C o n t e n t s. Contents. 2 Corporate Information. 3 Board Of Directors. 4-5 Notice of Annual General Meeting. 6-8 Directors Profile

Transcription

1 Contents 2 Corporate Information 3 Board Of Directors 4-5 Notice of Annual General Meeting 6-8 Directors Profile 9-13 Corporate Governance Statement 14 Additional Compliance Information 15 Statement on Internal Control Audit Committee Chairman s Statement Managing Director s Review C o n t e n t s Directors Report Balance Sheets 33 Income Statements 34 Statements of Changes in Equity Cash Flow Statements Notes to the Financial Statements 75 Statement by Directors 76 Statutory Declaration Report of the Auditors List of Properties Shareholdings Structure Warrant Holdings Structure 87 Statement of Directors Interests 88 Corporate Structure 1

2 Corporate Information C o r p o r a t e I n f o r m a t i o n AUDIT COMMITTEE Dato' Dr. Mohd. Noordin bin Haji Keling (Chairman) Dato' Ali bin Hassan James Wong Kwong Yew Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse Dato' Loh Siew Cheang NOMINATION COMMITTEE Dato' Ali bin Hassan (Chairman) Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse Dato' Dr. Mohd. Noordin bin Haji Keling Dato' Loh Siew Cheang REMUNERATION COMMITTEE Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse (Chairman) Dato' Ali bin Hassan Dato' Dr. Mohd. Noordin bin Haji Keling Dato' Tan Jing Nam Dato' Loh Siew Cheang COMPANY SECRETARIES Chan Keng Yew Choi Siew Fun BOARD OF DIRECTORS Dato' Ali bin Hassan Independent Non-Executive Chairman Aznan bin Abdul Aziz Deputy Chairman / Executive Director Dato' Tan Jing Nam Managing Director James Wong Kwong Yew Executive Director Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse Independent Non-Executive Director Dato' Dr. Mohd. Noordin bin Haji Keling Independent Non-Executive Director Dato' Loh Siew Cheang Non-Independent, Non-Executive Director REGISTERED OFFICE Jalan Desa, Bandar Country Homes, Rawang, Selangor Darul Ehsan Tel: (603) Fax: (603) Website: thbannualreport@tancoresorts.com SHARE REGISTRAR Sectrars Services Sdn. Bhd. (92781-X) No. 28-1, Jalan Tun Sambanthan 3 Brickfields, Kuala Lumpur. Tel: (603) Fax: (603) AUDITORS Monteiro & Heng Chartered Accountants PRINCIPAL BANKERS AmMerchant Bank Berhad (23742-V) Hong Leong Bank Berhad (97141-X) Malayan Banking Berhad (3813-K) STOCK EXCHANGE LISTING Main Board of the Kuala Lumpur Stock Exchange, Malaysia Tan Lee Sing Executive Director 2

3 Board Of Directors B o a r d Dato' Tan Jing Nam Managing Director Dato' Ali bin Hassan Independent Non- Executive Chairman Aznan bin Abdul Aziz Deputy Chairman / Executive Director James Wong Kwong Yew Executive Director O f D i r e c t o r s Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse Independent Non- Executive Director Dato' Dr. Mohd. Noordin bin Haji Keling Independent Non-Executive Director Dato' Loh Siew Cheang Non-Independent, Non-Executive Director Tan Lee Sing Executive Director 3

4 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN THAT the Forty-Fourth Annual General Meeting of the Company will be held in Agong & Madura Hall at Duta Palms Resort & Anglers' Club, Jalan Desa Permai, Bandar Country Homes, Rawang, Selangor Darul Ehsan on Thursday, 26 June 2003 at a.m. for the following purposes: - AGENDA 1. To receive and adopt the audited financial statements for the year ended 31 December 2002 together with the Reports of the Directors and the Auditors thereon (Resolution 1) To approve payment of Directors' Fees of RM144,000 in respect of the financial year ended 31 December (Resolution 2) To re-elect the following Directors retiring in accordance with Article 101 of the Company's Articles of Association : - (a) Mr. James Wong Kwong Yew (Resolution 3) (b) Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse (Resolution 4) (c) Dato' Loh Siew Cheang (Resolution 5) To consider, and if thought fit, to pass the following resolution: - "THAT Dato' Dr. Mohd Noordin bin Haji Keling, who retires in compliance with Section 129(6) of the Companies Act, 1965 be and is hereby appointed as a Director of the Company and to hold office until the conclusion of the next Annual General Meeting of the Company." (Resolution 6) APPROVAL FOR ISSUANCE OF NEW ORDINARY SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 "THAT, subject always to the Companies Act, 1965, the Articles of Association of the Company and approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby empowered pursuant to Section 132D of the Companies Act, 1965 to issue new ordinary shares of RM1.00 each in the Company, from time to time and upon such terms and conditions and for such purposes and to such persons whomsoever as the Directors may, in their absolute discretion deem fit and expedient in the interest of the Company, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued and paid-up share capital of the Company for the time being AND THAT the Directors be and are hereby also empowered to obtain approval from the Kuala Lumpur Stock Exchange for the listing of and quotation for the additional shares issued AND THAT such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company." (Resolution 9) To transact any other business for which due notice has been given in accordance with the Company's Articles of Association and the Companies Act, By Order of the Board Chan Keng Yew Choi Siew Fun Company Secretaries 5. To re-appoint Messrs. Monteiro & Heng as auditors of the Company and to authorise the Board of Directors to fix their remuneration. (Resolution 7) AS SPECIAL BUSINESS: - To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions: - 6. PROPOSED ISSUE OF ANNUAL REPORT IN CD-ROM FORMAT "THAT, subject to the compliance with the requirements of Kuala Lumpur Stock Exchange and any other relevant authorities, if any, the Company be and is hereby authorised to issue its Annual Report in CD-ROM Format for the financial year ending 31 December 2003, and that the approval given by the shareholders of the Company shall be subject to renewal at the next Annual General Meeting." (Resolution 8) Notes: (i) (ii) (iii) (iv) (v) Selangor Darul Ehsan 3 June 2003 A member 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. A member shall be entitled to appoint more than one proxy to attend and vote at the same meeting. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if the appointer is a corporation, either under seal or under the hand of an officer or attorney duly authorised. The instrument appointing a proxy must be deposited at the Company's Registered Office at Jalan Desa, Bandar Country Homes, Rawang, Selangor Darul Ehsan not less than 48 hours before the time for holding the meeting or any adjournment thereof. 4

