Danaharta Annual Report 2000

A n n u a l R e p o r t 2 0 0 0
Pengurusan Danaharta Nasional Berhad

C O V E R R A T I O N A L E

was set up in June 1998 to take over non-
performing loans (NPLs) from financial
institutions in Malaysia and resolve them
whilst seeking maximum recovery value.
Whilst the diamond may not necessarily

reflect the quality of Danaharta’s assets
(NPLs), certain characteristics can be used to
depict various aspects of Danaharta’s
operations.
From humble beginnings as a piece of

carbon, diamonds withstand tremendous
pressure to emerge the hardest stone known
to Man, often being used as an industrial
cutting tool. In a similar fashion, Danaharta
has had to withstand tremendous pressure
to set up operations and carve out NPLs,
from beleaguered financial institutions, that
are then expeditiously resolved.
The diamond’s most famous quality, its

translucence, is representative of
Danaharta’s efforts to be open, transparent
and professional in its policies and
operations.
Finally, diamonds are valuable. In the same

manner, Danaharta regards its employees as
precious to the agency’s cause and whose
collective efforts determine its eventual
success.
Contents 1
Contents
02 Notice of Annual General Meeting
04 Corporate Information
08 Corporate Governance
22 Chairman’s Statement
28 Review of Operations
51 Feature Articles
67 Reference Materials
99 Financial Statements
02 Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the Third Annual General Meeting of

PENGURUSAN DANAHAR TA NASIONAL BERHAD will be held by way of
Shareholder’s Circular Resolution pursuant to Article 72 of the Company’s Articles of
Association to transact the following businesses:
AS ORDINARY BUSINESS
Ordinary Resolutions
1. To receive the Audited Accounts for the financial year ended

31 December 2000 including the Directors’ Report and the Auditors’ Report.
(Resolution 1)
2. To re-appoint PricewaterhouseCoopers as the Company’s auditors and

to authorise the directors to fix the auditors’ remuneration.
(Resolution 2)
AS SPECIAL BUSINESS
Ordinary Resolutions
To consider and, if thought fit, pass the following Ordinary Resolutions:
3. “That the directors’ remuneration of RM310,612.02 for the financial year

ended 31 December 2000 be approved.”
(Resolution 3)
4. “That Raja Tun Mohar bin Raja Badiozaman be re-appointed as a

director in accordance with Section 129(6) of the Companies Act, 1965.”
(Resolution 4)
5. “That Dato’ Ho Ung Hun be re-appointed as a director in accordance

with Section 129(6) of the Companies Act, 1965.”
(Resolution 5)
By Order of the Board
PHANG TUCK KEONG

KAMARULZAMAN MOHD ARIFF
Joint Company Secretaries
Kuala Lumpur
10 April 2001
Contents 3
Corporate Information
05 Group Structure
06 Key Management Personnel

BOARD OF DIRECTORS
Raja Tun Mohar Raja Badiozaman – Chairman

Dato’ Mohamed Azman Yahya – Managing Director
Puan Husniarti Tamin
Dato’ Salleh Harun
Dato’ N. Sadasivan
Dato’ Richard Ho Ung Hun
Dato’ Mohamed Md Said
Mr. Eoghan M. McMillan NON-BOARD COMMITTEES
Mr. Alister T. L. Maitland
Oversight Committee
Puan Siti Maslamah Osman
JOINT COMPANY SECRETARIES Encik Ali Tan Sri Abdul Kadir
Datuk Dr. Awang Adek Hussin
Mr. Andrew Phang Tuck Keong
Encik Kamarulzaman Mohd Ariff Tender Board
Dato’ Mohamed Azman Yahya
Mr. Ee Kok Sin
BOARD COMMITTEES Encik Ahmad Zaini Muhamad
Encik Abdul Jabbar Majid
Executive Committee Encik Abdul Halim Othman
Puan Husniarti Tamin REGISTERED OFFICE
Tingkat 10, Bangunan Setia 1
Audit Committee 15 Lorong Dungun
Dato’ Richard Ho Ung Hun – Chairman Bukit Damansara
Dato’ Mohd Salleh Harun 50490 Kuala Lumpur
Mr. Alister T. L. Maitland Malaysia
Tel: 603-253 1122 Fax: 603-253 4360
Remuneration Committee
Mr. Eoghan M. McMillan AUDITORS
Dato’ Mohamed Md Said PricewaterhouseCoopers
11th Floor, Wisma Sime Darby
Jalan Raja Laut
P.O. Box 10192
50706 Kuala Lumpur
Malaysia
Corporate Information
Contents 05
5
Group Structure
Danaharta Group of Companies as at 31 December 2000
Loan Management Subsidiaries Asset Management Subsidiaries
100%
Danaharta Industri Sdn Bhd*
100%
Danaharta Urus Sdn Bhd
100%
Danaharta Bina Sdn Bhd*
100% 100%
Danaharta Managers Sdn Bhd Danaharta Kredit Sdn Bhd*
100%
Danaharta Perhotelan Sdn Bhd*
100%
Danaharta Managers (L) Ltd
100%
Danaharta Prasarana Sdn Bhd*
100%
Danaharta Ekuiti Sdn Bhd*
100%
Danaharta Hartanah Sdn Bhd
100%
TTDI Development Sdn Bhd Group
* Dormant as at 31 December 2000

Key Management Personnel
PENGURUSAN DANAHAR TA NASIONAL BERHAD
Dato’ Mohamed Azman Yahya – Managing Director
Encik Abdul Hamidy Hafiz – Director, Operations
Encik Mohd Bakke Salleh – Director, Property
Encik Zukri Samat – General Manager, Operations
Encik Johan Ariffin – General Manager, Property
Mr. Ravindran Navaratnam – General Manager, Corporate Services
Mr. Ramesh Pillai – General Manager, Risk Management
Mr. Andrew Phang Tuck Keong – General Manager, Legal Affairs and Joint Company Secretary
Mr. Ee Kok Sin – General Manager, Finance and Services
Encik Shariffuddin Khalid – General Manager, Communications and Human Resource
Puan Fatimah Abu Bakar – General Manager, Internal Audit and Compliance
DANAHARTA MANAGERS SDN BHD
Mr. Derrick Fernandez

General Manager
DANAHARTA URUS SDN BHD
Encik Fazlur Rahman Ebrahim

General Manager
TTDI DEVELOPMENT SDN BHD GROUP
Tuan Syed Hamid Hussain Al-Habshee

Group Chief Executive Officer
Corporate Governance
08 Application of the Malaysian Code

on Corporate Governance
14 Board of Directors
17 Executive Committee
18 Audit Committee
19 Remuneration Committee
20 Oversight Committee
APPLICATION OF THE MALAYSIAN CODE ON CORPORATE GOVERNANCE
INTRODUCTION
The financial crisis that affected Malaysia in 1997 and 1998 brought on, among other things,
an increased awareness of the need for corporate governance. To this end, a private-sector-
led Working Group on Best Practices in Corporate Governance (“Working Group”)
undertook to initiate and lead a review and to establish reforms of standards of corporate
governance at a micro level. The result, the Malaysian Code on Corporate Governance, was
issued in March 2000.
The Working Group comprised members of the financial and legal fraternities as well as
representatives from Bank Negara Malaysia (“BNM”), Kuala Lumpur Stock Exchange
(“KLSE”), Securities Commission and non-governmental organisations, and was chaired by
the Chairman of the Federation of Public Listed Companies.
Danaharta’s modus operandi and its use of public money require it to exercise a high level of
transparency and objectivity. Although the application of the Code is voluntary, it has already
been adopted by the KLSE in its new listing requirements, which require public listed
companies to state in their annual report how they apply the principles in the Code and
adopt the best practices. Although Danaharta is not a public listed company, it has taken the
step to apply the Code to its operations to further enhance its standards of corporate
governance.
A. DIRECTORS medium and long term; approving

business plans, including targets and
I. THE BOARD budgets; and making all major strategic
Danaharta is led by a strong and decisions.
experienced Board, befitting the
national asset management company’s As appropriate, the Board has delegated
role as a major government agency set certain responsibilities to the Board
up to restructure the banking sector. Committees, which include an
The Board consists of representatives Executive Committee (“EXCO”), an
from the Government (Ministry of Audit Committee and a Remuneration
Finance and BNM), private sector and Committee. The latter two Board
international community, who are Committees consist entirely of non-
drawn from the banking and property executive directors. The Board
industries and also from public Committees operate with clearly
accounting, legal and public service defined terms of reference.
backgrounds. This brings depth and
diversity in expertise and perspective to II. BOARD BALANCE
the leadership of Danaharta. With the exception of the Managing
Director who does not have any voting
The Board is responsible for the policies rights, the other eight Board members
and general affairs of Danaharta and are non-executive Directors. The
retains full and effective control of the Chairman is one of the non-executive
company. This includes responsibility Directors, and there is a clear division of
for: determining Danaharta’s general responsibility between the Chairman
policies and strategies for the short, and the Managing Director.
Contents 09
9
III. SUPPLY OF INFORMATION B. DIRECTORS’ REMUNERATION

The Board has four scheduled meetings
every year. Additional meetings for I. LEVEL AND MAKE-UP OF
particular matters such as major REMUNERATION
acquisitions, restructuring and asset Given that Danaharta is wholly-owned
disposals are held as necessary. At each by the government, its non-executive
regularly scheduled meeting, there is a Directors’ remuneration conform to
full financial and business review and government guidelines. All non-
discussion, including a comparison of executive Directors are regarded as
assisting the government and as such,
the performance to date against the
their remuneration package is standard,
annual budget and financial plan
consisting of two components - an
previously approved by the Board.
annual flat fee as a Board member and
an allowance for attendance of meetings
Each Board member receives a
at a standard rate. The fees and
comprehensive review and analysis of allowances for the Directors are
Danaharta’s business performance on a recommended by the Board of Directors
monthly basis. Directors are sent an and approved by the sole shareholder
agenda and a full set of the Board (Minister of Finance, Incorporated) at
papers for each agenda item to be the Annual General Meeting (“AGM”).
discussed, before the Board meeting.
Additional information is provided as The Remuneration Committee, which
appropriate. consists exclusively of non-executive
Directors, is responsible for making
IV. APPOINTMENTS TO THE BOARD recommendations on the Company’s
All nine Board members were framework of executive remuneration
appointed to the Board by the Minister and for determining specific
of Finance as per Section 5 of the remuneration packages for the
Pengurusan Danaharta Nasional Managing Director and the General
Berhad Act 1998 (“Danaharta Act”). The Manager, Internal Audit & Compliance.
Minister appoints such persons as he The Committee obtains advice from
thinks fit and proper to act and assist experts in compensation and benefits,
both internally and externally.
Danaharta in achieving its objectives.
II. PROCEDURE
V. RE-ELECTION
Danaharta’s employee remuneration
Since the establishment of Danaharta in
policy and procedures are set out in the
1998, there have been changes in the
Scheme of Service document and the
Board membership among the Human Resource Practice Manual. Both
government representatives (arising documents have been established by the
from retirement or transfer to another Remuneration Committee and approved
job) as well as the private sector by the EXCO.
representatives (due to a job assignment
overseas). A Director of the Board is III. DISCLOSURE
appointed to hold office for up to three Danaharta’s Directors’ (executive and
years and is eligible for re-appointment, non-executive) remuneration is shown
subject to the agreement and approval in aggregate, in accordance with
of the Minister of Finance. government guidelines.
C. RELATIONSHIP WITH II. INTERNAL CONTROL

SHAREHOLDER The Board is responsible for
maintaining a sound system of internal
I. DIALOGUE BETWEEN COMPANIES control and for seeking regular
AND INVESTORS assurance of its effectiveness. The Board
Danaharta recognises its responsibilities and Management have effected a
to its stakeholders (regulators, banking system of internal control designed to
sector, borrowers, service providers, manage, rather than eliminate, the risk
public, etc). Its modus operandi and use of failure to achieve the business
of public money require that Danaharta objectives (“remove NPL distraction”
exercises a high level of transparency and “maximise recovery value”) and
and objectivity. which can only provide reasonable
assurance against material
Danaharta communicates with its
misstatement or loss. There is an
stakeholders through a comprehensive
ongoing process for identifying,
communications programme. This
evaluating and managing significant
consists of regular press
risks faced by Danaharta - a risk
announcements and press conferences,
briefings to analysts and fund managers management policy was formally
and published reports such as the half- endorsed by the Board in 2000. This
yearly Operations Report and the process was in place during 2000 and
Annual Report. All published up to the date of the approval of the
information on Danaharta is also 2000 Annual Report and Financial
available on the company’s website Statements. The process is regularly
(www.danaharta.com.my). reviewed by the Board and is in line
with the Malaysian Code of Corporate
II. ANNUAL GENERAL MEETING Governance and “Statement of Internal
(“AGM”) Control” – Guidance for Directors of
It is neither relevant nor applicable for Public Listed Companies. In particular,
Danaharta to use the AGM to the Company has identified the
communicate with private investors following areas of risk, which are
and encourage their participation since subject to regular reporting to and
Danaharta has only one shareholder – review by the Audit Committee and the
the Minister of Finance, Incorporated. Board.
The Board seeks regular assurance on

D. ACCOUNTABILITY AND AUDIT the effectiveness of the internal control
system through independent appraisals
I. FINANCIAL REPORTING by the internal and external auditors. In
The Board presents a balanced, clear
addition, the Board has also endorsed
and meaningful assessment of
the implementation of Control Self-
Danaharta’s and the Danaharta Group’s
Assessment (“CSA”) in 2001. This will
financial positions and prospects in
require Heads of Divisions to conduct
their reports to the shareholder,
self-assessment on the effectiveness of
investors and regulatory authorities.
This assessment is primarily provided the internal controls for his/her area of
in the Annual Report through the responsibility and sign a memorandum
Chairman’s Statement and the Review of representation on an annual basis. In
of Operations. The half-yearly Operations this respect, the Company has
Report and quarterly announcements completed conducting business control
also reflect the Board’s commitment to awareness & CSA training for all
give updated assessments on executives throughout the whole of the
Danaharta’s performance. year.
Contents 11
Operational Financial
Credit Risk Financial Reporting

The objective is to minimise defaults There is a comprehensive budgeting
and maximise recovery to the system with an annual plan approved
shareholder. There is a structured and by the Board. Business results are
well-defined line of approving authorities reported monthly and compared to the
for all loan workout proposals, which plan, while forecasts are prepared
annually and reviewed regularly
are carried out in accordance with the
throughout the year. Danaharta
Company’s loan restructuring guidelines
announces its business results through
and are subject to independent Risk
its published half-yearly Operations
Management review.
Report and Annual Report.
Destruction of property Treasury Operations & Investments

To mitigate the risk of erosion of Funding mismatch, funds not invested
investment and loss of capital, a optimally and quoted/unquoted
property protection policy was put in investments not properly managed are
place and comprises adequate insurance significant risks faced by Danaharta. All
coverage, security guards to provide operations are carried out in accordance
physical security and the appointment with approved funding and investment
of agents provided under legislation policies and procedures. There are
e.g. Special Administrators and requirements for an independent Risk
Receivers & Managers. Management review of investments;
approval of investment and divestment
Realisation of Proprietary Assets decisions by the Assets and Liabilities
The risk of non-maximisation of Committee (“ALCO”); and daily
realisation proceeds is managed monitoring by Treasury. All operations
are monitored regularly by the ALCO
through a valuation review of loan
and are subject to internal and external
assets. Decisions in respect of the
audits.
realisation of proprietary assets are
reviewed and approved by the Market risks to mitigate the diminution
appropriate authorities. in value of proprietary securities held
are addressed by the setting-up of an
Loan Restructuring Failures Investment Unit. This Unit monitors
There is a post-approval implementation and manages positions with the
system to monitor and report on the involvement of Risk Management.
progress of loan recovery and defaults.
This is to ensure that agreed loan Legal Matters
workouts are implemented promptly
and defaults detected early for Vesting, litigation and other legal
appropriate actions to be taken. The matters are co-ordinated and controlled
Management Credit Committee by the Legal Affairs Division.
(“MCC”) conducts regular reviews of
default accounts. External Communication
Any incorrect perception of Danaharta

Performance of Service Providers
that may affect its reputation or image is
The risk of poor performance by service
addressed through the Communications
providers is mitigated by pre-qualifying
Unit which works with clearly defined
them onto Danaharta’s panel and
and approved communications policies
monitoring their progress and quality of and procedures.
service.
Business Conduct and Compliance Compliance & Consistency

Approved policies and procedures for
Quality and Integrity of Personnel key processes and activities are
One of Danaharta’s values is integrity. documented and disseminated for
Danaharta emphasises the development implementation. All employees are
of and adherence to high ethical responsible for ensuring that they
business practices by ensuring that conduct their work in accordance with
business is conducted in a transparent the Danaharta Act, other relevant laws
and regulations as well as company
and professional manner and in line
policies and guidelines, in particular the
with international best practices.
loan restructuring guidelines. Compliance
Danaharta’s standards on business
issues are subject to independent review
conduct and the code of behaviour
by the Risk Management and Internal
expected of its employees are Audit Divisions.
embedded in the Standards Business
Conduct (“SBC”) document. This is The Ethics and Conduct Committee, set
supplemented by the Guidelines on up in 1999, is responsible for reviewing
Handling of Frauds, Defalcations, any allegations on breaches of the SBC,
Breaches of the SBC and Misdemeanours. defalcation, frauds and misdemeanours.
In addition to the SBC, all directors are
required to adhere to the Directors’ Staffing
Code of Ethics. The need to attract and retain high-
calibre and experienced candidates is
Conflict of Interest, Frauds & critical to the achievement of
Defalcations Danaharta’s objectives. Danaharta adopts
These are significant risks to Danaharta. a strategy of continuous recruitment,
The SBC requires employees to make outsourcing of certain activities and
appropriate disclosures and declare succession planning for key senior
their independence by signing a positions. Danaharta has a Human
Resource Unit that is responsible for
“Declaration of Independence” upon
ensuring a conducive work environment
joining Danaharta and thereafter renew
and conducting regular reviews to
their declaration and disclosures
maintain competitive remuneration
annually. The Guidelines on Handling packages for the employees.
of Frauds, Defalcations, Breaches of the
SBC and Misdemeanours spell out the Risk Management
step by step procedures to manage any
allegation – from notification through to The Risk Management Division has
investigation and decision on the been set up to co-ordinate Danaharta’s
disciplinary action. In addition, senior risk response and be the guardian of
managers are required to submit their Danaharta’s Risk Management Policy.
annual declaration of assets to the In 2000, the Board endorsed a Risk
Managing Director. Management Policy which clearly
defines Danaharta’s overall policy in
Confidentiality handling the significant risks identified
Breach of confidentiality is a criminal and the strategies to manage these risks.
offence under the Danaharta Act and Independent risk review of the loan
the Official Secrets Act 1972. Every management papers, asset management
papers and investment proposal papers
employee and director is required to
forms part of the ongoing process of
sign a Confidentiality Agreement.
managing business risks (recovery risk,
Employees are also reminded periodically
credit risk, interest risk and valuation
of their confidentiality obligations.
risk).
Contents 13
III. RELATIONSHIP WITH THE Audit Committee. The external auditors

AUDITORS attend three of the five Audit
The Board Audit Committee Committee meetings, one of which is a
(“Committee”) comprises three non- meeting without the presence of the
executive Directors of the Board. The Managing Director. Both the external
composition and terms of reference of and internal auditors meet the Board at
the Committee are also provided in this least once a year when the annual
Annual Report. The Committee is audited accounts and report are
required to meet at least twice a year, presented to the Directors.
but in practice, the meetings are held
q u a r t e r l y. During the year ended The minutes of the Audit Committee
31 December 2000, the Committee meetings are formally tabled to the
met five times. Board for notation and action (where
applicable).
The Committee usually holds its
meeting before the Board meeting for Internal Audit
the quarter. This is to draw the Board’s
attention to any critical issues discussed Danaharta has an established Internal
at the Committee meeting. The Heads of Audit Division, which assists the Audit
Divisions for Operations, Pro p e r t y, Committee in the discharge of its duties
Risk Management and Finance are and responsibilities. Its principal role is
invited to attend Committee meetings. to provide assurance, through conducting
Others are invited by the Committee, independent appraisals, that:
where necessary, to brief the Committee
on the activities involving their areas of • There is a sound internal controls
responsibilities. system to achieve Danaharta’s
objectives and to safeguard the
In addition to its review of the scope shareholder’s investment and
and results of the audit and activities of Danaharta’s assets; and
the external and internal auditors, the
Audit Committee’s terms of reference • The system is functioning
include responsibility for overseeing adequately and its integrity is
internal controls, including operational maintained.
and financial controls, business ethics,
risk management and compliance. A review of the Internal Audit
Division’s operations is also provided in
The Committee meets with the external this Annual Report.
auditors annually to discuss the annual
financial statements and their audit Internal audits include evaluation of
findings. Once a year, the Committee processes through which significant
meets with the external auditors risks are identified, assessed and
without the presence of the Board managed. Such audits also ensure that
Executive Director (Managing Director). instituted controls are appropriate and
effectively applied and will achieve
The General Manager, Internal Audit acceptable risk exposures consistent
and Compliance, who acts as Secretary with Danaharta’s risk management
to the Audit Committee, communicates policy.
regularly with the Chairman of the
Board Of Directors
1 Raja Tun Mohar Raja Tun Mohar Raja Badiozaman Dato’Mohamed Azman Yahya
Raja Badiozaman
Raja Tun Mohar has had a Dato’ Azman started his career
2 Dato’ Mohamed distinguished career in Government, with KPMG in London, United
Azman Yahya having served as Special Economic Kingdom and subsequently joined
Adviser to three Malaysian Prime Island & Peninsular Berhad, a
reputable local property developer,
3 Puan Husniarti Tamin Ministers: the late Tun Abdul
where he was the Assistant
Razak (1972 - 1975); the late Tun
General Manager in charge of the
4 Dato’ Salleh Harun Hussein Onn (1975 - 1981); and finance department. Dato’ Azman’s
Dato’ Seri Dr. Mahathir Mohamad career in investment banking
5 Dato’ N. Sadasivan (1981 - 1988). Other Government began when he joined Bumiputra
positions held by Raja Tun Mohar Merchant Bankers Berhad in 1990
6 Mr. Eoghan M. McMillan include Secretary-General to and later headed the corporate
Treasury, Ministry of Finance finance department. He joined
7 Dato’ Mohamed Md Said (1971); Secretary-General (1960 - Amanah Merchant Bank Berhad in
1970) and Controller, Trade Division December 1994 as Chief Executive
8 Dato’ Richard Ho Ung Hun (1957 - 1960) at the Ministry of and later assumed the position of
Commerce and Industry. Group Executive Director of
9 Mr. Alister T.L. Maitland Amanah Capital Group, a financial
services and property group.
He was Chairman of Petronas
Berhad, the national oil
Dato’ Azman was named the
corporation (1984-1988), Malaysia Managing Director of Danaharta
Airline System Berhad, the in May 1998. He was named
national carrier (1973-1991) and amongst Asia’s most influential
Bank Islam Malaysia Berhad (1983- bankers by Institutional Investor in
1992). 1999 and “The Restructuring
Agency Chief of the Year” by
Raja Tun Mohar is currently Asiamoney in 2000. As the
Chairman of Socfin Company Managing Director of Danaharta,
Berhad, Ancom Berhad and Dato’ Azman serves as a member
Perusahaan Otomobil Kedua of the Malaysian Steering
Berhad (PERODUA). He is also a Committee on Bank Restructuring
and of the advisory panel for the
Director of Johan Holdings Berhad
Malaysian Banking Masterplan.
and YTL Power International
He is also a Director of Sime Darby
Berhad, and an adviser to YTL Berhad.
Corporation Berhad.
Dato’ Azman is a member of the
Institute of Chartered Accountants
(England and Wales) and of the
Malaysian Institute of Accountants.
1 3 2 4
Contents
Corporate Governance 15
Board Of Directors
Puan Husniarti Tamin Dato’ Salleh Harun Dato’N. Sadasivan
Puan Husniarti was appointed to Dato’ Salleh was appointed to Dato’ Sadasivan was with the
Danaharta’s Board of Directors Danaharta’s Board of Directors in Malaysian Industrial Development
and Executive Committee in September 2000 to replace Dato’ Authority (“MIDA”) for 27 years
August 2000 to replace Dato’ Dr. Dr. Zeti Akhtar Aziz, the Governor where he last served as its
Abdul Aziz Mohd Yaacob. She is of Bank Negara Malaysia. Dato’ Director-General from 1984 to
currently the Deputy Secretary- Salleh became a Deputy Governor 1995. He held several positions
General (Systems and Control) of of Bank Negara Malaysia in May during his tenure at MIDA,
Treasury, Ministry of Finance. 2000. namely Deputy Director-General
(1976 - 1984); Director of MIDA’s
Prior to this, she was the Deputy Dato’ Salleh started his career in Investment Promotion Office in
Secretary-General II at the Ministry Government in 1971. He left the Dusseldorf, Germany (1972 - 1976);
of Energy, Communications and service in 1974 to join Aseambankers Head of the Investment Promotion
Multimedia (1996-2000). Puan Malaysia Berhad, a merchant bank and Public Relations Division
Husniarti has been in Government within the Malayan Banking (1970 - 1972); and Head of Industrial
service since 1972 when she joined Group. He served the merchant Development in the States Division
the Economic Planning Unit bank for 14 years before leaving to (1968 - 1970). Prior to joining
(Human Resources Section), Prime take a senior management position MIDA, he was an Economist/
Minister’s Department, as Assistant in Maybank, the commercial Head of Division with the
Secretary. banking arm of the Group, in Economic Development Board
August 1988. In June 1994, Dato’ (EDB) of Singapore (1963 - 1969).
Puan Husniarti holds a Masters in Salleh was appointed as Executive
Business Administration from Director of Maybank. He had also Dato’ Sadasivan also sits on the
University of Oregon, USA and a served on the Boards of boards of Chemical Company of
Bachelor’s degree in Economics Aseambankers, Mayban Securities Malaysia Berhad, Leader
(Hons) from University of Malaya. Sdn Bhd, Mayban Assurance Sdn Universal Holdings Berhad,
Bhd as well as several other Petronas Gas Berhad, Amanah
companies within the Malayan Capital Partners Berhad, APM
Banking Group. Automotive Holdings Berhad and
Multi Vest Resources Berhad. He is
He is a member of the Institute of also a director of Bank Negara
Chartered Accountants (England Malaysia.
and Wales) and of the Malaysian
Association of Certified Public
Accountants.
5 6 7 8 9
Board Of Directors
Dato’ Richard Ho Ung Hun Mr. Eoghan McMillan Mr. Alister Maitland
Dato’ Richard Ho was a Member Mr. McMillan is Chairman and Mr. Maitland spent over 35 years
of Parliament between 1969 and Chief Executive Officer of Rodamco with the ANZ Banking Group Ltd
1982, having served as Deputy Asia N.V., a real estate investment (ANZ), retiring in June 1997. He
Minister of Road Transport, company listed on the Amsterdam served in New Zealand, United
Deputy Minister of Finance, Stock Exchange. He was with Kingdom and Australia. Amongst
Minister without Portfolio in the Arthur Andersen & Co. from 1959 other positions, he was Chief
Prime Minister’s Department and until 1993 and served as Country Economist and then held General
Minister of Labour and Manpower. Managing Partner for its practices Management positions in Global
He retired from Government in in Hong Kong and the People’s Treasury, Retail Banking,
1982 and became the Vice- Republic of China from 1979 until Management Services and was
Chairman (non-executive) of 1993. Managing Director of ANZ in New
Malayan Banking Berhad in 1983. Zealand. In his last six years, he
During his years at Arthur was on the main board of the bank
Dato’ Richard Ho also sits on the Andersen & Co., Mr. McMillan being Executive Director
boards of Mayban Finance Berhad, also served as a Member of the International. In this position, he
Aseambankers Malaysia Berhad, Professional Standards Committee was directly responsible for the
Mayban Assurance Berhad, and the International Board of Group’s operations in forty-two
Aseamlease Berhad, Aseam Credit Directors, as well as Chairman of countries.
Sdn Bhd, Mayban Trustees Berhad, the Finance Committee and
Mayban International (L) Limited, Regional Managing Partner for Today, he is a consultant to
Mayban International Trust operations in South-east Asia. corporations and Governments
(Labuan) Berhad, Mayban Offshore and a professional company
Corporate Services (Labuan) Sdn In 1989, while still with Arthur director. He is Chairman of the
Bhd, Mayban Management Berhad Andersen & Co., Mr. McMillan Education Trust Victoria Ltd,
and DMIB Berhad. was appointed by the Hong Kong Eastern Health Network Victoria,
Government to serve as an ComLand Ltd, Folkestone Limited,
independent Director of the Hong Mawson Capital Pty Ltd, Bevington
Kong Futures Exchange in Consulting Ltd, Centre for Practice
connection with the Exchange’s of International Trade, Melbourne
restructuring programme. From Business School and Australian
Dato’ Mohamed Md Said
then until 1992, he served as Centre for International Business,
Chairman of the Hong Kong University of Melbourne.
Dato’ Mohamed has been the
Futures Exchange and a Director
Managing Director of Sime UEP
of its wholly-owned subsidiary,
Properties Berhad since July 1990.
HKFE Clearing Corporation
He joined Sime Darby Berhad in
Limited.
1981 as Group Legal Adviser and
later served as Group Secretary of
Mr. McMillan is a Director on
the company.
appointment by the Hong Kong
Government of Land Development
Prior to this, Dato’ Mohamed
Corporation and a director, or an
served as Group Manager,
independent director, of a number
Corporate Affairs at Kumpulan
of other companies. He is also an
Fima Berhad (1979 – 1981); Senior
advisor to the International
Legal Adviser at Petronas Berhad
Business Leaders’ Advisory Council
(1975 – 1979); and Deputy Public
to the Mayor of Shanghai, China. In
Prosecutor/Federal Counsel at the
1997, he was made an Honorary
Attorney General’s Chambers
Citizen of Shanghai by the
(1970 – 1974).
Shanghai Municipal Government.
Contents 17
Executive Committee
MEMBERSHIP
■ Raja Tun Mohar Raja Badiozaman – Chairman
■ Dato’ Mohamed Azman Yahya
■ Puan Husniarti Tamin
■ Dato’ N. Sadasivan
FUNCTIONS
The Executive Committee’s (“EXCO”) main function is to assist the Board

of Directors in overseeing the operations of the Danaharta Group.
Included in the EXCO’s functions to assist the Board of Directors are the
following:
• Formulate the Danaharta Group’s general policies and strategies

which set out the direction of the Group for the short, medium and
long term.
• Appoint the Danaharta Group’s key management team which will

translate the Board’s general policies and strategies into detailed
business plans.
• Review and assess the Danaharta Group’s financial and operational

performances through periodic feedback and reports from the Audit
Committee and the management team.
• Review and assess the Danaharta Group’s loan and asset portfolio
management and ensure its consistency with the Danaharta Group’s
business policies and strategies.
• Approve major acquisitions and disposals within authority limits as

set out in the Authority Manual.
The EXCO met 17 times in the year ended 31 December 2000.

