Contents. Financial Statements. ewina Berhad Annual Report 99. Notice of Annual General Meeting. Corporate Information.

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1 Contents 2 Notice of Annual General Meeting 4 Corporate Information 5 Audit Committee 6 Chairman s Statement Financial Statements 10 Directors Report 14 Statement By Directors 14 Statutory Declaration 15 Report Of The Auditors 16 Consolidated Balance Sheet 17 Consolidated Profit And Loss Account 18 Balance Sheet 19 Profit And Loss Account 20 Consolidated Cash Flow Statement 22 Notes To The Account 34 Statistics Of Shareholdings 37 List Of Properties Held Form of Proxy KLSE Complaint Form

2 Notice Of Annual General Meeting NOTICE IS HEREBY GIVEN that the Sixth Annual General Meeting of the Company will be held at 1st Floor, Lot 9 & 11, Jalan P/9B, Kawasan Perusahaan Bangi, Bandar Baru Bangi on Friday, 30 June, 2000 at a.m. for the following purposes: Agenda 1. To receive and adopt the Report of the Directors and the Audited Accounts for the financial year ended 31 December, 1999 together with the Report of the Auditors thereon. 2. To re-elect the following Directors who are retiring in accordance with Article 87 of the Company's Articles of Association: (a) Brig. Gen (R) Dato' Yaacob Bin Haji Salleh (b) Dato' Motohiro Otsuka 3. To re-appoint Messrs. KPMG as Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration. 4. As Special Businesses: To consider and, if thought fit, to pass the following resolutions as Special Resolutions and Ordinary Resolution: Special Resolution No.1: - Proposed Increase in Authorised Share Capital "That the authorised share capital of the Company be increased from 25,000, comprising 25,000,000 ordinary shares of 1.00 each to 40,000, comprising 40,000,000 ordinary shares of 1.00 each by the creation of an additional 15,000,000 new ordinary shares of 1.00 each in the capital of the Company and in the consequence thereof, the Memorandum and Articles of Association of the Company and other relevant documents be so amended." Special Resolution No.2: Proposed amendments to the Articles of Association of the Company "That the Articles of the Association of the Company contained in Annexure A of the Annual Report for the financial year ended 31 December, 1999, copies of which have been circulated to the members and for the purpose of identification as subscribed by the Chairman of the Company, be and is hereby approved and adopted as the new Articles of Association of the Company in substitution for and to the exclusion of all existing Articles of Association thereof." Ordinary Resolution: Authority to Directors to allot and issue shares "That pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby authorised to 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 10% of the issued share capital of the Company for the time being, subject always to the approval of the relevant regulatory bodies being obtained for such allotment and issue." 5. To transact any other ordinary business for which due notice has been given. (Resolution 1) (Resolution 2) (Resolution 3) (Resolution 4) (Resolution 5) (Resolution 6) (Resolution 7) By Order of the Board Chua Siew Chuan Neo Khoon Chye Company Secretaries 2 6 June 2000

3 Explanatory Notes To Special Businesses: 1. The proposed adoption of the Special Resolution No. 1 is to allow the Company to accommodate any future capital expansion. 2. The proposed adoption of the Special Resolution No. 2 is to update the Articles of Association of the Company, where relevant, to incorporate the new requirements of the Prevailing Law. 3. The proposed adoption of the Ordinary Resolution is primarily to give flexibility to the Board of Directors to issue and allot shares at any time in their absolute discretion without convening a general meeting. Notes: 1. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but need not be a member of the Company. 2. In the case of a Corporate member, the instrument appointing a proxy shall be under its Common Seal or under the hand of an officer or attorney, duly authorised in that behalf. 3. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportion of his holding to be represented by each proxy. 4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at Lot 11, Jalan P/9B, Kawasan Perusahaan Bangi, Bandar Baru Bangi, Selangor Darul Ehsan not less than 48 hours before the time for holding the Meeting or at any adjournment thereof. 3

4 Corporate Information Board Of Directors YBhg Dato' Mohamed bin Sulaiman Chairman Tuan Haji Ibrahim bin Haji Ahmad Group Managing Director En Kamaluddin Abdullah Group Executive Director Mr Tatsunobu Abe Executive Director / Adviser Foong Choong Hong, Steven Brig. Gen (R) Dato' Yaacob bin Hj Salleh YBhg Dato' Motohiro Otsuka Shinya Abe (Alternate to Tatsunobu Abe) Company Secretaries Chua Siew Chuan Neo Khoon Chye Registrar M & C Services Sdn Bhd 11th Floor, Wisma Damansara Jalan Semantan Damansara Heights Kuala Lumpur Tel : Auditors KPMG Principal Bankers RHB Bank Berhad Oriental Bank Berhad Bank Pembangunan Malaysia Berhad Bank Islam Malaysia Berhad Stock Exchange Listing Kuala Lumpur Stock Exchange Second Board Registered Office Lot 11, Jalan P/9B, Kawasan Perusahaan Bangi Bandar Baru Bangi Selangor Darul Ehsan Tel : Fax :

