ANNUAL REPORT 2004 - LCTH Corp · Datuk Muhammad Feisol bin Haji Hassan (Vice Chairman) Annual Report 2004 8. LCTH CORPORATION BERHAD (633871-A) Annual Report 2004 9 PROFILE OF THE

A N N U A L R E P O R T 2 0 0 4

C O N T E N T S

Notice of Annual General Meeting 2 - 4

Statement AccompanyingNotice of Annual General Meeting 5

Corporate Structure 6

Corporate Information 7

Board of Directors 8

Profile of the Board of Directors 9 - 11

Chairman’s Statement 12 - 14

Audit Committee Report 15 - 17

Corporate Governance Statement 18 - 21

Statement on Internal Control 22 - 23

Other Information 24 - 25

Directors’ Report 26 - 30

Statement by Directors 31

Statutory Declaration 31

Report of the Auditors 32

Income Statements 33

Balance Sheets 34

Statements of Changes in Equity 35

Cash Flow Statements 36

Notes to the Financial Statements 37 - 55

Land and Building 56

Analysis of Shareholdings 57 - 59

Proxy Form Enclosed

LCTH CORPORATION BERHAD(633871-A)

Annual Report 2004 2

NOTICE IS HEREBY GIVEN THAT the First Annual General Meeting of the Company will beheld at Hang Jebat Function Room, Level 6, Le Meridian Kuala Lumpur, 2 Jalan Stesen Sentral,Kuala Lumpur Sentral, 50470 Kuala Lumpur on Friday, 25 March 2005 at 10.30 a.m. for thepurpose of considering the following businesses:-

1. To receive the Audited Financial Statements for the period ended 31 December 2004together with the Reports of the Directors and the Auditors thereon.

2. To declare a gross final dividend of 6.0 sen per ordinary share less income tax of 28% inrespect of the financial year ended 31 December 2004.

3. To approve payment of Directors’ fees.

4. To re-elect the following Directors who are retiring pursuant to Article 101 of theCompany’s Articles of Association:

(i) Datuk Muhammad Feisol bin Haji Hassan(ii) Mr Hew Lien Lee(iii) Mr Ching Heng Yang

5. To re-appoint Messrs. Ernst & Young as Auditors of the Company for the ensuing yearand to authorise the Directors to fix their remuneration.

6. To consider and, if thought fit, pass the following resolutions:

ORDINARY RESOLUTION NO. 1Authority to allot shares pursuant to Section 132D of the Companies Act,1965

"THAT pursuant to Section 132D of the Companies Act, 1965 and subject always to theapproval of the relevant authorities, the Directors be and are hereby empowered toissue shares in the capital of the Company from time to time and upon such terms andconditions and for such purposes as the Directors may deem fit provided that the aggregatenumber of shares issued pursuant to this resolution does not exceed 10% of the issuedshare capital of the Company for the time being and that the Directors be and are alsoempowered to obtain the approval for the listing of and quotation for the additionalshares so issued on the Bursa Malaysia Securities Berhad and that such authority shallcontinue in force until the conclusion of the next Annual General Meeting of the Company.”

ORDINARY RESOLUTION NO. 2

Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactionsof a Revenue or Trading Nature involving the Company’s subsidiary, Classic AdvantageSdn Bhd and Fu Hao Manufacturing (M) Sdn Bhd with the companies in the Fu YuCorporation Ltd Group.

“THAT approval be and is hereby given to the Company’s subsidiary, Classic AdvantageSdn Bhd and Fu Hao Manufacturing (M) Sdn Bhd, to enter into Recurrent Related PartyTransactions of a Revenue or Trading Nature and to give effect to the specified RecurrentRelated Party Transactions with the companies in the Fu Yu Corporation Ltd Group asstated in Section 2.2.3 of the Circular to Shareholders dated 2 March 2005 which arenecessary for the day to day operations of LCTH Group provided that:

i) the transactions are carried out in the ordinary course of business and are onnormal commercial terms which are not more favourable to the Related Partiesthan those generally available to the public and not detrimental to the minorityshareholders; and

ii) disclosure is made in the Annual Report of the aggregate value of transactionsconducted pursuant to the Shareholders’ Mandate during the financial year;

Resolution 1

Resolution 2

Resolution 3Resolution 4Resolution 5

Resolution 6

Resolution 7

Resolution 8

NOTICE OF ANNUAL GENERAL MEETING



AND THAT such approval shall continue to be in force until:

a) the conclusion of the next Annual General Meeting (“AGM”) of the Company atwhich time it will lapse, unless by a resolution passed at the meeting the authorityis renewed; or

b) the expiration of the period within which the next AGM of the Company is requiredto be held pursuant to Section 143(1) of the Malaysian Companies Act, 1965 (“theAct”) (but shall not extend to such extension as may be allowed pursuant toSection 143(2) of the Act); or

c) revoked or varied by resolution passed by the Shareholders in general meeting;

whichever is earlier,

AND THAT the Directors and the Secretaries of the Company be and are herebyauthorised to complete and do all such acts and things as they may consider expedientor necessary to give effect to the Proposed Renewal of Shareholders’ Mandate.”

By Order of the Board

LEONG OI WAH (MAICSA 7023802)LEONG SIEW FOONG (MAICSA 7007572)ZAINI BINTI CHE ALI (MAICSA 7028124)Company Secretaries

Kuala Lumpur2 March 2005

NOTES:

1. A member of the company who is entitled to attend and vote at this meeting is entitled to appoint a proxy or in the case of acorporation a duly authorised representative to attend and to vote in his stead.

2. A proxy may but need not be a member of the Company and Section 149(1)(b) of the Companies Act, 1965 shall not apply.

3. If the appointer is a corporation, the Form of Proxy must be executed under the common seal or the hand of an officer or attorneyduly authorised.

4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at Level 5, Menara Milenium, JalanDamanlela, Pusat Bandar Damansara, 50490 Kuala Lumpur not less than 48 hours before the time set for the holding of themeeting or adjourned meeting.

NOTES ON SPECIAL BUSINESS

(i) Ordinary Resolution No. 1

The proposed Ordinary Resolution No. 1 will give powers to the Directors to issue up to a maximum ten per centum(10%) of the issued share capital of the Company for the time being for such purposes as the Directors would considerin the best interest of the Company. This authority, unless revoked or varied by the Company at a general meeting, willexpire at the next Annual General Meeting of the Company.

(ii) Ordinary Resolution No. 2

Please refer to the Circular to Shareholders dated 2 March 2005.




NOTICE OF DIVIDEND ENTITLEMENT

NOTICE IS HEREBY GIVEN THAT a gross final dividend of 6.0 sen per ordinary share less income tax of 28% in respect of thefinancial year ended 31 December 2004, if so approved at the First Annual General Meeting, will be paid on 11 April 2005 toShareholders whose names appear in the Records of Depositors at the close of business on 28 March 2005.

