Magna Cover FA - Magna Prima fileChairman’s Letter Annual Report 2002 Magna Prima Berhad 3 “ The continuous effort for the improvement of operational efficiency and further finance

MAGNA PRIMA BERHAD369519-P

2002a n n u a l r e p o r t

Corporate Information

Chairman’s Letter to Shareholders

Board of Directors and Profile

Corporate Structure

C o n t e n t s

Senior Management

Terms and Reference of the Audit Committee

Statement on Corporate Governance

Statement on Internal Control

Financial Statements

Summary of Landed Properties

Analysis by Size of Shareholdings

Explanation of Variance

Notice of Annual General Meeting

Statement Accompanying Notice of Annual General Meeting

Letter from Shareholder Nominating Auditors

Proxy Form

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2 Magna pr ima Berhad Annual Report 2002

Corporate Information

AUDIT COMMITTEE

Kamil A. Rahman

Chairman

Feisal bin Sheikh Hussein (resigned 28 November 2002)

T. A. Rahman bin T. Andak

N. Chanthiran a/l Nagappan

Ng Yak Hee

NOMINATION COMMITTEE

T. A. Rahman bin T. Andak

Chairman


Ahmad Ghazali bin Md KassimKamil A. RahmanN. Chanthiran a/l Nagappan

REMUNERATION COMMITTEE

N. Chanthiran a/l Nagappan

Chairman


T. A. Rahman bin T. AndakKamil A. Rahman

JOINT COMPANY SECRETARIES

Ahmad Shahab bin Hj.Din

(MAICSA 0689340)

Yuen Yoke Ping

(MAICSA 7014044)

REGISTERED OFFICE

No.2, 2nd Floor, Jalan Prima 5,

Metro Prima,

52100 Kuala Lumpur.

Tel:03-6277 5555

Fax:03-6275 5182

Email:

[email protected]

SHARE REGISTRAR

Malaysian Share Registration

Services Sdn Bhd (378993-D)

7th Floor, Exchange Square

Bukit Kewangan

Jalan Raja Chulan

50200 Kuala Lumpur

Tel: 603-2026 8099

Fax: 603-2026 3736

AUDITORS

Folks DFK & Co.

Public Accountants

SOLICITORS

Nordin Torji & Yussof Ahmad

Sim Hazlina & Co.

JT Chong Associates

PRINCIPAL BANKERS

Malayan Banking Berhad

Bumiputra Commerce Bank Berhad

AmMerchant Bank Berhad

STOCK EXCHANGE LISTING

Kuala Lumpur Stock Exchange

Second Board

Listed Since 16 January 1997

KLSE Code: 7617

BOARD OF DIRECTORS

Y.Bhg. Dato’ Abd Gani bin Yusof

Executive Chairman

Ahmad Ghazali bin Md. KassimExecutive Director

Ng Yak HeeExecutive Director

Chua Lee BoonExecutive Director

Feisal bin Sheikh HusseinIndependent Non-Executive Director

(resigned 28 November 2002)

T. A. Rahman bin T. AndakIndependent Non-Executive Director

Kamil A. RahmanIndependent Non-Executive Director

N. Chanthiran a/l NagappanIndependent Non-Executive Director

Chairman’s Letter

Annual Report 2002 Magna Pr ima Berhad 3

“ The continuous effort forthe improvement ofoperational efficiency andfurther finance costs savingswill see further improvementin the results of the Group inthe coming year.”Dato’ Abd Gani bin Yusof– Executive Chairman

Chairman’s Letter to Shareholders

Dear Fellow Shareholders,

On behalf of the Board of Directors, it is my

great pleasure to present to you the Annual

Report and Audited Financial Statements of

Magna Prima Berhad for the year ended 31

December 2002. Last year remained to be a

challenging year for the Group, nevertheless,

I am pleased to report that the Group has

managed to achieve commendable results.

FINANCIAL REVIEW

For the year under review, the Group has

increased its turnover by 18% from RM114

million to RM135 million. As a result of our

continuous commitment to the improvement

of productivity and operational efficiency,

operational expenses has been reduced by

20%. A further reduction in bank borrowings

of approximately RM23 million has also led

to significant reduction in finance costs by

approximately 25% from RM8.5 million to

RM6.4 million. These initiatives have resulted

in significant improvements in profit from

operations from a loss of RM5 million in 2001

to a profit of RM0.2 million this year. The

major contributor to the year’s profit was

from the sales of properties under the Metro

Prima development project. The continuous effort for the improvement of operational efficiency and further

finance costs savings will see further improvement in the results of the Group in the coming year.

PROPERTY DEVELOPMENT

Our property development activities have focussed on the development of Phases 2 & 3 in Metro Prima, an urban

renewal project located at the northern fringe of Kuala Lumpur. The project consists of Vista Magna medium cost

apartments cum shopoffices and Mutiara Magna low and low-medium cost apartments which are scheduled for

completion by end 2003 and 2004 respectively. In addition, the development will also include a RM106 million

shopping complex with an estimated net lettable area of 40,000 sq. metres (400,000 sq. feet). This new landmark


Chairman’s Letter to Shareholders (cont’d)

will house Jaya Jusco as its anchor tenant and is expected to attract shoppers from the Sungai Buloh-Selayang-

Kepong neighbourhood centres. It will also act as a catalyst for further growth and appreciation of property

values in Metro Prima.

CONSTRUCTION

The major project for the construction arm in 2002 was the construction of a new hospital in Alor Setar, which

carries a sub-contract value of RM82 million. Apart from this, the Group has managed to secure a 3-year extension

of its operating contract for Bahau quarry which will provide additional guaranteed revenue until December 2005.

Previous work on the supply of rock materials and related ancillary services for the Sungai Selangor Dam and Jus

Dam in Melaka have also been successfully completed during the year.

OUTLOOK AND PROSPECTS

Moving forward, new property development projects have also been initiated. These include, among others, the

development of terrace houses in Seremban and detached houses in Mentakab, which is also part of the strategic

plan of the Group to amplify their presence in other states of Malaysia.


Chairman’s Letter to Shareholders (cont’d)

Being the major economic contributor to the national economy, the construction and property development

industries are expected to benefit from the Government’s economic initiatives. Magna Prima will continue to play

a significant role in this sector.

ACKNOWLEDGEMENT

I would like to express my gratitude to fellow

Directors for their contribution and commitment.

Encik Feisal bin Sheikh Hussein retired from the

board in November 2002. I take this opportunity

to once again bid him farewell and wish him all

the best in his future endeavours. On behalf of

the Board, I would like to thank all shareholders,

financiers, government departments, purchasers of

property in Magna Prima and business associates

for their support and confidence. Last but not

least, I also thank the management and staff for

the dedication and effort towards making Magna

Prima our pride and success.

DATO’ ABD GANI YUSOF

Executive Chairman

29 May 2003


Board of Directors and Profile

Dato’ Abd Gani bin YusofExecutive Chairman

Dato’ Abd. Gani bin Yusof, 49, was appointed a Director ofMPB on 7 November 1996 and is Executive Chairman. He wasappointed Director of MPK and MR on 1 March 1995 and 15June 1995 respectively. He chairs the Directors’ ManagementCommittee of MPB.

In 1980, he graduated from University Sains Malaysia with aBachelor of Science (Hon.) in Housing, Building and Planning.After graduation, he joined Peremba Berhad, a propertydevelopment company as a Technical Executive. He leftPeremba Berhad in 1988 as a Project Manager. From 1988 to1991, he was the General Manager of United Engineers (M)Berhad and was involved in the implementation of severalinfrastructure works in the country including the North-SouthExpressway. Subsequently, he was promoted to be a ProjectDirector in 1991 to 1992. Following that, he was appointed asManaging Director of Linkedua (M) Berhad (233673-W) for theduration 1993 to 1995. At the same time, he was also theManaging Director of Prolink Development Sdn Bhd (252945-M). Both Linkedua (Malaysia) Berhad and ProlinkDevelopment Sdn Bhd which are subsidiaries of RenongBerhad (90894-P) were involved in the construction of theSecond Link in Johor and the development of the Nusajayatownship in the vicinity of the aforementioned causewayrespectively.

Ahmad Ghazali bin Md. KassimExecutive Director

Ahmad Ghazali bin Md Kassim, aged 51, was appointed asa Director of MPB on 7 November 1996. He has been aDirector of MPB and MPK since 1994 and 1992 respectively.He sits on the Directors’ Management Committee of MPB andthe Nomination Committee. He is Executive Director forFinance & Corporate Services of MPB. He obtained a Master inBusiness Administration degree from University of SouthernCalifornia in 1987. He is a Fellow of the EconomicDevelopment Institute of World Bank and an advisor to the

International Program of the School of Business at Universityof Southern California. He served with Bank PembangunanMalaysia Berhad for almost 17 years until 1992 where his lastposition was General Manager (Operations). In 1992, he setup Magna Resources Sdn Bhd (242362-V) to provide financialand corporate services. Within the same year, he acquired a23% shareholding in Zelleco Construction Sdn Bhd (263750-M)("Zelleco") and subsequently became a Board Member of theCompany. Zelleco was subsequently restructured with theparticipation of the Malaysian Resources Corporation Berhad(7994-D) ("MRCB"). In 1994, he acquired a 35% stake inSouthern Integrated Agriculture Project Sdn Bhd (208542-M)"(SIAP") and in 1996 a subsidiary of SIAP, Johore Tenggara OilPalm Berhad (17867-T) ("JTOP") was listed on the Main Boardof the KLSE.

Ng Yak HeeExecutive Director

Ng Yak Hee, aged 58, was appointed to the Board of MPBon 7 November 1996 and is an Executive Director(Technical). He obtained his Bachelor Degree (Hons) in CivilEngineering from University Malaya in 1970. He is aprofessional Engineer with the Board of Engineers, Malaysiaand a corporate member of the Institutes of Civil EngineersMalaysia, Australia and United Kingdom. He has more than26 years of experience in the field of engineeringconsultancy, project management and construction works. Hestarted out with Minconsult Sdn Bhd (058835-P)("Minconsult") and served for 5 years, initially as an engineerand subsequently a resident engineer. He later worked inWan Mohamed & Khoo Sdn Bhd (40213-X) ("WMK") for 10years as the Director responsible for Roads and Bridges. In1987 he joined UM Engineering & Construction Pty Ltd-Australia ("UM") as its Contracts Manager. Prior to returningto Malaysia in 1992, he joined Airplan-GHD Join Venture("AGHD") for a year. Upon his return to Malaysia, he joinedRanhill Bersekutu Sdn Bhd (072416-T) ("RB") as its TechnicalDirector. He left RB in December 1994. Save for IJM whichwas a construction company, Minconsult, WMK, AGHD and

Sitting from left : Kamil A. Rahman, Dato’ Abd Gani bin Yusof, N. Chanthiran Nagappan and Ahmad Ghazali bin Md. Kassim. Standing from left : T.A. Rahman bin T. Andak, Chua Lee Boon and Ng Yak Hee.


Board of Directors and Profiles (cont’d)

RB were firms involved in the businesses of providingengineering consultancy services for infrastructure andbuilding projects among which were the Malaysia-SingaporeSecond Crossing, Light Rapid Transit 2, National SportsComplex and other major projects. Currently, he is still theExecutive Director of MPC, DE, MPK-M, MQ and CO. Ng is amember of MPB’s Directors’ Management Committee as wellas the Audit Committee.

Chua Lee BoonExecutive Director

Chua Lee Boon, aged 54, was appointed a Director of MPBon 7 November 1996. He is a Director of DE, KM and MIand is the Executive Director (Projects) of MPB. He sits onthe Directors’ Management Committee. He obtained hisBachelor Degree (Hons) in Civil Engineering from Universityof Malaya in 1973. He is a professional Engineer with theBoard of Engineers, Malaysia and a corporate member withthe Institute of Engineers, Malaysia, the Institute of CivilEngineering, United Kingdom and the Institute of Highwaysand Transportation, United Kingdom. He has more than 30years of experience in engineering construction, projectmanagement and engineering consultancy. He started workas an Engineer with Jabatan Kerja Raya (JKR) in 1973 inKedah. He was a Structural Design Engineer in the HeadOffice in JKR, K.L in 1974 and a year later in 1975 hebecame a District Engineer in Terengganu. In 1976 until1983, he was the Assistant Director of Roads for the State ofPahang. From 1984 to February 1992, he was the Director ofOperations in the Malaysian Highway Authority ("MHA"),responsible for all the engineering aspects of the North SouthExpressway and the New Klang Valley Expresswayprogramme. Upon his retirement from MHA in 1992, hejoined Pengurusan Lebuhraya Bhd (154459-T) as SeniorManager in the Business Development Department. In 1994,he joined Hyder Consulting Sdn Bhd (179134-V) (formerlyknown as Acer Consultants Sdn Bhd) ("Hyder") as director ofthe Civil & Structure Division.

T. A. Rahman bin T. AndakIndependent Non-Executive Director

T. A. Rahman bin T. Andak, aged 52, was appointed aDirector of MPB on 24 Jun 1996. Following listing of theCompany, he became an independent and non-executiveDirector. He is on the Audit Committee and theRemuneration Committee and chairs the NominationCommittee. He is also on the Board of a Subsidiary, DE. Hegraduated from Universiti Pertanian Malaysia with a Diplomain Agriculture in 1973. Following the attainment of hisDiploma in Agriculture, he has had over 23 years ofexperience in the agriculture field specialising in landscapework and agricultural projects. From 19980 – 1989, he wasthe Operations Manager with Permint Suterasemai Sdn Bhd("Permint") for 10 years. Permint was involved in thebusiness of silk worm rearing, silk fabric production andlandscaping activities. He later joined Eastern Empress SilkSdn Bhd as a Management Consultant for a year from 1990.He was self-employed from 1992 – 1994 and was involved inthe distribution and cultivation of fruits. He rejoined Permintin 1994 as a Project Manager before leaving the firm in 1995.He is currently the General Manager of Alpha Scapes (M)Sdn Bhd (369540-M), a landscaping and project managementcompany which he joined on 1 August 1996.

N. Chanthiran a/l NagappanIndependent Non-Executive Director

N. Chanthiran a/l Nagappan, aged 39, was appointed tothe Board of Magna Prima Berhad on 5 March 2002 as anindependent non-executive Director. He is in the AuditCommittee as well as the Nomination Committee and chairsthe Remuneration Committee. He holds a Bachelor’s Degree(Hons) in Accounting from University of Malaya and is aMember of the Malaysian Institute of Certified PublicAccountants and the Malaysian Institute of Accountants. He isalso qualified as a Certified Financial Planner and is aCertified Risk Professional. He is currently the sole proprietorof the accounting practise Messrs Chanthiran & Co and alsolectures on Corporate Finance and Corporate Recoveries. Hehas vast experience in financial advisory, receivership,liquidation and restructuring as he had served in thecorporate finance industry for 13 years, as Assistant Managerin Arab-Malaysian Merchant Bank Berhad and ProjectFinance Manager in Sadec Asia Pacific Sdn Bhd andAssociate Director (Corporate Finance) in Mustapha Raj Sdn.Bhd. He is an Associate Director of HC Corporate AdvisorySdn Bhd and a Director of MR Tax Consultants Sdn. Bhd.

Kamil A. RahmanIndependent Non-Executive Director

Kamil bin Datuk Haji Abdul Rahman, aged 54, is anotherindependent non-executive director and was appointed on 5 March 2002. En. Kamil chairs the Audit Committee andESOS Committee and sits on the Remuneration Committeeand the Nomination Committee. His area of specialisation isin corporate governance and corporate finance.

He graduated with a Bachelor of Commerce degree from theUniversity of Otago, New Zealand and subsequently qualifiedas a Chartered Accountant of the Institute of CharteredAccountants of New Zealand. He is also a Fellow CharteredSecretary of the Institute of Chartered Secretaries andAdministrators, United Kingdom, a Chartered Accountant ofthe Malaysian Institute of Accountants and a Fellow of theInstitute of Company Secretaries, Malaysia.