5 Notice of Annual General Meeting (cont d) Explanation note on Special Business. (i) Resolution pursuant to the Authority to Issue STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING Company's Annual Report in CD-ROM Format 1) NAMES OF DIRECTORS STANDING FOR RE-ELECTION (ii) In the face of the emerging trend towards information technology, and with the objective to leverage and take advantage of the technologies, the Company has decided to issue its annual reports in Compact Disc-Read Only Memory ("CD-ROM") format. The issue of annual reports in CD-ROM Format would not only provide savings in printing and storage costs for the Company but also reduce postages involved in the despatch of the annual reports to shareholders. The passing of Ordinary Resolution No. 8 as set out in the notice of the Forty-Fourth Annual General Meeting of the Company would empower the issue of the Company's Annual Report for the financial year ending 31 December 2003 in CD-ROM format. Shareholders' approval will be sought on yearly basis if the Company decides to issue its annual report in CD-ROM format for future years. Shareholders are however informed that printed copy of the Annual Report 2003 will be available upon request, whether verbal or written and a contact number will be designated to attend to shareholders requests. Shareholders are further assured that person(s) will be assigned by the Company to answer your queries relating to the use of CD-ROM. Resolution pursuant to Section 132D of the Companies Act, 1965 The proposed Ordinary Resolution No. 9, if passed, will empower the Directors of the Company to issue and allot shares in the Company up to an aggregate amount not exceeding 10% of the issued share capital of the Company for the time being for such purposes as they consider would be in the interest of the Company. This authority unless revoked or varied at a general meeting will expire at the next Annual General Meeting ANNUAL REPORT : The 2002 Annual Report is in the CD-ROM format. Printed copy of the Annual Report shall be provided to the shareholders upon request. Shareholders who wish to receive the printed copy of the Annual Report and who require assistance with viewing the CD-ROM, kindly contact Cik Rohana bt Mohd Yusoff at Tel: ext. 154 or Miss Yeap Pek Yoong at Tel: ext. 129 or to thbannualreport@tancoresorts.com. 2) 3) 4) Directors retiring by rotation pursuant to Article 101 of the Articles of Association Mr. James Wong Kwong Yew Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse Dato' Loh Siew Cheang Director retiring pursuant to Section 129(6) of the Companies Act, 1965 Dato' Dr. Mohd Noordin bin Haji Keling DETAILS OF ATTENDANCE OF DIRECTORS AT BOARD MEETINGS There were five (5) Board meetings held during the financial year ended 31 December The details of attendance of the Directors are set out in the Directors' Profile appearing on pages 6 to 8 of the Annual Report. PLACE, DATE & TIME OF FORTY-FOURTH ANNUAL GENERAL MEETING The Forty-Fourth Annual General Meeting of the Company will be held in Agong & Madura Hall at Duta Palms Resort & Anglers' Club, Jalan Desa Permai, Bandar Country Homes, Rawang, Selangor Darul Ehsan on Thursday, 26 June 2003 at a.m. DETAILS OF DIRECTORS SEEKING FOR RE-ELECTION OR RE-APPOINTMENT AT THE ANNUAL GENERAL MEETING Details of Directors who are seeking for re-election or re-appointment are set out in the Directors' Profile appearing on pages 6 to 8 of the Annual Report. Information relating to the Directors' securities holdings in the Company and its subsidiaries is presented on page 87 of the Annual Report. 5

6 Directors Profiles DATO' ALI BIN HASSAN Independent, Non-Executive Chairman - Malaysian, Aged 61 Dato' Ali bin Hassan was appointed as Chairman of Tanco Holdings Berhad ("THB") on 16 February He graduated with a Bachelor of Arts (Honours) from University of Malaya (1964) and also holds a Diploma in Public Administration from University of Malaya (1969) and a Master in Public Administration from University of Southern California, Los Angeles, in U.S.A. (1978). Prior to venturing into the private sectors, Dato' Ali held various senior positions in the public services such as the Public Service Department, the Prime Minister's Department, the Ministry of Finance, the Ministry of Energy, Telecommunications and Post Malaysia. Dato' Ali had also served as Executive Chairman of Inland Revenue Board of Malaysia from 1 March 1996 to 1 December He also served as Chairman of Telekom Malaysia Berhad before his appointment as Chairman of THB. Currently, he is also the Chairman of RHB Bank Berhad and sits on the Board of a public listed company, S P Setia Berhad. He does not have any family relationship with any other directors and/or major shareholders of THB. Neither does he have any conflict of interest with THB. He has not been convicted for offences within the past ten years. He is the Chairman of the Nomination Committee, a member of the Remuneration Committee and a member of the Audit Committee of THB. He attended four out of the five Board Meetings held during the financial year ended 31 December ENCIK AZNAN BIN ABDUL AZIZ Deputy Chairman / Executive Director - Malaysian, Aged 45 Encik Aznan bin Abdul Aziz was appointed as Deputy Chairman of THB since 8 January He holds a Diploma in Mechanical Engineering. He has extensive hand-on experience in property development and construction sectors. Over the last 23 years, he had been involved in various major development projects such as Bandar Country Homes, a 730 acres of self-contained township in Rawang, 682 units of mixed housing development for Koperasi Polis Diraja, Kelab Darul Ehsan, Taman Keramat, Taman Bukit Chedang and Taman Abdul Razak. He does not have any family relationship with any other directors and/or major shareholders of THB. He is deemed in conflict of interest with THB by virtue of his interest in certain privately-owned companies which are also involved in property development business. However, these privately-owned companies are not in direct competition with the business of THB. He has not been convicted for offences within the past ten years. He attended four out of the five Board Meetings held during the financial year ended 31 December DATO' TAN JING NAM Managing Director - Malaysian, Aged 47 Dato' Tan Jing Nam was appointed as Director of THB on 28 July 1995 and is presently the Managing Director of the group (appointed on 23 October 1995). He has over 26 years of experience in the property and construction sectors. Under his leadership, the Tanco diversified from plantation business to property development, construction and leisure businesses. He is the driving force behind the successful development of Bandar Country Homes, a self-contained township in Rawang. He is the brother of Madam Tan Lee Sing, a Director of THB. Save as aforesaid, he does not have any family relationship with any other directors and/or major shareholders of THB. He is deemed in conflict of interest with THB by virtue of his interest in certain privately-owned companies which are also involved in property development business. However, these privately-owned companies are not in direct competition with the business of THB. He has not been convicted for offences within the past ten years. He is a member of the Remuneration Committee of THB. He attended all the five Board Meetings held during the financial year ended 31 December