A Depositor shall qualify for entitlement only in respect of:

a) Shares transferred into the depositor’s securities account before 4.00 p.m. on 28 March 2005 in respect of ordinarytransfers; and

b) Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the BursaMalaysia Securities Berhad.

By Order of the Board

LEONG OI WAH (MAICSA 7023802)LEONG SIEW FOONG (MAICSA 7007572)ZAINI BINTI CHE ALI (MAICSA 7028124)Company Secretaries

Kuala Lumpur2 March 2004




STATEMENT ACCOMPANYINGNOTICE OF ANNUAL GENERAL MEETING

1. DIRECTORS WHO ARE STANDING FOR RE-ELECTION AT THE FIRST ANNUAL GENERAL MEETINGOF THE COMPANY ARE:

i. Datuk Muhammad Feisol bin Haji Hassan (Resolution 3)ii. Mr Hew Lien Lee (Resolution 4)iii. Mr Ching Heng Yang (Resolution 5)

The information of the Directors standing for re-election are set out in the Directors’ Profile appearing on page 9 of theAnnual Report.

2. DETAILS OF ATTENDANCE OF DIRECTORS AT BOARD MEETING

There were three (3) Board of Directors’ Meetings held during the financial year ended 31 December 2004.

The details of attendance of Directors are set out in the Corporate Governance Statement appearing on page 19 of theAnnual Report.

3. PLACE, DATE AND TIME OF THE FIRST ANNUAL GENERAL MEETING

The First Annual General Meeting of the Company will be held at Hang Jebat Function Room, Level 6, Le Meridian KualaLumpur, 2 Jalan Stesen Sentral, Kuala Lumpur Sentral, 50470 Kuala Lumpur on Friday, 25 March 2005 at 10.30 a.m.



CORPORATE STRUCTURE



CORPORATE INFORMATION

BOARD OF DIRECTORSLui Choon Hay (Executive Chairman)Datuk Muhammad Feisol Bin Haji Hassan (Vice Chairman/Independent Non-Executive Director)Hew Lien Lee (Managing Director)Ching Heng Yang (Executive Director)Tam Wai (Executive Director)Ho Nee Kit (Executive Director)Ong Seng Pheow (Independent Non-Executive Director)Mohd Nasir Bin A. Khalid (Independent Non-Executive Director)

COMPANY SECRETARIESLeong Oi Wah (MAICSA 7023802)21, Jalan 4/5446050 Petaling JayaSelangor Darul EhsanTel : 603-2718 1551

Leong Siew Foong (MAICSA 7007572)3, Jalan BayamTaman Kota Besar89000 Kota TinggiJohor Darul Ta’zimTel : 607-332 3536

Zaini Binti Che Ali (MAICSA 7028124)No. 12, Jalan RP 4/8Taman Rawang Perdana48000 RawangSelangor Darul EhsanTel : 603-2718 1551

REGISTERED OFFICELevel 5, Menara MileniumJalan DamanlelaPusat Bandar Damansara50490 Kuala LumpurTel : 603-2718 1551Fax : 603-2715 7699

HEAD/MANAGEMENT OFFICELot 2592, Jalan Perindustrian IIIKawasan Perindustrian Senai II81400 SenaiJohor Darul Ta’zimTel : 607-599 3331Website : www.lcth.com.my

AUDITORSErnst & Young (AF 0039)Suite 11.2, Level 11Menara Pelangi, 2, Jalan KuningTaman Pelangi80400 Johor BahruJohor Darul Ta’zimTel : 607-334 1740

SOLICITORSLee Choon Wan & CoNo. 12, Lorong DungunDamansara Heights50490 Kuala LumpurTel : 603-2093 0078

PRINCIPAL BANKERSRHB Bank Berhad (6171-M)180-181, Jalan Belimbing81400 SenaiJohor Darul Ta’zimTel : 607-599 6960

Malayan Banking Berhad (3813-K)No. 2741, 2742 & 2743Jalan Chain FerryTaman Inderawasih13600 Prai PenangTel : 604-399 2967

REGISTRARSymphony Share Registrars Sdn Bhd(378993-D)(formerly known as Malaysian ShareRegistration Services Sdn Bhd)Level 26, Menara Multi-PurposeCapital Square8, Jalan Munshi Abdullah50100 Kuala LumpurTel : 603-2721 2222Fax : 603-2721 2530

STOCK EXCHANGE LISTINGMain Board of Bursa MalaysiaSecurities Berhad

BOARD OF

DIRECTORS

Top Row (left to right):Lui Choon Hay (Chairman)Mohd Nasir bin A. Khalid

Ching Heng Yang

Middle Row (left to right):Tam Wai

Ho Nee Kit

Bottom Row (left to right):Ong Seng Pheow

Hew Lien Lee (Managing Director)Datuk Muhammad Feisol bin Haji Hassan (Vice Chairman)




PROFILE OF THE BOARD OF DIRECTORS

Lui Choon Hay, aged 66, a Singaporean, was appointed as the Executive Chairman of LCTH on 3June 2004. He is the founder of Fu Yu Corporation Limited (FYC) and its group of companies. Hisinvolvement in the mould fabrication and plastic injection moulding industry began in 1966 when hejoined Bao Guang (HK) Pte Ltd as a mould fabricator. Between 1968 and 1973, he worked as amould fabricator for companies including Fock Seng (HK) Pte Ltd and Bao Yuan (HK) Pte Ltd.Subsequently in 1973, he left Bao Yuan (HK) Pte Ltd to take up the position of head of toolingdepartment with Seng Seng Pte Ltd in Singapore. In 1977, he left the company to join Ata IndustriesPte Ltd as the tooling manager. In 1978, he ventured into his own business and founded FYC inSingapore, a company involved in the manufacturing of plastic injection moulding and mould fabrication.He was appointed as director of Fu Yu Holding Pte Ltd (FYH) in 1994. He is presently the executive

chairman of FYC, and director of Fu Yu Moulding & Tooling (Tianjin) Co. Ltd, Fu Yu Moulding & Tooling (Shanghai) Co Ltd, Fu YuMoulding & Tooling (Dongguan) Co. Ltd, Fu Yu Moulding & Tooling (Suzhou) Co Ltd, Fu Yu Moulding & Tooling (Zhuhai) Co Ltd,Fu Yu Investment Pte Ltd (FYI), Chang Fu Resources Pte Ltd, Fu Yu International Enterprise Limited, Fu Yu Trading Limited, Fu Yu(U.S.A) Limited, Fortune Mission, Fu Yu Mexico S.A. De C.V., Fu Yu Moulding & Tooling (Wujiang) Co.Ltd, IFN Pte Ltd, Kodon(Tianjin) Electronics & Electrical Apparatus Co. Ltd, Fu Yu Guadalajara, S.A. De C.V., Rapid Ultra Pte Ltd, NanoTechnologyManufacturing Pte Ltd, Qingdao Fu Qiang Electronics Co., Ltd, Fu Ying Moulding & Tooling (Shanghai) Co., Ltd, Fu Hao Manufacturing(M) Sdn Bhd (Fu Hao) and Classic Advantage Sdn Bhd (CA).

