THIS IS OUR PROMISE - I3investor

THIS IS OUR PROMISE

Nylex Annual Report 2003 1

We provide high quality and value-added solutions to our customersneeds, leveraging innovation and win-win approach for long term benefit asthe partner of choice – empowering excellence.

2 Nylex Annual Report 2003

Corporate Information

DirectorsY. Bhg. Datuk Haji Mohamed Al Amin bin Haji Abdul Majid, JP(Independent Non-Executive Chairman)

Y. Bhg. Dato’ Ahmad Johari bin Tun Abdul Razak (Executive Vice-Chairman)

Y. Bhg. Dato’ Siew Ka Wei(Group Managing Director)

Y.A.M. Tunku Muhriz Ibni Almarhom Tuanku Munawir(Independent Non-Executive Director)

Y.M. Tengku Yusoff bin Tengku Mahmud(Independent Non-Executive Director)

Y. Bhg. Dato’ Mohd Ismail bin Che Rus (Independent Non-Executive Director)

Teo Ek Tor(Non-Independent Non-Executive Director)

Toh Yiu Joe (Executive Director)

Chua Ah Lak(Executive Director)

Chieng Ing Huong(Independent Non-Executive Director)

Audit CommitteeY. Bhg. Dato’ Mohd Ismail bin Che Rus(Chairman)Y. Bhg. Dato’ Siew Ka WeiChieng Ing Huong

Nomination & Remuneration CommitteeChieng Ing Huong (Chairman)Y. Bhg. Dato’ Mohd Ismail bin Che Rus Teo Ek Tor

Company SecretaryChoo Se Eng, MICPA 2077

Registered Office602, 6th Floor, Block APhileo Damansara 1No. 9, Jalan 16/11,46350 Petaling Jaya, Selangor Darul EhsanTel (03) 7660 0008Fax (03) 7660 1151

Principal Place of BusinessPersiaran Selangor, Seksyen 15Shah Alam Industrial Estate40200 Shah Alam, Selangor Darul EhsanTel (03) 5519 1706Fax (03) 5510 0088

RegistrarPFA Registration Services Sdn Bhd1301 Level 13, Uptown 1No 1 Jalan SS21/58, Damansara Uptown47400 Petaling Jaya, Selangor Darul EhsanTel (03) 7725 4888/7725 8046Fax (03) 7722 2311

AuditorsErnst & YoungChartered Accountants

Stock Exchange ListingMain Board of the Kuala Lumpur Stock Exchange

Principal BankersMalayan Banking BerhadHSBC Bank Malaysia BerhadAlliance Bank Malaysia Berhad

SolicitorsShearn Delamore & Co

DomicileMalaysia

Tamco Electrical Industries Australia Pty Ltd

Suistulin Sdn Bhd

Tamco Chongqing Switchgear Company Ltd

Sinaran Takhta-Tamco Sdn Bhd

Corporate Structure

Legend:

Polymer Division

Engineering Division

Building Products Division

* formerly known as Tamco Electrical & Electronics (Malaysia) Sdn Bhd** formerly known as Tamco (Singapore) Pte Ltd*** formerly known as Tamco Electrical & Electronics (HK) Ltd

