EXPLANATORY NOTES

1.	BASIS OF PREPARATION

The quarterly report is unaudited and has been prepared in accordance with MASB 26, Interim Financial Reporting and Chapter 9, part K of the Listing Requirements of Kuala Lumpur Stock Exchange.

The quarterly financial report should be read in conjunction with the annual audited financial statements of the Group for the year ended 31 December 2002.

The accounting policies and methods of computation adopted by the Group in this quarterly financial report are consistent with those adopted in the financial statements for the year ended 31 December 2002.

2.	QUALIFIED AUDIT REPORT

The preceding annual financial statement of the Group were reported on without any qualification.

3.	UNUSUAL ITEMS AFFECTING ASSETS, LIABILITIES, EQUITY, NET INCOME OR CASH FLOWS

There were no exceptional items affecting assets, liabilities, equity, net income or cash flows for the current quarter.

4.	CHANGES IN ESTIMATES

There were no changes in estimates of amounts which give a material effect for the current quarter.

5.	TAXATION

Taxation for the current quarter is as follows:-:

6.	SALE OF UNQUOTED INVESTMENTS/PROPERTIES

There were no profit/(loss) on any sale of unquoted investments and/or properties respectively for the current quarter.

7.	PURCHASE OR DISPOSAL OF QUOTED SECURITIES

There has been no purchase or disposal of any quoted securities during the current quarter.

8.	CHANGES IN COMPOSITION OF GROUP
	
There are no changes in the composition of the Group during the current quarter under review.

9.	CORPORATE PROPOSALS

The Proposed Private Placement and the Proposed Employee Share Option Scheme (collectively “The Proposals”)
	
A request for extension for the implementation of the Proposals was submitted to the Securities Commission (SC) on 18 February 2003 and had been approved on 7 March 2003. The deadline for the implementation of the Proposals is now extended to 6 June 2003. The SC had also informed that no further extension would be granted for the Proposals.

	Proposed Private Placement
	
At present, potential placees have yet to be identified by the Company.

Proposed Employees’ Share Option Scheme (“Proposed ESOS”)

(i)	On 21 January 2003, an Option Committee (“OC”) was formed to administer the Proposed ESOS.

(ii)	On 11 April 2003, ESOS By-Laws were finalised and approved by the OC and further amendments will be made pursuant to the change in standard board lots of Second Board counters from 1,000 units to 100 units.

10.	ISSUANCE OF EQUITY SECURITIES AND REPAYMENT OF DEBT, SHARE BUY-BACKS, SHARE CANCELLATIONS, SHARES HELD AS TREASURY SHARES AND RESALE OF TREASURY SHARES

There were no issuance of equity securities and repayment of debt, share buy backs, share cancellation, shares held as treasury shares and resale of treasury shares during the current quarter.

11.	GROUP BORROWINGS 

12.	CONTINGENT LIABILITIES
	
	Contingent liabilities for the Group and the Company as at the latest practicable date of this announcement are as follows:
	RM’000

	i	Corporate Guarantees by Lankhorst Berhad	237,330
	ii	Bank Guarantees by Lankhorst Pancabumi 
		Contractors Sdn Bhd	39,082
	----------------
	276,412
	==========

13.	OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
	
	As at the latest practicable date from the date of issue of this quarterly report, there are no off-balance sheet financial instruments in issue.

14.	MATERIAL LITIGATION

There is a claim by Mudajaya Corporation Sdn Bhd for the sum of RM5,257,657.48 together with 8% interest from the date of legal proceedings filed at the Shah Alam High Court.

With the Decision passed by the court on 11 March 2002 on the dismissal of Mudajaya’s application for Summary Judgement (014) and with costs being awarded in Lankhorst’s favour, Mudajaya has appealed against the court’s decision but the appeal was struck off by the court on 17 October 2002. Again, Mudajaya appealed against the said decision and requested for reinstatement of appeal. The Appeal of Reinstatement was allowed by the court on 27 March 2003.

15.	SEGMENTAL INFORMATION

16.	REVIEW OF PERFORMANCE

As compared to the preceding year corresponding quarter, the Group’s revenue increased by RM5.271 million or 24%. The increase is mainly contributed by higher certified progress billings from soil improvement works and mechanical and electrical works.

As a result of the increase, the Group registered profit before tax of RM1.013 million as compared to loss before tax of RM0.554 million in the preceding year corresponding quarter.

As compared to the immediate preceding quarter, the Group managed to register a marginal increase in profit before tax from RM1.008 million (adjusted as a result of year end audit) to RM1.013 million. Despite the marginal increase, the Group remains optimistic of achieving favourable results throughout the financial year and it is hoped that the Group’s continuous effort will bear fruit.

17.	MATERIAL EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

As at the latest practicable date from the date of issue of this quarterly report, there is no material subsequent event to be reported.

18.	SEASONAL AND CYCLICAL FACTORS
	
	There are no significant variations to the level of profit due to seasonality or cyclicality of operations.

19.	PROSPECTS

	For Lankhorst Group of Companies, our ability to secure contracts profitably is critical to the long-term survival of the Group. The management is focusing all efforts towards achieving this by participating in tender processes and submitting proposals for suitable projects.

Our proven track record especially on specialized engineering and construction works such as railway tracks, bridges and soil improvement, will put us in good stead in securing contracts of sizeable quantum. As such, we are targeting to secure some highly specialized contracts in the railway track construction and soil improvement works.

20.	PROFIT FORECAST
	
	No profit forecast or profit guarantee has been provided in a public document for the current quarter.

21.	DIVIDENDS

No interim or final dividend has been declared or recommended for the current quarter.