5 Audit Committee Members YBhg Dato' Mohamed bin Sulaiman Committee Chairman / Independent Non-Executive Director Tuan Haji Ibrahim bin Haji Ahmad Committee Member / Group Managing Director Foong Choong Hong, Steven Committee Member / Independent Non-Executive Director Terms Of Reference Composition The Board of Directors shall elect an Audit Committee from amongst themselves (pursuant to a resolution of the Board of Directors) comprising of not less than three (3) members where the majority of them shall be composed of independent non-executive members of the Board. The members of the Audit Committee shall elect a chairman amongst themselves. All members of the Audit Committee, including the Chairman, will hold office only so long as they serve as Directors of the Company. Should any member of the Audit Committee cease to be a Director of the Company, his membership in the Audit Committee would cease forthwith. If, the members of the Audit Committee for any reason be 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 make up the minimum number of three (3) members. Duties The duties of the Audit Committee shall be: a) to consider the appointment of any external auditor, the audit fee, and any question of resignation or dismissal. b) to discuss with the external auditor before the audit commences the nature and scope of the audit, and to ensure co-ordination where more than one audit firm is involved. c) to review the quarterly financial statements before submission to the board. d) to discuss problems and reservations arising from the interim and final audits, and any matters the auditors may wish to discuss (in the absence of management where necessary). e) to review the internal audit program, consider the major findings of the internal audit investigations and management's response, and ensure co-ordination between the internal and external auditors. f) to keep under review the effectiveness of internal control system, and in particular review the external auditor's management letter and management's response. g) to carry out such other functions as may be agreed to by the Audit Committee and the Board of Directors. Authority The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employees and all employees are directed to co-operate with any request made by the Committee. The Committee is empowered by the Board to retain persons having special competence as necessary to assist the Committee in fulfilling its responsibilities. 5

6 Chairman s Statement On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Accounts of the Group and the Company for the financial year ended 31st December Financial Review I am pleased to report that our Group recorded a turnover of 31.4 million in the 1999 financial year, an increase of 46% from 21.5 million in The Group also reduced its pre-tax loss by 8% from million in 1998 to million in The increase in turnover was due mainly to the commencement of the pilot phase of the privatisation of food catering for the 5 military cookhouses of our Armed Forces as well as better sales performance of the Brahim's range of products in the local market. Operational Review The Group's lacklustre performance was mainly attributed to the food services division which accounted for the bulk of our losses, with the joint venture operations of Desasiswa Catering Services Sdn Bhd being the main problem. As mentioned in the 1998 annual report, the Group had invested significant capital in this joint venture to provide food and beverage to students at a local university in anticipation of a high turnover. Unfortunately, the actual turnover achieved was well below the forecast. Consequently, during the third quarter of 1999, the Group revamped and reorganised Desasiswa to avoid further losses. Nevertheless, Desasiswa's performance is expected to improve this year in view of the imminent introduction of the meal plan for all of its students residing on campus. 6

7 Our airport operations continue to be weak. Again, high fixed operating costs together with poor sales are taxing our resources here but we anticipate some relief in the form of better emplanement figures and therefore more customer traffic in tandem with the economic recovery of the region. We are also hopeful that the airport authorities will consider our appeal for a reduction in rental favourably. On a brighter note, I am pleased to report that Desatera Sdn Bhd, our food services joint venture with Koperasi Angkatan Tentera, successfully implemented the pilot phase of the privatised military cookhouses for the Malaysian Armed Forces. The feedback we received from the military and the end users has been very positive and certainly most encouraging. Arising from the successful implementation of this prestigious pilot project, we have now initiated the next phase of expansion into other selected military camps in the country. 7

8 Chairman s Statement... cont d Prospects The past few years have been very challenging. We believe that the group is now leaner and more resilient with the rationalisation of some of its businesses and we should begin to see a better performance this year. Manufacturing will continue to be our core business. Dewina Trading Sdn Bhd, the marketing arm of Dewina, has also been reorganized and given new direction with emphasis on more aggressive marketing of our products to the overseas markets especially the United States and Europe. Dewina Food Industries' ISO 9001 certification and the recognition of our successful OEM production for a major U.K. supermarket chain have placed the company in good stead for further breakthroughs in the European and U.S. mainstream markets. Furthermore, with the expected completion of Dewina's new R & D laboratories in mid-2000, the company will be more proficient in developing products to meet clients' specifications. Food services will also be a major contributor to the Group earnings following the imminent expansion of the military cookhouses privatisation programme and the implementation of the meal plan in the local university. Furthermore, the Group will be looking into strategic alliances and acquisitions to further strengthen its position and enhance its status as a major player in the food services sector. Acknowledgement and Appreciation On behalf of the Board, I would like to express my sincere appreciation and gratitude to our supportive bankers, creditors, business partners, customers, employees, and our shareholders for their continuing support and confidence during the past three difficult years. 8

9 Financial Statements 10 Directors Report 14 Statement By Directors 14 Statutory Declaration 15 Report Of The Auditors 16 Consolidated Balance Sheet 17 Consolidated Profit And Loss Account 18 Balance Sheet 19 Profit And Loss Account 20 Consolidated Cash Flow Statement 22 Notes To The Account 34 Statistics Of Shareholdings 37 List Of Properties Held Form of Proxy

