THREE-A RESOURCES BERHAD M Incorporated in Malaysia

Transcription

1 R THREE-A RESOURCES BERHAD M Incorporated in Malaysia A n n u a l R e p o r t

2 C O N T E N T S CORPORATE INFORMATION BOARD OF DIRECTORS PROFILE CHAIRMAN S STATEMENT CORPORATE GOVERNANCE STATEMENT AUDIT COMMITTEE REPORT FINANCIAL STATEMENTS SUMMARY OF LANDED PROPERTIES SHAREHOLDINGS STATISTICS NOTICE OF ANNUAL GENERAL MEETING PROXY FORM VISION To excel as one of the GLOBAL MARKET LEADERS in the manufacture of FOOD AND BEVERAGE ingredients MISSION To excel as one of the GLOBAL QUALITY BRANDS in the industries

3 CORPORATE INFORMATION Board of Directors Dato Mohd Nor Bin Abdul Wahid Non-Independent Executive Chairman Fang Chew Ham Deputy Executive Chairman & Managing Director Fong Chu Tong Chu King Non-Independent Executive Director Foong Chiew Fatt Non-Independent Executive Director Fong Chiew Hean Non-Independent Non-Executive Director Chew Eng Chai Independent Non-Executive Director Tan Chon Tan Kim Tieng Independent Non-Executive Director Dato Samsudin Bin Abu Hassan Independent Non-Executive Director Fang Siew Yee Non-Independent Executive Director 2 Secretaries Ng Bee Lian (MAICSA ) Tan Enk Purn (MAICSA ) Audit Committee Chew Eng Chai - Chairman Tan Chon Tan Kim Tieng Dato Mohd Nor Bin Abdul Wahid Nomination Committee Dato Samsudin Bin Abu Hassan - Chairman Chew Eng Chai Fong Chu Tong Chu King Remuneration Committee Tan Chon Tan Kim Tieng - Chairman Chew Eng Chai Dato Mohd Nor Bin Abdul Wahid GENERAL INFORMATION THREE-A RESOURCES BERHAD (TARB) is principally an investment holding company with one wholly-owned subsidiary, San Soon Seng Food Industries Sdn Bhd (SSSFI). SSSFI is involved in the manufacturing of the following products:- Caramel Colour (Full Range) Soya Protein Sauce (Hydrolysed Vegetable Protein; HVP) Natural Fermented Vinegar Glucose Syrup & Maltose Syrup Caramel Powder HVP Powder Soya Sauce Powder Today, SSSFI is well known to be one of the leaders in the manufacture of Food & Beverage Ingredients.

4 Registered Office AL 308, Lot 590 & Lot 4196 Jalan Industri, U 19 Kampung Baru Seri Sungai Buloh Selangor Darul Ehsan Malaysia Tel : Fax : Website : Company No M Principal Bankers OCBC Bank (Malaysia) Berhad Bumiputra-Commerce Bank Berhad Sponsor AmMerchant Bank Berhad 21st Floor Bangunan AmBank Group 55, Jalan Raja Chulan Kuala Lumpur Tel : Fax : Website : Auditors Ernst & Young Chartered Accountants Level 23A, Menara Milenium Jalan Damanlela Pusat Bandar Damansara Kuala Lumpur Tel : Fax : Share Registrar Signet Share Registration Services Sdn Bhd Level 26 Menara Multi Purpose Capital Square No.8, Jalan Munshi Abdullah Kuala Lumpur Tel : Fax : Stock Exchange Listing MESDAQ Market Bursa Malaysia Securities Berhad Stock Code Name 3A 3 TARB Group has ventured into countries around the world and the Group believes that the export markets shall provide the much needed earnings growth over the next one to two years. All products produced by TARB Group are HALAL certified by the Islamic Development Department of Malaysia. SSSFI was also awarded the International Acclaimed ISO 9001:2000 with UKAS (United Kingdom Accreditation System) by SIRIM for Quality Management System. TARB Group is well recognised for its quality products and services to its customers. The Group enhances to further its product range and always strive for continual improvements to meet customers satisfaction; as illustrated in the Group s ISO Quality Policy as below: Safe & Quality Product Satisfaction of Customer Strive for Continual Improvement