Audit Committee
MEMBERSHIP
■ Dato’ Richard Ho Ung Hun – Chairman
■ Dato’ Salleh Harun
■ Mr. Alister T. Maitland
Danaharta’s General Manager, Internal Audit and Compliance (“IAC”) acts

as Secretary to the Audit Committee.
FUNCTIONS
The Audit Committee (“AC”) is a key component in Danaharta’s

corporate governance structure. Its functions include the following:
• Review the external auditors’ work plan to satisfy itself that the audit
will meet the needs of Danaharta’s Board of Directors and
stakeholders.
• Review the external auditors’ report and the annual financial

statements and recommend them for acceptance by the Board of
Directors.
• Review the external auditors’ evaluation of the internal control

systems and subsequently the implementation of the agreed
improvements or rectification of the weaknesses highlighted.
• Consider the nomination of the external auditors’ and their

remuneration.
• Review and approve Danaharta’s internal audit plans.
• Review the audit reports and internal audit work through the
quarterly performance reporting by IAC on the implementation and
execution of the approved internal audit plans, follow-up of the
agreed actions and the performance of IAC.
• Review the compliance report in areas relating to the monitoring and

review of control procedures.
The Audit Committee met 5 times in the year ended 31 December 2000,
one of which was a meeting without the presence of the Managing
Director.
Contents 19
Remuneration Committee
MEMBERSHIP
■ Raja Tun Mohar Raja Badiozaman – Chairman
■ Dato’ N. Sadasivan
■ Dato’ Mohamed Md Said
■ Mr. Eoghan M. McMillan
FUNCTIONS
The main functions of the Remuneration Committee include:
• Provide an independent and unbiased review, assessment and

determination of the Danaharta Group’s remuneration structure and
policy. This review encompasses all levels of employees, from the
Managing Director to executive and clerical levels.
• Evaluate the Danaharta Group’s annual remuneration revision and

bonus.
• Review the Scheme of Service of the Danaharta Group as and when

required and approve revisions to the Scheme, where necessary.
• Recommend fees and/or allowances for the non-executive members of

the Board of Directors with appropriate consultation with any
independent advisers (if required) and to be approved by the
shareholder at the Annual General Meeting.
• Review, assess and determine the remuneration of the Managing

Director and General Manager, Internal Audit and Compliance.
The Remuneration Committee met 3 times in the year ended 31 December 2000.
Oversight Committee
As provided for by Section 22 of the Pengurusan Danaharta Nasional Berhad Act 1998, an
Oversight Committee was established in November 1998 to perform the following tasks:
• Approve appointments of Special Administrators and Independent Advisors as requested

by Danaharta.
• Approve any extension of moratorium periods given to companies under Special
Administrators.
• Approve the termination of the services of Special Administrators.
The Oversight Committee comprises three members, appointed by the Minister of Finance,
one each from the Ministry of Finance, Securities Commission and Bank Negara Malaysia.
Puan Siti Maslamah Osman Encik Ali is Chairman of the Asia-Pacific

Regional Committee of the International
Puan Siti is the Accountant-General at the Organisation of Securities Commissions
Ministry of Finance. She has also served as (“IOSCO”) and an ex-officio member of the
Deputy Accountant-General (Management IOSCO Executive Committee.
and Operation); senior accountant in various
divisions of the Accountant-General’s Before assuming his present position, Encik
Department including Consultancy Services Ali was the Executive Chairman and a
Division; Modernisation Accounting Unit Partner of Ernst & Young and its related
and Information Technology Services firms. He started his career in accounting in
Division; and finance manager at Bank 1969 and qualified as a member of the
Simpanan Nasional Berhad. Institute of Chartered Accountants in
England & Wales (“ICAEW”) in 1974. Encik
Puan Siti sits on the board of several non- Ali was also the President of the Malaysian
governmental bodies including Universiti Association of Certified Public Accountants
Kebangsaan Malaysia, Kumpulan Wang (“MACPA”), before his appointment as
Simpanan Guru, Yayasan Laporan Kewangan, Chairman of the SC.
Lembaga Piawaian Perakaunan Malaysia
and Institut Akauntan Malaysia. In addition, Datuk Dr. Awang Adek Hussin
she is the Honourable Treasurer of Persatuan
Suri dan Anggota Wanita Perkhidmatan Datuk Dr. Awang has been an Assistant
Awam Malaysia (PUSPANITA) and a council Governor at Bank Negara Malaysia since
member of the Chartered Institute of 1996. He is currently in charge of Bank
Management Accountants (“CIMA”) Malaysia Regulation, Insurance Regulation and
Division. Exchange Control. Datuk Dr. Awang has
held various positions in the Central Bank
Puan Siti is also a Fellow of CIMA, United including the Director of Economics
Kingdom. Department and Director of Bank
Regulation Department prior to being
Encik Ali Tan Sri Abdul Kadir promoted to the post of Assistant Governor.
He was seconded to Labuan Offshore
Encik Ali is Chairman of the Securities Financial Services Authority (“LOFSA”) to
Commission (“SC”), a post he assumed on become its first Director-General and
1 March 1999. He is Chairman of the Capital returned to Bank Negara Malaysia in 1998.
Market Strategic Committee and a member of Datuk Dr. Awang obtained his Ph.D. degree
the Foreign Investment Committee, Financial in economics from the University of
Reporting Foundation and the National Pennsylvania, Philadelphia, U.S.A. in 1984.
Economic Consultative Council II (“MAPEN II”)
Working Groups on Islamic Banking & Datuk Dr. Awang is a member of the
Financial System, and Economics and Securities Commission. He also serves as a
Competitiveness. Encik Ali also sits on the board member at the Malaysian Institute of
Finance Committee on Corporate Governance Insurance as well as Amanah Saham
and was recently appointed as a member on the Nasional Management Board and its
Labuan Offshore Financial Services Authority. Investment Committee.
Chairman’s Statement
On behalf of the Board of Directors, I am pleased to present the annual

accounts and report for Pengurusan Danaharta Nasional Berhad for the
financial year ended 31 December 2000.
ACQUISITIONS
Danaharta had progressed swiftly through its establishment and acquisition phases, having
completed its primary carve-out of non-performing loans (“NPLs”) by end-June 1999. During
the year, on 31 March 2000, Danaharta completed a secondary carve-out exercise. No further
acquisition exercise is being contemplated and Danaharta will concentrate on managing and
resolving the NPLs in its portfolio.
As at 31 December 2000, Danaharta had approximately RM47.49 billion (gross value) of

NPLs in its portfolio comprising RM20.39 billion acquired from financial institutions
(“FIs”) and RM27.10 billion from the Sime Bank Group and Bank Bumiputra Group
being managed on behalf of the government.
In respect of the NPLs acquired from FIs and as part of the acquisition agreements,
Danaharta entered into profit-sharing arrangements with these institutions. The
arrangements basically stipulate that any excess in recovery values over and above
Danaharta’s initial cost of acquisition plus directly attributable costs, are shared with
the selling FI on an 80 (FI):20 (Danaharta) basis. Danaharta has commenced making
payments to FIs in respect of such realised surpluses. It should be noted that should
Danaharta recover less than its cost of acquisition, the loss is borne solely by
Danaharta.
With regard to NPLs pertaining to the Sime Bank Group and Bank
Bumiputra Group, all recoveries are for the accounts of Bank
Negara Malaysia and the government respectively less any
commission due to Danaharta. Danaharta receives commission as
follows:
■ If net recovery value is less than or equals the net book value,
Danaharta receives 2% of the net recovery value
■ If net recovery exceeds net book value, Danaharta receives

2% of the net book value and 20% of the excess.
With regard to NPLs belonging to Bank Bumiputra Group, a

put option had been given to Bumiputra Commerce Bank
Berhad to transfer to Danaharta further NPLs from the
acquired assets of Bank Bumiputra Group until August 2001. As
such, the amount of NPLs to be managed may increase slightly
until the put option expires.
Raja Tun Mohar Raja Badiozaman

Contents 23
MANAGEMENT AND DISPOSAL OF THE NPLS
As set out in last year’s Annual Report, Danaharta processes NPLs by

earmarking viable NPLs for loan restructuring (i.e. the restructuring
will require them to be performing again – capable of repaying
principal and servicing interest) and non-viable NPLs for asset
restructuring, which entails the sale of business or collateral. Those
initially earmarked as viable will also undergo asset restructuring if
they default on their restructuring schemes.
Danaharta’s loan restructuring guidelines are now quite well known

(for easy reference, it has been included in this year’s Annual Report).
The guidelines provide a detailed framework to be followed in
restructuring loans as well as covenants for monitoring the performance of restructured
loans. Restructuring loans give Danaharta a better recovery rate which is why it is favoured
as an initial approach leaving the sale of collateral or business as a last resort.
Danaharta is now well into its management phase. Approximately 74% of its portfolio (by
value) have already been either restructured or approved for restructuring with an expected
recovery rate of 66%. This average recovery rate is calculated by projecting the recovery
proceeds from a resolution exercise (e.g. a restructuring scheme or sale of collateral) over the
outstanding loan amount. Looking at the regional experience, Thailand and Korea have
reported recovery rates of around 35% and 52% respectively. However, whilst this may give
the impression that Danaharta is ahead of the game, it is worth noting that the entire portfolio
has not been completely dealt with yet and the remainder NPLs are expected to be hard-core,
yielding lower recovery rates. Therefore, it is expected that the average recovery rates will
drop over time, the extent of which will be determined when all the NPLs accounts have been
resolved. In any case, Danaharta will be disclosing this information via its quarterly
operations update.
During the year, it was publicly announced that Danaharta has set itself a deadline of closing
down by 2005. As such, all our operational strategies will aim at achieving such a scenario.
TRANSPARENCY
Within Danaharta, there is a strong commitment to transparency in its operations. It

continues to hold public briefings and industry dialogues, issue a range of publications, reply
to Parliament and make frequent public announcements for the benefit of everyone who is
interested in Danaharta’s activities.
This year, Danaharta has added, to the above list, quarterly announcements that contain
updates on Danaharta’s progress.
DANAHARTA AS A REFERENCE CASE
As mentioned in my statement last year, Danaharta has increasingly been made the subject
of study by researchers and economic planners all over the world. During the year,
Danaharta hosted official visits from no less than 20 different organisations from 9 countries.
Many were NPL resolution agencies or foreign government officials seeking to study and
learn from our approaches and methods. Others were from multilateral agencies like the
World Bank seeking to affirm their understanding of Danaharta’s modus operandi. On one
occasion, Danaharta hosted a delegation of 40 Members of Parliament from Indonesia who
were interested to learn more about Danaharta. Another notable visit was from the
United States Department of Treasury.
During the year, I am proud to note that Asiamoney, a respected financial magazine, bestowed
its Restructuring Agency Chief of the Year award to Dato’ Azman Yahya, Danaharta’s
Managing Director. This international recognition is testament to the level of professionalism
and commitment found in Danaharta.
Danaharta has been happy to share whatever it can with all its visitors. It has always
maintained that NPL resolution agencies need to be designed to suit specific national
situations. In its case, the Danaharta management team had to study several examples
around the world before formulating the Malaysian approach albeit under severe time
constraints. Designers of NPLagencies should not adopt wholesale another agency’s modus
operandi without understanding the rationale and implications of such an approach.
FINANCIAL RESULTS
For the period ended 31 December 2000, the Danaharta Group made a consolidated loss
before tax of RM294.66 million mainly attributable to financing costs. No dividends were
declared. Operating expenditure was kept low at RM44.29 million. Danaharta’s operating
costs are low due to the leanness of the organisation and a conscious spirit to economise and
get the best value for money.
It must be understood that NPL resolution agencies all over the world make losses and this
is why Danaharta constantly strives to maximise recovery value so as to minimise the
eventual cost to be borne by the government.
ORGANISATION
Danaharta has 262 staff members. This is considered small when compared to the staff
strength of other NPL agencies in the region. From the start, Danaharta was designed to be a
lean organisation with a reliance on outsourcing work to the professional community e.g.
licensed valuers, lawyers and accountants. This is done deliberately given the finite-life
nature of Danaharta.
STANDARDS OF BUSINESS CONDUCT
As a national agency entrusted with public money, Danaharta has gone to great lengths to
uphold a reputation for professional behaviour, good corporate governance, impartiality and
integrity.
Detailed internal regulations define high standards of business conduct that all staff members
must comply with. Key sections of the regulations deal with conflicts of interest situations
and the need for appropriate and timely disclosures, and for confidentiality to be maintained.
Contents 25
For example, to avoid conflicts of interest, all staff members are prohibited from participating
in disposal exercises (e.g. sale of property collateral) conducted by Danaharta. Employees are
neither allowed to solicit or accept gifts or favours from third parties that may prejudice their
independent judgement nor conduct business activities outside Danaharta. Directors and
employees need to file an annual declaration of independence which includes disclosure of
financial interests. Furthermore, any employee wishing to trade securities is required to
obtain pre-clearance from the Internal Audit and Compliance Division. All Danaharta
personnel are prohibited from using inside information in line with insider trading laws.
CORPORATE DEVELOPMENTS
The Minister of Finance, Incorporated, Danaharta’s sole shareholder, increased the equity
capital of Danaharta by injecting RM750 million on 10 April 2000 and a further RM750 million
on 17 May 2000. The resultant paid-up capital of Danaharta as at 31 December 2000 stood at
RM3 billion.
During the year, Danaharta acquired the entire issued and paid-up capital of TTDI
Development Sdn Bhd – a reputable property development and management company
owned by Permodalan Nasional Berhad, another government agency. The rationale for the
acquisition is to support and complement Danaharta’s Property Division in their efforts to
manage and deal with property collateral that may not be sold through regular tenders of
foreclosed properties. It should be noted that, whilst Danaharta is a self-liquidating
organisation, TTDI will remain a going-concern and quite possibly be returned to quasi-
government ownership once Danaharta has achieved its mission.
ACKNOWLEDGEMENTS
The Board is appreciative of the guidance and co-operation extended by the following:
The National Economic Action Council;

Ministry of Finance;
Ministry of Land and Cooperative Development and Land Registeries and Offices
nationwide;
Bank Negara Malaysia;
Securities Commission;
Kuala Lumpur Stock Exchange;
Foreign Investment Committee; and
government ministries and departments and regulators at both federal and state levels.
The Board is grateful for the close collaboration with Danamodal Nasional Berhad and the
Corporate Debt Restructuring Committee in dealing with common issues arising from each
respective sphere of activities. The Board also acknowledges the co-operation of the financial
community when interacting with Danaharta.
The Board wishes to thank our consultants, advisers and business associates for the support
and services provided to Danaharta.
The Board expresses its gratitude to the members of the Tender Board and Oversight
Committee for their work involving Danaharta.
During the year, Dato’ Mohamed Adnan Ali (Oversight Committee member) retired from
government service. Puan Siti Maslamah Osman succeeded him as Accountant-General and
consequently replaced him on the Oversight Committee with effect from 27 October 2000.
We wish him a happy retirement and welcome Puan Siti Maslamah.
With regard to the Board, there have also been changes in

membership during the year:
■ Dato’ Dr. Abdul Aziz Yaacob, formerly the Deputy Secretary-

General (Policy) of the Ministry of Finance, left the Board after
being posted to the Public Services Department and was replaced
by Puan Husniarti Tamin, Deputy Secretary-General (Systems and
Security) of the Ministry of Finance, with effect from 11 August 2000;
and
■ Dato’ Dr. Zeti Akhtar Aziz, Governor of Bank Negara Malaysia,

was succeeded on the Board by Dato’ Salleh Harun, Deputy Governor
of Bank Negara Malaysia, with effect from 22 September 2000.
I wish to record my sincere thanks to both Dato’ Dr. Aziz and Dato’ Dr. Zeti for their
invaluable contribution during their tenure of duty. At the same time, we warmly welcome
their respective replacements to the Board.
As Chairman, I am most grateful to all the Board members for their conscientious attendance
and active participation during Board meetings and the various Board committees required
by Danaharta’s corporate governance policies.
On behalf of the Board, I thank the management and staff of Danaharta for their sterling
efforts in coping with the various challenges posed to date. It is hoped that the team spirit
and commitment that have taken us this far can be maintained to ensure Danaharta’s
eventual success.
Finally, we record our appreciation to the NPL borrowers who have co-operated with us and
we acknowledge the forbearance shown by borrowers in waiting to be dealt with by our
resolution teams who are faced with a mountain of work.
In closing this year’s statement, I see sustaining our country’s economic recovery as a priority
for all and Danaharta will continue to do its part by striving to resolve its NPLs as quickly as
possible.

Chairman
Review of Operations
28 Line Divisions
39 Support Divisions
44 Restructuring Case Studies

49 Post Balance Sheet Review
DANAHARTA ORGANISATION STRUCTURE AS AT 31 DECEMBER 2000
BOARD OF DIRECTORS
Managing Director GM Internal Audit & Compliance
Director Operations
GM Operations GM Corporate Services GM Legal Affairs
Operations Teams Corporate Planning Advisory

Corporate Finance Secretarial
GM Danaharta Urus Research
GM Communications &
Operations Teams GM Risk Management Human Resource
GM Danaharta Managers Risk Management Communications

Systems & Methods Human Resource
Operations Teams Security
GM Finance & Services
Director Property Finance & Treasury

IT
GM Property Administration
Planning & Development

Marketing & Sales
Technical Services
Valuation
Special Projects
LINE DIVISIONS
The Operations and Property Divisions constitute the Line Divisions within Danaharta.
A summary of their functions is as follows:
Operations:
• Responsible for loan acquisition and loan restructuring.
• Also houses a Credit Administration Unit to handle the administrative aspects of loan
management.
Property:
• Provides advisory services to loan management divisions on property-related issues
e.g., feasibility of projects and valuation of property collateral.
• Manages property collateral under Danaharta’s portfolio.
• Facilitates foreclosure of property collateral and manages the disposal and transfer
process.
• Manages properties that cannot be cleared through loan restructuring or foreclosure in
order to enhance the value of the properties and re-offer them to the market.
The activities of the Line Divisions are summarised in the rest of this section.
Contents 29
INTRODUCTION
Since its establishment 2 1/2 years ago, Danaharta has acquired a portfolio totalling
RM47.49 billion of non-performing loans (“NPLs”). Of these, RM35.83 billion (approximately
74%) has been either restructured or approved for restructuring, with expected recoveries of
RM23.8 billion (expected recovery rate of 66%). As at 31 December 2000, the default rate
stood at a tolerable 6%.
Danaharta expects to restructure the remaining unresolved NPLs of RM12.4 billion (in gross
value terms) by the end of 2001.
In the course of its recovery operations, Danaharta has accumulated assets in four broad
groups, which it needs to manage, namely cash, performing loans, securities and properties.
Out of the RM23.80 billion expected recoveries from NPLs that have been restructured or
approved for restructuring, RM12.03 billion has been received as follows, as at 31 December 2000:
RM billion
Cash (note 1) 6.40

Performing loans (note 2) 5.45
Securities (note 3) 0.62
Properties (note 4) 0.33
12.80
Less:
Adjustments
e.g. interest received on performing loans (0.77)
12.03
The balance of expected recoveries amounting to RM11.8 billion is at various stages of the
recovery process. Ultimately, it is intended to convert all non-cash asset groups to cash.
Notes:
1. Cash. Cash is generated from the sale of collateral/foreign loan assets, collections from restructured NPLs and
cash settlements.
2. Performing loans. These are restructured/rehabilitated NPLs that have turned performing.
3. Securities. This asset group comprises all kinds of securities e.g. shares, loan stocks that have been issued to
Danaharta as part of settlement schemes (note: this does not refer to share collateral);
4. Properties. This asset group comprises properties that remain unsold from property tenders that are
transferred to Danaharta Hartanah Sdn Bhd, a wholly-owned subsidiary of Danaharta, and properties that are
offered and accepted as full or partial settlement for NPLs i.e. set-offs (no set-off properties received as at 31
December 2000). This does not refer to property collateral that has not been foreclosed.
ACQUISITION
As at 31 December 2000, Danaharta had carved out a total of RM47.49 billion in gross value
of NPLs - RM39.30 billion from the banking system and RM8.19 billion from non-banking
and offshore institutions. Of this total, Danaharta is managing RM27.10 billion of NPLs in
respect of the Sime Bank Group and Bank Bumiputra Malaysia Berhad (“BBMB”) Group.
Offers made by Danaharta for RM8.03 billion in gross value of NPLs were rejected by
financial institutions (“FIs”).
PAYMENT FOR NPLS
In return for the NPLs acquired up to 31 March 2000, Danaharta issued RM11.14 billion in
face value of government-guaranteed bonds with a present value of RM8.22 billion and paid
RM0.8 billion in cash to the selling FIs, making a total fair purchase price of RM9.02 billion.
Cash payments were made mainly for acquisitions of NPLs from development finance
institutions, loans extended under the Islamic concept and unsecured loans. No further
bonds have been issued since 31 March 2000.
A summary of the bond issues up to 31 March 2000 is as follows:
Bond issues up to 31 March 2000
Date of issue Face value Price for Yield Present Date of Maturity
RM billion every value
RM100.00 RM billion
in face value
20 November 1998 1.022 69.832 7.150% 0.713 31 December 2003

30 December 1998 1.580 72.012 6.672% 1.138 31 December 2003
29 January 1999 1.105 71.301 6.654% 0.788 31 March 2004
26 February 1999 1.242 72.296 6.475% 0.898 31 March 2004
26 March 1999 1.393 72.758 6.445% 1.013 31 March 2004
29 April 1999 1.050 75.584 5.487% 0.793 30 June 2004
27 May 1999 0.511 76.229 5.400% 0.389 30 June 2004
29 June 1999 0.744 76.862 5.330% 0.572 30 June 2004
29 July 1999 0.527 76.223 5.319% 0.402 30 September 2004
26 August 1999 0.204 73.585 6.111% 0.150 30 September 2004
29 October 1999 0.575 76.365 5.283% 0.439 31 December 2004
29 December 1999 0.392 77.363 5.194% 0.303 31 December 2004
31 January 2000 0.162 77.244 5.063% 0.125 31 March 2005
29 February 2000 0.305 77.697 5.025% 0.237 31 March 2005
31 March 2000 0.328 77.494 5.165% 0.255 31 March 2005
Total 11.140 8.215
No bonds were issued in September and November 1999.

Contents 31
MANAGEMENT AND DISPOSITION
Danaharta’s approach in management and disposition of assets is summarised in the

diagram below
NPLs
VIABLE LOANS NON-VIABLE LOANS FOREIGN LOAN ASSETS
LOAN RESTRUCTURING ASSET RESTRUCTURING LOAN DISPOSAL

Informal Sale of Collateral Sale of Loan
• rescheduling • foreclosure via
• redemption • Receivers & Managers BID PROCESS
• settlement • liquidation
formal Sale of Business
• s.176 • Special Administrators
• Special Administrators via BID PROCESS
Yes No Yes No
Recovery Management of Management Recovery
Securities of Assets
VALUE
• property
ENHANCEMENT
• business
VALUE
ENHANCEMENT
S A L E T O M A R K E T
Loan Management Asset Management
Asset Management and Disposition
LOAN MANAGEMENT
As at 31 December 2000, Danaharta had within its portfolio 2,835 accounts relating to 2,507
borrowers, with a total gross value of RM47.49 billion. Danaharta has restructured or
approved for restructuring NPLs with a total gross value of RM35.83 billion (see table on
page 32). At the same time, Danaharta has initiated recovery measures with 98% of the
borrowers in terms of value and 91% in number. Statistics on the various stages of the loan
management process are presented on page 35.
NPLs restructured or approved for restructuring
Recovery Method *Loan outstanding Expected recovery Expected recovery

RM billion RM billion %
Performing loans 2.57 2.57 100%

Plain loan restructuring 7.06 6.54 93%
Settlement 6.34 4.86 77%
Scheme of arrangement 6.08 5.07 83%
SA– scheme approved 2.50 1.54 62%
Foreclosure 7.63 2.12 28%
Others 2.02 1.10 55%
Legal action 1.63 – –
35.83 23.80 66%
* Including accrued interest of RM0.789 billion
LOAN RESTRUCTURING
Danaharta uses the following methods to restructure loans:
(a) plain loan restructuring, where recovery is by way of rehabilitating an NPL to become a
performing loan (this may involve loan rescheduling) (93% expected recovery rate as at
31 December 2000);
( b ) settlement of loans, where loans are disposed outright e.g. foreign loan assets,
or where a settlement scheme has been agreed upon (77% expected re c o v e r y
rate as at 31 December 2000); and
(c) scheme of arrangement, which may be a scheme under section 176 of the Companies Act,
1965, a voluntary scheme of arrangement or a scheme under the Corporate Debt
Restructuring Committee (“CDRC”) (83% expected recovery rate as at 31 December 2000).
Loans that are clearly non-viable from the outset are placed under asset restructuring (see
below). Borrowers who fail to comply with the loan restructuring guidelines (at proposal
stage or post-approval stage) are also transferred to asset restructuring.
ASSET RESTRUCTURING
Non-viable loans and loans that fail to comply with the loan restructuring guidelines are placed
under asset restructuring. Asset restructuring involves the sale of a borrower’s business or the
underlying collateral of an NPL (which may comprise property and/or shares).
Sale of foreclosed properties

Danaharta may foreclose on property collateral, or shares pledged as security for loans. As at
31 December 2000, the expected recovery from foreclosure exercises showed a decrease from
48% (as at 30 June 2000) to 28%. This is mainly due to the shortfall recorded upon foreclosure
on the share collateral of one large loan.
As at 31 December 2000, Danaharta has conducted four property tenders, offering to the
market 449 properties (excluding hotel and leisure properties) with a total indicative value of
RM985.93 million.
Contents 33
Danaharta has sold 72% of the properties that have been offered in its tenders since the first
tender was launched in November 1999. Of the total of 325 properties sold, 253 properties
were sold in the primary sales (sold first time offered in tender) and 72 in the secondary sales,
(sold by Danaharta Hartanah) altogether for a total consideration of RM535.02 million
(RM 410.25 million from the primary sales and RM 124.77 million from the secondary sales).
Status of properties Number of Indicative Consideration C/IV %

under primary sales properties value (IV) received (C)
(RM million) (RM million)
Sold to successful bidders

in tenders 253a 405.18 410.25 101%
Unsold in tenders, transferred

to Danaharta Hartanah
Sdn Bhd for secondary sales 193 577.01 n/a n/a
Unsold in tenders, belonging

to Jalur Realty Sdn Bhd 3 3.74 n/a n/a
Total offered to the market

as at 31 December 2000 449 985.93
a Including 12 properties belonging to Jalur Realty Sdn Bhd, a property management company which
was previously part of the Sime Bank Group. The 12 properties have a total indicative value of
RM14.64 million and were sold for a total consideration of RM15.51 million. The sale of
Jalur Realty properties formed part of the resolution of the Sime Bank Group.
For properties sold via tenders, Danaharta has achieved more than their indicative values.
This shows that Danaharta’s indicative values are realistic and market-based.
Spearheading the property tender marketing efforts are 189 real estate agents (“REAs”) on
Danaharta’s panel with offices at 252 locations throughout Malaysia. These REAs actively
market the properties and provide advice, at no cost to the bidders, on their tenders. This
marketing strategy has proven effective and the performance of the REAs has been
impressive, given that successful sales via REAs accounted for 42%, 83% and 93% and 95% of
total sales in the four tenders to date respectively.
Project Management and Marketing

In July 2000, as part of the third property tender, Danaharta carried out project marketing for
85 units of the Villa Duta Condominium, at Bukit Antarabangsa, Selangor, which had been
foreclosed under section 57 of the Danaharta Act. A total of 78 units have been sold (54 units
via tenders and 24 units via private contract) for a total consideration of RM10.84 million.
Ninety percent of the units were sold above indicative value.
In addition, Danaharta successfully co-ordinated the sale by the Receivers & Managers,
PricewaterhouseCoopers, of 110 units of the Waikiki Condominium in Tanjung Aru, Kota
Kinabalu, Sabah (see case study on page 46).
Sale of Hotel and Leisure Properties (“HLP”)

In October 2000, Danaharta and the Special Administrators of seven companies launched a
joint tender, offering 11 hotels for sale. Danaharta had foreclosed on three of the hotels. At
the close of the tender in November 2000, 15 bids were received, of which three were
accepted. Another two hotels were sold after the tender closed. See case study on pages 44
and 45.
Special Administrators
NPL resolution of companies under Special Administration (SA- Scheme approved) showed
a recovery rate of 62% as at 31 December 2000. Further details on companies under Special
Administration can be found on pages 75 to 86.
LOAN DISPOSAL
As at 31 December 2000, Danaharta had completed three restricted tender exercises (“RTEs”)
to dispose foreign loan assets i.e. non-Ringgit loans and marketable securities extended to
or issued by foreign borrowers.
A summary of the three restricted tenders is as follows:
Restricted tender 1st 2nd 3rd

July to Aug. 1999 Dec. 1999 to Feb. 2000 Aug. to Sept. 2000
No. of accounts offered 15 28 45
Total principal value 142.5 251.8 168.8

USD million
No. of accounts sold or 13 25 29

settled by borrowers
Principal value of accounts 95.0 244.8 102.1
sold or settled by borrowers
(A) USD million
Consideration received 52.4m 173.2 66.3

(B) USD million (cash of USD36.5m (cash of USD169.3m (cash of USD64.2m
and instruments and instruments and instruments
worth USD15.9m) worth USD3.9m) worth USD2.1m)
Average recovery 55% 71% 65%

rate (B/A)%
For accounts disposed under the three RTEs, the average loan recovery rate is approximately
65%. No future disposal exercises are planned for foreign loan assets.
LOAN MANAGEMENT ST ATISTICS
As at 31 December 2000, Danaharta had within its portfolio 2,835 accounts relating to 2,507
borrowers, with a total gross value of RM47.49 billion. Danaharta has initiated recovery
measures with 98% of the borrowers in terms of value and 91% in number. Details of the
progress made by Danaharta in initiating recovery measures as at 31 December 2000 are
presented on the following page.
Contents 35
Loan Management Progress as at 31 December 2000
5% 9%
3%
20% 19%
10%
74%
11% 8%
18%
5%
2%
16%
74% Restructured/approved for restructuring 9% Performing

3% Proposal evaluated pending finalisation 19% Plain loan restructuring
10% Proposal submitted pending evaluation 18% Settlement
11% Recovery initiated pending submission of 16% Scheme of arrangement
proposal
5% Others
2% Recovery to be initiated
8% Special Administrators
20% Foreclosure
5% Legal action
RM47.49 billion
3%
6%
17%
13%
22%
16%
68%
7% 4%
6% 18%
9% 11%
68% Restructured/approved for restructuring 6% Performing

3% Proposal evaluated pending finalisation 22% Plain loan restructuring
13% Proposal submitted pending evaluation 18% Settlement
7% Recovery initiated pending submission of 11% Scheme of arrangement
proposal
6% Others
9% Recovery to be initiated
4% Special Administrators
16% Foreclosure
17% Legal action
2,507 borrowers
ASSET MANAGEMENT
MANAGEMENT OF SECURITIES
As at 31 December 2000, in the course of its recovery operations, Danaharta had in its
portfolio, securities with a market value of RM620 million. These comprise shares, as well as
redeemable, irredeemable and convertible securities, and will be realised into cash based on
Danaharta’s stated approach governing management of securities.
MANAGEMENT OF PROPERTIES
Properties that do not attract bids above the minimum price set by Danaharta in each
property tender are transferred to Danaharta Hartanah Sdn Bhd (a wholly-owned subsidiary
of Danaharta) via an automatic bid mechanism. These unsold properties are subsequently re-
offered to the market. These ‘secondary sales’ can be conducted in a variety of ways,
including sale by private contract (direct negotiation between Danaharta Hartanah and a
prospective buyer) or by offering the properties in the next open tender, together with other
newly foreclosed properties.
As at 31 December 2000, 193 unsold properties from the primary sales have been transferred
to Danaharta Hartanah. Of this, a total of 72 properties have been sold via private contract
sale or through Danaharta’s subsequent property tenders. Details of the secondary sales are
as follows:
Status of properties Number of Indicative Consideration C/IV %

under secondary sales properties value (IV) received (C)
(RM million) (RM million)
Re-offered and sold 41 43.96 35.55 81%

via private contract
Re-offered and sold in 31 113.07 89.22 79%
subsequent Danaharta
property tenders
Sub-total of 72 157.03 124.77 79%
properties sold
Withdrawn from sale 2 2.66 n/a n/a
Available for sale as at 119 417.32 n/a n/a
31 December 2000
Total re-offered to the market 193 577.01
Value enhancement by Danaharta Hartanah