Datuk Muhammad Feisol Bin Haji Hassan, aged 67, a Malaysian, was appointed as anIndependent Non-Executive Director and Vice Chairman of the Company on 3 June 2004. He is alsothe Chairman of the Nomination Committee. He graduated from University Malaya with a Bachelorof Arts degree in 1959. He started his career with the Government Service and served in thegovernment for 26 years before moving into the private sector. His career included service in bothState and Federal level including in district and land administration, personnel, financial planning andmanagement and policy implementation. At Federal level, he had served the Ministries of HomeAffairs, Information, Prime Minister’s Department and National & Rural Development. After hispublic service career, he was the Chief Executive Officer of Rakyat First Merchant Bankers Berhadfrom 1985 to 1989. At present, he sits on the board of directors and is an audit committee memberin Bina Darulaman Berhad, a company listed on the Main Board of Bursa Securities. He is also a director of International IslamicUniversity Holdings Sdn Bhd and Maersk Malaysia Sdn Bhd.

Hew Lien Lee, aged 48, a Malaysian, was appointed as the Managing Director of LCTH on 3 June2004. His career started in 1978, when he joined G.E Housewares Pte Ltd as a technician. In 1979, heleft to join Technomer Moulding Pte Ltd, a company involved in plastic injection moulding as seniorsupervisor. In 1984, he left to join Fu Yu Manufacturing Pte Ltd (now known as FYC) as productionsupervisor. Between 1984 and 2003, he held several positions in FYC including production andoperations manager, and finally as group general manager. In 1993, he was appointed as a director ofCA and Fu Hao. He has approximately 25 years of experience in the plastic injection mouldingindustry and has been instrumental in the success of LCTH Corporation Berhad and its subsidiarycompanies (LCTH Group). Since 2001, he has been responsible for the overall strategic directionand management of the LCTH Group.

Ching Heng Yang, aged 54, a Singaporean, was appointed as the Executive Director of LCTH on3 June 2004. His career started in 1970 when he joined Mandarin Pte Ltd, Singapore as mouldfabricator. In 1974, he left to join Ata Industries (Pte) Ltd, a company involved in mould fabrication. In1978, he left the company to establish FYC, a company involved in the manufacturing of plasticinjection moulding and mould fabrication. As the co-founder of FYC, he has extensive experience inthe plastic injection moulding industry as a result of more than 33 years of experience in the industry.Apart from being appointed as a director of FYH in 1994, he has been instrumental in the success ofFYC and its subsidiaries, including the LCTH Group of companies. Presently he is the Vice Chairmanand Executive Director of FYC, and director of Fu Yu Moulding & Tooling (Tianjin) Co. Ltd, Fu YuMoulding & Tooling (Shanghai) Co Ltd, Fu Yu Moulding & Tooling (Dongguan) Co. Ltd, Fu Yu Moulding& Tooling (Suzhou) Co Ltd, Fu Yu Moulding & Tooling (Zhuhai) Co Ltd, FYI, Chang Fu Resources Pte Ltd, Fu Yu InternationalEnterprise Limited, Fu Yu Trading Limited, Fu Yu (U.S.A) Limited, Fortune Mission, Fu Yu Mexico S.A. De C.V., Fu Yu Moulding &Tooling (Wujiang) Co.Ltd, Fu Yu Guadalajara, S.A. De C.V., Rapid Ultra Pte Ltd, IFN Pte Ltd, NanoTechnology Manufacturing PteLtd, Qingdao Fu Qiang Electronics Co., Ltd, Fu Ying Moulding & Tooling (Shanghai) Co., Ltd, Fu Hao and CA.



Tam Wai, aged 54, a Singaporean, was appointed as the Executive Director of LCTH on 3 June2004. He brings along with him more than 35 years of experience in plastic injection mouldingindustry. His career started in 1968 when he joined Hui Yuan Plastic Pte Ltd in Singapore, a companyinvolved in fabrication of moulds. In 1975, he left to join Seng Seng Pte Ltd as a mould fabricatorbefore leaving in 1977 to join Ata Industries (Pte) Ltd as a tooling engineer. Subsequently in 1978, heleft to establish FYC, a company involved in the manufacturing of plastic injection moulding andmould fabrication. As the co-founder of FYC, he is responsible for overseeing the mould design andfabrication operations of FYC and its subsidiaries. He was also appointed as director of FYH in 1994.Presently he is the executive director of FYC, and director of Fu Yu Moulding & Tooling (Tianjin) Co.Ltd, Fu Yu Moulding & Tooling (Shanghai) Co Ltd, Fu Yu Moulding & Tooling (Dongguan) Co. Ltd, Fu Yu

Moulding & Tooling (Suzhou) Co Ltd, Fu Yu Moulding & Tooling (Zhuhai) Co Ltd, FYI, Chang Fu Resources Pte Ltd, Fu YuInternational Enterprise Limited, Fu Yu Trading Limited, Fu Yu (U.S.A) Limited, Fortune Mission, Fu Yu Mexico S.A. De C.V., Fu YuMoulding & Tooling (Wujiang) Co.Ltd, Fu Yu Guadalajara, S.A. De C.V., Rapid Ultra Pte Ltd, IFN Pte Ltd, NanoTechnologyManufacturing Pte Ltd, Qingdao Fu Qiang Electronics Co., Ltd, Fu Ying Moulding & Tooling (Shanghai) Co., Ltd, Fu Hao and CA.

Ho Nee Kit, aged 51, a Singaporean, was appointed as the Executive Director of LCTH on 3 June2004. His involvement in the plastic injection moulding and mould fabrication industries began in1975 when he joined Ata Industries (Pte) Ltd, a company involved in fabrication of moulds. In 1978,he left to establish FYC, a company involved in the manufacturing of plastic injection moulding andmould fabrication. As the co-founder of FYC, he has been instrumental in overseeing all aspects ofthe management of operations of FYC and its subsidiaries including the LCTH Group of companies.He was also appointed as director of FYH in 1994. Presently he is the executive director of FYC, anddirector of Fu Yu Moulding & Tooling (Tianjin) Co. Ltd, Fu Yu Moulding & Tooling (Shanghai) Co Ltd, FuYu Moulding & Tooling (Dongguan) Co. Ltd, Fu Yu Moulding & Tooling (Suzhou) Co Ltd, Fu Yu Moulding& Tooling (Zhuhai) Co Ltd, FYI, Chang Fu Resources Pte Ltd, Fu Yu International Enterprise Limited,Fu Yu Trading Limited, Fu Yu (U.S.A) Limited, Fortune Mission, Fu Yu Mexico S.A. De C.V., Fu Yu Moulding & Tooling (Wujiang)Co.Ltd, Fu Yu Guadalajara, S.A. De C.V., Rapid Ultra Pte Ltd, IFN Pte Ltd, NanoTechnology Manufacturing Pte Ltd, Qingdao FuQiang Electronics Co., Ltd, Fu Ying Moulding & Tooling (Shanghai) Co., Ltd, Fu Hao and CA.

