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 Dear Valued Shareholders
On behalf of the Board of Directors, it is my pleasure to present the Annual Report and Financial Statements of Elba and its subsidiaries ("Elba Group") and the Company ("Elba") for the financial year ended 31 December 2003.
BUSINESS ENVIRONMENT AND OPERATION IN 2003
The year 2003 has been a challenging year to the market. As the local economy was still reeling from the adverse effects of the post Iraq war, there was a sudden outbreak of the Severe Acute Respiratory Syndrome ("SARS"). Thus, the losses incurred by the manufacturing division and the increase of finance cost have made the Elba Group to have a more challenging year.
The effects of the SARS outbreak have caused many uncertainties to the already competitive business environment of Elba Group. It has resulted in lower sales margin during the period concerned which directly affected the performances of the Group.
Apart from that, the apparel sector is currently facing the rising costs of production which is mainly due to the tight labour market and the increased wages of workers in the country. The losses incurred by the manufacturing division were due to the shortage of skilled labour coupled with high operations and maintenance costs for its plant and machinery.
The increase in finance cost was mainly arising from the additional interest costs on Collateral Loan Obligation ("CLO") which has helped the Elba Group in its business expansion and aggressiveness in enhancing its revenue levels.
In a nutshell, Elba Group is still maintaining its important role in the domestic apparels market while overcoming the changing business environment to remain competitive.
REVIEW OF FINANCIAL RESULTS AND OPERATIONS
In spite of a challenging year, the Elba Group managed to increase its revenue by thirty percent (30%) for the financial year under review as compared to the preceding financial year. The Group total revenue was higher due to encouraging trading sales from the festive season sales which the Group had actively promoted to counter the low seasons and the revenue generated by some subsidiaries which were dormant in the previous financial year. For the financial year under review, the Group experienced a loss before taxation of RM1.9 million.
Despite it being a challenging year, the Board of Directors and the management team of Elba have always encouraged its employees at all levels to persevere and remain committed to working towards a better year ahead. The Board of Directors will continuously educate its employees on the need to strive harder so as to overcome the challenges that the Elba Group may face in the coming years.
Apart from any unforeseen circumstances, the Elba Group is confident of improving its performance for the coming financial year.
DIVIDEND
The Board after giving due consideration to the funding requirements of the Group, does not recommend any dividend in respect of the current financial year.
CORPORATE EXERCISE
On behalf of the Board of Directors of Elba, I am pleased to inform that Elba has completed its Bonus Issue and Employee Share Option Scheme ("ESOS") in 2003. The paid up share capital of the Company has been increased to RM42,750,000 as at 31 December 2003. Hence, the Company has met the minimum share capital requirement of RM40 million for companies listed on the Second Board of the Bursa Malaysia Securities Berhad. With the completion of the Bonus Issue and ESOS Scheme, the Board of Directors of Elba believes that shareholders and employees are both rewarded accordingly for their continual support over the years.
FUTURE PROSPECTS
In an environment of heightened uncertainty in the global economy, the management of Elba has to reorganise their business strategies by exploring other possible business ventures. In view of this, the Company has already embarked on various business proposals and strategies so as to remain relevant and innovative in an ever changing and competitive textile and apparel market.
APPRECIATION
In an environment of heightened uncertainty in the global economy, the management of Elba has to reorganise their business strategies by exploring other possible business ventures. In view of this, the Company has already embarked on various business proposals and strategies so as to remain relevant and innovative in an ever changing and competitive textile and apparel market.
YEOH CHONG TENG
Executive Chairman | 
Company
