Diethelm Holdings (Malaysia) Berhad

Diethelm Holdings (Malaysia) Berhad (231378-A)

74 Jalan University

P. O. Box 77, 46700 Petaling Jaya, Selangor, Malaysia

Tel ++60-3 7966 0288 Fax ++60-3 7957 0829

www.dksh.com

A N N U A L R E P O R T 2 0 0 2

The Future

Strong RootsIn the 1860’s, the pioneering young Swiss entrepreneurs, Wilhelm Heinrich Diethelm and Edward Anton Keller ventured

to Singapore and the Philippines, while Hermann Siber headed for Yokohama. Independently, all three built flourishing

trading houses that soon developed extensive networks connecting Asia, Europe and the Americas. The Diethelm,

Edward Keller and SiberHegner companies gained a superior understanding and knowledge of their markets and customers,

which earned them the respect and trust of local business communities, as well as international business partners. While

mastering the challenges of the 19th and 20th centuries, the companies developed into state-of-the-art marketing,

services and distribution specialists.

In 2002, the Diethelm Keller Group merged its Asian service business with the SiberHegner Group to form DKSH,

combining their distinctive strengths. The new logo contains elements of each partner’s trademarks. The fan tree represents

the Group’s strength, durability and longevity. Market Intelligence describes DKSH’s core competency. While maintaining

the high-quality standards and long-term commitment of the Group to partners, principals, customers and employees,

DKSH is committed to build a global service brand in its areas of expertise.

Wilhelm Heinrich DiethelmSingapore, 1887

Edward Anton KellerPhilippines, 1887

Hermann SiberJapan, 1865

The fan tree has been a trademarkof the Group for a century.

Contents2 Notice of Annual General Meeting

4 Corporate Information

5 Operating Structure

6 Directors’ Profile

8 To Our Shareholders

10 Corporate Profile

16 Corporate Governance Statement

20 Statement of Internal Control

22 Audit Committee

24 Analysis of Ordinary Shares

26 List of Properties

27 Financial Highlights

27 Statement of Directors’ Responsibility

28 Directors’ Report

33 Consolidated Income Statement

34 Company Income Statement

35 Balance Sheets

37 Consolidated Statement of Changes in Equity

38 Company Statement of Changes in Equity

39 Cash Flow Statements

41 Notes to the Financial Statements

76 Statement by Directors and Statutory Declaration

77 Auditors’ Report

Proxy Form

1

2 Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Eleventh Annual General Meeting of the Company will be held at the KristalSuite 1&2, First Floor, West Wing, Hilton Petaling Jaya, No. 2, Jalan Barat, 46200 Petaling Jaya, Selangor Darul Ehsanon Thursday, 12 June 2003 at 10.00 a.m. for the purpose of transacting the following business :

AGENDA

As Ordinary Business

1. To receive and adopt the audited financial statements for the year ended31 December 2002 and the reports of the directors and auditors thereon.

2. To approve the payment of a final dividend of one (1) sen gross perordinary share less 28% income tax for the year ended 31 December 2002.

3. To approve the payment of directors’ fees for the year ended 31 December 2002.

4. To elect Ahmad Fakhrizzaki Abdullah who retires by rotation in accordance withArticle 99 of the Company’s Articles of Association and, being eligible, offers himself forre-election.

5. To elect Niels Johan Holm who retires is accordance with Article 82 of the Company’sArticles of Association and, being eligible, offers himself for election.

6. To re-appoint PricewaterhouseCoopers as auditors of the Company and to authorise thedirectors to fix their remuneration.

7. To transact any other business of an Annual General Meeting for which due notice shallhave been given.

By Order of the Board

Wendy Chan Choi Kuan, MCCS

Company Secretary(MACS 00728)

Petaling Jaya21 May 2003

Notes :(a) Every member is entitled to appoint a proxy or in the case of a corporation, to appoint a representative to attend and vote in his place. A proxy

need not be a member of the Company.

(b) The Proxy Form must be signed by the appointer or his attorney duly authorised in writing or if the appointer is a corporation, either under sealor under the hand of an officer or attorney duly authorised. In the case of joint holdings, the signature of the first named holder is sufficient.

(c) If the Proxy Form is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he thinks fit.

(d) If no name is inserted in the space for the name of your proxy, the Chairman of the Meeting will act as your proxy.

(e) The Proxy Form must be deposited at the Registered Office of the Company, 3rd Floor, 74 Jalan University, 46200 Petaling Jaya not less thanforty-eight (48) hours before the time of holding the Meeting or any adjournment thereof.

Resolution 1

Resolution 2

Resolution 3

Resolution 4

Resolution 5

Resolution 6

3

STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING

[Pursuant to Paragraph 8.28(2) of the Kuala Lumpur Stock Exchange (KLSE) Listing Requirements]

1. Details of Attendance of Directors at Board Meetings

A total of four Board Meetings were held during the financial year ended 31 December 2002, details of which are asfollows:-

Name of Directors Number of Meetings Attended

Michael Lim Hee Kiang 4 of 4Peter Heinser 4 of 4André Eugen Hägi 4 of 4Ahmad Fakhrizzaki Abdullah 4 of 4Thon Lek 4 of 4

2. Directors who are Standing for Election or Re-election

• Peter Heinser who retires by rotation in accordance with Article 99 of the Company’s Articles of Association willnot stand for re-election.

• Ahmad Fakhrizzaki Abdullah who retires by rotation in accordance with Article 99 of the Company’s Articles ofAssociation and, being eligible, offers himself for re-election.

• Niels Johan Holm who retires in accordance with Article 82 of the Company’s Articles of Association and, beingeligible, offers himself for election.

Profiles of the Directors standing for election and re-election are disclosed in pages 6 to 7 of the Annual Report.

3. Date, Time and Place of the Eleventh Annual General Meeting

The Eleventh Annual General Meeting of Diethelm Holdings (Malaysia) Berhad will be held as follows:-

Date : Thursday, 12 June 2003Time : 10.00 a.m.Place : Kristal Suite 1&2, First Floor, West Wing

Hilton Petaling JayaNo. 2, Jalan Barat46200 Petaling JayaSelangor Darul EhsanMalaysia

Date Time Venue

26 February 2002 11.45 a.m. 74 Jalan University, Petaling Jaya

16 May 2002 11.00 a.m. 74 Jalan University, Petaling Jaya

15 August 2002 10.50 a.m. 74 Jalan University, Petaling Jaya

31 October 2002 10.00 a.m. 74 Jalan University, Petaling Jaya

4 Corporate Information

Board of Directors• Michael Lim Hee Kiang Chairman• Niels Johan Holm Group Managing Director• Peter Heinser Executive Director• André Eugen Hägi Group Finance Director• Ahmad Fakhrizzaki Abdullah Director• Thon Lek Chief Operating Officer, Consumer Product Operations

Company Secretary• Wendy Chan Choi Kuan, MCCS

(MACS 00728)

Registered Address• 74 Jalan University

46200 Petaling JayaSelangor Darul EhsanTelephone : ++60-3 7966 0288Facsimile : ++60-3 7957 0829E-mail : dietmal@pc.jaring.my

Auditors• PricewaterhouseCoopers

Chartered Accountants

Principal Bankers• Malayan Banking Berhad• Deutsche Bank (Malaysia) Berhad• Public Bank Berhad• RHB Bank Berhad

Solicitors• Shearn Delamore & Co

Audit Committee• Michael Lim Hee Kiang Chairman• Ahmad Fakhrizzaki Abdullah Member• Peter Heinser Member

Share Registrars• Tenaga Koperat Sdn Bhd (118401-V)

20th Floor, Plaza Permata (formerly known as IGB Plaza)Jalan KamparOff Jalan Tun Razak50400 Kuala LumpurTelephone : ++60-3 4041 6522Facsimile : ++60-3 4042 6352E-mail : mr_chuah@tm.net.my

Stock Exchange Listing• The Kuala Lumpur Stock Exchange

Main BoardStock Code : 5908

• Trustee Share Status

5Operating Structure1 May 2003

100%

100% 100%

100%

100%

100%

100% 100%

DiethelmMalaysiaSdn Bhd

DiethelmLogisticsServicesSdn Bhd

EAC Marketing Services Sdn Bhd

DiethelmFranchise Holdings

(M) Sdn Bhd

HarpersTrading

(Malaysia)Sdn Bhd

HarpersTrading

(B) Sdn Bhd

The FamousAmos Chocolate

Chip CookieCorporation(M) Sdn Bhd

Diethelm Holdings (Malaysia) Berhad

DiethelmChemicalsMalaysiaSdn Bhd

6 Directors’ Profile

Mr Michael Lim Hee Kiang, aged 55, aMalaysian, is an independent non-executive Director and Chairman ofDiethelm Holdings (Malaysia) Berhad.He was appointed as Director ofDiethelm Holdings (Malaysia) Berhad on24 December 1991 and as Chairman ofthe Board on 1 January 1999. He is alsoserving as Chairman of the AuditCommittee. Mr Michael Lim is anAdvocate and Solicitor and currentlypractises with Messrs Shearn Delamore& Co. where he has been a partner of thefirm for the last 24 years. He graduatedwith a Bachelor of Laws (Hons.) degreein 1972 and obtained a Master of Lawsdegree with Distinction from the VictoriaUniversity of Wellington, New Zealandin 1973. On returning to Malaysia in1974, he was admitted to the High Courtof Borneo and subsequently to the HighCourt of Malaya in 1978. Mr MichaelLim was formerly a lecturer at the LawFaculty, University of Malaya for threeyears from 1975 to 1977. Mr MichaelLim attended all the four Board meetingsof the Company held in the financialyear ended 31 December 2002. Healso sits on the boards of SelangorProperties Berhad, Insas Berhad, DijayaCorporation Berhad, Paragon UnionBerhad and Kiara Emas Asia IndustriesBerhad. Mr Michael Lim does not haveany family relationship with any directorand/or major shareholder of DiethelmHoldings (Malaysia) Berhad, nor anypersonal interest in any businessarrangement involving the Companywith the exception that he is a partner ofthe Company’s principal solicitors, MessrsShearn Delamore & Co. He has had noconvictions for any offences within thepast 10 years.

Michael Lim Hee Kiang(Chairman)

Niels Johan Holm(Group Managing Director)

Mr Niels Johan Holm, aged 48, a Danish,was appointed as the Group ManagingDirector of Diethelm Holdings (Malaysia)Berhad on 6 January 2003. Mr Holm isa graduate from EAC/CopenhagenBusiness School majoring in Economics.He joined the Diethelm Group in March1997 in Thailand and commands morethan 25 years experience in distributionand logistics in Hong Kong, Malaysia,Taiwan, Singapore and Thailand -including nine years with EAC Malaysia,latest as its Managing Director. For theDiethelm Group in Thailand, Mr Holmgrew the business volume of the ConsumerProducts Unit five times and spearheadedthe acquisition of a major food servicecompany. During the past five years, retailbusiness in Thailand has evolved fasterthan anywhere else in Asia. Working withlarge international retailers in Thailand,Mr Holm has acquired substantialexperience and knowledge regarding bestpractice and expectations of the rapidlychanging Asian retail business. With hisextensive expertise and experience in thearea of Fast Moving Consumer Goods(FMCG) distribution, Mr Holm will be amajor driver in the further developmentof Diethelm Holdings (Malaysia) Berhad’sskills and capabilities to facilitatecontinued fast growth, particularly of theBusiness Unit Consumer Goods.Mr Holm also sits on the boards of theDiethelm Holdings (Malaysia) Berhadgroup of companies. He does not haveany family relationship with any directorand/or major shareholder of DiethelmHoldings (Malaysia) Berhad, nor anypersonal interest in any businessarrangement involving the Company. Hehas had no convictions for any offenceswithin the past 10 years.

Mr Peter Heinser, aged 57, a Swiss, wasappointed as a Director of DiethelmHoldings (Malaysia) Berhad on 4September 1997 and as its Chief ExecutiveOfficer on 1 April 2001. He was appointedas a member of the Audit Committee ofthe Company on 27 December 2001. Asa result of the merger of Diethelm KellerServices Asia with SiberHegner inSwitzerland in 2002, Mr Heinser’sfunctional job title was re-designated toGroup Managing Director. On 6 January2003, Mr Heinser relinquished hisfunctions as Group Managing Directorand continued to serve the MalaysianGroup as an executive director of theCompany. Mr Heinser is a graduatedmerchant (1966) and economist (1976)by education. He started his career withDiethelm in Switzerland in 1974. In 1981he took up the position of Chief FinancialOfficer of Diethelm Singapore and wassubsequently appointed as its ChiefExecutive Officer from 1989 to 1997.From 1998 to 2001, Mr Heinser was basedin Switzerland with overall responsibilitiesin the South East Asian operations.Mr Heinser attended all the four Boardmeetings of the Company held in thefinancial year ended 31 December 2002and he also sits on the boards of theDiethelm Holdings (Malaysia) Berhadgroup of companies. He does not haveany family relationship with any directorand/or major shareholder of DiethelmHoldings (Malaysia) Berhad, nor anypersonal interest in any businessarrangement involving the Company. Hehas had no convictions for any offenceswithin the past 10 years.

Peter Heinser(Executive Director)

7

Mr André Eugen Hägi, aged 54, a Swiss,was appointed as the Group FinanceDirector of Diethelm Holdings (Malaysia)Berhad on 12 November 1997. Mr Hägiis a Swiss certified financial controller andobtained a post-graduate degree in Masterof Business Administration from BrunelUniversity of London. From 1981 to1996, he worked with Ciba-Geigy ofSwitzerland as Head of Finance andAdministration of their companies in Iran,Singapore, Turkey, as well as of Ciba AgroInternational Ltd in Switzerland. From1996 to 1997 he was with the Swiss watchgroup SMH before joining DiethelmHoldings (Malaysia) Berhad in November1997. Mr Hägi attended all the fourBoard meetings of the Company held inthe financial year ended 31 December2002 and he also sits on the boards of theDiethelm Holdings (Malaysia) Berhadgroup of companies. Mr Hägi does nothave any family relationship with anydirector and/or major shareholder ofDiethelm Holdings (Malaysia) Berhad,nor any personal interest in any businessarrangement involving the Company. Hehas had no convictions for any offenceswithin the past 10 years.

André Eugen Hägi(Group Finance Director)

Ahmad FakhrizzakiAbdullah

(Director)

En Ahmad Fakhrizzaki Abdullah, aged 57,a Malaysian, is a non-independent non-executive Director of Diethelm Holdings(Malaysia) Berhad. He was appointed tothe Board of Diethelm Holdings(Malaysia) Berhad on 9 March 1993. Heis also a member of the Audit Committeeof the Company. En Ahmad was formerlythe Deputy Chief Executive of LembagaTabung Angkatan Tentera (LTAT) wherehis responsibility covered three major areasnamely Administration, Finance andInvestment. He is currently the GeneralManager of Perbadanan Perwira HartaMalaysia, a wholly-owned subsidiary ofLembaga Tabung Angkatan Tentera,which is involved in propertydevelopment, construction andmanagement. En Ahmad graduated fromthe University of Malaya with a degree inEconomics in 1971 and in 1992 attendedthe INSEAD International ManagementProgramme at Fountainebleau, France.Prior to joining LTAT in August 1974, hetaught at a private academic institution inKuala Lumpur and later served as aSystems Analyst at Malaysian AirlineSystem. En Ahmad attended all the fourBoard meetings of the Company held inthe financial year ended 31 December2002. En Ahmad does not have any familyrelationship with any director and/ormajor shareholder of Diethelm Holdings(Malaysia) Berhad, nor any personalinterest in any business arrangementinvolving the Company. He has had noconvictions for any offences within thepast 10 years.