10 Directors Report The directors have pleasure in submitting their report and the audited accounts of the Group and of the Company for the year ended 31 December Principal Activities The principal activities of the Company are the holding of investments and the provision of management services whilst the principal activities of the subsidiary companies are as stated in Note 4 to the accounts. Results Group Company Loss after taxation (10,961,977) (458,265) Minority interest 39,713 Loss attributable to shareholders (10,922,264) (458,265) Accumulated losses brought forward (7,094,751) (379,208) Accumulated losses carried forward (18,017,015) (837,473) Dividend No dividend was paid during the year and the directors do not recommend any dividend to be paid for the year under review. Reserves And Provisions There were no material movements to and from reserves or provisions during the financial year. Directors Of The Company Directors who served since the date of the last report are: Dato Mohamed bin Sulaiman Haji Ibrahim bin Haji Ahmad Kamaluddin bin Abdullah Steven Foong Choong Hong Brig. Gen (R) Dato Yaacob bin Haji Salleh Tatsunobu Abe Dato Motohiro Otsuka Shinya Abe (alternate to Tatsunobu Abe) 10

11 In accordance with the Company s Articles of Association, Brig. Gen (R) Dato Yaacob bin Haji Salleh and Dato Motohiro Otsuka retire by rotation from the Board at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election. Directors Interest The directors who held office at year end and have interests in the ordinary shares of the Company are as follows: Number of Ordinary shares Balance at Balance at Name Bought Sold Company Dato Mohamed bin Sulaiman 5,000 5,000 Haji Ibrahim bin Haji Ahmad direct 2,427, , ,000 2,427,001 through nominees 2,390,000 2,390,000 Kamaluddin bin Abdullah direct 1 1 through nominees 4,905,997 4,905,997 Tatsunobu Abe 1,254, ,000 1,154,001 Steven Foong Choong Hong 1,000 1,000 By virtue of their interests in the holding company, Haji Ibrahim bin Haji Ahmad and Kamaluddin bin Abdullah are also deemed interested in the ordinary shares of the subsidiary companies to the extent of the holding company s interest. None of the other directors held or dealt in the ordinary shares of the Company and its subsidiary companies during the year. Directors Benefits Since the end of the previous financial year no director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by directors shown in the accounts) by reason of a contract made by the Company or its related companies 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 except for sales amounting to 3,050,085 by a subsidiary company to a company in which certain director has interest. There were no arrangements during and at the end of the 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. 11

12 Directors Report... cont d Issue Of Shares There were no changes in the issued and paid up share capital of the Company. Options Granted Over Unissued Shares No options were granted to any person to take up unissued shares of the Company during the year. Other Statutory Information Before the profit and loss accounts and balance sheets of the Group and of the Company were made out, the directors took reasonable steps to ascertain that: i. there are no known bad debts 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 of the Company are not aware of any circumstances: i. that would render it necessary to write off any debts or the provision for doubtful debts in the Group and Company inadequate to any substantial extent, or ii. that would render the value attributed to the current assets in the Group and Company accounts 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 accounts, that would render any amount stated in the accounts 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 and 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 and 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 its obligations as and when they fall due. 12

13 In the opinion of the directors the results of the operations of the Group and of the Company for the financial year ended 31 December 1999 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, have indicated their willingness to accept re-appointment. Signed in accordance with a resolution of the directors: Haji Ibrahim bin Haji Ahmad Director Kamaluddin bin Abdullah Director Date: 29 March

14 Statement By Directors to the members of Dewina Berhad We, Haji Ibrahim bin Haji Ahmad and Kamaluddin bin Abdullah, being two of the directors of Dewina Berhad, do hereby state on behalf of the directors that in our opinion, the accounts set out on pages 16 to 33 are drawn up in accordance with 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 as at 31 December 1999 and of their results and cash flows of the Group for the year ended on that date. On behalf of the Board: Haji Ibrahim bin Haji Ahmad Director Kamaluddin bin Abdullah Director Bangi, Selangor Darul Ehsan Date: 29 March 2000 Statutory Declaration I, Kamaluddin bin Abdullah, being the director primarily responsible for the financial management of Dewina Berhad, do solemnly and sincerely declare that the accounts set out on pages 16 to 33, 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, Subscribed and solemnly declared by the abovenamed Kamaluddin bin Abdullah at Kuala Lumpur in Wilayah Persekutuan this 29 day of March Before me: Sarangam Rajoo Commissioner for Oaths No. W029 14

15 Report Of The Auditors as at 31 December 1999 We have audited the accounts set out on pages 16 to 33. The preparation of the accounts is the responsibility of the Company s directors. Our responsibility is to express an opinion on the accounts 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 accounts are free of material misstatement. An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the accounts. 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 accounts. We believe our audit provides a reasonable basis for our opinion. In our opinion: a. the accounts 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 1999 and the results of their operations and cash flows of the Group 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 accounts 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 subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the said Act. We have considered the accounts and the auditors report of the subsidiary company of which we have not acted as auditors as identified in Note 4 to the accounts. We are satisfied that the accounts of the subsidiary companies that have been consolidated with the Company s accounts are in form and content appropriate and proper for the purposes of the preparation of the consolidated accounts and we have received satisfactory information and explanations required by us for those purposes. None of the audit reports on the accounts of the subsidiary companies were subject to any qualification nor included any comment under sub-section (3) of Section 174 of the Act. KPMG Firm Number: AF 0758 Public Accountants Seow Yoo Lin Partner Approval Number: 1497/2/01(J) Kuala Lumpur, Date: 29 March