Ong Seng Pheow, aged 56, a Malaysian, was appointed to the Board of LCTH on 3 June 2004. Heis an Independent Non- Executive Director of the Company and is the Chairman of the AuditCommittee. He is a member of the Malaysian Institute of Certified Public Accountants (“MICPA”)and the Malaysian Institute of Accountants (“MIA”). He has over 34 years experience in publicpractice with an international firm of accountants and was its National Director of Assurance andAdvisory Business Services in Malaysia from 1994 till he retired in December 2003. He is currentlyalso an independent non-executive director of Daiman Development Berhad and George Kent(Malaysia) Berhad. Both companies are listed on the Main Board of Bursa Securities.

Mohd Nasir Bin A. Khalid, aged 57, a Malaysian, was appointed tothe Board of LCTH on 3 June 2004. He is an Independent Non-Executive Director of the Companyand is the Chairman of the Remuneration Committee. He obtained his Barrister-At-Law from Lincoln’sInn, London in 1973. He has over 31 years of experience in the legal fraternity, starting his career asa legal assistant at Allen & Gledhill from 1974 to 1976 before moving to Au Ah Wah & Co from 1976to 1977. He was made a partner in the legal firm Megat Najmuddin Teoh & Co, where he stayed till1979. He later joined Diethelm Malaysia Sdn Bhd in 1979 as the company secretary before joiningAntah Jardine Sandilands Sdn Bhd as the legal and corporate affairs manager from 1980 to 1982. Hejoined the firm of Tay, Tee & Nasir as one of the partners in 1982 before moving to the corporateworld as an executive director at Ban Hin Lee Bank Berhad from 1990 to 1994. He later rejoined asa partner at Tay Tee & Nasir in 1994, a position he still holds currently. He also sits on the board of directors of Matloob TradingSdn Bhd and Blacktop Industries Sdn Bhd.




OTHER INFORMATION

(i) Family relationship

Save for Mr Lui Choon Hay and Mr Tam Wai who are brothers-in-law, there is no other family relationship between thedirectors and major shareholder.

(ii) Conflict of interest

Save as disclosed in the Circular to shareholders dated 2 March 2005 where the directors, Messrs Lui Choon Hay, ChingHeng Yang, Tam Wai and Ho Nee Kit have interest in the recurrent related party transactions, none of the other directorshas any conflict of interest.

(iii) Convictions

The Directors of LCTH Corporation Berhad have no convictions for offences within the past 10 years.


Annual Report 2004

SIGNIFICANT CORPORATE DEVELOPMENTS

The Ministry of International Trade and Industry (“MITI”) and the Securities Commission(“SC) and the Foreign Investment Committee (“FIC”) had on 6th February 2004 and 11th

May 2004 respectively approved the Company’s restructuring exercise and the listing exerciseof the Company. The restructuring exercise saw the Company acquiring and consolidatingtwo of Fu Yu Corporation Limited’s Malaysian subsidiaries namely, Classic Advantage SdnBhd, having operations in Senai and Kluang, Johore and Fu Hao Manufacturing (M) Sdn Bhd,having its operations in Penang. The Company proceeded with the Initial Public Offering(“IPO”) and launched its prospectus on 30th September 2004.

The Company was amongst the first in Malaysia to conduct a briefing that is open to thepublic on 11th October 2004, in Kuala Lumpur, for the benefit of the public investors duringthe launch of its prospectus. Both corporate and individual investors as well as institutionalfund managers and analysts from the broking community attended the public briefing whichwas successfully organised with Vital Factor Sdn Bhd, the Company’s independent marketresearcher for the IPO.

On 8th November 2004, the Company’s shares were listed and quoted on the official list ofthe Main Board of Bursa Malaysia Securities Berhad.

FINANCIAL RESULTS

For the financial year ended 31 December 2004, the LCTH Group achieved revenue of RM262.7 million and a pre-tax profit of RM 67.1 million as compared to RM 237.2 millionrevenue and RM 63.9 million pre-tax profit respectively in the previous year. This is an increaseof 10.8% for revenue and 5.0% for pre-tax profit over the previous year.

The improved performance was attributable to a number of new products introduced byexisting customers in 2004 whilst the LCTH Group also continued to undertake measuresto improve operating efficiencies and financial performance of its businesses and to competemore effectively in the business environment.

PROFIT AFTER TAX

For the financial period under review, the LCTH Group achieved a Profit after tax ofRM57.2.million which is 12.4% less than the forecasted profit after tax of RM65.3 million asstated in the Prospectus.

The shortfall arose as a result of several factors which were beyond the control ofmanagement:

• World oil price surge to in excess of US$50 a barrel in September 2004 and thecontinued oil price instability also hampered new projects to be launched by customersand indeed certain customers cut back on their orders during the months of Octoberand November 2004. Margins were also squeezed in the 4th Quarter 2004 as certaincustomers also had instituted “cost down” measures in their continuing projects.

Oil price increases and instability from September last year affected most, if not all,global economies and industries. We were also affected as a result of increased costsof transportation relative to the petroleum price increases, packaging materials (bothpolyethylene bags and plastic sheets and paper cartons). Though resin is a majorcomponent of our costs, through long term relationship with our customers, wewere able to obtain supply of resins from our customers’ preferred resin suppliersand at the same time able to enjoy their economies of scale and relatively stable resinprices.

• Construction works and completion of the new plant in the Johore Technology Parkwere delayed due to the shortage of steel and other related building materials in thefirst half of 2004 and the bad inclement weather in the last few months of the year.Thus, we were not able to install the machine as planned by October 2004. Arisingfrom this delay, the LCTH Group was unable to take on the projects planned duringthe third quarter, in the of the year which is usually the peak period nor catch-up withthe production schedules in the last quarter, in the months of October and November2004.

CHAIRMAN’S STATEMENT

On behalf of the

Board of Directors of

LCTH Corporation

Berhad (“LCTH” or

“the Company”), I am

pleased to present

the Company’s first

Annual Report and

Financial Statements

for the financial year

ended 31 December

2004.

