricted access to any information pertaining to the Company; d) have direct communication channels with the external auditors and person(s) carrying out the internal audit function; e) be able to obtain independent professional or other advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary; and f) be able to convene meetings with the external auditors excluding the attendance of the executive members of the Company, whenever deemed necessary. Functions And Duties The Committee shall, amongst others, discharge the following functions: 1 Review the following and report the same to the Board of the Company: a) with the external auditors, the audit plan; b) with the external auditors, his evaluation of the quality and effectiveness of the entire accounting system, the adequacy and the integrity of the internal control system and the efficiency of the Group s operations and efforts and processes taken to reduce the Group s operational risks; 27

28 c) with the external auditors, the audit report; d) the assistance given by the employees of the Company to the external auditors; e) the adequacy of the scope, functions and resources of the internal audit functions and that it has the necessary authority to carry out its work; f) the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function; g) the quarterly results and year end financial statements, prior to the approval by the Board of Directors, focussing particularly on: changes in or implementation of major accounting policy changes significant and unusual events the accuracy and adequacy of the disclosure of information essential to a fair and full presentation of the financial affairs of the Group compliance with accounting standards, other statutory and legal requirements and the going concern assumption h) any related party transaction and conflict of interest situation that may arise within the Company/Group and any related parties outside the Group including any transaction, procedure or course of conduct that raises questions of management integrity; i) any letter of resignation from the external auditors of the Company; j) whether there is reason (supported by grounds) to believe that the Company s external auditors are not suitable for re-appointment; k) all areas of significant financial risk and the arrangements in place to contain those risks to acceptable levels; and l) any significant audit findings, reservations, difficulties encountered or material weaknesses reported by the external and internal auditors. 2 Recommend the nomination of a person or persons as external auditors and the external audit fee. 3 Promptly report to the Kuala Lumpur Stock Exchange ( KLSE ) on any matter reported by it to the Board of the Company which has not been satisfactorily resolved resulting in a breach of the KLSE Listing Requirements. 28

29 4 Carry out any other function that may be mutually agreed upon by the Committee and the Board which would be beneficial to the Company and ensure the effective discharge of the Committee s duties and responsibilities. Meetings 1 A minimum of two members present shall form the quorum. 2 The Committee shall meet at least five (5) times a year, although additional meetings may be called at any time at the Audit Committee Chairman s discretion. An agenda shall be sent to all members of the Committee and any other persons who may be required/invited to attend. All meetings to review the quarterly results and annual financial statements, shall be held prior to such quarterly results and annual financial statements being presented to the Board for approval. 3 Notwithstanding paragraph 2 above, upon the request of any member of the Committee, the external auditors or the internal auditors, the Chairman of the Committee shall convene a meeting of the Committee to consider any matters which should be brought to the attention of the directors or shareholders. 4 The external auditors and internal auditors have the right to appear and be heard at any meeting of the Committee and shall appear before the Committee when required to do so by the Committee. 5 The Committee may invite any Board member or any member of the Senior Management or any relevant employee within the Company who the Committee thinks fit to attend its meetings to assist in resolving and clarifying matters raised in audit reports. 6 The internal auditors shall be in attendance at meetings of the Committee to present and discuss the audit reports of findings and the recommendations relating thereto and to follow up on decisions made at these meetings. 7 The Committee may establish any regulations from time to time to govern its administration. Retirement And Resignation In the event of any vacancy in the Audit Committee, the Company must fill the vacancy within two months, but in any case not later than three months. Minutes 1 The Committee shall cause minutes to be duly entered in the books provided for the purpose of all resolutions and proceedings of all meetings of the Committee. Such minutes shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting and is so signed, shall be conclusive evidence without any further proof of the facts thereon stated. 29

30 2 Minutes of each meeting shall also be distributed to all attendees at the meetings and members of the Committee. 3 Detailed minutes of the Committee s meetings will be made available to all Board members. A summary of significant matters and resolutions will be reported to the Board by the Committee. 4 The books containing the minutes of proceedings of any meeting of the Committee shall be kept by the Company at the registered office of the Company and shall be open to the inspection of any member of the Committee and the Board. Secretary The Secretary to the Committee shall be the Company Secretary. ACTIVITIES In line with the terms of reference of the Committee, the following activities were carried out by the Committee during the year ended 30 June 2003 in discharging its functions: 1 Review of the external auditors scope of work and their audit plan. 2 Reviewing with the external auditors on the results of their audit, the audit report and internal control recommendations in respect of control weaknesses noted in the course of their audit. 3 Review of internal control procedures. 4 Review of the quarterly unaudited financial results announcements and recommending for the Board of Directors approval. 5 Reviewing the audited financial statements before recommending for the Board of Directors approval Reviewing the Company s compliance with the Listing Requirements of the Kuala Lumpur Stock Exchange and the applicable approved accounting standards issued by the Malaysian Accounting Standards Board. NUMBER OF MEETINGS HELD AND DETAILS OF ATTENDANCE During the financial year, a total of 5 Audit Committee Meetings were held and the details of attendance are as follows: Attendance YBhg Dato Lau Yin Lau Yen Beng 5 YBhg Tan Sri Dato Seri Dr Md Noordin Bin Md Sopiee 3 Mr Loh Mun San 5

31 Statement on Corporate Governance & Internal Control INTRODUCTION The Board of Directors of YTL e-solutions Berhad ( YTL e-solutions or Company ) is pleased to report that during the year under review, the Company and its subsidiaries ( Group ) continued to pursue its commitment to ensure that the highest standards of corporate governance are practiced throughout the Group. Good corporate governance is a fundamental part of the Group s responsibility to protect and enhance long term shareholder value and the financial performance of the Group, whilst taking into account the interests of other stakeholders. The Board has continued to undertake measures since its listing on the MESDAQ Market of the Kuala Lumpur Stock Exchange ( MESDAQ ) on 2 July 2002, in order to enhance its corporate governance framework. In assessing its corporate governance practices, the Group is governed by the Listing Requirements of the MESDAQ and Guidance Notes 2 on Corporate Governance ( Guidance Notes ), both of which were issued in March The Guidance Notes represent the recommended best practices with which listed companies are expected to comply. The Group has also endeavoured to comply with the Malaysian Code on Corporate Governance ( Code ) which was issued in January 2001 as a guide for public listed companies. This section of the Annual Report details the measures implemented by the Group to enhance its corporate governance practices and compliance with the MESDAQ Listing Requirements, the Guidance Notes and the Code. A GENERAL DUTIES OF BOARD The Board YTL e-solutions is led and managed by an experienced Board of Directors with a wide and varied range of expertise. This broad spectrum of skills and experience gives added strength to the leadership, thus ensuring that the Group is under the guidance of an accountable and competent Board of Directors. The Directors recognise the key role they play in charting the strategic direction, development and control of the Group and have adopted the five primary responsibilities as listed in the Guidance Notes, which facilitate the discharge of the Board s stewardship responsibilities. Board Balance The Board currently has ten (10) directors comprising seven (7) executive members and three (3) non-executive members, all three of whom are independent. The Board complies with the MESDAQ Listing Requirements for the Board to have at least two (2) independent directors, and for the selection and appointment of independent directors to be a matter for the Board as a whole. 31