16 Consolidated Balance Sheet as at 31 December 1999 Note Fixed Assets 3 39,686,038 35,669,728 Unquoted Investment At Cost 50,000 50,000 Current Assets Stocks 5 4,282,455 3,333,778 Trade debtors 6 4,591,932 8,421,326 Other debtors, deposits and prepayments 1,425, ,485 Fixed deposits with licensed banks 1,214,720 1,923,462 Cash and bank balances 2,945,123 1,412,470 14,459,966 16,022,521 Less: Current Liabilities Trade creditors 4,361,198 3,005,095 Other creditors and accruals 8,564,008 8,156,251 Hire purchase and lease creditors 8 757, ,888 Short term borrowings (unsecured) 9 12,683,533 8,490,000 Term loans ,513 1,391,958 Provision for taxation 126, ,795 Bank overdrafts (unsecured) 11 3,341,865 3,263,210 30,342,298 25,235,197 Net Current Liabilities (15,882,332) (9,212,676) Expenditure Carried Forward 12 2,650,277 2,653,190 26,503,983 29,160,242 Financed by: Share Capital 13 19,000,000 19,000,000 Share Premium 1,614,543 1,614,543 Accumulated Losses (18,017,015) (7,094,751) Reserve On Consolidation 5,862,373 5,862,373 Shareholders Funds 8,459,901 19,382,165 Minority Interest 396, ,027 Hire Purchase And Lease Creditors 8 1,415,425 2,141,036 Term Loans 10 16,231,820 7,483,014 26,503,983 29,160,242 The notes set out on pages 20 to 31 form an integral part of, and should be read in conjunction with, these accounts. 16

17 Consolidated Profit And Loss Account for the year ended 31 December 1999 Note Turnover 14 31,444,613 21,511,698 Loss before taxation 15 (10,961,977) (11,909,573) Taxation 16 (42,989) Loss after taxation (10,961,977) (11,952,562) Minority interest 39, ,523 Loss attributable to shareholders (10,922,264) (11,708,039) (Accumulated losses)/unappropriated profits brought forward (7,094,751) 4,613,288 Accumulated losses carried forward (18,017,015) (7,094,751) Loss per ordinary share (sen) 17 (57) (62) Retained by: Holding company (837,473) (379,208) Subsidiary companies (17,179,542) (6,715,543) (18,017,015) (7,094,751) The notes set out on pages 20 to 31 form an integral part of, and should be read in conjunction with, these accounts. 17

18 Balance Sheet as at 31 December 1999 Note Fixed Assets 3 906,294 1,000,860 Investments In Subsidiary Companies 4 7,312,379 7,312,379 Current Assets Other debtors, deposits and prepayments 36,124 83,896 Amount due from a subsidiary company 7 13,232,274 12,113,676 Cash and bank balances 8, ,273 13,277,324 12,876,845 Less: Current Liabilities Other creditors and accruals 453, ,858 Amount due to subsidiary companies 7 1,114, ,089 Hire purchase and lease creditors 8 88, ,851 Provision for taxation 3,806 10,806 1,660, ,604 Net Current Assets 11,616,427 12,064,241 Expenditure Carried Forward 12 4,736 19,835,100 20,382,216 Financed by: Share Capital 13 19,000,000 19,000,000 Share Premium 1,614,543 1,614,543 Accumulated Losses (837,473) (379,208) Shareholders Funds 19,777,070 20,235,335 Hire Purchase And Lease Creditors 8 58, ,881 19,835,100 20,382,216 The notes set out on pages 20 to 31 form an integral part of, and should be read in conjunction with, these accounts. 18

19 Profit And Loss Account for the year ended 31 December 1999 Note Turnover , ,975 Loss for the year 15 (458,265) (197,887) Accumulated losses brought forward (379,208) (181,321) Accumulated losses carried forward (837,473) (379,208) The notes set out on pages 20 to 31 form an integral part of, and should be read in conjunction with, these accounts. 19

20 Consolidated Cash Flow Statement for the year ended 31 December Cash Flows From Operating Activities Loss before taxation (10,961,977) (11,909,573) Adjustments for: Depreciation 3,790,830 2,823,451 Expenditure carried forward amortised 591, ,030 Expenditure carried forward written off 270, ,457 Fixed assets written off 473,431 Loss/(Gain) on disposal of fixed assets 6,990 (79,363) Gain on disposal of investment in subsidiary company (450,000) Interest expense 2,301,175 2,096,506 Interest income (35,852) (459,149) Provision for doubtful debts 111,866 2,491,777 Provision for expired stocks 357,296 Operating loss before working capital changes (3,925,384) (3,744,137) (Increase)/Decrease in working capital: Stocks (948,677) 207,140 Debtors 3,223,277 (4,683,352) Amount due from an associated company 191,848 Creditors 1,763,860 3,616,731 Cash generated from/(used in) operations 113,076 (4,411,770) Taxation (paid)/refund (7,000) 41,414 Interest paid (2,301,175) (2,096,506) Net cash used in operating activities (2,195,099) (6,466,862) Cash Flows From Investing Activities Purchase of fixed assets (9,129,967) (13,148,154) Payment of expenditure carried forward (858,671) (1,802,961) Proceeds from disposal of fixed assets 1,315, ,070 Interest received 35, ,149 Proceeds from disposal of investment in subsidiary company 600,000 Investments by minority shareholders of subsidiary companies 282, ,500 Net cash used in investing activities (8,354,426) (13,412,396) The notes set out on pages 20 to 31 form an integral part of, and should be read in conjunction with, these accounts. 20