Thon Lek(Chief Operating Officer,

Consumer Product Operations)

Mr Thon Lek, aged 55, a Malaysian, wasappointed to the Board of DiethelmHoldings (Malaysia) Berhad on 3 January2002. He holds a Bachelor of EconomicsDegree majoring in Applied Economicsfrom the University of Malaya. Mr Thonstarted his career with Harpers Trading(Malaysia) Sdn Bhd in 1971 holdingvarious managerial positions until he wasappointed as Managing Director in 1995.In recognition of his extensive experiencein the fields of marketing, sales,administration, logistics and warehousingfor close to three decades, in 1999,Mr Thon was appointed as ChiefOperating Officer, Consumer ProductOperations of Diethelm Holdings(Malaysia) Berhad where he oversees allconsumer product operations of DiethelmMalaysia Sdn Bhd and Harpers Trading(Malaysia) Sdn Bhd. Mr Thon attendedall the four Board Meetings of theCompany held in the financial year ended31 December 2002 and he also sits on theboards of the Diethelm Holdings(Malaysia) Berhad group of companies.Mr Thon does not have any familyrelationship with any director and/ormajor shareholder of Diethelm Holdings(Malaysia) Berhad, nor any personalinterest in any business arrangementinvolving the Company. He has had noconvictions for any offences within thepast 10 years.

8 To Our Shareholders

On behalf of the Board of Directors, it is my pleasure to present to you the Annual Report and the Audited Accounts ofthe Group and the Company for the financial year ended 31 December 2002.

Review of Results

2002 was again a successful year for the Group. Since 2000, we have firmly brought Diethelm Holdings (Malaysia)Berhad back to profitability and the results of 2002 confirm that we are heading in the right direction.

The Net Profit for the year improved by 69% from RM 5.1 million in 2001 to RM 8.7 million in 2002. It should benoted that the 2001 results did not reflect interest expenses on the restricted preference shares because they were considereddividends. With the adaptation of MASB 24, they are now reported as expenses and reflected in the Profit & LossStatement. Therefore, the adjusted Net Profit 2001 would only have amounted to RM 1 million and this makes theimprovement even more significant.

One of the key drivers to improved profitability was larger volume handled by the companies of Diethelm Holdings(Malaysia) Berhad Group. In 2002, revenue increased by 15.8% to RM 1,484 million. This strong growth was achievedin a difficult market, where consumer sentiments remained cautious.

The Trading segment accounted for RM 1,386 million of our sales and a growth rate of 17%. Here we provide distributionservices to Malaysian and international suppliers of consumer goods, pharmaceuticals and healthcare products. Whilepharmaceuticals enjoyed an overall strong demand throughout the year, the picture was much more heterogeneous forconsumer products. Some of our agencies had a very strong year, however, a few experienced some sales decline. Wenoted that strong advertising and promotional support could be very effective in the difficult consumer market. Thesegmental result benefited from the increase in sales and improved from RM 3 million in 2001 to RM 11 million in2002.

The Chemicals segment reported sales of RM 38 million as compared to RM 39 million in 2001. In this segment, wesupply raw materials and ingredients to Malaysian manufacturers and life-stock breeders. The decline in sales was aresult of adverse circumstances in both customer bases. The paint industry required less pigments for paint because ofthe slow-down in the construction sector. In the animal health market, the drop in life-stock prices had the same effecton feed supplements and animal health products. In line with the drop in sales, the segmental results also decreased fromRM 4 million in 2001 to RM 3 million in 2002.

The Food segment achieved sales of RM 14 million as compared to RM 12 million in 2001. Food now comprises ourFood Ingredients division and the Famous Amos Chocolate Chip Cookie Corporation (M) Sdn Bhd. Food Ingredients,a new activity of our Group, supplies a wide range of supplements, raw material and enhancers to food manufacturers inMalaysia. The business is still in its pioneer phase. On the other hand, Famous Amos is a well-known brand for freshlybaked cookies available in 22 locations in West and East Malaysia. The concept of constant renewal and expansion ofthe outlet network is proving successful. The segmental results remained on the level of 2001 because the acceleratedexpansion also increased the cost base.

The Travel segment is reported for the last time because, as previously announced, Diethelm Holdings (Malaysia)Berhad has sold its 58.8% shareholding in the Diethelm Travel Management Sdn Bhd Group to local and foreigninvestors with effect from 31 December 2002. The Travel segment reported sales of RM 49 million as compared to RM48 million in 2001. This business is still reflecting a difficult market and 2002 did not bring the awaited pick-up. Thesegmental result from 2002 was 9% below 2001.

Dividend

The Board of Directors is pleased to recommend a final dividend of one (1) sen gross per ordinary share for the yearended 31 December 2002.

9

Acknowledgment

Mr Peter Heinser will retire from the Board at the forthcoming Annual General Meeting and will not seek re-election.On 6 January 2003, Mr Heinser relinquished his functions as Group Managing Director and continue to serve theMalaysian Group as an executive director. The Board and the Management would like to take this opportunity toextend their gratitude to Mr Peter Heinser for his leadership, guidance, advice and contribution during his term ofoffice.

I would also like to thank my fellow members of the Board for their continued guidance and support. Finally, on behalfof the Board, I wish to acknowledge the efforts and the hard work by the staff and management of the DiethelmHoldings (Malaysia) Berhad Group and would like to express my sincere appreciation for their continued support.

Michael Lim Hee KiangChairman

Outlook

The Diethelm Holdings (Malaysia) Berhad Group is looking towards a promising future. The restructuring initiatedsince 1998 has returned the Group to sustainable profitability. A lot has changed since then and an efficient and solidstructure is in place. This has allowed the handling of considerably increased volumes without excessive adding of cost.

With the acquisition of EAC Marketing Services Sdn Bhd, soon to be renamed DKSH Marketing Services Sdn Bhd, theGroup has made another important step towards becoming the distribution services provider of choice in Malaysia.

Diethelm Holdings (Malaysia) Berhad is in a business where size matters. The more volume a company handles, thebetter it is placed to achieve synergy savings. Even before the acquisition of EAC Marketing Services Sdn Bhd, theGroup was well on that path and now our competitive position has improved further.

The performance of a distribution services provider is always dependent on its portfolio of agencies, which is subject tochange. Considerable competitive pressure leads to fluctuations and impacts margins. We expect 2003 to be no differentfrom previous years.

We are geared to further improve our performance with regards to efficiency, reliability and cost-effectiveness. We haveambitious targets for our sales despite the cautious sentiments in the consumer market. However, the year will not yetsee significant synergy savings from the acquisition because EAC Marketing Services Sdn Bhd will continue to use theirrented warehouse and to operate on their own computer infrastructure in 2003. The full integration into DiethelmHoldings (Malaysia) Berhad systems will only be completed in 2004.

With the continued support of our shareholders, business associates and our staff, the Group will be in a position tobecome a leading force in Malaysia in the year 2003 and beyond.

Niels Johan HolmGroup Managing Director

10 Corporate Profile

HISTORY

Diethelm was founded in Singapore in 1887 and has beendoing business in Malaysia for more than 100 years. In1923, a branch was established in Penang and an officewas opened in Kuala Lumpur in 1935.

Diethelm Holdings (Malaysia) Berhad was incorporatedon 24 December 1991 as Diethelm Holdings (Malaysia)Sdn Bhd as a vehicle to consolidate the interests of theDiethelm group of companies in Malaysia. On 1 March1994, the Company was converted to a public companyand assumed its present name. On 13 December 1994,the Company was listed on the Main Board of the KualaLumpur Stock Exchange. Since the restructuring exercisein 1992, Lembaga Tabung Angkatan Tentera (LTAT) hasbeen Diethelm’s Bumiputra partner and remains thesubstantial local shareholder of the Company with a 30%equity.

REGIONAL

Diethelm Holdings (Malaysia) Berhad is part of the newlymerged DKSH Group (Diethelm Keller SiberHegnerHolding Ltd.) with its corporate headquarters inSwitzerland. The merger between Diethelm KellerServices Asia Ltd and SiberHegner Holding Ltd in June2002 created a true Asian powerhouse in terms of businessactivities, market coverage and strengths, which augurswell for the Group’s future profitability and businessprospects. The merger also reflects a corporate missionthat bridges the gap between the East and West with anobjective to adopt a long- term approach to marketdevelopments.

DKSH operates a knowledge-based business model.Business Unit support and regional orientation is providedby the country organisations with their state-of-the-artIT and their ability to execute assignments to satisfyunique local requirements. The Group offers marketaccess and order fulfilment services for partners based inAsia, Europe and the Americas.

11

OPERATIONAL STRUCTURE

Diethelm Holdings (Malaysia) Berhad is an investmentholding company. The Group is one of the largestmarketing, sales, warehousing and distributionorganisations in Malaysia and offers a complete range ofservices to its principals. The Diethelm Malaysia Grouporganisational structure reflects and responds to thecomplexity of the businesses it operates. The Group alignsexperts with partners by speaking both the specialist andlocal languages.

BUSINESS UNITS

TRADING SEGMENT

This main segment deals with distribution services.Consumer Products distribution is involved in thedistribution, sales and marketing of a large range ofpackaged goods, both food and non-food, toiletries,household provisions, bakery products, hotel and cateringsupplies, photographic products, personal care products,confectionery and hardware, liquor and wine, cigarettesand tobacco products.

A key strength is the extensive network of 13 branchesand 4 sales offices located in most key towns of Peninsularand East Malaysia to enhance the sales coverage. Everybranch has a full sales management team headed by aregional sales manager and sales administration support.In addition, a full warehousing and distribution facilityoperates in Brunei.

To cater for the fast changing retail environment andto allow focus on key account management, we deal withboth the modern and traditional trade. The TradeRelations Management Department facilitates andprofessionally manages major trade accounts. The in-house developed Electronic Territory Management System(ETMS) provides accurate information on sales coverage,productivity and trade related data. In addition, aCustomer Call Centre strengthens customer service. Asa leading and growing service provider in the consumergoods industry, we are well prepared for the challengesahead and we are confident to extend our businesses. Theacquisition of the consumer products, photo imaging andtelephone card distribution activities from EAC Holdings(Malaysia) Sdn Bhd in the first quarter of 2003 willsignificantly increase our distribution strength in Malaysia.

12 Corporate Profile

Diethelm Logistics Services Sdn Bhd consolidates thewarehousing and distribution needs of the ConsumerProducts distribution. Spreading over 34 acres of land,the 50,000 square metres built-up Central DistributionCentre is one of Malaysia’s largest warehouses. It consistsof four identical blocks equipped with 46,236 selective-racked pallet spots and is protected by comprehensivesprinkler and alarm systems. Cold storage facilities forhandling air-conditioned, chilled and even frozenproducts are available. Diethelm Logistics Services SdnBhd is supplying all of its Peninsular Malaysia customersdirectly from its Central Distribution Centre in BukitKemuning. East Malaysian and the Brunei branchesmaintain their own warehouses for delivery to the trade.

The Central Distribution Centre of Diethelm LogisticsServices Sdn Bhd uses a modern warehouse managementsystem. It constantly implements new procedures and

tools to improve delivery standards and service levels toenhance our logistic capabilities.

Healthcare distribution comprises the PharmaceuticalGroup, Consumer Healthcare, PharmaAlliance andSpeciality. It distributes, promotes and marketspharmaceuticals, health supplements, cosmoceuticals,opticals, medical diagnostics, nutritional and dentalproducts.

We are proud to be partners with many multinationalcompanies, such as Abbott, Allergan, Advance MedicalOptics, Aventis, Berna Biotech, Boehringer Ingelheim,Bristol Myers-Squibb, Altana, Eisai, Gillette,GlaxoSmithKline, Johnson & Johnson Vision Care, LeoPharma, Novartis, Novo Nordisk, Organon, Pfizer,Procter & Gamble, Roche, Stiefel, SciclonePharmaceuticals, UCB Pharma, Unam Corporation andVifor International.

13

As an integrated service provider in the healthcareindustry, we offer a comprehensive range of servicescovering regulatory affairs, importation, warehousing,customisation, order processing, logistics, sales andmarketing, and business solutions.

To ensure consistent quality service to some 7,000customers nationwide, major investments were made overthe last two years in the areas of e-business, exclusivehealthcare order centres, the SAP-WMS managedDistribution Centre, decentralized branch operations, adelivery tracking system and a customer care centre. Inshort, our operations are able to monitor our processes,from the time orders are received to the point when theyare delivered to our valued customers.

We focus on developing business solutions to bettermanage our business, and to support our partners’activities in the coming years. Key areas include thedevelopment of Electronic Territory Management System(ETMS) for sales force effectiveness, Market Intelligence,Customer Relationship Management (CRM), MarketSegmentation Tools and Market Survey Solutions.

CHEMICALS SEGMENT

This smaller segment consists of the Speciality & LifeScience Chemicals Division, which markets, sells anddistributes life sciences products, specialties chemicals,industrial supplies and polymers. It serves a wide rangeof industrial customers, such as manufacturers of paintand ink, vinyl, rubber gloves, toiletries, pharmaceuticals,health food, food packaging, automotive and auto parts,metal stampers, printers, plastic moulders andcompounders. In the animal health industry, customersare mainly poultry and animal farmers and feed millers.It employs experienced industry experts to successfullypromote suppliers' products and professionally service themanufacturers. They are equipped with sound technicaland commercial skills to efficiently manage the marketsand products. An efficient logistics and order processingsystem was established to support the marketing and salesteams.

Diethelm Chemicals Malaysia Sdn Bhd is themanufacturing unit of the Speciality & Life ScienceChemicals Division producing a range of UV and whitemasterbatches. White masterbatches are used in theproduction of shopping bags and white polyethylenecontainers.

14 Corporate Profile

FOOD SEGMENT

There are two activities in this segment. The FamousAmos Chocolate Chip Cookie Corporation (M) Sdn Bhdwas acquired by Diethelm Franchise Holdings (M) SdnBhd in July 1997. It currently operates 19 successful hotbaked stores and 3 kiosks in shopping malls in Malaysia.Chocolate chip cookies, muffins and brownies are freshlybaked throughout the day in each of these stores.

Food Ingredients, a small unit managed by the Speciality& Life Science Chemicals Division, markets, sells anddistributes food ingredients to manufacturers of beverage,confectionery and biscuits. It also caters to the needs offast food establishments. A dedicated team providescustomers with expert advice and technical training. Afood application laboratory was set up to enhancetechnical support.