He is currently the Executive Chairman of Marska Sdn. Bhd.which is an investment holding company with interests inand associated companies dealing in corporate finance, ITand project management consultancy. His previous positionswere as Executive Director of Commerce InternationalMerchant Bankers Berhad and Senior Vice President of Bankof Commerce (M) Berhad. He is also a Director of PancaranIkrab Berhad, Khind Holdings Berhad, Global CarriersBerhad, Hotline Furniture Berhad, WDM Holdings Berhadand the Malaysia South Africa Business Council (a companylimited by guarantee).

All Directors of Magna Prima Berhad listed above areMalaysian citizens. They each do not have family ties withthe others on the Board nor with any major shareholder orthe management. None of the Directors has been penalizedfor any offence within the past 6 years (other than minortraffic offences, if any)

NB – The following references apply :MPB – Magna Prima Berhad MR – Magna Reality Sdn BhdMPC – Magna Prima MPK-M – Magna Park (Mentakab)

Construction Sdn Bhd Sdn Bhd (formerly knownas Kelana Molek Sdn Bhd)

DE – Dunia Epik Sdn Bhd MQ – Magna Quarry Services Sdn Bhd (formerly known asMagna-Idaman Sdn Bhd)

MPK – Magna Park Sdn Bhd CO – Crest Overseas Sdn Bhd


Corporate Structure

100%MAGNA REALTY SDN BHDInvestment Holding

100%MAGNA PRIMACONSTRUCTION SDN BHD

PROPERTYDEVELOPMENT

CIVIL ENGINEERING,BUILDING, QUARRY SERVICES

GENERALCONSTRUCTION

TRADING

91%MAGNA PARK SDN BHD

100%MAGNA PARK (SEREMBAN) SDN BHD

100%CREST OVERSEASSDN BHD

100%DUNIA EPIK SDN BHD

100%PRIMA HARDWARE SDN BHD

67%MAGNA QUARRYSERVICES SDN BHD(formerly known asMagna-Idaman Sdn Bhd)

100%MAGNA PARK(MENTAKAB)SDN BHD(formerly known asKelana Molek Sdn Bhd)

369519-P


Senior Management

MAGNA PRIMA BERHAD

Rosnan bin RosliSenior Manager, Finance & Corporate Serivces

Othman bin Hj. MohammadHuman Resource & Admin Manager

Sakri bin BasriBusiness Development Manager

Puad bin YaakubSenior Project Manager

MAGNA PARK SDN BHD

Zulkafli bin AbdullahExecutive Director

Norhanum binti NordinExecutive Director, Finance

Mohammad Nasir bin Mohd. NoorConstruction Manager

Siti Sarbiah binti Mohamad SaidCommercial Services Manager

Adzhar Mohammad NordinCredit Admin Manager

Crissy Lee Pooi LingAccounts Manager

Ahmad Kassim bin DaudProperty Manager

MAGNA PRIMA CONSTRUCTION SDN BHD

Yusof bin ZakariaSenior Project Manager

Chua Hock EimAssistant General Manager, Contracts

Hew Ah TuckSenior Plant Manager

Au Yong ChaiPlant Manager

Ho Fong SengSenior Project Manager

Devaprasad Jason A/L N. SamuelSenior Project Manager

Ang Tang PewSenior Quantity Surveyor

Chuah Suh NuoAccountant

DUNIA EPIK SDN BHD

Khoo Pek AiGeneral Manager, Finance

Ong Beng SoonSenior Project Manager


Terms and Reference of the Audit Committee

1. COMPOSITION

The Audit Committee shall be appointed by the Board of Directors and shall consist of at least three and amaximum of five directors. The majority of the members are independent of senior management and operationalfunctions and unencumbered by any relationship that might, in the opinion of the Board of Directors, beconsidered to be conflict of interest.

All members of the Audit Committee including the Chairman shall hold office only as long as they serve asDirectors of the Company. The members of the Audit Committee shall elect a Chairman from among theirmembers who is not an executive director or employee of the Company or any related corporation. Should anymember of the Audit Committee cease to be a Director of the Company, his membership in the Audit Committeewould cease forthwith.

If a member resigns or ceases to be a member resulting in the numbers being reduced to below three, the Boardshall, within three months, appoint such members to make up the minimum of three members.

2. OBJECTIVES

The primary objectives of the Audit committee are to:-• maintain, a direct line of communication between the Board, external auditors, management and internal

auditors through regularly scheduled meetings

• avail to the external and internal auditors private and confidential audiences at any time they desire withor without prior knowledge of management

• review existing practice and recommend to Management to formalise an ethics code for all executives andstaff of the Group.

3. AUTHORITY

The Committee is authorised by the Board to:

• investigate any activity within its terms of reference• obtain resources, which are reasonably required to enable performance of its duties• have free access to all information and documents it requires for the purpose of discharging its functions

and responsibilities• maintain direct communication channels with the external auditors and the Internal Audit Department• procure the service of external independent professional advice when deemed necessary• convene meetings with the external auditors, without the attendance of the management, whenever

deemed necessary.

4. MEETINGS

The Committee shall meet at least five times a year. Additional meetings may be called at the Chairman’sdiscretion. The Committee has the discretion to invite relevant personnel including external auditors and otheradvisors, if deemed necessary. The quorum for each meeting shall be two members.

Minutes of each meeting shall be kept and distributed to each member of the Committee and also members ofthe Board. The Committee Chairman shall report to the Board on activities of the committee.

5. SECRETARY

The Company Secretary shall be the secretary of the committee and be responsible for drawing up agendas inconsultation with the Chairman. The agenda, together with relevant documentation shall be circulated to theCommittee members, one week prior to each meeting.


Audit Committee (cont’d)

The secretary shall be responsible for recording attendance, keeping minutes of meetings and circulating minutes ofmeetings to the Committee members and members of the Board of Directors.

6. DUTIES AND RESPONSIBILITIES

The duties and responsibilities of the Committee are to:• review all financial information for publication, including quarterly and annual financial statements prior to

submission to the Board of Directors. The review shall focus on:- changes in accounting policies and practices- major judgmental areas- significant audit adjustments from the external auditors- compliance with accounting standards- compliance with KLSE and other regulatory and legal requirements

• discuss with the external auditor, the nature, scope and approach of the audit of the financial statements

• discuss with the external auditor on areas of concern arising from the audit of the financial statements

• assess the adequacy and effectiveness of the accounting procedures and the internal controls systems ofthe Company by reviewing management letters from external and internal auditors

• discuss problems and reservations arising from the interim and final audits and any matters the auditorsmay wish to discuss in the absence of the management, where necessary

• review the internal audit plan and processes, consider the major findings of internal audit and recommendactions and steps to be taken by management in response to the findings

• review the relevance and adequacy of the scope, functions and resources of internal audit and thenecessary authority to carry out the function

• determine extent of cooperation and assistance given by employees

• review any related party transactions and conflict of interest situations that may arise within the Company

• consider the appointment of the external auditors, the terms of reference of their appointment and anyquestions on resignation and dismissal before recommendation to the Board

• undertake such other responsibilities as may be agreed to by the Committee and the Board

• report its activities, significant results and findings.

THE AUDIT COMMITTEE

The Audit Committee was established on 13th January 1997 to act as a committee of the Board of Directors.

1. MEMBERS

Members of the Audit Committee during the financial year ended 31 December 2002 are as follows:

Members Status

Kamil A.Rahman * (Chairman) Independent Non-Executive DirectorFeisal Sheikh Hussein** Independent Non-Executive DirectorNg Yak Hee Non Independent Executive DirectorsT.A.Rahman T.Andak Independent Non-Executive DirectorN.Chanthiran Nagappan * Independent Non-Executive Director

*Appointed on 28 November 2002** Resigned on 28 November 2002


Audit Committee (cont’d)

2. MEETINGS

The Audit Committee convened eleven meetings during the financial year. The meetings were appropriatelystructured through the use of agendas and meeting papers, which were distributed to members with sufficientnotification.

Members No. of meetings No. of meetings attendedheld during tenure

Kamil A.Rahman (Chairman) 9 8Feisal Sheikh Hussein 11 8Ng Yak Hee 11 8T.A.Rahman T.Andak 11 9N.Chanthiran Nagappan 9 9

The Executive Director for Finance & Corporate Services and the General Manager, Group Corporate Financewere present by invitation in all meetings. Representatives of the external auditors as well as the Group InternalAuditor also attended the meetings upon invitation.

3. SUMMARY OF ACTIVITIES

During the year under review, the Audit Committee carried out the following duties in accordance with its termsof reference:• reviewed the quarterly unaudited financial results and audited financial statements prior to submission to the

Board for consideration and approval• reviewed the external auditors’ scope of work and audit plan for the year• reviewed and discussed the external auditors’ audit plan for the year• reviewed and discussed the external auditors’ audit report and areas of concern• considered the appointment and the terms of reference of the external auditors• reviewed the internal audit plan, considered the major findings of internal audit and recommended actions

to be taken by the management in response to the findings• assessed the adequacy and effectiveness of the accounting procedures and internal control systems of the

Company by reviewing the management letters from the external and internal auditors• reviewed the relevance and adequacy of the scope, functions and resources of internal audit and the

necessary authority to carry out the function• reviewed related party transactions• reported to the Board on its activities and significant findings and results.

4. INTERNAL AUDIT FUNCTIONS

During the year under review, the Internal Audit Department carried out the following activities:

• presented and obtained approval from the Audit Committee, the internal audit plan, strategy and scope ofwork

• reviewed and analysed key business processes and provided recommendations for improvements• monitored and ensured implementation of corrective action plans by the management• monitored compliance with policies and procedures and reviewed the adequacy and effectiveness of the

internal control structure of the Company• conducted a series of risk assessment workshops with the Group’s business units and departments• carried out investigation assignments.


Statement on Corporate Governance

The Malaysian Code on Corporate Governance is aimed at providing guidelines for companies especially public

listed companies to observe good corporate governance in their business practice.

The Magna Prima Group fully subscribes to good corporate governance and is committed in ensuring that it is

managed with integrity, transparency and accountability. These have always been recognised by the Group as its

key responsibility in achieving its objectives of enhancing stakeholders’ value and protecting the assets of the Group.

The Board will continue to take appropriate actions to ensure compliance of the Malaysian Code on Corporate

Governance in order to further improve best practices of the Group.

BOARD OF DIRECTORS

The Board

An experienced and effective Board consisting of members with a wide range of technical, financial, corporate and

management skills and experience leads and control the Group. The Board is responsible for the overall

management of the Group and in ensuring that the Group is managed with integrity, transparency and

accountability.

Board Balance

The Board with a balanced composition of executive and non-executive directors, currently comprises seven

members, four Executive Directors and three Independent Non Executive Directors.

The composition of the Board is as follows:

Directors Executive Independent Non-

Director Executive Director

Dato’ Abd Gani Yusof ✓

Ahmad Ghazali Md. Kassim ✓

Ng Yak Hee ✓

Chua Lee Boon ✓

T.A. Rahman T. Andak ✓

Kamil A. Rahman ✓

N. Chanthiran Nagappan ✓


Statement on Corporate Governance (cont’d)

Board Meetings

During the year, fourteen Board meetings were held and details of attendance by the Directors are as disclosed below:-

Directors No. of Meetings Attended %

Executive Directors

Dato’ Abd Gani Yusof 9/14 64

Ahmad Ghazali Md. Kassim 11/14 78

Ng Yak Hee 12/14 85

Chua Lee Boon 11/14 78

Non-Executive Directors

Feisal Sheikh Hussein ** 8/14 57

T.A.Rahman T.Andak 12/14 85

Kamil A.Rahman * 10/10 100

N.Chanthiran Nagappan* 8/10 80

Notes

* Appointed on 5 March 2002

**Resigned on 28 November 2002

Supply of Information

All Board members are supplied with information on a timely manner. Board reports are circulated prior to

Board meetings and the reports provide, amongst others, financial and corporate information, significant

operational, financial and corporate issues, performance of the Company and of the Group and management

proposals which require the approval of the Board.

The Directors have access to all information within the Group as a full Board or in their individual capacity

in discharging their duties and responsibilities. They also have direct access to the advice and the service of

the Company Secretaries, the external auditors and other independent professionals at all times.

The Company Secretaries appointed by the Board are qualified professionals under the Companies Act and

are individuals who are competent to provide strong and positive support to the Board.

Appointments to the Board

The Board has established a Nomination Committee, which has the primary responsibility to assess the suitability

of proposed board members and to recommend such appointments to the Board. The objective of the

establishment of this Committee is to ensure independent assessment of appointments to the Board. The


committee is also responsible for annual assessment of the mix skills and experience possessed by Board members

to ensure effectiveness of the Board, the committees of the Board, and the contribution of individual Directors.

The Nomination Committee comprises three Independent Non-executive Directors and one Executive Director.

During the financial year 2002, the committee met once with all members present.

Directors Training

All the Directors have completed their Mandatory Accreditation Programme ("MAP") conducted by the

Research Institute of Investment Analysts Malaysia. The Directors will continue to undertake other relevant

training programmes to further enhance their skills and knowledge.

Re-election

In accordance with 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. The Directors shall also retire from office at least once in three years but shall be eligible for re-

election.

THE AUDIT COMMITTEE

The Board is also assisted by the Audit Committee whose members, terms of reference and activities for the

year under review are stated on pages 10 and 11 of the Annual Report.

DIRECTORS’ REMUNERATION

The Remuneration Committee

The Remuneration Committee reviews and recommends to the Board the remuneration package of the

executive directors and senior management of the Group with the main aim of providing the level of

remuneration sufficient to attract and retain key personnel needed to run the Group successfully. Mr.

N.Chanthiran Nagappan chairs the committee comprising totally non-executive directors. Other members

include En. Kamil A. Rahman and En.T A Rahman T Andak.

Details of Directors’ remuneration in 2002 are as follow:-

Annual Remuneration Executive Non-Executive

Up to RM50,000 - 4RM200,000 - RM250,000 1 -RM250,001 - RM300,000 3




SHAREHOLDERS

Investment and Shareholders CommunicationIt has always been the company’s practice to maintain good relationship with its shareholders. Major corporate

developments and happenings in the Company have always been promptly announced to all shareholders, in

line with KLSE’s objectives of ensuring transparency and good corporate governance practice.

The financial performance of the Group, major corporate developments and other relevant information are

promptly disseminated to shareholders and investors via announcements of its quarterly performance, annual

report and corporate announcements to KLSE.

During the Annual General Meeting, shareholders are usually given a presentation on the performance and

major activities of the Group during the year under review, whereby the shareholders have opportunity to

enquire and comment on the Company’s performance and operations.

ACCOUNTABILITY AND AUDIT

Financial Reporting

In its financial reporting via quarterly announcements of results, annual financial statements and annual report

presentations including the Chairman’s Statement and Review of Operations, the Board of Directors always

provides a comprehensive assessment of the Group’s performance and prospects for the benefits of

shareholders, investors and interested parties. The Audit Committee also assists the Board in overseeing the

financial reporting processes of the Group and quality of its financial reporting.

Directors responsibility in financial reporting

The Board of Directors is responsible for the preparation of the annual financial statements of the Group and

to ensure that the financial statements give a true and fair view of the state of affairs of the Group and its result

and cash flow for the financial year.

The Board of Directors has ensured that the financial statement have been prepared in accordance with

applicable approved accounting standards in Malaysia, the requirements of the Companies Act 1965 and other

regulatory provisions. In preparing the financial statements, the Board of Directors has ascertained that

reasonable prudent judgement and estimates have been consistently applied and the accounting policies

adopted have been complied with.

The Directors have a general responsibility of taking reasonable steps as to safeguard the assets of the Group

and to prevent and detect any irregularities.

Relationship with the Auditors

Through the Audit Committee of the Board, the Group has established transparent and appropriate

relationship with the Group’s auditors, both internal and external. The Audit Committee also meets the

external auditors at least once a year without the presence of the management.


Statement on Internal Control

The Board of Directors is pleased to submit herewith the Statement on Internal Control of the Group.