5 BOARD OF DIRECTORS PROFILE DATO MOHD NOR BIN ABDUL WAHID (51 YEARS OF AGE) MALAYSIAN Non-Independent Executive Chairman. Appointed to the Board on 10 May Dato Mohd Nor holds a MBA in Finance from the American World University, Iowa, USA. He started his career with Bank Bumiputra Malaysia Berhad and was with the Bank Bumiputra Group for 23 years, rising from the position of Executive Trainee in the Bank s wholly owned subsidiary, Kewangan Bumiputra Berhad to a position as one of the Senior General Manager of the Bank, in-charged of Commercial Banking Division. He was also appointed as Director of several subsidiaries of the Bank. His experience includes both conventional and interest-free (Islamic) banking. Presently, Dato Mohd Nor is the Managing Partner of Mohd Nor, Zaki & Partners, a financial management consultants firm. He also holds directorship in Setron (Malaysia) Berhad., Saship Holdings Bhd. and Aikbee Resources Bhd. Dato Mohd Nor has attended all four Board Meetings during the financial year ended 31 December He has no conflict of interest with the Group and has not been convicted of offences within the past ten years. 4 FANG CHEW HAM (56 YEARS OF AGE) MALAYSIAN Deputy Executive Chairman cum Managing Director. Appointed to the Board on 10 May Mr Fang Chew Ham started the family business producing liquid caramel for more than 25 years ago. In 1978, he set up the Soon Seng Sauce Mixture and Food industry to manufacture Caramel Colour and this partnership was subsequently converted into San Soon Seng Food Industries Sdn Bhd (SSSFI) in 1989; and became a wholly owned subsidiary of Three-A Resources Berhad on 30th April Equipped with vast experience in the business of sauces and Caramel Colour, he heads the management of SSSFI. His leadership together with the expanded management personnel will result in broad and flexible goal setting, to meet the quality of the ever changing demands and the development of further products related to the manufacturing of soy sauce. Mr Fang is the co-opted member of The Working Group of Sauces which prepared the Malaysian Standard MS 513:1993 (SIRIM) Specification for Caramel in the Manufacture of Soya Sauce. Mr. Fang Chew Ham has attended all four Board Meetings during the financial year ended 31 December No conflict of interest with the Group and he is a brother of Fong Chu Tong Chu King, Foong Chiew Fatt and Fong Chiew Hean, all of whom are the current Directors of the Group. He has not been convicted of offences within the past ten years. FONG CHU TONG CHU KING (59 YEARS OF AGE) MALAYSIAN Non-Independent Executive Director and General Manager of the Group. Appointed to the Board on 10 May Mr Fong Chu King joined SSSFI in May 2000 after his retirement from Megasteel Mills Sdn Bhd. Mr Fong who graduated with a Bachelor of Science in Chemical Engineering from the National Taiwan University; is the elder brother of Mr Fang Chew Ham. A qualified Professional Engineer with Lembaga Jurutera Malaysia and a member of Institution Engineer Malaysia, he has more than 25 years of working experience in manufacturing industries. In his 20 years of service with the Lion Group of Companies, he held a number of positions including Manager of Amsteel Mills Sdn Bhd, General Manager of Megasteel Mills Sdn Bhd. As an Executive Director and General Manager, he is fully in-charged of the operation and plant expansion of TARB Group. Mr. Fong Chu King has attended all four Board Meetings during the financial year ended 31 December No conflict of interest with the Group and he is a brother of Fang Chew Ham, Foong Chiew Fatt and Fong Chiew Hean, all of whom are the current Directors of the Group. He has not been convicted of offences within the past ten years. FOONG CHIEW FATT (71 YEARS OF AGE) MALAYSIAN Non-Independent Executive Director. Appointed to the Board on 10 May Mr Foong Chiew Fatt was one of the founders of SSSFI with his two brothers. He brings with his vast experience in the sauce making industry and is one of the contributors to the long term strategy of the Group. Mr. Foong Chiew Fatt has attended all four Board Meetings during the financial year ended 31 December No conflict of interest with the Group and he is a brother of Fang Chew Ham, Fong Chu Tong Chu King and Fong Chiew Hean, all of whom are the Directors of the Group. He has not been convicted of offences within the past ten years.