7 Directors Profiles (cont d) MR. JAMES WONG KWONG YEW Executive Director - Malaysian, Aged 56 Mr. James Wong Kwong Yew was appointed as Director of THB on 28 July 1995 and was subsequently appointed as Executive Director on 23 October He is a Chartered Accountant (England and Wales since 1971). With over 31 years of experience in professional firms and the commercial sector, he is well versed in the field of accounting, corporate finance, banking and property development. Prior to joining THB, he was the Executive Vice President/Director of a listed financial services group. He does not have any family relationship with any other directors and/or major shareholders of THB. He does not have any conflict of interest with THB. He has not been convicted for offences within the past ten years. He is a member of the Audit Committee of THB. He attended all the five Board Meetings held during the financial year ended 31 December DATO' DR. MOHD. AMINUDDIN BIN MOHD. ROUSE Independent Non-Executive Director - Malaysian, Aged 57 Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse was appointed as Director of THB since 20 October He graduated with a B. Sc (Hons) in Biochemistry from University Malaya and holds a Ph.D in Agriculture Chemistry from University of Adelaide. Prior to venturing into commercial sector, he was an academician for 14 years having started as a lecturer in University of Pertanian Malaysia (now University Putra Malaysia) and serve as Professor in University Sains Malaysia. While in academia, he held numerous positions including Head of Biochemistry and Microbiology, Deputy Dean, Dean and Professor of Biochemistry. He ventured into corporate world in He also sits on the board of several public listed company including Konsortium Logistik Bhd, Star Publications (Malaysia) Bhd, Ajiya Bhd and Globetronics Technology Bhd. He is also a director of Deutsche Bank Malaysia Bhd and Malaysian South - South Corporation Bhd. He does not have any family relationship with any other directors and/or major shareholders of THB. He does not have any conflict of interest with THB. He has not been convicted for offences within the past ten years. He is the Chairman of the Remuneration Committee, a member of the Nomination Committee and a member of the Audit Committee of THB. He attended four out of the five Board Meetings held during the financial year ended 31 December DATO' DR. MOHD. NOORDIN BIN HAJI KELING Independent Non-Executive Director - Malaysian, Aged 76 Dato' Dr. Mohd. Noordin bin Haji Keling was appointed as Director of THB on 1 July A veterinary surgeon by profession, he graduated from the Bengal Veterinary College, Calcutta in 1950 and in 1956 from the Royal Veterinary College, University of London as a Member of the Royal College of Veterinary Surgeons, England. While in government service, he obtained post-graduate qualifications in tropical veterinary medicine at the University of Edinburgh in 1960 and in veterinary public health at the University of Toronto in He later obtained the Bachelor of Laws degree, LLB (Hons) from the University of London and the Certificate in Legal Practice (C.L.P) awarded by the Legal Profession Qualifying Board, Malaysia. He was admitted as an Advocate and Solicitor of the High Court, Malaya in December He had a distinguished career in the Veterinary Department, Malaysia, retiring in 1982 as the Director-General of the National Livestock Development Authority. On retirement he served for two years as Executive Vice-Chairman of MAX Agriculture Sdn Bhd, a company with principal activities in the manufacture and trading of fertilizers. Currently he also sits on the board of several private limited companies. He does not have any family relationship with any other directors and/or major shareholders of THB. He does not have any conflict of interest with THB. He has not been convicted for offences within the past ten years. He is the Chairman of the Audit Committee, a member of the Nomination Committee and a member of the Remuneration Committee of THB. He attended all the five Board Meetings held during the financial year ended 31 December

8 Directors Profiles (cont d) DATO LOH SIEW CHEANG Non-Independent Non-Executive Director - Malaysian, Aged 50 Dato' Loh Siew Cheang was appointed as Director of THB on 2 December He is a lawyer by profession. He holds LL.B (Hons) from University of Malaya and has been an Advocate & Solicitor, High Court, Malaysia since He is the Managing Partner of the Cheang & Ariff. He is a Co-ordinator of Advoc-Asia (a network of Asian Commercial Law Firms). He does not have any family relationship with any other directors and/or major shareholders of THB. He does not have any conflict of interest with THB. He has not been convicted for offences within the past ten years. He is a member of the Audit Committee, Nomination Committee and Remuneration Committee of THB. He attended three out of the five Board Meetings held during the financial year ended 31 December MADAM TAN LEE SING Executive Director - Malaysian, Aged 43 Madam Tan Lee Sing was appointed as Director of THB on 28 July She graduated from the University of Melbourne, Australia with a degree in Commerce in She has over 11 years of experience in the property and construction sectors. She is the sister of Dato' Tan Jing Nam, the Managing Director of THB. Save as aforesaid, she does not have any family relationship with any other directors and/or major shareholders of THB. She is deemed in conflict of interest with THB by virtue of her interest in certain privately-owned companies which is also involved in property development business. However, these privately-owned companies are not in direct competition with the business of THB. She has not been convicted for offences within the past ten years. She attended all the five Board Meetings held during the financial year ended 31 December