Ancom Berhad

Rhodemark Development Sdn Bhd

Nylex (Malaysia) Berhad

Nycon Manufacturing Sdn Bhd

Zonson Sports (M) Sdn Bhd

Logislease Sdn Bhd

Tamco Systems (Malaysia) Sdn Bhd *

Tamco Corporate Holdings Berhad

Hikmat Ikhlas Sdn Bhd

Tamco (Malaysia) Sdn Bhd

Tamco Industries Sdn Bhd

TEE Power & Engineering Sdn Bhd

Tamco Shanghai Switchgear Company Ltd

Etah Shanghai Electrical Co Ltd

Tamco Gulf Enterprises Sdn Bhd

Tamco Systems (Singapore) Pte Ltd **

100% Tamco Electrical & Electronics (S) Pte Ltd

Tamco Systems (Hong Kong) Ltd ***

Tamco Static Systems (Far East) Ltd

Malaysian Roofing Industries Sdn Bhd

PT Indomalay Ekatana Roofing Industries


Universal Motor Kontrol Pty Ltd

Universal Motor Kontrol Hong Kong Ltd

Kontrol Sales Pty Ltd

PT Kontrol Ragam Indonesia

50.1%

70%

49%

20%

100%

80%

51.9%

80%

100% 100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

99.9%

100%

100%

50%

49%

30%

100%

100%

70%


Making a ComebackFor the year under review, the consolidatedrevenue of the Group was RM386.4 million,up 5.6% from RM365.9 million in the previousyear. The consolidated profit before tax ofRM26.1 million was an indication of oursuccess in reversing the Group’s previousyear’s losses before tax of RM53.3 million.Included in the Group’s previous year’s lossesbefore tax of RM53.3 was a charge of RM33.3million being a one-time write-down of thecarrying cost of certain assets to their netrealisable values. The Group’s earnings pershare improved to 7.5 sen, compared with aloss of 27.8 sen in the previous year while nettangible asset per share was 74.3 sen, upfrom 69.4 sen last year.

The Polymer Division managed to improvetheir total revenue, achieving RM117.5 millionas compared to RM98.3 million in the previousyear. The increase in sales was largely due tohigher exports sales and strong sales ofprefabricated vertical drains to the TanjongPelepas and Tanjong Bin land reclamationprojects. The Division reported a profit beforetax of RM11.3 million for the financial year, aslight increase over 2002’s profit before tax ofRM11.2 million. If not for the impairment ofassets and the operating losses incurred byZonson Sports (Malaysia) Sdn. Bhd. (ZSM) - asubsidiary involved in the manufacture andmarketing of quality golf bags, the PolymerDivision would have achieved a commendableprofit before tax of RM15.4 million. During theyear, we decided to cease operations in ZSMas a result of weak prospects due to intenseprice competition within the industry.

Revenue from the Engineering Divisionrepresented the largest portion of the Group’srevenue, with sales reaching RM255.2 million,an increase from RM242.5 million for theprevious year. Our manufacturing unit inMalaysia, Tamco Corporate Holdings Berhad,remained the core revenue contributor withsales of RM136.8 million this year, largely dueto the strength of its exports. As a whole, theEngineering Division made a profit before tax

of RM14.6 million in the year, a completerecovery from the loss of RM17.3 million ayear ago.

Sales for the Building Products Division thisyear was RM13.7 million. This represented adecline from sales of RM25.0 million in theprevious year, due to the disposal of the loss-making Asia Pacific Insulation Corporation(APIC). In the previous year, APIC contributedsales of RM11.8 million before its disposal.Despite lower sales, the Division recorded anoperating profit before tax of RM1.4 million, animprovement over RM3.3 million in lossesrecorded in the previous year.

Renewing Our StrategiesIn September 2002, we announced ourintention to re-define the focus of our corebusinesses and re-organise our corporatestrategy with the objective of enhancing valueto our shareholders. We proposed two majorchanges: the proposed de-merger and spin-off of the Engineering Division from Nylex, andin the process, creating the Tamco Group asan independent strategic business unit; andthe acquisition of the Industrial ChemicalDivision from our ultimate holding company,Ancom Berhad (“Proposed ReorganisationScheme”).

The de-merger of the Tamco Group wouldallow it to independently chart its own growthstrategy in developing specialist capabilities inthe switchgear and power technologyindustries. With an annual turnover in excessof RM250 million and strong growthprospects, the de-merged Tamco is expectedto be listed.

With the de-merger, Nylex will be able to focusits resources on its core polymer business,which will be strengthened by the acquisitionof Ancom's Industrial Chemical Division. Theoperations of this division are engaged in themanufacture, trading and distribution of bulkand specialty chemicals and solvents. Theacquisition of this Division will create anenlarged chemical group with an annual

Chairman’s Statement In a challenging and uncertain marketplace, the test of survival for businesses is the ability to adapt to changes in theirenvironment. This year, we demonstrated our determination and ability toadapt to changes. By being adaptive to changes and capitalising on newopportunities, we managed to produce a much stronger set of results.


turnover in excess of RM300 million, withcapabilities in both manufacturing anddistribution. With an extended product rangeand customer base, significant synergies andeconomies of scale can be expected, arisingfrom the integration of both units’ supply chainmanagement and marketing activities.