6 FONG CHIEW HEAN (67 YEARS OF AGE) MALAYSIAN Non-Independent Non-Executive Director. Appointed to the Board on 10 May Mr Fong Chiew Hean was one of the initial founders of SSSFI. With vast experience in the sauce making industry, he actively contributes to the long term success of the Group. Mr. Fong Chiew Hean has attended all four Board Meetings during the financial year ended 31 December No conflict of interest with the Group and he is a brother of Fang Chew Ham, Fong Chu Tong Chu King and Foong Chiew Fatt, all of whom are the current Directors of the Group. He has not been convicted of offences within the past ten years. FANG SIEW YEE (24 YEARS OF AGE) MALAYSIAN Non-Independent Executive Director. Appointed to the Board on 03 March Ms Fang Siew Yee joined San Soon Seng Food Industries Sdn Bhd in 2001 as Assistant Manager and responsible for the administrative and purchasing matter of the Group. She graduated with an Honours Degree in Bachelor of Business Administration (Management) in 2001 from the University of Greenwich, London U.K. In view of her appointment on 03 March 2004, she has not attended any Board Meeting during the financial year ended 31 December She is the daughter of Fang Chew Ham, Deputy Executive Chairman cum Managing Director of the Group. Other than her position as Non-Independent Executive Director, she does not have any conflict of interest with the Group nor any business arrangement involving the Group. She has not been convicted of offences within the past ten years. 5 CHEW ENG CHAI (54 YEARS OF AGE) MALAYSIAN Independent Non-Executive Director. Appointed to the Board on 17 June Mr Chew Eng Chai is a fellow of the Institute of Chartered Accountants in England and Wales. He is also a member of the Malaysian Institute of Accountants as well as a member of the Malaysian Institute of Certified Public Accountants. Mr Chew was formerly a Director of Yeo Hiap Seng (Malaysia) Berhad, a company he had joined since He has more than 27 years experience in the food & beverage industry. Mr. Chew Eng Chai has attended all four Board Meetings during the financial year ended 31 December He has no conflict of interest with the Group and has not been convicted of offences within the past ten years. TAN CHON TAN KIM TIENG (65 YEARS OF AGE) MALAYSIAN Independent Non-Executive Director. Appointed to the Board on 17 June Mr Tan Chon Sing was graduated in 1963 with a Bachelor of Commerce in Accounting from Nanyang University, Singapore. He was a banker for eleven years before joining the stockbroking industry in He was admitted as a member of KLSE in 1987 and appointed as an Executive Director of Seremban Securities Sdn Bhd (now known as Malpac Management Sdn Bhd) until November He is currently a director of Malpac Holding Berhad and also sits on the Board of several other private limited companies. Mr. Tan Chon Sing has attended all four Board Meetings during the financial year ended 31 December He has no conflict of interest with the Group and has not been convicted of offences within the past ten years. DATO SAMSUDIN BIN ABU HASSAN (48 YEARS OF AGE) MALAYSIAN Independent Non-Executive Director. Appointed to the Board on 30 August Dato Samsudin is a fellow member of the Chartered Institute of Management Accountants (UK). Dato Samsudin has extensive experience in various businesses and a well-known corporate figure. After his graduation in London in 1980, he started his career as an Investment Officer in a local institution. In a period of more than twenty years thereafter, he has served in various positions in several private and public listed companies including as CEO, Director and Executive Chairman. Dato Samsudin currently sits on the Board of Seacera Tiles Berhad and is the President of the Malaysian Furniture Industry Council (MFIC) and a Trustee-Director of Malaysian Furniture Promotion Council (MFPC). Dato Samsudin has attended three Board Meetings out of four during the financial year ended 31 December He has no conflict of interest with the Group and has not been convicted of offences within the past ten years.

7 CHAIRMAN S STATEMENT DATO MOHD NOR BIN ABDUL WAHID NON-INDEPENDENT EXECUTIVE CHAIRMAN On behalf of the Board of Directors, I am pleased to present the Annual Report and Financial Statements of the Group and of the Company for the year ended 31 December PERFORMANCE REVIEW For the year 2003, the Group s revenue grew by 70% to RM40.5 million as compared to the preceding year of RM23.7 million. The profit before taxation for the Group also increased to RM3.2 million from RM2.5 million achieved in the year The better performance is a result of teamwork and co-operation among all the management and staff member of the Group. All the products of the Group enjoyed commendable growth as various...continuing effort and emphasis placed on research and development initiatives to improve the products quality of the Group. strategies had been adopted and implemented. The Group had carried out aggressive sales and marketing strategies and since captured numerous new customers locally and abroad. Another is the continuing effort and emphasis placed on research and development initiatives to improve the products quality of the Group.

8 DIVIDEND The Board of Directors does not recommend the payment of any dividend for the financial year ended 31 December BUSINESS DEVELOPMENTS Further to the successful launching of our new products consisting of caramel powder, hydrolised vegetable protein powder and soya sauce powder during the year 2003, the Group has embarked 7 on a new project to produce Maltodextrine powder products. The production of the powder products last year had provided us with the technology, skills and experience in producing the Maltodextrine powder products. The Maltodextrine powder project will broaden the product range of the Group and provides the synergies to the production plant as well. With the entry of the new products, the competitiveness of the Group will enhance tremendously.

9 CHAIRMAN S STATEMENT PROSPECTS The operating business conditions for the Group continue to be challenging. Nevertheless, we continue to strive in the development of both our customer and products base. The quality of our products is the element that differentiates us from our competitors and for us to have a competitive advantage. We continue to do our best in this area to impress upon our customers. 8 Strategies are formed to introduce our new and existing products to our customers and we will continue to improve on the services provided. We are aiming to broaden our products base to the existing customers while penetrating into new markets. APPRECIATION unwavering support in the Group. My gratitude to our shareholders, customers, business associates and the relevant authorities for their continued confidence in and To the dedicated management and staff, my sincere appreciation for their invaluable contribution, commitment and dedication in making this a successful year for the Group. DATO MOHD NOR BIN ABDUL WAHID Executive Chairman