One of the objectives of conducting the property tenders is to reduce the number of
properties that will eventually be managed by Danaharta. The tender process represents an
initial attempt to sell foreclosed property collateral for loans that cannot be restructured.
During the tender, Danaharta Hartanah submits a bid for each property at the minimum
price. Should the property remain unsold, it is transferred to Danaharta (at the minimum
price) and subsequently re-offered to the market.
Where necessary, Danaharta Hartanah will conduct value enhancement work on an unsold
property before re-offering it to the market. A recent example would be the refurbishment
work carried out on an industrial factory located in the Prai Industrial Estate, Penang (see the
case study on page 47).
Contents 37
DISTRIBUTION OF RECOVERY PROCEEDS
As at 31 December 2000, Danaharta has distributed a total of RM4.62 billion of recovery

proceeds as follows:
Distribution of recovery
1. Recovery proceeds for loans Cash

under management (RM)
NPLs of the BBMB Group and the Sime Bank Berhad Group 4,419,542,841.84
Sub-total 4,419,542,841.84
2. Recipient of surplus recovery No. of Cash

for acquired loans accounts (RM)
(a) The Pacific Bank Berhad 1 12,568,675.33

(b) Malayan Banking Berhad 2 30,135,709.35
(c) OCBC Bank Malaysia Berhad 1 148,898.61
(d) MBf Finance Berhad 1 136,000.00
(e) Bank Industri Malaysia Berhad 1 480,082.15
(f) Southern Bank Berhad 1 440,800.00
(g) Sabah Development Bank Berhad 1 3,828,714.24
(h) RHB Bank Berhad 2 57,070,851.84
(i) Bank of Commerce Malaysia Berhad 2 50,498,738.94
(j) Arab-Malaysia Finance Berhad 1 1,575,687.64
(k) RHB Sakura Merchant Bankers Berhad 1 10,622,769.81
(f) Bank Bumiputra Malaysia Berhad# 4 32,752,093.65
Sub-total 18 200,259,021.56
TOTAL DISTRIBUTED 4,619,801,863.40
# Relating to loans acquired at discounted prices by Pengurusan Danaharta Nasional Berhad

prior to the arrangement for Danaharta to manage the BBMB NPL portfolio. Payment made to
Danaharta Urus Sdn Bhd as the manager of BBMB NPLs.
Danaharta had acquired NPLs with a total gross value of RM20.39 billion at an average
discount of 55%, which may have led to shortfalls (difference between the loan outstanding
and the acquisition price) being suffered by selling financial institutions (“FIs”). However,
where Danaharta recovers more than the acquisition price it paid for a loan in addition to
holding and recovery costs incurred, it will share the surplus recovery with the selling FI.
Typically, the sharing is made on an 80(selling FI): 20(Danaharta) basis and the amount
receivable by the selling FI is limited to the shortfall value. Once Danaharta has realised its
acquisition costs (plus holding costs) in cash, it will distribute the surplus recovery to the FI
in the form of cash and securities.
With regard to the NPLs from the BBMB Group and the Sime Bank Group under the
management of Danaharta Urus Sdn Bhd and Danaharta Managers Sdn Bhd (both wholly-
owned subsidiaries of Danaharta) respectively, fees are levied as follows:
(a) If net recovery value is less than or equals net book value, Danaharta Urus/Danaharta
Managers receives 2% of the net recovery value.
(b) If net recovery value exceeds net book value, Danaharta Urus/Danaharta Managers
receives 2% of the net book value and 20% of the excess.
The amounts shown in the table are net of Danaharta’s fees.
SUMMARY OF ASSET MOVEMENT
Asset movements at six-month intervals up to 31 December 2000
50 47.4 48.2
45.6 12.0
45 7.6
3.0
40 39.3 3.1
8.9 2.7
35 18.4 12.0
30
25 19.7
20 30.6 11.8
15
10 18.7
5 12.4
–
Dec 98 June 99 Dec 99 June 00 Dec 00
Unrestructured NPLs Pending Implementation
Received Shortfall
Note: Except for unrestructured loans, all figures shown in the chart include accrued interest.
As with any other asset management company, the composition of Danaharta’s assets will
change over time from unrestructured NPLs to various asset groups and ultimately into cash.
Overall, there have been significant changes in respect of the composition of Danaharta’s
portfolio, as depicted in the above chart. As Danaharta moved from its establishment phase
to acquisition phase, its portfolio of NPLs (unrestructured at that stage) grew rapidly. In June
1999, its NPL portfolio stood at RM39.3 billion. From 1 July 1999, Danaharta moved into its
management phase and actively commenced recovery measures on the unrestructured NPLs
in its portfolio. As such, the above bar chart shows the gradual reduction of the
unrestructured component, replaced by the growth of other components representing NPLs
that have been processed where recovery proceeds have been received or pending
implementation. As at December 1999, Danaharta had initiated the recovery (via loan or asset
restructuring measures) on approximately RM15.0 billion of the portfolio (in gross value
terms). This amount increased to RM35.83 billion as at 31 December 2000 with RM12.4 billion
left to be resolved.
Based on the current pace and trend of its resolution activities, Danaharta is on track to
achieve its targeted closure by 2005.
Contents 39
SUPPORT DIVISIONS
CORPORATE SERVICES
The Corporate Services Division comprises three Units, namely Corporate Planning,
Corporate Finance and Research.
Corporate Planning Unit

During the year, the Corporate Planning Unit completed the
5-year business plan and budget for the Danaharta Gro u p .
The Unit implemented an improved reporting and
budgetary process with focus on cash flow management
and tighter post-implementation monitoring.
The Unit also participated in special projects on the stockbroking,

manufacturing, and hotel and leisure portfolios, and helped to
improve the custody function for both properties and shares.
Corporate Finance Unit

During the year, the Corporate Finance Unit actively supported various key areas of
Danaharta’s operations and also executed several special projects. For example, the Unit was
involved in:
• Evaluating and negotiating workout proposals submitted by corporate borrowers, in

particular those submitted by public listed companies and involving the issuance of
marketable securities.
• Formulating strategies to manage marketable securities received as settlement of debt via

workout proposals or received via foreclosure of loan collateral. In this regard, the Unit
conducted valuations of marketable securities for disposal purposes, in conjunction with
the Research Unit.
• Disposing the businesses and/or assets of wood-based, stockbroking, and hotel and
leisure companies to which Special Administrators had been appointed. Through the
appointment of Special Administrators, Danaharta (which had a total exposure of RM300
million to these 11 SBCs) managed to resolve the liabilities of the stockbroking companies
(“SBCs”) totaling RM2.81 billion. The resolution of these SBCs also attracted investments
of RM823.7 million in cash and RM430.4 million worth of instruments.
• Implementing two successful restricted tenders of foreign loan assets within Danaharta’s
portfolio, in conjunction with Danaharta Managers (L) Ltd.
Research Unit
During the year, the Research Unit undertook in-house research projects of special interest to
Danaharta. For example, the Unit conducted asset-focused research on property,
manufacturing and other sectors to which Danaharta was exposed. In addition, the Unit
provided information and analysis on macro-economic drivers that may have a material
impact on the management of assets.
RISK MANAGEMENT DIVISION
The Risk Management Division has grown substantially in strength and number, having
started its operations with other divisions after the establishment of Danaharta in June 1998.
Danaharta’s policy for the control and administration of risk is based on the concept of
“Enterprise Risk Management” which advocates centralising the co-ordination of an
organisation’s strategic response to risk. In Danaharta’s case, the centralisation is within the
Risk Management Division which comprises the Risk Management Unit and the Systems &
Methods Unit.
Risk Management Unit

During the year, Danaharta’s Board of Directors formally adopted Danaharta’s Risk
Management Policy which was formulated in line with Danaharta’s internal Standards of
Business Conduct and is also complementary to Danaharta’s business objectives.
In general, the function of the Risk Management Unit comprises the provision of general risk
advisory support services on all aspects of Danaharta’s operations from loan acquisition, loan
management and other operational functions right through to asset management. Areas of
support include, among other things, credit, market, operational and legal risks as well as
other non-tangibles such as reputational risk.
One of the main functions of this Unit lies in its independent review of loan management,
asset management and other project papers to ensure conformity and consistency in the
application of Danaharta’s policies and procedures throughout the Danaharta Group, and
also to highlight and mitigate pertinent risk issues.
Systems & Methods Unit

The responsibility of the Systems & Methods Unit lies, firstly, in the formulation of effective
procedures within the Danaharta Group. When drafting such procedures, particular care is
taken to ensure that management control and legal requirements are not compromised and
business is conducted in line with the company’s policies and objectives and the market’s
best practices in the most practical and efficient manner.
In order to achieve its objectives, the Unit has to undertake a certain amount of research on
what constitutes best practice as well as the compilation of relevant statistics to support its
formulation process.
The second function of this Unit is as the custodian for Danaharta’s policies and procedures
and the control point for their dissemination.
Finally, this Unit is instrumental in the process of rationalisation of existing procedures to

ensure that Danaharta’s operating procedures remain current, efficient and applicable
throughout Danaharta’s evolution.
Contents 41
FINANCE AND SERVICES DIVISION
The Finance and Services Division comprises the following Units:
Finance and Treasury Unit

The Finance and Treasury Unit is responsible for all aspects of Danaharta’s accounting, financial
management and treasury work, including management accounting as well as statutory
requirements. Monthly management reports are prepared in which the results of loan acquisitions,
loan and asset management and asset disposals are reported and compared to forecasts.
The Unit had also been responsible for the issue of around RM11.14 billion in face value of
government-guaranteed bonds to financial institutions for NPL acquisitions since the
beginning of Danaharta’s life.
Information Technology (“IT”) Unit

The IT Unit is responsible for all IT systems development, maintenance and operations.
Danaharta relies on IT to help compensate for its relatively small staff strength. IT is an
important part of Danaharta’s strategy to deal with its NPL portfolio in an efficient and
timely manner.
Administration Unit
This Unit is responsible for office administration matters necessary to support the various
Divisions of Danaharta.
LEGAL AFFAIRS DIVISION
The Legal Affairs Division comprises the following Units:
Legal Advisory Unit

The Legal Advisory Unit provides legal support services to Danaharta and its group of
companies. This includes legal advice on loan acquisitions, loan management (e.g. loan
restructurings, workout proposals & foreclosed property sales) and asset management.
During the year, the Unit was involved in preparing the Pengurusan Danaharta Nasional
Berhad (Amendment) Act 2000, which was passed by Parliament in July 2000. The
amendments are intended to:
• Clarify existing provisions of the Pengurusan Danaharta Nasional Berhad Act 1998 in order
to remove any doubts about their intended effect.
• Overcome practical difficulties which have arisen since Danaharta began operations.
Consequential amendments were made to the National Land Code through the National
Land Code (Amendment of the Fifteenth Schedule) Order 2000 which was gazetted on
30 November 2000.
The Unit was also involved in a nationwide tour to brief land administrators from the Office
of the Director of Land & Mines on Danaharta’s vesting procedures and transfer of
properties. These presentations will continue into 2001.
Secretarial Unit
The Secretarial Unit provides company secretarial services. Apart from maintaining the
Group’s statutory books and records and ensuring compliance with relevant laws, policies
and procedures relating to meetings of the Board, Board and management committees, the
Unit also acts as the secretariat to the Oversight Committee and the Tender Board.
COMMUNICATIONS AND HUMAN RESOURCE DIVISION
The Communications and Human Resource Division comprises the following Units:
Communications Unit
The Unit’s activities cover all aspects of public and investor relations,
advertising and event management. Given Danaharta’s strong commitment
to transparency in its operations, the Communications Unit continues its role
as a channel via which Danaharta updates all interested parties on its
objectives and activities in a timely manner. It is also responsible for
responding to queries from the public, Parliament, media and industry
analysts.
During the year, in addition to briefings to local and foreign analysts and fund managers,
supra-national organisations and various professional and trade associations, the Unit was
involved in briefings to local university lecturers and students together with regulators and
other government agencies. The Unit is also taking part in a nationwide tour to brief land
administrators from the Office of the Director of Land & Mines on Danaharta’s vesting
procedures and transfer of properties, together with representatives from the Property Division
and Legal Affairs Division.
The Communications Unit is responsible for all publications by Danaharta such as the
h a l f -yearly Operations Report and Annual Report, and has included quarterly
announcements for the first time this year.
Internally, the Unit was also involved in the marketing efforts related to the foreclosed
property tenders and the hotel and leisure property tender, among others.
Human Resource Unit

The Human Resource Unit is responsible for all human resource management needs of
Danaharta including recruitment, human resource development and personnel
administration. It also organises staff briefings on a regular basis on a variety of human
resource issues. Danaharta places great importance on managing its human resources given
the size and complexity of its mission.
Danaharta’s total employee strength grew from 237 as at the end of 1999 to 262 by the end of 2000.
Professional Staff Statistics (as at 31 December 2000)
Qualifications % Career Background %

Master’s Degree/ Local Banks 55
Professional Qualification 34 Foreign Banks 9
Bachelor’s Degree/Diploma 62 MNCs/International firms 13
Others 4 Local firms 18
Others 5
Working Experience % Age %

More than 3 years 100 More than 25 years 100
Gender %
Male 62
Female 38
Security Unit
The Security Unit, which comprises a team of 15 members, is responsible for security-related
matters including overseeing the security of Danaharta’s premises.
Contents 43
INTERNAL AUDIT AND COMPLIANCE DIVISION
The Internal Audit & Compliance Division plays an important role in contributing to
Danaharta’s good corporate governance. As part of the assurance process, the Division
conducts independent appraisals of the internal control framework covering all of
Danaharta’s business processes and activities to provide reasonable assurance to
management and the Board that the framework is robust, fit for purpose and functioning
efficiently and effectively. It maintains its independence and objectivity in reporting, by
being responsible functionally to the Audit Committee (“AC”).
The Division performs audits in accordance with approved internal audit plans. During the
year, a total of 15 audits were carried out covering most of Danaharta’s key business
operations and support activities, including loan management, property tenders, restricted
tenders of foreign loan assets, sales of securities, Special Administrator contracts and
treasury. Agreed actions arising from these audits were followed up with the Management
Executive Committee and the AC to ensure timely action is taken. The Division also provides
advice and support on internal controls in the development or revision of policies and
procedures for specific projects.
Danaharta’s adoption of Control Self-Assessment (“CSA”) by line management will lend a

different perspective in the appraisal process to provide assurance on the effectiveness of the
internal control framework. During the year, the Division conducted training on CSA for
180 staff members to stimulate risk and control awareness by encouraging them to talk about
risks and how those risks are managed and controlled. This is also to prepare the staff and
assist them in the development of a risk-based control framework and towards sustaining the
framework over time for continuous improvement. CSAwill be implemented formally from
2001 onwards.
As part of the formal self-appraisal and assurance process, Danaharta’s managers will be
required yearly (from 2002 onwards) to sign off and make representations on the
performance in important areas including integrity, risk management and internal controls,
accuracy of financial reporting and the Standards of Business Conduct (“SBC”).
Employees are required to observe and conduct themselves in accordance with the
requirements of Danaharta’s SBC policy (based on international best practice) when
performing their day-to-day activities. The Division assists the Board of Directors and
management in ensuring there is compliance with relevant laws and regulations as well as
Danaharta’s policies (in particular the SBC) that govern Danaharta’s activities. This is done
through conducting staff briefings and administering the annual declaration of independence
and financial disclosures as well as the pre-clearance for the buying & selling of stocks and
shares.
RESTRUCTURING CASE STUDIES
PERUSAHAAN SADUR TIMAH MALAYSIA BERHAD
Perusahaan Sadur Timah Malaysia Berhad (“Perstima”) is a manufacturer of electrolytic tin

plates. The company defaulted on its loan repayments in the second half of 1998 after years
of financial difficulties, caused in part by its diversification into areas of business in which it
had little expertise e.g. investment in shares. In January 1999, Perstima applied to the
Corporate Debt Restructuring Committee (“CDRC”) to consider its case, but was referred to
Danaharta in July 1999. This was to enable Danaharta to take the lead in resolving the case
given Danaharta’s exposure and the complexities involved.
Danaharta appointed Special Administrators over Perstima in September 1999. Upon

appointment, the Special Administrators assumed control of the assets and affairs of Perstima
and prepared a workout proposal for the company which addressed Perstima’s total debts of
around RM468 million. The workout proposal, in which the lenders and Perstima endured
‘haircuts’ of 30% and 90% respectively, was reviewed by an Independent Advisor and
subsequently approved at a secured creditors meeting in February 2000.
The proposal received the approval of the Securities Commission in June 2000 and was successfully
implemented by August 2000, at which point the SAs were released from their appointment.
Perstima acknowledges that it has been given a second chance in life. The new owners of Perstima
will focus on strengthening the company’s original business of electrolytic tin-plating. Perstima
also plans to increase its production output by 15% to 20% to further tap the export market.
HOTEL AND LEISURE PROPER TIES
Danaharta had earlier identified the hotel sector as one of the sectors that required a more
focused and specialised resolution approach. As at 31 December 2000, total loans outstanding
relating to hotel and leisure properties (“HLP”) within Danaharta’s porfolio amounted to
RM1.58 billion, with assets valued at RM2.2 billion. The portfolio comprised 47 assets - 31
operating hotels, six uncompleted hotels, three hotels which had closed operations, a
completed hotel which has remained unopened, two serviced apartments and four golf resorts.
Danaharta has been able to restructure many of the HLP-related NPLs to become performing
loans again. For loans where the borrowers were unable to restructure, Danaharta appointed
Special Administrators over the relevant companies as provided by the Danaharta Act.
The appointments of Special Administrators are to achieve the following objectives:
• Assume effective control of the business and assets and preserve the hotel business as a
going concern. This is because the inherent value of the hotel business (e.g. goodwill, hotel
operation, licences, clientele, tax benefits) may be worth more than the value of the assets
(i.e. land and building).
• Safeguard assets against theft, willful damage or sabotage.
• Formulate a restructuring scheme for the affected company, which would entail a disposal
of either the hotel business or the assets.
In cases where the appointment of Special Administrators was not viable, Danaharta had
foreclosed on the underlying collateral.
Contents 45
HLP tender
In October 2000, Danaharta and the Special Administrators of seven companies launched a
joint tender, offering 11 hotels for sale. Danaharta had foreclosed on three of the hotels. The
hotels are located one each in Kota Kinabalu, Sabah; Pulau Langkawi, Kedah; Kota Bharu,
Kelantan and Port Dickson, Negeri Sembilan; two each in Melaka and Johor Bahru, Johor;
and three in Pulau Pinang.
The HLP tender is in line with Danaharta’s approach to allow the market-
clearing mechanism to work. The target group for the tender included hotel
investors, hotel operators, asset class specialists, turnaround managers and
real estate agents who service hotel investors, as well as high net-worth
individuals.
No indicative values were provided during the tender. Danaharta had set a
new precedent in its disposal strategy by allowing bidders to set their own
bid prices without the guidance of an indicative value.
At the close of the tender in November 2000, 15 bids were received, of which
three were accepted. The successful bids were for the following properties:
Hotel Highest offer (cash)
Sale of foreclosed hotel by Danaharta
A 54-room resort in Port Dickson, Negeri Sembilan RM5,388,888.88
Sale by Special Administrators
A 126-room resort property known as Golden Pearl Island Resort,

Tanjung Tokong, Pulau Pinang RM15,000,000.00
A 3-star 200-room beach-front hotel in Tanjung Bungah,

Pulau Pinang RM19,100,000.00
The remaining two unsold foreclosed hotel properties were transferred to Danaharta
Perhotelan Sdn Bhd (a subsidiary of Danaharta that manages hotel properties) and later sold
through private contract for a combined consideration of RM20.4 million.
The Special Administrators, who currently control six hotels, will explore alternative options
to maximise recovery value from the assets and businesses of these hotels. These alternatives
may include a restricted tender open to investors who have indicated interest, sale by way of
negotiated private treaty, appointment of real estate agents to market specific assets,
structured deals, joint ventures, exit via guarantors or liquidation.
NASLEI ENTERPRISE SDN BHD
Naslei Enterprise Sdn Bhd (“NESB”), a property developer, was granted a term loan in 1981
to develop the Waikiki Condominium project in Tanjung Aru, Kota Kinabalu, Sabah. Sales
for the 234 units of condominiums commenced in 1982. However, the project was abandoned
in 1985 with only 45%-65% completion achieved. Subsequently, in 1989, Mr Gong Wee Ning
and two others of Coopers & Lybrand (now known as PricewaterhouseCoopers) were
appointed as Receivers pursuant to a court order. The creditor bank extended further loans
to NESB in 1991 and 1995 to help the company complete the project. The project was
eventually completed and the Certificate of Fitness was issued in February 1998.
The loan came into Danaharta’s portfolio in May 1999. Up to that point, efforts by the
Receivers to sell the remaining 110 unsold units had not progressed smoothly due to various
factors. Among these factors were legal impediments such as the Receivers’ power to sell
certain units and the Bumiputera quota. The project suffered from many physical ailments
such as poor roofing and design. In addition, it bore the stigma of an old abandoned project,
before refurbishment having been virtually unoccupied since 1998. Nevertheless, there were a
couple of bright spots, namely the project’s premier location in Tanjung
Aru, Kota Kinabalu and the fact that it is one of the last few good
condominium sites in the area.
Danaharta began meetings and discussions with the Receivers in August

1999 with a view to maximising recovery value and in August 2000, the
Receivers finally agreed to Danaharta’s proposed strategy to resolve the
loan. Danaharta then put the plan into action and accomplished, among
others, the following in August/ September 2000:
• Obtained a waiver from the Local Government and Housing Ministry on the Bumiputera
quota.
• Appointed a land surveyor to undertake a survey (for sub-division of master title) for
submission to the Land and Survey Department.
• Appointed real estate valuers to provide a valuation for the 110 unsold units - 52 two-
bedroom units and 58 three-bedroom units.
• Appointed a quantity surveyor and architect to advise on the necessary refurbishment

works, conducted tenders for various refurbishment packages and appointed contractors
to commence work.
Pre-marketing of the unsold units began in October 2000 and within two
weeks, all the units were sold, at valuation, for a total consideration of
RM29.9 million, 19 years after the developer received the initial loan for the
project. The refurbishment works were completed in November 2000 and
a property manager has been in place since January 2001 to manage the
day-to-day affairs of the condominium.
after refurbishment
Contents 47
before refurbishment
REFURBISHED FACTOR Y
Danaharta had foreclosed on a factory in Seberang Prai, Pulau Pinang,

under section 57 of the Danaharta Act and offered it in the property tenders
in November 1999 and March 2000. No acceptable bid was received
probably because the building was in a dilapidated state with large sections
of the roof missing.
In May 2000, Danaharta decided to refurbish the building (which by now

had been transferred to Danaharta Hartanah) in order to enhance its
marketability. Danaharta Hartanah re-appointed the original architect and
engineers and engaged one of its panel quantity surveyors to undertake the
tender exercise and administer the contract. The refurbishment was
completed in December 2000, in just 5 months and within budget.
Danaharta Hartanah was able to secure a six-year tenancy agreement with
a multinational corporation, beginning 1 March 2001. The total
refurbishment cost of RM4.5 million is expected to be recouped within 3
years.
PROPERTY DEVELOPER (“Company”) after refurbishment
The Company is involved in a mixed development project for a new township (“the Project”)
in Johor. The Project covers a total area of 1,288 acres, which is divided into five phases to be
developed over a period of 10 years. When the recession began in 1997 and continued into
1998, the Company experienced cash flow problems and defaulted on its loan repayments.
A financial consultant was appointed by the lending bank to monitor and supervise the
Project. Danaharta later acquired the loan in 1998.
At this stage, Phase I of the Project, which was launched towards the end of 1997, was 30%
sold and 35% completed. A viability study of the Project showed that the completion of
Phase I would greatly increase the attractiveness and saleability of subsequent phases. As
purchasers move into their houses and the commercial lots are filled, the area would be re-
populated. Increased activities around the area would in turn promote the sale of the unsold
units and enhance the value of the remaining phases within the Project.
Therefore, instead of abandoning the Project, it was proposed that Phase I be completed, but
with a revised number of units. After establishing the viability of the proposal, Danaharta
extended bridging financing, with stringent conditions, to the Company to enable it to
proceed with the Project. A quantity surveyor was also appointed to monitor and verify the
claims.
Danaharta also resolved a key issue of subdivided land titles for the Project. The Company
is now progressing well with the Project, having sold 65% of the units in Phase I.
Construction of both building and infrastructure is around 85% completed and the Company
expects to obtain the Certificate of Fitness for Occupation by the end of 2001.
The Company has been able to reduce its outstanding loan quite significantly. The success of
the loan restructuring is also indicated by the recent launching and good response to low-cost
houses (61% sold) under Phase II of the Project.
GOURMET BAKER Y
This Bakery was first highlighted in a case study in Danaharta’s 1998 Annual Report.
Ever since the Swiss parent company took over the Bakery in 1999, it has invested around
RM25 million in the Bakery’s operations. During the year, the Bakery received a further
boost from its parent company and settled in full its outstanding loan with Danaharta. This
was well ahead of its target in the workout proposal agreed by secured creditors.
One of the Bakery’s main problems in the past was that its factory did not operate at an
optimal level - it was too large for just the domestic market, but not large enough to cater to
the export market in a cost-effective manner. The recent launch of the Bakery’s new facilities
will finally enable it to tap the export market economically. Given that the Bakery is the
production hub for its Asian business, the Bakery is expected to achieve a three-fold jump in
turnover and increase its export sales from 60% to 80% of total sales. Its major export markets
include Japan, Singapore, Hong Kong, Taiwan, the United States and the Middle East.
MEKAR IDAMAN SDN BHD
On 30 September 1993, the government of Malaysia awarded the Penang Bridge concession
to Mekar Idaman Sdn Bhd (“MISB”) in which MISB was granted the right to manage,
operate, maintain and collect toll on the Penang Bridge. The consideration of RM550.0 million
to the government was financed by a syndicated term loan arranged by RHB Sakura
Merchant Bankers Berhad.
MISB subsequently entered into an agreement with Intria Berhad (“Intria”) to inject the
Penang Bridge concession into Intria. Part of the consideration for this asset injection was
satisfied through the issuance of new Intria shares, which were partly pledged by MISB as
security for the syndicated term loan. Following the asset injection, the principal source of
repayment on the syndicated loan was the dividends to be received on the Intria shares
and/or the divestment of the Intria shares held by MISB.
The adverse economic conditions in late 1997 and early 1998 coupled with the high prevailing
interest rate caused MISB to default on its loan. In April 1998, the syndicated lenders
appointed Messrs. Arthur Andersen as the Receivers & Managers (“R&M”) for MISB.
Danaharta acquired the loan from all the syndicated lenders in April 1999. Given that MISB
did not submit a plausible workout proposal, the only loan recovery avenue available was to
dispose the pledged Intria shares. However, given that the share market was soft at the time,
Danaharta recognised that disposing the pledged shares via the open market might not yield
the optimum values for the shares. In addition, premiums attached to controlling blocks of
shares would also diminish if the sale is conducted through the open market. Given these
considerations, Danaharta decided that an “en-bloc” sale of the pledged shares via an open
tender exercise would yield better recovery values.
The R&M, in liaison with Danaharta, then invited interested parties to bid for the pledged
Intria shares. The closing of the tender exercise was held in February 2000 at the premises of
the R&M. To add transparancy to the bidding process, all bidders were present to witness the
opening of the bids.
United Engineers (M) Berhad succesfully tendered for the pledged Intria shares with a bid of
RM371.8 million. This translated to RM1.07 per share vis-a-vis the prevailing market price of
RM0.99 per share based on the 1-month weighted average share price as at the closing date
of the tender exercise. The sale of the shares has now been completed.
By invoking market forces in an open tender process as a means to recovery, Danaharta

managed to achieve full recovery of the outstanding loan amount.
Contents 49
POST BALANCE SHEET REVIEW
NPLs OF SIME MERCHANT BANKERS BERHAD (“Sime Merchant”)
During the year, 43 accounts with a total gross value of RM299.4 million were transferred
from Sime Merchant to Danaharta Managers Sdn Bhd.
SALE OF HOTEL AND LEISURE PROPERTIES
Danaharta sold two more hotels for a total consideration of RM20.4 million after the hotel and
leisure property tender closed in November 2000.
SUB-UNDERWRITING OF TIME DOTCOM SHARES
Danaharta had taken over NPLs with a gross value of approximately RM355 million, which
were extended by various banks to Time Engineering Berhad (“Time Engineering”). These
NPLs, which were largely unsecured, were held by Danaharta (RM54 million), and two of its
wholly-owned loan management subsidiaries, Danaharta Urus Sdn Bhd (RM169 million) and
Danaharta Managers Sdn Bhd (RM132 million).
Similar to other creditors of Time Engineering, Danaharta had concluded that the best way to
maximise recovery value was to participate in the Time Engineering restructuring scheme,
the success of which is based on the listing of Time dotCom Berhad (“Time dotCom”).
In essence, the terms of the restructuring scheme are as follows:
• Danaharta will convert its NPLs into Time Engineering notes.
• Repayment of the Time Engineering notes would be from the proceeds of the Initial Public
Offering (“IPO”) of Time dotCom shares.
• The unsubscribed portion of the shares would be given to Danaharta as full settlement of
the Time Engineering notes in the event that the IPO is not fully subscribed.
The IPO was under-subscribed. As such, to date, Danaharta has realised approximately
RM91 million in cash from the redemption of Time Engineering notes and holds about
80 million Time dotCom shares representing 3.16% of the issued and paid-up capital of
Time dotCom. At the current market value, Danaharta’s expected recovery rate for the
Time Engineering NPLs is about 70%. This recovery rate is satisfactory given the unsecured
nature of the NPLs.
Danaharta did not inject any cash into Time dotCom in return for the shares; neither did
Danaharta buy any Time dotCom shares from the open market. Instead, it was a conversion
of debts owed i.e. the NPLs, into equity. This approach is commonly used by Danaharta in
respect of unsecured NPLs of listed companies.
Feature Articles
51 Critical Factors in Danaharta’s Progress
54 Importance of Risk Management in Financial Institutions
58 Solving the Non-Performing Loan Problem

– Are Asset Management Companies the Only Option?
62 Strategic Issues for Restructuring

FeatureContents
Articles 51
CRITICAL FACTORS IN DANAHAR TA’S PROGRESS
Having been in operation for the last 2 1/2 years, it is timely for Danaharta to step back and
examine what it has accomplished in light of its objectives. Danaharta was established by the
Malaysian government in June 1998 as part of a three-pronged measure to pre-empt a
banking crisis. Danaharta is mandated to achieve two main objectives:
• Effect a system-wide carve-out to remove non-performing loans (“NPLs”).