21 Cash Flows From Financing Activities Proceeds from short term borrowings 4,193,533 4,606,607 Proceeds from term loans 8,171,459 7,566,667 Advances from hire purchase and lease creditors 87,075 1,733,244 Repayment of term loans (307,098) (240,647) Repayment of hire purchase and lease creditors (850,188) (629,340) Net cash generated from financing activities 11,294,781 13,036,531 Net Increase/(Decrease) In Cash And Cash Equivalents 745,256 (6,842,727) Cash And Cash Equivalents At Beginning Of Year 72,722 6,915,449 Cash And Cash Equivalents At End Of Year 817,978 72,722 Cash And Cash Equivalents Comprise: Cash and bank balances 2,945,123 1,412,470 Fixed deposits with licensed banks 1,214,720 1,923,462 Bank overdrafts (3,341,865) (3,263,210) 817,978 72,722 21

22 Notes To The Accounts 31 December Principal Activities The principal activities of the Company are the holding of investments and the provision of management services whilst the principal activities of the subsidiary companies are as stated in Note 4 to the accounts. 2. Accounting Policies 2.1 Basis of Preparation The accounts are prepared under the historical cost convention and in compliance with approved accounting standards in Malaysia. 2.2 Basis of Consolidation The consolidated accounts include the audited accounts of the Company and all its subsidiary companies made up to the end of the financial year. The results of subsidiary companies acquired or disposed during the year are included in the consolidated profit and loss account from the date of their acquisition or up to the date of their disposal. Intercompany transactions are eliminated on consolidation and the consolidated accounts reflect external transactions only. 2.3 Reserve on Consolidation Reserve on consolidation represents the excess of the value attributable to the proportionate net tangible assets of the subsidiary companies at the acquisition date over the purchase consideration paid for acquiring their share capital. 2.4 Subsidiary Companies Investment in subsidiary companies, which are eliminated on consolidation, are stated at cost in the Company s accounts. 2.5 Depreciation Depreciation is provided on a straight line basis so as to write off the cost of the fixed assets over their estimated useful lives. The principal annual rates used are as follows: Long term leasehold land 1% Buildings 2% Motor vehicles 20% Equipment, furniture and fittings 12.5% 20% Plant and equipment 12.5% 14.5% Laboratory equipment 12.5% Renovation Over lease period of premises Kitchen equipment 12.5% During the year, the Group changed its depreciation rate for computers from 12.5% per annum to 20% per annum. The effect of the change is not material to the Group accounts. The stock of operating utensils is not depreciated whilst its subsequent replacement cost is charged to the profit and loss account. Construction-in-progress is not depreciated. 22

23 2.6 Stocks Stocks are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis and includes the raw materials, direct labour and an appropriate portion of fixed and variable production overheads. In arriving at net realisable value, due allowance is made for obsolete and slow-moving stocks. 2.7 Expenditure Carried Forward Expenditure carried forward which comprise preliminary and pre-operating expenses, cost of registration of trademark and franchise fees are amortised over a period of five years. Deferred promotional development cost is amortised over a period of three years or over the commercial life period of the respective products, whichever is lower. 2.8 Foreign Currency Translation Foreign currency assets and liabilities are translated into Ringgit Malaysia at the rates of exchange approximate to those ruling at the balance sheet date. Transactions during the year are converted at rates of exchange ruling on the transaction dates. Foreign exchange differences are taken to the profit and loss account. 2.9 Deferred Taxation Deferred taxation is provided on the liability method for all material timing differences except where no liability is expected to arise in the foreseeable future. Deferred tax benefits are only recognised when there is a reasonable expectation of realisation in the near future Investments Investments held for long term purpose are stated at cost less any provision for diminution in value which, in the opinion of the directors, is permanent in nature Acccounting for Leases Lease payments classified as finance leases are recorded at the fair value of the leased asset at the beginning of the duration of the lease. The amount of the leased asset is depreciated over its expected useful life consistent with the depreciation policy the Group adopts for depreciable assets that are owned. The difference between the total minimum lease payments over the duration of the lease and the initial recorded liability which represents the leasing interest, is expensed using Rule 78 method over the accounting years covered by the duration of the lease Cash and Cash Equivalents Cash and cash equivalents consists of cash on hand, balances with banks and highly liquid investments with original maturities of three months or less. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdraft. 23

24 3. Fixed Assets Long term leasehold Equipment, furniture land and Motor and Plant and Laboratory Kitchen Operating Construction- Group building vehicles fittings equipment equipment Renovation equipment utensils in-progress Total Cost At 1 January ,954,727 1,991,229 2,628,598 8,828, ,115 11,367,801 6,038, , ,220 44,543,898 Additions 9, , , ,596 10,900 4,699,665 2,425, , ,276 9,129,967 Disposals (12,040) (177,411) (188,836) (476,596) (629,988) (1,484,871) Transfers 806,220 (806,220) At 31 December ,758,357 1,939,776 3,435,912 9,475, ,015 15,590,870 7,834, , ,276 52,188,994 Accumulated depreciation At 1 January , , ,208 5,366, , , ,670 8,874,170 Charge for the year 200, , , , ,125, ,426 3,790,830 Disposals (70,852) (21,319) (7,604) (62,269) (162,044) At 31 December ,004,539 1,126, ,400 6,117, ,648 1,774,063 1,391,827 12,502,956 Net book value At 31 December ,753, ,548 2,573,512 3,357, ,367 13,816,807 6,442, , ,276 39,686,038 At 31 December ,150,410 1,188,762 2,170,390 3,462,201 99,378 10,711,250 5,477, , ,220 35,669,728 Depreciation charge for the year ended 31 December , , , ,983 21, , ,896 2,823,451 24