12



DIVIDENDS

The Company was also amongst the first in an IPO to include a dividend policy in its prospectus and further stated that forfinancial years ending 31st December 2004 and 2005, the Directors will declare a 7.56 sen gross dividend per share, representinga 7% gross dividend yield based on the issue price of RM1.08 per share for each of the two years. To-date, I am pleased to informshareholders that an interim gross dividend of 2.56 sen had been declared and paid on 10th December 2004.

Despite achieving a Profit after Tax of RM 57.2million which is 12.4 % less than the forecast as stated in the Prospectus, I am verypleased to inform shareholders that your Board of Directors has recommended a final gross dividend of 6.0 sen per sharewhich is subject to shareholders approval at the Annual General Meeting to be held on 25th March 2005.

If approved by shareholders, the gross dividends(interim and final) paid and payable for the year ended 31st December 2004would be 8.56 sen per share which represents a 7.93% gross dividend yield based on the issue price of RM 1.08 per share. Thesaid gross dividends declared and paid would represent 89.8% of the LCTH Group’s Profit after Tax for the financial periodended 31st December 2004.

GROWTH PROSPECTS

The Directors are confident of the Company’s growth prospects and profitability going into 2005 as a result of the foreseeableoil price stability and increased plant capacity in its new location in the Johor Technology Park (“JTP”) where the existing twoplants in Senai and Kluang in Johor will be fully relocated to JTP in May 2005. My special thanks to the Johor Corporation Bhd(“Johor Corp”) which spared no efforts in assisting the LCTH Group in Classic Advantage Sdn Bhd’s acquisition and constructionof its plant and office premises in the JTP.

The IPO proceeds will be utilised in accordance with the plans as stated in the Prospectus viz. purchase of the 32 acres of 60years leasehold industrial land from Johor Corp and the construction of the new plant and office premises. To-date 27 newmachine for injection molding have already been acquired and commissioned for production whilst the balance of 23 newmachine will be installed in the ensuing months to increase production capacity. In addition, the tool and dies division which willspearhead the Group’s fabrication of molds and dies business is expected to commence operation in June 2005.

The LCTH Group’s strategy is to develop Classic Advantage Sdn Bhd into a one-stop centre of Research and Development forthe fabrication of moulds and dies to meet the specific needs and requirements of its customers. This division when fullyoperational, together with the LCTH Group’s core business activity in precision plastic injection molding, the support from in-house secondary finishing processes and sub-assembly processes will further strengthen our capabilities and reach in theindustry which will increase the LCTH Group’s growth prospects and profitability in the years to come.

Meanwhile, your Board of Directors is confident of the future growth prospects of the LCTH Group and will continue to lookfor investments and business opportunities, including forming strategic alliances and acquisitions which will complement orincrease its involvement in the core businesses of the LCTH Group.




EMPLOYEES

Total staff strength of the LCTH Group at 31 December 2004 was 1,375 employees. The employees have continued to workhard to improve quality, efficiency and productivity of the LCTH Group businesses and they have responded positively to theperformance improvement measures implemented by the Management. The LCTH Group continues to emphasise training anddevelopment of staff at all levels.

CORPORATE GOVERNANCE

The application of and compliance with the principles and best practices as set out in the Code on Corporate Governance hasbeen disclosed in the Annual Report, which also includes a “Statement on Internal Control” as required under Bursa MalaysiaSecurities Berhad’s Listing Requirements.

The Board is committed to ensuring that the highest standards of corporate governance are practiced throughout the LCTHGroup.

APPRECIATION

On behalf of the Board of Directors. I wish to express my sincere gratitude and appreciation to the management and staff whohave been instrumental in the successful listing of the Company and also my appreciation to our customers, suppliers, contractors,business associates and professional advisors for their continued support and contribution to the LCTH Group’s success. Iwish to also make special mention and thank my fellow directors, our management and staff at all levels for your dedication anddiligence for bringing LCTH to a higher level of achievements and look forward to 2005, which will be an exciting year, full ofchallenges and more opportunities.

Lui Choon HayChairman2 March 2005




AUDIT COMMITTEE REPORT

AUDIT COMMITTEE MEMBERS

Ong Seng Pheow – Chairman, Independent Non-Executive DirectorLui Choon Hay – Member, Executive ChairmanDatuk Muhammad Feisol bin Haji Hassan – Member, Vice Chairman/Independent Non-Executive DirectorMohd Nasir bin A. Khalid – Member, Independent Non-Executive Director

TERMS OF REFERENCE

Composition

The Audit Committee shall be appointed by the Board from amongst its Directors (except alternate directors) which fulfils thefollowing requirements:

(a) the audit committee must be composed of no fewer than three (3) members;

(b) a majority of the audit committee must be independent directors; and

(c) at least one member of the audit committee must be a qualified :

(i) must be a member of the Malaysian Institute of Accountants; or

(ii) if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years’ working experienceand:

(aa) he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act, 1967;or

(bb) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule ofthe Accountants Act, 1967; or

(iii) fulfills such other requirements as prescribed by Bursa Malaysia Securities Berhad.

The Board shall, within three (3) months of a vacancy occurring in the Audit Committee which result in the number ofmembers reduced to below three (3), appoint such number of new members as may be required to make up the minimumnumber of three (3) members.

The Board shall review the term of office and performance of the Audit Committee and each of its members at least once everythree years.

Quorum

The quorum for a meeting of the Audit Committee shall be two (2) Provided Always that the majority of members presentmust be independent directors.

Chairman

The members of the Audit Committee shall elect a Chairman from among their number who shall be an independent director.



Meetings

Meetings of the Audit Committee shall be held not less than four (4) times a year. The external auditors may request a meetingif they consider that one is necessary and shall have the right to appear and be heard at any meeting of the Audit Committee.The Chairman shall convene a meeting whenever any member of the Audit Committee requests for a meeting. Written noticeof the meeting together with the agenda shall be given to the members of the Audit Committee and external auditor whereapplicable.

Other Board members and senior management may attend any particular meeting only at the Audit Committee’s invitation.

Questions arising at any meeting of Audit Committee shall be decided by a majority of votes and a determination by a majorityof members shall for all purposes be deemed a determination of the Audit Committee.

In the case of an equality of votes the Chairman of the meeting shall have a second or casting vote PROVIDED THAT wheretwo (2) members form a quorum, the Chairman of the meeting at which only such a quorum is present, or at which only twomembers are competent to vote on the question at issue, shall not have a casting vote.

The Company Secretary shall be the Secretary of the Audit Committee. The Secretary shall maintain minutes of the proceedingsof the meetings of the Audit Committee and circulate such minutes to all members of the Board.