To date, certain necessary government andregulatory approvals as well as approval fromour shareholders have already been obtained.Currently, we are awaiting the approvals of thelisting of Tamco by the Kuala Lumpur StockExchange and the Securities Commission andthe court sanction for the Proposed CapitalReduction Scheme at Nylex. These approvalswill be required in order to complete theProposed Reorganisation Scheme. Furtherdetails of these transactions are mentioned inNote 29 to the financial statements.

In conjunction with the de-merger and listingproposals, the debt profile of the Group wasstreamlined and restructured through thesuccessful issuance of a RM80.0 million longterm fixed rate Bai’ Bithaman Ajil serial bondby Tamco Corporate Holdings Berhad. Thebonds were rated A1 by Rating AgencyMalaysia Berhad and were fully placed out toAlliance Merchant Bank Berhad and CitibankBerhad. Part of the bond proceeds was usedto refinance the short-term borrowings of theNylex Group. As a result, the Group managedto reduce its dependence on short-termborrowings from 93.7% of total debt (basedon the Group’s total bank borrowings as at 31May 2003) to approximately 40.0% currently.

Empowering Our PeopleThis year, we bid farewell and thank you to MrHsieh Fu Hua, who resigned from the Boardfollowing his appointment as Chief ExecutiveOfficer of the Singapore Stock Exchange. Inaddition to myself, the Board has alsoappointed Mr Teo Ek Tor as a director, who willfurther strengthen the Group’s leadership withhis experience.

Also, the process of re-shaping our seniormanagement, which began in 2002, continuedthroughout this year with the objective ofstrengthening management leadership anddelivering optimum value to shareholders. Wecontinued to strengthen our seniormanagement in the implementation of ourstrategic plans. New appointments were KaneZhu as General Manager of Tamco Shanghaiand Ng Kok Meng as Chief Executive Officer ofTamco’s Trading Division.

In our continued efforts to empower ourpeople, we will aim to develop entrepreneurial,result-oriented leaders as part of our ongoingleadership training programme and second-line executive mentoring programme. Ourobjective is to groom a core group of leaderswho are passionately committed to the Group,with the essential knowledge and skillsrequired for a fast-paced businessenvironment.

Farewell to a Great LeaderIn June 2003, our former Chairman, Raja TunMohar, passed away peacefully at the age of81. A patriotic and enlightened man, hispassing was mourned nation-wide. Havingserved as Special Economic Advisor underthree Prime Ministers - Tun Abdul Razak, TunHussein Onn and Datuk Seri Dr MahathirMohamad - spanning four decades in the civilservice, Raja Tun Mohar was a pivotal figure inMalaysia’s economic development. Afterleaving the civil service in 1988, he continuedto contribute his knowledge and experience tothe nation in his role as chairman and directorof various corporations and institutions.Among them, he served as Chairman ofMalaysia Airlines, Danaharta, and Perodua,and led the Universiti Teknologi Petronas as itsfirst chancellor.

As remarkable and impressive as hisachievements were, Raja Tun Mohar will bemost remembered for his humility andgenerosity. He was also known for his coolcomposure, even in the most difficult ofsituations. Ever approachable, he possesseda gift of being able to forge consensus evenamongst staunch dissenters.

Raja Tun Mohar represented a generation ofsteadfast Malaysian patriots, whose style ofmanagement was consistent with that of hislife – embodying integrity, dignity, humilitysensitivity and dedication to the people. Wehave lost a great leader and will certainly misshis wisdom and friendship.

In GratitudeIn a year which saw global business sentimentseverely undermined by the Iraq war andSevere Acute Respiratory Syndrome (SARS),we are proud to have maintained our marketleadership by providing customised solutionsand value-added products and services to ourcustomers.

Looking forward, we are confident that theproactive changes we have undertaken willposition us better for future growth andreturns to our shareholders.

Our success is made possible only with theloyalty and resolute faith of our board,management and employees in the future ofNylex. On behalf of the board andmanagement of the Group, I offer my heartfeltthanks to our employees, as well as ourshareholders, customers and businesspartners for their dedication and unwaveringsupport.