9 Corporate Governance Statement The Board of Directors ("the Board") of Tanco Holdings Berhad recognises the importance of good corporate governance and fully supports the recommendations of the Malaysian Code of Corporate Governance (the Code). Accordingly, the Board is committed to ensuring that the highest standards of corporate governance are practised throughout the as a fundamental part of discharging its responsibilities to protect and enhance shareholder value. Set out below is a statement of how the has applied the principles and complied with the best practice provisions set out in the Code during the year. DIRECTORS The Board The is led and controlled by an effective Board. The Board meets on a scheduled basis, at least four (4) times a year, with additional meetings convened as necessary. All Board members bring an independent judgement to bear on issues of strategy, performance, resources and standards of conduct. The Board has delegated specific responsibilities to three (3) sub-committees (Audit, Nomination and Remuneration Committees), the details of which are set out below. These Committees have the authority to examine particular issues and report back to the Board with their recommendation. The ultimate responsibility for the final decision on all matters, however, lies with the entire Board. Board Balance The Board has a balanced composition of executive and non-executive directors so that no individual or small group of individuals can dominate the Board's decision making. The Board currently has eight (8) members, comprising four (4) executive Directors and four (4) non-executive Directors (including the Chairman). Three of the eight Directors are independent Non-Executive Directors within the meaning of Chapter 1.01 of the Listing Requirements and one Non-Independent Non-Executive Director. The Board therefore fulfilled the Listing Requirements under Paragraph 15.02, which states that one third of the board members must be Independent Directors. During the year ended 31 December 2002, five (5) Board meetings were held. The composition of the Board together with the attendance of the respective Directors at Board meetings are as follows:- Name of Director Date of Appointment Attendance Dato' Ali bin Hassan /5 Aznan bin Abdul Aziz /5 Dato' Tan Jing Nam /5 James Wong Kwong Yew /5 Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse /5 Dato' Dr. Mohd. Noordin bin Haji Keling /5 Dato' Loh Siew Cheang /5 Tan Lee Sing /5 Yong Poi Leong # /5 # Mr Yong Poi Leong resigned on 1 January 2003 Together, the Directors bring a wide range of business and financial experience relevant to the direction of an expanding. A brief description of the background of each Director is presented on pages 6 to 8 of the Annual Report. The role of the Chairman and the Managing Director are distinct and separate; the Chairman being Non-Executive, is not involved in the management and day-to-day operations of the. Dato' Dr. Mohd. Noordin bin Haji Keling is the Senior Independent Non-Executive Director, to whom all concerns may be conveyed. 9

10 Corporate Governance Statement (cont d) The presence of independent non-executive Directors in the Board provides objectivity and they are of the calibre necessary to carry sufficient weight in Board decisions. Although all the Directors have an equal responsibility for the 's operations, the role of the independent non-executive Directors is particularly important in ensuring that the strategies proposed by the executive management are fully discussed and examined, and take account of the long term interests, not only of the shareholders, but also of employees, customers, suppliers, and the many communities in which the conducts business. Supply of Information All directors are provided with an agenda and a set of Board papers, prior to every board meeting. The Board papers circulated include quarterly and annual financial statements, minutes of meetings, major operational and financial matters, and performance report of the. All matters requiring Board approvals are also circulated prior to the Board Meetings and during Board Meetings these matters are duly discussed and deliberated with senior management before decisions are made. All Directors have access to the advice and services of the Company Secretaries and where necessary, in the furtherance of their duties, take independent professional advice at the 's expense. Appointments to the Board New appointments to the Board are recommended by the Nomination Committee to the Board for their approval. The other responsibilities of the Nomination Committee include making recommendations to the Board on the appointment of members of Board Committees, the review on an annual basis of the Board structure, size and composition, and assessment of the effectiveness of the Board, its Committees and the contribution of each Board. The Nomination Committee consists of wholly Non-Executive Directors, a majority of whom are independent and its composition is as follows:- Designation Dato' Ali bin Hassan - Chairman of the Nomination Committee, Independent Non-Executive Director Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse - Independent Non-Executive Director Dato' Dr. Mohd. Noordin bin Haji Keling - Independent Non-Executive Director Dato' Loh Siew Cheang - Non-Independent, Non-Executive Director For the year, the Nomination Committee had one (1) meeting held on 28 February Directors' Training All directors have attended the Mandatory Accreditation Programme organised by RIIAM, the training arm of KLSE and will attend similar training programmes to equip themselves to discharge their duties more effectively. New directors are given essential Board and Company information and shall have the benefit of a familiarization programme aimed at deepening their understanding of the 's business operations. 10

11 Corporate Governance Statement (cont d) Re-election In accordance with the Company's Articles of Association, at least one third of the Directors are required to retire by rotation at each Annual General Meeting and can offer themselves for re-election at the Annual General Meeting. Directors who are appointed by the Board to fill a casual vacancy or as an addition to the existing Board are subject to election by shareholders at the next Annual General Meeting following their appointment. The Directors also shall retire from office at least once in three years, but shall be eligible for re-election. Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129 (6) of the Companies Act, DIRECTORS' REMUNERATION Remuneration Policy The Remuneration Committee reviews annually and recommends to the Board, the 's remuneration policy for Executive Directors to ensure that the Executive Directors are rewarded appropriately for their contributions to the 's growth and profitability, and that the remuneration policy supports the 's objectives and shareholders' interest. In framing the 's remuneration policy, the Remuneration Committee obtains the advice and information from external source, if necessary. It is, nevertheless, the ultimate responsibility of the entire Board to approve the remuneration of these Directors. The determination of the remuneration of the non-executive Directors including Non-Executive Chairman is a matter for the Board as a whole. Procedure The Remuneration Committee consists of five (5) members of which one (1) is executive director and four (4) non-executive directors; three (3) of whom are independent and its composition is as follows:- Designation Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse - Chairman of the Remuneration Committee, Independent Non-Executive Director Dato' Ali bin Hassan - Independent Non-Executive Director Dato' Dr. Mohd. Noordin bin Haji Keling - Independent Non-Executive Director Dato' Tan Jing Nam - Managing Director Dato' Loh Siew Cheang - Non Independent, Non-Executive Director For the year, the Remuneration Committee had one (1) meeting held on 28 February

12 Corporate Governance Statement (cont d) Disclosure A summary of the remuneration of the Directors for the financial year ended 31 December 2002, distinguishing between executive and non-executive Directors in aggregate, with categorization into appropriate components and the number of Directors whose remuneration falls into each successive band of RM50,000 are as follows:- Executive Director Non-Executive Directors Total Directors' Fees (RM) - 144, ,000 Salaries (RM) 2,887,200-2,887,200 Meeting Allowances - 7,500 7,500 Benefits-in-kind (RM) 84,550 23, ,500 Directors' Remuneration 0 -RM50, RM50,001-RM100, RM100,001-RM200, RM200,001-RM250, RM250,001-RM300, RM300,001-RM350, RM350,001-RM500, RM500,001-RM550, RM550,001-RM850, RM850,001-RM900, RM900,001-RM1,000, RM1,000,001-RM1,050, Detail remuneration of each Director is presented under Note 33 of the Financial Statements on pages 65 to 68 of the Annual Report. SHAREHOLDERS Dialogue between the Company and Investors The Board recognizes the importance of communication and proper dissemination of information to its shareholders, stakeholders and the public generally. However, any information that may be regarded as undisclosed material information about the will not be given. The following are the channels of communication of the Company to its shareholders, stakeholders, analysts and the public: - 1) the distribution of annual reports and circulars to shareholders; 2) timely quarterly results announcements and various disclosures and announcements made to the Kuala Lumpur Stock Exchange; 3) company's website at Annual General Meeting At each Annual General Meeting, the Board presents the progress and performance report of the and encourages shareholders to participate and pose questions to the Board in the Question and Answer session. Each item of special business included in the notice of the meeting will be accompanied by a full explanation of the effects of a proposed resolution. Separate resolutions are proposed for substantially separate issues at the meeting. 12