10 CORPORATE GOVERNANCE STATEMENT INTRODUCTION The Board of Directors ( Board ) of Three-A Resource Berhad is pleased to report on the application by the Group of the principles contained in the Malaysian Code on Corporate Governance ( Code ) and the extent of compliance with the best practices of the Code as required under the Listing Requirements ( LR ) of the Bursa Malaysia Securities Berhad. BOARD OF DIRECTORS Board Responsibility The Board has always recognised the need for good corporate governance to build and enhance long-term shareholders value. The Board has the overall responsibility for corporate governance of the Group; including its effective performance and control of the Company and of the Group and monitoring on issues relating to strategy and financial matters. Composition of the Board The Board currently has nine (9) members, comprising five (5) Non-Independent Executive Directors (including Non-Independent Executive Chairman and Managing Director), one (1) Non- Independent Non-Executive Directors, three (3) Independent Non-Executive Directors which complies with the Bursa Malaysia Securities Berhad /MESDAQ Listing Requirements that requires a minimum of two (2) or one-third (1/3) of the Board to be independent directors. Collectively, the Directors, comprising members from a wide background, bring considerable range of business, financial and technical experience to the Group. The Executive Directors have primary responsibilities for managing the Group s day-to-day operations and together with the other Directors, to ensure that the strategies are fully discussed and examined, and take into consideration the long-term interests of the various stakeholders including shareholders, employees, customers, suppliers and the various communities in which the Group conducts its business. In addition to the role and guidance of Independent Non-Executive Directors, each Director nevertheless brings an independent judgement to bear on issues of strategy, performance, resources and standards of conduct. 9 There is a balanced Board with the presence of independent directors who are individuals of credibility and who demonstrate objectivity and robust independence of judgement. All decisions of the Board are based on the decision of the majority and no single Board member can make any decisions on behalf of the Board, unless duly authorised by the entire Board. The good size and balanced composition ensures that no individual or a group of individuals dominate the decision making process and enable the Board to effectively discharge its principal responsibilities as set out in the Code. A brief profile of each of the Directors is presented on pages 4 and 5 of this Annual Report. Board Meetings During the financial year ended 31 December 2003, four (4) board meetings were held. Details of attendance of each Director at the Board Meetings held under the financial year are set out below:...the need for good corporate governance to build and enhance long-term shareholders value Name of Director Total Meetings Persentage of Attended Attendance (%) Dato Mohd Nor Bin Abdul Wahid 4/4 100 Fang Chew Ham 4/4 100 Foong Chiew Fatt 4/4 100 Fong Chiew Hean 4/4 100 Fong Chu Tong Chu King 4/4 100 Chew Eng Chai 4/4 100 Tan Chon Tan Kim Tieng 4/4 100 Dato Samsudin Bin Abu Hassan 3/4 75 Fang Siew Yee * - - Note: * Appointed on 03 March 2004

11 All the Directors have complied with the minimum 50% attendance at Board meetings during the financial year as stipulated by the Listing Requirements of Bursa Malaysia Securities Berhad. Scheduled Board Meetings are structured with a pre-set agenda. The Board members are regularly updated by the Company Secretary on new statutory and regulatory changes to duties and responsibilities of the Directors. Supply of Information Board reports and Minutes of the meetings are circulated prior to the Board meetings to give the Directors time to consider and deliberate on the issues to be raised at the Board meetings and to enable the Directors to obtain further information and explanation, where necessary, before the meetings. The Board reports provide, amongst others, periodical financial and corporation information, significant operational, financial and corporate issues, performance of the various products manufactured by the Group and management proposals that require Board s approval. In addition, the Directors may also seek independent professional advice, at the Company s expenses, if required. Directors may also consult with the Executive Directors and other Board members prior to seeking any independent professional advice. 10 Directors Training All the Directors have attended the Mandatory Accreditation Programme conducted by Research Institute of Investment Analysts Malaysia as required under the Listing Requirements of MESDAQ on training for Directors. Directors also attend other continuous education programmes and seminars as required under the Listing Requirements of Bursa Malaysia Securities Berhad. Appointment of Directors The appointment of any additional Director is made as and when it is deemed necessary by the existing Board with due consideration given to the mix of expertise and experience required for an effective Board. The Nomination Committee is responsible for identifying and recommending to the Board suitable nominees for appointment to the Board and Board Committees. Board Committees The Board of Directors has delegated specific responsibilities to three (3) sub-committees, namely the Audit Committee, Remuneration Committee and Nomination Committee, in order to enhance business and operational efficiency. The terms and reference of each Committee have been approved by the Board and, where applicable, comply with the recommendation of the Code. These Committees operate within clearly defined terms of reference. a) Audit Committee The Group has an Audit Committee whose composition meets the MESDAQ s Listing Requirements i.e. independent directors forming the majority and a member that is a qualified accountant. The Audit Committee meets at least four (4) times annually to review the Company s and the Group s financial reporting, the nature, scope and results of audit reviews. During the year ended 31 December 2003, a total of four (4) Audit Committee meetings were held. The Audit Committee meets periodically to carry out its functions and duties pursuant to its terms of reference. Other board members also attend meetings upon the invitation of the Audit Committee. The members and terms of reference of the Audit Committee of the Group are set out on page 13 and 14 of the Annual Report.