• Maximise recovery values.
As at 31 December 2000, Danaharta has under its management, NPLs amounting to

RM47.49 billion pertaining to 2,507 borrowers. Danaharta had restructured or approved for
restructuring 74% of its NPL portfolio, which amounted to RM35.83 billion, while the
expected recovery rate was 66%.
Thus far, Danaharta has met all its targets well within the set deadlines:
Establishment Phase
• Established a fully-functional asset management company (“AMC”) in three months,

compared to other AMCs which took between 7 and 15 months.
Acquisition Phase
• Acquired RM8.1 billion (gross value) of NPLs between September and December 1998
{target: RM8 billion}.
• Completed the primary acquisition exercise by end-June 1999 {target: end-December 1999}.
• Reduced net NPLs in the banking system to single-digit rates {as at end-December 2000,
the net NPL ratio on a 6-month basis was 6.3%}.
Management Phase
• Resolved RM32.15 billion (gross value) of NPLs by end-June 2000 {target: RM30 billion}.
The following factors contributed significantly to Danaharta’s ability to achieve the set
targets thus far:
CLEARLY THOUGHT-OUT PROCESS
The decision to establish Danaharta was a pre-emptive measure to avert a systemic banking
crisis at all cost. The economy went into recession from a position of strength (the risk-
weighted capital ratio of banks stood at 12% while net NPL was 2.2% in June 1997). What
Malaysia faced was a distressed banking sector, not a banking crisis. In formulating
Danaharta’s approach, the thought process involved analysing the national situation to
decide which AMC model or approach could be applied and how Danaharta could shape the
environment to enable it to operate in an efficient and expeditious manner.
The following initial operating conditions were taken into consideration:
• Is the banking system in a critical condition? (stress-tests were conducted)

• Has the economy grounded to a halt?
• What is the nature and magnitude of the NPL problem?
• Are the bankruptcy laws adequate?
• What are the sources of funding?
52 Feature Articles
The next step was to look at how the environment in which the AMC will be operating could
be improved and enhanced. This entailed the following:
• Giving special enforceable powers to the AMC.

• Setting achievable and focused objectives, goals, and targets.
• Developing clear operational guidelines.
• Research into the experiences and methods of other AMCs which could be adopted and
adapted.
• Outsourcing or implementing smart partnerships where necessary.
The thought processes that Danaharta went through in formulating its approaches, policies
and guidelines invariably involved consultation with regulatory bodies and discussions with
bankers, property players, business leaders and analysts. More importantly, these
approaches, policies and guidelines have been clearly communicated or made available to all
the relevant parties. This has been instrumental in ensuring Danaharta’s progress thus far.
INTERNATIONAL PRECEDENCE
Danaharta does not believe in a “one size fits all” solution to a banking crisis. It has taken
cognisance of, adopted and adapted, the experiences of other AMC-type vehicles worldwide
to suit its purpose. In formulating its approach, Danaharta referred to and researched on not
only the different types of AMC models and approaches, but also the underlying factors
which led to the adoption of such models and approaches in the first place. This is because
conclusions on the effectiveness of AMCs based on some quantitative measure such as
recovery rates is futile as the circumstances faced by each country are different.
Danaharta had extensively consulted with and benefited from the experti se of
e x - practitioners from Securum of Sweden and the Resolution Trust Corporation of the
United States during its establishment phase. Danaharta has also strengthened and
broadened its knowledge through regular dialogues, open exchange of views and ideas as
well as close working relationships with other AMCs in the region, namely Indonesian Bank
Restructuring Agency (IBRA), Financial Sector Restructuring Agency (FRA) of Thailand and
Korean Asset Management Corporation (KAMCO).
CONCENTRATION ON LARGER-SIZED NPLs
Danaharta modelled itself as a true asset management company i.e. dealing with NPLs on an
account-by-account basis and ensuring that in each case, the method of recovery used would
reap the best results. Given this philosophy, Danaharta set about designing an acquisition
approach that would result in a manageable number of accounts to be dealt with whilst in
value terms, be large enough to adequately relieve the pressure on the banking system.
At that juncture, NPLs above RM5 million (USD1.3 million) constituted about 70% of the total
NPLs in the system, and in terms of number of accounts, were estimated to be between
2,000 and 3,000 (compared with more than 500,000 and 150,000 accounts which FRA and
IBRAhave had to contend with respectively). Danaharta was of the view that small consumer
NPLs would be best handled by the financial institutions themselves. The sheer number of
accounts related to small loans makes it cost and time ineffective to be dealt with by a
centralised AMC. Danaharta felt that different types of recovery methods and recovery
agents may be needed for different types of borrowers i.e. large business loans need to be
treated differently from small consumer loans. Hence, the RM5 million threshold for NPL
acquisition had made the number of accounts more manageable given the fact that Danaharta
had targeted for its staff strength to be approximately 300.
FeatureContents
Articles 53
NPL RESOLUTION VERSUS NPL DISPOSAL
A rapid disposal agency would be beneficial in a situation where the magnitude of the
problem is too large and there is insufficient funding, expertise or special powers which
could give the AMC a clear advantage over banks in restructuring the NPLs. If the AMC has
the ability to perform over and above the standard of purchasers of distressed loans such as
the internationally-renowned foreign investment banks, then they should act as a centralised,
restructuring vehicle. Furthermore, initial research indicated that a significant proportion of
the larger NPLs in the Malaysian banking system were structural in nature and may require
both financial and corporate restructuring.
PENGURUSAN DANAHAR TA NASIONAL BERHAD ACT 1998 (“Danaharta Act”)
The existing legal framework in Malaysia, which is based on British law, is adequate
especially with respect to bankruptcy and foreclosure laws. However, in order for an AMC
to be able to carry out its functions in an effective and expeditious manner, Danaharta
proposed at the onset that it be given special powers over and above those of the banking
institutions. The Danaharta Act of Parliament was approved in September 1998 and gave
Danaharta special powers including the ability to:
• Acquire NPLs via statutory vesting.

• Manage corporate borrowers through the appointment of Special Administrators
(akin to Judicial Managers in the UK).
An amendment to the National Land Code also allowed Danaharta to foreclose on assets by
giving 30 days’ notice to the borrower, therefore bypassing the court auction process.
The Danaharta Act was passed in Parliament within three months. It was further amended
in September 2000 to clarify existing provisions in the Act and to overcome practical
difficulties in enforcing the provisions.
PRIVATE-SECTOR DRIVEN
Danaharta was established under the Companies Act, 1965, but is 100%-owned by the
Minister of Finance, Incorporated. Notwithstanding that, Danaharta is staffed by private-
sector professionals and thus, its management style and working environment are very much
influenced by private-sector practices. Danaharta has undertaken steps to ensure that proper
governance, international commercial best practices and adequate transparency and
disclosure practices are followed in its operations.
GOVERNANCE
Danaharta maintains a high standard of business conduct, based on international best

practice. In addition to the governing bodies and internal controls that oversee Danaharta’s
operations, Danaharta is committed to transparency in its operations and takes a pro-active
approach towards disclosure and communication. Danaharta believes that one of the most
effective methods of good governance is transparency. Not only does transparency instill the
discipline to adopt best practices and sound governance, but it also inspires market
confidence.
POLITICAL WILL
Finally, without the political will for Danaharta to do its job, Danaharta would not have
moved as quickly or effectively as it has done. The smooth passage of the Danaharta Act
through Parliament is but an example of the support of the government.
54 Feature Articles
IMPOR TANCE OF RISK MANAGEMENT IN FINANCIAL INSTITUTIONS
The management of risk is fundamental to the business of banking and is an essential

element of any bank’s strategy. Financial institutions face an array of risks, the most
important of them being credit risk, liquidity risk including market risk, and foreign
exchange and interest rate risks. The success or otherwise of the bank relies upon its proactive
rather than reactive management of risk.
In light of the recent economic crisis, the importance of establishing a comprehensive risk-
control framework for the identification, measurement and monitoring of all financial
(market, credit and operational) risks can no longer be underestimated. A lesson for the
financial institutions to learn from the 1997 crisis is that they should ensure that they have
adequate infrastructure to insulate themselves from the risk of unexpected losses. This is
particularly important as history has shown that poor risk management practices can lead to
significant losses to shareholders as evidenced by a number of prominent organisations
suffering significant losses.
It is therefore critical for financial institutions to evaluate their risk management capabilities
and strengthen their risk management practices so that they can meet the current challenges,
and more importantly, position themselves better to meet future challenges.
Risk management aims to provide banks with a better view of the future and the ability to
define the business policy accordingly.
CAUSES OF NPLs
The Asian crisis, which hit the region in 1997, has largely been stated as the cause of NPLs in
the financial sector. However, it would be fair to classify the causes of NPLs into three broad
categories namely, crisis-related, borrower-related and financial institution-related as
follows:
Crisis-related reasons Borrower-related reasons FI-related reasons
High interest rates Inappropriate business Asset-backed lending

practices
Credit crunch - Non-viable business Name lending

Financial Institutions
withdrew credit lines
Foreign loan exposure Over-expansion of business Poor credit or

evaluation understanding of
borrower’s business
Poor business High-risk nature of Poor monitoring of

conditions borrower’s business/ loans
environment
Change in business Poor management Poor structure of

conditions loans
Any single loan could have multiple reasons for turning non-performing, but it would not be
far wrong to say that the inadequacies of credit management practices within the banking
industry had played a role in contributing to the NPL situation in the country.
FeatureContents
Articles 55
RISK MANAGEMENT PRACTICES
Research has shown that risk management in many Asian financial institutions seems, in
many instances, more apparent than real. There is a gap between the laudable desire of senior
management to implement effective risk management practices and the implementation of
such practices throughout the organisation. The inherent weaknesses include basic
fundamentals such as:
• Poor understanding of the risks inherent in the organisation;

• Poor liquidity management;
• Lack of proper credit risk evaluation and management;
• Ill-defined and structurally non-cohesive internal processes and accountabilities; and
• Inappropriate risk management systems.
Arising from the above, risk management practices in the financial institutions continue to
remain fragile. Risk management has thus far been largely driven by the regulatory
authorities and is largely implemented to the extent required by regulation. Up until today,
many financial institutions place heavy reliance on the regulatory authorities to define the
standards for risk management. It is crucial for financial institutions to recognise that
regulators impose minimum control standards and that best risk management practices
require the tailoring of risk management practices to the overall vision, business strategies
and goals of the individual organisation.
Best practice also advocates that financial institutions strengthen their risk management
practices in order to:
• Assist organisations in minimising the likelihood of unexpected damage to earnings,

reputation or investors, business associates, customers and staff confidence;
• Contribute to greater operational effectiveness and efficiency, a better understanding of
risks and better decision-making processes; and
• Promote a more risk-aware organisation culture.
In developing a risk control framework, the biggest challenge lies with identifying the vast
range of risks that a bank is exposed to in its day-to-day activities. Risk identification is key
to addressing the enormous task of developing an effective risk management framework.
Careful planning and an effective methodology are critical factors for success.
STRATEGIC RISK MANAGEMENT
In general, a bank’s success as a financial intermediary is directly tied to its efficiency of risk
management and control. For strategic positioning of the balance sheet, Asset/Liability
Management (“ALM”) is a critical function in any business, and particularly so for a financial
institution. The ALM process is essentially concerned with the risk-return profile of the bank.
It is common practice for the Board of Directors to delegate responsibility for ALM to an
Asset/Liability Management Committee (“ALCO”). Not only does effective ALM contribute
significantly to the profitable growth of the institution, but it can be the key to the
institution’s very survival. Current cutting edge thinking would appear to recommend that
the scope of the ALCO be extended to cover all categories of risk in order to provide a
comprehensive measure of the risk-adjusted returns and, in so doing, become the true
custodian of the balance sheet.
The role of the ALCO may be further defined as covering the bank’s strategic response to risk.
Risk in this context would cover Enterprise Wide Risk. With regard to Enterprise Wide Risk,
the ALCO’s role would be to not only co-ordinate the bank’s short-term responses to risk
stimuli, but also provide strategic direction on the management of risk in order that the
bank’s vision may be realised. Ultimately, the decisions of the ALCO will effect changes in the
structure of the balance sheet as well as the delivery and support of the business strategy of
the financial institution.
56 Feature Articles
CORPORATE GOVERNANCE
The Malaysian Code of Corporate Governance aims to set out principles and best practices
on structures and processes that companies may use in their operations towards achieving
the optimal governance framework - which also entails effective risk management practices.
These structures and processes exist at a micro level and include issues such as the
composition of the board, procedures for recruiting new directors, remuneration of directors,
the use of board committees, their mandates and their activities.
In the context of a financial institution, the responsibility for maintenance of the banking
system and markets is being redefined as a partnership among a number of key players who
manage various dimensions of financial and operational risks.
In a summarised version, the workings of this risk management partnership may be viewed
as follows:
Key Players Responsibilities
Legal and Regulatory Set regulatory framework, including certain risk exposure
Authorities limits and other risk management parameters, which will
optimise risk management in the banking sector.
Supervisory Authorities Monitor financial viability and effectiveness of risk

management. Check compliance with regulations.
Shareholders Appoint “fit and proper” boards, management and auditors.
Board of Directors • Review and adopt strategic plans for the organisation.
• Oversee the conduct of the organisation’s business.
• Identify principal risks and ensure implementation of
appropriate systems to manage these risks.
• Succession planning.
• Developing and implementing an investor relations
programme or shareholder communications policy for the
organisation.
• Review the adequacy and the integrity of the company’s
internal control systems.
Executive Management Create systems to implement board policies, including risk

management, in day-to-day operations.
Audit Committee/ • Consider the appointment of external auditor, audit fee, etc.
Internal Audit • Discuss with external auditor before the audit commences,
the nature and scope of the audit.
• Review quarterly and year-end financial statements of the
organisation particularly on:
1. Any changes in accounting policies and practices.
2. Significant adjustments arising from the audit.
3. The going concern assumption.
4. Compliance with accounting standards and other legal
requirements.
FeatureContents
Articles 57
Key Players and Responsibilities Accountability (dimension of risk for which responsible)
Audit Committee/ • Discuss problems and reservations arising from the interim
Internal Audit and final audits, and any matter the auditor may wish to
discuss (in the absence of management where necessary).
• Review the external auditor’s management letter and
management’s response.
• Do the following where an internal audit function exists:
1. Review the adequacy of the scope, functions and
resources of the internal audit function, and that it has
the necessary authority to carry out its work.
2. Review the internal audit programme and results of the
internal audit process and where necessary ensure that
appropriate action is taken on the recommendations of
the internal audit function.
3. Review any appraisal or assessment of the performance
of members of the internal audit function.
4. Approve any appointment or termination of senior staff
members of the internal audit function.
5. Inform itself of resignations of internal audit staff
members and provide the resigning staff member an
opportunity to submit his reasons for resigning.
External Auditors • Express opinion and assess adherence to risk management

policies.
• Ensure adequate and proper disclosure.
Investors/Depositors • Understand responsibility and insist on proper and

adequate disclosure.
• Take responsibility for own decisions.
Rating Agencies and Media • Carry out detailed analysis on viability of companies.
• Assess information provided and prepare independent
evaluation and assessment (upside and downside) of the
company’s strengths.
Analysts Emphasise risk issues and provide unbiased advice to clients.
The main objective of the matrix above is to clearly define risk responsibilities and to
encourage a better system of identification and recording of these risks as well as more
effective and co-ordinated mitigation strategies. As globalisation sets in, the importance of all
of the above should not be undervalued. In order to compete effectively and efficiently, the
institution must be able to understand and mitigate the risks it faces such that its pricing
decisions are realistic and remain competitive.
Finally, as a result of the Asian financial crisis, financial institutions are experiencing an
inordinate amount of change. Risk management practices in many of these organisations
generally have not kept pace with this change. Risk management should no longer be seen as
an option for any financial institution and must be considered not only an essential cost of
doing business, but also an essential component in establishing effective corporate
governance within the institution.
58 Feature Articles
SOLVING THE NON-PERFORMING LOAN PROBLEM

– ARE ASSET MANAGEMENT COMPANIES THE ONLY OPTION?
BACKGROUND
In a scenario where individual banks face failure or where the banking sector is distressed or
in danger of a systemic failure, the proportion of non-performing loans (“NPLs”) to total
loans in the banking sector increases significantly, due to the erosion in value of the collateral
assets or a deterioration in the borrowers’ repayment capacity. NPLs are caused by a
multitude of factors - economic slowdown, improper or a lack of credit or risk management
practices of the banks, loans given out for non-viable businesses or projects or even fraud.
If these NPLs are not dealt with, there would be inherent direct or indirect
costs to the economy. The financial institutions may become distracted
with the additional efforts required to manage these problem loans. Banks
may lose sight of their core activities due to the distraction of having to
balance their books in light of the possibility of huge write-offs on loan
losses. As a result, banks may not be willing to lend and financial
intermediation may not take place, thereby exacerbating the slowdown in
the economy as credit is not made available for economic growth.
There are two options available - the first is the traditional option, which is
to allow banks to handle the NPLs in their own way. The second option is
to take the asset management company (“AMC”) route (Note: AMCs are
also known as NPL resolution agencies) which could be in the form of government-owned
AMCs; or private sector AMCs where (a) individual banks or groups of banks set up their
own AMCs or (b) NPLs are sold to foreign buyers to resolve.
THE TRADITIONAL OPTION...
The traditional option would consist of either continuing the negotiation with the borrowers
to restructure the loans or transferring the loans into a separate unit within the banks,
commonly known as the “ICU” where loan recovery is pursued in earnest. In most cases,
banks are better placed to resolve NPLs as they have informational advantage through their
existing long-standing relationship with their clients. They can work with these borrowers,
who have a better understanding of the true value of the assets, to get the best recovery.
Leaving the NPLs on the banks’ balance sheets may also incentivise the banks to maximise
recovery value and avoid writing off these loans, and to avoid future losses by improving
their loan approval and monitoring procedures. The banks also have the advantage of being
able to provide further drawdown of existing facilities or to extend new loans in the context
of loan restructuring. The traditional option is especially useful in dealing with small
businesses or consumer NPLs where the personal touch (i.e. relationship banking) is
required. The high volume of these small loans makes the centralised AMC route ineffective
in terms of time and cost.
If these small NPLs are carved out and dealt with by AMCs, the recovery rates from these
loans would be dependent on the type, methods and objectives of the AMCs. A rapid
disposition agency would achieve quick disposal of the loans or assets, but usually at
depressed or even “fire-sale” prices. AMCs that are not under time constraints could fall into
the trap of being a warehouse agency especially if there is no market for the sale of NPLs or
if the market for collateral assets is weak. There is also the problem of perception - AMCs
have been perceived as a bailout vehicle, be it for the banks or the corporate borrowers, or
subject to political interference and bureaucracy, if they are initiated by the government.
FeatureContents
Articles 59
...MAY NOT ALWAYS WORK
However, the traditional approach of resolving bad loans does not work in a crisis situation
where the flow of information and movement of capital is fast and furious. Where timely and
decisive action is required to avert a systemic failure or to help put the banking sector on its
feet again, a more holistic and concerted approach is needed. The banking sector landscape
has evolved over the years - gone are the days when relationship banking was the order of
the day. The “one borrower, one bank” scenario has evolved into that of “one borrower, many
banks”. Resolution of bad loans through the traditional option would not be effective as this
fragmented approach does not deal with the borrower per se - the crux of the issue - but is
more of a resolution of each individual loan.
Financial institutions may face a moral hazard issue when coming to terms with these NPLs
- there is an inherent reluctance to accept large write-offs on loan losses. There exists the
possibility that banks may want to avoid making such write-offs and the loans may remain
uncollected, especially if they were originally given on “dubious” or less than commercial
grounds.
The resolution of bad loans through the traditional approach would depend upon the
existing legal infrastructure, in particular the bankruptcy and foreclosure laws, and more
importantly, its enforceability. More often than not, recovery under existing laws would take
time, and in most developing countries, enhancements need to be made to these laws first to
enhance the prospect of loan recovery. Financial institutions do not have any special powers
which could help expedite the process, and also do not have the ability or luxury of allocating
sufficient resources to work on loan recovery, as the recovery process requires time and effort,
and a different level of expertise which not everyone is equipped with.
The distraction of managing NPLs, especially during a crisis situation, could result in
financial institutions not focussing on their core activities and as such, financial
intermediation in the economy could break down, leading to a credit crunch which could
cause economic growth to grind to a halt. Hence, the establishment of AMCs may seem to
be the only realistic option at a time when economic recovery is the underlying objective.
THE AMC OPTION
“Asset management companies” is a catch-all phrase that describes agencies established to

deal with NPL problems in the banking sector by removing NPLs from the financial
institutions with the objective of recovering value from the resolution or disposal of these
loans or assets. In many countries which have experienced bank failures or a banking sector
crisis where the NPL levels are unsustainably high, it has been the norm rather than the
exception that the government of the day establishes an AMC. Examples have been the
Resolution Trust Corporation of the United States, Securum of Sweden, FOBAPROA (now
known as IPAB) of Mexico, the AMCs in Africa, Eastern and Central Europe; and most
recently, the AMCs of the Asian region - Danaharta of Malaysia, IBRAof Indonesia, KAMCO
of Korea and FRA of Thailand, to name a few. It has been the experience of these countries
that AMCs, together with the establishment of a recapitalisation agency, do contribute
towards banking sector restructuring in particular, and economic recovery in general.
There are many advantages of establishing an AMC - first and foremost is that the AMC is
able to move in an expeditious manner and remove the distraction of managing NPLs from
the banking system. This frees up resources within the financial institutions and allows them
to concentrate on their core activities so that financial intermediation is uninterrupted. Direct
and indirect effects on the economy are hence minimised, especially during a crisis situation.
60 Feature Articles
The setting-up of a centralised AMC could lead to a more holistic, organised and focused
approach towards NPL resolution as the AMC would have a specific objective - to maximise
recovery value - and not have to contend with other goals as would be the case for the
financial institutions. The AMC would benefit from economies of scale in terms of the
deployment of its resources, especially in management of the loans or collateral, and the
subsequent disposal of these assets.
Although it can be useful during a country’s formative and developing years, the corporate
sector link with banks (for example, the link between Korean banks and the conglomerates
known as the “chaebol”) can be a double-edged sword if loans are given on less than
commercial grounds. A proper break of this link may be the key to unlocking difficult
restructuring cases.
The moral hazard issue where banks are unwilling to write off large loan losses can also be
effectively dealt with by selling NPLs to an AMC. Whilst the valuation of loans and collateral
assets undertaken by AMCs, based on fair market value, tend to be lower than net book
value, the lower values can be made more palatable to the banks if NPLs are acquired on a
willing-buyer, willing-seller basis with a profit-sharing element attached to the purchase
consideration. A percentage of the surplus recovery is offered to the selling banks as an
incentive to sell the NPLs to the AMC.
Where the AMC is a government-sponsored entity, special powers can be conferred to it to

enable the AMC to pursue its objectives in an expeditious and efficient manner. This could
include powers to seize, control or foreclose on assets of the borrowers, to seize control of a
corporate entity, and to transfer the rights as a chargee from the selling banks through
statutory vesting.
THE AMC OPTION CAN BE SUCCESSFUL IF...
Danaharta believes that AMCs, in whatever form or type that suits the national situation,
should and must be used in banking sector restructuring. There are different types of AMCs,
ranging from the rapid disposition agencies at one extreme, to the warehouse-type agencies
at the other, whilst there are also the true AMCs which focus on NPL resolution. The
effectiveness of the type and approach chosen for the AMC would depend on several factors:
• Nature of the problem

Structural NPLs or those caused by factors other than an economic slowdown would
require not only financial restructuring, but also corporate and operational restructuring.
Larger corporate loans would require a different treatment as opposed to small consumer
loans which are better handled by the banks themselves.
• Magnitude of the problem

The size of the NPL problem in terms of number of accounts would determine whether it
is cost and time-effective to pursue an NPL resolution strategy as opposed to outright
NPL disposal.
• Effectiveness of existing debt recovery policies, guidelines and methods

If the financial institutions have a better degree of success in debt recovery, and existing
guidelines and methods of debt recovery are adequate, then private-sector AMCs are
better suited to deal with the NPLs.
FeatureContents
Articles 61
• Legal infrastructure
Central to recovery efforts is the existing legal framework, particularly the bankruptcy
and foreclosure laws. Without adequate legal provisions, any type of AMC would not be
able to operate effectively. There is thus a strong case in favour of according special
powers to an AMC in order for it to perform better than the banks as an NPL resolution
agency.
• Political will
Special powers are not sufficient if they are not enforceable. The political will and support
of the government, and a close working relationship between the AMC and other
government agencies can greatly contribute to the success of an AMC.
• Adequacy of funding
In a banking crisis, the capital base of banks would be eroded. It is thus important to
ensure that banking sector restructuring efforts are adequately funded, especially where
banks have to suffer large write-offs on loans taken over by the AMC.
• Prevailing economic environment

Most AMCs are set up in response to a banking crisis where the recovery efforts of the
AMC are greatly constrained by the prevailing economic environment. Whether an AMC
adopts a rapid disposal approach or becomes a resolution agency would depend on the
market conditions, be it the property or stock market, as the recovery and disposal efforts
of the AMC could have an impact on the markets.
• Objectives
AMCs should have a clear and focused objective - setting up AMCs with multiple
objectives runs contrary to the age-old rule in economics where one must have at least as
many instruments as there are objectives.
• Enhancements to the operating environment

Having analysed the national situation, the policy-makers should look at how they can
shape the environment or circumstances in which the AMC is operating to enable it to
work more expeditiously and effectively. This could include the granting of special
powers including immunity to the staff; the policy of outsourcing certain functions of an
AMC; formulation of appropriate loan restructuring policies and guidelines; and the
acquisition of, or formation of joint-ventures with, entities which would make the AMC’s
operations more effective.
CONCLUSION
A 1999 World Bank study indicated that there had been 112 episodes of systemic banking
crises which occurred in 93 countries since the late 1970s and that the establishment of AMCs
has become an often recommended resolution strategy in banking sector restructuring. The
success of Securum of Sweden in dealing with the failure of Nordbanken in the early 1990s,
RTC of the United States in resolving the savings & loans institutions crisis in the early 1990s,
KAMCO of Korea which has chalked up a recovery rate of above 50% from their aggressive
disposals programme, and not forgetting Danaharta’s own resolution efforts, are all clear
examples of how successful AMCs are in resolving the NPL problem at a time of crisis.
AMCs are a potent force in dealing with NPLs provided they suit the national situation. They
must be practical and solution-oriented, and take the appropriate steps to enhance their
operating environment. However, AMCs must be made a finite-life organisation and not be
allowed to perpetuate itself or be used as a stop-gap measure to avoid moral hazard issues.
62 Feature Articles
STRATEGIC ISSUES FOR RESTRUCTURING
The term ‘restructuring’ took centre stage in the business world in the late 90’s and more so
with the Asian crisis. Companies and businesses restructure for various reasons, driven by
their own needs or changes in the business landscape. In Asia, financial distress has been the
key driver for restructuring as companies are forced to restructure to resolve debt obligations.
However, restructuring need not be driven by factors relating to financial distress, but can be
part of the normal course of corporate and business development. For example, companies
involved in merger and acquisition (“M&A”) activities are required to restructure to adapt to
the enlarged entities. While other companies may choose to restructure when there are
changes in the industry landscape, the focus of restructuring may be to respond to increasing
competition, use of new technology and changes in regulation, amongst others. Furthermore,
new products and services or use of new channels of delivery are other reasons for
restructuring. In summary, other than financial distress, restructuring should be part and
parcel of business and corporate development to enhance shareholder value. Asian
corporations should capitalise on the experience gained in restructuring during the crisis and
apply these principles in the future.
DEFINING RESTRUCTURING
Restructuring can be categorised into four broad areas that are often interrelated.
Financial Restructuring
It is usually undertaken to restructure cost of capital or provide relief from financial distress.
The composition of the balance sheet would be altered by simple debt rescheduling,
debt waivers, debt to equity conversions, or securitising cash flows from assets.
Operational Restructuring
Operational restructuring broadly entails changes in operation strategy, core processes and
systems. It goes to the essence of the business, that is, it seeks competitive advantage or even
short-term survival where there is financial distress. The end results of the restructuring are,
amongst others, reduction of overhead costs, integration of businesses, revenue enhancement
and better utilisation of excess capacity.
Corporate Restructuring
Corporate restructuring, commonly referred to by the media, involves changes in the group
structure that defines the relationships among shareholders, holding companies, subsidiary
companies and associate companies. The restructuring takes place when there are changes in
ownership, divestments of business, M&A activity or in financial distress situations. In the
case of financial distress, non-core subsidiaries are disposed and new businesses are injected
into the group.
Organisational Restructuring
Organisational restructuring aims to align the management and business structures of a
corporation with the business strategy & process. Normally, it is part of the necessary
changes in the course of business, but it may also be an inevitable process in a financial
distress situation where the existing management is replaced by new management. The
likely outcomes are, amongst others, changes in management positions, introduction of
downsizing programme and changes in the roles and responsibilities within the corporation.
However, changes in management will not take place even in financial distress situations if
both the shareholders and creditors are of the view that the problem was a result of factors
beyond the control of management. Shareholders and creditors would then need to be
convinced that the company under the current management would be able to meet debt
obligations and provide adequate returns in the future.
FeatureContents
Articles 63
Corporations could undergo any one or a combination of the types of restructuring, either
simultaneously or in stages. The type and extent of restructuring would be dependent on the
needs of the company and its ability to carry out the restructuring. For example, a company
in financial distress would try to complete financial restructuring and come to an agreement
with its creditors before carrying out any form of operational restructuring. Otherwise, the
company may improve its business performance, but that would be of no use if creditors
wound up the company.
The remainder of the article addresses issues on resolving financial distress in which
Danaharta has extensive experience.
SETTING THE ROAD MAP FOR RESTRUCTURING
The diagram below shows the options in restructuring financially-distressed companies.

Once the two parameters (borrower’s capacity and underlying business viability) for
determining the restructuring approach are agreed by creditors, borrowers and white
knights, they can take the next steps in formulating the solution.
Borrower has • Liquidate existing • Operational & financial

capacity to rescue non-viable business restructuring by borrower
company • Borrower as White Knight • Relieved of short-term
injects new business/ financial burden
capital
Borrower does NOT • Liquidate existing • Restructuring financed by

have capacity to non- viable business White Knight
rescue company • Introduce White Knight to (i.e. reverse take-over)
inject new business • Operational restructuring
(i.e. reverse take-over)
Non-viable Viable
The key tools in determining the parameters and deciding on the restructuring approach
include the following:
• Analysis of borrower’s financial statements.

