eastern & oriental berhad (555-k)

th Floor Wisma Damansara Jalan Semantan Kuala Lumpur Tel Fax

A N N U A LR E P O R T

“ENRICHED BY OUR HERITAG E ,BUILDING A LEGACY FOR THE FUTURE”

vision statementE voking old traditions with new directions, to enrich lifestyle

and experiences globally

mission statementTo contin u o u s l y achieve and maintain the highest degree of prestige,

r e l i a bility and quality

C o rp o r ate Inform at i o n

3 G roup Stru c t u re

‒ 1 0 - Year Group Financial Highlights

‒ D i re c t o rs ’ P ro fil e

‒ C o rp o r ate Gove rnance Stat e m e n t

I n t e rnal Control Stat e m e n t

‒ Audit Committee Report

‒ Other Inform at i o n

‒ C h a i rm a n ’s Stat e m e n t

‒ D i re c t o rs ’ R e p o rt

S t atement by Dire c t o rs

S t at u t o ry Declarat i o n

— c o n t e n ts —

annual re p o rt

R e p o rt of the Au d i t o rs to the Members of E a s t e rn & Oriental Berhad

Income Stat e m e n t s

‒ Balance Sheets

C o n s o l i d ated Statement of Changes in Equity

C o m p a ny S t atement of Changes in Equity

‒ C o n s o l i d ated Cash Flow Stat e m e n t

‒ Cash Flow Stat e m e n t

‒ Notes to the Financial Stat e m e n t s

G ro u p ’s Pro p e rt i e s

‒ S t atistics of Stock h o l d i n g s

‒ Notice of Annual General Meeting

S t atement A c c o m p a nying Notice of Annual General Meeting

‒ Fo rm of Prox y

‒ N o t e s

corporate inform a t i o n

D atuk Azizan bin Abdul Rahman C h a i rm a nD at o ’ Tham Ka Hon M a n aging Dire c t o rD atuk Henry Chin Poy WuA l oysius Choong Kok SinKamil Ahmad Meri c a nVi j eya r atnam a/l V. Thamotharam Pillay

Fam Chai Hing

A f fin Bank Berhad

Alliance Merchant Bank Berhad

Ambank Berhad

OCBC Bank (Malaysia) Berhad

R H B Bank Berhad

S o u t h e rn Bank Berhad

— main bankers —

— company secre t a ry —

— d i re c t o rs —

E rnst & Yo u n gL evel 23A, Menara Milenium, Jalan Damanlela P u s at Bandar Damansara Kuala LumpurTel - Fax -

Metra Management Sdn Bhd3 0 . 0 2 , 30th Floor, Menara Multi-Purp o s eCapital Square N o. 8 , Jalan Munshi A b d u l l a h Kuala LumpurTel - Fax -

th Floor Wisma DamansaraJalan Semantan Kuala LumpurTel - Fax -

The Main Board of Bursa Malaysia Securities Berhad

— stock exchange listing —

— re g i s t e red off i ce —

— registrar and transfer off i ce —

— a u d i t o rs —

g roup stru c t u reAs at 31 March 2004

e a s t e rn & oriental berhad

E a s t e rn & O riental Hotel Sdn Bhd • 10 0%

E & O E x p ress Sdn Bhd • 10 0%

E & O L e i s u re Sdn Bhd • 10 0%

E & O Restaurants Sdn Bhd • 10 0%

Lone Pine Hotel (Pe n a ng) Sdn Bhd • 1 0 0%

E & O Cruises Sdn Bhd • 1 0 0%

E & O Limousine Services Sdn Bhd • 1 0 0%

Eminent Pedestal Sdn Bhd • 7 0%

E & O Ve n t u res Sdn Bhd • 5 1%

Dynamic Degree Sdn Bhd • 5 1%

E & O Pro p e rty Development Berhad • 3 8 . 0 3%(18.99% held by Dynamic Degree Sdn Bhd)

E & O D eve l o p e rs Sdn Bhd • 10 0%

Radiant Kiara Sdn Bhd • 1 0 0%

True Vi t a l i t y Sdn Bhd • 1 0 0%

Te r atak Wa risan (M) Sdn Bhd(held by E & O Deve l o p e rs Sdn Bhd) • 5 0%

R e n own Heritage Sdn Bhd(held by Te r atak Wa risan (M) Sdn Bhd) • 5 0%

— p ro p e rty development/i n v e s t m e nt —

— hotel and others —

10-year group financial highlights

— re v e n ue —

— p rofit/(loss) before tax —

— p rofit/(loss) after tax & mi —

— s h a reholders’ fund —

— net earnings per share —

balance sheet

20 0 4 20 0 3 20 0 2 2 0 0 1 2 0 0 0 19 9 9 19 9 8 19 9 7 19 9 6 19 9 5

R eve n u e 117 , 8 8 2 3 3 , 4 4 9 9 1 , 1 5 6 79 , 3 9 8 1 4 1 , 4 0 5 1 27 , 8 5 9 1 3 0 , 5 8 6 11 3 , 075 5 2 , 5 0 1 2 3 , 0 9 0

P ro fit/(Loss) Before Ta x 17 , 707 ( 3 2 , 5 0 5) ( 2 1 , 2 5 4 ) 1 3 , 2 2 6 1 3 , 8 0 6 1 9 , 1 2 3 1 9 , 2 47 4 8 , 3 5 9 8 , 6 3 9 1 , 9 9 1

Ta x at i o n ( 2 , 8 1 5) 3 , 4 27 5 , 2 6 3 5 , 4 5 8 6 , 1 0 9 1 , 76 3 1 3 , 0 8 2 17 , 0 4 5 5 , 174 2 , 3 5 4

P ro fit/(L o s s) After Tax & M I 2 0 , 5 5 3 ( 3 2 , 2 6 9) ( 2 4 , 3 8 8 ) 8 , 779 7 , 6 97 17 , 3 6 0 6 , 1 6 5 3 1 , 3 1 4 3 , 4 11 ( 3 8 3)

D i v i d e nd – N e t * * 1 , 674 1 , 674 2 , 5 11 2 , 5 9 2 2 , 5 9 2 2 , 5 9 2 5 , 1 0 9 2 , 4 5 1 7 11 74 6

Issued and Paid-up Capital 2 3 2 , 472 2 3 2 , 472 2 3 2 , 472 1 2 2 , 3 5 3 1 0 2 , 8 4 1 1 0 2 , 8 4 1 1 0 2 , 8 4 1 1 0 2 , 8 4 1 1 0 0 , 0 2 1 2 9 , 0 2 4

Weighted Average No of Share s 2 3 2 , 472 2 3 2 , 472 2 2 2 , 274 1 0 6 , 8 5 0 1 0 2 , 8 4 1 1 0 2 , 8 4 1 1 0 2 , 8 4 1 1 0 2 , 1 3 6 4 2 , 2 67 2 9 , 0 1 3

S h a re h o l d e rs ’ F u n d * * 3 9 1 , 8 1 6 373 , 5 1 5 4 0 5 , 8 9 4 374 , 0 9 8 3 2 4 , 2 8 6 3 1 9 , 2 1 2 3 0 4 , 4 4 4 3 0 8 , 4 9 8 273 , 72 9 5 2 , 0 2 5

Net Earnings per share (s en) 8 . 8 ( 1 3 . 9 ) ( 11 . 0 ) 8 . 2 7. 5 1 6 . 9 6 . 0 3 0 . 7 8 . 1 ( 1 . 3 )

Net Dividend per share (s e n)* * * 0 . 7 0 . 7 2 . 1 2 . 5 2 . 5 2 . 5 5 . 0 2 . 5 2 . 4 2 . 6

N TA per share 1.41 1.34 * 1 . 47 * 2.50 * 3 . 11 * 3.06 * 2 . 9 6 3 . 0 0 2 . 74 1 . 79

* N TA is arri ved after deducting the follow i n g :

2 0 0 4 2 0 0 3 2 0 0 2 2 0 0 1 2 0 0 0 1 9 9 9 1 9 9 8 1 9 97 1 9 9 6 1 9 9 5

P remium on A c q u i s i t i o n 6 2 , 9 3 3 6 2 , 9 3 3 6 2 , 9 3 3 6 2 , 9 3 3 4 , 4 9 6 4 , 4 9 6 – – – –

S h a re of intangi bles of an A s s o c. c o m p a ny – – 2 , 3 0 0 5 , 2 0 0 – – – – – –

* * Reclassed due to change in company policy in compliance with MASB 19 “ E vents after the balance sheet dat e ” . Dividends which we re p rev i o u s ly accrued upon proposal by Dire c t o rs are now only recognised upon approval by share h o l d e rs at the Annual General Meeting.

*** In line with MASB 19 “Events after the balance sheet date”, net dividends per share of the year relates to net dividends approved by share h o l d e rs in respect of the preceeding financial ye a r. The ratio is hence calculated based on the preceeding ye a r ’s share c a p i t a l .

income statement

r a t i o s

After Restructuring— 10-year group financial highlights —

( rm ’ 0 0 0)

D ATO’ THAM KA HON

Managing Director

D at o ’ Tham Ka Hon, a Malay s i a n , aged 51 was appointed a Director and Managing Director of Eastern & Oriental Berhadon M ay . He curre n t ly sits on the boards of E & OP ro p e rty Development Berhad (form e r ly known as Kamu n t i n gC o rp o r ation Berhad), P u t r a j aya Perdana Berhad, M u l t i - P u rp o s eHoldings Berhad, Magnum Corp o r ation Berhad and MimalandB e r h a d . He is also the Managing Director of E & O Pro p e rt yD evelopment Berhad and the Chairman of Magnum C o rp o r ation Berhad.

D at o ’ Tham started his career as a Trainee A c t u a ry withA m e rican Intern ational Assurance in Kuala Lumpur. He has widee x p e rience in pro p e rty development and investment since the1980s when he completed one of the pioneer low and medium-cost housing schemes in Kuala Lumpur. His vast practicalk n owledge coupled with his skilled pro p e rty expertise becamei n c re a s i n g ly apparent with the development of the highly

p ro fit a ble Sri Damansara Project when he was heading thep ro p e rty development division in Land & General Berhad.

In , he took over Ja ck Chia Enterp rise Berhad which was later renamed Eastern & Oriental Berhad. He successfullycompleted several projects including the pre s t i gious D e s aC a h aya at Jalan A m p a n g, Kampung Wa risan at Jalan Je l at e k ,S ri Se-ekar (a luxurious condominium project) at Jalan U-Thant,whilst Desa Aman Puri (a part of Sri Damansara Project) isalmost completed. He was also re s p o n s i ble for the conservat i o n ,re s t o r ation and refurbishment of the Lone Pine Hotel, the oldesthotel along the Batu Fe rringhi beach f ront and the historical 120ye a rs old E & O Hotel in Pe n a n g.

D at o ’ Tham is married to Datin Chua Cheng Boon and they a re both substantial share h o l d e rs of the Company. Other than as disclosed above, D at o ’ Tham is not re l ated to any Dire c t o rand/or other major shareholder of the Company, has no confli c tof interest with the Company and has had no convictions foroffences within the past 10 ye a rs.

D at o ’ Tham Ka Hon D atuk Henry Chin Poy Wu

Mr A l oysius Choong Kok Sin

Encik Kamil Ahmad Meri c a n

Mr Vi j eya r atnam a/lV.Thamotharam Pillay

D at o ’ Azizan Abdul Rahman

d i rectors’ profile

D ATUK HENRY CHIN POY WU

Senior Independent non-executive Director

D atuk Henry Chin Poy Wu , a Malay s i a n , aged , wa sappointed to the Board of Eastern & Oriental Berhad as anIndependent non-exe c u t i ve Director on A p ril . He isalso the Chairman of the Audit Committee. He also sits on theboards of several public listed companies, n a m e ly, M a l ay s i a nMosaics Berhad, Kilang Papan Seri bu Daya Berhad, J.T.I n t e rn ational Berhad, N a nyang Press Holdings Berhad, G l e n e a lyP l a n t ations Malaysia Berhad, Magnum Corp o r ation Berhad andHap Seng Consolidated Berhad.

D atuk Henry spent over ye a rs of his career with The R oyal Malaysian Police and was holding the position of Chief of Po l i c e, Kuala Lumpur when he re t i red in 1993 fro mg ove rnment serv i c e. After his re t i re m e n t , D atuk Henrycontinues to be active ly invo l ved in communal serv i c e sworking for the benefit of education and we l fa re, and is a Boardmember of Unive rsity Malaysia Sabah and a member of theSabah State Pardon Board.

D atuk Henry has no fa m i ly re l ationship with any Dire c t o ra n d/or major shareholder of the Company, has no conflict of interest with the Company and has had no convictions foroffences within the past 10 ye a rs.

MR ALOYSIUS CHOONG KOK SIN

Executive Director

Mr A l oysius Choong Kok Sin, a Malay s i a n , aged , was appointedExecutive Director of Eastern & Oriental Berhad on October . He is also the Exe c u t i ve Director of E & O Pro p e rt yD evelopment Berhad (form e r ly known as Kamunting Corp o r at i o nB e r h a d ) . Mr Choong holds a Masters Degree in Urban LandAppraisal from Reading Unive rsity United Kingdom. He is aFe l l ow of the Royal Institution of Chart e red Surveyo rs and the

past President of the Institution of Surveyo rs ,M a l ay s i a . He is alsoa former member of the Board of Va l u e rs ,A p p r a i s e rs and Estat eA g e n t s ,M a l ay s i a . He joined the gove rnment service culminat i n gas the Deputy Director General in Ja b atan Penilaian danPe r k h i d m atan Hart a , Ke m e n t e rian Kewa n g a n ,w h e re he serve df rom to b e f o re joining Eastern & Oriental Berhad tohead the projects division in the Gro u p. He has extensivee x p e rience in pro p e rty consultancy and va l u at i o n .

Mr Choong has no fa m i ly re l ationship with any Dire c t o ra n d/or major shareholder of the Company, has no conflict of interest with the Company and has had no convictions for offences within the past 10 ye a rs.

ENCIK KAMIL AHMAD MERICAN

Non-independent non-executive Director

Encik Kamil Ahmad Meri c a n , a Malay s i a n , aged , a non-independent non-exe c u t i ve Director was appointed to theBoard of Eastern & Oriental Berhad on A p ril and is a member of the Audit Committee. He also sits on the boardof E & O Pro p e rty Development Berhad (form e r ly known asK a munting Corp o r ation Berhad) and Putrajaya Perdana Berhad.

Encik Kamil graduated in Architecture from Universiti TeknologiM a l aysia and the A r chitectural A s s o c i ation in London. He haswo r ked in va rious architectural firms in London and Malay s i aand possesses vast experience in the architectural fie l d . He isc u rre n t ly the Chief Exe c u t i ve Office of G D P A r chitects SdnB h d . He has been an external examiner for Unive rs i t iTe k n o l o gi Malaysia and Unive rsiti Malaya for the past 7 ye a rs.

Encik Kamil has no fa m i ly re l ationship with any Dire c t o rand/or major shareholder of the Company, has no conflict of interest with the Company and has had no convictions foroffences within the past 10 ye a rs.

D ATUK AZIZAN BIN ABDUL RAHMAN

Independent non-executive Director/Chairman

YBhg Datuk Azizan bin Abd Rahman, DMSM,aged , a Malaysian,was appointed as Chairman of Eastern & Oriental Berhad on November .

He started his career as a Shipping Executive in Harper Gilfillan (M)Sdn Bhd after graduating from University of Malaya in with adegree in Bachelor of Arts. In , he joined Pernas MISC ShippingAgencies Sdn Bhd as its first Branch Manager in the new Johor Port.He later became Penang Branch Manager and MISC MarketingManager based in Kuala Lumpur. In , he was attached toPanocean Limited in London in their Chartering Department.

He left MISC to join JF Apex Securities Berhad in as Director and launched his career in stockbroking and finance. As astockbroker, he was an active member of the stockbrokers fraternityand had held the post of President of the Association of StockbrokingCompanies of Malaysia until he left the industry. In , he wasappointed to the Board of Tongkah Holdings Berhad and also theKedah State owned Bina Darulaman Berhad to assist those companiesin their debt restructuring plans and to identify new businessstrategies.

Datuk Azizan thus brought with him vast experience in stockbrokingand corporate finance. He joined the MBf Group in to help inthe restructuring of the MBf Group and was subsequently appointedthe Managing Director of MBf Capital Berhad in . Uponcompletion of the exercise, Datuk Azizan stepped down as ManagingDirector and was appointed as the non-executive Chairman of MBfCorporation Berhad.He is also a Director of MBf Holdings Berhad,Apex Equity Holdings Berhad and Commerce Asset Ventures Sdn

Bhd. Datuk Azizan is currently the executive Deputy Chairman ofTSH Resources Berhad. He is also a member of the Investment Panelof Lembaga Tabung Haji.

Datuk Azizan has no family relationship with any Director and/ormajor shareholder of the Company, has no conflict of interest withthe Company and has had no convictions for offences within the past10 years.

MR VIJEYA R ATNAM A/L V. THAMOTHARAM PILLAY

Independent non-executive Director

Mr Vi j eya r atnam a/l V. Thamotharam Pillay, a Malay s i a n ,aged , an Independent non-exe c u t i ve Director was appointed to the Board of Eastern & Oriental Berhad on J u ly .Mr Vi j eya r atnam is a Fe l l ow of the Institute of Chart e re dAccountants in England and Wales and a member of the Malay s i a nInstitute of A c c o u n t a n t s. He has more than ye a rs post qualifyinge x p e rience cove ring auditing, financial planning, general managementand corp o r ate adv i s o ry. He is curre n t ly the Managing Director of an adv i s o ry and consultancy firm .

C u rre n t ly, Mr Vi j eya r atnam also sits on the Board of Multi-P u rpose Holdings Berhad, Bandar Raya Developments Berhad,Alliance Trustee Berhad, F u t u t e ch Berhad and several otherp ri vate limited companies.

Mr Vi j eya r atnam has no fa m i ly re l ationship with any Dire c t o ra n d/or major shareholder of the Company, has no conflict ofi n t e rest with the Company and has had no convictions foroffences within the past 10 ye a rs.

corporate Governance Statement

1. D I R E C T O R S

b o a rd of dire c t o r s

E O B is headed by an effective board which leads and c o n t rols the Gro u p.

b o a rd balance

The Board curre n t ly has six members , c o m p rising anindependent non-exe c u t i ve Dire c t o r / C h a i rm a n , a Managi n gD i re c t o r, an Exe c u t i ve Dire c t o r, a non-independent n o n - e xe c u t i ve Director and two independent non-exe c u t i veD i re c t o rs. The number of independent dire c t o rs which forms at least one third of the Board fulfills the Listing Require m e n t sof the Bursa Malaysia Securities Berhad (form e r ly known asM a l aysia Securities Exchange Berhad) [“Bursa Securi t i e s ” ] .

There is a clear segregation of responsibilities between theChairman and the Managing Director to ensure a balance of powerand authority.The non-executive Directors are independent ofmanagement and they exercise independent and objectivejudgement in Board decisions.

Currently, the composition of the Board reflects the broad range ofexperience, skills and knowledge necessary for effective leadershipof the Gro u p. D atuk Henry Chin has been identified as the SeniorIndependent non-exe c u t i ve Director to whom concerns may bec o nveyed if necessary.

The Board of Eastern & Oriental Berhad (“Board”) supportsthe Malaysian Code on Corporate Governance (“the Code”)w h i ch companies should adopt to raise the standards ofc o rp o r ate gove rn a n c e.

E a s t e rn & Oriental Berhad (“E O B”) ack n owledges t h at corp o r ate gove rnance is an on-going process thatre q u i res reassessment and re finement of managementpractices and systems. The Board is committed toe n s u ring that appro p ri ate standards of corp o r at eg ove rnance are practiced throughout the Gro u p.Set out below is a statement of how the Group has applied the principles of the Code and compliances with the best practices prov i s i o n s.

b o a rd meetings

The Board meets at least four times a year with additionalmeetings whenever necessary. D u ring the year ended

M a r ch , five Board Meetings we re held. The follow i n gis the record of attendance of the Board Members :

no. of board names of directors meetings attended

1 . D at o ’Tham Ka Hon 4

2 . D atuk Henry Chin Poy Wu 5

3 . M r. A l oysius Choong Kok Sin 4

4 . Encik Kamil Ahmad Merican 5

5 . D at o ’ S i ew Ka Wei ( resigned on August ) 3

6 . Mr Vi j eya r atnam a/l V.Thamotharam Pillay (appointed on J u ly ) 3

7 . D atuk Azizan bin Abd Rahman (appointed on N ovember ) 2

supply of inform a t i o n

All the Directors have access to the advice and services of theC o m p a ny Secre t a ry and other Management Staff of the Gro u p.T h ey may also take independent adv i c e, at the Company ’sexpense, in furtherance of their duties if so required.