Board’s Responsibility

The Board acknowledges that it is responsible for the Group’s system of internal control to safeguard

shareholders’ investment and the Group’s assets and for the continuing review of its adequacy and integrity.

For the year under review, the Group has in place a system of internal control and has established an on-

going process of reviewing, identifying, evaluating and managing significant risks faced by the Group.

The system of internal control and the process of risk management are reviewed regularly by the Board with

the assistance of the Audit Committee, Internal Audit Department and all relevant personnel of the Group

through a combination of key processes.

It must be noted that the system of internal control is designated to manage rather than to eliminate the risk

of failure to achieve business objectives and can only provide reasonable and not absolute against material

misstatement or loss.

Key Process of Controls

• The Board meets regularly to monitor and review the overall performance of the Group, to consider

the findings and recommendations of committees and to consider and approve measures to be taken

and changes in policies and procedures necessary to address risks and to enhance the system of

internal control.

• The Audit Committee which among other things is given the responsibility of assisting the Board in

the on-going evaluation of the system of internal control meets regularly to approve internal and

external audit plans and to consider the findings and recommendations of the internal and external

auditors and members of the Group’s management with a view to regularly enhance the system of

internal control.

• The Board is further assisted by a Management Committee comprising all executive members of the

Board that schedules weekly meetings with the management staff of each business unit of the Group

to closely monitor among other things, operational, project implementation, new business prospects,

human resource and financial issues and to identify risks and control issues that may require further

action.

• The Group has in place an Internal Audit Department to assist the Audit Committee to carry out

reviews of the risk identification procedures, the operations of internal controls and the review of

key business activities of the Group on the basis of audit plans that are drawn up based on the risk

profiles of the business units and that are approved by the Audit Committee.

• The Group has in place an organisation structure with proper segregation of duties and reporting

procedures and all heads of business units and departments are accountable for ensuring the

effective implementation of established policies and procedures.

• The Group has a policy on the level of authorisation required and the financial limits for each level

of authority in respect of revenue and capital expenditure.


Statement on Internal Control (cont’d)

• The Audit Committee with the assistance of the Internal Audit Department has also set in place an

on-going process of further formalising the risk management systems and has conducted a series of

risk assessment workshops with the Group’s business units and department.

• In connection with the on-going process of developing the risk management system and system of

internal control, the Internal Audit Department is in the process of compiling laid down controls into

manuals to facilitate implementation, on-going review and ensure continuity of the control.

• Regular financial reports, operational reports and internal audit reports are made available for the

review of the Board and its committees.

• A subsidiary of the Group, Magna Prima Construction Sdn Bhd which holds an ISO9002 certification,

is subject to regular annual audits by the internal and SIRIM auditors to ensure its systems and

documentation procedures continue to meet ISO9002 certifications.

Issues of internal control arising from annual audits have been reported to the Audit Committee which has or

will institute measures to be taken by the appropriate personnel to address such issues.

The Board is of the opinion that based on the current level of activities, the Group’s system of internal control

is adequate and accords with the guidance provided by KLSE’s Statement of Internal Controls : Guidance for

Directors of Public Limited Companies’.

Directors’ Report

Consolidated Balance Sheet

Consolidated Income Statement

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

Balance Sheet

Income Statement

Statement of Changes in Equity

Cash Flow Statement

Notes to the Financial Statements

Statement by Directors

Statutory Declaration

Report of the Auditors to the Members

F i n a n c i a lS t a t e m e n t s

20

24

25

26

27

28

29

30

31

32

62

62

63

20 Magna Pr ima Berhad Annual Report 2002

Directors Report

The directors have pleasure in submitting their report together with the audited financial statements of theCompany and of the Group for the financial year ended 31st December 2002 and the auditors' report thereon.

PRINCIPAL ACTIVITIES

The principal activities of the Company is that of an investment holding company and provision of managementservices. The principal activities of the subsidiary companies are set out in Note 11 to the financial statements. Therehave been no significant changes in the nature of these activities during the year.

FINANCIAL RESULTS Group Company

RM RM

Profit after taxation 341,694 138,524

Minority interests (90,993) -

Net profit for the year 250,701 138,524

RESERVES AND PROVISIONS

There were no material transfers made to or from reserves or provisions accounts during the year other than thosedisclosed in the financial statements.

DIVIDEND

No dividends have been paid, declared or proposed since the end of the previous financial year.

DIRECTORS

The names of the directors in office since the date of the last directors' report on 30th April 2002 are as follows:-

Dato’ Abd Gani Bin YusofAhmad Ghazali Bin Md. KassimT. A. Rahman Bin T. AndakNg Yak HeeChua Lee BoonKamil Hj Abdul RahmanN. Chanthiran a/l NagappanFeisal Bin Sheikh Hussein (Resigned on 28.11.2002)

In accordance with Article 100 of the Company's Articles of Association, Ahmad Ghazali Bin Md. Kassim and NgYak Hee retire at the forthcoming Eighth Annual General Meeting and being eligible, offer themselves for re-election.

Particulars of directors' interest in shares in the Company and its related corporations as shown in the Register ofDirectors' Shareholdings are as follows:-


Directors’ Report (cont’d)

DIRECTORS (CONT’D)

DIRECTORS IN OFFICE AT THE END OF THE FINANCIAL YEAR

Number of ordinary shares of RM1.00 each As at During the year As at

Shareholdings in the Company 01.01.2002 Acquired Disposed 31.12.2002

Dato' Abd Gani Bin Yusof- Direct interest 5,559,313 - - 5,559,313

Ahmad Ghazali Bin Md. Kassim - Direct interest 711,269 - - 711,269 - Indirect interest 3,286,107 - - 3,286,107

Ng Yak Hee - Direct interest 730,930 - - 730,930

Chua Lee Boon- Direct interest 485,930 - - 485,930

Ng Yak Hee & Chua Lee Boon- Indirect interest 4,063,384 - - 4,063,384

Shareholdings in subsidiary company, Number of ordinary shares of RM1.00 each Magna Park Sdn Bhd As at During the year As at

01.01.2002 Acquired Disposed 31.12.2002

Dato' Abd Gani Bin Yusof andAhmad Ghazali Bin Md. Kassim- Indirect interest 675,000 - - 675,000

By virtue of his interest in the shares of the Company, Dato' Abd Gani Bin Yusof is deemed to be interested in theshares of all other subsidiary companies that are held by the Company.

Except as disclosed above, no other directors held any interest in the shares in the Company and its relatedcorporations.

As at the end of the financial year and during the year, there did not subsist any arrangement to which the Companywas a party, whereby the directors or their nominees might acquire benefits by means of the acquisition ofshares in, or debentures of, the Company or any other body corporate other than any benefits that may arise fromthe following:-

(a) The Company's proposed acquisition of the entire paid-up share capital of MH Projects Sdn Bhd via a VoluntaryOffer and which is to be satisfied by the issuance of new ordinary shares of RM1.00 each of the Company tothe vendors as detailed in Note 34(a) to the financial statements. Dato' Abd Gani Bin Yusof is a deemedsubstantial shareholder of one of the vendors.

(b) The Company's Employee Share Option Scheme as detailed in Note 34(b) to the financial statements and ofwhich Dato' Abd Gani Bin Yusof, Ahmad Ghazali Bin Md. Kassim, Ng Yak Hee and Chua Lee Boon shall eachbe entitled to options of up to a maximum 400,000 new ordinary shares of RM1.00 each in the Company.

Since the end of the previous financial year, no director has received or become entitled to receive any benefits(other than a benefit included in the aggregate amount of remuneration received or due and receivable by thedirectors and as shown in the financial statements) by reason of a contract made by the Company or a relatedcorporation with the director or his nominees or with a firm of which he is a member or with a company in whichhe has a substantial financial interest other than by virtue of transactions entered into in the ordinary course ofbusiness and any benefits that may be derived from the arrangements mentioned in the preceeding paragraphs.



OTHER STATUTORY INFORMATION

(a) Before the financial statements of the Company and of the Group were made out, the directors took reasonablesteps:-

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the makingof provision for doubtful debts and satisfied themselves that all known bad debts had been written offand that adequate provision had been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accountingrecords in the ordinary course of business have been written down to an amount which they might beexpected so to realise.

(b) As at the date of this report, the directors are not aware of any circumstances:-

(i) which would render the amount written off for bad debts and provision made for doubtful debts in theCompany and the Group inadequate to any substantial extent;

(ii) which would render the values of current assets in the financial statements of the Company and of theGroup misleading; and

(iii) which have arisen which render adherence to the existing method of valuation of assets and liabilities ofthe Company and of the Group misleading or inappropriate.

(c) As at the date of this report, there does not exist:-

(i) any charge on the assets of the Company and of the Group which has arisen since the end of the financialyear which secures the liabilities of any other person; and

(ii) any contingent liability in respect of the Company and of the Group which has arisen since the end ofthe financial year.

(d) In the opinion of the directors:-

(i) no contingent or other liability has become enforceable or is likely to become enforceable within theperiod of twelve months after the end of the financial year which will or may affect the ability of theCompany and of the Group to meet their obligations when they fall due;

(ii) the results of the Company's and of the Group's operations during the financial year were notsubstantially affected by any item, transaction or event of a material and unusual nature; and

(iii) no item, transaction or event of a material and unusual nature has arisen in the interval between the endof the financial year and the date of this report which is likely to affect substantially the results ofoperations of the Company and of the Group for the financial year in which this report is made otherthan as disclosed in Note 34 to the financial statements.

(e) As at the date of this report, the directors are not aware of any circumstances not otherwise dealt with in thisreport or the financial statements of the Company and of the Group which would render any amount stated inthe financial statements misleading.



AUDITORS

The auditors, Messrs. Folks DFK & Co., have indicated that they do not wish to seek re-appointment.

Signed in accordance with a resolution of the directors,

DATO' ABD GANI BIN YUSOFDirector

KAMIL HJ ABDUL RAHMANDirector

Kuala Lumpur

Dated: 28 April 2003


Consolidated Balance Sheet as at 31st December 2002

2002 2001NOTES RM RM

SHARE CAPITAL 4 33,300,000 33,300,000

RESERVES 5 5,427,678 5,979,793

SHAREHOLDERS' FUNDS 38,727,678 39,279,793

MINORITY INTERESTS 2,352,750 2,261,757

LONG TERM AND DEFERRED LIABILITIESDeferred taxation 6 1,143,400 1,273,800

Hire purchase creditors 7 1,042,676 1,891,629

Trade creditor 8 1,604,629 2,208,847

Term loans (secured) 9 7,630,073 2,925,874

Other bank borrowing (unsecured) 21 - 700,000

52,501,206 50,541,700

Represented by :-

PROPERTY, PLANT AND EQUIPMENT 10 16,973,179 26,342,493

JOINT VENTURES 12 6,052,651 9,265,784

INVESTMENTS 13 425,000 425,000

REAL PROPERTY ASSETS 14 1,678,695 1,664,653

CURRENT ASSETSInventories 15 7,758,108 12,455,567 Gross amount due from customers for contract work 16 3,419,112 3,051,656 Development properties 17 94,769,317 92,710,540 Debtors 18 40,944,183 44,719,285 Deposits, cash and bank balances 19 6,331,440 6,579,958

153,222,160 159,517,006

CURRENT LIABILITIESCreditors 20 84,603,729 80,845,307 Bank borrowings 21 33,626,043 56,309,724 Taxation 7,620,707 9,518,205

125,850,479 146,673,236

NET CURRENT ASSETS 27,371,681 12,843,770

52,501,206 50,541,700

The notes on pages 32 to 61 form an integral part of these financial statements.


Consolidated Income Statement for the year ended 31st December 2002


REVENUE 22 134,950,109 113,884,856

COST OF SALES 23 (125,136,816) (104,990,108)

GROSS PROFIT 9,813,293 8,894,748

OTHER OPERATING INCOME 1,899,973 962,921

DISTRIBUTION EXPENSES (410,711) (855,307)

ADMINISTRATION EXPENSES (3,452,050) (4,551,217)

OTHER OPERATING EXPENSES (1,228,144) (924,279)

PROFIT FROM OPERATIONS 6,622,361 3,526,866

FINANCE COSTS (6,396,919) (8,516,268)

SHARE OF RESULTS OF JOINT VENTURE ENTITIES (290,015) 8,878,042

(LOSS)/PROFIT BEFORE TAXATION 24 (64,573) 3,888,640

TAXATION 25 406,267 (3,741,814)

PROFIT AFTER TAXATION 341,694 146,826

MINORITY INTERESTS (90,993) (91,899)

NET PROFIT FOR THE YEAR 250,701 54,927

EARNINGS PER SHARE (SEN) 26 0.8 0.2



Consolidated Statement of Changes in Equity for the year ended 31st December 2002

Share Share Capital Reserve on RetainedCapital Premium Reserve Consolidation Profit Total

RM RM RM RM RM RM

Balance at 31st December 2000 33,300,000 2,272,804 29,994 908,090 2,973,432 39,484,320

Amount credited to income statement - - - (259,454) - (259,454)

Net profit for the year - - - - 54,927 54,927


Amount credited to income statement - - - (259,454) - (259,454)

Shares issue expenses - (543,362) - - - (543,362)Net profit for the year - - - - 250,701 250,701




Consolidated Cash Flow Statement for the year ended 31st December 2002

2002 2001RM RM

CASH FLOWS FROM OPERATING ACTIVITIES(Loss)/Profit before taxation (64,573) 3,888,640 Adjustments for:- Depreciation 4,328,789 6,201,842 Gain on disposal of property, plant and equipment (108,426) -Plant and equipment written off 337,132 13,214 Share of joint venture loss/(profit) 290,015 (8,878,042)Loss on disposal of property, plant and equipment 57,914 524,026 Interest income (344,630) (325,969)Interest expense 6,396,919 8,516,268 Reserve on consolidation recognised (259,454) (259,454)Allowance for doubtful debts - 100,000 Bad debts written off 507,856 76,873 Write back of provision for expenses no longer required (804,542) -

Operating profit before working capital changes 10,337,000 9,857,398 Decrease/(Increase) in inventories 4,697,459 (12,405,644)(Increase)/Decrease in gross amount due from

customers for contract work (367,456) 2,049,359 (Increase)/Decrease in development properties and real property assets (2,072,819) 15,439,424 Decrease in trade and other debtors 3,672,846 1,753,187 Increase/(Decrease) in trade and other creditors 4,455,648 (5,664,268)

Cash generated from operations 20,722,678 11,029,456 Taxation paid (2,027,231) (652,557)Interest received 344,630 325,969 Interest paid (6,396,919) (8,516,268)

Net cash from operating activities 12,643,158 2,186,600

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment [Note 27(a)] (574,442) (163,273)Net proceeds from disposal of property, plant and equipment 5,868,627 18,450,831 Receipts from joint venture entities 2,923,118 -Real Property Gains Tax paid (67,580) -Placement of fixed deposits (734,902) -

Net cash from investing activities 7,414,821 18,287,558

CASH FLOWS FROM FINANCING ACTIVITIESPayment of hire purchase liabilities (1,818,555) (5,753,825)Term and bridging loans repaid (9,319,147) (11,051,365)Net repayment of short term bank borrowings (5,895,762) (618,504)Shares issue expenses (543,362) -

Net cash used in financing activities (17,576,826) (17,423,694)

NET INCREASE IN CASH AND CASH EQUIVALENTS 2,481,153 3,050,464 Cash and cash equivalents at beginning of year (8,834,644) (11,885,108)

CASH AND CASH EQUIVALENTS AT ENDOF YEAR [Note 27(b)] (6,353,491) (8,834,644)



Balance Sheet as at 31st December 2002


SHARE CAPITAL 4 33,300,000 33,300,000

RESERVES 5 2,572,518 2,977,356

SHAREHOLDERS' FUNDS 35,872,518 36,277,356

LONG TERM AND DEFERRED LIABILITIESDeferred taxation 6 16,100 16,100 Other bank borrowing (unsecured) 21 - 700,000