25 Equipment, Motor furniture vehicles and fittings Renovation Total Company Cost At 1 January , , ,505 1,402,649 Additions 133, ,556 Disposals (9,275) (9,275) At 31 December , , ,505 1,526,930 Accumulated depreciation At 1 January ,029 21,057 1, ,789 Charge for the year 141,778 70,877 6, ,465 Disposals (618) (618) At 31 December ,807 91,316 8, ,636 Net book value At 31 December , , , ,294 At 31 December , , ,802 1,000,860 Depreciation charge for the year ended 31 December ,778 16,805 1, ,286 The motor vehicles of the Company are acquired under hire purchase and lease arrangements. Fixed assets of the Group costing 4,312,867 (1998 4,486,375) are acquired under hire purchase and lease arrangements. Fixed assets amounting to 1,460,349 (1998 1,499,724) in certain subsidiary companies are not depreciated as they have not commenced operation during the year. Titles of land costing 1,596,420 (1998 1,596,420) of certain subsidiary companies are yet to be issued by the relevant land authority. 25

26 4. Investment In Subsidiary Companies Company Unquoted investment in subsidiary companies, at cost 7,312,379 7,312,379 The subsidiary companies, all incorporated in Malaysia except for Dewina Africa (Pty) Ltd and Zee One Enterprises, Inc. which are incorporated in the Republic of South Africa and United States of America respectively are as follows: Effective Group Name Principal activity Interest Dewina Food Industries Sdn. Bhd. Food manufacturing 100% 100% Dewina Trading Sdn. Bhd. Sale and marketing of food products 100% 100% Dewina Food Services Sdn. Bhd. Food catering 100% 100% Desasiswa Catering Services Sdn. Bhd. Food catering 70% 70% Northern Terrace (M) Sdn. Bhd. Food catering 100% 100% Desatera Sdn. Bhd. Food catering 70% 70% Dewina Host Sdn. Bhd. Food catering 51% 51% Dewina (Japan) Sdn. Bhd. Dormant 100% 100% Delimar Sdn. Bhd. Dormant 70% 70% Dewina YGM Sdn. Bhd. Dormant 60% 60% Dewina Nuruldaya Sdn. Bhd. Dormant 100% 100% Dewina Africa (Pty) Dormant 60% 60% Zee One Enterprises, Inc.#* Dormant 69% _ # The accounts of the subsidiary company were not audited for the period ended 31 December 1999 as it was newly incorporated and Audited by another firm of accountants. * Accounts of subsidiary companies consolidated using management accounts. 5. Stocks Group Raw materials 1,690,612 2,109,639 Work-in-progress 294, ,055 Finished goods 1,754, ,271 Consumable spares 543, ,109 4,282,455 3,691,074 Less: Provision for expired stocks (357,296) 4,282,455 3,333,778 26

27 6. Trade Debtors Group Trade debtors 4,703,798 12,413,103 Less: Provision for doubtful debts (111,866) (3,991,777) 4,591,932 8,421, Amount Due From/(To) Subsidiary Companies Amounts due from and to subsidiary companies are unsecured and have no fixed terms of repayment. The amounts are interest free except for an amount due from certain subsidiary companies amounting to 12,579,356 ( ,421,035) which bears interest at rates ranging from 9.80% to 11.05% ( % to 15.25%) per annum. 8. Hire Purchase And Lease Creditors Group Company Total hire purchase and lease obligations 2,680,428 3,784, , ,455 Interest-in-suspense (507,617) (848,797) (43,998) (77,723) 2,172,811 2,935, , ,732 Analysis of repayments: Repayable within twelve months 757, ,888 88, ,851 Repayable after twelve months 1,415,425 2,141,036 58, ,881 2,172,811 2,935, , , Short Term Borrowings (Unsecured) Group Short term borrowings comprise the followings: Revolving credit 10,000,000 7,800,000 Trust receipts 1,209,533 Bankers acceptances 1,474, ,000 12,683,533 8,490,000 These credit facilities bear interest at rates ranging from 4.10% to 9.75% ( % to 20.00%) per annum. The credit facilities are obtained by way of a corporate guarantee from the Company and a negative pledge over a subsidiary s existing and future unencumbered assets. 27