13 Corporate Governance Statement (cont d) ACCOUNTABILITY AND AUDIT Financial Reporting In presenting the annual financial statements and quarterly announcement to shareholders, the Directors aim to present a balanced and understandable assessment of the 's position and prospects. This also applies to other price-sensitive public reports and reports to regulators. Audit Committee The Audit Committee of the Board comprises three Independent Non-Executive Directors, one Non-Independent Non-Executive Director and one Executive Director. The composition of the Audit Committee together with the terms of reference and activities of the Audit Committee during the financial year ended 31 December 2002 are provided separately in this Annual Report. Internal Control The Board acknowledges its responsibility for establishing an efficient and effective system of internal controls covering not only financial controls but also controls relating to operational, compliance and risk management to safeguard shareholders' investment and the 's assets. Such system can, however, only provide reasonable and not absolute assurance against material misstatement, loss or fraud. The 's Statement on Internal Control is set out on page 15 of the Annual Report. Relationship with the Auditors The Company has established transparent and appropriate relationships with the Company's auditors through the Audit Committee. The auditors has continued to report to shareholders of the Company on their findings which are included as part of the Company's financial reports with respect to each year's audit on the statutory financial statements. From time to time, the auditors would highlight to the Audit Committee matters that require their attention. Directors' Responsibility Statement for Preparing the Financial Statements The Directors are required by the Companies Act 1965 to prepare financial statements for each financial year which have been made out in accordance with the applicable Approved Accounting Standards and give a true and fair view of the state of affairs, the results and cashflows of the and Company for the financial year. In preparing the financial statements, the Directors have:- - selected suitable accounting policies and applied them consistently; - made judgements and estimates that are reasonable and prudent; - ensured that all applicable accounting standards have been followed; and - prepared financial statements on a going-concern basis as the Directors have a reasonable expectation, having made enquiries, that the and Company have adequate resources to continue in operational existence for the foreseeable future. The Directors have responsibility for ensuring that the Company keeps accounting records which disclose the financial position of the and Company and which enable them to ensure that the financial statements comply with the Companies Act The Directors have overall responsibilities for taking such steps as are reasonably open to them to safeguard the assets of the to prevent and detect fraud and other irregularities. This Statement is made in accordance with the Board of Directors' resolution dated 22 April

14 Additional Compliance Information To comply with the Listing Requirements of Kuala Lumpur Stock Exchange, the following additional information is provided:- i) Material Contracts Save as disclosed in Note 33 of the Financial Statements for the financial year ended 31 December 2002, there were no other material contracts entered into by the Company and its subsidiary companies, involving Directors and major shareholders. ii) Utilisation of Proceeds The Company had raised RM46,884 million through a renounceable rights issue on a two-call basis of up to 167,443,363 new ordinary shares with 167,443,363 free attached warrants to the shareholders of the Company on the basis of one (1) new ordinary share and one (1) free warrant attached for every one (1) share held with the first call fixed at RM0.28 per share and with the second call of RM0.72 being from the existing reserves of the Company ("The Renounceable Two-Call Rights Issue with Warrants"). iii) iv) v) vi) vii) viii) ix) x) xi) The status of utilisation of the proceeds from the Renounceable Two-Call Rights Issue with Warrants and that had been undertaken as part of the 's corporate and restructuring exercise is as follows:- As approved Utilised as at Balance RM 000 RM 000 RM 000 Expenses for the corporate exercise 2,500 (2,500) - Repayment to Bankers 6,384 (6,384) - For property development project 33,000 (20,133) 12,867 Working capital of the 5,000 (5,000) - 46,884 (34,017) 12,867 Share buybacks During the financial year, there were no share buybacks by the Company. Options, warrants or convertible securities On 18 February 2002, the Company had issued 167,443, /2008 Warrants pursuant to the Renounceable Two-Call Rights Issue with Warrants. American Depository Receipt (ADR) or Global Depository Receipt (GDR) programme During the financial year, the Company did not sponsor any ADR or GDR programme. Imposition of sanctions/penalties There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management by the relevant regulatory bodies during the financial year. Non-audit fees The amount of non-audit fees paid or payable to the external auditors by the Company and its subsidiaries for the financial year ended 31 December 2002 amounted to RM16, Profit estimate, forecast or projection There is no material variance between the results for the financial year and the unaudited results previously announced by the Company. The Company did not issue any profit estimate, forecast or projections for the financial year. Profit guarantee During the financial year, the Company had not provided any profit guarantees nor is there any profit guarantee given to the Company. Recurrent related party transactions statement There was no recurrent related party transaction of a revenue nature, which requires shareholders' mandate during the financial year. Revaluation of landed properties In compliance to MASB 23 on Impairment of Assets, the Company had engaged the service of a professional valuer to give an indicative valuation of its landed assets for the sole purpose of determining impairment in value, if any on these assets. As a result of the valuation carried out, the has provided RM million in its financial statements for the year towards this. 14