12 b) Remuneration Committee The Group s Remuneration Committee was set up in November The Group has adopted the objectives as recommended by the Malaysian Code on Corporate Governance to determine the remuneration for Directors so as to ensure that the Group attracts and retains the Directors needed to run the Company successfully. The members of the Remuneration Committee during the year ending 31 December 2003, the majority of whom are Independent Directors, comprises the following: - Tan Chon Tan Kim Tieng (Independent Non-Executive Director) - Chew Eng Chai (Independent Non-Executive Director) - Dato Mohd Nor Bin Abdul Wahid (Non-Independent Executive Chairman) c) Nomination Committee The Nomination Committee was set up in November 2002, recommends suitable nominees for appointment as Directors. In addition the Nomination Committee assesses the effectiveness of the Board and committees of the Board. The members of the Nomination Committee during the year ending 31 December 2003, the majority of whom are Independent Director as follows: - Dato Samsudin Bin Abu Hassan (Independent Non-Executive Director) - Chew Eng Chai (Independent Non-Executive Director) - Fong Chu Tong Chu King (Non-Independent Executive Director) 11 Re-Election of Directors In accordance with the Company s Articles of Association (Articles), at the first Annual General Meeting of the Company, all Directors shall retire from office and at the Annual General Meeting in every subsequent year, at least one-third (1/3) of the Directors for the time being shall retire from office and be eligible for re-election PROVIDED ALWAYS that all Directors except a Managing Director appointed for a fixed period pursuant to these Articles shall retire from office once at least in each three (3) years but shall be eligible for re-election. Directors over seventy years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, Directors Remuneration The Remuneration Committee is responsible for making recommendations to the Board on the remuneration packages of executive Directors and members of Board Committees. In making recommendations to the Board, information provided by independent consultants and appropriate survey data are taken into consideration. The Board as a whole determines the level of fees of non-executive Directors and executive Directors. Directors fees are approved at the Annual General Meeting by the shareholders. Directors do not participate in decisions regarding their own remuneration packages. Details of the remuneration of Directors of the Company comprising remuneration received / receivable from the Company and subsidiary company during the financial year ended 31st December 2003 are set out on pages 39 and 40 of the audited Financial Statements in this Annual Report.

13 INVESTOR RELATIONS AND SHAREHOLDER COMMUNICATION The Group recognises the need and importance to maintain a constructive and effective communication with all shareholders, investors and the public in general in ensuring their confidence towards the Company. The Group has established a website ( for shareholders and the public to access information related to the Group. Investors and members of the public who wish to assess corporate information, financial statements, news and events related to the Group can channel their queries through , via the Group s website or contact the following personnel: NAME CONTACT NO. ADDRESS FANG SIEW YEE jessica@three-a.com.my FONG PENG FAI pffong@three-a.com.my 12 ACCOUNTABILITY AND AUDIT Financial Reporting In presenting the annual audited financial statements and quarterly announcements of results to shareholders, the Directors take responsibility to present a balanced and understandable assessment of the Group s financial position and prospects. Following discussions with the external auditors, the Directors consider that the Company uses appropriate accounting policies that are consistently applied and supported by reasonable as well as prudent judgements and estimates and that all accounting standards which they consider applicable have been followed during the preparation of the financial statements. The Directors are responsible for ensuring that the Company keeps the accounting records and are disclosed with reasonable accuracy which enables them to ensure that the financial statements comply with the Companies Act, They have the general responsibility for taking such steps to safeguard the assets of the Group and to detect and prevent fraud as well as other irregularities. The Audit Committee of the board assists by scrutinising the information to be disclosed, to ensure accuracy and adequacy. A statement by the Board on its responsibilities for preparing the financial statements is set out on page 19 of this Annual Report. Internal Control The Board recognises the importance of sound internal controls and risk management practices to good corporate governance. The Board is considering outsourcing the services of Internal Audit; taking into consideration of their scopes of works and service fees. Relationship with the Auditors The Company through the Audit Committees has an appropriate and transparent relationship with the external auditors. In the course of the audit of the Group s financial statements, the external auditors have highlighted to the Audit Committee and the Board, matters that require the Board s attention. The external auditors are invited to attend the Audit Committee meetings to present their audit plan and the auditors report on the audited financial statements.

