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 statements of the Group were reported 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 that give a material effect for the current quarter.

5.	TAXATION

Taxation for the current quarter is as follows:

	30.9.2003
RM	
Current period’s taxation	-	
Under provision inrespect of prior years	395	
Share of taxation of associated company	92	
	487	

6.	SALE OF UNQUOTED INVESTMENTS/PROPERTIES

The Company’s wholly owned subsidiary, Lankhorst Pancabumi Contractors Sdn Bhd had on 29 September 2003 disposed its 700,000 ordinary shares of RM1.00 each in Tractors Petroleum Services Sdn Bhd representing a 35% equity interest, for a cash consideration of RM1,505,000.00 only. There was a profit of RM176,235.00 on a consolidated basis arising from the said disposal.

The Company’s wholly owned subsidiary, Lankhorst Hartanah Sdn Bhd had on 30 July 2003 entered into a Conditional Sale and Purchase Agreement with Haji Ahmad Shalimin Bin Ahmad Shaffie for the disposal of a piece of land measuring approximately 54,753 square feet (5,087 square meters) provisionally known as Precinct 2.8 Section 14, Pusat Bandar Shah Alam, Selangor Darul Ehsan for a cash consideration of RM5,000,000.00 only.

None of the Directors and major shareholders of the Company or any other persons connected to them have any material interests, direct or indirect, in the disposal of the associated company nor in the proposed disposal of property.

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
	
Other than those disclosed above, there are no changes in the composition of the Group during the current quarter under review.

9.	CORPORATE PROPOSALS

There were no corporate proposals that has been announced but not completed as at the date of this report.

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 which was postponed to 5 August 2004.

15.	SEGMENTAL INFORMATION

		Property	Quarry
	Construction	Development	Operations	Investment	Elimination	Consolidated
	Sept-03	Sept-03	Sept-03	Sept-03	Sept-03	Sept-03
	RM’000	RM’000	RM’000	RM’000	RM’000	RM’000

	REVENUE
	EXTERNAL SALES	67,082	0	0	0	0	67,082

	INTER-SEGMENT
	SALES	(443)	0	0	0	0	(443)

	TOTAL REVENUE	67,526	0	0	0	0	67,526

	RESULT
	SEGMENT RESULT	11,962	0	0	0	0	11,962

	EXPENSES	(8,030)	(233)	(446)	(761)	0	(9,470)
							______

	OPERATING PROFIT/(LOSS)						2,492

FINANCE COST	(925)	(5)	(14)	0	0	(944)

	NET PROFIT/(LOSS)
	FROM ASSOCIATES						(14)

	INCOME TAX						(487)
							_____

	PROFIT AFTER TAX						1,047
							=====

16.	REVIEW OF PERFORMANCE

As compared to the preceding year corresponding quarter, the Group’s revenue decreased by RM21.7 million or 53%. Despite the decrease, the Group registered a profit before tax of RM0.06 million as compared to loss before tax of RM24.54 million in the preceding year corresponding quarter. This is mainly due to lower cost of sales incurred by the Group of RM17.31 million (Q2 2002: RM61.04 million).

As compared to the immediate preceding quarter, the Group registered a decrease in profit before tax from RM0.46 million to RM0.06 million. Despite the decrease, the Group remains optimistic of achieving favourable results throughout the financial year as shown in its current year to date profit before tax of RM1.53 million (30.9.2002: RM37.35 million loss before tax).

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

In tandem with optimistic expectation of the Malaysian economy, in general and the construction industry, in particular, Lankhorst remains upbeat on the prospect of securing new contracts in the future. To achieve this, efforts are focussed towards submission of proposals for suitable projects as well as participating in tenders both locally and internationally.

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.