TRAVEL SEGMENT

This unit comprises Diethelm Travel Management SdnBhd, Diethelm Borneo Expeditions Sdn Bhd and SingaiTravel Service Sdn Bhd. It enjoys the regional support ofthe Diethelm Travel Group throughout South East Asia.Diethelm Travel Management Sdn Bhd is principallyinvolved in corporate ticketing, worldwide hotelreservation and confirmation, meeting and conventionservices, incentive and leisure programmes, car hire andassistance in the delivery of travel documents and visaapplication. It is a member of the International AirTransportation Association (IATA) and it is also thenetwork company of Rosenbluth International inMalaysia. Diethelm Borneo Expeditions Sdn Bhd, basedin Kota Kinabalu, specialises in eco-tourism andadventure tour programmes whilst Singai Travel ServiceSdn Bhd in Kuching, provides “Meet and Greet” servicesand transfers and tours in Sarawak, Sabah, WestKalimantan and Brunei.

KL Sentral Outlet

15

We sold our 58.8% interest in Diethelm TravelManagement Sdn Bhd through our wholly-ownedsubsidiary, Diethelm Transport Holdings Sdn Bhd, toDiethelm Travel Asia Ltd and a group of local investors.Diethelm Travel Asia Ltd is the new travel arm of theDiethelm Keller Group. It is combining travel interestsin the various countries in order to synergize them into acentrally managed Southeast Asian travel organisation.This transaction was completed on 31 December 2002.

SUPPORT SERVICES

MANAGEMENT SERVICES

Group management services are part of Diethelm MalaysiaSdn Bhd with three operating units; InformationTechnology, Finance & Administration and BranchAdministration. It focuses on services to group companies,

which are more economically and efficiently provided bya central unit.

Information Technology is the central provider ofcomputer and communication solutions for the Groupand operates, maintains and develops the SAP R/3application as well as the nation-wide intranet linking allbranches. Information Technology also provides projectmanagement and technical expertise for the softwarerequirements of the operating units.

Finance and Administration comprises Group Control,Group Treasury and service units such as EstateManagement and Purchasing.

Branch Administration coordinates the administrativeunits in all branches of the Group to ensure that uniformprocedures and standards are applied.

16 Corporate Governance Statement

The Board of Directors intends to further improve and add to its comprehensive standards of corporate governancethroughout the Diethelm Group. The Board is working towards the application of all the Principles in Part 1 of theMalaysian Code on Corporate Governance and compliance with the best practices as recommended in Part 2 of theCode.

This Statement describes the current level of compliance, especially with regards to the Statement in the Annual Report2001. While the Statement follows Part 2 of the above-mentioned Standard, declarations to Part 1 are also integrated inorder to avoid duplication.

Directors

I Principal responsibilities: As explained in last year’s report, of the six principal responsibilities, the Board hasnot implemented two of them; succession planning and investor relations. The Board is of the opinion thatboth do not require any action because of the following reasons:‘Succession planning’: Diethelm Holdings is majority-owned by the international DKSH Group, which hasits own management development programme.‘Investor relations’: The quarterly releases to the Kuala Lumpur Stock Exchange provide all the relevantinformation for shareholders.

II Chairman and CEO: The functions of the Chairman and of the CEO are separated.

III Board Balance: The Board consists of six directors. Four are executive directors nominated by the majorityshareholder. One of them, who served as Group Managing Director until 6 January 2003, will retire at theAnnual General Meeting on 12 June 2003. One non-executive director is the representative of the largestminority shareholder. Under the previous listing requirements he was considered independent. The secondnon-executive director who also serves as Chairman, is an independent lawyer. In line with the amendmentsto the listing requirements, he is now an independent director. The Board plans to nominate independentdirectors as soon as suitable, qualified and willing candidates are identified.

IV Size of non-executive Board participation: The Board is of the opinion that its current composition reflectsin a proper manner the investments in the Company.

V Largest shareholder is a majority shareholder: The largest shareholder holds the majority of the shares in theCompany.

VI Independent Directors: Please refer to Point III.

VII Ombudsman: The non-executive Chairman, an independent director, continues in his previous function asOmbudsman.

VIII Appointments to the Board: The Board is responsible for the appointment of directors. At each annualgeneral meeting, one third of the directors retire and offer themselves for re-election. Every director willstand for re-election at least once every two to three years. The Board is of the opinion that its small size doesnot require a separate nomination committee.

17

IX/X Quality and Effectiveness of the Board: Diethelm Holdings (Malaysia) Berhad is managed by an experiencedBoard comprising members with a wide range of experience in the relevant fields, such as legal, marketing,sales, accounting, finance and business administration. Together, the directors bring a broad range of provenskills. Each director has more than 20 years of relevant experience and knowledge required to successfullymanage, direct and supervise the Company’s business activities.

XI Services of the Company Secretary: Directors have unrestricted access to the Company Secretary for adviceand services at all times.

XII Size of the Board: At present, the Board consists of six members. The Board will only consider an increase inthe number of directors if this is required by statutory terms and/or business developments.

XIII Directors’ Training: All Directors of the Company have attended the Kuala Lumpur Stock Exchange’sMandatory Accreditation Programme.

XIV Board Structure and Procedures: The agenda and issues to be discussed are prepared and circulated beforeeach Board meeting. The Company Secretary maintains the Minutes of Board meetings. During the financialyear ended 31 December 2002, the Board met a total of four times. Details of the attendance were as follows:

XV Board Prerogatives: The formal schedule of matters specifically reserved for the Board’s decision is forwardedto Board members prior to Board meetings.

XVI Relationship of the Board to Management: Diethelm Holdings (Malaysia) Berhad has formal Limits ofAuthority for the management, which are applied by all companies of the Group.

XVII Quality of Information: The Board is regularly presented with detailed historical and outlook information toarrive at its conclusions.

XVIII Agenda for Board Meetings: The Chairman and the Group Managing Director are jointly responsible fororganising information necessary for the Board to deal with the agenda.

XIX/XX Access to Information and Advice: Directors have access to information within the Group and to advice ofindependent professional advisors and internal/external auditors at the Company’s expense.

Director Status Board MeetingsAttended

Number %

Michael Lim Hee Kiang Independent Non-Executive 4 of 4 100

Ahmad Fakhrizzaki Abdullah Non-Independent Non-Executive 4 of 4 100

Peter Heinser Executive 4 of 4 100

Thon Lek Executive 4 of 4 100

Andre Haegi Executive 4 of 4 100

Niels Johan Holm Executive(Appointed on 6 January 2003)

18

XXI Access to Company Secretary: Please refer to Point XI.

XXII Quality of Company Secretary: The position is filled with a Certified Company Secretary with 16 yearsexperience in this field.

XXIII Use of Board Committees: The Board has established the Audit Committee in 1994. Its Terms of Referencetogether with the Audit Committee Report are disclosed in pages 22 to 23 of this Annual Report.

XXIV Remuneration Committee: The Board is of the opinion that such a committee is not required becauseDiethelm Holdings (Malaysia) Berhad is majority-owned by the international DKSH Group, which has itsworld-wide remuneration policy, applicable for the remuneration of executive directors. The Board determinedthe fees payable to non-executive directors subject to approval by the shareholders at the annual generalmeeting. During the financial year ended 31 December 2002, the remuneration of the executive and nonexecutive directors were as follows:

Additional statements required in Part 1 but not covered in part 2 of the Malaysian Code on Corporate Governance.

Accountability and Audit

DI Financial Reporting: The Board is responsible for ensuring that the financial statements of the Company give atrue and fair view of the state of affairs of the Group and of the Company as at 31 December 2002. The Boarddiscusses and approves quarterly and annual assessments of the Group’s position and prospects which are releasedto the Kuala Lumpur Stock Exchange in a timely manner.

DII Internal Controls: Please see the detailed Statement of Internal Control as disclosed in pages 20 to 21.

DIII Relationship with the Auditors: The Audit Committee reviews and discusses the annual findings with the externalauditors, PricewaterhouseCoopers. In doing so, the Company has established a transparent procedure with theauditors to meet the auditors’ professional requirements. From time to time, the auditors highlight to the AuditCommittee matters which require the Board’s attention.

Corporate Governance Statement

Executive Director(s) Non-Executive Director(s)

RM 50,000 and below 2

RM 600,001 to 650,000 1

RM 1,050,001 to 1,100,000 1

RM 1,100,001 to 1,150,000 1

19

Shareholders

CI Dialogue with Investors: Recognizing the importance of timely dissemination of information to shareholdersand other stakeholders, the Board ensure that they are well-informed of major developments in the Group.Information is communicated to them through the Annual Report and the various disclosures and announcementsmade to the KLSE, including quarterly and annual results.

CII Annual General Meeting: The Company’s Annual General Meetings serve as a principal forum for dialogue withshareholders. Extraordinary General Meetings are held as and when required.

Other Information

Sanctions and/or Penalties Imposed: There were no sanctions and/or penalties imposed on the Company and itssubsidiaries, directors or management by the relevant regulatory bodies.

Non-Audit Fees: During the year under review, non-audit fees paid to the external auditors of the Company amountedto RM220,000 which are made up of tax consulting fees of RM85,000, due diligence fees for the acquisition of EACMarketing Services Sdn Bhd of RM105,000 and other accounting fees of RM30,000.

American Depository Receipts (ADR) / Global Depository Receipts (GDR): During the year under review, the Companydid not sponsor any ADR or GDR programmes.

Share Buy-backs: During the year under review, the Company did not have any share buy-back exercises.

Options, Warrants or Convertible Securities: During the year under review, the Company did not have any exercise onoptions, warrants or convertible securities.

Variation in Results: In 2002, there were no differences of 10% or more to any announcements made.

Profit Guarantees: The Company does not have any profit guarantees.

Material Contracts: The directors are not aware of any material contracts between the Company and its directors andshareholders.

20 Statement of Internal Control

Introduction

The Board considers internal controls an essential requirement for the operation of every company of the Group.Internal controls are an on-going process to ensure that the shareholders’ investment and assets of the Group are wellmanaged and protected.

Responsibility

The Board confirms that it is responsible for the Group’s system of internal controls and for reviewing its adequacy andintegrity. However, it should be noted that such systems are geared towards managing rather than eliminating risks. Anysystem can provide only reasonable, and not absolute assurances, against material misstatement or loss.

The Group has an ongoing process for identifying, evaluating and managing significant risks throughout the year. Theprocess is being regularly reviewed by the Board.

Risk Management Framework

The Board has established the organisational structure of the Group with clearly defined lines of accountability andtransparent Limits of Authority as part of its risk management framework. Business risk assessments are an integral partof the annual strategic planning cycle.

Key Elements of Internal Controls

- Transparent Limits of Authority are available for each managerial position in the Group.

- Major procedures have been documented and are regularly reviewed and updated to reflect best corporate practices.

- The Internal Audit Department, reporting to the Audit Committee of the Board, checks on operational units andbranches and conducts ad-hoc investigations of incidents.

- Management receives regular and prompt financial information as well as overviews of its Key Performance Indicators.

- A central Group Treasury receives and settles all monetary transactions of the Group.

- Finance units are attached to all operational divisions to ensure that all business decisions properly reflect financialconsiderations and that the administrative processing is timely and efficient.

- The Central Distribution Centre in Bukit Kemuning has its own loss prevention controls system, managed byqualified professional staff.

- All principal companies and units of the Group apply the same standardized business processes on SAP R/3, whichare centrally managed and customised.

21

- Management regularly visits branches throughout Malaysia.

- Diethelm Holdings (Malaysia) Berhad is part of the DKSH Group and executive management from DKSH as wellas world-wide heads of business units regularly visit Malaysia to obtain current and detailed information on theperformance of the business.

- On a monthly basis, comprehensive financial reports have to be sent to DKSH.

- DKSH is closely involved in the annual strategic planning cycle and the target setting.

- DKSH Regional Audit conducts yearly review of Malaysian activities according to a programme decided by DKSH.

Control Weaknesses

A number of insignificant internal control matters were identified in 2002. All of them have been investigated by theInternal Audit Department and follow-up actions were taken and implemented. None of the weaknesses has resulted inany material losses, contingencies or uncertainties which would require a mentioning in this Annual Report.

22 Audit Committee

The Audit Committee of Diethelm Holdings (Malaysia) Berhad was established by the Board of Directors in September1994.

Composition

The Audit Committee comprises three directors, two of whom are non-executive directors. One independent directoris no longer classified as independent under the latest listing requirements. Please refer to the Corporate GovernanceStatement for further explanation.

Members

Members of the Board who also served on the Audit Committee in 2002 are as follows:

Michael Lim Hee Kiang (Chairman) Independent Non-Executive DirectorAhmad Fakhrizzaki Abdullah (Member) Non-Independent Non-Executive DirectorPeter Heinser (Member) Executive Director

Meetings

For the financial year under review, the Audit Committee met a total of four times. The Audit Committee meetingswere held on 26 February, 16 May, 15 August and 31 October 2002. Details of the attendance were as follows:

Audit Committee Meetings AttendedMembers Number %

Michael Lim Hee Kiang (Chairman) 4 of 4 100Ahmad Fakhrizzaki Abdullah (Member) 4 of 4 100Peter Heinser (Member) 4 of 4 100

Non-Members

Group Finance Director 4 of 4 100Chief Operating Officer, Consumer Product Operations 4 of 4 100Internal Audit Manager 4 of 4 100PricewaterhouseCoopers 1 of 4 25

Activities

During the financial year, the Audit Committee conducted its activities in line with its existing Terms of Reference,which include quarterly meetings to review the quarterly results, discussions on the internal audit reports to assess theeffectiveness of the system of internal controls in the areas audited, and discussions and approval of the internal annualAudit Plan for 2002. The Audit Committee also discussed the annual audited financial statements with the externalauditors, as well as its findings and recommendations.

Internal Audit Functions

The Company has an Internal Audit Department whose principal responsibility is regular and systematic reviews of thesystems of controls, to provide reasonable assurance that such systems continue to operate satisfactorily and effectivelyin the Company and the Group. The Internal Audit Department is adequately resourced and has appropriate standingwithin the Company and its subsidiaries to carry out its duties.

The Internal Audit Department also involves itself in facilitating the improvement of business processes within theCompany and subsidiary companies.

23

Terms of Reference

The overall objective of the Audit Committee is to assist the Board of Directors in discharging its statutory duties andresponsibilities relating to accounting and reporting practices and to ensure the required standard of corporate disclosureto the Kuala Lumpur Stock Exchange. The Terms of Reference of the Audit Committee are as follows:

(a) Membership

The Audit Committee shall be appointed by the Board of Directors from amongst its number and shall consist ofnot less than three members, a majority of whom shall be independent directors and at least one shall be in compliancewith Article 15.10 (1)(c) of the listing requirements of the Kuala Lumpur Stock Exchange. The Chairman of theAudit Committee shall be an independent non-executive director appointed by the Board. Currently, the Terms ofReference on membership are not met due to reasons explained under Point III of the Corporate GovernanceStatement.