15 Statement on Internal Control The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of internal control to safeguard shareholders' investments and the 's assets. Paragraph 15.27(b) of the Kuala Lumpur Stock Exchange (KLSE) Revamped Listing Requirements requires directors of listed companies to include a Statement of Internal Control in their annual reports. Set out below is the statement:- The Board of Directors of Tanco Holdings Berhad affirms its overall responsibility for the 's systems of internal controls, risk management, and for reviewing the adequacy and integrity of these systems. Due to the limitations that are inherent in any system of internal control, such systems are designed to manage, rather than eliminate the risk of failure to achieve business objectives. Accordingly such systems can only provide reasonable but not absolute assurances against material misstatement or loss. The existence of the Internal audit function aims to assist the Audit Committee to review the effectiveness of the 's internal control system. The Board confirms that there is an on-going process for identifying, evaluating and managing significant risks faced by the. This includes examining principal business risks in critical areas and identifying measures to mitigate, avoid and eliminate these risks. This process is regularly reviewed by the Audit Committee and the Board and accords with the Statement on Internal Control: Guidance For the Directors of Public Listed Companies. The process has been in place during the year under review and up to the date of approval of this annual report. The key elements of the 's system of internal control include the following:- - An organisation structure which formally defines lines of responsibility and delegation of authority. - Key functions such as corporate affairs, finance, tax, treasury and human resources are controlled centrally. - Incompatible responsibilities are properly segregated to ensure that no staff is in total control of the whole transactions. - The has a policy on financial limits and approving authority for its operating and capital expenditure. - There is effective reporting system in place to ensure timely generation of financial information for management review. - The internal audit function adopts a risk-based approach in identifying areas of priority and carries out its works in accordance with an annual audit plan approved by the Audit Committee and the Board. The Audit Committee holds regular meetings and reviews internal audit reports covering such matters. Significant issues are brought to the attention of the Board. In order to achieve the above objectives, the has the following procedures/processes in place:- - There is an annual budgeting and target setting process which includes forecasts for each operating units with detailed reviews at all levels of operations. The Board reviews and approves the annual budget. - Financial results are reviewed quarterly by the Audit Committee and the Board. - Operating units meetings are conducted regularly to review financial performance, business development and deliberate on management issues. - There are regular meetings between the senior management (Managing Director and Executive Directors) and heads of department to discuss business, operational and key management issues; and to review the financial performance of all the companies in the. - The Audit Committee has access to external auditors and their reports and meets them to discuss their findings and reports. The Statement is made in accordance with a resolution of the Board of Directors dated 22 April

16 Audit Committee Members Designation Dato' Dr. Mohd. Noordin bin Haji Keling - Chairman of the Audit Committee Independent Non-Executive Director Dato' Ali bin Hassan - Independent Non-Executive Director Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse - Independent Non-Executive Director James Wong Kwong Yew - Executive Director Dato' Loh Siew Cheang - Non Independent, Non-Executive Director Composition of Audit Committee 1. The Audit Committee shall be appointed by the Board of Directors from among its members and shall be consist of not less than three (3) members of whom a majority must be independent directors. 2. The Audit Committee shall include at least one director who is a member of the Malaysian Institute of Accountants or alternatively, a person who must have at least three (3) years working experience and have passed the examination specified in Part 1 of the First Schedule of the Accountants Act, 1967 or is a member of one of associations specified in Part II of the said Schedule. 3. No alternate director shall be appointed as a member of the Audit Committee. 4. The members of the Audit Committee shall elect a chairman from among their number who shall be an independent non-executive director. 5. If a member of the Audit Committee resigns, dies or for any other reason ceases to be a member with the result that the number of members is reduced below three (3), the board of directors 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. Terms of Memberships The term of office of Audit Committee members should be reviewed by the Board once every three (3) years. Authority The Audit Committee is authorised by the Board to investigate any activity of the Company and its subsidiaries within its terms of reference, the resources which it needs to do and full access to information. The Audit Committee is also authorised by the Board to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary. The Audit Committee shall have direct communication channels with the external auditors and person(s) carrying out the internal audit function and activity and be able to convene meetings with the external auditors, excluding the attendance of the executive members of the Audit Committee, whenever deemed necessary. 16

17 Audit Committee (cont d) Duties The duties of the Audit Committee should include the following:- (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) To consider the appointment of the external auditor, the audit fee and any questions of resignation or dismissal; To review with the external auditor before the audit commences, the nature and scope of the audit and their audit plan; To review the assistance given by the company's officers to the internal and external auditors; To review the quarterly and year-end financial statements of the Company, prior to the approval of the board of directors, focusing particularly on:- - any changes in accounting policies and practices; - significant and unusual events; - significant adjustments arising from the audit; - the going concern assumption; - compliance with accounting standards and other legal requirements; To discuss problems and reservations arising from the interim and final audits, and any matter the auditor may wish to discuss (in the absence of management where necessary); To review the external auditor's management letter and management's response; The internal audit function:- - review the adequacy of the scope, functions and resources of the internal audit function, and that it has the necessary authority to carry out its work; - review the internal audit programme and results of the internal audit process and where necessary ensure that appropriate action is taken on the recommendations of the internal audit function; - review any appraisal or assessment of the performance of members of the internal audit function; - approve any appointment or termination of Internal Auditor; - inform itself of resignations of Internal Auditor and Internal Auditor an opportunity to submit his reasons for resigning. To consider any related party transactions or conflict of interests situation that may arise within the Company or ; To consider the major finding of internal investigations and management's response; To report promptly to the Kuala Lumpur Stock Exchange (KLSE) matters reported by the Audit Committee to the Board which have not been satisfactorily resolved resulting in a breach of Listing Requirements of KLSE; To consider other topics as defined by the board. Attendance at Meetings The Financial Controller, Internal Auditor, and a representative of the external auditors shall normally attend meetings. Other Board members and employees may attend meetings upon the invitation of the Audit Committee. However, at least once a year the Audit Committee shall meet with the external auditors without executive board members present. The Company Secretary shall be the secretary of the Audit Committee. The secretary shall be responsible for keeping the minutes of the meeting of the Audit Committee, circulating them to Audit Committee members and to the other members of the Board of Directors. Quorum The quorum of the Audit Committee Meetings shall consist of a majority of members of whom are Independent. 17

18 Audit Committee (cont d) Frequency of Meetings The Audit Committee shall meet not less than four times (4) a year. In addition, the Chairman may call a meeting of the Audit Committee if requested to do so by any Audit Committee member or by the external auditors if they consider it necessary. Number of Meetings & Details of Attendance During the financial year ended 31 December 2002, the Audit Committee held a total of five (5) meetings. The details of attendance of the Audit Committee members are as follows:- Name of Director Attendance Dato' Dr. Mohd. Noordin bin Haji Keling 5/5 Dato' Ali bin Hassan 4/5 James Wong Kwong Yew 5/5 Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse 4/5 Dato' Loh Siew Cheang 3/5 Summary of Activities of the Audit Committee The following activities were performed by the Audit Committee during the financial year ended 31 December 2002:- (a) (b) (c) (d) (e) (f) (g) Reviewed the audit plans for the year for the Company and the prepared by the external auditors; Reviewed the audit reports for the Company and the prepared by the external auditors and consideration of major findings by the auditors and management's responses thereto; Reviewed the quarterly and annual results of the Company and the prior to submission to the Board of Directors for consideration and approval; Reviewed related party transactions entered into by the Company and the ; Reviewed the adequacy and relevance of the scope of internal audit works as stipulated in the internal audit plan. Reviewed and considered the findings in the internal audit reports and management's response thereto Followed up on remedial actions taken by the management on the internal audit raised. Internal Audit Function The has outsourced its internal audit function to a professional consulting firm, Nexia Consulting. The internal audit function is therefore independent of the activities of the and performs its duties with impartiality, objectivity and due professional care. The internal audit review of the 's operations encompasses an independent assessment of the Company's compliance with its internal controls and makes recommendation for improvements. During the financial year ended 31 December 2002, the internal auditors reviewed the adequacy and effectiveness of the accounting and operational internal control system of a core subsidiary of the. The audit activities carried out during the year included the following:- (a) Prepared the audit plan for the approval of the Audit Committee. (b) Performed internal audit works to review the adequacy and efficacy of the internal control systems relating to the operation of the core subsidiary. (c) Rendered internal audit reports on a quarterly basis to the Audit Committee, Board of Directors and management, identifying weaknesses and providing recommendations for improvements. (d) Acted on suggestions made by the Audit Committee and senior management on concerns over operations or control. (e) Attended all Audit Committee meetings to table and discuss the audit reports, and to follow up on matters raised. 18