• Analysis of business viability of the borrower.
• Analysis of future cash flows from the borrower’s business.
• Determination of borrower’s other resources e.g., statutory declaration of assets of key
individuals, letter of confirmation from underwriters or provision of new collateral as
security for the restructuring.
• Assessment of borrower’s credibility, commitment and integrity to restructure. The
assessment could be on objective matters such as repayments before restructuring or provision
of additional collateral. An alternative would be on subjective matters and is dependent on the
knowledge of the borrower and prior experience in dealing with the borrower.
It is worth noting that whoever initiates the restructuring would have a strong influence on
the outcome of the restructuring. If a borrower comes forward at an early stage of the
financial distress, creditors may be inclined to be more accommodative. The borrower can
usually play a role and even take the lead in the restructuring process, thereby addressing
issues in their interests. Where the borrower is not forthcoming with a restructuring plan,
then the interests of the creditors and the white knight who initiate the restructuring are
likely to take greater precedence over the borrower. In this case, the borrower may not have
any role in the restructuring process and is less likely to salvage the values of his capital.
64 Feature Articles
DEALING WITH THE DETAILS
Once there is an agreement, detailed issues of the restructuring are then addressed. If the
borrower is a public listed company, or a company that owns regulated entities or strategic
national assets, then the concerns of the government, regulators and minority shareholders
will also need to be addressed in the detailed proposal.
The restructuring needs to address the conflicting issues and objectives of the parties
involved. For example, major shareholders do not want fire sales on their assets and the risk
of losing management control, but white knights want to get the best possible prices. In
addition, lenders want to maximise their recovery while minority shareholders want their
interests protected. Above all, the pace of restructuring has to be quick so that the economic
value of the business is not destroyed. Therefore, the essential ingredients for a successful
restructuring are decisiveness, fair treatment of the various parties, compromise and good
project management.
Major Shareholders
In Asia, businesses tend to be family-owned and there is some resistance to new and often
painful adjustment measures, particularly if they lead to a dilution in ownership interest.
This brings us to the main concern of major shareholders - losing control of their company.
They want to maintain management control and avoid fire sales of existing assets or
liquidation. These shareholders also want to maximise the return on shareholders’ funds in
the future and would therefore seek to have the company relieved of as much debt as
possible. In addition, they expect indulgence and forbearance on the part of the creditors so
that business conditions can improve, thereby allowing them to repay the creditors and avoid
liquidation.
White Knights
White knights expect to acquire assets and businesses at prices relating to the worst of the
crisis so that they can enjoy the upside when the economy recovers. Where the restructuring
involves a reverse take-over (“RTO”), they may want the injection of own/related assets at a
fair value in consideration for shares or other instruments in the public listed company. In
listing its business, the white knight will consider an RTO as it may involve less stringent
conditions compared to an IPO (Initial Public Offer); however, the white knight will need to
pay a listing premium to existing stakeholders i.e. the creditors and shareholders.
Creditors’ Perspective
In general, creditors want to reduce their exposure and recover cash as quickly as possible
from the non-performing assets. Furthermore, the creditors’ perspective is also based on the
size of the exposure as this determines their influence in the negotiation and the capital loss
they are likely to suffer if they cannot achieve a satisfactory resolution. Large creditors are
likely to be key drivers in the restructuring. They would prefer a restructuring that preserves
their capital and can be completed quickly so that their own balance sheets are improved.
Smaller creditors, on the other hand, may place less priority on the loan and be willing to
hold out for a longer period.
In a restructuring, all creditors expect their rights as creditors to be maintained i.e. secured
creditors rank the highest followed by unsecured creditors and then shareholders. Hence, the
quantum and timing of repayments and access to the cash flows from the security must
follow the ranking.
FeatureContents
Articles 65
Minority Shareholders
Minority shareholders expect their interests to be protected as they were not directly involved
in the management of the company. However, it is important that they also recognise their
position as shareholders and expect the corresponding treatment.
There may be some validity in the minority shareholders’ request for special treatment given
the failure in corporate governance and the weakness in the supervision of the capital
markets.
Government
Where the company owns a strategic national asset or is a regulated entity, then government
policy needs to be addressed. In this case, government policy will influence the choice of a
restructuring plan. Therefore, in some instances, the government could lead and assist in the
restructuring and would have a say in who can buy the assets. Where strategic assets are
concerned, maximisation of value may not be achieved by selling to the highest bidder, but
the recovery will still be better than that obtained from a liquidation.
Where the government injects funds or extends other assistance to the shareholder, creditors
would normally benefit from repayment of their loans.
CONCLUSION
Restructuring is an essential part of the economic recovery in Asia. While the pace of
restructuring is important, it is equally important that issues are properly addressed and
workout proposals are viable. Looking forward, Asian companies should continue to focus
on restructuring in the broader sense as a means to improve their competitive advantage.
Reference Materials
67 Loan and Asset Management and Disposition
75 List of companies under Special Administration
87 Amendments to Danaharta Act

91 Common misconceptions about Danaharta’s activities
93 Calendar of Events
Reference Materials
Contents 67
Loan and Asset Management and Disposition
Danaharta’s approach in management and disposition of assets is summarised below.
Management and Disposition
NPLs
VIABLE LOANS NON-VIABLE LOANS FOREIGN LOAN ASSETS
LOAN RESTRUCTURING ASSET RESTRUCTURING LOAN DISPOSAL

Informal Sale of Collateral Sale of Loan
• rescheduling • foreclosure via
• redemption • Receivers & Managers BID PROCESS
• settlement • liquidation
formal Sale of Business
• s.176 • Special Administrators
• Special Administrators via BID PROCESS
Yes No Yes No
Recovery Management of Management Recovery
Securities of Assets
VALUE
• property
ENHANCEMENT
• business
VALUE
ENHANCEMENT
S A L E T O M A R K E T
Loan Management Asset Management
LOAN MANAGEMENT
LOAN RESTRUCTURING
When Danaharta acquires an NPL, Danaharta will first assess the viability of the loan. Every
borrower with a viable loan is given an opportunity to restructure the loan using Danaharta’s
published loan restructuring principles and guidelines.
These principles and guidelines were formulated after considering the following objectives:
• To maximise the overall recovery value and return to Danaharta.

• To minimise the involvement of taxpayers’ money.
• To ensure fair treatment of all stakeholders.
• To utilise where appropriate Danaharta’s special powers to leverage and benefit the
banking system as a whole.
The purpose of these principles and guidelines is to promote transparency and to provide a
basis for borrowers and their advisers to formulate workout proposals. Loan restructuring
schemes approved by Danaharta must adhere to these guidelines. Detailed rationale must be
given for deviations from these guidelines.
The guidelines are divided into four segments, namely:
• Loan restructuring principles;

• Guidelines for corporate borrowers;
• Guidelines for individual borrowers; and
• Guidelines for guarantors.
1. Loan restructuring principles
The following are the loan restructuring principles that must be observed:
1.1 Haircut to the shareholders of the borrower

Under the scheme, the shareholders must take a proportionately bigger haircut i.e.
where the scheme requires debt reduction, the share capital reduction ratio must be
greater than the debt reduction ratio. In addition, subordination of shareholders’
loans (if any) would be made a pre-requisite to the scheme.
1.2 Fair treatment to secured and unsecured creditors

Schemes must reflect a genuine effort by the borrower to settle with the creditors in a
fair manner. Settlements to secured creditors must be more favourable than those
offered to unsecured creditors.
1.3 No dilution of inadequate security

Schemes should not result in a dilution of the security to the lenders unless the
collateral is in excess of the outstanding loans. All forms of cash collateral must only
be utilised to retire or settle the outstanding loan amount.
1.4 Only one opportunity given

Danaharta will give the borrower only one opportunity in implementing a scheme.
This is to prevent borrowers from making unnecessary revisions once the scheme is
implemented.
1.5 Make borrowers work for lenders

Any scheme must allow for the lenders to also benefit from efforts put in by
borrowers. While viable borrowers are given the time and opportunity to make good
their obligations, they will be closely monitored on performance and efforts to repay
lenders.
Reference Materials
Contents 69
2. Guidelines for corporate borrowers
The following are the guidelines for corporate borrowers that should be adhered to:
2.1 Terms of settlement offered

No zero coupon structure should be entertained. All financial instruments offered
should have a reasonable yield that is commensurate with the cashflow of the
borrower.
2.2 Clarity of usage of funds

The usage of funds proposed under a scheme should be clearly identified/defined at
the outset and strictly adhered to.
2.3 Equity-kicker elements

The scheme should involve equity-kickers such as warrants, convertible loans, etc.
2.4 Repayment period

The repayment period for restructured loans should not exceed five years.
2.5 Benefits of written down assets

Any subsequent value realised in excess of the book value of assets (written down as
part of the scheme) should be subject to a sharing ratio between the borrower and the
lender.
2.6 Anti-dilution clause

The scheme should incorporate an anti-dilution clause to ensure that the intrinsic
value of the equity or quasi-equity is maintained. This clause will also pre-empt any
attempt by the shareholders of the borrower to dilute the eventual shareholdings of
creditors through issuance of new shares.
2.7 The scheme should contain covenants for monitoring purposes such as:
• A monitoring mechanism
• Inter-company lending
• Transfer of assets
• Dividend payments
• Future borrowings
3. Guidelines for individual borrowers
The following guidelines apply to individual borrowers and should be adhered to:
3.1 Statutory declaration

All individual borrowers are required to give a statutory declaration on their net
worth. This requirement is to increase the borrower’s accountability in relation to the
scheme.
3.2 Legal proceedings in the event the scheme fails

Legal proceedings are to be taken against the borrower should the scheme fail.
3.3 Annual review of performance

The scheme is to be closely monitored via an annual review of performance.
3.4 Moratorium on the disposal of personal assets

The disposal of personal assets by the borrower should not be allowed during the
duration of the scheme unless the proceeds are for the settlement of debts
outstanding.
3.5 Consent Judgement

Consent judgement should be obtained from borrowers prior to the commencement
of the scheme allowing Danaharta to apply all available avenues for recovery in the
event of the scheme failing. This will pre-empt any action by the borrower to delay
recovery action.
3.6 Equity-kicker
The scheme should include the provision of an equity-kicker to Danaharta.
3.7 Repayment period

The repayment period for restructured loans should not exceed five years.
3.8 The scheme should contain some covenants for monitoring purposes such as:
• A monitoring mechanism
• Future borrowings
4. Guidelines for guarantors
The guidelines apply to guarantors and should be adhered to:
4.1 Substantial and critical guarantors

Where the lending was made based on the standing and/or net worth of corporate or
individual guarantors, the recovery measures must recognise the obligation of the
guarantors. As such, relevant provisions of the guidelines for corporate and
individual borrowers should apply.
4.2 Other guarantors

In respect of other guarantors, no release of guarantees should be considered unless
all feasible recovery measures have been pursued.
Reference Materials
Contents 71
ASSET RESTRUCTURING
Non-viable loans are placed under asset restructuring as are borrowers who fail to produce
restructuring proposals acceptable to Danaharta or fail to comply with the loan restructuring
guidelines.
Asset restructuring involves the sale of a borrower’s business or the collateral of an NPL. In
either case, Danaharta will apply the principles of competitive bidding, preservation and
enhancement of the value of the business or collateral as well as orderly disposition.
Sale of foreclosed properties

Section 57 of the Danaharta Act and the Fifteenth Schedule of the National Land Code 1965
give Danaharta additional rights as a chargee over property collateral. If a borrower does not
repay his loan within 30 days from the date of a notice from Danaharta requiring it to do so,
Danaharta may sell the underlying property collateral by private treaty.
A ‘private treaty’ sale by Danaharta may be carried out by way of tender, private contract or
auction:
Sale by tender
Danaharta prefers the sale of property by way of open tender since it is the most transparent
method and allows the best recovery value. Properties are offered for sale at their respective
indicative values based on the latest independent valuations of the properties. A member of
the public can obtain from Danaharta brochures featuring key information about properties
being tendered and purchase a tender package for the property that he is interested in.
The tender package includes a copy of the latest valuation report on the property, a copy of
the sale & purchase agreement and the terms & conditions for the sale by way of tender.
Guided by this information, the prospective buyer may submit a bid for the property.
All submitted bids are collated by a Tender Committee comprising senior Danaharta
management officials who are not involved in organising and managing the tender process.
This is done in the presence of external auditors. The winning bids are later presented to the
Tender Board for its approval and all bidders are notified in writing of the success (or failure)
of their bids. The Tender Board is made up of two Danaharta representatives (including the
Managing Director), a representative of the Foreign Investment Committee, a valuer and an
accountant.
Danaharta plans to conduct a tender exercise periodically, the objectives of which are to:
• Reduce the number of properties that will eventually be managed by Danaharta.

• Establish a clear and transparent process to foreclose on assets at acceptable market-based
prices.
The tenders are marketed via a wide range of media, including newspaper advertisements,
radio announcements, television and newspaper interviews and through the Danaharta
website (www.danaharta.com.my). Other efforts include communication with potential
investors as well as establishment of links with and direct marketing to members of trade
organisations such as the Federation of Malaysian Manufacturers and various Chambers of
Commerce.
Spearheading the marketing efforts are the real estate agents on Danaharta’s panel, who
actively market the properties and advise bidders on their tenders.
It is important to appreciate that the tender process represents an initial sale of property
collateral. Unsold properties are transferred to Danaharta Hartanah and subsequently
re-offered to the market.
Sale by private contract

A private contract is basically a one-to-one negotiation between Danaharta as chargee of the
property collateral and a prospective buyer. For some types of property, this method may
give the best value. To ensure transparency, Danaharta makes it very clear that negotiations
must be guided by the market value, based on the latest independent professional valuation
of the property, and a sale will only proceed with the consent of the borrower.
Where the property is owned by Danaharta Hartanah, the borrower’s consent is no longer
required, but the negotiation is still guided by the market value.
Sale by Danaharta auction

A Danaharta auction will be similar to a property auction under the National Land Code and
will be conducted by a professional property auctioneer. This method has yet to be applied.
Sale of business via Special Administrators

The Danaharta Act confers on Danaharta the ability to manage corporate borrowers via the
appointment of Special Administrators. With the appointment, the Special Administrators
assume control of the assets and affairs of the company. The powers of the management and
the Board of the company are effectively suspended and only the Special Administrators can
deal with the assets of the company.
In order to preserve those assets until the Special Administrators are able to complete their
task, a 12-month moratorium will take effect from the date of appointment. During that
period, no creditor may take action against the company.
The Special Administrators will prepare a workout proposal that will be reviewed by an
Independent Advisor approved by the Oversight Committee. The Independent Advisor’s
role is to review the reasonableness of a proposal, taking into consideration the interests of all
creditors, whether secured or unsecured, and shareholders.
If Danaharta approves the proposal prepared by the Special Administrators, the latter will
call for a meeting of secured creditors to consider and vote on the proposal. A majority in
value of secured creditors present and voting at the meeting must approve the proposal
before it can be implemented. Relevant regulatory approvals must also be obtained.
The list of companies under Special Administration (including a brief update on each
company) as well as those where the services of the Special Administrators have been
terminated, are given on pages 75 to 86.
Sale of foreign loan assets

F o reign loan assets comprise non-Ringgit loans and marketable securities extended to
or issued by foreign companies. Disposing foreign loan assets for cash, Ringgit Malaysian
loan assets and/or non-Ringgit Malaysian loan assets allows Danaharta to:
• Dispose assets whose value is difficult to enhance

• Obtain Malaysian loan assets over which Danaharta can use its comparative strength by
exercising its legal powers to resolve the loans.
This method is also operationally more efficient and is consistent with Danaharta’s objective
of maximising the recovery value of acquired assets.
Principal bidders (“PBs”) and marketable account bidders (“MABs”) have participated in the
restricted tenders of the foreign loan assets within Danaharta’s portfolio. PBs can bid for both
loan accounts and marketable securities while MABs can bid for only marketable securities.
Danaharta has sought to enhance the transparency of the tender process by ensuring that all
available documentation in relation to the loan accounts are provided to the PBs. In addition,
Danaharta appointed an external accounting firm to review the process.
Reference Materials
Contents 73
ASSET MANAGEMENT
PROPERTY SALE BY DANAHAR TA HARTANAH SDN BHD
Danaharta has always maintained that the focus of its NPL resolution efforts is to restructure
the viable loans in accordance with Danaharta’s published loan restructuring principles and
guidelines (the first sieve). Non-viable loans are transferred to asset restructuring where
Danaharta will either appoint SAs to assume control of the business and assets of the
borrower, or foreclose on the property collateral. Where foreclosure is necessary, the
foreclosed properties are first offered to the market (the second sieve).
Properties that remain unsold after a tender exercise are transferred to Danaharta Hartanah.
It is only at this point (the third sieve) that Danaharta takes over the ownership of the
properties. Prior to this, Danaharta’s position was that of a chargee of the properties.
Danaharta Hartanah will continually and actively market and sell the properties under its
ownership by employing methods such as marketing via real estate agents, contacting
potential investors who have registered their interest with Danaharta or re-offering the
properties in subsequent property tenders. Where necessary, Danaharta Hartanah will
conduct value enhancement work on the properties. The number of properties that will
eventually be managed by Danaharta is expected to be minimal.
MANAGEMENT OF SECURITIES
As a result of loan restructuring exercises where settlements are in the form of securities,
Danaharta would own and manage the securities. These securities may include equity shares
which are set off as part of a settlement agreement or new securities issued by the borrower.
In general, the securities can be categorised into irredeemable, redeemable and convertible
securities:
Irredeemable securities
The two classes of securities in this category are ordinary shares and irredeemable
convertible loan stocks (ICULS). Danaharta will only dispose these securities if the share
price exceeds the pre-determined target price based on Danaharta’s fundamental analysis of
the securities.
Redeemable securities
This category includes both secured and unsecured loan stocks as well as preference shares.
Danaharta will only dispose these securities if the price exceeds the pre-determined target
price based on Danaharta’s analysis of the credit risks against the yield to maturity of the
securities. If the target price is not met, Danaharta will depend on redemption of the
securities as a means to exit from these securities.
Convertible securities
These are generally redeemable securities such as loan stocks and preference shares which
may be converted into equity shares. The management of these securities would be mainly
similar to that of redeemable securities, up to the point where the price of the ordinary shares
exceeds the redemption sum of the instrument. From that point onwards, any decision to sell
would be similar to that for ordinary shares i.e. when the prices exceeds the target price set
by Danaharta based on fundamental analysis.
The actual selling of securities that are readily tradable are made through:
• Stockbrokers, in accordance with market rules of the Kuala Lumpur Stock Exchange
(“KLSE”) where the securities are listed and normally traded through the KLSE; and
• Financial institutions, where sales would follow normal trade practices for marketable
instruments (relating mainly to securities that are not listed or normally traded through
the KLSE).
However, where the securities are subject to call and put options, the decision to dispose the
securities will be governed by the call and put option agreements. In situations where there
is a breach of the agreement, the decision to dispose will be based on the type of security as
explained above.
Reference Materials 75
List of Companies under Special Administration
As at 16 March 2001, Danaharta had appointed Special Administrators over 88 companies

(from 56 groups of companies). 74 companies are still under various stages of Special
Administration. The services of Special Administrators of 14 companies have been
discharged upon successful restructuring of the companies.
COMPANIES WHERE SPECIAL ADMINISTRA TORS HAVE BEEN DISCHARGED

UPON SUCCESSFUL RESTRUCTURING OF THE COMPANIES
Company, principal Special Administrators Independent

activities & listing status Advisors
1. Fima Securities Sdn Bhd Mr. Chew Hoy Ping RHB Sakura Merchant
(formerly known as Capitalcorp Ms. Chan Yim Fun Bankers Berhad
Securities Sdn Bhd) (PricewaterhouseCoopers)
Stockbroking Appointed on 4 January 1999
Discharged on 2 July 1999
2. Teramaju Sdn Bhd Mr. Patrick Chew Kok Bin Arab-Malaysian

Manufacturing of plywood Mr. Alvin Tee Guan Pian Merchant Bank Berhad
and wood-based products (Anuarul Azizan Chew & Co)
Appointed on 7 April 1999
Discharged on 6 January 2000
3. Premier Capital Securities Mr. Gong Wee Ning RHB Sakura Merchant
Sdn Bhd Ms. Chan Yim Fun Bankers Berhad
Stockbroking Ms. Yap Wai Fun
Mr. Kenneth Teh Ah Kiam
(PricewaterhouseCoopers)
Discharged on 27 July 2000
4. Innosabah Securities Mr. Gong Wee Ning Amanah Merchant

Sdn Bhd Ms. Chan Yim Fun Bank Berhad
Stockbroking Ms. Yap Wai Fun
Mr. Kenneth Teh Ah Kiam
Discharged on 23 June 2000
5. Nian Aik Sdn Bhd Mr. Narendra Kumar Jasani O.S.K. Holdings Berhad
Manufacturing of Ms. Janice Lee Guat Hoe
wood products (Shamsir Jasani Grant Thornton)
Appointed on 15 December 1999
Discharged on 11 August 2000
6. Alor Setar Securities Mr. Adam Primus O.S.K. Holdings Berhad

Sdn Bhd Varghese Abdullah
Stockbroking Mr. Ooi Teng Chew
(Ernst & Young)
Appointed on 12 December 1999
Discharged on 17 August 2000
7. Perusahaan Sadur Timah Mr. Adam Primus Arab-Malaysian

Malaysia Berhad Varghese Abdullah Merchant Bank Berhad
Manufacturing and sale of Mr. Foo San Kan
electrolytic tin plates Ms. Wong Lai Wah
(Ernst & Young)
Appointed on 9 September 1999
Discharged on 8 September 2000
Company, principal Special Administrators Independent

activities & listing status Advisors
8. WK Securities Sdn Bhd Encik Nordin bin Baharuddin Amanah Merchant

Stockbroking Mr. Adam Primus Bank Berhad
Varghese Abdullah
(Ernst & Young)
Appointed on 12 February 1999
Discharged on 29 November 2000
9. Labuan Securities Sdn Bhd Mr. Gan Ah Tee RHB Sakura Merchant
Stockbroking Mr. John Ho Shui Fah Bankers Berhad
Mr. Ooi Woon Chee
(KPMG)
10. MGI Securities Sdn Bhd Mr. Yeo Eng Seng Ferrier Hodgson MH
Stockbroking Mr. Adam Primus
Varghese Abdullah
(Ernst & Young)
11. Halim Securities Sdn Bhd Mr. Gong Wee Ning RHB Sakura Merchant
Stockbroking Ms. Chan Yim Fun Bankers Berhad
Discharged on 15 December 2000
12. J&C Trading Sdn Bhd Mr. Mok Yuen Lok Not required
Trading Mr. Poon Yew Hoe
(Horwath Mok & Poon)
Appointed on 30 June 2000
13. Taiping Securities Mr. Gan Ah Tee Amanah Merchant

Sdn Bhd Mr. Ooi Woon Chee Bank Berhad
Stockbroking Mr. Peter Ho Kok Wai
(KPMG)
Appointed on 12February 1999
14. MBf Northern Securities Mr. Gan Ah Tee Amanah Merchant

Sdn Bhd Mr. Peter Ho Kok Wai Bank Berhad
Stockbroking Mr. Ooi Woon Chee
(KPMG)
Discharged on 10 February 2001
Reference Materials
Contents 77
COMPANIES CURRENTLY UNDER SPECIAL ADMINISTRATORS
Company, principal Special Independent Update

activities & listing Administrators Advisors
status
1. Malaysia Electric Mr. Lim Tian Huat Commerce Successful white

Corporation Berhad Mr. George Koshy International knight selected.
Manufacturing and (Arthur Andersen & Co.) Merchant Secured creditors
retailing of household Appointed on 7 April 1999 Bankers approved workout
and electrical appliances Moratorium extended to Berhad proposal.
6 April 2001
2. MEC Industrial Appointed on Successful white

Park Sdn Bhd 9 September 1999 knight selected.
Property holding company Moratorium extended to Secured creditors
of the MEC Berhad group 8 September 2001 approved workout
proposal.
3. Teras Cemerlang Mr. Gong Wee Ning Aseambankers SAs preparing

Sdn Bhd Mr. Kenneth Malaysia workout proposal.
Investment holding Teh Ah Kiam Berhad
Moratorium extended to
7 April 2001
4. Repco Holdings SAs preparing
Berhad workout proposal.
Investment holding and
provision of management
services to companies within
the Repco group. Listed on
KLSE Second Board
5. Repco (Malaysia) SAs preparing

Sdn Bhd* workout proposal.
Trading in automotive parts
6. Everise Capital SAs preparing

Trading and investment
holding
7. Even Horizon Sdn Bhd* SAs preparing

Investment holding workout proposal.
8. Repco Timber SAs preparing

Provision of timber operation
management services and the
marketing of timber-related products

status
9. Everise Ventures SAs preparing

Organising and managing
4-digit forecast pools
10. Hajat Semarak (M) SAs preparing

Trading of timber logs
11. Teluk Jadi Sdn Bhd* SAs preparing

Extraction of timber logs workout proposal.
* Subsidiaries of Repco Holdings Berhad
12. Jupiter Securities Mr. Gan Ah Tee RHB Sakura Resolution by

Sdn Bhd Mr. Ooi Woon Chee Merchant borrower.
Stockbroking (KPMG Peat Marwick) Bankers Secured creditors
Appointed on 30 April 1999 Berhad approved workout
Moratorium extended to proposal.
29 April 2001
13. Manalom Sdn Bhd Mr. Mak Kum Choon Aseambankers Part of the
Housing and property Mr. Chu Siew Koon Malaysia underlying assets
development (Kassim Chan & Co) Berhad are being sold.
Appointed on 27 July 1999
26 July 2001
14. Perdana Industri Mr. Gong Wee Ning Malaysian Proposed

Holdings Berhad Mr. Lim San Peen International restructuring
Investment holding. (PricewaterhouseCoopers) Merchant scheme approved
Listed on KLSE Appointed on 28 July 1999 Bankers by regulatory
Main Board Moratorium extended to Berhad authorities.
29 July 2001 Pending
implementation of
scheme.
15. RNC Corporation Mr. Robert Amanah Proposed

Berhad (formerly known Teo Keng Tuan Merchant restructuring
as Arensi Holdings (M) Mr. Chew Chong Eu Bank Berhad scheme approved
Berhad) (Hanifah Teo & Associates) by regulatory
Manufacturing and trading Appointed on 28 July 1999 authorities.
of PVC pipes and fittings, Moratorium extended to Pending
ready mixed concrete, 27 July 2001 implementation
cement bricks and pre-cast of scheme.
products, as well as the
provision of financing services
and timber products.
Listed on KLSE Main Board
Reference Materials
Contents 79

status
16. Dax Foods Sdn Bhd Mr. Mok Yuen Lok Hew & Tan Pending
Manufacturing and Mr. Onn Kien Hoe implementation
marketing of chocolate-based (Horwath Mok & Poon) of scheme.
confectionery Appointed on 28 July 1999
27 July 2001
17. Sin Heng Chan Mr. Lim Tian Huat Malaysian SC approval
(Malaya) Berhad Mr. George Koshy International obtained.
Investment holding (Arthur Andersen & Co.) Merchant SAs/Borrower
company. Subsidiaries Appointed on Bankers seeking
engaged in broiler breeding, 11 August 1999 Berhad underwriting.
as well as manufacturing Moratorium extended to
and selling formulated 10 August 2001
animal products. Listed on
KLSE Main Board
18. Advance Synergy Tuan Syed Amin O.S.K. Successful white

Furniture Sdn Bhd Aljeffri Holdings knight selected.
Integrated furniture Encik Mohd Arif Berhad Secured creditors
manufacturing Hj Mustapah approved workout
(Aljeffri & Co) proposal.
Appointed on
9 September 1999
8 September 2001
19. Austral Mr. Lim Tian Huat RHB Sakura Successful white
Amalgamated Mr. George Koshy Merchant knight selected.
Berhad (Arthur Andersen & Co.) Bankers Awaiting
Holding company with Appointed on Berhad regulatory
subsidiaries involved in 9 September 1999 approval.
property development and Moratorium extended to
investment, hotels and 8 September 2001
resorts, foreign investments,
travel and tours, trading,
timber extraction and
finance. Listed on KLSE
Main Board
20. Instangreen Mr. Mak Kum Choon Perwira Affin Awaiting regulatory
Corporation Berhad Mr. Chu Siew Koon Merchant approval.
Listed on KLSE Main Board (Kassim Chan & Co) Bank Berhad
Appointed on
9 September 1999
21. SPJ Construction Moratorium extended to Awaiting regulatory
Sdn Bhd* 8 September 2001 approval.

status
22. Instangreen Awaiting regulatory

(Landscape) Sdn Bhd* approval.
The Group’s principal activities
are property and golf resort
development, golf course and
sports field design and construction,
landscaping and general civil
engineering works.
* Subsidiaries of Instangreen Corporation Berhad
23. Sportma Corporation Mr. Robert Ferrier SAs preparing

Berhad Teo Keng Tuan Hodgson MH workout proposal.
Manufacturing and trading Mr. Chew Chong Eu
of racquets and other (Hanifah Teo & Associates)
sports equipment. Appointed on
Listed on KLSE 9 September 1999
Second Board Moratorium extended to
8 September 2001
24. Seng Hup Mr. Tan Kim Leong KPMG SAs preparing
Corporation Berhad Mr. David workout proposal.
Import, export, wholesale Siew Kah Toong
and retail trading of decorative (BDO Binder)
light fittings and equipment Appointed on
and related products and 9 September 1999
accessories, as well as the Moratorium extended to
provision of management 8 September 2001
services, property development
and property holding
25. Beloga Sdn Bhd Mr. Heng Ji Keng KPMG Awaiting regulatory
Manufacturing and Mr. Kelvin Edward approval.
recycling of aluminium Flynn
and copper products (Ferrier Hodgson MH)
and general trading Appointed on
12 October 1999
11 October 2001
26. Kilang Papan Seribu Mr. Adam Primus Aseambankers Resolution by

Daya Berhad Varghese Abdullah Malaysia borrower.
Production of sawn timber Ms. Wong Lai Wah Berhad
and moulded timber products. Mr. Kevin K. How
Listed on KLSE Second Board (Ernst & Young)
Appointed on
14 December 1999
13 December 2001
Reference Materials
Contents 81

status
27. Timbermaster Mr. Lim San Peen Aseambankers Successful white

Industries Berhad Ms. Yap Wai Fun Malaysia knight selected.
Listed on KLSE (PricewaterhouseCoopers) Berhad
Main Board Appointed on
14 December 1999
28. Timbermaster Timber Moratorium extended to Successful white
Complex (Sabah) 13 December 2001 knight selected.
Sdn Bhd
29. Kompleks Perkayuan Successful white

Timbermaster knight selected.
Smallholders Sdn Bhd
30. Timbermaster Successful white

(Malaysia) Sdn Bhd knight selected.
31. Perkayuan T.M. Appointed on Successful white

(Malaysia) Sdn Bhd 24 January 2000 knight selected.
The Group is involved in

manufacturing and trading
of wood products, as well as
property development &
management, and gaming
& leisure.
32. Lumberise Sdn Bhd Ms. Chan Yim Fun K&N Kenanga SAs preparing
Manufacturing of wood Ms. Yap Wai Fun Berhad workout proposal.
products (PricewaterhouseCoopers)
Appointed on
15 December 1999
14 December 2001
33. Sandakan Plywood Ms. Chan Yim Fun K&N Kenanga SAs preparing
and Veneer Sdn Bhd Mr. Lim San Peen Berhad workout proposal.
Logging and (PricewaterhouseCoopers)
manufacturing of veneer Appointed on
15 December 1999
34. Sandakan Blockboard Moratorium extended to SAs preparing
Manufacturing Co. 14 December 2001 workout proposal.
Sdn Bhd
Manufacturing of plywood
and blockboard

status
35. Winshine Holdings Mr. Gan Ah Tee Horwath Successful white

Sdn Bhd Encik Mohamed Mok & Poon knight selected.
Investment holding and Raslan Abdul Secured creditors
provision of management Rahman approved workout
services (KPMG) proposal.
Appointed on Pending approval
15 December 1999 from regulatory
36. Winshine Industries Moratorium extended to authorities.
Sdn Bhd 14 December 2001
Manufacturing of furniture
and wood-based products
37. CA Furniture Mr. Ooi Woon Chee Asia Pacific Successful white
Industries Sdn Bhd Encik Mohamed Management knight selected.
Manufacturing of rubber Raslan Abdul Insight Secured creditors
wood furniture Rahman Sdn Bhd approved workout
Mr. Ng Chwe Hwa proposal.
(KPMG) Pending approval
38. CA Manufacturing Appointed on from regulatory
Sdn Bhd 16 December 1999 authorities.
Manufacturing of rubber Moratorium extended to
wood furniture 15 December 2001
39. Caton Wood Mr. Adam Primus Asia Pacific Successful white
Industries Sdn Bhd Varghese Abdullah Management knight selected.
Manufacturing of veneer, Ms. Wong Lai Wah Insight Secured creditors
plywood and blockboard Mr. Kevin K. How Sdn Bhd approved workout
(Ernst & Young) proposal.
Appointed on Pending approval
16 December 1999 from regulatory
Moratorium extended to authorities.
15 December 2001
40. Mentakab Veneer & Mr. Heng Ji Keng BDO Binder Restructuring
Plywood Sdn Bhd Mr. Kelvin Edward being
Manufacturing of veneer Flynn implemented.
and plywood (Ferrier Hodgson MH)
Appointed on
23 February 2000
22 February 2002
41. Woo Hing Brothers Mr. Heng Ji Keng Shamsir Jasani SAs preparing
(Malaya) Berhad Mr. Kelvin Edward Grant Thornton workout proposal.
Retailer in watches. Flynn
Listed on KLSE (Ferrier Hodgson MH)
Second Board Appointed on 2 March 2000
1 March 2002
Reference Materials
Contents 83

status
42. Bescorp Industries Mr. Tan Kim Leong Deloitte Secured creditors
Berhad Mr. Siew Kah Toong Kassim Chan approved workout
Manufacturing & sale of (BDO Binder) proposal.
reinforced concrete piles Appointed on 2 March 2000 Successful white
and contracting of piling Moratorium extended to knight selected.
& substructure works for 1 March 2002
infrastructure & construction
projects. Listed on KLSE
Second Board
43. Associated Kaolin Mr. Gong Wee Ning BDO Binder SAs preparing
Industries Berhad Mr. Lim San Peen workout proposal.
Manufacturing and sale of (PricewaterhouseCoopers)
refined kaolin, logging Appointed on 3 May 2000
and downstream timber
products
44. Mitsuoka Electronics Mr. Mak Kum Choon To be SAs finishing