Objectives

The primary objectives of the Audit Committee is to act as a committee of the full Board to assist in implementing andsupporting the oversight function of the Board and to act as a forum for discussion of internal control and risk managementissues.

Responsibilities

The functions and responsibilities of the Audit Committee shall include the following:

(1) review the following and report the same to the Board:

(a) with the external auditor, the audit plan;(b) with the external auditor, his evaluation of the system of internal controls;(c) with the external auditor, his audit report;(d) the assistance given by the employees of the Company to the external auditor;(e) the adequacy of the scope, functions and resources of the internal audit functions and that it has the necessary

authority to carry out its work;(f) the internal audit programme, processes, the results of the internal audit programme, processes or investigation

undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function;(g) the quarterly results and year end financial statements, prior to the approval by the Board, focusing particularly

on:(i) changes in or implementation of major accounting policy changes;(ii) significant and unusual events; and(iii) compliance with accounting standards and other legal requirements;

(h) any related party transaction and conflict of interest situation that may arise within the Company or Groupincluding any transaction, procedure or course of conduct that raises questions of management integrity;

(i) any letter of resignation from the external auditors of the Company; and(j) whether there is reason (supported by grounds) to believe that the Company’s external auditor is not suitable for

re-appointment; and

(2) recommend the nomination of a person or persons as external auditors.




Powers

The Committee shall, in accordance with the procedure determined by the Board and at the cost of the Company,:

(a) have authority to investigate any matter within its terms of reference;(b) have the resources which are required to perform its duties;(c) have full and unrestricted access to any information pertaining to the Company;(d) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or

activity (if any);(e) be able to obtain independent professional or other advice; and(f) be able to convene meetings with the external auditors, excluding the attendance of the executive members of the

Committee, whenever deemed necessary.

AUDIT COMMITTEE MEETINGS AND ATTENDANCE

During the financial year ended 31 December 2004, two (2) Audit Committee Meetings were held and the details of attendanceof each me mbers are as follows:-

Audit Committee Members Total meetings Percentage of Attendanceattended (%)

Ong Seng Pheow 2/2 100Mohd Nasir bin A.Khalid 2/2 100Datuk Muhammad Feisol bin Haji Hassan 2/2 100Lui Choon Hay 2/2 100

ACTIVITIES OF THE AUDIT COMMITTEE

During the financial year ended 31 December 2004, the Audit Committee, in discharging its functions and duties, carried out thefollowing activities:-

a. review of the quarterly reports of the Group prior tosubmission to the Board of Directors for consideration andapproval;

b. review of the related party transactions entered into by the Group;

c. review of the audit plan and scope of audit of external auditors; and

d. review of the fees of the external auditors.

INTERNAL AUDIT FUNCTION

Up until its listing on Bursa Malaysia Securities Berhad in November 2004, the Group’s internal control system was audited bythe internal audit department (“IAD”) of its parent company, Fu Yu Corporation Limited. The IAD conducted financial appraisalsregarding risks and internal controls. The IAD’s scope covers risk assessment, audit planning, special investigations, liaison withlegal professionals regarding irregularity as well as feasibility studies relating to risks and contingency concerns.

The Group will re-assess the use of IAD in 2005 and may resort to outsourcing the internal audit activities to professional firmsor set up its own internal audit department.

During the financial year, there were no significant weaknesses identified that would have resulted in any material losses,contingencies or uncertainties.




CORPORATE GOVERNANCE STATEMENT

The Board of Directors (“the Board”) of LCTH Corporation Berhad (“the Company”) is committed to ensuring the higheststandards of Corporate Governance are practiced throughout the organization as a fundamental part of discharging itsresponsibilities to protect and enhance shareholder value and financial performance of the Company. Currently, the Board isworking towards ensuring full application of all principles in the Malaysian Code on Corporate Governance (“the Code”) andis also committed to ensuring compliance with the best practices as recommended in the Code.

This statement details the commitment of the Board towards good corporate governance principles set out in Part 1 of theCode and the extent to which it has applied and complied with the best practices set out in Part 2 of the Code throughout thefinancial year ended 31 December 2004.

BOARD OF DIRECTORS

The Company is led and managed by an experienced Board comprising members with a wide range of experience in relevantfields such as entrepreneurship, economics, manufacturing, marketing, finance, accounting, legal and public service. The Directorsbring a broad range of skills, experiences and knowledge required to successfully direct and supervise the Group’s businessactivities. A brief profile of each Director is presented on pages 9 to 11 of the Annual Report.

Board Composition and Balance

The Board consists of an Executive Chairman, a Managing Director, three (3) Executive Directors and three (3) IndependentNon-Executive Directors, one of whom is also the Vice-Chairman.

The roles of the Chairman of the Board and Managing Director are segregated. The Chairman is primarily responsible for theproper conduct and working of the Board whilst the Managing Director is responsible for the day-to-day running of thebusiness and implementation of Board policies and decisions.

The three (3) Independent Non-Executive Directors of the Company are independent of management and free from anybusiness relationship which could materially interfere with the exercise of their judgement. They present a good mix of industry-specific knowledge plus broad business and commercial experience They provide guidance, unbiased, fully balanced and independentviews, advice and judgement to many aspects of the Group’s strategy so as to safeguard the interests of minority shareholdersand to ensure that the highest standards of conduct and integrity were maintained by the Group. The Board has also appointedDatuk Muhammad Feisol bin Haji Hassan as the Senior Independent Director to whom concerns may be conveyed.

Board Responsibilities

The Board retains full and effective control of the Group and has developed corporate objectives and position descriptionsincluding the limits to management’s responsibilities, which the Executive Directors are aware and are responsible for meeting.The Board has a formal schedule of matters reserved to itself for decision, which includes the overall Group strategy anddirection, investment policy, major capital expenditures, consideration of significant financial matters and review of the financialand operating performance of the Group.

The Board understands the principal risks of all aspects of the business that the Group is engaged in recognizing that businessdecisions require the incurrence of risk. To achieve a proper balance between risks incurred and potential returns to shareholders,the Board ensures that there are in place systems that effectively monitor and manage these risks with a view to the long termviability of the Group.

As certain Board functions are delegated to management, the Board ensures management are of the highest calibre and has inplace programmes to train and develop management and also provide for the orderly succession of management.

The Company has in place a policy to enable the Group to communicate effectively with its shareholders, other stakeholdersand the public generally. The policy ensures that it effectively interprets the operations of the Group to the shareholders andaccommodates feedback from shareholders, which should be factored into the Group’s business decisions.



Supply of Information

Prior to Board meetings, an agenda together with the relevant documents and information are distributed to all Directors. TheManaging Director and/or other relevant Board members will provide comprehensive explanation of pertinent issues andrecommendations by the management. The issues would then be deliberated and discussed thoroughly by the Board prior todecision-making.