19 Chairman's Statement Dear Valued Shareholders In 2002, the global economy was plagued by sluggish market sentiment and low consumer confidence. This was partly due to the uncertainties that still prevail following the events of the September 11, 2001; the subsequent Bali bombing; the ongoing political problems in the Middle East; the Iraq crisis; and North Korean issues. Meanwhile, weaknesses in the US and European economies and in the international capital markets further exacerbated the nervousness that continues to depress the current environment. Dato Ali bin Hassan, Chairman Fortunately, despite the adverse conditions, the Malaysian economy performed reasonably well. GDP growth rose from 0.4% in 2001 to 4.2% in 2002, fuelled mainly by domestic demand, rising exports, and our Government's major efforts to introduce various expansionary policies as counter measures to the problems noted above. We are confident that in the year ahead the Government will continue to implement fiscal and monetary policies to rejuvenate our economy. Given the tough operating environment, I am happy to report that on 1 March 2002 the and its bankers finally resolved the restructuring of our bank borrowings. With the completion of our restructuring and capital raising exercise, the is now focusing all its efforts on building the business. Tough measures have already been taken to address certain weaknesses within the, including disposing of non-core assets to pare down our borrowings; discontinuing marginal projects; and realigning functions to enhance our efficiency and reduce costs. On that positive note, on behalf of the Board of Directors, I am pleased to present the Annual Report and Financial Statements of the Company and the for the year ended 31 December FINANCIAL PERFORMANCE For the financial year ended 31 December 2002, the suffered a loss before tax and minority interest of RM118 million, as compared to a profit of RM620,000 in The loss was due mainly to an assets impairment loss of RM75 million, following the adoption of MASB 23 on "Impairment of Assets", which is a mandatory for compliance. In brief, MASB 23 requires the to recognise in its accounts impairment in value of its assets, if any as against its present market value even though the may hold the view that such impairments, if any are of temporary in nature. Other contributing factors were a bad debt write off of RM32 million, and a RM4.11 million loss arising from the sale of the entire development land held by our wholly owned subsidiary, Tanco Land Sdn Bhd. Overview of the development of Bandar Country Homes, Rawang 19

20 Chairman's Statement (cont'd) The acute labour shortage situation following the repatriation of foreign construction workers from the country in August 2002 also impacted on the 's results by bringing construction work almost to a standstill. The 's project in Palm Springs, Port Dickson bore the full brunt of this, and we were obliged to provide for further liquidated damages, claims and costs due to the consequent delays. I am glad to note that our management's fast response to the Government announcement succeeded in minimizing the impact on our results. We are also thankful for the Government's quick decision to reverse the ban on Indonesian workers after taking account of the views of the construction industry. Labour shortages have since eased considerably. CORPORATE HIGHLIGHTS Bangalow homes in Bandar Country Homes Corporate Restructuring On 1 March 2002, the successfully completed the restructuring of its bank borrowings into a six-year term loan, with a 24-month moratorium on interest payments and a 36-month moratorium on principal repayments. The Company also completed its capital raising exercise through a two-call rights issue of 167,443,363 new ordinary shares with 167,443,363 free attached warrants on the basis of one new ordinary share and one free warrant for every one share held. The exercise raised RM million for the, of which RM33 million is for the 's Palm Springs project, RM5 million for working capital, RM6.384 million for the repayment of bank borrowings, and the balance to go towards the cost of the exercise. Rationalization As part of an ongoing process of rationalization to address the gearing levels and shoring up of our financial position, the embarked on a strategy of disposing of non-core assets, closing non-viable businesses, and streamlining operations in order to cut costs and boost efficiency. Disposal of land held by Tanco Land Sdn Bhd On 9 October 2002, the Company announced the sale of its entire acres of mixed development land in Taman Rajawali, Seremban through three inter-conditional Sales and Purchase Agreements for a total consideration of RM15.84 million. The consideration will take the form of RM9 million in cash and RM6.84 million in 18 three-storey shop-office units in Pusat Bandar Rasah Jaya, Seremban. The sale has resulted in the incurring a loss of RM4.11 million. Completion is expected in Termination of the Sale and Purchase Agreement for Gem Beach Resort Sdn Bhd On 31 December 2002, the entered into a mutual agreement to terminate the Sale and Purchase Agreement for the acquisition of Gem Beach Resort Sdn Bhd. The agreement to purchase was made on 17 October 2000 for a total consideration of RM4,777, Palm Springs, Port Dickson

21 Chairman's Statement (cont'd) PROSPECTS Global economic uncertainties, the potential repercussions of a US-Iraq war, concerns over terrorism, the rising tension in the Middle East, and weak capital markets are all factors that are impeding consumer confidence and dampening the already fragile market sentiment. Any further adverse developments might throw the entire market into chaos. However, we draw comfort from the belief that our Government will continue to put in place measures to protect our economy from such external shocks. We are also reassured by Malaysia's strong economic performance, and the increasing breadth and depth of our domestic economy, which have proved the nation's resilience ever since the onset of the 1997 financial crisis. Further, we believe that the high employment numbers and the low interest regime will continue to sustain domestic demand. In these difficult economic conditions, while we must exercise prudence, we must also ready ourselves to capitalize on opportunities that arise. We will take our cue from the market to progressively roll out new products that meet market needs. With our experience and proven track record, we are confident that we are well placed to ride out this difficult period. Accordingly, whilst the Board is cautious about the situation, we remain confident of the 's future. Terrace Homes in Bandar Country Homes ACKNOWLEDGEMENTS On behalf of the Board of Directors, I would like to express our utmost appreciation to our directors, management and staff for their continued dedication and commitment to the. They have worked tirelessly during this challenging period. I would also like to convey our sincerest appreciation and thanks to our valued customers, bankers, business associates and the various Government agencies on whose support we rely for success. Finally, I offer our sincere gratitude to all our shareholders for standing by us during these trying times. Dato' Ali bin Hassan Chairman Bungalow Homes at Bandar Country Homes 21