Prior to each Board meeting, all the Directors are providedwith the meeting’s agenda, the necessary board papers andappropriate supporting documents for a focussed discussionat the Board meeting. All the Dire c t o rs have the right andduty to make further enquiries when they consider necessary.

re-election of dire c t o r s

The Articles of Association of the Company provides that atleast one third (1/3) or the number nearest to one third(1/3) of the directors,including the Managing Director besubject to retirement by rotation once in every three ()years and shall be eligible for re-election.

d i rectors’ training

All the Dire c t o rs had attended and successfully completedthe Mandat o ry A c c re d i t ation Pro gramme conducted by theResearch Institute of Investment Analysts Malaysia asrequired by the Bursa Securities Listing Requirements anda re re q u i red to attend the Continuing Educat i o nP ro gramme pre s c ribed by Bursa Securi t i e s.

2. BOARD COMMITTEES

The following Committees have been set up to assist theBoard to discharge its responsibilities effective ly.

i . Audit Committee

The Audit Committee, headed by a capable independentD i re c t o r, is gove rned by its written terms of re f e re n c e.T h eAudit Committee ensures that the inform ation disclosed inre l ation to the financial statements and internal controls area c c u r ate and adequat e.

The composition, t e rms of re f e rence and the activities ofthe Audit Committee are set out in the Audit CommitteeR e p o rt in this Annual Report.

i i . N o m i n ation Committee

The Nomination Committee was set up on Fe b ru a ry and comprises the following members :

D atuk Henry Chin Poy Wu

D atuk Azizan bin Abdul Rahman

Mr Vi j eya r atnam a/l V.Thamotharam Pillay

Encik Kamil Ahmad Meri c a n

The responsibilities of the Nomination Committee includerecommending to the Board, candidates for directorships inthe Company and directors to fill the seats on boardcommittees of the Company.

i i i . R e mu n e r ation Committee

The Remu n e r ation Committee was set up on Fe b ru a ry and comprises the following members :

Mr Vi j eya r atnam a/l V.Thamotharam Pillay

Encik Kamil Ahmad Meri c a n

Mr A l oysius Choong Kok Sin

The responsibilities of the Remuneration Committee includereviewing and recommending to the Board the remunerationpackages of the executive directors.

The re mu n e r ation packages of exe c u t i ve dire c t o rs and non-e xe c u t i ve dire c t o rs of the Company are decided by the Board as a whole, with the director concerned abstaining from p a rt i c i p ating in decision in respect of his individual re mu n e r at i o n .

The directors’fees are determined by the full Board and appproved by the stockholders of the Company at its annual general meetings.

3. S H A R E H O L D E R S

In line with good corp o r ate gove rn a n c e, the Group encouragesthe adoption of an open and transparent policy in respect of itsre l ationship with its stock h o l d e rs and inve s t o rs. The Boarda ck n owledges the need for stock h o l d e rs to be informed of allm at e rial business mat t e rs affecting the Gro u p.

The Group conducts dialogues with inve s t o rs from time totime as a means of effective commu n i c ation that enables theBoard and Management to convey inform ation about theC o m p a ny ’s perform a n c e, c o rp o r ate strat e gies and otherm at t e rs affecting stock h o l d e rs ’ i n t e re s t s.

The Annual Report and Notice of Annual General Meeting( “ AGM”) are set out to all stock h o l d e rs at least twe n t y - o n e(21) days before the date of the meeting.The AGM is thep rincipal forum for dialogue with all the Company ’ss t o ck h o l d e rs and they are encouraged to part i c i p ate in thequestion and answer session. The Dire c t o rs are ava i l a ble at themeeting to respond to the questions raised.

4. A C C O U N TABILITY AND AUDIT

Financial re p o rt i n g

In presenting the annual financial statements and quart e r lyannouncements to stock h o l d e rs , the Board aims to present

The aggre g ate re mu n e r ation of Dire c t o rs for the financial year ended M a r ch a re as follow s :

bonuses & b e n e fit ss a l a r i e s / f e e s others i n c e n t i v e s in kind t o t a l

’ 0 0 0 ’ 0 0 0 ’ 0 0 0 ’ 0 0 0 ’ 0 0 0

E xe c u t i ve Dire c t o rs . . . . . . . . . . . . . . . . . . . . . 932 – 66 33 1,031

N o n - E xe c u t i ves Dire c t o rs . . . . . . . . . . . . . . . . . 136 97 – – 233

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 , 2 6 4

The range of re mu n e r ation for the Dire c t o rs is disclosed in note 7 to the Financial Statements in this Annual Report .

a fair assessment on the Gro u p ’s position and pro s p e c t s.The Board ensures that the Gro u p ’s financial statements ared r awn up in accordance with the provisions of theCompanies Act and applicable approved accountingstandards in Malay s i a .This also applied to other pri c e -s e n s i t i ve public re p o rts and re p o rts to re g u l at o rs.

i n t e rnal contro l s

The Board ack n owledges its responsibility for the Gro u p ’ssystem of internal controls cove ring not only fin a n c i a lc o n t rols but also operational and compliance controls aswell as risk management to safeguard the stock h o l d e rs ’i nvestment and the Gro u p ’s assets. This system, by itsn at u re, can only provide re a s o n a ble but not absoluteassurance against misstatements or losses.

The Internal Audit function of the Group has beeno u t s o u r c e d . R ev i ews of internal controls have beenp e r f o rmed in stages and is an on-going pro c e s s. The Gro u pi n t e rnal auditors are independent of the activities theyaudit and are impartial with due professional care. F i n d i n g sof the Group internal auditors are re p o rted re g u l a r ly to theAudit Committee.The Board has implemented af r a m ework for the identific at i o n , eva l u ation andmanagement of significant ri s k s.

relationship with the auditors

The Board maintains a formal and transparent re l at i o n s h i pwith the Au d i t o rs. The Audit Committee meets with theAu d i t o rs at least once a year and whenever necessary.

Compliance with bestpractices of corporateg o v e rn a n c e

The Group has fully complied with the Best Practices ofC o rp o r ate Gove rn a n c e.

d i rectors’ re s p o n s i b i l i t ystatement for preparing theaudited financial statements

The Dire c t o rs are re q u i red by the Companies A c t , 1965 top re p a re the financial statements for each financial year whichh ave been made out in accordance with applicable approve daccounting standards and gi ve a true and fair view of the stat eof affa i rs of the Company and the Group as at the end of thefinancial year and of the results and cash flows of the Companyand the Group for the financial year then ended.

The Dire c t o rs are sat i s fied that in pre p a ring the fin a n c i a ls t atements of the Group and the Company for the year ended M a r ch , the Group and the Company have used anda p p l i e d , on consistent basis, the appro p ri ate accounting policiesand practices under the applicable approved accountingstandards in Malay s i a .

i n t e rnal control statement

I N T R O D U C T I O N

The Malaysian Code on Corporate Governance requires publiclisted companies to identify significant risks and maintain asound system of internal control to safeguard share h o l d e rs ’i nve s t m e n t s and the Gro u p ’s assets. The Bursa Malay s i aS e c u rities Berhad’s (“Bursa Securities”) Listing Requirementsrequire directors of public listed companies to include astatement in the annual reports on the state of their internalcontrols.The Burs a S e c u ri t i e s ’s S t atement on Internal C o n t ro l :Guidance for Dire c t o rs of Public Companies (“Guidance”) p rov i d e sguidance for compliance with these requirements. Set out belowis the Internal Control S t atement of the Board of Dire c t o rs ofE a s t e rn & Oriental Berhad (“EOB” or “the Company”) (“Board”),which has been pre p a red in accordance with the Guidance. I tshould be noted that the Board’s Internal Control Statementdoes not deal with the associated company, E & O PropertyDevelopment Berhad.

RESPONSIBILITY OF THE BOARD

The Board recognizes the importance of sound internal controlsand risk management practices to good corporate governance.The Board a f firms its overall responsibility for the Gro u p ’s systemof intern a l controls and risk management, and for reviewing theadequacy and integrity of those systems. It should be noted,however, that such systems are designed to manage rather thaneliminate the risk of fa i l u re to ach i eving business objective s. I na d d i t i o n , it should be noted that any system could only providereasonable and not absolute assurance against materialmisstatements or losses.

RISK MANAGEMENT FRAMEWORK

During the previous financial year, the Group continued itsreview of the significant risks and internal control processeswithin the Group with the assistance of external advisors.Theaim of the review was to identify and evaluate those significantrisks, as well as to develop appropriate controls to managethem. Controls were developed to manage these risks and

periodic reviews on the effectiveness of these controls will be a continuous process as a tool to risk management.

The Board acknowledges that risk management is an ongoingprocess that requires periodic reviews. Currently , these risksare reviewed by employees of the organization as part of theirinternal activities.

INTERNAL AUDIT FUNCTION

The Group has outsourced its internal audit function to provide the Audit Committee and the Board with theassurance regarding the adequacy of integrity of the intern a lc o n t rol systems within the Gro u p. The internal audit functionp e r f o rms ongoing rev i ews of compliances with establ i s h e dpolicies and pro c e d u res and re p o rts to the Audit Committee.

OTHER KEY ELEMENTS OF INTERNAL CONTROL

The other key elements of the Group’s internal control systemthat are being kept in place include:

• C l e a r ly defined delegation of responsibilities includingre l evant authori s ation leve l s :

• C l e a r ly defined internal pro c e d u res set out in operational and administration policies and pro c e d u re s ;

• Close personal invo l vement of exe c u t i ve dire c t o rs inm o n i t o ring and managing the main risk areas of the bu s i n e s s ; a n d

• Regular inform ation provided to senior management,c ove ring financial performance and key business indicat o rs.

WEAKNESSES IN INTERNAL CONTROLS THAT

R E S U LTED IN MATERIAL LOSSES

T h e re we re no mat e rial losses incurred during the curre n tfinancial year as a result of weaknesses in internal contro l .T h eBoard and Management continue to take measures to strengthenthe internal control env i ronment within the Gro u p.

audit committee re p o rt

D atuk Henry Chin Poy WuSenior Independent Director (C h a i rm an)

Kamil Ahmad Meri c a nNon-independent non-exe c u t i ve Director (M e m b er)

Vi j eya r atnam a/l V. Thamotharam PillayIndependent non-exe c u t i ve Director (M e m b er)

D atuk Azizan bin A b d . R a h m a nIndependent Dire c t o r / C h a i rman of the Board (M e m b er)

STRUCTURE OF THE AUDIT COMMITTEE

The Audit Committee shall be appointed by the Board and shall comprise at least three Dire c t o rs with the majority of them e m b e rs to be independent dire c t o rs.The Chairman of theCommittee shall be an independent director and be elected fro mamongst their members. All members of the Committee, i n c l u d i n gthe Chairm a n , will hold office until otherwise determined by theB o a r d . In the event of any va c a n cy in the Committee resulting inthe non-compliance with the Bursa Malaysia Securities Berhad’s( B u rsa Securities) Listing Require m e n t s , the Board of Dire c t o rsshall within three months of that event appoint such newmember(s) as may be re q u i red to comply with the Bursa Securi t i e sListing Require m e n t s.

O B J E C T I V E S

The objective of the Committee is to assist the Board in fulfil l i n gits fid u c i a ry responsibilities re l ating to internal contro l s ,c o rp o r ate accounting and re p o rting practices of the Gro u p. T h eCommittee will endeavour to adopt certain practices aimed atmaintaining appro p ri ate standards of re s p o n s i b i l i t y, i n t e grity andaccountability to the Company ’s share h o l d e rs.

A U T H O R I T Y

The Committee is authorised by the Board to:i. investigate any matter within its terms of reference;

ii. have the resources which are required to perform its duties;

iii. have full and unrestricted access to any information pertaining to the Company;

iv. have direct communication channels with the external auditorsand person(s) carrying out the internal audit function activity (if any);

v. obtain independent professional or other adv i c e ; a n d

v i . c o nvene any meetings with the external auditors , e x c l u d i n gthe attendance of the exe c u t i ve members of the Au d i tC o m m i t t e e, w h e n ever deemed necessary.

F U N C T I O N S

1 . To rev i ew the following and re p o rt the same to the Board ofD i re c t o rs of the Company :a . with the external auditor, the audit plan;

b. with the external auditor, his eva l u ation of the system ofi n t e rnal contro l s ;

c. with the external auditor, his audit re p o rt ;

d . the assistance gi ven by the employees of the Company tothe external auditor;

e. the adequacy of the scope, functions and resources of thei n t e rnal audit functions and that it has the necessarya u t h o rity to carry out its wo r k ;

f . the internal audit pro gr a m m e, p ro c e s s e s , the results of thei n t e rnal audit pro gr a m m e, p rocesses or inve s t i g at i o n su n d e rt a ken and whether or not appro p ri ate action is take non the re c o m m e n d ations of the internal audit function;

g. the quart e r ly results and year end stat e m e n t s , p rior to the approval of the Board of Dire c t o rs , focusing p a rt i c u l a r ly on:

— t e rms of re f e rence of the —audit committee

— composition of the audit committee —

i . changes in or implementation of majoraccounting policy ;

i i . s i g n i ficant and unusual events ari s i n g ; and

i i i . compliance with accounting standards, re g u l at o ryand other legal re q u i re m e n t s.

h . a ny re l ated party transaction and conflict of intere s ts i t u ation that may arise within the Company or Gro u pincluding any transaction, p ro c e d u re or course ofconduct that raises questions of management integri t y ;

i . a ny letter of re s i g n ation from the external auditors of the Company ;

j . whether there is reason (supported by grounds) tob e l i eve that the Company ’s external auditors is nots u i t a ble for re - a p p o i n t m e n t .

2 . To recommend the nomination of a person or persons as external auditors.

3 . To carry out such other functions as may be agreed to by the Audit Committee and Board of Dire c t o rs.

MEETINGS AND REPORTING PROCEDURES

The Committee shall meet at least four times a year and to form a quorum for any meeting the majority of membersp resent must be independent dire c t o rs. The Managi n gD i rector and the Finance Director shall be invited to attend all meetings of the Committee and the internal and extern a la u d i t o rs will be invited to attend when appro p ri at e.

The Company Secre t a ry shall be the secre t a ry of theCommittee and as a re p o rting pro c e d u re, the minutes of the meeting shall be circulated to all members of the Board.

The Audit Committee met five times during the financial ye a rended M a r ch and the record of the attendance of theAudit Committee Members are as follow s :

no of names of members meetings attended

1 . D atuk Henry Chin Poy Wu 5

2 . Encik Kamil Ahmad Merican 5

3 . Vi j eya r atnam a/l V.Thamotharam Pillay(appointed on J u ly ) 3

4 . D atuk Azizan Abdul Rahman(appointed on Fe b ru a ry ) 1

5 . D at o ’Tham Ka Hon ( resigned on J u ly ) 2

ACTIVITIES DURING THE YEAR

A summary of the activities of the Audit Committee ind i s ch a r ging its functions and duties included the follow i n g :i . rev i ew of the quart e r ly financial statements before its

a n n o u n c e m e n t s ;

i i . rev i ew of the external auditors ’ re p o rts in re l ation to audit,accounting and internal control issues arising from the auditand updates of the developments on accounting standardsissued by the Malaysian Accounting Standards Board;

i i i . rev i ew of the audit plan of the external auditors ;

i v. rev i ew of internal audit plan; a n dv. rev i ew of re l ated party transactions.

The Audit Committee through discussions with managementand the exe c u t i ve dire c t o rs , rev i ews of quart e r ly fin a n c i a lp e r f o rmance and input from the internal and external auditorshad discharged its functions effective ly during the ye a r.

To promote higher standards of Corp o r ate Gove rn a n c e, t h eG roup has engaged an external consultancy firm to prov i d ei n t e rnal audit serv i c e s.The Internal Audit functions aree l a b o r ated in the Internal Control Stat e m e n t .

1. U T I L I S ATION OF PROCEEDS

The proceeds arising from the completion of the corp o r ate proposals disclosed in Note 36 to the Financial Statements in this A n n u a lR e p o rt and the utilization of the said proceeds are as follow s :

R M ’ 0 0 0

Cash from Disposals and cash settlement pursuant to the terms of the Debt Settlement 8 3 , 2 8 7

Placement of Bonds 1 0 6 , 5 8 2

S h a res Placement (part ) 3 1 , 7 2 1

E & O P ROP RO S 1 5 , 1 0 92 3 6 , 6 9 9

Utilitised as follow s :

R e p ayment of borrow i n g s 1 6 3 , 8 7 9

R e p ayment to RASB of Completion Inter-Company Debt 3 4 , 6 8 0

Expenses for Corp o r ate Pro p o s a l s 3 , 5 9 7

Working Capital 3 4 , 5 4 32 3 6 , 6 9 9

The proceeds from the remaining shares and/or wa rrants to be disposed pursuant to the Shares Placement will depend on the market p rice on disposal.(Please refer to Note 36 to the Financial St atements for definitions used).

2. SHARE BUYBACKS

D u ring the financial ye a r, the Company did not enter into any share bu y b a ck transactions.

3. OPTIONS OR WA R R A N T S

D u ring the financial ye a r, no wa rrants we re exe r c i s e d .

On N ovember , the Company granted options over 12.486 million stock units to eligi ble employees of the Group under its Employees Share Option Sch e m e. The exercise price per stock units has been fixed at RM1.05. No options have been e xercised during the financial ye a r.

4. AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT (“GDR”) PROGRAMME

During the financial year, the Company did not sponsor any ADR or GDR programme.

5. SANCTIONS AND/OR PENALT I E S

T h e re we re no sanctions and/or penalties imposed on the Company and its subsidiari e s , D i re c t o rs or management by the re l eva n tre g u l at o ry bodies.

other information

Note 1:

a . WCW Te ch n o l o gies Sdn Bhd (“WCW”) is a subsidiary of E & OP ro p e rty Development Berhad (E&O Pro p ” ) . D at o ’ Tham Ka Hon(“TKH”) is a Director and Major Shareholder of Eastern & Ori e n t a lBerhad (“EOB”). He has direct interest of 2.02% and indire c ti n t e rests of 23.49% in EOB held through Te rra Realty Sdn Bhd(“TRSB”) and Multi-Purpose Holdings Berhad.TKH is also a Dire c t o rand a deemed Major Shareholder of E&O Prop via EOB’s interest of 25.61% and Dynamic Degree Sdn Bhd’s interests of 18.99%.D atin Chua Cheng Boon (“CCB”) is the other shareholder of T R S Band the wife of T K H . Both TRSB and CCB are persons connected to T K H .

b. Ancom Berhad (“Ancom”) and Dat o ’ S i ew Ka Wei (“SKW”) are pastMajor Share h o l d e rs of EOB and E&O Pro p, who have ceased to hold any interest in EOB and E&O Prop on Fe b ru a ry and August re s p e c t i ve ly. SKW was a Director of both EOB andE&O Prop during the financial year under rev i ew.

Note 2:

Kamil Ahmad Merican is a Director of EOB and E&O Pro p. He is a major Shareholder of some of the subsidiary companies of the GDPG roup and is the Chief Exe c u t i ve Officer of GDP A r chitects SdnB h d .

6. NON-AUDIT FEES

D u ring the financial ye a r, the Company did not pay anynon-audit fees to the external auditor.

7. VA R I ATION IN RESULT S

T h e re we re no va riances of 10% or more between theresults for the financial year and the unaudited re s u l t sp rev i o u s ly announced.

8. PROFIT FORECAST/PROFIT GUARANTEE

The Company did not issue any Pro fit Fo re c a st/P ro fitGuarantee during the financial ye a r.