35,888,618 36,993,456

Represented by :-

PROPERTY, PLANT AND EQUIPMENT 10 116,845 126,190

SUBSIDIARY COMPANIES 11 30,750,998 30,750,998

CURRENT ASSETSDebtors 18 7,073,314 8,167,615 Deposits, cash and bank balances 19 4,442 10,599

7,077,756 8,178,214

CURRENT LIABILITIESCreditors 20 790,966 681,021 Bank borrowings 21 1,078,447 1,274,209 Taxation 187,568 106,716

2,056,981 2,061,946

NET CURRENT ASSETS 5,020,775 6,116,268

35,888,618 36,993,456



Income Statement for the year ended 31st December 2002


REVENUE 22 500,000 500,000

OTHER OPERATING INCOME 88,833 -

ADMINISTRATION EXPENSES (344,716) (345,911)

OTHER OPERATING EXPENSES (8,371) (16,944)

PROFIT BEFORE TAXATION 24 235,746 137,145

TAXATION 25 (97,222) (77,000)

NET PROFIT FOR THE YEAR 138,524 60,145



Statement of Changes in Equity for the year ended 31st December 2002

Share Share RetainedCapital Premium Profit Total

RM RM RM RM

Balance at 31st December 2000 33,300,000 2,272,804 644,407 36,217,211

Net profit for the year - - 60,145 60,145


Shares issue expenses - (543,362) - (543,362)

Net profit for the year - - 138,524 138,524




Cash Flow Statement for the year ended 31st December 2002

2002 2001RM RM

CASH FLOWS FROM OPERATING ACTIVITIESProfit before taxation 235,746 137,145 Adjustments for:- Depreciation 19,239 18,385

Operating profit before working capital changes 254,985 155,530 (Increase)/Decrease in other debtors (435) 90,096 Increase/(Decrease) in other creditors 468,982 (177,598)

Cash generated from operations 723,532 68,028 Taxation paid (16,370) (19,124)

Net cash from operating activities 707,162 48,904

CASH FLOWS FROM INVESTING ACTIVITYPurchase of property, plant and equipment [Note 27(a)] (9,894) (1,220)

CASH FLOWS FROM FINANCING ACTIVITIESRepayment from subsidiary companies 735,699 252,347 Repayment of short term bank borrowings (895,762) (297,034)Shares issue expenses (543,362) -

Net cash used in financing activities (703,425) (44,687)

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (6,157) 2,997 Cash and cash equivalents at beginning of year 10,599 7,602

CASH AND CASH EQUIVALENTS AT END OF YEAR [Note 27(b)] 4,442 10,599



Notes to the Financial Statements at 31st December 2002

1. GENERAL INFORMATION

Magna Prima Berhad, a company incorporated and domiciled in Malaysia, is a public company limited byshares, and is listed on the Second Board of the Kuala Lumpur Stock Exchange ("KLSE").

The principal activities of the Company during the year is that of an investment holding company and provisionof management services. The principal activities of the subsidiary companies are set out in Note 11 to thefinancial statements.

Its registered office and principal place of business is located at No. 2, Jalan Prima 5, Metro Prima, 52100 KualaLumpur.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolutionof the directors on 28th April 2003.

2. FINANCIAL INSTRUMENTS

(a) A financial instrument is any contract that gives rise to both a financial asset of one enterprise and afinancial liability or equity instrument of another enterprise.

Financial assets of the Group include quoted investments, trade and other debtors, deposits with licensedbanks, and cash and bank balances.

Financial liabilities of the Group include trade and other creditors, hire purchase creditors and bankborrowings.

The Group's accounting policies and methods adopted in respect of its financial instruments and furtherinformation thereof are disclosed in the individual accounting policy statements or notes to the financialstatements associated with the respective financial instrument.

(b) The Group's financial instruments are subject to a variety of financial risks including credit risk, interestrate risk, market risk, liquidity and cashflow risks.

The Group's overall financial risk management objective is to seek to address and control the risks towhich the Group is exposed and to minimise or avoid the incidence of loss that may result from itsexposure to such risks and to enhance returns where appropriate.

The Board is primarily responsible for the management of these risks and to formulate policies andprocedures for the management thereof. The risks are managed by regular risk reviews, internal controlsystems, on-going formulation and adherence to financial risk policies and mitigated by insurancecoverage where appropriate.

(i) Credit Risk

Credit risk is the risk of financial loss attributable to default on obligations by parties contractingwith the Group. The Group's main exposure to credit risk is in respect of its trade debtors.

Credit risk is addressed by a management committee that sets policies, carries out evaluation andinstitutes mitigating actions.

In respect of construction and engineering activities, potential clients are subject to a creditevaluation process. Existing clients' risk profiles are reviewed regularly to avoid any financial lossand where appropriate, further contract works may be suspended and legal actions are taken toattempt recoveries and mitigate losses. For property development activities, vacant possession andtitles to properties sold are withheld until full payment has been made by purchasers of propertiesdeveloped by the Group.


Notes to the Financial Statements (cont’d)

2. FINANCIAL INSTRUMENTS (CONT’D)

(ii) Interest Rate Risk

The Group has interest rate risk in respect of its borrowings and deposits with licensed bank.

Bank borrowings are subject to interest based on floating rates while hire purchase financing andinterest bearing deposits are based on fixed rates.

Market interest rates movements are monitored with a view to ensuring that the most competitiverates are secured and where appropriate borrowings arrangements and interest bearinginstruments are restructured or reduced.

(iii) Market Risk

Market risk is the risk that the value of the financial instruments will fluctuate due to changes inmarket prices.

In this respect, the Group is exposed to the risk of fluctuation in the market price of quoted sharesinvested by the Group.

The Group does not engage in speculative investments and its investment in the quoted shares isheld for long term.

(iv) Liquidity and Cash Flow Risks

Liquidity or funding risk is the risk of the inability to meet commitments associated with financialinstruments while cash flow risk is the risk of uncertainty of future cash flow amount associatedwith a monetary financial instrument.

Liquidity and cash flow risks are addressed by annual and continuous review and forwardplanning of cash flow in relation to business plans to ensure a balanced and prudent portfolio ofcash and other liquid assets and credit facilities is maintained. The proper management of interestrate and credit risks have the effect of further minimising the incidence and effects of liquidity andcash flow risks.

3. SIGNIFICANT ACCOUNTING POLICIES

All significant accounting policies set out below are consistent with those applied in the previous year.

(a) Basis of Preparation

The financial statements of the Company and of the Group have been prepared under the historical costconvention unless as otherwise indicated in this summary of significant accounting policies and complywith applicable approved Accounting Standards in Malaysia.

The Group has chosen to apply the Malaysian Accounting Standards Board Standard 21 on BusinessCombinations ("MASB 21") prospectively as allowed for under the transitional provision of MASB 21 inthe preparation of the financial statements of the Group. Accordingly, business combinations effectedprior to 1st January 2002 have not been restated to comply with MASB 21.

(b) Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and all itssubsidiary companies made up to the end of the financial year. Subsidiary companies are thosecompanies in which the Group has power to exercise control over the financial and operating policiesso as to obtain benefits from their activities. All inter-company transactions are eliminated onconsolidation and the consolidated financial statements reflect external transactions only. Dunia Epik SdnBhd, Magna Prima Construction Sdn Bhd and Magna Realty Sdn Bhd are consolidated using the mergermethod of accounting in accordance with Malaysian Accounting Standard No. 2 on Accounting forAcquisitions and Mergers, the applicable accounting standard during the first period of theirconsolidation. The consolidation of all other subsidiary companies are based on the acquisition method.



3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(b) Basis of Consolidation (cont’d)

(i) Under the merger method of accounting, the results of subsidiary companies are presented as ifthe companies have been combined throughout the current and comparative accounting periods.The cost of investment in the Company's books is recorded at the nominal value of shares issued.

Where the nominal value of the share capital issued as purchase consideration is greater than thenominal value of the share capital of the subsidiary companies acquired, the difference arising isdeducted against consolidated reserve.

The excess of the nominal value of the share capital of the subsidiary companies acquired overthe nominal value of the share capital issued as purchase consideration is taken to merger reserve.

(ii) Under the acquisition method of accounting, the results of the subsidiary companies acquired ordisposed of during the year are included from the date of acquisition or up to the date of disposal.At the date of acquisition, the fair value of the subsidiary companies' net assets are determinedand these values are reflected in the consolidated financial statements.

The difference between the acquisition cost and their fair values is reflected as goodwill or reserveon consolidation as appropriate. Goodwill arising on consolidation is amortised over its estimateduseful economic life or written off in the year of acquisition to the consolidated income statementunder other operating expenses where it is deemed to have no continuing benefit. Reserve onconsolidation is credited to the consolidated income statement under other operating income overthe period it is estimated to accrue.

Minority interest is measured at the minority's share of the post acquisition fair values of the identifiableassets and liabilities of the subsidiary company.

(c) Investments

Investments in subsidiary companies are stated at cost. Where an indication of impairment exists, thecarrying amount of the investment is assessed and allowance is made for impairment where appropriatebased on the recoverable amount.

Investments in other non-current investments are stated at cost and an allowance for diminution in valueis made where, in the opinion of the directors, there is a decline other than temporary in the value ofsuch investments. Such a decline is recognised as an expense in the income statement.

On disposal of an investment, the difference between net disposal proceeds and its carrying amount ischarged or credited to the income statement.

(d) Property, Plant and Equipment and Depreciation

Property, plant and equipment are stated at cost less accumulated depreciation.

Freehold land is not amortised. Leasehold land is amortised over the lease period of 50 years. All otherproperty, plant and equipment are depreciated on the straight line basis so as to write off the costs ofthe assets over their estimated useful lives.

The principal annual rates used are as follows :-

Buildings 2% - 10%Plant and machinery 10%Furniture, fittings and equipment 10% - 20%Motor vehicles 20%Container store and cabin 10% - 20%Office renovation 10%

Where the carrying amount of an asset exceeds its estimated recoverable amount, the asset is writtendown to the estimated recoverable amount.




(e) Revenue Recognition

Revenue from construction contracts is recognised as detailed in Note 3(g).

Revenue from property development is recognised as detailed in Note 3(h).

Revenue from sale of goods and provision of services incidental to construction contracts is recognisedwhen the goods are delivered and services are rendered respectively.

Rental income is recognised on an accrual basis over the period of the tenancy.

Income from investment is recognised when the right to receive payment has been established.

All intra group revenue are eliminated on consolidation.

(f) Inventories

Completed properties held for sale are stated at the lower of cost and net realisable value. Cost isdetermined based on the specific identification method and includes cost of land and construction,proportion of overheads and interest incurred during construction.

(g) Construction Contracts

(i) Revenue and Expense Recognition

When the outcome of a construction contract can be estimated reliably, contract revenue andcontract cost are recognised over the period of the contract as revenue and expense respectivelyusing the percentage of completion method, determined by reference to the proportion thatcontract costs incurred todate bear to the estimated total contract costs.

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

When it is estimated that the total contract costs will exceed total contract revenue, the expectedloss is recognised as an expense immediately.

(ii) Gross Amount Due From/(To) Customers for Contract Work

Amount due from/(to) customers for contract work is the net amount of costs incurred plusrecognised profits less recognised losses and progress billing for all contracts in progress.

Contract costs incurred todate include costs directly related to the contract or attributable tocontract activities in general and costs specifically chargeable to the customers under the terms ofthe contract.

(h) Property Development Activities

(i) Real Property Assets

Real property assets consisting of land held for future development are stated at cost of acquisitionincluding all related costs incurred subsequent to the acquisition on activities necessary to preparethe land for its intended use.

Such assets are transferred to development properties when significant development work has beenundertaken and the development is expected to be completed within the normal operating cycle.




(h) Property Development Activities (cont’d)

(ii) Development Properties

Development properties represent properties on which development work has been undertakenand is expected to be completed within the normal operating cycle. Development properties arestated at cost, and where appropriate, include attributable profits less foreseeable losses andprogress billings. Cost consists of land and other direct expenditure and related overheadsincurred. Overheads include borrowing costs relating to the financing of the land anddevelopment.

(iii) Revenue Recognition

Revenue from property development is recognised as follows:-

(a) Revenue from completed property is recognised based on the contracted sales value ofsuch properties.

(b) Revenue from uncompleted properties is recognised on the percentage of completionmethod in respect of all property units that have been contracted for sale. The stage ofcompletion is determined by reference to the surveys of work performed.

(iv) Profit/Loss Recognition

Profits from property development is recognised using the percentage of completion method,determined by surveys of work performed. Foreseeable losses from property development areprovided for in full.

(i) Accounting for Joint Ventures

The Group carried out construction contracts on a joint venture basis through unincorporated jointlycontrolled entities over which there is contractually agreed sharing of control by the Group with one ormore parties.

The Group's interest in jointly controlled entities are accounted for in the consolidated financialstatements by the equity method of accounting. Under equity method of accounting, the Group's shareof results of the jointly controlled entities for the period is included in its financial statements based onthe results of the jointly controlled entities for the corresponding period. The Group's investments injointly controlled entities are carried in the balance sheet at an amount that reflects its share of the netassets of the jointly controlled entities. Where an indication of impairment exists, the carrying amount ofthe investment is assessed and written down to its recoverable amount.

(j) Hire Purchase Arrangements

Assets acquired under hire purchase arrangements are capitalised as plant and equipment based on thecost of the assets and the corresponding obligations are taken up as hire purchase creditors.

The interest element is charged to the income statement over the period of the hire purchasearrangements.

(k) Debtors

Debtors are stated at anticipated realisable value. Bad debts are written off as and when ascertained andallowance is made for any debts considered to be doubtful of collection.




(l) Provisions

A provision is recognised when it is probable that an outflow of resources embodying economic benefitswill be required to settle a present obligation (legal or constructive) as a result of a past event and areliable estimate can be made of the amount.

(m) Deferred Taxation

Provision is made under the liability method for taxation deferred in respect of all timing differencesexcept where it is reasonably expected that the tax effects of such deferrals will continue in theforeseeable future. Where timing differences result in a debit balance, this is recognised only where thereis a reasonable certainty of realisation.

(n) Cash and Cash Equivalents

Cash and cash equivalents in the cash flow statement comprise cash and bank balances, deposits withlicensed banks, bank overdrafts and highly liquid investments that are readily convertible to knownamounts of cash and which are subject to an insignificant risk of changes in value.

4. SHARE CAPITAL

Group and Company2002 2001

RM RMOrdinary shares of RM1.00 each

Authorised 50,000,000 50,000,000

Issued and fully paid 33,300,000 33,300,000

5. RESERVES

Group Company2002 2001 2002 2001

RM RM RM RM

Share premium 1,729,442 2,272,804 1,729,442 2,272,804 Capital reserve 29,994 29,994 - -

Reserve on consolidation 389,182 648,636 - -

Retained profit 3,279,060 3,028,359 843,076 704,552

5,427,678 5,979,793 2,572,518 2,977,356

(a) With the exception of retained profit, all other reserves are not distributable by way of cash dividends.

(b) Shares issue expenses of RM543,362 (2001 : RM Nil) is written off against share premium during the year.

(c) Capital reserve represents the transfer from retained profit arising from bonus issue of shares fromretained profit of a subsidiary company in 1998.



5. RESERVES (CONT’D)

(d) Reserve on consolidation

Group2002 2001

RM RM

At beginning of year 648,636 908,090 Amount credited to income statement (259,454) (259,454)

At end of year 389,182 648,636

Reserve on consolidation is credited to the consolidated income statement over five years, being theperiod it is estimated to accrue.

(e) Subject to agreement with the Inland Revenue Board, the Company has estimated tax credit balance ofRM392,200 (2001 : RM295,000) under Section 108 of the Income Tax Act, 1967 to frank payment of cashdividends out of its retained profit as at 31st December 2002 in full.

The Company has a tax exempt income of RM269,210 (2001: RM269,210) arising from the waiver of taxon income earned for the financial year ended 31st December 1999 pursuant to the Income Tax(Amendment) Act 1999, and is available for distribution as tax exempt dividend.