Y. Bhg. Datuk Haji Mohamed Al Amin bin HajiAbdul Majid, JPChairman1 October 2003

Board of Directors Our objective is to groom a core group of leaders with the essential knowledge and skills required for a fast-pacedbusiness environment.


1 Y. Bhg. Datuk Haji Mohamed Al Amin bin Haji Abdul Majid, JP Aged 48, Malaysian,Independent Non-Executive Chairman,appointed on 30 July 2003. He gained hisBachelor of Science Degree (Hons) in CivilEngineering from University of Aston, UnitedKingdom. He joined Perak State DevelopmentCorporation as a project engineer (1979) andwas appointed Executive Director of itssubsidiary, Maju Bangun Sdn Bhd (1981). In1982, he set up his own business, PanzanaEnterprise Sdn. Bhd. and has been theExecutive Chairman until today. He wasformerly Chairman of the Asean ChemicalIndustries Club (1999 to 2001). Currently he isChairman of Chemical Industries Council ofMalaysia and a corporate member of theInstitute of Engineers Malaysia. He is theExecutive Chairman of Country View Berhadand a director of Ancom Berhad, I Berhad andMCIS Zurich Insurance Berhad. Hisattendance to the Board meeting is notapplicable by virtue of his recent appointmentafter the financial year end. He is not related toany director or major shareholder of Nylex. Hedoes not hold any shares in Nylex and itssubsidiaries and has no conflict of interestthereof. He has no convictions for offenceswithin the last 10 years other than trafficoffences, if any.

2 Y. Bhg. Dato’ Ahmad Johari bin Tun AbdulRazak Aged 48, Malaysian, Executive Vice-Chairman, appointed on 29 January 2002;previously appointed Non-Independent Non-Executive Director on 12 October 1999.He gained his Bachelor of Laws (Hons) fromUniversity of Kent, UK. Called to the Bar ofEngland and Wales in 1976. Admitted as anadvocate and solicitor of the High Court ofMalaya (1977), and practised as an advocateand solicitor with Messrs. Shearn Delamore &Co. (1979 to 1994). He was the GroupManaging Director of Ancom Berhad since1994. On 30 July 2003, he was redesignatedas the Executive Chairman of Ancom Berhad.He is also the Chairman of Courts MammothBerhad and Daiman Development Berhad anda director of Daiman Golf Berhad and HongLeong Industries Berhad. He holds 150,000shares representing 0.07% directly in theCompany. He has attended three of the fourBoard meetings held during the financial yearended 31 May 2003. He is not related to anydirector or major shareholder of Nylex and hasno conflict of interest thereof. He has noconvictions for offences within the last 10years other than traffic offences, if any.

3 Y. Bhg. Dato’ Siew Ka Wei Aged 47,Malaysian, appointed Group ManagingDirector on 29 January 2002; previouslyappointed as Non-Independent NonExecutive Director on 12 October 1999. Hegained his Bachelor of Science Degree (Hons)in Chemical Engineering and Master ofScience degree in Operational Research fromImperial College, London, UK. He has a vastlocal and international working experience,well-versed in the field of petrochemicals,having been in the business for more than 20years. He was the past Chairman of the YoungPresidents Organisation (“YPO”) – MalaysianCharter and a director of the InternationalBoard of Directors of YPO, an internationalgrouping of over 8,500 CEOs of majorcompanies over the world. Currently GroupManaging Director of Ancom Berhad, and adirector of Eastern & Oriental Berhad,Kamunting Corporation Berhad and TamcoCorporate Holdings Berhad. He is an AuditCommittee member of Nylex and a substantialshareholder of Nylex through his interest inAncom as disclosed in the Directors’Shareholdings in the Annual Report. Heattended all four Board meetings held duringthe financial year ended 31 May 2003 and hasno conflict of interest thereof. He has noconvictions for offences within the last 10years other than traffic offences, if any.