Apart from the above, the Board members are updated on the Company’s activities and its operations on a regular basis. AllDirectors have access to all information of the Company on a timely basis in an appropriate form and quality necessary toenable them to discharge their duties and responsibilities.

All Directors have access to the advice and services of the Company Secretary and to obtain independent professional advice,whenever necessary, at the expense of the Company.

Board Meetings

There were three (3) Board of Directors’ Meetings held during the financial year ended 31 December 2004. Details of theattendance of the Directors at the Board of Directors’Meetings are as follows:

Directors Total Meetings Percentage of AttendanceAttended (%)

Lui Choon Hay 3/3 100Datuk Muhammad Feisol bin Haji Hassan 3/3 100Hew Lien Lee 3/3 100Ching Heng Yang 3/3 100Tam Wai 3/3 100Ho Nee Kit 3/3 100Ong Seng Pheow 3/3 100Mohd Nasir bin A.Khalid 3/3 100

Appointment to the Board

A Nomination Committee has been established by the Board comprising wholly Independent Non-Executive Directors asfollows:

Datuk Muhammad Feisol bin Haji Hassan Chairman (Independent Non-Executive Director)Mohd Nasir bin A. Khalid Member (Independent Non-Executive Director)Ong Seng Pheow Member (Independent Non-Executive Director)

The Committee is generally responsible to:

(i) assess the effectiveness of the Board as a whole, the Committees of the Board and the contribution of each individualDirector.

(ii) assess the size of the Board and review the mix of skills and experience and other qualities of the Board membersrequired for the Board to function completely and efficiently.

(iii) assess and recommend new nominees for appointment to the Board for the Board’s final decision-making.

The Board is entitled to the services of the Company Secretary who would ensure that all appointments are properly madeupon obtaining all necessary information from the Directors.

The Nomination Committee met once during the financial year ended 31 December 2004 to review the structure of theBoard.




Re-election

In accordance with the provisions of the Articles of Association of the Company, one-third (1/3) of the Board of Directors forthe time being or if their number is not three (3) or multiples of three (3), then the number nearest to one-third (1/3) shallretire from office at each Annual General Meeting and shall be eligible for re-election.

Directors’ Training

All the Directors of the Company has attended the Mandatory Accreditation Programme conducted by Bursa Malaysia TrainingSdn Bhd within the stipulated timeframe required in the Listing Requirements.

As the Continuous Education Programme (CEP) has been repealed by Bursa Malaysia with effect from 1 January 2005, theBoard of Directors will adopt a training programme deemed appropriate for the Directors.

Directors’ Remuneration

A Remuneration Committee has been established by the Board comprising a majority of Independent Non-Executive Directors,as follows:

Mohd Nasir bin A. Khalid Chairman (Independent Non-Executive Director)Datuk Muhammad Feisol bin Haji Hassan Member (Independent Non-Executive Director)Ong Seng Pheow Member (Independent Non-Executive Director)Hew Lien Lee Member (Managing Director)

The Remuneration Committee shall ensure that the levels of remuneration are sufficient to attract and retain Directors of thequality required to manage the business of the Group. The Remuneration Committee is entrusted under its terms of referenceto assist the Board, amongst others, to recommend to the Board the remuneration of the executive directors. In the case ofnon-executive directors, the level of remuneration shall reflect the experience and level of responsibilities undertaken by thenon-executive directors concerned.

The Remuneration Committee met once during the financial year ended 31 December 2004 to review theremuneration of the Directors.

Details of Directors’ remuneration for the financial year ended 31 December 2004 are set out as below:

Salaries and OtherGroup Fees Emoluments Bonus Emoluments Total

(RM’000) (RM’000) (RM’000) (RM’000) (RM’000)

Executive Directors 84 1,094 155 – 1,333

Non-Executive Directors 72 – – – 72

The number of Directors whose total remuneration falls within the respective bands are as follows:

Number of DirectorsExecutive Non-Executive

Below RM50,000 – 3RM50,001 – RM100,000 – –RM100,001 – RM150,000 – –RM150,001 – RM200,000 – –RM200,001 – RM250,000 1 –RM250,001 – RM300,000 3 –RM300,001 – RM350,000 1 –

5 3




SHAREHOLDERS

Dialogue with Investors

Recognising the importance of timely dissemination of information to shareholders and other stakeholders, the Board iscommitted to ensuring that the shareholders and other stakeholders are well informed of major developments of the Companyand the information is communicated to them through the following:

(i) the Annual Report;

(ii) the various disclosures and announcements made to Bursa Malaysia Securities Berhad including the Quarterly Resultsand Annual Results; and

(iii) the website at www.lcth.com which shareholders as well as members of the public are invited to access for the latestinformation on the Group.

General Meetings

The Company’s Annual General Meeting (“AGM”) serves as a principle forum for dialogue with shareholders. Shareholders areencouraged to meet and communicate with the Board at the AGM and to vote on all resolutions. Extraordinary GeneralMeetings is held as and when required.

ACCOUNTABILITY AND AUDIT

Financial Reporting

The Directors are responsible to present a true and fair assessment of the Group’s position and prospects in the annualreports and quarterly reports. The quarterly financial results were reviewed by the Audit Committee and approved by theBoard of Directors prior to submission to Bursa Malaysia Securities Berhad.

A statement by the Directors of their responsibilities in the preparation of financial statements is set out in the ensuing section.

Statement of Directors’ Responsibility for Preparing Financial Statements

The Board is responsible to ensure that the financial statements are properly drawn up in accordance with the provisions of theCompanies Act 1965 and approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs ofthe Group as at the end of the financial year and of the results and cash flows of the Group for the financial year then ended.

The Directors are satisfied that in preparing the financial statements of the Group for the year ended 31 December 2004, theGroup has adopted suitable accounting policies and applied them consistently, prudently and reasonably. The Directors alsoconsider that all applicable approved accounting standards have been followed in the preparation of the financial statements,subject to any material departures being disclosed and explained in the notes to the financial statements. The financial statementshave been prepared on the going concern basis.

The Directors are responsible for ensuring that the Group keeps sufficient accounting records to disclose with reasonableaccuracy, the financial position of the Group and which enable them to ensure that the financial statements comply with theCompanies Act, 1965.

Internal Control

The Board has an overall responsibility in maintaining a sound internal control system that provides reasonable assurance ofeffective and efficient operations and compliance with internal procedures and guidelines. The Statement on Internal Control isset out on page 22 of this Annual Report.

Relationship with the Auditors

The Board has established a formal and transparent arrangement for maintaining appropriate relationships with the externalauditors in seeking professional advice and ensuring the compliance with the appropriate accounting standards. The AuditCommittee met with the external auditors to discuss their audit plan, audit findings and the financial statements.