6. DEFERRED TAXATION Group Company

2002 2001 2002 2001RM RM RM RM

At beginning of year 1,273,800 369,800 16,100 16,100 Transfer (to)/from income statement (130,400) 904,000 - -

At end of year 1,143,400 1,273,800 16,100 16,100

(a) Deferred tax liabilities are arrived at as follows:-

Group Company2002 2001 2002 2001

RM RM RM RM

Tax effects of :(i) Excess of capital allowances

over depreciation 1,572,400 2,593,800 16,100 16,100 (ii) Other timing difference 868,500 1,919,200 - -(iii) Unutilised capital allowances (1,300) (535,600) - -(iv) Unabsorbed tax losses (1,296,200) (2,703,600) - -

1,143,400 1,273,800 16,100 16,100

All timing differences of the Group and the Company have been accounted for in arriving at the deferredtax liabilities above.



6. DEFERRED TAXATION (CONT’D)

(b) The tax effects of deferred tax benefits not recognised in the financial statements are as follows:-

Group2002 2001

RM RM

Unabsorbed tax losses 997,900 1,166,900 Unutilised capital allowances 2,200 -

1,000,100 1,166,900

7. HIRE PURCHASE CREDITORS Group

2002 2001RM RM

Outstanding hire purchase instalments- payable within one year 2,252,219 2,906,575 - payable between two to five years 1,607,304 2,891,982 - payable after five years 20,688 -

3,880,211 5,798,557 Future finance charge on hire purchase (1,092,197) (1,664,688)

Outstanding hire purchase principal 2,788,014 4,133,869 Amount payable within one year [included in current liabilities - creditors (Note 20)] (1,745,338) (2,242,240)

Amount payable after one year(included in long term and deferred liabilities) 1,042,676 1,891,629

8. TRADE CREDITOR Group

2002 2001RM RM

Amount repayable within one year(included in current liabilities - trade creditors) 1,565,000 1,365,000

Amount repayable between two to four years(included in long term and deferred liabilities) 1,604,629 2,208,847

3,169,629 3,573,847

The above represents the balance of the consideration due to a third party in respect of the acquisition ofleasehold land for development by a subsidiary company.

No interest is payable on the outstanding balance during the year.



9. TERM LOANS (SECURED) Group

2002 2001RM RM

RM203,000 term loan drawndown in 1995 and repayable by 84 monthly instalments commencing April 1995. 4,574 45,918

RM2,000,000 term loan drawndown in 1997/1998 and repayable by 120 monthly instalments commencing August 1998. 650,576 772,476

RM8,500,000 term loan drawndown in 1997 and repayable by 4 quarterly instalments commencing March 2001. - 8,500,000

RM25,000,000 bridging loan partially drawndown between 1997 and 1999 and repayable by 4 quarterly instalments commencing March 2001. - 22,405,690

RM150,000 term loan drawndown in 1998 and repayable by 84 monthly instalments commencing January 1998. - 78,862

RM112,500 term loan drawndown in 1998 and repayable by 84 monthly instalments commencing January 1998. - 63,245

RM103,500 term loan drawndown in 1998 and repayable by 84 monthly instalments commencing January 1998. 45,626 56,556

RM16,100,000 bridging loan fully drawndown in 1999 and repayable by 4 quarterly instalments commencing March 2000. - 3,124,040

RM2,500,000 term loan drawndown in 2000 and repayable by 84 monthly instalments commencing September 2001. - 2,500,000

RM30,146,815 restructured term loan repayable over 42 months commencing September 2002. 27,526,864 -

28,227,640 37,546,787

Amount repayable within one year(included in current liabilities - bank borrowings - Note 21) (20,597,567) (34,620,913)

Amount repayable after one year(included in long term and deferred liabilities ) 7,630,073 2,925,874

(a) The RM8,500,000 term loan, and RM25,000,000 and RM16,100,000 bridging loans attributable to asubsidiary company are secured by way of a deed of assignment over all the rights, title, interest andbenefit in and to a privatisation agreement for the property development project of the subsidiarycompany, assignment of proceeds from sale of properties in the said development project and fixed andfloating charges over all the assets of the subsidiary company. The remaining term loans other than therestructured term loan are secured by way of legal charges over the landed properties and certain plantand machinery of the respective subsidiary companies.

Term loans of RM2,000,000, RM8,500,000 and RM2,500,000 and the bridging loans of RM25,000,000 andRM16,100,000 are guaranteed by the Company.

The term and bridging loans bear interest at rates ranging from 0.5% to 3.0% (2001 : 0.5% to 3.0%) perannum above the lending financial institutions' base lending rates.



9. TERM LOANS (SECURED) (CONT’D)

(b) The outstanding sum under the RM8,500,000 term loan and RM25,000,000 bridging loan which have fallendue were restructured during the year as further detailed in Note 9(c). The outstanding sum under theRM16,100,000 bridging loan which has also fallen due was settled in full during the year as part of therestructuring of the aforesaid loans.

(c) The outstanding sum under the RM8,500,000 term loan and RM25,000,000 bridging loan were restructuredinto a term loan of 42 months tenure during the year. The repayment of the restructured term loan is asfollows :-

(i) The amount repayable over the first 28 months is based on portion of collections estimated from salesof certain development properties of the subsidiary company.

(ii) The outstanding balance at the end of the 28 months is repayable by 14 equal monthly instalments.

The restructured term loan bears interest at the rate of 2% per annum above the base lending rate of thelending bank.

In addition to the existing securities on the RM8,500,000 term loan and RM25,000,000 bridging loan, therestructured term loan is further secured by a legal assignment to be created over certain unsoldcompleted properties of the subsidiary company.

10. PROPERTY, PLANT AND EQUIPMENT

(a) Summary:- Accumulated Net Book Depreciation

Cost Depreciation Value Charge RM RM RM RM

Group 2002

Leasehold land - long lease 29,799 2,363 27,436 656 Buildings 2,121,238 229,386 1,891,852 48,386 Plant and machinery 32,359,985 19,441,353 12,918,632 3,778,408 Furniture, fittings and equipment 2,373,510 1,273,039 1,100,471 261,290 Motor vehicles 2,914,057 2,389,198 524,859 162,987 Container store and cabin 428,043 323,330 104,713 30,125 Office renovation 569,626 164,410 405,216 46,937

Total 40,796,258 23,823,079 16,973,179 4,328,789

Group 2001

Freehold land 1,979,602 - 1,979,602 - Leasehold land - long lease 105,376 7,230 98,146 1,128 Buildings 2,789,229 276,763 2,512,466 84,100 Plant and machinery 42,813,482 22,906,096 19,907,386 5,423,379 Furniture, fittings and equipment 2,452,523 1,221,859 1,230,664 275,461 Motor vehicles 2,676,720 2,539,170 137,550 304,181 Container store and cabin 404,943 300,147 104,796 44,954 Office renovation 489,356 117,473 371,883 68,639

Total 53,711,231 27,368,738 26,342,493 6,201,842



10. PROPERTY, PLANT AND EQUIPMENT (CONT’D)Accumulated Net Book Depreciation

Cost Depreciation Value Charge RM RM RM RM

Company 2002

Furniture, fittings and equipment 154,043 68,980 85,063 15,224 Office renovation 40,145 8,363 31,782 4,015

Total 194,188 77,343 116,845 19,239

Company 2001

Furniture, fittings and equipment 144,149 53,756 90,393 14,370 Office renovation 40,145 4,348 35,797 4,015

Total 184,294 58,104 126,190 18,385

(b) The reconciliation of cost and depreciation of property, plant and equipment at the beginning and at theend of the year is as follows:-

At beginning At end Group of year Additions Disposals Written off of year 2002 RM RM RM RM RM

Cost

Freehold land 1,979,602 - (1,979,602) - - Leasehold land - long lease 105,376 - (75,577) - 29,799

Buildings 2,789,229 130,575 (798,566) - 2,121,238 Plant and machinery 42,813,482 1,520 (9,260,705) (1,194,312) 32,359,985 Furniture, fittings and equipment 2,452,523 202,660 (13,650) (268,023) 2,373,510

Motor vehicles 2,676,720 600,517 (362,180) (1,000) 2,914,057 Container store and cabin 404,943 31,600 - (8,500) 428,043

Office renovation 489,356 80,270 - - 569,626

Total 53,711,231 1,047,142 (12,490,280) (1,471,835) 40,796,258

Accumulated Depreciation

Leasehold land - long lease 7,230 656 (5,523) - 2,363

Buildings 276,763 48,386 (95,763) - 229,386Plant and machinery 22,906,096 3,778,408 (6,316,471) (926,680) 19,441,353 Furniture, fittings and equipment 1,221,859 261,290 (10,028) (200,082) 1,273,039

Motor vehicles 2,539,170 162,987 (311,960) (999) 2,389,198 Container store and cabin 300,147 30,125 - (6,942) 323,330

Office renovation 117,473 46,937 - - 164,410

Total 27,368,738 4,328,789 (6,739,745) (1,134,703) 23,823,079

Net Book Value 26,342,493 16,973,179



10. PROPERTY, PLANT AND EQUIPMENT (CONT’D)At beginning At end

of year Additions of year RM RM RM

Company 2002

Cost Furniture, fittings and equipment 144,149 9,894 154,043 Office renovation 40,145 - 40,145

Total 184,294 9,894 194,188

Accumulated Depreciation Furniture, fittings and equipment 53,756 15,224 68,980 Office renovation 4,348 4,015 8,363

Total 58,104 19,239 77,343

Net Book Value 126,190 116,845

(c) Property, plant and equipment include the following assets acquired under hire purchase arrangements:-

Accumulated Net BookGroup Cost Depreciation Value2002 RM RM RM

Plant and machinery 13,590,306 6,888,051 6,702,255 Motor vehicles 643,360 148,405 494,955

14,233,666 7,036,456 7,197,210

Group2001

Plant and machinery 15,862,039 6,538,217 9,323,822 Motor vehicles 272,513 224,544 47,969

16,134,552 6,762,761 9,371,791

Company2002 - - -

Company2001 - - -

(d) Property, plant and equipment include the following assets pledged to financial institutions as securitiesfor term and bridging loans granted to certain subsidiary companies as disclosed in Note 9 to the financialstatements:-


Leasehold land - long lease 29,799 2,363 27,436 Buildings 2,121,238 229,386 1,891,852 Furniture, fittings and equipment 734,857 375,107 359,750 Motor vehicles 830,940 491,634 339,306 Office renovation 304,008 74,004 230,004

Total 4,020,842 1,172,494 2,848,348



10. PROPERTY, PLANT AND EQUIPMENT (CONT’D)


Freehold land 1,979,602 - 1,979,602 Leasehold land - long lease 105,376 7,230 98,146 Buildings 2,789,229 276,763 2,512,466 Plant and machinery 8,059,380 3,852,262 4,207,118 Furniture, fittings and equipment 616,981 292,534 324,447 Motor vehicles 626,546 566,202 60,344 Office renovation 223,738 53,629 170,109

Total 14,400,852 5,048,620 9,352,232

Company2002 - - -

Company2001 - - -

11. SUBSIDIARY COMPANIESGroup

2002 2001RM RM

Unquoted shares - at cost- ordinary shares 30,749,998 30,749,998 - redeemable preference shares 1,000 1,000

30,750,998 30,750,998

Details of the subsidiary companies, all of which are incorporated in Malaysia are as follows:-

Direct Subsidiary Principal Effective EquityCompanies Activities Interest (%)

2002 2001Dunia Epik Sdn Bhd Earthworks, drainage works, specialist

engineering and building construction 100% 100%

Magna Prima Specialist crushing services and Construction Sdn Bhd professional turnkey quarry services,

construction and trading activities 100% 100%

Magna Realty Sdn Bhd Investment holding 100% 100%

Prima Hardware Sdn Bhd* Dormant 100% 100%(formerly known asMagna Utara Sdn Bhd)

Indirect SubsidiaryCompanies

Magna Park (Mentakab) Sdn Bhd Property development 100% 100%[formerly known as

`Kelana Molek Sdn Bhd]`(held by Dunia Epik Sdn Bhd)



11. SUBSIDIARY COMPANIES (CONT’D)

Indirect Subsidiary Principal Effective EquityCompanies Activities Interest (%)

2002 2001Magna Park Sdn Bhd Property development 91% 91%(held by Magna Realty Sdn Bhd)

Crest Overseas Sdn Bhd Provision of quarry rock (held by Magna Prima blasting services 100% 100%Construction Sdn Bhd) (ceased operations in 2001)

Magna-Idaman Sdn Bhd Subcontractor in quarry(held by Magna Prima operation 67% 67%Construction Sdn Bhd) (ceased operations in 2001)

* Not audited by Folks DFK & Co.

12. JOINT VENTURESGroup

2002 2001RM RM

Current account with joint venture entities (2,923,118) -Accumulated share of profit 8,975,769 9,265,784

6,052,651 9,265,784

Details of the joint ventures carried out through jointly controlled entities in Malaysia are as follows:-

Principal EffectiveJoint Venture Entity Legal Form Activity Interest (%)

2002 2001

Konsortium Marimas Joint venture Civil works' 75% 75%- Magna Prima agreement contractors

Konsortium Marimas Joint venture Supply, 56% 56%- Magna Prima agreement installation and

maintenance ofequipment

Jayarena Joint venture Civil works' 70% 30%- Dunia Epik JV agreement contractor



12. JOINT VENTURES (CONT’D)

(a) The Group's proportionate interest in the joint venture entities are analysed as follows:-

Group2002 2001

RM RM

Gross amount due from customers for contract work 396,667 4,729,539 Debtors 7,013,571 43,719,907 Fixed deposits with a licensed bank 2,681,991 2,832,668 Bank balances 8,177 217,082 Creditors (5,349,088) (12,887,760)Bank borrowings - (29,345,652)

4,751,318 9,265,784 Due from other joint venture partners 1,301,333 -

Net Assets 6,052,651 9,265,784

(b) The Group's proportionate share of results of the joint venture entities are as follows:-

Group2002 2001

RM RM

Revenue 6,108,107 100,677,951

Cost of sales (6,706,149) (91,937,451)

Gross (loss)/profit (598,042) 8,740,500

Other operating income 308,091 137,542

Operating expenses (64) -

Net (loss)/profit for the year (290,015) 8,878,042

13. INVESTMENTSGroup

2002 2001RM RM

Quoted shares :-At cost 1,525,000 1,525,000 Less : Allowance for diminution in value (1,100,000) (1,100,000)

425,000 425,000

Market value 200,000 190,000



14. REAL PROPERTY ASSETSGroup

2002 2001RM RM

At cost:-Leasehold land 1,549,596 1,549,596 Development expenditure 129,099 115,057

1,678,695 1,664,653

15. INVENTORIES Group

2002 2001RM RM

At cost :-Completed properties held for sale 7,758,108 12,455,567

These properties are charged as securities for term loans as disclosed in Note 9 to the financial statements.

16. GROSS AMOUNT DUE FROM CUSTOMERS FOR CONTRACT WORK Group

2002 2001RM RM

Contract costs 87,084,386 24,279,492 Recognised losses (507,055) (2,000,280)

86,577,331 22,279,212 Progress billings including retention sum of RM4,634,929(2001: RM284,670) (83,158,219) (19,227,556)

3,419,112 3,051,656

17. DEVELOPMENT PROPERTIESGroup

2002 2001RM RM

At cost:Leasehold land 24,890,524 25,722,880 Development expenditure 196,284,962 273,048,257

221,175,486 298,771,137 Waiver of interest previously charged to development expenditure - (738,724)Portion transferred to income statement (45,226,905) (128,916,809)Completed properties transferred to inventories (88,290) (12,455,567)Portion transferred to real property assets - (1,664,653)

175,860,291 154,995,384 Estimated profit accrued on uncompleted development properties 59,587 1,915,894 Less: Progress billings (81,150,561) (64,200,738)

94,769,317 92,710,540



18. DEBTORSGroup Company

2002 2001 2002 2001RM RM RM RM

Trade debtors 34,063,779 37,381,705 - -

Less : Allowance for doubtful debts - (100,000) - -

34,063,779 37,281,705 - -

Other debtors, deposits and prepayments 6,880,404 7,437,580 310,213 309,778 Amount owing by subsidiary companies - - 6,763,101 7,857,837

40,944,183 44,719,285 7,073,314 8,167,615

(a) Bad debts of the Group written off against allowance for doubtful debts during the year amounted toRM100,000 (2001 : RM Nil).