(M) Sdn Bhd Mr. Chu Siew Koon appointed workout proposal.
Manufacturing and sale of (Kassim Chan & Co.)
transformers, adaptors Appointed on 24 May 2000
and motor coils
45. Abrar Corporation Mr. Lim San Peen Horwath Secured creditors
Berhad Mr. Gong Wee Ning Mok & Poon approved workout
Investment holding (PricewaterhouseCoopers) proposal.
company, with subsidiaries Appointed on 27 May 2000
involved in property
investment, development
and construction. Listed on
KLSE Main Board
46. Abrar Group SAs preparing

International Sdn Bhd workout proposal.
Investment holding company
with subsidiaries involved in
financial services
47. Utama Impian En. Razalee Amin To be SAs preparing

Sdn Bhd Mr. Tam Kok Meng appointed workout proposal.
Property development (Razalee & Co.)
company Appointed on 1 June 2000

status
48. Sri Hartamas Berhad Mr. Gan Ah Tee To be Successful white

Property development Mr. Ooi Woon Chee appointed knight selected.
company. Encik Mohamed SAs preparing
Listed on KLSE Raslan Abdul workout proposal.
Main Board Rahman
(KPMG)
49. Sri Hartamas Hotels Appointed on SAs preparing

Sdn Bhd* 21 August 2000 workout proposal.
Owner of two hotels in Melaka
and Pulau Pinang respectively.
50. Cempaka Mewah Appointed on SAs preparing

Sdn Bhd* 18 October 2000 workout proposal.
Property developer
51. Puncak Permata SAs preparing

Property developer
52. Mawar Tiara Sdn Bhd* SAs preparing

Property developer workout proposal.
53. Mewah Rembang Sdn Bhd* SAs preparing

Property developer workout proposal.
* Subsidiaries of Sri Hartamas Berhad
54. Rahman Hydraulic Mr Yeo Eng Seng Arab-Malaysian Secured creditors

Tin Berhad Mr. Adam Primus Merchant approved
Tin mining and rubber Varghese Abdullah Bank Berhad workout proposal.
production. Ms. Wong Lai Wah
Listed on KLSE Main Board (Ernst & Young)
55. Kuala Lumpur Mr. Mok Yuen Lok To be SAs preparing

Industries Holdings Mr. Poon Yew Hoe appointed workout proposal.
Berhad (Horwath Mok & Poon)
Investment holding. Appointed on 30 June 2000
Listed on KLSE
Main Board
56. Bee Hin Holdings Appointed on SAs preparing

Sdn Bhd* 27 October 2000 workout proposal.
Investment holding, rental
of properties and provision
of corporate and financial
support services
Reference Materials
Contents 85

status
57. Emville Sdn Bhd*

Property developer
58. Kuala Lumpur

Industries Berhad*
Investment and investment
property holding company
59. Sistem Irama

Sdn Bhd*
Property developer
* Subsidiaries of Kuala Lumpur Industries Holdings Berhad
60. Tang Kwor Ham Mr. Gan Ah Tee To be SAs preparing

Realty Sdn Bhd Mr. Ooi Woon Chee appointed workout proposal.
Property development Encik Mohamed
Raslan Abdul
Rahman
(KPMG)
61. Pakata Sdn Bhd Mr. Narendra Kumar To be SAs finalising

Manufacturing of printed Jasani appointed workout proposal.
colour boxes and Ms. Janise
industrial packaging Lee Guat Hoe
(Shamsir Jasani Grant Thornton)
62. Uncang Emas Encik Mohd Noor To be SAs preparing

Sdn Bhd Abu Bakar appointed workout proposal.
Property development Encik Suhaimi
and management Badrul Jamil
(Mohd Noor & Associates)
63. Miharja Development SAs preparing

Sdn Bhd workout proposal.
Property development
and investment
64. Profound View Mr. Lim Tian Huat RHB Sakura SAs preparing
Sdn Bhd Mr. George Koshy Merchant workout proposal.
Property development (Arthur Andersen & Co.) Bankers
Appointed on 24 July 2000 Berhad
65. Danau Kota SAs preparing
Development Sdn Bhd workout proposal.
Property development
66. Likas View Sdn Bhd SAs preparing

Property development workout proposal

status
67. Alpha Agencies Mr. Lim Tian Huat To be SAs preparing

Sdn Bhd Mr. Ng Teck Wah appointed workout proposal.
Developer of a 14-storey, (Arthur Andersen & Co.)
291-room hotel in Appointed on 24 July 2000
Kota Kinabalu, Sabah
68. Golden Pearl Island Mr. Mok Yuen Lok To be SAs preparing
Hotel Sdn Bhd Mr. Poon Yew Hoe appointed workout proposal.
Owner of a 12-storey, (Horwath Mok & Poon)
126-room hotel in Appointed on 24 July 2000
Pulau Pinang
69. Profil Kemas Mr. Kenneth To be SAs preparing

Sdn Bhd Teh Ah Kiam appointed workout proposal.
Developer and operator Ms. Chan Yim Fun
of a 14-storey, 330-room (PricewaterhouseCoopers)
hotel in Kota Bharu, Kelantan Appointed on 24 July 2000
70. Projek Kota Ms. Chan Yim Fun To be SAs preparing

Langkawi Sdn Bhd Mr. Kenneth appointed workout proposal.
Owner of a 177-room Teh Ah Kiam
resort hotel in (PricewaterhouseCoopers)
Pulau Langkawi, Kedah Appointed on 24 July 2000
71. Trimula Development Encik Mohamed To be SAs preparing

Sdn Bhd Raslan Abdul appointed workout proposal.
Property developer and Rahman
investment holding Mr. Ooi Woon Chee
company Mr. Gan Ah Tee
(KPMG)
Appointed on 22 August 2000
72. Salanta Development Encik Abdul Khudus To be SAs preparing

Sdn Bhd Mohd Naaim appointed workout proposal.
Property developer Encik Hassan Hussain
(KS & Associates)
Appointed on 29 August 2000
73. Techno Asia Holdings Mr. Lim Tian Huat To be SAs preparing
Berhad {formerly known Mr. Chew Cheng Leong appointed workout proposal.
as Westmont Land (Asia) (Arthur Andersen & Co.)
Berhad} Investment holding Appointed on 2 February 2001
company with subsidiaries
involved in property
development, investment
holding, palm plantations,
power generation and hotel
operations
74. Prima Moulds

Manufacturing
Sdn Bhd
{formerly known as
Techno Asia Sdn Bhd}
Manufacturing of standard
and custom mould bases
Reference Materials
Contents 87
Amendments to Danaharta Act
SUMMARY OF MAJOR AMENDMENTS TO

THE PENGURUSAN DANAHAR TA NASIONAL BERHAD ACT 1998
OBJECTIVES OF THE AMENDMENTS
The Malaysian Government recently tabled in Parliament the Pengurusan

Danaharta Nasional Berhad (Amendment) Bill 2000 (the “Amendment Bill”),
which introduces amendments to the Pengurusan Danaharta Nasional Berhad
Act 1998 (the “Danaharta Act”).
These amendments are intended:
(a) to clarify existing provisions of the Danaharta Act in order to remove any doubts
about their intended effect; and
(b) to overcome practical difficulties which have arisen since Danaharta began operations.
The Amendment Bill was passed by the Dewan Rakyat and the Dewan Negara on
17 July 2000 and 31 July 2000 re s p e c t i v e l y.
This summary sets out the major amendments introduced by the Amendment Bill, in the
following five categories:
Administrative matters
Vesting process
The Danaharta Act, which came into force in September 1998, introduced a statutory vesting
process to allow Danaharta to acquire non-performing loans (NPLs) in a speedy and efficient
manner. This process has enabled Danaharta to complete its acquisition of NPLs well ahead
of schedule.
The statutory vesting process involves the issue of a vesting certificate to evidence the
acquisition of an NPLby Danaharta. The Danaharta Act does not expressly allow Danaharta
to issue replacement vesting certificates, for example, to update information relating to an
NPL that has been acquired. The Amendment Bill clarifies that Danaharta may do so: new
sections 14A& 19A of the Danaharta Act.
Disclosure of information
Danaharta sells assets in a transparent and professional manner and transacts with anyone
who gives the best value. In order to maximise recovery values, it is important that
Danaharta is able to disclose information about viable businesses and other assets for sale to
potential investors or “white-knights”. The Amendment Bill amends section 20 of the
Danaharta Act to clarify that Danaharta may do so.
Oversight Committee
Under the Danaharta Act, a 12-month moratorium takes effect upon the appointment of
Special Administrators who are appointed with the approval of the Oversight Committee
established under the Act. The moratorium preserves the assets of the borrower company
and gives the Special Administrators the opportunity of preparing a workout (or
restructuring) proposal. The Amendment Bill clarifies that the Oversight Committee may
approve the termination of the moratorium before expiry of the initial 12-month moratorium
period where the Special Administrators have completed their tasks: amended section 22 of
the Danaharta Act.
Special Administrators
Appointment of Special Administrators

The Amendment Bill expands the list of affected persons over whom Danaharta may appoint
Special Administrators: amended section 21(1) of the Danaharta Act. In addition to the
borrower company itself, the class of persons over whom Danaharta may apply to appoint
Special Administrators includes:
• any subsidiary of the borrower;

• any company who has provided security to Danaharta; and
• any company where at least 2% of its share capital has been charged as security to
Danaharta.
Under the Danaharta Act, Danaharta can only appoint a Special Administrator with the
approval of the Oversight Committee established under the Act. The Oversight Committee
currently comprises the Accountant-General, the Chairman of the Securities Commission and
a Deputy Governor of Bank Negara Malaysia.
In order to obtain approval, Danaharta must satisfy the Oversight Committee that the criteria
set out in the Danaharta Act have been met. These include the fact that the company cannot
pay its debts, that the appointment would ensure its survival as a going concern, that the
appointment would result in a more advantageous realisation of assets than on a winding up,
or that it would achieve a more expeditious restructuring.
The amendment recognises that companies in a group often operate as a single economic
unit. Consistent with the existing provisions under the Danaharta Act, the appointment will
allow Danaharta to preserve and protect the value of its security.
The Danaharta Act does not expressly provide for the appointment of additional or
replacement Special Administrators. The Amendment Bill clarifies that such appointments
are possible: new section 25A(2) of the Danaharta Act.
The Amendment Bill also clarifies that the mere fact of an appointment of a Special
Administrator does not trigger a breach of contract or release any existing security: new
section 29A of the Danaharta Act.
Special Administrators’ powers

Amendments have been made to clarify the consequences of an appointment of a Special
Administrator. These include making it an offence for a person:
• to perform a function as an officer of the affected company without the prior approval of
the Special Administrator: new section 33(4) of the Danaharta Act; and
• to obstruct or hinder the Special Administrator: new section 39Aof the Danaharta Act.
In both cases, the penalty for committing such an offence is RM250,000 or jail for up to 3 years
or both.
New section 42A of the Danaharta Act allows a Special Administrator to challenge
transactions involving assets which were acquired at an overvalue from, or sold at an
undervalue to, a director of the affected company or a related party. This is similar to a
liquidator’s right under section 295 of the Companies Act, 1965.
Reference Materials
Contents 89
Sometimes, in order to preserve the value of viable businesses, it may be necessary for the
affected company to obtain interim funding to ensure that it is able to continue as a going
concern while a workout proposal is being prepared. It is unlikely that a lender would agree
to provide funding to a company under special administration unless it was assured of
receiving priority in repayment. The Amendment Bill introduces amendments to provide
creditors who lend to the affected company during the special administration such priority:
new section 66A of the Danaharta Act. Likewise, a Special Administrator will be paid
approved costs and expenses in priority.
Moratorium
Under the Danaharta Act, a person who wishes to commence legal proceedings against a
company under special administration must first seek Danaharta’s approval to do so. The
Amendment Bill clarifies that Danaharta’s decision on this matter is final and binding: new
section 41(7) of the Danaharta Act. This is consistent with the underlying purpose of the Act
which is to ensure that Danaharta can achieve its mission promptly, efficiently and
economically.
The Danaharta Bill makes a breach of the moratorium a specific offence: new section 41(8) of
the Danaharta Act. The penalty for this offence is a fine not exceeding RM250,000 or
imprisonment for up to 3 years or both.
Workout proposals
The Amendment Bill redefines a secured creditor to be those creditors who hold tangible
assets - such as land, shares or fixed deposits - as security: amended section 21(1) of the
Danaharta Act. This reflects the more common types of security usually held by financial
institutions. This more specific definition will allow a Special Administrator to identify
secured creditors with a greater degree of certainty.
Under the Danaharta Act, a Special Administrator is required to submit the workout proposal
for approval by Danaharta and, subsequently, by secured creditors. However, in some cases,
the affected company may not have any secured creditors. The Amendment Bill clarifies that,
in those circumstances, approval by Danaharta is sufficient: amended section 46(4) of the Act.
As with workout proposals approved by secured creditors, a proposal approved by
Danaharta will also be binding on the affected company, shareholders, creditors and those
affected by the proposal.
Private treaty sales
The Danaharta Act allows Danaharta to foreclose on assets charged to it by way of sale by
private treaty. The Danaharta Bill clarifies that the modes of sale by private treaty include
auction, tender and private contract: amended section 57(2) of the Danaharta Act. Open
tenders have been Danaharta’s preferred mode of sale.
The amendments also clarify that Danaharta may act as buyer of last resort for foreclosed
assets: amended section 57(5) of the Danaharta Act. It is not uncommon for lenders to reserve
the right to acquire foreclosed assets to ensure that those assets are sold at fair values. Thus,
for example, where Danaharta offers landed properties for sale, it will stand in as a buyer of
last resort to ensure that properties are sold at a minimum price, and not at fire sale prices.
In addition, the amendments clarify that Danaharta may exercise its rights to foreclose under
the Danaharta Act even though the selling bank may have commenced foreclosure
proceedings: amended section 57(6) of the Danaharta Act. As the loans acquired by
Danaharta are non-performing loans, foreclosure proceedings may already have been
commenced by the selling bank by the time it sells the NPLto Danaharta. Thus, for example,
the selling bank may have applied and obtained an order to sell the property under the
National Land Code. In those circumstances, Danaharta has the option of continuing with the
sale under the National Land Code or proceed in accordance with the Danaharta Act.
Finally, the Amendment Bill allows Danaharta to take appropriate steps to preserve the value
of properties charged to it and to facilitate the sale of the property: amended section 57(1)(b)
of the Danaharta Act. This amendment is intended to overcome the practical problems that
Danaharta now faces over acts of vandalism and malicious damage. Thus, for example, the
amendment will enable Danaharta to appoint guards to protect the property against such acts
of vandalism and malicious damage. In addition, in order to assist in maximising recovery
values, the amendment will enable Danaharta to arrange for site inspections.
General matters
The Danaharta Act imposes an obligation of secrecy on officers, employees and agents of
Danaharta. The Amendment Bill extends this obligation to the Oversight Committee and
specifies a penalty for breach of this secrecy obligation: new section 65(2) of the Danaharta
Act. The penalty for such an offence is RM250,000 or jail for up to 3 years or both.
Where a company commits an offence under the Danaharta Act, officers of the company may
also be charged for the same offence: new section 66B of the Danaharta Act.
New section 71 of the Danaharta Act clarifies that an act done in breach of the Danaharta Act
is not invalidated provided it was done in good faith. This is to ensure that acts done in good
faith are preserved and the interests of third parties who may have acted in reliance of those
acts are not affected. The person who committed the breach would of course still be
accountable for the breach.
New section 72 of the Danaharta Act prohibits injunctions being issued against Danaharta,
the Oversight Committee, Special Administrator or Independent Advisor. This provision is
required given Danaharta’s function and mission which is to maximise recovery values.
Legal proceedings by NPL borrowers are not uncommon even if those proceedings do not
have a sound legal basis. The greater the number of suits, the longer Danaharta will take to
complete its mission. The delays involved in litigation will reduce the recovery values of
NPLs and ultimately increase the cost to the public of resolving the NPL problem. Protection
against such time consuming suits will ensure that Danaharta is able to focus its resources on
the management and resolution of acquired NPLs in the shortest possible time.
Reference Materials
Contents 91
Common misconceptions about Danaharta’s activities
DISPOSAL OF PROPERTY COLLATERAL
DANAHARTA IS SLOW IN DISPOSING THE PROPERTIES IN

ITS PORTFOLIO
A common and frequent misconception about Danaharta’s property

sales is the expectation that Danaharta will be foreclosing on and
disposing all properties within its portfolio (as at 31 December 2000:
1,536 properties worth RM17 billion). This assumes that Danaharta’s
only method of recovery is foreclosure and sale of collateral. This is
not the case as Danaharta will explore the option of restructuring and
rehabilitating viable loans, much like what a bank would do.
Loan restructuring can be formal (e.g. via Special Administrators appointed under the
Danaharta Act or section 176 Companies Act restructuring) or informal (e.g. loan
rescheduling or debt/equity conversions). Under loan restructuring, Danaharta does not
need to foreclose on the property collateral. Ownership of the property remains with the
borrower or the third party chargor. Danaharta only forecloses on property collateral if the
loan is non-viable or where loan restructuring is unsuccessful. With the considerable success
achieved in loan restructuring to date, it is unlikely that much of the underlying property
collateral will have to be foreclosed on and sold off.
RECOVER Y
DANAHARTA HAS ALMOST RM50 BILLION OF NPLS, BUT HAS ONLY COLLECTED
RM535 MILLION FROM PROPERTY SALES. THERE IS NO REAL RECOVERY FROM
THE NPLS
Recovery proceeds from NPLs and assets in Danaharta’s portfolio that have been
restructured have quadrupled from RM3.14 billion as at December 1999 to RM12.03 billion as
at December 2000. Almost half of the recovery from the restructured assets of RM12.03 billion
is in the form of cash (approximately RM6.4 billion), with marketable securities and
properties, as well as performing loans, making up the rest.
With restructuring still in progress, more recovery is expected from the unresolved loans and
the restructuring schemes pending implementation.
AMENDMENTS TO THE DANAHAR TA ACT
THE DANAHARTA ACT IS NOT EFFECTIVE, THEREFORE IT NEEDS TO BE

AMENDED
The Danaharta Act has been effective. It has facilitated and expedited Danaharta’s acquisition
of non-performing loans (NPLs) with gross value of almost RM50 billion from financial
institutions within 18 months after Danaharta’s establishment, and has enabled Danaharta to
restructure viable loans, or foreclose on collateral and appoint Special Administrators over
corporate borrowers to maximise recovery value.
Many international analysts who have conducted studies of Danaharta and other asset
management companies (AMCs) in the region have concluded that effective legislative
powers is a main contributing factor towards Danaharta’s good recovery rates.
The amendments are to further clarify several provisions in the Danaharta Act and to address
practical difficulties that have surfaced during Danaharta’s two years in operations.
Common misconceptions about Danaharta’s activities
DANAHARTA IS OMNIPOTENT
In normal circumstances, the powers given to Danaharta might seem to be wide and
sweeping, but these are appropriate and necessary for a national asset management company
like Danaharta. They reflect the special mission entrusted to Danaharta. As a matter of fact,
Danaharta has less sweeping powers compared to other AMCs. For example, Danaharta does
not have compulsory acquisition powers and has no power to confiscate borrowers’ assets.
PREVENTING THE COURT FROM REVIEWING A DECISION MADE BY

DANAHARTA AND GRANTING AN INJUNCTION AGAINST DANAHARTA
CANNOT BE JUSTIFIED
In the course of Danaharta’s loan management efforts, it was discovered that some borrowers
apply for injunctions against Danaharta, the Oversight Committee, Special Administrator or
Independent Advisor merely as a delay mechanism, without any strong legal basis. Extra
powers and protection are required to prevent such petty actions from hindering Danaharta’s
efforts in expediting the resolution of the NPLsituation, and to ensure that the taxpayers do
not have to bear the costs of lengthy and expensive litigation.
Bear in mind that Danaharta has a limited life and these powers and protection will cease
once Danaharta has completed its mission and is wound up. Without such protection against
unwarranted litigation, such actions will simply delay the completion of its mission.
DANAHARTA’S POWERS ARE OPEN TO ABUSE
Danaharta’s corporate governance structure serves as an effective check and balance

mechanism, for example:
• An independent nine-member Board of Directors, comprising a non-executive Chairman,

a Managing Director, two representatives from the public sector, three representatives
from the private sector and two from the international community.
• Appointments of Special Administrators require the approval of an independent
Oversight Committee, comprising a representative each from the Ministry of Finance,
Bank Negara Malaysia and the Securities Commission.
• Loan workout proposals prepared by Special Administrators are subject to a review by
an Independent Advisor and require the approval of secured creditors.
• Our commitment and track record in transparency also serves as another check against
abuse - it is difficult to abuse our powers and yet be transparent at the same time. Our
efforts in being transparent, especially via timely disclosure of accurate information, have
been acknowledged by the international community.
Reference Materials
Contents 93
Calendar of Events
17 JANUARY 2000 22 MARCH 2000

Danaharta participates in roundtable Danaharta participates in 3rd Annual
discussion at the Asset Management Asia Pacific Hotel Industry Investment
Forum organised by World Bank Conference in Singapore
20 JANUARY 2000 28 MARCH 2000

Visit by Moody’s Investor Services Danaharta announces second sale of
foreclosed properties
Visit by World Bank
14 APRIL 2000
12 FEBRUARY 2000 Visit by Ministry of Finance Thailand/
R&M of Mekar Idaman Sdn Bhd Krung Thai Bank/Bank of Thailand
announces that United Engineers (M)
Berhad is the successful bidder for 18 APRIL 2000
shares in Intria Berhad Danaharta announces sale of businesses
and assets of nine wood-based
14 FEBRUARY 2000 companies
Danaharta presents paper on the overall
Malaysian banking sector restructuring 21-22 APRIL 2000
and recovery efforts with a role and Danaharta presents paper “The
progress update on Danaharta, Malaysian Capital Markets: Role and
Danamodal and the Corporate Debt Progress of Danaharta” at seminar
Restructuring Committee, at Salomon “Investment 2000: Issues and Strategies”
Smith Barney’s Asia Banking Conference organised by Permodalan Nasional
in Hong Kong Berhad
16 FEBRUARY 2000
Visit by International Monetary Fund 2 MAY 2000
Visit by Institute of International
21 FEBRUARY 2000 Finance
Visit by Deposit Insurance Corporation,
Japan 3 MAY 2000
Danaharta appoints Special
24 FEBRUARY 2000 Administrators of Associated Kaolin
Danaharta announces results of the Industries Berhad
second restricted tender of foreign loan
assets 9 MAY 2000
Danaharta participates in an Economic
29 FEBRUARY 2000 Forum at Universiti Utara Malaysia
Danaharta briefs media and analysts on (UUM), Kedah
its Operations Report for the six months
ended 31 December 1999
2 MARCH 2000
Administrators over Woo Hing Brothers
(Malaya) Berhad and Bescorp Industries
Berhad
13 MARCH 2000
Visit by the US Department of Treasury
Calendar of Events
10 MAY 2000 22 JUNE 2000

Danaharta participates in an Economic Danaharta announces sale of the
Forum at Universiti Sains Malaysia businesses of four wood-based
(USM), Penang companies
17 MAY 2000 26 JUNE 2000

Visit by Ministry of International Trade Danaharta awards seven real estate
& Industry, Japan agents for outstanding performance in
Danaharta’s second property tender
22 MAY 2000
Meeting with US and European 30 JUNE 2000
investors, organised by Bank Negara Danaharta appoints Special
Malaysia Administrators of J&C Trading Sdn
Bhd, Kuala Lumpur Industries Holdings
23 MAY 2000 Berhad and Tang Kwor Ham Realty
Danaharta holds press conference to Sdn Bhd
announce results of the second sale of
foreclosed properties Visit by Korea Tax Institute
24 MAY 2000 Visit by Embassy of Republic of Korea

Visit by Australian High Commission
25 MAY 2000 3 JULY 2000

Danaharta appoints Special Danaharta appoints Special
Administrators of Mitsuoka Electronics Administrators of Pakata Sdn Bhd
(M) Sdn Bhd
Danaharta signs agreement with
29 MAY 2000 Permodalan Nasional Berhad to acquire
Danaharta appoints Special TTDI Development Sdn Bhd
Administrators of Abrar Corporation
Berhad and Abrar Group International
Sdn Bhd
31 MAY 2000
Visit by World Bank
1 JUNE 2000
Danaharta appoints Special Administrators
of Utama Impian Sdn Bhd
7 JUNE 2000
Visit by Japan Centre for International 4 JULY 2000
Finance Special Administrators announce
successful tenderers for MBf Northern
13 JUNE 2000 Securities Sdn Bhd and Taiping
Visit by Standard & Poor’s Securities Sdn Bhd
16 JUNE 2000 Danaharta appoints Special

Danaharta appoints Special Administrators of Uncang Emas Sdn
Administrators of Sri Hartamas Berhad Bhd and Miharja Development Sdn Bhd
and Rahman Hydraulic Tin Berhad
Reference Materials
Contents 95
Calendar of Events
6 JULY 2000 2 AUGUST 2000

Danaharta appoints Special Danaharta participates in an Economic
Administrators of Profound View Sdn Forum at Universiti Teknologi Mara
Bhd, Danau Kota Development Sdn
Bhd and Likas View Sdn Bhd 4 AUGUST 2000
Danaharta announces third restricted
10 JULY 2000 tender of foreign loan assets
Visit by China Huarong Asset
Management Corporation
8 AUGUST 2000
Familiarisation visit by delegation from
11 JULY 2000
the Ministry of Finance and Ministry of
Danaharta announces third sale of
foreclosed properties Planning of Egypt
Visit by Korea Asset Management 16 AUGUST 2000

Corporation (KAMCO) Danaharta appoints Puan Husniarti
Tamin to replace Dato’ Dr. Abdul Aziz
Visit by Korea Securities Research Mohd Yaacob on Board of Directors
Institute
12 JULY 2000
Amendments of Danaharta Act debated
at Dewan Rakyat
18 JULY 2000
Forum at Universiti Malaysia Sarawak
19 JULY 2000
Forum at Universiti Malaysia Sabah
24 JULY 2000
Danaharta appoints Special Visit by Japan External Trade
Administrators of Alpha Agencies Sdn Organization
Bhd, Golden Pearl Island Hotel Sdn
Bhd, Profil Kemas Sdn Bhd and Projek 18 AUGUST 2000
Kota Langkawi Sdn Bhd Visit by Monetary Authority of
Singapore
25 JULY 2000
Roundtable discussion with analysts 19 AUGUST 2000
Danaharta participates in UUM’s “First
26 JULY 2000 International Conference on Banking
Visit by Institute of Developing and Finance: Issues and Strategy”
Economies, Japan
21 AUGUST 2000
Forum at Universiti Malaya
Administrators of Sri Hartamas Hotels
27 JULY 2000 Sdn Bhd
Visit by delegation from Indonesian
Banking Restructuring Agency 22 AUGUST 2000
(“IBRA”) Danaharta appoints Special
Administrators of Trimula Development
Amendments to Danaharta Act debated Sdn Bhd
at Dewan Negara
Calendar of Events
23 AUGUST 2000 2 OCTOBER 2000

Visit by delegation of Indonesian Danaharta appoints Dato’ Salleh Harun
Members of Parliament and IBRA to replace Dato’ Dr. Zeti Akhtar Aziz on
officials Board of Directors
24 AUGUST 2000 4 OCTOBER 2000

Danaharta announces results of the Visit by Standard & Poor’s
third sale of foreclosed properties
4-6 OCTOBER 2000
25 AUGUST 2000 Control Self Assessment (CSA) Workshop
Danaharta clarifies report on National for Danaharta executives
Steel Corporation of The Philippines
16 OCTOBER 2000
28 AUGUST 2000 Dialogue with delegation from Russell
Danaharta briefs media and analysts on 2020, organised by Economic Planning
its Operations Report for the six months Unit (EPU)
ended 30 June 2000
18 OCTOBER 2000
30 AUGUST 2000 Danaharta appoints Special
Danaharta appoints Special Administrators of Cempaka Mewah
Administrators of Salanta Development Sdn Bhd, Puncak Permata Sdn Bhd,
Sdn Bhd Mawar Tiara Sdn Bhd and Mewah
Rembang Sdn Bhd
11 SEPTEMBER 2000 Danaharta presents paper on the overall

Danaharta presents paper “A view of Malaysian banking sector restructuring
the challenges and prospects for the and recovery efforts with a role and
Malaysian economy” at Standard progress update on Danaharta,
Chartered Bank Investors Group dinner Danamodal and the Corporate Debt
in Kuala Lumpur Restructuring Committee at ING
Barings’ In-Depth Investment Summit
13 SEPTEMBER 2000 2000 in Singapore
Danaharta announces results of the
third restricted tender of foreign loan 19 OCTOBER 2000
assets Visit by delegation from the State Bank
for Foreign Economic Affairs, Republic
15 SEPTEMBER 2000 of Turkmenistan
Visit by Moody’s Investor Services
24 OCTOBER 2000
21 SEPTEMBER 2000 Visit by KAMCO
Danaharta issues FAQ on the Hottick
NPL and National Steel Corporation of
The Philippines 2 NOVEMBER 2000
Danaharta participates in a conference
22 SEPTEMBER 2000 on “Program, Strategy and Principles in
Visit by Government of Singapore Resolving Corporate Debt Restructuring”
Investment Corporation in Jakarta, Indonesia
25 SEPTEMBER 2000
Danaharta announces hotel & leisure
property tender
Reference Materials
Contents 97
Calendar of Events
4 NOVEMBER 2000 23 NOVEMBER 2000