1 2 3


4 Y.A.M. Tunku Muhriz Ibni Almarhom TuankuMunawir Aged 55, Malaysian, appointed asIndependent Non-Executive Director on 29August 2002. He gained his LLB (Hons) fromUniversity of Wales, Aberystwyth, UnitedKingdom. He started his working career in aninternational bank in Malaysia and became adirector and shareholder of a companylicensed as brokers in interbank foreignexchange and currency deposits market(1973–1986). He was the Chairman andshareholder of a Malaysian joint venture with aworldwide advertising agency (1981–1992),was Chairman and director of a joint venturecompany involved in manufacturing of buildingproducts (1995–1998) and was the Directorand shareholder of a company engaged inelectrical engineering and construction (1995to present). He has attended three of the fourBoard meetings held during the financial yearended 31 May 2003. He holds no otherdirectorships in public companies, shares inNylex or its subsidiaries and has no familyrelationship with any Nylex director or majorshareholder, nor has he any conflict of interestwith Nylex. He has no convictions for offenceswithin the last 10 years other than trafficoffences, if any.

5 Y.M. Tengku Yusoff bin Tengku MahmudAged 45, Malaysian, appointed asIndependent Non-Executive Director on 25 July 2001. He holds a Bachelor of Sciencedegree in Business Studies from University of Toledo, USA and an MBA from NewHampshire College, USA. He is a seniorlecturer in the Faculty of BusinessAdministration at MARA University ofTechnology, Terengganu Branch, where he isnow Deputy Provost of Student Affairs.Attended all four Board meetings held duringthe financial year ended 31 May 2003. Heholds no other directorships in publiccompanies, shares in Nylex or its subsidiariesand has no family relationship with any Nylexdirector or major shareholder, nor has he anyconflict of interest with Nylex. He has noconvictions for offences within the last 10years other than traffic offences, if any.

4 5


6 Y. Bhg. Dato’ Mohd Ismail bin Che RusAged 60, Malaysian, appointed asIndependent Non-Executive Director on 12 October 1999. He studied TrainingManagement at Royal Institute of PublicAdministration, London, UK and, as apostgraduate, Senior Management at theUniversity of Manchester, UK. He started hiscareer with Royal Malaysian Police asInspector (1962). He was promoted tonumerous positions before his appointmentas the Chief Police Officer for three states inMalaysia, and the Metropolitan Police ofKuala Lumpur. Held the rank of Commissionerof Police with the appointment as the Directorof Criminal Investigation Department prior tohis retirement. He is the Chairman of the AuditCommittee and a member of the Nominationand Remuneration Committee. Currently, he isa director of Ancom Berhad, Kop MantapBerhad and Selangor Dredging Berhad. Hehas attended all four Board meetings heldduring the financial year ended 31 May 2003.He is not related to any director or majorshareholder of Nylex, holds no shares in Nylexor its subsidiaries and has no conflict ofinterest thereof. He has no convictions foroffences within the last 10 years other thantraffic offences, if any.

7 Mr Toh Yiu Joe Aged 46, Australian,appointed as Executive Director on 9 August 2002. He was previously appointed Non-Independent Non-Executive Director on12 October 1999. Graduated from Universityof Western Australia and is a member of theInstitute of Chartered Accountants inAustralia. He has extensive experience inprivate equity investments and corporatefinance, having worked in Morgan Grenfell(Asia) Ltd and PrimePartners AssetManagement Pte Ltd. Currently, he is aPartner and Director of PrimePartners AssetManagement Pte Ltd. Attended all four Boardmeetings held during the financial year ended31 May 2003. He holds no otherdirectorships in public companies, does notown shares in Nylex or its subsidiaries andhas no family relationship with any Nylexdirector or major shareholder, nor has he anyconflict of interest with Nylex. He has noconvictions for offences within the last 10years other than traffic offences, if any.

8 Mr Chua Ah Lak Aged 55, Malaysian,appointed as Executive Director on 8 March 1994. He holds a degree in ChemicalEngineering (Hons) from Adelaide University,Australia and MBA from University of Malaya,Malaysia. Joined Nylex as a Production Cadetupon graduation in 1972, and in 1994 waspromoted to Chief Executive of the PolymerDivision. Currently, He is the ManagingDirector of Tamco Corporate HoldingsBerhad, a wholly owned subsidiary of Nylex.Attended three of the four Board meetingsheld during the financial year ended 31 May2003. He holds 100,000 shares representing0.04% directly in the Company. He holds noother directorships and has no familyrelationship with any Nylex director or majorshareholder, nor has he any conflict of interestwith Nylex. He has no convictions foroffences within the last 10 years other thantraffic offences, if any.