14 AUDIT COMMITTEE REPORT ACTIVITIES OF THE AUDIT COMMITTEE During the year, the Audit Committee carried out its duties and responsibilities as set out in its terms of reference. In performing its function, the Audit Committee reviewed the unaudited quarterly and half-year results, and the annual audited financial statements of the Company and the Group prior to their approval by the Board. It also reviewed the new accounting standards applicable in the preparation of the consolidated financial statements and the additional regulatory disclosure requirements. The Audit Committee reviewed all related party transaction ( RPTs ) and the Group s procedures for monitoring and reviewing of RPTs to satisfy itself that the procedures were sufficient to ensure that the RPTs were not more favourable to the related parties than those generally available to the public and also not detrimental to interests of minority shareholders. The Audit Committee comprises of the following members and details of attendance of each member at the Committee meeting held during the financial year ended 31 December 2003 are as follows:- Composition of the Committee CHEW ENG CHAI TAN CHON TAN KIM TIENG DATO MOHD NOR BIN ABDUL WAHID Chairman, Independent Non-Executive Director Member of the Malaysian Institute of Accountants Member, Independent Non-Executive Director Member, Non-Independent Executive Chairman Attendance at the Committee Meetings There were four (4) Audit Committee meetings held during the financial year ended 31 December The attendance records of the Audit Committee members are as follows:- CHEW ENG CHAI TAN CHON TAN KIM TIENG DATO MOHD NOR BIN ABDUL WAHID All four (4) meetings All four (4) meetings All four (4) meetings 13 TERMS OF REFERENCE Objectives i. Provide assistance to the Board in fulfilling its fiduciary responsibilities, particularly in the areas relating to the Company and its subsidiary company accounting and management controls, financial reporting and business ethics policies. ii. Provide greater emphasis on the audit function by serving as the focal point for communication between non-committee Directors, the External Auditors, Internal Auditors and the Management and providing a forum for discussion that is independent of the management. It is to be the Board s principal agent in assuring the independence of the Company s external auditors, the integrity to the management and the adequacy of disclosure to shareholders. iii. Undertake such additional duties as may be appropriate and necessary to assist the Board. Duties and Responsibilities In fulfilling its primary objectives, the Audit Committee will need to undertake the following duties and responsibilities as summarised below:- i. To consider the appointment of the external auditors; ii. To review the adequacy of the existing external audit arrangement, with particular emphasis on the nature, scope and approach of the audit and discuss the results of their examination and their evaluation of the system of internal accounting controls; iii. To review the quarterly interim results and annual financial statements with the management prior to them being submitted to the Board. The review shall focus on:- - any changes in accounting policies and practices - major potential risk issues, if any - significant adjustments and issues arising from the audit - the going concern assumption - compliance with the applicable approved accounting standards

15 AUDIT COMMITTEE iv. To review the external auditors audit report on the financial statements and to discuss issues arising from the interim and final audit; v. To review the assistance and co-operation given by the Group, its business units and its officers to external auditors; vi. To review with management on a periodic basis, the Company s general policies, procedures and controls especially in relation to management accounting, financial reporting, risk management and business ethics. vii. To review any related-party transaction and potential conflict of interest situations that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity. viii. To review the external auditors management letter and management s response. Authority The Audit Committee is authorised by the Board to investigate any activity within its terms of reference, it shall have:- i. Explicit authority to investigate any matters within its terms and reference; ii. The resources required to perform its duties; iii. Full access to any employee or member of the management which it requires in the course of performing its duties; iv. Unrestricted access to any information pertaining to the Company and its subsidiary; and v. Direct communication channels with both external auditors and internal auditors; 14 The Committee is also authorised by the Board to obtain outside legal or other independent professional advice it considers necessary and reasonable for the performance of its duties at the cost of the Company. Meeting i. Meetings shall be held at least four (4) times a year. Additional meetings may be called at any time at the discretion of the Chairman of the Committee. ii. The Chairman shall convene a meeting of the Audit Committee if requested to do so by any member, the management or the internal or external auditors to consider any matter within the scope of responsibilities of the Committee. iii. The Company Secretary shall be the Secretary of the Committee. iv. The minutes of each Committee meeting shall be tabled to the Board by the Chairman of the Committee. Membership i. The Committee shall be appointed by the Board from amongst its number and shall comprise not less than three (3) members, the majority of whom are independent non-executive directors. ii. The Chairman of the Committee shall be an independent non-executive director appointed by the Board. iii. No alternate director shall be appointed as member of the Committee. iv. If a member of the Committee resigns or for any other reason ceases to be a member with the result that the number of members is reduced to below three (3), the Board shall within three (3) months of that event, appoint such number of new members as may be required to make up the minimum number of three (3) members. INTERNAL AUDIT FUNCTION The Company does not have an Internal Audit function, but in the midst of considering the use of qualified professionals to review and assess the internal audit function of the Group on an ad-hoc basis. The internal audit function if established, shall be independent of the activities or operation of its audited. The Internal Auditor shall undertake the audit of the Group s operating units; reviewing the units compliance to internal control procedures, highlighting weaknesses and making appropriate recommendations for improvement. The Internal Auditor shall report directly to the Audit Committee.