(b) Meetings and Minutes

Meetings shall be held not less than four times a year, including at least one meeting with the external auditors.Group Finance Director, representatives of Internal Audit Department and a representative of the external auditorsshall normally be invited to attend the meetings. Other members of the Board may attend the meetings uponinvitation by the Audit Committee. A quorum shall be two members, a majority of whom must be independentdirectors. The Company Secretary shall act as the Secretary of the Audit Committee. The Secretary of the AuditCommittee shall keep and maintain proper records of the minutes of meetings of the Audit Committee and beresponsible for circulating the minutes to all members of the Board of Directors.

(c) Authority and Accessibility

The Audit Committee shall have the general authority to do all things necessary to fulfill its responsibilities asvested upon it by virtue of its appointment by the Board of Directors and such other special authority specificallyvested by the Board of Directors from time to time. It can obtain from all employees any information required andcan consult independent experts when and where it considers it necessary to carry out its duties.

(d) Functions and Responsibilities

The main functions and responsibilities of the Audit Committee are:- to satisfy themselves with the nature and scope of the external audit;- to review the audit report prepared by the external auditors;- to recommend the appointment of the external auditors and their terms of engagement;- to review the quarterly interim results, half-yearly and annual financial statements of the Company and the

Group before submission to the Board of Directors for approval, and to ensure that they are prepared in a timelyand accurate manner, complying with all accounting and regulatory requirements;

- to review the effectiveness of the internal control systems;- to review and approve the internal audit annual plan;- to review any related party transactions and conflict of interest situations that may arise within the Company

and the Group, including any transaction, procedure or course of conduct that raises questions of managementintegrity;

- to consider other issues as defined by the Board of Directors.

24 Analysis of Ordinary Sharesas at 18 April 2003

Authorised Share Capital : RM 100,000,000Issued and Paid-Up Capital : RM 83,478,076Voting Rights : 1 vote per ordinary share

Class of Shares- Ordinary share of RM 1.00 each fully paid up : RM 82,658,076- Preference share of RM 0.01 each fully paid up : RM 820,000

Distribution of Shareholders

No. of % No. of % ofRange Shareholders Shareholders Shares Held Issued Capital

Less than 1,000 0 0 0 01,000 to 10,000 3,001 96.2785 6,118,000 7.401610,001 to 100,000 103 3.3044 2,317,000 2.8031100,001 to less than 5% of issued shares 11 0.3529 6,771,000 8.19165% and above of issued shares 2 0.0642 67,452,076 81.6037

Total 3,117 100 82,658,076 100

Substantial Shareholders% of Issued

Name No. of Shares Held Capital

1 Dihoma Sendirian Berhad 42,155,076 50.9993

2 Lembaga Tabung Angkatan Tentera 25,297,000 30.6044

Directors’ Interests in Shares in the CompanyDirect

% of IssuedNo. of Shares Held Capital

1 Michael Lim Hee Kiang 10,000 0.01202 Niels Johan Holm - -3 Peter Heinser - -4 André Eugen Hägi - -5 Ahmad Fakhrizzaki Abdullah 10,000 0.01206 Thon Lek 5,000 0.0060

25

30 Largest Shareholders% of Issued

Name No. of Shares Held Capital

1 Dihoma Sendirian Berhad 42,155,076 50.99932 Lembaga Tabung Angkatan Tentera 25,297,000 30.60443 Permodalan Nasional Berhad 3,440,000 4.1617

4 Cartaban Nominees (Asing) Sdn Bhd - Bank of TokyoMitsubishi Luxembourg S.A. for Osterreichische Volksbanken AG 1,306,000 1.5800

5 Lienau Gunter Hans Joachim 425,000 0.5142

6 Foh Chong & Sons Sdn Bhd 370,000 0.44767 Sumur Ventures Sdn Bhd 340,000 0.41138 Wong Kem Chen 252,000 0.3049

9 Egon Arthur Heldner 202,000 0.244410 McLaren Saksama (Malaysia) Sdn Bhd 196,000 0.237111 HDM Nominees (Asing) Sdn Bhd – UOB Kay Hian Pte Ltd

for Saw Tze Choon 111,000 0.134312 Teh Chee Ch’ng 106,000 0.128213 Lim Hiang Chiap 103,000 0.1246

14 Teh Teik Lim & Brothers Sdn Bhd 90,000 0.108915 Gulam Rasul Ebrahim Nalla 75,000 0.090716 Koh Kee Hooi 70,000 0.0847

17 Goo Kiyo 60,000 0.072618 Menteri Kewangan Malaysia, Section 29 (SICDA) 53,000 0.064119 Mayban Nominees (Tempatan) Sdn Bhd

Pledged Securities Account for Huan Dee Lam (08319AQ0112) 49,000 0.059320 Tan Chee Hian 46,000 0.055621 Ng Lee Kiang 43,000 0.0520

22 Khaw Chin Hong 42,000 0.050823 Lee Kim Keong 42,000 0.050824 Hiew Woon Chow 41,000 0.0496

25 Malaysia Nominees (Tempatan) Sendirian BerhadPledged Securities Account for Ng Teck Lin (45-00009-000) 40,000 0.0484

26 Wong Kwee Chun 39,000 0.0472

27 Chew Siew Lan 33,000 0.039928 Go Suu Ken 31,000 0.037529 Chan Wai Luen 30,000 0.0363

30 Chew Yok Koon 30,000 0.0363

Total 75,117,076 90.88

26

Location & Description Net Approximate ApproximateBook Value Area Age of Building(RM ‘000) (Sq. feet) (No. of years)

Lot 52, Section 13, Petaling Jaya 35,982 258,746 40Selangor Darul EhsanWarehouse, factory and office complexsituated on leasehold land expiring in 2061.* The last revaluation was in 1997

Lot 7, Section 13, Petaling Jaya 10,765 83,171 42Selangor Darul EhsanOffice and warehousesituated on leasehold land expiring in 2058.* The last revaluation was in 1997

51/2 Mile, Jalan Tuaran, 928 48,400 27

Kota Kinabalu, SabahOffice and warehousesituated on leasehold land expiring in 2026.The Title Deed was registered in 1974# Sale and Purchase Agreementexecuted on 22 October 2002

# Disposal of this property is disclosed in Page 78 Note 31(b) of the Annual Report.

* The Group’s Revaluation Policy is disclosed in Page 44 Note 3(d) of the Annual Report.

List of Propertiesas at 31 December 2002

27

1998 1999 2000 2001 2002RM’000 RM’000 RM’000 RM’000 RM’000

Turnover 910,847 1,097,495 1,146,669 1,281,619 1,484,397

Profit/(loss) before tax (77,283) (5,422) 13,741 5,605 8,552

Net profit/(loss) attributable to shareholders (77,564) (5,301) 11,703 5,134 8,681

Total assets employed 478,215 469,806 493,879 567,850 620,302

Shareholders’ equity 19,998 96,678 104,246 105,833 * 32,514

* The Redeemable Cumulative Preference Shares is classified as a financial liability in the financial year ended 31December 2002 in accordance with MASB 24 “Financial Instruments: Disclosure and Presentation”. Please refer to theNotes to the Financial Statements as disclosed in Page 42 Note 2(b) and Page 69 Note 21 for further explanation.

The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year whichgive a true and fair view of the statement of affairs of the Company and the Group at the end of the financial year andthe profit or loss of the Company and the Group for the financial year.

The Directors consider that in preparing the financial statements for the year ended 31 December 2002, the Group hasused appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements andestimates. The Directors have responsibility for ensuring that the Company and the Group keep accounting recordswhich disclose with reasonable accuracy the financial position of the Company and the Group which enable them asdisclosed in Note 2 to the financial statements, to ensure that the financial statements comply with the applicableapproved Accounting Standards in Malaysia and the provisions of the Companies Act, 1965 except for the followingmatters relating to the financial statements of the Group:

(a) non disclosure of an analysis of expenses using a classification based on either the nature of expenses oftheir function as required by MASB 1: Presentation of Financial Statements; and

(b) non disclosure of the cost of inventories recognised as an expense during the financial year, or of theoperating costs, applicable to revenues, recognised as an expense during the financial year, classified bytheir nature, as required by MASB 2: Inventories.

The Directors are of the opinion that the above disclosures would be prejudicial to the business of the Group.

The Directors have general responsibility for taking such steps as are reasonably open to them to safeguard the assets ofthe Group and to prevent and detect fraud and other irregularities.

Financial HighlightsConsolidated Results of Diethelm Holdings (Malaysia) Berhad Group

Statement of Directors’ Responsibilityin respect of the Audited Financial Statements

28 Directors’ Report

The Directors have pleasure in submitting their report together with the audited financial statements of the Group andCompany for the financial year ended 31 December 2002.

PRINCIPAL ACTIVITIES

The Company is principally an investment holding company. The principal activities of the subsidiary companies ofthe Group are described in Note 13 to the financial statements. There have been no significant changes in the nature ofthese activities during the financial year.

FINANCIAL RESULTS

Group Company

RM’000 RM’000

Profit/(loss) from ordinary activities after tax 8,842 (626)Minority interest (161) 0

Net profit/(loss) for the financial year 8,681 (626)

DIVIDENDS

The dividends paid or declared by the Company since 31 December 2001 were as follows:

RM’000

In respect of the financial year ended 31 December 2001, as shown in theDirectors’ report of that financial year:

Final dividend of 1 sen per share on 82,658,076 ordinary shares, less incometax of 28%, paid on 21 August 2002. 595

The Directors now recommend the payment of a final dividend of 1 sen per share on 82,658,076 ordinary shares, lessincome tax of 28%, amounting to RM595,000 which is subject to the approval of shareholders at the forthcomingAnnual General Meeting of the Company.

RESERVES AND PROVISIONS

All material transfers to or from reserves and provisions during the financial year are shown in the financial statements.

29

DIRECTORS

The Directors who have held office during the period since the date of the last report are as follows:

Michael Lim Hee KiangAhmad Fakhrizzaki AbdullahPeter HeinserAndré Eugen HägiThon LekNiels Johan Holm (appointed as Group Managing Director on 6 January 2003)

In accordance with Article 99 of the Company’s Articles of Association, Peter Heinser and Ahmad Fakhrizzaki Abdullahwill retire at the forthcoming Annual General Meeting and, Ahmad Fakhrizzaki Abdullah, being eligible, offers himselffor re-election whilst Peter Heinser will not seek re-election.

In accordance with Article 82 of the Company’s Articles of Association, Niels Johan Holm will retire at the forthcomingAnnual General Meeting and, being eligible, offers himself for election.

DIRECTORS’ BENEFITS

During and at the end of the financial year, no arrangements subsisted to which the Company is a party being arrangementswith the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of sharesin, or debentures of, the Company or any other body corporate.

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other thanthe Directors’ remuneration as disclosed in Note 7 to the financial statements) by reason of a contract made by theCompany or a related corporation with the Director or with a firm of which he is a member, or with a company inwhich he has a substantial financial interest.

DIRECTORS’ INTERESTS IN SHARES

According to the register of Directors’ shareholdings, particulars of interests of Directors who held office at the end ofthe financial year in shares in the Company were as follows:

Number of ordinary shares of RM1 eachAt At

1.1.2002 Bought Sold 31.12.2002

Shares in the Company held by:

Michael Lim Hee Kiang 10,000 0 0 10,000Ahmad Fakhrizzaki Abdullah 10,000 0 0 10,000Thon Lek 5,000 0 0 5,000

None of the other Directors in office at the end of the financial year held any interest in shares of the Company and itsrelated corporations.

30

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) On 24 September 2002, Diethelm Transport Holdings Sendirian Berhad (‘DTH’), a wholly-owned subsidiary ofthe Company, entered into three conditional Sale and Purchase Agreements for the disposal of its entire 58.8%holding of 352,800 ordinary shares in Diethelm Travel Management Sendirian Berhad (‘DTM’). The total cashconsideration was RM564,480. All approvals from the relevant authorities have been obtained.

(b) On 22 October 2002, Harpers Trading (Malaysia) Sdn. Berhad (‘HTM’), a wholly-owned subsidiary of theCompany, entered into a Sale and Purchase Agreement with Comsa Chicken Products Sdn Bhd for the sale of aparcel of land with a building in Kota Kinabalu for a total cash consideration of RM2,300,000. A deposit of 10%amounted to RM230,000 has been received. This transaction has not yet been completed as at 31 December2002 as the terms and conditions as stipulated in the Sale and Purchase Agreement are yet to be fulfilled.

(c) On 28 October 2002, the Company entered into a Share Sale Agreement (‘SSA’) with EAC Holdings (Malaysia)Sdn Bhd (‘EAC’) for the proposed acquisition of the entire equity interest in EAC Marketing Services Sdn Bhd(‘EMSB’), a wholly-owned subsidiary of EAC, comprising two ordinary shares of RM1.00 each for the purpose ofacquiring primarily the consumer products businesses and certain assets of the EAC Group to be satisfied by cash.

These businesses of EAC and Presence Marketing Asia Sdn Bhd (‘PMSB’) together with certain assets relating tothe businesses as well as EAC’s 20% equity interest in Total Fame Sdn Bhd will be transferred to EMSB pursuantto an internal restructuring exercise of EAC and thereafter, the Company shall acquire equity interest in EMSBpursuant to the SSA for a cash consideration of not more than RM50,000,000. The approvals from the relevantauthorities have been received and the shareholders’ approval have been obtained at the Extraordinary GeneralMeeting held on 28 February 2003.

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS

Before the income statements and balance sheets were made out, the Directors took reasonable steps:

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making ofallowance for doubtful debts and satisfied themselves that all known bad debts had been written off and thatadequate allowance had been made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of businesstheir values as shown in the accounting records of the Group and Company have been written down to an amountwhich they might be expected so to realise.

Directors’ Report

31

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (CONTINUED)

At the date of this report, the Directors are not aware of any circumstances:

(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts inthe financial statements of the Group and Company inadequate to any substantial extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and Companymisleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Groupand Company misleading or inappropriate.

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelvemonths after the end of the financial year which, in the opinion of the Directors, will or may substantially affect theability of the Group or Company to meet their obligations as and when they fall due.

At the date of this report, there does not exist:

(a) any charge on the assets of the Group or Company which has arisen since the end of the financial year whichsecures the liability of any other person; or

(b) any contingent liability of the Group or Company which has arisen since the end of the financial year.

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or thefinancial statements which would render any amount stated in the financial statements misleading.

In the opinion of the Directors:

(a) the results of the Group’s and Company’s operations during the financial year were not substantially affected byany item, transaction or event of a material and unusual nature except as disclosed in Notes 25 and 31 to thefinancial statements; and

(b) there has not arisen in the interval between the end of the financial year and the date of this report any item,transaction or event of a material and unusual nature likely to affect substantially the results of the operations ofthe Group and Company for the financial year in which this report is made.

32

ULTIMATE HOLDING COMPANY

The Directors regard Diethelm Keller Holding AG, a company incorporated in Switzerland, as the ultimate holdingcompany of the Company.

GENERAL INFORMATION

The number of employees of the Group at the end of the financial year was 1,710 (2001: 1,650).