28 10. Term Loans Group Secured 13,088,126 4,916,667 Unsecured 3,651,207 3,958,305 16,739,333 8,874,972 Analysis of repayments: Repayable within twelve months 507,513 1,391,958 Repayable after twelve months 16,231,820 7,483,014 16,739,333 8,874,972 The secured term loans comprise the following: Securities Term Loan 4,914,580 4,916,667 Secured by way of a debenture 484,135 incorporating a fixed and floating 2,590,012 charge for 8 million over a subsidiary company s present and future assets; and a corporate guarantee by the Company. Term Loan 1,173,741 Secured by way of a debenture 3,925,658 incorporating a fixed and floating charge for 6.5 million over a subsidiary company s present and future assets; and a corporate guarantee by the Company. The secured term loans bear interest at rates ranging from 6.50% to 10.00% ( % to 10.00%) per annum and are fully repayable at their various due dates in 2005 and The unsecured term loans comprise the following: i. term loan with outstanding balance of 1,001,207 (1998 1,229,311) at year end, repayable by 60 monthly instalments of 30,393 commencing February The loan bears interest at 6.50% ( % to 6.00%) per annum and is obtained by way of a corporate guarantee from the Company. ii. An outstanding balance of 2,650,000 (1998 2,650,000) at year end is an amount owing by a subsidiary company to its corporate minority shareholder. The loan bears interest at rates ranging from 9.80% to 11.05% ( % to 15.25%) per annum and not repayable within the next twelve months. 11. Bank Overdraft (Unsecured) Group The bank overdraft is obtained by way of a corporate guarantee from the Company and a negative pledge over a subsidiary s assets and bears interest at rates ranging from 8.30% 10.05% ( % 14.30%) per annum. 28

29 12. Expenditure Carried Forward Group Company Cost Preliminary expenses Balance at 1 January 417, ,420 23,680 23,680 Additions 32,155 4,579 Balance at 31 December 450, ,999 23,680 23,680 Pre-operating expenses Balance at 1 January 3,225,625 1,613,539 Additions 826,516 1,612,086 Balance at 31 December 4,052,141 3,225,625 Deferred promotional development Balance at 1 January 661, ,839 Additions Balance at 31 December 661, ,839 Trademark registration expense Balance at 1 January 29,142 29,142 Additions Balance at 31 December 29,142 29,142 Franchise fees Balance at 1 January 186, ,296 Additions Balance at 31 December 186, ,296 Total 5,379,572 4,520,901 23,680 23,680 Accumulated amortisation Balance at 1 January 1,867, ,224 18,944 14,209 Charge during the year 591, ,030 4,736 4,735 Written off during the year 270, ,457 Balance at 31 December 2,729,295 1,867,711 23,680 18,944 Net of amortisation 2,650,277 2,653,190 4,736 Group Included in pre-operating expenses are: Audit fees 2,250 2,250 Interest hire purchase 3,629 Depreciation 9,574 29

30 13. Share Capital Group and Company Ordinary shares of 1 each: Authorised 25,000,000 25,000,000 Issued and fully paid 19,000,000 19,000, Turnover Group Company Invoiced value of goods sold less returns and discounts 31,444,613 21,511,698 Administrative charges receivable from subsidiary companies 298, ,975 31,444,613 21,511, , ,975 30

31 15. Loss Before Taxation Loss before taxation is arrived at: Group Company After charging: Auditors remuneration 55,000 50,500 8,000 8,000 Depreciation (Note 3) 3,790,830 2,813, , ,286 Office rental 180, ,000 Equipment rental 84,186 78,849 5,815 6,620 Premises rental 2,130,545 1,593,686 Expenditure carried forward amortised 591, ,030 4,736 4,735 Expenditure carried forward written off 270, ,457 Directors remuneration 393, , , ,415 Interest Term loans 773, ,568 Hire purchase and lease 334, ,522 33,725 33,725 Overdrafts 294, ,081 Short term borrowings 898,319 1,113,335 _ Subsidiary companies 564,371 Provision for doubtful debts 111,866 2,491,777 Stocks written off 437, ,834 Provision for expired stocks 357,296 Franchise royalty fees 282, ,254 Fixed assets written off 473,431 Loss on disposal of fixed assets 6,990 Loss on foreign exchange 102,695 and crediting: Rental income 307, ,580 Interest income fixed deposit 35, ,149 3, ,755 subsidiary companies 1,001,899 1,538,671 Insurance recovered 154,885 Gain on foreign exchange 532,504 Gain on disposal of investment 450,000 Gain on disposal of fixed assets 79,363 The estimated monetary value of other benefits not included in the above, received by the directors of the Group is 57,600 ( ,100) and by the directors of the Company is 24,000 ( ,000). 31

32 16. Taxation Group Current year 86,000 Overprovision in previous years (43,011) 42,989 No income taxation is provided by the Group for the year ended 31 December 1999 in view of the tax waiver for 1999 pursuant to Income Tax (Amendment) Act, Loss Per Ordinary Share The calculation of loss per ordinary share is based on the following: Group Loss attributable to shareholders (10,922,264) (11,708,039) Number of ordinary shares in issue 19,000,000 19,000,000 Loss per ordinary share (sen) (57) (62) 18. Deferred Taxation Subject to the agreement by the Inland Revenue Board and the finalisation of the tax computation, the Group has potential deferred tax benefits not taken up in the accounts under the liability method in respect of the following items: Group Company Unutilised tax losses 17,981,000 13,311, , ,000 Other timing differences 7,315,000 5,859, , , Significant Related Party Transactions Company Interest income from subsidiary companies 1,001,899 1,538,671 Administrative charges receivable from subsidiary companies 298, ,975 Rental expense payable to a subsidiary company 180, ,000 Interest payable to subsidiary company 564,371 The directors of the Company are of the opinion that the above transactions have been entered into in the normal course of business and have been established under negotiated terms. 32