16 F I N A N C I A L S T A T E M E N T S DIRECTORS REPORT STATEMENT BY DIRECTORS STATUTORY DECLARATION REPORT OF THE AUDITORS BALANCE SHEETS INCOME STATEMENTS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY COMPANY STATEMENT OF CHANGES IN EQUITY CASH FLOW STATEMENTS 27 NOTES TO THE FINANCIAL STATEMENTS

17 DIRECTORS REPORT The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The principal activity of the Company is investment holding. The principal activities of the subsidiary company are disclosed in Note 4 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. RESULTS Group RM Company RM Net profit/(loss) for the year 2,616,938 (162,620) There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements. 16 In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature other than the effects arising from the changes in accounting policies resulting in an increase in the Group's net profit for the year by RM67,000 as disclosed in Note 21 to the financial statements. DIVIDEND No dividend has been declared or paid by the Company since the end of the previous financial year. The directors do not recommend the payment of any dividend for the current financial year. DIRECTORS The names of the directors of the Company in office since the date of the last report and at the date of this report are: Fang Chew Ham Foong Chiew Fatt Fong Chiew Hean Fong Chu Tong Chu King Dato' Mohd Nor Bin Abdul Wahid Chew Eng Chai Tan Chon Tan Kim Tieng Dato' Samsudin Bin Abu Hassan Fang Siew Yee (Appointed on ) Mazlan Bin Ibrahim (Resigned on ) DIRECTORS BENEFITS Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate. Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors as shown in Note 17 to the financial statements or the fixed salary of a full-time employee of the Company or its related corporation) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 22 to the financial statements.

18 DIRECTORS' INTERESTS According to the register of directors' shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporation during the financial year were as follows: The Company Number of Ordinary Shares of RM0.20 each At At Bought Sold Direct interest Fang Chew Ham 48,590,300 - (4,000,000) 44,590,300 Foong Chiew Fatt 7,935, ,000 (600,000) 7,935,480 Fong Chiew Hean 7,935, ,935,480 Fong Chu Tong Chu King 3,967, ,000-4,467,740 Dato' Mohd Nor Bin Abdul Wahid 6,371,000 23,000,000 (24,851,000) 4,520,000 Mazlan Bin Ibrahim 70,000 - (70,000) - Chew Eng Chai 100,000 - (10,000) 90,000 Tan Chon Tan Kim Tieng 169,200 57, ,000 OTHER STATUTORY INFORMATION (a) Before the balance sheets and income statements of the Group and of the Company were made out, the directors took reasonable steps: (i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and 17 (ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise. (b) At the date of this report, the directors are not aware of any circumstances which would render: (i) (ii) the amount written off for bad debts or the amount of the provision for doubtful debts inadequate to any substantial extent; and the values attributed to current assets in the financial statements of the Group and of the Company misleading. (c) (d) (e) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. As at the date of this report, there does not exist: (i) (ii) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability of the Group or of the Company which has arisen since the end of the financial year other than as disclosed in Note 27 to the financial statements.

19 OTHER STATUTORY INFORMATION (CONT D) (f) In the opinion of the directors: (i) (ii) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations as and when they fall due; and no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made. AUDITORS The auditors, Ernst & Young, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors 18 Dato' Mohd Nor Bin Abdul Wahid Fang Chew Ham Kuala Lumpur, Malaysia 21 April 2004

20 STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965 We, Dato' Mohd Nor Bin Abdul Wahid and Fang Chew Ham, being two of the directors of Three-A Resources Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 21 to 45 are drawn up in accordance with applicable Approved Accounting Standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2003 and of the results and the cash flows of the Group and of the Company for the year then ended. Signed on behalf of the Board in accordance with a resolution of the directors Dato' Mohd Nor Bin Abdul Wahid Fang Chew Ham Kuala Lumpur, Malaysia 21 April STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965 I, Fang Chew Ham, being the Director primarily responsible for the financial management of Three-A Resources Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 21 to 45 are in my opinion 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 Fang Chew Ham at Kuala Lumpur in the Federal Territory on 21 April 2004 Fang Chew Ham Before me,

21 REPORT OF THE AUDITORS TO THE MEMBERS OF THREE-A RESOURCES BERHAD (Incorporated in Malaysia) We have audited the accompanying financial statements set out on pages 21 to 45. These financial statements are the responsibility of the Company's directors. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion: (a) the financial statements have been 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) (ii) the financial position of the Group and of the Company as at 31 December 2003 and of the results and the cash flows of the Group and of the Company for the year then ended; and the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and 20 (b) the accounting and other records and the registers required by the Act to be kept by the Company and by its subsidiary of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. We are satisfied that the financial statements of the subsidiary that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The auditors' report on the financial statements of the subsidiary was not subject to any qualification material to the consolidated financial statements and did not include any comment required to be made under Section 174(3) of the Act. Ernst & Young AF: 0039 Chartered Accountants Dato' Nordin Baharuddin No.837/03/06(J) Partner Kuala Lumpur, Malaysia 21 April 2004