The Company do not have any employees at the end of the financial year as the operations of the Company are managedby a subsidiary company.

The immediate and intermediate holding companies of the Group are Dihoma Sendirian Berhad and Diethelm Holdings(Asia) Sendirian Berhad respectively, both of which are incorporated in Malaysia.

The Company is a limited liability company, incorporated and domiciled in Malaysia, and listed on the Main Board ofthe Kuala Lumpur Stock Exchange.

The address of the registered office of the Company is as follows:

74, Jalan University46200 Petaling JayaSelangor Darul Ehsan

AUDITORS

The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.

In accordance with a resolution of the Board of Directors dated 28 March 2003.

PETER HEINSER ANDRÉ EUGEN HÄGIDIRECTOR GROUP FINANCE DIRECTOR

Directors’ Report

33

Note 2002 2001RM’000 RM’000

Revenue- continuing operations 1,436,646 1,234,176- discontinued operations 5(b) 47,751 47,443

6 1,484,397 1,281,619

Profit from operations- continuing operations 15,188 8,491- discontinued operations 5(b) 1,013 652

7 16,201 9,143

Finance cost 8 (7,649) (3,538)

Profit from ordinary activities before tax 8,552 5,605

Tax 9 290 (292)

Profit from ordinary activities after tax 8,842 5,313

Minority interest (161) (179)

Net profit for the financial year 8,681 5,134

Earnings per share (sen) - basic 10 10.50 2.64

Dividends per ordinary share (sen) 11 1.0 1.0

Consolidated Income Statementfor the financial year ended 31 December 2002

The notes on pages 41 to 75 form an integral part of these financial statements.

34

Note 2002 2001RM’000 RM’000

Revenue 6 5,447 277

Advances to a subsidiary company written off (136) 0

Impairment of investment in subsidiary companies (1,300) 0

Other operating expenses (174) (165)

Profit from operations 7 3,837 112

Finance cost 8 (4,119) (27)

(Loss)/profit from ordinary activities before tax (282) 85

Tax 9 (344) (70)

Net (loss)/profit for the financial year (626) 15

Dividends per ordinary share (sen) 11 1.0 1.0

Company Income Statementfor the financial year ended 31 December 2002

The notes on pages 41 to 75 form an integral part of these financial statements.

35

Group CompanyNote 2002 2001 2002 2001

RM’000 RM’000 RM’000 RM’000

NON CURRENT ASSETS

Property, plant and equipment 12 59,646 64,162 0 0Subsidiary companies 13 0 0 195,741 198,702Advance to a fellow subsidiary

company 14 53 52 53 52

59,699 64,214 195,794 198,754

CURRENT ASSETS

Subsidiary company held for disposal 15 0 1,350 0 0Short term investment 16 18 0 0 0Inventories 17 176,933 161,033 0 0Receivables 18 348,523 305,477 3,604 95Bank and cash balances 35,129 35,776 11 148

560,603 503,636 3,615 243

LESS: CURRENT LIABILITIES

Payables 19 381,681 327,451 6,377 3,538Borrowings (unsecured)- bank overdrafts 20 4,105 2,251 0 0- others 20 97,938 77,981 0 0Taxation 1,816 3,321 1,816 3,022

485,540 411,004 8,193 6,560

NET CURRENT ASSETS/(LIABILITIES) 75,063 92,632 (4,578) (6,317)

LESS: NON CURRENT LIABILITIES

Borrowings (unsecured) 20 20,248 49,669 0 0Redeemable cumulative

preference shares 21 82,000 0 82,000 0

102,248 49,669 82,000 0

32,514 107,177 109,216 192,437

Balance Sheetsas at 31 December 2002

36

Group CompanyNote 2002 2001 2002 2001

RM’000 RM’000 RM’000 RM’000

CAPITAL AND RESERVES

Ordinary share capital 82,658 82,658 82,658 82,658

Share premium 24,794 24,794 24,794 24,794

Revaluation reserve 17,071 17,071 0 0

(Accumulated losses)/retainedearnings 23 (92,009) (100,095) 1,764 2,985

Attributable to ordinary shareholders 32,514 24,428 109,216 110,437

Redeemable cumulativepreference shares 21 0 82,000 0 82,000

Shareholders’ equity 32,514 106,428 109,216 192,437

Minority interest 0 749 0 0

32,514 107,177 109,216 192,437

Balance Sheetsas at 31 December 2002

The notes on pages 41 to 75 form an integral part of these financial statements.

37

Redeemable ShareNumber cumulative premium on

of Nominal preference ordinary Revaluation AccumulatedNote shares value shares (RCPS) shares reserve losses Total

’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2001- as previously reported 82,658 82,658 82,000 24,794 17,071 (102,277) 104,246- prior year adjustment 25 0 0 0 0 0 595 595

- as restated 82,658 82,658 82,000 24,794 17,071 (101,682) 104,841

Net profit for the financial year 0 0 0 0 0 5,134 5,134Dividends for the financial

year ended:- 31 December 2000 11 0 0 0 0 0 (595) (595)- 31 December 2001 11 0 0 0 0 0 (2,952) (2,952)

At 31 December 2001 82,658 82,658 82,000 24,794 17,071 (100,095) 106,428

At 1 January 2002- as previously reported 82,658 82,658 82,000 24,794 17,071 (100,690) 105,833- prior year adjustment 25 0 0 0 0 0 595 595

- as restated 82,658 82,658 82,000 24,794 17,071 (100,095) 106,428

Net profit for the financial year 0 0 0 0 0 8,681 8,681Dividends for the financial

year ended:- 31 December 2001 11 0 0 0 0 0 (595) (595)Reclassified as non currentliability 21 0 0 (82,000) 0 0 0 (82,000)

At 31 December 2002 82,658 82,658 0 24,794 17,071 (92,009) 32,514

Consolidated Statement of Changes in Equityfor the financial year ended 31 December 2002

Issued and fully paidordinary shares of

RM1 each Non-distributable

The notes on pages 41 to 75 form an integral part of these financial statements.

38 Company Statement of Changes in Equityfor the financial year ended 31 December 2002

Redeemable ShareNumber cumulative premium on

of Nominal preference ordinary RetainedNote shares value shares (RCPS) shares earnings Total

’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2001- as previously reported 82,658 82,658 82,000 24,794 5,922 195,374- prior year adjustment 25 0 0 0 0 595 595

- as restated 82,658 82,658 82,000 24,794 6,517 195,969

Net profit for the financial year 0 0 0 0 15 15Dividends for the financial

year ended:- 31 December 2000 11 0 0 0 0 (595) (595)- 31 December 2001 11 0 0 0 0 (2,952) (2,952)

At 31 December 2001 82,658 82,658 82,000 24,794 2,985 192,437

At 1 January 2002- as previously reported 82,658 82,658 82,000 24,794 2,390 191,842- prior year adjustment 25 0 0 0 0 595 595

- as restated 82,658 82,658 82,000 24,794 2,985 192,437

Net loss for the financial year 0 0 0 0 (626) (626)Dividends for the financial

year ended:- 31 December 2001 11 0 0 0 0 (595) (595)Reclassified as non current

liability 21 0 0 (82,000) 0 0 (82,000)

At 31 December 2002 82,658 82,658 0 24,794 1,764 109,216

Issued and fully paidordinary shares of Non-

RM1 each distributable Distributable

The notes on pages 41 to 75 form an integral part of these financial statements.

39

Group CompanyNote 2002 2001 2002 2001

RM’000 RM’000 RM’000 RM’000

OPERATING ACTIVITIES

Net profit/(loss) for the financial year 8,681 5,134 (626) 15

Adjustments for non cash items:

Property, plant and equipment:- depreciation 9,825 11,915 0 0- write-offs 121 7 0 0- gain on disposal (348) (419) 0 0Inventories:- write-offs 4,671 3,980 0 0- allowance for obsolescence 1,576 1,488 0 0Allowance for doubtful debts 7,405 5,852 0 0Impairment of investment in subsidiary

companies 0 0 1,300 0Interest expense 7,649 3,538 4,119 27Interest income (44) (451) (989) (271)Net unrealised exchange gains (290) (255) 0 0Tax (290) 292 344 70Minority interest 161 179 0 0Advances to subsidiary company

written off 0 0 136 0Dividend income (2) (3) (4,450) 0Gain on disposal of subsidiary

companies 5(b) (419) 0 0 0

38,696 31,257 (166) (159)Changes in working capital:

Increase in inventories (22,065) (35,777) 0 0Increase in receivables (54,274) (50,712) 1 374Decrease in payables 56,526 50,569 67 (493)

Cash from operations 18,883 (4,663) (98) (278)

Dividend received 2 3 3,204 0Interest paid (3,549) (3,538) (19) (44)Interest received 44 451 279 605Tax paid (2,770) (1,555) (1,452) (530)Tax refund received 0 26 0 0

Net cash flow from operating activities 12,610 (9,276) 1,914 (247)

Cash Flow Statementsfor the financial year ended 31 December 2002

40

Group CompanyNote 2002 2001 2002 2001

RM’000 RM’000 RM’000 RM’000

INVESTING ACTIVITIES

(Advances to)/receipts on advancesto subsidiary companies 0 0 (2,130) 2,729

Receipts on advances to a relatedcompany 855 0 855 0

Additional investment in subsidiaries 0 0 0 (200)Proceeds from disposal of

property, plant and equipment 373 469 0 0Purchase of property, plant and

equipment (5,773) (7,533) 0 0Disposal of subsidiary companies 5(b) (606) 0 0 0

Net cash flow from investing activities (5,151) (7,064) (1,275) 2,529

FINANCING ACTIVITIES

Dividends paid (595) (595) (595) (595)(Repayment of )/proceeds from

short term borrowings (10,043) 19,137 0 0(Repayment to)/advances from

intermediate holding company (17) 4,293 (181) (1,484)Advances from immediate holding

company 596 769 0 0Receipts from immediate

holding company 0 63 0 0Advances to a fellow subsidiary

company (1) (1) 0 0Repayment of advances from

subsidiary companies 0 0 0 (1,500)

Net cash flow from financing activities (10,060) 23,666 (776) (3,579)

NET (DECREASE)/INCREASE INCASH AND CASH EQUIVALENTS (2,601) 7,326 (137) (1,297)

CURRENCY TRANSLATIONDIFFERENCES 100 (302) 0 0

CASH AND CASH EQUIVALENTSAT BEGINNING OF FINANCIALYEAR 33,525 26,501 148 1,445

CASH AND CASH EQUIVALENTSAT END OF FINANCIAL YEAR 24 31,024 33,525 11 148

Cash Flow Statementsfor the financial year ended 31 December 2002

The notes on pages 41 to 75 form an integral part of these financial statements.

41Notes to the Financial Statements31 December 2002

1 PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding and the principal activities of the subsidiary companiesare described in Note 13 to the financial statements.

2 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements of the Group and of the Company have been prepared under the historical cost convention(as modified for the revaluation of land and buildings), unless otherwise indicated in the individual policy statementsin Note 3 to the financial statements.

The financial statements comply with the applicable approved Accounting Standards in Malaysia and the provisionsof the Companies Act 1965 except for the following matters relating to the financial statements of the Group:

(i) non disclosure of an analysis of expenses using a classification based on either the nature of expenses or theirfunction as required by MASB 1: Presentation of Financial Statements; and

(ii) non disclosure of the cost of inventories recognised as an expense during the financial year, or of the operatingcosts, applicable to revenues, recognised as an expense during the financial year, classified by their nature, asrequired by MASB 2: Inventories.

The Directors are of the opinion that the above disclosures would be prejudicial to the business of the Group.

The new applicable approved accounting standards adopted in these financial statements are as follows:

(a) Retrospective application

Comparative figures have been adjusted or extended to conform with changes in presentation due to therequirements of the following new MASB Standards that have been applied retrospectively:

• MASB 19 “Events After the Balance Sheet Date”• MASB 20 “Provisions, Contingent Liabilities and Contingent Assets”• MASB 22 “Segment Reporting”

With the exception of MASB 19 (See Note 25), there are no changes in accounting policy that affect netprofit for the financial year as a result of the adoption of the above standards in these financial statements asthe Group was already following the recognition and measurement principles in those standards.

42 Notes to the Financial Statements31 December 2002

2 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED)

(b) Prospective application from 1 January 2002

MASB 21 The Group has taken advantage of the exemption“Business Combinations” provided to apply this Standard prospectively.

Accordingly, business combinations entered into priorto 1 January 2002 have not been restated to complywith this Standard.

MASB 23 This Standard does not allow retrospective“Impairment of Assets” application. The impact of applying this

Standard in the current financial year is set out inNote 13.

MASB 24 The Group has taken advantage of the“Financial Instruments: exemption provided to apply this StandardDisclosure and Presentation” prospectively. Accordingly, the following

presentation and disclosures have beenadopted in these financial statements:

• classification of Redeemable CumulativePreference Share (‘RCPS’)

The liability classification of RCPS (together withthe classification of the associated interest) hasbeen applied in accordance with this Standard asof 1 January 2002 (Notes 8, 11 and 21). Noadjustments have been made to the classificationadopted in the comparative financial year.

• disclosures

Comparatives are not disclosed upon firstapplication of MASB 24, as permitted by theStandard.

The preparation of financial statements in conformity with the applicable approved Accounting Standards inMalaysia and the provisions of the Companies Act 1965 requires the Directors to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at thedate of the financial statements and the reported amounts of revenues and expenses during the reported financialyear. Actual results could differ from those estimates.

43

3 SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiarycompanies made up to the end of the financial year.

Subsidiary companies are consolidated from the date of acquisition up to the date of disposal except whencontrol is intended to be temporary. All intercompany transactions, balances and unrealised surpluses anddeficits on transactions between group companies have been eliminated. Where necessary, accounting policiesfor subsidiary companies have been changed to ensure consistency with the policies adopted by the Group.Separate disclosure is made of minority interests.

The gain or loss on disposal of a subsidiary company is the difference between net disposal proceeds and theGroup’s share of its net assets together with any unamortised balance of goodwill on acquisition.

(b) Goodwill on consolidation

Goodwill or capital reserve arising on consolidation (negative goodwill) represents the excess or deficitrespectively of the fair value of purchase consideration of subsidiary companies acquired over the Group’sshare of the fair values of their separable net assets at the date of acquisition.

Goodwill (positive or negative) is written off against retained earnings in the financial year of acquisition.

(c) Subsidiary companies

Subsidiary companies are those companies that are controlled by the Group. Control is the power to governthe financial and operating policies of the subsidiary companies so as to obtain benefits from their activities.

Investments in subsidiary companies are stated at cost. Where an indication of impairment exists, thecarrying amount of the investment is assessed and written down immediately to its recoverable amount.

When control is intended to be temporary, the subsidiary companies are classified as current asset and carriedat lower of cost and net realisable value.