33 20. Capital Commitments Group Approved but not contracted for 5,400, Contingent Liabilities Company Guarantees given to banks for facilities granted to subsidiary companies 47,080,000 43,540,000 Performance bond contracted for a subsidiary company 1,400,000 In 1997 an ex-distributor in Australia filed a legal claim of AUD1,130,000 against a subsidiary company for alleged negligent misrepresentations. The directors of the Company as advised by the subsidiary company s solicitors are of the opinion that the Company has reasonable prospects of success in defending the claim and had filed a counter claim for 4,680,000 in the Malaysian High Court. As such, no provision has been made in the accounts. 22. Segmental Reporting No segmental reporting by industry and geographical segment has been provided as the Group is primarily involved in food manufacturing and catering activities and operates in Malaysia only. 33

34 Statistics Of Shareholdings as at 15 May 2000 Share Capital And Voting Rights Authorized Share Capital : 25,000,000 Issued and Fully Paid-Up Capital : 19,000,000 Class of Share : Ordinary shares of 1 each Voting Rights : On a show of hand, one vote for every shareholder : On a poll, one vote for every ordinary share held Analysis By Size Of Shareholdings As At 15 May 2000 No. of % of % of Shareholders/ Shareholders/ No. of Issued Size of Shareholdings Depositors Depositors Shares Held Capital 1 1, ,132, ,001 5, ,247, ,001 10, , Above 10, ,705, Total ,000, Substantial Shareholders According to the Register of Substantial Shareholders, the substantial shareholders of the Company as at 15 May 2000 are as follows : No. of Shares Held Direct Indirect Note % of Name of Shareholders Interest Interest Issued Capital 1. Ibrahim bin Haji Ahmad 5,572, Mohd Ibrahim bin Mohd Zain 3,241, Tatsunobu Abe 1,054, Lembaga Tabung Haji 1,000, Kamaluddin bin Abdullah 988, Note 1 Shares held through: No. of Shares UMB Nominees (Tempatan) Sdn Bhd 300,000 Oriental Nominees (Tempatan) Sdn Bhd 2,040,000 RHB Capital Nominees (Tempatan) Sdn Bhd 800,000 Note 2 Shares held through: Mayban Securities Nominees (Tempatan) Sdn Bhd 1,800,000 Note 3 Shares held through: UB Nominees (Tempatan) Sdn Bhd 988,000 34

35 As Bare Trustee Note No. of Shares % of Issued Capital Mayban Securities Nominees (Tempatan) Sdn Bhd 1 1,904, UB Nominees (Tempatan) Sdn Bhd 2 988, Note 1: Bare trustee for Mohd Ibrahim bin Mohd Zain for 1,800,000 shares. Note 2: Bare trustee for Kamaluddin bin Abdullah for 988,000 shares. Twenty Largest Shareholders In accordance with the Record of Depositors as at 15 May No. Name Number of Percentage of Ordinary Shares Total Shares 1. Ibrahim bin Haji Ahmad 2,432, Oriental Nominee (Tempatan) Sdn Bhd 2,040, Pledged Securities Account for Ibrahim bin Haji Ahmad 3. Mayban Securities Nominees (Tempatan) Sdn Bhd 1,800, Pledged Securities Account for Mohd Ibrahim bin Mohd Zain 4. Mohd Ibrahim bin Mohd Zain 1,441, Tatsunobu Abe 1,054, Lembaga Tabung Haji 1,000, UB Nominees (Tempatan) Sdn Bhd 988, Pledged Securities Account for Kamaluddin bin Abdullah 8. RHB Capital Nominees (Tempatan) Sdn Bhd 800, Pledged Securities Account for Ibrahim bin Haji Ahmad 9. UMB Nominees (Tempatan) Sdn Bhd 300, Pledged Securities Account for Haji Ibrahim Haji Ahmad 10. Faridah Rozilawati binti Abd Razak 288, Mayban Trustees Berhad 200, Amanah Saham Bank Islam Tabung Pertama 12. HLG Nominee (Tempatan) Sdn Bhd 188, Pledged Securities Account for Harjinder Singh Bal 13. PRB Nominees (Tempatan) Sdn Bhd 170, Rubber Industry Smallholders Development Authority 14. Othman bin Mohd Noor 158, AMSEC Nominees (Tempatan) Sdn Bhd 152, Pledged Securities Account for Foo Sai Heng 16. Syed Abdul Rashad bin Syed Ali 134, Yee Chek Mun 105, AMSEC Nominees (Tempatan) Sdn Bhd 80, Pledged Securities Account for Low Wei Keong 19. Ng Boon Hock 63, Ameer bin Shaik Mydin 61, Total 13,454,

36 Statistics Of Shareholdings... cont d as at 15 May 2000 Directors Shareholdings As At 21 January 2000 Name Direct Indirect Total % Dato Mohamed bin Sulaiman 5,000 5, Hj. Ibrahim b. Hj. Ahmad 4,822,001 (Note 1) 4,822, Kamaluddin Abdullah 4,905,998 (Note 2) 4,905, Tatsunobu Abe 1,154,001 1,154, Steven Foong Choong Hong 1,000 1, Brig. Gen (R) Dato Yaacob bin Hj Salleh 0.00 Dato Motohiro Otsuka 0.00 Shinya Abe 0.00 Note 1 Shares held through: UMB Nominee (Tempatan) Sdn Bhd 300,000 Oriental Nominee (Tempatan) Sdn Bhd 2,090,000 Note 2 Shares held through: UB Nominees (Tempatan) Sdn Bhd 4,105,997 RHB Capital Nominees Sdn Bhd 800,000 36