22 BALANCE SHEETS AS AT 31 DECEMBER 2003 Group Company Note RM RM RM RM NON-CURRENT ASSETS Property, plant and equipment 3 39,654,100 36,800,428 4,207 4,558 Investment in a subsidiary ,100,000 20,100,000 Amount owing by a subsidiary ,492,613 8,632,873 Reserve on consolidation 6 (4,553,656) (4,553,656) - - CURRENT ASSETS 35,100,444 32,246,772 28,596,820 28,737,431 Inventories 7 3,662,057 3,391, Trade receivables 8 12,312,925 9,930, Other receivables 9 105, ,636 1,160 1,160 Tax recoverable 186, Cash and bank balances 235,657 33,434 1,425 25,874 16,502,592 13,503,506 2,585 27,034 CURRENT LIABILITIES Borrowings 10 10,856,018 10,922, Trade payables 12 2,279,878 1,834, Other payables 13 2,093,612 1,001,225 26,748 29,188 Tax payable - 272, ,229,508 14,030,648 26,748 29,188 NET CURRENT ASSETS/(LIABILITIES) 1,273,084 (527,142) (24,163) (2,154) FINANCED BY: 36,373,528 31,719,630 28,572,657 28,735,277 Share capital 14 28,000,002 28,000,002 28,000,002 28,000,002 Reserves 5,162,337 2,545, , ,275 Shareholders' equity 33,162,339 30,545,401 28,572,657 28,735,277 Borrowings 10 1,657, , Deferred tax liabilities 15 1,553,652 1,059, Non-current liabilities 3,211,189 1,174, ,373,528 31,719,630 28,572,657 28,735,277 The accompanying notes form an integral part of the financial statements.

23 INCOME STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2003 Group Company Note RM RM RM RM Revenue 16 40,501,207 23,780, Cost of sales (31,179,073) (17,519,439) - - Gross profit 9,322,134 6,261, Other operating income 68, ,683-21,402 9,390,388 6,448,001-21,402 Administrative expenses (3,937,960) (2,649,581) (157,616) (67,048) Other operating expenses (1,416,743) (505,882) - - Profit/(loss) from operations 17 4,035,685 3,292,538 (157,616) (45,646) Finance costs 18 (798,048) (702,803) - - Profit/(loss) before taxation 3,237,637 2,589,735 (157,616) (45,646) Taxation 19 (620,699) (825,257) (5,004) - Net profit/(loss) for the year 2,616,938 1,764,478 (162,620) (45,646) 22 Basic earnings per share (sen) The accompanying notes form an integral part of the financial statements.

24 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2003 Share Share Revenue Capital Premium* Reserve # Total Note RM RM RM RM At 1 January (13,700) (13,698) Issue of share capital 14 28,000, ,000,000 Premium of RM0.05 per share on the issue of 39,500,000 ordinary shares of RM0.20 each arising from the Initial Public Offering - 1,975,000-1,975,000 Expenses relating to the Initial Public Offering - (1,180,379) - (1,180,379) Net profit for the year ,764,478 1,764,478 At 31 December ,000, ,621 1,750,778 30,545,401 At 1 January 2003 As previously stated 28,000, ,621 1,863,139 30,657,762 Prior year adjustment (112,361) (112,361) At 1 January 2003 (restated) 28,000, ,621 1,750,778 30,545,401 Net profit for the year - - 2,616,938 2,616,938 At 31 December ,000, ,621 4,367,716 33,162, * Non-distributable # Distributable The accompanying notes form an integral part of the financial statements

25 COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2003 Share Share Accumulated Capital Premium* Losses Total Note RM RM RM RM At 1 January (13,700) (13,698) Issue of share capital 14 28,000, ,000,000 Premium of RM0.05 per share on the issue of 39,500,000 ordinary shares of RM0.20 each arising from the Initial Public Offering - 1,975,000-1,975,000 Expenses relating to the Initial Public Offering - (1,180,379) - (1,180,379) Net loss for the year - - (45,646) (45,646) At 31 December ,000, ,621 (59,346) 28,735,277 Net loss for the year - - (162,620) (162,620) At 31 December ,000, ,621 (221,966) 28,572, * Non-distributable The accompanying notes form an integral part of the financial statements.

26 CASH FLOW STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2003 CASH FLOWS FROM OPERATING ACTIVITIES Group Company Note RM RM RM RM Profit/(loss) before taxation 3,237,637 2,589,735 (157,616) (45,646) Adjustments for: Depreciation 1,997,810 1,161, Provision for doubtful debts 162, , Bad debts written off 5, Provision for employee benefits 86, Unrealised foreign exchange losses - 1, Interest expense 667, , Interest income - (21,402) - (21,402) Operating profit/(loss) before working capital changes 6,157,707 4,464,861 (157,265) (66,931) Working capital changes: Inventories (270,609) (218,427) - - Receivables (2,508,235) (472,450) - (1,160) Payables 1,451,699 (1,118,534) (2,440) (116,510) Bankers acceptances 2,348,376 86, Cash generated from/(used in) operations 7,178,938 2,741,514 (159,705) (184,601) Interest received - 21,402-21,402 Interest paid (667,524) (596,889) - - Income tax paid (585,004) (766,359) (5,004) - 25 Net cash generated from/(used in) operating activities 5,926,410 1,399,668 (164,709) (163,199) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of a subsidiary - (8,177,739) - - Purchase of property, plant and equipment (4,851,482) (4,204,498) - (4,675) Net cash used in investing activities (4,851,482) (12,382,237) - (4,675)