9. M ATERIAL CONTRACTS

Other than those disclosed in Notes 35 and 36 to theFinancial Statements in this Annual Report, t h e re we re nom at e rial contracts entered into by the Company or itss u b s i d i a ries involving the interests of Dire c t o rs andsubstantial share h o l d e rs during the financial year underrev i ew.

1 0 . E VA L U ATION POLICY

The Group does not have a reva l u ation policy on landedp ro p e rt i e s.

1 1 . RECURRENT RELATED PA RTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“RRPT”)

The R R P T e n t e red into by the Group during the financial year ended M a r ch p u rsuant to the General Mandate approved bythe Stock h o l d e rs of the Company on September we re as follow s :

transacted value for financial

related part i e s type of transactions year ended 31.03.2004

RM’000

WCW Te ch n o l o gies Sdn Bhd ( 1 )

Receipt of constru c t i o n , management andc o n s u l t a n cy serv i c e s 1 5 , 2 9 2

GDP A r chitects Sdn Bhd ( 2 )

Receipt of achitectural serv i c e s 7 5

Dear Valued Share h o l d e rs ,

On behalf of the Board of Dire c t o rs , I am pleased to pre s e n tthe Annual Report and the Audited Financial Statements ofE a s t e rn & Oriental Berhad (EOB) for the financial year ended M a r ch .

EOB recorded a pro fit before tax of RM17.7 million, on theb a ck of a revenue of RM117.9 million for the financial ye a rended M a r ch . The significant improvement in reve n u ec o m p a red to the previous financial year was mainly at t ri bu t e dto the disposals of pro p e rty development and pro p e rt yi nvestment subsidiaries to its associated company ; E & OP ro p e rty Development Berhad (E&OPROP) (form e r ly know nas Kamunting Corp o r ation Berhad). Our hotel operat i o n srecorded an increase of 17 percent to RM16.2 million for thefinancial year compared to RM13.8 million recorded in thep revious financial ye a r.

In the past ye a r, the hotel industry saw several initiat i ve simplemented with the overall aim of boosting the domestict o u rism in Malay s i a . E f f o rts by both the public and the pri vat es e c t o rs on the back of a re c ove ring economy as evidenced byi m p roved domestic spending are expected to contri bu t ep o s i t i ve ly to the tourism sector in . S everal ch a l l e n g e ss u ch as the re-emergence of the Seve re Acute Respirat o ryS y n d rome (SARS) and global political uncertainty alsoa dve rs e ly impacted the industry to a certain extent.

T h e re was a general increase in Gove rnment spending toi m p rove public amenities as well as basic infrastru c t u re within

key tourist at t r a c t i o n s. In October , the Malay s i a nG ove rnment undertook a rev i ew of the Eighth Malaysia Plan’s( ‒ ) policies and strat e gies by initiating measures top romote selected services industries including touri s m .

P re d o m i n a n t ly in Pe n a n g, special task forces we re form e dwithin the Penang To u rism Action Council with the keyo b j e c t i ves of identifying core areas for rev i t a l i s ation work to further enhance tourism potential.

D i rect air flights between Penang and London, Hong Kong andKo rea have also improved tourist arri vals to the island.T h e rea re also plans to encourage flights from countries such as Chinaand Australia to disembark in Pe n a n g. The eventual intro d u c t i o nof direct flights to Penang by no-frills carri e rs will also play itsp a rt as one of the key dri ve rs in enlarging tourist arri vals inPe n a n g.

The State of Penang submitted its application to UNESCO(United Nations Educat i o n a l , S c i e n t i fic and CulturalO r g a n i s ation) in Fe b ru a ry to join the world heri t a g el i s t i n g. S u ch an effort demonstrates Pe n a n g ’s initiat i ves toenhance its image intern at i o n a l ly as a leading cultural andh e ritage centre in the re gi o n . The expected associated grow t hin tourist arri vals in the state would bode well for EOB’s hotel operat i o n s.

EOB curre n t ly has two hotel operations within the Gro u p ;n a m e ly the Eastern & Oriental Hotel (E &O Hotel) located inG e o r g e t own and the Lone Pine Hotel in Batu Fe rri n g h i , b o t hs i t u ated on Penang Island.

— review of operations —

— H O S P I TALITY INDUSTRY: TRENDS ANDD E V E L O P M E N TS —

c h a i rm a n ’s statement

For the period ended M a r ch , E & O Hotel recorded a revenue growth of 29.5 percent to RM12.3 million, c o m p a red to RM9.5 million in the preceding ye a r. O ver a similar prev i o u sp e ri o d , its pro fit margin improved signific a n t ly to 14.9 percentc o m p a red to 4.5 percent.

On the sales and marketing fro n t ,t h e re was a continuousrealignment of the sales team to capitalise on the positive growth of overall tourist arri va l s. Spearheaded by an aggre s s i ve sales andp romotion pro gr a m m e, E & O Hotel was able to signific a n t ly growin all revenue generating activities such as room rentals and in thea rea of food and beverages (F&B).

Additional incentives we re introduced to further serve the need of our valued guests such as the ‘E & O Pa s s p o rt’,a unique marketing tool developed to reward re p e atc u s t o m e rs. Another of E & O Hotel’s loyalty pro gr a m m enamed ‘The Ova l ’, in its second year of operat i o n s , a ch i eved a membership base of 2,500.

Plans are in place to design a targeted incentive pro gr a m m efor large corp o r ations or organisations that curre n t ly makes up a significant portion of total reve n u e. C o n c u rrent with the on-going customer re l ationship management pro gr a m m e,E & O Hotel re g u l a r ly conducts surveys and re s e a r ch amongits customers to obtain va l u a ble feedback on the existing andexpected level of serv i c e. In order to further expand its rangeof serv i c e s , E & O Hotel introduced the wireless bro a d b a n ds e rvices in June .

E & O Hotel’s emphasises a continuous development pro gr a m m efor its employe e s. Its stru c t u red training appro a ch has prove nto be beneficial, leading to the overall improvement of customers e rvice levels as well as higher employee pro d u c t i v i t y. All newe m p l oyees are taken through an ori e n t ation and trainingp ro gramme during their first month of employ m e n t , with a

focus on building teamwork as well as equipping them witha d e q u ate product know l e d g e.

With a staff strength of approximately 170 service professionals,E & O Hotel aims to deliver the highest service standards to its customers , maintaining its benchmark within the hospitalityi n d u s t ry. Old world ch a rm with modern amenities - that ’s theunique trademark of this wo r l d - re n owned hotel. E s t a bl i s h e dsince year , E & O Hotel will be celebrating its 120th year annive rs a ry next ye a r.

Lone Pine Hotel’s revenue re gi s t e red an increase of 5.3percent to RM2.7 million for the financial year ended M a r ch . P ro fitability also grew to 18.5 percent for the same peri o d , as compared to the pro fit margin of 12.6 percent in the preceding peri o d .

Capitalising on E & O Hotel’s vigorous sales team, gre at e re f f o rts are now placed on cross-selling both hotels’ p ro d u c t sand serv i c e s.This allows both hotel operations to collaborat eon a larger customer base thus improving the hotels’ m a r ke t i n gre a ch . S i m i l a r ly, this practice of shared resources is employe db e t ween re l ated departments of both hotels to reap theo p t i mum benefits of synergistic operat i o n s.

The Lone Pine loyalty pro gr a m m e, w h i ch was introduced in March , has more than 600 part i c i p ating members.M e m b e rs are able to enjoy privileges such as special discounts,p re f e rred room rates and pri o rity bookings similar to E & OH o t e l ’s ‘The Ova l ’ m e m b e rship pro gr a m m e.

Towards the end of , a facilities re j u ve n ation pro gr a m m ewas also introduced to improve the overall condition of theh o t e l . This included repainting of the building exterior walls as well as landscaping of key areas within the Lone Pine Hotelc o m p o u n d . Additional re c t i fic ation and upgrading works we realso carried out until mid- .

— Lone Pine Hotel —

— E & O Hotel—

To u rist arri vals in Penang amounted to approx i m at e ly 3 million in the past ye a r, with an expectation of re a ching the 3.5 million mark in . It is welcoming to note thatvisitor arri vals have almost gone back to their pre-SARS leve l .The tourism and hotel sub-sectors we re the hardest hit duri n gthe SARS outbre a k , but these industries are beginning tod i s p l ay re s i l i e n cy and brighter prospects in terms of occupancyr ate and total holiday bookings. Though the overall occupancyr ates we re dampened in , the outlook for year i sb righter with an expectation of overall occupancy rat e sc rossing the 50 percent mark.

The hospitality industry is expected to react positive ly with thep ro a c t i ve measures taken by both the public and pri vate sectorsto further boost the confidence within the tourism industry in and the ye a rs beyo n d . With a forecasted national Gro s sDomestic Product (GDP) growth at 6.7 percent for ,the Malaysian economy is expected to grow at a brisk pace.The services sector part i c u l a r ly transport at i o n , finance andt o u rism is seen as the key dri ver of growth in , w h i chbodes well for the Gro u p.

On the corp o r ate fro n t , EOB completed its re s t ru c t u ri n ge xercise in November w h i ch saw the disposal of EOB’sp ro p e rty development business to E&OPRO P. Upon obtainingthe consensus of the Gro u p ’s share h o l d e rs for the re s t ru c t u ri n gs ch e m e, s everal land banks we re transferred from EOB to theE & O P RO P, t u rning the latter into a pro p e rty deve l o p m e n tgro u p.

With the successful completion of the re s t ru c t u ring exe r c i s e,EOB will focus on its hotel operations and pro p e rt yi nvestment activities. Going forwa r d , EOB will be rev i ew i n g

n ew business opportunities that will realise the Gro u p ’s visionof enri ching lifestyle and experi e n c e s , be it in the hospitalityi n d u s t ry or otherwise.

I would like to take this opportunity to thank the Board of Dire c t o rs for welcoming me on the team. Indeed I lookf o r ward to working with the Board in spearheading grow t hand bri n ging the Group forwa r d . It is our aim to look towa r d sexisting and future business operations that are able toc o n t i n u o u s ly cre ate value for our share h o l d e rs.

I am also pleased to note the establishment of the Nominat i o nCommittee and the Remu n e r ation Committee in Fe b ru a rythis year and the appointments of the re l evant dire c t o rs.

On behalf of the Board, I wish to extend my sincerea p p re c i ation to the management, our valued customers ,s h a re h o l d e rs , e m p l oye e s , fin a n c i e rs , business associates and all stake h o l d e rs for their continuous support andc o n t ri butions to the Group during the ye a r.

D atuk Azizan bin Abdul Rahman

C h a i rm a n

E a s t e rn & Oriental Berhad

August

— a c k n o w l e d g e m e n ts —

— p ro s p e c ts —

financial statements I

Eas

tern

& O

rien

tal

Ber

had

(555

-K)

The directors are pleased to present their report together with the audited financial statements

of the Group and of the Company for the financial year ended 31 March 2004.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding and provision of management services to its subsidiary companies.The principal activities of the subsidiary and associated companies are disclosed in Note 15 and 16 respectively to the financialstatements.

There have been no significant changes in the nature of these activities during the financial year except for the discontinuation ofsubstantial property development activities following the disposal of subsidiaries involved in property development and propertyinvestment to its associated company, E &O Property Development Berhad (formerly known as Kamunting Corporation Berhad).

RESULTS

group company

’000 ’000

Profit after taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,892 14,005

Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,661 –

Net profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20, 553 14,005

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in thestatements of changes in equity.

In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were notsubstantially affected by any item, transaction or event of a material and unusual nature other than the effects arising from thedisposal of subsidiary companies resulting in a net gain of RM7,800,000 to the Group and a net loss of RM8,291,000 to theCompany as disclosed in Note 5 to the financial statements.

DIVIDENDS

The amount of dividends paid by the Company since March were as follows: ’000

In respect of the financial year ended March as reported in the directors' report of that financial year:First and final dividend of 1.0% less 28% income tax, on 232,472,000 ordinary stock units,declared on September and paid on November 1,674

At the forthcoming Annual General Meeting, a first and final dividend in respect of the financial year ended March , of2.0% less 28% income tax on 232,472,000 ordinary stock units, amounting to a dividend payable of RM3,348,000 (1.44 sen netper ordinary stock unit) will be proposed for stockholders’ approval.The financial statements for the current financial year do notreflect this proposed dividend. Such dividend, if approved by the stockholders, will be accounted for in equity as an appropriation ofretained profits in the financial year ending March .

directors’ report For the financial year ended 31 March 2004

Eas

tern

& O

rien

tal

Ber

had

(555

-K)

DIRECTORS

The names of the directors of the Company in office since the date of the last report and at the date of this report are:

Datuk Azizan bin Abd Rahman (appointed on ..)Dato' Tham Ka HonDatuk Henry Chin Poy WuAloysius Choong Kok SinKamil Ahmad MericanDato' Siew Ka WeiVijeyaratnam a/l V.Thamotharam Pillay (appointed on ..)

DIRECTORS’ BENEFITS

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Companywas a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Company orany other body corporate, other than those arising from the share options granted under the Employees' Share Option Scheme.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefitsincluded in the aggregate amount of emoluments received or due and receivable by the directors as shown in Note 7 to the financialstatements or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a relatedcorporation with any director or with a firm of which the director is a member, or with a company in which the director has asubstantial financial interest, except as disclosed in Note 35 to the financial statements.

DIRECTORS’ INTERESTS

According to the register of directors' shareholdings, the interests of directors in office at the end of the financial year in stock unitsand options over stock units in the Company during the financial year were as follows:

number of ordinary stock units of rm1 eachthe company 1.4.2003 acquired sold 31.3.2004

– direct interestDato’Tham Ka Hon – 6,699,586 (2,000,000) 4,699,586

– indirect interestDato’Tham Ka Hon 25,080,000 29,534,067 – 54,614,067Dato’ Siew Ka Wei 21,603,552 25,876,000 (47,479,552) –

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DIRECTORS’ INTERESTS (CONTINUED)

warrants 2001 / 2011 of rm1 eachthe company 1.4.2003 acquired exercised 31.3.2004

– direct interestDato’Tham Ka Hon – 6,699,586 – 6,699,586

– indirect interestDato’Tham Ka Hon 6,600,000 – – 6,600,000

Dato’ Siew Ka Wei 3,273,250 – (3,273,250) –

number of options over ordinary stock units of rm1 eachthe company 1.4.2003 granted exercised 31.3.2004

Dato’Tham Ka Hon – 4,500,000 – 4,500,000

Aloysius Choong Kok Sin – 4,500,000 – 4,500,000

Dato' Tham Ka Hon by virtue of his interest in ordinary stock units in the Company is also deemed interested in shares of all theCompany's subsidiary and associated companies to the extent the Company has an interest.

None of the other directors in office at the end of the financial year had any interest in stock units in the Company or its relatedcorporations during the financial year.

WARRANTS

In conjunction with the rights issue of 61,176,623 new ordinary stock units of RM1 each that were allotted on May ,61,176,623 free detachable warrants 2001/2011 were issued.The exercise price of warrants 2001/2011 is RM1.03 per warrant.

During the financial year, no warrants were converted to ordinary stock units.The number of outstanding warrants as at March was 61,176,298.

EMPLOYEES’ SHARE OPTION SCHEME

The Employees' Share Option Scheme ("Scheme") was approved by the stockholders at an Extraordinary General Meeting convenedon November .

The salient features of the Scheme are:

a. the number of new stock units to be offered under the Scheme shall be subject to a maximum of ten percent (10%) of the issued and paid-up share capital of the Company at any time during the existence of the Scheme;

b. any employee shall be eligible to participate in the Scheme if the following conditions are satisfied:

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i. the employee must be a confirmed employee of the Company or of an eligible subsidiary and not be on probation;

ii. the employee must have served the Company or an eligible subsidiary for a period of at least six (6) continuous months;and

iii. the employee must have attained the age of eighteen () years.

An Executive Director of the Company is eligible to participate in the Scheme if the Executive Director is involved in the day-to-day management of the Company, on the payroll of the Company, and the allotment to be made to the Executive Director has been approved by the Company in general meeting.

c. the option price shall be based on a discount of not more than 10% of the five days weighted average market price at the date on which the options are offered. Notwithstanding this, the exercise price per new stock unit shall in no event be less than its par value;

d. the new stock units to be allotted upon exercise of an option will upon allotment rank pari passu in all respects with the thenexisting issued stock units save and except that they will not be entitled to any dividends, rights, allotment or any distributiondeclared, made or paid to stockholders in respect of which the entitlement date precedes the allotment date of the aforesaidstock units;

e. the Scheme shall be in force for a period of five years and may be extended for another five years subject to the approval of the stockholders and relevant authorities; and

f. The options granted may be exercised at any time within a period of five years from the date of offer of the options.

On November , the Company granted 12.486 million options to eligible employees of the Group under the Scheme.No options have been exercised as at the date of this report.

The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the names of employees who have been granted options to subscribe for less than 300,000 ordinary stock units of RM1 each.The list of employees granted options to subscribe for 300,000 or more ordinary stock units of RM1 each during the financial year is as follows:

grant Expiry Exercise number of share optionsthe company date date price granted exercised 31.3.2004

Dato’Tham Ka Hon 20.11.2003 28.4.2007 RM1.05 4,500,000 – 4,500,000

Aloysius Choong Kok Sin 20.11.2003 28.4.2007 RM1.05 4,500,000 – 4,500,000

Kok Meng Chow 20.11.2003 28.4.2007 RM1.05 600,000 – 600,000

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EMPLOYEES’ SHARE OPTION SCHEME (CONTINUED)

grant Expiry Exercise number of share optionsthe company date date price granted exercised 31.3.2004

Lum Kwok Weng 20.11.2003 28.4.2007 RM1.05 375,000 – 375,000

Audry Reyes 20.11.2003 28.4.2007 RM1.05 375,000 – 375,000

Chan Kok Leong 20.11.2003 28.4.2007 RM1.05 300,000 – 300,000

Mohamed Razeek B MdHussain Maricar 20.11.2003 28.4.2007 RM1.05 300,000 – 300,000

Details of options granted to directors are disclosed in the section on Directors' Interests in this report.

OTHER STATUTORY INFORMATION

a. Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonable steps:

i. to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision fordoubtful debts and satisfied themselves that there were no known bad debts and that adequate provision had been madefor doubtful debts; and

ii. to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

b. At the date of this report, the directors are not aware of any circumstances which would render:

i. it necessary to write off any bad debts or the amount of the provision for doubtful debts inadequate to any substantialextent; and

ii. the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

c. At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

d. At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financialstatements of the Group and of the Company which would render any amount stated in the financial statements misleading.

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e. As at the date of this report, there does not exist:

i. any charge on the assets of the Group or of the Company which has arisen since the end of the financial year whichsecures the liabilities of any other person; or

ii. any contingent liability of the Group or of the Company which has arisen since the end of the financial year.

f. In the opinion of the directors:

i. no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelvemonths after the end of the financial year which will or may affect the ability of the Group or of the Company to meettheir obligations when they fall due; and

ii. no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financialyear and the date of this report which is likely to affect substantially the results of the operations of the Group or of theCompany for the financial year in which this report is made.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

Significant events during the financial year are disclosed in Note 36 to the financial statements.

SIGNIFICANT EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

Significant events subsequent to the balance sheet date are disclosed in Note 37 to the financial statements.

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AUDITORS

The auditors, Ernst &Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors.

Dato’ Tham Ka Hon Aloysius Choong Kok Sin

Kuala Lumpur, Malaysia

July

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STATEMENT BY DIRECTORS PURSUANTTO SECTION 169(15) OF THECOMPANIES ACT, 1965

We, Dato' Tham Ka Hon and Aloysius Choong Kok Sin, beingtwo of the directors of Eastern & Oriental Berhad, do herebystate that, in the opinion of the directors, the accompanyingfinancial statements set out on pages 33 to 94 are drawn up inaccordance with the provisions of the Companies Act, andapplicable Approved Accounting Standards in Malaysia so as togive a true and fair view of the financial position of the Groupand of the Company as at March and of the results andthe cash flows of the Group and of the Company for the yearthen ended.

Signed on behalf of the Board in accordance with a resolution ofthe directors.