Visit by Radanasin Asset Management Danaharta participates in a National
of Thailand Economic Action Council (NEAC)
briefing to delegations from Zimbabwe
7 NOVEMBER 2000 and Mozambique
Danaharta announces fourth sale of
foreclosed properties Visit by International Monetary Fund
8-12 NOVEMBER 2000 24 NOVEMBER 2000

Danaharta participates in “Malaysian Danaharta invites offers for shares in
Property Exhibition 2000” organised by United Chemical Industries Berhad
REHDA
28 NOVEMBER 2000
Visit by French Embassy
15 DECEMBER 2000
Danaharta announces results of hotel &
leisure property tender
18 DECEMBER 2000
Visit by delegation from People’s Bank
of China
9-10 NOVEMBER 2000
Danaharta participates in the “Non- 20 DECEMBER 2000
Performing Loans Forum of Asia Danaharta announces that KUB
Pacific” in Seoul, Korea Malaysia Berhad is the successful
bidder for shares in United Chemical
Industries Berhad
14 NOVEMBER 2000
Danaharta issues first quarterly report
as at 30 September 2000
Visit by delegation from China Great

Wall Asset Management Corporation
22 NOVEMBER 2000
Visit by Fitch IBCA
Financial Statements
99 Directors’ Report
103 Balance Sheets
104 Consolidated Statement Of Changes In Equity
105 Company Statement Of Changes In Equity
106 Income Statements
107 Cash Flow Statements
108 Notes To The Financial Statements
109 Statement By Directors
131 Statutory Declaration
132 Auditors’ Report

Directors’ Report 99
The Directors have pleasure in submitting their report with the audited financial statements of the
Group and of the Company for the financial year ended 31 December 2000.
BACKGROUND
The Company is a public company incorporated under the Companies Act, 1965. It is wholly owned by
the Minister of Finance Incorporated.
The Company was established by the Government of Malaysia in 1998 to act as the national asset
management company. Its objectives are to remove the distraction of managing non-performing loans
(‘NPLs’) from financial institutions and maximise the recovery value of acquired assets. Given the non-
performing nature of assets which are acquired, national asset management companies generally do not
have the long term prospect of making profits. However, the Directors will pursue the objective of
maximising recovery value for assets within the Company’s portfolio. This will result in a minimisation
of losses incurred over the long term.
The Pengurusan Danaharta Nasional Berhad Act 1998 which came into effect on 1 September 1998,
confers onto the Company the necessary powers to assist it to achieve its objectives. Through this Act
the Company has the ability to acquire assets with certainty of title and the ability to appoint Special
Administrators to manage the affairs of corporate borrowers.
PRINCIPAL ACTIVITIES
The Company is principally engaged in the business of acquiring and managing NPLs from financial
institutions.
The principal activities of the Company’s subsidiary companies are stated in Note 10 to the accounts.
There have been no significant changes in these principal activities during the financial year except that
Danaharta Hartanah Sdn Bhd commenced operations during the year.
FINANCIAL RESULTS
Group Company
RM’000 RM’000
Loss after taxation 295,356 412,218

Minority Interest 105 –
Net loss for the year 295,461 412,218
RESERVES AND PROVISIONS
There were no material transfers to or from reserves or provisions during the year other than those
disclosed in the financial statements and notes to the financial statements.
0100
SHARE CAPITAL
During the financial year, the following shares were issued by the Company:
No. of ordinary
Date of issue shares of RM1.00 each Purpose of issue Terms of issue
10 April 2000 750,000,000 Raising capital Cash at par

17 May 2000 750,000,000 Raising capital Cash at par
1,500,000,000
DIRECTORS OF THE COMPANY
The Directors of the Company who have held office during the financial year since the date of the last
report are:

Dato’ Ho Ung Hun
Eoghan M. McMillan
Alister T.L. Maitland
Dato’ Mohamed bin Md. Said
Husniarti Tamin (appointed 11.8.2000)
Dato’ Mohd Salleh Harun (appointed 22.09.2000)
Dato’ Dr. Zeti Akhtar Aziz (resigned 1.7.2000)
Dato’ Dr. Abdul Aziz Mohd Yaacob (resigned 1.7.2000)
Two of the Directors, Raja Tun Mohar Raja Badiozaman and Dato’ Ho Ung Hun are over 70 years of
age. In accordance with S129(2) of the Companies Act, 1965, they will retire as Directors in the
forthcoming Annual General Meeting but are eligible for re-appointment subject to the approval of the
shareholders pursuant to Section 129(6) of the Companies Act, 1965.
DIRECTORS’ BENEFITS
Since the end of the previous financial year, no Director has received or become entitled to receive a
benefit (other than as disclosed in the financial statements) by reason of a contract made by the
Company or a related corporation with the Director or with a firm in which the Director is a member
or with a company in which the Director has a substantial financial interest.
During and at the end of the financial year, no arrangements subsisted to which the Company or its
subsidiaries is a party with the object of enabling Directors of the Company to acquire benefits by
means of the acquisition of shares in or debentures of the Company or any other body corporate.
DIRECTORS’ INTERESTS
According to the Register of Directors’ shareholdings, none of the Directors in office at the end of the
financial year held any interests in the shares of the Company or its related corporations during the
financial year.
Directors’ Report 101
ACQUIRED ASSETS
Before the financial statements of the Group and of the Company were made out, the Directors took
reasonable steps to ascertain that actions had been taken in assessing the write-offs against and
provisions for acquired assets. Based on this assessment, as at 31 December 2000, other than the
provision for diminution in acquired assets as disclosed in note 25, there were no other write-offs
against nor provisions for acquired assets.
At the date of this report, the Directors are not aware of any circumstances which would render the
carrying value of acquired assets in the financial statements of the Group and of the Company impaired
to any substantial extent.
CURRENT ASSETS
Before the financial statements of the Group and of the Company were made out, the Directors took
reasonable steps to ensure that any current assets, other than debts and financing, which were unlikely
to realise in the ordinary course of business, their values as shown in the accounting records of the
Group and of the Company, have been written down to an amount which they might be expected so to
realise.
At the date of this report, the Directors are not aware of any circumstances which would render the
values attributed to the current assets in the financial statements of the Group and of the Company
misleading.
VALUATION METHODS
At the date of this report, the Directors are not aware of any circumstances which have arisen which
render adherence to the existing methods of valuation of assets or liabilities of the Group and of the
Company misleading or inappropriate.
CONTINGENT AND OTHER LIABILITIES
At the date of this report, there does not exist:
(a) any charge on the assets of the Group or of the Company which has arisen since the end of the
financial year which secures the liabilities of any other person; or
(b) any contingent liability of the Group or of the Company which has arisen since the end of the
financial year other than in the normal course of business.
No contingent or other liability of the Group or of the Company has become enforceable, or is likely to
become enforceable, within the period of twelve months after the end of the financial year which, in the
opinion of the Directors, will or may substantially affect the ability of the Group or of the Company to
meet their obligations as and when they fall due.
CHANGE OF CIRCUMSTANCES
At the date of this report, the Directors are not aware of any circumstances, not otherwise dealt with in
this report or the financial statements of the Group and of the Company, that would render any amount
stated in the financial statements misleading.
0102
ITEMS OF AN UNUSUAL NATURE
In the opinion of the Directors, the results of the Group’s and Company’s operations during the
financial year were not substantially affected by any item, transaction or event of a material and
unusual nature.
There has not arisen in the interval between the end of the financial year and the date of this report
any item, transaction or event of a material and unusual nature likely to affect substantially the results
of the operations of the Group and of the Company for the current financial year in which the report
was made.
AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
In accordance with a resolution of the Board of Directors dated 19 March 2001
RAJA TUN MOHAR RAJA BADIOZAMAN DATO’ MOHAMED AZMAN YAHY A

Chairman Managing Director
Kuala Lumpur
Balance Sheets As At 31 December 2000 103
Note Group Company

As at As at As at As at
31.12.2000 31.12.1999 31.12.2000 31.12.1999
RM’000 RM’000 RM’000 RM’000
ASSETS
Cash and bank balances 79,654 38,228 15,915 22,227

Deposits and placements with
financial institutions 4 2,513,908 1,523,301 2,486,916 1,415,266
Investment in marketable securities 5 531,907 274,895 531,843 274,895
Trade and other receivables 6 93,650 13,318 379,073 12,886
Acquired assets 7 8,267,091 8,286,855 8,237,055 8,286,855
Inventories 1,248 – – –
Property development expenditure 8 192,400 – – –
Investment properties 9 31,851 – – –
Investment in subsidiary companies 10 – – 3,000 2,000
Investment in associated companies 12 64,755 – – –
Fixed assets 13 14,958 12,610 8,768 11,738
Total assets 11,791,422 10,149,207 11,662,570 10,025,867
LIABILITIES AND
SHAREHOLDERS’ FUNDS
Trade and other payables 14 276,453 57,945 414,118 40,836

Short-term borrowings 15 526 – – –
Provisions 40,403 6,352 11,987 5,905
Redeemable guaranteed zero-coupon
bearer bonds 16 8,215,923 7,537,574 8,215,923 7,537,574
Long term loans 17 850,108 1,358,900 850,108 1,358,900
Joint venture 18 1,443 – – –
Taxation 5,029 – – –
Deferred Taxation 8,123 – – –
Total liabilities 9,398,008 8,960,771 9,492,136 8,943,215
Financed by:
SHARE CAPITAL 19 3,000,000 1,500,000 3,000,000 1,500,000
RESERVES 20 (607,025) (311,564) (829,566) (417,348)
SHAREHOLDERS’ FUNDS 2,392,975 1,188,436 2,170,434 1,082,652

MINORITY INTEREST 439 – – –
TOTAL LIABILITIES AND

The notes on pages 109 to 130 form an integral part of these financial statements.
0104
104 Consolidated Statement Of Changes In Equity
for the financial year ended 31 December 2000
Non-
distributable Distributable
Accumulated
Share capital losses Total
RM’000 RM’000 RM’000
Balance as at 1.1.2000 1,500,000 (311,564) 1,188,436

Issued during the year 1,500,000 – 1,500,000
Net loss for the year – (295,461) (295,461)
Balance as at 31.12.2000 3,000,000 (607,025) 2,392,975
Balance as at 1.1.1999 250,000 (17,309) 232,691

Balance as at 31.12.1999 1,500,000 (311,564) 1,188,436
Company Statement Of Changes In Equity 105
Non-
distributable Distributable
Accumulated
Share capital losses Total
RM’000 RM’000 RM’000
Balance as at 1.1.2000 1,500,000 (417,348) 1,082,652

Balance as at 31.12.2000 3,000,000 (829,566) 2,170,434
Balance as at 1.1.1999 250,000 (17,313) 232,687

Balance as at 31.12.1999 1,500,000 (417,348) 1,082,652
106 Income Statements
Note Group Company

Year ended Year ended Year ended Year ended
31.12.2000 31.12.1999 31.12.2000 31.12.1999
RM’000 RM’000 RM’000 RM’000
Revenue: Existing operations 21 443,325 198,567 317,800 93,949

Acquired operations 21 9,111 – – –
Total Revenue 452,436 198,567 317,800 93,949
Cost of Sales (6,913) – – –
Interest expense 22 (597,398) (469,480) (597,177) (469,480)
Overhead expenses 23 (44,289) (24,757) (41,769) (24,714)
Provision for diminution in acquired

assets 25 (105,954) – (97,954) –
Loss from operations (302,118) (295,670) (419,100) (400,245)
Other Income 3(d) 7,940 1,415 6,882 210
Share of losses of associated companies (1) – – –
Goodwill written-off (480) – – –
Loss before taxation (294,659) (294,255) (412,218) (400,035)
Taxation 26 (697) – – –
Loss after taxation (295,356) (294,255) (412,218) (400,035)
Minority interest (105) – – –
Net loss for the year (295,461) (294,255) (412,218) (400,035)
Accumulated loss brought forward (311,564) (17,309) (417,348) (17,313)
Accumulated loss carried forward (607,025) (311,564) (829,566) (417,348)
Consolidated Cash Flow Statement 107
for the year ended 31 December 2000
Year ended Year ended

31.12.2000 31.12.1999
RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES
Loss after taxation (295,356) (294,255)

Adjustments for:
Depreciation 4,032 2,741
Interest expense accrued 597,148 460,969
Interest income accrued (77,204) (28,591)
Loss on sale of fixed assets – 8
Amortisation of premium 816 –
Gain on disposal of marketable securities (5,454) –
Provision for diminution in acquired assets 105,954 –
Fixed assets written-off 8 –
Goodwill written-off 480 –
Operating profit before working capital changes 330,424 140,872
Movements in operating assets and liabilities:

Acquired assets (86,190) (5,134,102)
Other assets (6,493) (9,031)
Redeemable guaranteed zero-coupon bearer bonds 167,620 5,295,200
Amounts payable on acquired loans – (1,233,207)
Other liabilities 204,553 55,336
Net cash from/(used in) operating activities 609,914 (884,932)
CASH FLOW USED IN INVESTING ACTIVITIES
Acquisition of subsidiary (226,660) –

Acquisition of associated company (64,700) –
Purchase of marketable securities (396,173) (264,844)
Purchase of fixed assets (1,341) (11,178)
Proceeds from sale of marketable securities 147,110 –
Proceeds from sale of fixed assets 309 3
Interest received 59,003 –
Net cash used in investing activities (482,452) (276,019)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of share capital 1,500,000 1,250,000

Proceeds from long-term loans – 1,000,000
Interest paid (95,429) –
Payment of borrowings (500,000) –
Net cash generated from financing activities 904,571 2,250,000
Net increase in cash and cash equivalents 1,032,033 1,089,049

Cash and cash equivalents at beginning of year 1,561,529 472,480
Cash and cash equivalents at end of year 2,593,562 1,561,529
ANALYSIS OF CASH AND CASH EQUIVALENTS
Deposits and placements with financial institutions 2,513,908 1,523,301

Cash and bank balances 79,654 38,228
2,593,562 1,561,529
108 Company Cash Flow Statement
for the year ended 31 December 2000

31.12.2000 31.12.1999
RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES
Loss after taxation (412,218) (400,035)

Adjustments for:
Depreciation 3,550 2,558
Interest expense accrued 597,148 460,815
Interest income accrued (77,204) (28,591)
Amortisation of premium 816 –
Gain on disposal of marketable securities (5,454) –
Provision for diminution in acquired assets 105,954 –
Operating profit before working capital changes 212,592 34,747
Movements in operating assets and liabilities:

Acquired loans (56,154) (5,134,102)
Other assets (351,235) (8,562)
Redeemable guaranteed zero-coupon bearer bonds 167,620 5,295,354
Amounts payable on acquired loans – (1,233,207)
Other liabilities 379,583 37,853
Net cash from/(used in) operating activities 352,406 (1,007,917)
CASH FLOW USED IN INVESTING ACTIVITIES
Purchase of marketable securities (396,173) (264,844)

Purchase of fixed assets (845) (9,218)
Proceeds from sale of marketable securities 147,110 –
Proceeds from sale of fixed assets 266 –
Investment in subsidiary companies (1,000) (2,000)
Interest received 59,003 –
Net cash used in investing activities (191,639) (276,062)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of share capital 1,500,000 1,250,000

Proceeds from long-term loans – 1,000,000
Interest paid (95,429) –
Payment of borrowings (500,000) –
Net cash generated from financing activities 904,571 2,250,000
Net increase in cash and cash equivalents 1,065,338 966,021

Cash and cash equivalents at beginning of year 1,437,493 471,472
Cash and cash equivalents at end of year 2,502,831 1,437,493
ANALYSIS OF CASH AND CASH EQUIVALENTS
Deposits and placements with financial institutions 2,486,916 1,415,266

Cash and bank balances 15,915 22,227
2,502,831 1,437,493
Notes To The Financial Statements 109
31 December 2000
1 PRINCIPAL ACTIVITIES
The Company is principally engaged in the business of acquiring and managing non-performing
loans (‘NPLs’) from financial institutions with a view of maximising recovery values.
The principal activities of the Company’s subsidiary companies are stated in Note 10 to the
accounts.
There have been no significant changes in these principal activities during the financial year except
that Danaharta Hartanah Sdn Bhd commenced operations during the financial year. The Company
is incorporated and domiciled in Malaysia.
2 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
The financial statements of the Group and the Company are prepared in accordance with the
provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia.
3 SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of accounting
The financial statements of the Group and the Company have been prepared under the
historical cost convention.
(b) Basis of consolidation
The consolidated financial statements include the financial statements of the Company and all
its subsidiaries made up to 31 December 2000 except for those subsidiary companies as
disclosed in Note 10 to the financial statements. All material inter-company transactions have
been eliminated on consolidation.
(c) Revenue Recognition
(i) Interest income
Interest income on acquired loans is recognised on a receipt basis. All other interest
income is recognised on an accrual basis.
(ii) Income from recoveries of acquired loans
Upon the recovery of an acquired loan by the Company, any surplus obtained from the
consideration received on recovery against the consideration paid on acquisition of the loan
(Fair Purchase Price) will be shared between the selling financial institution and the
Company on a predetermined basis, after deducting the Company’s direct and holding
costs. The Company’s holding costs are calculated based on Malayan Banking Berhad’s
Base Lending Rate.
In the event that the Company suffers a loss on the recovery of an acquired loan, that loss
is immediately recognised in the Company’s financial statements.
31 December 2000
3 SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(c) Revenue Recognition (Cont’d)
(iii) Management fee income
Management fee income represents fee income earned on the management of assets by the
Company’s subsidiaries. The fee income is earned on recovery of the assets under
management and as such is recognised on a receipt basis.
(iv) Income from property development
Income from property development is recognised using the percentage of completion

method. Where foreseeable losses are anticipated, full provision for these losses is made in
the financial statements.
(d) Other income
Other income represents income derived from tender fees, fees on provision of financing
facilities, other investment income and any other income recognised on inception of such
transactions.
(e) Acquired loans
Acquired loans comprise acquired non-performing loans, advances and financing.
The Fair Purchase Price of acquired secured loans is based on the fair value of the collateral on
which the loans are secured, subject to a minimum value of 10% of the principal outstanding:
(i) Properties
Properties are valued by a panel of independent professional valuers.
(ii) Shares
Shares are either valued internally or by professional advisers based on general valuation
principles.
The Fair Purchase Price of acquired unsecured loans is determined at 10% of the principal
outstanding.
The carrying value of an acquired loan is its Fair Purchase Price less provision and repayment.
(f) Provisions for acquired loans
Secured acquired loans
Specific provisions are made for the shortfall in value between the value of the collateral and
the carrying value of the acquired loan.
Unsecured acquired loans
Specific provisions are made against the carrying value of unsecured acquired loans when, in
the opinion of the Directors, credit risks or economic or political factors make recovery
doubtful.
31 December 2000
(g) Acquired properties
The investment in acquired properties is stated at the consideration paid by Danaharta

Hartanah Sdn Bhd to acquire the properties.
Diminution in value will be provided when the sales price or revised valuation performed by
external valuers is lower than the carrying value.
(h) Property development expenditure
Properties under development comprising land and development expenditure are stated at cost
plus attributable profit less foreseeable losses, net of progress billing. Development expenditure
includes interest expense on loans and advances utilised to finance on-going development.
(i) Investment properties
Investment properties principally comprising leasehold land identified for development, are
held for long term rental yields. Investment properties are treated as long term investments and
carried at lower of cost and valuation. The Group revalues its long term investments every five
years.
On disposal of the investment property, the difference between the net disposal proceeds and
the carrying amount is charged or credited to the income statement.
(j) Investment in subsidiary companies
A subsidiary company is a company in which the Company controls the composition of its
board of directors or more than half of its voting power, or holds more than half of its issued
ordinary share capital.
Investments in subsidiary companies are stated at cost, and written down when the directors
consider that there is a permanent diminution in the value of such investments.
(k) Fixed assets and depreciation
Fixed assets are stated at cost less accumulated depreciation.
Freehold land, building in progress and renovations in progress are not depreciated.
Depreciation of other fixed assets is calculated to write off the cost of the fixed assets on a
straight-line basis over the expected useful lives of the assets concerned. The principal annual
rates of depreciation are as follows:
Office equipment and furniture and fittings 10% – 33 1/3%

Computer equipment and software 33 1/3%
Motor vehicles 25%
Leasehold land and buildings 2%
Car park equipment 20%
Office renovation 10%
(l) Issued zero-coupon bonds and fixed rate long term loan
The carrying value of the redeemable guaranteed zero-coupon bearer bonds issued by the
Company is the nominal value of the bonds less the unamortised discount. The discount on the
bonds is amortised on a straight-line basis over the duration of the bond.
31 December 2000
(l) Issued zero-coupon bonds and fixed rate long term loan (Cont’d)
The carrying value of the fixed rate long term loan from Khazanah Nasional Berhad is the
principal amount upon drawdown plus the accrued interest charge on the loan. As the total
interest charge is predetermined, the interest on the loan is accrued on a straight-line basis over
the duration of the loan.
The carrying value of the fixed rate long term loan from Employees Provident Fund (‘EPF’) is
the principal amount upon drawdown. Interest on the loan is accrued on a monthly basis and
paid to EPF on a semi-annual basis.
(m) Investment in marketable securities
The carrying value of the Company’s investment in its own bonds and other zero-coupon
bonds is the cost of purchase plus the accretion of discount to maturity on a straight-line basis.
The carrying value of the Company’s investment in its own bonds is shown as a deduction of
the Company’s liabilities. The carrying value of the Company’s other investments are shown
as an asset in ‘Investment in Marketable Securities’ and are valued at cost of purchase plus the
accretion of discount less amortisation of premium.
(n) Foreign currencies
Foreign currency transactions are converted into Ringgit Malaysia at the rate of exchange ruling
on the transaction dates. Assets and liabilities in foreign currencies at balance sheet date are
translated into Ringgit Malaysia at the rate of exchange ruling at that date.
Gains and losses arising from the current year’s transactions are dealt with in the income
statement.
(o) Investment in associated companies
Investments in associated companies are accounted for in the consolidated financial statements
by the equity method of accounting. Associated companies are companies in which the Group
exercises significant influence. Significant influence is the power to participate in the financial
and operating policy decisions of the associated companies but not control over those policies.
Equity accounting involves recognising in the income statement the Group’s share of the results
of associated companies for the period. The Group’s investments in associated companies are
carried in the balance sheet as an amount that reflects its share of the net assets of the
associated companies and includes goodwill on acquisition.
Unrealised surpluses and deficits on transactions between group companies and associated
companies have been eliminated to the extent of the Group’s interest in the associated
companies. Where necessary, in applying the equity method, adjustments have been made to
the financial statements of associated companies to ensure consistency of accounting policies
with the Group.
(p) Jointly controlled entities
The Group’s investments in jointly controlled entities are accounted for in the consolidated
financial statements by the equity method of accounting. Jointly controlled entities are
corporations, partnerships or other entities over which there is contractually agreed sharing of
control by the Group and one or more parties.
31 December 2000
(q) Accounting for leases
Leases of property, plant and equipment where the Group assumes substantially all the benefits
and risks of ownership are classified as finance leases.
Finance leases are capitalised at the estimated present value of the underlying lease payments.
Each lease payment is allocated between the liability and finance charges so as to achieve a
constant rate on the finance balance outstanding. The corresponding rental obligations, net of
finance charges, are included in borrowings. The interest element of the finance charge is
charged to the income statement over the lease period.
The property, plant and equipment acquired under finance lease contracts is depreciated over
the useful life of the asset.
(r) Deferred Taxation
Provision is made using the liability method of taxation deferred by timing differences except
where the tax effects of such timing difference are expected to be deferred indefinitely.
Deferred tax benefits are recognised only if there is reasonable expectation of their realisation.
(s) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, balances and deposits with banks . For the
purpose of the cashflow statement, cash and cash equivalents are presented net of bank
overdrafts.
4 DEPOSITS AND PLACEMENTS WITH FINANCIAL INSTITUTIONS
Group Company
31.12.2000 31.12.1999 31.12.2000 31.12.1999
RM’000 RM’000 RM’000 RM’000
Licensed banks 1,854,491 1,447,541 1,834,947 1,339,506

Licensed finance companies 659,417 75,760 651,969 75,760
2,513,908 1,523,301 2,486,916 1,415,266
5 INVESTMENT IN MARKETABLE SECURITIES
Unquoted Money Market Instruments in Malaysia
Group Company
31.12.2000 31.12.1999 31.12.2000 31.12.1999
RM’000 RM’000 RM’000 RM’000
Cagamas bonds/notes 50,194 – 50,194 –
Danamodal Bonds 130,221 264,844 130,221 264,844
Khazanah Bonds 138,205 – 138,205 –
Private debt securities 196,209 – 196,209 –
514,829 264,844 514,829 264,844
Amortisation of premium less 17,014 10,051 17,014 10,051

accretion of discounts
531,843 274,895 531,843 274,895
31 December 2000
5 INVESTMENT IN MARKETABLE SECURITIES (cont’d)
Group Company
31.12.2000 31.12.1999 31.12.2000 31.12.1999
RM’000 RM’000 RM’000 RM’000
Unquoted securities in Malaysia
Shares 35 – – –
Quoted securities in Malaysia
Shares 29 – – –
531,907 274,895 531,843 274,895
Market value of quoted shares 21 – – –
In the opinion of the Directors, no provision for diminution in value is deemed necessary as the
diminution is not permanent in nature.
The maturity structure of money market instruments held for investment are as follows:-
Group Company
31.12.2000 31.12.1999 31.12.2000 31.12.1999
RM’000 RM’000 RM’000 RM’000
One year to three years 202,720 – 202,720 –

Three years to five years 329,123 274,895 329,123 274,895
531,843 274,895 531,843 274,895
6 TRADE AND OTHER RECEIVABLES

Group Company
31.12.2000 31.12.1999 31.12.2000 31.12.1999
RM’000 RM’000 RM’000 RM’000
Trade Receivables 36,387 – – –

Less: Provision for doubtful debts (159) – – –
36,228 – – –
Amounts owing by subsidiaries – – 346,490 180

Other debtors, deposits and prepayments 24,224 2,916 1,082 2,896
Accrued interest receivable 18,362 2,350 16,712 1,758
Staff loans 14,836 8,052 14,789 8,052
93,650 13,318 379,073 12,886

31 December 2000
7 ACQUIRED ASSETS
Group Company
31.12.2000 31.12.1999 31.12.2000 31.12.1999
RM’000 RM’000 RM’000 RM’000
Acquired loans 8,237,055 8,286,855 8,237,055 8,286,855

Acquired properties 30,036 – – –
8,267,091 8,286,855 8,237,055 8,286,855
Provision for diminution of RM98 million (1999:Nil) and RM8 million (1999:Nil) were made against
acquired loans and acquired properties respectively.
Acquired loans are analysed by economic sector as follows:
Loan Rights Outstanding Carrying Value

31.12.2000 31.12.1999 31.12.2000 31.12.1999
RM’000 RM’000 RM’000 RM’000
Agriculture, hunting, forestry and fishing 258,059 227,493 155,036 130,804

Manufacturing 1,780,260 1,621,569 548,386 586,422
Electricity, gas and water 3,762 12,684 486 4,245
Wholesale, retail, restaurants and hotels 913,626 853,015 441,166 456,224
Construction 6,484,701 6,133,729 3,857,322 3,874,305
Purchase of residential property 992,553 918,406 740,747 691,027
Real Estate 1,426,297 1,204,167 892,280 687,689
Transport, storage and communications 126,565 126,565 20,651 21,261
Financing, insurance and business services 2,429,675 2,386,465 703,086 1,002,466
Consumption credit 226,178 196,709 41,294 49,179
Purchase of securities 1,734,453 1,738,709 579,637 544,966
Mining 368,061 56,469 88,390 25,643
Others 3,649,214 3,650,982 168,574 212,624
20,393,404 19,126,962 8,237,055 8,286,855
Included in ‘Others’ are loan rights outstanding totalling RM3,088 million which were acquired for
a nominal value of RM4. This relates to financing extended to a holding company which invested
in a company engaged in primary industry outside Malaysia. The classification of these loans as
‘Others’ was determined by the Company in view of the fact that they cannot be easily categorised
to any of the specific sectors. In substance, these loans are being managed by the Company and a
substantial proportion of any gains from the recoveries of these loans will accrue to the selling
financial institutions.
The above economic sector classifications are as defined by Bank Negara Malaysia and as
determined by the selling financial institution, other than the acquired loans as described in the
preceding paragraph.
31 December 2000
8 PROPERTY DEVELOPMENT EXPENDITURE
Group
As at As at
31.12.2000 31.12.1999
RM’000 RM’000
Land at cost
– Leasehold land 727 –
– Freehold land 10,948 –
Development expenditure 458,187 –
469,862 –
Portion of profit attributable to development work

performed to date 115,403 –
Less: Provision for foreseeable losses (415) –
584,850 –
Less: Progress billings rendered (392,450) –
192,400 –
Included in development expenditure is interest expense of RM4,901,754 (1999:Nil) charged for the
year.
9 INVESTMENT PROPERTIES
Group
As at As at
31.12.2000 31.12.1999
RM’000 RM’000
At cost
Long leasehold land, at cost 29,750 –
Development properties 2,101 –
31,851 –
10 INVESTMENT IN SUBSIDIARY COMPANIES
Company
As at As at
31.12.2000 31.12.1999
RM’000 RM’000
Unquoted shares in Malaysia, at cost 3,000 2,000

31 December 2000
10 INVESTMENT IN SUBSIDIARY COMPANIES (cont’d)
The following are the subsidiaries of the Company, all of which are incorporated in Malaysia:
Paid-up Effective interest

Name capital 2000 1999 Principal activity
RM % %
Danaharta Ekuiti Sdn Bhd 2 100 100 Dormant

Danaharta Hartanah Sdn Bhd 1,000,000 100 100 Asset Management
Danaharta Bina Sdn Bhd 2 100 100 Dormant
Danaharta Industri Sdn Bhd 2 100 100 Dormant
Danaharta Prasarana Sdn Bhd 2 100 100 Dormant
Danaharta Kredit Sdn Bhd 2 100 100 Dormant
Danaharta Perhotelan Sdn Bhd 2 100 100 Acquiring and
managing hotel
properties
Danaharta Managers Sdn Bhd 1,000,000 100 100 Asset management
Danaharta Managers (L) Ltd US$5,000,000 100 100 Asset management
Danaharta Urus Sdn Bhd 1,000,000 100 100 Asset management
Jalur Realty Sdn Bhd * 2,500,000 100 100 Property development
(formerly known as and rental
Simeban Realty Sdn Bhd )
Jalur Harta Sdn Bhd * 12,250,000 100 100 Property development
(formerly known as and rental
Simeban Harta Sdn Bhd)
Jalur Services Berhad * 14,000,000 100 100 Dormant
(formerly known as
Simeban Services Bhd)
Jalur Leasing (M) Sdn Bhd * 2,000,000 100 100 Dormant
(formerly known as
Sime Leasing (M) Sdn Bhd)
Subsidiary company of Danaharta Hartanah Sdn Bhd
TTDI Development Sdn Bhd # 223,000,002 100 – Property development
The subsidiary companies of TTDI Development Sdn Bhd are:-
Effective interest Principal activity

2000 1999
% %
TTDI Jaya Sdn Bhd # 100 – Property development

Pandan Maju Sdn Bhd # 100 – Property development
Tadisma Harta Sdn Bhd # 100 – Property development
TTDI Management Sdn Bhd # 100 – Project management
TTDI Properties Sdn Bhd # 100 – Dormant
TTDI Realty Sdn Bhd # 100 – Dormant
Tenaga Meranti Sdn Bhd # 100 – Investment holding
Panetra Imej Parking Sdn Bhd # 51 – Operator of car park
31 December 2000
The subsidiary companies of Pandan Maju Sdn Bhd are:-
Effective interest Principal activity