44

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(d) Property, plant and equipment

All property, plant and equipment are stated at historical cost less accumulated depreciation with the exceptionof certain land and buildings which are stated at valuation less subsequent depreciation. The subsidiarycompanies’ assets stated at valuation were revalued by the Directors in 1992 and 1997 based on open marketvaluations carried out by independent firms of professional valuers. For those property, plant and equipmentthat are stated at valuation, all subsequent additions are stated at cost. The Directors have applied thetransitional provisions of International Accounting Standards No. 16 (Revised) Property, Plant and Equipmentas adopted by the Malaysian Accounting Standard Board which allows the land and buildings to be stated attheir last revalued amounts less subsequent depreciation. Accordingly, these valuations have not been updated.

Surpluses arising on revaluation are credited to revaluation reserve. Any deficit arising from revaluation ischarged against the revaluation reserve to the extent of a previous surplus held in the revaluation reserve forthe same asset. In all other cases, a decrease in carrying amount is charged to income statement.

Where an indication of impairment exists, the carrying amount of the asset is assessed and written downimmediately to its recoverable amount.

Depreciation of other property, plant and equipment is calculated on a straight line basis to write off the costof each asset to its residual value, or the revalued amount over the term of its estimated useful life. Theprincipal annual rates of depreciation in use are as follows:

Long leasehold land Straight line over the term of the lease of99 years or 2%, whichever is shorter

Short leasehold land Straight line over the term of the lease of 52 yearsBuildings 2.86% - 33 1/3%Plant and machinery 10% - 33 1/3%Furniture, fittings and equipment 20% - 33 1/3%Motor vehicles 20%

Fully depreciated property, plant and equipment are retained in the accounting records until they are nolonger in use and no further charge for depreciation is made in respect of these assets.

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are includedin profit/(loss) from operations. On disposal of revalued assets, amounts in revaluation reserve relating tothose assets are transferred to retained earnings.

(e) Inventories

Inventories comprising raw materials, work in progress and finished goods are stated at the lower of cost andnet realisable value.

Cost is principally determined on a weighted average basis and comprises cost of purchase, costs of conversionand other costs incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less costs of completionand selling expenses.

Notes to the Financial Statements31 December 2002

45

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(f ) Trade receivables

Trade receivables are carried at anticipated realisable value. An estimate is made for doubtful debts based ona review of all outstanding amounts at the financial year end. Bad debts are written off in the financial yearin which they are identified.

(g) Foreign currencies

Financial statements of foreign operations are integral to the operations of the Company and are translatedusing procedures in the following paragraph as if the transactions of the foreign operations had been those ofthe Company.

Foreign currency transactions in Group companies are accounted for at exchange rates ruling at the transactiondates, unless hedged by forward foreign exchange contracts, in which case the rates specified in such forwardcontracts are used . Foreign currency monetary assets and liabilities are translated at exchange rates ruling atthe balance sheet date, unless hedged by forward foreign exchange contracts, in which case the rates specifiedin such forward contracts are used. Exchange differences arising from the settlement of foreign currencytransactions and from the translation of foreign currency monetary assets and liabilities are included in theincome statement.

The principal closing rates used in translation of foreign currency amounts were as follows:

Foreign currency 2002 2001RM RM

1 Euro 3.985 01 US Dollar 3.800 3.8001 Brunei Dollar 2.191 2.0531 Singapore Dollar 2.191 2.053

(h) Deferred taxation

The liability method of deferred taxation is adopted by the Group. Deferred taxation arising from materialtiming differences between accounting income and taxable income is provided in the financial statements.

Future income tax benefit in respect of tax losses is recognised only if the tax losses are expected to berecouped within a reasonable period of time.

(i) Cash and cash equivalents

For the purpose of the cash flow statements, cash and cash equivalents comprise cash in hand, demanddeposits, bank overdrafts and short term, highly liquid investments that are readily convertible to knownamounts of cash and which are subject to an insignificant risk of changes in value.

46 Notes to the Financial Statements31 December 2002

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(j) Dividends

Dividends on ordinary shares are recognised as liabilities when declared.

(k) Operating lease

Leases of assets under which all the risks and benefits of ownership are retained by the lessor are classified asoperating leases. Lease rental payments are charged to income statement in the financial year when incurred.When an operating lease is terminated before the lease period has expired, any payment required to be madeto the lessor by way of penalty is recognised as an expense in the financial year in which termination takesplace.

(l) Revenue recognition

Sales are recognised upon delivery of products and customer acceptance, if any, or performance of services,net of sales taxes and discounts, and after eliminating sales within the Group.

Other revenues earned by the Group are recognised on the following bases:

Interest income - as it accrues unless collectibility is in doubt.

Dividend income - when the shareholder’s right to receive payment is established.

(m) Financial instruments

(i) Financial instruments recognised on the balance sheet

The particular recognition methods adopted for financial instruments recognised on the balance sheetare disclosed in individual policy statements associated with each item.

(ii) Financial instruments not recognised on the balance sheet

Foreign currency forward contracts

The Group commits to foreign currency forward contracts to protect them from movements ofexchange rates against Ringgit Malaysia. This allows them to lock in an exchange rate with which aforeign currency asset or liability will be settled.

Exchange gains and losses arising from such contracts are deferred until the date of their actual realisationwhen they are included in the measurement of such transactions.

(iii) Fair value estimation for disclosure purposes

The fair value of forward foreign exchange contracts is determined using forward exchange market ratesat the balance sheet date.

Reported values of financial assets and liabilities with a maturity of less than one year are assumed toapproximate their fair values.

47

4 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s activities expose it to a variety of financial risks, in the areas of foreign currency exchange risk, interestrate risk and credit risk. The Group’s overall financial risk management objective is to ensure that the Group isadequately protected. Financial risk management involves risk reviews, internal control systems and adherence toDiethelm Keller SiberHegner (‘DKSH’) Group financial risk management policies.

(a) Foreign currency exchange risk

The Group’s foreign exchange control policies were established to protect the Group from foreign currencyrisks. The Group covers all foreign currency payables through foreign currency forward contracts, except inthose cases where the suppliers assume the risks.

(b) Interest rate risk

The Group’s income and operating cash flows are substantially independent of changes in market interestrates. Interest rate exposures arise from the Group’s borrowings. They are managed through the use of amixture of fixed and floating rate debts.

(c) Credit risk management

The Group is exposed to credit related risks. With regards to trade receivables, the Group operates severalcredit management units closely linked to the selling divisions to enable a fast and complete follow-up.Credit is only made available to customers after proper vetting and each customer is imposed a credit limit.With regards to foreign currency forward contracts, the Group only enters into such contracts with reputableMalaysian and International banks.

48

5 DISPOSAL OF SUBSIDIARY COMPANIES

(a) Effects of disposal on Company financial statements

The disposal of DTM did not give rise to a gain or loss in the financial statements of the Company as theinvestment was held directly by DTH, a wholly owned subsidiary company of the Company. DTM wasdisposed at its carrying value.

(b) Effects of disposal on consolidated financial statements

The effect of the disposal on the results of the Group for the current financial year to the date of disposal wasas follows:

2002RM’000

Revenue 47,751Other operating expenses (47,157)Gain on disposal of subsidiary companies 419

Profit from operations 1,013Finance cost (12)

Profit from ordinary activities before tax 1,001Tax (103)

Profit from ordinary activities after tax 898Minority interest (161)

Net profit for the financial year 737

The gain on disposal of the subsidiary companies to the Group of RM419,000 is the difference between netdisposal proceeds of RM564,000 and the Group’s share of its net assets of RM145,000.

Notes to the Financial Statements31 December 2002

49

5 DISPOSAL OF SUBSIDIARY COMPANIES (CONTINUED)

(b) Effects of disposal on consolidated financial statements (continued)

The effect of the disposal of DTM on the financial position of the Group was as follows:

At date ofdisposalRM’000

Property, plant and equipment (Note 12) 321Other quoted investments 1Receivables, deposits and prepayments 5,469Deposits, cash and bank balances 606Payables (2,278)Borrowings (385)Taxation (13)Non current liabilities (2,805)Minority interest (771)

Net assets/(liabilities) 145Net disposal proceeds (564)

Gain on disposal (419)

Total proceeds from disposal - cash consideration 564Expenses directly attributable to the disposal, paid in cash 0

Net disposal proceeds - cash consideration 564Net disposal proceeds outstanding as at 31 December 2002 (564)Cash and cash equivalents of subsidiary companies disposed of (606)

Net cash outflow on disposal (606)

There were no disposals in the previous financial year.

50

6 REVENUE

Group Company2002 2001 2002 2001

RM’000 RM’000 RM’000 RM’000

Continuing operations:Sale of goods 1,436,595 1,234,176 0 0Rendering of services 7 0 8 6Interest income 44 0 989 271Dividend income (gross)- unquoted investment in

subsidiary company 0 0 4,450 0

1,436,646 1,234,176 5,447 277Discontinued operations:Rendering of services 47,751 47,443 0 0

1,484,397 1,281,619 5,447 277

Notes to the Financial Statements31 December 2002

51

7 PROFIT FROM OPERATIONS

Group Company2002 2001 2002 2001

RM’000 RM’000 RM’000 RM’000Profit from operations is arrived at

after charging/(crediting) the following:Auditors’ remuneration:- fees for statutory audits 299 288 7 5- fees for other services 43 44 43 44Directors’ remuneration- fees 12 12 6 6- other emoluments 3,096 2,309 0 0Legal fees paid to a firm in which

a Director is a partner 0 237 0 0Property, plant and equipment:- depreciation 9,825 11,915 0 0- write off 121 7 0 0- gain on disposal (348) (419) 0 0Net exchange gains- realised (1,501) (2,092) 0 0- unrealised (290) (255) 0 0Cost of contract workers 971 808 0 0Allowance for doubtful debts 7,405 5,852 0 0Inventories:- write off 4,671 3,980 0 0- allowance for obsolescence 1,576 1,488 0 0Rental of land and buildings 15,628 14,400 0 0Rental income (4,344) (4,340) 0 0Interest income (44) (451) (989) (271)Dividend income (gross)- unquoted investment (2) (3) 0 0Gain on disposal of subsidiary companies (419) 0 0 0

Staff costs of the Group recognised as an expense during the financial year amounted to RM74,964,000(2001: RM70,569,000). Staff costs include the remuneration of executive directors.

The estimated monetary value of benefits-in-kind provided to Directors of the Company during the financialyear by way of usage of the Group’s assets amounted to RM37,300 (2001: RM19,142).

52

8 FINANCE COST

Group Company2002 2001 2002 2001

RM’000 RM’000 RM’000 RM’000Interest expense- bank overdrafts 73 104 19 27- bankers’ acceptance 1,059 1,296 0 0- term loans 1,950 1,950 0 0- others 467 188 0 0

3,549 3,538 19 27Dividend on RCPS 4,100 0 4,100 0

7,649 3,538 4,119 27

Notes to the Financial Statements31 December 2002

53

9 TAX

Group Company2002 2001 2002 2001

RM’000 RM’000 RM’000 RM’000

Tax charge for the financial year

In respect of the current financial year:

- Malaysian income tax 792 171 1,492 70 - tax credit on RCPS dividend (1,148) 0 (1,148) 0 - foreign tax 0 2 0 0

(356) 173 344 70

In respect of prior financial years:

- Malaysian income tax 66 119 0 0

(290) 292 344 70

The tax charge for the Company for the current financial year was in respect of non allowable expenses.

The effective tax rate of the Group for the current financial year was lower than the statutory tax rate inMalaysia mainly due to utilisation of unabsorbed tax losses brought forward.

The deferred tax effects of the revaluation surplus are not disclosed as the Group intends to retain theseproperties for long term use.

Group Company2002 2001 2002 2001

RM’000 RM’000 RM’000 RM’000

Tax losses

Tax saving as a result of the utilisationof current year tax losses for which creditis recognised during the financial year 30 24 30 24

Tax saving from the utilisation of taxlosses brought forward from previous yearsfor which the related credit is recognisedduring the financial year 4,221 3,297 0 0

Tax losses for which the related tax credithas not been recognised in thefinancial statements 40,736 55,767 0 0

54

10 EARNINGS PER SHARE

The earning per share is calculated based on the net profit for the financial year divided by the number of ordinaryshares in issue during the financial year. In the previous financial year, the earnings per share was calculated basedon the net profit after deducting dividends on RCPS divided by the number ordinary shares in issue.

Group2002 2001

Net profit for the financial year (RM’000) 8,681 5,134Less: Dividends on RCPS (Note 11) (RM’000) 0 (2,952)

Net profit after dividends on RCPS (RM’000) 8,681 2,182

Number of ordinary shares in issue (‘000) 82,658 82,658

Basic earnings per share (sen) 10.50 2.64

11 DIVIDENDS

Dividends declared or proposed during the financial year are as follows:

Group and Company2002 2001

Gross Amount of Gross Amount ofdividend dividend, dividend dividend,per share net of tax per share net of tax

Sen RM’000 Sen RM’000Ordinary sharesProposed final dividend:- financial year ended 31 December 2000 0 0 1.0 595- financial year ended 31 December 2001 1.0 595 0 0

1.0 595 1.0 595

RCPS 0 0 5.0 2,952

At the forthcoming Annual General Meeting, a gross final dividend of 1 sen per share amounting to RM826,000will be proposed for shareholders’ approval. These financial statements do not reflect this proposed final dividendand the dividend will be accrued as a liability in the financial year ending 31 December 2003 when approved byshareholders. This represents a change in accounting treatment from that of prior year as explained in Note 25.

Notes to the Financial Statements31 December 2002

55

12 PROPERTY, PLANT AND EQUIPMENT

Long Short Furniture,leasehold leasehold Plant and fittings and Motor

land land Buildings machinery equipment vehicles TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group

Net book value at1 January 2001 33,006 379 19,905 3,882 10,674 758 68,604

Additions 0 0 1,046 1,119 4,143 1,225 7,533Disposals 0 0 0 0 (16) (34) (50)Write-offs 0 0 0 (2) (4) (1) (7)Translation difference 0 0 0 0 (3) 0 (3)Depreciation charge (741) (15) (2,723) (1,174) (6,771) (491) (11,915)

Net book value at31 December 2001 32,265 364 18,228 3,825 8,023 1,457 64,162

Additions 0 0 935 748 3,715 375 5,773Disposal of subsidiary

companies 0 0 0 0 (151) (170) (321)Disposals 0 0 0 0 (4) (21) (25)Write-offs 0 0 (70) (46) (5) 0 (121)Translation difference 0 0 0 0 3 0 3Depreciation charge (741) (12) (2,838) (1,091) (4,708) (435) (9,825)

Net book value at31 December 2002 31,524 352 16,255 3,436 6,873 1,206 59,646

56

12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Long Short Furniture,leasehold leasehold Plant and fittings and Motor

land land Buildings machinery equipment vehicles TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group

At 31 December 2002:

Cost 15,306 500 28,600 10,302 42,603 4,491 101,802Valuation 21,762 0 409 0 0 0 22,171Accumulateddepreciation (5,544) (148) (12,754) (6,866) (35,730) (3,285) (64,327)

Net book value 31,524 352 16,255 3,436 6,873 1,206 59,646

At 31 December 2001:

Cost 15,306 500 27,752 9,695 40,812 5,962 100,027Valuation 21,762 0 409 0 0 0 22,171Accumulateddepreciation (4,803) (136) (9,933) (5,870) (32,789) (4,505) (58,036)

Net book value 32,265 364 18,228 3,825 8,023 1,457 64,162

The Group’s land and buildings were revalued in 1992 and 1997 by independent professional valuers using theopen market value basis. The book values of the properties were adjusted to reflect the revaluations and theresultant surpluses were credited to revaluation reserves.