STATEMENT ON INTERNAL CONTROL

A) RESPONSIBILITY

The Board has overall responsibility for the Group’s system of internal control and for reviewing its effectiveness whilstthe role of management is to implement the Board’s policies on risk and control.

The system of internal control is designed to manage rather than eliminate the risk of failure to achieve businessobjectives.

In pursuing these objectives, internal controls can only provide reasonable and not absolute assurance against materialmisstatement or loss.

B) KEY PROCESSES

The Board confirms that there is a continuous process for identifying, evaluating and managing the significant risks facedby the Group, which has been in place for the financial year under review and up to the date of the annual report andfinancial statements.

C) INTERNAL AUDIT FUNCTION

The Group utilizes the Internal Audit Department of its parent company, Fu Yu Corporation Limited which assists theAudit Committee as well as the Board of Directors in discharging their responsibilities by providing independent, objectiveassurance and advice that add value and improve the operations by:

• ensuring existence of processes to monitor the effectiveness and efficiency of operations and the achievement ofbusiness objectives;

• ensuring adequacy and effectiveness of internal control systems for safeguarding of assets, providing consistent,accurate financial and operational data;

• promoting risk awareness and the value and nature of an effective internal control system;

• ensuring compliance with laws, regulations, corporate policies and procedures; and

• assisting management in accomplishing its objectives by adopting a systematic and disciplined audit approach toevaluating and improving the effectiveness of risk management, control and governance processes within thecompanies’ operations.

The internal audit function has focused on high priority activities determined by risk assessment and in accordance withthe audit planning memorandum approved by the Audit Committee of the parent company, Fu Yu Corporation Limited.

In respect to Risk Management, the Board will continue to identify and monitor the risk factors for each operating unitand mitigate them by implementing appropriate action. In addition, the management of each operating unit is involved inidentifying and monitoring new emerging risk through daily operation activities.

The Board acknowledges that all of the Company’s activities and operations involve some degree of risk and is workingtowards establishing and implementing a structured and effective risk management framework.



D) INTERNAL CONTROL SYSTEM

The key elements of the Group’s internal control system are described below:

• Organisation structure with clearly defined delegation of responsibilities to the Committees of the Board;

• Regular meetings are held at operational and management levels to identify and resolve business, financial, operationaland management issues;

• Regular information are provided by the management to the Board on financial performance and key businessindicators;

• Monthly monitoring of results by the management through financial reports such as monthly management accountsand cash flow statements;

• Budgeting and forecasting system governed by Group’s policy;

• Audit Committee holds regular meetings with management on the actions taken on internal control issues identifiedthrough reports prepared by the internal auditors, external auditors and/or management; and

• Proper approval by the Board on capital expenditure.

There were no material losses incurred during the financial year as a result of weaknesses in internal control. TheManagement will continue to take adequate measures to strengthen the control environment in which the Groupoperates.

STATEMENT ON INTERNAL CONTROL



OTHER INFORMATION

SHARE BUY-BACK

The Company did not carry out any share buy-back for the financial year under review.

OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES

During the financial period ended 31 December 2004, the Company has not issued any options, warrants or convertiblesecurities.

AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT (“GDR”)

The Company did not sponsor any ADR or GDR programme.

SANCTION AND/OR PENALTY

There was no sanction and/or penalty imposed on the Company and its subsidiaries, directors or management by the regulatorybodies.

NON-AUDIT FEES

The non-audit fees paid by the Group to external auditors for the financial period ended 31 December 2004 was RM334,880.Out of this amount, RM67,380 was paid for special audit and other services and RM267,500 was paid to the ReportingAccountant in respect of the listing exercise and was set off against the share premium account.

PROFIT FORECAST

For the financial period under review, the Group achieved a Profit after Tax of RM 57.2.million which is 12.4% less than theforecasted profit after Tax of RM65.3 million as stated in the Prospectus.

The shortfall arose as a result of several factors which were beyond the control of management:

• World oil price surge to in excess of US$50 a barrel in September 2004 and the continued oil price instability alsohampered new projects to be launched by customers and indeed certain customers cut back on their orders during themonths of October and November 2004. Margins were also squeezed in the 4th Quarter 2004 as certain customers alsohad instituted “cost down” measures in their continuing projects.

Oil price increases and instability from September last year affected most, if not all, global economies and industries. Wewere also affected as a result of increased costs of transportation relative to the petroleum price increases, packagingmaterials (both polyethylene bags and plastic sheets and paper cartons). Though resin is a major component of our costs,through long term relationship with our customers, we were able to obtain supply of resins from our customers’preferred resin suppliers and at the same time able to enjoy their economies of scale and relatively stable resin prices.

• Construction works and completion of the new plant in the Johore Technology Park were delayed due to the shortageof steel and other related building materials in the first half of 2004 and the bad inclement weather in the last few monthsof the year. Thus, we were not able to install the machine as planned by October 2004. Arising from this delay, the LCTHGroup was unable to take on the projects planned during the third quarter, in the of the year which is usually the peakperiod nor catch-up with the production schedules in the last quarter, in the months of October and November 2004.

PROFIT GUARANTEE

During the financial year, there were no profit guarantees given by the Group.



MATERIAL CONTRACTS INVOLVING DIRECTORS’/MAJOR SHAREHOLDERS’ INTEREST

Save as disclosed below, there were no material contracts of the Company and its subsidiaries involving directors’ and majorshareholders’ interests for the financial year under review other than the related party transactions as disclosed in note 27 tothe financial statements:

(i) Stakeholder Agreement

The Company, Fu Yu Investment Pte Ltd (FYI), Ms Chew Yoon Moi and PM Securities Sdn Bhd have entered into astakeholder agreement on 3 November 2004 for the appointment of PM Securities Sdn Bhd by FYI and Ms Chew YoonMoi (“the Offerors”) as Stakeholder for the unsubscribed portion of the Offer for Sale shares.

REVALUATION POLICY

There was no revaluation done on the Group’s landed properties in respect of the financial year.

UTILISATION OF PROCEEDS

As at 31 December 2004, the gross proceeds arising from the Public Issue of RM 156.325 million has been utilised in thefollowing manner:

UtilisationApproved Amount Utilised

RM’000 RM’000

Purchase of land 16,000 15,958Construction of building 55,000 32,326Purchase of machineries 25,000 4,388Moulds and dies fabrication 25,000 0Working capital 28,125 2,779Plants relocation and consolidation 3,000 218Estimated listing expenses 4,200 4,200

156,325 59,869

OTHER INFORMATION

Documents

ANNUAL REPORT 2004 - LCTH Corp · Datuk Muhammad Feisol bin Haji Hassan (Vice Chairman) Annual Report 2004 8. LCTH CORPORATION BERHAD (633871-A) Annual Report 2004 9 PROFILE OF THE