2000 1999
% %
Indasaham Sdn Bhd # 70 – Property investment

Ikhlas Murni Sdn Bhd # 100 – Investment holding
# Subsidiary companies not audited by PricewaterhouseCoopers
* Following the share sale agreements between Sime Bank Berhad and Danaharta Managers Sdn
Bhd (‘DMSB’) and the share sale agreements between Sime Finance Berhad and DMSB, on
17 September 1999, the Company acquired Jalur Realty Sdn Bhd (formerly known as Simeban
Realty Sdn Bhd), Jalur Harta Sdn Bhd (formerly known as Simeban Harta Sdn Bhd), Jalur
Services Berhad (formerly known as Simeban Services Berhad) and Jalur Leasing (M) Sdn Bhd
(formerly known as Sime Leasing (M) Sdn Bhd ) (collectively referred to as ‘Jalur subsidiaries’)
for RM23,603,002. DMSB assumes a liability of RM23,603,000 for the consideration of the
acquisition and the remainder is paid in cash.
Following the agreement between Bank Negara Malaysia and DMSB on 17 September 1999,
DMSB is not subjected to any risk nor reward from its investment in the Jalur subsidiaries and
is unable to exercise its legal voting rights and has no influence on the management control of
the Jalur subsidiaries. Under this agreement, the repayment of DMSB’s liability as
consideration for the acquisition is conditional upon any cashflow received from the
investments. Any surplus cashflow shall accrue to Bank Negara Malaysia. As such, neither
DMSB’s investment nor the corresponding liability to acquire the investment is reflected in the
balance sheet of DMSB, and for this reason the results of the Jalur subsidiaries are not
consolidated into the financial statements of the Group.
In view of the above circumstances, the Registrar of Companies has granted relief to
Pengurusan Danaharta Nasional Berhad from having to consolidate and annex the financial
statements of these companies to the financial statements of the Company pursuant to
Section 169A of the Companies Act, 1965.
(a) Danaharta Managers Sdn Bhd
Following the agreement between Bank Negara Malaysia, the Company and DMSB on
7 December 1998, the NPLs of Sime Bank Bhd are to be managed by the Company and as such
the NPLs were acquired by DMSB, a 100% owned subsidiary of the Company. DMSB assumes
a liability for the consideration of the acquisition of which the repayment of that liability is
conditional upon the recovery of the acquired NPLs. Under the loan management
arrangement, DMSB is not subjected to any risk nor reward from these NPLs and as such,
neither the loans nor DMSB’s liability to acquire the loans is reflected in the balance sheet of
DMSB or in the consolidated balance sheet of the Group.
(b) Danaharta Managers (L) Ltd
Following the agreement between Bank Negara Malaysia, the Company and DMSB on
2 December 1998, the assets of Sime International Bank (L) Ltd are to be managed by the
Company and as such, DMSB acquired the entire share capital of Sime International Bank (L)
Ltd (which subsequently changed its name to ‘Danaharta Managers (L) Ltd’(‘DMLL’)) on
18 December 1998 for a nominal value of US$2 (approx. RM8). Under this arrangement, DMSB
assumes the liabilities of DMLL of which the repayment is conditional upon the recovery of
assets and accumulated losses of DMLL. Under the loan management arrangement, DMSB is
not subjected to any risk nor reward from these assets of DMLL and as such, neither DMLL’s
assets nor DMSB’s assumption of DMLL’s liabilities is reflected in DMSB’s balance sheet or in
the consolidated balance sheet of the Group.
31 December 2000
(c) Danaharta Urus Sdn Bhd
Following the agreement between the Government of Malaysia (‘Government’), Danaharta Urus
Sdn Bhd (‘DUSB’) and DMLL on 6 May 1999, the NPLs of BBMB, BBMB Kewangan Bhd and
BBMB Discount House Bhd are to be managed by DUSB, a 100% owned subsidiary of the
Company and the NPLs of BBMB International Bank (L) Ltd are to be managed by DMLL.
DUSB issued zero-coupon bonds for the consideration of the acquisition, the redemption of
which is conditional upon the recovery of the acquired assets and is indemnified by the
Government. As at 31 December 2000, DUSB has issued bonds at discounted values of
RM5,620,477,408 (redemption value of RM7,198,633,923) and USD194,728,494 (redemption values
of USD251,492,973) maturing on 31 March 2004 and bonds at discounted value of
RM2,950,797,641 (redemption value of RM3,796,458,850) and USD93,195,901 (redemption value
of USD123,705,352) maturing on 31 December 2004. Under the loan management arrangement,
DUSB is not subjected to any risk nor reward from these NPLs and as such, neither the loans
nor DUSB’s liability to acquire the loans is reflected in the respective balance sheets of DUSB or
in the consolidated balance sheet of the Group.
(d) The assets under management of DMSB, DMLL and DUSB as at 31 December 2000 are
RM11.4 billion (1999:RM10.8 million), RM5.2 billion (1999:RM5.4 million) and RM10.5 billion
(1999: RM10.1 million) respectively. All assets under management in the respective companies
pertain to the abovementioned agreements.
11 ACQUISITION OF A SUBSIDIARY COMPANY AND AN ASSOCIATED COMPANY
On 24 November 2000, Danaharta Hartanah Sdn Bhd (‘DHSB’), a subsidiary of the Company,
completed the acquisition of a 100% equity interest in TTDI Development Sdn Bhd (‘TTDI’) from
Permodalan Nasional Berhad (‘PNB’). The rationale for the acquisition is to support and
complement the Company’s Property Division in their efforts to manage and deal with property
collateral that may not be sold through regular tenders of foreclosed properties.
On 22 December 2000, DHSB subscribed for a 20.87% equity interest in PNB Merdeka Ventures Sdn
Bhd (‘PNBMV’), a subsidiary company of PNB that acquired a foreclosed property from the
Company. The equity interest in PNBMV was undertaken at the behest of PNB and to allow DHSB
to participate in future upside of the venture.
The purchase consideration for these acquisitions are as follows:-
RM’000
100% interest in TTDI 245,300

20.87% interest in PNBMV 64,700
310,000
The total purchase consideration of RM310 million above was netted-off against receivables from
PNB arising from sale of the foreclosed property.
31 December 2000
11 ACQUISITION OF A SUBSIDIARY COMPANY AND AN ASSOCIATED COMPANY (cont’d)
The effect of the acquisition of a 100% equity interest in TTDI on the financial results of the Group
during the period is shown below:-
One month ended
31.12.2000
RM’000
Revenue 9,111
Cost of sales (6,913)
Profit from operations 2,198

Interest Income 130
Interest expense (221)
Overhead expenses (1,740)
Operating profit 367

Other income 435
Profit before taxation 802

Taxation (697)
105
Minority Interest (105)
Net profit attributable to shareholders –

Less: Write-off of goodwill (480)
Decrease in Group net profit (480)
As the Group acquired 100% equity interest in TTDI, the effect of the acquisition on the Group
financial position is the full consolidation of the net assets acquired.
The details of net assets acquired, goodwill and cash flow arising from the acquisition are as follows:
At date of acquisition
RM’000
Cash and cash equivalents 18,640
Property, plant and equipment 5,278
Interest in associated companies 55
Other investments 64
Investment properties 31,851
Inventories 1,248
Property development expenditure 192,400
Trade and other receivables 58,885
Joint venture operations (1,443)
Trade and other payables (48,041)
Borrowings (unsecured) (526)
Taxation (5,029)
Deferred tax (8,123)
Minority interest (439)
Fair value of net assets acquired 244,820

Goodwill on acquisition 480
Total purchase consideration 245,300

Cash and cash equivalents in subsidiary acquired (18,640)
Net cash outflow on acquisition 226,660
The Goodwill arising on this acquisition is fully written-off in the consolidated income statement.
31 December 2000
12 INVESTMENT IN ASSOCIATED COMPANIES
Group
As at As at
31.12.2000 31.12.1999
RM’000 RM’000
Share of net assets of associated companies 64,756 –

Less: Share of post-acquisition loss (1) –
64,755 –
The details of the associated companies are as follows:
Name Country of incorporation Effective Interest

2000 1999
PNB Merdeka Ventures Sdn Bhd Malaysia 20.87% -

Colour Metal Sdn Bhd Malaysia 28.00% -
PNB Merdeka Ventures Sdn Bhd is an associated company of Danaharta Hartanah Sdn Bhd.
Colour Metal Sdn Bhd is an associated company of TTDI Realty Sdn Bhd.
13 FIXED ASSETS
Furniture Computer Leasehold
and Office Motor equipment land and Car Park Office
fittings equipment vehicles and software building equipment renovation Total
2000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
Cost
As at 1 January 2000 7,279 1,688 3,509 3,264 – – – 15,740

New acquisition 959 4,473 1,777 – 2,935 535 342 11,021
Additions 190 169 822 160 – – – 1,341
Disposals (180) (5) (271) – – – – (456)
Write-off (5) – (6) – – – (71) (82)
As at 31 December 2000 8,243 6,325 5,831 3,424 2,935 535 271 27,564
Accumulated depreciation
As at 1 January 2000 923 280 957 970 – – – 3,130

New acquisitions 642 3,297 1,498 – 54 102 72 5,665
Charge during the year 1,470 394 1,059 1,097 5 4 3 4,032
Disposals (54) (1) (92) – – – – (147)
Write-off (4) – (6) – – – (64) (74)
As at 31 December 2000 2,977 3,970 3,416 2,067 59 106 11 12,606
Net book value

As at 31 December 2000 5,266 2,355 2,415 1,357 2,876 429 260 14,958
31 December 2000
13 FIXED ASSETS (cont’d)
Furniture Computer
and Office Motor equipment
fittings equipment vehicles and software Total
2000 RM’000 RM’000 RM’000 RM’000 RM’000
Company
Cost
As at 1 January 2000 7,072 1,550 3,264 2,761 14,647

Additions 189 158 339 159 845
Disposals (180) (5) (191) – (376)
As at 31 December 2000 7,081 1,703 3,412 2,920 15,116
As at 1 January 2000 897 266 896 850 2,909

Charge during the year 1,424 335 838 953 3,550
Disposals (54) (1) (56) – (111)
As at 31 December 2000 2,267 600 1,678 1,803 6,348
Net book value
As at 31 December 2000 4,814 1,103 1,734 1,117 8,768
1999
Group
Cost
As at 1 January 1999 21 585 2,386 1,582 4,574

Additions 7,268 1,105 1,123 1,682 11,178
Disposals (10) (2) – – (12)
As at 31 December 1999 7,279 1,688 3,509 3,264 15,740
As at 1 January 1999 1 53 180 156 390

Charge during the year 922 228 777 814 2,741
Disposals – (1) – – (1)
As at 31 December 1999 923 280 957 970 3,130
Net book value
As at 31 December 1999 6,356 1,408 2,552 2,294 12,610

31 December 2000
13 FIXED ASSETS (cont’d)
Furniture Computer
and Office Motor equipment
fittings equipment vehicles and software Total
RM’000 RM’000 RM’000 RM’000 RM’000
Company
Cost
As at 1 January 1999 21 573 2,386 1,485 4,465

Additions 7,172 981 1,144 1,444 10,741
Disposals (121) (4) (266) (168) (559)
As at 31 December 1999 7,072 1,550 3,264 2,761 14,647
As at 1 January 1999 1 53 180 153 387

Charge during the year 896 214 736 713 2,559
Disposals – (1) (20) (16) (37)
As at 31 December 1999 897 266 896 850 2,909
Net book value
As at 31 December 1999 6,175 1,284 2,368 1,911 11,738
14 TRADE AND OTHER P AYABLES
Group Company
31.12.2000 31.12.1999 31.12.2000 31.12.1999
RM’000 RM’000 RM’000 RM’000
Trade payables 22,825 – – –

Interest payable to EPF 6,904 7,123 6,904 7,123
Deferred interest income on acquired assets 32,747 24,898 32,747 24,898
Security Deposits 28,861 – 22,439 –
Other liabilities 185,116 25,924 188,417 8,815
Amount due to subsidiary companies – – 163,611 –
276,453 57,945 414,118 40,836
Included in other liabilities are profit share due to Financial Institution and amount payable on
surplus recovery on foreclosure amounting to RM39 million (1999:Nil) and RM85 million (1999: Nil)
respectively.
31 December 2000
15 SHORT TERM BORROWINGS
Group
As at As at
31.12.2000 31.12.1999
RM’000 RM’000
Bank overdraft 509 –

Finance lease liability 17 –
526 –
The bank overdrafts are unsecured and bear interest at rates ranging from 0.25% to 1.00% (1999:
Nil) per annum above the lender bank’s base lending rate.
Finance lease liabilities are payable as follows:
Payments Interest Principal

31.12.2000 31.12.2000 31.12.2000
RM’000 RM’000 RM’000
Less than one year 18 1 17
16 REDEEMABLE GUARANTEED ZERO-COUPON BEARER BONDS
Group and Company

As at As at
31.12.2000 31.12.1999
RM’000 RM’000
Nominal value of bonds 11,140,400 10,344,400

Less: Unamortised discount (1,945,091) (2,334,994)
9,195,309 8,009,406
Less : Cost of investment in own bonds (913,988) (453,292)
Accretion of discount (65,398) (18,540)
8,215,923 7,537,574
Discount upon issuance 2,923,793 2,744,859

Amortisation to date (978,702) (409,865)
Unamortised discount as at 31 December 1,945,091 2,334,994
During the year, the Company issued RM796,000,000 (1999: RM7,743,000,000) nominal value of
redeemable guaranteed zero-coupon bearer bonds as consideration for the acquisition of loans.
These bonds are guaranteed by the Government of Malaysia. The bonds are redeemable by the
Company at its nominal value on the maturity date with the option by the Company to refinance
any of the bonds upon maturity for a further period of 1, 3 or 5 years. The refinanced bonds
would carry a coupon rate, which will be based on the then prevailing Malaysian Government
Security (MGS) yield of a similar tenor.
31 December 2000
16 REDEEMABLE GUARANTEED ZERO-COUPON BEARER BONDS (cont’d)
The discounted value of the bonds at the date of issue represents the consideration for the
acquisition of loans as shown below:
Nominal/
Maturity Discounted
Date of issue Date of maturity value value
RM’000 RM’000
First issue 20 November 1998 31 December 2003 1,021,600 713,404

Second issue 30 December 1998 31 December 2003 1,579,800 1,137,645
Third issue 29 January 1999 31 March 2004 1,105,400 788,161
Fourth issue 26 February 1999 31 March 2004 1,241,900 897,844
Fifth issue 26 March 1999 31 March 2004 1,392,900 1,013,446
Sixth issue 29 April 1999 30 June 2004 1,049,700 793,405
Seventh issue 27 May 1999 30 June 2004 511,200 389,683
Eighth issue 29 June 1999 30 June 2004 744,100 571,930
Ninth issue 29 July 1999 30 September 2004 527,200 401,848
Tenth issue 26 August 1999 30 September 2004 203,700 149,893
Eleventh issue 29 October 1999 31 December 2004 575,200 439,251
Twelfth issue 29 December 1999 31 December 2004 391,700 303,031
Thirteenth issue 31 January 2000 31 March 2005 162,300 125,367
Fourteenth issue 29 February 2000 31 March 2005 305,100 237,054
Fifteenth Issue 31 March 2000 31 March 2005 328,600 254,645
11,140,400 8,216,607
The timing of the redemption of the bonds is dependent on the recovery of the acquired loans,
realising proceeds at a minimum level of the Fair Purchase Price plus approximately 6.1% per
annum (1999: 6.2%) (being the internal rate of return of the bonds).
17 LONG-TERM LOANS
Group and Company
As at As at
31.12.2000 31.12.1999
RM’000 RM’000
Khazanah Nasional Berhad
Total interest charge on loan 123,118 420,737

Interest charge to date (50,108) (58,900)
Unaccrued interest charge as at 31 December 73,010 361,837
Loan redemption amount 423,118 1,220,737

Less: Unaccrued interest charge (73,010) (361,837)
350,108 858,900
Employees Provident Fund
Loan Principal 500,000 500,000
850,108 1,358,900
31 December 2000
17 LONG-TERM LOANS (cont’d)
The Long-Term loans relate to drawdowns on unsecured loans from Khazanah Nasional Berhad
(‘Khazanah’) and the Employees Provident Fund (‘EPF’). The interest on the Khazanah loans are at
a fixed rate of approximately 6.9% per annum and are calculated on the carrying value of the loan
semi-annually on a compounded basis. The interest charge for the Khazanah loans is payable on the
maturity date of the loans. The interest on the EPF loan is at a fixed rate of 8% per annum and is
payable on a semi-annual basis. The details of the loans are summarised below:
Principal
Date of Repayment upon
drawdown Date of maturity amount drawdown
RM’000 RM’000
Khazanah First tranche 18 December 1998 18 December 2003 423,118 300,000

EPF 28 April 1999 28 April 2004 500,000 500,000
923,118 800,000
18 JOINT VENTURE
Group
As at As at
31.12.2000 31.12.1999
RM’000 RM’000
Advances to joint venture 583 –

Share of loss (2,026) –
(1,443) –
The financial statements include the Group’s share of assets, liabilities, income and expenses of a
joint venture operation (‘JV’). The Group effectively owns 88% interest in the JV via TTDI’s
subsidiary companies, Pandan Maju Sdn Bhd and Indasaham Sdn Bhd, which owns 60% and 40%
interest respectively in the JV. The JV’s assets and liabilities at the balance sheet date and their
results for the financial year are as follows:
As at As at
31.12.2000 31.12.1999
RM’000 RM’000
Current assets 531 –

Current liabilities (2,171) –
Net current liabilities (1,640) –
Financed by
Current account (1,443) –

Minority Interest (197) –
(1,640) -
31 December 2000
19 SHARE CAPITAL
As at As at
31.12.2000 31.12.1999
RM ‘000 RM’000
Ordinary shares of RM1 each
Authorised:
As at 31 December 10,000,000 10,000,000
Issued and fully paid:
As at 1 January 1,500,000 250,000

Issued during the financial year 1,500,000 1,250,000
As at 31 December 3,000,000 1,500,000
20 RESERVES
Group Company
31.12.2000 31.12.1999 31.12.2000 31.12.1999
RM’000 RM’000 RM’000 RM’000
Accumulated losses 607,025 311,564 829,566 417,348
21 REVENUE
Group Company
31.12.2000 31.12.1999 31.12.2000 31.12.1999
RM’000 RM’000 RM’000 RM’000
Existing operations
Interest income from acquired loans 197,029 40,434 197,029 40,434

Interest income on deposits and placements 75,238 50,246 66,525 42,649
Interest income on marketable securities 9,863 10,051 9,863 10,051
Income from recoveries on acquired loans 44,383 815 44,383 815
Management fee income 116,812 97,021 – –
443,325 198,567 317,800 93,949
New acquisition
Revenue from property development 9,111 – – –

31 December 2000
22 INTEREST EXPENSE
Group Company
31.12.2000 31.12.1999 31.12.2000 31.12.1999
RM’000 RM’000 RM’000 RM’000
Bank charges 30 27 30 27
Long term loan interest expense 86,418 85,201 86,418 85,201
Amortisation of discount on
zero-coupon bonds 510,729 384,252 510,729 384,252
Interest on short-term borrowings 221 – – –
597,398 469,480 597,177 469,480
23 OVERHEAD EXPENSES
Group Company
31.12.2000 31.12.1999 31.12.2000 31.12.1999
RM’000 RM’000 RM’000 RM’000
Personnel costs 27,045 14,406 26,156 14,406

Establishment costs 4,208 2,776 4,137 2,759
Administration and general expenses 13,036 7,575 11,476 7,549
44,289 24,757 41,769 24,714
The number of employees as at end

of financial year 428 237 207 177
The above expenditure includes the following expenses:
Group Company
31.12.2000 31.12.1999 31.12.2000 31.12.1999
RM’000 RM’000 RM’000 RM’000
Auditors’ remuneration
- Statutory audit 218 200 120 115
- Other services 20 – – –
Directors’ remuneration (Note 24) 1,079 918 1,065 918
Depreciation 4,032 2,741 3550 2,559
Rental of premises 2,795 2,144 2,345 1,798
Hire of equipment 381 359 378 359
Loss on sale of fixed assets – 8 – 8
Fixed assets written-off 8 – – –
Share of loss of joint venture 11 – – –
31 December 2000
24 DIRECTORS’ REMUNERATION
Forms of remuneration in aggregate for all directors charged to the profit and loss account for the
year are as follows:
Group Company
31.12.2000 31.12.1999 31.12.2000 31.12.1999
RM’000 RM’000 RM’000 RM’000
Fees 91 76 77 76
Other remuneration
– Executive director 754 650 754 650
– Non-executive directors 234 192 234 192
1,079 918 1,065 918
25 PROVISIONS FOR DIMINUTION IN ACQUIRED ASSETS
Provision Provision
against against
Acquired Acquired
Loans Properties Total
RM’000 RM’000 RM’000
As at 1 January 2001 – – -
Charged to income statement 97,954 8,000 105,954
As at 31 December 2000 97,954 8,000 105,954
During the year, certain foreclosed properties, which had undergone the Tender Process, were sold
at less than their respective Fair Purchase Price (‘FPP’) . This shortfall was provided for against
Acquired Loans as the loan rights of the corresponding loans are still outstanding.
26 TAXATION
Group
31.12.2000 31.12.1999
RM’000 RM’000
Income tax
– current year 562 –
– underprovision in prior year 6 –
Deferred tax
– current year charge 129 –
697 –
31 December 2000
27 CORPORATE TAX EXEMPTION
Following the Letter from the Minister of Finance (‘MOF’) dated 4 September 1998, by the powers
vested onto the Minister of Finance under Section 127(3) (b) Income Tax Act 1967, the Company
and its subsidiaries are exempted from income tax liabilities for three years commencing Year of
Assessment 1999 until Year of Assessment 2001.
Subject to confirmation from MOF that this exemption is applicable to acquired subsidiary
companies, provision has been made for the tax liability of TTDI Development Sdn Bhd as
disclosed in note 26.
28 RELATED PARTY TRANSACTIONS
The Company is a public company incorporated under the Companies Act, 1965 and is wholly
owned by the Minister of Finance Incorporated. Transactions entered into by the Company, other
than those transactions which are entered into by enterprises in general in the course of their
normal dealings with Government Departments, agencies or Government controlled entities, are
considered to be related party transactions.
The transactions , balances and other arrangements between the Group and such entities are as
follows:
(a) The Group’s investments in marketable securities includes investment in bonds issued by
Danamodal Nasional Berhad and Khazanah Nasional Berhad with a total carrying value of
RM268 million as at 31 December 2000. The interest income credited to the income statement
from these investments amounts to RM15 million. Details of such investments are disclosed in
note 5.
(b) As part of the Group’s Asset Management activity, the Group entered into loan management
arrangements with the following parties:-
(i) Bank Negara Malaysia (‘BNM”) to manage NPLs of Sime Bank Berhad and Danaharta
Managers (L) Ltd (formerly known as Sime International Bank (L) Ltd) ,
(ii) Ministry of Finance (‘MOF’) to manage NPLs of BBMB, BBMB Kewangan Bhd , BBMB
Discount House Bhd and BBMB International Bank (L) Ltd.
Details of the arrangements are disclosed in note 10.
(c) As at 31 December 2000, the Group has long term borrowings from Khazanah Nasional Berhad
(‘KNB’) and Employees Provident Fund (‘EPF’). The interest expense charged to the income
statement for these borrowings amount to RM46 million and RM40 million respectively. Details
of the borrowings are disclosed in note 17.
Statement By Directors Pursuant To Section 169(15) 131
Of The Companies Act, 1965
We, Raja Tun Mohar Raja Badiozaman and Dato’ Mohamed Azman Yahya, being two of the Directors of
Pengurusan Danaharta Nasional Berhad state that, in the opinion of the Directors, the financial
statements set out on pages 103 to 130 are drawn up so as to give a true and fair view of the state of
affairs of the Group and the Company as at 31 December 2000 and of the results and cash flows of the
Group and of the Company for the financial year ended on that date in accordance with the applicable
approved accounting standards in Malaysia and the provisions of the Companies Act, 1965.
In accordance with a resolution of the Board of Directors dated 19 March 2001
RAJA TUN MOHAR RAJA BADIOZAMAN DATO’ MOHAMED AZMAN YAHY A

Chairman Managing Director
Kuala Lumpur
Declaration Pursuant To Section 169(16)

Of The Companies Act, 1965
I, Ee Kok Sin, the officer primarily responsible for the financial management of Pengurusan Danaharta
Nasional Berhad, do solemnly and sincerely declare that the financial statements of the Group and the
Company set out on pages 103 to 130 are, to the best of my knowledge and belief, correct and I make
this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of
the Statutory Declarations Act, 1960.
EE KOK SIN
General Manager, Finance and Services
Subscribed and solemnly declared by the abovenamed Ee Kok Sin at Kuala Lumpur in
Wilayah Persekutuan on 28 March 2001
before me:
Barathan a/l Sinniah @ Chinniah

Commissioner For Oaths
Kuala Lumpur
132 Report Of The Auditors To The Members of
Pengurusan Danaharta Nasional Berhad (Company No. 464363 W)
We have audited the financial statements set out on pages 103 to 130. These financial statements are the
responsibility of the Company’s Directors. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with approved auditing standards in Malaysia. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by Directors, as well as evaluating the overall
financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion:
(a) the financial statements have been prepared in accordance with the provisions of the Companies
Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair
view of;
(i) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial
statements; and
(ii) the state of affairs of the Group and the Company as at 31 December 2000 and of the results
and cash flows of the Group and the Company for the financial year ended on that date;
and
(b) the accounting and other records and the registers required by the Act to be kept by the Company
and its subsidiaries of which we have acted as auditors have been properly kept in accordance with
the provisions of the Act.
The names of the subsidiary companies which we have not acted as auditors are indicated in Note 10 to
the financial statements. We have considered the financial statements of this subsidiary and the
auditor’s reports thereon.
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the
Company’s financial statements are in form and content appropriate and proper for the purposes of the
preparation of the consolidated financial statements and we have received satisfactory information and
explanations required by us for those purposes.
Our audit reports on the financial statements of the subsidiaries were not subject to any qualification
and did not include any comment made under subsection (3) of Section 174 of the Act.
PricewaterhouseCoopers
(No. AF: 1146)
Public Accountants
Uthaya Kumar s/o K. Vivekananda

(No. 1455/6/02 (J))
Partner of the firm
Kuala Lumpur
28 March 2001
Published by:
Communications Unit
Fax: 603-253 7482 Website:www.danaharta.com.my
Contacts:
Shariffuddin Khalid
Tel: 603-257 7707 E-mail: sk@danaharta.com.my
Nora Shah
Tel: 603-257 7709 E-mail: nora@danaharta.com.my
Ng Mun Yee
Tel: 603-257 7712 E-mail: nmy@danaharta.com.my
Izhar Hifnei Ismail

Tel: 603-257 7713 E-mail: izhar@danaharta.com.my
is a special word coined by the
Government referring to assets in both financial
and physical forms. As such, to promote an
awareness of Danaharta and its mission to
manage such assets, it was decided to make the
name itself the logo - that is, a logotype.
The blue of the logotype conveys strength and

determination - qualities needed in abundance to
achieve Danaharta’s objectives i.e. to resolve non-
performing loans (NPLs) acquired from financial
institutions and to maximise their recovery value.
The coin in the centre of the logo signifies the tool
of trade for financial institutions, befitting
Danaharta’s role as a major government agency
helping to restructure and reform the banking
sector, whilst the rich matte gold hue of the coin
represents Danaharta’s national standing. The
cursive script used in the logotype is a reference to
the creativity and resourcefulness required to
formulate solutions to difficult challenges.
Pengurusan Danaharta Nasional Berhad 464363W
Tingkat 10, Bangunan Setia 1, 15 Lorong Dungun, Bukit Damansara, 50490 Kuala Lumpur, Malaysia
Tel: 603-253 1122 Fax: 603-253 4360 Website: www.danaharta.com.my

Danaharta Annual Report 2000

Загружено:

Сведения о документе

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Danaharta Annual Report 2000

Загружено:

Авторское право:

Доступные форматы

A n n u a l R e p o r t 2 0 0 0

Pengurusan Danaharta Nasional Berhad

Pengurusan Danaharta Nasional Berhad

Whilst the diamond may not necessarily

From humble beginnings as a piece of

The diamond’s most famous quality, its

Finally, diamonds are valuable. In the same

02 Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Third Annual General Meeting of

1. To receive the Audited Accounts for the financial year ended

2. To re-appoint PricewaterhouseCoopers as the Company’s auditors and

To consider and, if thought fit, pass the following Ordinary Resolutions:

3. “That the directors’ remuneration of RM310,612.02 for the financial year

4. “That Raja Tun Mohar bin Raja Badiozaman be re-appointed as a

5. “That Dato’ Ho Ung Hun be re-appointed as a director in accordance

By Order of the Board

PHANG TUCK KEONG

06 Key Management Personnel

Raja Tun Mohar Raja Badiozaman – Chairman

Danaharta Group of Companies as at 31 December 2000

Pengurusan Danaharta Nasional Berhad

Loan Management Subsidiaries Asset Management Subsidiaries

* Dormant as at 31 December 2000

PENGURUSAN DANAHAR TA NASIONAL BERHAD

Dato’ Mohamed Azman Yahya – Managing Director

Encik Abdul Hamidy Hafiz – Director, Operations

Encik Mohd Bakke Salleh – Director, Property

Encik Zukri Samat – General Manager, Operations

Encik Johan Ariffin – General Manager, Property

Mr. Ravindran Navaratnam – General Manager, Corporate Services

Mr. Ramesh Pillai – General Manager, Risk Management

Mr. Ee Kok Sin – General Manager, Finance and Services

Encik Shariffuddin Khalid – General Manager, Communications and Human Resource

DANAHARTA MANAGERS SDN BHD

Mr. Derrick Fernandez

DANAHARTA URUS SDN BHD

Encik Fazlur Rahman Ebrahim

TTDI DEVELOPMENT SDN BHD GROUP

Tuan Syed Hamid Hussain Al-Habshee

08 Application of the Malaysian Code

APPLICATION OF THE MALAYSIAN CODE ON CORPORATE GOVERNANCE

A. DIRECTORS medium and long term; approving

III. SUPPLY OF INFORMATION B. DIRECTORS’ REMUNERATION

C. RELATIONSHIP WITH II. INTERNAL CONTROL

The Board seeks regular assurance on

Credit Risk Financial Reporting

Destruction of property Treasury Operations & Investments

Any incorrect perception of Danaharta

Business Conduct and Compliance Compliance & Consistency

III. RELATIONSHIP WITH THE Audit Committee. The external auditors

Puan Husniarti Tamin Dato’ Salleh Harun Dato’N. Sadasivan

■ Raja Tun Mohar Raja Badiozaman – Chairman

■ Dato’ Mohamed Azman Yahya

■ Puan Husniarti Tamin

The Executive Committee’s (“EXCO”) main function is to assist the Board

• Formulate the Danaharta Group’s general policies and strategies

• Appoint the Danaharta Group’s key management team which will

• Review and assess the Danaharta Group’s financial and operational

• Approve major acquisitions and disposals within authority limits as

The EXCO met 17 times in the year ended 31 December 2000.

■ Dato’ Richard Ho Ung Hun – Chairman

■ Dato’ Salleh Harun

■ Mr. Alister T. Maitland

Danaharta’s General Manager, Internal Audit and Compliance (“IAC”) acts