6 7 8

Board of Directors (continued)


9 10

9 Mr Teo Ek Tor Aged 49, Singaporean,appointed as Non-Independent Non-Executive Director on 21 February 2003. Heholds a degree in Business Administration(Hons) from University of Western Ontario. Hehas over 20 years of experience in investmentbanking in Asia. He was until 1999 theRegional Managing Director of BNP PrimePeregrine Group responsible for South EastAsia. Also, he has contributed to and beeninstrumental in building up of 2 major regionalinvestment banking groups, Morgan GrenfellAsia (1980 to 1993) and BNP Prime Peregrine(1994 to 1999). Currently, he is the ManagingPartner of PrimePartners Asset ManagementPte Ltd. His attendance to the Board meetingis not applicable as no board meeting washeld during the financial year after hisappointment. He is a member of theNomination and Remuneration Committee.He holds no other directorships in Malaysianpublic companies, does not own shares inNylex or its subsidiaries and has no familyrelationship with any Nylex director or majorshareholder, nor has he any conflict of interestwith Nylex. He has no convictions foroffences within the last 10 years other thantraffic offences, if any.

10 Mr Chieng Ing Huong Aged 46, Malaysian,appointed as Independent Non-ExecutiveDirector on 20 June 2001. He gained hisBachelor of Commerce Degree inAccounting, Finance & Information Systemsfrom University of New South Wales,Australia. He is a Chartered Accountant,registered with the Institute of CharteredAccountants in Australia and the MalaysianInstitute of Accountants. Previously, he wasManaging Director of Equity & PropertyInvestment Corporation Limited, Australia, adirector of Hillgrove Gold NL, Australia and anexecutive director of OSK Holdings Berhad.Founder and currently a director andsubstantial shareholder of NationwideExpress Courier Services Berhad, SeniorVice-President, Business Development ofHwang-DBS Securities Berhad, Chairman ofSelangor Dredging Berhad and a director ofAncom Berhad and QL Resources Berhad.Indirectly holds 28,000 shares representing0.01% in Nylex through his spouse. He hasattended three of the four Board meetingsheld during the financial year ended 31 May2003. He is a member of the AuditCommittee and Chairman of the Nominationand Remuneration Committee. He has nofamily relationship with any Nylex director ormajor shareholder, nor has he any conflict ofinterest with Nylex. He has no convictions foroffences within the last 10 years other thantraffic offences, if any.

Senior Management In our continued efforts to empower ourpeople, we aim to develop entrepreneurial, result-oriented leaders aspart of our ongoing leadership training programme and second-lineexecutive mentoring programme.


The Senior Management play a critical role in ensuring the Group’s success. Togetherwith the Board, they plan, oversee andmonitor the day-to-day running of theGroup’s activities, with a firm focus onimplementing the strategies laid out toachieve the overall plan of the Group.

The exercise to re-shape our SeniorManagement resulted in a strong and resilientleadership team, ready to meet the challengesof a rapidly-changing business environmentand high customer expectations.

Besides implementing the Group’s corporatestrategies, the Senior Management hold theresponsibility of ensuring that the Group hasan effective system of corporate governance.

Each of the Senior Management individualsbring to the team a sound experience baseand core of knowledge in their field. Together,they form a synergistic and dynamic team,working towards a shared vision ofdeveloping the Group as a competitive andformidable market leader.

1 2 4 53

1 Ng Kok MengChief Executive OfficerTamco Systems Division

2 Guoh Siang LimActing General ManagerMalaysian Roofing Industries Sdn Bhd

3 Kam Lee ChingGeneral ManagerTamco Corporate Holdings Berhad

4 Eric ChanGeneral Manager of International OperationsEngineering Division

5 Lee Vin WahGeneral Manager of SalesEngineering Division

6 Chan Kia PatTechnology Development ManagerPolymer Division

7 Low Hong KengGeneral ManagerPolymer Division

8 Jonathan BongChief Financial Officer

9 Alex TanSenior Manager, ExportsPolymer Division

10 Choo Se EngCompany Secretary


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