(b) Included in other debtors, deposits and prepayments is the balance of outstanding proceeds fromdisposal of plant and machinery by certain subsidiary companies amounting to RM2,008,965 (2001 :RM5,157,612).

(c) Amount owing by subsidiary companies are unsecured and have no fixed terms of repayment. Includedin the amount owing by subsidiary companies is an amount of RM1,100,983 (2001 : RM1,974,209)representing short term advances to certain subsidiary companies. Interest is recovered from thesubsidiary companies proportionately based on the actual amount incurred on the borrowing by theCompany. Other balances owing by subsidiary companies are interest free.

19. DEPOSITS, CASH AND BANK BALANCES Group Company

2002 2001 2002 2001RM RM RM RM

Deposits with a licensed bank 734,902 24,800 - -

Cash and bank balances 5,596,538 6,555,158 4,442 10,599

6,331,440 6,579,958 4,442 10,599

(a) The Group's deposits of RM734,902 (2001 : RM Nil) with a licensed bank are pledged to the bank assecurities for bank facilities granted by the bank to a subsidiary company.

(b) Cash and bank balances of the Group include bank balances of RM2,932,935 (2001: RM3,815,103) whichare maintained in designated Housing Development Accounts pursuant to the Housing DevelopmentRegulations (Control and Licensing) Act 1966 and Housing Developers Regulations 1991 in connectionwith property development undertaken by a subsidiary company and the utilisation of which is restrictedto that property development.



20. CREDITORSGroup Company

2002 2001 2002 2001RM RM RM RM

Trade creditors 67,484,155 60,513,269 - -

Other creditors and accruals 15,374,236 18,089,798 790,966 321,984 Hire purchase creditors (Note 7) 1,745,338 2,242,240 - -

Amount owing to a subsidiary company - - - 359,037

84,603,729 80,845,307 790,966 681,021

(a) Included in other creditors and accruals is remuneration owing to directors of RM50,872 (2001 :RM177,542) for the Group and RM32,000 (2001 : RM132,542) for the Company.

(b) Amount owing to a subsidiary company is unsecured, interest free and has no fixed terms of repayment.

21. BANK BORROWINGS Group Company

2002 2001 2002 2001RM RM RM RM

Secured:-Term loans 20,597,567 34,620,913 - - Bank overdraft 11,950,029 - - -

Unsecured:-Bank overdrafts - 15,414,602 - - Short term loans - 5,000,000 - - Short term advances 1,078,447 1,974,209 1,078,447 1,974,209

33,626,043 57,009,724 1,078,447 1,974,209

Amount of short term advances repayable after one year [included in long term and deferred liabilities - other bankborrowing - Note 21(b)] - (700,000) - (700,000)

33,626,043 56,309,724 1,078,447 1,274,209

(a) The contractual terms and security arrangements of the term loans are detailed in Note 9 to the financialstatements.

The Group's secured bank overdraft is secured by a pledge of fixed deposits as disclosed in Note 19 tothe financial statements and guaranteed by the Company. The unsecured bank borrowings of the Groupare guaranteed by the Company. These bank borrowings bear interest at the rate of 1.5% (2001 : 1.5%)per annum above the base lending rates of the lending banks.

(b) The repayment terms of the unsecured short term advances were restructured in the previous financialyear into 24 monthly instalments. Accordingly, portion of the advances repayable after one year has beenclassified as long term liability as at the previous year end.



22. REVENUE

Revenue comprises :-Group Company

2002 2001 2002 2001RM RM RM RM

Value of construction and quarrying works 62,949,493 39,008,602 - -Sale of development properties 64,206,291 72,376,748 - -Sale of completed properties 6,052,483 - - -Rental of properties 36,000 36,000 - -Hire of plant 924,854 319,092 - -Subcontract fees 570,415 1,213,883 - -Trading and other income 210,573 930,531 500,000 500,000

134,950,109 113,884,856 500,000 500,000

23. COST OF SALES

Cost of sales comprises the following :-Group

2002 2001RM RM

Contract costs recognised as contract expenses 61,341,956 48,384,335 Cost of development properties sold 59,009,111 56,279,316 Cost of completed properties and trading goods sold 4,785,749 326,457

125,136,816 104,990,108

24. (LOSS)/PROFIT BEFORE TAXATION Group Company

2002 2001 2002 2001RM RM RM RM

(Loss)/Profit before taxation includes:-Interest income 344,630 325,969 - -Rental income 95,330 148,040 - -Gain on disposal of plant and equipmentand property net of Real Property Gains Tax of RM66,680 (2001 : RM Nil) 108,426 - - -

Reserve on consolidation recognised 259,454 259,454 - - Write back of provision for expenses no longer required 804,542 - - -

And is arrived at after charging:-Auditors' remuneration - current year 102,610 83,960 20,000 15,000 - underprovision in prior year 18,340 1,500 5,000 3,000

Depreciation 4,328,789 6,201,842 19,239 18,385 Directors' remuneration- Salaries and other emoluments [Note 24(a)] 1,319,796 1,367,558 (1,000) 34,835

Bad debts written off 507,856 76,873 5,620 -Professional fee paid to a firm in which adirector of the Company has an interest - 36,200 - -



24. (LOSS)/PROFIT BEFORE TAXATION (CONT’D)

Group Company2002 2001 2002 2001

RM RM RM RM

Hire of machineries 144,592 296,117 - -Rental of premises 251,274 149,720 5,250 3,187 Bank interest 4,502,902 6,071,697 - -Other interest 987,554 957,451 - -Hire purchase interest 906,463 1,487,120 - -Loss on disposal of plant and equipment and property net of Real Property Gains Tax of RM900 (2001 : RM Nil) 57,914 524,026 - -

Plant and equipment written off 337,132 13,214 - -Tax penalties 238,802 367,059 - -Penalty imposed by KLSE - 9,000 - 9,000 Allowance for doubtful debts - 100,000 - -Retrenchment benefits - 112,344 - -

(a) The details of the directors' remuneration during the year are as follows :-

Salary and EPF allowances Bonus contribution Allowance Total

RM RM RM RM RM2002

Executive Directors - Company 864,000 18,000 88,560 36,000 1,006,560 - Subsidiary companies 166,998 11,280 25,458 - 203,736

1,030,998 29,280 114,018 36,000 1,210,296

Non Executive Directors- Company - - - 109,500 109,500

1,030,998 29,280 114,018 145,500 1,319,796

2001

Executive Directors - Company 885,000 18,000 78,120 36,000 1,017,120 - Subsidiary companies 267,126 11,280 32,532 - 310,938

1,152,126 29,280 110,652 36,000 1,328,058

Non Executive Directors- Company - - - 39,500 39,500

1,152,126 29,280 110,652 75,500 1,367,558



24. (LOSS)/PROFIT BEFORE TAXATION (CONT’D)

(b) The number of directors whose remuneration falls within the following bands are as follows :-2002 2001

Non NonExecutive Executive Executive Executive

Range of Remuneration Directors Directors Directors Directors

Directors of the Company- Up to RM50,000 - 4 - 2- RM200,000 to RM250,000 1 - - -- RM250,000 to RM300,000 3 - 4 -

Directors of the Subsidiary Companies- Up to RM50,000 1 - - -- RM100,000 to RM150,000 - - 1 -- RM150,000 to RM200,000 1 - 1 -

25. TAXATION Group Company

2002 2001 2002 2001RM RM RM RM

Malaysian taxation- current year 206,000 2,857,000 94,500 77,000 - (over) / underprovision in prior years (481,867) (19,186) 2,722 -

Transfer (from)/to deferred taxation (130,400) 904,000 - -

(406,267) 3,741,814 97,222 77,000

(a) The Group incurred a current year's tax charge despite its loss for the year mainly due to losses of certainsubsidiary companies and for which there is no group relief against profits of other subsidiary companies

The effective taxation charge for the Company is higher than that based on the statutory rate of tax duemainly to certain expenses that are not tax deductible.

(b) The following are estimated unabsorbed tax losses and unutilised capital allowances, which are availablefor set off against future taxable income :-

Group2002 2001

RM RM

Unabsorbed tax losses 8,193,440 13,823,300 Unutilised capital allowances 12,660 1,913,180

8,206,100 15,736,480

26. EARNINGS PER ORDINARY SHARE

The basic earnings per share is calculated based on the Group's net profit for the year of RM250,701 and onthe weighted average number of ordinary shares in issue during the financial year of 33,300,000.

The comparative basic earnings per share is calculated based on the Group's net profit for the year of RM54,927and on the weighted average number of ordinary shares in issue during that financial year of 33,300,000.



27. NOTES TO CASH FLOW STATEMENTS

(a) Purchase of property, plant and equipment

Property, plant and equipment were acquired by the following means :-

Group Company2002 2001 2002 2001

RM RM RM RM

Cash payments 574,442 163,273 9,894 1,220 Hire purchase financing 472,700 - - -

Aggregate - at cost 1,047,142 163,273 9,894 1,220

Property, plant and equipment acquired by hire purchase financing are reflected as cash flow fromfinancing activities based on the principal amount of instalments made.

(b) Cash and cash equivalents at end of yearGroup Company

2002 2001 2002 2001RM RM RM RM

Deposits with a licensed bank (Note 19) - 24,800 - -

Cash and bank balances (Note 19) 5,596,538 6,555,158 4,442 10,599

Bank overdrafts (Note 21) (11,950,029) (15,414,602) - -

(6,353,491) (8,834,644) 4,442 10,599

28. CONTINGENT LIABILITIES Group Company

2002 2001 2002 2001RM RM RM RM

Guarantees given to financial institutions for facilities granted to subsidiary companies- secured on assets of subsidiary companies - - 56,844,315 74,049,000 - unsecured - - 1,500,000 27,500,000

Guarantees given to financial institutions for facilities granted to joint venture entity- secured on assets of joint venture entity 19,700,000 30,700,000 19,700,000 30,700,000

Guarantees given to trade creditors of subsidiary companies for credit facilities granted to subsidiary companies- unsecured - - 3,100,000 1,725,000

Limit of guarantee 19,700,000 30,700,000 81,144,315 133,974,000

Amount utilised 15,668,350 26,476,860 66,334,331 94,187,498

Bank guarantees and performance bonds- secured on assets of subsidiary companies 5,087,001 2,144,106 - - - unsecured 375,000 2,696,135 - -

Portion of late payment interest claimed by trade creditor and hire purchase creditorsunder appeal and not recognised in the financial statements 1,481,175 1,173,537 - -

22,611,526 32,490,638 66,334,331 94,187,498



29. SEGMENT REPORTING

The Group's segmental information is reported based on the Group's major business segments as follows :-

(a) Construction and engineering - provision of civil engineering services including construction ofbuildings, earthworks, drainage works, road works and quarrying works.

(b) Properties - development of mixed properties for sale

No segmental information is provided on a geographical basis as the Group's activities are carried outpredominantly in Malaysia.

All intersegment transactions have been entered into in the ordinary course of business and have beenestablished on the terms and conditions that are not materially different from those transacted with unrelatedthird parties.

2002 2001Construction Construction

and and Engineering Properties Group Engineering Properties Group

RM RM RM RM RM RM

RevenueTotal revenue 65,409,445 70,294,774 135,704,219 50,235,885 72,412,748 122,648,633 Intersegment revenue (754,110) - (754,110) (8,763,777) - (8,763,777)

External revenue 64,655,335 70,294,774 134,950,109 41,472,108 72,412,748 113,884,856

ResultsSegment result (External) (1,639,966) 2,157,318 517,352 (6,874,548) 2,252,056 (4,622,492)

Unallocated corporate income 95,756 818

Unallocated corporate expenses (387,666) (367,728)

Profit/(Loss) from operations 225,442 (4,989,402)

Share of results of joint venture entities (290,015) - (290,015) 8,878,042 - 8,878,042

(Loss)/Profit before taxation (64,573) 3,888,640

Taxation 406,267 (3,741,814)

Profit after taxation 341,694 146,826 Minority interest (90,993) (91,899)

Net profit for the year 250,701 54,927



29. SEGMENT REPORTING (CONT’D)

2002 2001Construction Construction

and and Engineering Properties Group Engineering Properties Group

RM RM RM RM RM RMOther information

Segment assets 49,931,806 121,392,890 171,324,696 62,673,610 124,376,317 187,049,927 Investment in joint ventures 6,052,651 - 6,052,651 9,265,784 - 9,265,784

Unallocated corporate assets 974,338 899,225

Consolidated total assets 178,351,685 197,214,936

Segment liabilities 53,303,382 74,227,569 127,530,951 62,761,148 81,684,416 144,445,564 Unallocated corporate liabilities 9,740,306 11,227,822

Consolidated total liabilities 137,271,257 155,673,386

Capital expenditure 427,751 609,497 1,037,248 79,357 82,696 162,053 Unallocated capital expenditure 9,894 1,220

1,047,142 163,273

Depreciation 4,106,425 199,976 4,306,401 5,999,118 184,339 6,183,457 Unallocated depreciation 22,388 18,385

4,328,789 6,201,842

Non-cash expenses other than depreciation 839,368 - 839,368 190,087 - 190,087

Unallocated non-cash expenses other than depreciation 5,620 -

844,988 190,087

30. SIGNIFICANT INTERCOMPANY TRANSACTIONS Group

2002 2001RM RM

Contract works and hiring of machineries between subsidiary companies 21,309,951 26,309,897

Management fee received from subsidiary company 500,000 500,000

Rental of premises charged between subsidiary companies 60,000 98,500

Sale of motor vehicle between subsidiary companies 33,000 -

The above transactions were carried out on terms not materially different from those transacted with unrelatedthird parties.



31. SIGNIFICANT RELATED PARTY TRANSACTIONSGroup

2002 2001RM RM

Sale of various types of properties developed by the Group to directors of subsidiary companies :-

- Ahmad Shahab Bin Din 73,999 -

- Norhanum Bt. Nordin - 191,324

Professional fee paid to Nordin Torji & Yusof Ahmad, a legal firm of which Feisal Bin Sheikh Hussein, a director of the Company, has an interest - 36,200

Rental of office paid to Fook Hua Holdings Sdn Bhd, a substantial shareholder of the Company 84,000 84,000

Certified value of contract work charged by Jayarena - Dunia Epik JV of which Dunia Epik Sdn Bhd is a member 5,652,671 951,642

Certified value of contract work charged to MH Projects Sdn Bhd, a company in which Dato' Abd Gani Bin Yusof, a director and substantial shareholder of the Company, has substantial interest 15,511,061 -

The balances of indebtedness from and to related parties included in the financial statements are as follows :-

Group Company2002 2001 2002 2001

RM RM RM RMAmount included in debtors :-

MH Projects Sdn Bhd 12,172,961 - - -

Amount included in creditors :-

Assar Quarry Products Sdn Bhd(a shareholder of a subsidiary company) 59,408 59,408 - -

Nordin Torji & Yusof Ahmad - 31,200 - -Jayarena - Dunia Epik JV 3,058,308 951,642 - -

The directors are of the opinion that the above transactions were carried out on terms not materially differentfrom those transacted with unrelated third parties.

32. EMPLOYEES INFORMATION

Group Company2002 2001 2002 2001

RM RM RM RM

Staff costs 9,263,875 8,341,823 160,429 112,856

The number of persons employed by the Group and the Company at the end of the financial year were 268and 13 (2001: 193 and 8) respectively.



33. MATERIAL LITIGATION

A police report was lodged on 23rd October 2000 that a sum of RM22,100,000, as detailed below, waswithdrawn from the bank accounts of two subsidiary companies on 16th October 2000 without properauthorisation from the Board of the respective subsidiary companies.