Dato’ Tham Ka Hon Aloysius Choong Kok Sin

Kuala Lumpur, Malaysia July

STATUTORY DECLARATION PURSUANTTO SECTION 169(16) OF THECOMPANIES ACT,1965

I, Kok Meng Chow, being the officer primarily responsible forthe financial management of Eastern & Oriental Berhad, dosolemnly and sincerely declare that the accompanying financialstatements set out on pages 33 to 94 are in my opinion correct,and I make this solemn declaration conscientiously believing thesame to be true and by virtue of the provisions of the StatutoryDeclarations Act, .

Kok Meng Chow

Subscribed and solemnly declared by the abovenamed KOKMENG CHOW at Kuala Lumpur in the Federal Territory on July .

Before me,

Soh Ah Kau

No.W315

Commissioner for Oaths

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We have audited the financial statements set out on pages 33 to 94.These financial statements are the responsibility of theCompany’s directors. Our responsibility is to express an opinionon these financial statements based on our audit.

We conducted our audit in accordance with applicable ApprovedStandards on Auditing in Malaysia.Those standards require thatwe plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accountingprinciples used and significant estimates made by the directors,as well as evaluating the overall presentation of the financialstatements.We believe that our audit provides a reasonable basisfor our opinion.

IN OUR OPINION:

a. the financial statements have been properly drawn up inaccordance with the provisions of the Companies Act, 1965and applicable Approved Accounting Standards in Malaysia soas to give a true and fair view of:

i. the financial position of the Group and of the Company asat March and of the results and the cash flows ofthe Group and of the Company for the year then ended;and

ii. the matters required by Section 169 of the CompaniesAct, 1965 to be dealt with in the financial statements; and

b. the accounting and other records and the registers required by the Act to be kept by the Company and by its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

We are satisfied that the financial statements of the subsidiariesthat have been consolidated with the financial statements of theCompany are in form and content appropriate and proper for thepurposes of the preparation of the consolidated financialstatements and we have received satisfactory information andexplanations required by us for those purposes.

The auditors’ reports on the financial statements of thesubsidiaries were not subject to any qualification material to theconsolidated financial statements and did not include anycomment required to be made under Section 174 (3) of the Act.

Ernst & Young Yeo Eng SengAF: 0039 No. 1212/12/04 (J)Chartered Accountants Partner

Kuala Lumpur, Malaysia July

report of the auditors to the members ofeastern & oriental berhad (Incorporated in Malaysia)At as 31 March 2004

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income statementsFor the financial year ended 31 March 2004

’000

group company

note 2004 2003 2004 2003

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 117,882 33,431 83,592 29,069

Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 (85,840) (23,520) – –

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,042 9,911 83,592 29,069

Other operating income. . . . . . . . . . . . . . . . . . . . . . . . . . 12,886 2,203 10,300 –

Selling and marketing expenses . . . . . . . . . . . . . . . . . . . . . (1,132) (1,650) – –

Administrative expenses. . . . . . . . . . . . . . . . . . . . . . . . . . (7,907) (10,122) (2,131) (2,508)

Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . (11,879) (12,696) (41,342) (8,014)

Gain/(loss) on disposal of discontinuing operations . . . . . . . . 5 8,705 – (7,386) –

Profit/(loss) from operations . . . . . . . . . . . . . . . . . . . . . . 6 32,715 (12,354) 43,033 18,547

Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (20,670) (26,847) (7,633) (8,228)

Share of results of associates . . . . . . . . . . . . . . . . . . . . . . 5,662 6,696 – –

Profit/(loss) before taxation . . . . . . . . . . . . . . . . . . . . . . . 17,707 (32,505) 35,400 10,319

Taxation– Company and subsidiaries. . . . . . . . . . . . . . . . . . . . . 9 (403) (1,111) (21,395) (11,276)

– Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 (2,412) (2,316) – –

(2,815) (3,427) (21,395) (11,276)

Profit/(loss) after taxation . . . . . . . . . . . . . . . . . . . . . . . . 14,892 (35,932) 14,005 (957)

Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,661 3,663 – –

Net profit/(loss) for the year 20,553 (32,269) 14,005 (957)

SEN SENEarnings per stock unit (sen)– Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 8.8 (13.9)

– Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 8.4 (13.9)

Net dividends per ordinary stock unit in respect ofthe year (sen) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.44 0.72 1.44 0.72

The accompanying notes form an integral part of the financial statements.

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balance sheets At as 31 March 2004

’000 group company

note 2004 2003 2004 2003

NON CURRENT ASSETS

Property, plant and equipment . . . . . . . . . . . . . . . . . . 12 124,348 143,570 62 98

Real property assets . . . . . . . . . . . . . . . . . . . . . . . . . 13 55,688 308,355 – –

Investment properties . . . . . . . . . . . . . . . . . . . . . . . . 14 19,000 83,329 – –

Investments in subsidiaries . . . . . . . . . . . . . . . . . . . . . 15 – – 68,997 140,376

Investments in associates . . . . . . . . . . . . . . . . . . . . . . 16 311,760 171,044 142,693 –

Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . 17 18,694 9,438 9,419 –

529,490 715,736 221,171 140,474

CURRENT ASSETS

Amounts due from subsidiary companies . . . . . . . . . . . . 18 – – 321,590 688,835

Development properties . . . . . . . . . . . . . . . . . . . . . . 19 – 81,191 – –

Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 530 467 – –

Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 21,228 30,494 13,988 15,150

Tax recoverable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,730 523 3,801 3,058

Deposits with licensed banks and financial institutions . . . 22 12,500 1,534 11,500 100

Cash and bank balances . . . . . . . . . . . . . . . . . . . . . . . 23 14,438 4,796 13,520 57

51,426 119,005 364,399 707,200

CURRENT LIABILITIES

Amounts due to subsidiary companies . . . . . . . . . . . . . . 24 – – 94,385 215,523

Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 68,890 120,680 49,720 33,828

Provision for retirement benefits . . . . . . . . . . . . . . . . . 26 24 6 – –

Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 65,919 252,344 42,028 226,989

134,833 373,030 186,133 476,340

NET CURRENT (LIABILITIES)/ ASSETS (83,407) (254,025) 178,266 230,860

446,083 461,711 399,437 371,334

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BALANCE SHEETS (CONTINUED)

group company

note 2004 2003 2004 2003

FINANCED BY:

Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 232,472 232,472 232,472 232,472

Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 159,344 141,043 143,140 130,809

391,816 373,515 375,612 363,281

Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 (10,549) 7,621 – –

Provision for retirement benefits . . . . . . . . . . . . . . . . . 26 66 70 – –

Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 63,934 57,247 23,825 8,053

Long term payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 – 22,315 – –

Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . 32 816 943 – –

446,083 461,711 399,437 371,334

NET TANGIBLE ASSETS PER STOCK UNIT (RM) 1.41 1.34

The accompanying notes form an integral part of the financial statements.

balance sheets At as 31 March 2004

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consolidated statement of changes in equity For the financial year ended 31 March 2004

’000 non-distributable distributable

share share revaluation retainednote capital premium reserve profits total

At April . . . . . . . . . . . . . . . . . . . 232,472 128,004 9,188 34,556 404,220– prior year adjustment . . . . . . . . . . . . . . – – – 1,674 1,674

At April (restated) . . . . . . . . . . . . 232,472 128,004 9,188 36,230 405,894 Loss for the year . . . . . . . . . . . . . . . . . . – – – (32,269) (32,269)Reserve on acquision of minority interest

in subsidiary company . . . . . . . . . . . . . – – – 1,564 1,564Dividend . . . . . . . . . . . . . . . . . . . . 11 – – – (1,674) (1,674)

At March . . . . . . . . . . . . . . . . . 232,472 128,004 9,188 3,851 373,515 Profit for the year . . . . . . . . . . . . . . . . . . – – – 20,553 20,553Transferred to deferred taxation . . . . . . . . – – (578) – (578)Dividend . . . . . . . . . . . . . . . . . . . . 11 – – – (1,674) (1,674)

At March . . . . . . . . . . . . . . . . . 232,472 128,004 8,610 22,730 391,816

The accompanying notes form an integral part of the financial statements.

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statement of changes in equity For the financial year ended 31 March 2004

non-distributable distributableshare share retained

note capital premium profits total

At April . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232,472 128,004 3,762 364,238– prior year adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 1,674 1,674

At April (restated) . . . . . . . . . . . . . . . . . . . . . . . . . . 232,472 128,004 5,436 365,912 Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – (957) (957)Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 – – (1,674) (1,674)

At March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232,472 128,004 2,805 363,281

Profit of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 14,005 14,005Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 – – (1,674) (1,674)

At March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232,472 128,004 15,136 375,612

The accompanying notes form an integral part of the financial statements.

’000

statement of changes in equity For the financial year ended 31 March 2004

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consolidated cash flow statement For the financial year ended 31 March 2004

note 2004 2003

CASH FLOWS FROM OPERATING ACTIVITIES

Profit/(loss) before taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,707 (32,505)

Adjustment for: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,576 4,065

Gain on disposal of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . (86) (3)

Gain on disposal of quoted investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,728) (156)

Loss/(gain) on disposal of investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 (767)

Gain on disposal of real property assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24,339) (610)

Gain on disposal of discontinuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,705) –

Property, plant and equipment written off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 –

Provision for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 –

Amortisation of other investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 8

Impairment of other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 5,513

Impairment of investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,993 –

Impairment of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 –

Capitalised unrealised gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,188 –

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,670 26,847

Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (244) (526)

Dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (572) (132)

Share of results of associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,662) (6,696)

Profit accrued based on percentage of completion method . . . . . . . . . . . . . . . . . . . . . . . . (2,551) (1,394)

Operating loss before working capital changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,514) (6,356)

Development expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,297 5,243

Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17,812) 20,280

Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (63) 154

Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221,747 29,639

’000

consolidated cash flow statement For the financial year ended 31 March 2004

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’000 note 2004 2003

CASH FLOWS FROM OPERATING ACTIVITIES (CONTINUED)

Cash generated from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206,655 48,960

Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20,670) (25,505)

Payment for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) –

Income tax refund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 786 271

Income tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,377) (2,642)

Net cash generated from operating activities . . . . . . . . . . . . . . . . . . . . . . . 185,390 21,084

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . (a) (426) (948)Purchase of real property assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (184) (5,024)Purchase of other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (116,000) (1)Purchase of investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – (5)Additional investment in associate company . . . . . . . . . . . . . . . . . . . . . . . (164,193) –

Additional investment in subsidiary company . . . . . . . . . . . . . . . . . . . . . . . – (1,673)Proceeds from disposal of property, plant and equipment . . . . . . . . . . . . . . 198 110Proceeds from disposal of real property assets . . . . . . . . . . . . . . . . . . . . . . 90,950 3,000Proceeds from disposal of investment properties . . . . . . . . . . . . . . . . . . . . 560 1,741Proceeds from disposal of other investments . . . . . . . . . . . . . . . . . . . . . . . 107,164 379Proceeds from disposal of shares in associate . . . . . . . . . . . . . . . . . . . . . . . 31,800 –

Proceeds from disposal of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,643 –

Dividends received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504 132

Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 526Net cash generated from/(used in) investing activities . . . . . . . . . . . . . . . . . 25,260 (1,763)

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note 2004 2003

CASH FLOWS FROM FINANCING ACTIVITIES

Drawdown of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 2,083Proceeds from margin financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,057 -Repayment of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (165,470) (26,252)Repayment of long term payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (370) (845)Repayment to affiliated company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26,800) -Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,674) (1,674)Deposits released as security for borrowings and bank guarantees 100 3,100Net cash used in financing activities . . . . . . . . . . . . . . . . . . (186,157) (23,588)

NET INCREASE/(DECREASE)IN CASH AND

CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . 24,493 (4,267)CASH AND CASH EQUIVALENTS AT

BEGINNING OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . (16,100) (11,833)CASH AND CASH EQUIVALENTS AT

END OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) 8,393 (16,100)

’000 ’000

consolidated cash flow statement For the financial year ended 31 March 2004

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CASH FLOWS STATEMENT (CONTINUED)

notes:

(a) Acquisition of property, plant and equipment during the year was fully paid for in cash.

(b) Cash and cash equivalents comprise the following:

2004 2003

Cash and bank balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,438 4,796Deposits with licensed banks and financial institutions . . . . . . . . . . . . . . 12,500 1,534Bank overdrafts (Note 27) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17,545) (21,330)

9,393 (15,000)Less :Deposits pledged as security (Note 22). . . . . . . . . . . . . . . . . . . . . (1,000) (1,100)

8,393 (16,100)

The accompanying notes form an integral part of the financial statements.

’000

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note 2004 2003

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,400 10,319Adjustment for: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Depreciation of property, plant and equipment . . . . . . . . . . . . . . . . . . . 36 36Provision for doubtful debt - intercompany . . . . . . . . . . . . . . . . . . . . . 10,242 6,112Impairment of investment in subsidiary companies . . . . . . . . . . . . . . . . 27,252 –

Loss on disposal of subsidiary companies . . . . . . . . . . . . . . . . . . . . . . . 7,386 –

Gain on disposal of quoted investment . . . . . . . . . . . . . . . . . . . . . . . . (10,300) –

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,633 8,228Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,975) (3,800)Dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (79,433) (25,000)

Operating loss before working capital changes . . . . . . . . . . . . . . . . . . . . . . (5,759) (4,105)

Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,363 1,838

Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,106 33,295

Changes in intercompany balances . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,532) (59,924)Cash used in operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,822) (28,896)

Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,633) (8,100)Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,455) (36,996)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . (a) – (9)Proceeds from disposal of shares in associate . . . . . . . . . . . . . . . . . . . . . . . 31,800 –

Proceeds from disposal of other investments . . . . . . . . . . . . . . . . . . . . . . . 106,581 –

Proceeds from disposal of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,252 –

Purchase of other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (116,000) –

Additional investment in subsidiary companies . . . . . . . . . . . . . . . . . . . . . (42,151) –

Additional investment in associate company . . . . . . . . . . . . . . . . . . . . . . . (164,193) –

Dividend received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,200 –

Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 22Net cash (used in)/generated from investing activities . . . . . . . . . . . . . . . . . (48,509) 13

’000

cash flow statement For the financial year ended 31 March 2004

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’000 note 2004 2003

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (159,671) (14,389)

Repayment to affiliated company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26,800) -

Net advances from subsidiary companies . . . . . . . . . . . . . . . . . . . . . . . . . 270,090 51,284

Proceeds from margin financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,057 -

Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,674) (1,674)

Deposits released /(placed) as security for borrowings and bank guarantees . . 100 (40)

Net cash generated from financing activities . . . . . . . . . . . . . . . . . . . . . . . 87,102 35,181

NET INCREASE/(DECREASE) IN CASH AND

CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,138 (1,802)CASH AND CASH EQUIVALENTS AT

BEGINNING OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,406) (13,604)CASH AND CASH EQUIVALENTS AT

END OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) 12,732 (15,406)

notes:

(a) Acquisition of property, plant and equipment during the year was fully paid for in cash.

(b) Cash and cash equivalents comprise the following:

2004 2003

Cash and bank balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,520 57Deposits with licensed banks and financial institutions . . . . . . . . . . . . . . 11,500 100Bank overdrafts (Note 27) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,288) (15,463)

12,732 (15,306)Less :Deposits pledged as security (Note 22). . . . . . . . . . . . . . . . . . . . . – (100)

12,732 (15,406)

The accompanying notes form an integral part of the financial statements.

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1. CORPORATE INFORMATION

The principal activities of the Company are investment holding and provision of management services to its subsidiary companies.The principal activities of the subsidiary and associated companies are disclosed in Note 15 and 16 respectively to the financialstatements.

There have been no significant changes in the nature of these activities during the financial year except for the discontinuation ofsubstantial property development activities following the disposal of subsidiaries involved in property development and propertyinvestment to its associated company, E &O Property Development Berhad (formerly known as Kamunting Corporation Berhad).

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Board of theBursa Malaysia Securities Berhad (formerly known as Malaysia Securities Exchange Berhad).The registered office and principalplace of business is located at 13th Floor,Wisma Damansara, Jalan Semantan, 50490 Kuala Lumpur.

The number of employees in the Group and in the Company at the end of the financial year were 226 (2003:374) and 4 (2003:4)respectively.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on July .

2. SIGNIFICANT ACCOUNTING POLICIES

a. Basis of Preparation

The financial statements of the Group and of the Company have been prepared under the historical cost convention modified to include the revaluation of certain assets included under property, plant and equipment.

The financial statements comply with the provisions of the Companies Act, 1965 and applicable Approved Accounting Standards in Malaysia.

During the financial year ended March , the Group and the Company adopted the following MASB Standards for the first time:

MASB 25 Income TaxesMASB 27 Borrowing CostsMASB 28 Discontinuing OperationsMASB 29 Employee Benefits

notes to the Financial Statements 31 March 2004

’000

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

a. Basis of Preparation (continued)

The adoption of the above MASB Standards has not given rise to any adjustments to the opening balances of retained profits of the prior and current year or to changes in comparatives, and the effect on the income statements has not been material.

b. Basis of Consolidation

i. SubsidiariesThe consolidated financial statements include the financial statements of the Company and all its subsidiaries. Subsidiariesare those entities in which the Group has power to exercise control over the financial and operating policies so as to obtainbenefits from their activities.

Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results of subsidiaries acquired or disposed of during the financial year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. The assets and liabilities of the subsidiaries are measured at their fair values at the date of acquisition.The difference between the cost of an acquisition and the fair value of the Group’s share of the net separable assets of the acquired subsidiary at the date of acquisition is included in the consolidated balance sheet as goodwill or reserve on consolidation. Goodwill or reserve on consolidation are written off against retained profits in the year of acquisition.

Intra-group transactions, balances and resulting unrealised gains are eliminated on consolidation and the consolidated financial statements reflect external transactions only. Unrealised losses are eliminated on consolidation unless costs cannot be recovered.Where necessary, adjustments are made to the financial statements of the subsidiary companies to ensure consistency of accounting policies with those of the Group.

The gain or loss on disposal of a subsidiary company is the difference between net disposal proceeds and the Group’s share of its net assets and is credited or charged to the income statements.

Minority interests in the consolidated balance sheet consist of the minorities’ share of the fair value of the identifiable assets and liabilities of the acquiree as at acquisition date and the minorities’ share of movements in the acquiree’s equity since then.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

b. Basis of Consolidation (continued)

ii. Associates

Associates are those companies in which the Group exercises significant influence but not control, through participation in the financial and operating policy decisions of the entities.

Investment in associates are accounted for in the consolidated financial statements by the equity method of accounting based on the audited or management financial statements of the associates. Under the equity method of accounting, the Group's share of profits less losses of associates during the financial year is included in the consolidated income statement.The Group's interest in associates is carried in the consolidated balance sheet at cost plus the Group's share of post-acquisition retained profits or accumulated losses and other reserves, including premium on acquisition. Premium on acquisition of associated companies is not amortised.

Unrealised gain on transactions between the Group and the associates are eliminated to the extent of the Group's interest in the associates. Unrealised losses are eliminated unless cost cannot be recovered.

c. Investments in Subsidiaries and Associates

The Company's investments in subsidiaries and associates are stated at cost less impairment losses.The policy for the recognition and measurement of impairment losses is in accordance with Note 2P.

On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is recognised in the income statement.

d. Property, Plant and Equipment and Depreciation

Property, plant and equipment are stated at cost/deemed cost less accumulated depreciation and impairment losses.The policy for the recognition and measurement of impairment losses is in accordance with Note 2P.

Certain freehold land and building and leasehold land are stated at valuation less impairment losses. Revaluations are made based on the valuation by independent valuers on an open market value basis in . As permitted under the transitional provisions of IAS 16 (Revised): Property, Plant and Equipment, these assets are stated at their previous revalued amount (subject to continuity in depreciation policy and the requirement to write an asset down to its recoverable amount) on the basis that the revaluation carried out then, was a one off isolated event and not intended to be an adoption of a revaluation policy in place of historical cost.