22 Managing Director s Review Dato Tan Jing Nam, Managing Director Dear Valued Shareholders The year under review posed numerous challenges that tested our resolve and determination to the full. Increasing competition in a subdued market required us to be extra innovative and proactive in responding to rapidly changing scenarios. However, 2002 was also the year that saw the successful completion of our restructuring and capital raising exercises, which have now given the a much-needed breather and the capital to focus on and work through our strategy to revitalize our businesses. As mentioned in the Chairman's Statement, the strategy we have embarked on involves aggressive measures to strengthen the 's financial position by disposing of non-core assets, closing non-viable businesses, and streamlining our organization so as to reduce costs and increase efficiency. Meanwhile, we are mindful that, in difficult times, opportunities are also aplenty, and we are constantly on the lookout to capitalize on any that arise. PROPERTY DEVELOPMENT During the fiscal year, the 's property division focused on developing and completing existing launched phases and making preparation for new launches to be made in The division has been careful to ensure that new launches meet market demands. This is especially necessary as it is currently a buyers' market. Today, though the demand for residential property remains strong, there is great price sensitivity, and fierce competition amongst developers. To maximize our market share, we are drawing on our wide experience, high reputation, quality products, strategic location and easy accessibility. Bandar Country Homes The 's major development activities are in Bandar Country Homes, ideally located at the Rawang Interchange of the North-South Highway, just 20-minutes from Kuala Lumpur and Petaling Jaya. The development spreads over 730 acres and is now a matured township complete with conveniences such as schools, kindergartens, polyclinics, petrol station, a wet and dry market, shops and offices, a club-house known as Duta Palms Resort & Anglers' Club and a host of other facilities. When the time is right, we will look into the development of a private college, a medical centre and two shopping complexes. Convenient location, easy access to modern amenities, affordable pricing and innovative designs, boasting a host of added features to suit modern lifestyles, are the unique features that have made Bandar Country Homes a success. 22 Corporate Office, Bandar Country Homes

23 Managing Director s Review (cont'd) For the year under review, 297 units were sold with a total sales value of RM million. In addition, 680 units were delivered, while 600 units are at the final stages of development. The bulk of the sales were of medium to low cost apartments, for which demand remains strong. This type of development will remain our primary focus for the immediate future. However, plans are also underway to launch middle to higher end housing units in 2003, for which we anticipate rising demand. Palm Springs Palm Springs, an integrated self-contained resort, covers over 500 acres of prime seaside land in Port Dickson. It is the biggest and most attractive resort development along the stretch, just over an hour's drive from Kuala Lumpur and a 30-minute drive from the Kuala Lumpur International Airport in Sepang. Its 18-hole golf club popularly known as Royal Palm Springs Golf Club is already established among the golf fraternity, and every year plays host to an increasing number of tournaments and participants. Within the club is a club village that features a variety of modern amenities such as a sand pool, a fun pool, a reflexology pool, two tennis courts, outdoor jacuzzis and caravan parks. Palm Springs, Port Dickson We have just completed a new conference hall of some 15,000 square feet, with a seating capacity of 1,000 people to cater to the growing demand for conference businesses. In addition to catering to our conference business needs, this venue will also serve well to our banquet functions connected with our golf tournaments and other income generating events that we target to secure. Today, Palm Springs has on show 402 units of completed and elegantly finished riverside apartments, with a further 402 apartments at the final stages of construction. These represent the resort's first phase of development. We were scheduled to complete the remaining units by 2003, having secured the necessary funding from the 's capital raising exercise. However, due to the acute labour shortage following the repatriation of foreign construction workers from the country in August 2002, construction was almost brought almost to a stop. The situation has since eased, with the Government reversing the ban, and we are now working hard to complete the remaining units. We remain confident of the potential of this project despite the setbacks, and are actively planning the next phases. Regal Resorts This project is in the vicinity of our Palm Springs development in Port Dickson. Since the sale of approximately 3.48 acres of the acres of the land to the Immigration Department of Malaysia in 2000, we have been re-planning the remaining land to maximize its potential. Duta Villas Golf Resort, Palm Springs 23

24 Managing Director s Review (cont'd) Taman Rajawali During the year, we disposed of the entire acres of mixed development land for a total consideration of RM15.84 million, as we consider the property as no longer crucial to the 's operations. The sale has resulted in the incurring a loss of RM4.11 million. The cash proceeds from the sale will be used to reduce bank borrowings. VACATION OWNERSHIPS Tanco Resorts Berhad Tanco Resorts Berhad (TRB) continued to maintain its position of dominance in the vacation ownership business despite increasing competition. We remain the biggest operator in the country, with a membership base of over 31,000, and with 15 resorts either fully owned or indirectly controlled by our management. For the financial year ended 31 December 2002, TRB continued to outpace its competitors, achieving a turnover of over RM85 million. This is the fourth year running that we have achieved a turnover of over RM70 million. Overseas resorts - Havenfield Hall & Cloth Hall, England However, the softening of several sections of the domestic economy due to global uncertainties badly affected some of our customers and consequently took its toll on our collections. As a result, we have made the difficult but prudent decision to write down our receivables. The changing market scenario also required us to revamp the organization to make it more responsive and cost-effective without sacrificing the quality of our customer service. We are also ever mindful of the need to continue to be innovative and to invest in upgrading our products so as to stay ahead of the game. LOOKING AHEAD Whilst 2003 is likely to be another challenging year in view of the uncertain global and regional economic and political scenario, we are optimistic that the will pull through by leveraging on its experience, strong reputation and the groundwork that we laid in Dato' Tan Jing Nam Managing Director 24 Duta Palms Resort & Anglers Club, Bandar Country Homes