Subsidiary companies RM

Magna Prima Construction Sdn Bhd 16,684,300 Dunia Epik Sdn Bhd 5,415,700

22,100,000

The withdrawals were made by a former director of the Company who was also a former director of therespective subsidiary companies.

On 1st November 2000, the Company and the two subsidiary companies, as joint plaintiffs, instituted a legalsuit against a third party corporation and six other individuals including the said former director for certaininjunctive reliefs and recovery of the sum of RM22,100,000. Injunctive orders ("Court Injunction") have sincebeen granted by the Court restraining the defendants, amongst others, from disposing their assets within thejurisdiction of the Court pending the trial of the suit. The orders had been served on the defendants except forthe said former director.

The amount of RM22,100,000 had been written off in full in 2000 because the prospect of recovery of the saidsum cannot be ascertained and will be recognised as income when and to the extent there is realisation.

The legal suit is pending full trial and is currently under case management before the Court. Significantdevelopments relating to the suit since the end of the previous financial year are as follows: -

(a) The plaintiffs have on 2nd April 2002 instituted a new suit similar in nature and claim with the aforesaidlegal suit, against the abovementioned former director following the plaintiffs' inability to serve theinjunctive orders on the said former director. The writ of summons and statement of claim were servedon the said defendant by way of substituted service on 13th August 2002. On 30th August 2002, theplaintiffs entered Judgement in Default of Appearance against the said defendant.

(b) The plaintiffs obtained a charging order dated 27th August 2002 from the Court against certain sharesof the Company held by the third party corporation; hence preventing the third party corporation fromdisposing the said shares.

(c) A stockbroking company ("Intervener") being a party interested over certain shares of the Company heldby two defendants via a legal charge, and which has filed application in the Court for an order to varyor set aside the injunctive orders obtained by the plaintiffs was granted by the Court to join in the suit asa defendant on 2nd January 2003. The hearing of the application by the Intervener is pending.

34. SIGNIFICANT EVENTS DURING THE YEAR/SUBSEQUENT EVENTS

(a) (i) The Company had on 28th February 2002 served a Notice of Voluntary Offer to the Board ofDirectors of MH Projects Sdn Bhd ("MHP") to acquire 5,000,000 ordinary shares of RM1.00 each inMHP ("the Offer Shares") representing the entire issued and paid-up share capital of MHP at an offerprice of RM10.00 per share. The total consideration of RM50,000,000 is to be satisfied by the issuanceof new ordinary shares of RM1.00 each in the Company ("MPB shares") to be credited as fully paid-up at an issue price of RM2.25 per MPB share.

On 26th June 2002, the Company served a notice to the Board of Directors of MHP to revise the offerprice for the Offer Shares from RM10.00 to RM9.00. The revised consideration of RM45,000,000 is tobe satisfied by the issuance of 4 new MPB shares to be credited as fully paid-up at an issue price ofRM2.25 per MPB share for every one share held in MHP.

The Voluntary Offer is conditional upon the Company securing more than 50% of the voting rightsin MHP and approvals from the relevant authorities and the shareholders of the Company.



34. SIGNIFICANT EVENTS DURING THE YEAR/SUBSEQUENT EVENTS (CONT’D)

The shareholders of MHP are Prima Ventures Sdn Bhd ("PVSB") and Metro Giant Group Sdn Bhd("MGG") which hold 85.6% and 14.4% of the equity in MHP respectively. Dato' Abd Gani Bin Yusof,a director and a substantial shareholder of the Company, is also a director and a deemed substantialshareholder of MHP by virtue of his deemed interest in PVSB. PVSB and MGG have given theirundertakings to dispose their entire shareholdings in MHP to the Company upon all relevantapprovals being obtained from the relevant authorities.

PVSB and parties acting in concert will hold more than 33% equity interest of the Company assumingfull acceptances for the Voluntary Offer and has applied to the Securities Commission for anexemption ("Proposed Exemption") from having to undertake the mandatory offer to the rest of theshareholders of the Company to acquire the remaining MPB shares not already owned by PVSB andparties acting in concert at the same offer price of RM2.25 per MPB share pursuant to Malaysian Codeon Take-Overs and Mergers.

The above proposals have been approved by the Foreign Investment Committee ("FIC") vide its letterdated 29th July 2002. The proposals are currently under the consideration of the SecuritiesCommission ("SC").

(ii) In connection with the Voluntary Offer, the Company entered into a Heads of Agreement ("HOA")with PVSB on 4th December 2002 to acquire 4,280,000 ordinary shares of RM1.00 each in MHPrepresenting 85.6% of the issued and paid-up share capital of MHP from PVSB at a purchaseconsideration of RM38,520,000 to be fully satisfied by the issuance of 17,120,000 new MPB shares atan issue price of RM2.25 per MPB share ("Proposed Acquisition"). The Proposed Acquisition is subjectto approvals by the relevant authorities and shareholders of the Company, and waiver by MGG inrespect of its pre-emption right over PVSB's shares in MHP.

Based on the HOA , the Company and PVSB shall enter into a Shares Sale Agreement within 3months from the date of the HOA or at a subsequent date as may be mutually extended by bothparties. On 21st March 2003, the Company announced that the HOA has been mutually extended fora further period of 6 months until 3rd September 2003 and the Shares Sale Agreement shall beentered within 6 months from the date of extension or at a subsequent date as may be mutuallyextended by both parties.

Upon completion of the Proposed Acquisition, the Company is obliged to extend a mandatory offerto MGG, the remaining shareholder of MHP, to acquire the remaining 720,000 ordinary shares in MHPheld by MGG, at the same offer price made to PVSB. Accordingly, the Voluntary Offer detailed inNote 34(a)(i) to the financial statements is expected to become a mandatory offer and a notice ofmandatory offer shall be served to the Board of MHP upon completion of the Proposed Acquisition.

(iii) On 31st March 2003, the Company announced that it has been informed by MHP vide its letter dated28th March 2003 that MHP has been served with a notice of winding up under Section 218 of theCompanies Act, 1965 by MGG.

(iv) On 4th April 2003, the Company filed an action in the High Court of Kuala Lumpur against MGG forspecific performance of MGG's undertaking to sell its entire shareholding in MHP to the Company.

(b) On 15th May 2002, the Company proposed a restricted issue ("Restricted Issue") of up to 5,111,363 newMPB shares of RM1.00 each to participating trade creditors of certain subsidiary companies of theCompany at an issue price to be determined and an employee share option scheme ("ESOS") of up to10% of the enlarged issued and paid-up share capital of the Company.

The above proposals were approved by the FIC and the SC vide their letters dated 29th July 2002 and30th December 2002 respectively. The proposals were approved by the shareholders of the Company atan Extraordinary General Meeting ("EGM") held on 28th April 2003.

(c) The proposed increase in the authorised share capital of the Company from RM50,000,000 toRM100,000,000 by the creation of additional 50,000,000 new MPB shares of RM1.00 each to facilitate theproposals disclosed in Note 34(a) and Note 34(b) to the financial statements was approved by theshareholders of the Company at the EGM held on 28th April 2003.



35. FINANCIAL INSTRUMENTS - OTHER DISCLOSURES

(a) Effective Interest Rate and Maturity Profile

The effective interest rates and maturity profile of financial instruments exposed to interest rate risks areas follows:

Maturity profileEffective Within 1 to More than

interest rate Total 1 year 5 years 5 years% RM RM RM RM

Group2002

Financial assetsBank balances (HousingDevelopment Accounts) 1.44 - 2.20 * 2,932,935 2,932,935 - -

Fixed deposits with licensed bank 3.20 734,902 734,902 - -

Financial liabilitiesTerm and bridging loans 6.90 - 8.40 28,227,640 20,597,567 7,630,073 - Bank overdrafts 7.90 11,950,029 11,950,029 - - Short term loans and advances 7.90 1,078,447 1,078,447 - -

Hire purchase creditors 7.24 - 14.55 2,788,014 1,745,338 1,026,707 15,969

Group2001

Financial assetsBank balances (HousingDevelopment Accounts) 1.43 - 2.98 * 3,815,103 3,815,103 - -

Fixed deposits with licensed bank 3.20 24,800 24,800 - -

Financial liabilitiesTerm and bridging loans 6.90 - 9.40 37,546,787 34,620,913 2,619,526 306,348 Bank overdrafts 7.90 15,414,602 15,414,602 - - Short term loans and advances 7.90 6,974,209 6,274,209 700,000 -

Hire purchase creditors 8.59 - 16.50 4,133,869 2,242,240 1,891,629 -

(* Effective rate of return)

Company2002

Financial liabilityShort term advances 7.90 1,078,447 1,078,447 - -

Company2001

Financial liabilityShort term advances 7.90 1,974,209 1,274,209 700,000 -



35. FINANCIAL INSTRUMENTS - OTHER DISCLOSURES (CONT’D)

b) Fair Values

(i) The fair values of current financial assets and liabilities of the Group and the Company at the balancesheet date approximated to their carrying amount in the balance sheet due to the short term natureof these financial instruments.

(ii) There is no significant difference between the fair values of long term bank borrowings and theircarrying amount at the balance sheet date.

(iii) The carrying amount and the corresponding fair values of the hire purchase creditors and long termtrade creditor at the balance sheet date are as follows:-

Group Group2002 2001

Carrying Fair Carrying Fairamount value amount value

RM RM RM RM

Hire purchase creditors 2,788,014 3,303,786 4,133,869 4,815,543

Long term trade creditor 3,169,629 2,778,078 3,573,847 3,038,218

The fair values of hire purchase and long term trade creditors represent their present values of futurecontractual cash flows discounted at rates appropriate to those instruments.

(iv) The fair value of the Group's quoted investment is based on its quoted market value at the balancesheet date as disclosed in Note 13 to the financial statements. The carrying amount of the quotedinvestment has not been reduced to its fair value because the investment is held for long term andthe directors are of the opinion that the decline in the value of the investment is temporary in nature.

36. COMPARATIVE FIGURES

(a) Certain comparative figures have been reclassified to conform with the current year's presentation, astabulated below:-

As reported As restated2001 Reclassification 2001

RM RM RM

Cash Flow - Group

Items:-

Bad debts written off - 76,873 76,873

Interest income (96,896) (229,073) (325,969)



36. COMPARATIVE FIGURES (CONT’D)

As reported As restated2001 Reclassification 2001

RM RM RM

Operating profit before working capital changes 10,009,598 (152,200) 9,857,398

Decrease in trade and other debtors 1,830,060 (76,873) 1,753,187

Cash generated from operations 11,258,529 (229,073) 11,029,456

Profit before taxation - Group

Profit before taxation includes :-Interest income 96,896 229,073 325,969

(b) In addition, the presentation and classification of certain items in the current year's financial statementshave been changed or modified to comply with the requirements of the following applicable approvedaccounting standards which came into effect during the year :-

(i) MASB 22, Segment Reporting

(ii) MASB 24, Financial Instruments : Disclosure and Presentation


Statement by Directors

In the opinion of the Directors, the financial statements set out on pages 24 to 61 are drawn up in accordance withapplicable approved Accounting Standards in Malaysia so as to give a true and fair view of the state of affairs of theGroup and of the Company as at 31st December 2002 and of the results of operations and cash flows of the Groupand of the Company for the year ended on that date.

Signed at Kuala Lumpur this 28 April 2003

On behalf of the Board,

DATO’ ABD GANI BIN YUSOFDirector

KAMIL HJ ABDUL RAHMANDirector

I, AHMAD CHAZALI BIN MD. KASSIM, being the Director primarily responsible for the financial management ofMAGNA PRIMA BERHAD, do solemnly and sincerely declare that to the best of my knowledge and belief, thefinancial statements set out in pages 24 to 61 are correct, and I make this solemn declaration conscientiously believingthe same to be true, and by the virtue of the provisions of the Statutory Declaration Act,1960.

Subscribed and solemnly declared )by the abovenamed AHMAD )CHAZALI BIN MD. KASSIM at )Kuala Lumpur in the Federal )Territory this 28 April 2003 )

Before me,

Statutory Declaration


Report of the Auditors to the Members of Magna Prima Berhad

We have audited the financial statements of the Group and Company set out on pages 24 to 61 of MAGNA PRIMABERHAD. The preparation of the financial statements are the responsiblity of the Company's directors. Ourresponsibility is to express an opinion on the financial statements based on our audit.

We conducted our audit in accordance with approved Standards on Auditing in Malaysia. These standards requirethat we plan and perform the audit to obtain all the information and explanation, which we considered necessary toprovide us with sufficient evidence to give reasonable assurance that the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in thefinancial statements. An audit also includes an assessment of the accounting principles used and significant estimatesmade by the directors as well as evaluating the overall adequacy of the presentation of information in the financialstatements.

We believe our audit provides a reasonable basis for our opinion.

In our opinion:-

a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965and applicable approved Accounting Standards in Malaysia so as to give a true and fair view of:-

(i) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financialstatements of the Group and of the Company;

(ii) the state of affairs of the Group and of the Company at 31st December 2002 and of the results of theoperations and cash flows of the Group and of the Company for the year ended on that date;

and

b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by theCompany and its subsidiary companies of which we have acted as auditors have been properly kept inaccordance with the provisions of the said Act.

We have considered the financial statements and the auditors' report thereon of the subsidiary company of which wehave not acted as auditors, as indicated in Note 11 to the financial statements.

We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company'sfinancial statements are in form and content appropriate and proper for the purposes of the preparation of theconsolidated financial statements and we have received satisfactory information and explanations required by us forthose purposes.

The auditors' reports on the financial statements of the subsidiary companies were not subject to any qualificationand did not include any adverse comment made under Subsection (3) of Section 174 of the Companies Act, 1965.