Long term leasehold properties comprise properties with an unexpired lease period of 50 years and more. All other leasehold properties are classified as short term.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

d. Property, Plant and Equipment and Depreciation (continued)

Freehold land and capital work-in-progress are not depreciated. Leasehold lands are depreciated over the period of the respective leases which range from 7 to 99 years. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:

Buildings 2% Renovations 10 - 20% Machinery and equipment 12 - 20% Motor vehicles 16 - 20% Furniture, fittings and equipment 7.5 - 10%

Upon the disposal of an item of property, plant or equipment, the difference between the net disposal proceeds and the net carrying amount is recognised in the income statement and the unutilised portion of the revaluation surplus on that item is taken directly to retained profits.

e. Real Property Assets

Real property assets consist of land and attributable development costs where development activities are not expected to becompleted within the normal operating cycle. Cost consists of land acquisition cost, attributable development expenditure andborrowing costs relating to the financing of the land and development. Such assets are classified within non-current assets andare stated at cost less impairment losses.The policy for the recognition and measurement of impairment losses is in accordancewith Note 2P.

Real property assets are reclassified as development properties at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle.

f. development properties

Land and development expenditure whereby significant development work has been undertaken and is expected to becompleted within the normal operating cycle is classified as development properties.

Development properties are stated at cost less impairment losses, and where appropriate, include attributable profit less progress payments received and receivable. Cost includes land cost, development expenditure and interest costs relating to the development and an allocation of common project expenses.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

g. Investment Properties

Investment properties consist of investments in land and buildings that are not substantially occupied for use by,or in the operations, of the Group and are held for their investment potential and rental income.

Investment properties are treated as long term investments and are stated at cost less impairment losses.

Upon the disposal of an investment property, the difference between the net disposal proceeds and the carrying amount is recognised in the income statement.

h. Revenue Recognition

Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterpriseand the amount of the revenue can be measured reliably.

i. Development activitiesProfit is recognised on the units for which sales agreements have been concluded, using the percentage of completionmethod.The percentage of completion is determined by the level of development costs incurred as a proportion of theestimated total development costs to completion. Consequently, revenue from development activities is recognised basedon the proportionate sales value of development properties attributable to the work performed.

ii. Sale of propertiesRevenue from sale of properties is recognised upon completion of the sale and purchase agreements.

iii. Property managementRevenue from property management is recognised when the service has been rendered based on rates agreed upon.

iv Hotel operations

Revenue from rental of hotel rooms are recognised on the accrual basis.

Revenue from sale of food and beverage is recognised based on invoiced value of goods sold.

Revenue from services incidental to the hotel operations is recognised net of service taxes when the services are performed.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

H. Revenue Recognition (continued)

v. Rental incomeRental income from investment properties is recognised on accrual basis based on agreed upon rental rates.

vi. Management feesRevenue from management services provided is recognised when service has been rendered.

vii. Interest incomeInterest income is recognised on accrual basis. If the recoverability is in doubt, then the interest income is recognised on cash basis.

viii. Dividend income Dividend income is recognised when the stockholder's right to receive payment has been established.

I. income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enactedat the balance sheet date.

Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

j. Inventories

Inventories comprising of food, beverages and consumables, are stated at the lower of cost and net realisable value. Cost is determined using the first in, first out method. Net realisable value is the estimated selling price in the ordinary course of business less selling expense.

k. Provisions for Liabilities

Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probablethat an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate ofthe amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditureexpected to be required to settle the obligation.

l. Foreign Currencies

Transactions in foreign currencies are initially converted into Ringgit Malaysia at rates of exchange ruling at the date oftransaction. At each balance sheet date, foreign currency monetary items are translated into Ringgit Malaysia at exchange ratesruling at that date. Non-monetary items which are carried at historical cost are translated using the historical rate as of the dateof acquisition and non-monetary items which are carried at fair value are translated using the exchange rate that existed whenthe values were determined.

All exchange differences are recognised in the income statement.

The principal exchange rates used for every unit of foreign currency ruling at the balance sheet date used are as follows:

Foreign currency 2004 2003rm rm

1 US Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.80 3.80

m. Operating Leases

Lease payments made under operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the income statement on a straight-line basis over the term of the lease.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

n. Employee Benefits

i. Short term benefitsWages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

ii. Defined contribution plansAs required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund (“EPF”). Such contributions are recognised as an expense in the income statement as incurred.

iii. Defined benefit plansOne of the subsidiaries of the Group operates an unfunded, defined benefit Retirement Benefit Scheme ("the Scheme") for the eligible employees of the subsidiary company. The subsidiary company’s obligations under the Scheme are determined based on triennial actuarial valuation where the amount of benefit that employees have earned in return for their service in the current and prior years is estimated. That benefit is discounted using the Projected Unit Credit Method in order to determine its present value. Actuarial gains and losses are recognised as income or expense over the expected average remaining working lives of the participating employees when the cumulative unrecognised actuarial gains or losses for the Scheme exceed 10% of the present value of the defined benefit obligation. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the amended benefits become vested.

The amount recognised in the balance sheet represents the present value of the defined benefit obligations adjusted for unrecognised actuarial gains and losses and unrecognised past service cost.

An actuarial valuation of the liabilities for the Scheme was carried out on June . Based on the actuarial report,there was a deficit reported at balance sheet date. The increase in defined benefit liability is recognised as an expense on a straight line basis over 5 years as permitted by MASB 29 upon first application.The subsidiary company has provided RM18,217 (2003: RM Nil) during the financial year and the balance of the deficit at the financial year end amounts to RM6,779 (2003: RM8,474).

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

n. Employee Benefits (continued)

iv. Equity compensation benefitsThe Company's Employee Share Option Scheme allows the Group’s employees to acquire ordinary stock units of the Company. No compensation cost or obligation is recognised.When the options are exercised, equity is increased by the amount of the proceeds received.

o. Cash and Cash Equivalents

Cash comprises cash and bank balances and deposits with licensed banks and financial institution. Cash equivalents are short term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.

p. Impairment of Assets

At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is any indication of impairment. If any such indication exists, impairment is measured by comparing the carrying values of the assets with theirrecoverable amounts. Recoverable amount is the higher of net selling price and value in use, which is measured by reference to discounted future cash flows.

An impairment loss is recognised as an expense in the income statement immediately, unless the asset is carried at a revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of any unutilised previously recognised revaluation surplus for the same asset.

q. Financial Instruments

Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement.Interests, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

i. Other Non-Current InvestmentNon-current investments other than investments in subsidiaries and associates are stated at cost less impairment losses.On disposal of an investment, the difference between net disposal proceeds and its carrying amount is charged or credited to the income statement.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

q. Financial Instruments (continued)

ii. ReceivablesReceivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date.

iii. PayablesPayables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received.

iv. Interest-Bearing BorrowingsBorrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.The amount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate which is the weighted average of the borrowing costs applicable to the Group’s borrowings that are outstanding during the financial year, other than borrowings made specifically for the purpose of acquiring another qualifying asset. For borrowings made specifically for the purpose of acquiring a qualifying asset, the amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of funds drawndown from that borrowing facility.

All other borrowing costs are recognised as an expense in the income statement in the period in which they are incurred.

v. Equity InstrumentsOrdinary stock units are classified as equity. Dividends on ordinary stock units are recognised in equity in the period in which they are approved for payment.

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3 REVENUE

Revenue of the Group and of the Company consists of the following:

group company2004 2003 2004 2003

Proportionate sales value of developmentproperties attributable to the work performed . . . . . . . . . . . . 2,887 5,067 – –

Sales of properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,153 4,697 – –

Property management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 5,146 – –

Hotel operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,196 13,819 – –

Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,644 4,680 – –

Management fee from subsidiary companies . . . . . . . . . . . . . . . . – – 184 269

Interest income from:– subsidiary companies . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 3,973 3,778

– others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 22 2 22

Gross dividend income from unquoted investments in subsidiary companies . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 79,433 25,000

117,882 33,431 83,592 29,069

4 COST OF SALES

group company2004 2003 2004 2003

Room . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,873 2,553 – –

Food and beverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,887 6,815 – –

Other operating departments . . . . . . . . . . . . . . . . . . . . . . . . . . 301 122 – –

Property development and sales costs. . . . . . . . . . . . . . . . . . . . . 74,698 7,467 – –

Rental cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,081 1,628 – –

Property management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 4,935 – –

85,840 23,520 – –

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5 DISCONTINUING OPERATIONS

The Group had entered into several sale and purchase agreements and several supplemental agreements with E &O PropertyDevelopment Berhad ("E&OPROP") (formerly known as Kamunting Corporation Berhad) to dispose of to E&OPROP the entireissued and paid up share capital of its subsidiary companies involved mainly in property development and property investment fora total cash consideration of RM77,252,088.

The effects of the disposals, which resulted in the Group’s withdrawal from substantial involvement in the property developmentand property investment sector, on the Group’s results, net assets and cash flows are as follows :

financial financialperiod ended year ended

24.11.2003 31.3.2003

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,309 18,233

Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,080) (13,914)

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,229 4,319

Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394 1,172

Selling and marketing expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (223) (650)

Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,787) (3,083)

Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (276) (600)

Gain from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,337 1,158

Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,246) (4,978)

Loss before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (909) (3,820)

Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (457) (880)

Net loss after income tax and attributable to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,366) (4,700)

Cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (60,472) 11,594

Cash flows from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,882 (1,731)

Cash flows from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,911 (10,879)

Total cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,679) (1,016)

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5 DISCONTINUING OPERATIONS (CONTINUED)

The net assets of the disposed subsidiaries were as follows:

24.11.2003 31.3.2003

Property, plant and equipment (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,797 15,041

Real properties assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159,461 178,963

Investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,258 49,412

Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 47

Development properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,477 97,124

Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,878 115,085

Cash and bank balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,990 4,634

Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (280,287) (327,215)

Bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (381) (345)

Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18,540) (4,500)

Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (944) (4,398)

Long term payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,940) (22,315)

Deferred tax liabilities (Note 32) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (808) (808)

Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,500) (12,500)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,508 88,225

Total disposal proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (77,252)

Gain on disposal to the Group* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,744

24.11.2003

* Gain on disposal comprised the following:Realised gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,705

Unrealised gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,039

10,744

Cash inflow arising on disposal:Cash consideration, representing cash inflow of the Company . . . . . . . . . . . . . . . . . . . . . . . . . 77,252

Cash and cash equivalents of subsidiaries disposed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,609)

Net cash inflow of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,643

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5 DISCONTINUING OPERATIONS (CONTINUED)

The disposal of subsidiaries had the following effect on the financial results of the Company:

2004

Total disposal proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,252

Less: Cost of investments in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84,638)

Loss on disposal of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,386)

The tax charge arising from the disposal of subsidiary companies during the financial year amounted to RM905,000 (Note 9).

6 PROFIT/(LOSS) FROM OPERATIONS

Profit /(loss) from operations is stated after charging/(crediting):group company

2004 2003 2004 2003

Auditors' remuneration:– audit fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 100 25 25

– non audit fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 325 – 315

– underprovision in prior year's audit fee . . . . . . . . . . . . . . . 21 21 – 12

Depreciation of property, plant and equipment . . . . . . . . . . . . . . 4,576 4,065 36 36Property, plant and equipment written off . . . . . . . . . . . . . . . . . 6 – – –

Amortisation of other investment . . . . . . . . . . . . . . . . . . . . . . . 8 8 – –

Rental for land, buildings and equipment . . . . . . . . . . . . . . . . . . 855 945 – –

Provision for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . 18 – – –

Impairment of investment in subsidiary companies . . . . . . . . . . . . – – 27,252 –

Provision for doubtful debts– intercompany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 10,242 6,112

(Gain)/loss on disposal of subsidiary companies . . . . . . . . . . . . . (8,705) – 7,386 –

Impairment of other investments . . . . . . . . . . . . . . . . . . . . . . . – 5,513 – –

Impairment of investment properties . . . . . . . . . . . . . . . . . . . . . 1,993 – – –

Impairment of property, plant and equipment . . . . . . . . . . . . . . . 157 – – –

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6 PROFIT/(LOSS) FROM OPERATIONS (CONTINUED)

group company2004 2003 2004 2003

Loss on disposal of property, plant and equipment . . . . . . . . . . . . – 1 – –

Loss/(gain)on disposal of investment properties . . . . . . . . . . . . . 50 (767) – –

Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (470) (633) – –

Management fees received from subsidiary companies . . . . . . . . . . – – (184) (269)Interest income from:

– subsidiary companies . . . . . . . . . . . . . . . . . . . . . . . . . . . – – (3,973) (3,778)

– others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (244) (526) (2) (22)

Gross dividend income from:– subsidiary companies . . . . . . . . . . . . . . . . . . . . . . . . . . . – – (79,433) (25,000)

– others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (572) (132) – –

Realised gain on foreign exchange . . . . . . . . . . . . . . . . . . . . . . (9) – – –

Bad debts recovered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22) – – –

Gain on disposal of property, plant and equipment . . . . . . . . . . . . (86) (4) – –

Gain on disposal of real property assets . . . . . . . . . . . . . . . . . . . (24,339) (610) – –

Gain on disposal of quoted investments . . . . . . . . . . . . . . . . . . . (10,728) (156) (10,300) –

* Staff costs:Wages and salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,128 7,033 265 255

Employees Provident Fund contribution . . . . . . . . . . . . . . . . 831 893 39 36

Pension costs– defined benefit plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 – – –

Other staff related expenses . . . . . . . . . . . . . . . . . . . . . . . . 1,436 2,422 213 187

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,413 10,348 517 478

* Staff costs exclude directors' remuneration.The directors' remuneration is disclosed in Note 7 to the financial statements.

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7 DIRECTORS' REMUNERATION

group company2004 2003 2004 2003

Directors of the CompanyExecutive:

– Salaries and other emoluments . . . . . . . . . . . . . . . . . . . . 998 891 998 891

– Benefits-in-kind * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 30 33 –

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,031 921 1,031 891

Non-Executive:– fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 99 136 99

– others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 – 97 –

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233 99 233 99

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,264 1,020 1,264 990

* The estimated monetary value of benefits-in-kind is provided to the directors by way of usage of the Group's and the Company's assets such as motor vehicles and the provision of accommodation and other benefits such as drivers.

The number of directors of the Company whose total remuneration (including director's fees) during the financial year fell withinthe following bands is analysed below:

number of directors2004 2003

Executive DirectorsRM300,001 to RM350,000 . . . . . . . . . . . . . . . . . . . . . . . . – 1

RM400,001 to RM450,000 . . . . . . . . . . . . . . . . . . . . . . . . 1 –

RM600,001 to RM650,000 . . . . . . . . . . . . . . . . . . . . . . . . 1 1

Non-Executive DirectorsBelow RM50,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3

RM100,001 to RM150,000. . . . . . . . . . . . . . . . . . . . . . . . . 1 –

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8 FINANCE COSTS

group company2004 2003 2004 2003

Interest expense on:– revolving credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,409 6,185 4,157 5,826

– bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,402 1,214 996 837

– term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,909 16,117 1,787 1,565

– others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,950 3,331 693 –

20,670 26,847 7,633 8,228

9 TAXATION

group company2004 2003 2004 2003

Malaysian income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 323 21,233 6,850

Deferred tax (Note 32) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 (70) – –

Real property gains tax on disposal of subsidiary companies (Note 5) . . . . . . . . . . . . . . . . . . . . . . 905 – 905 –

(Over)/underprovision of income tax in prior years . . . . . . . . . . (772) 858 (743) 4,426

Share of taxation of associated companies . . . . . . . . . . . . . . . . . . 2,412 2,316 – –

2,815 3,427 21,395 11,276

Domestic income tax is calculated at the Malaysian statutory tax rate of 28% (2003:28%) of the estimated assessable profit for the year.

A reconciliation of income tax expense applicable to profit/(loss) before taxation at the statutory income tax rate to income taxexpense at the effective income tax rate of the Group and of the Company is as follows:

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9 TAXATION (CONTINUED)

group2004 2003

Profit/(loss) before taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,707 (32,505)

Taxation at Malaysian statutory tax rate of 28% (2003:28%) . . . . . . . . . . . . . . . . . . . . . . . . . . 4,958 (9,101)

Effect of income not subject to tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,752) –

Effect of expenses not deductible for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,504 6,888

Effect of income subject to 20% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – (8)

Utilisation of previously unrecognised deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . (154) (208)

Deferred tax assets not recognised during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,036 5,038

Real property gains tax on disposal of subsidiary companies . . . . . . . . . . . . . . . . . . . . . . . . . . 905 –

(Over)/underprovision of income tax in prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (772) 858

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 (40)

Tax expense for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,815 3,427

company2004 2003

Profit before taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,400 10,319

Taxation at Malaysian statutory tax rate of 28% (2003:28%) . . . . . . . . . . . . . . . . . . . . . . . . . . 9,912 2,889

Effect of income not subject to tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,870) –

Effect of expenses not deductible for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,351 2,250

Deferred tax assets not recognised during the financial year . . . . . . . . . . . . . . . . . . . . . . . . . . 2,840 1,711

Real property gains tax on disposal of subsidiary companies . . . . . . . . . . . . . . . . . . . . . . . . . . 905 –

(Over)/underprovision of income tax in prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (743) 4,426

Tax expense for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,395 11,276

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10 EARNINGS PER STOCK UNIT

a. Basic

Basic earnings/(loss) per ordinary stock unit is calculated by dividing the net profit/(loss) for the year by the weighted averagenumber of ordinary stock units in issue during the financial year.

group2004 2003

Net profit/(loss) for the year (RM'000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,553 (32,269)

Weighted average number of ordinary stock units in issue ('000) . . . . . . . . . . . . . . . . . . . . . 232,472 232,472

Basic earnings per stock unit (sen) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8 (13.9)

b. Diluted

For the purpose of calculating diluted earnings per stock unit, the net profit for the year and the weighted average number ofordinary stock units in issue during the financial year have been adjusted for the dilutive effects of all potential ordinary stockunits, i.e. warrants and share options granted to employees.

group2004

Net profit for the year (RM'000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,553

Weighted average number of ordinary stock units in issue ('000) . . . . . . . . . . . . . . . . . . . . . 232,472

Effect of dilution:

Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,228

Share options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 757

Adjusted weighted average number of ordinary

stock units in issue and issuable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244,457

Diluted earnings per stock unit (sen) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4

Comparative diluted earnings per stock unit has not been presented as there were no diluted earnings per stock unit for theprevious financial year due to the anti-dilutive effect of the warrants.

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11 DIVIDENDS

group / company2004 2003

net amount of net amount ofdividend dividend dividend dividend

per stock net of tax per stock net of taxunit unit

sen sen

First and final dividend in respect of previous year 0.72 1,674 0.72 1,674

At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended March , of 2.0% less28% taxation on 232,472,000 ordinary stock units, amounting to a dividend payable of RM3,348,000 (1.44 sen net per ordinarystock unit) will be proposed for stockholders’ approval.The financial statements for the current financial year do not reflect thisproposed dividend. Such dividend, if approved by the stockholders, will be accounted for in equity as an appropriation of retainedprofits in the financial year ending March .