Net book value of revalued land and buildings of the Group had these assets been carried at cost less accumulateddepreciation, are as follows:

Group2002 2001

RM’000 RM’000

Long leasehold land 11,939 12,245Buildings 3,904 4,052

Net book value 15,843 16,297

Notes to the Financial Statements31 December 2002

57

13 SUBSIDIARY COMPANIES

Company2002 2001

RM’000 RM’000

Unquoted shares - at cost 71,500 71,500Impairment losses (1,300) 0

70,200 71,500Advances to subsidiary companies 125,541 127,202

195,741 198,702

Advances to subsidiary companies were unsecured and carried interest at rates ranging from 0% - 4%(2001: 0% - 7%) per annum. These advances are not intended to be recalled, in full or in part, within the next 12months from the balance sheet date.

The carrying amounts of these advances at the balance sheet date approximated their fair values.

58

13 SUBSIDIARY COMPANIES (CONTINUED)

The subsidiary companies of the Company are detailed below:

Group’sCountry of effective interest

Name of company incorporation 2002 2001 Principal activities

% %

Diethelm Malaysia Malaysia 100.0 100.0 General trading,Sendirian Berhad warehousing and distribution

of consumer, pharmaceutical,bio-medical, chemical andindustrial products and themanufacture of aluminiumand stainless steel householdproducts.

Subsidiary of DiethelmMalaysia SendirianBerhad

- Diethelm (B) Sendirian Negara Brunei 100.0 100.0 Dormant.Berhad * Darussalam

Harpers Trading Malaysia 100.0 100.0 General trading,(Malaysia) warehousing andSdn. Berhad distribution agency.

Subsidiary of HarpersTrading (Malaysia)Sdn. Berhad

- Harpers Trading (B) Negara Brunei 100.0 100.0 General trading,Sdn Bhd * Darussalam warehousing and

distribution agency.

Diethelm Chemicals Malaysia 100.0 100.0 Manufacturing andMalaysia Sendirian processing ofBerhad chemicals.

Diethelm Logistics Malaysia 100.0 100.0 Provision of warehousingServices Sdn Bhd and distribution services.

Diethelm Central Malaysia 100.0 100.0 Dormant.Services Sdn. Bhd.

Diethelm Franchise Malaysia 100.0 100.0 Investment holding.Holdings (M)Sdn Bhd

Notes to the Financial Statements31 December 2002

59

13 SUBSIDIARY COMPANIES (CONTINUED)

Group’sCountry of effective interest

Name of company incorporation 2002 2001 Principal activities

% %

Subsidiary of DiethelmFranchise Holdings(M) Sdn Bhd

- The Famous Amos Malaysia 100.0 100.0 Manufacture and saleChocolate Chip of chocolate chipCookie Corporation cookies.(M) Sdn Bhd

Diethelm Transport Malaysia 100.0 100.0 Investment holding.Holdings SendirianBerhad

Subsidiaries of DiethelmTransport HoldingsSendirian Berhad

- Diethelm Airtrans Malaysia 0.0 100.0 Air travel and air cargoSendirian Berhad # business.

- Diethelm Travel Malaysia 0.0 58.8 Sale of air tickets,Management package tours, vehicleSendirian Berhad ^ hiring and travel related

services.

Subsidiaries of Diethelm Travel Management Sendirian Berhad

- Diethelm Borneo Malaysia 0.0 50.0 Operation of local Expeditions adventure tours and Sendirian Berhad ^ inbound tour services.

- Singai Travel Service Malaysia 0.0 58.8 Travel agency Sdn. Bhd. +^ business.

* Audited by an affiliate of PricewaterhouseCoopers, Malaysia.

+ Audited by other firm of auditors.

^ Subsidiary company disposed of during the financial year.

# This Company is under liquidation (Note 16).

60

13 SUBSIDIARY COMPANIES (CONTINUED)

The auditors’ reports on the financial statements of Diethelm Malaysia Sendirian Berhad and Harpers Trading(Malaysia) Sdn. Berhad were qualified due to the following matters:

(i) non disclosure of an analysis of expenses using a classification based on either the nature of expenses or theirfunction as required by MASB 1: Presentation of Financial Statements; and

(ii) non disclosure of the cost of inventories recognised as an expense during the financial year, or of the operatingcosts, applicable to revenues, recognised as an expense during the financial year, classified by their nature, asrequired by MASB 2: Inventories.

14 ADVANCE TO A FELLOW SUBSIDIARY COMPANY

Advance to a fellow subsidiary company is unsecured, non interest bearing and is not intended to be recalled, infull or in part, within the next 12 months from the balance sheet date.

The carrying value at the balance sheet date of the advance to a fellow subsidiary company approximated the fairvalue.

15 SUBSIDIARY COMPANY HELD FOR DISPOSAL

Group2002 2001

RM’000 RM’000

Subsidiary company held for disposal, at cost 0 1,350

On 19 September 2001, a subsidiary company acquired a 100% equity interest in Singai Travel Service Sdn. Bhd.The subsidiary company has been excluded from consolidation in the previous financial year as control wasintended to be temporary because the subsidiary company was acquired and held exclusively with a view to itssubsequent disposal in the near future.

16 SHORT TERM INVESTMENT

Group2002 2001

RM’000 RM’000

Unquoted investment, at carrying value 18 0

This subsidiary company is not consolidated in current financial year as it was resolved that the company beliquidated by way of a Members’ Voluntary Winding Up on 26 December 2002. The carrying value has beenreclassified as a short term investment in the current financial year.

The carrying value at the balance sheet date of this investment approximated its fair value.

Notes to the Financial Statements31 December 2002

61

17 INVENTORIES

Group2002 2001

RM’000 RM’000At cost:

Raw materials 129 143Work-in-progress 1,745 762Finished goods 162,424 153,719

164,298 154,624

At net realisable value:

Finished goods 12,635 6,409

176,933 161,033

18 RECEIVABLES

Group Company2002 2001 2002 2001

RM’000 RM’000 RM’000 RM’000

Trade receivables 360,754 324,875 0 0Less: Allowance for doubtful debts (23,249) (24,946) 0 0

337,505 299,929 0 0Amount due from subsidiary companies 0 0 711 14Amount due from intermediate holding

company 0 3 0 3Amount due from a related company 2,813 0 2,813 0Other receivables 8,205 5,545 80 78

348,523 305,477 3,604 95

The currency exposure profile of trade receivables is as follows:Group2002

RM’000

Ringgit Malaysia 333,273Brunei Dollar 4,232

337,505

Credit terms of trade receivables ranged from 60 days to 90 days.

Credit risk management with respect to trade receivables is disclosed in Note 4(c) to the financial statements.

62 Notes to the Financial Statements31 December 2002

18 RECEIVABLES (CONTINUED)

The currency exposure profile of other receivables is as follows:

Group Company2002 2002

RM’000 RM’000

Ringgit Malaysia 7,592 80Brunei Dollar 613 0

8,205 80

The other receivables are repayable on demand.

19 PAYABLESGroup Company

2002 2001 2002 2001

RM’000 RM’000 RM’000 RM’000

Trade payables 334,310 280,853 0 0Amount due to subsidiary companies 0 0 270 270Amount due to ultimate holding company 0 325 0 0Amount due to immediate holding company 0 181 0 181Amount due to a related company 7 0 0 0Trade accruals 29,631 30,202 203 135Other payables 11,829 12,938 0 0RCPS dividend (net) 5,904 2,952 5,904 2,952

381,681 327,451 6,377 3,538

The currency exposure profile of trade payables is as follows:Group2002

RM’000

Ringgit Malaysia 256,738US Dollar 65,384Euro 4,795Brunei Dollar 4,111Singapore Dollar 2,437Others 845

334,310

The average credit term of trade payables is 90 days.

Amount due to subsidiary companies and a related company are unsecured, non interest bearing and have nofixed term of repayment.

63

19 PAYABLES (CONTINUED)

The currency exposure profile of trade accruals is as follows:

Group Company2002 2002

RM’000 RM’000

Ringgit Malaysia 29,206 203US Dollar 317 0Brunei Dollar 108 0

29,631 203

The trade accruals are repayable on demand.

The currency exposure profile of other payables is as follows:

Group2002

RM’000

Ringgit Malaysia 11,228Brunei Dollar 504Singapore Dollar 97

11,829

The average credit term of other payables is 30 days.

20 BORROWINGS (UNSECURED)

Group2002 2001

RM’000 RM’000

Current:Bank overdrafts (Note 24) 4,105 2,251

Bankers’ acceptance 47,914 37,757Promissory notes 20,024 11,211Revolving credits 0 29,013Term loan 30,000 0

97,938 77,981

102,043 80,232

64

20 BORROWINGS (UNSECURED) (CONTINUED)Group

2002 2001

RM’000 RM’000

Non current:Term loan 0 30,000Advances from:- intermediate holding company 11,060 11,077- immediate holding company 9,188 8,592

20,248 49,669

Total 122,291 129,901

Advances from holding companies are unsecured, non interest bearing and are not repayable within the next 12months.

Group Company2002 2001 2002 2001

% % % %

Weighted average year end effectiveinterest rates

Bank overdrafts 7.05 7.12 7.05 7.12Bankers’ acceptance 3.06 3.30 0 0Promissory notes 3.42 3.43 0 0Term loan 6.50 6.50 0 0

Estimated fair values

The carrying amounts of all borrowings at the balance sheet date approximated their fair values.

The undrawn committed borrowing facilities which expire within one year are as follows:

Group Company2002 2001 2002 2001

RM’000 RM’000 RM’000 RM’000

Bank overdrafts 5,660 8,000 2,000 2,000Bankers’ acceptance 170,692 167,300 6,292 13,800Promissory notes 1,000 9,800 0 0

Notes to the Financial Statements31 December 2002

65

21 REDEEMABLE CUMULATIVE PREFERENCE SHARES (‘RCPS’)

Group and Company2002 2001

RM’000 RM’000

Issued and fully paid:

82,000,000 RCPS with issue price of RM1.00 each,at beginning and end of financial year 82,000 82,000

Analysed as follows:

Nominal value 820 820Share premium 81,180 81,180

At 31 December 82,000 82,000

Details of the RCPS are as follows:

(i) The RCPS carry a fixed cumulative preferential gross dividend at the rate of RM0.05 (five sen) per share perannum.

(ii) The RCPS will not be entitled to participate in profits other than the preferential dividend.

(iii) The RCPS carry no voting rights.

(iv) The RCPS may be redeemed, in whole or in part, from 17 June 2001 at a redemption price of RM1.00 perRCPS together with preferential dividend accrued to the date of redemption (17 June 2004).

(v) The RCPS will not be convertible into fully paid ordinary shares.

The RCPS is classified as a financial liability in the current financial year in accordance with MASB 24 “FinancialInstruments: Disclosure and Presentation”.

The fair value of the RCPS at the balance sheet date, which is reclassified as a non current liability is approximatelyRM88,744,000.

66 Notes to the Financial Statements31 December 2002

22 SHARE CAPITALGroup and Company2002 2001

RM’000 RM’000

Authorised:

99,180,000 ordinary shares of RM1 each, at the beginning and end of financial year 99,180 99,180

82,000,000 RCPS of RM0.01 each, at the beginning and end of financial year 820 820

23 RETAINED EARNINGS

Subject to the agreement of the Inland Revenue Board, the Company has sufficient Malaysian Section 108(6) taxcredits to frank all of its retained earnings as at 31 December 2002, if paid out as dividends.

24 CASH AND CASH EQUIVALENTSGroup Company

2002 2001 2002 2001

RM’000 RM’000 RM’000 RM’000

Bank and cash balances 35,129 35,776 11 148Bank overdrafts (Note 20) (4,105) (2,251) 0 0

31,024 33,525 11 148

The currency exposure profile for bank and cash balances is as follows:Group Company2002 2002

RM’000 RM’000

Ringgit Malaysia 35,101 11Brunei Dollar 28 0

35,129 11

The currency exposure profile for bank overdrafts is as follows: Group2002

RM’000

Ringgit Malaysia (3,483)Brunei Dollar (622)

(4,105)

67

25 PRIOR YEAR ADJUSTMENT

During the financial year, the Group changed its accounting policy with respect to recognition of proposeddividend after balance sheet date in compliance with the new MASB 19 “Events After the Balance Sheet Date”.

Under MASB 19, if dividends to shareholders are proposed or declared after the balance sheet date, an enterpriseshould not recognise those dividends as a liability at the balance sheet date.

In previous financial years, dividends proposed by Directors after balance sheet date, but before shareholders’approval in the Annual General Meeting, were recognised as a liability in the balance sheet and as an appropriationof retained profits of the financial year.

The change in accounting policy has been accounted for retrospectively. Comparative information has beenrestated to reflect the change in accounting policy as follows:

As previously Effect of change Asreported in policy restatedRM’000 RM’000 RM’000

Group

At 1 January 2001: Accumulated losses (102,277) 595 (101,682)

At 31 December 2001: Accumulated losses (100,690) 595 (100,095) Proposed final dividend 595 (595) 0

Company

At 1 January 2001: Retained earnings 5,922 595 6,517

At 31 December 2001: Retained earnings 2,390 595 2,985 Proposed final dividend 595 (595) 0

68 Notes to the Financial Statements31 December 2002

26 COMMITMENTS

(a) Capital commitments

Capital expenditure not provided for in the financial statements are as follows:

Group2002 2001

RM’000 RM’000

Authorised and contracted for 2,943 1,925

Analysed as follows:

- Property, plant and equipment 2,943 1,864- Acquisition of additional shares in

Diethelm Borneo ExpeditionsSendirian Berhad by a subsidiary company 0 61

2,943 1,925

(b) Non cancellable operating lease commitments

The future minimum lease payments under non-cancellable operating leases are as follows:

Group2002 2001

RM’000 RM’000

Payable within one year 10,468 10,409Payable after one year but not later than five years 45,203 43,396Payable after five years 65,850 77,604

121,521 131,409

27 CONTINGENT LIABILITY - UNSECURED

A subsidiary company of the Group received a claim from a principal for an alleged wrongful termination of aproposed exclusive distributorship agreement. The Directors are of the opinion, after consultation with their legaladvisers, that the claim is wrong in law and made without legal basis and consequently, any estimate of anypotential liability that may arise cannot be made at this stage.

69

28 SIGNIFICANT RELATED PARTY DISCLOSURES

The immediate and intermediate holding companies of the Group are Dihoma Sendirian Berhad and DiethlemHoldings (Asia) Sendirian Berhad respectively, both of which are incorporated in Malaysia.

The ultimate holding company of the Group is Diethelm Keller Holding AG, a company incorporated inSwitzerland.