FOLKS DFK & CO.NO : AF 0502CHARTERED ACCOUNTANTS

OOI CHEE KUNNO : 996/03/04(J/PH)PARTNER

Kuala Lumpur

Date : 28 April 2003


Summary of Landed Properties

Description Land / Age of Net BookRegistered and Built-up Properties / ValueOwner Location Existing Use Tenure Area (sq.ft.) Buildings RM

Magna Park 146, Jalan Persisiran 1 unit Freehold 3,360/ 7 years 178,026Sdn Bhd Perling 2, Taman Perling 2 storey 1,680

Skudai, Johor Bahru Shop OfficeHS (D) 115551, for

PTD 32040 commercialMukim Pulai, rental

Daerah Johor BaharuJohor

Dunia Epik H.S.(D) 6614 Semi-Detached Leasehold 3,249 11 years 121,440Sdn Bhd PT .4211 Mukim House (Expiring

Mentakab, Daerah on 2028)Temerloh

No.19, Jalan PJU 1/37 Shop Office for FreeholdDataran Prima Commercial

47301, Petaling RentalJaya

Ground Floor (19-01) Shop Office 1,282 5 years 410, 088Level 1 (19-02) Subsidiaries 1,487 269,790Level 2 (19-03) Business 1,480 269,790Level 3 (19-04) Premises 1,480 269,790Level 4 (19-05) 1,487 269,790


Analysis by Size of Shareholdings as at April 30 2003

Size of No. of % of No. of % ofShareholdings Shareholders Shareholders Shares Held Shareholdings

Less Than 100 - - - -

100 to 1,000 948 52.96 944,520 2.84

1,001 to 10,000 706 39.44 2,695,271 8.09

10,001 to 100,000 106 5.92 3,085,731 9.27

100,001 to Less Than 5% 26 1.45 11,584,750 34.79

5% and above 4 0.23 14,989,728 45.01

TOTAL 1,790 100.00 33,300,000 100.00

LIST OF THIRTY (30) LARGEST SHAREHOLDERS AS AT APRIL 30, 2003

Nos. Names Shareholdings %

1 DATO’ ABD GANI BIN YUSOF 5,559,313 16.69

2 CONCRETE PANEL CONSTRUCTION SDN BHD 4,063,384 12.20

3 MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD 3,286,107 9.87(A/C FOR AHMAD GHAZALI BIN MD KASSIM)

4 FOOK HUA HOLDINGS SDN BHD 2,080,924 6.25

5 LEU LEANG @ LIEW YONG CHOY 1,606,939 4.83

6 TAN CHAI TIAM 1,441,000 4.33

7 HSBC NOMINEES (TEMPATAN) SDN BHD 1,329,682 3.99(HRBS SG FOR CHUA SUYA HONG @ CHUA LEE HOON)

8 AFFIN-UOB NOMINEES (TEMPATAN) SDN BHD 892,000 2.68(A/C FOR TANG CHEE MENG)

9 LOW YIT HO 834,000 2.50

10 NG YAK HEE 730,930 2.19

11 AHMAD GHAZALI BIN MD KASSIM 711,269 2.14

12 LIEW YUEAH CIN 600,000 1.80

13 CHUA LEE BOON 485,930 1.46

14 LEE SZE WEE 464,000 1.39

15 CITICORP NOMINEES (TEMPATAN) SDN BHD 210,000 0.63(A/C FOR DATO’ NOOR AZMAN @ NOOR HIZAM BIN MOHD NURDIN)

16 CHUA CHIN HEAN 200,000 0.60

17 MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD 200,000 0.60(ASEAM CREDIT SDN BHD FOR FOOK HUA HOLDINGS SDN BHD)

18 TOP GREEN ENTITY SDN BHD 200,000 0.60

19 CITICORP NOMINEES (ASING) SDN BHD 183,000 0.55(CBHK PBGSGP FOR KINGSBURG HOLDINGS LIMITED)

20 PRB NOMINEES (TEMPATAN) SDN BHD 157,000 0.47(A/C FOR RUBBER INDUSTRY SMALLHOLDERS DEVELOPMENT AUTHORITY)

21 KUALA LUMPUR CITY NOMINEES (TEMPATAN) SDN BHD 155,000 0.47(A/C FOR TANG CHEE MENG)


Analysis by Size of Shareholdings (cont’d)


22 KUALA LUMPUR CITY NOMINEES (TEMPATAN) SDN BHD 150,000 0.45(A/C FOR CHIANG YEE HONG)

23 TASEC NOMINEES (ASING) SDN BHD 150,000 0.45(MEESPIERSON ASIA LIMITED FOR SAVERN FINANCE LIMITED)

24 TENGKU UZIR BIN TENGKU UBAIDILLAH 148,000 0.44

25 MERCSEC NOMINEES (ASING) SDN BHD 143,000 0.43(A/C FOR REGIS BEAUCHESNE)

26 LIEW YEEH HUI 131,000 0.39

27 CHUA HOCK CHIN 118,000 0.35

28 LEONG SHIP SHAM MOY 117,000 0.35

29 LIEW AH KAU @ LIEW KONG YONG 117,000 0.35

30 TAN KIM ENG 110,000 0.33

LIST OF DIRECTORS’ SHAREHOLDINGS AS AT APRIL 30, 2003


1. DATO’ ABD GANI BIN YUSOF 5,559,313 16.69

2. AHMAD GHAZALI BIN MD KASSIM 711,269 2.14

3. NG YAK HEE 730,930 2.19

4. CHUA LEE BOON 485,930 1.46

5. T. A. RAHMAN BIN T. ANDAK - -

6. KAMIL BIN DATUK HJ ABDUL RAHMAN - -

7. N. CHANTHIRAN A/L NAGAPPAN - -


Explanation of Variance

EXPLANATION OF VARIANCE BY MORE THAN 10% BETWEEN THE GROUP’S UNAUDITED RESULTS RELEASEDON 26 FEBRUARY 2003 AND THE AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2002

The audited profit after taxation and minority interests for the year ended 31 December 2002 is RM250,701 comparedto the unaudited of the same of RM333,459 as announced on 26 February 2003. Explanations on the variance andreconciliation thereof is shown in Table 1 and 2 below.

TABLE 1 : COMPARISON BETWEEN UNAUDITED AND AUDITED RESULTS

PARTICULARS UNAUDITED AUDITED DIFFERENCERM RM RM

Profit before taxation (274,023) (64,573) 209,450Taxation 693,102 406,267 (286,835)Profit after taxation

before minority interest 419,079 341,694 (77,385)Minority interest (85,620) (90,993) (5,373)Profit after taxation

and minority interest 333,459 250,701 (82,758)

TABLE 2 : EXPLANATIONS AND RECONCILIATION BETWEEN UNAUDITED AND AUDITED RESULTS

DESCRIPTION RM

UNAUDITED PROFIT AFTER TAXATION AND MINORITY INTEREST 333,459ADJUSTMENTS:1) Movement in deferred tax (397,600)2) Adjustment to contract cost 5,047,1853) Adjustment to revenue from construction contract (4,983,448)4) Interest expense over taken up 3,6215) Decrease in share of profit of joint venture entity (47,314)6) Over provision of taxation 248,0147) Accrual of tax penalty (11,883)8) Bad debts written off (100,388)9) Adjustment to minority interest (5,373)10) Adjustment to estimated profit accrued on development properties based

on updated budget on the project 182,77711) Others (18,349)AUDITED PROFIT AFTER TAXATION AND MINORITY INTEREST 250,701


Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Eighth Annual General Meeting of Magna Prima Berhad will be held at the

Ground Floor, No. 2, Jalan Prima 5, Metro Prima, 52100 Kuala Lumpur on Monday, 23 June 2003 at 10.00 a.m. for

the following purposes:

1. To receive the audited accounts for the year ended 31 December 2002 and the Reports of the Directors and

Auditors thereon. Resolution 1

2. To re-elect the following Directors who retire in accordance with Article 100 of the Company’s Articles of

Association: -

Ahmad Ghazali bin Md Kassim Resolution 2

Ng Yak Hee Resolution 3

3. To appoint Auditors of the Company and to authorise the Directors to fix their remuneration.

(Messrs Folks DFK & Co. are not seeking re-appointment. The Company has received notice from a shareholder

nominating Messrs Anuarul Azizan Chew & Co. as Auditors) Resolution 4

4. To approve payment of Directors’ fees for the year ended 31 December 2002 Resolution 5

5. As Special Business:

As SPECIAL BUSINESS, to consider and, if thought fit, pass the following ordinary resolutions: -

a) Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions.

"That, subject to the Companies Act, 1965 ("Act"), the Memorandum and Articles of Association of the

Company and the Listing Requirements of the Kuala Lumpur Stock Exchange, approval be and is hereby

given to the Company to enter into all transactions involving the Related Parties as specified in Section __

of the Circular to Shareholders dated 29 May 2003 provided that such transactions are:

(i) recurrent transactions of a revenue or trading nature;

(ii) necessary for the day-to-day operations;

(iii) carried out in the ordinary course of business on normal commercial terms which are not more

favourable to the Related Parties than those generally available to the public; and

(iv) are not to the detriment of the minority shareholders.

And that the Mandate, unless revoked or varied by the Company in a general meeting, shall continue in

force until next Annual General Meeting of the Company or the expiration of the period within which the

next Annual General Meeting is required to be held pursuant to Section 143(1) of the Act (but shall not

extend to such extensions as may be allowed pursuant to Section 143(2) of the said Act);

And further that the Directors of the Company be authorised to complete and do all such acts and things

(including executing all such documents as may be required) as they may consider expedient or necessary

to give effect to the Mandate. Resolution 6

b) "That pursuant to Section 132D of the companies act, 1965, and subject to the approvals of the relevant

government and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in

the Company, at any time, at such price, upon such terms and conditions and for such purposes and to such

person or persons whomsoever as the Directors may, in their absolute discretion, deem fit, provided that

the aggregate number of shares issued pursuant to this resolution in any one financial year does not exceed

10% of the issued share capital of the Company for the time being and that the Directors be and are also

empowered to obtain the approval from the Kuala Lumpur Stock Exchange for the listing of and quotation

for the additional shares so issued and that such authority shall continue in force until the conclusion of the

next Annual General Meeting of the Company." Resolution 7


Notice of Annual General Meeting (cont’d)

By order of the Board

AHMAD SHAHAB BIN HJ. DIN (MAICSA 0689340)

YUEN YOKE PING (MAICSA 7014044)

Joint Company Secretaries

Kuala Lumpur

29 May 2003

Note:

1. A member of the Company who is entitled to attend and vote at this Meeting is entitled to appoint a proxy or proxies

to attend and vote on his behalf.

2. A proxy need not be a member of the Company.

3. Where the member of the Company appoints two or more proxies, the appointment shall be invalid unless the

member specifies the proportion of his shareholding to be represented by each proxy.

4. If the proxy is executed by a corporation, the Form of Proxy must be under its common seal or the hand of an

officer or attorney duly authorised.

5. The instrument appointing the proxy must be deposited at the Registered Office of the Company at No. 2, 2nd Floor,

Jalan Prima 5, Metro Prima, 52100 Kuala Lumpur, not less than forty-eight (48) hours before the time set for

holding the Meeting or adjourned Meeting.

6. Explanatory Notes on special business:

The Ordinary Resolution 6 under item 4 if passed, will authorise the Company and each of its subsidiaries to enter

into recurrent related party transactions of revenue or trading nature which are necessary for its day to day

operation. The recurrent related party transactions are in the ordinary course of business and which are on terms

not more favourable to the related party than those generally available to the public. This authority unless revoked

or varied at a general meeting, will expire at the next Annual General Meeting of the Company. Please refer to the

Circular to Shareholders dated 29 May 2003 with regard to Ordinary Resolution 5.

The Ordinary Resolution 7 proposed under item 4, if passed, will give the Directors of Company, from the date of

the above General Meeting, authority to issue and allot ordinary shares from the unissued capital of the Company

being for such purposes as the Directors consider would be in the interest of the Company. This authority will,

unless revoked or varied by the Company in General Meeting expire at the conclusion of the next Annual General

Meeting of the expiration of the period within which the next Annual General Meeting is required by law to be

held, whichever is the earlier.


Statement Accompanying Notice of Annual General Meeting(PURSUANT TO PARAGRAPH 8.28 (2) OF THE LISTING REQUIREMENTS OF THE KUALA LUMPUR STOCK EXCHANGE)

1. Directors who are standing for re-election at the 8th Annual General Meeting of the Company

Pursuant to Article 100 of the Company’s Articles of Association

Ahmad Ghazali bin Md Kassim

Ng Yak Hee

2. Details of attendance of Directors at Board Meetings

There were fourteen (14) Board meetings held during the financial year ended 31 December 2002. Details of

attendance of the Directors are set out on page 12 of the Annual Report.

3. Date, Place and Time of Board Meetings

The date, place and time of Board meetings held during the financial year ended 31 December 2002 were as

follows: -

Date of Meeting Place Time

15 January 2002 No. 2, 2nd Floor 3.00 p.m.

Jalan Prima 5, Metro Prima

52100 Kuala Lumpur

24 January 2002 No. 2, 2nd Floor 11.00 a.m.


52100 Kuala Lumpur

27 February 2002 No. 2, 2nd Floor 10.00 a.m.


52100 Kuala Lumpur

28 February 2002 No. 2, 2nd Floor 2.30 p.m.


52100 Kuala Lumpur

12 April 2002 No. 2, 2nd Floor 3.00 p.m.


52100 Kuala Lumpur

30 April 2002 No. 2, 2nd Floor 10.00 a.m.


52100 Kuala Lumpur

31 May 2002 No. 2, 2nd Floor 10.00 a.m.


52100 Kuala Lumpur


Statement Accompanying Notice of Annual General Meeting (cont’d)

14 Jun 2002 No. 2, 2nd Floor 3.00 p.m.


52100 Kuala Lumpur

13 August 2002 No. 2, 2nd Floor 3.00 p.m.


52100 Kuala Lumpur

29 August 2002 No. 2, 2nd Floor 10.30 a.m.


52100 Kuala Lumpur

5 September 2002 No. 2, 2nd Floor 2.30 p.m.


52100 Kuala Lumpur

22 October 2002 No. 2, 2nd Floor 3.00 p.m.


52100 Kuala Lumpur

6 November 2002 No. 2, 2nd Floor 10.00 a.m.


52100 Kuala Lumpur

28 November 2002 No. 2, 2nd Floor 11.00 a.m.


52100 Kuala Lumpur

4. Further details of the Directors who are standing for re-election

Details of the Directors who are standing for re-election are set out in the Directors’ Profile appearing on pages

6 and 7 of the Annual Report.


Letter from Shareholder Nominating Auditors

Mr. Ang Tang Pew (I/C No. 590307-10-5847)No. 238, Lorong 20, Sungai Jarom42600 Jenjarom, Kuala LangatSelangor

20 May 2003

The Board of DirectorsMagna Prima BerhadNo. 2, 2nd FloorJalan Prima 5Metro Prima52100 Kuala Lumpur

Dear Sirs

NOTICE OF NOMINATION OF AUDITORS

I, the undersigned, being a registered shareholder of Magna Prima Berhad, hereby give noticepursuant to section 172(11) of the Companies Act, 1965 of my nomination of Messrs Anuarul AzizanChew & Co. for appointment as new Auditors of the company in place of Messrs Folks DFK & Co. atthe forthcoming Annual General Meeting of the company.

I propose that the following resolution be considered at that meeting:-

" As Messrs Folks DFK & Co. are not seeking re-appointment as auditors, their retirement be and ishereby accepted with thanks for their past services and in place thereof, Messrs Anuarul Azizan Chew& Co. having consented to act, be and are hereby appointed as Auditors of the company for the yearended 31 December 2003, to hold office until the conclusion of the next Annual General Meeting andthat authority be and is hereby given for the Directors to determine their remuneration. "

Yours faithfully

ANG TANG PEW

Proxy Form

I/We, of

being a member / members of Magna Prima Berhad hereby appoint

of

or falling him/her, CHAIRMAN OF THE MEETING as my/our proxy to vote for me/us on my/our behalf at the Eigth AnnualGeneral Meeting of the Company to be held at Ground Floor, No. 2, Jalan Prima 5, Metro Prima, 52100 Kuala Lumpur on 23June 2003 at 10.00 am and at any adjournment thereof.

Resolutions No. For Against

To receive the audited accounts for the year ended 31 December 2002 and the Reports of the Directors and Auditors thereon. No.1

To re-elect the following Directors who retire in Accordance withArticle 100 of the Company’s Articles Of Association:-

Ahmad Ghazali bin Md Kassim No.2

Ng Yak Hee No. 3

To appoint Anuarul Azizan Chew & Co. as Auditors of the Company and to authorise the Directors to fix their remuneration. No. 4

Directors’ fees for the year ended 31 December 2002 No. 5

As Special Business

Renewal of shareholders’ mandate for recurrent related party transactions No. 6

Grant of authority pursuant to Section 132D of the Companies Act, 1965 No. 7

Please indicate with an "X" in the space provided, how you wish your vote to be cast. If you do not do so, the proxy mayvote or abstain at his/her discretion)

……………………………………………… ………………………….. NO. OF SHARES HELDSignature/Common Seal Date

Notes:

1. A member of the Company entitled to attend and vote at this Meeting is entitled to appoint a proxy or proxies to attend and vote on hisbehalf.

2. A proxy need not be a member of the Company.

3. Where the member of the Company appoints two or more proxies, the appointment shall be invalid unless the member specifies theproportion of his shareholding to be represented by each proxy.

4. If the proxy is executed by a corporation, the Form of Proxy must be under its common seal or the hand of an officer or attorney dulyauthorised.

5. The instrument appointing the proxy must be deposited at the Registered Office of the Company at No. 2, 2nd Floor, Jalan Prima 5, MetroPrima, 52100 Kuala Lumpur, not less than forty-eight (48) hours before the time set for holding the Meeting or adjourned Meeting.

(369519-P)(Incorporated in Malaysia)

Documents

Magna Cover FA - Magna Prima fileChairman’s Letter Annual Report 2002 Magna Prima Berhad 3 “ The continuous effort for the improvement of operational efficiency and further finance