12 PROPERTY, PLANT AND EQUIPMENT

land machinery furniture,and and fixtures capital

buildings* equipment and motor work-ingroup equipment renovations vehicles progress total

Cost

At April . . . . . . . . 139,710 2,686 9,550 313 3,769 2,051 158,079

Additions . . . . . . . . . . . . 134 12 280 – – – 426

Disposals . . . . . . . . . . . . – – (176) (1) (171) – (348)

Write-off . . . . . . . . . . . . – (6) (4) – – – (10)

Reclassification . . . . . . . . (4,895) – 4,895 – – – –

Disposal of subsidiaries (Note 5) . . (11,639) – (2,435) (311) (2,150) (2,051) (18,586)

At March . . . . . . 123,310 2,692 12,110 1 1,448 – 139,561

Representing:At cost . . . . . . . . . . . . . . 104,361 2,692 12,110 1 1,448 – 120,612

At deemed cost (or valuation) . . . . . . . 18,949 – – – – – 18,949

. . . . . . . . . . . . . . . . 123,310 2,692 12,110 1 1,448 – 139,561

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12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

land machinery furniture,and and fixtures capital

buildings* equipment and motor work-inequipment renovations vehicles progress total

Accumulated

Depreciation

At April . . . . . . . . 6,046 945 3,873 215 3,430 – 14,509

Charge for the year . . . . . 2,358 219 1,738 21 240 – 4,576

Impairment losses for the year . . . . . . . . – – 157 – – – 157

Disposals . . . . . . . . . . . . – – (71) (1) (164) – (236)

Write-off . . . . . . . . . . . . – (3) (1) – – – (4)

Disposal of subsidiaries (Note 5) . . – – (1,493) (234) (2,062) – (3,789)

At March . . . . . . 8,404 1,161 4,203 1 1,444 – 15,213

Analysed as:Accumulated

depreciation . . . . . . . . 8,404 1,161 4,046 1 1,444 – 15,056

Accumulated impairment losses . . . . – – 157 – – – 157

. . . . . . . . . . . . . . . . 8,404 1,161 4,203 1 1,444 – 15,213

Net Book Value

At March :At cost . . . . . . . . . . . . . . 97,660 1,531 7,907 – 4 – 107,102

At deemed cost (or valuation) . . . . . . . 17,246 – – – – – 17,246

. . . . . . . . . . . . . . . . 114,906 1,531 7,907 – 4 – 124,348

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12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

land machinery furniture,and and fixtures capital

buildings equipment and motor work-inequipment renovations vehicles progress total

net book value

At March :At cost . . . . . . . . . . . . . . 116,340 1,741 5,677 98 339 2,051 126,246

At deemed cost (or valuation) . . . . . . . 17,324 – – – – – 17,324

. . . . . . . . . . . . . . . . 133,664 1,741 5,677 98 339 2,051 143,570

Depreciation charge for . . . . . . 2,257 228 1,126 32 422 – 4,065

* land and buildings of the group

long term short term freehold short termfreehold leasehold leasehold freehold land and leasehold

land land land building bulding land andbuilding total

cost

At April . . . . . . . . 15,200 363 386 3,000 118,761 2,000 139,710

Additions . . . . . . . . . . . . – – – – 134 – 134

Reclassification . . . . . . . . – – – – (4,895) – (4,895)

Disposal of subsidiaries . . . – – – – (11,639) – (11,639)

At March . . . . . . . 15,200 363 386 3,000 102,361 2,000 123,310

Representing:At cost . . . . . . . . . . . . . . – – – – 102,361 2,000 104,361

At deemed cost (or valuation) . . . . . . . 15,200 363 386 3,000 – – 18,949

. . . . . . . . . . . . . . . . 15,200 363 386 3,000 102,361 2,000 123,310

12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

* land and buildings of the group

long term short term freehold short termfreehold leasehold leasehold freehold land and leasehold

land land land building bulding land andbuilding total

Accumulated

Depreciation

At April . . . . . . . . – 103 262 1,260 3,506 915 6,046

Charge for the year . . . . . – 5 13 60 2,051 229 2,358

At March . . . . . . – 108 275 1,320 5,557 1,144 8,404

Net Book Value

At March :At cost . . . . . . . . . . . . . . – – – – 96,804 856 97,660

At deemed cost (or valuation) . . . . . . . 15,200 255 111 1,680 – – 17,246

. . . . . . . . . . . . . . . . 15,200 255 111 1,680 96,804 856 114,906

At March :At cost . . . . . . . . . . . . . . – – – – 115,255 1,085 116,340

At deemed cost (or valuation) . . . . . . . 15,200 260 124 1,740 – – 17,324

. . . . . . . . . . . . . . . . 15,200 260 124 1,740 115,255 1,085 133,664

Depreciation charge for . . . . . . – 5 13 60 1,950 229 2,257

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12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Furniture,company Fittings and

Equipment renovations total

cost

At April / March 367 2 369

Accumulated Depreciation

At April 269 2 271

Charge for the year 36 – 36

At March 305 2 307

net book value

At March 62 – 62

At March 98 – 98

Depreciation charge for 36 – 36

a. The Group's properties were revalued based on valuation by independent valuers on the open market value basis in .As permitted under the transitional provisions of IAS 16 (Revised): Property, Plant and Equipment, these assets are stated at their previous revalued amount (subject to continuity in depreciation policy and the requirement to write an asset down to its recoverable amount) on the basis that the revaluation carried out then, was a one off isolated event and not intended to be an adoption of a revaluation policy in place of historical cost.

b. Had the revalued freehold, long and short term leasehold land and freehold building been carried at historical cost, the net book value of the revalued properties that would have been included in the financial statements of the Group as at March would have been as follows:

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12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

group2004 2003

Freehold land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,872 5,872

Long term leasehold land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 118

Short term leasehold land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 53

Freehold building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,214 1,259

7,250 7,302

c. The net book value of property, plant and equipment pledged for borrowings (Note 27) are as follows:group

2004 2003

Freehold land and buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,200 132,196

Long term leasehold land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 368 260

Short term leasehold land and building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,686 1,210

102,254 133,666

13 REAL PROPERTY ASSETS

group2004 2003

At cost:

Freehold land and buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,700 130,534

Long term leasehold land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 112,164

Development expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,988 65,657

55,688 308,355

Real property assets amounting to RM55,688,000 (2003: RM106,283,000) have been pledged as security for borrowingsas disclosed in Note 27 to the financial statements.

Included in the development expenditure are borrowing costs capitalised of RM18,663,246 (2003: RM18,663,246).

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14 INVESTMENT PROPERTIES

group2004 2003

At cost:

Freehold land and buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,993 86,194

Less:Accumulated impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,993) (2,865)

19,000 83,329

Investment properties amounting to RM20,993,000 at cost (2003:RM61,931,000) have been pledged as security for borrowingsas disclosed in Note 27 to the financial statements.

15 INVESTMENTS IN SUBSIDIARIES

company2004 2003

Unquoted shares at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,650 156,777

Less:Accumulated impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (43,653) (16,401)

68,997 140,376

15 INVESTMENTS IN SUBSIDIARIES (CONTINUED)

The details of subsidiary companies, all of which are incorporated in Malaysia, are as follows:

paid-up sharecompany principal activities capital effective interest

2004 2003Subsidiaries % %

of the Company

Dynamic Degree Sdn. Bhd. Investment holding 3,000,000 51 51

E &O Developers Sdn.Bhd. Investment in real properties 5,500,000 100 –

E &O Ventures Sdn. Bhd. Dormant 100 51 51

Eastern &Oriental Hotel Sdn. Bhd. Hotel owner and operator,

property development and

property investment 29,700,000 100 100

E & O Leisure Sdn. Bhd. Property investment 2 100 100

Radiant Kiara Sdn. Bhd. Property investmentand property development 920,004 100 –

True Vitality Sdn. Bhd. Property investment

and property development 67,250,000 100 100

Regal Alliance Sdn. Bhd. Property development 24,152,582 – 100

Ambangan Puri Sdn. Bhd. Property investment and property development 1,250,000 – 100

Seventy Damansara Sdn. Bhd. Property development

(formerly known as Beta Auto and investment holding

Sdn. Bhd.) 3,250,000 – 51

E & O Properties Sdn. Bhd. Property development and

investment holding 16,580,000 – 100

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15 INVESTMENTS IN SUBSIDIARIES (CONTINUED)

paid-up sharecompany principal activities capital effective interest

2004 2003Subsidiaries of E & O % %

Properties Sdn Bhd

E & O Management Services Sdn.Bhd. Property management and

property investment 2 – 100

Kayangan Budaya Sdn.Bhd. Property development 12,500,200 – 75

Minat Ganda Sdn.Bhd. Property development and

property investment 500,060 – 100

Radiant Kiara Sdn.Bhd. Property investment and

property development 920,004 – 100

E & O Developers Sdn.Bhd. Investment in real properties 5,500,000 – 100

Subsidiaries of Eastern & OrientalHotel Sdn. Bhd.E & O Restaurants Sdn.Bhd. Investment holding 2 100 100

E & O Express Sdn.Bhd. Hotel operator 500,000 100 100

Subsidiaries of E & ORestaurants Sdn. Bhd.Eminent Pedestal Sdn.Bhd. Operation of restaurant 100 70 70

Subsidiaries of E & OExpress Sdn. Bhd.Lone Pine Hotel (Penang) Sdn.Bhd. Hotel management 320,000 100 100

a. Information relating to the disposal of the subsidiaries is set out in Note 5 to the financial statements.

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16 INVESTMENTS IN ASSOCIATES

group company2004 2003 2004 2003

In Malaysia:Quoted shares, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293,503 150,810 142,693 –

Unquoted shares, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,422 3,422 – –

Unrealised gain arising from sale of land and subsidiarycompanies to an associate company . . . . . . . . . . . . . . . . . . . . (5,227) – – –

Share of post acquisition reserves . . . . . . . . . . . . . . . . . . . . . . . 20,062 16,812 – –

311,760 171,044 142,693 –

Market value of quoted shares . . . . . . . . . . . . . . . . . . . . . . . . . 415,043 93,136 238,297 –

The Group’s interests in the associates are analysed as follows:group

2004 2003

Unrealised gain arising from sale of land and subsidiarycompanies to an associate company . . . . . . . . . . . . . . . . . . . (5,227) –

Share of net tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 254,053 108,110

Premium on acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,934 62,934

311,760 171,044

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16 INVESTMENTS IN ASSOCIATES (CONTINUED)

The details of associated companies, all of which are incorporated in Malaysia, are as follows:

group’s name of company principal activities effective interest

2004 2003

% %

E &O Property Development Berhad

("E&OPROP") (formerly known as

Kamunting Corporation Berhad) Property 38.03 26.90

Teratak Warisan (M) Sdn. Bhd. Investment holding 50.00 50.00

Renown Heritage Sdn. Bhd. Property Investment 25.00 25.00

During the financial year, the Group received 328,385,150 shares of RM0.50 each from its associated company, E&OPROP for thedisposal of real property assets and inter-company balances due from its former subsidiaries to E&OPROP as disclosed in Note 36(iv) and 36 (v) to the financial statements.

The Group intends to dispose approximately 116,236,000 of the E&OPROP shares received to raise working capital and repayborrowings. As at the balance sheet date, the Group had disposed of 43,000,000 E&OPROP shares (see Note 36 (ix)) for a gain of approximately RM10,300,000.

The Group's effective interest of 38.03% excludes the 116,236,000 E&OPROP shares disposed/to be disposed.

The quoted shares in an associated company of RM130,107,875 (RM150,809,926) are pledged as security for borrowings as disclosed in Note 27 to the financial statements.

17 OTHER INVESTMENTS

group company2004 2003 2004 2003

Quoted shares in Malaysia, at cost . . . . . . . . . . . . . . . . . . . . . . 29,819 29,819 – –

Less: Accumulated impairment losses . . . . . . . . . . . . . . . . . . . . (21,326) (21,326) – –

8,493 8,493 – –

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17 OTHER INVESTMENTS (CONTINUED)

group company2004 2003 2004 2003

Quoted shares outside Malaysia, at cost . . . . . . . . . . . . . . . . . . . 51 51 – –

Less:Amount written off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) (3) – –

48 48 – –

Quoted warrants in Malaysia, at cost . . . . . . . . . . . . . . . . . . . . . 9,419 – 9,419 –

Quoted irredeemable cumulative unsecuredloan stocks (ICULS) in Malaysia . . . . . . . . . . . . . . . . . . . . . – 331 – –

Less: Accumulated impairment losses . . . . . . . . . . . . . . . . . . . . . – (176) – –

– 155 – –

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 734 742 – –

Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,694 9,438 9,419 –

At Market Value:Quoted shares:

– in Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,628 7,334 – –

– outside Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 36 – –

Warrants quoted in Malaysia. . . . . . . . . . . . . . . . . . . . . . . . . . . 63,848 – 63,848 –

ICULS quoted in Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 155 – –

As at March , investment in quoted shares in Malaysia with a book value of RM6,283,000 (2003: RM7,511,000) andmarket value of RM8,574,000 (2003: RM7,236,000) have been pledged to various financial institutions for credit facilities grantedto the Group and to the Company, as disclosed in Note 27 to the financial statements.

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18 AMOUNTS DUE FROM SUBSIDIARY COMPANIES

company2004 2003

Interest bearing amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333,985 329,731

Non-interest bearing amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,959 365,216

337,944 694,947

Less:Provision for doubtful debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16,354) (6,112)

321,590 688,835

The amounts due from subsidiary companies are unsecured and is repayable on demand. The interest bearing amounts bearinterest at rates ranging from 0.5% to 7% (2003: 0.5%to 5%) per annum.

19 DEVELOPMENT PROPERTIES

group2004 2003

Freehold land and buildings, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 85,028

Development expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 415,791

– 500,819

Attributable profit accrued to date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 202,305

– 703,124

Less: Progress billings to date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – (621,933)

– 81,191

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20 INVENTORIES

group2004 2003

At cost:Food, beverages and tobacco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299 260

General supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231 207

530 467

21 RECEIVABLES

group company2004 2003 2004 2003

Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 880 5,977 – –

Retention monies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,231 – –

880 7,208 – –

Less:Provision for doubtful debts (13) (89) – –

867 7,119 – –

Amount due from associated company . . . . . . . . . . . . . . . . . . . . 8,869 9,074 3,858 4,168

Performance deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 10,500 8,000 10,500

Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335 1,201 33 34

Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429 389 200 193

Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,728 2,211 1,897 255

21,228 30,494 13,988 15,150

The amount due from associated company is unsecured, interest free and repayable on demand.

The Group's normal trade credit term ranges from payment in advance to 30 days. Other credit terms are assessed and approvedon a case-by-case basis.

The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors.

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22 DEPOSITS WITH LICENSED BANKS AND FINANCIAL INSTITUTIONS

Deposits with licensed banks and financial institutions of the Group and of the Company amounting to RM1,000,000 (2003:RM1,100,000) and RM nil (2003: RM100,000) respectively are pledged to banks as security for bank guarantees and creditfacilities granted to the Company and its subsidiary companies.

The effective interest rates of deposits during the financial year is 3.2% (2003: 2.7% to 3.2%) per annum.

The average maturity of deposits as at the end of the financial year is 30 (2003:30) days.

23 CASH AND BANK BALANCES

Included in cash and bank balances of the Group are amounts of RM2,000 (2003: RM2,311,000) held pursuant to Section 7A ofthe Housing Development (Control and Licensing) Act, and therefore restricted from use in other operations.

24 AMOUNTS DUE TO SUBSIDIARY COMPANIES

The amounts due to subsidiary companies represent advances from subsidiary companies which are unsecured, interest free andrepayable on demand.

25 PAYABLES

group company2004 2003 2004 2003

Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,597 34,422 75 315

Accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,880 22,258 1,301 454

Deposits received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580 1,711 – –

Sinking fund accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 4,177 – –

Underwriting deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 – 15,000 –

Application monies received . . . . . . . . . . . . . . . . . . . . . . . . . . 24,908 – 24,908 –

Amount due to a shareholder of a subsidiary company . . . . . . . . . . – 12,826 – –

Amounts due to affiliated companies . . . . . . . . . . . . . . . . . . . . . 16,949 10,262 8,241 –

Other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,976 2,192 195 227

Refundable deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 32,832 – 32,832

68,890 120,680 49,720 33,828

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25 PAYABLES (CONTINUED)

The credit terms of trade payables ranged from 60 days to 120 days.

The refundable deposits were deposits placed by E&OPROP, in connection with the disposals as disclosed in Note 36 to thefinancial statements.

The application monies received is in respect of the Renounceable Restricted Offer for Sale ("ROS") of 60,437,000 E&OPROPwarrants to the shareholders of E&OPROP at an offer price of RM0.25 per share ("Warrants Offer").The Warrants Offer wascompleted on April .The Company had entered into an Underwriting Agreement on January to underwrite theWarrants Offer.The deposit collected in accordance to the Underwriting Agreement was fully refunded on completion ofWarrants Offer.

Affiliated companies refers to subsidiaries of the associated company, E&OPROP. Included in amount due to affiliated companies isRM7,879,574 due to Regal Alliance Sdn.Bhd., a former subsidiary company under terms and conditions as disclosed in Note 36(vii) to the financial statements.The balance which was unsecured and bears interest at 8% per annum up to March wasrepaid on April .

26 PROVISION FOR RETIREMENT BENEFITS

A subsidiary of the Group operates an unfunded, defined benefit Retirement Benefit Scheme ("the Scheme") for its eligibleemployees. Under the Scheme, eligible employees are entitled to retirement benefits on last drawn monthly salary adjusted for thenumber of years of service on attainment of Normal Retirement Age of 55 or Optional Retirement Age of 45.

group2004 2003

Present value of unfunded defined benefit obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 76

Unrecognised actuarial gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 –

Net liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 76

Analysed as:

– current. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 6

– non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 70

90 76

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26 PROVISION FOR RETIREMENT BENEFITS (CONTINUED)

The amounts recognised in the income statement are as follows:group

2004 2003

Current service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 –

Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 –

Amortisation of transition amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 –

18 –

The entire charge for the year has been included in administrative expenses.

Movements in the net liability in the current year were as follows:

group2004 2003

At April. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 76

Amount recognised in the income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 –

Contributions paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) –

At March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 76

group2004 2003

Principal actuarial assumptions used: % %

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 7

Expected rate of average salary increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5

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27 BORROWINGS

group company2004 2003 2004 2003

Short Term Borrowings

Secured:

Bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,545 21,330 12,288 15,463

Revolving credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,732 96,291 7,732 90,291

Margin financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,057 – 5,057 –

Term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,585 130,643 16,951 118,235

65,919 248,264 42,028 223,989

Unsecured:

Trust receipt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,080 – –

Revolving credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 3,000 – 3,000

65,919 252,344 42,028 226,989

Long Term Borrowings

Secured:

Term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,934 57,247 23,825 8,053

63,934 57,247 23,825 8,053

group company2004 2003 2004 2003

Total Borrowings

Bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,545 21,330 12,288 15,463

Revolving credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,732 99,291 7,732 93,291

Trust receipt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,080 – –

Margin financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,057 – 5,057 –

Term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,519 187,890 40,776 126,288

129,853 309,591 65,853 235,042

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27 BORROWINGS (CONTINUED)

group company2004 2003 2004 2003

Maturity of borrowings:

Within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,919 252,344 42,028 226,989

More than 1 year and less than 2 years . . . . . . . . . . . . . . . . . . . . 25,479 18,966 17,575 8,053

More than 2 years and less than 5 years . . . . . . . . . . . . . . . . . . . 18,924 18,750 6,250 –

5 years or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,531 19,531 – –

129,853 309,591 65,853 235,042

The weighted average effective interest rates at the balance sheet date for borrowings were as follows:-

group company2004 2003 2004 2003

% % % %

Revolving credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.50 to 8.15 5.50 to 8.15 5.55 to 8.15 5.55 to 8.15

Bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.65 to 8.15 7.65 to 8.15 7.65 7.65

Trust receipt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 8.15 – –

Term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.04 to 7.77 7.05 to 8.90 7.04 to 7.77 7.05 to 8.40

The borrowings are secured against the Group's properties and investments in quoted shares as disclosed in Note 12, 13, 14, 16,17 and 22 to the financial statements and corporate guarantees issued by the Company.

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28 SHARE CAPITAL

group / companyNumber of ordinary

stock units of RM1 each amount2004 2003 2004 2003

Authorised:At April / March . . . . . . . . . . . . . . . . . . . . . 500,000 500,000 500,000 500,000

Issued and fully paid:At April / March . . . . . . . . . . . . . . . . . . . . . 232,472 232,472 232,472 232,472

29 RESERVES

group company2004 2003 2004 2003

Distributable:Retained profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,730 3,851 15,136 2,805

Non-distributable:Share premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128,004 128,004 128,004 128,004

Revaluation reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,610 9,188 – –

136,614 137,192 128,004 128,004

159,344 141,043 143,140 130,809

The revaluation reserve of the Group arose as a result of the revaluation of lands and buildings of a subsidiary company,net of deferred taxation effect.

The Company has sufficient tax credit under Section 108 of the Income Tax Act 1967 and the balance in the tax-exempt incomeaccount to frank the payment of dividends out of its entire retained profits as at March .

30 MINORITY INTERESTS

The minority interests reflect a net debit balance due to losses borne by a minority shareholder, which has agreed to take up its share of liabilities arising from the losses incurred by the subsidiary company.

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31 LONG TERM PAYABLE

company2004 2003

Deferred purchase consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 38,424

Amount payable within one year (included in trade payables under current liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . – (16,109)

Amount payable after one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 22,315

Repayable as follows:Repayable within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 16,109

Payable between one year and two years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 6,376

Payable between two and five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 15,939

– 38,424

Long term payable represents the deferred purchase consideration in respect of real property assets and investment propertiesacquired by a subsidiary company in previous financial year. The subsidiary has been disposed of to E&OPROP during the currentfinancial year.