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are othersignificant related party transactions.

Group2002 2001

RM’000 RM’000Purchases from:

(i) Diethelm Keller Holding AG- management services 2,664 2,900

(ii) Lembaga Tabung Angkatan Tentera - a substantialshareholder of the Company- rent of land and building 10,618 9,792

(iii) Diethelm & Co, Ltd, a related company- internal audit fee 318 337

29 SEGMENTAL INFORMATION

The Group is organised into four main business segments:

• Trading• Chemicals• Food• Travel

All the major operations of the Group are carried out in Malaysia.

70 Notes to the Financial Statements31 December 2002

29 SEGMENTAL INFORMATION (CONTINUED)

(a) Primary reporting format-business segments

Trading Chemical Food Travel GroupRM’000 RM’000 RM’000 RM’000 RM’000

Financial year ended31 December 2002

Revenue

Total revenue 1,385,705 37,636 14,188 48,571 1,486,100Inter-segment revenue (183) (700) 0 (820) (1,703)

External revenue 1,385,522 36,936 14,188 47,751 1,484,397

Results

Segment results (external) 10,606 3,172 1,410 594 15,782Gain on disposal of

subsidiary companies 419

Profit from operations 16,201Finance cost (7,649)

Profit from ordinary activities before tax 8,552Tax 290

Profit from ordinary activities after tax 8,842Minority interest (161)

Net profit for the financial year 8,681

At 31 December 2002

Other information

Segment assets 530,788 16,411 3,643 0 550,842Unallocated assets 69,460Total assets

620,302

Segment liabilities (286,735) (4,684) (446) 0 (291,865)Unallocated liabilities (295,923)

Total liabilities (587,788)

Capital expenditure 5,773Depreciation (9,825)

71

29 SEGMENTAL INFORMATION (CONTINUED)

(a) Primary reporting format -business segments (Continued)

Trading Chemicals Food Travel GroupRM’000 RM’000 RM’000 RM’000 RM’000

Financial year ended31 December 2001

Revenue

Total revenue 1,184,264 39,417 11,763 48,070 1,283,514Inter-segment revenue (575) (693) 0 (627) (1,895)

External revenue 1,183,689 38,724 11,763 47,443 1,281,619

Results

Profit from operations 3,085 3,983 1,423 652 9,143Finance cost (3,538)

Profit from ordinary activities before tax 5,605Tax (292)

Profit from ordinary activities after tax 5,313Minority interest (179)

Net profit for the financial year 5,134

72 Notes to the Financial Statements31 December 2002

29 SEGMENTAL INFORMATION (CONTINUED)

(a) Primary reporting format -business segments (Continued)

Trading Chemicals Food Travel GroupRM’000 RM’000 RM’000 RM’000 RM’000

At 31 December 2001

Other information

Segment assets 481,783 15,884 1,977 8,294 507,938Unallocated assets 59,912

Total assets 567,850

Segment liabilities (246,307) (4,535) (356) (6,814) (258,012)Unallocated liabilities (202,661)

Total liabilities (460,673)

Capital expenditure 7,533Depreciation (11,915)

Segment assets consist primarily of property, plant and equipment, inventories and trade receivables. Segmentliabilities comprise of only trade payables. Capital expenditure comprises additions to property, plant andequipment (Note 12).

(b) Secondary reporting format - geographical segments

Although the Group has an operation in Negara Brunei Darussalam, there is no geographical segments beingdisclosed as secondary reporting format due to the revenue contributed by this foreign company is notmaterial to constitute an independent geographical segment as stipulated under MASB 22.

73

30 FINANCIAL INSTRUMENTS

(a) Forward foreign exchange contracts

Forward foreign exchange contracts are entered into by subsidiary companies in currencies other than theirfunctional currency to manage exposure to fluctuations in foreign currency exchange rates on specifictransactions. In general, the Group’s policy is as disclosed in Notes 3 and 4.

At 31 December 2002, the settlement dates on open forward contracts ranged between 1 and 6 months. Theforeign currency amounts to be received and contractual exchange rates of the Group’s outstanding contractsare as follows:

Currency RM’000Hedged item to be paid equivalent Contractual rate

Trade payables:

EUR 455,000 Euro 1,741 1 EUR = RM3.826AUD 171,000 Australian Dollar 363 1 AUD = RM2.123USD 1,630,000 US Dollar 6,205 1 USD = RM3.807SGD 863,000 Singapore Dollar 1,876 1 SGD = RM2.174CHF 64,000 Swiss Franc 165 1 CHF = RM3.578

Future purchase of finished goods over the following 3 months:

EUR 191,000 Euro 737 1 EUR = RM3.859SGD 145,000 Singapore Dollar 318 1 SGD = RM2.193

The fair value of outstanding forward contracts of the Group at the balance sheet date was a favourable netposition of RM119,000.

The net unrecognised gains at 31 December 2002 on open contracts which hedge anticipated future foreigncurrency purchase of finished goods amounted to RM24,000. These net exchange gains are deferred untilthe related purchases are transacted, at which time they are included in the measurement of such transactions.

Future liabilities in foreign currencies are forward-purchased from reputable banks when their amount anddue date are known. Forward hedges are exclusively used for bona-fide and documented trade transactionsand not for speculative purposes in line with the Group’s policy.

74 Notes to the Financial Statements31 December 2002

30 FINANCIAL INSTRUMENTS (CONTINUED)

(b) Credit risks

The Group has no significant concentrations of credit risk.

31 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) On 24 September 2002, Diethelm Transport Holdings Sendirian Berhad (‘DTH’), a wholly-owned subsidiaryof the Company, entered into three conditional Sale and Purchase Agreements for the disposal of its entire58.8% holding of 352,800 ordinary shares in Diethelm Travel Management Sendirian Berhad (‘DTM’).The total cash consideration was RM564,480. All approvals from the relevant authorities have been obtained.

(b) On 22 October 2002, Harpers Trading (Malaysia) Sdn. Berhad (‘HTM’), a wholly-owned subsidiary of theCompany, entered into a Sale and Purchase Agreement with Comsa Chicken Products Sdn Bhd for the saleof a parcel of land with a building in Kota Kinabalu for a total cash consideration of RM2,300,000. Adeposit of 10% amounted to RM230,000 has been received. This transaction has not yet been completed asat 31 December 2002 as the terms and conditions as stipulated in the Sale and Purchase Agreement are yet tobe fulfilled.

(c) On 28 October 2002, the Company entered into a Share Sale Agreement (‘SSA’) with EAC Holdings (Malaysia)Sdn Bhd (‘EAC’) for the proposed acquisition of the entire equity interest in EAC Marketing Services SdnBhd (‘EMSB’), a wholly-owned subsidiary of EAC, comprising two ordinary shares of RM1.00 each for thepurpose of acquiring primarily the consumer products businesses and certain assets of the EAC Group to besatisfied by cash.

These businesses of EAC and Presence Marketing Asia Sdn Bhd (‘PMSB’) together with certain assets relatingto the businesses as well as EAC’s 20% equity interest in Total Fame Sdn Bhd will be transferred to EMSBpursuant to an internal restructuring exercise of EAC and thereafter, the Company shall acquire equityinterest in EMSB pursuant to the SSA for a cash consideration of not more than RM50,000,000. Theapprovals from the relevant authorities have been received and the shareholders’ approval have been obtainedat the Extraordinary General Meeting held on 28 February 2003.

75

32 COMPARATIVES

Certain comparatives of the Group were reclassified to conform with current year’s presentation as follows:

As previously Asreported Reclassification restatedRM’000 RM’000 RM’000

BALANCE SHEET

Non current asset

Property, plant and equipment

Long leasehold land- cost 20,406 (5,100) 15,306- valuation 16,662 5,100 21,762

Current liabilities

Payables

Trade accruals 22,703 7,499 30,202Other payables 20,437 (7,499) 12,938

Non current liabilities

Borrowings (Unsecured)

Bankers’ acceptance 40,458 (2,701) 37,757Promissory notes 8,510 2,701 11,211

76

STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

We, Peter Heinser and André Eugen Hägi, two of the Directors of Diethelm Holdings (Malaysia) Berhad, state that, inthe opinion of the Directors, the financial statements set out on pages 33 to 75 are drawn up so as to give a true and fairview of the state of affairs of the Group and Company as at 31 December 2002 and of the results and the cash flows ofthe Group and Company for the financial year ended on that date in accordance with the applicable approved AccountingStandards in Malaysia and the provisions of the Companies Act, 1965 except for the non-disclosures referred to in Note2 to the financial statements.

In accordance with a resolution of the Board of Directors dated 28 March 2003.

PETER HEINSER ANDRÉ EUGEN HÄGIDIRECTOR GROUP FINANCE DIRECTOR

STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965

I, André Eugen Hägi, the Director primarily responsible for the financial management of Diethelm Holdings (Malaysia)Berhad, do solemnly and sincerely declare that the financial statements set out on pages 33 to 75 are, in my opinion,correct, and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisionsof the Statutory Declarations Act, 1960.

ANDRÉ EUGEN HÄGI

Subscribed and solemnly declared by the abovenamed André Eugen Hägi at Petaling Jaya, Selangor Darul Ehsan inMalaysia on 28 March 2003, before me.

NO. B064N. MADHAVAN NAIRCOMMISSIONER FOR OATHS

Statement by Directors and Statutory Declaration

77

REPORT OF THE AUDITORS TO THE MEMBERS OF DIETHELM HOLDINGS (MALAYSIA) BERHAD(Company No. 231378 A)

1 We have audited the financial statements set out on pages 33 to 75. These financial statements are the responsibilityof the Company’s Directors. Our responsibility is to express an opinion on these financial statements based onour audit.

2 We conducted our audit in accordance with approved auditing standards in Malaysia. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are freeof material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used and significantestimates made by Directors, as well as evaluating the overall financial statement presentation. We believe that ouraudit provides a reasonable basis for our opinion.

3 As disclosed in Note 2 to the financial statements, the financial statements comply with the applicable approvedAccounting Standards in Malaysia and the provisions of the Companies Act 1965 except for the following mattersrelating to the financial statements of the Group:

(i) non disclosure of an analysis of expenses using a classification based on either the nature of expenses or theirfunction as required by MASB 1: Presentation of Financial Statements; and

(ii) non disclosure of the cost of inventories recognised as an expense during the financial year, or of the operatingcosts, applicable to revenues, recognised as an expense during the financial year, classified by their nature, asrequired by MASB 2: Inventories.

4 Except for the non-disclosures referred to in paragraph 3 above, in our opinion, the financial statements have beenprepared in accordance with the provisions of the Companies Act, 1965 and applicable approved AccountingStandards 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 financial statements;and

(ii) the state of affairs of the Group and Company as at 31 December 2002 and of the results and cash flows ofthe Group and Company for the financial year ended on that date.

5 In our opinion, the accounting and other records and the registers required by the Act to be kept by the companyand by the subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisionsof the Act.

PricewaterhouseCoopers(AF 1146)Chartered Accountants11th Floor Wisma Sime DarbyJalan Raja LautP O Box 1019250706 Kuala Lumpur, MalaysiaTelephone +60 (3) 2693 1077Facsimilie +60 (3) 2693 0997

78

REPORT OF THE AUDITORS TO THE MEMBERS OF DIETHELM HOLDINGS (MALAYSIA) BERHAD(CONTINUED) (Company No. 231378 A)

6 The names of the subsidiary companies of which we have not acted as auditors are indicated in Note 13 to thefinancial statements. We have considered the financial statements of these subsidiary companies and the auditors’reports thereon.

7 We are satisfied that the financial statements of the subsidiary companies that have been consolidated with theCompany’s financial statements are in form and content appropriate and proper for the purposes of the preparationof the consolidated financial statements and we have received satisfactory information and explanations requiredby us for those purposes.

8 The audit reports on the financial statements of the subsidiary companies were not subject to any qualificationother than those disclosed in Note 13 to the financial statements, and did not include any comment made undersubsection (3) of section 174 of the Act.

PRICEWATERHOUSECOOPERS(No. AF: 1146)Chartered Accountants

THAYAPARAN A/L S. SANGARAPILLAI(No. 2085/09/04 (J))Partner of the firm

28 March 2003

I / We, ......................................................................................................(Company No: /NRIC No:.........................)(Please use block letters)

of...................................................................................................................................................................................................... (full address)

.........................................................................................................................................................................................................

.........................................................................................................................................................................................................

being a member / members of DIETHELM HOLDINGS (MALAYSIA) BERHAD (231378 - A) hereby appoint

.............................................................................................................(NRIC No: ....................................................)

of..................................................................................................................................................................................................... (full address)

or failing him, the Chairman of the Meeting as my/our proxy to vote for me/us and on my/our behalf at theEleventh Annual General Meeting of the Company to be held at the Kristal Suite 1&2, First Floor, West Wing, HiltonPetaling Jaya, No. 2, Jalan Barat, 46200 Petaling Jaya, Selangor Darul Ehsan on Thursday, 12 June 2003 at 10.00 a.m.and at any adjournment thereof.

My/Our proxy is to vote as indicated below :

Ordinary Resolution 1 Adoption of report and accounts

Ordinary Resolution 2 Approval of final dividend

Ordinary Resolution 3 Approval of directors’ fees

Ordinary Resolution 4 Re-election of Ahmad Fakhrizzaki Abdullah

Ordinary Resolution 5 Election of Niels Johan Holm

Ordinary Resolution 6 Re-appointment of PricewaterhouseCoopers as auditors

(Please indicate with an “x” in the spaces provided how you wish your vote to be cast. If you do not do so, the proxy willvote or abstain from voting at his discretion.)

Dated this.............day of .................................................................. 2003.

Signature of Member ...............................................

Notes :

Every member is entitled to appoint a proxy or in the case of a corporation, to appoint a representative to attend and vote in his place. A proxy need not be a member ofthe Company.

The Form of Proxy must be signed by the appointer or his attorney duly authorised in writing or if the appointer is a corporation, either under seal or under the hand ofan officer or attorney duly authorised. In the case of joint holdings, the signature of the first named is sufficient.

If the Form of Proxy is returned without any indication as to how proxy shall vote, the proxy will vote or abstain as he thinks fit.

If no name is inserted in the space for the name of your proxy, the Chairman of the Meeting will act as your proxy.

The Form of Proxy must be deposited at 3rd Floor, 74, Jalan University, 46200 Petaling Jaya not less than forty-eight (48) hours before the time of holding the Meeting orany adjournment thereof, or in the case of a poll, not less than twenty-four (24) hours before the time appointed for taking the poll.

Proxy Formfor the Eleventh Annual General Meeting

.......................................................

AgainstFor

Diethelm Holdings (Malaysia) Berhad

No. of ordinary shares held

fold here

The Company Secretary

Diethelm Holdings (Malaysia) Berhad (231378-A)

74, Jalan University

46200 Petaling Jaya

Selangor Darul Ehsan

Malaysia

affixpostage

here

fold here..........................................................................................................................................................................................................................................................................................

..........................................................................................................................................................................................................................................................................................