32 DEFERRED TAX LIABILITIES

group company2004 2003 2004 2003

At April . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 943 205 – –

Acquisition of minority interest in a subsidiary company . . . . . . . . – 808 – –

Disposal of subsidiary companies (Note 5) . . . . . . . . . . . . . . . . . (808) – – –

Transferred from revaluation reserve . . . . . . . . . . . . . . . . . . . . . 578 – – –

Recognised in the income statement (Note 9) . . . . . . . . . . . . . . . 103 (70) – –

At March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 816 943 – –

The components and movement of deferred tax assets and liabilities of the Group during the financial year are as follows:

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32 DEFERRED TAX LIABILITIES (CONTINUED)

unutilised property,capital plant and

allowances equipment others total

Deferred Tax (Assets)/LiabilitiesAt April . . . . . . . . . . . . . . . . . . . . . . . . . (3,389) 4,364 (32) 943

Disposal of subsidiary companies (Note 5) . . . . . . . . – (808) – (808)

Recognised in the income statement . . . . . . . . . . . . (251) 343 11 103

Transferred from revaluation reserve . . . . . . . . . . . – 578 – 578

At March . . . . . . . . . . . . . . . . . . . . . . . . (3,640) 4,477 (21) 816

Deferred tax assets have not been recognised in respect of the following items:

group company2004 2003 2004 2003

Unutilised business losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,375 34,966 684 684

Unabsorbed capital allowances . . . . . . . . . . . . . . . . . . . . . . . . . 11,181 6,425 527 505

Unabsorbed reinvestment allowances . . . . . . . . . . . . . . . . . . . . 47,755 47,755 – –

Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,702 6,445 16,354 6,111

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201 207 – –

99,214 95,798 17,565 7,300

The unutilised business losses, unabsorbed capital allowances, unabsorbed reinvestment allowances, provisions and othertemporary difference are available indefinitely for offset against future taxable profits of the Company and respective subsidiarycompanies.

33 OPERATING LEASE PAYABLES

Operating Lease Payables

The future minimum lease payables of the Group and of the Company under non-cancelable operating leases are summarised as follows:

group2004 2003

1 year after balance sheet date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 658 493

More than 1 year but not later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,477 756

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34 CONTINGENT LIABILITIES

company2004 2003

Guarantees given to financial institutions for credit facilities granted to subsidiary companies:– Secured * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,639 53,585

– Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 560 8,640

* The secured portion relates to term loans secured by legal charges over the Group's property, plant and equipment,investment properties and pledge of fixed deposits as disclosed in the respective notes to the financial statements.

35 SIGNIFICANT RELATED PARTY TRANSACTIONS

group2004 2003

Expenses:Amount payable for renovation work performed by WCW Technologies Sdn.Bhd. . . . . . . . . . . . . – 728

Amount payable for construction contract performed by WCW Technologies Sdn.Bhd. . . . . . . . . . 15,292 2,734

Professional fees payable to GDP Architect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 80

The directors are of the opinion that all the transactions above have been entered into in the normal course of business and havebeen established on terms and conditions that are not materially different from those obtainable in transactions with unrelatedparties.

The other related party transactions relating to the corporate exercise involving E&OPROP has been disclosed in Note 36 to thefinancial statements.

The affiliated companies and their relationships with the Group are as follows:

Affiliated companies Relations

WCW Technologies Sdn.Bhd. Subsidiary company of the associated company, E&OPROP

GDP Architect A company in which a director of the Company is an executive officer

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36 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

COMPLETED EVENTS

The following transactions have been completed on November pursuant to the terms of the respective share sale agreements, and sale and purchase agreement dated May as amended by the relevant supplemental agreements:

i. Disposal of 1,250,000 ordinary shares representing the entire equity interest in Ambangan Puri Sdn. Bhd. ("APSB") for a cash consideration of RM32,573,306. The purchase consideration has been adjusted from RM29,573,306 to RM32,573,306 after adjusting for total dividends of up to RM18.0 million instead of RM21.0 million as stated in the Circular to Shareholders dated September .

ii. Disposal of 24,152,582 ordinary shares representing the entire equity interest in Regal Alliance Sdn. Bhd. ("RASB") for a cash consideration of RM35,988,769.The purchase consideration has been adjusted from RM26,988,769 to RM35,988,769 after adjusting for total dividends of up to RM58.2 million as opposed to RM67.2 million stated in the Circular to Shareholders dated September .

iii. Disposal of 7,000,000 ordinary shares representing the present entire issued and paid-up share capital in E &O Properties Sdn.Bhd. ("EOP") and 9,580,000 new ordinary shares in EOP to be issued pursuant to the capitalisation of the amount owing by EOP to the Company for a cash consideration of RM8,690,013.

iv. Disposal of a piece of land by True Vitality Sdn.Bhd. ("TVSB Land Disposal") for RM90,000,000 satisfied by RM9,000,000 cash and the remaining RM81,000,000 by the issuance of 162 million new ordinary shares of RM0.50 each in E&OPROP at an issue price of RM0.50 per E&OPROP share.

v. Disposal by the Company to E&OPROP of approximately RM83.193 million of the net amounts owing by two former subsidiaries of the Company, namely Minat Ganda Sdn. Bhd. and Kayangan Budaya Sdn. Bhd. for a consideration of approximately RM83.193 million satisfied by the issuance of approximately 166.385 million new E&OPROP shares at an issue price of RM0.50 per E&OPROP share.

vi. The debt settlement by E&OPROP to the Company of approximately RM113,034,786 of net amounts owing by APSB,Seventy Damansara Sdn. Bhd. (formerly known as Beta Auto Sdn. Bhd. (an associate company of APSB)), EOP and certain subsidiaries of EOP to the Company with RM116 million nominal value of bonds ("Bonds") with 116 million detachable warrants.The Company paid RM2,965,214 to E&OPROP to settle the difference between the inter-company balances and RM116 million Bonds.

Pursuant to the debt settlement, E&OPROP has issued RM116 million 4-year secured Bonds with 116,000,000 detachable warrants ("Warrants") to the Company on November .

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36 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONTINUED)

COMPLETED EVENTS (CONTINUED)

vii. On November , the Company together with True Vitality Sdn. Bhd. entered into a Fourth (4th) Supplementary Agreement with E&OPROP to extend the repayment date for the estimated inter-company debt of approximately RM35,000,000 (“Inter-company Debt ”) due by the Company to RASB.The amount bears interest of 8% per annum up to March .

The Company has repaid RM6.8 million and RM10 million on December and January respectively.On March , the Company and E&OPROP agreed to extend the repayment date for the Inter-company Debt from March to June . The interest rate for the extended period was increased from 8% to 9% per annum.

The Company repaid RM10 million of the Inter-company Debt on March and repaid the remaining balance of approximately RM7.9 million on April .

viii. On January , Alliance Merchant Bank Berhad ("Alliance") on behalf of the Company announced that the Company had on January fixed the offer price for the proposed renounceable restricted offer for sale ("Warrants Offer") involving 60.437 million E&OPROP's warrants to shareholders of E&OPROP at RM0.25 per warrant. The Warrants Offer was completed on April .

ix. On November , Alliance on behalf of the Company announced that the Company proposes to undertake the placement of up to 116.236 million E&OPROP shares and/or 58.118 million Warrants to interested investors ("Proposed Placement"). The Company had on December and March disposed 30 million and 13 million E&OPROP shares at RM0.67 and RM0.90 per share respectively.

37 SIGNIFICANT EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

i. On April , the Group entered into a Sale and Purchase Agreement to dispose of the investment properties at a total consideration of RM19,000,000.

ii. On July , the Company proposed to undertake a special issue of an aggregate of 33,709,000 new ordinary stock units of RM1.00 each to identified Bumiputra investors ("Special Issue Shares") to comply with the 30% Bumiputra equity requirement imposed by the Securities Commission and the Foreign Investment Committee.

The proposed special issue may be implemented in tranches, depending on the market sentiment at the point of implementation.

The issue price of the Special Issue Shares will be determined at a later date, which will depend on the performance and condition of the stock market of Bursa Malaysia Securities Berhad (formerly known as Malaysia Securities Exchange Berhad) prior to the respective price-fixing dates and the performance of the stock units of the Company.

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38 COMPARATIVE FIGURES

The following comparative figures of the financial statements and notes thereto have been restated to conform with current year'spresentation.

groupas previously

as restated reported

Balance Sheet

Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,680 120,756

Provision for retirement benefits (Note 26) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 –

Income Statement

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,431 33,449

Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23,520) (23,547)

Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,203 2,190

Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,122) (10,100)

The comparative figures have been audited by a firm of chartered accountants other than Ernst &Young.

39 FINANCIAL INSTRUMENTS

a. Financial Risk Management Objectives and Policies

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for thedevelopment of the Group’s businesses whilst managing its interest rate, foreign exchange, liquidity and credit risks.The Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative transactions.

b. Interest Rate Risk

The Group’s primary interest rate risk relates to interest-bearing debt as the Group had no substantial long term interest-bearing assets as at March .The investments in financial assets are mainly short term in nature and have been mostlyplaced in fixed deposits.

The Group reviews its debt portfolio, taking into account the investment holding period and nature of its assets.This strategy allows it to capitalise on cheaper funding in a low interest rate environment and achieve a certain level of protection against rate hikes.

The information on maturity dates and effective interest rates of financial assets and liabilities are disclosed in their respective notes.

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39 FINANCIAL INSTRUMENTS (CONTINUED)

c. Foreign Exchange Risk

The Group is not significantly exposed to foreign currency risk as majority of the Group's transactions, assets and liabilities are denominated in Ringgit Malaysia.

The Group does not engage in any hedging transactions.

d. Liquidity Risk

The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure thatrefinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group maintains sufficientlevels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives tomaintain available banking facilities at a reasonable level to its overall debt position. As far as possible, the Group raisescommitted funding from both capital markets and financial institutions and balances its portfolio with some short term fundingso as to achieve overall cost effectiveness.

e. Credit Risk

Credit risks, or the risk of counterparties defaulting, are controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised and monitored by limiting the Group’s associations to business partners with high creditworthiness.Trade receivables are monitored on an ongoing basis via Group management reporting procedures.

The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial instruments.

f. Fair Values

The carrying value of the Group's borrowings is considered to be a reasonable estimate of the fair values as the borrowings will be repriced immediately in the event of any changes to the market interest rates.

The carrying amount of financial assets and liabilities approximate their fair value. For unquoted investments, it is not practical to estimate the fair value of the unquoted shares because of the lack of quoted market prices and the inability to estimate fair value without incurring excessive costs. However, the Group and the Company believe that the carrying amount represents the recoverable values.

40 SEGMENT INFORMATION

Business Segments

The Group operates mainly in Malaysia and is organised into four major business segments:

i. Property development

ii. Property investment

iii. Hotels operations

iv. Investment holding

On November , certain subsidiary companies engaged in property development and property investment were disposedand accordingly, the operations in these segments were significantly curtailed.

The directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business andhave been established on terms and conditions that are not materially different from those obtainable in transactions withunrelated parties.

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40 SEGMENT INFORMATION (CONTINUED)

Business Segments (continued)

property property hotel investment2004 development investment operations holding total elimination consolidated

REVENUE

External sales . . . . . . . . . 98,040 3,644 16,196 2 117,882 – 117,882Inter-segment sales . . . . . . – – 288 83,590 83,878 (83,878) –

Total revenue . . . . . . . . . 98,040 3,644 16,484 83,592 201,760 (83,878) 117,882

RESULT

Segment results . . . . . . . . 13,660 4,721 (4,298) 41,583 55,666 (31,656) 24,010Gain/(loss)on disposal

of discontinuedoperations . . . . . . . . . 10,666 (1,961) – – 8,705 8,705

Finance costs . . . . . . . . . . (20,670)Share of results of

associates . . . . . . . . . . – – – 5,662 5,662 5,662Taxation . . . . . . . . . . . . . (2,815)

Profit after taxation . . . . . 14,892Minority interests . . . . . . 5,661

Net profit for the year . . . . 20,553

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40 SEGMENT INFORMATION (CONTINUED)

Business Segments (continued)

property property hotel investment2004 development investment operations holding total elimination consolidated

ASSETS

Segment assets . . . . . . . . . . . . . 228 19,051 184,240 62,907 266,426 266,426Investments in associates . . . . . . – – – 311,760 311,760 311,760Unallocated

corporate assets . . . . . . . . . . 2,730Consolidated total assets . . . . . . 580,916

LIABILITIES

Segment liabilities . . . . . . . . . . . 250 5,824 16,731 63,720 86,525 86,525Unallocated corporate

liabilities . . . . . . . . . . . . . . . 113,124Consolidated

total liabilities . . . . . . . . . . . 199,649

OTHER INFORMATION

Depreciation and amortisation . . . . . . . . . 276 25 4,239 44 4,584 4,584

Impairment loss. . . . . . . . . . . . . – 2,150 – – 2,150 2,150

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40 SEGMENT INFORMATION (CONTINUED)

Business Segments (continued)

property property hotel investment2003 development investment operations holding others total elimination consolidated

REVENUE

External sales . . . . . . . . . . . . 14,910 4,680 13,819 22 – 33,431 – 33,431Inter-segment sales . . . . . . . . – – 240 29,046 – 29,286 (29,286) –

Total revenue . . . . . . . . . . . . 14,910 4,680 14,059 29,068 – 62,717 33,431

RESULT

Segment results . . . . . . . . . . (627) 2,411 (5,526) 13,214 (8) 9,464 (21,818) (12,354)Finance costs. . . . . . . . . . . . . (26,847)Share of results of associates. . . – – – 6,696 – 6,696 6,696Taxation . . . . . . . . . . . . . . . (3,427)

Profit after taxation . . . . . . . . (35,932)Minority interests . . . . . . . . . 3,663

Net profit for the year . . . . . . (32,269) Eas

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40 SEGMENT INFORMATION (CONTINUED)

Business Segments (continued)

property property hotel investment2003 development investment operations holding others total elimination consolidated

ASSETS

Segment assets . . . . . . . . . . 417,661 105,272 131,667 7,832 742 663,174 663,174Investments in associates . . . – – – 171,044 – 171,044 171,044Unallocated corporate assets . 523

Consolidated total assets . . . . 834,741

LIABILITIES

Segment liabilities . . . . . . . . 35,369 9,082 19,590 49,108 2 113,151 113,151Unallocated corporate

liabilities . . . . . . . . . . . . 340,454

Consolidated total liabilities . . 453,605

OTHER INFORMATION

Depreciation and amortisation . . . . . . . . . . 268 207 3,556 35 7 4,073 4,073

Impairment loss. . . . . . . . . . . – – – 5,513 – 5,513 5,513

Note: No geographical segment information is presented as the Group operates principally within Malaysia.

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location description/ lot number/tenure land area netexisting use (acres) book value

(rm’000)

10 farquhar street Land held under – Freehold . ,

10200 penang Lots , , – Leasehold and Building expiring in .

for hotel use – Leaseholdexpiring in .

* The last revaluation date was in

10 farquhar street Land held for – Freehold . ,

10200 penang development

10 farquhar street Land held for – Freehold . ,

10200 penang development

section 2 Land held under – Freehold . ,

town of batu ferringgi developmentnorth east district, penang

section 2 Land held under – Freehold . ,

town of batu ferringgi developmentnorth east district, penang

section 2 Land with .

town of batu ferringgi building for Geran No.

north east district, hotel use Leasehold-expiring inpenang

sri seekar units of , . ,

jln u-thant completed luxury Seksyen

kuala lumpur condominiums Geran No.

Freehold

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Group’s PropertiesAs at 31 July 2004

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ORDINARY SHARE CAPITAL

Authorised capital : RM500,000,000

Issued and paid up capital : RM232,471,492

Class of shares : Ordinary stock units of RM1.00 each

Voting rightsOn show of hands : 1 voteOn a poll : 1 vote for each ordinary stock unit held

Number of stockholders : 4,384

distribution of stockholders

size of stockholdings no. of stockholders % no. of stock units %

Less than 100 203 4.63 4,991 0.01 100 – 1,000 678 15.47 395,673 0.16

1,001 – 10,000 2,951 67.31 10,995,090 4.73 10,001 – 100,000 458 10.45 12,103,199 5.21

100,001 to less than 5% 91 2.07 137,575,466 59.18 5% and above of issued share capital 3 0.07 71,397,073 30.71

total 4,384 100.00 232,471,492 100.00

30 largest stockholders

name no. of stock units %

1. Avenue Capital Resources Berhad (formerly known as Avenue Assets Berhad) . . . . . . 27,317,073 11.75

2. AllianceGroup Nominees (Tempatan) Sdn Bhd (for Terra Realty Sdn Bhd (Custodial)) . 25,080,000 10.79

3. Multi-Purpose Holdings Berhad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000,000 8.17

4. Pausini Consulting Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,500,000 4.95

5. JB Nominees (Asing) Sdn Bhd (for Citibase Limited) . . . . . . . . . . . . . . . . . . . . . . 8,914,264 3.83

6. JB Nominees (Tempatan) Sdn Bhd (for MCC Credit Sdn Bhd) . . . . . . . . . . . . . . . . 8,902,500 3.83

7. Lembaga Tabung Angkatan Tentera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,600,000 3.27

8. RHB Merchant Nominees (Tempatan) Sdn Bhd (for Devanna Limited) . . . . . . . . . . . 7,220,000 3.11

9. Amanah Raya Nominees (Tempatan) Sdn Bhd (for Skim Amanah Saham Bumiputera) . 7,000,000 3.01

10. Multi-Purpose Insurans Bhd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,386,500 2.75

statistics of stockholdingsAs at 31 July 2004

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11. Minister of Finance (for Akaun Jaminan Pinjaman Kerajaan Persekutuan) . . . . . . . . . . 5,600,000 2.41

12. JB Nominees (Tempatan) Sdn Bhd (for Domestic Star Sdn Bhd) . . . . . . . . . . . . . . . 5,479,450 2.36

13. HSBC Nominees (Asing) Sdn Bhd (for Liberty Square Offshore Partners Ltd (SEA)) . 5,060,100 2.18

14. Magnum 4D (Selangor) Sdn Bhd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,850,000 2.09

15. AllianceGroup Nominees (Tempatan) Sdn Bhd (for Alliance Merchant Bank Berhad) . . 4,699,586 2.02

16. Southern Nominees (Tempatan) Sdn Bhd (for Domestic Star Sdn Bhd) . . . . . . . . . . . 4,600,000 1.98

17. HSBC Nominees (Asing) Sdn Bhd (for Strong Asia Pacific Fund Inc) . . . . . . . . . . . . 3,750,000 1.61

18. RHB Nominees (Asing) Sdn Bhd (for Montgomery International Investments Limited) . . 2,564,100 1.10

19. Loo Khee Kwong @ Danny Loo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,525,600 1.09

20. HSBC Nominees (Asing) Sdn Bhd (for Liberty Square Partners LP) . . . . . . . . . . . . . 2,065,300 0.89

21. United Overseas Nominees (Tempatan) Sdn Bhd (for Siau Teng Chong) . . . . . . . . . . 2,059,700 0.89

22. Aliya Akbar Khawaja Mohd Akbar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,990,300 0.86

23. Magnum 4D (Johor) Sdn Bhd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,704,000 0.73

24. Citicorp Nominees (Asing) Sdn Bhd (for Bear Stearns Securities Corporation) . . . . . 1,677,200 0.72

25. JB Nominees (Tempatan) Sdn Bhd (for MCC Credit Sdn Bhd) . . . . . . . . . . . . . . . . 1,633,300 0.70

26. Allianz Life Insurance Malaysia Berhad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,615,400 0.69

27. Allianz Life Insurance Malaysia Berhad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,514,100 0.65

28. PM Securities Sdn Bhd (for IVT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,447,000 0.62

29. Allianz General Insurance Malaysia Berhad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,370,000 0.59

30. HSBC Nominees (Asing) Sdn Bhd (for OIA Asia Pacific Partner LP (Oechsle Intl Ad)) . . 1,317,700 0.57

total 186,443,173 80.21

WARRANTS 2001/2011

Issued : 61,176,623

Outstanding : 61,176,298

Number of warrantholders : 2,020

distribution of warrantholders

size of holdings no. of warrantholders % no. of warrants %

Less than 100 3 0.15 150 0.01

100 – 1,000 161 7.97 132,003 0.21

1,001 – 10,000 1,259 62.32 7,471,692 12.21

10,001 – 100,000 550 27.23 17,687,400 28.91

100,001 to less than 5% 44 2.18 13,585,400 22.21

5% and above of issued share capital 3 0.15 22,299,653 36.45

total 2,020 100.00 61,176,298 100.00

30 largest warrantholders

name no. of warrants %

1. A.A. Anthony Securities Sdn Bhd (for IVT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,067 16.35

2. AllianceGroup Nominees (Tempatan) Sdn Bhd (for Terra Realty Sdn Bhd (Custodial)) . 6,600,000 10.79

3. AllianceGroup Nominees (Tempatan) Sdn Bhd (for Alliance Merchant Bank Berhad) . . 5,699,586 9.32

4. RHB Merchant Nominees (Tempatan) Sdn Bhd (for Devanna Limited) . . . . . . . . . . . 1,900,000 3.11

5. John Jong Khiam Yong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,295,400 2.12

6. Christina Loh Yoke Lin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,150,000 1.88

7. DB (Malaysia) Nominee (Asing) Sdn Bhd (for North Northwest Fund) . . . . . . . . . . . 585,300 0.96

8. Mayban Nominees (Tempatan) Sdn Bhd (for Yeap Gek @ Yeap Poh Chim) . . . . . . . . . 571,800 0.93

9. Douglas Cheng Heng Lee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 0.82

10. Soon Seng Kai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 0.82

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11. Mayban Securities Nominees (Tempatan) Sdn Bhd (for Tan Wei Kian) . . . . . . . . . . . . 406,000 0.66

12. Seet Kim Meng . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390,700 0.64

13. Wong Nyook Yin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347,500 0.57

14. Mayban Nominees (Tempatan) Sdn Bhd (for Ch’ng Gim Chew) . . . . . . . . . . . . . . . 325,000 0.53

15. AllianceGroup Nominees (Tempatan) Sdn Bhd (for Len Min Sin) . . . . . . . . . . . . . . 300,000 0.49

16. Hong Leong Finance Berhad (for Chan Seng Fatt) . . . . . . . . . . . . . . . . . . . . . . . . 300,000 0.49

17. DB (Malaysia) Nominee (Asing) Sdn Bhd (for Northwest Asia x Ltd) . . . . . . . . . . . . 292,600 0.48

18. Yeap Hup Suan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000 0.41

19. Mayban Nominees (Tempatan) Sdn Bhd (for Too Hooi Seong) . . . . . . . . . . . . . . . . . 210,000 0.34

20. United Overseas Nominees (Tempatan) Sdn Bhd (for Len Book Learn) . . . . . . . . . . 206,000 0.34

21. Koh Lee Huat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201,400 0.33

22. CIMSec Nominees (Tempatan) Sdn Bhd (for Len Min Sin) . . . . . . . . . . . . . . . . . . . 200,000 0.33

23. Hong Leong Finance Berhad (for Lim Choon Tiew) . . . . . . . . . . . . . . . . . . . . . . . 200,000 0.33

24. Ling Hee Leong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000 0.33

25. TASec Nominee (Tempatan) Sdn Bhd (for Lee Oi Yoke) . . . . . . . . . . . . . . . . . . . . . 200,000 0.33

26. Hay Chai Hoon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198,000 0.32

27. A.A. Assets Nominees (Tempatan) Sdn Bhd (for Low Khian Beng) . . . . . . . . . . . . . 178,900 0.29

28. Lim Say Teong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,200 0.28

29. Ng Chooi Guan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,000 0.28

30. Mayban Nominees (Tempatan) Sdn Bhd (for Danial Izwan Woon bin Abdullah) . . . . . 158,100 0.26

total 33,708,553 55.13

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DIRECTORS’ INTEREST AS AT 30 JULY 2004

name of director direct interest % indirect interest %

no. of stock units

ordinary stock units

1. Dato’ Tham Ka Hon 4,699,586 2.02 25,080,000(1) 10.79

29,534,067(2) 12.70

no. of warrants

warrants 2001/2011

1. Dato’ Tham Ka Hon 6,699,586 10.95 6,600,000(1) 10.79

employee share option scheme options granted exercised balance held

1. Dato’ Tham Ka Hon 4,500,000 – 4,500,000

2. Aloysius Choong Kok Sin 4,500,000 – 4,500,000

(1) Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through his interest in Terra Realty Sdn Bhd.(2) Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through his indirect interest in Multi-Purpose Holdings Berhad.

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SUBSTANTIAL STOCKHOLDERS HOLDING 5% OR MORE OF ISSUED AND PAID-UP CAPITAL AS AT 30 JULY 2004

no. of stock units

name of stockholder direct interest % indirect interest %

1. Avenue Capital Resources Berhad(formerly known as Avenue Assets Berhad)(“AAB”) 27,317,073 11.75 – –

2. Terra Realty Sdn Bhd (“TRSB”) 25,080,000 10.79 – –

3. Multi-Purpose Holdings Berhad (“MPHB”) 19,000,000 8.17 10,534,067(1) 4.53

4. Dato’ Tham Ka Hon 4,699,586 2.02 54,614,067(2) 23.49

5. Datin Chua Cheng Boon – – 25,080,000(3) 10.79

6. Dynamic Icon Sdn Bhd (“DISB”) – – 29,534,067(4) 12.70

7. Lim Tiong Chin – – 29,534,067(4) 12.70

8. Pantai Holdings Berhad – – 27,317,073(5) 11.75

9. Quantum Aspects Sdn Bhd (“QASB”) – – 29,534,067(6) 12.70

10. Datuk Surin Upatkoon – – 29,534,067(7) 12.70

1 Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through its interests in Magnum Corporation Berhad which is an associate company of MPHB and in A.A.Anthony Securities Sdn. Bhd., a wholly-owned subsidiary of Dynamic Pearl Sdn. Bhd. which is a wholly-owned subsidiary of MPHP.

2 Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through TRSB and DISB which has interest in QASB which in turn has interest in MPHB.

3 Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through TRSB.

4 Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through QASB which in turn has interest in MPHB.

5 Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through AAB.

6 Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through MPHB.

7 Deemed interest by virtue of Section 6A(4)of the Companies Act, 1965 held through DISB which has interest in QASB which in turn has interests in MPHB.

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NOTICE IS HEREBY GIVEN that the Seventy-Seventh (77th) Annual General Meeting of Eastern & Oriental Berhad will be held at the Berjaya

Hall, Bukit Kiara Equestrian & Country Resort, Jalan Bukit Kiara, Off Jalan Damansara, 60000 Kuala Lumpur, on Wednesday, September

at 10.30 a.m. for the following purposes:

1. To receive and adopt the Audited Financial Statements for the year ended March (Resolution 1)

together with the Reports of the Directors and Auditors thereon.

2. To re-elect the following Directors who retire in accordance with Article 98 of theCompany’s Articles of Association:

– Encik Kamil Ahmad Merican (Resolution 2)

– Dato’ Tham Ka Hon (Resolution 3)

3. To re-elect Datuk Azizan bin Abd Rahman who retire in accordance with Article 103 of the (Resolution 4)

Company’s Articles of Association.

4. To approve the payment of Directors’ fees in respect of the year ended March . (Resolution 5)

5. To approve a first and final dividend of 2% less income tax for the year ended March . (Resolution 6)

6. To re-appoint Messrs Ernst & Young as auditors of the Company and to authorise the Directors to (Resolution 7)

fix their remuneration.

To consider and if thought fit, to pass the following resolutions:

7. Ordinary Resolution (Resolution 8)

Authority to allot and issue shares in general pursuant to Section 132D of the Companies Act, 1965

“THAT subject always to the Companies Act, 1965, the Articles of Association of the Company and approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered, pursuant to Section 132D of the Companies Act, 1965, to issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per centum (10%) of the total issued capital of the Company and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

— as special business —

— as ordinary business —

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notice of annual general meeting

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8. Special Resolution. (Resolution 9)

Amendments to Articles of Association of the Company

“THAT the Articles of Association of the Company be amended as follows:

i. in Article 2, to delete the following existing definitions and to replace them with new definitions:

Existing Definitions New Definitions

Member Any person/persons for the time being Member Any person/persons for the time beingholding shares in the Company and whose holding shares in the Company and whosenames appear in the Register of Members names appear in the Register of Members(except the Malaysian Central Depository (except Bursa Malaysia Depository Nominees Sdn. Bhd.) including depositors Nominees Sdn. Bhd.) including depositorswhose names appear on the Record of whose names appear on the Record ofDepositors. Depositors.

Central Depository Malaysian Central Depository Sdn. Bhd. Central Depository Bursa Malaysia Depository Sdn. Bhd.

Market Day Any day on which there is trading of Market Day Any day on which there is trading ofSecurities on the Kuala Lumpur Stock Securities on the Stock Exchange.Exchange.

Stock Exchange Kuala Lumpur Stock Exchange or any Stock Exchange Bursa Malaysia Securities Berhad or other Stock Exchange on which the any other Stock Exchange on which the Company is listed, as the context requires. Company is listed, as the context requires.

Listing The Listing Requirements of Kuala Lumpur Listing The Listing Requirements of Bursa MalaysiaRequirements Stock Exchange including any amendment Requirements Securities Berhad including any amendment

to the Listing Requirements that may be to the Listing Requirements that may bemade from time to time. made from time to time.

ii. to delete existing Article 5 in its entirety and to renumber Article 5A as Article 5.

Existing Article 5

Save to the extent provided by the Act none of the funds of the Company or of any subsidiary thereof shall be directly or indirectly employed in the purchase or subscription of or in loans upon the security of the Company’s shares.

Existing Article 5A to be renumbered Article 5

All issues of new Securities for which listing is sought is to be made by way of crediting the Securities Accounts of the allottees with such Securities save and except where it is specifically exempted from compliance with section 38 of the Central Depositories Act. The Company shall notify the Central Depository of the names of the allottees and all such particulars required by the Central Depository to make the appropriate entries in the Securities Accounts of such allottees.

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iii. immediately after the existing Article 50, to insert the following new Article 50A:

New Article 50A

The Company may, with the sanction of the Members in a general meeting, purchase its own shares and the Company may make payment for such purchase on such date(s), terms and manner as may be determined by the Directors and any shares so purchasedmay be dealt with by the Company in such manner as decided by the Directors, subject always to the provisions of the Act and all other applicable laws, regulations, rules and guidelines for the time being in force and the requirements of the Stock Exchangeand/or any other relevant authority.

iv. immediately after the existing Article 106,to insert the following new Articles 106A and 106B:

New Article 106A

For purposes of Article 106 and subject to applicable laws for the time being in force in Malaysia, the contemporaneous linking together by an instantaneous telecommunication device of a number of Directors no less than the quorum required by Article 106,whether or not any one or more of the Directors is out of Malaysia, is deemed to constitute a meeting of Directors and all provisionsof these Articles as to meetings of the Directors will apply to such meeting held by instantaneous telecommunication device so longas the following conditions are met:

i. each of the Directors taking part in the meeting by means of video conference, telephone conference, audio visual or other instantaneous telecommunication device must be able to hear and/or see each of the other Directors taking part at the commencement and for the duration of the meeting;

ii. at the commencement of the meeting each Director must acknowledge his presence for the purpose of the meeting to all of the other Directors taking part.

New Article 106B

A Director may not leave the meeting by disconnecting his instantaneous telecommunication device unless he has previously obtained the express consent to the Chairman of the meeting and a Director will be conclusively presumed to have been present and to have formed part of the quorum at all times during the meeting by instantaneous telecommunication device unless he has previously obtained the express consent of the Chairman of the meeting to leave the meeting. Minutes of the proceedings at a meeting of the Directors by instantaneous telecommunication device will be sufficient evidence of such proceedings and of the observance of all necessary formalities if certified as correct minutes by the Chairman of the meeting. Notwithstanding anything contained in these Articles to the contrary, a meeting held by instantaneous telecommunication device is deemed to be a meeting held in Malaysia and participation by the Director shall constitute presence in person or by proxy or representative. For purposes of Article 106A and 106B, “instantaneous telecommunication device” shall mean any telecommunication conferencing device with or without visual capacity.

v. to amend the existing Article 110 to include signing of Resolution by Alternate Directors, to insert the words “or other written electronic communications” after the word “telefax” and to delete the word “telex” at the last line.

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Existing Article 110

A Resolution in writing signed by a majority of the Directors for the time being in Malaysia and constituting a quorum shall be as effective as a Resolution passed at a meeting of the Directors duly convened and held and may consist of several documents in the like form each signed by one or more of the Directors. In this Article the expressions “in writing” and “signed” shall include approval by telefax or telex by any such Director.

Amended Article 110

A Resolution in writing signed by a majority of the Directors for the time being in Malaysia and constituting a quorum shall be as effective as a Resolution passed at a meeting of the Directors duly convened and held; provided that where a Director is not so present but has an alternate who is so present, then such Resolution must also be signed by such alternate. Any such Resolution may consist of several documents in the like form each signed by one or more of the Directors or their alternate(s).In this Article the expressions ‘in writing’and ‘signed’ shall include approval by telefax or other written electronic communications by any such Director.

9. To transact any other business for which due notice shall have been given in accordance with the Articles of Association of the Company and the Companies Act, .

Subject to the approval of the stockholders, a first and final dividend of 2% less income tax in respect of the financial year ended March , will be paid on November to stockholders whose names appear on the Register of Members and Record of Depositors at the close of business on October .

NOTICE IS HEREBY GIVEN that the Share Transfer Books and Register of Members of the Company will be closed on October to determine stockholders’ entitlements to the dividend payment.

A Depositor shall qualify for the entitlement to the dividend only in respect of:

. Shares deposited into the Depositors’ Securities account before 12.30 p.m. on October (in respect of shares which are exempted from mandatory deposit);

. Shares transferred to the Depositors’ Securities account before 4.00 p.m. on October in respect of ordinary transfers; and

. Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the rules of the Bursa MalaysiaSecurities Berhad.

By Order of the Board

FAM CHAI HINGCompany Secretary

Kuala LumpurDated: September

— notice of book closure —

notes

1. A member of the Company entitled to attend and vote at this meeting is entitled to appoint one or more proxy to attend and vote in his stead. A proxy may but need not be a member of the Company.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if the appointor is a corporation either underits common seal or under the hand of an officer or attorney duly authorised in writing.

3. The instrument appointing a proxy must be deposited at the registered office of the company at 13th floor,Wisma Damansara, Jalan Semantan, 50490 Kuala Lumpur not later than48 hours before the time set for the meeting or at any adjournment thereof.

4. Stockholders are reminded that pursuant to the Securities Industry (Central Depositories) (Amendment) (No.2) Act, which came into effect on November , all stockunits not deposited with Bursa Malaysia Depository Sdn Bhd by 12.30 p.m. on December and not exempted from mandatory deposit, have been transferred to the MinisterOf Finance (“MOF”). Accordingly, only the MOF is eligible to attend the meeting for such undeposited stock units.

EXPLANATORY NOTES ON SPECIAL BUSINESS1. Ordinary Resolution pursuant to Section 132D of the Companies Act,1965

The proposed Resolution 8, if passed, will empower the Directors to allot and issue new ordinary stock units in the Company up to ten per centum (10%) of the issued sharecapital of the Company for such purposes as they consider would be in the interest of the Company. This authority, unless revoked or varied at a general meeting, will expire atthe next Annual General Meeting.

2. Special Resolution on Amendments to Articles of Association of the Company

The proposed Resolution 9, if passed, will amend the Articles of Association of the Company (“Articles”) to incorporate the new names of the Bursa Malaysia Securities Berhadand Bursa Malaysia Depository Sdn Bhd following the demutualisation of the Kuala Lumpur Stock Exchange, and to update the Articles to include conduct of meeting via electronicmeans, to allow the signing of Resolutions by Alternate Directors and other written electronic means and to allow the Company to purchase its own shares in accordance to theprevailing laws and regulations.

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statement accompanying notice of annual general meeting

1. Re-election of Directors

The Directors standing for re-election at the Seventy-Seventh Annual General Meeting of the Company are as follows:

Pursuant to Article 98 of the Company’s Articles of Association

i. Encik Kamil Ahmad Mericanii. Dato’ Tham Ka Hon

Pursuant to Article 103 of the Company’s Articles of Association

i. Datuk Azizan bin Abdul Rahman

2. details of attendance of directors at board meetings

The details of attendance of each Director at Board Meetings are set out on page of the Annual Report.

3. The place, date and time of the meeting

The Seventy-Seventh Annual General Meeting of the Company will be held at the Berjaya Hall, Bukit Kiara Equestrian & Country Resort, Jalan Bukit Kiara, Off Jalan Damansara, Kuala Lumpur on Wednesday, September at 10.30 a.m.

4. further details of directors standing for re-election

Details of the Directors standing for re-election at the Seventy-Seventh Annual General Meeting of the Company are set out in the Directors’ Profile appearing on pages to of the Annual Report.

notes

1. a member of the company entitledto attend and vote at this meetingis entitled to appoint one or moreproxies to attend and vote in hisstead. a proxy may but need not bea member of the company.

2. the instrument appointing a proxyshall be in writing under the handof the appointor or his attorneyduly authorised in writing or if theappointor is a corporation eitherunder its common seal or underthe hand of an officer or attorneyduly authorised in writing.

3. the instrument appointing a proxytogether with the power of attorneyor other authority, if any, underwhich it is signed, shall be depositedat the Registered office of thecompany at 13th floor, wismadamansara, jalan semantan, 50490kuala lumpur not later than 48 hoursbefore the time set for the meetingor at any adjournment thereof.

4. stockholders are reminded thatpursuant to the securities industry(central depositories) (amendment)(no. 2) act, 1998 which came intoeffect on 1 november 1998, all stockunits not deposited with bursamalaysia depository sdn bhd by12.30pm on 1 december 1998 and notexempted from mandatory deposit,have been transferred to theminister of finance (“mof”). accor-dingly, only the mof is eligible to attend the meeting for suchundeposited stock units.

EASTERN & ORIENTAL BERHAD (555-K)(Incorporated in Malaysia under the Companies Enactment, 1917)

FORM OF PROXY

I/We............................................................................... NRIC No. ............................................................

(Full Name in Capital Letters)

of .....................................................................................................................................................(Full Address)

being a member(s) of EASTERN & ORIENTAL BERHAD (COMPANY NO.: 555-K) hereby appoint...........................

.................................................................................................................................................................................

(Full Name in Capital Letters)

of ..............................................................................................................................................................................

(Full Address)

or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us and on my/our behalf at the Seventy-Seventh Annual General Meeting of the Company to be held at the Berjaya Hall, Bukit Kiara Equestrian & Country Resort,Jalan Bukit Kiara, Off Jalan Damansara, Kuala Lumpur on Wednesday, September at . a.m or at anyadjournment thereof.The proxy is to vote in the manner indicated below, with an “X” in the appropriate spaces. If nospecific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.

resolution for against. To receive and adopt the Audited Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ❍ . . . . . . . . . . . ❍

. To re-elect Encik Kamil Ahmad Merican. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ❍ . . . . . . . . . . . ❍

. To re-elect Dato’ Tham Ka Hon. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ❍ . . . . . . . . . . . ❍

. To re-elect Datuk Azizan bin Abdul Rahman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ❍ . . . . . . . . . . . ❍

. To approve the payment of Directors’ fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ❍ . . . . . . . . . . . ❍

. To approve a first and final dividend of % less income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . ❍ . . . . . . . . . . . ❍

. To re-appoint Messrs Ernst & Young as Auditors .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ❍ . . . . . . . . . . . ❍

. To authorise the issue of shares pursuant to Section 132D of the Companies Act, 1965 . . . . . . . ❍ . . . . . . . . . . . ❍

. To approve the amendments to the Company’s Articles of Association . . . . . . . . . . . . . . . . . . . . ❍ . . . . . . . . . . . ❍

Signed this ........................... day of .......................... .

Number of stock units held Signature of member(s)/Seal

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notes

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notes